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Business Process Management and IT
1
Chapter 1
Business Process A set of activities that are performed in coordination
in an organizational and technical environment.
Goal directed - These activities jointly realize a business goal
Each business process is enacted by a single organization
A business process may interact with business processes performed by other organizations
Functional v/s Process OrganizationFunctional Organisation Process Organisation
Work unit Department Team
Key Figure Functional Executive Process Owner
Benefits • Focus on Functional Excellence• Easier to implement work balancing
because workers have similar skills• Clear management direction on how
work should be performed
• Responsive to market requirements• Improved communication and
collaboration between different functional tasks
• Performance measurements aligned with process goals
Weaknesses • Barrier to communicate between different functions
• Poor handover between functions that affects customer service
• Lack of end-to-end focus to optimize organizational performance
• Duplication of functional expertise
• Inconsistency of functional performance between processes
• Increased operational complexity
Strategic Value Supports cost leadership strategy Supports differentiation strategy3
BUSINESS PROCESS
FLOW
A prescribed sequence of
steps
Performed In order to produce
A desired result for the organization
AUTOMATION
Deliver Business tactics
faster
Zero loss of information
The Perfect Fit w/SOA and Applications
LEVELS (Different levels can be identified in business
process management, ranging from high-level business strategies to implemented
business processes)
Business Strategy
Goals
Organizational business processes
Operational business processes
Implemented Business processes4
BPM - Life Cycle
5
Analysis
Design
Implementation
Run & Monitor
Optimize
Business Process ManagementBody of principles, methods and tools to Analyze, (re-)design, Execute and Monitor business processes, with the aim of improving their overall performance.
Key factors in implementing BPMFactors Key ConsiderationsScope A 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, Train Employees, Formal Certification, BasicEducation, Existing Skill sets
Tools to be used White-Boards, Sticky Notes, Software For Mapping,Documenting, Software for Simulation, Comprehensive BPMS
Investments to Make
Training, Tools, Time
Sponsorship/Buy-in Needed
Executive Level, Department Level, Process Owner Level,Employee Level
6
Impact of IT on BPM
Automating repetitive business processes
BPMS works by ‘loosely coupling’ with existing application
Operational savings
Reduction in the administration involved in Compliance and ISO
Freeing up of employee time
7
Six Sigma
Set of strategies, techniques & tools for process improvement
DMAIC Cycle
D: Define
M: Measure
A: AnalyzeI: Improve
C: Control
8
Total Quality ManagementOrganization-wide effort to install and make permanent a climate in
which it (business or firm or organization) continuously improves its ability to deliver high-quality products and services to customers.
Plan
DoCheck
Act
9
Business Process Reengineering To prevent means becoming ends, the business processes
need to be reengineering with the changing time andtechnology
BPR is fundamental rethinking and radical redesign ofprocesses to achieve dramatic improvement, in critical,contemporary measures of performance such as cost,quality, service and speed.
Few important key words, which need clear understanding Dramatic Achievement Radical Redesign Fundamental rethinking
Accounting Information Systems (AIS)Defined as a system of collection, storage and processing of financial and accounting data that is used by decision makers.
Computer-based method for tracking accounting activity in conjunction with information technology resources.
The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities.
Basic functions include Collecting and storing data; recording transaction and Safeguarding organizational assets.
Data Processing Cycle - Data input; Data storage; Data processing and Information output
Business Risks of Failure of IT Superficial or deficient executive involvement Deficient project management Limited option for customization of BPM software is
required Inadequate assessment of the need for change
management Resources not available when desirable Software fails to meet business needs System may be over-engineered when compared to the
actual requirements Technological obsolescence
Mapping Systems
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Flowchart E-R Diagram
Data Flow Diagram Decision Table
MAPPING SYSTEMS
Flowchart
14
Pictorial representation
Using organized combination of shapes,
lines, and text
That graphically illustrates all the steps
of a process and algorithm.
Can be used for -
• Training
• Troubleshooting
• Testing
• Inspecting a process
Symbols in Flowchart
15
PROCESS SYMBOL - represents any process, function, oraction.
DOCUMENT SYMBOL - represents any type of hard copy input or output.
DECISION SYMBOL - Decision Symbol is a junction where a decision must be made.
