1. Systems Analysis & Design
CSUN Information Systems
Systems Analysis & Design
Business
Modeling
IS 431: Lecture 5B

2. Business Modeling: Why, What , How ???
An IS professional can add value in helping an organization to define and improve its business processes and design appropriate IS.
What are business processes and how can they be designed to support an organization’s objectives?
How do we design information systems that collect, maintain, and process the data needed to generate the outputs required by management to effectively manage business processes in the information age?
“HOW MANY processes and data items are needed for an information system ? ”
Semantic models  models of real world actions or phenomenon, REAL Business Process Modeling
IS 431 : Lecture 5B

3. The Value Chain IS 431 : Lecture 5B VALUE FIRM INFRASTRUCTURE
The Value Chain
VALUE
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND
LOGISTICS
OPERATIONS
OUTBOUND
LOGISTIC
MARKETING
& SALES
LOGISTIC
SERVICE
COST
MARGIN
IS 431 : Lecture 5B

4. Value-Added Activities
Customer-Value-Added Activity (maximize)
a business process that a customer is willing to pay for
Business-Value-Added Activity (minimize)
a business process that is essential to managing an organization
Non-Value-Added Activity (eliminate)
customer will not pay for; business value will not be increased
Goals of a business system: effective, efficient, competitive.
IS 431 : Lecture 5B

5. Business Processes Acquisition/Payment Business Process
Conversion Business Process
Sales/Collection Business Process
Human Resources
Financial Resources
Supplies
Inventories
Property, Plant and Equipment
New Ideas (R & D)
Miscellaneous services
Operations
(Varies widely depending upon the industry;
SAP industry solution maps)
Marketing and Sales
Service
Promotion
Outbound logistics
Collection and Credit
E-Commerce
ACTIVITIES
IS 431 : Lecture 5B

6. Acquisition / Payment Process
Regardless of the type of good or service being acquired, the following are typical operating events in the acquisition / payment business process:
Request goods or services.
Order goods or services.
Receive and inspect goods or services.
Store and/or maintain goods.
Pay for goods or services.
Return goods.
Specifics may vary
IS 431 : Lecture 5B

7. Sales/Collection Process
Although there is some diversity across the types of goods and services sold, the sales/collection process typically includes the following events:
Receive an order for goods or services.
Select and inspect goods or services to be delivered.
Prepare goods or services for delivery.
Deliver goods or services.
Receive payment for goods or services.
Accept customer returns of goods.
Specifics may vary
IS 431 : Lecture 5B

8. Conversion Process
General activities in the conversion process include:
Assembling.
Growing.
Excavating.
Harvesting.
Basic manufacturing (e.g., metals, woods, and chemicals).
Finished manufacturing (e.g., tools, instruments, components).
Cleaning.
Transporting.
Distributing.
Providing (e.g., power, water, protection, communication).
Training.
Discovering (e.g., research and development).
IS 431 : Lecture 5B

9. Business Process Events
A business process is “a series of activities intended to accomplish the strategic objectives of an organization.”
Operating Events are the operating activities performed within a business process to provide goods and services to customers.
Information Events include three activities: recording data about operating events, maintaining reference data that are important to the organization, and reporting useful information to management and other decision makers.
Decision/Management Events are activities where management and other people make decisions about planning, controlling, and evaluating business processes.
IS 431 : Lecture 5B

10. Business Process and Business Events
Take Customer Order
Event 1:
Marketing
Event 3:
Ship the Goods
Event 4:
Collect Payment
Business Process: Delivering Goods and Collecting Payment
IS 431 : Lecture 5B

11. Business Process Activities (Events)
Decision /
management
events
Define &Trigger
Operating
events
Trigger
Trigger
Information
events
IS 431 : Lecture 5B

12. Processes that Trigger Information System Responses
Record (event data)
Maintain
(agent, resource, location data)
Business
events
Information
processes
Trigger
Information Needs
of Decision Makers
Information
processes
Report
(in many formats)
Trigger
IS 431 : Lecture 5B

