2. Introduction
Topics to be covered in the presentation are:
➢ ERP systems definition.
➢ ERP systems Architecture.
➢ Examples of Enterprise systems Architecture.
➢ ERP Modules.
➢ Explanation of different ERP Modules with examples.
➢ Business benefits and limitations of implementing ERP systems.
➢ Systems Integration.
3. What is an ERP System?
➢ Enterprise resource planning systems are comprehensive software
applications that are used for combining data across an organisation,
along with detailed knowledge of all major components to support
critical organisation functions.
➢ An ERP system enable all kind of data across various departments to be
gathered in a single database.
4. Enterprise Systems Architecture
➢ Converts the goals of an organisation into a successful enterprise
change
➢ Key requirements, principles and models of an organisation are created
or altered in an Enterprise Systems Architecture
➢ Two main components of the architecture are:
- Client
- Server
5. Enterprise Systems Architecture (cont’d)
➢ The architecture of an ERP system is classified into three layers or tiers:
- Web Servers (request or input data).
- Application Servers (intermediary between web & data servers).
- Data Servers (store data or respond to request).
➢ Most commonly implemented architectures:
- Two-tier implementation (client and server play role).
- Three-tier implementation (application server is the additional tier).
6. Examples of Enterprise Systems Architecture
1. The need of big data for enterprise information technology management
(EITM)
- Used where large amount of data are
stored.
- Components are connected with each other
to track activities.
- Requires java bytecode instrumentation for
calculations.
Source: Enterprise system architecture-
gigadubai.com
7. Examples of Enterprise Systems Architecture (cont’d)
2. Zachman Framework for enterprise architecture
➢ First applied by US
department of defence.
➢ In this framework, same
data is organised in such a
way that each time the
data has a different
meaning, depending on the
roles and jobs of the
employees using it.
Source: architecturevillaimage.blogspot.com
8. ERP Modules
A common ERP system consists of
different functional areas called ERP
modules, which work independently and
combine together at the end to meet an
organisation’s goals. Some of the main
ERP modules are:
➢ Human Resource Management
➢ Supply Chain Management
➢ Inventory Management
➢ Financial Management
➢ CRM
➢ Marketing Management
➢ Sales Management Source: cinnects.com
9. Human Resource Management
Human resources pertain to the management of all genres of employment. Human Resource
Management starts from recruiting a worker, providing a compensation to him or her,
labour law, and ends with dealing to dismissal and retirement.
EXAMPLE:
While dealing with the recruitment
section, the HR manager takes the
following steps :
1. Initial interview
2. Testing of the applicant
3. Selection interview
4. Background and reference check
5. Medical examination of the
applicant
6. Decision making, whether to hire the
applicant or not Source: Connceptdraw.com
10. Supply Chain Management
➢ Supply Chain Management is defined as the supervision of activities in a
supply chain to increase customer value and sales of the product that an
organisation is selling.
EXAMPLE
➢ Amazon, a popular shopping website, follows the following supply chain
and has attained a reputed position in the e-commerce industry.
Source: smartsheet.com
11. Inventory Module
➢ This module ensures the availability of stock.
➢ Includes different activities like identifying
needs, inventory status, goal set-up,
restocking, creation of reports etc.
EXAMPLE:
In a manufacturing business, inventory can be of any form, such as:
➢ Scrap goods, like wood, used in making a shelf.
➢ Work-in-process inventory, like an incomplete wooden cupboard in a
furniture manufacturing business.
Source: liveblogspot.com
12. Financial Management
➢ Mainly focuses on the proper management of funds.
➢ Funds should be managed in such a way that risk, cost and control are
in a balanced state.
EXAMPLE:
➢ It is possible to obtain funds from another
country. For example, the two most important
sources of capital for international access of
funds are: Foreign Direct Investment and
Foreign Institutional Investors.
Characteristics of financial
management.
Source: wikifinancepedia.com
13. Sales and Marketing Management
➢ Marketing management: Management of advertising, promotions and
sales to meet customer satisfaction.
➢ Sales management: Applying different skills practically in order to sell a
product by an individual or group of individuals.
EXAMPLE:
➢ In real estate sector, an empty apartment is to
be sold.
➢ The firm would not be able to sell that
apartment if proper sales and marketing skills
are not there.
Source: business-fundas.com
14. Business benefits of implementing ERP
➢ Dynamic nature, easy to modify.
➢ The system can perform in real time.
➢ Business activities can be redesigned easily.
➢ Quality of customer service has become better and faster.
➢ All the departments are linked with each other, data can be shared easily
across an organisation.
15. Business limitations of implementing ERP
➢ Too much changes are disturbing.
➢ Costs and time required to train employees about the new system.
➢ Initial purchasing costs are high.
➢ An organisation may lose the ability to compete because of the as-is
implementation in an ERP system.
16. ERP Implementation with System Integration
➢ Systems integration provide an information system where all data and
information can be combined from different components of an organisation
and allows the smooth working of the organisation.
➢ Human links are more time consuming, sometimes incorrect and unreliable.
➢ There is no successful ERP system without Systems Integration.
➢ Close attention is required for Systems Integration.
17. Functional silos: A component of Systems integration
➢ Functional silos is based on division and departmentation, where each
department has different functioning.
➢ Functional silos are usually passed through by business processes for
handling multiple jobs.
➢ Functional silos is of two types.
- Horizontal silos: Usually transparent and classifies various departments
at same level.
- Vertical silos: Not transparent, roles are divided in hierarchical layers.
18. Conclusion
➢ An ERP system should be selected carefully, based on the
organisations functionality.
➢ There are remarkable benefits that an organisation can have if a good
ERP system is selected and implemented.
➢ 25 to 30% of inventory costs can be reduced.
➢ Reduction in cost of raw materials.
➢ Reduction in production costs.
➢ Time saving.
➢ On the other hand, information implementation costs are high and
risks are also great. It all depends on implementation whether proper
or not.
19. Discussion
➢ How to implement ERP system?
➢ What are the functional areas of the horizontal and vertical
silos?
20. Bibliography
➢ Aslam, K 2011, ERP and enterprise architecture, viewed 10 Nonember 2018,
https://www.slideshare.net/komalaslam/erp-and-enterprise-architecture?qid=b721d19b-4757-429a-
857d-0ed44adb35c1&v=&b=&from_search=2
➢ Mankovskii, S n.d., Big data challenges in application project management, viewed on 21 November 2018,
https://www.researchgate.net/figure/Example-Enterprise-System-Architecture_fig1_267963934
➢ Cornett, S n.d. What is enterprise architecture?- definition & examples, viewed on 21 November, 2018,
https://study.com/academy/lesson/what-is-enterprise-architecture-definition-examples.html
➢ Gtz, J 2013, Human resource management process, viewed on 15 November 2018,
https://www.mindmeister.com/257173888/human-resource-management-process
➢ Smartsheet, n.d., What is supply chain?, viewed on 15 November 2018,
https://www.smartsheet.com/supply-chain-management
➢ Rajnikant, 2009, ERP module, viewed on 16 November 2018,
https://www.slideshare.net/rajnikantxidas/erp-module
➢ Wikifinancepedia, 2018, What is financial management? Definition, example and its importance, viewed on
15 November 2018, https://wikifinancepedia.com/finance/financial-management/what-is-financial-
management-definition-examples-and-its-
importanceps://worialspoint.com/itil_v3_foundation/financial_managemen
➢ Wamicha, E n.d., Materials management: planning and process, viewed on 17 November 2018,
https://study.com/academy/lesson/materials-management-planning-process.html
➢ Pipedrive blog, n.d., Sales management definition, process, strategies and resources,
https://www.pipedrive.com/en/blog/sales-management
21. Bibliography (cont’d)
➢ Techopedia, 2018, System integration (SI), viewed on 23 November 2018,
https://www.techopedia.com/definition/9614/system-integration-si
➢ Modi, S 2015, Enterprise resource planning-best ppt, viewed on 19 November 2018,
https://www.slideshare.net/SiddharthModi1/complete-knowledge-of-enterprise-resource-planning-
best-ppt?qid=5ace4652-818d-48bf-8a04-2a3b1988c2e5&v=&b=&from_search=3
➢ Quain, S 2018, The difference between vertical and horizontal business organisations, viewed on 21
November 2018, https://smallbusiness.chron.com/difference-between-vertical-horizontal-business-
organizations-24915.html
Notes de l'éditeur
This presentation will be explaining the topics like ERP systems definition, ERP systems Architecture, Examples of Enterprise systems Architecture, ERP Modules, Explanation of different ERP Modules with the help of examples, Business benefits and limitations of implementing ERP systems and Systems Integration.
This slide gives the definition of an ERP system that is basically used in an organisation, containing the thorough knowledge of all the important and useful components for decision making process.
An Enterprise Systems Architecture is responsible for converting sight and plan into a successful enterprise change by making, communicating and altering the key requirements, principles and models in a better way which further define the enterprise’s future circumstances and allows its advancement. ERP applications are established in a dispersed manner. The ERP system has two main components: server and client. The server contains all the data of an organisation which is stored in a centralized database. Mostly the servers are centralised and clients are spread to various locations throughout the enterprise.
The responsibility of the ERP systems Architecture is divided among three functional areas: the database,client(web) and applications.
The database is a component from where all the data and information can be exchanged with the client. The client component enters the data in the database and requests the information which it wants to be accessed. Application component is the middle-man between the client and the server.
The 2 most commonly implemented architectures are:
Two-tier implementation: In a two-tier implementation, server acts as both the server and application. Clients request or input the data to that server.
Three-tier architecture: The three-tier architecture consists of separated functions for database and applications, basically used for large-scale industries’ ERP setup. Here the client needs two or more network connections. First the client would connect to the application system and then to the database server after which the server would respond.
In a system where large databases are needed, each component is extended with the agents who have a look on the activities of that component and also trace process transactions.EITM systems use java bytecode instrumentation to generate tens of millions of measurements every minute at a constant rate. This kind of architecture can be managed in different ways, and offers detailed monitoring of every process.
Another example of enterprise systems architecture is Zachman Framework. It was published by John A. Zachman in 1987, who worked at IBM as “white paper” which was first applied by US department of defense. The framework that he designed describes how the same data present in a system has different organisational meanings. In the given diagram, each row illustrates the view according to a particular stakeholder, having an additional information down each column.
An ERP system has different modules. All these modules work separately in an organisation, whatever their jobs are or what task is assigned to them. In the end, all the results gained from each module are combined together in a single software in order to meet the organisational goals. There are a number of ERP modules. Some of the important modules are explained in this presentation.
Human resource management is one of the most important module in an ERP system. As the name suggests, It deals mostly with human beings. A human resource manager’s responsibility is to hire an employee, provide wages or compensation, and even to fire out the employee who is not working properly. The example given in the slide represents the steps taken by the human resource manager while dealing with recruitment section.
A supply chain consists of a number of distributors, which are connected by “links”. The chain includes numerous producers for parts, the manufactured object, a place where the object is stored (known as warehouse), supply centres, and a store where people can purchase the products. Each link is tied up with another one in a particular direction. Tn the SCM, a link cannot be accessed before going to the previous link.
Inventory module ensures the availability of sufficient stock in a warehouse. The inventory module in an ERP consists various activities like discovering the inventory needs, set up goals, finding different methods and alternatives of restocking the products, tracing use of each item, and creating a report of inventory status. The example shows inventory in a manufacturing business,which is brought up to be converted into a product that is to be sold by that business. The consumers can be common people and other businesses.
In financial management module of the ERP system, decisions are taken by the managers that result in the accession and funding of credits for the businesses. The decision taken in financial management can either be for long term or for short term. In the world full of competition, finances can be procured from several sources. Bonds that are signed by an organisation or a firm, can be converted to several options so that the requirements of the investors are fulfilled. Financial manager decides how to use the procured funds reasonably. A good financial management lies in these key aspects, as shown in the figure:
Marketing is defined as the advertisement of goals and services to the customers. The decisions taken by an organisation in order to make marketing successful is known as marketing management. The sales module responds to placement of order, maintaining order priority, transportation and billing. Marketing concepts are based on clear goals that includes: Cost efficiency, Social responsibilities and Effectiveness within a particular market.
Suppose we want to build an apartment in a suburban area. This area has lots of families and is also close to the city. So the scope of earning profit is good. After an year from the completion of the apartment, that has been constructed from the savings of the company, the expenditure graph is dwindling because enough profit is not earned by the company. In order to earn profit, good sales & marketing skills are still to be learnt by our organisation.
ERP system has a dynamic nature whilst responding to the modifications in the organisation for earning more profit in an industry.
Referencing and passing information at actual time with other partners helps to enhance productivity. It also helps to reduce the costs of goods and services.
ERP systems enable the reengineering of administrative activities which helps in improving the business processes.
ERP system has made the quality of customer service better and faster. This is because in ERP, information flows in both the directions (i.e., up and down the organisational hierarchy) and across all the units of a business.
Data sharing across all the departments of an organisation. Everyone can collaborate easily with anyone and thus encouraging teamwork.
Constant changing of business roles and limits of a department can disturb an organisation
Training the employees about how to deal with the new system can be expensive and it also takes a lot of time.
Starting costs of buying a software are generally high, along with high consultant costs which interrupt between the work flow of employees
A company might be unable to compete with the other ones while implementing vanilla(as-is) ERP. when all the companies are using same standardized system, this case usually occurs.
-All the modules would work only if these would be able to know what are the jobs of other modules and what are they supposed to do. The concept Systems Integration allows all the module to communicate with each other so that they can combine and share information to work with a continuous flow.
- If information is to be shared through human links, then sharing may consume more time, errors are more possible and the data may also not be fully accurate. So this would not allow the project in an organisation to be completed in time
- If we suppose an ERP system without systems integration, then it fails to share information in real time between organisational partners. For example, the stocks manager is unable to know the status of transported product.
- Systems integration is very important for the growth of an organisation. So there is a need to focus more on it by the concerned authorities, like managers.
Generally, organisations are structured on the basis of departmentation and how the departments are divided, which depends upon their functionality. Each department has a particular function to perform. People who are brilliant and doing that function, are hired only.
Business processes go over the functional silos in the case where different tasks in a department require different skills. The task may involve many people and departments. For example selling a product to a customer. This would involve departments like sales department ,distribution department and finance department. This would also involve people, i.e., salespersons, managers etc. in those departments.
Two types of functional silos are horizontal silos and vertical silos. Horizontal silos is used for breaking the difficult tasks into easily manageable small tasks that can be assigned to a group of people at the same level. Employees working at horizontal silos are able to see what the other departments are doing.
In vertical silos, roles to be a assigned to people are in a hierarchy, that is from strategic planning to management control and then to operational control. Top level of hierarchy is the most complex one and thus the organisation tend to break functions into smaller units at that level. A department at a lower level is not able to see the activities of the higher one.
To conclude, ERP system has a rosy picture for all the organisations and that is the reason why every business organisation is not able to work without an ERP system The benefits obtained from the ERP system can outweigh its limitations.
Q1. How to implement ERP system?
There are mainly 6 steps to implement an ERP system:
Firstly, it is required to select an employee from each department who have a detailed knowledge about that department. This would help in selecting a better ERP option.
Make a note on the goals and objectives to be accomplished by the organisation.
When you are sure about what you want to accomplish, then it is time to select a good ERP software. There are a number of ERP vendors in the market. Make sure that whatever ERP software you are purchasing, should completely fit with the organisation’s environment.
The fourth step for implementing the ERP system, after purchasing a software, all the outdated data needs to be removed. Only important data should be moved from an old ERP system to a new one.
Train your employees to the new changes and the training should be completed before bringing the software live so that they do not make any error.
The last step is to test the software. If there is any problem with the system, then issues should be resolved after which you can work live with the new ERP system.
Q2. What are the functional areas of the horizontal and vertical silos?
The vertical silos follows a top-bottom approach. In any organisation, the top level would be held by the CEO, president or the owner. Manager and supervisors would take place at the middle level, and at the last section, regular employees are supposed to take part. All the major decisions are taken by the top-level individuals regarding marketing, sales and customer service standards, which are informed to the middle-level managers or supervisors. Their job is to divide work among the employees to achieve the desired goals. Vertical silos is ideal for very large scale industries.
In a horizontal silos, very few managers are there and employees are given the authority to take the decisions, even the complex ones also. They are free to offer suggestions and their ideas in the company. The employees feel empowered in such an organisation because they can take decisions without any approval from the higher authority. Horizontal silos is ideal for a small-scale industry.
