Chapter 22 Business Processes Information and Information Systems
Chapter 22 Business Processes, Information, and Information Systems
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? How does the knowledge in this chapter help Dee and you? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -2
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? • See the introductory video Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -3
Q 1: How Did This Stuff Get Here? • Business processes must work together as an integrated system • A business must: – Obtain payments for its goods and services – Cover costs – Make profit Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -4
Q 2: What Is a Business Process? • A network of activities, resources, facilities, and information that interact to achieve some business function. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -5
Q 2: What Is a Business Process? (cont’d) • Business process is a network of: – Activities (processes) – Resources (inputs) – Facilities (inputs) – Information (both inputs and outputs) • Processes interact to achieve business function • Click for more information Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -6
Q 2: What Is a Business Process? (cont’d) • Business systems are integrated processes • Examples: – Inventory management processes – Manufacturing processes – Sales and support processes – Accounting systems – HRM Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -7
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 • Information – activities use information to know how to transform inputs to outputs. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -8
Portion of Inventory Management Business Process Figure 2 -1 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -9
Inventory Management Business System Processes 1. Purchasing (activity) queries Inventory Database (facility) and obtains Quantity. On. Hand (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) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -10
Inventory Management Business System, (cont’d) 6. Supplier sends Shipping. Invoice (info) to Payment 7. Shipping. Invoice compared to Order, generates Check (info and resource) 8. Counter Sales (activity) interacts with Customer (resource), Inventory (resource), and Inventory Database (facility) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -11
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) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -12
Resources • Items of value • External to organization • Examples: – Customers – Suppliers – Consultants Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -13
Facilities • Structures used within business process • Places where things are produced or stored, or equipment, machines, buildings • Examples: – Inventories – Databases – Factories – Equipment Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -14
Information • Used by activities • Determines how to transform inputs into outputs • So, what is information and how is it different than data? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -15
Q 4: What Is Information? • Knowledge is derived from data • Data is processed and presented in meaningful context • Data is processed by summing, ordering, averaging, grouping, comparing, or other similar operations • Information is “a difference that makes a difference” Data Processes Information Knowledge Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -16
Characteristics of Good Information 1. Accurate – Correct and complete – Crucial for management – Cross-check information to ensure accuracy 2. Timely – Produced in time for intended use 3. Relevant to both: – Context – Subject Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -17
Characteristics of Good Information, (cont’d) 4. Just Barely Sufficient – Sufficient for purpose for which generated – Do not need too much or extraneous information 5. Worth its cost – Relationship between cost and value – Information systems cost money to develop, maintain, and use – Must be worth the cost (time and money) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -18
Q 5: What Is the Role of Information in Business Processes? • Business processes generate information by giving context to data: – Process gives context to data – May turn low-level information into high-level information • Useful for management and strategy decisions • Click here for more information Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -19
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 • Systems designers determine relationship of activities to information systems – Relationships are determined during systems development Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -20
What Does It Mean To Automate a Process Activity? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -21
What Does It Mean To Automate a Process Activity? (cont’d) • Automation of processes – Transfers work done by people to computers – People follow procedures (instructions) – Computers follow software instructions Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -22
An Information System to Support Counter Sales Figure 2 -4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -23
An Information System to Support Counter Sales (cont’d) • Fully automated (Mc. Donald’s new drive-up window technology) – 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 • Programs record sales and make changes Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -24
An Information System to Support Payment Figure 2 -5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -25
An Information System to Support Payment (cont’d) • 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 • Programming expensive • Probably not effective Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -26
An Information System to Support Purchasing Figure 2 -6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -27
An Information System to Support Purchasing (cont’d) • Purchasing clerk’s computer runs program that queries database and identifies stock levels and generates Purchase. Order • Designers decided to balance work between automation and manual activity – Searching database is repetitive • Automated process – Selecting suppliers is complicated • Manual process Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -28
MIS in Use: The Need for Business Processes • To understand the need for business processes, the importance of process design, and the role that information systems play in support of such processes • A seemingly simple business process can be unexpectedly complex Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 1 -29
Order Approval Process Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 1 -30
What Is Your Role? • Your mind and your thinking are the most important part of information system. • The quality of your thinking is a large part of the quality of the information system. • You can dramatically improve the quality of your thinking if you are able to use information systems effectively. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -31
Guide: Understanding Perspectives and Points of View • A “problem” is defined as a “perceived difference between what is and what ought to be”. • An information system development team must have common definition and understanding of the problem in order to communicate with each other. • What can a development team do to create common definitions and understanding? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -32
Ethics Guide: Understanding Perspectives and Points of View (cont’d) • 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 plausible reasons for the problem: 1. Customer service does not have data about prior customer contacts. 2. Customer support recommended a solution that did not work. 3. Company is shipping too many defective laptops. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -33
Guide: Understanding Perspectives and Points of View (cont’d) What happens if you are meeting with three people who have three different views concerning the customer support problem use? Q: How would they behave? Q: Which thinking style would lead to a more productive meeting? Why? • When you enter the business world, being able to discern and adapt to the perspectives and goals of those with whom you work will make you much more effective. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -34
Ethics Guide: Egocentric vs. Empathetic Thinking • Egocentric thinking – Centers on self – “I’m right, everyone else is wrong. ” – “I believe sales are declining because our price is too high. We need to cut the price. ” • Empathetic thinking – “My View” is one possible interpretation. – Take time to learn what others are thinking. – Take time to understand the problem domain as a system. (What factors can affect sales? ) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -35
Egocentric Thinking • “Professor Jones, I couldn’t come to class last Monday. Did we do anything important? ” • Egocentric Thinking • Implies the student isn’t accountable for his actions • Implies professor lectured on nothing important • Doesn’t take into account professor’s view of absences • Assumes the professor has time to rehash the class discussions and activities one-on-one. • Puts responsibility on the professor to remember everything said in class. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -36
Empathetic Thinking • “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. ” • Empathetic thinking approach – – Takes personal responsibility Minimizes impact of absence on someone else Considers impact from professor’s side Considers that the professor must interrupt their other work to give extra help so you can recover from your absence Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -37
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 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -38
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? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 2 -39
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 40
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