Unit 1 Enterprise: An Overview: Structure

Enterprise Resource Planning Unit 1
Unit 1 Enterprise: An Overview
Structure
1.1 Introduction
Objectives
1.2 Business Functions and Business Processes
Relationship between business functions and business
processes
1.3 Importance of Information
Characteristics of information
Types of information
1.4 Information System
Components of an information system
Different types of information systems
Management information system
1.5 Enterprise Resource Planning
Business modelling
Integrated data model
1.6 Summary
1.7 Glossary
1.8 Terminal Questions
1.9 Answers
1.10 Case Study: Airline Management Information System (AMIS)
1.1 Introduction
An enterprise is an entity, organisation, or undertaking, which is created for
a commercial purpose or business venture. In other words, it is a group of
Sikkim Manipal University Page No. 1

individuals, who work together to accomplish common goals and objectives.

To achieve these goals, an enterprise needs to perform several interrelated
functions such as marketing, sales, production, and human resource.
To perform its business functions effectively, an enterprise has to
incorporate an integrated approach. Enterprise Resource Planning (ERP) is
an approach that aims to streamline and integrate the different operations
and processes of an enterprise. ERP helps an enterprise in the efficient
allocation of resources such as men, material, money, and machine. It
controls the flow of management information across an enterprise. This
leads to standardised business processes and increased profitability of an
enterprise.
In this unit, you will study about an enterprise. You will also study about the
relationship between the business functions and the business processes of
an enterprise. Next, you will be acquainted with the importance of
information and its characteristics and different types. The integrated
information system, its components, and different types, are also discussed
at length in the unit. A short discussion about Management Information
System (MIS) is also included in the unit. In the end, you will be apprised
about the significance of ERP and important ERP concepts, namely,
business modelling and integrated data model.
Objectives
After studying this unit, you will be able to:
explain the importance of an enterprise
define the relationship between the business functions and business

processes of an enterprise
assess the importance of information
analyse the importance of information system in an enterprise
evaluate the significance of Enterprise Resource Planning

1.2 Business Functions and Business Processes

You must have heard the term enterprise so many times. However, do you
know its actual meaning and function? An enterprise is a structure in which
people work together to accomplish common objectives. In order to achieve
these objectives, the enterprise needs to perform various business functions
and processes.
Every business process is a part of a particular business function. For
example, the sales and marketing function of an enterprise comprises
processes such as promotion campaigns, pricing, lead generation, and
demand and supply analysis. Similarly, the human resource function of an
enterprise involves processes such as recruitment, job evaluation, and
performance appraisal. So, you can say that a business process involves a
chain of activities; each of which is a part of a certain business function.
Now, let us discuss the two terms, business function and business
process, in detail.
A business function refers to an activity that an enterprise performs to
realise its pre-determined goals and objectives. You can also define a
business function as a series of rationally interrelated activities or tasks
performed by an enterprise in order to obtain the desired results. Generally,
an enterprise classifies similar activities into groups to simplify work,
increase efficiency, and allocate resources effectively. For example,
activities, such as recruitment, performance appraisal, and compensation
management, come under the human resource function of an enterprise.
Business functions are broadly categorised into two types:
Internal Business Functions: Refer to business functions that are
performed within an enterprise. For example, sales, production, human
resource, etc.
External Business Functions: Refer to those business functions that are
performed by an external enterprise or agency. For example, public
relations, market research, etc.
Figure 1.1 represents the different business functions of an enterprise:

Figure 1.1: Business Functions

Now, to be specific, an enterprise that is engaged in the manufacturing and
selling of products can have the following business functions:
Sales and marketing
Production
Materials management
Human resource
Accounting and finance
Quality control
Each of these business functions consists of numerous business

processes/activities. A business process is defined as a set of activities
performed in a sequence to produce a valuable output from the available
inputs. Let us consider the previous example to establish a relationship
between a business function and a business process. The marketing
function of an enterprise includes activities (processes) such as budgeting,
planning, market research, demand forecasting, pricing, packaging,
advertising, and distribution. Similarly, the human resource function of an
enterprise comprises activities such as recruitment, compensation
management, and performance evaluation.
There can be three types of business processes, which are as follows:

