Enterprise Resource Planning

Unit 3

Unit 3

ERP and Related Technologies

Structure: 3.1 Introduction Objectives 3.2 Business Process Re-engineering 3.3 Management Information systems 3.4 Decision Support Systems 3.5 Executive Information Systems Advantages of EIS Disadvantages of EIS 3.6 Data Warehousing 3.7 Data Mining 3.8 On-Line Analytical Processing 3.9 Supply Chain Management 3.10 Summary 3.11 Terminal Questions 3.12 Answers 3.13 Case Study 3.14 Glossary

3.1 Introduction
By now you must be familiar with the Concept of enterprise and importance of decision making during the implementation of an Enterprise Resource Planning (ERP) system. ERP is commonly defined as the technique and concept for the integrated management of businesses as a whole, and the effective use of management resources, to improve the efficiency of an enterprise are known as ERP. In an organisation, ERP systems serve an important function by integrating separate business functions like materials management, product planning, sales, distribution, finance and accounting; and others into a single application. However, ERP systems do have certain limitations as listed below: To generate custom reports or queries, managers have to depend on a programmer. This inhibits them from obtaining information quickly, which is very important for maintaining a competitive advantage.
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More often, managers need to look past the current status to find trends and patterns that help them to make better decisions. But ERP systems provide current status only, such as open orders, limiting the resources for managers There are no applications in ERP systems that integrate the data with other enterprise or division systems. They also fail to provide external intelligence support.

Many technologies are developed which help to overcome these limitations. These technologies help in overcoming the limitations of a standalone ERP system, when used in conjunction with the ERP package, and thus, help the employees to make better decisions. Some of these technologies are: Business Process Reengineering (BPR) Management Information System (MIS) Decision Support Systems (DSS) Executive Information Systems (EIS) Data Warehousing Data Mining On-line Analytical Processing (OLAP) Supply Chain Management Out of the above technologies MIS, DSS, and EIS are forerunners of the ERP systems. Once the ERP system and the other technologies (like Data Warehousing, Data Mining, OLAP, and so on.) are integrated, the MIS or DSS become redundant, as the new systems take care of their functions, and are slowly phased out from the scene. To cope up with the increased competition in the current ERP market, the ERP vendors are searching for ways to penetrate into new market segments, and expand the existing ones. Tomorrows ERP systems will have most of these technologies integrated into them when compared to the existing ones. In this unit we will see how each of these technologies is related to ERP systems. This unit familiarises you with the old and current technologies of ERP systems, their drawbacks and advantages, and development on new technologies.
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Learning Objectives After studying this unit you will be able to: Analyse and know the technologies that are related to ERP systems Explain how technologies like BPR enables organisations to analyse their business functions better, thereby facilitating a more efficient ERP implementation Analyse how predecessors of ERP like MIS, DSS and EIS will slowly phase out Explain how new technologies and concepts like data warehousing, data mining, OLAP and supply chain management help increase the power, usefulness, efficiency, and effectiveness of ERP systems.

3.2 Business Process Reengineering (BPR)

BPR has been around for quite some time and a lot has been written about it in both, the practitioner trade press and the academic research journals. However, the controversy still remains about whether there is any accurate description of BPR, or BPR is just a trend. Some even say that it is an appealing label to tag on to whatever your company is doing is of latest and greatest work which is up to the current market trend. But if re-engineering is to continue in the long run, then it must do more than advertise its considerable successes to date. It must become more proactive and inclusive with regard to human, organisational, and motivational change issues. Dr Michael Hammer defines BPR 1 as ".the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical and contemporary measures of performance such as cost, quality, service, and speed." One of the main tools for making this change is the Information Technology (IT). Any BPR effort that fails to recognise the importance of IT, and goes through the pre-BPR analysis and planning phases without considering the various IT options available, is a wrong way in proceeding for implementation. The effect of this kind of proposed IT solutions on the employees and the organisation, is bound to crash during takeoff.

Article In Harvard Business Review

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We have seen that the ERP systems help in integrating the various business processes of the organisation with the help of modern developments in IT. With a good ERP package, the organisation will have the capability of achieving dramatic improvements in critical areas such as cost, quality, speed, and so on. Many BPR initiatives end up in the ERP implementation. Initially, the concept of BPR was started as a technique in private sector to help their organisations to re-think, how they do their work in order to improve customer service, cut operational cost, and to stay ahead of their competitors. Later some of the big companies adopted this to redesign their business processes, rather than re-adjusting current ways of doing work. In the concept of reengineering, Information Technology (IT) plays an important role. Some experts consider BPR as a major enabler for new forms of working and collaboration within their organisation, and across organisational borders. It has enabled in increasing organisational efficiency. With the experience and lessons learned from the early adopters, some BPR practitioners advocated a change from IT-centric and emphasis to a customer-centric approach. This enables the developer, to develop technology keeping in mind the customer and the organisation norms rather than the technology and the organisation requirements. These processes are characterised by process ownership, customer focus, value adding, and cross-functionality. Most of the time reengineering has not lived up to its expectation, the main reasons are: Reengineering process is carried out with a view point that the organisations processes ineffectiveness is the limiting factor for its performance. However, most of the time this may or may not be true. Most of the developers adopt the principle that, the reengineering processes of performance improvement needs to be started with complete removal or revamping of the previous system, which is also not an effective method. Many experts do believe that, the process of reengineering does not provide an effective way to focus improvement efforts on the organisations constraint.
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Activity 1 Conduct a survey and list out the various support technology for ERP systems designed by various companies and their application in various sectors. Self Assessment Questions 1. More often managers need to look past the current status to find ___________________ which help them in better decision making. 2. BRP must become more proactive and inclusive with regard to __________________ issues. 3. Reengineering process is carried out with a view point that the ________________ processes

3.3 Management Information Systems (MIS)

In the past, most payroll systems were data processing systems that did little more than process time sheets, print payroll checks, and keep totals of annual wages and deductions. Most other departmental information systems did the same data processing and never monitored the actual process of the departments. The data processing systems evolved into management information systems, as managers began to demand more and better information about the working of the organisation,. For example, a human resource MIS system is capable of predicating the average number of worker sick days, the amount that must be given as bonus, the overtime allowances, and so on. MIS is a computer-based system that optimises the collection, collation, transfer, and presentation of information throughout an organisation. MIS accomplished this through an integrated structure of databases and information flow with in the organisation. Data Processing System(DPS) is a system which processes data which has been captured and encoded in a format recognisable by the data processing system or has been created and stored by another unit of an information processing system.

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The major differences between a Management Information System (MIS) and Data Processing System (DPS) are: When compared to DPS, the integrated database of the MIS enables greater flexibility in meeting the information needs of the management. The MIS integrates the information flow between functional areas like accounting, marketing, manufacturing, and so on, whereas, data processing systems tend to support a single functional area. MIS caters to the information needs of all levels of management whereas data processing systems focus on departmental-level support. Management's information needs are supported on a timelier basis with the MIS (with its on-line query capability) than with a data processing system.

The main characteristics of the MIS are the ability to: Support the data processing operation of transaction handling and record keeping. Support a variety of functional areas in an organisation using integrated database. Provide operational, tactical,, and strategic levels of the organisation, but does not provide ad-hoc query facility for most part of the structured information.

Any successful MIS must support a business five year plan or its equivalent. It must be flexible enough to provide reports based up on performance analysis in specific areas critical to that plan. The reports include feedback loops that allow for titivation of every aspect of the business, including recruitment and training regimens. MIS must not only point out how things are carried out, but why they are not able to perform as planned. These reports also include performance related to cost centres and projects that drive profit or loss. This must be done in such a way that it identifies individual accountability in virtual real-time. Professor Allen S. Lee states that2 "research in the information systems field examines more than the technological system, or just the social system, or

MIS Quarterly journal

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even the two side by side; in addition, it investigates the phenomena that emerge when the two interact." The MIS is so flexible that it can adapt very well to the changing needs of an organisation.

