MIS - Management Information Systems

HandOut #008

CROSS-FUNCTIONAL ENTERPRISE SYSTEMS

This section introduces you to concepts and examples of cross-functional e-business applications that redefine the traditional models of the business functions. These cross-functional enterprise applications are integrated combinations of information subsystems that share information resources and support business processes across the functional units of the business enterprise and extend beyond to customers, suppliers, and other business partners. Cross-Functional Enterprise Applications Information systems in the real world typically are integrated combinations of cross-functional business systems. Such systems support business processes, such as product development, production, distribution, order management, customer support, and so on. Many organizations are using information technology to develop integrated cross-functional enterprise systems that cross the boundaries of traditional business functions in order to reengineer and improve vital business processes all across the enterprise. These organizations view cross-functional enterprise systems as a strategic way to use IT to share information resources and improve the efficiency and effectiveness of business processes, and develop strategic relationships with customers, suppliers, and business partners. See Figure 5.17. Many companies first moved from functional mainframe-based legacy systems to integrated cross-functional client1server applications. This typically involved installing enterprise resource planning, supply chain management, or customer relationship management software from SAP America, PeopleSoft, Oracle, and others. Instead of focusing on the information processing requirements of business functions, such enterprise software focuses on supporting integrated clusters of business processes involved in the operations of a business. Now, as we see continually in the Real World Cases in this text, business firms are using Internet technologies to help them reengineer and integrate the flow of information among their internal business processes and their customers and suppliers. Companies all across the globe are using the World Wide Web and their intranets and extranets as a technology platform for their cross-functional and interenterprise e-business systems.

Enterprise Application Architecture Figure 5.18 presents an enterprise application architecture, which illustrates the interrelationships of the major cross-functional enterprise applications that many companies have or are installing today. This architecture does not provide a detailed or exhaustive application blueprint, but provides a conceptual framework to help you visualize the basic components, processes, and interfaces of these major e-business applications, and their interrelationships to each other. This application architecture also spotlights the roles these e-business systems play in supporting the customers, suppliers, partners, and employees of a business.

Notice that instead of concentrating on traditional business functions, or only supporting the internal business processes of a company, enterprise applications are focused on accomplishing fundamental business processes in concert with a company's customer, supplier, partner, and employee stakeholders. Thus, enterprise resource planning (ERP) concentrates on the efficiency of a firm's internal production, distribution, and financial processes. Customer relationship management (CRM) focuses on acquiring and retaining profitable customers via marketing, sales, and service processes. Partner relationship management (PRM) aims at acquiring and retaining partners who can enhance the selling and distribution of a firm's products and services. Supply chain management (SCM) focuses on developing the most efficient and effective sourcing and procurement processes with suppliers for the products and services needed by a business. Knowledge management (KM) applications focus on providing a firm's employees with tools that support group collaboration and decision support. IBM Corporation: Global Cross Functional Enterprise Systems An enterprise e-business system requires end-to-end connectivity across all of the different processes, from the innards of a company's legacy systems to the outer reaches of its suppliers, customers, and partners. Consider the real-time, configure-to-order system that IBM has created for its personal systems division. A customer in Europe can configure a personal computer on IBM's website and get real-time availability and order confirmation. Seems simple, doesn't it? But behind the scenes, it takes a team of rocket scientists and a hundred man-years of effort to stitch together the myriad business processes and systems that need to work together to make this simple action possible. Heres what happens when the customer places the order: The order travels to IBMs fulfillment engine located in the United Kingdom; its e-commerce engine located in Boulder, Colorado; its ERP and production management systems located in Raleigh, North Carolina; its sales reporting system located in Southbury~ Connecticut; its product database located in Poughkeepsie, New York; and back to the customer's browser in Europe. Every system updates its status and communicates with every other system in real time. And every order placed in Europe zips across the Atlantic an average of four times. In its journey, it touches dozens of geographical units, legacy systems, and databases strewn across the globe. Enterprise Application Integration How does a business interconnect some of the cross-functional enterprise systems shown in Figure 5.18? Enterprise application integration (EAI) software is being used by many companies to connect major e-business applications like CRM and ERP. See Figure 5.19. EAI software enables users to model the business processes involved in the interactions that should occur between business applications. EAI also provides middleware that performs data conversion and coordination, application communication and messaging services, and access to the application interfaces involved. Thus, EAI software can integrate a variety of enterprise application clusters by letting them exchange data according to rules derived from the business process models developed by users. For example, a typical rule might be:

When an order is complete, have the order application tell the accounting system to send a bill and aleii shipping to send out the product.

