Workflow-Supported Invoice Management: The Case of a System Implementation at a German Media Company

490 Lang

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IT5718

Workflow-Supported Invoice Management: The Case of a System Implementation at a German Media Company Karl R. Lang City University of New York (CUNY), USA

EXECUTIVE SUMMARY This case concerns the implementation of a workflow-management application at a large, publicly listed, German media company. The system collects information-rich business-process documents, stores them in an organizational memory system, distributes organizational knowledge, and ultimately informates staff and management in various business situations. The implementation was based on a combination of workflow management software from the SAP corporation and archiving software from the IXOS Software corporation. The management was able to document and report organizational performance gains in terms of both process efficiency and knowledge effectiveness. The implemented system has reduced the amount of paper and shelf space needed, sped up the manual archiving procedure, and increased the efficiency in the accounting department. The overall gains in organizational efficiency are estimated to be approximately 50%. The new system also improves organizational effectiveness through better information-distribution and knowledge-access by staff and organizational decision-makers. This case serves as a practical example that demonstrates how an organization can create business value through process automation, resulting in more efficient operations and improved performance. This chapter appears in the book, Annals of Cases on Information Technology 2004, Volume 6, edited by Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written Mehdi Khosrow-Pour. Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic permission of Idea Group Inc. is prohibited. forms without written permission of Idea Group Inc. is prohibited.

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ORGANIZATION BACKGROUND The company described in the case was founded in 1988 and has been a successful business in the European media landscape for more than 10 years. Originally focused solely on television services, it started in 1990 to broadcast television programs 24 hours a day, which was a first in the market. The company became profitable in 1993. By continuously redefining its business, it extended its business to other media, most notably the Internet. In 1997 the company went public by doing an IPO. It is now listed at the German stock exchange in Frankfurt. The organization currently employs more than 2,000 people and generates more than US$1 billion annual revenues. It is organized in four divisions: television, multimedia, merchandising, and services. The television division encompasses television stations, television production, and a licenses department. The multimedia division supports several groups, including Internet services, teletext services, e-commerce services, a news agency, community services, and the external interest section. The merchandising division consists of retail merchandising and club merchandising. And lastly, the services division covers advertising and promotion, studios, logistics, and creative works. The company has 14 subsidiaries in different European countries, as well as stakes in media companies in Switzerland. The company decided back in 1994 to implement a comprehensive enterprise resource planning (ERP) application with SAP R/3. The executive management made this strategic decision with the long-term goal of a fully integrated enterprise in mind, where information would be easily shared among its members and flow seamlessly across departments. Following the modular system architecture of SAP was seen as a prudent way to achieve this goal in successive, incremental steps. In the subsequent years, the company successfully implemented the SAP R/3 modules FI (Finance), MM (Materials Management), CO (Controlling), SD (Sales and Delivery), PM (Production Management), and HR (Human Resources). As information flows increased in scope and volume, management recognized that organizational knowledge needed to be better organized if it was to be used and reused effectively on an enterprise-wide scale. The idea of creating a centralized knowledge repository (termed organizational memory) with integrated store, update, and search and retrieve functions was conceived. Based on the good experiences from the previous projects combined with a general willingness to use new technologies, the project, Workflow-Supported Organizational Memory Through Optical Archiving and SAP Business Workflow, was initiated. Invoice management was selected as the project’s first pilot application. The primary goal was to create an organizational memory system that would be supplied with organizational knowledge, initially from a single key business process (invoice management). Workflow technology would be employed to collect information, store it in the organizational memory system, and distribute information from the memory base to organizational agents when needed. If successful, the organizational memory system would be extended to integrate the information flows that had been implemented in the earlier ERP application.

