Session 2 N 3 - ISM

10/11/2022
Information Systems for Managers

PGP
Tuesday, October 11, 2022
Prof. Shekhar Shukla

Faculty, Information Systems Area
IIM Indore
Session 2 and 3
Enterprise Systems
Course Instructor : Dr. Shekhar Shukla

Faculty, Information Systems Area
IIM Indore
Tuesday, October 11, 2022
1
10/11/2022
What is a Process?
➢ A specific ordering of work activities across time and space, with a beginning, an end,
and clearly identified inputs and outputs: a structure for action. (Davenport, 1993)
➢ Has sequence, purpose/ desired outcome, interaction
Function Process
Focus on “What” Focus on “How”
Vertical Horizontal
Static Dynamic
Task-centered Customer-oriented
Individual/Specialist Team/Generalist
Parochial Holistic
IIM Indore Information Systems for Managers 3
What is a business process?

➢ Every service is supported by a set of business processes, which provides approach and
guidance to deliver the service
➢ Business System is a collection of processes that take one or more inputs and create
output that is of value to all stakeholders
➢ Business Process is a group of logically related tasks that use the firm's resources to
provide customer-oriented results in support of the organization's objectives
➢ Business Process is a collection of activities that, taken together, create value for
customer e.g. new product for customer.
➢ Business processes move information and / or materials across several units and
functions, to accomplish a specific end result
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10/11/2022
What is a business process?

➢ To understand how ERP systems are useful is to first understand what a business process
is
➢ Business Process is activities that companies do in a daily business
Order Fulfilment Process
Lower Parel , Mumbai Store
Jio Digital
Jio Digital
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Detailed Order Fulfilment
Confirmation on conversation and understanding of process
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Steps in Order Fulfilment Process
Potential Issues that can arise in Business Process
➢ There must be a great communication and collaboration between individuals and

departments to execute a single process seamlessly
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Business Functions
➢ Why do business functions tend to generate silos effect?
Journey from Functional Silos to Process Centricity
Functional Process Process

Organization Orientation Organization
Sales Process
Sales & Marketing
Sales & Marketing
Administration
Administration
Development
Production
Development
Production
Reserch &
Reserch &
Customer Delivery Process
Product Development Process
Functions lead Core processes Core processes

business defined, lead the
activity functions still business activity
dominate
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Solution for Silos Effect

➢ A process-oriented approach ensures the seamless flow of information between different
departments
Rationale for Enterprise Systems

➢ Enterprise Systems is termed as a system that supports end-to-end business process
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Centricity of Financial Processes

➢ The two-business process that are highlighted in blue, financial accounting and
management accounting
➢ If we take a closer look at this picture, we would see that all the other business
processes have lines drawn back to the center part, and what these lines actually
mean is that behind each of these business activities and process, eventually it could
be termed or referred to as a business or financial transaction
➢ That's the reason why this definition provided by Gartner highlights the fact that the
business transaction that we see in all companies can eventually be tied to financial
transactions
3 Key ERP Concepts

➢ Everyone works with real-time shared data and applications
➢ Technology becomes transparent for users through open systems architecture
➢ A Process View of the organization is required to make it a success
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ERP Implementation Success Factors

➢ Top management commitment
➢ End user participation
➢ Process mapping and gap analysis
➢ Data management- crispness
➢ User expectations –definition and targeting
Enterprise System Vendors
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SAP: One of the largest market shares of ERP

➢ Historical relevance of SAP
German Name
Historical orientation of SAP

➢ This company was started up by five software engineers who were working for IBM. At
the time they were actually trying to build a system, an enterprise system for Xerox.
Unfortunately, this project did not finish and it was halted.
➢ Five engineers went back home to Germany, they thought that what they were doing for
Xerox was really really important, and they decide to start a company to continue
making ERP systems.
➢ Their very first client in Germany was actually a chemical manufacturing plant, and the
system that they're building it was a pretty simple one.
➢ All they were required to construct was to have a payroll module, and also in accounting
module. The result of that, they were able to create the very first version of SAP, which
is called SAP R/1 in 1972
➢ What we see in this first version of SAP, really is a combined version in which the
application and presentation layer is all in one single layer
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➢ As they move out in the next few years, they began to get more requests to make more
programs more sophisticated ones, and particularly in 1979, they were asked to create an
additional module that incorporates the manufacturing side of things
➢ Knowing that manufacturing side of things requires a lot of recording of different parts,
different units, they decided to incorporate a second layer, known as the database layer,
to store every single entity separately from the SAP software itself
➢ This is when the SAP R/2 version begin to come up, because there's two distinct layers
in the program. One from the database layer, and second is the application and
presentation layer

