Information Technology

Table of Contents

S. No. Chapter Name

1. Business Process Management & IT

2. Information Systems and IT Fundamentals

3. Telecommunication and Networks

4. Business Information Systems

5. Business Process Automation through

Application Software

Chapter [1]

Business Process Management

& IT

What is a PROCESSEngineering perspective~

A Sequence of steps that convert given input into desired output.

Business perspective ~ Coordinated and standardized sequence of events; Performed by people and machines; Surpass functional boundaries; To achieve business objective and to create value

for customers.Example : Accounting, Marketing, Costing,

Budgeting, Operations, SCM etc.

Functional v/s Process Organization

Factors Functional Process

Work Unit Department Team

Key person Functional Executive Process Owner

Benefits

• Functional Excellence• Easier to implementation• Clear management

direction

• Market responsiveness• Improved communication &

coordination between dept.• Performance measurement

with process goal.

Weakness

• Barrier to communicate between depts.

• Poor customer services.• Lack of optimizing

organit’al performance

• Duplication of expert• Inconsistency of functional

performance• Increased operational

complexity

Strategy Cost-leadership Differentiation

Process Management

PM is a planned efforts to map and improve organizational process.

It involves following tasks ~• Define the Process and Roles involved.• Establish performance measures• Develop organizational setup to standardize the

process.

Business Process Management

“The achievement of an organizational objectives through the improvement, management and control of essential business process.”

It is a combination of methods and tools for ensuring processes are improved to achieve enterprises objectives.

Characteristics BPM results in increase effectiveness, cost

reduction and enhancing value creation. It is achieved through proactive and reactive

management It uses business tools such BPR, Six Sigma and

TQM. BPR : Business Process Re-engineering Six Sigma : creates defects free output TQM : Total Quality Management

BPM Terminology Achievement : Realizing strategic objectives

Organization : Independent entity with which process is associated end-to-end.

Objectives : Strategic goals or defined process output.

Improvement : Increased efficiency and effectiveness.

Management : People or Process performance measurement.

Control : Check to ensure adherence to standard. Plan-Do-Check-Act cycle.

Essential : That contributes to achieve strategic goals and values creation to customer

Business : Economic activities

Process : Sequence of steps

Processes are Assets

Value to Customers

Continuous Improvement

Involved Technology

BPMPrinciples

BPM : Practices Develop process oriented structure Appoint process owner Top management’s commitment to BPM Follow bottom-up approach for implementation Involve IT Work boundary less collaboration. Continuous training and improvement Performance related incentives Use of radical approach viz. TQM, BPR

Some Common Business Process

Classification of Business Process

Business process

Organizational

Operational

Business Strategy

Goals

Organizational BP

Operational BP

Implemented BP

determine

determine

determine

determine

realize

realize

realize

realize

Organizational v/s Operational

• Combination of many operational process

• Described in plain text and diagrams in semiformal notation

• Works in non-technical environment

• Specify tasks by their input, output and interdependencies

• E.g. Production process

• Part of an organizational process

• Described as steps of a procedure

• Executes in technical environment

• Performs the tasks.

• E.g. Quality control

Needs for BPM Implementation Enhances future capabilities Increases cost-effectiveness Increases customer satisfaction Continuous improvement Radically re-engineering Removes cultural barriers Developing leadership Empowering employee

KEY FACTORS IN BPM IMPLEMENTATION

Scope • Process, department, company

Goals • efficiency, automation, effectiveness, satisfaction

Methods • TQM, Six Sigma, BPR, BPMLC

Skills • Employee training, certification, consultant

Tools • White board, drawing sheets, mapping s/w, simulation s/w, BPMS

Investment • Training program, tools and time

Support • Top mgmt, dept. mgrs, process owners, employee level

Automation in BPM

Improve delivery time

Improve quality

Customize

Cost reduction

Handle Workload

Handle Complexity

Challenges in BPA Implementation

Growing number of user interfaces. Increase complexity due to product, service price

options. Suite of build and buy applications with its own

data format. Budgetary control. Automation does not guaranty improvement. Linking existing application by process layer in the

system. Skill requirements. Change in organizational structure.

BPM TechnologyIt is automation of BPs and to create a process layers by linking various application to execute a single end-to-end process. BPM technology provides ~

Better management of flow of activities. Better administration of people. Reduce delivery time Performance monitoring Support audit for compliance Maximize ROI

Value Chain Analysis

Value chain is a set of activities within and around an organization to provide value-for-money product/services.

