Two Key ERP Principles - Buisness Management - Lecture Slides, Slides of Business Administration

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Two Key ERP Principles

• Standardisation
  • Industry level
  • Firm level
• Centralisation
  • Cost saving – eg computing
  • Control over resources
  • Organisational transformation – eg: shared services

Impact of ERP

• Impact on processes
  • how to identify it?
  • How to measure it?
• Impact on ability of the firm
  • Autonomy
  • Decision making
  • Collaboration
  • Etc…

Impact on Processes

• As is / to Be analysis
  • Current processes
  • Would be process
• Template processes
• Data collection routines
• Workarounds
• “devil is in the details”
  • Business process steps
  • authorisations

Impact on decision making

• Research on the impact of IT
  • Particularly on middle management
    • Number of middle managers
    • Role and contribution to the firm
  • Contingency framework
• Research on ERP – very little!

Pre-ERP observations

“One reason, then, that we expect top acceptance of information technology is its implicit promise to allow the top to control the middle just as Taylorism allowed the middle to control the bottom.”

The computer and the new decision-making techniques associated with it are bringing changes to white-collar, executive and professional work as momentous as those that the introduction of machinery has brought to manual jobs.

Principles of Scientific management

• describe and bread down a task to its smallest unit; science for each element of work
• restrict behavioral alternatives facing worker
• remove worker discretion in planning, organizing, controlling
• use time and motion studies to find one best way to do work
• provide incentives to perform job one best way-tie pay to performance
• use experts (industrial engineers) to establish various conditions of work

Impacts and problems

• new departments-
  • industrial engineering, personnel, quality control
• growth in middle management
• separation of planning from operations
• rational rules and procedures
• increase in efficiency
• formalized management, mass production
• human problems
  • dehumanization of work; sabotage, group resistance, hated by workers

Analogy with ERP

• New departments
  • ERP team / data integrity team
  • Shared services
• New roles and responsibilities
  • Middle manager group split two ways
  • Winners and losers
• Increase in efficiency in the general case
• Problems with exceptions
• Dysfunctional uses of the application

Key problem

• ERP are designed for the operational level
• Even at that level, virtualisation is imperfect
• Management decisions are not all mechanistic
• Main job is to deal with exceptions
• Current environment = exceptions are the norm
• Winter (1985) the case for mechanistic decision

making

• But need organisational routines for deciding

when to automate responses.

Real WorldSnapshotData Model Business Logic

Configuration / distribution model

Virtual representation

of the world

Intangible / Uncertain

Cognitive Map (THINK)

Tangible /

Certain

Spreadsheet tool

SEEDocsity.com

Joint Workshop on Decision Support Systems, Experimental Economics & e-Participation June 5th - 7th, 2005 - Graz, Austria

Scenario for Automatic Decision

Making

Primary Decision Cycles

Secondary Decision Cycles

EMERGENT PROCESSES

FORMALISED PROCESSES

NON ROUTINE DECISION ARENA

AUTOMATED DECISION ARENA

Joint Workshop on Decision Support Systems, Experimental Economics & e-Participation June 5th - 7th, 2005 - Graz, Austria

Scenario for Automatic Decision

Making with ERP

Primary Decision Cycles

Secondary Decision Cycles

EMERGENT PROCESSES

FORMALISED PROCESSES

NON ROUTINE DECISION ARENA

AUTOMATED DECISION ARENA

Joint Workshop on Decision Support Systems, Experimental Economics & e-Participation June 5th - 7th, 2005 - Graz, Austria

Decision Making Life Cycle

Primary Cycle “People” Level

Secondary Cycle Systems Level

Coded / Formalised Problems & Solutions

New

Problems

Old Problems Revisited

Capture

Extract (exit strategy)

Dialogue

Embedded Knowledge

Some conclusions

• Implementing ERP is non-trivial
• Visibility on post ERP impact is low
  • Business processes
  • Managerial decision making
• ERP is an imperfect tool (eg: virtualisation)
• Commitment to spending means

implementations rarely done properly

(“Mindlessly” Swanson and Ramilier)

• And never reversed…just taken to next stages

with more implementations

Business processes

• Sales order processing
• Purchasing
• Production planning
• Describe in terms of inputs, process steps, output

and actors involved

• Specify what data must be collected at the

various stages

• Identify some generic impacts of ERP