➢ In the 90's, that's when the client server architecture becomes more and more popular.
What the client server architecture does is that, they allow clients or the end users to
access programs that are stored in large-scale computers, known as servers, through
their own terminal
➢ Recognizing this movement, SAP when about to tweak and change their program, so
that it effectively has three different layers
➢ The database layer to store the different business objects in the program, the program
itself sits on the application layer, and the same time they designed a graphical user
interface, to form the presentation layer that the user sees
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➢ Moving on in the 2000's, that's when we see the service oriented architecture beginning
to emerge
➢ What this era had, was that the different modules were able to call the different functions
of other modules using service oriented names
➢ Again SAP, saw that this trend is catching up, they tweak and change their program to
incorporate this service aspects of it. This is where in the 2000's we begin to see further
developments of SAP
➢ Around 2018, we are using the SAP version known as SAP ERP 6.0
➢ Having known the history of SAP and why it came about, one quick question that I
would like to point to you is that have you ever wondered what R stands for in the early
versions of this software?

➢ So, R actually stand for real time, simply because SAP was the first company, or the first
program, that allow real time access of the data that is sitting directly in the disk of a
computer
➢ So, prior to that, most of the computers had their data stored in magnetic tapes, that has
to be processed by a human person manually at the end of each day
➢ So, as you can imagine, the steps of processing data was actually pretty cumbersome,
and SAP prides itself as being the first software and program, that's able to seamlessly
access data in real time
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SAP data and application access
SAP Access
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Decision Process for Selection of ERP System
➢ https://www.panorama-consulting.com/wp-content/uploads/2016/07/Clash-of-the-Titans-2016-2.pdf
Factors Important for ERP Vendor Selection

➢ Factors Important
➢ Why is it that we will want to select a vendor that has a sizable market share or shortlist
rate? Take a moment to think about that
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Reason 1:Market Share as an important factor

➢ So, if you want to see and to recall the fact that ERP systems are very costly systems to
purchase, and typical dollar amount, they will be at least in millions to buy and to
implement such systems
➢ As a result of that, they are quite different from that phone that you have in your pocket.
You will not be using ERP systems for two to three years and once a new version comes
out, you would dispose and change to a new system. Typically, when you are buying and
using an ERP system, you should be looking at a time frame of 10 years, 15 years, or
even 20 years in the use of a system
➢ For that reason, it is important to ensure that the vendor that you're working with is still
in business for the next 10-20 years. That's the reason why a good indicator of whether a
vendor is going to stay in business is the market share and also the shortlist rate. If they
have a sizable market share, it is quite likely that they will stay in business for the long
term. That's the reason why people tend to look at the market share and the shortlist rate
to see the health of the vendor