START/END SYMBOL - represents START or END of the process.
INPUT/OUTPUT SYMBOL - represents data that isavailable for input or resulting from processing.
A Housing Society in a newly developed Smart City has provided several advanced security systems to each house in that city. Based on the value of these advanced security systems installed in each house, the Society has divided all the houses in four categories and fixed the criteria for annual maintenance charges as under:
House Category Maintenance charges as % of value of advanced security systems installed at house
A 8%
B 6%
C 4%
D 3%
In addition to above there is a GST @ 12% on the amount of maintenancecharges. Considering house number and value of advanced security systeminstalled, as input, draw a flow chart to have printed output as housenumber, maintenance charges, GST and the total amount to be paid by eachhouse owner. (Fictitious Rates are taken for the sake of simplicity) 16
Flow Chart Example
Yes
Start
Read HNO, VAL_ASS
Yes
No
If HC = A?
If HC = B?
No
MC = 0.08 * VAL_ASS
MC = 0.06 * VAL_ASS
Yes
No
If HC = C? MC = 0.04 * VAL_ASS
MC = 0.03 * VAL_ASS
No
Yes
GST = 0.12 * MC
TA = MC + ST
Print HNO, MC, GST, TA
More HNO ?
Stop
Flowchart Ex. (Ctd..)
17
A book publisher of Information Technology offers discount to itscustomers on the basis of customer type as detailed below:
Customer Type Discount
Book Seller 30%
Library 20%
Student 10%
Further if number of copies purchased is more than 20, thenadditional discount of 5% is allowed irrespective of customer type.Number of books, unit price of each book and customer type aregiven as input.
Draw a flow chart to calculate the net amount after all discount andprint customer type, number of copies and net amount.
18
Flow Chart Example (Ctd..)
Let us define the variables first:
Customer Type: CT;Discount: DISC;Unit Price of Each Book: XNumber of Copies: NC;Net Amount: AMT
Flow Chart Example (Ctd..)
19
No
DISC = 0.1
No
Yes
If CT=
Library
?
DISC = 0.35
If NC >
20?
“Invalid
Customer
Type”
Start
Read CT, NC, X
Print CT, NC, AMT
Stop
Yes
NoIf CT=
Book
Seller?
Yes
No
If NC >
20?
DISC = 0.3
No
Yes
DISC = 0.2
DISC = 0.25
If NC >
20? Yes
DISC = 0.15
AMT = NC *(X - DISC*X)
Yes
NoIf CT=
Student
?
Entity Relationship Diagrams
Data modeling technique that creates a graphicalrepresentation of the entities, and therelationships between entities, within aninformation system.
Boxes are commonly used to represent entities.
Diamonds are normally used to represent relationships.
Ovals are used to represent attributes.20
21
1:1 relationship
1:N relationship
Student bookborrow
M:1 relationship
Administrators MinisterReport to
M:N relationship
Student courseenrolls
Types of Relationships
Data Flow Diagram is a graphical representation of the flow of data through an information system.
22
Symbol MEANING
PROCESS
DATA STORE
ENTITY
DATA FLOW
23
Decision Table is a collection of a basis (condition)
and a conclusion (action).
Condition Stubwhich comprehensively lists thecomparisons or conditions
Condition Entrieswhich list in its various columns thepossible permutations of answer to thequestions in the conditions stub
Action stubwhich comprehensively lists the actions tobe taken along the various programbranches
Action Entrieswhich lists, in its columns correspondingto the condition entries the actions con-tingent upon the set of answers toquestions of that column.
