Management Information Systems
Unit 4
Unit4
Structure
4.1 Introduction 4.2 Business Process Re – Engineering 4.2.1 Basics of BPR 4.2.2 Importance of BPR 4.3 Improving a process in BPR 4.4 Object Oriented methodology 4.5 BPR – Current Focus 4.5.1 Concept of Database 4.5.2 Data mining 4.5.3 Data warehousing 4.6 Summary TQs Answer to SAQs and TQs
Business Process Reengineering
4.1 Introduction
As more and more business functions gets added to the existing process, it becomes inevitable to think of alternative better processes . It may not be possible to always replace an existing system, but may be possible to enhance the existing system or redesign the system. A change of process is possible. For changing the process it is necessary to know all the conditions which affect the process and accordingly incorporate a change mechanism. The methodologies which are adopted to bring about changes are called reengineering.
Learning Objectives
In this unit, student will learn about i ) the fundamentals of business process reengineering (BPR)
47
Sikkim Manipal University
Management Information Systems
Unit 4
ii) iii) iv) v) vi)
importance of BPR various stages in BPR how to improve a process Business object model Current focus of BPR
4.2
Business process reengineering
4.2.1 Basics of BPR
The existing system in the organization is totally reexamined and radically modified for incorporating the latest technology. This process of change for the betterment of the organization is called as Business process reengineering. With Business process being reengineered, the organizations have to change the workflow and business procedures for efficiency in the organization. Latest software are used and accordingly the business procedures are modified, so that documents are worked upon more easily and efficiently. This is called as workflow management.
4.2.2 Importance of BPR
Business process reengineering is a major innovation changing the way organizations conduct their business. Such changes are often necessary for profitability or even survival. BPR is employed when major IT projects such as ERP are undertaken. Reengineering involves changes in structure, organizational culture and processes. Many concepts of BPR changes organizational structure. Team based organization, mass customization, empowerment and telecommuting are some of the examples. The support system in any organization plays a important role in BPR. ES, DSS, AI (discussed later) allows business to be conducted in different locations, provides flexibility in manufacturing permits quicker delivery to customers and supports rapid paperless transactions among suppliers, manufacturers and retailers. Expert systems can enable organizational changes by providing expertise to non experts. It is difficult to carry out BPR calculations using ordinary programs like spreadsheets etc. Experts make use of applications with simulations tools for BPR. Reengineering is basically done to achieve cost reduction, increase in quality, improvement in speed
Sikkim Manipal University
48
Management Information Systems
Unit 4
and service. BPR enable a company to become more competitive in the market. Employees work in team comprising of managers and engineers to develop a product. This leads to the formation of interdisciplinary teams which can work better than mere functional teams. The coordination becomes easier and faster results can be achieved. The entire business process of developing a product gets a new dimension. This has led to reengineering of many old functional process in organizations.
Self Assessment Questions1 : True or False
1. This process of change for the betterment of the organization is called as Business process re engineering. 2. Experts make use of applications with animation tools for BPR.
4.3
Improving a process in BPR
Any organization will have number of processes aligned with their business activities. Over years the processes may have to be improved. For any improvement it is necessary to first observe the existing process. Understand the processes, analyze the processes, and set up suitable performance parameter of the processes in order to measure the processes. Organizations will have to work on increasing the efficiency of the system in terms of information generated and how much of the information is utilized, what is the percentage of redundant information if any, speed of the process, service and quality. Business process reengineering helps in reorganization of the entire work force along with various flows, minimizing the wastages, and giving the system a new dimension. Organization can obtain very large payoff from their investments in information technology for their MIS. The process reengineering brings about a radical change in the flow of the information and related documents from one business function to another very efficiently. This process of management is called ‘work flow management’. Most of the companies want to improve the quality in every field, like in products, services and operations. Various methods to improve a process could be – a) A concept called as total quality management (TQM) is used, to make everybody and all the process in organization contribute towards better quality. The latest in quality management is Six sigma. It is a specific measure of quality, representing 3.4 defects per million opportunities.
