BUSINESS PROCESS AND ROLE OF INFORMATION SYSTEMS IN BUSINESS PROCESSES

Businesses gain a competitive edge when they minimize costs and streamline business processes Business process a standardized set of activities that accomplish a specific task, such as processing a customers order
Workflows of material, information, knowledge Sets of activities, steps May be tied to functional area or be cross-functional

Customer facing process - results in a product or service that is received by an organizations external customer Business facing process - invisible to the external customer but essential to the effective management of the business

EXAMPLE
Sales and marketing systems
Functional concerns include:
Sales management, customer identification market research, advertising and promotion, pricing, new products

Examples of systems:
Order processing (operational level) Pricing analysis (middle mgmt) Sales trend forecasting (senior mgmt)

 Information technology enhances business processes in two main ways:

Increasing efficiency of existing processes
Automating steps that were manual

Enabling entirely new processes that are capable of transforming the businesses
Change flow of information Replace sequential steps with parallel steps Eliminate delays in decision making

BUSINESS PROCESS IMPROVEMENT

Companies are forced to improve their business processes because customers are demanding better products and services Business process improvement attempts to understand and measure the current process and make performance improvements accordingly

BUSINESS PROCESS MODEL

Business process modeling (or mapping) - the activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities, in a structured sequence Business process model - a graphic description of a process, showing the sequence of process tasks, which is developed for a specific
As-Is process model To-Be process model

Business process management (BPM) - integrates all of an organizations business process to make individual processes more efficient

EXAMPLE

IS FRAMEWORK

 Foundation Concepts-includes trends, components & role of Information system. Information Technology- includes major concepts, developments & managerial issues involved in computer hardware, software, telecommunication n/w & data resource management technologies. Business Applications-how businesses use internet & other IT to support their business processes ,e-business & e-commerce and business decision making. Development Processes- development & implementing business/IT STRATEGIES & SYSTEMS USING SEVERAL strategic planning and application development approaches. Management Challenges- includes security & ethical challenges and global IT management.

Role of IS
Support Competitive Advantage Support Business Decision Making Support of Business Processes and Operations

COMPONENTS OF IS

 People Resources Hardware Resources Software Resources

Computer systems Peripherals

End Users IS Specialists

Data Resources
Data versus Information

Network Resources
Communication media Network support

System software Application software Procedures

 Transaction processing systems

Perform and record daily routine transactions necessary to conduct business
E.g. sales order entry, payroll, shipping

Allow managers to monitor status of operations and relations with external environment Serve operational levels Serve predefined, structured goals and decision making

Management information systems

Serve middle management Provide reports on firms current performance, based on data from TPS Provide answers to routine questions with predefined procedure for answering them Typically have little analytic capability

 Decision support systems

Serve middle management Support nonroutine decision making
E.g. What is impact on production schedule if December sales doubled?

Often use external information as well from TPS and MIS Model driven DSS
Voyage-estimating systems

Data driven DSS

Intrawests marketing analysis systems

 Executive support systems

Support senior management Address nonroutine decisions requiring judgment, evaluation, and insight Incorporate data about external events (e.g. new tax laws or competitors) as well as summarized information from internal MIS and DSS E.g. ESS that provides minute-to-minute view of firms financial performance as measured by working capital, accounts receivable, accounts payable, cash flow, and inventory.

Relationship of systems to one another

TPS: Major source of data for other systems ESS: Recipient of data from lower-level systems Data may be exchanged between systems In reality, most businesses systems only loosely integrated

Strategic Information System

IS not only supports operations and decision making, it provides Competitive Advantage SIS is a use of IT intended to support or shape the competitive strategy of the enterprise SIS can be any of the TPS, MIS, DSS, and ESS Example: ATM, Sears Customer Database

Trends in IS

Centralized and Decentralized Information System

Centralized system- A completely centralized information system handles all processing at a single computer site, maintains a single central database, has centralized development of applications, provides central technical services, sets development priorities centrally, and allocates computer resources centrally. The system's remote users are served by transporting input and output data physically or electronically.

 Decentralized System- A completely decentralized system may have no central control of system development, no communication links among autonomous computing units, and stand-alone processors and databases at various sites. Each unit funds its own information-processing activities and is totally responsible for all development and operation.

Advantages & Disadvantages

An advantage of centralized information systems is that they provide for standardization in the collection of data and the release of information. There also are some economies of scale. A centralized system reduces the need for multiple hardware, software, space, personnel, and databases. It may be possible to recruit more qualified personnel in a central facility. Observations indicate that user motivation and satisfaction are increased under a decentralized environment. This is attained because users feel more involved and more responsible, systems are better customized to their specific needs, and they usually get better response time in routine operations as well as in requests for changes.

Role of Information in Decision Making Process

Decision Making: a process of choosing among alternative courses of action for the purpose of attaining a goal or goals Decision making vs. problem solving?

Levels of Decision Making . Strategic decision making . Management control . Knowledge-level decision making . Operational control Types of Decisions . Unstructured decisions . Structured decisions

Stages of Decision Making

Stages in Decision Making, Information Requirement, and Supporting Information Systems Intelligence Exception reporting -MIS Design Simulation prototype - DSS, KWS Choice -What-if simulation - DSS; large models Implementation -Graphics, charts -PC and mainframe decision aids

 Intelligence phase Reality is examined The problem is identified and defined -Scan the environment to identify problem situations or opportunities Identify organizational goals and objectives Determine whether they are being met Explicitly define the problem

 Design phase Representative model is constructed The model is validated and evaluation criteria are set Generating, developing, and analyzing possible courses of action Includes Understanding the problem Testing solutions for feasibility A model is constructed, tested, and validated Modeling Conceptualization of the problem Abstraction to quantitative and/or qualitative forms

- Choice phase

Includes a proposed solution to the model If reasonable, move on to the

Search, evaluation, and recommending an appropriate solution to the model Specific set of values for the decision variables in a selected alternative

The problem is considered solved after the recommended solution to the model is successfully implemented

Search Approaches
Analytical Techniques Algorithms (Optimization) Blind and Heuristic Search Techniques

 Implementation phase Solution to the original problem Important Issues

Resistance to change Degree of top management support Users roles and involvement in system development Users training

Failure: Return to the modeling process

Types of Decisions
Type of structure - Nature of task
Structured Unstructured

Level of decision making - Scope Strategic Managerial Operational

Nature of Decision
Structured Problems Routine and repetitive with standard solution Well defined decision making procedure Given a well-defined set of input, a well defined set of output is defined Semi-structured Problems Has some structured aspect Some of the inputs or outputs or procedures are not well defined Unstructured Problems All phases of decision making process are unstructured Not well defined input, output set and procedures

Scope of Decision
Operational Planning and Control: Focus on efficient and effective execution of specific tasks. They affect activities taking place right now E.g... What should be today's production level Management Control and Tactical Planning Focus on effective utilization of resources more longer range planning horizon E.g... What is next years production level Strategic Planning Long-range goals and policies for resource allocation E.g... What new products should be offered