INF10003

Introduction to Business Information Systems

Lecture 3
Organizational Process and Systems
Business Process
Decision Making Systems

Acknowledgement to Dr. Paul Scifleet, Dr. Jason Sargent & Dr. Adi Prananto for contributions to unit content.
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Lecture Objectives
At the end of this session you should be able to:
 Explain what is meant by business process management (BPM), its role and value.
 Apply the basic symbols of BPMN (business process modelling notation) to develop a business
process model.
 Demonstrate the value of business process modelling .
 Explain the importance of decision making for managers at each of the three primary
organisational levels, along with characteristics associated with decision making at each level.
 Define critical success factors (CSFs) and key performance indicators (KPIs), and explain how
managers use them to measure the success of MIS projects.
 Explain how managers can use Decision Support Systems to support decision making.

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Business Processes
• “A Business Process is a standardised set of activities that accomplish a specific task, such as
processing a customer’s order”. (Baltzan, Lynch & Fisher 2015, p. 118)
Activities
o Transform resources and information of one type into resources and information
of another type
o Can be manual, automated or a combination

https://www.youtube.com/watch?v=NXbGIilFidA (2.13 min)

The moment a customer places an order through a simple business process dozens if not
hundreds of other business processes are set into action.

• Value chain analysis:

views the company as a series of business processes that each add value to the product or service (i.e. a
value-chain is a network of value-creating activities)

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Business Processes
1. Setting the scope, creating a model of business process components
 Users review and adjust model
 “As-is” documents current process; it is changed to solve process
problems
 “to-be” model

2. Creating plan for Information System Components

 Analysis considering five elements of IS (hardware, software,
data, procedures, people) and required input, output, feedback

3. Creating and implementing a new business process

4. Create policy and procedures for ongoing assessment of process effectiveness

 Adjust and repeat cycles

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Business Processes
• Functional processes
– Activities in a single department or function
– Problem: may lead to ‘islands of automation’
• Cross-Functional processes
– Activities among many business departments
– Eliminate or reduce isolated systems and data
• Example: processes involved in Product return/exchange/or recall, Sales,
Finance, Marketing, Inventory, Operations, Logistics

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Business Processes
• Inter-Organisational processes
– Activities that cross organisational boundaries
– Business processes that involve activities in another business or organisation
• Usually as a part of Supply Chain Management (SCM)
• Example: Credit card transaction processing

– More difficult than functional and cross-functional systems

• Requires negotiation,
• Contracts, Litigation to resolve conflicts between organisations
» Example: tracking of purchase through outsourced delivery, e.g.
courier or Australia post website

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How does a business process look like?
• Business process mapping refers to activities involved in defining
– what a business entity does,
– who is responsible,
– to what standard a business process should be completed, and
– how the success of a business process can be determined.

• The main purpose behind business process mapping is to assist

organisations in becoming more effective.
• A clear and detailed business process map or diagram allows
consulting firms to come in and look at whether or not
improvements can be made to the current process.
Job Started Job Finished

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Using tools to visualize Business Processes
• Business process mapping, also known as process charts, has become much
more prevalent and understood in the business world in recent years. Process
maps can be used in every section of life or business.

• The Major Steps of Process Improvement using Process Mapping

– Process identification - identify objectives, scope, players and work areas.
– Information gathering - gather process facts (what, who, where, when) from
the people who do the work.
– Process Mapping - convert facts into a process map.
– Analysis - work through the map, challenging each step (what-why?, who-
why?, where-why?, when-why?, how-why?)
– Develop/Install New Methods - eliminate unnecessary work, combine steps,
rearrange steps, add new steps where necessary
– Manage process - maintain process map in library, review routinely, and
monitor process for changes

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Using the symbols used in flowcharts

• Simple Process Map

Start or End point

Decision

Process Step
Connector

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Using the symbols used in flowcharts
• Ordering a burger
Approach sales
counter

Look at
menu

Order
burger
Value Adding
Receive burger
Want yes (end)
Order fries
fries?
no

Want yes Pay cashier

Order drink
drink?
no

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Using the symbols used in flowcharts
• Ordering a burger (improved process)
Approach sales
counter

Look at
menu

Order
Combo meal

Pay cashier

Receive burger
(end)

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Using the symbols used in flowcharts
• Ordering a burger (benefits of the improved process)
 Less complex (customer perspective)
 Less complex from employee perspective
 Less time to complete order
 Less key presses by the operator
 Less errors
 Less complaints
 Improved turn around time from order to fulfillment.
 Open opportunities for other value adding features.

