Exploring the Role of ERP Systems in Business: A Comprehensive Report

Desklib provides past papers and solved assignments for students. This report analyzes ERP systems.

Contents
Introduction......................................................................................................................................2
Aim/ objective.................................................................................................................................2
Information System Categories.......................................................................................................3
Operational Level Management..................................................................................................3
Tactical Level Management........................................................................................................3
Strategic Level Management.......................................................................................................4
TPS..............................................................................................................................................4
MIS..............................................................................................................................................4
DSS..............................................................................................................................................5
ERP System.....................................................................................................................................5
Types of ERP System..................................................................................................................6
Advantages of ERP..........................................................................................................................7
Disadvantage of ERP.......................................................................................................................8
Conclusion.....................................................................................................................................10

Introduction
In this report summarized study is made on ERP System where key roles of ERP system are
mentioned with its type such as cloud ERP system, Hybrid ERP system and On-Premise system.
Diagrams and pictures are used to make the report interactive. Advantages and disadvantages are
mentioned so that reader can decide pros and cons of ERP system. Real life business benefits are
compared and information systems are categorized which include a pyramid diagram that
contains detailed study on sub parts such as TPS, MIS, OLAP and DSS. Different models are
explained to get better understanding of ERP system.
Aim/ objective
The aim is to provide complete details of how ERP System is beneficial for business despite of
its size and nature of its growth. This report will focus on the storage system and need to store
data on cloud services. How ERP System will work and what are the advantages of installing the
software and how ERP System can arrange data more efficiently and elegantly. ERP system’s
importance can be seen through Anthony’s pyramid to make the flow of data in systematics
order. Different models will be described to support the benefits and working of ERP system.

Information System Categories
Industry is divided into upper level, middle level and operational level. Each of the level requires
data from the user which support every level in the industry. These are evaluated in the basis of
day to day transactions for the industry. There are levels of the pyramid: operational
management, tactical management and strategic management. In this sub parts are divided as
unstructured, structured, semi structured, decision support system, management information
system and transaction processing system.
Figure 1: Pyramid
(Source: Information system, 2019)
Operational Level Management
In this every day’s activity is taken in consideration for business transactions. Decisions made at
this level are structured means the decision are made while keeping predefined rules and
regulations. For example if a person is employee of a particular shop and has a credit policy for
letting customer to borrow certain amount, then the employee would decide to which extent the
customer can borrow the amount.

Tactical Level Management
This level consist managers or supervisors which manage the organization. These employees
have an overlook of the organization and can make semi structured decisions. These are based on
rule and guidelines but these level people can go beyond the limits if needed. For example a
manager can overlook payment and credit limit of a particular customer. This shows that
manager has no use of this information but this benefits the industry.
Strategic Level Management
This is the upper most level in the industry in which the decisions are unstructured means no
guidelines or regulation are there. Decision can be made according to the situation. In this level
long term effect of the decision are seen and decisions are made for benefits of organization in
future. The decisions are made with the help of external data and managers which guide in
unstructured decisions.
TPS
TPS stands for Transaction Processing in which transaction are seen for day to day process of the
industry. This level contains the users which are associated with the organization. The main
focus is to answer the question for every day activity such as;
 How much production was more than previous day?
 How much resources are left?
 What amount is left to be paid by customer to organization?
 How many customers joined today?
These are highly structured decisions which are answered by managers and the report contains
detailed information.
MIS
MIS stand for management information system in which managers monitor current process of
the organization and check the output from the transaction processing unit which is used as an
input. These are unstructured decision and managers are responsible for it. These are analyzed by
algorithms which compare, summarize and aggregate the results so that this data can be used to
produce reports. Questions can be;
 Sales at particular point of period

 Budget granted to organization
 Welfare of employee
DSS
DSS stands for decision support system which are senior management team and decision are
non-routine. Decisions are taken into consideration from internal systems and external systems.
Main focus in on the decision that change frequently. Questions are like;
 If production is doubled then what would be the impact on employees?
 If competitor enter the same market what would be the effect on the sales?
ERP System
The full form of ERP is Enterprise Resource Planning in which different ERP application
communicate with each other to share particular database. This concept was introduced in 1990’s
.Each module or application works for specific area of business. Some of the basis modules are
logistic, human resource and finance. ERP system takes all the data as input and then process the
data for filtration and removes the duplicate data to save time, space and cost.
Figure 2: ERP System
(Source: Amazon.com, 2019)

 Business insight: Real time data or information are collected and reports are made
accordingly.
 Increasing Number of users: Number of users are increasing rapidly due to advantages of
ERP systems.
 Lower Risk: Data is duplicated at multiple data-ware houses so that if one data ware
house is damage then data can be retrieved from secondary storage.
 Provide employees the data and platform to work.
 Help to work more efficiently with 3rd party vendors.
Understand the requirement of business and evaluate all areas, tools and process that build your
business. Ensure that ERP systems benefits and discuss with stakeholders, team members and
decision makers. Assign the task to team members for managing the process unit.
Figure 3: ERP System
ERP maintains separate spreadsheets and database which are manually merged for report to be
generated. Entire data or reports can be retrieved from the system.

Types of ERP System
Majorly there are 3 types of ERP system which are Hybrid ERP, Cloud ERP and On-Premise
ERP. These have their individual advantages which make them different from each other.
Figure 4: Types of ERP
(Source: Solutions, 2019)
 Hybrid ERP: This gives the services by combining the other ERP solutions. The cost for
hybrid ERP is much lower than ON-Premise ERP but provides functionality of Cloud
ERP system. Hybrid ERP is flexible and provides content-rich transactions.
Figure 5: Hybrid ERP

 Cloud ERP: In this the ERP system is hosted on cloud platform rather than the data center
provide by user. Cloud ERP is suitable for small scale business or growing business.
There are many vendors which provide high quality cloud services with security of data.
Top level vendors are Microsoft, Oracle, Dynamics, SAP.
Figure 6: Cloud ERP
(Source: I2space.com, 2019)
 On-Premise ERP: In this software is installed on the computer where the data is managed
by IT staff. SaaS known as Software-as-a-Service which a part of On-Premise ERP.
Advantages of ERP
There are many benefits of ERP System which can make day to day work or long term
planning efficient. These help to run business smoothly and make the process much simpler.
Some of the advantages are listed below:

Figure 7: ERP advantage
(Source: FM, 2019)
 Visibility: All the steps in the industry are made clear and visible and access is given
so that the data can be accessed from every field or department. The capital can be
controlled by working on precise level. This allows company to streamline and
collaborate for completing task.
 IT Cost: Investment cost for ERP is large but it improves efficiency and instead of
working on multiple platforms with different teams and staff which in total is
expensive. ERP bring all the resources on a single platform which make if much
simpler and less complex.
 Improved Planning and Reporting: ERP systems organize every process which in turn
generate reports and can be analyze at any point of time. The data can be compared or
shared without any hassle.

 Improved Efficiency: ERP systems reduce the time and effort taken by arranging the
work on daily basis. ERP reduces manual time required to properly write down daily
activities.
 Data Quality and Security: high level of security is provided and backups are made in
order to provide consistency, accuracy and security. Cloud system provides higher
security as it contains sensitive and critical data. Expert team is there which prevents
the hacker to hack the systems.
 Superior Scalability: ERP makes it easy for growth of company by tracing company’s
growth efficiently and elegantly. To ensure the future of the company proper plan and
roadblocks are seen so find a vendor which suits best for your business.
 Complete Customization: There are various designs and templates that suit your
business or software can be purchased so that the entire flow of system can be
managed by ERP provider.
 Business Process: ERP has true and tried processes which bring benefits to all the
type and size of business. These provide real time results which helps in operating
organization. Most of the processes are automated so cost and errors are reduced.
 Supply Management Chain improved: ERP systems provide support when dealing
with production and physical inventory. Supply chain can be more responsive and
enhance overall operation.
Disadvantage of ERP
There are some drawbacks of ERP. On should be familiar with the disadvantages of ERP system
and some are listed below.

 Software Cost: license are needed on beforehand to install the software which could
charge around five digits and monthly payments are to be deposited to continue the
services.
 Maintenance Cost: Implementation cost is high and IT staff would be required to
manage this system or trainings are provided which again increases the cost.
 Complexity: Some times this system can become complex for large scale business as
ERP provides numerous functionalities.
 Customization Cost: Customization takes lot of effort and time which cost more but this
makes it difficult to upgrade the system in future.

Conclusion
This report focuses on ERP system and its benefits. This report will contain advantages and
disadvantages of ERP System. In this the reader will get brief idea of ERP System. Different
business types required different ERP Systems to manage their data. How the data can be stored
on cloud or personal system which are systematically managed. Retrieval and management of
data become easier. Examples of SAP or ERP are mentioned. Anthony’s pyramid are explained
with their types such as MIS, DSS, TPS.