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Unit 6: Information Technology Framework
Self Assessment Notes
State whether the following statements are true or false:
11. When firms introduced extensive computing to control and monitor operations and
financials in the early 1990s, much of the development was completed piecemeal.
12. A new generation of ERP systems is evolving to provide additional integration.
6.7 ERP System Design
The centre of the system is the central database or information warehouse where all information
is maintained to facilitate access to common and consistent data by all modules. Surrounding
the database are the functional modules that initiate and coordinate business activities. Although
total ERP benefits can best be achieved when all functions are integrated into a common
application, many firms elect to implement systems using a modular approach to spread resource
requirements and minimize risk as a limited number of firm functions are in transition at any
time.
6.7.1 Central Database
The central database is the relational information repository for the entire ERP system. The
central database is described as relational because it relates or links information regarding
operational entities so that there is minimal information redundancy in the database. Over
time, information redundancy usually leads to inaccuracy because one reference to a data item
is eventually changed without a comparable change in the other reference.
Example: If a customer address is contained in two different locations in the database, it
is likely that eventually one reference will be changed if the customer moves but the second
reference will be forgotten. At that point, the database would no longer be consistent and all
references to the second address would be incorrect.
Some ERP applications use a proprietary data structure that limits access. In these cases, all
communication with the database must be accomplished through the ERP. Having the ERP
system act as an interface doesn’t have to be a problem, but it may reduce flexibility and data
consistency. In most cases, however, the database structure uses one of several open database
architectures that can be accessed by other systems. Open database architecture means that the
interface is publicly defined and documented and can be used by a range of other applications.
6.7.2 Supply Chain Applications
The ERP supply chain applications include the modules labeled inventory and supply
applications, manufacturing applications, and sales and delivery applications. These three modules
support supply chain activity, including raw materials acquisition, production, and customer
order fulfilment. These modules incorporate the transactions and processes that initiate the
entire range of supply chain activities.
6.7.3 Financial Applications
The financial module incorporates the transactions necessary to maintain the firm’s financial
and accounting records. Specifically, the module maintains the contents and references to the
firm’s general ledger and tracks payables and receivables. The module also facilitates the
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