MIS390:

Lesson 2: Types of Information Systems

Business Processes and Information Systems

In Lesson 1, we were introduced to the term business process. A business process is a set of actions completed to achieve a specific objective for the business, such as selling a product, hiring a new employee, or delivering a finished product to a customer. The success of a business process strongly depends on how well it's designed and coordinated. Business processes can occur within a single functional area or cross over different functional areas. However, business processes that cover different functional areas are called cross-functional business processes.

For examples of business processes in a single functional area, see Table 2.1 on page 44 of the textbook (Laudon & Laudon, 2020). For cross-functional business processes, see Figure 2.1. 

+ Figure 2.1 Text Description

Business process: Fill customer order

1. Sales—receives the order
2. Accounting—verifies customer credit, processes order
3. Production—processes the components of the order

Business process: Determine employee commission.

1. Sales—employee sells product
2. Sales—summary of all employees sales is compiled
3. Human Resources—calculates and disburses employee commission

Information systems are used to improve business processes. One way information systems improve business processes is through automation. Automation allows processes to be completed with little or limited human intervention. Refer to the initial case at the beginning of this lesson about using a self-service kiosk to fulfill a customer order. It's clear that automation is a key component in the order-fulfillment process. 

In addition to automation, information systems improve business processes by reducing the amount of time it takes to complete a task. Information systems also give rise to new business processes, such as allowing customers to download music and pay bills online. Additionally, information systems change the way businesses operate by transforming their business model. For example, the way people apply for jobs today is a new model involving online searching and online applications. Another example illustrates how information systems have changed the way people acquire music today. Many individuals download music from sites such as iTunes or stream music through Pandora instead of going to a physical store to purchase a CD.