Information Systems for Business

Managing Knowledge and Artificial Intelligence

What is the Role of Knowledge
Management Systems in Business?
• Knowledge management systems among fastest growing areas of
software investment
• Information economy
• 37 percent U.S. labor force: knowledge and information workers
• 55 percent U.S. G D P from knowledge and information sectors
• Substantial part of a firm’s stock market value is related to
intangible assets: knowledge, brands, reputations, and unique
business processes
• Well-executed knowledge-based projects can produce
extraordinary ROI
Important Dimensions of Knowledge (1 of 3)
• Data, knowledge, and wisdom
• Tacit and Explicit Knowledge
• Tacit knowledge: Knowledge residing in the minds of the employees
that has not been documented
• Explicit knowledge: Documented knowledge
• Important dimensions of knowledge
• Knowledge is a firm asset.
• Intangible asset
• Knowledge experiences network effects, not subject to the law of
diminishing returns
• Knowledge has different forms.
• Tacit or explicit
• Involves know-how, craft and skill – procedures, etc.
Important Dimensions of Knowledge (2 of 3)
• Important dimensions of knowledge
• Knowledge has a location.
• Cognitive event involving mental models and maps of individuals
• Social and individual basis of knowledge
• Knowledge is “sticky” (hard to move), “situated” (enmeshed in a
firm’s culture) and “contextual” (works only in certain situations).
• Knowledge is situational.
• Knowledge is conditional; knowing when to apply a procedure is just
as important as knowing the procedure (conditional).
• Knowledge is related to context; you must know how to use a certain
tool and under what circumstances
Important Dimensions of Knowledge (3 of 3)
• Knowledge-based core competencies
• Key organizational assets
• Knowing how to do things effectively and efficiently in ways
others cannot duplicate is a prime source of profit and
competitive advantage
• Example: Having a unique build-to-order production
system
• Organizational learning
• Process in which organizations gain experience through
collection of data, measurement, trial and error, and
feedback
The Knowledge Management Value Chain (1 of 3)
• Knowledge management
• Set of business processes developed in an organization
to create, store, transfer, and apply knowledge
• Knowledge management value chain
• Each stage adds value to raw data and information as
they are transformed into usable knowledge
• Knowledge acquisition
• Knowledge storage
• Knowledge dissemination
• Knowledge application
The Knowledge Management Value Chain (2 of 3)
• Knowledge acquisition
• Documenting tacit and explicit knowledge
• Storing documents, reports, presentations, best practices
• Unstructured documents (e.g., e-mails)
• Developing online expert networks
• Creating knowledge
• Tracking data from T P S and external sources
• Knowledge storage
• Databases
• Document management systems
• Role of management
The Knowledge Management Value Chain (3 of 3)
• Knowledge dissemination
• Portals, wikis
• E-mail, instant messaging
• Search engines, collaboration tools
• A deluge of information?
• Training programs, informal networks, and shared management
experience help managers focus attention on important
information.
• Knowledge application
• New business practices
• New products and services
• New markets
The Knowledge Management Value Chain
Building Organizational and Management Capital:
Collaboration, Communities of Practice, and Office
Environments
• Developing new organizational roles and responsibilities for
the acquisition of knowledge
• Chief knowledge officer and other executives
• Dedicated staff / knowledge managers
• Communities of practice (C O P s)
• Informal social networks of professionals and employees
• Activities include education, online newsletters, sharing
knowledge
• Reduce learning curves of new employees
Major Types of Knowledge Management Systems
What Types of Systems Are Used for
Enterprise-Wide Knowledge Management?
• Three major types of knowledge in an enterprise
• Structured documents
• Reports, presentations
• Formal rules
• Semi-structured documents
• E-mails, videos
• Unstructured, tacit knowledge
• 80% of an organization’s business content is semi-structured
or unstructured
What is Artificial Intelligence? (1 of 2)

It is the field of developing computer programs for carrying out tasks,

simulating the intelligent way of problem solving by humans.

Computers:
• problem definition,
To simulate intelligence: • select an appropriate solution technique,
• Deducing patterns by searching in
database and in domain knowledge
• acquiring the domain knowledge,
• implementing the control strategies to
Search through the knowledge
solve the problem for different situations.
What Is Artificial Intelligence? (2 of 2)
• Grand vision
• Computer hardware and software systems that are as
“smart” as humans
• So far, this vision has eluded computer programmers and
scientists
• Realistic vision
• Systems that take data inputs, process them, and produce
outputs (like all software programs) and that can perform
many complex tasks that would be difficult or impossible
for humans to perform.
Main tasks of AI
• Classification
• Estimation / Prediction
• Search
• Optimization
• Inference
Applications of Artificial Intelligence
• Examples:
• Recognize millions of faces in seconds
• Interpret millions of C T scans in minutes
• Analyze millions of financial records
• Detect patterns in very large Big Data databases
• Improve their performance over time (“learn”)
• Navigate a car in certain limited conditions
• Respond to questions from humans (natural language);
speech activated assistants like Siri, Alexa, and Cortana
Major Types of Artificial Intelligence?
• Expert systems
• Machine learning
• Neural networks and deep learning networks
• Genetic algorithms
• Natural language Processing
• Computer vision
• Robotics
Type 1: Expert Systems
• Earliest applications of AI in business – 1970s
• Capture tacit knowledge in very specific and limited domain of human
expertise
• Capture knowledge as set of rules – Knowledge elicitation
• Typically perform limited tasks
• Diagnosing malfunctioning machine
• Determining whether to grant credit for loan
• Used for discrete, highly structured decision making
• Knowledge base: Set of hundreds or thousands of rules
• Inference engine: Strategy used to search knowledge base
• Forward chaining
• Backward chaining
Rules in an Expert System
Schematic of a Knowledge-based Expert
System

• It uses an inference engine that

creates a bridge between the
bidirectional knowledge domain and
the end user.
• The system responds in real time and
is flexible.
• Ex: decision-making, diagnosis, root
cause analysis
Type 2: Machine Learning

Traditional programming

Machine learning

Machine learning is the “art of programming

computers” to learn from data.
Machine Learning
• How computer programs improve performance
without explicit programming
• Recognizing patterns
• Experience
• Prior learnings (database)
• Supervised vs. unsupervised learning
• Contemporary examples
• Google searches
• Recommender systems on Amazon, Netflix
Type 3: Neural Networks
• Find patterns and relationships in massive amounts of data too
complicated for humans to analyze
• “Learn” patterns by searching for relationships, building models,
and correcting over and over again
• Humans “train” network by feeding it data inputs for which
outputs are known, to help neural network learn solution by
example from human experts.
• Used in medicine, science, and business for problems in pattern
classification, prediction, financial analysis, and control and
optimization
How a Neural Network Works
A Deep Learning Network
Type 4: Genetic Algorithms
• Useful for finding optimal solution for specific problem by
examining very large number of possible solutions for that
problem
• Conceptually based on process of evolution
• Search among solution variables by changing and
reorganizing component parts using processes such as
inheritance, mutation, and selection
• Used in optimization problems (minimization of costs,
efficient scheduling, optimal jet engine design) in which
hundreds or thousands of variables exist
• Able to evaluate many solution alternatives quickly
Genetic algorithm
• Useful for finding optimal solution for specific problem
by examining very large number of possible solutions
for that problem.
Population

Selection, Crossover,
• Conceptually based on process of evolution

Mutation
Fitness
• Search among solution variables by changing and evaluation
reorganizing component parts using processes such
as inheritance, mutation, and selection.
Termi
• Used in optimization problems (minimization of costs, -nate
efficient scheduling, optimal jet engine design) in which
hundreds or thousands of variables exist
• Able to evaluate many solution alternatives quickly.
Type 5: Natural Language Processing
• Understand, and speak in natural language. Read natural language
and translate
• Typically today based on machine learning, aided by very large
databases of common phrases and sentences in a given language
• Example: Google Translate
• Spam filtering systems
• Customer call center interactions: What is the customer’s problem?
What solutions worked in the past?
• Digital assistances: Siri, Alexa, Cortana, Google Assistant
• Not useful for an ordinary common sense human conversation but
can be very useful in limited domains, e.g. interacting with your car’s
heating system.
Type 6: Computer Vision Systems
• Digital image systems that create a digital map of an image (like a
face, or a street sign), and recognize this image in large data bases of
images in near real time
• Every image has a unique pattern of pixels
• Facebook’s DeepFace can identify friends in photos across their
system, and the entire web
• Autonomous vehicles can recognize signs, road markers, people,
animals, and other vehicles with good reliability
• Industrial machine (robot) vision
• Passport control at airports
• Identifying people in crowds
Type 7: Robotics
• Design, construction, and operation of machines that
can substitute for humans in many factory, office, and
home applications (home vacuums).
• Generally programmed to perform specific and
detailed actions in limited domains, e.g. robots spray
paint autos, and assemble certain parts, welding,
heavy assembly movement.
• Used in dangerous situations like bomb disposal
• Surgical robots are expanding their capabilities
Type 8: Intelligent Agents
• Work without direct human intervention to carry out
repetitive, predictable tasks
• Deleting junk e-mail
• Finding cheapest airfare
• Use limited built-in or learned knowledge base
• Some are capable of self-adjustment, for example: Siri
• Chatbots
• Agent-based modeling applications:
• Model behavior of consumers, stock markets, and supply
chains; used to predict spread of epidemics
Intelligent Agents in P&G’s Supply Chain Network
Enterprise Content Management Systems
• Help capture, store, retrieve, distribute, preserve
documents and semi-structured knowledge
• Bring in external sources
• News feeds, research
• Tools for communication and collaboration
• Blogs, wikis, and so on
• Key problem: developing taxonomy
• Digital asset management systems
An Enterprise Content Management System
Locating and Sharing Expertise
• Provide online directory of corporate experts in well-
defined knowledge domains
• Search tools enable employees to find appropriate
expert in a company
• Social networking and social business tools for finding
knowledge outside the firm
• Saving
• Tagging
• Sharing web pages
Learning Management Systems (LMS)
• Provide tools for management, delivery, tracking, and
assessment of employee learning and training
• Support multiple modes of learning
• C D-R O M, web-based classes, online forums, and so
on
• Automates selection and administration of courses
• Assembles and delivers learning content
• Measures learning effectiveness
• Massively open online courses (M O OC s)
• Web course open to large numbers of participants
Knowledge Workers and Knowledge Work
• Knowledge workers
• Researchers, designers, architects, scientists, engineers who create
knowledge for the organization
• Three key roles
• Keeping organization current in knowledge
• Serving as internal consultants regarding their areas of
expertise
• Acting as change agents, evaluating, initiating, and promoting
change projects
• Knowledge work systems
• Systems for knowledge workers to help create new knowledge and
integrate that knowledge into business
Requirements of Knowledge Work Systems
• Sufficient computing power for graphics, complex
calculations
• Powerful graphics and analytical tools
• Communications and document management
• Access to external databases
• User-friendly interfaces
• Optimized for tasks to be performed (design engineering,
financial analysis)
Requirements of Knowledge Work Systems
Examples of Knowledge Work Systems
• C A D (computer-aided design)
• Creation of engineering or architectural designs
• 3D printing
• Virtual reality systems
• Simulate real-life environments
• 3D medical modeling for surgeons
• Augmented reality (A R) systems
• V R M L (Virtual Reality Modeling Language)
Business Benefits of Using Intelligent
Techniques for Knowledge Management
• Intelligent techniques: Used to capture individual and
collective knowledge and to extend knowledge base
• To capture tacit knowledge: Expert systems, case-based
reasoning, fuzzy logic
• Knowledge discovery: Neural networks and data mining
• Generating solutions to complex problems: Genetic
algorithms
• Automating tasks: Intelligent agents
• Artificial intelligence (A I) technology:
• Computer-based systems that emulate human behavior
Enhancing Decision Making
Business and decisions
Strategic Long-term, high-impact decisions that shape the direction of the organization.
These decisions are typically made by top management and affect the organization’s overall strategy
and long-term goals. • Entering a new international market
• Developing a new product line
• Merging with or acquiring another company

Tactical Medium-term decisions that support strategic goals and are often concerned with how strategies will be
implemented.
These decisions are usually made by middle management and focus on how to execute strategic plans
effectively.
• Setting sales targets for a quarter
• Developing a marketing campaign for a new product
• Implementing new HR policies

Operational Short-term, routine decisions that deal with the day-to-day operations of the organization.
These are made by lower-level managers or supervisors and are concerned with the day-to-day
functioning of the business.
• Ordering inventory for a store
• Resolving customer service issue
• Scheduling shifts
Business and decisions
Structured Decisions that are routine, repetitive, and well-defined. They follow established procedures or rules
and typically involve clear, quantifiable criteria.
• Operational: Reordering inventory when it falls below a certain level.
• Tactical: Setting quarterly sales targets based on historical data.

Semi- Decisions that have some level of uncertainty but also involve elements that can be quantified or
structured managed with existing procedures. These decisions often require a combination of predefined rules
and judgment
• Tactical: Developing a marketing strategy based on market research and historical performance but needing
to adapt to current trends.
• Strategic: Deciding on entering a new market based on a combination of market data and qualitative
insights.

Unstructured Decisions that are novel, complex, and involve high levels of uncertainty. These decisions do not follow
established procedures and often require a high degree of judgment, creativity, and problem-solving

• Strategic: Deciding on a response to a sudden market disruption caused by a new competitor.

• Strategic: Developing a new product line in response to emerging market trends and technological advances.
 Decision making process Scenario: A company’s sales have been
Intelligence

declining, and management needs to

Problem Recognizing and defining the issue that needs to be decide how to address this issue.
identification addressed or the opportunity to be seized.
Declining sales figures are noted.
Design

Generating Developing a range of possible solutions or options • Option A: Increase marketing efforts.
• Option B: Reduce product prices.
alternatives to address the problem or opportunity.
• Option C: Enhance product features.

• A: Marketing might increase visibility but

requires a budget.
Evaluating Assessing the pros and cons of each alternative to • B: Price reduction could attract customers
alternatives determine which is the most effective. but may reduce profit margins.
Choice

• C: Product enhancements could make the

product more appealing but require R&D
investment.
Choosing best Selecting the option that best addresses the problem
alternative A is chosen because it has the potential to
or capitalizes on the opportunity.
Implementation

reach a broader audience with a manageable

budget.

Putting the chosen alternative into action, and assessing A marketing campaign is designed and launched.
Implementing Sales figures and customer engagement are
the outcomes of the decision to ensure it resolves the
and evaluating tracked to assess the campaign’s impact.
problem or capitalizes on the opportunity effectively.
Managerial activities
• Classical model (Henri Fayol)
• PLANNING: Setting objectives and determining the best course of action to achieve them.

• ORGANIZING: Arranging resources and tasks to implement the plan effectively.

• LEADING (Coordinating and Deciding): Motivating and directing employees to achieve

organizational goals

• CONTROLLING: Monitoring performance, comparing it with goals, and making adjustments as

necessary.
 IS for Managerial activities
• How INFORMATION SYSTEMS support managerial activities and decision-making?

• Data Collection and Storage: IS collect, store, and manage vast amounts of data from various sources (e.g.,
sales data, customer information, financial records).
A Customer Relationship Management (CRM) system stores customer interactions and sales data, providing managers
with comprehensive insights into customer behavior and preferences.

• Data Analysis and Reporting: IS tools analyze data and generate reports, helping managers understand
trends, identify problems, and make informed decisions.
Business Intelligence (BI) systems analyze sales data to identify patterns and forecast future sales, helping managers make
strategic decisions about inventory and marketing.

