Chapter 22 Business Processes Information and Information Systems

This Could Happen to You • In order for Dee to get a budget approved for the blog she needs to: – Provide specific details – Provide answers to: • How will this blog impact the sales process? • How will the salespeople use it? • How will it help gain sales? • What else will the CFO want to know? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -2

Study Questions Q 1: Q 2: Q 3: Q 4: Q 5: Q 6: How did this stuff get here? What is a business process? What are the components of a business process? What is information? What is the role of information in business processes? How do information systems support business processes? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -3

Q 1: How Did This Stuff Get Here? • Business processes must work together as an integrated system for a Business to be successful. • A business must: – Obtain payments for its goods and services – Cover costs – Make profit © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -4

Q 2: What Is a Business Process? • Business process is a network of: – Activities (processes) – Resources (inputs) – Facilities (inputs) – Information (both inputs and outputs) • Processes interact to achieve business objectives © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -5

Q 3: What Are the Component of a Business Process? • Activities – transform resources and information of one type into resources and information of another type. • Resources – items of value, such as customers, suppliers, employees, distributors, and so on • Facilities – structures used within resources. Ex: inventories, databases, factories, vehicles (Plant & Equipment) • Information – activities use information to know how to transform inputs to outputs. © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -6

Portion of Inventory Management Business Process Figure 2 -1 © 2008 Pearson Prentice Hall,

Activities • Transform resources and information from one form into another • Follow rules and procedures • Can be manual, automated, or combination • Example: – Payment (activity) transforms Quantity. Received (information) and Shipping. Invoice (information) into Payment. To. Supplier (resource) © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -8

Resources • Items of value • Examples: – Customers – Suppliers – Raw Material

Facilities • Structures used within business process • Places where things are produced or stored, or equipment, machines, buildings • Examples: – Inventories (? Warehouse? ) – Databases – Factories – Equipment © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -10

Q 4: What Is Information? Definitions: • Knowledge derived from data (Information? ) • Data processed and presented in meaningful context • Data processed by summing, ordering, averaging, grouping, comparing, or other similar operations • Information is “a difference that makes a difference” Data Processes Information Knowledge © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -11

Characteristics of Good Information 1. Accurate – Correct and complete 2. Timely – Produced in time for intended use 3. Relevant to both: – Context – Subject 4. Just Barely Sufficient – “Tell me all I need to know and no more” Einstein. 5. Worth its cost © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -12

Q 5: What Is the Role of Information in Business Processes? • Business processes generate information by giving context to data. • Data – Quantity Ordered, Quantity Received, Quantity Invoiced • Process – Vendor Payment (3 -Way Match) • Output – Discrepancy? (“the difference that makes a difference”) – Payment? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -13

Q 6: How Do Information Systems Support Business Processes? • IS supports activities in a business process – Several activities may use one information system – Activity may have own information system – Activity may use several information systems © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -14

What Does It Mean To Automate a Process Activity? © 2008 Pearson Prentice Hall,

An Information System to Support Counter Sales Figure 2 -4 © 2008 Pearson Prentice

An Information System to Support Payment Figure 2 -5 © 2008 Pearson Prentice Hall,

An Information System to Support Purchasing Figure 2 -6 © 2008 Pearson Prentice Hall,

Order Approval Process © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 1 -20

How Does the Knowledge in This Chapter Help Dee and You? • After reading this chapter, Dee and you should: – Understand the need for business processes, the importance of process design, and the role that information systems play in support of these processes – Be able to create process diagrams to show information needed – Understand the usefulness of blogs as a facility that contains information that makes a difference – Be able to answer the three questions Dee’s boss asked © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -21

How Does the Knowledge in This Chapter Help Dee and You? (cont. ) • How will this blog impact the sales process? • How will the salespeople use it? • How will it help gain sales? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 1 -22

Sales Process • Activities • Customer Call • Customer Order • Customer Delivery • Customer Invoice • Customer Payment • Customer Service • Resources • Customers • Call Reports • Products • Sales People 1 -23 • Facilities • Customer/ Product Databases • Inventory (Warehouse) • Customer Site • Sales Office • Information • Customer Needs • Promotional Terms • Pricing • Product Availability • Shipping Alternatives © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Active Review Q 1: How did this stuff get here? Q 2: What is a business process? Q 3: What are the components of a business process? Q 4: What is information? Q 5: What is the role of information in business processes? Q 6: How do information systems support business processes? © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke 2 -24

Chapter Extension 3 Information Systems and Decision Making © 2008 Pearson Prentice Hall, Experiencing

Study Questions Q 1: How do decisions vary by level? Q 2: What is the difference between structured and unstructured decisions? Q 3: How do decision level and decision process relate? Q 4: What is the difference between automation and augmentation? Q 5: How does IS support decision steps? CE 3 -26 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Q 1: How Do Decisions Vary by Level? • Decisions occur at three levels 1. Operational • Day-to-day activities • Transaction processing systems (TPS) 2. Managerial (Tactical) • Allocation and utilization of resources • Management information systems (MIS) 3. Strategic • Broader-scope, organizational issues • Executive information systems (EIS) CE 3 -27 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Q 2: What Is the Difference Between Structured and Unstructured Decisions? • Structured decisions – Understood and accepted method for making decision – Examples of structured decision processes: • Formula for computing reorder quantity • Allocating furniture and equipment to employees • Unstructured decisions – No agreed-on or standardized decision-making method – Examples of unstructured decision processes: • Predicting direction of economy or stock market • How well suited an employee is for a particular job CE 3 -28 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Q 3: How Do Decision Level and Decision Process Relate? 1. Operational-level decisions usually fairly structured and short time horizon 2. Mid-level (control and tactical management) usually semi-structured and medium time horizon 3. Strategic-level decisions usually highly unstructured and long time horizon CE 3 -29 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Decision Support in Business Decision Structured/ Unstructured Choose a Supplier based solely on price? Expand into Eastern Europe? Prepare an Income Tax Return? CE 3 -30 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke Org. Level

Relationship Between Decision Level and Decision Process CE 3 -31 © 2008 Pearson Prentice

Q 4: What Is the Difference Between Automation and Augmentation? • Automated information system – Hardware and program components do most of the work • IS computes quantity of items to order by monitoring inventory levels or production plans • Augmentation information system – Humans do bulk of work – Systems support work done by people • Email, instant messaging, videoconferencing CE 3 -32 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke

Q 5: How Does IS Support the Steps in Decision Making? CE 3 -33

Active Review Q 1: How do decisions vary by level? Q 2: What is the difference between structured and unstructured decisions? Q 3: How do decision level and decision process relate? Q 4: What is the difference between automation and augmentation? Q 5: How does IS support decision steps? CE 3 -34 © 2008 Pearson Prentice Hall, Experiencing MIS, David Kroenke