Introduction

With the Winter Gear Distributors case, you experienced the value of integrating all of the stand-alone information systems within a company into one comprehensive system. As we saw, creating one central, integrated information system can profoundly improve the core business processes of an organization, such as filling orders and replenishing inventory. In fact, we agreed that it would be difficult to effectively manage an organization if an integrated source of information were not available to support operations, control and innovation. The larger and more complex the organization, the greater the need is for information and therefore information system integration.

In almost the same breath, we have stressed the importance of alignment between the organization's core business processes and the information systems that enable those processes. This is because all information systems are built around a formal work flow or process and if that work flow varies significantly from the way the organization does its work, process mistakes and data entry errors are bound to arise. For this reason, we have stressed the need to select information systems that complement the way work is done. Where there is a difference in approach, we have recommended reengineering the actual business process rather than customizing the software. Bear in mind that information system software companies study related business processes in depth as they develop their products and work to incorporate industry best practices into system workflows. Therefore, in many instances by following the embedded business process in an information system, your organization may find itself adopting industry best practices and an overall better way of doing its business.

Some companies purposely choose the very best application specific software that aligns with each of their core business processes. We call this software acquisition strategy a "best in breed" approach. In so doing, they take advantage of some of the best industry thinking but at the expense of information system integration. Increasingly, organizations have come to recognize that systems and data integration is the bigger challenge. Software manufacturers have responded by providing integrated software suites called enterprise resource planning (ERP) systems. These suites typically include a series of application specific software products (a.k.a. modules) that share a common look and fell (a.k.a. human interface) and a common backend database. See the IT Checklist for examples of leading ERP products. Though these ERP systems come with a steep price tag and are a challenge to implement, they offer many advantages to willing users, including:

a flexible body of information system capabilities - the company licensing the software can choose which modules it wants and can implement modules in order of priority.

significant processing power to handle lots of transactions and to provide enterprise views of the data and underlying process or performance issues.

a common look and feel among the different ERP modules, lowering barriers to staff learning the system.

back end data standards that provide consistency and uniformity in data definitions and use - an absolutely critical capability as we have seen in the case of Hardrock Caf.

the ease with which different modules can access shared information, such as customer or financial data

a host of built-in measurement mechanisms that can easily roll-up aggregated data for management and control purposes

high level analytical capabilities that enable forecasting and more strategic uses of transactional data residing in the ERP.

Session 12 and many of the sessions that follow will engage you in the application of ERP systems to enable enterprise-wide operations, management, and innovation. At the close of 2011 the world-wide sales ERP systems stood at $288 billion for the year. This speaks to the realization by many companies that their future success depends on the effective control of their information and that an ERP system is an essential tool set to that end.

Getting to Know ERP Systems

We refer to information systems that integrate the processes and information flows of an entire organization as "Enterprise Resource Planning" systems or ERP. ERP systems represent potentially one of the most important and strategic uses of information technology.

An ERP is one example of a category of software applications referred to as "Enterprise Information Systems." These systems are used to integrate business processes and information across large parts of an entire business enterprise. There are three primary enterprise information system applications (see Figure), covering the chain of information flows from the customer to the company to the supplier and back. ERP sits in the middle and integrates the enterprise's internal information flows and stores. Customer Relationship Management (CRM) systems support and integrate all of the separate processes and systems that companies use to support sales and marketing. You were first introduced to CRM systems in the Hard Rock article. Supply Chain Management (SCM) systems support and integrate all of the separate processes and systems that companies use to support purchasing. The Brose case addresses the use of a SCM system.

Unlike ERPs, which operate primarily within the organization, CRM and SCM systems are used to link the company to its customers and suppliers - both external to the organization. As such, these systems cross the boundaries of the organization and are great candidates for using telecommunications and the internet to connect a company's information systems to those of its customers and suppliers. All three systems accomplish essentially the same things: integrating processes, information flows, and information stores to improve operations, control, and learning/innovation that ultimately providing the company with a strategic advantage. You will find that the slides for Session 12 include a great deal of information about ERP systems and their CRM and SCM cousins. Pay particular attention to the slide narratives that go into detail about the workings of these complex information systems as well as the challenges faced in successfully implementing them. Here again the Brose case will prove useful in demonstrating best practices in taking on a new ERP system.

Postscript (Boston Globe, 5/31/15, pp: G3):

According to a recent study emerging from MIT's Sloan Management Review, the deployment and use of ERP systems may be undermining employee productivity, innovation, and well being. In some organizations the move to big, complex integrated systems and the associated efforts to keep them current (regarding both legal compliance and functionality), dealing with the information glut that occurs as a result of introducing these systems, and how to navigate through these systems, staff training and IT support without diminishing time spent on assigned (real) work. Some of the examples cited in the Sloan study show that employees resign from the stress of having to cope with these additional challenges. In response, corporate management needs to be more mindful of how ERP's are implement and their impact on the work force. The human resources function can also do more to ensure that employees are both well prepared and support for the changes in the ERP as they arise.

Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers 100 Cumulative Porcontage of Money Income 20 20 40 60 80 100 Cumulative Percentage of Households 1) Refer to the above figure. For which Lorenz curve does the richest 40 percent make 50 the nation's money income? A)A B) B CC DJ D 2) Suppose a college increases the wages paid to student employees. Which of the follow options is the best description of the most likely effect of the increase in wage earning demand curve for school sweatshirts in the bookstore? A) The demand curve shifts to the left. B) a rightward movement along the demand curve C) The demand curve shifts to the right. D) a leftward movement along the demand curve 3) In general, who will benefit as the result of a tariff? 1. Domestic producers II. Domestic consumers III. The domestic government A) I only B) II only C) both I and III D) both II and III E) All of the above are correct.) The interest-rate-based monetary policy transmission med ism argues that an increase in the money supply 67) A) has no effect on aggregate demand but increases short-run aggregate supply. B) causes interest rates to fall, which causes an increase in planned investment, and an increase in aggregate demand. C) causes the Inflation rate to decline, which causes an increase in household consumption spending and an increase in aggregate demand. D) has no effect on aggregate demand but reduces long-run aggregate supply. 64) An asset is liquid if 68) A) it is backed by a government guarantee. B) it can be exchanged for other items of value without high transaction costs. CJ it earns interest. D) All of the above are correct. 69) Suppose the economy currently has an inflationary gap. The Fed engages in contractionary (69) monetary policy. The impact of contractionary monetary policy will be to A) increase short-run aggregate supply, decrease prices and increase real GDP. BJ increase short-run aggregate supply, decrease in prices and decrease in real GDP. C) decrease aggregate demand, decrease prices, and decrease real GDP. D') decrease aggregate demand, decrease prices, and increase real GDP. 70) The crowding-out effect refers to the tendency of expansionary fiscal policy to 70) A) replace low-skilled labor with higher-skilled labor. B) cause firms to produce beyond capacity. C) cause decreases in planned investment or planned consumption. D) cause households to save less. 71) The primary purpose of the FDIC is to reduce the potential for 71) A) bank runs. B) excessive interest rates. C) reserve cheating. D) government regulations. 72) Which of the following will cause a reduction in the amount of money individuals wish to hold? 72) A) an increase in income B) an increase in the price level C) an increase in the interest rate D) all of the above 73) United States coins and currency are backed by 73) A) reserves of foreign currencies. B) confidence that they will retain their value. C) gold. D) silver. 74) ) Suppose a college increases the wages paid to student employees. Which of the following options is the best description of the most likely effect of the increase in wage earnings on the demand curve for school sweatshirts in the bookstore? A) a leftward movement along the demand curve B) The demand curve shifts to the right. C) a rightward movement along the demand curve D) The demand curve shifts to the left.QUESTION 6 Enterprise information systems are often referred to as Enterprise Resource Planning (ERP) Systems. These systems are characterized by..... a. a common look and feel to all the application modules at the front end but a database for each application module at the backend b. a common look and feel to all the application modules at the front end and a common database backend c. a varied look and feel to all the application modules at the front end and a common database backend Od. a varied look and feel to all the application modules at the front end and a database for each application module at the backend QUESTION 7 Brose also maintained a CRM ERP. Why was that? Oa. they needed this system to support their point-of-sales system O b. the SCM system lacked CRM capabilities O c. with only 40 (very large) customers world-wide, Brose cannot afford to lose any of them; customer relationship management is a key enabler of customer retention Od. the IT team made these choices and wanted more systems to manage QUESTION 8 What made the process of bidding and contracting for work with an auto manufacturer so difficult for Brose? Oa. agreeing with the customer on a per unit price for large quantities of product that would typically not go into product for another 12 to 18 months Ob. fluctuating energy costs Oc. industrial unrest Od. not knowing if the goods could be shipped in time QUESTION 9 Brose was driven to deploy and then employ a SCM ERP due to its need to... a. develop new products in anticipation of customer needs Ob. save money on the shipment of goods overseas Oc. coordinate shipments to customers Od. coordinate enterprise-wide activities and optimize factory performance QUESTION 10 A Customer Relationship Management ERP would typically include the following modules: a. marketing campaign management, customer services and financial management Ob. accounting, human resources, and operations c. sales management, marketing campaign management and customer services d. marketing campaign management, customer services and supply chain