Enterprise Resource Planning - Essay Example

Enterprise Resource Planning Enterprise Resource Planning (ERP), nowadays, has become an integral part of every organization that needs to unify all its business processes. (Brady, Monk, & Wagner, 2001) ERP helps in organizing the business processes and increases the overall efficiency. (Lau) The major advantage of implementing an information system with ERP is that it provides a single point entry for data inside the system. A single point entry means that there can be minimal redundancy and a reduction in overhead costs spent on labor. (Jacobs, 2000) A centralized database helps in maintaining data integrity. Information system (IS) managers gain immense knowledge while making precise business decisions based on the different statistics provided by a centralized database. This could weigh as a greater advantage for companies implementing ERP over other companies. A Chief Information Officer (CIO) practising in a business where huge amount of data is handled can highly benefit from these systems since the integrity of data is maintained in all circumstances. According to Lau (2005, p.127), there are several issues that need attention from a Chief Information Officer before implementation. A CIO basically needs to examine the objectives and need for implementing an ERP system. The management needs methods to tackle the continuous changes in requirements. The manager needs to identify the financial backup of the company as implementing an ERP system is highly expensive. The CIO has to take timely decisions based on the business factors and the changes required in structure and environment.(Willcocks, Leslie, & Sykes, 2000) Future integration problems of different systems are always imminent and managers should be able to create plans to adapt to the scalability of an organization. The recent example for integration and changes in structures of the system is when the University of Kent chose IBM Cognos 8 for planning requirements, replacing the spreadsheets used earlier. It is the responsibility of the CIO to provide information systems that are responsive and efficient for students. (Navuluri 2008) The current mortgage crisis and the economic recession in US have certainly affected the ERP supported information systems. With further recession predicted, CIO’s would face more tough time as changes in ERP systems require high expenditure, a cost practically unaffordable in such a crisis.(Unit4aggresso, 2008) A progressive way to move forward would be to adapt right type of plans for an ERP system, to reengineer it and contour processes to avoid loss. The CIO must have a solid relationship with peers and act knowledgeably for a successful ERP implemented system. Security An organization is bound to security threats from all possible ways. In an information system, the major security concerns are with data integrity, user authentication and stealing of data. When a system is affected by breach of security, the integrity of business data gets affected. It is the responsibility of the CIO to designate authorities and a separate team to work on the security issues. The security system can be managed either by an internal team or could be outsourced depending on the decisions taken by the top management. In cases of e-businesses where the trading is done online, security can be compromised rather effortlessly. One kind of a threat is denial of service, where the user’s request for a particular action is denied. Other is spoofing where users enter their credentials in a fake webpage. (Lin, 2006) There are cases of financial fraud such as theft of debit card or credit card done using a fake transaction. Due to these kinds of threats, an information system, especially web based systems have to be managed with highest priority and top level planning.( Trček, 2006. p.19) The CIO plays the major role of drafting security policies for managing information security. The CIO does the changes in strategies and makes those required decisions after consulting with the person in superior ranks. A policy determines how the security is implied and administered. A policy is framed by the CIO underlining the different threats and ranking them up depending on their severity. Since it is a herculean task, one of the solutions would be to cascade the responsibilities to committees of members appointed at different levels. (Dowland, Furnell, Bhavani, Thuraisingham, & Wang, 2005. p.216) The major issues facing a CIO while drafting a policy would be choosing the best-of breed firewall systems and intrusion detection systems. (Rahul, 2003) For example, as a CIO of a university, the key issue would be identity theft, theft of data and data corruption. If such a case happens, then the entire responsibility of facing the challenges falls on the CIO. The CIO must be able to keep up with the constantly changing IT infrastructure. (govttech, 2009) The campus network needs to be well designed complying with the policies devised under the CIO. A risk assessment can be made on which systems to be given highest degree of security. A disaster recovery management policy is also devised by the CIO in case of security breaches. The CIO determines on when to take backup of critical informations and where to store them. If an ERP system is involved, then appropriate funds should be generated to provide the benefits of security policies too. On a concluding note, the security in a campus could be as good as how the CIO handles the team appointed for the same.