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Commerce Eduworld
Classes For : FYJC - SYJC - CA - CS
CA – IPCE
Paper 7A : Information Technology
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Compiled by: CA Vinesh R. Savla
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Unit 1: Business Process Management & IT
From a business perspective,
- A process is a coordinated and standardized flow of activities ,
- P erformed by people or machines,
- Which can traverse functional boundaries to achieve a business objective and
- C reates value for internal or external customers.
To manage a process -
(i) Define it and map the tasks to the roles involved.
(ii) Performance measures can be established.
(iii) Descri be the organizational setup that enables the standardization of the process
throughout the organization.
Functional Organization Process Organization
Work Unit Department Team
Key Figure Functional Executive Process Owner
Benefits (i) Functional excellence.
(ii) Easier to implement work
balancing.
(iii) Clear management direction .
(i) Responsive to market
requirements.
(ii)
Improved communication and
collaboration between different
functional tasks.
(iii)
Performance measurements
aligned with process goals.
Weaknesses (i) Barrier to communication between
different functions.
(ii)
Poor handover between functions
that affects customer service.
(i) Duplication of functional
expertise.
(ii)
Increased operational
complexity.
Business Process Flow :
(1) Accounting :
(2) Sales : (Order to Cash)
(i) Customer Order (ii) Recording (Checking availability) (iii) Pick release
(iv) Shipping (v) Invoice (vi) Receipt (vii) Reconciliation
(3) Purchase : ( Procure to Pay )
(a) Purchase requisition (b) Request for quote (c) Quotation
(d) Purchase order (e) Receipts (f) Payments
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(4) Finances :
Classification of Business Processes:
A. Business Strategy: (Highest Level) :
Describes long-term concepts to develop a sustainable competitive advantage
B. Goals: (Second Level) :
B usiness strategy is broken down to Operational Goals .
C. Organizational Business Processes:
H igh -level processes that are specified in textual form by their inputs, outputs, expected
results and dependencies on other organizational business processes
D. Operational Business Processes:
T he activities and their relationships are specified
E. Implemented Business Processes:
Contain information on the execution of the process activities.
Business Process Management (BPM) :
The achievement of an organizations objectives through the improvement, management
and control of essential business processes
Business Process Management System (BPMS) :
- A generic software system
- that is driven by process representations
- to coordinate the enactment of busine ss processes.
The primary benefits o f using technology for BPM are:
(i) Effectiveness gains - A utomated coordination of activities;
(ii) Distribution of tasks to process participants ;
(iii) Amalgamation of applications;
(iv ) A bility to process more with less effort and higher quality.
BPMs Principles :
1. Processes are assets that create value for customers.
2. Management of processes - Measuring, monitoring, controlling, and analyzing business
processes.
3. Continuous improvement of processes.
4. Information technology is an essential enabler for BPM.
BPMs Practices :
1. Process -oriented organizational structure:
(a) Process Organization
(b) Case management organization (Case Managers)
(c) Horizontal process management organization (Process owner for core process)
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2. Appoint Process Owners:
- R esponsible for influencing functional workers and functional heads
- S hould be a senior member of the organization
3. Top- Down Co mmitment, Bottom - Up Execution
4. Use Information Technology (IT) to Manage Processes
5. Col laborate with Business Partners
6. Continuous Learning and Process Improvement
7. Align Employee Rewards to Process Performance
8. Utilize Six Sigma, BPR, TQM and Other Process Improvement Tools
Busine ss Process Management Life Cycle (BPM -L Cycle) :
Theories of Process Management :
(I) Six Sigma :
Six Sigma is a set of strategies and tools for process improvement. It seeks to improve the
quality of process outputs by identifying and removing the causes of defects.
P hases: (DMAIC)
(i) Define: Measurements that are critical to customer satisfaction
(ii) Measure: Variances of output
(iii) Analyze: Possible causes are analyzed statistically to determine root cause of variation
(iv) Improve: Solution alternatives are generated to fix the root cause. The most appropriate
solution is identified.
(v) Control: Process is st andardized and documented
(II) Total Quality Management (TQM) :
TQM is a management mechanism designed to improve the quality of the product or
process by engaging every stakeholder as well as the customers .
TQM processes are divided into four sequential categories:
(i) Plan: Define the problem, collect data, and ascertain root cause;
(ii) Do : Develop and implement a solution;
(iii) Check: Confirm the results through before -and-after data comparison;
(iv) Act: Document results, inform others about changes, and make recommendations
(III) Business Process Reengineering (BPR) :
BPR is the fundamental rethinking and radical redesign of processes, to achieve dramatic
improvement, in critical measures of performance such as cost, quality, service and speed.
{ Dramatic achievement means to achieve 80% or 90% reduction and not just 5%, 10% .
P ossible only by making major improvements and breakthroughs
{ Radical redesign means reinventing and not improving. C lean slate approach
{ Fundamental rethinking means asking the question why do you do what you do,
thereby eliminating business processes altogether if it does not add any value to the
customer.
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BPR Success factors:
(i) Organization wide commitment: Top management has to convince every affected group
about the potential benefits to the organization as a whole and secure their commitment.
(ii) BPR team composition: BPR team should include representatives from top
management, business process owners, technical experts and users. (Manageable size )
(iii) Business needs analysis: Identify exactly the processes that need reengineering.
(iv) Adequate IT infrastructure: Set of hardware, software, networks, facilities, etc.
(v) Effective change management: BPR involves changes in people behavior and culture,
processes and technologies. The success of BPR depends on how effectively management
conveys the need for change to the people.
(vi) Ongoing continuous improvement: Innovation and continuous improvement are key to
the successful implementation of BPR.
BPM Implementation: Key factors to consider in implementing BPM :
Factors Key Considerations
Scope Single process, a department, the entire company
Goals Process understanding, improvement, automation, re-engineering,
optimization
Methods to be used Six Sigma, BPM Life Cycle Method, TQM, Informal methods
Skills Required Consultants, Trained Employees, Basic Education
Tools to be used White-Boards, Sticky Notes, Software For Mapping, BPMS
Investments to Make Training, Tools, Time, Capital
Challenges in implementing BPA :
{
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