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SETTING THE STAGE In recent years, technology has advanced rapidly, enabling significant changes in the ways companies communicate and coordinate. Modern communication methods, such as e-mail, Internet forms, and digital video streaming, speed up business processes and give the term “business document” a new, richer meaning. Companies rely increasingly on electronic business documents. As with paper documents, recording and managing business processes requires securely archiving documents with immediate access for authorized users. In order to improve process automation, more and more companies are turning to integrated archiving solutions that let them manage documents in a more secure and structured manner. Combined with a workflow solution, a documentmanagement system enables companies to process information more efficiently and to support decision-making processes more effectively. Building IT-supported, collective organizational memory systems has been identified as one of the key challenges to improving organizational decision-making and achieving better organizational performance (Stein & Zwass, 1995; Stohr & Zhao, 2001; Ba, Lang, & Whinston, 1997). The role of computer networks as an enabling technology for effectively collecting and distributing organizational knowledge has been widely discussed (Scott, 1998; Watson Smith, Narasimhan, & Rhee, 1998; Klamma & Schlaphof, 2000; Holsapple & Joshi, 2001). Meanwhile, research in workflow management has shifted focus from organizational efficiency to organizational effectiveness. That is, aside from efficiency gains through process automation, workflow management is increasingly seen as a backbone technology to support knowledge-centric activities in organizational environments (Stohr & Zhao, 1998; Lang & Zhao, 2000). Workflowsupported information flow and distribution applications within (Zhao, Kumar, & Stohr, 2001) and across (van der Aalst, 2000) organizational boundaries have been analyzed and discussed. This paper presents the case of a workflow-enabled software application system that collects information-rich business process documents, stores them in an organizational memory system, and informates staff and management in various decision-making situations. The IT management was able to document and report organizational performance improvements in terms of both process efficiency and knowledge effectiveness. Combining SAP R/3 as the workflow machine and IXOS-ARCHIVE as the knowledge repository of the organizational memory system enabled the organization to explore powerful options in organizational knowledge distribution.1 The R/3 system, with its comprehensive and modular infrastructure, plays a strategic role in many companies. Most business applications of SAP R/3 relate to enterprise resource planning (ERP), but high availability, relatively familiar interfaces, and powerful communication technology make R/3 also a viable platform for integrating business documents, managing business processes, and supporting decision-making tasks. The system contains a component called SAP Business Workflow that can represent electronic documents, define workflows and tasks, and execute and coordinate business processes (Rickayzen, Dart, Brennecke, & Schneider, 2002). Whether e-mail, graphic images, host files, Web documents, or traditional printed documents, a business document system allows an enterprise to archive its entire collective memory electronically—permanently and in auditable form. It can integrate an archive with organizational processes, thus effectively creating an organizational memory Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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system (Stein & Zwass, 1995). A document archive manages large volumes of documents and enterprise-wide data, giving global access to both employees and authorized external business partners. Users can quickly and easily search, retrieve, share, forward, and reuse all the data and documents. Many companies use ERP systems to integrate and optimize business processes (Davenport, 1998). Documents are closely tied to organizational decision-making processes. Whether requests for bids, quotations, orders, delivery notices, or invoices, documents trigger or accompany business processes and provide essential information to decision-makers. Therefore, the integration and optimization of business processes includes letting authorized users view all the business documents related to a process on their desktops. For example, a sales manager should have easy access to all the invoices, orders, and correspondence that relate to his or her customers. To meet this need, IXOS Software and SAP jointly developed SAP ArchiveLink. This standard SAP R/3 component forms the interface between R/3 and the integrated archive system. An electronic archive provides authorized users access to organizational memory. Experienced SAP R/3 users can continue to use the familiar SAPGUI (a graphical user interface for SAP R/3). Other employees can use groupware products such as Lotus Notes or office applications such as Microsoft Office to interface with the SAP R/3 application. The possibility of adding Web-based browser interfaces was discussed, but was considered not critical because of the limited number of people who were to use the system initially. And since Web-interfacing was not included in the standard SAP system package that was deployed at the site, it was decided to defer the building of a browser interface until the SAP installation would be upgraded to a higher version that included that option. An optical document archive can streamline business processes and improve productivity by enabling workflow solutions based on electronic documents: incoming information can be more quickly recorded and forwarded to the appropriate people within and outside the company. This lets employees make better decisions, because they have access to relevant and correct information at the right time. And since they can find important documents more quickly, they can respond to customer inquiries more quickly and accurately. Better-informed employees, customers, and business partners, who are in turn able to better coordinate with each other, results ultimately in better organizational performance and increased organizational effectiveness.

