Chapter 4 - Enterprise Systems
Building and Understanding of the Value Chain
- The value chain is a connected series of activities, each of which adds value or sup-
ports the addition of value to the firm’s good or services.
- Five core components:
- Inbound Logistics
- the receiving, warehousing, and inventory control of raw materials re-
quired to create a product or service.
- the value-creating and often proprietary activities that transform the raw
inputs into the final product.
- Outbound Logistics
- the activities required to get the finished product to the customer, includ-
ing packaging, warehousing, and order fulfillment.
- Marketing and Sales
- all activities associated with getting buyers to purchase the product, in-
cluding working with distributors, retailers or online channels, marketing,
advertising, and pricing.
- Service Activities
- those that maintain and enhance the product’s value, including customer
support, repair services, and warranty and recall.
- Primary activities directly related to the production and distribution of the organization’s
products and services.
- Support activities are value chain activities that an organization conducts to support
the creation of business value by the primary activities.
- Firm infrastructure (administration)
- Technology development
- Human resource management
Information Systems that Support Business Activities
- Functional information systems
- focus on the activities of the functional department to improve its efficiency and
- accounting, marketing, human resources, financial, manufacturing IS
- Workflow management systems Chapter 4 - Enterprise Systems
- represents the steps, organizational resources, input and output data, and tools
needed to complete a business process.
- supports activities that several departments of the organization may carry out.
- benefits include less misplaced or stalled work, managers can focus more time
on business decision rather than on tracking work, more analysis and tighter
control of the processes.
- Business rule is a statement that defines or constrains some aspect of the busi-
- Transaction processing systems
- transaction is an exchange of goods or services between two or more parties
that creates a relationship between the parties.
- enables transaction activities and capture the key data created by the transac-
- ACID: Atomicity, Consistency, Isolation, Durability
- ACID allow organizations to create systems that can handle large numbers of
- Management information and document management systems
- Periodic reports include financial statements or monthly sales reports.
- Exception reports monitor when and why exceptions occur of key values, de-
fined as critical to the operation.
- Demand reports are generated based on user requests.
- Executive information systems (EIS) designed to provide summary information
about business performance to those making high-level strategic decisions.
- Document management systems when organizations begin to recognize data
management needs that revolve around business documents.
- Knowledge management systems
- Explicit knowledge includes anything that can be written down, stored, and codi-
- Tacit knowledge includes the know-how that people have through learning and
- Groupware: Communication tools, conferencing tools, collaborative manage-
- Decision support systems Chapter 4 - Enterprise Systems
- Help businesses use communications technologies, knowledge, and models to
organize and access data to perform decision-making activities.
- Financial models, statistical models, optimization models, simulation modeling.
- Types of DSS include: communications-driven, data-driven, document-driven,
- Supply chain management
- Supply chain is a system of organizations, people, technology, activities, infor-
mation, and resources involved in moving a product or service from supplier to
- Manages materials, information, and finances as they move from supplier to
manufacturer to wholesaler to retailer to consumer.
- Materials managements, inventory management, order management, logistics
- Enterprise resource planning
- A way of integrating the departments and functions across an organization.
- Companies run its applications from a single database.
- Improves organizational efficiency and effectiveness.
- Provides value by providing visibility throughout its delivery network, enabling
new business sales, and reducing costs through process standardization.
- Can become incredibly complex and difficult to mange as it grows.
Enterprise Systems that Support the Value Chain
- Enterprise systems are large-scale applications that support business units or func-
- Inbound logistics, Operations, Outbound logistics, Marketing and Sales, Service, Ad-
ministration and Finance Systems, Human Resources, Technology Development, and
Software as a Service (SaaS)
- Essentially renting software.