DMBA210: Management Information System

MASTER OF BUSINESS ADMINISTRATION

SEMESTER 2

DMBA210
MANAGEMENT INFORMATION
SYSTEM
Unit: 7 - Business Process Integration with IT 1
DMBA210: Management Information System

Unit – 7
Business Process Integration with IT

DCA324
KNOWLEDGE MANAGEMENT
Unit: 7 - Business Process Integration with IT 2
DMBA210: Management Information System

TABLE OF CONTENTS

Fig No /
SL SAQ / Page
Topic Table /
No Activity No
Graph
1 Introduction - -
4
1.1 Objectives - -
2 Case Study - - 5-7
3 Business Process Integration - -
3.1 Business processes i - 8 - 13
3.2 Example of a complex process 1 -
4 Motivation for Enterprise Systems 2 - 14 - 16
5 Enterprise Resource Planning Systems 3, 4 -
5.1 Finance and accounting module - -
5.2 Human resource management module - - 17 - 21
5.3 Manufacturing and operations module - -
5.4 Sales and marketing module - -
6 Summary - - 22
7 Glossary - - 23
8 Terminal Questions - - 24
9 Answers - - 25
10 References - - 26

Unit: 7 - Business Process Integration with IT 3

DMBA210: Management Information System

1. INTRODUCTION
Organisations execute complex business processes as part of their work. Business processes consist
of activities that transform inputs into desired outputs. Computerization leads to automation of
processes across departments and organisations. Enterprise systems integrate complex business
processes, providing a means to re-engineer old processes and also to replace existing, legacy systems.
ERP systems integrate functions across the enterprise through a common platform that includes
modules for finance and accounting, marketing and sales, human resource management and
operations management.

1.1. Objectives
After studying this unit, you should be able to:
• Explain business process integration
• Discuss the motivation for enterprise systems
• Explain the enterprise resource planning
systems

Unit: 7 - Business Process Integration with IT 4

DMBA210: Management Information System

2. CASE STUDY
ERP via the Cloud at Oxford Book Store

When Oxford book store opened on the swanky Park Street of Kolkata in 1920, it catered to a select
clientele who read English books. Ninety years later this book store still thrives and has expanded
its operations to over 20 stores across India, and also boasts of an online book store. In its modern
form, the book store offers a wide selection of books, a pleasant ambience for customers to sit and
browse books, weekend events such as book readings and musical performances, and also a cafe
that serves tea with snacks. The stores include stationary, toys, and gift items, along with books
from different languages, magazines, music discs, and film DVDs.

Oxford book store’s drive to modernise and upgrade its offerings is a response to the tremendous
rise in competition both from other book stores and from online book sales. Over the last decade,
brands such as Landmark, Cross- word, and Strand have created a chain of book stores to address
the demand of a growing urban population interested in English language books. These chains
specialised, initially, in imported books, which were usually hard to find anywhere in India. With
the tremendous growth in the book publishing business in India, the stores have started selling
many books written and published in India, along with the international bestsellers.

The book publishing numbers in India are impressive – the country has about 19,000 publishers,
publishes about 90,000 titles a year and the number of titles is growing at about 30% per annum.
Organised retail outlets, such as Oxford book store, account for only 7% of the total market, and
the rest are sold through informal channels such as university book stores, textbook stores, railway
station stalls, footpath book sellers, and so on. The online retailers too have a significant share of
the market, accounting for almost 2 million books a year.

Despite the large number of publishers and titles being published, as well as the presence of
organised retailers, the demand for books is an unmet need. There are very few book retail outlets
outside of the major metros and some towns. The online retailers have an issue with gaining the
trust of customers and cannot reach out to those in un-served locations.

Oxford book store was able to spot the potential of growth in the book mar- ket, reflected in the
unmet demand, as well as the growing competition in its current urban markets. It wanted to scale
up its operations by opening newer stores and establishing its presence. However, it had a severe
problem.

