Mit6e Ch06 by Firli

Managing Information Technology
6th Edition
CHAPTER 6
ENTERPRISE SYSTEMS
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 1

APPLICATION AREAS
Interorganizational systems
• Systems that span organizational boundaries
• e-Business applications
– B2C – link businesses with their end consumers
– B2B – link businesses with other business
customers or suppliers
• Electronic data interchange (EDI) systems

APPLICATION AREAS
Intraorganizational systems
Enterprise Systems
• Systems that support all or most of the organization
Managerial Support Systems
• Systems that support a specific manager or group of

managers

APPLICATION AREAS
Intraorganizational systems (cont’d)

CRITICAL CONCEPTS
Batch processing
• A group (or batch) of transactions are
accumulated, then processed all at one time

CRITICAL CONCEPTS
Batch processing (cont’d)
• In the early days of computers, all processes
were batched
• Major problem is the time delay before the
master file is updated

CRITICAL CONCEPTS
Online processing
• Each transaction is entered directly into
computer when it occurs

CRITICAL CONCEPTS
Batch processing vs. Online processing
Batch Processing Online Processing
• Significant delay before master • Master file updated within a
file is updated (usually 1 day) fraction of a second
• Much less expensive to • Much more expensive to
operate operate
• Some applications naturally • Some applications need to be
suited for batch processing processed in real time
(e.g., payroll)
Note: given the tradeoffs, hybrid systems that combine online

data entry with batch processing are very common

CRITICAL CONCEPTS
Online processing
Interactive System
• A fully implemented online system where user

interacts directly with the computer
In-line System
• Provides for online data entry, but processing of

transactions is deferred for batch processing

CRITICAL CONCEPTS
Functional information systems
• Information systems that support one of an
organization’s primary business functions
Example Business Functions and Subsystems
Marketing Accounting Personnel Personnel Engineering
Production
Planning Sales
Forecasting
Production
Scheduling Etc.

CRITICAL CONCEPTS
Vertically integrated information systems
Example Sales System
• Serve more than one Top Management
Long-term trend analysis
vertical level in an
organization or industry
Middle Management
Weekly data analysis to
track slow-moving items
and productive salespeople
Produce invoices
Capture initial sales data

CRITICAL CONCEPTS
Distributed systems
• Refers to mode of delivery rather than traditional
class of applications
• Processing power is distributed to multiple sites,
which are then tied together via
telecommunications lines

CRITICAL CONCEPTS
Client/server systems
• A type of distributed system where processing
power is distributed between a central server
computer and a number of client computers
(usually PCs)

CRITICAL CONCEPTS
Client/server systems (cont’d)
Client Middleware Server
• Handles user • Software to support • Runs on bigger

interface clients and server machine
• Accesses distributed interaction • Handles data storage
• Three categories: for applications …
services through a – Server operating systems – Databases
network – Transport stack software – Web pages
– Service-specific software – Groupware

CRITICAL CONCEPTS
Client/server systems (cont’d)
Two-tier system Three-tier system
• Original client/server • Became popular in
systems the mid-1990’s
Client
Client
Application
Server
Server
Database
Server
CRITICAL CONCEPTS
Client/server systems
• Two models:
– Fat client/thin server: most processing done on
the client
– Thin client/fat server: most processing done on
the server
• In general…
– Web and groupware servers are fat servers
– Database servers are thin servers

CRITICAL CONCEPTS
Service-oriented architecture (SOA)
• Application architecture based on a collection of
functions, or services, where these services can
communicate (or be connected) with one another
• Advantages:
– Once a service is created, it can be used over and over
again
– Services can be created internally or obtained
externally

TRANSACTION PROCESSING SYSTEMS
• Process thousands of transactions each day in
most organizations
• Examples: sales, payments made and received,
inventory shipped and received, paying
employees
• Typical outputs: invoices, checks, orders, reports
• Critical to business operations

Payroll system
• Common system
used to produce
payroll checks
• Also contains
numerous other
subsystems

Order entry system
• Basic idea…
– Orders received and entered into system
– System updates files and prints invoice
• Also contains numerous other subsystems

Order entry system (cont’d)
• Transaction begins with an entry of a Sales Order or a
Query

Op's Data Custo mers et.
Online TPS
Processing
In teractiv e
(24/7)
Data
Clerks
Log Data
Supervis ors
Mgmt Data
Cumula tiv e Nig ht-time Batc h

