Enterprise Resource Planning

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Unit- 1

ERP

ERP (Enterprise Resource Planning) means the techniques and concepts for integrated management of

businesses as a whole from the viewpoint of the effective use of management resources to improve the

efficiency of enterprise management.

ERP is an enterprise wide information system that facilitates the flow of information and coordinates all

resources and activities within the organization. ERP comprises of a commercial software package that

promises the seamless integration of all the information flowing through the company’s financial,

accounting, human resources, supply chain and customer information.

An ERP system is an attempt to integrate all functions across a company to a single computer system that

can serve all those functions’ specific needs.

“Integration” is the key word for ERP implementation.

Combines all databases across departments into a single database that can be accessed by all employees.

ERP automates the tasks involved in performing a business process.

Enterprise Resource Planning - a software system that integrates core business areas such as

manufacturing, distribution, financials and human resources.

Example: A warehouse in Singapore enters a customer order

data automatically flows to other areas of the company.

It would flow to the financial and accounting people in New York

Automatically update accounts receivable.

The order would also flow to the manufacturing operations in Europe instructing them to make

another component.

Inventory levels would automatically be reduced in the warehouse and an order would be placed to

replenish inventory.

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Features of ERP

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Benefits of ERP

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(a) Reduction of lead-time -- The elapsed time between placing an order and receiving it is known as the

lead time. It plays a significant role in purchasing and inventory control.

(b) On-time shipment - To shorter product development cycle’s efficiency is increased in design and

development activities. ERP systems are designed to help your company trim data transfer time, reduce

errors and increase design productivity by providing an automated link between engineering and

production information hence help in on-time shipment.

(c) Reduction in cycle time- Cycle time is the time between receipt of the order and delivery of the

product. At one end of the manufacturing spectrum is the make-to-order operation, where the cycle time

and cost of production are high. This is because in a make-to-order situation the manufacturer starts

making the product or designing the product only after receiving the order.

He will procure the materials and components required for production only after getting the order.

On the other end of the manufacturing operations is the make -to-stock approach, where the products are

manufactured and kept in the finished goods inventory before the order is placed.

In the case of make-to-order items, the ERP systems save time by integrating with CAD/CAM

systems. Dramatic time and cost reductions are possible when CAD engineered designs are converted

automatically into software programs for computerized production machines using CAD/CAM systems.

This automatic conversion eliminates the costly and time consuming steps of having a person convert

design drawings into a computer program for computer-controlled production equipment, such as robots

or machine tools. These systems reduce cycle times by 30-50%. Combined with this, the automation

achieved in material procurement, production planning and the efficiency achieved through the plant

maintenance and production systems of the ERP packages go a long way in reducing the cycle times.

(d) Better customer satisfaction

(e) Improved supplier performance -- The ERP systems provide vendor management and procurement

support tools designed to coordinate all aspects of the procurement process. They support the organization

in its efforts to effectively negotiate, monitor, and control procurement costs and schedules while assuring

superior product quality. The supplier management and control processes are comprised of features that

will help the organization in managing the supplier relations, monitoring the vendor activities and

managing the supplier quality.

(f) Increased flexibility

(g) Reduction in quality costs

(h) Improved resource utility -- As manufacturing processes become more sophisticated and as the

philosophies of

elimination of waste and constraint management achieve broader acceptance,

manufacturers place increased emphasis upon planning and controlling capacity. The

creation of an accurate, achievable production schedule requires the availability of both

material and capacity. It is useless, and indeed wasteful, to have financial resources tied

up in material, if the capacity is insufficient or improperly planned. Waste not only raises

costs, it also affects customer service levels and customer good will.

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The ERP systems also have simulation capabilities that help the capacity and resource

planners to simulate the various capacity and resource utilization scenarios and choose

the best option. The efficient functioning of the different modules in the ERP system like

manufacturing, materials management, plant maintenance, sales and distribution ensures

that the inventory is kept to a minimum level, the machine down time is minimum, the

goods are produced only as per the demand and the finished goods are delivered to the

customer in the most efficient way. Thus, the ERP systems help the organization in

drastically improving the capacity and resource utilization.

(i) Improved information accuracy and decision-making capability

(ii) Information Integration -- The first and most important advantage lies in the promotion of

integration. The reason ERP systems are called integrated is because they have the ability to

automatically update data between related business functions and components. For example, you

need only update the status of an order at one place, say, in the order-processing system; all the

other components will automatically get updated. So, when a customer places an order and the

order is entered into the system, it triggers a lot of events and actions in a number of modules –

finance, production planning, production, inventory management and so on.

Key drivers of ERP market

1.CRM first and ERP follows - Many ERP purchases are driven by CRM decisions. ERP itself can be hard

to justify but with CRM it is easier. With companies concerned about budgets and ROI it is a lot easier to

demonstrate value for money from CRM packages – through directly increased sales, improved

customer service and effective marketing.CRM systems help make sales teams more effective and

efficient. The plan would be to increase sales, without hiring too many new sales and customer service

staff. To deliver the right information at speed, a new ERP system may be needed to underpin the CRM

platform.

2. Business Intelligence Guides Action- Companies can reduce their margins of error via an ERP system

that provides the operational data to make more informed decisions. New tool sets allow marketing

groups to predict and forecast which customer groups should be targeted with which offers, for the

best returns.

3. ERP Market Changes- There have been a number of consolidations in the ERP market. Oracle has

taken over Siebel, PeopleSoft and JD Edwards. Many of the BI vendors are no longer independent and

have become part of ERP platforms

4. Mergers and Acquisitions - Oracle took over PeopleSoft, Siebel and JD Edwards and Microsoft, bought

Great Plains and Navision. Choosing a relatively weak vendor is not always a bad thing; their initial

prices are often less. However, long term you may need to implement a new solution rather than

upgrade the product you choose. If they are merged into a larger entity at a later date, this can mean

that the R&D investment is larger.

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5. Two-tier ERP ---(enterprise resource planning) is the practice of running two ERP systems at once --

one larger system at the corporate level, and one smaller system at the plant, division, or subsidiary

level. A company may choose to run two-tier ERP for a variety of reasons. For example, it allows an

existing legacy ERP system to remain functional across the organization -- which reduces the costs

associated with replacing the system -- while letting individual business units deploy ERP systems that

may be better suited to their needs.

A two-tier ERP model may also be adopted by organizations that operate globally and must respond to

location-specific business requirements in multiple countries. Two-tier ERP may be deployed through

in-house systems or through cloud-based ERP.

6. Web ERP -- Software as a Service (SaaS) is well accepted in the CRM market, with the successes of

Salesforce.com. Most other vendors now delivering competitive solutions using this model. ERP is a little

more difficult, if only in circumstances where there are many other systems to integrate with e.g.

warehouse, manufacturing, supply chain. In many scenarios this is not an issue, but others may pose a

problem. This is something you would need to work through with the vendors you are considering. Cloud

and SaaS offerings have increased the choices for ERP software purchasers and deployment options

available to them.

7. Time to Overhaul--- Many of the systems currently in place are 10 plus years old. They were installed in

many cases by companies prior to the end of the millennium. Vendors have continued to innovate on

platforms and the range of solutions they offer – often at a faster rate than companies can move.

Many installed applications need a revamp or a replacement. Many companies that have not updated their

ERP may well be on unsupported versions of their software.

At this point it may be easier/cheaper to move to a newer platform than try and upgrade the old one.

8. Vertical Specialties--- There has always been a strong vertical element to ERP packages. There has long

been a battle between niche ERP solutions and general purpose solutions with templates and

customization. SAP could be considered to be the vendor most associated with the latter strategy.

The pendulum appears to be swinging back to addressing key market verticals. ERP

implementations geared to specific industries are popular. A two-tier example may have a central

administrative ERP solution at headquarters that is fed by individual ERP implementations in its divisions,

subsidiaries, factories, branches or departments.

9. ROI Matters-- Organizations specifying ERP are focusing much more on clearly defining a business case

and

demanding return on investment (ROI). Purchases tend to be smaller and more frequent, as rapid ROI

becomes more and more essential to buyers. The BI tools market is particularly popular at the moment and

driving much of the market growth.