Management Processes: Involve processes that are carried out by the top
management of an enterprise. These processes include formulation and
implementation of cross-functional strategies that help an enterprise to
achieve its long-term objectives. Typical management processes include:
Corporate governance
Strategic management
Operational Processes: Refer to processes that form the core business of

an enterprise. The following are the typical operational processes:
Purchasing
Manufacturing
Advertising and marketing
Sales
Supporting Processes: Refer to the processes that support the core

business of an enterprise. The following are some of the supporting
processes of an enterprise:
Accounting
Recruitment
Administrative support
IT support
1.2.1 Relationship between business functions and business

processes
All business functions and processes together form the internal working
environment of an enterprise. Figure 1.2 shows the relationship between
business functions and business processes of an insurance enterprise:

Figure 1.2: Relationship Between Business Functions and

Business Processes in the Insurance Sector
Figure 1.2 shows the steps involved in the process of selling an insurance
plan to a customer by an insurance enterprise. This process involves steps
such as making a proposal, taking a request, checking the request,
calculating premium, drafting a proposal, and informing the customer. All
these steps are the business processes of an insurance organisation. On
the other hand, relationship management, acceptance, calculation, and
support are the different business functions of an insurance organisation.
Thus, you can say that the business processes and business functions of
organisations are interlinked and none of these can work in isolation.
Self Assessment Questions:

1. A ________ refers to an activity that an enterprise performs to realise
its pre-determined goals and objectives.
2. ___________ refer to those business functions that are performed
within an enterprise.
3. A business function is defined as a set of activities that are performed
in a sequence to produce a valuable output from the available inputs.
(True/False)

4. All business functions and processes together form the internal

working environment of an enterprise. (True/False)
5. A single business process may not always belong to the single
business function. (True/False)
Activity 1:
Visit a retail store and list the different business functions that are being
performed there. Also, classify the internal and external business
functions of the store.
1.3 Importance of Information

In the previous section, you studied about different business functions and
processes of an enterprise. To perform all these functions and processes
effectively, an enterprise collects data related to its target market,
customers, and competitors. This data helps an enterprise to make crucial
business decisions. Data is a representation of facts, observations,
assumptions, and occurrences related to the people, processes, and
functions of an enterprise. Data can be collected in the form of text,
numbers, audio, video, and images.
However, data seems to be useless until it is processed to extract the
desired results. When data is processed and converted into a form that has
a specific meaning, it becomes information. For example, when a market
researcher asks people to complete questionnaires about a product or a
service, the collected questionnaires are data. When this data is processed
and analysed to prepare a market report, the resulting report is information.
So, you can say that information is a well-processed form of data that has a
specific meaning and purpose. Information helps an enterprise in decision
making. Thus, it is important for an enterprise to have accurate and timely
information.
1.3.1 Characteristics of information

Information is integral to effective decision making in an enterprise.
Therefore, it is important for an enterprise to have the right information, in

the right form, and at the right time, to make correct decisions. The following
are the characteristics of information:
Accuracy: Implies that information should be correct and based on facts.
Inaccurate information not only turns useless, but also leads to ineffective
decision making.
Relevance: Refers to one of the most important characteristics of
information. The information can only be useful if it is relevant to the
respective domains of decision making. For example, an enterprise wants to
formulate effective marketing strategies. In this case, the collected
information should be related to current market trends and needs and
preferences of customers.
Timeliness: Implies that information should be available when it is needed.
For example, you are the marketing manager of an enterprise. You have to
select an appropriate promotional tool. In such a case, if you get information
related to consumer behaviour after the completion of the decision-making
process, the information is useless. So, you should note that the value of
the information is inversely proportional to time.
Completeness: Refers to the characteristic of the information being fully
interpretable. If the information does not make complete sense, it may not
help in decision making.
1.3.2 Types of information

