Enterprise - An Overview

7/29/2019 Enterprise - An Overview

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An enterprise

Is a group of people

With a set of common goals,

Which has certain resources (people, money, energy, materials, space, time) at itsdisposal to achieve these goals

The enterprise acts as a single entity

Examples: IBM, Ford, Tata Motors, Accenture, Microsoft, Indian Railways, Ramu’s Teashop, etc

The resources are considered the inputs, and the attainment of the goals the output of the process.

The degree of success of an enterprise is often measured by the ratio between theoutputs and inputs. This ratio is called productivity.



The organization is divided into different units based on the functions theyperform— finance, manufacturing, production planning, purchasing, sales anddistribution, R&D, HR, etc.

The various departments have their own goals.

The different departments function in isolation and have their own data collection& analysis systems.

The result is that, instead of taking the organization towards the common goal thevarious departments end up pulling it in different directions as one departmentdoes not know what the other does and for what purpose.

So unless all the departments know what the others are doing and for whatpurpose, the inter-departmental conflicts will arise thus disrupting the normalfunctioning of the organization.

The solution is to have a centralized information storage and management facility.



In the enterprise way, the entire organizationis considered as a single system.

Information about all the aspects of the

organization is stored centrally and is

available to all departments, thus avoiding

conflicts.

ERP systems help to make this task easier

by integrating the information systems,

enabling smooth and seamless flow of

information across departmental barriers,

and automating business process andfunctions.

ERP systems help the organization to work

and move forward as a single entity.

Central

Database

R&D

Sales &

Distribution

Marketing

Production

Fiance

Production

Planning



Information is refined data. An information system consists of three elements—

people, procedures, and data.

Information activities are find, create, receive, acquire, monitor, classify,safeguard, organize, use, publish, collaborate, disseminate, archive, dispose,transfer, etc.

Management information system (MIS) produce information products thatsupport many of the day-to-day decision making needs of the management.

The problem with traditional MIS is that they operate at a departmental leveland they give only information that has been pre-defined.

Traditional information systems fail to capture the information needs of the

entire organization as they concentrate on capturing department levelinformation—isolated information gathering.

No decision-maker can take good decisions with the isolated information thatthey can get from the information produced by individual departments.



No organization can function as islands of different departments.

All the departments should have access to the organization’s information.

In today’s competitive business environment, the key resource of every

organization is information.

If all the information islands, which are functioning in isolation, are integratedinto a single system, the impact of that would be dramatic.

If the organization does not have an efficient and effective mechanism then the

chances of that organization succeeding are very remote.



The three fundamental characteristics of information are accuracy, relevancy, andtimeliness.

To survive, the organization must always be on its toes, gathering and analyzing thedata—both internal and external. Any mechanism that will automate the informationgathering and analysis process will enhance the chances of the organization to beatthe competition.

What is needed is a system that treats the organization as a single entity and caters tothe information needs of the whole organization.

If this is possible, and if the information that is generated is accurate, timely andrelevant, then these systems will go a long way in helping the organization to realizeits goals.

Integrated management information provides the decision makers with accurate,relevant, timely, and up-to-the minute information so that they can make better andinformed decisions much faster.

Integrated management information will enable the organization to become morecompetitive, agile and respond quickly to the changes in the business environment,customer interests and trends.



ERP implementation project an enterprise in its own right. Common goal: successful implementation of the project

Resources: ERP package, hardware, money, people, etc.

People: Employees, management, consultants, ERP vendors, etc.

Organization’s Responsibilities:

Own and sponsor the ERP implementation project (usually done by the CEO, CIO,

COO, or someone senior) Designate the right people to lead the project.

Select and assign the right people to the implementation team

Select the ERP package best suited for the organization

Make available the necessary infrastructure (resources)

Ensure top management support and participation

Manage package vendors and external consultants Manage and deal with employee resistance

Motivate the employees to change and to learn new technologies

Re-train and re-locate employees and ensure the complete participation

Operate the ERP system in the best possible manner

Maintain the ERP system at its peak efficiency



Business modeling or creating a business model is one of the first activities in any ERPproject. ERP systems should mirror the business processes.

A business model is a representation of the business as one large system, showing the

interconnections and interdependencies of the various sub-systems and business processes.

Based on the organization’s goals, objectives and strategic plans, a business model

consisting of the business processes is developed.

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 processes more effectively and efficiently.

The business is modeled as an integrated system.

Information is a very important resource and is very critical in managing all the other

resources.

The business model is usually represented in the graphical form using flowcharts and flow

diagrams.



Plant Material

InvoiceContract

Customer Order

Processes Interrelationships &

Interdependencies

Real

World

Business

Model

Real-world and Business Model



The most critical step in the ERP implementation is the creation of an integrated datamodel as all the employees from the different departments get access to the integrateddata and this will help in better decision-making.

With the implementation of ERP systems all the data will be from the integrateddatabase.

Maintaining and managing the integrated data constantly updated and up-to-date is oneof the biggest challenges of ERP implementation and operation.

The integrated database will reduce data redundancy and give all employees access tothe updated and up-to-the minute information about the entire organization.

When designing the data model for the ERP system, the most important thing that shouldbe kept in mind is the information integration and the process/ procedure automation.

