PSSI-Ch 08

2e
Chapter 8
Enterprise
Systems
Information Technology for Managers

George W. Reynolds
Strayer University
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Learning Objectives
• What role does management play in the selection,
implementation, and operation of enterprise system
software and vendors?
• What are the issues that can arise in the
implementation of enterprise systems and how can
these be avoided?
2
What is an Enterprise System?
3
Enterprise System
• Ensures that business transactions are processed
efficiently and accurately
• Employs a database of key operational and
planning data that can be shared with authorized
users across the organization
• Examples
– Enterprise resource planning system
– Customer relationship management system
– Product life cycle management system
4
Enterprise Resource Planning
5
Enterprise Resource Planning (ERP)
System
• Set of integrated programs that manage a
company’s vital business operations
• Goals
– Enable easy access to business data
– Create efficient, streamlined work processes
• Enables people in various organizational units to
access and update the same information
– Based on permission levels assigned within the
system
6
Figure 8.1 - Enterprise Resource
Planning System
7
Enterprise Resource Planning (ERP)
System (continued)
• Each industry has different business practices
– ERP vendors offer tailored software modules that
meet the needs of specific industries
– Companies can pick and choose which modules to
install
8
Table 8.1 - SAP R/3 ERP Software Modules
for a Manufacturing Organization
9
Table 8.1 - SAP R/3 ERP Software Modules
for a Manufacturing Organization (continued)
10
Benefits of Using an ERP System
• Improved access to quality data for operational
decision making
– Provides better customer service and support
– Strengthens customer and supplier relationships
– Generates new business opportunities
• Improvement of work processes
– ERP vendors combine the requirements of leading
companies within the same industry to develop a set
of best practices

11
(continued 1)
• Elimination of costly, inflexible legacy systems
– Separate systems can be replaced with a single
integrated set of applications
• Opportunity to upgrade and standardize technology
infrastructure
– Standardizing on fewer technologies and vendors
reduces ongoing maintenance and support costs

12
(continued 2)
• Simplified consolidation of financial data
– Accurate, consistent, detailed, and up-to-date
information is important for business
– ERP enables rapid consolidation of data across
multiple organizational units and countries

13
Classification of ERP Vendors
• Tier I
– Target multinational firms with annual revenue
exceeding $1 billion
– Solutions are complex and expensive to implement
and support
• Tier II
– Target medium-sized firms with annual revenue
between $50 million to $1 billion
– Solutions are less complex and less expensive to
implement and support
14
Classification of ERP Vendors
(continued)
• Tier III
– Target smaller firms with annual revenue between
$10 million to $50 million
– Solutions are easy and inexpensive to implement
and support
15
Figure 8.2 - ERP Software
16
ERP Customization
• Organizations customize an ERP software to:
– Integrate other business systems
– Add data fields or change field sizes
– Meet regulatory requirements
• Open-source ERP systems allow organizations to
modify the source code to meet their needs

17
Supply Chain Management (SCM)
• Planning, execution, and control of all activities
involved in:
– Raw material sourcing and procurement
– Conversion of raw materials to finished products
– Warehousing and delivery of products to customers
• Goal
– Decrease costs and improve customer service

18
(continued 1)
• Supply chain includes the following processes
– Demand planning: Determining the demand for a
company’s products by considering the factors that
can affect demand
– Sourcing
– Manufacturing
– Logistics
– Customer service

19
(continued 2)
• ERP systems do not work directly with
manufacturing machines on the production floor
– Production data must be passed to the ERP
accounting modules to maintain accuracy of data
– Production quality data can be added based on the
results of quality tests run on a sample

20
Customer Relationship Management
21
Customer Relationship Management
(CRM) System
• Supports all aspects of customer encounters
– Marketing, sales, distribution, accounting, and
customer service
• Goal
– To understand and anticipate the needs of current
and potential customers to increase customer
retention and loyalty

22
Figure 8.4 - Customer Relationship
Management (CRM) System
23
Features of CRM
Contact Sales Customer

management management support
Marketing Social
Analysis
automation networking
Access by Import
smartphones contact data
24
Table 8.3 - Primary Benefits of a CRM System
25
Product Life Cycle Management
26
Product Life Cycle Management (PLM)
• Enterprise business strategy that creates a
common repository of product information and
processes to:
– Support the collaborative creation, management,
dissemination, and use of product and packaging
definition information
27
Product Life Cycle Management
Software
• Manages the data and processes associated with
the phases of the product life cycle
• Provides support for the following functions
– Configuration management
– Document management
– Engineering change management
– Release management
– Collaboration with suppliers and original equipment
manufacturers (OEMs)
28
Scope of PLM
Computer-aided design (CAD)
• Use of software to assist in the creation, analysis, and

modification of the design of a component
Computer-aided engineering (CAE)
• Use of software to test the robustness and performance of

components and assemblies
Computer-aided manufacturing (CAM)
• Use of software to control machine tools and related

machinery in the manufacture of products
29
Figure 8.7 - PLM Business Strategy
30
PLM Software
• Categories of manufacturing
– Discrete manufacturing: Production of distinct
items that can be decomposed back into their basic
components
• Autos, airplanes, furniture, or toys
– Process manufacturing: Production of products
that are the result of a chemical process
• Soda, laundry detergent, gasoline, and
pharmaceutical drugs

31
Avoiding Enterprise Systems Failures
32
Ways to Avoid Enterprise Systems
Failures
• Organizations should:
– Assign a full-time executive to manage the project
– Appoint an experienced, independent resource to
provide project oversight
– Allow sufficient time for transition from the old
processes to the new processes
– Involve users throughout the project and act on their
feedback
– Deliver project value early and often
33
Ways to Avoid Enterprise Systems
Failures (continued)
– Plan to spend considerable time and money training
people
– Define metrics to assess project progress and
identify project-related risks
– Keep the scope of the project well defined and
contained to essential business processes
– Be wary of modifying the enterprise system software
to conform to their business practices

34
Hosted Software Model for Enterprise
Software
Information
Copyright ©2016 Cengage Learning. Technology
All Rights Reserved. for
MayManagers
not be scanned, copied or duplicated, or posted to a publicly accessible
35
Hosted Software Model
• Aims to help customers acquire, use, and benefit
from the new technology
– Associated complexity and high start-up costs are
avoided
– Advantageous for SMEs as they can experiment with
powerful software capabilities without a high
investment

36
Table 8.7 - Advantages and Disadvantages
of Hosted Software Model

37
Summary
• Enterprise systems are used by all types of
organizations to ensure that business transactions
are processed efficiently and accurately
• ERP system is a set of integrated programs that
manages a company’s vital business operations
• Benefits of ERP
– Improved access to quality data for operational
decision making
– Improvement of work processes
– Elimination of costly and inflexible legacy systems
38
Summary (continued)
• Disadvantages associated with ERP systems
– Time consuming
– Difficult
– Expensive to implement
• Organizations include CRM systems to manage all
aspects of customer encounters
• PLM software reduces time to market and costs
– Ensures regulatory compliance
39

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2e

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Contact Sales Customer

Computer-aided design (CAD)

• Use of software to assist in the creation, analysis, and

Computer-aided engineering (CAE)

• Use of software to test the robustness and performance of

Computer-aided manufacturing (CAM)

• Use of software to control machine tools and related

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

Information Technology for Managers

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