©1999 Addison Wesley Longman Slide 1.1 Business Processes 3.

©1999 Addison Wesley Longman Slide 1.1

BusinessProcesses

3


Table 3.1Ford’s New Payables System



CUSTOMER

Ford’s suppliers

Ford’s manufacturing and purchasing departments



PRODUCT

Verification that the the order was fulfilled correctly by the supplier

Payment to the supplier



BUSINESS PROCESS

Major Steps:

•Order material

•Receive shipments

•Reconcile receipts with purchase orders

•Pay suppliers

Rationale:

•store purchase orders in a shared database

•accept shipments only if they match the purchase order

•pay on receipt, not invoice



PARTICIPANTS

Purchasing department

Receiving department

Accounts payable department

INFORMATION

Purchase order

Receipt confirmation

TECHNOLOGY

Computer system supporting a shared database


Figure 3.1Symbols used in data flow diagrams


Figure 3.2Context diagram for the Ford purchasing system


Figure 3.3Data flow diagram showing the main processes in Ford’s original purchasing system


Figure 3.4Data flow diagram dividing PCH 1 into four subprocesses


Figure 3.5Standard flowchart symbols


Figure 3.6Flowchart showing the rules governing a procedure


Table 3.2Impacts of Architectural Characteristics of Business Processes

DEGREE OF STRUCTURE

Problem if the level is too high: •People doing the work are prevented from their judgement.•People doing the work feel like cogs in a machine because they have too little autonomy.

Problem if the level is too low:•Easily forseeable errors occur because well-understood rules are not applied consistently.•Outputs are inconsistent.

RANGE OF INVOLVEMENT

Problem if the level is too high: •Work is slowed down because too many people get involved before steps are completed.

Problem if the level is too low: •Work is performed based on narrow or personal considerations considerations, resulting in decisions that may not be the best for the overall organization.



LEVEL OF INTEGRATION

Problem if the level is too high: •Steps in the process are too intertwined. •Participants in different business processes get in each other’sway. •To change one step it is necessary to analyze too many other steps or processes.

Problem if the level is too low: •Steps in the processes are too independent. •The process needs greater integration to produce results.

COMPLEXITY

Problem if the level is too high: •Participants, managers, and programmers have difficulty understanding how the system operates or what will happen if it is changed.

Problem if the level is too low: •The system cannot handle the different cases that it should be able to handle.



DEGREE OF RELIANCE ON MACHINES

Problem if the level is too high:•People become disengaged from their work.•People’s skills may decrease. •Mistakes occur because people overestimate what the computers are programmed to handle.

Problem if the level is too low: •Productivity and consistency decrease as bored people perform repetitive work that computers could do more efficiently.

ATTENTION TO PLANNING, EXECUTION, AND CONTROL

Problem if the level is too high: •Too much effort goes into planning and controlling within the process, and not enough goes into execution.

Problem if the level is too low: •Insufficient effort in planning and control leaves the business process inconsistent and unresponsive to customer requirements



TREATMENT OF EXCEPTIONS, ERRORS, AND MALFUNCTIONS

Problem if the level is too high: •The process focuses on exceptions and becomes inefficient and inconsistent.

Problem if the level is too low: •The process fails altogether or handles exceptions incorrectly, resulting in low productivity or poor quality and responsiveness perceived by customers.


Table 3.3 Different Levels of Imposing Structure on Work

DEGREE TO WHICH STRUCTURE IS IMPOSED

Highest: Substitution of technology for people

High: Enforcement of rules or procedures

Low: Access to information or tools


Figure 3.8Five levels of integration between business processes


Figure 3.8, continuedFive levels of integration between business processes


Figure 3.8, continuedFive levels of integration between business processes


Figure 3.9Planning, execution, and control


Table 3.4Comparison of Planning, Execution, and Control

PLANNING

Time focus: Future

Important issues related to information:•Having reliable methods of projecting into the future by combining models, assumptions, and data about the past and present

EXECUTION

Time focus: Present

Important issues related to information: •Providing information that tells people what to do now to meet the plan and adjust for any problems that have occurred recently •Using current information to identify problems or errors in current work •Collecting information without getting in the way of doing the work

CONTROL

Time focus: Past

Important issues related to information: •Having reliable methods of using data about the past to develop or adjust plans, and to motivate employees•Provide information current enough current enough that it can be used to guide current actions


Table 3.5Finding the Right Level for Each Process Performance Variable

RATE OF OUTPUTProblem if the level is too high: •Lower productivity and consistency due to increasing rates of errors and reworkProblem if the level is too low:•Lower productivity due to the cost of unused capacity

PRODUCTIVITYProblem if the level is too high:•Too much emphasis on cost per unit and too little emphasis on quality of the outputProblem if the level is too low: •Output unneccessarily expensive to produce

CONSISTENCYProblem if the level is too high:•Inflexilbility, making it difficult to produce what the customer wantsProblem if the level is too low:

•Too much variability in the output, reducing quality perceived by the customer


Table 3.5Finding the Right Level for Each Process Performance Variable

CYCLE TIMEProblem if the level is too high:•Lack of responsiveness to customer •Excess costs and waste due to delaysProblem if the level is too low:•Product produced too soon is damaged or compromised before the customer needs it Delivery before the customer is ready

FLEXIBILITYProblem if the level is too high:•Too much variability in the output, reducing quality perceived by the customerProblem if the level is too low: •Inflexibilty, making it difficult to produce what the customer wants or to modify the process over time

SECURITYProblem if the level is too high: •Excess attention to security gets in the way of doing workProblem if the level is too low: •Insufficient attention to security permits security breaches


Table 3.6Process Performance Variables and Related Roles of Information Systems

PROCESS PERFORMANCE VARIABLE

•Rate of output

•Productivity

•Consistency

•Cycle Time

•Flexibilty

•Security


Figure 3.10Control chart for monitoring consistencey of a business process


Figure 3.11Identifying the causes of long cycle times


Figure 3.12Automation versus flexibilty


Figure 3.13Using an eye scanner for controlling access


Figure 3.14Information systems related to Mintzberg’s management roles


Table 3.7Common Sources of Management Information

FORMAL, COMPUTER-BASED

Internal sources: Key indicators generated by internal tracking systems

External sources: Public databases

FORMAL, DOCUMENT-BASED

Internal sources: Planning reports, internal audits

External sources: Industry reports, books, magazines

FORMAL, VERBAL

Internal sources: Scheduled meetings

External sources: Industry forums

INFORMAL

Internal sources: Lunch conversations, gossip, management-by-walking-around

External sources: Trade shows, personal contacts

©1999 Addison Wesley Longman Slide 1.1 Business Processes 3.

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