Management Information Systems

PGP – MIS
( 28th Feb 2024)

Srinivas Josyula
Enterprise Applications
Contents

• Enterprise systems
• Supply Chain Management (SCM) Systems
• Customer Relationship Management (CRM) systems
• Challenges and Opportunities

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Instructional Videos
Maersk Line: Global Supply Chain Overhaul

https://www.youtube.com/watch?v=KEC5DQqCykI
Enterprise Systems
• Enterprise resource planning (E R P) systems

• Suite of integrated software modules and a common

central database

• Collects data from many divisions of firm for use in

nearly all of firm’s internal business activities

• Information entered in one process is immediately

available for other processes
How Enterprise Systems Work ?
Enterprise Software
Built around thousands of predefined business processes that
reflect best practices
• Finance and accounting
• Human resources
• Manufacturing and production
• Sales and marketing
To implement, firms:
• Select functions of system they wish to use
• Map business processes to software processes
• Use software’s configuration tables for customizing
Business Value of Enterprise Systems

• Increase operational efficiency

• Provide firm-wide information to support decision
making
• Enable rapid responses to customer requests for
information or products
• Include analytical tools to evaluate overall
organizational performance and improve decision-
making
Supply Chain
• Network of organizations and processes for:
• Procuring materials
• Transforming materials into products
• Distributing the products
• Upstream supply chain
• Downstream supply chain
• Internal supply chain
Nike’s Supply Chain
Supply Chain Management
Inefficiencies cut into a company’s operating costs
Can waste up to 25 percent of operating expenses
Just-in-time strategy
Components arrive as they are needed
Finished goods shipped after leaving assembly line
Safety stock: buffer for lack of flexibility in supply chain

Bullwhip effect
Information about product demand gets distorted as it
passes from one entity to next across supply chain
The Bullwhip Effect
Supply Chain Management Software

Supply chain planning systems :

• Model existing supply chain

• Enable demand planning
• Optimize sourcing, manufacturing plans
• Establish inventory levels
• Identify transportation modes

Supply chain execution systems

• Manage flow of products through distribution centers and

warehouses
Internet and Global Supply Chains
Global supply chain issues
• Greater geographical distances, time differences
• Participants from different countries
• Different performance standards
• Different legal requirements

Internet helps manage global complexities

• Warehouse management
• Transportation management
• Logistics
• Outsourcing
Demand Driven : Push to Pull

Push-based model (build-to-stock)

• Earlier SCM systems
• Schedules based on best guesses of demand

Pull-based model (demand-driven)

• Web-based
• Customer orders trigger events in supply chain

Internet enables move from sequential supply chains to concurrent

supply chains

Complex networks of suppliers can adjust immediately

Push vs Pull SCM Models
Emerging : Internet driven Supply Chains
Business Value of SCM systems
• Match supply to demand
• Reduce inventory levels
• Improve delivery service
• Speed product time to market
• Use assets more effectively
• Total supply chain costs can be 75 percent
of operating budget
• Increase sales
Customer Relation Management
Knowing the customer
In large businesses, too many customers and too many
ways customers interact with firm
C R M systems
• Capture and integrate customer data from all over
the organization
• Consolidate and analyze customer data
• Distribute customer information to various systems
and customer touch points across enterprise
• Provide single enterprise view of customers
Customer Relation Management
Customer Relation Management
CRM packages typically include tools for:

• Sales force automation (SFA)

• Sales prospect and contact information
• Sales quote generation capabilities

• Customer service
• Assigning and managing customer service requests
• Web-based self-service capabilities

• Marketing
• Capturing prospect and customer data, scheduling and
tracking direct-marketing mailings or e-mail
• Cross-selling
How CRM helps Marketing ?

