OMIS 455 Exam 1

FI

Financial

Business Process Improvement

Organizations must adapt or die Business world is very competitive Demands are constantly changing

SD

Sales and Distribution

Running Parallel

Run ERP and Legacy at the same time until its clear its 'safe' to turn off legacy systems

SAP

Systems Application and Products

Real Value

value for which the customer is willing to pay

Business Value

value that helps the company run its business

Brooks' Law - Mythical Man Month

"adding manpower to a late software project makes it later.

Why Business Processes are Complex?

-Lots of parts, components & subsidiary jobs -Lots of partners; e.g., suppliers/customers E.g. Re-ordering merchandise at Wal-Mart -Multiple components of the functional organizational structure Silos <==> cross functionality Lack of visibility across processes; e.g., in many companies different departments make different and independent decisions

Continuous Improvement Steps

1.Bureaucracy 2.Value Added 3.Duplication 4.Simplification 5.Cycle Time 6.Automation ** This one is last!

Calculation Systems

1950-80 Single purpose Eliminate tedious human work Examples: Payroll, General ledger, Inventory Technology used: Mainframes, magnetic tapes, batch processing Back office systems*

Functional Optimization

A particular department or function reaches its maximum output or performance

Benchmarking

A reference or measurement standard that is used for comparison.

Cross Functional Flowchart

A.k.a. Swimlane diagram Used to map business processes Depicts team members (functional areas) across the top Each step is aligned vertically under the appropriate employee or team Clearly identifies each person's tasks in the process

ASAP

Accelerated, Systems Application and Products An approach resulting in a quick, cost effective implementation of SAP ERP Minimizes the length of time between installation and production start up Maximizes the utilization of SAP resources Incorporates a process oriented approach to training Results in a repeatable "model" that can be used with other implementations of SAP ERP

AIS

Accounting Information Systems

Management Processes

Actions that managers should take to support the other processes Examples: Planning Goal setting Performance management

Big Bang

All modules, all locations, all users at the same time Three steps All software configuration options chosen and implemented Thoroughly test individual modules and interfaces between modules and other systems Typically a many month process Testing feedback allows tuning application Shut down legacy system(s) and start up production ERP system Done in very short time (few days) Legacy system is gone....no return to legacy system possible

Silo Culture

An attitude found in some organizations that occurs when several departments or groups do not want to share information or knowledge with other individuals in the same company. A silo mentality reduces efficiency and can be a contributing factor to a failing corporate culture.

Information System

Any combination of IT and people's activities that support operations, management, and decision making for an organization. People, processes, and technology (data).

AM

Asset Management

ASAP - Realization

Based on the business blueprint steps are taken to configure the R3 system

BS

Basis (middleware)

BPI

Business Process Improvement

Simplification

Can we streamline the process? Unnecessary functional interfaces Can we standardize a step, form or report? Can we eliminate or combine steps?

CMMI

Capability Maturity Model Integration

Configuration

Changing things to work for the user

System Approach

Complex problems are broken up into smaller manageable problems using a systems' hierarchy, and then developing a solution for each problem within the hierarchy

CO

Controlling

Why Improve Business Processes?

Cost savings Efficiency gains Improved quality Better customer experience Better worker experience Overall: better use of space, time, and resources -> competitive advantage, or at least a strategic necessity

CRM

Customer Relationship Management System

Value Added

Customer added value Business added value No added value

Measuring Outcomes 2

Customer satisfaction - "Number of times customer has to phone the company before getting their problem solved" or "Amount of time on hold." Quality - "Number of errors in assembly." Cost - "Amount spent per quarter on parts." Cycle time - Number of hours to assemble one unit of a product.

Process Time

Cycle time: total time a process takes from begin to end. Cycle time = setup time + wait time + move time + queue time + process time + other time: Setup time: time needed to change existing capacity so it can accept and process the new work. Examples? Wait time: job is waiting for the next process step to start. Examples? Move time: job has to be physically moved elsewhere. Examples? Queue time: job is waiting on another job ahead of it to complete. Examples? Process time: job is being worked on. Note: typically, !!only process time adds value!! ==> strive to reduce non-process time to zero.

Value Analysis

Each activity in the process is analyzed for the value it adds to the product or service Value added is determined from the perspective of customer

Formal Process

Easy to document, and probably is E.g., customer calls in to change their address

Waterfall Strengths

Easy to understand, easy to use Provides structure to inexperienced staff Milestones are well understood Sets requirements stability Good for management control (plan, staff, track) Works well cost or schedule are most important

Goals of Business Process Improvement

Effectiveness - does a process produce the desired results and customer/client needs? Efficiency - does the process minimize the use of resources? Adaptability - is the process flexible in the face of changing needs?

Intangible Roi

Employee satisfaction? Process Improvements? Customer Satisfaction

ERP

Enterprise Resource Planning An integrated information system that serves all departments (functional areas) within an organization (enterprise).

Eliminate Duplication

Establish a single data source Eliminate two employees doing the same work (e.g. generating similar reports)

Bureaucracy

Excessive control Fear of making mistakes Simply something that grew out of time Jack Welch - "productivity's enemy" Ask yourself - is this bureaucracy needed? Statutory requirement, audit for accuracy or compliance, legally requires, tax related

Measuring Outcomes 1

First, model the process Determine process performance measures: inputs, outputs. time: up/down time; idle/slack time, etc. yield; scrap; overages; stockouts. quality

Inputs

For example, if you're building a bicycle, the inputs are the tires, wheels, nuts, bolts, chains, gears, and so forth.

