BUSINESS INFORMATION

SYSTEMS
(UGBS 655)
Introduction

Dr. Eric Afful-Dadzie

(OMIS, Dept.)

Week 1
How Businesses Use Information
Systems

Business Functions
&
Business Processes
RECAP – Week 2
Information Systems that Span Organizational Boundaries
Decision-Making Levels of an Organization
• Executive level (top)
– Long-term decisions
– Unstructured decisions
• Managerial level (middle)
– Decisions covering weeks and months
– Semi-structured decisions
• Operational level (bottom)
– Day-to-day decisions
– Structured decisions
Types of Information Systems
 Learning Objectives
• Explain business processes and how the enterprise perspective differs
from a traditional functional perspective.
• Distinguish between Business process and Business Functions
• Identify kinds of data that each main functional area produces
• Identify the kinds of data that each main functional area needs
• Define integrated information systems and explain why they are
important
• Evaluate the role played by systems serving the various levels of
management in a business and their relationship to each other.
• Explain how enterprise applications improve organizational
performance.
 Evolution of Business Processes
• The Age of the Craftsworker
• The Age of the Factory
• The Age of the Specialist
– The downside of functional organizations
• Optimizing the individual parts does not optimize the whole.
• If you can’t see the whole, you might inadvertently be damaging the end result when optimizing a piece of
the process.

• Business process re-engineering: 1985-1993

• The insight of reengineering was that by identifying, making visible, rethinking, and radically redesigning end-
to-end business processes, they could be dramatically improved.

• Enterprise Resource Planning

• Managing and integrating key business processes on a single platform. Achieve cross-functional.

• On-demand services (eg. Cloud computing)

• After years of being treated as a support organization, IT is now a full partner in developing business
strategy and implementing new processes. Firms purchase ONLY what they need.
 Processes Everywhere (Examples)
• Order-to-cash: This is a type of process performed by a vendor,
which starts when a customer submits an order to purchase a
product or a service and ends when the product or service in
question has been delivered to the customer and the customer has
made the corresponding payment.

• Quote-to-order: This type of process typically precedes an order-

to-cash process. It starts from the point when a supplier receives a
“Request for Quote” (RFQ) from a customer and ends when the
customer in question places a purchase order based on the
received quote.

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 Processes Everywhere (Examples)

• Procure-to-pay: This type of process starts when someone in an

organization determines that a given product or service needs to
be purchased. It ends when the product or service has been
delivered and paid for.

• Issue-to-resolution: This type of process starts when a customer

raises a problem or issue, such as a complaint related to a defect in
a product or an issue encountered when consuming a service.
Processes Everywhere (Examples)

• Application-to-approval: This type of process starts when

someone applies for a benefit or privilege and ends when the
benefit or privilege in question is either granted or denied.

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 Business Function and Business Process
• Business Function: The logical level structure an
organization uses to control and manage its resources and
processes (e.g., human resource management function, supply
chain management function).
• Business Process: A series of interrelated activities through
which work is organized and focused to produce a product or
service. This is conducted within a business functional unit.
• Collection of activities that take one or more kinds of input to
create an output such as report or forecast that is of value. There
two main types:
▪ Core business processes (Primary)
▪ Support business processes
Functional areas in business
Customer
services
Administration
Operations and IT support

The main Marketing and

functional sales
Finance areas

Human
Research and
resources
development
 Support business processes
• General Management and firm infrastructure
– Corporate governance (legal, finance, planning and
public relations), accounting, building services,
management and administrative support.
• Human Resource Management
– Activities associated with recruitment, hiring, training,
compensating and staff lay-off.
• Technology and process development
– Activities related to maintenance, automation, design
or redesign of equipment, hardware, software,
procedures and technical knowledge
 The Order Fulfillment Process

FIGURE 2-1 Fulfilling a customer order involves a complex set of steps that requires the close coordination of the
sales, accounting, and manufacturing functions.
Basic characteristics of business processes
According to Bosilj Vukšić, Hernaus and Kovačić (2008)
❑ Each process has a purpose;
❑ Each process has an owner;
❑ Each process has a beginning and end;
❑ Inputs are entering the process, outputs are exiting process;
❑ Process is composed of sequential feasible activities
❑ Based on the inputs and outputs of the process can be easily
determined by the success of the process;
❑ To survive the process should have known internal and
external suppliers and customers;
❑ Process improvement is inevitable.
Example: Procurement, logistics and Distribution
• Purchasing
• Distributing
• Loading
• Packing
• Shipping
• Receiving
• Transporting
• Warehousing
 Business processes

How are businesses in Ghana using IT to achieve some of these business processes?
Business Process Management (BPM) is the science of overseeing how
work is performed in an organization to ensure consistent outcomes
and to take advantage of improvement opportunities.
 Cross-functional Example
Input Functional unit Process Output
responsible

Request to purchase Marketing and Sales Sales and order Order is generated
computers