10. Mobile ERP -- According to research, the more advanced users of ERP implement end to end processes

and workflow. With the growing mobility of the workforce, key processes like quote to cash need to be

enabled for Smartphone’s and notebooks. Mobile applications will continue to proliferate, driving

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functionality out towards employees. Mobile and other self-service options lower costs and increase

transaction quality while improving timeliness.

Unit-2

OLTP

• Online transaction processing, or OLTP, is a class of information systems that facilitate and

manage transaction-oriented applications, typically for data entry and retrieval transaction

processing.

• Online transaction processing (OLTP) applications are high throughput, insert/update-intensive

systems.

• These systems are characterized by growing volumes of data that several hundred users access

concurrently.

• Typical OLTP applications are airline reservation systems, large order-entry applications, and

banking applications. The key goals of OLTP systems are availability (sometimes 7 day/24 hour

availability); speed (throughput); concurrency; and recoverability.

• Online Transaction Processing (OLTP) systems are one of the most common data

processing systems in today's enterprises. Classical examples of OLTP systems are order entry,

retail sales, and financial transaction systems.

•

OLTP systems are primarily characterized through a specific data usage that is different from data

warehousing environments, yet some of the characteristics, such as having large volumes of data

and lifecycle-related data usage and importance, are identical.

Characteristics of OLTP

• Short response time

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The nature of OLTP environments is predominantly any kind of interactive ad hoc usage. OLTP systems

require short response times in order for users to remain productive.

• Small transactions

OLTP systems normally read and manipulate highly selective, small amounts of data; the data processing is

mostly simple and complex joins are relatively rare. There is always a mix of queries and DML workload.

For example, one of many call center employees retrieves customer details for every call and enters

customer complaints while reviewing past communication with the customer.

• Data maintenance operations

It is not uncommon to have reporting programs and data updating programs that need to run either

periodically or on an ad hoc basis. These programs, which run in the background while users continue to

work on other tasks, may require a large number of data-intensive computations.

• Large user populations

OLTP systems can have immeasurably large user populations where many users are trying to access the

same data at once. For example, an online auction Web site can have hundreds of thousands (if not

millions) of users accessing data on its Web site at the same time.

OLAP

On-Line Analytical Processing (OLAP) is a category of software technology that enables analysts,

managers and executives to gain insight into data through fast, consistent, interactive access in a wide

variety of possible views of information that has been transformed from raw data to reflect the real

dimensionality of the enterprise as understood by the user.

Codd’s Guidelines/features for an OLAP system

1. Multidimensional Conceptual View. Provide a multidimensional data model that is intuitively

analytical and easy to use. Business users’ view of an enterprise is multidimensional in nature. Therefore, a

multidimensional data model conforms to how the users perceive business problems.

2. Transparency. Make the technology, underlying data repository, computing architecture, and the

diverse nature of source data totally transparent to users. Such transparency, supporting a true open

system approach, helps to enhance the efficiency and productivity of the users through front-end tools that

are familiar to them.

• Whether OLAP is or is not part of the user’s customary front-end (e. g., spreadsheet or graphics

package) product, that fact should be transparent to the user. If OLAP is provided within the

context of a client server architecture, then this fact should be transparent to the user-analyst as

well. OLAP should be provided within the context of a true open systems architecture, allowing the

analytical tool to be embedded anywhere the user-analyst desires, without adversely impacting the

functionality of the host tool.

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• Transparency is crucial to preserving the user’s existing productivity and proficiency with the

customary front-end, providing the appropriate level of function, and assuring that needless

complexity is in no way introduced or otherwise increased.

• Additionally, it should be transparent to the user as to whether or not the enterprise data input to

the OLAP tool comes from a homogenous or heterogeneous database environment.

• 3. Accessibility. Provide access only to the data that is actually needed to perform the specific

analysis, presenting a single, coherent, and consistent view to the users. The OLAP system must

map its own logical schema to the heterogeneous physical data stores and perform any necessary

transformations. The OLAP system should access only the data actually required to perform the

indicated analysis and not take the common "kitchen sink" approach which brings in unnecessary

input.

• 4. Consistent Reporting Performance. Ensure that the users do not experience any significant

degradation in reporting performance as the number of dimensions or the size of the database

increases. Users must perceive consistent run time, response time, or machine utilization every

time a given query is run.

• 5. Client/Server Architecture. Conform the system to the principles of client/server

architecture for optimum performance, flexibility, adaptability, and interoperability. Make the

server component sufficiently intelligent to enable various clients to be attached with a minimum

of effort and integration programming.

• 6. Generic Dimensionality. Ensure that every data dimension is equivalent in both structure and

operational capabilities. Have one logical structure for all dimensions. The basic data structure or

the access techniques must not be biased toward any single data dimension.

• 7. Dynamic Sparse Matrix Handling. Adapt the physical schema to the specific analytical model

being created and loaded that optimizes sparse matrix handling. When encountering a sparse

matrix, the system must be able to dynamically deduce the distribution of the data and adjust the

storage and access to achieve and maintain consistent level of performance.

• If the OLAP tool cannot adjust according to the distribution of values of the data to be

analyzed, models which appear to be practical, based upon the number of consolidation paths and

dimensions, or the size of the enterprise source data, may be needlessly large and/or hopelessly

slow in actuality. Access speed should be consistent regardless of the order of cell access and

should remain fairly constant across models containing different numbers of data dimensions or

varying sizes of data sets.

• 8. Multiuser Support. Provide support for end users to work concurrently with either the same

analytical model or to create different models from the same data. In short, provide concurrent data

access, data integrity, and access security.

• 9. Unrestricted Cross-dimensional Operations. Provide ability for the system to recognize

dimensional hierarchies and automatically perform roll-up and drill-down operations within a

dimension or across dimensions. Have the interface language allow calculations and data

manipulations across any number of data dimensions, without restricting any relations between

data cells, regardless of the number of common data attributes each cell contains.

• 10. Intuitive Data Manipulation. Enable consolidation path reorientation (pivoting), drill-down

and roll-up, and other manipulations to be accomplished intuitively and directly via point-and-click

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and drag-and-drop actions on the cells of the analytical model. Avoid the use of a menu or multiple

trips to a user interface.

• 11. Flexible Reporting. Provide capabilities to the business user to arrange columns, rows, and

cells in a manner that facilitates easy manipulation, analysis, and synthesis of information. Every

dimension, including any subsets, must be able to be displayed with equal ease.

• 12. Unlimited Dimensions and Aggregation Levels. Accommodate at least fifteen, preferably

twenty, data dimensions within a common analytical model. Each of these generic dimensions

must allow a practically unlimited number of user-defined aggregation levels within any given

consolidation path.

OLAP operations

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• Aggregation (roll-up)

– dimension reduction: e.g., total sales by city

– summarization over aggregate hierarchy: e.g., total sales by city and year -> total sales by

region and by year

• Slice and dice or rotation

– e.g., sales where city = Palo Alto and date = 1/15/96

• Navigation to detailed data (drill-down)

– e.g., (sales - expense) by city, top 3% of cities by average income

• Visualization Operations (e.g., Pivot)

Drill down and roll up

The two basic hierarchical operations when displaying data at multiple levels of aggregations are

the ``drill-down'' and ``roll-up'' operations. Drill-down refers to the process of viewing data at a level of

increased detail, while roll-up or drill up refers to the process of viewing data with decreasing detail.

Slice and dice or rotation

It refers to rearranging data so that it can be viewed from different perspectives.

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Typical users Staff Managers, Executives

Horizon Weeks, Months Years

Refresh Immediate Periodic

Data model Entity-relationship Multi-dimensional

Schema Normalized Star

Emphasis Update Retrieval

• Horizon

OLTP databases store “live” operational information. An invoice, for example, once paid, is possibly

moved to some sort of backup store, maybe upon period closing. On the other side 5-10 strategic analysis

are usual to identify trends. Extending life of operational data, would not be enough.

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Refresh

• OLTP requires instant update. When you cash some money from an ATM you balance shall be

immediately updated. OLAP has not such requirement. Nobody needs instant information to make

strategic business decision.

• OLAP data has to be refreshed periodically. This means extra timing and resources for cleansing

and accruing data. If, for example, an invoice was canceled, we wouldn't like to see its value first

inflating sales figures and later reverted.

• More time and more resources would also allow better indexing to address huge tables covering

the extended horizon.

Emphasis

• OLTP emphasis is on update. Transaction level isolation assures that database is always in a

consistent state. This can imply in some overhead to coordinate concurrent updates but is

necessary even in small applications.

• On the other side OLAP can be updated by periodic (daily) processes that work in standalone mode

thus consistency can be assured through update process.

• But OLAP faces another challenge: retrieval. Suppose a telecom executive asking how much was

billed last year in communications from USA to Japan. Can you figure how much time would it take

to go ever each individual call to get the result?

• OLTP emphasis is on retrieval and it organizes data to return result of ad hoc inquiries in a

reasonable amount of time.

Enterprise Application Integration(EAI)

Enterprise application integration (EAI) is the use of software and computer systems architectural principles to

integrate a set of enterprise computer applications.

• EAI is an integration framework, which is composed of a number of technologies and services that

form a middleware to enable integration of systems and applications across the organization.

• Middleware is computer software that provides services to software applications beyond

those available from the operating system. It can be described as "software glue”. Middleware

makes it easier for software developers to perform communication and input/output, so they can

focus on the specific purpose of their application.

EAI model

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Need of EAI

• Supply chain management applications (for managing inventory and shipping), customer

relationship management applications (for managing current and potential customers), business

intelligence applications (for finding patterns from existing data from operations), and other types

of applications (for managing data such as human resources data, health care, internal

communications, etc.) typically cannot communicate with one another in order to share data or

business rules.

• For this reason, such applications are sometimes referred to as islands of

automation or information silos. This lack of communication leads to inefficiencies, wherein

identical data are stored in multiple locations, or straightforward processes are unable to be

automated.

• Enterprise application integration is the process of linking such applications within a single

organization together in order to simplify and automate business processes to the greatest extent

possible, while at the same time avoiding having to make sweeping changes to the existing

applications or data structures.

• In the words of the Gartner Group, EAI is the “unrestricted sharing of data and business

processes among any connected application or data sources in the enterprise.

• Enterprise application integration (EAI) is the process of allowing two or more enterprise systems

to operate as one.

• Most EAI offerings include software, hardware, and services. Typically, EAI systems are used to

integrate incompatible systems—such as an older system in which a major investment has already

been made, commonly referred to as a legacy system, and a newer application, such as a customer

resource management (CRM) system—within a single business.

• However, EAI systems are also used with increasing frequency to integrate the enterprise systems

of various companies to allow business transactions between enterprises to take place

electronically.

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EAI Integration Architectures

Within EAI, there exist two types of integration architecture:

• Direct point-to-point (PTP)

• This is the basic, more traditional approach. It is used because it is easy and quick, certainly viable

for situations where we have few systems to integrate. For example, a new web site may need to

interface with an existing sales order system and point-to-point integration may appear suitable.

However, as you integrate additional applications, you get a situation like that shown in Figure.

• As this solution scales up, the infrastructure proves brittle. The tight coupling, dependence, and

number of integration points are all major disadvantages.

• Middleware-based

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We need to provide something to mediate between applications in EAI. By using middleware, we

can provide generic interfaces, which allow applications to pass messages to each other. Each of these

interfaces defines a process that the application provides.

Now, our five applications only have five integration points. We can also add and replace

applications in a manner that does not affect other ones. The middleware itself can perform operations

such as routing, transforming, aggregating, separating, and converting on the data that is passed.

Types /methods/tools for EAI

• Data-level integration----This refers to the sharing of data between various data stores so as to keep

the information consistent in multiple systems. Data level integration would mean extracting data

from one store, process it as per the requirements, and update the processed data in some other

data store.

• User interface (UI)-level integration -- This refers to integrating various applications by

establishing user interfaces as a common point of integration.

• Application-level integration --- This refers to integrating various processes or applications together

and thus, allowing these processes or applications to share business logic and data.

• Method-level integration---- Through this integration, sharing of common business logic or method is

allowed. After this type of integration, different applications would be able to access the method of other

application.

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Some EAI tools

• TIBCO

• MQSeries

• WebMethods

• Vitria

• iPlanet

• BizTalk

• WebLogic

• SAP XI

• Gentran

Types of information systems

What are information systems

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• An information system can be defined technically as a set of interrelated components that collect

(or retrieve), process, store, and distribute information to support decision making and control in

an organization.

• In addition to supporting decision making, coordination, and control, information systems may also

help managers and workers analyze problems, visualize complex subjects, and create new

products.

• An information system(IS) is typically considered to be a set of interrelated elements or

components that collect(input), manipulate(processes), and disseminate (output) data and

information and provide a feedback mechanism to meet an objective.

•

Activities/Functions of Information system

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Three activities in an information system produce the information that organizations need to make

decisions, control operations, analyze problems, and create new products or services.

These activities are input, processing, and output.

Input captures or collects raw data from within the organization or from its external environment.

Processing converts this raw input into a more meaningful form. Output transfers the processed

information to the people who will use it or to the activities for which it will be used.

Information systems also require feedback, which is output that is returned to appropriate

members of the organization to help them evaluate or correct the input stage.

Components of Information Systems

1. Resources of people: (end users and IS specialists, system analyst, programmers, data administrators

etc.).

2. Hardware: (Physical computer equipments and associate device, machines and media).

3. Software: (programs and procedures).

4. Data: (data and knowledge bases), and

5. Networks: (communications media and network support).

Various Resources

People resources

• End users: (also called users or clients) are people who use an information system or the

information it produces. They can be accountants, salespersons, engineers, clerks, customers, or

managers. Most of us are information system end users.

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• IS Specialists: people who actually develop and operate information systems. They include systems

analysts, programmers, testers, computer operators, and other managerial, technical, and clerical IS

personnel. Briefly, systems analysts design information systems based on the information requirements of

end uses, programmers prepare computer programs based on the specifications of systems analysts, and

computer operators operate large computer systems.

Hardware resources

• Machines: as computers and other equipment along with all data media, objects on which data is

recorded and saved.

• Computer systems: consist of variety of interconnected peripheral devices. Examples are

microcomputer systems, midrange computer systems, and large computer systems.

Software Resources

Software Resources includes all sets of information processing instructions. This generic concept of

software includes not only the programs, which direct and control computers but also the sets of

information processing (procedures). Software Resources includes:

• System software, such as an operating system.

• Application software, which are programs that direct processing for a particular use of

computers by end users.

• Procedures, which are operating instructions for the people, who will use an information system.

Examples are instructions for filling out a paper form or using a particular software package.

Data Resources

• Data resources include data (which is raw material of information systems) and database.

• The data resources of IS are typically organized into:

o Processed and organized data-Databases.

o Knowledge in a variety of forms such as facts, rules, and case examples about

successful business practices.

Network Resources

• Telecommunications networks like the Internet, intranets, and extranets have become essential to

the successful operations of all types of organizations and their computer-based information

systems.

• Telecommunications networks consist of computers, communications processors, and other

devices interconnected by communications media and controlled by communications software. The

concept of Network Resources emphasizes that communications networks are a fundamental

resource component of all information systems. Network resources include:

• Communications media: such as twisted pair wire, coaxial cable, fiber-optic cable and

communication satellite systems.

• Network support: This generic category includes all of the people, hardware, software, and data

resources that directly support the operation and use of a communications network. Examples

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include communications control software such as network operating systems and Internet

packages.

Operations Support System

• The operations support system provides information about the day-to-day activities of the

organization. They support the operations of the organization, by keeping track of the resources

and the transactions.

• For example, in a banking operation, the operations support system are used to keep track of

current balance of the customer; in a manufacturing unit, it helps to keep track of the inventory of

the items; and, in a sales unit, it keeps track of the number of units of each item sold. Thus,

transaction processing is the main function of the operations support system.

Transaction Processing System

• A computerized system that performs and records daily routine transactions necessary to the

conduct of the business

• TPSs are information systems that process data resulting from the occurrence of business

transactions.

• Example: payroll system; production instructions

• Systems that capture, store and process data that are generated in the course of the

• day-to-day activities of organizations. Such systems help to address routine questions.

• The data can be categorized based on the two dimensions of frequency and

• externality.

• Frequency. Frequent data relates to the day-to-day, repetitive operations of the

• organization, such as issuing payments. Non-frequent data relates to either one-off or

• infrequent operations of the organisation, such as hiring personnel.

