Module IT 417–Enterprise Resource Planning Systems

Enterprise Resource Planning Systems (ERP)

CHAPTER 1: Business Functions and Business Processes

Learning Outcomes:

After successfully completing this lesson, you will be able to do the following:
 Know the evolution ERP, why it grows, its advantages and why it fails.
 Name the main functional areas of operation used in business
 Differentiate between a business process and a business function
 Identify the kinds of data each main functional area produces
 Identify the kinds of data each main functional area needs
 Define integrated information systems, and explain why they are essential in today’s globally
competitive business environment

Vision
A globally recognized institution of higher learning that develops competent and morally upright citizens
who are active participants in nation building and responsive to the challenges of 21st century

Mission
Batangas State University is committed to the holistic development of productive citizens by providing a
conducive learning environment for the generation, dissemination and utilization of knowledge through
innovative education, multidisciplinary research collaborations, and community partnership that would
nurture the spirit of nationhood and help fuel national economy for sustainable development.

Core Values
 Faith
 Patriotism
 Human Dignity
 Integrity
 Mutual Respect
 Excellence

Quality Policy
Batangas State University is committed to the continuous improvement of its services to all customers to
meet the challenges of a world class educational institution.

Reasons Why To Use Information Technology

1. Manage information
2. Deliver a high quality information to the decision makers at the right time
3. Automate the process of data collection
4. Collation and refinement

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 Module IT 417–Enterprise Resource Planning Systems

Isolated information systems – a pre-ERP scenario

Information integration through ERP systems

What is ERP?

Enterprise – is a group of people with a common goal, which has certain resources at its disposal to
achieve that goal.

Resources – included are money, man-power, materials, and all the other things that are required to run
the enterprise.

Planning – is done to ensure that nothing goes nothing. Putting necessary functions in place and more
importantly, putting them together.

Enterprise Resource Planning or ERP - is a method of effective planning of all the resources in an
organization.
- Covers the techniques and concepts employed for the integrated management of businesses as a
whole, from the viewpoint of the effective use of management resources, to improve the efficiency
of an enterprise.

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 Module IT 417–Enterprise Resource Planning Systems

- Core software used by companies to coordinate information in every area of business to help
manage companywide business process and use common database and shared management
reporting tools.
-

Evolution of ERP

Misconception about ERP

1. That ERP is a computer system
Yes, computers and IT are integral parts of ERP system; but ERRP is primarily an
enterprise-wide system, which encompasses corporate mission, objectives, attitudes, beliefs,
values, operating style, and people who make the organization

2. ERP is for manufacturing organizations alone.

Due to the way in which ERP was historically developed from the methods of Material
Requirement Planning (MRP) and Manufacturing Resource Planning (MRP-II), which are relevant
to manufacturing organizations during 1970s.

Reasons for the growth of the ERP market

1. To enable improved business performance
- Cycle time reduction
- Increased business agility (quick moving)
- Inventory reduction
- Order fulfillment improvement

2. To support business growth requirements

- New products/product lines, new customers
- Global requirements including multiple languages and currencies

3. To provide flexible, integrated, real-time decision support

- Improve responsiveness across the organization

4. To eliminate limitation in legacy systems

- Century dating issues
- Fragmentation of data and processing
- Inflexibility of data and processing
- Insupportable technologies
5. To take advantage of the untapped mid-market (medium size organizations)
- Increased functionality at a reasonable cost
- Client server/open systems technology
- Vertical market solutions

The Advantages of ERP

Direct Benefits
1. Business Integration
The first and most important advantage lies in the promotion of integration, the automatic
data updation (automatic data exchange among applications).

2. Flexibility
Different languages, currencies, accounting standards and so on can be covered in one
system and functions that comprehensively manage multiple locations of a company can be
packaged and implemented automatically

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 Module IT 417–Enterprise Resource Planning Systems

3. Better Analysis and Planning Capabilities

Boost to the planning functions by enabling the comprehensive and unified management of
related business and its data, it becomes possible to fully utilize many types of decision support
systems and simulation functions.

4. Use of Latest Technology

In order to grow and to sustain the growth of the company, they had to embrace the latest
developments in the field of Information Technology. Therefore, they quickly adapted their systems
to take advantage of the latest technologies like open systems, Internet/Intranet, client/server
technology, CALS (Computer-Aided Acquisition and Logistics Support), electronic-commerce, etc.

Reasons why ERP implementation fails

1. Wrong product
2. Incompetent and haphazard implementation
3. Inefficient or ineffective usage

Business process – collection of activities that takes some input and creates an output that is of value to
the customer.

Functional Areas of Operation

1. Marketing and Sales (M/S)
2. Supply Chain Management (SCM)
3. Accounting and Finance (A/F)
4. Human Resources (HR)

Business functions – are activities specific to that functional area of operation.

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