3.4 Decision Support System (DSS)

Before making a decision managers spend a lot of time and effort in gathering and analysing information. Decision Support Systems (DSSs) were created to assist managers in the task of data gathering and analysing. DSS is an interactive information system that relies on an integrated set of user-friendly software and hardware tools. With the help of these tools you can produce and present information targeted to support management in the decision-making process. In many occasions, depending on their previous experience knowledge, decision-makers can make quality decisions. However, decision-makers, especially at the top management levels, are often confronted with complex decisions. The analysis of such complex decisions involves many factors that may be difficult for a human being to handle. The need for complex information analysis and reduction of human interference in some crucial decision making process demanded for a decision making system, and led to the evolution of Decision Support Systems (DSSs). A DSS can help to close the information gap and allow managers to improve the quality of their decisions. This requires the DSS hardware and software to be embedded with the latest technological innovations, planning and forecasting models, fourth generation languages, and even artificial intelligence. In many cases, DSS facilitates the decision-making process, helping the decision-makers to choose between alternatives. Some decision support systems can automatically rank the alternatives, based on the decision-maker criteria. DSS also helps in removing the monotony and boredom of gathering and analysing data. Management Information Systems (MIS) are best at supporting decisions that involve structured problems such as, when to reorder the raw materials, how much to order, and so on. In contrast, DSS are designed to support decision-making processes involving semi-structured and unstructured problems. Here, the role of the DSS is to help managers in getting the
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information they want, in the way they want. For example, if a manager wants to reduce cycle time. He might look at various facts like, the availability of raw materials, skilled personnel, the average machine down time, and so on. So there is no way the system can anticipate what the manager wants. But DSS is capable of helping the managers in making such decisions. The main characteristics of a DSS, are: It is designed to address semi-structured and unstructured problems. It mainly supports decision-making at the top management level. It is interactive, user-friendly, and the decision-maker can use it with little or no assistance from a computer professional. It makes general-purpose models, simulation capabilities and other analytical tools available to the decision-maker. A DSS does not replace the MIS; instead supplements the MIS. There are distinct differences between them. MIS emphasises on planned reports on a variety of subjects; DSS focuses on decision-making. MIS is standard, scheduled, structured, and routine; DSS is quite unstructured, and is available on request. The organisational system constrains the MIS; DSS is immediate and user-friendly. There are several ways to classify DSS applications. However, not all DSS will fit neatly into one category, but a mix of two or more architecture in one will neatly fit into the category. Based on the kind of supports provided by DSS, it can be classified into three distinct, interrelated categories like the Personal Support, Group Support, and Organisational Support. DSS components may be classified as: Inputs: It includes factors, numbers, and characteristics to analyse. User Knowledge and Expertise: It covers the area where there is a requirement of a user for manual analysis of the inputs. Outputs: It helps in transforming data from which DSS "decisions" are generated. Decisions: These are the results produced by the DSS based on user criteria.

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DSS which perform selected and related decision-making functions and are based on artificial intelligence or intelligent agents technologies are called Intelligent Decision Support Systems (IDSS). DSS is extensively used in business and management like the executive dashboard, business performance software, and so on. It allows faster decision making, identification of negative trends, and better allocation of business resources. For example, the software might obtain information from the local operating system in a computer, from one or more applications that may be running. Information is also obtained from one or more remote sites on the Web and is presented as though it all came from the same source. Activity 2 Visit a manufacturing industry and analyse the training methods adopted by the management to get their employees work in the new technological environment and the strategies developed by the company to enhance the efficiency of their system with the new technology. Self Assessment Questions 4. MIS is a computer-based system that optimises the collection, collation, transfer, and _______________ of information throughout an organisation. 5. The MIS supports the data processing functions of ________________ and _______________. 6. DSS is designed to address ___________ and ______________ problems.

