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An enterprise Is a group of people With a set of common goals, Which has certain resources (people, money, energy, materials, space, time) at its disposal to achieve these goals The enterprise acts as a single entity Examples: IBM, Ford, Tata Motors, Accenture, Microsoft, Indian Railways, Ramu’s Teashop, etc The resources are considered the inputs, and the attainment of the goals the output of the process.
The degree of success of an enterprise is often measured by the ratio between the outputs and inputs. This ratio is called productivity.
The solution is to have a centralized information storage and management facility. The various departments have their own goals. purchasing. etc. R&D. HR. The different departments function in isolation and have their own data collection & analysis systems. So unless all the departments know what the others are doing and for what purpose. the inter-departmental conflicts will arise thus disrupting the normal functioning of the organization. manufacturing. instead of taking the organization towards the common goal the various departments end up pulling it in different directions as one department does not know what the other does and for what purpose. The organization is divided into different units based on the functions they perform— finance. sales and distribution. production planning. . The result is that.
enabling smooth and seamless flow of information across departmental barriers. Information about all the aspects of the organization is stored centrally and is available to all departments. the entire organization is considered as a single system. In the enterprise way. thus avoiding conflicts. Production Planning Fiance Marketing Central Database R&D Production Sales & Distribution . and automating business process and functions. ERP systems help to make this task easier by integrating the information systems. ERP systems help the organization to work and move forward as a single entity.
disseminate. Management information system (MIS) produce information products that support many of the day-to-day decision making needs of the management. collaborate. organize. No decision-maker can take good decisions with the isolated information that they can get from the information produced by individual departments. procedures. dispose. etc. use. Traditional information systems fail to capture the information needs of the entire organization as they concentrate on capturing department level information—isolated information gathering. transfer. monitor. safeguard. create. classify. . The problem with traditional MIS is that they operate at a departmental level and they give only information that has been pre-defined. acquire. publish. Information activities are find. receive. archive. and data. Information is refined data. An information system consists of three elements— people.
All the departments should have access to the organization’s information. No organization can function as islands of different departments. the impact of that would be dramatic. the key resource of every organization is information. . If the organization does not have an efficient and effective mechanism then the chances of that organization succeeding are very remote. In today’s competitive business environment. which are functioning in isolation. are integrated into a single system. If all the information islands.
agile and respond quickly to the changes in the business environment. The three fundamental characteristics of information are accuracy. relevant. Any mechanism that will automate the information gathering and analysis process will enhance the chances of the organization to beat the competition. timely. then these systems will go a long way in helping the organization to realize its goals. If this is possible. and timeliness. and up-to-the minute information so that they can make better and informed decisions much faster. and if the information that is generated is accurate. relevancy. Integrated management information will enable the organization to become more competitive. To survive. . customer interests and trends. What is needed is a system that treats the organization as a single entity and caters to the information needs of the whole organization. timely and relevant. the organization must always be on its toes. Integrated management information provides the decision makers with accurate. gathering and analyzing the data—both internal and external.
CIO. People: Employees. etc. money. management. Common goal: successful implementation of the project Resources: ERP package. people. Organization’s Responsibilities: Own and sponsor the ERP implementation project (usually done by the CEO. or someone senior) Designate the right people to lead the project. hardware. etc. ERP implementation project an enterprise in its own right. consultants. COO. ERP vendors. Select and assign the right people to the implementation team Select the ERP package best suited for the organization Make available the necessary infrastructure (resources) Ensure top management support and participation Manage package vendors and external consultants Manage and deal with employee resistance Motivate the employees to change and to learn new technologies Re-train and re-locate employees and ensure the complete participation Operate the ERP system in the best possible manner Maintain the ERP system at its peak efficiency .
The business model is usually represented in the graphical form using flowcharts and flow diagrams. ERP systems should mirror the business processes. A business model is a representation of the business as one large system. Information is a very important resource and is very critical in managing all the other resources. Based on the business model. Based on the organization’s goals. a business model consisting of the business processes is developed. the ERP system is developed with the aim of providing the required information and necessary assistance to the various individuals to perform their business processes more effectively and efficiently. . objectives and strategic plans. showing the interconnections and interdependencies of the various sub-systems and business processes. The business is modeled as an integrated system. Business modeling or creating a business model is one of the first activities in any ERP project.
Real World Processes Interrelationships & Interdependencies Plant Material Business Model Custom er Order Contract Invoice Real-world and Business Model .
The data model should reflect the entire organization and should successfully depict and integrate the data structures of the entire organization. Maintaining and managing the integrated data constantly updated and up-to-date is one of the biggest challenges of ERP implementation and operation. With the implementation of ERP systems all the data will be from the integrated database. . the most important thing that should be kept in mind is the information integration and the process/ procedure automation. The most critical step in the ERP implementation is the creation of an integrated data model as all the employees from the different departments get access to the integrated data and this will help in better decision-making. The integrated database will reduce data redundancy and give all employees access to the updated and up-to-the minute information about the entire organization. When designing the data model for the ERP system.
