Ch. 5

business process perspective/process perspective

"big picture" view of a business from perspective of business processes performed; typically made up of cross-functional processes that transverse disciplines, departments, functions, and organizations

abstract

-Sloan Valve Company is family-owned global manufacturer of plumbing products -previous business strategy had launch of new products every year -new product development (NPD) process was core and strategic, but also slow, wasted resources, and inefficient -initially invested in enterprise system to automate internal processes --> successful implementation, problems continued because didn't fix the NPD process -NPD process redesign team led by IT manager -after 9 months, team proposed new end-to-end NPD with 6 subprocesses (ideation, business case development, project portfolio management, product development, product and process validation, and launch) -IS was an upgraded enterprise system that supported PLM -quality, timing, and output greatly improved

case 2: santa cruz bicycles

-innovating new tech for bikes -designing the bike manufacturing process is very challenging -Santa Cruz Bicycles digitally designs and builds mountain bikes and tests them under extreme conditions -designed and patented Virtual Pivot Point (VPP) suspension system, which absorbs shocks of rough terrain -one feature allowed rear wheel to bounce 10 inches without hitting the frame or seat, providing shock absorption without rider's discomfort -first few prototypes didn't work well -integrated PLM software because R&D team previously used computer-aided design (CAD) software that took too long and was costly -PLM system uses simulation and tracks all variables in few minutes, while CAD took 7 hours to run -also decreased its design-to-prototype process by hiring new master frame builder to build and test prototypes in house and investing in van-size machine that fabricates intricate parts -halved the time the design to shipping process from 28 months to 12-14 months

summary

-most business processes today have a significant IS component to them, either completely executed through software or an important information component complements the physical execution of the process -IS enable change by providing both the tools to implement the change and the tools on which the change is based; can impede change, particularly when the process flow is mismatched with the capabilities of the IS -to understand the role IS plays in business transformation, one must take a business process rather than a functional (silo) perspective -digital business models are disrupting traditional business models by enabling companies to better understand their customers, offer new and innovative products and services, and dynamically leverage ecosystems -agile business processes are processes that are designed to be easily reconfigurable, while dynamic processes are designed to automatically update themselves as conditions change; both require a high degree of IS, which makes the task of changing the process a software activity rather than a physical activity -incremental change with TQM and Six Sigma implies an evolutionary approach, while radical change with a BPR approach is more sudden; both can be disruptive to the normal flow of the business, so strong project management skills are needed -BPM systems are used to help managers design, control, and document business processes and ultimately the workflow in an organization. -an enterprise system is a large information system that provides the core functionality needed to run a business and typically implemented to help organizations share data between divisions; sometimes used to effect organizational transformation by imposing a set of assumptions on the business processes they manage -an ERP system is a type of enterprise system used to manage resources including financial, human resources, and operations -a CRM system is a type of enterprise system used to manage the processes related to customers and the relationships developed with customers -an integrated supply chain is often managed using an SCM system, an enterprise system that crosses company boundaries and connects vendors and suppliers with organizations to synchronize and streamline planning and deliver products to all members of the supply chain -a PLM system is a type of enterprise system designed to support product development from its first idea up through its end -IS are useful as tools to both enable and manage business transformation and the general manager must take care to ensure that consequences of the tools themselves are well understood and well managed

enterprise system (or enterprise information systems (EIS))

a set of IS tools that many organizations use to enable this information flow within and between processes across the organization; examples include ERP, SCM, CRM, and PLM

agile business processes

designed to be easily updated/changed

dynamic business processes

designed to update automatically; they reconfigure themselves and learn as the business utilizes them

six sigma

incremental data-driven approach to quality management for eliminating defects from a process; term comes from idea that if quality of all output from a process were mapped on a bell-shaped curve, the tail of the curve (aka six sigma from the mean) would be where there were less than 3.4 defects per million

process

interrelated, sequential set of activities and tasks that turns inputs into outputs and includes: -beginning and an end -inputs and outputs -set of tasks (subprocesses or activities) that transform inputs into outputs -set of metrics for measuring effectiveness

enterprise resource planning (ERP)

large, highly complex software program that integrates many business functions under a single app and typically integrated with a database

total quality management (TQM)

management philosophy in which quality metrics drive performance evaluation of people, processes, and decisions; its objective is to continually and incrementally improve the activities of the business toward the goal of eliminating defects and producing highest quality outputs possible

business process reengineering (BPR) (or radical process redesign)

radical change approach that occurs over a short amount of time

digital business models

research by Peter Weill and Stephanie Woerner suggests that business models have changed from value chains to digital ecosystems and enabled managers to have a razor sharp understanding of customer needs; their work suggests that digital business models fall into one of four types based on knowledge needed/known of the customer and business design and control of key decisions

workflow

series of connected tasks and activities performed by people and computers that together form a business process

customer relationship management (CRM)

set of software programs that supports management activities performed to obtain, enhance relationships with, and retain customers; include sales, support and service processes

middleware

software used to connect processes running in one or more computers across a network

supply chain management (SCM)

system that manages the integrated supply chain; processes are linked across companies with a companion process at a customer or supplier

product life cycle management (PLM)

systems automate the steps that take ideas for products and turn them into actual products; includes the innovation activities, NPD, and management, design, and product compliance; contain all the information about a product such as design, production, maintenance, components, vendors, customer feedback, and marketing

business process management (BPM)

systems provide a way to build, execute, and monitor automated processes that are intelligent, dynamic, and may go across organizational boundaries

workflow diagram

tool used to understand a business process which shows a picture, or map, of the sequence and detail of each process step

silo perspective (or functional view)

view of an organization based on self-contained functional units/departments such as manufacturing, engineering, logistics, sales, marketing, finance, accounting, and HR