Announcements: --For lecture next week, read Chapters 8 (Now read 1-9)
PART III: Next Three Chapters
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Transcript of PART III: Next Three Chapters
Using IS forCompetitive Advantage
Part 3Chapters 7,8,9
Dr. Chen, Management Information Systems
Performance Recording, Integration, Delivery, and Evaluation (PRIDE)
• PRIDE prototype connecting health club and home workout data with employer, insurance company, healthcare professionals.
• Written in C# code, stores data in Azure database in the cloud.
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Performance Recording, Integration, Delivery, and Evaluation (PRIDE) (cont'd)
• Windows Phone emulator to demonstrate phone interface.
• Port application to iOS and Android devices after obtaining financing.
• Flores lost interest• Required too much of time• Big financial commitment.• Risks in startup venture.
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Cast of Characters
• Zev Friedman bought PRIDE company for small amount of cash and a royalty agreement with Flores.
• Jared Cooper, new general manager.• Nicki Jensen, marketing professional.• Michele Russell, sales director.• James Wu, technology manager.
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Why Study the PRIDE Case
• Future business professionals need to be able to assess, evaluate, and apply emerging information technology to business.
PRIDE system will allow you to practice that key skill.
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Chapter 7Processes, Organizations, and
Information Systems
Jason C. H. Chen, Ph.D.Professor of MIS
School of Business AdministrationGonzaga UniversitySpokane, WA [email protected]
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“How Much Money Does a System Own?
• Who are the target customers and how to induce them to buy?
• Doctors?• Care about medicine and operations, some care
about costs• Not focused on exercise.
• Insurance companies? • Exercise doesn’t prevent disease.• When people get in good shape, they live
longer, and their long-term health care expenses increase.
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Who Will Pay?
• Health clubs.• Employers.• Selling ad space to health clubs and
manufacturers.• Social media–driven.• Can PRIDE support 10,000 people spinning at the
same time?• Who to monetize PRIDE?
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Study Questions
Q1: What are the basic types of processes?Q2: How can information systems improve process quality?Q3: How do information systems eliminate problems of information silos?Q4: How do CRM, ERP, and EAI support enterprise processes?Q5: What are the elements of an ERP system?Q6: What are the challenges of implementing and upgrading
enterprise information systems?Q7: How do inter-enterprise IS solve the problems of enterprise silos?Q8: 2026?
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What are Business Process and Business Process Management?
• Business process: A set of logically related tasks performed to achieved a defined business outcome
• Business process management (BPM) is a management approach focused on aligning all aspects of an organization with the wants and needs of clients. It is a holistic management approach[1] that promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology.
Dr. Chen, The Trends of the Information Systems Technology TM -10
http://en.wikipedia.org/wiki/Business_process_management
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Q1: What Are the Basic Types of Processes?
Business Process with Three Activities
Fig 7-1 Business Process with Three Activities
1
2
3
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How Do Structured Processes Differ from Dynamic Processes?
Fig 7-2 Structured Versus Dynamic Processes
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How Do Processes Vary by Organizational Scope?
Fig 7-3 Common Workgroup Processes
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Characteristics of Information Systems
Fig 7-4 Characteristics of Information Systems
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Which of the following is an example of a structured process?
A) ill-defined, ambiguous situationsB) collaborationC) customer returnsD) social networking
Answer: _______C
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Q2: Process Quality?• Two dimensions of process quality:
• Process ___________• Ratio of process outputs to inputs
• Process ___________• How well a process achieves organizational strategy
• How Can Processes Be Improved (by organization) ?– Change process ________– Change process ________– Change _______
efficiency
effectiveness
structureresources
both
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How Can Information Systems Improve Process Quality? (cont.)
• Performing an activity– Partially automated, completely automated
• Augmenting human performing activity– Common reservation system
• Controlling data quality process flow– Ensure data complete and correct before
continuing process activities
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Information systems improve process quality by ________.
A) duplicating dataB) entirely replacing human activityC) changing the work cultureD) controlling process flow
Answer: _______D
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Islands of Automation
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Q3: How Do Information Systems Eliminate the Problem of Information Silos?
• What are the problems of information silos?– Data are duplicated– Data inconsistency– Data isolated– Business processes disjointed– Lack of integrated enterprise information– Inefficiency: decisions are made in isolation– Increased cost for the organization
20
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Extra Examples of Islands of Automation at a HospitalWhat are the problems?How to solve this problem?
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An Enterprise System for Patient Discharge
Fig 7-7 Example Enterprise Process and Information System
Solution:A centralized
Enterprised DB
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Problems Created by Information Silos
Figure 7-5: Problems Created by Information Silos
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How Do Organizations Solve the Problems of Information Silos?
• Integrate data into single database
• Revise applications
• Allow isolation, manage to avoid problems
Fig 7-6 Information Silos as Drivers
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Which of the following information systems eliminates data duplication and carefully manages changes to duplicated data to maintain consistency?
