LECTURE 2:

BUSINESS PROCESSES,
INFORMATION AND
DECISION MAKING
Zorana Svedic BUS 237 Information Systems in Business
 Agenda
2

Administration
Email vs. Canvas Discussions
Use email for specific individual questions include BUS 237 in the Subject
Use Canvas Discussions for general questions

Post your Student Introduction

Complete Practice Quiz on Chapters 1 & 2
Quiz #1 on Chapter 3 Due BEFORE Next Lecture!!!

Business Processes
Data vs. Information
Decision Making
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 How did this stuff get here?
3

How did we all meet in this room today?

Who unlocked the door?
Who turned on the lights?

Who set up the projector?

Who made sure there were more seats than students?

Who made sure someone was teaching the course?

Who made sure there were textbooks in the store?

We are surrounded by business processes

Understanding how things work helps us to make us
more valuable members of the economy

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 What is a Business Process?
4

A Business Process describes a set of activities that are

necessary to complete a response to a stimulus applied
to an organization

Customer orders Employee picks the Products are delivered

products products from Inventory to customer

stimulus set of activities response

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 Business Process
5

A business process is a series of tasks or steps designed

to produce a product or service
A business process is a system, and sometimes business
processes are also referred to as business systems

Examples:
Inventory management processes
Manufacturing processes

Sales and support processes

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 Business Process
6

Example Stimulus:
customer request BUSINESS
supplier shipment PROCESS
management directive
information about competitor Example Response:
ship product
update inventory
create committee
develop new marketing
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 Business Process Components
7

A business process is a network of:

Activities
Resources
Facilities
Information

These interact to achieve business function

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 Example Business Process:
sales, purchasing, and inventory management
8

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 Activities
9

Activities transform resources and information

of one type into resources and information of another
type
follow rules and procedures
can be manual, automated, or combination

Example:
Payment (activity) transforms QuantityReceived
(information) and ShippingInvoice (information) into
SupplierPayment (resource)

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 Activities
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Picking items from

inventory is an
activity

Shipping is an
Ordering is an activity
activity

Paying is an
activity

Receiving is an
activity

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 Resources and Facilities
11

Resources are items of value

An organization uses resources to provide value for its
customers and successful outcomes for the owners
Example resources:

Internal to Organization
cash, cheques, workers
External to organization
valued customers, suppliers inventory

Facilities are structures used within the business process

Example facilities:
Inventory, Database, Equipment, Factory, Trucks

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 Resources and Facilities
12

Inventory is a
Facility
Customer is a Supplier is a
Resource Resource

Database is a
Facility

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 What is Data?
13

Data are recorded facts or figures

Not meaningful on its own

Requires context to be meaningful

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 What is Information?
14

Information is knowledge derived from data

It is the central focus of information systems
Business processes create, process, and store information
e.g. Quantity received = 6, Shipping Invoice = 8
These should be equal. There is a problem!

The concept of Information can be difficult to define

Knowledge derived from data
Data presented in a meaningful context
Data processed by summing, ordering, averaging,
grouping, comparing, or other similar operations
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 Good Information
17

1. Accurate
correct and complete
crucial for management & decision making
cross-check information to ensure accuracy
2. Timely
produced in time for intended use
3. Relevant
context
subject
4. Just Barely Sufficient
sufficient for purpose for which generated
do not need additional, extraneous information
5. Worth Its Cost
relationship between cost and value
information systems cost money to develop, maintain, and use
must be worth the cost

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 IS Five Components
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 Characteristics of the Five Components
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The outermost components of information system,

hardware and people, are both actors; they can take
actions.

The software and procedure components are both sets

of instructions: software is instructions for hardware,
and procedures are instructions for people.

Finally, data is the bridge between the computer side

on the left and the human side on the right.

