Definition of Enterprise Resource Planning: Enterprise Resource Planning can be best defined as the group of activities which is directed towards the efficient management of critical functions of an organization by constantly monitoring the key performance indicators of the organization. Similarly, Enterprise Integrated System is an extension of Enterprise Resource Planning that further provides for the interchange of integrated data between all the related departments from a common platform. The following are the components of Enterprise Integrated Information System.
Diagram illustrating the components of Enterprise Integrated Information System
Functioning and Interaction of the components: With the advent of Enterprise Resource Planning in an organization the integration of various functional areas became possible. Such functional areas used to independently work without any interdependence among the various modules. When Enterprise Integrated Information System is adopted, various modules such as asset management, production planning, materials management, human resources, engineering and production etc work in a manner so as to keep their records constantly updated with an aim to not miss on any targets to be met or tasks to be performed in a timely manner. For example, the production module keeps a track of the production requirements and capacity to be met. The human resource module works towards keeping updated information regarding employee recruitment, training, payroll and the benefits that they are entitled to. The accounting/finance and the control modules have a direct or indirect effect on every other module thus encompassing all the other modules.
Benefits of individual components of Enterprise Integrated Information Systems: Every module or component of the enterprise integrated information system is solely responsible for up-to-date information about the relevant processes that have a significant effect on the critical processes of the organization. Without production planning module, it would be difficult to assess the production tasks and the consequent requirements for such tasks to be accomplished. Similarly without human resource module in place, the exact needs of the work force of the organization cannot be calculated.
Benefits of Enterprise Integrated Information Systems: With an Enterprise Integrated Information Systems in place, the quality and efficiency of the organization gets better with each passing day as a result of the integration of the internal processes. Subsequently, the production and staff costs are controlled while enhancing the quality of customer service provided to the customers. The integration of the internal processes also has the potential to equip management with faster decision making skills due to ease of interdepartmental communication.
Certainly, the most important component of Enterprise Integrated Information Systems is the finance module. As this module has a significant impact on the functioning of the other modules. For instance, if the finance module does not approve of the budget to be incurred for the acquisition of new plant & machinery, the production planning module, the sales module and the inventory module get stagnant with their respective decision making processes. A delay in decision making on part of any module definitely has a negative impact of the critical processes of the business and consequently the organizational objectives remain unachieved.
References
1. James A. O'Brien, George M. Marakas. (2006). Management Information Systems. Irwin: McGraw hill.