• Externality. External data relates to operations involving individuals or institutions

• outside the organisation's boundaries, such as the organisation's clients, suppliers.

• Internal data relates to operations involving individuals or institutions inside the

• organisation's boundaries, such as employees.

• The above classification enables us to determine the type of IT we need.

Basic TPS Model

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Stages of TPS

• Five Stages Of Transaction Processing

– Data Entry

– Processing

– Database Maintenance

– Document And Report Generation

– Inquiry Processing

Data entry

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Data entry is simply the capturing of business data during the transaction. For example, when

making a purchase at your favorite clothing store the cashier will collect transaction data by scanning the

bar code of the items that you've purchased and by swiping your credit or debit card through the credit

card reader. This same transaction data can also be recorded through e-commerce web sites on the

internet.

Processing

• There are two different types of transaction processing, batch processing and real-time processing.

• Batch processing is when transaction data is collected and processed periodically. For example, a

retail store might collect transaction data throughout the day but only after the store closes does

the data get processed. The theory supporting batch processing is that it is a more efficient use of

computer resources. Batch processing is also believed to be easier to control than online

processing, but is constantly out of date as transactions are not updated immediately, but daily,

weekly or even monthly.

• Real-time processing is when transaction data is instantaneously processed. For example, an online

retailer collects and processes transaction data each time a transaction is made. This is why

customers receive an email confirmation within minutes of their purchase. An advantage of real

time processing is that it supports a high frequency of change; however, extra precautions must be

taken in order to ensure data protection. Online processing is often more expensive than batch

processing; however, the data is always up to date.

Database Maintenance

Databases must always be up-to-date and correct. Transaction processing systems assist in

maintaining the corporate databases of an organization to reflect changes resulting from day-to-day

business transactions. This maintenance ensures that the data records stored in the company's databases

are correct.

Document And Report Generation

• Documents and reports are created through the transaction processing system. Some

examples include purchase orders, paychecks, sales receipts, invoices, and customer

statements. Important to remember that TPS reports are operational and do not typically include

analysis.

• Transaction processing systems typically generate 2 types of reports, action documents and

information documents. Action documents require an action take place and information documents

notify that a transaction has occurred.

Inquiry Processing

Inquiry processing is when the consumer uses the internet, intranets, extranets, and web browsers

to make inquiries and receive answers concerning the results of a transaction processing activity. For

example, every time you check your bank account online, you are checking the status of transaction

processing activities. Another example would be when you track the shipping of an online or catalog

purchase.

Management Support System

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• The purpose of the management support system is to assist the managers at different levels

in an organization, in the controlling and the management of the business.

• Management support systems provide different kinds of reports, such as summary report,

sales report, and customer balance report. They also assist the managers in the decision making

process by generating projected reports like projected sales report etc.

• Management support systems also provide information to the executives related to the

overall operations of the organization, the overall growth, profits, its performance etc. Moreover,

for any of the reports, it also provides a detailed report specifying its internal details, if required.

Management Information Systems

Management Information system is concept and

combination of three words:

– Management: It means to manage information

in a organize manner to make information useful.

– Information: Information refers to collected, organized and meaningful data.

– System: A system means co-related components which works together for a same goal.

– “ information systems that integrate data to provide formalized reports that summarize the

information to assist with managerial monitoring and controlling of organizational activities and

resources”.

– The MIS is defined as the system that provides information support for decision making in the

organization.

– The MIS is defined as an integrated system of man and machine for providing the information to

support the operations, the management and the decision making function in the organization.

– The MIS is defines as the system based on the data base of the organization evolved for the purpose

of providing information to the people in the organization.

– The MIS is defines as a Computer-based Information System.

Features of MIS

The Basic characteristics of an effective Management Information System are as follows:

• I. Management-oriented:

The basic objective of MIS is to provide information support to the management in the organization

for decision making. So an effective MIS should start its journey from appraisal of management needs,

mission and goal of the business organization. It may be individual or collective goals of an organization.

The MIS is such that it serves all the levels of management in an organization i.e. top, middle and

lower level.

II. Management directed:

When MIS is management-oriented, it should be directed by the management because it is the

management who tells their needs and requirements more effectively than anybody else.

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Manager should guide the MIS professionals not only at the stage of planning but also on

development, review and implementation stages so that effective system should be the end product of

the whole exercise in making an effective MIS.

III. Integrated:

It means a comprehensive or complete view of all the sub systems in the organization of a company.

Development of information must be integrated so that all the operational and functional information sub

systems should be worked together as a single entity. This integration is necessary because it leads to

retrieval of more meaningful and useful information.

IV. Common data flows:

• The integration of different sub systems will lead to a common data flow which will further help in

avoiding duplicacy and redundancy in data collection, storage and processing.

• For example, the customer orders are the basis for many activities in an organization viz. billing,

sales for cashing, etc. Data is collected by a system analyst from its original source only one time.

Then he utilizes the data with minimum number of processing procedures and uses the information

for production output documents and reports in small numbers and eliminates the undesirable

data. This will lead to elimination of duplication that simplify the operations and produce an

efficient information system.

V. Common database:

• This is the basic feature of MIS to achieve the objective of using MIS in business organizations. It

avoids duplication of files and storage which leads to reduction in costs. Common database means a

“Super file or Master file” which consolidates and integrates data records formerly stored in many

separate data files. The organization of the database allows it to be accessed by each subsystem and

thus, eliminates the necessity of duplication in data storage, updating, deletion and protection.

VI. Computerized:

• MIS can be used without a computer. But the use of computers increases the effectiveness and the

efficiency of the system. The queries can be handled more quickly and efficiently with the

computerized MIS. The other benefits are accuracy, storage capacity and timely information.

VII. User friendly/Flexibility:

• An MIS should be flexible i.e. there should be room for further modification because the MIS takes

much time in preparation and our environment is dynamic in nature.MIS should be such that

it should be used independently by the end user so that they do not depend on the experts.

VIII. Information as a resource:

• Information is the major ingredient of any MIS. So, an MIS should be treated as a resource and

managed properly.

Architecture of MIS

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• Whereas transaction-processing systems automate routine and repetitive business transaction

processing activities to reduce errors and increase efficiency, MIS help managers exercise effective

controlling of organizational resources and activities.

• Rationally, MIS are designed to get the right information, at the right time and amount, to the right

user, in the right format to allow managers to monitor and manage the organization better.

Features of MIS reports

• Differentiation by content

In terms of content, MIS reports could be Detailed or Summarized.

• Differentiation by schedule

• MIS reports, either in detailed or summarized content, could be produced either on

schedule, on demand or on exceptional basis. Ex- Periodic reports are produced at regular intervals:

daily, weekly, monthly, quarterly, etc. For example, a report of organizational unit salary totals

produced every month after staff have been paid.

• Exception report: filters out information to highlight situations that are out of normal range

according to some pre-set criteria. For example:

• • reports of staff not achieving minimum performance goals

• • just the names of those staff who have been absent more than five times during the past month

• • details of only those loans which had received no repayment for more than eight weeks

On demand reports are produced as and when required in response to an ad hoc request. For

example,

• the past training of a staff member, in response to their request to go on a training course.

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• List of products that are not selling as well as forecasts predicted so that reasons could be

investigated and ways devised before the problem gets out of hand

Decision Support System

• A decision support system (DSS) is a computer-based application that collects, organizes and

analyzes business data to facilitate quality business decision-making for management, operations

and planning.

• A decision support system (DSS) is a computer-based information system that supports business

or organizational decision-making activities. DSSs serve the management, operations, and planning

levels of an organization and help to make decisions, which may be rapidly changing and not easily

specified in advance.

• Decision Support Systems - DSS - are a specific class of computer-based information

systems that support your decision-making activities.

• A decision support system analyzes business data and provide interactive information

support to managers and business professionals during the decision-making process, from problem

recognition to implementing your decision.

• Decision Support Systems use (1) Analytical models, (2) specialized databases, (3) a

decision maker’s own insights and judgments, and (4) an interactive, computer-based modeling

process to support semi-structured business decisions.

Typical information that a decision support application might gather and present are:

• comparative sales figures between one period and the next.

• Projected revenue figures based on product sales assumptions.

• inventory data organized into relational databases for timely analysis

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Components of DSS

• A typical Decision support systems has four components: data management, model management,

knowledge management and user interface management.