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Business Process Management
• Business processes will change over time:

– Improvements (often continuous, may include streamlining, adapting

etc.)
– Re-engineering (significant change)
– Automation

• Business Process Management (BPM)

• Systematic process of creating, assessing, and altering business processes
• Involves a sequence of well-managed steps

• https://www.youtube.com/watch?v=hAsRTy7UlN4

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Business Processes Modelling
• The activity of creating a graphic description (detailed flow chart or map) of
business processes and activities in their structured sequence
• Developed both for as-is models and to incorporate change in to-be models
• Today BPMN (business process modelling notation) is a standard notation for
creating business process documentation

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Basic Symbols of BPMN (Business Process Modelling
Notation)
Events Start event Artefact
Data object
End event
Transation
details
Timer event
Connections
Activities
Process flow
Activity Task
Message flow

Activity Sub process -- |Annotations can be added Annotations

+

Gateways Pool & Swim Lanes

Generic
Lane 1 Lane 2

+ Parallel Fork/Join
Pool

X Exclusive Decision/Merge

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Business Processes Modelling with Swim Lane
diagrams Activity

Start

End

Basic Structure of a Swim Lane Diagram

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Business Processes Modelling with Swim Lane
diagrams
Scenario for PR Consulting: The consultant submits to his manager an expense
report with information on costs he has incurred for the job. The manager
checks if the report is correct in terms of allowable expenditures and pricing. If
it is not correct the manager returns the report to the consultant. If it is correct
the manager forwards the report to the Data Entry clerk who enters the data
into the system.
Consultant
Expense Reporting

Manager
Data Entry Clerk

Starting a Simple Swim Lane Diagram on Expense Reporting

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Business Processes Modelling with Swim Lane
diagrams
Scenario for PR Consulting: The consultant submits to his manager an expense report with
information on costs he has incurred for the job. The manager checks if the report is correct in
terms of allowable expenditures and pricing. If it is not correct the manager returns the report
to the consultant. If it is correct the manager forwards the report to the Data Entry clerk who
enters the data into the system. Activity Data

Expense
Consultant

Data
Start
Expense Reporting

Manager

End
Data Entry Clerk

Decision
Gateway System

Finalising a Simple Swim Lane Diagram on Expense Reporting End

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 Business Processes Modelling with Swim Lane
diagrams
Data
Start Activity

Submit Submit
letter letter
Registration Registration

Write Reject
Application letter Application Write Reject
complete complete letter

Min Min
Standard Standard
met met

Suitable for Suitable for Write

Write Write Accept
program Reject Accept program
letter
letter letter

Decision
Gateway
End

Two Swim Lane Diagrams – as-is and to-be

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 Business Processes Modeling
Swim Lane Diagrams Vertical alignment Example

Start

Activity Take Manual

Application Form

Manual Add Manual

This is the result of Application Application
Fill Application Form Form Form To Bank
action System
This is the result of
Manual Record Add Manual
Application Form
action to Bank System

Digital Record

-- | Indicates this is an annotation End

Data
-- | This Swim Lane does not have a Gateway
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 Business Processes Modeling
Swim Lane Diagram – alternative to previous example, Horizontal alignment

Start
Customer

Filll in form Deliver form to

manually bank

Completed
form

Activity

Recieve Enter manual End

customer form form to System
Bank

Data
Digital
form

-- | This Swim Lane does not have a Gateway

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Business Processes Modeling
Swim Lane Diagram – another example, Vertical alignment

Start

Decision Activity
Gateway

Employee
Database
Data

End
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What can happen when a company fails to correctly model its transactions and even
more importantly its Business Processes?

One Tel: Australian Krispy Kreme & Starbucks – not Borders – Went bust in 2011
telecommunications company - Went successful in Australia
bust in 2001 • huge brick and mortar stores
• Rapid expansion, global • rapid expansion
ambitions • did not adapt to changing
• Complex Marketing – Billing • poor marketing – reliance on market
System couldn’t address the Brand name
level of complexity • Initially relied on Amazon for
• assumed knowledge of online presence
• Billing delayed up to 6 weeks
Australian customer
with inevitable impact on cash
flow

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Management Key Concepts
• Organisations
– People working together and coordinating their actions to achieve
specific goals
• Goal
– A desired future condition that the organisation seeks to achieve
• It may be to make a profit, raise more money for a charity or to improve
the benefit to members of a club

Adapted from Jones, G & George, J 2004, Essentials of Contemporary Management, McGraw-Hill Irwin, USA

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What is Management?
• Management
– The planning, organising, leading, and controlling of human and other
resources to achieve organisational goals effectively and efficiently.
• Managers
– The people responsible for supervising the use of an organisation’s
resources to meet its goals.

