Using MIS 2e
Chapter 7: Business Process
Management
David Kroenke
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Study Questions

Q1 – Why is business process management (BPM) important to
organizations?

Q2 – How do information systems solve process problems?

Q3 – What role do information systems play in business processes?

Q4 – What are the most common functional systems?

Q5 – What are the problems of functional systems?



Q6 – What are the functions and characteristics of customer
relationship management (CRM) systems
Q7 – What are the functions and characteristics of enterprise
resource (ERP) planning systems?
Q8 – How do I choose the best system?
Chapter 7: Business Process Management
7-2
Q1 – Why is BPM important to organizations?


Business Process Management (BPM) is the systematic process of
creating, assessing, and altering business processes
Four stages of BPM:




1. Create model of business
process components; the “asis” model documents the
current process and users
review and adjust the model
2. Create system components;
uses five elements of IS
(hardware, software, data,
procedures, and people)
3. Implement business
process
4. Create policy for ongoing
assessment and effectiveness
Chapter 7: Business Process Management
7-3
Q1 – Why is BPM important to organizations?
 Functional processes involve activities within a single department;
e.g., accounting or human resources.
 Cross-functional processes involve activities among several business
departments; e.g., Customer Relationship Management (CRM)
integrates the activities of several departments including sales,
marketing, and customer support. The idea is not to improve existing
functional systems, but to create more efficient business processes
that integrate activities of all departments in a value chain
 Inter-organizational processes cross into multiple companies; e.g.,
SCM (Supply Chain Management)
Chapter 7: Business Process Management
7-4
Q2 – How do organizations solve process problems?


Object Management Group created a standard set of terms and
graphical notations for documenting business processes
That standard, called Business Process Modeling Notation
(BPMN) is documented at www.bpmn.org
BPMN Process Diagram of Top Level Business Process
Chapter 7: Business Process Management
7-5
Q2 – How do organizations solve process problems?
Expand the original process
diagram to show task
assignments for each of three
individuals
Now expand
the Assemble
and Ship
Equipment
activity
Chapter 7: Business Process Management
7-6
Q2 – How do organizations solve process problems?
This is the “as
is” process for
the Assemble
and Ship
Equipment
activity
The process
consists of
two parallel
flows; for
regular and
special
equipment,
respectively
Chapter 7: Business Process Management
7-7
Q2 – How do organizations solve process problems?
Business Process Management helps a business streamline its activities in
order to increase its margins by creating more efficient processes.
The process has been redesigned to create a single integrated picking list,
which presumably will eliminate one trip to the warehouse, reducing the time it
takes to select the equipment, thereby reducing cost and adding value
Chapter 7: Business Process Management
7-8
Q3 – What role do information systems play in business processes?

Even with the redesign there is a problem as the trip leader is not notified
if special equipment is not available; e.g.



A client requested and paid for a private tent. His request and payment were
processed by the Register Clients activity.
However, no such tent was available in inventory, and equipment and logistics
manager was supposed to notify trip scheduler, who was supposed to notify
client.
Tent did exist, but it had been damaged and out for repair. Trip scheduler did
not know it was under repair and allocated it to the client
Chapter 7: Business Process Management
7-9
Q3 – What role do information systems play in business processes?

Information systems, and database systems in particular, can play an
important role in implementing activities that link other activities


Thus create a database application to track equipment, location, and status
Add new activity “Process Equipment Database” that updates database from
Register Clients, Assemble & Ship, Restore Equipment activities
Linkages are the
interactions across
the value
activities.
Understanding a
company’s
linkages helps it
succeed in
designing or
redesigning its
business
processes.
Chapter 7: Business Process Management
7-10
Q4 – What are the most common functional systems?
Functional systems facilitate the work of a single department. These
systems evolved as extensions of the first system within an area; e.g.
payroll evolved into human resources.
Chapter 7: Business Process Management
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Q5 – What are the problems of functional systems?
Traditional functional systems provide benefits to individual
departments, but operate in isolation leading to data duplication,
inconsistency, and lack of integrated information. Isolated decisions
also lead to inefficiencies and the individual applications are
sometimes called islands of automation.
Thus there is a movement toward cross-functional systems that
integrate the activities of all departments in a value chain (network of
activity that implements business strategy); e.g., CRM and ERP
Chapter 7: Business Process Management
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Q6 –What are the functions and characteristics of CRM systems?


