Exam reveiw ITM Chapter 4-6.docx

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Information Technology Management
ITM 102

ITM Exam review   4,5,6 Chapter 4 Enterprise Computing Challenges and Enterprise Resource Planning Chapter 4 overview SECTION 4.1 - ENTERPRISE COMPUTING CHALLENGES – Innovation: Finding New – Social Entrepreneurship: Going Green – Social Networks: Who’s Who – Virtual Worlds: It’s a Whole New World SECTION 4.2 – ENTERPRISE RESOURCE PLANNING (ERP) “over view” – Enterprise Resource Planning – Core ERP Components – Extended ERP Components – Integrating SCM, CRM, and ERP – Measuring ERP Success – Choosing ERP Software – ERP and SME Markets • Enterprise resource planning (ERP) integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make decisions by viewing enterprise-wide information on all business operations. ERP as a business concept resounds as a powerful internal information management nirvana: Everyone involved in sourcing, producing, and delivering the company’s product works with the same information, which eliminates redundancies, reduces wasted time, and removes misinformation. Learning outcomes • Buffett believes in focused investing and believes that all investors should look at five features: 1. The certainty with which the long-term economic characteristics of the business can be evaluated 2. The certainty with which management can be evaluated, both as to its ability to realize the full potential of the business and to wisely employ its cash flows 3. The certainty with which management can be counted on to channel the reward from the business to the shareholders rather than to itself 4. The purchase price of the business 5. The levels of taxation and inflation that will be experienced and that will determine the degree by which an investor’s purchasing-power return is reduced from his gross return Innovation finding new six best practices of innovation: • Find your relevant edge • Assemble innovation hothouses • Reward risk takers • Celebrate diversity • Look around • Mix practitioners and developers Social entrepreneurship “going green” • Social Responsibility implies that an organization has a responsibility to society. • Corporate Policy reflects the position a company takes on social and political issues. • Sustainable or “Green” describes systems that minimize damage to the environment. Energy consumption Breakdown of Power Usage in The Typical Data Centre • For convenience and to allow for automatic updates and backup, the majority of computer equipment is never completely shut down. It draws energy 24 hours a day. Percentage ­ lighting/humidifier ­ power distribution units ­ air conditioners ­ Ups ­ IT equipment ­ Chiller E waste • Ewaste - Refers to discarded, obsolete or broken electronic devices • Sustainable IT disposal - Refers to the safe disposal of MIS assets at the end of their life cycle • Electronic Product Stewardship Canada (EPSC) – an industry association that educates and encourages e-waste control • Recent International laws restrict the use of hazardous materials. • Moore’s Law has made technological devices smaller, cheaper, and faster, allowing more people from all income levels to purchase computing equipment. This increased demand is causing numerous environmental issues. Ewaste refers to discarded, obsolete, or broken electronic devices. Ewaste includes CDs, DVDs, thumb drives, printer cartridges, cell phones, iPods, external hard drives, TVs, VCRs, DVD players, microwaves, and so on. Greener IT four ways to save energy in a data center ­ use outdoor air for cooling, cool high density areas, use low power processors, incorporate cooling solutions, use server power management, buy high efficiency power supplies, use vuirtulization to condolidate servers. Organizational social networking • three types of social networking an organization can implement:  Passive search  Boomerangs  Marketing networks Passive Search—Finding people for new jobs who are happy and productive where they through business networking sites. Boomerangs—Former employees returning to old jobs. Marketing Networks—Using business networks for marketing and events It’s a whole new world • Virtual World—An Internet resource which presents a 3D virtual community. • Virtual Organizations– interactive web presence for businesses and their customers. • Virtual Workforce—working from home…or anywhere via the Internet. Tools for virtual workforce • Mobile commerce (m-commerce)—ability to purchase goods and services through a mobile device. • Telematics—The blending of wired and wireless technologies for efficient electronic communication. • Electronic tagging—the use of RFID (radio frequency identification) and other systems to identify and tracking digital assets. 