introduction to enterprise systems lecture 1. definition of an enterprise system an enterprise...
TRANSCRIPT
Introduction to Enterprise systems
Lecture 1
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
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
The Organisation
Production Finance/
accounting
Sales/
marketing
Human
Resources
Organisational
Problem
Organisational
Level
Strategic
Tactical
Knowledge
Operations
Senior Management
General or Middle
Knowledge or Data
Production Workers
Management
Workers
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.5
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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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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The ideal of the enterprise IT Modern technologies A consistent architecture Capable of supporting business change for
years to come Moreover, the adoption of new technologies
should involve:– End-users: Business needs– Vendors: Selling opportunities– Industry analysts: Spotting trends
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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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IT and Business Strategy
• Any 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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Role of IT is “pivotal” in supporting business strategy
• Contribute to the achievement of business goals such as.– Launch of new product (if sufficient resources available)– Entry to new market (based on market analysis and resources…)
• Deliver objectives (information), such as critical success factors (CSF), in a manner which is:– Cost effective– Timely– Flexible
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IT Strategy• The plan an organisation uses in providing information services.• IT that allows business to implement its business strategy.• IT that helps determine the company’s capabilities .• IT Strategy must make sense in the context of the organisational
structure and organisational strategy• 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?
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CoreCompetency
The resources and capabilities that have been determined to be a source of competitive advantage for a firm over its rivals.
Building a business strategy would need to consider:
StrategyAn integrated and coordinated set of actions taken to exploit core competencies and gain a competitive advantage.
Business Level Strategy
Actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product markets.
Leads to
Leads to
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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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.
• Supplier management.– Carefully manage outsourced IT.
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Core Activities (continued)
• Architecture and standards.– Be aware of incompatibilities between information systems.– Remember Inconsistent data undermines integrity.
• Security– Important to all general managers.– Much more than a technical problem.
• Business continuity planning– Disaster recovery.– “What if” scenarios.
• Human resource management.– Hiring, firing, training, outsourcing, etc.
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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.
• In most cases, IT is a service to the rest of the business.
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IT Organisational structures• Centralised – bring together all staff, hardware, software,
data, and processing into a single location.• Decentralised – the components in the centralised structure
are scattered in different locations to address local business needs.
• Federalism – a combination of centralised and decentralised structures.
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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Calculating the cost of IT
• The most basic method of determining costs is to add up all of the hardware, software, network, and people involved in IS.
• Real cost is not as easy to determine.
• Most companies continue to use the over-simplistic view of determining cost and never really know the real cost.
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IT Investment Monitoring
• “If you can’t measure it, you can’t manage it”.
• Management needs to make sure that money spent on IT results in organisational benefit.
• Must agree upon a set of metrics for monitoring IT investments.
• Often financial in nature (using metrics such as ROI, payback analysis… ).
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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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Internal rate of return• Commercial organisations are judged by the owners on the basis of
profit (and sometimes revenue).
• In order to deliver any profit target, the organisation will set a rate of return it expects from any existing or new business.– Building in evaluation of the riskiness of the business.
• This internal benchmark is called the Internal Rate of Return. It would be related to the benefits associated with the ROI
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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.