Information Systems for

Managers - 04

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 Topics covered
• Business Processes
• Impact of IT
• Reengineering of work
• IT and Business Process Redesign
• Management challenges in Business Process
Redesign

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 Business Processes
• Business processes refer to the manner in
which work is organized, coordinated and
focused to produce a valuable product or
service.
• They are the collection of activities required to
produce a product or service.
• Performance of a business firm depends on
how well its business processes are designed
and coordinated.

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 Order Fulfillment Process

Sales Generate Submit order

order

Accounting Check credit Approve credit Generate Invoice

production
Assemble product Ship product

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Cashless Claims Process
Claims Process
 How IT improves Business Processes
• Information systems automate many steps in
business processes that were formally
performed manually. E.g. Leave management
System
• Business processes can be improved by using
information technology to achieve greater
efficiency, innovation and customer services.
E.g. core banking system

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 Impact of IT - 01
• Efficiency
• Effectiveness
• Transformation

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 Impact of IT - 02
Efficiency
• Efficiency can be defined as doing things right
• Computer based information processing
systems have supported efficiency by
automating routine paperwork processing
tasks.

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 Impact of IT - 03
Effectiveness
• Effectiveness is defined as doing the right
things
• E.g. An effective sales manager focuses on
tasks that pay off in increased sales volumes

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 Impact of IT - 04
Transformation
• Transforming the way a functional unit or an
organization does business using information
technology.
• E.g. Improvement of sales using a CRM
package

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 Impact of IT - 05
How do applications that achieve the objectives
of efficiency, effectiveness and transformation
affect the individual, functional unit and the
organization?

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 Impact of IT - 06
Applications that have an impact on individual
Efficiency Task Mechanization Word processing.
Using a
spreadsheet to do
budget plan

Effectiveness Work improvement Using a prospect

database to
generate sales
letters

Transformation Role expansion Using a portable PC

to do “what-if”
analysis for
investment clients

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 Impact of IT - 07
Applications that have an impact on functional
unit
Efficiency Process Automation Order-entry; credit
checking

Effectiveness Functional Computer aided

enhancement design, computer
aided
manufacturing

Transformation Functional CD-ROM disks for

redefinition business search

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 Impact of IT - 08
Applications that have an impact on the
organization
Efficiency Boundary extension Online order entry
linking customers
and suppliers

Effectiveness Service Online diagnostic

enhancement database for
electrical
appliances

Transformation Product innovation Holiday Inn’s video

conferencing

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Framework for application of IT
Individual Functional Unit Organization

Efficiency Task Process Boundary

Mechanization Automation extension

Effectiveness Work Functional Service

improvement enhancement enhancement

Transformation Role expansion Functional Product innovation

redefinition

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 Reengineering of work
• Process of reengineering of work
– Organize around outcomes, not around tasks
– Have those who use output of a process to
actually perform the process
– Treat geographically dispersed units as if they are
centralized
– Link parallel activities during the process, rather
than at the end of the process
– Capture information once at the source

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Business Process Reengineering and
Business Process Redesign

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 IT and Business Process Redesign
• Steps in business process redesign
– Develop business vision and process objectives
– Identify processes to be re-designed
– Understand and measure existing processes
– Identify IT levers
– Design and build prototype of the process

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 Role of IT in Business processes
(re-design)
• Entities
– Inter-organizational processes
– Inter-functional processes
– Inter-personal processes
• Activities
– Operational activities
– Managerial activities

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 Management challenges in Business
process re-design
• Guidelines to manage transition
– Create task force with people from cross functional
groups
– Have re-design teams work closely with managers and
staff
– Explain through the information systems group wrt
power offered by technology
– Build a team of industrial engineers with strong
interpersonal skills, understanding of multiple
functions, process measurement etc.
– Build IT technology platforms that support cross
functional applications.

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 Summary
• Business Processes
• Impact of IT
• Reengineering of work
• IT and Business Process Redesign
• Management challenges in Business Process
Redesign

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