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.

Features of ERP

Benefits of ERP

(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.

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.

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

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

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.

• 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

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

• 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.

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.

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

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.

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

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.

Some EAI tools
• TIBCO
• MQSeries
• WebMethods
• Vitria
• iPlanet
• BizTalk
• WebLogic
• SAP XI
• Gentran
Types of information systems
What are information systems

• 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

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.

• 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

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

Stages of TPS
• Five Stages Of Transaction Processing
– Data Entry
– Processing
– Database Maintenance
– Document And Report Generation
– Inquiry Processing
Data entry

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

• 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.

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

• 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.

• 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

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

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

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.

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

 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

 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

 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.

 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.

 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

 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.

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

throughout its life cycle.
BPR (from book chap 10)
Reengineering guidance and relationship of Mission and Work Processes to Information Technology.

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

 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.

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

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

 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

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

• 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

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

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.

• 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

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.

• 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.

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

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.

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