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  • 1. Alex Domínguez Lecture notes, Grenoble Graduate School of Business, France, May 2008.
  • 2. Objective and Contents From the point of view of non-IT management, the main objective of this course is to analyse, represent and apply the theoretical models and frameworks which support the strategic analysis and development of an organisation‘s Information Strategy and Information Systems 5. Project 1. Organisation 2. IS, IT, and all Identification, 3. Types of IS 4. IS Strategy Components That Justification and Planning 10. IS 9. IS Testing, 7. Business Operations, 8. IS 6. IS Installation, Process Maintenance, Acquisitions Architecture and Integration Reengineering and Updating 12. Enterprise 11. 13. Managing IS: ERP, CRM, Internetworks International IS and SCM 2
  • 3. Information Technology Requirements Hardware • Lap Top computer, if possible • Speakers Software applications • Acrobat Reader – Version 7 or higher • Windows Media Player – Version 9 or higher • Real Player – Version 6 or higher Telecommunications • Internet Connection 3
  • 4. Bibliography Books • Applegate, L.M., R.D. Austin, and F.W. McFarland. Corporate Information Strategy and Management. 7th Edition. McGraw-Hill, USA, 2007. • Carr, N.G. Does IT Matter: Information Technology and the Corrosion of Competitive Advantage. HBS Press, USA, 2004. • Laudon, K.C., and J.P. Laudon. Management Information Systems: Managing the Digital Firm. 10th Edition. Prentice-Hall, USA, 2007. • Lutchen, M.D. Managing IT as a Business: A Survival Guide for CEOs. John Wiley & Sons, USA, 2004. • O‘Brien, J.A. and G.M. Marakas. Enterprise Information Systems. 13th Edition. McGrah-Hill International Edition, USA, 2007. • Smith, H.S. and P. Fingar. IT Doesn´t Matter: Business Process Do. Meghan- Kiffer Press, USA, 2003. • Turban, E., E. McLean, and J. Wetherbe. Information Technology for Management. 6th Edition. Wiley, USA, 2008. Websites • BRINT: • CIO: 4
  • 5. Organisation Components An organisation is made of … PEOPLE must posses knowledge and skills required to perform assigned tasks and job positions must be fulfilled by appropriate people Other people participating in organisation: • Customers • Suppliers • Partners • Outsourced people 5
  • 6. Organisation Components An organisation is made of PEOPLE, … PEOPLE uses is required by INFORMATION must be self-consistent and normalised Information = data + meaning = (symbols + structure) + meaning • It provides answers about ―who‖, ―what‖, ―where‖, and ―when‖ • It is independent of the way it is obtained Major types of information in organisation: • Human resources information • Finance and accounting information • Manufacturing and production information • Sales and marketing information 6
  • 7. Organisation Components An organisation is made of PEOPLE, INFORMATION, … PEOPLE • Human resources processes • Hiring employees • Evaluating employees‘ job performance • Evaluating employees‘ in benefits plans • Finance and accounting processes INFORMATION respond • Paying creditors defines • Creating financial statements feeds • Managing cash accounts • Manufacturing and production processes • Assembling the product respond • Checking for quality • Producing bills of materials • Sales and marketing processes • Identifying customers PROCESSES • Making customers aware from the product must be normalised • Selling the product and controlled 7
  • 8. Organisation Components An organisation is made of PEOPLE, INFORMATION, PROCESSES, … PEOPLE feedback • Products are made; services are delivered • Products are used; services are experienced • Products possess physical characteristics we INFORMATION can evaluate before we buy; services do not modify even exist before we buy them • Products are impersonal; services are personal feeds define modify produce PROCESSES PRODUCTS / SERVICES 8
  • 9. Organisation Components An organisation is made of PEOPLE, INFORMATION, PROCESSES, PRODUCTS/SERVICES, and … • Technology is the relationship that an organisation has with its tools and crafts, and to what extent organisation can PEOPLE control its environment • Technology is machines, equipment, and systems considered as a unit INFORMATION TECHNOLOGY is fed by and interacts with each component It refers to technological side of systems PROCESSES PRODUCTS / SERVICES 9
  • 10. Organisation Components The organisation as a system PEOPLE Complexity of model: • 30 communication channels • Each component must be linked with itself as well as among other 4 components INFORMATION TECHNOLOGY Complexity reveals the intrinsic systemic nature of a organisation A system is a set of interacting or interdependent entities, real or PROCESSES PRODUCTS / abstract, forming an integrated SERVICES whole 10
  • 11. Organisation Components Organisation’s internal and external attributes Government Customers Communities Environment Standard operating procedures Internal Internal Competitors culture politics Suppliers Internal structure Regulatory Agencies Stakeholders Worker Unions 11
  • 12. IS, IT, and All That Information Systems (IS) An Information System (IS) collects, processes, stores, analyses, and disseminates information for a specific purpose Environment Inputs Processing Output Information Processing Information (input) Information (output) Control Control Information Feedback 12
  • 13. IS, IT, and All That Types of IS Agreed-upon procedures Standard inputs and Information features outputs Fixed definitions Long-range planning policies Strategic information Decision Support Formal Systems Policy implementation and control Managerial information Management Information Systems Information needed to operate business Operational information Data processing Information Systems Systems Office gossip networks Group of friends Informal Information exchange Chat systems Based on computers Computer-based Used for handling business applications 13
  • 14. IS, IT, and All That Computer-based IS (CBIS) A CBIS is a IS that uses computer technology to perform some or all of its intended task Hardware Software Network Databases Procedures People 14
  • 15. IS, IT, and All That Computers versus IS An IS involves much more than computers Organisation Technology • Computer- Based Management Information Systems The successful application of an IS requires an understanding of the business and its environment that is supported by the IS 15
  • 16. IS, IT, and All That Information Technology (IT) IT is the organisation‘s collection of information systems, their users, and the management to oversees them IT is also known as: • Information and Communication Technology (ICT) • Information Technology and Telecommunications (IT&T) in Australia • Infocomm in Asia 16
  • 17. Paper - IT Doesn’t Matter Objective Dimension the importance of IT into organisations DIRECTIONS Create multidisciplinary Before lecture: Read the international teams paper (3 people) Discuss the paper in your Review the paper own team (5 minutes) (10 minutes) Explain your conclusions to Free discussion other teams (10 minutes) (3 minutes by team) 17
  • 18. Types of IS IS versus Groups served KIND OF IS GROUPS SERVED Strategic Senior Executive Support Systems Level Managers Decision Support Systems Management Level Middle Management Information Systems Managers Knowledge Work Systems Knowledge Knowledge & Level Data Workers Office Automation Systems Operational Operational Transaction Processing Systems Level Managers Sales and Manufacturing Finance and Human Source: Laudon & Laudon, Chapter 2 Marketing & Production Accounting Resources 18
  • 19. Types of IS IS definitions Executive • Address non-routine decisions requiring judgment, evaluation, Support and insight because there is no agreed-on procedure for arriving Systems a solution (ESS) • Support non-routine decision making, focus on problems Decision- that are unique and rapidly changing, for which the Support procedure for arriving at a solution may not be fully Systems (DSS) predefined in advance Management • Provide managers with reports and, in some Information Systems cases, with online access to the organisation‘s (MIS) current performance and historical records • Promote the creation of a new knowledge Knowledge Work Systems and ensure that new knowledge and (KWS) technical expertise are properly integrated into the business • Increase productivity by supporting Office Automation Systems (OAS) the coordinating and communicating activities of the typical office • Perform and record the daily routine transactions Transaction Processing Systems (TPS) necessary to conduct business 19
  • 20. Types of IS Systemic nature of IS Information Groups Kind of IS Type of IS Information Inputs Processing Outputs Served Executive Graphics Projections Strategic Aggregate data, Senior Support Simulations Responses to Level external, internal Managers Systems (ESS) Interactive queries Special reports Decision- Low-volume data Interactive Professionals Analytic models Decisions analyses Support Simulations Staff Systems (DSS) Data analysis tools Responses to managers Analysis Management queries Level Summary transactions Management Routine reports data Summary Middle Information Simple models High-volume data Exception reports Managers Systems (MIS) Low-level analysis Simple models Knowledge Work Design specifications Models Professionals Modelling simulations Systems (KWS) Knowledge base Graphics Technical staff Knowledge Level Office Document management Documents Automation Clerical Documents schedules Scheduling Schedules workers Systems (OAS) Communications Mail Sorting Transaction Operations Operational Transactions Listing Detailed reports lists Processing personnel Level Events Merging Summaries Systems (TPS) Supervisors updating 20
  • 21. Types of IS The six major types of IS Sales and Manufacturing Human Groups Kind of IS Type of IS Finance Accounting Marketing & Production Resources Served Executive N-year sales N-year Strategic N-year Profit Personnel Senior Support trend budget Level operating plan planning planning Managers Systems (ESS) forecasting forecasting Decision- Pricing / Sales region Production Cost Contract cost Support profitability analysis scheduling analysis analysis Management Systems (DSS) analysis Middle Level Management Capital Managers Sales Inventory Annual Relocation Information investment management control budgeting analysis Systems (MIS) analysis Knowledge Work Systems Engineering IS Graphics IS Managerial IS (KWS) Knowledge Knowledge and Data Level Office Workers Automation Word processing Document imaging Electronic calendars Systems (OAS) Machine Compensation control Payroll Order Securities Training and Transaction tracking Plant trading Accounts Operational development Operational Processing Scheduling payable Level Managers Systems (TPS) Order Cash Employee processing Material management Accounts record movement receivable keeping control 21
  • 22. Types of IS IS and decision making Organisational Level Type of Decision Operational Knowledge Management Strategic Structured Accounts Receivable Electronic Production Scheduling Cost Overruns TPS OAS MIS Budget semi-structured Preparation Project DSS scheduling Facility KWS Location ESS Unstructured Product New Products Design New Markets 22