Decision making takes place at all the levels of an enterprise (top level,
middle level, and bottom level). So, managers at different levels require
different types of information to make business decisions. Based on these
levels, information is categorised in the following three types:
Strategic Information: Refers to the information that is used by the top
management of an enterprise to establish an overall business strategy.
Strategic information can be related to the profitability of each division of an
enterprise, level of competition in the market, and investments made by the
enterprise.
Tactical Information: Refers to the information that helps middle-level
managers in the allocation of resources. Tactical information can be related

to business productivity, profit and cash flow forecasts, and prices of

different products.
Operational Information: Provides support to the bottom-level managers
of an enterprise in carrying out day-to-day operational tasks. For example, a
production manager may want information related to the quality control
checks that are being carried out in the manufacturing process.

6. _______ can be collected in the form of text, numbers, audio, video,
and images.
7. When data is processed and analysed to prepare a market report, the
resulting report is ________.
8. ___________ provides support to the bottom-level managers of an
enterprise in carrying out day-to-day operational tasks.
9. Data is an organised, structured, and processed form of information
and has a specific meaning. (True/False)
1.4 Information System

Have you ever noticed how does an enterprise make its decisions? It is
information that enables an enterprise to make sound decisions and win in
todays competitive world. In other words, you can say that information is a
valuable asset of an enterprise, which ensures effective business decision
making. Therefore, an enterprise should manage and store its information in
a manner so that it can be easily retrieved as and when required.
Information System (IS) is a set of interrelated components, which collects,
stores, processes, generates, and disseminates information for effective
business decision making.
For example, an enterprise wants to increase its profits by improving the
efficiency of its sales function. In such a case, IS can help the enterprise to
make effective sales decisions by providing information related to current
market trends, needs and preferences of customers, and availability of
similar products.

IS comprises two terms, namely, information and system. As discussed

earlier, information is a well-processed form of data and has a specific
meaning. On the other hand, a system is an arrangement that takes input
and converts it into a valuable output. So, you can define IS as an
arrangement that processes data and provides meaningful information. This
information supports the decision-making process of an enterprise. Apart
from this, an enterprise can use this information for future references. Figure
1.3 shows the working of an IS:
Figure 1.3: Working of an Information System

Nowadays, IS has become a significant component of any successful
business enterprise. It supports various business functions, such as
marketing, finance, production, and human resource, by providing useful
information.
1.4.1 Components of an information system

An IS is an organised combination of resources, such as people,
technology, and data, to produce meaningful information. The following are
the key components of an IS:
People: Refers to the most important resource of an IS. An IS requires
people for its operation. These people (resources) are categorised into two
types:
IS Specialists: Involve individuals who are responsible for developing
and operating an IS. They include system analysts, software developers,
system operators, programmers, and other IT personnel.

End Users: Involve individuals who use information produced by an IS.

They include market researchers, production managers, customers, and
accountants.
Hardware Resources: Include physical devices and materials used for

information processing. These resources include computers, keyboards,
mouse, printers, scanners, magnetic tapes, and pen drives.
Software Resources: Include a set of instructions to direct and control
computer hardware. Software resources can be of two types, namely,
programmes and procedures. Programmes include operating system and
application software, while procedures include data-entry procedures and
information distribution procedures.
Data: Includes observations and facts derived from the internal and external
sources of an enterprise. The internal sources are product descriptions,
customer records, employee records, etc. On the other hand, external
sources are supplier details, market conditions, competitor information, etc.
Network: Comprises a server and administrative tools for connecting and
distributing information to the different departments of an enterprise.
Information: Includes reports and results derived after processing the data.
For example, sales reports, cash flow forecasts, market reports, etc.
1.4.2 Different types of information systems

In an enterprise, there are varied requirements for information. As discussed
earlier, top-level managers need information for business planning and
strategic management. Middle-level managers need information to monitor
and control business activities, while employees working at operational level
need information to carry out their jobs.
Therefore, an enterprise generally has several information systems
operating at the same time. Table 1.1 shows the different kinds of
information systems in an enterprise:
Table 1.1: Different Types of Information Systems
Information System Description

Executive Support System Refers to a system that is designed to help
the top management of an enterprise in


