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Informatisation of Business Processes

A business managements system is a system used to influence all business activities in order to improve the performance and obtain the maximum profit. This is an objective of management. The management process is a chain of goal-directed interconnected actions.

It is a cycle of five stages, which are as follows:

  • Planning (planning values of various indicators and setting deadlines when such values shall be achieved);
  • Registering (registering actual values of the indicators according to the schedule);
  • Controlling (calculating the variance between the planned and actual values);
  • Analyzing (analyzing the reasons for deviations of actual values from planned values, if any);
  • Regulating (performing control activities and/or adjusting the plan).

Based on the results of the analysis, re-planning is carried out (adjusting the plan and/or performing control activities). Therefore, next stages of the management cycle conform to the new plan. Otherwise, they correspond to the earlier version of the plan.

business management model

When managing an enterprise, people use various organization models. As a rule, a multidimensional matrix of indicators represents the company's generalized model. Such matrix has one specific measure. That is time. It is used to indicate a period during which we need to know the values of the indicator we are interested in. It is obvious that values of different indicators change over time. Besides, a planning horizon corresponds to the dates.

Values of all indicators at a particular point of time measure the current condition of the modeled enterprise. An example is statistical or periodic reports containing indicators of the model and their values.

What affects the value of each dimension? Enterprise’s activities lead to the events subsequently changing indicator values (model measurements).

The mechanism of these changes is the following:

  1. An event is registered by creating a document
  2. The document takes legal effect
  3. The event is reflected in a multidimensional matrix of values.

The description above refers to the generalized model. In fact, the management board has a complex structure and is divided into several subdivisions, which are assigned with their own management tasks and have particular models of such tasks.

What is informatisation of business management?

Information systems can have different names, but they have at least one thing in common – they are designed to support management processes. What is the software support of management processes? Which part of a management process is supported by software and how? To answer these questions, we need to consider a management process structure.

Any management process can be viewed from two perspectives. The first is traditional functional management and the second is process management. The latter is a solution that meets the actual needs of functional management. Any hierarchical organization faces one and the same difficulty.

Each employee and every functional subdivision treat as their task only the function they have been assigned with. In this case, the final result is an assignment that is not given to anyone. A hierarchical organization builds vertical superior-subordinate relationships, thus ensuring the performance of assigned functions. However, this is not enough for the delivery of final products or services (meeting the needs of external customers), which requires the interaction between several independent subdivisions. This is the horizontal or network interaction in the process of creating final user value. Such interaction (communication) comprises a process topology.

A hierarchical system offers unsystematic options to resolve arising issues: through memos, notes, briefings, meetings, etc. There are only two systematic solutions. They are project and process management.

Both project and process management involve the introduction of administrative regulations outlining the horizontal interaction between the subdivisions within the hierarchy.

Project management sets the rules for each project, e.g. in the form of a network schedule and project charter. Process management is based on the assumption that our actions repeat. Rules are set for a business process template (administrative regulations), and activities involved in each process are carried out according to this template (subsequent repetition of our actions).

Key aspects of a business process are as follows:

  • Cross-functionality: a process involves several subdivisions
  • Repetition: a sequence of actions is specified in a template (otherwise, it is a project)
  • Communication: interaction between managers and not between the functions they execute.

A business process does not resolve the issue of functional incompetence. It can and should be handled by functional management. An employee fails to perform his duties? Train or replace him. There is no need to set the sequence of actions a doctor should carry out. He decides himself how to treat his patients. However, functional management helps him to deal with routine operations (making up documents, etc.) and meets his reference and information needs. Process management ensures the interaction with other participants of a diagnostic and treatment process (e.g. with pharmacies or diagnostic services), according to the corresponding regulations.

Therefore, business management processes include two constituents: the performance of assigned functions in the circumstances outlined in the regulations and the execution of the regulations, i.e. communication with other participants of the process according to the metrics specified in the regulations (business process templates). In other words, regulations used in the management process create conditions for functional actions and subsequent selection of next process steps.

Functional or process management?

We can represent the functional aspect of any activity as an ordered list of functions comprising the activity. The process aspect of an activity is a directed graph, which is a chain of transfers from one node to the other. Each node represents an activity function or a point to decide what the next step in the process is and who shall manage the process. This shows the dual functional and process nature of any activity.

Which part of a management process is supported by software and how? Standard computer systems support the functions required to implement management tasks, including planning, registration, control, analysis, and regulation. However, this management cycle relates, first of all, to the indicators of the main processes and not to the attributes of management processes. Its aim is to optimize the production performance and provision of services. Here we deal with economic indicators of the business model. The quality of the management process can be indirectly seen from the economic indicators, which values have been eventually obtained with the help of blue collars. Management processes stay out of sight, i.e. it cannot be checked how managers performed their administrative regulations.

What is cross-functional management? Toyota (Japan) was the first to introduce cross-functional management. It helps to manage business processes outside the traditional operation boundaries of business subdivisions. The main aim of cross-functional management is to coordinate activities of various subdivisions to reach final goals and to complete the tasks faced by the enterprise.

In other words, a cross-functional process involves several subdivisions. Process methodology says that technological initiatives shall be aimed at such processes as they usually are the reasons for major issues and, therefore, contain the greatest potential for the improvement. Any hierarchical organization comes up against individual interests of each subdivision that prevail the interests of the entire company.

Functional or process management? These are not alternatives but different sides of management activities, which complement each other.

Business management informatisation ensures a coordinated support of functions and processes involved in management activities using information technologies.