Course: INTRODUCTION TO

MANAGEMENT INFORMATION SYSTEMS

Lecture 8-2: Key System Applications

for Digital Age: ERP & BI
 Learning Objectives

Upon successful completion of this lecture, you will be able to:

• Understand knowledge of an ERP system.
• Understand the Business Value of an ERP system.
• Understand Business Intelligence and applications.
• Understand the Business Value of BI

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 Part 1: Enterprise
Resource Planning (ERP)
 Enterprise resource planning (ERP)
systems
• Suite of integrated software modules and a common central
database
• Collects data from many divisions of firm for use in nearly all of
firm’s internal business activities
• Information entered in one process is immediately available for
other processes

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 Enterprise resource planning (ERP)
systems

ERP systems feature a set of

integrated software modules and a
central database that enables data
to be shared by many different
business processes and functional
areas throughout the enterprise.

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 ERP software

• Built around thousands of predefined business processes that

reflect best practices
• Finance and accounting
• Human resources
• Manufacturing and production
• Sales and marketing
• To implement, firms:
• Select functions of system they wish to use.
• Map business processes to software processes.
• Use software’s configuration tables for customizing.

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 Business value of ERP systems

• Increase operational efficiency

• Provide firm-wide information to support decision making
• Enable rapid responses to customer requests for information
or products
• Include analytical tools to evaluate overall organizational
performance

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 Issues In Implementing ERP -1
• Most companies underestimate the complexity, planning, implementing
and training required to install ERP systems.
• Failure to involve affected employees in planning & implementing will
make ERP difficult to use and may not be effective in enabling the
company to achieve its goals.
• ERP implementation takes time, do NOT act too fast, too soon.
• Insufficient training in ERP operating procedures can create more
problems than anticipated.
• Reliance on software vendor marketing hype can be a fatal error to the
business.

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 Issues In Implementing ERP -2
• ERP implementation requires intimate knowledge of business operation
and technical savvy.
• ERP success depends on staffing the project with the best from the
business and IT organization.
• ERP software is very complex, the business process also changes quickly,
making it difficult for anyone outside the company to implement it
correctly.
• ERP is about efficiency and effectiveness, identifying redundancy as well
as wasteful resources in a company.
• After ERP implementation, it is possible that a company may have to
replace many people.

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 Issues In Implementing ERP -3
• Most ERP is commercial-off-the-shelf (COTS) software or vendor
provided systems.
• When the ERP software can’t handle one of your business processes, DO
NOT allow people to change the software to make it do what they want.
Modifications may interfere with the ERP design, affecting every module
of the ERP system because they are all tightly linked together.
• If you modify the ERP system, it also affects the upgrading process. You’ll
need to do the modification again when the new version of ERP is
released.

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 Solutions
• ERP implementation requires a strong, experienced manager.
• Most IT project managers may not have the business skills to ensure a
successful ERP implementation. An ERP manager must be a person that
has successfully implemented an ERP system or similar system that spans
across multiple organizations.
• The ERP manager will also need the support of team members who have
industry expertise in both business and IT projects.
• ERP managers must ensure that testing covers the spectrum of functional
requirements and infrastructure scenarios to avoid any surprises. ERP
must include end users in designing and executing the tests.

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Part 2: Business Intelligence
 Decisions Based On Information
• Companies need information to support management to make the right business
decisions.
• Before the computer age, most businesses had to collect data from non-
automated sources. Because collection and analysis took a long time, many
managers had to make business decisions primarily on the basis of intuition or
experience.
• As businesses started automating more and more systems, more data became
available. Information technologies has increased the speed of collecting data
from various systems within the company, extracting pertinent information, and
turning that information into knowledge from which decisions can be made.
• The type of information required by decision makers is directly related to the
level of management and the amount of structure in the decision situations.

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 What is Business Intelligence?
• Business intelligence (BI), is a term that refers to a variety of software
applications used to analyze an organization’s data to improve decision
making, cut costs, identify inefficient business processes and new
business opportunities.
• Business intelligence or a decision support system (DSS) is made up of
several related activities, including data mining, online analytical
processing, querying and reporting.
• The purpose of business intelligence is to support better business
decisions based on facts and data rather than on intuition and anecdotes.
• The implementation of business intelligence is challenging because of
technical information flaws and resistance. Management must make sure
that the data collected is accurate and consistent

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 Business Intelligence Tools
• Business intelligence tools are software applications designed to collect, analyze,
report, and present information to decision making managers such as:
1. Business Intelligence Dashboards: Visually-based summaries of business
data that show ‘at-a-glance’ business conditions through metrics and Key
Performance Indicators(KPIs).
2. Online Analytical Processing (OLAP): An information system that supports
interactive examination of large amounts of data from many perspectives.
3. Reporting software generates aggregated views of data to keep the
management informed about the state of their business.
4. Data mining-extraction of information from a database by utilizing software
that can isolate and identify previously unknown patterns or trends in large
banks of data.

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 Business Intelligence Dashboards

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 On-Line Analytical Processing (OLAP)
• Software that allows the managers to quickly examine and analyze large amounts of data
that has been summarized into hierarchies and multidimensional views.
• OLAP tools are useful in analyzing trend analysis on sales and financial information.
They enable managers to consolidate and drill down into many layers of sales statistics
to isolate products that are the most critical.
• OLAP tools can provide:
• Data Consolidation
• Aggregation of data.
• Simple roll-ups to complex groupings of interrelated data.
• Drill-Down
• Display detailed data that comprises consolidated data.
• Slicing and Dicing
• Look at data from different viewpoints.
• Analyze trends and patterns over certain time periods.

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 Starting Business Intelligence
Activities
• Sharing information is critical to the success of business, because
everyone involved in the process must have access to information to be
able to make the right decisions.
• Business Intelligence projects should start with executives to ensure their
needs are addressed.
• Business Intelligence should then focus on sales because it is revenue
generating. With the help of BI systems, sales people can modify their
practices to improve sales performance.
• Once executives and salespeople are on board, IT managers can apply
what they learned to deploy Business Intelligence across the company.

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 Key Factors In Business Intelligence
• Focus on business objectives.
• Ensure data is accurate.
• Deploy system quickly, then adjust as you go. Don't spend a lot of time
developing the "perfect" system because things will change as the business
evolves.
• Take an integrated approach by building the data warehouse first to store all
relevant data.
• Train users effectively.
• Define specific benefits you expect to achieve, then conduct reviews every
month or quarter to ensure the system produces the expected benefits.
• Don't hurry to buy software tools before details are in place and your system
works as expected.
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 Business value of BI

• Business intelligence can be used to identify improvement

opportunities, analyze business data into accessible reports,
react quickly to retail demand and optimize prices.
• Business intelligence can give companies better position and
leverage during negotiations by quantifying the value of
relationships with suppliers and customers.
• Business intelligence can save money by optimizing business
processes and focusing on decisions.

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 Summary

• Demonstrated knowledge of an ERP system.

• Explained issues & solutions in implementing an ERP system in
a company.
• Defined Business value of ERP systems
• Explain the Business Intelligence concept and how IT can
support business to achieve competitive advantage.
• Defined Business value of BI

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 Question – Lecture 8.2
1. Define an ERP system and explain how ERP software works.
2. Describe how ERP systems provide value for a business.
3. Describe issues in implementing ERP.
4. What is Business Intelligence?
5. Describe how BI systems provide value for a business.

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