Chapter 2
Information Systems and IT Fundamentals
24
Learning Objectives
To understand the need for IT in business organisations its relevance in Auditing
To explain BPA and understand the role of BPA in improving business processes
To understand the term ‘computing’ and various popular computing architectures
To understand information system layers – different layers of interaction in an information system
To explain information system life cycle and the process of building IS, and
To have an overview of recent technologies
25
Need for IT and Relevance in Auditing
A strategic business enabler, e.g., banking Communication capabilities
Data and information management
Automated processes
Relevance in Auditing Audit objectives
IT risks and issues
Need for control in IS
Impact of IT on risks and controls26
BPA and Its role in Improving processes
BPA – automation of business processes
IT processes Database access and changes
File replication and data backup
Systems and event log monitoring
Job scheduling
Application integration
File transfers
Printing
The steps involved in BPA27
Computing and Computing Architecture
Comp Sc., Comp. Engg., IS, IT, SE
IT servers
file, print, network, database, application, web, mail
Architectures
ISA – fixed and variable length
RISC v. CISC
Emerging computing models - cloud
28
Information System Layers
Application program
Hardware
Operating system – system software
Networks
DBMS – data, database and models
Hierarchical, network, relational, OO, ORDBMS
Computing models – client-server, Internet, mobile, cloud
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Information System Life Cycle
Investigate – understand the problem
Analyze – Assess the solutions
Design or select the best solutions
Implement – put solution into effect
Maintain and review – evaluate results
30
Overview of Recent Technologies
Bluetooth
Wi Fi
Laptop, tablet, smartphone, touchpad, iPad, iPod, ultra mobile PC (UMPC)
Android
31
Chapter 3
Telecommunication and Networks
32
TELECOMMUNICATION NETWORK
33
Computer Network
A collection of autonomous(independent) computers –
laptops, PCs, Phones, Servers etc.
interconnected by some means (Transmission
media) through which they are able to communicate
To share resources (like audios, videos, doc files, storage servers etc.) andprovide high reliability.
Fundamentals of Communication
a Sendera
Receiver
theMessage
theMedia
aProtocol
35
Sender
Receiver
Media
36
Telecommunication Network Model
Terminals
Telecommunication Processors
Telecommunication Media
Guided
Twisted PairCoaxial Cables
Fibre Optic
Unguided
Micro Waves
Radio Waves Infra Red
Waves
Satellite
Cellular Phones
Computers Telecommunication Control Software
37
Classification of Telecommunication
Network
Area Coverage Based Classification
LAN
MAN
WAN
Functional Based Classification
Client-Server
Peer-to-Peer
Multi-Tier
Ownership Based Classification
Public Network
Private Network
Virtual Private Network
Functional Based Client-Server: A client is a single-user workstation that provides a presentation services and
the appropriate computing. A client computer can request specific data from the server. The server program retrieves the requested data from its data bases and returns it to the client.
Peer-to-Peer : P2P network is created with two or more PCs connected together and going through a separate server computer. there are no dedicated servers. All computers are equal and therefore are termed as peer. Normally, each of these machines functions both as a client and a server.
Multi-Tier: A tier is a distinct part of hardware or software.
Single Tier: A single computer that contains a database and a front-end (GUI) to access the database is known as Single Tier System. Generally, this type of system is used in small businesses
Two-Tier: a presentation layer or interface runs on a client, and a data layer or data structure gets stored on a server.
Three Tier: in which the functional process logic, data access, computer data storage and user interface are developed and maintained as logical independent modules ie.. Presentation, Application (business logic tier) and Database tier are different. 38
39
Transmission Mode
The Direction of Exchanges
Simplex
Half-Duplex
Duplex
Number of bits sent simultaneously
Parallel
Serial
Synchronization b/w Transmitter and
Receiver
Synchronous
Asynchronous
40
X Y
Unidirectional, Simplex
One way at a time, Half Duplex
Both ways simultaneously, Duplex
Transmission Mode – Direction of Exchanges
41
Parallel Serial
Transmission Mode – No. of bits sent simultaneously
0
1
1
1
0
0
1
0
Sender Receiver
0
1
1
1
0
0
1
0
Sender Receiver
0 1 1 1 0 0 1 0
AsynchronousSynchronous
Transmission Mode Synchronization b/w Transmitter and Receiver
43
Network Topologies
Mesh Star Bus Ring
44
Transmission Media
Guided
Twisted Pair
Coaxial Cables
Optical Fibers
Unguided
Radio
Micro Infra-Red Waves
Satellite
Cellular Phones
Switching Techniques
45
Transmission Techniques
Broadcast Networks Switching Techniques
Message Switching
Circuit SwitchingPacket Switching
Temporary connections
46
I II
III
IV
A
B
C
D
E
F
G
Circuit - Switched Network
A,B and C in case of pt. to pt. require 12 links but four
switches reduce no. and total length of the links.
