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Information Technology Management
ITM 410
Irene Lee

Business Process - A process is a series of activities or tasks which transforms inputs into outputs  Transformations are classified as:  Physical - The transformation of raw materials to a finished product  Locational - The transportation service provided by an airline  Transactional - Banking and transformation of cash into stocks by a brokerage firm  informational - The tranformational of financial data into information in the form of financial statements  A business process describes how something is done in an organization  A business process is an activity which is conducted in an organization in order to achieve a specific outcome  A business process is a collection of related activities or tasks that produce a specific service or product for a customer  A business process consists of a series of steps each of which must be completed in order to achieve a specific outcome Types of Business Processes  Management Processes - The processes that govern the operation of a company as a system  Examples of management processes:  Corporate governance  Strategic Management  Operational processes - The processes that comprise the business and create value.  Examples of operational processes are:  Purchasing, Manufacturing, Marketing , Sales  Core Processes - The operational processes that are directly related to the mission of the company.  Examples of core processes are: Order fulfillment process, Manufacturing, Consulting, Claims processing, Tax preparation  Support Processes - The processes that support the core processes  Examples of support processes are: Accounting, Recruitment, Technical support Examples of Business Processes: Claims process, Course registration, Filing a job application, Applying for a passport, Requesting a cash refund or product exchange, Order fulfillment, Credit approval, Billing, Admissions, Budget planning, Order fulfillment, New employee training Business Process Decomposition - When a business process is divided up into separate activities, each activity is called a sub-process.  Each activity may has its own attribute: Processing time, Buffer, Unit flow Process Types and Hierarchies Process are categorized according to their scope within an organization into three types:  Individual Processes - This process is carried out by separate individuals  Vertical or functional processes - This process is contained within a specific functional unit or department  Horizontal or cross functional processes - This process cuts across several functional units  Core processes are cross-functional processes Process Architecture/Process Structure  Inputs and outputs  Inputs and outputs and entry and exit points of the process  Inputs are transformed into outputs  Establish the process boundaries  Flow units  A flow unit is a transient entity that proceeds through various activities and finally exits the process as a finished product  Examples; files, documents, cash, forms, orders, requests  Network of activities and buffers  Series process activities  Buffers – Wait times  Through which flow units pass in order to be transformed from inputs to outputs  Resources - Resources are tangible assets that are necessary to perform activities within the process.  Information structure - Information structure specifies which information is required and which is available in order to make the decisions necessary for performing a process. System Thinking:  Conceptualizing a set of entities, activities, or organizations as systems  Focusing on how elements relate to each other and depend on each other  The different components of a company work together to achieved the desired outcome based on the mission. Systems View of an Organization  Organizations have customers, products, and suppliers  Work occurs in organizations  Inputs are converted to outputs in organizations  Outputs flow to customers  Business Model – The term business model is used for broad range of informal and formal descriptions to represent  core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, operational processes, and policies  A business model is a framework for creating value:  Economic value  Social value  Other forms of value There are two views of organizations a) Traditional View of an Organization  Focus: Boss  Primary Relationships: Chain of Command  Orientation: Hierarchical  Decision Maker: Management  Style: Authoritarian b) Process View of an Organization  Focus: Customer  Primary Relationship: Customer-supplier  Orientation: Process  Decision Maker: Employees  Style: Participative  Process view follows work as it moves across the organization  Emphasis is placed on work output  Output must meet customer requirements  Process structure is clear to everyone – increase transparency  Employees understand how their efforts fit into the big picture  Employee involvement and participation increases  Barriers among departments breakdown  Process Management - A collection of basic principles used to manage, control, and improve processes  Managers are responsible for specific processes or activities.  Managers are responsible for organizing the process, securing the resources needed to execute it, measuring the results, providing rewards or corrective feedback, changing and improving it when possible  Key issues of Business Process Management:  Strategic Focus and Customer Focus  Continuous learning and improvement  Performance Excellence and Benchmarking  Appropriate IT Support  Lean Process with Knowledge Visibility Successful Process Management - 3 Phases: 1. Initialization – process authority, scope, interfaces and handoffs are determined • assign process ownership • analyze boundaries and interfaces 2. Definition – workflow documentation / baseline for process evaluation is defined • Define the process by documenting its workflow • Establish control points and measurement • Identify the process boundaries, input, and output • Document process, activities, workflow 3. Control – means and procedures for processing monitoring, feedback and control are established • establish control points (inspection, verification, auditing, measuring, counting) • Develop and implement measures • Take corrective action and providing feedback and control • Means and procedures for process monitoring, feedback, and control are established Measurements  Measures of conformance: verification that work conforms to a given requirement  Measures of response time: time is takes to complete work (cycle time, lead time)  Measures of service levels: the degree to which a service or resource is available to a customer  Measures of repetition: frequency of recurring events  Measures of cost: cost of waste- prevention costs, appraisal costs, failure costs. Types of Costs  Prevention costs are associated with preventing future nonconformance  Appraisal cost are associated with detecting nonconformities  Failure costs deal with nonconformities, example scrap and rework warranties. Rich Picture - A rich picture is a tool which is used to for recording and reasoning about aspects of the work context.  A rich picture is a graphical representation that identifies  identifies all the stakeholders  depicts their concerns  Shows some of the structure underlying the work context.  