Chapter 1. Business Process Management and IT
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1 Chapter 1 Business Process Management and IT 1
2 Business Process A set of activities that are performed in coordination in an organizational and technical environment. Goal directed - These activities jointly realize a business goal Each business process is enacted by a single organization A business process may interact with business processes performed by other organizations
3 Functional v/s Process Organization Functional Organisation Work unit Department Team Key Figure Functional Executive Process Owner Benefits Focus on Functional Excellence Easier to implement work balancing because workers have similar skills Clear management direction on how work should be performed Weaknesses Barrier to communicate between different functions Poor handover between functions that affects customer service Lack of end-to-end focus to optimize organizational performance Process Organisation Responsive to market requirements Improved communication and collaboration between different functional tasks Performance measurements aligned with process goals Duplication of functional expertise Inconsistency of functional performance between processes Increased operational complexity Strategic Value Supports cost leadership strategy Supports differentiation strategy 3
4 BUSINESS PROCESS A prescribed sequence of steps Performed In order to produce A desired result for the organization FLOW AUTOMATION Deliver Business tactics faster Zero loss of information The Perfect Fit w/soa and Applications LEVELS (Different levels can be identified in business process management, ranging from highlevel business strategies to implemented business processes) Business Strategy Goals Organizational business processes Operational business processes Implemented Business processes 4
5 Business Process Management Body of principles, methods and tools to Analyze, (re-)design, Execute and Monitor business processes, with the aim of improving their overall performance. Optimize Run & Monitor Analysis BPM - Life Cycle Design Implementation 5
6 Factors Scope Key factors in implementing BPM Key Considerations A single process, a department, the entire company Goals Process understanding, improvement, automation, reengineering, optimization Methods to be Six Sigma, BPM Life Cycle Method, TQM, Informal methods used Skills Required Consultants, Train Employees, Formal Certification, Basic Education, Existing Skill sets Tools to be used White-Boards, Sticky Notes, Software For Mapping, Documenting, Software for Simulation, Comprehensive BPMS Investments to Training, Tools, Time Make Sponsorship/Buyin Executive Level, Department Level, Process Owner Level, Needed Employee Level 6
7 Impact of IT on BPM Automating repetitive business processes BPMS works by loosely coupling with existing application Operational savings Reduction in the administration involved in Compliance and ISO Freeing up of employee time 7
8 Six Sigma Set of strategies, techniques & tools for process improvement DMAIC Cycle D: Define C: Control M: Measure I: Improve A: Analyze 8
9 Total Quality Management Organization-wide effort to install and make permanent a climate in which it (business or firm or organization) continuously improves its ability to deliver high-quality products and services to customers. Act Plan Check Do 9
10 Business Process Reengineering To prevent means becoming ends, the business processes need to be reengineering with the changing time and technology BPR is fundamental rethinking and radical redesign of processes to achieve dramatic improvement, in critical, contemporary measures of performance such as cost, quality, service and speed. Few important key words, which need clear understanding Dramatic Achievement Radical Redesign Fundamental rethinking
11 Accounting Information Systems (AIS) Defined as a system of collection, storage and processing of financial and accounting data that is used by decision makers. Computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities. Basic functions include Collecting and storing data; recording transaction and Safeguarding organizational assets. Data Processing Cycle - Data input; Data storage; Data processing and Information output
12 Business Risks of Failure of IT Superficial or deficient executive involvement Deficient project management Limited option for customization of BPM software is required Inadequate assessment of the need for change management Resources not available when desirable Software fails to meet business needs System may be over-engineered when compared to the actual requirements Technological obsolescence
13 Mapping Systems Flowchart E-R Diagram MAPPING SYSTEMS Data Flow Diagram Decision Table 13
14 Flowchart Pictorial representation That graphically illustrates all the steps of a process and algorithm. Using organized combination of shapes, lines, and text Can be used for - Training Troubleshooting Testing Inspecting a process 14
15 Symbols in Flowchart PROCESS SYMBOL - represents any process, function, or action. DOCUMENT SYMBOL - represents any type of hard copy input or output. DECISION SYMBOL - Decision Symbol is a junction where a decision must be made. START/END SYMBOL - represents START or END of the process. INPUT/OUTPUT SYMBOL - represents data that is available for input or resulting from processing. 15
16 Flow Chart Example A Housing Society in a newly developed Smart City has provided several advanced security systems to each house in that city. Based on the value of these advanced security systems installed in each house, the Society has divided all the houses in four categories and fixed the criteria for annual maintenance charges as under: House Category Maintenance charges as % of value of advanced security systems installed at house A 8% B 6% C 4% D 3% In addition to above there is a 12% on the amount of maintenance charges. Considering house number and value of advanced security system installed, as input, draw a flow chart to have printed output as house number, maintenance charges, GST and the total amount to be paid by each house owner. (Fictitious Rates are taken for the sake of simplicity) 16
17 Flowchart Ex. (Ctd..) Start Read HNO, VAL_ASS Yes If HC = A? MC = 0.08 * VAL_ASS No If HC = B? Yes MC = 0.06 * VAL_ASS No If HC = C? Yes MC = 0.04 * VAL_ASS No MC = 0.03 * VAL_ASS GST = 0.12 * MC TA = MC + ST Print HNO, MC, GST, TA More HNO? Yes Stop No 17
18 Flow Chart Example (Ctd..) A book publisher of Information Technology offers discount to its customers on the basis of customer type as detailed below: Customer Type Discount Book Seller 30% Library 20% Student 10% Further if number of copies purchased is more than 20, then additional discount of 5% is allowed irrespective of customer type. Number of books, unit price of each book and customer type are given as input. Draw a flow chart to calculate the net amount after all discount and print customer type, number of copies and net amount. 18
19 Flow Chart Example (Ctd..) Start Read CT, NC, X If CT= Book Seller? No If CT= Library? No If CT= Student? No Yes Yes Yes If NC > 20? Yes If NC > 20? Yes If NC > 20? Yes No DISC = 0.3 DISC = 0.35 No DISC = 0.25 No DISC = 0.1 Let us define the variables first: DISC = 0.2 DISC = 0.15 Customer Type: CT; Discount: DISC; Unit Price of Each Book: X Number of Copies: NC; Net Amount: AMT AMT = NC *(X - DISC*X) Print CT, NC, AMT Stop Print Invalid Customer Type 19
20 Entity Relationship Diagrams Data modeling technique that creates a graphical representation of the entities, and the relationships between entities, within an information system. Boxes are commonly used to represent entities. Diamonds are normally used to represent relationships. Ovals are used to represent attributes. 20
21 Types of Relationships 1:1 relationship 1:N relationship Student borrow book M:1 relationship Administrators Report to Minister M:N relationship Student enrolls course 21
22 Data Flow Diagram is a graphical representation of the flow of data through an information system. Symbol MEANING PROCESS DATA STORE ENTITY DATA FLOW 22
23 Decision Table is a collection of a basis (condition) and a conclusion (action). Condition Stub Condition Entries which comprehensively lists the comparisons or conditions Action stub which comprehensively lists the actions to be taken along the various program branches which list in its various columns the possible permutations of answer to the questions in the conditions stub Action Entries which lists, in its columns corresponding to the condition entries the actions contingent upon the set of answers to questions of that column. 23
24 Chapter 2 Information Systems and IT Fundamentals 24
25 Learning Objectives To understand the need for IT in business organisations its relevance in Auditing To explain BPA and understand the role of BPA in improving business processes To understand the term computing and various popular computing architectures To understand information system layers different layers of interaction in an information system To explain information system life cycle and the process of building IS, and To have an overview of recent technologies 25