CASE DESCRIPTION In 1999, the invoice management and verification process, a large-scale process with an annual volume of some 80,000 incoming invoices, was chosen as the prototype business process to be linked to the organizational memory system. The implementation commenced in 2000, supported by an external software consulting firm, and took several months, followed by extensive testing and trial. Automating the invoice verification process would also significantly shorten the time required for process execution. The conventional invoice-management process was characterized by both long transportation and idle periods of the paper documents en route, as well as having been resource and time consuming for supporting tasks like recording and archiving each step in the process. To change that situation, the process of invoice management and verification was completely redesigned and automated using the SAP Business Workflow module. Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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All process documents were completely digitized in the new design. Incoming invoices, for example, were scanned centrally and then electronically sent to the bookkeeper using SAP Business Workflow. In the accounting department, the bookkeeper can have a look at the scanned document via the Archive Viewer and decide how to route that invoice. Another workflow task module is triggered if an invoice and its corresponding purchase order do not match properly. Now the bookkeeper identifies the responsible purchasing officer, and routes the verification task document, which includes links to the archive, to the responsible person immediately. The purchasing officer can then annotate the archived documents as necessary and make the decision to release (or withhold) the invoice so that the invoice can be paid. The notes and annotations made to the scanned invoice are logically assigned to that invoice and electronically signed by the purchasing officer. This method generates a transparent invoice process history.

System Implementation All digitized documents have to be stored in organizational memory, that is, in our case in the IXOS archive system, and they have to be accessible to all people with a relevant interest. To accomplish this goal, several options supported by the SAP software concerning the archiving incoming original documents were considered: • Late Archiving: Archiving occurs after the SAP document has been entered. • Concurrent Archiving: Archiving occurs while the SAP document is processed. • Early Archiving: The incoming original document is first archived and, in a second step, assigned to a particular SAP document. Early Archiving was the solution chosen for this case, which deals with more than 80,000 incoming invoices annually. With this method one can expect the best speed-up factor for the invoice management process. New documents are scanned at once when they arrive at the central mailing room. A clerk then enters the digital document, classified Figure 1: System Environment for Early Archiving

Jukeboxes

Scan-Client Archive-Server

Interface ArchiveLink

Research-Clients (regular PC) SAP R/3 System

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by document type, into the electronic archive. A pre-designed workflow, depending on the document type, is started for further processing. Figure 1 shows the general system environment necessary to implement Early Archiving with SAP Business Workflow.

Process Analysis A deep understanding of all the business processes involved is essential when implementing complex workflow solutions. Understanding and analyzing the invoice verification process with all its ramifications and idiosyncrasies, for example, was a timeconsuming job requiring close cooperation between system analysts and task managers. To give an overview, the traditional, manual process can be described as follows. Most of the incoming invoices are received at the company’s internal mailing room. A mail clerk opens, sorts, and counts all the invoices. Next, an accounting officer looks at the invoices and assigns and distributes them, according to some internal rules, to the particular bookkeeper in charge, who is then in charge of processing the invoice. A bookkeeper can process 60 invoices daily on average. The bookkeeper enters the invoice data into the SAP R/3 system. If the invoice and the related purchase order match (in value and received items), a payment order is issued and the invoice is paid, which in fact ends the invoice verification workflow in this case. On the other hand, if the invoice does not match with the related purchase order, or if there is no purchase order at all that is related to the invoice,2 the bookkeeper annotates the invoice document and makes a hardcopy. In the absence of a purchase order, the bookkeeper has to find an authorized employee who is able to verify the invoice (for example, for pizza ordered for a meeting two weeks earlier). Once the origin of the purchase is found, the hardcopy is sent by internal mail to a clerical officer in the corresponding department. The clerk identifies the responsible cost center manager. Depending on the nature and value of the invoice, there could be more than one cost center manager for covering the purchase. Once the cost center manager is identified, a clerical worker makes another copy of the invoice (actually a copy of a copy of the invoice) and forwards it. Now, the cost center manager verifies the invoice or asks for a credit note on his copy of the invoice. To be on the safe side, the clerk makes an additional copy (including the notes of the cost center manager) and finally sends all the documents back to the bookkeeper. Based on the notes on the invoice copy, the bookkeeper processes the invoice or asks the creditor for a credit note. Finally the invoice, together with the copies and annotations, are stored in the archive. The diagram in Figure 2 illustrates the traditional invoice verification process. A number of obvious flaws regarding efficiency, transparency, and speed in managing the manual invoice-verification process can be identified: • The invoice verification is slow and resource-intensive. It involves several people and it takes on average four to five weeks to complete. • The distribution and transportation by internal mail is slow and expensive. • The invoice documents are not circulated in a predefined way. • There are multiple versions of the same invoice with different annotations in circulation. • To find a stored invoice in the archive takes a lot of time (at least 2-3 hours). Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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Figure 2: Traditional Invoice Verification Process R/3 R/3 DB