Header Body Footer
Virtual CircuitDatagram
Packet
Packet- Switched Network
48
Message - Switched Network
M2
SP 1
SP 2
SP 3
SP 4
M1
M1
Store and ForwardStore and Forward
Store and ForwardStore and Forward
M1
M2
M1
Q
PA
B
49
Transmission Protocol
Syntax refers to the structure or format of the data,
meaning the order in which they are presented.
Semantics refers to the meaning of each section
of bits.
Timing refers to two characteristics: when the data is to be transmitted and how fast can they
be sent.
50
Host A
Session
Application
Transport
Network
Data Link
Physical
Host B
Presentation
Session
Application
Transport
Network
Data Link
Physical
Frames
Bits
Segments
Packets
Presentation
Open Systems Interconnection (OSI) Reference Model and TCP/IP
TCP/IP
Application
Transport
Network
Data Link
Physical
Network Security
Aspects
Privacy
Message Authentication
Message Integrity
Non-repudiation
Techniques
Intrusion Detection
System
Firewall
Network Access Control
Anti – MalwareSite Blocking
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52
e-Commerce
Business to Business (B2B)
Business to Consumer (B2C)
Consumer to Business (C2B)
Consumer to Consumer (C2C)
Business to Government (B2G)
Business to Employee (B2E)
Mobile Commerce
Electronic Fund
Transfer
Chapter 4
Business Information Systems
53
Functions of Information SystemsINPUT(Business
problems in the
form of data,
information,
instructions,
opportunities)
PROCESSING(Software,
Programs, people,
equipments,
storage)
OUTPUT(Solution to
problems in the
form of reports,
graphics,
calculations,
voices)
CONTROL(Decision
Makers, Auto
Control)
Feedback
Operational Level Systems
• Supportoperationalmanagers intrackingelementaryactivities.
• For example -TPS
Knowledge Level Systems
• Support thebusiness tointegrate newknowledge intothe business andcontrol the flow ofpaperwork andenable groupworking.
• For eg: OAS andKMS.
Management Level Systems
• Support themiddle managersin monitoring,decision-makingand administrativeactivities.
• For example -MISand DSS.
Strategic Level Systems
• These areinformationsystems at thestrategic levelof anorganizationdesigned toaddressunstructureddecision-making.
• For example -ExecutiveInformationSystems.
Operational Level Systems
(a) Operational-level systems or OperationalSupport Systems (OSS) ensure that businessprocedures are followed.(b) These support operational managers intracking elementary activities.(c) TPS is an operational level system.
Transaction Processing Systems (TPS)
Often considered the bread of MIS application
The upper management knows that it cannot pull the plug on its TPS and survive.
Historically, many organizations had TPS since the 1950’s. Most of these TPS have morethat paid for themselves. Many TPS have been – and continue to be – mainframe-oriented.
The accurate recording of transactions
TPS includes –
• Used control procedures in issuing such documents as paychecks, invoices, customerstatements, payment reminders
• It may be far-reaching, extending completely through and out of the organization, linkingtogether - The entire financial system; Factory; Customer and suppliers.
57
Transaction Processing Cycle In CBIS, transaction data must be converted to a form that can be entered into the computer system for processing. This involves: Source data automation , Electronic data interchange and Document Management Systems .
Data Entry
Transaction processing and File/Database Updating
Inquiry processing
Document and Report generation
• Collecting
• Recording
• Coding
• Editing
• Batch mode
• Online vs. Real time
• Online interrogation by authorized users in authorized manners
• Responses are often displayed in a pre-specified format on the user’s workstation screen
• One may also print out a copy of the response as it appears on the screen
• Information, Action and Turnaround documents
• Accounting statements
• Control listings and Edit reports
58
Knowledge Level Systems
These support the business to integrate new knowledge into the business and control the flow of paperwork and enable group working.
Two types of Knowledge Level Systems are: Office Automation SystemsKnowledge Management Systems
Office Automation Systems
Office Automation refers to the integration ofoffice functions usually related to managinginformation. Basic activities include - Document Capture Document Creation Receipts and Distribution Filling, Search, Retrieval and Follow up Calculations Recording Utilization of Resources
Management Level Systems
• These systems support the middle managersin monitoring, decision-making andadministrative activities. This is helpful inanswering questions like are things workingwell and in order?• Management Information System (MIS) andDecision Support System (DSS) are types ofManagement Support Systems.
