Unit 2.2
Business Processes
IT 233: Business Information Systems
Learning Objectives
By the end of this chapter, you will be able to:
- ✅ Define what a business process is and its role in creating value.
- ✅ Identify the three key components of any business process.
- ✅ Provide examples of common business processes across an organization.
- ✅ Explain why understanding processes is crucial for business improvement.
What is a Business Process? ⚙️
A business process is a collection of linked tasks which find their end in the delivery of a service or product to a client.
In simple terms, it's the specific, ordered set of steps a company takes to create value for its customers.
Think of it as the organization's recipe for success.
The 3 Core Components
1. Inputs
The resources required to start the process.
(e.g., data, materials, customer request)
2. Activities
The series of steps that transform the inputs.
(e.g., actions by people or systems)
3. Outputs
The final product or service of value.
(e.g., a delivered product, a report, a solved issue)
⚙️ Classify the Component
Click Input, Activity, or Output for each scenario item.
Anatomy of a Process: Order Fulfillment 📦
Example: Fulfilling an online order
INPUT
Customer's online order
ACTIVITIES
- Pick items from warehouse
- Pack items in a box
- Arrange for shipping
OUTPUT
Delivered package to the customer
⚙️ Sequence the Process: Momo Restaurant
Correct sequence builds here:
Processes Across the Business 📊
Sales & Marketing
- Lead Generation
- Order Fulfillment
Finance & Accounting
- Invoicing Customers
- Procure-to-Pay
Human Resources
- Employee Onboarding
- Payroll Processing
Operations
- Product Assembly
- Quality Control
⚙️ Match Process to Department
Select the correct department for each business process, then check.
🔗 Cross-Functional Processes: Order-to-Cash
Most important processes cross several departments. No single department owns the whole thing.
| Step | Department |
|---|---|
| 1. Customer places an order and credit is checked | Sales & Marketing, Finance |
| 2. Goods are picked, packed and shipped | Operations (warehouse) |
| 3. Invoice is sent | Finance & Accounting |
| 4. Payment is received and recorded | Finance & Accounting |
| 5. After-sales follow-up | Sales & Marketing |
If each department works in its own system, orders get lost between departments. That's why firms use shared systems such as ERP.
🎬 Watch: Order-to-Cash, Step by Step
Practical Application in Nepal 🇳🇵
Example: Mobile Wallet Top-Up (e.g., eSewa/Khalti)
- Input: User request to load funds from a linked bank account.
- Activities:
- User enters amount.
- App sends secure request to bank via ConnectIPS.
- Bank verifies credentials (PIN/Biometrics).
- Bank debits user's account and confirms transfer.
- Wallet provider credits the user's wallet balance.
- Output: Updated wallet balance, ready for payment.
⚙️ eSewa Top-Up: Step Simulator
Why Document Processes? 🔍
An organization cannot effectively manage what it does not understand.
- 🎯 Identify Inefficiencies: Find and eliminate bottlenecks, redundant steps, and waste.
- 🎯 Ensure Consistency: Standardize tasks for predictable quality and outcomes.
- 🎯 Simplify Training: Create clear, repeatable instructions for new employees.
- 🎯 Enable Improvement: Provide a baseline for process re-engineering and automation with IT.
📏 How Do We Measure a Process?
Efficiency: "doing things right"
Using fewer resources (time, money, people) for the same output.
Effectiveness: "doing the right things"
Achieving the goal the customer actually cares about.
| Metric | Question it answers |
|---|---|
| Cycle time | How long from start to finish? |
| Cost per unit | How much does each output cost to produce? |
| Error rate | What share of outputs go wrong? |
| Customer satisfaction | Did the customer get what they wanted? |
🧮 Worked Example: Measuring a Pharmacy's Process
Illustrative example with sample numbers.
| Metric | Handwritten prescriptions | After e-prescriptions |
|---|---|---|
| Prescriptions filled per 8-hour day | 120 → 15 per hour | 160 → 20 per hour |
| Errors (wrong drug or dose) | 6 of 120 → 5% | 2 of 160 → 1.25% |
| Average customer wait | 20 minutes | 8 minutes |
Quick check: which rows show efficiency, and which show effectiveness? Throughput and wait time are efficiency, and fewer errors is effectiveness (the right medicine reaches the patient).
Without measuring first, the pharmacy could not prove the new system helped.
The Foundation for Improvement ⚡
You cannot improve what you do not understand.
Documenting and analyzing a business process is the first and most critical step toward making it better, faster, or cheaper.
⚙️ Bottleneck Detective
A Banepa bookstore processes online orders. Click the bottleneck step — the one step slowing the entire process.
🍔 Real Case: McDonald's Redesigns a Process (1948)
- Brothers Richard and Maurice McDonald ran a busy drive-in in San Bernardino, California, with slow service and a long menu.
- In 1948 they closed, redesigned their process, and reopened with the "Speedee Service System".
- They cut the menu to about nine items, gave each worker one task, and laid the kitchen out like a factory assembly line.
- Orders that used to take far longer were now ready in well under a minute, at lower prices.
Same inputs (meat, buns) and same output (a meal), but redesigned activities. The process itself became the competitive advantage.
🎬 Watch: Not Food, a Process
The Oldest McDonald's: Downey, 1953
🍕 Real Case: Domino's Pizza Tracker
- Launched by Domino's in the US in 2008.
- It shows the customer each stage of their order live: order placed, prep, bake, quality check, out for delivery.
- The internal process didn't change much, but now the customer can see it.
Discuss: which Nepali services already show you their process stages? (Ride-hailing apps, courier tracking, online passport application status…)
🎬 Watch: Your Pizza, Stage by Stage
Chapter 2.2: Key Takeaways
- A business process is a structured set of activities that transforms inputs into valuable outputs for a customer.
- Processes are the fundamental building blocks of how any organization operates and creates value.
- Every functional area of a business (Sales, HR, Finance) relies on a set of core processes to function.
- Documenting processes is essential for consistency, training, identifying inefficiencies, and enabling improvement through technology.
Discussion & Application
Group Activity (5 mins)
Choose a simple, everyday activity at a local Nepali business (e.g., ordering momo at a restaurant, withdrawing cash from an ATM).
Describe it as a business process:
- Identify the Inputs.
- List the key Activities in sequence.
- Define the final Output.
🏊 Activity: Draw a Swimlane Map
In pairs, 2 minutes: Draw three lanes: Student, Librarian, Library System. Place the steps of borrowing a book in the right lane.
| Student | Librarian | Library System |
|---|---|---|
| 1. Searches catalogue, finds book | Shows shelf location and availability | |
| 2. Brings book and ID card | 3. Scans ID and book | 4. Checks for fines, records loan, sets due date |
| 6. Takes book | 5. Stamps or prints the due date | 7. Sends a reminder 2 days before the due date |
Every arrow that crosses a lane is a hand-off, and hand-offs are where delays and errors usually happen.
Exam Practice 📝
Short answer
- Define a business process.
- List the key components of a business process.
- Give one example of a business process in each of accounting, marketing, and HR.
Exam Practice 📝 (continued)
Long answer
- Explain the components of a business process, using an example from a Nepali organization.
- Why is it important for organizations to understand and measure their business processes? Discuss with examples of cross-functional processes.
Revise the answers in the full note.
Image & Video Credits
Images
- Oldest operating McDonald's, Downey, California (opened 1953; not the 1948 San Bernardino restaurant): Bryan Hong (Brybry26), CC BY-SA 2.5, via Wikimedia Commons
- Order-to-cash swimlane diagram: made for this course
Videos (YouTube)
- THE STORIES BEHIND WORLD BRANDS, "How McDonald's Won With Speed" (18–84 s); dramatised narration
- Chargebee, "What is Order to Cash | O2C or OTC" (21–111 s)
- Domino's New Zealand, "Don Meij on Domino's Pizza Tracker" (3–40 s)
Thank You!
Next Up: Chapter 3 - Information Systems & Strategy