Thus, as Figure 5.19 illustrates, EAl software can integrate the front-office and back-office applications of a business so they work together in a seamless, integrated way, This is a vital capability that provides real business value to a business enterprise that must respond quickly and effectively to business events and customer demands. For example, the integration of enterprise application clusters has been shown to dramatically improve customer call center responsiveness and effectiveness. That's because EAI integrates access to all of the customer and product data customer reps need to quickly serve customers. EAI also streamlines sales order processing so products and services can be delivered faster. Thus, EAL improves customer and supplier experience with the business because of its responsiveness. See Figure 5.20. Dell Computer: Enterprise Application Integration In a survey of just 75 companies it deals with, Dell Computer found they used 18 different software packages, says Terry Klein, vice president of e-business for Dell's "relationship group." This lack of integration means that companies aren't getting the seamless processing that reduces costs and speeds up customer responsiveness. Dell knew that figuring out how to get its system to talk to each of those 18 different systems in its partners' back offices, one at a time, would be impractical, to say the least. So Dell installed software from WebMethods, a maker of industrial-strength business-to-business integration software, based in Fairfax, Virginia. WebMethods' enterprise

application integration'(EAI) technology acts as a software translator and creates a kind of hub that, using the Web, allows instantaneous communication among networked companies' internal business systems. For Dell, the first fruit of installing the WebMethods software is what Dell calls e-procurement, and it goes like this. A business customer pulls product information directly from Dell's server into the customer's purchasing system, which creates an electronic requisition. After the requisition is approved online by the customer, a computer-generated purchase order shoots over the Internet back to Dell. The entire process can take 60 seconds. Dell says the system, which went live in the spring of 2000, has automatically cut errors in its procurement processes from about 200 per million transactions to 10 per million. And Dell has been able to shave $40 to $50 off the cost of processing each order. That adds up to $5 million a year in cost savings, since thousands of orders flow to Dell through its WebMethods system daily. The EAI software also enabled Dell to build links to 40 or so of its biggest customers, allowing a customer to buy, say, a truckload of new laptops online while Dell simultaneously enters the order for those laptops into the customer's procurement system. Think of it as one-click shopping for corporate buyers. just as Amazon.com automates the process of entering credit card information to speed purchases by consumers, Dell is able to update its customers' procurement tracking systems every time they make a purchase.

Transaction Processing Systems Transaction processing systems (TPS) are cross-functional information systems that process data resulting from the occurrence of business transactions. Transactions are events that occur as part of doing business, such as sales, purchases, deposits, withdrawals, refunds, and payments. Think, for example, of the data generated whenever a business sells something to a customer on credit, whether in a retail store or at an e-commerce site on the Web. Data about the customer, product, salesperson, store, and so on, must be captured and processed. This in turn causes additional transactions, such as credit checks, customer billing, inventory changes, and increases in accounts receivable balances, that generate even more data. Thus, transaction processing activities are needed to capture and process such data, or the operations of a business would grind to a halt. Therefore, transaction processing systems play a vital role in supporting the operations of an e-business enterprise. Online transaction processing systems play a strategic role in electronic commerce. Many firms are using the Internet, extranets, and other networks that tie them electronically to their customers or suppliers for online transaction processing (OLTP). Such real-time systems, which capture and process transactions immediately, can help firms provide superior service to customers and other trading partners. This capability adds value to their products and services, and thus gives them an important way to differentiate themselves from their competitors. Syntellect's Online Transaction Processing For example, Figure 5.21 illustrates an online transaction processing system for cable pay-per-view systems developed by Syntellect Interactive Services. Cable TV viewers can select pay-per-view events offered by their cable companies using the phone or the World Wide Web. The pay-per-view order is captured by Syntellect's interactive voice response system or Web server, then transported to Syntellect database application servers. There the order is processed, customer and sales databases are updated, and the approved order is relayed back to the cable company's video server, which transmits the video of the pay-per-view event to the customer. Thus, Syntellect teams with over 700 cable companies to offer a very popular and very profitable service.

The Transaction Processing Cycle Transaction processing systems, such as Syntellect's, capture and process data describing business transactions, update organizational databases, and produce a variety of information products. You should understand this as a transaction processing cycle of several basic activities, as illustrated in Figure 5.22.

Data Entry. The first step of the transaction processing cycle is the capture of business data. For example, transaction data may be collected by point-of-sale terminals using optical scanning of bar codes and credit card readers at a retail store or other business. Or transaction data can be captured at an electronic commerce website on the Internet. The proper recording and editing of data so they are quickly and correctly captured for processing is one of the major design challenges of information systems. Transaction Processing. Transaction processing systems process data in two basic ways: (1) batch processing, where transaction data are accumulated over a period of time and processed periodically, and (2) real-time processing (also called online processing), where data are processed immediately after a transaction occurs. All online transaction processing systems incorporate real-time processing capabilities. Many online systems also depend on the capabilities of fault tolerant computer systems that can continue to operate even if parts of the system fail. Database Maintenance. An organization's database must be maintained by its transaction processing systems so that they are always correct and up-to-date. Therefore, transaction processing systems update the corporate databases of an organization to reflect changes resulting from day-to-day business transactions. For example, credit sales made to customers will cause customer account balances to be increased and the amount of inventory on hand to be decreased. Database maintenance ensures that these and other changes are reflected in the data records stored in the company's databases.

Document and Report Generation. Transaction processing systems produce a variety of documents and reports. Examples of transaction documents include purchase orders, paychecks, sales receipts, invoices, and customer statements. Transaction reports might take the form of a transaction listing such as a payroll register, or edit reports that describe errors detected during processing. Inquiry Processing. Many transaction processing systems allow you to use the Internet, intranets, extranets, and Web browsers or database management query languages to make inquiries and receive responses concerning the results of transaction processing activity. Typically, responses are displayed in a variety of prespecified formats or screens. For example, you might check on the status of a sales order, the balance in an account, or the amount of stock in inventory and receive immediate responses at your PC.

Enterprise Collaboration Systems Enterprise collaboration systems (ECS) are cross-functional e-business systems that enhance communication, coordination, and collaboration among the members of business teams and workgroups. Information technology, especially Internet technologies, provides tools to help us collaborate-to communicate ideas, share resources, and coordinate our cooperative work efforts as members of the many formal and informal process and project teams and workgroups that make up many of today's organizations. Thus, the goal of enterprise collaboration systems is to enable us to work together more easily and effectively by helping us to:

Communicate: Sharing information with each other. Coordinate: Coordinating our individual work efforts and use of resources with each other. Collaborate: Working together cooperatively on joint projects and assignments.

For example, engineers, business specialists, and external consultants may form a virtual team for a project. The team may rely on intranets and extranets to collaborate via e-mail, videoconferencing, discussion forums, and a multimedia database of work-in-progress information at a project website. The enterprise collaboration system may use PC workstations networked to a variety of servers on which project, corporate, and other databases are stored. In addition, network servers may provide a variety of soft-ware resources, such as Web browsers, groupware, and application packages, to assist the team's collaboration until the project is completed. Tools for Enterprise Collaboration The capabilities and potential of the Internet, as well as intranets and extranets, are driving the demand for better enterprise collaboration tools in business. On the other hand, it is Internet technologies like Web browsers and servers, hypermedia documents and databases, and intranets and extranets that provide the hardware, software, data, and network platforms for many of the groupware tools for enterprise collaboration that business users want. Figure 5.23 provides an overview of some of the software tools for electronic communication, electronic conferencing, and collaborative work management.

Electronic communication tools include electronic mail, voice mail, faxing, Web publishing, bulletin board systems, paging, and Internet phone systems. These tools enable you to electronically send messages, documents, and files in data, text, voice, or multimedia over computer networks. This helps you share everything from voice and text messages to copies of project documents and data files with your team members, wherever they may be. The ease and efficiency of such communications are major contributors to the collaboration process. Electronic conferencing tools help people communicate and collaborate while working together. A variety of conferencing methods enables the members of teams and workgroups at different locations to

exchange ideas interactively at the same time, or at different times at their convenience. These include data and voice conferencing, videoconferencing, chat systems, discussion forums, and electronic meeting systems. Electronic conferencing options also include electronic meeting systems, where team members can meet at the same time and place in a decision room setting. Collaborative work management tools help people accomplish or manage group work activities. This category of software includes calendaring and scheduling tools, task and project management, workflow systems, and knowledge management tools. Other tools for joint work, such as joint document creation, editing, and revision, are found in the software suites. Figure 5.25 summarizes the software tools for electronic communications, conferencing, and collaborative work management that are vital components of today's enterprise collaboration systems. General Electric Co.: Committed to Enterprise Collaboration GE has made a huge commitment to the Lotus Development tools QuickPlace (which lets employees set up Web-based work spaces) and Sametime (for realtime online meetings), which permit ad hoc collaboration without help from the IT department. These tools streamline the company's communication in myriad ways. Thus, GE's recruiting teams can set up QuickPlaces to trade information about prospective hires. And GE engineers share drawings, design requirements, and production schedules with supervisors on manufacturing floors. In all, GE has created almost 18,000 QuickPlaces for 250,000 users, says CTO Larry Biagini. "And if we have an engineering project with someone outside the company, we'll set up a QuickPlace or Sametime session and invite outside people." There's also Support Central, a companywide knowledge management system developed using software from GE's Fanuc division. Employees sign on and complete a survey about their areas of expertise. The responses are added to a knowledge base so people with questions anywhere in GE can find people with answers. "Someone may have a question about, say, titanium metallurgy, and they'll be able to find documents about it, or send e-mail or initiate an online chat with someone who can help," says Stuart Scott, CIO of GE Industrial Systems. The result of all this collaboration? Faster workflow and quicker, smarter decisions, GE executives Say.