1. 1 Systems Analysis & Design Business Modeling IS 431: Lecture 5B CSUN Information Systems http://www.csun.edu/~dn58412/IS431/IS431_F15.htm

2. 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

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

4. 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.

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

6. 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

7. 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

8. 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).

9. 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.

10. IS 431 : Lecture 5B 10 Business Process: Delivering Goods and Collecting Payment Event 1: Marketing Event 2: Take Customer Order Event 3: Ship the Goods Event 4: Collect Payment Business Process and Business Events

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

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

13. IS 431 : Lecture 5B 13  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. Decision/ManagementOperating EventsInformation Events Process Analysis: Golden Pizza  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

14. 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.

15. 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

16. 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.

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

18. 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.

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

20. 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)

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

22. IS 431 : Lecture 5B 22 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?

23. 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?

24. IS 431 : Lecture 5B 24 Sequence of Events 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 Receive payment Ship merchandise Receive payment Ship merchandise OR Provide CreditCash in Advance

25. 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).

26. IS 431 : Lecture 5B 26 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 Example: MrKool’s Business Rules …

27. 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.

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

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

30. 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.

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

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

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

34. IS 431 : Lecture 5B 34 From REAL Model... Inventory Cash SalesSalesperson Customer Cash Collection Cashier ResourcesEventsAgents

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

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

37. 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)

38. IS 431 : Lecture 5B 38 A Generic DFD for an Information System 1.0 Enter Data 2.0 Maintain Data 3.0 Report Data D3External Agents D2Resources D5Locations EXTERNAL AGENT D4Internal Agents D1Business Event INTERNAL AGENT (Manager)