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Introduction to Enterprise I.T. systems

Lecture 1

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Definition of an Enterprise System

• An enterprise system is an interrelated set of information systems (technologies) working together for the purpose of facilitating planning, control, coordination, and decision making in Enterprises to aid in achieving the vision and mission of the organisation

Input Processing Output

Feedback

Organisation

Environment

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Basic I.S. Activities• An Enterprise’s IT requirements will typically have internal IT staff capable of

developing and deploying systems.

• Basic activities:– Input: capturing or collecting raw data from inside or outside the organisation– Processing: converting the raw data into a more appropriate or useful form– Output: transferring the processed data to the people or business activities

that need it– Feedback: output used to refine input

• Basic Components– Organisations: consist of specialised units with a clear-cut division of labour,

e.g. sales, manufacturing, personnel, finance– People: use information generated by I.S. in their jobs– Technology: the means by which data are transformed and organised for

business use• Hardware, Software, Storage technology, Communications technology

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The Organisation

Production Finance/accounting

Sales/marketing

HumanResources

OrganisationalProblem

OrganisationalLevel

Strategic

Tactical

Knowledge

Operations

Senior Management

General or Middle

Knowledge or Data

Production Workers

Management

Workers

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Understanding the enterprise IT environment

• Decision making in enterprise IT is driven by the need to balance a number of different factors apart from technical feasibility.

• The way that these are balanced is sometimes called IT governance – Processes designed to ensure the right decisions are made and that

all stakeholders, including senior management, internal customers, and departments such as finance, have the necessary input into the decision making process.

• There are 5 main factors which impact the decision.

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Understanding the enterprise IT environment

• There are five primary drivers1. Skills: Costs and availability2. Technology life-cycle: How enterprise IT evolves

and how the IT industry evolves3. Business requirements: how IT supports business

strategy4. IT organisation: Activities of the department5. How investment and benefit can be measured

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Specialisation of skills

• Most staff will either have be predominantly technically skilled or business skilled – even in IT departments.

• Attempting to use technically focused staff on business focused problems will result in poor solutions and vice versa.

• Therefore, the way we develop software should attempt to allow separation of roles between the two.

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Technical skills

Business skills

Combination

Dealing with the skills challenge• Goal 1: Reduce the technical skills requirement and allow

more staff to participate in any software development process

• Goal 2: Reduce the amount of code that needs to be written.– Allow developers to focus on writing business logic that is specific

to the problem at hand, not infrastructure code which is generic– Maximise the amount of reuse of existing systems, codes, designs

etc– Reducing the amount of code written also reduces the cost of

maintenance

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Understanding the enterprise IT environment

• There are five primary drivers1. Skills: Costs and availability2. Technology life-cycle: How enterprise IT evolves

and how the IT industry evolves3. Business requirements: how IT supports business

strategy4. IT organisation: Activities of the the department5. How investment and benefit can be measured

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The IT life-cycle is driven by many factors• The IT industry itself

– Technology innovation

• The business environment– New customer demand

• eCommerce in 1990s– Economic cycle – Competition among end-users

However in reality systems are only decommissioned when there is a compelling business need. Enterprise systems are typically used for 7+ years. Only sometimes is that it is too old to maintain

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Understanding the enterprise IT environment

• There are five primary drivers1. Skills: Costs and availability2. Technology life-cycle: How enterprise IT evolves

and how the IT industry evolves3. Business requirements: how IT supports

business strategy4. IT organisation: Activities of the the department5. How investment and benefit can be measured

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Business Strategy and I.T.

• Any I.T. investment within an enterprise will be evaluated in the context of whether it fits into the overall business strategy.

• “A company's strategy is its overall plan of development. Corporate strategy can be more formally defined as a comprehensive “long term” plan or action that identifies the critical direction and guides the allocation of resources of an entire organization in order that it will achieve a competitive advantage.“

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The “resulting” IT Strategy

• The plan an organisation uses in providing information services.

1. IT that allows business to implement its business strategy.2. IT that helps determine the company’s capabilities .3. IT Strategy must make sense in the context of the organisational

structure and organisational strategy4. Four key IT infrastructure components are key to IT strategy:

Hardware, software, networking, data

• Need to answer questions such as what IT is required to ensure successful entry into new markets?

Understanding the enterprise IT environment

• There are five primary drivers1. Skills: Costs and availability2. Technology life-cycle: How enterprise IT evolves

and how the IT industry evolves3. Business requirements: how IT supports business

strategy4. IT organisation: Activities of the department5. How investment and benefit can be measured

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Core Activities of IT department• Anticipating new technologies.

– IT must keep an eye on emerging technologies.– Work closely with management to make appropriate decisions.– Weigh risks and benefits of new technologies.

• Strategic direction.– IS can act as consultants to management (provide CSF).– Educate managers about current technologies/trends; e.g. cloud

computing.

• Business continuity planning– Disaster recovery.– “What if” scenarios. (using complex computational software)

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What IT Does Not Do• Does not perform core business functions such as:

– Selling– Manufacturing– Accounting.

• Does not set business strategy, however, may aid in providing information that develop, implement and evaluate strategies.– Deliver objectives (information), such as critical success factors (CSF), in a

manner which is:• Cost effective• Timely• Flexible

• In most cases, IT is a service to the rest of the business.

Understanding the enterprise IT environment

• There are five primary drivers1. Skills: Costs and availability2. Technology life-cycle: How enterprise IT evolves

and how the IT industry evolves3. Business requirements: how IT supports business

strategy4. IT organisation: how IT is itself organised, the

roles in an IT department5. How investment and benefit can be measured

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Return on Investment calculation• Calculate the lifetime costs of the project (normally set to 3 or 5 years

depending on the organisation)– Initial equipment and software costs– Staff costs including salary, benefits, recruitment and training costs for

development and roll-out phase.– Staff costs (as above) for each year the system is maintained.– Software, hardware and network maintenance costs.

• Calculate the lifetime benefit of the project.

• Return on investment = (Benefit (difficult to quantify ) – Cost)/Cost– RoI < 0 means the investment is never covered– RoI > 0 means the investment is covered. It must then be compared to

other potential investments to see which is the best.

• Payback analysis identifies how long it will take before RoI>0

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Impact of IT upon enterprise structure

• Scott Morton’s 5 levels of organisational restructuring

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Impact upon enterprise structure

• evolutionary levels: • localised exploitation within individual business

functions. The primary objectives addressed are local efficiency and effectiveness;

• internal integration between different systems and applications, generally involving not just automation, but also rationalisation, and using a common IT platform. Efficiency and effectiveness are enhanced by coordination and cooperation within the enterprise;

•

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Impact upon enterprise structure

• revolutionary levels: • business process redesign, involving more thorough re-

evaluation of the enterprise value-chain and the production process, and more far-reaching change.

• business network redesign, the reconfiguration of the scope and tasks of the business network involved in the creation and delivery of products and services. Coordination and cooperation extend, selectively, beyond the enterprise's boundaries.

• business scope redefinition, involving migration of functions across the enterprise's boundaries, to the extent of changing the organisation's conception of the business it is in.

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Sample exam question

• What do you understand by the term IT governance (3 marks)

• Describe 4 factors associated with this term. (20 marks)

• Discuss which of the factors mentioned above are the most important for a successful I.T. goverance. (7 marks)