This document discusses various topics related to enterprise resource planning systems and related technologies. It defines business process reengineering and describes transaction processing systems, management information systems, decision support systems, and executive information systems. It also explains concepts like data warehousing, data mining, and online analytical processing. The document emphasizes that business process reengineering and enterprise resource planning systems can be used together by organizations to improve performance.

1. Enterprise Resource Planning- ERP
Session 2
Chapter 3

2. Chapter 3 : ERP and Related Technrises
Chapter Highlights:
• Business Process reengineering
• Information Systems
• Transaction Processing Systems
• Management Information Systems
• Decision Support Systems
• Executive Information Systems
• Data Warehouse and Data Mining
• Online Analytical Processing
• Lets Sum Up

3. • Define business process re-engineering
• Explain information systems
• Discuss transaction processing system
• Describe management information systems
• State the importance of decision support systems
• List the functions of executive information systems
• Explain data warehousing
• Discuss data mining
• Describe on-line analytical processing

4. What is Reengineering
The fundamental rethinking and radical redesign of
core business processes to achieve dramatic improvements in
critical performance measures such as
• Quality,
• Cost,
• Cycle time.

5. What BPR is Not?
• Automating: Automate poor and inefficient processes.
• Downsizing: Doing less with less. Cut costs or reduce
payrolls.
BPR involves innovation: Creating new products and
services, as well as positive thinking are critical to the
success of BPR.

6. What is Process?
• A process is simply a structured, measured set of activities designed
to produce a specific output for a particular customers or market.
-- Thomas Davenport
• Characteristics:
– A specific sequencing of work activities across time and place
– A beginning and an end
– Clearly defined inputs and outputs
– Customer-focus
– How the work is done
– Process ownership
– Measurable and meaningful performance

7. Process Approach to Management
PROCESS
Output
Scrap
Corrective Action
Machines
Feedback
Methods
Materials
Men
Environment

8. New Life Insurance Policy Application Process at
Mutual Benefits Life Before Reengineering*
• 30 steps, 5 departments, 19 persons
• Issuance application processing cycle time: 24 hours
minimum; average 22 days
• only 17 minutes in actually processing the application
Department A
Step 1
Department A
Step 2
Department E
Step 19
. . . .
Issuance
Application
Issuance
Policy
*Source: Adapted from Rethinking the Corporate Workplace: Case Manager at
Mutual Benefit Life, Harvard Business School case 9-492-015, 1991.
Mutual Benefits Life Before Reengineering*

9. The New Life Insurance Policy Application Process
Handled by Case Managers
• application processing cycle time:
4 hours minimum; 2-5 days average
• Application handling capacity double
• Cut 100 field office positions
Case Manager
Underwriter Physician
Mainframe
LAN
Server
PC
Workstation

10. Reengineering Example
Which line is
shorter and
faster?
Cash Lane
No more than
10 items

11. Reengineered Process
Key Concept:
• One queue for multiple
service points
• Multiple services
workstation

12. A BPR Framework
Organization
– Job skills
– Structures
– Reward
– Values
Technology
– Enabling technologies
– IS architectures
– Methods and tools
Process
– Core business processes
– Value-added
– Customer-focus
– Innovation

13. Business Process Reengineering Cycle
Define corporate
visions and business
goals
Identify business
processes to be
reengineered
Analyze and
measure an
existing process
Identify enabling IT &
generate alternative
process redesigns
Evaluate and
select a process
redesign
Implement the
reengineered
process
Continuous
improvement of
the process
Visioning
Identifying
Analyzing
Redesigning
Evaluating
Implementing
Improving
Manage change and stakeholder interests
Enterprise-wide engineering
Process-specific
engineering

14. BPR Principles
• Organize around outcomes, not tasks.
• Subsume information-processing work into the real work that
produces the information.
• Treat geographically dispersed resources as though they were
centralized.
• Link parallel activities instead of integrating their results.
• Put decision points where the work is performed and build controls
into the process.
• Capture information once and at the source.
Source: Michael Hammer, “Reengineering Work: Don’t Automate, Obliterate,” Harvard Business Review,
July-August, 1990, pp. 104-112.

15. Select The Process & Appoint Process Team
Understand The Current Process
Develop & Communicate Vision Of Improved Process
Identify Action Plan
Execute Plan
Key Steps

16. Ford Vs Mazda Example

17. Business Process Re-engineering
The steps involved in BPR are:
Ascertaining the business process that needs to be
redesigned
Determining the areas of improvement in the process
and the measures to rectify them
Bringing an improved process in practice and
administering changes
Integrating the improved process with other business
processes of the organisation
Taking regular feedback from employees to ensure that
the process is in accordance with the requirements of
the organisation

18. Business Process Re-engineering
Focus of BPR
• Fast speed: BPR compresses time taken to perform strategic business processes.
• Customer focus: BPR focusses on serving customers by designing customer- oriented
processes. This helps an organisation in eliminating customer complaints.
• Flexibility: Through BPR, organisations can transform their traditional processes into highly
adaptive processes to respond quickly to changes taking place in the business environment.
• Adoption of technology: BPR requires an innovative use of technology to achieve the
challenging goals defined by an organisation.

19. ERP System

20. Business Process Re-engineering
ERP and BPR
• Enterprise Resource Planning (ERP) is an application that supports an organisation in
determining the best possible ways to manage its available resources.
• BPR involves analysing the performance of business processes and determining the
possible changes that can help in streamlining operations.
• To improve their overall performance, organisations can deploy both BPR and ERP
together.

21. Types of Data Processing
• collects the transaction data together as a group or batch and
processes it later.
• It has a time delay. Transactions are collected but not processed
until it is suitable or cost-effective to process them.
• Waiting for a large amount of data usually results in lesser
processing costs per transaction.
Batch Transaction Processing
• Real-time transaction processing is the instant processing of data.
• It provides instant confirmation of a transaction but needs access to
an online database.
• Real-time processing includes a terminal or workstation to input
data and show the outcome of the TPS.
Real-time Transaction Processing

22. Examples of Real Time Processing
• Reservation systems- Airline, Train, Cinema
• Point of Sales terminals
• A Library book issue and return system
• Banking Transaction System

23. Control
Input Processing Output
Other systems & Environment
Control & feedback Control & feedback
Basic Architecture of an IS
Storage of data

24. Information Systems Perspectives
DATA WORKERS
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR
MANAGERS
MANAGEMENT LEVEL MIDDLE
MANAGERS
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
KNOWLEDGE LEVEL KNOWLEDGE &
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
RESOURCES
MARKETING

25. Information Systems
• Information can be defined as output retrieved by analysing data collected from
different sources such as employees, customers, suppliers and competitors.
• The following are the key components of an information system:
– Hardware: It includes physical devices for information processing such as
computers, keyboards, mouse, scanners, pen drives, etc.
– Software: It includes a set of instructions to direct the computer’s hardware.
– Data: It includes facts and observations (collected from various sources) used by
programs to produce meaningful information.
– People: They are one of the main components of an information system. People
are responsible for the development and operation of an information system.

26. Role of Information Systems in Business Today

27. Information Systems
Information systems used at various levels in an organisation are:
Transaction Processing System
Management Information System
Decision Support System
Executive Information System

28. Transaction Processing System
• Transaction Processing System (TPS) is a type of information system that is used to gather, record,
manipulate and retrieve data related to day-to-day business transactions of an organisation.
• TPS is used by organisations to record the business transactions that take place with various parties
such as vendors, suppliers and customers.
• In TPS, there are two ways of processing transactions: batch processing and real-time processing.
• In batch processing, data related to transactions is collected over a period of time, say a week or a
month, and processed from time to time. On the other hand, in real-time processing, data is
processed immediately once a transaction takes place.

29. Advantages of Transaction Processing System
•It processes transactions quickly and makes data
available for performing various business processes.
•It integrates both comprehensive safeguards and
disaster recovery systems to reduce the chances of
failure.
•It ensures standardized transaction processing by
obtaining identical data for all types of transactions.

30. Transaction Processing to MIS

31. Management Information System(MIS)
• Management Information System (MIS) collects data from various internal and
external sources, processes it and provides meaningful information.
• MIS can be defined as an information system that:
– comprises various tools for data analysis
– delivers information to support managerial functions, such as planning,
organising, etc.
– gathers information as per the defined rules
• The importance of MIS is explained in the following points:
– It provides access to useful and timely information to managers.
– It lays a basis for logical decision making.
– It distributes integrated information among different departments of an
organisation.