Responses by Channel for January 2019 Promotional Campaign

CRM capabilities
Customer Loyalty Management Process
Operational and Analytical CRM
Operational CRM
• Customer-facing applications
• Sales force automation call center and customer service
support
• Marketing automation

Analytical CRM
• Based on data warehouses populated by operational CRM
systems and customer touch points
• Analyzes customer data (OLAP, data mining, etc.)
• Customer lifetime value (CLTV)
Analytical CRM DWH
Business value of CRM
Business value of CRM systems
• Increased customer satisfaction
• Reduced direct-marketing costs
• More effective marketing
• Lower costs for customer acquisition/retention
• Increased sales revenue

Churn rate
• Number of customers who stop using or purchasing
products or services from a company
• Indicator of growth or decline of firm’s customer base
Enterprise Applications Challenges
Expensive to purchase and implement enterprise applications
• Multi-million dollar projects
• Long development times

• Technology changes
• Business process changes
• Organizational learning, changes
• Switching costs, dependence on software vendors
• Data standardization, management, cleansing
Next Generation Applications

Enterprise solutions/suites
• Make applications more flexible, web-
enabled, integrated with other systems

• Open-source applications
• On-demand solutions
• Cloud-based versions
• Functionality for mobile platform
Next Generation Applications
Social CRM
• Incorporating social networking technologies
• Company social networks
• Monitor social media activity; social media analytics
• Manage social and web-based campaigns

Business intelligence
• Inclusion of BI with enterprise applications
• Flexible reporting, ad hoc analysis, “what-if” scenarios,
digital dashboards, data visualization
Business Process
Reengineering

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Business Process - Definition
1) ‘A business process is a collection of activities that takes one or more kinds of inputs
and creates an output that is of value to the customer’ Hammer and Champy (1993)

2) ‘A business process is defined as the chain of activities whose final aim is the
production of a specific output for a particular customer or market’. Davenport
(1993)

3) ‘A business process is a set of one or more linked procedures or activities which

collectively realize a business objective or policy goal, normally within the context
of an organizational structure defining functional roles and relationships. Workflow
Management Coalition (WfMC, 1999) .

4) Business process is a ‘step-by-step rules specific to the resolution of a business

problem’. Havey (2005).

5) Business process modelling (BPM) is a useful tool to capture, structure and

formalise the knowledge about business processes (Guha et al., 1993; Abate et al.,
2002).
6) BPM is a field of knowledge that encompasses methods, techniques and tools to
design, enact, control and analyse business processes. BPM differs from business
process reengineering, van der Aalst et al. (2003).
focus shift ….Functional to Process
Increasingly, organizations are shifting away from hierarchical,
functionally-based structures to structures based on horizontal
business processes.

From a pragmatic point of view, business processes describe how

something is done in an organization, rather than what is done.
They cut across an organization and represent the flow and
transformation of information, decisions, materials, or resources
to serve customers (Stanford, 2005).
In spite of numerous definitions, business processes can be defined
as structured, analytical sets of cross-functional activities which
continuously strive toward achieving improvement and providing
added value to customers
Process types..
1. Core (or operational) Business Processes – The value-added activities that
support and facilitate customer lifecycle, represent the foundation of most
businesses, the value that customers pay for, and the essence of most businesses
(e.g., developing and managing products or services, marketing and selling
products or services, managing customer service, etc.).
2. Management (or guiding) Business Processes – Involve planning, direction
setting, monitoring, decision making , and communicating with respect to a firm’s
core business processes and assets (e.g., strategy formulation and strategic
decision-making , planning and budgeting, performance measurement and
reporting, resource allocation, stakeholder communications, etc.)
3. Support (or enabling) Business Processes – Essential requirements to execute
the core business processes ; (e.g., managing human resources , providing working
facilities, managing information technology, etc.).
Process..
1. Any process, process step, or process product (document, data or other product of
a process step) that does not contribute to the organizations mission, or its ability
to meet its mission, is waste.
2. Process Architecture – is an abstraction depicting an overview of an organization
as a set of critical processes. It documents all critical processes and includes date
of last improvement, process success, stakeholders of process, interrelationships
and dependencies. It is a tool to identify continuous improvement needs of the
organization
3. Process improvement projects –
I. Process Analysis steps:
a) Leaning : removing the unwanted/ unneeded tasks
b) Cleaning : improve the process to further improve process steps
c) Greening: to minimize environmental impact of the process
II. Redesign : application of ideas from analyses, evaluation of innovative approaches, ownership,
(type of process), outsource/ insource/ offshore etc.,
III. Process improvement requires knowledge behind the process history, purpose, problems, method
of conduct, current metrics, reliance on information from external sources, documentation
Functional
Functional
organization
organization
Process based Organization structure

Source: The New Faces of Organizations in 21st Century, Vol. 2 (pp.33-80; by Tomislav Hernaus, University of Zagreb, Faculty of Economics and Business)
Process of - Process Improvement
Initiation

As- is
Mapping

Lean

Clean

Green

Redesign

Error-
proof
Develop
Measures

Source : Process mapping and Management by Sue Cogner (2011), Business Expert Press
Process maturity
Input (I) Output (O)
Process (P)

Feedback

Process = IPO + Feedback

Input : Data or materials ; Output : goods or service that results from process; Feedback:
monitoring and metrics on output quality that are be used to regulate/ control the process

Effectiveness: Ability to achieve desired results; Efficiency : Results achieved vs resources

used

How Process travels from Supplier to Customer

Input

Output
Process

Supplier Customer
Systems Development and Organizational Change

IT-enabled organizational change

Automation
• Increases efficiency
• Replaces manual tasks
Rationalization of procedures
• Streamlines standard operating procedures
• Often found in programs for making continuous quality
improvements
• Total quality management (TQM)
• Six sigma
Systems Development and Organizational Change

Business process redesign

• Analyze, simplify, and redesign business processes
• Reorganize workflow, combine steps, eliminate repetition
Paradigm shifts
• Rethink nature of business
• Define new business model
• Change nature of organization
Organizational Change Carries Risks
and Rewards
Business Process Reengineering
Don’t find a fault find a remedy
- Henry Ford
Business Process Reengineering - Need
1) Business Reengineering means starting all over, starting from
scratch
1. Heart of BPR, and need of the hour:
a) Customer focused and Market-driven in external relations
b) Process focused and team oriented in internal operations
2. Areas of focus:
a) Increase Productivity; Responsiveness; Higher levels of
Service; Reduced Cost; Time to market; Response time;
Customer Service and Competitiveness

BPR is about competitiveness; discontinuous thinking – identifying

and abandoning the outdated
Key Concepts

1. Focus on the Customer

2. Focus on the Process
3. Breakthrough Objectives
4. Challenge the underlying Assumptions
5. Productive Deployment of Resources
6. Usage of ICT as enabler
Focus on Process
Functions are vertical and complex, and Managers
look up towards top (CEO) for direction.

Value
Flows
Horizontally
Across
Functions
to customers

All work is a process, and every process has requirements to be met to satisfy customers
BPR
BPR is a two-pronged effort:
Behavioral:
Identification of changes in the “way people work” through out
organization that will have to take place for technical aspects of
BPR to be successful, and subsequent management of those
changes
Technical :
Identification of :
a) Processes through out the Business
b) The Core Business process that drive the Organization’s value
c) Reengineering of those processes in order to tighten
connections with customers, streamline operations, eliminate
wasteful , nonvalue- added steps in the identified processes
Competitiveness':
Cost
Quality
Delivery Lead time
Reliability
Product Characteristics
Product Support and
Responsiveness
Service
Process focus..
1. Process travel from Supplier to customer

Process
Input

Output
Supplier Customer

2. Focus should be on Core Business Processes which touch

the customer
3. Process brings together people, technology and
information
4. Formal (explicit) and informal process (tacit)
BPR’s Aim….
1. Eliminating repetitive, paper intensive bureaucratic tasks
2. Improving product quality
3. Improving service quality
4. Reducing costs significantly
5. Improving customer satisfaction / experience
Role of IT in BPR
1. The word Reengineering appeared in IT field and has evolved into a broader
change process.
2. If used together, IT and BPR can create more flexible, team oriented
coordinative, and communication based work capability (Whitman, 1996)
3. IT has been used to overcome communication barriers among different
corporate functions, to empower line workers and to fuel process
reengineering (Attaran, 2004)
4. Hammer and Champy (1993) introduce IT as a key enabler of BPR
5. According to Davenport and Short (1990) BPR needs to take broader view of
IT and Business activity. IT capabilities should support Business processes
and Business Processes should be in terms of IT capabilities.
6. Attaran (2004) considers the role of IT in BPR before the design of the
process, while the process is being designed and after the completion of the
design.
7. In essence, the role of IT in BPR can be explored in three aspects:
a) the role of IT in BPR projects as an enabler
b) The role of IT in BPR projects as a supportive; and
c) The role of IT in BPR projects as a facilitator and catalyst
Business Process Redesign
Business process management (BPM)
Variety of tools, methodologies to analyze, design, optimize
processes
Used by firms to manage business process redesign
Steps in BPM

1. Identify processes for change

2. Analyze existing processes
3. Design the new process
4. Implement the new process
5. Continuous measurement
As-is Business Process for Purchasing a Book from
a Physical Bookstore
Redesigned Process for Purchasing a
Book Online
Tools for Business Process Management

• Identify and document existing processes

• Identify inefficiencies
• Create models of improved processes
• Capture and enforce business rules for performing, automating
processes
• Integrate existing systems to support process improvements
• Verify that new processes have improved
• Measure impact of process changes on key business performance
indicators
Systems Development
Activities that go into producing an information system solution to
an organizational problem or opportunity
• Systems analysis
• Systems design
• Programming
• Testing
• Conversion
• Production and maintenance
The Systems Development Process
Systems Analysis
Analysis of problem to be solved by new system
• Defining the problem
• Identifying causes
• Specifying solutions
• Identifying information requirements
• Feasibility study
• Systems proposal report
• Information requirements
Faulty requirements analysis is a leading cause of systems
failure and high systems development costs
Systems Design
• Describes system functions and specifications that will deliver
identified during systems analysis.

• Should address all managerial, organizational, and technological

components of system solution.

• Role of end users

• User information requirements drive system building
• Users must have sufficient control over design process to
ensure system reflects their business priorities and
information needs.
• Insufficient user involvement in design effort is major cause
of system failure
System Design Specifications (1 of 2)

Category Specifications

Output Medium, Content, Timing

Input Origins, Flow, Data entry
User Interface Simplicity, Efficiency, Logic, Feedback, Errors
Database Design Logical data model, Volume and speed requirements, File
organization and design, Record specifications
Processing Computations, Program modules, Required reports, Timing of
outputs
Manual Procedures What activities, Who performs them, When, How, Where
Controls Input controls (characters, limit, reasonableness), Processing
controls (consistency, record counts), Output controls (totals,
samples of output), Procedural controls (passwords, special forms)
System Design Specifications (2 of 2)

Category Specifications

Security Access controls, Catastrophe plans, Audit trails

Documentation Operations documentation, Systems documents, User
documentation
Conversion Transfer files, Initiate new procedures, Select testing method
Cut over to new system
Training Select training techniques, Develop training modules, Identify
training facilities
Organizational Changes Task redesign, Job redesign, Process design, Organization structure
design, Reporting relationships
Completing the Systems Development
Process (1 of 3)
• Programming
• System specifications from design stage are translated into
software program code
• Testing
• Ensures system produces right results
• Unit testing: Tests each program in system separately
• System testing: Test functioning of system as a whole
• Acceptance testing: Makes sure system is ready to be used
in production setting
• Test plan: All preparations for series of tests
A Sample Test Plan to Test a Record Change
Completing the Systems Development
Process (2 of 3)
• Conversion
• Process of changing from old system to new system
• Four main strategies
• Parallel strategy
• Direct cutover
• Pilot study
• Phased approach
• Requires end-user training
• Finalization of detailed documentation showing how system
works from technical and end-user standpoint
Completing the Systems Development
Process (3 of 3)
• Production and maintenance
• System reviewed to determine if revisions needed
• May include post-implementation audit document
• Maintenance
• Changes in hardware, software, documentation, or procedures to a
production system to correct errors, meet new requirements, or
improve processing efficiency
• 20 percent debugging, emergency work
• 20 percent changes to hardware, software, data, reporting
• 60 percent of work: user enhancements, improving
documentation, recoding for greater processing efficiency
Systems Development
Core Activity Core Activity

