ERP Satellite Systems from Operations to Governance PDF

1 Lesson 10 ERP Satellite Systems from Operations to Governance ing. Massimiliano Oleotto Learning Objectives 2 Q1. What does «Satellite System» mean? Q2. What are the Operational ISs? Q3. And the Tactical ones? Q4. And the Strategic ones? Q5. And what about CPM? G1. Let’s give the floor to …...

1 Lesson 10 ERP Satellite Systems from Operations to Governance ing. Massimiliano Oleotto Learning Objectives 2 Q1. What does «Satellite System» mean? Q2. What are the Operational ISs? Q3. And the Tactical ones? Q4. And the Strategic ones? Q5. And what about CPM? G1. Let’s give the floor to … Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. What does «Satellite System» mean? 3 We are at the end of a long journey, in which we have considered: • • the ERP System as the most complete example of IS the BI System as another example of IS – and the BI System can be connected to an ERP System To complete our journey we consider other examples of IS, all generally connected to the ERP System → so, if the latter is a «planet», the former are the «satellites» Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. What does «Satellite System» mean? 4 The BI System can be connected to an ERP System, but it can also be incorporated by an ERP System Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. What does «Satellite System» mean? 5 A common example of IS that can be both connected to and incorporated by an ERP System is Office Automation Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q1. What does «Satellite System» mean? 6 The ISs we consider – and the related Systems – concern the different company levels: operational, tactical and strategic Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 1 7 Q1. What does «Satellite System» mean? • • • «Satellite System» is an IS that “rotates” around the ERP System these ISs are connected to the ERP System and all together form the Extended ERP System an IS can be connected to another IS but also incorporated into it – it becomes a Module of the other IS Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What are the Operational ISs? 8 An Operational IS deals with operations and has these features: • • • it supports Business Processes at an operational level it is also called Transaction Processing System because it processes transactions, i.e. the recording of events as Data it facilitates Execution, because transactions are processed in real time, i.e. minute by minute – therefore it can: ▪ suggest what to do now ▪ provide alerts if actions are not be done as planned • it is as simple as possible – sometimes “fool proof” Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q2. What are the Operational ISs? 9 A 1st example of Operational IS is WMS → it’s a System that supports all the Business Processes executed in a warehouse, like receiving, stocking and shipping Typical (logistics) activities: • incoming items → receipt, quality control and identification • warehouse → loading (putaway), counting (storage) and unloading (pickup) • outgoing items → packaging and shipping • return management → both for incoming items and outgoing items Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto WMS Q2. What are the Operational ISs? 10 A 2nd example of Operational IS is TMS → it’s a System that supports all the Business Processes executed for distribution, like shipments to customer and transfers between warehouses Typical (distribution) activities: • planning → contract, fulfillment and billing • scheduling → routes (roads, traffic, weather, etc.), carriers (private fleet management or carrier selection) and loads (FTL or LTL) • execution → booking and tracking (visibility) • control → post shipment analysis Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto TMS Q2. What are the Operational ISs? 11 A 33d example of Operational IS is MES → it’s a System that supports all the Business Processes executed in a factory, like resource use, work execution and product completion Typical (production) activities: • work → scheduling, monitoring (progress and Data collection) and controlling • products → completion and quality control • materials → picking and traceability • labor → productivity • equipment → productivity, maintenance and link with CBS Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto MES Q2. What are the Operational ISs? 12 With IoT, more and more transactions are automated, and therefore CBS are becoming more and more important Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 2 13 Q2. What are the Operational ISs? • • • Operational ISs support operational BPs, which are related to Execution The support is done by recording transactions in the simplest way possible – it can be automated with CBS (Cyber Physical System) Some examples are WMS (Warehouse Management System), TMS (Transportation Management System) and MES (Manufacturing Execution System) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. And the Tactical ones? 14 A Tactical IS deals with supervisions and has these features: • • • it supports Business Processes at a tactical level it is also called Management Information System because it manages activities, i.e. the use of transactions as Information it facilitates Planning and Control, because activities are managed in near real time, i.e. day by day – therefore it can: ▪ suggest a detailed plan of what to do next ▪ provide indications if activities were not be done as planned • it is structured – sometimes too “bureaucratic” Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q3. And the Tactical ones? 15 A 1st example of Tactical IS is CRM → it’s a System that supports all the Business Processes executed in a customer relationship, like marketing, sales and service (feedback and support) Typical (relationship) activities: • Information dissemination → lead generation through campaign • relationship building → opportunities and quotes • sales operation → customer PO entry and company SO tracking • collaboration → follow-up after sales • analysis → case management Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto CRM Q3. And the Tactical ones? 16 A 2nd example of Tactical IS is SRM → it’s a System that supports all the Business Processes executed in a supplier relationship, like sourcing, purchasing and collaboration Typical (relationship) activities: • marketing → supplier search • portal → request for quotation and invitation to tender • onboarding → supplier SO entry • evaluation → company PO tracking • development → both for product design and production planning • reports → case management Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto SRM Q3. And the Tactical ones? 17 A 3rd example of Tactical IS is HRM → it’s a System that supports all the Business Processes concerns with employees lifecycle, like recruitment, onboarding, development and separation Typical (lifecycle) activities: • staffing → job analysis, selection, hiring, personnel management, etc. • training → placement, orientation, skill management, etc. • motivation → performance appraisal, disciplinary actions, etc. • maintenance → participation, compliance (labor laws and health & safety), industrial relations, etc. Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto HRM Q3. And the Tactical ones? 18 A 4th example of Tactical IS is PLM → it’s a System that supports all the Business Processes concerns with products lifecycle: introduction, growth, maturity and decline Typical (lifecycle) activities: • conception → define customer requirements • design → define new product project • realization → Data (CAx) and structure management (BOM with options) • continuous improvement → change management (workflow) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto PLM Q3. And the Tactical ones? 19 The product can be … a project (!) In this case you don’t use PLM but PPM – and of course, a PPM System includes … a PMS (!) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 3 20 Q3. And the Tactical ones? • • • Tactical ISs support tactical BPs, which are related to Planning & Control The support is done by supervising information in a structured way – managing is the opposite of improvising (!) Some examples are CRM (Customer Relationship System), SRM (Supplier Relationship System), HRM (Human Resources Management) and PLM (Product Lifetime Management) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q4. And the Strategic ones? 21 A Strategic IS deals with choices («what-if») and has these features: • • • • • it supports Business Processes at a strategic level it is also called Decision Support System because it supports decisions, i.e. the use of Information as basis for choosing it facilitates Governance, because decisions are supported with the right frequency – therefore it can create alternative scenarios and choose the most suitable for the context it is complex – sometimes very complex (!) it always requires highly skilled personnel Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q4. And the Strategic ones? 22 A 1st example of Strategic IS is APS → it’s a System that supports all the Business Processes related to «make a plan», like forecasting, planning and scheduling Typical (planning) activities: • demand forecasting → it defines customer commitments • requirement planning → it defines company orders to meet the commitments – there are 3 processing (SOP, MPS and MRP) and each one has its own capacity check • resource scheduling → allocation and optimization (constraints) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto APS Q4. And the Strategic ones? 23 A 2nd example of Strategic IS is TQM → it’s a System that supports all the Business Processes related to «make a control», like quality assurance (QA), quality control (QC) and quality testing (QT) Typical (controlling) activities: • [QA] process assessment → Business Process compliance are verified according to Procedures • [QC] activity check → Performance compliance are controlled according to audit plans • [QT] defect detection → item compliance are tested according to inspection plans Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto TQM Q4. And the Strategic ones? 24 A BPMS is a Software that can be included in a TQM System in order to execute the process assessment Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 4 25 Q4. And the Strategic ones? • • • Strategic ISs support strategic BPs, which are related to Decisions The support is done by choosing alternatives through complex scenarios – this is typically the “work” of governance Some examples are APS (Advanced Planning and Scheduling) and TQM (Total Quality Management) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 26 A 3rd example of Strategic IS is CPM Corporate Performance Management is an “umbrella” expression that encompasses the methodologies, measures, processes and systems used to monitor and manage the performance of a company. The applications that allow this management translate strategic information into operational plans and return aggregated results. [Gartner Dictionary] → CPM is a system that supports company strategy because it monitors and manages its performance Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 27 The CPM definition is characterized by these elements: • • • performance → it considers activities with a planned objective – there is an overall performance (company exercise) that is broken down into detailed performances (company activities) manages → it defines the target for each objective – there are overall targets (called goals) and detailed targets related to them (called … objectives again) monitors → it measures the result for each objective – there is a KPI for each objective, and the KPIs show a vision of the company that is unique Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 28 Therefore the CPM System is characterized by these elements: • • • performance → a Master Plan for future years obtained through «what-if» and developed in Detailed Plans (both operational, economic and financial) manages → a BSC for connecting targets – organizational capacity (resources), internal processes (activities), value for customers (products) and economic-financial results (outcomes) monitors → a PMS for collecting KPIs, and a Single Accounting System for reconciling Financial Accounting and Management Accounting Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 29 The Business Processes supported by the CPM are: • Strategic Management for strategy definition (here you have Master Plan and BSC) • Management Control for tactical control (here you have Detailed Plans, PMS and Single Accounting System), which is divided into: ▪ ▪ ▪ ▪ strategic planning → Budgeting tactical planning → Planning tactical control → Management Reporting strategic control → Accounting Reporting Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 30 Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 31 Today some CPMs focused more on financial issues and less on strategic issues, so there are strategic CPMs and financial CPMs Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Q5. And what about CPM? 32 With AI, CPMs are evolving into ESS that extracts knowledge from information both internal and external to the company Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto Learning Objectives – Recap 5 33 Q5. And what about CPM? • • • • Another example of Strategic IS is CPM (Corporate Performance Management) CPM is a system that supports Strategic Management and Management Control It has 3 elements: a Master/Detailed Plan, a BSC and a PMS based on a Single Accounting System Thanks to AI, CPM is evolving into ESS (Executive Support System) Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto G1. Let’s give the floor to … 34 … Angela Marsilio, Senior Consultant at Valorando, a company located in Padua that provides management consultancy 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 – Chapter 6-8 ❑ Other books: Marianne Bradford – Modern ERP, select implement & use today's advanced business systems – Chapter 12 ❑ Organization and Information Systems | a.y. 2023-2024 | Diego Campagnolo – Massimiliano Oleotto