1. CHAPTER 2 Decision Making and Business Processes Opening Case: Information Systems Improve Business Processes at Grocery Gateway Nour El Kadri

2. 2 of 43 Chapter Two Overview SECTION 2.1 - DECISION-MAKING AND INFORMATION SYSTEMS –Decision Making –Transactional Data & Analytical Information –TPS, DSS, and ESS –Artificial Intelligence –AI VS, TPS, DSS, and EIS SECTION 2.2 – BUSINESS PROCESSES –Understanding the Importance of Business Processes –Business Process Improvement –Business Process Reengineering –Business Process Modelling –Business Process Management

3. 3 of 43 LEARNING OUTCOMES 1.Explain the difference between transactional data and analytical information, and between OLTP and OLAP. 2.Define TPS, DSS, and EIS and explain how organizations use these types of information systems to make decisions. 3.Understand what AI is and the four types of artificial intelligence systems used by organizations today.

4. 4 of 43 LEARNING OUTCOMES 4.Describe how AI differs from TPS, DSS and EIS. 5.Describe the importance of business process improvement, business process reengineering, business process modelling, and business process management to an organization and how information systems can help in these areas.

5. SECTION 2.1 DECISION-MAKING SYSTEMS

6. 6 of 43 Decision Making Decision-Making, Problem-Solving, and Opportunity-Seizing Information Systems

7. 7 of 43 DECISION MAKING Reasons for the growth of decision-making information systems –People need to analyze large amounts of information –People must make decisions quickly –People must apply sophisticated analysis techniques, such as modeling and forecasting, to make good decisions –People must protect the corporate asset of organizational information

8. 8 of 43 TRANSACTIONAL DATA & ANALYTICAL INFORMATION Moving up through the organizational pyramid, users move from requiring transactional information to analytical information

9. 9 of 43 Transaction Processing Systems Transaction processing system (TPS) - the basic business system that serves the operational level (analysts) in an organization Online transaction processing (OLTP) – the capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information

10. 10 of 43 Decision Support Systems Decision support system (DSS) – models information to support managers and business professionals during the decision-making process. Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

11. 11 of 43 Decision Support Systems Three quantitative models used by DSSs include: 1.Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model 2.What-if analysis – checks the impact of a change in an assumption on the proposed solution 3.Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output

12. 12 of 43 Decision Support Systems “What-if” analysis

13. 13 of 43 Decision Support Systems Goal-seeking analysis

14. 14 of 43 Decision Support Systems Interaction between a TPS and a DSS

15. 15 of 43 Executive Information Systems Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization

16. 16 of 43 Executive Information Systems Interaction between a TPS and an EIS

17. 17 of 43 Digital Dashboards Digital dashboard – integrates information from multiple components and presents it in a unified display

18. 18 of 43 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. 19 of 43 ARTIFICIAL INTELLIGENCE (AI) The ultimate goal of AI is the ability to build a system that can mimic human intelligence

20. 20 of 43 ARTIFICIAL INTELLIGENCE (AI) Four most common categories of AI include: 1.Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems 2.Neural Network – attempts to emulate the way the human brain works –Fuzzy logic – a mathematical method of handling imprecise or subjective information

21. 21 of 43 ARTIFICIAL INTELLIGENCE (AI) Four most common categories of AI include: 3.Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival- of-the-fittest process to generate increasingly better solutions to a problem 4.Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

22. SECTION 2.2 BUSINESS PROCESSES

23. 23 of 43 UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESSES Sample Business Processes

24. 24 of 43 UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESSES 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

25. 25 of 43 UNDERSTANDING THE IMPORTANCE OF BUSINESS PROCESSES Customer Facing, Industry-Specific, and Business Facing Processes

26. 26 of 43 BUSINESS PROCESS REENGINEERING Business process – a standardized set of activities that accomplish a specific task, such as processing a customer’s order Business process reengineering (BPR) – the analysis and redesign of workflow within and between enterprises The purpose of BPR is to make all business processes best-in-class

27. 27 of 43 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 ignores the road completely

28. 28 of 43 Finding Opportunity Using BPR Progressive Insurance mobile claims process

29. 29 of 43 Finding Opportunity Using BPR Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit

30. 30 of 43 BUSINESS PROCESS MODELLING Business process modelling (or mapping) – is 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 – is a graphic description of a process, showing the sequence of process tasks, which is developed for a specific purpose and from a selected viewpoint.

31. 31 of 43 BUSINESS PROCESS MODELLING As-Is and To-Be Process Model for Ordering a Hamburger

32. 32 of 43 BUSINESS PROCESS MODELLING As-Is and To-Be Process Model for Order Fulfillment

33. 33 of 43 BUSINESS PROCESS MODELLING Customer Service As-Is and To-Be Process Model

34. 34 of 43 BUSINESS PROCESS MANAGEMENT Business Process Management (BPM) – integrates all of an organization’s business processes to make individual processes more efficient. Key reasons for using BPM:

35. 35 of 43 BUSINESS PROCESS MANAGEMENT Customer Service As-Is and To-Be Process Model

36. 36 of 43 BUSINESS PROCESS MODELLING EXAMPLES E-business Process Model

37. 37 of 43 BUSINESS PROCESS MODELLING EXAMPLES Online Banking Process Model

38. 38 of 43 BUSINESS PROCESS MODELLING EXAMPLES Customer Order Business Process Model

39. 39 of 43 BUSINESS PROCESS MODELLING EXAMPLES eBay Buyer Business Process Model

40. 40 of 43 BUSINESS PROCESS MODELLING EXAMPLES eBay Seller Business Process Model

41. 41 of 43 BUSINESS PROCESS MODELLING EXAMPLES Business Process Improvement Model

42. 42 of 43 OPENING CASE QUESTIONS Information Systems are Central at Grocery Gateway 5.Describe how Grocery Gateway’s customer Web site improves or supports Grocery Gateway’s business processes. 6.Describe how Descartes’ fleet management software improved Grocery Gateway’s logistics business processes. 7.How do those improvements in business process affect the customer experience? The company’s bottom line?

43. 43 of 43 OPENING CASE QUESTIONS Information Systems are Central at Grocery Gateway 8.What other kinds of information systems could be used by Grocery Gateway to improve its business processes? 9.Comment on the need for integration between the various types of information systems at Grocery Gateway. What benefits from integration do you see for the company’s various business processes? What challenges to you think will exist in facilitating such integration?