  • 23. Types of IS Interrelationships among IS ESS MIS DSS KWS & TPS OAS 23
  • 24. Video case - UPS International Distribution What external factors affect international operations at UPS? How do these factors cause UPS to adjust its operations? Explain how ISPS facilitates the ability of UPS to ship packages internationally. Describe the type and role that the Delivery Information Acquisition Devise (DIAD: a handheld computer) plays in UPS business processes. How important is information to the global expansion of UPS? What advantages does UPS gain by carefully capturing information? Discuss the role of volume in the business activities of UPS. DIRECTIONS Create multidisciplinary Before lecture: Watch the Review the video international teams video (10 minutes) (3 people) Explain your conclusions to Discuss the video in your own Free discussion other teams team (10 minutes) 24 (3 minutes by team) (10 minutes)
  • 25. IS Strategy Alignment •Performance Measurement / Analysis / Reporting •Business Management IS Management Lens Liaison / Service Level Agreement •Governance and Leadership • 6 IS business risk Resiliency •Data Quality and drivers Operations •Service Delivery Management • 14 main •Business Continuity / (Operations & Initiatives) Disaster Recovery competencies •Enterprise Core Systems •Security /Confidentiality / • Qualitative and Privacy quantitative focus Context Filter Leverage Futures •User Technology •Emerging Technologies Competencies & Skills Support •Organisation / People / Skills •Marketing Communications •Sourcing Management & Legal Contract Issues •Finance / Budgeting 25
  • 26. IS Strategy Managers of IS IS Management CIO & IT CEO & CIO CIO & CTO Managers Managing Managing the Managing the Managing Managing IS Managing Application IT IT Business Strategy Technology Development Organisation Infrastructure 26
  • 27. IS Strategy The Chief Information Officer (CIO) CIO: A senior strategic-level management position that oversees all IS and personnel for an organisation, concentrating on long-range IS planning and strategy 27
  • 28. IS Strategy The CIO yesterday and today 28
  • 29. IS Strategy Strategy and IS IS IMPACT AND POTENTIAL Business Strategy Business Where is the business going and Strategies why • Business Decisions • Objectives and Direction • Change Business Applications Processes Supports Direction for business business IS Strategy What is required • Business Based • Demand Orientated • Application Focused Organisational Infrastructure Needs and Data Classes Databases and services priorities IT Strategy How it can be delivered Information Architecture • Activity Based • Supply Orientated • Technology Focused 29
  • 30. IS Strategy 5 major steps in IS strategy and planning Step 1 - Project Identification, Justification, and Planning IS and enabler Identify IS projects From business goals to information needs Justify IS investment System-required functionalities Need to solve problems Step 2 – IS Architecture Business Information Architecture Technical Architecture IT Process Data Architecture Organisation Architecture Infrastructure Reengineering Application Architecture Feasibility Step 3 – Acquisition /Development) Options Management Build – How, which methodology Buy – What, from whom Vendor Management Business Lease – What, from whom Project Management Partners Partner – Which partner, how to partner Evaluation Outsource – Where to outsource Step 4 – Testing, Installation, and Integration Business Testing Installation Partners Business Integration Training Partners Security Conversion Deployment Step 5 – Operations, Maintenance, and Updating Operations Maintenance Updating Replacement 30
  • 31. Video case - Cisco and Centrica: E-working and IS Transformation What are Centrica's guiding principles? How does Centrica's CIO define a network? What are the components of Centrica's E-working model? What are some of the challenges that Centrica faces in maintaining effective networking systems? What are some of the specific tools that Centrica has implemented? Provide examples of quantifiable benefits that Centrica has experienced as a result of its Cisco initiatives How does Centrica plan to extend the benefits of its E-working systems? DIRECTIONS Create multidisciplinary Before lecture: Watch the Review the video international teams video (10 minutes) (3 people) Explain your conclusions to Discuss the video in your own Free discussion other teams team (10 minutes) 31 (3 minutes by team) (10 minutes)
  • 32. Project Identification, Justification, and Planning Step 1 - IS strategic planning process Understanding of Business Objectives IS Objectives Organisation Strategy Business Strategic Plan Identifying IS IS Vision Vision Defining IS IS Strategic Strategic Initiatives Objectives Financial Investment Internal Efforts (Cost/Benefit) (Activities) Analysing IS Risk Assessment Objectives (Project Risks) IS Activities Portfolio External Efforts Portfolio (Environment trends) Personnel Requirements Project Schedule Analysis (Skills needed) Analysing IS Gantt Chart First Year Budget Objectives IS Strategic Plan Time and Links among activities First Year Profits Portfolio 32
  • 33. Project Identification, Justification, and Planning Step 1 – IS strategic planning (growth model) Data Administration Integration • Information • Expenditures on requirements rather integrating (via than processing drive Control telecommunications the applications • In response to and databases) portfolio management existing systems concern about Expansion cost versus (Contagion) benefits, systems • Centralised projects are expected to show growth takes place as users a return Initiation demand more applications • When computers are initially introduced 33
  • 34. Project Identification, Justification, and Planning Step 1 – Determining Critical Success Factors What objectives are central to the organisation? What are the critical factors What IS can that are supply these essential to measures? meeting these objectives? Ask What What variables decisions or underlie these actions are decisions, and key to these how are they critical measured? factors? 34
  • 35. Project Identification, Justification, and Planning Step 1 – Defining scenarios • Descriptions of alternative coherent and plausible futures • ―Narratives‖ of the evolving dynamics of the future They are • Specific strategy-focused views of the future • The combination of tacit and explicit knowledge • Predictions They are • Variations around a midpoint/base case not • Generalised views of feared or desired Futures • The product of outside futurists or consultants • The short to medium term prognosis is unstable / uncertain Do use • You need to understand ―why‖ something is happening them if • You need to create a shared understanding of key issues and uncertainty • … • You need to create a more outward looking open and customer focused culture You need to have a strategic conversation with stakeholders, employees, users, etc. Do not • The scenarios aren‘t designed to address a clear strategic question use them • You can‘t get a reasonable level of support or visibility within the organisation • You can‘t ensure a reasonable level of involvement in the process if … 35
  • 36. Project Identification, Justification, and Planning Step 1 – Scenario planning Develop a Strategic Vision • Balance Commitment • Flexibility Implement Identify Key Effectively Success Factors Develop Multiple Monitor in Real Future Scenarios Time • Embracing • Adjust Dynamically • Uncertainty Generate Strategic Options 36
  • 37. Project Identification, Justification, and Planning Step 1 – From scenarios to strategy Actions that are needed whatever the scenario (Imperatives) Recommen- dations for Drivers of Strategic Scenarios future change implications strategy & action Actions needed to reach a preferred future outcome (Preferences) Involves assessing actions against capabilities and competencies, identifying opportunities and reviewing risks 37
  • 38. Project Identification, Justification, and Planning Step 1 - Why invest in IS projects Strategic Support to Top Competitive Long-term- objectives of corporate management performance costs and investment strategy support objectives benefits in IS Strategic Considerations Performance Involvement indicators Evaluation Priority of Market ROI & profit Security of senior Budgets Product cost generating methods investment research level managers data Tangibles • Financial Tactical • Nonfinancial Considerations Labour Defective rate Lead-time Inventory Setup time absence of products Operational Intangibles Considerations Quality and Improve Securing Competitive Data User‘s System image customer future Teamwork Existing IS Servers Advantage migration perception integration improvement relationship business 38
  • 39. Project Identification, Justification, and Planning Step 1 – Project identification Project Identification 1. Identification of IS project 2. Project description 3. Project value 4. Project costs (Project ownership) (What is the project?) (Benefits) (Anticipated costs) Anticipated Requestor and/or Project's objectives Strategic Technical resources and department and deliverables criteria criteria funding needed Outcome(s) to be Organisational Intra- or Inter- IS and IT needed realised excellence dependencies Stakeholders for Communication Organisational Staff effort this project? improvement prioritisation required Impacted on Architecture & Leadership infrastructure organisation development dependencies Customer service Timetable learning Impact of not doing Affordable & accessible this project products/services “Best practice" to Risk reduction be used as guidance 39
  • 40. Project Identification, Justification, and Planning Step 1 – Project types Type 4 Projects Type 2 Projects (research-and- (product-development- organisational-change- like METHODS WELL DEFINED like projects) NO projects) Project Management Project Management Style: Eagle Style: Coach Type 3 Projects Type 1 Projects (systems-development- (engineering-like like projects) projects) YES Project Management Project Management Style: Conductor Style: Sculptor YES NO GOAL WELL DEFINED 40
  • 41. Project Identification, Justification, and Planning Step 1 – Why projects fail Inexperience Lack of in scope and communication complexity 20% 17% Failure to define objectives 17% Technical issues 14% Project Management Problems 32% 41
  • 42. Project Identification, Justification, and Planning Step 1 - Constraints in planning A: An IS project B: An IS project is managed stumbles on crisis Overrun As an IS Time Cost project is Time Cost A managed B Resources Resources Performance Performance 42
