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

2. Chapter Two Overview SECTION 2.1 - DECISION-MAKING SYSTEMS
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. DECISION-MAKING SYSTEMS
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 QUESTIONS Second 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 QUESTIONS Second 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

51. OPENING CASE QUESTIONS Second Life: Succeeding in Virtual Times
How could a company use Second life to revamp its customer service process?
How could a company use second Life to revamp its order entry process?
How could a company use Second Life to reinvent relationships with customers, partners, and employees?

52. CLOSING CASE ONE DARPA
How is the DoD using AI to improve its operations and save lives?
Why would the DoD use an event, such as the DARPA Grand Challenge, to further technological innovation?

53. CLOSING CASE ONE DARPA
Describe how autonomous vehicles could be used by organizations around the world to improve business efficiency and effectiveness
Describe the potential business impacts of the Ansari X competition

54. CLOSING CASE TWO Revving Up Sales at Harley-Davidson
How does Talon help Harley-Davidson employees improve their decision-making capabilities?
Identify a few key metrics a Harley-Davidson marketing executive might want to monitor on a digital dashboard
How can Harley-Davidson benefit from using decision support systems in its business

55. CLOSING CASE TWO Revving Up Sales at Harley-Davidson
How can Harley-Davidson use business process improvement to increase customer satisfaction?
How can Harley-Davidson use business process reengineering to improve its supplier relationships?

56. CLOSING CASE THREE Delta Airlines Plays Catch-Up
What business risks would Delta be taking if it decided not to catch up with industry leaders in using IT to gain a competitive advantage?
What competitive advantages can an airline gain by using DSS and EIS?
What other industries could potentially benefit from the use of yield management systems?

57. CLOSING CASE THREE Delta Airlines Plays Catch-Up
How can American and United use customer information to gain a competitive?
What types of metrics would Delta executives want to see in a digital dashboard?

58. BUSINESS DRIVEN BEST SELLERS
Reengineering the Corporation, by Michael Hammer and James Champy

59. BUSINESS DRIVEN BEST SELLERS
The First 90 Days, by Michael Watkins

60. BUSINESS DRIVEN BEST SELLERS
Execution, by Larry Bossidy and Ram Charan