If you are considering a business system implementation, there will likely be many new terms thrown around that you may be unfamiliar with. Here are a list of the most common; along with their definitions to help you learn the language before you start.
Business Intelligence (BI): BI is the process of distilling data into actionable information. BI may also refer to the tools used to accomplish this task. BI elements include dashboards, gauges, alerts and other methods of conveying critical decision-making information quickly, accurately and timely. BI varies greatly depending on the person’s need, based on the job he or she has. A purchasing agent may need to know which products are critically low; which purchase orders to expedite, or other information related to supplying customers or manufacturing required products. A CFO will require information related to cash flow, pending sales, credit lines and other financial measurements. BI provides this information in real-time (or near real-time) without running reports.
CRM Systems: Customer Relationship Management systems – are software products at the simplest level, and provide an electronic rolodex of customer, prospect and vendor information. At a higher level, it may include marketing and sales processes and tools, integration to your ERP system, quoting and case or warranty management, in addition to calendaring and email management. CRM generally includes tools to provide a systematized method to track marketing and sales activity. This information provides the sales person with reminders, automated communications (letters, emails, quotes, etc.), and records of communications to facilitate the sales process. Management may derive a sales pipeline from a sales process with defined steps or it may be informal (scribbled on a napkin over lunch).
EDI: Electronic Data Interchange – this is a defined methodology for transferring documents (purchase orders, invoices, advanced ship notices, etc.) between different computer systems. The American National Standards Institute (ANSI) X.12 standard defines these documents in the United States. For example, EDI translates my purchase order (which I create in, for example, Microsoft Dynamics NAV) to a file that is transmitted through a VAN (Value Added Network) to your computer (for example, Sage Pro) as a Sales Order. Each of these documents has a number (Purchase Order – 856, Functional Acknowledgment – 997, and so forth). Each of your trading partners may use a different revision of the same document with different data standards. The ANSI X.12 standard provides a means to make the translation possible.
ERP: Enterprise Resource Planning – is both a discipline and a category of software. It most commonly means a software system designed to improve a company’s performance through resource planning, production and operational control, and management control. This software typically includes accounting and finance modules as well as inventory control with sales and purchase orders. In a manufacturing environment, it will include Bills of Material and Routings as well as production and inventory planning. It may include capacity planning for resources like people and machines. ERP, for distribution and manufacturing companies, will frequently have integrated forecasting and planning tools to facilitate purchasing and manufacturing orders. ERP systems may also include sophisticated subsystems like Warehouse Management Systems (WMS), Material Resource Planning (MRP) and Manufacturing Resource Planning (MRPII).
Goals: Long-term aims that you want to accomplish; generally broad in nature and may be abstract. E.G., “We want to be the most efficient provider of widgets to our customers.”
ISV: Independent Software Vendor – Software development companies whose products look like a part of an ERP product. The ISV software may or may not be certified by the ERP vendor. Some ISVs will OEM their software to the ERP vendor.
IT: Information Technology – Professionals in the IT field have many names and the IT field itself has many names. You may see CIO (Chief Information Officer), Director of MIS (Management Information Systems), Director of IT or other similar names. The field, IT, and its professionals encompass many areas of expertise, including: PC hardware, Servers, network hardware, operating systems, databases, software, security, Internet, Web servers and access control, to name a few.
Lean (Lean Manufacturing): Lean is a system of eliminating waste from a process. It is a process of identifying waste and value. You can increase or enhance Value by first identifying and then eliminating waste. Lean focuses on repeatable standard work processes so that everyone does their tasks in the same way. The standard provides the foundation against which change can be measured (does the change reduce waste or does it create more waste than the standard). Lean Manufacturing involves the operator who performs the step as a part of the team to improve the process. This collaborative effort involves people from throughout the company in the manufacturing process. This process empowers the individual to use his or her own creativity to change the standard in conjunction with others on the team. For more on this, you may be interested in reading our whitepaper, Lean Manufacturing Insights.
MRP: Material Requirements Planning – a production planning and inventory control software system used in managing manufacturing processes.
MRPII: Material Requirements & Resources Planning – expands on the MRP concept to include capacity constraints in the form of machines, work centers and personnel.
Objectives: Concrete attainments required to accomplish goals; narrow or precise achievements that can be evaluated. “We will increase our order fulfillment rate from 90% to 95% by clearly articulating our stocking product list, setting stock levels based on the best scientific methods available and collaborating on our weekly forecasting with our customers.”
OEM: Original Equipment Manufacturer – has two connotations: 1) Components manufactured by one company and sold as a part of the purchaser’s product. 2) Products manufactured by one company and sold under the purchasing company’s brand name. In the software world, one software developer may include a second developer’s product under the first developer’s brand name. This is frequently done with products for EDI and freight software that require integration to many third parties.
SCM: Supply Chain Management – software tools to facilitate the communication of requirements and available product in the distribution channel. These tools are designed to provide quicker communication of demand (people or companies buying a product) to the distributors and manufacturers. The goal is to make and sell more of the products that are in high demand and less of the products that are in low demand.
VAR: Value Added Reseller – a company who sells software written by another company. Most software in the mid and small company market is sold by VARs, since most companies require specialized (vertical) industry knowledge. The VAR differs from a retail sale because the VAR brings his or her specialized knowledge or skills to the software. This value may be in a special implementation process or special industry knowledge that facilitates the buyers’ use of the software to accomplish business goals.