Unit: 7 - Business Process Integration with IT 5

DMBA210: Management Information System

Like all book retail outlets in India, Oxford book store had very poor inventory management. They
had a large number of books in inventory that did not move. Besides, each store in the chain
managed its own inventory, with the result that a single book could have multiple codes in different
stores; therefore the management found it hard to say how many copies of a book they had. Oxford
added 50,000 titles to its stocks every year, to the 200,000 titles it already had. It added 150 stock-
keeping-units (SKUs) every day, and required computerisation to manage this large inventory.

Oxford book store is a medium enterprise, with a gross turnover of Rs 250 million. It wanted to
create information systems that would help it manage its inventory of books across all its stores in
India. It also needed the information systems to help it scale to both more retail stores (with a
target of 100 stores in India and abroad) and an online store. But Oxford’s management did not
want to do this with a heavy investment, in millions of rupees, in information systems; they wanted
a solution that suited their medium size.

The Chief Technology Officer (CTO) of Oxford book store, Subhasish Saha, said ‘Management was
looking for a model that would allow Oxford book store to leverage its full IT potential without [a]
large one-time IT capital investments or [compromising on] issues of scalability’. The solution they
sought had to have low upfront investment, and also allow them to cover their entire operations
and enable them to scale. The solution Saha settled on was that of using an ERP system from SAP,
not purchased outright, but acquired through the Cloud. This meant that a high down payment was
not required, but the expenses could be paid on a monthly basis and charged to operational
expenses.

The ERP package enabled them to have their entire inventory, across all stores, on a single system.
It integrated their point-of-sale terminals with the inventory, thus allowing them to see their stock
position on books on a current basis. Furthermore, the system also provided for payroll and
accounting functions. With a total cost of Rs 10.8 million, to be paid out in instalments, this also
met Oxford’s investment constraints.

The biggest challenge for the implementation, as is the case for all ERP implementations, was that
of finding a vendor who could not only roll out the system but also remain as a long-term partner
for the duration of the project. Oxford book store eventually settled for the Tata Consultancy
Services (TCS) as the vendor, banking on the latter’s strong reputation and due to the fact that the
system would be available on the TCS cloud service called iON. TCS provided technical, project and
business consulting for the implementation.

Unit: 7 - Business Process Integration with IT 6

DMBA210: Management Information System

The results of the implementation were very impressive. With the improved stock management,
Oxford book store was able to increase retail sales, reduce costs on slow inventory and also
improve online sales. Online sales increased by as much as 100%, and the total revenues increased
by Rs 34 million. Furthermore, Oxford could create special offerings like the Gems program, where
private firms could offer Gems points to their employees as rewards, which could be redeemed at
Oxford stores.

The system also streamlined operations across all the stores, giving Oxford a platform to open more
retail outlets. Some critics argue that the pay-as- you-go model is more expensive in the long run,
as the total payouts, after some time, exceed the initial down payment costs. However, Saha
counters that ‘The technology adoption strategy for Oxford has been relying on a no-CAPEX model.
It is true that when the cost is calculated for five years then there won’t be much difference. But
with a proprietary solution we would have to face the one-time payment, maintenance and up-
gradation challenge’.

Unit: 7 - Business Process Integration with IT 7

DMBA210: Management Information System

3. BUSINESS PROCESS INTEGRATION

3.1. Business processes
In an earlier unit, we had defined a business process as any business activity that involves the
movement of information between individuals, groups or departments. This definition was used in
the context of systems analysis and of defining requirements for information systems within
organisations. In the current context, the definition of a business process remains largely the same,
with a small difference: business processes are understood as activities within or across
organisations that involve some inputs, which are transformed to produce desired outputs. A
business process, in this larger sense, then may involve inputs that are not just information but
actually are transformations that act on all types of inputs to produce outputs that are desired by the
organisation. Here is a notable difference that processes are now to be understood as happening
within or across organisations.

