Business Process Documentation for ERP

Business Process Documentation for ERP- Supported Organisations PANAYIOTOU NIKOLAOS, PONIS STAVROS, GAYIALIS SOTIRIS, PANAYIOTOU THEODOROS National Technical University of Athens Mechanical Engineering Department, Section of Industrial Management & Operational Research 15780 Zografos, Athens GREECE [email protected]

Abstract: - This paper presents a case study demonstrating the documentation of organisational business processes in a large Petroleum company operating in Greece. The introduction of an advanced Enterprise Resource Planning (ERP) system covering all the business processes reengineered the way the organisation operated and called for analytical documentation of the new processes and activities. An integrated business modeling approach was introduced, covering specific systemic views: organisational, functional, information and control. The ARIS architecture was used, providing the means for linking the different views and connecting them with information technology. Specific ARIS methods (Organisational Charts, Extended Event Process Chains (eEPCs), Process chain Diagrams, Entity Relationship Diagrams (eERMs), Function Trees and Role Allocation Diagrams) were selected and combined with analytical process descriptions and ERP users’ manuals. The outcomes of the approach introduced were the provision of analytical documentation and specific guidelines for each employee taking into account both their organisational and ERP system roles and generating automatic job descriptions. The expected long-term outcome of the implemented approach is the achievement of a continuous improvement scheme, which will support the operation of the company and the maintenance of the ERP system. Key-Words: - Enterprise Modelling, ERP System, Continuous Improvement, ARIS Architecture, Case Study

1 Introduction Enterprise Resource Planning (ERP) systems are large commercial software packages that promise a seamless integration of information flow through an organization, by combining various sources of information into a single software application and a single database [1]. By integrating the various aspects of the organization and streamlining the data flows, they overcome the fragmentation problems of legacy systems [2]. The evolution of ERP came about originally in response to the increasingly pressing demands of global market competition, customer demands, and changes in business and IT imperatives [3]. It was not long before ERP applications dominated the market. According to Sprott [4], ERP systems were one of the fastest growing and most profitable areas of the software industry during the late 1990s while in 1998, approximately 40% of companies with annual revenues over $1 billion had undergone ERP implementations [5]. The adoption of ERP systems has been the focus of substantial research in recent years. Although early research has covered many aspects of ERP implementation, it has focused mainly on the earlier stages of the ERP lifecycle [1]. It is common, for companies, after running a marathon that could take up to four years from day one to go-live, to believe that the ERP project is finished. That is not the case though. The implementation of an ERP system does

not follow a life cycle of having a beginning and an end; on the contrary it is a continual process. As Davenport [6] argues, an enterprise system is not a project, it’s a way of life. According to a recent survey (2000) by Deloitte Consulting only 53% of the company executives asked, realise that going live isn’t the end of their ERP program, but rather the end of the beginning. The ERP go-live phase initiates an ongoing process including numerous maintenance activities and issues that need to be resolved after an ERP system becomes operational. Examples of such activities include enhancements, user support, and system upgrades [1]. One of the most significant tasks a company has to undertake after going live is the management of the organizational change the ERP system has incurred to the company. According to Davenport, ERP implementation often results in a large-scale organizational change [2]. Mashari [7] argues that change management can be supported by some software tools which ease the training of staff and by helping them to take the appropriate steps within a process, automating communication activities within a project, ensuring that responsibilities are assigned to the proper people and groups, increasing flexibility and responsiveness, and providing more accountability by generating and maintaining audit trails [8]. A good example of change management, relative to the work done in this

research paper, is changing roles and responsibilities [9], while another one can be seen in Schaaf’s study on after going live innovative training [10]. In this new emerging business process and technological environment enterprise modelling provides a semantic unification space at the corporate level where shared concepts (e.g. organizational and IT roles and their related activities) can be properly defined, mapped to one another and widely communicated in the forms of enterprise models [11]. Enterprise Modelling techniques and associated visual languages are very important and useful to support new approaches to enterprise business transformation and improvement [12]. To support these efforts, a plethora of tools have appeared in the software market e.g. ARIS Toolset, FirstSTEP, METIS, Enterprise Modeller, KBSI tools, CimTool, MOOGO, IMAGIM [13], processing power has increased dramatically and modelling architectures have evolved and in some cases even matured [14]. According to Gartner and its BPA Magic Quadrant the market leader company in this field based on its vision and its ability to execute is IDS Scheer S.A. the developer of ARIS Collaborative Suite of business process modelling tools. IDS is a strategic partner of SAP AG the leading ERP software company [15] and ARIS software and its underlying architecture and semantics is used for all the process, organizational, functional and data modelling activities throughout SAP R/3 implementations. This paper presents the work done within the context of a project followed the “go live” phase of the implementation, aiming in elaborating a business process modelling tool to support the change management process by providing accurate and easily accessible documentation for specific aspects of the enterprise these being the reengineered processes, the new organizational roles and activities, the system roles assigned to organizational units and the job descriptions per organizational and system roles. The application of the elaborated business process modelling tool resulted in elevating the new system acceptance by the employees, increased employee involvement and commitment, enhanced employees satisfaction and eventually contributed –especially combined with a thorough training programme- to the overall ERP implementation project success.