Data Processing Interfacing
Analy sis Systems
Data
Daily
Reports
Back
up
Data
Periodic Batc h
Processing Monthly
(Monthly ) Reports
MIS\D SS
Data Financia l
Warehouse Systems
Managers
MIS/D SS Retr ieval
System
Staf /R esearchers
ESS Analy sis
System Exte rnal
Data
ESS Graphic Executiv es

Presentation
ESS Data Systems
Planners

Figure 3: Structure of Transaction Processing Systems
ERP SYSTEMS
SAP and other vendors designed “suites” of integrated modules for “back-office”
transaction processing that eliminated the need for custom-developed interfaces.
3 Modules for Value-Chain Activities

S Materials Production/ Sales/
Management modules Operations modules Distribution modules C
U
U
P
S
P
Procurement Production Distribution T
L
O
I
M
E
Financials/Accounting modules E
R
R
S Human Resources modules
S
2 Modules for Enterprise Support Activities
ERP SYSTEMS
• Choosing the right software is important
– From one vendor or multiple vendors (“best of breed”)
• Implementing multiple modules at once is difficult
– Requires large investment of money and people
resources
Source: Gartner Dataquest

ERP SYSTEMS
Today’s vendors offer modules
beyond the “back-office” modules

ENTERPRISE RESOURCE PLANNING SYSTEMS
Benefits for Business Operations and Decision-Making

• Support for Cross-Functional processes
– Modules were designed to support business processes that
involved multiple business functions and multiple geographic
locations
• Access to Integrated Data via a unified platform
– Data entered into one module could be accessed in real-time by
other modules, by employees in dispersed business units, if a
single centralized database is implemented.
• Support for Global Transactions
– National currencies are automatically converted to the parent
firm’s currency
– Employees in different countries can see the same screen in
their own languages

ENTERPRISE RESOURCE PLANNING SYSTEMS
Benefits for Managing the IT Infrastructure
• Centralized Database on Client/Server Architecture
– Many early adopters replaced legacy system applications (with
separate databases) written for mainframe computers
• Software updates with increased functionality from the vendor
on a regular basis
– Companies can avoid high costs of customized system enhancements
• Standard IT platform for external transactions and regulatory
compliance
– Enables transactions with external suppliers and customers
– Costs avoided for updating legacy systems (e.g., Y2K and Euro
compliance)

DATA WAREHOUSING
• Is the establishment and maintenance of a large
data storage facility containing data on all (or at
least many) aspects of the enterprise
• Provides users data access and analysis capabilities
without endangering operational systems
• Designed for analysis of data, not efficient
operational performance
• Summary reports may be automatically generated
on periodic basis

DATA WAREHOUSING

DATA WAREHOUSING
Key characteristics of data in a data warehouse
• Subject-oriented
– Data stored by business subject, rather than by application
– Customer, Claims vs. Order-Billing, Claims Processing
• Integrated
– Data stored once in a single integrated location
• Time-variant
– Data tagged with some element of time
– Data available for long periods of time
• Nonvolatile
– Data warehouse is “read only”: existing data is not overwritten or
updated

DATA WAREHOUSING
• Establishing a data warehouse:
– Is time-consuming and expensive
– Requires software tools to:
• Construct warehouse
• Operate warehouse
• Access and analyze data from the warehouse
• Average project costs based on study of 33 DW projects
(from Journal of Data Warehousing)
Average 1st-year costs $1,560,371
Data extraction and transformation 200,000
DBMS software 105,000
DW Administration 588,000
System staff and system integration 222,000
EIS, DSS, and Data mining software 272,000

CUSTOMER RELATIONSHIP MANAGEMENT SYSTEMS
Customer relationship management (CRM)

• A business strategy directed at customer
relationships that involves new business
processes for execution and communication
– Customer interactions focused on customer needs
• Integrated approach to customer channels for
marketing, sales, and support
– Cross-functional vs. single functional view

CRM systems
• A new way to compete using IT: service-based
differentiation
– Single-face-to-the-customer, no matter which channel
customer uses
Traditional Channels New Electronic Channels
• Call centers • E-mail
• Field reps • Web sites for consumers and
partners
• Retail dealer networks/ • Communications via wireless

business partners devices
CRM systems (cont’d)

