Introduction to Enterprise Resource Planning (ERP)

Objectives
At the end of the session you will be able to :
 List the functions of an enterprise and some corresponding business processes.  Discuss the types of information systems (IS) used in an organization.  Explain the interrelationships between the various information systems  Elaborate on the contribution of IS to various business processes.  Describe the integration of various enterprise functions and business processes.  List some advantages of Enterprise Resource Planning Systems and discuss some challenges faced by them.

Menu Screen
 Function of enterprise and corresponding business processes ( slides 4-7)  Categories of Information Systems (slides 8-9)  Four major types of IS (slides 10-22)  Interrelationships among IS (slides 23-26)  Integrating functions and business processes (slides 2732)  Enterprise Resource Systems (slides 33 42)  Benefits of ERP (slide 43)  Challenges faced by ERP systems (slides 44-46)

Functions Of Enterprise

Sales Human resources

Engineering Design

Inventory

Enterprise

Production Planning

Finance Quality legal Maintenance

Controlling

Business Process
A business process is a sequence of activities followed by individuals in a business to achieve some business goal. Often these are manual activities executed by employees who play certain roles in the business in addition to others who are external to the business: customers, business partners, etc.

An Example of Business Process

Systems from a Functional Perspective

Examples of Business Processes
Functional Area
Manufacturing and production

Business Process Assembling the product Checking for quality Producing bills of materials Identifying customers Making customers aware of the product Selling the product Paying creditors Creating financial statements Managing cash accounts Hiring employees Evaluating employees job employees performance Enrolling employees in benefits plans

Sales And Marketing

Finance and accounting

Human resources

Categories Of Information System

Different Categories of Systems

Three main categories of information systems function at different organizational levels: 1. Operational - level systems: Support operational managers keep track of the elementary activities and transactions. 2. Management-level systems: Serve the monitoring, controlling, decision-making, and administrative activities Strategic-level systems: Help senior management tackle and address strategic issues.

3.

Four Major Types of Information Systems

 Transaction Processing Systems (TPS)  Management Information Systems (MIS)  Decision-Support Systems (DSS)  Executive Support Systems (ESS)

Four Major Types of Information Systems

Four Major Types of Information Systems:

1. Transaction Processing Systems (TPS)

 These are the basic business systems that serve the operational level.  A computerized system that performs and records the daily routine transactions necessary for the conduct of the business.

A Symbolic Representation for a Payroll TPS

Typical Applications of TPS

Four Major Types of Information Systems:

2. Management Information Systems (MIS)
These systems serve at management level.

Inputs: High volume transaction level data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting

Management Information Systems (MIS)

A Sample MIS Report :

Four Major Types of Information Systems:

3. Decision-Support Systems (DSS)

These systems serve at the management level

 Inputs: Transaction level data  Processing: Interactive  Outputs: Decision analysis  Users: Professionals, staff  Example: Contract cost analysis

Decision-Support Systems (DSS) (Continued)

Four Major Types of Information Systems:

4. Executive Support Systems (ESS):
 Inputs: Aggregate data  Processing: Interactive  Outputs: Projections  Users: Senior managers  Example: 5 year operating plan

Model of a Typical Executive Support System

EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

 Top level management  Designed for the individual senior manager  Ties CEO to all levels  Very expensive  Extensive support staff

Interrelationships Among Information systems

Interrelationships Among Information systems

In contemporary digital firms, different types of systems are closely linked to one another. This is the ideal. In traditional firms these systems tend to be isolated from one another, and information does not flow seamlessly from one end of the organization to the other. Efficiency and business value tend to suffer greatly in these traditional firms.

Business Processes and Information Systems

Business processes:
As we have discussed earlier, business process consists of  Manner in which work is organized, coordinated, and focused to produce a valuable product or service  Concrete work flows of material, information, and knowledge knowledgesets of activities  Unique ways to coordinate work, information, and knowledge  Ways in which management chooses to coordinate work

Business Processes and Information Systems (Continued)

 Information systems help organizations achieve great efficiencies by automating parts of processes  IS also contributes to completely rethinking processes.  Business processes typically span several different functional areas.