  • 43. Videocase - Blue Rhino Slows Down to Get Ahead What is Blue Rhino's business strategy? How well was that strategy supported by information systems? Why did Blue Rhino have to revamp its systems and business processes? What management, organisation, and technology issues did the company have to deal with as it built its new systems? What management, organisation, and technology issues did the company have to deal with as it built its new systems? How successful has Blue Rhino been in responding to the requirements of the Sarbanes-Oxley legislation? DIRECTIONS Create multidisciplinary Review the case Before lecture: Read the case international teams (10 minutes) (3 people) Explain your conclusions to Discuss the casein your own Free discussion other teams team (10 minutes) 43 (3 minutes by team) (10 minutes)
  • 44. IS Architecture Step 2 – IS architecture framework What is an Architecture? A definition of the IS via models What is an Architecture A representation of the IS via views of Framework? models How does this relate to an IS The architecture model guides the implementation? implementation 44
  • 45. IS Architecture Step 2 – Building a 2D IS business architecture Scope (Planner) What External Requirements and Business Function Modeling Data Drivers Enterprise Model - Conceptual (Business Owner) How Business Process Models Process System Model – Logical (Designer) Where versus Logical Models Requirements Definition Location Network Technology Model - Physical (Implementer) Who Solution Definition and Physical Models People Role Development Detailed Representation - Out of Context (Builder When Subcontractor) As Built Deployment Time Schedule Functioning Enterprise (User’s View) Why Functioning Enterprise Evaluation Motivation 45
  • 46. IS Architecture Step 2 – IS architecture rules Basic Model = Entities and Relationships Relationship Entity Entity Rule 1: Rule 2: Rule 3: Rule 4: Rule 5: • Each column • Basic model • Each row • Each cell is • Combining the has a simple, of each represents a unique cells in one basic model column is distinct view row forms a unique complete description from that view What How Where Who When Why (Data) (Function) (Locations) (People) (Time) (Motivation) Scope (Contextual) Planner Enterprise Model (Conceptual) Business Owner System Model (Logical) Designer Technology Model (Physical) Implementer Detailed Representation (Out-of-Context) Subcontractor Functioning System 46
  • 47. IS Architecture Step 2 - Zachman Enterprise Architecture Framework What How Where Who When Why (Data) (Function) (Location) (People) (Time) (Motivation) List of List of locations List of List of List of Scope List of things processes that in which the organisations events/cycles business (Contextual) important to the business business important to the important to goals/strategi Planner the business performs operates business the business es Enterprise Model e.g., Business e.g., Semantic e.g., Business e.g., Workflow e.g., Master e.g., Business (Conceptual) Logistics Model Process Model Model Schedule Plan Business Owner System System Model e.g., Distributed e.g., Human e.g., Logical e.g., Application e.g., Process e.g., Business (Logical) System Interface Data Model Architecture Structure Rule Model Designer Architecture Architecture Technology e.g., e.g., Model e.g., Physical e.g., System e.g., Control e.g., Rule Technology Presentation (Physical) Data Model Design Structure Design Architecture Architecture Implementer Detailed Representation e.g., Data e.g., Network e.g., Security e.g., Timing e.g., Rule e.g., Program (Out-of-Context) Definition Architecture Architecture Definition Definition Subcontractor Functioning e.g., e.g., Data e.g., Function e.g., Network e.g., Schedule e.g., Strategy System Organisation 47
  • 48. IS Architecture Step 2 - General enterprise IS architecture Processes Enterprise Systems Supply Customer Chain Processes Relationship Management Management Customers & Systems Processes Systems Customers & Distributors Distributors Enterprise IS automate Knowledge processes that span Management multiple business Systems functions and organisational levels and may extend outside the Sales and Manufacturing Finance and Human organisation Source: Laudon & Laudon, Chapter 2 Marketing & Production Accounting Resources 48
  • 49. IS Architecture Step 2 - Specific enterprise IS architecture Suppliers, Distributors, Resellers Supply Chain Management (Sourcing, Procuring) Knowledge Management IS, Collaboration IS, Decision Support IS, Administrative Control Financial(Accounting/Auditing IS, Partner IS, Human Resources/Procurement IS, Relationship Management IS, (Selling, Distribution), Management Control IS Logistics Production Distribution Enterprise Resource Planning IS Stakeholders Employees Partners, Enterprise Application Decision Support IS Integration Customer Relationship Management IS Customer Marketing Sales Service Supply Chain Management (Delivering) Customers, Resellers 49
  • 50. IS Architecture Step 2 – A simple network architecture Network consists of two or more connected computers Network interface device (NIC) is the connection Network operating system (NOS) point between one routes and manages communications on computer and the network the network and coordinates network resources (saving or retrieving files on your hard drive versus a network drive) Switch has more intelligence than Router (bridge) is a special a hub and can forward data to a communications processor used to specified device or destination. route packets of data through different The switch is used within a given networks, ensuring that the message network to move information sent gets to the correct address Number of possible connections on a network Hub connects network composed of N computers is N×(N-1) components, sending a packet of data to all other connected devices If there are 10 computers on a network, there are 10×9 = 90 possible connections Source: Laudon & Laudon, Chapter 7 50
  • 51. IS Architecture Step 2 – IS feasibility Objectives • To find out if an IS development project can be done • it possible? • it justified? To suggest possible alternative solutions • Alternative 1: Insourcing (Build) • Alternative 2: Buy • Alternative 3: Lease • Alternative 4: Partner • Alternative 5: Outsource To provide management with enough information to know • Whether the project can be done • Whether the final product will benefit its intended users • What the alternatives are • Whether there is a preferred alternative A management-oriented activity • After a feasibility study, management makes a ―go/no-go‖ decision • Need to examine the problem in the context of broader business strategy 51
  • 52. IS Architecture Step 2 – IS feasibility analysis Operational Feasibility • It is the measure of how well particular IS will work in a given environment • It is people-oriented Technical Schedule Feasibility Feasibility • It is the measure of the practicality of a specific • It is a measure of how technical IS solution reasonable the project and the availability of timetable is technical resources • It is computer oriented Feasibility Analysis Legal Feasibility • It is the measure of Economic legal aspects such as Feasibility contracts, liability, violations, and legal • It is the measure of the other traps frequently cost-effectiveness of an unknown to the IS solution technical staff 52
  • 53. IS Architecture Step 2 – Feasibility study contents 1. Purpose & scope of the study • Objectives (of the study) • Who commissioned it & who did it • Sources of information • Process used for the study • How long did it take,… 2. Description of present situation • Organisational setting, current system(s) • Related factors and constraints 3. Problems and requirements • What‘s wrong with the present situation? • What changes are needed? 4. Objectives of the new system • Goals and relationships between them 5. Possible alternatives • …including ‗do nothing‘ 6. Criteria for comparison • Definition of the criteria 7. Analysis of alternatives • Description of each alternative • Evaluation with respect to criteria • Cost/Benefit analysis and special implications 8. Recommendations • What is recommended and implications • What to do next •E.g. may recommend an interim solution and a permanent solution 9. Appendices • To include any supporting material 53
  • 54. Whitepaper – Developing a Enterprise Architecture Objective Discus the growing role and importance of enterprise architectures in the management of organisations DIRECTIONS Create multidisciplinary Before lecture: Read the international teams whitepaper (3 people) Discuss the whitepaper in Review the whitepaper your own team (5 minutes) (10 minutes) Explain your conclusions to Write team‘s conclusions other teams (3 minutes by team) Free discussion (10 minutes) 54
  • 55. Business Process Reengineering Steps 1 and 2 - Business Process Reengineering (BPR) Process Continuous oriented BPR refers to the redesign of improvement approach to IS business processes, its implementation associated systems and organisational structures Business Operations Workflow Outcomes Cost The aim of BPR is to achieve management Reduction dramatic improvement in process performance Streamlined business processes 55
  • 56. Business Process Reengineering Objectives: 1. Preparation & • · To establish a strong management support Participants: BPR team, coordination of a Duration: 2 days BPR consultants • · To explain to the members of the BPR implementation team the BPR project implementation details of the project and their role in the successful outcome in the BPR effort Objectives: 2. Business Participants: BPR team, diagnosis & Duration: 4 BPR consultants, • To diagnose & identify problematic areas in the current processes measurements weeks personnel involved with • To measure the performance characteristics of the current processes (AS-IS model) processes based on measurable factors such as average cycle time, delays, number of mistakes or number of customer complaints Objectives: 3. Selection of processes for Duration: 7 Participants: BPR team, • To identify the strategic processes that are feasible to change change & weeks BPR consultants • To redesign and model the selected processes modelling Objectives: 4. Technical Participants: BPR team, • To automate modelled business processes (step 2) using networks and design of the Duration: 10 BPR consultants, IT workflow tools solution using IT weeks experts (TO-BE model) • To redesign and model the selected processes Objectives: 5. Personnel Participants: Process team • To train personnel in the new ways of working using IS in the Duration: 10 adjustment & members, process redesigned processes. weeks training coordinator, trainers • To redesign and model the selected processes Objectives: 6. Management Participants: BPR team, of change & BPR consultants, process • To establish a positive attitude for the change between employees Duration: 1 week • To minimise the resistance to change between employees by employee team, executive empowerment management empowering their position based on performance appraisal and bonus systems Objectives: 7. Introduction of Duration: Day new processes and time are set Participants: The whole • To set the time and date of operating under the new processes, into business by executive business organisation emphasising the fact that working under the old processes is not an operations management acceptable practice Duration: Runs Objectives: dynamically and • To capitalise from the BPR project and develop internal experts for 8. Continuous Participants: BPR continuously other BPR projects improvement implementation team after the end of the project 56
