03 Introduction to Enterprise Systems and...

COMM 205 Introduction to Management

Information Systems

Winter 2017 – Term 1

COMM 205 Introduction to Management

Information Systems

Winter 2017 – Term 1

Introduction to Enterprise Systems and TechnologiesIntroduction to Enterprise

Systems and Technologies

Learning ObjectivesLearning Objectives

1. Explain the purposes of Transaction Processing Systems (TPS) and its relationship with other information systems.

2. Describe Enterprise Resource Planning (ERP) systems and their associated benefits and challenges.

1. Explain the purposes of Transaction Processing Systems (TPS) and its relationship with other information systems.

2. Describe Enterprise Resource Planning (ERP) systems and their associated benefits and challenges.

For discussion …For discussion …

What are the advantages and disadvantages of self-service kiosks?

Are there any other improvements you would suggest for McDonald’s or other restaurants?

What are the advantages and disadvantages of self-service kiosks?

Are there any other improvements you would suggest for McDonald’s or other restaurants?

(Source: http://www.ctvnews.ca/business/mcdonald-s-canada-introducing-new-self-serve-options-table-service-1.2588733)

Learning Objective 1Learning Objective 1

Explain the purposes of Transaction Processing Systems (TPS) and its relationship with other information systems.

What are Transaction Processing Systems

A transaction is any business event that generates data worth being captured and stored in a database. Student registration, sales order processing, flight booking,

funds transfer, etc.

Transaction processing system (TPS) supports the monitoring, collection, storage and processing of data generated by each of the organization’s basic business transactions. The data is input to the organization’s database.

A transaction is any business event that generates data worth being captured and stored in a database. Student registration, sales order processing, flight booking,

funds transfer, etc.

Transaction processing system (TPS) supports the monitoring, collection, storage and processing of data generated by each of the organization’s basic business transactions. The data is input to the organization’s database.

How TPS Manage DataHow TPS Manage Data

TPS must handle high volumes of data, avoid errors and provide a highly secure and stable environment.

How TPS Manage Data (cont’d)How TPS Manage Data (cont’d)

The database has to be protected from errors resulting from overlapping or concurrent updates.

The database has to be protected against inconsistencies arising from system failure.

A transaction must be reversible. An audit trail of transaction flow must be

available.

The database has to be protected from errors resulting from overlapping or concurrent updates.

The database has to be protected against inconsistencies arising from system failure.

A transaction must be reversible. An audit trail of transaction flow must be

available.

Major Features of TPSMajor Features of TPS

Performance System response time is critical in TPS. System performance is usually

measured by the number of transactions they can process in a given period of time.

Availability The system must be available whenever it is needed. System availability

is the percentage of time that a given system is active and working.

Performance System response time is critical in TPS. System performance is usually

measured by the number of transactions they can process in a given period of time.

Availability The system must be available whenever it is needed. System availability

is the percentage of time that a given system is active and working.

Acceptable Uptime (%) Average Downtime / Month95.0 % 36 hours

99.0 % 7 hours

99.9 % 43 minutes

99.99 % 4 minutes

99.999 % 26 seconds

Major Features of TPS (cont’d)Major Features of TPS (cont’d)

Data Integrity Data integrity refers to the overall completeness, accuracy and

consistency of data. It aims to prevent unintentional changes to information.

Ease of Use The system should be simple for users to understand, protect them from

data-entry errors as much as possible, and allow them to easily correct their errors.

Modular Growth The system should be capable of growth at incremental costs, rather

than requiring a complete replacement. It should be possible to add, replace or update hardware and software

components without shutting down the system.

Data Integrity Data integrity refers to the overall completeness, accuracy and

consistency of data. It aims to prevent unintentional changes to information.

Ease of Use The system should be simple for users to understand, protect them from

data-entry errors as much as possible, and allow them to easily correct their errors.

Modular Growth The system should be capable of growth at incremental costs, rather

than requiring a complete replacement. It should be possible to add, replace or update hardware and software

components without shutting down the system.

