PART IV: Chapter Topics Chapter 10: Business Process & Information Systems Development Two closely related and overlapping themes are examined Chapter 11: Information Systems Management Goal of the chapter is to give an appreciation for the responsibilities of IS management and to be an effective consumer of IS services Chapter 12: Information Security Management Provides an overview of the major components of information systems security

Fox Lake Chapter 10 Examines how Fox Lake could define new business processes and an information system to support those processes Chapter 11 Investigates what Fox Lake is and is not doing with regard to management of IS resources Chapter 12 Discusses why Fox Lake’s information systems are particularly vulnerable to computer misuse and crime

Chapter 10 Business Process and Information Systems Jason C. H. Chen, Ph.D. Professor of MIS School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

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Study Questions Q1: Why do organizations need to manage business processes? Q2: What are the stages of Business Process Management (BPM)? Q3: How can BPMN process diagrams help identify and solve process problems? Q4: Which comes first, business processes or information systems? Q5: What are systems development activities? Q6: Why are business processes and systems development difficult and risky? Q7: What are the keys for successful process and systems development projects? Q8: 2022?

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What are Business Process and Business Process Management? Business process: A set of logically related tasks performed to achieved a defined business outcome Business process management (BPM) is a management approach focused on aligning all aspects of an organization with the wants and needs of clients. It is a holistic management approach[1] that promotes business effectiveness and efficiency while striving for innovation, flexibility, and integration with technology. http://en.wikipedia.org/wiki/Business_process_management Dr. Chen, The Trends of the Information Systems Technology TM -7

BUSINESS VALUE & FOCUS –IS Perspective IS/E-BUSINESS Customer centric SCM CRM BPR ERP Demands Products/ Services Value What they need/want? How many they need/want? When they need/want? How to reach them? Who are the customers? Where are the customers? Their purchasing habits HOW TO REACH THEM? IT/INTERNET/E-BUSINESS Business Models & Strategies

Q1: Why Do Organizations Need to Manage Business Processes? Reasons for change Improve process quality Change in technology Change in business fundamentals Market Product lines Supply chain Company policy Company organization Internationalization Business environment

Steps in Processing an Order Fig 10-1: Steps in Processing an Order

2: What Are the Stages of Business Process Management (BPM)? Systematic process of creating, assessing, altering business processes (and is an iteration process). Four stages of BPM Create model of business process components Users review and adjust model “As-is model” documents current process; it is changed to solve process problems Create system components Uses five elements of IS (hardware, software, data, procedures, people) Implement business process Create policy for ongoing assessment of process effectiveness Adjust and repeat cycles

Stages in the BPM Cycle [2] [1] [3] [4] policy creation and assessment Four stages of BPM Create model of business process components - Users review and adjust model - “As-is model” documents current process; it is changed to solve process problems Create system components - Uses five elements of IS (hardware, software, data, procedures, people) 3. Implement business process Create policy for ongoing assessment of process effectiveness - Adjust and repeat cycles MRV never designed its processes, had no assessment program [4] policy creation and assessment Fig 10-2: Stages in the BPM Cycle

Q/A T/F: Business Process Management (BPM) is a one-time process for systematically creating, assessing, and altering business processes. Answer: ______ In business process management, once the as-is model is created, the team must ________. A) obtain feedback about implementation B) assess the results of the changes C) create system components D) implement changes in the organization Answer: ________

Scope of Business Process Management Fig 10-3: Scope of Business Process Management BPM can apply only to commercial, profit-making organizations but also nonprofit and government organizations

Q3: How Can BPMN Process Diagrams Help Identify and Solve Process Problems? Critical for a team to agree on both what is and what ought to be. Must have some notation for documenting processes and one common standard for creating process documentation. Dozens of definitions are used by authors, industry analysts, and software products.

Need for Standard for Business Processing Notation These differences and inconsistencies can be problematic when two different organizations with two different sets of definitions must work together. Object Management Group (OMG) created a standard set of terms and graphical notations for documenting business processes. That standard, called Business Process Modeling Notation (BPMN), is documented at www.bpmn.org.

