INFORMATION SYSTEM for BUSINESS (ISB)

Tutorial #03

SYSTEMS FOR LINKING THE ENTERPRISE

Reviewing all the different types of systems we have just described, you might
wonder how a business can manage all the information in these different systems.
You might also wonder how costly it is to maintain so many different systems. And
you might wonder how all these different systems can share information and how
managers and employees are able to coordinate their work. In fact, these are all
important questions for businesses today.

Enterprise Applications
Getting all the different kinds of systems in a company to work together has proven
a major challenge. Typically, corporations are put together both through normal
“organic” growth and through acquisition of smaller firms.

Over a period of time, corporations end up with a collection of systems, most of

them older (legacy system), and face the challenge of getting them all to “talk” with
one another and work together as one corporate system. There are several solutions
to this problem.

One solution is to implement enterprise applications, which are systems that span
functional areas, focus on executing business processes across the
business firm, and include all levels of management. Enterprise applications
help businesses become more flexible and productive by coordinating their
business processes more closely and integrating groups of processes so they
focus on efficient management of resources and customer service.

Each of these enterprise applications integrates a related set of functions and

business processes to enhance the performance of the organization as a whole. The
architecture for these enterprise applications encompasses processes spanning the
entire organization and, in some cases, extending beyond the organization to
customers, suppliers, and other key business partners.

For example, when a customer places an order, the order data flow automatically
to other parts of the company that are affected by them. The order transaction
riggers the warehouse to pick the ordered products and schedule shipment. The
warehouse informs the factory to replenish whatever has been depleted. The
accounting department is notified to send the customer an invoice. Customer
service representatives track the progress of the order through every step to inform
customers about the status of their orders. Managers are able to use firm-wide
information to make more precise and timely decisions about daily operations and
longer-term planning.

There are four major enterprise applications:

1. Enterprise Systems,
2. Supply Chain Management Systems,
3. Customer Relationship Management Systems, And
4. Knowledge Management Systems.

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1. ENTERPRISE SYSTEMS
Firms use enterprise systems, also known as Enterprise Resource Planning
(ERP) systems, to integrate business processes in manufacturing and
production, finance and accounting, sales and marketing, and human
resources into a single software system. Information that was previously
fragmented in many different systems, in ERP is stored in a single
comprehensive data repository where it can be used by many different parts
of the business.

In a CIO magazine (April, 2008) article, "ERP Definition and Solutions,"

emphasizes that ERP is not really about planning. The focus is on the
integration of departments and functions across the company, making the
word "enterprise" the key. ERP is a single-computer system that allows all
functional areas in the company to collaborate in resource sharing. This is
opposite of traditional approaches of separate resource budgets and
processes, and it helps to reduce waste and resource inefficiencies.

ERP’s major objective is to tightly integrate the functional areas of the

organization and to enable seamless information flows across the functional
areas.

Here, Integration means seamless information flowing through a company’s

financial and accounting, human resource information, supply chain
information, and customer information system.

ERP - Enterprise Resource Planning

 Enterprise means organization-wide
 Resource refers to all the resources at your disposal
 Planning means looking at the long-term view rather than just current

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 ERP Definition
“A business strategy and set of INDUSTRY-DOMAIN-SPECIFIC
APPLICATIONS that build customer and shareholder
communities value network system by enabling and
optimizing enterprise and inter-enterprise collaborative
operational and financial processes” ~ (Source: Gartner’s Research
Note SPA-12-0420)

Advantages of ERP Systems

 There are many advantages of implementing an EPR system; here are a
few of them:
 A totally integrated system
 The ability to streamline different processes and workflows
 The ability to easily share data across various departments in an
organization
 Improved efficiency and productivity levels
 Better tracking and forecasting
 Lower costs
 Improved customer service

Disadvantages of ERP Systems

While advantages usually outweigh disadvantages for most organizations
implementing an ERP system, here are some of the most common obstacles
experienced:
 Usually many obstacles can be prevented if adequate investment is made
and adequate training is involved, however, success does depend on skills
and the experience of the workforce to quickly adapt to the new system.
 Customization in many situations is limited
 The need to reengineer business processes
 ERP systems can be cost prohibitive to install and run
 Technical support can be shoddy
 ERP's may be too rigid for specific organizations that are either new or
want to move in a new direction in the near future.

2. Supply Chain Management Systems

Firms use supply chain management (SCM) systems to help manage
relationships with their suppliers. These systems help suppliers, purchasing
firms, distributors, and logistics companies share information about orders,
production, inventory levels, and delivery of products and services so that they
can source, produce, and deliver goods and services efficiently. The ultimate
objective is to get the right amount of their products from their source to their
point of consumption in the least amount of time and at the lowest cost. These
systems increase firm profitability by lowering the costs of moving and making
products and by enabling managers to make better decisions about how to
organize and schedule sourcing, production, and distribution.