Real World Processes Interrelationships & Interdependencies Plant Material Business Model Custom er Order Contract Invoice Data Model Tables Fields View s Dom ains. etc. Data & Program Model Data Model and its Relationship with the Real World . etc. Program Model Program Function Display Screens.
ERP An abbreviation for Enterprise Resource Planning meaning techniques & Concepts for integrated management of Business as a whole from view point of effective use management resources to improve the efficiency of enterprise management Is an integrated software packages which support the above ERP concepts Is a software designed to model and automate many of the basic processes of the company from finance to shop floor with a Goal of integrating information across the company Eliminating complex expensive links between computer that were never meant to talk to each other .
ERP means more work and procedures ERP will make many employees Redundant & Jobless ERP is sole responsibility of Management ERP is just for Managers/Decision Makers Organizations can Succeed without ERP .
MRP generates schedules for operations & raw material purchase based on production requirements of finished goods. the structure of production system. monitoring item usage. The activities of inventory management include identifying inventory requirements. current inventory levels and lot sizing procedure for each operation . providing replenishment techniques & options. reconciling inventory balances and reporting inventory status 1970s Material Requirement Planning (MRP) Materials Resource Planning or MPR utilizes S/W application for scheduling production process. setting targets.Year(s) 1960s System Inventory management & Control Description Inventory management & control is a combination of IT & BP of maintaining appropriate levels of stock in a warehouse.
utilizes S/W applications for coordinating manufacturing process. finance. from product planning.Year(s) 1980s System Manufacturing Requirement Planning (MRP II) Description Manufacturing Requirement Planning or MRP II. part purchasing. Erp S/W system may include application modules to support different functions such as marketing. ERP systems often integrates business activities across functional departments from product planning to order tracking. inventory control to product distribution 1990s Enterprise Resource Planning (ERP) Enterprise Resource Planning or ERP uses multimodule application S/W for improving performance of the internal business process. accounting and human resources .
integrated. real time decision support Improve responsiveness across organizations Provide a tool for improved Management Control & Standardization . Following are the reasons for so many companies replacing their key business systems with ERP Enable improved business performance Cycle time reduction Increased business agility Inventory reduction Order fulfillment improvement Support Business Growth Requirements New product/Product lines. New customers Global requirements including multiple Languages & Countries Provide flexible.The market for Enterprise Resource Planning Systems (ERP) is very hot. Industry analysts have forecasted the growth rates of more than 30% in coming few years.
the future will see Fierce competition for market share Merger & acquisition for strategic and competitive advantage . As more & more companies opt for ERP solutions and as vendors shift their focus from big companies to different market segments ( SME etc.Eliminate Limitation in Legacy Systems Century dating issue (Y2K) Fragmentation of data & processing Inflexibility to change Insupportable technologies Take advantage of untapped mid-market (medium sized organization) Increased functionality at a reasonable cost Client/Server open system technology Vertical Market Solution The above are a few reasons for the growth of ERP market.).
.Advantages Business Integration Flexibility Better analysis & planning capabilities Use of latest technologies All the above factors leading to Improved efficiencies Information Integration for better decision making Faster response time to customer queries etc.
the organization’s business process have to changed. This will slow down the project. In some other cases. if they are inefficient. can create employee resistance. This will mean making changes in long-established ways of doing business and redefine the roles and responsibilities. In many cases ERP packages have to be customized to fit the way in which the company does business. This if not done properly. . introduce dangerous bugs into the system and make upgrading the software to the ERP vendor's next release very difficult.
It requires the cooperation of all in the organization for succeed . It changes the nature of jobs in all functional business areas of the organization 10. It is very expensive and its implementation is very costly and risky 11. It influences business partners to become more competitive and agile 4. It helps the business process reengineering process 6. ERP systems makes the business process automated and more streamlined and makes the organization more agile and competitive so that it can respond to the changing customer needs and competition quickly and efficiently. It changes the information systems function and job profiles of IT professionals 9. It enforces best practice business processes in organizations 7. Some of the characteristics of ERP systems are: 1. It affects almost all organizations 2. It forces the competition to change their business strategies and processes 3. It improves the profits of the organizations engaged in implementation consultancy 5. It fully utilizes the true potential of client/server computing and other latest technologies 8. Its implementation is a long and complex project 12. ERP is most important to companies because of their improvement in the way the company takes a customer order and processes it into an invoice and revenue (order fulfillment process).
11. 4. 3. relevant and up-to-date information to the decision makers It provides on-line and real-time information It enables better and faster decision-making It forces the use of best practices It enables organizational standardization It eliminates information asymmetries It allows simultaneous access to the same data for planning and control It facilitates intra-organization communication It enables inter-organization collaboration It enables the organization to be more agile and competitive . 9. 8. 5. 12. 2. ERP facilitates value creation by changing the basic nature of organizations in a number of different ways: 1. 7. 6. 10. It integrates the organizations’ activities It eliminates data redundancy It provides accurate. timely.
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