What is a business process?
Chapter 2- Business processes, information and decision making Q1- how did this stuff get here Q2- What is a business process? - Business process – network of activities, resources, facilities and information that interact to achieve some business objective o Aka. Business system o Ex. Inventory management processes, manufacturing processes, sales processes, and customer-support processes - Managing this inventory is a business process – ensure that there is enough inventory to fulfill customers’ requests while at the same time making sure there is not too much inventory - Inventory management process works to balance the demands from customers with the inventory purchased from suppliers (purchasing is an important activity), supports the process by collecting information o An inventory database keeps track of what the customers have ordered (quantity ordered) what is currently in inventory (Quantity on hand) o Critical point : the reorder point – the system lets the manager of the restaurant know that it is time to order new supplies (each good can have its OWN reorder point) o Purchase order is created in order to reorder , lists the items ordered and the quantity desired -> sends to the supplier -> ships the goods with the shipping invoice to the restaurant o The shipped goods are first checked to make sure the restaurant received what was ordered o The newly received goods are then placed in inventory and the inventory database is updated with the quantity received - There are many different ways of represetnign a business process o Understanding o Modeling o Redesigning business processes are a big part of what business analysts do Q3- what are the components of a business process? -
A business process consists of activities, resources, facilities and information Activities: transform resources and information of one type into resources and information of another type o Payment activity transforms quantity received and shipping invoice into a supplier payment (resource) o An activity can consist or be made up of strictly manual activities (people following procedures) be automated or controlled by computers (hardware directed by software) or as is often the case be a combination of manual and automated activities
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Resources: items of value o Customers and suppliers are resources too but they are external and hence not under the restaurant’s direction and control Facilities : structures used within the business process (ex. Inventories and databases) …others are factories, pieces of equipment etc Information – activities use information to determine how to transform the inputs they receive into the outputs they produce o It has activities and resources but it uses the term repository for facility and the term business item for data o Differences and inconsistencies can be problematic esp when 2 diffferent organizations with 2 different sets of definitions must work together Objective management group (OMG)- created a standard set of terms and graphical notations for documenting business processes o Standard called : business process modeling notation (BPMN) Provides 4 graphical elements that can be used to document a process
Q4 – What is information? -
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Information is knowledge derived from data; data is defined as recorded facts or figures (ex. Recording wages) Average wage : knowledge that is derived from the data of individual wages Information is data presented in a meaningful context Information is processed data, or that information is processed by summing, ordering, averaging, grouping, comparing, or performing other similar operations o We do something to data to produce information Bateson defines information as a difference that makes a difference – if you get new information and it does not make a difference to your decision , is what you received really information? Characteristics of good information o All information is not equal: some information is better than other information o Accurate: good information is accurate information – correct and complete data (reliable) The IS function can develop a bad reputation in the organization if a system is known to produce inaccurate information When you begin to use an information system be sceptical, begin with scepticism and keep in mind that over time information may lose its level of accuracy o Timely : timely information – produced in time for its intended use Timelieness can be measured against a calendar or against events When you participate in the development of an IS, timeliness will be part of the requirements you will request Expensive to produce on time information
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Information system that will not deliver ads over the web, but will also enable you to determine how frequently customers click on those ads Determining click ratios in near real time can be very expensive, saving the data and processing it some hours alter may be much easier and cheaper and sufficient for your needs Relevant Information should be relevant both to the context and to the subject Need information that is summarized to an appropriate level for your job A list of wage rate is bad, average wage rate is good Just barely sufficient Information needs to be sufficient for the purpose for which it is generated but just barely so, critical decision that each of us must make each day is what information to ignore The more information you have the more information you will need to ignore due to time Worth its cost Information is not free For information to be worth its cost, there must be an appropriate relationship between the cost of information and its value Information and information systems should be subject to the same financial analyses to which other assets are subjected
Q5- What is the role of information in business processes? -
What does information have to do with real business processes that move actual goods and provided services to real people? Any time a good is moved or a service is provided, data and ifnromation are always created Anytime there is a physical flow there is the potential to capture a flow of information Flow of service are always accompanied by a potential flow of data and information Payment process: compares the quantity received to the shipping invoice (generates a supplier payment) Thus, a business process generates information by bringing together important items of data in a context This information is important several reasons, first it let us know when we need to make payments of goods or services received, keeps our inventory up to date Information becomes even more useful when we start using it to manage business processes
Business process management (BPM) -
Over time, if we keep collecting data, the process itself will generate information that will be useful for management and strategy decisions
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George Box a pioneer in quality control noted that a by-product of every business process is information about how the process can be improved Able to determine the cheapest, or fastest or most reliable suppliers – use the info in the inventory database to assess our inventory ordering strategy and use it to determine pilferage and theft lossess (Business process management) Business process management is a field of management that promotes the development of effective and efficient processes through continuous improvement and innovation Technology -> business process There are many methods that organizations have developed to support their improvements In business processes, including total quality managemtn, six sigma, and lean production Information about the process provides the ability to better manage the process itself Information is therefore an important part of effective management
Q6- How do information systems support business processes? -
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Information systems are used by the activities in a business process (particular relationship varies among the processes), depending on the activities it may use up to several information systems What does it mean to automate a process activity? o The outermost components, hardware and people are both sets of instructions (take action) o Software is instructions for hardware, and procedures are instructions for people o Data is the bridge between the computer side on the left and the human side on the right When a business process is handled by an automated system – means that work formerly done by people following procedures has been moved so that computers now do wthat work by following instructions in software Work from moving from the right side to the left (automation work from human side to computer side) An information system to support counter sales o The counter sales activity interacts with the customer -> receives order, takes wthe tiems from the inventory and receives customer’s payment o The cashier need to be trained only in how to use the cash register, they never need to wrok directly with the sales recording programs on the computer o The designers of this system decided to fully automate it because the cahsier’s job is a low-skill level position with high turnover (refers to the rate at which new employees arrive and existing ones depart) Designers wanted to reduce the amount of training time that cashiers required before they could productively use the cash registers An information system to support payment o Payment receives the quantity received and the shipping invoice and it produces supplier payment
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No cheque is generated (instead payment generates an authorization and sends it to someone else who cuts the cheque o The information system that supports the payment activity is a mostly manual system o The designers of this system chose to have it s a manual system because processing exceptions is complicated – many different exception and each requires a different response o Programming all of those exceptions would be expensive and probably not ver effective so letting humans deal with such varied situations is better o Accounts payable clerks will need much more training than the cashiers An information system to support purchasing o Balances the work between automation and manual activity o The person doing the purchasing has personal computer that is connected t other computer that hosts the database o When making decision on what items to order she is guided by the inventory management practices – purchasing program on her computer o Searching the inventory database of items that are low in stock is a perfect application for a computer o Selecting which supplier to use is a process that can require human judgement The 3 different information systems at the restaurant support the needs of users in the company’s various business processes – counter sales, payments and purchasing
Q7- how do information systems support decision making? -
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Making decisions is central to managing organizations Information support decision making by providing the ifnroation – the raw material for many decisions Decision vary by level o Occurs at 3 levels in organizations o Operational, managerial and strategic o Operational : day to day activities (IS that support it is called transaction processing systems (TPS) o Managerial decision : the allocation and utilization of resources (IS that support it is called the management information system (MIS) o Strategic decision: broader organizational issues (should we start a new product line) (executive information system (EIS) The decision time frame increases as we move from operational to managerial to strategic decisions
Decision vary by structure -
Structured and unstructured subsequent
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A structured decision is one for which there is an understood and accepted method for making the decision (standard method) An unstructured decision is a process for which there is no agreed upon decision making method (ex. Prediciting the future direction of the economy)
Supporting decision making -
