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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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 OPERATIONAL MANAGERS MANUFACTURING FINANCE ACCOUNTING HUMAN RESOURCES Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall Business Processes Supported by Functional Area Information Systems 8-4 IS Today (Valacich & Schneider) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall INTERRELATIONSHIPS AMONG SYSTEMS External ESS External MIS DSS TPS IS Today (Valacich & Schneider) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall Architecture of a TPS 8-11 Processing Online Immediate results Batch Transactions collected and processed later Not needed immediately IS Today (Valacich & Schneider) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall 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) 5/22/2017 Copyright © 2010 Pearson Education, Inc. Published as Prentice Hall