Please note, there is an updated execution of this book easily accessible at If you are not compelled to use this edition because that a course, you might want to examine it out.

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Learning Objectives

Upon effective completion that this chapter, you will be may be to:

define the ax business process;identify the various systems needed to support company processes in one organization;explain the worth of an enterprise source planning (ERP) system;explain exactly how business procedure management and business procedure reengineering work; andunderstand just how information technology combined with company processes can bring an organization competitive advantage.Introduction

The fourth component of info systems is process. However what is a procedure and how does the tie into info systems? and in what ways do processes have actually a function in business? This chapter will certainly look come answer those concerns and likewise describe how business processes have the right to be supplied for strategic advantage.

What Is a business Process?

We have actually all heard the term process before, yet what specifically does it mean? A process is a collection of tasks that space completed in order to attain a goal. A organization process, therefore, is a process that is focused on achieve a goal because that a business. If you have worked in a service setting, you have actually participated in a organization process. Anything indigenous a simple process for making a sandwich at Subway to building a an are shuttle utilizes one or an ext business processes.

Processes are something that businesses go through every job in stimulate to attain their mission. The far better their processes, the much more effective the business. Part businesses watch their procedures as a strategy because that achieving compete advantage. A process that achieves its goal in a unique method can set a firm apart. A process that eliminates prices can allow a agency to reduced its price (or retain an ext profit).

Documenting a Process

Every day, every of us will conduct numerous processes without also thinking about them: acquiring ready for work, using an ATM, reading our e-mail, etc. However as procedures grow more complex, they must be documented. For businesses, it is vital to execute this, due to the fact that it permits them come ensure regulate over how tasks are undertaken in your organization. That also permits for standardization: McDonald’s has actually the same procedure for structure a big Mac in every one of its restaurants.

The simplest means to record a procedure is to simply develop a list. The list mirrors each action in the process; every step deserve to be checked off top top completion. Because that example, a simple process, together as exactly how to create an account ~ above eBay, might look choose this:

Go to top top “register.”Enter your call information in the “Tell us around you” box.Choose her user ID and password.Agree to User Agreement and also Privacy plan by clicking on “Submit.”

For procedures that room not so straightforward, documenting the procedure as a checklist might not be sufficient. Because that example, below is the procedure for determining if an short article for a term requirements to be added to Wikipedia:

Search Wikipedia to recognize if the term currently exists.If the ax is found, then an short article is currently written, therefore you need to think of another term. Walk to 1.If the hatchet is not found, then look to watch if there is a connected term.If over there is a related term, then create a redirect.If there is not a connected term, then produce a new article.

This procedure is reasonably simple – in fact, it has actually the same number of steps together the previous example – but due to the fact that it has actually some decision points, it is more an overwhelming to track v as a simple list. In these cases, it might make an ext sense to use a chart to document the process:

Process diagram for determining if a brand-new term need to be included to Wikipedia (click come enlarge). (Public Domain)

Managing Business procedure Documentation

As organizations start to document their processes, it i do not care an administrative task to keep track the them. Together processes adjust and improve, the is vital to know which procedures are the most recent. It is additionally important to manage the procedure so the it deserve to be easily updated! The necessity to manage procedure documentation has been just one of the driving forces behind the development of the document management system. A record management device stores and tracks documents and also supports the adhering to functions:

Versions and timestamps. The paper management system will keep multiple version of documents. The many recent version of a document is basic to identify and will be offered up through default. Approvals and also workflows. Once a process needs to it is in changed, the device will regulate both access to the papers for editing and also the routing the the record for approvals.Communication. When a procedure changes, those who implement the procedure need to it is in made mindful of the changes. A file management system will notify the suitable people when a readjust to a paper is approved.

Of course, paper management systems are not only offered for regulating business process documentation. Numerous other types of records are controlled in these systems, such together legal files or architecture documents. 

