Business Processes, Information, and Information Systems

Viewing a firm as a system

Business Process

• A network of

  • activities, (process)

  • resources, (input)

  • facilities, and (inputs)

  • information (both inputs and outputs) that interact to achieve some business function.

• must work together as an integrated system

• Related group of activities that use people, information and other resources to create value for internal and external users.

• is a related group of steps or activities that use people, information, and other resources to create value for internal or external customers.

Business processes and Functional areas of business

Portion of Inventory Management Business Process

1. Purchasing (activity) queries Inventory Database (facility) and obtains QuantityOnHand (information)

2. If reorder needed, Purchasing generates Order (information) to Supplier (resource)

3. Order Placement (activity) sends copy to Receiving (activity)

4. Receiving puts goods into Inventory (facility)

5. Record (Info) sent to Inventory Database (facility) and Payment (activity)

6. Supplier sends ShippingInvoice (info) to Payment

7. ShippingInvoice compared to Order, generates Check (info and resource)

8. Counter Sales (activity) interacts with Customer (resource), Inventory (resource), and Inventory Database (facility)

Activities

• Transform resources and information from one form into another

• Follow rules and procedures

• Can be manual, automated, or combination

• component of a business process

• transform resources and information of one type into resources and information of another type.

Resources

• item of value

• external to organization

• component of a business process

• items of value:

  • customers,

  • suppliers,

  • employees,

  • distributors, and so on

Facilities

• Structures used within business process

• Places where things are produced or stored, or equipment, machines, buildings

• ex:

  • Factories

  • Equiptment

• Component of a business process

• structures used within resources.

  • inventories

  • databases

Information

• Used by activities

• Determines how to transform inputs into outputs

• Business processes generate (answer) by giving context to data:

  • Process gives context to data

  • May turn low-level information into high-level information

• activities use (answer) to know how to transform inputs to outputs

Automation of processes

• Transfers work done by people to computers

• People follow procedures (instructions)

• Computers follow software instructions

Fully Automated

• Cashiers do not require extensive training

• Cashiers do not work directly with programs on computer

• Computer in cash register communicates with computer connected to the Inventory Database

• Ex:

  • McDonald’s new drive-up window  technology

Manual

• Accounts Payable Clerk reads documents and issues payment or investigates discrepancies

• Processing exceptions complicated

  • Programming expensive

  • Probably not effective

Manual and Automated process

• Balance work

  • Searching database is repetitive

    • (answer) process

  • Selecting suppliers is complicated

    • (answer) process

• combination

Order Approval Process

Framework

Brief set of ideas for organizing thought process about a particular type of thing or situation

Models

Simplified representations of reality

System

A set of interacting components that operate together to accomplish a purpose

System Properties

• A system has

  • Purpose

  • Boundary

  • Environment

  • Inputs

  • Outputs

Work System

A system in which humans perform a business process using information, technology, and other resources to produce products for internal or external customers.

Value Chain

• Set of processes a firm uses to create value for its customers

• A process’s value added is the amount of value it creates for its internal and external customer

Information Technology

the hardware and software that make information systems possible.

Information System

a system that uses information technology to capture, transmit, store, retrieve, manipulate, or display information used in one or more business processes.

Firm

consists of a large number of interdependent business processes that work together to generate products or services in a business environment.

Business Environment

includes the firm itself and everything else that affects its success, such as competitors, suppliers, customers, regulatory agencies, and demographic, social and economic conditions.