• ___ _______
Many players__in___ _______
the CRM ___________
systems marketplace
•• ___ __of
Most ___ ___
the top __________ _______
CRM enterprise _____offer:
vendors
–– __________ ___ __ ___ ___
Traditional out-of-the-box CRM
– __________ ____ _________ ___ ________ ________
–__________
Traditional CRM with templates for specific
vertical industries
• ____ ________ _______ ____ _____ _______ _
• _Major
___ERP software vendors also offer CRM
_____
• modules
_________(e.g., SAP and
___ ______ __ Oracle)
__ ______ ________
• Salesforce.com
– _____ __ ____ ___
offers an on-demand
________ ____ solution
–– _______ _________
Vendor is also the __ _____ host
software
– RecentlyCopyright
purchased by Oracle
© 2009 Pearson Education, Inc. Publishing as Prentice Hall 34
Types of purchased CRM systems
CRM
e-CRM
Suites
Ex. Siebel, Clarify Ex. NetPerceptions

(automated customer interactions)
ERP
Extensions
Ex. mySAP, PeopleSoft/Vantive

CRM Implementations: 4 “Perils” to Avoid*

1: Implementing CRM before creating a business
strategy for how data will be used
2: Rolling out a CRM system before changing internal

processes to support the data collection and usage
3: Assuming that “more [CRM technology] is better”
4: Stalking, not “wooing,” Customers
*Rigby et al., “Avoid the Four Perils of CRM,” Harvard Business Review, Feb. 2002, 101-109.

DATA WAREHOUSE &
CRM system supported by a data warehouse
• CRM systems often pull data that is stored in a
data warehouse
• Example: Harrah’s Entertainment
– Total Rewards system captures all guest transactions
(including slot machines and game tables)
– Harrah’s can track who plays what games, where,
when, and how often – and then offer special deals
aimed at generating repeat business

OFFICE AUTOMATION
• A set of office-related applications that might or
might not be integrated into a single system
Most Common Office Applications

• Word processing • Desktop publishing
• Electronic mail • Electronic calendaring
• Telephony • Document imaging
• Voice mail • Document preparation,
storage, and sharing
• Copying

OFFICE AUTOMATION
Word processing and application suites
• Many word processing applications available
– Market leader is Microsoft Word
– Some others are free:
• OpenOffice (free office suite)
• Zoho (free online office suite)

OFFICE AUTOMATION
Word processing and application suites (cont’d)
• Word processors typically sold as part of an
application (office) suite
– Microsoft Word is part of MS-Office
• Includes spreadsheet, presentation, database, e-mail,
collaboration, and publishing applications
• Microsoft Office 2008 for Mac recently released
– Advantage is the ability to copy and paste from
one application to another in the same suite

OFFICE AUTOMATION
Future developments
• Internet (VoIP) telephony:
– Allows users to make telephone calls using their workstations
– Increasing interdependence between telephone and
computer networks because both are now using the same
lines
• Faxes/copies will be sent over office network
• Business documents will be stored digitally
• Videoconferencing between individuals and teams will
become more common

OFFICE AUTOMATION

GROUPWARE
• Industry term that refers to software designed to
support groups by facilitating:
– Collaboration
– Communication
– Coordination
• Also called collaboration or collaborative
environment
• Products vary in the features they provide

GROUPWARE
Common Groupware Features
• Electronic mail • Meeting support systems
• Electronic bulletin boards • Workflow routing
• Computer conferencing • Electronic forms
• Electronic calendaring • Internet telephony
• Group scheduling • Sharing documents
• Desktop • Learning management
videoconferencing systems
• Electronic whiteboards • Instant messaging
• Shared workspace

GROUPWARE
Groupware Products
• Microsoft Exchange • EMC Documentum eRoom
• Lotus Notes • Microsoft Office Groove
• Oracle Collaboration Suite • Microsoft SharePoint Server
• Novell GroupWise • Thruport Technologies HotOffice
• Microsoft Office Communications • IBM Workplace Collaboration
Server Services
• Web Crossing

GROUPWARE
• Lotus Notes was purchased by IBM in 1995

GROUPWARE

INTRANETS AND PORTALS
• Intranet: a network operating within an organization
that employs the same TCP/IP protocol used on the
Internet
• Advantages:
– Implementation is relatively easy (Web technologies)
– Web browser acts as “universal client” that works with
heterogeneous platforms
– Little, if any, user training required
– E-mail and document sharing available to all in the
organization
– Low cost due to common technologies and little training

