Chapter 7: Enhancing Business Processes Using Enterprise Information Systems

Order-To-Cash Process

the processes associated with selling a product or service

Procure-To-Pay Process

the processes associated with procuring goods from external vendors

Make-To-Stock Process

goods are produced based on forecasts and are stocked in a warehouse; customers’ orders are then fulfilled from inventory.

Make-To-Order Process

raw materials, subcomponents, and accessories are procured based on forecasts, but actual manufacturing does not start until an order is received; in extreme cases, even design and engineering start only when an order is received.

Core activities

The activities within a value chain that process inputs and produce outputs, including inbound logistics, operations and manufacturing, outbound logistics, marketing and sales, and customer service.

Support activities

business activities that enable the primary activities to take place. Support activities include administrative activities, infrastructure, human resources, technology development, and procurement.

Value system

information flows from one company’s value chain to another company’s value chain.

Upstream information flow

consists of information that is received from another organization

Downstream information flow

the information that is produced by a company and sent along to another organization

Standalone applications

Systems that focus on the specific needs of individual departments are typically not designed to communicate with other systems in the organization

Legacy systems

many standalone applications are typically either fast approaching or beyond the end of their useful life within the organization

Best-of-breed approach

using a suite of independent systems that are the best systems within their respective areas

Enterprise-wide information system

an integrated suite of business applications for virtually every business process, allowing companies to integrate data across functional areas on a company-wide basis.

Internally focused systems

support functional areas, business processes, and decision making within an organization. These activities can be viewed as a series of links in a chain along which information flows within the organization.

Externally focused systems

help to streamline communications and coordinate business processes with customers, suppliers, business partners, and others who operate outside an organization’s boundaries.

Inter-organizational system

A system that communicates across organizational boundaries

Package software

written by third-party vendors for the needs of many different users and organizations, supporting standardized, repetitive tasks, such as word processing, payroll processing, or preparing taxes.

Custom software

designed and developed exclusively for specific organizations and can accommodate their particular business needs.

Modules

components that can be selected and implemented as needed

Vanilla Software

The features and modules that an enterprise system comes with out of the box

Customization

provides either additional software that is integrated with the enterprise system or consists of direct changes to the vanilla application itself.

Best practices

most enterprise systems are designed to operate according to industry-standard business processes

Business process management

a systematic, structured improvement approach by all or part of an organization whereby people critically examine, rethink, and redesign business processes to achieve dramatic improvements in one or more performance measures, such as quality, cycle time, or cost.

Business process reengineering

radical redesign of an organization is sometimes necessary to lower costs and increase quality and that information systems are the key enabler for that radical change

Enterprise resource planning (ERP) systems

(ERP) An information system that integrates business activities across departmental boundaries, including planning, manufacturing, sales, marketing, etc.

ERP core components

support the important internal activities of the organization for producing its products and services.

ERP extended components

support the primary external activities of the organization for dealing with suppliers and customers