1.3.

REASONS FOR THE GROWTH OF THE ERP MARKET

There is no doubt that the market for the Enterprise Resource Planning (ERP) systems is in great
demand. Industry analysts are forecasting growth rates of more than 30 % for at least the next 3
years.
Now why are so many companies replacing their key business systems? The answer is:
1. To enable improved business performance
Cycle time reduction: the time required to contact other department is reduced.
Inventory reduction: As the data is integrated there is no need to re enter the data and the
paperless transaction is done using EDI (Electronic Data Interchange).
Order fulfillment improvement: There is no conflict between the departments like sales
and production so order can be made on time.
2. To support business growth requirements
New Products and New Customers: we can grow our organization by implementing new
Products in the market and get the new customers for that product.
Globalize the product: We can globalize the product for International customers
3. To provide flexible, integrated, real-time decision support:
Managers get the integrated data of different departments at any time to analyze and to take
important decisions at the right time.
4. To eliminate limitations in the legacy system:
Integration of the isolated departments
Decision support system
Availability of the right data at right time
Flexibility to change
Supporting latest technologies
5. Take advantage of the untapped mid market:
Increased functionality at reasonable cost
Vertical market solutions
Open system technology

There are some of the reasons for explosive growth rate of the ERP market and the ERP vendors.
As more and more companies are joining the race, the ERP vendors are shifting their focuses
from big fortune 1000 companies to different market segments like medium sized companies and
small companies. The future will see the battle for market share and mergers and acquisitions for
strategic and competitive advantage. The ultimate winner in this race will be the customer, who
will get the better products and better services at affordable prices.


1.4. THE ADVANTAGES OF ERP
Installing the ERP system has many advantages, some of the direct advantages include improved
efficiency, information integration for better decision making, faster response time for customer
queries, etc. And the indirect benefits include better corporate image, improved customer
goodwill, customer satisfaction, and so on. The following are some of the direct benefits of the
ERP systems.
1. Business Integration: The reason why the ERP packages are considered to be integrated is
the automatic data updation (automatic data exchange among departmental applications) that
is possible among the related business components. Since conventional company information
systems was isolated departmental functions, almost all were weak in terms of
communication and integration of information. In the case of ERP packages, the data of
related business functions is also automatically updated at the time of transactions occurs.
For this reason, one is able to grasp business details in real time, carry out the various types
of management decisions in a timely manner, based on that information.
2. Flexibility:
Multilanguage: It supports different languages so that the company can work in the
language they want.
Multi currency: It also support different currencies so that if the company is globalize
(multinational) then it could have branches in many countries and for this it should
support different currencies.
Multiple accounting Standards: Organization can have multiple products and it can have
extremely different way of business and information flow for different products, so there
should be different accounting for calculation of profits, wages, and general ledger and so
on. Here ERP provide Multiple Accounting Standards for this type of company. To cope
with company globalization and system unification, this flexibility is essential.
3. Better Analysis and planning capabilities: With the Integration of Information, one can get
any information from the enterprise system. Because of this it became possible to utilize the
decision support system and analysis of data from a variety of dimensions, one is able to give
the decision maker the information they want thus enabling them to make better decisions.
FOR Example:
Problem:
In 2007, our organization has made 35% more profit then the year 2006, now in 2010 the
company want same 35% increment in the profit margins, this is the important task of the
managers to cope with.
Solution:
Manager will first analyze the data of 2007 from the Archive such that he will get the
information on the tasks to achieve 35% increment, he will analyze all the departmental duties
assigned that time, To analyze all these information the manager can take a help of DSS
(Decision Support System) system to take the departmental decision and EIS (Executive
Information System) to take the decision at the organizational level. So the system will help the
manager to do the Planning and also to take better decision to achieve the companys goal.
4. Use of the latest technology: The ERP vendors are very quick to realize that in order to
grow and sustain that growth; they had to embrace the latest developments in the field of IT.
Therefore, they quickly adapted their systems to take the advantage of the latest technologies
like open systems, client/server technology, Internet/Intranet, e-commerce, etc. It is this
quick adaptation to the latest change in information technology that makes the flexible
adaptation to change in future business environments possible. It is this flexibility that makes
the in-corporation of the latest technology possible during system customization,
maintenance and expansion phases.
However, ERP systems have three significant limitations:
1. Managers cannot generate custom reports or queries without help from a programmer and
this inhibits them from obtaining information quickly, which is essential for maintaining a
competitive advantage.
2. ERP systems provide current status only, such as open orders. Managers often need to look
past the current status to find trends and patterns that aid better decision-making.
3. The data in the ERP application is not integrated with other enterprise or division systems
and does not include external intelligence.
There are many technologies that help to overcome these limitations. These technologies, when
used in conjunction with the ERP package, help in overcoming the limitations of a standalone
ERP system and thus, help the employees to make better decision.

The major differences between a management information system and a Data
Processing system are:
The integrated database of the MIS enables greater flexibility in meeting the information
needs of the management.
The MIS supports many functional areas (accounting, marketing, manufacturing, etc.)
whereas data processing systems tend to support a single functional area.
MIS caters to the information needs of all levels of management whereas data processing
systems focus on departmental-level support.
Management's information needs are supported on a more timely basis with the MIS (with its
on-line query capability) than with a data processing system.

3.3. DECISION SUPPORT SYSTEM (DSS)

Managers spend a lot of time and effort in gathering and analyzing information before making
decisions. Decision support systems were created to assist managers in this task.
Decision support systems are interactive information systems, to produce and present
information targeted to support management in the decision-making process.

However, decision-makers, especially at the top management levels, are often confronted with
complex decisions. The analysis of such complex decisions which involve many factors can be
difficult for a human being. These types of decisions and the need for complex information
analysis required for such decision-making, led to the evolution of decision support systems.

A DSS can help close the information gap and allow managers to improve the quality of their
decisions. To do this, the DSS hardware and software employ the latest technological
innovations, planning and forecasting models, 4th generation languages and even artificial
intelligence. In many cases, DSS facilitates the decision-making process, helping the decision-
makers to choose between alternatives. Some decision support systems can automatically rank
the alternatives, based on the criteria given by the decision-maker. DSS also help in removing
the monotony and tedium of gathering and analyzing data.
DSS are designed to support decision-making processes involving semi-structured and
unstructured problems. Here, the role of the DSS is to help managers in getting the information
they want in the way they want. For example, a manager wants to reduce cycle time. He might
look at various facts like the availability of raw materials, skilled personnel, the average machine
down time, and so on. So there is no way the system can anticipate what the manager wants.
DSSs are capable of helping the managers in making such decisions.

The main characteristics of a DSS are:
A DSS is designed to address semi-structured and unstructured problems.
The DSS mainly supports decision-making at the top management level.
DSS is interactive, user-friendly can be used by the decision-maker with little or no
assistance from a computer professional.
DSS makes general-purpose models, simulation capabilities and other analytical tools
available to the decision-maker.

A DSS does not replace the MIS; instead a DSS supplements the MIS. There are distinct
differences between them. MIS emphasizes on planned reports on a variety of subjects; DSS
focuses on decision-making. MIS is standard, scheduled, structured and routine; DSS is quite
unstructured and is available on request. MIS is constrained by the organizational system; DSS is
immediate and user-friendly.


The following table summarizes the major differences between OLTP and OLAP system design.

Basis OLTP System
Online Transaction Processing
(Operational System)
OLAP System
Online Analytical Processing
(Data Warehouse)
Source of data Operational data; OLTPs are the
original source of the data.
Consolidation data; OLAP data comes
from the various OLTP Databases
Purpose of
data
To control and run fundamental
business tasks
To help with planning, problem solving,
and decision support
What the data Reveals a snapshot of ongoing
business processes
Multi-dimensional views of various
kinds of business activities
Inserts and
Updates
Short and fast inserts and updates
initiated by end users
Periodic long-running batch jobs refresh
the data
Queries Relatively standardized and simple
queries Returning relatively few
records
Often complex queries involving
aggregations
Processing
Speed
Typically very fast Depends on the amount of data
involved; batch data refreshes and
complex queries may take many hours;
query speed can be improved by
creating indexes
Space
Requirements
Can be relatively small if historical
data is archived
Larger due to the existence of
aggregation structures and history data;
requires more indexes than OLTP
Database
Design
Highly normalized with many tables Typically de-normalized with fewer
tables; use of star and/or snowflake
schemas
Backup and
Recovery
Backup religiously; operational data
is critical to run the business, data
loss is likely to entail significant
monetary loss and legal liability
Instead of regular backups, some
environments may consider simply
reloading the OLTP data as a recovery
method