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Business Processes

Alter Information Systems 4th


ed.

Objectives

Process modeling.

Process characteristics.

Data Flow Diagrams (DFDs).


Flowcharts and pseudocode.
Business process performance variables.

Basic communication concepts.


Basic decision-making concepts.
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From Last Week:

Explain why you believe it is or is not


important for managers and system
participants to be able to analyse
information systems.

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Answer (based on Text)

Managers should be able to analyze information


systems in order to get a better appreciation of
how information technologies can affect the
business process. System participants should
also be able to analyze information systems in
order to appreciate the effects of an information
system on the way they do their work.

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Case: PanAmSat

0.What was the case about???

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Case: PanAmSat

1. Explain how this case is related to the


discussion of infrastructure in this chapter.

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Answer

Chevron and others depended on


PanAmSats satellites, and when one
satellite failed, Chevrons own business
suffered.

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Case: PanAmSat

2. PanAmSats system of providing satellite


communication infrastructure for other
companies can be viewed as a work system.
Assume that tomorrow you will join a team
analysing this work system in detail. To help
organize your own thoughts use the work
system framework to identify your assumptions
about the business process, participants,
information, and so on.
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Work System Analysis

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Work System Analysis

Customers:

Products and Services:

information about PanAmSats customers and services. Operational information with regard
to the operation of the telecommunication networks.

Technology:

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people interested in PanAmSat telecommunication services. PanAmSat employees and


operators providing those services.

Information:

supporting the operation of all satellites in order to provide telecommunications services.

Participants:

satellite telecommunications services.

Business Process:

a prospective customer for PanAmSat satellite telecommunications services.

satellites, computers, and telecommunications networks.

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Case: PanAmSat

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It is easy to say that business and


government should assess risks and take
appropriate action. Thinking about ITbased systems ranging from pagers to
ATMs to air traffic control, suggest general
guidelines a business or government
might use for deciding what failure rate to
tolerate and what level of resources to
devote to disaster recovery.
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Answer

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The guidelines, the tolerable rate of failure and


the level of resources to devote to disaster
recovery in IT-based systems for pagers, ATMs
or air traffic control, should be significantly
different. For instance, while a downtime of one
hour may cause inconvenience to the users of
pagers, it may cause a disaster for air traffic
control, and downtime may also cause
significant financial damage for ATM users.
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Opening Case- Charles Schwab

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Considered the only retail operation to have


successfully adapted its business to the
Web
Built on the idea of eliminating stockbrokers
and providing only transaction processing
services
Started offering online trading early (using
proprietary software), and was quick to
move to Web trading
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Process Modeling
Documenting a Business
Process

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Alter Information Systems 4th


ed.

Process Modeling

A business process that involves naming


business processes and subdividing them
into their basic elements

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Helps clarify the problem the information


system attempts to solve

Business Process Reengineering


(BPR) = the complete redesign of a
business process using IT
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Ford Reengineers Accounts


Payables Process

Old process:

The receiving department accepted orders


that did NOT match the purchasing order

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Lots of overhead to reconcile the inconsistencies

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Ford Reengineers Accounts


Payables Process

Context Diagram:

List all Outputs of Accounts Payable Process


Cheque to Vendor
Report to Accounting System

List all Inputs of Accounts Payable Process


Purchase Order
Invoice
Report (s) from Loading Dock

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Ford Reengineers A/P Process


Old Process Flow:
1.
2.
3.
4.
5.
6.

Manager needing item fills out purchase order


Purchase order approved
Purchase order sent to vendor
Vendor ships (partial) order, mails invoice
(Partial) Order arrives at (one of many) loading docks.
Clerk fills out list of items received.
If approved purchase order = invoice = list of items
received at loading dock, Then
cut cheque and mail

Else
try to resolve discrepancy

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Ford Reengineers Accounts


Payables Process

New process:

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ONLY shipments that match the purchase


order are accepted
Matching done using shared database
Checks cut by computer, 500 accountants
reassigned

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The business process was changed, by


eliminating steps that did not add value
The new information system was
successful only because of the
reorganized work flow

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Data Flow Diagrams (DFDs)

Represent the flow of data between


different processes within a system

Key points:

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Simple & intuitive, not focusing on details


