Erp and related technologies

Enterprise Resource Planning
SWETA BARNWAL Page 1
Topics Covered: ERP and Related Technologies
Business Processing Reengineering(BPR), Data Warehousing, Data Mining, On-line
Analytical Processing(OLAP), Supply Chain Management (SCM), Customer Relationship
Management(CRM), Electronic Data Interchange (EDI)
ERP AND RELATED TECHNOLOGIES
ERP is an abbreviation for Enterprise resource planning and means the techniques and concepts
for the integrated management of business as a whole, from the viewpoint of the effective use
of management resources, to improve the efficiency of an enterprise.
ERP systems serve an important function by integrating separate business functions-materials
management, product planning, sales, distribution, finance and accounting and others-into a
single application.
However, ERP systems have three significant limitations:
•1. Managers cannot generate custom reports or queries without help from a programmer and this
inhibits them from obtaining information quickly, which is essential for maintaining a
competitive advantage.
•2. ERP systems provide current status only, such as open orders. Managers often need to look
past the current status to find trends and patterns that aid better decision-making.
•3. The data in the ERP application is not integrated with other enterprise or division systems and
does not include external intelligence.
There are many technologies that help to overcome these limitations. These technologies, when
used in conjunction with the ERP package, help in overcoming the limitations of a standalone
ERP system and thus, help the employees to make better decisions. Some of these technologies
are:
•Business Process Reengineering (BPR)
•Management Information System (MIS)
•Decision Support Systems (DSS)
•Executive Information Systems (EIS)
•Data warehousing
•Data Mining
•On-line Analytical Processing (OLAP)
•Supply Chain Management
1. BusinessProcess Reengineering(BPR):
Business processes are: It is simply a set of activities that transform a set of inputs into a set of
outputs (goods or services) for another person or process using people and tools. We all do them,
and at one time or another play the role of customer or supplier.
So why business process improvement?
Improving business processes is paramount for businesses to stay competitive in today's market
place. Over the last 10 to 15 years companies have been forced to improve their

business processes because we, as customers, are demanding better and better products and
services.
And if we do not receive what we want from one supplier, we have many others to choose from
(hence the competitive issue for businesses). Many companies began business process
improvement with a continuous improvement model. This model attempts to understand and
measure the current process, and make performance improvements accordingly.
THE BUSINESS PROCESS REENGINEERING (BPR) VISION
Business Process Reengineering (BPR) is based on a vision of the future that is increasingly
shared by enterprises around the world. It is evolving into the sum total of everything we've
learned about management in the industrial age recast into an information age framework.
The impact of BPR on organizational performance
The two cornerstones of any organization are the people and the processes. If individuals are
motivated and working hard, yet the business processes are cumbersome and non-essential
activities remain, organizational performance will be poor. Business Process Reengineering is
the key to transforming how people work. What appear to be minor changes in processes can
have dramatic effects on cash flow, service delivery and customer satisfaction. Even the act of
documenting business processes alone will typically improve organizational efficiency by 10%.
DATA WAREHOUSING:
Data warehousing is the process of constructing and using a data warehouse. A data warehouse is
constructed by integrating data from multiple heterogeneous sources that support analytical
reporting, structured and/or ad hoc queries, and decision making. Data warehousing involves
data cleaning, data integration, and data consolidations.
Using Data Warehouse Information
There are decision support technologies that help utilize the data available in a data warehouse.
These technologies help executives to use the warehouse quickly and effectively. They can
gather data, analyze it, and take decisions based on the information present in the warehouse.
The information gathered in a warehouse can be used in any of the following domains −
Tuning Production Strategies: − The product strategies can be well tuned by repositioning the
products and managing the product portfolios by comparing the sales quarterly or yearly.
Customer Analysis: − Customer analysis is done by analyzing the customer's buying
preferences, buying time, budget cycles, etc.
Operations Analysis: − Data warehousing also helps in customer relationship management, and
making environmental corrections. The information also allows us to analyze business
operations.
Increasingly, organizations are analyzing current and historical data to identify useful
patterns and support business strategies. Emphasis is on complex, interactive, exploratory