13. Process Analysis: Golden Pizza
Decision/Management
Operating Events
Information Events
Analyzing the market, competitors, and customers.
Deciding what pizzas to place on Golden’s menu.
Determine if the cooked pizza is correct for presenting order form.
Receive customer pizza order.
Receive customer payment.
Make pizza.
Deliver pizza to customer.
Generate a customer analysis report.
Generate a report of sales by pizza type.
Generate a gross margin analysis.
Generate a report of lost sales (due to the 20 minutes guarantee.)
Trigger
Trigger
IS 431 : Lecture 5B

14. Developing a REAL Business Process Model
REAL Business Process Modeling is a formal method of identifying and representing the essential characteristics that collectively describe business processes and events.
REAL = Resources, Events, Agents, and Locations.
Preparing a REAL Business Process Model requires the identification of strategically significant business activities and essential characteristics about these business activities.
IS 431 : Lecture 5B

15. Developing a REAL Business Process Model …
Step 1: Understand the organization’s Environment and Objectives
Step 2: Review the business process and identify the strategically significant operating events
Step 3: Analyze each event list in #2 to identify Resources, Events, Agents, and Locations
Step 4: Identify the relevant behaviors, characteristics, and attributes of REAL
Step 5: Identify and document direct relationships within REAL
IS 431 : Lecture 5B

16. Step 1: Understand The Organization’s Environment and Objectives
REAL modeling is an aid in analyzing an organization and its activities.
Collect data and insights about the organization’s objectives, industry, value chain, strategies, product lines, and customers.
Pay attention to the organization’s people, structure, technologies, and measurements.
A better understanding of these factors will enhance the evaluation of effective and efficient business processes valuable, competitive, meeting the organization’s objectives.
IS 431 : Lecture 5B

17. Understanding the Business Environment
Industry
The Company
Objectives
Strategies
Measurements
Competitors
Technologies
Customers
Economic Forces
People
Capital
Technology
Value Chain
Products
Structure
IS 431 : Lecture 5B

18. Step 2: Review the Business Process and Identify the Strategically Significant Operating Events
Begin by dividing the organization into its business processes. “What happened? How and Why? ”
REAL graphical model—include the strategically significant operating events that comprise a business process. (The ones that the organization wants to plan, evaluate and execute/or control)
Begin REAL graphical model by representing events with a descriptor.
IS 431 : Lecture 5B

19. Step 2 example: MrKool’s Retail Model
Events
Sell
merchandise
Receive
customer
payment
IS 431 : Lecture 5B

20. Step 3: Analyze Each Event Listed in Step 2 to Identify R E A L
Describe essential characteristics of the Events—the characteristics which:
if omitted, would render an inaccurate or incomplete description of the event.
form the basis for generating outputs for information customers to plan, execute, control and evaluate organization activities.
What kinds of Resources were involved?
What roles are performed and who/what Agents perform the roles?
Where did the event occur? (Location)
IS 431 : Lecture 5B

21. Step 3 example: MrKool’s REAL Model
RESOURCES/ LOCATION
EVENTS
AGENTS
Merchandise
Salesperson
Sell Merchandise
Register
Customer
Receive
Customer
Payment
Cash
IS 431 : Lecture 5B

22. At what time or sequence in the process should the event occur?
Step 4: Identify the Relevant Behaviors, Characteristics, and Attributes of REAL
At what time or sequence in the process should the event occur?
What are the exceptions to the “normal” ordering of events in the process?
What is the proper authorization or approval to execute this event?
What is a reasonable amount of resources associated with this event?
What are the acceptable locations for executing this event?
IS 431 : Lecture 5B

23. Step 4 example: MrKool’s REAL Model
What is an acceptable time period between events in a business process?
How might the order of events vary by customer?
Does the location from which goods are shipped matter?
How many salespeople are assigned to each customer?
Should a sales order clerk have custody of cash?
IS 431 : Lecture 5B

24. Sequence of Events
Receive payment
Ship merchandise
Receive payment OR
Ship merchandise
Provide Credit
Cash in Advance
The sequence of events may also be a function of the physical characteristics of the event (in production)
Sometimes the sequence of events is dictated by business policy
IS 431 : Lecture 5B