A) departmental information systemsB) workgroup information systemsC) personal information systemsD) enterprise information systems
Answer: ______D
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Islands of Automation – Another Example
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How Do Enterprise Information Systems Eliminate Silos?
The information (e.g., scheduling) can be________. Therefore, it will improve productivity and increase customer satisfaction.
shared
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Customercentric
______ are the customers?_______are the customers?Their purchasing ______
What they need/want?How many they need/want?When they need/want?How to reach them?
Demands Products
E-BUSINESS
BUSINESS FOCUS
• SCM• CR
M• BPR• ERP
WhoWhere
habits
Supply Chain ManagementCustomer Relationship ManagementBusiness Process ReengineeringEnterprise Resource Planning
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Manufacturing Industry Value Chain Product and Service Flow
Research and Development
EngineeringProduction
and Manufacturing
Marketing Sales and
Distribution Service
Primary Activities
Administrative and Other Indirect Value Added
Support Activities
N
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How do functional systems relate to the value chain?
Reorganized Porter Value Chain Model
Porter’s value chain model from Chapter 3 is reorganized to show primary and support activities from a customer’s perspective, beginning with Marketing and Sales on the left, to Service and Support on the right.
Competitive
Adva
ntag
e
(Value)
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Q4: How Do CRM, ERP and EAI Support Enterprise Processes?
Business Process Reengineering (BPR)• BPR means radically changing how people work -
changing business policies and controls, systems and technology, organizational relationships and business practices, and reward programs.
• Integrated data, enterprise systems create stronger, faster, more effective linkages in value chains
• Difficult, slow, and exceedingly expensive • Key personnel determine how best to use new technology • Requires high-level and expensive skills and considerable
time
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Deconstruction of the newspaper industry: BPR
Old newspaper industry value chain
Journalists
ColumnistsEditors Printers Distributors Readers
New newspaper industry value chain
Journalists
ColumnistsInternet
Editors
Readers
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BPR
Radical Change = New organization + IT
Types ofOrganizational =Strategies
IndustryStructure +
CompetitiveStrategies +
CooperativeStrategies
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Emergence of Enterprise Application Solutions
• Inherent processes Predesigned procedures for using software
products Based on “industry best practices”
• Three solutions (applications) Customer relationship management (CRM) Enterprise resource planning (ERP) Enterprise application integration (EAI)
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• CRM Suite of applications, a database, and a set of inherent processes Intended to support customer-_______ organization Integrates all primary activities of value chain
• Manage all interactions with customer though four phases of customer life cycle:
1. Marketing—marketing sends messages to target market2. Customer Acquisition—customer prospects order and need to be
supported3. Relationship Management—support and resale processes increase
value to existing customers4. Loss/churn—win-back processes categorize customers according
to value and attempt to win back high-value customers
Customer Relationship Management (CRM)
centric
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Which phase of the customer life cycle categorizes customers according to value and attempt to win back high-value customers?
A) loss/churnB) customer acquisitionC) relationship managementD) Marketing
Answer: _______A
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Four Phases of Customer Life CycleFigure 7-8 depicts the four phases of the customer life cycle and shows how a CRM system integrates them into three major processes: solicitation, lead-tracking, and relationship management.
Fig 7-8: The Customer Life Cycle
(1) (2) (3)(4)
80/20 Rule?
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A(n)________ system is a suite of applications, a database, and a set of inherent processes for managing all the interactions with the customer, from lead generation to customer service.
A) business process reengineeringB) customer relationship managementC) enterprise resource planningD) customer lifecycle management
Answer: ________B
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Why Do We Need Customer Relationship Management?
• Organizations can find their most valuable customers through “RFM”: – Recency: How recently a customer purchased items?
=> leads and opportunities– Frequency: How frequently a customer purchased
items? => retention– Monetary Value: How much a customer spends on
each purchase? => profitability
80/20 Rule (Pareto Principle)We will study more in chapter 9 – Business Intelligence
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Fig (extra): Scope of CRM in Value Chain Activities
Figure 7-?? shows how a CRM system integrates the primary business activities in the value chain model.
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CRM Applications Customer Relationship Management (CRM) systems store data
in a single (integrated) database and link CRM processes to one another.
Fig 7-9 CRM Applications
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ERP Applications
Fig 7-10 ERP Applications
integration
Five elements of an ERP system: (1) Hardware, (2) ERP Application programs (software), (3) ERP Databases, (4) Business process procedures and (5) ______ and Consulting (people)
Training
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Pre-ERP Information System: Bicycle Manufacturer
Fig 7-11 Pre-ERP Information Systems
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ERP Information Systems
What is the major difference between these two systems?
Fig 7-12 ERP Information Systems
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The primary purpose of an ERP system is ________.
A) customizationB) duplicationC) integrationD) customer acquisition
Answer: ________C
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ERP Enabled Sales Dashboard
Fig 7-13 Sales Dashboard
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Enterprise Application Integration (EAI)
• Connects system “islands.”• Enables communicating and sharing
data.• Provides integrated information.• Provides integrated layer over the top of
existing systems while leaving functional applications “as is.”
