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Business process integration, automation, and optimization in ERP

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DOI: 10.1108/14637150910975516

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BPMJ
15,4 Business process integration,
automation, and optimization
in ERP
504
Integrated approach using enhanced
process models
Premaratne Samaranayake
School of Management, University of Western Sydney,
Penrith South DC, Australia

Abstract
Purpose – The purpose of this paper is to propose an integrated approach to process integration,
automation, and optimization through enhanced business process models.
Design/methodology/approach – The approach is based on a framework of process integration
for functional applications, automation for business workflows, and additional functionalities for
process optimization. The proposed approach is illustrated using enhanced process models over
business integration, automation, and optimization with data elements, structures, and organizational
elements. The standard sales order process cycle, quotation approval process, and production order
cycle are chosen for illustrating process integration, automation, and optimization, respectively.
Findings – The proposed approach combines applications and workflows using integrated
process/data models and forms a foundation for business process optimization. It is shown that the
integrated approach can improve existing business processes in enterprise resource planning (ERP),
beyond business process re-engineering (BPR) principles, once enhanced business process models are
implemented. This approach eliminates need for a hierarchical representation of business processes
and highlights the flexibility and visibility of business process implementation in ERP system
environment.
Research limitations/implications – Although process integration, automation, and optimization
are illustrated using selected business process examples, it requires generalization of these
enhancements over entire business blueprint of ERP system. Thus, one key limitation of this research
is that it is not generalized for the entire business blueprint of ERP. This also requires changes to data
structures beyond current relational data in many ERP systems.
Originality/value – This research provides an integrated approach to business process modeling
beyond traditional functional and workflow applications by eliminating hierarchical nature of process
and data elements.
Keywords Business process re-engineering, Functional analysis, Process efficiency
Paper type Research paper

Business Process Management
Journal
Vol. 15 No. 4, 2009
pp. 504-526
q Emerald Group Publishing Limited
1463-7154
DOI 10.1108/14637150910975516
Introduction
Over the last two decades, organizations, including small-and-medium size enterprises
(SMEs) have moved to implementing some kind of enterprise resource planning (ERP)
systems. ERP systems are business software packages that enable organizations to:
.
Integrate their business functions (sales, production, human resources, financial,
purchasing, etc.) throughout the enterprise, using integrated application modules
based on business processes of best-business practices.
 .
Share common data, information, and knowledge throughout the entire Enhanced
enterprise. process models
.
Automate critical parts of its business processes.
.
Generate and access real-time information using a single database of all basic
and transaction data.

