Workflow, BPM, ERP Systems and ERP Workflow Integration

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The aim of an ERP system is to provide an integrated solution to all business areas of a particular enterprise. Ideally, you have one software system that the entire company can access and work with. So, for example, all the data for finance, sales, accounting, human resources and inventory is managed in one central repository and each business group within the organization accesses only the subset of data that they need.

Workflow as a concept is nothing new. Even before the era of computers, there have always been established procedures for handling operations within a corporate structure. Take a purchase order, for example: an employee notifies their manager that they require a particular item; the manager then puts in a requisition, which, depending on his level of authority, may need to be bumped further up the management chain until it is authorized; it is then handed over to the purchasing coordinator and finally purchased. The workflow can be relatively straightforward or very complex, but it is basically a business process that consists of a number of sequential tasks performed in a particular order or following a set of rules that is designed to facilitate a particular objective. Examples of processes for which workflows are commonly in place include order processing and fulfillment, sales cycle and campaign management, performance reviews, medical/insurance claims processing, expense reporting, warranty management, invoice processing and more.

The ERP workflow can be part of the larger concept of Business Process Management (BPM), which is a more holistic approach to business processes. Companies that employ BPM aim to optimize their business processes while striving to be more efficient, more effective, and improve the level of tracking and control built into their processes as a whole.

BPM and workflow implementation force companies to sit down and evaluate their processes and the rationale behind them:  what is the flow of a particular task (e.g. draft -> ready -> financial approval -> final authorization -> sent to vendor), what possible scenarios exist, what rules need to be applied at each stage of the process (e.g., a purchase order cannot be moved from a status of “cancelled” to “sent to vendor” or any order over $10,000 needs another level of authorization), who is involved at each stage and what level of authority should they be granted. Creating a detailed blueprint of business processes, streamlining and regulating the workflow facilitates a greater degree of control; enhanced ability to respond to any potential issues; and increased efficiency, accountability and transparency for continued auditing and analysis of the process.

In many of the available solutions, in addition to automating the routing of documents and tasks from one person to another, email or SMS notification is employed to inform the next person in the chain of events that a document or process requires their attention. Rules can often be set so that another person in the chain is notified if a document remains at a particular status for too long (e.g. if the tracking document for an item in a repair shop remains by a certain technician at the status “in process” for more than two days, both the technician and his or her supervisor will receive automatic notification so that they can investigate the delay).

BPM and workflow functionality are increasingly a part of many ERP solutions, and it makes sense to implement such process maps and controls early in the game in order to maximize the benefits of the ERP system. Some ERP vendors offer built-in workflow functionalities, while others offer possibilities for third-party integration. If third-party solutions are employed, it’s very important that the ERP and BPM/Workflow groups understand and communicate about the technology and processes that are being implemented.

Remember: workflows involve humans, and the people involved at all levels of the process should also be involved in the initial mapping out of the processes before they are implemented. While mapping out the process, you may discover new and better ways to perform tasks or provide better oversight. The defining and modeling phase is often a learning process for both employees and managers. Collaboration during the definition process can produce enhanced processes, improve performance of both the system as a whole and of individual employees, and ultimately foster a sense of “ownership” in each individual regarding his or her part in the process itself.

In conclusion and to recap, workflow and BPM systems control the flow of information between individuals or departments, and direct it to the next appropriate processing stage according to an established workflow map. A good system should enable managers to monitor the progress of a particular process within the workflow, handle exceptions, escalate individual exceptions and generate reports that can be used to improve performance. It is therefore advisable that you make BPM and workflow one of your priorities when selecting or implementing an ERP software solution.

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ERP Myths and Facts

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This post is dedicated to those who know that there are no simple answers in the ERP space, and want to learn more about it. Here are a few Myths and Facts from the world of ERP.

 

MYTH: “Our project is not progressing as planned because it lacks management commitment”

FACT: Progress is often not achieved because of management burn-out. People involved can be disillusioned by promises made and expectations that were built-up by overzealous vendor reps, consultants who collect exorbitant fees as the project lingers and IT personnel who were looking for big budgets and the opportunity to rub shoulders with the “big boys.” When management is made aware of the process, and understands that there are no silver bullets in ERP or quick fixes, then expectations don’t run amok and progress can be measured in a real and meaningful fashion. A successful ERP implementation can provide a qualifiable ROI.

 

MYTH: “Our system went live in just a few months”

FACT: It is more likely that the financial part of the ERP went live in a few months rather than the whole system. Corporate financials are fairly straight forward to implement. Also, in most organizations the financials are already “under control.” An ERP system’s biggest added value is not in the financial area, but rather in other parts of the operation and perhaps in tying those other parts into the financials. Modeling and effectively managing operations in an integrated ERP system may take years to implement. In fact, it is an ongoing process. Ultimately, the system must be flexible enough to accommodate operational changes indefinitely.

MYTH: “Once we finished getting our ERP system up and running, our expenses went down drastically.”

FACT: Outside consulting fees may have been reduced and the initial costs for setting up the system are paid off, but companies often fail to take ongoing internal implementation investment into consideration. In the words of one CIO, “we planned for $600,000 and a 6 months project; we reached both and then stopped counting.” An ERP implementation extends over long periods of time, and any worth its salt will take years, not months.

 

MYTH: “Consultants are professionals who can guide the selection process and manage the project while maintaining an objective stance.”

FACT: We believe that anyone reading this already knows the facts.

 

MYTH: “Comparing ERP functionality lists is a good practice for initial screening of vendors for your project.”

FACT: Functionality lists are of marginal value in the selection of potential ERP systems. A single line in a list may represent a world of functionality in one software packages and very little in another. Even if the desired functionality is fully supported in the software, actually making it work for your specific needs may make implementation complex and cost prohibitive. Referrals in your industry are a much better yardstick. As the implementation team is just as important as the software in terms of successful projects, referrals from industry representatives regarding the implementation team are the second most valuable indicator.

 

By Galit Raviv

 

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