Management Reporting SystemIt is the MIS sub-system that issues pre-formatted reports to managers
Info
rmat
ion
Sys
tem
That provides predefined types of information to management;
For relatively structured types of decisions; and
focuses on Information, and occasionally, on effectiveness.
Usually concerned with data about the past than data relating to the future.
Pro
pe
rtie
s
Support structured and semi-structured decisions, primarily at the middle and lower levels
Provides fixed types of information in an established format; the information requirements of users are normally known and stable
Often implemented with voluminous, hard copy reports, requiring each users to search specifically for key information
Usually require a formal request to be submitted; formal systems development may be required to approve the request.
62
Decision Support SystemAn interactive Computer-based system that facilitate the solution of unstructured problems by a set of decision makers working together as a group.
PROPERTIES
Middle or top management focus
Interactive capabilities
Use of models
Difficulty in cost justifying
Evolutionary development
Focus on managerial effectiveness, rather than efficiency
DSS TOOLS
Micro computer systems
DBMS
Display devices and Graphics generators
General-purpose programming languages
Optimization tools
Statistical tools
Spreadsheet packages 63
Components of a DSS
GUI
DBMS
Spreadsheet Appl
Word Processor
DTP Application
Graphic software
Report generator
Stat, OR, Other Analysis software
Database
ModelBase
Workstation
DecisionMaker
DSS Software
64
Strategic Level Systems
• Strategic-level Systems (SLS) are informationsystems at the strategic level of an organizationdesigned to address unstructured decision-making.
•Executive Information Systems (EIS) – It issometimes referred to as an Executive SupportSystem (ESS). It serves the strategic level i.e. toplevel managers of the organization.
Chapter 5
66
Business Process
Automation through
Application Software
Information Processing The effort to create information from raw data is known as “Information Processing”.
Two types of Information Processing exist.
Manual Information Processing Cycle
Computerized Information Processing Cycle
67
Controls in BPA and their need
68
Objectives of BPA
Control Objectives
Control Objectives
AuthorizationCompleteness
Accuracy
ValidityPhysical Safeguards
and Security
Error handling
Segregation of Duties
69
Information Systems’ Controls
The controls are used to Prevent, Detect, orCorrect unlawful events. An unlawful event canarise if unauthorized, incomplete, inaccurate,redundant, ineffective, or inefficient inputenters the system.
Preventive Control; Detective Control; and Corrective Control
70
Controls in BPA – Audit Perspective
71
Managerial Top Management
Information Systems Management
Systems Development
Programming Management
Data Administration
Quality Assurance
Security Administration
Operations Management
Application Boundary
Input
Communication
Processing
Database
Output
Application Controls
BoundaryControls
• Comprisesthecomponentsthat establishthe interfacebetween theuser and thesystem.
InputControls
• Comprisesthecomponentsthatcapture,prepare,and entercommandsand datainto thesystem.
Communication Controls
• Comprisesthecomponentsthattransmitdata amongsystems andsubsystems.
ProcessingControls
• Run-to-RunTotals;ReasonablenessVerification; EditChecks etc.
DatabaseControls
• Comprisesthecomponentsthat define,add, access,modify, anddelete datain thesystem.
OutputControls
• Comprisesthecomponentsthatretrieve andpresentdata tousers of thesystem.
72
Cloud ComputingCloud Computing is computing in which large groups ofremote servers are networked to allow centralized datastorage and online access to computer services orresources.
Characteristics of Cloud Computing
Elasticity and Scalability Pay-per-Use
On-demand Resiliency
Multi Tenancy Workload
Movement for certain types of workloads.73
Cloud Computing Types
75
delivers special purpose softwarethat is remotely accessible.
offers high level integratedenvironment to build, test, anddeploy custom apps.
hardware, software, equipments,can scale up and downdynamically (elastic).
Cloud Service ModelsInfrastructure as a Service Platform as a Service Software as a Service
Grid ComputingGrid Computing is the collection of computer resources from multiple locations to reach a common goal.
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