As such, ERP systems have emerged as the core of successful data, information, and 505
knowledge management through integrated functional applications across the entire
organization. Further, the adoption of ERP systems are becoming more of supporting their
businesses under ever changing environment of diminishing market shares, tough
competition, ever increasing customer expectations and globalization.
Today’s ERP systems have represented for large companies’ one of the most
relevant areas of investment in IT (Davenport, 1998). Despite these investments and
widespread use of ERP systems, many companies are beginning to realize that the real
impact of ERP systems on management styles and practices is actually well below
expectations, especially on the front of organizational integration (Beretta, 2002). Need
for better utilization and performance of enterprise system resources has led to the
focus on two main areas: improvements in ERP system implementation aspects and
business process improvements over process integration, automation, and
optimization within business blueprint of ERP.
There has been substantial research on various aspects of ERP system
implementations to date. Shehab et al. (2004) present a comprehensive literature review
on various aspects of ERP, in particular ERP system implementation projects. On the
subject of business processes in ERP, there is limited research on business process
improvements within ERP systems, in particular process automation and optimization
aspects. The limited research reported in the literature are confined to areas such as
business process modeling, simulation, reference model for SMEs, and a selected spectrum
of industries (Barber et al., 2003; Clegg, 2006; Martin and Cheung, 2005; Metaxiotis et al.,
2003; Persona et al., 2004; Samaranayake, 2003; Sandhu and Gunasekaran, 2004; Serrano
and Hengst, 2005; Samaranayake and Chan, 2006; Themistocleous et al., 2001). In early
1990s, research activities were mainly focused on principles of business process
re-engineering (BPR) and their influence on ERP systems for improvements in
applications (Davenport and Short, 1990; Hammer, 1990). It has been recognized that BPR
plays a significant role in ERP system implementations (Hammer and Champy, 2001;
Martin and Cheung, 2005; Sandoe et al., 2001; Sumner, 2005). It is evident from the
literature that success of ERP implementations and subsequent improvements on
performance are dependent on how well benefits of BPR projects are achieved and
maximized (Martin and Cheung, 2005; Sumner, 2005). Further, organizations are taking a
process-oriented view, focusing on customer, for achieving maximum benefits of BPR
projects, as part of ERP system implementations (Sandoe et al., 2001).
Barber et al. (2003), through a comprehensive literature review, show that few tools
are available for supporting management of business processes in manufacturing and
that, except for a few small-scale processes, BPR implementations in manufacturing
have had limited success. Apart from BPR focus, there were significant interests on
applications themselves. Themistocleous et al. (2001) identified problems associated
with application integration (AI) in ERP systems. Their results confirm that AI, as a
new means of system integration, adds value by placing business logic in the
BPMJ applications network. Further, Persona et al. (2004) identified the general requirements
15,4 and guidelines for the definition of an integrated model of the order to delivery cycle in
a Versatile Manufacturing environment. Metaxiotis et al. (2003) proposed a
knowledge-based system for production scheduling that could be incorporated as a
custom module in an ERP system. Overall, most of research activities on business
processes in ERP system are confined narrowly on business process modeling, selected
506 industries or organizations of SME sector.
Although many BPR projects seem to provide streamlined business processes
through waste elimination, simplification, and integration (the first three principles of
BPR), process automation and optimization have not been fully incorporated into
business blueprint of many ERP systems. Martin and Cheung (2005) demonstrate
through a case study that significant improvements through BPR can still be achieved
after the implementation of ERP systems. Clegg (2006) proposes a holonic modeling
approach based on the application of systems thinking to designing, managing and
improving business processes, while Samaranayake (2003) proposes an enhancement
to event-driven process chain (EPC) methodology of business process modeling and
thereby improved process integration.
Further, although many ERP systems support business workflows for automation of
selected business processes through a set of tools, templates, etc. many organizations seem
to be under-utilizing business workflows of ERP. Anecdotal evidence suggests that this is
mainly due to the fact that workflows are separate from business transactions, which
require additional effort for setting up before they can be used. As a result, very few
businesses have adopted business workflows for automating business processes,
supported by common process integration through applications. Further, process
integration, as part of functional applications in ERP, does not provide process automation
since functional applications in ERP systems are confined to the first three principles of
BPR: waster elimination, simplification, and integration.
The lack of substantial research on process automation and optimization; and the
current level of business process achievements using ERP systems suggest that there is a
potential for further enhancements of overall performance of ERP systems through
business process improvements. In order to achieve business process improvements
further, BPR principles (waste elimination, simplification, integration, and automation)
need to be re-enforced through enhanced process models. Once BPR principles are
re-enforced, such processes are candidates for incorporating process optimization with
additional functionality for many potential processes. Since many organizations use some
kind of an ERP system for functional applications through business transactions and do
not use workflow tool for automating those functional applications, it is also possible for
enhancing the utilization of existing ERP system resources by integrating applications
and workflows through enhanced business process models.
The integration of functional applications and workflows in ERP system environment
require integration of business processes with organizational elements and data structures
over the entire business blueprint of ERP. On the subject of integration, Beretta (2002)
identified the lack of organizational integration with the business processes in ERP while
McAdam and McCormack (2001) identified the lack of research exploring the integration
of business processes extending throughout supply chains. Further, Bhatt (2000)
concludes from a survey that data integration and communication networks integration
affect the dimensions of BPI. On the other hand, researchers began to view the integration
as one of the important issue in successful implementation of business processes in ERP Enhanced
(Beretta, 2002). Recently, Lau et al. (2003) proposed a system with features of ability to process models
reconfigure and customize business workflows, allowing the integration of workflow in a
flexible way within industry environment. Very recently, Samaranayake and Chan (2006)
proposed an approach to integrate business processes and workflows with data elements,
structures, and organizational elements for better and effective planning, control, and
execution within core functional applications of ERP. 507
Although business process optimization is beyond BPR principles, business process
optimization requires re-engineered business processes as the foundation. Thus,
process integration within functional applications in ERP becomes the basis for such
process improvements. However, process integration in current ERP systems do not
guarantee business process optimization, due to limitations of modeling techniques
and BPR principles under which business processes of ERP are based. Therefore,
business process optimization is best achieved when business processes are modeled
using enhanced process models and additional functionality is incorporated using
integrated process/data models. Further, the process optimization through additional
functionality and integrated process/data models using enhanced EPC methodology
can be linked with applications, allowing integration of business process components
with workflow and optimization components for eventual applications in ERP.
In this research, business process improvements are achieved through
improvements in business process modeling, based on enhanced EPC methodology
for process integration and automation across functional applications before extending
those business processes with business process optimization using additional
functionalities, as required by each process cycle within the broader business blueprint
of ERP. In this regard, the process optimization with enhanced process models can be
incorporated into existing planning, control and execution process cycles. Additional
functionalities, associated with process optimization, enable removing limitations in
current process cycles, such as lack of simultaneous planning of materials, resources,
and activities, infinite loading of resources, and limited forward planning capabilities
across common functional applications. Thus, the approach is considered to be an
extension of BPR principles from process automation to optimization, for enhanced
business blueprints of ERP systems. Those concepts of process integration and
automation using enhanced EPC methodology are further extended for process
optimization, by way of relaxing some of the constraints in the current process
integration. Those constraints include:
.
Optional events as a result of some functions which are optional rather than
compulsory events for improved and/or optimized processes.
. Inability to finitely load resources.
.
Lack of forward and simultaneous planning of many components.

For example, scheduling and capacity leveling in production order creation can be part of
the production order creation process, where improved production order cycle eliminates
the manual intervention of capacity leveling and finite scheduling of operations.
This paper is organized as follows. An overview of common business processes of
ERP system is presented first, followed by the enhanced EPC methodology for the
business process modeling. Next, the framework of process integration, automation,
and optimization based on enhanced process models is presented. This is followed by
BPMJ the illustration of the framework using individual models of business process
15,4 integration, automation, and optimization with data elements and structures; and
integrated model for process applications, based on part of sales order process for
process integration, quotation approval for workflow and production order for process
optimization. Finally, this paper concludes with research findings and
recommendations for future research directions.
508
Core business processes in ERP system environment
Business processes in ERP system are grouped into various process cycles within the
business blueprint and are represented by functional applications such as sales and
distribution (SD), production planning, plant maintenance, project management,
materials management, finance planning, and human resources (Sumner, 2005; Monk
and Wagner, 2006). Process cycles in each of these functional applications integrate
various functions, events, and other process components for planning, control, and
execution of many items/components (materials, resources, and vendors) involved
(Curran et al., 1998). In general, these process cycles consist of many cross-functional
processes. Each business process in ERP system would involve some data elements
and/or structures, organizational elements depending on the area of applications.
Further, process components can have links with process components of another
process and related data elements and structures. For example, order proposal as part
of the sales order process leads to sales order requirements based on customer’s
product configuration of product order process (Karim et al., 2009). Some of the very
common business processes/cycles in ERP system environment are described, along
with data and organizational elements involved, before the overview of the proposed
approach for process integration, automation, and optimization.