analysis of very large datasets created by integrating data from across all parts of an enterprise;
data is fairly static.
FunctionsofDataWarehouseToolsand Utilities
The following are the functions of data warehouse tools and utilities −
• Data Extraction − Involves gathering data from multiple heterogeneous sources.
• Data Cleaning − Involves finding and correcting the errors in data.
• Data Transformation − Involves converting the data from legacy format to warehouse
format.
• Data Loading − Involves sorting, summarizing, consolidating, checking integrity, and
building indices and partitions.
• Refreshing − Involves updating from data sources to warehouse.
Three Complementary Trends:
• Consolidate data from many sources in one large repository
• Loading, periodic synchronization of replicas.
• Semantic integration.
DATA MINING
• The ability of a system to store data resulting from Data Mining to be used in future
inquiries of that database. Data mining is the process of identifying valid, novel,
potentially useful and ultimately comprehensible information from databases that is used
to make crucial business decisions.
• Data mining permits our companies to profile customers, predict sales trends, and enable
customer relationship management (CRM), among other BI initiatives.
• Mining must therefore be integrated with the warehouse data structures and supported by
warehouse processes to ensure both effective and efficient use of the technology and
related techniques.
• As shown in the BI architecture, the atomic layer of the warehouse as well as data marts
is excellent data sources for mining. Those same structures must also be recipients
of mining results to ensure availability to the broadest audience.
• Generally, data mining (sometimes called data or knowledge discovery) is the process of
analyzing data from different perspectives and summarizing it into useful information -
information that can be used to increase revenue, cuts costs, or both.
• Data mining software is one of a number of analytical tools for analyzing data. It allows
users to analyze data from many different dimensions or angles, categorize it, and
summarize the relationships identified. Technically, data mining is the process of finding
correlations or patterns among dozens of fields in large relational databases.
• Data mining is primarily used today by companies with a strong consumer focus - retail,
financial, communication, and marketing organizations. It enables these companies to
determine relationships among "internal" factors such as price, product positioning, or

staff skills, and "external" factors such as economic indicators, competition, and customer
demographics. And, it enables them to determine the impact on sales, customer
satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary
information to view detail transactional data.
• With data mining, a retailer could use point-of-sale records of customer purchases to send
targeted promotions based on an individual's purchase history. By mining demographic
data from comment or warranty cards, the retailer could develop products and promotions
to appeal to specific customer segments.
• For example, Blockbuster Entertainment mines its video rental history database to
recommend rentals to individual customers. American Express can suggest products to its
cardholders based on analysis of their monthly expenditures.
Data mining consists of five major elements:
• Extract, transform, and load transaction data onto the data warehouse system.
• Store and manage the data in a multidimensional database system.
• Provide data access to business analysts and information technology professionals.
• Analyze the data by application software.
• Present the data in a useful format, such as a graph or table.
OLAP (On Line Analytical Processing)
• It is an approach to quickly provide the answer to analytical queries that are dimensional
in nature.
• It is part of the broader category business intelligence, which also includes Extract
transform load (ETL), relational reporting and data mining.
• The typical applications of OLAP are in business reporting for sales, marketing,
management reporting, business performance management (BPM), budgeting and
forecasting, financial reporting and similar areas.
• The term OLAP was created as a slight modification of the traditional database term
OLTP (On Line Transaction Processing).
• Databases configured for OLAP employ a multidimensional data model, allowing for
complex analytical and ad-hoc queries with a rapid execution time.
• OLAP is Fast Analysis of Shared Multidimensional Information (FASMI). They borrow
aspects of navigational databases and hierarchical databases that are speedier than
their relational
• For example a set of customers can be grouped by city, by district or by country; so with
50 cities, 8districts and two countries there are three hierarchical levels with 60 members.
• These customers can be considered in relation to products; if there are 250 products with
20categories, three families and three departments then there are 276 product members.
• With just these two dimensions there are 16,560(276 * 60) possible aggregations. As the
data considered increases the number of aggregations can quickly total tens of millions or
more.
• The calculation of the aggregations AND the base data combined make up an OLAP
cube, which can potentially contain all the answers to every query which can be answered
from the data (as in Gray, Bosworth, Layman, and Pirahesh, 1997). Due to the potentially

large number of aggregations to be calculated, often only a predetermined number are
fully calculated while the remainder are solved on demand.
There are three types of OLAP:
• Multidimensional or MOLAP: It is the 'classic' form of OLAP and is sometimes referred
to as just OLAP. MOLAP uses database structures that are generally optimal
for attributes such as time period, location, product or account code. The way that each
dimension will be aggregated is defined in advance by one or more hierarchies.
• Relational or ROLAP: It works directly with relational databases. The base data and the
dimension tables are stored as relational tables and new tables are created to hold the
aggregated information. Depends on a specialized schema design.
• Hybrid or HOLAP: There is no clear agreement across the industry as to what constitutes
"Hybrid OLAP", except that a database will divide data between relational and
specialized storage.
Supply Chain Management (SCM):
• It is the process of planning, implementing, and controlling the operations of the supply
chain with the purpose to satisfy customer requirements as efficiently as possible. Supply
chain management spans all movement and storage of raw materials, work-in- process
inventory, and finished goods from point-of-origin to point-of-consumption.
• According to the Council of Supply Chain Management Professionals (CSCMP), a
professional association that developed a definition in 2004, Supply Chain Management"
encompasses the planning and management of all activities involved in sourcing and
procurement, conversion, and all logistics management activities.
• Importantly, it also includes coordination and collaboration with channel partners, which
can be suppliers, intermediaries, third-party service providers, and customers. In essence,
Supply Chain Management integrates supply and demand management within and across
companies.
Opportunities enabled by Supply Chain Management
The following strategic and competitive areas can be used to their full advantage if a supply
chain management system is properly implemented.
• Fulfillment: “Ensuring the right quantity of parts for production or products for sale
arrives at the right time.” This is enabled through efficient communication, ensuring that
orders are placed with the appropriate amount of time available to be filled. The supply

