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Q 4 How Do CRM, ERP, and EAI Support Structured Enterprise Processes? 229

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increase the value of existing customers by selling t h e m more p r o d u c t . Inevitably, over t i m e the organization loses customers. W h e n this occurs, w i n - b a c k processes categorize customers according to value a n d a t t e m p t to w i n back high-value customers.

Figure 7-12 illustrates the m a j o r c o m p o n e n t s of a CRM a p p l i c a t i o n . N o t i c e t h a t c o m p o n e n t s exist for each stage of the customer l i f e cycle. As s h o w n , all applications process a c o m m o n c u s t o m e r database. This design eliminates d u p l i c a t e d customer data a n d removes the p o s s i b i l i t y of inconsistent data, I t also means that each depart- m e n t knows w h a t has been h a p p e n i n g w i t h the customer at other d e p a r t m e n t s . Cus- t o m e r s u p p o r t , for example, w i l l k n o w n o t to p r o v i d e $1,000 w o r t h of s u p p o r t labor to a c u s t o m e r t h a t has g e n e r a t e d $300 w o r t h of business over t i m e . However, t h e y ' l l k n o w to b e n d over b a c k w a r d s f o r t h e c u s t o m e r s t h a t have g e n e r a t e d h u n d r e d s o f thousands of dollars of business. The result to the customer is that he or she feels like they are dealing w i t h one e n t i t y a n d n o t many.

CRM systems vary i n the degree of functionality they provide. One of the p r i m a r y tasks w h e n selecting a CRM package is to determine the features y o u need and to f i n d a package that meets that set of needs. You might be involved i n just such a project d u r i n g your career.

Enterprise resource planning (ERP) is a suite of applications called modules, a data- base, a n d a set of i n h e r e n t processes for c o n s o l i d a t i n g business o p e r a t i o n s i n t o a single, c o n s i s t e n t , c o m p u t i n g p l a t f o r m . A n E R P system is a n i n f o r m a t i o n system based o n ERP technology. As s h o w n i n Figure 7-13, ERP systems i n c l u d e the f u n c t i o n s

Solicitation and Lead

Management Applications

Human Resources

Applications

Sales Applications

Relationship Management Applications

ERP Database

Inventory Applications

Manufacturing Applications

Customer Support

Applications

Accounting Applications

ERP Applications

232 CHAPTER 7 Structured Processes and Information Systems

o f C R M systems, b u t also i n c o r p o r a t e a c c o u n t i n g , m a n u f a c t u r i n g , i n v e n t o r y , a n d l i u m a n resources applications.

Tfie p r i m a r y p u r p o s e o f a n ERP system is i n t e g r a t i o n ; a n ERP system allows the l e f t h a n d o f t h e o r g a n i z a t i o n t o k n o w w h a t the r i g h t h a n d is d o i n g . This i n t e g r a t i o n a l l o w s r e a l - t i m e u p d a t e s g l o b a l l y , w h e n e v e r a n d w h e r e v e r a t r a n s a c t i o n takes p l a c e . C r i t i c a l b u s i n e s s d e c i s i o n s c a n t h e n be m a d e o n a t i m e l y basis u s i n g t h e latest data.

To u n d e r s t a n d the u t i l i t y of this i n t e g r a t i o n , consider the pre-ERP systems s h o w n i n Figure 7-17. T h i s d i a g r a m represents the same processes used b y a b i c y c l e m a n u f a c t u r e r t h a t we discussed i n Chapter 3. I t includes five d i f f e r e n t databases, one each f o r v e n d o r s , r a w m a t e r i a l s , f i n i s h e d goods, m a n u f a c t u r i n g p l a n , a n d C R M . Consider the p r o b l e m s t h a t appear w i t h such separated data w h e n the sales depart- m e n t closes a large order, say for 1,000 bicycles.

First, s h o u l d the c o m p a n y take the order? Can i t meet the schedule requirements for s u c h a large order? Suppose one of the p r i m a r y parts vendors recently lost capacity due t o a n earthquake, a n d the m a n u f a c t u r e r cannot o b t a i n parts for the order i n t i m e . I f so, t h e o r d e r schedule o u g h t n o t t o be a p p r o v e d . However, w i t h s u c h separated systems this s i t u a t i o n is u n k n o w n .

Even i f parts can be o b t a i n e d , u n t i l t h e order is entered i n t o t h e finished goods database, p u r c h a s i n g is u n a w a r e o f the need t o b u y n e w parts. The same c o m m e n t applies to m a n u f a c t u r i n g . U n t i l the new order is entered i n t o the m a n u f a c t u r i n g p l a n , t h e p r o d u c t i o n d e p a r t m e n t doesn't k n o w t h a t i t needs to increase m a n u f a c t u r i n g . A n d , as w i t h parts, does the c o m p a n y have sufficient m a c h i n e a n d f l o o r capacity to fill the order o n a t i m e l y basis? Does i t have s u f f i c i e n t p e r s o n n e l w i t h the correct s k i l l

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Q4 How Do CRM, ERP, and EAI Support Structured Enterprise Processes? 233

sets? S h o u l d i t be h i r i n g ? Can p r o d u c t i o n m e e t t h e o r d e r schedule? N o o n e k n o w s before the order is approved.

