Flashcards on Enhancing Business Processes Using Enterprise Information Systems

Learning Objectives

• 7.1 Explain core business processes that are common in organizations.
• 7.2 Describe what enterprise systems are and how they have evolved.
• 7.3 Describe enterprise resource planning (ERP) systems and how they help to improve internal business processes.
• 7.4 Understand and utilize the keys to successfully implementing enterprise systems.

Core Business Processes

• Core Business Processes: Fundamental activities that support the functioning of business organizations.
  • Order-to-Cash: Process of selling goods/services and collecting payments.
  • Procure-to-Pay: Process of ordering goods/services and making payments.
  • Make-to-Stock or Make-to-Order: Manufacturing processes based on forecasts (Make-to-Stock) or actual customer orders (Make-to-Order).

Order-to-Cash Process

• Involves several functional areas:
  • Sales and Marketing
  • Accounting and Finance
  • Manufacturing and Operations

Procure-to-Pay Process

• Key functional areas include:
  • Supply Chain Management
  • Accounting and Finance
  • Manufacturing and Operations

Make-To-Stock vs Make-To-Order

• Make-to-Stock:
  • Process: Forecast demand, produce stock, manage quality control.
• Make-to-Order:
  • Process: Receive specific customer orders, procure inputs, schedule production, quality control, and ship the product.

Organizational Value Chains

• Value Chain: Represents a series of activities that a company performs to deliver a valuable product or service to the market.
• Core Activities: Inbound and Outbound Logistics, Manufacturing, Marketing and Sales, Customer Service.
• Support Activities: Administration, Human Resources, Technology Development, Procurement.
• Value Systems: Multiple organizational value chains interconnected.

Evolution of Enterprise Systems

• Standalone Systems: Legacy applications that operate independently without integration, leading to data duplication and inefficiency.
• Enterprise Systems:
  • Integrated systems that bring together all departments into one platform, minimizing data redundancy.
  • Designed to support comprehensive business processes across the organization.

Improving Business Processes through Enterprise Systems

• Types of Software:
  • Packaged Software: General solutions by third-party vendors.
  • Custom Software: Tailored solutions developed for specific organizations.
• Modular Design: Enterprise systems can be implemented in blocks (modules) focused on different functional areas (e.g., accounting, HR).
• Business Process Management (BPM): A methodology used to analyze, improve, and optimize business processes.
  • Steps include developing a vision, identifying critical processes, and designing new processes.

Enterprise Resource Planning (ERP) Systems

• ERP systems centralize data and streamline business processes, including:
  • Core Components: Financial management, operations management, human resource management.
  • Extended Components: Manage external relationships with suppliers and customers.
• Selection Criteria for ERP Systems:
  • Centralization vs Decentralization in business units.
  • Flexibility vs Standardization of policies.

Challenges and Limitations of ERP

• Implementation of ERP systems often requires significant changes in business processes.
• Post-implementation limitations include the inability to make rapid changes or modify systems economically.

Keys to Successful Implementation of Enterprise Systems

1. Secure Executive Sponsorship: Essential for resource allocation and decision-making.
2. Consult Outside Experts: Leverage knowledgeable specialists to guide selection and implementation.
3. Thorough User Training: Vital for minimizing productivity loss during transitions.
4. Multidisciplinary Approach: Involve stakeholders from different departments to ensure all needs are met.
5. Evolve the Implementation: Adapt to changing technologies and needs with flexibility and agility.

Contemporary Developments and Considerations

• Cloud-Based ERP: Modern trend enhancing scalability and real-time operations.
• Internet of Things (IoT): Revolutionizing how data is collected and processed within ERP systems.
• Security Updates: Necessity of upgrading systems to mitigate risks related to software flaws.
• Mobile Integration in ERP: Supporting management on-the-go for improved productivity and service quality.

Ethical Considerations in Data Management

• Amazon's data collection practices for consumer insights raise ethical dilemmas regarding privacy and data security.