  • 57. Business Process Reengineering Steps 1 and 2 - The 3 R’s of reengineering Customer focus Redesign • Simplify • Standardise Speed • Empowering • Employeeship • Groupware Comprehension • Measurements Flexibility Reorchestrate Retool Quality • Synchronise • Networks • Processes • Intranets • IS • Extranets Innovation • Human Resources • Workflow Productivity 57
  • 58. So … who needs BPR? Is Information Management just another hype? (alternative link: DIRECTIONS Create multidisciplinary Before lecture: Watch the Review the video international teams video (10 minutes) (3 people) Explain your conclusions to Discuss the video in your own Free discussion other teams team (10 minutes) (3 minutes by team) (10 minutes) 58
  • 59. IS Acquisitions Step 3 – IS acquisition options Insourcing (Build) Insourcing (Build) Buy Outsourcing Buy IS IS Lease Acquisition Acquisition Options Options Partner Partner Lease Outsourcing 59
  • 60. IS Acquisitions Step 3 – Insourcing environment Tracking & Desktop Strategy Reporting Computers Computer Infra- Phones Servers Structure Recruit, Hire, Management Train Inter- networking Processes 60
  • 61. IS Acquisitions Step 3 – Insourcing types Considered only for specialised applications (Components are not available) From scratch Expensive and slow process, but it will provide the best fit Insourcing Standard components (building) Companies with experienced IS staff can Some software languages use … Third-party subroutines From components It offers the greatest flexibility and can be the least expensive option in the long run From a software standpoint It may also result in a number of false starts and wasted experimentations 61
  • 62. IS Acquisitions Step 3 – Reasons for insourcing Strategic Considerations Strengths Weaknesses Enable staff to develop professionally Project resources/timeline may not allow time for re-skilling • Opportunity cost of resources time may be high Use existing best-in-class abilities • Best use of resources may be elsewhere Internal management and skills are insufficient to achieve Maintain control over important agency projects project success • Must continue to resolve internal resource problems and Minimise risks of managing a vendor relationship weaknesses • If resources leave, project deadlines may be jeopardised Responsiveness to change – no contract adjustments Difficulties with addressing scope change may be still affect needed project timelines and budgets Financial Considerations Strengths Weaknesses Time and labour overruns may occur in the environment, and Costs are more defined and explicit, and more easily cost impact on overtime, etc. may vary significantly from controlled month-to-month An optimal solution may require newer technologies and Leverage the use of existing IT equipment and skills skills Extra costs of contract management overhead are foregone Day-to-day, detailed management costs are experienced 62
  • 63. IS Acquisitions Step 3 –Insourcing System Development Life Cycle (SDLC) and its deliverables Planning & Project Management Plan Requirements Project Schedule Analysis Phase Feasibility Study Requirements Traceability Matrix Identify business; Systems Boundary Document functional and technical Requirements Document requirements High Level Design and Development Project Schedule High Level Design Document Design & Detailed Design Document Development Phase Test Plan Document Prototype Test Results Document Complete system Support, Implementation, and Training Plan Documents design, build, and test Design and Development Project Management Plan and Schedule prototype High Level Implementation Project Schedule Integration, Test & Perform User, Administration and Support Training Implementation Execute and Test Pilot Implementation Phase Post-Pilot Reconciliation Execute, Production System Implementation Deploy pilot and Execute Acceptance Testing production system Prepare As-Built Documentation Initiate System Operations and Support Plan System Operation Execute Change / Configuration Management Plan Phase Execute and control support operations plans 63
  • 64. IS Acquisitions Step 3 – In house building pitfalls 64
  • 65. IS Acquisitions Step 3 – Buying advantages and disadvantages Advantages of the ―buy‖ option Disadvantages of the ―buy‖ option Many different types of-the-shelf software are available Software may not exactly meet the organisation‘s needs Much time can be saved by buying rather than building Software may be difficult or impossible to modify, or it may require huge The organisation can know what it is business process changes to implement getting before it invests in the software The organisation will not have control The organisation is not the first and only over the software improvements and user new versions (may only recommend) Purchased software may avoid the need to hire personnel dedicated to the project Purchased software can be difficult to integrate with existing (legacy) systems The vendor updates the software frequently Vendors may drop a product or go out of business The price is usually much lower for a buy option 65
  • 66. IS Acquisitions Step 3 – Buying cycle (example on software) Become aware of a need Become aware that solutions exist to address the need Start Looking Feel urgency to address the need Decide to seek a solution for a need Contact trusted colleagues for initial information and recommendations Research Research alternative solutions, costs, include extensions to current solutions Alternatives Issue RFI to known vendors (formal process only) Develop prioritised requirements for a solution Defining Request form proposal (RFP) to vendors for more information and pricing Requirements Compare vendors, eliminate vendors that cannot address the need Request presentation, demonstration of vendor solutions Justify and allocate resources to address the need Identify risk of purchase Manage Risk Develop risk mitigation needs Contact reference customers provided by vendors Request formal quote (RFQ) from select vendors Negotiate Negotiate with top few vendors for best value solution Purchase Choose vendor and gain approval to purchase Contract to purchase and receive delivery of solution Train pilot program participants Pilot Solution Deploy solution in pilot program Review pilot program results Develop plan and schedule for deployment Deploy Purchase/develop training programs Solution Set up systems for solution operation Broadly Deploy solution broadly Source: Manage solution deployment process 66
  • 67. IS Acquisitions Step 3 - Leasing Lease An agreement whereby the owner of something (the Lessor) grants the right of possession to another party (i.e., the Tenant or Lessee) for a specified period of time (i.e., the Lease Term) and for a specified consideration (i.e., rent) The vendor can help with the installation and frequently will offer to also contract for the operation and maintenance of the Leasing the application system from an outsourcer and install it on the organisation‘s premises Leasing can be Many conventional applications are leased done in one of this way two ways Using an application system provider (ASP), is becoming more popular Application Service Provider (ASP) •An organisation that hosts software applications on its own servers within its own facilities •Customers access the application via private lines or the Internet 67
  • 68. IS Acquisitions Step 3 – Reason to lease Reasons to Lease • Help smooth budget spikes • Facilitate rapid technology deployment • Facilitate standardisation efforts • Provide an effective disposal strategy for used equipment Reasons not to Lease • Lack of an in-house IS asset management program • Unacceptable risks of signing a multi-year contract committing to one technology or vendor • Lack of negotiation and contract management skills • Inability to strictly adhere to contract length, terms, and conditions • Lack of a strong architectural plan for technology 68
  • 69. IS Acquisitions Step 3 – How to decide to lease (example) Yes Asset Replacement Management Cycle Are routines in place Is the desktop cycle to track machines, Yes 36 moths or less for order replacements, notebooks and high- and facilities returns end workstations? at the end of the lease term? No No Stable Applications • Reasonable stable applications Yes software? • Risk of early obsolescence an issue? No Strategic View Stop! LEASE Is there a leveraged Yes Leasing may not be the low-cost payback from acquiring equipment solution for your organisation immediately? No Source: Gartner, Inc. Leasing Decision Drivers for PCs, Laptops and Distributed Equipment, January 1999. 69
  • 70. IS Acquisitions Step 3 – How to lease 2. Leasing request 3. Lessee Analysis 4. Leasing agreement Leasing Entity Lessee of IS (Intermediary) 7. Choose Final Option •Return •Buy •New Lease 6. Deliver IS 5. Buy IS 1. Chosen IS provider Lessor 70
  • 71. IS Acquisitions Step 3 – Some questions & answers about leasing How do I decide how long my • Attempt to match your lease term to the useful or optimum life of the lease term should be? equipment you are leasing • It is permissible to upgrade leased equipment as long as the upgrades Can upgrade be made to the do not diminish the value of the equipment leased equipment? • Remember that the leased item belongs to the Lessor in an operating lease, the Lessee only has the right to use the item • It is always prudent to plan your end of lease options in advance to avoid future surprises or inconvenience What are my options at the end of • Leases typically have a variety of end-of-term options: Return the the lease? equipment, extend the lease, and purchase the equipment for fair market value or residual value • Be aware that leasing companies are entitled to fair market How do I terminate or buy the compensation for the expected income and administrative costs related equipment before the lease term to the termination of your lease is over? • In the extreme, terminating a lease can result in your requirement to completely fulfil the obligations of the lease equipment What happens if I am unsatisfied • This is a complex situation and the course of action will vary depending on your particular circumstances with my equipment and wish to • First contact the supplier of the equipment to have the issues attended return it? to and to determine what remedies are available under the warranty 71
  • 72. IS Acquisitions Step 3 – Partnership Partnership A cooperative relationship between people or groups (partners) who agree to share responsibility for achieving some specific goal Business Partners Supplies Manufacturing Sales, Distribution, Customers and Assembly Customer Service Marketing Suppliers Channels e-Commerce Production, HRM, Finance, Accounting, Engineering Integration Back Front Office Office 72
