Business Process Modeling
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BusinessProcessesandDataFlow.pptxBusiness Processes and Data Flow
ITSS 3300
Timothy Stephens
(Supplemental Material from Laudon, Dennis, Wixom, Roth, et al)
Course Objectives
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Describe the evolving nature of IS and IT and its role in today’s organizations.
Describe and model key business processes and apply knowledge of information technologies to support operational and strategic business processes.
Apply information systems viz. spreadsheet and analytics software, to solve business problems.
Understand core IS concepts within an organization such as
*data management,
*information technology,
*enterprise systems,
*information systems management
*business intelligence
that enable students to relate information systems to their field of study.
Course Objectives
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Describe and model key business processes and apply knowledge of information technologies to support operational and strategic business processes.
Business Processes
Business processes
Sets of activities, routines, steps
Flows of material, data, information, knowledge
May be tied to functional area or be cross-functional
Businesses: Can be seen as collection of business processes
Business processes may be assets or liabilities
Business processes are at the heart of every business. This could include anything from ordering a hamburger at McDonalds, to applying for a driver's license at the DMV. Studying a firm's business processes is an excellent way to learn a great deal about how that business actually works. How could a business process be a liability? Think of some dysfunctional business processes or really poor business process.
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Structured and Dynamic Processes
Structured Processes
Support operational and structured managerial decisions and activities
Standardized
Usually formally defined and documented
Exceptions rare and not (well) tolerated
Process structure changes slowly and with organizational agony
Example: Customer returns, order entry, purchasing, payroll, etc.
Dynamic Processes
Support strategic and less structured managerial decision and activities
Less specific, fluid
Usually informal
Exceptions frequent and expected
Adaptive processes that change structure rapidly and readily
Example: Collaboration; social networking; ill-defined, ambiguous situations
Structured processes are formally defined, standardized processes involving day-to-day operations: accepting a return, placing an order, purchasing raw materials, and so forth.
Dynamic processes are flexible, informal, and adaptive processes normally involving strategic and less structured managerial decisions and activities.
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Business Process Examples
Sales and Marketing
Identifying Prospects
Human Resources
Producing Payroll
Finance and Accounting
Creating Financial Statements at Period Close
Supply Chain
Maintaining Inventory Levels
Manufacturing, Production
Assembling The Product
Remember that organizations typically have some form of separate management and operating structures for various business functions. Other examples include checking the product for quality (manufacturing and production), selling the product (sales and marketing), paying creditors (finance and accounting), and evaluating job performance (human resources).
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How Information Technology Improves Business Processes
Efficiency Increases of existing processes
Automating steps that were manual
Enabling entirely new processes
Changing flow of information
Replacing sequential steps with parallel steps
Eliminating delays in decision making
Supporting new business models
Examples of entirely new business processes made possible by information technology are downloading a song from iTunes or buying a book or e-book from Amazon. You might also remember the Amazon book reader Kindle which is continuously connected to the Internet and allows customers to download books and pay for them using Amazon’s one-click purchase method.
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Goals of a Process Model
To show how processes really happen, as opposed to how they are supposed to happen or how we expect they happen.
To understand what contributes to different types of flows for the same processes, thus determine metrics.
Measurements/Data – inputs, outputs, duration, etc.
To find ways to improve the flows.
To identify ways that IT will affect workflows.
The communication requirements between players in the process.
Business Process Modeling
Graphic representation of activities in a business process
BPMN Standards are established for graphic elements
Activity documentation part of a broader design process – UML
Common Software/Tools:
Microsoft Visio – Free from UTD Microsoft Download
LucidChart – Free Trial
Microsoft Powerpoint
Rational Software Modeler – Free Trial from IBM
Basic Shapes and Symbols
Start
End
Activity
Or
Process
Gateway or Decision
System or
Data Store
Swim Lanes
(Connector)
Simple Example: Fill an Order
Place Order
Build It
Receive Order
OK?
Check It
Ship It
Swim Lanes: Who performs the activity?
Even Better: Who and When
Time series is an even better representation of what activities are performed by whom, what activities are dependent on other activities, and generally, how long does each activity (and the process as a whole) take to complete.
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Data Needed: (and How it is used)
Examining the data flow will help identify data storage/repository requirements, and additional process steps. In this case a data store is required for customer orders (customer, item, quantity ordered), and a process improvement step that results from the Quality Control process
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Business Process Modeling Fundamentals
All process modeling and analysis should address the following fundamental questions, and the onset of the project:
What is the overall purpose of the process?
What is the deliverable/outcome?
What is the starting point?
Who are the active participants in the process?
People/Departments
Automation Steps
How do you know you have reached the desired ending point?
Measurements, such as time frames/duration, number of resources, quality, etc.
