UNIT 1

Introduction and Business Modeling.

Prepared By
Mrs. M. A. Khade.
Asst. Professor.
PVPIT Budhgaon.

Prepared by Mrs. M. A. Khade 1

 Overview
• Change in business environment.
• Improve quality, Time to market, Customer
satisfaction, Performance and Profitability.
• Thus There is need of infrastructure which will
provide information across all functions and
locations within organization.
• ERP is solution to all.

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 Definition
• ERP
• Entire enterprise which can be managed
within a more global, tightly integrated, closed
loop solution is called enterprise Resource
Planning.

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General ERP Model.

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 Accommodating Variety
• Most Important aspect is Multi
• Eg. Multicurrency, multilingual support.
• Multimode:-
• Single manufacturing strategy wont work.
Many approaches/Mix approaches
e.g. make to stock, assemble to order/design to
order
• Many approaches could be repetitive.
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 Accommodating Variety cont.
• Multi Facility
• Total proposed solution must support all the
divisions under a corporate banner.

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 Integrated Management Information
• Today we require flexible reporting tool to
extract information.
• Current trend is Electronic Data Interchange.
• E.g. Customer Information, Purchase order,
invoices to customer.

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 Integrated Management Information
cont.

• Database Creation.
• It helps in time and attendance reporting,
contributing to machine monitoring control
and post sales statistics.
• E.g. order completion, dispatch, collection of
money.

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 Seamless Integration
• Most crucial aspect is engineering change
management.
• Whether it is new product or changes in existing
product integrating this application fully into
enterprise system is important.
• Product pricing-for materials should handle all
necessary cost information.
• WIP Management:-
• Includes the scheduling, distribution
management.
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 Supply Chain Management
• End to end supply chain management is
increasingly becoming crucial.
• Reason is todays enterprises are complex mixture
of manufacturing/distribution sites.
• There is need of one method, which will
ultimately optimize the overall flow of demand
and supply data, known as Intelligent Resource
Management.
• It includes the issues as how inventory is located,
stored and controlled by providing for multiple
locations and levels.
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 Supply Chain Management cont.
• Warehouse management.
• Scheduling and WIP Management

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 Resource Management
• HRM includes
 Employee database.
 Job descriptions and evaluations.
 Application Tracking.
 Performance Review.
 Career Planning.
 Training Employees.
 Creating alternate organization structure.
• Equipment- important resource
• TQM(Total quality Management)
• E.g. quality planning required for ISO 9000
certification.
• Maintenance Management.
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 Integrated Data Model
• Application should provide true integration
over entire enterprise system specifically
providing data for employees, suppliers and
customers.
• General accounting facility.
• Online management.
• Project Management.

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 Scope
• Financials- Financial accounting, Asset
Management.
• Logistics:- Production Planning, materials
management.
• HR:- Personal Management, Training and
Development, Skills Inventory.
• Workflow:- Workflow integrates the entire
organization with flexible assignment of tasks and
responsibilities to location, position, job, group or
individuals.
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 Technology
• Hardware , Software
• Operating System
• Client Server Architecture
• Scalable and Flexible
• Cost

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 Benefits of ERP
• Tangible Benefits
– Reduction of lead time by 60%
– 99% on time Delivery.
– Doubled Business
– Increase of inventory turns over 30%.
– Cycle time cut to 80%
– WIP reduced to 70%

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 Benefits of ERP
• Intangible Benefits of ERP
 Better customer satisfaction.
 Improved vendor flexibility
 Reduced quality costs.
 Improved resource utility.
 Improved information accuracy.
 Improved decision making capability.

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 ERP and Modern Enterprise
• The modern enterprise Paradigm.
ERP sometimes also termed as MRP
Both the models purport to integrate all the
processes of the organization with the customer
satisfaction side of the marketing.
Simply we term ERP as the 4M’s
Man, Money, Materials and Machines for their
best values.

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 ERP and Modern Enterprise cont.
• Where ERP Comes in
• Whenever change takes place the enterprise should
be able to adjust to it immediately and effectively.
• This pro-activeness is termed as Enterprise wide
integration.
• To avail this ERP packages are mostly built on Object
Oriented Programming.
• Worth benefit of this is quick adaptability.

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 What is Business Engineering?
• BE revolves around information Technology &
continuous change.
• It is termed as refinement of an organizations
changing needs.
• BE is rethinking of business process to
improve speed, quality & o/p of materials or
services.

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 Overview of BE
• The new trend of downsizing in 90’s became
part of infrastructure.
• It was designed to meet the challenge and
creating a business environment that would
optimize performance and remain flexible
enough to accommodate change.
• Often many companies have created special
groups and lead by senior executives that
focus solely on BE.

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 Overview of BE cont.
• It was earlier trend that productivity is
achieved through machines only.
• Now todays trend is productivity is depending
upon knowledge and information.
• Major trend is change.

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 Principles of Business Engineering
• Competition and increased customer power have
now undetermined importance of economies of
scale.
• No more related to buying and selling of product.
• It encompasses the whole gamut of business
activities, from customer service, consulting and
pricing to production and shipping.
• Now a days customers are more selective.
• BE makes companies more customer focused and
responsive to changes in the market.
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 BPR, ERP & IT.
• IT empowers BPR.
• In past IT used to automate existing business
process but now technology is being used to
change those process fundamentally.
• It made the process more effective and
enhanced its scale.
• IT and Business Reengineering go hand in
hand. This merge is called as Business
engineering.
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 BPR, ERP & IT Cont.
• BE combines the innovations of IT and BPR
focuses on Business process.
• This is made possible with the help of client
server architecture.
• BE could be also termed as efficient redesign
of company's value added chains.

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Business Engineering with Information
Technology
• BE is unthinkable without IT but It doesn't mean
that IT can be used thoughtlessly in the BE.
• IT enables to decide guidelines, it answers the
questions like how ,when, where to apply in IT.
• All the Stake holders for BE project [The
management, IT users, IT experts] must get
together to chart out a companies goals.
• They will make sure the key process in order to
achieve success.
• Next step is to reengineer the process.
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Business Engineering with Information
Technology cont.
• Benefits of IT
 Developing the business strategy to match or exceed
the performance of company’s competitor.
 To get a process streamlined.
 Cost is another major factor it includes startup cost,
training cost, n/w cost.(will vary with size and scope
of the information Technology project)

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Business Engineering with Information
Technology cont.
• Long term benefits of IT when coupled with BE.
 Increased revenues per sales call
 Decreased inventory, h/w, admin and operating cost.
 Recaptured market share.
 Reduced or eliminated overtime.

• In conclusion we can say IT when coupled with BE

can be flexibly used to achieve different goals of
company.

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 ERP and Management Concerns
• No. of companies are shifting to ERP systems.
• Considering huge amount of investment in terms
of time and money that ERP involves risk
associated with changes.
• It is important for decision makers to have good
understanding of issues so that it keep focused
on their concerns.
• Concerns can be divided in to 3 categories.
 Short Term
 Medium Term
 Long Term
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 ERP and Management Concerns Cont.
• Short Term- Shifting from legacy systems and
implementation delays.
• Mid Term- is to return on investment.
• Long term- incorporating the best practices from
the industry into company's system and
procedures.
• Implementation delays can result in exponential
growth in costs bot direct and indirect.
• Solution is ERP Deployment and has 2 parts
1)Selection 2)Implementation.
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 Building the Business Model
• Building the ERP solution is linked with overall
MIS planning.
• To build model it needs core
processes/activities of the business.
• Planning- Top Down
• MIS implementation Bottom Up.

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