26 Need for IT and Relevance in Auditing A strategic business enabler, e.g., banking Communication capabilities Data and information management Automated processes Relevance in Auditing Audit objectives IT risks and issues Need for control in IS Impact of IT on risks and controls 26
27 BPA and Its role in Improving processes BPA automation of business processes IT processes Database access and changes File replication and data backup Systems and event log monitoring Job scheduling Application integration File transfers Printing The steps involved in BPA 27
28 Computing and Computing Architecture Comp Sc., Comp. Engg., IS, IT, SE IT servers file, print, network, database, application, web, mail Architectures ISA fixed and variable length RISC v. CISC Emerging computing models - cloud 28
29 Information System Layers Application program Hardware Operating system system software Networks DBMS data, database and models Hierarchical, network, relational, OO, ORDBMS Computing models client-server, Internet, mobile, cloud 29
30 Information System Life Cycle Investigate understand the problem Analyze Assess the solutions Design or select the best solutions Implement put solution into effect Maintain and review evaluate results 30
31 Bluetooth Wi Fi Overview of Recent Technologies Laptop, tablet, smartphone, touchpad, ipad, ipod, ultra mobile PC (UMPC) Android 31
32 Chapter 3 Telecommunication and Networks 32
33 TELECOMMUNICATION NETWORK 33
34 Computer Network A collection of autonomous (independent) computers laptops, PCs, Phones, Servers etc. interconnected by some means (Transmission media) through which they are able to communicate To share resources (like audios, videos, doc files, storage servers etc.) and provide high reliability.
35 Fundamentals of Communication a Sender a Receiver Sender the Message the Media Media a Protocol Receiver 35
36 Telecommunication Network Model Terminals Telecommunication Processors Telecommunication Media Computers Telecommunication Control Software Guided Micro Waves Unguided Satellite Twisted Pair Coaxial Cables Fibre Optic Radio Waves Infra Red Waves Cellular Phones 36
37 Classification of Telecommunication Network Area Coverage Based Classification Functional Based Classification LAN MAN WAN Client-Server Peer-to-Peer Multi-Tier Ownership Based Classification Public Network Private Network Virtual Private Network 37
38 Functional Based Client-Server: A client is a single-user workstation that provides a presentation services and the appropriate computing. A client computer can request specific data from the server. The server program retrieves the requested data from its data bases and returns it to the client. Peer-to-Peer : P2P network is created with two or more PCs connected together and going through a separate server computer. there are no dedicated servers. All computers are equal and therefore are termed as peer. Normally, each of these machines functions both as a client and a server. Multi-Tier: A tier is a distinct part of hardware or software. Single Tier: A single computer that contains a database and a front-end (GUI) to access the database is known as Single Tier System. Generally, this type of system is used in small businesses Two-Tier: a presentation layer or interface runs on a client, and a data layer or data structure gets stored on a server. Three Tier: in which the functional process logic, data access, computer data storage and user interface are developed and maintained as logical independent modules ie.. Presentation, Application (business logic tier) and Database tier are different. 38
39 Transmission Mode The Direction of Exchanges Simplex Half- Duplex Duplex Number of bits sent simultaneously Parallel Serial Synchronization b/w Transmitter and Receiver Synchronous Asynchronous 39
40 Transmission Mode Direction of Exchanges Unidirectional, Simplex X One way at a time, Half Duplex Y Both ways simultaneously, Duplex 40
41 Transmission Mode No. of bits sent simultaneously Parallel Serial Sender Receiver Sender Receiver 41
42 Transmission Mode Synchronization b/w Transmitter and Receiver Synchronous Asynchronous
43 Network Topologies Mesh Star Bus Ring 43
44 Transmission Media Guided Unguided Twisted Pair Coaxial Cables Optical Fibers Radio Cellular Phones Micro Infra-Red Waves Satellite 44
45 Switching Techniques Transmission Techniques Broadcast Networks Switching Techniques Circuit Switching Packet Switching Message Switching 45
46 A B C Circuit - Switched Network Temporary connections I II A,B and C in case of pt. to pt. require 12 links but four switches reduce no. and total length of the links. III IV D E F G 46
47 Packet- Switched Network Datagram Packet Header Body Footer Virtual Circuit
48 Message - Switched Network A Store and Forward M1 SP 1 M1 Store and Forward SP 3 M2 P B M2 SP 2 Store and Forward M1 M1 SP 4 Store and Forward Q 48
49 Transmission Protocol Syntax refers to the structure or format of the data, meaning the order in which they are presented. Semantics refers to the meaning of each section of bits. Timing refers to two characteristics: when the data is to be transmitted and how fast can they be sent. 49
50 Open Systems Interconnection (OSI) Reference Model and TCP/IP Host A Host B TCP/IP Application Application Presentation Presentation Application Session Transport Network Data Link Segments Packets Frames Session Transport Network Data Link Transport Network Data Link Physical Bits Physical Physical 50
51 Network Security Aspects Techniques Nonrepudiation Privacy Message Authentication Intrusion Detection System Firewall Network Access Control Message Integrity Anti Malware Site Blocking 51
52 e-commerce Business to Business (B2B) Business to Consumer (B2C) Consumer to Business (C2B) Consumer to Consumer (C2C) Business to Government (B2G) Mobile Commerce Electronic Fund Transfer Business to Employee (B2E) 52
53 Chapter 4 Business Information Systems 53
54 INPUT (Business problems in the form of data, information, instructions, opportunities) Functions of Information Systems PROCESSING (Software, Programs, people, equipments, storage) OUTPUT (Solution to problems in the form of reports, graphics, calculations, voices) CONTROL (Decision Makers, Auto Control) Feedback
55 Operational Level Systems Knowledge Level Systems Management Level Systems Strategic Level Systems Support operational managers tracking elementary activities. For example -TPS in Support the business to integrate new knowledge into the business and control the flow of paperwork and enable group working. For eg: OAS and KMS. Support the middle managers in monitoring, decision-making and administrative activities. For example -MIS and DSS. These are information systems at the strategic level of an organization designed to address unstructured decisionmaking. For example - Executive Information Systems.
56 Operational Level Systems (a) Operational-level systems or Operational Support Systems (OSS) ensure that business procedures are followed. (b) These support operational managers in tracking elementary activities. (c) TPS is an operational level system.
57 Transaction Processing Systems (TPS) Often considered the bread of MIS application The upper management knows that it cannot pull the plug on its TPS and survive. Historically, many organizations had TPS since the 1950 s. Most of these TPS have more that paid for themselves. Many TPS have been and continue to be mainframeoriented. TPS includes The accurate recording of transactions Used control procedures in issuing such documents as paychecks, invoices, customer statements, payment reminders It may be far-reaching, extending completely through and out of the organization, linking together - The entire financial system; Factory; Customer and suppliers. 57
58 Transaction Processing Cycle In CBIS, transaction data must be converted to a form that can be entered into the computer system for processing. This involves: Source data automation, Electronic data interchange and Document Management Systems. Data Entry Collecting Recording Coding Editing Transaction processing and File/Database Updating Inquiry processing Batch mode Online vs. Real time Online interrogation by authorized users in authorized manners Responses are often displayed in a pre-specified format on the user s workstation screen One may also print out a copy of the response as it appears on the screen Document and Report generation Information, Action and Turnaround documents Accounting statements Control listings and Edit reports 58
59 Knowledge Level Systems These support the business to integrate new knowledge into the business and control the flow of paperwork and enable group working. Two types of Knowledge Level Systems are: Office Automation Systems Knowledge Management Systems
60 Office Automation Systems Office Automation refers to the integration of office functions usually related to managing information. Basic activities include - Document Capture Document Creation Receipts and Distribution Filling, Search, Retrieval and Follow up Calculations Recording Utilization of Resources
61 Management Level Systems These systems support the middle managers in monitoring, decision-making and administrative activities. This is helpful in answering questions like are things working well and in order? Management Information System (MIS) and Decision Support System (DSS) are types of Management Support Systems.
62 Information System Properties Management Reporting System It is the MIS sub-system that issues pre-formatted reports to managers That provides predefined types of information to management; For relatively structured types of decisions; and focuses on Information, and occasionally, on effectiveness. Usually concerned with data about the past than data relating to the future. Support structured and semi-structured decisions, primarily at the middle and lower levels Provides fixed types of information in an established format; the information requirements of users are normally known and stable Often implemented with voluminous, hard copy reports, requiring each users to search specifically for key information Usually require a formal request to be submitted; formal systems development may be required to approve the request. 62
63 Decision Support System An interactive Computer-based system that facilitate the solution of unstructured problems by a set of decision makers working together as a group. PROPERTIES DSS TOOLS Middle or top management focus Interactive capabilities Use of models Difficulty in cost justifying Evolutionary development Focus on managerial effectiveness, rather than efficiency Micro computer systems DBMS Display devices and Graphics generators General-purpose programming languages Optimization tools Statistical tools Spreadsheet packages 63
64 Components of a DSS Workstation GUI DSS Software Word Processor Spreadsheet Appl DBMS DTP Application Database Decision Maker Graphic software Report generator Stat, OR, Other Analysis software Model Base 64
65 Strategic Level Systems Strategic-level Systems (SLS) are information systems at the strategic level of an organization designed to address unstructured decisionmaking. Executive Information Systems (EIS) It is sometimes referred to as an Executive Support System (ESS). It serves the strategic level i.e. top level managers of the organization.
66 Chapter 5 Business Process Automation through Application Software 66
67 Information Processing The effort to create information from raw data is known as Information Processing. Two types of Information Processing exist. Manual Information Processing Cycle Computerized Information Processing Cycle 67
68 Controls in BPA and their need Objectives of BPA 68
69 Control Objectives Segregation of Duties Error handling Authorization Control Objectives Physical Safeguards and Security Completeness Validity Accuracy 69
70 Information Systems Controls The controls are used to Prevent, Detect, or Correct unlawful events. An unlawful event can arise if unauthorized, incomplete, inaccurate, redundant, ineffective, or inefficient input enters the system. Preventive Control; Detective Control; and Corrective Control 70
71 Controls in BPA Audit Perspective Managerial Application Top Management Boundary Information Systems Management Systems Development Programming Management Data Administration Quality Assurance Input Communication Processing Database Output Security Administration Operations Management 71
72 Application Controls Boundary Controls Input Controls Communicati on Controls Processing Controls Database Controls Output Controls Comprises the components that establish the interface between the user and the system. Comprises the components that capture, prepare, and enter commands and data into the system. Comprises the components that transmit data among systems and subsystems. Run-to-Run Totals; Reasonable ness Verification ; Edit Checks etc. Comprises the components that define, add, access, modify, and delete data in the system. Comprises the components that retrieve and present data to users of the system. 72
73 Cloud Computing Cloud Computing is computing in which large groups of remote servers are networked to allow centralized data storage and online access to computer services or resources. Characteristics of Cloud Computing Elasticity and Scalability On-demand Multi Tenancy Movement for certain types of workloads. Pay-per-Use Resiliency Workload 73
74 Cloud Computing Types
75 Cloud Service Models Infrastructure as a Service Platform as a Service Software as a Service delivers special purpose software that is remotely accessible. offers high level integrated environment to build, test, and deploy custom apps. hardware, software, equipments, can scale up and down dynamically (elastic). 75
76 Grid Computing Grid Computing is the collection of computer resources from multiple locations to reach a common goal. 76
77 Thank You!!! 77
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