ch05 - Chapter 5 Information Technology and Changing...

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1 Chapter 5 Information Technology and Changing Business Processes Managing and Using Information Systems: A Strategic Approach, 2 nd ed.
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2 The Challenge facing CIGNA Corp CIGNA needed to radically improve operating efficiency Investments in IT were failing to support the company’s strategic direction CIGNA concentrated on developing an in- house team of managers tasked with introducing new systems Individual units cut operating expenses by up to 42%, cycle times improved by 100%, customer satisfaction was up 50%, and quality improved by 75%.
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3 SILO VERSES BUSINESS PROCESS PERSPECTIVES
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4 Silo Business Structure (Figure 5.1) A common view of a firm is as a hierarchy organized around a set of functions Each group has a core competency it concentrates on Functional groups in a firm tend to complete their part of a process and “throw it over the wall” to the next group in the value chain This “inward-looking” focus can lower the effectiveness of each functional group.
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5
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6 Limits to functionally organized organizations Functionally organized firms tend to perform sub-optimally for three reasons: Individual departments duplicate information maintained elsewhere. Communications gaps often exist between functional groups. Functional structure tends to become ingrained , inhibiting reorganization.
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7 Process Perspective Two popular approaches for transforming business are: Business process reengineering (BPR) aka radical business processes improvement Incremental (aka continuous) process improvement done in conjunction with Total Quality Management (TQM). Both view business as a set of processes rather than a functional hierarchy.
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8 Managing from a Business Process Perspective As functional organization tends to result in lower performance, managers may take a business process perspective on value creation. Each business processes must include the following: A beginning and an end Inputs and outputs Sub-processes that turn inputs into outputs A set of metrics for measuring effectiveness
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9 Typical business processes Examples of business processes include: customer order fulfillment, manufacturing planning and execution, payroll, financial reporting and procurement Fig. 5.2 shows a typical procurement example.
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10
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11 Processes cross functional lines Processes, such as the procurement example shown in the last slide, cut across functional lines. For example, requirements for goods might originate in the operations department but be based on guidelines from the finance department.
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12 Processes help focus on business goals By cutting across functions, processes focus efforts towards business goals. In Figure 5.3, the vertical bars represent
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ch05 - Chapter 5 Information Technology and Changing...

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