Chapter 7 Business Process Management This Could Happen

Chapter 7 Business Process Management

This Could Happen to You • MRV has a problem – Defective business process results in unhappy customer (no tent) – Its business process needs fixing Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -2

Study Questions Q 1: Why is business process management important to organizations? Q 2: How does business process management vary in scope? Q 3: How does Business Process Management Notation (BPMN) document business processes? Q 4: How does the interaction of business process elements affect cost and added value? Q 5: What role do information systems play in business processes? Q 6: What are the advantages of the service-oriented architecture (SOA)? Q 7: Why are XML and other SOA standards important? How does the knowledge in this chapter help MRV and you? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -3

Q 1: Why Is Business Process Management Important To Organizations? Tasks for processing an

Q 1: Why Is Business Process Management Important to Organizations? (cont’d) • Processing an order crosses departmental boundaries • Credit card processing, shipping, scheduling extend to other companies • Business processes and IS must evolve as business changes Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -5

BPM • Business Process Management (BPM) – Systematic process of creating, assessing, altering business processes • Four stages of BPM 1. Create model of business process components • • Users review and adjust model “as-is model” documents current process; it is changed to solve process problems Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -6

BPM (cont’d) 2. Create system components – Uses five elements of IS (hardware, software, data, procedures, people) 3. Implement business process 4. Create policy for ongoing assessment of process effectiveness – Adjust and repeat cycles Ø MRV never designed its processes, had no assessment program Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -7

Q 2: How Does Business Process Management Vary in Scope? • BPM Scope – Functional • Single department • BPM easier at this level • Problem: may lead to “islands of automation” – Cross-functional • Goal: Eliminate/reduce isolated systems and data • Uses committees to resolve conflicts between departments Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -8

Q 2: How Does Business Process Management Vary in Scope? (cont’d) – Interorganizational • Most difficult to do • Ex: SCM, credit card transaction processing • Requires negotiation, contracts, litigation to resolve conflicts between organizations BPM applies to profit-making, non-profit, and governmental organizations Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -9

Q 3: How Does Business Process Modeling Notation (BPMN) Document Business Processes? • Software industry standardized notation for BPMN by Object Management Group (OMG) • BPMN information Figure 7. 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -10

Top-Level Business Processes at MRV Figure 7. 5 Copyright © 2010 Pearson Education, Inc.

Business Process with Three Swim Lanes Figure 7. 7 Copyright © 2010 Pearson Education,

MRV Assemble & Ship Equipment Process Figure 7. 8 Copyright © 2010 Pearson Education,

Q 4: How Does the Interaction of Business Process Elements Affect Cost and Added Value? • Ways to increase process performance 1. Brute force approach—add people, equipment 2. Change process structure w/o changing resource allocations 3. Do both 1 and 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -14

Changing a Process by Adding Resources • Determining value change generates – Computer simulation – Financial analysis • MRV - Contact trip leader or contact trip scheduler activities could be automated Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -15

Modified Allocations in the Assemble & Ship Equipment Process Figure 7 -9 Copyright ©

Changing a Process by Altering Process Structure • MRV—Equipment and Logistics manager creates an integrated picking list to minimize travel time and speed up picking equipment Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -17

Changing a Process by Altering Process Structure (cont’d) Figure 7. 10 Copyright © 2010

Q 5: What Role Do Information Systems Play in Business Processes? • Roles – Implement business process activities – Entirely manual, automated, or mixed information systems Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -19

IS Alternatives for Implementing the Register Clients Activity Alternatives: 1. Entirely manual—using word processor to record data, prepare documents of client roster and special requests list 2. Use spreadsheet or database application to accomplish above activities, plus determine trip availability, collect deposits and trip payments 3. Entirely automated—create Register Client system – Clients use Internet to register and pay for trips Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -20

Information Systems for Facilitating Linkages Among Activities • Create database application to track equipment, location, status • New activity “Process Equipment Database” – Updates database from Register Clients, Assemble & Ship, Restore Equipment activities – The trip scheduler can reserve special equipment and be notified if not available Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -21

Equipment Database Resource Completely Automated Figure 7 -11 Copyright © 2010 Pearson Education, Inc.

Q 6: What Are the Advantages of the Service-Oriented Architecture (SOA)? • Service—repeatable task a business performs – Check space available on a river trip – Enroll client on a river trip – Bill client’s credit card • SOA—standard techniques to model every activity as a service and interactions among services Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -23

Activities Modeled as Services • Non-SOA Model (Figure 7 -12) problems – Circles are people (resources), not services – Adding more resources to model difficult – Data about tent requirements spread all over company – Many people need to be contacted to find tent status – Inventory-management service inferred, not modeled Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -24

Non-SOA Business Model Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7

Service Interactions Governed by Standards • Encapsulation—places logic for a service in one place and all other services go to it for that service – “the principle of information hiding is the hiding of design decisions in a computer program that are most likely to change, thus protecting other parts of the program from change if the design decision is changed. ” (wikipedia. org) • Standards reduced proprietary designs and expanded scope and importance of SOA Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -26

Example of Two Independent, Encapsulated Services Figure 7 -13 Copyright © 2010 Pearson Education,

Q 7: Why Are XML and Other SOA Standards Important? e. Xtensible Markup Language (XML)—used to model and structure data “XML's purpose is to aid information systems in sharing structured data, especially via the Internet, to encode documents, and to serialize data” (wikipedia. org) XML tags (metadata)—name and identify data items XML document—set of XML tags and data Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -28

Q 7: Why Are XML and Other SOA Standards Important? (cont’d) Important features – XML schema—XML document that describes structure of other XML documents – Any program can read schema to determine structure of an XML document processing – Enables programs to share data in a standardized way – Data can be passed from one service to another without problems Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -29

The SOAP and WSDL Standards • Simple Object Access Protocol (SOAP) – Protocol for exchanging messages encoded in XML – SOAP messages can be exchanged using HTTP, HTTPS, FTP – Messages have metadata to specify how to route message, what services need to process it, how security and encryption are to be handled – Device, network, vendor, product independent Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -30

WSDL • Web Services Description Language, pronounced “wiz-dəl” • “WSDL is often used in combination with SOAP and XML Schema to provide web services over the Internet. A client program connecting to a Web service can read the WSDL to determine what functions are available on the server. Any special datatypes used are embedded in the WSDL file in the form of XML Schema. The client can then use SOAP to actually call one of the functions listed in the WSDL. ” (wikipedia. org) Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -31

Key Features of SOA Standards Figure 7 -14 Copyright © 2010 Pearson Education, Inc.

How Does the Knowledge in This Chapter Help MRV and You? • • MRV should review its processes Needs to create “as-is” process documentation Knowledge will help pinpoint problem areas Could create services that “call” other services, such as: – MRV Web site interacting with social networking sites • Help MRV be better consumer of vendors’ services • You: Be a better consumer of your company’s software development staff • You may review and produce process diagrams one day Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -33

MIS in Use: The County Planning Office • Planning office issues building, septic system, county road access permits • Serves homeowners, builders • Any construction or remodeling that involves electrical, gas, plumbing, other utilities, conversion of unoccupied spaces into living or working space Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -34

MIS in Use: The County Planning Office (cont’d) • Problems – Sequential nature of permitting process slow and frustrating – Serial engineering reviews took 3 -4 weeks each – Customers wanted concurrent reviews Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -35

Sequential Permit Review Process Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Parallel Permit Review Process • Figure 2 Copyright © 2010 Pearson Education, Inc. Publishing

Ethics Guide: Dialing for Dollars • Assume you are a salesperson • It has been a bad quarter. So, vice president of sales has authorized a 20% discount on new orders. • Only stipulation—customers must take delivery prior to end of quarter so Accounting department can book the order for this quarter. • VP says “Start dialing for dollars, and get what you can. Be creative. ” • You identify your top customers to offer the discount deal Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -38

Ethics Guide: Dialing for Dollars, Scenario 1 1. With one customer, you say they may take full delivery now and return unsold inventory next quarter • Customer wants this stipulated on purchase order – Accounting will not book full sales amount with stipulation • So, salesperson agrees to send an email with stipulation – Accounting books full amount • Significant amount of unsold product probably will be sent back next quarter for refund Q: Is it ethical to write agreement to take back product in an email? Q: What would the boss do if he finds out? 7 -39

Ethics Guide: Dialing for Dollars, Scenario 2 2. With another customer, you don’t offer discount, but agree to post 80% of sale due this quarter with the 20% credit posted next quarter – Accounting books full price now, takes off 20% next quarter – Will hurt sales next quarter Q: Is it ethical to offer the discount? Q: How would it affect company’s balance sheet? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -40

Ethics Guide: Dialing for Dollars, Scenario 3 3. Sell product to fictitious company owned by relative – Accounting books full sale this quarter – All merchandise returned next quarter for refund Q: Is this ethical? Q: Is this legal? • Company’s MRP II system is scheduling production for next quarter based on this quarter’s sharply increased sales. Accordingly, it generates a schedule with substantial production increases and schedules workers for production runs. Q: What impact do your sales activities impact next quarter’s inventories? 7 -41

Guide: The Flavor-of-the-Month Club • Management programs are often introduced into organizations – – Kick-off meetings Change management experts explain programs HR amends annual review to include changes Senior management seems to forget about the programs – Program loses support and new one is introduced – Employees grow more cynical with each failed program – Employees want change from bottom-up Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -42

Active Review Q 1: Why is business process management important to organizations? Q 2: How does business process management vary in scope? Q 3: How does Business Process Modeling Notation (BPMN) document business processes? Q 4: How does the interaction of business process elements affect cost and added value? Q 5: What role do information systems play in business processes? Q 6: What are the advantages of the service-oriented architecture (SOA)? Q 7: Why are XML and other SOA standards important? How does the knowledge in this chapter help MRV and you? Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7 -43

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