ERP System Analysis: Categories, Benefits, and Real-Life Use

This report provides a comprehensive analysis of Enterprise Resource Planning (ERP) systems and their crucial role within organizations. It begins by defining information systems and categorizing them into Transaction Processing Systems (TPS), Management Information Systems (MIS), Decision Support Systems (DSS), and Online Analytical Processing (OLAP) systems. The report then delves into ERP systems, explaining their function in managing business processes, collecting and interpreting data, and integrating various business functions through a common database. The benefits of ERP systems are discussed, including improved collaboration, better analytics and reporting, increased productivity through automation, enhanced customer relationship management, and improved inventory monitoring and production planning. The report concludes by emphasizing the importance of technological advancements, the benefits of ERP software, and the need for organizations to assess their strengths and requirements before implementing such systems.

ERP System

Table of Contents
INTRODUCTION...........................................................................................................................1
DISCUSSION..................................................................................................................................2
Categories of Information System...............................................................................................2
ERP system..................................................................................................................................3
Benifits of ERP in a real life business.........................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Information system is termed as information and communication technology which is
used by the organization in order to promote the interaction of employees which ultimately
support effective business process. IS are generally considered as a socio-technicle and
organizational system which is designed to process, retrieve and collect the data. IS is a set of
interrelated components which work together in order to provide the meaning information which
is used by the management of the company in decision-making, coordination, analysis and
making strategies. Due to the increased competition within the society, business have adopted
various methods to improve the efficiency and effectiveness within organization. The report will
suggest various ways that help the organization in increasing automated tasks and therefore it
will minimise the human efforts and maximise the overall productivity.
Moreover, the report will provide the different types of information system which are
used to support the operations of the enterprise. It will also make a clear understanding about use
of ERP (Enterprise Resource Planning) system within the firm. However, Information system
consists of various different types of software such as Transaction processing system (TPS),
Management information system (MIS), Decision support system (DSS), Artificial system and
Online Analytical Processing system (OLAP) etc (Tarhini and et.al., 2015). the report will
provide the role of Such systems in controlling and managing the large amount of database
within the firm. It will make clear understanding about enhanced data collection and retrieving
techniques which supports efficient functioning of the company. The essay will provide detailed
study about ERP systems which can be used by any kind of organization and help them in
facilitating error free production and transaction which eventually helps the business to enhance
their efficiency.
Aim
To analyse key role of ERP system within an organization in managing and controlling
all the business functions.
Objectives
 To categorise and gather information about different types of information system.
 To analyse various components and functional areas of ERP systems.
 To analyse benefits of ERP system in real life business.
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DISCUSSION
Categories of Information System
An information system is a integrated and coordinated network of components which
combine together in order to convert the data into information. Information system is mainly
consists of five components such as input, process, output, feedback and control (Arasu and
et.al., 2015). Meanwhile, hardware consists of Input/output devices, processor, OS, media
devices which supports the functioning of various programs. For instance, organizations uses IS
to process Financial accounts, to manage human resource and to reach potential customers with
online promotions. IS can be further categorised into various different systems which are
described below:
Transaction processing system (TPS): These systems are mostly used by an organization at
operational level for recording day to day business transaction records and all the decisions made
at this level are structured. It is mainly used to answer questions like number of units sold,
inventory left, due outstanding etc. All these questions are answered by TPS system by recording
all the daily business transactions of the company. All the information produced at this level
provided to the operational managers in detailed manner. Some of the most common example of
transaction processing systems are stock control system, point of sales system, payroll systems
etc.
Management Information System (MIS): This system is used in organizations at tactical
management level used by tactical managers for monitoring current performance status of the
company. Output generated by transaction processing system is the input of management
information system. This system is used by managers to predict, control and monitor the overall
performance of the company. Decisions made at this level is semi-structured. Some common
examples of MIS systems that are used by the companies are: budgeting system, sales
management system, Human resource management system etc (Costa and et.al., 2016). This also
helps in predicting the inventory that should be ordered for the next quarter based on the sales of
the current quarter.
Decision Support System (DSS): DSS systems are used by at strategic management level of an
organization used by senior managers for making unstructured or non-routine decisions. This
system uses all the input required informations from TPS and MIS systems as well as from all
kinds of external system that are used by organizations. This system is used to measure the
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performance of the employees, employees performance impact on production of the company,
impact of new competition of sales of the company etc. Some of the most common types of DSS
systems used by organizations are: Bank loan management system, financial planning system
etc.
Online Analytical processing (OLAP): This type of system is used to analyse all the
multidimensional information or data which is used and can be viewed at multiple dimensions
(Greenberg, 2017). It can be used by companies to record and analyse sales of each product in
different regions. It can also be used to compare the predicted and actual sales of the product.
One of the main reason due to which this OLAP system is used by the organizations is that it can
be used to answer all kinds of ad hoc queries of the business.
ERP system
Enterprise Resource planning is an integrated business process management software that
is often used by an organization in real-life in order to use system which has integrated
applications which helps the organization to manage back-end office and automate all the back-
end office functions, human resource and services. It is used by many organizations for
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Illustration 1: Types of information System
(Source: Types of Information System, 2019)

managing, collecting, storing and interpreting data related to all the business activities. ERP
helps in providing an integrated view of all the business processes that uses a common database
of the company. ERP system can be used for tracking cash flow, raw materials, production
capacity, not only this it is also used to check the status of business orders, payroll and purchase
orders. ERP systems also helps in maintaining and managing the information flow between all
the business functions which eventually helps in managing and connecting all the internal and
external stakeholders.
ERP systems can be used by any kind of organization and help them in facilitating error
free production and transaction which eventually helps the business to enhance their efficiency
(Laudon and Laudon, 2015). This system can run on variety of systems and can be different
types of databases in managing information flow and databases. ERP systems also helps in
generating reports, generate a business performance matrix and synchronize them, which helps
the employees in automating their financial work more efficiently. This essay will lay emphasis
on different categories of information system, detail analysis of ERP systems and its benefits in
real life business.
In addition to this, ERP implementation involves installing the software, moving the
financial data over new system, configuration of users and processes and training the users about
the software (Peters and Panayi, E., 2016). Also, there is no standard time frame for an ERP
project implementation because it varies according to several circumstances (Benifits of ERP
System, 2017).
Benefits of ERP in a real life business
Enterprise resource planning can be beneficial within the organization as it enhances the
productivity, efficiency which leads to the effective performance of the business. This system
controls the different processes within the company which supports the organization as a group
of departments that are interrelated by the information they share and generate from the
processes. Enterprise Resource planning software is used to manage a number of business
functions that benefits the company in various aspects (Laudon and Laudon, 2016).
Organizations generally seek to employ ERP system within the business due to various benefits
and such advantages are described below:
ERP unifies many of the systems from product development to accounts payable which
supports staff members to access necessary tools. It has improved the feature of Improved
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Collaboration as it ERP provides the centralised database which ensures easy accessibility of
information and hence reduces the cost on trainings and efforts applied on logistic. This
promotes effective collaboration and communication between staff. A central database of
information aids in Better analytics and reporting. Since an ERP records and stores the all the
input data, so it makes this system a excellent business intelligent tool. It ensures efficient and
easier report generation for different teams within organization. Also, most of the ERP softwares
also provides the customizable dashboard which allows the executives in identifying the login
and logout time of the employees. In traditional times when operations and functions of the
business are dependent on the efforts of employees. So ERP has transformed the way of reducing
the human efforts and aiding automated tasks which ultimately Improved productivity. It
lowers the chances of human errors and this have eliminated the redundant tasks such as data
entry and have advanced the quick calculations (Types of Information System, 2019).
However, Customer relationship is one of the important aspect for any business
organization as consumers buys the product and increases the profitability of the firm. So ERP
have increases customer approach and thus it has improved the communication of t he customers
with the company. As most ERP systems are generally equipped with CRM toolwhich enables
business in better understanding the needs and requirements of people. Additionally, ERP often
provides the tool for Compliance and Risk Management. It has improved the reliability and
accuracy which improves overall profitability. ERP system utilize the bar coding, RFID tags and
serial numbers to keep tabs on the inventory of the business so ERP provides the tool for
Improved inventory Monitoring. Additionally, ERP manages the bill of material and fixed
assets which allows the user to easily create and edits the BOMs along with all the track of
previous changes. Along with the inventory, ERP system also manages the manufacturing
operations which helps in Improved production planning and resource Management
(Pearlson, Saunders and Galletta, 2016). This enables the users to optimize the production
schedules, equipment and labour to maximise the capacity .
CONCLUSION
From the above study, it can be concluded that technological advancement is one of the
important aspect which need to be enhanced within the company in order to retain it competitive
market. The report has described the use of different types of information system within
organization. It has also explained the use of Transaction processing system which helps in
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recording all the day to day operations of the business. Also, it has provided the significance of
different functionalities of ERP system which helps the company in increasing the productivity
as well as efficiency of operations. The study has provided the implications of enterprise
resource planning which performs the automated tasks and provides various opportunities for the
growth and sustainable development of the firm. It has also explained various different types of
information system which integrates the input data and process the information and produce it
into a meaningful data. The essay has also explained the importance of processed data in
decision-making and strategic planning by the top management people of the company. Also, it
has explained the benefits of ERP software which helps in performing various different functions
and contribute the firm in effective planning and sustainability.
Furthermore, it has assisted the users in providing various benefits of such system that
ultimately helps in sustainable development of the business. Furthermore, the study has provided
the clear understanding about formulations and functioning of ERP system that will benefit the
company in performing the automatic tasks. The above presented documented has justified the
comments by evaluating a comprehensive knowledge about the technological development
within the firm. Also, it is essential for the organization to analyse the strengths and requirement
of the firm as employing technological development initially requires lot of investment so
company need to financial stable in order to employ such systems.
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REFERENCES
Books and Journals
Arasu, A. and et.al., 2015, April. Transaction processing on confidential data using cipherbase.
In 2015 IEEE 31st International Conference on Data Engineering (pp. 435-446). IEEE.
Costa, C.J.and et.al., 2016. Enterprise resource planning adoption and satisfaction
determinants. Computers in Human Behavior. 63. pp.659-671.
Greenberg, J.S., 2017. Comprehensive stress management. McGraw-Hill Education.
Laudon, K.C. and Laudon, J.P., 2015. Management Information Systems: Managing the Digital
Firm Plus MyMISLab with Pearson eText--Access Card Package. Prentice Hall Press.
Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education
India.
Pearlson, K.E., Saunders, C.S. and Galletta, D.F., 2016. Managing and using information
systems, binder ready version: a strategic approach. John Wiley & Sons.
Peters, G.W. and Panayi, E., 2016. Understanding modern banking ledgers through blockchain
technologies: Future of transaction processing and smart contracts on the internet of
money. In Banking beyond banks and money (pp. 239-278). Springer, Cham.
Tarhini, A. and et.al., 2015. Analysis of the critical success factors for enterprise resource
planning implementation from stakeholders’ perspective: A systematic
review. International Business Research.8(4). pp.25-40.
Online
Types of Information System. 2019. [Online]. Available through:
<https://www.guru99.com/mis-types-information-system.html>
Benifits of ERP System. 2017. [Online]. Available
through:<https://solutiondots.com/blog/advantages-and-disadvantages-of-erp-system/>
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