Business Processes Fundamentals

Business Processes

• Business processes are flows of material, information, and knowledge that define how specific business tasks are performed.
• These processes may be tied to a functional area or be cross-functional.
• A business can be seen as a collection of business processes.
• Business processes can be assets or liabilities.

Functional Business Processes

• Examples include:
  • Manufacturing and production (assembling products, checking for quality, producing bills of materials)
  • Sales and marketing (identifying customers, making customers aware of products, selling products)
  • Finance and accounting (creating financial statements, paying creditors, managing cash accounts)
  • Human resources (hiring employees, evaluating employees' job performance, enrolling employees in benefits plans)

Improving Business Processes with Information Technology

• IT increases efficiency of existing processes by:
  • Automating manual steps
  • Changing the flow of information
  • Replacing sequential steps with parallel steps
  • Eliminating delays in decision making
  • Supporting new business models
• IT enables entirely new processes.

Systems for Different Management Groups

• Transaction Processing Systems (TPS):
  • Serve operational managers and staff
  • Perform and record daily routine transactions necessary to conduct business
  • Examples: sales order entry, payroll, shipping
  • Allow managers to monitor status of operations and relations with external environment
  • Serve predefined, structured goals and decision making

Systems for Different Management Groups (continued)

• TPS failure can lead to a firm's demise.
• A payroll system is an example of a TPS.
• Systems for business intelligence:
  • Provide data and software tools for organizing and analyzing data
  • Used to help managers and users make improved decisions
• Other systems include:
  • Management Information Systems
  • Decision Support Systems
  • Executive Support Systems

Management Information Systems

• Serve middle management
• Provide reports on firm's current performance, based on data from TPS
• Provide answers to routine questions with predefined procedures for answering them
• Typically have little analytic capability

Decision Support Systems

• Serve middle management
• Support nonroutine decision making that is unique and rapidly changing
• Use internal and external information, including TPS and MIS data
• Examples: model-driven DSS (e.g. voyage-estimating systems) and data-driven DSS.