131957 2881 ERP and Related Technologies

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    Enterprise resourceplanning

    andRelated Technologies

    Semester 5th

    BSc (IT)

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    ERP is an abbreviation for Enterprise resource

    planning and means the techniques and concepts for

    the integrated management of business as a whole,

    from the viewpoint of the effective use of

    management resources, to improve the efficiency of

    an enterprise.

    ERP systems serve an important function by

    integrating separate business functions-materials

    management, product planning, sales, distribution,

    finance and accounting and others-into a singleapplication.

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    However, ERP systems have three significant limitations:

    1. Managers cannot generate custom reports or queries

    without help from a programmer and this inhibits them from

    obtaining information quickly, which is essential formaintaining a competitive advantage.

    2. ERP systems provide current status only, such as open

    orders. Managers often need to look past the current status

    to find trends and patterns that aid better decision-making.

    3. the data in the ERP application is not integrated with

    other enterprise or division systems and does not include

    external intelligence.

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    There are many technologies that help to overcome these

    limitations. These technologies, when used in conjunction

    with the ERP package, help in overcoming the limitations of

    a standalone ERP system and thus, help the employees tomake better decisions. Some of these technologies are:

    Business Process Reengineering (BPR)

    Management Information System (MIS)

    Decision Support Systems ( DSS)

    Executive Information Systems (EIS)

    Data warehousing

    Data Mining

    On-line Analytical Processing (OLAP)

    Supply Chain Management

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    Business Process Reengineering (BPR)

    Business processes are: simply a set of activities

    that transform a set of inputs into a set of outputs

    (goods or services) for another person or process

    using people and tools. We all do them, and at one

    time or another play the role of customer or supplier.

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    So why business process improvement?

    Improving business processes is paramount forbusinesses to stay competitive in today's

    marketplace. Over the last 10 to 15 years companieshave been forced to improve their businessprocesses because we, as customers, are demandingbetter and better products and services.

    And if we do not receive what we want from onesupplier, we have many others to choose from(hence the competitive issue for businesses). Many

    companies began business process improvementwith a continuous improvement model. This modelattempts to understand and measure the currentprocess, and make performance improvementsaccordingly.

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    Definition of BPR.

    Corporate Reengineering

    The most common definition used in the private sector

    comes from the book entitled, Reengineering the

    Corporation, a Manifesto for Business Revolution, by MIT

    professors Michael Hammer and James Champy. Hammer

    and Champy defined business process reengineering as:

    The fundamental rethinking and radical redesign of business

    processes to bring about dramatic improvements in critical,

    contemporary measures of performance, such as cost,

    quality, service, and speed. (Reengineering the Corporation,Hammer and Champy, 1993)

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    The major emphasis of this approach is the fact thatan organization can realize dramatic improvementsin performance through radical redesign of its

    processes. This is in contrast to the notion ofstreamlining processes in order to achieve ameasured level of performance.

    Another aspect to the Hammer/Champy definition isthe notion of breakthroughs. This approach toreengineering assumes the existing process is notsound and therefore needs to be replaced. A properly

    reengineered process will provide quantum leaps inperformance, achieving breakthroughs in providingvalue to the customer.

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    Even though these definitions focus on different

    strategies of implementing change, the common

    element is that the change occurs across the whole

    process.

    THE BUSINESS PROCESS REENGINEERING

    (BPR) VISION

    Business Process Reengineering (BPR) is based on a

    vision of the future that is increasingly shared by

    enterprises around the world. It is evolving into the

    sum total of everything we've learned aboutmanagement in the industrial age recast into an

    information age framework.

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    The impact of BPR on organizationalperformance

    The two cornerstones of any organization are the

    people and the processes. If individuals aremotivated and working hard, yet the businessprocesses are cumbersome and non-essentialactivities remain, organizational performance will bepoor. Business Process Reengineering is the key totransforming how people work. What appear to beminor changes in processes can have dramatic

    effects on cash flow, service delivery and customersatisfaction. Even the act of documenting businessprocesses alone will typically improveorganizational efficiency by 10%.

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    Management Information System (MIS)

    Management Information Systems (MIS), areinformation systems, typically computer based, that

    are used within an organization. WordNet described

    an information system as "a system consisting of the

    network of all communication channels used within

    an organization".

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    As an area of study it is commonly referred to as

    information technology management.

    The study of information systems is usually a

    commerce and business administration discipline,

    and frequently involves software engineering, but

    also distinguishes itself by concentrating on the

    integration of computer systems with the aims of theorganization.

    The area of study should not be confused with

    Computer Science which is more theoretical andmathematical in nature or with Computer

    Engineering which is more engineering.

