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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

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.
slide4

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.
slide7

Decision/

managements

Events

Define and

often trigger

Operating

Events

Trigger

Trigger

Information

Events

EXHIBIT 2-3

Business Process Activities (Events)

slide8

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.
slide9

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?
slide10

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
slide11

EXHIBIT 2-5

REAK Business Process Model Matrix

slide12

Sell

merchandise

Receive

Customer

payments

EXHIBIT 2-6

McKell’s Retail Store REAL Model: Step 2

slide13

Merchandise

Sales

person

Sell

Merchandise

Register

Customer

Receive

Customer

payment

Cash

EXHIBIT 2-7

McKells Retail Store REAL Model: Step 3

slide14

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

slide15

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

slide16

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.
slide18

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

slide20

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)

slide21

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)

slide22

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. Owen Cherrington.2000. Accounting Information Technology, And Business Solutions. Irwin McGraw-Kill, New York-USA.
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