Modeling/Mapping a Process
Preliminary
Finalize Business Scenario and Perspective
Confirm purpose of the process: desired outcome, participants and/or automation
Brainstorm the activities (one idea per sheet of notepad – or line on sheet of paper)
Map the process by creating a Swimlane with Time Series
One line per participant
Sequence the activities. Don’t forget about the decisions
Look for improvement opportunities
Focus on efficiency and effectiveness
Specifics include automation, parallel activities, feedback
Business Process Redesign (Re-Engineering)
Business process management (BPM)
Variety of tools, methodologies to analyze, design, optimize processes
Used by firms to manage business process redesign
Steps in BPM
Identify processes for change
Analyze existing processes
Design the new process
Implement the new process
Continuous measurement
Fundamentally, organizations should always be looking to improve their processes: Making sure they are maximizing efficiency in the wake of ever-increasing technology.
There is a risk, however. Many organizations embark on a grand journey of improvement, typically headed by consultants or a special group within the organization. There is a fine line of radical improvement, and operational realities. Consultants (either internal or external) have little or no detail knowledge of the organization’s operations, and risk making recommendations which are either un-implementable or unreasonable. Therefore, the effort MUST include (and I would argue, be led by) the business process owners.
It is important to note that, even with effective process redesign, a majority of reengineering projects do not achieve breakthrough gains because of inadequate change management.
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Example: Purchase Book at Bookstore
Purchasing a book from a physical bookstore requires many steps to be performed by both the seller and the customer.
This slide’s graphic illustrates the process of purchasing a book prior to reengineering, including the steps if a book is not available. It emphasizes the sequential nature of the task. Besides the time taken for this process, what are other disadvantages of this traditional business process?
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Redesigned (Re-Engineered) Process
Using Internet technology makes it possible to redesign the process for purchasing a book so that it requires fewer steps and consumes fewer resources.
This graphic illustrates the book purchasing process after reengineering as an online process. The new process and technology has reduced numerous stages to four or five. What are the elements that have allowed these steps to occur?
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Improving Process Quality
Process efficiency
Ratio of outputs to inputs.
Process effectiveness
How well a process achieves organizational strategy.
How can processes be improved (efficiency and/or effectiveness)?
Change process structure.
Change process resources.
Change both.
Performing an activity.
Partially automated, completely automated.
Augmenting human performing activity.
Ex: Common reservation system.
Controlling data quality.
Ensure data complete and correct before continuing process activities.
Data Flow Diagrams (DFD)
Show creation and communication of data created in process steps.
DFD Elements:
Process – Activity or function performed for a specific business reason
Data Flow – Collection of data, and communication with data store or other process activities
Data Store – Collection of data that is stored in some way
External Entity – Person, organization, or system that is external, but has interactions with the process.
Reading a Data Flow Diagram
© 2015 John Wiley & Sons. All Rights Reserved.
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Eliminating Information Silos
What are the problems of information silos?
Data duplicated.
Data inconsistency.
Data isolated.
Disjointed processes.
Lack of integrated enterprise information.
Inefficiency: decisions made in isolation.
Increased cost for organization.
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An information silo exists when data are isolated in separated information systems.
Information system silos arise when:
IS supports departmental processes rather than enterprise-level processes.
Personal and workgroup support applications are created over time.
Organizations grow, especially by merger and acquisitions.
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Example: Problems Created By Information Silos
Here is an example of problems created information silos – Processing a simple order (In this case, IndyMac owns Ajax Construction, and utilizes a payables solution from OneWest Bank)
Duplicated and inconsistent data
Separated supporting applications; difficult for two activities to reconcile their data, getting approvals will be slow and possibly erroneous
Lack of integrated enterprise data as a consequence of disjointed systems
Inefficiency results from making decisions in isolation
Information silos increase costs — duplicated data, disjointed systems, limited information, and inefficiencies all mean higher costs
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Solving the Problems of Information Silos
Integrate into single database.
Revise applications.
Manage to avoid problems.
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Summary of Business Processes
Why is Process Mapping Important?
Describe Who does What and When
Show flow/sequence of activities, required inputs, resulting outputs
Data Flow Diagrams show flow of data and information through the process activities
Identify communications and hand-offs
Process Analysis shows opportunities for efficiency and/or redesigning the process
BPM From a Business Perspective:
Doing the right things
Doing things right
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Company ProcessingOrderProcessingManufacturing & ShippingQuality ControlCustomerInventoryReplenishRequestSchedule ManufacturingSendconfirmationShip ItemTest ItemManufacture ItemCustomer PlacesOrderReceive confirmationCustomer ReceivesOrderOrder Processing SystemYesDid Item Pass?No
Company Order ProcessOrderProcessingManufacturing & ShippingQuality ControlCustomerDay 6Day 2Day 3Day 4Day 1InventoryReplenishRequestSchedule ManufacturingSendConfirmationShip ItemTest ItemManufacture ItemCustomer PlacesOrderReceive ConfirmationCustomer ReceivesOrderOrder Processing SystemYesDid Item Pass?No
Company Order ProcessOrderProcessingManufacturing & ShippingQuality ControlCustomerDay 6Day 2Day 3Day 4Day 1InventoryReplenishRequestSchedule ManufacturingSendConfirmationShip ItemTest ItemManufacture ItemDate, Item,QuantityCustomer PlacesOrderReceive ConfirmationCustomer ReceivesOrderCustomer, Item,QuantityOrder Processing SystemYes:(Customer, Item,Quantity)Did Item Pass?(Item, Quantity,Reject Rate)NoProcess Improvement
