L2 - Business Processes and Information Systems

What are silos?

Self-contained departments, organised by expertise

What are business structured around?

Silos

What advantages does a silo perspective have?

Optimised expertise

Avoid redundancy

Easier to benchmark with outside orgs

Utilises specific knowledge

Easier to understand each silo's role

What are the disadvantages of a silo perspective?

No process, no ownership, no responsibility

Sub-optimisation

Slow, prone to errors

What is a business process?

Sequential set of interrelated activities that turn inputs into outputs

What must a business process have?

Beginning and end

Inputs/outputs

Tasks to transform inputs into outputs

Effectiveness-measuring metrics

What are some examples of effectiveness-measuring metrics?

Throughput

Cycle time

Profit and quality per output

What are some examples of a business processes?

Manufacturing planning/execution

Payroll

Procurement

Financial reporting

Why is a process perspective better than a silo perspective?

Maintains big picture

Focuses on cross-functional work

Helps manager

Reduces duplicate work

Optimises business processes

Serves customers and stakeholders best

Diagram of a procurement business process

Diagram of Zara's business processes

Diagram of a detailed business process with levels

What does the Porter's Value Chain Model address?

Activities that create, deliver and support a company's product or services

Which two broad categories are Porter's Value Chain Model split into?

Primary and Support activities

What are the primary activities in the Value Chain Model?

Activities that directly relate to the value created in a product or service

What are the support activities in the Value Chain Model?

Activities that make it possible for the primary activities to exist and remain co-ordinated

Diagram of Porter's Value Chain Model

How can organisations alter the value chain?

Lower the cost of performing an activity

Add value to a product or server (buyers pay more)

What are value networks?

Business that provide mediation between buyers and sellers

What are some examples of value networks?

Parcel delivery companies

Auctions

Uber, AirBnB, etc.

What are the primary activities of a value network?

Infrastructure development and operation

Service provision

Promotion to buyers and sellers

Diagram of a value network for service businesses

How can organisations stay competitive?

Assess effectiveness of core business processes

What does a process redesign involve?

Implementing a new or significantly changed production or delivery method

Which goals are linked to process redesign?

Improved quality

Faster processes

Reduced costs (e.g. labour, material, energy etc.)

Reduced environmental damage

Regulation conformance

In which state should business processes never be designed?

Isolation

What are the three approaches to redesign?

Systematic redesign

Clean sheet

Continuous process improvement

What does the systematic redesign involve?

Identifying, analysing and critically evaluating existing processes

Planning major improvements

What does the systematic redesign approach focus on?

Eliminating valueless activities

Streamlining core valuable activities

Diagram of a hospital current business process

Diagram of a systematically redesigned business process at a hospital

What are the advantages of systematic redesign?

May lead to quick improvements

Less disruptive and more staff support

Less risky

What are the disadvantages of systematic redesign?

Less innovative

What are the areas of attention for systematic redesign?

Eliminate - valueless activity

Simplify - Where possible

Integrate - Elements of process

Automate - Where appropriate

Diagram of areas of attention for systematic redesign

How does the clean sheet (radical design) approach work?

Old process completely discarded, new process designed

What is the goal of clean sheet (radical design) approach ?

To make rapid, breakthrough impact on key metrics

When is the clean sheet (radical design) approach used?

To attain aggressive improvements

True or False: In the clean sheet approach, organisations work forwards from the current state rather than backwards from the expected outcome.

False. Organisations work backwards from the expected outcome.

What are the advantages of clean sheet approach?

Higher potential

What are the disadvantages of clean sheet approach?

Risky and disruptive

Must be planned carefully

Staff and stakeholder resistance

When should a clean sheet approach be used?

Major changes are required in a short time

Systematic re-design doesn't work

True or False: Clean sheet approach to re-design is only conducted within an organisation's staff

False: It is often conducted with help from external advisers

What does continuous process improvement approach to re-design focus on?

Small, incremental and often daily operation

What is the aim of the continuous process improvement approach?

To improve the current process without entire transformations

What are the advantages of current process improvement approach?

Eliminates waste

Reduces errors

Optimises current process

Lower risks

Achieve with fewer resources

Less disruptive

What are some useful principles for designing a process?

Start with most critical processes

Eliminate unnecessary tasks

Transform processes into events (as much as possible)

Minimise people involved

Make processes and events parallel

Reduce waiting times before processes and events

Diagram of phases of process innovation

What are some common criteria for process selection?

Health and criticality of a process and feasibility of innovation

True or False: When effectively linked with improvements to business processes, advances in IS enabled increased competitiveness

True. The right design coupled with the right technology (IS with IT).

True or False: There are nine categories of impact that an IS can make in process change

True.

Automation

Informational

Sequential

Tracking

Analytical

Geographical

Intellectual

Integrative

Disintermediation

AISTAGIID

What is meant by the category of impact ‘automation’ in relation to process change?

Reducing human labour

What is meant by the category of impact ‘informational’ in relation to process change?

Providing timely and a right amount of information

What is meant by the category of impact ‘sequential’ in relation to process change?

Changing process sequences or enabling parallelism

What is meant by the category of impact ‘tracking’ in relation to process change?

Monitoring processes, goods etc.

What is meant by the category of impact ‘analytical’ in relation to process change?

Supporting decision-making by better analysis & presentation of info.

What is meant by the category of impact ‘geographical’ in relation to process change?

Transferring information over long distances

What is meant by the category of impact ‘intellectual’ in relation to process change?

Capturing and distributing intellectual assets

What is meant by the category of impact ‘integrative’ in relation to process change?

Co-ordinating and integrating tasks/processes

What is meant by the category of impact ‘disintermediation’ in relation to process change?

Eliminating intermediaries

E.g. Wholesalers