Processes, Organizations and Information Systems - Chapter 8 Summary

Decisions and Processes

Decisions are related to processes, which can be structured or dynamic.

  • Structured Processes: Formally defined and standardized, used for day-to-day operations.

  • Dynamic Processes: Flexible, informal, and adaptive, used for strategic and managerial (tactical) decisions.

This chapter focuses on structured processes.

Structured vs. Dynamic Processes

  • Structured Processes:

    • Formally defined with a procedure.

    • Often written into a procedures manual.

    • Established over time.

  • Dynamic Processes:

    • Flexible, informal, and adaptive.

    • Involve less structured decisions that are strategic or tactical (managerial).

    • Require human judgment.

Structured Processes & the Organization

  • Workgroup Processes:

    • Common processes regularly found in departments.

    • Referred to as functions.

    • Example: A cash register that records all transactions is a functional information system.

  • Enterprise Processes:

    • Organization-wide or span multiple departments in a company.

    • Examples:

      • Customer Relationship Management (CRM): Attract, sell, and support customers.

      • Enterprise Resource Planning (ERP): Accounting, HR, manufacturing, inventory, and distribution.

  • Inter-enterprise Processes:

    • Span two or more organizations.

    • All organizations have interlocking processes.

    • Example: Cell phone manufacturing involves multiple organizations.

Inter-Enterprise Process: Cell Phone Manufacturing

  • Raw Materials from:

    • China, Germany, U.S., Taiwan, Japan, South Korea

  • Components Manufacturing:

    • South Korea: Samsung, SK Hynix

    • U.S.: Intel Corp, Broadcom, Qualcomm, NVIDIA, Texas Instruments

    • Taiwan: Taiwan Semiconductor, Raming Technology

    • Switzerland: STMicroelectronics

    • Germany: Infineon Technologies

  • Assembly:

    • China

Improving Processes

  • Process efficiency:

    • The amount of effort or input required to do the process.

    • Mostly quantitative.

    • Focus on speed without errors.

    • Ratio of outputs to inputs.

    • Example: "We successfully hired 32 laborers in 14 days."

  • Process effectiveness:

    • How well a process achieves organizational strategy or goals.

    • Often qualitative.

    • Examples: "Were the laborers ‘good’ employees?" "Did the laborers stay with the company for 60 days?"

Improving Processes: Change the Process Structure

  • Using technology to change structure.

    • Example 1: Typing a two-page paper

      • Replace a typewriter with a computer/word processing software.

      • Easier to correct mistakes, no whiteout needed, continuous typing with backspace.

    • Example 2: Laying brick for a building

      • Replace a wooden plank scaffold with a hydraulic scaffold.

      • Traditional method: Lay 10 courses of brick, stop, raise the scaffold by hand (takes 8 hours).

      • Improved method: Press a button and the hydraulic scaffold rises quickly.

    • Example 3: Purchase an article of clothing

      • Replace a brick & mortar purchase with an online purchase.

      • Traditional method: Drive to mall, walk to store, pick up item, return to the shelves.

      • Improved method: Three clicks on a website.

Improving Processes: Change Process Resources

  • Technology change because of resource changes.

    • Example 1: Typing a two-page paper

      • Typewriter resource cost: 99, computer/word processing software cost: 399.

      • Easier to correct mistakes and continuous typing with backspace.

    • Example 2: Laying brick for a building

      • Rent wooden plank scaffold for 100 per week, rent hydraulic scaffold for 1,000 per week.

      • Traditional method: Lay 10 courses of brick, stop, raise the scaffold by hand (about 1 hour).

      • Improved method: Press a button and the scaffold rises in about 30 seconds.

    • Example 3: Purchase an article of clothing

      • Brick & mortar store (rent space, fill with shelves, 3 employees) in Harrisonburg, minimum is about 600 per month, compared to an online store (e.g., Yahoo Store, 29.99 per month).

      • Traditional method: Drive to mall, walk to store, pick up item, drive home, return.

      • Improved method: Three clicks.

The Need for Data Integration

  • Data Silos:

    • A person, department, or enterprise does not share data.

  • Problem with data silos:

    • The same data has a different definition or value wherever it is found.

    • Causes data integrity problems.

  • Data Integrity Solutions:

    • Shared data enterprise-wide solutions.

      • Customer Relationship Management Systems (CRM)

      • Enterprise Resources Planning Systems (ERP)

The Need for Data Integration: CRM and ERP

  • Customer Relationship Management Systems (CRM):

    • Integrates the five phases of the customer life cycle:

      • Marketing (Awareness/Discovery): Customer becomes aware of the brand or product.

      • Customer acquisition: Customer explores the brand/product, engages with sales.

      • Purchase/Sale: Customer purchases the product or service.

      • Retention: Steps to maintain the customer, improve customer relationship, provide services.

      • Advocacy/Loyalty: Satisfied customers become brand advocates.

  • Enterprise Resource Planning Systems (ERP):

    • Integrates organizational functions together:

      • Accounting

      • Supply chain

      • Manufacturing

      • Inventory

      • Human resources

      • Procurement

      • Delivery

      • Receiving

      • Financials

      • Research & Development

Challenges of Implementing and Upgrading Enterprise Systems

Five Primary Factors:

  • Collaborative management:

    • Multiple functions/multiple departments - Who is in charge?

  • Requirements gaps:

    • Requirements are the needs of the system – does a purchased enterprise system fit your organizations needs? Do you adjust your needs or adjust the system?

  • Transition problems:

    • Planning and training – how successful is cross-function planning or cross-function training?

  • Employee resistance:

    • People dislike change – “does the change in the system benefit me?”

  • New technology:

    • Does the technology solve our problem? Do we know how to use the new tech? What is the cost of new tech?

ERP and CRM in the Big Picture of an Organization

  • Changes made to the structure affect processes.

  • Consider the impact on:

    • Hardware

    • Software

    • Data

    • Procedures

    • People

ERP & CRM and the Value Chain Model

  • Primary Activities:

    • Inbound Logistics (ERP)

    • Operations / Manufacturing (ERP)

    • Outbound Logistics (ERP/CRM)

    • Sales and Marketing (ERP/CRM)

    • Customer Service (ERP/CRM)

  • Support Activities:

    • Administration and Management (ERP)

    • Human Resources (ERP)

    • Technology Development

    • Procurement (ERP)

Each link in the value chain may be a workgroup. All the workgroups together form an enterprise. Inbound & outbound logistics connect for inter-enterprise processes.