(ESS) strategic decision making. The ESS
collects, analyses, and summarises
important internal and external information
used in an enterprise.
MIS Refers to a system that aims at processing
internal data of an enterprise and
summarising it into a series of
management reports. These reports are
generally used by middle-level managers
and operational supervisors. A detailed
discussion about MIS has been included
later in the unit.
Decision Support System Refers to a system that helps managers to
(DSS) make decisions in situations when there is
uncertainty about the possible outcomes of
those decisions. DSS uses spread sheets
to analyse different options and
alternatives.
Knowledge Management Refers to a system that provides
System (KMS) knowledge and expertise for making
decisions at all levels of management. It
provides two types of knowledge, namely,
explicit knowledge and tacit knowledge.
Information that is documented, stored,
and coded with the help of an information
system is known as explicit knowledge. On
the other hand, information that is based
on processes and procedures stored in an
individuals mind falls under tacit
knowledge.
Transaction Processing Refers to a system that helps in processing
System (TPS) day-to-day business transactions efficiently
and accurately. This system can be useful
in performing activities like sending
invoices to customers, calculating monthly


payroll, identifying raw material
requirements, tracking the movement of
inventory, etc.
Office Automation System Refers to a system that helps employees to
(OFS) handle various office tasks such as raw
data storage and electronic transfer of
information. Apart from this, it helps
employees to have a comprehensive view
of all the assets of an enterprise and
capture data related to the total revenue
and expenditure of the enterprise.
Among all these, MIS is one of the most commonly used information
systems. It provides information related to various business aspects to
managers. Let us discuss about the significance of MIS in the next section.
1.4.3 Management information system

According to Schwartz, MIS is the system of people, equipment,
procedures, documents, and communication that collects, validates,
operates on, transforms, stores, retrieves, and presents data for use in
planning, budgeting, accounting, controlling, and other management
processes.
MIS is a computer-based system that supports managers to perform various
management functions such as planning, organising, directing, and
controlling. It provides accurate and timely information to facilitate effective
decision making in an enterprise. This results in a significant increase in the
overall profitability of an enterprise.
MIS aims to transform data into meaningful information for appropriate
decision making. It distributes information to the different departments of an
enterprise, so that they can carry out their activities effectively. MIS
comprises three primary resources:
People
Technology
Information

Functions of MIS
As you know, MIS serves the information needs of managers in making
various business decisions. The following are the main functions of MIS:
Collects data from various sources such as financial reports, sales
records, newspapers, magazines, etc.
Processes, analyses, and summarises the collected data
Transforms the collected data into useful and meaningful information
Disseminates information to the intended users
Stores information at a centralised location, so that it can be easily

retrieved
Advantages and limitations of MIS

MIS enables an enterprise to manage and store a large amount of data. In
addition, the following are a few advantages of MIS:
Coordinates the activities of different departments
Provides quick and reliable referencing of information
Provides easy access to relevant data and documents
Requires lesser number of employees
Saves time and cost of an enterprise
In spite of many benefits, MIS has certain limitations, which are:

Requires constant monitoring
Ignores non-qualitative factors such as morale and attitude of

employees
Reduces effectiveness due to frequent changes in management

functions
Produces output that depends entirely on the quality of input

MIS provides information specific to particular departments. However, to

achieve its goals within the stipulated time, an enterprise requires a system
that serves the information needs of the whole enterprise.

10. An enterprise should manage and store its information in a manner,
so that it can be easily retrieved as and when required. (True/False)
11. IS comprises two terms, namely, __________ and ___________.
12. __________ refers to a system that is designed to help the top
management of an enterprise in strategic decision making.
13. MIS is a computer-based structure that supports managers to
perform various management functions such as planning, organising,
directing, and controlling. (True/False)
Activity 2:
How can MIS be useful in the banking sector?
1.5 Enterprise Resource Planning

In the previous section, you studied about different information systems for
performing different business functions. All these different information
systems provide different information. In such a case, it becomes difficult for
the organisation to compile the information and take appropriate business
decisions. Thus, an organisation needs an information system that can
provide integrated information about different business processes in one
place.
An integrated information system is the one that is formed by linking
together different software applications physically or functionally to act as a
single system. ERP is an integrated information system that controls and
integrates all the business functions of an enterprise. According to Nah and
Lau (2001), ERP is a packaged business software system that enables a
company to manage the efficient and effective use of resources (materials,
human resources, finance, etc.) by providing a total, integrated solution for
the organisations information-processing needs.

