Module 1: Introduction to ERP

1. Enterprise- An Overview

2. Integrated Management Information

3. Business Modeling

4. Integrated Data Model

By Shital H. More

1. Enterprise- An Overview

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• What is an Enterprise?

Ans:- Defination:-An enterprise is group of people with a common goal which has certain resources at its disposal(control) to achieve this goal.

Fig: The Enterprise By Shital H. More

• The enterprise act as single entity

• This view (single entity) is different from traditional approach.

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Traditional Approach:-

• The organization is divided in different units based on the functions they perform.

• Different units like Manufacturing and Production department Production planning department Purchasing department Sales& Distribution department Finance department R&D department • This departments are compartmentalized and have

their own goal & objectives By Shital H. More

• These departments function in isolation or as silos and have their own system of data collection & analysis.

• (Problem):- So the information that is created or generated by various departments are available to only top management and not to the other departments.

Figure: Org. where there is no little communication between departments

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• So results, Instead of taking org. towards the common goal the various depts. end up pulling it in different direction.

• Because of only one department does not know what the other does. So departmental objective can be conflict.

• (Solution) In enterprise way ,

the entire organization is considered as system and all depts.. are sub-system.

• Information about all the aspects of the organization is stored centrally and is available to all depts..

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Figure: An enterprise where all departments know what others are doing.

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• Through transparency and access to information , departments will no longer be working in isolation.

• Each sub system knows what other are doing, why doing, & what should be done for common goal.

• ERP system helps to make easier by,

Integrating the information system

Enabling smooth & seamless flow of information across departmental barrier

Automating business process & function.

Helping the organization to work & move forward as a single entity.

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2. Integrated Management Information

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• An information system is an open, purposive system that produces information using the ‘input-process-output’ cycle.

• The minimal information system consists of three elements- People,

Procedures and

Data.

• People follow procedures to manipulate data to produce information.

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• Today information system is an organized combination of people, hardware, software, communication, network and data resources that collects, collate (assemble), transforms, and disseminates in organization.

• Management information system also called information reporting systems.

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• An Integrated Management System (IMS) integrates all of an organization’s systems and processes into one complete framework, enabling an organization to work as a single unit with unified objectives.

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• This system give only the information that they are designed to produce at the time they were built.

• So if manager want some information, its not in the reports, So these system are not helpful to them.

• So these integrated approach is required. (Lack, need, require).

• There are three fundamental characteristics of information's are accuracy, relevancy and timeliness.

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Examples of existing processes can include:

• Quality Management

Systems (QMS)

ISO 9001 • Occupational Health &

Safety (OHSMS or SMS or

HMS)

OHSAS 18001:20077

•Environmental Management

Systems (EMS)

ISO 14001

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IMS= QMS + EMS + SMS + EnMS + FSMS + ISMS

• QMS – Quality Management System

• EMS – Environmental Management System

• SMS – Safety Management System

• EnMS – Energy Management System

• FSMS – Food Safety Management System

• ISMS – Information Security Management System

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Benefits of IMS

• Improving the performance of the entire organization

• Increased efficiency and effectiveness

• Cost reductions while minimizing the disruption caused by several external audits

• To increased performance, employee and customer satisfaction, and continuous improvement

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3. Business Modeling

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Business Model

• It is a framework for creating economic, social, and/or other forms of value.

• The term 'business model' is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies.

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• A business model is the strategy that a company uses to generate revenue from its product or service offering.

• Companies follow different business models depending on their products and services.

• Companies choose or invent the model that will generate the most profit.

• The model determines the sales and marketing strategies of the company, including branding, pricing, sales channels and potential partners.

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• For instance, mobile phone carriers often choose to sell mobile phone sets at very low prices and to generate most of their revenues from plans which are based on services consumed, such as minutes spent on calls.

• This model is attractive to investors as it generates an ongoing revenue stream along with the potential to offer new services and features in the future, for additional revenues.

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• All companies have different strategies and use different business models to make money in their industry.

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Business function:- • Organization that make products to sell have following

functions: Marketing & sales Production & material managements Accounting & finance Human resources etc…………. • Each function area comprises a variety of business

function and business activities.

(Problem) Earlier business system , • What happened in one functional area is not closely

related to what happened in others. • So one area’s information system has no impact on other

areas.

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Business process:-

• (solution) Recently organization has started term business process.

• Definition:- A business process is a collection of activities that takes one or more kinds of input and created an output.

• Used :- BP helps to manager to look their organization from a customer’s perspectives.

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• Difference between Business function & Business process:-

• BP cuts across more than one BF to get the task done.

• Example, There car was damaged during delivery so

BF: - to accept the damage items.

BP: - to repair or replace car.

• For the company to provide satisfaction, it must sure that its functional area of operation is integrated.

• Sharing data effectively and efficiency between and within functional area leads more efficient BP.

• Information system can be designed so that accurate and timely data are shared between functional area.

• These system are called integrated(combine in to whole) information system.

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Business Process Modeling (BPM)

• Its first activity in any ERP project.

• It is the activity of representing process of an enterprise, so that the current process may be analysed, improved, and automated.

• Definition:- A business model is representation of the business as

one large system,

Showing the inter connections and

Interdependencies of various sub-

system and business processes.

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Fig. 2: Example of business process modeling of a process with a normal flow

with the Business Process Modeling Notation

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Business Modeling:- • A business model consisting of the business process,

based on the organization’s goal, objectives and strategic plans.

• Based on the business model, the ERP system is developed with the aim of providing the required information and necessary assistance to the various individuals to perform their business process more effectively and more efficiently.

• BPM is typically performed by business analysts, who provide expertise in the modeling discipline; by subject matter experts, who have specialized knowledge of the processes being modelled; or more commonly by a team comprising both.

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• In business modeling ,we model the business as an integrated system making the processes managing its facilities and materials.

• Information is very important resources and is very critical in managing all the other resources.

• A business model is a representation of the

Actual business

what the various business functions of organization are

How they are related

What their interdependencies are and so on…..

• A business model is usually represented in the graphical form using flowcharts and flow diagrams.

• From this model data model of the system is created.

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Fig. 3:Real World and

Business Model By Shital H. More

4. Integrated Data Model

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Integrated data model:-

• Most critical steps in ERP is creation of an integrated data model.

• All the employees from different departments get access to the data-integrated data.

• Company uses the integrated data for its analysis and decision-making.

• The information integrated and the process or procedure automation.

• The data model should reflect the entire org. and should successfully depict (showing) and integrated the data structures of the entire organization

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Fig. 4:Data Model & its

relationship with the real

world By Shital H. More