The technical data of the publication:
Simon S. (2010): Business Process Management possibilities in the software Microsoft dynamics NAV Studia Universitatis “Vasile Goldis” Arad Seria Stiinte Economice Anul 20 Partea 1. - 2010 p. 176.-181.
Summary
The development of the informational society, the globalisation creates such demands in economic life for which the decision making mechanisms in a lot of companies are not prepared. The management of companies must keep step with the possibilities and threats appearing in market. The effective economic decision making process needs not only a computer aided information system, but a modern administration system too. The old planning and controlling concepts are no longer sufficient to drive companies successfully in a global and competitive environment. The flow of business processes should be continuous, the distinguished activities based on a functional management must be controlled and be able to be managed by an integrated information system. The Microsoft Dynamics NAV software collects the managerial functions and data into one integrated entrepreneurial resource planning system.
Keywords: workflow, value chain, computer aided information system, Microsoft
1. The theoretical background
Predicting our future it is not an unusual scenario, that network-economy will have a much more important role than now. Globalisation, the networks of computers, information systems and their users will have a great influence on the management and administration of entreprises. The evolved organizational structures and business processes became so complicated, that management needs an effective help from information technology.
Business process management is a holistic management approach that promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. (Smart, Maddern & Maull, 2008) Business process management makes us to improve processes continuously. A business process is a network of value-added activities, performed by their relevant organizational units to achieve the common business goal. These processes could be critical to organizations. (Ryan ,2009)
Although the original focus of Business Process Management was on the automation of mechanistic business processes, it has since been extended to integrate human-driven processes in which human interaction is connected to the mechanistic processes. In most workflow systems when individual steps in the business process require human interactions to be performed, these steps are assigned to appropriate members of the organization.
A workflow consists of a sequence of connected steps, and it is a chart of a sequence of operations, declared as work of a person, persons, one or more simple or complex mechanisms. A workflow may be seen as any abstraction of real activities, parts of a work in order. For control purposes, workflow may be a view on real work under a specific aspect, being a virtual representation of actual work. (Russell, Hofstede, Aalst, Mulyar)
One of the most influential contributors to modern concepts of management was Henri Fayol. He has proposed that there are five primary functions of management: (1) planning, (2) organizing, (3) commanding, (4) coordinating, and (5) controlling (Fayol, 1988) Fayol's work has stood the test of time and has been shown to be relevant and appropriate to contemporary management. Fayol’s theories and ideas were ideally a result of his age and environment. In the post revolutionized France a bourgeois republic was emerging. He stressed the importance and the practice of forecasting and planning.
Although Fayol is described as the father of modern operational management theory, some experts associate him with Frederick Winslow Taylor. The primary difference between Fayol and Taylor was that Taylor viewed management processes from the bottom up, while Fayol viewed management processes from the top down. Taylor starts with the most elemental units of activity—the workers' actions—then studies the effects of their actions on productivity, creates new methods for making them more efficient, and applies what he learns at lower levels to the hierarchy. Fayol criticized Taylor’s functional management: each workman, instead of coming in direct contact with the management at one point only receives his daily orders and help from the next different bosses: (1) route clerks, (2) instruction card men, (3) cost and time clerks, (4) gang bosses, (5) speed bosses, (6) inspectors, (7) repair bosses, and the (8) shop disciplinarian (Taylor 1911)
M. Porter’s value chain theory emphasizes the importance of business processes. A Porter’s value chain is a raw of activities or business units at firms. A business unit is the appropriate level for construction of a value chain, not at the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities in a specific order gives the products more added value than the sum of added values of all activities.
The value chain categorizes the generic value-adding activities of an organization. The "primary activities" include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). The "support activities" include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity. (Porter 1985)
The old planning and controlling concepts are no longer sufficient to drive companies successfully in a global, highly dynamic, and competitive environment. The Beyond Budgeting Model has inspired many companies in redesigning their controlling, planning and management systems.
“Compared with the traditional management model, Beyond Budgeting has two fundamental differences. First, it is a more adaptive way of managing. In place of fixed annual plans and budgets that tie managers to predetermined actions, targets are reviewed regularly and based on stretch goals linked to performance against world-class benchmarks, peers, competitors and prior periods. Second, the Beyond Budgeting model enables a more decentralized way of managing. In place of the traditional hierarchy and centralized leadership, it enables decision-making and performance accountability to be devolved to line managers and creates a self-managed working environment and a culture of personal responsibility. ” (Daum 2010) The new controlling, planning and management ideas and methods require new technical mainly information technology background. It is also a challenge for the famous software making enterprises (e.g. Microsoft Co.) to create an appropriate administrative background.
Connecting the activities at an entreprise there are processes which are similar to those at other entreprises. On the base of these activities we can create administrative modules, and from the network of these modules we can create an algorithm of an entreprise and a standardized algorithm for the entreprises. These modules could not only be virtual, administrative, but they can even be cost centers or profit centers in accounting or a physically separated groups of activity.
Such a standardized algorithm could even be transfered to be a logical base of a software. This is how the Entrepreneurial Resource Planning Softwares are structured. At my students’ manual I showed such an algorithm (Figure No. 1.) wich was developed by me in 2004. (Simon 2004) My algorithm has a considerable similarity to the system of modules of the Microsoft Dynamics NAV 5.00 software (Figure No. 2.), which was released four years later in 2007.
The similarity means that both models starts from the same function: mine starts from information management (apart from the previous environmental analysis) Ms NAV’s starts from administration. The next steps are the same: human resources, because technology will depend on HR, not backwards. After HR comes the arrangement and preparation of manufacturing (NAV) or operation, production (at my model). Logistics is before the operation in my model, but in NAV one part of it, the resource planning is before it, but warehousing comes after it immediately. After the transforming modules comes marketing in both models and the last module is finance in both models.
After studying the theoretical background of managing and efficiently harmonizing business processes, let’s examine the Microsoft Dynamics NAV 5.00 software and its capabilities for this economic aim.
Figure No. 1. : Simon Sandor’s General Model of Entrepreneurial Activity (Simon 2004)
Figure No. 2.: Microsoft Dynamics NAV 5.00 Screenshot (Microsoft Corporation 2007)
2. The process management capabilities of Microsoft Dynamics NAV
Microsoft NAV is designed specifically for medium-sized companies seeking one solution to help increase productivity without disrupting everyday business operations. The software is built from modules. If we make a data entry to one of the modules, the influence of it can be seen in every modules. (Edelényi, Mitterer, Tremmel) Due to this opportunity, users can always work with the newest data from every sector of the enterprise. This modular structure gives the possibility to adjust the software’ feature flexibly to the request of the technology or the organization. (Microsoft Corporation 2007) Due to its modular structure the software can easily manage the following main business processes.
Supply Chain Management
It is possible to tailor workflow processes to meet specific needs and keep pace with competitive markets. We can improve inventory management, manage single- or multi-site warehouses, and handle order processing and demand planning throughout the flexible and easily manageable forms. With the software it is easy to optimize cash flow by streamlining accounts-receivable processes and tracking customer payments, and to help drive efficiency and maximize cash resources with flexible, integrated accounts-payable capabilities. It is a useful possibility to match the goods on hand with customer demand reducing inventory and distribution costs, to satisfy demand with multiple planning options and tracking of utilization and materials costs.
Manufacturing
With this module in Microsoft Dynamics NAV, we can strengthen operational efficiency and manage production, using production orders, bills of material, supply planning, and capacity requirements planning. We can streamline the operations by automating manufacturing processes and gain greater visibility into a lot of aspects. The software increases the accuracy of promised orders so the users can respond quickly to customer queries about order status and delivery, and to changing customer demands with flexible manufacturing. Using a Web browser, vendors can manage catalogs, enter drop shipment orders, and maintain delivery dates.
Customer Relationship Management
The software enables automation of many day-to-day tasks for sales, customer service, and marketing professionals. We can manage customer records and sales histories, create and launch marketing campaigns, and track customer activity. It is manageable to forecast and track parts of consumption, proactively prepare contracts and service agreements, to automate routine sales, to use Microsoft Office Outlook and Employee Portal of Microsoft Dynamics NAV together to help the sales department team to work together more effectively.
Financial Management
The software provides accounting and finance solutions to help to track and analyze business information. We can manage the general ledger, payables, receivables, inventory, analytical accounting, fixed assets, and cash flow, financial processes across multiple currencies, locations, or companies, in addition to performing bank reconciliations and collections. Microsoft Dynamics NAV can help to control and manage the entire life cycle of fixed assets from acquisition to disposal, to monitor fiscal performance, to drive efficiency and maximize cash resources with flexible, integrated accounts payable capabilities, and to optimize cash flow by streamlining accounts receivable processes and tracking customer payments.
Business Intelligence and Reporting
The software can bring strategic insight into the business processes with sophisticated reporting, analysis, and budgeting solutions, it helps to improve and supports decision-making throughout the organization. It can give access to real-time, business-critical information and a wide range of analytical and reporting tools can help to manage budgets, create and consolidate reports, and look for trends and relationships. The software is built on industry-standard Microsoft technology and integrates with other business intelligence products and technologies: e.g. Microsoft Office and Microsoft Sharepoint.
Literature
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Edelényi M., Mitterer á., Tremmel P. Vállalatirányítási Rendszerek Laboratóriumi Jegyzet Nyugat-Magyarországi Egyetem Informatikai és Gazdasági Intézet Gazdasági Informatika Szak Sopron (manuscript, students’ manual)
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Simon S., 2004, Üzleti tervezés (Business Planning) Teesedik Samuel University 2004
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Taylor F. W. ,1911, "The Principles of Scientific Management". Harper & Brothers. Free book hosted online by Eldritch Press. p.68