CHAPTER 1

What is Enterprise Systems?

1. Defined as the large complex computing systems which handle large volumes of data and
enable organizations to integrate and coordinate their business processes. Such systems normally
are a single system central to organizations and ensure that information can be shared across all
functional levels and management hierarchies.

2. Enterprise systems are software that provides solutions to an integrated business organization.

3. Information systems that allow companies to integrate information across operations on

an enterprise-wide basis

4. Web-based information systems such as Enterprise Resource Planning (ERP), Supply Chain
Management (SCM), and Customer Relationship Management (CRM), tying together all aspects
of the enterprise so that operations, the supply chain, distribution channels, accounting systems,
and other information transfers are coordinated among the core firm and all relevant
collaborators.

5. Software packages that support organizational processes and services, generating valuable
data to support decision-making. These systems can solve enterprise-wide problems and improve
data integration

6. Large and complex information systems, which manage large volumes of data and support
organizations to integrate and coordinate their business processes.

7. “Commercial software packages that enable the integration of transaction-oriented data and
business processes throughout an organization (and perhaps eventually throughout the entire
inter-organizational supply chain)” (Markus & Tanis, 2000: 176).
The systems include enterprise resource planning (ERP), customer relationship management
(CRM), supply chain management (SCM), product life-cycle management (PLM) and e-
procurement software (Shang & Seddon, 2002).
BUSINESS PROCESS AND BUSINESS PROCESS INTEGRATION

Digital transformation has created many opportunities for companies.

One is to be able to work together with other organizations, through the integration of processes.
Partners, customers, suppliers and even competitors (in purchasing cooperatives, for example)
can work together to achieve better results.

To achieve these goals, there is a methodology called BPI – Business Process Integration. It aims
to promote this integration in a harmonious way and with benefits for all involved, without
forgetting internal business integration.

Why do companies want to adopt BPI – Business Process Integration?

Companies seek, through BPI, a way not only to integrate applications and systems internally.
The goal is bigger: they want to relate and exchange information externally, with the tools and
data from partners, suppliers and customers.

In the same way that an ERP (Integrated Management System) generates more transparency,
agility and reliability in the management of a company, BPI acts in a similar way between
companies.

Thus, the needs of all are aligned with the objectives of the business, which brings transparency,
agility and flexibility to companies. The result is more efficiency and innovation.

This is because some of the processes dominated by organizations external to your business are
unknown or few are exploited in your organization. And it works the other way around, too.

For example, a company that produces wooden furniture for hotels does not understand anything
about hospitality, much less about forest cultivation and the extraction of timber.

However, if everyone could align their goals, it may be possible to create integrated and
innovative processes, from planting trees to the use of wooden furniture by hotel guests.
With all stakeholders exchanging information, it is possible to create integrated processes that
are much more objective and efficient for the group. Thus, more value is delivered to end
customers using fewer resources.

Imagine that the hotel knows that its customers prefer furniture made with light wood and with
certain coloring and shape. If this information is shared with the logger and the furniture factory,
the whole value chain can prepare for this.

Thus, the integration of processes goes beyond the boundaries of the company and encompasses
each stage of the production process, in different organizations.

But, what is BPI, that allows it to advantage businesses in such a way?

What is BPI – Business Process Integration?

Business Process Integration (BPI) is a crucial technique for supporting inter-organizational

business interoperability. BPI enables the automation of business processes and the integration of
systems into several organizations “

In this sense, the integration of organizational process models is one of the most used approaches
to achieve BPI.

But integrating models is very complex. Therefore, it requires process analysts to have extensive
experience.

Therefore, it is crucial to follow a rigorous and careful step by step in pursuit of BPI.

Without this, in addition to wasting precious time by “walking around in circles,” you will not
achieve the desired benefits in terms of agility, innovation and customer satisfaction.

Now that it’s clear to you what BPI is, let’s take a step-by-step approach to implementing it in
your company.

IMPLEMENTING ENTERPRISE SYSTEM

The 5 steps for implementing BPI in your company

1- Identification of business processes

The first step in implementing BPI is to identify processes. For this, there is nothing more
appropriate than using business process mapping tools. Good BPM software, in addition to
mapping, also enables process modeling and automation.

In this way, you know in real time the process’s performance and the adjustments you need to
make to promote continuous improvement.

With processes identified, automated and optimized, you need to define a way to share them with
other organizations. Documentation is the next step.

HEFLO is a complete BPM software that does everything from mapping and modeling and
documentation to automation.

2- Process documentation

The traditional way of sharing a process is through documentation.

Typically printed or PDF documents (and even Word) are created specifying all the details of the
process, the person in charge, tasks and decision making.

Some BPM tools, such as HEFLO, do the documentation automatically, based on the process
diagram itself, created in the tool through a drag-and-drop interface.

Of course, this speeds up the consolidation and exchange of information. See in the image below
how people can view, approve, and send suggestions for documented processes.

But what if, through authorizations with login and password, the analysts and process
owners of partner organizations could access the process diagrams of other organizations and
edit them in the tool simultaneously?

3 – Collaborative modeling of newly integrated processes

Without the use of collaborative BPM tools, you’ll need to share the documentation, wait for the
analysts at each company to study them, and set up meetings to define what the integrated
processes will look like.

With the use of the collaborative tool, this will be much easier.

Everyone who has access to the process models can make changes and create new process
diagrams from the existing ones without losing the previous ones.

One can even capture one process from one organization (already modeled in the tool) “copy and
paste” into another and integrate it quickly.

In addition, everyone can make comments and suggestions in the processes as others model and
adjust them.

4 – Implementation

As the tool also automates the processes, implementation is very agile and can be accompanied
by all the organizations involved.

A request made by one company can trigger a process in the other that, through the same flow of
tasks, triggers the suppliers in a third company, and so on.

5- Monitoring and continuous improvement

Like there is in a BPM process, the BPI process provides for the creation of KPIs (Key
Performance Indicators) to track processes.
Thus, together, companies and organizations can assess whether integrations are having the
desired effects and provide the necessary adjustments and improvements to the processes.

All this in a transparent way and based on facts and figures.

So, what do you think of doing BPI – Business Process Integration – with the help of a BPM
tool?

Does your business use BPI? What do you think of the idea?

Share your BPI experience with us! Tell us how you use it in your business.

And if this is news to you, what do you think? Are our companies mature enough to exchange
information in real time in this way?

Business Process Integration: Creating Connectivity

Business Process Integration (BPI) is essential for businesses looking to connect systems and
information efficiently. BPI allows for automation of business processes, integration of systems
and services, and the secure sharing of data across numerous applications. Overcoming
integration challenges allows organizations to connect systems internally and externally.
Moreover, BPI allows for the automation of management, operational, and supporting processes.
This gives businesses an edge over competitors as they can spend less time concerned about the
challenges of integration and more time and energy on driving new business.

Previously, business process integration software was only available to large enterprise
companies that could afford it. Today, businesses of all sizes need a efficient integration solution
to streamline processes between marketing, sales, customer service, and supply chain
management, etc. Integration among administrative, operational, and support processes increases
productivity by simplifying regular enterprise functions.

Integration Barriers
Integration without the proper tools is complicated. Many businesses implement custom
integration to take on the challenge of creating seamless connectivity. This method calls for a
developer to create point-to-point integrations between applications and services. As a business
grows and the number of integrations increases, the point-to-point architecture or “spaghetti
code”, becomes complex, fragile, and expensive to maintain.

Companies without an integration solution often resort to manual data entry. This method
requires individuals to transfer data from one application to another by hand, often resulting in
“swivel chair” data entry. Such a technique is time consuming and expensive. Some companies
employ data loaders or other tools to help integration, yet with limited connectivity to certain
services, they are not always scalable.

Business Process Integration Solution

Organizations seek a solution not only to synchronize applications and systems internally, but
also to connect externally to partner, supplier, and customer systems. Business process
management strives to improve processes and align the needs of customers with company
objectives. This gives businesses visibility and flexibility, making them more efficient and
innovative.

Moreover, workflow automation promotes efficient interactions between process models and
data models. Business process re-engineering works towards improving efficiency across the
business model by helping companies evaluate and implement best practices for process
automation and business integration. Critical governance and operations processes can be
automated and synchronized to ensure businesses follow standards. Core business processes
relating to marketing, sales, and purchases can be integrated with support and accounting to
enhance visibility and improve communication across the team. With critical business processes
automated, companies are free to focus primarily on driving new business.

MuleSoft offers a solution to take on the challenges of business process integration. Mule as
an Enterprise Service Bus is a lightweight integration platform that enables connectivity across
applications and services. It provides the technology to automate business process within the
organization as well across customers, partners, and suppliers. Mule as an ESB quickly and
reliably enables integration between data and technology.

Mule as an ESB takes the pain out of integration. By leveraging a library of Anypoint
Connectors, creating instant API connectivity with popular third party applications and services
without complicated code is both fast and easy. With Anypoint Studio, any developer can
quickly create integrations, customize business processes and make modifications. Moreover,
Mule as an ESB eliminates the task of manual data entry and simplifies the synchronization of
data between cloud and on-premises applications with repeatable integrations.
MuleSoft Supports Business Process Integration

As a trusted name in integration, Mule as an ESB enables over 1,600 organizations in more than
60 countries to build application networks that increase the clock speed of business.
Additionally, Mule as an ESB is open source and developer friendly, with a growing developer
community. The lightweight and flexible platform has the power to drive even the most
demanding and mission-critical SOA implementations. Best of all, Mule as an Enterprise Service
Bus is scalable - easily adapting to changing business requirements.

Leveraging Mule as an Enterprise Service Bus makes it easy to simplify business process
integration. BPI breaks down integration barriers, gives organizations control over their
processes, and makes businesses more efficient. Get started today by contacting a Mule
expert today.

Enterprise resource planning (ERP) is the integrated management of main business processes,
often in real time and mediated by software and technology.

ERP is usually referred to as a category of business management software — typically a suite of

integrated applications—that an organization can use to collect, store, manage, and interpret data
from many business activities.