25. Example: MrKool’s Business Rules
Each sale takes place at a specific register (location).
Each sale involves only one customer (external agent).
Only one salesperson (internal agent) is responsible for each sale.
Each sale involves one or more items of merchandise (resource).
IS 431 : Lecture 5B

26. Example: MrKool’s Business Rules …
Additional rules:
The salesperson and customer do not have a direct relationship, The customer and salesperson are related only through the sale.
Sales can only involve merchandise, not fixed assets.
Sales cannot involve more merchandise (quantity) than McKool has on hand.
Sales cannot involve merchandise McKool does not offer.
The store keeps records on who sold which merchandize to whom at a specific cash register
IS 431 : Lecture 5B

27. Step 5:Identify and Document Direct Relationships within REAL
Draw a line from each event to each resource, internal agent, external agent, and location associated with that event. On the line, add a meaningful term or phrase that describes the relationship between the objects.
Graphically display events that are related to other events to show the required sequence of events in a business process. Draw lines from event to event in the correct sequence
Document direct relationships between pairs of agents, locations, and resources that exist independently of an operating event. Connect the pairs with a line.
IS 431 : Lecture 5B

28. Template (Relationship Descriptions on the Lines) Internal Agent
Resource
Event
External
Agent
Location
Internal Agent
Resource
Event
External
Agent
Location
IS 431 : Lecture 5B

29. Step 5 example: MrKool REAL Model
internal
agent
Merchandise
Salesperson
involves
internal agent
Sell Merchandise
takes
place at
external
agent
results in
Register
takes
place at
external
agent
Customer
Receive
Customer
Payment
increases
Cash
IS 431 : Lecture 5B

30. Linking Processes Business processes are linked together in two ways:
sharing common resources or
an event in one process triggering an event in another process.
Collectively business processes result in the acquisition of goods and services  the conversion of acquired goods and services into goods and services for customers  the delivery of the goods and services to customers  the collection or payment from customers.
IS 431 : Lecture 5B

31. Linked Processes 31 Acquisition Inventory (Share a common Resource)
Sales
(One triggers another)
Collection 31
IS 431 : Lecture 5B

32. 1.0 and 2.0 share the same resource (data store D1)
Linked Processes
1.0
1.0 D1
2.0
2.0
1.0 and 2.0 share the same resource (data store D1)
1.0 triggers 2.0 32
IS 431 : Lecture 5B

33. A Model of Business Events
Summary:
A Model of Business Events
Event
Internal Agents
Location
External
Agents
Resources
What happened?
When did it happen?
Who was involved?
What resources were involved?
Where did it occur?
IS 431 : Lecture 5B

34. From REAL Model ... Resources Events Agents Inventory Sales
Salesperson
Customer
Cash
Collection
Cash
Cashier
IS 431 : Lecture 5B

35. …to ERD Salesperson Inventory Sales Customer Cash Collection Cash
Sell 1
Salesperson M
Inventory M
Sales
Include M M M
Sell to 1
Pay for
Customer 1
Receive
from M M
Cash
Collection
Cash 1
Include M M
Cashier
Receive by 1
IS 431 : Lecture 5B

36. Information Systems Requirements
Recording operating event data (INPUT)
Maintaining (updating) reference data about resources, agents, and locations (PROCESSING)
Reporting useful data to system users (OUTPUT)
IS 431 : Lecture 5B

37. Define Necessary Processes/Functions for the System (DFD)
One recording process for each business event object in the application’s REAL model
One maintenance process for each resource, agent, and location in the application’s REAL model
One reporting process for each required output view (Source documents for next processes, pre-formatted reports, ad-hoc reports)
IS 431 : Lecture 5B

38. A Generic DFD for an Information System
1.0 D1
Business Event
EXTERNAL AGENT
Enter Data D2
Resources D3
External Agents
2.0
Maintain Data D4
Internal Agents D5
Locations
3.0
INTERNAL AGENT (Manager)
Report Data
IS 431 : Lecture 5B