ERP Systems

An enterprise source planning (ERP) system is a software application application through a centralized database that deserve to be offered to run an entire company. Let’s take a closer look in ~ the meaning of every of this components:

With a central database: all data in one ERP mechanism is save in a single, main database. This centralization is crucial to the success of an ERP – data entered in one part of the agency can be immediately obtainable to various other parts the the company. That have the right to be offered to run an entire company: one ERP deserve to be supplied to manage an entire organization’s operations. If they so wish, companies can purchase modules because that an ERP the represent various functions in ~ the organization, such together finance, manufacturing, and also sales. Part companies select to purchase countless modules, others choose a subset the the modules. 

An ERP device not only centralizes one organization’s data, yet the procedures it enforces are the processes the company adopts. As soon as an ERP seller designs a module, it has to implement the rules because that the associated business processes. A selling point of an ERP device is that it has ideal practices built right right into it. In other words, when an company implements an ERP, it also gets improved finest practices as component of the deal!

For plenty of organizations, the implementation of one ERP mechanism is terrific opportunity to boost their organization practices and also upgrade their software at the exact same time. However for others, one ERP brings them a challenge: Is the process embedded in the ERP really better than the procedure they are at this time utilizing? and if they implement this ERP, and also it wake up to it is in the exact same one that all of their rivals have, will they merely become much more like them, make it much more complicated to differentiate themselves?

Registered trademark that SAP

This has been just one of the objections of ERP systems: the they commoditize business processes, driving all businesses to usage the very same processes and thereby shed their uniqueness. The an excellent news is the ERP systems likewise have the ability to it is in configured with custom processes. For establishments that desire to continue using their very own processes or even design new ones, ERP systems offer methods to support this v the use of customizations.

But there is a limit to tailoring an ERP system: organizations have to maintain the changes themselves. Anytime an update to the ERP system comes out, any type of organization the has created a custom process will be required to add that change to their ERP. This will need someone to keep a listing of these changes and will likewise require retesting the device every time an update is made. Organizations will have to wrestle v this decision: When should they walk ahead and also accept the best-practice processes constructed into the ERP system and when must they spend the resources to construct their own processes? It provides the many sense to just customize those procedures that are critical to the competitive benefit of the company.

Some of the best-known ERP sellers are SAP, Microsoft, and also Oracle.

Business process Management

Organizations that are serious around improving their organization processes will likewise create frameworks to control those processes. Business process management (BPM) deserve to be assumed of as an intentional effort to plan, document, implement, and also distribute an organization’s organization processes v the support of details technology.

BPM is an ext than simply automating some basic steps. When automation can make a business an ext efficient, it cannot be provided to carry out a compete advantage. BPM, ~ above the other hand, can be one integral part of creating that advantage.

Not all of an organization’s processes need to be managed this way. One organization have to look for procedures that are vital to the to work of the business and also those that may be provided to bring a compete advantage. The best processes come look at are those that incorporate employees native multiple departments, those that call for decision-making the cannot be conveniently automated, and also processes that readjust based ~ above circumstances.

To make this clear, let’s take a look at an example.

Suppose a huge clothing retailer is looking to get a competitive benefit through premium customer service. As part of this, they develop a task force to build a state-of-the-art returns plan that enables customers to return any kind of article the clothing, no questions asked. The organization additionally decides that, in bespeak to protect the competitive benefit that this returns plan will bring, lock will build their very own customization to their ERP device to implement this return policy. As they prepare to roll out the system, lock invest in cultivate for all of their customer-service employees, reflecting them how to use the brand-new system and specifically exactly how to procedure returns. When the updated returns process is implemented, the company will have the ability to measure several an essential indicators about returns that will enable them to change the policy as needed. For example, if they uncover that countless women are returning their deluxe dresses after ~ wearing castle once, they might implement a readjust to the procedure that limits – to, say, fourteen job – the moment after the initial purchase that an item can it is in returned. As changes to the returns plan are made, the transforms are rolled the end via internal communications, and also updates to the returns handling on the device are made. In our example, the device would no longer enable a dress to be reverted after fourteen days without an authorized reason.