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 Automation of Process Activity
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Automation of processes
Transfer work done by people to computers
People follow procedures
Computers follow software instructions

Moving work from human side to computer side

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 IS to Support Counter Sales (1)
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 IS to Support Counter Sales (2)
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Fully automated
Cashiers do not require extensive training
Cashiers do not work directly with programs on computer

Computer in cash register communicates with computer

that hosts Inventory Database

Programs record sales and makes changes

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 IS to Support Payment (1)
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 IS to Support Payment (2)
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Payment receives QuantityReceived and

ShippingInvoice and produces SupplierPayment

Mostly manual
Accounts Payable Clerk reads documents and issues
payment or investigates discrepancies
Processing exceptions complicated
Programming expensive
Probably not effective

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 IS to Support Purchasing (1)
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 IS to Support Purchasing (2)
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Purchasing Clerk computer runs program that queries

database and identifies stock levels and generates
PurchaseOrder

Balanced work between automation & manual activity

Searching database is repetitive
Automated process
Selecting suppliers is complicated
Manual process

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 Business Process Design
27

Approaches to improving organizational performance,

each has its advantages and disadvantages
1. Business Process Automation (BPA)
2. Business Process Improvement (BPI)
3. Business Process Transformation (BPT)

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 Business Process Automation (BPA)
28

The least intense form of automation

Involves automating some aspect of a business process
through the application of information technology
Leaves the manual system essentially unchanged but
makes processes more efficient by automating them
Focuses on detailing the as-is system
BPA does not impact the way things are done, but rather
how fast they are accomplished

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 BPA Example: Library
29

Objective: Reduce library checkout line-up

Before BPA
Manual checkout

After BPA
Computerized checkout

Customer still checks books out at the desk, but

the computer makes this process more efficient

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 Business Process Automation
30

Things to think about:

Solving problems that users have with the current system
using BPA may be a CONTINUAL firefight.

Think about whether there is a root cause to the problem.

By focusing on the problem rather than the solution, you
may get an indication that a more revolutionary design of
the system is necessary.

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 Business Process Improvement (BPI)
31

A notch up on the analysis intensity level of

automation
BPI recommends that employees involved in the process
should look for ways to incrementally improve it
This approach takes an evolutionary view of the system
No radical changes but constant search for improvements
Changes are made to the way things are done, not just
the computer system but the business process as well

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 BPI Example: Library
32

Objective: Reduce library checkout line-up

Before BPI
Manual checkout

After BPI
Professors can use computers to search catalog, check out
books and have them delivered using campus mail
Changes both the computer system and the way you do

business

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 Business Process Improvement
33

Things to consider:
More effort required in identifying potential
opportunities.
Requires an analysis strategy and more information about
alternatives.
Activity based costing
Benchmarking

Add more time when considering this improvement.

Sometimes difficult to find an end to the project.

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 Business Process Transformation (BPT)
34

High level of intensity of automation

A radical and fundamental rethinking of the business
processes currently used
Looking for dramatic improvements
High risk

Increased time

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 BPT Example: Library
35

Objective: Reduce library checkout line-up

Before BPT
Manual checkout

After BPT
Make texts available on web.
You didnt want the book anyway, just the information.
Scan all the books and then make the information
searchable and downloadable. Very radical!

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 Information Systems & Decision Making
36

Data are an important part of any information system

Data can be transformed into information by providing
context
Information can be an important starting point for
decision making in many organizations
IS support decision making by providing the
informationthe raw materialfor many decisions
Decision making in organization is varied and complex

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 Decisions Vary by Level
37

Operational decisions concern day-to-day activities

Transaction Processing Systems (TPS)

Managerial decisions concern the allocation and

utilization of resources
Management Information Systems (MIS)

Strategic decisions concern broader-scope,

organizational issues
Executive Information Systems (EIS)

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 Decisions Vary by Structure
38

A structured decision is one for which there is an

understood and accepted method for making the
decision
e.g., How much tax do I need to pay?
Weather forecasting
An unstructured decision process is one for which there
is no agreed-on decision-making method
e.g., Who should I marry?
Weather itself
Note: terms structured and unstructured refer to the decision
process/method, not to the underlying subject/problem!

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 Supporting Decision Making
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 Decision-Making Steps
40

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 What is Your Role?
41

You are part of system (people)

You are the most important component of an IS

you must be able to use the information system
the quality of your thinking (the questions you ask, the
information you provide) are important to the quality of
the output of the system

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 Summary
42

An organization is usually made up of a business processes that

deliver products and services to customers
Business Processes create, use and store information
BPA, BPI, and BPT are different approaches to improving
organizational performance and each has its advantages and
disadvantages
Information is an important starting point for many types of
business decisions
Understanding how information systems can support business
decisions can make you a better user of these systems

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 Next Week
43

To Do List
Thank you!
Quiz 1 on Chapter 3

Have a safe &

pleasant week Readings

Chapter 3
Word Lab Notes

BUS 237