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CHAPTER 2. MODELING BUSINESS PROCESSES. Business Processes. Every organization has three basic business processes. Acquisition/payment Business Process. Organizations can acquire a wide variety of goods and series including: Human resources Financial resources Supplies Inventories

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CHAPTER 2

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Chapter 2

CHAPTER 2

MODELING BUSINESS PROCESSES


Business processes

Business Processes

  • Every organization has three basic business processes.

  • Acquisition/payment Business Process. Organizations can acquire a wide variety of goods and series including:

    • Human resources

    • Financial resources

    • Supplies

    • Inventories

    • Property, plan, and equipment

    • New ideas

    • Miscellaneous services

  • Conversion Business process. Focuses on converting goods and service acquired into goods and services for sale.

  • Sales/Collection Business Process. Includes the sequence of activities involved in delivering goods and service to customers for payments.


Are all processes and business activities created equally

Are All Processes and Business Activities Created Equally?

  • Porter illustrated that each firm is a “collection of activities that are performed to design, produce, market deliver, and support its product.

  • A value chain is defined as a set of business activities that add value or usefulness to an organization’s product or service.


Chapter 2

Revenue

Costs

Margins

Film Infrastructure

Human resources management

Technology development

Support

activities

procurements

Inbound

Logistics

Operations

Outbound

Logistics

Marketing

&

sales

Services

Primary activities

EXHIBIT 2-1

Porter’s Generic Value Chain


Porter s primary value activities include the following categories

Porter’s primary value activities include the following categories:

  • Inbound logistics

  • Operations

  • Out bond Logistics

  • Marketing and sales

  • Service

  • Porter’s support value activities include:

    • Procurement

    • Technology development

    • Human resource management

    • Firm Infrastructure


  • Business processes events

    BUSINESS PROCESSES EVENTS

    • Business Process is a series of activities intended to accomplish the strategic objectives of an organization

    • Devided each business process into three different event:

      • Operating events are the operating activities performed within a business process to provide goods and service to customers.

      • Information events include three activities: recording data about operating events, maintaining reference data that are important to the organization, and reporting useful information to management and other decision makers.

      • Decision management events are activities where management and other people make decision about planning, controlling, and evaluating business processes.

    • Workflow refers to jobs or task performed by members of a workgroup to achieve some objective.


    Chapter 2

    Decision/

    managements

    Events

    Define and

    often trigger

    Operating

    Events

    Trigger

    Trigger

    Information

    Events

    EXHIBIT 2-3

    Business Process Activities (Events)


    Chapter 2

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

    DEVELOPING A REAL BUSINESS PROCESS MODEL

    • Real business process modeling is a formal method of identifying and representing the essential characteristics that collectively describe business processes and events. Real business process model requires you to identify strategically significant business activities and essential characteristics about these business activities.


    Chapter 2

    EXHIBIT 2-4

    Essential Characteristic of Business Activities

    • What happened?

    • When did it occur ?

    • Who was involved and what roles did they play ?

    • What resources were involved and how much?

    • Where did the event occur ?

    • What can go wrong during execution of the event?


    Chapter 2

    • The essential characteristics of business in the answers to the following:

      • What happened

      • When did each event occur

      • What roles are performed and who/what agents perform the roles in executing each event

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

      • Where did the event occur

      • What can go wrong in executing the events


    Chapter 2

    EXHIBIT 2-5

    REAK Business Process Model Matrix


    Chapter 2

    Sell

    merchandise

    Receive

    Customer

    payments

    EXHIBIT 2-6

    McKell’s Retail Store REAL Model: Step 2


    Chapter 2

    Merchandise

    Sales

    person

    Sell

    Merchandise

    Register

    Customer

    Receive

    Customer

    payment

    Cash

    EXHIBIT 2-7

    McKells Retail Store REAL Model: Step 3


    Chapter 2

    Resource

    Internal

    agent

    Event

    External agent

    (if needed)

    Location

    (if needed)

    Resource

    Internal

    agent

    Event

    Location

    (if needed)

    External agent

    (if needed)

    EXHIBIT 2-8

    Template without Diamonds. Place Relationship Descriptions on the Lines


    Chapter 2

    Resource

    Internal

    agent

    Event

    External agent

    (if needed)