  • 73. IS Acquisitions Step 3 – Partnership models Maturity Value Commodity Preferred Strategic Added Alliance Cooperation Vendor Vendor Partnership Vendor 73
  • 74. IS Acquisitions Step 3 – Internal partnership advantages Education, Information, and Experiences • Bi-directional exchange of know-how • Personnel attend, participate, and report on key conferences world-wide • Project attracts visits by world‘s leading experts • Regular seminar series and working group meetings • Early access to scientific publications, journals and technical report series • Relationship with other partners provides intelligence about world-wide activities • Video, computer, and paper library of key internal and external research work and results Demonstrations of and Experimentation with Advanced Systems • Dedicated demonstration facilities for prototyping of new systems • Field trials provide hands-on experience with advanced products and prototypes Technology Acquisition, Intellectual Property • Intellectual property policy enabling and encouraging technology transfer to partners • Prototype builds and deployment industry partner sites Access to Expertise • Recruitment of experts • Opportunity to involve leading academics in industry lead projects Alliance with World-Wide Partners • Build business alliances with other partners having complementary skills 74
  • 75. IS Acquisitions Step 3 - Outsourcing Outsourcing involves the transfer of the management and/or day-to-day execution of an entire business function to an external service provider Business Process Outsourcing (BPO) is the outsourcing of a specific business process task, such as payroll Back office outsourcing – It includes internal Front office outsourcing – It includes customer- business functions such as billing or purchasing related services such as marketing or tech support Information Technology Outsourcing (ITO), therefore, is a subset of business process outsourcing ITO falls under the domain of the CIO 75
  • 76. IS Acquisitions Step 3 – Reasons for outsourcing Strategic Considerations Strengths Weaknesses Can be leveraged to improve operating efficiency, and migration to Loss of control over day-to-day decision-making better and more efficient methods of computing can be facilitated Risk of becoming tied to one vendor or technology, making Enable changes in an organisation‘s culture and processes responsiveness to changes more difficult • Outsourcing agreement must be managed effectively by Allows IS personnel to focus on strategic planning and new areas of knowledgeable staff to ensure vendor‘s ability to deliver services development/core processes and products • Identification of core processes may change over time Provides access to expert knowledge in old and new technology Ensure knowledge transfer so that reductions in staff skills and staff areas knowledge of IS needs/systems is minimised Can be leveraged to respond quickly to legislative mandates, new • High exist barriers technologies, and new business needs • Once a contract is entered, it can be difficult to back out Financial Considerations Strengths Weaknesses Cost savings on equipment and staffing through vendors economies May become tied to obsolete technology so vendor can achieve of scale economies of scale Locking in to one vendor without the ability to take the program in- Smother cash flow as predetermined amounts go to the vendor, who house or switch to another vendor will cause price increases when buys material and equipment the contract is renewed • Cost of outsourcing agreement is dependent upon contract terms Access to technology without capital investment and conditions for changes, maintenance, etc. • Cost may spiral quickly Management time and money savings through reduced need to Costs to organisation in terms of staff time for contract management oversee day-to-day operations may be higher than anticipated 76
  • 77. IS Acquisitions Top 10 Reasons to Outsource Step 3 – Outsourcing top 10 Top 10 Factors in Vendor Selection Reduce and control operating costs Commitment to quality Improve organisation focus Price Gain access to world-class capabilities Reference/reputation Free internal resources for other purposes Flexible contract terms Necessary resources are not available internally Scope of resources Accelerate reengineering benefits Additional value-added capability Function is difficult to manage internally or is out of control Cultural match Make capital funds available Existing relationship Share risks Location Cash infusion Other Top 10 Factors for Successful Outsourcing Top 10 IS Areas Being Outsourced Understand company goals and objectives Maintenance and repair A strategic vision and plan Training Selecting the right vendor Applications development Ongoing management of the relationship Consulting and reengineering A properly structured contract Mainframe data centres Open communication with affected individuals/groups Client/server services and administration Senior executive support and involvement Network administration Careful attention to personal issues Desktop services Near term financial justification End-user support Use of outside expertise Total IS outsourcing 77
  • 78. IS Acquisitions Step 3 – Outsourcing decision flowchart Are you All activities evaluating all IS One activity services or one activity? • Gather information on Gather information on IS needs organisation needs and • Identify IS activities, priorities strengths, weaknesses For each activity For the activity Does the Does the No Is this activity Yes organisation Yes organisation Yes required? need to own the need to perform activity? the process? Evaluate No No business needs by activity Consider Outsourcing Keep internal, but Activity Measurement- evaluate performance Benchmarking Possibility of Choice of options • If no possibility for improvement, keep in house improvement? Determined by cost- Yes to both No to either • If no accurate measures, or understanding Accurate benefit analysis, exists, these must be known before measures/understanding business case outsourcing can proceed of activity? Or Or All other options: Prepare for vendor reengineering, leasing, Outsource activity selection, contract, etc. etc. 78
  • 79. IS Acquisitions Step 3 – Outsourcing process Organisation Define Strategy Plan organisation needs and Organisation outcomes Information Manage Analyse options Resources Strategy transition at end- to achieve All other options Plan of-contract outcomes Outsourcing Manage, Establish evaluate, monitor measurements/ contract requirements Manage transition to Select vendors outsourcing Negotiate contract 79
  • 80. IS Acquisitions Step 3 – Offshoring Offshoring is a type of outsourcing Offshoring simply means having the outsourced IS business functions done in another country Offshoring is done in order to Tap talent currently Overcome regulations Reduce labor Enter new markets unavailable that prevent specific expenses domestically activities domestically Related terms to Offshoring are Nearshoring Inshoring Bestshoring which implies relocation of which means picking picking the "best shore" business processes to services within a country based on various criteria (typically) lower cost foreign locations, but in close geographical proximity 80
  • 81. IS Acquisitions Step 3 – Key factors to decide where offshore 81
  • 82. IS Acquisitions Step 3 – Offshoring in the world 82
  • 83. IS Acquisitions Step 3 – Insourcing versus Outsourcing (1) Insourcing Low Level Outsourcing MRD = Market MRD = Market Research Research Document Document PRD = Priorisation PRD = Priorisation Research Research Document Document 83
  • 84. IS Acquisitions Step 3 – Insourcing versus Outsourcing (2) High Level Complete Outsourcing Technical Outsourcing MRD = Market MRD = Market Research Research Document Document PRD = Priorisation PRD = Priorisation Research Research Document Document 84
  • 85. Case: Pilkington PLC Detail the reasons for the total outsourcing decision at Pilkington. Do you think the decision makes the most sense or was there an equally or more viable alternative? From your reading of the case, what do you think are the major business, technical and economic factors a company needs to take into account when making an IT sourcing decision? What in-house capability did Pilkington retain? Was this enough? Were there advantages in keeping in-house greater technical expertise? Consider the questions at the end of the case, and the problem posed by Jo Boyers. What directions would you recommend for Pilkington? Give reasons for your answers Identify any cultural, economic, or political factors that are relevant to this case DIRECTIONS Create multidisciplinary Discuss the case in your Before lecture: Read the Review the case international teams own team case (5 minutes) (3 people) (10 minutes) Explain your conclusions Free discussion to other teams Write team‘s conclusions (10 minutes) (3 minutes by team) 85
  • 86. IS Testing Installation, and Integration Step 4 – IS Testing IS Testing is any activity aimed at evaluating an attribute or capability of a IS and determining that it meets its required results Information Telecommu Processes nications IS Functionality Engineering Adaptability Testing (Exterior (Interior (Future Quality) Quality) Quality) Correctness Efficiency Flexibility Reliability Testability Reusability Usability Documentation Maintainability Hardware Software Integrity Structure 86
  • 87. IS Testing Installation, and Integration Step 4 – Testing process Design System Test Design/Build Execute Organise Execute Sign off and Test Acceptance Testing Project System Test Pilot Processes Test Build Test Environment IEEE standards • 829-1983 IEEE Standard for Software Test Documentation • 1008-1987 IEEE Standard for Software Unit Testing • 1012-1986 IEEE Standard for Software Verification & Validation Plans • 1059-1993 IEEE Guide for Software Verification & Validation Plans 87
  • 88. IS Testing Installation, and Integration 1 introduction INSTALLATION PLAN 1.1 Purpose of this document Step 4 - Installation 1.2 Objectives 1.3 Identification 1.4 References 1.5 Relationship to other plans 1.6 Key Stakeholders 1.7 Points of Contact 2 Installation Plan 2.1 Overview 2.2 Scope 2.3 Environment 2.4 Tasks 2.5 Security 2.6 Site Specific Information 2.7 Site Name [x] 2.7.1 Schedule 2.7.2 Software Inventory 2.7.3 Hardware Inventory 2.7.4 Network Inventory 2.8 Installation Procedures 2.9 Entry and Exit Criteria 2.10 Backup Procedure 2.11 Change Control Procedure. 2.12 Installation Test Procedure 2.13 Constraints 2.14 Issues 2.15 Assumptions 2.16 Dependencies. 2.17 Resource Requirements 3 Training 4 Project Management 4.1 Roles and Responsibilities 5 Appendices 5.1 Glossary of Terms 5.2 Acronyms and Abbreviations 88
  • 89. IS Testing Installation, and Integration Step 4 - Securing Senior Security Security Security Tools: Management Policies & Procedures & Hardware & Commitment & Training Enforcement Software Support 1st Layer: Perimeter Security (Network Layer Security) • Virus scanning • Firewalls • Virtual private networking • Operating system protection 2nd Layer: Authentication (Proof of Identity) • User name/password • Password synchronisation • Biometrics • Single sign-on 3rd Layer: Authorisation (Permissions Based on Identity) • User/group permissions • Enterprise directories • Enterprise user administration • Rules-based access control 89