chain management system also allows a company to constantly see what is on stock and
making sure that the right quantities are ordered to replace stock.
• Logistics: “Keeping the cost of transporting materials a slow as possible consistent with
safe and reliable delivery.” Here the supply chain management system enables a
company to have constant contact with its distribution team, which could consist of
trucks, trains, or any other mode of transportation.
• Production: “Ensuring production lines function smoothly because high-quality parts are
available when needed.” Production can run smoothly as a result of fulfillment and
logistics being implemented correctly. If the correct quantity is not ordered and delivered
at the requested time, production will be halted, but having an effective supply chain
management system in place will ensure that production can always run smoothly
without delays due to ordering and transportation.
Customer Relationship Management (CRM)
CRM is an abbreviation for Customer Relationship Management and is a phrase used to
describe all aspects of interaction that a company has with its customer, whether it is sales or
service-related. It's a business strategy that helps you to better understand your customer, retain
customers, provide excellent customer service, win new clients and increase profitably.
Many aspects of CRM rely heavily on technology. CRM software will collect, manage and link
information about the customer. You can use CRM software to create marketing campaigns,
view a customer's entire of history of interactions with your business and use it to streamline
daily business and sales tasks.
CRM systems compile customer data across different channels -- or points of contact between
the customer and the company -- which could include the company's website, telephone, live
chat, direct mail, marketing materials and social media. CRM systems can also give customer-
facing staff detailed information on customers' personal information, purchase history, buying
preferences and concerns.
Components of CRM
At the most basic level, CRM software consolidates customer information and documents into a
single CRM database so business users can more easily access and manage it.
Over time, many additional functions have been added to CRM systems to make them more
useful. Some of these functions include recording various customer interactions over email,
phone, social media or other channels; depending on system capabilities, automating various
workflow automation processes, such as tasks, calendars and alerts; and giving managers the
ability to track performance and productivity based on information logged within the system.
• Marketing automation
• Sales force automation
• Contact center automation
• Geo-location technology or location-based services
• Workflow automation
• Lead management

• Human resource management
• Analytics
• Artificial Intelligence in CRM
Types of CRM technology
The four main vendors of CRM systems are Sales force, Microsoft, SAP and Oracle. Other
providers are popular among small- to midmarket businesses, but these four tend to be the choice
for large corporations. The types of CRM technology offered are as follows:
• On-premises CRM: This system puts the onus of administration, control, security and
maintenance of the database and information on the company using the CRM software.
With this approach, the company purchases licenses upfront instead of buying yearly
subscriptions from a cloud CRM provider. The software resides on the company's own
servers and the user assumes the cost of any upgrades. It also usually requires a
prolonged installation process to fully integrate a company's data. Companies with
complex CRM needs might benefit from an on-premises deployment.
• Cloud-based CRM: With cloud-based CRM -- also known as SaaS (software as a
service) or on-demand CRM -- data is stored on an external, remote network that
employees can access anytime; anywhere there is an internet connection, sometimes with
a third-party service provider overseeing installation and maintenance. The cloud's quick,
relatively easy deployment capabilities appeal to companies with limited technological
expertise or resources.
• Open source CRM: An Open source CRM system make source code available to the
public, enabling companies to make alterations at no cost to the company employing the
system. Open source CRM systems also enable the addition and customization of data
links on social media channels, assisting companies looking to improve social
CRM practices.
The benefits and advantages of CRM include:
1. Enhanced contact management
2. Cross-team collaboration
3. Heightened productivity
4. Empowered sales management
5. Accurate sales forecasting
6. Reliable reporting
7. Improved sales metrics
8. Increased customer satisfaction and retention
9. Boosted marketing ROI
10. Enriched products and services

