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Chapter 1: Introduction to Business

Process

Learning Objectives

After completing this chapter you will be able to:

1. Define the functional organizational structure, and explain why this structure creates problems

for modern businesses

2. Describe key business processes in an organization

3. Identify the main integration points between and among processes

4. Understand the cross-functional nature of processes and their relationship to organizational

areas

5. Adopt and apply an integrated perspective to business processes

6. Describe GBI’s organizational structure

7. Explain how the SAP system promotes an integrated approach to business processes

Chapter Outline and Teaching Suggestions

1. The Functional Organizational Structure

a. The Silo Effect

b. Enterprise Systems

Discuss how companies are organized, and explain that the functional structure is the most

common organizational structure. You can use a university or company or a business school

department that you are familiar with as an example. Point out that processes are crossfunctional. Ask the question: Why is the functional structure so common? Figure 1-1 will assist

you in explaining the cross-functional nature of business processes.

Explain the silo effect and its negative implications for modern business organizations. You

can give an example such as creating a sales order in sales and marketing with no integration

or communication with inventory management or production.

Point out that the nature of the functional organizational structure and the cross-functional

nature of processes directly conflict with each other.

Explain the benefits of an enterprise system (ES) (i.e., supports end-to-end processes,

productivity, competitive edge, monitoring and changing of business processes, etc.).

2. Business Processes

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a. Procurement - Buy

b. Production - Make

c. Fulfillment - Sell

d. Material Planning - Plan

e. Inventory and Warehouse Management - Store

f. Lifecycle Data Management - Design

g. Asset Management and Customer Service - Service

h. Human Capital Management - People

i. Project Management - Projects

j. Financial Accounting - Track for Track for External Reporting

k. Management Accounting - Track for Internal Reporting

Define and explain a business process. Point out that organizations use many processes to

achieve their objectives and they employ specific terms to identify the processes. Processes can

be directly related or closely related to creating and delivering goods and services. Use Figure

1-2 to illustrate a process that is executed in response to a need (trigger). The process is

carried out through a sequence of steps and results in an output. You can use an example such

as ordering supplies.

Processes can be supported by other processes and can have numerous sub-processes. Point

out that communication and coordination of tasks are very important. Figure 1-3 can assist

you in explaining this point. Ask students to indentify some other processes that they are

familiar with.

Describe and give examples of the business processes (A - K). Figures 1-4 through 1-10 will

assist you.

3. Global Bicycle, Incorporated (GBI)

Explain that Global Bicycle, Incorporated (GBI) is a fictional company that is used to illustrate

the important concepts, processes, and techniques discussed in the textbook. Figure 1-11 will

assist you in explaining GBI's organizational structure.

Call up the SAP University Alliance Community (UAC) website http://uac.sap.com, and

demonstrate the functionality and services available for students. Also instruct students to

read the GBI Backround Document on the UAC to understand GBI’s history, products and

operations.

4. How To Use This Book

a. Chapter Structure

b. SAP Software and Certification

c. WileyPLUS

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Explain the four key sections in most of the process chapters. Provide a brief background on

the origins of SAP and the problems it initially solved.

Explain that most SAP consultants are not programmers and have mastered the material

presented in this book.

Explain the three levels of SAP Certification and the value added of becoming a SAP-certified

consultant.

Point out that the importance of the WileyPLUS online supplements and the value added to

passing the SAP Certification exam. Reinforce the point that using this textbook and the

ancillary materials can substitute for taking a formal TERP 10 course.

Review questions

1. Question:

Describe the functional organizational structure. Why do you think this structure is so common?

.

Answer:

The functional organization structure is divided into functions, or departments, each of which is

responsible for a set of closely related activities. This type of organizational structure is widely

used because it spreads the responsibility across an organization instead of locating it in one

particular person or group. In addition, it enables people to specialize in terms of skills and

knowledge.

2. Question:

What is the silo effect? Why does it exist? How can an organization reduce or eliminate the silo

effect?

.

Answer:

The silo effect refers to an organizational structure in which workers complete their tasks in

their functional “silos” without regard to the consequences for the other functions in the

process. This situation exists because each department within a functional organization works

independently and focuses on its objectives. This tendency can be reduced by thinking sideways

or viewing the business across functional boundaries and focusing on the end-to-end nature of

the process and its intended outcomes.

3. Question:

What is a business processes? Why is a process view of organizations essential to becoming a

successful manager?

.

Answer:

A business process is a set of tasks or activities that produce desired outcomes. Every process is

triggered by some event, such as receiving a customer order or recognizing the need to

purchase something. A process view can liberate managers from the silo effect. Managers must

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