Figure 7-17 does n o t show accounting. We can assume, however, that the c o m p a n y has a separate a c c o u n t i n g system t h a t is s i m i l a r l y isolated. Eventually, records of business activity f i n d their way to the accounting department and v«ll be posted into the general ledger. W i t h such a pre-ERP system, financial statements are always o u t d a t e d , available several weeks after the close of the quarter or other accounting period.

Contrast t h i s s i t u a t i o n w i t h the ERP system i n Figure 7-18. Here, all a c t i v i t y is processed by ERP a p p l i c a t i o n programs and consohdated data are stored i n a central- ized ERP database. W h e n sales is c o n f r o n t e d w i t h the o p p o r t u n i t y to sell 1,000 bicycles, the i n f o r m a t i o n that i t needs to c o n f i r m that t l i e order, schedule, and terms are possible can be o b t a i n e d f r o m the ERP system i m m e d i a t e l y . Once the order is accepted, a l l departments, i n c l u d i n g purchasing, m a n u f a c t u r i n g , h u m a n resources, a n d accounting, are n o t i f i e d . Further, transactions are p o s t e d to the ERP database as t h e y occur; the result is that financial statements are available quickly, i n most cases correct financial statements can be p r o d u c e d i n real t i m e . W i t h such i n t e g r a t i o n , ERP systems can display the c u r r e n t status of c r i t i c a l business factors t o managers a n d executives, as s h o w n i n the sales dashboard i n Figure 7-19 o n the next page.

Of course, the d e v i l is i n the details. It's one t h i n g to d r a w a rectangle o n a chart, l a b e l i t "ERP A p p U c a t i o n Programs," a n d assume t h a t data i n t e g r a t i o n takes a l l t h e p r o b l e m s away. I t is far m o r e d i f f i c u l t t o w r i t e those a p p h c a t i o n p r o g r a m s a n d t o design the database t o store t h a t integrated data. Even m o r e p r o b l e m a t i c , w h a t proce- dures s h o u l d employees a n d others use t o process those a p p l i c a t i o n programs?

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234 CHAPTER 7 Structured Processes and Information Systems

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Specifically, for example, w h a t actions s h o u l d salespeople take before t h e y approve a large order? Here are some of the questions t h a t need to be answered or resolved:

* H o w does the sales d e p a r t m e n t d e t e r m i n e t h a t an order is considered large? By dollars? By volume? W h o approves customer credit (and how)? W h o approves p r o d u c t i o n capacity (and how)? W h o approves schedule and terms (and how)? W h a t actions need to be t a k e n i f the customer m o d i f i e s the order? H o w does m a n a g e m e n t o b t a i n oversight o n sales activity?

As y o u can i m a g i n e , m a n y o t h e r questions m u s t be answered as w e l l . Because o f its i m p o r t a n c e t o o r g a n i z a t i o n s today, w e w i l l discuss ERP i n f u r t h e r d e t a i l i n q u e s t i o n Q5. Before w e d o so, h o w e v e r , c o n s i d e r t h e t h i r d t y p e o f e n t e r p r i s e system: E A I .

ERP systems are n o t for every o r g a n i z a t i o n . For example, some n o n m a n u f a c t u r i n g companies f i n d the m a n u f a c t u r i n g o r i e n t a t i o n of ERP i n a p p r o p r i a t e . Even for m a n u - f a c t u r i n g companies, some f i n d the process of c o n v e r t i n g from t h e i r c u r r e n t system to an ERP system t o o d a u n t i n g . Others are q u i t e satisfied w i t h t h e i r m a n u f a c t u r i n g a p p l i c a t i o n systems and do n o t w i s h to change t h e m .

Companies for w h i c h ERP is inappropriate still have the problems associated w i t h i n f o r m a t i o n silos, however, and some choose to use enterprise application integration (EAI) to solve those p r o b l e m s . EAI is a suite o f software a p p l i c a t i o n s t h a t integrates existing systems by p r o v i d i n g layers o f software that c o n n e c t a p p l i c a t i o n s together. EAI does t i i e f o l l o w i n g :

It connects system "islands" via a n e w layer of software/system. It enables existing applications to c o m m u n i c a t e a n d share data. It provides integrated i n f o r m a t i o n . I t leverages existing systems—leaving f u n c t i o n a l applications as is, b u t p r o v i d i n g an integration layer over the top.

• It enables a gradual move t o ERR

T h e layers o f E A I s o f t w a r e s h o w n i n Figure 7-20 enable e x i s t i n g a p p l i c a t i o n s t o c o m m u n i c a t e v d t h each o t h e r a n d t o share data. For example, EAI software can

Q5 What Are the Elements of an ERP System? 235

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be c o n f i g u r e d to a u t o m a t i c a l l y m a k e the d a t a c o n v e r s i o n r e q u i r e d t o m a k e data conversions a m o n g d i f f e r e n t systems. W h e n the C R M a p p l i c a t i o n s send data to the m a n u f a c t u r i n g a p p l i c a t i o n system, for example, the C R M system sends its data to a n EAI software p r o g r a m . T h a t EAI p r o g r a m makes the c o n v e r s i o n a n d t h e n sends the c o n v e r t e d data to the ERP system. The reverse a c t i o n is taken to send data back f r o m the ERP to the C R M .