32. Management Information System
The main objective behind using MIS is to help managers in making multifaceted
business decisions with ease. Besides, an organisation implements MIS due to the
following reasons:
To operate in the dynamic business
environment
To survive in competition
To accomplish managerial functions
efficiently and effectively

33. Decision Support Systems
• Decision Support System (DSS) is an interactive information system that is
developed to help managers in making critical business decisions by performing
logical data analysis and testing hypothesis.
• DSS mainly gathers and presents information related to legacy and relational data
sources, relative data figures, estimated figures based on assumptions and data
available and possible outcomes of different decision alternatives.
• The main characteristics of DSS are explained as follows:
– It helps individuals in performing decision-making activities and processes.
– It is an interactive system designed to enable decision-makers or staff users to
understand the procedure of interaction and operations performed.
– It is developed to be used as both routine and ad-hoc decision support task.

34. Comparison of DSS and MIS

35. Executive Information Systems
• Executive Information System (EIS) is a tool that supports decision
making at the top level of an organisation.
• It presents information in the form of customised reports to help
executive levels in making a comparison of trends.
• EIS can help the top executives of the organisation in setting sales
targets for the next three years.
• It presents a report in a graphical format that can be easily analysed
by top-level executives in a short period of time.

36. Advantages and Disadvantages of Executive Information Systems
Some advantages of EIS:
• It enables top management to quickly access both internal and external information.
• It helps executive-level managers in handling strategic issues and making efficient decisions by
providing updated information.
• It displays the relevant information in the form of graphics, tables and equations, which helps top-
level executives in making quick analysis.
• It establishes sync between executives working on different systems within an organisation.
• By providing correct and timely information, it helps executives in identifying critical success
factors.
Some of the important disadvantages of EIS are as follows:
• Its functionality is limited as it is meant only for top-level management.
• Sometimes, the graphical representation may not answer questions in the mind of top-level
managers. This makes it difficult for top managers to perform complete analysis and arrive at a
conclusion.
• In terms of functions, it is difficult to separate EIS from DSS as both offer similar decision-making
tools.

37. Operations Support Systems
Process Control System (PCS)
• A Process Control System (PCS) monitors and controls physical processes in an
organization by providing a completely automated control over a process..
• It manages manufacturing environment and electronically controls the process
based on restrictions defined by the user.
• In a typical PCS, a measuring device is used to detect gas or liquid present in a
manufacturing environment.
• The frequency signature of the specific gas or liquid is sent to the receiver, where
it is converted to a digital signal and then identified by the processor.
• This identification is used for system tasks by the host controller and
automation system. (Electronic sensors in underground mining plants).

38. Customer Support Systems
Online Transaction Processing Systems (OLTP)
Enables Customers to interact with the main
system to
• Exchange information
• Put through a transaction /Query
• Transfer documents

39. Data Warehousing

40. Data Warehousing
• Data warehousing is a process of amalgamating all the data required by an
information system at a centralised location.
• A data warehouse is a database that is designed for the purpose of reporting and
analysis.
• Through data warehousing, an organisation can store data in such a manner that it
can be easily analysed and converted into meaningful information. Moreover, the
data is protected from various risks such as damage, theft and misuse.
• Some important advantages of data warehousing are as follows:
– It enables integrated storage of data for quick access.
– It offers backup for a large amount of data produced in the past.
– It offers a view of cross-functional data that is helpful in decision making.

41. Data Mining
• Data mining is a process of extracting maximum information (as related to the consumer behaviour)
from a data set and converting it into meaningful observation for further application.
• Modern data mining systems are capable of comparing past patterns, formulating inferences and
testing hypothesis to generate operational rules.
• Two commonly used data mining techniques are:
– Transactional log: It is a method of data collection in which Web servers record and store
interactions between users and search engine in a log file.
– Clickstream data: It is the data generated as a result of each user’s session.

43. Online Analytical Processing (OLAP)
• On-Line Analytical Processing (OLAP) is a technology that is used to arrange and analyse data stored
at large databases or data warehouses. It facilitates data analysis at multiple databases simultaneously.
There are mainly three types of OLAP used in organisations, which are:
Relational OLAP
Multidimensional OLAP
Hybrid OLAP

44. Online Analytical Processing

45. Let’s Sum Up
• In the modern scenario, organisations are adopting Business Process Re-engineering
(BPR) to improve and enhance the efficiency of their existing processes.
• BPR involves radical and innovative reorientation of existing business processes to
achieve goals more effectively.
• To improve their overall performance, organisations can deploy both BPR and ERP
together.
• An information system is a set of interrelated components that collects, stores,
analyses and disseminates information for effective business decision making.
• In an organisation, different types of information systems are used at various levels.
Some of these information systems include TPS, MIS, DSS and EIS.