Business processes have a telescopic character: the nature of a business pro- cess may extend from
being one that is elementary to one that is very com- plex. Furthermore, a process may consist of sub-
processes, which are also processes in their own right. While analysing processes, an analyst will
strive to understand the most elemental business processes that constitute more com- plex processes,
which further constitute more complex processes and so on.

Complexity of a process may extend to the number of activities, persons, and departments it includes
as well as the amount of time and effort it takes to complete. Some processes, for instance, of securing
a payment, may involve several parties across several organisations and take a short time to complete.
In contrast, a process of making a batch of mechanical parts by machining in a factory may take only
a few inputs and steps, but may extend across a large span of time.

One of the aims of building information systems has been to identify and map basic processes that
can be automated to build highly complex systems. Such automation can improve the speed and
accuracy of the processes as well as help reduce costs of conducting them. Though this goal has been
achieved with large-scale computerisation within organisations across the world, it has led to a
consequent increase in the complexity of processes in terms of the nature of involvement of people,
departments, and organisations and also in the nature of processes. The old manual processes tended
towards simplicity at the individual, atomic activity level, with complexity arising from multiple

Unit: 7 - Business Process Integration with IT 8

DMBA210: Management Information System

processes combining to form higher level processes. But the modern computerised atomic processes
are highly complex even to start with.

As an example, compare the task of buying a film ticket in India by the manual method, which is still
prevalent in many theatres in India, with buying the ticket online. The manual method means going
to the film theatre personally, or through an agent, and appearing at a counter where the ticket vendor
can sell the buyer a ticket for a film that will run the same day or at some future date. The buyer has
to provide information about the type of ticket, economy or premium ticket, the show for which it is
required and the date for which it is required. The buyer usually has to buy the ticket using a cash
transaction. The ticket purchased is printed on paper indicating the correct date and time for the show.
The theatre management has to ensure that sufficient tickets are available at the ticket counter for all
the shows for which tickets can be purchased in advance. The manual process for buying the ticket
thus involves sub-processes of the buyer arriving at the window (after, per- haps, waiting in a queue),
informing the vendor about the time and date of the show, providing the money, and the vendor then
giving the buyer the relevant ticket after ascertaining that tickets for the desired show are available.
Pre-requisite processes involve printing sufficient number and type of tickets by the theatre
management.

The process of buying a ticket online is simpler for the buyer but far more com- plicated, considering
the number of sub-processes it invokes. A buyer can use a website, such as [Link],
find the film and theatre that he/ she is interested in, select the theatre, the show time, the seats, the
price of the ticket, and then order the purchase. The buyer can then purchase the ticket using a credit
card, a transaction that involves sending information to a bank or a credit card agency, verifying the
credit available, enabling the transaction, and then verifying the card owner’s details. Once the card
enables the purchase, the buyer prints out the ticket receipt. The online sites also send an SMS text
message to the buyer, if a mobile number is provided, to indicate the details of the purchase. This
involves another organisation that enables the sending of the SMS. Once the buyer arrives at the film
theatre, he/she has to provide the details of the purchase to an automated kiosk or at the counter to
receive her tickets that will allow him/her to enter the hall to see the film. The prior arrangement the
management of the film theatre has to make is to arrange with the website to list their films and
provide details about show times, hall seating arrangements and prices. The website management
has to enable the buyer to select the tickets and also enable an easy payment through multiple
possible gateways. The purchase has then to be listed by the management at the theatre in their kiosks
and counters to issue the final tickets to the buyer.

Unit: 7 - Business Process Integration with IT 9

DMBA210: Management Information System

The two examples clearly show that the manual method of ticket buying requires a fewer number of
sub-processes but is more expensive for the buyer in terms of transaction time. Table 7.1 lists the
sub-processes involved in both manual and online buying. In contrast, the online method is very
convenient for the buyer, but takes a much larger number of sub-processes, involves a larger number
of agencies and has much greater information flows.

