Chapter Processes, Organizations, and Information Systems “How Much Money Does a System Own? • • Who are the target customers and how to induce them to buy? Doctors? – Care about medicine and operations, some care about costs – Not focused on exercise • Insurance companies? – Exercise doesn’t prevent disease – When people get in good shape, they live longer, and their long-term health care expenses increase Copyright © 2017 Pearson Education, Inc 7-2 Who Will Pay? • Health clubs • Employers • Selling ad space to health clubs and manufacturers • Social media–driven • Can PRIDE support 10,000 people spinning at the same time? • Who to monetize PRIDE? Copyright © 2017 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 information systems eliminate problems of information silos? Q4: How CRM, ERP, and EAI support enterprise processes? 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: 2026? Copyright © 2017 Pearson Education, Inc 7-4 Q1: What Are the Basic Types of Processes? Business Process with Three Activities Copyright © 2017 Pearson Education, Inc 7-5 How Do Structured Processes Differ from Dynamic Processes? Copyright © 2017 Pearson Education, Inc 7-6 How Do Processes Vary by Organizational Scope? Copyright © 2017 Pearson Education, Inc 7-7 Characteristics of Information Systems Copyright © 2017 Pearson Education, Inc 7-8 Q2: How Can Information Systems Improve Process Quality? • Process efficiency – Ratio of 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 © 2017 Pearson Education, Inc 7-9 How Can Information Systems Improve Process Quality? • Performing an activity – Partially automated, completely automated • Augmenting human performing activity – Ex: Common reservation system • Controlling data quality – Ensure data complete and correct before continuing process activities Copyright © 2017 Pearson Education, Inc 7-10 Q6: What Are the Challenges of Implementing and Upgrading Enterprise Information Systems? Copyright © 2017 Pearson Education, Inc 7-36 Q7: How Do Inter-enterprise IS Solve the Problems of Enterprise Silos? Copyright © 2017 Pearson Education, Inc 7-37 Inter-enterprise PRIDE System Copyright © 2017 Pearson Education, Inc 7-38 Q8: 2026? • ERP vendors and customers resolved problems of cloud-based ERP • Hybrid model – ERP customers store most of their data on cloud servers managed by cloud vendors and store sensitive data on their own servers • Gov’t, accounting, financial standards for monitoring organizations for appropriate compliance • Delicate balance between risk of loss and improvement to processes • Machines able to employ ERP system to schedule own maintenance Copyright © 2017 Pearson Education, Inc 7-39 Security Guide: One-Stop Shopping • IS design involves constant trade-offs – Risk of loss higher, security focused – Inter-enterprise system can connect competitors with different incentives and agendas – How secure is the cloud vendor? – Bitcoin Centrally located, accessible from anywhere, very large sum of electronic money Copyright © 2017 Pearson Education, Inc 7-40 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 © 2017 Pearson Education, Inc 7-41 Active Review Q1: What are the basic types of processes? Q2: How can information systems improve process quality? Q3: How information systems eliminate the problems of information silos? Q4: How CRM, ERP, and EAI support enterprise processes? 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: 2026? Copyright © 2017 Pearson Education, Inc 7-42 Case Study 7: A Tale of Two Inter-organizational IS • Access CT – Enrolled 208,301 and model for state-run exchanges • Cover Oregon – Spent $250 million for system clearly inoperable – Exchange’s board of directors decided to stop development and utilize the federal exchange Copyright © 2017 Pearson Education, Inc 7-43 Healthcare Exchange Interorganizational IS Copyright â 2017 Pearson Education, Inc 7-44 Access CT Exchange went live in only 12 months • Counihan – More than 30 years of experience working in insurance industry, – Key player in development of Massachusetts healthcare system • Hired senior staff with deep experience in insurance Copyright © 2017 Pearson Education, Inc 7-45 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 project plan and began search for contractor to develop the site Copyright © 2017 Pearson Education, Inc 7-46 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 © 2017 Pearson Education, Inc 7-47 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 © 2017 Pearson Education, Inc 7-48 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 © 2017 Pearson Education, Inc 7-49 Copyright © 2017 Pearson Education, Inc ... information systems improve process quality? Q3: How information systems eliminate problems of information silos? Q4: How CRM, ERP, and EAI support enterprise processes? Q5: What are the elements... activity – Partially automated, completely automated • Augmenting human performing activity – Ex: Common reservation system • Controlling data quality – Ensure data complete and correct before... Workflow Problem? • Computer programmer? No • Network engineer? No • Database administrator? No • Someone with knowledge of business Yes! – If workflow involves information system, someone knowledgeable