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Learning Objectives

Upon successful completion that this chapter, you will certainly be may be to:

define the term business process;identify the different systems needed to support company processes in one organization;explain the value of one enterprise source planning (ERP) system;explain just how business procedure management and also business process reengineering work; andunderstand how information modern technology combined with company processes can lug an organization competitive advantage.Introduction

The fourth component of details systems is process. However what is a procedure and just how does that tie into information systems? and also in what means do processes have actually a duty in business? This chapter will look come answer those concerns and likewise describe how organization processes can be provided for strategic advantage.

What Is a company Process?

We have all heard the ax process before, but what specifically does the mean? A process is a collection of jobs that space completed in bespeak to accomplish a goal. A organization process, therefore, is a procedure that is concentrated on afford a goal for a business. If friend have operated in a service setting, you have actually participated in a organization process. Anything native a simple process for do a sandwich at Subway to building a room shuttle makes use of one or much more business processes.

Processes are something the businesses go v every job in bespeak to attain their mission. The better their processes, the an ext effective the business. Some businesses check out their processes as a strategy for achieving competitive advantage. A process that achieves its goal in a unique method can collection a firm apart. A process that eliminates expenses can enable a firm to lower its prices (or retain more profit).

Documenting a Process

Every day, each of united state will conduct numerous processes without even thinking around them: acquiring ready because that work, utilizing an ATM, reading our e-mail, etc. Yet as processes grow much more complex, they should be documented. Because that businesses, that is essential to perform this, due to the fact that it permits them to ensure regulate over how tasks are undertaken in their organization. That also enables for standardization: McDonald’s has the same process for structure a large Mac in all of its restaurants.

The simplest means to record a procedure is come simply create a list. The list reflects each action in the process; each step have the right to be confirm off ~ above completion. Because that example, a basic process, together as just how to produce an account top top eBay, can look prefer this:

Go to ebay.com.Click ~ above “register.”Enter your call information in the “Tell us about you” box.Choose her user ID and also password.Agree to User Agreement and also Privacy plan by clicking on “Submit.”

For procedures that space not for this reason straightforward, documenting the process as a checklist might not be sufficient. Because that example, below is the process for determining if an write-up for a term requirements to be included to Wikipedia:

Search Wikipedia to determine if the term already exists.If the ax is found, then an short article is currently written, therefore you need to think of another term. Walk to 1.If the ax is no found, climate look to see if there is a connected term.If there is a associated term, then produce a redirect.If there is not a connected term, then produce a new article.

This procedure is reasonably simple – in fact, it has actually the same variety of steps as the previous instance – but because it has actually some decision points, it is more complicated to track v as a basic list. In this cases, it may make an ext sense to usage a diagram to file the process:

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Process diagram because that determining if a brand-new term must be included to Wikipedia (click come enlarge). (Public Domain)

Managing Business procedure Documentation

As organizations start to record their processes, it becomes an administrative task to save track of them. Together processes readjust and improve, the is important to recognize which processes are the most recent. That is also important to manage the process so that it can be conveniently updated! The need to manage procedure documentation has been one of the driving pressures behind the production of the document administration system. A document management device stores and tracks documents and also supports the complying with functions:

Versions and also timestamps. The record management system will save multiple version of documents. The many recent variation of a record is basic to identify and will be served up by default. Approvals and workflows. As soon as a process needs to it is in changed, the system will control both accessibility to the records for editing and the routing of the record for approvals.Communication. As soon as a procedure changes, those who implement the process need to be made conscious of the changes. A record management mechanism will educate the suitable people as soon as a adjust to a file is approved.

Of course, document management systems are not only offered for regulating business process documentation. Plenty of other varieties of papers are regulated in these systems, such as legal papers or style documents. 

ERP Systems

An enterprise resource planning (ERP) system is a software program application v a central database that have the right to be used to run an entire company. Let’s take it a closer look at the an interpretation of each of these components:

With a centralized database: all data in one ERP mechanism is stored in a single, main database. This centralization is key to the success of an ERP – data entered in one part of the agency can it is in immediately available to various other parts the the company. That deserve to be used to run whole company: an ERP deserve to be supplied to manage an entire organization’s operations. If they so wish, companies can purchase modules for an ERP the represent different functions in ~ the organization, such as finance, manufacturing, and also sales. Part companies pick to purchase plenty of modules, others pick a subset of the modules. 