  • 90. IS Testing Installation, and Integration Step 4 - Enterprise Application Integration (EAI) During the next 10 years, enterprises will face unprecedented levels of both business and technology change. Accordingly, IS organisations' primary value discipline must be agility EAI is a Technical foundation to support flexible information exchange by providing enterprise wide application connectivity on any system on any platform The mission of EAI is to control a heterogeneous computing environment in such a way it behaves as one system ENTERPRISE APPLICATION INTEGRATION 90
  • 91. IS Testing Installation, and Integration Step 4 - EAI purposes Data (information) Process integration Vendor independence Common façade integration • Ensuring that information • Linking business • Extracting business • An EAI system could in multiple systems is processes across policies or rules from front-end a cluster of kept consistent applications applications and applications, providing a implementing them in the single consistent access EAI system, so that even interface to these if one of the business applications and applications is replaced shielding users from with a different vendor's having to learn to interact application, the business with different applications rules do not have to be re-implemented 91
  • 92. IS Testing Installation, and Integration Step 4 - Traditional view versus EAI view Company Sales R&D Purchasing Production Distribution Traditional View Focus on functional areas EAI View Company Focus on Sales F&E Purchasing Production Distribution business processes Delivery to customer Customer order 92
  • 93. IS Testing Installation, and Integration Step 4 - EAI helps to reduce complexity Reduction of Complexity EAI From n×n to n 93
  • 94. IS Testing Installation, and Integration Step 4 - Multi-tiered EAI architecture Successful implementation of consistent, scalable, reliable, incremental, cost-effective EAI solutions depends on the standards and methodologies that we define for these levels It must be • Within an application determined how we • Between applications within an enterprise need to share • Between enterprises information • Directly with customers 94
  • 95. IS Testing Installation, and Integration Step 4 - EAI implementation pitfalls In 2003 it was reported that 70% of all EAI projects fail Most of these failures are not due to the software itself or technical difficulties, but due to management issues Constant • The very nature of EAI is dynamic and requires dynamic project managers to manage their change implementation Lack of EAI • EAI requires knowledge of many issues and technical aspects experts Competing • Within the EAI field, the paradox is that EAI standards themselves are not universal standards EAI is a tool • EAI is not a tool, but rather a system and should be implemented as such paradigm Building • Engineering the solution is not sufficient. Solutions need to be negotiated with user departments interfaces is to reach a common consensus on the final outcome. A lack of consensus on interface designs an art leads to excessive effort to map between various systems data requirements Loss of detail • Information that seemed unimportant at an earlier stage may become crucial later • Since so many departments have many conflicting requirements, there should be clear Accountability accountability for the system's final structure 95
  • 96. IS Testing Installation, and Integration Step 4 - EAI implementation pitfalls Other potential problems may arise in these areas Emerging Requirements Protectionism The applications whose data is being integrated often belong to different departments which EAI implementations should be extensible and have technical, cultural, and political reasons modular to allow for future changes. for not wanting to share their data with other departments Advantages of EAI implementation • Real time information access among systems • Streamlines business processes and helps raise organisational efficiency • Maintains information integrity across multiple systems Disadvantages of EAI implementation • Prohibitively high development costs, especially for small and mid-sised businesses • EAI implementations are very time consuming, and need a lot of resources • Require a fair amount of up front design, which many managers are not able to envision or not willing to invest in. Most EAI projects usually start off as point-to-point efforts, very soon becoming unmanageable as the number of applications increase 96
  • 97. Video case - PeopleSoft's Enterprise Performance Management (EPM) System How does PeopleSoft incorporate the concept of immediacy into its Enterprise Performance Management (EPM) system? Name the systems integrated into its EPM system? Concerning the integration of the EPM system, what can you say about EAI architecture and Internet architecture? For the EPM system, guess two types of testing and securing process performed before run EPM broadly? What kind of role does PeopleSoft assign to analytics in its EPM system? What kind of businesses are likely to benefit from using PeopleSoft EPM? DIRECTIONS Create multidisciplinary Before lecture: Watch the Review the video international teams video (10 minutes) (3 people) Explain your conclusions to Discuss the video in your own Free discussion other teams team (10 minutes) (3 minutes by team) (10 minutes) 97
  • 98. IS Operations, Maintenance, and Updating Step 5 – Operation versus Innovation Operating versus Innovating Operating Innovating Creating today's revenue Creating tomorrow's revenue Steps are pre-defined Steps are undefined Steps are mostly linear Steps are mostly non-linear Single route and result Multiple routes and results Driven by functional teams Driven by cross-functional teams Reworking is waste Reworking is part of learning Clear, shared goals Unclear, often conflicting goals Clear front end Fuzzy front end Easy to measure Tough to measure Rich historical data Poor historical data Forecasting possible Forecasting almost impossible Short cycle time Long cycle time Many common causes Many special causes Traditional players & roles New players & roles Doing things right Doing right things 98
  • 99. IS Operations, Maintenance, and Updating Step 5 – Operations management planning criteria Control • By creating and maintaining a positive flow of work by utilising what resources and facilities are available Lead • By developing and cascading the organisations strategy/mission statement to all staff Organise • Resources such as facilities and employees so as to ensure effective production of goods and services Plan • By prioritising customer, employee and organisational requirements Maintaining • And monitoring staffing, levels, Knowledge-Skill-Attitude (KSA), expectations and motivation to fulfil organisational requirements 99
  • 100. IS Operations, Maintenance, and Updating Step 5 – Disaster recovering Disaster Recovery It is the process, policies and procedures of restoring operations critical to the resumption of business, including regaining access to data (records, hardware, software, etc.), communications (incoming, outgoing, toll-free, fax, etc.), workspace, and other business processes after a natural or human-induced disaster 100
  • 101. IS Operations, Maintenance, and Updating Step 5 – The disaster cycle Risk Preparedness Reduction Disaster Rebuilding Event Restoration Relief 101
  • 102. IS Operations, Maintenance, and Updating Step 5 – Disaster recovering strategies and precautions Disaster Recovery Strategies for Data Protection • Backups made to tape and sent off-site at regular intervals (preferably daily) • Backups made to disk on-site and automatically copied to off-site disk, or made directly to off-site disk • Replication of data to an off-site location, which overcomes the need to restore the data (only the systems then need to be restored). This generally makes use of Storage Area Network (SAN) technology • High availability systems which keep both the data and system replicated off- site, enabling continuous access to systems and data Precautionary Measures to Prevent a Disaster Situation • Local mirrors of systems and/or data and use of disk protection technology such as RAID • Surge Protectors — to minimise the effect of power surges on delicate electronic equipment • Uninterruptible Power Supply (UPS) and/or Backup Generator to keep systems going in the event of a power failure • Fire Preventions — more alarms, accessible fire extinguishers • Anti-virus software and other security measures 102
  • 103. IS Operations, Maintenance, and Updating Step 5 – Business Continuity Planning Business Continuity Planning (BCP) It is an interdisciplinary peer mentoring methodology used to create and validate a practiced logistical plan for how an organisation will recover and restore partially or completely interrupted critical function(s) within a predetermined time after a disaster or extended disruption 8. Review BCP 1. Initiate BCP (review project recovery plan) 7. Test BCP 2. Identify (test recovery business threat plan) Business Continuity Planning Life Cycle 6. Define BC process (define 3. Conduct risk recovery analysis process) Creating a Business Continuity Plan (alternative link: 5. Design BCP 4. Establish (design BCP (establish recovery plan) recovery team) 103
  • 104. IS Operations, Maintenance, and Updating Step 5 –Business continuity & recovery Total Continuity Program Management • Overall project management • Risk management • Crisis management • Industry benchmark Business Continuity IS Recovery Program Program Design Execution • Understanding business • Recovery tasks and IS requirements • Testing • Evaluate current • Other functional exercise capabilities plan & procedure • Develop continuity plan IS Recovery Program Design • Assess IS capabilities • Develop recovery procedures • Design solutions 104
  • 105. IS Operations, Maintenance, and Updating Step 5 – Replacement Plan IS and IT Inventory • Executive Support IS and IT • Decision-Support Systems IS and IT • Management Information Systems IS and IT • Knowledge Work Systems IS and IT • Office Automation Systems IS and IT • Transaction Processing Systems IS and IT Replacement Plans • Executive Support IS and IT Replacement Plan • Decision-Support Systems IS and IT Replacement Plan • Management Information Systems IS and IT Replacement Plan • Knowledge Work Systems IS and IT Replacement Plan • Office Automation Systems IS and IT Replacement Plan • Transaction Processing Systems IS and IT Replacement Plan Budget needs to Funds Replacement Plan • Executive Support IS and IT • Decision-Support Systems IS and IT • Management Information Systems IS and IT • Knowledge Work Systems IS and IT • Office Automation Systems IS and IT • Transaction Processing Systems IS and IT 105
  • 106. 106