Adapted from Jones, G & George, J 2004, Essentials of Contemporary Management, McGraw-Hill Irwin, USA

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Organisational Resources
• All forms of resources are an organisations assets
• Human resources
– Not only people but their talent, skills and knowledge
• Financial resources
– Capital investments to support ongoing and long-term operations
• Physical Assets
– Land and Raw materials; office and production facilities, and
equipment
• Information
– Usable data and information

Griffin, R Management (9th Edition), Houghton Mifflin Company, USA, 2007

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Why do we need information?
• Why do we need the information?
– So managers at various levels can make informed decisions

• Thus the information has to be accurate, timely, worth its cost, barely sufficient
and relevant

• If it is not, then managers cannot make good decisions and hence they are at a
distinct disadvantage

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Utilising Information Systems
• Information Systems is increasingly used to help managers.
• How can Information Systems help?
– Provide a better cross-departmental view of their organisation.
– Make more and better information about the organisation available to
outsiders
– Empower employees at all organisational levels
– Help managers carry out their roles more effectively and efficiently
– Increase awareness of competitive opportunities
– Make the organisation more responsive to its customers

Adapted from Jones, G & George, J 2004, Essentials of Contemporary Management, McGraw-Hill Irwin, USA
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Management Information Systems – Systems Thinking

• Systems thinking is a way of looking at a problem holistically. It “requires you to

model the components of the system and to connect the inputs and outputs
among those components into a sensible whole - one that explains the
phenomenon observed”
• (Kroenke, Bunker & Wilson, 2014 p.8)

(Baltzan, Lynch & Fisher 2015, p.22)

Systems Thinking: A cautionary Tale (Cats in Borneo)

https://www.youtube.com/watch?v=17BP9n6g1F0 (3.09 min)

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Management Levels & Responsibilities
Strategic Senior Managers

Long-range planning
Strategic decisions

Middle Middle Managers

Implement goals
Make tactical decisions
Plan & control operations

Operational
Operational Managers
(First Line Managers)

Manage general
workforce
Monitor day-to-day
events
Sales Manufacturing & Finance & Human Make operational
& Marketing Production Accounting Resources decisions

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Decision Types
Strategic Novel, non-routine
decisions requiring
Approve capital budget; decide corporate objectives judgment and
insights

Middle
Only part of decision
Allocate resources to managers; develop a marketing has clear-cut
answers provided by
plan
accepted procedures

Operational
Routine decisions
Restock inventory; determine special offers to with definite
customers procedures

Sales & Manufacturing & Finance & Human

Marketing Production Accounting Resources

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Management Levels
• Organisations often have 3 levels of managers:
– Top Managers: Responsible for the performance of all
departments and have cross-departmental responsibility.
They establish organisational goals and monitor middle
managers.
– Middle Managers: Supervise first-line managers. They are
also responsible to find the best way to use departmental
resources to achieve goals.
– First-line Managers: responsible for day-to-day operation.
They supervise the people performing the activities
required to make the good or service.

Jones, G, George, Hill, C., J 2000, Contemporary Management, (2nd Edition), McGraw-Hill Irwin, USA

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How do Decision vary by Level?
• Decisions occur at three levels
– Strategic
• Broader-scope, organisational issues
– Executive information systems
– Managerial
• Allocation and utilisation of resources
– Management information systems
– Decision Support Systems
– Operational
• Day-to-day activities
– Transaction processing systems

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Structured vs Unstructured Decisions
• The type of decision making is different at each level
• Structured decisions
– Understood and accepted decisions
• Formula for computing reorder quantity
• Standard method for allocating furniture
• Unstructured decisions
– No agreed-on decision-making method
– Not standardised
• Predicting future direction of economy
• Assessing how well-suited an employee is for performing a task

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Types of Information Systems
ESS (Executive
ESS (Executive Support
Support Systems)
Systems)

Top (Strategic)

DSS
DSS(Decision
(DecisionSupport Systems)
Support Systems)

Middle Management MIS (Management Information Systems)

TPS (Transaction Processing Systems)

Operational Level Systems

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Transaction Processing Systems
• The basic business systems that serve one functional area at the
operational level of the organisation.
• A TPS is a computerised system that performs and records the daily
routine transactions necessary to conduct the business.

• sales order entry

• hotel reservation systems
• payroll
• employee record keeping
• shipping.

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Transaction Processing Systems
• Operational Level
• Tasks, resources, and goals are predefined and highly structured
• In one functional area

The decision:
Whether to approve a withdrawal.
• Current Balance?
• Adequate Identification?
This decision is so routine it can be easily
automated. All that must be determined is
whether the criteria are satisfied.

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Example: Inventory Management
• Inventory management IS assists with computing appropriate
reorder points (minimise stock while avoiding “stock-outs”).
• Model requires re-ordering the of stock when inventory drops to a
pre-determined re-order point.

Quantity

Reorder
Point

Lead Time Time

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Types of Information Systems
ESS (Executive
ESS (Executive Support
Support Systems)
Systems)

Top (Strategic)

DSS
DSS(Decision
(DecisionSupport Systems)
Support Systems)

Middle Management MIS (Management Information Systems)

TPS (Transaction Processing Systems)

Operational Level Systems

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Management Information Systems (MIS)

• Provide managers with reports or with on-line access to the

organisation’s current performance and historical records.
– Oriented almost exclusively to internal, not external events
– Concentrate on one functional area

• Primarily serve the functions of planning, controlling, and decision

making at the middle management level
– Again in one functional area

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Management Information Systems (MIS)

• Depend on underlying TPS for their data (the inputs).

• MIS summarise and report on the company’s basic operations in one functional
area.
– The MIS system is then used by middle level managers

• The basic transaction data from TPS are compressed and are usually presented in
long reports that are produced on a regular basis (e.g. weekly, monthly, etc).

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Management Information Systems (MIS)

• MIS provides routine periodical reports.

Laudon, C, & Laudon, J, 2003, Management Information Systems: Managing the Digital Firm, (8th Edition), Prentice Hall, USA

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TPS and MIS Report Compared
A TPS Report
 Each salesperson would receive a report showing a summary of transactions with
each of their clients.
 The salesperson would have some idea about how their sales are going and try to
target certain customers (a form of CRM)
An MIS Report
 A manager would get a summary of
sales for a region
 They examine the report and take
action on some matter such as employ
more staff or train staff in a certain
region

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Metrics: Measuring success
• A business undertakes many activities and projects

• Each activity/project has a goal/s

• How does a business know it is on track to reach these goals?

• The business needs metrics

• Measurements that evaluate results to determine whether a project is meeting its
goals

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Metrics: Critical Success Factors (CSFs)

• Crucial steps that companies perform to achieve their

goals and objectives and implement their business
strategies. For example:

– Create high-quality products

– Retain competitive advantages
– Reduce product costs
– Increase customer satisfaction
– Recruit and retain the best professionals

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Metrics: Key Performance Indicators (KPIs)
• The quantifiable metrics a company uses to evaluate progress towards its critical success
factors. For example:

– Turnover rates of employees

– Number of product returns
– Number of new customers
– Average customer spending

– https://www.youtube.com/watch?v=9Co8slUvYj0 (1.52min)
• KPIs help measure the progress of the CSF
• One CSF can have multiple KPIs

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Components of a DSS
A decision support system (DSS) is a computer system designed to provide assistance,
guidance and resources to allow someone to make informed and well supported
decisions.

A DSS collects, organises and

analyses business data in all
forms to facilitate quality
business decision-making for
management, operations and
planning.

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Components of a DSS
DSS applications are used in many diverse fields, including medical
diagnosis, credit loan verification, evaluating bids on engineering
projects, business and business management, agricultural production
as well as in government and public services areas.

A typical DSS consists of three basic components:

1. The database
2. The model base
3. The user interface.

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DSS User Interfaces
The user interface integrates the two into a consistent system and provides the
decision maker with controls for and possibly feedback about managing the data and
the models.

Most DSS systems utilise a

spreadsheet style environment
(Excel), with the flexibility of being
able to change or modify some key
points (for example, tax rate).

Look familiar?

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DSS User Interfaces
DSS systems generally utilise a dashboard. Any time Any place Intelligence
A mobile DSS uses dynamic web-based and mobile
dashboards and can interface with a host of intuitive
tools to turn data into actionable intelligence.

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Bibliography
 Baltzan P, Lynch K & Blakey P 2013, Business driven information systems, 2e, McGraw-Hill Australia, NSW.

 Baltzan P, Lynch K & Fisher J 2015, Business driven information systems, 3e, McGraw-Hill Australia, NSW

 Kroenke D, Bunker D & Wilson D 2014, Experiencing MIS, 3rd edn, Pearson Australia, Frenchs Forest, Australia

 Rainer Jnr RK, Turban E & Potter RE 2007, Introduction to Information Systems: Supporting and Transforming Business, John Wiley & Sons, Hoboken, NJ.

 Robbins S, Bergman R, Stagg I & Coulter M 2009, Foundations of Management, 3rd edn, Pearson Australia, Frenchs Forest, Australia.

 Rummler & Brache 1995, Improving Performance: How to manage the white space on the organizational chart, Jossey-Bass, San Francisco.

 Stair R, Moisiadis F, Genrich R & Reynolds G 2008, Principles of Information Systems, Thomson, Sth. Melbourne, Australia.

 Wood J, Chapman S, Fromholz M, Morrison V, Wallace J, Zeffane R, Schmerhorn J, Hunt J & Osborn R 2009, Organizational Behaviour: A Global
Perspective. 3rd edn, John Wiley & Sons, Brisbane, Australia.

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