An ERP mechanism not just centralizes one organization’s data, however the procedures it enforces are the processes the organization adopts. As soon as an ERP vendor designs a module, it needs to implement the rules for the connected business processes. A selling suggest of an ERP system is that it has finest practices built right right into it. In various other words, as soon as an organization implements one ERP, it likewise gets improved finest practices as component of the deal!

For plenty of organizations, the implementation of one ERP device is terrific opportunity to enhance their service practices and upgrade their software at the exact same time. But for others, an ERP bring them a challenge: Is the procedure embedded in the ERP really far better than the procedure they are at this time utilizing? and if castle implement this ERP, and also it wake up to it is in the very same one that all of their competitors have, will they merely become much more like them, making it lot more complicated to differentiate themselves?

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Registered trademark of SAP

This has been one of the criticisms of ERP systems: that they commoditize business processes, driving all businesses to usage the exact same processes and thereby shed their uniqueness. The an excellent news is that ERP systems additionally have the capability to it is in configured with custom processes. For organizations that desire to proceed using their own processes or even design new ones, ERP equipment offer means to assistance this v the usage of customizations.

But over there is a border to customizing an ERP system: organizations have to maintain the changes themselves. At any time an update to the ERP mechanism comes out, any organization the has developed a custom procedure will be required to include that adjust to your ERP. This will need someone to preserve a listing of these changes and also will likewise require retesting the system every time an update is made. Establishments will have to wrestle through this decision: When must they go ahead and also accept the best-practice processes constructed into the ERP system and also when must they spend the resources to develop their own processes? It renders the many sense to only customize those procedures that are crucial to the competitive benefit of the company.

Some of the best-known ERP merchants are SAP, Microsoft, and also Oracle.

Business procedure Management

Organizations that room serious about improving their organization processes will likewise create frameworks to manage those processes. Business process management (BPM) can be assumed of as an intentional effort to plan, document, implement, and also distribute one organization’s company processes v the assistance of details technology.

BPM is more than just automating some basic steps. If automation deserve to make a business more efficient, it can not be supplied to carry out a compete advantage. BPM, top top the various other hand, can be an integral part of producing that advantage.

Not all of an organization’s processes have to be controlled this way. An organization must look for processes that are crucial to the work of the business and also those that might be offered to bring a competitive advantage. The best processes come look at space those that include employees native multiple departments, those that require decision-making that cannot be quickly automated, and also processes that adjust based ~ above circumstances.

To do this clear, let’s take it a look at an example.

Suppose a big clothing retailer is spring to obtain a competitive benefit through premium customer service. As part of this, they develop a task pressure to construct a advanced returns policy that permits customers to return any kind of article the clothing, no concerns asked. The organization likewise decides that, in order to defend the competitive benefit that this returns policy will bring, lock will construct their very own customization to their ERP system to perform this returns policy. As they prepare to roll out the system, they invest in training for all of their customer-service employees, reflecting them how to usage the brand-new system and specifically exactly how to procedure returns. When the update returns process is implemented, the organization will be able to measure several crucial indicators around returns that will allow them to change the policy as needed. For example, if they uncover that many women space returning their deluxe dresses ~ wearing castle once, they could implement a adjust to the process that borders – to, say, fourteen days – the moment after the initial purchase that things can it is in returned. As changes to the returns plan are made, the alters are rolled the end via interior communications, and also updates come the returns processing on the mechanism are made. In our example, the system would no longer permit a dress to be changed after fourteen days there is no an authorized reason.

If done properly, business procedure management will provide several crucial benefits to an organization, which can be supplied to add to competitive advantage. These services include:

Empowering employees. When a business process is draft correctly and also supported with info technology, employees will have the ability to implement the on their very own authority. In our returns-policy example, an employee would have the ability to accept returns made before fourteen work or usage the system to make determinations on what returns would certainly be allowed after fourteen days. Built-in reporting. By structure measurement right into the programming, the organization deserve to keep up to date on an essential metrics about their processes. In our example, these deserve to be supplied to enhance the returns process and also, ideally, to alleviate returns. Enforcing ideal practices. Together an company implements procedures supported by details systems, it have the right to work to implement the best practices because that that class of organization process. In ours example, the organization might want to require that all customers returning a product without a receipt show a legit ID. This requirement have the right to be built into the system so that the return will certainly not be processed uneven a valid ID number is entered. Enforcing consistency. By producing a procedure and enforcing the with details technology, the is feasible to develop a consistency throughout the entire organization. In ours example, every stores in the sleeve chain deserve to enforce the very same returns policy. And also if the returns plan changes, the readjust can be instantly enforced throughout the whole chain. 

Business process Reengineering

As establishments look to manage their processes to obtain a competitive advantage, they likewise need to recognize that their existing ways of law things may not be the most reliable or efficient. A process developed in the 1950s is no going to be far better just since it is currently supported through technology.

In 1990, Michael Hammer published an post in the Harvard business Review entitled “Reengineering Work: Don’t Automate, Obliterate.” This post put front the believed that merely automating a bad process does not make that better. Instead, companies must “blow up” your existing processes and also develop new processes that take benefit of the new technologies and concepts. He says in the introduction to the article:<1>

Many of our job designs, job-related flows, manage mechanisms, and also organizational frameworks came of period in a different competitive environment and before the development of the computer. They are geared towards better efficiency and also control. However the watchwords of the new decade are innovation and also speed, service, and quality.

It is time to prevent paving the cow paths. Rather of embedding outdated processes in silicon and software, we should obliterate them and start over. We have to “reengineer” our businesses: usage the strength of contemporary information technology to radically redesign our organization processes in bespeak to achieve dramatic enhancements in your performance.

Business process reengineering is not simply taking one existing process and automating it. BPR is fully understanding the objectives of a procedure and then considerably redesigning it from the ground increase to attain dramatic enhancements in productivity and also quality. But this is easier said than done. Most of us think in terms of just how to execute small, local improvements to a process; finish redesign needs thinking ~ above a bigger scale. Hammer gives some guidelines for just how to go around doing business process reengineering:

Organize approximately outcomes, not tasks. This simply method to style the procedure so that, if possible, one human being performs every the steps. Rather of repeating one step in the procedure over and also over, the human being stays connected in the procedure from begin to finish. Have those who use the outcomes the the procedure perform the process. Using information technology, many simple tasks are currently automated, for this reason we have the right to empower the human who demands the result of the process to execute it. The instance Hammer provides here is purchasing: rather of having actually every department in the company use a purchasing room to order supplies, have actually the supplies ordered straight by those who require the gives using an info system.Subsume information-processing work into the real work that produce the information. As soon as one component of the firm creates details (like sales information, or payment information), it need to be processed by that exact same department. Over there is no need for one part of the agency to process information created in another part of the company.Treat geographically dispersed resources together though they were centralized. V the interactions technologies in place today, it becomes less complicated than ever before to not worry about physical location. A multinational organization does not need separate support departments (such together IT, purchasing, etc.) for each place anymore. Link parallel tasks instead of integrating your results. Departments that work-related in parallel have to be sharing data and communicating v each other throughout their activities instead of waiting until each group is done and then compare notes. Put the decision points whereby the occupational is performed, and also build controls into the process. The civilization who perform the occupational should have actually decision-making authority and also the procedure itself should have integrated controls using info technology. Capture information once, at the source. Requiring details to be entered more than once reasons delays and also errors. With info technology, an organization can record it once and also then do it accessible whenever needed. 

These ethics may seem like typical sense today, but in 1990 they took the business world through storm. Hammer gives instance after example of how organizations improved their organization processes by countless orders of magnitude without including any brand-new employees, simply by an altering how lock did points (see sidebar).