Structure, process and concerns Process Strategy - The pattern of decisions made in managing processes so that they will achieve their competitive priorities is called a process strategy.  Process strategy guides a variety of process decisions, and in turn is guided by the operations strategy and the organization’s ability to obtain the resources necessary to support them.  A process involves the use of an organization’s resources to provide something of value.  No service can be provided and no product can be made without a process.  No process can exist without at least one service or product.  Managing processes involves answering a key question such as: How to provide services or make products?  And making a decision  Many different choices are made in selecting human resources, equipment, outsourced services, materials, workflows, and methods that transform inputs into outputs  Another choice is which processes are to be done in-house, and which processes are to be outsourced – that is, done outside the firm and purchased as material and services.  This decision helps to define the value chain Process improvement decisions are needed when:  A gap exists between competitive priorities and competitive capabilities  A new or modified service or product is being offered  Quality must be improved  Demand for a service or product is changing  Current performance is inadequate  The cost or availability on inputs has changed  Competitors are gaining by using a new process  New technologies are available  Competitive priorities have changed  Someone has a better idea Major Process Decisions – Operations managers must consider four common process decisions to ensure effective process design:  Process structure  how processes are designed relative to the kinds of resources needed,  how resources are partitioned between them,  how their key characteristics are classified  Customer involvement - The ways in which customers become part of the process and the extent of their participation  Operations managers make more of the process visible to the customers (workers may be observed working)  Resources flexibility - The ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions  Operations Managers decide whether to have flexible workforce (workers who are capable of doing many tasks)  Capital intensity - The mix of equipment and human skills in the process;  As the capabilities of technology increase and its costs decrease, managers face an ever- widening range of choices, from operations utilizing very little automation to those requiring task-specific equipment and little human intervention  The automation decision requires careful examination of the type of capital needed for the process Front Office - A front office process is a process with high customer contact where the service interacts directly with the internal or external customer  Example: the process of the sale of financial services to municipalities  The process is customized to meet specific customer needs. Hybrid Office - A hybrid office process is a process with moderate levels of customer contact and standards with some options available  The workflow progresses from one workstation to the next, with dominant paths  Example; the process of evaluating employee performance on a quarterly basis Back Office - The back office process has a low customer contact and little service customization. The work is standardized and routine, with flows from one service provider to the next until the service is completed.  Example the monthly production of client fund balance reports Two strategies for change are:  Process reengineering - Process reengineering also called business process reengineering (BPR) is the fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed  BPR is about reinvention, rather than incremental improvement  estimates suggest 50-70% of all BPR projects have failed due to:  lack of top mgmt support  poor understanding of org/infrastructure needed to support new design  inability to deliver on technology  lack of guidance and motivation  Fundamental Argument upon which BPR rests - Information technology can be used to enable new ways of doing work which are more time and cost efficient and effective than old/existing ways of working  Business Process Re-engineering uses concepts: Business strategy, Accounting, Organization Design, Information Systems, Industrial Engineering  Approach of BPR  Core business processes  Elimination of unnecessary work and supervisory activities  Strong leadership  Cross-functional teams (high involvement workplace, self-managing teams, employee empowerment)  Top-down performance targets, bottom-up deciding how to achieve them  IT is a primary enabler of BPR  BPR projects are initiated by the need for strategic change  BPR team must determine who needs the information, when they need it, and where  BPR requires a “clean-slate” philosophy (starting with the way the customer wants to deal with the company)  Process improvement - BPR team must understand the current process (AS-IS process), what it does, how well it performs, and what factors affect it  BPR team must examine every activity involved in the process throughout the organization, recording each step, questioning why it is done, and then eliminating unnecessary activities  Strategic Fit - The process strategist should understand how the four major process decisions tie together, so as to identify ways of improving poorly designed processes  The choices should fit the situation and each other  When the fit is more strategic, the process will be more effective Process Choice – A way of structuring the process by organizing resources around the process of organizing them around the products  Job process – A process with the flexibility needed to produce a wide variety of products in significant quantities, with considerable complexity and divergence in the steps performed  Batch process – A process that differs from the job process with respect to volume, variety, and quantity  Line process – A process that lies between the batch and continuum; volumes are high and products are standardized, which allows resources to be organized around particular products  Continuous Process – The extreme end of high volume standardized production and rigid line flows, with production not starting and stopping for long time intervals Production and inventory strategies  Make to order strategy - A strategy used by manufacturers that make products to customer specification in low volumes  Assemble to order strategy – a strategy for producing a wide variety of products from relatively few assemblies and components after the customer orders are received  Make to stock strategy – a strategy that involves holding items in stock for immediate delivery, thereby minimizing customer delivery times  Mass production – a term sometimes used in the popular press for a line process that uses the make to stock strategy  Strategy Maps show cause and effect ◦ …faster process cycle times will increase retention of customers  A common visual framework  Embeds the elements of the balanced score card into a cause and effect chain  Conne
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