Chapter 7: Processes, Organizations, and Information Systems

Business Process with Three Activities

Remember the last time you applied for a credit card? There were questions that you had to answer and mostly it was done by an electronic device. However, the cashier will be the one to tell you "congrats you have been approved " or the cashier looked at you and said something like "I am sorry but unfortunately, you did not get approved and you will receive a letter by mail explaining the reasons why you were denied". Either outcome, did you ever wondered what the process looked like? Although this image explains the process of ordering something, applying for a credit card involves its own process as well.

Processes can be Structured or Dynamic

Processes vary by Three Levels of Organizational Scopes

• Workgroup process-exists to enable workgroups to fulfill the charter, purpose, and goals o a particular group or department.
• Workgroup information system/functional information systems- exists to support one or more processes within the workgroup.
• Functional application- the program component of a functional information systems.

• Enterprise processes-span an organization and support activities in multiple departments.
• Enterprise information systems- support one or more enterprise processes.
• Examples: CRM, ERP, EAI


• Inter-enterprise processes- span two or more independent organizations.
• Inter-enterprise information systems- support one or more inter-enterprise processes.

Two Dimensions of Process Quality

• Process efficiency- is a measure of the ratio of process outputs to inputs.
• Process effectiveness- is a measure of how well a process achieves organizational strategy.

How Can Information Systems Improve Process Quality?

• Change the Process Structure
• Sometimes process quality can be changed by reorganizing the process.
• Can also increase process effectiveness.
• If an organization chooses a cost-leader strategy, then that strategy might mean that no special terms should ever be approved.
• Change the Process Resources
• Activities are accomplished by humans and information systems.
• Example: if delays are caused by the check customer credit acitivity, one way to increase process effectiveness is to add more people to that acitivity.
• Adding people should decrease delays, but it will also add cost, so the organization needs to find the appropriate bakance between effectiveness and efficiency.
• Change Both Process Structure and Process Resources
• Unless a structure change is only a simple reordering of tasks, changing the structure of a process almost always involves a change in resources as well.
• Performing an Activity
• When you purchase from Amazon or another major online retailer, information systems check your credit while your transaction is being processed.
• Augmenting a Human Performing an Activity
• Similar to managing patient appointments, the receptionist uses an information system to augment the appointment creation activity.
• Controlling Data Quality Process Flow
• The cheapest way to correct errors for data errors is at the source, and it avoids the problems that develop when process activities are begun with incomplete data.
• Information systems also plays a role in controlling process flow.
• The information system can also be relied upon to make correct process-routing decisions for processes that are more complicated.

What Are the Problems of Information Silos?

Information silo- is the condition that exists when data are isolated in separated information systems.
Data integrity- a problem that an organization encounters when it has inconsistent duplicated data.

 Information Silos as Drivers

Example of an Enterprise System for Patient Discharge

In the past hospitals like other businesses had to input their business process/transactions by paper  method. However, today majority is done through an enterprise process and information system. Now hospitals can keep track of current data, so they can plan accordingly by department and for example the kitchen cook does not cook 100 meals, if only 80 are staying another night.

• Business process reengineering-is the activity of altering existing and designing new business processes to take advantage of new information system. 
• Difficult
• Slow
• Exceedingly expensive
• Inherent processes-are predesigned procedures for using the software products, saved organizations from the expense delays, and risks of business process reengineering.
• Organizations could license the software and obtain as part of the deal, prebuilt processes that the vendors assured them were based on "industry best practices"

CRM, ERP, and EAI Support Enterprise Processes

• Customer Relationship Management (CRM) 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.

• Every contact and transaction with the customer is recorded in the CRM database. 
• CRM system vary in the degree of functionality they provide. 
• Determine the feature needed and then find a package that meets those needs!

• Customer Life Cycle- marketing, customer acquisition, relationship management, and loss/churn.   

The Customer Life Cycle

CRM Applications

• Enterprise Resource Planning (ERP)- a suite of applications called modules, a database and a set of inherent processes for consolidating business operations into a single, consistent, computing platform.
• ERP system-is an information system based on ERP technology.
• Primary purpose: integration to allow the Left hand of the organization know what the Right hand is doing!
• Allows real-time updates globally, whenever and wherever a transaction takes place.
• Must include applications that integrate: Supply Chain, Manufacturing, CRM, Human Resources, and Accounting.