4.2 enterprise resource planning ERP Failures • Blaming ERP for the "pickle" that many a company who has implemented ERP find themselves in is like blaming the CAD package for a poorly architected building. Like just about everything else, IT-enabling business processes is about using the right tools for the right reasons and executing. • Enterprise resource planning – integrates all departments and functions throughout an organization into a single IT system (or integrated set of IT systems) so that employees can make enterprise-wide decisions by viewing enterprise-wide information on all business operations. ERP powerful organization tools ERP is: • Solution to incompatible applications. • Addresses the need for global information sharing. • Avoids the expense of fixing legacy systems. Legacy Systems—are older computer technology still in use. Functional Systems—serve single business departments or units. Legacy systems exist in personal computing as well as business Enterprise resource planning system Core data – employees, orders, customers, sales, inventory  ERP- Global sales report, Global manufacturing report, global shipping report Enterprise resource planning - ERP Integration Data Flow • At the heart of all ERP systems is a database; when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system “Data” (centre) – purchasing, accounting and finance, manual resources, inventory, manufacturing, marketing and sales • Why do organizations need integrations, if an ERP system contains one database that connects all applications together? • Most organizations operate functional “silos”, and each department typically has its own systems • A company might purchase an ERP and then all of the functional silos would be on one system; however, this doesn’t happen very often in the real world ERP automates business processes such as order fulfillment—taking an order from a customer, shipping the purchase, and then billing for it. With an ERP system, when a customer service representative takes an order from a customer, he or she has all the data necessary to complete the order. When one department finishes with the order, it is automatically routed via the ERP system to the next department. To find out where the order is at any point, a user needs only to log in to the ERP system and track the order. ERP systems automate business processes, for example, order fulfillment  When a Customer Service Representative (CSR) takes an order from a customer, he or she has all the information necessary to complete the order (the customer’s credit rating and order history, the company’s inventory levels, and the delivery schedule) ERP process flow Data”centre” – sales/quote/order – warehouse pack/ship – receiving returns – accounting/biling/payment • The organization before ERP Multiple functional systems provide support for the unique needs of each department but cannot be integrated across the enterprise  document management, workflow, erp …etc The organization after ERP - A central data repository and integrated applications in each department allow for the unique processing needs of each functional unit while having data sharing across the enterprise. Core and extended ERP components The evolution of ERP ERP – material planning, order entry, distribution, general ledger, accounting, shop floor control Extended ERP – scheduling, forecasting, capacity planning, ecommerce, warehousing, logistics ERP –II – project management, knowledge management, workflow management, customer relationship’, human resource, portal capability .. • Core ERP components – traditional components included in most ERP systems and they primarily focus on internal operations • Ex te nd ed ERP components – extra components that meet the organizational needs not covered by the core components and primarily focus on external operations Core and extended ERP components Three most common core ERP components 1. Accounting and finance 2. Production and materials management 3. Human resource Accounting and finance ERP component – manages accounting data and financial processes within the enterprise with functions such as general ledger, accounts payable, accounts receivable, budgeting, and asset management Deeley Harley-Davidson Canada (DHDC), the exclusive Canadian distributor of Harley-Davidson motorcycles, has improved inventory, turnaround time, margins, and customer satisfaction—all with the implementation of a financial ERP system • Production and materials management ERP component – handles the various aspects of production planning and execution such as demand forecasting, production scheduling, job cost accounting, and quality control Production and materials management ERP components • This figure displays the typical ERP production planning process. The process begins with forecasting sales in order to plan operations. A detailed production schedule is developed if the product is produced, and a materials requirement plan is completed in the product is purchased. Sales forcasting  operaations planning  detailed scheduling/production,  materials requirement planning, purchasing • Human resource ERP component – tracks employee information including payroll, benefits, compensation, performance assessment, and assumes compliance with the legal requirements of multiple jurisdictions and tax authorities Extended ERP components include: • Business intelligence • Customer relationship management • Supply chain management • E-business • Business intelligence – describes information that people use to support their decision-making efforts • Customer relationship management – involves managing all aspects of a customer’s relationships with an organization to increase customer loyalty and retention and an organization's profitability • Supply chain management – involves