ERP Class Notes

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California Polytechnic State University, San Luis Obispo *

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420

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Information Systems

Date

Oct 30, 2023

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docx

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Uploaded by CaptainWaterStork35

ERP  In each business unit, there are set of activities that are common, and data to be shared.  INTEGRATION, STANDARDIZATION, AND SHARING CAN HELP DELIVER BUSINESS VALUE.  Enterprise Resource Planning (ERP): A single system to rule all functions. Thinking of the processes and the functions and then integrating the functions  ERP should always come with CAUTION as risks and failures could be involved  ERP Failure Example : o Target in Canada with ERP system resulted in no integration, poor understanding, employees rushed to enter data manually, 30% accuracy of data, etc. o Hershey’s & Nike: developed supply chain problems from an ERP o Avon: the complexity of the ERP system made the employees quit. Examining ERP Failures ERPs are like designing rockets in the early days, not all factors are knowns so a large number of projects are expected to fail  Causes of ERP problems: o MISCOMMUNICATION AND MISUNDERSTANDING are the biggest factors in ERP failures. o Underdelivering less than the anticipated benefit (due to different expectations) o Over Budget : overrunning the costs (misunderstood can increase consulting fees) o Operational Disruption to be expected during ERP implementation (tech issues o Long time to break even takes longer. Time taken to recoup ERP costs  Succeeding with EPR : o Time spent in finalizing requirements is time and money saved, o Realistic expectations, o Getting buy-in from all units, o Detailed planning, realistic budgeting, training, and support. Porter uses the term value chain to describe an organization’s business processes because these business processes are comprised of the work activities through which the organization creates ecosystem value by transforming inputs into outputs. Success depends on effectiveness (doing the right thing) and efficiency (doing the thing right) of the business processes in the model. Types of categories of work activities: 1. Primary processes : refer to work activities directly involved in providing product/service 2. Support processes refer to work activities that provide direction for the primary processes or that provide resources to execute the primary processes. The nature of the business processes Specifying End-to-End Business Processes  Most organizations use the functional approach for organizing work, where each functional unit is assigned the responsibility for performing a set of business processes. If all units successfully accomplish their work activities and it meshes well than the organizations’ objective is achieved. Responsibility is dispersed across multiple people in different units.  The likelihood of work-related disturbances occurring increases significantly when information must move from one functional unit to another in a rapid and error

free manner. For information to flow rapidly and error free across units, interrelated work activities must be automated and interconnected.  Because of the problems inherent with the functional approach , most organizations have moved to organizing their work activities as e nd-to end business processes, where all the work activities associated with accomplishing critical work out are designed as a seamlessly connected workflow. Responsibility for all work activities can be assigned to the owner of the process. Rationalizing Business Processes : The business process is rationalized through an iterative cycle of: 1. Process Specification: defines the purposes and describes what’s involved in executing each work task comprising a business process and indicates the existence and natures of relationships among work tasks . R Define operating procedures (describes what must be done) R Define business rules (conditions to be met) R Define data elements (reflects attributes of the objects and events associated with a business process).Data must be defined and assigned to data owners to ensure integrity. 2. Process Measurement: once business process is specified and executed the owner must ensure efficiency and effectiveness with process measurement. R Set goals for performance improvement. R Define performance metrics. R Track Process performance: performance metrics are computed and compared to performance goals. 3. Process improvement is ensuring the business process is executed as specified and that process specific performance goals are achieved and these goals increase over time. R Analyze process performance and design/implement process improvements Business Process Modeling and Business Process Digitalization Business process modeling - the work tasks and flows are visually depicted making it easier to understand and improve the business process. Business process digitalization can be very effective in improving a business process’s performance. 4 ways to enhance a business process via digitalization: 1) Automation: automating work tasks (human to digital solutions) 2) Control: controlling work tasks 3) Empowerment: empowering humans involved in work tasks 4) Interaction: facilitating the interactions among the actors (humans & digital)

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