18.1 18.2 LEARNING OBJECTIVES DESCRIBE FEATURES OF ENTERPRISE COMPUTING & INDUSTRIAL...

18.2

LEARNING OBJECTIVESLEARNING OBJECTIVES

• DESCRIBE FEATURES OF ENTERPRISE DESCRIBE FEATURES OF ENTERPRISE COMPUTING & INDUSTRIAL NETWORKSCOMPUTING & INDUSTRIAL NETWORKS

• EXPLAIN BUSINESS & TECHNOLOGY EXPLAIN BUSINESS & TECHNOLOGY DRIVERS DRIVERS

• IDENTIFY ELEMENTS & DECISIONS IN IDENTIFY ELEMENTS & DECISIONS IN BUILDING INFORMATION BUILDING INFORMATION TECHNOLOGY TECHNOLOGY

INFRASTRUCTUREINFRASTRUCTURE

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18.3

LEARNING OBJECTIVESLEARNING OBJECTIVES

• COMPARE VISION OF ENTERPRISE COMPARE VISION OF ENTERPRISE SYSTEMS AND INDUSTRIAL NETWORKS SYSTEMS AND INDUSTRIAL NETWORKS WITH MANAGEMENT REALITYWITH MANAGEMENT REALITY

• PLAN DEVELOPMENT OF ENTERPRISE PLAN DEVELOPMENT OF ENTERPRISE SYSTEMS AND INDUSTRIAL NETWORKS SYSTEMS AND INDUSTRIAL NETWORKS

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18.4

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

• MANAGINGMANAGING INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY ((IT) IT) INFRASTRUCTURE & ARCHITECTURE: INFRASTRUCTURE & ARCHITECTURE: ENTERPRISE COMPUTINGENTERPRISE COMPUTING

• MANAGING THE NEW MANAGING THE NEW ITIT INFRASTRUCTUREINFRASTRUCTURE• ENTERPRISE SYSTEMSENTERPRISE SYSTEMS• INDUSTRIAL NETWORKS & EXTENDED INDUSTRIAL NETWORKS & EXTENDED

ENTERPRISE ENTERPRISE SYSTEMSSYSTEMS

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German:German:

SYSTEME, ANWENDUNGEN, SYSTEME, ANWENDUNGEN, PRODUKTE IN DER PRODUKTE IN DER DATENVERARBEITUNGDATENVERARBEITUNG

English:English:

SYSTEMS, APPLICATIONS, PRODUCTS IN DATA SYSTEMS, APPLICATIONS, PRODUCTS IN DATA PROCESSING PROCESSING

Pronounced “S A P.” Like you say: “I B M”Pronounced “S A P.” Like you say: “I B M”

SAPSAP

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ENTERPRISE RESOURCE ENTERPRISE RESOURCE PLANNINGPLANNING (ERP):(ERP):

• Collection of software programs Collection of software programs which ties enterprise’s (finance, which ties enterprise’s (finance, manufacturing, sales, HR, ...) into a manufacturing, sales, HR, ...) into a cohesive database.cohesive database.

• This software also provides tools to This software also provides tools to analyze data to plan production, analyze data to plan production, forecast sales, analyze quality, …forecast sales, analyze quality, …

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BUSINESS VALUE CHAINBUSINESS VALUE CHAIN

• INTERDEPENDENT FUNCTIONS DEAL INTERDEPENDENT FUNCTIONS DEAL WITH VENDOR & CUSTOMER BUSINESS WITH VENDOR & CUSTOMER BUSINESS PROCESSESPROCESSES

• TYPICAL CHAIN: TYPICAL CHAIN: – INBOUND LOGISTICSINBOUND LOGISTICS– MANUFACTURINGMANUFACTURING– FINANCEFINANCE– MARKETING & SALESMARKETING & SALES– SUPPORTSUPPORT

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TRADITIONAL VIEW OF TRADITIONAL VIEW OF SYSTEMSSYSTEMS

• APPLICATION SPECIFIC:APPLICATION SPECIFIC: Separate Separate systems support discrete business systems support discrete business processes, discrete segments of processes, discrete segments of business value chainbusiness value chain

• FIRM BOUNDARIES:FIRM BOUNDARIES: Vendors & Vendors & customers rarely considered, customers rarely considered, impermeable, tightly controlledimpermeable, tightly controlled

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18.9

ENTERPRISE BUSINESS ENTERPRISE BUSINESS SYSTEMSSYSTEMS

MARKETINGMARKETING INBOUNDINBOUND MANUFACTURING MANUFACTURING FINANCEFINANCE AND AND SUPPORTSUPPORT LOGISTICSLOGISTICS SALES SALES

VENDORSVENDORS

CUSTOMERSCUSTOMERSSINGLE SOFTWARE & SINGLE SOFTWARE & HARDWARE SYSTEMHARDWARE SYSTEM

PERMEABLE BOUNDARIESPERMEABLE BOUNDARIES

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ENTERPRISE BUSINESS ENTERPRISE BUSINESS SYSTEMSSYSTEMS

• ENTERPRISE COMPUTING:ENTERPRISE COMPUTING: Firmwide Firmwide integration of key business process integration of key business process information, processes shared with information, processes shared with multiple firmsmultiple firms

• INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY ((ITIT)) – ITIT INVESTMENT PORTFOLIO INVESTMENT PORTFOLIO– ITIT & PUBLIC INFRASTRUCTURES & PUBLIC INFRASTRUCTURES– BUSINESS LOGICBUSINESS LOGIC

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18.11

INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY ((ITIT))

• ITIT INVESTMENT PORTFOLIO: INVESTMENT PORTFOLIO: Firm’s Firm’s total capital investment on total capital investment on ITIT

• IT IT INFRASTRUCTURE:INFRASTRUCTURE: List of hardware, List of hardware, software, telecommunications, people software, telecommunications, people related to related to ITIT

• PUBLIC INFRASTRUCTURE:PUBLIC INFRASTRUCTURE: External External links to firm’s links to firm’s ITIT infrastructure infrastructure

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18.12

INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY ((ITIT))

• BUSINESS LOGIC:BUSINESS LOGIC: Specifications of Specifications of model & processes to maximize model & processes to maximize firm’s revenuefirm’s revenue

• ITIT ARCHITECTURE: ARCHITECTURE: Applications, Applications, relationship to firm’s business logic, relationship to firm’s business logic, descriptions of systems that support descriptions of systems that support business model & processesbusiness model & processes

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18.13

INDUSTRIAL NETWORKS & INDUSTRIAL NETWORKS & TRANSENTERPRISE SYSTEMSTRANSENTERPRISE SYSTEMS

• INDUSTRIAL NETWORKS:INDUSTRIAL NETWORKS: Networks Networks linking systems of multiple firms, linking systems of multiple firms, also called EXTENDED also called EXTENDED ENTERPRISESENTERPRISES

• BUSINESS DRIVERSBUSINESS DRIVERS

• TECHNOLOGY DRIVERSTECHNOLOGY DRIVERS

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18.14

BUSINESS DRIVERSBUSINESS DRIVERS

• MARKETS:MARKETS: Globalization, information Globalization, information intensity reduce marginsintensity reduce margins

• INDUSTRY:INDUSTRY: Mergers, acquisitions, Mergers, acquisitions, consolidations increase economies of consolidations increase economies of scale, competitionscale, competition

• FIRMS & ORGANIZATIONS:FIRMS & ORGANIZATIONS: Process Process redesign highlight need for enterprise-redesign highlight need for enterprise-wide wide ITIT

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18.15

BUSINESS DRIVERSBUSINESS DRIVERS

• PRODUCTS & SERVICES:PRODUCTS & SERVICES: Growth of info Growth of info capabilities shortens product life cyclecapabilities shortens product life cycle

• MANAGEMENT PROCESS THINKING:MANAGEMENT PROCESS THINKING: Shift Shift to view firm as integrated processes, to view firm as integrated processes, industry-based views of cooperation, industry-based views of cooperation, alliancealliance

• MANAGEMENT STRATEGY:MANAGEMENT STRATEGY: Belief that Belief that IT IT investment leads to valuable knowledgeinvestment leads to valuable knowledge

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18.16

TECHNOLOGY DRIVERSTECHNOLOGY DRIVERS

• RELATIONAL DATABASE TECHNOLOGYRELATIONAL DATABASE TECHNOLOGY• REDUCTION IN STORAGE COSTSREDUCTION IN STORAGE COSTS• EXPANDED PUBLIC INFRASTRUCTUREEXPANDED PUBLIC INFRASTRUCTURE• DEPLOYMENT OF CLIENT/SERVERDEPLOYMENT OF CLIENT/SERVER• EVOLUTION OF DESKTOP COMPUTINGEVOLUTION OF DESKTOP COMPUTING• ENTERPRISE SOFTWARE: Standardized ENTERPRISE SOFTWARE: Standardized