( Suess, 2003) Web Services Web services allow business models to communicate between each other regardless of the difference in underlying structures. (Newcomer, 2002. p.2) It provides a common layer for interactions allowing companies to provide several new application services to users with enhanced ease of use. The significant advantage with using web services is that the amount of expenditure spent on information systems is considerably reduced. (Web Services basics, 2003) The web services could easily be applied to an existing database of an organization or can be implemented with any other existing technology. (So what is Web Services, 2002)Any level of web security can be provided with web services and the web services can be integrated with any previously implemented security policies. Usage of web services increases the throughput of underlying architecture and increases cost effectiveness.( Web Services, 2005) Using Web services automates several applications which needs recursive iterations of the same code. This in itself saves a large amount of time. The CIO’s need not require maintenance work which was done for custom codes once implemented. On the CIO point of view, there are very few critical issues that could pose a problem while implementing web services. The CIO needs to be technically strong on these issues in order to overcome the challenges. (Lynn, 2002) The CIO has to ensure that proper policy has been put up while implementing web services. A web service based application exposes the entire information system to the web. Hence, a proper verification process has to be done before giving away confidential information. The CIO has to deal with the issue of choosing the right kind of web service for the application. The selection includes several factors such as cost, credibility of the vendor and the vendor’s ability to keep in touch with the evolving changes. (Champion, 2004) An example problem is when what happens when the CIO chooses a wrong vendor. If the wrong vendor is chosen, then it may lead to handing over the competitive edge to other companies and the whole investment of converting all applications to web services gets nullified. The CIO also need to have back up plans to revert back to original technologies if in case the security in web services is compromised. Though touted as secure in every possible way, these information systems carry an unpredictable risk as no specific standards are followed for authentication. To prevention this, the CIO has to follow multiple standards to avoid any risk. Another factor that needs a CIO’s attention is that since web services is a medium for exchange of communication between two different platform based applications, the owner of other application might adopt for some other technology. Hence a robust, all medium compatible middleware needs to be implemented. These are some of many risks that the CIO needs to address when choosing web services.( Varon, 2003) Supply Chain Management. Supply Chain Management, a management concept, helps in realizing better results for all the supply chain members in an organization including the customers. Supply chain management and IT play a major part in streamlining an organization’s processes. The complexity of supply chain management has resulted in organizations opting for online communication systems. The web increases the quality of communication being done between the customer and the organization. The internet has changed the way on how the supply chain management is done and helped customers learn more about how to sell, buy products and use the services of companies more effectively. The incorporation of IT has led in improved cost efficiency. For example, the transfer of documents supporting global trading between two companies can be sent cheaply and securely. The exchanges done between different companies can be easily tracked and managed through supply chain. On the user end perspective, placing orders, paying charges to an organization can be easily done with the help of e-commerce.(Sreenivas, 2007) To incorporate supply chain management with information technology, CIO’s may opt for an Enterprise Resource Planning system forecasting the statistics and changes that could be required in future. One of the major issues for a CIO would be in integrating the supply chain application with ERP systems. The key to this integration is to bring all applications on a common platform to reduce the costs and to increase the efficiency. An important part of CIO’s role would be to determine a list of which are must have and which are good to have during the integration. The CIO also needs to confirm the list through business experts and people in higher positions. The other issue a CIO faces is deciding upon the IT support staffs and their varied skill sets.(Srinivas, 2008) A real time example where a CIO could face a problem would be on deciding upon the technology to choose to integrate the supply chain applications. The functionalities of different applications from different vendors may be the best-of breed but CIO’s might not look into the compatibility issues that might arise with the middleware applications. This in turn, results in investment on another software and hence another set of skilled staffs need to be employed. This may not be an optimal way for cost management and will not be supported by the organization. Similarly, if the CIO fails to determine what type of information should be shared between different distributors and what remains to be private, then it might lead to confiscation of data and loss of jobs.(Scalet, 2001) The roles of CIO and supply chain management needs to be combined to show effective results provided business specific opportunities are relied upon rather than the organizational trend. (Ferrari, 2008) Customer Relationship Management Customer Relationship management (CRM) refers to managing the customers and their needs in an effective manner. CRM is mandatory for companies whose direct point of contact are the customers. The effectiveness of the management depends on how the organization knows about its customers and how well it utilizes the information to market its products and services. The management has to go through the life cycle of drawing in customers, spending efforts to increase their value as customer and effectively implementing different policies to retain them in a successive manner. The management involves maintaining a large database about the customers. Data mining can be done to identify the different relationships between different needs of the customer and thereby identifying the major needs to fulfill to increase and retain the existing customer base. It helps in identifying the prospects of cost cutting and in turn including new customers. (Edelstein, n.d.) As a CIO, it is important to understand that managing customer information is not entirely based on technology. It also depends on how well the CIO identifies the needs of the customer that the organization can satisfy. The customer environment continually evolves and keeping up with the change is a hard task for a CIO. A CIO needs to be ahead in identifying the future changes in customer needs and should always take the first step before the customer.(Support your CRM, 2002) The CIO needs to identify the right of kind of technology that helps the business process to move to the next level on the customer perspective. (McAlearney, 2007) The CIO also needs to determine on whether to outsource CRM or to manage it individually depending on the requirements such as cost management and scalability of the database. Other issues that need addressing are defining the basic business priorities; accepting the on lying challenges; estimating the impact of solving them and writing down the effective cost analysis methods. (Wailgum, 2007) A real time problem faced by CIO’s is the need to continuously improve in multiple IT applications and to manage the conflicts between each other that are bound to happen. As long as the CIO consistently finds new applications for the customer, the interest of the customers stays with the company. Creation of special teams to develop strategies, policies is one way to move forward. A full scale consolidation of business processes and business reengineering are also other solutions that could be followed by the CIO.(Virtusa, 2008) As reports suggest, 70% of CRM projects fail due to lack of proper understanding of the process management. A successful CRM is one which follows the process of putting right people to right work and choosing right process to follow and the right technology to execute it. (ismsystems, 2009) Outsourcing Every organization tries to outplay the other in every aspect and the underlying technology supporting the processes of the organization plays a major part in it. The technology is continuously changing and one which is considered best-of-breed for today may become outdated in the near future. A CIO who identifies such a change and adapts to the advanced technology always runs ahead of others. In such a process a CIO needs to identify the cost that needs to be spent for the transformation and the method to follow. A new technology may require workers with new skill sets and employing them to do may not be a cost effective way. Instead a CIO can opt for outsourcing the development and maintenance of the information system. (Goodman, 2002, p. 118-122) On following this method, a CIO must face several issues to solve. First of all, the entire information system may be made up of different technologies communicating each other through standardized middleware components. So, a change in one system’s technology affects other systems communication interface and middleware technologies. It is the responsibility of the CIO to decide on the vendor who could provide maximum output with minimum cost. A CIO may not outsource services frequently and hence may not be aware of the loop holes in a contract a vendor presents and the organization may fall for it. A better solution for such an issue would be to assign a intermediary person who has done several outsourcing agreements and knows the ins and outs of an agreement. For a CIO, outsourcing may present either an opportunity to provide best of IT services to the campus or a threat to the entire architecture of the system if it goes wrong in planning. Hence, a CIO must be able to restructure the strategy of the information system suiting the service contracts made with the outsourced party. (Goodman, 2002, p.121) The CIO has the rights to decide on when to end the outsourcing. The end may state a success if the current project yields expected results or the CIO may continue to outsource expanding the number of projects.( Stenzel, p.304) A major problem that might arise for a CIO is if the outsourced project fails to meet the requirements. In such a case, the CIO must be able to revert back to the existing technologies, analyze the cost expenditure, review the causes of failure, meet up with the superiors and designated teams and decide on whether to continue with the same vendor or to cancel the agreement. It is also necessary to make an in-depth analysis of the future changes that the developing technology would undergo. The other risk that a CIO might face is the security breach if the employees of the outsourced contractor compensate the information. (Adeleye, Annansingh, & Nunes, 2004) To avoid such kind of risks, the organization and the CIO can follow a Business Continuity Management model (BCM) where the business process can be outsourced in a controlled environment. (Gibb, & Buchanan, 2006) The Open Source Movement The public can edit and change the source code of software and enhance the software with their knowledge. Such kinds of codes are referred to as open source. They need no licensing to be used and any number of people can access it. The development of such open sources started in the early 90’s and now it has become a major competitor to licensed or closed software. The advantages of open source are a plenty. People can enhance the software in the way they want to customize; it will be continuously evolving, largely unaffected by viruses and provides several layers of services. An example of such an open source is Linux, developed way back in 90’s, now continuing as one of the biggest brands in operating systems. And most important of them all is that open source software is entirely free.