ACCT 361 Chapter 2

What is a business event?

A business event is a single business activity within a business process. Examples of business events include paying employees, visiting customers, repairing machines, or training employees. When business events are executed, they trigger the need for information processes to record (document) business event data.

What is the difference between a business process and an information process?

A business process denotes business actions made by an organization (e.g. the organization sells products and collects cash or the organization purchases products and pays vendors) in an effort to provide goods and services to customers. Information processes are the mechanical or clerical data collection, storage, and output activities of the organization. [A business process is what an organization does, while an information process documents what an organization does.]

What is a data repository?

A collection of stored data.

List the three general types of business processes common to every organization.

Acquisition/Payment Process Conversion Process Sales/Collection Process

List and describe the steps in REAL business process modeling.

Step 1: Review the business process and identify the business events of interest Step 2: Analyze each event listed in step one to identify the event resources, agents, and locations Step 3: Identify the relevant behaviors, characteristics, and attributes of the events, resources, agents, and locations Step 4: Identify the direct relationships between objects Step 5: Validate the real business process model with business persons

List the essential characteristics that define business events.

Defining the essential characteristics of business events involves answering five questions: 1. What happened? 2. When? 3. What roles are performed and who/what performs the roles? 4. What kinds of resources were involved and how much was used? 5. Where did the event occur?

What is an extended enterprise process?

Extended enterprise processes are business processes and events that span across organization boundaries.

How can using a common language enable us to help organizations define their business processes?

If we want to help organizations define their business processes, we need to use a language that allows us to talk about all aspects of business processes - not just the financial aspects of some business events. The language we present in this chapter is based on understanding and modeling business processes using REAL Business Process Modeling (or REAL BPM). This common language is intended to help you focus on describing the world around you so you can learn more about business processes, their related information processes, and the decisions associated with them

How do you determine the scope of a business process model?

In your model, you should define the scope to the business processes and events that an organization wants to plan, execute (control), and/or evaluate.

Describe three types of information processes.

Information processes include recording data that describes an organization's business processes, maintaining or keeping the data about an organization relevant and up to date, and reporting useful information to those who execute and evaluate the business processes. For example, suppose you wanted to document a sale to a customer. You would perform a recording information process to document the sale in the organization's database. If you had a customer change of address or name change, you would perform a maintenance information process to update the address or name change, so that the data stored in the database remains valid and current. If someone wanted you to provide output about total sales, or customers involved in sales, you or other information users would execute a reporting information process to generate and display needed outputs.

What is an information process? How are information processes triggered?

Information processes include three activities: recording data about business events, maintaining other reference data that are important to the organization, and reporting useful information to decision makers. Each business event triggers a recording process needed to document the event. Occasionally, things happen which are important to an organization (e.g., a customer moves or an employee gets married) that trigger maintenance processes. Recording and maintaining processes create and maintain a repository of data that documents and describes an organization's business processes, including the people and resources associated with the processes. This data repository, or collection of data, is used to generate output for information customers. Reporting, the most demanding of the information system responses, provides information and measurements to support decision making activities (planning, controlling, and evaluating). Decision makers trigger reporting processes when they request information.

Describe the relationship between business processes and events.

Just like a play that is comprised of four separate acts, business processes are comprised of a discrete, related series of business events that management wants to plan, execute (control), and evaluate. Thus the term business process implies a group of business events, while the term business event implies a single business activity within a business process.

What is a learning organization?

Learning organizations are constantly searching for innovative ways to improve their business processes. Some people believe an organization's ability to learn may be "the single most important factor for creating a sustained competitive advantage."

What is REAL business process modeling?

REAL Business Process Modeling, attributed to Dr. Bill McCarthy, is a formal method of identifying and representing the essential characteristics of business processes and events. The title REAL is an acronym for Resources, Events, Agents, and Locations that collectively describe the essential characteristics of business processes and events.

Describe the acquisition/payment process. What are the organizational objectives of this process? List four sample acquisition/payment process events.

The acquisition/payment process includes business events involved in acquiring, paying for, and maintaining the goods and services needed by an organization. Objectives of this process include acquiring only those goods or services that an organization needs and can afford, receiving only those goods and services actually ordered or requested, paying only for goods and services actually received, and making sure that the goods and services acquired are properly maintained and available when needed. Organizations can acquire a wide variety of goods and services including: Human resources (e.g., people's time and skills), Financial resources, Supplies, Inventories, Property, plant, and equipment, New ideas (e.g., research and development), or Miscellaneous services (e.g., legal, power, telephone, protection, medical, financial, or custodial). Regardless of the type of good or service being acquired, the following are typical events in the acquisition/payment process: Request the good or service, Select a supplier, Order the good or service, Receive the good or service, Inspect the good or service, Store and/or maintain the resource, and Pay for the good or service. If you analyze a variety of acquisition/payment business processes, you will notice that some organizations may order the events differently, may use a subset of the events, or may add more detailed events. Nonetheless, the basic nature of the process is fairly stable across organizations and resources.

How can the "why" of an event be answered?