ERP provides an integrated and continuously updated view of core business processes using
common databases maintained by a database management system. ERP systems track business
resources—cash, raw materials, production capacity—and the status of business commitments:
orders, purchase orders, and payroll. The applications that make up the system share data across
various departments (manufacturing, purchasing, sales, accounting, etc.) that provide the data
ERP facilitates information flow between all business functions and manages connections to
outside stakeholders.

Enterprise system software is a multibillion-dollar industry that produces components supporting

a variety of business functions. IT investments have become the largest category of capital
expenditure in United States-based businesses over the past decade. Though early ERP systems
focused on large enterprises, smaller enterprises increasingly use ERP systems.
The ERP system integrates varied organizational systems and facilitates error-free transactions
and production, thereby enhancing the organization's efficiency. However, developing an ERP
system differs from traditional system development. ERP systems run on a variety of computer
hardware and network configurations, typically using a database as an information repository.

ERP systems typically include the following characteristics:

 An integrated system
 Operates in (or near) real time
 A common database that supports all the applications
 A consistent look and feel across modules
 Installation of the system with elaborate application/data integration by the Information
Technology (IT) department, provided the implementation is not done in small steps[20]
 Deployment options include: on-premises, cloud hosted, or SaaS

Functional area

An ERP system covers the following common functional areas. In many ERP systems, these are
called and grouped together as ERP modules:

 Financial accounting: general ledger, fixed assets, payables including vouchering, matching
and payment, receivables and collections, cash management, financial consolidation
 Management accounting: budgeting, costing, cost management, activity based costing
 Human resources: recruiting, training, rostering, payroll, benefits, retirement and pension
plans, diversity management, retirement, separation
 Manufacturing: engineering, bill of materials, work orders, scheduling, capacity, workflow
management, quality control, manufacturing process, manufacturing projects, manufacturing
flow, product life cycle management
 Order processing: order to cash, order entry, credit checking, pricing, available to
promise, inventory, shipping, sales analysis and reporting, sales commissioning
 Supply chain management: supply chain planning, supplier scheduling, product
configurator, order to cash, purchasing, inventory, claim processing, warehousing (receiving,
put-away, picking and packing)
 Project management: project planning, resource planning, project costing, work breakdown
structure, billing, time and expense, performance units, activity management
 Customer relationship management (CRM): sales and marketing, commissions, service,
customer contact, call center support – CRM systems are not always considered part of ERP
systems but rather business support systems (BSS)
 Data services: various "self–service" interfaces for customers, suppliers and/or employees

Connectivity to plant floor information

ERP systems connect to real–time data and transaction data in a variety of ways. These systems
are typically configured by systems integrators, who bring unique knowledge on process,
equipment, and vendor solutions.

Direct integration—ERP systems have connectivity (communications to plant floor equipment)

as part of their product offering. This requires that the vendors offer specific support for the plant
floor equipment their customers operate. ERP vendors must be experts in their own products and
connectivity to other vendor products, including those of their competitors.

Database integration—ERP systems connect to plant floor data sources through staging tables
in a database. Plant floor systems deposit the necessary information into the database. The ERP
system reads the information in the table. The benefit of staging is that ERP vendors do not need
to master the complexities of equipment integration. Connectivity becomes the responsibility of
the systems integrator.

Enterprise appliance transaction modules (EATM)—These devices communicate directly

with plant floor equipment and with the ERP system via methods supported by the ERP system.
EATM can employ a staging table, web services, or system–specific program interfaces (APIs).
An EATM offers the benefit of being an off–the–shelf solution.

Custom–integration solutions—Many system integrators offer custom solutions. These systems

tend to have the highest level of initial integration cost, and can have a higher long term
maintenance and reliability costs. Long term costs can be minimized through careful system
testing and thorough documentation. Custom–integrated solutions typically run
on workstation or server-class computers.
Configuration

Configuring an ERP system is largely a matter of balancing the way the organization wants the
system to work with the way it was designed to work. ERP systems typically include many
settings that modify system operations. For example, an organization can select the type of
inventory accounting—FIFO or LIFO—to use; whether to recognize revenue by geographical
unit, product line, or distribution channel; and whether to pay for shipping costs on customer
returns.

Two-tier enterprise resource planning

Two-tier ERP software and hardware lets companies run the equivalent of two ERP
systems at once: one at the corporate level and one at the division or subsidiary level. For
example, a manufacturing company could use an ERP system to manage across the
organization using independent global or regional distribution, production or sales centers,
and service providers to support the main company’s customers. Each independent center
(or) subsidiary may have its own business models, workflows, and business processes.

Given the realities of globalization, enterprises continuously evaluate how to optimize their
regional, divisional, and product or manufacturing strategies to support strategic goals and
reduce time-to-market while increasing profitability and delivering value.[45] With two-tier ERP,
the regional distribution, production, or sales centers and service providers continue operating
under their own business model—separate from the main company, using their own ERP
systems. Since these smaller companies' processes and workflows are not tied to main company's
processes and workflows, they can respond to local business requirements in multiple locations.

Factors that affect enterprises' adoption of two-tier ERP systems include:

 Manufacturing globalization, the economics of sourcing in emerging economies

 Potential for quicker, less costly ERP implementations at subsidiaries, based on selecting
software more suited to smaller companies
 Extra effort, (often involving the use of Enterprise application integration) is required where
data must pass between two ERP systems[47] Two-tier ERP strategies give enterprises agility
in responding to market demands and in aligning IT systems at a corporate level while
 inevitably resulting in more systems as compared to one ERP system used throughout the
organization.

Customization

ERP systems are theoretically based on industry best practices, and their makers intend that
organizations deploy them "as is ERP vendors do offer customers configuration options that let
organizations incorporate their own business rules, but gaps in features often remain even after
configuration is complete.

ERP customers have several options to reconcile feature gaps, each with their own pros/cons.
Technical solutions include rewriting part of the delivered software, writing a homegrown
module to work within the ERP system, or interfacing to an external system. These three options
constitute varying degrees of system customization—with the first being the most invasive and
costly to maintain. Alternatively, there are non-technical options such as changing business
practices or organizational policies to better match the delivered ERP feature set. Key differences
between customization and configuration include:

 Customization is always optional, whereas the software must always be configured before
use (e.g., setting up cost/profit center structures, organizational trees, purchase approval
rules, etc.).
 The software is designed to handle various configurations and behaves predictably in any
allowed configuration.

 ERP creates a more agile company that adapts better to change. It also makes a company
more flexible and less rigidly structured so organization components operate more
cohesively, enhancing the business—internally and externally.[60]
 ERP can improve data security in a closed environment.

What is ERP Software?

Enterprise resource planning (ERP) software is an integrated suite of applications
designed to manage business functions, such as finance, human resources, sales and
manufacturing.
Different ERP systems are designed for different company sizes and industries. Many ERP
systems are flexible and can accommodate organizations of any size. For example, small
organizations do not necessarily have to select a system designed for SMBs. When implementing
a system designed for large enterprises, small organizations can simply pick and choose the
modules they implement.
Small organizations also can choose a different solution from the same vendor. For
example, Tier 1 ERP vendors have different solutions designed for different size companies.
When properly implemented, ERP software increases organizational efficiency by automating
business processes and enabling access to reliable data.
 CHAPTER 2

ANALYSING BUSINESS REQUIREMENTS FOR SELECTING AND IMPLEMENTING

ENTERPRISE SYSTEM AND SOFTWARE

SELECTION OF ENTERPRISE SYTEM SOFTWARE

Top 10 key ERP selection criteria:

1. Business requirements
2. Upper management support
3. User support
4. Functional requirements
5. Integration with existing systems
6. Budget and resources
7. Technology and future scalability
8. Total cost of ownership and ROI

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9. Evaluate and select options
10. Necessary customization

ERP selection criteria #1: business requirements

Develop a clear and comprehensive list of your requirements for your ERP. Use every resource
available to make this list excellent. Talk to your production workers and your purchasing
manager. Listen to executive management, and your customers and suppliers. Call in former
employees and current salespeople. When every thought is written, then prioritize the entire list.
Reach a solid consensus as to which requirements are absolutely “must have”. The next priority
tier includes things that are not mandatory but there is general agreement that including them
will benefit the company. Any other listed items are in a lower category, merely “nice to have”.

Take your priority list around to the same people who provided your inputs. Do they agree with
the requirement list? Does it need to be updated? Can someone provide a solid case to elevate a
point from tier 2 to tier 1? Much of every other criterion assumes this list is as good as it can be.

An ERP requirements template will be invaluable to this process, allowing you to break down
your required features into specific functionality. Our requirements template goes beyond
individual feature requests, and asks for specific function e.g. how does the general ledger
automate recurring transactions? And, if the software allows rules to calculate the amounts for
GL transactions. This granular detail will give you a full scope a system's functionality, and how
their software can meet your requirements i.e. is it out-of-the-box functionality, a customization,
or a 3rd party integration.

ERP selection criteria #2: upper management support

This could seem like an obvious criterion. Too often, it is not recognized for its importance.
One can select the absolute best ERP for their organization, yet without upper management
support, the project is likely doomed. Support goes beyond simply getting a spending approval.
You want your management to actively embody their support. When a resource from another
department is needed, the manager can throttle progress by providing lukewarm support. When

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a choice arises to support the new ERP or use the present system, you want confidence that the
manager truly supports the ERP even if there is a short-term cost at the point of the choice.
Pitching senior management for ERP project buy-in may seem daunting, but it is key to your
project's success - alongside determining selection costs, you need to focus your business case on
company goals, and how ERP can help your organization achieve them.

ERP selection criteria #3: user support

People in every functional area will be users of the new ERP. Gain their support by ensuring
their needs and desires are included in the requirements list. Those users, wherever they work,
will have much to gain through the success of your ERP implementation. Let those users know
they will have the support they need such as training and equipment they need to use the ERP
and receive value for them as well as for the overall organization. Make certain they know they
will have support helping them through the needed changes. In return, they will support your
efforts to use and benefit from your new ERP. Make sure here that the documentation users will
need is available when and where needed by users and is of sufficient quality to meet their needs.

ERP selection criteria #4: functional requirements

Your business has certain functional requirements that must be satisfied even before your change
and update requirements. Does this ERP support sales orders that include both physical products
related and services? If that is what your business sells, it has to. Your business operates in
multiple countries around the globe. Do the accounting components of ERP include multiple
currencies and the ability to work with the variety of tax systems in those countries?

