INFORMATION

SYSTEM(ERP) AND DSS

Chapter 4
Index
4.1 DSS
4.2 ERP System
4.3 Concepts of Decision Making and DSS
4.4 Difference between MIS and DSS
DSS-Decision Support System
 A decision support system (DSS) is a computerized
information system used to support decision-making
in an organization or a business.
 A DSS lets users sift (examine) through and analyze
massive reams of data and compile information that
can be used to solve problems and make better
decisions.
DSS
 The benefits of decision support systems include
more informed decision-making, timely problem
solving and improved efficiency for dealing with
problems with rapidly changing variables.
DSS
 The term, DSS refers to a class of systems, which
support the process of decision-making. The emphasis is
on support rather than on the automation of decisions.
DSS allows the decision-maker to retrieve data and test
alternative solutions during the process of problem-
solving.
 DSS can also be defined as a set of well-integrated,
user-friendly, computer-based tools that combine data
with various decision-making models – qualitative and
quantitative – to solve semi-structured and unstructured
problems.
Structured Decisions
 Structured or Programmed decisions are the ones
where the organization has already faced such
decisions. And the employees are used to solving
such problems.
 For instance, the hiring of new IT specialists in a firm.
 Many analysts categorize decisions according to the
degree of structure involved in the decision-making
activity.
 Business analysts describe a structured decision as
one in which all three components of a decision – the
data, process, and evaluation are determined.
Semi-Structured Decisions:
 Decisions in the middle between structured and
unstructured decisions, requiring some human
judgment and at the same time with some
agreement on the solution method.
 A semi-structured decision is one in which most of
the factors needed for making the decision are
known but human experience and other outside
factors may still impact the decision. A good
example of a semi-structured decision is the
hiring process.

 Unstructured decisions
 Unstructured decisions are those in which
the decision maker must provide judgment,
evaluation, and insights into the problem
definition.
 There is no well-understood procedure for making
them.
DSS
 A DSS could be used to project a company's
revenue over the upcoming six months based on
new assumptions about product sales.
 A DSS can integrate multiple variables and
generate an outcome and alternate outcomes, all
based on the company's past product sales data
and current variables.
Benefits of DSS

 Improves efficiency and speed of decision-making

activities.
 Increases the control, competitiveness and capability of
futuristic decision-making of the organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it
reveals new approaches and sets up new evidences for
an unusual decision.
 Helps automate managerial processes.
Types of DSS
 Status Inquiry System
 Data Analysis System
 Information Analysis System
 Accounting System
 Model Based System
Status Inquiry System
 It helps in taking operational, management level, or
middle level management decisions, for example
daily schedules of jobs to machines or machines to
operators.
Data Analysis System
 It needs comparative analysis and makes use of
formula or an algorithm, for example cash flow
analysis, inventory analysis etc.
Information Analysis System
 In this system data is analyzed and the information
report is generated. For example, sales analysis,
accounts receivable systems, market research
analysis etc.
Accounting System
 It keeps track of accounting and finance related
information, for example, final account, accounts
receivables, accounts payables, etc. that keep track
of the major aspects of the business.
Model Based System
 Simulation models or optimization models used for
decision-making are used infrequently and creates
general guidelines for operation or management.
 The product decision mix decision, material mix, job
scheduling rules, resource or asset or facilities
planning system etc.
Components of a DSS
Following are the components of the Decision Support System −
 Database Management System (DBMS) − To solve a problem the
necessary data may come from internal or external database. In an
organization, internal data are generated by a system such as TPS
and MIS. External data come from a variety of sources such as
newspapers, online data services, databases (financial, marketing,
human resources).
 Model Management System − It stores and accesses models that
managers use to make decisions. Such models are used for designing
manufacturing facility, analyzing the financial health of an
organization, forecasting demand of a product or service, etc.
 Support Tools − Support tools like online help; pull down menus,
user interfaces, graphical analysis, error correction mechanism,
facilitates the user interactions with the system.
ERP - Enterprise
 An enterprise is a group of people with a common
goal.
 It acts as a single entity.
 A challenge for an enterprise is to coordinate the
activities of different functional areas so that
organized goals are achieved.
 An enterprise is considered a system and the
departments are called as subsystems.
Enterprise
 Information about all the aspects of the
organization is stored centrally and is available to
all the departments.
 This transparency and access to information ensures
that the departments no longer work in isolation
pursuing their independent goals.
 The organization’s decision-makers have to do a
detailed, consistent, and technically correct job of
selecting a software package.
Typical Business Process
Key Observations

 A typical Enterprise has many departments/

business Units (BU)
 These Departments/ BU continuously communicate
and exchange data with each other
 The success of any organization lies in the effective
communication and data exchange within the
departments/ BU as well as associated third party
such as vendors, outsourcers and customers
ERP
 ERP is an acronym that stands for Enterprise
Resource Planning.
 ERP is a package software solution that addresses
the enterprise needs of an organization by tightly
integrating the various functions of an organization
using a process view of the organization.
 ERP represents application software in the
corporate environment. ex-: SCM, CRM,
Manufacturers, Service sectors, Marketing
Researchers.
 ERP does not only address the needs of a single
function such as Finance, Marketing, Production or HR;
rather it addresses the entire needs of an enterprise
that cuts across these functions to meaningfully execute
any of the core processes.
 ERP integrates the functional modules tightly.
 The data once entered in any of the functional modules
(whichever of the module owns the data) is made
available to every other module that needs this data.
This leads to significant improvements by way of
improved consistency and integrity of data.
Need
 Globalization
 shortened product life cycle.
ERP
Enterprise
Examples of ERP
 Oracle Finance
 People Soft
 BANN
 JD Edwards
 SAP
 Advantages of ERP
36

 Business Integration
 Flexibility
 Better analysis and planning capabilities
 Use of latest technology
Centralized ERP Systems
ERP
 Enterprise resource planning (ERP) is business process
management software that allows an organization to
use a system of integrated applications to manage the
business and automate many back-office functions
related to technology, services, and human resources.
 ERP is an integrated, real-time, cross-functional
enterprise application, an enterprise-wide transaction
framework that supports all the internal business
processes of a company.
 It supports all core business processes such as sales
order processing, inventory management, and control,
production and distribution planning, and finance.
ERP
 ERP predicts and balances demand and supply.
 It is an enterprise-wide set of forecasting, planning,
and scheduling tools, which
 links customers and suppliers into a complete supply
chain,
 employs proven processes for decision-making
 coordinates sales, marketing, operations, logistics,
purchasing, finance, productivity, cost reduction, and
inventory turnover and
 it provides the foundation for e-commerce.
Scope of ERP
 Finance − Financial accounting, Managerial accounting,
treasury management, asset management, budget control,
costing, and enterprise control.
 Logistics − Production planning, material management,
plant maintenance, project management, events
management, etc.
 Human resource − Personnel management, training and
development, etc.
 Supply Chain − Inventory control, purchase and order
control, supplier scheduling, planning, etc.
 Workflow − Integrate the entire organization with the
flexible assignment of tasks and responsibility to locations,
position, jobs, etc.
Advantages of ERP
 Business Integration
 Flexibility
 Better analysis and planning capabilities
 Use of the latest technology
❑ Eliminates duplication, discontinuity, and redundancy in data.
❑ Provides information across departments in real-time
❑ Provides control over various business processes
❑ Increases productivity, better inventory management, promotes
quality, reduced material cost, effective human resource
management, reduced overheads, and boosts profits.
Business Integration
 It provides automatic data exchanges among
applications.
 The data of related business transactions is also
automatically updated at the time that transaction
occurs.
Flexibility
 Diverse multidimensional environment such as
language, currency, account standards etc are
covered in one system and functions
Better analysis and planning capabilities

 By enabling the comprehensive and unified

management of a related business and its data, it
becomes possible to fully utilize many types of
decision support systems and simulation functions.
 Decision makers get the information that they want.
Use of latest technology
 ERP vendors were very quick to realize that in order
to grow and sustain that growth they have to
embrace the latest developments in the field of IT.
 So, they quickly adapted their systems to take
advantage of the latest technologies like open
systems, client/server technology, the Internet/
Intranet, e-commerce, cloud computing, etc.
Risk of ERP
 Change Management
 Internal staff adequacy
 Training
 Consultants
 Discipline
Change Management
 ERP changes the way, the companies run and
people work. Some jobs may be no longer required
and some new jobs may get created.
 People think that ERP will increase workload, it will
hinder their creative work.
 As ERP is a change and human nature is to resist
change, this can result in ERP failure.
Internal staff adequacy
 ERP requires large number of people from within
the organization. The bulk of ERP implementation
and post-implementation team will be made of
companies employees. Finding people who have
necessary skills is a difficult task.
Training
 This is the most misjudged activity of ERP life cycle.
Training usually takes place at the end of ERP life
cycle, when it looks that overall cost will exceed the
budget, training is the first activity to be curtailed.
 When proper training will not be given, employees
will be unable to get full benefits of ERP.
Consultants
 They are the experts in the implementation of ERP
package. They might not be familiar with the
internal working and culture of the organization.
They may try to implement ERP system without
taking into account all the needs of the
organization.
Discipline
 The ERP project requires great amount of discipline
from management and employees. The
management has to constantly monitor the
implementation.
 Discipline to learn and determination of practice
what is learn
ERP Vendors
 Depending on your organization's size and needs
there are a number of enterprise resource planning
software vendors to choose from in the large
enterprise, mid-market and the small business ERP
market.
 Gartner's annual market share reports put SAP,
Oracle, Sage, Microsoft and NetSuite among the
top vendors.
ERP and Security
 The integration of ERP software to the existing IT
infrastructure only increase the risk of both hackers
who break through perimeter security and insiders
who abuse system privileges to misappropriate
assets- mainly cash-through acts of fraud.
 It is not about just network security and network
traffic but about business transactions that inflict
financial losses from system based fraud, abuse and
errors.
How to manage security
 Physical Access Restriction
 Passwords
 Firewalls and Encryption
 Audits
 Backups
Physical Access Restriction
 One way to reduce the risk of security breaches is
to make sure that only authorized personnel have
access to computer equipments.
Passwords
 Passwords are effective ways only if they are
chosen are chosen carefully. Most computer users
choose passwords that are easy to guess thus
making the job of unauthorized user easy.
 A growing number of security systems refuse to
allow users to choose any real words as passwords
so hackers can not use dictionary software to guess
them systematically.
 Even the best passwords should be changed
frequently.
Firewalls and Encryption
 Many data thieves do their work without breaking
into computer systems they intercept messages as
they travel between computers on networks.
 Firewalls guard information against unauthorized
access to an internal network.
 To protect transmitted information, many
organizations use encryption software to scramble
their transmissions. The message can be read only
after it has been reconstructed with a matching key.
Audits
 Audit control software is used to monitor and record
computer transactions as they happen, so auditors
can trace and identify suspicious activity.
5 Factors Important to Successful ERP
Implementation
❑ Top Management Engagement
❑ Project leaders are veterans and team members
are decision makers
❑ Third parties fill gaps in expertise
❑ Change management goes hand in hand with
project planning
❑ A satisfying mindset prevails
Decision Making as a Component of
Problem Solving
Difference between DSS and MIS

DSS MIS

 It is usually un-
 It is structured decision
structured or semi making.
structured decision
making
 Rigid Decision
 Flexible Design
 Indirect Access to data
 Direct Access to data
 Provides tactical
 Provide strategic information to top
information management
Difference between DSS and MIS

DSS MIS

 Main focus is analysis  Main focus is

and decision support information processing
 Ad hoc reports-rapid  Periodic reports
reports  It has past and present
 It has future data
predictions for data