1. Decisions & Processes: Value-Driven Business
Chapter 2
Decisions & Processes: Value-Driven Business
Opening Case:
Information Systems Improve Business Processes at Grocery Gateway

2. Chapter 2 Overview
SECTION DECISION-MAKING AND INFORMATION SYSTEMS
Making Business Decisions
Measuring Decision Success
Types of Information
Enhancing Decision-Making with MIS
Artificial Intelligence
SECTION 2.2 – BUSINESS PROCESSES
Evaluating Business Processes
Business Process Modelling Examples
Business Process Improvement
Business Process Re-engineering
The Future: Business Process Management
Decision making and problem solving encompass large-scale, opportunity-oriented, strategically focused solutions. Students today must possess decision-making and problem-solving abilities to compete in the e-Business world. Organizations today can no longer use a “cook book” approach to decision making. This chapter focuses on technology and the development of business processes that make decisions, solve problems, and find new innovative opportunities for Canadian and global enterprises.

3. Learning Outcomes
Explain the difference between transactional data and analytical information, and between Online Transactions Processing (OLTP) and Online Analytical Processing (OLAP).
Explain how organizations use Transactions Processing Systems (TPS), Decision Support Systems (DSS), and Executive Information Systems (EIS) to make decisions and how each can be used to make unstructured, semi- structured and structured decisions.
Describe what Artificial Intelligence (AI) is and the five types of artificial intelligence systems used by organizations today.
A detailed review of the learning outcomes can be found at the end of the chapter in the textbook in the section headed, “Summary of Key Themes”.

4. Learning Outcomes Describe how AI differs from TPS, DSS and EIS.
Describe the importance of business process improvement, business process re-engineering, business process modelling, and business process management to an organization and how information systems can help in these areas.
A detailed review of the learning outcomes can be found at the end of the chapter in the textbook.

5. DECISION-MAKING AND INFORMATION SYSTEMS
SECTION 2.1
DECISION-MAKING AND INFORMATION SYSTEMS
CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Walt Disney Decides to Call His Mouse Cartoon Character Mickey, not Mortimer
Sunday, November 18, 1928, is a historic moment in time since it is the day that the premier of Steamboat Willie debuted, a cinematic epic of seven minutes in length. This was the first cartoon that synchronized sound and action.
Like all great inventions, Mickey Mouse began his life in a garage. After going bankrupt with the failure of his Laugh O Gram Company, Walt Disney decided to rent a camera, assemble an animation stand, and set up a studio in his uncle’s garage. At the age of 21, Walt and his older brother Roy launched the Disney Company in The company had a rocky start. Its first film, Alice, hardly made enough money to keep the company in business. His second film, Oswald the Rabbit, was released in 1927 with small fanfare. Then Disney’s luck changed and in 1928 he released his seven minute film about a small mouse named Mickey. Disney never looked back.
The truth is Mickey Mouse began life as Mortimer Mouse. Walt Disney’s wife, Lilly, did not like the name and suggested Mickey instead. Walt Disney has often been heard to say, “I hope we never lose sight of one fact – that this was all started by a mouse.”
Would Mortimer have been as successful as Mickey? Would Mortimer have been more successful than Mickey? How could Walt Disney have used technology to help support his all-important decision to name his primary character? There are many new technologies helping to drive decision support systems, however it is important to note that some decisions, such as the name of a mouse, are made by the most complex decision support system available - the human brain.

6. Making Business Decisions
Managerial Decision Making Challenges
2.1
You might have students think through the process that they would go through if a friend offered to sell them a car that they wanted for about half the retail price if they could get them the cash within a week. What sort of information would they need on which to make the decision? How quickly could they assemble the information (and what technology would they use to get it)? What analysis would they do? At the very least they should do a cost-benefit analysis.
Everyday managers are faced with many decisions that must be made almost at once to keep operations moving, requiring detailed information processed with sophisticated analysis. This chapter shows how information systems support these, sometimes very difficult, tasks.
Figure 2.1

7. Making Business Decisions
Learning
Outcome
Common Company Structure
2.1
Decision-making and problem-solving occur at each level in an organization
Making Business Decisions -
Understanding the way people makes decisions is critical to embrace. They way people make decisions is going to affect your business and the culture that is created there.
Sheena Lyengar did her thesis work on “how people make decisions.” Great Ted.com talk to show your students
Figure 2.2

8. Operational Decision-Making
Employees develop, control, and maintain core business activities required to run the day-to-day operations
Structured decisions
Situations where established processes offer potential solutions
2.1
Operational
Operational Decision Making -
Employee Type: front-line workers, lower management, analysts, staff
Focus: Internal, functional
Time Frame: Short term, day-to-day operations
Decision Types: Structured, recurring, repetitive
MIS Type: Information (summarized from raw data)
Metrics: Key performance indicators focus on efficiency
Examples:
The retail clerk accepts or rejects a return based on whether a receipt is offered or not
Production manager determines the number of products to be made today based on a sales report.
Decision about shipping an order today based on inventory in the warehouse.
Accounts payable clerk pays an invoice based on the organization’s written policy of taking advantage of supplier discounts for cash.
What are some examples of types of systems or activities at this level?
Payroll
Accounts payable & receivable
Sales and Order processing

9. Managerial Decision-Making
Employees evaluate company operations to identify, adapt to, and leverage change
Semi-structured decisions
Occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision
2.1
Managerial
Managerial Decision Making
Employee Type: Middle mgmt., managers, directors
Focus: Internal, cross-functional
Time Frame: Short term, daily, monthly, yearly and medium term up to 2 years
Decision Types: Semistructured, adhoc, reporting
MIS Type: Business Intelligence
Metrics: KPIs focusing on efficiency, and CSFs focusing on effectiveness
Examples:
Do we grant credit to the new company that is applying for it?
Do we roll out a new flavour of our successful frozen food dinner?
Having selected candidates that meet the basic requirements for a job, which one do we hire?
Of the four investment opportunities for our organization, which one do we put our limited funds into?
What can we do to reduce employee theft?
In semi-structured decisions, some part of the decision can be made on hard data and some must be made on qualitative criteria. Most management decisions fall into this category.
What are some examples of types of systems or activities at this level?
Sales management
Contract analysis
Quality management
Product introduction
Audits

