Lecture 5

Business Processes and ERPs

By:
Assistant Professor
Dr. Rebwar M. Nabi
Rebwar.nabi@spu.edu.iq
Learning Objectives

Upon successful completion of this chapter, you will be able to:

 define the term business process;
 identify the different systems needed to support business processes in an
organization;
 explain the value of an enterprise resource planning (ERP) system;
 explain how business process management and business process reengineering
work; and
 understand how information technology combined with business processes can
bring an organization competitive advantage.

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What is a business process?
 A process is a series of tasks that are completed in order to
accomplish a goal.
 A business process, therefore, is a process that is focused on
achieving a goal for a business.
 Processes are something that businesses go through every day
in order to accomplish their mission.
 The better their processes, the more effective the business.

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Documenting a Process
 The simplest way to document a process is to simply create a list.
 How to create an account on eBay, might look like this:
1. Go to ebay.com.
 
2. Click on “register.”
 
3. Enter your contact information in the “Tell us about you” box.
 
4. Choose your user ID and password.
 
5. Agree to User Agreement and Privacy Policy by clicking on “Submit.”

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Documenting a Process

 A list is not good enough for some processes. Below is a

process diagram to determine if a new term should be
added to Wikipedia.

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Managing Business Process
Documentation
 The requirement to manage process documentation has been
one of the driving forces behind the creation of the document
management system.
 A document management system stores and tracks documents
and supports the following functions:
 Versions and timestamps.
 Approvals and workflows.
 Communication.
 A document management system will notify the appropriate
people when a change to a document is approved.

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ERP Systems

 An enterprise resource planning (ERP) system is a

software application with a centralized database that
can be used to run an entire company.

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ERP Systems
 All data in an ERP system is stored in a single, central
database.
 data entered in one part of the company can be
immediately available to other parts of the company.
 An ERP can be used to manage an entire organization’s
operations.
 Companies need to purchase modules for an ERP that
represent different functions within the organization.
 Some companies choose to purchase many modules,
others choose a subset of the modules.

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ERP modules

 When an ERP vendor designs a module, it has to

implement the rules for the associated business
processes.

 These rules reflects the best practices for that process

within a giving industry.

 The implementation of an ERP system is an excellent

opportunity to improve their business practices.

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ERP challenges

 Is the process embedded in the ERP really better than

the process they are currently utilizing?

 Can a company differentiate from its competitors if

they use the same ERP system?

 Can a ERP be customized to match a given organization

processes? (Yes, but who “manage” the customized
system?)

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ERP vendors

 Some of the best-known ERP vendors are:

 SAP
 Microsoft
 ORACLE (People Soft)
 INFOR (mid size and small organizations)
 ODDO
 Many More…..

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ERP and organizational value

 ERP vendors combine subset of ERP modules to offer

applications with high impact on the organizations.
 The most important ones are:

 Customer Relationship Management (CRM) systems

 Supply Chain Management (SCM) systems.
 Some ERPs support Third-party Apps

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ERP and customer
relationship management
 CRM systems allow to managing a company’s interaction
with current and future customers.
 We are familiar with CRM systems from companies that
we do business with:
 Your car dealer send you a letter (or card) letting you
know that your card need service.
 Netflix recommends you new movies to watch.
 Expedia send you offers for cities you have visited.

 https://www.youtube.com/watch?v=XmnPlfJh7zM

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Advantages of CRM Systems

 Allows track goals and metrics for sales, marketing, and

customer services.
 Increase customer retention
 Increase profitability
 Facilitate to identify “who are your customers”
 Permits to know “what is important to your customers”
 Allows opportunity management

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ERP and Supply Chain
Management
 Supply chain management has been defined as the
"design, planning, execution, control, and monitoring of
supply chain activities with the objective of creating
net value, building a competitive infrastructure,
leveraging worldwide logistics, synchronizing supply
with demand and measuring performance globally.”
(APICS 2013).

 SCM draws heavily from the areas of operations

management, logistics, procurement and information
technology, and aims for an integrated approach to
optimize the flow of good and services. (Bartch 2013)

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SCM examples

 Dell
 https://www.youtube.com/watch?v=owQzo82ac_M
 Walmart
 https://www.youtube.com/watch?v=yZC4neLax5o
 Many more can be found in the internet

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Advantages of SCM Systems

 Secure accurate SCM metrics

 Help controlling bullwhip effect
 Facilitate visualization of SCM metrics
 Improve productivity
 Increase profitability
 Help to integrate value systems

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Business Process Management

 The literature report three

alternatives to business process
manage:
 Automatize
 Streamlining
 Business process engineering

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Automation

 While automation can make a business more efficient, it

cannot be used to provide a competitive advantage.
 Simply automating a bad process does not make it
better.
 Organizations that are serious about improving their
business processes will also create structures to manage
those processes.
 Business process management (BPM) can be thought of
as an intentional effort to plan, document, implement,
and distribute an organization’s business processes with
the support of information technology.

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Streamlining

 Streamlining has a better impact on efficiency and

productivity, but it cannot warranty a competitive or
sustainable advantage.
 It is a good strategy for process that are essential to the
company but they cannot bring competitive advantage.
 Business process management will provide several key
benefits to an organization, which can be used to
contribute to competitive advantage.

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Business process management

The benefits of business process management include:

• Empowering employees.

• Built-in reporting.

• Enforcing best practices.  

• Enforcing consistency.  

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Business process
reengineering
 Organizations look to manage their processes to gain a
competitive advantage.
 Companies should “blow up” their existing processes
and develop new processes that take advantage of the
new technologies and concepts.
 Do not optimize, obliterate (Hammer 1990.)
 BPR is fully understanding the goals of a process and
then dramatically redesigning it from the ground up to
achieve dramatic improvements in productivity and
quality.

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How to do BPR (Hammer)
 Organize around outcomes, not tasks.
 Have those who use the outcomes of the process perform
the process.
 Subsume information-processing work into the real work
that produces the information.
 Treat geographically dispersed resources as though they
were centralized.
 Link parallel activities instead of integrating their results.
 Put the decision points where the work is performed, and
build controls into the process.
 Capture information once, at the source.

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Important Links
 MS Dynamics
 https://dynamics.microsoft.com/en-us/
 Oracle
 https://www.oracle.com/erp/
 SAAP
 https://www.sap.com/products/erp-financial-managemen
t/small-business-erp.html?sort=latest_desc&tab=featured

 ODDO
 https://www.odoo.com/

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KPI and BI
the Key for the right decision

 What is KPI
 KPI stands for key performance indicator, a quantifiable measure of
performance over time for a specific objective. KPIs provide targets for teams to
shoot for, milestones to gauge progress, and insights that help people across the
organization make better decisions. From finance and HR to marketing and
sales, key performance indicators help every area of the business move forward
at the strategic level.
 Link:
https://www.qlik.com/us/kpi#:~:text=Key%20performance%20indicators%
20(KPIs)%20are,the%20success%20of%20your%20business
.
 What is BI
 Business intelligence (BI) leverages software and services to transform data into
actionable insights that inform an organization’s business decisions.
 Link:
https://www.cio.com/article/272364/business-intelligence-definition-and-solutions.
html
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Summary
• Define the term business process;
 
• Identify the different systems needed to support business
processes in an organization;
 
• Explain the value of an enterprise resource planning (ERP) system;
 
• Explain how business process management and business process
reengineering work; and
 
• Understand how information technology combined with business
processes can bring an organization competitive advantage.

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