Lect 2

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Opening Case:
Information Systems
Improve Business Processes
at Grocery Gateway
McGraw-Hill-Ryerson
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DECISION-MAKING AND
INFORMATION SYSTEMS
McGraw-Hill-Ryerson
©2015 The McGraw-Hill Companies, All Rights Reserved
Making Business Decisions
Learning
Outcome
2.1
Managerial Decision Making Challenges
FIGURE 2.1
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Making Business Decisions
Learning
Outcome
Common Company Structure
2.1
Decision-making
and problemsolving occur at
each level in an
organization
FIGURE 2.2
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Operational Decision-Making
Learning
Outcome
2.1
• Operational decision making
(day-to-day) operations
– Employees develop, control, and
maintain core business activities
required to run the day-to-day
operations
• Structured decisions
– Situations where established
processes offer potential solutions
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Managerial Decision-Making
Learning
Outcome
2.1
• Managerial decision making
– Employees evaluate company
operations to identify, adapt to,
and leverage change
• Semi-structured decisions
– Occur in situations in which a few
established processes help to
evaluate potential solutions, but
not enough to lead to a definite
recommended decision
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Strategic Decision-Making
Learning
Outcome
2.1
• Strategic decision making
– Managers develop overall
strategies, goals, and objectives
• Unstructured decisions
– Occurs in situations in which no
procedures or rules exist to
guide decision makers toward
the correct choice
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Measuring Success
Learning
Outcomes
2.1
• Project
– Temporary activity a company undertakes to a
create a new product, service or result
• Metrics
– Measurements that evaluate results to determine
whether a project is meeting its goals
– Common Types:
– KPIs – Key Performance Indicators
– Critical success factors (CSFs)
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Critical Success Factors
Learning
Outcome
2.1
• These are crucial steps companies perform to achieve
their goals and objectives and implement their
strategies. (CSFs for a firm that want to be best).
– Create high-quality products
– Retain competitive advantages
– Reduce product costs
– Increase customer satisfaction
– Hire and retain the best professionals
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Key Performance Indicators (KPIs)
Learning
Outcome
2.1
The quantifiable metrics a company uses to evaluate
progress toward critical success factors
– Turnover rates of employees
– Number of product returns
– Number of new customers
– Average customer spending
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Benchmarking
Learning
Outcome
2.1
• Benchmark
– Baseline values the system seeks to
attain
• Benchmarking
– A process of continuously
measuring system results,
comparing those results to
benchmark values, and identifying
steps and procedures to improve
system performance
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Measuring Success
Learning
Outcome
2.1
Efficiency Metrics
• Throughput
• Transaction Speed
• System Availability
• Information Accuracy
• Response Time
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Effectiveness Metrics
• Usability
• Customer Satisfaction
• Conversion Rates
• Financial Goal
Achievement
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Benchmarking Efficiency & Effectiveness
Learning
Outcome
Managerial Decision Making Challenges
2.1
FIGURE 2.5
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Types of Information
Learning
Outcome
2.1
• Transactional Data
– Encompasses all the raw facts within a single
business process or unit of work
– Supports daily operational tasks
– Examples: Order size, manager’s salary,
product price, stock price, shipping date
• Analytical Information
– Summarized transactional data
– Used to support decision analysis
– Examples: market trends, forecasts, sales by
region, environmental scans
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Types of Information Processing
Learning
Outcome
2.1
• Online Transactions Processing (OLTP)
– Captures, stores, updates and process data according to
defined rules
• Online Analytical Processing (OLAP)
– Summarization or aggregation of raw data from
transaction systems
– Data transformed into information for the managerial
and strategic organizational levels
• Granularity
– Level of detail from raw data (granular or fine) to
summarized data (coarse)
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Information Levels through an
Organization
Learning
Outcome
2.1
Information Levels Throughout an Organization
FIGURE 2.6
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Three Major Classes of IS
Learning
Outcome
2.2
Transactions Processing Systems
• Handles data for the operational level
• Performs OLTP for transactional data
– Examples: Payroll and Order Entry
Decision Support Systems
• Models data and information to support
managerial decisions
• Performs OLAP
Executive Information Systems
• Highly aggregated data for strategic
decisions
• Usually presented in a graphical format.
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Quantitative DSS Models
Learning
Outcome
2.2
Sensitivity Analysis
• Changing one factor in an analysis and
observing the change in result
What-if Analysis
• Changing a basic assumption in the analysis
and observing the impact on the result
• Often used for contingency plans
Goal-Seeking Analysis
• Determining the optimal configuration of
resources necessary to achieve a stated goal.
