Class 6 Organization in Process View MIS 2000 Information Systems for Management Updated Jan. 2014.

Class 6

Organization in Process View

MIS 2000 Information Systems for Management

Updated Jan. 2014

OutlineOutline

• Organization and process

• Concept of Process

• Business (Organizational) Process

• Management in process view

• Operational & strategic processes

• Process Design

• Process Performance

• Process optimization

• IS, Process Design & Performance

• Summary


PRoc & Roll

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Management Process

Sales & Delivery Process

Marketing Process Production Process

OrganizationOrganization Most apparently, organization* is a collection of people with particular

expertise, which delivers a certain product (good or service). From process perspective taken in this course, organization is a set of

business processes that altogether deliver a certain product. Processes contain data – some managed via IS, some manually.


Research & Development Process

Accounting Process

IS Development & Maintenance Process

Supply Process

Organization

HR Process

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General Concept of Process

• Process is a set of activities connected from a start to an end point.

• Process is similar to procedure, but usually larger in scope and it contains procedures.

• An example of process with typical components:


Pick a class

Do readings

Think + Make notes

Learned enough?

No

Have a drink + Be happy!

Yes

Activity

Decision activity (point)

Flow

Start

End

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Business or Organizational Process

Definition: Business process is a set of activities connected from a start to an end point, which deliver a product of a measurable value to a customer (internal or external*).


ACCOUNTIONG PROCESS IN ANY ORG.(tracking expenses & income, account mgt.)

PRODUCTION PROCESS IN BANK (borrowing, lending, investing)

HR PROCESS IN ANY ORG. (professional development, pay, wellness)

Client

Employee

Management

Servicesfor clients

Servicesfor employees

Financial reports

PRODUCTION PROCESS IN FACTORY (scheduling, assembly, quality control)

Start End Customer

Buyer

ValueProduct

Good formarket

Utility/Price,Timing, Quality

Utility, Cost, Speed, Quality

Timing, Quality

Accuracy,Depth, Timing

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Management in Process View Management in Process View Business process location can be:Business process location can be:

In organization (e.g., HR dept.— employee )In organization (e.g., HR dept.— employee ) Between organization and market (e.g., marketing message to customer)Between organization and market (e.g., marketing message to customer) Between organizations (e.g., interactions between buyers and sellers in Between organizations (e.g., interactions between buyers and sellers in

supply chain).supply chain).

From the BP perspective, management is focused on managing processes to From the BP perspective, management is focused on managing processes to (a) meet process performance standards goals, and (a) meet process performance standards goals, and

(b) to raise these standards.*(b) to raise these standards.* Process performance determines organizational performance.**Process performance determines organizational performance.** Role of IS:Role of IS: (a) Proper support of IS is needed for a process to perform as planned.(a) Proper support of IS is needed for a process to perform as planned. (b) IS are an instrument for the process improvement. (b) IS are an instrument for the process improvement.

Information Systems (IS)

Process Design & Performance

Organizational Performance

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• Operational processes make most of organizational functioning. That’s what employees do as their regular, everyday work.

• Strategic processes happen in some intervals (e.g., strategic planning, introducing new product). Some strategic processes are not readily visible (e.g., change of product philosophy).*

Operational and Strategic ProcessesOperational and Strategic Processes


Operations Strategies

Daily “grind”, short time horizon Occasional activities, long time horizon

Routines (patterns, with little or no variation)

More variability

Context of jobs, tasks, procedures, processes

Significant advances, big changes in business and organizing

IS are embedded in operations, provide necessary support

IS support is partial (e.g., decision making as part of planning; engineering systems)See Note**

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Design of Business ProcessDesign of Business Process

Design aspects: How does a process look like? Design aspects: How does a process look like? CCCFIS: Composition, Coordination, Complexity, Flexibility, CCCFIS: Composition, Coordination, Complexity, Flexibility,

and IS.and IS.

1. 1. CompositionComposition: What components do make a process?: What components do make a process? StartStart Flow (Control)Flow (Control) Activity (data-based, physical) Activity (data-based, physical) Decision (special activity)Decision (special activity) LoopLoop EndEnd

Activity and Decision Activity and Decision

are often called Step are often called Step

* *

Open Order

Fill Order

Deliver overnight

Rush order?

