Chapter 2 Business Processes Information and Information Systems

Study Questions l l l 2 -2 How did this stuff get here? What is a business process? What are the components of the business process? What is information? What role does information play in business processes? How do information systems support business processes? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

How Did This Stuff Get Here? l l Business processes must work together Each business must – – – 2 -3 Obtain payment Cover costs Make profit © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Business Processes l Network of: – – l 2 -4 Activities Resources Facilities Information

Business Processes, continued l l Business systems Examples: – – – 2 -5 Inventory management processes Manufacturing processes Sales and support processes © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Business System l l 2 -6 Activities Facility Information Resource © 2008 Pearson Prentice

Inventory Management Business System l l l 2 -7 Purchasing(activity) queries Inventory Database(facility) obtains Quantity. On. Hand(information) If reorder needed, Purchasing generates Order(information) to Supplier(resource) Order Placement(activity) sends copy to Receiving(activity) Receiving puts goods into Inventory(facility) Record sent to Inventory Database and Payment(activity) © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Inventory Management Business System, continued l l l 2 -8 Supplier sends Shipping. Invoice(information) to Payment Shipping. Invoice compared to Order, generates Check(information and resource) Counter Sales(activity) interacts with Customer(resource), Inventory(resource), and Inventory Database © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Portion of Inventory Management Business System Figure 2 -1 2 -9 © 2008 Pearson

What Are the Components of a Business Process? l l 2 -10 Activities Resources

Activities l l Transforms resources and information from one type into another Follows rules and procedures Can be manual, automated, or combination Example: – 2 -11 Payment(activity) transforms Quantity. Received(information) and Shipping. Invoice(information) into Payment. To. Supplier(resource) © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Resources l l l Items of value External to organization Examples: – – 2

Facilities l l Structures used within business process Examples: – – 2 -13 Inventories

Information l l l 2 -14 Used by activities Determine how to transform inputs

What is Information? l l l 2 -15 Knowledge derived from data Data presented in meaningful context Processed data Data processed by summing, ordering, averaging, grouping, comparing A difference that makes a difference © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Data l l 2 -16 Recorded facts or figures Not meaningful on its own

Good Information l Accurate – – – l Timely – l Produced in time for intended use Relevant – – 2 -17 Correct and complete Crucial for management Cross-check information to ensure accuracy Context Subject © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Good Information, continued l Just Barely Sufficient – – l Worth Its Cost – – – 2 -18 Sufficient for purpose for which generated Do not need additional, extraneous information Relationship between cost and value Information systems cost money to develop, maintain, and use Must be worth the cost © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

What Is the Role of Information in Business Processes? l Business processes generate information: – – Brings together items of data in a context May be higher level l 2 -19 Useful for management and strategy decisions © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

How Do Information Systems Support Business Processes? l Used by activities in a business process – – – l Systems designers determine relationship of activities to information systems – 2 -20 Several activities may use one system Activity may have own system Activity may use several systems Relationship determined during systems development © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

What Does It Mean to Automate a Process Activity? Insert 2 -3 2 -21

Automation of Process Activity l Automation of processes – – – 2 -22 Transfer work done by people to computers People follow procedures Computers follow software instructions © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Information System Supporting Counter Sales Figure 2 -4 2 -23 © 2008 Pearson Prentice

Information System Supporting Counter Sales, continued l Fully automated – – l l 2 -24 Cashiers do not require extensive training Cashiers do not work directly with programs on computer Computer in cash register communicates with computer that hosts Inventory Database Programs record sales and makes changes © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Information System to Support Payment Figure 2 -5 2 -25 © 2008 Pearson Prentice

Information System to Support Payment, continued l l Payment receives Quantity. Received and Shipping. Invoice and produces Supplier. Payment Mostly manual – – Accounts Payable Clerk reads documents and issues payment or investigates discrepancies Processing exceptions complicated l l 2 -26 Programming expensive Probably not effective © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Information System to Support Purchasing Figure 2 -6 2 -27 © 2008 Pearson Prentice

Information System to Support Purchasing, continued l l Purchasing clerk computer runs program that queries database and identifies stock levels and generates Purchase. Order Designers balanced work between automation and manual activity – Searching database is repetitive l – Selecting suppliers is complicated l 2 -28 Automated process Manual process © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Your Role in Information System l l You are part of system (people) Most important component – – 2 -29 Must be able to use system Quality of thinking © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Ethics Guide l l 2 -30 A problem is a perceived difference between what is and what ought to be Information system development team must have common definition and understanding of the problem © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Ethics Guide, continued l Egocentric thinking – – – l Empathetic thinking – – 2 -31 Centers on self “Real view” “What really is” View is one possible interpretation Learn what others are thinking © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Ethics Guide, continued l “Professor Jones, I couldn’t come to class last Monday. Did we do anything important? ” – Egocentric l l 2 -32 Doesn’t take into account professor’s view Implies professor lectured on nothing important © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Ethics Guide, continued l “I couldn’t come to class, but I got the class notes from Mary. I read through them, and I have a question…Oh by the way, I’m sorry to trouble you with my problem. ” – – 2 -33 Empathetic thinking Minimize impact of absence on your professor Consider situation from professor’s side Professor must do something extra to help you recover © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Ethics Guide, continued l l Suppose you buy a new laptop and it fails within a few days. Repeated calls to customer support produce short-term fixes, but your problem continues Three different views: – – – 2 -34 Customer service does not have data about prior customer contacts Customer support recommended a solution that did not work Company is shipping too many defective laptops © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Ethics Guide, continued l What happens if you are meeting with the three people who have these views and they are engaging in: – – 2 -35 Egocentric thinking? Empathetic thinking? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Active Review l l l 2 -36 How did this stuff get here? What is a business process? What are the components of the business process? What is information? What role does information play in business processes? How do information systems support business processes? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke