ERP

An Enterprise Resource Planning or ERP is an integrated computer-based application used to administer internal and external resources, including tangible assets, financial resources, materials, and human resources. Its use is to aid the flow of information among all business functions within the limitations of the organization and manage the connections to external stakeholders. ERP is built on centralized database and usually utilizes common computing platform and consolidates all business operations in a uniform and enterprise wide system environment.

Erp functions Help reduce operating costs 1. ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system. 2. The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business. 3. The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs. Facilitate Day-to-Day Management

ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision-making and managerial control. ERP software helps track actual costs of activities and perform activity based costing.

Support Strategic Planning

Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target audience and a set of goals and objectives; plan and design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes." Part of ERP software systems is designed to support resource-planning portion of strategic planning.

The Competitive Business Environment and the Emerging Digital Firm

Four powerful worldwide changes have altered the business environment.

Emergence of the Global Economy

Today, information systems provide the communication and analytical power that firms need for conducting trade and managing business on a global scale. Globalization and information technology also bring new threats to domestic business firms.

Transformation of Industrial Economies

In a knowledge and information, based economy; knowledge and information are key ingredients in creating wealth. Knowledge and information are becoming the foundation for many new services and products.

Transformation of the Business Enterprise

The traditional business firm was and still is a hierarchical, centralized, structured arrangement of specialist that typically relied on a fixed set of standard operating procedures to deliver a mass-produced product.

The Emerging Digital Firm

The intensive use of information technology in business firms since the mid 1990s, coupled with equally significant organizational redesign, created the condition for a new phenomenon in industrial society. The digital firm is organization where nearly all significant business processes and relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means. Business processes refer to the unique ways in which organizations coordinate and organization work activities, information, and knowledge to produce a product or service.

Hidden Cost of ERP System:

Training expenses Customization: Core of ERP system is actual customization of ERP system itself. Integration and testing Replacing the staff Implementation team can never stop Wait for ROI
Commentary The information obtained and used should be needed for decision-making. it doesn't matter how interesting it is. Businesses are often criticised for producing too much information simply because their information systems can "do it". A good way of ensuring relevance is to closely define the objectives of any information reports. Another way to improve relevance is to produce information that focuses on "exceptions" - e.g. problems, high or low values, where limits have been exceeded.

Quality Required Relevant

Up-to-date

Information needs to be timely if it is to be actioned. For example, the manager of a large retail business needs daily information on how stores are performing, which products are selling well (or not) so that immediate action can be taken. To improve the speed with which information is produced, businesses usually need to look at upgrading or replacing their information systems.

Accurate

As far as possible, information should be free from errors (e.g. the figures add up; data is allocated to the correct categories). The users of information should be informed whenever assumptions or estimates have been used. Accruate information is usually a function of accurate data collection. If information needs to be extremely accurate, then more time needs to be allocated for it to be checked. However, businesses need to guard against trying to produce "perfect" information - it is often more important for the information to be up-to-date than perfect.

Meet the needs Users of information have different needs. The managing director doesn't have time to trawl through thick printouts of each week's production or sales listings - he or she wants a summary of of the User the key facts. The quality control supervisor will want detailed information about quality testing results rather than a brief one-line summary of how things are going. It is a good idea to encourage users to help develop the style and format of information reporting that they require.

Easy to use and Information should be clearly presented (e.g. use summaries, charts) and not too long. It also needs to be communicated using an appropriate medium (e.g. email, printed report, presentation. understand Businesses should also consider developing "templates" which are used consistently throughout the organisation - so that users get used to seeing information in a similar style.

Worth the cost Often forgotten. Information costs money. Data is costly to collect, analyse and report. Information takes time to read and assimilate. All users should question whether the information they recieve/have requested is worthwhile Reliable Information should come from authoritative sources. It is good practice to quote the source used whether it be internal or external sources. If estimates or assumptions have been applied, these should be clearly stated and explained.

Types of information system

For most businesses, there are a variety of requirements for information. Senior managers need information to help with their business planning. Middle management need more detailed

information to help them monitor and control business activities. Employees with operational roles need information to help them carry out their duties. As a result, businesses tend to have several "information systems" operating at the same time. This revision note highlights the main categories of information system and provides some examples to help you distinguish between them.

The main kinds of information systems in business are described briefly below:
Information System Executive Support Systems Description

An Executive Support System ("ESS") is designed to help senior management make strategic decisions. It gathers, analyses and summarises the key internal and external information used in the business. A good way to think about an ESS is to imagine the senior management team in an aircraft cockpit - with the instrument panel showing them the status of all the key business activities. ESS typically involve lots of data analysis and modelling tools such as "what-if" analysis to help strategic decision-making.

Management Information Systems

A management information system ("MIS") is mainly concerned with internal sources of information. MIS usually take data from the transaction processing systems (see below) and summarise it into a series of management reports. MIS reports tend to be used by middle management and operational supervisors.

Decision-Support Systems

Decision-support systems ("DSS") are specifically designed to help management make decisions in situations where there is uncertainty about the possible outcomes of those decisions. DSS comprise tools and techniques to help gather relevant information and analyse the options and alternatives. DSS often involves use of complex spreadsheet and databases to create "what-if" models. Knowledge Management Systems ("KMS") exist to help businesses create and share information. These are typically used in a business where employees create new knowledge and expertise - which can then be shared by other people in the organisation to create further commercial opportunities. Good examples include firms of lawyers, accountants and management consultants. KMS are built around systems which allow efficient categorisation and distribution of knowledge. For example, the knowledge itself might be contained in word processing documents, spreadsheets, PowerPoint presentations. internet pages or whatever. To share the knowledge, a KMS would use group collaboration systems such as an intranet.

Knowledge Management Systems

Transaction Processing Systems

As the name implies, Transaction Processing Systems ("TPS") are designed to process routine transactions efficiently and accurately. A business will have several (sometimes many) TPS; for example: - Billing systems to send invoices to customers - Systems to calculate the weekly and monthly payroll and tax payments - Production and purchasing systems to calculate raw material requirements - Stock control systems to process all movements into, within and out of the business

Office Automation Systems

Office Automation Systems are systems that try to improve the productivity of employees who need to process data and information. Perhaps the best example is the wide range of software systems that exist to improve the productivity of employees working in an office (e.g. Microsoft Office XP) or systems that allow employees to work from home or whilst on the move.

Definition: Management Information Systems (MIS) is the term given to the discipline focused on the integration of computer systems with the aims and objectives on an organisation. The development and management of information technology tools assists executives and the general workforce in performing any tasks related to the processing of information. MIS and business systems are especially useful in the collation of business data and the production of reports to be used as tools for decision making. Applications of MIS With computers being as ubiquitous as they are today, there's hardly any large business that does not rely extensively on their IT systems. However, there are several specific fields in which MIS has become invaluable. * Strategy Support While computers cannot create business strategies by themselves they can assist management in understanding the effects of their strategies, and help enable effective decision-making. MIS systems can be used to transform data into information useful for decision making. Computers can provide financial statements and performance reports to assist in the planning, monitoring and implementation of strategy. MIS systems provide a valuable function in that they can collate into coherent reports unmanageable volumes of data that would otherwise be broadly useless to decision makers. By studying these reports decision-makers can identify patterns and trends that would have remained unseen if the raw data were consulted manually.

MIS systems can also use these raw data to run simulations hypothetical scenarios that answer a range of what if questions regarding alterations in strategy. For instance, MIS systems can provide predictions about the effect on sales that an alteration in price would have on a product. These Decision Support Systems (DSS) enable more informed decision making within an enterprise than would be possible without MIS systems. * Data Processing Not only do MIS systems allow for the collation of vast amounts of business data, but they also provide a valuable time saving benefit to the workforce. Where in the past business information had to be manually processed for filing and analysis it can now be entered quickly and easily onto a computer by a data processor, allowing for faster decision making and quicker reflexes for the enterprise as a whole. Management by Objectives While MIS systems are extremely useful in generating statistical reports and data analysis they can also be of use as a Management by Objectives (MBO) tool. MBO is a management process by which managers and subordinates agree upon a series of objectives for the subordinate to attempt to achieve within a set time frame. Objectives are set using the SMART ratio: that is, objectives should be Specific, Measurable, Agreed, Realistic and Time-Specific. The aim of these objectives is to provide a set of key performance indicators by which an enterprise can judge the performance of an employee or project. The success of any MBO objective depends upon the continuous tracking of progress. In tracking this performance it can be extremely useful to make use of an MIS system. Since all SMART objectives are by definition measurable they can be tracked through the generation of management reports to be analyzed by decision-makers. Benefits of MIS The field of MIS can deliver a great many benefits to enterprises in every industry. Expert organizations such as the Institute of MIS along with peer reviewed journals such as MIS Quarterly continue to find and report new ways to use MIS to achieve business objectives. Core Competencies Every market leading enterprise will have at least one core competency that is, a function they perform better than their competition. By building an exceptional management information system into the enterprise it is possible to push out ahead of the competition. MIS systems provide the tools necessary to gain a better understanding of the market as well as a better understanding of the enterprise itself.

Enhance Supply Chain Management Improved reporting of business processes leads inevitably to a more streamlined production process. With better information on the production process comes the ability to improve the management of the supply chain, including everything from the sourcing of materials to the manufacturing and distribution of the finished product. Quick Reflexes As a corollary to improved supply chain management comes an improved ability to react to changes in the market. Better MIS systems enable an enterprise to react more quickly to their environment, enabling them to push out ahead of the competition and produce a better service and a larger piece of the pie. Further information about MIS can be found at the Bentley College Journal of MIS and the US Treasurys MIS handbook, and an example of an organisational MIS division can be found at the Department of Social Services for the state of Connecticut.