Information Systems Today: Managing in the Digital World 7-1 7 Chapter Enhancing Business Intelligence Using Information Systems Use of outdated information

Information Systems Today: Managing in the Digital World 7-1

7ChapterEnhancing Business Intelligence Using Information Systems

Use of outdated information systems can be costly. A software glitch at the Tokyo Stock Exchange cost Misuho Securities Co. $US350 million.

COIS11011 WEEK 7


Learning Objectives


Learning Objectives


Decision-Making Levels of an Organization


Operational Level• Day-to-day business processes

• Interactions with customers

• Information systems used to:o Automate repetitive tasks

o Improve efficiency

• Decisions:o Structured

o Recurring

o Can often be automated using IS


Summary of Characteristics: Operational Level


Managerial Level

• Functional managerso Monitoring and controlling operational-level activitieso Providing information to executive levelo Midlevel managers

• Focus on effectively utilizing and deploying resources

• Goal of achieving strategic objectives

• Managers’ decisionso Semistructuredo Contained within business functiono Moderately complexo Time horizon of few days to few months


Summary of Characteristics: Managerial Level


Executive Level

• The president, CEO, vice presidents, board of directors

• Decisionso Long-term strategic issues

o Complex and nonroutine problems

o Unstructured decisions

o Long-term ramifications


Summary of Characteristics: Executive Level


Comparison of Decision-Making Levels

Operational Level

Managerial

Level

Executive

LevelWho Foreman or supervisor Midlevel managers and

functional managersExecutive-level managers

What Automate routine and repetitive activities

Automate the monitoring and controlling of operational activities

Aggregate summaries of past organizational data and projections of the future

Why Improve organizational efficiency

Improve organizational effectiveness

Improve organizational strategy and planning

IS Transaction Processing Systems (TPS)

Management Information Systems (MIS)

Executive Information Systems (EIS)


Learning Objectives


General Types of Information Systems• Input-process-output model

o Basic systems model

o Payroll system example


Transaction Processing System• Operational level• Purpose:

o Processing of business events and transactionso Increase efficiency

• Automation• Lower costs• Increased speed and accuracy

• Exampleso Payroll processingo Sales and order processingo Inventory managemento Etc.


Architecture of a TPS


Architecture of a TPS: Inputs

• Source Documentso Different data entry methods


Architecture of a TPS: Processing

• Online processingo Immediate results

• Batch processingo Transactions collected and later processed together

o Used when immediate notification not necessary


Architecture of a TPS: Outputs

• Counts, summary reports

• Inputs to other systems

• Feedback to systems operator


Summary of TPS Characteristics


Management Information Systems• Managerial level

• Purpose:o Produce reportso Support of midlevel managers’ decisions

• Exampleso Sales forecastingo Financial management and forecastingo Manufacturing, planning and schedulingo Inventory management and planningo Etc.


Architecture of an MIS


Architecture of an MIS: Inputs

• TPS data

• Internal data

• Requests for reports


Architecture of an MIS: Processing• Aggregation

• Summary


Architecture of an MIS: Outputs


Summary of MIS Characteristics


Executive Information Systems• A.k.a. Executive support systems

• Executive level

• Purposeo Aid in executive decision-makingo Provide information in highly aggregated form

• Exampleso Monitoring of internal and external events and

resourceso Crisis managemento Etc.


Architecture of an EIS


Architecture of an EIS: Inputs

• Hard datao Facts and numbers

o Generated by TPS & MIS

• Soft datao Nonanalytical information

o Web-based news portals

•Customizable

•Delivery to different media


Architecture of an EIS: Processing

• Summarizing

• Graphical interpreting


Architecture of an EIS: Outputs• Summary reports

• Trends

• Simulations


EIS Output: Digital Dashboards• Digital dashboard

o Presentation of summary information

o Information from multiple sources

o Ability to drill down if necessary


EIS Output: Digital Dashboard (II)

• Total employee absenteeism

a) line chart b) drill-down numbers


Summary of EIS Characteristics


Learning Objectives


7 Information Systems that Span Organizational Boundaries


1. Decision Support Systems• Decision making support for recurring

problems

• Used mostly by managerial level employees (can be used at any level)

• Interactive decision aid

• What-if analyses o Analyze results for hypothetical changeso E.g., Microsoft Excel


Architecture of a DSS


Common DSS Models


Summary of DSS Characteristics


Using DSS to Buy a Car

• Selling price – $22,500

• Down payment – $2,500

• Monthly payment – about $400

• Interest rate information from the bank


Microsoft Excel: Loan Analysis Template

• Calculate o Monthly payment

o Total amount paid

o Total interest paid

• What-if analysiso Change inputs

o See the results


Loan Analysis Summary

• Examine results

• Choose best solution for given situationo E.g., based on monthly payment or total

interest


2. Intelligent Systems

• Artificial intelligenceo Simulation of human intelligence

o Reasoning, learning, sensing, hearing, walking, talking, etc.


Example: Artificial Intelligence


Intelligent Systems

• Intelligent systemo Sensors, software and computers

o Emulate and enhance human capabilities

• Three typeso Expert systems

o Neural networks

o Intelligent agents


Expert Systems• Use reasoning methods

• Manipulate knowledge rather than information

• System asks series of questions

• Inferencing/pattern matchingo Matching user responses with predefined rules

o If-then format

• Fuzzy logico Represent rules using approximations


Example: Expert System

Expert system to make a medical recommendation


Architecture of an Expert System


Summary of ES Characteristics


Neural Network System

• Approximation of human brain functioning

• Training to establish common patternso Past information

• New data compared to patterns

• E.g., loan processing


Example: Neural Network System

Loan processing system relying on a neural network


Intelligent Agent Systems

• Program working in the background

• Bot (software robot)

• Provides service when a specific event occurs


Intelligent Agent Types1.Buyer agents (shopping bots) – search for best

price

2.User agents – perform a task for the user

3.Monitoring and sensing agents – keep track of key information

4.Data-mining agents – analyze large amounts of data

5.Web crawlers (web spiders) – browse the Web for specific information

6.Destructive agents – malicious agents designed by spammers


3. Data Mining and Visualization Systems• Application of

sophisticated statistical techniqueso What-if analyses to

support decision making

• Capabilities can be embedded into a large range of systems


Visualization• Display of complex data relationships using

graphical methods

Visualization of a weather system


Text Mining

• Extraction of information from textual documents

• Web crawlers used to extract information from Internet


4. Office Automation Systems

• Developing documents, scheduling resources, communicating

• Exampleso Word processing

o Desktop publishing

o Electronic calendars

o E-mail


Architecture of an Office Automation System


Summary of OAS Characteristics


5. Collaboration Technologies

• Increased need for flexible teams

• Virtual teams – dynamic task forceso Forming and disbanding as needed

o Fluctuating team size

o Easy, flexible access to other team members

• Need for new collaboration technologies


Video Conferencing• Costs – few thousand dollars to $500,000

• Dedicated videoconferencing systemso Located within organizational conference roomso Highly realistic


Desktop Videoconferencing

• Low-cost alternative to dedicated videoconferencing

• Enablerso Increase in processing

power

o Internet connection speed


Future of Desktop Videoconferencing

• Notebook computers with built in video cameras

• Microsoft Office RoundTable 2007o 360-degree camerao Unified communications

software o Built in microphoneo Meeting content can be

recorded, indexed and stored


Groupware

• Enables more effective team worko Distinguished

along two dimensions


Benefits of Groupware


Asynchronous Groupware

• 1989 – Lotus Development released Notes

• Lotus Notes still an industry leader

• Other toolso E-mail, newsgroups,

mailing lists, group calendars, collaborative writing tools, etc.


Synchronous Groupware• Electronic meeting systems

o Help groups have better meetings

• Uses of EMSo Strategic planning sessions

o Marketing focus groups

o Brainstorming sessions

o Business process management

o Quality improvement

• Web-based implementations


Example: Electronic Meeting System


6. Knowledge Management Systems

• Generating value from knowledge assets

• Collection of technology-based systems

• Knowledge assetso Skills, routines, practices, principles, formulas,

methods, heuristics and intuitiono Used to improve efficiency, effectiveness and

profitabilityo Documents storing both facts and procedureso Examples

• Databases, manuals, diagrams, books, etc.


Benefits and Challenges of Knowledge Based Systems


How Organizations Utilize KMS

Successful KMS facilitate the exchange of knowledge


Web-Based Knowledge Portals

Knowledge repository


7. Functional Area Information Systems

• Cross-organizational-level IS

• Support specific functional area

• Focus on specific set of activities


Business Processes Supported by Functional Area Information Systems


Organizational Functions and Representative Information Systems


Geographic Information System• Use of geographically

referenced informationo Finding optimal location

for a new store

o Identification of areas too wet to fertilize (see figure)

o Locating target customers

o Infrastructure design