Module 1

Business event risks

A business event occurring at the wrong time or sequence, A business event occurring without proper authorization, A business event involving the wrong internal agent, A business event involving the wrong external agent, A business event involving the wrong resource, A business event involving the wrong amount of resource, and/or A business event occurring at the wrong location.

Data repository

- a collection of data such as a database, is used to generate reports for information customers

Workflow

- refers to jobs or tasks performed by members of a workgroup to achieve some objective.

Margin

- the difference between total value and the cost of performing the value activities.

All businesses have 3 processes:

1) Acquiring and paying for resources, 2) Converting resources into goods and services for customers 3) Delivering goods and services to customers and collecting payment

Business Events in Procurement

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. • Discovering (e.g., research and development).

Extended enterprise business processes

Business processes are not only linked within an organization but business processes span organization boundaries.

Primary Activities

Inbound logistics, operations, outbound logistics, marketing and sales, and service.

Support Activities

Procurement, technology development, human resource management, and infrastructure

economic event

Recall that some business events are economic in nature because they increase or decrease the quantity of a firm's economic (financial) resources. It is important that you identify these during your analysis because measuring these events is critical if an organization is to comply with financial reporting regulations. For example, the receipt of goods from a vendor in exchange for a payment meets the definition of an economic event a purchase. Thus, a procurement process should include the event that reflects the transfer of goods ownership.

REAL

Resources, Events, Agents, and Locations

event trigger

The action that initiates or authorizes an event. Sample triggers include a previous event, input from an external entity, a decision by an internal agent, or a business need. For example, in many organizations, a Ship Customer Order event should only occur if triggered by the existence of a valid, completed negotiation of a customer order event. A Negotiate Customer Order event of a pizza store (such as the Golden Pizza) is triggered by a customer's decision to order pizza. A manager's decision to add personnel will trigger a Hire New Employee event.

When did each event occur?

This involves determining each event's time of occurrence, relative to other events in the process, as well as the absolute time of an event. The absolute time of an event refers to the date/time stamp for an event and how long it took for an event to transpire

Where did the event occur?

This involves identifying the location of each event. What can go wrong in executing the event? This involves identifying the risks associated with each event. At this point in our learning, we will focus on business risks and add in the risks associated with information and information processing later.

What kinds of resources were involved and how much was used?

This involves identifying the resource(s) (the what) that is the focus of the event. Think of potential and realized resource increases and decreases rather than only physical decreases or increases. For example, if someone orders inventory, what is the resource? It is what the customer ordered -- inventory. The level of inventory may not physically decrease as a result of the order, but the inventory available for other orders and potential sales is decreased

What happened?

This involves identifying the strategically relevant events within a business process. You should also strive to understand how each event is executed and why it is executed. This will aid in identifying opportunities for improvement

Business Process Analysis using REAL template as a starting point

Use REAL Business Process Modeling Template as a starting point for identifying and representing the essential characteristics that collectively describe business processes and events

Business Processes

a collection of related activities that combine different resources and inputs to create an output that is of value to the organization, its stake holders or its customers. These outputs may be products or services. - Acquiring and paying for resources - Converting resources acquired into goods and services - Delivering goods and services to customers and collecting payment - Managing the supply chain - Managing the customer relationship - Managing the product lifecycle management, Human Resouces - Managing accounting and financial services

Decision/Management Event

activities where management and other people make decisions about planning, controlling, and evaluating business processes -Managing resources - corporate governance - strategic management

Business Process Events

are the operating activities performed within a business process to provide goods and services to customers.

