Using MIS 2e Chapter 7_ Information Systems within Organizations

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					     Using MIS 2e
Chapter 7: Business Process
      Management

        David Kroenke



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  Study Questions

      Q1 – Why is business process management (BPM) important to
       organizations?

      Q2 – How do information systems solve process problems?

      Q3 – What role do information systems play in business processes?

      Q4 – What are the most common functional systems?

      Q5 – What are the problems of functional systems?

      Q6 – What are the functions and characteristics of customer
       relationship management (CRM) systems

      Q7 – What are the functions and characteristics of enterprise
       resource (ERP) planning systems?

      Q8 – How do I choose the best system?


Chapter 7: Business Process Management                                 7-2
    Q1 – Why is BPM important to organizations?

     Business Process Management (BPM) is the systematic process of
      creating, assessing, and altering business processes

    Four stages of BPM:
         1. Create model of business
          process components; the “as-
          is” model documents the
          current process and users
          review and adjust the model
         2. Create system components;
          uses five elements of IS
          (hardware, software, data,
          procedures, and people)
         3. Implement business
          process
         4. Create policy for ongoing
          assessment and effectiveness


Chapter 7: Business Process Management                                 7-3
  Q1 – Why is BPM important to organizations?
   Functional processes involve activities within a single department;
    e.g., accounting or human resources.
   Cross-functional processes involve activities among several business
    departments; e.g., Customer Relationship Management (CRM)
    integrates the activities of several departments including sales,
    marketing, and customer support. The idea is not to improve existing
    functional systems, but to create more efficient business processes
    that integrate activities of all departments in a value chain
   Inter-organizational processes cross into multiple companies; e.g.,
    SCM (Supply Chain Management)




Chapter 7: Business Process Management                               7-4
  Q2 – How do organizations solve process problems?

     Object Management Group created a standard set of terms and
      graphical notations for documenting business processes
     That standard, called Business Process Modeling Notation
      (BPMN) is documented at www.bpmn.org




                                         BPMN Process Diagram of Top Level Business Process




Chapter 7: Business Process Management                                                 7-5
  Q2 – How do organizations solve process problems?

     Expand the original process
        diagram to show task
    assignments for each of three
             individuals




 Now expand
the Assemble
   and Ship
  Equipment
    activity




Chapter 7: Business Process Management                7-6
  Q2 – How do organizations solve process problems?


This is the “as
is” process for
 the Assemble
    and Ship
   Equipment
     activity

The process
 consists of
two parallel
  flows; for
regular and
    special
equipment,
respectively




Chapter 7: Business Process Management                7-7
  Q2 – How do organizations solve process problems?
      Business Process Management helps a business streamline its activities in
          order to increase its margins by creating more efficient processes.




     The process has been redesigned to create a single integrated picking list,
    which presumably will eliminate one trip to the warehouse, reducing the time it
        takes to select the equipment, thereby reducing cost and adding value

Chapter 7: Business Process Management                                            7-8
    Q3 – What role do information systems play in business processes?

    Even with the redesign there is a problem as the trip leader is not notified
     if special equipment is not available; e.g.
        A client requested and paid for a private tent. His request and payment were
         processed by the Register Clients activity.
        However, no such tent was available in inventory, and equipment and logistics
         manager was supposed to notify trip scheduler, who was supposed to notify
         client.
        Tent did exist, but it had been damaged and out for repair. Trip scheduler did
         not know it was under repair and allocated it to the client




Chapter 7: Business Process Management                                            7-9
 Q3 – What role do information systems play in business processes?
    Information systems, and database systems in particular, can play an
     important role in implementing activities that link other activities
         Thus create a database application to track equipment, location, and status
         Add new activity “Process Equipment Database” that updates database from
          Register Clients, Assemble & Ship, Restore Equipment activities

                                                                Linkages are the
                                                               interactions across
                                                                      the value
                                                                      activities.
                                                                Understanding a
                                                                     company’s
                                                                 linkages helps it
                                                                     succeed in
                                                                    designing or
                                                                   redesigning its
                                                                      business
                                                                     processes.


Chapter 7: Business Process Management                                          7-10
  Q4 – What are the most common functional systems?




    Functional systems facilitate the work of a single department. These
   systems evolved as extensions of the first system within an area; e.g.
                   payroll evolved into human resources.

Chapter 7: Business Process Management                                  7-11
  Q5 – What are the problems of functional systems?