Think about any ERP components not required by your business. If your business is distribution
and you perform no manufacturing, can you easily work around any work-in-process demands
made by an integrated inventory system included in some ERPs?

Specific sectors and departments will have very specific functional needs; your ERP selection
criteria should factor in each department's needs and desires. Your ERP should make things
easier - not harder - on all departments. Your supply chain needs to know if your ERP is going to
integrate with their suppliers, and if they can track shipments through the new system. Sales

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want to know how ERP is going to handle different sales territories, and if they can handle multi-
tiered orders. Make sure to factor each department into your ERP requirements list.

ERP selection criteria #5: integration with existing systems

Most businesses considering an ERP selection have other systems that are quite adequate for
their purpose and the business is not interested in changing multiple systems along with their
ERP. The question now to be asked: how will those systems integrate with ERP? Almost
always, there are common data elements. Can ERP read and use the existing data in that other
system? Will you allow the same data to exist and how will you keep those separately updated
data elements compatible? Will you be better served by changing the other system to use that
data from ERP?

What integration tools come with this ERP? It should have simple integration such as .csv files
for occasional data updates. That type of update is inefficient and likely too slow for everyday
use. Web services and XML files that allow different systems to quickly transfer data between
systems are a more modern way to work.

Many customers and suppliers use EDI (electronic data interface) to share data between
companies. If this is needed, be sure your ERP supports that need.

ERP selection criteria #6: budget and resources

How much money is available for an ERP system? If you only have $10, then you have to have a
very strict selection criterion. A 2021 Software Path report stated that on average you can expect
to spend about $9,000 on each user of your system - that's a big investment and a reminder that
ERP selection is a long-term consideration. Most ERP systems will be used for a decade or
longer so ongoing maintenance and support for the ERP as well as the infrastructure related are a
budget concern. Your choice today will lock costs into future budgets.
Use our free ERP price and budget guide to calculate how much your ERP costs

Who is going to take the time and perform the work involved in selecting and implementing
ERP? Ideally, you can devote full-time resources to the project but many businesses will want to
use part-time resources. You need to plan who will perform the necessary work those resources
perform now while they devote time toward ERP.

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Your ERP budget can vary based on business size, the latest ERP research from Software Path
collated budget data from thousands of ERP projects to find an average cost per user for various
business sizes. Interestingly, their ERP project report also found that companies in the healthcare
industry typically had a higher estimated budget per user.

Requirements, resources, industry, and company size are all factors you should include in your
ERP selection criteria to find the right software.

ERP selection criteria #7: technology and future scalability

These concerns apply to the software used to develop your ERP system and to the hardware
required to use that ERP. We know there will be ongoing developments and improvements in
both domains. We might not want either to perform on the bleeding edge of technology but
neither do we want either one to use obsolete technology today. At the same time, we want to
buy our ERP from a provider that has a good record of accomplishment of keeping up with
technology developments and who promises to maintain that strategy.

ERP selection criteria #8: total cost of ownership and ROI

Add up all the incremental costs you will incur due to this ERP. There will be the initial
purchase amount and some initial consulting expense. You might need some updates to your
servers and networks immediately. You will spend money on training and temporary labor while
your people are implementing ERP. You will have support and maintenance costs every year
while you use the ERP.

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At the same time, you will benefit from improvements in the cost to perform work. You might
see additional revenue because you now can provide services and products to your customers
that were not possible without this ERP.

Spread those costs and benefits over time and calculate your return on investment. Most
businesses have a threshold return needed before making an investment. Ensure that this ERP
passes your business ROI threshold.

ERP selection criteria #9: evaluate and select options

The traditional ERP system running on an on-premises server and supported by an in-house IT
staff is not the only choice today. Many businesses choose an ERP that runs in the cloud using a
SaaS framework. The initial investment is reduced in favor of monthly “rental” payments that
include the software and most support needs.

You can choose a hybrid approach where your business owns the ERP but operates it in the
cloud running on shared servers.

Many ERP systems today are developed using open source software too. These benefit from free
or very low cost to acquire the software. You have the source code for open-source so you have
the power for complete customizations. Users everywhere update open source ERP and they
find and fix bugs. Those improvements are available to all users immediately with no need to
wait for a development company to issue a new revision.

If you have concerns related to these options, your choice will point to what ERP system
selection criteria are essential for your business.

ERP selection criteria #10: necessary customization

The perfect ERP will never require any customization. Since none are likely to be perfect, any
customization will be a selection criterion. Understand among your team what customization is
desired and whether it truly is essential. Today’s ERP systems use knowledge gained from
thousands of customers. Is there some component of your business that is unique among every
other business around the world? Not likely. If your desired customization can be worked
around easily using an existing ERP, that customization is not a selection criterion. If that
customization can be deferred while you use an existing ERP and evaluated later, it is not
immediately a criterion, but the ability to implement that customization later is a criterion.

On the other hand, if your desired customization is required, look at ERP systems with an eye
toward the ease and efficiency of that customization. Do you have developers skilled in the
programming language required? Are developers with that skill available in the employment
market?

How will your ERP handle the customization? Can you use business objects or other validation
techniques to ensure compatibility with other components of the ERP? Can you introduce your
customization with no adverse effects on other components of ERP?

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Some ERPs available will have better answers to your questions than others will and will help
limit your available choices among ERP systems.

ARCHITECTURE OF ENTERPRISE SYSTEMS

The architecture of an enterprise system refers to the technical structure of the software, the ways
that users interact with the software, and the ways the software is physically managed on
computer hardware. Most modern ES have either a three-tier client-server architecture or a
service-oriented architecture. There are many different ways to deploy ES in these two
architectures. Both models offer distinctive technical and cost benefits, and both models have
drawbacks. Nevertheless, the impact of these two models on the management of business
processes is largely the same. We examine Client-Server types of architecture below.

Client-Server Architecture

Think of a desktop application that you routinely use, such as word processing, spreadsheet, or
presentation software. These applications consist of three components, or layers: (1) how you
interact with the application (using menus, typing, and selecting); (2) what the application allows
you to do (create formulas or charts, compose an essay); and (3) where the application stores
your work (on your hard drive or flash drive). These layers are the presentation layer, application
layer, and data layer, respectively. In the desktop applications mentioned above, all three layers
are contained in one system. In contrast, the three-tier client-server architecture separates these
layers into three separate systems, as illustrated in Figure 2-1.

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DATA IN AN ENTERPRISE SYSTEM

As we discussed earlier, a central component of any ERP system is the common database that
stores data related to all the processes. Without this function, integrating the various processes
would be difficult, if not impossible.

Therefore it is essential to understand how data are organized in an ERP

system. We address this topic in the following section. We then introduce the
different types of data that are stored in an ERP system, and we identify basic
data elements that are common to many processes. We will develop these topics and introduce
additional data elements in later chapters that discuss specific processes.

Data in an ERP system are used to represent the physical system in

which process steps such as creating a purchase order and receiving goods are

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carried out. These steps generate data, which represent the outcomes of the
steps.

There are three types of data in an ERP system: organizational data,

master data, and transaction data.

ORGANIZATIONAL DATA

Organizational data are used to represent the structure of an enterprise.

Examples of organizational structure are companies, subsidiaries, factories,
warehouses, storage areas, and sales regions. The three organizational data
elements discussed in this chapter are client, company code, and plant (see
Figure). Note that the terms organizational data, organizational levels, and organizational
elements are often used interchangeably, depending on the context.

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MASTER DATA

Master data represent entities associated with various processes. For example, processes involve
buying materials from vendors and selling materials to customers. In this example, customers,
vendors, and materials are represented in an ERP system using master data.

The most commonly used master data in an organization is the material master. Materials are
used in numerous processes. They are purchased, sold, produced, and planned for.

They are used in maintenance and service, and in projects. Consequently, material master data
are some of the most complex and extensively utilized data in an ERP system. In contrast, other
master Data in an Enterprise System data are relevant only to certain processes. For example,
vendor master data apply to procurement, and customer master data are utilized in fulfillment..

Material Master Data

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TRANSACTION DATA

Processes are executed in the context of organizational levels, involve master data, and result in
transaction data. Transaction data reflect the consequences of executing process steps, or
transactions.

Examples of transaction data are dates, quantities, prices, and payment and delivery terms. Thus,
transaction data are a combination of organizational data, master data, and situational data—that
is, data that are specific to the task being executed, such as who, what, when, and where.

Transaction_Data

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CHAPTER 3

ORGANIZATIONAL CHANGE AND CHANGE MANAGEMENT

WHAT IS ORGANIZATIONAL CHANGE MANAGEMENT?

Organizational change refers to the actions in which a company or business alters a major
component of its organization, such as its culture, the underlying technologies or infrastructure it
uses to operate, or its internal processes. Organizational change management is the method of
leveraging change to bring about a successful resolution, and it typically includes three major
phases: Preparation, implementation, and follow-through.

WHAT CAUSES ORGANIZATIONAL CHANGE?

Many factors make organizational change necessary. Some of the most common faced by
managers include:

 New leadership at the helm of the company or within its departments

 Shifts in the organizational team structure
 The implementation of new technology
 The adoption of new business models

TYPES OF ORGANIZATIONAL CHANGE

Organizational change is a broad term. Some change is sweeping: A substantial evolution in the
direction of a company. Other shifts are less dramatic, focusing instead on a small aspect of a
firm.

It can be helpful to think of change as a spectrum. On one end, you’ll find adaptive change,
which speaks to those modest iterations. On the other, there’s transformational change, in which
vast change is pursued.

Adaptive changes are small, incremental changes organizations adopt to address needs that
evolve over time. Typically, these changes are minor modifications and adjustments that
managers fine-tune and implement to execute upon business strategies. Throughout the process,
leadership may add, subtract, or refine processes.

One example of an adaptive change is an organization that upgrades their computer operating
systems from Windows 8 to Windows 10.

Transformational changes have a larger scale and scope than adaptive changes. They can often
involve a simultaneous shift in mission and strategy, company or team structure, people and
organizational performance, or business processes. Because of their scale, these changes often
take a substantial amount of time and energy to enact. Though it's not always the case,
transformational changes are often pursued in response to external forces, such as the emergence
of a disruptive new competitor or issues impacting a company’s supply chain.

