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Management

Information System
ADL – 11

05/13/10
What Makes The Business To Think:

The Challenges Of Globalization

Unprecedented Levels Of Competition.

Shifting Of Mass Production System To Mass Customization


System

Deals With Multiple Countries, Multiple Currencies

Trade Barriers Are Falling

Consumers Are In Demand

Change Becomes Constant

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Attention Goes To:

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What Is Information System:

An Information System Is An Open, Purposive System


That Produces Information By Using “Input-process-
output” Cycle From The Available Data.

Manpower Money Machines Technology Customer

DATA
Processing Output
Input
Inf
orm
Feedback Control ati
o n

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Why Information System:

To Remain Competitive, Desired Information Is Required To


The Right People At The Right Time.

Information Systems Used To Enable Information Flow


Within And Between Processes Efficiently And Effectively.

Through Information System Competitive Advantage Can Be


Gained Via Cost Reduction, Product Enhancement, And
Customer Service Improvements.

Information Systems Are Useful Tools To Enable And Manage


Business Transformation Or Change.

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Management Information System # 1:

According To Schwartz,

MIS Is A System Of People, Equipment,


Procedures, Documents And Communication
That Collects, Validates, And Operates On
Transformers, Stores, Retrieves And
Present Data For Use In Planning, Budgeting,
Accounting, Controlling, And Other Management Process.
The MIS Emphasizes:
Organization-wide Information
Decision Support
Managerial Emphasis
Computer Based Systems

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Management Information System # 2:

Provide A System For Collecting, Processing, Storing,


Retrieving, And Transmitting Information To The Users.

User
Source
Data User
Processing Dissemination
Capturing
Source
User
Source User
Retrieval
Source

Storages

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Management Information System # 3:

 Facilitates The Decision Making Processes By Furnishing Information


 This Helps Decision-maker To Select The Best Course Of Action.

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Characteristics Of MIS:

Management Oriented:
Management Directed:
Integrated:
Common Data Flow:
Heavy Planning Element/ Long Term
Planning:
Sub-system Concept:
Flexibility And Ease Of Use:
Need Based:
Exception Based:
Future Oriented:

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Limitations Of MIS:

MIS Cannot Replace Managerial Judgments In Decision-making.

The Quality Of Output Of An MIS Is Directly Proportional To The


Quality Of Input And Processes.

In A Fast Changing And Complex Environment, MIS May Not


Have Enough Flexibility To Update Itself Quickly.

MIS Takes Only Quantitative Factors Into Account.

MIS Is Less Useful In Making Non-programmed Decisions.

MIS Is Less Effective In Organizations Where Information Is Not


Being Shared With Others.

MIS Is Less Effective Due To Frequent Changes In Top


Management, Organizational Structure And Operational
Management.

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Why Enterprise Resource Planning:

Information Systems Are Becoming More And More Complex

Due To The Stumbling Blocks: Time, Cost, Objective Data,


Unstructured Process

Development Of A Vision Of Integrated Information System

Dissimilar Systems

Business Becomes Global

Incoherent Business Process

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Current Business Scenario:

Customer

Suppliers (Europe)

(China)
Human Resources
/ Payroll at Sales
Finance at (North
Headquarters
Headquarters (Japan) America
Planning Manufacturing (Japan) )
Headquarter Product A
(China)
(Japan) Distribution Customer
(Logistics)
Shipping and (Australia)
Transportation
Foreign Trade
Planning at Manufacturing
Manufacturing Product B Human Resources
(Indonesia) Finance at / Payroll at
Plants (China & Sales
Manufacturing Manufacturing
Indonesia) Plants (China and (China)
Plants
(China and Indonesia)
Indonesia) Customer
Suppliers (Korea)
(India)
What Is ERP:

Serves As A Cross-functional Enterprise Backbone That Integrates & Automates Many Internal
Business Processes And Information Systems Covering All Functional Areas.

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Characteristics Of ERP:

 Many Distinct Business Modules Such As Financial,


Manufacturing, Accounting, Distribution, Etc.
 Use Centralized Common Database Management System
(DBMS)
 The Modules Are Integrated And Provide Seamless Data Flow
Among The Modules
 They Are Flexible And Offer Best Business Practices
 They Require Time-consuming Tailoring And Configuration
Setups For Integrating With The Company’s Business Functions
 The Modules Work In Real Time With Online And Batch
Processing Capabilities
 They Are Internet-enabled

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Evolution Of ERP:

2000s Web Extended ERP

1990s Enhanced ERP

1980s Enterprise Resource Planning

Manufacturing Resources Planning


1970s
( MRP II )
Manufacturing Requirements Planning
1960s
( MRP )

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Shifting Trends Of ERP:

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ERP Modules:

The Number And Features Of The Modules Vary With The Package. Some Of
The Most Common Modules Available In Almost All Packages Are:

Finance/Accounting Shop-floor Management


Mfg. Planning/Scheduling Inventory Management
Plant Maintenance, Procurement Management
Quality Management, Production Control
Material Management Transportation Management
Human Resources Supply Chain Management
Distribution Management Customer Relationship Management
Customer Order Management E-business
Cost Management

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Benefits Of ERP:
 Gives A Company An Integrated Real-time View Of Its Core Business Processes
 Helps Improve The Quality And Efficiency Of Customer Service
 Reductions In Transaction Processing Costs And Hardware, Software, And It Staffs
 Leads To Improved Performance, Better Decision Making, Competitive Advantage

 Replaces A Multiplicity Of Different Systems And Databases

 Allows Replacement Of Disparate Systems


E.G. Exxon Mobile Used ERP To Replace 300 Different Systems

 Increases Organizational Real Time Information Flow

 Process Reengineering -- Update Old Processes

 Foundation For New Processes, Such As E-procurement

 Lays Foundation For Electronic Commerce

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MIS Vs. ERP:

Both MIS And ERP Systems Focus On The Automation Of


Business Processes, Data Transfer, And Information Sharing
Across The Organization.

MIS Is An Information System Designed For Providing


Information To Support Operational Control, Management
Control, And Decision-making Functions In An Organization

ERP Systems Are Some Of The Most Advanced, State-of-the-


art Management Information Systems In Today’s Business
World.

An ERP System Integrates Information Systems And Business


Processes To Enable Information Entered Once To Be Shared
Throughout The Organization.

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MIS Vs. ERP:

MIS’s Role:
1. To Generate Reports-for Example
2. To Answer What-if Questions Asked By Management
3. To Support Decision Making

ERP’s Role:

1. Staff Reduction
2. Better Inventory Management
3. Improve Customer Responsiveness
4. Efficient Procurement
5. Enhanced Financial Management And Corporate
Governance:
6. Software Security: E.G. Seradex ERP
7. Encouraging Uniqueness
8. Changing The Working Pattern
9. Web-enable ERP
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Why ERP Is The Best ? # 1

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In What ? How ?
Reliable information access Common database, consistent and accurate
data, improved reports
Avoid data and operation redundancy Avoids multiple data input to the central
database
Delivery and cycle time reduction Minimizing retrieving and reporting delays

Cost reduction Time saving in decision making


Easy adaptation Changes in business processes easy to adapt
and restructure
Improve scalability Structured and modular design
Improve maintenance Vendor supported long term contracts as a
part of procurement
Global outreach Extended modules like CRM and SCM
E-commerce, e-business Collaborative culture

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Why ERP Is The Best ? # 4

BEFORE ERP WITH ERP


Business Processes Proliferation of fragmented processes Re-engineering around a business
with duplication of effort models that conforms with “ best
practices”
Productivity Lack of openness to customers and Direct interactions with customer and
suppliers suppliers by enhanced ERP
modules like SCM and ERP
Supply chain management Lack of integration Linkages with suppliers and
customers
eBusiness Web based interfaces support isolated Web based interfaces are front end to
systems and their components integrated system
Information Lack of tactical information for effective Allows cross functional access to the
monitoring and control of same data for planning and
organizational resources control.
Communication Lack of effective communications with Facilitate organizational
customers and suppliers communications with customers
and suppliers

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ERP :Integration With E-Procurement and E-Commerce:

 Many companies with ERP use e-commerce


 E-commerce needs to interface with ERP

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ERP : Integration With CRM and SCM:

Supplier
Supplier
Collaboration
Collaboration

SCM
SCM

Key
Key Process
Process
Integration
Integration
via
via ERP
ERP
Product
Product
Lifecycle
Lifecycle
CRM
CRM
Management
Management
Design
Design Consumers
Consumers
Partners
Partners and
and Channels
Channels

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ERP : Integration With SCM:

Inventory
2000 1990 1980 1970 1960

Production Production
+ scheduling
MRP Management
Purchasing
Major
Finance,
MRP + labor
MRP II Manufacturing
Resources
Coordinated
All internal Manufacturing
MRP II + resources
ERP and Service
Transactions
Internal customers Internal Enhanced
ERP + and suppliers SCM ERP/SCM

Internal External suppliers Extended Web Extended


ERP/SCM + and customers SCM ERP

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ERP : Integration With CRM:

Back Office
ERP

Front Office
(CRM)

 Front-end Function Like Managing, Acquiring And Retaining Customers


Are Effectively Managed By CRM. They Effectively Capture The
Customer Requirements At The Front End

 ERP, Integrated With All Functional Areas, Converts This Customer


Requirement Into Feasible Finished Products In Time.
ERP And BPR:

Shift From Efficient To Effective, Passive To Active, Tactical To


Strategic And Automation To Optimization, Is The Motto Of ERP.

Business Process Re-engineering [BPR] Brings Out

The Deficiencies Of The Existing Setup,


Solves Old Problems,
Redesigns Selected Processes, etc

BPR And ERP Will Give Way To Implement New Systems And The
Long Pending Improvements In The Existing Systems

Implementing An ERP System Usually Requires A Company To


Perform Business Process Reengineering (BPR) Or Business Process
Re-design (BPRD).

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Before Conclusion:

 The ERP market is expected to grow 8 percent until 2008

 The leading ERP system providers are SAP and Oracle/PeopleSoft.

 SAP holds 40 percent of the $24 billion ERP market

 Oracle and PeopleSoft systems hold 10 percent and 12 percent respectively

 One Study Indicates that 33 % of companies said their ERP system


significantly reduces personal requirement.

 A study of ERP implementations reports that benefits typically start 8 months


after implementation with median annual savings of $1.6 million
Conclusion:

Management Information System

Resource

Enterprise Resource Planning

…Leads To Focusing On Creating Value And Improving Business


Processes And Better Customer Satisfaction.

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Questions? Discussion?