10. Strategic Decision-Making
Managers develop overall strategies, goals, and objectives
Unstructured decisions
Occurs in situations in which no procedures or rules exist to guide decision makers toward the correct choice
2.1
Strategic
Strategic Decision Making
Employee Type: Senior management, executives
Focus: external, industry, cross company
Time Frame: Long term, yearly, multi-year
Decision Types: Unstructured, nonrecurring, one time
MIS Type: Knowledge management, EIS (Executive Information Systems)
Metrics: CSFs focusing on effectiveness
Examples:
Will we restructure the organization’s entire salary and benefit plan to attract better qualified employees at every level?
What industry trends will this organization take advantage of to outpace the competition?
Should we purchase the single supplier of our raw materials to ensure continuing supply and remove the threat of supplier power?
Will we launch the very successful American version of our advertising campaign in China and risk Chinese government intervention?
What are some examples of types of systems or activities at this level?
Export initiatives
Medium and long-term profit planning
Company-wide restructuring

11. Measuring Success Project Metrics
Learning
Outcomes
Project
Temporary activity a company undertakes to a create a new product, service or result
Metrics
Measurements that evaluate results to determine whether a project is meeting its goals
Common Types:
KPIs – Key Performance Indicators
Critical success factors (CSFs)
2.1
Ask your students why they would want to define metrics to evaluate a projects success?
What types of metrics would they apply to the following situations? How would the metrics help them determine if their decision was successful?
Buying a new car
Purchasing a home
Renting an apartment
Buying a new office building
Buying employee health insurance

12. Critical Success Factors
Learning
Outcome
The crucial steps companies make to perform to achieve their goals and objectives and implement strategies
Create high-quality products
Retain competitive advantages
Reduce product costs
Increase customer satisfaction
Hire and retain the best professionals
2.1
See Figure
Ask your students what categories would they list if they were writing their own personal CSFs?
Potential answers include:
Engage in Continuous Learning – Earn a Degree
Exercising and Practicing Healthy Habits
Building strong relationships and friendships

13. Key Performance Indicators (KPIs)
Learning
Outcome
The quantifiable metrics a company uses to evaluate progress toward critical success factors
Turnover rates of employees
Number of product returns
Number of new customers
Average customer spending
2.1
Key points to understand about CSFs and KPIs =
CSFs = are elements crucial for a business strategy’s success and one CSF can have many KPIs
KPIs = measure the progress of the CSFs with quantifiable measurements can focus on external and internal measurements
RESOURCE FOR CLASSROOM ACTIVITY
KPI Library
This is a KPI library or aggregator for finding KPIs in many industry’s. Over 240,000 professionals use this library to research, and share and compare KPI strategies with other executives all over the world

14. Benchmarking Benchmark Benchmarking
Learning
Outcome
Benchmark
Baseline values the system seeks to attain
Benchmarking
A process of continuously measuring system results, comparing those results to benchmark values, and identifying steps and procedures to improve system performance
2.1
Many companies benchmark by identifying other non-competing companies who are outstanding performers in an aspect they wish to measure. For example, several universities and colleges interviewed airline managers when they wanted to automate their course registration system. Academic institutions don’t compete with airlines and so airlines were willing to talk about the strengths, weaknesses and possible pitfalls of their system and help educators set realistic goals.

15. Measuring Success Efficiency Metrics Effectiveness Metrics Throughput
2.1
Efficiency Metrics
Effectiveness Metrics
Throughput
Transaction Speed
System Availability
Information Accuracy
Response Time
Usability
Customer Satisfaction
Conversion Rates
Financial Goal Achievement
See Figure 2.4 Common Types of Efficiency & Effectiveness Metrics
Have students distinguish between efficiency and effectiveness?
Efficiency—maximizing output while minimizing input
Effectiveness—Doing the right things right
Have students provide personal or business examples of what happens when efficiency is maximized over effectiveness, and, when effectiveness is maximized

16. Benchmarking Efficiency & Effectiveness
Managerial Decision Making Challenges
2.1
Ideally, a firm wants to operate in the upper right-hand corner of the graph, realizing both significant increases in efficiency and effectiveness. This is often how productivity is defined.
Have students provide examples of businesses that they think operate optimally and ask them to detail why they think the company is effective as well as efficient.
Have students comment on where they work or processes they see at school that are either inefficient or ineffective and make suggestions for improvement.
CLASSROOM EXERCISE
Measuring Efficiency and Effectiveness
Break your students into groups and ask them to create a plan to measure the efficiency and effectiveness of this course and recommendations on how they would improve the course to make it more efficient and more effective. Student answers to this exercise will vary. They will need to determine ways to benchmark current efficiency and effectiveness and ways to continuously monitor and measure against the benchmarks to determine if the course is becoming more or less efficient and effective (class quizzes and exams are the most obvious benchmarks). Ask your students to present their plan and recommendations to the entire class. Be sure students’ plans and recommendations address the following:
Design of the classroom
Room temperature
Lighting and electronic capabilities of the classroom
Technology available in the classroom
Length of class
and instant messaging
Students’ attendance
Students’ preparation
Students’ arrival time
Quizzes and exams (frequency, length)
Figure 2.5

17. Types of Information Transactional Data Analytical Information
Encompasses all the raw facts within a single business process or unit of work
Supports daily operational tasks
Examples: Order size, manager’s salary, product price, stock price, shipping date
Analytical Information
Summarized transactional data
Used to support decision analysis
Examples: market trends, forecasts, sales by region, environmental scans
2.1
Transactional data is usually gathered through operations such as purchases, sales/orders, shipping, payroll. The decisions around these activities are structured. Employees have a limit in terms of the amount of money they can spend purchasing or the amount of credit that can be extended. Payroll is based on pre-determined wages and salaries. Have students identify a basic operational process. List the fields of data that can be collected from each transaction.
Analytical information is used for semi-structured decisions. Using the transaction data collected in the first exercise, help the students identify meaningful information that could be used for an ad hoc business decision by selecting, combining and summarizing data.
For example, sales data is collected from individual orders. By summarizing sales for each region, problem areas can be identified and dealt with.

