BRIDGING THE GAP: LINKING IT-INFRASTRUCTURE AND
BUSINESS PROCESSES
Jochen Franke, Andreas Möbs, Sertac Son, Heinz-Theo Wagner
Institute for Information Systems
Johann Wolfgang Goethe University
Mertonstr. 17, 60325 Frankfurt am Main, Germany
Phone: ++ 49 69 798 28124
Fax: ++ 49 69 798 28585
Working Paper
Abstract
Profitability and performance of companies strongly depend on which business processes are
employed and how these processes are designed. Today, most business processes heavily rely on IT.
Many ratios exist to assess business process performance and IT performance, whereas the impact of
IT on business process performance remains indistinct in recent research.
This paper introduces a simulation testbed, which simultaneously models business processes, the
supporting IT infrastructure and their dependencies. In our approach, we distinguish between two
layers, the business process layer and the IT infrastructure layer. On the IT infrastructure layer, we
propose three generic IT resources and describe their characteristics. On the business process layer,
processes are divided into subtasks which issue bundled IT resource requests.
A generic billing process is used to analyze the effect of IT capacity variation on process cycle time.
The planning and evaluation of IT supported business processes by scenario analysis is a potential
application of our simulation testbed.
Keywords: Business Process Modelling, Simulation, IT infrastructure, IT evaluation.
1
INTRODUCTION
Business processes are market centered descriptions of an organization’s activities, comprising both
material and information processes (Georgakopoulos et al. 1995). They are at the core of a firm consisting of groups of activities and sub-tasks directed towards creating value. Profitability and performance of companies strongly depend on which processes are employed and how these processes are designed. Few processes can be executed without support by information technology (IT), whilst the
degree of deployed IT varies broadly. On the one hand, there are fully automated processes (e.g. cash
remittance processes at banks) and on the other hand, processes with a high degree of human involvement exist (e.g. a human resource department seeking potential employees).
In order to assess business process performance and IT performance, many ratios exist. Subject of this
paper is the impact of IT capacity variation on business ratios. We suggest a simulation testbed to
model business processes and the supporting IT infrastructure to be able to vary IT capacity and
observe the impact on various business performance ratios.
To compare various scenarios, our model can be initialized several times with varying parameters. A
potential application of our testbed is the planning and evaluation of IT supported business processes
by scenario analysis.
2
RELATED RESEARCH
In this paragraph an overview of the related research in the area of IT evaluation, which analyzes the
impact of IT on various economic values, is presented.
First of all, the general role of IT in business processes is discussed. Afterwards, a brief overview of
research on the general impact of IT on firm performance is presented. Finally the term resource is
defined as it is of core importance to our simulation model.
2.1
IT in business processes
IT platforms bridging geographical and organizational boundaries, consisting of network equipment,
carrier lines, workstations, servers, operating systems, databases, communication and business
software, de-signed, developed and operated by IT personnel are the basis for the functionality of most
business processes.
In this context, IT has a positive impact on the outcome of the business processes when the implemented technology is suitable for the intended goals. The prerequisite is a task-technology fit and a
dedication towards business needs leading to a voluntary and extensive usage of the provided technology (Devaraj et al. 2003) (see also Agarwal et al. (2002), Dewett et al. (2001)).
Henderson and Venkatraman (Henderson et al. 1993) provide a strategic alignment model (SAM),
which will be used in the following to clarify the alignment view of this paper and the link between IT
and business processes. They argue that the alignment between business and IT strategies is a
prerequisite for value realization from IT investments. This perspective is also underpinned by recent
articles from Kearns et al. (2001), Cragg et al. (2002), and Sääksjärvi (2000). Within the SAM, our
paper focuses on the operational integration, which is the link between “Organizational Infrastructure
and Processes” and “I/S Infrastructure and Processes”, highlighting the need to align organizational
requirements and delivery capability of IT. This alignment is a major task and challenge for business
and IT managers. With information about business goals and the motivation to direct IT efforts
towards business needs, an optimal alignment of IT and business processes can be reached
(McCormack et al. 2001) (Gordon et al. 2000) (Keen 1991).
Most studies in this field use firm level output, which provides only a limited under-standing of the
dynamic process behind the creation, and therefore, the measurement of IT business value. For the
purpose of creating or enhancing value, resources, including technological resources, are allocated to
those processes comprising the value chain. We are developing a simulation model of IT business
value derived from the impact of IT on processes and dependencies within the value chain.
Various researchers have indicated the potential benefits from adopting a process oriented view of the
business value chain (Crowston et al. 1986) (Bakos 1987) (Kauffman et al. 1989) (Wilson 1993).
However, where process oriented studies have appeared (Banker et al. 1990), their application has
focused on specific technologies thus limiting the generalization of their findings to other
technological and organizational contexts. These observations led to the development of a process
oriented framework based on the premise that organizations derive business value through the impact
of IT on intermediate business processes (Mooney et al. 1995).
2.2
The general impact of IT on business processes
In assessing IT business value, IS researchers have tended to equate business value with productivity
gains from IT at the firm-level. Unfortunately, the overall findings from this branch of research have
been contradictory, fueling the debate on the existence of a productivity paradox (Baily et al. 1988).
Findings range from identifying negative relationships between IT investment and various organizational performance criteria (Berndt et al. 1995) (Weill 1992) (Loveman 1994), to neutral or bi-modal
impacts (Strassman 1990) (Harris et al. 1991) to suggesting positive and significant returns from IT
investments (Barua et al. 1995) (Brynjolfsson et al. 2003a) (Brynjolfsson et al. 2003b) (Hitt et al.
1996).The general impact of IT on performance criteria remains indistinct.
Despite the recent focus on IS research in the field of business process change and business
engineering, it seems surprising that only a limited number of researchers addressed IS evaluation at
the business process level.
Ginzberg focuses on the economic impact of information systems on organizational processes as a
result of implemented information technologies (Ginzberg 1979).
Farbey et al. argue to abandon the IS project as the fundamental unit of analysis in IS evaluation and
adopt the wider concept of the business process instead. In particular, the authors assert that it is only
possible to evaluate the costs and benefits in an integrated way considering business changes through
enabling IT (Farbey et al. 1992).
2.3
IT Resources
Resource is a broadly defined term also covering IT. To clarify the role of IT and its relation and importance to the business, the resource-based view (RBV) is used as a theoretical foundation. One of
the roots of the RBV is the seminal work of Edith Penrose, who views the firm as a collection of
productive resources guided by an administrative function (Penrose 1959).
Clemons and Row (Clemons et al. 1991) define resources “as any long-lived productive capability“,
where resources can be produced internally to a firm or acquired from the market. If a resource can be
produced or acquired easily and cost-effectively, the creation of a sustainable competitive advantage
SCA) based on such resources can hardly be established.
3
A SIMULATION MODEL TO LINK BUSINESS PROCESSES TO
IT-INFRASTRUCTURE
3.1
Modeling Business Processes
Business Process Modeling (BPM) is a widely used term, covering methods, techniques and tools to
support the analysis and design of business processes, thus providing a conceptual basis (Sivaraman et
al. 2002).
One trend in business information systems development can be observed as the change of paradigms
from a data-oriented view of a firm’s information systems towards a process-oriented view, which has
recently been supported by multiple concepts in the context of web services implementation (e.g.
BPEL4WS, BPML, WSCI, XLANG or WSDL) (Aalst et al. 2003).
For business process modeling purposes, a lot of different concepts such as petri nets, event-driven
process chains, UML or BPML, are available and constantly being developed. We select the BPML as
modeling concept. For visualization, the Business Process Modeling Notation (BPMN) is used (bpmi
2003). BPMN and BPML are highly expressive international standards for business process
modelling. They fit into the web services paradigm and constitute a common framework for business
process representation.
Although business process modeling tools like the ARIS Toolset reach high market coverage and can
be used for process simulations, an integrated representation of the direct-monetary relationship between IT infrastructure and business process is missing.
3.2
Modeling IT Infrastructure
The term IT infrastructure refers to enabling technologies, sourcing arrangements and control structures which combined establish a system for information processing in enterprises (Mitchell et al.
1999). The main purpose of IT infrastructure is to provide consistent and quick information support
throughout the firm in order to support the business processes (Bhatt 2000).
The simulation model focuses on the technical aspects of the IT infrastructure. Sourcing arrangements
and control structures are not taken into account.
The broad variety of present IT resources is reduced to three generic resources, namely computing
capacity, storage capacity and network capacity, in accordance with (Janakiraman et al. 2003).
In our simulation model, IT resources exhibit two characteristics: resource requests are always
bundled and excess capacity cannot be stored. Bundling refers to the fact that neither of the resources
is useful on their own (e.g. data storage operations always require computing power and network
bandwidth). The impossibility to store capacity describes the fact that excess capacity cannot be
accumulated. Computing power or network bandwidth are only available per-time.
3.3
The simulation model
Adler et al. developed a stochastic processing network model to measure the impact of human
resources on project cycle time (Adler et al. 1995). A model for capacity sizing of a shared resource in
the context of call center operations has been proposed by Aksin and Harker (Aksin et al. 2003). In
this paper, we will focus on the impact of IT resource capacity variation on total process cycle time.
Our simulation model consists of two layers, the IT infrastructure layer comprising the available IT
resources and the business process layer. The IT resources support and enable the execution of the
tasks, which a business process consists of.
The IT infrastructure layer consists of three resources: network capacity, transaction capacity and
storage capacity. Network capacity or bandwidth reflects the total available data throughput provided
by network components for a given time period. For a single task in a business process, the amount of
used network capacity can be estimated by various methods (e.g. traffic accounting). Transaction
capacity deals with the ability of the underlying IT systems to process data. In a client-server
architecture, the number of remote procedure calls (RPC) issued by the client is an estimate for the
utilization of this type of resource. Excess capacity of both resources cannot be accumulated over
time. Storage capacity reflects the file server storage space and the database storage space. Storage is a
cumulative value. Each process instance consumes a specific amount of storage for a given time with
every task specifying the time the data is stored.
A business process consists of a number of tasks, which are connected in a specific order. The
individual tasks issue bundled IT resource requests. None of the three resources is of value on their
own; they are always requested in conjunction. In case of parallel execution of several process instances, a parallel demand for IT resources will result. As the resources’ capacities are limited, the
requests might not be satisfied immediately, resulting in a delay until enough resource capacity is
available leading to a higher total process cycle time.
In our model each task specifies its demand for the three IT resources. The task is completed, as soon
as the required resource bundle can be provided. This approach is primarily designed for IT-intensive
processes and client-server-architectures, where IT-infrastructure plays a crucial role and processing is
mainly done in backend-applications.
Figure 1 shows a business process consisting of two tasks incorporating two resources and the linkage
between the IT infrastructure layer and the business process using BPMN:
Business Task 1
(1)
Business Task 2
(8)
(4)
RD1
P1
RD2
P2
end (9)
Business Process Layer
start
(5)
R-B1
11 12 1
2
10
9
3
8
4
7 6 5
(7)
Delay
R-B2
11 12 1
2
10
9
3
8
4
7 6 5
Delay
11 12 1
2
10
9
3
8
4
7 6 5
(3)
(2)
Flow Condition =
Resource bundle
combination in time
R1
capacity per time
11 12 1
2
10
9
3
8
4
7 6 5
(2)
IT-Infrastructure Layer
(6)
Flow Condition =
Resource bundle
combination in time
(3)
R2
capacity per time
Figure 1.
Linking IT-Infrastructure to Business Processes
After a starting event has occurred (1) the resources R1 and R2 (3) and the first task of the business
process (4) are initiated. A timer (2), associated to both resources, reflects the time-dependent availability and capacity of both resources. The shorter the timer delay, the higher the capacity of the associated resource per time. The specific resource consumption of each task is communicated by RD1 (4)
to R-B1 (5). R-B1 takes care of the allocation of IT resources in the necessary combination to enable
the execution of the business task. A second, task-specific timer (7), inhibits a delay, which is not
induced by IT resources. This delay can reflect further processing steps which have to be conducted in
order to complete this task (e.g. manual processing steps). Finally, task P1 signals the completion of
this subtask and the overall process proceeds with the second task, which is handled equivalently. All
subtasks are executed in a similar manner until an end event is reached (9). The time between the
initialization of the start event and the occurrence of the end event is defined as one process cycle.
There may be more than one single process instance running at a given time if multiple start events are
executed before an end event is reached. Those instances will run parallel on the business process
layer, while using the same IT resources concurrently.
3.4
Configuration of the simulation model
The capacity of each IT resource is varied systematically and the resulting impact on the overall process cycle time is tracked.
RosettaNet provides generic specifications of common business processes (RosettaNet consortia). As
an example we choose a generic financial billing process (RosettaNet PIPs 3C4, 3C5 and 3C6) due to
the fact that the extent to which information technology is used is generally high. The following diagram illustrates a comprehensive overview.
Seller
Create invoice
Create billing
statement notification
Process remittance
advice
Process invoice reject
Send message
Send message
Receive message
Receive message
Receive message
Receive message
Send message
Send message
Process invoice
Process billing
statement
Create remittance
advice notification
yes
Schedule Payment
Is invoice accepted?
no
Notify Reject
Buyer
Figure 2.