ERP Applications

Pre-ERP Information Systems

ERP Information Systems

Sales Dashboard- 

ERP integration systems can display current status of critical business factors to managers and executives.

• ERP System and Hardware
• Paas: Replace an organization's existing hardware, infrastructure with hardware in the cloud. (Larger installations)
• Saas:  Acquire a cloud-based ERP solution. (Smaller and New)
• ERP Databases
• Trigger: is a computer program stored within the database that runs to keep the database consistent when certain conditions arise.
• Stored Procedures: is a computer program stored in the database that is used to enforce business rules.
• Business Process Procedures
• Process Blueprints: what some ERP vendors call the inherent processes that are defined in the ERP solution.
• Training and Consulting
• Train the Trainer: to reduce expenses, the vendors sometimes train the organization's employees, called Super Users, to become in-house trainers in training sessions called train the trainer.
• Two Categories: 1st Training about how to implement the ERP solution. 2nd Training on how to use the ERP application sotware
• ERP vendors also provide on-site consulting for implementing and using the ERP system.

• Industry-specific solutions: Solutions that contain program and database configuration files as well as process blueprints that apply to ERP implementations in specific industries.
• Major ERP Vendors
1. SAP
2. Oracle
3. Infor
4. Sage
5. Microsoft Dynamics

 

Enterprise Application Integration (EAI)

• Enterprise Application Integration (EAI)- is a suite of software applications that integrates existing systems by providing layers of software that connect applications together.
• It connects system "islands" via a new layer of software/system.
• It enables existing applications to communicate and share data.
• It provides integrated information.
• It leverages existing systems-leaving functional applications as is but providing an integration layer over the top.
• It enables a gradual move to ERP
• No centralized EAI Database, but the EAI software keeps files of metadata that describe data formation and locations. 
• Major benefit is that EAI enables organizations to use existing applications while eliminating many of the serious problems of isolated systems.

Challenges of Implementing and Upgrading Enterprise Information Systems

• Collaborative Management
• Enterprise systems do not have a clear boss.
• The organization needs to develop some sort of collaborative management for resolving process issues.
• Usually the enterprise develops committees and steering groups for providing enterprise process management.
• Work of both groups is slow and expensive!
• Requirements Gaps
• 1st challenge: Identify the gaps
• An organization must know both what it needs and what the new product does.
• If its too diffcult to determine, it is better to license than to build.
• 2nd challenge: Decide what to do with gaps
• Organization changes the way it does things to adapt to the new application
• The application must be altered to match waht the organization does
• Either choice is problematic!
• Employees will resist change
• Paying for alterations is expensive
• Transition Problems
• Requires careful planning and substantial training.
• Employee Resistance
• Change requires effort and engenders fear.
• 1st: Senior-level management needs to communicate the need for the change to the organization and reiterate it throughout the transition process.
• 2nd: Employees fear change because it threatens self-efficacy, which is a person's belief that he or she can be successful at his or her job.
• 3rd: In many ways the primary benefits of a new ERP system are felt by the accounting and finance departments and the senior management.
• New Technology
• Affects all information systems, but it affects enterprise systems particularly because of their importance and their value.

How Do Inter-enterprise IS Solve the Problems of Enterprise Silos?

Information silos that exist among healthcare providers, health clubs, and patients, the principal PRIDE users. From the above image,  we can see that isolation of information/data causes problems. All three entities would like to produce reports from the integrated data.




Unlike the first image without PRIDE, this one exemplifies the structure of an inter-enterprise system that meets the goals of the three types of participants.

• Distributed Systems: Applications processing is distributed across multiple computing devices.
• Standards such as http, https, html5, css3, JavaScript, and SOA using Web services enable programs to receive data from, and display data to, a variety of mobile and desktop devices.
• PRIDE data is requested and delivered using JSON.

2026?

• Hybrid Model- ERP customers will store most of their data on cloud servers managed by cloud vendors and store sensitive data on servers that they manage themselves.
• Governmental Agencies
• Financial Institutions
• Accountants
• Mobility
• Pro- Most people at work will carry a mobile device that will enable to process ERP and other enterprise applications from wherever they happen to be.
• Con- Security threats, and ERP systems can be hacked,
• Effect of Internet of Things- Future users of ERP systems will be people, devices and machines.
• Factory Automation
• Inventory-picking Robots
• Self-driving Cars and Trucks
• Machines schedule their own maintenance

The Future of ERP