The online method of ticket purchase is an example of the manner in which business processes have
been integrated to serve a common purpose. Ticket purchasing is simplified for the buyer who,
however, is unaware of the complex processes involved in the simple ticket purchase.

Table 7.1: Manual and online processes of buying a cinema ticket

In other business processes, the complexity can be much higher than in the above example. An
example is provided in Section 7.3.2.

3.2. Example of a complex process

Certain business processes require a large number of steps to be initiated and completed before the
processes are themselves complete. These steps could involve persons and groups from different
departments within the organisation, as also groups and people from other organisations. The
complexity of such pro- cesses arises from the number of steps and the boundaries across which those
steps have to be executed, as also from the choices that may be required to be made to complete the
entire process. Within the execution scenario, there may be certain steps that can be reversed and
certain steps that cannot be reversed.

Unit: 7 - Business Process Integration with IT 10

DMBA210: Management Information System

Now, we examine a complex process in some detail. The objective is to gain an understanding of the
people, departments and organisations that are involved as also of the information and material flows
that are required. The process is based on a hypothetical book store, much like Oxford book store
discussed in the opening case. The process steps are as follows:

1. A customer arrives at the store website and makes a book selection. The customer then logs in
to a store account that he/she already has, and selects a book for payment.
2. The system checks for the customer’s credit or debit card account, which it finds.
3. The system then checks with the partner bank if the customer’s card can be charged. Upon
receiving a confirmation, the credit/debit card details are transmitted to the bank, and the
bank then asks the customer for security information (after redirecting the customer to its
site). If the security is cleared, the credit transaction is completed.
4. The store receives a confirmation of the transaction from the bank and confirms the order for
the customer.
5. The order details, including the customer’s address, the title of the book and the quantity order
are then transmitted to the shipping and inventory management modules.
6. The inventory management module will check if the book is available from stock, and if so,
where it is located. If it is not in stock, then the purchasing module is informed that will then
pass the request for this item to a vendor. If the book is in stock then it is located and the
shipping module is informed.
7. The shipping module then passes the order and address information to the stock and shipping
clerks, who can physically obtain the book from the shelves and package it for shipping. The
clerks also include a receipt and a shipping invoice with the package. The receipt is obtained
from the accounts department.
8. The shipping module also checks whether the customer has cancelled the order or the order
has been cancelled for some other reason (such as the bank reporting a default on credit) or
the order has been postponed or delayed. If the order has been cancelled then the shipping
module cancels the shipping instructions.
9. Once the physical shipping of the book is started through a logistics or shipping agency, the
details of the shipping number are recorded and may be sent via e-mail or SMS to the customer.
10. When the amount from the customer is received from the bank, the accounts module is
updated with the cash credit.

Unit: 7 - Business Process Integration with IT 11

DMBA210: Management Information System

11. The details of the book are recorded by the marketing and sales department in order to keep
track of fast-moving or popular titles that could be offered on discount or for special
promotions. The marketing department may inform the procurement and inventory section
of the demand for the book and whether to order more copies.
12. The inventory department may also perform checks on the number of books available in stock
for the title and place further orders or not. Consolidated reports based on the inventory and
marketing inputs may be prepared for relevant product managers to evaluate and recommend
further action.
13. When the book is received by the customer, the information is recorded and the customer’s
account is updated.

Figure 7.1 depicts that there are at least four departments – information systems, marketing, accounts,
inventory, and shipping – involved in the process of selling and shipping a book to a customer online.
As all the possible outcomes of the process were not explored, this is a minimum number that is
involved in the process. The example also shows engagement with two external agencies (the bank
and the shipping agent) for the process to complete. Since the process is highly automated, the people
involved are few – the shipping clerks, the delivery agents, and the managers who decide on
inventories. Reports generated from this process, and many other such processes, will however reach
managers in all departments including those at the very top.

