Business process – information technology case report

        BUSINESS PROCESS – INFORMATION TECHNOLOGY CASE REPORT

ABSTRACT

        This paper explores the nature and essence of Information Technology as it is correlated with Business Processes. In reality, it pertains to an outsourcing of IT service that requires one party to avail of the expertise of another party with regards to modern IT business and technology. A business process is considered to be an essential element in business success since it simplifies the operation and organizes the various processes. However, the parties entering into a business process outsourcing with regards to the use of Information Technology takes a complicated task of carefully scrutinizing every detail of the purported agreement to ensure that trust and confidence between the parties will continue reign for years.

INTRODUCTION

         The increasing trend of market competition that emerged beginning in 1990’s had caused many business entities to improve their business performance and reduce all cost associated with operating the business. They forced upon themselves to implement a re-skilling of their people, redirect resources, reshape products and redesign processes by installing IT systems. As a result of organizational changes made by management, business processing has become a new tool to reducing costs through an effective partnership with a third-party provider with the purpose of innovating operations in the face of rising competition in the market. The emergence of business process outsourcing is a good example of business reengineering involving business information development.

         However, business process and information system go hand in hand in today’s business environment because on has become an indispensable part of the other. Companies handling business processing outsourcing are supported by a plethora of communication and information-related technologies and parties usually depend on the other for continued growth and development.  Benefits that can derived from information technology goes beyond effectiveness, productivity and efficiency. Any organizational change within the business process environment necessarily includes the installation or redesigning of the information technology and system to suit business needs and processes. This paper explores the connection between business processing and the utilization of information technology as they are correlated with the sample company Microsoft with its Microsoft Dynamics platform for business IT servicing of client companies and other business processing companies.

The Traditional View

The following figures illustrates the traditional view about the connection between the business functions and the information systems. This would initially confirm the view of Nicholas Carr regarding the use of IT in business processes.

Figure 1

[pic 1]

The modern concept which negates Carr’s interpretation of the Business Process-Information Technology partnership is illustrated in the following figure:

Figure 2

[pic 2]

Business Processes

        It refers to the proper organization of work process in a coordinated manner and with focus on the value of the product offered or service rendered. It consists of a set of activities involving the flow of materials, knowledge and information and there is unique way of coordinating these elements in accordance with the wishes of management. A business process may be internal in nature as when the management decides to do the organization itself without the assistance of third-parties. Managers may be called upon to conduct a strategic planning and formulate a strategic plan to implement the proper organization contemplated in a business process integration plan. The strategic plan provides a framework for effectuating reforms needed in carrying in out the business process initiative.

        A company may also choose to outsource the business process to save time and expenses. A third-party provider may be called upon to render the service under an agreement that could last for several years. Business process outsourcing or BPO is now a popular business undertaking around the world because of the benefits a company get such as efficiency and productivity at work and minimizing capital expenditures for the additional equipment needed to improve the services to be rendered by the company. In fact, outsourcing is beneficial to both companies since it promotes economy of scale and confines each business to the main purpose rather than engage in operating many business units some of which are within the competence of other companies to handle.

        The adoption of installation of an information system helps companies achieve greater efficiencies in terms of production as it automates different parts of business processes. It also helps organizations rethink and streamline the different processes of a company. For a manufacturing or a production company, it assists in assembling products, check their qualities as well as produce materials and bills in a fast or expeditious manner. For a sales and marketing company, it facilitates in the identification of customers and enhance the process of creating customer awareness. For the finance and accounting section, it makes it easier to settle accounts with creators and product a real-time financial statements with a focus on cash accounts. For the human resources, it simplifies the recruitment and selection process, improve the performance and evaluation system and facilitates in the enrolment and the entitlement of employees to a number of benefit plans.

Cross-Functional Business Processes

        A business process that follows a cross-functional approach transcend the boundary between marketing, sales, manufacturing and research and development.  It also considers group employees coming from different functional specialties in completing a piece of job and a typical example for this is the Order fulfilment process. Modern businesses consider the cross-functional approach if their business volume is high enough that existing internal structure is inadequate to serve the needs of clients and partners. A company then enters into an agreement with a number of business process outsourcing companies to handle a phase of the operation depending on its specialty and skills. For example, a car manufacturer may want to hire a supply chain logistics provider for the delivery of products and hire an accounting firm to handle its financial books of accounts instead of doing the two operations internally. This saves time and expenses and the company can always re-channel funds to other productive endeavors (Harmon, 2007).

Enterprise Applications

         Carr has not realized the full potential of installing a reliable IT in the company. His ideas of computer-dependent operation may be traceable to the old and dilapidated concepts of computing power such as the use of old operating systems, an old network system that continues to use cables and wires instead of the wireless technology common nowadays.  The purported IT solution provides the enterprise application for the company. It establishes an enterprise system, a supply chain management system, knowledge management system and a customer relationship management system. All these systems portray the use of an IT as specific to the requirements of each of the units involved. The whole system, however, should be able to serve outside the business organization’s boundaries covering both the vendors and the customers. The technology to be used should be a unified platform where efficient operations and customer-drive business processes can be observed (Gleick, 2011).

Challenges of Enterprise System

        The challenges are limited to the use of equipment and the centralization of the decision-making processes. Technology-wise, the IT system needs to use a number of software to attract a larger investments in money, expertise and time. An outsourcer should be well-equipped in needed equipments and technology devices so that the client feels that the security and safety of data and information is assured of.  A client desirous of implementing an internal IT system for internal use is also mandated to use the proper equipments and processes to ensure that internal operations are running smoothly as they adapt to the modern technology being integrated in the company’s system. For both the outsourcing company and the client, the use of modern technology is an indispensable requirement in preparing the company to the challenges of globalization and advancement in technology. For instance, workers are now using the social media Facebook to communicate even at far-flung places around the world as long as there is net connectivity. The organizational coordination and decision-making may be centralized to fast-track the processing of customers’ orders and request. Management and IT systems are therefore complementary and one can’t fully function without the other.

Marketing Risks Associated with Outsourcing

Listed hereunder are the major risks that are associated with outsourcing of business processes, and the suggested measures in reducing these risks:

1. The delays committed by third parties can cause a decline in the satisfaction of end-customers and on-time delivery performance. Delays can be caused many factors which are beyond the control of the outsourcing entity, such as: labor disputes, political unrest, customs delays, weather, interruptions due to terrorism and outbreak of diseases. Delays can be prevented through regular monitoring.
2. The process of outsourcing may affect the quality of the service or product. Outsourcing companies need to be evaluated for integrity and experience.
3. If there is insufficient planning, this may cause the transition phase to fail in both budgets and schedules. Holding a strategic planning on a regular basis provides the opportunity for a review of the budget and schedules.
4. The suppliers or outsourcing company may not be financially viable. The outsourcing company must be chosen on the basis of their financial integrity.

The Supply Chain and the IT System

         A company’s marketing and supply chain units need to follow the procurement processed mandated by government agencies or the law. Some safeguards have been put in place to protect the rights of parties to a supply chain transaction and to safeguard the flow of goods as well as the integrity of the financial system where settlements are generally made. Statutory and mandatory regulations involving procurement, bidding and accreditation processes are intended to make the supply chain effective, reliable and durable. Another is the adoption of rules regulating the flow of money such as anti-money laundering initiatives to prevent any illegal trade from being carried out by unscrupulous parties. Lastly, e-commerce laws are being made to take into account the evidentiary value of commercial transactions done on the internet and those involving internet banking transactions (Stanoevska-Slabeva et al., 2010).