FIS 431/631 Financial Information Systems: Analysis and Design Process Modeling Joe Callaghan Oakland University Department of Accounting & Finance

Objectives u Process Models –Functional Hierarchy Diagrams –Process Modeler u Oracle 9i Introduction –From DBA point of view –Designer 9i –Accounts verification u Designer 9i Implementation u Apply to Belgium Chocolate Company Case

Analysis Tasks Review Decides what processes are needed to implement business strategy Decides how processes interrelate Decides what data is needed Identifies areas for systems design Involves users extensively Creates activity models (FHD, PM) Creates interaction models (REA) Creates a fully normalized data model (ERD) Identify modules, which contain business logic to enforce business rules Remains independent of technology and current systems

Analysis Tasks with REA Interaction Modeling Systems Design Activity Analysis Interaction Analysis 1 Interaction Analysis 2 PLD, ELC FHD, PM REA Data Analysis ERD

Activity Models Record the activities of interest to the business (i.e., the things the business does or should do) Involves decomposition of business processes from the highest level (AMP of Resources, Conversion Processes, MSC Processes) to the lowest (elementary processes), FHD Also involves the specification of process dependency events, to refine decomposition of the processes, PM

HEART OF ORGANIZATION Conversio n Processes Customers Finished Goods and Services to Customers MSC Processes Supply goods and services Receive payment Activity Models: Template for Decomposition of Business Processes (IPSO) Suppliers AMP Processes Input Resources to the Organization Request input resources Pay for input resources Adds value RBMS Source: Hollander, Denna & Cherrington (2000), adapted

Business Process Types and Business Processes AMP Processes Human Resources Financial Resources Supplies Inventories Property, Plant and Equipment Conversion Processes Operations Varies widely depending upon the industry MSC Processes Marketing Sales Collection and Credit

What is a process? A process is group of related business events intended to accomplish the strategic objectives of the enterprise Business event (often used synonymous with business activity): an activity performed by the business, e.g., “take customer order” ( Hint:Each event should contain a verb and a noun )

Business Process Type: MSC Business Processes and Their Events Place TV ad Take customer order Collect payment Ship goods

Business Process: Simple MS Simple MSC Process Ship goods Take customer order

Events Most events are easy to identify because the business records data on forms or files. Events are characterized by the fact that they happen or have duration –For activity and REA models, they are characterized by at least a verb and a noun, but could have an adjective, take customer order, deliver customer order, pay supplier –For data models (ERD), they are characterized by a noun, e.g., Order header, Order detail, Sales header, Sales detail, Cash receipt

Objectives of Activity Analysis To understand the processes of the firm independent of: organization structure, existing IS, and technology To verify the understanding with users To lay the foundation for system design

Business Activities Terminology Function – a group of activities that together completely support one aspect of furthering the mission of the business (e.g., AMP of Resources, Conversion, MSC of Products/Services) Process – a group of related business events Elementary process – an event, and maintenance of RALs Procedure - How the lowest level (elementary) processes are carried out

Naming a Process Processes (events) are named using a verb (action) plus a noun (an entity type or attribute), e.g. TAKE ORDER, STAFF PROJECT

Process versus Procedure Process - what the business does, a specific action the business requires, e.g. CHARGE CUSTOMER Procedure - how the action is carried out, e.g. PRINT INVOICE

Activity Analysis Techniques Decomposition - Functions decompose into smaller functions or processes, processes into smaller processes. This is represented in the Function Hierarchy Diagram (FHD) Dependency Analysis - This shows the conditions necessary to enable one process/event to execute and thus the dependency of one process/event on another. This is shown in the Process Modeler (PM) (PM confirms the FHD).

Hierarchy Diagramming ROOT FUNCTION A FUNCTION B PROCESS X PROCESS Y

Decomposition Rules Processes may be decomposed into sub- processes Processes may be decomposed ultimately into elementary processes An activity that is decomposed must be broken down into two or more activities (parent has at least two children) An activity is totally described by its subordinates (sum of children should explain entire parent)

Decomposition Using Business Events Identify process that follows an important business activity Activity - Customer returns defective product Subsequent events (making up the process) - Give customer an exchange, Refund money, Return defective product to supplier

Elementary Processes: The Lowest Level of the Hierarchy Achieves a useful business result Leaves the business in a consistent state, i.e. preserves referential integrity, data integrity of attribute values, and integrity of the business transaction In general performed by one person, in one location, until complete

Functional Hierarchy Diagram: Partial Business Function Decomposition

Process Modeling (PM) Determine the conditions necessary to enable the execution of a process (lowest level process is an event or maintenance of RALs). Since one process step (or event) can supply the conditions necessary for another process step to execute, this shows dependencies between processes steps (or events).

Process Modeler Verifies the process decomposition because sibling processes should be interdependent –if not, there may be a missing process or a superfluous process Adds to business understanding by –identifying data needed to execute a process and the information that it provides –exploring sources of imports and destinations of exports of a process

Process Dependency Occurs When u The post condition of one process is the necessary precondition of another process REVIEW INVENTORY ITEM LOW STOCKPLACE ORDER

Dependency Types Sequential Dependency SELECT PRODUCT SELECT DISTRIBUTOR NEGOTIATE PRICE

Dependency Types Parallel Dependency PLACE ORDER CANCEL ORDER REVISE ORDER RECEIVE GOODS Prerequisite event Dependent events

Dependency Types Mutually Exclusive Dependency O INTERVIEW APPLICANT MAKE JOB OFFER REJECT APPLICANT

Oracle 9i Introduction From DBA point of view Designer 9i Accounts verification

Tool: Oracle Designer 9i™

Designer 9i Implementation Northwind Example You Apply to Belgium Chocolate Company Case (Phase 1) for Next Time

For Next Time Complete BCC Phase 1 Complete Oracle 9i Tutorial Prepare for REA Modeling Questions?