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CHAPTER TWO DECISIONS AND PROCESSES: VALUE DRIVEN BUSINESS

CHAPTER TWO DECISIONS AND PROCESSES: VALUE DRIVEN BUSINESS. MAKING BUSINESS DECISIONS. Managerial decision-making challenges Analyze large amounts of information Apply sophisticated analysis techniques Make decisions quickly. DECISION-MAKING ESSENTIALS.

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CHAPTER TWO DECISIONS AND PROCESSES: VALUE DRIVEN BUSINESS

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  1. CHAPTER TWO DECISIONS AND PROCESSES: VALUE DRIVEN BUSINESS

  2. MAKING BUSINESS DECISIONS • Managerial decision-making challenges • Analyze large amounts of information • Apply sophisticated analysis techniques • Make decisions quickly

  3. DECISION-MAKING ESSENTIALS Decision-making and problem-solving occur at each level in an organization

  4. METRICS: MEASURING SUCCESS • Project – A temporary activity a company undertakes to create a unique product, service, or result • Metrics – Measurements that evaluate results to determine whether a project is meeting its goals

  5. Why Managers Need IT Support • The number of alternatives to be considered constantly increases. • Decisions must be made under time pressure. • Decisions are more complex. • Decision makers can be in different locations and so is the information. (NEW! – the WebEx collaboration example)

  6. A Framework for Computerized Decision Analysis

  7. Problem Structure & Nature of Decisions The first dimension deals with the problem structure, where does the decision making processes fall along the continuum ranging from highly structured to highly unstructured decisions. Structured Unstructured Semistructured The second dimension of decision support deals with the nature of decisions Operational control Management control Strategic planning

  8. EFFICIENCY AND EFFECTIVENESS METRICS • Efficiency MIS metrics – Measure the performance of MIS itself, such as throughput, transaction speed, and system availability • Effectiveness MIS metrics –Measures the impact MIS has on business processes and activities, including customer satisfaction and customer conversation rates

  9. SUPPORT: ENHANCING DECISION MAKING WITH MIS • Model – A simplified representation or abstraction of reality • Models help managers to • Calculate risks • Understand uncertainty • Change variables • Manipulate time to make decisions

  10. SUPPORT: ENHANCING DECISION MAKING WITH MIS Types of Decision Making MIS Systems

  11. Decision Support Systems (DSS) • Decision support systems • combine models and data • in an attempt to solve semistructuredand unstructured problems • with extensive user involvement (interaction; examples to be seen) • DSS capabilities • Sensitivity analysis • What-if analysis • Goal-seeking analysis

  12. Decision Support Systems (DSS) • Three quantitative models used by DSSs include: • Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model • What-if analysis – checks the impact of a change in an assumption on the proposed solution (the outcome of the solution) • Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output

  13. Decision Support System (DSS) [Laudon]

  14. System Architecture: DSS [Jessup&Valacich, edited by Zhang] **

  15. STRATEGIC SUPPORT SYSTEMS Information Levels Throughout An Organization

  16. Digital Dashboards Digital Dashboards: • Provide rapid access to timely information. • Provide direct access to management reports. • Are very user friendly and supported by graphics.

  17. Sample Performance Dashboard

  18. Another Example of Dashboard

  19. Executive Dashboard Demo http://www.informationbuilders.com/rfr/qtdemo/AdvVis_ExecDash/AdvVis_ExecDash.html

  20. THE FUTURE: ARTIFICIAL INTELLIGENCE (AI) • Artificial intelligence (AI) – Simulates human intelligence such as the ability to reason and learn • Intelligent system – Various commercial applications of artificial intelligence

  21. Expert Systems Expertise Expert systems (ESs) The transfer of expertise from an expert to a computer and then to a user involves four activities: • Knowledge acquisition • Knowledge representation • Knowledge inferencing • Knowledge transfer

  22. The Components of Expert Systems [edited by Zhang, from multiple sources] Knowledge base {rules; cases} Inference engine User interface Blackboard Explanation subsystem Knowledge base Rule-based Expert System (ES): human knowledge modeled as rules[typically 100-10,000 rules] Case-based ES: … stored as cases Inference Engine: the component of an ES that performs the reasoning function – the “brain” of ES

  23. An Example of a Small Rule Base [Nickerson]

  24. EVALUATING BUSINESS PROCESS • Businesses gain a competitive edge when they minimize costs and streamline business processes

  25. Data Visualization Systems • The Power of Visualization • Even though a picture is “worth a thousand words,” we have to be very careful about just what we are seeing. • Remember, on the Internet, it is “user beware!” • Types of data visualization systems • Geographical Information Systems • Virtual Reality

  26. New York City Police Department Command Center Data visualization in action

  27. Example of data visualization Hans Rosling at the TED Talks

  28. EVALUATING 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. MODELS: MEASURING PERFORMANCE • 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

  30. SUPPORT: CHANGING BUSINESS PROCESSES WITH MIS • Workflow – Includes the tasks, activities, and responsibilities required to execute each step in a business process

  31. SUPPORT: CHANGING BUSINESS PROCESSES WITH MIS • Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

  32. THE FUTURE: BUSINESS PROCESS MANAGEMENT • Business process management (BPM) – Focuses on evaluating and improving processes that include both person-to-person workflow and system-to-system communications

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