Organization and Information Systems PDF

Dagli studenti, per gli studenti DISCLAMER: Materiale tratto dalle slide del corso Organisation and Information System (OIS) a.s. 2023/2024, tenuto dal professor Diego Campagnolo e Massimiliano Oleotto WARM UP As we already discussed last year, the organization processes can be resolved i...

Dagli studenti, per gli studenti DISCLAMER: Materiale tratto dalle slide del corso Organisation and Information System (OIS) a.s. 2023/2024, tenuto dal professor Diego Campagnolo e Massimiliano Oleotto WARM UP As we already discussed last year, the organization processes can be resolved in some way. In the organization people cooperate through the same objectives. Usually, the organization brings to us many positives aspects such as economies of scale, specialization and learning economies. But we know that in an organization one of the main needs is to try to get some sort of COORDINATION which can be done using the hierarchy, the conventions and the markets. There’s a different approach in which the organization problem can be distinguished in: Division of labor: In this case the division of labor provides us two main sub-decision. o Task division: In this case we define what are the jobs necessary in our company. o Task allocation: In this case we define who does what. Integration of report: This is the one in which we define systems that support the organization. o Reward system: The reward system is something very important, but it needs to be used carefully because if it’s not used correctly, it could bring us to certain situation that need to be avoided; o Information provision: The information provision is a system that is very useful in a company. This system grants to the employees the possibility to have access to every information at every time. Focus of this course So, the organization problem can be resolved but the approach could be different. (BEST FIT) But when we think about an organization, we need to consider that there are different forces that needs to be balanced1 in our company. Company has FOUR challenges to make the right balancing: 1. DIFFERENTIATION: a. Vertical differentiation: The vertical integration defines the hierarchy positions in terms of who have the authority and versus whom he can apply that authority. This lead us to a better control but it could be very slow in decision making. b. Horizontal differentiation: The horizontal differentiation establish the roles and the eventual subunits. We can really use as its best the economies but in some cases the objectives could be not the same as the one the organization want to persecuted; 2. INTEGRATION When we talk about integration, we need to think it as the process that permits us to coordinate various processes, task and subunit activities. There are many integrations model that could be used but they are different in terms of independency given to the people or even the costs 2: a) Authority hierarchy: it’s someone that can impose his person because he has the authority to do so b) Direct contact: in this case the manager get in contact with other managers to find a solution and to coordinate activities; c) Liaison role: a specific manager has the role to coordinate with managers from other sub units (one specific person get in touch with every manager of every unit); 1 Because both of this things has positive and negative aspect. 2 they are ordered in terms of power. Last is the most independent method of integrations. Favaro Davide | Organization and Information System 1  d) Teams: teams are a group of managers that reunites and discuss eventual activities that needs to be done; e) Task force: task force is a group of specialized people that are reunited to solve a urgent problem; f) Integration manager: someone who helps the other units with his coordinating activity; (area manager) 3. Decentralization vs centralization When we talk about this topic we need to consider that a centralized organization is an organization usually used to avoid the possible not know aspects of our activities. Usually, it’s very precise and also we are focus on our goals, but this could bring us to slow decision making and also to a low flexibility (can’t adapt to the market changes); 4. Mutual adjustment or standardization Mutual adjustment is the possibility in which people can find the solution using not a specific scheme but using different types of scheme and also mainly their competences. But this is expensive, so many companies choose the other method. ORGANIZATIONAL STRUCTURES When we speak about organizational structures, we need to consider that could be different structures considering on how the first line manager are organized. 1. FUNCTIONAL STRUCTURES A) NORMAL FUNCTIONAL STRUCTURE When we speak about functional structures, we mean that they are organized by INPUT. People are organized in units that have the same competences. ADVANTAGES DISADVANTAGES -Possibility to use and get economies of -Communications problems: The function could specializations. become very autonomous and not communicate -Reducing the waste of time in terms of with the other functions. controlling for the head of the function. -Costumer problems or regional problems 3: -Possibility to create a great environment in Sometimes as the company gets bigger they which people collaborate to persecute the main need to integrate and not only differentiation objectives of the organizations; because this could lead to inefficiency; -Strategic problems: Managers spends to much time on finding solutions to improve the coordination. -Measurement problems: Sometimes it’s not easy to evaluate the performance of a certain unit because we don’t have the exact data; 3 more you diversify, more you are introduce variety in the unit. We are increasing the type of knowledge that are required to do the job. Favaro Davide | Organization and Information System 2  B) Modified functional structures. Functional structure with certain figure or a certain office that helps the coordination between the functions. This figure is called the integrational manager (product and project manager) and usually its main goal is to coordinate the different functions of the same level but it’s important to indicate that this manager does not have authority, but it has only formal authority. Examples of this positions could be the product manager or the project manager. Usually, the project manager has more authority and it could happen that he has its own authority regarding his project. In this case to avoid any sorts of conflicts people that are working on a certain project are responding only to the project manager but they will be returning under the power of their respective function manager when the project will end; C) THE MATRIX MODEL The matrix model is a particular model in which people could get order from their project manager but also from their function manager. This Is a very powerful model, but it needs appropriate systems to work (powerful information system that permit integration among two lines) The main advantage of the matrix model is that the information can flow to a product to another, avoiding the structural barriers but if not regulated correctly could lead to conflict and ambiguity 4. 2. DIVISIONAL STRUCTURE In this type of structure, the first line manager are organized as OUTPUT so they create the division. A division could represent a geographical region, certain costumers or products. The main advantages are: -Better control; -The effectiveness of the organization is increased; -Every division can be measured because we have the right data in terms of revenues and costs; -We can afford to have an internal labor of market; Usually the divisional structure are used when we need to differentiate and not integrate so usually they are used by big companies that has many targets. Another thing we need to evaluate it’s the transfer pricing: Some division needs to be valuated very carefully because some of them could produce only internally and we need to define a price that is 4 Matrix requires people that are able to mange the flexibility. They must adapt during the time. Favaro Davide | Organization and Information System 3  available only in our company and not outside, so probably this division will evaluate not in term of profit and losses but with other types on indexes. Sometime also the manager tends to use some of the information to reach their own purposes and not the company objectives. In this type of structure there could be what we call hybrid structure: In this type of structure, if the function below every single division does the exact same activity, we can take those function and put them in the first line of management. CHAPTER 1 – MIS MIS stand for Management Information System and it can be defined as the processes, the strategies and the information used by the management itself to define what are the strategies. We can analyze MIS through 3 different aspect (3 color line): So when we talk about MIS we need to think that it’s made up of three main elements: -PROCESSES: This could be defined how to make something. Set of activity for particular purpose. -INFORMATION SYSTEM: When we talk about information system we need to think about a group of elements 5 that produce information from data; -INFORMATION: When we talk about information we need to say that they are not a synonymous to data. In fact, a data it’s something with a meaning while an information it’s a data that has been interpreted; CREATE-ADAPT-MONITOR OF THE COMPONENTS OF MIS It could bring us many questions but MIS is very important for every position inside our company. In fact the systems even like the processes and information needs to follow the path of being created then monitored and even adapted. The information system of course needs to be created because it’s not something that emerges casually but also it could need to be adapted to different situations. STRATEGY The final objective of the MIS is to help the company to run a proper strategy to achieve their main objectives, so it needs appropriate processes, information systems and information itself. Sometimes not all the decisions produce equal things in the companies, in fact some companies could really gain advantages by switching to some information systems while others that has not the right competencies to use a certain information system could really see a downgrade in their performances. 