Financial Billing Process (RosettaNet PIP)
For our purposes, only the buyer-side information system will be simulated. The starting events on the
seller side will be triggered exogenously. When analyzing an existing business process, the IT
resource requests have to be evaluated by adequate methods (e.g. traffic accounting, number of RPC
etc.). In a first step, the individual IT resource requests of every subtask are specified according to
plausibility.
According to a recent empirical study of top-1000 German firms, the fraction of incorrect billing
statements is approximately 8% (Skiera et al. 2003). In our model the rejection of an invoice is stochastically simulated with a probability set according to the study’s results.
The simulation is started with a reasonable capacity of IT resources. In subsequent simulation runs, the
capacity of all resources is varied and the resulting mean process cycle time of the process instances is
analyzed.
4
FURTHER STEPS
Our simulation model provides a testbed to simulate the impact of IT resource capacity on business
process cycle times. We use an instance of a generic billing process to simulate various configurations
of IT resource capacity and analyze the impact of this variation on the overall business process cycle
time.
References
van der Aalst, W.M.P., Hofstede A.H.M., Weske M.: Business Process Management: A Survey, in:
Proceedings of BPM'2003. pp 1-12. Springer LNCS 2678, Heidelberg: 2003
Adler, P.S., Mandelbaum, A., Nguyen, V., Schwerer, E.: From Projext to Process Management for
Analyzing Product Development Time, in: Management Science, 41(3), pp. 458-484, 1995.
Agarwal, R., Sambamurthy, V: Principles and Models for Organizing the IT Function, in: MIS
Quarterly, Vol. 1 No. 1, pp. 1-16, 2002.
Aksin, O.Z., Harker, P.T.: Capacity sizing in the presence of a common shared resource:
Dimensioning an inbound call center, in: European Journal of Operational Research, 147, pp. 464483, 2003.
Baily, M.N. and Chakrabarti, A.: Electronics and White-Collar Productivity, in: Brainard, W.C. and
Perry G.L. (eds): Brookings Papers on Economic Activity, Washington, D.C., The Brookings
Institution, 1988.
Bakos, J.Y.: Dependent Variables for the Study of Firm and Industry-Level Impacts of Information
Technology, in: Proceedings of the Eight International Conference on Information Systems,
Pittsburgh, Pennsylvania, pp. 10-23., 1987.
Banker, R. D., R. J. Kauffman and Morey R.C.: Measuring Gains in Operational Efficiency from
Information Technology: A Study of the Positran Deployment at Hardee's Inc., Journal of
Management Information Systems, 7(2), pp. 29-54, 1990
Barua, A., Kriebel, C.H. and Mukhopadhyay, T.: Information Technologies and Business Value: An
Analytic and Empirical Investigation, in: Information Systems Research, 6(1), pp. 3-23, 1995.
Berndt, E.R. and Morrison, C.J.: High-tech Capital Formation and Economic Performance in the U.S.
Manufacturing Industries: An Exploratory Analysis, in: Journal of Econometrics, 65(1), pp. 9-43,
1995.
Bhatt, G.D.: Exploring the relationship between information technology, infrastructure and business
process re-engineering, in: Business Process Management Journal, 6(2), pp. 139-163, 2000.
bpmi.org: Business Process Modeling Notation Draft 1.0, The Business Process Modeling Initiative,
2003.
Brynjolfsson, E. and Hitt, L.: Computing Productivity: Firm-Level Evidence; in MIT Sloan Working
Paper 4210-01, June 2003
Brynjolfsson, E: The IT Productivity GAP, in: Optimize, July 2003
Clemons, E.K. and Row, M.C.: Sustaining IT Advantage: The Role of Structural Differences, in: MIS
Quarterly, 15(3), pp. 275-292, 1991.
Cragg P., King, M. and Hussin, H.: IT alignment and firm performance in small manufacturing firms,
Journal of Strategic Information Systems, 11, pp. 109-132, 2002.
Crowston, K. and Treacy, M.E.: Assessing the Impacts of Information Technology on Enterprise
Level Performance, in: Proceedings of the Seventh International Conference on Information
Systems, San Diego, California, pp. 377-388, 1986.
Devaraj, S. and Kohli, R.: Performance Impacts of Information Technology: Is Actual Usage the
Missing Link?, in: Management Science, 49(3), pp. 273-289, 2003.
Dewett, T. and Jones, G.R.:,The role of information technology in the organization: a review, model,
and assessment, in: Journal of Management, 27, pp. 313-346, 2001.
Farbey, B., Land, F. and Targett, D.: Evaluating Investments in IT, in: Journal of Information
Technology, 7(2), pp. 109-122, 1992.
