Integration

Linking it all together

Role of Processes in Business

Source: GAO/AIMD-10.1.15 May 1997 Version 3 Business Process Reengineering Assessment Guide

What is a Business Process?

A collection of linked tasks which find their end in the delivery of a
service or product to a client.
A set of activities and tasks that, once completed, will accomplish an
organizational goal.
Involves clearly defined inputs and a single output.
Inputs are made up of all of the factors which contribute (either
directly or indirectly) to the added value of a service or product.
Factors can be categorized into management processes, operational
processes and supporting processes.

Elements of a Business Process

Has a Goal
Has specific inputs
Has specific outputs
Uses resources
Has a number of activities that are performed in some order
May affect more than one organizational unit. Horizontal
organizational impact
Creates value of some kind for the customer. The customer may be
internal or external.

Types of Processes
Operational processes constitute the core business.
Management processes govern the operation of a
particular organizations system of operation.
Supporting processes such as human resources and
accounting are put in place to support the core
processes.

Operational Business Processes

Refer to the operations of an organization.
Directly contribute to the creation of goods
or services responsible for the revenues of
the organization.
Usually designed once and then repeated
many times - assembly line process .

Support Business Processes

Essentially a set of interrelated activities that are
aimed at supporting operational business processes

Maintenance Processes.
Organizational learning processes usually
aimed at knowledge acquisition and
sharing.

Understanding a Process
A process requires a series of actions to achieve a certain
objective.
processes are continuous but also allow for adhoc action.
Processes can be simple or complex based on number of
steps, number of systems involved etc.
They can be short or long running.
Longer processes tend to have multiple dependencies and a
greater documentation requirement.

The Order Fulfillment Process

Business Process Integration

Invoice

Payment

CRM
Receipt
Customer

Supplier
Goods
Receipt

Purchase
Order

Sales
Order

Shipped Goods
Packslip

Check
Availability

Warehouse 1

Packslip
Info.

Stock
Transfer
Sales Issue

Sales Office

Warehouse 2
Material
Receipt

Material
Request

Material
Issue

Invoice

Work Order
Order Costing
Order

Stock Issue
Stock Receipt
Stock

Finance &
Administration
Masters
Chart of Accounts
Account Definitions
Journal Voucher

Adjustment

Settlement
Cost Roll up

Manufacturing
Unit

10

The Typical Value Generation Process

Procure-to-Pay
Purchase
Requisition

Run Materials
Requirement Planning
Single Item, Single
3-Way
Level
Match
Convert Purchase
Requisition to Purchase
Order
Create Goods Receipt
Payment
Create Invoice Receipt
to Vendor
from Vendor
Post Payment to Vendor Invoice

Receipt

Purchas
e
Order
Notify
Vendor

Vendor
Shipment
Goods
Receipt
11

The Typical Value Delivery Process

Order-to-Cash
Sales Order
Entry

Logging on the SAP System

Create Vendor Master
Or
de
Create Material Master
rCreate Customer Master
Create Customer Quotation
Create Sales Order with
Reference to Customer Receipt of
Quotation
Customer Payment
Check Stock Status

Invoice
Customer

Check
Availability
Pick
Materials

Pack
Materials

Post Goods
Issue
12

Production Process
(Make-to-Stock)
Production
Proposal
(Planning/Other)

Capacity
Planning

Schedule
and Release
Shop Floor
Documents

Order
Settlement
Goods
Issue
Goods
Receipt

Completion
Confirmation

The Typical Order Process

Purchase
Requisition
Schedule
and Release
Convert Production
Proposal

Purchase
Order

EDI, Suppliers,
SCM, SRM

Procure-to-Pay

Quality, Goods
Run MPS w/MRP PPS, IM, Issue
MM
Production
Check
Availability

Process

Sales Order Linked to SD,

Entry
customers,

CRM to-Cash
OrderPick
Materials

Receipt of
Payment
Invoice
Customer

Post Goods
Issue

Goods
Receipt

Completion
Confirmation

Quality
Inspection

Invoice
Receipt

Payment
to Vendor

Goods
Receipt

Order
Settleme
nt

14

Business Architecture of an Integrated System

Horizontal Integration:
Personnel,
Sales & Marketing,
Procurement & Inventory,
Engineering & Production
Vertical Integration:
Accounting,
Reporting & Controlling,
Analysis and
Long Term Planning
15