TPS and Other Types of Information Systems

Expert System (ES)

Executive Information System (EIS)

Decision Support System (DSS)

Management Information System (MIS)

Transaction Processing System (TPS)

Learning Objective 2Learning Objective 2

Describe Enterprise Resource Planning (ERP) systems and their associated benefits and challenges.

Traditional IS in an Organization

No Integration among application systems!

Functional / Information Silos

The World before ERP for a Manufacturing Firm

Payroll

Order Entry Credit

Fulfillment Manufacturing

AccountsReceivable

What Problems Does an ERP System Solve?

An information silo is isolated data stored in separated information systems. Data redundancy. Difficulties in consolidating meaningful and accurate reporting.

Time consuming, labor intensive, incomplete and often inaccurate.

Time-lag of performance data that impedes effective planning and proactive decision-making.

Outdated, manual and paper-intensive processes Data entry redundancies and errors. Inefficient use of employee resources. Order-to-delivery and production delay.

An information silo is isolated data stored in separated information systems. Data redundancy. Difficulties in consolidating meaningful and accurate reporting.

Time consuming, labor intensive, incomplete and often inaccurate.

Time-lag of performance data that impedes effective planning and proactive decision-making.

Outdated, manual and paper-intensive processes Data entry redundancies and errors. Inefficient use of employee resources. Order-to-delivery and production delay.

What Problems Does an ERP System Solve? (cont’d)

Global expansion complicated due to software integration issues Difficulties gathering data to track performance of each new

location and its impact on the company as a whole. Inefficiencies managing complex international customer and

vendor relationships.

Global expansion complicated due to software integration issues Difficulties gathering data to track performance of each new

location and its impact on the company as a whole. Inefficiencies managing complex international customer and

vendor relationships.

What is ERP?What is ERP?

Enterprise Resource Planning (ERP)Often called “enterprise system”. Adopts a business process view of the overall

organization. Integrates all departments and functions

throughout an organization into a single information system so that employees can make enterprise-wide decisions by viewing enterprise-wide information on all business operations.

Enterprise Resource Planning (ERP)Often called “enterprise system”. Adopts a business process view of the overall

organization. Integrates all departments and functions

throughout an organization into a single information system so that employees can make enterprise-wide decisions by viewing enterprise-wide information on all business operations.

ERP in an OrganizationERP in an Organization

ERP evolved to include administrative, sales, marketing, human resources processes.

Traditional ERP Modules (e.g. SAP ERP)

Accounting/Financials• A/R and A/P• Asset accounting• Cash management• General ledger• Profitability analysis• Financial consolidation

Operations & Logistics• Inventory management• Material req’t planning• Materials Management• Production planning• Purchasing• Shipping

Sales & Distribution• Order management• Pricing• Sales management• Sales planning

Human Resources• Human-resource time accounting• Payroll• Personnel planning• Travel Expense

Source: Davenport, T. H. “Putting the Enterprise into Enterprise Systems,” Harvard Business Review, July-August 1998, pp. 121-131.

ERP – How does it work?ERP – How does it work?

ERP allows integration among different systems (modules) Data sharing among different modules Joint execution among different modules

o Inputting data in one module triggers the execution not only of that module but also all related modules.

Consolidate operational, sales and financial information across multiple departments, sites and international locations

o Provide real-time visibility into business performance spanning the entire organization.

ERP allows integration among different systems (modules) Data sharing among different modules Joint execution among different modules

o Inputting data in one module triggers the execution not only of that module but also all related modules.

Consolidate operational, sales and financial information across multiple departments, sites and international locations

o Provide real-time visibility into business performance spanning the entire organization.

ERP Integrated Data FlowsERP Integrated Data Flows

At the heart of all ERP systems is a database; when a user enters or updates information in one module, it is immediately and automatically updated throughout the entire system.

ERP Automated Process FlowERP Automated Process Flow

The World after ERP for a Manufacturing Firm

Payroll

ERP Analytics and ReportingERP Analytics and Reporting

An ERP system takes data from across the enterprise, consolidates and correlates the data, and generates enterprise-wide organizational reports.

