Introduction to Enterprise Resource Planning (ERP)

1
Introduction to Enterprise Resource
Planning (ERP)
2
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.

3
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 27-32)
• Enterprise Resource Systems (slides 33 42)
• Benefits of ERP (slide 43)
• Challenges faced by ERP systems (slides 44-46)

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Functions Of Enterprise
Inventory
Enterprise
Quality
legal
5
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.

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An Example of Business Process
7
Systems from a Functional Perspective

• Examples of Business Processes

Manufacturing and production
Sales And Marketing
Finance and accounting
Human resources
8
Categories Of Information System
9
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
• 3. Strategic-level systems
• Help senior management tackle and address
  strategic issues.

10
Four Major Types of Information Systems

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

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Four Major Types of Information Systems
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Four Major Types of Information Systems

• 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.

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A Symbolic Representation for a Payroll TPS
14
Typical Applications of TPS
15
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

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Management Information Systems (MIS)
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A Sample MIS Report
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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

19
Decision-Support Systems (DSS) (Continued)
20
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

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Model of a Typical Executive Support System
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EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)

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

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Interrelationships Among Information systems
24
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.
25
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
  knowledgesets of activities
• Unique ways to coordinate work, information, and
  knowledge
• Ways in which management chooses to coordinate
  work

26
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.

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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

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INTEGRATING FUNCTIONS AND BUSINESS PROCESSES
Introduction To Enterprise Applications

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

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• Cross-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

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The Order Fulfillment Process
31
Systems for Enterprise-Wide Process Integration

• Enterprise applications
• Designed to support organization-wide process
  coordination and integration

32
Systems for Enterprise-Wide Process Integration

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

33
Enterprise Systems

• Enterprise systems, also known as enterprise
  resource planning (ERP) systems, provide a single
  information system for organization-wide
  coordination 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.

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What is ERP ?

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

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• ERPs are cross-functional and enterprise wide.
  All functional 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.

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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.
• business strategy and set of industry-domain-speci
  fic applications that build customer and
  shareholder communities value network system by
  enabling and optimizing enterprise and
  inter-enterprise collaborative operational and
  financial processes (Source Gartners Research
  Note SPA-12-0420)

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• 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

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• 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.)

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Enterprise Application Architecture
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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

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Traditional View of Systems
42
Enterprise Systems
43
Benefits of Enterprise Systems

• Help to unify the firms structure and
  organization One organization
• Management Firm wide knowledge-based management
  processes
• Technology Unified platform
• Business More efficient operations
  customer-driven business processes

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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

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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

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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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THANK YOU