If done properly, business procedure management will provide several crucial benefits to an organization, which can be provided to add to vain advantage. These services include:

Empowering employees. Once a business procedure is designed correctly and supported with details technology, employee will have the ability to implement it on their own authority. In our returns-policy example, an employee would be able to accept returns made before fourteen work or use the device to do determinations ~ above what returns would be allowed after fourteen days. Built-in reporting. By building measurement right into the programming, the organization can keep increase to day on vital metrics concerning their processes. In our example, these can be provided to boost the returns procedure and also, ideally, to mitigate returns. Enforcing ideal practices. As an organization implements processes supported by details systems, it can work come implement the ideal practices for that class of company process. In our example, the organization might want to require that all customers returning a product there is no a receipt present a legal ID. This requirement can be constructed into the system so the the return will certainly not be processed unless a valid ID number is entered. Enforcing consistency. By producing a process and enforcing it with info technology, the is feasible to develop a consistency across the whole organization. In our example, all stores in the sleeve chain can enforce the very same returns policy. And also if the returns plan changes, the adjust can be instantly enforced across the entire chain. 

Business process Reengineering

As organizations look to manage their processes to acquire a vain advantage, they also need to recognize that their existing means of doing things may not it is in the most efficient or efficient. A process developed in the 1950s is not going to be much better just because it is now supported by technology.

In 1990, Michael Hammer released an short article in the Harvard organization Review entitled “Reengineering Work: Don’t Automate, Obliterate.” This article put forward the thought that just automating a bad process does not make that better. Instead, companies should “blow up” their existing processes and also develop brand-new processes that take benefit of the new technologies and also concepts. He says in the advent to the article:<1>

Many of our task designs, work-related flows, regulate mechanisms, and also organizational frameworks came of age in a different competitive environment and also before the advent of the computer. They space geared towards higher efficiency and control. Yet the watchwords of the new decade are innovation and speed, service, and also quality.

It is time to stop paving the cow paths. Instead of embedding outdated processes in silicon and software, we have to obliterate them and also start over. We need to “reengineer” our businesses: usage the strength of modern-day information modern technology to radically redesign our organization processes in order to attain dramatic renovations in your performance.

Business process reengineering is not just taking one existing process and automating it. BPR is totally understanding the purposes of a procedure and then dramatically redesigning that from the ground up to attain dramatic improvements in productivity and also quality. However this is less complicated said than done. Most of united state think in state of how to execute small, local improvements to a process; complete redesign calls for thinking top top a larger scale. Hammer provides some guidelines for how to go about doing business procedure reengineering:

Organize about outcomes, not tasks. This simply method to architecture the process so that, if possible, one person performs every the steps. Instead of repeating one action in the procedure over and also over, the human stays associated in the process from begin to finish. Have those who use the outcomes of the procedure perform the process. Using info technology, many basic tasks are now automated, so we deserve to empower the human being who demands the result of the procedure to perform it. The instance Hammer offers here is purchasing: rather of having every room in the agency use a purchasing room to order supplies, have the offers ordered directly by those who require the supplies using an information system.Subsume information-processing work into the real job-related that produces the information. When one component of the firm creates info (like sales information, or payment information), it need to be handle by that very same department. There is no need for one part of the firm to process information created in another part of the company.Treat geographically dispersed resources as though they to be centralized. V the communications technologies in ar today, that becomes easier than ever before to not worry about physical location. A multinational organization does not need separate support departments (such together IT, purchasing, etc.) for each location anymore. Link parallel activities instead of integrating your results. Departments that work in parallel must be share data and communicating v each other throughout their tasks instead that waiting till each group is done and also then to compare notes. Put the decision points whereby the occupational is performed, and build controls into the process. The people who perform the work should have actually decision-making authority and the procedure itself need to have integrated controls using info technology. Capture info once, in ~ the source. Requiring info to it is in entered an ext than once reasons delays and errors. With details technology, an organization can capture it once and then do it accessible whenever needed. 

These values may it seems ~ like usual sense today, but in 1990 they took the business world by storm. Hammer gives instance after example of just how organizations enhanced their service processes by plenty of orders of magnitude without adding any new employees, just by an altering how they did things (see sidebar).

