Benefits and Customization of ERP Systems

This assignment discusses the importance of Enterprise Resource Planning (ERP) systems in managing business functions through a unified system. It highlights various modules such as inventory management, human resources, sales, purchase, customer relationship management, finance and accounting, production/engineering, supply chain management, and more. The benefits of ERP systems are also emphasized, including cost savings, increased visibility, ease of planning and reporting, easy customization, better customer service, increased efficiency, quality data and services, standardized business processes, and improved supply chain management. It is recommended to customize the ERP system according to the organization's business processes for efficient implementation.

MANAGING INFORMATION AND
TECHNOLOGY-2

Table of Contents
INTRODUCTION...........................................................................................................................3
Aim.........................................................................................................................................3
Objective.................................................................................................................................3
SUMMARY.....................................................................................................................................3
Categories of Information Systems........................................................................................3
ERP Systems..........................................................................................................................5
Benefits of ERP System in a real-life business......................................................................6
CONCLUSION AND RECOMMENDATIONS............................................................................7

INTRODUCTION
Information system can simply be defined as a software that are used in an organization
to collect, analyse and organize data. It is mostly used in business for achieving high level of
profitability. It is mostly seen and used as a tool for achieving productivity and efficiency in
mostly all the business operations. Today use of information system in business is not an option
in-fact it has become the most essential part in organizations. It is used to provide various
advantages to business like understanding and making business model, achieve operational
excellency, improvement in decision making, to gain competitive advantage etc. There are
different types of information system that are used business as an organization is divided into
upper, middle and operational level, so information required at each level by different users are
totally different (Cassidy, 2016). These various type of information system are used for specific
purposes at different levels in an organization. All these systems serve differently to the business
according to their users at various levels. Enterprise Resource Planning is a business
management information system that is used by organizations to manage their office as well as
automate their business functions. ERP tool help business in managing their employees, record,
accounts as well as all the internal and external factors that could affect the company. It reduces
both time and efforts of the company. This assignment will lay emphasis on categories of
information system, use and benefits of ERP system in real-life business and some
recommendations and solutions to information system.
Aim
To Study different types of information system and different ways an ERP system can
play a key role in managing and controlling organization-wide information streams.
Objective
To provide an in-depth analysis of how ERP systems can enhance data collection, and the
organizational as well as dissemination capabilities of a business.
SUMMARY
Categories of Information Systems
There are various levels of an organization, so it is important to understand information
required by the users who will use and operate the system at respective levels (Dwivedi and et.al,
2015). There are various types of information system used by different levels of an organization
such as:

Transaction Processing System (TPS): This type of systems are used in recording daily
business transactions of an organization. This system is used by users of operational management
level. The main objective of this system is to answer like number of products sold, inventory left
in hand etc. By recording these transactions TPS system is used by operational managers to take
decisions or to provide complete detailed monthly report of transactions (Kasemsap, 2018).
There are various type of TPS systems used for various purposes such as: Point of sales system
to record daily sales, Payroll system to process employees salaries and loan management, Stock
control system used to keep a track of inventory level, Airline booking system used to manage
flight booking and various other systems.
Management Information System (MIS): it is mostly used by tactical managers to
monitor organization's performance status. Output of TPS system is used as an input to MIS
system. This system analyse input in order to produce report that can be used by tactical
managers to control, monitor and predict future performance. Using this system tactical
managers take semi-structured decisions based on their experience like to predict number of
goods or inventories that are needed to order for next quarter based on previous quarter (Stair
and Reynolds, 2017). There are various types of MIS systems such as: sales management system
used to get input from point of sales system, budgeting system gives a brief idea of amount of
money that is needed to spend within the organization for long and short term, human resource
management system gives an overall details about all the employees, staff turnover etc.
Decision Support System (DSS): DSS systems are mostly used by senior management
persons to make non-routine decisions. This system uses input from internal systems such as
transaction processing system or management information system as well as from external
systems. Main aim of this system is to provide solutions to problems that changes frequently and
are unique such as impact on employees' performance if production in the factory is doubled etc.
Types of DSS systems are: Financial planning system that is used to evaluate alternative ways of
achieving goals, Bank loan management system used to verify credits of loan applicants and
predict likelihood of recovering loan etc.
Executive Information System (EIS): It is a strategic level information system used by
the top level managers like executives etc. This system helps all the senior managers to analyse
environment in which their business operates in order to identify long term trend and action plan.
Information used or stored in this system is often weakly structured and is from both internal and

external sources (Tole and Matei, 2016). This type of systems are often customized according to
the client and their use.
ERP Systems
Enterprise Resource planning or ERP is basically a modular system software that is
simply used to integrate all the main and functional areas of an organization's business processes
into a unified system. In other words it is an integrated system used by organizations to manage
their business functions and centralize as well as integrate their system. It is mostly used by
companies to manage their supply chain so that they can keep a track of all the manufacturing
parts and their distribution. It can be used in sectors like manufacturing, health care, non profit
group organizations, hospitality industry, construction sector etc. this system includes main
modules such as finance, HR, accounting, material management, production, supply chain
management or customer relationship management. Organizations choose their modules based
on importance of their modules in their business. ERP system has become one of the most
essential part of business today as it is used for managing their functions. It also helps
companies to avoid making double entries as information is shared within all the modules which
increases the accuracy of the output data and also increases the collaboration between all the
organizational departments.
According to the organization's need all the required components are customized and
integrated in an ERP system. There are eight basic modules that are mostly found in an ERP
system (Ptak and Schragenheim, 2016). Each module in an ERP system is specialized to handle
an organization's basic processes. There are various components of ERP system out of which few
of them are explained below:
Human Resource module: It helps an organization's HR team in management of human
resources efficiently and effectively. It helps in payroll management, managing employees'
information, tracking employees records, job description etc.
Inventory module: it is used to manage and track inventory items. All the items stored in
an inventory are assigned with a unique serial numbers which are used to track its current
location and for updating inventory.
Sales module: It is used for analysing and handling sales department, managing invoice
for taxation, to track sales orders, shipment of items or materials etc.

