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
 www.google.com