Strategic Information System for Digitalization - MyAssignmenthelp

Question: Discuss about theStrategic Information System for Digitalization. Answer: Report Overview, Introduction Background As the world is moving towards the age of globalization and digitalization, the complexity of the business processes keeps on increasing, with pressure of automating the business processes and cost cutting, it becomes impossible for the organizations to run their business without using IT systems. Emerson electric whose case is discussed in this report is one of such organizations which are now considering switching to modern ERP systems from traditional legacy systems. A lot of investment is needed in the ERP projects due to its complexity. Moreover, there are many case studies consisting of FoxMeyer Drug, Hersheys and Nike that how their ERP implementation project proved to be a nightmare and make them on verge of bankruptcy (Hustad, Olsen, 2014). It is important to study the product before choosing the ERP vendor as often, multiple stakeholders are involved. In order to ensure the success of the project risk analysis and risk mitigation techniques are also quite important. This r eport aims at discussing the various steps required for selection of the ERP vendor and this will help in making the informed decision and also ensure that the investments would reap the benefits and also throw the light on common challenges for selecting ERP systems by traditional organizations like Emerson electric. Analysis Discussion Emerson Electric has offices in more than 200 countries. It is a global manufacturing conglomerate. Various products like density measurement equipment, pressure measurement equipment, valves, Water treatment systems are manufactured by Emerson Electric and it competes with the worlds major business giants like Schneider, Honeywell, ABB, General electric, Agilent to name a few (Hung Ho, 2012). The organizations business processes and other important aspects that will be helpful in making a correct decision about selection of appropriate ERP vendor are discussed in detail as follows: Definition of Existing Business Processes There are numerous suppliers worldwide providing raw materials to Emerson electric which buys raw materials from them and converts them into finished goods after carrying out various manufacturing operations like drilling, cutting and assembling. It operates in Business to Business segment as its final products are used in other industries. Some of the common business processes of the company are as follows: It requests for quotations from suppliers and procures to pay business process which consists of floating requirements. It places order once quotations are received, based on the cost and other parameters, like lead time, quality and freight conditions, it can finalize the contract with the selected suppliers. The quality department inspects the material received once the order is placed and accepted by the supplier. Invoice is processes and payment is made to the suppliers, once accepted. This entire transaction is posted to general ledger in the end (Esteves, 2014). Make to order and Make to stock: Emerson Electric manufactures some of the products having standard specifications based on the forecast of the demand. They are then stored in the warehouse and customer orders are replenished from the warehouses. While some of the products are confirmed products which means each customer specifies their own requirements and specifications while placing order. Therefore, such orders will be manufactured only when the customer sales order is booked and processed. There are various sub processes involved in this process are carrying out of sequence of operations, issuing materials, scheduling of various jobs, detailed routing and BOM preparation, creation of discrete jobs (Teittinen Pellinen, 2013). Order to cash process: This process involves the processing of customer orders and booking the orders. Customer shipping date is promised once booking date is confirmed, these orders will be manufactured or directly replenish from the available quantity. When the final invoice is received, entire transaction is paid to the general ledger of the company, once material is shipped to the customers and account receivables are updated. Quality process: When material is received from the supplier, it is measured against the quality standards as quality processes are also very important. Also, to make sure that quality is maintained throughout during the work order creation and processing, their qualities are measured after critical operation (Huang, Handfield, 2015). Warehouse processes: Various warehouses processes like put away, picking also needs to be performed. When material is received from the supplier, it also has to be placed in the warehouse and also the finished goods that have been manufactured are placed in the warehouses. The integrated view of customer ERP business process for Emerson can be shown as: Develop Business Requirements Emerson electric has filtered its requirement lists which are must to be supported by the selected ERP products based on the above business processes It should have financial capability and accounts reconciliation features It should also have serial tracking, ABC analysis of inventory, Cycle counting ERP system must support e-procurement where purchase orders are placed with suppliers in real time ERP systems must have supplier collaboration tool where forecasts can be shared with suppliers It also has the sales order processing system that can calculate the appropriate promising date by