Work Centered Analysis

An integrated model for business operations with emphasis on information technology

Carl Longnecker and Mark Van Oyen
Loyola University Chicago Dept. Information Systems & Operations Management Chicago, IL 60611 This paper describes the Work Centered Analysis (WCA) framework or model for understanding business operations as systems consisting of business processes. It provides a high-level perspective on how a business process links people, technology, and information to customers through the firms products and services. It can be used to analyze existing operations for business process reengineering (BPR), or to assist the design of new ones. WCA was developed by Steven Alter and is fully documented in his textbook Management Information Systems, A Management Perspective, Addison Wesley, 1999. With permission from the author, this paper augments Alters WCA model to provide a broader perspective on business processes that is suitable for examining labor cross-training and coordination issues.

What system are we talking about?

Confusion often results when the word system is used. Information system computer system business system hardware system they can have many and conflicting meanings. WCA uses the following definitions of system, as depicted in the following figure.

Context

Information technology is the hardware and software used by information systems. It includes hardware and software such as Pentium workstations, Windows Operating Systems and SAP Application Software. An information system is a particular type of system that uses information technology to capture, transmit, store, retrieve, manipulate or display information. Information systems often support ``work systems, which, roughly speaking, are operations organized to accomplish desired tasks. An example of an information system is a hardware and software system that provides monthly sales analysis reporting to a business. Counter to the intuition of many, information systems in businesses frequently do not create significant value. You might suspect that a business with an inefficient information system would disappear quickly. However, both inefficient corporate behemoths and small companies can survive due to the profitability of other parts of the business. A work system is a system in which human participants perform a business process using information, technology, and other resources to produce products for internal or external customers. An example of a work system is the process in R&D that designs including the product a team and all its supporting overhead. Another example would be a process that accepts and fulfills a customer order. The core of a work system is a business process consisting of steps or tasks related in time and place, having a beginning and an end, and having inputs and outputs. More specifically, we define a task to be the accomplishment of a meaningful activity toward the creation of product (or service) for a customer. Fundamentally, all work done in any production or service environment can be broken down into tasks.

The relationship of an information system to the work systems of a firm used to be much simpler than it is today. The earliest information systems, accounting systems, created nothing of direct value. The tasks directly linked to the product or service did not crucially depend on the information system, which merely recorded what happened, tracking the activities of the firm. Of course, this historical information was ideally used in the higher level planning activities such as forecasting, capacity planning (labor as well as resource and facility capacity planning), aggregate planning, master production scheduling (MPS), and even sequencing and scheduling on the shop floor. Now, information technology is often deeply embedded in the business processes and essential to their functioning. For example, robots (electro-mechanical and others) are used in many manufacturing operations. Many electro-mechanical robots have imbedded information systems and are supervised through a network-based information system. Turning off the information system means turning off the robots, which causes the production/service operation to grind to a halt. In the service sector, some of the information systems (such as email, web

sites, search engines, and shopping/purchasing robots) used can be viewed as virtual robots. The example applies here as well. Even standard, off-the-shelf software and PC/workstation/server hardware has become essential to business operations. Related to this is the increasingly widespread use of local area networks (LANs) to provide Intranet and Internet services. Such information technology has become integral parts of the overall operational processes and is being used for floor shop monitoring, production planning, and production control, communication, managerial analysis and decision making, virtual stores, advertising, and performing a wide variety of tasks.

Businesses as Systems Consisting of Business Processes

The figure below shows the primary tasks in serving a customer in a restaurant. This is a model of a business process for creating value through food and beverage service.

The scope of a business process is determined by the specific set of tasks it includes. Business processes vary greatly in scope. Some business processes are largely contained within one function of the business, such as engineering. The most important business processes often involve many functions. For example, processing a customer order often involves Sales and Marketing, Accounting and Finance, and Production. This figure shows many of the common business processes in firms that manufacture goods.

A processs value added is the amount of value it creates for internal or external customers. The business process perspective is critical to creating information systems that are value added to the organization. Historically, many information systems did not provide value added. They generated interesting information or automated unimportant support processes, but they did not directly build products and did not contribute a good return on investment. To be effective, information systems must be integrated into the primary business processes of the organization in a manner that is highly value added.

Business Processes: Products, Labor, Resources and Context.