A l t h o u g h there is no c e n t r a l i z e d EAI database, the EAI software keeps files o f metadata that describe data formats and locations. Users can access the EAI system t o find the data they need. I n some cases, the EAI system provides services that provide a " v i r t u a l integrated database" for the user to process.

The m a j o r b e n e f i t of EAI is that i t enables organizations to use existing applica- tions w h i l e e l i m i n a t i n g m a n y of the serious p r o b l e m s of isolated systems. C o n v e r t i n g to an EAI system is n o t nearly as d i s r u p t i v e as c o n v e r t i n g t o a n ERP system, a n d i t provides m a n y of the benefits of ERR Some organizations develop EAI applications as a stepping-stone to complete ERP systems.

What Are the Elements of an ERP System? Because of its i m p o r t a n c e to organizations today, we w i l l consider ERP i n more d e p t h t h a n CRM or EAI. To begin, the t e r m ERP has been applied to a w i d e array of a p p l i c a t i o n solutions, i n some cases erroneously. Some vendors a t t e m p t e d to catch the buzz for ERP by misapplying the t e r m to applications that provided o n l y one or t w o integrated f u n c t i o n a l applications.

The o r g a n i z a t i o n ERPsoftware360 p u b l i s h e s a w e a l t h of i n f o r m a t i o n a b o u t ERP v e n d o r s , p r o d u c t s , s o l u t i o n s , a n d a p p h c a t i o n s . A c c o r d i n g to its Web site {wvyw.erpsoftware360.com/erp-I01.htm), for a p r o d u c t to be considered a t r u e ERP p r o d u c t i t m u s t i n c l u d e applicafions t h a t integrate:

S u p p l y c h a i n ( p r o c u r e m e n t , sales order processing, i n v e n t o r y m a n a g e m e n t , supplier management, and related activities)

- M a n u f a c t u r i n g (scheduling, capacity p l a n n i n g , q u a l i t y c o n t r o l , b i l l of materials, and related activities)

* CRM (sales prospecting, customer management, m a r k e t i n g , customer s u p p o r t , call center support)

** H u m a n resources (payroll, t i m e and attendance, HR management, c o m m i s s i o n calculations, benefits administration, and related activities) A c c o u n t i n g (general ledger, a c c o u n t s receivable, a c c o u n t s p a y a b l e , cash m a n a g e m e n t , fixed asset a c c o u n t i n g )

A n ERP s o l u t i o n consists of a p p l i c a t i o n p r o g r a m s , databases, business process procedures, a n d t r a i n i n g a n d c o n s u l t i n g . We consider each, i n t u r n .

236 CHAPTER 7 Structured Processes and Information Systems

ERP v e n d o r s design a p p l i c a t i o n p r o g r a m s to be c o n f i g u r a b l e so t h a t d e v e l o p m e n t teams can alter t h e m to m e e t a n organization's r e q u i r e m e n t s w i t h o u t c h a n g i n g p r o g r a m code. Accordingly, d u r i n g t h e ERP d e v e l o p m e n t process, t h e developmet\ t e a m sets c o n ^ i g u i a t i o n parameters t h a t specify h o w ERP a p p l i c a t i o n p r o g r a m s w i l l operate. For example, a n h o u r l y p a y r o l l a p p h c a t i o n is c o n f i g u r e d to specify t h e n u m b e r o f hours i n the standard workweek, h o u r l y wages for different j o b categories, wage adjustments f o r o v e r t i m e and h o l i d a y w o r k , a n d so f o r t h .

O f course, there are l i m i t s to h o w m u c h c o n f i g u r a t i o n can be done. I f a n e w ERP c u s t o m e r has r e q u i r e m e n t s t h a t c a n n o t be m e t via p r o g r a m c o n f i g u r a t i o n , t h e n i t either needs to adapt its business to w h a t the software can do or w r i t e (or pay another vendor to write) a p p l i c a t i o n code to meet its r e q u i r e m e n t . As stated i n Chapter 4, such c u s t o m p r o g r a m m i n g is expensive, b o t h i n i t i a l l y and i n l o n g - t e r m maintenance costs. Thus, choosing an ERP s o l u t i o n that has applications t h a t f u n c t i o n close to the o r g a n i - zation's requirements is c r i t i c a l to its successful i m p l e m e n t a t i o n .

A n ERP s o l u t i o n i n c l u d e s a database design as w e l l as i n i t i a l c o n f i g u r a t i o n data. I t does n o t , o f course, c o n t a i n the company's o p e r a t i o n a l data. D u r i n g development, the t e a m m u s t enter the i n i t i a l values for t h a t data as p a r t of the d e v e l o p m e n t effort.

If your only experience w i t h databases is creating a few tables i n Microsoft Access, t h e n y o u probably imderestimate the value and importance of ERP database designs. SAR the leading vendor of ERP solutions, provides ERP databases that contain over 15,000 tables. The design includes the metadata for those tables, as w e l l as their relationships to each other, and rules and constraints about how the data i n some tables m u s t relate to data i n other tables. The ERP solution also contains tables filled w i t h i n i t i a l configuration data.

Reflect o n the d i f f i c u l t y o f c r e a t i n g a n d v a l i d a t i n g data m o d e l s (as discussed i n Chapter 5), a n d y o u w i l l have some idea of the a m o u n t of i n t e l l e c t u a l c a p i t a l invested i n a database design of 15,000 tables. Also, consider the m a g n i t u d e of the task of filling such a database w i t h users' data!

A l t h o u g h we d i d n o t discuss t h i s database feature i n Chapter 5, large organiza- t i o n a l databases c o n t a i n t w o types of p r o g r a m code. The first, called a trigger, is a c o m p u t e r p r o g r a m stored v d t h i n the database that runs to keep the database consis- t e n t w h e n certain c o n d i t i o n s arise. The second, called a stored procedure, is a c o m - p u t e r p r o g r a m s t o r e d i n t h e database t h a t is u s e d t o e n f o r c e business rules. A n example o f such a rule w o u l d be never to sell certain items at a d i s c o u n t . Triggers a n d stored procedures are also p a r t of the ERP s o l u t i o n . M u c h of this p r o g r a m code needs t o be c o n f i g u r e d d u r i n g the ERP i m p l e m e n t a t i o n as w e l l .

T h e t h i r d c o m p o n e n t of an ERP s o l u t i o n is a set of i n h e r e n t procedures t h a t i m p l e - m e n t s t a n d a r d business processes. ERP v e n d o r s d e v e l o p h u n d r e d s , or even t h o u - sands, of procedures t h a t enable the ERP c u s t o m e r o r g a n i z a t i o n to a c c o m p l i s h its w o r k u s i n g the a p p l i c a t i o n s p r o v i d e d b y t h e vendor. Figure 7-21 shows a p a r t of the SAP o r d e r i n g business process; t h i s process i m p l e m e n t s a p o r t i o n of t h e i n b o u n d logistics activities. Some ERP vendors call the i n h e r e n t processes t h a t are d e f i n e d i n the ERP s o l u t i o n process blueprints.

W i t h o u t delving i n t o the details, y o u should be able to u n d ^ s t a n d the flow of w o r k o u t l i n e d i n this process. Every f u n c t i o n (rounded rectangles i n Figure 7-21) consists of a set of procedures for accomplishing that f u n c t i o n . Typically these procedures require an ERP user to use application menus, screens, and reports to accomplish the activity.

As w i t h a p p h c a t i o n p r o g r a m s , ERP users m u s t e i t h e r adapt t o t h e p r e d e f i n e d , i n h e r e n t processes a n d procedures or design n e w ones. I n the latter case, the design of n e w procedures m a y necessitate changes to a p p l i c a t i o n p r o g r a m s a n d t o database structures as w e l l . Perhaps y o u can b e g i n to u n d e r s t a n d w h y organizations a t t e m p t to c o n f o r m to v e n d o r standards.

Q5 What Are the Elements of an ERP System? 237

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3ecause of t h e c o m p l e x i t y a n d d i f f i c u l t y of i m p l e m e n t i n g a n d u s i n g ERP s o l u t i o n s , ERP vendors have developed t r a i n i n g c u r r i c u l a and classes. SAP operates universities, i n w h i c h customers a n d p o t e n t i a l customers receive t r a i n i n g b o t h before a n d after the ERP i m p l e m e n t a t i o n . I n a d d i t i o n , ERP v e n d o r s t y p i c a l l y c o n d u c t classes o n site. To reduce expenses, the vendors sometimes t r a i n t h e ovganization's employees, called Super Users, to b e c o m e i n - h o u s e trainers i n t r a i n i n g sessions called t r a i n the trainer.

240 C H A P T E R 7 Structured Processes and \rAformaVion Sysrems

ERP t r a i n i n g falls i n t o t w o b r o a d categories. T h e f i r s t category is t r a i n i n g about h o w to i m p l e m e n t the ERP s o l u t i o n . This t r a i n i n g includes topics such as o b t a i n i n g

t o p - l e v e l m a n a g e m e n t s u p p o r t , p r e p a r i n g the o r g a n i z a t i o n f o r change, and" d e a l i n g w i t h the inevitable resistance that develops w h e n people are asked to p e r f o r m w o r k i n n e w ways. The second category is t r a i n i n g o n h o w to use the ERP a p p l i c a t i o n software; >Ocv\s> vn.cV\iete?. s^ecVtvc svep?, lox ViS>va%'0cve,'¥S5 •a:5>p\\c«S\w\?> VQ •̂ LtCCiTWp\N.̂ X!!c\ activities i n processes hke those i n Figure 7-21.