Primary Activities

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

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

decompose the processes to the level organization members and leadership want to plan, execute, control, and evaluate

Information Event

defined as any information processing activities that support the business events such as recording data about business events, maintaining reference data that are important to the organization, and reporting useful information to management and other decision makers

value chain analysis

describes the activities the organization performs and links them to the organizations competitive position. -Evaluates which value each particular activity adds to the organizations products or services -Ability to perform and manage the linkages between these activities is a source of comparative advantage

related

describes the roles of event resources, agents and locations. The Negotiate Customer Order event and the Inventory resource are related orders involve requests for inventory items. The Negotiate Customer Order event and the Salesperson agent are related if the salesperson executes the order (or receives credit for the event). The Negotiate Customer Order event and the customer agent are related orders are received from customers. A Deliver Inventory to Customer (Sale) event and the Inventory resource are related - the organization sells inventory items. A Deliver Inventory to Customer (Sale) event and the Customer agent are related the customer takes delivery of the inventory items. A Collect Payment from Customer event and the Cash resource are related a customer payment increases the cash resource balance. Collect Payment from Customer event and the Customer agent are related customers are the source of customer payments.

Support Activities

facilitate accomplishing the primary activities.

Margin

implies that organizations realize a profit margin that depends on their ability to manage the linkages between all activities in the value chain. -the organization is able to deliver a product / service for which the customer is willing to pay more than the sum of the costs of all activities in the value chain.

Agents

include humans performing work, but can also include machines that perform work on behalf of human operators (such as automobile assembly line robots or a web site that provides a customer service).

Procurement

includes the activities involved in acquiring, paying for, and maintaining the goods and services needed by an organization. - Human resources - Financial resources - Supplies - Inventories - PP and E - New Ideas (research) - Legal, power, telephone, ect

Order to Cash

includes the sequence of activities involved in delivering goods and services to customers for payment. Whenever one entity acquires and pays for goods and services, another entity is selling the goods or services and receiving payment.

Integrated value chain system

is comprised of the set of value chains in an entire industry and it encompasses the value chains of tiers of suppliers, channels, and customers

Duality

one event causes resource inflows while the other event causes resource outflows. For example, in the procurement process, modeling duality involves including an inflow of goods or services from a vendor event and also including a corresponding outflow event (such as payment to the vendor or a purchase return). Business events that include the increment and decrement of two resources

Conversion Business Process

process focuses on converting input (goods, services, labor, intellectual property, etc.) into final product goods and services that are offered for sale to customer.

Reporting events

provides information and measurements to support organization activities such as planning, controlling, and evaluating.

each business event typically involves

t least one resource, one internal agent, and one location (if an explicit location is identified). Some (but not all) events will also include at least one external agent.

Only a certain value of profit margin available

the difference of the final price the customer pays and the sum of all costs incurred with the production and delivery of the product/service. -Members of a value chain system can cooperate to improve their efficiency and to reduce their costs

Value Activities

the physical and technological activities preformed by an organization (primary and support, value chain)

Economic in nature

they increase or decrease the quantity of a firm's economic(financial) resources

A typical value chain analysis can be performed in the following steps

• Analysis of own value chain - which costs are related to every single activity • Analysis of customers value chains - how does our product fit into their value chain • Identification of potential cost advantages in comparison with competitors • Identification of potential value added for the customer - how can our product add value to the customers value chain (e.g. lower costs or higher performance) - where does the customer see such potential

Business Events in Procurement Process

• Identify need and internally request the purchase of goods or services by an authorized purchasing agent. • Enter into an agreement to order goods or services from a vendor. • Receive and inspect goods or services from a vendor. • Store and/or maintain goods. • Pay a vendor for goods or services. • Return goods to a vendor.

Business Events in Order to Cash

• Market goods or services to potential or returning customers - Negotiate (with a potential customer) the terms of an order for goods or services. • Select and inspect goods or services to be delivered to the customer. • Prepare goods or services for delivery to the customer. • Deliver goods or services to the customer. • Receive payment for goods or services from the customer • Negotiate the terms of, and possibly accept, a customer return of goods.

internal and external agents

Events involving the exchange of resources between organizations always involve both. For example, the internal role of a salesperson may be performed by a person or by a computer that interacts with the external agent (the customer). Sample external agents include customers, vendors, or shipping agents. Events internal to the organization involve an internal agent only