Sikkim Manipal University
49
Management Information Systems
Unit 4
b) c)
Another method to improve is to benchmark. Benchmarking is setting standards for products, service and other activities and then measuring performances against the standards. Customer focus – a process may be redesigned to meet the customer demands in terms of service, product features and quality.
d)
Shorter cycle time – it eliminates many hidden costs arising out of errors in the process. Such errors may be trapped in the early stage of the process if the cycle time is reduced.
Self Assessment Questions2 : Fill in the blanks
1. 2. 3. Any organization will have number of ______ aligned with their business activities. Business process reengineering helps in ________ of the entire work force along with various flows, ______ the wastages, and giving the system a new dimension. A concept called as ________ is used, to make everybody and all the process in organization contribute towards better quality.
4.4
Object Oriented Methodology
An object contains values scored in instance variables within the object. An object contains deep level of nesting within itself governed by the parameters of the business process modeling. An object has mainly a procedure defined within and a set of values called attributes. The procedure are called methods which operate on the attributes. A process may be broken down into a set of procedures and attributes. This can then be represented as a business process object model. Object that contain the same types of values and the same methods are grouped into what are known as ‘classes’. A class is nothing but a definition of the object. An object is an instance of the class. It has the following advantages in management information systems over other conventional methods – a) new processes can be easily added in future whenever required. b) Processes may contain features called object which may be used as communication entities in a system. c) Object once designed for a particular usage may be reused for other purposes in a process. d) Attributes of the object are well secured. e) The object can be modified and expanded very easily without affecting the existing process.
Sikkim Manipal University
50
Management Information Systems
Unit 4
4.5
BPR – the current focus
Apart from the usual ways of managing a process in any business information system, it is necessary to enhance the value of the process and also the methods used in improving the process. Some of the concepts of information management for effective information systems are the traditional concept of database, the emerging concepts of data mining and data warehousing.
4.5.1 Concept of Database – Database is a data structure used to store organized information.
A database is typically made up of many linked tables of rows and columns. For example, a company might use a database to store information about their products, their employees, and financial information. Databases are now also used in nearly all ecommerce sites to store product inventory and customer information. Database software, such as Microsoft Access, FileMaker Pro, and MySQL is designed to help companies and individuals organize large amounts of information in a way where the data can be easily searched, sorted, and updated.
4.5.2 Data Mining Data mining is primarily used as a part of information system today, by
companies with a strong consumer focus retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among "internal" factors such as price, product positioning, or staff skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary information to view detail transactional data. With data mining, a retailer could use pointofsale records of customer purchases to send targeted promotions based on an individual's purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments.
4.5.3 Data Warehousing A data warehouse is a copy of transaction data specifically structured
for querying and reporting. The main output from data warehouse systems are either tabular listings (queries) with minimal formatting or highly formatted "formal" reports on business activities. This becomes a convenient way to handle the information being generated by various processes. Data warehouse is an archive of information collected from wide multiple sources, stored under a unified scheme, at a single site. This data is stored for a long time permitting the user an access to archived
Sikkim Manipal University
51
Management Information Systems
Unit 4
data for years. The data stored and the subsequent report generated out of a querying process enables decision making quickly. This concept is useful for big companies having plenty of data on on their business processes. Big companies have bigger problems and complex problems. Decision makers require access to information from all sources. Setting up queries on individual processes may be tedious and inefficient. Data warehouse may be considered under such situations.
4.6 Summary
After going through this unit, student would have learnt the the fundamentals of business process re engineering (BPR), its importance of BPR and the various steps in BPR. Also explanation is provided to understand how to improve a process. Business object model is introduced and the significance of business object models to MIS is explained.
Terminal Questions
1. Explain what is meant by BPR? What is its significance ? 2. Explain the object oriented methodology ? 3. How is Data mining and warehousing useful?
Answer to Self Assessment Questions(SAQ)
SAQ1 : 1True, 2False SAQ2 : 1processes, 2 reorganization , minimizing, 3) TQM.
