AFM241 Study Guide - Final Guide: Net Present Value, Information Technology Management, Business Analytics
30 May 2018
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- 2) Increased integration of applications
- 3) Improved quality of reports
- 4) Reduction of time for issuing of reports
- 5) Improved decisions based on timely and reliable accounting information
6.3.3 Benefits: For IT Infrastructure
- IT infrastructure consists of all sharable and reusable IT resources (e.g.
telecommunications networks and servers).
- It provides a foundation for present and future business applications.
- Companies devote a substantial portion of their IT budgets on IT infrastructure. ES are
technically not clearly identifiable as IT infrastructure, but they represent a
significant investment.
- ES provide infrastructure that supports:
- 1) Business flexibility for future changes
- 2) Reduced IT costs and marginal costs of business units’ IT
- 3) Increased capability for prompt and economic implementation of new applications
6.3.4 Benefits: For Competing with Business Analytics
- ES are the foundation for development of future applications, such as decision support
systems (DSS) and business intelligence (BI) systems.
- ES adoption is the foundation for a firm’s ability to compete in terms of business
analytics.
- ES are transaction focused and designed to capture the flow of information associated
with the firm’s business processes.
- The typical ES provides the user with the tools to summarize transaction level data and
prepare reports that can be used to monitor performance and support decision making.
- Firms that want to leverage this data to compete in terms of business analytics will have
to extract the transactional data and transfer it into a data warehouse. Next, they will
have to invest in the appropriate DSS and BI tools.
- In order to realize the full benefits of centralized information and use of integrated
systems, ES are often augmented with DSS, BI and other analytics applications.
6.4 Business Value: Accounting/Finance Angle
- ES were designed to link distinct and interdependent business units, thus they provide
technological and business integration.
- Technological integration means that the firm can have a common IT infrastructure that
allows smooth transfer of information from one business unit to another.
- If technological integration is coupled with appropriate investments in human skills, new
workflow or process redesign, it can lead to business process integration.
- ES is the foundation for the development of e-commerce and supply chain application.
- The theory that relates to integration is Porter’s value chain. A firm’s activities can
be divided in primary and support. A firm’s ability to integrate these activities
better than its competitors is what makes a company more valuable than its
competitors.
- When a firm implements an entire ES suite, this signals that it will try to integrate the
entire value chain.
- The functional scope of ES implementation refers to the number of modules
implemented.
- When the functional scope is greater, the expected increase in firm value is greater.
Document Summary
Increased integration of applications, improved quality of reports, reduction of time for issuing of reports, improved decisions based on timely and reliable accounting information. It infrastructure consists of all sharable and reusable it resources (e. g. telecommunications networks and servers). It provides a foundation for present and future business applications. Companies devote a substantial portion of their it budgets on it infrastructure. Es are technically not clearly identifiable as it infrastructure, but they represent a significant investment. Es provide infrastructure that supports: business flexibility for future changes, reduced it costs and marginal costs of business units" it, increased capability for prompt and economic implementation of new applications. Es are the foundation for development of future applications, such as decision support systems (dss) and business intelligence (bi) systems. Es adoption is the foundation for a firm"s ability to compete in terms of business analytics. Es are transaction focused and designed to capture the flow of information associated with the firm"s business processes.
