Chapter 7: Processes, Organizations, and Information Systems

Basic Types of Processes

Structured processes are formally defined, standardized processes involving day-to-day operations: accepting a return, placing an order, purchasing raw materials, and so forth.

Dynamic processes are flexible, informal, and adaptive processes normally involving strategic and less structured managerial decisions and activities.

Three levels of organizational scope

1. Workgroup - help a workgroup to accomplish a goal (e.g. accounts payable). Workgroup IS used to support one or more IS processes.
2. Enterprise - processes spanning multiple departments. Enterprise IS support enterprise processes (e.g. ERP, CRM).
3. Inter-enterprise-processes that require cooperation amongst different entities (e.g. prescription drugs).

The workgroups represent 6 of the 9 value-added activities.

Characteristics of Information Systems

• Processes are used at three levels of organizational scope: workgroup, enterprise, and inter-enterprise.
• Characteristics of departmental informational systems are summarized in Workgroup. Often, procedures are formalized in documentation, and users frequently receive formal training in use of those procedures.

Information systems can improve process quality

• Process efficiency 
• Ratio of outputs to inputs
• Process effectiveness
• How well a process achieves organizational strategy
• How can processes be improved?
• Change process structure
• Change process resources
• Change both
• Performing an activity
• Partially automated, completely automated
• Augmenting human performing activity
• Ex: Common reservation system
• Controlling data quality
• Ensure data complete and correct before continuing process activities

The problems of information silos:

• Data duplicated
• Data inconsistency
• Data isolated
• Disjointed processes
• Lack of integrated enterprise information
• Inefficiency: decisions made in isolation
• Increased cost for organization

Solving the problems of information silos

• Integrate into single database
• Revise applications
• Allow isolation, manage to avoid problems

How do CRM, ERP, and EAI support enterprise processes?

• Business Process Reengineering (BPR)
• Integrated data, enterprise systems create stronger, faster, more effective linkages in value chains
• Difficult, slow, exceedingly expensive
• Key personnel determine how best to use new technology
• Requires high-level and expensive skills and considerable time

Emergence of Enterprise Application Solutions

• Inherent processes
• Predesigned processes for using application
• "Industry best practices"
• Customer relationship management (CRM)
• Enterprise resource planning (ERP)
• Enterprise application integration (EAI)

Customer Relationship Management (CRM)

• Suite of applications, database, set of inherent processes
• Manage all interactions with customer through four phases of customer life cycle
• Marketing,  customer acquisition, relationship management, loss/churn
• Supports customer-centric organization

Customer Life Cycle

CRM Applications

ERP Applications

Enterprise Application Integration (EAI)

• Connects system "islands"
• Enables communicating and sharing data
• Provides integrated information
• Provides integrated layer on top of existing systems while leaving functional applications "as is"
• Enables gradual move to ERP

Design and Implementation for the Five Components

• EAI enables organizations to use existing silo applications while eliminating many serious problems of isolated systems

Someone with knowledge of business can fix a workflow problem

• If workflow involves information system, someone knowledgeable and comfortable working with technical people
• You with help of a business analyst

Elements of an ERP System

• Hardware
• ERP Application programs
• ERP Databases
• Business process procedures
• Training and Consulting

True ERP have application to integrate:

• Supply chain (procurement, sales order processing, inventory management, supplier management, and related activities)
• Manufacturing (scheduling, capacity planning, quality control, bill of materials, and related activities)
• CRM (sales prospecting, customer management, marketing, customer support, call center support)
• Human resources (payroll, time and attendance, HR management, commission calculations, benefits administration, and related activities)
• Accounting (general ledger, accounts receivable, accounts payable, cash management, fixed asset accounting)

ERP Solution Components

• ERP Application Programs
• Configurable vendor applications
• ERP Databases
• Trigger
• Computer program within database to keep database consistent when certain conditions arise
• Stored Procedure
• Enforces business rules
• Businesses Processes and Procedures
• Adapt to inherent processes and procedures, or design new ones?
• Training & Consulting
• Training to implement
• Top management support, preparing for change, dealing with resistance
• Training to use
• Industry-Specific Solutions

Characteristics of Top ERP Vendors

Challenges of Implementing and Upgrading Enterprise Information Systems

• Collaborative Management
• Requirements Gaps
• Transition Problems
• Employee Resistance
• New Technology

2026 - Hybrid Model

• ERP customers store most of their data on cloud servers managed by cloud vendors and store sensitive data on their own servers.