Define business processes and their relationship to information systems

week 3 Tutorial anwsers | Nitin Verma -

define business processes and their relationship to information systems

What are business processes? How are they related to information systems? Define business processes and describe their relationship to business. business processes workflows of material information knowledge sets of Define and describe business processes and their relationship to information systems? Top Answer: Business Information Systems is mostly about computer. Management Information Systems (14th) edition X Define business processes and describe the role they play in organizations. • Describe the relationship between information systems and business processes.

Information systems automate manual business processes and make an organization more efficient. Data and information are available to a wider range of decision-makers more quickly when information systems are used to change the flow of information.

Tasks can be performed simultaneously rather than sequentially, speeding up the completion of business processes. Information systems can also drive new business models that perhaps wouldn t be possible without the technology.

How do systems serve the various levels of management in a business? Describe the characteristics of transaction processing systems TPS and the roles they play in a business. Transaction processing systems TPS are computerized systems that perform and record daily routine transactions necessary in conducting business; they serve the organization s operational level. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organization.

At the operational level, tasks, resources, and goals are predefined and highly structured. Managers need TPS to monitor the status of internal operations and the firm s relationship with its external environment.

TPS are major producers of information for other types of systems. Transaction processing systems are often so central to a business that TPS failure for a few hours can lead to a firm s demise and perhaps that of other firms linked to it. Middle management needs systems to help with monitoring, controlling, decision-making, and administrative activities. MIS provide middle managers with reports on the organization s current performance.

This information is used to monitor and control the business and predict future performance. The basic transaction data from TPS are compressed and usually presented in reports that are produced on a regular schedule. MIS serve managers primarily interested in weekly, monthly, and yearly results, although some MIS enable managers to drill down to see daily or hourly data if required. MIS generally provide answers to routine questions that have been specified in advance and have a predefined procedure for answering them.

MIS systems generally are not flexible and have little analytical capability. Most MIS use simple routines, such as summaries and comparisons, as opposed to sophisticated mathematical models or statistical techniques.

MIS are generally not flexible and provide little analytical capabilities. In contrast, DSS are designed for analytical purposes and are flexible. Describe the characteristics of decision support systems DSS and how they benefit businesses. Decision-support systems DSS support nonroutine decision-making for middle managers. DSS provide sophisticated analytical models and data analysis tools to support semistructured and unstructured decision-making activities.

Define and describe business processes and their relationship to information systems ?

DSS focus on problems that are unique and rapidly changing; procedures for arriving at a solution may not be fully predefined. DSS are designed so that users can work with them directly; these systems include interactive, user-friendly software. Executive support systems help senior managers address strategic issues and long-term trends, both in the firm and in the external environment. ESS address nonroutine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution.

ESS provide a generalized computing and communications capacity that can be applied to a changing array of problems. ESS are designed to incorporate data about external events, such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS.

ESS are designed for ease-of-use and rely heavily on graphical presentations of data. How do systems that link the enterprise improve organizational performance? Explain how enterprise applications improve organizational performance. An organization operates in an ever-increasing competitive and global environment. The successful organization focuses on the efficient execution of its processes, customer service, and speed to market.

Enterprise applications provide an organization with a consolidated view of its 3 operations across different functions, levels, and business units. Enterprise applications allow an organization to efficiently exchange information among its functional areas, business units, suppliers, and customers.

Define enterprise systems, supply chain management systems, customer relationship management systems, and knowledge management systems and describe their business benefits. Enterprise systems integrate the key business processes of an organization into a single central data repository. This makes it possible for information that was previously fragmented in different systems to be shared across the firm and for different parts of the business to work more closely together.

Information flows seamlessly throughout an organization, improving coordination, efficiency, and decision making. Gives companies the flexibility to respond rapidly to customer requests while producing and stocking only that inventory necessary to fulfill existing orders. Increases customer satisfaction by improving product shipments, minimizing costs, and improving a firm s performance.

Improves decision making by improving the quality of information for all levels of management. That leads to better analyses of overall business performance, more accurate sales and production forecasts, and higher profitability.

In short, supply chain management systems help businesses better manage relationships with their suppliers. Get the right amount of products from the companies source to their point of consumption with the least amount of time and with the lowest cost. SCM provides information to help suppliers, purchasing firms, distributors, and logistics companies share information about orders, production, inventory levels, and delivery of products and services so that they can source, produce, and deliver goods and services efficiently.

SCM helps organizations achieve great efficiencies by automating parts of these processes or by helping organizations rethink and streamline these processes. SCM is important to a business because through its efficiency it can coordinate, schedule, and control the delivery of products and services to customers. Decide when and what to produce, store, and move Rapidly communicate orders Track the status of orders Check inventory availability and monitor inventory levels Reduce inventory, transportation, and warehousing costs Track shipments Plan production based on actual customer demand Rapidly communicate changes in product design Customer relationship management systems enable a business to better manage its relationships with existing and potential customers.

