Week 10

Ch5: IS for Managing Business

Processes
 Chapter 5:
IS for Managing Business
Processes
Business Process

Business process:
o a set of activities and tasks that will accomplish an organizational goal.
Three types:
o Management processes
o Operational processes
o Supporting processes
Goal of business process design is effectiveness and efficiency
IS and Business Process

IT can help!
o Information Systems can ENABLE business change
IT can hurt!
o Inflexible information systems

True transformation requires discontinuous thinking

o Recognize and shed outdated rules
o Dont [rearrange] deck chairs on the Titanic
 Real World Example

Sloan Valve Company, a family-owned global manufacturer of plumbing products, was

launching a range of new products every year.
The new product development (NPD) process was both a core process and a
strategic asset.
The process was complex
The process was broken
No one was accountable for the process

What did Sloan do?

(c) 2013 John Wiley & Sons,

Silo vs Process Perspectives
Functional (Silo) Perspective

A typical hierarchical structure is organized by function or core

competency.
Silos are self-contained functional units
Silos have benefits for the organization
o Training optimization
o Avoid redundancy in expertise.
o Make it easier to understand the role of each silo.

(c) 2013 John Wiley & Sons,

 Disadvantages of Functional (Silo)
Perspective
Can be significantly sub-optimized
Inter-departmental communication gaps
Improper hand-offs between silos could produce negative results

Silos can view the organization too myopically

o Lose sight of the big picture

(c) 2013 John Wiley & Sons,

Process Perspective
Process-oriented organizations break down the barriers of structural
departments
Can avoid sub-optimizations by
o avoid or reduce duplicate work
o Facilitate cross-functional communication
o Optimize business processes
Process Design Basics

Processes, are interrelated and sequential

Process will have:
o Start and end
o Inputs and outputs
o Transformation tasks
o Metrics
o WORKFLOWS
 Business Process Management - BPM
Class of systems that help manage business workflows.
Initially helped track document-based processes
Modern tools allow an organization to actively manage and improve its processes
from beginning to end.

(c) 2013 John Wiley & Sons,

Changing Business Processes
 Changing Business Processes

Two techniques are used to transform business processes:

o Radical process redesign.
o Incremental, continuous process improvement.

These approaches view the business as a set of business processes

rather than using a silo perspective.
o Subscribe to the process-oriented view

(c) 2013 John Wiley & Sons,

Incremental Change
Managers improve business processes through small, incremental changes.
o Three steps:
Choose process
Choose metric
Enable personnel
Workers often react favorably to incremental change.

(c) 2013 John Wiley & Sons,

Incremental Change - Total Quality Management

Based on W. Edwards Demings key principles to transform business processesDemings 14 Points.

1. Create constancy of purpose for improving products and services.
2. Adopt the new philosophy.
3. Cease dependence on inspection to achieve quality.
4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single
supplier.
5. Improve constantly and forever every process for planning, production and service.
6. Institute training on the job.
7. Adopt and institute leadership.
8. Drive out fear.
9. Break down barriers between staff areas.
10. Eliminate slogans, exhortations and targets for the workforce.
11. Eliminate numerical quotas for the workforce and numerical goals for management.
12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system.
13. Institute a vigorous program of education and self-improvement for everyone.
14. Put everybody in the company to work accomplishing the transformation.

(c) 2013 John Wiley & Sons,

 Incremental Change - Six Sigma Methodology

Six Sigma methodology is a very specific set of steps to be followed

depending on the life cycle of process
EXISTING PROCESSES
o DMAIC (define, measure, analyze, improve, control)
NEW PROCESSES
o DMADV (define, measure, analyze, design, verify)

(c) 2013 John Wiley & Sons,

Radical Change

Helps attain aggressive improvement goals.

The goal is to make a rapid, breakthrough impact on key metrics

Typically faces greater internal resistance

Used only when major change is needed in a short time.

(c) 2013 John Wiley & Sons,

Radical Changes a word of caution
Typically faces greater internal resistance than incremental change
Not surprising, as workers are being asked to cease old behaviors in
favor of new
Should be carefully planned and communicated
Consider change management discussion from a few weeks back

(c) 2013 John Wiley & Sons,

Agile and Dynamic Processes
Agile and Dynamic Business Processes

Processes that iterate through a cycle of design, deliver, evaluate,

redesign, etc
Agile processes are designed to simplify redesign and
reconfiguration
o Flexible and easily adaptable, incrementally changed with little effort
Dynamic processes, on the other hand, reconfigure themselves as
they learn
Both require a high degree of IT use
Examples

AGILE
o Manufacturing operations
Automobile production lines
o Software development
Agile methodologies

DYNAMIC
o Cloud infrastructure (AWS, Azure, etc)
Enterprise Systems
Enterprise Systems

Enterprise Systems are integrated software packages with a common

database, cutting across organizational systems
Include examples such as:
o Enterprise Resource Planning (ERP)
o Supply Change Management (SCM)
o Customer Relationship Management (CRM)
o Product Lifecycle Management (PLM)
Figure 5.8 Enterprise systems and the processes they automate.

(c) 2013 John Wiley & Sons, 7-24

 Enterprise Resource Planning (ERP) Systems
Allow for the integrated management of core business processes
Category of business management software
o Used to collect, store, manage and interpret data from business activities

Provides continuously updated repository of core processes

Allows the organization to track:
o Business resources
o Status of business commitments

(c) 2013 John Wiley & Sons,

 ERP II
ERP originally dealt with core back-office processes
Modules included:
o Manufacturing,Accounting,human resources,sales.
ERP II describes web-based software that allows access to ERP
systems by employees and partners
o Reaches outside of the organization
Enables collaborative initiatives using other enterprise applications

(c) 2013 John Wiley & Sons,

https://en.wikipedia.org/wiki/Enterprise_resource_planning#/media/File:ERP_Modules.png
 Managing Customer Relationships
Customer relationship management (CRM)
o A set of software programs useful in obtaining, enhancing relationships
with, and retaining customers.
o Consists of technological components as well as many pieces of
information
Optimized CRM processes and systems can have tremendous impact
on a business

(c) 2013 John Wiley & Sons,

 Managing Supply Chains

Supply chain management (SCM) systems manage the integrated

supply chain.
Supply chain process:
o Begins with raw materials
o Ends with a product or service ready to be delivered
o Includes all activities in between

(c) 2013 John Wiley & Sons,

Product Lifecycle Management (PLM)

PLM systems automate the lifecycle of a product

o From Ideation
o To decommission
PLM contains all the information ever captured about a product.

(c) 2013 John Wiley & Sons,

Benefits of Enterprise Systems

All modules easily communicate together with efficiency.

Useful tools for effectively centralizing operations and decision making.
Reinforce the use of standard procedures across different locations.
Redundant data entry and duplicate data may be eliminated.
Standards for numbering, naming, and coding enforced.
Data and records can be cleaned up through standardization.

(c) 2013 John Wiley & Sons,

Disadvantages of Enterprise Systems

Require a lot of work!

Redesign of business processes

Organizations are expected to conform to the enterprise system

A hefty price tag
Sold as a suite rather than individual modules.
Risky

(c) 2013 John Wiley & Sons,