Enterprise Business Processes and Applications (IS 6006) Masters in Business Information Systems 2008 / 2009 Fergal Carton Business Information Systems

Last week Assignment dates discussed, will be aligned with other MBS BIS dates What is a business process? Exercise: getting a loan, document the process Use of examples in assessed work

This week Exercise: loan process –What are the characteristics of a process? –Why did sub-prime crisis arise? Process definitions Types of processes Meaning of integration? What is an enterprise application? Why automate business processes?

Getting a loan Apply for loan Provide personal profile information Run checks on credit worthiness Calculate repayment capability Check references and liquidity Obtain collateral Interview Approve loan Lodge cash to account

What is wrong with current banking processes? Risk taking is highly rewarded in investment banking? Huge bonus payments for winners (€1m+) Over focus on credit targets? Poor insurance of bad debt, or re-sold insurance? Loss of tracability of original transactions? Repackaging credit loses granularity? Totally virtual, no physical element? Didn’t vet customers?

Process mapping criteria Represents a transformation Must be clear: one A4 sheet Should eliminate ambiguity Workflow or automation Has rules

“Kicking the tyres” of a process What is unique about this process? Is there seasonality? What happens to the process under duress? What are customers complaining about? What are competitors doing? Is the business model changing? –Is the way of doing business evolving?

A process is … a systematic series of actions directed to some end: to devise a process for homogenizing milk. a continuous action, operation, or series of changes taking place in a definite manner: the process of decay.

To process means … to treat or prepare by some particular process, as in manufacturing. to handle (papers, records, etc.) by systematically organizing them, recording or making notations on them, following up with appropriate action, or the like: to process mail.

In business, a process is … A sequence of tasks which completes one cycle of any business activity –Manufacturing a product –Selling a product –Purchasing raw material –Creating a Fixed Asset Register –Paying a supplier –Shipping a product –…

Job shop vs. assembly line Quality vs. quantity Car manufacturer Sprinkler systems Computer storage products …

A process requires … Someone to carry it out … Some parameters … Some master data … Some communication … Some deadlines …

Sample processes … Registering as a student Buying and using top-up credit for phone Registering as a user for on-line services Getting educated Moving house …

Process characteristics Has to meet a particular requirement Has to be sustainable Should be efficient Clear responsibilities Uses information systems intelligently

Porters value model

3.1 Develop strategic supplier relationships 3.2 Identify, qualify and select suppliers 3.3 Plan rqmts for product, spares, subassemblies & components 3.4 Procure product, spares, subassemblies & components 3.5 Expedite, receive and disposition materials 3.6 Manage the product RMA process 3.7 Approve and pay 1.1 Conceive new products 1.2 Design New Products & Features 1.3 Build Prototype for feasibility study & business case 1.4 Develop software & establish test procedures 1.5 Integrate new product into organization 1.6 Manage the product life cycle 2.1 Develop marketing strategy 2.2 Develop product strategy 2.3 Launch new products & features 2.4 Develop & conduct marketing programs 2.5 Establish strategic alliances & partnerships 2.6 Acquire, qualify and refer leads 2.7 Develop proposals, solicit orders and close deals 4.1 Assemble test & integrate products 4.2 Receive & process orders 4.3 Allocate, configure & ship customer orders 4.4 Install, establish final configuration and test equipment at customer site 4.5 Bill & collect money 5.1 Prepare svcs and spares strategy 5.2 Remotely monitor customer product performance; diagnose & remedy problems 5.3 Provide post- installation customer service 5.4 Manage customer warranty and maintenance programs 5.5 Provide customer training & education 6.1 Develop strategic plans and establish operating goals 6.2 Develop Budgets 6.3 Manage the BRM process 7.1 Forecast, measure and report financial & operating goals 7.2 Procure capital items/leases & other goods & services 7.3 Recruit, hire & retain employees 7.4 Deliver total compensation to employees 7.5 Acquire product patents & copyrights 7.6 Plan for and Deliver facility & infrastructure requirements 1.0 Develop New Products & Features 2.0 Position & Sell2.0 Position & Sell 2.0 Position & Sell2.0 Position & Sell 4.0 Fulfill Sales Order4.0 Fulfill Sales Order 4.0 Fulfill Sales Order4.0 Fulfill Sales Order 5.0 Service Aftermkt5.0 Service Aftermkt 5.0 Service Aftermkt5.0 Service Aftermkt 6.0 Exec. Planning Cycle6.0 Exec. Planning Cycle 6.0 Exec. Planning Cycle6.0 Exec. Planning Cycle 7.0 Support Enterprise7.0 Support Enterprise 7.0 Support Enterprise7.0 Support Enterprise 3.0 Source & Mfg. Inventory3.0 Source & Mfg. Inventory 3.0 Source & Mfg. Inventory3.0 Source & Mfg. Inventory Mapping business activity into processes

What does integration mean? –All users access the application via a web browser –Information can shared between different parts of the business –Users follow the same training programme –The data is stored in an array of database tables

What does integration mean? Hardware –iPhone (PDA + phone + media player) –Car engine (self diagnostics, GPS, …) –Printer + scanner + photocopiers + fax –VLSI: inetgration of different circuits onto one chip Software –Outlook ( + Calendar + Contacts) –MS.net development suite (front-end tools, programming, connectivity wizards) –Google (browser + content management) –Adobe (document and workflow) Data –Inventory and Sales need access to Product file –Engineering and planning need access to BOM

Integration example: Bank branch What does integration mean in a bank perspective? Products Customer services Transaction processing Data model …

Integration downsides Response times Vulnerability: single point of failure Limitations on expansion Dependence on single vendor Flexibility to change system … Access to basic information is complicated

Who benefits? Finance gain greater visibility Manufacturing? –Demand may be too unstable for MRP –Production planning needs more “nuance” –ERP is too literal –Much planning still done on Spreadsheets Sales: need of integration

Family of applications Enterprise Resource Planning systems Supply Chain Management Customer Relationship Management Other more specialised applications such as planning, warehouse management … Merging into ERPII / XRP –encompassing all aspects of the business

CRM Early 00’s Sales Force Automation Contract Management Customer Service & Support Marketing Automation Documentation Management SCM Logistics Electronic Invoicing Electronic Marketplaces Contract Management Late 90’s Early 00’s ERP II Product Data Management Engineering Change Orders New Product IntroductionCollaborative Product Design A Complete Family Tree