R/3 App Srv

R/3 GUI

Post Office • Open • Sort • Count

Accounting Secretary • Count • Check • Distribute

Bookkeeper • Data entry • Stamp • Copy • Store • Send • Link original and copy

Responsible Department • Identify Cost Center Manager • Copy • Forward

Cost Center Manager • Verify • Make notes • Forward

Archive • Store • Research for requests

Process Redesign A set of criteria was defined in order to facilitate the design of a more effective, automated workflow. The processes should be free of redundancy and structurally predefined. This requirement is necessary to translate and represent the physical, realworld process as SAP Business Workflow elements. Since SAP Business Workflow is based on event-controlled process chains, it is essential that every step in the invoiceverification process can either be expressed by an event or through a process. It is also essential that every decision that needs to be made during the execution of the process can be expressed by using the IF…THEN… control structure. For example: IF value of invoice > $1,000, THEN department head has to verify the invoice. In addition to the technical requirements, the new processes have to comply with requirements set by accounting principles and the German tax regulation. For example: • All incoming invoices and credit notes have to be scanned at one central scanning station. • The electronic image documents must be clearly and completely readable after scanning. • After scanning, the documents have to be transmitted to the bookkeeper immediately. • There must be a definite link between the document and the related transaction in SAP R/3. • It must be possible that all notes and annotations made on the archived document can be related to a specific user (by digital signature, for example). Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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All archived documents have to be accessible and displayable for at least 10 years.

Based on these requirements, the basic process structure for each working station involved in the invoice verification process was designed as follows:

Mailing Room There are no major changes for the employees in the mailing room. They open all incoming invoices, presort and count them. After that, a clerk from the scanning station comes and picks up all the invoices.

Scan Station The employees at the scan station sort the incoming invoices by creditor and scan them (Figure 3). The IXOS software requests a check after completing the scanning. The quality and quantity of the scanned invoices has to be checked by the staff to ensure every invoice is scanned and every scanned invoice is readable. Next, the scanned invoices are sent to the corresponding bookkeeper. Every bookkeeper is responsible for a certain range of creditors (for example, bookkeeper X may be responsible for creditors whose names start with M–O). This makes it easy for the staff at the scanning station to assign the appropriate bookkeeper to the invoices. After sending the scanned invoices to the bookkeeper, the scan queue at the scan station is processed and the bookkeeper can instantaneously find the referred work items in his or her integrated inbox.

Figure 3: Ixos Scan Client: Depiction of Sample Invoices

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Figure 4: Sap R/3 and Ixos Archive Viewer Screen Showing a Sample Invoice for Further Processing

Bookkeeper The bookkeeper now opens his or her integrated inbox in SAP R/3 and starts processing the work item (Figure 4). When executing the work item, the R/3 system opens a window to enter the invoice data into R/3 and automatically starts the IXOS-Archive viewer showing the scanned invoice. All bookkeepers have very large computer screens (at least 21 inches) to work comfortably with both windows simultaneously. Now the bookkeeper enters the invoice data into the SAP R/3 system. If the invoice and the related purchase order match, then the invoice is automatically paid and the invoice verification process is completed. If, on the other hand, the invoice does not match with the purchase order, or if the purchase order is missing, the R/3 system creates a new workflow that is designed to handle these cases. The workflow system then determines through role decomposition the possible employees in charge of the further processing based on the organization model included in SAP R/3, or based on certain run-time parameters (for example, customer or invoice id number). The corresponding work item, including the link to the archived document, is sent to the Integrated Inbox of the SAP Service Point (SSP). A new position is created in each department for this purpose. Usually, a departmental secretary takes this position and is often referred to as the SSP in this function. In order to correct possible clerical errors in the assignment of original documents, the bookkeeper has the option to make the necessary changes. When the invoice is processed, the bookkeeper generates a corresponding SAP document and establishes the link to the original document in the archive. As a result, the archived original document is available for all subsequent working steps of the entire process chain with a single click. Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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SAP Service Point (SSP) The SSP officer finds all the invoices that need verification in her Integrated Inbox. By executing the work item, the Archive Viewer starts and shows the scanned invoice. Additionally, the officer is asked to make a decision and to send the document to the selected manager, either by SAP Business Workflow or by traditional e-mail. If the manager is a SAP user, he or she will get the invoice via Workflow, but in most cases the manager is not an active SAP user. In those cases, IXOS Archive allows the manager to send archive links via regular e-mail. Once the manager has made a decision, the SSP sends the work item back to the bookkeeper or asks the creditor for a credit note.

Cost Center Manager The cost center manager, who is authorized to verify the invoice, finds a link to the scanned document either in the SAP Integrated Inbox or e-mail inbox. By double-clicking on the link, the Viewer starts and the manager can see the invoice document. Now he or she can make a decision and make the appropriate comments and annotations on the document. Finally the manager sends the document back to the SSP. Figure 5 illustrates the newly defined invoice-verification process. Process abstraction constitutes the basis for the definition of a workflow within the SAP R/3 system. In a first step, one has to identify which parties and user groups are involved in the entire invoice verification process. Looking at Figure 6 from a process point of view reveals the following scheme.

Figure 5: Redesigned Invoice Verification Process: Workflow Definition

IXOS

R/3

R/3 Workflow R/3 App Srv

DMS Srv.

R/3 DB

IXOS Scan Client Scan Station

Post Office

R/3 GUI

R/3 GUI

Difference

via e-mail

yes

Bookkeeper

SSP

yes

Invoice OK

Cost Center Manager no

Asking for a credit note

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Figure 6: Process View at the Invoice Verification

Integrated Inbox Bookkeeper

Incoming Inv oices

Inv oice Scanning

Intergrated Inbox SA P Serv ice Point

Inv oice Entry

Invoice Coordination

E-mail Inbox M anager

Inv oice Verfication

SA P R/3

IX OS A rchiv e

Figure 7: Event View at the Invoice Verification Process Bookkeeper

SSP

Manager

START

Start Data Entry Execute Identify SSP Execute

Invoice ok / not ok? ok not ok

Complete Data Entry Execute

Verfify Invoice Make Annotations

Invoice denied Ask f. CN Reverse

END

END Enter Credit Note Execute

END

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After designing the system view, one has to define the processes and the events necessary to trigger these processes. At this point it becomes clear how important a thorough understanding of every step and decision made in the process is. Defining an appropriate event view of the invoice verification process is an essential success factor of the entire workflow development. Figure 7 shows such an event view based on the abstractions depicted in Figures 5 and 6. Such an event view has to be created for every possible scenario. After creating all the views, one can start to implement the views as SAP Business Workflow Definitions. A Workflow Definition has to be created for each process that needs be automated with R/3 and SAP Business Workflow. The workflow definition module in SAP uses the same method of event-controlled process chains that is implemented in the SAP reference models. The process models are an important component of the SAP reference model. They present a clear depiction, overviewing the relationships between the various business functions, the events triggering and linking them, the related information objects, and the acting organizational units. The SAP reference process models are therefore used as the starting point for the formal workflow definitions. In particular, they serve: • to show which functionality is already contained in the R/3 software; • to show how the functions in the business processes are related, by which events they are controlled, which events they produce; and • to identify where it is practical, useful, or necessary to make extensions. Besides the functions and events required in a business environment, a SAP Workflow Definition is composed of other steps and control elements such as: • sending and editing messages, • creating text documents and notes, • setting and monitoring deadlines, • escalation of overdue activities, • responding to processing exceptions. A workflow can activate predefined process models. It controls the activity flow, distributes and monitors work steps, interprets rules, supplies applications with parameters and data, and evaluates the results. The relationship between the SAP reference model and the SAP Workflow Definitions is determined by essential common aspects and by some important differences. The reference model provides a map of the R/3 functionality at the conceptual level. It accompanies the R/3 System and can be accessed via the SAP Business Navigator. The Workflow Definition describes a company-specific business process at the operational level. Unlike the reference model process views, the workflow definition can be executed. It is recommended to create an overall workflow definition first. Later on, one can create more detailed instances. Based on the invoice verification process definition given above, the Workflow Definition, shown in Figure 8, can be developed in the SAP Graphical Workflow Editor.

