Final Flashcards
What are the steps in decision making
- Intelligence gathering
- Alternative formulation
- Choice
- Implementation
- Review
What are the decision making challenges
• Factors that make business decision making challenging
– Uncertainty and complexity
– Information overload
– Data quality
What do managers need to make decisions
– Data
• Raw facts
– Information
• Summarized data
– Knowledge
• Relationships among pieces of information
• Cause and effect relationships
– Price increase on Sales, Market share
– Effect of new manufacturing technology on product quality
– What is beyond knowledge? Imagination or vision
• E.g.,of future business direction
• Cannot be mimicked by computers
• Formation of a business vision triggers knowledge gathering processes which then guide decision-making
How does IS help decision making
Information Systems are valuable to the extent they help augment (not replace) the knowledge of managers about their business environment during decision-making
What are the problems with operational data
• Raw data usually unsuitable for sophisticated reporting or data mining
– Dirty data
– Values may be missing
– Inconsistent data
– Data not integrated
– Data can be too fine or too coarse (granularity)
– Too much data
• curse of dimensionality
• too many rows
What is OLTP and how does it support decision making?
• Online Transaction Processing (OLTP) system collects data electronically and process the transactions online
• Backbone of all functional, cross-functional, and inter-organizational systems in an organization
• OLTP systems support decision making by providing the raw information about transactions and status for an organization
What are the two types of transaction processing
• Real-time processing
– Transactions are entered and processed immediately upon entry
• Examples: airline reservation systems, banking systems
• Batch processing
– System waits until it has a batch of transactions before the data are processed and the information is updated
• Example: transfer of all daily branch transactions to the central office for processing
Explain online analytical processing
• While data may be collected in OLTP, the data may not be used to improve decision making
• Online Analytic Processing (OLAP) systems focus on making OLTP- collected data useful for decision making
– OLAP provides the ability to sum, count, average, and perform other simple arithmetic operations on groups of data
– OLAP report has measures, or facts, and dimensions
Is Data an Asset?
• What is an Asset?
– Something that can be used by an organization to produce a benefit
• Data as an Asset
– Reusable
– Low storage cost
– Used to improve revenue or decrease costs, and improve decisions
– Provides Organizational Memory
How do BI systems provide competitive advantages?
• Business Intelligence (BI) system provides information for improving decision making
• Primary systems:
– Reporting systems
– Data-mining systems
– Knowledge-management (KM) systems
– Expert systems
Explain reporting systems
• Integrate data from multiple sources
• Process data by sorting, grouping, summing, averaging, and
comparing
• Format results into reports
• Improve decision making by providing right information to right user at right time
Explain data mining systems
• Process data using sophisticated statistical techniques
– Regression analysis
– Decision tree analysis
• Look for patterns and relationships to anticipate events or predict future outcomes
– Market-basket analysis
– Predict donations
Explain Knowledge management systems
• Create value from intellectual capital
• Collect and share human knowledge
• Supported by the five components of the information system • Foster innovation
• Improve customer service
• Increase organizational responsiveness
• Reduce costs
Explain Expert systems
• Encapsulate the knowledge of human experts in the form of If/Then rules
– If condition is true, Then initiate procedure
• Improve diagnosis and decision making in non-experts
Characteristics and Comp Advantages
Slide 23 lesson 7
What is a data warehouse
• Data Warehouse is used to extract and clean data from operational systems and other sources
• Prepares data for BI processing
• Data-warehouse DBMS
– Stores data
– May also include data from external sources
– Metadata concerning data stored in data-warehouse meta database
– Extracts and provides data to BI tools
What are the components of a date warehouse
Data warehouse Metadata
Data warehouse Database
See slide 25 lecture 7
What is datamart
• Data Mart is a data collection
– Created to address particular needs
• Business function
• Problem
• Opportunity
– Smaller than data warehouse
– Users may not have data management expertise
• Knowledgeable analysts for specific function
Review slides 27 and 28 lecture 7
Yes
What are the characteristics and categories of data mining systems
• Data mining is the application of statistical techniques to find patterns and relationships among data and to classify and predict
• Knowledge discovery in databases (KDD)
• Take advantage of developments in data management
• Two categories:
– Unsupervised
– Supervised
Explain unsupervised data mining
• Analysts do not create model or hypothesis before running the analysis
• Apply data-mining technique to the data and observe results
• Hypotheses created after analysis as explanation for results
• Example:
– Cluster analysis
• identify groups of entities that have similar characteristics
Explain supervised data mining
• Model developed before the analysis
• Statistical techniques applied to data to estimate parameters of the
model
• Examples:
– Regression analysis
• measures the impact of a set of variables on another variable
– Neural networks
• used to predict values and make classifications, such as “good prospect” or “poor prospect” customers
What is database marketing
• You have the applications, the database and data warehouse etc…. Now you need to use it!
