Information Technology Management Business Processes

A Business Process According to Pearlson A beginning and end Inputs and outputs A set of tasks that turn inputs into outputs A set of metrics that turn inputs into outputs “This may seem like a simplistic model of a process, but the truth is that a process is simply a set of tasks that are done to effect transformation of inputs into outputs”

Typical business processes Examples of business processes include: Customer order fulfillment, Manufacturing planning and execution, Claim processing Stock trade Mortgage application processing Financial reporting Procurement Each business processes includes the following: A beginning and an end Inputs and outputs Sub-processes that turn inputs into outputs (Should include) A set of metrics for measuring effectiveness

Traditional Representation & Characterization of a Business Process Yes No Start Here End Here Or Follow the Arrows Drivers: Tasks & Sequence Characteristics Well Structured Linear Consistent/Standardized

Simple Procurement Process Receive requirement for goods/ services Create and send purchase order Receive goods Verify invoice Pay vendor

Mortgage Loan Workflow Process Sub-process Measure Home Rate Quality Identify Comps Analyze Value Input Address Output Value Input Complete Application Financial Status Appraisal Credit History Request Approval Approval/Denial Reject Title Search No Yes Output Complete Documents Close

What is the Value of Workflow Business Process Yes No Start Here End Here Or Follow the Arrows Define/Understand How Work Gets Done Streamline & Optimize to Increase Efficiency – Take out Time Cost Assure Quality Enable Automation

Information Systems Support Options Automate or support “as is” process Incrementally/continuously improve the process (Total quality management –TQM- is an example of this) Radically redesign before supporting ( Business process reengineering –BPR) Re-define the process to match package software process definition

Hierarchical Structure with “as is” Process View Functional groups within a firm tend to complete their portion of a process and “throw it over the wall” to the next group in the value chain. Supporting “as is” processes with IS perpetuates Duplicate information Communications problems Ineffective organizations

Managing from a Business Process Perspective Increases Efficiency & Effectiveness Functions Business Processes A process focus creates value by: Identifying the customers of processes Identifying these customers requirements Clarifying the value that each process adds to the overall goals of the organization

Incremental Change Mapping “as is” process Key Metrics Process engineers begin process mapping by defining the scope, mission and boundaries of the process Next, the engineer will develop a high-level”flowchart” (description) of the process. Next, he/she develops a detailed “flow diagram” (description) of everything that happens in the process. Key Metrics Customer Satisfaction Quality Operating Costs Revenue

Business Process Reengineering (BPR)

Enterprise Information Systems An enterprise system is a comprehensive software package that incorporates all modules needed to run the operations of a business (like ERP) It should include the following modules: Manufacturing Accounting Human resources Sales The most widely used enterprise system is offer by a German company, SAP. Among many competing products are those produced by PeopleSoft, Baan and Oracle.

Benefits of Enterprise Systems In an enterprise system, all information system modules communicate with each other, offering enormous efficiencies over stand-alone systems. For example, manufacturing and accounting may keep their own vendor records and these accounts are kept in somewhat different form. Implementing an EIS will also require that business processes be redesigned to achieve optimal performance of the integrated modules. The EIS has some flexibility as well, since, once developed it is a relatively simple matter to change parameters in a process.

When an EIS is appropriate Situations in which it is appropriate for an EIS to drive business process design include: When an organization is just starting out and processes do not yet exist. When an organization doesn’t rely on its operational business processes as a source of competitive advantage. When current systems are in crisis and there is not enough time, resources or knowledge in the firm to fix them. But it is not appropriate when the business derives strategic advantage from the processes that the EIS would support

What about Other Processes Product innovation Web site design Learning Executive decision to buy a company Complex system sales Development of an ad campaign Does this definition work? “This may seem like a simplistic model of a process, but the truth is that a process is simply a set of tasks that are done to effect transformation of inputs into outputs” Does the picture work?

Relationship Process Model Customer Request Performer Acceptance Performer Fulfills Customer Declares Satisfaction Source: Action Technologies

Putting Requests and Responses Together

Compare the Pictures Push Pull Efficient Reduces cost Reduces time Improves Quality Push Task Driven Flexible Increases customer satisfaction Enables innovation Pull Relationship Driven

Business Process Definition: Recurrent set of business rules that is linked to other processes through an interface Recurrent: If it is not done over and over than it is just a decision and why invest resources to do it well Business Rules: This is the structure of the process that defines how the business handles a request Interface: The linkage to other processes Source:Peter G.W. Keen

Business Strategic Context Future State Current State

Could We Combine the Best of Both Worlds? Flexibility & Efficiency

We Need a Business Services View of Processes to Create Flexibility New Business Services Custom Business Services Customers Contracting & Fulfillment Manager Standard Business Services

Relationship View of Processes Customer Business Services Contracting & Fulfillment Manager Relationship Collaborative Contracting Proxies (Authority) Events (Dynamics) Fulfillment Contract Boundaries Define Business Services Inputs & Outputs Workflows within Business Services for Efficiency

We Need a Relationship View of the Loan Process Home Improvements Insurance Documents Credit Appraisal Approval Customers Apply Title Contracting & Fulfillment Manager Other Services

Loan Process Based on Relationships & Events Appraisal Title Financial Checks Apply Quick/Complete/ Existing Customer Customer New Services Contracting & Fulfillment Manager Approval Pre & Post Document Business Services