ERP integrates the functions of the different departments of an enterprise.

Moreover, it ensures that all departments are automatically updated about
the occurrence of an event. For instance, when an order is placed by a
customer, ERP automatically updates all the interrelated departments, such
as production, finance, and inventory control, about the order. Apart from
this, ERP helps an enterprise in the efficient allocation of resources, which
leads to a significant increase in the profitability of the enterprise.
Before implementing an ERP project, an enterprise should establish clear
goals that can be achieved through such an implementation. The
implementation of an ERP project requires support from many people such
as employees, package and hardware vendors, and communication
experts. The ERP project of an enterprise can be successful if all these
people are well-versed with the actual working of an ERP system.
1.5.1 Business modelling

Creating a business model or business modelling is the first step of
implementing an ERP project. A business model represents the
description of operations or methods that an enterprise carries out to
generate revenue. In other words, it is a representation of different functions
of an enterprise and how these functions are interrelated to each other.
Based on this model, an ERP system is designed to allocate resources for
carrying out different business functions more effectively.
A business model is developed based on the business strategy and
objectives of an enterprise. It is represented in the form of flowcharts and
data flow diagrams. A business model can be simple or complex depending
upon the nature of the business of an enterprise. For example, the business
model of a restaurant can be simple. This is because a restaurant earns
revenue simply by serving quality food to its customers as per the orders
placed by them. On the other hand, the business model of an IT firm may be
complex, as the firm can generate revenue from various sources such as by
providing quality service to customers through various modes, making
alliances with other firms, and conducting marketing campaigns.
Figure 1.4 shows an ideal business model:

Figure 1.4: An Ideal Business Model
The business model of an enterprise is effective if it has the following

components (as shown in Figure 1.4):
Value Proposition: Refers to one of the most important components of a
business model. The business model of an enterprise should involve a
description of customer needs and preferences. Moreover, it should also
specify how an enterprise strives to create value for its customers.
Generally, an enterprise focuses on providing quality customer support
services to achieve a high level of customer satisfaction and creating a
positive experience for the customers.
Market Segment: Refers to another key element of a business model. A
business model should clearly mention the target market of an enterprise.
Product Differentiation: Implies that a business model should also specify
how an enterprises products or services are different from that of its
competitors. A business model should mention the unique features of an
enterprises products and services.
Pricing: Implies that a business model should clearly state the prices of the
different products and services of an enterprise.
Revenue: Refers to an important constituent of a business model. A
business model should include a description about the different sources for
an enterprise to generate revenue. These sources can be sales and leasing.
In addition, it should specify the cost structure and target profit margins of
an enterprise.
Competitive Strategy: Implies that a business model should clearly state
how an enterprise will attempt to gain a sustainable competitive advantage.
Generally, an enterprise uses various strategies, such as product
differentiation and niche marketing, to achieve an edge over its competitors.

Distribution/delivery: Implies that a business model should include a

description about the different distribution channels used by an enterprise.
An enterprise should analyse each of these components to design a sound
business model. A business model not only describes different business
functions but also helps managers to make continuous improvement in
business processing.
While developing a business model, an enterprise is considered as an
integrated system and different business processes are referred to as
resources. Information is considered the most important resource that
manages the other resources of an enterprise.
1.5.2 Integrated data model

In the context of ERP implementation, the creation of an integrated data
model is one of the most critical steps. An ERP system aims at providing
access to integrated data to all the employees of an enterprise. This
integrated data is used for business decision making. Once an ERP system
is implemented in an enterprise, the data pertaining to a single department
is no longer required. This is because an ERP system provides information
related to all the departments of an enterprise, which helps employees to
get updated about the activities of different departments.
Therefore, while designing an ERP system, an enterprise should develop an
integrated model that clearly specifies how the activities of different
departments are related to each other.
14. _________ helps an enterprise in making an efficient allocation of
resources, which leads to an increase in the profitability of the
enterprise.
15. A _________ represents the description of operations or methods
that an enterprise carries out to generate revenue.
16. Name the component of a business model that mentions the target
market of an enterprise.
17. Once an ERP system is implemented in an enterprise, the data
pertaining to a single department is no longer required. (True/False)

Activity 3:
Identify and analyse the use of ERP in the telecom sector.
1.6 Summary
Let us recapitulate the main points discussed in the unit:
An enterprise is an entity, wherein people work together to achieve
common goals.
A business function is an activity performed by an enterprise to achieve

its pre-decided goals and objectives. On the other hand, a business
process is a set of activities carried out in a chronological order to
produce a valuable output from the available inputs. Thus, it can be said
that business functions and business processes are interlinked to each
other and cannot be performed alone.
Data is a collection of facts, observations, assumptions, and

occurrences, related to the people, processes, and functions, of an
enterprise. The processed form of data is called information, which has
a specific meaning. Information enables an enterprise in making efficient
decisions. Information is categorised into three types, namely, strategic
information, tactical information, and operational information.
IS helps in collecting and processing gathered information for effective

decision making. The key components of an IS include people,
hardware resources, software resources, data, network, and information.
The different types of IS are ESS, MIS, DSS, KMS, TPS, and OFS.
ERP integrates the activities of the different departments of an

enterprise. The two important steps in the implementation of an ERP
project are business modelling and integrated data model.

1.7 Glossary
Let us have an overview of the important terms mentioned in the unit:
Business Function: An activity that an enterprise performs to achieve its
pre-determined goals and objectives.
Business Process: A series of activities that are performed in a certain
sequence to produce a valuable output from available inputs.
Data: A representation of facts, observations, assumptions, and
occurrences, related to the people, processes, and functions, of an
enterprise.
Enterprise: A systematic structure in which people work together to achieve
common goals.
Enterprise Resource Planning (ERP): An information system that controls
and integrates all the business functions of an enterprise.
Information: A well-processed form of data that has a specific meaning.
Information System (IS): A set of interrelated components that collects,
stores, processes, generates, and disseminates information for effective
business decision making.
Management Information System (MIS): A computer-based system that
helps managers in performing management functions, such as planning,
organising, directing, and controlling.
1.8 Terminal Questions

1. What do you mean by an enterprise?
2. Explain the two types of business functions.
3. What are the different types of business processes?
4. What are the different characteristics of information?
5. Define IS.
6. What do you mean by MIS? List the advantages and limitations of MIS.

7. Explain the components of a business model.

8. Write a short note on integrated data model.
1.9 Answers
Self Assessment Questions

1. Business function
2. Internal business functions
3. False
4. True
5. True
6. Data
7. Information
8. Operational information
9. False
10. True
11. Information, system
12. ESS
13. True
14. ERP
15. Business model
16. Market segment
17. True

Terminal Questions
1. An enterprise refers to an entity in which people work together to
achieve common goals. Refer Section 1.2 Business Functions and
Business Processes, which defines an enterprise.
2. The two types of business functions are internal business functions and
external business functions. Refer Section 1.2.1 Relationship between
business functions and business processes, which explains the two
types of business functions.
3. The different types of business processes are management processes,
operational processes, and supporting processes. Refer Section 1.2.1
Relationship between business functions and business
processes, which lists different types of business processes.
4. The characteristics of information include accuracy, relevance,

timeliness, and completeness. Refer Section 1.3.1 Characteristics of
information, which lists the characteristics of information.
5. IS can be defined as a set of interconnected components that gathers,

stores, processes, and distributes information for effective business
decision making. Refer Section 1.4 Information System, which defines
IS.
6. MIS refers to a computer-based system that enables managers to take
various decisions. Refer Section 1.4.3 Management information
system, which defines and lists the advantages and limitations of MIS.
7. The different components of a business model include value
proposition, market segment, product differentiation, pricing, revenue,
competitive strategy, and distribution/delivery. Refer Section 1.5.1
Business modelling, which lists the components of a business model.
8. An integrated model should be developed while designing an ERP

system in order to determine how the activities of different departments
are interrelated. Refer Section 1.5.2 Integrated data model, which
explains the integrated data model.

