Chapter 2McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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CHAPTER 2: LEARNING OUTCOMES

1. Explain the importance of decision making for managers at each of the three primary organization levels along with the associated decision characteristics.

2. Define critical success factors (CSFs) and key performance indicators (KPIs), and explain how managers use them to measure the success of MIS projects.

3. Classify the different operational, managerial, and strategic support systems, and explain how managers can use them to make decisions and gain competitive advantage.

4. Describe artificial intelligence and identify its five main types.

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CHAPTER 2: LEARNING OUTCOMES

5. Explain the value of business processes for a company and differentiate between customer-facing and business-facing processes.

6. Demonstrate the value of business process modeling and compare As-Is and To-Be models.

7. Differentiate among business process improvements, streamlining, and reengineering.

8. Describe business process management and its value to an organization.

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MAKING BUSINESS DECISIONS

• Managerial decision-making challenges Analyze large amounts of information Apply sophisticated analysis techniques Make decisions quickly

• The six-step decision-making process:1. Problem Identification2. Data Collection3. Solution Generation4. Solution Test5. Solution Selection6. Solution Implementation

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Decision-Making Essentials

• Operational Decision Making—Employees develop, control, and maintain core business activities required to run the day-to-day operations

• Managerial Decision Making—Employees evaluate company operations to identify, adapt to, and leverage change

• Strategic Decision Making—Managers develop overall strategies, goals, and objectives

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• 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

• Critical Success Factors (CSFs)—The crucial steps companies make to perform to achieve their goals and objectives and implement strategies

• Key Performance Indicators (KPIs)—The quantifiable metrics a company uses to evaluate progress toward critical success factors

METRICS: MEASURING SUCCESS

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METRICS: MEASURING SUCCESS

• 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

• Benchmark—Baseline values the system seeks to attain

• Benchmarking—A process of continuously measuring system results, comparing those results to optimal system performance (benchmark values), and identifying steps and procedures to improve system performance

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SUPPORT: ENHANCING DECISION MAKING WITH MIS

• Model—A simplified representation or abstraction of reality

• Operational Support Systems: Transaction Processing System (TPS)—Basic

business system that serves the operational level and assists in making structured decisions

Online Transaction Processing (OLTP)—Capturing of transaction and event information using technology to process, store, and update

Source Document—The original transaction record

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SUPPORT: ENHANCING DECISION

MAKING WITH MIS• MANAGERIAL SUPPORT SYSTEMS:

Online Analytical Processing (OLAP)—Manipulation of information to create business intelligence in support of strategic decision making

Decision Support System (DSS)—Models information to support managers and business professionals during the decision-making process

• STRATEGIC SUPPORT SYSTEMS: Executive Information System (EIS)—A specialized

DSS that supports senior level executives within the organizationo Granularityo Visualizationo Digital Dashboard

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THE FUTURE: ARTIFICIAL INTELLIGENCE

(AI)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

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-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users

5. Virtual Reality—A computer-simulated environment that can be a simulation of the real world or an imaginary world

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EVALUATING BUSINESS PROCESS

• Businesses gain a competitive edge when they minimize costs and streamline business processes

• 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

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MODELS: MEASURING PERFORMANCE

• Business Process Modeling—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

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SUPPORT: CHANGING BUSINESS PROCESSES WITH

MIS• Workflow—Includes the tasks, activities, and

responsibilities required to execute each step in a business process

• Improving Operational Businesses—Automation:

Business Process Improvement—Attempts to understand and measure the current process and make performance improvements accordingly

Automation—The process of computerizing manual tasks

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SUPPORT: CHANGING BUSINESS PROCESSES WITH

MIS• Improving Managerial Business Processes – Streamlining: Streamlining—Improves business process efficiencies

by simplifying or eliminating unnecessary steps Bottleneck—Occurs when resources reach full capacity

and cannot handle any additional demands Redundancy—Occurs when a task or activity is

unnecessarily repeated• Improving Strategic Business Processes – Reengineering: Business Process Reengineering (BPR)—Analysis

and redesign of workflow within and between enterprises

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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

• BPM not only allows a business process to be executed more efficiently, but it also provides the tools to measure performance and identify opportunities for improvement, as well as to easily capture opportunities such as:

Bringing processes, people, and information together Breaking down the barriers between business areas and

finding “owners” for the processes Managing front-office and back-office business processes