        Traditional functional systems provide benefits to individual
        departments, but operate in isolation leading to data duplication,
        inconsistency, and lack of integrated information. Isolated decisions
        also lead to inefficiencies and the individual applications are
        sometimes called islands of automation.
        Thus there is a movement toward cross-functional systems that
        integrate the activities of all departments in a value chain (network of
        activity that implements business strategy); e.g., CRM and ERP

Chapter 7: Business Process Management                                      7-15
    Q6 –What are the functions and characteristics of CRM systems?

    Customer relationship management (CRM) is the set of business
     processes for attracting, selling, managing, and supporting customers.
     These include: solicitation, lead tracking (presale), and relationship
     management (post sale).
    The difference between CRM systems and traditional functional
     applications is that CRM addresses all activities that touch the customer
     (before and after the sale) and provides a single repository for data
     about all customer interactions.




Chapter 7: Business Process Management                                    7-16
 Q6 –What are the functions and characteristics of CRM systems?

      A Customer Relationship Management (CRM) system has three
       major components: solicitation, lead tracking (presale), and
       relationship management (post sale).
      The CRM is centered on an integrated customer database




Chapter 7: Business Process Management                                7-17
 Q7 – What are the functions and characteristics of ERP systems?


      An Enterprise Resource Planning (ERP) System provides more
       integration than a CRM by integrating primary value chain activities
       with human resources and accounting support activities across the
       enterprise.




Chapter 7: Business Process Management                                    7-18
     Q7 – What are the functions and characteristics of ERP systems?
     ERP provides a cross-
      functional view of the
      organization with more
      efficient business
      processes. The potential
      benefits of an ERP system
      include: lead time
      reduction, inventory
      reduction, improved
      customer service, and
      higher profitability.
     ERP implementation is
      very expensive and time
      consuming. Management
      support is crucial!
     The initial (and most
      successful) vendor of ERP
      software is the German
      company SAP

    Chapter 7: Business Process Management                             7-19
 Q7 – What are the functions and characteristics of ERP systems?
    The first task is to model the current business processes by comparing the
     processes to the ERP blueprint (see next slide).
    The company must then eliminate the differences. The organization converts its
     data and procedures to the new ERP system.
    Implementation requires that users be trained on the new processes,
     procedures, and use of the ERP system features and functions.
    The process of moving from separated, functional applications to an ERP
     system is difficult, time consuming, and expensive. Employees resist the
     changes in work responsibilities and normal habits
    Because so much organizational change is required, all ERP projects must
     have full support of the CEO and executive staff. Frequent two-way
     communication is essential.




Chapter 7: Business Process Management                                        7-20
  Q7 – What are the functions and characteristics of ERP systems?
     Business process management
     requires an organization to
     develop a vision for the
     organization that specifies
     business objectives and to
     identify critical processes that
     are to be redesigned.
     ERP vendors provides
     hundreds of inherent processes
     such as placing an order
     These processes have been
     tested and the organization
     modifies its activities to
     conform to these processes
     The disadvantage is that the
     processes may be different
     from what is already in place
     and require dramatic change.


Chapter 7: Business Process Management                              7-21
    Q8 – How do I Choose the Best System (Ask Independent Experts)

    Gartner Research (www.gartner.com) is the world’s leading
     information technology research and advisory company providing
     technology-related insight necessary for clients to make the right
     decisions, every day. Founded in 1979, Gartner is headquartered
     in Stamford, Connecticut, U.S.A., and has 4,000 associates,
     including 1,200 research analysts and consultants in 80
     countries.
    Forrester Research, Inc. (www.forrester.com) is an independent
     research company that provides pragmatic and forward-thinking
     advice to global leaders in business and technology. Forrester
     works with professionals in 19 key roles at major companies
     providing proprietary research, consumer insight, consulting,
     events, and peer-to-peer executive programs. For more than 25
     years, Forrester has been making IT, marketing, and technology
     industry leaders successful every day.

Chapter 7: Business Process Management                               7-22
  Q8 – How do I Choose the Best System (UM Access to Gartner)




                                                           UM spends
                                                       significant money
                                                          for access to
                                                       Gartner Research.
                                                        It is available to
                                                          students and
                                                      alumni at no charge
                                                       (i.e., those with a
                                                             Cane ID)




Chapter 7: Business Process Management                                       7-23
  Q8 – How do I Choose the Best System (Gartner’s Magic Quadrant)

                                                      The Magic Quadrant is
                                                      based on two axes:

                                                      Ability to Execute:
                                                      Summarizes factors such as
                                                      the vendor's financial
                                                      viability, market
                                                      responsiveness, product
                                                    UM spends $75,000channels
                                                      development, sales
                                                      year for access to
                                                    a and customer base.
                                                     Gartner Research.
                                                       It is available of
                                                      Completeness to Vision:
                                                      Reflects the alumni
                                                    students and vendor's
                                                      innovation, whether the
                                                         at no charge
                                                      vendor drives or follows the
                                                      market, and if the vendor's
                                                      view of how the market will
                                                      develop matches Gartner's
                                                      perspective.




Chapter 7: Business Process Management                                        7-24
  Q8 – How do I Choose the Best System (Gartner’s Magic Quadrant)




                                                    UM spends $75,000
                                                    a year for access to
                                                     Gartner Research.
                                                      It is available to
                                                    students and alumni
                                                        at no charge




Chapter 7: Business Process Management                                     7-25
  Q8 – How do I Choose the Best System (Gartner Hype Cycle)

                                                        The Hype be on the
                                                     You want to Cycle is a
                                                        commentary on the pattern
                                                      “leading edge”, not to
                                                        of human response
                                                      the “bleeding edge”
                                                        technology and provides a
                                                         graphical way to track
                                                         multiple technologies within
                                                         an IT domain or technology
                                                         portfolio. Hype Cycles
                                                    UM spends $75,000 planners
                                                         enable technology
                                                         to for access to
                                                    a yearcompare their
                                                     Gartner Research. a
                                                         understanding of
                                                         technology's to
                                                      It is available evolution
                                                         against Gartner's
                                                    students and alumnianalysis
                                                         of the technology's
                                                        at no charge
                                                         maturity, to decide when to
                                                         invest in that technology.
                                                         Each point on a hype cycle
                                                         includes an estimate of the
                                                         expected time to
                                                         mainstream adoption.


Chapter 7: Business Process Management                                         7-26
  Q8 – How do I Choose the Best System (Gartner Hype Cycle)


                                                     You want to be on the
                                                      “leading edge”, not
                                                      the “bleeding edge”




                                                    UM spends $75,000
                                                    a year for access to
                                                     Gartner Research.
                                                      It is available to
                                                    students and alumni
                                                        at no charge




Chapter 7: Business Process Management                                     7-27
    Summary

    Business Process Management (BPM) is the systematic process of
     creating, assessing, and altering business processes
    Functional systems facilitate the work of a single department and
     evolved as extensions of the first system within an area; e.g., payroll
     evolved into human resources. The problem with functional applications
     is isolation.
    Cross functional systems span the activities of many departments and
     integrate the activities of an entire business process.
         Customer relationship management (CRM) supports solicitation, lead
          tracking, and relationship activities within the organization
         Enterprise Resource Planning (ERP) integrates all of the organization’s
          principal processes. It is a formal approach based on a set of inherent
          processes.
         Most organizations are a mixture of functional and integrated systems.
    Inter-organizational processes cross into multiple companies


Chapter 7: Business Process Management                                              7-28
    Summary (Continued)

    Gartner Research and Forrester Research provide are competing
     companies that provide independent analysis of technology and
     technology trends
    Access to Gartner research is free to UM students and alumni
         The Gartner Magic (upper right) Quadrant identifies visionary companies
          excelling in implementation
         The Gartner Hype Cycle displays the time frame required for technology
          implementation




Chapter 7: Business Process Management                                          7-29
        Review: Select the appropriate term for each item
         Michael Porter – Customer Relationship Management – Data Duplication
              – Islands of Automation – Enterprise Resource Planning – SAP
         – Business Process Modeling Notation – Business Process Management

   1.    Problem with functional systems. Data Duplication
   2.    Individual applications (as opposed to cross functional applications)
         are sometimes called. Islands of Automation
   3.    He defined the value chain. Michael Porter
   4.    Cross-functional system for attracting, managing, selling, and
         supporting customers. Customer Relationship Management
   5.    German company known for ERP systems SAP
   6.    Cross-functional system that integrates an organization’s principal
         processes Enterprise Resource Planning
   7.    Systematic and structured approach whereby an organization
         rethinks its business processes. Business Process Management
   8.    Standard set of terms and graphical notations for documenting
         business processes Business Process Modeling Notation
   9.    Company providing independent evaluation Gartner Research

Chapter 7: Business Process Management                                          7-30

				
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