Farbey, B. Land, F. and Targett, D.: Editorial, Special issue on Information Systems Evaluation,
European Journal of Information Systems, (7)3, pp. 155-157, 1998.
Georgakopoulos, D., Hornick, M., Sheth, A.: An Overview of Workflow Management: From Process
Modeling to Workflow Automation Infrastructure, in: Distributed and Parallel Databases, 3, pp.
119-153, 1995.
Ginzberg, M.J.: Improving MIS Project Selection, Omega, (7)6, pp. 527-537, 1979.
Gordon, J.R. and Gordon, S.R.: Structuring the Interaction between IT and Business Units: Prototypes for Service Delivery, in: Information Systems Management, 17(1), p. 7-16, 2000.
Harris, S.Y. and Katz, J.L.: Organizational Performance and Information Technology Investment
Intensity in the Insurance Industry, in: Organization Science, 2(3), pp. 263-295, 1991.
Henderson, J.C. and Venkatraman, N.: Strategic alignment: Leveraging information technology for
transforming organizations, in: IBM Systems Journal, 32(1), pp. 4-16, 1993.
Hitt, L. and Brynjolfsson, E.: Productivity, Business Profitability, and Consumer Surplus: Three
Different Measures of Information Technology Value, MIS Quarterly, 20(2), pp. 121-142, 1996.
Janakiraman, G., Santos, J., Turner, Y.: Automated Multi-Tier System Design for Service Availability,
1st Workshop on Design of Self-Managing Systems (at DSN 200), San Fancisco, California, 2003.
Kauffman, R. J. and Weill, P.: An Evaluative Framework for Research on the Performance Effects of
Information Technology Investment, in: Proceedings of the Tenth International Conference on
Information Systems, Boston, Massachusetts, pp. 377-388, 1989.
Kearns, G.S. and Lederer, A.L.: Strategic IT Alignment: A Model for Competitive Advantage, in:
Proceedings of the 22th International Conference on Information Systems, 2001.
Keen, P.G.W.: Shaping the Future: Business Design through IT, Harvard Business School Press,
Boston, 1991.
Loveman, G. W.: Assessing the Productivity Impact of Information Technologies, in: Allen, T.J. and
Scott-Morton, M. (eds), Information Technology and the Corporation of the 1990s. New York,
Oxford University Press, 1994.
McCormack, K.P. and Johnson, W.C.: Business Process Orientation: Gaining the E-Business Competitive Advantage, St. Lucie Press, Boca Raton, London, New York, Washington D.C, 2001.
Mitchell, V., Zmud, R.: The Effects of Coupling IT and Work Process Strategies in Redesign Projects,
in: Organization Science, 10(4), pp. 424-438, 1999.
Mooney, J.G., Gurbaxani, V. and Kraemer, K.L.: A Process Oriented Framework for Assessing the
Business Value of Information Technology, in: Proceedings of the Sixteenth International
Conference on Information System, Amsterdam, The Netherlands, pp. 17-27, 1995.
Penrose, E.T.: The Theory of the Growth of the Firm, Basil Blackwell, Oxford, 1959.
RosettaNet consortia: http://www.rosettanet.org.
Sääksjärvi, M.: The Roles of Corporate IT Infrastructure and Their Impact on IS Effectiveness, in:
Proceedings of the 8th European Conference on Information Systems Vol. 1, Vienna, Austria,
2000.
Sivaraman, E., and Kamath, M.: On the Use of Petri Nets for Business Process Modeling, presented at
the 11th Annual Industrial Engineering Conference, Orlando, Florida, 2002.
Skiera, B., König, W., Gensler, S., Weitzel, T., Beimborn, D., Blumenberg, S., Franke, J., Pfaff, D.:
Financial-Chain-Management – Prozessanalyse, Effizienzpotenziale und Outsourcing – Eine
empirische Untersuchung mit den 1.000 größten deutschen Unternehmen, Research Report,
University of Frankfurt, Germany, 2003.
Strassman, P.A.: The Business Value of Computers, New Canaan, Connecticut, Information
Economics Press, 1990.
Weill, P.: The Relationship Between Investment in Information Technology and Firm Performance: A
Study of the Valve Manufacturing Sector, in: Information Systems Research, 3(4), 307-333, 1992.
Wilson, D.: Assessing the Impact of Information Technology on Organizational Performance, in:
Banker, R.D., Kauffman R.J., and Mahmood, M.A. (eds), Strategic Information Technology
Management: Perspectives on Organizational Growth and Competitive Advantage. Harrisburg,
Pennsylvania: Idea Group Publishing, 1993.