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Basic Concepts For Understanding Systems: Business Processes, Information, and Information Systems

1. The document discusses key concepts for understanding business systems including business processes, information, information systems, and how they interact. 2. A business process is a network of activities, resources, facilities, and information that work together to achieve a business function. 3. Information systems support business processes by automating activities and allowing information to flow between processes.

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Kristine
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67 views42 pages

Basic Concepts For Understanding Systems: Business Processes, Information, and Information Systems

1. The document discusses key concepts for understanding business systems including business processes, information, information systems, and how they interact. 2. A business process is a network of activities, resources, facilities, and information that work together to achieve a business function. 3. Information systems support business processes by automating activities and allowing information to flow between processes.

Uploaded by

Kristine
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Basic Concepts

for Understanding
Systems

Business Processes,
Information, and
Information Systems
Viewing a firm as a system
Primary processes for a hypothetical
restaurant
Who is a toy factory’s customer?
• Business processes must work together as
an integrated system

• A business must:
– Obtain payments for its goods and services
– Cover costs
– Make profit
What Is a Business Process?

• A network of activities, resources,


facilities, and information that interact
to achieve some business function.
Business processes and functional
areas of business
What Is a Business Process? (cont’d)
• Business process is a network of:
– Activities (processes)
– Resources (inputs)
– Facilities (inputs)
– Information (both inputs and outputs)
• Processes interact to achieve business
function
What Is a Business Process? (cont’d)
• Business systems are integrated processes
• Examples:
– Inventory management processes
– Manufacturing processes
– Sales and support processes
– Accounting systems
– HRM
What Are the Component of a
Business Process?
• Activities – transform resources and information of one type
into resources and information of another type.
• Resources – items of value, such as customers, suppliers,
employees, distributors, and so on
• Facilities – structures used within resources. Ex: inventories,
databases
• Information – activities use information to know how to
transform inputs to outputs.
Portion of Inventory Management
Business Process

Figure 2-1
Inventory Management
Business System Processes
1. Purchasing (activity) queries Inventory Database (facility)
and obtains QuantityOnHand (information)
2. If reorder needed, Purchasing generates Order
(information) to Supplier (resource)
3. Order Placement (activity) sends copy to Receiving
(activity)
4. Receiving puts goods into Inventory (facility)
5. Record (Info) sent to Inventory Database (facility) and
Payment (activity)
Inventory Management
Business System, (cont’d)
6. Supplier sends ShippingInvoice (info) to Payment
7. ShippingInvoice compared to Order, generates
Check (info and resource)
8. Counter Sales (activity) interacts with Customer
(resource), Inventory (resource), and Inventory
Database (facility)
Activities
• Transform resources and information from one
form into another
• Follow rules and procedures
• Can be manual, automated, or combination
• Example:
– Payment (activity) transforms QuantityReceived
(information) and ShippingInvoice (information)
into PaymentToSupplier (resource)
Resources

• Items of value
• External to organization
• Examples:
– Customers
– Suppliers
– Consultants
Facilities
• Structures used within business process
• Places where things are produced or stored, or
equipment, machines, buildings
• Examples:
– Inventories
– Databases
– Factories
– Equipment
Information
• Used by activities
• Determines how to transform inputs into
outputs
What Is the Role of Information in
Business Processes?
• Business processes generate information by giving
context to data:
– Process gives context to data
– May turn low-level information into high-level
information
• Useful for management and strategy decisions
How Do Information Systems Support
Business Processes?
• IS supports activities in a business process
– Several activities may use one information system
– Activity may have own information system
– Activity may use several information systems

• Systems designers determine relationship of activities


to information systems
– Relationships are determined during systems
development
What Does It Mean To Automate a
Process Activity? (cont’d)
• Automation of processes
– Transfers work done by people to
computers
– People follow procedures
(instructions)
– Computers follow software instructions
An Information System to Support
Counter Sales

Figure 2-4
An Information System to Support
Counter Sales (cont’d)
• Fully automated (McDonald’s new drive-up window technology)
– Cashiers do not require extensive training
– Cashiers do not work directly with programs on
computer

• Computer in cash register communicates with


computer connected to the Inventory Database

• Programs record sales and make changes


An Information System to
Support Payment

Figure 2-5
An Information System to
Support Payment (cont’d)
• Payment receives QuantityReceived and
ShippingInvoice and produces SupplierPayment

• Mostly manual
– Accounts Payable Clerk reads documents and
issues payment or investigates discrepancies
– Processing exceptions complicated
• Programming expensive
• Probably not effective
An Information System to
Support Purchasing

Figure 2-6
An Information System to
Support Purchasing (cont’d)
• Purchasing clerk’s computer runs program that
queries database and identifies stock levels
and generates PurchaseOrder

• Designers decided to balance work between


automation and manual activity
– Searching database is repetitive
• Automated process
– Selecting suppliers is complicated
• Manual process
MIS in Use: The Need for Business
Processes
• To understand the need for business
processes, the importance of process design,
and the role that information systems play in
support of such processes
• A seemingly simple business process can be
unexpectedly complex
Order Approval Process
Basic Concepts for Understanding
Systems
• Framework
• Models
• System
• Work System
• Business Process
• Value Chain
• Information Systems
• Information Technology
Framework
• Brief set of ideas for organizing
thought process about a particular
type of thing or situation
Models
Simplified representations of reality
System
• A set of interacting components
that operate together to
accomplish a purpose
System properties
• A system has
–Purpose
–Boundary
–Environment
–Inputs
–Outputs
Viewing the Company as a System
Work System
• A system in which humans perform a
business process using information,
technology, and other resources to
produce products for internal or
external customers.
Work System
People

Information Business Process Products

Other resources
Business Process
• Related group of activities that use
people, information and other
resources to create value for internal
and external users.
Value Chain
• Set of processes a firm uses to create
value for its customers
• A process’s value added is the amount
of value it creates for its internal and
external customer
Value Chain
Basic Ideas in Understanding MIS
• Information technology is the hardware and
software that make information systems
possible.
• An information system is a system that uses
information technology to capture, transmit,
store, retrieve, manipulate, or display
information used in one or more business
processes.
Basic Ideas in Understanding MIS
• A business process is a related group of steps or
activities that use people, information, and other
resources to create value for internal or external
customers.
• A firm consists of a large number of interdependent
business processes that work together to generate
products or services in a business environment.
• The business environment includes the firm itself
and everything else that affects its success, such as
competitors, suppliers, customers, regulatory agencies,
and demographic, social and economic conditions.
Information Systems

Business environment

Firm

Business process

Information system

Information
technology

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