5 5 components in information system (pag. 6) Favaro Davide | Organization and Information System 4 HOW MIS RELATE TO ORGANIZATIONAL STRATEGY? The mis are here to help the organizations to achieve their strategies, but in an organizational strategy we don’t see only the mis but it’s a sequence of structures that defines the global organizational strategy. A) Industry structure When we speak industry structure we are talking about what how the profitability of the company could be analyzed and we can do this analysis using the model of porter. Porter indicated 5 possible voices: Possibility of new entrants: His strength is determined by the presence or absence of any possible entry barriers (for example wallmart evaluates this very strong); Possibility of substitutes: In this case if our services or products can be substituted very easily or not; Existing rivals: To evaluate this we need to consider if there’s rivals trying to put others out form the market, if there’s exit barriers, if there’s copycats; Possible customers or suppliers’ bargains: In this case we need to evaluate the power contract that the customers or suppliers has; B) Competitive strategies Considering the porter’s model the company needs to decide the main focus of its strategy. For porter there are four different ways: a. Focusing on costs and industry-wide: In this case we need to concentrate on reducing the costs and also be the leader across every single product/service we offer; b. Focusing on costs and on only a certain segment: in this case we need to become leaders of a certain product/service we are producing by reducing the amount of costs; c. Focusing on differentiation and industry wide: In this case we need to produce the better product/Service across the industry; d. Focusing on a certain product with differentiation: In this case we need to become the best in a certain segment. Favaro Davide | Organization and Information System 5  As porter said it’s strictly necessary that companies select one way and not try to put together different strategies for example trying to become a leader in costs and also trying to produce the better product across the industry. C) VALUE CHAIN When we speak about value we can say that it’s the amount of money customers are willing to pay to get a certain product or service. A margin is the difference between the value and our costs. So the value chain Is a chain In which we produce value all over it but it’s formed by: Primary activities: These are the activities that produce value across our company, and those are: o Inbound logistics: It regards the receiving, stocking and so on; o Outbound logistics: It regards the collecting and storing and distribution of orders; o Customer services: Those are services that helps customers with their problems; o Sales and marketing; o Operations and manufacturing; Support activities: Those are the activities that not produce an immediate value, but they support the primary ones. It’s very important to define that those are: o Technology: In this case we can speak about research and development but includes the development of new procedures, is and strategies; o Human resources: It includes the formation and the management of our employees; o Firm infrastructure; o Procurement: Finding the correct vendors; Linkages activities: There activities are the one that have interactions across the value chain activity. D) The business processes comes at the end and we can say that its driven by the strategy and the competitive advantage that emerged trough our analysis of industrial factors, competitive strategy and value chain. Having a certain information system could help us to have a competitive advantage because as we already said the information systems needs to be created, adapted and controlled considering the needs of our company. Favaro Davide | Organization and Information System 6 CHAPTER 2 When we talk about business process (D), we are talking about a certain sequence of activities used to accomplish a function. An activity could be defined as a task that is part of a business process. Nowadays a business process is very important and usually it’s represented using what we can call the BPMN 6 standards because this helps in the reading of the process itself but also it could lead us to get some advantages, like: Policies can be applied very easily to everybody, from customers to employees. It reduces the possible errors that could occurs. Competences are scalable, so if a new thing is invented in our company, it can be teaches to the other people; It boosts our results. An information system as we already said is a group of components that helps the organization to analyze information, but we did not say that EVERY information system is formed by 5 elements: Software; Hardware; Data; Procedures; People; -Software and procedures gives instructions; -Hardware and people do the jobs while following the instructions of respectively software and procedures; -Data is used as a bridge between the two macro groups; But how do we use the 5 forces of our information system? -we are the key: Our mind and our thinking it’s not useless but it’s very important, so they are not a mere component of our IS. In fact even if we have the best information possible but we don’t know how to procedure that, this could lead us to not gain any sort of adavantages; -By using the 5 data model we can resolve very quickly the possible problems that could emerge, so we need to make each component work; -Estimate the scope of the IS; -Changing hardware is easy but the software not because this could lead to uncertainty and also problems inside the company (this can be applied to the procedures and people). So we need to prioritize the elements that are difficult to replace; -appreciate that information systems are more than a technology because people would think that possible improvement of an is system could be possible only by buying new technology stuff, so In this case we could have problems of untertrained people that uses it stuffs that are not at their level; 6 Business Process Model and Notation Favaro Davide | Organization and Information System 7 HOW DO BUSINESS PROCESSES AND INFORMATION SYSTEM RELATE? We can define that business processes and information system are related to each other because usually every information system supports at least a process but it could happen that a certain process is not supported by an information system. Thinking about one of the element of IS, the procedures, we already said that we can define those as a sort of theory that is applied to people when they need to use the IS. If we consider the possible links between process and procedure we need to say that for every different process there’s a different procedure and also for every different process there’s different procedures supported only from certain IS. DYNAMIC VS STABLE PROCESS STABLE PROCESS DYNAMIC PROCESS -This process can be defined as the one that are -These type of process are not defined and are less permanent inside the company or we can call specific, more adaptive and even intuitive. Usually those like process that are defined and these process are used for activities that emerges standardized; casually; -These types of process are used for day by day -these also uses support procedures; activities; -These uses prescriptive procedure. -Adaption is critical; -control Is critical; -Innovation is expected; -efficiency is more important the effectviness -effectviness is more important; What is an information? As we already said an information is different from a data. While a data It’s something which has a meaning an information is a data which has been interpreted. We already said in chapter 1 that information could also represent the knowledge of the people that do a certain procedure and also as we know it’s one of three components of the MSI which helps the management In defining correct strategies; About information we say that: They are not the same as data as we already discussed; They could be different from person to person because someone could attribute different meaning to certain things; The information is located inside us; How can we use this ideas about information practically? -As we said information could be different from person to person so this should bring us questions about how difficult could be communicating with others if we give different meaning to our information; -We need to stay curious and achieve more data that are going to be elaborated into data; Favaro Davide | Organization and Information System 8 -People thinks they are giving information to people but in reality they are giving data. In fact something with a meaning is a data but it’s up to the people who is receiving the data elaborate that and transform it into information; -A new is could be frustrating and companies needs to anticipate the eventual change of is; -We need to stay effective on the team, giving data that are not similar to the ones our colleagues already have; WHAT ARE THE CARATTERISTICS OF DATA? 1. Accurate: Data needs to be accurate so they need to precise, correct and complete. When we talk about accuracy we are talking about that the data must come from a trustable resources; 2. Timing: Data needs to come in time, so in this case is very important the timeliness. Timeliness indicates that the data can be available to everybody at everybody and whenever the people need those data; 3. Relevant: It’s very important that the data are relevant, so we need to discard the data that have no meaning or are useless for a certain situation; 4. Just sufficient: Nowadays we have lots of data but it’s important to elaborate those and maintain the most important ones; 5. Worth the costs: To get and elaborate data we need to consider if this is worth the costs or not. Settimana del 9 ottobre CHAPTER 3 We need to identify two separate definitions that identifies two different things: 1) INFORMATION TECHNOLOGY (IT) can be defined as the machines, software and network used by the company to run activities that are fundamental to achieving the main objectives that have been defined. 2) THE INFORMATION SYSTEM (IS) As already discussed the information system can be defined as a mix of components used by the company to do a certain process. Usually, our information systems are built on the information technology that is available in the company. It can be defined as the activity of retrieving, elaborate and distribution of data In the company. IS use IT It is important to identify certain definition that could be very important: Computer: The computer is defined as the tangible part and it’s the machine that could run an algorithm. The algorithm: The algorithm is a sequence of activity that needs to be done to achieve something. Program: A program is a sequence of instructions that is the result of programming. A software is a particular program that helps us in running the machine. A network is formed by machines colligated by each other in the same over the same line transmission or over the same channel. Favaro Davide | Organization and Information System 9 HARDWARE But how can our information be represented in our PC? It’s simple, our information are represented in our pc by using data. Data and information are different, because information it’s something with a meaning while data is something that has been interpretated. The interpretation in our case is done very easily, using instruments like the bit. The bit is a sequence of 1 and 0 and eight bit forms a byte. With bytes we can represent information. But what are the components of our hardware? The hardware as we said it’s formed by some components, and those are: The CPU: the cpu is how our processor is called. The central process unit is very important because it elaborates information and transforms those into data. It’s important to have a processor that could be as speedy as possible. Ram: The ram is our Random Access Memory is volatile memory, meaning that it loses its contents when the power is turned off. Rom: ROM stands for Read-Only Memory. It is a type of non-volatile memory that is used primarily in the startup process of a computer or other electronic devices. Unlike Random Access Memory (RAM), ROM retains its content even when the power is turned off. The peripheric: Are the things utilized by humans to interact with the machines. Also, there are three types of machines: o Computer. o Mobiles. o Server: Servers are like computers, but they are special computers that provides certain services to the other computers colligated to him. SOFTWARE The software, as we already said is the intangible part but even the software is made up of different components. The first one is the operating system. The operating system is a program that controls all the applications and hardware of our machines. There’s different types of operating systems nowadays but the main one is Microsoft and android and Microsoft services for servers; The second one is firmware, which is a program that permit us to run and use a certain machine or a certain program. It’s installed in the ROM inside the machine The third very important thing is virtualization. The visualization is the process in which our machine can create virtual machines that have the ability to operate manually; When we buy a software we don’t buy the whole software but we buy only the license to use it for a certain period of time. Also there’s different types of software, according to the customization that has been applied to every one of those: -General software: Are the softwares that can be called as horizontal market applications and are for examples calculators, internet navigation, and ecc…; -Specific software: Are the software called like vertical market applications, and are like for example erp systems; Favaro Davide | Organization and Information System 10 -A very customizable software that runs specific programs; One of the alternatives of paid software are the open software which, unlikely to the paid ones, are not made by companies but are made but users, so they can be updated very easily and also are very easy to use. Also nowadays considering the software the native applications are slowly disappearing because nowadays developers try to create inclusive applications that could be run to different types of software. When we are programming, we need to consider other important things: Source code: it’s the code in which the programmer writes its code but cannot be run by the machine. Machine code: It’s the way a machine interpretants our source code with his binary system, and this could be done by using a specific program called complier. The compiler is a program that permits us to transform the source code into machine code. So programming is the definition and implementation of an algorithm firstly in a source code and secondly, it’s interpreted and run by the machine by using a compiler. When we speak about software, we need also to indicate that it communicates with us by using an interface. The user interface nowadays has mutated and nowadays we have the UX, which includes the classic UI but that is integrated to the way a user responds to the application. NETWORKS Networks are machines that are colligated by a wire or wireless. There are two main types of networks and those are: -LAN: Local area network: The local area network is a small network and private. It usually uses as a form of connection between the machine the physics method, so they use wires usually. -The WAN: The wan is called as wide area network. This network is usually a big system that runs with a wireless system. The wan is widely used by a company with lots of different subsidiaries in the world. Knowing these types of networks helps us in analyzing what are the protocols. PROTOCOLS are specified rules that helps us in connecting computers from different networks or even from the same network. An example of protocol could be the Bluetooth used in our PAN (or personal area network). The pan usually uses connections between machines from the same network. But one of the main things that comes to our mind when we talk about network is the internet. Internet was born as a military project and it objective was to collegate network to different network. In fact we could have a WAN when we have situation like: A network of network: In this case the networks are colligated to each other by using protocol systems like router because they have incompatible protocols; A more extendend network: In this case networks uses the same protocol and it became a “bigger” network; Favaro Davide | Organization and Information System 11 One of the different types of protocol that are used by the internet are: The VPN: The vpn, or virtual private network, is a system that helps us from a lan device to communicate with different systems through the internet; The intranet: Intranet is usually a private network used by the company. This private network is usually well protected to not let any information be able to subjects outside of the company; The WWW is one of the main protocols. It was born by combining internet and hypetext. From the WWW we can have access to different links by using this system. If we consider this situation we need to indicate that the www uses languages like HTML and CSS to visualize and customize the pages that can be visible; Usually all the Internet services uses a three way step: a. The first and second one are accessible because the organization build and maintain interconnection on a global scale; b. The third one is accessible by paying a certain fee to companies that holds the services. Those company provides us with the possibility to have: o Access to the Internet; o Have a personal online address; o And also have a router that helps us running the internet process; Thanks to the network we have the distributed applications. The distributed application are application that can get in touch with other application from the same computer or different computers. Most of the applications nowadays uses this format which is a three way step: 1. It represent the information to the UI 7; 2 It elaborate the information and it is put on the server; 3 Data is now stored on another server; Like the distributed application one service that is commonly used is the cloud. Cloud permit us to have access to information whenever we need and every time. Usually we have access to the cloud by paying a certain annual fee (Saas) but also the cloud could host only a server (IaaS) or it could host computer OS and programs (Paas); Finally, we can define the configuration as how the network, the hardware and the software are arranged inside an organization to get the IS working CHAPTER 4 What is a database? Talking about what a database is, we need to identify that a database is a collection of data that can be utilized in the company. We need to have data and for this also systems that can permit us to analyze those data and even systems that permit us to have access whenever we want to those data. The building of a DB consist of: - Data modeling - Database design 7 Interfaccia utente Favaro Davide | Organization and Information System 12 A database is usually constituted by three main elements: 1. THE TABLES: The tables are instruments that we use to represent our data. Thinking about tables we need to indicate the thing that constitutes it a. Rows (record): Indicates certain values that a unit can assume from the different columns; b. Columns (field): Columns indicate a specific category; c. Cells (value): Cells indicate a special data that is identified by the proper cell; d. The key of the table is called primary keys, and they identify certain unique row in the table 8; e. Table can be implemented by spreadsheet like excels, but excel is not a database. Excel is a program that helps us in creating tables; 2. THE RELATIONSHIPS: To do a relational database we need to define what is a foreign key. A foreign key is a key that can permit us to link different tables. So that primary key is not from our table but it helps us colligating tables between each other. a. One important thing to define is the DB schema (pictures), which represent how our data are visualized in tables and also the possible relations between the tables; 3. THE DATA DICTIONARY: a. In the database we have data that includes an explanation of the data itself. The data that holds information about the data and also about the DB schema is called METADATA. b. So we can define the metadata as a description of the content of our datas. c. Data can be extracted by using the SQL language WHAT IS A DBSM? (DATABASE MANAGEMENT SYSTEM) AND SQL? The DBMS is a system that usually helps us in creating, processing and administering the database (management of data). Administering data include this main activities: Trying to reduce the possible situations of conflict information; Trying to reduce the possibility of having malfunction; Garant or deny access to certain users; Have the possibility to have a recovery system; Memorize our data with mass memory stores; SQL AND SELECT OPERATION When we process our database, we use SQL language. Which is not a programming language because it’s not based on running an algorithm. STRUCTURED QUARY LANGUAGE permit us to insert, modify and delete data from our database system. Access to user is given by SQL because not everyone can access to the whole database. Only the DB administrator can manipulate data. The select operation with SQL permits us to select certain data from our table with the usage of filters. THE JOIN OPERATION 8 In the context of relational databases, a primary key is a field or a set of fields in a table that uniquely identifies each record in that table. The primary key must contain unique values, and it cannot have NULL values. Favaro Davide | Organization and Information System 13 If we have more than one table with join operation we can match the table in only one. WHAT IS DATBASE PROCESSING? To make database useful we have to interpretate the data. To interpretate and to access different data we need to use a database application. The database application is formed by: Forms: Forms can be identified as the UI of our database application; Report: Present the data in a structured way; Query: Are instructions that we give to our program to find certain data; Application program: It’s the program that runs the query. User with the application connects to the DBMS that access and find the data that we need. Sometimes it happens that the database can be used by different people in the same moment, and int this case it’s very important to avoid the lost update problem. It is a problem that could occur when we don’t have for certain situations a lock in. Is a system that locks the possibility to have access to certain information in a certain period of time; A Database Application System is the sum of three components: a DB, a DBMS and a DB Application Usually the database application system use the distributed application method. With this method we can use different application from different computers or even from the same computer by using a system that colligates us to a server and then to the database. Example of database application system are for example ERP system, the DB itself, and social network. HOW DO WE PROGRAM OUR DATABASE SYSTEM? The data model could be defined as the representation of the database data while the database design could be identified as the conversation of data model into a DB schema. We can use the ER system to program our database. - E: entity. Is something that the user wants to track. Entity has attributes and identifier. (bokes) - R: relationship. Link between two entities. It’s represented by a line. There’s two types of relationship: o 1:N (ONE TO MANY); o N:N(MANY TO MANY); Favaro Davide | Organization and Information System 14 THE USAGE OF NOSQL The NOSQL systems are heavily used because managing the date has become very difficult due to an increase of It. We can call in fact those data the BIGDATA. To describe the big data we can use the 4V: Velocity: The velocity in which the data reproduce; Variety: What Is the variety of data; Voracity: It’s the uncertainty of the data; Volume: How heavy are our data; So nowadays, for this type of data, the relational databases and system are not very useful. In fact we use system that are like NOSQL that are non- relational DBMS with different characteristics. CHAPTER 5 How can we use IS to improve process? IS can be identified as a group of components that help us in doing certain activities and achieve our objectives. So, the elements that constitute our BUSINESS PROCESS are: Business IS are a sequence of activities that need to be followed to achieve certain objective Activities: Activities can be defined as tasks that need to be done to achieve our objectives; People: People and their abilities are important. We already said that to improve an Information System is always important to upgrade not only the hardware but even train people; Resources: The resources that the company has are fundamental to define what are the possible objectitve; The role: Everybody in an organization should have his role. This is done to increase the efficiency of our activities and to avoid conflicts; People are a crucial part of our organization. When we build an organization, we need to pay attention to not formalize to much the processes. Formalization avoid self-solution but is important to give space to interpretate and thinking. In organization is very important to have the capability to organize the process considering the possible interactions between different process. DESIGNING A PROCESS Design a good process means find right balance between innovation and formalization: avoid routine process and not kill innovation. There’re different charatteristics we need to look after when we design a process: 1. The Stability of flow: a. Structured: It’s usually used by day-by-day process, so process that are done for basic or daily activities; b. Dynamic: we are considering a more dynamic situation and usually something that does not occur very frequently. Favaro Davide | Organization and Information System 15  2. The type of process (scope): a. Operational process: Are the process related to common activities, or we can define those as the process related to routine activities. b. Managerial process: The managerial process are very important and can be defined as the process that help us in allocating resources; c. Strategic process: The strategic process are very important and usually can affect the whole firm. Usually these types of process have long term timing and with it they can affect the whole firm 9 by implementing certain strategic decisions. 3. Objective: a. Efficiency (efficienza): The efficiency is measured considering the input and output. An efficient process usually tends to be much more standardized and formalized. Usually our main objective is to create more output with the resources that we have; b. Effective (efficacia): Effective is measured only considering the output. Usually, effectiveness is much more expensive but tends to be more innovative. The main goal is to achieve the objective that we defined. 4. Position in the value chain: is the amount of money a customer is willing to pay us. The value chain is constituted by three main activities a. The primary activities: There are constituted by sales, support of the customer, manufacturing, and inbound and outbound logistics. These are the main activities that produce value; b. The support activities: Are the activities related to the primary one and helps the constitution of those. Those could be: Firm related structure, human resources, technology progress c. The linkages activities are activity related to an existing activity. Porter defined that if a certain department is working well we don’t have to improve that department we need to create new departments that include different activities; When we have a process, we need to indicate certain things such as: Doing questions about the objectives; Trying to improve processes; Don’t confuse IS and processes; Ensure that all the processes works well together; Standardize structured process and keep the dynamic process fluid; HOW CAN MANAGEMENT IMPROVE PROCESSES? By defining ojective: It’s important that the management identifies what activities and objective can be related to a certain process and what not. Sometime the management could have objectives that are not completely declared and also they could identify objective that are not suitable for certain process; Defining measures: For improving our process we need to identify measures that could help us in analyzing our results and also our objectitves. To do this usually we use the KPI (key performance indicator) o There’s many different characteristics:  Reasonable: The kpi needs to be valid and compelling 10.  Accurate: It needs to measure exact information and also in a precise way;  Consistent: In terms of consistency we indicate that he needs to be reliable, so he does not to provide us incorrect or unreliable information; 9 Tutta l’azienda (operazioni non comuni) 10 Avvincente Favaro Davide | Organization and Information System 16  HOW CAN INFROMATION SYSTEM IMPROVE A PROCESS? 11 Improve an activity: improve an existing activity (for example giving a gps to our pizza driver); Improving data flow among activities: We can try to put the info’s of order process In the gps; Improve control of activities: Control is one of the most utilized ways to improve a process, because it formalizes the behavior of employees and consent to run the process in a very smooth way. Use automation: Automation can be found when an activity that was done by a human is now done by a machine or a computer. Choosing between automation and human force can be quite difficult, because a machine is more efficient, can do more things in the same period of time, is speedy, and ecc… but humans provides more security, can be much more flexible and also are less expensive than machines; improve procedures: Improving procedures is quitly important as the technology and other aspects could change. Usually changing procedures could be quite difficult because this could lead to some problems. So we need to change procedures everytime a process or an is changes; HOW CAN PROCESS MANAGEMENT PRINCIPALES HELP US IN IMPROVE PROCESSES? By outsorcing activities: If we don’t have the capacity or if it is worth the cost we should outsorce certain activities that we do inside of our company; Try to get rid of the bottleneck activities: These activities slow down the process and also could be a waste of resources; Trying to improve activities that are not related to our IS; Remove unproductive resources; Redesign the structure by redesigning the structure and roles; Improve feedback; Usually one of the main system used is the six sigma. The six sigma has as it’s main objective to improve output process and removing causes of defects and trying to reduce the variability in the process. CHAPTER 6 THE BUSINESS PROCESS MODEL Business processes are very important and give the company a huge advantage to expand the view of company. In BP there is the PROCESS OWNER: someone inside of our company that has the capability to approve certain processes. To understand business process we have to define 3 thing: 1. Processes: an activity that permits us to transform input resources into output by applying a value. This 11 Come si può migliorare un processo con l’implementazione di un SISTEMA DI INFORMAZIONE? Favaro Davide | Organization and Information System 17  process permits us to do certain activities and generate VALUE. When we talk about value, we need to define again what porter said: “Value is the amount of money someone is willing to pay to get our product”. 2. Process in a business way: o The transformation of input resources; o The output is the final product; o PERFORMANCE could be defined as an activity that is done to achieve a certain objective which was already defined. For company there are two type of objective:  If it’s more an effective objective which is measured by comparing only the amount of output that could have been generated;  If it’s more an efficiency objective in which the companies are down for producing more about by reducing the amount of input, they are using; 3. Elements that characterize a business process: o A group of performances. o That has boundaries. o And also has procedures for every actor that has a role inside of the process itself. A GROUP OF PERFORMANCES When we talk about a group of performance, we could indicate that as a group of activities that are usually linked to each other. The system created from this union is called ERP 12. We need to analyze carefully what is the role of the ERP in different situations: a. The role of the ERP in the value chain. b. The value of the ERP in the PDCA triangle that defines the plan, what to do, how do we control and to who is destined a certain information. c. The implementation: It’s very important to identify how we could implement the ERP. Usually the best procedure come from practice instead of theory. Extended ERP is the collection of BP using Value Chain, PDCA and Implementation Level (Best Practice) criteria THE ROLE OF BOUNDARIES Boundaries are fundamental because it helps the company in defining what performance refers to. Boundaries could bring us to know if we have a company that is based on function or if it’s a company based on procedures. Nowadays those types of companies are still not yet very diffused because are not easy to implement. PROCEDURE A procedure is a set of instructions given to a machine or a man that needs to be done to do a certain activity or to achieve a certain objective. Usually, procedures are related to man activities but they could also be defined as the software if we consider the machine part of our information system. 12 Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes for optimal performance. (see chapter 7 – ERP, campagnolo) Favaro Davide | Organization and Information System 18  HOW CAN WE LINK THE INFORMATION SYSTEM TO THE BUSINESS PROCESS? IS could be defined as a set of instructions and activities that help us in the execution of the business process by managing information. The business process (BP) and the information system (IS) are related to each other by the information itself. As we already said the information is one of the key part of our organization. Also, when we think about the IS and how it has evolved we need to figure out that a lots of the roles that were runner by the humans (a role is a set of activity that are done by a certain actor inside of a company) nowadays are being done by the machines. When a business process is good? A business process is good when: 1. It permits us to have a much better view in terms of the activity that needs to be done, modified or deleted. Usually, this activity is done by using the value stream mapping. 2. Performance are good. It’s very important to choose correct performance indicators such as the KPI to define if we achieved our objectives or not. 3. When elements keep Structured and Dynamic Business Processes distinct. it means that a Business Process can be repeated with few or no differences. 4. not confuse the IS with the business process. The IS could be defined as something that helps us in analyzing information and provide us a better point of view of the business process. o IS SILOS: IS could hinder. IS SILOS is something that happens when there are different information systems that are related to different departments. This can be cost efficient but brings to the interruption of Data flow among activities. Business Processes exist in all companies regardless of whether they have been identified or formalized. It is important to formalized them (transparency). Favaro Davide | Organization and Information System 19  Which is the best solution? Depends on the objective of the company. They’re both good process. WHAT IS BUSINESS PROCESS MANAGEMENT? Business process management could be defined as the activity of transforming strategies into actions by implementing, analyzing, governing, and improving good business processes. if we were to represent it, it is an endless cycle. Benefit of BPM: 1. Constant improvement by using for example the SIX- SIGMA. 2. getting rid of activities that are a waste of resources and non-adding value. 3. Sub-optimization: Department are optimized but the whole company is not by the point of view of BPM. Typically happen with SILOS IS. The aim of BPM is to optimize that. 4. Improving the customer experience: BPM helps to meet customer expectations, increase the quality of the product and could lead to a lower prices. Favaro Davide | Organization and Information System 20  HOW CAN WE IMPROVE THE BUSINESS PROCESS MODEL? There are various approaches used to improve a Business Process we have just seen three of them. We can group these approaches in two may group: 1. The first one is the BPR which requires us to us a bigger step in one direction. In this case the improvement is fundamental, innovative, and decisive. 2. The CPI Is also a possible situation that defines an improvement, but this is done by having small steps. The process is incremental, persistent, and conservative. We now focus on BPM BUSINESS PROCESS MANAGEMENT ANALYSIS If we consider the BPMA analysis is the understanding of business processes trough: The activities of the process. The objective of every single activity. The linkages between every single performance. To do that it’s important to identify that usually the BPMA is carried on because we want to achieve: Standardization: We achieve standardization when we can define a set of instructions for certain activity. From here I can formalize the behavior of the people that need to do those activities. The standardization, is mainly related to the common role and not to the people and also permit us to apply policies very easily; For strategic planning; Organizational change; Management base; IS implementation; eg. New ERP system. To analyze the business process, we need to identify the situation we want to portrait. In fact we could identify two different state of the company in our analysis: Our analysis reflects the current state of the company, and in this case we have the as-is analysis; (this is the most used method by the company because provide a better understanding and analysis) Or we could implement an analysis considering the future state of the company using the to-be analysis (GAP analysis). Favaro Davide | Organization and Information System 21 There are several methods to do BPMA but every single method include two main activities: 1. Information gathering: the company needs to retrieve information using collectors such as interviews. This is done to have much more data but also quality and reliable data 2. Result documentation: data are processed and inserted in apposite documents such as the ppt or doc file. THE PROCESS MODELLING Is a set of instruments that helps the company in modelling the process, a graphical representation of BP. The processing model is very important for two main reason: OBJECTIVE (detailed map with a larger view of the company) and STANDARDIZATION (must be standardized for business community and help company to standardize the process itself). Most used standardized notation (business modelling software): BPMN 2.0: This type of software is quite common in the USA, but it’s also quite difficult to use and implement; Flow charting; They both use the same set of symbols 13: Circles for the events; Diamond for possible decision making; Rectangular for a process; Lines for describing a certain flow; The processing model needs to respect two main thing: SIMPLICITY: It’s requested only the objects that provides the main information. To do that usually objects are deleted till the meaning of the process is still the same; CLARITY: With clarity we define that the process needs to insert as many objects as needed to avoid misunderstandings. Usually, considering the company dimension, we can distinguish two type of processing model programs: Big companies: Business Process Modelling Suite. This type of process uses the BPMS 2.0 and it’s quite difficult to learn, but it not only provides the possibility to manage the process but also to create it; (ORACLE for example) Small companies uses the process card software, which are more simplified and less expensive to implement; (VISO for example) 13 See slide 17 of ‘7 business process’ for a detailed explanation. Favaro Davide | Organization and Information System 22 Now we see how BPM analysis could be applied to two business processes: - Procurement - Sales This is the 6 step to make a BPM analysis on the two process. THE PROCUREMENT PROCESS The procurement process is one of the easiest processes in the company. This process provides the acquirement of raw materials and other components necessary for the company to produce goods and services that will then be sold to the customers or other companies. In this process we are considering B2B relations, and the procurement is formed by three main activities: 1. Order: activity managed by the purchasing manager. First activity looks for what item is needed, contact the supplier and ask for a quotation. If it is good, then send the purchase order; 2. Receiving: managed by the warehouse manager, we need to receive the materials that we ordered from our supplier and stock those. Also, it’s important to update our inventory in the warehouse. 3. Payment: We need to look to see if the invoice has the same value as the purchase order. The payment is usually delayed for the b2b activities. This process could cause different problems (through As-is Analysis): Presence of information silos: In this case it could happen when there’s isolated information systems. This could be resolved by implementing an extra layer of information system and links to the isolated ones. Small communication with the sales department. No budget control. Difficulty in checking the invoice. Then we define the role: - order phase → Purchasing Manager - receive phase → Warehouse Manager - pay phase → Accountant - every phase → ERP System. ERP is a key element for process because helps to crate purchasing requisitions, allow you to insert PO and updated warehouse status once we received the materials. Defining objectives through KPI 14: effectiveness: 14 KPI are in red for each objective. Favaro Davide | Organization and Information System 23  better supplier relationships → Supplier Growth Rate supplier service level before PO → Quotation Time supplier service level after PO → Purchasing Lead Time efficiency: purchasing efficiency → Actual vs. Budget Costs warehousing efficiency → Putaway Time PROCESS MODEL: transform business process in a real one making a draw to represent it. THE SALES PROCESS15 The sales process is one of the most difficult process in a company. It regards the selling of goods and services to customers or to other businesses. Main activities of sales process: The sell: The sell is managed by the sales manager and it’s main activity is to create sales order by checking if the item is available, the quantity and delivery date and the price; The shipping: This is managed by the werehouse manager. In this case we need to pack the items and send those to a certain destination; The payment: In this case we need to obtain the payment. The payment could be daleyed or not, and this depends if we relies on certain customers or if they are not reliable. The sales process has some disadvantages: The possible presence even here of the information silos; Possible risky sales that will not be payed completely; Impossibility to attend for the customer orders; Unauthorized discounts; Then we need to define the ROLES, KPI and create a PROCESS MODEL as we do for the previous process. 15 We do the same thing with the sale process Favaro Davide | Organization and Information System 24 CHAPTER 7 ERP SISTEMS Enterprise Resource Planning could help companies with different structure in the management of their activities but also with the management of the information that the different department could have (doesn’t matter if it’s a functional structure, a divisional structure or a modified functional structure). Every structure has its own advantages and its own disadvantages. FUNCTIONAL STRUCTURE: This structure is effective for evaluating specialized economies and offers better control. It allows managers to spend less time on activities since individuals in their functions tend to self-regulate. Competences can be scaled, reducing the need for external labor market access. However, it's typically employed by small companies with a single product, leading to routine tasks and stifling innovation. Additionally, it may lead to communication issues between functions. o ERP SOLUTION: help the company in finding a correct solution to increase the capacity of communicating between the different functions and to avoid also the possible “Island” solutions, or solutions that could work on only a particular context DIVISONAL STRUCTRURE: Divisional structure organizes companies based on the market output they provide. It's common in large companies, with a primary output-focused level and a secondary input-focused level. These firms prioritize product differentiation, exhibit strong control over their objectives, and benefit from an internal labor market. o ERP SOLUTION: could help the firm to solve these problems:  Potential issues with differing manager and company objectives (short vs long term goals)  Significant challenge lies in managing internal transfer prices  Need to establish a system that avoids performance evaluation problems within divisions  Evaluation involves identifying the recipients of each division's output and assessing their performance MATRIX STRUCTURE: A matrix structure is a hybrid organizational structure that combines elements of both functional and divisional structures. In a matrix structure, employees have dual reporting relationships - they report both to a functional manager (based on their area of expertise or specialization) and to a project or product manager (based on the specific project or product they are working on). o ERP SOLUTION: we could find possible solutions to avoid possible conflicts problems or possible missing authority figures that could cause inefficiencies in the company But if the ERP is so powerful, why nowadays we still have information silos? An information silo could be defined as autonomous Information Systems that are not linked to each other. Still to this day this type of structure is very used and there’s different reason on why people still use it: o Companies may have data spread across various databases; consolidating them could lead to potential data loss. o Information silos are preferred for safeguarding sensitive data. o Different departments often have distinct objectives. Favaro Davide | Organization and Information System 25  o Implementing individual information systems can be faster and less risky than adopting a unified company-wide system, reducing the chance of data loss. o It is a cost-effective approach. o Allows for easy data control, which translates to significant organizational power. PROBLEM: ‘island solution’. Problem in data update, so information could be not the same in all the company. SOLUTION: the implementation of the ERP or the Enterprise Application Integration EAI EAI is a way we can implement a sort of system that can link the different information silos inside of our company. We need a new information system (IS) formed by metadata that permits us to link and communicate with the other IS. Cheaper solutions for small companies. ERP, (Enterprise Resource Planning) aids in overall company management by integrating departmental information. Implementation can be costly, especially for new companies with limited resources. Prioritizing MRP (Material Requirements Planning) in early stages is crucial. ERP enhances interdepartmental communication (integrated process) and enables real-time information updates. ERP is one big IS that link all the process together. As the ERP is an information system it’s formed by the 5 key elements which are Hardware, Software, Data, Procedure and people. HARDWARE, including components like CPU, RAM, and storage, is crucial in information systems. External devices facilitate user-machine interaction. Upgrading is significant, but informing employees about the changes is equally vital to avoid potential issues. Hardware could be various and sometimes firms decide to implement cloud 16 because they want to get rid of data center 17. Cloud in general has some advantages: o Permit to have better data protection. o Are less expensive. o Permit to have updated data to everybody. o Can easily determine the user access (while in a database we need to define who has access to certain data). o Permit to have a global scalability as they can consent to us to have a lower IT usage. SOFTWARE refers to the intangible component controlling a machine, including the operating system, firmware, and virtualization. It also encompasses applications, which are sets of rules executed by the machine. Examples of application that could integrate the process are: o SCM o Manufacturing o CRM 16 For example cost efficiency, scalability, flexibility, security and availability. 17 Expensive and very hard to implement. Favaro Davide | Organization and Information System 26  o HR o Accounting Customized software may be desired, but it's important not to compromise performance. Customization is costly and demands highly skilled developers for ongoing updates. This because the standard software is usually already optimized for every single task. Then we have to adapt the single software to our business through the configuration. ERP could have and mange different types of DATA: o Transactional Data: related to events o Master Data: do not change with every transaction o Organizational Data: about the organization PROCEDURES: instruction to achieve certain objective. o Select ERP processes and specify how they will be executed on the ERP software o Procedures improve control: limit behavior and provide consistent results. Any drawbacks? important to balance the innovation with standardization, because if we only focus on the standardization our activities will become routine activities o First step: crafting procedure – Second step: training employees to use the procedure. Training is expensive. PEOPLE: as we know, are crucial in a company because they usually do all the activities that the IT are not able to do. The main people that we need to consider while talking about an ERP software are: o Users: employees of the firm implementing the system o Systems Analysts: employees that support, maintain and adapt the system after implementation. o Consultants: work for the ERP vendor and provide us ERP system. He provides better solutions. o Success in ERP position is based less on technical skills and more on process understanding and ability to work with people. Why? o When using ERP everyone plays a specific role and have access to screens and data based on that role. In general ERP is POSITIVE because: 1. Provides real-time, updated information to prevent data gaps. 2. Offers enhanced data visibility through tools like dashboards for management. 3. Eliminates information silos. 4. Facilitates seamless integration across all company departments. 5. Optimizes processes into best practices, reducing theoretical inefficiencies. The CHALLENGING of implementing an ERP system: a) challenges about the decision making. Choose a vendor aligned with your specific activities, emphasizing a good vendor relationship. Identify and address potential departmental gaps within the company. Define the format for data usage. Decide on the implementation approach - either a significant shift or a gradual process 18. Determine whether customization or standardized software best suits your needs. b) challenges about people 18 BPR and CPI at page 21. Similar concept apply to Business process. Favaro Davide | Organization and Information System 27  management: Management's involvement in using ERP software is crucial for employee motivation. If they see the management isn't willing to learn, they may lack motivation as well. Relying too heavily on the IT department can lead to solutions that may look good on paper but don't work well in practice. Beware of overselling - buying software with overestimated capabilities can lead to problems down the line. They primary facing with a new thing. Team: This means that it's important for the management to ensure that there is smooth and effective collaboration among team members. To achieve this, everyone in the team should have a good understanding and mastery of their respective roles and responsibilities. This knowledge helps prevent breakdowns in communication and cooperation within the team. Individual: The management influence also could be quite big in terms of motivation in learning new software. Many times people could feel only pain but not gain, so it’s important to define proper measures like for example rewards, that will motivate the employee to learn a new erp. c) challenges about upgrading. 1. Resistance from employees, especially if they perceive the upgrade as benefiting management more than themselves. 