Financial help to Accounting and Payment/Financing Customer’s purchase

purchase Finance is completed

Technical support Marketing and Sales 24-hr helpline Customer’s technical

query is resolved

Fulfillment of order Supply chain Shipping and delivery Customer receives

management computer

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Improving Business Processes: Guidelines
• Attack each delay
– What causes it?
– How long is it?
– How could we reduce its impact?
• Examine each decision point
– Is this a real decision or just a checking activity?
– If the latter, can we automate or eliminate it?
• Dematerialize documentation.
– Can we do it electronically?
– Eliminate multiple copies?
– Share a common database?
 The Silo Effect
• The functional structure served organizations well for a number of years
because it enabled them to cope with the challenges generated by their rapid
growth.
• Over time, the system developed serious drawbacks.
• Particularly, people in the different functional areas came to perform their
steps in the process in isolation, without fully understanding what steps
happen before and what steps happen next.
• They essentially complete their part of the process, hand it off to the next
person, and then proceed to the next task.
• By focusing so narrowly on their specific tasks, they lose sight of the ‘‘big
picture’’ of the larger process, be it procurement, fulfillment, or anything
else. This tendency is commonly referred to as the silo effect.
• Silos effect because workers complete their tasks in their functional ‘‘silos’’
without regard to the consequences for the other components of the process.
What Problems arise from Functional Information Systems?

• Data duplication, data inconsistency

• Disjointed applications

Fig. 7. Functional Information systems

 Links between functions
• All functional areas must
link together to achieve the HR R&D
overall aims and objectives Ops

• This means cooperation and

IT Admin Sales
good communications

CS Marketing
Financ
e
 Business Processes
• Sharing data effectively and efficiently between and within
functional areas lead to more efficient business processes
• Integrated information systems: Systems in which functional areas share data
 Trends in modern IT
enabled business processes
• Offshoring: Offshoring means getting work done in a different country.
• Outsourcing: Outsourcing refers to obtaining certain services or
products from a third party company.
• Job losses associated with offshoring and outsourcing.
• What are the reasons why a business would choose to outsource or
offshore?
• What factors will you consider when deciding between offshoring
or outsourcing?
 Business Processes and Information Systems

• Information technology enhances business processes by:

– Increasing efficiency of existing processes
• Automating steps that were manual
– Enabling entirely new processes
• Change flow of information
• Replace sequential steps with parallel steps
• Eliminate delays in decision making
• Support new business models
 How technology is transforming business
• The collaboration Economy – Known as collaboration consumption where physical, virtual and
intellectual goods are shared among a group of people, rather than individually owned. E.g. social
lending, peer-to-peer hotels (property rental), peer-to-peer task, bike sharing etc.
• Technology has flattened the marketplace
• Has reduced barriers to entering markets around the world.
• This allows buyers and sellers from around the world to connect and do business. E.g. is
Amazon, Ebay, Etsy etc.
• Technology moves businesses faster
• E-mail interactions have replaced memos, phone calls, and faxes. Your smartphones can
connect you to your entire business network while you are out of the office.
• Workflows and automated tasking systems have cut down on organizational bureaucracy,
streamlining operations.
• Consumers are more connected than ever before
• Cloud Computing and virtualization
• We are virtualizing our desktops, our servers, and our storage – which means data is stored on
remote servers and accessed in a wired or wireless way
 Critical metrics for IT success
• Growing interdependence between ability to use information
technology and ability to implement corporate strategies and achieve
corporate goals.
• Business firms invest heavily in information systems to achieve six
strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
 Critical metrics for IT success

• Operational excellence:
– Improvement of efficiency to attain higher profitability
– Information systems, technology an important tool in achieving
greater efficiency and productivity
– Walmart’s Retail Link system links suppliers to stores for superior
replenishment system
 Critical metrics for IT success
• New products, services, and business models:
– Business model: describes how company produces, delivers, and sells
product or service to create wealth
– Information systems and technology a major enabling tool for new
products, services, business models
• Examples: Apple’s iPad, Google’s Android OS, and Netflix
• Amazon.com began as an online bookseller and rapidly outpaced traditional
brick-and-mortar businesses like Barnes and Noble, Borders, and Waterstones
• MTN pays mobile money subscribers GH₵ 25 million in interest
Source: http://starrfmonline.com/2017/08/19/mtn-pays-mobile-money-subscribers-gh%e2%82%b5-25-million-in-interest/)
 Critical metrics for IT success
• Customer and supplier intimacy:
– Serving customers well leads to customers returning, which raises
revenues and profits.
– Note: 21st Century, don’t overburden the customer
• Example: High-end hotels that use computers to track customer preferences
and used to monitor and customize environment
– Intimacy with suppliers allows them to provide vital inputs, which lowers
costs.
• Example: JCPenney’s information system which links sales records to contract
manufacturer

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 Improving Customer services
(Recommendation Algorithms)
 Critical metrics for IT success
• Improved decision making
– Without accurate information:
• Managers must use forecasts, best guesses, luck
• Results in:
• Overproduction, underproduction
• Misallocation of resources
• Poor response times
• Poor outcomes raise costs, lose customers
– Example : Verizon’s Web-based digital dashboard (Business Intelligence)
provide managers with real-time data on customer complaints, network
performance, line outages, and so on
 Improved decision making

Basket Analysis – Association Rules

 Critical metrics for IT success
• Competitive advantage
– Delivering better performance
– Charging less for superior products (Amazon)
– Responding to customers and suppliers in real time
– Examples: Apple, Walmart, UPS
 Critical metrics for IT success
• Survival
– Information technologies as necessity of business
– Industry-level changes
• Example: Citibank’s introduction of ATMs
– Governmental regulations requiring record-keeping
• Examples: Toxic Substances Control Act, Sarbanes-Oxley Act