With the growth of the Web, potential customers can easily comparison shop for retail and wholesale goods and even raw materials, so treating customers better has become very important. This information helps firms identify, attract, and retain the most profitable customers; provide better service to existing customers; and increase sales.

CRM systems consolidate customer data from multiple sources and provide analytical tools for answering questions such as: CRM tools integrate a business s customer-related processes and consolidate customer information from multiple communication channels, giving the customer a consolidated view of the company. Detailed and accurate knowledge of customers and their preferences help firms increase the effectiveness of their marketing campaigns and provide higher-quality customer service and support.

Knowledge management systems enable organizations to better manage processes for capturing and applying knowledge and expertise. These systems collect all relevant knowledge and experience in the firm, and make it available wherever and whenever it is needed to improve business processes and management decisions.

They also link the firm to external sources of knowledge. KMS support processes for acquiring, storing, distributing, and applying knowledge, as well as processes for creating new knowledge and integrating it into the organization.

define business processes and their relationship to information systems

KMS include enterprise-wide systems for managing and distributing documents, graphics, and other digital knowledge objects; systems for creating corporate knowledge directories of employees with special areas of expertise; office systems for distributing knowledge and information; and knowledge work systems to facilitate knowledge creation. KMS use intelligent techniques that codify knowledge and experience for use by other members of the organization and tools for knowledge discovery that recognize patterns and important relationships in large pools of data.

Explain how intranets and extranets help firms integrate information and business processes. Because intranets and extranets share the same technology and software platforms as the Internet, they are easy and inexpensive ways for companies to increase integration and expedite the flow of information within the company intranets alone and with customers and suppliers extranets.

They provide ways to distribute information and store corporate policies, programs, and data. Both types of nets can be customized by users and provide a single point of access to information from several different systems. Businesses can connect the nets to transaction processing systems easily and quickly. Why are systems for collaboration and teamwork so important and what technologies do they use? Some companies choose to purchase many modules, others choose a subset of the modules.

When an ERP vendor designs a module, it has to implement the rules for the associated business processes. A selling point of an ERP system is that it has best practices built right into it. In other words, when an organization implements an ERP, it also gets improved best practices as part of the deal! For many organizations, the implementation of an ERP system is an excellent opportunity to improve their business practices and upgrade their software at the same time.

But for others, an ERP brings them a challenge: Is the process embedded in the ERP really better than the process they are currently utilizing? And if they implement this ERP, and it happens to be the same one that all of their competitors have, will they simply become more like them, making it much more difficult to differentiate themselves?

Learning Objectives

The good news is that ERP systems also have the capability to be configured with custom processes. For organizations that want to continue using their own processes or even design new ones, ERP systems offer ways to support this through the use of customizations.

But there is a drawback to customizing an ERP system: Whenever an update to the ERP system comes out, any organization that has created a custom process will be required to add that change to their ERP.

This will require someone to maintain a listing of these changes and will also require retesting the system every time an upgrade is made. Organizations will have to wrestle with this decision: When should they go ahead and accept the best-practice processes built into the ERP system and when should they spend the resources to develop their own processes? It makes the most sense to only customize those processes that are critical to the competitive advantage of the company.

Business Process Management Organizations that are serious about improving their business processes will also create structures to manage those processes. BPM is more than just automating some simple steps. While automation can make a business more efficient, it cannot be used to provide a competitive advantage. BPM, on the other hand, can be an integral part of creating that advantage. An organization should look for processes that are essential to the functioning of the business and those that may be used to bring a competitive advantage.

The best processes to look at are those that include employees from multiple departments, those that require decision-making that cannot be easily automated, and processes that change based on circumstances. Suppose a large clothing retailer is looking to gain a competitive advantage through superior customer service. As part of this, they create a task force to develop a state-of-the-art returns policy that allows customers to return any article of clothing, no questions asked.

The organization also decides that, in order to protect the competitive advantage that this returns policy will bring, they will develop their own customization to their ERP system to implement this returns policy. As they prepare to roll out the system, they invest in training for all of their customer-service employees, showing them how to use the new system and specifically how to process returns.

Once the updated returns process is implemented, the organization will be able to measure several key indicators about returns that will allow them to adjust the policy as needed.

define business processes and their relationship to information systems

As changes to the returns policy are made, the changes are rolled out via internal communications, and updates to the returns processing on the system are made. In our example, the system would no longer allow a dress to be returned after fourteen days without an approved reason. If done properly, business process management will provide several key benefits to an organization, which can be used to contribute to competitive advantage.