The answer to the why question requires you to define the strategy of the organization and how the strategy is accomplished. Strategies are operationalized by planning, executing, and evaluating business processes. Therefore, the why question is answered by defining where a particular event fits into the fabric of an organization's business processes and the event's relative importance in accomplishing the organization's strategy.

What is a model? What are the strengths and weaknesses of modeling?

The chapter is based on the concept of modeling a system before you build and implement it. The chapter discusses modeling approaches, thus it is important to think about what a model is and how it benefits you in building systems. A model is a pattern or scaled object that represents some existing object. Modeling a system before building allows you to better understand the phenomenon you are trying to support with an information system. In our case, those phenomena are business processes, the related information processes, and the decisions associated with them. You can use your model as a blueprint or roadmap for developing the actual system. Modeling is wonderful if you choose the proper phenomenon to model and if your model is well constructed and represents a thorough understanding of the phenomenon. Modeling is not so beneficial if you model the wrong phenomenon or if you model is poorly constructed.

How are business and information processes related?

Business process events trigger information processes to record and maintain business data. While performing activities in a business process, decision-makers need data to support their decision. This decision making triggers the need for information processes to report useful information. Decision-makers also need information process reporting to evaluate business processes.

Are the various business processes related or linked? Explain.

Business processes are linked together in two ways: by sharing common resources or by an event in one process triggering an event in another process. For example, the Receive Merchandise event (part of the acquisition/payment process) and the Ship Merchandise event (part of the sales/collection process) are linked by the common resource Merchandise. The Receive Merchandise event increases the quantity of Merchandise on hand, while the Ship Merchandise decreases the quantity on hand. Another example of a linking resource is Cash. Cash is the resource involved in the Receive Payment event (the sales/collection process) and provides funds to perform the Pay Vendor event (the acquisition/payment process). Alternatively, the sales/collection and conversion processes are closely linked by events. An Enter Customer Order event (part of the sales/collection process) will trigger the need for a Provide Service event (part of the conversion process). Furthermore, Provide Services event (part of the conversion process) triggers Receive Payment event (part of the sales/collection process).

What is a business process?

Business processes are the activities associated with providing goods and services to customers. Sample business processes include acquiring and paying for various resources (e.g. financing, human skills, materials and supplies, and plant and equipment); converting resources acquired into goods and services for customers; and delivering goods and services to customers and collecting payment. Just like a play that is comprised of four separate acts, business processes are comprised of a discrete, related series of business events that management wants to plan, execute (control), and evaluate. Thus the term business process implies a group of business events.

Describe the conversion process. What are the organizational objectives of this process? List four sample conversion process events.

The conversion process focuses on converting goods and services acquired into goods and services for sale. Conversion processes across, or even within, organizations are very diverse and depend on the type of good or service being produced, the technology and resources utilized, the restrictions of regulators, governments, society, or customers, and the preferences of customers and management. Some of the more general types of conversion processes include: Assembling, Growing, Excavating, Harvesting, Basic manufacturing (e.g., metals, woods, and chemicals), Finished manufacturing (e.g., tools, instruments, and components), Cleaning, Transporting, Distributing, Providing (e.g., power, water, protection, and communication), Educating, or Discovering (e.g., research and development). The diversity of conversion processes makes it difficult to propose a single generalized conversion process. Assembling a toy car is vastly different from defending a client in court or discovering a cure for a crippling disease. Furthermore, any one organization may utilize more than one type of conversion process to generate unique goods and services for customers. Nonetheless, at the heart of any conversion process is a sequence of business events that serves to convert goods and services acquired into goods and services for customers.

How far do you go when decomposing business processes into business events?

The extent to which business processes should be decomposed into business events is to the level organization members and leadership want to plan, execute, and evaluate. This implies that when you list the events that comprise a business process, you have included all events that an organizations wants to either plan for, control execution of, or evaluate.

What is the key to modeling business processes?

The key to modeling business processes is identifying business events. Care must be used to distinguish between business processes, information processes, and decision making.

Describe the sales/collection process. What are the organizational objectives of this process? List four sample sales/collection events.

The sales/collection process includes the sequence of events involved in delivering goods and services to customers for payment. Essentially, the sales/collection process is the mirror image of the acquisition/payment process. Whenever one organization or individual acquires and pays for goods and services, someone else is selling the goods or services and receiving payment. Although there is some diversity across the types of goods and services sold, the basic process typically involves the following events: Receive an order for goods or services, Select the good or service to be delivered, Inspect the good or service to be delivered, Prepare the good or service for delivery, Deliver the good or service, and Receive payment for the good or service. As with the acquisition/payment process, some organizations may order the events differently, may use a subset of the events, or may add more detailed events. Nonetheless, from an event perspective, the basic nature of the sales/collection process remains fairly constant across organizations and industries.

Explain what is meant by a primary value activity.

These are the events that create customer value and provide organization distinctiveness in the marketplace. They are viewed as the critical activities in running a business.

Explain what is meant by a support value activity.

These facilitate accomplishing the primary activities.