applications in integrated environmentapplications in integrated environment

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18.17

MODEL FOR PLANNING MODEL FOR PLANNING ENTERPRISE SYSTEMSENTERPRISE SYSTEMS

FIRM STRATEGY AND GOVERNANCEFIRM STRATEGY AND GOVERNANCE

BUSINESS MODELBUSINESS MODEL

BUSINESS PROCESSESBUSINESS PROCESSES

FIRM FIRM ITIT ARCHITECTURE ARCHITECTURE

FIRM FIRM IT IT INFRASTRUCTUREINFRASTRUCTURE

FIRM’S MARKET ENVIRONMENT

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MANAGING THE NEW MANAGING THE NEW ITIT INFRASTRUCTUREINFRASTRUCTURE

• ELEMENTS OF THE INFRASTRUCTUREELEMENTS OF THE INFRASTRUCTURE

• KEY INFRASTRUCTURE DECISIONSKEY INFRASTRUCTURE DECISIONS

• GOVERNANCEGOVERNANCE

• MERGERS & ACQUISITIONSMERGERS & ACQUISITIONS

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18.19

ELEMENTS OF THE NEW ELEMENTS OF THE NEW INFRASTRUCTUREINFRASTRUCTURE• RELIANCE ON NETWORKED DESKTOP RELIANCE ON NETWORKED DESKTOP

& PERSONAL DEVICE COMPUTING& PERSONAL DEVICE COMPUTING

• RISE OF THE INTERNETRISE OF THE INTERNET

• GROWING PUBLIC INFRASTRUCTUREGROWING PUBLIC INFRASTRUCTURE

• RELIANCE ON THIRD PARTIESRELIANCE ON THIRD PARTIES

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18.20

KEY INFRASTRUCTURE DECISIONSKEY INFRASTRUCTURE DECISIONS

• PROCESSORSPROCESSORS

• SOFTWARE ENVIRONMENTSOFTWARE ENVIRONMENT

• SHARED APPLICATIONSSHARED APPLICATIONS

• TELECOMMUNICATIONSTELECOMMUNICATIONS

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18.21

GOVERNANCE: CONNECTING GOVERNANCE: CONNECTING INFRASTRUCTURE TO STRATEGYINFRASTRUCTURE TO STRATEGY

• TRADITIONAL INFRASTRUCTURE, TRADITIONAL INFRASTRUCTURE, ARCHITECTURE GREW HAPHAZARDLYARCHITECTURE GREW HAPHAZARDLY

• REQUIRES 4 LEVELS OF INVOLVEMENTREQUIRES 4 LEVELS OF INVOLVEMENT– STRATEGIC: CEO, CIO, top managersSTRATEGIC: CEO, CIO, top managers– OPERATIONAL: Set functional specs, establish OPERATIONAL: Set functional specs, establish

budgetbudget– BUSINESS, REGIONAL UNITS: Plan to allocate BUSINESS, REGIONAL UNITS: Plan to allocate

fundsfunds– FUNCTIONS: Detail plans & implementFUNCTIONS: Detail plans & implement

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MERGERS & ACQUISITIONSMERGERS & ACQUISITIONS

• ECONOMIES OF SCALE, SCOPE, ECONOMIES OF SCALE, SCOPE, KNOWLEDGE, TIMEKNOWLEDGE, TIME

• CUT COSTS, REDUCE RISKSCUT COSTS, REDUCE RISKS• POTENTIAL PROBLEMS:POTENTIAL PROBLEMS:– Integrating diverse systemsIntegrating diverse systems– Merged entity cannot execute new processesMerged entity cannot execute new processes– Loss of customersLoss of customers

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FOUR STAGES:FOUR STAGES:

1. STRATEGIC EXPLORATION:1. STRATEGIC EXPLORATION: Identify Identify firms with strong IT assets, knowledge firms with strong IT assets, knowledge bases, potential for rapid integrationbases, potential for rapid integration

2. VALUATION:2. VALUATION: Identify integration Identify integration costs, estimate economies of scale, costs, estimate economies of scale, scope, knowledge, timescope, knowledge, time

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FOUR STAGES:FOUR STAGES:

3. PURCHASE:3. PURCHASE: Establish transition Establish transition team, validate costs & benefits, team, validate costs & benefits, establishestablish IT IT transition teams transition teams

4.4. TRANSITION:TRANSITION: Activate systems Activate systems coordinating group, search for best coordinating group, search for best systems, reduce redundanciessystems, reduce redundancies

