Lecture-III - Overview of ERP, BP - BF

Lecture – III
Part – I
An Overview of ERP
Enterprise Resource Planning
1
Recall: What is OSS
Definition:
Examples:
2
Recall: What is MSS
Definition:
Examples:
3
Recall: Business Models
•Functional Business Model (1930)

• Process-Driven Business Model (1993)
4
What is an Enterprise
A business span over multiple geographical locations and involves more than one
Functional Areas. It may be a large size company or mid/small company.
Example : Dell Computers, DHL, Toyota, Mazda, TCS, PIA, SSGC, and Dollar Ink
These enterprises consists on different functional areas of operation such as:
 Sales Division
 Marketing Division
 Inventory Management Division
 Accounting Department
 Finance Division
 Human Resource Division
 Customer Relation Division
These enterprises has growing business track and also good Return on Investment
(profit).
Concepts in Enterprise Resource Planning by Ellen F Monk, 4th Edition - Iftikhar ul Sami 5
What are the Resources
A business involves more than one functional areas and each functional area is holding
some sort of resources like:
 People
 Procedures
 Machines
 Computers
 Networking Devices
 Software
 Infrastructure
 Budget
Business runs on specified procedures and procedures use above resources to achieve
optimal benefits.
What is a Planning
A business needs good planning to use all its resources to start, run, optimize, compete
and finally grow.
Business can achieve highest degree of success or suffer worst failure only due to
Planning.
Planning needs all resources in right quantity, at right time to execute the planning. If
these resources are not available in right quantity or at right time, a good planning may
also suffer failure and vice versa.
In today’s competitive business environment, integrated Management Information

Systems are playing vital role to execute business planning.
It is a software package designed to meet the business needs of almost every type of
businesses.
An enterprise resource planning systems are a core software programs used by

companies to integrate and coordinate information in every functional area of business.
ERP programs helps organizations manage database and shared management reporting
tools.
ERP programs are designed to work within and between companies.
ERP systems requires large budget to implement which involves the cost of following:
 Hardware
 Software and Licensing
 Training
 Consultants Fee
Why Enterprise Resource Planning
 ERP systems are designed specifically to meet business needs of all businesses.
 ERP systems are designed on best practices on which various businesses achieve
highest successes.
 Most of the businesses now shift on ERP systems.
 A modern business need.
 ERP systems are consistently offering updates.
 ERP systems are able to work round the clock around the globe.
 Reliable
Benefits of Enterprise Resource Planning
 ERP systems are cost effective solutions to run the businesses.
 Centralized data storage facility thus eliminates the requirements of separate MIS.
 Reduce chance of error at minimum.
 Integrates Supplier and Purchaser.
 Reduce time delay thus increase productivity by using Electronic Data Interchange.
 On-Premise as well as Cloud based ERP solutions are available.
Risks in Enterprise Resource Planning
 ERP systems are costly solutions and requires management commitment for full
implementation.
 ERP systems are mainly failed due to lack of acceptance by management and staff.
 ERP systems are sophisticated systems therefore requires additional ERP trained staff
to maintain and therefore build extra pressure on company budget.
 Wrong implementation may meet failure.
 Poor planning for implementation may extend implementation time which ultimately
increase the cost.
 ERP solutions needs optimal business processes to achieve success and if old
business processes are running with ERP then the chance of failure also increase.
Cost of Enterprise Resource Planning
ERP systems are designed for different level of business i.e Large, Mid-size, and small-
size therefore the cost of each ERP solution differs.
The cost of ERP software is also depends on the purchase of ERP modules. ERP modules
are as under:
 Sales and Distribution (S/D)

 Supply Chain Management (SCM)
 Accounting and Finance (A/F)
 Human Resource Management (HRM)

 Customer Relationship Management (CRM)
 Controlling
The estimated costs of the ERP solutions for different level of businesses are as under:
Large Companies (>1000 employees) 100 – 500 Million $ and 4 - 6 years

