48 terms

Enterprise Systems Management

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ES Components and Key Features
Client server architecture, unified database, integrated processes, scalable, real time data, data visibility
ERP Implementation Strategies
In-house, fits organisation but most difficult, expensive, slowest
In-house + vendor supply, blend proven features with organisational fit, difficult to develop, expensive and slow
Best-of-breed, theoretically ideal, hard to link, slow, potentially inefficient
Customise vendor system, proven features modified to fit organisation, slower, usually more expensive than pure vendor
Select vendor modules, less risk, fast, inexpensive, if expands inefficient and higher total cost
Full vendor system, fast, inexpensive, efficient, inflexible
ASP, least risk & cost, fastest, at mercy of ASP
ASP Risks
Applications and data controlled by others, service failures out of your control, confidentiality a possibility, performance issues possible
Risk Management Cycle
Risk identification, risk analysis, risk control and risk reporting/
ERP Critical Success Factors
Clear understanding, strategic goals
Top management commitment
Project management implementation
Great implementation team
Cope with technical issues
Data accuracy
Levels of IS/IT Failure
Corresponding failure - Don't meet design objectives
Process failure - Not on time/within budget
Interaction failure - System not used as designed
Expectation failure - Return not what stockholders expected
Ways to BPR
Clean slate - reengineer everything from scratch. Pros: not advantaged by tool, not limited by best practices, retain competitive advantage, not subject to vendor changes.
Technology enabled - first select a system, then reengineer. Focus on ERP best practices, tools help structure reengineering, process bounded (easier), know design is feasible
Key Process Points
Asynchronous communication, eliminate duplication of information, reduce information flow, reduce controls and reduce contact points.
ERP Value Creation
Integrates firms activities
Employ's best practices
Enables organisational standardisation
Eliminate informational asymmetrics
Provides online real time information
Allows same time simultaneous data
Facilitates intra-organisational communication & collaboration
Types of Bolt-ons
Demand forecasting and planning systems
Factory planning & scheduling systems
Inventory management systems
Supply network planner systems
Customer Relationship Management
E-Procurement System
Data Warehouse System
How does BoB Work
Third party software, middleware - purpose built translation software, XML interchange, Service Orientated Architecture
BoB Risks
Technical, will it work? level of efficiency can be questionable
User acceptance
Financial, very expensive (custom built software)
Ongoing, maintenance, upgrades or patches to either package may break middleware connectivity
Why use Made to Order
Used in environments where traditional demand forecasting not possible - high uncertainty, erratic, discontinous demand.
Highly customised product, laptops, automotive, construction equipment
How do Made to Order Work
Generic production units are created and assigned tentative completion dates, time fence is established (longest cumulative total including procurement, production, assembly). As orders are received, generic units are replaced with specific units and configuration, quantity and due dates are locked. If order is not received by 'time fence', generic production uni is rescheduled or dropped from production schedule.
Primary Concern for Made to Order
Managing the vendor-manufacturer replenishment activities, traditionally this is controlled through purchaser with economic trade off between ordering lead times and inventory holding costs.
Advanced order commitments (AOC) - Open access to sales data and MRP records for supply chain, allows vendor visibility into future orders. Data sharing amongst multiple enterprises. Internal and external users require single point of access to data.
What is VMI
Vendor monitors stock levels, vendor decides when to replenish, how many, which usually results in more frequent smaller deliveries. Users are Walmart, Bunnings, Home Depot
Business Side of VMI
Target is to get customers as partners. Service level agreements require negotiations. VMI team needs inventory analysts, information system expert, sales & accounts representatives. Issues what product (setting inventory levels, batch size), type of purchase (standard, consignment), who is responsible for stock levels. Need to consider sharing of data, inter-organisational data, supplier must be able to see customers inventory data, joint planning. `
Technical Side of VMI
EDI, allows access to inventory data at the customers location
VMI functionality, management replenishment, interfaces between EDI and ERP, may be separate system of part of ERP
ERP, receives orders from VMI functionality
Advantages of VMI
Customer - Lower overall cost (reduced bullwhip effect, no generation of purchase orders), improved service, reduced inventory levels, greater certainty of supply
Supplier - Lower overall cost, increased customer satisfaction, greater efficiency (reduced bullwhip effect, automated generation orders), strengthens customers relationship (effectively locks in customers), great sales point for new customers
Disadvantages of VMI
Supplier, frees up customer cash assets which can be used to buy competitors products
Definition of SME
Varies depending on location, the basis of evaluation is total number of employees, total revenue, industry sector. In Australia, <200 employees. No hard and fast rule
SME Requirements
Operate in a competitive, fast moving environment, need to respond quickly to the market place (flexible, reactive)
Use of ERP in SME
Seen as a way of staying competitive. Different approaches then from large enterprise:
Different motivation -Strategic needs (growth), tactical consideration (simplified information system, standardised processes, improved supply chain management)
Different types of systems - More niche industry groups, use less ERP functionality
Different implementation procedures - Big bang, pre-configured packages, stand alone ERP, little or nor customisation, use BPR to achieve fit
Different benefits - Better performance in manufacturing, better logistics/supply chain management
SME ERP Selection
Vendor selection critical, must be long term sustainable, SME will need greater Vendor support due to lack of technical expertise, looking for best fit for current business processes
Greater range of ERP to choose from
Flexibility
Tailor to local needs/marketplaces, product and service, demand/supply chain.