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    In business, information systems support business

    processes and operations, support decision making,

    and support competitive strategies.

    2. MIS: How does the company "mine" its

    relational database systems for information and

    trends to be used in the management of the

    business?

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    The major differences between a managementinformation system and a Data Processing system are:

    1. The integrated database of the MIS enables greater

    flexibility in meeting the information needs of themanagement.

    2. The MIS integrates the information flow betweenfunctional areas (accounting, marketing, manufacturing,

    etc.) whereas data processing systems tend to support asingle functional area.

    3. MIS caters to the information needs of all levels ofmanagement whereas data processing systems focus on

    departmental-level support. 4. Managements information needs are supported on a

    more timely basis with the MIS (with its on-line querycapability) than with a data processing system.

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    The main characteristics of the management

    information system are:

    1. The MIS supports the data processing functions of

    transaction handling and record keeping.

    2. MIS uses an integrated database and supports a

    variety of functional areas.

    3. MIS provides operational, tactical and strategic

    levels of the organization with timely, but for the

    most part structured information (ad-hoc query

    facility is not available0.

    4. MIS is flexible and can be adapted to the

    changing needs of the organization.

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    Decision Support Systems ( DSS)

    In the course of their decision activities managers work withmany pieces of knowledge. Some of this knowledge is

    descriptive, characterizing the state of past, present, future,

    or hypothetical worlds.

    Such knowledge is commonly called information or data.

    Other pieces of knowledge are procedural in nature,

    specifying how to accomplish various tasks.

    In addition to "know what" (information) and "know how"(procedures), a manager may work with reasoning

    knowledge on the way toward reaching a decision.

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    This third kind of knowledge indicates that certain

    conclusions are valid under particular

    circumstances.

    Two other kinds of knowledge are very much

    concerned with communication. One is linguistic

    knowledge which enables a manager to understand

    incoming messages.

    Conversely, a manager works with presentation

    knowledge when constructing outgoing messages.

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    Managers are first and foremost knowledge workers

    who are involved in the making of decisions.

    Sometimes, a manager makes decisions

    individually. In other cases, decision-making may be

    distributed, involving the combined and coordinated

    efforts of many knowledge workers.

    Both individual and distributed decision making are

    susceptible to support by systems that facilitate,

    expand, or enhance a manager's ability to work with

    one or more kinds of knowledge. Such knowledge-based systems are called decision support systems

    (DSSs).

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    Decision support systems; emphasize a knowledge-

    management perspective. With the relentless

    advances in the technology and economics of

    computers, we are rapidly reaching the point where

    a manager's success depends on his or her

    understanding of DSS possibilities and skill in DSS

    application. Many DSSs are oriented toward individual decision

    support. There is growing interest in DSSs that

    directly support distributed decision making at thegroup, organization, and inter-organization levels.

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    Decision support systems also differ with respect to

    the kinds of knowledge they help manage.

    The majority of conventional DSSs have been

    devised to help manage primarily descriptive and

    procedural knowledge. In contrast, there is a class of

    artificially intelligent DSSs concerned mainly with

    the representation and processing of reasoningknowledge.

    i i i f SS

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    The main characteristics of DSS are:

    1. A DSS is designed to address semi-structured and

    unstructured problems.

    2. The DSS mainly supports decision-making at the

    top management level.

    3. DSS is interactive, user-friendly can be used bythe decision-maker with little or no assistance from

    a computer professional.

    4. DSS makes general-purpose models, simulation

    capabilities and other analytical tools available to

    the decision-maker.

    A SS d l h S i d SS

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    A DSS does not replace the MIS; instead a DSS

    supplements the MIS. There are distinct differences

    between them. MIS emphasizes on planned reports

    on a variety of subjects; DSS focuses on decision-

    making. MIS is standard, scheduled, structured and

    routine; DSS is quite unstructured and is available

    on request. MIS is constrained by the organizationalsystem; DSS is immediate and user-friendly.

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    Executive Information Systems (EIS)

    Definitions for Executive Information Systems

    A computerized system intended to provide current andappropriate information to support executive decisionmaking for managers using a networked workstation.

    The emphasis is on graphical displays and an easy to useinterface that present information from the corporatedatabase.

    They are tools to provide canned reports or briefing books

    to top-level executives. They offer strong reporting anddrill-down capabilities. An early term for a sophisticateddata-driven DSS targeted to senior executives.

    E i i f i (EIS) id

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    Executive information systems (EIS) provide a

    variety of internal and external information to top

    managers in a highly summarized and convenient

    form. EIS are becoming an important tool of top-

    level control in many organizations.

    They help an executive spot a problem, an

    opportunity, or a trend.

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    Executive information systems have

    these characteristics:

    1. EIS provide immediate and easy access toinformation reflecting the key success factors thecompany and of its units.

    2. AUser-seductive@ interfaces, presentinginformation through color graphics or video, allowan EIS user to grasp trends at a glance. 3. EISprovide access to a variety of databases, bothinternal and external, through a uniform interface.

    4. Both current status and projections should beavailable from EIS.

    5 A EIS h ld ll il i h

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    5. An EIS should allow easy tailoring to the

    preferences of the particular users or group of users.

    6. EIS should offer the capability to Adrill down@

    into the data.

    DSS i il d b iddl d l l l

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    DSS are primarily used by middle and lower level managers

    to project the future, EIS's primarily serve the control needs

    of higher level management.

    1. EISs primarily assist top management in uncovering aproblem or an opportunity. Analysts and middle managers

    can subsequently use a DSS to suggest a solution to the

    problem.

    2. At the heart of an EIS lies access to the data. EISs may

    work on the data extraction principal, as DSSs do, or they

    may be given access to the actual corporate databases or

    data warehouses. 3. EISs can reside on personal workstations or servers.

    D l i EIS

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    Developing EIS

    EIS's should make it easy to track the critical

    success factors (CSF) of the enterprise, that is, the

    few vital indicators of the firm's performance.

    With the use of this methodology, executives may

    define just the few indicators of corporate

    performance they need. With the drill-down

    capability, they can obtain more detailed data behind

    the indicators.

    St t i b i bj ti th d l f EIS

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    Strategic business objectives methodology of EIS

    development takes a company-wide perspective of

    the strategic business objectives of the firm where

    the critical businesses are identified and prioritized.

    Then the information needed to support these

    processes is defined, to be obtained with the EIS that

    is being planned. Finally, an EIS is developed toreport on the CSFs. This methodology avoids the

    frequent pitfall of aligning an EIS too closely to a

    particular sponsor.

    A EIS t k th f ll i i t id ti

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    An EIS takes the following into consideration:

    1. The overall vision and mission of the company

    and the company goals.]

    2. Strategic planning and objectives

    3. Crisis management/Contingency planning

    4. Strategic control and monitoring of overalloperations

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    Data warehousing

    Introduction Increasingly, organizations are analyzing current

    and historical data to identify useful

    Patterns and support business strategies. Emphasisis on complex, interactive, exploratory analysis of

    very large datasets created by integrating data from

    across all parts of an enterprise; data is fairly static.

    Three Complementary Trends:

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    Three Complementary Trends:

    Data Warehousing: Consolidate data from manysources in one large repository:

    * Loading, periodic synchronization of replicas.

    * Semantic integration.

    ON-LINE Analytical Processing (OLAP):

    * Complex SQL queries and views.

    * Queries based on spreadsheet-style operationsand multidimensional view of data.

    * Interactive and online queries. 3. Data Mining:

    Exploratory search for interesting trends and

    anomalies.

    1 Definitions for Data Warehousing

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    1. Definitions for Data Warehousing

    The ability of a system to store data resulting

    from Data Mining to be used in future inquiries of

    that database. Data mining is the process of

    identifying valid, novel, potentially useful and

    ultimately comprehensible information from

    databases that is used to make crucial businessdecisions.

    The primary concept of data warehousing is that the

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    The primary concept of data warehousing is that the

    data stored for business analysis can be accessed

    most effectively by separating it from the data in

    operational systems. The most important reason forseparating data for business analysis, from the

    operational data, has always been the potential

    performance degradation on the operational syatemthat can result from the analysis processes.

    High performance and quick response time is almost

    universally critical for operational systems.

    The main reasons for needing automated computer

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    The main reasons for needing automated computersystems for intelligent data analysis are:

    1. Enormous volume of existing and newly

    appearing data that require processing. 2. The inadequacy of the human brain when

    searching for complex multifactorial dependencies

    in the data. 3. The lack of objectiveness in analyzing the data

    4. The automated data mining systems is that thisprocess has much lower cost than hiring an army ofhighly trained professionals statisticians.

    Data mining D t i i it i t

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    Data mining. Data mining permits our companies toprofile customers, predict sales trends, and enable customer

    relationship management (CRM), among other BI

    initiatives. Mining must therefore be integrated with the warehouse

    data structures and supported by warehouse processes to

    ensure both effective and efficient use of the technology and

    related techniques.

    As shown in the BI architecture, the atomic layer of the

    warehouse as well as data marts is excellent data sources for

    mining. Those same structures must also be recipients ofmining results to ensure availability to the broadest

    audience.

