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CHAPTER 2

CHAPTER 2. MODELING BUSINESS PROCESSES. Business Processes. Every organization has three basic business processes. Acquisition/payment Business Process. Organizations can acquire a wide variety of goods and series including: Human resources Financial resources Supplies Inventories

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CHAPTER 2

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  1. CHAPTER 2 MODELING BUSINESS PROCESSES

  2. Business Processes • Every organization has three basic business processes. • Acquisition/payment Business Process. Organizations can acquire a wide variety of goods and series including: • Human resources • Financial resources • Supplies • Inventories • Property, plan, and equipment • New ideas • Miscellaneous services • Conversion Business process. Focuses on converting goods and service acquired into goods and services for sale. • Sales/Collection Business Process. Includes the sequence of activities involved in delivering goods and service to customers for payments.

  3. Are All Processes and Business Activities Created Equally? • Porter illustrated that each firm is a “collection of activities that are performed to design, produce, market deliver, and support its product. • A value chain is defined as a set of business activities that add value or usefulness to an organization’s product or service.

  4. Revenue Costs Margins Film Infrastructure Human resources management Technology development Support activities procurements Inbound Logistics Operations Outbound Logistics Marketing & sales Services Primary activities EXHIBIT 2-1 Porter’s Generic Value Chain

  5. Porter’s primary value activities include the following categories: • Inbound logistics • Operations • Out bond Logistics • Marketing and sales • Service • Porter’s support value activities include: • Procurement • Technology development • Human resource management • Firm Infrastructure

  6. BUSINESS PROCESSES EVENTS • Business Process is a series of activities intended to accomplish the strategic objectives of an organization • Devided each business process into three different event: • Operating events are the operating activities performed within a business process to provide goods and service to customers. • Information events include three activities: recording data about operating events, maintaining reference data that are important to the organization, and reporting useful information to management and other decision makers. • Decision management events are activities where management and other people make decision about planning, controlling, and evaluating business processes. • Workflow refers to jobs or task performed by members of a workgroup to achieve some objective.

  7. Decision/ managements Events Define and often trigger Operating Events Trigger Trigger Information Events EXHIBIT 2-3 Business Process Activities (Events)

  8. Business processes are not only linked within an organization but business processes span organization boundaries. Extended enterprise business processes. DEVELOPING A REAL BUSINESS PROCESS MODEL • Real business process modeling is a formal method of identifying and representing the essential characteristics that collectively describe business processes and events. Real business process model requires you to identify strategically significant business activities and essential characteristics about these business activities.

  9. EXHIBIT 2-4 Essential Characteristic of Business Activities • What happened? • When did it occur ? • Who was involved and what roles did they play ? • What resources were involved and how much? • Where did the event occur ? • What can go wrong during execution of the event?

  10. The essential characteristics of business in the answers to the following: • What happened • When did each event occur • What roles are performed and who/what agents perform the roles in executing each event • What kinds of resources were involved and how much was used • Where did the event occur • What can go wrong in executing the events

  11. EXHIBIT 2-5 REAK Business Process Model Matrix

  12. Sell merchandise Receive Customer payments EXHIBIT 2-6 McKell’s Retail Store REAL Model: Step 2

  13. Merchandise Sales person Sell Merchandise Register Customer Receive Customer payment Cash EXHIBIT 2-7 McKells Retail Store REAL Model: Step 3

  14. Resource Internal agent Event External agent (if needed) Location (if needed) Resource Internal agent Event Location (if needed) External agent (if needed) EXHIBIT 2-8 Template without Diamonds. Place Relationship Descriptions on the Lines

  15. Resource Internal agent Event External agent (if needed) Location (if needed) Resource Internal agent Event Location (if needed) External agent (if needed) EXHIBIT 2-9 Template with Diamonds. Place Relationship Descriptions Inside the Diamonds

  16. Merchandise Sales person internal agent Involves Takes place it Sell Merchandise External agent Register Customer Result in Takes place it External agent Receive Customer payment increases Internal agent Cash EXHIBIT 2-10 McKells Retail Store REAL Model: Step 5

  17. CONCLUDING COMMENTS • REAL concepts serve as a template for identifying and describing the essential characteristics of operating events.

  18. Resource Internal agent Resource Increment (+) Resource Decrement (-) Event External agent (if needed) Location (if needed) Resource Increment (+) Resource Decrement (-) Resource Internal agent Resource Increment (+) Resource Increment (+) Event Resource Decrement (-) Location (if needed) External agent (if needed) Resource Decrement (-) EXHIBIT 2-11 Partial REAL Diagram for Linked Business Process Example

  19. Conversion Process Check hilves Supplies and Materials Acquisition/ Maintenance/Payment Process Hive Human Labor Field Supply Barn Hire Workers Hive Workers Extract Honey Marc Store mat. & supplies Cherry Bee Store Materials & supplies Pay workers Materials & supplies Hive workers Cash Strain honey Hive workers Honey in process Marc Vendor store Purchase mat. & supplies Package honey Supply barn Packaged Honey Cerry bee store Sell Honey Store Honey Packaged Honey Vendor Marc Cherry Bee Store Pay for mat & supplies Collect Payment Cash Customer Cash EXHIBIT 2-14 Cherry Bee REAL Models (Without Relationship description) Labor Acquisition/Maintenance/ Payment Process Sales/Collection Process

  20. Call on customer Submit bid Customer Representatives Services Negotiate Contract Customer Provide services Janitor Cash Receive payments Customer Payment personnel EXHIBIT 2-15 REAL Model of a services Process (Without relationship descriptors)

  21. Greet victim shelter receptionist Interview Victim Interviewer Room Assign room Clothing Issue clothing Inventory clerk Personal care items Issue personal Care items Food Provide foot Personal counselor Goals resources sources Help set goals, identify resources Victim Discharge victim EXHIBIT 2-16 REAL Model of a Not-for-Profit Organization (Without relationship descriptors)

  22. Coal Bake Fuel Baker Coke Blast Furnace Iron One Blast Blast Furnace op. Limestone Pig iron Finishing Furnace Mix Oxygen Finishing Furnace op. Alloys Steel ingots Rolling Mill Mill Finished steel Milling Operator EXHIBIT 2-17 REAL Model of a Manufacturing Process (Without relationship descriptors)

  23. Reference • Hollander, A. S. Eric L. Denna, J. Owen Cherrington.2000. Accounting Information Technology, And Business Solutions. Irwin McGraw-Kill, New York-USA.

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