Unit: 7 - Business Process Integration with IT 12

DMBA210: Management Information System

Fig. 7.1: Example of complex process of an online book order and execution involving many
departments and two external organisations

This example shows the complex nature of processes and the massive integration required between
people, departments, and systems. With the use of information systems, many of these processes
can be integrated with automatic flows of information from one department or system to another.

SELF-ASSESSMENT QUESTIONS – 1
True or False:
1 Business processes refer not necessarily to processes within the organisation, but to any
process that is transformational in nature, taking inputs and producing outputs that are
desired by the organisation. (True/False)

Unit: 7 - Business Process Integration with IT 13

 DMBA210: Management Information System

4. MOTIVATION FOR ENTERPRISE SYSTEMS

In a landmark paper that appeared in the Harvard Business Review in 1990, Michael Hammer argued
strongly for what came to be known as Business Process Re-engineering. Hammer’s fundamental
insight was that large- scale computerisation of processes in organisations was automating manual
processes but not changing or re-engineering them to use the power of computers. As an example,
Hammer showed that Ford Motors, a large automobile manufacturer in the USA, created three
documents for ordering and receiving goods. Each of these documents, one from the ordering
department, one from the receiving dock, and one from the vendor, were sent to the accounts payable
department, where a clerk had to match these documents to verify that the correct order had been
received. Ford found that it had 400 employees in the accounts receivable department to do this work,
while a rival, similar sized firm had five employees for the same task. Ford then thought of re-
engineering the accounts receivable process, where the ordering department entered all the details
of the order online, and the receiving clerk checked the goods against the purchase order available in
a database. This way the work of the accounts receivable department was reduced. Hammer showed
that this method of re-engineering allowed man- agers to integrate and streamline work processes,
using the power of computer technology, rather than create automated versions of tedious manual
processes.

The 1990s also saw the rise of what are now termed as enterprise systems. The most visible of these
systems were called enterprise resource planning (ERP) systems, whereas the others were (later)
termed supply chain management (SCM) systems and customer relationship management (CRM)
systems. Such systems also encouraged organisations to think of process integration and put into
place processes that utilised the computing power enabled by them. Furthermore, such systems also
forced organisations to align their processes along the best practices within their industries. For
example, an ERP implementation entails that the accounts receivable process in manufacturing
organisations be conducted in a manner very similar to the way it had been designed within the ERP,
which had undertaken research to ensure the ‘best practices’ of the industry were included.

Enterprise systems also gained popularity as they enabled firms to bring together a number of legacy
systems within one platform. The idea was to bring ‘islands of information’ under one umbrella. Many
large commercial firms, by early 1990s, across the world had invested in distributed, departmental
information systems that automated the processes and work for their departments. Exchange of
information between departments and having high-level views of joint data was difficult and

Unit: 7 - Business Process Integration with IT 14

DMBA210: Management Information System

presented many challenges. Data was not maintained in the same formats, and there was little
coordination regarding updating the same data. Besides, the systems were built on a heterogeneous
set of hard- ware and software (mainframes running Unix, desktops running Windows, etc.) and thus
data migration was much harder. Enterprise systems pulled together these departmental information
systems under a common, standard platform to overcome many of these problems.

Enterprise systems also helped organisations move from obsolete technology, acquired at high cost
many years ago. One of the problems that spurred deployment of enterprise systems was the Y2K
problem. This problem, in the 1990s, refers to the impending arrival of the year 2000. Many software
programmers, who had started writing code in the 1970s and 1980s, when they were required to use
the year value for some calculations, used the last two digits of the year rather than the entire set of
four digits. For example, they used 69 instead of 1969. Computations that required dividing by the
value of the year used two dig- its. Systems managers realised that in the year 2000, the last two digits
would be zeros, and this raised a fear – it was well known that dividing by zeros within computer
programs throws errors. Organisations had two options – either to check all their software for any
place where a possible division by the year could occur, or change their software to newer packages
where this problem had been resolved. Many opted for the second option and decided to buy
enterprise software anyway, as these could address the integrated computing needs of the entire
organisation. This drove up the demand for enterprise systems and many firms started their roll-outs
before the year 2000. Millions of dollars were spent on these systems. It is a remarkable irony of
history that the Y2K problem turned out to be a non-problem. The dawn of the year 2000 triggered
no catastrophic failures of systems as had been predicted.