Fig 10-4: Business Process Management Notation (BPMN) Symbols

Documenting the As-Is Business Order Process: Existing Ordering Process Each role in the business process is given its own swim lane. Fig 10-5: Existing Ordering Process

Fig 10-6: Check Customer Credit Process

BPMN: Business Process Management _________ Notation Q/A T/F: In a BPMN process diagram, the swim-lane layout is used to simplify process diagrams and to draw attention to interactions among components of the diagram. Answer: ________

Using Process Diagrams to Identify Process Problems Operations Manager allocates inventory to orders as processed Credit Manager allocates customer credit for orders in process. Allocations correct, if order accepted If rejected, allocations not freed, inventory still allocated and credit extended for orders not processed Possible fix: Define an independent process for Reject Order (UYK#3 p.383)

How Can Business Processes Be Improved? Add more ________ Adds costs unless efficiencies of scale Change _______ structure Reduce work and costs Increase costs and increase effectiveness to offset _________

Fig 10-7: Revised Order Process

Fig 10-8: Fox Lake Wedding Planning and Facilities Maintenance Processes

Q4: Which Comes First, Business Processes or Information Systems? Fig 10-9: Fox Lake Processes Showing IS Components

Fig 10-10: Many-to-Many Relationship of Business Processes and Information Systems

Build Business Processes First [2] next stage [1] [3] Starting from processes and working toward Information Systems (IS) is likely to work well for the business process under consideration, but will cause problems later, for other processes that use the same IS. -- why? 1) Cause IS resource constraint, 2) conflict of IS requirements etc. [4] policy creation and assessment Starting from processes and working toward Information Systems (IS) is likely to work well for the business process under consideration, but will cause problems later, for other processes that use the same IS. Fig 10-11: BPM and Systems Development

Build Information System First This development process makes business processes a poor step-child of the IS development process as BP can include many activities that are not part of the IS. Fig 10-12: Classic Five-Step Systems Development Life Cycle

Why systems development is needed? While you may be able to purchase an off-the-shelf software program, you won’t be able to do that with information systems. Here are some of the reasons why: You must construct or adapt procedures to fit the business and the people who will be using the system. You can’t buy procedures. People must be trained to use the information system effectively. You can’t buy that. Users must take ownership of their system. That’s the single most important criterion for the success of an information system. Information system maintenance involves two things: Fixing a system to make it do what it should have done in the first place, or Adapting it to changing requirements.

Systems Development Is Not Just for Techies Establishing the system’s goals, setting up the project, and determining requirements require business knowledge and management skill. Tasks such as building computer networks and writing computer programs require technical skills. Developing the other components requires nontechnical, human relations skills.

Nontechnical, Human Relations Skills Required Creating data models requires the ability to interview users and understand their view of the business activities. Designing procedures, especially those involving group action, requires business knowledge and an understanding of group dynamics. Developing job descriptions, staffing, and training all require human resource and related expertise. Coordinated teamwork of both specialists and nonspecialists with business knowledge.

How Do Businesses Use the SDLC Process? Systems definition Management’s statement of objective and goals for new system Requirements analysis Identify features and functions Component design (hardware, software, network) Based on approved user requirements Implementation Purchase, build, test, and convert to new system System maintenance (fix or enhance) Repair, add new features, maintain See http://www.learn.geekinterview.com/it/sdlc/sdlc-methodology-steps.html

Another Factor: Off-the-Shelf Software If starting with business processes first Likely to choose package for processes being developed, but not for later processes If starting with information systems first Likely to choose package that works for all users, but, business processes will get short shrift.

