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14-09-20 - Introduction To Business Processes

This document provides an overview of key concepts relating to business processes and accounting information systems (AIS). It defines important terms like system, data, information, business process, and transaction. It describes the major business cycles like revenue, expenditure, production, and payroll cycles. It explains that an AIS collects and processes data to produce useful information for decision making. An AIS adds value by improving quality, efficiency, knowledge sharing, and decision making. Finally, an organization's AIS is influenced by its overall strategy and goals.

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75 views

14-09-20 - Introduction To Business Processes

This document provides an overview of key concepts relating to business processes and accounting information systems (AIS). It defines important terms like system, data, information, business process, and transaction. It describes the major business cycles like revenue, expenditure, production, and payroll cycles. It explains that an AIS collects and processes data to produce useful information for decision making. An AIS adds value by improving quality, efficiency, knowledge sharing, and decision making. Finally, an organization's AIS is influenced by its overall strategy and goals.

Uploaded by

citra
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© © All Rights Reserved
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You are on page 1/ 21

Course: ISYS6186-Business Process Fundamental

Effective Period : September 2020

Introduction
to Business Processes

Session 1
Acknowledgement

These slides have been adapted from:

Accounting Information Systems


14th (2018)
Marshall B. Romney, Paul John Steinbart
Pearson Education Limited, England
ISBN: 978-1-292-22008-6

Chapter 1
Learning Outcome
Student will able to :
• Describe the model of business process
Learning Objectives
After studying this chapter, student will able
to :
• Distinguish between data and information:
– Discuss the characteristics of useful
information.
– Explain how to determine the value of
information.
• Explain the decisions an organization makes:
– The information needed to make them.
– The major business processes present in most
companies.
System
A system is a set of two or more
interrelated components that
interact to achieve a goal.
system - Two or more interrelated
components that interact to
achieve a goal, often composed of http://www.naesys.com/
subsystems that support the system-integration.html#

larger system.
goal conflict - When a subsystem’s goals are inconsistent with
the goals of another subsystem or the system as a whole.
goal congruence - When a subsystem achieves its goals while
contributing to the organization’s overall goal.
Data and Information

Data
Facts that are collected,
recorded, stored, and
processed by an
information system.
Information
Data that have been
organized and processed https://www.guru99.com/difference-information-data.html

to provide meaning and


improve decision
making.
What Makes
Information Useful?
There are seven general characteristics
that make information useful:
1. Relevant: information needed to make a decision (e.g., the
decision to extend customer credit would need relevant
information on customer balance from an A/R aging report)
2. Reliable: information free from bias
3. Complete: does not omit important aspects of events or
activities
4. Timely: information needs to be provided in time to make
the decision
5. Understandable: information must be presented in a
meaningful manner
6. Verifiable: two independent people can produce the same
conclusion
7. Accessible: available when needed
What Makes
Information Useful?
To illustrate the value of information, consider the case of 7-Eleven.
When a Japanese company licensed the very successful 7-Eleven name
from Southland Corporation, it invested heavily in IT. However, the U.S.
stores did not. Each 7-Eleven store in Japan was given a computer that:
• Keeps track of the 3,000 items sold in each store and determines what
products are moving, at what time of day, and under what weather
conditions.
• Keeps track of what and when customers buy to make sure it has in
stock the products most frequently purchased.
• Orders sandwiches and rice dishes from suppliers automatically. Orders
are placed and filled three times a day so that stores always have fresh
food. In addition, suppliers can access 7-Eleven sales data electronically
so that they can forecast demand.
• Coordinates deliveries with suppliers. This reduces deliveries from 34 to
12 a day, resulting in less clerical receiving time.
• Prepares a color graphic display that indicates which store areas
contribute the most to sales and profits.
Information Needs and
Business Processes
business process - A set of related, coordinated, and
structured activities and tasks, performed by a person, a
computer, or a machine, that help accomplish a specific
organizational goal.
transaction - An agreement between two entities to exchange
goods or services, such as selling inventory in exchange for
cash; any other event that can be measured in economic terms
by an organization.
transaction processing – Process of
capturing transaction data, processing it,
storing it for later use, and producing
information output, such as a managerial
report or a financial statement.
Information Needs and
Business Processes
Information Needs and
Business Processes
revenue cycle - Activities associated with selling goods and
services in exchange for cash or a future promise to receive
cash.
expenditure cycle - Activities associated with purchasing
inventory for resale or raw materials in exchange for cash or a
future promise to pay cash.
production or conversion cycle - Activities associated with
using labor, raw materials, and equipment to produce
finished goods.
human resources/payroll cycle - Activities associated with
hiring, training, compensating, evaluating, promoting, and
terminating employees.
financing cycle - Activities associated with raising
money by selling shares in the company to
investors and borrowing money as well as paying
dividends and interest.
Interactions Between AIS and
Internal and External Parties
Basic Business Processes
Transactions between the business organization and external
parties fundamentally involve a “give–get” exchange.

