AIS-ERP
supplies real-time information. Decision support, modeling,
Traditional Information Systems- Closed database architecture,
similar in concept to basic flat-file model; Distinct, separate,
independent databases; Also known as Decentralized System.
The success of any organization lie’s in effective communication
and data exchange within the Departments/BU as well as
associated third party such as Vendors, Outsourcers and
Costumers.
Problems with Decentralized System
 Numerous disparate information system are
developed individually over the time.
 Integrating the data becomes time and money
consuming.
 Inconsistencies and duplication of data.
 High inventory, material and human resource cost.
ENTERPRISE RESOURCE PLANNING (ERP)- a cross-functional
enterprise system driven by an integrated suite of software
modules that supports the basic internal business processes of a
company. It is the practice of consolidating an enterprise’s
planning, manufacturing, sales and marketing efforts into one
management system. It combines all databases across
departments into a single database that can be accessed by all
employees. It provides a smooth and seamless flow of
information across organization
ERP System:
 Data is maintained at a central location and is shared
with various Departments.
 Departments have access information/ data of the
other Departments/BU
Benefits:
 Eliminates the duplication, discontinuity and
redundancy in data.
 Provides information across departments in real time.
 Provides control over various business processes.
 Increase Productivity, better inventory management,
promotes quality; reduced material cost, and boosts
profits.
 Better Customers interaction, increased throughput,
improves customer services.
ERP Application Components:
 Supply Chain and Vendor Management
 Projects and HR Management
 Manufacturing Production and Service Management
and Delivery
 Finance and Accounting
 Customer Relationship Management
Core applications- operationally support day-to-day business
activities.
 Sales and distribution, business and production
planning, shop floor control and logistics.
 Also called online transaction processing (OLTP).
On-line Analytical Processing (OLAP)- a decision support tool that
information retrieval, ad-hoc reporting/analysis, and what-if
analysis.
Data warehouse- a database constructed for quick
At the core of ERP are the financial modules, including general
ledger, accounts receivable, accounts payable, billing and fixed
asset management. It includes budgets, cash-flow, expense and
tax reporting.
Business Intelligence (BI)- a standard component of most ERP
packages. It allows users to share and analyze the data collected
across the enterprise and centralized in the ERP database.
Supply Chain Management (SCM) or Logistics- improves the flow
of materials through an organization by managing planning,
scheduling, procurement, and fulfillment, to maximize customer
satisfaction and profitability. It includes production scheduling,
demand management, distribution management, inventory
management, order, and warehouse management.
Human resource management ERP- enhances the employee
experience – from initial recruitment to time tracking. It includes
payroll, performance management, time tracking, benefits,
compensation and workforce planning.
Manufacturing modules- make manufacturing operations more
efficient through product configuration, job costing and bill of
materials management. It includes Capacity Requirements
Planning, Materials Requirements Planning, forecasting, Master
Production Scheduling, work-order management and shop- floor
control.
Integration- key to the value of an ERP package.
ERP Systems Configurations
 Most based on the client-server model.
 Typical two-tier model:
o Server handles application and database
duties.
o Used in LAN applications
o User Presentation Layer, Application and
Database Layer
 Three-tier model:
o Database and application functions
separated.
o Typical of large systems that use WANs.
o Client initially establishes communication
with the application server.
o User Presentation Layer, Application Layer,
Database Layer
OLTP vs. OLAP Servers
 OLTP events consist of large numbers of simple online
transactions that:
o Access large amounts of aggregated data.
o Analyze relationships among business
elements and compare data over time
periods.
 o Present data in different perspectives. Costs of ERP
o Involve complex calculations.  Reengineering- 43%
o Respond quickly to user requires.  Data Conversions- 15%
 Support mission critical tasks through simple queries of  Training and Change Management- 15%
operational databases.  Software- 15%
 OLAP supports management-critical tasks through  Hardware- 12%
analytical investigation of complex data associations
captured in data warehouses:
o Consolidation is the aggregation or roll-up
of data.
o Drill-down allows the user to see data in
selectively increasing levels of detail.
o Slicing and dicing enables the user to
examine data from different viewpoints to
uncover trends and patterns.
 Allow users to analyze complex data relationships.

Data warehousing- involves extracting, converting and

standardizing data from ERP and legacy systems and loading it
into a central archive – the data warehouse.

ERP Evolution

ERP Implementation Phases

1. Concept/initiation
2. Development
3. Implementation
4. Closeout/Operation and maintenance

Risks with ERP Implementation

Inventory Management & Control-1960’s
is the combination of information technology and business
processes of maintaining the appropriate level of stock in a
warehouse. The activities of inventory management include
identifying inventory requirements, setting targets, providing
replenishment techniques and options, monitoring item usages,
reconciling the inventory balances, and reporting inventory
status.
Material Requirement Planning (MRP)-1970’s
utilizes software applications for scheduling production processes.
MRP generates schedules for the operations and raw material
purchases based on the production requirements of finished
goods, the structure of the production system, the current
inventories levels and the lot sizing procedure for each operation
Manufacturing Requirements Planning (MRP) II)-1980’s
utilizes software applications for coordinating manufacturing
processes, from product planning, parts purchasing, inventory
control to product distribution.
 Expensive
 Time-consuming (can take months to years)
 Great risk for the organization
 Transfer of Knowledge
 Acceptance with the company
Causes of ERP Failures
 Business managers and IT professionals underestimate
the complexity of the planning, development, and
training needed
 Failure to involve affected employees in the planning
and development phases
 Trying to do too much too fast in the conversion
process
 Failure to do enough data conversion and testing
Conclusion: The benefits of a properly selected and implemented
ERP system can be significant. BUT cost of implementing can be
quite high and risks are great.
Best Practices of ERP Implementation
 Change Management
 Extensive Education and Training
 Data Clean up and Data Integrity
 Implementation is viewed as an ongoing process

Enterprise Resource Planning (ERP)-1990’s

uses multi-module application software for improving the
performance of the internal business processes.