Data Management Component

The data management component performs the function of storing and maintaining the

information that you want your Decision Support System to use. The data management component,

therefore, consists of both the Decision Support System information and the Decision Support System

database management system.

Model Management Component

The model management component consists of both the Decision Support System models and the

Decision Support System model management system.

Decision Support Systems help in various decision-making situations by utilizing models that

allow you to analyze information in many different ways.

For example, you would use what-if analysis to see what effect the change of one or more variables

will have on other variables, or optimization to find the most profitable solution given operating

restrictions and limited resources. Spreadsheet software such as excel can be used as a Decision Support

System for what-if analysis.

The model management system stores and maintains the Decision Support System’s

models. Its function of managing models is similar to that of a database management system. The model

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management component can not select the best model for you to use for a particular problem that requires

your expertise but it can help you create and manipulate models quickly and easily.

User Interface Management Component

The user interface management component allows you to communicate with the Decision Support

System. It consists of the user interface management system. This is the component that allows you to

combine your know-how with the storage and processing capabilities of the computer.

The user interface is the part of the system you see through it when enter information, commands, and

models.

Knowledge Management System

The Knowledge--Based Management Subsystem can support any of the other components or act as an

independent component.

The knowledge management component, like that in an expert system, provides information about the

relationship among data that is too complex for a database to represent. It consists of rules that can

constrain possible solution as well as alternative solutions and methods for evaluating them.

Unit-4

ERP role in e-commerce (with book)

Facilitating customer

Tracking of goods

Customer ordering of

goods

Vendor managed

inventories

Building goods to

order

Linking with

suppliers

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E-BUSINESS Pushes ERP To The Network Edge

In recent years, there has been a revolution in systems planning and design.

Management takes an integrated company-wide view of its IT investments and choices, and implements an ERP system that integrates the core business processes of an entire company into a single software and hardware system.

Customers, suppliers and business partners are consciously included in the business process, systems operation and systems development.

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The Advantage: E-Business & ERP in One

UNIT-3

Business modules in erp packages

An ERP system covers the following common functional areas. In many ERP systems these are called and

grouped together as ERP modules:

Financial accounting: General ledger, fixed asset, payables, receivables, cash management, financial

consolidation

Management accounting: Budgeting, costing, cost management, activity based costing

Lower costs

• Less maintenance

• No redundant data

• No redundant business logic

• Easy customization

• Easy to upgrade

• Greater flexibility

• Scalability

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Human resources: Recruiting, training, payroll, benefits, 401K, diversity

management, retirement, separation

Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow

management, quality control, manufacturing process, manufacturing projects, manufacturing

flow, product life cycle management

Supply chain management: Supply chain planning, supplier scheduling, order to

cash, purchasing, inventory, product configurator, claim processing

Project management: Project planning, resource planning, project costing, work break down

structure, billing, time and expense, performance units, activity management

Customer relationship management: Sales and marketing, commissions, service, customer

contact, call center support - CRM systems are not always considered part of ERP systems but

rather Business Support systems (BSS). Specifically in telecom scenario

Data services : Various "self–service" interfaces for customers, suppliers and/or employees

Business uses resources to produce goods and services. These resources are land, labour

and capital. These three resources become productive when combined in a rational way for some

creative or gainful purpose. This is the function of the fourth resource entrepreneurship or

management. Entrepreneurs or managers combine the resource like land, labour and capital in

different ways to produce goods or services. It is the function of the management to plan the

effective and efficient use of the resources available to the enterprise.

The enterprise resource planning (ERP) system help the management in making the

planning process more productive and efficient.

ERP modules

Finance Module

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Financial Accounting

Controlling

Investment Management

Treasury Management

Enterprise Controlling

Human Resources Module

Personnel Management

Organizational Management

Payroll Accounting

Time Management

Personnel Development

Sales & Distribution Module

Logistic Management Module

Production Management

Plant Maintenance

Quality Management

Material Management

Finance module

A set of processes are required so that they can provide the financial information in the form that is

required by the user, such financial solution is provided by the ERP package.

The financial application component of the ERP provides us with the information of financial

functionality across the different business area.

The finance business of ERP also provides analysis support to the business.

The finance module of the most ERP system will have the following subsystems:

Financial Accounting (General Ledgers, Accounts Receivable / Payable, Fixed Asset

Accounting)

Investment Management (Investment Planning / Budgeting / Controlling)

Controlling (Cash Management, Treasury Management)

Enterprise Controlling (EIS, Business Planning and Budgeting)

Financial accounting

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The financial accounting system objective is to provide company-wide control and

integration of financial information which is required for strategic decision making.

the Financial Accounting Module of an ERP system, gives you the ability to centrally track financial

accounting data within an international framework of multiple currencies, companies and

languages.

Eg: When raw material moves from inventory into manufacturing, the system reduces quantity

values in inventory and subtracts value for inventory account in the balance sheet.

Controlling

This module gathers the functions required for effective internal cost accounting.

It offers a versatile information system, with standard reports and helps in analysis.

Treasury management

The organization can gain a significant competitive advantage by efficiently managing the short

term, medium term and long term payment flows and managing the risk.

All these operating divisions are linked so that the financial transactions can be planned and these

positions in treasury have a significant impact on the organizations success.

It also helps in management and control of cash flow.

Manages the risk among all the division of organization

Investment management

Investment management process starts from the planning of an organization till the settlement of

an organization.

The investment programs are carried out in each and every department and it also tells us the up to

date information about funds, plant cost and actual cost from external and internal activities.

The investment program allows to distribute budgets which help us to monitor the budget and

avoid over run.

It also helps us to manage and plan capital projects.

The investment measures that need to be monitored are done from time to time according to the

internal order.

Enterprise controlling

Enterprise controlling comprises of those functions that will optimize share-holder value, while

meeting internal objectives for growth and investment.

This module includes:

Executive Information Systems-provides an overview of the critical information

necessary to manage the organization.

Business Planning and Budgeting-Business Planning and Budgeting supports the

management team of business units and groups in the calculation of business

targets such as return on investment.

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Profit Centre Accounting-It analyses the profitability of internal responsibility

centres

Human resources module

Human resource management is an essential factor of any successful business.

The various subsystems under HR module are:

Personnel management: (HR master data, Personnel administration, information systems,

recruitment, travel management, benefits administration, salary administration)

Organizational management: (Organizational structure, staffing, schedules, job descriptions,

planning scenarios, personnel cost planning)

Payroll Accounting: (Gross/net accounting, history function dialogue capability, multi currency

capability, international solutions)

Time management: (Shift planning, work schedules, time recording, absence determination)

Personnel development: Career and succession planning, profile comparisons, qualifications

assessments, additional training determination. Training and event management.)

Sales and distribution module

With today’s business environment characterized by growing competition shrinking cycle times

and the accelerating pace of technological innovation companies are increasingly being forced to

streamline business processes.

Here, increased efficiency in sales and distribution is a key factor to insure that companies retain a

competitive edge and improve both profit margins and customer service.

Here, increased efficiency in sales and distribution is a key factor to insure that companies retain a

competitive edge and improve both profit margins and customer service.

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The following are the sales related business transactions:

Sales queries, such as inquiries and quotations

Sales orders

Outline agreements, such as contracts and scheduling agreements

Delivery/Shipment

Invoicing/Billing

After sales support

The sales and distribution module very actively interacts with the material management and

financial accounting modules for delivery and billing.

Typically, a sales and distribution module will contain the following sub systems:

Master data management

Order management

Warehouse management

Shipping

Billing

Pricing

Sales support

Transportation

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Foreign trade

Logistic Management Module

Logistics management is the part of supply chain management that plans, implements,

and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and

related information between the point of origin and the point of consumption in order to meet

customer's requirements.

Logistic Management Module

sub modules

Plant maintenance module

The Plant maintenance module includes an entire family of product covering all aspects of

plant/ equipment maintenance and becomes, integral to the achievement of process

improvement.

The major subsystems of a maintenance module are :

Preventive Maintenance Control.

Equipment Tracking.

Component Tracking.

Plant Maintenance Calibration Tracking.

Plant Maintenance Warranty Claims Tracking.

Quality management module

The quality management module supports the essential elements of a system.

It penetrates all processes within an organization.