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DSS “What-if” Analysis
Learning
Outcome
2.2
FIGURE 2.7
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DSS “Goal-Seeking” Analysis
Learning
Outcome
2.2
FIGURE 2.8
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Interaction Between TPS & DSS
Learning
Outcome
2.2
FIGURE 2.9
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Executive Information Systems
( Executive Decision Support)
Learning
Outcome
2.2
• Specialized DSS for senior
managers & executives
• Uses external as well as
internal data
• Essential results at a glance
• Visualization tools display key
results
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Executive Information Systems
Learning
Outcome
2.2
FIGURE 2.10
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Digital Dashboards
Learning
Outcome
2.2
Integrates information from multiple components and presents it
in a unified display
FIGURE 2.12
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Artificial Intelligence (AI)
Learning
Outcome
2.3
Artificial intelligence (AI)
• Simulates human intelligence such as the ability to reason
and learn
Intelligent system
•
Various commercial applications of artificial intelligence
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Types of Artificial Intelligence
Learning
Outcome
2.3
FIGURE 2.14
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AI--Expert Systems
Learning
Outcome
2.3
Software applications that imitate human
reasoning in a specific subject area.
3 components of expert systems
• Knowledge base
– Database containing objective information
and subjective experiences
– Contributions from leading experts
• Set of Rules
– Similar to a search engine, compiles
knowledge to a specific situation
• User Interface
– Allows non-technical individuals to more easily
ask questions of the system
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AI--Neural Networks
Learning
Outcome
2.3
Attempts to emulate the way the human brain works in
•
•
•
•
Learning and adjusting to new circumstances on its own
Functioning without complete information
Coping with large amounts of information and many variables
Analyzing non-linear patterns.
Uses:
• Decisions that involve patterns or image recognition
• Problems where “rules” or logical pathways are unknown
Fuzzy Logic:
• A mathematical method of handling imprecise or subjective
information
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AI--Genetic Algorithm
Learning
Outcome
2.3
A system that evaluates thousands of options
choosing the most likely to succeed.
Optimization
• Finds the combination of inputs product the best
output.
• Works faster with more possibilities than any
human
Uses
• Which set of projects should a company invest in?
• Network configuration selects the lowest cost
among millions of possible connections
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AI--Intelligence Agents & Multi-agent
Systems
Learning
Outcome
2.3
Specialized applications that complete online tasks that require
decision-making.
Based on a programmed “set of rules” that can adapt to changing
situations.
Shopping Bot
• Application that searches the net for products, negotiates price and
executes transactions for businesses
Multi-agent systems
• Intelligence Agents that work independently and interact with each other.
Agent-based modelling
• Use of multi-agent systems to simulate and predict behavior of human
organizations
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AI--Virtual Reality
Learning
Outcome
2.3
Computer-generated environment that
simulates a real world or imaginary world
experience.
Uses
• Flight simulation for pilot training
• Surgery conducted from a remote site.
Visual images guide the surgeon who
manipulates equipment many miles away.
• Remote use of equipment to dispose of
hazardous waste.
• Entertainment.
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OPENING CASE QUESTIONS
Information Systems are Central at Grocery Gateway
1.
What information systems are used at Grocery Gateway to help
staff make decisions? Would you classify these systems as TPS,
DSS, or EIS?
2.
How do these systems support operational-, managerial- or
strategic-level decisions?
3.
What steps could the company take to leverage the transactional
data collected by the information systems outlined in the case to
help make managerial and strategic decisions for the company?
4.
Identify a few key metrics that a Grocery Gateway executive
might want to monitor on a digital dashboard. How can these
metrics be used to improve organizational decision making?
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BUSINESS PROCESSES
McGraw-Hill-Ryerson
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Understanding the Importance of
Business Processes
Learning
Outcome
2.5
Business Process
• Standardized set of activities that accomplish a
specific task
• Transform a set of inputs into a set of outputs
(goods & services)
Types of Business Processes
• Customer check-out process, order delivery
processes, invoicing process, payroll process etc.,
etc.
Importance
• Determine bottlenecks, eliminate duplication,
identify and benchmark smooth running
processes
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Sample Business Process
Learning
Outcome
2.5
FIGURE 2.15
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The Order-to-Delivery Process
Learning
Outcome
2.5
FIGURE 2.16
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Customer- & Business-Facing Processes
Learning
Outcome
2.5
Customer-Facing Processes
• Result in a product or service
that is received by an
organization’s external
customer.