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES: Introduction to Enterprise Applications Examples of Business Processes Manufacturing and production:  Assembling product, checking quality, producing bills of materials Sales and marketing:  Identifying customers, creating customer awareness, selling

INTEGRATING FUNCTIONS AND BUSINESS PROCESSES:

Introduction To Enterprise Applications

Finance & accounting accounting:  Paying creditors, creating financial statements, managing cash accounts
 Human resources resources:  Hiring employees, evaluating performance, enrolling employees in benefits plans

CrossCross-Functional Business Processes:

 Transcend boundary between sales, marketing, manufacturing, and research and development  Group employees from different functional specialties to a complete piece of work

Example: Order Fulfillment Process

The Order Fulfillment Process

Systems for Enterprise-Wide Process Integration

Enterprise applications:
 Designed to support organization-wide process organizationcoordination and integration

Systems for Enterprise-Wide Process Integration

Consist of :
 Enterprise systems  Supply chain management systems  Customer relationship management systems  Knowledge management systems

Enterprise Systems
 Enterprise systems, also known as enterprise resource planning (ERP) systems, provide a single information system for organization-wide organizationcoordination and integration of key business processes.  Information that was previously fragmented in different systems can seamlessly flow throughout the firm so that it can be shared by business processes in manufacturing, accounting, human resources, and other areas.

What is ERP ?


ERP stands for: Enterprise Resource Planning systems This is what it does: attempts to integrate all data and does: processes of an organization into a unified system. A system. typical ERP system will use multiple components of computer software and hardware to achieve the integration. integration. A key ingredient of most ERP systems is the use of a unified database to store data for the various system modules. modules.

ERPs are cross-functional and enterprise wide. All crossfunctional departments that are involved in operations or production are integrated in one system. In addition to manufacturing, warehousing, logistics, and Information Technology, this would include accounting, human resources, marketing, and strategic management. management.

Enterprise Resource Planning ERP

Definition of an ERP system


ERP or Enterprise Resource Planning systems are software systems for businesses management encompassing modules supporting functional areas such as sales and marketing, finance, production, distribution accounting, human resource management, maintenance, inventory management, project management, transportation and e-business etc. etc. business strategy and set of industry-domain-specific industry-domainapplications that build customer and shareholder communities value network system by enabling and optimizing enterprise and inter-enterprise collaborative interoperational and financial processes (Source: Gartners Research Note SPA-12-0420) SPA-12-

Software solution that addresses the Enterprise needs, taking a process view of the overall organization to meet the goals, by tightly integrating all functions and under a common software platform ERP is a commodity -- product in the form of software SAP, Oracle Applications, PeopleSoft, JD Edwards, Great plains etc. are worlds leading ERP packages

Features of an ERP system



Architecture of ERP system facilitates transparent integration of modules providing flow of information between all function within enterprise in real time. Many different software are replaced by one integrated system. Reliable information access through common DBMS Eliminates data and operational redundancies (no duplication of work or data entries etc.)

Enterprise Application Architecture

Traditional Silo View of Information Systems

Within the business:  There are functions, each having its uses of information systems Outside the organizations boundaries:  There are customers and vendors
 Functions tend to work in isolation

Traditional View of Systems

Enterprise Systems

Benefits of Enterprise Systems

 Help to unify the firms structure and organization: One organization  Management: Firm wide knowledge-based knowledgemanagement processes  Technology: Unified platform  Business: More efficient operations & customercustomerdriven business processes

Challenges of Enterprise Systems

Difficult to build: Require fundamental changes in the way the business operates Technology: Require complex pieces of software and large investments of time, money, and expertise Centralized organizational coordination and decision making: Not the best way for the firms to operate

Business and Technical Benefits

 

Automation of business transactions Flexibility in changing the system catering to newer business processes. Coordination across business functions Coordination across geographical distances resulting in better Managerial control Consistent information and interface thus easier to understand and work in Single system

 

Prime Reasons for Implementing ERP

  

Need for common platform Process improvement. Data visibility that could be used to improve operating decisions. Operation cost reductions. Increased customer responsiveness. Improved strategic decision making Personal Improvement

   

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