18. Types of Information Processing
Learning
Outcome
Online Transactions Processing (OLTP)
Captures, stores, updates and process data according to defined rules
Online Analytical Processing (OLAP)
Summarization or aggregation of raw data from transaction systems
Data transformed into information for the managerial and strategic organizational levels
Granularity
Level of detail from raw data (granular or fine) to summarized data (coarse)
2.1
OLTP supports bookkeeping as it captures, stores and processes sales and purchasing data for an organization. Production of Financial Statements (Balance Sheet, Income Statement, Statement of Retained Earnings and Cash Flow Statement) is supported by OLAP as summarized transactions are categorized as assets, debt or equity, income or cash flow.
Have your students provide examples of data capture and its transformation into information. Which system captures granular sales data? What can marketers do with aggregate or coarse sales summaries?

19. Business Intelligence
Broad term describing the information supporting analytical and strategic decision-making
Consolidation
Aggregation of information into groups of interrelated information
Drill-Down
Breaking out of details into successive levels of greater granularity
Slice-and-Dice
Grouping data in different ways to offer differing perspectives
2.1
Consolitation
Regional financial forecasts roll-up into a national projection.
Drill Down
Poor national sales performance diagnosed by breaking sales out by province. Isolating poor provincial performance on a store by store basis or by sales representative.
Slice and Dice
View total production time lost due to accidents by factory or view total time production time lost by type of accident across all factories.
Help students construct examples of each type of analysis.

20. Business Intelligence
Information Levels Throughout an Organization
2.1
Ask students to provide examples of information moving from the operational to the managerial and strategic levels. Have them describe possible analytical processes and how the data moves from fine to coarse granulatiry.
Figure 2.6

21. Three Major Classes of IS
Transactions Processing Systems
Handles data for the operational level
Performs OLTP for transactional data
Examples: Payroll and Order Entry
Decision Support Systems
Models data and information to support managerial decisions
Performs OLAP
Executive Information Systems
Highly aggregated data for strategic decisions
Usually presented in a graphical format.
2.2

22. Quantitative DSS Models
Sensitivity Analysis
Changing one factor in an analysis and observing the change in result
What-if Analysis
Changing a basic assumption in the analysis and observing the impact on the result
Often used for contingency plans
Goal-Seeking Analysis
Determining the optimal configuration of resources necessary to achieve a stated goal.
2.2
Have students consider going on vacation. Have them list factors like weather, car reliability, and other factors that might impact the success of their holiday. How dependent are they on all these factors working out?
Have them examine more fundamental assumptions such as health, financial resources, even the travel provider not going bankrupt. What backup plans might they have.
Provide the students with a budget and an objective and have students in groups figure out how to achieve the objective given the budget they have.

23. DSS “What-if” Analysis
2.2
This figure displays Excel being used as a DSS to determine “what-if” analysis by using Excel’s Scenario Manager to determine what will happen to total sales as the price and quantity of units sold changes
If your students are interested in learning more about Excel DSS tools, such as Scenario Manager, have them review the Excel technology plug-ins
Figure 2.7

24. DSS “Goal-Seeking” Analysis
2.2
This figure displays Excel being used as a DSS to determine “goal-seeking” by using Excel’s Goal Seek tool to determine how much money a person can borrow with an interest rate of 5.5% and a monthly payment of $1,300
If your students are interested in learning more about Excel DSS tools, such as Goal Seek and Solver, have them review the Excel technology plug-ins
Goal Seek and Solver offer similar functionality
Solver is more advanced than Goal Seek as Solver allows the user to enter in many additional constraints on the end result
Figure 2.8

25. Interaction Between TPS & DSS
2.2
The TPS supplies transaction-based data to the DSS
The DSS summarizes and aggregates the information from the many different TPS systems, which assists managers in making informed decisions.
Canadian Pacific Railway (CPR) uses a DSS to analyze the movement of all its railcars and to track shipments against delivery commitments.
Similar to the logistics and scheduling challenges faced by Grocery Gateway, CPR would have a difficult task of integrating and analyzing this transaction-based data without this tool.
Figure 2.9

26. Executive Information Systems
Learning
Outcome
2.2
Specialized DSS for senior managers & executives
Uses external as well as internal data
Essential results at a glance
Visualization tools display key results
Execution means to act. At the top of the organizational pyramid, Executives must integrate data from all business disciplines within the company plus all relevant data from the business environment to make strategic decisions with large financial impacts and long-term consequences. As data moves up in an organization it is aggregated and synthesized into the few salient points required to make a decision at the top.

27. Executive Information Systems
2.2
Why would you need interaction between a TPS and EIS?
The EIS needs information from the TPS to help executives make decisions
Without knowing order information, inventory information, and shipping information from the TPSs, it would be very difficult for the CEO to make strategic decisions for the organization
Figure 2.10

28. Digital Dashboards
Learning
Outcome
Integrates information from multiple components and presents it in a unified display
2.2
Just as in your car where you can, at a glance, check the speed you are driving, the level of gas in the tank, the engine temperature and whether it is time for an oil change, the Digital dashboards, whether basic or comprehensive, deliver results quickly.
The quicker employees have information, the quicker they can respond to problems, threats, and opportunities. In this example from a marketing executive, the margin, expenses and revenues are updated in real time on the left. On the right, monthly averages and current product distribution provide a basis for comparison.
Dashboards are critical for people making frequent, rapid decision with significant consequences. Have students suggest what might be on a dashboard for a production manager at a factory or an IT manager for a national retail chain making sure point of sale computers were up and running in every store.
Figure 2.12

29. Artificial Intelligence (AI)
Learning
Outcome
Artificial intelligence (AI)
Simulates human intelligence such as the ability to reason and learn
Intelligent system
Various commercial applications of artificial intelligence
2.3
At Manchester Airport in England, the Hefner AI Robot Cleaner alerts passengers
to security and nonsmoking rules while it scrubs up to 65,600 square feet of
floor per day. Laser scanners and ultrasonic detectors keep it from colliding with
passengers.
Shell Oil’s SmartPump keeps drivers in their cars on cold, wet winter days. It can
service any automobile built after 1987 that has been fitted with a special gas cap
and a windshield-mounted transponder that tells the robot where to insert the pump.
Matsushita’s courier robot navigates hospital hallways, delivering patient files,
X-ray films, and medical supplies.
The FireFighter AI Robot can extinguish flames at chemical plants and nuclear
reactors with water, foam, powder, or inert gas. The robot puts distance between
human operators and the fire.9
AI systems increase the speed and consistency of decision making, solve problems
with incomplete information, and resolve complicated issues that cannot be solved
by conventional computing. There are many categories of AI systems; five of the most
familiar are: (1) expert systems, (2) neural networks, (3) genetic algorithms, (4) intelligent
agents, and (5) virtual reality
CLASSROOM VIDEO
Something to Get Their Attention
Great clip to show student's the power of AI.

30. Types of Artificial Intelligence
2.3
CLASSROOM EXERCISE
Hod Lipson Demonstrates Cool Little Robots
Hod Lipson demonstrates a few of his cool little robots, which have the ability to learn, understand themselves and even self-replicate. At the root of this uncanny demo is a deep inquiry into the nature of how humans and living beings learn and evolve, and how we might harness these processes to make things that learn and evolve. Hod Lipson works at the intersection of engineering and biology, studying robots and the way they "behave" and evolve. His work has exciting implications for design and manufacturing -- and serves as a window to understand our own behavior and evolution.
Figure 2.14

31. AI--Expert Systems
Learning
Outcome
Software applications that imitate human reasoning in a specific subject area.
3 components of expert systems
Knowledge base
Database containing objective information and subjective experiences
Contributions from leading experts
Set of Rules
Similar to a search engine, compiles knowledge to a specific situation
User Interface
Allows non-technical individuals to more easily ask questions of the system
2.3
Uses the collective knowledge of leaders in the field. Used for everything from medical diagnosis to solving complex technical problems to methods for solving conflict.
Disadvantages include: Often difficult to use or to frame questions for useful answers. It has no common sense and so, does not filter out wrong assumptions or impossible solutions. It does not make “mental leaps” as humans can. It derives its “answers” from information it already has and experiences that have been stored within it.
CLASSROOM EXERCISE
The Analyst™ is a diagnostic tool, now accessible online, that fills the gap between what you need and what busy, human doctors can offer. With less and less time to address a patient's individual needs and yet more and more research and other information to digest, incorrect and incomplete diagnoses are frequently made On this site they have a great diagram that compares The Analyst to a Doctor.

32. AI--Neural Networks
Learning
Outcome
Attempts to emulate the way the human brain works in
Learning and adjusting to new circumstances on its own
Functioning without complete information
Coping with large amounts of information and many variables
Analyzing non-linear patterns.
Uses:
Decisions that involve patterns or image recognition
Problems where “rules” or logical pathways are unknown
Fuzzy Logic:
A mathematical method of handling imprecise or subjective information
2.3
Uses of Neural Networks include:
-Profiling local crime patterns from police report data to better deploy resources and develop prevention programs
-Mail order businesses profile current customers to determine most likely new target consumers
-The Canadian Construction Claims Tracker analyzed 567 construction claims to be able to predict with 65% accuracy the outcome of a contract dispute.
Currently Universities and Colleges offer seats in their programs based on the applicants marks from high school and on educational tests such as SAT, LSAT, and GMAT. How might an educational institution use neural networks to decide who should gain admission? What do you think of this idea?

33. AI--Genetic Algorithm
Learning
Outcome
A system that evaluates thousands of options choosing the most likely to succeed.
Optimization
Finds the combination of inputs product the best output.
Works faster with more possibilities than any human
Uses
Which set of projects should a company invest in?
Network configuration selects the lowest cost among millions of possible connections
2.3
Have students consider the multiplier effect of many factors that can be arranged in different ways. The Multiplication Formula would suggest that if there are 6 different materials that could be used for Input A, 7 different materials that could be used for Input B and five different materials for Input C, 6x7x5 would yield 900 alternatives. If a company could choose from investing $1 million and $5 million in any of six possible countries using any of 3 different methods of financing, for up to 12 products, the options grow into the thousands.

34. AI--Intelligence Agents & Multi-agent Systems
Learning
Outcome
Specialized applications that complete online tasks that require decision-making.
Based on a programmed “set of rules” that can adapt to changing situations.
Shopping Bot
Application that searches the net for products, negotiates price and executes transactions for businesses
Multi-agent systems
Intelligence Agents that work independently and interact with each other.
Agent-based modelling
Use of multi-agent systems to simulate and predict behavior of human organizations
2.3
Biomimicry is the study of the ecosystem to adapt characteristics from it into organizational situations. Biomimicry inform multi-agent systems and allow them to predict human behavior in response to a wide area of interest from stock market fluctuations, fire alarms to changes in interest rates. Agent-based modelling has aided optimizing cargo routing, cost reductions in production and distribution of industrial gases, and to find efficient ways of distributing anti-AIDS drugs in Africa.
CLASSROOM EXERCISE
Building Artificial Intelligence
The idea of robots and artificial intelligence is something that has captured people’s attention for years. From the robots in Star Wars to the surreal computer world in the Matrix, everyone seems to be fascinated with the idea of robots.
Break your students into groups and challenge them to build a robot. The robot can perform any function or activity they choose. The robot must contain a digital dashboard and enable decision support capabilities for its owner. Have the students draw a prototype of their robot and present their robot to the class. Have your entire class vote on which robot they would invest in if they were a venture capital firm.

35. AI--Virtual Reality
Learning
Outcome
Computer-generated environment that simulates a real world or imaginary world experience.
Uses
Flight simulation for pilot training
Surgery conducted from a remote site. Visual images guide the surgeon who manipulates equipment many miles away.
Remote use of equipment to dispose of hazardous waste.
Entertainment.
2.3
CLASSROOM EXERCISE
Take a Drive or a Walk
This is an interesting website where you can view yourself walking or driving down street in Calgary or Fredericton or a small town north of Toronto like King City or Maple.  Although the images are not in real-time, they are sufficiently up-to-date to give you a good idea of what the locale is like. It’s a great way to familiarize yourself with a place before you travel to it for the first time or to plan a fantasy vacation. Use the following link to download the free software application…and away you go!

