Enhancing Business Intelligence Using Information Systems
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1 Chapter Enhancing Business Intelligence Using Information Systems Use of outdated information systems can be costly.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. U.S.$350 million. Information Systems Today: Managing in the Digital World 7-1
2 Learning Objectives Information Systems Today: Managing in the Digital World 7-2
3 Learning Objectives Information Systems Today: Managing in the Digital World 7-3
4 Decision-Making Levels of an Organization Information Systems Today: Managing in the Digital World 7-4
5 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 Information Systems Today: Managing in the Digital World 7-5
6 Summary of Characteristics: Operational Level Information Systems Today: Managing in the Digital World 7-6
7 Managerial Level Functional managers o Monitoring and controlling operational-level activities o Providing information to executive level o Midlevel managers Focus on effectively utilizing and deploying resources Goal of achieving strategic objectives Managers decisions o Semistructured o Contained within business function o Moderately complex o Time horizon of few days to few months Information Systems Today: Managing in the Digital World 7-7
8 Summary of Characteristics: Operational Level Information Systems Today: Managing in the Digital World 7-8
9 Executive Level The president, CEO, vice presidents, board of directors Decisions o Long-term strategic issues o Complex and nonroutine problems o Unstructured decisions o Long-term ramifications Information Systems Today: Managing in the Digital World 7-9
10 Summary of Characteristics: Operational Level Information Systems Today: Managing in the Digital World 7-10
11 Comparison of Decision-Making Levels Operational Level Managerial Level Executive Level Who Foreman or supervisor Midlevel managers and functional managers Executive-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) Information Systems Today: Managing in the Digital World 7-11
12 Learning Objectives Information Systems Today: Managing in the Digital World 7-12
13 General Types of Information Systems Input-process-output model o Basic systems model o Payroll system example Information Systems Today: Managing in the Digital World 7-13
14 Transaction Processing System Operational level Purpose: o Processing of business events and transactions o Increase efficiency Automation Lower costs Increased speed and accuracy Examples o Payroll processing o Sales and order processing o Inventory management o Etc. Information Systems Today: Managing in the Digital World 7-14
15 Architecture of a TPS Information Systems Today: Managing in the Digital World 7-15
16 Architecture of a TPS: Inputs Source Documents o Different data entry methods Information Systems Today: Managing in the Digital World 7-16
17 Architecture of a TPS: Processing Online processing o Immediate results Batch processing o Transactions collected and later processed together o Used when immediate notification not necessary Information Systems Today: Managing in the Digital World 7-17
18 Architecture of a TPS: Outputs Counts, summary reports Inputs to other systems Feedback to systems operator Information Systems Today: Managing in the Digital World 7-18
19 Summary of TPS Characteristics Information Systems Today: Managing in the Digital World 7-19
20 Management Information Systems Managerial level Purpose: o Produce reports o Support of midlevel managers decisions Examples o Sales forecasting o Financial management and forecasting o Manufacturing, planning and scheduling o Inventory management and planning o Etc. Information Systems Today: Managing in the Digital World 7-20
21 Architecture of an MIS Information Systems Today: Managing in the Digital World 7-21
22 Architecture of an MIS: Inputs TPS data Internal data Requests for reports Information Systems Today: Managing in the Digital World 7-22
23 Architecture of an MIS: Processing Aggregation Summary Information Systems Today: Managing in the Digital World 7-23
24 Architecture of an MIS: Outputs Information Systems Today: Managing in the Digital World 7-24
25 Summary of MIS Characteristics Information Systems Today: Managing in the Digital World 7-25
26 Executive Information Systems A.k.a. Executive support system Executive level Purpose o Aid in executive decision-making o Provide information in highly aggregated form Examples o Monitoring of internal and external events and resources o Crisis management o Etc. Information Systems Today: Managing in the Digital World 7-26
27 Architecture of an EIS Information Systems Today: Managing in the Digital World 7-27
28 Architecture of an EIS: Inputs Hard data o Facts and numbers o Generated by TPS & MIS Soft data o Nonanalytical information o Web-based news portals Customizable Delivery to different media Information Systems Today: Managing in the Digital World 7-28
29 Use of Web-based Portals for Gathering Soft Data Information Systems Today: Managing in the Digital World 7-29
30 Architecture of an EIS: Processing Summarizing Graphical interpreting Information Systems Today: Managing in the Digital World 7-30
31 Architecture of an EIS: Outputs Summary reports Trends Simulations Information Systems Today: Managing in the Digital World 7-31
32 EIS Output: Digital Dashboards Digital dashboard o Presentation of summary information o Information from multiple sources o Ability to drill down if necessary Information Systems Today: Managing in the Digital World 7-32
