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20 CHAPTER 1 Introduction to Business Processes

CHAPTER SUMMARY

This chapter introduced the key concepts related to common business processes
in organizations, the typical functional structure that companies employ to man-
age their operations, and the benefi ts of adopting a holistic view of integrated
business processes and their role in effectively translating corporate strategy
into operational effi ciency.
Most companies are organized according to functional departments,
which group together related activities and assets under specialized manage-
ment controls. Although this approach enables companies to focus resources
on specifi c activities, it also creates communication diffi culties and delays
between the highly specialized groups. Business processes cut across the verti-
cal barriers (silos) that characterize the functional structure. For this reason they
require cross-functional communication and collaborative execution.
Enterprise systems allow companies to effectively manage business pro-
cesses across functional areas and institutional boundaries. They perform this
task by removing barriers to sharing and accessing information, thereby provid-
ing a holistic platform to execute integrated business processes consistently
and effi ciently. One of the key benefi ts to managing business processes with
an integrated enterprise system is that process data are collected throughout
the execution of each step of the process. Managers can then use these data to
monitor and improve the organization’s processes. Enterprise systems enable
companies to achieve operational effi ciency through transparency across func-
tional areas, and they provide consistent information for managerial decision
making. All business processes have an impact on the organization’s fi nancial
status, and the real-time impact of process execution can be monitored and
analyzed through the use of an integrated enterprise system.

KEY TERMS

Asset management and customer Inventory and warehouse
service processes management (IWM) process
Business process Lifecycle data management process
Controlling Management accounting or
controlling (CO) processes
Enterprise systems (ES)
Material
Financial accounting (FI) processes
Material planning process
Fulfi llment process
Procurement process
Functional structure
Production process
Global Bike Incorporated (GBI) Project
Human capital management (HCM) Project management processes
processes
Silo effect

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