And the Answer Is . . . In theory: In practice: Better to start with ___________________ More likely to result in processes and systems that are aligned with the organization’s strategy and direction In practice: Organizations take both approaches Off-the-shelf software: Start with business processes and select “off-the-shelf” application that works for those processes Why? Off-the-shelf software: Start with business processes and select “off-the-shelf” application that works for those processes Why? – ease of development and use (end-user can develop the apps by their own)

And the Answer Is . . . In theory: In practice: Better to start with ___________________ More likely to result in processes and systems that are aligned with the organization’s strategy and direction In practice: Organizations take both approaches Off-the-shelf software: Start with business processes and select application that works for those processes

Q/A Which of the following is true for the relationship between business processes and information systems? A) Developing information systems before business processes ensures that all activities are considered in the development process. B) Information systems incorporate all business process activities, and hence should be developed before business processes. C) Starting from processes and working toward information systems is the best option to anticipate future demands and new business processes. D) Starting with processes and working toward systems is more likely to result in processes and systems that are aligned with the organization's strategy and direction. Answer: ______

SDLC What does SDLC stand for? List the phases of SDLC Systems Development Life Cycle List the phases of SDLC Analysis Design Implementation Maintenance

4: What Are Systems Development Activities? Systems definition Management’s statement of objective and goals for new system Requirements analysis Identify features and functions Component design (hardware, software, network) Based on approved user requirements Implementation Purchase, build, test, and convert to new system System maintenance (fix or enhance) Repair, add new features, maintain Analysis

4: What Are Systems Development Activities? [1] [2] [3a] [3b] (Feasibility Study) What is it and Why it is important? [4] [5] Fig 10-13: BPM Provides Requirements for Systems Development

Define System Goals and Scope Fig 10-14: SDLC: System Definition Phase

How Is System Definition Accomplished? (b.) Define scope for new system Defined by customers, users involved, business processes impacted, physical location, functional area Clear definition of scope simplifies Requirements determination Coordination and other work

Assess Feasibility Dimensions of feasibility ______ feasibility Cost Approximated, “back-of-the-envelope” analysis Purpose: eliminate infeasible ideas early Consider cost of previous projects, operational and labor costs __________ feasibility Ball park estimate Is it technically likely to meet needs? _____________ feasibility Fit with customs, culture, charter, legal requirements of organization ___________________ feasibility Is the proposed system legally? Cost Schedule Technical Organizational

Systems Definition/Investigation (Feasibility Study) What are new from the last slide? Economic Feasibility Operational Feasibility Can we afford it? Will it be accepted? Schedule Feasibility Technical Feasibility iTeaching Tip: Consider redisplaying slide 5 “Traditional Systems Development Life Cycle”, before beginning discussion of this lecture slide. As pointed out earlier, all application development methodologies share certain common activities. During the remainder of this lecture we will discuss these activities. We will begin by discussing systems investigation. The Investigation Phase begins the preliminary study of the proposed information system solution to meet the E-Business needs. Its focus is to seek to answer the questions: What are our opportunities, what are our priorities, and can IS be used to address these needs? Because the process of application development can be costly both in time and resources, the system investigation phase begins with a Feasibility Study. The goal of feasibility studies is to evaluate alternative systems and to propose the most feasible and desirable systems. Feasibility is assessed across four major categories: Organizational Feasibility. This focuses on how well a proposed information system supports the objectives of the organization. Technical Feasibility. This ascertains whether reliable hardware and software capable of meeting the needs of the proposed system can be acquired or developed. Operational Feasibility. This refers to the willingness and ability of the management, employees, customers, suppliers, and others to operate, use, and support a proposed system. Economic Feasibility. This is concerned with whether the proposed IS benefits are greater than its costs. This area is particularly concerned with financial affordability -- whether the firm can pay to develop the system. A cost/benefit analysis is used to weigh the total costs a new system is likely to incur against the total anticipated benefits to be gained. This includes determining tangible costs (such as hardware and software purchases and employee salaries) and intangible costs such as effects on employee morale and disruptions in productivity during the installation of the new system. Benefits too can be either tangible (such as reduced inventory and carrying costs) or intangible (higher customer satisfaction). Economic feasibility study – (cost-benefit analysis) – identifies the financial benefits and costs associated with the systems development project Operational feasibility study – examines the likelihood that the project will attain its desired objectives Technical feasibility study – determines the organization’s ability to build and integrate the proposed system Schedule feasibility study – assesses the likelihood that all potential time frames and completion dates will be met Legal and contractual feasibility study – examines all potential legal and contractual ramifications of the proposed system Which type of feasibility study would be appropriate for each of the following: Implementation of a new payroll system Implementation of a new CRM system Implementation of a new module to an existing CRM system Implementation of a new ERP system Implementation of a additional functionality to an existing KM system Will it be completed by the deadline? Does the IT capability exist? Organizational Feasibility Legal and Contractual Feasibility (Is it a good fit – objective of the organization Is the proposed system legally?

Form a Project Team Typical three personnel on a development team are: Manager (or mangers for larger projects) Specialist: System analysts Programmers Software testers or, other functional specialist such as accounting, finance, and marketing Users: Users must be involved in most of SDLC phases Depending on nature of project, team may also include hardware and communications specialists, database designers and administrators, and other IT specialists.

Form a Project Team Team composition changes over time. During requirements definition, the team will be heavy with systems analysts. During design and implementation, it will be heavy with programmers, testers, and database designers. During integrated testing and conversion, the team will be augmented with testers and business users.

Business and Systems Analysts Business Analysts Someone who are well versed in Porter’s models, organizational strategy, and system alignment theory and who also understand the proper role for technology. IS professionals who understand both business and technology. They are active throughout the systems development process and play a key role in moving the project through the systems development process. Systems analysts integrate the work of the programmers, testers, and users.

Fig 10-15: Focus of Personnel Involved in BPM and Systems Development

Phase Two: Requirements Analysis System Analysts are IS professionals who understand both business and technology. The most important phase in the SDLC process is to determine system requirements. If the requirements are wrong, the system will be wrong. Seven activities occur in this phase as the diagram shows. Users are a critical part of this phase. They must approve the requirements before moving to the next phase. Fig 10-16 SDLC: Requirements Analysis Phase

Phase Three: Component Design: Design Tasks Pertain to Each of the Five IS Components All five components require attention in the design phase: Hardware—Determine the specifications and evaluate alternatives against the requirements. Purchase it, lease it, or lease time from hosting service Programs—Decide whether to use off-the-shelf software, off-the-shelf with alterations, or custom-developed software. Database—Convert the data model to a database design. Procedures—Design procedures for users, operations personnel, and for normal, backup, and failure recovery tasks. People—Design job descriptions for users and operations personnel. You may have to add new jobs or alter existing jobs. Fig 10-17: SDLC: Component Design Phase

Q/A T/F: If a project involves off-the-shelf programs, then little database design needs to be done. Answer: ________

Phase Four: Implementation Focuses on implementing the system and includes the tasks of building each of the five system components testing the system and converting users to the new system. Fig 10-18: SDLC: Implementation Phase

System Conversion Approaches Pilot Implement entire system in limited portion of business MRV uses system for selected customers. Advantage: limits exposure to business if system fails Phased System is installed in phases or modules. Each piece is installed and tested. Parallel Complete new and old systems run simultaneously Very safe, but expensive Plunge (or direct) High risk if new system fails, no old system to fall back on Only used if new system is not vital to company operation