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Figure 8: Overall Workflow Definition for Invoice Verification Workflow gestartet

XOR

Create long Image key

Complete document

Long Image Key created

document completed

Select org. unit of cost center

Release/Reject parked document

XOR

Org. unit selected Release

ArchiveLink: Assign document type

Reject

END

Loop until it's released

Preliminary posting

XOR

Determine Fipp key Document rejected

Fipp created

Document released

Posting released doument

posted

Workflow beendet

Workflow beenden

System Deployment Once all processes are identified and described as SAP Business Workflow Definitions, the workflow solution can be implemented. A full implementation in a SAP R/3 environment usually has three steps and each step is executed on a different SAP R/3 system3: (1) The first step consists of development and testing. In this stage the Workflow Definition is created as described above. During the development it is very Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.

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(2)

(3)

503

important to involve the end users. Because of different backgrounds the end users (for example, the bookkeeper, the SSP, managers, and so on) often have expectations from a workflow solution that might differ quite a bit from those of professional SAP developers. Moreover, the end user can experience how the solution is growing and how her recommendations are taken into consideration. This increases the acceptance and the willingness to work with the new solution. The second step is an integration step. The entire workflow solution has to be migrated to an integration system. Ideally, the integration system is a mirror image of the production system. It is recommended not to change the Workflow Definition on that system. The integration step is mainly for training and testing purposes. When training the users in the invoice verification process, it is important to ensure that all participants understand both the entire process and their own tasks within this process, as well as the value created by doing their own tasks. Again, early involvement of the end users can increase employee motivation and satisfaction. The third step is to run the system in production mode. Before doing this, one has to ensure that everybody is well trained, and all required hardware and software is installed on the employees’ desktops. In business practice, there is usually only one attempt at going into production mode with complex systems. If that fails, there is a good chance that the project is abandoned all together. After releasing the new invoice verification process application, most of the users at first had to work harder than before. Many things were new to them and therefore took longer than expected. But after about eight weeks of running the new system, workloads had evened out and the users had completely adapted to the new process and could start to enjoy the benefits.

Implementation and deployment of the workflow-enabled invoice management system took four months. During that time, at least three experienced consultants worked full time on the project and a number of in-house staff were involved in supplementary tasks. One system administrator and one external developer supported the project. After deploying the system and launching the new application service, three more months of continuous fine-tuning and improvements were necessary. Overall, about 250 consulting days were billed for the entire project.

Organizational Performance After running the system for several months, the company achieved significant organizational performance improvements. Evaluating tangible performance measures resulted in the following efficiency gains (Grove, Jeong, Kettinger, & Teng, 1995): • Cycle-time reduction of the invoice-verification process by one week (20-25%). • Efficiency in the accounting department increased by 50% (now one bookkeeper can process 90 invoices a day instead of 60). • Reduction of amount of paper and shelf space needed (elimination of over 50,000 thick paper folders). • Reduction of manual archiving activities (more than 90% of all invoice documents are stored automatically in the archive system).