Answer to Terminal Questions
1. Refer 4.2 2. Refer 4.4 3. Refer 4.5
Sikkim Manipal University
52
doc_929255087.pdf
Unit 4
Unit4
Structure
4.1 Introduction 4.2 Business Process Re – Engineering 4.2.1 Basics of BPR 4.2.2 Importance of BPR 4.3 Improving a process in BPR 4.4 Object Oriented methodology 4.5 BPR – Current Focus 4.5.1 Concept of Database 4.5.2 Data mining 4.5.3 Data warehousing 4.6 Summary TQs Answer to SAQs and TQs
Business Process Reengineering
4.1 Introduction
As more and more business functions gets added to the existing process, it becomes inevitable to think of alternative better processes . It may not be possible to always replace an existing system, but may be possible to enhance the existing system or redesign the system. A change of process is possible. For changing the process it is necessary to know all the conditions which affect the process and accordingly incorporate a change mechanism. The methodologies which are adopted to bring about changes are called reengineering.
Learning Objectives
In this unit, student will learn about i ) the fundamentals of business process reengineering (BPR)
47
Sikkim Manipal University
Management Information Systems
Unit 4
ii) iii) iv) v) vi)
importance of BPR various stages in BPR how to improve a process Business object model Current focus of BPR
4.2
Business process reengineering
4.2.1 Basics of BPR
The existing system in the organization is totally reexamined and radically modified for incorporating the latest technology. This process of change for the betterment of the organization is called as Business process reengineering. With Business process being reengineered, the organizations have to change the workflow and business procedures for efficiency in the organization. Latest software are used and accordingly the business procedures are modified, so that documents are worked upon more easily and efficiently. This is called as workflow management.
4.2.2 Importance of BPR
Business process reengineering is a major innovation changing the way organizations conduct their business. Such changes are often necessary for profitability or even survival. BPR is employed when major IT projects such as ERP are undertaken. Reengineering involves changes in structure, organizational culture and processes. Many concepts of BPR changes organizational structure. Team based organization, mass customization, empowerment and telecommuting are some of the examples. The support system in any organization plays a important role in BPR. ES, DSS, AI (discussed later) allows business to be conducted in different locations, provides flexibility in manufacturing permits quicker delivery to customers and supports rapid paperless transactions among suppliers, manufacturers and retailers. Expert systems can enable organizational changes by providing expertise to non experts. It is difficult to carry out BPR calculations using ordinary programs like spreadsheets etc. Experts make use of applications with simulations tools for BPR. Reengineering is basically done to achieve cost reduction, increase in quality, improvement in speed
Sikkim Manipal University
48
Management Information Systems
Unit 4
and service. BPR enable a company to become more competitive in the market. Employees work in team comprising of managers and engineers to develop a product. This leads to the formation of interdisciplinary teams which can work better than mere functional teams. The coordination becomes easier and faster results can be achieved. The entire business process of developing a product gets a new dimension. This has led to reengineering of many old functional process in organizations.
Self Assessment Questions1 : True or False
1. This process of change for the betterment of the organization is called as Business process re engineering. 2. Experts make use of applications with animation tools for BPR.
4.3
Improving a process in BPR
Any organization will have number of processes aligned with their business activities. Over years the processes may have to be improved. For any improvement it is necessary to first observe the existing process. Understand the processes, analyze the processes, and set up suitable performance parameter of the processes in order to measure the processes. Organizations will have to work on increasing the efficiency of the system in terms of information generated and how much of the information is utilized, what is the percentage of redundant information if any, speed of the process, service and quality. Business process reengineering helps in reorganization of the entire work force along with various flows, minimizing the wastages, and giving the system a new dimension. Organization can obtain very large payoff from their investments in information technology for their MIS. The process reengineering brings about a radical change in the flow of the information and related documents from one business function to another very efficiently. This process of management is called ‘work flow management’. Most of the companies want to improve the quality in every field, like in products, services and operations. Various methods to improve a process could be – a) A concept called as total quality management (TQM) is used, to make everybody and all the process in organization contribute towards better quality. The latest in quality management is Six sigma. It is a specific measure of quality, representing 3.4 defects per million opportunities.
Sikkim Manipal University
49
Management Information Systems
Unit 4
b) c)
Another method to improve is to benchmark. Benchmarking is setting standards for products, service and other activities and then measuring performances against the standards. Customer focus – a process may be redesigned to meet the customer demands in terms of service, product features and quality.
d)
Shorter cycle time – it eliminates many hidden costs arising out of errors in the process. Such errors may be trapped in the early stage of the process if the cycle time is reduced.
