Introduction to Information Systems INFT 11000 Fall 2024 Week 2 PDF

INFT 11000 INTRODUCTION TO INFORMATION SYSTEMS FALL 2024 WEEK 2  Lecture Outline 1. What is Business Process? 2. Competitive Advantage and Strategic Information Systems 3. What is Business Process Modelling? 4. Information Systems in Business Process Management 5. Business Process Reengin...

INFT 11000 INTRODUCTION TO INFORMATION SYSTEMS FALL 2024 WEEK 2  Lecture Outline 1. What is Business Process? 2. Competitive Advantage and Strategic Information Systems 3. What is Business Process Modelling? 4. Information Systems in Business Process Management 5. Business Process Reengineering, Business Process Improvement, and Business Process Management What is a Business Process? Opening Case: Palantir What is Palantir & What Does Palantir Do? https://youtu.be/h0TrjWXM-9s?si=73gYepppPQe_Cx_8 Opening Case: Palantir  The brainchild of Karp’s friend and law-school classmate Peter Thiel, Palantir was founded in 2003. It was seeded in part by In-Q-Tel, the C.I.A.’s venture-capital arm, and the C.I.A. remains a client.  Palantir’s technology is rumored to have been used to track down Osama bin Laden — a claim that has never been verified but one that has conferred an enduring mystique on the company. These days, Palantir is used for counterterrorism by a number of Western governments...  The U.S. Army uses it for logistics, among other things.  The investment bank Credit Suisse uses it to guard against money laundering.  These myriad applications are just further proof that many problems are data-integration problems. https://www.nytimes.com/interactive/2020/10/21/magazine/ palantir-alex-karp.html Business pressures, organizational performance and responses, and IT support. Case study: Summary  Palantir system helped respond to business pressures (national security and bank fraud)  The system helps analyze vast amounts of data and gives competitive advantage  The study highlights incredible complexity of modern tech world  Palantir highlights the rapidly changing environment and challenges that an organization faces and how systems may respond to them  Demonstrates that IS can be strategic Information Systems Our Phenomena of Interest: Business Processes  Collection of related events, activities and decisions, that involve a number of actors and objects, and that collectively lead to an outcome that is of value to an organization or its customers.  Examples:  Order-to-Cash  Quote-to-Order  Procure-to-Pay  Application-to-Approval  Fault-to-Resolution (Issue-to- Resolution)  Claim-to-Settlement  Business Processes A business process is an ongoing collection of related activities that create a product or service of value to the organization, its business partners, and/or its customers Comprised of three elements: o Inputs o Resources o Outputs Efficiency vs. effectiveness ~Rainer IntroIS Business process e- ticket ordering.  “My washing machine doesn’t work…” Insurance Call Centre Company Technician Customer Customer Parts Service Store Dispatch Centre VALUE fault-to-resolution process  Processes and Outcomes  Every process leads to one or several outcomes, positive or negative  Positive outcomes deliver value  Negative outcomes reduce value  Fault-to-resolution process’ outcomes: 1. Fault repaired without technician intervention 2. Fault repaired with minor technician intervention 3. Fault repaired and fully covered by warranty 4. Fault repaired and partly covered by warranty 5. Fault repaired but not covered by warranty 6. Fault not repaired (customer withdrew request) Examples of Business Processes Examples of Business Processes Continued Cross-Functional Processes  The processes that are the real value in the company (main processes) are precisely those that span multiple organizational areas, IT systems and applications.  Most of the time the processes are divided when there are transfers between departments, because once a process is transferred to the next department, it is difficult to track and manage.  Therefore, an organization requires a more holistic and comprehensive to define and manage their business processes form in which the business process is seen as an organizational entity that encompasses areas, and managed as a single process rather than a set of tasks in individual organizations. No single functional area is responsible Competitive advantage  Competitive advantage  In 1984 Hayes and Wheelwright suggested that companies compete in the marketplace by virtue of one or more of the following competitive priorities:-  Quality  Lead-time  Cost  Flexibility  Many authors and practitioners have added to and adapted this list over the years.  Foo and Friedman (1992) for example proposed a set of six competitive priorities, adding `Service' and `Manufacturing Technology' to the above while expanding `Time' into:  `time to market' and  `lead times'.  