taking into account the various make and buy lead times of the product and where appropriate sales order is booked and special instructions are captured (Brown, Xu, Stevenson, 2015). Software should also have the ability to scale in case the company wishes to apply it for other sites. It should have routing capturing information, ability to track which material is issued for which job and used in which finished good assembly. Ability to rollup costs for calculating the cost of the goods. Reporting and dashboard features that could capture the key performance indicators and also helps management in decision making Ability to enter quality results Determine the Systems Requirements Most important thing is that customizations are not advisable in ERP systems as they are quite expensive to maintain and also lost during upgrades. Thus, standard business requirements should be directly fit into the system without customizing any aspect of it. There are various other system requirements too. Also, there should be functional security in the systems so that appropriate role should access only the appropriate functions (Shukla, Mishra, Jain, Yadav, 2016). One more crucial thing is that system should be secure and also supports data backup functions. Also, system should be easy to use, easy to maintain, cost effective and user friendly. Apart from it, there are two important things, on the premise and cloud. This is the age of cloud computing. As on the premise version is quite expensive and took time to implement, ERP vendor must have its product confirm to the latest standards which is also available on the cloud. System should also have the cross functional view of the business processes and supports integrative approach in the processes. It means Emerson does not have to buy the server, storage or perform backup activities, it just wants subscription based system on cloud which is easy to scale up as well as scale down (Ahmad, Cuenca, 2013). Software and Vendor Selection Lets discuss some of the most popular and seasoned product, from numerous ERP/AIS systems. XERO: Xero is the biggest beneficiary of advent of cloud computing and thus challenging the leadership position of MYOB, it is a popular software and it has the largest cloud provider company in Australia. It is growing very fast and has the inventory, procurement and finance features but it is also mainly an accounting systems and not complete ERP systems. It requires to be integrated to other tools and third party bolt on systems for achieving the complete equivalent ERP functionality. In this sense, it may be expensive and also required dealing with multiple vendors and finalizing deals. As Emerson is looking for single ERP package to fulfill its requirements, Xero will not be able to fulfill that as it is not a complete ERP system. MYOB: MYOB began to lose its leadership status to Xero, although it is one of the oldest accounting software in Australia which is having a largest markets share but with the advent of the cloud, it is facing downside. Not only this, its approach is quite confused in Cloud. Apart from it, it is primarily accounting system which provides taxation features, account reconciliation; e-procurement features but lacks features in manufacturing operation like ability to maintain Bills of material and routing operation. Though its good software, it does not entirely fulfill the business requirement of Emerson Electric and thus is not recommended because of just being an accounting system. Oracle ERP: Oracle ERP includes all the functionalities of these products in its ERP program and is very famous ERP and it acquired worlds best product like Siebel, People soft, Demantra. It has Account payables, account receivables, general ledger, manufacturing, Procurement, customer services and many other modules. Emerson can buy any number of modules based on its business requirements. It also has a cloud based subscription and thus easy to scale up. Though it fulfills all the business requirements, its expensive pricing is the only downside. It will be easy to implement and easy to maintain however due to licensing being quite expensive, it is not recommended to Emerson Electric. SAP Systems: For SAP systems it makes sense for the company to shortlist the SAP and invite vendor to showcase its features as they are very popular ERP packages and it has been used by the competitors of Emerson like Honeywell, Agilent, GE systems. Moreover, SAP like oracle have all the supply chain, services, manufacturing and finance modules and company can buy any based on its requirements. It also has subscription based billing on the cloud. Its global currency support make it very useful for the global company like Emerson that have plants in different locations as well as buy materials from suppliers located in different geographies and it is cheaper than oracle. In conclusion, SAP is the recommended software which can fulfill the needs of the Emerson Electric and aligns with its business processes as well. It can be said that all the above software is good for the company. However, there are numerous benefits of SAP over other software. SAP is a reputed company and the sales support from SAP is also good. Therefore, it is recommended that Emerson Electric should use the services of SAP. It is also recommended that Emerson should get the standard SAP suite customized to match its internal requirements. SAP has standard products and these products would be utilized with maximum efficiency only when the core product is customized to meet the local needs of Emerson Electric. Determine at least three ways which companies or organizations utilize such technologies to improve business efficiency Currently, each department is looking to satisfy his own department performance indicators without worrying about the overall performance indicators as business processes are operating in silos. But with ERP, cross functional have their indicators which mean each department has to contribute its bests so that the overall process is efficient. This will reduce redundancy and ability to handle multiple times in multiple systems (Haddara, 2014). With ERP implementation, there will be only one instance of customer data that will be maintained unlike currently where customer data is maintained by the sales team as well as account receivables team. News systems will improve the velocity, adaptability and visibility of the entire supply chain of the company. Less quantity of inventory means less shrinkage costs, less obsolescence costs, less storage costs. With e-procurement, lead time of procurement to pay cycle will reduce which means company can also reduce the inventory that it keeps. In order to improve on time order fulfillment rate with proper inventory quantity in place, organization will able to fulfill more customer order on time. Manufacturing processes like cost rollup helps the company to understand the cost it is incurring on various products and thus helps in better pricing strategies. Evaluate the Level of Efficiency of the Technology Implementation Organization also needs to evaluate the implementation partner after finalizing the software. There are many organizations which implements the ERP software for organizations like Deloitte, Accenture. Thus, the proposals should be invited from both of them with clear cut mention of goals, requirements, expectations and the better proposal should be evaluated. For the efficient technology implementation as they are actually the product experts who know the intricacies of the product, the implementation partner is very important. Accenture has respectable reviews and has huge experience and has served numerous manufacturing clients in SAP worldwide. Efficiency of implementation can be measure if various milestones are on time, budget is under controlled and users are satisfied with the performance (Nwankpa, 2015). There has been failure of SAP implementation project at FoxMeyer which completely blames its implementation partner. Examine Potential Security Risks, Data Breaches The key potential risks ERP are data theft and data leakage. ERPs systems contain huge set of data comprising of personnel, confidential information of suppliers, customers and employees. Moreover, there is payment information, various contracts information is stored which makes With cloud, data is often stored in servers which have multiple backups in various geographies so as to handle any calamity and emergency (Dixit Prakash, 2011). ERPs systems quite susceptible for the data theft and data attack. Also, there are certain rules related to law that the confidential data in few of the countries should not be stored in the server which is not in the physical location of the country i.e. in a server situated in a foreign country. Ability to make changes in the key data by super users is also a big threat and must be taken care by the company. Thus, such cases need to be evaluated so as to save from a penalty. Provide Guidelines on how These Risks could be Mitigated. Biggest risk is the risk of exposing confidential information to someone who is not supposed to do so. This can be protected by the functional security. For instance, person who is a receiver will able to see only that information in the systems, i.e. open purchase orders and quantity that is due for receiving. Thus, appropriate rights will help the company to protect such risks. There are various ways to handle these risks and most of them are inbuilt in the ERP systems and nothing extra is required (Dezdar Ainin, 2011). The company needs to mention the important business laws and conditions with the cloud provider and ensure that key terms that will be responsible for what to protect itself from any miscarriage of data (Momoh Roy, 2010). Moreover, ERP systems have proper workflows built in so as to take care of various approvals. Workflows will take care of any unauthorized approval and thus provide the added benefit. For example, purchase orders often flows through various steps before it is approved and placed with suppliers. Conclusion The various aspects of the selection of ERP or Accounting systems are discussed in this case. Emerson electric is a manufacturing conglomerate that is planning to replace its existing systems by modern ERP systems. Thus, company has treaded itself on the path of exploring the correct software which aligns with its business processes. This case discusses what the important things are and attribute that should be looked into the EPR vendor and its product and the very first thing which is feasibility study of the business processes. After these decisions are made, risk analysis should be required along with clear timelines and milestones to achieve the same. As conclusion, Emerson electric has been advised to use the SAP ERP to move from its traditional system to highly automated ERP system as this ERP is a proven software and has used by the business giants in the world of manufacturing like Honeywell, GE, ABB. Moreover, it fulfills all the business requirements for Emerson electric and aligns with its business processes. References Alaqeel, K., Shakkah, M. S., Rahmat, R. 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