Process analysis overview Introductory notes Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

IT and coordination Information Technology & coordination costs –Coordination = managing dependencies among activities* –Falling cost of computing power = lower coordination costs? –Well-designed information systems can decrease the cost of organizational coordination –Business strategies that exploit lower coordination costs can gain competitive advantage –Examples: Federal Express Flew all packages to Memphis hub no matter what their destination, providing next-day delivery. American Airlines Makes more money on computerized reservation system that it does on flying aircraft. Schwab OneSource Makes a market in mutual funds that had been sold through proprietary channels, reducing the profitability of established fund companies. *Thomas W. Malone et. al. (1997) Tools for inventing organizations: Toward a handbook of organizational processes, Center for Coordination Science, Massachusetts Institute of Technology, Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

A perspective on coordination What is coordination? –A business can be described as a series of steps that repeat over and over … i.e., a process –Some steps produce a product or service –The remainder coordinate production Simplified, coordination: –delivers the right thing –at the right time –to the right place …and is another way of talking about management Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

Coordination = managing dependencies among activities CoordinationTermExplanation Deliver the right thingUsability Make sure that the product or service is “usable” (i.e., what the customer wants, profitable for the company, legal, within regulatory guidelines etc.) At the right timePrerequisites or Sequencing Make sure that the product or service is produced or created in the appropriate order -- so that things which must come before others occur reliably in sequence. To the right placeAccessibility or Transfer Make sure that the product or service is delivered to where it is needed. Note that the prerequisite/sequencing idea focuses on delivery at the right time. These characteristics describe how one activity in a business process depends on others that occur around it. You will hear us refer to these as dependencies between process activities. Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

An example: Federal Express Transport package Collect package Move package Deliver package Federal Express Receive delivery information Receive package Move to truck Load on plane Fly to Memphis Move to truck Drive to destination Deliver package We will call this kind of process map an activity decomposition It works top-down and bottom-up –Moving downward describes how a piece of business is done. –Moving upward describes the goals of the process. How Why Process Analysis Introduction Coordination Dependencies Decompos’n Mapping Representation Specialization Innovation Summary

Mapping a process Transport package Federal Express Receive delivery information Receive package Move to truck Load on plane Fly to Memphis Move to truck Drive to destination Deliver package Collect package Move package Deliver package In your projects, you may be able to develop a top-down business description. It is more likely, however, that you will have to work from the bottom up, or in both directions at once. In practice, such “mid-level” analysis can help you redefine what you believe to be the strategic goals of the business. In this course, be prepared to develop multiple drafts of your process maps, and to use them as a table of contents for summarizing your analysis. This means much more than just drawing a map. Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

Representing a Process Transport package Federal Express Receive delivery information Receive package Move to truck Load on plane Fly to Memphis Move to truck Drive to destination Deliver package Collect package Move package Deliver package If you use your process map intelligently, a small number of symbols can carry a great deal of information. They can become the basis of a fairly sophisticated analysis that explicitly considers the parts of a process its major variations its most important coordination characteristics You can use this analysis to assist in designing, prototyping and demonstrating the information systems that would improve the performance of the business. Your course project is intended to give you an opportunity for gaining first-hand experience with such a prototype. It is, in essence, an exercise in business design. Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representat’n Specialization Innovation Summary

Analyzing a Process - Specializations Transport package Federal Express Receive delivery information Receive package Move to truck Collect package Move package Deliver package The idea of process specializations assists in understanding major variations that exist within a business For example, consider the different ways in which people may want to submit FedEx packages some customers may wish to go to a FedEx office others may wish they didn’t have to Collect how?Collect at FedEx office Check delivery data Input bar- code Move to truck Collect at FedEx office Use FedEx Ship Input delivery data Glance at insert Move to truck Use FedEx Ship Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

Process innovation - Dependency analysis Transport package Federal Express Receive delivery information Receive package Move to truck Collect package Move package Deliver package You can use the idea of dependencies to focus on potential business innovations. For example, consider different ways to manage usability manage prerequisites or sequencing manage (information) accessibility Collect at FedEx office Customer can talk directly to a skilled shipping agent. Agent can correct shipping information immediately. Shipping agent enforces proper sequencing. No packages shipped without adequate information. Customer must call FedEx to track package. FedEx maintains 800 numbers and phone banks to support package tracking. Use FedEx Ship Customer enters shipping data directly into central FedEx computers. Validation routines in the input software ensure that adequate information is provided. Customer can track any package at any time from any PC on the Web using FedEx’s computers. Collect how? UsabilityPrerequisitesAccessibility Collect at FedEx office Use FedEx Ship Trade-off matrix Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary

Process analysis in this course takes a coordination perspective. Information systems may assist in reducing coordination costs. Doing so effectively depends upon business and system design. We will learn techniques for describing and prototyping information systems that support new business designs. The course project will give you hands-on experience in developing such a prototype. Process Analysis Introduction Coordination Dependencies Decomposition Mapping Representation Specialization Innovation Summary