Manufacturing planning and execution process cycle

The manufacturing planning, control, and execution cycle forms major part of production
planning module of ERP system (Dickersbach et al., 2007). It provides functionalities over
long to medium-term planning of key aspects (materials and capacities) and short-term
execution of those plans. At the long-term planning, sales and operations planning (SOP)
develops realistic and consistent plans for the operational level of the organization,
starting from sales projections and operating budget. SOP output determines the rate at
which the organization provides manufacturing, engineering, and financial resources to
support the sales plan. The output of SOP is usually a production plan for product group of
individual products, over a long-term to medium-term planning horizon. Demand
management disaggregates production plan into individual requirements. Master
production scheduling and/or material requirements planning (MRP) are subsequently
used for determining individual requirements of materials (finished and semi-finished
products, raw materials). MRP process, based on explosion of bills of materials (BOM) and
time phasing of lead-times, results in planned orders with planned quantities and basic
planned dates. The output of MRP is a combination of planned orders, dependent
requirements and purchase requisitions, depending on the types of materials and
inventory status of all materials involved. Planned orders are then converted into
production orders which undergo complete production order cycle in the production
activity control, until order settlement with costing is complete.
 Apart from various planning, control, and execution functions involved in this Enhanced
process cycle, each process involves various master data such as material masters, process models
BOM, work centres, operations routings, and cost centres. Further, the process cycle
generates transaction data such as planned orders and production orders. Although the
process cycle represents integrated processes from long-term planning to short-term
execution, it lacks process automation, rather requires significant manual interfacing
at various levels over many functions such as goods movements, finite loading of 509
resources, and forward scheduling of execution plans if there are materials shortages
and/or overloaded resources (Samaranayake, 2008). This suggests that there is
potential for process automation and optimization as part of improvements in the
production order cycle.

Customer order management process cycle

This process cycle is a key process combination within the SD module of many ERP
systems. The process starts with pre-sales activities followed by sales order processing
(Curran et al., 1998; Lawrence et al., 2005; Oberniedermaier and Sell-Jander, 2005; Iyer,
2007). The main objective of pre-sales activities is to provide the customer price
information through either an inquiry or a price quotation. Main activities of pre-sales
include tracking customer contacts, sales calls, visits, and mailings. Sales order
processing involves a series of activities, and starts with a sales order creation based
on a previous quotation or an inquiry generated from pre-sales activity (Sandoe et al.,
2001). There are few cross functional activities within the sales order processing such
as checking customer’s credit status with accounts receivable; and checking inventory
records and the production planning records as part of inventory sourcing. Further, the
process checks whether the requested material is available and can be delivered on the
date the customer desires. Once the availability and credit checking activities are
completed as part of the sales order processing, the process proceeds to delivery
function. The delivery activity releases the documents that the warehouse uses to pick
and pack. The information generated in this activity can be based on distribution
requirements planning for planned quantities and dates, based on implosion of
distribution network with delivery requirements. Finally, the invoice and customer
payment in the accounting department will complete the process. All of these activities
and events associated with the overall customer order management process are
grouped into a standard order processing function and delivery processing process
(Karim et al., 2009). Similar to manufacturing planning and execution cycle, this
process also involves various data and transaction data. The most common master
data are materials and customers. Sales can be established through a sales area within
an ERP system environment, which combines three individual organizational
elements: sales organization, sales division, and distribution channel. Overall, process
involves various sequential planning steps and manual functions including goods
issue, picking, packing, and billing which are candidates for automation and
optimization as part of further improvements.

Material and quality management process cycle

This process cycle starts with a request for goods or services. This is usually in the form
of a purchase requisition created manually or automatically via MRP. The source of
supply is determined for needed item by either the purchasing department or the system.
BPMJ The requisition is assigned to a vendor. A purchase order is created with reference to the
15,4 requisition. The order follow-up is to expedite the prompt delivery of the order. The goods
are received into the warehouse via purchase order goods receipt. If the goods are received
into restricted use, the process provides quality management functionalities for further
processing of goods, in order to complete quality checks before they can be put into
unrestricted use. Once goods are received and checked, the invoice is validated by
510 comparing it to the original purchase order price and quantity received. Payment will be
made based on payment terms and conditions defined. Master data directly associated
with this process include materials and vendors. Transaction data can range from simple
purchase requisitions to purchase orders. Organizational data directly associated with this
process include plant, storage location and purchasing organization. Similar to core
processes discussed above, this process cycle also involves various planning and
scheduling steps; and manual functions, in particular functions related to good
movements including goods receipts and stock transfer between storage locations (Curran
et al., 1998; Sumner, 2005). The current level of manual intervention through various
functions can be reduced through further improvements over the complete process cycle
by eliminating manual interfacing and incorporating improved planning and scheduling
methods.

Maintenance management process cycle

The maintenance process cycle can be divided into five stages: notification, planning,
control, execution, and completion (Stengle and Ematinger, 2001). At each stage,
various functions are performed using different master data and generate information
including transaction data. The cycle starts when the maintenance department is
notified of damage, malfunction, problem, or some other request (e.g. request for a
modification) in the form of notification. In the planning stage, a maintenance order is
created with planning of resources and materials. At control level, the maintenance
order is released, the availability is checked, required capacity is provided, and
required shop papers are printed. The execution phase comprises the same issue of
spare parts from stock and the actual execution of the order. When the work is
completed, the actual times required to do the work are back reported/confirmed in the
completion step. Other technical information is also entered in order to document repair
and to record the condition of the technical system. The order is then settled in the
accounting department. Similar to other process cycles, this process also involves
various data elements such as materials, task lists, functional hierarchies. The key
transaction data in this process is the maintenance order initiated from notification.
Overall, this process involves many functions and data including maintenance order
cycle in the execution phase. Thus, this process cycle is a potential candidate for
further improvements over various functions and activities through automation and
optimization.

Human resources management process cycle

The human resources process cycle contains a number of sub-processes including
recruitment, hiring, benefits enrollment, training, travel, time reporting, and shift
planning, payroll, employee development and salary administration, and cost planning
and reporting (Krämer et al., 2004). Each and every component of this process cycle would
involve a number of data elements and/or data structures as well as would have links
between them depending on the requirements of the process. Although this process cycle Enhanced
has limited scope for further improvements over functions and activities, this process links process models
with many other functional applications within ERP. Thus, any improvements in core
processes would have impact on planning and execution within this process cycle.
Apart from key process cycle discussed above, there are a number of other processes
involved in ERP such as financial planning and control processes, project management
processes. Similar to the above process cycles, any business process in ERP could be 511
represented by a cycle of activities (sub-processes). Since many of the business processes
in process cycles discussed above involve a number of data elements and structures,
integration of such data elements and structures with business processes as part of
business process modeling is the key for further improvements in automation and
optimization. Thus, process modeling with integrated data through enhanced EPC
methodology forms the foundation for effective process automation and optimization.

Methodology for business process improvements in ERP system

environment
Although empirical research methodology is well established in the literature (Eisenhardt,
1989; Flynn et al., 1990; Yin, 1994), in particular with operations management related
research activities, the methodology adopted in this research is based on a theoretical
foundation, which underlines the problem being studied, followed by a descriptive
problem formulation and associated solution methods. In this case, descriptive problem
formulation is directly related to business process improvement methods, using enhanced
process models. Instead of surveys, questionnaires, case studies used in qualitative
research methodology, the problem identified within business processes within ERP
system environment is formulated using a selected set of process cycles, both using
current methods and enhanced process models.
In this paper, business processes are modeled using enhanced EPC methodology for
potential improvements through an integrated approach where automation and
optimization of business processes can be incorporated into integrated business
processes using enhanced process models. A framework of process integration,
automation, and optimization is presented as a foundation for solving the problem of
process limitations within current business blueprints of ERP. Each improvement
aspect as part of solution to current business process limitations is illustrated with a
practical business process example and numerical data within an ERP system
environment. First, business process is integrated using sales order process, followed by
process automation using quotation approval workflow. In the next stage, the process
optimization, as part of overall improvement is illustrated using production order cycle
where finite loading of resources is incorporated by eliminating manual capacity loading
and leveling of current process practices. Three levels of improvements are carried out,
based on the framework of overall integrated process/data models, facilitated by unitary
structuring technique at each level. Thus, the problem of process limitation can be
tackled using appropriate models at each level as described in each section below.

Enhanced EPC methodology for business process modeling

It has been noted in the literature that BPR has been a prominent improvement
philosophy in the decade of 1990s. During this period, many organizations
implementing BPR projects adopted some kind of process mapping techniques for
BPMJ describing current business practices. The common techniques adopted were
15,4 integrated definition for function modeling (IDEF0) and American Society of
Mechanical Engineers standards for process mapping (Peppard and Rowland, 1995). In
early days of ERP system developments, many ERP vendors adopted EPC
methodology for modeling of entire business blueprint. EPC methodology
incorporates functions and events as key process elements, which are connected
512 with logical operators (AND, OR, and XOR) to form business process models. Business
process models, in the form of EPC diagrams, are connected with process paths, to
form process cycles and entire business blueprint.
Curran et al. (1998) present an overview of SAP R/3’s (SAP is the market leader in
ERP solutions) business blueprint. SAP R/3’s business blueprint consists of process,
data, organizational and information views and forms the reference model of business
process applications. The business process view is integrated with associated data and
information views at the database level of ERP using business transactions. However,
this level of integration, due to limitations of current process modeling, lacks true view
of direct interactions between process and data components. Limitations of current
business process modeling methods have been compiled in the research literature
(Samaranayake, 2003; Rosemann, 2006; Sandhu and Gunasekaran, 2004). The
limitations include lack of process transparency, weak integration across some
cross-functional processes including need for manual interfacing between broader
process cycles such as goods movements and capacity leveling in production order
cycle. Rosemann (2006) identified potential pitfalls of business process modeling,
through an analysis of large process modeling projects. Major problems with current
systems are that many processes are represented by optional functions rather than
compulsory functions due to limitations of existing functionalities and modeling
techniques themselves. Therefore, given the complexities of current business processes
(number of process components, data elements and structures), interactions between
components and process improvements are complex to be worked out manually,
without the help of an integrated process/data model. Further, many business
processes make it difficult to predict the complexities in terms of value-adding vs
non-value adding, number of links and impact other processes have.
Thus, those limitations of EPC methodology and current complexities of business
processes have led to explicit need for fundamental changes to process modeling
techniques. In this regard, Samaranayake (2003) proposed an approach to enhance EPC
methodology, by way of integrating business process components with data elements
and structures at the process model level. It has been shown that the enhanced EPC
methodology is effective for integration of business processes with data elements and
structures in ERP systems for simple and flexible business process applications. Main
features of the enhanced EPC methodology include:
.
Representation of process function using integrated tasks, activities, operations,
and materials.
.
Links and relationships (parent-component, component-component and
component precedence) between individual items within and across functions.
.
Integration of process, data, and organizational elements at process model level.
A comparison between enhanced EPC and traditional EPC is made and is shown in
Table I. In the case of enhanced EPC, functions are represented by a set of relevant
 Designation Description EPC Methodology Enhanced EPC Enhanced
Methodology process models
Event Events describe the
occurrence or status of
activity (ies)
Function Functions describe state
transform ations through
A1 A3 A4 513
L1 L1 L2
tasks.
M1 A2

