6 Class 6 Organization in Process View MIS 2000 Information Systems for Management Bob Travica Updated Jan. 2016

Outline Organization and process Concept of Process Business (Organizational) Process Management in process view Operational & strategic processes Process Design Process Performance Process optimization IS, Process Design & Performance (part) Summary Organization in Process View PRoc & Roll 2 of 19

Organization Most apparently, organization* is a collection of people with particular expertise, which delivers a certain product (good or service). From process perspective taken in this course, organization is a set of business processes that altogether deliver a certain product. Processes contain data – some managed via IS, some manually. Organization in Process View Management Process Marketing Process Production Process Accounting Process IS Development & Maintenance Process Supply Process Organization HR Process Sales & Delivery Process Research & Development Proc. 3 of 19

General Concept of Process Process is a set of activities connected from a start to an end point. Process is similar to procedure, but usually larger in scope and it contains procedures. An example of process with typical components: Organization in Process View Pick a class Do readings Think + Make notes Learned enough? No Have a drink + Be happy! Yes Activity Decision activity (point) Flow Start End 4 of 19

Business or Organizational Process Definition: Business process is a set of activities connected from a start to an end point, which delivers a product of a measurable value to a customer (internal or external). Organization in Process View PRODUCTION PROCESS IN FACTORY (scheduling, assembly, quality control) StartEnd Customer (External) Buyer Value Deliverable Good for market Utility/Price, Timing, Quality HR PROCESS IN ANY ORG. (hiring, professional development, pay, wellness) (Internal) Employee Services for employees Timing, Quality 5 of 19

Strategic processes happen in some intervals (e.g., setting long-term goals, activities leading to materializing the goals); game plan. Operational processes make regular, everyday work. Resemble moves (step patterns) in a game. Operational and Strategic Processes Organization in Process View Operational processesStrategic processes Daily “grind”, short time horizonOccasional activities, longer time Steps patterns, with small known variation (Routines) More variation in process IS are embedded in operations, provide necessary support IS support is partial (e.g., decision making as part of planning) 6 of 19

Management in Process View From the process perspective, managers’ focus should be on BP management (BPM) From the process perspective, managers’ focus should be on BP management (BPM) Management goals are Management goals are (a) meet business process performance standards goals (a) meet business process performance standards goals (b) to raise these standards. (b) to raise these standards. Better process performs better Better process performs better Process performance influences organizational performance (financial outputs, innovation, customer service) Process performance influences organizational performance (financial outputs, innovation, customer service) IS are an instrument for the process improvement. IS are an instrument for the process improvement. Organizational Performance Organizational Performance Process Design Process Performance Information System 7 of 19

Design of Business Process Design aspects: How does a process look like? Design aspects: How does a process look like? CCCFIS: Composition, Coordination, Complexity, Flexibility, and IS. CCCFIS: Composition, Coordination, Complexity, Flexibility, and IS. 1. Composition: What is the arrangement of process steps? 1. Composition: What is the arrangement of process steps? Start Start Flow of steps Flow of steps Activity (data-transformation steps Activity (data-transformation steps or matter-related) or matter-related) Decision (choice-making step) Decision (choice-making step) Loop (repeating steps) Loop (repeating steps) End End ** Open Order Fill Order Deliver overnight Rush order? Deliver regularly Send Invoice Send Payment Reminder Payment received on due tae? Close Order yes no Process diagram for Customer Order Fulfillment (simple form) 8 of 19

Design of Business Process: Composition 1. Composition: What components do make a process? 1. Composition: What components do make a process? Ask: Ask: Are the steps defined accurately: activity names, decisions? Activities apply to data (order, invoice) and objects (delivery items). Are the steps defined accurately: activity names, decisions? Activities apply to data (order, invoice) and objects (delivery items). Do the flows make sense? Do loops (if any) make sense? Do the flows make sense? Do loops (if any) make sense? Are all components included? Are all components included? Composition errors are marked red in this diagram. Composition errors are marked red in this diagram. Organization in Process View Get Order Fill Order Deliver overnight Rush order? Deliver regularly Send Invoice Close Order yesno Fulfill Customer Order Process CCCFIS  9 of 19

Business Process Design: Coordination 2. Coordination: Dependencies between process steps and their contribution to the process deliverable. 2. Coordination: Dependencies between process steps and their contribution to the process deliverable. Ask: Ask: What are dependencies between activities in time (below) and quality of deliverables? What are dependencies between activities in time (below) and quality of deliverables? Dependencies are: Dependencies are: Sequential (A finishes, B starts) Sequential (A finishes, B starts) Parallel (A & B at the same time; saves process time).* Parallel (A & B at the same time; saves process time).* 10 of 19 Open Order Fill Order Deliver overnight Rush order? Deliver regularly Send Invoice Send Payment Reminder Payment received on due tae? Close Order yes no Check Old Orders Reduces coordination Fulfill Customer Order Process CCCFIS 

Business Process Design: Complexity 3. Complexity: The scope of business process. 3. Complexity: The scope of business process. Ask: Ask: What is the number process steps (activities and decisions) What is the number process steps (activities and decisions) Number of loops? Number of loops? Depth of process - are there sub-processes? (not here if the delivery step is handled by a another company; if internal, delivery steps may have some depth). Depth of process - are there sub-processes? (not here if the delivery step is handled by a another company; if internal, delivery steps may have some depth). Organization in Process View Open Order Fill Order Deliver overnight Rush order? Deliver regularly Send Invoice Send Payment Reminder Payment received on due tae? Close Order yes no Fulfill Customer Order Process CCCFIS  11 of 19