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Managerial decisions tend to be both structured and unstructured Another way to examine the relationship between information systems and decision making is to consider hwo an information system is used during the steps of the decision making process Steps: o Intelligence gathering: decision makers determine what is to be decided and what the critiera for the descision will be and what data is available o Alternatives formulation = the stage in which decision makers lay out various altneratives Analyze alternatives and make decisions out of choices (implantation) Review step: lead to another decision and another iteration through the decision process Each of these decision making steps needs a different type of information system Implementation stage= involves the use of communications applications all types of information systems can be used during review
Q8- what is your role? -
Part of every information system you use Even if you have the perfect information system , if you don’t know what to do with the inforatmion that it produces you are simply wasting your time and money(quality of thinking is important)
What is a spreadsheet -
Electronic model for business people to prepare financial statements
A business process consists of activities, resources, facilities and information Activities: transform resources and information of one type into resources and information of another type o Payment activity transforms quantity received and shipping invoice into a supplier payment (resource) o An activity can consist or be made up of strictly manual activities (people following procedures) be automated or controlled by computers (hardware directed by software) or as is often the case be a combination of manual and automated activities
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Resources: items of value o Customers and suppliers are resources too but they are external and hence not under the restaurant’s direction and control Facilities : structures used within the business process (ex. Inventories and databases) …others are factories, pieces of equipment etc Information – activities use information to determine how to transform the inputs they receive into the outputs they produce o It has activities and resources but it uses the term repository for facility and the term business item for data o Differences and inconsistencies can be problematic esp when 2 diffferent organizations with 2 different sets of definitions must work together Objective management group (OMG)- created a standard set of terms and graphical notations for documenting business processes o Standard called : business process modeling notation (BPMN) Provides 4 graphical elements that can be used to document a process
Q4 – What is information? -
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Information is knowledge derived from data; data is defined as recorded facts or figures (ex. Recording wages) Average wage : knowledge that is derived from the data of individual wages Information is data presented in a meaningful context Information is processed data, or that information is processed by summing, ordering, averaging, grouping, comparing, or performing other similar operations o We do something to data to produce information Bateson defines information as a difference that makes a difference – if you get new information and it does not make a difference to your decision , is what you received really information? Characteristics of good information o All information is not equal: some information is better than other information o Accurate: good information is accurate information – correct and complete data (reliable) The IS function can develop a bad reputation in the organization if a system is known to produce inaccurate information When you begin to use an information system be sceptical, begin with scepticism and keep in mind that over time information may lose its level of accuracy o Timely : timely information – produced in time for its intended use Timelieness can be measured against a calendar or against events When you participate in the development of an IS, timeliness will be part of the requirements you will request Expensive to produce on time information
o
o
o
Information system that will not deliver ads over the web, but will also enable you to determine how frequently customers click on those ads Determining click ratios in near real time can be very expensive, saving the data and processing it some hours alter may be much easier and cheaper and sufficient for your needs Relevant Information should be relevant both to the context and to the subject Need information that is summarized to an appropriate level for your job A list of wage rate is bad, average wage rate is good Just barely sufficient Information needs to be sufficient for the purpose for which it is generated but just barely so, critical decision that each of us must make each day is what information to ignore The more information you have the more information you will need to ignore due to time Worth its cost Information is not free For information to be worth its cost, there must be an appropriate relationship between the cost of information and its value Information and information systems should be subject to the same financial analyses to which other assets are subjected
Q5- What is the role of information in business processes? -
What does information have to do with real business processes that move actual goods and provided services to real people? Any time a good is moved or a service is provided, data and ifnromation are always created Anytime there is a physical flow there is the potential to capture a flow of information Flow of service are always accompanied by a potential flow of data and information Payment process: compares the quantity received to the shipping invoice (generates a supplier payment) Thus, a business process generates information by bringing together important items of data in a context This information is important several reasons, first it let us know when we need to make payments of goods or services received, keeps our inventory up to date Information becomes even more useful when we start using it to manage business processes
Business process management (BPM) -
Over time, if we keep collecting data, the process itself will generate information that will be useful for management and strategy decisions
-
-
George Box a pioneer in quality control noted that a by-product of every business process is information about how the process can be improved Able to determine the cheapest, or fastest or most reliable suppliers – use the info in the inventory database to assess our inventory ordering strategy and use it to determine pilferage and theft lossess (Business process management) Business process management is a field of management that promotes the development of effective and efficient processes through continuous improvement and innovation Technology -> business process There are many methods that organizations have developed to support their improvements In business processes, including total quality managemtn, six sigma, and lean production Information about the process provides the ability to better manage the process itself Information is therefore an important part of effective management
Q6- How do information systems support business processes? -
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-
-
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Information systems are used by the activities in a business process (particular relationship varies among the processes), depending on the activities it may use up to several information systems What does it mean to automate a process activity? o The outermost components, hardware and people are both sets of instructions (take action) o Software is instructions for hardware, and procedures are instructions for people o Data is the bridge between the computer side on the left and the human side on the right When a business process is handled by an automated system – means that work formerly done by people following procedures has been moved so that computers now do wthat work by following instructions in software Work from moving from the right side to the left (automation work from human side to computer side) An information system to support counter sales o The counter sales activity interacts with the customer -> receives order, takes wthe tiems from the inventory and receives customer’s payment o The cashier need to be trained only in how to use the cash register, they never need to wrok directly with the sales recording programs on the computer o The designers of this system decided to fully automate it because the cahsier’s job is a low-skill level position with high turnover (refers to the rate at which new employees arrive and existing ones depart) Designers wanted to reduce the amount of training time that cashiers required before they could productively use the cash registers An information system to support payment o Payment receives the quantity received and the shipping invoice and it produces supplier payment
o
-
-
No cheque is generated (instead payment generates an authorization and sends it to someone else who cuts the cheque o The information system that supports the payment activity is a mostly manual system o The designers of this system chose to have it s a manual system because processing exceptions is complicated – many different exception and each requires a different response o Programming all of those exceptions would be expensive and probably not ver effective so letting humans deal with such varied situations is better o Accounts payable clerks will need much more training than the cashiers An information system to support purchasing o Balances the work between automation and manual activity o The person doing the purchasing has personal computer that is connected t other computer that hosts the database o When making decision on what items to order she is guided by the inventory management practices – purchasing program on her computer o Searching the inventory database of items that are low in stock is a perfect application for a computer o Selecting which supplier to use is a process that can require human judgement The 3 different information systems at the restaurant support the needs of users in the company’s various business processes – counter sales, payments and purchasing
Q7- how do information systems support decision making? -
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Making decisions is central to managing organizations Information support decision making by providing the ifnroation – the raw material for many decisions Decision vary by level o Occurs at 3 levels in organizations o Operational, managerial and strategic o Operational : day to day activities (IS that support it is called transaction processing systems (TPS) o Managerial decision : the allocation and utilization of resources (IS that support it is called the management information system (MIS) o Strategic decision: broader organizational issues (should we start a new product line) (executive information system (EIS) The decision time frame increases as we move from operational to managerial to strategic decisions
Decision vary by structure -
Structured and unstructured subsequent
-
A structured decision is one for which there is an understood and accepted method for making the decision (standard method) An unstructured decision is a process for which there is no agreed upon decision making method (ex. Prediciting the future direction of the economy)
Supporting decision making -
-
-
Managerial decisions tend to be both structured and unstructured Another way to examine the relationship between information systems and decision making is to consider hwo an information system is used during the steps of the decision making process Steps: o Intelligence gathering: decision makers determine what is to be decided and what the critiera for the descision will be and what data is available o Alternatives formulation = the stage in which decision makers lay out various altneratives Analyze alternatives and make decisions out of choices (implantation) Review step: lead to another decision and another iteration through the decision process Each of these decision making steps needs a different type of information system Implementation stage= involves the use of communications applications all types of information systems can be used during review
Q8- what is your role? -
Part of every information system you use Even if you have the perfect information system , if you don’t know what to do with the inforatmion that it produces you are simply wasting your time and money(quality of thinking is important)
What is a spreadsheet -
Electronic model for business people to prepare financial statements