An example of a transformational change is the adoption of a customer relationship management

software (CRM), which all departments are expected to learn and employ.

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Many changes will fall somewhere between adaptive and transformational on the spectrum. For
this reason, managers need to understand that the change process must be tailored to the unique
challenges and demands of each situation.

WHY IS ORGANIZATIONAL CHANGE MANAGEMENT IMPORTANT?

Organizational change is necessary for companies to succeed and grow. Change management
drives the successful adoption and usage of change within the business. It allows employees to
understand and commit to the shift and work effectively during it.

Without effective organizational change management, company transitions can be rocky and
expensive in terms of both time and resources. They can also result in lower employee morale
and competent skill development. Ultimately, a lack of effective change management can lead
the organization to fail.

A MANAGER’S ROLE IN ORGANIZATIONAL CHANGE

Within an organization, every employee has a different role in assisting with change. While
many staff members may complete heavily detailed work, senior-level executives with longer
tenure might have different goals. Even within management, leaders and managers perform
different tasks.

Leaders, for example, have to be courageous by taking on risks. They need to look at the big
picture and articulate high-level change to the company, explain why it’s occurring, and motivate
people to support the transition. To be successful as a leader, you must be insightful and know
who to put in charge of carrying out change processes.

Managers are more concentrated on making business transitions successful. They focus on
implementing change by determining the discrete steps that need to happen and their sequence.
Managers are also typically responsible for allocating resources, such as personnel, and
determining how success is measured. Ideally, leaders will also be managers, but it’s the primary
responsibility of a manager to know how to design, direct, and shape change processes.

To achieve this, managers must have a wide array of skills, such as:

 The ability to communicate clearly and effectively—this includes actively listening to their
team and colleagues
 A highly developed level of emotional intelligence
 Strong organizational skills
 An eye for detail
 Problem-solving and decision-making skills
 Delegating without micromanaging

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PREPARING FOR ORGANIZATIONAL CHANGE

To prepare for organizational change, it’s essential to first define the organizational change,
understand why it’s critical, and garner support from your colleagues.

Then, create a roadmap that clearly articulates and measures success, and explains how the
business—and its employees, customers, and constituencies—will be affected.

Ensure the process plan aligns with business goals and outlines the implementation and
sustainability of the organizational change. Note what challenges may arise and be flexible
enough to adjust accordingly. Be sure to celebrate small victories along the way.

Change management doesn’t stop once you’ve successfully executed the transition. Both
throughout and following the process, you need to continuously assess outcomes, measure data,
train employees on new methodologies and business practices, and readjust goals as necessary.

Six key steps to effective organizational change management.

1. Clearly define the change and align it to business goals.

It might seem obvious but many organizations miss this first vital step. It’s one thing to articulate
the change required and entirely another to conduct a critical review against organizational
objectives and performance goals to ensure the change will carry your business in the right
direction strategically, financially, and ethically. This step can also assist you to determine the
value of the change, which will quantify the effort and inputs you should invest.

Key questions:
• What do we need to change?
• Why is this change required?

2. Determine impacts and those affected.

Once you know exactly what you wish to achieve and why, you should then determine the
impacts of the change at various organizational levels. Review the effect on each business unit
and how it cascades through the organizational structure to the individual. This information will

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start to form the blueprint for where training and support is needed the most to mitigate the
impacts.

Key questions:
• What are the impacts of the change?
• Who will the change affect the most?
• How will the change be received?

3. Develop a communication strategy.

Although all employees should be taken on the change journey, the first two steps will have
highlighted those employees you absolutely must communicate the change to. Determine the
most effective means of communication for the group or individual that will bring them on
board. The communication strategy should include a timeline for how the change will be
incrementally communicated, key messages, and the communication channels and mediums you
plan to use.

Key questions:
• How will the change be communicated?
• How will feedback be managed?

4. Provide effective training.

With the change message out in the open, it’s important that your people know they will receive
training, structured or informal, to teach the skills and knowledge required to operate efficiently
as the change is rolled out. Training could include a suite of micro-learning online modules, or a
blended learning approach incorporating face-to-face training sessions or on-the-job coaching
and mentoring.

Key questions:
• What behaviors and skills are required to achieve business results?
• What training delivery methods will be most effective?

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5. Implement a support structure.

Providing a support structure is essential to assist employees to emotionally and practically

adjust to the change and to build proficiency of behaviors and technical skills needed to achieve
desired business results. Some change can result in redundancies or restructures, so you could
consider providing support such as counseling services to help people navigate the situation. To
help employees adjust to changes to how a role is performed, a mentorship or an open-door
policy with management to ask questions as they arise could be set up.

Key questions:
• Where is support most required?
• What types of support will be most effective?

6. Measure the change process.

Throughout the change management process, a structure should be put in place to measure the
business impact of the changes and ensure that continued reinforcement opportunities exist to
build proficiencies. You should also evaluate your change management plan to determine its
effectiveness and document any lessons learned.

Key questions:
• Did the change assist in achieving business goals?
• Was the change management process successful?
• What could have been done differently?

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Job Redesign Process

 Revising the Job Content: Job redesigning process involves recollecting and revising
job-related information to determine the inconsistency between person and the job.
 Analyzing Job-related Information: Once the job analyst is through with recollecting
and revising the job content, analyzing the discrepancies is the next step. It is done to
determine the hindrances in performing job-related tasks and duties and investigate why
an employee is not able to deliver the expected output.
 Altering the Job Elements: The next step is to amend the job elements. It may include
cut back on extra responsibilities or addition of more functions and a higher degree of
accountability. The basic aim of altering the job content is to design a job in such a
manner that encourages employees to work harder and perform better.
 Reformation of Job Description and Specification: After altering the job elements, a
job analyst needs to reform the job description and specification in order to make sure
that the worker placed at a particular place is able to deliver what is expected of him.
 Reshuffling the Job-related Tasks and Duties: Next is to reallocation of new or altered
tasks and functions to employees. It may be done by rotating, enriching, enlarging and
engineering the job. The idea is to motivate the performers while increasing their
satisfaction level.

Advantages of Job Redesigning

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 Enhances the Quality of Work-Life: Job redesigning motivates the employees and
enhances the quality of their work life. It increases their on-the-job productivity and
encourages them to perform better.
 Increases Organization’s and Employees’ Productivity: Altering their job functions
and duties makes employees much comfortable and adds to their satisfaction level. The
unambiguous job responsibilities and tasks motivate them to work harder and give their
best output. Not only this, it also results in increased productivity of an organization.
 Brings the Sense of Belongingness in Employees: Redesigning job and allowing
employees to do what they are good at creates a sense of belongingness in them towards
the organization. It is an effective strategy to retain the talent in the organization and
encouraging them to carry out their responsibilities in a better fashion.
 Creates a Right Person-Job Fit: Job Redesigning plays an important role in creating a
right person-job fit while harnessing the full potential of employees. It helps organization
as well as employees in achieving their targets or goals.

Therefore, the purpose of job redesigning is to identify the task significance and skill variety
available in the organization and reallocating the job-related tasks and responsibilities according
to the specific skills possessed by an employee.

Governance of processes and data

Data governance (DG) is the process of managing the availability, usability, integrity and
security of the data in enterprise systems, based on internal data standards and policies that also
control data usage. Effective data governance ensures that data is consistent and trustworthy and

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doesn't get misused. It's increasingly critical as organizations face new data privacy regulations
and rely more and more on data analytics to help optimize operations and drive business
decision-making.

A well-designed data governance program typically includes a governance team, a steering

committee that acts as the governing body, and a group of data stewards. They work together to
create the standards and policies for governing data, as well as implementation and enforcement
procedures that are primarily carried out by the data stewards. Ideally, executives and other
representatives from an organization's business operations take part, in addition to the IT
and data management teams.

Why data governance matters

Without effective data governance, data inconsistencies in different systems across an

organization might not get resolved. For example, customer names may be listed differently in
sales, logistics and customer service systems. That could complicate data integration efforts and
create data integrity issues that affect the accuracy of business intelligence (BI), enterprise
reporting and analytics applications. In addition, data errors might not be identified and fixed,
further affecting BI and analytics accuracy.

These are some of the top reasons to have a data governance program.

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Poor data governance can also hamper regulatory compliance initiatives. That could cause
problems for companies that need to comply with the increasing number of data privacy and
protection laws, such as the European Union's GDPR and the California Consumer Privacy Act
(CCPA). An enterprise data governance program typically includes the development of common
data definitions and standard data formats that are applied in all business systems, boosting data
consistency for both business and compliance uses.

Data governance goals and benefits

A key goal of data governance is to break down data silos (A data silo is a collection of data
held by one group that is not easily or fully accessible by other groups in the same organization.
Finance, administration, HR, marketing teams, and other departments need different information
to do their work.) in an organization. Such silos commonly build up when individual business
units deploy separate transaction processing systems without centralized coordination or an
enterprise data architecture. Data governance aims to harmonize the data in those systems
through a collaborative process, with stakeholders from the various business units participating.

Another data governance goal is to ensure that data is used properly, both to avoid introducing
data errors into systems and to block potential misuse of personal data about customers and other
sensitive information. That can be accomplished by creating uniform policies on the use of data,
along with procedures to monitor usage and enforce the policies on an ongoing basis. In addition,
data governance can help to strike a balance between data collection practices and privacy
mandates.

Besides more accurate analytics and stronger regulatory compliance, the benefits that data
governance provides include improved data quality; lower data management costs; and increased
access to needed data for data scientists, other analysts and business users. Ultimately, data
governance can help improve business decision-making by giving executives better information.
Ideally, that will lead to competitive advantages and increased revenue and profits.

Who's responsible for data governance?

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In most organizations, various people are involved in the data governance process. That includes
business executives, data management professionals and IT staffers, as well as end users who are
familiar with relevant data domains in an organization's systems. These are the key participants
and their primary governance responsibilities.

Chief data officer. The chief data officer (CDO) -- if there is one -- is often the senior executive
who oversees a data governance program and has high-level responsibility for its success or
failure. The CDO's role includes securing approval, funding and staffing for the program;
playing a lead role in setting it up; monitoring its progress; and acting as an advocate for it
internally. If an organization doesn't have a CDO, another C-suite executive will usually serve as
an executive sponsor and handle the same functions.

Data governance manager and team. In some cases, the CDO or an equivalent executive -- the
director of enterprise data management, for example -- may also be the hands-on data
governance program manager. In others, organizations appoint a data governance manager or
lead specifically to run the program. Either way, the program manager typically heads a data
governance team that works on the program full time. Sometimes more formally known as
the data governance office, it coordinates the process, leads meetings and training sessions,
tracks metrics, manages internal communications and carries out other management tasks.

Data governance committee. The governance team usually doesn't make policy or standards
decisions, though. That's the responsibility of the data governance committee or council, which
is primarily made up of business executives and other data owners. The committee approves the
foundational data governance policy and associated policies and rules on things like data access
and usage, plus the procedures for implementing them. It also resolves disputes, such as
disagreements between different business units over data definitions and formats.

Data stewards. The responsibilities of data stewards include overseeing data sets to keep them
in order. They're also in charge of ensuring that the policies and rules approved by the data
governance committee are implemented and that end users comply with them. Workers with
knowledge of particular data assets and domains are generally appointed to handle the data

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stewardship role. That's a full-time job in some companies and a part-time position in others.
There can also be a mix of IT and business data stewards.

Data governance implementation

Data governance should be a strategic initiative for organizations. In an article on creating a data
governance strategy, Donald Farmer, principal of consultancy TreeHive Strategy, recommended
a series of steps to take, including the following to-do items:

 identify data assets and existing informal governance processes;

 increase the data literacy and skills of end users; and
 decide how to measure the success of a governance program.

Before implementing a data governance framework, another step cited by Farmer is identifying
the owners or custodians of different data assets across an enterprise and getting them -- or
designated surrogates -- involved in the governance program. The CDO, executive sponsor or
dedicated data governance manager then takes the lead in creating the program's structure,
working to staff the data governance team, identify data stewards and formalize the governance
committee.

Once the structure is in place, the real work of governing data begins. The data governance
policies and data standards must be developed, along with rules that define how data can be used
by authorized personnel. In addition, a set of controls and audit procedures are needed to ensure
ongoing compliance with internal policies and external regulations and to guarantee that data is
used in a consistent way across applications. The governance team should also document where
data comes from, where it's stored and how it's protected from misuse and security attacks.

Data governance initiatives usually also include the following elements:

 Data mapping and classification. Mapping the data in systems helps document data
assets and how data flows through an organization. Different data sets can then be
classified based on factors such as whether they contain personal information or other

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sensitive data. The classifications influence how data governance policies are applied
to individual data sets.

 Business glossary. A business glossary contains definitions of business terms and

concepts used in an organization -- for example, what constitutes an active customer.
By helping to establish a common vocabulary for business data, business glossaries
can aid governance efforts.

 Data catalog. Data catalogs collect metadata from systems and use it to create an
indexed inventory of available data assets that includes information on data lineage,
search functions and collaboration tools. Information about data governance policies
and automated mechanisms for enforcing them can also be built into catalogs.

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 Chapter-4
Post Implementation Issues.
An ERP implementation involves people as well as technology. Accordingly, it may face people-
related challenges, such as resistance to change, as well as technical obstacles. Common ERP
implementation challenges include:

7 Key ERP Implementation Issues.

1. Project management. ERP implementations entail multiple phases: discovery and

planning, design, development, data migration, testing, deployment, support and post-
launch updates. Each phase brings critical tasks, and all elements need to stay on track,
which requires meticulous project management. Additionally, successful ERP
implementations require participation from all the groups that will be involved in
developing and using the system. That can be incredibly challenging, because each
department is juggling its ERP project responsibilities with multiple other priorities.
Strong project and people management, which includes setting realistic expectations,
time frames and milestones, along with timely two-way communication, is critical to
success. As with change management, backing from executives and other top leaders is
essential to conquering this challenge, as well.
2. Project planning: Organizations often underestimate the time and budget necessary for a
successful implementation. One of the most common causes of budget overruns is scope
creep—when a business adds capabilities or features to the system that weren’t part of the
original plan—and another is underestimating staffing needs.
Developing a clear and realistic plan from the start can help to avoid those issues. A
realistic project plan that acknowledges possible speed bumps and minor cost overruns
and addresses them in advance will simplify that decision-making process and keep the
project on track.
3. Data integration: One of the key advantages of ERP is that it provides a single, accurate
source of data for the whole organization. A key step in ERP implementation is data
migration, which typically involves moving data from multiple older systems into the
ERP database. But first, you have to find all of your data. This may be much more
challenging than you expect. The information may be spread far and wide across the
organization, buried in accounting systems, department-specific applications,
spreadsheets and perhaps on paper.
Well-planned data migration can help to keep the entire ERP implementation project on
time and on budget. It’s also an opportunity to winnow out obsolete and redundant data
lurking in the organization’s older systems. In contrast, under prioritizing data migration
can cause issues such as inaccurate or duplicate data and challenges to your go-live date.
4. Data quality: Once the organization has located all data sources, it can start thinking
about migrating it to the ERP system. But that may involve a serious data hygiene
exercise. Because multiple departments interact with the same customers, products and
orders, organizations often have duplicate versions of the same information in their
systems. The information may be stored in different formats; there may be
inconsistencies, like in addresses or name spellings; some information may be inaccurate;
and it may include obsolete information such as customers or suppliers that have since
gone out of business.

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 5. Change management. An ERP implementation involves more than just switching to a
new software system. It typically means overhauling business processes to take
advantage of the efficiency and productivity improvements possible with the new
solution. This requires a shift in mindset and a change in everyday work processes for
many employees, which presents typical change management challenges.
6. Cost overruns: ERP projects are infamous for sailing past budgets after the
implementation kicks off. Many organizations underestimate the amount of work
required to move to a new business system, and that results in spending more money than
expected. These cost overruns often show up in a few different areas.
To avoid blowing up the budget, companies should consider these and other overlooked
expenses, and budget more than they think for them. Coming in under budget is always
preferable to the alternative.
7. Continuous improvement: An ERP implementation is not a one-off effort that ends
when the new system goes live. The solution must continue to evolve to support new
business demands and technology. The project team needs to continue to manage the
project after deployment, fixing issues and supporting new requirements as they come up.
Once implemented, business often use ERP systems for more than a decade, so it’s
imperative to perform a periodic review to assess whether the system is still meeting the
organization’s needs. Older on-premises systems can be harder to upgrade than
leading cloud-based systems, which automatically make new features and innovations
available to users. An outdated ERP system can begin to hinder the business, so it’s
worth periodically assessing whether it’s better to stay with the current system or begin
the extensive project of finding a replacement.

THE ENTERPRISE SYSTEM PROCESS

The general theory of the system has become in recent decades as one of the most spectacular
achievements in science and technology. Starting from the systemic approach to the enterprise
based the triplet, input (I )- process (P) - output (E), the authors outlined four classes of problems
with four types of questions of the triplet (I, P, E) as such (Table 1):

Table 1. The Enterprise System Processes

The Class of System/Subsystem Known Unknown Questions

Problem Elements Elements

Modeling {I}{E} {P} How?

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Simulation {I}{P} {E} What?

Optimization {P}{E} {I} With?

The classes of problems to address systemic risk assessment of the company are:

• Modeling - describes the behavior of the analyzed system. Develops the situation that shows
how having known {I} to obtain{E} desired.

• Simulation – analyzes the system generating its behavior. The question is, what happens
with {E} when we know the input vector values under a constant process.

• Optimization - management of the system. It identifies the input vector values {I} to
materialize with what it achieves the goals {E} in terms of a constant process.

• Control – maintaining nth state of the system. The input vector values {I} are continuously
controlled which are subjected to a constant process and thus develop the goals {E}.

Control
Communication and control are essential elements in the management process. Corporate
communication for business sustainability, corporate communication component that integrates
communication with stakeholders relevant to the organization, has as the central theme the
growth prospects of sustainability of the organization in the context of sustainable
development.

ORDER PROCESING

Order processing starts with the receipt of an order from a customer. It may be obtained
by a salesperson, be telephoned in, or arrive by mail. Regular buyers and sellers are often linked
electronically. As the buyer’s inventories become low, an electronic purchase order is generated.
It is communicated to the seller, whose computers will determine that the goods are available,
and the seller will inform the buyer, still using electronic methods, that the order will be filled
and shipped by a certain date.
The first step in most order-processing systems is to verify the accuracy of the order—
that is, to make certain that the document contains no internal errors that might mean the
customer was uncertain about what he or she was ordering. The next step is to verify the
customer’s credit or ability to pay. After determining from which inventory point to ship the
goods, instructions are sent to that warehouse to fill the order. At the warehouse an ―order
picking list‖ is given to a warehouse worker, who assembles the specific order. In the packing
area, it is checked and packed for shipment, and the package is labeled.
The traffic manager prepares the transportation documents and notifies a carrier to pick
up the shipment. An invoice for the goods is sent to the buyer, and various inventory and
financial records are updated. The shipper uses the term ―order cycle‖ to indicate the span of

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time between receiving and shipping the order. The buyer uses the phrase to indicate the span of
time between placing and receiving the order.

Packaging
Two purposes are served by packaging: promoting the product and protecting it. The
promotional effort is to make the product stand out on a store shelf and say ―take me home‖ to
the customer walking down the store aisle. The protective function is to protect the product and,
in some instances, to keep the product from damaging surrounding items. Retail packages of
food and drugs must be tamperproof to the extent that the consumer can determine whether the
package has been tampered with. Choice of packaging materials also is influenced by concerns
for environmental protection. Containers that can be recycled, or are made of recycled materials,
are enjoying increased demand. Many local and state laws encourage the recycling of beverage
containers.
Most retail products are packed in a hierarchy of packaging. The concept can be compared to
building blocks—the smallest size is the shelf container that the customer buys and takes home.
These containers fit into boxes that are about one cubic foot in dimension and are unloaded, item
by item, by the person stocking the shelves. These boxes in turn are handled on pallets, wooden
platforms about 6 inches high and 40 inches by 48 inches along the top.
Pallets are loaded two or four boxes high and moved by mechanical devices known
as forklift trucks, tractor like vehicles with two lifting prongs in front that fit into slots in the
pallet and then lift it. Loaded pallets are moved by forklift trucks into and out of warehouses,
railcars, and trucks, Pallet loads are also called ―unit loads‖ and are the most common way of
handling packaged freight. Goods that are not packaged are often handled in bulk. Examples are
iron ore, coal, and grains that move in trainload, truckload, and shipload lots. They are loaded,
unloaded, and transferred by large mechanical devices. Liquids such as petroleum are pumped
through pipelines or carried in

PURCHASING SYSTEM
What Is a Purchasing System?
A purchasing system is a process for buying products and services encompassing purchase from
requisition and purchase order through product receipt and payment. Purchasing systems are a
key component of effective inventory management in that they monitor existing stock and help
companies determine what to buy, how much to buy and when to buy it. Purchasing systems may
be based on economic order quantity models.

Purchasing systems play an essential role in controlling a company's cash outflows in that they
ensure that only necessary purchases are made and that they are made at reasonable prices.
Understanding Purchasing Systems
Purchasing systems makes the purchasing process more efficient and help companies reduce
supply costs. Computerized purchasing systems can cut companies' administrative costs, shorten
the length of the purchase cycle and reduce human error, thereby minimizing shortages. They
can also simplify order tracking and make it easier to manage purchasing budgets by quickly
creating expenditure reports.
Purchasing systems play an essential role in controlling a company's cash outflows. They ensure
that only necessary purchases are made and that they are made at reasonable prices. Purchasing

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systems make use of outputs from production planning systems. These outputs include input
amounts needed in the production process.
KEY TAKEAWAYS

 A purchasing system encompasses the process of purchasing from requisition through

product receipt and payment.
 Purchasing systems maintain efficiency by ensuring that only needed purchases are made
and that they are effected at reasonable prices.
 Purchasing systems are augmented through automated systems like purchase-to-pay and
economic models such as economic order quantity.
Economic Order Quantity and Purchasing
The economic order quantity (EOQ) model is used in inventory management by calculating the
number of units a company should purchase for its inventory with each batch order to reduce the
total costs of its inventory. The costs of its inventory include holding and setup costs.
The EOQ model seeks to ensure that the right amount of inventory is ordered per batch so a
company does not have to make orders too frequently and there is not an excess of inventory
sitting on hand. It assumes that there is a trade-off between inventory holding costs and inventory
setup costs, and total inventory costs are minimized when both setup costs and holding costs are
minimized.
Purchase-to-Pay
Purchase-to-Pay is an integrated system that fully automates the goods and services purchasing
process for a business. The system gets its name because it handles all aspects of the acquisition
from the purchase of goods to the payment of the vendor. The Purchase-to-Pay system begins
with requisitioning, then proceeds to procurement, and ends with payment. Purchase-to-Pay
seeks to optimize the purchasing process, thereby benefiting the organization through better
financial controls and efficiency. This streamlined, integrate

THE PRODUCTION PLANNING PROCESS

Production planners are employees who interact with the inventory system and the sales forecast
to determine how much to produce. Planners follow three important principles:

• Using a sales forecast, and taking into account current inventory levels, create an aggregate
(combined) production plan for all products. Aggregate production plans help to simplify the
planning process in two ways: First, plans are made for groups of related products rather than for
individual products. Second, the time increment used in aggregate planning is frequently a month
or a quarter, while the production plans that will actually be executed operate on a daily or
weekly basis. Aggregate plans should consider the available capacity in the facility.

• Break down the aggregate plan into more specific production plans for individual products and
then into smaller time intervals.

• Use the production plan to determine raw material requirements. Production planners aggregate
products into product groups to reduce the number of variables they must consider when
developing a production plan. Developing production groups can be complicated. For example,
cereal manufacturers can group together different package sizes, or they might group together

5
product brands (such as kids’ cereals, health cereals, and so on). A consumer products company
may group by product type (e.g., shampoo, laundry detergent, and disposable diapers).
Ultimately, the monthly production plan will be disaggregated to determine weekly raw
materials orders and daily production schedules.

The SAP ERP Approach to Production Planning

The SAP ERP approach to the production planning process is shown in Figure . Refer to this
figure throughout this discussion to track the stages in the production planning process.

The information at each stage of the production process flows through the following steps, which
are explained in detail in the upcoming sections:

• Sales forecasting is the process of predicting future demand for a company’s products.

• Sales and operations planning (SOP) is the process of determining what the company will
produce. In the diagram, the Sales forecasting and Starting inventory levels are inputs to this
process. At first glance, it might seem that a company should just make products to match
forecasted sales, but developing the production plan is often more complicated than that because
capacity must be considered. Many products have seasonal demand, and to meet demand during
peak periods, production planners must decide whether to build up inventory levels before the
peak demand, increase capacity during the peak period, subcontract production, or use some
combination of these approaches.

• In the Demand management step, the production plan is broken down into smaller time units,
such as weekly or even daily production figures, to meet demand for individual products.

• The Materials requirements planning (MRP) process determines the amount and timing of raw
material orders. This process answers the questions: ―What raw materials should we be ordering
so we can meet a particular level of production?‖ and ―When should we order these materials?‖

• In the Purchasing step, the quantity and timing information from the MRP process is used to
create raw materials purchase orders, which are transmitted to qualified suppliers.

• The Detailed scheduling process uses the production plans developed during the demand
management step as an input for a production schedule. The detailed scheduling method used
depends on the manufacturing environment.

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• The Production process uses the detailed schedule to manage daily operations, answering the
questions: ―What should we be producing?‖ and ―What staffing do we need to produce those
products?‖

ACCOUNTING ACTIVITIES
Accounting activities can generally be classified as either financial accounting or managerial
accounting. An additional area of accounting, tax accounting, is beyond the scope of this text.
Because tax accounting is chiefly the external reporting of a business’s activities to the Internal
Revenue Service, data gathered for financial accounting serves as the basis for tax accounting.
Financial accounting consists of documenting all the transactions of a company that have an
impact on the financial state of the organization and then using those documented transactions to
create reports for investors and external parties and agencies. These reports, typically called
financial statements, must follow the prescribed rules and guidelines of various agencies, such as
the Financial Accounting Standards Board (FASB), the U.S. Securities and Exchange
Commission (SEC), and the Internal Revenue Service (IRS).

Common financial statements include balance sheets and income statements.

Balance Sheet
The balance sheet is a summary of account balances such as cash held; amounts owed to the
company by customers; the cost of raw materials and finished-goods inventories; the value of
fixed assets such as buildings; amounts owed to vendors, banks, and other creditors; and amounts
that the investors have invested in the company. A balance sheet provides an overview of a
company’s financial health at a point in time, a key consideration for a company’s creditors and
investors. Figure shows a sample balance sheet for Fitter Snacker.

Income Statement

The income statement, or profit and loss (P&L) statement, shows the company’s revenue and
expenses and the profit or loss for a period of time (typically a quarter or a year). Profitability is
important to creditors and investors. It is also important information for managers in charge of

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day-to-day operations. In general, a manager views profits as indicators of success and losses as
indicators of problems to be solved. Figure shows a sample income statement for Fitter.

In accounting, a company’s accounts are kept in a record called the general ledger. In the SAP
ERP system, input to the general ledger occurs simultaneously with the business transaction in
the specific module. Many SAP ERP modules cause transaction data to be entered into the
general ledger, including:

• Sales and Distribution (SD)—The SD module records a sale and then creates an
accounts receivable entry (a general ledger document that indicates a customer owes
money for the goods received by the customer).

• Materials Management (MM)—The MM module controls purchasing and records

inventory changes. The receipt of goods from a purchase order creates an accounts
payable entry in the general ledger, which indicates the company has an obligation to pay
for goods it has received. Whenever material moves into or out of inventory (purchased
materials arrive from the vendor, raw materials are taken out of inventory to support
production, or finished goods go from production to inventory), general ledger accounts
are affected.

• Financial Accounting (FI)—The FI module manages the accounts receivable and

accounts payable items created in the SD and MM modules, respectively. The FI module
is also where the general ledger accounts are closed at the end of a fiscal period (quarter
or year), and it is used to generate financial statements.

• Controlling (CO)—The CO module tracks the costs associated with producing products.
To make a profit, a company must have an accurate picture of its product costs so it can
make correct decisions about product pricing and promotions, as well as capital
investments.

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 • Human Resources (HR)—The HR module manages the recruiting, hiring,
compensation, termination, and severance of employees; the HR module also manages
benefits and generates the payroll.

• Asset Management (AM)—The AM module manages fixed-asset purchases (plant and

machinery) and the related depreciation

PLANNING CONTROL

Following are the important activities involved in program plan preparation and program control:

Program plan preparation activities Program control activities

 Processing a large amount of  Provide supporting activities to refine and
information improve the delivery
 Extensive consultation with  Reduce the impact of ambiguity and brings
stakeholders certainty
 Preparing the program plan  Justify the continuance of the program

In case of the Program plan preparation activities, Preparing a program plan involves processing
a large amount of information. This information comes from external sources like lessons
learned from previous programs.

The stakeholders including management groups need to go through an extensive consultation

regarding this information to identify the right path for a program. The final program plan is a
result of multiple iterations.

In the beginning, the first iterations give ambiguous plans but with progressive refining and input
from other information baselines, the program plan improves. Finally, the program plan is
prepared.

In case of Program control activities, Program control provides supporting activities and
processes that run throughout the lifecycle of a program to refine and improve delivery of the
program.

It helps reduce the impact of ambiguity and bring certainty whenever possible. It justifies the
continuance of the program by ensuring that benefits outweigh expenses. Also, the management
and control of the program should learn from the experience in previous tranches.
In the next section, we will discuss the program plan.

Program Plan
The program plan is the key control document for a program which forms a complete picture of
how the program is going to work. Following are the functions of a program plan:

 Program plan has to ensure that there is a clear understanding of the program objectives
mentioned in the vision statement.

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 The blueprint should have the ability to achieve the objectives and the same is confirmed
in the program plan. Benefits should be linked to projects and tranches, and similarly, the
projects should contribute towards the benefits.
 Program plan gets inputs from various documents.
 The inputs from resources, on their capacity and skills, form a part of the program plan.
 The stakeholder needs regarding appropriate information also form a part of the program
plan.
 The risks and issues as well as identifying the roles of responsible persons should form a
part of the program plan.
 The timetable in the program plan identifies the dependencies and interfaces between
projects and benefits.
 The program plan lists the milestones to ensure that the progress is monitored.
 It is important to ensure that transition is smooth by considering the cultural aspects and
acceptance of teams involved in change.
 A number of governance strategies include associated plans and it is perfectly acceptable
to integrate these plans into the program plan for simplicity, wherever appropriate.
 Developing and maintaining the program plan requires on-going coordination of all
project plans.
 The focus of program planning is on the interdependencies between projects and any
dependencies on external factors outside the control of the program

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 CHAPTER-5
HUMAN RESOURCE MANAGEMENT

CONCEPT OF HUMAN RESOURCE MANAGEMENT

Of all the factors of production namely M„s of Management i.e Materials, Machinery, money,
methods and Men, Man occupies an important place. The other 4 M„s by themselves will not
help the organization to achieve its goals unless there is an effective coordination and utilization
of human resources. Rensis Libert says, all the activities of any enterprise are initiated and
determined by the persons who make up the institution, plant or office and all else that make a
modern form are unproductive except for human effort and direction of all the tasks of the
management.
In the past, people migrated from villages to towns seeking employment. They found themselves
in totally different and new situations to which they were not used to. So whenever they feel
frustrated, they return to their villages and this resulted in loss of trained labor. These people had
no proper leader to guide them and even no proper masters to manage them. The necessity of
proper personnel management was then felt. It was realized that a good personnel management
will go a long way in making efficient the overall management of the organization.

The management must, therefore, be aware not only of the organizational but also employee
needs. None of these can be ignored. The achievements for the organizations, the ‗people at
work„, ‗the people who manage them„ (i.e., managers themselves), and other groups of the
public (such as the consumers, shareholders, the entrepreneurs, the governments, the suppliers,
etc.) are possible through a concerted effort. The employee develops four dimensional
relationships: (i) those between management and workers; (ii) those among the workers
themselves; (iii) those among the managerial personnel; and (iv) those among different members
of the organization and the community. In other words, he develops ―human relations‖ the
purpose of which is not to enable him to discover clever techniques for winning friends and
influencing people through personality development; nor to enable him to manipulate people as
though they are puppets, but to assist him in working more effectively with other people in
organization.

DEFINITIONS OF HUMAN RESOURCE MANAGEMENT

Different authors have given different definitions of the term ―Human Resource Management‖.
Some of these are reproduced below:

"The personnel function is concerned with the procurement, development, compensation,

integration and maintenance of the personnel of an organization for the purpose of contributing
toward the accomplishment of that organization„s major goals or objectives."

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 - Edwin B. Flippo

"Personnel administration is a method of developing the potentialities of employees so that they

get maximum satisfaction out of the work and give their best effort to the organization."

-Pigors and Myres

"Personnel Management is the specialized intelligent handling of the human factor by a separate
department which could devote its full time for research along the line of improvement in
industrial relations."

- R.G.Gokhale

"Personnel administration is the art of acquiring, developing and maintaining a component work
force in such a manner as to accomplish maximum efficiency and economy in the functions and
objectives of the organization."

-American Society for Personnel Administration

"Personnel Management is the part of the management function which is primarily concerned
with human relationships within an organization. Its objective is the maintenance of those
relationships on a basis which, by considering of the well-being of the individual, enables all
those engaged in the undertaking to make their maximum personnel contribution in the effective
working of the undertaking."

- Indian Institute of Personnel Management

"Manpower management effectively describes the process of planning and directing the
application, development and utilization of human resources in employment."

- Dale Yoder

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The task takes into consideration four basic elements, namely, the capacities, interests,
opportunities and personality of the employees.

Capacities- referring to those abilities or attainments, inherited or acquired, that a worker has, is
capable of and must to a certain degree at lease exercise in his work.

Interests- not only an individual„s desires and ambitions, but also his instinctive impulsive
tendencies, vague yearnings, and ill-defined cravings that may or may not stir him to his fullest
action in performing his duties.

Opportunities- not only opportunities for advancement, but opportunities to exercise his
capacities and satisfy his interests.

Personality- the sum total of a worker„s reaction to his experiences and environment, personality
is manifest by an individual„s reception by others. The workers„ personality has great influence
upon his opportunities.

HR Manager role:

The HR Manager typically performs a variety of roles, such as the role of conscience, of a
counselor, a mediator, a company spokesman, a problem-solver and a change agent. He performs
many miscellaneous roles in accordance with the needs of a situation, such as-

1. The Conscience Role: Under this role, the HR Manager reminds the management of their
moral and ethical obligations towards employees.

2. The Counselor Role: Under this role he encourages the employees to meet him frequently for
consultation and discussion of their mental, physical and career problems and at times even their
family problems.

3. The Mediator Role: Under this role, he tries to settle disputes between labour and
management as also those between an individual and a group. He is not only a peace maker but
also serves as a liaison and communicating link.

4. The Spokesman Role: under this role, he works as a spokesman for or as a representative of

3
his organization. This he is able to do as he deals intimately with many key organizational
activities and functions and has a better overall picture of his company„s operations.

5. The Problem-Solver Role: He is a problem-solver in respect of issues involving human

resource management and overall long-range organizational planning.

6. The Change- Agent Role: He serves as a change agent in respect of introduction

and implementation of major institutional changes.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

The importance of human resource management can be discussed as:

(a) Social Significance

Proper management of personnel, enhances their dignity by satisfying their social needs. This it
does by:

(i) maintaining a balance between the jobs available and the job seekers according to the
qualification and needs,

(ii) Providing suitable and mist productive employment, which might bring them psychological
satisfaction;

(iii) making maximum utilization of the resource in an effective manner and paying the
employee a reasonable compensation in proportion to the contribution made by him;

(iv) eliminating waste or improper use of human resource, through conversation of their normal
energy and health; and

(v) by helping people make their own decisions, that are in their interests.

(b) Professional Significance

By providing healthy working environment, it promotes team work among the employees. This
is done by:

(i) maintaining the dignity of the employees as a human being;

(ii) providing maximum opportunities for personal development;

(iii) providing healthy relationship between different work groups so that work is effectively
performed;

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(iv) improving the employees„ working skill and capacity;
(v) correcting the errors of wrong posting and proper reallocation work.

(c) Significance for Individual Enterprise

It can help the organization in accomplishing its goals by :

(i) creating right attitude among the employees through effective motivation;

(ii) utilizing effectively the available resources and

(iii) securing willing co-operation of the employees for achieving goals of the enterprise and
fulfilling their own social and other psychological needs of recognition, love, affection,
belongingness, esteem and self actualization.

Relevancy of HRM

HRM is more relevant in today„s context due to the following compulsions:

1. Change Management: Today, terms such as ―Learning Organization, Managing

Organizational Change, Change Agents and the like are being increasingly encountered. It is now
an accepted fact that any organization can survive in today„s socio-economic environment only if
it is proactive to environment changes. Advances in information technology too are focusing
organizations to change their very way of thinking.

2. Competence: It is often said, "Give a man a job that he excels at and he would not have to
work". In the organizational context, it may not be always feasible to allocate tasks to individuals
at which each one excels, but surely we can enhance competence of individuals for specific tasks
through well-designed training programs. It is equally important to take note of the interests of
the individual.

It is much easier to train him in tasks closer to his inherent liking. It is, however, seen that many
managers do not realize the importance of this aspect and would prefer sub-optimal performance
form an employee rather than spare him for training/ retraining because in the latter case the
employees would not be available for work during that manager„s tenure. What is not
appreciated is that without the required competence, an employee would either shirk from the
assigned tasks or would do a lousy job. After a while such an employee would attempt
recognition through destructive means because he is unable to make a mark as a good performer.

3. Commitment: The extent to which the employees are committed to their work and

5
organization has a significant bearing on an organization„s performance. Commitment levels can
be assessed in a number of ways. One can make use of informal interviews and questionnaires,
statistics on absenteeism, grievances, and voluntary separations. Transparency in organizational
functioning, employees„ perception of various HRM policies, channels of communication, and
role models played by superiors strongly influence employee commitment.

4. Congruence of objectives: Even well-qualified and committed employees could pursue goals
at variance to the organizational objectives. It is, therefore, essential that all newcomers to the
organization are properly socialized into the existing community and are made aware to the
organizational values, work ethos, customs and traditions. It is important that they know what the
organization stand for and what it wants to achieve and in the process, what is expected from
each individual, so that he can find reason and meaning for his existence in the organization. This
exercise is commonly referred as socialization.

5. Motivation: Another aspect of human behavior is the employee„s willingness to work and the
desire to constantly improve his performance. There are different schools of thought on
motivation but essentially, all agree that work is not inherently distasteful. People want to
contribute to meaningful goals, particularly, those they have in setting. Most people can exercise
far more creativity, self-direction and self-control than their present jobs demand. It is, however,
necessary to create an environment in which all members can contribute to the limits of their
ability. Subordinates must be encouraged to participate in the process of decision-making,
continually broadening their self-direction and self control as this would not only lead to direct
improvement in operating efficiency but would also ensure their grooming for higher
responsibilities.

CHALLENGES OF HUMAN RESOURCE MANAGEMENT

Changes in socio-economic and political conditions are bound to bring about changes in the
environment within the organizations. The personnel managers of today may find themselves
obsolete because of the rapidly changing business environment, and therefore they should
constantly update their knowledge and skills by looking at the organization„s needs and
objectives. Some of the important challenges are:

i. Vision penetration: Evolving the right vision is an entrepreneurial or top management

function, but its utility increases immensely if it percolates, and is understood and accepted down
the line. Vision not only provides the fuel and direction to business strategy, but also helps
managers evaluate management practices and make decisions. Penetration of vision shall
therefore become an important, integral part of man management in future.

6
ii. Internal environment: Creating an environment, which is responsive to external changes,
providing satisfaction to the members of the organization, and sustaining it through culture,
useful traditions, practices, and even systems, will become another important dimension of
managing managerial personnel.

iii. Change in industrial relations: The practice of IR has undergone sea change.
The notion that workers must be disciplined at the manager„s will have to be
buried. Development of workers may need simpler and appropriate inputs,
but both the workers and managers must be managed and developed by the
same set of assumptions and HRM philosophy of the company.

iv. Building organizational capabilities: The paradigm of managing managers

would include not only assisting them to acquire new skills and knowledge
and to evaluate environmental changes to evolve business strategies, but also
to live in a psychological state of readiness to continually change.

v. Job design and organizational structure: In designing organizations, we will, hopefully,

soon give up uncritical acceptance of foreign concepts and fads like quality circles, TQM, etc.
Instead of these, organizational structure and design will primarily be based on

(i) task approach, i.e. understanding of the intricacies of technology, jobs and functions to
be performed to achieve organizational tasks, and

(ii) people approach, which takes cognizance of their strengths, idiosyncrasies,

aspirations and relationships at work.

vi. Increasing size of workforce: The organizations are ever increasing in size and complexity,
multiplying the number of people working therein. The management of an increased workforce
poses serious problems and challenges especially since the workers are becoming more
conscious of their rights.

vii. Changing psycho-social system: In the traditional bureaucratic mode, the organizations were
designed to perform technical functions with strict compartmentalization of work functions. But
in future, human participation will be required not only in technical functions but also in
establishing the democratic humanistic system.

viii. Satisfaction of higher level needs: The workers are becoming much aware of their higher
level needs. The awareness is likely to intensify further in the future workforce. Therefore

7
managers would be required to evolve appropriate techniques of motivating the workers and
getting work from them.

ix. Equalitarian social system: Major developments that have taken place in the last four
decades have been due to the desire of the organization„s members to have greater say and
influence in organizational functioning. Thus, contemporary organizations are putting lesser
emphasis on the hierarchical structures and thus moving towards a more equalitarian social
system. This is going to be more common in days to come.

x. Technological advances: In the wake of technological advances new jobs will created and
many jobs will become redundant. Unemployment resulting from modernization could be
liquidated by properly assessing manpower needs and training of redundant employees in
alternate skills.

xi. Computerized information system: It will play a revolutionary role in managerial decision
making. It will also have an increasing impact in coordination and at strategic levels.

xii. Changes in legal environment: To meet with the increasing changes in the legal
environment, necessary adjustments will have to be made so that greater utilization of human
resources can be achieved.

xiii. Management of human relations: The new generation workforce comprising educated and
conscious workers will ask for higher degree of participation and avenues for self-fulfillment. It
is rather difficult to motivate many of the new generation workers than their predecessors. This is
partly due to change in their value system and higher levels of professional competency.

HUMAN RESOURCE FUNCTIONS

Significant Functions of Human Resource Management

Human Resource Management is the effective use of employees in an organization. It is designed

to maximize the performance level of the employees. It is a department that looks after a plethora
of functions. Besides recruiting and firing, it has a plethora of responsibilities to fulfill.

8
Here are a few significant functions of HRM-

5.1 Recruitment And Selection

Recruitment is the process of attracting, short listing, selecting and appointing the candidates for a
job role. Hiring potential candidates by assessing their skills is the primary function of Human
Resource Management. Before taking the step of recruitment and selection, the companies must
consider the process of staffing as an important step. They should analyze the number of
employees needed and work on the budget. They should then move forward to recruit and select
the employees.

5.1.2 Orientation

Orientation is one of the most important processes of human resource management. It is vital for
the adjustment of employees in the new environment. The purpose of the orientation process is to
familiarize the employees with the working of the organization by introducing them to the long-
term and short-term goals. It instills the brain of an employee with the goals and objectives of the
company and how can they serve the company‟s growth. Also, it helps the employees to know
their job description, duties and job role.

5.1.3 Maintaining Good Working Conditions

Good working conditions attract all the employees. Good working environment also includes
motivating the employees. Lack of motivation makes the employees unproductive. They are not
able to provide fruitful results if they are not encouraged and appreciated. There are chances that
an employee will leave the company if the workplace and work environment is not impressive
enough. One of the important factors that the HR department must consider is the financial and
non-financial benefits. Employee welfare should also be taken into account.

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5.1.4 Managing Employee Relations

Employee relations boost confidence in the employees. The process is crucial for human resource
management as it motivates the employees and helps them emerge as victors. Organizing
activities that help to know an employee at the personal and professional front is the way to
promote good employee relations. The organization will be successful when the employer and the
employee gets to enjoy a healthy relationship.

5.1.5 Training And Development

Another important function of the human resource development is Training and Development. It
prepares the employees to perform their best by undergoing educational and training programs. It
instills the learning ability in the employees and introduces them to the new techniques and tools.
This increases their work efficiency. Human resource development aims at creating a good work
culture.

HR professionals have a lot of responsibilities on their shoulders. Without certain skills and
knowledge, they will not be able to carry out the above-mentioned functions. Therefore, HR
professionals must be trained enough to prove their worth. Most of the organizations hire HR
professionals who are certified. Certifications prove that the HR professional is geared up to
showcase his skills in the work. Certifications provide credibility and recognition to the HR
professional and give them the ability to take the decisions on their own.

Make the best use of the employees by undergoing the above-mentioned important functions!

5.2 HOW ENTERPRISE SYSTEM SUPPORT BUSINESS

Enterprise systems integrate the firm‟s key business processes in sales, production, finance,
logistics, and human resources into a single software system so that information can flow
throughout the organization, improving coordination, efficiency, and decision making.

Enterprise systems (ES) are software packages that include enterprise resource planning (ERP)
software and such related packages as customer relationship management (CRM), and supply
chain management (SCM) from vendors such as SAP, Oracle.

10
These systems help create a more uniform organization in which everyone uses similar processes
and information, and measures their work in terms of organization-wide performance standards.

The coordination of the firm‟s key business processes allows the firm to respond more rapidly to
customer demands.

The following are 10 ways that enterprise systems can benefit the companies that successfully
implement them:

1. Store Business Data in a Usable Format

One of the most important aspects of improving the customer experience is having data stored in
a way that can be easily analyzed. As the saying goes, “what gets measured, gets managed,” and
the same applies for business data. Some examples of data that should be stored include
customer order history, when and where they made those orders, and how long it took for those
orders to be processed. A company‟s ability to quickly retrieve this type of information in order
to answer customers‟ questions can go a long way toward improving customer satisfaction.

2. Automate the Customer Service Process for Employees

Using an Enterprise Resource Planning (ERP) system can be a major benefit for companies
looking to streamline their customer service experience. ERPs allow businesses to automate their
customer service process, which helps ensure that each employee is giving customers a
consistent experience, and also ensuring that back office functions are as streamlined as possible.
Automation saves time, which can then be used towards efforts to respond to customer requests
for product information and to forecast for new products. If employees are spending less time on
tracking down a customer‟s order, they can spend more time developing long-lasting, profitable
customer relationships.

3. Scale Available Resources (Up and Down) as Needed

One of the lesser-known benefits of enterprise systems is their ability to scale the IT capabilities
of a business up or down as needed. This means that companies that need to store additional data
or require access to additional processing power can get that excess capacity using a cloud,
software as a service (SaaS), or an Internet-based enterprise system instead of needing to invest
in IT hardware. This also means that if less IT capabilities are needed for any reason, those same
services can be scaled down. These flexible solutions allow a company to control costs while
continuing to meet their customers‟ needs.

4. Maximize the Reliability of IT Infrastructure Necessary for Customer Service

Another benefit of enterprise systems is their increased reliability compared to small-scale IT

solutions. This means that the systems will have greater “uptime” and little to no “downtime.”
Making sure IT systems are collecting data and operating properly as close to 100% of the time
as possible is an essential part of a strong and consistent customer experience.

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5. Secure Customer Data

Over the past few years, we have seen a significantly increased number of security breaches into
corporate servers. Large multinational corporations such as Home Depot, Target, Sony, and
many others have seen their supposedly secure data centers breached, often at the cost of
hundreds of millions, or even billions of dollars. Securing customer data is not just imperative
for a good customer experience; it is an essential financial priority as well.

6. Real-Time Access to Information

Business environments are always changing, and that means that waiting months for data is
simply no longer feasible. Having access to real-time information about a business‟s operations
is a powerful feature of enterprise systems. A high level of access to data allows leadership to
assess and improve upon the company‟s processes far more efficiently than if they had to wait
months before having actionable data.

7. Reduce the Cost of Doing Business

Enterprise systems ultimately reduce the cost of running a business, which means that a company
will have more of its budget free to increase customer service capabilities or invest in other
assets that can improve the customer experience. One example is inventory control, as keeping
too much or too little inventory can have a significant effect on a business‟ bottom line.

8. Standardized Process

One of the greatest challenges in larger enterprises is producing a consistently positive customer
experience. One of the benefits that comprehensive and real-time data storage, in conjunction
with the use of ERPs, provides is the ability to ensure standardization of the customer experience
to a significantly greater degree than would otherwise be possible.

9. Improve Supply Chain Management

Enterprise systems can help streamline supply chain management, in large part through the use
of data about where, when, and how customers order and suppliers deliver. This again
emphasizes the importance of storing business data in a usable format. Ultimately, the ability to
streamline the supply chain means that products are delivered to customers more reliably, and at
a lower cost, than would otherwise be possible.

10. Ensure Regulatory Compliance

Regulation has long been a reality of business, but over the past several years, regulations have
become increasingly stringent and enforced. Regulations such as the Sarbanes-Oxley
Act demand that investors receive a significant amount of data about a company‟s operations,
including information about the properties, assets and inventory management. One of the
benefits of enterprise management systems is that much of the data these regulations require can
be collected through automated means. Thus, enterprise systems can be used to ensure

12
compliance with increasingly onerous federal regulations without taking personnel away from
their essential customer service functions.

These are just 10 of the many ways an enterprise system can benefit a business and its customer
satisfaction record. The diversity of these ten benefits underscores the importance of having
training and experience working with these complex systems. Businesses are realizing that
customers are long-term assets, and by utilizing an enterprise system they can keep these assets
in their portfolio.

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