• One way of using it is to understand customer to achieve intimacy and increase effectiveness of marketing.
• Techniques for using data to build a stronger relationship with customers and differentiating products and services
– One-to-one marketing – Transactive contents
What is one to one marketing and what is it suitable for
• Segment the market on the basis of individuals based on precise and timely understanding of their needs, targeting specific marketing messages to these individuals, and then positioning the product to be truly unique
• Ultimate form of market segmentation where the segments are individuals
• It’s suitable for products:
1. that can be produced in very complex forms,
depending on individual tastes
2. whose price can be adjusted to the level of personalization
3. were the individual’s tastes and preference can be effectively gauged
• Is it nearly as good as personal attention?
What is trans active content
• Most common reasons people go online are to
communicate and find information
• Transactive content results from the combination of traditional content, such as articles and product descriptions with dynamic information such as new product announcements, and is tailored to each user’s profile
What do u need to do before u can effectively aquire info
Acquire an IS system first!
How do u develop a competitive edge
There are two basic ways to develop competitive advantage through systems:
– Changing the Product: By introducing new products or services or enhancing current products or services
– Business Processes: Organizations use technology to help lock in customers, reduce costs, and create entry barriers for competitors in the market
How do you gain a competitive advantage using IS systems
• Businesses determine competitive strategies
• Create processes to achieve strategies
• Information systems developed to support business processes
– Help organizations achieve competitive advantage
– Need to avoid creating systems that are unrelated to organization’s strategy
Evolution of info systems
Lesson 9 slide 6
What is a functional system and what does it lead to
• Facilitated the work of single department or function
• Functions added to calculation system programs to provide more
value
– e.g. payroll expanded to become human resources
• Lead to “Islands of automation”
– Work independently from each other
– Effective as independent functions
– Inefficient working in cooperation with other processes across entire business
– Examples: human resources; financial reporting
What is an integrated cross functional system • Facilitated the work of single department or function
• Functions added to calculation system programs to provide more
value
– e.g. payroll expanded to become human resources
• Lead to “Islands of automation”
– Work independently from each other
– Effective as independent functions
– Inefficient working in cooperation with other processes across entire business
– Examples: human resources; financial reporting
What are the basic types of functional systems
These support functional areas in organizations, such as:
• Marketing and Sales
– Product Management, CRM (Customer Relationship Management), Sales forecasting
• Production (operation and manufacturing) – Operations systems, Manufacturing systems
• Human Resources
– Recruitment, Planning, payroll, skill and performance management
• Accounting and Finance
– Financial Management Systems
What do functional systems euqal
• Functional systems provide tremendous benefits, but are limited because they operate in isolation – as “silos”
• The “silo” means that each business area operates as its own business, actively competing against other areas in the same organization for resources. “Silos” can make the
overall company less competitive
What are the problems with functional systems
• Data duplication results from each application having own database – potential lack of data integrity
• Business processes disjointed across functions (silos)
– produces lack of integrated enterprise information because of limited
information available at any one source
• Inefficient (operational, tactical and strategic) decisions based on limited knowledge
Increased overall costs and lost opportunities to organizations!
What is enterprise application intergration
• The problems with functional systems are sometimes addressed using EAI
• EAI is a software layer (application) that allows the sharing of data from multiple functional systems
• Band-Aid solution to address issues with multiple functional systems.
