Transcript IST4e Chapter 8

Chapter 8
Enhancing Business Intelligence
Using Information Systems
8-1
“Most executives, many
scientists, and almost all
business school graduates
believe that if you analyze data,
this will give you new ideas.
Unfortunately, this belief is
totally wrong. The mind can only
see what it is prepared to see.”
Edward de Bono,
Creative Thinking Guru
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Business Intelligence (BI)
8-2
 Gather & analyze information from internal/external
sources in order to make better business decisions.
 Used to monitor & control processes from
disconnected reports, databases, & spreadsheets
 BI Continuous Planning
 Continuously monitor and analyze business
processes
 Results lead to ongoing adjustments
 Involves decision makers from all levels
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
TYPES OF INFORMATION SYSTEMS
KIND OF SYSTEM
GROUPS SERVED
EXECUTIVE
(STRATEGIC) LEVEL (ESS)
SENIOR
MANAGERS
MANAGEMENT LEVEL
(MIS) and (DSS)
MIDDLE
MANAGERS
OPERATIONAL
LEVEL (TPS)
SALES &
MARKETING
IS Today (Valacich & Schneider)
OPERATIONAL
MANAGERS
MANUFACTURING
FINANCE
ACCOUNTING
HUMAN
RESOURCES
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Business Processes Supported by Functional
Area Information Systems
8-4
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
INTERRELATIONSHIPS AMONG SYSTEMS
External
ESS
External
MIS
DSS
TPS
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Operational Level
8-6
 Day-to-day business processes
 Interactions with customers
 Information systems used to:
 Automate repetitive tasks
 Improve efficiency
 Decisions:
 Structured
 Recurring
 Can often be automated using IS
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Managerial Level
8-7
 Functional managers
 Monitoring and controlling operational-level activities
 Providing information to executive level
 Midlevel managers
Focus on effectively utilizing and deploying resources
 Goal of achieving strategic objectives

 Managers’ decisions
 Semistructured
 Contained within business function
 Moderately complex
 Time horizon of few days to few months
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Executive Level
8-8
 President, CEO, vice presidents, board of directors
 Decisions
 Long-term strategic issues
 Complex and nonroutine problems
 Unstructured decisions
 Long-term ramifications
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Comparison of Decision-Making Levels
8-9
Operational
Level
Managerial
Level
Executive
Level
Who
Foreman or supervisor
Midlevel managers and
functional managers
Executive-level
managers
What
Automate routine and
repetitive activities
Automate the monitoring
and controlling of
operational activities
Aggregate summaries
of past organizational
data and projections of
the future
Why
Improve organizational
efficiency
Improve organizational
effectiveness
Improve organizational
strategy and planning
IS
Transaction
Processing Systems
(TPS)
Management Information
Systems (MIS)
Executive Information
Systems (EIS)
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Transaction Processing Systems (TPS)
8-10
 Operational level
 Purpose:
 Processing of business events and transactions
 Increase efficiency
Automation
 Lower costs
 Increased speed and accuracy

 Examples:
 Payroll processing
 Sales and order processing
 Inventory management
 Product purchasing, receiving, and shipping
 Accounts payable and receivable
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Architecture of a TPS
8-11
 Processing
 Online


Immediate
results
Batch


Transactions
collected and
processed later
Not needed
immediately
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Management Information Systems
8-12
 Managerial level
 Purpose:
 Produce reports
 Support of midlevel managers’ decisions
 Examples:
 Sales forecasting
 Financial management and forecasting
 Manufacturing, planning and scheduling
 Inventory management and planning
 Advertising and product pricing
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Business Intelligence
8-13
 Components

Information and Knowledge Discovery


Search for hidden relationships
Hypotheses testing
 Ad Hoc Queries and Reports
 Examples:


Scheduled Reports
Exception Reports
* Drill-down Reports
* Key-Indicator Reports
 Online Analytical Processing (OLAP)
 Complex, multidimensional analyses of data stores for data
mining

OLAP data components:
 Measures (or facts)—values or numbers the user wants to analyze
• Categorized data
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Data Mining
8-14
 Association Discovery - Technique used to find correlations
 Sequence Discovery - Association discovery over time
 Text mining - Extracting information from text documents
 Can be applied to a variety of documents:


Web sites
Transcripts (phone calls, interview, applications)
 Web Mining - Analyze usage or content of Web pages
 Used by Amazon.com to see customer’s usage


Clickstream data—recording of the user’s path through a Web site
Stickiness—ability to attract and keep visitors
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Executive Information Systems
8-15
 Aka Executive support system
 Executive level
 Purpose:
 Aid in executive decision making
 Provide information in highly aggregated form
 Examples:
 Executive-level decision making
 Long-range and strategic planning
 Monitoring of internal and external events and resources
 Crisis management
 Staffing and labor relations
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Decision Support Systems (DSS)
8-16
 Decision-making support for recurring problems
 Used mostly by managerial level employees (can be
used at any level)
 Interactive decision aid
 What-if analyses


Analyze results for hypothetical changes
Example: Microsoft Excel
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Collaboration Technologies
8-17
 Increased need for flexible teams
 Virtual teams—dynamic task forces
 Flexible, form and disband as needed
 Fluctuating team size
 Need for new collaboration technologies
 Groupware - Enables more effective team work
Disregard for time and place
 Asynchronous – Lotus Notes, Email, Calendaring, newgroups
 Synchronous – Electronic Meeting systems
 Use: brainstorming, strategic planning, focus groups
 Web-based

IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Intelligent Systems
8-18
 Artificial intelligence
 Simulate human intelligence


Expert Systems


Reasoning, learning, seeing, hearing,
walking, talking, and feeling
Rule-based systems
Neural Networks
Approximation of human brain functioning
 Training to establish common patterns
 New data compared to past information


Intelligent agents (bots– software robots)
Program that works in the background
 Acts when a specific event occurs

IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Knowledge Management Systems
8-19
 Generating value from knowledge assets
 Collection of technology-based systems
 Knowledge assets
 Skills, routines, practices, principles, formulas, methods,
heuristics, and intuitions
 Used to improve efficiency, effectiveness, & profitability
 Documents storing both facts and procedures

Examples: Databases, manuals, diagrams, books, etc.
 Explicit knowledge - documented
 Tacit Knowledge – located in one’s mind
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016
Information Visualization
8-20
 Application of sophisticated statistical techniques
 What-if analyses to support decision making
 Capabilities can be embedded into a large range of
systems


Digital dashboards
Geographic Information Systems
 Use
geographically referenced information
 Ex: optimal store locations, target customers
IS Today (Valacich & Schneider)
Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall
4/11/2016