Supply chain management systems are one type of inter-organizational system

because they automate the flow of information across organizational
boundaries. You will find examples of other types of inter-organizational
information systems throughout this text because such systems make it possible
for firms to link electronically to customers and to outsource their work to other
companies.

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3. Customer Relationship Management Systems
Firms use customer relationship management (CRM) systems to help manage
their relationships with their customers. CRM systems provide information to
coordinate all of the business processes that deal with customers in sales,
marketing, and service to optimize revenue, customer satisfaction, and customer
retention. This information helps firms identify, attract, and retain the most
profitable customers; provide better service to existing customers; and increase
sales.

4. Knowledge Management Systems

Some firms perform better than others because they have better knowledge
about how to create, produce, and deliver products and services. This firm’s
knowledge is difficult to imitate, unique, and can be leveraged into long-term
strategic benefits.

A Knowledge Management System (KMS) is a software solution or a set of tools

and processes designed to efficiently capture, store, organize, retrieve, and share
knowledge within an organization. The primary goal of a KMS is to facilitate the
creation, management, and dissemination of knowledge to enhance decision-
making, problem-solving, collaboration, and innovation within the organization.

Knowledge management systems (KMS) enable organizations to better manage

processes for capturing and applying knowledge and expertise. These systems
collect all relevant knowledge and experience in the firm, and make it available
wherever and whenever it is needed to improve business processes and
management decisions. They also link the firm to external sources of knowledge.

Types of Knowledge:

1. Explicit Knowledge: This type of knowledge is codified and easily articulated

in formal language. It can be readily communicated and shared through
documents, manuals, databases, and other tangible forms. Explicit
knowledge includes facts, procedures, rules, and other information that can
be written down and transferred explicitly. E.g. documents, databases,
emails, wikis, forums.

2. Tacit Knowledge: Tacit knowledge is the opposite of explicit knowledge. It is

more personal, difficult to express in words, and often resides in individuals'
experiences, skills, insights, and intuitions. Tacit knowledge is typically gained
through practical experience and is challenging to articulate or transfer to
others directly. E.g. expert insights captured using interviews, podcasts and
Seminar lectures etc.

Key components and features of a Knowledge Management System may include:

1. Knowledge Capture: A KMS enables users to capture knowledge from various
sources, such as documents, databases, emails, wikis, forums, and expert
insights.
2. Knowledge Storage and Organization: The system organizes knowledge into a
structured repository, making it easily searchable and accessible. This may
involve categorizing information, tagging content with relevant keywords, and
creating taxonomies. Microsoft SharePoint is a good software tool to enable
it.

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3. Search and Retrieval: A robust search functionality allows users to find
relevant knowledge quickly and efficiently. Full-text search, advanced
filtering, and intelligent algorithms may be used to improve the retrieval
process.
4. Integration: KMS may integrate with other enterprise systems, such as
Customer Relationship Management (CRM), Enterprise Resource Planning
(ERP), and Learning Management Systems (LMS) to streamline knowledge
sharing and application.
5. Version Control: To ensure accuracy and prevent conflicts, a KMS may
implement version control to track changes to documents and provide access
to previous versions.
6. Knowledge Creation and Sharing: The system encourages employees to
contribute new knowledge and insights, fostering a culture of continuous
learning and knowledge exchange.
7. Analytics and Reporting: KMS may offer analytics and reporting capabilities
to track usage, identify popular topics, and assess the effectiveness of
knowledge-sharing initiatives.
8. Security and Access Control: Data security is crucial in a KMS to protect
sensitive information. Access control mechanisms ensure that only
authorized users can access certain knowledge assets.

Some important Terms:

• Organizational Learning is the creation of new Standard Operating Procedures
(SOPs) and business processes reflecting experience
• Knowledge Management is a set of processes, helps organizations to Identify,
Select, Organize, Disseminate and Transfer Important information and
expertise within the organizational memory in an unstructured manner.
• Knowledge Assets is the Organizational knowledge enabling the business to
create value
• Intranets and Extranets
Enterprise applications create deep-seated changes in the way the firm
conducts its business, offering many opportunities to integrate important
business data into a single system. They are often costly and difficult to
implement.
Intranets and extranets deserve mention here as alternative tools for
increasing integration and expediting the flow of information within the firm,
and with customers and suppliers.
Intranets are simply internal company Web sites that are accessible only by
employees. The term “intranet” refers to the fact that it is an internal
network, in contrast to the Internet, which is a public network linking
organizations and other external networks. Intranets use the same
technologies and techniques as the larger Internet, and they often are simply
a private access area in a larger company Web site.
Extranets are company Web sites that are accessible to authorized vendors
and suppliers, and often used to coordinate the movement of supplies to the
firm’s production apparatus.

WHAT IS COLLABORATION & TEAMWORK?

Collaboration is working with others to achieve shared and explicit goals.
Collaboration focuses on task or mission accomplishment and usually takes
place in a business, or other organization, and between businesses.

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Collaboration can be short-lived, lasting a few minutes, or longer term,
depending on the nature of the task and the relationship among participants.
Collaboration can be one-to-one or many-to-many.

Teamwork: Teams are part of the organization’s business structure for getting
things done. Teams have a specific mission that someone in the business
assigned to them. They have a job to complete. The members of the team need
to collaborate on the accomplishment of specific tasks and collectively achieve
the team mission.

COLLABORATIVE TOOLS
E-mail and Instant Messaging (IM)
E-mail and instant messaging have been embraced by corporations as a major
communication and collaboration tool supporting interaction jobs. Their
software operates on computers, cell phones, and other wireless handheld
devices and includes features for sharing files as well as transmitting messages.
Many instant messaging systems allow users to engage in real-time
conversations with multiple participants simultaneously.

Social Networking
We’ve all visited social networking sites such as MySpace and Facebook, which
feature tools to help people share their interests and interact. Social networking
tools are quickly becoming a corporate tool for sharing ideas and collaborating
among interaction-based jobs in the firm.
Social networking sites such as Linkedin.com provide networking services to
business professionals, while other niche sites have sprung up to serve lawyers,
doctors, engineers, and even dentists.
e.g. IBM built a Community Tools component into its Lotus Notes collaboration
software to add social networking features. Users are able to submit questions
to others in the company and receive answers via instant messaging.

Wikis
Wikis are a type of Web site that makes it easy for users to contribute and edit
text content and graphics without any knowledge of Web page development or
programming techniques.
e.g. The most well-known wiki is Wikipedia, the largest collaboratively edited
reference project in the world. It relies on volunteers, makes no money, and
accepts no advertising. Wikis are ideal tools for storing
and sharing company knowledge and insights.

Virtual Worlds
Virtual worlds, such as Second Life, are online 3-D environments populated by
“residents” who have built graphical representations of themselves known as
avatars.
e.g. Organizations such as IBM and INSEAD, an international business school with
campuses in France and Singapore, are using this virtual world to house online
meetings, training sessions, and “lounges.” Real-world people represented by
avatars meet, interact, and exchange ideas at these virtual locations.
Communication takes place in the form of text messages similar to instant
messages.

Internet-Based Collaboration Environments

There are now suites of software products providing multi-function platforms
for workgroup collaboration among teams of employees who work together from
many different locations. Numerous collaboration tools are available, but the
most widely used are Internet-based audio conferencing and video conferencing
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systems, online software services such as Google Apps/Google Sites, and
corporate collaboration systems such as Lotus Notes and Microsoft SharePoint.

Virtual Meeting Systems

In an effort to reduce travel expenses, many companies, both large and small,
are adopting videoconferencing and Web conferencing technologies.
An important feature of leading-edge high-end videoconferencing systems is
Telepresence Technology, an integrated audio and visual environment that
allows a person to give the appearance of being present at a location other than
his or her true physical location.
e.g. Companies such as Heinz, General Electric, Pepsico, and Wachovia are using
virtual meeting systems for product briefings, training courses, strategy sessions,
and even inspirational chats.

Q. What are business processes? How are they related to information systems?
A business process is a logically related set of business events/activities that
defines how specific business tasks are performed, and it represents a
unique way in which an organization coordinates work, information, and
knowledge.
Managers need to pay attention to business processes because they
determine how well the organization can execute its business, and they may
be a source of strategic advantage. There are business processes specific to
each of the major business functions, but many business processes are
cross-functional.
Information systems automate parts of business processes, and they can
help organizations redesign and streamline these processes.

Q. How do systems that link the enterprise improve organizational performance?

Enterprise applications are designed to coordinate multiple functions and
business processes. Enterprise systems integrate the key internal business
processes of a firm into a single software system to improve coordination
and decision making. Supply chain management systems help the firm
manage its relationship with suppliers to optimize the planning, sourcing,
manufacturing, and delivery of products and services. Customer relationship
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 management (CRM) systems coordinate the business processes surrounding
the firm’s customers. Knowledge management systems enable firms to
optimize the creation, sharing, and distribution of knowledge. Intranets and
extranets are private corporate networks based on Internet technology that
assemble information from disparate systems.
Extranets make portions of private corporate intranets available to outsiders.

Q. Why are systems for collaboration and teamwork so important and what
technologies do they use?
Collaboration is working with others to achieve shared and explicit goals.
Collaboration and teamwork have become increasingly important in business
because of globalization, the decentralization of decision making, and growth
in jobs where interaction is the primary value-adding activity.
Collaboration is believed to enhance innovation, productivity, quality, and
customer service. Effective collaboration today requires a supportive
organizational culture as well as information systems and tools for
collaborative work. Collaboration tools include e-mail and instant messaging,
wikis, video conferencing systems, virtual worlds, social networking systems,
cell phones, and Internet collaboration platforms such as Google Apps/Sites,
Microsoft SharePoint, and Lotus Notes.

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