3.5 Executive Information Systems (EIS)

The line dividing DSS and EIS is very thin. EIS can be considered as a better and sophisticated DSS. Top-level executives and decision-makers have to face many problems and face enormous work related pressures. In spite of that, they have to make the right decisions, at the right time, to resolve the problems and take the company forward keeping the profit margins high. In today's competitive world, reaction times are shrinking, and time to make decisions is very less. EIS is a decision support system especially made for senior-level executives. The main concern of an EIS is how decisions can affect the entire organisation.
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An EIS takes the following into consideration: The overall vision and mission of the company, and the companys goals Strategic planning and objectives Organisational structure Crisis management/Contingency planning Strategic control and monitoring of overall operations The user interface is very important as an EIS needs to be efficient to get back the relevant data for decision makers. Several types of interfaces are available for the EIS structure, such as scheduled reports, questions/ answers, menu driven, command language, natural language, and input/ output. The most important aspect is that the interface must fit the decision makers decision-making style. If the executive is not comfortable with the final information style, the EIS will not be fully utilised. It is considered that an ideal interface for an EIS would be the one thats: Simple to use Highly flexible Provides consistent performance Reflects the executives world Contains help information Many a times executive decision-making also requires access to outside information from competitors, governmental regulations, trade groups, news gathering agencies, and so on. So most executive decision involves a high degree of uncertainty and a future course for the organisation. Successful EIS are easy to use, flexible and customisable, and use the latest technological innovations. 3.5.1 Advantages of EIS Some of the advantages of EIS are: Easy for top management to use as extensive computer experience is not required in operations Provides timely delivery of company summary information Information that is provided is understood better Filters data for management Improves to tracking information Offers efficiency to decision makers
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3.5.2 Disadvantages of EIS Some of the disadvantages of EIS are: It is system dependent It has limited functionality, with respect to design Its information overload for some managers Its benefits are hard to quantify It has high implementation costs Its system may become slow, large, and hard to manage It needs good internal processes for data management It may lead to less reliable and less secure data In future mainframe computer systems and the executive info systems will not be bonded together. This methodology will help executives escape from learning different computer operating systems and substantially decreases the implementation costs for companies. However, utilising existing software applications lies in this new kind of technology. Executives can also eliminate the need to learn a new or special language for the EIS package. Future executive information systems are concentrated only on providing a system that supports senior executives, but also contain the information needs for middle managers. Since, future EIS are equipped with the power of integrating potential new applications and technology into the systems, the future executive information systems will become diverse. For example, consider incorporating artificial intelligence (AI), integrating multimedia characteristics and ISDN technology into an EIS. This enhances the capability of the EIS system by making them timely, efficient and effective in supporting the decision making process.

3.6 Data Warehousing

A lot of problems are created when the operational data is kept in the databases of the ERP system. Over a period of time, the amount of data will increase and this will affect the performance of the ERP system. Therefore it is better to archive the operational data once its use is over. When I say 'the use is over', it does not mean that the archived data is useless, of course, it is one of the most valuable resources of the organisation. However, once the operational use of the data is over, it must be removed from the operational databases. For example, once the financial year is over, the
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daily transactional data can be archived. Figure 3.1 shows what happens if the data is not archived.

Figure 3.1: Operational Data vs. Archive Data

As you can see from the Figure 3.1, it is evident that even though the operational data volume is nearly the same each year, the data is not archived. The total amount of data that is stored in the operational database will go on increasing. Figure 3.2 shows the effect of keeping this huge amount of data in the operational database. It is clear from the above graph that, as the volume of the data in the database increases, the performance of the database and the related applications decreases. Since the data that has to be processed by the system is more and increases every year, resulting in the decrease in the performance of the ERP system.

Figure 3.2: Data Volume vs. Performance Sikkim Manipal University Page No. 48

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From the above discussions, it is evident that we must separate the operational data from the non-operational data. Here the term archive data is not used, because if the non-operational data is archived, there is little or no use for it. But this data is a very valuable resource, and is too precious to be kept in some archive. It is in this situation that a data warehouse comes in handy. Data warehousing has become an essential module in every ERP package. In order to track the performance of the company and to plan for the future, the current data and the data from the previous years are very essential for the managers. They come in handy for managing the non operational data and help in reducing the large and growing data base of an organisation. The basic principle of data warehousing system is that, the data stored for business analysis can be accessed most effectively by separating it from the data in operational systems. The potential performance degradation on the operational system can result during the analysis processes. To overcome this business analysis and the operational data are stored separately High performance and quick response time is very essential feature for operational systems. The reason for separating the operational data from the analysis data has no significant changes with the evolution of the data warehousing systems. Except that now they are considered more formally during the data warehouse building process. The advancement in technologies and changes in the nature of business have made many of the business analysis processes much more complex and sophisticated. The latest technologies in data warehousing systems support very sophisticated online analysis, including multi-dimensional analysis in addition to producing standard reports. Activity 3 Visit a departmental store and write down the steps how you can implement an ERP package. Also analyse how you can enhance the efficiency of the stores inventory management using Data Warehousing. Self Assessment Questions 7. EIS is a ___________ system especially made for senior-level executives.
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8. If the data is not archived the total amount of data that is stored in the __________________ will go on increasing. 9. _________________ has become an essential module in every ERP package.

3.7 Data Mining

In todays information age that we live, many organisations widely recognise the importance of collecting data that reflects our business, or activities that achieve competitive advantage. In most organisations powerful systems are available for collecting data and managing it in large databases. However, the major bottleneck of converting this data into effective information is, the difficulty faced in extracting knowledge about the relevant issue from the data collected from the systems data base. Modelling the investigated system and discovering relations that connect variables in a database are the subjects of data mining. Data mining is the process of identifying valid, new, potentially useful, and ultimately clear information from databases. This information is used to make crucial business decisions. Modern data mining systems, self learn from the previous history of the investigated system, formulating and testing hypotheses about the rules, which the system obeys. When a brief and valuable knowledge about the system of interest has been discovered, it can and must be incorporated into some decision support system. This helps the manager make wise and informed business decisions. The main reason for needing automated computer systems for intelligent data analysis is the enormous volume of existing and newly appearing data that require processing. The amount of data collected each day by various businesses, scientific, and governmental organisations around the world is daunting. Research organisations, academic institutions, and commercial organisations create and store huge amounts of data each day. It is very difficult for human analysts to cope with such overwhelming amounts of data. Two other problems that human analysts suffer while processing the data are: The inadequacy of the human brain when searching for complex multifactorial dependencies in the data The lack of objectiveness in analysing the data
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The major cause of concern with a human expert is that, most of the results he draws are always with the help of the previous experience of investigating other systems. However, this may or may not help sometimes under certain new conditions, but it is almost impossible to get rid of this reality. One additional benefit that you can find using automated data mining systems is that, this process has a much lower cost than hiring an army of highly trained and paid professional statisticians. However, data mining will not completely eliminate the human participation in solving the task but it significantly simplifies the job. This system allows an analyst, who is not a professional in statistics and programming, to manage the process of extracting knowledge from data stored in the data base. Data mining commonly involves four classes of tasks: Classification: Arranges the data into predefined groups. For example, consider an email program that attempts to classify an email as legitimate or spam. Some of the common algorithms are decision tree learning, nearest neighbor, naive Bayesian classification, and neural networks. Clustering: Is a process of classification of data but the groups are not predefined, so the algorithm will try to group similar items together. For example, when we search for data from a particular year, all the data containing the key words of the entered search statement will be listed. But it will not be grouped; instead all the relevant data will be made available. Regression: This task tries to find the function which models the data with the least error. Association rule learning: This task performs the search for relationships between variables. For example, consider a supermarket that gathers data on their customer purchasing habits. With the help of association rule learning task, the supermarket can determine which products are frequently bought together and use this information for marketing purposes. This is sometimes referred to as market basket analysis.

The verification of the patterns produced by the data mining algorithms that occur from wide data set is the last leg of knowledge discovery from data. In
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most case the patterns that data mining algorithms find may not be true and valid. It is usual for the data mining algorithms to find patterns in the training set which are not present in the general data set, this is called over fitting. This can be overcome if the evaluation uses a set of test data, which the data mining algorithm was not trained on. The patterns obtained are applied to this test set and the resulting output is compared to the desired output. For example, a data mining algorithm trying to separate spam from valid emails would be trained on a training set of sample emails. Once trained, the patterns obtained would be applied to the test set of emails which it had not been trained on. The correctness of these patterns can then be measured from how many emails they correctly classify.

3.8 On-Line Analytical Processing (OLAP)

According to Business Intelligence Ltd3, OLAP can be defined in five words Fast Analysis of Shared Multidimensional Information. FAST means that the system has the ability to deliver most of its responses to users within about five seconds, with the simplest analysis taking no more than one second and very few taking more than 20 seconds. ANALYSIS means that the ability of the system to cope with any business logic and statistical analysis that is relevant for the application and the user, and keep it easy enough for the target user. SHARED means that the system is well equipped to meet all the security requirements for confidentiality (possibly down to cell level). If multiple write access is needed; it provides concurrent update locking at an appropriate level. MULTIDIMENSIONAL means, that the system must provide a multidimensional conceptual view of the data, including full support for hierarchies and multiple hierarchies. INFORMATION is refined data that is accurate, timely, and relevant to the user. Simply put, OLAP describes a class of technologies that are designed for live ad-hoc data access and analysis. While transaction processing (OLTP) generally relies solely on relational databases, OLAP has become synonymous with multidimensional views of business data. Multidimensional
3

http://www.OLAPReport.com

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database technology supports these multidimensional views, and provides the technical basis for calculations and analysis required by Business Intelligence applications. For a very wide range of applications OLAP technology is preferred as a right choice for a company. The most common applications are budgeting and planning; sales and marketing analysis; financial reporting and consolidation. In past few years OLAP is extensively being used for applications such as product profitability and pricing analysis; activity based costing; manpower planning; and quality analysis. Any management system that requires a flexible, top down view of an organisation use OLAP.