Unfortunately, business process reengineering obtained a negative name in many organizations. This was due to the fact that it was offered as an excuse for expense cutting the really had actually nothing to carry out with BPR. For example, numerous companies just used it together an excuse for laying off part of your workforce. Today, however, numerous of the values of BPR have been incorporated into businesses and also are considered part of good business-process management.

Sidebar: Reengineering the university Bookstore

The procedure of to buy the correct textbooks in a stylish manner because that college great has constantly been problematic. And now, through online bookstores such as Amazon competing directly through the college bookstore for students’ purchases, the college bookstore is under pressure to justify its existence.

But college bookstores have one big advantage over your competitors: lock have accessibility to students’ data. In other words, as soon as a student has registered for classes, the bookstore knows specifically what publications that college student will require for the upcoming term. To leverage this benefit and take advantage of brand-new technologies, the bookstore wants to implement a brand-new process that will make purchasing books through the bookstore advantageous to students. Though they may not be able to compete ~ above price, castle can administer other advantages, such together reducing the moment it bring away to discover the books and the ability to guarantee the the book is the exactly one because that the class. In stimulate to carry out this, the bookstore will must undertake a process redesign.

The goal of the procedure redesign is simple: record a higher percentage that students as customers the the bookstore. After ~ diagramming the existing procedure and meeting v student focus groups, the bookstore come up with a new process. In the new process, the bookstore makes use of information an innovation to mitigate the quantity of work-related the students need to do in bespeak to obtain their books. In this brand-new process, the bookstore sends the students an e-mail v a perform of every the books required for your upcoming classes. By click a link in this e-mail, the students deserve to log right into the bookstore, check their books, and also purchase the books. The bookstore will certainly then deliver the publications to the students.

College bookstore procedure redesign (click come enlarge)

ISO Certification

Many establishments now case that they space using finest practices as soon as it comes to service processes. In stimulate to set themselves apart and prove to their customers (and potential customers) that they are certainly doing this, these establishments are seeking out an ISO 9000 certification. ISO is an acronym for worldwide Standards organization (website here). This body specifies quality criter that organizations have the right to implement to present that they are, indeed, managing company processes in an effective way. The ISO 9000 certification is concentrated on high quality management.

In stimulate to obtain ISO certification, an organization need to be audited and also found come meet particular criteria. In the most straightforward form, the auditors perform the adhering to review:

Tell me what girlfriend do (describe the business process).Show me whereby it says that (reference the procedure documentation).Prove the this is what happened (exhibit evidence in recorded records).

Over the years, this certification has evolved and also many branches of the certification now exist. ISO certification is one method to separate an organization from others. Girlfriend can discover out an ext about the ISO 9000 standard here.


The introduction of info technologies has had a substantial impact on just how organizations design, implement, and also support company processes. From file management equipment to ERP systems, details systems space tied into organizational processes. Making use of business procedure management, organizations deserve to empower employees and leverage their processes for competitive advantage. Making use of business process reengineering, organizations deserve to vastly improve their effectiveness and also the quality of your products and services. Complete information technology with service processes is one way that information systems can lug an company lasting competitive advantage.

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Study QuestionsWhat does the ax business process mean?What room three instances of business procedure from a job you have had or an company you have observed?What is the worth in documenting a company process?What is one ERP system? just how does one ERP mechanism enforce best practices for an organization?What is just one of the criticisms of ERP systems?What is business process reengineering? how is it various from incrementally enhancing a process?Why walk BPR acquire a bad name?List the guidelines because that redesigning a business process.What is business process management? What role does the play in permitting a agency to identify itself?What does ISO certification signify?

ExercisesThink of a business procedure that you have had actually to do in the past. Just how would you paper this process? would a diagram make more sense than a checklist? record the process both together a checklist and also as a diagram.Review the return policies at her favorite retailer, then answer this question: What info systems perform you think would should be in place to support their return policy.If you to be implementing an ERP system, in which instances would friend be more inclined to modify the ERP to complement your service processes? What space the drawbacks of law this?Which ERP is the best? execute some initial research and compare 3 leading ERP solution to every other. Write a two- to three-page paper that compares your features.