Systems analysis Identify problem(s), Specify solutions, Establish information

requirements
Systems design Create design specifications
Programming Translate design specifications into program code
Testing Perform unit testing, Perform systems testing, Perform acceptance
testing
Conversion Plan conversion, Prepare documentation, Train users and technical
staff
Production and Operate the system, Evaluate the system, Modify the system
maintenance
Traditional Systems Life Cycle
• Oldest method for building information systems
• Phased approach
• Development divided into formal stages
• “Waterfall” approach: One stage finishes before next stage
begins
• Formal division of labour between end users and information
systems specialists
• Emphasizes formal specifications and paperwork
• Still used for building large complex systems
• Can be costly, time-consuming, and inflexible
The Traditional Systems Development Life Cycle
Prototyping (1 of 2)
• Building experimental system rapidly and inexpensively for end
users to evaluate

• Prototype: Working but preliminary version of information

system
• Approved prototype serves as template for final system

• Steps in prototyping
• Identify user requirements
• Develop initial prototype
• Use prototype
• Revise and enhance prototype
The Prototyping Process
Prototyping (2 of 2)
• Advantages of prototyping
• Useful if some uncertainty in requirements or design
solutions
• Often used for end-user interface design
• More likely to fulfill end-user requirements
• Disadvantages
• May not accommodate large quantities of data or large
number of users
• May not undergo full testing or documentation
End-User Development
• Allows end users to develop simple information systems with
little or no help from technical specialists.

• Reduces time and steps required to produce finished application

• Tools include
• User friendly query languages and reporting
• PC software tools
End-User Development
• Advantages
• More rapid completion of projects
• High level of user involvement and satisfaction
• Disadvantages
• Not designed for processing-intensive applications
• Inadequate management and control, testing, documentation
• Loss of control over data
• Managing end-user development
• Require cost-justification of end-user system projects
• Establish hardware, software, and quality standards
Application Software Packages and
Cloud Software Services
Application software packages and cloud software services
Save time and money
Many packages offer customization features
Evaluation criteria for systems analysis include:
Functions provided, flexibility, user friendliness, required resources,
database requirements, installation and maintenance efforts,
documentation, vendor quality, and cost
Request for Proposal (RFP)
Detailed list of questions submitted to packaged-software vendors
Used to evaluate alternative software packages
Outsourcing (1 of 2)
Several types
Cloud and SaaS providers
Subscribing companies use software and computer
hardware provided by vendors
External vendors
Hired to design, create software
Domestic outsourcing
Driven by firm’s need for additional skills, resources,
assets
Offshore outsourcing
Driven by cost-savings
Outsourcing (2 of 2)
Advantages
Allows organization flexibility in IT needs
Disadvantages
Hidden costs, for example:
Identifying and selecting vendor
Transitioning to vendor
Opening up proprietary business processes to third party
Total Cost of Offshore Outsourcing
Rapid Application Development (RAD), Agile
Development, and DevOps
• Rapid application development (RAD)
• Process of creating workable systems in a very short period
of time
• Joint application design (JAD)
• Used to accelerate generation of information requirements
and to develop initial systems design
• Agile development
• Focuses on rapid delivery of working software by breaking
large project into several small subprojects
• Dev Ops
• Builds on Agile development principles as an organizational
strategy
Mobile Application Development
Mobile websites
Mobile web apps
Native apps
Special requirements for mobile platform
Smaller screens, keyboards, multitouch gestures, saving
resources (memory, processing)
Responsive web design
Websites programmed so that layouts change automatically
according to user’s computing device
Thank You

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Runaway Projects and System Failure

Projects: 30–40 percent IT projects

• Exceed schedule, budget
• Fail to perform as specified

Types of system failure

• Fail to capture essential business requirements
• Fail to provide organizational benefits
• Complicated, poorly organized user interface
• Inaccurate or inconsistent data
Consequences of Poor Project Management
Project Management Objectives
Project management:
Activities include planning work, assessing risk, estimating
resources required, organizing the work, assigning tasks,
controlling project execution, reporting progress, analyzing
results

Five major variables

• Scope
• Time
• Cost
• Quality
• Risk
 Management Structure for Information Systems Projects