VC analysis is a useful tool to identify activities involved in the process and assessing the value added by each of them.

It helps to identify the ways in which we enhance value creation for customers.

SupportActivities

Primary Activities

Firms Infrastructure

Human Resources Management

Technology Development

InboundLogistics

Operations

OutboundLogistics

Marketing& Sales Services

Procurement

Accounting Information System

• System of collection, storage, processing and reporting of financial and accounting data.

• Collection : pre-numbered, properly designed Sr. document.

• Storage : chronological recording in journals.

• Safeguarding : controls to ensure accurate processing.

Collect

Safeguard

Record

Processing CyclesFinancing cycle

Human Resource cycle

Expenditure cycle

General ledger and reporting cycle

Revenue cycle

Production cycle

Funds

Funds

Data

DataData

Data

Data

labor Raw Material

Finished goods

Funds

Financing Cycle ~• It includes collection and storage of transaction

involving acquisition of funds and utilization of funds.

Revenue Cycle ~• It includes collection and storage of transaction

involving Sales and Marketing, A/Cs Receivable, Inventory.

Expenditure Cycle~• It includes collection and storage of transaction

involving Purchasing, A/Cs Payable, Cash disbursement.

Human Resource Cycle ~• It includes collection and storage of transaction

involving Payroll, Job, Taxation.

Production Cycle ~• It includes collection and storage of transaction

involving Operations, Quality, Inventory.

General Ledger and Reporting Cycle~• It includes collection and storage of transaction of

all other cycles to post them into related ledgers and generate various reports as financial statement.

Data Processing Cycle ~• It is a back end cycle concerned with storage and

updation of data in many files.• It works in on-line real time basis to keep the file

always updated.• It generates audit trail to support auditing of other

cycles.• It maintains three type of data file :

Master file Transaction file Reference file

Impact of IT on BPM1 • Business involvement in designing

IT based processes

2 • Ability to integrate people and system participating in the process

3 • Ability to simulate business processes

4• Ability to real time monitoring,

controlling and improvement in the process

5• Ability to change existing process

in real time without elaborate efforts.

Benefits of IT on BPM

• Automating repetitive processes1• Loosely coupling with existing

applications2• Operational saving : Cost and

Time3• Reduction in Administration

activities : Audit and Compliance4• Freeing up of employee time :

No manual activities5

Risk of failure of IT Inadequate investment in training Lack of corporate policy Lack of top management involvement Poor project management Failure in gap analysis Customization of software Not enough flexibility Compatibility with systems of partners Fail to meet business need Technological obsolescence

Business Process Re-engineering

BPR focuses on core business processes and attempt to change them with best practice.

Definition –– Business Process Re-engineering is the

fundamental rethinking and radical re-designing of processes to achieve dramatic improvement in critical and contemporary measures of performance such as cost, quality, service and speed.

Fundamental Re-thinking ~

Radical Re-designing ~

Dramatic Improvement ~

BPR Success factors Organization wide commitment

– Strong leadership and support and sponsorship from top management

Team Composition– Consultant, top management, process owner and

users

Business Need Analysis– Which current processes need re-engineering

Adequate IT infrastructure– Set of appropriate hardware, software, network, and

facilities

Effective change management– To change people behavior, organization culture,

processes, technology

On-going Continuous Improvement– Gradual on-going improvement through continuous

learning.

System Mapping tools

Mapping Tools

ER-diagram

DFD

Flow chart

Outline chart

Decision table/Tree

ER-diagram

System FlowchartDiagrammatic representation of data flow, data storage, manual and automated steps of processing taken place in an IS.

Data Flow Diagram

CustomerSalesman

S.O.P.

Sales fileManagement

Flowchart v/s DFDS.No. Flowchart DFD

1. Steps of process Flow of data

2. Do not show external source and destination

Describes path from external to internal source

3. Timing and sequence of process is shown Not described

4. How system functions What functions are performed by system.

5. Used to design a process Describe path of data within the process

6. Type ~ System , Program, Type ~ physical, Logical

Outline Chart

Decision Table

Credit eligibility R1 R2 R3 R4

C1 Experience >= 5 years Y Y N N

C2 Credit limit OK Y N Y N

A1 ACCEPT X

A2 REJECT X X X

Decision Tree

Play 9Don’t play 5

Play 2Don’t play 3

Play 4Don’t play 0

Play 3Don’t play 2

Play 2Don’t play 0

Play 0Don’t play 3

Play 0Don’t play 2

Play 3Don’t play 0

sunnyover cast

rainy

<=70 >70 windy Non-windy