Chapter 12 - Using Technology to Enhance Business Processes.pdf

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University of Waterloo
Accounting & Financial Management
AFM 341
Clark Hampton

Chapter12 - UsingTechnologyto Enhance Business Processes Arwa Naalwala University of Waterloo Saturday, August 03, 201310:29 PM  Nature of business environment is changing  Accountants need to continually enhance the IT systems Business Strategy  Accountants help develop processes and applications that support business strategy  As evaluators – need to consider how well business processes and apps support the strategy and goals  Value-chain analysis is a technique for realizing strategies and goals by considering the contribution of various activities in a business process IT Environment  IT Strategy – organization’s broad vision for using IT to support the organization’s overall business strategy and processes  IT Infrastructure – organization of technology to support business processes  IT Function – organization of people who are responsible for acquiring and developing info systems and supporting end-users  Systems Development Process – apps are developed, used and maintained. Represented by the systems development life cycle - a series of steps used by organizations to build accounting applications.  Accountants need good understanding to help select and develop appropriate apps  Auditors need to understand to evaluate accounting systems and controls Business Strategy and the Value Chain  Increasing competition means focus must be greater on improving the effectiveness of their business processes and information systems  Porter provides a framework = every organization can be viewed as value-chain  Value Chain: comprises a series of value activities performed to design, produce, market, deliver, and support its product  Primary activities (each supported by HR and technology): o Inbound logistics – activities for ordering, receiving, storing and distributing inputs o Operations – transforms inputs into outputs o Outbound logistics – activities for obtaining order and collecting, storing, and distributing products to customers o Marketing – activities related to sales, advertising, promotion and pricing o Services – activities such as training, installation, and repair  Each of these primary activities is supported by HR, acquisitions and some form of technology  IT support services would include acquisition of technology, installation and maintenance of hardware and software, training, user support, and developing standards and procedure for use of technology. Alternative Strategies  Three generic strategies for competitive advantage: o Cost leadership – tries to be lowest cost producer o Differentiation – strives to be unique o Focus – aim at cost leadership or differentiation in narrow segments  Competitive advantage arises from primary and support activities ○ ex. Improving purchasing, cut distribution costs, implement efficient assembly process ○ ex. By offering superior product design and excellent service IT and Value-Chain Management  Many activities in value chain involve interactions with others (ex. customers and suppliers)  Companies increasingly use IT to redesign their business processes and to gain competitive advantage  Top executives now help to develop the value-chain strategies to enhance interactions with business partners ○ Dell's approach is to replace inventory with information o By sharing its inventory information with its supplier. Dell is able to keep 5 days' worth of inventory vs. 90 days like its competitors. o Used IT to enhance customer interactions - customers can customize their orders etc. IT and Multi-User Systems Coordination of primary and support activities requires employees to share data. Several issues arise : 1. Data must be shared by multiple users 2. While it is shared, do not allow each user full access to the database o System must be configured so that users have access to parts of the application needed to their tasks 3. Different devices used by multiple people must be linked together into a network  Local Area Networks (LANs): network used to connect computers, printers, and other devices using a small geographical area  Wide Area Networks (WAN): link computers across large geographical areas  Three common ways for connecting data and applications in networked environments: 1) Terminal Emulation 2) File-server approach 3) Client-Server Systems Terminal Emulation • personal computer that acts as a terminal of a main computer  Users get the use of the PC for applications + can use the central computer for shared data File Server Approach  computer used for storing shared files; appears as a large hard drive to users  All input, output, and processing tasks occur at the PC clients  copies of the DBMS application software run on each client computer  Entire files must be transferred to the client PC Client Server Systems  Server does not serve as a passive disk drive  each computer on a network is either a client or server; servers = more powerful and manage client’s connections to the network, printers, and data  Processing tasks shared between client and server  Server stores data and the program that manages the database and software in the client’s computer handles human interface with the database  Client-server computing is greater than the file-server approach when there are many users and large Databases E-Business  E-business: encompasses all kinds of electronic exchanges with customers and suppliers as well as internal business operations and communications  E-commerce: transaction-oriented part of e-business that enables buying and selling processes through Web and proprietary network technology E-Business Basics  Requires interaction b/w at least 2 computers, thus requires at least 2 pieces of software  HTML commonly used for exchanges between browser and server  It has the ability to link documents together Features of the client-server systems ( see Key point 12.3 on pg. 500) ○ Different client computers can access the HTML documents from the server ○ HTML used to standardize webpages ○ See Key point 12.4 pg. 502 for examples of tags used in HTML coding language Static and Dynamic Web Pages for E-Business Applications  Static Web pages: created in HTML and do not change automatically in response to user requests or as a result of changes in the underlying info. Therefore, difficult to keep up to date ○ Every time the content changes, the HTML document has to be rewritten ○ Another Problem : appears same to all users ○ Limits users options to access information. Cannot narrow down, has to choose from whatever categories presented  Dynamic Web pages: are linked to real-time databases; HTML Web page created automatically when info is retrieved from database. Thus, info provided is up-to-date as the company's database ○ Make e-commerce possible ○ If Quantity_On-Hand is not sufficient for the order, the system will notify the user immediately  Dynamic webpages cost a lot more but make things more efficient for the customer and the order taker. Chapter 12 Page 2  Dynamic webpages cost a lot more but make things more efficient for the customer and the order taker.  Require a three-tier, client-server architecture ○ Client Tier – consists of the browser software running on the user’s PC  User selects a Web addres browser locates t Web server sends a Web page in HTML format  browser reads and interprets it to display a document for the user ○ Middle Tier – interacts with both client tier and back-end DB  Uses a standard interface such as Open DB Connectivity to interact with the database server  ODBC allows applications to interact with a variety of DBMS products that use SQL □ So if company was to replace the current DBMS with a new one, the application in the web server would not require major changes  Microsoft's ASP ( Active Server Pages) is one technology used to create HTML documents □ Can access information from a database, mark up the information as HTML, and send this information to the client. ○ Bottom Tier (DB server) – stores the DB and DB management software; processes SQL requests from middle tier and sends the requested data or updates the DB in response  The three arrangements are not necessarily implemented on three different computers, although this arrangement is common E-Business and Business Processes • E-business can be used to enhance an organization's interactions with customers and suppliers as well as its internal operations • Goal is to add value by improving the system for inbound and outbound logistics marketing and services  For e-commerce, must consider costs of 1) reengineering business processes 2) designing graphical user interface 3) integrating back-end operations (ex. order processing and inventory) Interacting with Customers  e-business can be used to enhance interactions with customers and increase customer awareness of products  As e-business grows, companies can implement e-commerce apps for order entry, cash collection, and provision of service  Costs vary depending on what functions are supported by the application Interacting with Suppliers  Supply chain management involves coordinating a firm’s purchasing process with suppliers to reduce inventories, avoid stock outs, ensure smooth production and reduce waste  emphasis is on supplier partnerships and not just internal decisions  Extranets: websites designed to provide secure access to corporate info to selected trading partners ○ Extranets go beyond transaction processing (e-commerce) & support communications and document- sharing applications Internal Operations  Intranet : network that uses IT to exchange info within an organization  Uses HTML, Java, ASP  O
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