Enterprise Resource Planning Erp Mis Dss DW & DM: Department of Business Management

Enterprise Resource Planning
ERP MIS DSS DW & DM
Department of Business
Management
Evolution of ERP
 Material Requirement Planning (MRP)

 Manufacturing Resource Planning (MRP
II)
 Enterprise Resource Planning (ERP)
 ERP II
December 7, 2021 2
Evolution of ERP (MRP)
 Mechanism for manufacturing companies to

calculate more precisely what materials they need,
at what time and what is the optimum quantity?
 Planning, Manufacturing, Inventory & Costing
 Manufacturing Feedback to system
 Benefit : Inventory and process time reduction
with new production planning system
December 7, 2021 3
Evolution of ERP (MRP II)
 MRP matured into Manufacturing Requirement

Planning (MRP II) in early eighties
• Along with precise material planning, detail capacity
planning, scheduling, shop floor control and other
calculations
• Benefit: greater reduction due to integration with
accounting and human resource system
 ERP
• Evolved MRP II further to embrace all business
functions, not just those concerned with actual
manufacturing, customer satisfaction and almost
every aspects of business
December 7, 2021 4
ERP II
 Industry oriented (specialized)

 Transition from an internal view of the
organization to the business network
vision within the industry
 Electronic Commerce
• Developing html interface for internet/intranet
• Supporting complete commercial transactions
December 7, 2021 5
ERP System – Cost Component
 Software - 30%
 Consulting - 24%
 Hardware - 18%
 Implementation Team - 14%
 Training - 11%
 Others - 3%
Source: ERP survey of US Manufacturing firms 2000
December 7, 2021 6
ERP Packages implemented
 SAP 25%
 Oracle 14%
 Multiple packages 10%
 Baan 9%
 JD Edwards 7%
 People Soft 2.5%
 Others remaining
Source: ERP survey of US Manufacturing firms 2000
December 7, 2021 7
Market Shares
ERP Vendor Market Share

World wide Asia Pacific
Oracle 11% 18%
SAP 30% 19%
Peoplesoft 5% 6%
J D Edwards 4% 3%
Invensys ( Baan) 1% 3%
Source: Gartner Report Titled “ Dynamic Shifts in Spending for Enterprise
Applications Software : Market Share and Forecast 2000 “
December 7, 2021 8
Beyond ERP
Supplier
Supplier
Collaboration
Collaboration
Supply
Supply Chain
Chain
Management
Management
Key
Key Process
Process
Integration
Integration via
via
ERP
ERP
Product
Product
Lifecycle
Lifecycle Customer
Customer
Management
Management Management
Management
Consumers
Consumers and
and
Design
Design Partners
Partners Channels
Channels
December 7, 2021 9
A few SAP clients
Company No. of users Duration

Tata Steel 800 15 months
Madura Garments 200 11 months
L&T 300 12 months
ITC 800 12 months
EID Parry 700 7 months
Carrier Aircon 300 12 months
BOC 180 7 months
Asian Paints 400 10 months
Whirlpool 400 12 months
December 7, 2021 10
ERP – a threat to employees
 Job descriptions and functions may change for

many. Example : Order Entry in ERP
• An order enters the system
• Information passed automatically to sales &
distribution and finance
• Distribution module checks items in stock
• If in stock, items dispatched and finance module
intimated
• If no, information goes to manufacturing for
production
• Order entry person’s role changes
December 7, 2021 11
ERP – a threat to employees
 Employees find difficult to accept change

 Fear of unemployment
 Training & motivation
 Top management to take necessary
steps to motivate people to accept
change
 Change Management
December 7, 2021 12
ERP Business Model
 One of the initial activities in ERP Project

 Not a mathematical model
 Representation of the various business functions of
the organization, their interrelationship and their
interdependencies
 From the business model, data model of the system
is created
 Business model and process flows are created during
• Pre-implementation – for ERP vendors to select what are the
different modules to offer and for effort estimation to quote
December 7, 2021 13
Business Model
Commercial Purchase Inventory
Sales Order from Customer Production Planning Manufacturing
Despatch/Delivery Product Warehouse Finished Goods
Quality Finance Human Resource
December 7, 2021 14
Integrated Data Model
 Derived from the Business Model

 Depicts the entire data flow of the organization
 At any point of time database should reflect the
snapshot of the organization. Example
• Order Entry -> Sale update -> Material Despatch ->
Finished Goods Stock reduction -> Update Accounts
Receivables
 Interfacing with some critical system on a periodic
basis
• Weigh bridge
• Batch Payroll
December 7, 2021 15
BPR (Business Process re-
engineering)
 Fundamental rethinking and radical redesign of business

processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost,
quality, service & speed. It improves all three areas
essential to business effectiveness –
• Business plans, Business Process & Business Information.
 By setting focus on business re-engineering, and on
development of Information systems that directly support
strategic business plans, managers can take control &
turn today's chaotic environment to their competitive
advantage.
December 7, 2021 16
BPR
 A popular perception about BPR is that it is a

means of streamlining the business processes.
 Ideally, Organizations should look at a
continuum from streamlining to re-inventing.
 In the case of re-inventing a process, the
existing one is scrapped and a new one is
created from scratch with a fresh look.
Concepts & ideas from within and outside the
industry should be welcomed.
December 7, 2021 17
BPR & ERP
Just automating the existing business practices will

not help ERP to achieve the anticipated results
because, OO + NT = EOO
Business Process Re-engineering [BPR] brings out
the deficiencies of the existing setup
BPR and ERP will give way to implement new
systems and the long pending improvements in the
existing systems
BPR may be time consuming but the scope can be
restricted & controlled by the Management
December 7, 2021 18
BPR - Steps
Step 1 Step 2 Step 3
Understand Simplify/Improve Automate

Understand the Draft & frame the Implement with
existing possibilities & ways the help of
systems to simplify or improve ERP
associated with or eliminate the
all the processes
functionalities
December 7, 2021 19
MIS (Management Information
System)
 A step forward from traditional EDP like Payroll System

 Normally integrated using structured databases and
information flow
 Computer-based or manual system that transforms data
into information useful in the support of decision making.
 MIS is used to generate reports-for example, financial
statements, inventory status reports, or performance
reports needed for routine or non-routine purposes.
 MIS is standard, structured, scheduled and routine.
December 7, 2021 20
DSS (Decision Support System)
 Information system to help top managers in decision

process
 MIS is used to support decisions for structured problems
• When to re-order the material?
• Production/despatch target vs. actual
 DSS to support unstructured or semi structured
information need
• What would happen to cash flow if the company changes its
credit term for its customers?
 DSS should be interactive and easy to use
 DSS does not replace MIS, but supplements it
 Different DSS tool available such BI from Oracle
December 7, 2021 21
EIS (Executive Information
System)
 Better and sophisticated DSS

 EIS is also a decision support system for
very senior executives
 Requires access to outside information
from competitors, government rules and
regulations, news agencies etc.
December 7, 2021 22
Data Warehousing
 Enterprise system creates operational data in large

databases
 Increases very fast, old data not useful in the current
transactional system.
 System performance deteriorates
 Should we purge them out and forget?
 No, archive them. These data are useful resource. Can
do analytical job like vendor’s performance analysis
 Separate operational data from non operational data.
These data are useful for decision support.
 Create a Data Warehouse. Can do mining on this data.
December 7, 2021 23
What is Data Warehousing?
 A data repository which stores integrated information

for efficient querying, analysis and reporting.
 It has data collected from multiple, disparate sources
of an organization.
• Heterogeneous data transformed and combined into
homogenous data, typically summarized
 Used for decision support and data analysis systems
(DSS)
• Trend Analysis over time
• Forecasting
• Strategic Planning for Business – Analyst
 Provides data analysis capability - OLAP
December 7, 2021 24
Why Data Warehouse is needed?
 Analysis requires millions of records of data

which are historical in nature.
 Data is collected from heterogeneous sources
(RDBMS, flat files, Excel sheet etc.)
 Need to make quick and strategic decisions.
 In essence, it is a copy of the organization’s
operational data adequately modified to
support the needs of analytical processes and
stored outside the operational database.
December 7, 2021 25
Operational Database Systems Vs.
Data Warehouses
 Database systems are used for OLTP

application and contain operational
data for day to day transaction
 Data warehouses are used by
knowledge workers for data analysis
and decision making based on those
analytical result. These systems are
known as Online Analytical Processing
(OLAP) system.
December 7, 2021 26
OLAP
 Information Technology evolved from good old

EDP to MIS and then DSS
 Database Technology improvement
 Increasing storage capacity and cheaper
hardware
 Normally operational databases record detail
transactions data and do not explicitly record
summarized data.
 The corporate managers require enterprise
wide summarized information to support
decision process.
December 7, 2021 27
OLAP
 An organization’s success depends on its ability

to analyze data and to make intelligent decisions
that would potentially affect its future.
 Systems that facilitate such analysis are called
On Line Analytical Processing (OLAP) systems
 OLAP application requires historical data to
enable trend analysis and future predictions
December 7, 2021 28

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Enterprise Resource Planning

ERP MIS DSS DW & DM

 Material Requirement Planning (MRP)

 Mechanism for manufacturing companies to

 MRP matured into Manufacturing Requirement

 Industry oriented (specialized)

ERP Vendor Market Share

Company No. of users Duration

 Job descriptions and functions may change for

 Employees find difficult to accept change

 One of the initial activities in ERP Project

Commercial Purchase Inventory

Sales Order from Customer Production Planning Manufacturing

Despatch/Delivery Product Warehouse Finished Goods

Quality Finance Human Resource

 Derived from the Business Model

 Fundamental rethinking and radical redesign of business

 A popular perception about BPR is that it is a

Just automating the existing business practices will

Step 1 Step 2 Step 3

Understand Simplify/Improve Automate

 A step forward from traditional EDP like Payroll System

 Information system to help top managers in decision

 Better and sophisticated DSS

 Enterprise system creates operational data in large

 A data repository which stores integrated information

 Analysis requires millions of records of data

 Database systems are used for OLTP

 Information Technology evolved from good old

 An organization’s success depends on its ability

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