Full Revisionary Notes for CA - IPCE on Information Technology

Commerce Eduworld CA – IPCE Paper 7A: Information Technology Index Unit No. Particulars Page No. 1 Business Process Management & IT 1 - 9 2 Information Systems and IT Fundamentals 10 – 17 3 Telecommunication and Networks 18 – 30 4 Business Information Systems 31 – 36 5 Business Process Automation through Application Software 37 – 43 Commerce Eduworld’s Revisionary Notes contains all the Important Provisions relevant from Exam Point of View. However, these Notes are meant for REVISION ONLY. Commerce Eduworld CA - IPCE - Information Technology 1 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 proc ess 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 Commerce Eduworld CA - IPCE - Information Technology 2 (4) Finances : Classification of Business Processes: A. Business Strategy: (Highest Level) : D escribes 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 org anizational business processes D. Operational Business Processes: T he activities and their relationships are specified E. Implemented Business Processes: C ontain information on the execution of the process activities. Business Process Management (BPM) : ￿ The achievement of an organization￿s objectives through the improvement, management and control of essential business processes ￿ Business Process Management System (BPMS) : - A generic software system - t hat is driven by process representations - t o coordinate the enactment of busine ss processes. The primary benefit s of using technology for BPM are: (i) Effectiveness gains - Automated coordination of activities; (ii) Distribution of tasks to process participants ; (iii) Amalgamation of applications; (iv) Ability to process more with less effort and higher quality. BPM￿s 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. BPM￿s 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) Commerce Eduworld CA - IPCE - Information Technology 3 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 : D efine 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. ￿Clean 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. Commerce Eduworld CA - IPCE - Information Technology 4 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. (M anageable 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, p rocesses 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 : {