• Cheaper than the alternative (deploy a new industry standard integrated system)
What is the importance of Industry standard business processes
• Business process design (redesign) idea
– It is difficult and expensive for organizations to automate or improve existing
functional systems
– Organizations should create new, more efficient business processes that integrate the activities of all departments involved in a value chain
– In other words, re-design business processes (review lecture 2 notes) • Cross-departmental business processes
– Take advantage of as many activity linkages as possible
What are the challenges of Business Process Design
• Process design projects are expensive and difficult
• May take a long time
• Employees resist change
• Ultimate outcome is uncertain
What are the benefits and problems of industry standard processes
• Early business process design projects were tailor-made
• Software vendors designed integrated applications, with built-in
industry standard processes
– Integrate activities across departments
– Save costs of tailor-made process design
– Examples: Oracle, SAP
• Problems:
– Industry standard processes may be very different from existing processes in the
organization
– May require the organization to change substantially
What are cross functional systems
• Cross-functional systems are designed to overcome problems in functional systems
• Enterprise Resource Planning (ERP)
– Support all the primary business processes as well as the human resource and accounting
support processes
– Enterprise-wide systems that integrate sales, order, inventory, manufacturing, and customer service activities
• Customer Relationship Management (CRM)
– Support the business processes of attracting, selling, managing, delivering, and supporting
customers
– Direct value chain activities that involve the customer
– Integrates four phases of the customer life cycle: marketing, customer acquisition, relationship management, and loss/churn
– All customer data stored in single database
What are the characteristics of ERP
Provides cross functional view
Has a formal approach based on formal bus models
Maintains data in central data base
Large benefits but hard to implement
Very expensive
What is the rationale behind ERP’s
– The software uses predefined processes and requires the company to
adapt itself to the software.
– The software is designed around the best practices for that particular function. The company can benefit from using the most successful solutions in a particular industry to help achieve its objectives.
– The software helps the organization automate many of the steps taken from industry-wide best practices instead of having to do everything manually.
– And best of all, the software will help employees remember all of the necessary steps in a process and provide the data to all who need it.
What if I want to keep my own processes with ERP’s
– enterprise software can be modified, but it is very
expensive and very difficult to do so.
– Because the software is so complex, changing just one of the processes may disrupt some of the other interdependent modules.
– Workarounds and add-ons can be used instead.
– Internet services and make the data available to external sources such as suppliers, governmental agencies, and customers.
What are the benefits of ERP’s
• Efficient business processes
• Inventory reduction
• Lead-time reduction
• Improved customer service
• Greater, real-time insight into organization • Higher profitability
How do CRM’s achieve benefits
– Many companies have customer data but not information
– The ability to turn raw data into useful information is where CRM systems shine.
– CRM systems gather customer information from all corners of a business, consolidate the information and then provide it to the organization’s customer contact points.
– By offering a consolidated viewpoint of the customer to these contact points, a company can cater to the customer that offers the most profitability.
What are the components of CRM
Solicitation
Lead tracking
Relationship management
Slide 27 lecture 9
What is the Business value of CRM’s
• Better understand customers, thus make better decisions about product lines and marketing campaigns.
• Also help reduce the customer churn rate and identify which customers are most profitable.
– Increased customer satisfaction
– Reduced marketing costs
– More effective marketing
– Lower costs for customer acquisition and retention – Increased sales revenue
– Better response to customer needs
What are inter organizational systems and what are the types
• Systems that cross organizations
– involve selling and purchasing
– integrate multiple-company operations
• Types of Inter-organizational Systems
– E-commerce
– Supply Chain Management (SCM)
What is supply chain management
• A supply chain is a network of organizations and facilities that transforms raw materials into products delivered to customers
– Involves customers, retailers, distributors, manufacturers, suppliers, transportation companies, warehouses, inventories, and some means for transmitting messages and information among the organizations involved
What is supplier relationship management
• Business process for managing all contacts between an organization and its suppliers
• Supplier is any organization that sells something to the organization that has the SRM application
• Supports both the in-bound logistics primary activity and the procurement support activity
• Support basic business processes
– source, purchase, and settle