INTRANETS AND PORTALS
• Portals: software that provides intranets with a
structure and easier access to internal
information via a Web browser
– Initial intranets had lots of documents, but little structure to
help users find them

FACTORY AUTOMATION
• Traditional factory automation:
– Numerically controlled machines, which use a
computer program or a tape with punched holes to
control movement of tools on machines
– Material requirements planning (MRP) uses data
input to produce a production schedule for the
factory and a schedule of needed raw materials
• Computer-integrated manufacturing (CIM)
– Combines MRP with the ability to carry out schedules
through computer controlled machines

FACTORY AUTOMATION
• Three major categories of CIM systems
1. Engineering systems
2. Manufacturing administration
3. Factory operations

FACTORY AUTOMATION
Engineering systems
• Computer-aided design (CAD) – use of two and three-
dimensional computer graphics to create and modify engineering
designs
• Computer-aided engineering (CAE) – system that analyzes
functional characteristics of a design and simulates the product
performance under various conditions
• Group technology (GT) – systems that logically group parts
according to physical characteristics, machine routings, and other
machine operations
• Computer-aided process planning (CAPP) – systems that plan the
sequence of processes that produce or assemble a part

FACTORY AUTOMATION
Manufacturing administration
• Manufacturing resources planning (MRP II)
– A system that usually has three components:
1. Master production schedule
2. Material requirements planning
3. Shop floor control
– Attempts to implement just-in-time (JIT) production
– Does not directly control machines on the shop floor
– An information system that tries to minimize inventory
and employ machines efficiently and effectively

FACTORY AUTOMATION
Manufacturing administration (cont’d)
• Supply chain management (SCM)
– Systems to deal with distribution and
transportation of raw materials and finished
products throughout the supply chain
– Are often interorganizational systems that
communicate with suppliers and/or distributors

SUPPLY CHAIN
MANAGEMENT (SCM) SYSTEMS
• Designed to deal with the procurement of
components needed to make a product or service
and movement and distribution of finished
products through the supply chain
• Five basic components of SCM system:
1. Plan: developing strategy for managing resources
2. Source: choosing suppliers
3. Make: manufacturing the product
4. Deliver: logistics of getting product to the customer
5. Return: procedure for handling defective products

FACTORY AUTOMATION
Factory operations
• Computer-aided manufacturing (CAM) – use
of computers to control manufacturing
processes
– Series of programs to control automated
equipment on shop floor
– Includes guiding vehicles to move raw materials
and finished products
– Requires a lot of input from other systems

FACTORY AUTOMATION
Factory operations (cont’d)
• Manufacturing automation protocol (MAP) –
communications protocol to ensure an open
manufacturing system
– Pioneered by General Motors and now accepted
by nearly all manufacturers and vendors
– Allows for seamless communication between all
equipment on the factory floor

FACTORY AUTOMATION
Robotics
• A branch of artificial intelligence (AI) where
scientists and engineers build machines to
accomplish coordinated physical tasks like
humans do
• Advantages:
– Perform repetitive tasks tirelessly
– Produce consistent high-quality output
– Avoid putting humans at risk (subject to dangers such
as paint inhalation or retinal damage)

All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice Hall

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Managing Information Technology

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 1

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 2

• Systems that support all or most of the organization

Managerial Support Systems

• Systems that support a specific manager or group of

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 4

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 7

Note: given the tradeoffs, hybrid systems that combine online

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8

• A fully implemented online system where user

• Provides for online data entry, but processing of

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 9

Marketing Accounting Personnel Personnel Engineering

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 10

Capture initial sales data

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13

Client Middleware Server

• Handles user • Software to support • Runs on bigger

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 14

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 17

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Cumula tiv e Nig ht-time Batc h

ESS Graphic Executiv es

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 22

3 Modules for Value-Chain Activities

Source: Gartner Dataquest

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 24

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 25

Benefits for Business Operations and Decision-Making

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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 30

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 31

Customer relationship management (CRM)

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 32

• Retail dealer networks/ • Communications via wireless

CRM systems (cont’d)

Types of purchased CRM systems

Ex. Siebel, Clarify Ex. NetPerceptions

Ex. mySAP, PeopleSoft/Vantive

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 35

CRM Implementations: 4 “Perils” to Avoid*

2: Rolling out a CRM system before changing internal

3: Assuming that “more [CRM technology] is better”

4: Stalking, not “wooing,” Customers

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 36

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 37

Most Common Office Applications

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