OTHER MIS TITLES OF INTEREST MIS: Systems Analysis and Design, 8/e Kendall & Kendall ©2011 Managing Information Technology, 7/e Essentials of Systems Analysis and Design, 5/e Brown, DeHayes, Hoffer, Martin & Perkins ©2012 Valacich, George & Hoffer ©2012 SharePoint for Students Cole, Fox & Kroenke ©2012 DECISION SUPPORT SYSTEMS: Experiencing MIS, 3/e Decision Support and Business Intelligence Kroenke ©2012 Systems, 9/e Using MIS, 4/e Turban, Sharda & Delen ©2011 Kroenke ©2012 Business Intelligence, 2/e MIS Essentials, 2/e Turban, Sharda, Delen & King ©2011 Kroenke ©2012 DATA COMMUNICATIONS & NETWORKING: Management Information Systems, 12/e Laudon & Laudon ©2012 Applied Networking Labs Boyle ©2011 Essentials of Management Information Systems, 9/e IT Networking Labs Laudon & Laudon ©2011 Cavaiani ©2010 IT Strategy, 2/e Principles of Computer Networks McKeen & Smith ©2012 and Communications Dumas & Schwartz ©2009 Information Systems Management In Practice, 8/e McNurlin, Sprague & Bui ©2009 Business Data Networks and Telecommunications, 8/e MIS Cases: Decision Making with Application Panko & Panko ©2011 Software, 4/e Miller ©2009 ELECTRONIC COMMERCE: Information Systems Today, 5/e E-Commerce: Business, Technology, Society, 8/e Valacich & Schneider ©2012 Laudon & Traver ©2012 DATABASE: Electronic Commerce 2012 Turban, King, Lee, Liang & Turban ©2012 Hands-on Database Introduction to Electronic Commerce, 3/e Conger ©2012 Turban, King & Lang ©2011 Modern Database Management, 10/e Hoffer, Ramesh & Topi ©2011 ENTERPRISE RESOURCE PLANNING: Database Concepts, 5/e Enterprise Systems for Management, 2/e Kroenke & Auer ©2011 Motiwalla & Thompson ©2012 Database Processing, 12/e Kroenke & Auer ©2012 CORPORATE SECURITY: Applied Information Security, 2/e SYSTEMS ANALYSIS AND DESIGN: Boyle ©2012 Object-Oriented Systems Analysis and Design The Management of Network Security Ashrafi & Ashrafi ©2009 Carr, Snyder & Bailey ©2010 Modern Systems Analysis and Design, 6/e Corporate Computer and Network Security, 2/e Hoffer, George & Valacich ©2011 Panko ©2010 Second Edition Enterprise Systems for Management Luvai F. Motiwalla University of Massachusetts Lowell and Jeff Thompson Oracle Consulting Boston Columbus Indianapolis New York San Francisco Upper Saddle River Amsterdam Cape Town Dubai London Madrid Milan Munich Paris Montreal Toronto Delhi Mexico City Sao Paulo Sydney Hong Kong Seoul Singapore Taipei Tokyo Editorial Director: Sally Yagan Editor in Chief: Eric Svendsen Executive Editor: Bob Horan Director of Editorial Services: Ashley Santora Editorial Project Manager: Kelly Loftus Director of Marketing: Patrice Lumumba Jones Senior Marketing Manager: Anne Fahlgren Senior Managing Editor: Judy Leale Production Project Manager: Clara Bartunek Creative Art Director: Jayne Conte Cover Designer: Suzanne Behnke Cover Art: Fotolia Lead Media Project Manager: Lisa Rinaldi Full-Service Project Management: Abinaya Rajendran / Integra Software Services Pvt. Ltd. Printer/Binder: STP / RRD / Harrisonburg Cover Printer: STP / RRD / Harrisonburg Text Font: 10/12, Times Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page within text. Copyright © 2012, 2009 Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, electronic, mechanical, photocopying, recording, or likewise. To obtain permission(s) to use material from this work, please submit a written request to Pearson Education, Inc., Permissions Department, One Lake Street, Upper Saddle River, New Jersey 07458. Many of the designations by manufacturers and seller to distinguish their products are claimed as trademarks. Where those designations appear in this book, and the publisher was aware of a trademark claim, the designations have been printed in initial caps or all caps. Library of Congress Cataloging-in-Publication Data Motiwalla, Luvai F. Enterprise systems for management / Luvai F. Motiwalla, Jeff Thompson.—2nd ed. p. cm. Includes bibliographical references and index. ISBN-13: 978-0-13-214576-3 (alk. paper) ISBN-10: 0-13-214576-6 (alk. paper) 1. Management information systems. I. Thompson, Jeffrey, II. Title. HD30.213.M68 2012 658.4'038011—dc22 2011007275 10 9 8 7 6 5 4 3 2 1 ISBN 10: 0-13-214576-6 ISBN 13: 978-0-13-214576-3 This book is first and foremost dedicated to the many students whom I have taught and learned from over the years including the design and implementation of ERP systems in the real-world organizations. They have helped me understand and appreciate the often-complex concepts and render them in terms that are familiar and related to their everyday lives. The book is also dedicated to the many friends and colleagues with whom I have interacted over the past 20 years. In addition, I dedicate this book to my wife, Rashida, our caring parents, and our kids, Taher and Naqiya, who encouraged and supported me while writing this book. Finally, I dedicate this book to the memory of my father, Fazle, who passed away in 2007! Luvai Motiwalla I would like to dedicate this book to my wife, Deb, and our two children, Trevor and Taylor. They are my inspiration and motivation. They keep me balanced and centered on what is important in life. Jeff Thompson BRIEF CONTENTS Preface xiii Acknowledgments xix About the Authors xxi Chapter 1 Introduction to Enterprise Systems for Management 1 Chapter 2 Systems Integration 35 Chapter 3 Enterprise Systems Architecture 57 Chapter 4 Development Life Cycle 88 Chapter 5 Implementation Strategies 139 Chapter 6 Software and Vendor Selection 167 Chapter 7 Operations and Postimplementation 190 Chapter 8 Program and Project Management 225 Chapter 9 Organizational Change and Business Process Reengineering 242 Chapter 10 Global, Ethics, and Security Management 266 Chapter 11 Supply Chain Management 302 Chapter 12 Customer Relationship Management 331 Index 353 iv CONTENTS Preface xiii Acknowledgments xix About the Authors xxi Chapter 1 INTRODUCTION TO ENTERPRISE SYSTEMS FOR MANAGEMENT 1 ̈ CASE 1.1 Opening Case: Hershey’s Enterprise 21 Project 2 Preview 3 Enterprise systems In Organizations 4 Information Silos and Systems Integration 5 Enterprise Resource Planning Systems 6 What Is an ERP? 6 Evolution of ERP 7 Business Process and ERP 8 ERP System Components 10 ERP Architecture 11 e-Business and ERP 14 Benefits and Limitations of ERP 15 ERP Implementation 17 Business Process Management 17 ERP Life Cycle 17 ERP Implementation Strategies 18 Software and Vendor Selection 19 Operations and Post-Implementation 21 People and Organization 21 Project Management 21 Role of Consultants 22 Change Management 23 Business Process Reengineering 23 Global, Ethical, and Security Management 23 ERP Vendors 24 Key Vendors 25 SAP 26 Software Extensions and Trends 27 v vi Contents Implications for Management 28 Summary 29 • Exercises 31 • Review Questions 31 Discussion Questions 32 ̈ CASE 1.2 Real-World Case: Rolls Royce’s ERP Implementation 32 Chapter 2 SYSTEMS INTEGRATION 35 ̈ CASE 2.1 Opening Case: Air Cargo’s e-Enterprise System 36 Preview 37 Functional Silos 38 Horizontal Silos 38 Vertical Silos 39 Business Process and Silos 40 Evolution of Is in Organizations 42 IS Architectures 44 IS Functionalization 44 Systems Integration 46 Logical Vs. Physical SI 46 Steps in Integrating Systems 47 Benefits of System Integration 48 Limitations of System Integration 48 ERP and Systems Integration 49 ERP’s Role in Logical Integration 49 ERP’s Role in Physical Integration 50 Implications for Management 51 Summary 52 • Exercises 53 • Review Questions 53 Discussion Questions 54 ̈ CASE 2.2 Real-World Case: Systems Integration at UPS Corp 54 Chapter 3 ENTERPRISE SYSTEMS ARCHITECTURE 57 ̈ CASE 3.1 Opening Case: Nestlé’s ERP Implementation 58 Preview 59 Why Study Enterprise System Architecture? 59 ERP Modules 60 Production Module 62 Purchasing Module 62 Inventory Management Module 62 Sales and Marketing Module 63 Finance Module 63 Human Resource Module 63 Contents vii Miscellaneous Modules 63 Benefits of Key ERP Modules 63 ERP Architecture 65 Layered Architecture Example 65 Benefits and Limitations 71 Web Services Architectures 72 Service-Oriented Architectures 74 SOA and Web Services 77 Enterprise Content Management and SOA 77 Cloud Architecture 78 Implications for Management 81 Summary 82 • Exercises 83 • Review Questions 83 Discussion Questions 84 ̈ CASE 3.2 Real-World Cases: Wipro and MBH 84 Chapter 4 DEVELOPMENT LIFE CYCLE 88 ̈ CASE 4.1 Opening Case: Of Men and Mice: An ERP Case Study 89 Preview 90 Systems Development Life Cycle 91 Traditional SDLC 91 Rapid SDLC Approaches 92 ERP Implementation Life Cycle 93 ERP Implementation Plan 94 ERP Implementation Methodology 95 Traditional ERP Life Cycle 96 Rapid ERP Life Cycles 99 ERP Life Cycle Vs. SDLC 105 Project Management 107 Project Roles and Responsibilities 109 Implications for Management 109 Summary 112 • Exercises 113 • Review Questions 113 Discussion Questions 114 ̈ CASE 4.2 Real-World Case: Two Short Cases: OilCO & ExploreCO 114 Appendix A 118 Appendix B 137 Chapter 5 IMPLEMENTATION STRATEGIES 139 ̈ CASE 5.1 Opening Case: Aquatech International Corporation 140 Preview 141 viii Contents ERP Components 141 Hardware 141 Software 142 People Resources