ERP vendors also p r o v i d e on-site c o n s u l t i n g for i m p l e m e n t i n g a n d u s i n g the ERP system. A d d i t i o n a l l y , a n i n d u s t r y o f t h i r d - p a r t y ERP c o n s u l t a n t s has d e v e l o p e d to s u p p o r t n e w ERP c u s t o m e r s a n d i m p l e m e n t a t i o n s . These c o n s u l t a n t s p r o v i d e k n o w l e d g e g a i n e d t h r o u g h n u m e r o u s ERP i m p l e m e n t a t i o n s . Such k n o w l e d g e is v a l u e d because most organizations o n l y go t h r o u g h an ERP c o n v e r s i o n once. I r o n i - cally, h a v i n g d o n e so, t h e y n o w k n o w h o w to do i t . Consequently, some employees, seasoned by an ERP c o n v e r s i o n w i t h t h e i r employer, leave t h a t c o m p a n y to become ERP consultants

l!ifi!iiii58Kr|f"Spacsfic Solutions As y o u can tell, considerable w o r k needs to be done to customize an ERP a p p l i c a t i o n to a p a r t i c u l a r customer. To reduce t h a t w o r k , ERP vendors p r o v i d e starter kits for spe- cific industries called industry-specific solutions. These s o l u t i o n s c o n t a i n p r o g r a m a n d database c o n f i g u r a t i o n files as w e l l as process b l u e p r i n t s t h a t a p p l y to ERP i m p l e - m e n t a t i o n s i n specific industries. Over t i m e , SAP, w h i c h first p r o v i d e d such solutions, a n d o t h e r ERP v e n d o r s created dozens of s u c h starter kits for m a n u f a c t u r i n g , sales a n d d i s t r i b u t i o n , h e a l t h care, and other m a j o r industries.

Whgit Coeiiparites Pm the Mmm E R P \febiidors? A l t h o u g h m o r e t h a n 100 d i f f e r e n t companies advertise ERP p r o d u c t s , n o t a l l of those p r o d u c t s meet the m i n i m a l ERP c r i t e r i a . Even of those t h a t do, the b u l k of the m a r k e t is h e l d by the five vendors s h o w n i n Figure 7-22. This figure shows m a r k e t r a n k rather t h a n m a r k e t share because i t is d i f f i c u l t t o o b t a i n c o m p a r a b l e revenue n u m b e r s . I n f o r is o v m e d b y p r i v a t e e q u i t y i n v e s t o r s a n d does n o t p u b h s h f i n a n c i a l d a t a .

Figure 7-22 C h a r a c t e r i s t i c s of Top E R P V e n d o r s Company

ERP Market Rank Remarks Future

Epicor 5 Strong-industry specific solutions, especially retail.

Epicor 9 designed for flexibility (SOA). Highly configurable ERP Lower cost.

Microsoft Dynamics

4 Four products acquired: AX,Nav, GP,and Solomon. AX and Nav more comprehensive. Solomon on the way out? Large VAR channel.

Products not well integrated with Office. Not integrated at all with Microsoft development languages. Product direction uncertain. Watch for Microsoft ERP announcement on the cloud (Azure).

Infor 3 Privately held corporation that has acquired an ERP product named Baan, along with more than 20 others.

Span larger small companies to smaller large companies.Offers many solutions.

Oracle 2 Combination of in-house and acquired (PeopleSoft, Siebel) products.

Intensely competitive company with strong technology base. Large customer base. Flexible SOA architecture. Expensive. Oracle C E O Ellison owns 7 0 % of NetSuite.

SAP 1 Led ERP success. Largest vendor, most comprehensive solution. Largest customers.

Technology older. Expensive and seriously challenged by less expensive alternatives. Huge customer base. Future grov\/th uncertain.

Q6 What Are the Challenges of Implementing New Enterprise Information Systems? 241

Microsoft's ERP revenue is c o m b i n e d w i t h its C R M revenue, a n d its t r u e ERP revenue is u n k n o w n . S i m i l a r l y , Oracle a n d SAP c o m b i n e ERP r e v e n u e w i t h r e v e n u e f r o m o t h e r p r o d u c t s .

What Are the Challenges of Innplementing New Enterprise Information Systems? I m p l e m e n t i n g n e w e n t e r p r i s e systems, w h e t h e r C R M , ERP, or E A I , is c h a l l e n g i n g , d i f f i c u l t , expensive, a n d risky. I t is n o t u n u s u a l for enterprise system projects to be w e l l over b u d g e t a n d a year o r m o r e late. T h e expense a n d risks arise f r o m f o u r p r i m a r y factors {see Figure 7-23).

U n l i k e d e p a r t m e n t a l systems i n w h i c h a single d e p a r t m e n t m a n a g e r is i n charge, enterprise systems have no clear boss. Examine the discharge process i n Figure 7-10; there is n o m a n a g e r of discharge, T h e discharge process is a c o l l a b o r a t i v e e f f o r t a m o n g m a n y d e p a r t m e n t s {and customers).

W i t h n o single manager, w h o resolves the disputes t h a t i n e v i t a b l y arise? A l l o f these d e p a r t m e n t s u l t i m a t e l y r e p o r t t o the CEO, so there is a single boss over a l l o f t h e m , b u t employees can't go to t h e CEO w i t h a p r o b l e m a b o u t , say, c o o r d i n a t i n g discharge activities between n u r s i n g a n d housekeeping. The CEO w o u l d t h r o w t h e m o u t of his or her office. Instead, the o r g a n i z a t i o n needs to develop some sort o f collab- orative m a n a g e m e n t for resolving process issues.