To clearly define a helpful framework for business processes, we begin with the notion of a task (step or activity). Tasks are related in time and place, have a beginning and an end, and have inputs and outputs. To define a task, we first identify its constituent elements, which are: Labor (people, participants, managers, blue collar workers, etc.), Products (finished goods, semi-finished goods, subassemblies, services, jobs, orders, related information, etc.), Resources (IT, equipment, tools, facilities, etc.) Context ((business environment, supply chain, parternships, firm-firm relationships, marketplace, etc.)

We define a task as the assignment of labor and/or resources to a product over time as appropriate in its context. Tasks are broadly construed to represent any of the activities that are required to accomplish or indirectly support the output of products and services. Thus, we 4

included as tasks activities such as machine maintenance and repair, which are common additional skills given to assembly line operators, A business process is a related group or sequence of tasks that use products, labor, and resources to create value for internal or external customers in a manner that is effective in its context. Products should be thought of broadly. They can be goods or services delivered to customer, or significant creations used internally. The ``product associated with a repair task on a machine used on the production line is a purely logical one (e.g., a repair order), since it is not directly associated with any physical item delivered to the customer. However, it is an essential support task. Without maintenance the manufacturing line would eventually fail and profits would sag.

The business process model encourages the user to invest in processes that create products of significant value, and reduce or eliminate processes that dont create products with significant value.

The Work Centered Analysis (WCA) Model

The WCA model (see the figure below) takes a comprehensive look at all of the elements required to serve the customer with special attention to information systems and technology.

Context

LABOR

Resource: Information

Resource: Technology

Customers the internal and external customers of a work system are the people who receive and use its output entities. Internal customers are people within the same firm. External customers are people outside the firm who receive and use work system output finished entities. These outputs include the products or services that are the reason for the firms existence.

Products are usually viewed as the output of a work system such as services provided to the customer or finished goods, but a more careful examination reveals that the product usually contains a mix of information and physical and service components. Furthermore, as one defines the business process, it becomes clear that it is important to use the term product to refer to the raw materials, parts, sub-assemblies, semi-finished goods, and everything that is transformed into the final product or service. From the perspective to labor cross-training and coordination, it is especially important to view products (also referred to abstractly as entities) very broadly so that every task of significance can be associated with some product, which is often not directly connected with anything sold to the customer. Business Process - is a related group of tasks/activities that create products used directly or indirectly to provide value to customers. Common ways to improve work system performance include changing business processes by adding, combining or eliminating tasks or by changing the methods used to perform tasks. Labor - are the participants that accomplish the tasks in a business process. Even highly automated systems include human participants, even if only for maintenance and repair. For example, automated voice response systems link to human agents who can sometimes be reached when none of the automated options suffices. Work systems depend on participants skills (depth and breadth), effort, motivation, and their effective coordination with other participants. They also affect many participants personally for good or ill, even though many systems are designed in a very narrow, technical manner as if these impacts were irrelevant or unimportant.

Resources: Information refers to information other than the product itself that is used to accomplish the tasks that comprise the business process. This information can take many forms including numbers, text, sounds, pictures, and even video in a wide variety of media and file formats. Some of the information for a work system may be created or modified within the system under study, while other information may be received from other work systems. Every product or task has at least some information associated with it. For example, the maintenance of a resource such as a milling machine can be viewed abstractly as a product, in our view. Performing a task to provide this (internal) maintenance product requires the assignment and coordination of labor (repairpersons), the product (a work order along with the needed information), and resources (the milling machine, repair tools) in a manner appropriate to the context (is repairperson in-house employee or out-sourced labor?). This needed information that is part of the product might include a historical maintenance and repair record for the broken machine as well as instructions for proper maintenance. Resources: Technology denotes the tools, devices, and equipment that either perform work directly (as in key resources that are a part of a production line), or are used to help people perform work (for example, a standard PC that a manager uses to perform his tasks effectively). Technology in a work system has no value whatsoever unless it is used within a business process. In contrast to the perspective of an engineer, scientist, or technician, the business professionals view of technology concentrates on (1) how the technology dovetails with the firms strategy to enable the work system to attain competitive advantage and/or excellence , (2) short and long run costs, and (3) the relevant risks. A WCA analysis includes technology, but should emphasize how the technology is used within the work systems instead of the internal details of the technology. Context captures the activities, contracts, and relationships among mutually interacting firms that enable the operation to operate in the context of its marketplace. Examples of this would include supply-chain management agreements and practices, partnerships, networks, alliances, etc.