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To illustrate the improvements, one can use the following calculation. The company receives 80,000 invoices a year on average. Each invoice has several pages and there are at least two copies of each invoice. This generates approximately 1 million pages of paper a year. It amounts to about 5,000 folders a year, assuming one can store 200 pages in one traditional office folder. Since the invoices by law need to be kept for at least 10 years, the archive needs to store about 50,000 invoice folders. Upon request, it typically took two to three hours to find and manually retrieve a particular invoice in the traditional paper archive. Using the newly introduced computer system, no more office folders were needed and any particular invoice document can be retrieved within seconds. Besides increased organizational efficiency, the project also resulted in a more effective use of business intelligence by organizational decision-makers. This applies to tasks that revolve around the invoice-management processes, but also extends to other tasks and decisions that benefit from the system. The main benefits of the invoice management system in terms of organizational effectiveness can be summarized as follows: • more transparency in the decision-making process; • better decision quality in the invoice approval process; • all people involved in the invoice verification process have access to the same document (no secondary archiving); • non-technical and casual R/3 users can participate in the workflow-management process by email and access the organizational memory via simple request forms; • high quality of archived documents (no more copies, or copies of copies); • consistent and safe storage of archived documents (including backups); and • independent of the invoice verification business process, employees can access the organizational memory system and retrieve organizational knowledge for reuse in a different context. Based on the results of the project, the following key success factors for implementing the workflow-supported invoice management system can be identified: • detailed identification and deep understanding of all sub-processes involved; • involvement of all people participating in the process already in the test and development stage; • suitable visualization and improvement of processes; • comprehensive education, training, and extensive support before and during the productive stage; • combination of DBMS and SAP ensures a complete system integration; • technical infrastructure (SAP and Intranet) to cover non-R/3 users; and • commitment and support from the top management.

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CURRENT CHALLENGES FACING THE ORGANIZATION By itself, the project of implementing an automated, computer-supported invoice management system can certainly be considered a success. The project stayed within the anticipated budget and was completed on time. The delivered system supports all the functions required for invoice management, and the users have adopted the system and use it effectively in their work. However, the implementation did not go without some problems, and the successful adoption of the invoice management systems without doubt will depend on how the organization is addressing the remaining challenges it is still facing. The main challenges can be grouped into three areas: people, extensions and integration, and changing IT infrastructure. (1)

People—Business processes are very much emphasized in SAP application systems: Documents are uniquely linked with specific SAP objects, such as requests or quotations. In addition, documents can be assigned to multiple objects. To access a document in the R/3 system, users normally need specific technical knowledge about the relevant pieces in the R/3 application. It is difficult to keep track of logically related documents. This means that it is practically impossible for novice or casual R/3 users to perform even simple tasks like retrieving a specific document. This, unfortunately, prevents a large number of employees from effectively using an enterprise-wide SAP knowledge base. Everyday business tasks, on the other hand, call for document-based access methods for information retrieval. Examples are an accounting clerk who needs to see all the invoices sent in the last 30 days, or a sales employee who needs an overview of all the offers sent to customers. In cases like these, the employee should not really need to know about the underlying business processes and their representation in SAP; they merely need access to the information in the organizational memory system in a way that is easy and useful for them. While enough resources and support was made available to train the core staff well so that they are able to effectively use the system, it remains problematic to assign substitute or new staff to working with the system. Furthermore, a large number of employees not directly involved with invoice management could benefit from occasionally and casually accessing the organizational memory of the system, to gather some information they may need for a variety of tasks. However, the system is not really designed for novice users, which makes it hard to use for people unfamiliar with SAP software.

(2)

Extensions and Integration—Naturally, the gains in organizational effectiveness would increase if business processes other than invoice-management were automated and linked to the organizational memory. The company plans to consider automating and integrating other business processes in the near future, if the positive early experience holds up. However, a preliminary examination of this issue has indicated that the complexity of integrating other business processes, slated for process automation, into one integrated workflow-supported application that feeds into the same organization memory system is substantial. The management is now pondering whether it might be more reasonable to consider separate

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implementation of the new workflow solutions with simple data exchange mechanisms for communicating and interacting across different workflow applications, or to stick with the original plan of extending the current invoice management system and incorporating additional workflows, and thus developing an integrated enterprise solution. Conceptually, a seamlessly integrated system supporting cooperating workflows across functional boundaries within the organization would be the preferred choice, but at the same time, the failure risk of such an implementation and uncertainties about return on investment might preclude such a decision. (3)

Changing IT Environment—The current system was developed and implemented as a SAP application within the conventional SAP environment for enterprise resource planning. Meanwhile, more and more organizational applications are developed as intranet solutions with standard Web browsers as the user interface of choice. It has become desirable or even necessary to provide users of the invoice management system with a Web-based interface as well. Newer SAP software product family versions like the mySAP Business Suite include a SAP Web Application Server and in fact offer that possibility. But nevertheless, some major upgrade and redevelopment would be necessary to run the invoice management system over the company’s intranet.