Figure 7.2 depicts the multiple reasons for organisations to adopt enterprise systems.

Fig. 7.2: Motivation for enterprise systems

Unit: 7 - Business Process Integration with IT 15

DMBA210: Management Information System

SELF-ASSESSMENT QUESTIONS – 2
Fill in the blanks:
2 In the 1990s, enterprise systems like , , and gained popularity as they enabled
firms to bring together a number of systems within one platform.
True or False:
3 The Y2K problem was one of the main factors that spurred deployments of enterprise
systems. (True/False)
4 Enterprise systems force organisations to align their processes along industry best practices.
(True/False)
Choose the correct answer:
5 Enterprise systems are popular because they address
a) problems of legacy systems with widely varying data formats
b) business process re-engineering needs
c) both (a) and (b)
d) needs to keep costs low and help manage change more easily

Unit: 7 - Business Process Integration with IT 16

DMBA210: Management Information System

5. ENTERPRISE RESOURCE PLANNING SYSTEMS

ERP systems constitute the most important enterprise systems currently being used. The term ERP
evolved from Material Resources Planning (MRP) that were systems developed to integrate functions
of manufacturing, such as man- aging inventories, parts purchases, and production planning. An MRP
system allowed managers to provide inputs about product demand, including the different items
demanded and the time at which they are required, and the system then determined the type, number,
and time duration in which various intermediate parts had to be assembled. It also tracked inventory
levels for parts, and using scientific models determined when these parts had to be replenished to
ensure a smooth manufacturing process.

Inspired by the manner in which MRP managed different systems used for manufacturing on the shop
floor, software engineers tried to integrate data and operations for all other functions of the
organisation. This led to evolution of ERP.

One of the pioneers in the world of ERP systems is the German company SAP. Starting in the late
1970s, SAP had a vision of creating a common platform for all the major functions of any commercial
organisation. The company was started by engineers who had worked in IBM and who knew the
challenges of integrating data across functions. SAP remained a relatively unknown player in
enterprise systems until the 1990s by when some very large firms around the world had deployed
SAP very successfully across their enterprise.

SAP currently is synonymous with ERP software. It is one of the largest soft- ware product firms in
the world and has deployments in 100,000 companies across 120 countries. The firm itself employs
about 50,000 people, and it partners with over 2000 companies who act as SAP specialists and
implementers. SAP is available in 40 languages and in 50 different currencies.

Owing to the popularity of the ERP software concept, several competitors to SAP have emerged over
the years, many of which have been bought out or have not survived. Currently, the strongest
competitors to SAP are Oracle, Microsoft (with a product called Microsoft Dynamics), Ramco, Epicor,
and Infor. Almost 70% of the market share is with SAP, Oracle, and Microsoft, with the balance
distributed between over a dozen smaller vendors. The smaller players include open source ERP
products such as Adempiere, OpenBravo, and Compiere.

An ERP package consists of four fundamental modules – manufacturing, finance and accounting, sales
and marketing, and human resources – that are supported by a central database. Figure 7.3 shows

Unit: 7 - Business Process Integration with IT 17

DMBA210: Management Information System

these modules. Each mod- ule fully implements the functions that it is designed for, and additionally
brings the best practices in terms of processes. The modules may be implemented independently but
the core database remains the same.

