Business Processes: Governance, Operations & Transactions

• A business process is a series of activities completing a specific business purpose
• The four primary types are governance, management, operations, and information processes.
• Focus will be given to operations and associated information processes.

Governance Processes

• Address the directional aspects of a business
• They evaluate, direct, monitor, and control organizational performance
• These processes serve the ruling function and ensure alignment of strategic direction with stakeholder interests
• Governance consist of:
  • Evaluating: Assessing stakeholder interests and establishing strategic direction
  • Directing: Establishing strategic plans, policies, structures, and roles to implement strategy
  • Controlling: Establishing processes like risk and compliance management to meet strategic objectives
  • Monitoring: Establishing monitoring systems for organizational performance and compliance

Management Processes

• Address administrative business aspects
• Activities include planning, implementing, running, controlling, and monitoring operations
• These processes serve the running function, ensuring operations processes meet expectations
• Management processes consist of:
  • Planning: Defining operational objectives to support the organizational strategy
  • Implementing: Developing and executing processes to support operational objectives
  • Decision Making: Identifying and selecting actions to run the business and meet operational objectives
  • Controlling: Implementing controls to ensure operational objectives are met
  • Monitoring: Monitoring operational processes and performance

Operations Processes

• Address the operational aspects of a business
• Activities performed fulfill the central business function(s) of a business entity, fulfilling it's intended purpose
• Operations consist of:
  • Core Processes: Activities that constitute an entity's core business and generate primary value for stakeholders
    • Selling Goods/Services: Order processing, fulfillment, delivery/distribution, and collections
    • Acquiring/Procuring Resources: Requirements, determination, procuring/purchasing, receiving, storing, and payments
    • Producing Goods/Services: Product/production design, planning/scheduling, and storing
  • Supporting Processes: Activities that facilitate the achievement of core operations processes
    • Accounting/Reporting: Transaction, financial, and management reporting
    • Finance: Cash, financial planning, investments, and financing
    • Human Resources: Employee recruiting, hiring, training, development, and compensation
    • Information Systems: Acquisition, development, implementation, and operation of information systems/processes
    • Marketing: Market research, identification, strategy, promotion, sales generation, and distribution
    • Service: Installation, parts, repairs, replacements, and customer support

Information Processes

• Address the informational business aspects
• Activities transform data from operations into valuable information
• Information performs the keeping track function and supports operations
• Steps in the data/information processing cycle:
  • Data Capture: Inputting activities to get data into the system by collect, verify, and enter
  • Data Processing: Transforming captured data into useful data, by adding, altering, reviewing, updating, and deleting
  • Data Maintenance: Storage activities to maintain data so that it quickly accessible, by organizing, filing, and retrieving
  • Data Distribution: Output activities providing useful information in meaningful format, by aggregating, preparing, and distributing

Operations and Information Objectives

• Business objectives are requirements to drive and assess business performance
• A business process objective is a goal for a particular business process, which assessed how processes function relative to expectations
• Operations process objectives ensure operational processes effectiveness, efficiency, and security
• Effectiveness, efficiency, and security of operations directly impact information integrity and security
• Objectives fall into three areas:
  • Ensure Effective Operations: Concerns the effectiveness of an operational process to fulfill its purpose, capturing, processing, storing, and distributing information
    • An example, ensure clients are properly billed and employees are properly compensated
  • Ensure Efficient Operations: Concerns the efficiency of an operational process performed in a timely manner, capturing, processing, storing, and distributing information
    • An example, to make sure the billing process if cost effective, well organized, or completed in a timely manner, and make sure payroll is systematic or completed in a timely manner
  • Ensure Security of Operations Resources: Concerns the protection of resources like cash, information, and data, processing, and distributing information
    • An example, to ensure the confidentiality of client information to keep it protected from theft

Information Process Objectives

• Objectives ensure the integrity and security of information processing activities (capture, processing, maintenance, and distribution) and data/information
• Objectives are tailored to a particular system process, addressing input, processing, and output integrity, along with security concerns
  • Ensure Input Integrity: Concerns the accuracy, completeness, and validity of data capture activities given certain restrictions
    • An example, ensure hours and billable hours are accurate
  • Ensure Processing Integrity: Concerns the accuracy, completeness, and validity of data processing activities given certain restrictions
    • An example, to ensure billing totals are accurately computed and employee taxes are accurate
  • Ensure Output Integrity: Concerns the accuracy, completeness, and validity of data distribution activities given certain restrictions
    • An Example, ensure billing invoices are sent and billed properly
  • Ensure Security of IS Resources: Concerns protection of IS components like people, data, processes, IT, and facilities, ensuring confidentiality, integrity, and availability. An example is to protect client employee data from loss

Transaction Processing

• Transaction refers to a business impacting an organization
  • Transactions may be financial impacting financial position with monetary items, or nonfinancial with no monetary items
• Transaction Processing is capture, maintenance, and distribution of business transaction information
  • Transaction processes are business information processes to track operations
• A transaction processing system (TPS) is designed to process transactions, capture and distribute data.
• Transaction cycle is a data processing to process transaction data for recurring transaction events.
  • Transaction cycles organize ongoing events into activity sequences for efficient information processing, which track operations.
  • The core three are revenue, expenditure, and production, with a fourth general ledger/ reporting cycle

Revenue Cycle

• Revenue: Processes data relating to selling goods/services, focusing on selling to customers, and collecting payments
  • Consisting of order entry/sales (OE/S), billing/accounts receivable (B/AR), and cash receipts (CR)
  • Process:
    • Order Entry/Sales (OE/S) → Billing/Accounts Receivable (B/AR) → Cash Receipts (CR)
  • OE/S: Process Sales Order → Fulfill Order → Deliver/Ship Order → Update Inventory
  • B/AR: Determine Billing → Prepare Customer Invoice → Send Invoice → Update Customer A/R
  • CR: Receive Payments → Verify Payments → Deposit Receipts → Record Payment/Update Customer A/R
• Key documents for steps and integrity:
  • Customer Order: Captures a customer's request for goods/services
  • Sales Order: Standardizes critical order data like customer information and items ordered with terms
  • Customer or Order Acknowledgment: Informs the customer that has been fulfilled
  • Picking Ticket: Authorizes the warehouse to remove and ship items, referred to as a stock release
  • Packing slip: Notifies the customer of the quantities of each item in the shipped package. Also notifiying quantity of each item
  • Bill of Lading: Create a contract between seller and carrier, identify who is reliable for damage
  • Shipping Notice: Notifies customer and billing department if goods shipped to initiate accounts receivable by issuing an invoice
  • Sales Invoice (Customer Invoice): Notification stating an invoice for payment
  • Remittance Advice: Send back to document the payments amounts due
  • Remittance List: provide seller with date properly
  • Deposit Slip: amount for deposit the bank

Expenditure and Production cycles

• Expenditure processes data to procuring resources, including inventory purchasing, human resources, fixed assets, and operating
  • Consisting of purchasing/receiving (P/R), payables/accounts payable (P/AP), and cash disbursements (CD)
  • Process:
    • Purchasing/Receiving (P/R) →Payables/Accounts Payable (P/AP)→ Cash Payments (C/P)
  • Determine Requirements → Order Goods/Services → Receive Goods/Services→ Record/Update Inventory
  • Receive Vendor Invoice →Validate Invoices/Payables → Record Payables/Update A/P
  • Prepare Payments → Issue Payments → Record Payments/Update A/P
• Key documents for steps:
  • Purchase Requisition: Authorization for purchase of goods
  • Purchase Order: Request the good/services
  • Vendor Packet Slip: Trigger the receiving process to verify and match against the packaging slip
  • Purchase Order(Blind Copy): Supporting the verifying of the packaging ship, in order to ensure the are not influenced
  • Receiving Report: Verify the the items from the vendor
  • Purchase Invoice: Notify payables in order to trigering accounts payable subprocess
• Production focuses on converting resources into finished product/service,
  • Consisting of product/production design (P/PD), production planning/scheduling (PP/S), materials requirements planning (MRP), production events/operations (PE/O), and management reporting (MR)
  • Process:
    • P/PD → PP/S → MRP → PE/O → MR
  • Links: Production planning/scheduling (PP/S) to revenue cycle order entry/sales (OE/S) and inventory purchasing/receiving (P/R) to materials requirements planning.
• Key Documents:
  • Bill of Material: listing types quantities of components
  • Parts Master: a record listing details

E-Transaction Processing

• e-Transaction processing uses networks to facilitate transactions (processing transactions online)
  • Includes online transaction entry (OLTE), online batch processing (OLBP), online real-time processing (OLRT)
  • Online Transaction Entry (OLTE): device scanning information for quick data process
  • Online Batch Processing (OLBP): Data entered at a time accumulates in temporary file, good for bulk data
  • Online Real Time (OLRT): immediate model updates in constant access of up-to-date information

OLTP, E-Payments, & POS

• Online Transaction Processing (OLTP): systems enable online applications, processing simple transactions with fast response times, being, concurrent, high volume, always available.

• Electronic (e-Payment) Processing: Utilizes online tech to pay rather than cash, and direct payments

  • Electronic Funds Transfer (EFT): direct money transfers with online networks
  • Electronic Payment (e-Payment) Methods: ways consumers pay electronically
  • Money: a value card for payments
  • Wallets: Applications with an encrpted user to payment and allow people to pay online
  • Payments: through mobile
  • Currency: unregulated currency
  • Service (EPS): process online or face to face transaction

• Point of Sale (POS) Systems :

  • POS: is the time and place payment
  • consists of updating the information.
  • Systems : Computer cash register with a larger, wider list processes.

• Mobile Point of Sale (mPOS): uses cell phone

Process Analysis and Mining

• Process Analysis: systematic analysis of internal business processes for strategy and improvement in customer efficiency
  • Goal Specification: identify the goal to improve
  • Process Identification: identify to analyze
  • Data Collection : collect data from are performing worst - Process mapping visual the data
  • Analysis analyse the issues identify the opportunities to improve
  • Plan Improvements implement new process Mining: analytics that track and analyse data
• Process mining tools extract BP data captured by tools

Explore business processes, including the roles of governance, operations, and information. Learn how transaction cycles streamline operations and enhance customer value. Understand the impact of e-transactions and POS systems on business efficiency.