The task priorities, according to the quality loop, shift from production (implementation

phase) to production planning and product development (planning phase), to procurement

and sales and distribution, as well as through the entire usage phase.

It handles the traditional tasks of quality planning, quality inspection and quality control.

The quality management module’s internal functions do not directly interact with the data

or processes of other modules.

Material Management Module

The material management module optimizes all purchasing processes with workflow-

driven processing functions, enables automated supplier evaluation, lowers procurement

and warehousing costs with accurate inventory and warehouse management and integrates

invoice verification.

The main module of material management are as follows:

i. Pre- Purchasing Activity.

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ii. Purchasing.

iii. Vendor Evaluation.

iv. Inventory management.

v. Invoice verification and material inspection.

Production Management

A good manufacturing system should provide for multi-mode Manufacturing applications

that encompass full integration of resource management.

A robust system of manufacturing planning business process and execution must satisfy a

variety of business practices and production methods.

These business practices and production methods place stringent demands on the

manufacturer. Regardless of how manufacturers view their internal operations, to the

customer, it boils down to quick response to customer demand in two fundamental ways;

Manufacturers either make products to stock prior to receipt of a customer order, or they

make and ship the product upon receipt of a customer order.

Manufacturers must accomplish this task quickly, efficiently and cost effectively to remain

profitable and competitive. These two fundamental ways of responding to customer

demand are as shown in Fig

Today, companies must be able to deliver customer-specific products with the le time of standard,

off-the-shelf products. To help manage product and market shifts, manufacturing module provides

the freedom to change manufacturing and plan methods, as and when they need a change.

The Manufacturing modules of most ERP vendors, do not limit businesses to a single manufacturing

method, such as make-to-stock or make-to order (Figure given below). Instead, many

manufacturing and planning methods can be combined within the same operation, with unlimited

flexibility to choose the best method or combination of methods for each product, at each stage

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throughout its life cycle.

BPR (from book chap 10)

Reengineering guidance and relationship of Mission and Work Processes to Information Technology.

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ERP and BPR (rest @ Chapter 10, ERP by DP Goyal)

Enterprise resource planning (ERP) is a software platform that helps business owners determine how to best

use their available resources. Business process re-engineering (BPR) involves observing and analyzing how the

business works to determine changes that may streamline operation at the business. ERP and BPR can go hand-

in-hand. An organization's management might use BPR as a means of looking at the current operations of a

business to determine how to best proceed when designing or choosing a new ERP.

The goal of business process re-engineering is to determine what changes can be made in the way the business

operates to improve aspects of a business. Often, BPR will focus on a specific part of the business, like costs,

customer service or marketing and advertising. Using BPR does not necessarily lead to ERP. Though ERP and

BPR are related, a well-conducted BPR may find that there is no need for an ERP platform in the business. A

business conducting BPR may determine to drop an ERP method for reasons including cost, effectiveness, or

maintenance.

As an integrated type of software that performs in multiple departments of business, an ERP platform handles a

number of tasks. Generally, ERP programs help business owners manage their finances, keep employee records

and schedule the use of their assets, whether the assets include buildings, machinery, work, or money. Because

an ERP addresses not only one business task, but a number of business tasks, ERP and BPR are most often used

together to improve operations in a business with a fundamental problem in organizing its processes and

resources.

Implementing business process analysis usually starts with examining how well the company is meeting the

goals set out in its mission statement. Effective BPR usually involves subdividing existing business tasks into

smaller units and improving processes within the subdivided task units. Generally, goals during BPR include

improving process effectiveness and efficiency, improving adherence to regulations or specifications set for the

product or service, and improving control over variables in each process.

Just like ERP and BPR can be used together to improve an existing ERP platform, a business executive can

benefit from using an existing ERP to enhance the effectiveness of BPR. One of the advantages to an ERP is that it

stores integrated data from all parts of the program, allowing an executive to access and examine data to plan

the most effective business process changes. An executive can use company information like resource and

financial data to make the best decisions for change within the company.

ERP and BPR can also be used together to facilitate change management. Once BPR is completed and the course

of change has been determined, ERP can be used to facilitate communication and information exchange for staff

members affected by the readjustment process. BPR can also be used to help establish the most effective way of

implementing ERP use for an existing workforce

ERP Implementation life cycle and implementation methodology chapter 8, 11 by DP Goyal

ERP Project management

ERP project management is concerned with activities involved in ensuring that the ERP system is

implemented on time; within budget; and in accordance with the requirements of the user.

The various steps involved in project management are:

Identification of various tasks

Determine the order of sequence

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Assessment of risk and mitigation strategies

Allocate resources to each and every activity

Monitor the progress and corrective action

Identification of various tasks

The various tasks involved in the implementation of ERP system are as follows:

(1) Preparation of implementation plan

(2) Formation of steering committee

(3) Acquisition of facilities

(4) Analysis and redesign of business process

(5) Customization of ERP package

(6) Acquisition of IT infrastructure

(7) User’s training

(8) Conversion of data

(9) Testing

(10) Documentation

(11) Go live

(12) Change Management

(13) Evaluation and maintenance

Determine the order of sequence

Having identified the various tasks, the project leader needs to decide about the sequence of the

activities.

There may be some activities that can only be carried out in sequence, i.e., these can not be

undertaken in parallel to some other activity, as well as some activities that can be undertaken in

parallel.

In order words, here the dependent and the non-dependent activities are determined so that the

activities may be planned to be undertaken accordingly.

Assessment of risk and mitigation strategies

A risk may be defined as the likelihood of a given outcome and the magnitude of the occurrence.

There may be various risks associated with the implementation of ERP systems.

In order to make sure that the process of ERP implementation is smooth and ERP systems are

meeting the goals and strategies of the organization; the project manager must assess all the risks

and prepare a plan for the mitigation, monitoring and management of these risks.

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Allocate resources to each and every activity

Once the order of activities is known, the appropriate resources in terms of time; people; and

money can be allocated.

The allocation of resources to various activities becomes a plan that can be used to monitor and

control the progress of various activities.

The project milestones, which are sub-goals to be achieved over a period of time(per month or per

week) are defined and a month-wise or week –wise schedule is prepared so that ERP team can have

a benchmark for performance and may adhere to these defined milestones.

Monitor the progress and corrective action

In this step, the progress of various activities is monitored to see whether the ERP implementation

is progressing as per the plan or not.

If there are deviations between the actual and the planned activities, the corrective steps are taken

so as to bring the ERP project implementation on track.

ERP Project monitoring and control

Once the project schedule is created and the project schedule is being tracked and updated, the

most challenging job of managing an ERP project is monitoring and controlling the project.

The purpose of schedule control is to take measures to eliminate schedule delay and ensuring tasks

are on time. Controlling the project schedule includes several components:

Control changes

Observe performance

Follow-up

Develop and implement a reporting strategy

Control changes

Control begins by recognizing that most projects do not go as planned. To prevent the project from

falling behind, you must define a process for continued control and monitoring of needs – and begin

implementing the process at the start of the project.

Controlling project variances begins with keeping your project schedule accurate, detailed, and on

task. Continuously refer to the statement of work or scope document help eliminate scope creep

(uncontrolled changes in a project).

Use a predetermined process of change control and approval to add to or redefine the scope of the

project.

Observe performance

Once a control process is in place, the project manager and stakeholders must then balance

between being too aggressively involved or too hands off. Task owners need a reasonable amount

of time to complete their tasks. They appreciate follow-up but not constant observation.

During the control phase the project manager must be fully and actively engaged. Human behavior

plays a very large role in controlling the project schedule as it relate to timely task completion. The

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project manager must have a keen awareness of what is happening (or not happening) with the

project and must be alert to possible risks.

Follow up

Routinely update the schedule. If a participant is not available during a normally scheduled update

session, arrangements should be made to get the update earlier so that information can be shared

with the rest of the project team and stakeholders.

A tried and true management theory still works -- management by walking around. Stakeholders,

team leaders and the project manager cannot control a project strictly from their offices. To

effectively control a project, the project manager and key team leaders must get to know the task

owners in their environments and gain understanding of the effort involved in the task

implementation.

Develop and implement a reporting strategy

Develop a reporting strategy beyond the updating of the project schedule.

Status reports should include topics such as issue identification, issue resolution, decisions, or

upcoming events.