U s u a l l y t h i s means t h a t the enterprise develops c o m m i t t e e s a n d steering groups f o r p r o v i d i n g e n t e r p r i s e process m a n a g e m e n t . A l t h o u g h t h i s c a n be a n effective s o l u t i o n , a n d i n fact m a y be t h e only s o l u t i o n , t h e w o r k of s u c h groups is b o t h slow a n d expensive.

As stated i n Q3, few o r g a n i z a t i o n s t o d a y create t h e i r o w n e n t e r p r i s e systems f r o m scratch. Instead, t h e y license a n enterprise p r o d u c t t h a t provides specific f u n c t i o n s a n d features a n d t h a t includes i n h e r e n t procedures. But, such licensed p r o d u c t s are never a perfect f i t . A l m o s t always there are gaps b e t w e e n the organization's require- m e n t s a n d the application's capabilities.

The first challenge is i d e n t i f y i n g the gaps. To specify a gap, an o r g a n i z a t i o n m u s t k n o w b o t h w h a t i t needs a n d w h a t t h e n e w p r o d u c t does. However, i t c a n be v e r y d i f f i c u l t for a n o r g a n i z a t i o n to d e t e r m i n e w h a t i t needs; t h a t d i f f i c u l t y is one reason o r g a n i z a t i o n s choose t o license r a t h e r t h a n t o b u i l d . F u r t h e r , t h e features a n d f u n c t i o n s o f c o m p l e x p r o d t i c t s Hke C R M or ERP are n o t easy t o i d e n t i f y . T h u s , gap i d e n t i f i c a t i o n is a m a j o r task w h e n i m p l e m e n t i n g enterprise systems.

The second challenge is d e c i d i n g w h a t to do w i t h gaps, once t h e y are i d e n t i f i e d . Either t h e o r g a n i z a t i o n needs t o change the w a y i t does t h i n g s t o adapt to t h e n e w

Figure 7-m

• Collaborative management Four Primary Factors

• Requirements gaps

• Transition problems

. Employee resistance

242 CHAPTER 7 Structured Processes and Information Systems

a p p l i c a t i o n , or the a p p l i c a t i o n m u s t be altered to m a t c h w h a t the o r g a n i z a t i o n does. Either choice is p r o b l e m a t i c . Employees w i l l resist change, b u t p a y i n g for alterations is expensive and, as n o t e d i n Chapter 4, the organization is c o m m i t t i n g t o m a i n t a i n i n g those alterations as the a p p l i c a t i o n is changed over t i m e . Here, organizations f i l l gaps b y choosing t h e i r lesser regret.

Transifosi Probiiems T r a n s i t i o n i n g t o a n e w e n t e r p r i s e system is also d i f f i c u l t . The o r g a n i z a t i o n m u s t s o m e h o w change f r o m u s i n g isolated d e p a r t m e n t a l systems to using the n e w enter- prise system, w h i l e c o n t i n u i n g to r u n the business. It's like h a v i n g heart surgery w h i l e r u n n i n g a 100-yard dash.

Such transitions require careful p l a n n i n g a n d substantial t r a i n i n g . Inevitably, p r o b - lems w i l l develop. K n o w i n g this w i l l occur, senior management needs to c o m m i m i c a t e the need for the change to the employees and t h e n stand b e h i n d the new system as the kinks are w o r k e d out. It is an i n c r e d i b l y stressful t i m e for all i n v o l v e d . We w i l l discuss development techniques and i m p l e m e n t a t i o n strategies further i n Chapter 10.

EsYsplioyes Resisteiic© People resist change. Change requires e f f o r t a n d i t engenders fear. Considerable research and literature exists about the reasons for change resistance a n d h o w organi- zations can deal w i t h i t . Here we w i l l summarize the m a j o r principles.

First, senior-level m a n a g e m e n t needs t o c o m m u n i c a t e the need for the change to the o r g a n i z a t i o n , a n d reiterate this, as necessary, t h r o u g h o u t the t r a n s i t i o n process. Second, employees fear change because i t threatens self-efficacy, w h i c h is a person's behef t h a t he or she can be successful at his or her j o b . To enhance c o n f i d e n c e , employees need to be t r a i n e d a n d coached o n the successful use of the n e w system. W o r d - o f - m o u t h is a v e r y p o w e r f u l factor, a n d i n some cases key users are t r a i n e d ahead of t i m e to create positive buzz about the n e w system. Video d e m o n s t r a t i o n s of employees successfully u s i n g the n e w system are also effective.

T h i r d , employees m a y need t o be given extra i n d u c e m e n t t o change t o the n e w system. As one experienced change consultant said, " N o t h i n g succeeds like praise or cash, especially cash." Straight-out pay for change is b r i b e r y ; b u t contests w i t h cash prizes a m o n g employees or groups can be very effective at i n d u c i n g change.

I m p l e m e n t i n g n e w enterprise systems can solve m a n y p r o b l e m s a n d b r i n g great efficiency a n d cost savings to an organization, b u t i t is n o t for the f a i n t of heart.