Others have added  `Innovation', https://www.ifm.eng.cam.ac.uk/research/dstools/quality-time-  `Dependability' etc. cost-flexibility/ Porter’s Competitive Forces Model. Porter's Competitive Forces Model, also known as Porter's Five Forces Framework, is a strategic analytical tool developed by Michael Porter in 1979. It is used to assess and analyze the competitive environment within an industry and helps organizations understand the factors that influence competition and profitability. The model is widely used by businesses to formulate their competitive strategies and make informed decisions.   Threat of New Entrants:  This force assesses the ease with which new competitors can enter the market. Barriers to entry, such as economies of scale, brand loyalty, government regulations, and high capital requirements, can deter new entrants and make an industry less attractive.  Bargaining Power of Suppliers:  This force examines the power suppliers have over the industry. If there Porter’s are few suppliers and they have unique resources or products, they can exert significant influence and potentially raise prices or reduce the quality of goods and services. Competitive  Bargaining Power of Buyers:  This force evaluates the power customers have to negotiate prices and demand better quality or service. If buyers have many alternatives and Forces low switching costs, they can put pressure on industry players to offer better terms.  Threat of Substitute Products or Services: Model  This force considers the availability of substitute products or services that can meet the same needs as those in the industry. The existence of close substitutes can limit price increases and reduce profit margins.  Intensity of Competitive Rivalry:  This force assesses the level of competition among existing firms in the industry. Factors such as the number of competitors, their market share, and their strategies all influence the competitive rivalry. High rivalry can lead to price wars and reduced profitability. Strategies for Competitive Advantage. AI in Bike Share : Tale of two cities  https://youtu.be/fu7VLfcLf6Y ?si=clkmzzbivqdzSeZX  VS  https://youtu.be/Whu-FafSA6 A?si=m_czZxuexiw8hbsO What is Business Process Modelling? Process Modelling… 24  is a common language for naming and framing an issue  integrates processes with other artefacts (e.g. systems, organizations, data, services, risks)  enables walk-through, validation and testing (e.g. via simulation)  can be used as a benchmark for measuring improvements – “what- if” analysis  provides a blueprint for process automation Adapted from Davis, 2000; Wreden, 1998 Why Process Modelling? 25  Business processes are increasingly valued as essential assets of an organization  This significance demands dedicated management of processes  We need ways to extract processes out of the organizational complexity in order to discuss, analyze, improve and automate them The Core 26 Elements of a Process  Activities  active elements (e.g. ‘enter sales order’)  time-consuming, resource- demanding  state-changing  Events  passive elements (e.g. ‘sales order has been entered’)  represent conditions / circumstances  atomic, instantaneous The Core 27 Elements of a Process  Business Objects (or Data)  the organizational artifacts that undergo state changes  physical or electronic information  examples:  sales order, digital object, consulting proposal  Actors (or Resources)  the entities performing process activities and generating events  human and systems  examples:  financial officer, warehouse clerk  ERP, CRM, SAP, application X… How do we combine these? 1. What needs be done and when? - Control flow 2. What do we need to work on? – Data 3. Who’s doing the work? - Resources (human & systems) Finance ERP Department Invoice Report Invoice Enter Check no Invoice Invoice Post Invoice mismatches Invoice Details Mismatches Invoice received posted Invoice DB Invoice Senior Finance Officer mismatch Block exists Invoice Invoice blocked Process Perspectives 29 Enter Check  Control Flow Perspective Invoice Invoice no mismatches Post Invoice Invoice Details Mismatches Invoice received posted  “what needs to be done and when”  predecessor/successor relationship among activities and events mismatch Block exists Invoice Invoice  the central information depicted in a process model blocked  Data Perspective  “what do we need to work on”  input/output data to activities Invoice Report Invoice DB  complements the control flow  Resource Perspective  “who’s doing the work” Finance ERP Department  human participants and systems that perform control flow activities and generate events Senior Finance Officer  complements the control flow Further Potential Elements in a 31 Process  Objectives, Goals  link to strategy  Risks  for risk-profiling the process  Policies, Rules  for checking process compliance  Knowledge  to depict expertise required  … Where does process modelling fit in BPM? Body of principles, methods and tools to design, analyze, execute and monitor business processes, with the ultimate goal of improving them. IT systems Customers People Organizational Business Processes Data Trading Partners IT infrastructure Suppliers Dumas, La Rosa, Mendling, Reijers, 2013 Where does process modelling fit in BPM? …design, analyze, execute and monitor business processes… Process identification Focus of this unit Process Processarchitecture architecture Conformance Conformanceand and Process As-is As-isprocess process performance performanceinsights insights discovery model model Process monitoring and Process controlling analysis Executable Executable Insights Insightson on process process weaknesses weaknessesand and model model their their impact impact Process Process implementation To-be To-beprocess process redesign model model Information Systems in Business Process Management The goal of business processes  Customer Satisfaction  Cost Reduction  Cycle and fulfillment time reduction  Quality  Differentiation  Productivity IS in Process Management IS’s help execute the process by more efficiently and more effectively by: o Informing employees when it is time to complete a task o Providing required data o Providing a means to complete the task Capturing and Storing Process Data Processes generate data o Dates, times, product numbers, quantities, prices, addresses, names, employee actions IS’s capture and store process data (aka transaction data) Capturing and storing data provides immediate, real-time feedback Monitoring Process Performance IS evaluates information to determine how well a process is being executed Evaluations occur at two levels: o Process level o Instance level Monitoring identifies problems for process improvement Changing Nature of the Workforce The workforce is becoming more diversified: o Women o Single parents o Minorities o Persons with disabilities IT is enabling telecommuting employees Powerful Customers Increasing consumer sophistication and expectations Consumers are more knowledgeable about o Products and services o Price comparisons o Electronic auctions Customer relationship management (CRM) Technology Pressures Technological innovation and obsolescence o Rapid development of both new and substitute products and services Information overload o Vast stores of data, information, and knowledge o Difficulties in managing data for decision making Societal, Political, and Legal Pressures Social responsibility Compliance with government regulations Protection against terrorist attacks Ethical issues Social Responsibility Green IT o Facilities design and management o Carbon management o International and U.S. state environmental laws Business–Information Technology Alignment Six characteristics of excellent alignment: 1. Organizations view IT as an engine of innovation that continually transforms the business, often creating new revenue streams. 2. Organizations view their internal and external customers and their customer service function as supremely important. 3. Organizations rotate business and IT professionals across departments and job functions. 4. Organizations provide overarching goals that are completely clear to each IT and business employee. 5. Organizations ensure that IT employees understand how the company makes (or loses) money. 6. Organizations create a vibrant and inclusive company culture. Business Process Re-engineering Business Process Reengineering Business process reengineering is a strategy to make an organization more productive and profitable Organization examine their business processes from a “clean sheet” perspective and reconstruct the business functions Improvement Management Business Process Improvement  Business process Improvement is a less radical strategy to make an organization more productive and profitable  Organization examine their business processes from a incremental perspective and address root causes of ineffectiveness IT’s About Business NASCAR Uses IT in Its Prerace Inspection https://youtu.be/2-X_eujF8Z8?si=E8YEr76Rpld73ZDi Measures of Excellence in Executing Business Processes Customer satisfaction Cost reduction Cycle and fulfillment time reduction Quality Differentiation Productivity Business Process Reengineering (BPR) Michael Hammer & James Champy, 1993, Reengineering the Corporation Business process reengineering (BPR) o A radical redesign of an organization’s business processes to increase productivity and profitability o Examines business processes with a “clean slate” approach Business Process Improvement (BPI) Business process improvement (BPI) o An incremental approach to move an organization toward business process centered operations o Focuses on reducing variation in process outputs by identifying the underlying cause of the variation Six Sigma is a popular methodology for BPI BPI versus BPR BPI BPR Low risk/low cost High risk/high cost Incremental change Radical redesign Bottom-up approach Top-down approach Takes less time Time consuming Quantifiable results Impacts can be overwhelming All employees trained in BPI High failure rate IT’s About Business BPR case studies https://youtu.be/bca91f2zIJE?si=XA1STTldKFq4UAzh (~24 mins) Questions?