Organisational Aspects Flashcards
How does organisational strategy determine IS structure?
Industry Structure -> Competitive Strategy -> Value Chains -> Business Processes -> Information Systems
Porter’s Five-Forces Model for Industry Structure Analysis
- Threat of new entrants (function of barriers to entry)
- Bargaining power of buyers
- Bargaining power of suppliers
- Threat of substitutes
- Internal rivalry among existing competitors
How does Industry Analysis determine Competitive Strategy
Two generic strategies:
- cost
- differentiation
Two generic scopes:
- industry-wide
- focus
How does competitive strategy determine value chain structure
Value Chain Structure includes all PRIMARY ACTIVITIES and SUPPORT ACTIVITIES. The margins of all of these activities are added up to arrive at the TOTAL MARGIN.
Primary activities include:
- Inbound logistics
- Operations/ manufacturing
- Outbound logistics
- Sales and Marketing
- Customer Service
Support Activities include:
- Technology (R&D etc.)
- Procurement (raw materials)
- HR (training, recruiting, compensation)
- Firm infrastructure (accounting, legal, general management…)
How does the Value Chain determine business processes?
Goal: Analyse all value generating activities and fit them to the strategy:
- cost: eliminate unnecessary cost drivers
- differentiation: improve quality of service
Functional Information Systems and their downsides
IS are deployed for a specific function only, e.g. sales and marketing (Lead Generation), manufacturing (MRP), customer service (CRM), HR
Problems:
- data duplication & inconsistencies across databases
- disjointed applications
- limited information and lack of integrated information
- isolated decisions and thus inefficiencies
- increased expenses
Integrated, Cross-Functional IS
As a solution to the downsides of functional IS, integrated IS integrate the activities of an entire business process!
By licensing a cross-functional software (e.g. SAP or Oracle ERP software), businesses benefit from the best-practice processes inherent in the software.
Organisations thus change their processes to fit with the Enterprise Application Solutions!
Challenges when transitioning to Integrated, Cross-Functional IS
- many departments have to coordinate their activities
- most organisations today possess a mix of functional and integrated systems
- to compete successfully, all IS need to be integrated
- all components of IS can prove a more or less difficult challenge
- data quality dimensions also are issues
Customer Relationship Management (CRM)
- suite of applications, a database, and a set of inherent processes
- manages all interactions with customer through marketing, customer acquisition, relationship management, and churn/loss
- supports customer-centric organisations
Enterprise Resource Planning (ERP) system
- integrates all the organisation’s principal processes
- primarily used by manufacturing companies
- most successful vendor: SAP
- Uses ONE SINGLE DATABASE to which a wide range of applications connect: sales, customer support, accounting, manufacturing, inventory, HR, …
Characteristics, benefits and challenges of ERP
CHARACTERISTICS:
- provides cross-functional, process view of organization
- formal approach based on formal business models
- data is maintained centralised
- large benefits but hard to implement; complex
- often very expensive
BENEFITS:
- efficient business processes
- inventory reduction
- lead-time reduction
- improved customer service
- greater real-time insight into organisation
- higher profitability
CHALLENGES:
- inherent processes may be different from existing ones
- in most cases, organisations have to dopt to ERP inherent processes
- such change will disrupt ongoing operations and disturb various stakeholders
ERP Implementation steps
- Determine current processes and ERP modules: model current processes “as-is”, identify relevant ERP blueprint processes
- move inconsistencies: compare “as-is” model to blueprint and adjust either the current situation or the ERP blueprint processes to correct misfits
- Implement ERP system: prepare detailed plan, train users, simulate and test, convert data, convert to new procedures, convert to ERP (full support of CEO and executive staff needed!!)
Beyond ERP
digital economy needs mobility, agility and flexibility, but ERPs move at a steady and slow pace!
Trends:
- enterprise mobile apps
- IoT and data driven process optimisation
