Class 7

Organization in Process View

MIS 2000 Information Systems for Management

Bob Travica

Updated May 2015

Outline

• 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 (part)

• Summary

Organization in Process View

PRoc & Roll

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Organization 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.

Organization in Process View

Management Process

Marketing Process Production Process

Accounting Process

IS Development & Maintenance Process

Supply Process

Organization

HR Process

Sales & Delivery Process Research &

Development Proc.

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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:

Organization in Process View

Pick a class

Do readings

Think + Make notes

Learned enough?

No

Have a drink +

Be happy!

Yes

STUDENTS’ STUDY PROCESS

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).

Organization in Process View

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

(Internal) Employee

Servicesfor employees

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

Start End Customer

(External) Buyer

ValueDeliverable

Good formarket

Utility/Price,Timing, Quality

Timing, Quality

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• Strategic processes happen in some intervals (e.g., setting long-term goals, activities leading to materializing the goals); game plan.

• Operational processes make regular, everyday work. Resemble moves (step patterns) in a game.

Operational and Strategic Processes

Organization in Process View

Operational processes Strategic processes

Daily “grind”, short time horizon

Occasional activities, longer time

Steps patterns, with small known variation (Routines)

More variation in process

IS are embedded in operations, provide necessary support

IS support is partial (e.g., decision making as part of planning)

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Management in Process View From the process perspective, managers’ focus should be on BP

management (BPM)

Management goals are

(a) meet business process performance standards goals

(b) to raise these standards.

Better process performs better

Process performance influences organizational performance (financial outputs, innovation, customer service)

IS are an instrument for the process improvement.

Organizational Performance

Process Design

Process Performance

Information System

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Design of Business Process

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

and IS. 1. Composition: What is the arrangement of process steps?

Start Flow of steps Activity (data-transformation steps or matter-related) Decision (choice-making step) Loop (repeating steps) End

* *

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

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Design of Business Process: Composition

1. Composition: What components do make a process?

Ask: • Are the steps defined accurately: activity

names, decisions? Activities apply to data (order, invoice) and objects (delivery items).

• Do the flows make sense? Do loops (if any) make sense?

• Are all components included?

Composition errors are marked red in this diagram.

Organization in Process View

Get Order

Fill Order

Deliver overnight

Rush order?

Deliver regularly

Send Invoice

Close Order

yes no

Fulfill Customer Order Process

CCCFIS

P

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Business Process Design: Coordination

2. Coordination: Dependencies between process steps and their contribution to the process deliverable.

Ask: • What are dependencies between

activities in time (below) and quality of deliverables?

• Dependencies are:• Sequential (A finishes, B starts)• Parallel (A & B at the same time;

saves process time).*

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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

Check Old Orders

Reduces coordination

Fulfill Customer Order Process

CCCFIS

P

Business Process Design: Complexity

3. Complexity: The scope of business process. Ask:

• What is the number process steps (activities and decisions)

• Number of loops? (2 in the diagram)• Depth of process - are there sub-processes?

(not here if the delivery step is handled by a another company)

Organization in Process View

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

Fulfill Customer Order Process

CCCFIS

P

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Business 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. There are two versions of the process determined by two different delivery steps, so flexibility is 2 (very low).

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

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

lowhigh variation

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CCCFIS

P

Business Process Design: IS 5. IS Properties: Coverage and characteristics of an IS

built into a business process. * Important aspects:

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

networks) Characteristics of user interface screens Characteristics of databases (local vs., distributed)

CCCFISP

Organizational Performance

Process Design

Process Performance

Information System• Non-functional characteristics

• Functionality• Technological properties

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Process Performance Measurement

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

Filtering criterion: Does a process serve useful organizational purpose?

There are odd processes surviving from the past. They may perform well but have no real purpose.

1. Customer Value – Characteristics of the process deliverable that matter to 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 times of all steps• for parallel steps, take 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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CVTCIS

PP

IS Performance 4. IS performance influences process performance

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

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

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

CVTCISP

Organizational Performance

Process Design

Process Performance

Information System• Non-functional characteristics

• Functionality• Technological properties

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Relationships between Process Performance

Organizational 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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Organizational Performance

Process Design

Process Performance

Information System

Summary 1/2

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

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). BP can be inside and outside of organizations. BP works with data and physical objects.

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

There are operational and strategic processes.

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Summary 2/2

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

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

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

Process performance influences organizational performance.

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