COMM 391. Discussion. Learning Objectives ANALYZING AND IMPROVING BUSINESS PROCESSES. Introduction to Management Information Systems

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1 COMM 391 Introduction to Management Information Systems ANALYZING AND IMPROVING BUSINESS PROCESSES Winter 2014 Term 1 Learning Objectives 1. Explain business processes and discuss the importance of business process improvement and reengineering. 2. Explain business process modeling and compare As-Is and To-Be models 3. Describe business process management and its value to an organization Discussion Do you hate waiting in line at the bookstore? Do you find it frustrating when you go to the bookstore and cannot find the book you want? 2014 Y.M. Cheung Y.M. Cheung 4

2 Learning Objective 1 Explain business processes and discuss the importance of business process improvement and reengineering. What is a Business Process? A business process is an ongoing collection of related activities that create a product or a service of value to the organization, its business partners, and/or its customers. A process has inputs and outputs, and its activities can be measured Y.M. Cheung 5 6 Business Process Example Example of Business Processes Accounting Finance Marketing Ordering an E-ticket from an airline Web site accounts payable accounts receivable invoice billings petty cash bank loan applications Applying customer credit approval and credit terms Generating financial cash flow reports Producing sales lead Handling customer complaints customer service Y.M. Cheung 8

3 Example of Business Processes (cont d) Production/ Operation Processing bills of materials Processing physical inventory Handling shipping and freight claims Human Resources employee hiring Handling employee orientation Producing performance appraisals and salary adjustments MIS service agreements and emergency procedures Reporting computer security incidents What is a Cross-Functional Business Process? This is a process in which no single functional area is responsible for its completion; multiple functional areas collaborate to perform the function. For example, product development involves research, design, engineering, manufacturing, marketing, and distribution Y.M. Cheung 9 10 The Order-to-Delivery Process Customer-facing processes vs. Business-facing processes Customer-facing processes front-office processes result in a product or service received by an organization s external customer. Business-facing processes back-office processes are invisible to the external customer but are essential to the effective management of the business

4 Value Chain and Business Processes Business Process Hierarchy (Source: Value Chains and Business Processes, A value chain usually describes a major line of business. An organization may have a few value chains. A value chain is usually decomposed into a few business processes (e.g. a supply chain, a new product development process.) Processes usually contain a few sub-processes. Activities are the lowest level process Business Process Hierarchy (cont d) Why are Business Processes Important? Examining business processes helps an organization determine bottlenecks, eliminate duplicate activities, combine related activities, and identify smoothrunning processes. To stay competitive, organizations must optimize and automate their business processes. (Source: Enterprise Business Process Architecture

5 Business Process Improvement Business Process Improvement is a cyclical activity. It attempts to understand and measure current processes and upgrade them. Metrics at the end are feedback for a new round of improvements. Steps in Business Process Improvement Business Process Reengineering Business Process Reengineering (BPR) is the analysis and redesign of workflow within and between enterprises. Reengineering is "... the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary modern measures of performance, such as cost, quality, service, and speed. (Hammer and Champ) Initiating Business Process Change Companies should initiate a business process change when: 1. there has been a pronounced shift in the market the process was designed to serve; 2. the company is below industry benchmarks on its core processes; or 3. the company needs to regain competitive advantage. Alternative business process should be effective (they deliver the intended results) and efficient (they consume the least amount of resources for the intended value.) Process Change Spectrum Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

6 Automation Improving Operational Business Processes The process of computerizing manual tasks, making them more efficient and effective, and dramatically lowering operational costs. Payroll is an excellent example. Transaction Processing Systems (TPS) are primarily used to automate business processes. Streamlining Improving Managerial Business Processes Streamlining improves business process efficiencies by simplifying or eliminating unnecessary steps. Bottlenecks occur when resources reach full capacity and cannot handle any additional demands. Redundancy occurs when a task or activity is unnecessarily repeated Reengineering Improving Strategic Business Processes Requires a different mindset than that required in continuous business process improvement programs. Focus on a new process rather the current one What should the process look like? What do customers want it to look like? What do other employees want it to look like? How do best-in-class companies do it? How can new technology facilitate the process? Learning Objective 2 Explain business process modeling and compare As-Is and To-Be models. Business Process Reengineering Model 23 24

7 What is Business Process Modeling (BPM)? Business process modeling (or mapping) is the activity of creating a detailed flowchart, work flow diagram or process map of a work process showing process inputs, tasks and activities in a structured sequence. A Business Process Model is a graphic description of a process, showing the sequence of tasks that complete the process from a selected viewpoint. Purposes of Business Process Model Expose process detail gradually and in a controlled manner. Encourage conciseness and accuracy in describing the process model. Focus attention on the process model interfaces. Provide a powerful process analysis and consistent design vocabulary BPM Example (1) Online Sales Process Model BPM Example (2) Online Banking Process Model 27 28

8 BPM Example (3) Order Fulfillment Process Model BPM Example (4 ) ebay Buyer and Seller Business Process Model What are As-Is and To-Be Models? BPM Example - As-Is and To-Be Process Models for Ordering a Hamburger Current (As-Is) Process Model Represents the current state of the operation that has been mapped, without any specific improvements or changes to existing processes. Target (To-Be) Process Model Displays how the process problem will be solved or implemented. Shows the results of applying change improvement opportunities to the current (As-Is) process model. As-Is and To-Be Process Models for Ordering a Meal at a Burger Restaurant

9 BPM Example (cont d) Swim Lane Flowchart Example As-Is and To-Be Process Models for Order Fulfillment (Source: Swim Lane Flowchart BPM Example (cont d) Customer Service As-Is and To-Be Process Models Enhancing Business Processes with Information Systems For best results, business processes should drive IS choices and should be based on business strategies and goals

10 Learning Objective 3 Describe business process management and its value to an organization. Business Process Management Business process management (BPM) focuses on aligning all aspects of an organization with the wants and needs of clients. It promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. It attempts to improve Source: wikipedia processes continuously Key Reasons for BPM Is BPM for Business or IS? It is a collaboration of business and IS. Both parties need to be involved in evaluating, selecting, and implementing a BPM solution. Effective BPM solutions allow business owners to manage many aspects of the information system through business rules they develop and maintain Y.M. Cheung 39 40

11 BPM Tools (Source: (Source: Conclusion Organizations must go beyond the basics when implementing business process improvement and realize that it is not a onetime project. Continuous monitoring and improving core business processes will guarantee performance improvements across an organization. (Source: