Components Of A Business Process

Published Date: 02 Nov 2017

Activities (Shown as rectangles)

Activities are a collection of related tasks that through receiving inputs, processes those inputs to produce outputs. Activities can be manual (activities done by people), automatic (activities done by computers) or a combination of both. An example of an activity is when a McDonalds cashier (person at the first window), takes your order (Input), inserts the order into the computer (Processing of input), the computer generates an invoice (Processing of input), the cashier receives payment for the order (Processing of input), the order is prepared (Processing of input) and handed over at the last window (Output).

Decisions (Shown as diamonds)

Decisions are questions that can be answered by giving a yes, or no answer. These decisions provide branching points within the business process which enable the data flow to either continue along the business process to the next activity or to be redirected to another activity should the decision be different. These decisions (gates) are usually linked to requirements within a business process to check certain rules before data can flow through the business process to its final destination (if it has been modelled that way). An example is where the McDonalds cashier asks the person ordering the take away, if they would like to upsize their meal for an additional R10. The person then has the decision to say yes, or no – which will have an impact or outcome on the final order prepared.

Roles

Roles (Shown in ovals below activities)

Roles are sets of procedures. Procedures are actions performed in a certain way by resources (people or computers). In other words, roles are the procedures given to resources to ensure that they execute the activities within a given process. An example would be the role of the McDonalds cashier. She/he could have several activities that form part of their role within the process. These activities could include the taking of orders, generating of invoices, receipt of payments, following up on orders etc., all this while giving customers friendly service.

Resources

Resources

Resources (Not graphically shown but assigned to roles)

Resources are the people, computers (programs), facilities and often money that are assigned to roles for the fulfilment of the required activities. McDonalds can for example in off-peak times, only use one cashier lady/guy who can take orders, receive payment, and give food to clients. While in peak times two or three additional people might be required. Similarly two or three kitchen staff might be needed in off-peak times and five or six in peak times.

Repository

Repository (Shown as scrolls)

Repositories are collections of business records. It can take the form of a computer programme, a database, an excel spreadsheet, a book, a list etc. Repositories are used to hold the institutional memory of the organisation and usually form the basis for the creation of management information. For example the repository in the computer system of McDonalds, could give a list of what people have ordered in the last month. With further analysis and interpretation of this information, McDonalds should be able to see which meals their customers prefer, when they buy and how much they buy.

Data Flow

Data Flow (Shown as arrows)

Data is referred to as facts and statistics collected for referencing or further analysis. All business processes include data flows (flows: the moving of data in a logical manner), which is the movement of a data item from one activity to another, or to a repository where it is stored for further use. A typical data flow in McDonalds could be the order captured in the computer that gets transferred to the kitchen printer/screen to initiate the activity of preparing the ordered food.

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2.2. Why is it important that we develop information systems?

Importance of developing Information Systems

Information systems form an important part of the effectiveness and efficiency of an organisation. It is used to support the business processes of the organisation and assist in the implementation, and execution of key activities, storing of data used for later analysis, and by controlling the flow of data from its entry point to its intended destination (could be a data repository, activity or a decision point).

Information systems can also handle integral parts of the business processes that people within organisations normally would have to handle, but causes possible risks and inefficiencies of the business. Developing and implementing information systems also usually comes at an initial cost, but could benefit the organisation by saving associated costs of resources (people) who have to complete the activities manually. The return on investment for the implementation of the information system could have huge time and cost savings, should the organisation feel that the long term benefits outweigh the costs of having the work done manually. They could decide to have a blended approach, where some areas of the business are automated, and others done by people. It is the correct blend of people and information systems that could have a lasting effect for organisations, and ensure an effective and efficient operating organisation. An example of this could be

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2.3. Briefly discuss the five (5) characteristics of good information.

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5 Characteristics of Good Information

Information can be defined as the creation of knowledge as a result of processing data (recorded facts and/or figures), through the ordering, summing, grouping, averaging, comparing, etc. An example of this could be when someone generates a pivot table in Microsoft Excel on a set of data within a table. We can therefore say that we need to do something to data in order to create useful information. Information can be very useful in the making of important decisions regarding the organisation’s focus and or core business.

Not all information is equal, as some information could be better than other information. We can differentiate good information from bad information by looking at 5 characteristics of good information.

Information should be accurate

What constitutes good information is the use of correct, complete and accurate information. This information should also be correctly processed/packaged, to ensure that the information contained within the system is correct and can be interpreted accurately. The integrity of the system and the information contained therein should not be questionable, and should be based on facts derived from data.

Information should be timely

In organisations today, we are bound by deadlines, pressing priorities and quite often many ad-hoc requests for information, to be able to effectively run the organisation, manage stakeholder expectations and ensure a sustainable business. It is therefore very important that information be delivered on time and accessible to all key stakeholders. A good example is when an organisation needs to deliver a quarterly financial report, to ensure that the information not only be made available for the generating of the report prior to the end of the quarter, but that the report itself be delivered on time (perhaps within a week of the end of the quarter), to ensure that management can make the necessary decisions about the running of the business, or to identify where they can save unnecessary costs.

Information should be relevant

Organisations have varying levels of management and it is very important that information be relevant within the context of each of these managerial levels. A head of unit will be interested in information about how the organisation has performed in line with its strategic objectives, whereas a senior or middle manager might be interested in the total sales for a quarter against the predicted or forecasted sales. Information should also be specific to the area of management. For example an Operations Manager will be interested in information about how the operational aspects of the organisation is performing, while he/she may not be very interested in the branding or marketing of the organisation.

Information should be sufficient

Because businesses today need to be able to make decisions, and make them quickly, information given to management should not only be on time, and relevant, but should be just enough to be able to make the necessary decisions. So even though the information given to a Financial Manager should include all details about the organisations finances, from individual sales, to purchases of sock etc., the information should be just sufficient to ensure that the Financial Manager can make the necessary decisions about the management of the organisation and its finances. This information can take the form of a summarised and rolled up version of the detailed finances, to show how much product was purchased, vs. how much sales were made in the last year, to how much profit the organisation has made.

Information should be worth its cost

Turning facts and figures into usable information always has a cost associated with it. Whether it is a person who generates information through the analysis of data or whether it is the development of an information system to do the analysis for us – it all costs organisations money. In other words, the value of generating this information should be greater than or equal to its cost, else it might not be worth the organisations time or money. There needs to be an appropriate relationship between the value and cost of information, and needs to consider all aspects of the business, and ask the necessary questions – What is the value of the information, and what does this information cost.

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2.4. Briefly describe the process implementation of competitive advantage.

The process of implementation of competitive advantage

Organisations can further increase their competitive advantage by addressing the following principles:

Lock in customers and buyers – this can be done by making it extremely difficult or expensive for customers and buyers to change to another provider. A very important business strategy called "switching costs" gives organisations the advantage of retaining existing customers, as it will be too expensive for customers to switch products or services to a different provider. A strong brand identity, customer loyalty and high switching costs will ensure that customers and buyer continue to support the products and services of your organisation.

Lock in suppliers – Similarly organisations can ‘lock in suppliers’, by making it very difficult for suppliers to change to other organisations. Business processes will ensure that communication with suppliers and everyday operations will be made effective and efficient, and ensure that stock is delivered, stock is on time, has been paid for, and will continue to build strong, lasting relationships with suppliers.

In the computer industry, both hardware and software, ‘vendor lock-in’ can be used to describe situations in which there is a lack of compatibility or interoperability between equivalent components. This can make it difficult to switch systems at many levels; the application program, the file format, the operating system, or various pieces of computer hardware ranging from a video card to a whole computer or even an entire network of computers. Note that in many cases, there are no technical standards that would allow creation of interoperable systems. At nearly any level of systems architecture, lock-in may occur. This creates a situation where lock-in is often used as leverage to get market share, often leading to monopolies and antitrust actions. [i] 

Raise barriers to market entry – An example of ‘barriers to entry’ within a certain industry could be due to an organisation’s technological patents (the sole right to make, use, or sell something) or patents on business processes (a unique or special way to create or sell a product/service).

Establish alliances – Another means for creating a competitive advantage is to establish alliances. Other examples are to establish standards within the organisation’s area of practise, promote the awareness of the product and its needs, develop the market size, reduce purchasing costs, and provide other benefits.

Reduce costs - Organisations these days can gain a competitive advantage through the creation of new or unique products and/or services, or by differentiating their product or service from other organisations. But there are also other areas where organisations can gain a competitive advantage, through implementing clear, and well-defined business processes, and improving the efficiency of the organisation. This is usually done by automating allot of the manual processes, and managing it with the use of an information system. This in turn saves the organisation much needed funds, which would otherwise be spent on human resources, and increases the organisations profitability. These costs can be used for the further advancement of the organisation, through the development of organisational infrastructure, increasing the organisations competitive advantage even further.

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Question 3

3.1. Define key and foreign key within a database and explain how metadata makes databases more useful.

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Figure : Primary Keys and Foreign Keys [ii] 

Before we explain how metadata makes a database more useful, let’s first define what a database is, what a key is and what a foreign key is.

What is a database?

A database can be described as self-describing collection of integrated records. It is integrated because relationships exist among rows of data within the database. Some people also say that a database is an organised set of data (tables) contained within a computer or database management system, which people can access in various ways to query and or manage the data within it. In other words we can also say that a database is a collection of tables which have relationships between different rows, and columns. Databases also include meta-data, which is a special set of data that describes and gives information about other data and/or the structure of the database.

What is a key?

A key is an attribute within a column or group of columns that identifies a unique row in a table. A database key is an attribute utilized to sort and/or identify data in some manner. Each table also has a ‘primary key’ which uniquely identifies records.

What is a foreign key?

A foreign key is defined as a column or group of columns used to represent relationships. The values of a foreign key matches values of a primary key in a different (so called ‘foreign’) table. Foreign keys are utilised to cross-reference data between relational tables.

What is Metadata?

The fact that a database is "self-describing" means that a database contains, within itself, a description of its contents. The meta-data from a table within SQL Server database describes several things about the table and the data contained within it. Figure 3 below shows an extract from a SQL Server 2012 table named ‘Invoices’, with meta-data describing what data resides in its columns (foreign key – ifkContractID, Contract Num, sProject No, Invoice date, etc.), it shows which ‘data types’ are allowed within the table, and whether the table will allow ‘NULL’ fields. Each column could also have different properties, and/or specifications around how the data within it will be structured, how it will be stored and how it will be managed.

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Figure : Meta-data of a SQL Server table

How meta-data makes databases more useful

We can therefore say that it is due to the metadata within a database, that databases have become so much more effective to use than excel spreadsheets or lists. It is because of metadata, that no one needs to guess or try and remember, or even record what is in the database, as we can view this information at any time by looking at the database properties.

Meta-data provides a more structured and controlled way in which a database will store and recall data, making it far more effective than other data repositories. It also makes data more reliable, and increases the integrity of the data.

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3.2. Explain how information systems vary by scope.

How Information Systems vary by Scope

Scope

Amount of Users

Procedures

Problems

Data Duplication

Personal

1

Informal

Isolated

Among employees

Work Group

10 - 100

Understood within group

Solutions within group

Among Departments

Enterprise

100 - 1000

Formalised

Solutions affect enterprise

Minimised

Interenterprise

1000s

Formalised

Solutions affect multiple organisations

Controlled

Figure : How Information Systems vary by Scope

How Information Systems vary by Scope

If we have a look at Figure 4 above, there are different characteristics we can identify within an information system, which will highlight how information systems vary by scope.

Amount of Users:

Personal information systems are used by a single user.

A workgroup information system is a system that is shared by a group of people for a particular purpose and could have 10 – 100 users.

Enterprise information systems span entire organisations and support activities of many different departments. These systems could have 100-1000 users.

Interenterprise information systems are shared by two or more independent organisations and could have thousands of users.

We can therefore identify that the amount of users increase substantially as the scope moves from a personal to an interenterprise information system.

Procedures:

Because a personal information system only has one user, procedures are not documented or formalised in any manner.

For a workgroup information system, all users in the group have to understand the procedures, and often have procedures documented and/or training is given for the group to clearly understand these procedures.

Enterprise information systems have formalised and very well documented procedures and all users have to undergo formal procedure training.

Interenterprise information systems have formalised procedures and training for users is mandatory.

We can therefore identify that as the size and capacity of the information system increases, procedures become formalised and well documented, and training becomes an absolute must for all users.

Problems:

Personal information systems do not have any major problems that cannot be quickly resolved by the individual user.

Problems within a workgroup information system often resolved with the context of a group. When two or more workgroups within an organization duplicate data, the duplication can cause huge problems for the organization.

Solutions to problems within an enterprise information system, usually involves several different departments.

Within interenterprise information systems, problems are usually solved through focussed meetings, service provider contracts, and sometimes by lawsuit.

Problems affect a much larger group of people or organisations, and become much bigger as you move from personal information systems to interenterprise information systems.

Data Duplication:

Data within a personal information system can usually have duplication and is usually not very important.

Duplications made within the workgroup information system can be identified and addressed by the responsible group.

A major advantage of an enterprise information system is that it can eliminate all data duplication, or allow it to happen. Any changes to duplicated data is managed carefully to maintain consistency.

Within interenterprise information systems, data is often duplicated between the different organisations, but is carefully managed.

Control and effectiveness in managing the duplication of data increases as the size and capacity of the information system increases, systems become more complex as the amount of data increases.

Capacity to change:

When changes need to be made within a personal information system, it can be done easily and quickly, without any real problems.

Making any changes within the workgroup information system is allot more complicated than a personal information system, as a large group of members within the group need to be informed and trained on any changes made.

Changes within the enterprise information system are very difficult to change, as there is usually no clear boss for the system, no collaborative management to address any problems, difficult to manage and develop gaps within the system etc.

Because of the nature and complexity of interenterprise information systems, making any changes could be very difficult, and very costly.

We can therefore say that it becomes increasingly more difficult for an organisation or organisations to adapt to changes as the information system becomes larger, and more complex.

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3.3. How can an introduction to management information systems assist you to obtain non-routine skills?

Obtaining non-routine skills through an introduction to management information systems

There are four key non-routine skills that one can learn by working through the introduction to managing information systems, as the content of this introduction will require a every topic therein will require you to apply and practise them.

Abstract Reasoning

Abstract reasoning is the ability to make and manipulate models. This involves the five components of an information system, how to use these models to assess the scope of any new information system, manipulate and construct models, create date models, and how to make process models.

Systems Thinking

Systems’ thinking is the ability to model the components of a system, to connect the inputs and outputs of the components into a practical manner that reflects the structure and dynamics of the system as a whole. This skill will enable you to be able to discuss and illustrate systems, critique systems; compare alternative systems, and apply different systems to different situations.

Collaboration

Collaboration is the activity of two or more people working together to achieve a common goal, result, or work product. It is a process of giving and taking critical feedback. To be able to challenge a proposal made by a department or manger without stepping on anyone’s toes, and when you do, to be able to manage the resistance.

Ability to Experiment

Experimentation is about making a reasoned analysis of an opportunity, envisioning potential solutions, evaluating those possibilities, and developing the most promising ones, consistent with the resources you have.

The management information systems course is the most important course in the business school because:

1. It will give you the background you need to assess, evaluate, and apply emerging information systems technology to business.

2. It can give you the ultimate in job security—marketable skills—by helping you learn abstraction, systems thinking, collaboration, and experimentation.

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Question 4

4.1. Name and briefly describe each of the four stages in Business Process Modelling.

Four stages in Business Process Modelling

Businesses constantly evolve and change as business requirements change to adapt to the external environment and other factors. The business processes that support the business must therefore evolve together with the changing needs of the business. They have to change without shutting the business down, and because business processes are critical, complex and dynamic in structure, business process management (BPM) can be used to address this complex problem. Business process management (BPM) is a systematic approach that a business can use in order to create, evaluate (assess) and alter business processes. The BPM process has four stages:

Figure : Stages of the BPM Cycle

Model Processes: The first step in this process is to create a model of the business process. Users or experts of the particular area of work will adjust and evaluate the model, until it fits their need – this is usually referred to as an ‘as-is model’, that shows how things are currently done, which can then later on be adjusted to improve problematic processes.

Create Components: Once you have a model, you can start to create the components. These components have the five elements of every information system (hardware, software, data, procedures, people), with some being completely automated (instructions of software to hardware), some being completely manual (procedures for people), and others a combination of the two.

Implement Processes: The organisation will take the outputs from the first two steps, the model and components, and implement the business processes as required.

Assess Results: Well organised and geared organisations, review these business processes on an on-going basis for improvement in the effectiveness and efficiency of the organisation. They do this through the creation of policies, procedures and committees that continually review business processes.

When the need for any changes arises, the business will model new and adjusted processes, and the whole cycle will start again. Because these changes of business processes are inevitable, organisations can either plan for these changes, or change as-and-when the needs arises. It will be much better for organisations to plan for changes, and ensure their business processes always remain as streamlined as physically possible.

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4.2. By using the five-component model, describe three (3) different types of information systems that are used in business processes.

Figure : Five Component Model

Three different types of information systems that are used in business processes

Management information system (MIS), is the development and use of information systems that help a business achieve their goals and objectives. The definition has three key elements:

The development and use of information systems

Information Systems (computer-based information system)

The business goals and objectives

By using the five component model, we can say that it takes people with the guidance of procedures to be able to generate data, develop and design software and maintain hardware. Furthermore we can say that through using information systems, business processes managed by people and procedures can be automated, by means of software giving instructions to hardware. When an organisation has these five components working effectively towards efficient and effective business processes, the goals and objectives of an organisation can be met.