Describe what users do,
do rather than what
computers do
Focus only on flows of information
Ignore flows of materials, decision points, etc.
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Data Flow Diagrams (DFDs)

Classical DFDs Limit analysis to flow of


information
Suggested improvements: include everything
Add material flows, order of flows, controls,
importance
All of which are important, but impossible to
understand all at once

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Cognitive overflow!!!
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Figure 3.1

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Context diagram bounds the system +


summarizes the data flows
Identify the business processes and break
them down into subprocesses

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Possible to look at a process at any level of


detail

Important to solve disagreements about


how work is being done or how it should be
done in the future
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Figure 3.2

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F 3.3

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DFD Summary

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Only list information flows


Do NOT list process flows
Do NOT list material flows

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Flowcharts & Structured English

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Used to fill in the details left out of the DFD


Flowchart = use standard symbols to
express the logic & sequence of
procedures
Structured English (pseudocode) = precise
descriptions of the logic in a procedure

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Figure 3.6

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Alter Information

Idealized business process the way the


process is supposed to work

Workaround a divergence

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Assumes that the participants follow the rules


Necessary when the rules built into the system
become an obstacle to getting the work done
May indicate a poor design or that an external
change has occurred
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Process Modelling Summary

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Real business processes very complex


Need tools to simplify, to allow
understanding of process
DFDs capture information flow
Flowcharts capture process flow

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Process Characteristics

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Alter Information Systems 4th


ed.

Process Characteristics

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Degree of Structure
Range of Involvement
Level of Integration
Rhythm (Periodicity)
Complexity
Level of Automation
Planning, Execution, and Control
Errors & Exceptions
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Degree of Structure

The extent to which a task or business


process can be scripted in advance, e.g.,

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Order of steps
Required information
Validation
Relationships between inputs and outputs

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Structured task = possible to exactly


specify how the task is to be performed
and the evaluation criteria

Semistructured task information


requirements and procedures are
generally known, but some aspects rely on
human judgment

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Ex.: totaling invoices, ATMs, etc.

Ex.: medical diagnosis


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Unstructured task cannot specify what


information is to be used, how to use it,
nor what the evaluation criteria should be

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Ex.: choosing a picture for the cover of a


fashion magazine

The desired degree of structure is


sometimes a matter of controversy
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Successful Information systems impose


the amount of structure appropriate for the
task being supported

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Too much structure stifles creativity


Too little structure may lead to inefficiencies
and errors

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Range of Involvement

Refers to the organizational span of


people associated with the business
process

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Too narrow
decisions are made from a
local viewpoint, often missing enterprise-wide
opportunities
Too wide
business processes slow down

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Level of Integration

Often a confusing term


The right level of integration is not obvious

disorganized & unproductive


complex & hard to control

INTEGRATION = mutual responsiveness &


collaboration between distinct activities or
processes

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Too little
Too much

Related to the speed with which one responds


to events in the other
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Five levels of integration

Common culture

Common standards

Using consistent terminology & procedures

Information sharing

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Shared understandings & beliefs

Independent business processes can share each


others data
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Five levels of integration (cont.)

Coordination

Collaboration

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Separate but interdependent processes respond to


each others needs and limitations
Strong interdependence; the unique identity of
each process begins to disappear

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Rhythm

The frequency and predictability with


which a process occurs

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Periodic
Event-driven
Haphazard

E-business makes it possible to support


more responsive business rhythms
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Complexity

Complexity how many types of elements


the system contains + the number and
nature of their interaction

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Complex systems are difficult to develop and


understand
Difficult to anticipate the consequences of
changes

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Managing Complexity

How to handle complexity?

Eliminate low value variables

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Different versions of processes and information


that exist simply because of historical accident

Recognize variations explicitly and treat them


differently, instead of using a fundamentally
similar process

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Degree of Reliance on Machines

Tasks assigned to computers are:

Tasks assigned to people require:

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Totally structured
Can be described completely
Require speed, accuracy, endurance
Common sense
Intelligence
Judgment
Creativity
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Planning, Execution, and ControlFigure 3.10

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Attention to Errors & Exceptions

The process architecture should specify


how the process should respond when
errors, exceptions, or malfunctions occur
Tradeoff:

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Wasting resources by being unsystematic vs.


diverting resources from the main system
goals through excessive formalization of
exception handling
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Evaluating Business Process


Performance
Seven Main Performance
Variables

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Alter Information Systems 4th


ed.