Installation Conversion Methods: 4 Ps Cut-over time Old System New System Parallel Old System New System Pilot When the development of a system will replace or improve a current system, a conversion process will be needed. Conversion methods are used for managing system change and managing both the cost and risk associated with a failure of the new system.. Four major forms of system conversion are common: Parallel. This involves operating both the old and the new system at the same time for some period until the project development team and end user management agree to switch over completely to the new system. This is the least risky approach but the most costly, since resources must be used to keep both the new and old system operational. Pilot. Here one department or often an off-site office gives the new system a trial run to see how it works and to catch any problems before the system is implemented company-wide. This is a less costly approach. Risk of failure is isolated to the department or office which receives the new system. Phased. Here the new system is implemented gradually throughout the organization according to some diffusion plan, such as department by department, section by section, or even floor by floor. This approach exposes the organization to more risk, but is less costly. Plunge. This "cold turkey" approach ends use of the old system and begins use of the new system all at once. This approach has the highest risk, but is the least costly to implement. Can be considered for non-critical applications, or application improvements that are marginal. Old System New System Phased Old System New System Plunge/ Direct

Design and Implementation for the Five Components Fig 10-19: Design and Implementation for the Five Components

SDLC: System Maintenance Phase (5) Fig 10-20:

Causes of Information Systems Failures 35+ years of research on causes of information systems failures Lack of user __________ Unclear, incomplete, and inconsistent ___________ Changing requirements and specifications Many businesses __________ research findings involvement. requirements. ignore

Q6: Why Are Business Processes and Systems Development Difficult & Risky? SDLC ________ Sequence of nonrepeated phases It rarely works smoothly, causing development team to go back and forth, raising costs and delaying project Requirements documentation difficulty Business requirements sometimes change making documented requirements incomplete or obsolete “Analysis paralysis”—projects spend so much time on documentation that it hampers progress Scheduling and budgeting difficulties Time and cost estimates for large project are usually way off People who make initial estimates know little about how long it will take or cost

Q6. Why Are Business Processes and Systems Development Difficult & Risky? (cont.) Changing Technology While the project is underway, technology continues to change. Diseconomies of Scale As development teams become larger, the average contribution per worker decreases. Brooks’ Law: Adding more people to a late project makes the project later.

1a 1b 2 3 4 Fig 10-21: Major Challenges to System Development Requirements documentation difficulty Business requirements sometimes change making documented requirements incomplete or obsolete “Analysis paralysis”—projects spend so much time on documentation that it hampers progress Scheduling and budgeting difficulties Time and cost estimates for large project are usually way off People who make initial estimates know little about how long it will take or cost Changing Technology While the project is underway, technology continues to change. Diseconomies of Scale As development teams become larger, the average contribution per worker decreases. Brooks’ Law: Adding more people to a late project makes 4 Fig 10-21: Major Challenges to System Development

Q7: What Are the Keys for Successful Process and Systems Development Projects? Create a work-breakdown structure (WBS) Break project into smaller tasks until each task is small enough to estimate and manage Every task results in deliverables Estimate time and costs Create a project plan Adjust the plan via trade-offs Manage development challenges

Fig 10-22: Create a Work-Breakdown Structure (WBS)

Gantt Chart of the WBS for the Definition Phase of a Project

Create a Project Plan: Gantt Chart with Assigned Resources & Critical Path

Project Triangle (Project Management Trade-offs) Time Cost The center of project triangle is ________ Scope (Requirements) The objective of the PM is to define project’s scope realistically and ultimately deliver quality of product/service on time, on budget and within scope.

Trade-Offs in Requirements, Cost, and Time? Balancing development drivers Requirements (scope) Cost Time Trade-offs Elaborate requirements increase costs and time Time can be reduced to a point w/o adding costs Increasing time may reduce or increase costs If schedule needs to be shortened, two alternatives available: reduce requirements or add labor Adding more people creates diseconomies of scale (Brooks’ Law)

Insert Figure 10-12 here (Figure CE19-2 in Experiencing MIS 2/e) Adjust Plan via Trade-offs: Trade-offs Among Requirements, Schedule, and Cost? Insert Figure 10-12 here (Figure CE19-2 in Experiencing MIS 2/e)

Manage Development Challenges Critical Factors Coordination Diseconomies of scale Configuration control Unexpected events Team morale

Q8: 2022? Users more knowledgeable and demanding More agile systems using SOA and other techniques More Cloud-based development Emergence of new software vendor business models

End of Chapter 10