University of Calicut

Master of Business Administration

BUS 2C 15 Management Information Systems

MODULE 3

Prepared By:
Mohammed Jasir PV
Asst. Professor
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Information Reporting Systems
• Decision Support Systems
• Executive Support Systems
• Expert systems
• Enterprise Resource Planning Systems
 Expanding Roles of IS

• Data Processing: 1950s-1960s

• Management Reporting: 1960s-1970s
• Decision support: 1970s-1980s
• Strategic and End User Support: 1980s-1990s
• Global Internetworking: 1990s-2000s
 Outputs of a MIS

Scheduled reports
 Produced periodically, or on a schedule (daily, weekly, monthly)
Key-indicator report
 Summarizes the previous day’s critical activities
 Typically available at the beginning of each day
Demand report
 Gives certain information at a manager’s request
Exception report
 Automatically produced when a situation is unusual or requires management
action
Drill Down reports
Provide detailed data about a situation
 Role of Information in Decision Making

• The decision making process includes the following stages:

• Identification and structuring of problem: One needs information to identify a
problem and put it in a structured manner.
• Putting the problem in a context: Without information about the context in
which the problem has occurred, one cannot take any decision on it. In a way ,
the context defines the problem
• Generation of alternatives: Information is a key ingredient in the generation of
alternatives for decision-making.
• Choice of the best alternative: Based on the information about he suitability of
the alternatives, a choice is made to select the best alternative
 Classification of IS

Information
Systems

Operations Management
Support System Support System

Process Office
Executive
TPS control automatio MIS DSS
IS
systems n systems
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Information Reporting Systems
• Decision Support Systems
• Executive Support Systems
• Expert systems
• Enterprise Resource Planning Systems
TRANSACTION PROCESSING SYSTEM
 Definition - Transaction Processing System

• A TPS is a type of information system that

collects, stores, modifies and retrieves
(re-check) the data transactions of an
enterprise
• A Transaction Processing System or Transaction
Processing Monitor is a set of information
which process the data transaction in database
system that monitors transaction programs
 TPS - Example

Online Payment
Airline seat reservation system

ATM POS (Point of Sale)

• If an electronic payment is made, the amount must be either both
withdrawn from one account and added to the other, or none at all. In case
of a failure preventing transaction completion, the partially executed
transaction must be 'rolled back' by the TPS
• An airline seat reservation system is accessed by multiple operators, after
an empty seat inquiry, the seat reservation data must be locked until the
reservation is made, otherwise another user may get the impression a seat
is still free while it is actually being booked at the time. Without proper
transaction monitoring, double bookings may occur
 Features of Transaction Processing Systems

• Rapid response – fast performance with rapid results

• Reliability – well designed backup and recovery with a low failure rate
• Inflexibility – treat every transaction equally. It may be used many
times each day which means it has to be precise and inflexible
• Controlled processing – maintain specific requirements for the roles
and responsibilities of different employees
• User friendliness
 Qualifiers

• In order to qualify as a TPS, transactions made by the system must pass the ACID test.
• Atomicity - A transaction’s changes to the state are atomic: either all happen or none
happen. These changes include database changes, messages, and actions on
transducers.
• Consistency - TPS systems exist within a set of operating rules (or integrity
constraints). The actions taken as a group do not violate any of the integrity
constraints associated with the state.
• Isolation - Even though transactions execute concurrently, it appears to each
transaction T, that others executed either before T or after T, but not both.
• Durability - Once a transaction completes successfully (commits), its changes to the
state survive failures.
 Objectives of TPS

• Ensure data and information integrity and accuracy

• Produce timely documents and reports
• Increase labor efficiency
• Help provide increased and enhanced service
• Help build and maintain customer loyalty
• Achieve competitive advantage
 TPS Requirements

• Capture, process and store transactions

• Produce reports and information about transactions
• Accurate and timely
• Efficient – (Require less labor)
• Increase customer service
• Increase competitive advantage
 Types of TPS

1. Batch Processing system

• Batch processing is where the information is
collected as a batch and then processed later on
• Eg. Paying by cheque
• Eg. Salary (Weekly, Monthly)
• Batch processing is useful for enterprises that need
to process large amounts of data using limited
resources
 Types of TPS

2. Real-time processing
• Under real-time processing, every single
transaction is processed with immediate effect
• There is no time delay in the real-time
processing system
 Primary Components of TPS

• Inputs: The source documents fetched from the transactions made by

customers or organizations and contain information regarding money. These
may be bills, invoices, coupons, customer orders, etc.
• Outputs: The documents generated after the complete processing of the
inputs are called outputs.
• Processing units: Processing refers to the step where the information
provided at the input step is broken down into segments to be processed
into relevant output.
• Storage: The location in the memory where all the desired information is
stored is called memory. Generally, the information is stored in the form of
ledgers.
 Characteristics of TPS

• Performance
• Rapid Processing : customers can’t wait for TPS to respond
• Reliability: Breakdown will disrupt or stop business
• E.g. Banking, Financial, Stocks, Airline reservations
• Data Integrity
• TPS is primarily concerned with data integrity
• Efficiency
• Paperless Transactions
• Reduce manual data entry (errors)
• Speed up transaction process
• Elimination of redundant steps
 Disadvantages of TPS

• Processing inefficiency
• Data repetition
• Temporal integrity (unity, wholeness) problems
• Lack of information coherence (sticking together)
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Information Reporting Systems
• Decision Support Systems
• Executive Support Systems
• Expert systems
• Enterprise Resource Planning Systems
OFFICE AUTOMATION SYSTEM
 Office Automation Systems

• Late 1960s saw Mini computers changes the scenarios in an office

• Office automation uses computer technology to improve the efficiency of
office work
 Definition - OAS

• OAS can be defined as “various machines and

softwares that are used for the purpose of
generating, compiling, saving modifying and
relaying the office data which is required for
completing general processes and objectives”
 Characteristics of Office Automation Systems

• Sophisticated electronic equipment and communication systems

• Involves people, procedure and technology
• Involves the use of computers with other electronic-equipment
• OAS completely relies on LAN
• OAS should be designed as a multifunction IS to provide executives decision
support tools
• Office automation support a large number of software packages
 Three activities of OAS

Data Management Information Storage Data Storage

 Office Automation Systems

Knowledge • Word processing

Workers
• Desktop Publishing
• E-mail
• Tele-text (FAX)
OAS • Tele-conferencing
• Image storage and retrieval
• Multimedia
Clerical • Fund Transfer
Workers
 Advantages of OAS

• Reduce involvement in clerical work

• Fast and accurate storage
• Less work force
• Large amount of data
• Less storage space
 Advantages of OAS

• Ease of use
• Safety & Security
• Operation of highly repetitive tasks
• Faster decision making
• Better quality control
• Increased productivity
• Greater precision
 Disadvantages of OAS

• Expensive (1st time)

• More Technical
• Resist to change
• Training cost & time
• No use without power
• New Technology
• Locating the files
• Maintenance
• Error probability
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Decision Support Systems
• Information Reporting Systems
• Executive Support Systems
• Expert systems
• Enterprise Resource Planning Systems
DECISION SUPPORT SYSTEM
 Decision Support System (DSS)

• DSS is another sub-system of MIS

• DSS assists managers in making unstructured
decisions
• A DSS is a computer-based information
system that supports business or
organizational decision-making activities
 Decision Support System (DSS)

• DSS is another sub-system of MIS

• DSS assists managers in making unstructured
decisions
• DSS enables managers to interact with the
database, model base and other s/w, so that
they can generate information for their current
need
• Otherwise managers will have to depend on
some reports produced according to some pre-
planned needs of similar situations
Structured & Unstructured Decisions
 Unstructured Decisions

• The population of your country is increasing, Your

water supply will not support many new people.
What you do?
• Choose destination for vacation
• Which supplier to choose?
• Introduce new product
 Real Examples – Unstructured Decisions

• In 2005 Mc. Donald´s became aware of a need to

respond to growing costumer concerns regarding foods
high in fat and calories.
• For several decades, costumers of fast food restaurants
were more concern with the taste and the price rather
than healthiness.
• In response, Mc. Donald´s decide to offer healthier
alternatives such as substituting apple slides in happy
meals for french fries and discounting the use of trans-
fats
 What is DSS?

• A DSS is a computer-based information system that supports business or

organizational decision-making activities.
• A DSS is a collection of integrated software applications and hardware that form
the backbone of an organization’s decision making process and help to make
decisions, which may be rapidly changing and not easily specified in advance.
• Decision Support Systems (DSS) are a specific class of computerized information
system that supports business and organizational decision-making activities .
• A properly designed DSS is an interactive software-based system intended to
help decision makers compile useful information from raw data, documents,
personal knowledge, and/or business models to identify and solve problems and
make decisions
 DSS Objectives

• Increase the effectiveness of the manager's

decision-making
• Improve the effectiveness of directors’
decision making

“Supports the manager in the decision-making

process but does not replace it”
 DSS Architecture

Data Model
Management Management

Other
Knowledge Systems
Management

User Interface

User
Conceptual Model of a DSS

[Figure 10.9]
 DSS Components

• Inputs : Factors, numbers, and characteristics to analyse

• User Knowledge and Expertise : Inputs requiring manual analysis by the user
• Outputs : Transformed data from which DSS "decisions" are generated
• Decisions : Results generated by the DSS based on user criteria
 DSS Applications

• Medical Diagnosis
• Business & Management
• Agricultural Production
• Forest Management

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 Management requirement of DSS

• Allocating resources
• Preparing budgets
• Observation of results
• Evaluation of result
• Modification of activities and resources
 Characteristics of DSS

• Support To Managers At All Levels

• Support Individual and groups
• Contains a Data base
• Focuses on decision processes
• Concerned with small area
• Permits managers to test the probable results of alternate decisions
• Solve semi-structured & Unstructured problems
• Helps refining management judgment
• Decision maker has control over decisions
 DSS Requirements

• Data collection from multiple sources (sales data, inventory data, supplier
data, market research data. etc.)
• Data formatting and collation
• A suitable database location and format built for decision support -based
reporting and analysis
• Robust tools and applications to report, monitor, and analyze the data
 DSS Tools

For Operational For Tactical planning / For Strategic planning

Management Control

• Linear Programming • Dynamic programming • Expert systems

• Queuing theory • Regression analysis • Natural language
• ANOVA • Network analysis systems
• Correlation analysis • Game theory • CASE tools
• Mean, mode, median • Non-linear programming
 Types of Analytical models

1. What-if analysis - Observing how changes to selected variables affect

other variables
2. Sensitivity analysis - Observing how repeated changes to a single variable
affect other variables
3. Goal-seeking analysis - Making repeated changes to selected variables
until a chosen variable reaches a target value
4. Optimization analysis - Finds an optimum value for selected variable
given certain constraints
 Types of DSS Models

1. Financial models - Provide cash flow, internal rate of return, and other
investment analysis
2. Statistical analysis models - Provide summary statistics, trend
projections, and hypothesis testing
3. Graphical modeling programs - Assist decision makers in designing,
developing, and using graphic displays of data and information
4. Project management models –
• Handle and coordinate large projects
• Help users discover critical activities and tasks that could delay or
jeopardize an entire project
 DSS Advantages

• Time savings
• Cost reduction
• Promote learning
• Improve effectiveness
• Competitive advantage
• Improves personal efficiency
• Increase decision maker satisfaction
• Improve interpersonal communication
 DSS Disadvantages

• Cost of development & monetary cost

• Difficulty in quantifying all the data
• Lack of technology knowledge in users
• Information overload
• Unanticipated errors
• System design failure
• Overemphasize decision making
• Too much dependence on DSS
• Fear of implementation of new technology
 Capabilities of DSS
DSS can help managers to perform
• What-if analysis
• Model building
• Sensitivity analysis
• Effect of multiple variables
• Risk Analysis
• Goal seeking analysis (reverse of “What-if”)
• Graphic capability (Portrays data as diagrams)
• Exception reporting analysis
• Hardware capabilities
• Access to Database
 Types of DSS

DS systems can be separated into five

broad categories, each aiding decision
making by different methods
 Types of DSS

• Data-driven DSS
• Helps generating information from DB, data warehouses, data mines &
websites
• Model-driven DSS
• Contains Mathematical models, “What-if” analysis & sensitivity analysis

Sensitivity Analysis: A procedure to determine the sensitivity of the outcomes of an

alternative to changes in its parameters. If a small change in a parameter results in
relatively large changes in the outcomes, the outcomes are said to be sensitive to that
parameter. This may mean that the parameter has to be determined very accurately or that
the alternative has to be redesigned for low sensitivity.
DSS vs other management tools
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Decision Support Systems
• Expert systems
• Executive Support Systems
• Information Reporting Systems
• Enterprise Resource Planning Systems
EXPERT SYSTEM
 Expert System

• Expert System is a sub-system of MIS

• Expert systems have evolved out of the work on artificial intelligence
• ES gathers a database of knowledge or expertise to offer advice or
solution for problems by imitating human experts
• Eg. MYCIN, Forecast Pro etc.
 PROSPECTOR PUFF
Used by geologists to identify sites Medical system for diagnosis of
for drilling or mining respiratory conditions
 DESIGN ADVISOR MYCIN
Gives advice to designers of Medical system for diagnosing blood
processor chips disorders. First used in 1979
 LITHIAN DENDRAL
Gives advice to archaeologists Used to identify the structure of chemical
examining stone tools compounds. First used in 1965
 Definition of Expert Systems

According to Prof. Edward Feigenbaum "An intelligent computer

program that uses knowledge and inference procedures to solve
problems that are difficult enough to require significant human
expertise for their solution."
 Major 4 Components of Expert Systems

1. Knowledge Base
2. Reasoning or Inference Engine
3. User Interface
4. Explanation Facility
 Components of Expert Systems

• Knowledge acquisition facility

• Knowledge base
• Knowledge based mgt systems
• Reasoning capability
• Work space
• Explanation facility
• Inference engine
• User interface
 Knowledge Base

• Represents all the data and information imputed by experts in the field.
• Stores the data as a set of rules that the system must follow to make decisions.

Knowledge Acquisition

Expert Knowledge Human

System Engineer Expert
 Inference Engine

• Asks the user questions about what they are looking for.
• Applies the knowledge and the rules held in the knowledge base.
• Appropriately uses this information to arrive at a decision

User Interface

• Allows the expert system and the user to communicate.

• Finds out what it is that the system needs to answer.
• Sends the user questions or answers and receives their response.
 Explanation Facility

• Explains the systems reasoning and justifies its conclusions.

ES Development Life Cycles
 ES Development Life Cycles

1. Assessment
• Determine feasibility & justification of the problem
• Define overall goal and scope of the project
• Resources requirement
• Sources of knowledge

2. Knowledge Acquisition
• Acquire the knowledge of the problem
• Involves meetings with expert
• Bottleneck in ES development
 ES Development Life Cycles

3. Design
• Selecting knowledge representations approach and problem solving
strategies
• Defined overall structure and organization of system knowledge
• Selection of software tools
• Built initial prototype
• Iterative process
 ES Development Life Cycles

4. Testing
• Continual process throughout the project
• Testing and modifying system knowledge
• Study the acceptability of the system by end user
• Work closely with domain expert that guide the growth of the knowledge
and end user that guide in user interface design
5. Documentation
• Compile all the projects information into a document for the user and
developers of the system such as:
• User manual
• Diagrams
• Knowledge dictionary
6. Maintenance
• Refined and update system knowledge to meet current needs
 Expert Systems Vs. Human advices

• Expert systems accumulate knowledge of many experts

• So, it gives a better advice than that of a single expert or consultant
• ES does not replaces human advices but supplements them
• Expert systems are the most widely applied & commercially
successful AI technology
 Characteristics of ES

• High-level expertise
• Adequate response time
• Permits Inexact Reasoning
• Good Reliability
• Comprehensibility
• Flexibility
• Thrives on Reasonable Complexity
• Makes Mistakes
 Characteristics of Expert Systems

1. High-level expertise.
• The most useful characteristic of an expert system.
• This expertise can represent the best thinking of top experts in
the field, leading to problem solutions that are imaginative,
accurate, and efficient.
2. Adequate response time.
• The system must also perform in a reasonable amount of time,
comparable to or better than the time required by an expert to
solve a problem.

80
 Characteristics of Expert Systems

3. Permits Inexact Reasoning.

• These types of applications are characterized by information that is uncertain,
ambiguous, or unavailable and by domain knowledge that is inherently
inexact.
4. Good Reliability.
• The system must be reliable and not prone to crashes because it will not be
used

81
 Characteristics of Expert Systems

5. Comprehensibility.
• The system should be able to explain the steps of its
reasoning while executing so that it is understandable.
• The systems should have an explanation capability in the
same way that human experts are suppose to be able to
explain their reasoning.
6. Flexibility.
• Because of the large amount of knowledge that an expert
system may have, it is important to have an efficient
mechanism for modifying the knowledge base.

82
 Characteristics of Expert Systems

7. Symbolic Reasoning.
• Expert systems represent knowledge symbolically as sets
of symbols that stand for problems concepts.
• These symbols can be combined to express relationship
between them. When these relationship are represented
in a program they are called symbol structures.
• For example,
• Assert: Ahmad has a fever
• Rule: IF person has fever THEN take panadol
Conclusion: Ahmad takes panadol

83
 Characteristics of Expert Systems

8. Reasons Heuristically
• Experts are adapt at drawing on their experiences to help
them efficiently solved some current problem.
Typical heuristics used by experts:
• I always check the electrical first.
• People rarely get a cold during the summer
• If I suspect cancer, then I always check the family history.
9. Makes Mistakes
• Expert systems can make mistakes.
• Since the knowledge of expert have to be captured as close
as possible in expert system, like its human counterpart, it
can make mistakes.
84
 Characteristics of Expert Systems

10. Thrives on Reasonable Complexity

• The problem should be reasonably complex, not too easy or too difficult.
11. Focuses Expertise
• Most experts are skillful at solving problems within their narrow area of
expertise, but have limited ability outside this area.

85
 Advantages of Expert Systems

• Can be simple to use

• Efficient results
• Accurate results
• Adaptation and adjustments to changing conditions
• Cost effective
 Limitations of ES

• Difficult to maintain
• Limited focus
• Inability to learn (Cannot refine own knowledge base)
• Maintenance problems
• Can excel only in solving specific types of problems in a limited
domain of knowledge
• Difficult and costly to develop and maintain properly
• Possibility of error
• May have high development costs
• Raise legal and ethical concerns
 Differences in System Characteristics

Dimensions TPS MIS DSS

Type of users Clerical and supervisory Middle Management All levels including top
mgmt. and professionals.

Focus Data transactions Information Decision, flexibility

Payroll, sales data, Sales forecasting, Strategic planning,

Applications inventory Production control, integrated problems

Ease of use Low Moderate High

Processing Interest Expediency Efficiency Effectiveness

Reason for Cost saving, customer Reporting basic Improved decision

development service information making
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Decision Support Systems
• Expert systems
• Executive Support Systems
• Information Reporting Systems
• Enterprise Resource Planning Systems
Executive Support Systems
 Executive Information (Support) Systems

• Executive Information Systems evolved in 1980s

• A computer-based system that serves the information needs of top executives
• It’s originally designed to support the strategic information needs of top mgt
• Provides rapid access to timely information and direct access to mgt reports
• Very user-friendly & Supported by graphics
• Easily connected to the Internet
• Microsoft Excel also has many EIS features
• Aim - delivery and displays of information rather than the analysis diagnosis of
problems and possible solutions
 Executive Information Systems

• An EIS is a set of computer based tools with features such as color graphics
touch screens, voice activated commands, and natural language interfaces the
hep managers to quickly retrieve, analyze, navigate, summarize and disseminate
large volumes of data
• An EIS is frequently connected with on line information services so that top
managers can quickly access external data as well
 Characteristics / Functions of an EIS

An EIS has two special functions:

• Derived information function:-
It allows managers to find the cause or source of a certain problem
through data analysis
• Drill down function:-
EIS precisely locate and retrieve necessary information at any desired
level of detail
 Capabilities of Executive Information System

• Drill-down paths
• Information at any desired level of detail
• Critical success factors
• Strategic, managerial or operational
• Sources: organizational, industrial, environmental
• Types of information monitored:
• Key problem narratives
• Highlight charts
• Top level financials
• Key factors
• Detailed key performance indicator responsibility reports
Capabilities of Executive Information System

• Status Access
• Relevance of latest data of key indicators
• Analysis
• Built-in analytical functions
• Integration with DSS products
• Analysis by intelligent agents
• Exception reporting
• Management by exception to standards
 Capabilities of Executive Information System

• Navigation of information
• Large amounts of data can be analyzed
• Audio and Visual
• Use of colors and sounds
• Communications
• E-mail, GSS, news groups, interface with voice mail
 Success Criteria for DSS/EIS

Rockart and Delong (1988) identified eight critical success factors for
achieving successful DSS/EIS.
• Commitment from top management
• Availability of accurate and reliable data
• Careful problem selection
• Integrated of DSS and EIS with existing technologies
• Meaningful analysis of cost vs. benefits
• A clear link to business objectives
• Management of organizational resistance
• Management of the spread and evolution of the system
Features of Executive Information System
 An EIS Development Framework

Watson, et al suggest a framework with three components:

1. Structural perspective: focus is on people and data as they relate to the EIS
2. Development process: the dynamics and interactions are identified
3. User-system dialog: contains an action language for processing the commands
Role of EIS
 Advantages of EIS

• Provide easy access to corporate data for the executives

• Present graphically
• Can able to retrieve information easily
• Easy for upper level executive to use
• Ability to analyze trends
• Increased executive time horizons
• Better reporting system
• Improve office automation
• Reduce time for finding information
 Disadvantages of EIS

• Functions are limited

• Hard to quantify data
• Executive may encounter information overload
• System may become slow
• Difficult to keep current data
• May lead to less reliable and insecure data
• Excessive cost for small company
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Decision Support Systems
• Expert systems
• Executive Support Systems
• Information Reporting Systems
• Enterprise Resource Planning Systems
 Information Reporting Systems

What Is A Management Reporting System?

• A management reporting system is a part of a management control system that
provides business information
• This information can be in the form of reports or statements
• The system is designed to assist members of the management by providing
timely pertinent information
Why Do We Need An Effective Management Reporting System?

• Constant need of reports for decision making and analysis of trends

• Reports being unavailable with the right stakeholders at the right time
• Lack of visibility and a single holistic view of the enterprise performance
• Data redundancy, duplication of data leading to data management and
quality issues leading to error prone reports
• High value resources
• Changing a global report to fit local needs
 Scope / Benefits of MRS

• Improve decision making

• Improves management effectiveness
• Improves responsiveness to issues
• Improve efficiency of resources in the delivery of organizational
services
 Role of MRS

• Identifying the problem

• Evaluate alternate solutions
• Implement the best solution
• Review implementation
Essentials of an Effective Management Reporting System

• Should be flexible 
• Localization of reports
•  The need for accuracy is high
• Only effective when it promptly generates reports
• Cost effective
• Reports should be detailed enough
• New reports should be proactively created
• An automated delivery of reports
• High-level of consistency
 Module 3 - Syllabus

Information systems:
• Transaction Processing Systems
• Office Automation Systems
• Decision Support Systems
• Expert systems
• Executive Support Systems
• Information Reporting Systems
• Enterprise Resource Planning Systems
 What is ERP?

• The practice of consolidating an enterprise’s

planning, manufacturing, sales and marketing
efforts into one management system
• Combines all databases across departments into
a single database that can be accessed by all
employees
• ERP automates the tasks involved in performing
a business process
• “Integration” is the key word for ERP
implementation
 ERP

• All data in an ERP system is stored in a single, central database

• Data entered in one part of the company can be immediately available to other
parts of the company
• An ERP can be used to manage an entire organization’s operations
• It may also integrate key customers and suppliers as part of the enterprise’s
operation.
• Companies need to purchase modules for an ERP that represent different
functions within the organization
• Some companies choose to purchase many modules, others choose a subset of
the modules
• It provides integrated database and custom-designed report systems.
• It adopts a set of “best practices” for carrying out all business processes.
Evolution of ERP
How Do ERP Systems Work?
 ERP Components

• Finance: modules for bookkeeping and making sure the bills are paid on time. Examples:
• General ledger
• Accounts receivable
• Accounts payable
• HR: software for handling personnel-related tasks for corporate managers and individual
employees. Examples:
• HR administration
• Payroll
• Self-service HR
• Manufacturing and Logistics: A group of applications for planning production, taking orders and
delivering products to the customer. Examples:
• Production planning
• Materials management
• Order entry and processing
• Warehouse management
Example – Before ERP
Example – After ERP
Who are the main ERP vendors?
 Why ERP?

• To integrate financial data.

• To standardize manufacturing processes.
• To standardize HR information
• Integrate customer order information
• Reduce inventory
 Benefits of ERP Systems

Internal Benefits External Benefits

• Integration of a single source of data • Improved customer service and order
• Common data definition fulfillment
• A real-time system • Improved communication with
• Increased productivity suppliers and customers
• Reduced operating costs
• Enhanced competitive position
• Improved internal communication
• Increased sales and profits
• Foundation for future improvement
 Risks with ERP Implementation

• Expensive
• Time-consuming (can take months to years)
• Great risk for the organization
• Transfer of data
• Acceptance with the company
• Education and training
• Availability of internal technical knowledge and resources
• Resistance to change
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