Locally managed, business processes, IS, IT
Standardisation
Cross business or product unit sharing, human knowledge, information, collaboration on projects.
Centrally managed, business processes, IS, IT
Resisted by business units that are required to change their business processes
Balanced Approach to Flexibility/Standardisation
Country by Country (business unit by business unit)
Realigning business and functional IS and IT infrastructure from the corporate centre
Defining a region approach to IT/IS infrastructure
Globalisation of business IT/IS infrastructure
Managing a global IT infrastructure in a decentralised application environment
Country by Country
Strength is through flexibility and ability to respond quickly to local changes in the market place.
Weaknesses are high cost of global business, incompatible systems across business units, poor sharing across business units.
Structure has some centralisation, financial performance management and R&D
Realigning business and functional IS and IT infrastructure from the corporate centre
Local managers still make IS/IT decision, senior IS/IT manager appointed at corporate centre (CIO). Their role is to monitor IT/IS, develop standards, lowering costs, authority is based on persuasion not mandated power.
Strengths are maintain flexibility, reduction in overall IT operating costs, IT/IS knowledge shared from corporate centre to local units
Weaknesses are decision making is slow, standards development takes a long time (committee based)
Defining a region approach to IT/IS infrastructure
Top-down regional focus, standardisation across a single region.
Strengths are reduction in cost by standardisation across a region, still a degree of flexibility.
Weaknesses is requires considerable change in company culture, long implementation cycle.
Globalisation of business IT/IS infrastructure
Top-down manages, standardization globally. Greatest cost saving for IT/IS, same system across globe, new system implemented once.
Strengths are there's complete alignment, company strategy, culture, processes etc.
Weaknesses are total loss of local flexibility, requires strong company and top down mandated management.
Managing a global IT infrastructure in a decentralised application environment
Aims to keep bottom up culture, maintain flexibility, global standardization of IT/IS. IT/IS decision made through manager consensus, very slow progress, open debate encouraged amongst local managements, top down decision made and implemented.
Strengths globally standardized infrastructure, centrally supported infrastructure, promotes best practice transfer between business units, maintain some flexibility at the business unit level.
Weaknesses are it requires the development of a managed consensus culture, can encourage IT outsourcing at the local business unit level
Why is need for auditing resisted?
Expensive in terms of resource usage
Requires a huge volume of work to validate the processes and results of the audit
Concerns that the results will be used against the project sponsors/implementers
Post Implementation Auditing Concepts
Monitor the performance measures identified in the project justification stage
Identify the information needed to monitor key justifications
Document the source of all information identified
Post Implementation Auditing Costs
Most cost monitoring done in relation to implementation project, some costs cannot be evaluated until after implementation, all costs need to be monitored.
IT Requirements and Factors for Auditing
Platform neutrality and interoperability
Scalability - Performance, functionality, size, in both directions
Adaptability
Security - data and process
Reliability - Uptime, maintenance, accuracy of output
Ease of use
Perceived value
Business Performance Factors for Auditing
Effect on supply chain performance
Strategic - customer query time, order lead time, supplier lead time
Tactical - accuracy of forecasting, product development life cycle time, purchase order cycle time
Operational - Level of finished good inventory, cost per operation hour, capacity utilisation, quality of delivered goods
Auditing Management Issues
Identification of issues, identification of experts, analysis (who does this), resolution of disagreements, elicitation culture (organisation must have culture needed to make judgement)
Results of Auditing
Better performance related decisions in relation to the system
More realistic project proposals (project forecasts will be tested, better selection of future projects)
Identification of existing projects that should be discontinued
Realising ERP Benefits - Time
Critical mass - Full implementation must be completed before most benefits can be realised, phased rollout takes time.
Infrastructure projects first - Adds less value to organisation
Getting familiar with data - Takes time to learn how to use the data
Time of implementation - Companies who implemented later achieved benefits earlier
Drivers of ES Benefit Realisation
Integrate - has greatest effect on realised benefits, need to integrate existing legacy systems, BoB systems and consolidate
Optimise - Continuous refinement of business process to fit, ongoing BPR for alignment
Informate - Use available information to transform work, information value adding (data warehouse and BI tools), not just access to data, access to right data
Tracking Benefits
Actively tracking benefits makes realisation quicker
Benefits management - more benefits realised if an individual is accountable
Feral Systems
End user developed, usually in-house to circumvent formal system
Usually relatively small, often Access databases or Excel spreadsheets
No formal approval from senior management, beyond control of regulatory framework.
Why are Feral Systems Created
Work around gaps in the formal IS
User perceives official system to be inadequate
Motivations: Quality (missing functionality, inherent design/software/hardware flaws), Information (formal system cannot deliver accurate, appropriate, timely info), service (perceived lack of a timely response to user requests)
Benefits of Feral Systems
Alignment to user requirements
Facilitate innovation
Fall back to known technology after a new system implementation, helps to re-establish stability and order after time of change)
Reduce tensions between opposing groups in a power struggle within an organisation
Limitations of Feral Systems
Lead to system and data issues within the organisations (users extract data from formal system, data integrity/redundancy/synchronisation)
Feral Systems often lack any backup or system recovery plan
Lack of formal training or user documentation
Lack of organisational visibility
Capitalising on Feral Systems
Analyst the feral system
Bring good feral systems into mainstream if possible
Managing feral systems
Culture of openness, acceptance and innovations, encourage open source development within organisation
Inclusion of all user stakeholders in formal project development
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