2 Problem Formulation The introduction of an advanced and complicated Enterprise Resource Planning System (ERP) in an

organization is frequently connected with Business Process Reengineering (BPR) initiatives. No matter what the approach of the reengineering will be, ERP-Driven BPR or pure BPR, a number of important changes will affect the future operation of the organization. Business Process Reengineering can result in one or more of the following alternatives:  Organisational restructuring affecting the existing divisions and departments of the company.  Business process redesign of existing processes, or even new business process creation for operations that did not exist in the past.  Introduction of new Information Technology (IT) systems and changes in the interfaces between the applications of the existing IT infrastructure. As a result, the organisation faces a new reality, which affects both the everyday and strategic operation of the company. This reality has to be thoroughly documented and the employees have to be well trained and supported in order for the company to be able to fast and efficiently adapt to the changes the ERP system imposed. After the ERP system “goes live”, in other words, when the new system comes into operation and the old one is discontinued, the Top Management of the organisation needs analytical documentation consisting of the following elements:  The new Organisational Charts.  Analytical Process Descriptions of the new business processes (core and support).  The Job Descriptions for each organisational role, under the light of the newly introduced organisational chart and the altered business processes.  The IT authorization profiles for the users of the new ERP system and the Systemic Roles they have.  Process Oriented ERP Manuals that can support the users in their everyday activities. It can be understood that the above elements are interrelated and affect each other. The coverage of these elements involves the elaboration of the following terms:  Processes: A process is a set of activities, which are carried out towards a well-defined goal, usually with the participation of many different departments of the organisation. The total number of processes covers all the operations of the company. Each process can be decomposed

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into smaller activity bundles called sub-processes. Activities: An activity is the smallest operation that takes place in an organisation. A process and (sub-process) consists of a number of specific activities. Events: The events are the triggers or the result state for an activity or a process. Organisational roles: A company consists of organisational units, such as divisions and departments. Each employee is assigned to an organisational position, is included in an organisational unit and has at least one specific organisational role, which underlies his/ hers basic tasks (activities) in the organisation. IT Roles: All the employees that have access to the Information Systems of the organisation must carry out systemic activities, which are part of specific IT roles. The determination of the users’ IT roles is very important for Internal Audit purposes. Information: The information (as well as the material) can be the input or the output of an activity. It can have a formal (e.g. report or application form) or informal (e.g. verbal information) form. Information is the most important form of interface between the different departments or divisions. Employees: The employees are the intellectual asset of the organisation and are responsible for its operations. They have one or more organisational roles but they can also have one or more IT roles.

Business processes are dynamic in nature. Such a dynamic behavior suggests that documentation cannot realize its full benefits in case it is managed just like a snapshot. It has to be easily updateable and directly accessible to every employee of the company. It can be concluded that the determination of the appropriate software tool affects the success of the documentation system and the implementation of the continuous process improvement in the organisation. Based on the concepts described in the previous paragraphs and trying to cover the specific needs for documentation of organisations after the implementation of large ERP systems, a proposed business modelling approach was developed, based on the ARIS architecture and the ARIS IT software consisting of the methods (business modelling tools) presented in Figure 1.

