OIS 23-24 The Whole Picture PDF

1 Lesson 5 “The whole picture” from ERP to ERP System ing. Massimiliano Oleotto Learning Objectives 2 Q1. How can you see all the Business Processes? Q2. What is the «Extended» ERP System? Q3. What are the Modules of an Extended ERP System? Q4. Do not need Additional Modules? G1. Let’s give th...

1 Lesson 5 “The whole picture” from ERP to ERP System ing. Massimiliano Oleotto Learning Objectives 2 Q1. How can you see all the Business Processes? Q2. What is the «Extended» ERP System? Q3. What are the Modules of an Extended ERP System? Q4. Do not need Additional Modules? G1. Let’s give the floor to … Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 3 The execution of a (good) Business Process must be supported by an IS Why? … We know this (!) Because the IS manages the flow of information necessary for its execution → it is the basis for decisions, planning, coordination, controls and evaluations Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 4 Today an IS must be implemented with a Business Software Why? … We also know this (!) Because a Business Software improves the execution: • efficiency → better timeliness, accuracy, relevance, essentiality and … of course, cost • effectiveness → it derives from successful experiences (Best Practice) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 5 The “dependence” of a Business Process on “its” Business Software today is such that the former cannot be executed without the latter Business Process Information System Business Software Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 6 • • • The name of the Business Software is now one with the name of “its” Business Process As an IS can support a set of Business Process, a Business Software can implement a set of IS If a collection of Business Processes are executed with a single Business Software: • the name of the Business Software is one with the name of the collection of Business Processes • the Business Software is organized in as many modules as there are Business Processes in the collection – the name of each module is one with the name of “its” Business Process Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 7 Here are the most popular collections of Business Processes → to get the Business Software just add ... System (!) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 8 Things are much more complex ... and the level of complexity depends on the company and its position within its supply chain Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. How can you see all the Business Processes? 9 So ... You can see all the Business Processes of a company, i.e. the “whole picture” of it, by seeing … All the modules of its “bigger” Business Software … Or all the modules of an Extended ERP System (!) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 1 10 Q1. How can you see all the Business Processes? • • • • a BP must be supported by an IS, and a IS must be implemented with a Business Software nowadays a BP can’t be executed without “its” Business Software a Business Software is generally a collection of BP, and it’s organized in Modules – each one is referred to a specific BP the “bigger” Business Software is the Extended ERP System with which you can see the “whole picture” of a company Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 11 The ERP is a particular collection of tactical Business Processes It is also: • a “de facto” standard given by the ERP Systems that implement it • the most popular standard in the world for tactical Business Processes – thanks to the spread of ERP Systems Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 12 The reasons for the spread of ERP are: • • • it adopts the Value Chain model, that tracks the value perceived by the customer and directs every activity to that value → it eliminates all waste it adopts the PDCA model, that is a structured approach to the performance of both the company exercise and all its activities → it eliminates every improvisation it adopts the Best Practice method, that implements a pragmatic management to obtain the best results in the same context → it eliminates every theorization Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 13 Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 14 The «Extended» ERP is another particular collection of Business Processes It extends ERP to: • other tactical Processes • strategic Business Processes • operational Business Processes Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 15 But… How can we get an Extended ERP System? In two ways: • EAI approach → it joins existing different Business Software with some EDI • ERP approach → it is an new single Business Software, that is: • process-centered • cross-functional Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 16 You may think that ERP approach is the best one … it isn’t today, even if it was yesterday (!) Process 1990 Tactical Tactical Sw (legacy system) 2000 2010 2020 ERP Extended ERP ERP Strategic / Operational - - Extended ERP Best-ofbreed Sw System Approach EAI ERP ERP EAI (!) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 17 Strategic Tactical Operational Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto EXTENDED ERP Learning Objectives – Recap 2 18 Q2. What is the «Extended» ERP System? • • • • ERP is the most popular “standard” collection of BP – it’s a “de facto” standard given by the ERP Systems that implement it Extended ERP is another collection of BP, i.e. the one that extends ERP to all the BPs of the company there are two approaches to get an Extended ERP System: Enterprise Application Integration, alias EAI, and Enterprise Resource Planning, alias ERP today the most used approach is EAI, because the ERP System is connected to the Best-of-breed Sw Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 19 An Extended ERP System allows you to execute the Business Processes of the entire company, and an ERP System is the center of it A System can’t be called an ERP System if it hasn’t these areas: • • • • • Finance Sales and Marketing Procurement Human Resources Operations Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 20 company → Value Chain area → Sales & Marketing activity → Sales Order entry Module → Sales Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What is the «Extended» ERP System? 