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Chapter 2

Chapter 2. Chapter 2. Business Processes, Information, and Information Systems. This Could Happen to You. In order for Dee to get a budget approved for the blog she needs to: Provide specific details Provide answers to: How will this blog impact the sales process?

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Chapter 2

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  1. Chapter 2 Chapter 2 Business Processes, Information, and Information Systems

  2. This Could Happen to You In order for Dee to get a budget approved for the blog she needs to: • Provide specific details • Provide answers to: • How will this blog impact the sales process? • How will the salespeople use it? • How will it help gain sales? • What else will the CFO want to know?

  3. Study Questions Q1: How did this stuff get here? Q2: What is a business process? Q3: What are the components of a business process? Q4: What is information? Q5: What is the role of information in business processes? Q6: How do information systems support business processes?

  4. Q1: How Did This Stuff Get Here? Business processes must work together as an integrated system for a Business to be successful. A business must: • Obtain payments for its goods and services • Cover costs • Make profit

  5. Q2: What Is a Business Process? Business process is a network of: • Activities (processes) • Resources (inputs) • Facilities (inputs) • Information (both inputs and outputs) Processes interact to achieve business objectives

  6. Q3: What Are the Component of aBusiness Process? Activities – transform resources and information of one type into resources and information of another type. Resources – items of value, such as customers, suppliers, employees, distributors, and so on Facilities – structures used within resources. Ex: inventories, databases, factories, vehicles (Plant & Equipment) Information – activities use information to know how to transform inputs to outputs.

  7. Portion of Inventory Management Business Process Figure 2-1

  8. Activities Transform resources and information from one form into another Follow rules and procedures Can be manual, automated, or combination Example: • Payment (activity) transforms QuantityReceived (information) and ShippingInvoice (information) into PaymentToSupplier (resource)

  9. Resources Items of value Examples: • Customers • Suppliers • Raw Material • Products

  10. Facilities Structures used within business process Places where things are produced or stored, or equipment, machines, buildings Examples: • Inventories (? Warehouse?) • Databases • Factories • Equipment

  11. Q4: What Is Information? Definitions: Knowledge derived from data (Information?) Data processed and presented in meaningful context Data processed by summing, ordering, averaging, grouping, comparing, or other similar operations Information is “a difference that makes a difference” Data Processes Information Knowledge

  12. Characteristics of Good Information Accurate • Correct and complete Timely • Produced in time for intended use Relevant to both: • Context • Subject Just Barely Sufficient • “Tell me all I need to know and no more” Einstein. 5. Worth its cost

  13. Q5: What Is the Role of Information in Business Processes? Business processes generate information by giving context to data. Data • Quantity Ordered, Quantity Received, Quantity Invoiced Process • Vendor Payment (3-Way Match) Output • Discrepancy? (“the difference that makes a difference”) • Payment?

  14. Q6: How Do Information Systems Support Business Processes? IS supports activities in a business process • Several activities may use one information system • Activity may have own information system • Activity may use several information systems

  15. Portion of Inventory Management Business Process Figure 2-1

  16. What Does It Mean To Automate a Process Activity?

  17. An Information System to Support Counter Sales Figure 2-4

  18. An Information System to Support Payment Figure 2-5

  19. An Information System to Support Purchasing Figure 2-6

  20. Order Approval Process

  21. How Does the Knowledge in This Chapter Help Dee and You? After reading this chapter, Dee and you should: • Understand the need for business processes, the importance of process design, and the role that information systems play in support of these processes • Be able to create process diagrams to show information needed • Understand the usefulness of blogs as a facility that contains information that makes a difference • Be able to answer the three questions Dee’s boss asked

  22. How Does the Knowledge in This Chapter Help Dee and You? (cont.) How will this blog impact the sales process? How will the salespeople use it? How will it help gain sales?

  23. Sales Process • Activities • Customer Call • Customer Order • Customer Delivery • Customer Invoice • Customer Payment • Customer Service • Resources • Customers • Call Reports • Products • Sales People • Facilities • Customer/ Product Databases • Inventory (Warehouse) • Customer Site • Sales Office • Information • Customer Needs • Promotional Terms • Pricing • Product Availability • Shipping Alternatives

  24. Active Review Q1: How did this stuff get here? Q2: What is a business process? Q3: What are the components of a business process? Q4: What is information? Q5: What is the role of information in business processes? Q6: How do information systems support business processes?

  25. Chapter Extension 3 Information Systems and Decision Making

  26. Study Questions Q1: How do decisions vary by level? Q2: What is the difference between structured and unstructured decisions? Q3: How do decision level and decision process relate? Q4: What is the difference between automation and augmentation? Q5: How does IS support decision steps?

  27. Q1: How Do Decisions Vary by Level? • Decisions occur at three levels • Operational • Day-to-day activities • Transaction processing systems (TPS) • Managerial (Tactical) • Allocation and utilization of resources • Management information systems (MIS) • Strategic • Broader-scope, organizational issues • Executive information systems (EIS)

  28. Q2: What Is the Difference Between Structured and Unstructured Decisions? • Structured decisions • Understood and accepted method for making decision • Examples of structured decision processes: • Formula for computing reorder quantity • Allocating furniture and equipment to employees • Unstructured decisions • No agreed-on or standardized decision-making method • Examples of unstructured decision processes: • Predicting direction of economy or stock market • How well suited an employee is for a particular job

  29. Q3: How Do Decision Level and Decision Process Relate? • Operational-level decisions usually fairly structured and short time horizon • Mid-level (control and tactical management) usually semi-structured and medium time horizon • Strategic-level decisions usually highly unstructured and long time horizon

  30. Decision Support in Business

  31. Relationship Between Decision Level and Decision Process

  32. Q4: What Is the Difference Between Automation and Augmentation? • Automated information system • Hardware and program components do most of the work • IS computes quantity of items to order by monitoring inventory levels or production plans • Augmentation information system • Humans do bulk of work • Systems support work done by people • Email, instant messaging, videoconferencing

  33. Q5: How Does IS Support the Steps in Decision Making?

  34. Active Review Q1: How do decisions vary by level? Q2: What is the difference between structured and unstructured decisions? Q3: How do decision level and decision process relate? Q4: What is the difference between automation and augmentation? Q5: How does IS support decision steps?

  35. Chapter Extension 3 Information Systems and Decision Making

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