➢ The second reason why it's important to consider the market share and the selection rates
or the shortlist rates of ERP vendors is because subsystems tend to inter-operate across
different companies
➢ If you want to record a situation where you have created a document in Microsoft
Windows, and you find that this file or this document might not operate or might not
open for a user that's using a Macintosh operating system
➢ For the same reason, because ERP systems are inter-used across different organizations,
if the downstream or upstream partners of your firm does not use the same ERP software
as you do, you might run into problems of documents or information that could not be
opened or accessed across different firms
➢ That's the reason why it's important that the market share of a ERP vendor is an
important consideration. ERP systems that have large market share would mean that
both your downstream, your upstream partners are quite likely to be using the same
system as you are
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➢ A third reason why we care about market share or shortlist rates is because systems
operating in the ERP space is usually very complicated. It takes a lot of resources to
train consultants to be efficient at troubleshooting and also in maintaining such systems
➢ Hence, because of the fact that sudden ERP systems might have larger market share,
they will be better at attracting consultants in getting trained in being efficient in
troubleshooting such systems
➢ Hence, again, market share over here would be an important consideration
Scenario of Market Share of ERP Vendors
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Benefits Realization
Types of benefits
➢ Why low customer interaction and time benefits?
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Rationale for low benefit realization
➢ Customer Interaction: First is that, there could be measurement issues over here in the sense
that they could be measuring things on an objective fashion. For instance, the amount of
customer interaction might've increase with the use of ERP systems, but companies might be
having better quality levels of interaction with the customers because of the fact that now they
get to know more about their customers better.
➢ It is well known in the literature of ERP implementation that employees that are deeply
involved with the implementation of ERP systems undergo this feeling of change resistance, and
as a result, they may become disgranted against the use of the system and hence, they might be
providing bias feedback to its subsystems. So, it's important to go back and to understand if, as a
whole, company has indeed improved some of its measures that they have reported.
➢ Time: Companies have to take time to adjust their old ways of running the business to the new
way of running the business upon the roll out of the systems. So, in a short run, we might be
seeing that some of these benefits are not realized, but over time, the system might produce the
anticipated benefits.
Summary Data
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The magical quadrant
Understanding the quadrant axes
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Understanding the quadrant
Leader Match Companies

➢ An example of an industry that matches leaders will be that of the pharmaceutical
industry because the processes needed for the approval of drugs can be very
sophisticated, and the industry is known to be subjected to regulation which is why they
have to be constantly on the lookout for new features that is required in the regulation
and drug approval process
➢ So, for a firm that's operating in this space where they have sophisticated need, and they
have needs to change their way of operating over time rather frequently, they'll be best
off engaging a system that falls in the Leader space
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Challenger Match Companies

➢ For instance, a company such as Walmart has a lot of different products under inventory,
and as a need to categorize these products in their warehouse, and to ensure that they do
a good job and fulfillment
➢ So, they'll be good in engaging an ERP system that is high in terms of the execution so
that they could dedicate right resources and the fulfillment process
➢ At the same time we know that companies operating in the wholesale retailing industry
does not face many regulations or changes in the industries for several years
➢ As a result, the ERP system that they use need not have an updated version of their
features over a short period of time.
Niche Player Match Companies

➢ The last quadrant on the bottom left relates to the example of a mom-and-pop store that
you see off your street
➢ A mom-and-pop store is not a very sophisticated business, but still they would need an
ERP system to help record the products that they're selling
➢ So, for that purpose, they can engage an ERP system that has low ability to execute. At
the same time because this business in the retail sector doesn't change much, the ERP
system that they utilize need not have a high level of completeness of vision
➢ As a result, they could spend less money buying a smaller system that can reap them
more savings such as Infor.
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Visionaries match companies

➢ What and Why?
Change Management for Organizations w.r.t ERP
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Some practical perspectives of change management strategy
The PPT Framework (Source: Gartner)
Technology
The art and science of

Process
change management
encompasses all three
aspects to be in sync
People with each other
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Comprehensive ERP Functional Role
Aspects of ERP Utility
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Evolution of ERP V2.0
E
ERP was about: ERP II includes:
E nterprise E xtendibility
– Allowing the Enterprise to incrementally
– Meeting the internal
integrate itself with other systems and
requirements of the
R
beyond the companies boundaries
enterprise SAP NetWeaver, Collaborative ERP…
R esources
R esults
– Managing the results of the company
– Managing the resources through full transparency and control
P
and assets of the Analytics, Strategic Enterprise Mgmt,
company Corporate Governance…
P lanning & Processes

P
eople
– Letting people ‘manage their enterprise’ to
– Making the back-office make the entire enterprise efficient
efficient People-centric UI, Business Content,
Roles, Universal Portal access
Enterprise Architecture: A success paradigm to ERP Systems

➢ Organizations aiming to deploy ERP should have a real time design view all
components of the organizations especially on the following 4 dimensions:
➢ Business Architecture
➢ Application Architecture
➢ Data Architecture
➢ Technology Architecture
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Enterprise Architecture (https://www.youtube.com/watch?v=9TVc32M_gIY )
CISCO Case Analysis – Case Artefacts

➢ Pete Solvik started as CIO in January 1993, Cisco Systems was a $500 million dollar
company running an outdated software package to support its core transaction
processing
➢ Solvik saw a need for change, as the current application was unstable, and did not
afford the company required flexibility or room for growth. Solvik’s instinct was, at
first, to avoid an Enterprise Resource Planning (ERP) solution altogether: an ERP
implementation, he felt, was too risky to undertake
➢ In January 1994, the company’s legacy environment failed so dramatically that the need
for change could no longer be ignored. Cisco decided to implement ERP
comprehensively, and quickly
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CISCO Case Analysis – Case Artefacts

➢ While in the planning stage, Cisco tapped industry resources to research ERP options.
The selection team spent an intensive 10 days writing a Request for Proposals, giving
vendors two weeks to respond
➢ In turn, Cisco invited respondents to demonstration sessions, asking vendors how each
would best meet Cisco’s processing requirements
CISCO Case Questions

➢ 1. What was CISCO’s initial approach to IT decision-making? Explain in brief. [1 slide
max]
➢ 2. What was Pete Solvik’s initial thoughts on implementing ERP at CISCO just after he
joined? Explain. [ 1 slide max]
➢ 3. Is ERP implementation a top-down approach? Justify with the learning/incidents from
CISCO case. [2 slides max]
➢ 4. Why there is always a “performance dip” just after ERP implementation? Explain. [2
slides max]
➢ 5. What are the steps followed by CISCO in ERP implementation including systems
analysis and planning? Explain in brief. [ 2 slides max]
➢ 6. As part of ERP implementation, what did CISCO follow: Change in its business
processes OR customization of vendor’s ERP software? Justify in brief. [ 2 slides max]
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28

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10/11/2022

Information Systems for Managers

Information Systems for Managers

Prof. Shekhar Shukla

Information Systems for Managers

Course Instructor : Dr. Shekhar Shukla

Tuesday, October 11, 2022

IIM Indore Information Systems for Managers 3

What is a business process?

IIM Indore Information Systems for Managers 4

What is a business process?

IIM Indore Information Systems for Managers 5

Order Fulfilment Process

Lower Parel , Mumbai Store

IIM Indore Information Systems for Managers 6

Detailed Order Fulfilment

IIM Indore Information Systems for Managers 7

Confirmation on conversation and understanding of process

IIM Indore Information Systems for Managers 8

Steps in Order Fulfilment Process

IIM Indore Information Systems for Managers 9

Potential Issues that can arise in Business Process

➢ There must be a great communication and collaboration between individuals and

IIM Indore Information Systems for Managers 10

➢ Why do business functions tend to generate silos effect?

IIM Indore Information Systems for Managers 11

Journey from Functional Silos to Process Centricity

Functional Process Process

Customer Delivery Process

Product Development Process

Functions lead Core processes Core processes

IIM Indore Information Systems for Managers 12

Solution for Silos Effect

IIM Indore Information Systems for Managers 13

Rationale for Enterprise Systems

IIM Indore Information Systems for Managers 14

Centricity of Financial Processes

IIM Indore Information Systems for Managers 15

3 Key ERP Concepts

IIM Indore Information Systems for Managers 16

ERP Implementation Success Factors

IIM Indore Information Systems for Managers 17

Enterprise System Vendors

IIM Indore Information Systems for Managers 18

SAP: One of the largest market shares of ERP

IIM Indore Information Systems for Managers 19

Historical orientation of SAP

IIM Indore Information Systems for Managers 20

Historical orientation of SAP

IIM Indore Information Systems for Managers 21

Historical orientation of SAP

IIM Indore Information Systems for Managers 22

Historical orientation of SAP

IIM Indore Information Systems for Managers 23

Historical orientation of SAP

IIM Indore Information Systems for Managers 24

SAP data and application access

IIM Indore Information Systems for Managers 25

IIM Indore Information Systems for Managers 26

Decision Process for Selection of ERP System

IIM Indore Information Systems for Managers 27

Factors Important for ERP Vendor Selection