Functional Interfaces

Functional Interfaces: Points of connection between departments This is where the "baton" gets passed from one department to another These connections are not given enough attention in most businesses These functional interfaces present the greatest opportunities for performance improvement

Performer Vs. System

Functional interfaces should not be ignored Can work with just individuals but if the system is bad, then there is little your individual performer can do If you put a good performer against a bad system, the system will win almost every time

Process Modeling

Graphical representations are usually easier to understand than written descriptions If you can't draw a picture to describe it, you don't understand it! Provide a good starting point for analyzing a process Participants can design and implement improvements Document the business process Shows actors, actions and information exchanges. Provides a common (shared) 'language' and symbols

ASAP - Final Preparation

In this phase, the R3 system is fine-tuned. Necessary adjustments are made.

Middleware (third party software)

Integrate software applications from several vendors Could be used for best-of-breed Usually used to implement "add-ons" (specialty software such as customer relationship management, supply chain integration, etc.)

Modeling Processes

Interview stakeholders Anyone who will be affected by the new system - supervisor, peer managers, employees, and even customers and suppliers. What is your role in the process? Steps and decisions What do you want from the process? Grade current process Group facilitation Document review Observation

Middle-of-the-road

Involves some changes in the core ERP modules and a significant amount of business process re-engineering

Knowledge

Learned criteria or expertise to information

Customization

Manipulating the code or data completely

MRP

Manufacturing Resource Planning Systems

MM

Material Management

Phased Approach

Modules implemented one at time or in small groups Sometimes, only selected locations implement the module Modules are implemented in a sequence Requires significant attention to existing systems

Comprehensive

Most expensive, lengthy, and costly approach Involves implementation of full functionality of the ERP software

Informal Process

Not documented No prescribed response E.g.., long time customer wants a discount

Waterfall Development

Planning -> Analysis -> Design -> Implementation -> System

Different Phases of ERP implementation

Pre-Evaluation Gap-Analysis Package Evaluation Project Planning Phase Reengineering Configuration Implementation Team Training End-user training Testing Going Live Post - implementation

ASAP - Go Live and Support

Procedures and measurements are developed to review the benefits of the R3 investment on an ongoing basis

Support Processes

Produce products that are invisible to the external customer but essential to the effective management of the business Examples: Budgeting Training Purchasing Information management

PP

Production Planning

PA

Profit Analysis

PMI

Project Management Institute

ASAP - Project Preparation

Proper planning and assessing organizational readiness is essential

Reduce Cycle Time

Reduce the number functional interfaces Optimize value adding activities Eliminate non-value adding activities Perform activities in parallel

Output

Results of the activities— e.g. finished bicycles.

SCM

Supply Chain Management system (EDI)

Key Features

Swimlane Horizontal band that shows work activities in the context of the organization. What person or functional area is in charge of it? Workflow Set of interrelated activities Chronologically listed Supplier-customer relationship Shows functional interfaces

SDLC

System Development Life Cycle Planning, Designing, Creating an information system for organization

Sub- Optimization Principle

That functional optimization often contributes to the sub-optimization of the organization as a whole Frequently occurs in organizations with silo cultures No departments are independent of each other Shouldn't focus on just one aspect of the business without considering the effect on the rest of the

ASAP - Business Blueprint

The engineer delivers a complete toolkit of predefined business processes.

Tangible Return on Investment

The return that can be had through investing in an ERP system. There are a number of ways ROI can be realized: Provable / Measurable Lower supply chain / production cost (better inventory management - Walmart!) Lower IT costs Improved productivity - both from IT and end user staff.

Primary Processes

Those that result in a product or service that is received by an organization's external customer Examples: Manufacturing Distribution Billing Order Fulfillment

Process Cost

Time and Cost are Related People Technology/tools Overhead Inputs Scrap ETC....

TCO

Total Cost of Ownership Sum of all direct and indirect costs associated with an asset or acquisition over its entire life cycle

TQM

Total Quality Management

Hidden Cost of ERP?

Training Integration and testing Customization Data conversion Consultants** New employees Implementation teams never stop

Activities

Transform inputs into outputs. E.g., building a frame, attaching the wheels, and tuning the gears.

Functional System

Typically contained within a department Islands of automation - used to improve operations Applications independently developed and deployed Driving force: availability of servers, PCs

Vanilla

Utilizes core ERP functionality and exploits the "best practice" business processes built into the software Simply align business process to ERP system

Information

When we put data in context and describe relations between data points, we convey meaning, converting data

Internal Benchmarking

acting as the base/starting point of an improvement process so that improvement can be assessed and the methods to be used to raise the benchmark addressed acting as the basis for comparison between departments and/or companies in a group

External Benchmarking

for comparing the performance of the organization with that of other organizations, to enable: specific competitor-to-competitor comparisons. the basis of comparison of similar functions, services or products with the industry in general, or to industry leaders comparison of common business processes or functions, irrelevant of the industry concerned

Scope Creep

in project management refers to uncontrolled changes or continuous growth in a project's scope. This can occur when the scope of a project is not properly defined, documented, or controlled. It is generally considered harmful.

Process Improvement

is a series of actions taken by a process owner to identify, analyze and improve existing processes within an organization to meet new goals and objectives. These actions often follow a specific methodology or strategy to create successful results Continuous process improvement vs. business process reengineering

Business Process

is an activity or set of activities that that together add value to the company

System Integration

linking together different software applications physically or functionally, to act as a coordinated whole.

Data

refers to the raw description of things such as objects, events and activities, but absent any organization or relationships to convey meaning.

Business Process Improvement

set of disciplined approaches and tools that managers use to enhance their company's performance. Systematic Focuses on business processes

Moore's Law

the number of transistors in a dense integrated circuit doubles approximately every two years.