Monday, October 22, 2012


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A business process may involve activities from more than one business functional area. Explain why that is so (you can cite an example if you like, to clarify the issues). In a company that has an ERP system, the accountants talk in terms of data flows between modules and sharing data between modules. Why are the accountants speaking imprecisely? I.e., why are data flows between modules and sharing data between modules misnomers if an ERP system is used?

A business process takes in a variety of inputs and creates outputs that are valuable to customers. To produce such outputs a business must have a process that incorporates many business functions throughout the business operation. Since a business process contains the steps that go into producing an output, it only makes sense that many areas of the business are involved in the process. For example, when a customer returns an item for repair, the item must go through a business process to be fixed and returned. Within this process there are many functions that must occur in order to make it possible. These business functions can come from any one of the functional areas within the business. Business functions are the building blocks for the processes that take place within a business. An ERP system integrates the areas of a business, which enables the processes to run more smoothly and efficiently.

Data is stored in a central database where it can be applied and accessed by authorized personnel. There is not a flow of data, as the accountants describe, because the information is always kept within the system, as opposed to the more primitive methods used in the past in which data was literally shared between sectors of the company. This was a riskier way of sharing data because the probability of loosing, misplacing or entering data inaccurately, was high. Since information is entered in real-time, there is no need for a “flow” to obtain data; data is available as soon as it is entered. With out an ERP package, it takes time for needed information to go from where it was gathered to where it was needed, slowing the overall processing time. Integrating areas of the business allows information to be shared without any effort.

When used to describe an ERP system, the terms data flows between modules and sharing data between modules are misnomers because they better describe a company without an ERP system in place. An ERP system incorporates the different areas of a business to avoid the uncollected and scattered informational groups that occur when an un-integrated system is in place. In an integrated system with a central database, data flows only from the source to the database, not between modules. This reduces the probability of losing information in “the shuffle” and decreases the overall time it takes for data to go from where it is collected to where it is needed. Information in an ERP system is not “shared” in the same sense as information in an un-integrated system. Sharing information without an ERP system in place is like sharing a shower it can only be used one at a time, (and like the water) information trickles in piece by piece and is hard to gather. Information in an ERP system is like sharing a pool it’s filled to the brim and everyone can get in! The authorized personnel who need it can assess all of the information contained within the central database of an ERP system. All areas of the business access the same database, which eliminates communication lags, redundant data and ensures that all information is consistent. The vast capacity of the database holds information about all aspect of the business ranging from employees birthdates to the favorite color of the firms biggest client. The centralized database is a pool of information in which all areas of the business contribute to and share.

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