S1 L3 M1

Organisation units describe CW

Organisation
the
unit FP DA
FW

enterprise structure
DR TA C

TL

Material or Material or resource M1 M1 - Material

Resource objects portray physical
object objects involved R1 R1 - Resource

Process paths show the

Process path
connection between
processes.

Logical operators describe

Logical XOR XOR
the logical relationships
operator
between events and
functions. Additional AND operator Table I.
depending on changes to Elements of EPC and
the process. enhanced EPC

activities and associated components including resources, materials and suppliers; and
relationships/links between components such as activity precedence,
parent-component relationships, using unitary structuring technique (Woxvold,
1992). All process and functional components described above (materials, resources,
operations, suppliers, customer, and events) are directly integrated with data elements
and structures at the model representation. It is expected that enhanced EPC
methodology can eliminate some of the process modeling constraints and thereby
enable business process optimization, using additional functionality and associated
optimization methods. Overall, enhanced business process models incorporate not only
functions and events but also data elements, structures, and relationships between
those components. Enhanced EPC methodology forms the basis of framework for
process improvements through integration, automation, and optimization and is
illustrated later, using one of the standard processes of ERP business blueprint.

Framework for business process integration, automation, and optimization

The framework for business process integration, automation, and optimization is a
three-stage process improvement approach and is based on enhanced EPC methodology.
BPMJ The main features of the framework include: enhanced process models over process
15,4 integration and automation, incorporating both process and data elements, relationships
and links; and process optimization with additional functionalities using integrated
process/data models. The framework provides a basis for developing a set of
transactions not only carrying out functional applications using execution of process
steps but also execution of relevant workflows and/or process optimization within the
514 process. For example, the function “quotation to be created from inquiry” within the
standard sales order process can be automated through the business workflow
“quotation approval”. Similarly, the production order process involving various
functions and events can be optimized by incorporating scheduling functions for finite
loading of resources into the production order creation function, with required data
elements, structures, and organizational elements. This not only eliminates the need for
separate execution of applications and business workflows, but also provides required
functionalities for optimizing complex business processes.
Key elements of the framework (Figure 1) are three building blocks (business
process integration, process automation, and process optimization) and interactions
between each stage for business process improvements. Each building block consists
of business processes, based on enhanced EPC methodology using unitary structuring
technique, allowing many types of process components and relationships, before
processes become candidates for optimization at the top level of the framework. At the
lowest level, process functions are replaced by various types of components (activities,
resources, materials, and suppliers), depending on the type of function and the purpose
within the process. Those components are linked together using three different
relationships: parent-component (hierarchical), component-component (sequential), and
activity precedence (closed-network). Similarly, process automation, supported by
process integration, is represented by process components such as functions, events
(triggering and terminating), resources, agents, and tasks.
When business processes of the entire business blueprint of ERP systems are
improved through enhanced process models at three levels, business process views of
resulting processes/process cycles do represent both applications and workflows with
data elements, structures, and relationships between components. Further, the

Event

Process optimisation

Additional functions for optimization: e.g.

Basic functions finite loading of resouces, forward planning,
simultaneous planning

Triggering
Process automation Workflow tasks / functions
event
Figure 1.
Framework for process
integration, automation, Process integration
Event Basic functions
and optimization
framework can be used as a basis for developing organization’s business blueprint as Enhanced
part of ERP system implementation project. This involves development of individual process models
process models for functional applications through process integration, workflows for
process automation and additional functionality required for process optimization.
Once these individual models for process integration, automation, and optimization are
developed, they can be linked together for relevant applications. Thus, business
processes are enhanced at three levels of the framework using: 515
(1) Integration of process and data elements including organizational elements.
(2) Extending integrated processes for automation with triggering events and
associated resources (agents).
(3) Incorporation of additional functionalities with associated data
elements/structures and organizational elements for business process
optimization.

Therefore, business process improvements using integrated process/data models can

provide improvements beyond BPR principles, where additional functionalities allow for
detailed scheduling and process optimization. Further, the framework provides the
flexibility and maintainability of many process cycles, and can be used to simulate
existing processes to achieve better planning and execution outcomes. In business process
optimization, additional functionalities based on enhanced EPC are incorporated, by
removing current process constraints such as logical operator OR and optional functions.
For example, logical operator OR and the preceding process path with optional functions
can be replaced with AND operator and required functionality for process optimization.
In general, business process optimization through additional functionalities primarily
focuses on three aspects:
(1) finite loading of resources;
(2) forward planning at execution phase depending on requirements arising from
uncertainty; and
(3) simultaneous planning of all involved.

In order to illustrate these three levels of improvements, standard sales order process,
quotation approval, and production order process are chosen.

Business process integration with data and organizational elements

The business process shown in Figure 2 represents standard order process (Curran
et al., 1998) with major process components such as functions, events, and business
logics. Since this is a cross-functional process within SD application module of ERP,
the process associates with a number of data elements and structures over various
functional transactions, through the links maintained at the database level.
The sales order process in ERP system environment is supported by associated data
elements and structures, usually modeled separately using data models based on
entity-relationship diagrams. However, EPC-based business process models do not
include data elements and/or structures Sandoe et al. (2001), although they are linked
together at the database level. This means that business process models lack the
process and data integration at the modeling level. On the other hand, enhanced
EPC-based process models Samaranayake (2003) eliminate the need for separate
BPMJ Cust. mail
campaign to
15,4 be created

Mailing Customer
campaign inquires about
processing products

Customer
516 RFQ
processing

Sales activity Sales activity Direct mail

is to be is agreed campaign is xor
prepared upon sent

Quotation to Quotation
xor Sales activity Quotation is Inquiry items
be created reason
processing to be created are rejected
from inquiry occurred
from contact

xor

Customer
quotation
processing

xor
Standard order Standard order
w/o quote ref. with ref. to quote Quotation is
Quotation
received is received sent Quotation is
items are
valid
rejected

xor 1 and 2 are connectors

with further process elements
Figure 2.
Standard
Part of standard order order processing
process based on EPC
methodology 2
Source: Curran et al. (1998)

models for process and data components, rather integrate process components as well
as data elements and structures. Thus, enhanced EPC methodology is adopted for
representing the process integration with data elements and structures as shown in
Figure 3, for part of the sales order process.
As shown in Figure 3, many functions in the original process are expanded with a set
of activities, precedence between activities and set of resources. For example, the
function “mailing campaign processing” in the original EPC is replaced by a unitary
structure-based function with activities, resources, material, a supplier and associated
relationships/links. Further, events in the process do remain unchanged while functions
are replaced by unitary structure-based functions. In the terminology of this approach,
the outline of the component icons appear as “M”, “A”, “R”, and “S” which represent
materials, activity, resource, and supplier, respectively. Thus, A1-A5 represents
pre-sales activities. Components attached to those activities are labour and machine
resources (L1-L3, MC1). Material M1, supplied by supplier S1, can be a material and/or a
 Cust. mail
campaign
Enhanced
A1 A4
to be created
A3
process models
Sales activity
L1 L1 L2 A5 is agreed A6 A7
upon

L2 L4
M1 A2 L4
517
S1 L3 M1

Customer Quotation to
inquires about Standard order
A8 A9 be created
A10 A11 w/o quote ref.
products from inquiry received
Standard order
xor
L5 L5 processing
L6 L7
Quotation is
valid
Figure 3.
Part of standard order
process based on
Standard order enhanced EPC
with ref. to is
received methodology

set of materials required for pre-sales activities. This suggests that data elements and
structures could be attached to the business process, which eliminates the need for
ambiguous situation of data relationships with business process components. It also
provides a foundation for simultaneous planning of all process components within
functions and thereby improvements on the overall process. Simultaneous planning of
components can be carried out using appropriate methodologies (Samaranayake and
Toncich, 2007), and details of such planning are not reported here since it is beyond the
scope of this paper.

Business workflow integration with data and organizational elements

Business process automation, similar to process integration, involves a number of
components such as events, agents, steps, and loops for decisions, and relationships.
Modeling of process automation combines workflow components to represent
triggering events, steps, and relationships in business process automation and enables
implementation of business workflows within system environment. However, agents
associated with process automation are only interfaced with other process components
in the workflow models rather than integrated into the workflow models with
relationships.
In ERP system environment, current business workflow models are based on EPC
methodology, using basic components such as events (triggering and terminating), steps
(task, decision, etc.), and loops. However, these models lack structural integration of all the
components and relationships involved. In this research, business process automation is
modeled using enhanced EPC methodology where workflow components are integrated
with data elements and structures at the workflow model level.
For the purpose of model illustration, quotation approval workflow within the sale
order process is considered and extended with data and organizational elements. The
workflow for quotation approval enables automated approval or rejection, based on
notification of quotation. Thus, the workflow model for quotation approval involves
the triggering event of notification of quotation and few steps and loops before
BPMJ it terminates. The workflow starts immediately after the start of the triggering event
15,4 (notification of quotation created) and uses initial values and specifications such as
workflow and event containers. The resulting workflow model, based on enhanced
EPC methodology, is shown in Figure 4.
This workflow includes triggering event (TR1), terminating event (TM1), a number
of steps (activities A12-A16) and a number of resources (labour resource components
518 L8-L12) attached to those steps. The workflow model is similar to business process
model except that business workflow takes all aspects of process models (process
integration) and adds process automation aspects such as triggering events and
additional relationships between components. It also incorporates not only business
workflow elements (events, loops, and steps) but also agents (represented by resource
components) as data elements. Therefore, enhanced workflow models eliminate the
need for interfacing workflows through data at the time of workflow execution. For
example, an agent (resource component) associated with a decision point in the
workflow is incorporated into the model for better planning of resources involved.
Further, these models clearly indicate branching in and out of process models and
provide better visibility of all involved, including data and organizational elements.
The main feature of the enhanced model is incorporation of material and resource
elements into the workflow rather than having them as background elements.
While the enhanced methodology for workflow provides integration of both workflows
and data elements at the structural level, workflows may still be executed separately
from applications. For simultaneous execution of both applications and workflows,
process models need to be integrated with workflow models.