How Will Service-Oriented Architecture (SOA) Impact Enterprise Information Systems? Service-oriented architecture (SOA) is a software design p h i l o s o p h y i n w h i c h activities are organized i n t o m o d u l e s of f u n c t i o n a l i t y called Web services t h a t are requested and delivered over the Internet^ u s i n g SOA standards. I n t h i s q u e s t i o n , we w i l l f i r s t describe SOA principles and t h e n explain h o w SOA w i l l i m p a c t enterprise i n f o r m a t i o n systems like ERP.

I t is d i f f i c u l t to explain SOA directly w i t h o u t d e l v i n g i n t o details of c o m p u t e r p r o g r a m design a n d i m p l e m e n t a t i o n . Instead, consider the analogy of a pizza stand. The stand p u b l i s h e s a m e n u of pizzas t h a t i t is capable of p r o d u c i n g . As everyone k n o w s , t h e

Some companies may change too often. See the Guide on pages 246-247for a discussion on how management fads can grow tiresome for employees.

^ Actually, any internet that uses TCP/IP could be used. Here, to simplify, we'll assume the Internet.

Q7 How Will Service-Oriented Architecture (SOA) Impact Enterprise Information Systems? 243

c u s t o m e r studies t l i e m e n u , orders a pizza, the p i z z a is created, a n d the c u s t o m e r pays. The m e n u specifies the content, size, and price of the pizza. As a customer, y o u have no idea h o w or where the pizza is b e i n g made. The pizza s t a n d c o u l d be b u y i n g f r o z e n pizzas f r o m a grocery d o w n the street a n d b a k i n g t h e m , or i t c o u l d make the sauces i n - h o u s e b u t b u y the d o u g h elsewhere, or i t c o u l d make e v e r y t h i n g in-house. You have n o idea h o w i t is done, a n d as l o n g as the pizza is delivered i n accordance w i t h t h e t e r m s i n t h e m e n u , y o u d o n ' t need t o . The p i z z a s t a n d can make m a j o r changes i n t h e ways t h a t i t makes pizzas, and y o u n e e d never k n o w a b o u t those changes. You s t i l l get the pizza you've ordered at the price o n the m e n u .

U s i n g SOA t e r m i n o l o g y , w e w o u l d say t h a t the pizza stand provides a service t h a t is c o n s u m e d by the customer. The p r o d u c t i o n of the service (pizza) is encapsulated, w h i c h means that the m e t h o d o l o g y a n d l o c a t i o n of the service is private. Users of the service do n o t k n o w h o w or where the service is p e r f o r m e d , and they need n o t know. A l l they need to k n o w is the m e n u .

A Web service is an encapsulated software service p r o v i d e d over the I n t e r n e t using standard protocols. A service provider creates a service description, w h i c h documents h o w to use the service, and publishes that d e s c r i p t i o n u s i n g a standardized language called Web Service Description Language (WSDL).

A l l service p r o v i d e r s p u b l i s h W S D L d e s c r i p t i o n s o f t h e i r services. For example, A m a z o n . c o m offers aWeb service for programs to use to search its Web site. I f y o u w a n t t o w r i t e a p r o g r a m t o access t h a t service, y o u f i r s t need t o access t h e Web service's W S D L service d e s c r i p t i o n . You can f i n d i t at http://soap.amazon.com/schemas2/ AmazonWebServices.wsdl. T h a t code has m e a n i n g to c o m p u t e r p r o g r a m m e r s ; t h e y k n o w h o w t o use i t to w r i t e programs to search A m a z o n . c o m . Check i t out just for f u n .

Because the service is encapsulated, n o one knows h o w or where t h a t service is p r o v i d e d . A m a z o n . c o m c o u l d e m p l o y m i l l i o n s of people w h o m a d l y search p r i n t e d catalogs i n a d u s t y back r o o m i n Chicago, or, t h a t service c o u l d be d i s t r i b u t e d over t h o u s a n d s o f c o m p u t e r s u s i n g A m a z o n . c o m ' s o w n Elastic C l o u d 2 (EC2; see Case Study 1, page 28). Or i t c o u l d be s o m e t h i n g else. But, because of encapsulation, the search m e t h o d a n d l o c a t i o n can change t o m o r r o w w i t h o u t i m p a c t i n g any p r o g r a m that accesses that s e m c e .

P r o g r a m m e r s w h o w a n t t o d e v e l o p p r o g r a m s t o request the service use t h e service d e s c r i p t i o n t o d e s i g n t h e i r p r o g r a m s . Later, t h e services are d e l i v e r e d a n d c o n s u m e d using standards such as X M L , SOAP, REST, a n d others.

T h e m a j o r e n t e r p r i s e a p p l i c a t i o n s l i k e SAP a n d Oracle ERP were d e v e l o p e d l o n g before the I n t e r n e t a n d l o n g before the SOA standards were developed. They consist of h u n d r e d s o f t h o u s a n d s of lines of c o m p u t e r code, a l l w r i t t e n t o use p r e - I n t e r n e t technology.

Today however, ERP customers do n o t w a n t to be restricted to thick-cUent applica- tions o n t h e i r desktop c o m p u t e r at w o r k . They w a n t to be able to access ERP a n d other enterprise a p p l i c a t i o n s u s i n g a Web browser, a n iPad, a s m a r t p h o n e , a n d H T M L 5 devices yet to come. The changing technical landscape poses a n e n o r m o u s challenge and b u r d e n o n enterprise s o l u t i o n vendors. R e w r i t i n g all of the SAP code, for example, to enable use of these other devices is too costly and w o u l d take too l o n g . Even i f SAP c o u l d afford the redevelopment investment, by the t i m e i t has r e w r i t t e n its software a n e w standard or device w i l l have come along.

Web services p r o v i d e a s o l u t i o n to this p r o b l e m . Rather t h a n r e w r i t i n g all of the ERP code, SAP can b u i l d an SOA interface a r o u n d p a r t i c u l a r features and f u n c t i o n s i n their existing code a n d expose the f u n c t i o n a l i t y o f that older code via a Web service.

For example, ail ERP applications m a i n t a i n a vendor list and a list o f items and prices of p r o d u c t s each vendor provides. The existing t h i c k - c l i e n t , desktop a p p l i c a t i o n is accessed via forms a n d reports b u i l t i n t o the code. N o w suppose SAP or another ERP

— - customers that w a n t to access this fist ancf these prices using an I'Pador an

No SQL? Who knows?

I n this case, SAP or another s o l u t i o n provider can expose the vendor and price Hsts as a Web service. They can p r o v i d e Web services for q u e r y i n g for a vendor, q u e r y i n g for all parts p r o v i d e d by a vendor, u p d a t i n g prices, r e m o v i n g a vendor or i t e m f r o m a l i s t , a n d so f o r t h . As s h o w n i n Figure 7-24, once t h e y have d o n e t h a t , c u s t o m e r s or t h i r d - p a r t y vendors can w r i t e code that w i l l expose these services o n a w i d e variety of devices.

F u r t h e r m o r e , the c u s t o m e r c a n use t h i s ERP data i n ways t h a t n o one ever envisioned. Suppose, for example, t h a t the customer wants to compare prices of the items i t purchases to prices for the same items o n A m a z o n . c o m . N o one at SAP or any other ERP v e n d o r ever p l a n n e d o n t h a t r e q u i r e m e n t , b u t a customer c o u l d use data f r o m b o t h the ERP and A m a z o n . c o m Web services to develop a r e p o r t a p p l i c a t i o n .

We t h i n k of H T M L a n d Web browsers as h a v i n g p r o v i d e d m o s t of the u t i l i t y o f t h e Web. However, i n t e r m s of n o n t r i v i a l I n t e r n e t a p p l i c a t i o n s with deep f u n c t i o n a l i t y , SOA Web services are at least of equal i m p o r t a n c e .

2022? J^^ Because of the exceedingly l o w processing costs, w e can expect t h a t m o r e a n d m o r e enterprise IS solutions w i l l move to the c l o u d . Because of the flexibility a n d adaptability of Web services, we can f u r t h e r expect that those cloud-based enterprise solutions w i l l be exposed as Web services. A l l of this is h a p p e n i n g r i g h t now, i n 2012.

B u t , let's take the n e x t step. W h a t h a p p e n s w h e n c l o u d - b a s e d SOA e n t e r p r i s e applications have m o v e d t o the iPad and the A n d r o i d p h o n e a n d are h o s t e d i n Office 365 a n d SharePoint Online? You'll l e a r n about tribes and their r e l a t i o n s h i p to Google-H i n the next chapter, b u t w h a t happens w h e n users have t a k e n t h e i r d a t a f r o m t h e i r s m a r t p h o n e a n d posted i t i n a w o r k circle o n G o o g l e + w i t h a h n k for m o r e data back t o SharePoint Online?

This e v o l v i n g , b u t real, scenario creates e n o r m o u s security challenges t h a t w e ' l l discuss i n Chapter 12. B u t w h a t else?

It's ine\'itable: islands of automation, version 2,0. A n e w type of i s l a n d of a u t o m a - t i o n w i l l result f r o m t h e s t o r i n g o f data i n t h e i C I o u d , i n Google-f-, i n SharePoint O n l i n e , a n d so o n , w h i l e o t h e r versions o f t h e data are stored i n the c o r p o r a t e d a t a center i n SAP or w h a t e v e r — m a y b e n o longer t h e c u r r e n t version, b u t some version.

Using t h i s perspective, examine Figm'e 7-10 again. It's likely that doctors, nurses, a n d f a m i l i e s w i l l w a n t t o access a n d process p a t i e n t d a t a o n w h a t e v e r devices are c o n v e n i e n t for t h e m . I n that case, where is the integrated data for any given patient? The enterprise database s h o w n i n t h a t figure has some version of i t . But where is the rest? A n d w h e r e is t h e c u r r e n t version? The d a t a are spread over devices used by people all over the h o s p i t a l , at doctors' chnics, a n d i n their homes. I n t r u t h , there is no data i n t e g r a t i o n i n this scenario.

We have re-created i n f o r m a t i o n silos, b u t these version 2.0 silos are m o r e isolated a n d less secure t h a n the previous ones. The cost savings of the c l o u d and the c o n v e n - ience of personal devices ensure the success of this n e w scenario. But, t h e n what? You a n d y o u r classmates w i l l f i n d o u t as y o u manage y o u r w a y t h r o u g h this p r o b l e m i n t l i e next 10 years.