The SAP ERP package further distinguishes between modules and business processes. The modules
represent functions such as marketing or accounting, whereas the business processes are integrated,
and they implement a number of transactions or steps that may cut across modules.

SAP business modules include within them a large number of operations or functions that are
routinely used by organisations. Figure 7.4 depicts such SAP components. A brief description of these
operations is described ahead.

Fig. 7.3: Important modules of an ERP package supported by the central data- base

Fig. 7.4: Depiction of SAP components that support business functions and processes that cut across
departments and organisation (SAP ERP and SCM packages are shown)
Source: Adapted from SAMS Teach Yourself SAP in 24 Hours by G.W. Anderson.

Unit: 7 - Business Process Integration with IT 18

DMBA210: Management Information System

5.1. Finance and accounting module

Finance and accounting module includes:
1. General ledger accounting: It is a place to record all the business trans- actions occurring
across the organisation.
2. Accounts payable and receivables: It is a place where the data pertaining to vendor
payments is recorded, along with cash and monies received from customers.
3. Asset accounting: It is a place where data about transactions involving fixed assets is
maintained.
4. Funds monitoring: It is a set of operations where revenues and expenditures are monitored,
along with a facility to plan and monitor budgets.
5. Governance and risk: It is a facility to monitor and govern the organisation’s regulatory
requirements. These functions help the organisation monitor its compliance with various laws
and regulations.
6. Overhead cost controlling: It is a function that enables the organisation to allocate, monitor,
and assess the overhead costs being incurred, as also helps in controlling these costs.
7. Activity-based costing: It is a function that allows the firm to charge overheads to activities
such as sales, operations, and customer management, and obtain an analysis of overheads
based on the principles of activity-based costing.
8. Profitability analysis: It is an analysis function that helps the organisation to view the profits
from different product lines and departments.
9. Business planning and budgeting: It is a function that enables management to see the
dependencies between profits and loss, and the balance sheet and cash flows, and create plans
for budgets.
10. Cash management: It allows firms to have a clear view of their liquidity, both in terms of
current status and future flows.
11. Credit management: It enables firms to have a clear view of credits allocated, pending,
management, and control.

5.2. Human resource management module

Human resource management module includes:
1. Workforce process management: It is a place where data on employee performance,
benefits, and work record is maintained according to legal requirements. These functions
enable management to view the record of and make decisions about employees.
Unit: 7 - Business Process Integration with IT 19
DMBA210: Management Information System

2. Manager self-service: It is a module that allows managers to view the profile of employees to
seek out top performers and those with specific skills, calculate costs associated with
employees, and estimate salary enhancements and budgets.
3. Enterprise compensation management: It is a place where data and analyses regarding
salaries, benefits, bonus awards, salary trends, salary adjustments, budgets and planning, and
compensation management are conducted. This module helps keep track of salary trends
within the industry to help management attract and retain the best skilled and talented
employees.
4. E-Recruitment: This module helps organisations track candidates for employment through
online databases, notifications, and hiring facilities.
5. Organisational management: This module helps with analysing the structure of the
organisation in terms of its reporting and functional hierarchy, and helps analyse how
different structures could be evolved and how they could be staffed.
6. Organisational learning: This module allows managers to assess the qualifications and skills
within their workforce and plan for training and education for skills development. The module
enables planning for company-wide training programs, budgeting for them, and managing
their execution.

5.3. Manufacturing and operations module

Manufacturing and operations module includes:
1. Production planning and control: This module maintains data on all production-related
activities such as raw materials, sales forecasts, and plans, production schedules, bill-of-
material for different products, orders for repetitive manufacturing, costs of production data,
just-in-time production plans, and so on. It is a high-level module for managing the production
function.
2. Material management: This module is responsible for managing inventories of consumable
and non-consumable items in the firm. The module manages the inventory that includes
purchasing, billing, storage in ware- houses and bins, confirming invoices, as also material
planning.
3. Plant maintenance: This module helps manage different manufacturing plants by keeping
data on plant equipment, maintenance schedules, service routines, equipment details,
equipment warranties and contracts, and orders.

