Fachhochschule Sdwestfalen

Wir geben Impulse

Bachelor of Business Administration with Informatics
Enterprise Resource Planning

Moodle:
Course name: Enterprise Resource Planning I - WS 2017/18
Password: Hopp2017

Concepts in Enterprise Resource Planning

4th Edition
BRET WAGNER
ELLEN MONK

Process Modelling & Improvement

Winter Term 2017/18 Slide 2
- Chapter 7
Chapter Seven - Process Modelling, Process
Improvement, and ERP Implementation

Objectives:
After completing this chapter, you will be able to:
Use basic flowcharting techniques to map a business process
Develop an event process chain (EPC) diagram of a basic business process
Evaluate the value added by each step in a business process
Develop process improvement suggestions
Discuss the key issues in managing an ERP implementation project
Describe some of the key tools used in managing an ERP implementation
project

Process Modelling & Improvement

Winter Term 2017/18 Slide 3
- Chapter 7
Introduction

Tools that can be used to describe business processes

Flowcharts, event process chains
Not specific to ERP
Can help managers identify process elements that can be improved
Central role of process-modeling tools in ERP implementation projects

Business processes can be quite complex

Process model: any abstract representation of a process
Process-modeling tools provide a way to describe a business process so that
all participants can understand the process

Process Modelling & Improvement

Winter Term 2017/18 Slide 4
- Chapter 7
Process Modeling

Advantages of process models

Graphical representations are usually easier to understand than written
descriptions
Provide a good starting point for analyzing a process
Participants can design and implement improvements
Document the business process
Easier to train employees to support the business process

Process Modelling & Improvement

Winter Term 2017/18 Slide 5
- Chapter 7
Flowcharting Process Models

Flowchart
Any graphical representation of the movement or flow of concrete or
abstract items
Clear, graphical representation of a process from beginning to end
Uses a standardized set of symbols
Process mapping
Often used interchangeably with flowcharting
Specifically refers to activities occurring within an existing business
process

Process Modelling & Improvement

Winter Term 2017/18 Slide 6
- Chapter 7
Flowcharting Process Models (contd.)

Figure 7-1: Basic flowcharting symbols

Process Modelling & Improvement
Winter Term 2017/18 Slide 7
- Chapter 7
Fitter Snacker Expense Report Process

Maria, Fitter Snacker salesperson

Completes a paper expense report after travel
Makes a copy for her records
Attaches receipts for any expenses over $25
Mails it to her zone manager at the branch office
Kevin, zone manager
Reviews expense report
Approves report or mails it back to Maria asking for explanation,
verification, or modification
After approval, mails it to corporate office

Process Modelling & Improvement

Winter Term 2017/18 Slide 8
- Chapter 7
 Fitter Snacker Example

Figure 7-2: Partial process map for

Fitter Snacker expense-reporting
process

Process boundaries define:

Which activities are to be included
in the process
Which activities are considered part
of environmentexternal to
process
All processes should have only one
beginning point and one ending point
Decision diamond asks a question that
can be answered with yes or no

Process Modelling & Improvement

Winter Term 2017/18 Slide 9
- Chapter 7
Extensions of Process Mapping

Hierarchical modeling: ability to flexibly describe a business process in

greater or less detail, depending on the task at hand
Modeling software that supports hierarchical modeling
Provides user the flexibility to move easily from higher-level, less detailed
views to the lower-level, more detailed views

Process Modelling & Improvement

Winter Term 2017/18 Slide 10
- Chapter 7
Figure 7-3: Hierarchical modeling of Fitters expense-reporting process
Process Modelling & Improvement
Winter Term 2017/18 Slide 11
- Chapter 7
Extensions of Process Mapping (contd.)

Deployment flowcharting
Also called Swimlane flowchart
Depicts team members across the top
Each step is aligned vertically under the appropriate employee or team
Clearly identifies each persons tasks in the process

Process Modelling & Improvement

Winter Term 2017/18 Slide 12
- Chapter 7
Figure 7-4: Deployment, or swimlane, flowcharting of the Fitters expense
report process
Process Modelling & Improvement
Winter Term 2017/18 Slide 13
- Chapter 7
Event Process Chain (EPC) Diagrams

Event process chain (EPC) format

Uses only two symbols to represent a business process
Matches the logic and structure of SAPs ERP software design
Two structures: events and functions
Events: a state or status in the process
Functions: part of the process where change occurs

Process Modelling & Improvement

Winter Term 2017/18 Slide 14
- Chapter 7
Event Process Chain (EPC) Diagrams (contd.)

Figure 7-5: EPC components

Process Modelling & Improvement
Winter Term 2017/18 Slide 15
- Chapter 7
Event Process Chain (EPC) Diagrams (contd.)

EPC software
Enforces an event-function-event structure
Standardized naming convention for functions and events
Three types of branching connectors
AND
OR
Exclusive OR (XOR)
Basic EPC diagram can be augmented with additional information

Process Modelling & Improvement

Winter Term 2017/18 Slide 16
- Chapter 7
Event Process Chain (EPC) Diagrams (contd.)

Figure 7-6: Basic EPC layout Figure 7-7: AND connector

Process Modelling & Improvement
Winter Term 2017/18 Slide 17
- Chapter 7
Event Process Chain (EPC) Diagrams (contd.)

Figure 7-8: OR connector Figure 7-9: XOR connector

Process Modelling & Improvement

Winter Term 2017/18 Slide 18
- Chapter 7
 Figure 7-10: Possible connector and triggering combinations
Process Modelling & Improvement
Winter Term 2017/18 Slide 19
- Chapter 7
Splitting and Consolidating Paths

Figure 7-11: Splitting and consolidating paths

Process Modelling & Improvement
Winter Term 2017/18 Slide 20
- Chapter 7
Organizational and Data Elements

Figure 7-12: EPC diagram with organizational and data elements

Process Modelling & Improvement
Winter Term 2017/18 Slide 21
- Chapter 7
Loops

Discusion:
What could be the problem here?
Propose an alternative solution which
eliminates the problem.

Process Modelling & Improvement

Winter Term 2017/18 Slide 22
- Chapter 7
Loops - continued

Figure 7-13: EPC diagram with loop

Process Modelling & Improvement
Winter Term 2017/18 Slide 23
- Chapter 7
EPC Exercises

1. Smart Shelf:
If goods have been removed from the shelf, the shelf level has to be
adjusted accordingly. Subsequently it is assessed whether the shelf level
has fallen below the refill level. In this case it is checked if the according
good is still on stock. If so, then the responsible employee is informed to
replenish it. If not, an order is generated.
2. Application Handling:
In the HR Department of a company incoming applications initially are
roughly pre-sorted into interesting and uninteresting applications. In case of
an interesting application, the completion of the documents is checked. If
necessary, the candidate concerned may be prompted to send in missing
documents. As soon as the application documents are complete the
candidates are invited for job interviews.

Process Modelling & Improvement

Winter Term 2017/18 Slide 24
- Chapter 7
Process Improvement

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
Real value: value for which the customer is willing to pay
Business value: value that helps the company run its business
No value: an activity that should be eliminated

Process Modelling & Improvement

Winter Term 2017/18 Slide 25
- Chapter 7
Evaluating Process Improvement

Disrupting the current process to make changes can be costly and time
consuming
Dynamic process modeling takes a basic process flowchart and puts it into
motion
Uses computer simulation techniques to facilitate the evaluation of
proposed process changes
Computer simulation
Uses repeated generation of random variables that interact with a logical
model of the process
Predict performance of the actual system

Process Modelling & Improvement

Winter Term 2017/18 Slide 26
- Chapter 7
ERP Workflow Tools

Workflow tools
Software programs that automate the execution of business processes
and address all aspects of a process, including:
Process flow (logical steps in the business process)
People involved (the organization)
Effects (the process information)
ERP software provides a workflow management system
Workflow tasks: links that can include basic information, notes, documents,
and direct links to business transactions
SAP system can:
Monitor workflow tasks
Automatically take various actions if the tasks are not completed on time

Process Modelling & Improvement

Winter Term 2017/18 Slide 27
- Chapter 7
Workflow Builder in SAP ERP

Figure 7-14: SAP ERP Workflow Builder screen

Process Modelling & Improvement
Winter Term 2017/18 Slide 28
- Chapter 7
SAP ERP Business Workplace

Figure 7-16: Managers Business Workplace with workflow task

Process Modelling & Improvement
Winter Term 2017/18 Slide 29
- Chapter 7
ERP Workflow Tools (contd.)

Workflow provides a number of useful features

Employees can track progress of workflow tasks
System can be programmed to send reminders to employee(s)
responsible for a task
For sporadic processes, workflow tools are a powerful way to improve
process efficiency and effectiveness

Process Modelling & Improvement

Winter Term 2017/18 Slide 30
- Chapter 7
Implementing ERP Systems

Late 1990s: many firms rushed to implement ERP systems to avoid the Y2K
problem
Since 2000: pace of implementations has slowed considerably
Most Fortune 500 firms have implemented an ERP system
Current growth is in the small to midsized business market
Implementation of ERP is an ongoing process

Process Modelling & Improvement

Winter Term 2017/18 Slide 31
- Chapter 7
ERP System Costs and Benefits

ERP implementation is expensive

Usually ranging between $10 million and $500 million, depending on
company size
Costs of ERP implementation
Software licensing fees
Consulting fees
Project team member time
Employee training
Productivity losses

Process Modelling & Improvement

Winter Term 2017/18 Slide 32
- Chapter 7
ERP System Costs and Benefits (contd.)