Unfortunately, business process reengineering gained a poor name in many organizations. This was since it was supplied as an excuse for price cutting that really had actually nothing to perform with BPR. For example, countless companies merely used it as an excuse because that laying off component of their workforce. Today, however, many of the ethics of BPR have been integrated into businesses and also are considered component of good business-process management.

Sidebar: Reengineering the university Bookstore

The process of purchasing the exactly textbooks in a timely manner for college classes has always been problematic. And now, through online bookstores such as Amazon completing directly with the university bookstore because that students’ purchases, the college bookstore is under push to justification its existence.

But university bookstores have actually one big advantage over their competitors: they have access to students’ data. In various other words, as soon as a student has registered because that classes, the bookstore knows exactly what publications that student will need for the upcoming term. To leverage this benefit and take benefit of brand-new technologies, the bookstore wants to implement a brand-new process that will certainly make purchasing publications through the bookstore useful to students. Despite they might not be able to compete on price, castle can provide other advantages, such as reducing the time it bring away to uncover the books and also the capability to guarantee that the book is the exactly one because that the class. In bespeak to execute this, the bookstore will have to undertake a process redesign.

The goal of the procedure redesign is simple: capture a greater percentage of students together customers the the bookstore. After ~ diagramming the existing procedure and meeting v student emphasis groups, the bookstore comes up with a new process. In the brand-new process, the bookstore makes use of information technology to mitigate the lot of job-related the students have to do in stimulate to acquire their books. In this brand-new process, the bookstore sends out the student an e-mail through a perform of all the publications required for their upcoming classes. By click a connect in this e-mail, the students have the right to log right into the bookstore, confirm their books, and purchase the books. The bookstore will certainly then provide the publications to the students.

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College bookstore process redesign (click to enlarge)

ISO Certification

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Many establishments now insurance claim that they room using best practices once it comes to organization processes. In bespeak to set themselves apart and also prove to your customers (and potential customers) the they are undoubtedly doing this, these institutions are seeking out an ISO 9000 certification. ISO is an acronym for global Standards company (website here). This body specifies quality requirements that organizations can implement to display that they are, indeed, managing organization processes in an effective way. The ISO 9000 certification is focused on high quality management.

In order to get ISO certification, an organization should be audited and also found to meet specific criteria. In its most simple form, the auditors carry out the complying with review:

Tell me what you do (describe the organization process).Show me where it says that (reference the procedure documentation).Prove the this is what happened (exhibit evidence in documented records).

Over the years, this certification has evolved and many branches of the certification currently exist. ISO certification is one means to separate an company from others. Friend can uncover out an ext about the ISO 9000 conventional here.

Summary

The introduction of info technologies has had a substantial impact on exactly how organizations design, implement, and support organization processes. From file management solution to ERP systems, details systems space tied right into organizational processes. Using business process management, organizations deserve to empower employees and also leverage their procedures for vain advantage. Making use of business process reengineering, organizations can vastly boost their effectiveness and also the quality of their products and services. Complete information technology with service processes is one means that information systems can carry an company lasting vain advantage.

See more: Economists Distinguish Between The Short Run And The Long Run As Follows:

Study QuestionsWhat does the term business process mean?What space three instances of business procedure from a project you have had actually or an company you have observed?What is the worth in documenting a organization process?What is one ERP system? exactly how does one ERP mechanism enforce best practices for an organization?What is one of the objections of ERP systems?What is business procedure reengineering? exactly how is it different from incrementally enhancing a process?Why walk BPR acquire a negative name?List the guidelines for redesigning a organization process.What is business process management? What function does that play in permitting a firm to identify itself?What go ISO certification signify?

ExercisesThink the a business procedure that you have had to carry out in the past. How would you file this process? would a diagram make much more sense 보다 a checklist? file the procedure both together a checklist and as a diagram.Review the return policies at her favorite retailer, then answer this question: What info systems execute you think would have to be in place to support their return policy.If you were implementing one ERP system, in which situations would friend be much more inclined to change the ERP to enhance your organization processes? What space the limit of law this?Which ERP is the best? do some original research and compare three leading ERP solution to each other. Compose a two- come three-page document that compares your features.