Business Process Analysis: Determining Business Competitiveness

1. Business Process Analysis: Determining Business Competitiveness MIS 202 Business Information Systems April 7, 2009

2. What is happening next week? MIS 202

3. Agenda • Project 1 discussion • Business Process Analysis Overview • L.L. Bean Example • KMS Activity • Team Process Presentations

4. Project 1 General Discussion MIS 202

5. Ohio University Processes

6. Accounts Payable Business Process • Industry Standard: $0.60 • University Standard: $2.50 • What do you think OU’s average is?

7. OU Accounts Payable Process: $15

8. IS and Strategy Recap

9. Porter’s Five Forces MIS 202

10. Porter’s Four Competitive Strategies MIS 202

11. The Value Chain MIS 202

12. The Value Chain and Business Processes • Each activity area or functional area of the value chain consists of multiple, more specific business processes. • For example, within the “Market and sell the product or service” activity, one specific business process that takes place is customer order processing. MIS 202

13. Information Systems Business Strategy People Problem and Opportunity Areas IS Processes IT

14. Recap: What is a Business Process? • business is an organized effort to convert resources into a product or service for customers with a goal of making profit. • a business organizes its efforts into business processes to achieve a set of goals.

15. Example Business Process: LL Bean Customer Order Processing • The diagram on the left represents a business process flow. • Process flows are used regularly in business analysis to understand the steps, sequence, and participants in key business activities such as order processing. • Note that this is an “as-is” version of the process. MIS 202

16. “As-Is” and “To-Be” Business Process Analysis • Organizations often wish to redesign business processes to improve the effectiveness and efficiency of those processes. • The first step, designed to fully understand how the current process works, is to map out the “as-is” business process. • The second step, designed to create a better process, is to map out the “to-be” process. MIS 202

17. Systems Development Life Cycle (SDLC) Analysis Requirements Definition Design Development Implementation As-Is Processes To-Be Processes

18. LL Bean’s “To-Be” Ordering Process • To the left, you’ll see LL Bean’s “to-be” customer ordering process after they began web-based order processing. • Of particular note is that there are fewer “actors” involved and the steps have been simplified. • This led to significant cost savings and customer service enhancement for LL Bean. MIS 202

19. Organizational Alignment People • Often, when a business process is changed, the people involved in the process need to be re-arranged. • Roles, responsibilities, and tasks need to be redesigned to align with the new business process. IS Processes IT MIS 202

20. L.L. Bean • Analyze the changes between the AS IS and TO BE processes in terms of • Process • IT • People MIS 202

21. Why Change Business Processes? • To improve the quality of the outcome or product of the process • To improve the efficiency of the process • Reduce the timethe process takes • Reduce the cost of the process As with the LL Bean example, technology advancement occasionally presents an opportunity to reinvent a business process. This type of advancement is called a disruptive technology. MIS 202

22. Process Improvement or Transformation • Process improvement - “tweaking” an existing process to make it work better • Process transformation - “reengineering” or “reinventing” a process by creating a whole new way of doing something (often driven by the emergence of a disruptive technology) MIS 202

23. Measuring the Success of a Process Change - KPIs • Key performance indicators (KPIs),are used throughout businesses to evaluate the effectiveness of business processes. • When redesigning a process, part of the “as-is” analysis involves collecting baseline KPIs so you know what the current performance is. • After implementing the “to-be” process, measurements of those same KPIs are taken to compare against the baseline. • This allows you to measure the impact of the process changes made. MIS 202

24. Types of KPIs There are three categories of KPIs that allow you to fully measure the performance of a business process. • Cost – Ex., average cost to process and ship a customer order • Quality – Ex., accurate and timely customer order fulfillment percentage • Time – Ex., average cycle time to process a customer order MIS 202

25. Kickin’ Mule IS Strategic Assessment • What are KMS’ current competitive advantages? • KMS is considering selling hot sauce in addition to salsa. Use porter’s five forces to determine how well they are positioned strategically for entrance into this market. • Which of the five forces could this business use to achieve competitive advantage in this new market? • Which activities in the value chain does this business need to focus on to maintain its current competitive advantage? • How might information systems be used overall to help this business achieve and maintain competitive advantage? • Draw up business process for Ordering MIS 202

26. Kickin’ Mule Salsa As-Is Order Process MIS 202

27. Lab 1: Business Process Analysis • In our next class which is our first lab for MIS202, you will learn how to create a business process flow diagram using a software tool called Microsoft Visio. • For this lab, we will use our case L.L. Bean’s “as-is” customer ordering process as the example. MIS 202

28. Team Process Presentation • As Is and To Be Process Flows: • assigned commercial basis for to-be • Do some cursory web research • Create as-is and to-be • People/Process/IT Change Summary • how your company’s business system evolved • assessment of changes in terms of quality and efficiency. • Presentation: • 10-minute presentation MIS 202

29. Example IBM Shipment Tracking MIS 202