Business Driven Information Systems 2e

1. Business Driven Information Systems 2e CHAPTER 2 STRATEGIC DECISION MAKING

2. Chapter Two Overview • SECTION 2.1 - DECISION-MAKING SYSTEMS • Decision Making • Transaction Processing Systems • Decision Support Systems • Executive Information Systems • SECTION 2.2 – BUSINESS PROCESSES • Understanding the Importance of Business Processes • Business Process Improvement • Business Process Reengineering • Business Process Modeling • Business Process Management

3. Chapter Two Overview • Decision-enabling, problem-solving, and opportunity-seizing systems

4. SECTION 2.1 DECISION-MAKING SYSTEMS

5. LEARNING OUTCOMES • Explain the difference between transactional information and analytical information. Be sure to provide an example of each • Define TPS, DSS, and EIS and explain how an organization can use these systems to make decisions and gain competitive advantages • Describe the three quantitative models typically used by decision support systems

6. LEARNING OUTCOMES • Describe the relationship between digital dashboards and executive information systems • Identify the four types of artificial intelligence systems

7. DECISION MAKING • Reasons for the growth of decision-making information systems: People must: • Analyze large amounts of information • Make decisions quickly • Apply sophisticated analysis techniques • Protect the corporate asset of organizational information

8. DECISION MAKING • Model – a simplified representation or abstraction of reality • IT systems in an enterprise

9. TRANSACTION PROCESSING SYSTEMS • Moving up users move from requiring transactional information to analytical information

10. TRANSACTION PROCESSING SYSTEMS • Transaction processing system (TPS) - basic business system that serves the operational level • Online transaction processing (OLTP) – capturing of transaction and event information using technology • Online analytical processing (OLAP) – manipulation of information to create business intelligence in support of strategic decision making

11. DECISION SUPPORT SYSTEMS • Decision support system (DSS) – models information to support managers and business professionals during the decision-making process • Three quantitative models used by DSSs include: • Sensitivity analysis • What-if analysis • Goal-seeking analysis

12. DECISION SUPPORT SYSTEMS • What-if analysis

13. DECISION SUPPORT SYSTEMS • Goal-seeking analysis

14. DECISION SUPPORT SYSTEMS • Interaction between a TPS and a DSS

15. EXECUTIVE INFORMATION SYSTEMS • Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization • Most EISs offering the following capabilities: • Consolidation • Drill-down • Slice-and-dice

16. EXECUTIVE INFORMATION SYSTEMS • Interaction between a TPS and an EIS

17. Digital Dashboards • Digital dashboard – integrates information from multiple components

18. ARTIFICIAL INTELLIGENCE (AI) • Intelligent system – various commercial applications of artificial intelligence • Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn

19. ARTIFICIAL INTELLIGENCE (AI) • Four most common categories of AI include: • Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems • Neural Network – attempts to emulate the way the human brain works • Fuzzy logic – a mathematical method of handling imprecise or subjective information

20. Artificial Intelligence (AI) • Four most common categories of AI include: • Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem • Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

21. Data Mining • Data-mining systems sift instantly through information to uncover patterns and relationships • Data-mining systems include many forms of AI such as neural networks and expert systems

22. OPENING CASE QUESTIONSSecond Life: Succeeding in Virtual Times • How could companies use Second Life for new product or service decision making? • How could financial companies use neural networks in Second Life to help their businesses?

23. OPENING CASE QUESTIONSSecond Life: Succeeding in Virtual Times • How could a company such as Nike use decision support systems on Second Life to help its business? • How could an apparel company use Second Life to build a digital dashboard to monitor virtual operations?

24. SECTION 2.2 BUSINESS PROCESSES

25. LEARNING OUTCOMES • Describe business processes and their importance to an organization • Differentiate between customer facing processes and business facing processes • Compare business process improvement and business process reengineering

26. LEARNING OUTCOMES • Describe the importance of business process modeling (or mapping) and business process models • Explain business process management along with the reason for its importance to an organization

27. UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESS • Businesses gain a competitive edge when they minimize costs and streamline business processes • Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order

28. UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESS • Customer facing process -results in a product or service that is received by an organization’s external customer • Business facing process -invisible to the external customer but essential to the effective management of the business

29. UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESS

30. UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESS

31. UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESS

32. UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESS

33. BUSINESS PROCESS IMPROVEMENT • Companies are forced to improve their business processes because customers are demanding better products and services • Business process improvement – attempts to understand and measure the current process and make performance improvements accordingly

34. BUSINESS PROCESS IMPROVEMENT • Business process improvement model

35. BUSINESS PROCESS REENGINEERING • Business process reengineering (BPR) -analysis and redesign of workflow within and between enterprises

36. Finding Opportunity Using BPR • A company can improve the way it travels the road by moving from foot to horse and then horse to car • BPR looks at taking a different path, such as an airplane which ignore the road completely

37. Finding Opportunity Using BPR • Progressive Insurance mobile claims process

38. Finding Opportunity Using BPR • Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

39. Selecting a Process to Reengineer • Criteria to determine the importance of the process • Is the process broken? • Will reengineering of this process succeed? • Does it have a high impact on the strategic direction? • Does it significantly impact customer satisfaction? • Is it antiquated? • Does it fall far below best-in-class? • Is it crucial for productivity improvement? • Will savings from automation be clearly visible? • Is the return on investment high?

40. BUSINESS PROCESS MODELING • Business process modeling (or mapping) - 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 • To-Be process model

41. BUSINESS PROCESS MODELING

42. BUSINESS PROCESS MODELING

43. BUSINESS PROCESS MANAGEMENT • Business process management (BPM) - integrates all of an organization’s business process to make individual processes more efficient

44. BPM Examples

45. BPM Examples

46. BPM Examples

47. BPM Examples

48. BPM Examples

49. BPM Examples

50. BPM Examples