Organisation

Organisational Charts

Requirements Definition Design Specification

Role Allocation Diagrams (RAD) E F D O

Entity Relationship Diagrams (ERM)

Data

Value Added Process Chain Chain Diagram Diagrams(PCD)

Control

Implementation

Extended Event Process Chains (eEPC) Function Tree

Function

Fig. 1 Proposed Business Modelling Tools The methods used in the four views supported by the ARIS architecture are the following:  Data View: Entity Relationship Models (ERM) are used for the representation of the exchanged information in the new system.  Function View: The function tree method is used for the hierarchical representation of functions in order to minimise their complexity.  Organisational View: The organisational charts are used in order to designate the chain of command within the organisation. The analysis reaches the representation level of the employee.  Control View: Extended Event Process Chain (eEPC) diagrams are used for the representation of the control view, which combine the data, function and organisational views. PCD diagrams are used for the representation of additional information such as the automated functions in the new system. The definition of each transaction operated by the different system roles is presented in Role Allocation Diagrams (RAD). A further method in the strategic level (the Value-Added Chain Diagram) was used in order to define the core and support business processes of the organization. The selected methods in the four views of the ARIS Architecture enable the generation of the following reports, which cover the specific organisational needs for analytical documentation after the implementation of an ERP system:  Analytical organisational charts reaching the representation level of employees (covering the need for up-to-date organisational charts).  List of organisational roles per employee (covering the need for analytical and easy to use organisational charts).  Activities carried out by each employee, organisational role, department and division

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(covering the need for job descriptions for each organisational role). Activities carried out by each IT role (covering the need for efficient IT authorizations design). List of IT roles per employee (covering the need for IT authorizations monitoring). List of necessary transactions for each system role and each employee (covering the need for IT authorizations monitoring). Process descriptions for each process based on the verbal description of each activity (covering the need for process documentation). List of references (transactions) to ERP Users’ Manuals material for the operation of the systemic activities (covering the need for meaningful support of the system’s users).

3 A Case Study of a Large Organisation Operating in the Petroleum Industry The company in which the proposed business process modelling approach was applied is the largest industrial and commercial enterprise in its country, operating as a fully integrated oil enterprise whose activities range from refining of crude oil and trading/ marketing of petroleum products to production, trading and marketing of all other forms of energy. It employs about 4,500 people worldwide, while revenues in year 2000 totaled €4,3 million. The efficiency of the group is further enhanced by the integrated administrative scheme, which encompasses most of the subsidiaries and affiliates. Following the corporate restructuring and the high cash flows of the 1998-2000 period, the group now has the liquidity and borrowing capacity to finance its business expansion. In the context of this expansion, the company decided to integrate its business process by the acquisition and implementation of an ERP system, provided by the market leading company on the enterprise resource planning software market. The size of the company under study and the wide scope of the ERP system implementation were expected to impose a large amount of organizational distortion thus calling for the reception of certain measures to support the change management process. The work presented in this paper concerns the after-live phase of the ERP project, this being the use and maintenance phase. The main goal of the project was the elaboration of analytical business process models, for the mapping of the whole enterprise under the prism of the newly implemented ERP system in the four views

provided by the ARIS architecture (organisational, function, data, and process view). The final business model included all the reengineered processes, the new organisational roles that execute the activities in which the processes are decomposed, the system roles assigned to organisational units and the job descriptions per organisational and system role. To achieve this goal, a set of modelling ARIS methods have been selected from the numerous methods included in the ARIS toolset and subsequently deployed in a holistic manner, in order to develop a business model capable to support the particular needs of the management reporting system on jobs, system and organisational roles. The expected result of the business modelling tool development and application is the decision support of management and the job abetting for the employees during the after live phase of the ERP system, thus improving the system’s acceptance in the first stages of the use and maintenance phase. The first step taken in this study was the elaboration of the business oriented organisation view, which described the hierarchical structure of the organisation, meaning the organizational units with the communication and reporting relationships among them. In this paper the organisational chart method of ARIS architecture has been used in order to streamline the description of the enterprise, consolidating similar task groups into organisational units. Organisational units are directly being assigned with organisational positions. A position is an ARIS object which is defined by the function amount that an individual employee (person) can handle. Positions and persons assigned to each position were allocated to the aforementioned organisational units according to the parameters of business or reporting structures. Specific employees, however, are rarely allocated to a particular function because the business concept would have to be updated if these persons were transferred or left the company. Therefore the term “role” was introduced describing a certain type of employee with clearly defined qualifications and skills. The roles represented in the organisational charts are organisational roles. The system roles (the SAP R/3 roles) assigned to each employee having authorization access to the system were separately defined in different organizational charts. Having elaborated the organisational diagrams of the business structure, the study efforts turned into the assessment and mapping of the process and sub-process hierarchy of the enterprise. In the top level of this structure (strategic view), a Value Added Chain Diagram was deployed, consisting of both the core and the support business processes and the relationships between them. Business Process

strategy creates functions that the enterprise must carry out efficiently. The identified business processes were decomposed in sub-processes with the use of function trees. These function trees are hierarchy diagrams decomposing function bundles (in our case, processes), into functions (sub-processes that can be broken down further, directly blending in with a function bundle), and elementary functions (in our case, activities) that cannot be broken down any further. The data view includes the description of information objects, manipulated by activities. In this paper, the detailed data structure of a business application area was modeled using the ARIS ERM method, which is a standard for modeling business processes in real world projects. These diagrams consist of entity and relation types, linked with each other by edges. Extended ERMs are enhanced by specifying cardinalities, adding specification/ generalization operators and reinterpreting relation types into entity types. For the specific reporting needs of the company a number of ERM diagrams were elaborated. All the methods used in the context of the strategic, data and function view of the ARIS architecture are integrated into one view (control view), which manages to combine all this information into one consistent and meaningful model. The ARIS method used in this view is the extended Event Driven Process Chain Diagram (eEPC) which displays the activities in different detail and is the key component of SAP R/3 modeling concepts for business engineering and customizing. The eEPCs utilize a sequence of events and functions (in our models, activities) to transform a number of inputs to a desired output. Actions are illustrated by indicating the successive function with arrows delivering messages regarding the occurrence of an event to the next function, and thus activating it. Before the next function the messages are placed in the queue for processing. Messages can contain additional attributes transmitting special processing information to the next function. Logical relationships between the objects in the diagram are represented using the OR, AND and XOR symbols of the ARIS methodology. The eEPC diagrams can be easily transformed into PCD diagrams, which emphasise on the organizational participation in the sub-process. Each activity can be assigned both roles and transactions. However, because there is no direct relationship between roles and transactions in an EPC diagram, with roles that occur multiple times, it cannot be decided for which transactions these roles are responsible. The assignment of roles to

transactions is accomplished in the Role Assignment Diagram (RAD). One role is shown per column. The transactions are placed in the columns, creating implicit relationships. In addition to the representation of event control, in the context of the process view, the data flows between functions were represented using information objects directly connected with the activities that make use or generate them. The interconnections between the ARIS views, is shown in Figure 2.

Fig. 2 Interconnections Between the Business Process Model Objects Recapitulating, within the context of the project a set of ARIS diagrams (organizational charts, function trees, ERMs, eEPC’s, Function Allocation Diagrams and Role Allocation Diagrams) were elaborated creating an analytical business model, covering the needs of the SD (Sales & Distribution), FI (Finance), CO (Controlling), PP (Production Planning), MM (Material Management), PM (Plant Maintenance) and QM (Quality Management) software modules. The business model included database information for 4500 employees, 84 business processes, 908 activities, 206 system roles and 592 system transactions. In the following paragraphs of the paper a limited case study regarding the purchasing process (the SKU Material purchasing sub-process). More specifically, the steps followed for the implementation of the business process modelling approach, were the following:  Interviews with the key users of each module in order to obtain a perfect understanding of the new business process.  Thorough study of the business blueprints developed during the implementation phase, as well as the ERP’s user manuals.  Construction of the new organizational chart after the ERP-driven BPR took place (ARIS organizational view). An example of an

organizational chart for the Purchasing Department is presented in Figure 3.

displays the transactions of three purchasing system roles.

Purchasing Department Head of Department

Buyers Supervisor

Kotidis

Georgiou

MM – Buyer Supervisor

ME21N: Create Purchase Order

ME21N: Create Purchase Order

ME21N: Create Purchase Order

ME28: P.O Release

ME28: P.O Release

MM02: Change Material

MM02: Change Material

Tomatsidis

Thanos

Agiptatdis

Kyriakou

Fig. 3 Purchasing Department Organisational Chart  Determination of the organisation business processes and classification in core and support processes. The determined business processes are determined in the Value Added Chain Diagram of Figure 4. Production Production &&Production Production Control Control

Purchasing Purchasing

Plant Maintenance

Sales Sales Processing Processing

Quality Management

Production Planning

MM – Buyer Head of Department

Plant Buyers

Buyers

Bouklas

MM - Buyer Noidis G.

Inventory Management

Distribution Distribution

Financials

Controlling

Fig. 4 Enterprise Value Added Chain Diagram  Elaboration of a function tree for each process included in the Value Added Chain Diagram. The function tree of the purchasing process consisted of ten different sub-processes is shown in Figure 5.

ME9F: Message Output

ME9F: Message Output

Fig.7 Transactions for Purchasing System Roles  Identification of important information exchanged between the activities and representation of their relationships with the use of entity relationship diagrams (ERM). The ERM (partial view) of the purchasing process is shown in Figure 8.

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1 Non NonSKU SKU Material Material Purchasing Purchasing

SKU Material SKU Material Purchasing Purchasing

Service Service Purchasing Purchasing

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Urgent Material Urgent Material Purchasing Purchasing

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1 Contractual Contractual Agreement Agreement Creation Creation

Purchasing Purchasingby by Contractual Contractual Agreement Agreement

Vendor Master Vendor Master Maintenance Maintenance

Crude CrudeOil Oil Purchasing Purchasing (FOB) (FOB)

Crude Oil Crude Oil Purchasing (CIF) Purchasing (CIF)

Fig. 5 Purchasing Process Function Tree

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Vendor

Material

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 Identification of the systemic roles for each user of the ERP system and their representation with the use of role diagrams. A role diagram for a buyer supervisor is shown in Figure 6. Kotidis

MM - Buyer Supervisor

MM - Power User Vendors

MM - Purchase Order Approver

MM Purchasing Process Overview

MM - Power User Materials

MM Inventory Monitoring

MM - Fuel Contracts Agreement Display

MM Agreement Management Clerk

Fig.6 Buyers’ Supervisor Role Diagram  Definition of transactions per system role using the Role Allocation ARIS method. Figure 7,

Participates

Purchase Order Line Item

Purchasing Info Record

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Participates

Fig. 8. Purchasing ERM Diagram (Partial View)  Development of analytical process chain diagrams (decomposition of the processes included in the process diagrams, representing all the activities taking place, automated or not). These diagrams integrate all the discrete ARIS views using elements from the organizational charts, the data models and the role diagrams. An example of an eEPC diagram for the SKU Material Purchasing Process is presented in Figure 9.

Material

Vendor Buyer Purchase Requisition Line Item

Purchase Requisition Approved

Print of Purchase Order

Buyer

MM - Buyer

Purchase Order Header Purchase Order Header

Purchase Order Line Item

Purchase Order Header

Purchase Order Creation

MM - Buyer Purchase Order Line Item

Purchase Order Created

Purchase Order Approval

Purchasing Department

Buyers Supervisor

Send Purchase Order to Vendor MM - Buyer

Head of Department

MM – Buyer Supervisor Purchase Order Approved

Purchase Order Printed

MM – Buyer Head of Department

 Connection of the users’ manuals with the activities that each employee has to undertake, making the study of the support material easier and more focused (as each employee could identify the parts of the manuals that were of interest to him/ her).

Vendor

Purchase Order Sent

Fig. 9 SKU Material Purchasing eEPC (Partial View)  Generation of all the reports presented in Chapter 2, based on the underlying ARIS model repository.  Validation of the results and presentation to the Top Management.

4 Conclusions and Further Research The proposed business modelling approach was applied in one of the largest companies in Greece. All business processes and activities of the company were modeled in the ARIS software using the suggested methods described in the paper. All three thousands and five hundred employees were included in the analytical organisational charts and their organisational and IT roles were identified in the models. This analytical representation enabled the appropriate reporting generation requested by the Top Management. This reporting helped the organisation to manage change realized due to the ERP implementation by providing the following benefits:  Representation of the new organisational structure in the “after live” era.  Identification of the new process models, as transactional activities traditionally operated by specific departments were transferred to the departments where they occurred.  Analytical process and activity mapping and clear explanation of the participating organisational and IT roles.  Identification of employees that could undertake specific activities (either manual or systemic) or could replace absent employees.  Control of the authorization profiles and roles of the employees having access to the IT systems and capability for improvement in their future design.  Generation of helpful material for the employees and the activities in which they participate.

The ARIS software capability and the database support it offers, enabled the easy update and alteration of the business models, making the available documentation up-to-date for every company employee. The real-time, standardized and exact representation of the organisational business models encouraged the initiatives for continuous process improvement and the participation of all the employees who could easier make suggestions for improved process operations. One of the identified areas that could further improve was the easier reporting generation and the need for employees’ computer literacy (outside the IT department) in order to be able to easily use the available documentation on-line. Moreover, the effort needed for the generation of the models raised questions concerning the successful applicability of the approach in smaller organisations. The proposed approach is now implemented in an enterprise of one thousand employees and further research conclusions are expected by the end of the year.

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