Week 2 - System Integration - Role of ERP in Business Functions and Processes

Information Technology - FIT 3138: Real-Time Enterprise Systems Lecture 2
1. Course Information

  • Semester: 2, 2016

  • Lecture Topic: Systems Integration - Role of ERP in Business Functions and Processes

4. Introduction to Enterprise Resource Planning (ERP)

  • ERP Programs:

    • Core software coordinating information across all business areas.

    • Manages companywide business processes using a common database and shared reporting tools.

  • Business Process Definition: A collection of activities transforming input into valuable output for the customer.

5. The Shift from Functional Silos to Business Processes

  • Functional Silo Issues: Leads to short-sighted improvements focused on individual divisions.

  • Business Process Focus Benefits: Enhances organizational efficiency and effectiveness through a holistic operational view.

6. Functional Areas and Business Processes

  • Understanding ERP: Requires recognizing business operations through its functional areas.

  • Functional Areas of Operation: (Sturgeon-Gereffi model)

    • Marketing and Sales (M/S)

    • Supply Chain Management (SCM)

    • Accounting and Finance (A/F)

    • Human Resources (HR)

7. Functional Areas of Operation

  • Characteristics: Areas are interdependent, requiring data from others for effective operation. Integration improves communication and workflow.

  • Information System (IS) Definition: Combination of computers, people, procedures, and software to store, organize, and deliver information.

8. Business Processes Definition and Characteristics

  • Definition: Activities transforming inputs into outputs valuable to customers.

  • Advantages of Business Process Perspective: Enables managers to view operations from the customer's viewpoint.

  • Effective Sharing of Data: Essential for streamlined business processes.

9. Inputs and Outputs in Business Processes

  • Inputs: Materials, people, equipment.

  • Importance of Information Management: Requires timely and accurate information for effective input transformation.

Functional Area Summaries & Interrelations

  • Marketing and Sales (M/S): Handles product development, pricing, promotion, order processing, and sales forecasting. Requires customer data, order data, sales trends, and production costs, interacting with A/F and SCM for pricing.

  • Supply Chain Management (SCM): Manages manufacturing (production) and raw material purchasing. Information needs are driven by M/S sales forecasts to plan production and control inventory costs.

  • Accounting and Finance (A/F): Documents transactions, handles raw material purchasing, payroll, and customer receipts. Crucial for M/S and SCM for forecasting and staffing decisions. Inputs include customer payments, accounts, sales, inventory, and payroll data; outputs are supplier payments, financial reporting, and credit evaluation.

  • Human Resources (HR): Manages recruitment, training, evaluation, and compensation. Uses departmental forecasts for personnel needs, requiring personnel data, skills assessments, and regulatory compliance.

22. Importance of Timely and Accurate Data Sharing

  • ERP Benefits: Facilitates real-time information sharing across all functional areas, supporting organizational success and profitability.

23. Systems Integration

  • Definition and Benefits: Integrated systems allow rapid responses to market changes, enhancing flexibility and efficiency.

  • Logical Access: Enables data sharing based on stakeholder needs.

  • Physical Integration: Ensures seamless connections among different application systems.