When a business process is designed correctly and supported with information technology, employees will be able to implement it on their own authority. In our returns-policy example, an employee would be able to accept returns made before fourteen days or use the system to make determinations on what returns would be allowed after fourteen days.

By building measurement into the programming, the organization can keep up to date on key metrics regarding their processes. In our example, these can be used to improve the returns process and also, ideally, to reduce returns.

As an organization implements processes supported by information systems, it can work to implement the best practices for that class of business process.

In our example, the organization may want to require that all customers returning a product without a receipt show a legal ID. This requirement can be built into the system so that the return will not be processed unless a valid ID number is entered. By creating a process and enforcing it with information technology, it is possible to create a consistency across the entire organization. In our example, all stores in the retail chain can enforce the same returns policy.

  • INFO What are business processes? How are they related to information systems?

And if the returns policy changes, the change can be instantly enforced across the entire chain. Business Process Reengineering As organizations look to manage their processes to gain a competitive advantage, they also need to understand that their existing ways of doing things may not be the most effective or efficient.

define business processes and their relationship to information systems

A process developed in the s is not going to be better just because it is now supported by technology. He states in the introduction to the article: They are geared towards greater efficiency and control. Yet the watchwords of the new decade are innovation and speed, service, and quality. It is time to stop paving the cow paths. Instead of embedding outdated processes in silicon and software, we should obliterate them and start over.

Business process reengineering is not just taking an existing process and automating it.

INFO What are business processes? How are they related to information systems? - PDF

BPR is fully understanding the goals of a process and then dramatically redesigning it from the ground up to achieve dramatic improvements in productivity and quality. But this is easier said than done. Most of us think in terms of how to do small, local improvements to a process; complete redesign requires thinking on a larger scale. Hammer provides some guidelines for how to go about doing business process reengineering: Organize around outcomes, not tasks.

This simply means to design the process so that, if possible, one person performs all the steps. Instead of repeating one step in the process over and over, the person stays involved in the process from start to finish.

Have those who use the outcomes of the process perform the process. Using information technology, many simple tasks are now automated, so we can empower the person who needs the outcome of the process to perform it. The example Hammer gives here is purchasing: Subsume information-processing work into the real work that produces the information.

When one part of the company creates information like sales information, or payment informationit should be processed by that same department. There is no need for one part of the company to process information created in another part of the company.

Treat geographically dispersed resources as though they were centralized. With the communications technologies in place today, it becomes easier than ever to not worry about physical location.

A multinational organization does not need separate support departments such as IT, purchasing, etc. Link parallel activities instead of integrating their results. Departments that work in parallel should be sharing data and communicating with each other during their activities instead of waiting until each group is done and then comparing notes.

Put the decision points where the work is performed, and build controls into the process. The people who do the work should have decision-making authority and the process itself should have built-in controls using information technology.

Capture information once, at the source. Requiring information to be entered more than once causes delays and errors. With information technology, an organization can capture it once and then make it available whenever needed. These principles may seem like common sense today, but in they took the business world by storm. Hammer gives example after example of how organizations improved their business processes by many orders of magnitude without adding any new employees, simply by changing how they did things see sidebar.

Unfortunately, business process reengineering got a bad name in many organizations. This was because it was used as an excuse for cost cutting that really had nothing to do with BPR.

For example, many companies simply used it as an excuse for laying off part of their workforce. Today, however, many of the principles of BPR have been integrated into businesses and are considered part of good business-process management. Reengineering the College Bookstore The process of purchasing the correct textbooks in a timely manner for college classes has always been problematic.

But college bookstores have one big advantage over their competitors: In other words, once a student has registered for classes, the bookstore knows exactly what books that student will need for the upcoming term. To leverage this advantage and take advantage of new technologies, the bookstore wants to implement a new process that will make purchasing books through the bookstore advantageous to students.

define business processes and their relationship to information systems

Though they may not be able to compete on price, they can provide other advantages, such as reducing the time it takes to find the books and the ability to guarantee that the book is the correct one for the class.

In order to do this, the bookstore will need to undertake a process redesign. The goal of the process redesign is simple: After diagramming the existing process and meeting with student focus groups, the bookstore comes up with a new process.

In the new process, the bookstore utilizes information technology to reduce the amount of work the students need to do in order to get their books.

define business processes and their relationship to information systems

In this new process, the bookstore sends the students an e-mail with a list of all the books required for their upcoming classes. By clicking a link in this e-mail, the students can log into the bookstore, confirm their books, and purchase the books.

Session 2 - Business Use of IS - part 2

The bookstore will then deliver the books to the students.