Business-Facing Processes
• Are invisible to the external
customer but are essential to
the effective management of
the business.
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Customer- & Business-Facing Processes
Learning
Outcome
2.5
Examples of Customer-Facing, Industry Specific & BusinessFacing Processes
FIGURE 2.17
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Business Process Modelling
(Mapping)
Learning
Outcome
2.5
The activity of creating a detailed flow chart or process map of a
work process showing its inputs, tasks, and activities, in a
structured sequence
Business process model
• A graphic description of a process, showing the sequence of
process tasks, which is developed for a specific
As-Is process model
• Current state of the operation without improvements or changes
To-Be process model
• Shows the results of proposed changes to As-Is model
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Process Models for Ordering a Hamburger
Learning
Outcomes
Learning
Outcome
2-5
FIGURE 2.18
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Business Process Modelling
Learning
Outcome
2.5
FIGURE 2.18
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As-Is Process Modelling for Order Fulfillment
Learning
Outcome
2.5
FIGURE 2.19
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Business Process Improvement
Learning
Outcome
2.5
Attempts to understand and measure current
processes and make performance improvements
accordingly.
Three conditions for initiating a business process change:
1.
2.
3.
A pronounced shift in the market the process was
designed to serve.
The company is markedly below industry benchmarks
on the performance of its core processes.
To regain competitiveness, the company must leap-frog
the competition on key dimensions.
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Business Process Improvement
Learning
Outcome
2.5
Workflow
• Tasks, activities, and responsibilities required to execute each
step in a business process.
Critical Ingredients in Process Improvement
• Understanding workflow, customer expectations and the
competitive environment
Steps in Business Process Improvement
FIGURE 2.20
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Online Order Fulfillment Process Model
Learning
Outcome
2.5
FIGURE 2.24
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eBay Customer-Facing
Business Process Models
Learning
Outcome
2.5
Purchasing
An Item on
eBay
Selling An
Item on
eBay
FIGURE 2.25
FIGURE 2.26
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OPENING CASE QUESTIONS
Information Systems are Central at Grocery Gateway
5.
6.
7.
8.
9.
10.
What does Grocery Gateway’s customer order process look like?
Describe how Grocery Gateway’s web site supports Grocery Gateway’s
business processes
Describe how Descartes’ fleet management software improved Grocery
Gateway’s logistics business processes.
How does the business process affect the customer experience? The
company’s bottom line?
What other kinds of information systems could be used by Grocery
Gateway to improve its business processes?
Comment on the need for integration between the various types of
information systems at Grocery Gateway. What benefits do you see for
the company’s various business processes? What challenges do you
think will exist in facilitating such integration?
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CLOSING CASE ONE
Information Systems Are Critical For Take-Off in Canada’s Airline
Industry
1.
2.
3.
4.
5.
6.
7.
What advantages are there for an airline to use a revenue management
system.
Are revenue management systems a competitive advantage or simply a
new necessity for doing business in the airline industry today?
What type of decisions could a revenue management system be used to
help make?
Is a revenue management system a TSP, DSS, or an EIS?
Would the revenue management system described in the case contain
transactional data or analytical information?
What types of metrics would an airline executive want to see in a digital
dashboard?
How could AI enhance the use of an airline’s revenue management
system for decision support?
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CLOSING CASE TWO
Leveraging the Power and Avoiding the Pitfalls of BPM
1.
How can BPM help improve global outsourcing? Records
management? Supply chain management?
2.
What other business activities are excellent candidates for BPM?
3.
Which of the five pitfalls mentioned above do you think is the most
important? Why?
4.
Which of the five pitfalls mentioned above do you think is the most
common pitfall that organizations face when undergoing BPM?
Why?
5.
What is the advantage of treating BPM as a project, as opposed to
some other type of business activity?
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CLOSING CASE THREE
Actionly: Online Brand Management
1.
Define the three primary types of decision-making systems, and
explain how a customer of Actionly might use them to find business
intelligence?
2.
Describe the difference between transactional and analytical
information, and determine which types Actionly uses to create a
customer’s digital dashboard?
3.
Illustrate the business process model used by a customer of
Actionly following Twitter tweets?
4.
Explain business process reengineering and how Actionly used it to
create its unique business model?
5.
Formulate different metrics Actionly uses to measure the success
of a customer’s marketing campaign.
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