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3.BIS - Week 3
3.BIS - Week 3
SYSTEMS
(UGBS 655)
Introduction
Week 1
How Businesses Use Information
Systems
Business Functions
&
Business Processes
RECAP – Week 2
Information Systems that Span Organizational Boundaries
Decision-Making Levels of an Organization
• Executive level (top)
– Long-term decisions
– Unstructured decisions
• Managerial level (middle)
– Decisions covering weeks and months
– Semi-structured decisions
• Operational level (bottom)
– Day-to-day decisions
– Structured decisions
Types of Information Systems
Learning Objectives
• Explain business processes and how the enterprise perspective differs
from a traditional functional perspective.
• Distinguish between Business process and Business Functions
• Identify kinds of data that each main functional area produces
• Identify the kinds of data that each main functional area needs
• Define integrated information systems and explain why they are
important
• Evaluate the role played by systems serving the various levels of
management in a business and their relationship to each other.
• Explain how enterprise applications improve organizational
performance.
Evolution of Business Processes
• The Age of the Craftsworker
• The Age of the Factory
• The Age of the Specialist
– The downside of functional organizations
• Optimizing the individual parts does not optimize the whole.
• If you can’t see the whole, you might inadvertently be damaging the end result when optimizing a piece of
the process.
9
Processes Everywhere (Examples)
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Business Function and Business Process
• Business Function: The logical level structure an
organization uses to control and manage its resources and
processes (e.g., human resource management function, supply
chain management function).
• Business Process: A series of interrelated activities through
which work is organized and focused to produce a product or
service. This is conducted within a business functional unit.
• Collection of activities that take one or more kinds of input to
create an output such as report or forecast that is of value. There
two main types:
▪ Core business processes (Primary)
▪ Support business processes
Functional areas in business
Customer
services
Administration
Operations and IT support
Human
Research and
resources
development
Support business processes
• General Management and firm infrastructure
– Corporate governance (legal, finance, planning and
public relations), accounting, building services,
management and administrative support.
• Human Resource Management
– Activities associated with recruitment, hiring, training,
compensating and staff lay-off.
• Technology and process development
– Activities related to maintenance, automation, design
or redesign of equipment, hardware, software,
procedures and technical knowledge
The Order Fulfillment Process
FIGURE 2-1 Fulfilling a customer order involves a complex set of steps that requires the close coordination of the
sales, accounting, and manufacturing functions.
Basic characteristics of business processes
According to Bosilj Vukšić, Hernaus and Kovačić (2008)
❑ Each process has a purpose;
❑ Each process has an owner;
❑ Each process has a beginning and end;
❑ Inputs are entering the process, outputs are exiting process;
❑ Process is composed of sequential feasible activities
❑ Based on the inputs and outputs of the process can be easily
determined by the success of the process;
❑ To survive the process should have known internal and
external suppliers and customers;
❑ Process improvement is inevitable.
Example: Procurement, logistics and Distribution
• Purchasing
• Distributing
• Loading
• Packing
• Shipping
• Receiving
• Transporting
• Warehousing
Business processes
How are businesses in Ghana using IT to achieve some of these business processes?
Business Process Management (BPM) is the science of overseeing how
work is performed in an organization to ensure consistent outcomes
and to take advantage of improvement opportunities.
Cross-functional Example
Input Functional unit Process Output
responsible
Request to purchase Marketing and Sales Sales and order Order is generated
computers
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Improving Business Processes: Guidelines
• Attack each delay
– What causes it?
– How long is it?
– How could we reduce its impact?
• Examine each decision point
– Is this a real decision or just a checking activity?
– If the latter, can we automate or eliminate it?
• Dematerialize documentation.
– Can we do it electronically?
– Eliminate multiple copies?
– Share a common database?
The Silo Effect
• The functional structure served organizations well for a number of years
because it enabled them to cope with the challenges generated by their rapid
growth.
• Over time, the system developed serious drawbacks.
• Particularly, people in the different functional areas came to perform their
steps in the process in isolation, without fully understanding what steps
happen before and what steps happen next.
• They essentially complete their part of the process, hand it off to the next
person, and then proceed to the next task.
• By focusing so narrowly on their specific tasks, they lose sight of the ‘‘big
picture’’ of the larger process, be it procurement, fulfillment, or anything
else. This tendency is commonly referred to as the silo effect.
• Silos effect because workers complete their tasks in their functional ‘‘silos’’
without regard to the consequences for the other components of the process.
What Problems arise from Functional Information Systems?
• Disjointed applications
CS Marketing
Financ
e
Business Processes
• Sharing data effectively and efficiently between and within
functional areas lead to more efficient business processes
• Integrated information systems: Systems in which functional areas share data
Trends in modern IT
enabled business processes
• Offshoring: Offshoring means getting work done in a different country.
• Outsourcing: Outsourcing refers to obtaining certain services or
products from a third party company.
• Job losses associated with offshoring and outsourcing.
• What are the reasons why a business would choose to outsource or
offshore?
• What factors will you consider when deciding between offshoring
or outsourcing?
Business Processes and Information Systems
• Operational excellence:
– Improvement of efficiency to attain higher profitability
– Information systems, technology an important tool in achieving
greater efficiency and productivity
– Walmart’s Retail Link system links suppliers to stores for superior
replenishment system
Critical metrics for IT success
• New products, services, and business models:
– Business model: describes how company produces, delivers, and sells
product or service to create wealth
– Information systems and technology a major enabling tool for new
products, services, business models
• Examples: Apple’s iPad, Google’s Android OS, and Netflix
• Amazon.com began as an online bookseller and rapidly outpaced traditional
brick-and-mortar businesses like Barnes and Noble, Borders, and Waterstones
• MTN pays mobile money subscribers GH₵ 25 million in interest
Source: http://starrfmonline.com/2017/08/19/mtn-pays-mobile-money-subscribers-gh%e2%82%b5-25-million-in-interest/)
Critical metrics for IT success
• Customer and supplier intimacy:
– Serving customers well leads to customers returning, which raises
revenues and profits.
– Note: 21st Century, don’t overburden the customer
• Example: High-end hotels that use computers to track customer preferences
and used to monitor and customize environment
– Intimacy with suppliers allows them to provide vital inputs, which lowers
costs.
• Example: JCPenney’s information system which links sales records to contract
manufacturer
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Improving Customer services
(Recommendation Algorithms)
Critical metrics for IT success
• Improved decision making
– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Results in:
• Overproduction, underproduction
• Misallocation of resources
• Poor response times
• Poor outcomes raise costs, lose customers
– Example : Verizon’s Web-based digital dashboard (Business Intelligence)
provide managers with real-time data on customer complaints, network
performance, line outages, and so on
Improved decision making