How Businesses Use Digital Technologies Flashcards
Business Processes
A collection of activities required to produce a product or service (how work is organized, coordinated and focused to produce a valuable product or service)
Supported by flows of material, information and knowledge across different participants
Examples of business processes could be fulfilling an order, developing a new product, creating a marketing plan, hiring an employee
See examples of business processes
The order fulfillment process
Steps required to fulfill an order
Sales, accounting and manufacturing and production are all separate from each other - sometimes they overlap in reality (one person sales also does some of the accounting activities), but logically they are separate.
See model for fulfillment process
How IT improves business processes
Increasing efficiency of existing processing: automate steps in business processed previously performed manually, such as checking the credit card or generating invoices
Enable new processes: changing flow of information, do tasks simultaneously which eliminates delays in decision making, supports new business models
It also affects the fulfilment process – such as Information systems making Spotify able to do a whole different business model (no “assemble product”)
Four Main Business functions
Sales and marketing
Manufacturing and production
Finance and accounting
Human resources
How different management groups use systems
Operational Management
TPS, Transaction processing system, which performs daily routine transactions necessary to conduct business
Middle Management
MIS, Management Information Systems, which transforms data from TPS into understandable information and provide answers to routine questions with predefined procedure for answering them (how many oranges were sold in the last 24 hours)
DSS, Decision Support Systems, which support non-routine decision making (what is the impact on production schedule if December sales double?), based on external information as well as TPS and MIS
Senior Management
ESS, Executive Support Systems, which address non-routine decisions requiring judgement, evaluation and insight, based on data from MIS, DSS and external data, such as new tax laws or competitors
Transaction Processing System (TPS)
Serve operational management, which track elementary activities and transactions of the organization, such as sales, receipts, cash deposits, flow of material in factories
Perform and record daily routine transactions necessary to conduct business
Serve predefined, structured goals and decision making – how many parts are in inventory?
• Supermarket register: predefined structured goal is to register what you buy and thus will give you the correct price you have to pay
Examples: MobilePay, Loyalty Apps, Self Check Out, Check-in and check-out in airport and Rejsekort
Management information systems (MIS)
Serve middle management
Provide reports on firm’s current performance, based on data from TPS, with information used to monitor and control the business and predict future performance
• While TPS is more about data, the MIS is more advanced and transform it into information which is shown in reports
• Sometimes a TPS can ALSO be an MIS, if it is also able to make reports (e.g. Supermarket: if it only includes scanning and providing the price, it is only a TPS, but some of them could be smarter and also be able to make reports about what goods are selling best)
• Reports are produced on a regular schedule based on the TPS data
Provide answers to routine questions with predefined procedure for answering them
• E.g. How many oranges have been sold in the last 24 hours?
Typically have little analytical capability
Decision Support Systems (DSS)
Serve middle management
Support non-routine decision making (eg. what is the impact on production schedule if December sales double?)
Based on external information as well as TPS and MIS
Executive Support System
Support senior management
Address non-routine decisions requiring judgement, evaluation and insight
Incorporate data about external events (e.g. New tax laws or competitors, a me too case), as well as summarized information from internal MIS and DSS
Usually information from the other systems are delivered to senior executives through a portal
Information is filtered and compressed to only display the most important data to senior managers
Business Intelligence (BI)
term for data and software tools for organizing, analyzing and providing access to data to help managers and other enterprise users make more informed decisions