33 EIS Output: Digital Dashboard (II) Total employee absenteeism a) line chart b) drill-down numbers Information Systems Today: Managing in the Digital World 7-33
34 Summary of EIS Characteristics Information Systems Today: Managing in the Digital World 7-34
35 Learning Objectives Information Systems Today: Managing in the Digital World 7-35
36 7 Information Systems that Span Organizational Boundaries Information Systems Today: Managing in the Digital World 7-36
37 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 changes o E.g., Microsoft Excel Information Systems Today: Managing in the Digital World 7-37
38 Architecture of a DSS Information Systems Today: Managing in the Digital World 7-38
39 Common DSS Models Information Systems Today: Managing in the Digital World 7-39
40 Summary of DSS Characteristics Information Systems Today: Managing in the Digital World 7-40
41 Using DSS to Buy a Car Selling price $22,500 Down payment $2,500 Monthly payment about $400 Interest rate information from the bank Information Systems Today: Managing in the Digital World 7-41
42 Microsoft Excel: Loan Analysis Template Calculate o Monthly payment o Total amount paid o Total interest paid What-if analysis o Change inputs o See the results Information Systems Today: Managing in the Digital World 7-42
43 Loan Analysis Summary Examine results Choose best solution for given situation o E.g., based on monthly payment or total interest Information Systems Today: Managing in the Digital World 7-43
44 2. Intelligent Systems Artificial intelligence o Simulation of human intelligence o Reasoning, learning, sensing, hearing, walking, talking, etc. Information Systems Today: Managing in the Digital World 7-44
45 Example: Artificial Intelligence Information Systems Today: Managing in the Digital World 7-45
46 Intelligent Systems Intelligent system o Sensors, software and computers o Emulate and enhance human capabilities Three types o Expert systems o Neural networks o Intelligent agents Information Systems Today: Managing in the Digital World 7-46
47 Expert Systems Use reasoning methods Manipulate knowledge rather than information System asks series of questions Inferencing/pattern matching o Matching user responses with predefined rules o If-then format Fuzzy logic o Represent rules using approximations Information Systems Today: Managing in the Digital World 7-47
48 Example: Expert System Expert system to make a medical recommendation Information Systems Today: Managing in the Digital World 7-48
49 Architecture of an Expert System Information Systems Today: Managing in the Digital World 7-49
50 Summary of ES Characteristics Information Systems Today: Managing in the Digital World 7-50
51 Neural Network System Approximation of human brain functioning Training to establish common patterns o Past information New data compared to patterns E.g., loan processing Information Systems Today: Managing in the Digital World 7-51
52 Example: Neural Network System Loan processing system relying on a neural network Information Systems Today: Managing in the Digital World 7-52
53 Intelligent Agent Systems Program working in the background Bot (software robot) Provides service when a specific event occurs Information Systems Today: Managing in the Digital World 7-53
54 Intelligent Agent Types 1. 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 Information Systems Today: Managing in the Digital World 7-54
55 3. Data Mining and Visualization Systems Application of sophisticated statistical techniques o What-if analyses to support decision making Capabilities can be embedded into a large range of systems Information Systems Today: Managing in the Digital World 7-55
56 Visualization Display of complex data relationships using graphical methods Visualization of a weather system Information Systems Today: Managing in the Digital World 7-56
57 Text Mining Extraction of information from textual documents Web crawlers used to extract information from Internet Information Systems Today: Managing in the Digital World 7-57
58 4. Office Automation Systems Developing documents, scheduling resources, communicating Examples o Word processing o Desktop publishing o Electronic calendars o Information Systems Today: Managing in the Digital World 7-58
59 Architecture of an Office Automation System Information Systems Today: Managing in the Digital World 7-59
60 Summary of OAS Characteristics Information Systems Today: Managing in the Digital World 7-60
61 5. Collaboration Technologies Increased need for flexible teams Virtual teams dynamic task forces o Forming and disbanding as needed o Fluctuating team size o Easy, flexible access to other team members Need for new collaboration technologies Information Systems Today: Managing in the Digital World 7-61
62 Video Conferencing Costs few thousand dollars to $500,000 Dedicated videoconferencing systems o Located within organizational conference rooms o Highly realistic Information Systems Today: Managing in the Digital World 7-62
63 Desktop Videoconferencing Low-cost alternative to dedicated videoconferencing Enablers o Increase in processing power o Internet connection speed Information Systems Today: Managing in the Digital World 7-63
64 Future of Desktop Videoconferencing Notebook computers with built in video cameras Microsoft Office RoundTable 2007 o 360-degree camera o Unified communications software o Built in microphone o Meeting content can be recorded, indexed and stored Information Systems Today: Managing in the Digital World 7-64
65 Groupware Enables more effective team work o Distinguished along two dimensions Information Systems Today: Managing in the Digital World 7-65
66 Benefits of Groupware Information Systems Today: Managing in the Digital World 7-66
67 Asynchronous Groupware 1989 Lotus Development released Notes Lotus Notes still an industry leader Other tools o , newsgroups, mailing lists, group calendars, collaborative writing tools, etc. Information Systems Today: Managing in the Digital World 7-67
68 Synchronous Groupware Electronic meeting systems o Help groups have better meetings Uses of EMS o Strategic planning sessions o Marketing focus groups o Brainstorming sessions o Business process management o Quality improvement Web-based implementations Information Systems Today: Managing in the Digital World 7-68
69 Example: Electronic Meeting System Information Systems Today: Managing in the Digital World 7-69
70 6. Knowledge Management Systems Generating value from knowledge assets Collection of technology-based systems Knowledge assets o Skills, routines, practices, principles, formulas, methods, heuristics and intuition o Used to improve efficiency, effectiveness and profitability o Documents storing both facts and procedures o Examples Databases, manuals, diagrams, books, etc. Information Systems Today: Managing in the Digital World 7-70
71 Benefits and Challenges of Knowledge Based Systems Information Systems Today: Managing in the Digital World 7-71
72 How Organizations Utilize KMS Successful KMS facilitate the exchange of knowledge Information Systems Today: Managing in the Digital World 7-72
73 Web-Based Knowledge Portals Knowledge repository Information Systems Today: Managing in the Digital World 7-73
74 7. Functional Area Information Systems Cross-organizational-level IS Support specific functional area Focus on specific set of activities Information Systems Today: Managing in the Digital World 7-74
75 Business Processes Supported by Functional Area Information Systems Information Systems Today: Managing in the Digital World 7-75
76 Organizational Functions and Representative Information Systems Information Systems Today: Managing in the Digital World 7-76
77 Geographic Information System Use of geographically referenced information o Finding optimal location for a new store o Identification of areas too wet to fertilize (see figure) o Locating target customers o Infrastructure design Information Systems Today: Managing in the Digital World 7-77
78 End of Chapter Content
79 Opening Case: Amazon.com 35 million customers worldwide Innovations leading to satisfaction o Personalized greeting o Memory for recent purchases o Targeted gold box offers and bargains Fraud protection o Shipping vs. billing address comparison o Method of shipment checks o Credit card sources checks One-click shopping Information Systems Today: Managing in the Digital World 7-79
80 The Growing Blogosphere One of the fastest growing phenomena in the digital world Information Systems Today: Managing in the Digital World 7-80
81 Information Systems Problems at the Tokyo Stock Exchange Outdated information system causing problems o December 2005: Order to sell 610,000 shares for 1 yen/share (U.S.$0.009) The actual price of the stock 610,000 yen (U.S.$5,310) Error was irreversible Misuho Securities Co. lost billions of yen (U.S.$350 million) o January 2006: TSE shut down because software reached trading capacity Designed to handle 4.5 million Reached the capacity at 2:00 p.m. Information Systems Today: Managing in the Digital World 7-81
82 Ministry of Sound Started as a small dance club in London 1990 expansion started when new group of fans joined o Data management problem o Key to success IS consultants Integration of databases across business units Central data warehouse Today global dance franchise o Record label, licensed products, tours, clubs, events and cell phones Information Systems Today: Managing in the Digital World 7-82
83 Nanotubes Nano something microscopic Nanoscale o Nanometer 8-10 atoms o Human hair 70,000-80,000 nm thick Nanotubes o Sequence of carbon 60 (C60) atoms o Extremely strong o Pure conductors of electricity o Used in resistors, capacitors, inductors, diodes, transistors Information Systems Today: Managing in the Digital World 7-83
84 Too Much Intelligence? RFID and Privacy RFID tags o Latest in technological tracking devices o Information imprinted on a tag o Tag generates signature signal o Special RFID reader interprets signal Use of RFID tags o Pharmaceutical industry Tracking of medication from factory to pharmacy o Retail businesses Information Systems Today: Managing in the Digital World 7-84
85 Jeff Bezos, Founder and CEO, Amazon.com Jeff Bezos o Example of how to succeed in e- commerce o 1986 graduated from Princeton o 1990 Bankers Trust Company youngest vice president o D.E. Shaw & Co. Amazon.com o 1994 founded o 2003 first time profitable o Today worth $17 billion Information Systems Today: Managing in the Digital World 7-85
86 Internet Protocol Television HDTV (high-definition television) o Digital TV service through cable subscription o Full duplex connection o Services Video-on-demand, Web access, voice access Information Systems Today: Managing in the Digital World 7-86
87 Internet Protocol Television (II) IPTV (Internet protocol television) o Programming control in consumer s hands o Will be available in more areas than HDTV o Europe and Asia lead the world in IPTV revenue o By 2009 US-based revenue expected to reach $44 billion o Services Access to extensive video and film libraries Phone calls, Internet connection, video games Information Systems Today: Managing in the Digital World 7-87
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