  • 107. IS Architecture General enterprise IS architecture Processes Enterprise Systems Supply Customer Chain Processes Relationship Management Management Customers & Systems Processes Systems Customers & Distributors Distributors Enterprise IS automate Knowledge processes that span Management multiple business Systems functions and organisational levels and may extend outside the Sales and Manufacturing Finance and Human organisation Source: Laudon & Laudon, Chapter 2 Marketing & Production Accounting Resources 107
  • 108. IS Architecture Specific enterprise IS architecture Suppliers, Distributors, Resellers Supply Chain Management (Sourcing, Procuring) Knowledge Management IS, Collaboration IS, Decision Support IS, Administrative Control Financial(Accounting/Auditing IS, Partner IS, Human Resources/Procurement IS, Relationship Management IS, (Selling, Distribution), Management Control IS Logistics Production Distribution Enterprise Resource Planning IS Stakeholders Employees Partners, Enterprise Application Decision Support IS Integration Customer Relationship Management IS Customer Marketing Sales Service Supply Chain Management (Delivering) Customers, Resellers 108
  • 109. internetworking Components of a simple network Network consists of two or more connected computers Network interface device (NIC) is the connection Network operating system (NOS) point between one routes and manages communications on computer and the network the network and coordinates network resources (saving or retrieving files on your hard drive versus a network drive) Switch has more intelligence than Router (bridge) is a special a hub and can forward data to a communications processor used to specified device or destination. route packets of data through different The switch is used within a given networks, ensuring that the message network to move information sent gets to the correct address Number of possible connections on a network Hub connects network composed of N computers is N×(N-1) components, sending a packet of data to all other connected devices If there are 10 computers on a network, there are 10×9 = 90 possible connections Source: Laudon & Laudon, Chapter 7 109
  • 110. internetworking Client/Server computing Client/server software splits the processing of applications between the client and server to take advantage of strengths of each machine E-mail and browsers are examples 110
  • 111. internetworking Network topologies (architectures) Network Topology is the specific physical, logical, or virtual, arrangement of the network components and devices (nodes) Network topology is determined only by the configuration of connections between nodes 111
  • 112. internetworking PAN, LAN, and CAN networks Personal Area Network Campus Area Network Local Area Network (LAN) (PAN) (CAN) • Area covered: 4-6 metres • Area covered: Up to 500 • Area covered: Up to 1,000 • Features: PAN is used for meters (half a mile); an metres; a college campus communication among office or floor of a building or corporate facility computer devices close to • Features: LAN connects • Features: A number of one person (e.g., printers, personal computers in a LANs interconnected within fax machines, telephones, small office, all the multiple buildings or a PDAs or scanners) computers in one building, geographic area (school or all the computers in campus or military base) several buildings in close proximity. Common topologies are: star, ring, bus, and tree 112
  • 113. internetworking MAN and WAN networks Metropolitan Area Network (MAN) Wide Area Network (WAN) • Area covered: A city or metropolitan area • Area covered: Transcontinental or global • Features: MAN is categorised between a LAN area and a WAN • Features: WAN connects LANs to each other and offers the means to provide services and resources in multiple locations – Internet is a WAN 113
  • 114. internetworking Communication protocols: TCP/IP A protocol is a set of rules and procedures governing transmission of information between two points of a network TCP/IP is the worldwide standard protocol TCP part IP part Establishes a connection between the computers, Includes the Handles the movement of sequences the transfer of Responsible for the disassembling and data between computers packets, and delivery of packets reassembling of packets acknowledges the during transmission packets sent 114
  • 115. internetworking Internetworks Internetwork Any interconnection among or between In practice, a network using the IP public, private, commercial, industrial, protocol or governmental networks “The” Internet 3 variants of internetworks Extranet Intranet 115
  • 116. internetworking Major Internet services E-mail • Person to person messaging • Document sharing Usenet newsgroups • Discussion groups on electronic bulletin boards Chatting and instant messages • Interactive conversations Telnet • Logging on to one computer system and doing work to another File Transfer Protocol (FTP) • Transferring files from computer to computer World Wide Web (WWW) • Retrieving, formatting, and displaying information (including text, audio, graphics, and video) using hypertext links 116
  • 117. internetworking How Google works 4500 PCs linked together and connected to the Internet Results delivered to user, 10 to a page Small text summaries are prepared for each Web page A PageRank software measures the “importance“ or popularity of each page by solving an equation with more than 500 million variables and 2 billion terms. These are likely the “best” pages for the query 117
  • 118. internetworking Internet governance No one ―owns‖ Internet Worldwide Internet policies are established by the following organisations Abbreviation Key: • BCBS - Basel Committee on Banking Supervision • CERN - European Organisation for Nuclear Research • COE - Council of Europe et al. • FATF - Financial Action Task Force • GEO - Group on Earth Observations • ICANN - Internet Corporation for Assigned Names and Numbers • ICAO - International Civil Aviation Organisation • IETF - Internet Engineering Task Force • IMF - International Monetary Fund • ITU - International Telecommunication Union • OECD - Organisation for Economic Cooperation and Development • UNCITRAL - United Nations Commission on International Trade Law • UNESCO - United Nations Educational, Scientific and Cultural Organisation • W3C - World Wide Web Consortium • WIPO - World Intellectual Property Organisation • WTO - World Trade Organisation 118
  • 119. internetworking Unique features of Internet Technology Feature Business Significance Ubiquity – Internet/Web technology is available • The market place is extended beyond traditional boundaries and is everywhere: at work, at home, and elsewhere by removed from a temporal and geographic location using mobile devices, anytime • Shopping can take place anywhere in a marketplace • Customer convenience is enhanced, shopping cost reduced Global reach – The technology reaches across • Commerce is enabled across cultural and national boundaries national boundaries, around the earth seamlessly and without modification • The marketplace includes potentially billions of consumers and millions of business worldwide Universal standards – There is one set of Ones set of technical media standards exists across the globe technology standards, namely Internet standards Richness – It is possible to transmit video, audio, Video, audio, and text marketing messages can be integrated into a and text messages single marketing message and consumer experience Interactivity – The technology woks through Business can engage consumers in a dialogue that dynamically adjust interactions with the user the experience for each individual consumer and makes the consumers a co-participants in process of delivering goods to market Information density – The technology reduces Information processing, information storage, and communication cost information costs and raises quality drop dramatically, while currency, accuracy, and timeliness improve greatly, information becomes plentiful, cheap, and accurate Personalisation / Customisation – The Business can personalise marketing messages and customise products technology enables personalised messages to and services based on individual consumer characteristics and be delivered to individuals as well as groups preferences Source: Laudon & Laudon, Chapter 7 119
  • 120. internetworking Intranets in organisations Intranet • It is a computer network that uses the same technology and protocols as the Internet but is restricted to certain users Example • Boots may have an Intranet in their main offices that is only available to employees of Boots Benefits of Intranets • Integrate cross-platforms • Break down the communication barriers • Reduce information distribution cost • Immediate information delivery • Increase internal communication • Allow minimal learning curve • Get the customers involved • Use of Open standards • Allow Scalability 120
  • 121. internetworking Use of Intranets Communication and Collaboration Communicate and Existing e-mail, Voice- collaborate with e-mail, mail Systems discussion forums, chat and conferencing Everyone Business Operations and Management Intranet F Internet Enterprise Secure, universal Information Existing Databases and access to view and use Portal I Enterprise Applications corporate and external data R E Web Publishing W HTML, MS Office, XML, Author, publish, and Java, and Other share hypermedia A Employees Document Types documents L Intranet Portal L Extranet Management Centrally administer Customers, Existing Hardware and clients, servers, Suppliers, Networks security, directory, and and Partners traffic Source: O‘Brien & Marakas Chapter 6 121
  • 122. internetworking Extranets in organisations Extranet • It is a private network that uses Internet protocols, network connectivity, and possibly the public telecommunication system to securely share part of an organisation's information or operations with suppliers, vendors, partners, customers or other businesses Benefits to Buyers • Fewer phone and fax enquiries • Less mismatching of orders and invoices • Accurate information on supplier ability • Reduced risk of supply and delays • Improved order fill rates • Reduced inventory levels • Reduced downtime and overtime • Lowered procurement/inventory costs • Improved asset utilisation Benefits to Suppliers • Faster order-to-cash cycle • Fewer phone and fax enquiries • Insight into own performance • Better capacity utilisation • Increased inventory turns • Increased order fill rates • Increased revenue • Lowered costs • Improved asset utilisation 122
  • 123. internetworking How an organisation uses the Internet, Intranets, and Extranets Source: Turban, et. al. Chapter 1 123
  • 124. internetworking Discussion: Network Security Cisco - Security Training Video ATT's Anti Social Engineering Training Video (alternative link: (alternative link: 124
  • 125. internetworking Corporate internetworking infrastructure 125
