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Chapter 7

COMM 190 Chapter Notes - Chapter 7: Enterprise Application Integration, Business Process, Ibm Db2


Department
Commerce
Course Code
COMM 190
Professor
Mosey Nicholas J
Chapter
7

Page:
of 3
Chapter 7: Competitive Advantage and Business Processes
What are the Fundamental Ways of Achieving Competitive Advantage?
One way is to enhance the product or service through information systems
The second way is through business processes look for technology to help retain
customers, reduce costs, and create entry barriers
In effect, companies are making their primary and support activities more productive
compared to those of competitors
o Happens when business process become more effective, efficient, or both
What are Business Functions and Functional Systems?
Business functions are the primary and support activities in an org’s value chain
A functional system is the second era of IS the goal is to facilitate the work of a single
department/function add more features over time to provide more value & assistance
Functional Silos and Cross-Functional Systems
The problem with functional applications is their isolation
o Often called functional silos because they are designed to work independently
The separation makes it seems as if various departments in the same company should
work separately and independently of each other the truth is that they are interrelated
This realization lead to cross-functional systems which integrate data and business
processes across different departments and systems
Interorganizational systems: info systems processing routine transactions between 2+ orgs
Why are Functional Systems Changing?
As mentioned, the benefits of functional systems are limited because the systems operate
in isolation leads to:
o Data duplication and inconsistency; disjointed processes; limited info and lack of
integrated info; isolated decisions lead to inefficient overall activities, expenses
How Can Business Processes Be Improved?
Before talking about how technology can improve businesses processes, it’s important to
note they can be improved other ways too by 1) adding resources, 2) adding increased
specialization, and 3) changing/eliminating unproductive activities
First step in considering how IT can improve your business is understanding where
improvements might take place
o Change activities so you get more/same done w. same/less resources, respectively
Business process design involves the creation of new, usually cross-functional, business
practices during IS development
o Orgs do not create new IS to automate existing business processes but use
technology to enable new, efficient business processes
Integrating Functional Systems: AEI and ERP
Integrating these system can be very complex and requires careful thinking
Here are two approaches to integration
Enterprise application integration (EAI) is an approach to combining functional systems
which uses layers of software as a bridge to connect different functional systems together
o The data for each functional system, stays with the functional system
o The EAI server pulls whatever data from each functional system which acts to
integrate the necessary information from the functional systems
The second approach is enterprise resource planning
o There is a single central database, people in the functional areas use ERP to send
and receive data directly from the central data base, no functional systems exist
o This comes with prebuilt software so the org must remove existing func systems
Current business processes must also be changed
What are the Challenges of Implementing Business Process Changes?
1. Business processes are often complex and require many people to agree on the changes to
be made takes time and a lot of effort
2. We have to convince the organization that the changes are worth the effort estimate
business value that will come from it (can’t over/underestimate benefits)
3. Many employees resist change like how they work now, don’t want their department
to be reorganized, don’t want to work for someone new, etc.
What is the Importance of Industry Standard Processes?
These are processes that are built into business applications from companies like SAP
o If the software is designed well, the standard process will effectively integrate
activities across departments
These pre-built processes can save the org the high cost of designing new processes
o Also enables an org to benefit immediately from tried and tested cross
departmental processes
However, these processes may be very different from your existing processes which
would require the org to change disruptive to operations and employees
What are ERP Systems?
These are systems that support many/all of the primary business processes as well as the
accounting and HR support processes
It is an outgrowth of materials resource planning (MRP), and the primary users of this
software of manufacturing companies
ERP represents the ultimate cross-departmental process system system can integrate
sales, order, inventory, manufacturing, customer service, HR, accounting, and others
ERP Characteristics
1. Takes a cross-functional, process view of the entire org single central database
2. It is a formal approach that is based on documented, tested business models defines
the process blueprint (a set of inherent processes for all org activities)
o Org’s must adapt to these processes or the system will not operate effectively
3. The process of moving from separated functional application to and ERP system is
difficult, fraught with challenges, and can be slow
4. An ERP system is very costly need new hardware and software, develop new
procedures, training employees, converting data, etc.
Benefits of ERP
Efficient business processes they are effective and do not need to be improved
With better planning, companies can reduce their inventory levels and the time each unit
stays in inventory is reduced
Org’s can provide better info about orders, products, and customer status to customers
o This leads to better and less costly customer service
Makes company-wide data more easily accessible and result in great, real-time visibility
Can produce and sell the same products at lower costs because of smaller inventories,
reduced lead times, and less expensive customer support higher profitability
ALL DEPENDS ON HOW YOU USE THE SYSTEM if everyone has it, the only
way to get competitive advantage is using it effectively and integrating the system