Business Process Solutions Chapter 11

Chapter Introduction

• Learning outcomes include defining business processes, understanding business process management (BPM) and re-engineering, identifying supporting systems, contrasting transaction processing systems with enterprise systems, and recognizing how IT can provide competitive advantage.

Business Process

• A business process is a series of tasks aimed at achieving specific business goals.
• Effective processes contribute to business efficiency and can provide a competitive edge.
• Documenting processes is critical to ensure organizational control and standardization, exemplified by Tim Hortons' uniform coffee-making procedure.
• Complex processes may require diagrams for better tracking and understanding, compared to simple checklists.

Managing Business Process Documentation

• Document management systems track and maintain versions of business process documents, ensuring employees have access to the most current processes.
• Such systems support approvals, workflows, and notifications of document changes to relevant stakeholders.

Tools for Documentation

• Diagramming tools facilitate business process modeling, enhancing understanding and communication.
• BPMN offers a straightforward flowchart style for documenting processes but may lack in system decomposition for complex systems.
• DFD uses a holistic top-down approach to illustrate system components and data flows.
• UML is a comprehensive modeling tool for constructing software systems, but may be overly complex for straightforward business process documentation.

Business Process Management

• BPM involves planning, documenting, implementing, and distributing business processes with technology support.
• It aims to enhance efficiency and provide competitive advantages, focusing on processes that cross departmental boundaries or require complex decision-making.
• Benefits of BPM include empowering employees, built-in reporting, enforcing best practices, and maintaining consistency across operations.

Business Process Reengineering (BPR)

• BPR involves a radical rethinking of existing processes to achieve substantial improvements in productivity and quality.
• Michael Hammer's principle suggests that automation alone does not improve inefficient processes; a complete redesign is necessary.
• BPR gained notoriety for misuse in cost-cutting measures but has since been integrated into effective business process management strategies.

Example of Business Process Management in Retail

• A clothing retailer can gain an advantage through superior customer service, exemplified by an innovative returns policy.
• By developing a customized ERP system and training employees, the retailer can effectively manage returns and adjust policies based on customer behavior.

Information Systems

• Information systems automate business transactions and processes, offering support for operational, tactical, and strategic decision-making.
• Transaction Processing Systems (TPS) form the foundation of information systems, collecting and managing transaction data.
• TPS are critical in retail and banking for processing transactions, but data privacy concerns can arise if customers remain anonymous in cash transactions.
• Loyalty programs help retailers gather customer data through incentives, facilitating improved customer relationship management.### Transaction Processing Systems (TPS)
• TPS produces outputs including external documents (e.g., payment notifications) and internal reports.
• It collects raw data from both internal and external sources for database storage.
• A centralized database acts as the key information resource for the company, enabling efficient data management.
• Data can be updated through:
  • Batch Processing: Data collected over a period, processed together. Efficient for periodic tasks like payroll.
  • Online Processing: Real-time updates, keeping data current, often at a higher cost. Example: airline reservations.

Management Information Systems (MIS)

• MIS extracts data from centralized databases to generate reports, facilitating routine managerial decisions.
• Reports tailored to meet specific information needs of managers.
• Other systems, such as decision support, executive information, and expert systems, support non-routine decision making.

Enterprise Resource Planning (ERP)

• ERP systems centralize organizational information control, addressing data management challenges.
• Major vendors include SAP, Microsoft, and Oracle.
• Key characteristics of ERP:
  • Centralized database where all organizational data is stored and accessed.
  • Organization-wide integration managing various functions (finance, manufacturing, sales).
  • Modular nature allows customizable setups based on specific organizational needs.

ERP Functionality Example

• Sales: Orders processed with real-time credit checks, pricing calculations, and confirmations.
• Inventory: Immediate availability check with notifications for manufacturing requirements.
• Manufacturing: Automatic production escalation based on confirmed orders.
• Human Resources: Hiring notifications triggered by demand increases.
• Purchasing: Automatic orders to replenish raw material inventories in response to demand.
• Order Tracking: Customers can monitor order status and view additional products.
• Decision Support: Management insights leading to strategic planning based on sales trends.

Business Processes and ERP

• Implementing ERP enforces standardized business processes, often incorporating best practices.
• Organizations must choose between adopting these recommended practices and customizing their processes.
• Customization can complicate system upgrades, requiring ongoing maintenance.

Other Enterprise Systems

• Customer Relationship Management (CRM): Manages customer interactions, enhancing personalization and relationship-building.
• Supply Chain Management (SCM): Oversees the entire supply chain, improving coordination and inventory management, exemplified by Walmart's integration capabilities.
• Knowledge Management: Captures and organizes internal knowledge, allowing for better utilization of company insights.

Electronic Data Interchange (EDI)

• EDI facilitates the electronic exchange of business documents, reducing resource requirements in supply chain management.
• It improves efficiency by automating order processes and data sharing between partners.

Summary Takeaways

• Information technologies greatly influence organizational design and processes.
• Effective management of business processes is essential for competitive advantage.
• ERP systems provide a framework for integrating and managing business operations through centralized databases and best practices.### Processes
• A sequence of tasks aimed at achieving a specific goal.

SAP

• Stands for Systems, Applications & Products in Data Processing.
• Originates from Germany and specializes in enterprise software.
• Focuses on managing business operations and customer relations.

Supply Chain Management (SCM)

• Manages the connections along the supply chain.
• Oversees inventory across different product development stages.

Transaction Processing System (TPS)

• Collects, modifies, and retrieves data related to business transactions.
• Acts as a crucial system for processing day-to-day operations.

Versions and Timestamps

• Document management systems maintain multiple versions of documents.
• The latest version is easily identified and designated as the default.

Explore the key concepts of Chapter 11, focusing on Business Process Solutions. This chapter covers topics such as Business Process Management, Information Systems, and Enterprise Resource Planning, providing a comprehensive understanding of how these elements integrate within business processes. Test your knowledge with a quiz designed to assess your grasp of these essential topics.