    Location

    (if needed)

    Resource

    Internal

    agent

    Event

    Location

    (if needed)

    External agent

    (if needed)

    EXHIBIT 2-9

    Template with Diamonds. Place Relationship Descriptions Inside the Diamonds


    Chapter 2

    Merchandise

    Sales

    person

    internal

    agent

    Involves

    Takes

    place it

    Sell

    Merchandise

    External

    agent

    Register

    Customer

    Result

    in

    Takes

    place it

    External

    agent

    Receive

    Customer

    payment

    increases

    Internal agent

    Cash

    EXHIBIT 2-10

    McKells Retail Store REAL Model: Step 5


    Concluding comments

    CONCLUDING COMMENTS

    • REAL concepts serve as a template for identifying and describing the essential characteristics of operating events.


    Chapter 2

    Resource

    Internal

    agent

    Resource

    Increment (+)

    Resource

    Decrement (-)

    Event

    External agent

    (if needed)

    Location

    (if needed)

    Resource

    Increment (+)

    Resource

    Decrement (-)

    Resource

    Internal

    agent

    Resource

    Increment (+)

    Resource

    Increment (+)

    Event

    Resource

    Decrement (-)

    Location

    (if needed)

    External agent

    (if needed)

    Resource

    Decrement (-)

    EXHIBIT 2-11

    Partial REAL Diagram for Linked Business Process Example


    Exhibit 2 14 cherry bee real models without relationship description

    Conversion Process

    Check

    hilves

    Supplies and Materials Acquisition/

    Maintenance/Payment Process

    Hive

    Human

    Labor

    Field

    Supply

    Barn

    Hire

    Workers

    Hive

    Workers

    Extract

    Honey

    Marc

    Store mat. &

    supplies

    Cherry Bee

    Store

    Materials &

    supplies

    Pay

    workers

    Materials &

    supplies

    Hive

    workers

    Cash

    Strain

    honey

    Hive

    workers

    Honey in

    process

    Marc

    Vendor

    store

    Purchase mat.

    & supplies

    Package

    honey

    Supply

    barn

    Packaged

    Honey

    Cerry bee

    store

    Sell

    Honey

    Store

    Honey

    Packaged

    Honey

    Vendor

    Marc

    Cherry Bee

    Store

    Pay for mat

    & supplies

    Collect

    Payment

    Cash

    Customer

    Cash

    EXHIBIT 2-14 Cherry Bee REAL Models (Without Relationship description)

    Labor Acquisition/Maintenance/

    Payment Process

    Sales/Collection Process


    Chapter 2

    Call on

    customer

    Submit bid

    Customer

    Representatives

    Services

    Negotiate

    Contract

    Customer

    Provide

    services

    Janitor

    Cash

    Receive

    payments

    Customer

    Payment

    personnel

    EXHIBIT 2-15

    REAL Model of a services Process (Without relationship descriptors)


    Chapter 2

    Greet

    victim

    shelter

    receptionist

    Interview

    Victim

    Interviewer

    Room

    Assign

    room

    Clothing

    Issue

    clothing

    Inventory

    clerk

    Personal

    care items

    Issue personal

    Care items

    Food

    Provide

    foot

    Personal

    counselor

    Goals

    resources

    sources

    Help set goals,

    identify resources

    Victim

    Discharge

    victim

    EXHIBIT 2-16

    REAL Model of a Not-for-Profit Organization (Without relationship descriptors)


    Chapter 2

    Coal

    Bake

    Fuel

    Baker

    Coke

    Blast

    Furnace

    Iron

    One

    Blast

    Blast

    Furnace op.

    Limestone

    Pig iron

    Finishing

    Furnace

    Mix

    Oxygen

    Finishing

    Furnace op.

    Alloys

    Steel

    ingots

    Rolling

    Mill

    Mill

    Finished

    steel

    Milling

    Operator

    EXHIBIT 2-17

    REAL Model of a Manufacturing Process (Without relationship descriptors)


    Reference

    Reference

    • Hollander, A. S. Eric L. Denna, J. OwenCherrington.2000. AccountingInformation Technology, And BusinessSolutions. Irwin McGraw-Kill, New York-USA.


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