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ENTERPRISE SYSTEMSENTERPRISE SYSTEMS

• THE VISIONTHE VISION

• THE REALITYTHE REALITY

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18.26

ENTERPRISE SYSTEMS: ENTERPRISE SYSTEMS: THE VISIONTHE VISION

• STRUCTURE & ORGANIZATION:STRUCTURE & ORGANIZATION: One One organizationorganization

• MANAGEMENT:MANAGEMENT: Firm-wide Knowledge- Firm-wide Knowledge-based management processesbased management processes

• TECHNOLOGY:TECHNOLOGY: Totally Totally unified information systemunified information system

• BUSINESS:BUSINESS: Customer- Customer-driven business processesdriven business processes

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18.27

ENTERPRISE SYSTEMS: ENTERPRISE SYSTEMS: THE REALITYTHE REALITY

• DAUNTING DAUNTING IMPLEMENTATIONIMPLEMENTATION• UNREALISTIC UNREALISTIC COST / BENEFIT ANALYSISCOST / BENEFIT ANALYSIS• NOT ACHIEVING NOT ACHIEVING ROBUSTNESSROBUSTNESS• TRAPPED IN TRAPPED IN DIGITAL CONCRETEDIGITAL CONCRETE: Older systems : Older systems

hard, expensive to changehard, expensive to change• DIFFICULT TO ATTAIN DIFFICULT TO ATTAIN

INTEROPERABILITYINTEROPERABILITY• DIFFICULT TO REALIZEDIFFICULT TO REALIZE

STRATEGIC VALUESTRATEGIC VALUE

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INDUSTRIAL NETWORKS & INDUSTRIAL NETWORKS & EXTENDED ENTERPRISE SYSTEMSEXTENDED ENTERPRISE SYSTEMS

• THE VISIONTHE VISION

• THE REALITYTHE REALITY

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18.29


THE VISION:THE VISION:

STRUCTURE:STRUCTURE: From marketplace to From marketplace to “value web”“value web”

VALUE WEB:VALUE WEB: COLLECTION OF FIRMS COLLECTION OF FIRMS ACTING TOGETHER IN AN ACTING TOGETHER IN AN INDUSTRIAL VALUE CHAIN INDUSTRIAL VALUE CHAIN COORDINATED BY NETWORKSCOORDINATED BY NETWORKS

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18.30

INDUSTRIAL NETWORKSINDUSTRIAL NETWORKS

INDUSTRIAL NETWORKSINDUSTRIAL NETWORKS

INDUSTRY INDUSTRY VALUE VALUE CHAINCHAIN

FIRM 1 FIRM 2 FIRM 3COMPETING

FIRMS

VENDOR 1

VENDOR 2

VENDOR 3

COMPETING VENDORS

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THE REALITY:THE REALITY:

• CHOOSING BOUNDARY REGIMECHOOSING BOUNDARY REGIME

• SHARING COSTS, RETAINING SHARING COSTS, RETAINING BENEFITSBENEFITS

• VULNERABILITY & DEPENDENCEVULNERABILITY & DEPENDENCE

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18.32


THE STEPS:THE STEPS:

1. KNOW 1. KNOW WHEREWHERE YOU ARE: Relative to YOU ARE: Relative to technology, competitiontechnology, competition

2. KNOW 2. KNOW WHOWHO YOU ARE, YOU ARE, WHERE YOU WHERE YOU WANT TO BEWANT TO BE

3. DEVISE 3. DEVISE LONG TERM PLANLONG TERM PLAN (FIVE YEARS): (FIVE YEARS): Don’t redesign everything at onceDon’t redesign everything at once

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THE STEPS:THE STEPS:

4. SUCCESS WILL REQUIRE SIGNIFICANT 4. SUCCESS WILL REQUIRE SIGNIFICANT CULTURAL, MANAGERIAL PROCESS CULTURAL, MANAGERIAL PROCESS CHANGECHANGE

5. 5. RETRAINRETRAIN MANAGERS, EMPLOYEES MANAGERS, EMPLOYEES

6. DEVELOP 6. DEVELOP INCENTIVE SYSTEMSINCENTIVE SYSTEMS TO TO SUPPORT NEW INFORMATION SUPPORT NEW INFORMATION ENVIRONMENTSENVIRONMENTS

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18.34

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18.1 18.2 LEARNING OBJECTIVES DESCRIBE FEATURES OF ENTERPRISE COMPUTING & INDUSTRIAL...

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