Viewing Businesses as Systems

Basic Concepts for Understanding Systems

• Framework• Models• System• Work System• Business Process• Value Chain• Information Systems• Information Technology

Framework

• Brief set of ideas for organizing thought process about a particular type of thing or situation

Models

Simplified representations of reality

System

• A set of interacting components that operate together to accomplish a purpose

System properties

• A system has– Purpose– Boundary– Environment– Inputs– Outputs

Engineering

A firm as a system

Supplier

Customer

Production Sales Delivery Service

Finished goods

PreferencesEquipmentInformation

Orders

FinishedGoods

ServiceRequests

Product design

THE FIRMOrders To suppliers

Purchaseditems

Work System

• A system in which humans perform a business process using information, technology, and other resources to produce products for internal or external customers.

Work System

Business Process

People

Information

Other resources

Products

Business Process

• Related group of activities that use people, information and other resources to create value for internal and external users.

Value Chain

• Set of processes a firm uses to create value for its customers

• A process’s value added is the amount of value it creates for its internal and external customer

Value Chain

Information System

• A type of work system that uses information technology to capture, transmit, store, retrieve, manipulate or display information thereby supporting one or more other work systems

Information Technology

• Hardware and software used by information systems

Information Technology, Information Systems, and work systems

InformationTechnology

InformationSystem

WorkSystem

Firm

Phases in building and maintaining systems

• Initiation

• Development

• Implementation

• Operation & Maintenance

Work-Centered Analysis (WCA) Framework

Customer Product

External or Internal who use or receive direct benefit from the product

Other Stakeholders Infrastructure the customer should have to

use the product

Information content Physical content Service Content

Business Process

Major Steps Rationale Processes providing inputs Processes receiving the product

Participants Information Technology

People who perform the work Shared human structure

Created or modified within this system

Received from other work systems

Technology within the system

Shared technology infrastructure

Customer Product

Person who purchases books Wholesalers that supply the books Amazon.com’s shipping department

Information about books that might be purchased

Information describing each book order Books that are eventually delivered

Business Process

Major Steps:Purchaser logs on to www.amazon.comPurchaser identifies desired book or give search criteriaPurchaser looks at book-related information and decides what to orderPurchaser enters orderAmazon. com orders book from wholesalerWholesaler sends book to Amazon.comShipping department packages order and sends it to purchaser

Rationale:Instead of forcing book buyers to go to typical bookstores, permit them to use online access from home or from work

Participants Information Technology

People interested in purchasing books

Order fulfillment department of wholesaler

Shipping department of Amazon.com

Orders for book Price and other

information about each book

PC’s used by purchasers Computers and networks

used by Amazon.com for order processing

Work Centered Analysis (WCA) for Amazon.com