Business Process Design: Flexibility 4. Flexibility: The extent of variation in a process. Ask: Are there alternative steps? How many versions of process are there? Fulfill Customer Order Process analyzed in previous slides is a routine process (operation) with low variability coming just from the way delivery can be done. There are two versions of the process determined by two different delivery steps, so flexibility is 2 (very low). Strategic (Make Long-Term Plan, Develop New Product) Routine operations (e.g., Process Customer Order, Register Course) lowhigh variation 12 of 19 CCCFIS 

Business Process Design: IS 5. IS Properties: Coverage and characteristics of an IS built into a business process. * 5. IS Properties: Coverage and characteristics of an IS built into a business process. * Important aspects: Important aspects: The portion of process IS covers (system’s “footprint”) The portion of process IS covers (system’s “footprint”) What IT are used (computers, mobile devices, networks) What IT are used (computers, mobile devices, networks) Characteristics of user interface screens Characteristics of user interface screens Characteristics of databases (local vs., distributed) Characteristics of databases (local vs., distributed) CCCFIS  Organizational Performance Organizational Performance Process Design Process Performance Information System Non-functional characteristics Functionality Technological properties Information System Non-functional characteristics Functionality Technological properties 13 of 19

Process Performance Measurement Process performance can be assessed by this metrics: Process performance can be assessed by this metrics: CVTCIS: Customer Value, Time, Cost, and IS Performance. CVTCIS: Customer Value, Time, Cost, and IS Performance. Filtering criterion: Does a process serve useful organizational purpose? Filtering criterion: Does a process serve useful organizational purpose? There are odd processes surviving from the past. They may perform well but have no real purpose. There are odd processes surviving from the past. They may perform well but have no real purpose. 1. Customer Value – Characteristics of the process that matter to the customer (external or internal); see slide Customer Value – Characteristics of the process deliverable that matter to the customer (external or internal); see slide 5. CONS- UMER Inventory Manager Manuf. Manager Delivery Manager Inventory Manager 14 of 19

Process Metrics: Time & Cost 2. Time: What is the total time between the start and end point of a process? sum up execution times of all steps for parallel steps, take time of the longest step 3. Cost: What is the amount of expenditures in monetary figures? sum up costs for labor, materials, IS, other technologies, overhead 15 of 19CVTCIS  

IS Performance 4. IS performance influences process performance (performance booster): Non-functional characteristics of IS that reflect on process time and cost. 4. IS performance influences process performance (performance booster): Non-functional characteristics of IS that reflect on process time and cost. The most important IS characteristics is IS speed, which depends on many factors (speed of data processing, transfer, and retrieval; size of main memory) The most important IS characteristics is IS speed, which depends on many factors (speed of data processing, transfer, and retrieval; size of main memory) Another important characteristic is the IS reliability (small down time, recovering capability, security of data) Another important characteristic is the IS reliability (small down time, recovering capability, security of data)CVTCIS  Organizational Performance Organizational Performance Process Design Process Performance Information System Non-functional characteristics Functionality Technological properties Information System Non-functional characteristics Functionality Technological properties 16 of 19

Relationships between Process Performance and Organizational Performance The better a business process performs, the better the organizational performance. For example a faster and less costly process, improves the income to cost ratio (or decreases costs while usually enlarging the income). * 17 of 19 Organizational Performance Organizational Performance Process Design Process Performance Information System

Summary 1/2 Organization is a whole consisting of business processes that altogether deliver a certain product (good or service). Organization is a whole consisting of business processes that altogether deliver a certain product (good or service). Business process is a set of activities connected from a start to an end point, which deliver a product of a measurable value to a customer (internal or external). BP can be inside and outside of organizations. BP works with data and physical objects. Business process is a set of activities connected from a start to an end point, which deliver a product of a measurable value to a customer (internal or external). BP can be inside and outside of organizations. BP works with data and physical objects. The goal of managing organizations from the process perspective is to improve process performance and design, which leads to higher organizational performance. The goal of managing organizations from the process perspective is to improve process performance and design, which leads to higher organizational performance. There are operational and strategic processes. There are operational and strategic processes. Organization in Process View 18 of 19

Summary 2/2 Process design refers to process composition, coordination, complexity, flexibility, and IS (CCCFIS). Process design can be optimized with help of IS. Process design refers to process composition, coordination, complexity, flexibility, and IS (CCCFIS). Process design can be optimized with help of IS. Process performance can be measured in terms of customer value, time, cost, and IS performance (CVTCIS). Process performance can be measured in terms of customer value, time, cost, and IS performance (CVTCIS). IS is (a) part of organizational design (IS footprint), (b) helps optimize process design (optimizer role), and (c) influences directly process performance (performance booster). IS is (a) part of organizational design (IS footprint), (b) helps optimize process design (optimizer role), and (c) influences directly process performance (performance booster). Process performance influences organizational performance. Process performance influences organizational performance. Organization in Process View 19 of 19