Customer relationship management (CRM) is the set of business
processes for attracting, selling, managing, and supporting customers.
These include: solicitation, lead tracking (presale), and relationship
management (post sale).
The difference between CRM systems and traditional functional
applications is that CRM addresses all activities that touch the customer
(before and after the sale) and provides a single repository for data
about all customer interactions.
Chapter 7: Business Process Management
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Q6 –What are the functions and characteristics of CRM systems?


A Customer Relationship Management (CRM) system has three
major components: solicitation, lead tracking (presale), and
relationship management (post sale).
The CRM is centered on an integrated customer database
Chapter 7: Business Process Management
7-17
Q7 – What are the functions and characteristics of ERP systems?

An Enterprise Resource Planning (ERP) System provides more
integration than a CRM by integrating primary value chain activities
with human resources and accounting support activities across the
enterprise.
Chapter 7: Business Process Management
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Q7 – What are the functions and characteristics of ERP systems?



ERP provides a crossfunctional view of the
organization with more
efficient business
processes. The potential
benefits of an ERP system
include: lead time
reduction, inventory
reduction, improved
customer service, and
higher profitability.
ERP implementation is
very expensive and time
consuming. Management
support is crucial!
The initial (and most
successful) vendor of ERP
software is the German
company SAP
Chapter 7: Business Process Management
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Q7 – What are the functions and characteristics of ERP systems?





The first task is to model the current business processes by comparing the
processes to the ERP blueprint (see next slide).
The company must then eliminate the differences. The organization converts its
data and procedures to the new ERP system.
Implementation requires that users be trained on the new processes,
procedures, and use of the ERP system features and functions.
The process of moving from separated, functional applications to an ERP
system is difficult, time consuming, and expensive. Employees resist the
changes in work responsibilities and normal habits
Because so much organizational change is required, all ERP projects must
have full support of the CEO and executive staff. Frequent two-way
communication is essential.
Chapter 7: Business Process Management
7-20
Q7 – What are the functions and characteristics of ERP systems?
Business process management
requires an organization to
develop a vision for the
organization that specifies
business objectives and to
identify critical processes that
are to be redesigned.
ERP vendors provides
hundreds of inherent processes
such as placing an order
These processes have been
tested and the organization
modifies its activities to
conform to these processes
The disadvantage is that the
processes may be different
from what is already in place
and require dramatic change.
Chapter 7: Business Process Management
7-21
Q8 – How do I Choose the Best System (Ask Independent Experts)