An example of using Work Centered Analysis Amazon.Com

In the mid-90s Amazon demonstrated the power of the Internet by selling books on-line. Many stories about this technical success concentrate on the customer and the buying process over the Internet. On the other hand, by the summer of 2000, Amazon had not yet achieved profitability, despite an enormous market capitalization. The WCA model tells a richer story.

CUSTOMER A person who purchases books on-line, via the WWW

PRODUCT A book plus Catalog information on line about books that might be purchased Customer reviews of books, also available for general access Information about book sales Recommended purchases by interest category and level BUSINESS PROCESS (Major Steps): 1. Purchaser logs on to www.amazon.com 2. Purchaser identifies desired book or gives search criteria 3. Purchaser browses book-related information 4. Purchaser decides what to order 5. Purchaser enters order 6. Amazon.com ships from a warehouse, sometimes the next day 7. Warehouse selects book and shipping department packages order 8. UPS or other service delivers order to the customer Business Rationale: Instead of forcing book buyers to travel to typical bookstores with limited inventories, provide an online, globally accessible virtual mega-store that allows the search, research, selection, and purchase of books (and other products over time). LABOR (by category) Amazon Warehouse Dept Shipping Department of Amazon Customer Service for Problem Handling (including problems with automated sales function) IT Staff that maintains and supports the enabling applications and data center operations RESOURCES: INFORMATION Online catalog Online customer reviews Online sales history for books Online access to order status RESOURCES: TECHNOLOGY Personal computer used by purchaser with a WWW browser Custom web application created for customer ordering Computers and networks used by Amazon.com for order processing Automated warehouse technology CONTEXT Third-party logistics (US Mail, Federal Express, UPS) Any partnerships or contracts signed with publishers or other suppliers Internet access growing rapidly High rate of PC purchases

Even with a very streamlined analysis, WCA enables a more in-depth understanding of the Amazons innovation. The product is no longer simply selling books. An information system enabled business process has enhanced the product. Unlike traditional local bookstores, a database of reviews by other purchasers of a book and professionally written recommendations are now available to every customer via the Amazon.Com website. In addition, Amazons business process has radically changed. At one time, a customer had to travel to a bookstore with a limited inventory. The Amazon customer, via their browser, has direct access to a much larger catalog enabling short lead times for low volume books. For a reasonable fee, some books can be delivered to their doorstep overnight. The resulting process, based on a centralized warehouse is much more operationally efficient due to the risk pooling across a very large customer base that allows for reduced inventory levels and costs to provide the same service level for a given catalog, as compared to a decentralized approach. There are many participants, largely hidden from view, within Amazon. The choice of how to group participants depends on the purpose of the analysis. There is critical enabling information online. The need for the book catalog is obvious. The value of the customer reviews is less obvious. No longer is the customer limited to the opinions of one random salesperson in a bookstore, the customer has access to what many say about the book. Amazon.Com is a lot more than a story about buying over the Internet. The WCA shows that it is a story about a successful firm that targeted a specific group of customers, enhanced the traditional product, and adopted an innovative business process. Participants, information and technology are the critical enablers.

Use of Work Centered Analysis

The WCA method can be used in a number of ways: As an organizing principle when business professionals must build their own small information systems using end-user tools. As a way to analyze a situation and even develop a tentative recommendation before conducting the detailed analysis and design of an information system. As a way to make sure that an ongoing collaboration between business and information systems professionals balances business issues and computer system details. As a way information systems and operations management professionals can make sure they have an adequate understanding of the business environment. 9

WCA is distinguished from traditional information systems and operations management models by these characteristics: Explicitly incorporates the linkage of technology to customer and product/service, which facilitates an evaluation of the contribution to the bottom line. Explicitly incorporates the linkage to business processes. This helps to ensure that the investment in an information system is a cost-effective element of critical business processes and does not become merely a superfluous part of the operation. It is a comprehensive, high-level perspective, yet reasonably thorough. WCA is useful in strategy and planning activities because it enables balanced consideration of product, customer, process, technology participants and information.

10