Deliver regularly

Send Invoice

Send Payment

Reminder

Payment received on due tae?

Close Order

yes

yes

no

no

Process diagram for Customer Order

Fulfillment (simple form) 8 of 19

Design of Business Process: CompositionDesign of Business Process: Composition

1. 1. CompositionComposition: What components do make a : What components do make a process?process?

Ask: Ask: • Are the steps defined accurately (note: Are the steps defined accurately (note:

names)? names)?

Activities are Activities are actionsactions (get, fill, send, close, (get, fill, send, close,

deliver).deliver).• Activities apply to Activities apply to datadata (order, invoice) (order, invoice)

and objects (delivery items).and objects (delivery items).• Do the flows make sense?Do the flows make sense?• Are all steps included (note: decisions)?Are all steps included (note: decisions)?

Composition errors marked red.Composition errors marked red.


Get Order

Fill Order

Deliver overnight

Rush order?

Deliver regularly

Send Invoice

Close Order

yes no

Fulfill Customer Order Process

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CCCCCCFFISIS

Business Process Design: Business Process Design: CoordinationCoordination

2. 2. CoordinationCoordination: The functional fit of : The functional fit of process activities and decisions (steps). process activities and decisions (steps).

Ask: Ask: • Do all the parts equally contribute to the Do all the parts equally contribute to the

end result? end result? • What are dependencies between What are dependencies between

activities in time (below) and quality of activities in time (below) and quality of deliverables?deliverables?

There are: There are: • Sequential coordination (A finishes - B Sequential coordination (A finishes - B

starts)starts)• Parallel coordination (A & B in same Parallel coordination (A & B in same

time; saves process time).*time; saves process time).*

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Open Order

Fill Order

Deliver overnight

Rush order?

Deliver regularly

Send Invoice

Send Payment

Reminder


Close Order

yes

yes

no

no

Check Old Orders

Reduces coordination


CCCCCCFFISIS

Business Process Design: ComplexityBusiness Process Design: Complexity

3. 3. ComplexityComplexity: The number of process parts and : The number of process parts and connections between them. connections between them.

Ask:Ask:• Measure of Complexity: No. of Measure of Complexity: No. of Steps/No. of Steps/No. of

Steps in Benchmark Process (step=Steps in Benchmark Process (step=activity and activity and decision) decision)

• Number of loops and their nesting (loop within Number of loops and their nesting (loop within loop)loop)

• Depth of process (how many sub-processes)Depth of process (how many sub-processes)• IS can absorb some complexity (some sub-IS can absorb some complexity (some sub-

processes could be automated). * processes could be automated). *


Open Order

Fill Order

Deliver overnight

Rush order?

Deliver regularly

Send Invoice

Send Payment

Reminder


Close Order

yes

yes

no

no


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CCCCCCFFISIS

Business Process Design: FlexibilityBusiness Process Design: Flexibility

4. Flexibility: The extent of variation in a process.• Ask: Are there alternative steps?• How many versions of process are there?

Fulfill Customer Order Process analyzed in previous slides is a routine process (operation) with low variability coming just from the way delivery can be done. So, Variability=2; there are two versions of the process determined by two different delivery steps.

Strategic (Make Long-Term Plan,Develop New Product)

Routine operations(e.g., Process Customer Order,Register Course)

lowhigh variation

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CCCCCCFFISIS

Business Process Design: ISBusiness Process Design: IS 5. 5. IS as part of process design (“IS as part of process design (“footprintfootprint”)”): IS is part : IS is part

business process? business process? Some important aspects: Some important aspects:

The portion of process IS covers (system’s “footprint”)The portion of process IS covers (system’s “footprint”) What IT are used (computers, networks, mobile What IT are used (computers, networks, mobile

devices)devices) Characteristics of user interface screensCharacteristics of user interface screens Characteristics of databases (local, distributed, Characteristics of databases (local, distributed,

centralized or not) centralized or not)

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CCCCCCFFISIS


Process Design(IS part)

Process Performance

Information System(functions,

characteristics)

Process OptimizationProcess Optimization How to optimize (improve) a process:How to optimize (improve) a process:

Composition: Correct and completeComposition: Correct and complete Coordination: Enhance, think parallel coordinationCoordination: Enhance, think parallel coordination Complexity: SimplifyComplexity: Simplify Flexibility: Apply appropriate variationFlexibility: Apply appropriate variation IS* (IS* (process optimizerprocess optimizer): IS helps in of optimizing of the ): IS helps in of optimizing of the

aspects above. (See also class 9) aspects above. (See also class 9)



Process Design(3CF)

Process Performance

Information System

Process Performance MeasurementProcess Performance Measurement

Process performance can be assessed by this metrics:Process performance can be assessed by this metrics: CVTCIS: Customer Value, Time, Cost, and IS Performance.CVTCIS: Customer Value, Time, Cost, and IS Performance.

Filtering criterion: Does a process serve useful organizational Filtering criterion: Does a process serve useful organizational purpose?purpose? There are odd processes surviving from the past. They may There are odd processes surviving from the past. They may

perform well but have no real purpose. perform well but have no real purpose.

1. 1. Customer Value Customer Value – Characteristics of the process product that – Characteristics of the process product that matter to matter to

the customer (external or internal); see slide 5.the customer (external or internal); see slide 5.CONS-UMER

InventoryManager

Manuf.Manager

Delivery Manager

InventoryManager

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Process Metrics: Time & Cost

2. Time: What is the total time between the start and end point of a process?

• sum up execution time of all the steps• for parallel steps, take the time of the longest step

3. Cost: What is the amount of expenditures in monetary figures?

• sum up costs for labor, materials, IS, other technologies, overhead

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CVCVTTCCISIS

IS PerformanceIS Performance 4. 4. IS performance influences process performance IS performance influences process performance

((performance boosterperformance booster)): Non-functional characteristics* of IS : Non-functional characteristics* of IS that reflect on process time and cost. that reflect on process time and cost.

The most important IS characteristics is The most important IS characteristics is IS speedIS speed, which , which depends on many factors (speed of data processing, transfer, depends on many factors (speed of data processing, transfer, and retrieval; size of main memory)and retrieval; size of main memory)

Another important characteristic is the Another important characteristic is the IS reliability IS reliability (small (small down time, recovering capability, security od data)*down time, recovering capability, security od data)*

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CVCVTTCCISIS


Process Design

Process Performance

Information SystemPerformance

Relationships between Process Performance Relationships between Process Performance Organizational PerformanceOrganizational Performance

The better a business process performs, the better the organizational performance. For example a faster and less costly process, improves the income to cost ratio (or decreases costs while usually enlarging the income). *

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Process Design

Process Performance

Information Systems

Summary 1/2Summary 1/2

Organization is Organization is a whole consisting of business processes that a whole consisting of business processes that altogether altogether deliver a certain product (good or service)deliver a certain product (good or service)..

Business process is a Business process is a set of activitiesset of activities connected connected from a start to an from a start to an end pointend point, which , which deliver a productdeliver a product of a of a measurable valuemeasurable value to a to a customer customer (internal or external). BP can be inside and outside of (internal or external). BP can be inside and outside of organizations. BP works with data and physical objects.organizations. BP works with data and physical objects.

The goal of managing organizations from the process perspective The goal of managing organizations from the process perspective is to improve process performance and design, which leads to is to improve process performance and design, which leads to higher organizational performance. higher organizational performance.

There are operational and strategic processes.There are operational and strategic processes.


Summary 2/2Summary 2/2

Process design refers to process composition, coordination, Process design refers to process composition, coordination, complexity, flexibility, and IS (CCCFIS). Process design can be complexity, flexibility, and IS (CCCFIS). Process design can be optimized with help of IS.optimized with help of IS.

Process performance can be measured in terms of customer value, Process performance can be measured in terms of customer value, time, cost, and IS performance (CVTCIS).time, cost, and IS performance (CVTCIS).

IS is (a) part of organizational design (IS footprint), (b) helps IS is (a) part of organizational design (IS footprint), (b) helps optimize process design (optimizer role), and influences directly optimize process design (optimizer role), and influences directly process performance (performance booster).process performance (performance booster).

Process design and performance influence organizational Process design and performance influence organizational performance.performance.


Class 6 Organization in Process View MIS 2000 Information Systems for Management Updated Jan. 2014.

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