Class 6

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MIS 2000 Information Systems for Management Bob
Travica
Class 6 Organization in Process View
Updated Jan. 2016
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Outline

• Organization and process
• Concept of Process
• Business (Organizational) Process
• Management in process view
• Operational strategic processes
• Process Design
• Process Performance
• Process optimization
• IS, Process Design Performance (part)
• Summary

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Organization

• Most apparently, organization is a collection of
  people with particular expertise, which delivers
  a certain product (good or service).
• From process perspective taken in this course,
  organization is a set of business processes that
  altogether deliver a certain product.
• Processes contain data some managed via IS,
  some manually.

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General Concept of Process

• Process is a set of activities connected from a
  start to an end point.
• Process is similar to procedure, but usually
  larger in scope and it contains procedures.
• An example of process with typical components

Start
Decision activity (point)
Activity
Flow
End
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Business or Organizational Process

• Definition Business process is a set of
  activities connected from a start to an end
  point, which delivers a product of a measurable
  value to a customer (internal or external).

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Operational and Strategic Processes

• Strategic processes happen in some intervals
  (e.g., setting long-term goals, activities
  leading to materializing the goals) game plan.
• Operational processes make regular, everyday
  work. Resemble moves (step patterns) in a game.

Operational processes Strategic processes
Daily grind, short time horizon Occasional activities, longer time
Steps patterns, with small known variation (Routines) More variation in process
IS are embedded in operations, provide necessary support IS support is partial (e.g., decision making as part of planning)
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Management in Process View

• From the process perspective, managers focus
  should be on BP management (BPM)
• Management goals are
• (a) meet business process performance standards
  goals
• (b) to raise these standards.
• Better process performs better
• Process performance influences organizational
  performance (financial outputs, innovation,
  customer service)
• IS are an instrument for the process improvement.
  

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Design of Business Process

• Design aspects How does a process look like?
• CCCFIS Composition, Coordination, Complexity,
  Flexibility, and IS.
• 1. Composition What is the arrangement of
  process steps?
• Start
• Flow of steps
• Activity (data-transformation steps
• or matter-related)
• Decision (choice-making step)
• Loop (repeating steps)
• End

Process diagram for Customer Order Fulfillment
(simple form)
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Design of Business Process Composition
C C C F IS
P

• 1. Composition What components do make a
  process?
• Ask
• Are the steps defined accurately activity names,
  decisions? Activities apply to data (order,
  invoice) and objects (delivery items).
• Do the flows make sense? Do loops (if any) make
  sense?
• Are all components included?
• Composition errors are marked red in this
  diagram.

Get Order
Fill Order
Rush order?
yes
no
Deliver overnight
Deliver regularly
Send Invoice
Close Order
Fulfill Customer Order Process
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C C C F IS
Business Process Design Coordination
P

• 2. Coordination Dependencies between process
  steps and their contribution to the process
  deliverable.
• Ask
• What are dependencies between activities in time
  (below) and quality of deliverables?
• Dependencies are
• Sequential (A finishes, B starts)
• Parallel (A B at the same time saves process
  time).

Fulfill Customer Order Process
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Business Process Design Complexity
C C C F IS
P

• 3. Complexity The scope of business process.
• Ask
• What is the number process steps (activities and
  decisions)
• Number of loops?
• Depth of process - are there sub-processes? (not
  here if the delivery step is handled by a another
  company if internal, delivery steps may have
  some depth).

Fulfill Customer Order Process
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C C C F IS
Business Process Design Flexibility
P

• 4. Flexibility The extent of variation in a
  process.
• Ask Are there alternative steps?
• How many versions of process are there?
• Fulfill Customer Order Process analyzed in
  previous slides is a routine process (operation)
  with low variability coming just from the way
  delivery can be done. There are two versions of
  the process determined by two different delivery
  steps, so flexibility is 2 (very low).

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Business Process Design IS
C C C F IS

• 5. IS Properties Coverage and characteristics of
  an IS built into a business process.
• Important aspects
• The portion of process IS covers (systems
  footprint)
• What IT are used (computers, mobile devices,
  networks)
• Characteristics of user interface screens
• Characteristics of databases (local vs.,
  distributed)

P
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Process Performance Measurement

• Process performance can be assessed by this
  metrics
• CVTCIS Customer Value, Time, Cost, and IS
  Performance.
• Filtering criterion Does a process serve useful
  organizational purpose?
• There are odd processes surviving from the past.
  They may perform well but have no real purpose.
• 1. Customer Value Characteristics of the
  process deliverable that matter to the customer
  (external or internal) see slide 5.

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CV T C IS
P
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Process Metrics Time Cost

• 2. Time What is the total time between the start
  and end point of
• a process?
• sum up execution times of all steps
• for parallel steps, take time of the longest step
• 3. Cost What is the amount of expenditures in
  monetary figures?
• sum up costs for labor, materials, IS, other
  technologies,
• overhead

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IS Performance
CV T C IS
P

• 4. IS performance influences process performance
  (performance booster) Non-functional
  characteristics of IS that reflect on process
  time and cost.
• The most important IS characteristics is IS
  speed, which depends on many factors (speed of
  data processing, transfer, and retrieval size of
  main memory)
• Another important characteristic is the IS
  reliability (small down time, recovering
  capability, security of data)

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Relationships between Process Performance and
Organizational Performance

• The better a business process performs, the
  better the organizational performance. For
  example a faster and less costly process,
  improves the income to cost ratio (or decreases
  costs while usually enlarging the income).

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Summary 1/2

• Organization is a whole consisting of business
  processes that altogether deliver a certain
  product (good or service).
• Business process is a set of activities connected
  from a start to an end point, which deliver a
  product of a measurable value to a customer
  (internal or external). BP can be inside and
  outside of organizations. BP works with data and
  physical objects.
• The goal of managing organizations from the
  process perspective is to improve process
  performance and design, which leads to higher
  organizational performance.
• There are operational and strategic processes.

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Summary 2/2

• Process design refers to process composition,
  coordination, complexity, flexibility, and IS
  (CCCFIS). Process design can be optimized with
  help of IS.
• Process performance can be measured in terms of
  customer value, time, cost, and IS performance
  (CVTCIS).
• IS is (a) part of organizational design (IS
  footprint), (b) helps optimize process design
  (optimizer role), and (c) influences directly
  process performance (performance booster).
• Process performance influences organizational
  performance.