36. OPENING CASE QUESTIONS Information Systems are Central at Grocery Gateway
What information systems are used at Grocery Gateway to help staff make decisions? Would you classify these systems as TPS, DSS, or EIS?
How do these systems support operational-, managerial- or strategic-level decisions?
What steps could the company take to leverage the transactional data collected by the information systems outlined in the case to help make managerial and strategic decisions for the company?
Identify a few key metrics that a Grocery Gateway executive might want to monitor on a digital dashboard. How can these metrics be used to improve organizational decision making?
OPENING CASE QUESTIONS
Information Systems are Central at Grocery Gateway
1. What information systems are used at Grocery Gateway to help them make decisions? Would you classify these systems as TPS, DSS, or EIS?
The web site acts as a TPS as it supports customer transactions.
Logistic Management System is a mostly a DSS with some aspects of an EIS incorporated into it as analyzing some of its data can lead to strategic decisions.
2. How do these systems support operational, managerial or strategic level decisions?
TPS collect operational data that allows the organization to fulfill daily operations such as the web site which collects customer orders which in turn cause Grocery Gateway to need to make decisions about products, deliveries, etc. The logistics management system also fulfill some operational decisions as it allows for decisions around deliveries, routes, and other operational issues involved with deliveries. It also allows for decisions around become more efficient in routing and deliveries from analyzing the data and in turn can lead to strategic level decisions around deliveries and even web site strategies and changes.
3. What steps could the company take to leverage the transactional data that is collected by the information systems outlined in the case to help make managerial and strategic decisions for the company?
The company can start to use different types of analysis on the data to help them make analytical and strategic decisions for the company. The types of analysis include:
Sensitivity Analysis
What-if Analysis
Goal Seek Analysis
These analyses can then be tied to digital dashboards for more instantaneous access to the analysis and give Grocery Gateway information on items like the market pulse, customer service and cost drivers.
4. Identify a few key metrics that Grocery Gateway marketing executives might want to monitor.
Grocery Gateways customers are generally busy people with not enough time on their hands want an easier and quicker way of doing their chores. Also, people who are physically challenged and find shopping difficult, or those who do not own a car can find this service beneficial. Some key metrics might be:
Best-selling product
Worst selling product
Date of highest sales per month
Date of worst sales per month
Correlation between product sales
Distance to nearest grocery outlet
Sales by region
Sales by season
Time to delivery of goods

37. SECTION 2.2 BUSINESS PROCESSES
This section provides an overview of business processes and how they are develop or made more effective through business process improvement, business process reengineering, business process modelling, business process management, and finally gives some business process modelling examples.
CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Richard Sears Decides to Sell Products through a Catalogue
Sears Roebuck changed the shape of an entire industry by being lucky enough to discover a huge untapped market that lay waiting to be discovered. In the 1880s about 65 percent of the population (58 million) lived in the rural areas. Richard Sears lived in North Redwood, Minnesota, where he was an agent at the Minneapolis and St. Louis railway station. Sears began trading products such as lumber, coal, and watches, when the trains would pass through. Sears moved to Chicago in 1893 and partnered with Alvah C. Roebuck, and the Sears & Roebuck Company was born. The company first published a 32-page catalogue selling watches and jewellery. By 1895 the catalogue was 532 pages long and included everything from fishing tackle to glassware. In 1893 sales reached $400,000 and by 1895 sales topped $750,000.
Sears invented many new marketing campaigns and concepts that are still in use today, including a series of rewards (or loyalty programs) for customers who passed copies of the catalogue on to friends and relatives. Sears was one of the first companies to recognize the importance of building strong customer relationships. Sears’ loyalty program gave each customer 24 copies of the catalogue to distribute, and the customer would generate points each time an order was placed from one of the catalogues by a new customer. The Sears catalogue became a marketing classic. It brought the world to the isolated farms and was a feast for the new consumers. The entire world was available through the Sears catalogue, and it could be delivered to the remotest of doorsteps.

38. Understanding the Importance of Business Processes
Learning
Outcome
Business Process
Standardized set of activities that accomplish a specific task
Transform a set of inputs into a set of outputs (goods & services)
Types of Business Processes
Customer check-out process, order delivery processes, invoicing process, payroll process etc., etc.
Importance
Determine bottlenecks, eliminate duplication, identify and benchmark smooth running processes
2.5
Have students diagram a typical process they may deal with everyday such as ordering coffee from Tim Horton’s or Starbucks. Have them determine the number of process steps that are involved. Where has the coffee shop introduced technology to speed up efficiency and effectiveness? How does the layout of the area behind the counter improve (or get in the way of) service? Where are there bottlenecks? What could be done about them?

39. Sample Business Process
2.5
This figure provides an excellent starting point for a class discussion on the various business processes that typical businesses undertake in a typical day.
Consider a single transaction cycle from customer order to shipment and have students identify the interactions. The next slide (Figure 2.17 from the text) provides one solution.
Figure 2.15

40. The Order-to-Delivery Process
2.5
What other processes bring functional units together?
Some examples:
Accounting and Finance authorize customer credit for Sales prospects
Marketing and Operations bundle several products together for special promotions. Sales sells extended warranties supported by customer service.
Figure 2.16

41. Customer- & Business-Facing Processes
Learning
Outcome
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.
2.5
Can students name a few customer facing business processes?
Marketing campaign
Sales initiative such as a discount
New product
New service
Distribution of a product or service
Customer billing
Customer service
Order processing
Can students name a few business facing processes?
Goal setting
Day-to-day planning
Performance feedback
Employee rewards
Resource allocation
Strategic planning
Internal budgets
Internal training
Purchasing raw materials in the supply chain
Figure 2.12 provides others

42. Customer- & Business-Facing Processes
Examples of Customer-Facing, Industry Specific & Business-Facing Processes
2.5
Business Process Patent protects a business’s specific set of procedures for conducting its business from competitors.
Core Processes are the basic activities, such as manufacturing and selling products, that make up the primary value chain.
Cable Ready
A current cable subscriber calls up to change the date for activating the service at a new address from Feb. 22 to March 1. The subscriber is successful and hangs up the phone happy. However, on February 22nd the cable at the current home is disconnected and the customer is no longer happy. The customer service representative forgot to change the date of the disconnection and only changed the date of the activation.
Practically speaking, these two events will almost always be linked - and the system probably should have prompted the customer service representative to ask if they were. The point: In focusing on business process, it is important to facilitate real-world tasks that are, by nature, "integrated."
Figure 2.17

43. Business Process Modelling (Mapping)
Learning
Outcome
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
Current state of the operation without improvements or changes
To-Be process model
Shows the results of proposed changes to As-Is model
2.5
Why is it important to diagram the As-Is process prior to diagramming the To-Be process?
It is important to understand the entire process from end-to-end before determining how to fix the process
What is the difference between the As-Is and To-Be process
Have the students provide examples of As-Is versus To-Be processes. Some possibilities could be
Current mode of transportation versus dream car.
Current residence (apartment, at parent’s home) versus home ownership.
Grade report with Ds versus grade reports with As.
Falling off a ski hill versus slaloming.
Personal before and after pictures dieting or fitness.

44. Process Models for Ordering a Hamburger
Learning
Outcomes
2-5
Ask students to interpret the model.
Does it seem realistic?
How would they change it?
Figure 2.18

45. Business Process Modelling
Learning
Outcome
2.5
Ask your students if they can think of any other processes that have been reengineered
Pumping gas (pay at the pump)
Auto checkout at the grocery store
Bar codes
As your students to name any other types of recent business process improvement examples and which of the following methods were used. Any other methods?
Eliminate redundancies
Improve efficiency
Improve effectiveness
Streamline processes
Make your business better, faster, cheaper!
CLASSROOM EXERCISE
Videos on BPM
Microsoft's business and industry offers a surprisingly good introduction to people driving business success through business process.
Here are some good client videos on BPM.  Gives a nice real world perspective: K2 and Siemens.
Funny video to kick-off your process modeling lecture.
Figure 2.18

46. As-Is Process Modelling for Order Fulfillment
2.5
Ask students to interpret the model. Have them note that in this process model there are a number of different people interacting in the fulfillment of the order. How has this diagram broken out all the roles involved? Most processes have sub processes that need to be identified and integrated.
Does the order fulfillment process pictured here seem realistic? What changes would your students make?
Figure 2.19

47. Business Process Improvement
Learning
Outcome
Attempts to understand and measure current processes and make performance improvements accordingly.
Three conditions for initiating a business process change:
A pronounced shift in the market the process was designed to serve.
The company is markedly below industry benchmarks on the performance of its core processes.
To regain competitiveness, the company must leap-frog the competition on key dimensions.
2.5
Many students work part time while attending school. Ask them what are they expected to accomplish at work and what processes they use to perform their tasks and achieve successful results. If they could make three improvements to their efforts more efficient and effective, what would they suggest?

48. Business Process Improvement
Learning
Outcome
Workflow
Tasks, activities, and responsibilities required to execute each step in a business process.
Critical Ingredients in Process Improvement
Understanding workflow, customer expectations and the competitive environment
2.5
CLASSROOM EXERCISE
Examining and Re-engineering a College Business Process
Ask your students to discuss issues they have encountered around the college due to an inefficient or ineffective process. Choose one of the processes, break your students into groups, and ask them to reengineer the process. How would they change it to make it more effective or more efficient? Would they add a new technology device to help with the process such as a scanner, PDA, or RFID? Be sure to have them diagram the As-Is process and the To-Be process. Have them present their reengineered processes to the class.
Steps in Business Process Improvement
Figure 2.20

49. Steps in Business Process Improvement
2.5
We live in an era of rapidly changing processes. Have students identify processes that have been subjected to significant change in the recent past. How was it done before? How is it done now? What are the advantages, but also, the disadvantages of doing things currently. Processes could include: on-line program and course selection, viewing movies and television entertainment, paying bills, purchasing cars, travel or other more expensive items.
Figure 2.21

50. 2.5
Continuously improving technologies allow process to improve in flexibility and adapt to customer needs. “Paperless” banking allows electronic deposit of a pay cheque and subsequent electronic payments to creditors without sacrificing access to hard copy cheques and physical cash.
Figure 2.23

51. Online Order Fulfillment Process Model
2.5
Radical improvements in technology have altered the way customers want to do business and have revolutionized the market. Amazon revolutionized the book selling business by taking advantage of the innovation called the Internet. More recently, Netflix, revolutionized the way we watch movies.
Have students review Slide 46, As-Is Order Fulfillment Process and compare it to the more streamlined online order process pictured here. Have them note the differences.
Figure 2.24

52. eBay Customer-Facing Business Process Models
2.5
Businesses must view there processes from the customer’s perspective. A network of sophisticated and far-reaching processes make online auctions possible but the process for the buying or selling individuals is simplicity itself.
Purchasing An Item on eBay
Selling An Item on eBay
Figure 2.25
Figure 2.26

53. Business Process Engineering (BPR)
Learning
Outcome
Is the analysis and re-design of workflow within and between enterprises.
Is not built off of the old process. Is always revolutionary not evolutionary.
A vision is created and an entirely innovated process is implemented.
2.5
When Amazon first implemented its online bookstore it had to re-engineer its entire delivery process. Customers were not taking books out of a store, the store was taking books to them.
The job search function has been completely re-engineered. Instead of going to an employment center and looking at paper postings on a billboard, or checking Want Ads, mailing paper resumes to companies, and waiting for the phone to ring, it is done on line through company and search firm websites.
Have students suggest processes that they do differently now and discuss the new Business-Facing processes that had to be created to achieve them.
Business Process Re-engineering Model
Figure 2.27

54. Business Process Re-engineering
Learning
Outcome
Results in better, faster and cheaper AND re-defining best practices in the industry.
Focus must be on core business activities:
Does it impact highly on customer satisfaction?
Is it consistent with the strategic direction?
Is it crucial for productivity improvement?
Does it fall below best in class?
2.5
Have students explain how each image can be viewed as Business Process Re-engineering.
Figure 2.28

55. Creating Customer Value
Learning
Outcome
The key driver for Business Process Engineering.
2.5
Auto Insurance Claims Process
Have students interpret the two diagrams. How is the change in process a win-win for both the company and the client?
Figure 2.29