Self Assessment Questions2 : Fill in the blanks
1. 2. 3. Any organization will have number of ______ aligned with their business activities. Business process reengineering helps in ________ of the entire work force along with various flows, ______ the wastages, and giving the system a new dimension. A concept called as ________ is used, to make everybody and all the process in organization contribute towards better quality.
4.4
Object Oriented Methodology
An object contains values scored in instance variables within the object. An object contains deep level of nesting within itself governed by the parameters of the business process modeling. An object has mainly a procedure defined within and a set of values called attributes. The procedure are called methods which operate on the attributes. A process may be broken down into a set of procedures and attributes. This can then be represented as a business process object model. Object that contain the same types of values and the same methods are grouped into what are known as ‘classes’. A class is nothing but a definition of the object. An object is an instance of the class. It has the following advantages in management information systems over other conventional methods – a) new processes can be easily added in future whenever required. b) Processes may contain features called object which may be used as communication entities in a system. c) Object once designed for a particular usage may be reused for other purposes in a process. d) Attributes of the object are well secured. e) The object can be modified and expanded very easily without affecting the existing process.
Sikkim Manipal University
50
Management Information Systems
Unit 4
4.5
BPR – the current focus
Apart from the usual ways of managing a process in any business information system, it is necessary to enhance the value of the process and also the methods used in improving the process. Some of the concepts of information management for effective information systems are the traditional concept of database, the emerging concepts of data mining and data warehousing.
4.5.1 Concept of Database – Database is a data structure used to store organized information.
A database is typically made up of many linked tables of rows and columns. For example, a company might use a database to store information about their products, their employees, and financial information. Databases are now also used in nearly all ecommerce sites to store product inventory and customer information. Database software, such as Microsoft Access, FileMaker Pro, and MySQL is designed to help companies and individuals organize large amounts of information in a way where the data can be easily searched, sorted, and updated.
4.5.2 Data Mining Data mining is primarily used as a part of information system today, by
companies with a strong consumer focus retail, financial, communication, and marketing organizations. It enables these companies to determine relationships among "internal" factors such as price, product positioning, or staff skills, and "external" factors such as economic indicators, competition, and customer demographics. And, it enables them to determine the impact on sales, customer satisfaction, and corporate profits. Finally, it enables them to "drill down" into summary information to view detail transactional data. With data mining, a retailer could use pointofsale records of customer purchases to send targeted promotions based on an individual's purchase history. By mining demographic data from comment or warranty cards, the retailer could develop products and promotions to appeal to specific customer segments.
4.5.3 Data Warehousing A data warehouse is a copy of transaction data specifically structured
for querying and reporting. The main output from data warehouse systems are either tabular listings (queries) with minimal formatting or highly formatted "formal" reports on business activities. This becomes a convenient way to handle the information being generated by various processes. Data warehouse is an archive of information collected from wide multiple sources, stored under a unified scheme, at a single site. This data is stored for a long time permitting the user an access to archived
Sikkim Manipal University
51
Management Information Systems
Unit 4
data for years. The data stored and the subsequent report generated out of a querying process enables decision making quickly. This concept is useful for big companies having plenty of data on on their business processes. Big companies have bigger problems and complex problems. Decision makers require access to information from all sources. Setting up queries on individual processes may be tedious and inefficient. Data warehouse may be considered under such situations.
4.6 Summary
After going through this unit, student would have learnt the the fundamentals of business process re engineering (BPR), its importance of BPR and the various steps in BPR. Also explanation is provided to understand how to improve a process. Business object model is introduced and the significance of business object models to MIS is explained.
Terminal Questions
1. Explain what is meant by BPR? What is its significance ? 2. Explain the object oriented methodology ? 3. How is Data mining and warehousing useful?
Answer to Self Assessment Questions(SAQ)
SAQ1 : 1True, 2False SAQ2 : 1processes, 2 reorganization , minimizing, 3) TQM.
Answer to Terminal Questions
1. Refer 4.2 2. Refer 4.4 3. Refer 4.5
Sikkim Manipal University
52
doc_929255087.pdf