Software in Information Systems
Sidebar: Y2K and ERP
The initial wave of software-application development began in the 1960s, when applications were developed for mainframe computers. In those days, computing was expensive, so applications were designed to take as little space as possible. One shortcut that many programmers took was in the storage of dates, specifically the year. Instead of allocating four digits to hold the year, many programs allocated two digits, making the assumption that the first two digits were "19". For example, to calculate how old someone was, the application would take the last two digits of the current year (for 1995, for example, that would be "95") and then subtract the two digits stored for the birthday year ("65" for 1965). 95 minus 65 gives an age of 30, which is correct.
However, as the year 2000 approached, many of these "legacy" applications were still being used, and businesses were very concerned that any software applications they were using that needed to calculate dates would fail. To update our age-calculation example, the application would take the last two digits of the current year (for 2012, that would be "12") and then subtract the two digits stored for the birthday year ("65" for 1965). 12 minus 65 gives an age of -53, which would cause an error. In order to solve this problem, applications would have to be updated to use four digits for years instead of two. Solving this would be a massive undertaking, as every line of code and every database would have to be examined.
This is where companies gained additional incentive to implement an ERP system. For many organizations that were considering upgrading to ERP systems in the late 1990s, this problem, known as Y2K (year 2000), gave them the extra push they needed to get their ERP installed before the year 2000. ERP vendors guaranteed that their systems had been designed to be Y2K compliant – which simply meant that they stored dates using four digits instead of two. This led to a massive increase in ERP installations in the years leading up to 2000, making the ERP a standard software application for businesses.
Customer Relationship Management
A customer relationship management (CRM) system is a software application designed to manage an organization's customers. In today's environment, it is important to develop relationships with your customers, and the use of a well-designed CRM can allow a business to personalize its relationship with each of its customers. Some ERP software systems include CRM modules. An example of a well-known CRM package is Salesforce.
Supply Chain Management
Many organizations must deal with the complex task of managing their supply chains. At its simplest, a supply chain is the linkage between an organization's suppliers, its manufacturing facilities, and the distributors of its products. Each link in the chain has a multiplying effect on the complexity of the process: if there are two suppliers, one manufacturing facility, and two distributors, for example, then there are 2 x 1 x 2 = 4 links to handle. However, if you add two more suppliers, another manufacturing facility, and two more distributors, then you have 4 x 2 x 4 = 32 links to manage.
A supply chain management (SCM) system manages the interconnection between these links, as well as the inventory of the products in their various stages of development. A full definition of a supply chain management system is provided by the Association for Operations Management: "The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally." Most ERP systems include a supply chain management module.