3.9 Supply Chain Management

A supply chain can be defined as a network of facilities and distribution options that performs the function of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Both in service and manufacturing organisations supply chains system exist. However, the complexity of the chain may vary greatly from industry to industry and firm to firm. Traditionally, the departments like the marketing, distribution, planning, manufacturing, and purchasing of an organisation operated independently along the supply chain. This kind of traditional organisations each departments had their own objectives, which often conflict with other departments objectives. For example, Marketing's objective of high customer service and maximum sales revenue conflicts with manufacturing and distribution goals. Many manufacturing operations are designed to maximise throughput and lower costs, but very little concern was given for the impact of this on inventory levels and distribution capabilities. With the very little information and based on the historical buying patterns purchasing contracts were often negotiated. This resulted in chaos and there was not a single, integrated plan for the organisation there were plans as many as services the company offered. This clearly demanded a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.
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If the SCM has to be successful their must be a change from managing individual functions to integrating activities into key supply chain processes. For example, the purchasing department places orders as requirements become known. In case of marketing department, it has to respond to customer demand, communicate with several distributors and retailers as it attempts to determine ways to satisfy this demand. Information shared between supply chains partners can only be fully leveraged through process integration. The integration process of Supply chain business process involves collaborative work between buyers and suppliers, joint product development, common systems, and shared information. But one has to understand that continues information flow is required to operate an integrated supply chain. Top management of many companies have reached the conclusion that optimising the product flows cannot be accomplished without implementing a process approach to the business. An organisations supply chain or logistics network is affected because of supply chain sustainability. This is a major business issue and is frequently quantified by comparison with SECH ratings like social, ethical, cultural and health records. Today consumers have become aware of the environmental impact of their purchases and companys SECH ratings. Along with this nongovernmental organisations ([NGO]s), are setting the agendas for focusing on transitions to organically-grown foods, anti-sweatshop labor codes, and locally-produced goods that will support independent and small business groups. Because supply chains frequently account for over 75% of a companys carbon footprint many organisations are exploring how they can reduce this and thus improve their SECH rating. Companies can improve their overall competencies with the help of supply chain specialisation, in the same way that outsourced manufacturing and distribution has done. It allows them to focus on their core competencies and assemble networks of specific, best-in-class partners to contribute to the overall value chain itself, thereby increasing overall performance and efficiency. The leading reason why supply chain specialisation is gaining popularity is just because of the companys ability to quickly obtain and deploy this domain-specific supply chain expertise without developing and maintaining an entirely unique and complex competency in house.
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Activity 4 Conduct a survey in a manufacturing industry, to know how much time and the training was required for the company to bring their employees to work with the new technology being implemented in their existing ERP package. Self Assessment Questions 10. Data mining is the process of identifying Valid, new, potentially useful, and ultimately clear ______________ from databases. 11. INFORMATION is refined data that is _________, timely, and relevant to the user 12. __________________ is a strategy through which such integration can be achieved.

3.10 Summary
Before ERP systems, each department in an organisation would most likely have their own computer system, data, and database. Unfortunately, many of these systems would not be able to communicate with one another or need to store or rewrite data to make it possible for cross computer system communication. For instance, the financials of a company were on a separate computer system than the HR system, making it more intensive and complicated to process certain functions. Once an ERP system is in place, usually all aspects of an organisation can work in harmony, instead of every single system needing to be compatible with each other. For large organisations, increased productivity, and less types of software are a result. Implementation of an ERP System Implementing an ERP system is not an easy task to achieve, in fact it takes lots of planning, consulting and in most cases 3 months to 1 year. Moreover ERP systems are extraordinary wide in scope and for many larger organisations can be extremely complex. Implementing an ERP system will ultimately require significant changes on staff and work practices. While it may seem reasonable for an in house IT staff to head the project, it is widely advised that ERP implementation consultants be used, as consultants are