  • 126. internetworking Internetworking: management opportunities and challenges • Organisations have opportunities to radically reduce the cost of Management communicating with their employees, vendors, and customers opportunities • There are many new opportunities to develop new business models based on the new telecommunications technologies • Loss of management control • Distributed resources are harder to control • Employees have independent sources of computing power Management • Use of technology for non-business purposes challenges • Organisational changes must take place as firms embrace new technologies • Polices for handling data • Reliability and security 126
  • 127. Enterprise IS: ERP, CRM, and SCM Enterprise IS – Traditional view Enterprise Resource Planning (ERP) System Integrate all departments and functions across a company onto a single computer system that can serve all those different departments‘ particular needs AFTER ERP 127
  • 128. Enterprise IS: ERP, CRM, and SCM ERP high level implementation framework Continuous Change Management Activities Process or step Gap Resolution Define not supported 1. Re-engineer process to agree with ERP Business Evaluate with/in ERP 2. Use a Bolt-on (3rd party product) If 5 Processes / against ERP 3. Develop enhancement or extension Assess functionality 4. Interface to legacy or mandated system Requirements 5. Process not performed within ERP Interviews, (current process remains) workshops, prototypes, & If 1, 2, 3 or 4 demos with Process supported with / in Go-Live Process Owners and ERP Stakeholders Tailor ERP, and / or interface as required, Testing to support new processes Iterate through multiple rollouts, if necessary Blueprint or Realisation or Construction Phase Final Prep Deployment Requirements 128
  • 129. Enterprise IS: ERP, CRM, and SCM Cost of implementing an ERP ERP Costs ERP Market Share Data Conversions 15% SAP 29% Training and Others Change Reengineering 47% Management 43% 15% Oracle Software Applications 15% The Sage 10% SSA Global Microsoft Group Hardware Technologies Dynamics 7% 12% 3% 4% 129
  • 130. Enterprise IS: ERP, CRM, and SCM Customer Relationship Management-IS (CRM-IS) Marketing and Fulfilment E-mail Sales Customer • Cross-sell Service and • Up-sell Fax Prospect Web Support or Customer Telephone Contact and Retention Account and Loyalty Management Programs 130
  • 131. Enterprise IS: ERP, CRM, and SCM Supporting the 3 phases of CRM with IS CRM Phases (Customer Life Acquire Enhance Retain Cycle) Direct Marketing Customer Cross-sell Support and Up-sell CRM Functional Solutions Sales Force Proactive Automation Service Shared Customer Data Collaborative Service The Internet CRM-IS Integrated Solution Partner Organisation Customer 131
  • 132. Enterprise IS: ERP, CRM, and SCM CRM-IS business integrated solution 132
  • 133. CRM-IS Integrated Solution Enterprise IS: ERP, CRM, and SCM Capture, store extract, process, interpret, and Customer services, order Communication, coordination, report customer data to a management, invoice/billing, and collaboration between user, who then analyses and sales/marketing vendors and customers them as needed automation and management Analytical CRM Operational CRM Collaborative CRM Analytical Tools Inbound Touchpoints DATA Ad Hoc Query CAPTURE Web ANALISE Report Call Centre Extract, Transform, On Line Analytical Load Processes Store Processing (OLAP) MARKETING Automated Data Mining AUTOMATION Teller Machine (ATM) Data Operational SALES INTERACT Warehouse Store AUTOMATION Campaign Mgmt E-mail SERVICES AUTOMATION Churn Analysis Direct Mail Propensity Scoring Telemarketing Implement Plans PLAN Customer Mobile devices Profitability Analysis EXECUTE Analytical Applications Outbound Touchpoints 133
  • 134. Enterprise IS: ERP, CRM, and SCM Causes of failure of CRM IS Budget Problems Software CRM Failure 4% Problems Bad Advise 2% 1% Lack of CRM Skills Other 6% 4% Organisational Change 29% Poor Planning 12% Lack of CRM Company Politics / Understanding Inertia 20% 22% 134
  • 135. Enterprise IS: ERP, CRM, and SCM The Supply Chain An organisation‘s Supply Chain is a network of organisations and business processes for procuring raw materials, transforming into products, and distributing them to customers Parts of a Supply Chain Upstream It includes the organisation's suppliers and their suppliers and the process for managing relationships with them Internal Supply Chain It includes process for transforming the materials, components, and services furnished by suppliers into finished goods and for managing materials and inventory Downstream It consists of the organisations and process for distributing and delivering products to the final customers 135
  • 136. Enterprise IS: ERP, CRM, and SCM The Bullwhip effect in SC • Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the Supply Chain • Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers Source: Laudon & Laudon, Chapter 9 136
  • 137. Enterprise IS: ERP, CRM, and SCM Supply Chain Management (SCM) SCM attempts to coordinate the business processes to speed information, product, and fund flows up and down a supply chain to reduce time, redundant effort, and inventory costs SCM Main Processes Source: Laudon & Laudon, Chapter 9 137
  • 138. Enterprise IS: ERP, CRM, and SCM SCM-IS The primary goal of all SCM-IS systems is to automate flow of information between company and supply chain partners Order Planning Advanced Scheduling Generate demand forecasts for a Supply Chain product (demand planning) Demand Planning Planning IS Help develop sourcing and manufacturing plans for that product Distribution Planning Transportation Planning 2 types of SCM-IS Order Commitments Track the physical status of goods, Final Production the management of materials, Supply Chain warehouse and transportation Replenishment Execution IS operations, and financial information involving all parties Distribution Management Reverse Distribution Source: Laudon & Laudon, Chapter 9 138
  • 139. Enterprise IS: ERP, CRM, and SCM Advantages of SCM-IS Business Value of SCM Effective and efficient SCM-IS Internet-based advantages business can enable an organisation to Improved customer service and responsiveness (product Decrease the power of its buyers Provide standard set of tools availability) Cost reduction (SCM costs represent 75% of operating Increase its own supplier power Facilitate global supply chains expenses for many firms; reducing SC costs can have major impact) Increase switching costs to reduce Cash utilisation (improved cash the threat of substitute products or Reduce costs flows) services Create entry barriers thereby Enable efficient customer response reducing the threat of new entrants Increase efficiencies while seeking a competitive advantage through Allow concurrent supply chains cost leadership Source: Laudon & Laudon, Chapter 9 139
  • 140. Enterprise IS: ERP, CRM, and SCM 140 The ideal organisation
  • 141. Multimedia case – Manugistics: Enterprise Profit Optimisation Important Notice You need Internet connection and a Web browser. If your web browser does not have the Flash plug-in installed, you will need the Macromedia Flash Player to view What business goals can Manugistics help a company meet? How does Manugistics promise to achieve these goals? Explain Manugistics's view of supplier relationship management and supply chain management Describe Manugistics's view of pricing and revenue optimisation Summarise the EPO method 141
  • 142. Managing International IS IS management challenges Growth of international IS Technology Organising issues & Challenges international IS opportunities Managing global systems Business Driver It is an environmental force to which businesses must respond and that influence a business‘s direction 142
  • 143. Managing International IS International IS Architecture International IS Architecture It consists of basic IS required by organisations to coordinate worldwide trade and other tasks Global Environment: Business Drivers & Challenges Corporate Global Strategies Organisational Structure Management & Business Procedures Technological Platform 143
  • 144. Managing International IS Types of global strategies & business organisation Domestic Exporter • Centralisation in home country Multinational • Central home base • Decentralised production, sales, marketing in other countries Franchiser • Product created, initially produced in home country • Relies heavily on local workers to produce, market in other countries Transnational • Truly Global Firm • No national headquarters • Value-added activities managed from global perspective • Optimises supply & demand, taking advantage of local competitive strengths 144
  • 145. Managing International IS Types of global IS • Domestic Home • Copies of home Base system used in foreign locations Centralised Duplicated Networked Decentralised • Integrated & coordinated at • Each unit has all locations unique system 145
  • 146. Managing International IS Global business strategy & structure Strategy Function Domestic Multinational Franchiser Transnational Exporter Production Centralised Dispersed Coordinated Coordinated Finance / Centralised Centralised Centralised Coordinated Accounting Sales / Mixed Dispersed Coordinated Coordinated Marketing Human Centralised Centralised Coordinated Coordinated Resources Strategic Centralised Centralised Centralised Coordinated Management
  • 147. Managing International IS Global IS configurations Strategy System Configuration Domestic Multinational Franchiser Transnational Exporter Dominant Centralised Pattern Dominant Duplicated Pattern Emerging Dominant Emerging Decentralised Pattern Pattern Pattern Emerging Dominant Networked Pattern Pattern 147
  • 148. Managing International IS Reorganise the business & develop global IS Agree on Organise common user value-adding requirements activities for comparative advantage Encourage Induce local users to procedural accept business ownership changes Developing Reorganise Global IS the business Develop & Establish operate IS at single world each level headquarters • National Coordinate Coordinate • Have global CIO • Regional software applications • International releases development 148
  • 149. Managing International IS Strategy: divide, conquer, pacify Define core business processes GLObal loCAL GLOCAL Identify Make core benefits systems to CIO need to think globally and act locally clear coordinate centrally Choose an approach • Incremental • Grand design • Evolutionary 149
  • 150. Video case: Fedex IWAY Testimonial What role does WebFocus play in FedEx's operations? What goals does WebFocus help FedEx meet? Explain the analogy that Joe Namie uses to compare FedEx's information technology with the technology upon which the company's pilots rely Describe the scope of the reporting information that is available to FedEx as a result of WebFocus What type of global strategy is behing WebFocus? What type of global strategy and structure is behing WebFocus? 150
  • 151. Conclusion: The strategic role of IS IS can change goals, operations, products, services, and environment to gain competitive advantage Sustainable Organisation Competitive Advantages Physical & Essential Cost Communications Innovation & Management Entrepreneurship Capability Conditions Competitiveness Infrastructure 151