Unit 2: ERP Systems, Business Processes, and IT
Obtaining a competitive advantage with information technology requires more than just using the technology. As we saw in the last unit, it is about the innovative use of technology integrated into your business processes that bring about competitive advantage. In this unit, you will dig deeper into the concepts of business processes and explore the use of ERP Systems, Business Process Management, and Business Process Reengineering in an organization.
Completing this unit should take you approximately 5 hours.
Upon successful completion of this unit, you will be able to:
- explain the concept of business processes;
- explain the purpose of an enterprise resource planning (ERP) system in organizations;
- give examples of how information systems support organizations in managing business processes; and
- explain the concept of business process reengineering and describe the role information technology plays in it.
2.1: What Is a Business Process?
A business process is a series of tasks that are repeated in order to produce a measurable output. Pay attention to how the business process has been defined in business literature over the years. Take a moment to write a definition of a business process in your own words.
How would you explain that business processes are crucial for the functioning of a business? What happens if those processes are not transparent or misunderstood? How is technology integrated with the processes? Think about tasks you regularly perform, like paying your bills online or checking your email. Can you define the steps involved in the actions? Do you use technology to facilitate those actions? Are you able to map out simple processes that support your day-to-day activities? Based on your process map, do you feel confident that another person could complete the task? If not, why?
2.2: Enterprise Resource Planning Systems
ERP crosses traditional boundaries, such as sales, marketing, manufacturing, and vendor suppliers. Designed to be an internal coordination system that facilitates both decision-making and responding to customer needs, ERP has become an essential part of business-infrastructure technology. Watch this video to learn how ERP systems are used in businesses. What is an ERP system? What is its business function? What parts of the business are usually included in an ERP implementation? Is ERP essential? If so, why? If not, Why not?
Every management decision has some alternative. In the case of ERP, there are compelling arguments both in support and opposing ERP implementation. The application of ERP is not without risks in that improper or incomplete implementation can cause a drop in productivity, response to customer needs, and loss in competitive advantage. Implementing an ERP system can also create a cast in stone mentality, "This is the only way to do this, nothing else is acceptable", causing a loss of flexibility in customer relations. Conversely, ERP has tremendous advantages in ensuring consistent, increasing value in products and services. What are the rewards of implementing an ERP system for an organization? What are the risks of implementing an ERP system?
Look back on your notes. Did you uncover any advantages or risks that the course did not mention earlier? Did you find benefits or risks that you had not considered? Given the advantages and disadvantages of implementing an ERP system, imagine that you need to write a cautionary letter to your company CEO in response to an email she just sent you:
"Good morning. I want to implement a new ERP and you are the lead for the transition. I want it online quickly but don't spend a lot of money on it. Also, make sure everyone has access to it – I don't want the IT department to be the only employees around here who can make sure this system works."
2.3: Business Process Management
While this article focuses on healthcare, it also reflects the need for BPM in nearly every discipline. Business processes drive efficient and effective operations, activities, and procedures. From this perspective, read this article to better understand the application of business process management (BPM) in an area quite possibly outside your normal scope of work. How do business processes and enterprise resource planning systems work together to support information technology in a business organization?
This video explains the basics of BPM and gives you an idea of how a business might use software to support business processes.
Several issues surround business process reengineering that must be understood for its effective use in the business environment. First, it is critical to know what BPR is and what it isn't. Second, you need to know when and where it can be effectively used to improve your business operations. Third, you need to appreciate the power of the business process as the cornerstone of success.
Unit 2 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.