Chapter 2:

Business Process
Overview
• Example of a business process: The registration process becomes a
freshman at a college
• The process begins with the prospective student visiting the new
student enrollment (PMBP) and then PMBP staff then perform
input data prospective students to the system
• At that time, the prospective student was photographed for the
photo to be stored in the system along with the prospective
student's data
• Then the prospective student is notified information about USM
(date and time), then prospective students come to the treasurer
to make payment of USM fee
• And then the prospective student receives a USM card and proof of
payment of USM fee and then follows USM on the appointed day
• The result of USM is announced then the graduated student
candidate re-register by attaching the required files
• And make payment of the first installment tuition to the treasurer
Objectives
After studying this chapter, you should be able to:
• Describe the components of an organization's strategy and
mission
• Describe some form of organizational structure with its
advantages, disadvantages and implications for the operation of
an organization
• Define and exemplify a business process
Discuss the importance of adopting a business process
perspective within an organization
• Describe the role of the ERP system in a business process
design
• Consider some issues for an organization that turns to process
focus
• Describe and evaluate approaches to change specific business
processes in a BPR (Business Process Re-engineering)
Contents
• Strategy and Mission Organizations
• Design / organizational Forms
• Perspective Functional Organization
• Excess forms based organization functional
• Lack Forms Based Organization Functional
• Does the business process?
• Differences Business Process Perspective The Perspective of
Business Functions
• Business Process In An Organization
• Why Business Processes?
• ERP Systems and Business Processes
• It should be considered when switching to environment-based business
processes
• Changing Business Processes
• Technology-driven process improvements
Strategy and Organization Mission
Overview

Prospective students
Pay a USM fee and get
apply for USM
proof of USM card and USM implemented
registration by
card
providing personal data

For prospective
students who pass
Make a First Ticket Announcement of USM
USM: re-register by
Payment payment Results
completing the
necessary files
Overview
• A business process must be designed in such a way as to produce
output quickly, precisely and efficiently as possible
• A business process must have a specific purpose
• A business process contains several different tasks that originate
in different parts of an organization that work together for the
completion of a particular process.
• Business processes to date lie within the heart of a modern
organization
• Along with increasing competition among companies, many
companies are required to reevaluate existing business processes
and take into account the many assumptions and philosophies
embodied in their business process design.
Overview
• In this chapter, we will begin to understand how an organization
determines its purpose, which certainly comes from the mission
and strategy and the development of the implementation of a
business process
• This chapter will also lead us to differentiate the traditional model
(hierarchical model) with (model learner – process-based
model) an organization-based process model following its
advantages and disadvantages
• we will also understand the advantages of adopting a business
process perspective and explaining how a business process
becomes central to the design of a modern organization
• Understand BPR (Business Process Reengineering) as an
approach to organizational change as well as see some advantages
and disadvantages of BPR
Lesson Objective
After studying this chapter, you should be able to:
• Describe the components of an organization's strategy and mission
• Describe alternative organizational structure and their strengths,
weaknesses and implications organization operations
• Define and examples a business process
• Discuss the benefits of organizations adopting a business process
perspective
• Explain the role enterprise resource planning (ERP) systems play in
business process design
• Consider some of the issues for organizations changing to a process-
based focus
• Describe and evaluate approaches to changing business processes, in
particular BPR (Business Process Re-engineering)
• Critically evaluate BPR
1. Organisational Strategy and Mission
• Organizational Mission
• When organization are created they will typically have a mission statement
• The mission statement usually contains an expression of the organization’s vision,
business domain, competencies and values
• Organizational Vision
• The vision make a clear statement about what the organisations wants to be in the
future
• Organizational Strategies
• Strategy is about:
• A selection of a series of actions to be performed
• A tool to translate the mission into an activity
• in a business environment, the strategy can work on three levels, namely:
• Internal strategy
• Relates to the decisions that are made within the organization, such as
organizational design and activities that are performed
• Competitive strategy
• Concerned with understanding the industry within which the
organisation operates and distinguishing the organization within an
industry
• Business portfolio strategy
• Operates at a broader level
• Looking at the decision of which industry an organization should
compete within and how organizations can compete in new industries.
• Information technology and the application of information systems can impact on each
level of these strategy levels that has been described.
1. Strategy and Mission Organizations
1. Strategy and Mission Organizations
• Strategy describes how an organization deal with competitors, and
the products are sold in the market as well as using the shipping
method how
• Michael porter noticed that a business has two choices when
deciding on a strategy
• cost leadership
• Looking at an organization is able to carry out their
activities are cheaper than their competitors, through
economies of scale, technology, overhead costs are low or
line efficiently with suppliers
• Differentiation
• Meaningful a business adds value to its customers,
offering products and services that is unique targeted to
meet the needs of the customer
• Requires attention and higher customer personalization to
be tailored to customer demands which ultimately allow
organizations to set higher product costs
1. Strategy and Mission Organizations
• Porter see that the implementation and delivery of alternative strategies
(differentiation) include 5 stages:
• Operational Effectiveness
• Ability to perform the activities better than competitors
• Effective related to doing things right
• Uniqueness
• - A business should choose activities that are different from other
competitors on the market to differentiate themselves from
competitors and gain a strategic advantage
• Trade-offs
• A group of activities chosen by the organization is to consciously define
the market to be served, products or services to be provided and tools
that will be used to deliver a product or service
• Fit
• Related to the way an organization combines several different activities
to achieve a common goal. The more activities that work together, the
stronger the suitability(fit)and the more difficult for competitors to
imitate
• Sustainability
• more activity in a business and the better unity and the
implementation of inter-activity, the more difficult to imitate
competitors more
• All perspectives on this strategy relies on the choice of organizational activity
1. Strategy and Mission Organizations
• Porter also stared that an organization can differentiate itself from the other
competitors and be successful in the industry, should look at more than just the
internal functions and understand the five forces that shape the industry in
which organization operates:
• Rivalry among existing competitors
• A native of the state where the business operates now derived from
strategies and new techniques, new products, how the different
services and offer a lower price than existing competitors
• Threat of substitute products or services
• goods or a substitute that can be used as an alternative to what is
produced by the industry that exists today
• Bargaining power of suppliers
• A provider of inputs in a production organization or service provider
can position itself in a strong position to bargain if he is the only
business that is able to provide certain products or services
• Bargaining power of buyers
• it depends on the positioning of customers in their relationship to the
organization. An organization that provides goods or services to
customers who are specialists may lose the customer so that the
customer is in a strong position
• Threat of new entrants
• Organizations newly entering the industry can change the dynamic of
competition in the market environment and create competition that
much more to the existing market players in the industry
1. Strategy and Mission Organizations
• Using the power of five, an industry organization can analyze
them to identify specific opportunities or threats and then
develop tactics to the situation
• Organizational options to a series of activities undertaken
much influenced by internet and use e-commerce today
• In other words, the internet has led to new opportunities such
as online auctions, digital market for music and movies, and
organizations that obtain and compile and make changes to
specific to the customer's needs
• wotif.com  hotel accomodation
• traveloka.com
• pegi.pegi.com
• Internet also enable the group to reach more potential
customers, which despite being a steer them toward more
product selection and purchase of other alternatives that
ultimately divert the organization of the ability of depressing
prices
• Through the Internet, businesses can also be more flexibility
in the choice of their activity and better management of the
existing outsourcing and partnerships to support their
activities
2.Design/ Organizational Forms
• There is a technique that is used to manage a company's
business through internal organizational design
• Can also referred to as the organizational structure or
hierarchy of the organization
• It is a structure of relationships, interactions and
reporting responsibilities among the organization's staff
• Throughout the years, the organization has adopted
various types of organizational design
• Consisting of two approaches:
• Functional perspective
• Business process perspective
Perspective Functional Organization
• Functional perspective
• is a view of organizational design that emphasizes the role
of reporting responsibilities in a hierarchical manner, on
the specific role of each - each worker and emphasis on the
division of departments / divisions
• An organization designed hierarchy or use a functional
perspective of an organization has a structure that is the most
obvious, which include: the functional division and reporting
responsibilities among functions - functions of existing
businesses
• Frederick Taylor developed the management philosophy
known as Scientific management
• it is an approach to design work that considers workers do
work and over - again
• In Scientific management every employee should have a role
and responsibilities are clearly defined
• The idea of Frederick Taylor were employees led by middle
management responsible for Top Management
Perspectives Functional Organization

• In this perspective, departments or business functions is a

specific part of the organization in the role of particular to
contribute to the organization in achieving its objectives
• business function or department is the sales
department, which is responsible for selling products or
services.
• Business functions of
production(manufacturing),responsible for producing
finished goods
• Functions accounting business(accounting),responsible
for recording financial activities of the company
• Every business functions will certainly be doing activities
respectively, to be considered for the function of each
department can be translated clearly, with overlapping
minimal between one department to the other departments.
Perspectives Functional
Organization
• In figure 2.3, there are five functional areas or
departments that include: logistics, production,
accounting, sales and human resources.
• Each department above perform specific functions that
differ in organization.
• The organization is divided into three levels: operational
level, the level of management oversight and strategic
oversight level
• At the operational level (operational control),the
attention focused on a job well done on a functional
area or department. This includes operational
activities and those who supervise the performance of
those tasks
Perspectives Functional Organization
• At the level of supervision of the management (management
control), responsible for overseeing the performance of a variety
of different functional areas. In this case the two departments
(logistics and production) is responsible to a manager, and three
other departments (accounting, sales and human resources)
responsible to the manager of the latter. This manager will
integrate information related to the performance of each
department under the supervision of them and move that
information to a higher level is called a strategic level
• At the level of strategic oversight (strategic control),attention is
directed to develop a strategy for business success and generate
the right mission for the organization , It is completed by an
analysis of performance information obtained from the
management level and based on the analysis of the strategic
management of the external environment
Perspectives Functional Organization
• Communication can occur between departments
• It should be noted that it is not advisable to be able to
do the sharing of information between departments, it
should be raised first to the management level first and
then distributed to the operational level
• in fact, some organization no longer adopt the model
this, some even eliminating layer (layer) in their
organizations, some turn to business process models
that will be discussed later
Excess forms based organization functional

• Control and coordination

• One of the advantages of this form of functional
based organization is the level of control very good
for the organization because the degree of
accountability and reporting.
• Specificity
• Employment, responsibility has been defined very
clearly
• It makes people who are in the organization will
know clearly when to connect with anyone for any
activity
Lack Forms Based Organization Functional
• Do not reflect on the fact that there are at this point
• Business today is more attention to customer needs
instead of finding the best way to control the operations
of the organization
• Normally it would be difficult to provide customer
service through the organization of design hierarchy or
department because of the low level of communication
between functional areas.
• Problems of information and communication
• Perspective function to create an organization that is too
hierarchical and bureaucratic
• Consequences general obtained is the customer service
is very slow because of the limitations on
communication problems as a result of the shape is too
hierarchical and bureaucratic
Lack Forms Based Organization Functional

• Slow reaction the business environment

• The shape of the bureaucracy to make the organization
slow to respond to business changes which occur in
either internal or external to the organization
• Example: the strategic level will take time for the
socialization of the new strategy to the level of
management and of course it will take longer for
dissemination to the operational whereas the new
strategy should be applied
• Focus on things that are not right
• Through the functional form, the staff are more focused
on what is presented by the leadership of each company
and not on the customer effect from too much
bureaucratic a form of organization
3. Does the business process?
• Interlocking activities (interrelated activities / integrated)
• The business process view of business functions to be integrated with
one another and work together to provide goods or services to
customers
• Across the organization (covering all organizations)
• Using the perspective of horizontal
• Department or different functional must cooperate and communicate
with each other to provide products or services required by the customer
• Predetermined organizational goals (organizational objectives specified)
• each business process is designed is tailored to the organization's goals
are predetermined, so that business processes that itself also has a target
/ goal apiece which if achieved an achievement of the objectives of the
organization itself
• Every goal there remain unnoticed integration in the achievement of
organizational goals
• Customer needs (customer needs)
• The organization's goals are set triggered from the needs of customers so
that the business process perspective is strongly oriented towards
customer needs
• With the needs of customers, the purpose of the new organization can be
specified
Differences Perspective of Business
Process and The Perspective of Business
Functions
Business Process in an Organization
• The business process is key to any organization
• Business can not be accomplished without a process that can be carried out
or implemented
• Example:
• Sales
• Objective : to sell products to customers and receive revenue from
the sale
• Performers: sales staff, customer, cashier, warehouse
• Input: sales orders
• Output: sales invoices, shipping documents
• Procurement / purchasing
• Objective : getting goods from suppliers and manage inventory to be
sold to customers and avoid the shortage
• Performers: warehouse staff, purchasing staff, sales staff and
vendor
• Feedback: purchase requisitions, orders that have not been met
• Output: purchase orders
• Production
• Objective : transform raw materials into finished goods
• Performers: the production staff and sales staff
• Input: orders that have not been met, a notice of production, raw
materials
• Output: finished goods
 4. Why Business Processes?
• There are several arguments for adopting the perspective of business
processes within an organization:
• Advantages of the resource because more emphasis on the process.
This can be achieved because of the perspective of the offer
organizations a more coordinated approach and an integrated,
reducing the time it is not necessary to repeat the work,
bureaucracy and administration
• Process perspective can provide benefits to the organization
through customer service and customer relationships better, the
emphasis on value-adding and even strategic advantage
• Perspective can process directs an organization in the use of
resources with better
• Perspective can process also eliminates data duplication and
unnecessary use in storage as well as restructure the less effective
communication network between departments. This of course will
lead an organization to better information flow within the
organization, which eventually brought the organization to a more
effective decision-making by the management
4. Why Business Processes?
• Perspective process can also reduce bureaucracy and
create a more flexible organization. By eliminating the
existing level within the organization that will include
activities to identify the tasks and functions as well as
eliminate the duties and functions that do not add to the
value of the company including its structure
• Process perspective can also provide organizations a
competitive advantage, along with the organization in
view of the design of business processes them as a tool to
differentiate themselves from competitors in their
industry environment. Competitive advantage
(competitive advantage)arise from the design of business
processes that are unique or offer something different that
has value to the customer
• A business process does have the principle of
"interlockingactivites“ will remain in "outsource“ it. One
of the advantages of outsourcing is cost savings
34
35
36
37
5. ERP Systems and Business Processes
• An system ERP (Enterprise Resource Planning) is a set of complex
computer program modules that integrate the different functional
areas of an organization
• Form hierarchical organizational structure tends to make each
individual business functions / departments that are in it to make an
application / information systems that stand alone to address the
problems that arise in their own section
• This has resulted in duplication of data across the entire organization
will then make its own problems as a result of lack of interaction
between departments
• ERP system is a way for a organization to implement a system to
overcome the problems caused by a functional approach and pointed
to the perspective of the process
• In the ERP system there is some set of modules that are connected to
multiple areas functional different from the organization that
integrates well and is able to operate efficiently
• Example: when sales have enter sales data into sales module, the data
will be automatically updated inventory following are accounts
receivable and other sections
5. ERP Systems and Business Processes

• This integration reflected the fact that the organization

process oriented can use the ERP which is operated
through a shared database for the organization
• Finally the issue of duplication and redundancy of data
can be completed
• Please note that in order to implement ERP, of course,
required business processes are standardized well
• Need note that the use of ERP can be used as one of the
alternative approaches to gain a competitive advantage
5. ERP Systems and Business Processes
• In some cases, it's better to change an ERP package
rather than changing business processes existing today
• However there are also those who say that should an
organization adopt the ERP system of the change it because
there are two reasons:
• The ERP system is based on best practices for a process
• The cost of an ERP system is quite expensive though
without being changed, especially when an organization
to change and modify the draft of the system, of course,
will increase the cost will be much higher
• Best practice is the best way to perform a particular process
• Both of these arguments each plausible, but only one of the
main factors that must be considered either to change the
system or change so that the process in accordance with the
system of competitive advantage (competitive advantage)
5. ERP Systems and Business Processes
• Talking about strategic advantage (competitive advantage), it
is something unique done by an organization but not owned
by the other competitors were finally distinguish a
organization from competitors
• An organization's course aims to get a form rather than
clappers competitive over its competitors
• One way to get a form of competitive advantage is through
the configuration of the existing business processes
• So if an organization designing business processes and
consider adopting ERP, then the organization should be
careful in considering the existing business processes, how
they provide a strategic advantage, and how business
processes can be represented in an ERP system whether it is
appropriate or even conflict
5. ERP Systems and Business Processes
• Generally can be done by looking at the activity of
homogeneous so that some of the activities that can be
incorporated into a homogeneous ERP system
• However keep in mind that the ERP system is not
always able to be differentiating an organization from
others, sometimes when a system's already adopting
ERP, business process there could be a differentiating
an organization from its competitors.
• The right thing is supposed to be an organization that is
first implemented ERP system to choose either type of
business processes that differentiate the organization
from its competitors would have advantages centralized
data bases, lack of duplication of data, integration
between business functions and ultimately affect the
performance of the process based services to customers
6. Things should be considered when switching
to environment-based business processes
• Management Change
• the first step in adopting a business process perspective
should be represented in the design of the organization
• an organization should define seriously and immediately
change according to perspective have been due if the
barrier would not affect the achievement of
organizational goals
• Changes should be top-down, but keep in mind the fact,
level the top management are usually part of the most
recent and difficult to change
• Changes to a process-based organization can mean
significantly change the way of everyone in the
organization to perform their duties. And further, these
changes can sometimes make changes in the structure of
decision makers in an organization (power shifting) and
it is this which is usually not preferred by level top
Management of because of concerns about several
matters related to the strategic level and management
6. Things should be considered when switching
to environment-based business processes
• People Change
• Everyone inside the organization is automatically focuses
on the integration of their functional with other business
functions within the organization, so this will give some
authority to the parties that may have remained at the
operational level
• Workers are becoming more are involved again in a series
of tasks in the whole process and participated in
integrating one activity to another. This of course creates a
business environment that is more stimulated for workers
within the organization.
• Generally resisted change because of two things:
• The manager will be facing redundancies in the
division of tasks
• The manager will face a change in the duties and
responsibilities of even the possibility of losing some
authority
7. Changing Business Processes
• Business processes are not static and concrete, so it should
seen as something that can be changed continuously as a
result of technological developments, competition and
general changes in business environment all impact on how
organizations are choosing to redesign their business
processes
• Means that changes to business processes called Business
Process Design, with a few differences that are available for
a organizational change
• Business Process Design is a task of turning operations on
the organization's business processes
• There are three approaches to business process design:
• Total Quality Management (TQM)
• business process Re-engineering (BPR)
• The combination of both approach above called Ecletic
Approach
7. Changing Business Processes
• Total Quality Management
It is: a gradual approach to changes in the organization that
works on the principle that a series of small progressive steps is
the best way to improve the operation
• TQM philosophy is geared to the four concepts, namely:
• Quality, emphasizes the cost of covering the cost of
rework (rework)and product returns are greater than the
costs associated with the development and improvement
of business processes to generate output better
• People, employee organizations should be encouraged to
provide feedback about the design process businesses (in
particular the operational level), this is because it is they
who best understand the business processes
• Organizations, stressing on the overall interaction
between functional areas of business in providing
products or services to customers
• Management, required the support of the top
management in terms of business process changes
7. Changing Business Processes
• Business Process Re-engineering
• It is: thinking and redesign of fundamental business process
improvements to achieve performance improvement in terms
of organization such as: cost, quality, service and speed
• Consisting of 4 components that are the important aspects of
BPR:
• Fundamental aspect
• Stressing on the question as what activities are
carried out as part of business processes that now
• Radical component
• Stressing on the organization thinking of ways - new
ways of a process can be developed
• Dramatic aspect
• Interest BPR is to help achieve improvements in
performance indicators used in the organization
• Process aspect
• Interest BPR is to provide increased value-added
companies in the eyes of customers
Technology-driven Process Improvements
• One of the principles of business process re-engineering is the use of
technology
• process of re-engineering should be addressed as one of the ways that
technology can be used to improve the operation and function of the
business process
• Organizations can achieve the advantages of the use of IT to transform business
processes and create new business opportunities
• Organizations will benefit from the use of IT applications in solving business
problems
• the extent of adoption of IT can be started with the integration of technology
with business processes that are running, then IT can be used to model
business processes and then as a way to make it happen
• There are four areas that constitute the organization's advantage over the use
of IT in business processes, namely:
• Information Based, referring to the information generated more quality
• Strategy Based, IT utilization improves competitive advantage
• Transaction Based, the benefits in terms of transaction management
more efficient and cost-saving
• Change Based, benefits in the positive changes produced by TI for
example: a new way of conducting business, new business models,
generating a new business plan
Technology-driven process improvements
• Examples of the use of IT
• Vendor - managed inventory system
• Integration between systems used by an
organization with suppliers / vendors
• evaluated receipts settlement
• system capable of alerting to pay this debt and the
repayment of customer receivables without having
to first print and send invoices to customers
• Electronic bill payment
• system where customers can pay their bills using the
internet or telephone
• Electronic bill presentation and payment
• Technology where by using the internet to send the
bill to the customer and then customer can make
payments electronically
Technology-driven process improvements

• Examples of the use of IT

• Mobile payment
• with the increasing use of smartphones then
people - people migrate to the use of mobile
payment so that they do not have to carry cash
around - where
• RFID or Bar coding
• Technology barcode offers the ease of capture of
data in accounting information systems
• Radio Frequency Identification tags (RFID tags)
is a label that contains a small microchip inside
it. The reader is referred to as an RFID
transceiver.
51
52
Lesson Summary
After studying this lesson, you be able to:
• Describe the components of an organization's strategy and mission
• Describe alternative organizational structure and their strengths,
weaknesses and implications organization operations
• Define and examples a business process
• Discuss the benefits of organizations adopting a business process
perspective
• Explain the role enterprise resource planning (ERP) systems play in
business process design
• Consider some of the issues for organizations changing to a process-
based focus
• Describe and evaluate approaches to changing business processes, in
particular BPR (Business Process Re-engineering)
• Critically evaluate BPR
Unit Summary
After studying this chapter, you be able to:
• Describe the components of an organization's strategy and mission
• Describe some form of organizational structure with its advantages,
disadvantages and implications for the operation of an organization
• Define and exemplify a business process
Discuss the importance of adopting a business process perspective
within an organization
• Describe the role of the ERP system in a business process design
• Consider some issues for an organization that turns to process focus
• Describe and evaluate approaches to change specific business
processes in a BPR (Business Process Re-engineering)
Question & Answers