• Corporate strategic planning group

• Responsible for firm’s strategic plan
• Information systems steering committee
• Reviews and approves plans for systems in all divisions
• Project management group
• Responsible for overseeing specific projects
• Project team
• Responsible for individual systems project
Management Control of Systems Projects
Information Systems Plan (1 of 2)
• Identifies systems projects that will deliver most business value
• Links development to business plan
• Road map indicating direction of systems development, includes:
• Purpose of plan
• Strategic business plan rationale
• Current systems/situation
• New developments
• Management strategy
• Implementation plan
• Budget
Information Systems Plan (2 of 2)
• For effective plan
• Document existing systems and infrastructure components
• Identify decision-making improvements
• Develop metrics established for quantifying values
• Clear understanding of long-term and short-term information
requirements

• Key performance indicators (KPIs)

• Strategic analysis identifies small number of KPIs, determined
by managers
 Portfolio Analysis
• Used to evaluate alternative system projects
• Inventories all of the organization’s information systems projects
and assets
• Each system has profile of risk and benefit
• High benefit, low risk
• High benefit, high risk
• Low benefit, low risk
• Low benefit, high risk
• To improve return on portfolio, balance risk and return from systems
investments
A System Portfolio
Scoring Models
• Used to evaluate alternative system projects, especially when
many criteria exist

• Assigns weights to various features of system and calculates

weighted totals
• Many qualitative judgments involved
• Requires experts who understand the issues and the technology
Example of a Scoring Model for an E R P System

Criteria Weight ERP ERP ERP ERP

System System System System
A% A Score B% B Score
1.1 Online order entry 4 67 268 73 292
1.2 Online pricing 4 81 324 87 348
1.3 Inventory check 4 72 288 81 324
1.4 Customer credit check 3 66 198 59 177
1.5 Invoicing 4 73 292 82 328
2.1 Production forecasting 3 72 216 76 228
2.2 Production planning 4 79 316 81 324
(etc.) (etc.) (etc.) (etc.) (etc.) (etc.)
Grand Totals 3,128 3,300
Information System Costs and Benefits

• Tangible benefits
• Can be quantified and assigned monetary value
• Systems that displace labor and save space:
• Transaction and clerical systems

• Intangible benefits
• Cannot be immediately quantified but may lead to quantifiable
gains in the long run
• For example, more efficient customer service, enhanced
decision making

• Systems that influence decision making:

• ESS, DSS, collaborative work systems
Capital Budgeting for Information Systems
• Capital budgeting models
• Measure value of long-term capital investment
projects
• Rely on measures of the firm’s cash outflows and
inflows
• Principle capital budgeting models used to evaluate I T
projects
• Payback method
• Accounting rate of return on investment (R O I)
• Net present value
• Internal rate of return (I R R)
• Limitations of financial models
Dimensions of Project Risk
• Project size
• Cost
• Time
• Number of organizational units affected
• Organizational complexity

• Project structure
• Structured, defined requirements run lower risk

• Experience with technology

• Team familiar with hardware and software
Controlling Risk Factors
First step in managing project risk involves identifying nature and level
of risk of project
Each project can then be managed with tools and risk-management
approaches geared to level of risk
Managing technical complexity
Internal integration tools
Project leaders with technical and administrative experience
Highly experienced team members
Frequent team meetings
Securing of technical experience outside firm if necessary
Formal Planning and Control Tools
Used for documenting and monitoring project plans
Help identify bottlenecks and impact of problems
Gantt charts
Visual representation of timing and duration of tasks
Human resource requirements of tasks
PERT charts
Graphically depict tasks and interrelationships
Indicate sequence of tasks necessary
Gantt Chart
Increasing User Involvement and
Overcoming User Resistance
External integration tools
Link work of implementation team to users at all levels
User resistance to organizational change
Counterimplementation
Strategies to overcome user resistance
User participation, education and training
Management edicts and policies
Incentives for cooperation
Improvement of end-user interface
Resolution of organizational problems prior to introduction of new system
Designing for the Organization
• Need to address ways in which organization changes
with new system
• Ergonomics
• Interaction of people and machines in work
environment
• Organizational impact analysis
• How system will affect organizational structure,
attitudes, decision making, operations
• Sociotechnical design
• Addresses human and organizational issues
Project Management Software Tools
• Can automate many aspects of project
management
• Capabilities for defining, ordering tasks
• Assigning resources to tasks, tracking
progress
• Manage very large numbers of tasks and
relationships
• Microsoft Project
• Cloud-based software
• Project portfolio management software
Thank You

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