MIS 325PSCJ

IntroductionThe goal of business process modeling is to identify

what is currently happening and what to do differently to satisfy customer requirements

Modeling a business process helps determine whether the business process needs to be improved, automated or reengineered

There are three approaches. Each approach varies in the level of “intensity” with which change is desired:

Business Process Automation (BPA) Business Process Improvement (BPI) Business Process Reengineering (BPR)

Business Process Automation (BPA)Business Process Automation

leaves the manual system essentially unchanged but makes processes more efficient by automating them.

BPA does not impact the way things are done, but rather how fast they are accomplished.

Example: Library Before BPA: Manual Checkout After BPA: computerized checkout customer still checks books out at desk, the

computer makes this process more efficient.

Business Process Improvement (BPI)Business Process Improvement

This approach takes an evolutionary view of the system. No radical changes but constant search for

improvements. Changes are made to the way things are done, not just

the computer system but the business system as well.

Example: Library Before BPI: manual checkout After BPI:

students can use computer to search catalog, check out book and have it delivered using campus mail.

changes both the computer system and the way you do business.

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Business Process Improvement using Six SigmaSix Sigma is defined as “an improvement program

aimed at reducing variability and achieving near elimination of defects from every product, process, and transaction”

Six Sigma aims to reduce costs and increase revenue through increased process efficiency and effectiveness.

This methodology focuses on variance reduction, cycle time reduction and yield improvement. Six Sigma is divided into 5 steps: define, measure, analyze, improve, and control (DMAIC).

Business Process Reengineering

Business Process Reengineeringa radical and fundamental rethinking of the

business processes currently used looking for dramatic improvements high risk increased time very often associated with “downsizing”

BPR is concerned with radical change, so we need radical techniques to use BPR.

Resistance to change is highest here, because the stakes are highest.

Business Process Reengineering

The search for, and implementation of, radical change in business processes to achieve breakthrough results

Synonyms: business process redesign, business transformation, process innovation, business reinvention, change integration

Starting point: clean sheet of paperExample: Library

Before BPR: manual checkout after searching the stacks

After BPR:Make books available on web

Business Process Reengineering

BPR Objectives:To dramatically reduce costReduce timeTo dramatically improve customer services or to

improve employee quality of lifeTo reinvent the basic rules of the business e.g.

the airline industry fast food to feeding people anywhere, anyhow.

When Should a Business Process be Reengineered? (I)

• Three forces are driving companies towards redesign (The three C’s)

Customers – are becoming increasingly more demanding

Competition– has intensified and is harder to predict

Change– in technology – constant pressure to improve; design new

products faster– flexibility and ability to change fast are

requirements for survival

Business Process Re-engineering case studies

Reasons for BPR Failures

• Lack of support from senior management• Poor understanding of the organization and the

infrastructure• Inability to deliver necessary technology• Lack of guidance, motivation and focus• Fixing a process instead of changing it• Neglecting people’s values and beliefs• Willingness to settle for marginal results• Quitting too early• Allowing existing corporate cultures and mgmt attitudes to

prevent redesign• Not assigning enough resources• Working on too many projects at the same time• Trying to change processes without making anyone unhappy• Pulling back when people resist change

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Business Processes

Collection of activities that takes one or more kinds of input and creates an output that is of value to customerCustomer can be traditional external customer or

internal customerThinking in terms of business processes helps managers

to look at their organization from the customer’s perspective

Businesses must always consider customer’s viewpoint in any transaction

Sharing data effectively and efficiently between and within functional areas leads to more efficient business processes

Managing inputs and business processes effectively requires accurate and up-to-date information

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Marketing and Sales

Needs information from all other functional areas

Customers communicate orders to M/S in person or by telephone, e-mail, fax, the Web, etc.

M/S has a role in determining product pricesPricing might be determined based on a

product’s unit cost, plus some percentage markup

Requires information from Accounting and Finance, and Supply Chain Management data

M/S needs to interact with Human Resources to exchange information on hiring needs, legal requirements, etc.

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Supply Chain Management

Needs information from various functional areasProduction plans based on information about product

sales (actual and projected) that comes from Marketing and Sales

With accurate data about required production levels:Raw material and packaging can be ordered as

neededInventory levels can be kept low, saving money

Supply Chain Management data and records can:Provide data needed by Accounting and Finance to

determine how much of each resource was usedSupport the M/S function by providing information

about what has been produced and shipped

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Accounting and Finance

A/F personnel:Record company’s transactions in the books of

accountRecord accounts payable when raw materials are

purchased and cash outflows when they pay for materials

Summarize transaction data to prepare reports about company’s financial position and profitability

People in other functional areas provide data to A/FM/S provides sales dataSCM provides production and inventory dataHR provides payroll and benefit expense data

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Human Resources

HR needs information from the other departments

Tasks related to employee hiring, benefits, training, and government compliance are all responsibilities of HR

HR needs accurate forecasts of personnel needs from all functional units

HR needs to know what skills are needed to perform a particular job and how much the company can afford to pay employees

HR observes governmental regulations in recruiting, training, compensating, promoting, and terminating employees

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ERP softwareSignificant amount of data is maintained by and

shared among the functional areasTimeliness and accuracy of these data critical to

each area’s success and to company’s ability to make a profit and generate future growth

Managers think in terms of business processes that integrate the functional areasNeed to share information between functions and

functional areasERP software provides this capability by means of

a single common databaseAllows accurate, real-time information to be

availableExamples of ERP software are SAP and Oracle