56. Increasing Change Increases Benefits
2.5
Have students define and provide examples for Automate, Streamline, Business Process Engineering and Strategic Re-engineering given what has been discussed previously. Have them consider the obstacles for moving higher up the spectrum such as risk, access to resources, motivating employees to manage change. Consider any of the major banks or major retail chains. Where are each of the specific businesses on the spectrum and what have they done to get there? Where are they positioned in terms of market share? How long an leadership window do they have before they are matched and, possibly, surpassed. Think Blackberry.
Figure 2.30

57. Business Process Management
Learning
Outcome
Integrates all of an organization’s business processes to make individual processes more efficient.
Focus on People & Systems
Focuses on evaluating and improving processes that include both person-to-person workflow and system-to-system communications
Works across functional areas so IT and functional managers must understand each other and work together
Requirements
Flexibility with cultural and organizational change
Willingness to share power and information
2.5
Not only do managers have to be willing to change but subordinates must have the perception to see possible process improvements and have the courage to make suggestions to their superiors. How many students have offered suggestions to their bosses? What kind of response did they get? In groups, have students discuss their work (or school) processes. Pick one to review and discuss methods of improving the output by changing how it is done. Would any student be willing to offer their idea to upper management? Why or why not?

58. Key Reasons for BPM Figure 2.31 2.5 Benefits Include:
Bringing processes, people, and information together.
Breaking down the barriers between business areas and finding owners forthe processes.
Managing business processes within the enterprise and outside the enterprise with suppliers, business partners,
and customers.
Looking at systems horizontally instead of vertically
Efficiently automating, tracking and managing business processes in real time
Consolidating span of control and increases accountability
Enabling proactive and continuous improvement
Figure 2.31

59. OPENING CASE QUESTIONS Information Systems are Central at Grocery Gateway
What does Grocery Gateway’s customer order process look like?
Describe how Grocery Gateway’s web site supports Grocery Gateway’s business processes
Describe how Descartes’ fleet management software improved Grocery Gateway’s logistics business processes.
How does the business process affect the customer experience? The company’s bottom line?
What other kinds of information systems could be used by Grocery Gateway to improve its business processes?
Comment on the need for integration between the various types of information systems at Grocery Gateway. What benefits do you see for the company’s various business processes? What challenges do you think will exist in facilitating such integration?
What does Grocery Gateway’s customer order process look like?
Customer ↘ Web Site ↗ Order ↘ Order Pick ↗ Place on Truck ↘ Delivered to Customer
Describe how Grocery Gateway’s customer Web site improves or supports Grocery Gateway’s business processes.
The web site allows customer to access its products 24 hours a day, 7 days a week in a simple way. Besides supporting online merchandising, single item picking, home delivery operations, and customer service it also allows them to use the web site to retain customers.
Describe how Descartes’ fleet management software improved Grocery Gateway’s logistics business processes.
Some business improvements experienced by Grocery Gateway include reduced delivery time by 14 percent, and increasing the stops per hour for delivery trucks by 12.4 percent. They have also improved the ordering processes and delivery mechanisms, and gained a solid and repeating customer base.
How does the business process affect the customer experience? The company’s bottom line?
There are numerous benefits Grocery Gateway could offer its members including additional discounts for frequent shopping, menu planning, foods tailored to specific dietary needs only available to Grocery Gateway members, a Grocery Gateway calendar featuring Grocery Gateway coupons and only available for sale to Grocery Gateway members, and even recipes and online cooking tips for different kinds of foods.
What other kinds of information systems could be used by Grocery Gateway to improve its business processes?
Answers will vary and could include a number of different kinds of information systems. Some suggestions include:
Customer Relationship Management Systems
Supplier Relationship Management Systems
Employee Relationship Management Systems
Comment on the need for integration between the various types of information systems at Grocery Gateway. What benefits do you see for the company’s various business processes? What challenges do you think will exist in facilitating such integration?
There needs to be a great deal of integration of the systems as not only do the products that customers are ordering need to be available for delivery, the time windows that customers request deliveries in must be integrated not only into the delivery schedule but also the routing. The benefits are many and Grocery Gateway is already seeing some of these benefits such as the optimization of delivery routes which result in better customer satisfaction and cost savings. The 14% improve in on-time delivery and the 12.4% increase in yearly paid stops per paid hours, are a metrics that show these benefits. The challenges are also great and start with the need to bring employees together to develop the “As-Is” model and the “To-Be” plans so that the integration is possible in the first place. The other major challenge is that the project of integrating business processes is very large.

60. CLOSING CASE ONE Information Systems Are Critical For Take-Off in Canada’s Airline Industry
What advantages are there for an airline to use a revenue management system.
Are revenue management systems a competitive advantage or simply a new necessity for doing business in the airline industry today?
What type of decisions could a revenue management system be used to help make?
Is a revenue management system a TSP, DSS, or an EIS?
Would the revenue management system described in the case contain transactional data or analytical information?
What types of metrics would an airline executive want to see in a digital dashboard?
How could AI enhance the use of an airline’s revenue management system for decision support?
What advantages are there for an airline to use a revenue management system?
Revenue management systems are used to maximize revenue generated on every flight by forecasting the demand for a flight at various fare levels based on historical demand. Without a revenue management system airlines could not optimize the flights because, given that airlines like Air Canada carry over 20 million passengers each year, it is not possible to do forecasting by hand.
Are revenue management systems a competitive advantage or simply a new necessity for doing business in the airline industry today?
Airlines such as Air Canada, WestJet, Air Ontario and Air Toronto know that it is necessary to use information technology to plan and schedule their flights. Because so many airlines have invested very heavily in this type of technology, it is no longer a competitive advantage to a business, but simply a necessity for the airline industry today. However, innovative uses of the technology, such as loyalty programs for frequent flyers, may allow an airline to gain a competitive advantage over the other airlines.
What type of decisions could a revenue management system be used to help make?
An airline’s revenue management system can be used to support decisions being made because it will provide information on the preferences of customers for timing and destination of flights, the time between booking and the flight, and other buying patterns.
Is a revenue management system a TPS, DSS, or an EIS?
A revenue management system is all of these systems since it not part of the collection of transactional data but more importantly it is a DDS and EIS that help airline make critical decisions like those mentioned in the previous question.
Would the revenue management system described in the case contain transactional data or analytical information?
Airlines can us their innovative IT systems to gain valuable business intelligence into their customer information. They conceived and rolled out hugely successful frequent flyer programs, which increased the likelihood that frequent business travelers, their most profitable customers, would fly with them instead of with a competitor. Frequent flyer programs require sophisticated computer system to properly account for and manage the flight activity of millions of customers. Ultimately, frequent flyer programs became an entry barrier for the industry because all airline companies felt they could not compete for the best customers without having their own frequent flyer systems.
What types of metrics would airline executives want to see in a digital dashboard?
Airline executives could use throughput and speed efficiency metrics to baseline and benchmark its gate and boarding applications. They could also use usability and customer satisfaction effectiveness metrics to determine the satisfaction in its gate and boarding applications. The dashboard could also contain information on market pulse, customer service, and cost drivers. It should also allow for sensitivity analysis, what-if analysis, and goal-seeking analysis.
How could AI enhance the use of an airline’s revenue management system for decision support?
Students can answer this question in a number of ways but the key item is that the answer deals with adding reasoning to the management systems. Examples may include automatic decisions on passenger loads to the customer web site.

61. CLOSING CASE TWO Leveraging the Power and Avoiding the Pitfalls of BPM
How can BPM help improve global outsourcing? Records management? Supply chain management?
What other business activities are excellent candidates for BPM?
Which of the five pitfalls mentioned above do you think is the most important? Why?
Which of the five pitfalls mentioned above do you think is the most common pitfall that organizations face when undergoing BPM? Why?
What is the advantage of treating BPM as a project, as opposed to some other type of business activity?
How can BPM help improve global outsourcing? Records management? Supply Chain Management?
BPM can help improve global outsourcing by helping in making decisions about which jobs to outsource and which jobs to keep local. With records management it can help by linking records management to the business process so that records are created at the start of the process, maintained in the state they need to be in during each stage process and disposed of at the end of the process. With supply chains it can be used to more tightly integrate all the process and application need to create and maintain a tightly integrated supply chain.
What other business activities are excellent candidates for BPM?
Other business processes that are excellent candidates are:
Project scope estimation
Business case sign-off
Project sponsorship identification
Project stakeholder management
Document and design “As-Is” business models
And the list goes on
Which of the five pitfalls mentioned above do you think is the most important? Why?
Answers will vary here but make sure the student justifies their choice in the answer they give.
Which of the five pitfalls mentioned above do you think is the most common pitfall that organizations face when undergoing BPM? Why?
Again answers will vary here depending on their experience but again make sure the answer is justified with the why part of the answer.
What is the advantage of treating BPM as a project, as opposed to some other type of business activity?
The advantage of treating BPM as a project rather than another type of business activity is that if one looks at the five common pitfalls an organization faces when undergoing BPM are commonly found in project and thus there has been the development of the project management approach to help prevent some of these pitfalls. Thus, using a project management approach and treating BPM as project rather than another type of business activity may alleviate some of the pitfalls.

62. CLOSING CASE THREE Actionly: Online Brand Management
Define the three primary types of decision-making systems, and explain how a customer of Actionly might use them to find business intelligence?
Describe the difference between transactional and analytical information, and determine which types Actionly uses to create a customer’s digital dashboard?
Illustrate the business process model used by a customer of Actionly following Twitter tweets?
Explain business process reengineering and how Actionly used it to create its unique business model?
Formulate different metrics Actionly uses to measure the success of a customer’s marketing campaign.
Define the three primary types of decision-making systems, and explain how a customer of Actionly might use them to find business intelligence.
Decision-making skills are essential for all business professionals, at every company level, who make decisions that run the business. At the operational level, employees develop, control, and maintain core business activities required to run the day-to-day operations. Operational decisions are considered structured decisions, which arise in situations where established processes offer potential solutions. Structured decisions are made frequently and are almost repetitive in nature; they affect short-term business strategies.
At the managerial level, employees are continuously evaluating company operations to hone the firm’s abilities to identify, adapt to, and leverage change. Managerial decisions cover short- and medium-range plans, schedules, and budgets along with policies, procedures, and business objectives for the firm. These types of decisions are considered semi-structured decisions; they occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision.
At the strategic level, managers develop overall business strategies, goals, and objectives as part of the company’s strategic plan. They also monitor the strategic performance of the organization and its overall direction in the political, economic, and competitive business environment. Strategic decisions are highly unstructured decisions, occurring in situations in which no procedures or rules exist to guide decision makers toward the correct choice. They are infrequent, extremely important, and typically related to long-term business strategy.
Describe the difference between transactional and analytical information, and determine which types Actionly uses to create a customer’s digital dashboard.
Transactional information encompasses all of the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks. Analytical information encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks. Actionly is using transactional information to make analytical decisions. The transactional information includes customer’s names, brands purchased, thoughts, friends, social status, and other types of social networking data. The analytical decisions that are made from this information include determining product success to service success.
Illustrate the business process model used by a customer of Actionly following Twitter tweets.
Student answers to this question will vary. Be sure they included the following in their business process model
Gather data
Identify followers
Identify Tweets – posting, time, content
Correlate Tweets to action including purchases, services, or returns
Explain business process reengineering and how Actionly used it to create its unique business model.
Business process improvement attempts to understand and measure the current process and make performance improvements accordingly. Streamlining improves business process efficiencies by simplifying or eliminating unnecessary steps. Bottlenecks occur when resources reach full capacity and cannot handle any additional demands; they limit throughput and impede operations. Streamlining removes bottlenecks, an important step if the efficiency and capacity of a business process are being increased. Business process reengineering (BPR) is the analysis and redesign of workflow within and between enterprises and occurs at the systems level or companywide level and the end-to-end view of a process.
Formulate different metrics Actionly uses to measure the success of a customer’s marketing campaign.
Analyzing data is at the core of Actionly’s business model and without metrics the company would not have function. Potential metrics include:
Number of followers
Number of Tweets
Number of posts
Number of friends
Number of recommendations
Number of sales
Number of customers