The data model should reflect the entire organization and should successfully depict andintegrate the data structures of the entire organization.



Plant Material

InvoiceContract

Customer Order

Processes Interrelationships &

Interdependencies

Real

World

Business

Model

Data &

Program

Model

Data Model

Tables

Fields

Views

Domains, etc.

Program Model

Program

Function

Display Screens, etc.

Data Model and its Relationship with the Real World



ERP

An abbreviation for Enterprise Resource Planning meaning techniques &Concepts for integrated management of Business as a whole from viewpoint of effective use management resources to improve the efficiency of enterprise management

Is an integrated software packages which support the above ERP concepts

Is a software designed to model and automate many of the basic processesof the company from finance to shop floor with a Goal of

integrating information across the company

Eliminating complex expensive links between computer that were never meant to talk to each other



ERP means more work and procedures

ERP will make many employees Redundant & Jobless

ERP is sole responsibility of Management

ERP is just for Managers/Decision Makers

Organizations can Succeed without ERP



Year(s) System Description

1960s Inventory management & Control Inventory management & control is a

combination of IT & BP of maintaining

appropriate levels of stock in a warehouse. The

activities of inventory management include

identifying inventory requirements, setting

targets, providing replenishment techniques &

options, monitoring item usage, reconciling

inventory balances and reporting inventory

status

1970s Material Requirement Planning (MRP) Materials Resource Planning or MPR utilizes

S/W application for scheduling production

process. MRP generates schedules for operations& raw material purchase based on production

requirements of finished goods, the structure of

production system, current inventory levels and

lot sizing procedure for each operation



Year(s) System Description

1980s Manufacturing Requirement Planning

(MRP II)

Manufacturing Requirement Planning or MRP II,

utilizes S/W applications for coordinating

manufacturing process, from product planning,

part purchasing, inventory control to product

distribution

1990s Enterprise Resource Planning (ERP) Enterprise Resource Planning or ERP uses multi-

module application S/W for improving

performance of the internal business process.

ERP systems often integrates business activities

across functional departments from product

planning to order tracking. Erp S/W system mayinclude application modules to support different

functions such as marketing, finance, accounting

and human resources



The market for Enterprise Resource Planning Systems (ERP) is very hot. Industry analysts haveforecasted the growth rates of more than 30% in coming few years. Following are the reasons forso many companies replacing their key business systems with ERP

Enable improved business performance

Cycle time reduction

Increased business agility Inventory reduction

Order fulfillment improvement

Support Business Growth Requirements

New product/Product lines, New customers

Global requirements including multiple Languages & Countries

Provide flexible, integrated, real time decision support

Improve responsiveness across organizations

Provide a tool for improved Management Control & Standardization



Eliminate Limitation in Legacy Systems

Century dating issue (Y2K)

Fragmentation of data & processing

Inflexibility to change

Insupportable technologies

Take advantage of untapped mid-market (medium sized organization)

Increased functionality at a reasonable cost

Client/Server open system technology

Vertical Market Solution

The above are a few reasons for the growth of ERP market. As more & more companies opt for ERP solutions and as vendors shift their focus from big companies to different market segments ( SME etc.), the future will see

Fierce competition for market share

Merger & acquisition for strategic and competitive advantage



Advantages Business Integration

Flexibility

Better analysis & planning capabilities

Use of latest technologies

All the above factors leading to

Improved efficiencies

Information Integration for better decision making

Faster response time to customer queries etc.





In many cases ERP packages have to be customized to fit the way in which the

company does business.

This will slow down the project, introduce dangerous bugs into the system and

make upgrading the software to the ERP vendor's next release very difficult.

In some other cases, the organization’s business process have to changed, if

they are inefficient.

This will mean making changes in long-established ways of doing business andredefine the roles and responsibilities. This if not done properly, can create

employee resistance.



ERP is most important to companies because of their improvement in the way the company takesa customer order and processes it into an invoice and revenue (order fulfillment process).

ERP systems makes the business process automated and more streamlined and makes theorganization more agile and competitive so that it can respond to the changing customer needsand competition quickly and efficiently.

Some of the characteristics of ERP systems are:

1. It affects almost all organizations

2. It forces the competition to change their business strategies and processes

3. It influences business partners to become more competitive and agile

4. It improves the profits of the organizations engaged in implementation consultancy

5. It helps the business process reengineering process

6. It enforces best practice business processes in organizations

7. It fully utilizes the true potential of client/server computing and other latest technologies8. It changes the information systems function and job profiles of IT professionals

9. It changes the nature of jobs in all functional business areas of the organization

10. It is very expensive and its implementation is very costly and risky

11. Its implementation is a long and complex project

12. It requires the cooperation of all in the organization for succeed



ERP facilitates value creation by changing the basic nature of organizations in a numberof different ways:

1. It integrates the organizations’ activities

2. It eliminates data redundancy

3. It provides accurate, timely, relevant and up-to-date information to the decision

makers4. It provides on-line and real-time information

5. It enables better and faster decision-making

6. It forces the use of best practices

7. It enables organizational standardization

8. It eliminates information asymmetries

9. It allows simultaneous access to the same data for planning and control

10. It facilitates intra-organization communication

11. It enables inter-organization collaboration

12. It enables the organization to be more agile and competitive

Documents

Enterprise - An Overview