Seven Main Performance Variables

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Activity Rate and Output Rate


Consistency
Productivity
Flexibility
Cycle Time
Downtime
Security

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Activity Rate and Output Rate

Output rate = the amount of outputs


produced per unit of time
Activity rate = the number of interim work
steps performed per unit of time

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The distinction is important mainly for systems


that take long to complete and/or are complex

The activity rate is a good predictor of the


output rate
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Capacity = the theoretical limit for the


output rate

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The challenge to determine the ideal capacity


and output rate

Scalability = the ability to increase or


decrease the capacity without major
disruption or excessive costs
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Consistency

Consistency = applying the same


techniques in the same order to obtain the
same results

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TQM: unwarranted variability destroys quality

Information systems may force


organizations to do things consistently
Emphasizing consistency often makes it
difficult to be flexible
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Flexibility

Flexibility = the ease with which the


process can be modified to:

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Meet customer needs


Adapt to external changes

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How to achieve FLEXIBILITY WITHIN A


FRAMEWORK OF CONSISTENCY:

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Avoid restrictions that can be left to the


judgment of the process participants
Delay as long as possible converting
information to physical results that are hard to
change
Use technical tools and methods that are
themselves flexible
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Productivity

Productivity = the amount of output


produced vs. the resources consumed

Waste = any activity that uses resources


without adding value

Reduces productivity
Built into the way many processes operate

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Ford example

IT does not always lead to increased


productivity

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Cycle Time

Cycle time = the length of time between


the start of a process and its completion

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Processing time for each step


Waiting times between steps
Dependencies between steps

Bottleneck = an essential step where a


capacity shortage induces consistent
delays
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Downtime

Downtime = the amount of time the


process is out of operation

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Unexpected failures
Planned maintenance

Especially important consideration for


e-business

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Security

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Security = the likelihood that the process


is not vulnerable to unauthorized uses,
sabotage, or criminal activity
Depends on procedures that insure
accuracy and prevent unauthorized
access

Alter Information

More About Communication


and Decision Making

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Alter Information Systems 4th


ed.

Activities that are part of business


processes include:

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Processing data
Communicating
Making decisions
Thinking/creating
Taking physical action
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Basic Communication Concepts

Information systems can improve


communication by:

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Enabling communication that would otherwise


be impossible
Making communication more effective
Eliminating unnecessary person-to-person
communication
Making communication more systematic
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Personal communication
Impersonal communication
Anonymous communication

IT can make communication more personal


or more impersonal.

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Synchronous (same-time)
communication

Asynchronous (different-time)
communication

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Basic Decision-Making Concepts

Steps in a decision process

Problem finding

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All too often resources are spent finding good


solutions to the wrong problem!

Problem solving

Decision processes typically iterate


between the various phases
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Four-phase Decision Making


Process Figure 3.15

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Rationality vs. satisficing

Rationality a common model for explaining


how people should make decisions

Satisficing how people actually behave


when making a decision

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Rational people are expected to attempt to


maximize their welfare

Looking for a satisfactory alternative, rather than


the optimal one
bounded rationality
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Common flaws in decision


making

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Poor framing
Recency effects
Primacy effects (anchoring)
Poor probability estimation
Overconfidence
Escalation phenomena
Association bias
Groupthink
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Automating decisions

Have important advantages when


A great deal of information must be processed; or
Small delays affect the outcome

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Only acceptable when every aspect of the


decision is fully understood

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Discussion Topic

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Assume you are a manager in a company where


a computerized calendar system has been
installed. The system requires that you specify
the times you are available for meetings,
thereby making it possible for people you work
with to set up a meeting without a lot of phone
calls and delays. Explain why this increase in
integration may affect you personally in some
positive ways and some negative ways.
Alter Information

Answer (text)
Group calendaring systems can increase an
individuals productivity by automating the
amount of time it takes to schedule meetings.
They also restrict an individuals ability to be
flexible with his/her schedules, since others
would depend on the time availability
registered with the group calendaring system to
set up meetings.

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Alter Information