Gartner Research (www.gartner.com) is the world’s leading
information technology research and advisory company providing
technology-related insight necessary for clients to make the right
decisions, every day. Founded in 1979, Gartner is headquartered
in Stamford, Connecticut, U.S.A., and has 4,000 associates,
including 1,200 research analysts and consultants in 80
countries.
Forrester Research, Inc. (www.forrester.com) is an independent
research company that provides pragmatic and forward-thinking
advice to global leaders in business and technology. Forrester
works with professionals in 19 key roles at major companies
providing proprietary research, consumer insight, consulting,
events, and peer-to-peer executive programs. For more than 25
years, Forrester has been making IT, marketing, and technology
industry leaders successful every day.
Chapter 7: Business Process Management
7-22
Q8 – How do I Choose the Best System (UM Access to Gartner)
UM spends
significant money
for access to
Gartner Research.
It is available to
students and
alumni at no charge
(i.e., those with a
Cane ID)
Chapter 7: Business Process Management
7-23
Q8 – How do I Choose the Best System (Gartner’s Magic Quadrant)
The Magic Quadrant is
based on two axes:
Ability to Execute:
Summarizes factors such as
the vendor's financial
viability, market
responsiveness, product
UM
spends $75,000
development,
sales channels
base.
a and
yearcustomer
for access
to
Gartner Research.
Completeness
of Vision:
It is available to
Reflectsand
the vendor's
students
alumni
innovation, whether the
at no charge
vendor drives or follows the
market, and if the vendor's
view of how the market will
develop matches Gartner's
perspective.
Chapter 7: Business Process Management
7-24
Q8 – How do I Choose the Best System (Gartner’s Magic Quadrant)
UM spends $75,000
a year for access to
Gartner Research.
It is available to
students and alumni
at no charge
Chapter 7: Business Process Management
7-25
Q8 – How do I Choose the Best System (Gartner Hype Cycle)
Hype
a
YouThe
want
to Cycle
be on isthe
commentary on the pattern
“leading
edge”, not
of human response to
the
“bleeding
edge”
technology
and
provides a
graphical way to track
multiple technologies within
an IT domain or technology
portfolio. Hype Cycles
UM spends
$75,000 planners
enable technology
a year
for access
to compare
theirto
Gartner
Research.
understanding
of a
It is
available evolution
to
technology's
against
Gartner's
students
and
alumnianalysis
of no
the charge
technology's
at
maturity, to decide when to
invest in that technology.
Each point on a hype cycle
includes an estimate of the
expected time to
mainstream adoption.
Chapter 7: Business Process Management
7-26
Q8 – How do I Choose the Best System (Gartner Hype Cycle)
You want to be on the
“leading edge”, not
the “bleeding edge”
UM spends $75,000
a year for access to
Gartner Research.
It is available to
students and alumni
at no charge
Chapter 7: Business Process Management
7-27
Summary



Business Process Management (BPM) is the systematic process of
creating, assessing, and altering business processes
Functional systems facilitate the work of a single department and
evolved as extensions of the first system within an area; e.g., payroll
evolved into human resources. The problem with functional applications
is isolation.
Cross functional systems span the activities of many departments and
integrate the activities of an entire business process.




Customer relationship management (CRM) supports solicitation, lead
tracking, and relationship activities within the organization
Enterprise Resource Planning (ERP) integrates all of the organization’s
principal processes. It is a formal approach based on a set of inherent
processes.
Most organizations are a mixture of functional and integrated systems.
Inter-organizational processes cross into multiple companies
Chapter 7: Business Process Management
7-28
Summary (Continued)


Gartner Research and Forrester Research provide are competing
companies that provide independent analysis of technology and
technology trends
Access to Gartner research is free to UM students and alumni

The Gartner Magic (upper right) Quadrant identifies visionary companies
excelling in implementation

The Gartner Hype Cycle displays the time frame required for technology
implementation
Chapter 7: Business Process Management
7-29
Review: Select the appropriate term for each item
Michael Porter – Customer Relationship Management – Data Duplication
– Islands of Automation – Enterprise Resource Planning – SAP
– Business Process Modeling Notation – Business Process Management
1.
2.
3.
4.
5.
6.
7.
8.
9.
Problem with functional systems. Data Duplication
Individual applications (as opposed to cross functional applications)
are sometimes called. Islands of Automation
He defined the value chain. Michael Porter
Cross-functional system for attracting, managing, selling, and
supporting customers. Customer Relationship Management
German company known for ERP systems SAP
Cross-functional system that integrates an organization’s principal
processes Enterprise Resource Planning
Systematic and structured approach whereby an organization
rethinks its business processes. Business Process Management
Standard set of terms and graphical notations for documenting
business processes Business Process Modeling Notation
Company providing independent evaluation Gartner Research
Chapter 7: Business Process Management
7-30