ACKNOWLEDGMENT The author could not have written this case without the help of Mr. Marko Schmidt (MBA 2001) who conducted, as part of an independent study as my student at the Hong Kong University of Science & Technology, the basic case research and provided most of the diagrams presented in the case.

ENDNOTES 1

2

3

See http://www.sap.com for detailed descriptions of SAP software products. The IXOS archiving system is described in more technical detail at http://ixos.de. It is quite common that there is no purchase order for low-value products like flowers, for example. A standard SAP R/3 environment consists of a test, integration, and production system.

REFERENCES Ba, S., Lang, K.R., & Whinston A.B. (1997). Enterprise Decision support using intranet technologies. Decision Support Systems, 20(2), 99-134. Davenport, T. (1998). Putting the enterprise into the enterprise system. Harvard Business Review, (July-August), 121-131.

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Grove, V., Jeong S.R., Kettinger W.J., & Teng T.C. (1995). The implementation of business process reengineering. Journal of Management Information Systems,12(1), 109-144. Holsapple, C.W., & Joshi, K.D. (2001). Organizational knowledge resources. Decision Support Systems, 31(1), 39-54. Klamma, R. & Schlaphof, S. (2000). Rapid knowledge deployment in an organizationalmemory-based workflow environment. In Proceedings of the 8th European Conference on Information Systems (ECIS 2000), Vienna, Austria, pp. 364-371. Lang, K.R., & Zhao, J.L. (2000). Reengineering distance learning in electronic markets. Journal of Organizational Computing and Electronic Commerce, 10(2), 103-128. Rickayzen, A., Dart, J., Brennecke, C., & Schneider, M. (2002). Practical workflow for SAP—using SAP’s WebFlow engine. City: SAP Press. Scott, J.E. (1998). Organizational knowledge and the intranet. Decision Support Systems, 23(1), 3-17. Stein, E.W., & Zwass, V. (1995). Actualizing organizational memory with information systems. Information Systems Research, (2), 85-117. Stohr, E.A., & Zhao, J.L. (1998). The Expanding mission of workflow technology. Document World, 3(5), 21-26. Stohr, E.A., & Zhao, J.L. (2001). Workflow automation: Overview and research issues. Information Systems Frontiers, 3(3), 281-296. van der Aalst, W. (2000). Loosely coupled interorganizational workflows: Modeling and analyzing workflows crossing organizational boundaries. Information & Management, 37, 67-75. Watson Smith, M.B., Narasimhan, S., & Rhee, H.S. (1998). Communication and coordination in the virtual office. Journal of Management Information Systems, 14(4), 728. Zhao, J.L., Kumar, A., & Stohr, E.A. (2001). Workflow-centric information distribution through e-mail. Journal of Management Information Systems, 17(3).

BIOGRAPHICAL SKETCH Karl Reiner Lang is Associate Professor in Information Systems at the Zicklin School of Business, Baruch College, City University of New York (CUNY) in New York City. He received his MBA from the Free University of Berlin, Germany, and holds a PhD in Management Science from the University of Texas at Austin, USA (1993). Prior to joining Baruch, he was teaching courses on Information Technology at the University of Texas at Austin, the Free University of Berlin, the Hong Kong University of Science & Technology, and the Wharton School of Business at the University of Pennsylvania. His research interests include management of digital businesses, decision technologies, knowledge-based products and services, and issues related to the newly arising informational society. His recent publications have appeared in research journals such as the Journal of Management Information Systems, Annals of Operations Research, Computational Economics, Journal of Organizational Computing and Electronic Commerce, and Decision Support Systems.

Copyright © 2004, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.