21 Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 22 What are the Modules of Finance area? • • • • • • • • Accounting → based on a Chart of Accounts and a General Ledger, it produces Financial Statements according to an Accounting Standard, e.g. IFRS Accounts Receivable → it manages money owed to the company by customers for items provided on credit Accounts Payable → it manages money that the company owes to suppliers for items purchased on credit Cash Management → it manages bank transactions and liquidity forecast Expense Management → it handles employees expenses Asset Management → it handles the life cycle of fixed assets Management Accounting → it supports activities like Profitability Analysis (based on Centre Accounting) and Product Costing (based on Cost Accounting) Budgeting and Reporting → it produces Financial Plans and Financial Reports Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 23 What are the Modules of Sales and Marketing area? • • • • Sales Process, also known as Order-to-cash Process → well, we know it … it begins with a Sales Order and ends with the payment collection from the customer Quote Process, also known as Quote-to-order Process → it begins with a Quotation sent to a prospect and ends with a Sales Order Lead Generation, also known as Contact-to-quote Process → it begins with the first interaction with a lead and ends with a Quotation sent to him as a prospect Customer Relationship Management → it handles all the front-office activities that interface with the customer, especially Marketing (based on Campaign) and Customer Service (based on Satisfaction or, more often, Complaint) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 24 What are the Modules of Procurement area? • • Procurement Process → well, we know it … it begins with a Purchasing Requisition and ends with the payment to the supplier Supplier Relationship Management → it handles all the front-office activities that interface with the supplier, especially Sourcing (based on potential suppliers) and Supplier Performance Management (based on supplier assessment) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 25 What are the Modules of Human Resources area? • • • • • • Personnel Management, also known as Recruit-to-retire Process → it follows the employee during his/her life cycle in the company: hiring, assignment, promotion, etc., till termination Payroll and Benefits → it manages salary, benefits and compensation Time and Attendance → it records employee absences and holidays, and notes which activities employees have worked on when present Recruitment Management → it screens and interviews quality candidates in order to place the ones with the right skill into the right positions within the company Learning and Talent Management → it increases employee motivation providing him/her with skill training and career planning Employee Performance Management → it evaluates employee performance Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 26 What are the Modules of Operations area? • • • • • • Warehouse Management → it supports the day-to-day operations in a warehouse: supplier receiving, production moving, customer shipping, inventory counting, etc. Manufacturing Planning → based on Product Structure (Resource Capacity, Bill of Materials and Routings), it creates all plans necessary for production (SOP, MPS, MRP, etc.) Shop Floor Control → it manages manufacturing activities Quality Assurance → it ensures that every item meets company specifications Distribution and Transportation → it manages inbound (supplier-to-plant), outbound (plant-to-customer) and internal (plant-to-plant) stock transports Plant Maintenance → it solves plant assets (equipment, facilities, fleets, etc.) problems with replace-or-repair decisions Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 27 Here are the modules of Sap Business One Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. What are the Modules of an Extended ERP System? 28 But, after seeing what characterizes an ERP System, … what is missing? That is … what more does an Extended ERP System have? Simply, with an Extended ERP System: • • some Business Processes are executed in a more precise way you have other Business Processes Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 3 29 Q3. What are the Modules of an Extended ERP System? • • • An IS is an ERP System if it has at least these areas: Finance, Sales and Marketing, Procurement, Human Resources, and Operations With an ERP System it is possible to go top-down from the entire organization to the single performance through Areas and Modules An Extended ERP System adds to ERP System both a greater support to BP and more BPs Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q4. Do not need Additional Modules? 30 If an Extended ERP System allows you to execute the Business Processes of your entire company … … you may think that you do not need Additional Modules In other words, you already have it all (!) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q4. Do not need Additional Modules? 31 Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q4. Do not need Additional Modules? 32 An Extended ERP System allows you to execute all the BPs of a company efficiently and effectively using Best Practices However, the BPs of the company in which you want to implement an ERP System may differ from those of the latter You need a decision: • you keep the BPs of the company and modify the Extended ERP System, also through Additional Modules • you modify the BPs of the company by standardizing them to those of the Extended ERP System • a little bit of both Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 4 33 Q4. Do not need Additional Modules? • • An Extended ERP System implements all the BPs of an organization... in a standardized way If a critical BP in a company differs from the one you have in an Extended ERP System that you want to implement in that company, you may need an Additional Module, i.e. a change in the Extended ERP System in order to support the existing BP Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto G1. Let’s give the floor to … 34 … Elia Mardegan, project manager at Datalab on Sap Business One implementations Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto References 35 Course book: Earl McKinney Jr. • David M. Kroenke – Processes, Systems, and Information, An Introduction to MIS – Chapters 5-6 ❑ Other books: Marianne Bradford – Modern ERP, select implement & use today's advanced business systems – Chapters 7-10 ❑ Massimiliano Oleotto – La mappa dei processi aziendali operativi nelle PMI, Come evitare di perdersi in azienda – Chapters 3-5 ❑ Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto