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1
Chapter 5
IT and Business Transformation
2
Sloan Valve
What was wrong with their Product Development Process?
What did Sloan do? What is NPD?
Did it help?
Are all enterprise system implementations this successful?

3
Complex and slow; 16 units had to coordinate; took 18-24
months to bring new products to market; >50% of ideas didn’t
make it; nobody accountable
New Product Development: Adoption of ERP. Process: team
included members across the firm; proposed new process of (1)
ideation (2) business case development, (3) project portfolio
management, (4) product development, (5) product/process
validation, (6) launch
Results: Time to market reduced to 12 months, poor ideas
filtered out early; better access to info and customer feedback;
better accountability
Other firms: No, some failed, such as: Overstock.com, Levi
Strauss, Avis Europe
3
Silo (Functional) Perspective
Specialized functions (sales, accounting, production, etc.
Advantages:
Allows optimization of expertise.
Group like functions together for transfer of knowledge.
Disadvantages:

Sub-optimization (reinvent wheel; gaps in communication;
bureaucracy)
Tend to lose sight of overall organizational objectives.
Executive Offices
CEO
President
Operations
Marketing
Accounting
Finance
Administration
4
4
The Process Perspective
Examples of processes:
Fulfill customer orders
Manufacturing, planning, execution
Procurement (see below)
Processes have:
Beginning and an end
Inputs and outputs
A process to convert inputs into outputs
Metrics to measure effectiveness
They cross functions

5
5
Receive Requirement for Goods/Services
Create and Send Purchase Order
Receive Goods
Pay Vendor
Verify Invoice
Cross-Functional Nature of Business Processes
6

6
How to Manage a Process
Identify the customers of processes (who receives the output?)
Identify the customers’ requirements (how do we judge
success?)
Clarify the value each process adds to the organizational goals
Share this perspective so the organization itself becomes more
process focused
7
Comparison of Silo Perspective and
Business Process PerspectiveSilo PerspectiveBusines s Process
PerspectiveDefinitionSelf-contained functional units such as
marketing, operations, financeInterrelated, sequential set of
activities and tasks that turns inputs into
outputsFocusFunctionalCross-functionalGoal
AccomplishmentOptimizes on functional goals, which might be
suboptimal for the organizationOptimizes on organizational
goals, or the “big picture”BenefitsHighlighting and developing
core competencies; functional efficienciesAvoiding work
duplication and cross-functional communication gaps;
organizational effectivenessProblemsRedundancy of information
throughout the organization; cross-functional inefficiencies;

communication problemsDifficult to find knowledgeable
generalists; sophisticated software is needed
Click to edit Master text styles
Second level
Third level
Fourth level
Fifth level
8
What do you do when things change?
Dynamic and agile processes
Examples:
Agile: Autos are built with wires and space for options
Dynamic: Call centers route incoming or even outgoing calls to
available locations and agents
Software defined architectures (see chapter 6)
IT is required to pull this off well
9
Techniques to Transform a Static Process

Radical process redesign
Also known as business process reengineering
Incremental, continuous process improvement
Including total quality management (TQM) and Six Sigma
10
Incremental Change
Total Quality Management
Often results in favorable reactions from personnel
Improvements are owned and controlled
Less threatening change
Six-Sigma is one popular approach to TQM
Developed at Motorola
Institutionalized at GE for “near-perfect products”
Generally regarded as 3.4 defects per million opportunities for
defect (6 std dev from mean)
11

11
Improve-ment
Time
Radical Change
Business Process Reengineering (BPR)
Sets aggressive improvement goals.
Goal is to make a rapid, breakthrough impact on key metrics in
a short amount of time.
Greater resistance by personnel.
Use only when radical change is needed.
12
12
Improve-ment

Time
Comparing the Two
13
Improve-ment
Key Aspects of Radical Change Approaches
Need for quick, major change
Thinking from a cross-functional process perspective
Challenge to old assumptions
Networked (cross-functional organization)
Empowerment of individuals in the process
Measurement of success via metrics tied to business goals and
effectiveness of new processes
14
Workflow and Mapping Processes

Workflow diagrams show a picture of the sequence and detail of
each process step
Objective is to understand and communicate the dimensions of
the process
Over 200 products are available to do this
High-level overview chart plus detailed flow diagram of the
process
15
BPM
Information systems tools used to enable information flow
within and between processes.
Comprehensive, enterprise software packages.
Most frequently discussed:
ERP (Enterprise Resource Planning),
CRM (Customer Relationship Management),
SCM (Supply Chain Management)
Designed to manage the potentially hundreds of systems
throughout a large organization.
SAP, Oracle, Peoplesoft are the most widely used ERP software
packages in large organizations.
16

16
BPM Architecture
17
Standardization vs IntegrationBusiness Process
StandardizationLowHighBusiness Process
IntegrationHighSingle face to customers and suppliers but
standards not enforced internallyHigh needs for reliability,
predictability, and sharing; single view of
processLowDecentralized design; business units decide how to
meet customer needsTasks are done the same way across units,
but there is little need for business units to interact
Source: J. Ross “Forget Strategy: Focus IT on your Operating
Model,”
MIT Center for Information Systems Research Briefing
(December 2005)
18

Enterprise Systems (Enterprise Resource Planning or ERP)
Seamlessly integrate information flows throughout the
company.
Reflect industry “best” practices.
Need to be integrated with existing hardware, OSs, databases,
and telecommunications.
Some assembly (customization) is required
The systems evolve to fit the needs of the diverse marketplace.
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ERP Advantages and
DisadvantagesAdvantagesDisadvantagesRepresent “best
practices”
Modules throughout the organization communicate with each
other
Enable centralized decision-making
Eliminate redundant data entry
Enable standardized procedures in different locationsEnormous
amount of work
Require redesign of business practices for maximum benefit
Require customization if special features are needed
Very high cost
Sold as a suite, not individual modules
Requires extensive training
High risk of failure

20
ERP II
Makes information available to external stakeholders too
Enables e-business applications
Integrates into the cloud
Includes ERP plus other functions (see Figure 5.8)
21
ERP and ERP II Functions
22
Customer Relationship Management
Customer Relationship Management (CRM) is a natural

extension of applying the value chain model to customers.
CRM includes many management activities performed to
obtain,
enhance relationships with, and
retain customers.
CRM can lead to better customer service, which leads to
competitive advantage for the business.
23
23
CRM
Common systems are:
Oracle
SAP
Salesforce.com (web-based cloud system)
Oracle and SAP integrate into their ERP systems
24
Supply Chain Management (SCM)
An enterprise system that manages the integrated supply chain

Translation: processes are linked across companies
The single network optimizes costs and opportunities for all
companies in the supply chain
Every part of the supply chain has the latest information about
sales expected and inventories from source materials at all
stages
Bullwhip effect occurs when the supplier at each stage adds a
small “buffer” for it’s suppliers in case demand is higher than
expected
25
Difficulties in Integrated Supply Chains
Information integration requires agreement of what information
to share, how to share it, and the authority to view it.
Trust must be established
Planning must be synchronized carefully
Workflow must be coordinated between partners to determine
what to do with the information they obtain
26
Advantages and Disadvantages

of Enterprise Systems
27
The Adoption Decision
The enterprise system sometimes should drive business process
redesign when:
Just starting out.
Organizational processes are not relied upon for strategic
advantage.
Current systems are in crisis.
It is inappropriate for the enterprise system to drive business
process redesign when:
Changing an organization’s processes that are relied upon for
strategic advantage.
The package does not fit the organization.
There is a lack of top management support.
28
28

Summary
After you have listened to this lecture and read Chapter 5 of
your text
Complete the Week 6 Research Paper: Business Process
Redesign
29
3
29
Influence of Digital Technology on Roadmap
Development for Digital Business Transformation
Iryna Strutynska
Department of Computer Science
Ternopil Ivan Puluj National Technical
University
Ternopil, UKRAINE
[email protected]
Galina Kozbur

University
Ternopil, UKRAINE
[email protected]
Lesia Dmytrotsa
University
Ternopil, UKRAINE
[email protected]
Olena Sorokivska
Department of Management and Administration
Ternopil Ivan Puluj National Technical University
Ternopil, UKRAINE
[email protected]
Liliya Melnyk
Department of Management and Administration
Ternopil Ivan Puluj National Technical University
Ternopil, UKRAINE
[email protected]
Abstract—In a highly competitive information economy,
business structures require continuous introduction of
innovation, effective information technology to ensure
sustainable long-term market benefits, as well as their rational
functioning. The implementation of the digital business model
is
one of the promising areas, which makes it possible to realize
the
activity of enterprises even more productively. The digital
business model allows businesses to react more responsibly to

the needs of potential buyers and customers, and also helps
adapt and optimize business processes over a certain period of
time to certain market conditions. That is why, the purpose of
the article is to identify the peculiarities of the influence of
digital technology on the transformation of existing business
models of organizations. In view of this, an in-depth analysis of
the main stages of the development of a roadmap for the digital
transformation of business has been carried out; business
process management software products and the most suitable
ones have been examined. The article studies digital
technologies
in the context of enterprise business groups and reflects how
relevant technologies affect the transformation of the existing
linear business model into the digital business model and
reflects
the most significant effects for business.
Keywords—information technology, digital economy, digital
technologies, information management system, digital business
model, business processes, BPM, business process management,
CRM, ERP.
I. INTRODUCTION
In this digital era, the pace of change is extremely
frustrating and each organization encounters existential
threats from new and existing competitors. In the era of the
Industrial Revolution 4.0, technology is the right of any
company to change its own business model so as to
differentiate itself from the entire world market.
The competitiveness of business structures is shaped by
the use of digital technologies, the application of the
information management system, reengineering and the
transformation of existing business processes into new digital
business models.

Digitalization is the use of digital technologies to change
the business model and provide new revenue and value-
producing opportunities; it is the process of moving to a
digital business [1-7].
The problem of the development of the digital economy
and the transformational processes taking place in society
under the influence of digitization has received a lot of
attention among both foreign authors [1-2, 10-12] and
Ukrainian researchers [3, 5-6], etc.
Fig. 1. The evolution Digital Business Development Path
(Source: Author’s interpretation based on: Gartner)
Despite numerous scientific studies on the development
of information and communication technologies and the
digital economy, we consider that the issues of the impact of
digital technology on the transformation of existing business
models of the organization are insufficiently examined.
II. PROBLEM ANALYSIS AND MARKET TRENDS
On the one hand, in the market of information
technologies and services, there are already a lot of software
products (world and domestic) that are largely able to fill the
gaps in information technology companies. Domestic
business is in search of suitable technologies for business
automation, is familiar with the best European and world
practices of digital transformation.
The development of information technology (systems) of
management for a particular business is a project for the
development of a roadmap for the digital transformation of
business. This is a very important project that requires
significant financial support, highly trained specialists and

knowledge-intensive technology, knowledge in many areas,
namely, project management, digital development
management and others (fig. 2).
978-1-7281-0450-8/19/$31.00 ©2019 IEEE 333
Fig. 2. Relationships Computer Science, Information Systems
with Business World
Before deciding on the use of any information technology
in business, it is necessary to analyze the current business
model (fig. 3) and the business processes of the organization,
to understand the problems that are encountered by the
relevant stakeholders, and only then integrate into the digital
transformation.
Fig. 3. Elements of the business model canvas
(Source: Author’s interpretation based on: Osterwalder, 2010)
In general, modern business solves the triple strategic task
for strengthening their competitive positions:
first, it is necessary to establish closer relations with
suppliers and clients (the sector of work with clients, increase
sales);
second, to increase the level of own operational
efficiency (the sector of effective operational activity of the
organization);
third, to increase the competitiveness of products
produced (consolidation of certain sectors of the business
model).

The fulfilment of all these tasks is impossible without the
integration of information systems and technologies into the
business sphere.
We offer to consider achievement of these three tasks
through the prism of business processes of the organization
using certain information technologies (digital instruments)
(Table 1).
TABLE I. GROUPS OF BUSINESS-PROCESSES OF
ORGANIZATION AND DIGITAL TECHNOLOGIES OF THEIR
TRANSFORMATION
# Groups of business-
processes of organization
Digital instruments
(systems, products, digital
decisions)
Task 1. Establishing closer relations with suppliers and
customers
1 Interaction with suppliers
Management)
2 Interaction with customers
(consumers)
Systems CRM (Customer
Relationships Management)
Task 2. Increase the level of own operational efficiency
3 Resources management ERP (Enterprise Resources

Planning)
4 Management of Business
Process
BPM-system (Business process
management)
5 Analytical component
management (data analysis)
Technologies Big Data, Data
mining, OLAP-cube, cloud
computing,
6 Providing modern
technologies to employees
of the company to
effectively carry out daily
work
Office 365, Google doc, use of
CRM system, dashboards for
evaluation of key indicators
Task 3. Increase the competitiveness of products
7 Product management
(control, storage and
provision of necessary
information)
Systems PLM (Product Lifecycle
Management) and PDM (Product
Data Management), digital
sensors, GIS technology and

others.
8 Marketing activity,
including:
New ways to attract
customers;
Search for effective sales
channels for a particular
consumer;
Changing products or
services using technology.
Digital Internet Marketing Tools
Google Analytics, Google
AdWords; SEO and SMM
Using chat bots to communicate
with customers;
Forming funnel sales;
Connecting a virtual or
complementary reality to a
shopping mall, collecting
customer data.
One of the possible options for an effective and efficient
organizational information support system for the enterprise
is a system that is integrated with the technology of
operational management of business processes.
334
III. SOFTWARE TOOLS FOR MODELING BUSINESS
PROCESS
It is necessary to use informational products that enable

us to simulate business business processes, the so-called "As
Is" model (the “How It Is” Business Processes Model), which
will allow you to see “weak areas” in business, build a new
business model of business-processes, that is, model “To Be”.
These information products will allow you to structure and
automate business processes (reengineering business
processes) of the enterprise.
In the IT market there is a differentiated set of BPM
systems. That is why as the basis for the study «Gartner magic
quadrant bpm tools, 2018» [13] was considered and other
researches [11, 14]. All the information is systematized in
table 2 where TOP 10 BPM-systems are listed and their
characteristics are provided.
TABLE II. 10 BPM-SYSTEMS AND THEIR
CHARACTERISTICS
BPM
Systems Vendor Details
Easy to use Standards support License and cost
Integration with
other corporate
applications
Ability to
dynamically
change the
business
process

ELMA BPM
Founded 2007
Luxembourg
Cloud, SaaS, Web Installed
- Mac
Installed - Windows
Mobile - Android Native,
Mobile - iOS Native
BPMN
Paid,
Free Demo and
free version for five
jobs
Ability to integrate
with "1 C: Enterprise" Yes
Bizagi BPM
Founded 1989
United
Kingdom
Cloud, SaaS, Web
Installed - Windows
Mobile - Android Native,
Mobile - iOS Native

BPMN,
XPDL
Paid,
Free Demo and
free version
Wide possibilities of
integration with CRM
and ERP systems Yes
Bitrix24 Founded 1998 United States
Cloud, SaaS, Web
Installed - Mac
Installed - Windows
Mobile - Android Native
Mobile - iOS Native
IDEF, BPMN
Paid (Starting Price
$39.00/month),
Over 10,000
intranets created
already! Up to 12
users free!
Wide possibilities of
integration with CRM

and ERP systems Yes
Oracle BPM
Founded 1977
United States Convenient and simple, realization of violin tasks
BPMN,
BPEL
Paid,
Free Demo
Wide integration
possibilities Yes
erwin
Business
Process
Founded 1988
United States
Deployment Cloud, SaaS,
Web
Installed - Windows
IDEF0,
IDEF3, DFD
Paid,
Free Demo, free
version

Wide integration
possibilities Yes
Appian Founded 2004 United States
Convenient and simple,
realization of violin tasks BPMN
Paid (Starting Price
$75.00/month), Free
Demo
To store ARIS models,
an object database is
used
No
IBM
Blueworks
Live
IBM Cloud-based BPM
platform. Simple and
straightforward
BPMN Paid,
Free Demo
Wide integration
possibilities
Yes

Bpm’online Founded 2011
Ukraine, United
States
Is ideal for middle-sized
companies and enterprises BPMN Paid, Free Demo
Wide integration
possibilities
Yes
Bonita BPM Founded 2001
France
realization of violin tasks BPMN Bonita open solution
Wide integration
possibilities
Yes
Pegasystems Founded 1983
United States
developed on Java and
OOP concepts
BPMN
Paid,
Free Demo and

free version
Wide integration
possibilities
Yes
Each of the above systems deserves attention. However,
we offer in practical examples a more detailed analysis of the
most suitable software products. The following perspectives
are taken into account: the features of the system, prices and
simplicity of its use (Erwin Business Process, Bitrix24,
Bizagi BPM, ELMA BPM, Pegasystems, Bonita BPM).
(Erwin Business Process, Bitrix24, Bizagi BPM, ELMA
BPM, Pegasystems, Bonita BPM).
IV. PRACTICAL RESULTS
After the practical use of these six BPM systems, we have
chosen two systems that are cost-effective, the most simple
and easy to use.
The advantages of BPM system Erwin Business
Process:
1. Clear, standard, and concise representation of the
elements. To ensure the unity of representing elements of data
models in ERwin, standardized representations of object
names, standardized data types, and standard model samples
(reference models) are used. Visual representation of large
data arrays. Due to the powerful graphic system and
navigation system (IDEF0, IDEF3, DFD);
2. The ability to interact with users. ERwin provides
various opportunities for sharing information among all
members within an organization. Collaborative work with

Depositary Users. ERwin provides automatic version control,
access control, conflict management, and model modification
to work together effectively. At the expense of the web portal,
business analysts, technical specialists and others can access
data models in understandable configurations for them;
335
3. Application of open architecture. ERwin provides
extensive integration opportunities with other process
modeling and information system development tools (more
than 120 different tools).
Fig. 4. BPM for Agroholding Mriya (IDEF0, IDEF3)
BPM ELMA system has a sophisticated yet clear
interface. It is distributed in three versions intended for
organizations with different needs and staff numbers. In
addition, there is a free version for five jobs, which makes it
possible to use it fully in the activities of small businesses
(Fig. 5).
When an enterprise establishes the necessary
configuration of all business processes and coordinates it with
the organizational system, it is at this stage that makes it
possible to decide on the application of certain digital
technologies in the context of different groups of business
processes.
Fig. 5. BPM «Receiving an order from a client» (Agroholding
Mriya»
(system BPM ELMA, BPMN)
It is precisely the implementation of certain information

management systems in the existing business model that will
lead to data transformation and the emergence of a new
digital business model (Fig. 6).
Fig. 6. Digital focus areas are drivers for transforming existing
business models
(Source: structured by the authors on the basis of the conducted
in-depth analysis)
336
With the use of modern information technology business
transforms into a new business model and receives significant
benefits:
- access to new markets;
- added value of the product through technology
- intensification and automation of existing business
processes;
- consolidation of key resources (6), key activities (5),
customer relationships (4) and sales channels (3) in integrated
digital business processes based on certain digital systems
(platforms);
- change of business culture;
- formation of a single ecosystem;
- intelligent analytics and forecasting;
- effective cooperation with clients, customers and
partners;
- optimization of system management (including

reduction of funds);
- acceleration of economic cycles;
- efficient use and release of production and warehouse
capacities as a result of reduction.
V. CONCLUSIONS
It is determined that the emergence of the digital economy
has opened new opportunities for the development of
business structures.
New digital technologies have affected the transformation
of existing business models of organizations. Digital business
models have begun to penetrate large and small companies in
different sectors.
That is why in the article the features of application of
modern information technologies in the context of groups of
business. That is why in the article the features of applicati on
of modern information technologies in the context of groups
of business processes and components of business models of
the organization are explored. In view of this, an in-depth
analysis of the main stages of the development of a roadmap
for the digital transformation of business has been carried out;
business process management software products and the most
suitable ones have been examined. The research reflects how
relevant technologies affect the transformation of the existing
linear business model into the digital business model and
discovers the most significant effects for business.
In a future version of this article, we intend to propose to
consider current models and methodologies for calculating
the digital transformation index of EU countries and the
world. We will analyze the general structure of the indicators,

we will pay special attention to the analysis of indicators of
the index of digital transformation of business structures and,
based on this, we will work towards adapting and developing
our own methods and methodologies for digital
transformation for the domestic economy and business
structures.
REFERENCES
[1] Gartner It-Glossary [Electronic resource]. – Access mode:
https://www.gartner.com/it-glossary/digital-business-
transformation
[2] Designing the Digital Economy: Embedding Growth through
Design,
Innovation and Technology [Electronic resource]. – Access
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https://www.policyconnect.org.uk/apdig/sites/site_apdig/files/re
port/4
63/fieldreportdownload/designcommissionreport-
designingthedigitaleconomy.pdf
[3] «Cyfrovyj porjadok dennyj» – 2020 [Electronic resource]. –
2016. –
Access mode:
https://ucci.org.ua/uploads/files/58e78ee3c3922.pdf
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[Electronic
resource]. – Access mode:
https://www.pwc.com/mt/en/publications/assets/the-new-digital-
economy.pdf
[5] F shchuk V. Tsyfrova ekonom ka – tse realno / V. F shchuk
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ekonomika-tse-realno-1001102.html
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[7] OECD Digital Economy Papers [Electronic resource]. –
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https://www.oecd-ilibrary.org/docserver/5ade2bba-
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=B6
62B5E8370EFB9CA9C50B164A621F97
[8] [Osterwalder and Pigneur, 2010] Osterwalder, A. and
Pigneur, Y.
(2010). Business Model Generation: A Handbook for
Visionaries,
Game Changers, and Challengers. John Wiley and Sons Inc.
[9] Nguyen, G. (2014). Exploring collaborative consumption
business
models – case peer-to-peer digital platforms, Aalto University,
92 p.
[10] Westerman, G., Bonnet, D., and McAfee, A. (2014).
Leading Digital:
Turning Technology into Business Transformation. Harvard
Business
Review Press.
[11] The Infrastructure Needs of the Digital Economy
[Electronic
resource]. – Access mode:
https://www.bcg.com/publications/2015/infrastructure-needs-of-

the-
digital-economy.aspx
[12] Digitalization vs Digital Transformation: A Trojan Horse
or a Golden
Opportunity? [Electronic resource]. – Access mode:
https://www.scalefocus.com/insights/ business/digitalization-vs-
digital-transformation/
[13] Gartner magic quadrant bpm tools, 2018 [Electronic
resource]. –
Access mode:
https://www.gartner.com/reviews/market/business-
process-management-platforms
[14] Business Process Management (BPM) Tools [Electronic
resource]. –
Access mode: https://www.trustradius.com/business-process-
management-bpm
337

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