ELECTRONIC DATA INTERCHANGE (EDI)
Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents
in a standard electronic format between business partners. By moving from a paper-based
exchange of business document to one that is electronic, businesses enjoy major benefits such as
reduced cost, increased processing speed, reduced errors and improved relationships with
business partners.
Each term in the definition is significant:
• Computer-to-computer– EDI replaces postal mail, fax and email. While email is also an
electronic approach, the documents exchanged via email must still be handled by people
rather than computers. Having people involved slows down the processing of the documents
and also introduces errors. Instead, EDI documents can flow straight through to the
appropriate application on the receiver’s computer (e.g., the Order Management System) and
processing can begin immediately. A typical manual process looks like this, with lots of
paper and people involvement:
The EDI process looks like this — no paper, no people involved:
• Business documents – These are any of the documents that are typically exchanged between
businesses. The most common documents exchanged via EDI are purchase orders, invoices
and advance ship notices. But there are many, many others such as bill of lading, customs
documents, inventory documents, shipping status documents and payment documents.

• Standard format– Because EDI documents must be processed by computers rather than
humans, a standard format must be used so that the computer will be able to read and
understand the documents. A standard format describes what each piece of information is
and in what format (e.g., integer, decimal, mmddyy). Without a standard format, each
company would send documents using its company-specific format and, much as an English-
speaking person probably doesn’t understand Japanese, the receiver’s computer system
doesn’t understand the company-specific format of the sender’s format.
o There are several EDI standards in use today, including ANSI, EDIFACT,
TRADACOMS and ebXML. And, for each standard there are many different versions,
e.g., ANSI 5010 or EDIFACT version D12, Release A. When two businesses decide to
exchange EDI documents, they must agree on the specific EDI standard and version.
o Businesses typically use an EDI translator – either as in-house software or via an EDI
service provider – to translate the EDI format so the data can be used by their internal
applications and thus enable straight through processing of documents.
• Business partners – The exchange of EDI documents is typically between two different
companies, referred to as business partners or trading partners. For example, Company A
may buy goods from Company B. Company A sends orders to Company B. Company A and
Company B are business partners.
According to a recent research study from Forrester, EDI continues to prove its worth as an
electronic message data format. This research states that “the annual volume of global EDI
transactions exceeds 20 billion per year and is still growing.” For buyers that handle numerous
transactions, using EDI can result in millions of dollars of annual savings due to early payment
discounts. From a financial perspective alone, there are impressive benefits from implementing
EDI. Exchanging documents electronically improves transaction speed and visibility while
decreasing the amount of money you spend on manual processes. But cost savings is far from the
only benefit of using EDI.
But let’s start with cost savings anyway:
• Expenses associated with paper, printing, reproduction, storage, filing, postage and
document retrieval are all reduced or eliminated when you switch to EDI transactions,
lowering your transaction costs by at least 35%
• A major electronics manufacturer calculates the cost of processing an order manually at $38
compared to just $1.35 for an order processed using EDI
• Errors due to illegible faxes, lost orders or incorrectly taken phone orders are eliminated,
saving your staff valuable time from handling data disputes
The major benefits of EDI are often stated as speed and accuracy:
• EDI can speed up your business cycles by 61%. Exchange transactions in minutes instead of
the days or weeks of wait time from the postal service
• Improves data quality, delivering at least a 30—40% reduction in transactions with errors—
eliminating errors from illegible handwriting, lost faxes/mail and keying and re-keying
errors
• Using EDI can reduce the order-to-cash cycle time by more than 20%, improving business
partner transactions and relationships
However, the increase in business efficiency is also a major factor:
• Automating paper-based tasks allows your staff to concentrate on higher-value tasks and
provides them with the tools to be more productive

• Quick processing of accurate business documents leads to less re-working of orders, fewer
stock outs and fewer cancelled orders
• Automating the exchange of data between applications across a supply chain can ensure that
business-critical data is sent on time and can be tracked in real time. Sellers benefit from
improved cash flow and reduced order-to-cash cycles
• Shortening the order processing and delivery times means that organizations can reduce
their inventory levels
In many cases, the greatest EDI benefits come at the strategic business level:
• Enables real-time visibility into transaction status. This in turn enables faster decision-
making and improved responsiveness to changing customer and market demands, and
allows businesses to adopt a demand-driven business model rather than a supply-driven one
• Shortens the lead times for product enhancements and new product delivery
• Streamlines your ability to enter new territories and markets. EDI provides a common
business language that facilitates business partner on boarding anywhere in the world
• Promotes corporate social responsibility and sustainability by replacing paper-based
processes with electronic alternatives. This will both save you money and reduce your CO2
emissions

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