Purchase module: It manages all the processes involved in procurement of raw materials
that are required by the organization. It is used for listing vendors or suppliers, recording or
receiving quotation, preparing purchase order etc.
Finance and accounting module: It is used for managing complete inflow and outflow
of an organizationals capital/money (Nwankpa, 2015). This module helps the organization to
keep a track of all the accounts related transactions for example: balance sheet, expenditure,
budgeting, payments etc.
Customer relationship management module: This module helps in boosting sales
performance by providing better, established and healthy customer service and relationship. All
the information and details related to customers is available in this module.
Production/Engineering module: This module consist of functionalities such as raw
material usage, production planning.
Supply chain management: This module helps in management of flow of all the items
from manufacturer to customers and customers to manufacturer. It normally involves roles like:
distributors, manufacturer, retailers etc.
Benefits of ERP System in a real-life business
There are various benefits of ERP System in a real life business, such as:
Cost saving: ERP system can be used to improve efficiency and unify companies IT cost.
Instead of investing and spending in multiple systems which requires additional infrastructure,
staff etc. Company can focus and invest on a single ERP system.
Increased visibility: One of the biggest benefit of this system is that it provides access to
all the important required business processes by making every department information easily
available to the senior management etc.
Easy planning and reporting: As it is implemented across every department in an
organization, which helps in a single unified reporting system for each and every process. With
the help of all the information available at one place, ERP system can generate useful and
important reports at any time.
Easy customization: It consists of many applications that can be implemented together
according to the requirement of the business (Alcivar and Abad, 2016). Organization can freely
choose any module or component according to their business.

Increased efficiency: ERP system also helps in reducing training cost, reduce efforts and
time required by their employees in order to carry out their daily activities. This system can help
the business to reduce manual processes.
Better customer Service: ERP system helps in storing all the clients' information in a
single centralized system, through which company can maintain their relationship with their
customers. With the help of this system an organization can interact with their customers in a
better way as well as can provide them with better and fast service.
Data quality and service: Main concept of an ERP system is its data i.e. sharing and
receiving data at different functions of a business. It has a built in control over its system and
access which increases its data security. Database system on which it runs provides centralized
backup facility for all the important and sensitive data.
Standardized business process: it helps in standardizing organizations business
processes in order to increase efficiency and productivity of their systems or functions. These
automated processes and system helps in reducing errors and cost to a great extent.
Improved supply chain management: This system provides better and improved supply
chain management in a variety of ways which helps in on time delivery, shortened lead times and
many more which helps in improving demand forecasting, inventory management, procurement
etc.
CONCLUSION AND RECOMMENDATIONS
From the above essay it has been summarized that, there are various kinds of information
and ERP system that are used by most of the organization, as they help the organization in
controlling and managing their functions in an easy and efficient manner. These systems help the
organization in many ways such as: Transaction processing system helps the organization in
recording their daily business transactions, management information system helps in producing
reports that can be used in controlling, managing and predicting future performances, Decision
support system can be used to provide solution that changes frequently etc. All these systems are
used at different levels of an organization by different persons. ERP system is a centralized
system used by various organizations in order to manage their business functions through a
unified system. It consists of various modules that helps the organization to automate their
business processes with the help of different modules such as: inventory module, human
resource, sales, purchase, customer relationship management, finance and accounting,

production/ Engineering, supply chain management and many more modules. This ERP system
helps and benefits the organization in many ways, like: it helps in saving cost, increases
visibility, ease planning and reporting, easy customization, better customer service, increases
efficiency, increases quality of data and services, standardized business processes, improves
supply chain management etc.
It is recommended for organizations to customize their own ERP system so that its
implementation cost can be reduced as these systems are way too costly. This system should be
customized according to all the business processes of an organization in order to be used
efficiently. This will help the company to easily automate their business processes in an efficient
manner.

REFERENCES
Books and Journals
Alcivar, I. and Abad, A.G., 2016. Design and evaluation of a gamified system for ERP
training. Computers in Human Behavior. 58. pp.109-118.
Cassidy, A., 2016. A practical guide to information systems strategic planning. Auerbach
Publications.
Dwivedi, Y.K., and et.al., 2015. Research on information systems failures and successes: Status
update and future directions. Information Systems Frontiers. 17(1). pp.143-157.
Kasemsap, K., 2018. The role of information system within enterprise architecture and their
impact on business performance. In Global Business Expansion: Concepts,
Methodologies, Tools, and Applications (pp. 1078-1102). IGI Global.
Nwankpa, J.K., 2015. ERP system usage and benefit: A model of antecedents and
outcomes. Computers in Human Behavior. 45. pp.335-344.
Ptak, C.A. and Schragenheim, E., 2016. ERP: tools, techniques, and applications for integrating
the supply chain. Crc Press.
Stair, R. and Reynolds, G., 2017. Fundamentals of information systems. Cengage Learning.
Tole, A.A. and Matei, N.C., 2016. Executive Information Systems'(EIS) structure and their
importance in decision-making. A comparison between decision support computer
systems. Journal of Information Systems & Operations Management, p.1.