Chapter 1
Understand the organization
and the business processes
Things to ponder:
“Never ask things to be easier,
always ask yourself to be BETTER”
Learning outcomes
Discuss the traditional view of an organization
Discuss the system views of an organization
Describe a process
Describe the history of process improvement
Describe the common terms used in this course
Understand your organization
Organization
Any group, company,
corporation, division,
department, plant, or sales office
(Harrington et al. 1997)
A stable, formal, social structure
that takes resources from the
environment and processes
them to produce outputs
(Laudon and Laudon, 2007).
Understand your organization
Example of organization structure : source Google
Understand your organization
Capital and labor are primary inputs from the environment
The organization transforms the input into products and
services
The products and services are consumed by the environment
in return for supply inputs
Organizations are stable- longevity and routines
Formal legal entities that have rules, standard operating
procedures that abide by laws organization
Social structure
Inputs from Outputs to the
the environment environment
Figure 7: Traditional view
(source: Loudon and Loudon, 2007) Production process
Understand your organization
How the previous definitions relate to Information
Systems technology?
What are the possible changes?
Example: Billing System
customers
suppliers
Organization
Information Systems
Inputs Processes Outputs
Figure 8: System view
(source: Loudon and Loudon, 2007)
feedbacks
Regulatory agencies stockholder competitors
Understand your organization
Features of organizations
Structure
Policy / standard operating procedures
Politics
Culture
Vision & mission
What is a Process ?
Major processes
sub processes
Input
Output
activities
Figure 1: Process hierarchy
Tasks
(source: Harrington et al. 1997
Definitions
• Process –
– logical, related, sequential set of activities
– require input from resources (supplier) input output
– Process
add value to the input and
– produce output to the users (customers)
• Major processes –
– involves more that one function within the organization
structure
– has significant impact to the organization
– If it becomes too complex, it is divided into sub-processes
Definitions
• Sub-process
– a portion of a major process
– deliver a specific objective in support of the major process
• Activities
– Things go on within a process or sub-process
– Usually performed by unit /department
– Documented in an instruction
– Instruction documents the tasks involved
• Tasks
– Individual elements
– Relate to how an items perform a specific assignment
What is a business process?
Business processes
A set of activities by which administrative tasks are performed
Refers to how an organization performs the operation in a certain
manner, coordinate, organized and focused to deliver a good and
valuable product and services
Ex. how the product/services is developed, generate, fulfilling order or
hiring a staff can be a source of competitive advantage.
feedback Other business
supplier
process
Business
input process
output
Other customer
resources
feedback
Figure 2: Business process relationship
Understanding business
processes
How?
Talk about them?
Looking at them?
Read the procedures?
Talk to the manager or supervisor?
Document them?
Understanding business
processes
What are the best way to gain an understanding
about one business process?
Who can provide those information?
Business processes
Figure 3: Example of business process description (source: Google image)
History
1970-1980a: the 1st wave of performance-improvement
activities
– Works were done to reduce error rates and to maximize
productivity in the product processes (manufacturing)
2nd wave focused on improving administrative processes
– The Business Process Improvement (BPI) methodology focuses
on administrative & support processes only
An overview: Business
Process Improvement
Improving business processes are vital for businesses to
stay competitive and sustain in today's marketplace.
Previously, companies have been forced to improve their
business processes because we, the customers, are
demanding for better products and services. Ex. the
rejection of the product, and customer shift demand and
interest, etc.
Less radical approaches to organizational transformation
are referred as Business Process Improvement (BPI).
Since then many companies have began business process
improvement by adopting related improvement model
such as continuous improvement model.
BPI
Figure 4: Example of BPI early stage (source: Google)
An overview: Business Process
Automation (BPA)
Another less radical approach is
BPA where the technology is
used to support existing
procedures and practices.
Although the benefits can be
achieved through these
approaches but the
improvement may not be
enough to generate a ROI.
Thus, the BPR concept was Figure 5: Example of BPA cycle (source: Google)
introduced to make dramatic
improvement to the business.
An overview: Business Process
Reengineering (BPR)
BPR is a process that focusing on redesigning or
reengineering
the existing business processes,
the associated systems and
organizational structures.
The aim is to achieve a dramatic improvement in
business performance.
An overview: Business Process
Reengineering (BPR)
Another reasons that trigger such changes could
include:
poor financial performance,
external competition,
erosion of market share or
emerging market opportunities, etc.
BPR
Figure 6: Example of BPR methodology (source: Google)
Transformation of the Business
Enterprise
Traditional business enterprise
Hierarchical
Centralized
Structured arrangement
Fixed set of SOPs
Deliver mass-produced product /services
New form enterprise
Flattened
Decentralized
Flexible arrangement
Rely on instant information in producing mass-customized
products/services to suit the market demand
Transformation of the Business
Enterprise
Traditional business enterprise
Relies on formal plan,
Rigid division of labor
Formal rules
New form enterprise
Informal commitment and networks
Flexible arrangement of teams and individuals
Customer orientation
Appeals to knowledge, learning and decision
making of individual employees
IT makes it possible
Transformation into Digital
Enterprise
Digital enterprise
all significant business processes and
relationship with the stakeholders are
digitally enabled, and key corporate
assets are managed through digital
means (Loudon and Loudon, 2007)
4 major systems that helps to define
digital enterprise
Supply chain management system
Customer relationship management system
Enterprise system
Knowledge management system
From Digital Enterprise into e-
Business
E-Business
All electronically mediated
information exchanges both
within an organization and with
external stakeholders
supporting the range of business
processes (Chaffey, 2007)
The transformation of key
business processes through the
use of Internet technology –
IBM (Chaffey, 2007)
Figure 9: Example of e-Business cycle (source: Google)
Summary
Introduced the common terms and concepts used
for the course
Examples of existing methodologies related to
the course
Discussed the traditional view of an organization
and the changes occurred due to BPI
Discussed the impact of IT/ICT to business
enterprises.
References
Harrington, H.J., Esseling, E.K. and Nimwegen, H.V., Business Process
Improvement: Documentation, Analysis, Design, and Management of
Business Process Improvement, 1997.
Chaffey, D. and Wood, S., Business Information Management:
Improving Performance using Information Systems, Prentice Hall,
2005.
Loudon, K. and Loudon, J. Management Information System, Prentice
Hall, 2009
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