Companies must identify a significant financial benefit that will be generated

by ERP system
Only way companies can save money with ERP systems is by using them to
support more efficient and effective business processes
Companies must manage transfer of data from old computer systems to new
ERP system

Process Modelling & Improvement

Winter Term 2017/18 Slide 33
- Chapter 7
Implementation and Change Management

Key challenge is not in managing technology, but in managing people

ERP system changes how people work
To be effective, change may have to be dramatic
Business processes that are more effective require fewer people
Some employees may be eliminated from their current jobs

Organizational change management (OCM): managing the human

behavior aspects of organizational change
People do not mind change, they mind being changed
If ERP implementation is a project that is being forced on employees, they will
resist it
When employees have contributed to a process change, they have a sense of
ownership and will likely support the change

Process Modelling & Improvement

Winter Term 2017/18 Slide 34
- Chapter 7
Implementation Tools

Many tools are available to help manage implementation projects

Example: process mapping
SAP provides Solution Manager tool
Helps companies manage implementation of SAP ERP
In Solution Manager, ERP implementation project is presented in a five-phase
Implementation Roadmap:
Project Preparation (15 to 20 days)
Business Blueprint (25 to 40 days)
Realization (55 to 80 days)
Final Preparation (35 to 55 days)
Go Live and Support (20 to 24 days)

Process Modelling & Improvement

Winter Term 2017/18 Slide 35
- Chapter 7
Solution Manager: Implementation Roadmap

Figure 7-17: Implementation Roadmap in Solution Manager

Process Modelling & Improvement
Winter Term 2017/18 Slide 36
- Chapter 7
Implementation Tools (contd.)

Project Preparation
Organizing technical team
Defining system landscape
Selecting hardware and database vendors
Defining projects scope
Scope creep
Business Blueprint
Produces detailed documentation of business process requirements of
the company

Process Modelling & Improvement

Winter Term 2017/18 Slide 37
- Chapter 7
Implementation Tools (contd.)

Realization
Project team members work with consultants to configure the ERP
software in development system
Final Preparation
Testing the system throughput for critical business processes
Setting up help desk for end-users
Setting up operation of the Production (PROD) system and transferring
data from legacy systems
Conducting end-user training
Setting Go Live date

Process Modelling & Improvement

Winter Term 2017/18 Slide 38
- Chapter 7
Implementation Tools (contd.)

Go Live and Support

Company begins using new ERP system
Monitoring of system is critical so that changes can be made quickly if
performance of the system is not satisfactory
Important to set a date at which the project will be complete

Process Modelling & Improvement

Winter Term 2017/18 Slide 39
- Chapter 7
System Landscape Concept

SAP recommends a system landscape for implementation

Three completely separate SAP systems:
Development (DEV)
Quality Assurance (QAS)
Production (PROD)
Transport directory:
special data file location on
DEV server

Figure 7-18: System landscape for SAP ERP implementation

Process Modelling & Improvement

Winter Term 2017/18 Slide 40
- Chapter 7
System Landscape Concept (contd.)

Development (DEV) system used to develop configuration settings and

special enhancements using ABAP code
Changes recorded in transport directory
Changes imported into QAS system
QAS system: changes are tested
All settings, programs, and changes that pass testing are transported to
PROD system
PROD system: used by company to run its business processes

Process Modelling & Improvement

Winter Term 2017/18 Slide 41
- Chapter 7
Additional EPC Exercise (ARIS Express)

Create an EPC for the following process:

When a person calls for a room reservation, the hotelier first clarifies the
preferred room type: double or single, and smoker or non-smoker. The
customer is then asked if he/she also wants breakfast. If yes, breakfast is
added to the bill and an according reservation is forwarded to the restaurant.
The hotelier then asks for the time of arrival. If the customer will arrive later
then 6pm, the hotelier collects his/her credit card information to secure the
room reservation. The hotelier finally repeats all the information from the
reservation dialogue and asks the customer for any mistakes. In case of any
mistakes, he restarts the reservation dialogue from the beginning. If
everything is correct, he submits the reservation to the hotel reservation
system and confirms the reservation to the customer.

Process Modelling & Improvement

Winter Term 2017/18 Slide 42
- Chapter 7
Summary

Business processes
ERP systems are designed to provide the information, analysis tools,
and communication abilities to support efficient and effective business
processes
Process modeling: fundamental tool in understanding and analyzing
business processes
Process mapping: process-modeling tool that uses graphical symbols to
document business processes
Other methodologies: hierarchical modeling, deployment flowcharting,
event process chain diagramming, value analysis, and business process
improvement
SAPs Solution Manager: set of tools and information that can be used to
guide an implementation project
Included in SAP ERP to help manage the implementation of ERP
software
Process Modelling & Improvement
Winter Term 2017/18 Slide 43
- Chapter 7
Summary (contd.)

SAPs system landscape was introduced to show how changes to ERP

system during implementation (and beyond) are managed
Most challenges to ERP implementation involve managing personnel and
their reactions to the change, rather than managing technical issues

Process Modelling & Improvement

Winter Term 2017/18 Slide 44
- Chapter 7