(Whitlock, 2001) Despite all these advantages, the organizations and the CIOs’ still go for licensed software to develop an information system. The main drawback against the open source movement is security. The entire concept of information system lies under the foot hold of security provided by technology. If security is compromised, then whole point of having an information system for an organization gets weekend. The CIOs’ think of an open source as an open house where anyone can place their things. They want a house locked against hackers and cyber thieves. Though there are theories from proponents of open source that it is far secure than closed source since even the good people get to see the loop holes and fix it whereas in closed source only the bad guys tend to hack it. Since this theory is not entirely proved, the managers of the information system opt for licensed software though it is expensive.(Gillin, 2006) If the CIO decides to opt for open source, there are several pros and cons to consider. In case of costs, the pro is obvious but the drawback is the cost spent in hiring employees to customize the software to the organization’s need. In case of licensing, the pro is that it is simple six page licensing agreement and free to everyone but the con is that the agreement is too generic and vague to be accepted. On the aspect of enhancing software, though enhancements can be made by anyone, there is no one to fall back for the CIO if it doesn’t work. On other perspective favoring the CIO is that there are people to fall back in the open community but, too many products lack popularity and if the chosen one also falls in it, then it becomes hard to revert back . (Gillin, 2006) The current economy situation could force the CIO to go for open source software for applications where minimum amount of security is required in order to reduce costs. If the economy continues down the hill, then open source might be the best option for a CIO to implement in an information system.(Asay, 2008) Organisational change In the current environment, the changes in an organization have become inevitable. The changes in technology, in structure and in several other aspects have led people to act swiftly to maintain the integrity of the organization. These changes have to be made in order to sustain the competitive edge held over other companies. A change in technology in an information system obviously leads to a change in its underlying framework because of the complexity of connectivity between several systems. A change in organization doesn’t mean only a change in its structure; it affects the employees of the organization too. Some may get laid off due to their inability to adapt to the change, some may relieve their work because of stress and deployment of new employees might take place. (Managing organizational change, n.d.) The CIOs are expected to manage the change and transform them into a globalized strategy. The role of the CIO is next to the CEO when managing organizational change comes to the fore. Though CIOs don’t have any say on formation of business processes, they are the better ones who know about what each process does. Hence, they act as a change agent when the change has to be managed. The CIO creates the necessary conditions for the changes to happen. The CIO doesn’t play the role of change agent for the entire change process. Different persons take over as change agents for different changes. The CIO must be aware of when to become a change agent and for what kind of a change process.(Organizational Change, 1990) A real time example of organizational change is when there is a change in structure, say, moving from a distributed line of action to a more centralized process. As a CIO, the first issue to address in a change process would be to optimize the operational efficiency of the information system. Regarding the standardization of Information system with business, the CIO needs to listen from all quarters and talk to all staffs and superiors to identify what kind of technology to be implemented to support the change. It may also involve sacking of staffs and employing new people in order to support the changes in the technology. Though the CIO facilitates this process, the selection of staffs is done by the several IT heads selected by CIO itself. After aligning all the changes, the CIO returns back to the original work of innovation and processing new technologies to support new processes. (Oosten, 2008) With changes occurring in a regular manner, the role of a CIO changes drastically over time. As of now, every organization looks for a CIO who can fit as a leader having ability to change business processes, as a global CIO who can globalize the information system of the organization, as a merger who can synchronize the change when any acquisitions are made. These qualities are becoming mandatory for CIOs working in any kind of business. (Bahl, 2006) References (n.d.) (2008) IT managers suffer from rigid ERP during recession.[Online]. (n.d.), (n..d.). Available from: http://www.unit4agresso.com/310_press/312_press-releases/2314-news_it-managers-suffer-from-rigid-erp-during-recession.aspx [Accessed 09th April 2009] (n.d.) (2009) IT Security Still Top Challenge for Federal CIOs. (n.d.), (n.d.). 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