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usually more cost effective and are specifically trained in implementing these types of systems. One of the most important traits that an organisation should have when implementing an ERP system is ownership of the project. Due to the various changes that takes place in an organisation and its effect on almost every individual in the organisation, it is important to make sure that everyone is on board and help making the project and using the new ERP system a success. Usually organisations use ERP vendors or consulting companies to implement their customised ERP system. There are three types of professional services that are provided when implementing an ERP system, they are Consulting, Customisation, and Support. Consulting Services usually consulting services are responsible for the initial stages of ERP implementation, they help an organisation go live with their new system, with product training, workflow, improve ERPs use in the specific organisation, and so on. Customisation Services Customisation services work by extending the use of the new ERP system or changing its use by creating customised interfaces and/or underlying application code. While ERP systems are made for many core routines, there are still some needs that need to be built or customised for an organisation. Support Services- Support services include both support and maintenance of ERP systems. For instance, trouble shooting and assistance with ERP issues.

3.11 Terminal Questions

1. 2. 3. 4. 5. What is EIS? What is data warehousing? What is data mining? What do you mean by OLAP? Explain the concept of supply chain management?

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3.12 Answers
Self Assessment Questions 1. Trends and patterns 2. Human, organisational, and motivational change 3. Organisations 4. Presentation 5. Transaction handling and record keeping. 6. Semi-structured and unstructured 7. Decision support 8. Operational database 9. Data warehousing 10. Information 11. Accurate 12. Supply chain management Terminal Questions 1. Refer 3.5 2. Refer 3.6 3. Refer 3.7 4. Refer 3.8 5. Refer 3.9

3.13 Case Study

Gold Rush Corporation a company which manufactures gold watches and sells them to watch stores and jewellery shops across the country. The methodology adopted by the management of the company to predict future demand for the high quality gold watches and different styles depended heavily on its sales trends report that sales department collected through various sources like the distributors, vendors, news paper articles and so on. Their were occasion in the past, where the production managers received the sales information report from the sales departments which would be a week old, sometimes the report of the vendors and distributors order for most popular watch styles would reach the managers a month later.

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Most of the production estimates for the next production plan was taken based on these reports. Even though the production managers were grateful for the information they received from the sales department. The delay had a sever effect on the efficiency of the production planning. However, the production managers could avoid costly production overruns and also shortages in product, if information was readily available for them during their production planning meetings. For over coming this and improving the efficiency in the system, Gold Rush Corporation decided to implement an Executive Information System (EIS). This system possessed information regarding real time sales and orders of Gold Rushs products. The system was designed so that it was available to all senior level managers of the company, including the production managers. With the help of this new system production managers were able to estimate more accurately the inventory levels they must realise in order to meet the market demand. Since the Executive Information System provides managers with valuable and accurate real time information that help production managers to cut down on holding costs, if they move to real time inventory model with the help of EIS. As you can analyse in this case study how efficiency of an organisation can be enhanced with this king of open distribution of information method with the help of executive information system designed for a companys specific needs. Every company should realises that bottom line should improve for achieving better efficiency levels. Many of the large organisations find it difficult when it comes in handling widespread distribution of information. However, with implementation of and Executive Information System can help in over coming some of the problems that these large organisation face when it come to information management. Questions: 1. Discuss the reasons why the managers of Gold Rush Company where not able to plan efficiently the production output for the coming production period. 2. Explain how Executive Information System (EIS) helped in resolving the problems faced by the managers. 3. Do you think the companies can carry out the production planning efficiently with the help of EIS? Discuss.

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Enterprise Resource Planning

Unit 3

3.14 Glossary
Term Archive Description A collection of documents such as letters, official papers, photographs, or recorded material, kept for their historical interest To provide what is wanted or needed in a particular situation or by a particular group of people The act of joining or combining two or more things or departments A lack of warmth and spontaneity in somebody's manner or in the atmosphere on a particular occasion An event that might occur in the future, especially a problem, emergency, or expense that might arise unexpectedly and therefore must be prepared for Somebody or some organisation that goes ahead of others in the competition that they face in the market. To stop something from continuing or developing further in an organisation by the forces inside or out side an organisation

Caters Conjunction Constraint Contingency

Forerunners Inhibits

References 1. Data Mining: Concepts, Models, Methods, and Algorithms by Kantardzic, Mehmed (2003). 2. WareHouse Information Prototype at Stanford (WHIPS) by Yang & Jun. 3. Supply Chain Management: More Than a New Name for Logistics by Cooper. M.C., Lambert. D.M. & Pagh. J.

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