Articulo

Chapter 8

Enterprise Systems
Information Technology For Management 6th Edition
Turban, Leidner, McLean, Wetherbe Based on lecture slides by L. Beaubien, Providence College 

John Wiley & Sons, Inc.
Chapter 8 1

Integration: Internal vs. External
Internal integration refers to integration within  company between applications, and/or between  applications and databases.External integration refers to integration of  applications and databases among business  partners. Enterprise Resource Planning (ERP) vs. Supply  Chain Management (SCM) / Customer  Relationship Management (CRM) Enterprise Systems span all or some functional  areas in an organization.
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Enterprise Resource Planning
 A software application which is built around an integrated database and which supports all the  major functional areas and business activities of  an organization, no matter where its facilities are  located.

 

 

Manufacturing Roots of ERP
 The vision of having an integrated IS began on 

the factory floor  MRP used inputs of forecast inventory levels  and lead times  MRP II incorporated more links to other  functions order processing and product costing ERP is viewed as an extension of MRP II provided better visibility of operational data
   

Organizational Structure
There are two constraints that affect how we have traditionally  designed organizations.

• No integrated data • No universal communications

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Organizational Structure
As a result, we created functional organizations, slow  communications, and fragmented business processes.

CEO

VPFinance

VP Marketing

VP Manuf­ing

VP Logistics

A
Message / Interaction

B

X
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Significant communication has to go  up before it goes across.

Organizational Structure
The stovepipes participate in the end­to­end business processes,  but they do not see how it all fits together.
CEO

VP Finance

VP Marketing

VP Manuf­ing

VP Logistics

Design Product

BuildProduct

Sell Product

Service Product

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Organizational Structure
Pieces of the end­to­end business process are held in stand­alone  databases.
CEO VP Manuf­ing VP Logistics

VP Finance

VP Marketing

D B D
Design Product

S S

D B X B
Build Product

D B

S

X

S

Sell Product

X

Service Product

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Organizational StructureThe information systems are fragmented, just like the organizations  and processes.  Different phases of the product cycle will use  redundant, conflicting databases.
D B S D B

D S X D
Design Product

S B

X

B

Build Product

S

Sell Product

X

Service Product

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Organizational Structure
To make things worse, each top manager has a different incentive.
CEO

VP Finance

VP Marketing

VPManuf’ing

VP Logistics

Keep costs down High employee utilization High machine utilization Sell lots of units Profitability Minimize leased space Units produced

X X X X ? X X ? ?

X X

?
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Organizational Structure
This difference in incentives creates a phenomenon called  “suboptimization,” in which every manager meets his/her objectives, but the overall objectives of the company are not met.
CEO Costs Leases VP Finance Units Sold Employee Utilization Machine Utilization Units Produced VP Manuf­ing Costs Employee Utilization VP Logistics

VP Marketing

Design Product

Build Product

Sell Product

Service Product

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Organizational Structure
Who is responsible for the product end­to­end?  
CEO Costs Leases Units Sold Employee Utilization Machine UtilizationUnits Produced VP Manuf­ing Costs Employee Utilization

VP Finance

VP Marketing

VP Logistics

Product Life Cycle

Market Share

12

Profitability

Organizational Structure
There are several alternatives to organizational design.

• Divisional structure • Hybrid structure • Matrix structure • Teams

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Organizational Structure
Divisional by Geography....