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Question 5

5.1. Name four (4) categories of business intelligence systems, and describe the basic characteristics of each.

Categories of Business Intelligence Systems

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Reporting Systems

Reporting Systems are used to integrate data from multiple sources, and can process data in a variety of different ways. Examples of these types of systems could be PowerPivot (an add-in to Microsoft Excel), where a person can integrate multiple different data sources (Excel, SQL database, SharePoint Lists, flat files etc.) by creating relationships between these datasets. Once this is done, you can draw pivot tables or pivot charts (by grouping, summing, comparing, averaging, and many more functions) that include data across all the different data sources. These systems allow users to report across many different data sources, and can deliver accurate information, deliver the right type of information, to the right person, at the right time.

Data Mining Systems

These systems use complex algorithms and techniques to find patterns, trends and relationships within historical data that cannot be found through standard reporting techniques. They use these techniques to discover patterns and relationships and improve decision making by anticipating certain events, or to predict future outcomes. An example of this is where auditors use data mining systems for reviewing historical records to identify fraud and corruption or where fraud-like actions could possible take place.

Knowledge Management Systems

These systems are all about creating value within an organisation, through the collecting and sharing of human knowledge of products (intellectual capital), product uses, best practises, lessons learnt, and other important knowledge with management, employees, stakeholders, clients and even the general public. An example of knowledge that is shared by a knowledge management systems are case studies. These case studies can enhance the decisions made by people within the organisation, reduce costs, improve client relations, and increase the organisations responsiveness to clients.

Expert Systems

These systems apply many if/then rules, to diagnose a specific situation and give a recommendation, or answer (usually designed by an expert) to questions or queries. Operational Systems can therefore have thousands such rules to enable non-expert users to be able to make the necessary decisions without having to consult an expert. These systems improve decisions made by non-experts, by processing expert knowledge in a usable way.

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5.2. Briefly summarise each of the problems that occur when using operational data for business intelligence systems.

Problems from using operational data for business intelligence systems

There are 6 possible problems that occur when using operational data for business intelligence systems. These include:

Dirty Data – This is problematic data, where the values entered for a specific column is irrelevant, incomplete or incorrect. This causes a big problem for data-mining purposes, as a business information system will not be able to interpret the information correctly, or completely. An example is where a user captured the client’s gender as X, instead of M (Male) or F (Female).

Missing Values – Missing values is another big problem. Not so much for an organisation who requires to call a client about marketing a new product, but missing information about what the client has previously bought and how much they bought, causes a problem for a data-mining system about which products are in demand, which ones are not, and which ones to market for in the future.

Inconsistent Data – Usually this problem creeps in if data has been gathered over time. When street names change or clients move, the information captured about where the client lives will not match when clients place new orders. So a sales graph indicating total deliveries within each area, will not be correct.

Data not integrated – When an organisation has two or more different data sources (say SQL databases, and excel files), where one contains transactional data (sales made in the last year), and another clients personal information (Name, Age, Gender etc.), they will not be able to see what type of clients have ordered what products, how much they have ordered in the last year, and when they have placed their orders, unless these two data sources have not been integrated.

Wrong granularity – This refers to the degree in which data has been summarised or detailed.

Too fine: This data expresses allot of detail. An example of this data could be a data repository that includes data about contracts with service providers, where the data has service provider names, company name, contract duration, contract amount, disbursement amounts, VAT, Tax clearance, etc.

Too Coarse: This data is highly summarised. An example of this data would be the total amount of service providers working on a project. This data cannot be used for forecasting purposes, as we would need information about the duration and value of the contracts with each of the service providers.

Usually too fine a granularity would be preferred too coarse a granularity, as you can still summarise and simplify fine data, but will not have enough information from coarse data to be able to make any necessary sense of it.

Too much data

Too many attributes: If data has too many columns (attributes) or too many rows, it could make analysing or mining the data very difficult. An example of an engineer who wants to see which assets within a certain region needs replacing. He has a dataset showing all infrastructure assets within the Johannesburg City (Infrastructure Asset Register), each assets attributes, its replacement values, depreciation values, and many more accounting calculations. For the engineer to try and to find this information from millions of lines of data and hundreds of attributes (columns), causes a big problem. A major activity within data-mining is the most effective and efficient way for selection of the required attributes (columns).

Too many data points: The previous example also has too many rows of data, which will make it difficult to derive meaningful information about the assets. This problem can usually be addressed through statistical sampling, in order to reduce the amount of data and ensure an effective and efficient analysis of the data, fir for its intended purpose.