2. Lack of long-term planning for the upgrade. 3. Difficulty with customized software. 4. New implementation may introduce additional challenges. CHAPTER 8 FROM ERP TO ERP SYSTEM Definition from previous chapter: “the business process is a mix of activities (called performances) that consent tor transform an input resource in a final output by applying to the output a value.” “BS is a group of performances, that has certain boundaries, and has defined procedures for each single performance.” Talking about the group of performance we identified the ERP, and we identify how the ERP is (these are also the reason for the spread of ERP): Positioned in the value chain: As we know from porter there’s different types of activities (primary, support and linkages); ➜ it eliminates all waste. What is the role in the PDCA model: ‘plan do control at’ model we identified how the management can in fact manage the operational, strategic organizational operations; ➜ it eliminates every improvisation. The implementation: Implementation of ERP involves adopting best practices, which eliminate theoretical uncertainties. Practical approaches often yield more efficient solutions compared to theoretical ones. ➜ it eliminates every theorization. Favaro Davide | Organization and Information System 28 Companies commonly utilize ERP systems, but it's important to note that the optimal solution is often referred to as "best breed" software19 (IS is implemented with this software). Additionally, there's a growing trend towards extended ERP systems 20, which incorporate multiple business processes, each with its own module. As we saw in the previous chapter, we have two approaches to get an Extended ERP system 21: EAI approach: it joins existing different Business Software with some EDI (electronic data interchange) ERP approach: implementation of a single brand-new software that consents to manage our business processes. This software is process-centered and cross-functional. Is a particular collection of tactical Business Processes. Today the most used approach is EAI, because the ERP System is connected to the Best-of-breed Sw. There are different modules that constitute an ERP system and without those the ERP could not exist. Those are defined as the CORE of ERP. If an IS have at least these areas we can define it as an ERP. 1) The sales and marketing module: 2) The procurement: 3) The human resources: 4) The finance: The module of the finance one are: a. Accounting: Provide information about basic accounting; b. Cash flow management: Interacts with banks c. Asset manage: Manages the asset life cycle; d. Accounting receivable and accounting payable: Manages the credit and debit situations; e. Budgeting report: It produces reports about the possible budget forecast; f. Expenses management: It manages expenses; 5) The operation module 19 Also called business software. In Italian: ‘Il processo azinedale è dipendente dal suo software azinedale. Il software fa parte del sistema informativo azinedale (IS)’. Best breed = che meglio si innestano/adattano. 20 the “bigger” Business Software is the Extended ERP System with which you can see the “whole picture” of a company 21 Definition of those are at page 27. Favaro Davide | Organization and Information System 29 An Extended ERP system enhances precision in executing business processes and enables diversification. Generally, ERP systems are already optimized for performance. They act as structured information systems guiding the company. However, deviations can occur, especially when using customized software. Sometimes we could have the necessity to add in a ERP a new business process, this could be a problem because we can incur in some problem. ERP è l'IS per eccellenza. Sta al centro perché mi collega tutti gli IS nella striscia rossa. L'EXTENDED ERP collega tutte le strisce. CHAPTER 9 and 10 FROM A PLAN TO THE IMPLEMENTATION OF THE ERP Implementing an ERP is a complex process, typically taking 6 to 12 months. While it offers numerous advantages, there are key considerations to do 22: 1. Intrusiveness for both employees and the company, requiring adaptation to a new system. 2. Complex: Considerable cost and time investment. 3. Risky: Potential risks of either failure or success in the implementation. To make a successful implementation of ERP I have to make less these key considerations: 1. Less intrusiveness ➜ Change Management (see below) 2. Less complex ➜ Project Management (see below) 3. Less risky ➜ Risk management (see below) Usually when we implement an ERP we need to look at what are the possible: Pain points that ERP could solve. Advantages from the implementation. Disadvantages after the implementation. THE PROJCT MANAGEMENT The project management is one of the most important tools that can be used to manage a good implementation of the ERP. Project ≠ Process. Project is a set of temporary activities that aim to create a unique product. The process usually aims to be a set of repetitive activities which aims to produce a standardized product. The project management is constituted by 5 phases: 1. The initiation, 22 implementing another IS is less problematic than an ERP Favaro Davide | Organization and Information System 30  2. the planning, 3. the execution, 4. the controlling 5. the closing phase. These activities are similar to the PDCA model that we saw earlier. Here we don’t have an action phase but we have Initialing and closing phase because the project is temporary. Due to his complexity Project management require the usage of software called PMS. 1- The initiation The preparation of the project: It defines what are the objectives of the project and also it obtain the resources from the project sponsor and the stakeholders; The statement of word: Is a document that was written vby the project management that identifies the key points and elements of the project. 2- The planning It’s based on three main sub-activities: SCOPE, we identify what are objectives of the project trough WBS. The WBS is a document that identifies two main things: o All the activities that need to be done (if an activity is not listed Is not relevant); WBS o Reflects all the project requirements. TIME, do it fast through schedule. The schedule is a very important document that consent us to have: o Sequence of activities. o The possibility to assign resources (human and capital) to the different types of activities. o The main thing to achieve is the critical path. The critical path permits us to organize activities considering how long those are in terms of time; COSTS, do it cheap with budget. With the budget we can: o Collect its total costs and reorganize those in different types of categories. o Analyze those with a bottom-up analysis or a top down; 3- The execution The execution is the third part of the project management process. The execution of the process follows 4 main steps: The execution activity ends only when the activity is finished. All the data must be collected and analyzed. It’s important that the data can be verified. Most of the time and money for the project is consumed. Favaro Davide | Organization and Information System 31  4- The controlling controlling activity is one of the most important as it needs to be verify that the project management respect the scope, is in time and also it respects the budget in terms of costs. The most used tool to control a project is Earned Value Management – based on Earned Value, i.e. the planned cost of what has been achieved to date. (there are other method shown in picture) 5- The closing phase Characterized by: the archiving of the project → you state that the project is finished – and this can happen if the scope is reached, but also if it cannot be reached or you no longer want to reach it the drafting of the Commissioning Report → it is a document written by the project manager in which what has been done is summarized – it is what is given to the project sponsor THE RISK MANAGEMENT Risk can be identified as the possibility that something could fail. This can be identified as a risk in the “bad way”, but there’s also risk in the good way. Risk in a good way we mean that there’s the possibility that there could be positive effect from certain actions, and in this case, we call this situation “Opportunity” because it brings you closer to the objective. In this case when we talk about the risk, we are talking about a situation that could bring “downside” effect. When we do a risk management, we need to consider four phases: 1- Identification This is the phase in which we need to identify all the possible risks. We define type and register all the risk. 2- Risk assessment done at the beginning of the implementation project. Risk assessment means evaluate for each risk its Probability (%), Impact (%) and Net Value (€) to have. The type of evaluation could be: o qualitative analysis ➜ Probability · Net Value o quantitative analysis ➜ Risk level = Probability · Impact. The risk level is linked to:  Risk appetition: What is the attitude toward the risk;  Risk threshold: When we start to not accept the risk;  Risk tolerance: When we don’t accept the risk; 3- Risk response Risk response identifies how we “fight” those risks Favaro Davide | Organization and Information System 32  o Avoiding: In this case we try to avoid the risk, eliminating it; o Transfer: The risk is transferred to apposite people or company (insurance); o Accept: In this case we accept the risk and its possible consequences; o Mitigate: In this case we know the presence of risk but we try to mitigate it with certain actions; 4- Risk monitor In this phase we control the possible result of the mitigation plan. We could have preventive actions to reduce the probability of the risks or we could have executive actions that are done when we overpass the threshold level, and this could reduce the possible bad effects of the risks; Approach to implementation Before implementing an ERP system, we need to select the correct ERP system that suits our business. For this reason, ERP system selection is a particular phase (3-6 month) divided in 6 steps: Scope: The scope identifies why the ERP system has been implemented for the first time, and what we want to achieve with that. Sometimes it could also refer to the objective of the project; Requirements: We need to find an ERP that can help us with our specific requirements. Most of the time there are general requirements but also there are specific requirements that the company must study very well to identify the perfect ERP. Usually, the ERP is selected considering the “special requirements. Search: In the search phase we identify the possible supplier and software 23 that the company must look at to implement the ERP. For selecting those we will look at different resources online and offline. DEMO: The demo is a demonstration of the software supplier, that demonstrates how the software works. Demo could include reference visit (ERP in a similar company) or standalone demo (trial version of the ERP) Quotation: Quotation is the phase in which the company asks the supplier for the possible evaluation for the implementation. This is not a standardized operation as every quotation has its own exceptions. Selection: The company selects the ERP software that is the most appropriate for his activity. We should assign marks and weights to obtain a score and a ranking to make the best choice. The ERP market is a very competitive market that is usually dominated by multinational companies. Nowadays those companies tend to have software for big and small companies, and this is done for having and conquering all the market. The two biggest companies are SAP and ORACLE. 23 At least 6-8 names per categories Favaro Davide | Organization and Information System 33  CHANGE MANAGEMENT Is crucial for ERP success and for make it less invasive. They should not only implement it but also seek to understand it, avoiding issues and employee resistance. Establishing a rewards system for software learning is essential. Additionally, it's important not to overly rely on IT technicians, as their solutions may be theoretical and not practical. Organizational change is the movement of an organization away from its present state and toward some desired future state to increase its effectiveness. We could define two types of change: - EVOLUTIONARY: change that is gradual, incremental, and narrowly focused - REVOLUTIONARY: change that is rapid, dramatic, and broadly focused. Is more innovative with the restructuring and reengineering of the firm. For Kotter, which is one of the biggest exponents of the organizational change, there are 8 points that are the core of the change management: 1. ESTABLISHING A SENSE OF URGENCY A lot of firms fail the first step because they are not able to communicate a sense of urgency. To do that we need to change management structure to obtain this urgency to change. Bad company: Change is easier for those company that are not performing well, because this could lead to an improvement of the firm. Good company: It is the opposite form the previous one. A company that is performing good usually is very protective of their management because they think that this is what grants success. New management could rely on some instruments like the creation of a crisis inside the company and that could lead to highlight major weaknesses and allow errors to compound. Crisis must be managed. They have to bombard people with information on possible future opportunities and rewards. 2. BUILD THE GUIDING TEAM To have success in change we need a group of 3-5 components, that will expand it’s capacity in the course of the time. The group must include also senior manager with person form other department to reach the objective of change. We need to have the right combination of capitilities within the group. Companies that fail in this phase often anticipate excessive coordination from human resources and lack effective teamwork. Success in this stage requires establishing a cohesive team and forming groups with both internal connections and the ability to influence those outside the core group. 3. DEVELOPING A VISION & STRATEGY Vision ➜ what the people wants effectively to reach in the long term. This must be defined in a comprehensive way. So everyone could understand the activity and strategy to achieve the vision. An effective vision usually can be defined as: Imaginable: This is what the future will look like. Desirable: It appeals the interest of the customer and employees; Feasible: It’s formed by objectives that can be effectively reached; Focused: it’s clear enough to make a certain path to follow; Flexible: Allow the people to make “moves”, so we don’t have a standardized approach Communicable: Easy to communicate. Favaro Davide | Organization and Information System 34  4. COMMUNICATING THE CHANGE VISION Leading team must utilize all the resources of the company to communicate the vision and then the result of changing. Company usually focuses on ‘standardized instruments’ that reach few people. Communication must pass also through the ordinary activities. People need to be willing to help during the changing. Key element in communicating the vision are for example: simplicity, metaphor, Multiple forums and repetition. 5. EMPOWERING BROAD-BASED ACTION 24 Company needs to get rid of obstacle to achieve success in changing and this must be done ASAP. Firms need recognition and reward system to motivate people and change that system that could undermine the change vision. Trying to remove all the barriers at once and proceed with fear and pessimism could lead company to fail. 6. GENERATING SHORT-TERM WINS Achieving short-term wins is crucial because not everyone will stay committed to change without visible progress or the attainment of specific objectives 25. Managers may feel pressured to deliver short-term wins, but these successes are essential for sustaining urgency level up. This small win must come fast with visible result that penetrate emotional with meaningful to others. 7. CONSOLIDATING GAINS & PRODUCING MORE CHANGE Organizational change requires years to fully integrate into a company, a fact sometimes overlooked. After 2-3 years, the leadership may mistakenly believe the battle is won, not realizing that altering the ingrained thinking of the organization is often challenging due to its deep integration within the company itself. This is because new approaches are fragile and subject to regression. 8. ANCHORING NEW APPROACHES IN THE CULTURE Once the change process is complete, it is essential to incorporate these changes effectively. Communication with employees about how the changes can significantly enhance performance is crucial. Additionally, it is important for the management to embody the new approach. This can be achieved by sharing vivid stories about the new organization. Introducing turnovers, both among employees and top management, could be relevant to reinforce the shift in perspective. The change in the organization could not be very easy, in fact this could be denied by several factors like for example 26: INDIVIDUAL factors: for example the uncertainty of the future, the possible presence of turnover, the self-side analysis of losing the position and habit that doesn’t fit with change. GROUP factors: The presence of group that are coalished that has its own thinking. ORGANIZATIONAL factors: like for example power related to certain position, the organizational culture, the organizational structure 24 Dare potere ad azioni ad ampio raggio. 25 Within 12-24 people want to see result that could be increase in quality indicators or in market share. 26 Table with method for dealing with resistance to change in 10 slide 31. Favaro Davide | Organization and Information System 35 CHAPTER 11 THE IMPLEMENTATION OF AN ERP SYSTEM During the implementation we can identify some costs and benefits of this step that the company is facing. With this analysis I can understand if ERP system investment lead to a net gain for the company. → COSTS o Tangible ➜ cost of ownership (TCO) is the most relevant one and easiest to quantify. It is formed by:  The capital expenditure which is related to the costs of the acquisition of the software and also the configuration of it from the vendor.  The one-time expenses: Those expenses are related to one time only expenses. Often referred to the implementation of the ERP.  The recurrent expenses: expenses that the company needs to sustain in every period and are usually related to the maintenance. o Intangible ➜ very difficult to define because they regards the advantage that a competitor that has already implemented an ERP could have versus us. For example the cost of not implementing ERP. → BENEFITS o Tangible ➜ Improving time management strategies and implementing an ERP system can enhance overall performance. This regards savings of money or time and cash increasing. o Intangible ➜ regards the intangible gains with the ERP but are not very easy to calculate. Ratio to evaluate the introduction of ERP. For implementing the ERP, we can use two possible ways: 1. WATERFALL analysis 27: Define 6 phases executed in sequence. At the end of every phase, we obtain a milestone to built next phase. At the end we will achieve our scope. This method also includes a short period of system supervision after its start up to verify that everything is ok 2. AGILE METHOD: is executed not in sequence, we do and re-do activities achieving partial of the scope. WATERFALL method for Implementation Project The 6 phases are the following: 1. Engineering In this phase we design and start the project. This phase include the following activities: a. Project team building b. Risk Assessment c. SOW issue: here we could have different implementation strategies. i. Big bang ➜ Usually in this case we implement the ERP system in a single operation. This is fast but it could be quite risky 27 Implementation project Favaro Davide | Organization and Information System 36  ii. Step by step ➜ In this case we implement the ERP system step by step by trying to introduce it in every single business process; iii. Core & Roll-out ➜ the activation occurs at different times for branches, but always activating all Business Processes iv. Parallel implementation ➜ In this case we introduce the new ERP system but we don’t shut down the old information system of the Business processes. This modality is not used anymore. d. Project planning. Is one of the more critical activity of the Implementation Project because it is always difficult to: i. Plan activities ii. Ensuring that the activities are as defined by the plan Theory suggest three roles to do that in the best way: 1. TIME HORIZONS: planning is a forecast, and forecasts are more accurate the closer they are and the more aggregated they are. 2. PRIORITY: planning considering what type of activity we have In consideration and its urgency. Distinguish between urgent and important. 3. GRAPHICAL: Represent activities and their progress graphically to check for any delays on schedule. This is often used by the project management. The plan activity utilized three modes which were the scope, the time and the costs that utilized respectively as instruments the WBS, the schedule and the budget. The schedule is a popper document