Unit: 7 - Business Process Integration with IT 20

DMBA210: Management Information System

5.4. Sales and marketing module

Sales and marketing module includes:
1. Sales management: This module helps in managing a sales force by keeping data on sales
force distribution, sales calls, sales contacts, customer contacts and call information, regional
sales data, contracts, and so on.
2. Marketing management: This module helps in planning for campaigns, costs of campaigns,
and analysing competitor data.
3. Distribution management: This module complements the production module in keeping
track of product distribution centres, the needs of various zones and warehouses, and the
unmet demand.
Many of the tasks of the sales and marketing function of the ERP have now shifted to CRM systems,
which is discussed later.

SELF-ASSESSMENT QUESTIONS – 3
Choose the correct answer:
6 An ERP package consists of
a) four fundamental modules (manufacturing, finance and accounting, sales and
marketing and human resources) and a centralised database
b) modules that may be implemented independently, but with the same core database
c) all modules that bring best practices in terms of processes
d) all of the above

Unit: 7 - Business Process Integration with IT 21

DMBA210: Management Information System

6. SUMMARY
Let us recapitulate the important concepts discussed in this unit:
• Business processes have a telescopic character; the nature of a business process may extend
from being one that is elementary to one that is very complex.
• ERP package consists of four fundamental modules – manufacturing, finance and accounting,
sales and marketing, and human resources.

Unit: 7 - Business Process Integration with IT 22

DMBA210: Management Information System

7. Financial
GLOSSARY Management is concerned with the procurement of the least cost funds, and its effective

Activities within an organisation that require some inputs that are

Business process -
transformed into desired outputs.

Process re- Changing manual processes by using computerisation to make them more
-
engineering streamlined and integrated.

The problem perceived by the computing industry in the 1990s to occur

Y2K problem -
owing to the arrival of the year 2000.

Unit: 7 - Business Process Integration with IT 23

DMBA210: Management Information System

8. TERMINAL QUESTIONS
1. Identify and document three business processes in your college or organisation. Do any of these
processes cut across departments?
2. What is business process re-engineering?
3. What is the Y2K problem? How did it arise?
4. What is an ERP system? What are its major components?
5. Briefly identify the main functions of the finance and accounting module of an ERP.

Unit: 7 - Business Process Integration with IT 24

DMBA210: Management Information System

9. ANSWERS
Self-Assessment Questions
1. True
2. ERP, SCM, CRM, legacy
3. True
4. True
5. (c)
6. (d)

Terminal Questions Answers

1. Refer Section 7.3.1
2. Refer Section 7.4
3. Refer Section 7.4
4. Refer Section 7.5
5. Refer Section 7.5.1

Unit: 7 - Business Process Integration with IT 25

DMBA210: Management Information System

10. REFERENCES
• Gupta, V. (August 2011) Oxford Bookstore boosts efficiency using cloud based solution.
Information Week.
• Anderson, G.W. (2011) SAMS Teach Yourself SAP in 24 Hours, Pearson Education.
• Hammer, M. (1990) Re-engineering work: Don’t automate, obliterate.
• Harvard Business Review.

E-REFERENCE
• Pathak, A. (2011) Publishing in India Today: 19,000 Publishers, 90,000 Titles, Many Opportunities.
The article is available at: [Link] [Link]/2011/07/publishing-in-india-
today-19000-publishers- 90000-titles/ (accessed on July 2011).
• Chidambaram, V. With SaaS ERP, Oxford Bookstore increased its revenue by Rs 3.4 crore. The
article is available at: [Link] study/erp-solution-delivered-saas-style-
bumped-oxford-bookstores-reve- nue-rs-34-crores (accessed on July 2011).

Unit: 7 - Business Process Integration with IT 26