© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Chapter 2 Business Processes, Information, and Information Systems Chapter 2

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke This Could Happen to You In order for Dee to get a budget approved for the blog she needs to: – Provide specific details – Provide answers to: How will this blog impact the sales process? How will the salespeople use it? How will it help gain sales? What else will the CFO want to know? 2-2

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Study Questions Q1: How did this stuff get here? Q2: What is a business process? Q3: What are the components of a business process? Q4: What is information? Q5: What is the role of information in business processes? Q6: How do information systems support business processes? 2-3

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q1: How Did This Stuff Get Here? Business processes must work together as an integrated system for a Business to be successful. A business must: – Obtain payments for its goods and services – Cover costs – Make profit 2-4

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q2: What Is a Business Process? Business process is a network of: – Activities (processes) – Resources (inputs) – Facilities (inputs) – Information (both inputs and outputs) Processes interact to achieve business objectives 2-5

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q3: What Are the Component of a Business Process? Activities – transform resources and information of one type into resources and information of another type. Resources – items of value, such as customers, suppliers, employees, distributors, and so on Facilities – structures used within resources. Ex: inventories, databases, factories, vehicles (Plant & Equipment) Information – activities use information to know how to transform inputs to outputs. 2-6

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Portion of Inventory Management Business Process 2-7 Figure 2-1

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Activities Transform resources and information from one form into another Follow rules and procedures Can be manual, automated, or combination Example: – Payment (activity) transforms QuantityReceived (information) and ShippingInvoice (information) into PaymentToSupplier (resource) 2-8

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Resources Items of value Examples: – Customers – Suppliers – Raw Material – Products 2-9

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Facilities Structures used within business process Places where things are produced or stored, or equipment, machines, buildings Examples: – Inventories (? Warehouse?) – Databases – Factories – Equipment 2-10

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q4: What Is Information? Definitions : Knowledge derived from data (Information?) Data processed and presented in meaningful context Data processed by summing, ordering, averaging, grouping, comparing, or other similar operations Information is “a difference that makes a difference” 2-11 DataProcessesInformationKnowledge

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Characteristics of Good Information 1. Accurate –Correct and complete 2. Timely –Produced in time for intended use 3. Relevant to both: –Context –Subject 4. Just Barely Sufficient –“Tell me all I need to know and no more” Einstein. 5.Worth its cost 2-12

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q5: What Is the Role of Information in Business Processes? Business processes generate information by giving context to data. Data – Quantity Ordered, Quantity Received, Quantity Invoiced Process – Vendor Payment (3-Way Match) Output – Discrepancy? (“the difference that makes a difference”) – Payment? 2-13

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q6: How Do Information Systems Support Business Processes? IS supports activities in a business process –Several activities may use one information system –Activity may have own information system –Activity may use several information systems 2-14

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Portion of Inventory Management Business Process 2-15 Figure 2-1

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke What Does It Mean To Automate a Process Activity? 2-16

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke An Information System to Support Counter Sales 2-17 Figure 2-4

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke An Information System to Support Payment 2-18 Figure 2-5

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke An Information System to Support Purchasing 2-19 Figure 2-6

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Order Approval Process 1-20

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke How Does the Knowledge in This Chapter Help Dee and You? After reading this chapter, Dee and you should: –Understand the need for business processes, the importance of process design, and the role that information systems play in support of these processes –Be able to create process diagrams to show information needed –Understand the usefulness of blogs as a facility that contains information that makes a difference –Be able to answer the three questions Dee’s boss asked 2-21

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke How Does the Knowledge in This Chapter Help Dee and You? (cont.) How will this blog impact the sales process? How will the salespeople use it? How will it help gain sales? 1-22

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Sales Process Activities Customer Call Customer Order Customer Delivery Customer Invoice Customer Payment Customer Service Resources Customers Call Reports Products Sales People Facilities Customer/ Product Databases Inventory (Warehouse) Customer Site Sales Office Information Customer Needs Promotional Terms Pricing Product Availability Shipping Alternatives 1-23

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Active Review Q1: How did this stuff get here? Q2: What is a business process? Q3: What are the components of a business process? Q4: What is information? Q5: What is the role of information in business processes? Q6: How do information systems support business processes? 2-24

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Chapter Extension 3 Information Systems and Decision Making

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q1:How do decisions vary by level? Q2:What is the difference between structured and unstructured decisions? Q3:How do decision level and decision process relate? Q4:What is the difference between automation and augmentation? Q5:How does IS support decision steps? Study Questions CE 3-26

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q1: How Do Decisions Vary by Level? CE 3-27 Decisions occur at three levels 1.Operational Day-to-day activities Transaction processing systems (TPS) 2.Managerial (Tactical) Allocation and utilization of resources Management information systems (MIS) 3.Strategic Broader-scope, organizational issues Executive information systems (EIS)

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Structured decisions –Understood and accepted method for making decision –Examples of structured decision processes: Formula for computing reorder quantity Allocating furniture and equipment to employees Unstructured decisions –No agreed-on or standardized decision-making method –Examples of unstructured decision processes: Predicting direction of economy or stock market How well suited an employee is for a particular job Q2: What Is the Difference Between Structured and Unstructured Decisions? CE 3-28

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q3: How Do Decision Level and Decision Process Relate? 1.Operational-level decisions usually fairly structured and short time horizon 2.Mid-level (control and tactical management) usually semi-structured and medium time horizon 3.Strategic-level decisions usually highly unstructured and long time horizon CE 3-29

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Decision Support in Business CE3-30 DecisionStructured/ Unstructured Org. Level Choose a Supplier based solely on price? Expand into Eastern Europe? Prepare an Income Tax Return?

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Relationship Between Decision Level and Decision Process CE 3-31

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q4: What Is the Difference Between Automation and Augmentation? Automated information system –Hardware and program components do most of the work IS computes quantity of items to order by monitoring inventory levels or production plans Augmentation information system –Humans do bulk of work –Systems support work done by people , instant messaging, videoconferencing CE 3-32

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q5: How Does IS Support the Steps in Decision Making? CE 3-33

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Q1:How do decisions vary by level? Q2:What is the difference between structured and unstructured decisions? Q3:How do decision level and decision process relate? Q4:What is the difference between automation and augmentation? Q5:How does IS support decision steps? Active Review CE 3-34

© 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Chapter Extension 3 Information Systems and Decision Making