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    Data Mining

    Generally, data mining (sometimes called data orknowledge discovery) is the process of analyzing data from

    different perspectives and summarizing it into useful

    information - information that can be used to increase

    revenue, cuts costs, or both.

    Data mining software is one of a number of analytical tools

    for analyzing data. It allows users to analyze data from

    many different dimensions or angles, categorize it, andsummarize the relationships identified. Technically, data

    mining is the process of finding correlations or patterns

    among dozens of fields in large relational databases.

    Continuous Innovation

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    Continuous Innovation

    Although data mining is a relatively new term, the

    technology is not. Companies have used powerful

    computers to sift through volumes of supermarket

    scanner data and analyze market research reports for

    years. However, continuous innovations in computer

    processing power, disk storage, and statisticalsoftware are dramatically increasing the accuracy of

    analysis while driving down the cost.

    What can data mining do?

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    What can data mining do?

    Data mining is primarily used today by companies

    with a strong consumer focus - retail, financial,communication, and marketing organizations. Itenables these companies to determine relationships

    among "internal" factors such as price, productpositioning, or staff skills, and "external" factorssuch as economic indicators, competition, andcustomer demographics. And, it enables them to

    determine the impact on sales, customer satisfaction,and corporate profits. Finally, it enables them to"drill down" into summary information to viewdetail transactional data.

    With data mining a retailer could use point-of-sale

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    With data mining, a retailer could use point of salerecords of customer purchases to send targetedpromotions based on an individual's purchase

    history. By mining demographic data from commentor warranty cards, the retailer could developproducts and promotions to appeal to specificcustomer segments.

    For example, Blockbuster Entertainment mines itsvideo rental history database to recommend rentals

    to individual customers. American Express cansuggest products to its cardholders based on analysisof their monthly expenditures.

    WalMart is pioneering massive data mining to

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    WalMart is pioneering massive data mining totransform its supplier relationships. WalMartcaptures point-of-sale transactions from over 2,900

    stores in 6 countries and continuously transmits thisdata to its massive 7.5 terabyte Teradata datawarehouse. WalMart allows more than 3,500suppliers, to access data on their products and

    perform data analyses. These suppliers use this datato identify customer buying patterns at the storedisplay level. They use this information to managelocal store inventory and identify newmerchandising opportunities. In 1995, WalMartcomputers processed over 1 million complex dataqueries.

    The National Basketball Association (NBA) is exploring a

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    The National Basketball Association (NBA) is exploring a

    data mining application that can be used in conjunction with

    image recordings of basketball games. The Advanced Scout

    software analyzes the movements of players to help coachesorchestrate plays and strategies. For example, an analysis of

    the play-by-play sheet of the game played between the New

    York Knicks and the Cleveland Cavaliers on January 6,

    1995 reveals that when Mark Price played the Guardposition, John Williams attempted four jump shots and

    made each one! Advanced Scout not only finds this pattern,

    but explains that it is interesting because it differs

    considerably from the average shooting percentage of49.30% for the Cavaliers during that game.

    By using the NBA universal clock a coach can

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    By using the NBA universal clock, a coach can

    automatically bring up the video clips showing each

    of the jump shots attempted by Williams with Price

    on the floor, without needing to comb through hoursof video footage. Those clips show a very successful

    pick-and-roll play in which Price draws the Knick's

    defense and then finds Williams for an open jumpshot.

    How does data mining work?

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    How does data mining work?

    While large-scale information technology has beenevolving separate transaction and analytical systems,

    data mining provides the link between the two. Data

    mining software analyzes relationships and patterns

    in stored transaction data based on open-ended user

    queries. Several types of analytical software are

    available: statistical, machine learning, and neural

    networks. Generally, any of four types ofrelationships are sought:

    Classes: Stored data is used to locate data in predetermined

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    pgroups. For example, a restaurant chain could minecustomer purchase data to determine when customers visitand what they typically order. This information could be

    used to increase traffic by having daily specials. Clusters: Data items are grouped according to logical

    relationships or consumer preferences. For example, datacan be mined to identify market segments or consumeraffinities.

    Associations: Data can be mined to identify associations.The beer-diaper example is an example of associativemining.

    Sequential patterns: Data is mined to anticipate behavior

    patterns and trends. For example, an outdoor equipmentretailer could predict the likelihood of a backpack beingpurchased based on a consumer's purchase of sleeping bagsand hiking shoes.

    Data mining consists of five major elements:

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    Data mining consists of five major elements:

    Extract, transform, and load transaction data onto

    the data warehouse system.

    Store and manage the data in a multidimensional

    database system.

    Provide data access to business analysts and

    information technology professionals.

    Analyze the data by application software.

    Present the data in a useful format, such as a graphor table.