• Enables a gradual move to ERP.
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EAI: Design and Implementation for the Five Components
Virtual Integrated Database
• EAI is a suite of software applications that connects systems “islands”.• EAI Automatically Makes Data Conversions Among Different Systems
Fig 7-14 Design and Implementation for the Five Components
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Q5: What Are the Elements of an ERP System?
• Hardware• ERP Application programs• ERP Databases• Business process procedures• Training and Consulting
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ERP and CRM with Value Chain Model
• What is the difference between the following two systems (CRM and ERP)?
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Fig (extra): ERP Applications and the Value Chain
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True ERP Have Application that Integrate: (
http://www.erpsoftware360.com/erp-101.htm)
• Supply chain • Manufacturing • CRM • Human resources • Accounting
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ERP Solution Components
• ERP Application Programs– Configurable vendor applications
• ERP Databases– Trigger Computer program within database to keep
database consistent when certain conditions arise
– Stored Procedure Enforces business rules
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ERP Solution Components (Cont’d)
• Business Processes and Procedures– Adapt to predefined, inherent processes and
procedures, or design new ones?• Training & Consulting– Training to implement – Top management support, preparing for
change, dealing with resistance– Training to use
• Industry-Specific Solutions
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What is SAP?
SAP
Systems
Applications
Products...
in data processing
Company Originated in Walldorf, Germany 1972
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SAP Ordering Business Process
Fig 7-15 SAP Ordering Process
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Characteristics of Top ERP Vendors
Fig 7-16 SAP Characteristics of Top ERP Vendors
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ERP training falls into two broad categories. One of the categories is training on how to use the ERP application software. What does the training include?
A) steps for obtaining top-level management supportB) steps for using the applications to accomplish the activities in various processesC) procedures to deal with employee resistance to the new systemD) procedures to prepare for organizational changes while implementing ERP solutions
Answer: _______B
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Q6: What Are the Challenges of Implementing and Upgrading Enterprise Information Systems?
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Five Primary Factors• Collaborative management• Requirements _____• Transition problems • Employee _________• New ____________
gaps
resistancetechnology
Implementation is challenging, difficult, expensive, and risky. It is not unusual for enterprise system projects to
be well over budget and a year or more late.
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Q7: How Do Inter-enterprise IS Solve the Problems of Enterprise Silos?
Fig 7-18 Information Silos Without PRIDE
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• Efficient business processes that are effective• Inventory reduction• Lead-time reduction• Improved customer service• Greater real-time insight into organization• Higher profitability• No data inconsistency problems due to integrated
database• Business process blueprints tested in hundreds of
organizations
Benefits of ERP
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Inter-Enterprise PRIDE System
Fig 7-19 Inter-enterprise PRIDE System
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THE CONNECTED CORPORATION:THE FUTURE OF ERP
• Data points where SCM, CRM, and ERP integrate.• Lines between SCM, CRM, and ERP will continue to blur
– Internet – continue to help organizations integrate data and process across functional departments
– Interface – customizable employee browsers – Wireless technology – support a mobile workforce
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• Radio Frequency Identification (RFID) systems• RFID uses low-powered radio transmitters to read data stored in a tag at
distances ranging from 1 inch to 100 feet. The reader captures the data from the tag and sends them over a network to a host computer for processing.
The Wireless Revolution
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Joseph wishes to increase the operational efficiency of his new startup. In order to achieve this, what should Joseph do?
A) Joseph should use integrated data stored in his firm's central database to analyze its day-to-day activities.B) Joseph should avoid analyzing his firm's distribution systems as they do not play a role in the firm's daily activities. C) If Joseph plans to support formally defined and documented activities in his firm, he should use a dynamic planning system over a structured planning system.D) If Joseph plans to include less specific and fluid activities in his firm, he should use a structured planning system over a dynamic planning system.
Answer: _______A
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• Radio Frequency Identification (RFID) systems• Use tiny tags (transponders) with embedded microchips that
transmit radio signals over short distance to RFID readers• Operate in various unlicensed frequency bands
• Low frequency systems have short reading ranges (up to few feet)
• Requires special middleware to filter, aggregate RFID data• Usually requires companies to upgrade hardware and
software to handle massive amounts of data produced by RFID systems
• Used to track movement of goods through supply chain• RFID systems can track each pallet, lot, or even unit item
in shipment
The Wireless Revolution
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• Wal-Mart Grapples with RFID• What conditions would make adopting RFID more
favorable for suppliers?• Should Wal-Mart require all its suppliers to use
RFID? Why or why not? Explain your answer.
Business Applications of using RFID
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Q8: 2026?• ERP vendors and customers resolved problems of cloud-
based ERP.• Hybrid model
• ERP customers store most of their data on cloud servers managed by cloud vendors and store sensitive data on their own servers.
• Gov’t, accounting, financial standards for monitoring organizations for appropriate compliance.
• Delicate balance between risk of loss and improvement to processes.
• Machines able to employ ERP system to schedule own maintenance.
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• END of CHAPTER 7