Mid-size Companies (<1000 employees)10 – 20 Million $ and about 2 years
Small-size Companies (<500 employees) 0.3 – 1.4 Million $ and 10 Months
Do every business needs ERP
ERP solutions are designed for running business as well as managing government offices
and also ERP solutions are used in academic institutes.
ERP solutions are effective but the choice is ultimately based on the business needs.
Every business needs Management Information System and most of the time that MIS
fulfills the business requirements, but maintaining and upgrading those MIS are very
costly.
Very small businesses are still working on small MIS so they don’t needs ERP solutions
but whenever their business grows such MIS would not support their business and then
ultimately they would transfer on ERP.
Lecture – III
Part – II
Business Process
And
Business Function
14
An example of Functional Area and Business Processes
Efficient Functional Areas of Operation
Functional areas are interdependent therefore each requires data from the others.
Better integration of functional areas leads to improvements in communication,

workflow, and success of company.
An example of Business Processes
Effective Business Processes
Thinking in terms of business processes helps managers to look at their organization
from the customer’s perspective.
Businesses must always consider customer’s viewpoint in any transaction i.e

Customer is not required to interact with each business function involved in the
process.
Successful business managers view business operations from the perspective of a

satisfied customer.
Sharing data effectively and efficiently between and within functional areas leads to
more efficient business processes thus fulfil the concept of Integrated Information
Systems.
Managing resources (inputs) and business processes effectively requires accurate

and up-to-date information
Functional Areas and Business Processes of a
Small Coffee Shop
• Examine business processes of the coffee shop
• See why coordination of functional areas helps achieve efficient
and effective business processes
• Look at how integration of the information system improves
the business
Marketing and Sales
Functions of Marketing and Sales

• Developing products
• Determining pricing
• Promoting products to customers
• Taking customers’ orders
• Helping create a sales forecast
• Need to keep track of customers

• Good repeat customers allowed to charge purchases—up to a point
Supply Chain Management
Functions within Supply Chain Management

• Making the coffee (manufacturing/production)
• Buying raw materials (purchasing)
• Production planning requires sales forecasts from M/S functional
area.
• Sales forecasts: Analyses that attempt to predict the future
sales of a product.
• Production plans used to develop requirements for raw materials
and packaging
• Raw materials: Bottled spring water, fresh lemons, artificial
sweetener, raw sugar
• Packaging: Cups, straws, napkins
Accounting and Finance
Functions within Accounting and Finance

• Recording raw data about transactions (including sales), raw
material purchases, payroll, and receipt of cash from customers
• Raw data: Numbers collected from sales, manufacturing and other
operations, without any manipulation, calculation, or arrangement
for presentation
• Data from Accounting and Finance used by Marketing and Sales

and Supply Chain Management
• Sales records are important component of sales forecast
• Sales forecast is used in making staffing decisions and in
production planning
• Records from accounts receivable used to monitor the overall
credit-granting policy of the coffee shop
Human Resource
Functions of Human Resources
• Recruit, train, evaluate, and compensate employees
• HR uses sales forecasts developed by the individual departments to
plan personnel needs
• Systems integrated using ERP software provide the data sharing
necessary between functional areas
Functional Area Information System
• Potential inputs and outputs for each functional area described

next
• Note the kinds of data needed by each area and how people use
the data
• Information systems maintain relationships between all functional
areas and processes
Information Flow Diagram -Marketing and Sales
Information Flow Diagram - Supply Chain Management
Information Flow Diagram - Accounting and Finance
Information Flow Diagram - Human Resource

Lecture-III - Overview of ERP, BP - BF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Lecture-III - Overview of ERP, BP - BF

Uploaded by

Copyright:

Available Formats

Lecture – III

•Functional Business Model (1930)

• Process-Driven Business Model (1993)

These enterprises consists on different functional areas of operation such as:

also suffer failure and vice versa.

In today’s competitive business environment, integrated Management Information

An enterprise resource planning systems are a core software programs used by

ERP programs are designed to work within and between companies.

 Sales and Distribution (S/D)

 Human Resource Management (HRM)

Large Companies (>1000 employees) 100 – 500 Million $ and 4 - 6 years

Better integration of functional areas leads to improvements in communication,

Businesses must always consider customer’s viewpoint in any transaction i.e

Successful business managers view business operations from the perspective of a

Managing resources (inputs) and business processes effectively requires accurate

Functions of Marketing and Sales

• Need to keep track of customers

Functions within Supply Chain Management

Functions within Accounting and Finance

• Data from Accounting and Finance used by Marketing and Sales

• Potential inputs and outputs for each functional area described

You might also like