the management of information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability • E-business – means conducting business on the Internet, not only buying and selling, but also serving customers and collaborating with business partners Primary Users and Business Benefits of Enterprise Applications Enterprise application – crm, scm, erp \ssmles parketing/cs, custommers, accouting finance logistics Integration • Middleware – Several different types of software that sit between and provide connectivity for two or more software applications The connected corporation • Enterprise application integration middleware – Takes a new approach to middleware by packaging commonly used applications together, reducing the time needed to integrate applications from multiple vendors Measuring ERP Success with the Balanced Scorecard The Four Primary Perspectives of the Balanced Scorecard Vision and strategy – financial, internal business process, customer, learning and growing Balanced Scorecard is a measurement system whose objective is to clarify the company’s vision and strategy and translate them into actions. It starts with the customer… • Customer—”To achieve our vision, how should we appear to our customer. • Financial –”To succeed financially, how should we be appearing to our shareholders?” • Internal Business Process—”To satisfy our shareholders and customers, what business processes must we excel at?” • Learning and Growing—”To achieve our vision, how will we sustain our ability to change and improve?” Choosing ERP software Successful ERP projects share 3 attributes 1. Overall fit • Off the rack • Off the rack and tailored to fit • Custom made 2. Proper business analysis • Successful companies spend up to 10 percent of the project budget on a business analysis 3. Solid implementation plans • A plan is needed to monitor the quality, objectives, and timelines Overall fit  This refers to the degree of gaps that exist between the system and the business process. A well-fitting ERP has no major process gaps and very few minor ones Proper business analysis The best way to determine which fit strategy is right is to conduct a thorough business analysis. Successful companies normally spend up to 10 percent of the project budget on a business analysis. Chapter 5 Operations Management and Supply Chain Management • SECTION 5.1 – OPERATIONS MANAGEMENT “over view” – Operations Management Fundamentals – OM in Business – Information Systems’ Role in OM • SECTION 5.2 – SUPPLY CHAIN FUNDAMENTALS – Supply Chain Fundamentals – Information Systems’ Role in the Supply Chain – Supply Chain Management Success Factors – Future Supply Chain Trends Operations management foundations Production management describes all the activities managers do to help companies create goods. Operations management (OM) is the management of systems or processes that convert or transform resources (including human resources) into goods and services. A transformation process is often referred to as the technical core, especially in manufacturing organizations, and is the actual conversion of inputs to outputs. Operations management fundamentals Operations Involves the Conversion of Inputs into Outputs Example of Inputs, Transformation, and Outputs Hospital inputs include patients, medical supply, doctors, and nurses. OM in business Typical OM activities include: • Forecasting • Capacity planning • Scheduling • Managing inventory • Assuring quality • Motivating and training employees • Locating facilities Forecasting: Estimating demand for a product/service Capacity Planning: Determining the amount of space, equipment and throughput is needed to achieve the production targets. Scheduling: Determining when the production will occur. Managing inventory: Ensuring raw materials will be available on time and in place and that work in progress and finished goods have storage. Assuring quality: Ensuring standards are met through sampling inputs, in process work and outputs. Motivating and training employees: Appropriate pay, benefits, scheduling, and direction, supervision and instructions. Locating Facilities: Determining where to put production facilities and the cost effectiveness of near major markets or away from markets and close to transportation routes. Hierarchy of operational planning IS support for operations strategy depends on IS support for operations strategy depends on: – Level of available technology. – Skill level of workers. – Degree of vertical integration, to what degree the suppliers are owned (or partnered) with the company. – Extent to which outside suppliers are used. • SBU Strategic Business Unit—is a stand-alone business under a corporate umbrella • Strategic Planning—are the collection of decisions focus in doing the right things over a longer period of time • MPR Systems—use sales forecast to make sure parts and materials are available • Global Inventory Management Systems (GIMS)—locate, track and predict materials and components by installing GPS in transportation vehicles • Operational Planning and Control (OP&C)—deals with day-to-day operations. Competitive OM strategy Five key competitive priorities that can add value for customers: 1. Cost 2. Quality 3. Delivery 4. Flexibility 5. Service 1. Cost—key determinant in a customer purchase decision 2. Quality—Product quality should reflect the exact requirements of a customer Process quality ensures a consistent error-free quality level. Several international quality methodologies exist including Six Sigma Quality, ISO9000, ISO14000, TQM, CMMI. An assignment for students is for individual students or groups to research one of these methodologies to see when they started and by whom; what objective is achieved and how; what prominent companies use them today and why; and what the advantages as well as disadvantages there are. 3. Delivery—fast and reliable 4. Flexibility—offering a wide variety of products to customers. Offering a choice of environmentally friendly products and services. 5. Service—New products revert to being commodities quickly. Often the distinguishing factor is the service provided by the supplier. OM and the supply chain • Supply chain consists of all parties involved, directly or indirectly, in the procurement of a product or raw material • Supply chain management (SCM) involves the management of information flows between and among stages in a supply chain to maximize total effectiveness and profitability. Supply chain management • The four basic components of Supply chain management (SCM) are: – Supply chain strategy – Supply chain partners – Supply chain operation – Supply chain logistics • Supply Chain Strategy. A company must have a plan for managing all the resources that go toward meeting customer demand for products or services. • Supply Chain Partners – Companies chosen to deliver finished products, raw materials and services. • Supply Chain Operations –Scheduling production activities, including testing, packaging, and preparing for delivery. • Supply Chain Logistics—product delivery process and elements including orders, warehouses, carriers, defective product returns and invoicing. A typical manufacturing supply chain: Supplier, storage, manufacturing, storage (finished goods), distribution, retailer, customer A typical service supply chain: Supplier, storage, service, customer • SCM software can enable an organization to generate efficiencies within these steps by automating and improving the information flows throughout and among the different supply chain components. Impact of Efficient & Effective Supply Chain Management on Porter’s Five Forces • Effective and efficient SCM systems can enable an organization to  Decrease the power of its buyers  Increase its own supplier power  Increase switching costs to reduce the threat of substitute products or services  Create entry barriers thereby reducing the threat of new entrants  Increase efficiencies while seeking a competitive advantage through cost leadership  “Organizations supply chain”  Supplier power + 5.2 Supply Chain Fundamentals Supply chain fundamentals • The supply chain has three main links: 1. Materials flow from suppliers and their “upstream” suppliers at all levels 2. Transformation of materials into semi-finished and finished products through the organization’s own production process 3. Distribution of products to customers and their “downstream” customers at all levels • Collecting, analyzing, and distributing transactional information to all relevant parties, SCM systems help all the different entities in the supply chain work together more effectively • SCM has significantly improved companies’ forecasting abilities over the last few years A Typical Supply Chain for a Manufacturer Supplier/supplies  supplier manufacturer (transformation) distributor retailer customer customer’s customer • They need to determine all areas and potential threats that make the supply chain vulnerable. For example, • An unusually bad season in Australia causes the eucalyptus harvest to fall short of expectation production levels, which causes the price to skyrocket • The factory in Lititz, Pennsylvania, is destroyed by a fire • One of its transportation ships sinks • A hurricane causes one of its transportation ships to be delayed The five basic supply chain management components • Plan – This is the strategic portion of supply chain management. A company must have a plan for managing all the resources that go toward meeting customer demand for products or services. • Source – Companies must carefully choose reliable suppliers that will deliver goods and services required for making products. • Market– This is the step where companies manufacture their products or services. This can include scheduling the activities necessary for production, testing, packaging, and preparing for delivery. • Deliver – This step is commonly referred to as logistics. Logistics is the set of processes that plans for and controls the efficient and effective transportation and storage of supplies from suppliers to customers. • Return – This is typically the most problematic step in the supply chain. Companies must create a network for receiving defective and excess products and support customers who have problems with delivered products. Information Systems’ Role in the Supply Chain • IS’s primary role is to create integrations or tight process and information linkages between functions within a firm • Information systems’ primary role in SCM is in integrating the information links between functions within a firm such as marketing, sales, finance, manufacturing and distribution—and between firms to allow the smooth synchronized flow of both information and products between customers, suppliers and transportation providers across the supply chain. Factors Driving SCM “supply Chain management/middle” • Information technology – only recently have advances in IT made it possible to bring the idea of a truly integrated supply chain to life • Visibility – The ability to view all areas up and down the supply chain. The bullwhip effect means that distruptions upstream at supply source increase in impact as they move downstream to the consumer. For example: A strike at a supplier making one critical computer component means stock-outs on the shelves of the computer retailer. Organizations need to know what is happening above and below them to be able to manage effectively. • Consumer behaviour – Demand Planning systems create forecasts using statistical tools and techniques so that customers can respond faster to consumer demands, reducing inventory and improving delivery time. • Competition – To provide a competitive edge, Supply Chain Planning Systems (SCP), process correct and timely information with Mathematical algorithms to improve the flow of input materials and final product outputs through the supply chain. Supply Chain Execution (SCE) automates steps in the supply chain such as order, shipment and payment. A blanket PO (purchase order) sits in the suppliers’ computers and the use of the purchasers’ products are tracked. When the purchasers’ inventory falls to a specified level an automatic shipment is triggered and payment is done through automatic bank withdrawal. The most common system is EDI (Electronic Data Interchange). • Speed – As EDI and other Supply Chain Execution applications remove the need for paper flow and allow for continuous materials and product flow, speed is increased. Increasing speed and capacity of servers and telecommunications has improved supply chain speed dramatically. Competition  Supply chain planning Supplier manufacturer distributor retailer customer Supply chain execution  As each link in the Supply Chain becomes automated the speed of the flow of goods and services increases. Three Factors Fostering Speed 1. Pleasing customers has become something of a obsession. Serving the customer in the best, most efficient, and most effective manner has become critical, and information about issues such as order status. 2. Information is crucial to manager’s abilities to reduce inventory and human resource requirements a competitive level. 3. Information flows are essentials to strategic planning for and deploying resources. Why is information speed critical in a supply chain? a. If the information arrives three dates late, chances are high that managers have already made decisions based on current information that might have been inaccurate b. Information timeliness is critical c. IT is an enabler of information timeliness Supply Chain Management Metrics • Common supply chain metrics include: – Back order – Inventory cycle time – Customer order cycle time – Inventory turnover • Supply chain management metrics can help an organization understand how it’s operating over a given time period. Supply chain measurements can cover many areas including procurement, production, distribution, warehousing, inventory transportation, and customer service. • The solution is to measure all key areas of the supply chain. Seven Principles of SCM 1. Segment Customers by service needs, regardless of industry, and tailor service to those segments. 2. Customize the logistics network and focus intensively on the service requirements and on profitability of the pre-identified customer segments. 3. Listen to signals of market demand and plan accordingly. Planning must span the entire chain to detect signals of changing demand. 4. Differentiate products closer to the customer, since companies can no longer afford to hold inventory to compensate for poor demand forecasting. 5. Strategically manage sources of supply, by working with key suppliers to reduce overall costs of owning materials and services. 6. Develop a supply chain information technology strategy that supports different levels of decision-making and provides a clear view (visibility) of the flow of products, services and information. 7. Adopt performance evaluation measures that apply to every link in the supply chain and measure true profitability at every stage Supply Chain Success Factors • SCM industry best practices include: 1. Make the sale to suppliers. 2. Wean employees off traditional business practices. 3. Ensure the SCM system supports the organizational goals. 4. Deploy in incremental phases and measure and communicate success. 5. Be future oriented. Studying industry best practices is an excellent way to improve SCM implementation success 6. A large part of any SCM system extends beyond the organization to the suppliers. Since the organization has very little control over anything external to itself, these pieces are typically the most complicated to build, develop, and implement. Be sure suppliers are on board with the benefits that the SCM system will provide to ease SCM implementation difficulties
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