Lesson 4 - ERP and DSS PDF

Information Management Enterprise Resource Planning and Decision Support Systems Lesson 4 BY: DANDREF C. REYES  ERP SYSTEM Enterprise Resource Planning (ERP) is a software that is built to organizations belonging to diff...

Information Management Enterprise Resource Planning and Decision Support Systems Lesson 4 BY: DANDREF C. REYES  ERP SYSTEM Enterprise Resource Planning (ERP) is a software that is built to organizations belonging to different industrial sectors, regardless of their size and strength. The ERP package is designed to support and integrate almost every functional area of a business process such as procurement of goods and services, sale and distribution, finance, accountings, human resource, manufacturing, production planning, logistics & warehouse management.  ERP SYSTEM ERP is a business management software is usually a suite of integrated applications that a company can use to collect, store, manage, and interpret data from many functional areas.  Functional Areas Financial Accounting − Deals with financial transactions and data. Human Resource − Deals with information related to employee of an organization. Customer Relationship Management − Deals with capturing and managing customer‘s relationship, facilitating the use of customer experience to evaluate the knowledge database. Sales and Distribution − Deals with order placement, delivery, shipment and invoicing.  Functional Areas Logistics and Warehouse Management − Deals with storage of products and shipment. Manufacturing and Material Management − Deals with the production and production planning activities. Supply Chain Management − Deals with the movement of products, storing, managing, and controlling supplies. Business Intelligence − Analyzes data and converts the same to information.  The ERP Computers have become so complex and commonplace in organizations, it is much easier to integrate all of the data and processing software modules and hardware into one large unit that is easier to access and control. This is called Enterprise Resource Planning, or ERP. Normally ERP systems use the same database throughout an entire company to store various types of data for different computerized functions. When first developed, ERP systems were used only for large manufacturing companies. Today, they benefit all sizes of companies, even those that are quite small.  Foundation for Understanding ERP Systems: During early phases of development, integrated solutions were designed for particular process areas such as − – Material Management − the integrated system was known as Material Requirement Planning (MRP) – Manufacturing − the integrated system was known as Manufacturing Resource Planning However none of the integrated systems came with a complete solution for an organization covering major business process areas. In early 1990‘s, the Gartner Group first used the acronym ERP. By mid–1990‘s, ERP systems addressed all the core enterprise functions. In the early stages, most of the ERP solutions were focused on automating back office functions that were not directly affecting customers or general public. Later, front office functions such as customer relationship management and e–business systems were integrated.  What is ERP software? ERP software has its roots in the 90s manufacturing industry, where earlier forms of the applications were used for manufacturing resource planning (MRP) and computer integrated manufacturing (CIM). However, ERP has grown to cover all core functions of a business, regardless of its industry sector. As a result, both private and public sector organizations now use ERP systems in some form or other. ERP applications tend to be modular in nature, sharing vital business information which is held on a central database repository, or repositories.  What does ERP software do? ERP systems typically carry out financial and business planning functions, which might formerly have been carried out by many smaller standalone applications. Examples of ERP system modules include: product lifecycle management, supply chain management (for example purchasing, manufacturing and distribution), warehouse management, customer relationship management (CRM), sales order processing, online sales, financials, human resources, and decision support system.  Why use ERP software? One major benefit of having a single modular ERP system is that it can unite and link together multiple processes and parts of the business, making the business run more efficiently. By automating various functions, you can also benefit from having, for example, good order tracking, from acceptance through to fulfilment. In terms of the revenue cycle, you can track invoices through to cash receipts.  Why use ERP software? ERP systems also centralize the data in one place, which can eliminate the problem of synchronizing changes between multiple systems, and allows business managers to get a more accurate view of the business‘s information. Having a single data repository can also lower the risk of losing sensitive data, if you use appropriate data security and authorization.  What are the drawbacks of ERP systems? ERP systems can prove to be complex and difficult to customize, keeping in mind the actual complexities and idiosyncrasies of each individual business itself. Many firms fail to adequately invest in ongoing training for the involved IT personnel, and there is often a lack of corporate policy to protect the integrity of the data in the ERP systems and the ways in which it is used. Business processes frequently have to be re-engineered to fit the new ERP system, and this can lead to problems with processes and staff.  What are the drawbacks of ERP systems? Also, ERP systems can be very expensive. This has led to a newer breed of simpler ERP systems for smaller enterprises which carry a lower cost, and many established ERP vendors now offer managed ERP services, offered over the web. Finally, the fact that ERP systems centralize the data in one place can increase the risk of loss of sensitive information in the event of a security breach.  Decision Support Systems (DSS) Decision support systems (DSS) are interactive software-based systems intended to help managers in decision-making by accessing large volumes of information generated from various related information systems involved in organizational business processes, such as office automation system, transaction processing system, etc. DSS uses the summary information, exceptions, patterns, and trends using the analytical models. A decision support system helps in decision-making but does not necessarily give a decision itself. The decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions.  Characteristics of a DSS Support for decision-makers in semi-structured and unstructured problems. Support for managers at various managerial levels, ranging from top executive to line managers. Support for individuals and groups. Less structured problems often requires the involvement of several individuals from different departments and organization level.  Characteristics of a DSS Support for interdependent or sequential decisions. Support for intelligence, design, choice, and implementation. Support for variety of decision processes and styles. DSSs are adaptive over time.  Classification of DSS There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows: Text Oriented DSS: It contains textually represented information that could have a bearing on decision. It allows documents to be electronically created, revised and viewed as needed. Database Oriented DSS: Database plays a major role here; it contains organized and highly structured data. Spreadsheet Oriented DSS:  Classification of DSS Spreadsheet Oriented DSS: It contains information in spread sheets that allows create, view, modify procedural knowledge and also instructs the system to execute self- contained instructions. The most popular tool is Excel and Lotus 1- 2-3. Solver Oriented DSS: It is based on a solver, which is an algorithm or procedure written for performing certain calculations and particular program type. Rules Oriented DSS: It follows certain procedures adopted as rules.  Classification of DSS Rules Oriented DSS: Procedures are adopted in rules oriented DSS. Export system is the example. Compound DSS: It is built by using two or more of the five structures explained above.  Types of DSS Following are some typical DSS: Status Inquiry System: It helps in taking operational, management level, or middle level management decisions, for example daily schedules of jobs to machines or machines to operators. Data Analysis System: It needs comparative analysis and makes use of formula or an algorithm, for example cash flow analysis, inventory analysis etc.  Types of DSS Information Analysis System: In this system data is analyzed and the information report is generated. For example, sales analysis, accounts receivable systems, market analysis etc. Accounting System: It keeps track of accounting and finance related information, for example, final account, accounts receivables, accounts payables, etc. that keep track of the major aspects of the business. Model Based System: Simulation models or optimization models used for decision- making are used infrequently and creates general guidelines for operation or management. Model of Decision Support System  Midterm: Activity 2 Make a research on the following: – What is Business Intelligence System? – Characteristics of BIS – What is Knowledge Management System?