1.10 Case Study: Airline Management Information System

(AMIS)
The airline industry is among the early adopters of MIS. The main goals of
this industry for adopting MIS were to reduce costs and improve efficiency
by providing quick access of data to the employees. The evolution of AMIS
has largely contributed to the growth of the airline industry. AMIS helps the
airline industry to perform versatile functions such as finance and
accounting, reservation and e-ticketing, inventory management, flight
operations and engineering, payroll, and marketing statistics. Not only does
it provide this, but it also provides information related to random booking,
overstaffing, understaffing, earned or unearned revenue, daily transactions,
expense records, etc.
AMIS is a web-based, easy-to-use system that supports various operating
systems such as Linux, Netware, and Windows. The system protects the
data from unauthorised access and can be easily customised whenever
required. The cost of such a system ranges from INR 20,000 to INR
100,000.
Questions:
1. Do you think AMIS is a cost-effective tool to manage data?
2. How does AMIS help the airline industry?
References and Suggested Readings

Thomas F. Wallace and Michael H. Kremzar (2001), ERP: Making It
Happen: The Implementers' Guide to Success with Enterprise Resource
Planning.
Simha R. Magal and Jeffrey Word March (2012), Integrated Business
Processes with ERP Systems.

E-references
http://en.wikipedia.org/wiki/Enterprise
http://www.businessdictionary.com/definition/business-function.html
http://www.sparxsystems.com/downloads/whitepapers/The_Business_Pr
ocess_Model.pdf
http://en.wikipedia.org/wiki/Architecture_of_Integrated_Information_Syst
ems
http://en.wikipedia.org/wiki/Enterprise_resource_planning
http://www.webopedia.com/TERM/E/ERP.html

Unit 1 Enterprise: An Overview: Structure

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Unit 1 Enterprise: An Overview: Structure

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Enterprise Resource Planning Unit 1

Unit 1 Enterprise: An Overview

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individuals, who work together to accomplish common goals and objectives.

define the relationship between the business functions and business

assess the importance of information

analyse the importance of information system in an enterprise

evaluate the significance of Enterprise Resource Planning

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1.2 Business Functions and Business Processes

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Figure 1.1: Business Functions

Accounting and finance

Each of these business functions consists of numerous business

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Operational Processes: Refer to processes that form the core business of

Advertising and marketing

Supporting Processes: Refer to the processes that support the core

1.2.1 Relationship between business functions and business

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Figure 1.2: Relationship Between Business Functions and

Self Assessment Questions:

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4. All business functions and processes together form the internal

1.3 Importance of Information

1.3.1 Characteristics of information

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1.3.2 Types of information

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to business productivity, profit and cash flow forecasts, and prices of

Self Assessment Questions:

1.4 Information System

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IS comprises two terms, namely, information and system. As discussed

Figure 1.3: Working of an Information System

1.4.1 Components of an information system

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End Users: Involve individuals who use information produced by an IS.

Hardware Resources: Include physical devices and materials used for

1.4.2 Different types of information systems

Information System Description

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Information System Description

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Information System Description

1.4.3 Management information system

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Processes, analyses, and summarises the collected data

Transforms the collected data into useful and meaningful information

Disseminates information to the intended users

Stores information at a centralised location, so that it can be easily

Advantages and limitations of MIS

Provides quick and reliable referencing of information

Provides easy access to relevant data and documents

Requires lesser number of employees

Saves time and cost of an enterprise

In spite of many benefits, MIS has certain limitations, which are:

Ignores non-qualitative factors such as morale and attitude of

Reduces effectiveness due to frequent changes in management

Produces output that depends entirely on the quality of input

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MIS provides information specific to particular departments. However, to

Self Assessment Questions: