MANAGEMENT

SYSTEM









B heemesh Chowdar y.K achar agadl a
ENTERPRI SE






Copy Ri ght @ 2013
K achar agadla M edi a Cor p









I N DEX





Enterprise Information Management
Business Intelligence
Enterprise Content Management
Business Process Management
Business Performance Management
Executive Information System
Enterprise Resource Planning












ENTERPRISE INFORMATION MANAGEMENT

Ent erprise I nf ormat ion M anagement (EIM ) i s a par t i cul ar f i el d of i nt er est wi t hi n i nf or mat i on
t echnol ogy ar ea. It speci ali zes i n f i ndi ng sol ut i ons f or opt i mal use of i nf or mat i on w i t hi n or gani zat i ons,
f or i nst ance t o suppor t deci si on-maki ng pr ocesses or day-t o-day oper at i ons t hat r equi r e t he avail abil i t y
of know l edge. It t r i es t o over come t r adi t i onal IT-rel at ed bar r ier s

t o managi ng i nf or mat i on on an
ent er pr i se l evel .

Defi ni t i on:

Ent er pr i se i nf or mat i on management combi nes busi ness i nt ell igence (BI) and ent er pr i se cont ent
management (ECM ). Ent er pr i se i nf or mat i on management t akes t hese t w o appr oaches t o managi ng
i nf or mat i on one st ep f ur t her , i n t hat i t appr oaches i nf or mat i on management f r om an ent er pr i se
per spect i ve. Wher e BI and ECM r espect i vely manage st r uct ur ed and unst r uct ur ed i nf or mat i on, EIM does
not make t hi s " t echni cal " di st i nct i on. It appr oaches t he management of i nf or mat i on f r om t he
per spect i ve of ent er pr i se i nf or mat i on st r at egy, based on t he needs of i nf or mat i on w or ker s. ECM and BI
i n a sense choose a denomi nat i onal i sed appr oach, si nce t hey onl y cover par t of t he i nf or mat i on w i t hi n
an or gani zat i on. Thi s resul t s i n a l ack of avai l able i nf ormat i on dur i ng deci si on-maki ng pr ocesses, mar ket
anal ysi s or pr ocedur e def i ni t i on.


BUSINESS INTELLIGENCE

Business int elligence (BI ) i s t he abi li t y of an or ganizat i on t o col l ect , mai nt ai n, and or gani ze dat a. Thi s
pr oduces l ar ge amount s of i nf or mat i on t hat can hel p devel op new oppor t uni t i es. Ident i f yi ng t hese
oppor t uni t i es, and i mpl ement i ng an ef f ect i ve st r at egy, can pr ovi de a compet i t i ve mar ket advant age and
l ong-t er m st abi li t y.
[ 1]

BI t echnol ogi es pr ovi de hi st or i cal , cur r ent and pr edi ct i ve vi ew s of busi ness oper at i ons. Common
f unct i ons of busi ness i nt el l igence t echnol ogi es are r epor t i ng, onl i ne anal yt i cal pr ocessi ng, anal yt i cs, dat a
mi ni ng, pr ocess mi ni ng, compl ex event pr ocessi ng, busi ness per f or mance
management , benchmar ki ng, t ext mi ni ng, pr edi ct i ve anal yt i cs and pr escr i pt i ve anal yt i cs.

The goal of moder n busi ness i nt ell igence deployment s i s t o suppor t bet t er busi ness deci si on-
maki ng. Thus a BI syst em can be cal led a deci si on suppor t syst em (DSS).
[ 2]
Though t he t er m busi ness
i nt el li gence i s somet i mes a synonym f or compet i t i ve i nt el li gence (because t hey bot h suppor t deci si on
maki ng), BI uses t echnol ogies, pr ocesses, and appl i cat i ons t o anal yze most l y i nt er nal , st r uct ur ed dat a
and busi ness pr ocesses w hil e compet i t i ve i nt ell igence gat her s, analyzes and di ssemi nat es i nf or mat i on
w i t h a t opi cal f ocus on company compet i t or s. If under st ood br oadl y, busi ness i nt el li gence can i ncl ude
t he subset of compet i t i ve i nt el l igence.





ENTERPRISE CONTENT MANAGEMENT

Ent erprise cont ent management (ECM ) i s a f or mal i zed means of organi zi ng and st or i ng an
or gani zat i on' s document s, and ot her cont ent , t hat r el at e t o t he or gani zat i on' s pr ocesses. The t er m
encompasses st r at egi es, met hods, and t ool s used t hr oughout t he l i f ecycl e of t he cont ent

Defi ni t i on:
The Associ at i on f or Inf or mat i on and Image M anagement (AIIM ) Int er nat i onal , t he w or l dw i de
associ at i on f or ent er pr i se cont ent management , def ined t he t er m Ent er pr i se Cont ent M anagement i n
2000. AIIM has r ef i ned t he abbr evi at i on ECM sever al t i mes t o r ef l ect t he expandi ng scope and
i mpor t ance of i nf or mat i on management :

La t e 2005
Ent er pr i se cont ent management i s t he t echnol ogi es used t o Capt ur e, M anage, St or e, Pr eser ve, and
Del i ver cont ent and document s r el at ed t o or gani zat i onal pr ocesses.

Ea rly 20 06
Ent er pr i se cont ent management i s t he t echnol ogi es used t o Capt ur e, M anage, St or e, Pr eserve, and
Del i ver cont ent and document s r el at ed t o or gani zat i onal pr ocesses.
ECM t ool s and st r at egi es all ow t he management of an or gani zat i on' s unst r uct ur ed i nf or mat i on,
w her ever t hat i nf or mat i on exi st s.

Ea rly 20 08
Ent er pr i se Cont ent M anagement (ECM ) i s t he st r at egi es, met hods and t ool s used t o capt ur e, manage,
st or e, pr eser ve, and deli ver cont ent and document s r el at ed t o or gani zat i onal pr ocesses. ECM t ool s and
st r at egi es all ow t he management of an or gani zat i on' s unst r uct ur ed i nf or mat i on, w her ever t hat
i nf or mat i on exi st s.
[ 1]


Ea rly 20 10
Ent er pr i se Cont ent M anagement (ECM ) i s t he st r at egi es, met hods and t ool s used t o capt ur e, manage,
st or e, pr eser ve, and del i ver cont ent and document s r el at ed t o or gani zat i onal pr ocesses. ECM cover s t he
management of i nf or mat i on w i t hi n t he ent i r e scope of an ent er pr i se w het her t hat i nf or mat i on i s i n t he
f or m of a paper document , an el ect r oni c f i l e, a dat abase pr i nt st r eam, or even an emai l .

The l at est def i ni t i on encompasses ar eas t hat have t r adi t i onal ly been addr essed by r ecor ds
management and document management syst ems. It al so i ncl udes t he conver si on of dat a bet w een
var i ous di gi t al and t r adi t i onal f or ms, i ncl udi ng paper and mi cr of i l m.

ECM i s an umbr el l a t er m cover i ng document management , w eb cont ent management , sear ch,
col l abor at i on, r ecor ds management , di gi t al asset management (DAM ), w or k-f l ow management , capt ur e
and scanni ng. ECM i s pri mari l y aimed at managi ng t he l i f e-cycl e of i nf or mat i on f r om i ni t i al publi cat i on or
cr eat i on al l t he w ay t hr ough ar chi val and event ual ly di sposal . ECM appli cat i ons ar e del iver ed i n t hr ee
w ays: on-pr emi se sof t w ar e (i nst all ed on t he or gani zat i on s ow n net w or k), sof t w ar e as a ser vi ce (SaaS)
(w eb access t o i nf or mat i on t hat i s st or ed on t he sof t w ar e manuf act ur er s syst em), or a hybr i d sol ut i on
composed of bot h on-pr emi se and SaaS component s.

ECM ai ms t o make t he management of cor por at e i nf or mat i on easi er t hr ough si mpl i f yi ng st or age,
secur i t y, ver si on cont r ol , pr ocess r out i ng, and r et ent i on. The benef i t s t o an or gani zat i on i ncl ude
i mpr oved ef f i ciency, bet t er cont r ol , and r educed cost s. For exampl e, many banks have conver t ed t o
st or i ng copi es of ol d checks w i t hi n ECM syst ems ver sus t he ol der met hod of keepi ng physi cal checks i n
massi ve paper w ar ehouses. Under t he ol d syst em a cust omer r equest f or a copy of a check mi ght t ake
w eeks, as t he bank empl oyees had t o cont act t he w ar ehouse t o have someone l ocat e t he r i ght box, f i l e
and check, pul l t he check, make a copy and t hen mai l i t t o t he bank w ho w oul d event ual l y mai l i t t o t he
cust omer . Wi t h an ECM syst em i n pl ace, t he bank empl oyee si mpl y sear ches t he syst em f or t he
cust omer s account number and t he number of t he r equest ed check. When t he i mage of t he check
appear s on scr een, t hey are abl e t o i mmedi at ely mail i t t o t he cust omer usuall y w hil e t he cust omer i s
st i l l on t he phone.


























BUSINESS PROCESS MANAGEMENT
Business process management (BPM ) has been r ef er r ed t o as a " hol i st i c management "
appr oach
[ 1]
t o al i gni ng an or gani zat i on' s busi ness processes w i t h t he w ant s and needs of cl i ent s. It
pr omot es busi ness ef f ect i veness and ef f i ci ency w hil e st r i vi ng f or i nnovat i on, f l exi bi li t y, and i nt egr at i on
w i t h t echnol ogy. BPM at t empt s t o i mpr ove pr ocesses cont i nuousl y. It can t her ef or e be descr i bed as a
" pr ocess opt i mi zat i on pr ocess." It i s ar gued t hat BPM enabl es or gani zat i ons t o be mor e ef f i ci ent , mor e
ef f ect i ve and mor e capabl e of change t han a f unct i onal l y f ocused, t r adi t i onal hi er ar chi cal management
appr oach.

An empi r i cal st udy by Kohl bacher (2009) i ndi cat es t hat BPM hel ps or gani zat i ons t o gai n
hi gher cust omer sat i sf act i on, pr oduct qual i t y, del i ver y speed and t i me-t o-mar ket speed.
[ 2]
An empi r i cal
st udy by Ver a & Kunt z (2007) conduct ed i n t he Ger man hospi t al sect or i ndi cat es t hat BPM has a posi t i ve
i mpact on or gani zat i onal ef f i ci ency

A busi ness pr ocess compr i ses a " seri es or net w or k of val ue-added act i vi t i es, per f ormed by t hei r
r el evant r ol es or coll abor at or s, t o pur posef ul l y achieve t he common busi ness goal ."
[ 4]
These pr ocesses
ar e cr i t i cal t o any or gani zat i on as t hey can gener at e r evenue and of t en r epr esent a si gni f i cant
pr opor t i on of cost s. As a manageri al appr oach, BPM sees pr ocesses as st r at egi c asset s of an or gani zat i on
t hat must be under st ood, managed, and i mpr oved t o del i ver val ue-added pr oduct s and ser vi ces t o
cl i ent s. Thi s f oundat i on cl osel y r esembles ot her Tot al Qual i t y M anagement or Cont i nuous Impr ovement
Pr ocess met hodol ogi es or appr oaches. BPM goes a st ep f ur t her by st at i ng t hat t hi s appr oach can be
suppor t ed, or enabl ed, t hr ough t echnol ogy t o ensur e t he vi abi li t y of t he manageri al appr oach i n t i mes
of st r ess and change. In f act , BPM of f er s an appr oach t o i nt egr at e an or gani zat i onal " change capabi l i t y"
t hat i s bot h human and t echnol ogi cal . As such, many BPM ar t i cl es and pundi t s of t en di scuss BPM f r om
one of t w o vi ew poi nt s: peopl e and/ or t echnol ogy.

BPM or Busi ness Pr ocess M anagement i s of t en r ef er r ed t o

as ' M anagement by Busi ness Pr ocesses' .
The t er m " busi ness" can be conf usi ng as i t i s of t en li nked wi t h a hi er ar chi cal vi ew (by f unct i on) of a
company. It i s t her ef or e pr ef er abl e t o def i ne BPM as " cor por at e management t hr ough pr ocesses" . By
addi ng BPM t he second meani ng of ' Busi ness Per f or mance M anagement ' used by Pr Scheer i n hi s ar t i cl e
" Advanced BPM Assessment " ,
[ 6]
BPM can t her ef or e be def i ned as " company per f or mance management
t hr ough pr ocesses" . And i t ' s t hi s r esol ut el y per f or mance-or i ent ed def i ni t i on w hi ch i s chosen

her e.
Domi ni que Thi aul t , i n M anaging Per f or mance t hrough Business Pr ocesses def i nes BPM as a
management -t hr ough-pr ocesses met hod w hi ch hel ps t o i mpr ove t he company' s per f or mance i n a mor e
and mor e compl ex and ever -changi ng envi r onment . M anagement t hr ough pr ocesses i s a management
met hod based on t w o l ogi cal l evel s: pr ocess gover nance and pr ocess management :

Pr ocess gover nance i s al l of t he company' s gover nance act i vi t i es w hi ch, by way of al l ocat i ng on
t he pr ocesses, w or k t ow ar ds r eachi ng i t s obj ect i ves, w hi ch ar e bot h oper at i onal and pr ogr ess-
r el at ed.
Pr ocess management i s all t he management act i vi t i es of a gi ven pr ocess w hi ch w or k t ow ar ds
r eachi ng t he obj ect i ves al l ocat ed f or t hi s pr ocess.

Roughl y speaki ng, t he i dea of busi ness pr ocess i s as t r adi t i onal as concept s
of t asks, depar t ment , pr oduct i on, and out put s. The management and i mpr ovement appr oach as of
2010, w i t h f or mal def i ni t i ons and t echni cal model i ng, has been ar ound si nce t he ear l y 1990s
(see busi ness pr ocess model i ng). Not e t hat t he IT com muni t y of t en uses t he t er m " busi ness pr ocess" as
synonymous w i t h t he management of mi ddlew ar e pr ocesses; or as synonymous w i t h
i nt egr at i ng appli cat i on sof t w ar e t asks. Thi s view poi nt may be over ly r est ri ct i ve - a l i mi t at i on t o keep i n
mi nd w hen r eadi ng sof t w ar e engi neer i ng paper s t hat r ef er t o " busi ness pr ocesses" or t o " busi ness
pr ocess model i ng" .
Al t hough BPM i ni t i al l y f ocused on t he aut omat i on of busi ness pr ocesses w i t h t he use of i nf or mat i on
t echnol ogy, i t has si nce been ext ended

t o i nt egr at e human-dr i ven pr ocesses i n w hi ch human i nt er act i on
t akes pl ace i n seri es or par al lel wi t h t he use of t echnol ogy. For example (i n w or kf l ow syst ems), w hen
i ndi vi dual st eps i n t he busi ness pr ocess r equi r e depl oyi ng human i nt ui t i on or j udgment , t hese st eps ar e
assi gned t o appr opr i at e member s w i t hi n t he or gani zat i on.

M or e advanced f or ms such as human i nt er act i on management ar e i n t he complex i nt er act i on bet w een
human w or ker s i n per f or mi ng a w or kgr oup t ask. In t hi s case, many peopl e and syst ems i nt er act i n
st r uct ur ed, ad-hoc, and somet i mes compl et ely dynamic w ays t o compl et e one t o many t r ansact i ons.
BPM can be used t o under st and or gani zat i ons t hr ough expanded vi ew s t hat w oul d not ot her w i se be
avai l abl e t o or gani ze and pr esent , such as r el at i onshi ps bet w een pr ocesses. When i ncl uded i n a pr ocess
model , t hese r el at i onshi ps pr ovi de f or advanced r epor t i ng and anal ysi s. BPM i s r egar ded by some
[ w ho?]
as
t he backbone of ent er pr i se cont ent management .
Because BPM al l ows or gani zat i ons t o abst r act busi ness pr ocess f r om t echnol ogy i nf r ast r uct ur e, i t goes
f ar beyond aut omat i ng busi ness pr ocesses (sof t w ar e) or sol vi ng busi ness pr obl ems (sui t e). BPM enabl es
busi ness t o r espond t o changi ng consumer , mar ket , and r egul at or y demands f ast er t han compet i t or s

cr eat i ng compet i t i ve advant age.

As of 2010 t echnol ogy has al l ow ed t he coupl i ng of BPM t o ot her met hodol ogi es, such as Si x Si gma.
BPM t ool s al l ow user s t o:
vi si on - st r at egi ze f unct i ons and pr ocesses
def i ne - basel i ne t he pr ocess or t he pr ocess i mpr ovement
model - si mul at e t he change t o t he pr ocess
anal yze - compar e t he var i ous si mul at i ons t o det er mi ne an opt i mal i mpr ovement
i mpr ove - sel ect and i mpl ement t he i mpr ovement
cont r ol - depl oy t hi s impl ement at i on and by use of user -def i ned dashboar ds moni t or t he
i mpr ovement i n real t ime and f eed t he per f ormance i nf or mat i on back i nt o t he simul at i on model
i n pr epar at i on f or t he next i mpr ovement i t er at i on
r e-engi neer - r evamp t he pr ocesses f r om scr at ch f or bet t er r esul t s

Thi s br i ngs w i t h i t t he benef i t of bei ng abl e t o simul at e changes t o busi ness pr ocesses based on r eal -
l i f e dat a (not j ust on assumed know ledge). Al so, t he coupl i ng of BPM t o i ndust r y met hodol ogi es al l ow s
user s t o cont i nual l y st r eamli ne and opt i mi ze t he pr ocess t o ensur e t hat i t i s t uned t o i t s mar ket need.
[ 8]

As of 2012 r esear ch on BPM has pai d i ncr easi ng at t ent i on t o t he compl i ance of busi ness pr ocesses.
Al t hough a key aspect of busi ness pr ocesses i s f l exi bi l i t y, as busi ness pr ocesses cont i nuousl y need t o
adapt t o changes i n t he envi r onment , compl i ance w i t h busi ness st r at egy, pol i ci es and gover nment
r egul at i ons shoul d al so be ensur ed.
[ 9]
The compliance aspect i n BPM i s hi ghl y i mpor t ant f or
gover nment al or gani zat i ons. As of 2010 BPM appr oaches i n a gover nment al cont ext l ar gel y f ocus on
oper at i onal pr ocesses and knowl edge r epr esent at i on.
[ 10]
Al t hough t her e have been many t echni cal
st udi es on oper at i onal busi ness pr ocesses bot h i n t he publ i c and i n t he pr i vat e sect or , r esear cher s have
r ar el y t aken l egal compl i ance act i vi t i es i nt o account , f or i nst ance t he l egal i mpl ement at i on pr ocesses i n
publ i c-admi ni st r at i on bodi es.

BPM Li fe Cycl e
Busi ness pr ocess management act i vi t i es can be gr ouped i nt o si x cat egor i es: vi si on, desi gn, model i ng,
execut i on, moni t or i ng, and opt i mi zat i on.

Funct i ons ar e desi gned ar ound t he st r at egi c vi si on and goal s of an or gani zat i on. Each f unct i on i s
at t ached w i t h a l i st of pr ocesses. Each f unct i onal head i n an or gani zat i on i s
r esponsi bl e f or cer t ai n set s of pr ocesses made up of t asks w hi ch ar e t o be
execut ed and r epor t ed as pl anned. M ul t i pl e pr ocesses ar e aggr egat ed t o
f unct i on accompl i shment s and mul t i ple f unct i ons ar e aggr egat ed t o achi eve
or gani zat i onal goal s.

Design
Pr ocess Desi gn encompasses bot h t he i dent i f i cat i on of exi st i ng pr ocesses and
t he desi gn of " t o-be" pr ocesses. Ar eas of f ocus i ncl ude r epr esent at i on of t he
pr ocess f l ow , t he f act or s w i t hi n i t , al er t s & not i f i cat ions, escal at i ons, St andar d
Oper at i ng Pr ocedur es, Ser vi ce Level Agr eement s, and t ask hand-over mechani sms.
Good desi gn r educes t he number of pr obl ems over t he li f et i me of t he pr ocess. Whet her or not exi st i ng
pr ocesses ar e consi der ed, t he aim of t hi s st ep i s t o ensur e t hat a cor r ect and ef f i cient t heor et i cal desi gn
i s pr epar ed.
The pr oposed i mpr ovement coul d be i n human-t o-human, human-t o-syst em, and syst em-t o-syst em
w or kf l ow s, and mi ght t ar get r egul at or y, mar ket , or compet i t i ve chal lenges f aced by t he busi nesses.

M odeling
M odel i ng t akes t he t heor et i cal desi gn and i nt r oduces combi nat i ons of vari ables (e.g., changes i n rent
or mat er i al s cost s, w hi ch det er mi ne how t he pr ocess mi ght oper at e under di f f er ent ci r cumst ances).
It al so i nvol ves r unni ng " w hat -i f analysi s" on t he pr ocesses: " What i f I have 75% of r esour ces t o do t he
same t ask?" " What i f I w ant t o do t he same j ob f or 80% of t he cur r ent cost ?" .

Execut ion
One of t he w ays t o aut omat e pr ocesses i s t o devel op or pur chase an appl i cat i on t hat execut es t he
r equi r ed st eps of t he pr ocess; how ever , i n pr act i ce, t hese appl i cat i ons r ar el y execut e al l t he st eps of t he
pr ocess accur at el y or compl et el y. Anot her appr oach i s t o use a combi nat i on of sof t w ar e and human
i nt er vent i on; how ever t hi s appr oach i s mor e compl ex, maki ng t he document at i on pr ocess di f f i cul t .
As a r esponse t o t hese pr obl ems, sof t w ar e has been devel oped t hat enabl es t he f ul l busi ness pr ocess (as
devel oped i n t he pr ocess desi gn act i vi t y) t o be def i ned i n a comput er l anguage w hi ch can be di r ect l y
execut ed by t he comput er . The syst em w i l l ei t her use ser vi ces i n connect ed appl i cat i ons t o per f or m
busi ness oper at i ons (e.g. cal cul at i ng a r epayment pl an f or a l oan) or , w hen a st ep i s t oo compl ex t o
aut omat e, w i l l ask f or human i nput . Compar ed t o ei t her of t he pr evi ous appr oaches, di r ect l y execut i ng a
pr ocess def i ni t i on can be mor e st r ai ght f or w ar d and t her ef or e easier t o i mpr ove. How ever , aut omat i ng a
pr ocess def i ni t i on r equi r es f l exi bl e and compr ehensi ve i nf r ast r uct ur e, w hi ch t ypi cal l y r ul es out
i mpl ement i ng t hese syst ems i n a l egacy IT envi r onment .

Busi ness r ul es have been used by syst ems t o provi de def i ni t i ons f or gover ni ng behavi or , and a
busi ness r ul e engi ne can be used t o dr i ve pr ocess execut i on and r esol ut i on.

M onit oring
M oni t or i ng encompasses t he t r acki ng of i ndivi dual processes, so t hat i nf or mat i on on t hei r st at e can be
easi ly seen, and st at i st i cs on t he per f or mance of one or mor e pr ocesses can be pr ovi ded. An exampl e of
t he t r acki ng i s bei ng able t o det er mi ne t he st at e of a cust omer or der (e.g. or der ar ri ved, aw ai t i ng
del i ver y, i nvoi ce pai d) so t hat pr obl ems i n i t s oper at i on can be i dent i f i ed and cor r ect ed.
In addi t i on, t hi s i nf or mat i on can be used t o w or k w i t h cust omer s and suppli er s t o impr ove t heir
connect ed pr ocesses. Exampl es of t he st at i st i cs ar e t he gener at i on of measur es on how qui ckly a
cust omer or der i s pr ocessed or how many or der s wer e pr ocessed i n t he l ast mont h. These measur es
t end t o f i t i nt o t hr ee cat egor i es: cycl e t i me, def ect r at e and pr oduct i vi t y.
The degr ee of moni t or i ng depends on w hat i nf or mat i on t he busi ness w ant s t o eval uat e and anal yze
and how busi ness w ant s i t t o be moni t or ed, i n r eal -t i me, near r eal -t ime or ad-hoc. Her e, busi ness
act i vi t y moni t or i ng (BAM ) ext ends and expands t he moni t or i ng t ool s gener all y pr ovi ded by BPM S.
Pr ocess mi ni ng i s a col l ect i on of met hods and t ool s rel at ed t o pr ocess moni t or i ng. The ai m of pr ocess
mi ni ng i s t o anal yze event l ogs ext r act ed t hr ough pr ocess moni t or i ng and t o compar e t hem w i t h an a
pr ior i pr ocess model. Pr ocess mi ni ng al l ow s pr ocess anal yst s t o det ect di scr epanci es bet w een t he act ual
pr ocess execut i on and t he a pr i ori model as w ell as t o anal yze bot t l enecks.

Opt imizat ion
Pr ocess opt i mi zat i on i ncl udes r et r i evi ng pr ocess per f or mance i nf or mat i on f r om model i ng or
moni t or i ng phase; i dent i f yi ng t he pot ent i al or act ual bot t l enecks and t he pot ent i al oppor t uni t i es f or
cost savi ngs or ot her impr ovement s; and t hen, appl yi ng t hose enhancement s i n t he design of t he
pr ocess. Over al l , t hi s cr eat es gr eat er busi ness val ue.
[ 11]


Re-engineering
When t he pr ocess becomes t oo noi sy and opt i mi zat i on i s not f et chi ng t he desi r ed out put , i t i s
r ecommended t o r e-engi neer t he ent i r e pr ocess cycl e. BPR has become an i nt egr al par t of or gani zat i ons
t o achi eve ef f i ci ency and pr oduct i vi t y at w or k.

Pr act i ce:
Whi l e t he st eps can be vi ew ed as a cycl e, economi c or t i me const r ai nt s ar e l i kel y t o l imi t t he pr ocess
t o onl y a f ew i t er at i ons. Thi s i s of t en t he case w hen an or gani zat i on uses t he appr oach f or shor t t o
medi um t er m obj ect i ves r at her t han t r yi ng t o t r ansf or m t he or gani zat i onal cul t ur e. Tr ue i t er at i ons ar e
onl y possi bl e t hr ough t he col l abor at i ve ef f or t s of pr ocess par t i ci pant s. In a maj or i t y of or gani zat i ons,
compl exi t y w il l r equi r e enabli ng t echnol ogy (see below ) t o suppor t t he pr ocess par t i ci pant s i n t hese
dai l y pr ocess management chal l enges.

To dat e, many or gani zat i ons of t en st ar t a BPM pr oject or pr ogr am wi t h t he obj ect i ve t o opt i mi ze an
ar ea t hat has been i dent i f i ed as an ar ea f or i mpr ovement .
In t he f i nanci al sect or , BPM i s cr i t i cal t o make sur e t he syst em del iver s a qual i t y servi ce w hi l e
mai nt ai ni ng r egulat or y compl i ance.


Cur r ent l y, t he i nt er nat i onal st andar ds f or t he t ask have li mi t ed BPM t o t he appl i cat i on i n t he IT sect or ,
and ISO/ IEC 15944 cover s t he oper at i onal aspect s of t he busi ness. How ever , some cor por at i ons w i t h t he
cul t ur e of best pr act i ces do use st andar d oper at i ng pr ocedur es t o r egul at e t hei r oper at i onal
pr ocess.
[ 15]
Ot her st andar ds ar e cur r ent l y bei ng wor ked upon t o assi st i n BPM i mplement at i on
(BPM N, Ent er pr i se Ar chi t ect ur e, and Busi ness M ot i vat i on M odel ).

BPM t echnology
Some def i ne t he BPM Syst em or Sui t e (BPM S) as " t he w hol e of BPM ." Ot her s r el at e t he i mpor t ant
concept of i nf or mat i on movi ng bet w een ent er pr ise sof t w ar e packages and immedi at el y t hi nk of Ser vi ce
Or i ent ed Ar chi t ect ur e (SOA). St i l l ot her s l i mi t t he def i ni t i on t o " model i ng" (see Busi ness modeli ng).
BPM i s now consi der ed a cr i t i cal component of Oper at i onal Int el li gence (OI) sol ut i ons t o deli ver r eal -
t i me, act i onabl e i nf or mat i on. Thi s r eal -t i me i nf or mat ion can be act ed upon i n a var i et y of w ays - al er t s
can be sent or execut i ve deci si ons can be made usi ng r eal -t i me dashboar ds. OI sol ut i ons use real -t ime
i nf or mat i on t o t ake aut omat ed act i on based on pr e-def i ned r ules so t hat secur i t y measures and or
except i on management pr ocesses can be i ni t i at ed.
These ar e par t i al answ er s and t he t echnol ogi cal of f eri ngs cont i nue t o evol ve. The BPM S t er m may not
sur vi ve. Today i t encompasses t he concept of suppor t i ng t he manageri al appr oach t hr ough enabli ng
t echnol ogy. The BPM S shoul d enabl e al l st akehol der s t o have a f i r m under st andi ng of an or gani zat i on
and i t s per f or mance. The BPM S shoul d f aci li t at e busi ness pr ocess change t hr oughout t he l i f e cycl e
st at ed above. Thi s assi st s i n t he aut omat i on of act i vi t i es, col l abor at i on, i nt egr at i on w i t h ot her syst ems,
i nt egr at i ng par t ner s t hr ough t he val ue chai n, et c. For i nst ance, t he si ze and compl exi t y of dai l y t asks
of t en r equi r es t he use of t echnol ogy t o model ef f ici ent l y. These model s f acil i t at e aut omat i on and
sol ut i ons t o busi ness pr obl ems. These model s can al so become execut abl e t o assi st i n moni t or i ng and
cont r ol l i ng busi ness pr ocesses. As such, some peopl e vi ew BPM as " t he br i dge bet w een Inf or mat i on
Technol ogy (IT) and Busi ness." . In f act , an ar gument can be made t hat t hi s " hol i st i c appr oach" br i dges
or gani zat i onal and t echnol ogi cal sil os.
Ther e ar e f our cr i t i cal component s of a BPM Sui t e:
Pr ocess Engi ne a r obust pl at f or m f or model i ng and execut i ng pr ocess-based appl i cat i ons,
i ncl udi ng busi ness r ul es
Busi ness Analyt i cs enable manager s t o i dent i f y busi ness i ssues, t r ends, and oppor t uni t i es
w i t h r epor t s and dashboar ds and r eact accor di ngl y
Cont ent M anagement pr ovi des a syst em f or st or i ng and secur i ng el ect r oni c document s,
i mages, and ot her f i l es
Col l abor at i on Tool s remove i nt r a- and i nt er depar t ment al communi cat i on bar r i er s t hr ough
di scussi on f or ums, dynami c w or kspaces, and message boar ds

BPM al so addr esses many of t he cr i t i cal IT i ssues under pi nni ng t hese busi ness dr i ver s, i ncl udi ng:

M anagi ng end-t o-end, cust omer -f aci ng pr ocesses
Consol i dat i ng dat a and i ncr easi ng vi si bi li t y i nt o and access t o associ at ed dat a and i nf or mat i on
Incr easi ng t he f l exi bi li t y and f unct i onal i t y of cur r ent i nf r ast r uct ur e and dat a
Int egr at i ng wi t h exi st i ng syst ems and l ever agi ng emergi ng servi ce or i ent ed ar chi t ect ur e (SOAs)
Est abl i shi ng a common l anguage f or busi ness-IT al ignment

Val i dat i on of BPM S i s anot her t echni cal i ssue t hat vendor s and user s need t o be aw ar e of , i f r egul at or y
compl i ance i s mandat or y. The val i dat i on t ask coul d be per f or med ei t her by an aut hent i cat ed t hi r d par t y
or by t he user s t hemsel ves. Ei t her w ay, vali dat i on document at i on w i l l need t o be gener at ed. The
val i dat i on document usual l y can ei t her be publ i shed of f i ci all y or r et ai ned by user s.












BUSINESS PERFORMANCE MANAGEMENT

Business perf ormance management i s a set of management and anal yt i c pr ocesses t hat enabl e t he
management of an or gani zat i on' s per f or mance t o achieve one or mor e pr e-sel ect ed goal s. Synonyms f or
" busi ness per f or mance management " i ncl ude "corporat e perf ormance management
(CPM )"
[ 1]
and "ent erprise perf ormance management ".

Busi ness per f or mance management i s cont ained w i t hi n appr oaches t o busi ness pr ocess
management .
[ 4]

Busi ness per f or mance management has t hr ee mai n act i vi t i es:
sel ect i on of goal s,
consol i dat i on of measur ement i nf or mat i on r el evant t o an or gani zat i on s pr ogr ess agai nst t hese
goal s, and
Int er vent i ons made by managers i n li ght of t hi s i nf or mat i on w i t h a vi ew t o i mpr ovi ng f ut ur e
per f or mance agai nst t hese goal s.
Al t hough pr esent ed her e sequent i al l y, t ypi cal l y al l t hr ee act i vi t i es wi ll r un concur r ent l y, w i t h
i nt er vent i ons by manager s af f ect i ng t he choi ce of goal s, t he measur ement i nf or mat i on moni t or ed, and
t he act i vi t i es bei ng under t aken by t he or gani zat i on.

Because busi ness per f or mance management act ivi t i es i n l ar ge or gani zat i ons of t en i nvol ve t he
col l at i on and r epor t i ng of l ar ge vol umes of dat a, many sof t w ar e vendor s, par t i cul arl y t hose
of f er i ng busi ness i nt ell igence t ool s, mar ket pr oduct s int ended t o assi st i n t hi s pr ocess. As a r esul t of t hi s
mar ket i ng ef f or t , busi ness per f ormance management i s of t en i ncor r ect l y under st ood as an act i vi t y t hat
necessar i l y r el ies on sof t w ar e syst ems t o w or k, and many def i ni t i ons of busi ness per f or mance
management expl i ci t ly suggest sof t w ar e as bei ng a def i ni t i ve component of t he appr oach.

Thi s i nt er est i n busi ness per f or mance management f r om t he sof t w ar e communi t y i s sal es-dri ven
.
" The
bi ggest gr ow t h ar ea i n oper at i onal BI anal ysi s i s i n t he ar ea of busi ness per f or mance management ."
Si nce 1992, busi ness per f or mance management has been st r ongl y i nf l uenced by t he r i se of t he bal anced
scor ecar d f r amew or k. It i s common f or manager s t o use t he bal anced scor ecar d f r amew or k t o cl ar i f y t he
goal s of an or gani zat i on, t o i dent i f y how t o t r ack t hem, and t o st r uct ur e t he mechani sms by w hi ch
i nt er vent i ons w il l be t r i gger ed. These st eps ar e t he same as t hose t hat ar e f ound i n BPM , and as a r esul t
bal anced scor ecar d i s of t en used as t he basi s f or busi ness per f ormance management act i vi t y w i t h
or gani zat i ons.

In t he past , ow ner s have sought t o dr i ve st r at egy dow n and acr oss t hei r or gani zat i ons, t r ansf or m t hese
st r at egi es i nt o act i onabl e met r i cs and use anal yt i cs t o expose t he cause-and-ef f ect r el at i onshi ps t hat , i f
under st ood, coul d gi ve i nsi ght i nt o deci si on-maki ng.

Defi ni t i on
Busi ness per f or mance management consi st s of a set of management and anal yt i c pr ocesses,
suppor t ed by t echnol ogy, t hat enabl e busi nesses t o def i ne st r at egi c goal s and t hen measur e and
manage per f ormance agai nst t hose goal s. Cor e busi ness per f or mance management pr ocesses
i ncl ude f i nanci al pl anni ng, oper at i onal pl anni ng, busi ness modeli ng, consol i dat i on and r epor t i ng,
anal ysi s, and moni t or i ng of key per f or mance i ndi cat or s l i nked t o st r at egy.

Busi ness per f or mance management i nvol ves consol idat i on of dat a f r om var i ous sour ces, quer yi ng, and
anal ysi s of t he dat a, and put t i ng t he r esul t s i nt o pr act i ce.

M et hodol ogi es
Var i ous met hodol ogi es f or i mpl ement i ng busi ness per f or mance management exi st . The di sci pli ne
gi ves compani es a t op-dow n f r amew or k by w hi ch t o al i gn pl anni ng and execut i on, st r at egy and t act i cs,
and busi ness-uni t and ent er pr i se obj ect i ves. React i ons may i ncl ude t he Si x Si gma st r at egy, bal anced
scor ecar d, act i vi t y-based cost i ng (ABC), Tot al Qual i t y M anagement , add, i nt egr at ed and Theor y of
Const r ai nt s.

The bal anced scor ecar d i s t he most w i del y adopt ed

per f or mance management met hodol ogy.
M et hodol ogi es on t hei r ow n cannot del i ver a f ull solut i on t o an ent er pr i se' s CPM needs. M any pur e-
met hodol ogy i mpl ement at i ons f ail t o del i ver t he ant i ci pat ed benef i t s due t o l ack of i nt egr at i on w i t h
f undament al CPM pr ocesses

M et r i cs & Key Per for mance I ndi cat or s

Some of t he ar eas f r om w hi ch bank management may gai n know l edge by usi ng busi ness per f or mance
management i ncl ude:
cust omer -r el at ed number s:
new cust omer s acqui r ed
st at us of exi st i ng cust omer s
at t r i t i on of cust omer s (i ncl udi ng br eakup by r eason f or at t r i t i on)
t ur nover gener at ed by segment s of t he cust omer s - possi bl y usi ng demogr aphi c f i l t er s
out st andi ng bal ances hel d by segment s of cust omers and t er ms of payment - possi bly usi ng
demogr aphi c f i l t er s
col l ect i on of bad debt s w i t hi n cust omer r el at i onshi ps
demogr aphi c anal ysi s of i ndi vi dual s (pot ent i al cust omer s) appl yi ng t o become cust omer s, and
t he l evel s of appr oval , r ej ect i ons and pendi ng number s
del i nquency anal ysi s of cust omer s behi nd on payment s
pr of i t abi l i t y of cust omer s by demogr aphi c segment s and segment at i on of cust omer s by
pr of i t abi l i t y
campai gn management
r eal -t i me dashboar d on key oper at i onal met r i cs
over al l equi pment ef f ect i veness
cl i ck st r eam anal ysi s on a w ebsi t e
key pr oduct por t f ol i o t r acker s
mar ket i ng-channel anal ysi s
sal es-dat a anal ysis by pr oduct segment s
cal l cent er met r i cs
Though t he above l i st descr i bes w hat a bank might moni t or , i t coul d r ef er t o a t el ephone company or
t o a si mi l ar ser vi ce-sect or company.

It ems of gener i c i mpor t ance i ncl ude:
consi st ent and cor r ect KPI-r el at ed dat a pr ovi di ng i nsi ght s i nt o oper at i onal aspect s of a company
t i mel y avai labi li t y of KPI-r el at ed dat a
KPIs designed t o di r ect l y r ef l ect t he ef f i ci ency and ef f ect i veness of a busi ness
i nf or mat i on pr esent ed i n a f or mat w hi ch ai ds deci si on-maki ng f or management and deci si on-
maker s
abi l i t y t o di scer n pat t er ns or t r ends f r om or gani zed i nf or mat i on
Busi ness per f or mance management i nt egr at es t he company' s pr ocesses w i t h CRM or
[
ERP. Compani es
shoul d become bet t er abl e t o gauge cust omer sat i sf act i on, cont r ol cust omer t r ends and i nf l uence
shar ehol der val ue

Appl i cat i on Soft w ar e T ypes
Peopl e w or ki ng i n busi ness i nt el li gence have devel oped t ool s t hat ease t he w ork of busi ness
per f or mance management , especi all y w hen t he busi ness-i nt ell igence t ask i nvol ves gat her i ng and
anal yzi ng l ar ge amount s of unst r uct ur ed dat a.
Tool cat egor i es commonl y used f or busi ness per f or mance management i ncl ude:
OLAP onl i ne anal yt i cal pr ocessi ng, somet imes si mply cal l ed " anal yt i cs" (based on di mensi onal
anal ysi s and t he so-cal l ed " hyper cube" or " cube" )
scor e car di ng, dash boar di ng and dat a vi sual i zat i on
dat a w ar ehouses
document w ar ehouses
t ext mi ni ng
DM dat a mi ni ng
BPO busi ness per f or mance opt i mi zat i on
EPM ent er pr i se per f or mance management
EIS execut i ve i nf or mat i on syst ems
DSS deci si on suppor t syst ems
M IS management i nf or mat i on syst ems
SEM S st r at egi c ent er pr i se management sof t w ar e

Desi gn & I mpl ement at i on

Quest i ons asked w hen i mpl ement i ng a busi ness per f ormance management pr ogr am i ncl ude:
Goal-alignment queries
Det er mi ne t he shor t - and medi um-t er m pur pose of t he pr ogr am. What st r at egi c goal (s) of
t he or gani zat i on w i ll t he pr ogr am addr ess? What or gani zat i onal mi ssi on/ vi si on does i t r el at e t o?
A hypot hesi s needs t o be cr af t ed t hat det ai l s how t hi s i ni t i at i ve w il l event uall y i mpr ove r esul t s /
per f or mance (i .e. a st r at egy map).

Baseline queries
Assess cur r ent i nf or mat i on-gat her i ng compet ency. Does t he or gani zat i on have t he capabi li t y
t o moni t or i mpor t ant sour ces of i nf or mat i on? What dat a i s bei ng coll ect ed and how i s i t bei ng
st or ed? What ar e t he st at i st i cal par amet er s of t hi s dat a, e.g., how much r andom vari at i on does
i t cont ai n? Is t hi s bei ng measur ed?

Cost and risk queries
Est i mat e t he f i nanci al consequences of a new BI i ni t i at ive. Assess t he cost of t he pr esent
oper at i ons and t he i ncr ease i n cost s associ at ed w i t h t he BPM i ni t i at i ve. What i s t he r i sk t hat t he
i ni t i at ive wi ll f ai l ? Thi s ri sk assessment shoul d be conver t ed i nt o a f i nanci al met ri c and i ncl uded
i n t he pl anni ng.

Cust omer and st akeholder queries
Det er mi ne w ho w i l l benef i t f r om t he i ni t i at i ve and w ho w i l l pay. Who has a st ake i n t he
cur r ent pr ocedur e? What ki nds of cust omer s / st akehol der s wi ll benef i t di rect l y f r om t hi s
i ni t i at ive? Who w i l l benef i t i ndi r ect l y? What quant i t at i ve / qual i t at i ve benef i t s f ol l ow ? Is t he
speci f i ed i ni t i at ive t he best or only w ay t o i ncr ease sat i sf act i on f or al l ki nds of cust omer s? How
w i ll cust omer benef i t s be moni t or ed? What about empl oyees, sharehol der s, and di st r i but i on
channel member s?

M et rics-re lat ed queries
Inf or mat i on r equi r ement s need oper at i onal i zat i on i nt o cl ear l y def i ned met r i cs. Deci de w hi ch
met r i cs t o use f or each pi ece of i nf or mat i on bei ng gat her ed. Ar e t hese t he best met r i cs and
w hy? How many met ri cs need t o be t r acked? If t hi s i s a l ar ge number (i t usual l y i s), w hat ki nd of
syst em can t r ack t hem? Ar e t he met r i cs st andar di zed, so t hey can be benchmar ked agai nst
per f or mance i n ot her or gani zat i ons? What ar e t he i ndust r y st andar d met r i cs avai l abl e?

M easurement met hodology-relat ed queries
Est abl i sh a met hodol ogy or a pr ocedur e t o det er mi ne t he best (or accept abl e) w ay of
measur i ng t he r equi r ed met r i cs. How f r equent l y w il l dat a be col l ect ed? Ar e t her e any i ndust r y
st andar ds f or t hi s? Is t hi s t he best w ay t o do t he measur ement s? How do w e know t hat ?

Result s-relat ed queries
M oni t or t he BPM pr ogr am t o ensur e t hat i t meet s obj ect i ves. The pr ogr am i t sel f may r equi re
adj ust i ng. The pr ogr am shoul d be t est ed f or accur acy, r el i abi li t y, and val i di t y. How can i t be
demonst r at ed t hat t he BI i ni t i at i ve, and not somet hi ng el se, cont r i but ed t o a change i n r esul t s?
How much of t he change w as pr obabl y r andom?



















EXECUTIVE INFORMATION SYSTEM

An execut ive inf ormat ion syst em (EIS) i s a t ype of management i nf or mat i on syst em t hat f aci l i t at es
and suppor t s seni or execut i ve i nf or mat i on and deci si on-maki ng needs. It pr ovi des easy access t o
i nt er nal and ext er nal i nf or mat i on r elevant t o or gani zat i onal goal s. It i s commonl y consi der ed a
speci al i zed f or m of deci si on suppor t syst em (DSS).

EIS emphasi zes gr aphi cal di spl ays and easy-t o-use user i nt er f aces. They of f er st r ong r epor t i ng
and dr i l l -dow n capabi l i t i es. In gener al , EIS ar e ent er pr i se-w i de DSS t hat hel p t op-l evel execut i ves
anal yze, compar e, and hi ghl ight t r ends i n i mpor t ant var i abl es so t hat t hey can moni t or per f or mance and
i dent i f y oppor t uni t i es and pr obl ems. EIS and dat a w ar ehousi ng t echnol ogi es ar e conver gi ng i n t he
mar ket pl ace.
In r ecent year s, t he t er m EIS has l ost popul ar i t y i n f avor of busi ness i nt el li gence (w i t h t he sub ar eas of
r epor t i ng, anal yt i cs, and di gi t al dashboar ds).

Tr adi t i onal l y, execut i ve i nf or mat i on syst ems wer e mai nf r ame comput er -based pr ogr ams. The
pur pose w as t o package a company s dat a and t o pr ovi de sales per f or mance or mar ket r esear ch
st at i st i cs f or deci si on maker s, such as f i nanci al of f i cer s, mar ket i ng di r ect or s, andchi ef execut i ve of f i cer s,
w ho w er e not necessari l y w el l acquai nt ed w i t h comput er s. The obj ect i ve w as t o devel op comput er
appl i cat i ons t hat hi ghl ight ed i nf or mat i on t o sat i sf y seni or execut i ves needs. Typi cal ly, an EIS pr ovi des
onl y dat a t hat suppor t ed execut i ve l evel deci si ons, not al l company dat a.

Today, t he appl i cat i on of EIS i s not onl y i n t ypical cor por at e hi er ar chi es, but al so at per sonal
comput er s on a l ocal ar ea net w or k. EIS now cr oss comput er har dw ar e pl at f or ms and i nt egr at e
i nf or mat i on st or ed on mai nf r ames, per sonal comput er syst ems, and mi ni comput er s. As some cl i ent
ser vi ce compani es adopt t he l at est ent er pr i se i nf or mat i on syst ems, empl oyees can use t hei r per sonal
comput er s t o get access t o t he company s dat a and i dent i f y i nf or mat i on rel evant t o t hei r deci si on
maki ng. Thi s ar r angement l et s al l user s cust omi ze t hei r access t o company dat a, and pr ovi des r elevant
i nf or mat i on t o upper and l ow er cor por at e l evel s.

Component s
EIS component s can t ypi cal l y be cl assi f i ed as:
Har dw ar e
Sof t w ar e
User i nt er f ace
Tel ecommuni cat i ons

Har dw ar e
When t al ki ng about comput er har dw ar e f or an EI S envi r onment , w e shoul d f ocus on t he har dw ar e
t hat meet t he execut i ve s needs. The execut i ve must be put f i r st and t he execut i ve s needs must be
def i ned bef or e t he har dw ar e can be sel ect ed. The basi c har dw ar e needed f or a t ypi cal EIS i ncl udes f our
component s:
Input dat a-ent r y devi ces. These devi ces al l ow t he execut i ve t o ent er , ver i f y, and updat e dat a
i mmedi at ely
The cent r al pr ocessi ng uni t (CPU), w hi ch i s t he ker nel because i t cont r ol s t he ot her
comput er syst em component s
Dat a st or age f i l es. The execut i ve can use t hi s par t t o save usef ul busi ness i nf or mat i on, and t hi s
par t al so hel p t he execut i ve t o sear ch hi st or i cal busi ness i nf or mat i on easi ly
Out put devi ces, w hi ch pr ovi de a vi sual or per manent r ecor d f or t he execut i ve t o save or r ead.
Thi s devi ce r ef er s t o t he vi sual out put devi ce such as moni t or or pr i nt er
In addi t i on, w i t h t he advent of l ocal ar ea net w or ks (LAN), sever al EIS pr oduct s f or net w or ked
w or kst at i ons became avai l abl e. These syst ems r equi r e l ess suppor t and l ess expensi ve comput er
har dw ar e. They al so i ncr ease EIS i nf or mat i on access t o mor e company user s.
Soft war e
Choosi ng t he appr opr i at e sof t w ar e i s vi t al t o an ef f ect i ve EIS. Ther ef or e, t he sof t w ar e component s
and how t hey i nt egr at e t he dat a i nt o one syst em ar e i mpor t ant . A t ypi cal EIS i ncl udes f our sof t w ar e
component s:
Text -handl i ng sof t w ar edocument s ar e t ypi cal l y t ext -based
Dat abasehet er ogeneous dat abases on a r ange of vendor -speci f i c and open comput er
pl at f or ms hel p execut i ves access bot h i nt er nal and ext er nal dat a
Gr aphi c basegr aphi cs can t ur n vol umes of t ext and st at i st i cs i nt o vi sual i nf or mat i on f or
execut i ves. Typi cal gr aphi c t ypes ar e: t i me seri es char t s, scat t er di agr ams, maps, mot i on
gr aphi cs, sequence char t s, and compar i son-or i ent ed gr aphs (i .e., bar char t s)
M odel baseEIS model s cont ai n r out i ne and speci al st at i st i cal , f i nanci al , and ot her quant i t at i ve
anal ysi s

User i nt er face
An EIS must be ef f i ci ent t o r et r i eve r el evant dat a f or deci si on maker s, so t he user i nt er f ace i s ver y
i mpor t ant . Sever al t ypes of i nt er f aces can be avai l able t o t he EIS st r uct ur e, such as schedul ed r epor t s,
quest i ons/ answ er s, menu dr i ven, command l anguage, nat ur al l anguage, and i nput / out put .

T el ecommuni cat i on
As decent r al i zi ng i s becomi ng t he cur r ent t r end i n compani es, t el ecommuni cat i ons w i ll pl ay a pi vot al
r ol e i n net w or ked i nf or mat i on syst ems. Tr ansmi t t i ng dat a f r om one pl ace t o anot her has become cr uci al
f or est abl i shi ng a r eli able net w or k. In addi t i on, t el ecommuni cat i ons w i t hi n an EIS can accel er at e t he
need f or access t o di st r i but ed dat a.

APPLI CAT I ON:
EIS hel ps execut i ves f i nd t hose dat a accor di ng t o user -def i ned cr i t er i a and pr omot e i nf or mat i on-
based i nsi ght and under st andi ng. Unl i ke a t r adi t i onal management i nf or mat i on syst em pr esent at i on, EIS
can di st i ngui sh bet w een vi t al and sel dom-used dat a, and t r ack di f f er ent key cr i t i cal act i vi t i es f or
execut i ves, bot h w hi ch ar e hel pf ul i n eval uat i ng i f t he company i s meet i ng i t s cor por at e obj ect i ves. Af t er
r eal i zi ng i t s advant ages, peopl e have appli ed EIS i n many ar eas, especi al ly, i n manuf act ur i ng, mar ket i ng,
and f i nance ar eas.

M anufact ur i ng
Basi cal l y, manuf act ur i ng i s t he t r ansf or mat i on of r aw mat er i al s i nt o f i ni shed goods f or sal e, or
i nt er medi at e pr ocesses i nvolvi ng t he pr oduct i on or f ini shi ng of semi -manuf act ur es. It i s a l ar ge br anch
of i ndust r y and of secondar y pr oduct i on. M anuf act ur i ng oper at i onal cont r ol f ocuses on day-t o-day
oper at i ons, and t he cent r al i dea of t hi s pr ocess i s ef f ect i veness and ef f i ci ency.

M ar k et i ng
In an or gani zat i on, mar ket i ng execut i ves r ol e i s t o cr eat e t he f ut ur e. Thei r mai n dut y i s managi ng
avai l abl e mar ket i ng r esour ces t o cr eat e a mor e ef f ect i ve f ut ur e. For t hi s, t hey need make j udgment s
about r i sk and uncer t ai nt y of a pr oj ect and i t s i mpact on t he company i n shor t t er m and l ong t er m. To
assi st mar ket i ng execut i ves i n maki ng ef f ect i ve mar ket i ng deci si ons, an EIS can be appl ied. EIS pr ovi des
an appr oach t o sal es f or ecast i ng, w hi ch can al l ow t he mar ket execut i ve t o compar e sal es f or ecast w i t h
past sal es. EIS al so of f er s an appr oach t o pr oduct pr i ce, w hi ch i s f ound i n vent ur e anal ysi s. The mar ket
execut i ve can eval uat e pr i ci ng as r el at ed t o compet i t i on al ong w i t h t he r el at i onshi p of pr oduct qual i t y
w i t h pr i ce char ged. In summary, EIS sof t w ar e package enabl es market i ng execut i ves t o mani pul at e t he
dat a by l ooki ng f or t r ends, per f or mi ng audi t s of t he sales dat a, and cal cul at i ng t ot al s, aver ages, changes,
var i ances, or r at i os.

Fi nanci al
A f i nanci al anal ysi s i s one of t he most i mpor t ant st eps t o compani es t oday. The execut i ve needs t o
use f i nanci al r at i os and cash f l ow anal ysi s t o est i mat e t he t r ends and make capi t al i nvest ment deci si ons.
An EIS i s a r esponsi bi li t y-or i ent ed appr oach t hat i nt egr at es pl anni ng or budget i ng wi t h cont r ol of
per f or mance r epor t i ng, and i t can be ext r emel y hel pf ul t o f i nance execut i ves. EIS f ocuses on f i nanci al
per f or mance account abi l i t y, and r ecogni zes t he impor t ance of cost st andar ds and f l exi bl e budget i ng i n
devel opi ng t he qual i t y of i nf or mat i on pr ovi ded f or al l execut i ve l evel s.

Advant ages of EI S

Easy f or upper -l evel execut i ves t o use, ext ensi ve comput er exper i ence i s not r equi red i n
oper at i ons
Pr ovi des t i mel y del i ver y of company summar y i nf or mat i on
Inf or mat i on t hat i s pr ovi ded i s bet t er under st ood
EIS pr ovi des t i mely del iver y of i nf or mat i on. M anagement can make
Deci si ons made pr ompt l y.
Impr oves t r acki ng i nf ormat i on
Of f er s ef f i ci ency t o deci si on maker s

Fut ur e T r ends
The f ut ur e of execut i ve i nf o syst ems i s not bound by mai nf r ame comput er syst ems. Thi s t r end f r ee
execut i ves f r om lear ni ng di f f er ent comput er oper at i ng syst ems, and subst ant i all y decr eases
i mpl ement at i on cost s. Because t hi s t r end i ncl udes using exi st i ng sof t w ar e appli cat i ons, execut i ves don' t
need t o l ear n a new or speci al l anguage f or t he EIS package.













ENTERPRISE RESOURCE PLANNING
Ent erprise r esource planning (ERP) syst ems i nt egr at e i nt er nal and ext er nal management
i nf or mat i on acr oss an ent i r e or gani zat i onembr acing f i nance/ account i ng, manuf act ur i ng, sal es and
ser vi ce, cust omer r el at i onshi p management , et c. ERP syst ems aut omat e t hi s act i vi t y w i t h an
i nt egr at ed sof t w ar e appl i cat i on. The pur pose of ERP is t o f aci l i t at e t he f l ow of i nf ormat i on bet w een al l
busi ness f unct i ons i nsi de t he boundar ies of t he organi zat i on and manage t he connect i ons t o out si de
st akehol der s.
[ 1]

ERP syst ems can r un on a var i et y of comput er har dw ar e and net w or k conf i gur at i ons, t ypi cal l y empl oyi ng
a dat abase as a r eposi t or y f or i nf or mat i on

Funct i ona l Ar ea s:
The f ol l ow i ng ar e common f unct i onal ar eas covered i n an ERP Syst em. In many ERP Syst ems t hese
ar e cal l ed and gr ouped t oget her as ERP M odul es:

Financial Account ing
Gener al Ledger , Fi xed Asset , Payabl es, Recei vabl es, Cash M anagement , Fi nanci al Consol i dat i on

M anagement Account ing
Budget i ng, Cost i ng, Cost M anagement , Act i vi t y Based Cost i ng

Human Resources
Recr ui t i ng, Tr ai ni ng, Payr ol l , Benef i t s, 401K, Di ver si t y M anagement , Ret i r ement , Separ at i on

M anuf act uring
Engi neer i ng, Bil l of M at er i al s, Wor k Or der s, Schedul i ng, Capaci t y, Wor kf l ow M anagement , Qual i t y
Cont r ol , M anuf act ur i ng Pr ocess, M anuf act ur i ng Pr oj ect s, M anuf act ur i ng Fl ow , Pr oduct Li f e Cycl e
M anagement

Supply Chain M anagement
Suppl y Chai n Pl anni ng, Suppl i er Schedul i ng, Or der t o Cash, Pur chasi ng, Invent or y, Pr oduct
Conf i gur at or , Cl ai m Pr ocessi ng

Proj ect M anagement
Pr oj ect Pl anni ng, Resour ce Pl anni ng, Pr oj ect Cost i ng, Wor k Br eak Dow n St r uct ur e, Bi l l i ng, Ti me and
Expense, Per f or mance Uni t s, Act i vi t y M anagement

Cust omer Relat ionship M anagement
Sal es and M ar ket i ng, Commi ssi ons, Ser vi ce, Cust omer Cont act , Cal l Cent er Suppor t - CRM syst ems
ar e not al w ays consi der ed par t of ERP syst ems but r at her BSS syst ems . Speci f i cal l y i n Tel ecom scenar i o

Dat a Services
Var i ous " sel f ser vi ce" i nt er f aces f or cust omer s, suppl i er s and/ or empl oyees

Access Cont rol
M anagement of user pr i vi l eges f or var i ous pr ocesses

COM PONENT S:

Tr ansact i onal dat abase
M anagement por t al / dashboar d
Busi ness i nt ell igence syst em
Cust omi zabl e r epor t i ng
Ext er nal access vi a t echnol ogy such as w eb ser vi ces
Sear ch
Document management
M essagi ng/ chat / w i ki
Wor kf l ow management

Adva nt a ges
The f undament al advant age of ERP i s t hat i nt egr at i ng myri ad busi nesses pr ocesses saves t i me and
expense. M anagement can make deci si ons f ast er , and w i t h f ew er er r or s. Dat a becomes vi si bl e acr oss
t he or gani zat i on. Tasks t hat benef i t f r om t hi s i nt egr at i on i ncl ude:

Sal es f or ecast i ng, w hi ch al l ow s i nvent or y opt i mi zat i on
Chr onol ogi cal hi st or y of ever y t r ansact i on t hr ough r el evant dat a compi l at i on i n ever y ar ea of
oper at i on.
Or der t r acki ng, f r om accept ance t hr ough f ul f i l l ment
Revenue t r acki ng, f r om i nvoi ce t hr ough cash r ecei pt
M at chi ng pur chase or der s (w hat w as or der ed), i nvent or y r ecei pt s (w hat ar r i ved),
and cost i ng (w hat t he vendor i nvoi ced)
ERP syst ems cent r al i ze busi ness dat a, br i ngi ng t he f ol low i ng benef i t s:
They eli mi nat e t he need t o synchr oni ze changes bet w een mul t i pl e syst emsconsol i dat i on of
f i nance, mar ket i ng and sal es, human r esour ce, and manuf act ur i ng appl i cat i ons
They br i ng l egi t i macy and t r anspar ency i n each bi t of st at i st i cal dat a.
They enabl e st andar d pr oduct nami ng/ codi ng.
They pr ovi de a compr ehensive ent er pri se vi ew (no " i slands of i nf or mat i on" ). They make r eal t ime
i nf or mat i on avail abl e t o management anyw her e, any t i me t o make pr oper deci si ons.
They pr ot ect sensi t i ve dat a by consol i dat i ng mul t i pl e secur i t y syst ems i nt o a si ngl e st r uct ur e.

Benefi t s

ERP can gr eat l y i mpr ove t he quali t y and ef f i ci ency of a busi ness. By keepi ng a company' s i nt er nal
busi ness pr ocess r unni ng smoot hl y, ERP can l ead t o bet t er out put s t hat benef i t t he company such
as cust omer ser vi ce, and manuf act ur i ng.
ERP pr ovi des suppor t t o upper l evel management t o pr ovi de t hem w i t h cr i t i cal deci si on maki ng
i nf or mat i on. Thi s deci si on suppor t al l ow s t he upper l evel management t o make manager ial
choi ces t hat enhance t he busi ness dow n t he r oad.
ERP al so cr eat es a mor e agi l e company t hat can bet t er adapt t o si t uat i ons and changes. ERP
makes t he company mor e f l exi ble and l ess ri gi dl y st ruct ur ed i n an ef f or t t o al l ow t he di f f er ent
par t s of an or gani zat i on t o become mor e cohesi ve, i n t ur n, enhanci ng t he busi ness bot h i nt er nall y
and ext er nal l y



ERP Ext ensi on
fnterprise Resource PIanning (fRP)
fnterprise Resource PIanning (fRP)
ZInovy RadovIIsky, Ca/ijornia S/a/c Univcrsi/y, Hayuard
Introduction to LRP 707
DehnIIIon oI LRP 707
BrIeI HIsIory oI LRP LvoIuIIon 707
LRP and L-connerce 708
PrincipIes, Ieatures, and AppIications oI LRP 709
MaIn LRP PrIncIIes 709
LRP IeaIures 709
LRP AIIcaIIons and TIeIr InIegraIIon 710
Major LRP Vendors 712
LRP Henehts, Issues, and AppIications Service
Providers 713
LRP BenehIs 713
LRP Issues 713
LRP SoIuIIons Ior IndusIrIes and SnaII-SIze
ConanIes 714
AIIcaIIons ServIce ProvIders (ASPs) 714
LRP SeIection and InpIenentation 715
ConcIusion: The Iuture oI LRP 716
GIossary 716
Cross ReIerences 717
ReIerences 717
lN1RODUC1lON 1O fRP
Denition of fRP
Iev recenIIy InIroduced soIIvare aIIcaIIons Iave Iad
sucI a roIound InacI on LusIness as enIerrIse re-
source IannIng (LRP). LRP sysIens exerIenced sIgnIh-
canI grovII In saIes In IIe IasI decade oI IIe 20II cenIury.
Iron 1990 Io 2000, IIe LRP saIes Iave grovn Iron S1
LIIIIon Io aInosI S30 LIIIIon. In 2004 IIe enIerrIse a-
IIcaIIons narkeI vIII reacI, accordIng Io sone IorecasIs
(AMR ResearcI CenIer-Press CenIer [AMR|, 2000), S78
LIIIIon. LRP sysIens vIII conIInue Io Le one oI IIe IargesI,
IasIesI-grovIng, and nosI InluenIIaI Iayers In IIe ITheId
veII InIo IIe nev nIIIennIun.
LnIerrIse Resource PIannIng (LRP) Is dehned as an
InIegraIed conuIer-Lased sysIen IIaI nanages InIernaI
and exIernaI organIzaIIon resources. TIese resources In-
cIude IangILIe asseIs, hnancIaI resources, naIerIaIs, and
Iunan resources. AI IIe sane IIne, LRP Is an aIIca-
IIon and soIIvare arcIIIecIure IIaI IacIIIIaIes InIornaIIon
lovs LeIveen varIous LusIness IuncIIons InsIde and ouI-
sIde an organIzaIIon and, as sucI, Is an enIerrIse-vIde
InIornaIIon sysIen. UsIng a cenIraIIzed daIaLase and o-
eraIIng on a connon conuIIng IaIIorn, LRP consoII-
daIes aII LusIness oeraIIons InIo a unIIorn sysIen envI-
ronnenI.
TIe vord "enIerrIse In IIe LRP nane reresenIs IIe
IacI IIaI IIIs sysIen InIegraIes and auIonaIes rocesses
vIIIIn an enIIre organIzaIIon regardIess oI IIe organI-
zaIIon's naIure. In IacI, LRP sysIens Iave Leen InIe-
nenIed In nanuIacIurIng, dIsIrILuIIon, IransorIaIIon,
educaIIon, IeaIIIcare, LankIng, and oIIer IndusIrIes. TIe
vord "resource In IIe LRP nane relecIs IIe sysIen's
InIenIIon Io raIIonaIIze IIe usage oI an organIzaIIon's re-
sources. IInaIIy, IIe vord "IannIng descrILes one oI IIe
naIn IuncIIons oI resource nanagenenI, I.e., IannIng
resources IIrougI a varIeIy oI LusIness rocesses.
InIroduced In IIe earIy 1990s, IIe Iern "LRP does
noI relecI IIe reaI caaLIIIIIes oI IIe sysIen II rere-
senIs. IIrsI, LRP sysIens rovIde noI onIy IannIng LuI
aIso oIIer nanagenenI IuncIIons sucI as organIzIng,
conIroIIIng, scIeduIIng, reorIIng, andanaIyzIng LusIness
rocesses. Second, a IradIIIonaI aroacI Io LRP con-
sIders II a "Lack-end conuIerIzed sysIen Ior nanag-
Ing IIe InIernaI resources oI an organIzaIIon. Hovever,
IIe LRP Ias crossed IIe LoundarIes oI LeIng jusI a sys-
Ien Ior IannIng InIernaI resources. II nay oIIen conIaIn
"IronI-end aIIcaIIons oI nanagIng cusIoners and
InrovIng cusIoner saIIsIacIIon-cusIoner reIaIIon-
sII nanagenenI (CRM), coIIaLoraIIng vIII suIIers
IIrougI aIIcaIIons oI suIy cIaIn nanagenenI (SCM),
and uIIIIzIng LusIness-Io-LusIness (B2B) e-connerce. As
sucI, IIIs InIegraIed sysIen conLInes exIernaI (IronI-
end) and InIernaI (Lack-end) LusIness aIIcaIIons and
sIouId Le dehned as an exIended enIerrIse nanagenenI
sysIen or exIended LRP sysIen (see IIgure 1).
As IIe orIgInaI Iern "LRP does noI IuIIy descrILe
exIsIIng InIegraIed soIuIIons, nany LRP soIIvare ven-
dors avoId usIng IIIs Iern Io reresenI IIeIr exIended
enIerrIse nanagenenI sysIens. Ior exanIe, IIese sys-
Iens are caIIed "ToIaI InIegraIed SoIuIIons, "L-BusIness
PIaIIorn, "L-BusIness SuIIe, eIc. RegardIess, IIe Iern
"LRP or "LRP sysIen conIInues Io Le IIe nosI ouIar
Iern Io descrILe a suIIe oI InIegraIed aIIcaIIons oI an
exIended enIerrIse nanagenenI sysIen.
rief History of fRP fvoIution
LRP sysIens Iave nore IIan a 30-year IIsIory oI evoIu-
IIon. UndersIandIng IIIs evoIuIIon Is InorIanI Ior con-
reIendIng currenI LRP sysIens and seeIng ersecIIves
oI IIeIr IuIure deveIonenI. TIe Idea oI InIegraIIng and
auIonaIIng LusIness rocesses uIIIIzIng conuIer ro-
grans vas hrsI InIroduced In IIe IaIe 1960s-earIy 1970s
vIII IIe deveIonenI oI na/cria/ rcquircncn/s p/annin
(MPP). TIIs coIncIded vIII IIe IIne vIen nanuIac-
IurIng conanIes sIarIed Io exIensIveIy enIoy con-
uIers, secIhcaIIy naInIranes and nInIconuIers, In
LusIness and nanagenenI decIsIons. MRP Is an InIe-
graIed conuIer-Lased sysIen Ior caIcuIaIIng naIerIaI
and deIIvery scIeduIes. II conLInes InvenIory nanage-
nenI, naIerIaIs IannIng, caacIIy IannIng, urcIasIng,
?0?
ENTERPRISE RESOURCE PLANNING (ERP) ?08
Figure 1: Cenerul LkP structure.
and dIsIrILuIIon. LaIer MRP sysIens aIso generaIed ur-
cIase orders Io suIIers and vork scIeduIes Ior InIernaI
roducIIon.
TIe nexI najor sIe In IIe evoIuIIon oI LRP vas IIe
deveIonenI In IIe earIy Io nId-1980s oI a nev Lreed
oI InIegraIed sysIens: nanujac/urin rcsourcc p/annin
(MPP II). TIIs sysIen IuIIy InIegraIed naIerIaIs and ca-
acIIy IannIng vIII dIsIrILuIIon IannIng, saIe orderIng,
narkeIIng, hnance/accounIIng, and Iunan resources. Be-
sIdes IannIng naIerIaI and caacIIy resources, MRP II
InIegraIed InvenIory vIII hnancIaI/accounIIng Iransac-
IIons, saIes orders vIII naIerIaIs IannIng and accounI-
Ing/hnance IransacIIons, narkeIIng and saIes anaIysIs
vIII denand IorecasIIng, eIc. AII InuIs and ouIuIs,
anaIysIs, and reorIIng vere Lased on one cenIraIIzed
daIaLase sysIen. MRP II vas very ouIar and vIdeIy
uIIIIzed Ly a varIeIy oI Iarge and nIdsIze conanIes IIaI
enIoyed redonInaIeIy naInIrane and nInIconuIer
IecInoIogy.
Modern LRP sysIens vere esIaLIIsIed In IIe earIy
1990s. TIIs coIncIded vIII IIe roIIIeraIIon oI ersonaI
conuIers, vIIcI reIaced IIe oId naInIrane caaLII-
IIIes vIII IIe nev cIIenI-server IecInoIogy. ConsIdered
as an advanced MRP II sysIen, nodern LRP Ias severaI
najor dIIIerences Iron MRPII sysIens: uIIIIzaIIon oI IIe
cIIenI-server IecInoIogy and IIs aLIIIIy Io run on ersonaI
conuIers (cIIenIs) and overIuI servers uIIIIzIng nuIII-
Ie oeraIIng IaIIorns (UnIx, NT, eIc.), advenI oI LRP
InIo nonnanuIacIurIng conanIes ("enIerrIse raIIer
IIan "nanuIacIurIng resource IannIng), and InIegra-
IIon oI MRP II aIIcaIIons vIII nev LusIness rocesses
IIke suIy cIaIn nanagenenI and cusIoner reIaIIonsII
nanagenenI. In IIe nId- and IaIe 1990s, a Iarge nunLer
oI conanIes converIed IIeIr exIsIIng conuIer sysIens
Io LRP due Io IIe Y2K roLIen. RaIIer IIan sendIng
a suLsIanIIaI anounI oI noney on hxIng IIIs roLIen In
IIe exIsIIng sysIens, conanIes reIerred Io InIenenI
nodern LRP sysIens IIaI vere Y2K conIIanI.
TIe IaIesI evoIuIIon oI LRP sysIens sIarIed aI IIe end
oI IIe 1990s vIII IIe InIroducIIon oI InIerneI-enaLIed
LRP sysIens. TIIs InIroducIIon correIaIed agaIn vIII na-
jor cIanges In IT sysIens IIaI vere sIgnIhed Ly IIe InIer-
neI and e-connerce revoIuIIon. TIe nev sysIens vere
cIaracIerIzed Ly InIerneI-enaLIed LRP arcIIIecIure, nev
IronI-end e-connerce soIuIIons, easy access Io IIe sys-
Ien Ly enIoyees, cusIoners, and suIIers, coIIaLora-
IIve IannIng and scIeduIIng, and oIInIzed oeraIIons,
hnance, and narkeIIng decIsIons.
fRP and f-commerce
TIe najorIIy oI nodern LRP sysIens are IuIIy InIerneI-
enaLIed sysIens. TIIs neans IIaI connunIcaIIon Le-
Iveen a server vIere an LRP sysIenIs InsIaIIed and nany
cIIenIs (end-user PCs) Is done IIrougI IIe InIerneI.
An LRP sysIen nay conrIse IIree naIn IIers: cIIenIs,
aIIcaIIons server, and daIaLase server (see IIgure 2).
CIIenIs are end-users IIaI connecI Io IIe sysIen vIa InIer-
neI Lrovsers. An aIIcaIIons server IncororaIes a WeL
server, Iorns, sysIen IooIs, and a varIeIy oI LRP ro-
grans. A daIaLase server IncIudes a reIaIIonaI daIaLase
vIII LRP records. Sone LRP sysIens Iave Leen deveI-
oed vIII searaIe aIIcaIIons and WeL servers, vIIcI
vouId dehne IIen as Iour-IIer sysIens (cIIenIs, WeL
server, aIIcaIIons server, and daIaLase server).
LRP sysIens are consIdered Io Le a LackLone oI
e-connerce soIuIIons. SuccessIuI uIIIIzaIIonoI IIe "IronI-
end e-connerce soIuIIons Is unInagInaLIe vIIIouI
PRINCIPLES, FEATURES, AND APPLICATIONS OF ERP ?09
Figure 2: 1ypcul urchtecture ol lnternet-enubled LkP sys-
tems.
sIrong suorI Ly and cooeraIIon vIII IIe InIernaI
"Lack-end conuIer sysIens. In IacI, nany LRP vendors
conLIne LRP aIIcaIIons and e-connerce soIuIIons In
one InIegraIed conuIer sysIen.
PRlNClPLfS, FfA1URfS, AND
APPLlCA1lONS OF fRP
Main fRP PrincipIes
In nany resecIs, LRP Is a resuII oI nodern organIza-
IIons' eIIorIs In desIgnIng nanagenenI InIornaIIon sys-
Iens. VarIous rocesses oI an organIzaIIon Iave Io Le
IInked IogeIIer so IIaI vIenever a cIange In an ex-
IernaI or InIernaI rocess Iakes Iace, IIe conany Is
aLIe Io adjusI aII oIIer reIaIed rocesses InnedIaIeIy
and eIIecIIveIy. LRP sysIens enaLIe IIIs Io Iaen, noI
onIy aI IIe InIornaIIon sysIens IeveI LuI aIso aI IIe a-
IIcaIIons IeveI, Ly uIIIIzIng cerIaIn rIncIIes and Iea-
Iures. TIe Ivo naIn LRP rIncIIes are InIegraIIon and
auIonaIIon.
LRP InIegraIIon Is Lased uon IIese IIens:
A sIngIe daIaLase sysIen oeraIIng on a connon con-
uIIng IaIIorn. AII LRP aIIcaIIons vouId InuI daIa
and reIrIeve InIornaIIon IronIIe sane daIaLase and aII
enIoyees vouId Iave IIe sane oInI oI access Io geI
necessary InIornaIIon
An InIegraIed seI oI connonIy desIgned LusIness a-
IIcaIIons IncIudIng nanuIacIurIng, dIsIrILuIIon, nar-
keIIng, accounIIng, hnance, and Iunan resources. TIIs
seI consoIIdaIes aII LusIness rocesses InIo a unIIorn
sysIen envIronnenI
InIegraIIon LeIveen InIernaI conany aIIcaIIons and
exIernaI aIIcaIIons Ior accessIng cusIoners and su-
IIers.
LRP auIonaIIon reresenIs IIe aLIIIIy oI an LRP sys-
Ien Io auIonaIIcaIIy rocess LusIness IransacIIons and
InIornaIIon LeIveen dIIIerenI rocesses and IuncIIons
InsIde an organIzaIIon, as veII as LeIveen IIIs organI-
zaIIon and IIs cusIoners and suIIers. TIe eIenenIs oI
LRP auIonaIIon are as IoIIovs:
AuIonaIed LusIness IransacIIons. Ior exanIe, IIese
can IncIude caIcuIaIIon oI roducIIon and naIerIaI
scIeduIes, denand IorecasIs, InvenIory IeveIs, and ro-
ducIIon cosIs.
AuIonaIIc InIornaIIon sIarIng LeIveen nunerous or-
ganIzaIIon IuncIIons. DaIa creaIed In one aIIcaIIon
Lecone avaIIaLIe Io oIIer reIaIed aIIcaIIons. Ior ex-
anIe, a nev enIoyee InuI nade In a Iunan re-
sources noduIe nay Le avaIIaLIe In oIIer aIIcaIIons
IIke urcIasIng and narkeIIng, vIIcI uIIIIze IIIs en-
Ioyee InIornaIIon.
AuIonaIed recordIng, nonIIorIng, and reorIIng oI IIe
daIa generaIed In LRP.
fRP Features
One oI IIe nosI InorIanI LRP IeaIures Is IIaI II Is
a proccss-drivcn sys/cn. In conIrasI Io IndIvIduaI and
IuncIIon-drIven conuIer aIIcaIIons In narkeIIng, h-
nance, or oeraIIons, an LRP sysIen InIegraIes IIese
IuncIIons InIo a varIeIy oI conuIer-Lased rocesses.
TIey reresenI reaI LusIness rocesses IIaI conanIes
aIy Io nanagIng resources, vorkIng vIII cusIoners
and suIIers, eIc. In generaI, an LRP sysIen nay IncIude
a varIeIy oI LusIness rocesses sucI as
order IuIhIInenI
roducIIon IannIng and scIeduIIng
caacIIy IannIng
ouIsourcIng naIerIaIs Iron suIIers (urcIasIng)
sIIIng roducIs Io IIe cusIoners
roducI cosIIng, aynenIs, and receIIs
nanagIng cusIoners
seIecIIng and nanagIng suIIers.
Sone oI IIese rocesses are InIerreIaIed and deen-
denI on one anoIIer (see IIgure 3). InIegraIIng IIese LusI-
ness rocesses InIo a conany's LRP sysIen rovIdes IIe
necessary envIronnenI Ior runnIng IIe conany In reaI
IIne vIII aII IuncIIons LeIng InIeroeraLIe In IIe sysIen.
OIIer IeaIures oI LRP sysIens IncIude
A rc/a/iona/ da/abasc IIaI InIegraIes aII daIa InuIs,
IransacIIons, and ouIuIs oI LRP sysIens. TIIs can suL-
sIanIIaIIy reduce or even eIInInaIe Inaccuracy and In-
consIsIency oI records IIaI nIgII Iave exIsIed In se-
araIe IndIvIduaI daIaLases. TIe OracIe daIaLase Is IIe
nosI ouIar reIaIIonaI daIaLase used In LRP sysIens.
Conpany-uidc acccss /o injorna/ion Iron a reIaIIonaI
daIaLase. TransacIIons IIaI are IakIng Iace In eacI
LRP-drIven LusIness rocess nay Le vIsILIe, In rIncI-
Ie, Io anyone In an organIzaIIon. In racIIce, Iovever,
IIe IeveI oI an enIoyee's vIsILIIIIy oI and access Io LRP
rocesses deends on IIe enIoyee's roIe (resonsILIII-
IIes) In IIe conany.
Mu//ip/c sinu//ancous acccsscs Io IIe LRP sysIen Ly
nany users and In varIous IocaIIons. TIIs IeaIure nay
ENTERPRISE RESOURCE PLANNING (ERP) ?10
Figure 3: LkP processes und ther ntegruton.
Le used Ly a conany IIaI Ias nuIIIIe donesIIc and
InIernaIIonaI IocaIIons/dIvIsIons and vanIs Io InIegraIe
aII LusIness IuncIIons InIo one conuIer sysIen. TIIs
IeaIure aIso enaLIes IasI and reIIaLIe InIornaIIon sIar-
Ing LeIveen dIIIerenI arIs oI IIe conany.
Sca/abi/i/y, vIIcI neans IIaI an LRP sysIen rovIdes
adequaIe caaLIIIIIes In IIe sIIuaIIon vIere IIe IoIaI
nunLer oI users oI IIe sysIen Is grovIng. TIIs nay
Le due Io IIe conany's exansIon or Io IIs nerger
vIII or acquIsIIIon oI anoIIer conany. A scaIaLIe
LRP sysIen sIouId aIso acconnodaIe a grovIng nun-
Ler oI users and aIIcaIIons vIIIouI jeoardIzIng IIe
seed oI IransacIIons or IIe erIornance oI IIe enIIre
sysIen.
In/crnc/-bascd arc/i/cc/urc oI LRP sysIens. Iron a IecI-
nIcaI sIandoInI, LRPsysIens sIouId Le lexILIe enougI
Io run on various inp/cncn/a/ion p/a/jorns and oeraI-
Ing sysIens, IIke UnIx, LInux, and NT.
fRP AppIications and 1heir lntegration
LRP InIegraIes a greaI varIeIy oI LusIness aIIcaIIons.
TIeIr IIIIes, cononenIs, and caaLIIIIIes nay vary Le-
Iveen dIIIerenI LRP soIIvare ackages. Hovever, IradI-
IIonaIIy, an LRP sysIen Is conosed oI nanujac/urin
and dis/ribu/ion, nancia/, /unan rcsourcc nanacncn/
(HPM), and nar/c/in and sa/cs grous oI aIIcaIIons.
In addIIIon, an exIended LRP sysIen nay IncIude supp/y
c/ain nanacncn/ (SCM) and cus/oncr rc/a/ions/ip nan-
acncn/ (CPM) grous oI aIIcaIIons. In nany nodern
sysIens, IIe nanujac/urin and dis/ribu/ion aIIcaIIons
are IIgIIIy assocIaIed vIII, and soneIInes Lecone Inse-
araLIe Iron, IIe SCM aIIcaIIons. TIus, IIey nay Le
consIdered as one conLIned LRP grou. TIe sane Is Irue
Ior IIe nar/c/in, sa/cs, and CPM grou.
WIIIIn eacI grou, LRP aIIcaIIons nay Le cIus-
Iered InIo IIree naIn caIegorIes. TIe hrsI caIegory-corc
app/ica/ions-Is conosed oI IradIIIonaI "Lack-end LusI-
ness aIIcaIIons exIsIIng In currenI and oId versIons
oI IIe LRP soIIvare. TIe second caIegory-app/ica/ions
cn/anccncn/s-Is a seI oI addIIIonaI aIIcaIIons IIaI are
used Io anaIyze, Inrove, and oIInIze LusIness decIsIons
and rocesses In eacI LRP grou. TIe IIIrd caIegory-
c-conncrcc so/u/ions-Is conosed oI varIous aIIca-
IIons oI B2B e-connerce. TIese grous and caIegorIes
oI LRP aIIcaIIons are resenIed In TaLIe 1.
TIe SCM grou oI aIIcaIIons Is assocIaIed vIII
IannIng and scIeduIIng naIerIaI and InIornaIIon lovs
Iron suIIers Io a nanuIacIurIng/servIce organIzaIIon,
scIeduIIng, execuIIng, nonIIorIng, and reorIIng roduc-
IIon Ians InIIIs organIzaIIon, and dIsIrILuIIng hnaI rod-
ucIs Io IIe cusIoners. TIe aIIcaIIons' enIancenenIs In
IIe SCM grou IncIude nanujac/urin and supp/y c/ain
in/c//icncc aIIcaIIons IIaI rovIde a varIeIy oI anaI-
yses and daIa reorIs on urcIasIng, suIIer scIeduI-
Ing and suIIer erIornance, roducIIon resuIIs, dIs-
IrILuIIon scIeduIes, and oIIer IuncIIons. BesIdes, IIIs
caIegory conIaIns aIIcaIIons oI advanccd p/annin and
sc/cdu/in (APS) IIaI enaLIe Io creaIe oIInIzed roduc-
IIon scIeduIes, IakIng InIo accounI naIerIaI and caacIIy
consIraInIs. AIso, IIe SCM grou InIegraIes a nunLer oI
B2B e-connerce aIIcaIIons IncIudIng
c-procurcncn/, vIIcI rovIdes caaLIIIIIes Ior ouIsourc-
Ing naIerIaI, IaLor, and oIIer resources onIIne (onIIne
urcIasIng)
PRINCIPLES, FEATURES, AND APPLICATIONS OF ERP ?11
1abIe 1 Mujor Croups ol LkP ^pplcutons
AppIications' Categories
Groups of
AppIications Core AppIications AppIications fnhancements f-commerce AppIications
SCM Croup. lnventory Munulucturng lntellgence L-procurement
Munulucturng, Supply Chun Plunnng (^nulytcs) L-suppler Portuls
Dstrbuton, Muteruls kequrements ^dvunced Plunnng und Schedulng Prvute Lxchunge
Supply Chun Plunnng Supply Chun lntellgence Cnlne ^ucton
Munugement Cupucty kequrements (^nulytcs) Colluborutve Commerce
Plunnng Suppler kelutonshp Munugement (C-commerce)
Shop lloor Munugement L-desgn
Wurehouse Munugement Moble Supply Chun
Purchusng Commerce
uulty Munugement
Product Development
Munugement
lnunculs Croup. Cenerul Ledger lnuncul lntellgence L-expenses
^ccountng, ^ccounts kecevuble (^nulytcs) L-recevubles
lnunce ^ccounts Puyuble ulunce Scorecurd L-puyment
^sset Munugement
Cush Munugement
^ctvty used Costng
udgetng
Property Munugement
1reusury Munugement
HkM Croup. Personnel ^dmnstruton Hk lntellgence (^nulytcs) Sell-Servce Humun
Humun kesource Puyroll Crgunzutonul Development kesources
Munugement Lmployee enets und L-recrutment
Compensutons L-leurnng
1me Munugement Hk-centrc Web Portul
1runng ^dmnstruton lnlormuton Colluboruton
Moble Commerce
CkM Croup. Crder Munugement Murketng lntellgence L-murketng
Murketng, Sules, Product Congurutor (^nulytcs) L-sellng
Customer Crder lulllment Servce lntellgence L-lulllment
kelutonshp Customer Munugement (^nulytcs) L-servce
Munugement Servce Munugement ^dvunced Demund Moble Sules
Murketng Munugement
Sules Customer lnteructon Center
lled Customer Servce (Cull Center)
priva/c cxc/anc, vIIcIIs aneIecIronIc narkeIIace IIaI
InvIIes suIIers and cusIoners Io do IradIng onIIne
co//abora/ivc conncrcc (c-conncrcc), vIIcI enaLIes
Luyers and seIIers Io coIIaLoraIe on denand IorecasIIng
and syncIronIze Ians Lased on IIe dynanIc excIange
oI InIornaIIon
nobi/c conncrcc (n-conncrcc), vIIcI exIends IIe su-
Iy cIaIn nanagenenI sysIen Io aII IIe nenLers oI
IIe neIvork vIII vIreIess connunIcaIIons regardIess
oI vIere IIey are.
IInancIaIs are anoIIer najor grou oI LRP
aIIcaIIons. TIey IncIude core accounIIng and hnancIaI
aIIcaIIons, as veII as aIIcaIIons enIancenenIs and
e-connerce soIuIIons (see TaLIe 1). IInancIaI InIeIIIgence
aIIcaIIons are used Io anaIyze and oIInIze narkeI
IorecasIs, credII rIsk oI nev conIracIs, casI lov and
IIquIdIIy, hnancIaI orIIoIIo, and narkeI rIsk. AIso, hnan-
cIaI InIeIIIgence aIIcaIIons nonIIor and Irack hnancIaI
erIornance and neasure key hnancIaI IndIcaIors. TIe
IInancIaIs grou aIso conIaIns severaI B2B e-connerce
aIIcaIIons (see TaLIe 1). Ior exanIe, L-receIvaLIes
(L-aynenI) Is a secure onIIne aIIcaIIon IIaI aIIovs
cusIoners Io revIev accounI InIornaIIon, ay LIIIs,
IransIer Iunds, and dIsuIe InvoIces onIIne.
TIe HRM grou oI aIIcaIIons Is conosed oI
core aIIcaIIons, nodern anaIyIIcaI IooIs (HP in/c//i-
cncc'ana/y/ics), and a varIeIy oI HRM e-connerce a-
IIcaIIons (see TaLIe 1). LxanIes oI HRM e-connerce
aIIcaIIons are
sc/j-scrvicc /unan rcsourccs, vIIcI aIIov IIne nan-
agers and enIoyees Io udaIe and use HR InIornaIIon
IIrougI InIerIaces ersonaIIzed Io IIeIr roIes
ENTERPRISE RESOURCE PLANNING (ERP) ?12
c-rccrui/ncn/, vIIcI Is a seI oI conreIensIve recruII-
nenI IooIs and servIces IIaI are InIegraIed vIII a
neIvork oI recruIInenI servIce rovIders.
TIe CRM grou oI aIIcaIIons IncIudes a seI oI core,
enIancenenIs, and e-connerce aIIcaIIons reIaIed Io
cusIoner InIeracIIons vIII IIe conany, nanagIng cus-
Ioner denands, and InrovIng cusIoner saIIsIacIIon(see
TaLIe 1). Anong e-connerce CRM soIuIIons are
c-nar/c/in, vIIcI enaLIes InIenenIaIIon and execu-
IIon oI ersonaIIzed, reaI-IIne nass narkeIIng over IIe
InIerneI
c-sc//in, vIIcI rovIdes conreIensIve caaLIIIIIes Ior
seIIIng roducIs and servIces over IIe InIerneI
c-scrvicc, vIIcI oIIers cusIoners and LusIness arIners
onIIne access Io dedIcaIed InIornaIIon sucI as roducI
caIaIog and rIcIng soIuIIons.
Major fRP Vendors
TIe nunLer oI soIIvare conanIes IIaI deveIo LRPsoII-
vare runs In IIe Iundreds. Many oI IIese conanIes ro-
vIde IInIIed LRP IuncIIonaIIIy as narkeI nIcIe Iayers,
oIIers Iocus on sone verIIcaI narkeIs (IndusIrIes). Hov-
ever, a reIaIIveIy Iarge segnenI oI IIese conanIes rovIde
conreIensIve soIuIIons Io IIeIr cusIoners. TIe IargesI
and nosI ouIar LRP vendors are SAP, OracIe, and Peo-
IeSoII. TIese IIree conanIes Iave around 56 oI IIe
gIoLaI LRP narkeI sIare (see IIgure 4).
SAP (vvv.nysa.con) Is IIe IargesI LRP vendor In
IIe vorId (To 100 SoIIvare Vendors, 2001). TIe nosI Ia-
nous SAP sysIen, SAP R/3, IncIudes aII connon grous
oI IIe LRP aIIcaIIons. SAP Is secIhcaIIy ouIar vIII
Iarge nanuIacIurIng conanIes IIaI run IIs nanuIacIur-
Ing, dIsIrILuIIon, and suIy-cIaIn aIIcaIIons. ReaIIz-
Ing IIaI IIs R/3 arcIIIecIure couId noI neeI IIe cIaIIenges
oI e-connerce In IIe IaIe 1990s, SAP sIarIed InIenenI-
Ing an InIerneI-Lased soIuIIon. Ior IIaI, SAP IauncIed IIs
IoIaIIy redesIgned, InIerneI-Lased soIuIIon-nySAP.con.
II Is a Lroad underIakIng Ly SAP Io exIend IIs Lack-oIhce
suIIe Io IIe WeL. TIIs sIIe Is a sIngIe enIry oInI Ior a range
oI IronI-end, Lack-end, and e-connerce LRP aIIca-
IIons. TIe SAPsoIIvare Ias Leen InIenenIedIn a varIeIy
oI conanIes (redonInaIeIy, Iarge conanIes) IncIudIng
IBM, HevIeII-Packard, PIIIIs, SIenens, CIevron, and
nany oIIers.
OracIe CororaIIon (III://vvv.oracIe.con) Is IIe sec-
ond IargesI LRP vendor. OracIe vas IIe hrsI conany Io
oIIer a IuIIy InIegraIed, InIerneI-enaLIed suIIe oI LusIness
aIIcaIIons-L-BusIness SuIIe. TIIs sysIen runs enIIreIy
on IIe InIerneI, suorIIng e-LusIness across IIe SCM,
IInancIaI, Hunan Resources, and CRM grous. Hov-
ever, OracIe's IInancIaIs and CusIoner ReIaIIonsII Man-
agenenI grous oI aIIcaIIons are consIdered Io Le IIe
conany's nosI ouIar anong IIe cusIoners. OracIe's
L-BusIness SuIIe, aIong vIII SAP, Is aIso connonIy used
Ly Iarge and nId-sIze nanuIacIurIng and servIce cona-
nIes. TIese IncIude CIsco, SunMIcrosysIens, AIIed Ma-
IerIaIs, VIsa InIernaIIonaI, AIcoa, Xerox, and nany oIIers.
PeoIeSoII, Inc. (III://vvv.eoIesoII.con) Is aIso
one oI IIe IargesI LRP vendors. 1usI IIke OracIe LRP, IIe
IaIesI versIon oI IIe PeoIeSoII LRP sysIen Is on IIe In-
IerneI and reresenIs a IuII seI oI WeL-Lased grous oI
aIIcaIIons. BoII OracIe and PeoIeSoII uI every as-
ecI oI a cIIenI's LusIness, IronsuIy cIaIn nanagenenI
Io saIes, on IIe InIerneI. Hovever, PeoIeSoII consIders
IIs LRP sysIen Io Le IIe onIy ure HTML-Lased soIuIIon
In IIe IndusIry. PeoIeSoII's aIIcaIIons do noI requIre
1ava dovnIoads (as OracIe does) Io run IIe Lrovser and
are IuIIy accessILIe Iron a IosI oI noLIIe devIces sucI as
PDAs and ceII Iones. Hovever, OracIe cIaIns IIaI 1ava
Is IyIcaIIy IncIuded In a WeL Lrovser and IIs L-BusIness
SuIIe Is accessILIe Iron noLIIe devIces vIere II nakes
sense. PeoIeSoII cusIoners IncIude a varIeIy oI LusIness
conanIes, unIversIIIes, and governnenI organIzaIIons.
Figure 4: 1op LkP vendors.
ERP HENEFITS, ISSUES, AND APPLICATIONS SERVICE PROVIDERS ?13
Anong IIe nosI Ianous PeoIeSoII cusIoners are 3Con
CororaIIon, SrInI, HevIeII-Packard, AnaIog DevIces,
and BrIIIsI TeIecon.
BesIdes SAP, OracIe, and PeoIeSoII, IIere are nany
oIIer quIIe ouIar LRP vendors IncIudIng 1.D. Ld-
vards (III://vvv.jdedvards.con), Invensys SoIIvare
SysIens (III://vvv.Invensys.con), and SIeLeI SysIens
(III://vvv.sIeLeI.con).
fRP fNfFl1S, lSSUfS, AND
APPLlCA1lONS SfRVlCf PROVlDfRS
fRP enets
TIe raId grovII and roIIIeraIIon oI LRP sysIens In IIe
asI 10 years IndIcaIed IIe greaI InorIance oI IIese sys-
Iens Io LusInesses. In generaI, IIe InIenenIaIIon oI an
LRP sysIen sIouId Increase IIe reIIaLIIIIy oI a conany's
InIornaIIon, rovIde IuII access Io IIIs InIornaIIon aI any
oInI oI IIne, auIonaIe a varIeIy oI Iasks and rocesses In
dIIIerenI organIzaIIonaI IuncIIons, Inrove IorecasIIng,
IannIng, scIeduIIng, and reorIIng, and IacIIIIaIe exIer-
naI coIIaLoraIIon vIII cusIoners and suIIers. TIese In-
rovenenIs nay Iead Io a sIorIer order-Io-narkeI IIne,
Iover InvenIory IeveIs, nore eIhcIenI and eIIecIIve nan-
agenenI oI resources, and, as a resuII, najor cosI savIngs
and Increased reIurn on InvesInenIs (ROI). A uLIIcaIIon
aI CIOMaazinc (TIe ABCs oI LRP, 2002) suggesIs IIaI IIe
nedIan annuaI savIngs Iron a nevIy InIenenIed LRP
sysIen are aroxInaIeIy S1.6 nIIIIon.
A survey conducIed Ly MaLerI, SonI, and VenkaIara-
nanan (2001) sIoved IIaI 70 oI conanIes IIaI InIe-
nenIed LRP IeII IIaI IIeIr sysIens Iave Leen successIuI
or very successIuI. TIIs survey aIso Iound IIaI InorIanI
InrovenenIs due Io IIe LRP InIenenIaIIon are asso-
cIaIed vIII (In a descendIng order oI InorIance)
quIckened InIornaIIon resonse IIne and Increased In-
IeracIIon across IIe enIerrIse
reduced order cycIe
decreased hnancIaI cIose cycIe
Inroved InIeracIIon vIII cusIoners
Inroved on-IIne deIIvery
Inroved InIeracIIon vIII suIIers
Iovered InvenIory IeveIs
Inroved casI nanagenenI
reduced dIrecI oeraIIng cosIs.
TIe sane survey aIso recognIzed IIaI areas LenehIIng
IIe nosI Iron LRP vere avaIIaLIIIIy and quaIIIy oI InIor-
naIIon and InIegraIIon oI LusIness oeraIIons/rocesses,
as veII as IIe IIree IuncIIonaI areas oI InvenIory nanage-
nenI, hnancIaI nanagenenI, and suIIer nanagenenI
and rocurenenI.
fRP lssues
DesIIe IIe LenehIs, LRP sysIens sIIII renaIn IIe nosI
conIIcaIed, IIne-consunIng, and cosIIy conuIer-Lased
sysIens. InIenenIaIIon IIne and soIIvare cosI deend
on IIe conany's sIze, nunLer oI InIenenIed aIIca-
IIons (noduIes), and IeveI oI IannIng and rearaIIon oI
IIe InIenenIaIIon rocess.
A survey conducIed Ly MaLerI eI aI. (2001) sIoved
IIaI IIe LRP InIenenIaIIon IIne Ior a Iarge or nId-sIze
conany couId vary Iron 23 Io 35 nonIIs, on IIe aver-
age. TIe average InIenenIaIIon cosI Ior a Iarge or nId-
sIze conany couId Le around S20 nIIIIon, and snaIIer
hrns nay send u Io S12 nIIIIon (WIIIIs, WIIIIs-Brovn,
& McMIIIan, 2001, MaLerI eI aI., 2001). A suLsIanIIaI or-
IIon oI conanIes, vIIIe InIenenIIng LRP, Iad najor
cosI overruns exceedIng IIe orIgInaI esIInaIed LudgeI Ly
an average oI 60 (MaLerI eI aI., 2001).
InIenenIaIIon Is onIy one eIenenI oI IIe IoIaI cosI
oI ovnersII (TCO) oI an LRP sysIen. In generaI, TCO
IncIudes soIIvare IIcense Iees, Iardvare cosI, InsIaIIa-
IIon and InIenenIaIIon Iees (consuIIIng, addIIIonaI er-
sonneI, IraInIng, IesIIng, eIc.), cosI oI naInIenance, and
cusIoner suorI. TIe average TCO oI an LRP sysIen
couId run u Io S85 nIIIIon, LuI Ior sone Iarge orga-
nIzaIIons couId reacI S400 nIIIIon (TIe ABCs oI LRP,
2002). AccordIng Io one sIudy (CIIIIe, 1999), nore IIan
65 oI execuIIves LeIIeved IIaI LRP InIenenIaIIon Iad
aI IeasI a noderaIe roLaLIIIIy oI IurIIng IIeIr conanIes.
In severaI cases, docunenIed In IIe IIIeraIure sources,
a Iong and IneIhcIenI InIenenIaIIon Ied Io suLsIanIIaI
dravLacks In IIe conanIes' erIornance, Ioss oI saIes
and cusIoners, and sIraIned reIaIIonsIIs vIII suII-
ers. Anong nunerous conanIes IIaI exerIenced cosIIy
roLIens vIII IIeIr LRP InIenenIaIIons vere W.L.
Gore and AssocIaIes (vIII PeoIeSoII) and WIIrIooI,
HersIey Ioods, AIIIed WasIe IndusIrIes, and VoIksvagen
(aII vIII SAP).
AnaIysIs oI LRP InIenenIaIIon racIIces reveaIed IIe
IoIIovIng najor Issues IIaI conanIes need Io deaI vIII
vIIIe InIenenIIng an LRP sysIen:
LRP Is a conIex and raIIer rIgId sysIen IIaI nay re-
quIre a conany Io redesIgn IIs LusIness rocesses. TIe
Io LRP sysIens are Lased on IIe LesI LusIness rac-
IIces, and a conany nusI acceI IIe assunIIons In-
IerenI In IIose sysIens. TIIs usIes IIe conany Io-
vard generIc rocesses esIaLIIsIed In LRP. TIus, IIe
conany needs Io ensure IIaI adoIIng generIc ro-
cesses does noI sacrIhce IIs roducIIonresuIIs, cusIoner
servIce, and coneIIIIve advanIage.
SuccessIuI LRP InIenenIaIIon Is nearIy InossILIe
vIIIouI IIorougI rearaIIon and eIhcIenI nanage-
nenI oI IIe InIenenIaIIon rocess. TIese requIre
sIrong execuIIve connIInenI and InvoIvenenI In IIe
LRPInIenenIaIIon rocess IronsIarI Io hnIsI, an en-
overed InIenenIaIIon Iean IIaI needs Io dehne oL-
jecIIves, ouIcones, and InIenenIaIIon sIraIegy, cIearIy
deveIoed educaIIon and IraInIng sIraIegIes, and IuII
connunIcaIIon oI LRP Ians Io IIe conany's enIoy-
ees.
LRPsysIens requIre vIrIuaIIy a IIIe-cIangIng exerIence
Ior everyone InvoIved. A conany IIaI InIenenIs LRP
and IIs enIoyees need Io overcone IradIIIonaI conser-
vaIIsn In uIIIIzIng a revIousIy unknovn conuIer sys-
Ien, vIIcI Ias nev InuI Iorns, ouIuI reorIs, Iunc-
IIonaIIIy, eIc. TIus, exIensIve and consIsIenI IraInIng oI
ENTERPRISE RESOURCE PLANNING (ERP) ?14
aII InvoIved enIoyees Lecones a crIIIcaIIy InorIanI
eIenenI oI a successIuI LRP InIenenIaIIon.
fRP SoIutions for lndustries
and SmaII-Size Companies
A Io-ranked LRP sysIen, LeIng a IIne- and noney-
consunIng sysIen, nay noI Le suIIaLIe Ior InIenenIa-
IIon In snaII and nId-sIze conanIes. AIso, a sIandard
LRP sysIen, vIIcI Is deveIoed vIII generaIIzed LusI-
ness rocesses and aIIcaIIons, nay noI Le arorIaIe
Ior cerIaIn IndusIrIes. To address IIese Issues, IIe IeadIng
LRP vendors rovIde a IosI oI soIuIIons IIaI IncIude
cusIonIzIng LRP sysIens Ior IndIvIduaI IndusIrIes
deveIoIng LRP soIuIIons Ior snaII and nId-sIze con-
anIes
IoverIng aIIcaIIons cosIs Ly seIIIng IndIvIduaI nod-
uIes
rovIdIng IosIIng soIuIIons usIng aIIcaIIons servIce
rovIders (ASP).
Ior exanIe, SAP esIaLIIsIed cusIonIzed soIuIIons
Ior 21 dIIIerenI IndusIrIes, anong vIIcI are aerosace
and deIense, auIonoIIve, LankIng, cIenIcaI, consuner
roducIs, engIneerIng and consIrucIIon, hnancIaI ser-
vIces, and IeaIIIcare. LacI IndusIry-reIaIed LRP sysIen
conIaIns IndusIry-secIhc aIIcaIIons, Ior exanIe, pro/
nanacncn/ and ris/ nanacncn/ aIIcaIIons Ior Lanks
or /ca///carc c-busincss app/ica/ions Ior IIe IeaIIIcare
IndusIry. BesIdes, an IndusIry-reIaIed sysIen nay aIso
IncIude sIandardIzed LRP aIIcaIIons IIke accounI-
Ing/hnance, CRM, Iunan resources, and oIIers reIevanI
Io IIaI IndusIry.
OracIe Ias InIroduced, aIong vIII IIs veII-knovn L-
BusIness SuIIe, an InIegraIed seI oI aIIcaIIons Ior snaII-
and nId-sIze conanIes-SnaII BusIness SuIIe. TIIs sys-
Ien consIsIs oI onIy a Iev LRP aIIcaIIons IInIIed In
caaLIIIIIes, IIke accoun/in, sa/cs jorcc au/ona/ion, cus-
/oncr suppor/ nanacncn/, cnp/oycc cxpanscs, /inc and
bi//in, payro//, on/inc bi// payncn/, \cb s/orc, and cus-
/oncr carc. Due Io IIe reIaIIveIy snaII nunLer oI a-
IIcaIIons and IIeIr IInIIed caaLIIIIIes, IIe TCO oI IIe
SnaII BusIness SuIIe Is Iover IIan IIaI oI a generaI LRP
sysIen.
AnoIIer vay oI IoverIng TCO Is Io acquIre a grou
oI aIIcaIIons raIIer IIan IIe enIIre sysIen. AnaIysIs oI
LRP InIenenIaIIon sIoved IIaI conanIes Iend Io uII-
IIze onIy a suLseI oI IIe aIIcaIIons avaIIaLIe In a sIan-
dard LRP sysIen. A survey conducIed Ly MaLerI, SonI,
and VenkaIarananan (2000) sIoved IIaI IIe nosI Ire-
quenIIy InIenenIed LRP aIIcaIIons are hnancIaI ac-
counIIng, naIerIaIs nanagenenI, roducIIon IannIng,
order enIry, urcIasIng, hnancIaI conIroI, and dIsIrILu-
IIon/IogIsIIcs. TIus, seIIIng IIese noduIes IndIvIduaIIy or
In an InIegraIed ackage nay reduce cusIoner TCO and
sIorIen IIe InIenenIaIIon cycIe.
AppIications Service Providers (ASPs)
Due Io IIe conIexIIy and cosIs oI LRPs, LRP IosI-
Ing/ouIsourcIng Lecane a ouIar oIIon Ior snaII and
nId-sIze conanIes IIaI Iack IIe caIIaI and resources
Io do In-Iouse InIenenIaIIon. An aIIcaIIons servIce
rovIder (ASP) Is an organIzaIIon IIaI IosIs, nanages,
naInIaIns, and nonIIors conuIer aIIcaIIons on Le-
IaII oI IIs cusIoners. An ASP assunes resonsILIIIIy Ior
IIe underIyIng deIIvery necIanIsns, vIIcI IncIude neI-
vorkIng InIrasIrucIure and Iardvare requIrenenIs. An
ASP nay aIso Le resonsILIe Ior aIIcaIIon naInIenance
and ugrades, IraInIng, IecInIcaI suorI, and overaII sys-
Iens nanagenenI. TyIcaIIy, an ASP cIarges an end-user
organIzaIIon a hxed nonIIIy Iee Lased on IIe aIIca-
IIon usage and servIces rendered. TIese servIces nay In-
cIude Iardvare InsIaIIaIIon, cusIoner suorI, naInIe-
nance, and ugrade.
Many conanIes ouIsourcIng LRP-reIaIed aIIca-
IIons evIdenced LenehIs Iron ASPs. ResearcI oI IIe AL-
erdeen Grou (2001) suggesIed IIaI IosIed soIuIIons
couId Le InIenenIed 23 IasIer and aI 60 Iover cosI
IIan In-Iouse LRP sysIens. ResearcI conducIed Ly IIe
auIIor IdenIIhed IIe IoIIovIng InorIanI LenehIs oI ouI-
sourcIng enIerrIse aIIcaIIons IIrougI an ASP versus
InIenenIIng IIen In-Iouse (IIe LenehIs are resenIed
In descendIng order oI IIeIr InorIance):
Various cos/ savins'cos/ rcduc/ions, u/ic/inprovc con-
panics rc/urn on invcs/ncn/s (POI). TIese reduced cosIs
IncIude cosIs oI addIIIonaI ITsIaII Io nanage InIenen-
IaIIon, naInIenance, and suorI oI IIe aIIcaIIons, ex-
enses oI creaIIng, runnIng, and naInIaInIng a conIex
InIrasIrucIure, cosI oI InsIaIIIng and runnIng servers and
oIIer Iardvare, and cosI oI soIIvare ugrades/udaIes.
Conpanics can conccn/ra/c on //cir corc conpc/cncics.
OuIsourcIng conIex LRP sysIens aIIovs conanIes
Io Iocus on IIeIr core sIraIegIc acIIvIIIes and acIIeve
greaIer coneIIIIve dIIIerenIIaIIon In IIeIr rIncIaI
LusIness areas.
Ias/ inp/cncn/a/ion sc/cdu/c. AccordIng Io varIous re-
searcIes, IIe average IIne Io InIenenI ouIsourcIng so-
IuIIons Is around 6 nonIIs, vIIcI Is aI IeasI Iour Io sIx
IInes Iover IIan IIe average IIne Ior InIenenIIng an
LRP sysIen In-Iouse.
Invcs/ncn/ ris/ rcduc/ion. TIe ASP nodeI reduces con-
anIes' rIsk oI nakIng Iuge InvesInenIs In IIe soII-
vare InIenenIaIIon and urcIasIng soon-Io-Le oLso-
IeIe soIIvare.
Pcu/ar soj/uarc upradcs'upda/cs. In nany cases, ASP
conanIes are resonsILIe Ior IIe IIneIy ugrade oI
IIeIr soIIvare accordIng Io cusIoner suggesIIons and
requesIs.
WIIIe seIecIIng an ASP conany, cusIoners sIouId
consIder a conLInaIIon oI IacIors reresenIIng najor as-
ecIs oI IIe ASP nodeI. Based uon severaI researcI re-
orIs and InIornaIIon IronIIe ASP-reIaIed WeL sIIes, IIe
auIIor IdenIIhed InorIanI IacIors IIaI cusIoners need
Io Iook InIo vIIIe seIecIIng IIe ASP. TIese IacIors are re-
senIed LeIov In descendIng order oI IIeIr InorIance Io
cusIoners:
Guaran/ccd dc/ivcry (rc/iabi/i/y oj vcndor). CusIoners
vouId need Io geI a reIIaLIe ASP IIaI rovIded servIce
ERP SELECTION AND IMPLEMENTATION ?15
1abIe 2 Mun Steps und Llements ol LkP lmplementuton
Steps fIements
Phuse l. - lorm LkP selecton und mplementuton teum
Prepuruton und Selecton - Develop LkP vson (needs, objectve, outcomes)
ol LkP - ldently the mplementuton model (one-vendor soluton, best-ol-breed soluton,
outsourcng, etc.)
- Develop selecton crteru
- Lstublsh LkP soltvure cunddute lst (lour to sx cunddutes)
- Creute kequest lor Proposul (klP), und send t to the prospectve cunddutes
- kevev ther responses und dently three-lour nulsts
- kequest the nulsts to demonstrute ther puckuges
- Select the vnner und negotute the contruct
- lustly the nvestment
Phuse 2. - Crgunze the mplementuton project
lnstulluton und - Dene the perlormunce meusures lor the nev system
lmplementuton - Creute the ntul detuled mplementuton project plun
- Lducute the project teum
- ^ssess ntegrty ol the exstng dutubuse
- lnstull nev or upgrude exstng hurdvure
- lnstull the soltvure, perlorm the computer room plot
- Lducute the LkP users
- Dene und rene procedures lor the nev system
- Lnsure ntegrty und uccurucy ol the dutu
- rng the st module/product/plunt lve, rene und udjust. kepeut the sume lor
other modules/products/plunts
- lmprove contnuully
vIrIuaIIy aII IIe IIne, vIII uIIne oI aI IeasI 99 and
guaranIeed access 24 Iours a day and 7 days a veek.
uic/ inp/cncn/a/ion /inc. TIe InIenenIaIIon cycIe
IIne sIouId Le no nore IIan 6-9 nonIIs.
Vcndors rcpu/a/ion. CusIoners sIouId seIecI a veII-
reIerenced vendor IIaI Ias a successIuI Irack record oI
InIenenIaIIons, exceIIenI cusIoner servIce, and naIn-
Ienance.
Iinancia/ s/abi/i/y oj ASP. An ASP's hnancIaI osIIIon Is
very crIIIcaI Io suorIIng IIe ongoIng LusIness so IIaI
II can rovIde servIces over IIe Iong Iern. TIereIore, a
cusIoner, rIor Io nakIng IIs hnaI ASP decIsIon, needs
Io IuIIy InvesIIgaIe IIe ASP's hnancIaI erIornance and
resuIIs.
Sca/abi/i/y. ASPs sIouId oIIer servIces IIaI scaIe as
quIckIy as a conany deveIos.
Cos/ oj ASP. CusIoners sIouId Iook Ior Iov-cosI soIu-
IIons vIII a hxed Iee sIrucIure aI conaIILIe raIes.
Appropria/c sccuri/y. CusIoners vouId need Io geI ASPs
IIaI rovIde Iayered daIa securIIy and Lacku servIce.
Moreover, onIy auIIorIzed escorIed ersonneI sIouId
Iave access Io IIe daIa cenIer.
Ixpcr/isc ui// app/ica/ions. ASPs nusI Iave exIendedex-
erIence vIII and exerIIse In InIenenIIng and naIn-
IaInIng aIIcaIIons II IosIs.
Projcssiona/ scrviccs. II Is reIeraLIe Io Iave an ASPcon-
any IIaI Is a nIcIe Iayer and Iocuses on a secIhc nar-
keI segnenI. ASPs sIouId Iave an aLIIIIy Io InIegraIe
vIII exIsIIng sysIens and rovIde sone aIIcaIIon cus-
IonIzaIIon.
Pcu/ar upda/cs. CusIoners vouId need Io seIecI an
ASP IIaI IrequenIIy enIances IIs soIIvare vIII reguIar
udaIes.
fRP SfLfC1lON AND
lMPLfMfN1A1lON
TIe seIecIIon and InIenenIaIIon oI an LRP sysIen con-
sIsIs oI severaI najor sIes IIaI reare a Iranevork Ior
successIuI InIenenIaIIon, IdenIIIy an LRP soIIvare ven-
dor and aIIcaIIons Io Le InIenenIed, and InsIaII and
InIenenI IIe soIIvare. As descrILed Ly LangenvaIIer
(2000), IIe naIn sIes and IIeIr eIenenIs are resenIed
In TaLIe 2.
One oI IIe crIIIcaI eIenenIs In IIe hrsI sIe Is Io deveIo
a conany's LRP vIsIon. TIe vIsIon sIouId IncIude oL-
jecIIves, needs, and execIaIIons Ior InIenenIIng sucI
a sysIen, as veII as an InIenenIaIIon nodeI. Today,
conanIes uIIIIze severaI InIenenIaIIon nodeIs. One oI
IIen Is a sIngIe InIegraIed LRP sysIen Iron an LRP soII-
vare vendor, I.e., a "one-vendor sysIen. AnoIIer nodeI
Is assocIaIed vIII a conLInaIIon oI IIe "LesI oI Lreed
aIIcaIIons. Ior exanIe, a conany nIgII decIde
Io seIecI SCM aIIcaIIons Iron SAP, HR Iron PeoIe-
SoII, and IInancIaIs Iron OracIe. In IIIs case, searaIe
suLsysIen soIuIIons are InIerIaced and noI InIegraIed
(HarreIson, 2001). TIe IIIrd nodeI nIgII reresenI an
ouIsourcIng oI LRP soIuIIons IIrougI ASP. To cIoose
a secIhc InIenenIaIIon nodeI, a conany needs Io
Iake InIo consIderaIIon a varIeIy oI IacIors IncIudIng
sIze oI IIe conany, IndusIry IIe conany LeIongs Io,
ENTERPRISE RESOURCE PLANNING (ERP) ?1
1abIe 3 LkP lmplementuton Meusurements
Group of Measurements PossibIe lndicators
lnuncul results - Cost suvngs
- keturn on nvestments
- lnuncul puybuck
- 1otul cost ol ovnershp
Process mprovement - Crder lulllment tme
results - Procure-to-puy tme
- lnventory level
- Producton/servce quulty
Customers und suppler - Smultuneous number ol
sutslucton customers n the system
- Number ol customer
complunts
- kelutonshp vth supplers
Systems results - ^vulublty ol nlormuton
- kelublty ol nlormuton
- System response tme
aLIIIIy Io InIegraIe varIous aIIcaIIons, and rojecIed
InvesInenIs.
SeIecIIon oI IIe LesI LRP vendor sIouId Le Lased on
IIe IoIIovIng crIIerIa:
Ica/urcs and junc/iona/i/yIIe caaLIIIIIes IIaI LRP
soIIvare Ias Io IuIhII IIe conany's needs, IIe nuIII-
IIcIIy oI IeaIures and aIIcaIIons IIaI IIe vendor can
rovIde
Is/ina/cd /o/a/ cos/ oj ouncrs/ip (TCO) as dehned In
LRP Issues
Providcd scrvicc and suppor/-quaIIIy and IIneIIness oI
a vendor's roducI InsIaIIaIIon, servIce avaIIaLIIIIy, cus-
Ioner servIce, LusIness consuIIIng, and sysIen InIegra-
IIon
Iinancia/ viabi/i/y oI IIe vendor Io rovIde Iong-Iern
servIce Ior IIe conany (vendor's revenues, grovII nar-
gIns, earnIngs er sIare, IundanenIaIs raIIos, eIc.)
Tcc/nica/ cxccu/ion-aLIIIIy oI IIe vendor Io neeI Indus-
Iry nIIesIones (R&DcaaLIIIIIes In conarIson Io IIose
oI oIIer vendors).
To nonIIor and anaIyze InIenenIaIIon rocesses and
resuIIs, a conany needs Io uI In Iace a sysIen oI LRP
InIenenIaIIon neasurenenIs. TIIs sysIen sIouId de-
scrILe hnancIaI resuIIs oI InIenenIIng LRP, rocess and
sysIen InrovenenIs, cusIoner and suIIer saIIsIac-
IIon, and IecInIcaI/sysIen erIornance resuIIs. PossILIe
neasurenenIs oI LRP InIenenIaIIon are resenIed In
TaLIe 3.
CONCLUSlON: 1Hf FU1URf OF fRP
In nore IIan 30 years oI evoIuIIon, LRP sysIens Iave
underIaken a sIgnIhcanI IransIornaIIon Iron IuncIIon-
secIhc aIIcaIIons Io IuIIy InIegraIed rocess-drIven
sysIens. TIese sysIens oeraIe over IIe InIerneI and con-
IaIn LoII Lack-end and IronI-end caaLIIIIIes. BeIng one
oI IIe naIn enIerrIse-Lased conuIer arcIIIecIure and
LusIness aIIcaIIon, LRP sysIens Iave Leen exerIenc-
Ing a dranaIIc grovII In saIes Ior IIe asI 10-12 years,
and, accordIng Io varIous IorecasIs (AMR, 2000, DaIa
AnaIysIs Grou, 2000), vIII conIInue Io grov In IIe Iu-
Iure.
TIe IurIIer deveIonenI oI LRP sysIens Is assocIaIed
vIII IIe IoIIovIng Irends:
IuII InIegraIIon oI e-connerce soIuIIons InIo LRP sys-
Iens
SuLsIanIIaI Increase In IIe nunLer oI coIIaLoraIIve LRP
IooIs and aIIcaIIons
IuIure deveIonenI oI anaIyIIcaI and LusIness InIeIII-
gence IooIs InLedded InIo LRP
An oen LRP arcIIIecIure envIronnenI IIaI nakes II
ossILIe Io connecI IIe sysIen vIII oIIer InIernaI and
exIernaI cusIoner and suIIer aIIcaIIons.
In IIeu oI IIese Irends, TIe GarIner Grou (Genovese,
Bond, ZrInsek, & Irey, 2001) Ias InIroduced and de-
scrILed a nev LRP aradIgn sIIII-LRP II. AccordIng
Io GarIner, "LRP II Is an aIIcaIIon and deIoynenI
sIraIegy IIaI exands ouI Iron LRP IuncIIons Io acIIeve
InIegraIIon oI an enIerrIse's key donaIn-secIhc, InIer-
naI and exIernaI coIIaLoraIIve, oeraIIonaI and hnancIaI
rocesses. A cornersIone oI LRP II Is oen arcIIIec-
Iure oI IIs cononenIs. TIaI neans IIaI IIe nonoIIIIIc
sysIens oI IIe asI vIII Iave Io cIange. LRP II vIII Le
nore cononenIIzed, and, IIus, conanIes vIII oen
IIeIr sysIens u Io oIIer conanIes, suIIers, and cus-
Ioners. TIIs vouId IurIIer IrradIaIe IIe "Invard Iook-
Ing naIure oI core LRP sysIens and IIe "one vendor
ovns everyIIIng LRP nodeI. AccordIng Io IIe LRP II
conceI, core LRP sysIens Iave Io Le redehned and
exIended Io enLrace IIe InIerneI, nev vIrIuaI suIy
cIaIn nodeIs, CRM sysIens, and IIe B2B e-connerce
nodeIs. WIII LRP II, IIe roIe oI LRP sysIens exands
Iron an aIIenI Io oIInIze enIerrIse resources Io
a Iocus on "exosIng IIe InIornaIIon InvoIvIng IIose
resources Io oIIer enIerrIses vIIIIn a connunIIy oI
InIeresI.
TIe GarIner Grou's researcI (Genovese eI aI., 2001)
redIcIs IIaI Ly 2005 40 oI LRP II vendors vIII oIIer
naIIve InIegraIIon oI LeIveen 60 and 80 oI enIerrIse-
cenIrIc connerce rocesses, deendIng on donaIn. AIso,
Ly 2005 Iess IIan 50 oI enIerrIses vIII reIy on a sIn-
gIe vendor Io enaLIe nore IIan 80 oI IIeIr enIerrIse-
cenIrIc connerce rocesses.
GLOSSARY
Applicutions service provider (ASP) OrganIzaIIon
IIaI IosIs, nanages, naInIaIns, and nonIIors con-
uIer aIIcaIIons on LeIaII oI IIs cusIoners.
H2H (business-to-business) e-commerce Use oI con-
uIer neIvorks, rInarIIy IIe InIerneI, Io Luy and seII
roducIs, servIces, InIornaIIon, and connunIcaIIons
LeIveen LusIness organIzaIIons.
REFERENCES ?1?
Customer relutionshipmunugement (CRM) SeI oI a-
IIcaIIons reIaIed Io cusIoner InIeracIIons vIII a con-
any, nanagIng cusIoners' denands and orders, and
InrovIng cusIoner saIIsIacIIon.
Enterprise resource plunning (ERP) InIegraIed
conuIer-Lased sysIen IIaI nanages InIernaI and
exIernaI organIzaIIon's resources, aIIcaIIon and
soIIvare arcIIIecIure IIaI IacIIIIaIes InIornaIIon
lovs LeIveen varIous LusIness IuncIIons InsIde and
ouIsIde an organIzaIIon.
ERP II AIIcaIIon and deIoynenI sIraIegy IIaI ex-
ands ouI IronLRP IuncIIons Io acIIeve InIegraIIonoI
an enIerrIse's key donaIn-secIhc, InIernaI and exIer-
naI coIIaLoraIIve, oeraIIonaI, and hnancIaI rocesses.
Munulucturing resource plunning (MRP II) InIe-
graIed conuIer-Lased sysIen IIaI conLInes naIerI-
aIs and caacIIy IannIng vIII dIsIrILuIIon IannIng,
saIe orderIng, narkeIIng, hnance/accounIIng, and Iu-
nan resources.
Muteriul requirements plunning (MRP) InIegraIed
conuIer-Lased sysIen Ior caIcuIaIIng naIerIaI and
deIIvery scIeduIes, conLInes InvenIory nanagenenI,
naIerIaIs IannIng, caacIIy IannIng, urcIasIng,
and dIsIrILuIIon.
Process-driven system LRPIeaIure oI InIegraIIng LusI-
ness IuncIIons InIo a varIeIy oI rocesses, vIIcI are
conuIerIzed versIons oI reaI LusIness rocesses IIaI
conanIes aIy Io nanagIng resources, vorkIng vIII
cusIoners and suIIers, eIc.
Sculubility LRP IeaIure oI rovIdIng adequaIe caaLIII-
IIes vIen IIe IoIaI nunLer oI users oI a sysIen Is grov-
Ing due Io a conany's exansIon or IIs nerger vIII or
acquIsIIIon oI anoIIer conany.
Supply chuin munugement (SCM) SysIen oI rIn-
cIIes, neIIods, and aIIcaIIons oI IannIng and
scIeduIIng naIerIaI and InIornaIIon lovs Iron
suIIers Io a nanuIacIurIng/servIce organIzaIIon,
scIeduIIng, execuIIng, nonIIorIng, and reorIIng ro-
ducIIon Ians In IIIs organIzaIIon, and dIsIrILuIIng h-
naI roducIs Io IIe cusIoners.
Totul cost ol ownership (TCO) ToIaI cosI oI ovnIng
a conuIer-Lased sysIen, IncIudes soIIvare IIcense
Iees, Iardvare cosI, InsIaIIaIIon and InIenenIaIIon
Iees (consuIIIng, addIIIonaI ersonneI, IraInIng, IesI-
Ing, eIc.), cosI oI naInIenance, and cusIoner suorI.
Y2K problem DerIved Iron resenIIng a year as a
Ivo-dIgII nunLer In soIIvare, Ior exanIe "00 couId
sIand Ior "1900 or "2000. TIIs can cause IaIIures In
arIIIneIIc, conarIsons, sorIIng, and InuI/ouIuI Io
daIaLases or hIes vIen daIe-reIaIed daIa are nanIu-
IaIed. TIIs roLIen oIenIIaIIy exIsIs In oId conuIer-
Lased sysIens.
CROSS RfFfRfNCfS
See App/ica/ion Scrvicc Providcrs (ASPs), Eusincss-/o-
Eusincss (E2E) I/cc/ronic Conncrcc, Cus/oncr Pc/a/ion-
s/ip Manacncn/ on //c \cb, Supp/y C/ain Manacncn/.
RfFfRfNCfS
AMR ResearcI CenIer-Press CenIer (2000). AMP rc-
scarc/ prcdic/s cn/crprisc app/ica/ions nar/c/ ui// rcac/
S78 bi//ion by 2004. ReIrIeved 2000 Iron III://
vvv.anrresearcI.con/ressroon/hIes/00613.as
ALerdeen Grou (2001). I-procurcncn/. Iina//y rcady jor
princ /inc (ALerdeen Grou VIevoInI, MarcI 21).
CIIIIe, S. (1999). LRP InIenenIaIIon. Harvard Eusincss
Pcvicu, (1), 16-17.
DaIa AnaIysIs Grou (2000). Iorccas/ cn/crprisc rcsourcc
p/annin (IPP) sa/cs /o rou a/ 24.9 /o S73 b/n in
2004. ReIrIeved OcIoLer 24, 2000 Iron III://vvv.
InIoIecIIrends.con/renIerrIseresourceIannIng.IIn
Genovese, Y., Bond, B., ZrInsek, B., and Irey, N. (2001).
T/c /ransi/ion /o IPP II. Mcc/in //c c/a//cncs (SIraIe-
gIc AnaIysIs ReorI, SeIenLer 21, 1-34). SIanIord,
CT: GarIner Grou.
HarreIson, B. (2001, 1une). DecIsIons: ConarIng LesI-
oI-Lreed soIuIIons Io aII-In-one LRP suIIes. APICS-T/c
Pcrjornancc Advan/ac, 25-27.
LangenvaIIer, G. A. (2000). In/crprisc rcsourcc p/annin
and bcyond. In/cra/in your cn/irc oraniza/ion. Boca
RaIon, IL: SI. LucIe Press.
MaLerI, V. A., SonI, A., and VenkaIarananan, M. A. (2000,
second quarIer). LnIerrIse resource IannIng survey
oI U.S. nanuIacIurIng hrns. Produc/ion and Invcn/ory
Manacncn/ 1ourna/, 52-58.
MaLerI, V. A., SonI, A., and VenkaIarananan, M. A. (2001,
IIIrd/IourII quarIers). LnIerrIse resource IannIng:
MeasurIng vaIue survey oI U.S. nanuIacIurIng hrns.
Produc/ion and Invcn/ory Manacncn/ 1ourna/, 46-51.
TIe ABCs oI LRP (2002). CIO Maazinc. ReIrIeved
IeLruary 7, 2002 IronIII://vvv.cIo.con/Ioruns/er/
edII/122299 er.IInI
To 100 SoIIvare Vendors (2001). ReIrIeved 2001 Iron
III://vvv.nanuIacIurIngsysIens.con/Io100/
WIIIIs, T. H., WIIIIs-Brovn, A. H., and McMIIIan, A.
(2001, second quarIer). CosI conIaInnenI sIraIegIes Ior
LRP sysIen InIenenIaIIons. Produc/ion and Invcn-
/ory Manacncn/ 1ourna/, 36-41.






















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