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 27-
32)
 Enterprise Resource Systems (slides 33 – 42)
 Benefits of ERP (slide 43)
 Challenges faced by ERP systems (slides 44-46)
 Functions Of Enterprise

Sales Engineering
Design
Human resources

Inventory Enterprise Production

Planning

Finance Controlling
Quality Maintenance
legal
 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 Business Process
Manufacturing Assembling the product
and production Checking for quality
Producing bills of materials
Identifying customers
Sales And Marketing Making customers aware of the
product
Selling the product
Paying creditors
Finance and accounting Creating financial statements
Managing cash accounts
Hiring employees
Evaluating employees’ job
Human resources
performance
Enrolling employees in benefits
plans
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

3. Strategic-level systems:
Help senior management tackle and address strategic
issues.
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—sets 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
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

The Order Fulfillment Process
 Systems for Enterprise-Wide Process
Integration

Enterprise applications:

 Designed to support organization-wide process

coordination 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
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.
 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.
 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.
 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-specific applications that

build customer and shareholder communities value network system by
enabling and optimizing enterprise and inter-enterprise collaborative
operational and financial processes” (Source: Gartner’s Research Note
SPA-12-0420)
 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 world’s 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 organization’s 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 firm’s structure and
organization: One organization

 Management: Firm wide knowledge-based

management processes

 Technology: Unified platform

 Business: More efficient operations & customer-

driven 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
THANK YOU