Status reports should routinely be distributed to stakeholders, team leaders and team members

and other resource management. We recommend weekly written status reports.

Consider additional updates various interest groups such as Steering Teams, Boards of Trustees,

Faculty senates, or Department Heads. These updates should be customized to the audience.

Unit-4

INTEGRATING SCM, CRM, AND ERP

SCM, CRM, and ERP are the backbone of e-business

Integration of these applications is the key to success for many companies

Integration allows the unlocking of information to make it available to any user, anywhere, anytime

In the earlier days of the ERP systems there were standalone systems like Financial, Manufacturing,

Human Resource, Material Management and Production Planning. Slowly then there were

technologies like CRM, SCM etc. which began to integrate with the ERP interface/systems in order

to improve efficiency and effectiveness of the systems

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ERP, SCM and CRM are independent systems, fragmented nature of these information systems is

not conducive to the coordination of the corporate resources and seriously affect the response rate

due to which it is difficult to form long-term sustainable competitive business advantage.

Thus there is a requirement of the systems to integrate with each other in-order to achieve

business resource sharing and unified deployment of the various resources according to the

customer demands.

Customer Relationship Management (CRM) management system is aimed at improving the

relationship between enterprise and customers. The CRM is working on the principles of the

satisfying the customers of the enterprise through relationship development, proper timely

maintenance of the product, satisfying timely needs and wants of customer and also timely

completion of the project or product for the customers. Thus we could say that CRM is more

concerned about markets (sales forecasts, sales strategies and marketing campaigns).

Supply Chain Management (SCM) management system is the control of the supply chain as

a process from supplier to manufacturer to wholesaler to retailer to consumer. Supply chain

management does not involve only the movement of a physical product through the chain but also

any data that goes along with the product (such as order status information, payment schedules,

and ownership titles) and the actual entities that handle the product from stage to stage of the

supply chain.

There are essentially three goals of SCM: to reduce inventory, to increase the speed of

transactions with real-time data exchange, and to increase revenue by satisfying customer

demands more efficiently.

Benefits after integration

The ERP system only with CRM and SCM together would form a closed loop system that would

customize the system for the enterprise increasing the efficiency in terms of stock reduction,

resource utilization etc. and effectiveness in terms of service level, timeliness etc. and would greatly

increase the help in the decision making for the business process. Immediately after integration the

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system would become interactive /simulative and real time along with integrated control with

bottoms-up approach for paradigm.

Analytical tools are necessary to decide on tactical moves by modeling upstream activities. Real-

time information would provide accurate appreciation of such activities, as well as downstream

sensitivity to changes taking place upstream. In order to operate along a critical path, one must

program the different phases of an integrated solution, aiming to reduce mismatch risk at early

stages by identifying key items that must be targeted and by following their progress through the

pipeline. Such targeting is necessary to guarantee timeliness, quality of product, and cost-effective

implementation. Successful integration requires firm management of internal resources, hence ERP

chores, and it must provide the assurance that numerous suppliers will adhere to schedule

deadlines.

ERP, CRM, SCM

INTEGRATION TOOLS

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• Many companies purchase modules from an ERP vendor, an SCM vendor, and a CRM vendor and

must integrate the different modules together

– Middleware – several different types of software which sit in the middle of and provide

connectivity between two or more software applications

– Enterprise application integration (EAI) middleware – packages together commonly

used functionality which reduced the time necessary to develop solutions that integrate

applications from multiple vendors

ERP Vendor and Software Selection Process

The selection of a vendor that best meets the needs and long-term direction of the company is a

critical step in the successful ERP implementation, because of the following reasons:

(a) There are a large number of ERP products available in the market with different functionalities and

features which are developed by different organizations. To decide that which product and from which

company is the most suitable, may be a confusing situation for the organization.

(b) ERP systems, being the most complex; and heavy investment decision, need careful assessment of the

various vendors and their packages so as to make the final decision about the ERP package.

ERP SOFTWARES

SAP-AG, BAAN, ORACLE, PEOPLESOFT, JD EDWARDS, openerp

Vendor Selection Process

(i) Identification of requirements

Before searching for the ERP vendors, an organization must identify and document the user and

system requirements. This is done by documenting the existing system functionality or by using business

process re-engineering to address best practices in industry. It is through this process that an organization

would know its functional requirements, which would become the basis to select ERP system.

(ii)Preparation of Database of ERP Vendors and ERP Packages

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The next step in the selection of ERP vendor and ERP software process is to identify and prepare a list of

the companies providing software packages. For the identification of prospective ERP vendors, one can

search on the Internet using the Web search engines ; ask the practitioners; subject matter experts and/or

ask the department managers. This step should focus to collect information on the following aspects of

various vendors:

• The product offering

• The target segment

• The client list

• Implementation philosophy and support services

• The hardware and software infrastructure required to support ERP

• The financial strength and so on

(iii) Matching user Requirements to ERP Product Features

In this step, based on the functional requirements document, a high level evaluation of the identified

vendors is done. Sometimes, the more specific information from various vendors is also sought. By

gathering and reviewing the information, the organization is able to broadly understand the match

between its business processes and the vendor’s software package. This step also helps the company to

assess whether the documented processes are appropriate or require changes. For determining the user

requirements, generally two models of an organization's processes are used

(a) As Is-This model is used to model current processes of the organization.

(a) To Be- It is used to model the would be requirements ; or the future preferred processes of the

organization.

(iv) Request for Bids/Proposal

The request for bid(RFB) which is also called request for proposal(RFP) generally includes the type of ERP

system, an organization is looking for with specific functionality; specified hardware and software

infrastructure; training requirements; customization; and any specific contract issues. The RFP also

specifies the format to respond to the proposal including a pricing sheet; description of the selection

process and a timeline for selecting an ERP vendor.

(v) Vendor Analysis and Selection

After the bids are received, these are opened on the pre-specified date, generally by a committee and a

comparative sheet of all the received bids is prepared. To evaluate the bids, many different skills are

required. For example, an organization needs to evaluate the bid on functionality; technology

requirements; pricing; time required to implement the project; contract terms and so on. The purpose of

this step is to short list only a few, say two or three top vendors with which to start negotiating a purchase.

(vi) Negotiation and Contract Agreement

In this step, the shortlisted vendors are called for further, negotiations on the product, services and

maintenance of the ERP systems. During this process value of each of the product of the shortlisted vendor

is understood and a competition among the competing vendors is created so as to get the best deal. A

‘Letter of Intent’ is usually given immediately upon this decision being approved by the sanctioning

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authority. Finally, the negotiated contract has to be signed by both parties and then the formal purchase

order is released.

(vii) Delivery and Implementation The process of selection of the ERP vendor and ERP package should

not be complete, once an organization enters in contract with some vendor for the acquisition of ERP

system; rather it is to be seen that the vendor delivers and implements the system as per the terms of the

contract.

(viii) Post-Implementation Review After the system is implemented, a system evaluation is made to

determine how closely the new system conforms to the specifications and to the overall mission and goals

of the organization. A post-implementation review is made, in which system specifications and user

requirements are audited. The feedback obtained in this step helps in taking corrective action.

ERP selection issues

• In selecting ERP software for particular company, we need to know some issues as follow:

– Whom to Buy From

– What consultant can add

– Locking and Leasing Options

– Troubleshoot Early

Whom to Buy From

• Midsize companies buy ERP in one of two ways: directly from software vendors, or indirectly,

through a value-added re-seller (VAR)

• From SearchITChannel.com defines VAR as follows;

• “In the computer and other industries, a VAR (value-added reseller) is a company that takes an

existing product, adds its own "value" usually in the form of a specific application for the product (for

example, a special computer application), and resells it as a new product or "package." For example, a

VAR might take an operating system such as IBM's OS/390 with Unix services and, adding its own

proprietary UNIX application designed for architects, resell the package to architectural firms.

Depending on sales and installation requirements, the VAR could choose whether or not to identify

OS/390 as part of the package ”

• Customers should ask how much technical support the VAR can be provided, since that can be

critical to a successful ERP implementation.

• However, Mid-Market vendors may not have as many resources for ongoing support and product

upgrades as the largest vendors do.

• Most large and many mid-market vendors offer modules geared to the needs of particular

industries such as manufacturing or distribution.

• If a company has very specific needs in mind when it begins looking for an ERP package, it may

want to work directly with a mid-market vendor that is experienced in designing a suite that meets

needs of its industry.

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• Some financial executives may prefer to shop for an entire ERP package directly from a mid-market

vendor to know about the differences between packages firsthand and make decisions without the

help from third parties who might be biased.

• The buyer can hire a consultant with expertise in the chosen software to help with the selection and

implementation.

• ERP decision makers should be aware that while VAR also can do some consulting functions their

advice as consultants could be biased to a particular supplier.

What consultant can add

• An industry expert may be better able to determine which suite will work well for a given company.

• An expert in a particular module may know more about how to get that software up and running.

• Consultants are generally more independent than VARs but still many are more familiar with one

vendor’s product than others’.

• When choosing a consultant, a prudent ERP decision maker should inquire about that consultant’s

financial ties to the software vendor it recommends.

Locking and Leasing Options

• The company that purchase all the modules does not have access to any module until it pays for the

“key” to it.

• Instead of buying, some companies lease ERP modules or suites in which they might rent the

modules they need.

• This save on equipment cost and implementation cost.

• With this the responsibility of ensuring that the system is kept running is on vendor. The company

is not aware all behind the scene.

• But this may involve considerable expense and inconvenience; if that vendor changes formats, the

company has no choice but to do the same.

Troubleshoot Early

• After ERP suite has been chosen the company must know will implement it and keep up-to-date.

• Even the ERP choice that the company has is great, it is of no meaning if there is no one with know-

how to install and maintain.

• Before the company commits to a particular ERP package, the decision makers must know the IT

people needed to implement and upgrade it – whether they come inside or outside the company.

They must available and affordable.

• An adequately staffed consultant or VAR offers troubleshooting support to the ERP purchaser.

• Some VARs offer rapid implementation packages, which are supposed to get the ERP system up and

running more quickly.

ERP PRE & POST Implementation Issues

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PRE IMPLEMENTATION ISSUES

1.FUNCTIONALITY

• The ability of ERP package to support the business practices followed in the company determines

the smoothness of its implementation.

• Major gaps in required functionality of ERP can lead to time consuming and cumbersome

customizations that could put budgets and schedules off track.

• A focused evaluation exercise at selection stage would help eliminate incompatible choices.

2. TECHNOLOGY

• ERP solutions that support open , non-proprietary technology standards :

- should support different kinds of OS, databases, and operate on most major client/server hardware

platforms, LAN and user interfaces as to minimize risk towards technology obsolescence.

- should permit ready adaptation of the system in response to ongoing changes in operation and

production processes in the company.

- and should be easy to use to minimize customization effort.

3. IMPLEMENTABILITY OF THE SOLUTION

• It relates to (a) functionality of ERP, (b) its ease of configuration, (c ) ease of use, and(d) software

flexibility to support optimization of business processes.

• For better implementation roles & responsibility of different employees have to be clearly

identified, understood, and configured into the system.

• Simple and easy to use procedures create user trust & confidence, whereas large complex packages

have failed due to difficulty in configuration & usage.

The top management along with various departments must be prepared to adapt that change, and

to implement the ERP package.

It is useful for the organization to engage in a brief business process exercise supported by the ERP

package prior to its implementation. Software is so tightly integrated that making modifications to

its core capabilities is difficult and often extremely expensive.

Obtaining support from executives is the key criterion for success. Expectations must be managed.

High expectations lead to disappointment and low expectation leads to surprise by the amount of

change. Employees must be informed by a rigorous communication programme.

POST IMPLEMENTATION ISSUES

1. PROBLEM OF TRANSFORMATION DUE TO ERP

• Employees find it hard to digest the transformations that place in an organization all on a sudden

due to ERP implementation.

• In fact employees exhibit positive signs as everything goes right in the first place. But as one

progresses he finds difficult to work as it gets more complex.

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• The initial interest and expectation turns into apprehensiveness in due course of time.

• There is another category of people who did not encourage ERP right from the conceptualization

stage.

2 ENHANCEMENT OF ERP FUNCTIONS

• scope of ERP gets wider as it is implemented in an organization.

• This dilutes the ERP Existing system after modifying it a couple of times. Repeated change in

configurations and systems will only add to the confusions.

• When the functions are operated by a single machine it becomes increasingly difficult to make the

necessary changes. These troubles arise when they are not foreseen and addressed in the

implementation stage.

• They have to be given a place in ERP implementation plan.

3 ORGANIZATIONAL REACTION TO CHANGE

• Changes do happen quickly and immediately in the organization after ERP is implemented.

• But if there is no proper understanding of the process or mishandling of information, it will result

in questioning the ERP process. If updating is not done in the machine it will only affect the

business process and create unnecessary confusions.

• The changes don't happen all on a sudden in an organization and expecting it immediately will only

cause needless disappointments.

• In spite of all this, expecting every member in the organization to respond proactively, if that

happens the chances of ERP implementation

4 ORGANIZATIONS NONADHERENCE TO THE STARTED PRINCIPLES

• Organizations largely experience a wide gap between practices and preaching .-In fact this has a

negative effect on the entire scenario itself.

• The voracity and impact of loss could be greater and more devastating when this turns out to be

true even in the case of ERP.

• Since ERP successful functioning is purely based on following the laid down procedures the lag

could throw a serious challenge on ERP'S potential right from the stage of its implementation.

5 INFLATING RESOURCES FOR ERP IMPLEMENTATION

• The implementation time and money always exceeds the promises and stipulated deadline and

amount.

• This makes companies to lose faith on ERP and ERP vendors.

• They think that ERP vendors overplay on the costs and time required but it is not so.

• In fact they are aware of it in the very beginning stage itself but have a different reason

for concealing. They don't disclose it in the beginning because it would look like exaggerating.

• However many people mistake this to be the cause for ERP implementation failure.

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6 EMERGENCIES

• Emergency communication channels in case of failure should be prepared.

• There should be proper maintenance of the system

• There should be effective back-up plans incase system failures occur in required coverage areas.

Public Sector ERP

Revenue Sources - Public sector organizations often receive funding from multiple tax sources such as

personal income tax, sales tax, property tax, and other sources including intergovernmental revenue, user

fees, tolls, or grants (McGee R. W., 2004). Some revenue streams, such as property taxes, have traditionally

been more predictable and less elastic due to this tax’s lower susceptibility to tax avoidance (Lee, Johnson,

& Joyce, 2008), (Bowman & Kearney, 2003), and therefore provide more stable and predictable funding

streams. Public sector organizations that rely more heavily on grants or other intergovernmental revenue

sources will likely have more complex financial management and reporting requirements

Organizational Silos

In open forms of government, power is often intentionally shared across the enterprise. Beyond formal

divisions of power between executive, legislative, and judicial branches, there are often statutory or less

formal concentrations of power which are as just as important to understand Because of the sharing of

power in the public sector, it is often difficult to obtain client signoff on important configuration and

project decisions (Blake, 2010), (Jamison, 2011). This can lead to project delays and cost overruns. At the

same time, it is common to see elected officials or agencies exercise their statutory authority or political

power to refrain from participating in an ERP project, or even publically distance themselves from, or

politically capitalize on, a troubled a project

Transparency and Public Interest

There are substantially more articles about troubled public sector ERP projects than successful projects

(Byrne, 2011). Thus, public interest and the media attention that comes with it can add significant risk to a

public sector ERP deployment (

Elections

External Mandates

Many public sector organizations either receive substantial categorical funding or are subject to unfunded

legal mandates. Such mandates may be derived from other levels of government, voter referendums, or

judicial decisions. External mandates may materially impact the public sector organization’s operations

Social Goals

Public sector organizations typically have business practices reflecting a broader set of goals than cost

reduction and efficiency. Examples of such social goals include small, minorityowned, women-owned, or

veteran-owned business contract participation targets

Process Orientation

Private sector organizations often define success by revenue growth, improved profitability, and stock

price. In contrast, defining success for public sector organizations often proves elusive (Miller & Robbins,

2009). Most people would deem cost savings and efficiency improvements from implementing ERP as

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successes (Gossling, 2009). When those cost savings are generated from laying off government employees

in the middle of a recession, fewer people would embrace this view (Hill, 2010). Such political

considerations often lead public sector organizations to focus on process and compliance improvements,

which are embraced by a broader constituency.