ERP Application Architecture

16

ERP Architecture
Human Resources

Finance
-General Ledger
-Accounts Receivable
-Accounts Payable
-Procurement
-Fixed Assets
-Treasury Mgmt
-Cost Control
-Grant Management

-HR/Benefits
Administration
-Payroll
-Self-service HR

e-Business
-eProcurement
- Employee Self Service
- e-Recruiting/e-Hiring
- e-Filing
- Citizen Access
- Web-enabled transactions
- e-Commerce

Transaction Engine
Core software that manages
transaction flow among
applications and handles tasks
like security and data integrity

Customer Relationship Mgt

Data Analysis
Decision support software that lets
senior executives and other users
analyze transaction data to track
business performance

Supply Chain Mgmt

Planning, scheduling and fulfillment
applications that address all
procurement requirements across
the enterprise

-Consistent user experience

- Personalization of services
- Realtime access- enterprise info

What is Process mapping?

Process mapping is a tool that is used to understand,
analyse and document processes and activities in an
organisation and assist in identifying opportunities for
improvement
A process map displays the sequential steps involved
in converting a specific input into the required output

Deliverables of Process Mapping

An action plan for implementation containing identified and
prioritised suggestions for improvement.
Documented differences between existing work flow and Best
Practices.
Identified problem areas using root cause analysis
Documented existing work flow with highlighted problems.

Business Process Reengineering

It is the Fundamental Rethinking and Radical Redesign
of Business Processes to achieve Dramatic
Improvements in
Cost
Quality
Service
Speed

Evolution of BPR
Created by Dr. Michael Hammer, James Champy &
Thomas Davenport in the Early 90s (1990-1993)
Davenports research companies redesigning
processes: Process Innovation
Because Processes were at the heart of the Management
Philosophies these efforts were described as

Business Process Reengineering

Identify Opportunities for Improvement

Go beyond understanding the current flow to
identifying areas for improvement, such as:
Process opportunities
Technology opportunities and issues
Short-term fixes or urgent action items

Try Answering These Questions

What new information is available and easily
accessible?
What new technologies have recently been
introduced or on the horizon that can change the
business-customer interaction?
What new ways of structuring cross-functional
work teams, compensation systems and incentive
methods have proven to be effective?

Use of Critical Analysis

Cross-Functional Flowcharts - Swim Lanes

Publication Process

Customer

Printing Process

The printed
material is stuck
and bound
together

Spelling checks
for grammar and
spelling are run

Shipping

Packaging
Dept

The
information
to be
published is
collected

Order received

QA
Dept

Request

Printing
Dept

Publication Process

Ready for
distribution?

Order
Fulfilment
Process

Cause and Effect Diagram

Outside
Influences

Quality

Housemates
finished milk

Cheap Milk

Expired
Faulty Fridge

No money

Fridge not cold

For breakfast

Milk gone off

For Micky the

cat

No Milk in
Fridge

Large store too far

Milk ran out
Battery dead

Rent too high

Closed on Sundays
Lazy

Left lights on
Old battery
Car won't start

Supplies

Poor Salary
Small Store
Insufficient

Mortagage
Student loans
Too many
debts

No Money

Aspects to be Evaluated
How are things currently done?
What changes may be occurring?
What new conditions exist in the business environment?
What are the sources of concern?
Are there any operating procedures which are harmful to
companys functioning?

Phases in BPR
Begin Organisational change
Build the Reengineering Organisation
Identify BPR opportunities
Understand the existing process
Reengineer the process
Blueprint the new Business System
Perform the Transformation
IT plays an important role in bringing about the change