• Decision Support Systems (DSS): DSS provide interactive tools that help managers analyze complex data
and evaluate various decision alternatives.
A DSS can simulate different scenarios based on financial projections, allowing managers to evaluate the impact of
different business strategies
 IS for Managerial activities
• How INFORMATION SYSTEMS support managerial activities and decision-making?

• Communication and Collaboration: IS facilitate communication and collaboration among managers and
teams, ensuring that information is shared efficiently across the organization.
Collaboration tools like Microsoft Teams or Slack enable real-time communication and document sharing among team
members working on a project.

• Automation of Routine Tasks: IS automate repetitive and routine tasks, freeing up managers to focus on
more strategic activities.
Enterprise Resource Planning (ERP) systems automate tasks such as order processing, payroll, and inventory management.

• Monitoring and Control: IS provide real-time monitoring and control over various business processes,
helping managers track performance and ensure compliance with organizational standards
Performance management systems monitor key performance indicators (KPIs) and generate alerts if performance deviates
from targets.
Where can we use AI/ML?
• PLANNING: Setting objectives and determining the best course of action to achieve them.

Forecasting and Predictive Analytics: Machine learning algorithms can analyze historical data to predict future trends
and outcomes, aiding in more accurate planning.

• ORGANIZING: Arranging resources and tasks to implement the plan effectively.

Resource Allocation: ML can optimize resource allocation by predicting demand and adjusting resource distribution
accordingly.

• LEADING (Coordinating and Deciding): Motivating and directing employees to achieve

organizational goals
Performance analysis: ML can analyze employee performance data to identify trends and areas for improvement,
supporting leadership in managing and motivating employees.

• CONTROLLING: Monitoring performance, comparing it with goals, and making adjustments as

necessary.
Anomaly Detection and Risk Management: ML can identify anomalies and potential risks by analyzing patterns in
operational data, enabling better control and preventive measures.
Business intelligence (BI)
• Necessity of BI tools:
• Informed decisions based on data analysis and reporting

➢ Management Information Systems (MIS)

To provide regular, structured information to support management in planning, controlling, and
operational decision-making.

Primarily deals with internal data that is regularly collected and processed.

Generates routine reports, summaries, and dashboards based on predefined queries

and operational data.

Example:
Sales Reporting: An MIS might can generate daily or weekly sales reports, showing sales figures
by product, region, or salesperson, enabling sales managers to monitor performance and
identify trends.

Usage by Managers:
Operational Managers: Use MIS to monitor and control daily operations, ensure performance
targets are met, and make routine operational decisions.
Business intelligence (BI)
• Necessity of BI tools:
• Informed decisions based on data analysis and reporting

• Decision Support Systems (DSS)

To support complex decision-making and problem-solving by providing interactive tools and
models.
Utilizes both internal and external data, including historical data, forecasts, and scenario
analysis.
Offers interactive reports, analytical models, and decision-making support tools

Example:
Financial Planning: A DSS might assist in financial forecasting by modeling various scenarios,
such as the impact of a new investment or changes in market conditions, helping finance
managers make informed decisions about budgets and investments.

Usage by Managers:
Middle and Senior Managers: Use DSS to analyze complex issues, evaluate alternatives, and make
decisions based on detailed data and models. They use it for strategic and tactical planning.
Business intelligence (BI)
• Necessity of BI tools:
• Informed decisions based on data analysis and reporting

• Executive Support Systems (ESS)

To provide top executives with high-level, summarized information to support strategic decision-
making and overall organizational oversight.
Data: Integrates internal and external data, focusing on strategic trends and performance
indicators.
Output: Delivers high-level dashboards, key performance indicators (KPIs), and executive
summaries.
Example:
Corporate Performance Monitoring: An ESS might provide a CEO with a dashboard showing key
metrics like revenue growth, profit margins, market share, and major project statuses, allowing
for quick assessment of overall organizational health.

Usage by Managers:
Top Executives: Use ESS to gain insights into the organization’s strategic performance, monitor
KPIs, and make high-level strategic decisions.
Thanks