a si c b u si n e ss p ro ce sses are:
These b
cl e : g iv e g oo d s / give service—get cash
– Revenue cy
cle : g et go o ds / get se rvice—give
– Expenditure cy
cash
on cy cl e : give la bor and give raw
– Prod u cti
goods
materials—get finished
get labor
– Payroll cycle: give cash—
—get cash
– Financing cycle: give cash
What Is an Accounting
Information System (AIS)?

• AIS is a system that collects, records,


stores, and processes data to produce
information for decision makers.
• Consists of
– People who use the system
– Processes (procedures and instructions)
– Technology (data, software, and information
technology)
– Controls to safeguard information
• Thus, an AIS collects and stores data,
transforms that data into information,
and provides adequate controls.
What Is an Accounting
Information System (AIS)?

FIGURE 1-3
An AIS Processes Data to Produce
Information for Decision Makers
What Is an Accounting
Information System (AIS)?

compSix
There are six components of an AIS:
1. The people who use the system o
2. The procedures and instructions used to of an nent
collect, process, and store data
AI S
3. The data about the organization and its
business activities
4. The software used to process the data
5. The information technology
infrastructure, including the computers,
peripheral devices, and network
communications devices used in the AIS
6. The internal controls and security
measures that safeguard AIS data
What Is an Accounting
Information System (AIS)?
These six components enable an AIS to
fulfill three important business functions:
1. Collect and store data about organizational
activities, resources, and personnel.
Organizations have a number of business
processes, such as making a sale or purchasing
raw materials, which are repeated frequently.
2. Transform data into information so management
can plan, execute, control, and evaluate
activities, resources, and personnel.
3. Provide adequate controls to safeguard the
organization’s assets and data.
How Does an AIS Add Value
to an Organization?

• A well thought out AIS can add value


by:
– Improving the quality and reducing
the costs of products or services
– Improving efficiency
– Sharing knowledge
– Improving efficiency and
effectiveness of its supply chain
– Improving the internal control
structure
– Improving decision making
AIS and Corporate Strategy

• An AIS is influenced by
an organization’s strategy.
• A strategy is the overall goal the
organization hopes to achieve (e.g.,
increase profitability).
• Once an overall goal is determined, an
organization can determine actions needed
to reach their goal and identify the
informational requirements (both financial
and nonfinancial) necessary to measure
how well they are doing in obtaining that
Key Terms
• System • Revenue cycle
• Goal conflict • Expenditure cycle
• Goal congruence • Production (conversion) cycle
• Data • Human resource/payroll cycle
• Information • Financing cycle
• Information technology (IT) • General ledger and reporting
• Information overload system
• Value of information • Accounting information system
• Business process (AIS)
• Transaction • Predictive analysis
• Transaction processing
• Give-get exchange
Continued to session 2

Thank you

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