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MIS524 Business Processes

MIS524 Business Processes. What is a process?. A sequence of activities that achieves a business result that (is): produces a specified output for a customer or market has a beginning and end not based on existing organizational structures may be unnamed and unrecognized.

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MIS524 Business Processes

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  1. MIS524Business Processes

  2. What is a process? • A sequence of activities that achieves a business result that (is): • produces a specified output for a customer or market • has a beginning and end • not based on existing organizational structures • may be unnamed and unrecognized

  3. Process Characteristics • Dynamic vs. Slice in time • Customer viewpoint • De-emphasis of functional silos • Implications of process improvement

  4. Reengineering Projects • Reengineering projects were very frequent throughout 1990s • Processes reengineered: customer service (25%), order fulfillment (16%), manufacturing (15%), customer acquisition (11%) • Few cited research or product development, none cited management processes • Today reengineering may be carried via software package implementation, e.g. SAP

  5. Example Reengineering Benefits

  6. Formula for Process Effectiveness Value Time Elapsed Time The objective is to get this close to 1

  7. BPR Life Cycles • Mirror software development life cycles • Phases • Process identification • Process analysis • Process redesign • New process implementation

  8. Identifying Processes for Innovation • First step in BPR Life Cycles • Selection from major organizational processes • Trade off between project magnitude and political feasibility

  9. Process Types • Core • Network • Support • Management

  10. Process Selection Criteria • Strategic Importance • Dysfunction • Feasibility

  11. Process Types: a different view (Keen 1997) • Identity • Priority • Background • Mandated • Folklore

  12. Relationship of Process to Competitive Advantage • Salience • Worth • Asset • Liability

  13. Process Selection (Keen) Yes Does process X define your firm for customers, employees, or investors? Identity No Is excelling at process X critically important to business performance? Priority Yes No Does X provide necessary support to other processes? Background No Yes Is X carried out because it is legally required? Mandated Yes No Folklore

  14. Determining Process Worth Does Process X tie up substantial capital? No Yes Value Neutral Does it generate more value than the cost of the capital it uses? No Yes Liability Asset

  15. Role of IT • Databases • Telecommunication networks • Workflow software • Imaging

  16. Impact of IT on Process Innovation - Examples • Automation – eliminating human labor from process • Sequence – changing process sequence or enabling parallelism • Information and analysis – capturing improved process information for analysis and decision making • Tracking – monitoring process status and objects for improved control

  17. Profiling Successful Reengineering Projects (Teng, Jeong, Grover 1998) • Study to understand BPR success • 100 participating firms - manufacturing 29%, banking/finance 13%, insurance 10% • Main processes, customer service, product development, order management • Research questions • Do reengineering projects aimed at more radical changeresult in higher implementation success? • How are the allocation of resources and energy to stages of a project related to implementation success?

  18. Measures of Success • Perceived success of the project • Goal fulfillment • Goals - cost reduction, cycle-time reduction, customer satisfaction, worker productivity, defects reduction • Measure of the ratio actual/goal

  19. Reengineering Projects Change • Work flow patterns • Roles and responsibilities • Performance measures and incentives • Organizational structure • IT applications • Shared values and culture • Skill requirements

  20. Results • Significant correlation between extent of change to work flow, roles and responsibilities, performance measures, and IT applications with perceived success • Insufficient effort paid to later stages • Additional effort on later stages will have greater impact on project success

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