IS for Competitive Advantage.docx

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Western University
Computer Science
Computer Science 1032A/B
Diane Goldstein

IS for Competitive Advantage Achieving Competitive Advantage  From chapter 3 o Determine competitive strategies o Create processes to achieve strategies o IS developed to support business processes  Help achieve competitive advantage  Systems must be related to organization’s strategy Calculation Systems  Antiquated systems  Relieved workers of repetitive calculations  Labour-saving devices  Produced little information  E.g. o Computing payroll and writing checks o Inventory tracking Functional Systems  Facilitated work of single department or function  Next step o Functions added to calculation system programs providing more value o E.g. – payroll expanded to become human resources  Islands of automation o Effective as independent functions o Inefficient working in cooperation with other processes across entire business  E.g. o Human resources, financial reporting  Basic types of Functional Systems o Marketing and sales systems  Product management  Product and brand management  Assess o Effectiveness of marketing messages o Advertising o Promotions  Sales forecasting  Planning production  Managing inventory  Financial reporting  Customer management  Generate follow-up business  Turn prospects into customers  Managing customers o Operations systems  Manage finished-goods inventory  Used primarily by non-manufacturers  Order entry  Order management  Inventory management  Customer service o Manufacturing systems  Process data about inventories  Manufacturing scheduling and operations  Support production and planning  Facilitate production of goods  Inventory systems o Inventory control, management and policy  Use of UPC codes  Computer stocking level and reorder quantities from previous data  Inventory viewed as assets or liabilities  Just-in-time (JIT) inventory policy  Manufacturing-planning systems o Bill of materials (BOM)  List of materials that comprise item to be manufactured o Schedules equipment, people and facilities o Ability to show labour and equipment requirements  Manufacturing-scheduling systems o Generate master production schedule (MPS)  Analyze past sales to estimate future sales o Three philosophies  Push production planning  Organization creates schedule and pushes good through manufacturing and sales  Pull production  Responds to customer demand  Reduction in inventory triggers production  “One-off” producers  Neither category  Combination of push and pull systems  Material requirement Planning o Materials requirement planning (MRP)  Plans needed for materials used in manufacturing o Manufacturing resource planning (MRP II)  Plans needed for materials, personnel and machinery  Manufacturing operations systems o Control of machinery and production processes  Operate production lines o Licked to manufacturing-scheduling systems o Human resource information systems  Support  Recruitment  Compensation  Evaluation  Development of employees, training  Employee assessment  Planning functions o Accounting systems  General ledger  Financial reporting  Accounts receivable  Accounts payable  Cos accounting  Cash management  Treasury management  Budgeting applications  Importance of legislation  Enacted to prevent corporate fraud  Creation of internal controls  Sarbanes-Oxley Act (US)  Bill 198 or Budget Measures Act (chapter 9) Functional Systems  Many benefits  Limited since they operate in isolation o Data duplication  Each application has its own database  Potential lack of data integrity o Business processes disjointed across functions  Produces lack of integrated enterprise information o Limited decisions based on limited knowledge o Increased costs to organization Business Process Design (redesign)  Do not simply automate of improve existing functional systems  Consider the creation of new, more efficient business processes o Integrate activities of all departments involved in a value chain  Cross-departmental business processes o Take advantage of as many activity linkages as possible Challenges of Business Process Design  Process design projects o Expensive and difficult o May take a long time  Employees resist change  Ultimate outcome is uncertain Industry Standard Processes  Many early business process design projects were tailor-made  By mid-1990s, software vendors designed integrated applications with built-in industry standard processes o Integrate activities across departments o Save costs of tailor-made process design o E.g. – Oracle, SAP  Advantages o Inherent business processes o Use of tired and tested processes  Disadvantages o May be different from existing processes in the organization o May require the organization to change substantially Integrated Cross-Functional Systems  Operate across departmental boundaries o Increased functionality  Process-based systems support complete business process o Integrated processing more efficient o The need for a clear line of authority  Interorganizational systems o Cross-functional systems used by two or more related companies Cross Functional Systems  Designed to overcome problems in functional systems  Two cross-functional systems: o Customer relationship management systems (CRM)  Organization is customer centered  Support processes  Attracting, selling, managing, delivering and supporting customers  Direct value chain activities involving customer  Integrates four customer life cycle phases  Single repository for customer data  Eliminates inconsistent data
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