Chapter Processes, Organizations, and Information Systems “How much money does a system own?” • Who we sell it to, and how we induce them to buy? • Doctors? – Care about medicine and operations, and some care most about expensive operations If they cared about exercise, they’d own health clubs • Insurance companies? – Exercise doesn’t prevent disease – When you get in good shape, you last longer, and their care expenses increase Copyright © 2016 Pearson Education, Inc 7-2 Who Will Pay? • Health clubs • Employers • Revenue selling ads to health clubs and manufacturers • Social media–driven • Can PRIDE support 10,000 people spinning at the same time? Copyright © 2016 Pearson Education, Inc 7-3 Study Questions Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How CRM, ERP, and EAI support enterprise processes? Q4: How information systems eliminate problems of information silos? Q5: What are the elements of an ERP system? Q6: What are the challenges of implementing and upgrading enterprise information systems? Q7: How inter-enterprise IS solve the problems of enterprise silos? Q8: 2025? Copyright © 2016 Pearson Education, Inc 7-4 Q1: What Are the Basic Types of Processes? Business Process with Three Activities Copyright © 2016 Pearson Education, Inc 7-5 How Do Structured Processes Differ from Dynamic Processes? Copyright © 2016 Pearson Education, Inc 7-6 How Do Processes Vary by Organizational Scope? Copyright © 2016 Pearson Education, Inc 7-7 Characteristics of Information Systems Copyright © 2016 Pearson Education, Inc 7-8 Q2: How Can Information Systems Improve Process Quality? • Process efficiency – Ratio of process outputs to inputs • Process effectiveness – How well a process achieves organizational strategy • How Can Processes Be Improved? – Change process structure – Change process resources – Change both Copyright © 2016 Pearson Education, Inc 7-9 How Can Information Systems Improve Process Quality? • Performing an activity – Partially automated, completely automated • Augmenting human performing activity – Common reservation system • Controlling data quality process flow – Ensure data complete and correct before continuing process activities Copyright © 2016 Pearson Education, Inc 7-10 Q6: What Are the Challenges of Implementing and Upgrading Enterprise Information Systems? Copyright © 2016 Pearson Education, Inc 7-35 Q7: How Do Inter-enterprise IS Solve the Problems of Enterprise Silos? Copyright © 2016 Pearson Education, Inc 7-36 Inter-enterprise PRIDE System Copyright © 2016 Pearson Education, Inc 7-37 Q8: 2025? • ERP vendors and customers provide application and systems using the cloud • Warehouse worker on loading dock and shipping department carry mobile devices to process ERP and other enterprise applications • Managers, decision makers, and other knowledge workers have similar applications on their own phones, or other mobile devices • Exercise equipment, machines, robots, and other forms of factory automation will generate and consume data • ERP vendors adapt software to particular requirements of 3D manufacturing Copyright © 2016 Pearson Education, Inc 7-38 Security Guide: One-Stop Shopping • Information systems design involves constant trade-offs – Trade-off eliminating problems of information silos against security threat of having all data in one repository • Under what circumstances is an enterprise system considered the solution? • Under what circumstances are enterprise systems a source of information silos? • When machine side of IS has limits and flaws, human side picks up the slack Copyright © 2016 Pearson Education, Inc 7-39 Using the Guide: ERP and the Standard, Standard Blueprint • Organization adapts processes to standard blueprints • If all firms in an industry use same business processes, how can a firm gain competitive advantage? • How will innovation occur? • Does “commoditized” standard blueprint prevent sustaining a competitive advantage? Copyright © 2016 Pearson Education, Inc 7-40 Active Review Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How CRM, ERP, and EAI support enterprise processes? Q4: How information systems eliminate the problems of information silos? Q5: What are the elements of an ERP system? Q6: What are the challenges of implementing and upgrading enterprise information systems? Q7: How inter-enterprise IS solve the problems of enterprise silos? Q8: 2025? Copyright © 2016 Pearson Education, Inc 7-41 Case Study 7: A Tale of Two Inter-organizational IS • Access CT – Enrolled 208,301 and was a model for state-run exchanges • Cover Oregon – Spent $250 million, clearly inoperable and exchange’s board of directors decided to stop development and utilize the federal exchange Copyright © 2016 Pearson Education, Inc 7-42 Healthcare Exchange Interorganizational IS Copyright â 2016 Pearson Education, Inc 7-43 Access CT Only 12 months until Exchange went live • Counihan more than 30 years of experience working in insurance industry, key player in development of Massachusetts healthcare system • Hire senior staff with deep experience in insurance Copyright © 2016 Pearson Education, Inc 7-44 Access CT (cont'd) • Wadleigh director of application development for CIGNA, a health services organization • Primary assignment—hire and manage an outside contractor to develop exchange website and supporting backend code and manage implementation of exchange information system • Created a project plan and began search for contractor to develop the site Copyright © 2016 Pearson Education, Inc 7-45 Cover Oregon • Did not hire a supervising contractor for project, instead took an active role in software’s development • Agency suffered high employee turnover, and had difficulty hiring and keeping qualified personnel Copyright © 2016 Pearson Education, Inc 7-46 Cover Oregon (cont'd) • OHA hired software development company to create major software components – Two of three finalists dropped out at last minute, leaving Oracle Corporation a sole source vendor – Oracle negotiated time and materials contracts instead of contract for specific deliverables at specific prices – When problems developed, Oracle was paid tens of millions of additional money for change orders on same time and materials basis Copyright © 2016 Pearson Education, Inc 7-47 Cover Oregon (cont'd) • Oregon legislature required state to hire a quality assurance contractor, Maximus Corporation, to oversee project • Maximus reported significant problems involving divided control, lack of clear requirements, inappropriate contracting methodology, lack of project planning, and lack of progress • Unclear who got those reports or what was done with them • Head of OHA project threatened to withhold Maximus payment End result: Exchange development failed Copyright â 2016 Pearson Education, Inc 7-48 Copyright © 2016 Pearson Education, Inc 7-49 ... Differ from Dynamic Processes? Copyright © 2016 Pearson Education, Inc 7-6 How Do Processes Vary by Organizational Scope? Copyright © 2016 Pearson Education, Inc 7-7 Characteristics of Information... Increased cost for the organization Copyright © 2016 Pearson Education, Inc 7-11 Problems Created by Information Silos Copyright © 2016 Pearson Education, Inc 7-12 How Do Organizations Solve the