Benefits of ERP SystemsBenefits of ERP Systems

Data sharing occurs in real time. Implements integrated processes that are

industry best practices.More managers see more data, leading to better

insight. The information silo problem is solved. Better integration with supply chain partners.

Data sharing occurs in real time. Implements integrated processes that are

industry best practices.More managers see more data, leading to better

insight. The information silo problem is solved. Better integration with supply chain partners.

Challenges of Implementing ERP Systems

ERP vendor selection. Gap analysis – identify differences between the

business requirements and the capabilities of chosen ERP system.

Customization – Companies may need to change existing business processes to fit the predefined business processes of the software (best practices.)

Data definition and ownership issues. Change management – Underestimating the complexity

of the transition or cutover and training required to implement a new ERP system.

ERP vendor selection. Gap analysis – identify differences between the

business requirements and the capabilities of chosen ERP system.

Customization – Companies may need to change existing business processes to fit the predefined business processes of the software (best practices.)

Data definition and ownership issues. Change management – Underestimating the complexity

of the transition or cutover and training required to implement a new ERP system.

Costs of ERP SystemsCosts of ERP Systems

The cost of an ERP system: depends on the size and complexity of the software

package, which is a function of the size of the firm includes new hardware required to run the system includes consultant and business analyst fees includes the time required for implementation

(disruption of business) includes training costs (cost to develop and deploy

training plus employees time away from their job)

The cost of an ERP system: depends on the size and complexity of the software

package, which is a function of the size of the firm includes new hardware required to run the system includes consultant and business analyst fees includes the time required for implementation

(disruption of business) includes training costs (cost to develop and deploy

training plus employees time away from their job)

ERP Software VendorsERP Software Vendors

Most organizations use commercially available ERP software from major vendors including: SAP Oracle PeopleSoft Microsoft NetSuite

SAP ERPSAP ERP

(Source: http://go.sap.com/product/enterprise-management/erp.html)

Oracle ERPOracle ERP

Microsoft Dynamics ERPMicrosoft Dynamics ERP

(Source: https://www.microsoft.com/en-ca/dynamics/erp-ax-overview.aspx)

NetSuite ERPNetSuite ERP

(Source: http://www.netsuite.com/portal/products/netsuite/erp.shtml)

Oracle Buys NetSuiteOracle Buys NetSuite

(Source: http://www.cio.com/article/3101773/best-practices/oracle-buys-netsuite-what-does-this-

mean.html)

(Source: https://techcrunch.com/2016/07/28/oracle-buys-enterprise-cloud-services-company-netsuite-

for-9-3b/)

Cloud ERP vs. On-Premise ERPCloud ERP vs. On-Premise ERP

Cloud ERP On-Premise ERP

Advantages Cheaper up front More customizableStable and easy to use Offer greater control over data

Typically take less time to implement

Has more control over the implementation process

Disadvantages Less customizable in general

Upfront investment can be seen as riskier

Data security is in the hands of the vendor

Implementation process can take significantly longer

(Recommended Reading: http://www.softwareadvice.com/resources/cloud-erp-vs-on-premise/)

ConclusionConclusion

Transaction Processing Systems (TPS) monitor, store, collect, and process data generated from all business transactions. They were typically developed independently to support a particular functional area within an organization, resulting in “information silos”.

Enterprise Resource Planning (ERP) systems help companies operate more efficiently and effectively by combining all of an organization’s operational data into one central core information system.

Transaction Processing Systems (TPS) monitor, store, collect, and process data generated from all business transactions. They were typically developed independently to support a particular functional area within an organization, resulting in “information silos”.

Enterprise Resource Planning (ERP) systems help companies operate more efficiently and effectively by combining all of an organization’s operational data into one central core information system.

For discussion …For discussion …

Should organizations tailor their business processes in order to align with the functions and processes in an ERP system?What are the pros and cons?

03 Introduction to Enterprise Systems and...

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