Notification of
quotation created
Legend
Approval of
TR1 A12
quotation Event
Rejected
L8
Approved Revise notification of
quotation? Step
Send mail (activity)
A13
Yes
No Resource
Revise and
L9 send it back (agent)
Send it A15 A16
back
Revised Loop/Step
L12 (decision)
L11
Cancelled
Yes
Resubmit?

No Workflow
Figure 4.
Terminate terminated
Enhanced business
workflow A14
workflow model
TM1
for quotation
approval process L10
Integration of process and workflow models using individual models and links Enhanced
Improvements on process integration and automation can be further extended using process models
integration of individual models of applications and business workflows. This can be
achieved through branching out from the process model for business workflow and
then branching into the appropriate position on the process after the execution of the
business workflow. In order to illustrate the integration of process and workflow
models, part of the process with events and functions is identified as an eligible 519
candidate for business process automation in an ERP system environment. The main
requirement is that the process has a triggering event, terminating event and few steps
in between. Careful analysis of the sales order process shows that the event “quotation
to be created” can be treated as a triggering event for the business workflow. This
event may trigger an approval and/or rejection process. It could also involve various
levels of approvals depending on the quantity and other information relevant to the
quotation. Steps involved in automation (workflow) would be things like sending mail,
revision of the quotation, approving the quotation. Once the quotation is approved or
rejected, workflow could be terminated and the original process can proceed. Thus, the
resulting model based on both models as well as associated links is shown in Figure 5.
It can be noted from Figure 5 that the quotation approval workflow is incorporated into
the sales order process. Therefore, the resulting model is a basis for combining both
application and workflow models within overall SD module of SAP R/3. This would
provide a foundation for enhanced functionality for both applications and workflows
within ERP system environments. The integration of both process and workflow models
can be carried out for many functional areas within ERP, provided links between process
and workflow models are identified. The workflow usually needs a triggering event to
start the workflow. In this case, the triggering event selected is “quotation to be created”
based on the information from enquiry. This is the point it branches out of business
process and branches into the business workflow. Upon realizing of the terminating event
in the business workflow, the information is sent back to business process for the reminder
of the process. Implementation of integrated applications and workflows requires
re-thinking of how business blueprint of an ERP system can be enhanced with all the
common workflows. This means that each process cycle in ERP can be a potential
candidate for integrated application/workflow model. Once all process cycles are
redesigned, they can become the complete blueprint of the system. Based on such an
enhanced business blueprint, transactions need to be extended to cover both applications
and workflows within those applications.

Business process optimization using enhanced business process models

Once the process is integrated and automated, the next level of improvement is the process
optimization. Since business process optimization is a step beyond BPR principles,
business process optimization requires re-engineered processes and more importantly
enhanced process models, which enable additional functionalities and options along
with integrated data elements, structures, and organizational elements in ERP.
In this case, business process optimization can be incorporated into the business
process blueprint where existing processes are streamlined and improved using enhanced
process models, additional functionality and process options by relaxing process
constraints. Since process integration and automation are already integrated with data
elements and structures, process optimization can also integrate functionality with
BPMJ Customer
mail campaign A4
15,4 to be created
A1 A3

Sales activity
L1 L1 L2
A5 is agreed A6 A7
upon
L2 L4
M1 A2 L4

520
S1 L3 M1
Customer
inquires Quotation Standard order
about A8 A9 to be created A10 A11 w/o quote
products from inquiry ref.received Standard order
xor
L5 L5 processing
L6 L7
quotation is
valid

Standard
order

Notification of
quotation created

Approval of
TR1 A12
quotation
Rejected
L8
Approved Revise notification
of quotation?
Send mail ?
A13
Yes
No

L9 Revise and
Send it A16 send it back
back A15
Revised
L12
Resubmit? L11 Yes
Cancelled
No
Figure 5.
Integrated model for Terminate A14 Workflow
part of sales order process workflow teminated
and quotation approval TM1
workflow L10

associated data elements and structures. Once all potential processes are improved
through enhanced process models and associated data elements/structures; and
incorporated into an existing business process blueprint using appropriate business
transactions, process optimization can easily be achieved over many process cycles across
functional applications.
As part of process optimization, additional functionalities enable removing limitations
in current process cycles, such as lack of simultaneous planning of materials, resources
and activities, infinite loading of resources and limited forward planning capabilities
across common functional applications. Further, concepts of process integration and
automation using enhanced process models can be used in process optimization through Enhanced
various means including relaxing some of the constraints in the current process process models
integration. Those constraints include:
.
optional events as a result of some functions rather than compulsory events for
improved and/or optimised processes;
.
inability to finitely load resources; and
521
.
lack of forward and simultaneous planning of many components.

For example, scheduling and capacity leveling in production order creation can be part
of the production order creation process and thereby eliminates the manual
intervention of capacity leveling and finite scheduling of operations.
Thus, for the purpose of this research, the production order cycle (Figure 6), including
order creation to settlement is considered and extended with additional functionality,
supported by data elements, structures, and organizational elements. The production
order cycle constitutes a set of functions: order proposal, order creation, order scheduling,
availability check, capacity leveling, order release, order printing, material withdrawal
(goods issue), confirmations, goods receipt, settlement, and completion. Currently,
production order creation assumes early start and finished times for all the operations
involved and requires manual interference for availability of materials and resources. This
means that there is infinite loading of resources. Further, production order good
movements are manually handled and involve considerable slack times. As a result,
production order completion may take longer than it requires. Further, if materials are not
available for production to initiate, this can also cause delays in the production and
requires forward planning of remaining operations. However, current production order
cycle cannot handle forward planning of all involved. Overall, production order creation
function is a key candidate for optimization in three areas: finite loading of resources,
simultaneous planning of all for feasible production execution and forward planning of
goods movements and other operations under any breakdown of machines, unavailability
of materials.
It can be noted from process view of part of the production order cycle (order
proposal to order release) shown in Figure 7 that some events at production order
creation level lead to the need for functions performed manually outside the order

Completion Order proposal

Settlement Order creation

Goods receipt Scheduling

Confirmations Availability check

Material withdrawal Capacity levelling Figure 6.

Production order cycle
Order printing Order release with major functions
BPMJ Creating/processing
15,4 production order

Material reservation Capacity requirements Preliminary costing

522 is reached is created is carried out

Production order
is created

Release of production
order

Inspection lot is
Production order
created automatically
is to printed
for production order
Production order
is released
Production order
printing

Figure 7.
EPC for part of the Production order
production order cycle is printed

creation, before the production order is released for execution. Further, events such as
“material reservation is created”, “capacity requirements is created”, and “preliminary
costing is carried out for planned order” and associated functions are optional at this
stage. In current systems, this has led to three additional (isolated) functions in the
order cycle, which are manually interfaced as outlined before. This suggests that order
creation and subsequent release can be carried out with or without those functions are
carried out. Functions associated with those events can be scheduling, availability
check and capacity leveling. In order to optimize this process from the current level, by
eliminating manual interfacing and optional nature of important functionality, the
following functions can be incorporated into the order creation:
.
Finite loading of resources at the time of order creation rather than capacity
leveling.
.
Simultaneous planning of materials and resources for availability check.
.
Forward planning of all the operations at the time of order creation instead of
separate scheduling.

Further, processing of production order beyond order release (the event in the main route
of the process) requires manual interfacing for material and capacity availability checks.
These activities may result in overloaded capacities and shortage of materials. These Enhanced
situations would have been avoided if those events are handled using appropriate process models
techniques at the time of order creation and linked with functions: finite loading in the
case of overloaded capacity situation and forward planning of production based on
availability of materials leading to an event: materials and capacities are available,
before releasing the production order. These additional events and functions can be
handled only when the production order creation process is implemented, based on 523
enhanced process view as shown in Figure 8.
Once above functions are incorporated and associated events are made compulsory
rather than optional, the production order creation process would result in production
orders with finitely loaded resources and better schedules for operations. Similarly,
good movements within the production order cycle involve activities (operations),
materials and resources so that complete execution of production order is not only
execution of materials and capacities required for production, but also execution of
goods movements between plant and warehouse. Thus, the process shown in Figure 8
is an enhanced process and incorporates relevant functions required for good

Creating/processing
production order

Capacity requirements Material reservation Preliminary costing

is created is reached is carried out

A1 A3 A4

L1 L1 L2
Production order
is created
A1 A2

Release of production L1 L3 M1
order
Finite loading of resources

Inspection lot is Production order

created automatically is to printed
for production order

Addional function for Production order

printing Figure 8.
lot inspection
Enhanced EPC for
production order creation
Production order Production order with finite loading
is released is printed function
BPMJ movements which minimizes manual intervention and provides flexibility and
15,4 transparency of the whole production order process.
It can be noted from the production order creation process shown in Figure 8 that the
process is represented by a combination of existing functions and additional functions for
optimizing the whole process. Implementation of this process in an ERP system will result
in additional functionalities and more importantly transactions with workflows and
524 optimization aspects. Further, it can result in improved transaction data where those
functions are already built-in as part of the planning. In the case of production order cycle
demonstrated here, scheduling is based on availability of both materials and capacities at
the time of order creation. Further, any unexpected situation during the execution phase
can be handled effectively since the production order cycle now contains not only
hierarchical and sequential operations routings, but also other relationships between
components. Overall, the production order cycle is improved through enhanced process
models using improved integration, automation, and optimization.

Conclusions and directions for future research

This paper identified the need for an integrated approach for business process
improvements beyond traditional BPR principles. Two levels of improvements proposed
include improvements in business process modeling and improved process functionalities.
Thus, the proposed integrated approach for business process improvements is to improve
overall blueprint of ERP system through enhanced process integration, automation, and
optimization. The approach is based on the framework of process integration, automation,
and optimization using unitary structure-based functions, tasks with resources and
additional functionality for functional applications, workflows and optimum solutions,
respectively. It has been shown that the proposed framework integrates business
processes with data structures using various components (materials, resources, and
activities), across many functional areas within ERP business blueprint. Main features of
the framework are process integration, automation, and optimization using enhanced EPC
methodology. The proposed framework has been demonstrated using a standard business
process cycle in ERP. It is shown that the resulting process integration, automation, and
optimization can provide streamlined transactions beyond process integration when
implemented in existing business blueprints of ERP systems. This approach eliminates
the need for a hierarchical representation of business processes and is capable of providing
visibility, flexibility, and maintainability for further improvements, in particular in
process optimization using enhanced business processes.
Further research is required for generalizing this approach over many functional
applications within current business blueprint of ERP systems. Adoption of enhanced
process integration, automation, and optimization requires major change to business
process blueprint, which would subsequently lead to enhanced business transactions
within functional applications of ERP. As a continuation of this research, it is expected
that enhanced process integration be carried out on a selected process area within a
commercial ERP system environment.

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Corresponding author
Premaratne Samaranayake can be contacted at: p.samaranayake@uws.edu.au

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