Because learning changes everything.

CHAPTER TWO

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 SECTION 2.1 – Decision Support Systems.
• Making Organizational Business Decisions.
• Measuring Organizational Business Decisions.
• Using MIS to Make Business Decisions.
• Using AI to Make Business Decisions.

SECTION 2.2 – Business Processes. CHAPTER TWO

• Managing Business Processes.
OVERVIEW
• Using MIS to Improve Business Processes.

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 SECTION 2.1: DECISION
SUPPORT SYSTEMS

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 1. Explain the importance of decision making for
managers at each of the three primary
organization levels along with the associated
decision characteristics.

2. Define critical success factors (CSFs) and key

performance indicators (KPIs), and explain how
managers use them to measure the success of
MIS projects. LEARNING
OUTCOMES 1
3. Classify the different operational, managerial,
and strategic support systems, and explain how
managers can use them to make decisions and
gain competitive advantage.

4. Describe artificial intelligence and identify its

main types.

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 MAKING ORGANIZATIONAL BUSINESS
DECISIONS

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 THE DECISION-MAKING PROCESS
• The Six-step
Decision-Making
Process.

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 DECISION-MAKING ESSENTIALS
• Organizational
Levels.

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 OPERATIONAL DECISION-MAKING ESSENTIALS
• Operational level – Employees develop,
control, and maintain core business activities
required to run the day-to-day operations.

• Operational decisions – Affect how the firm

is run from day to day.

• Structured decisions – Situations where

established processes offer potential
solutions.

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 MANAGERIAL DECISION-MAKING ESSENTIALS
• Managerial level – Employees evaluate company
operations to identify, adapt to, and leverage change.

• Managerial decisions – These concern how the

organization should achieve the goals and objectives set
by its strategy.

• Semistructured decisions – Occur in situations in which

a few established processes help to evaluate potential
solutions but not enough to lead to a definite
recommended decision.

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 STRATEGIC DECISION-MAKING ESSENTIALS
• Strategic level – Managers develop overall
strategies, goals, and objectives.

• Strategic decisions – Involve higher-level

issues concerned with the overall direction of
the organization.

• Unstructured decisions – Occurs in

situations in which no procedures or rules
exist to guide decision makers toward the
correct choice.

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 MEASURING ORGANIZATIONAL BUSINESS DECISIONS 1
• Project – A temporary activity a
company undertakes to create a unique
product, service, or result.

• Metrics – Measurements that evaluate

results to determine whether a project is
meeting its goals.

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 MEASURING ORGANIZATIONAL BUSINESS
DECISIONS 2
Critical success factors (CSFs) – The crucial steps companies make to
perform to achieve their goals and objectives and implement strategies.
• Create high-quality products.
• Retain competitive advantages.
• Reduce product costs.
• Increase customer satisfaction.
• Hire and retain the best professionals.

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 MEASURING ORGANIZATIONAL BUSINESS
DECISIONS 3
Key performance indicators (KPIs) – The quantifiable metrics a company uses to
evaluate progress toward critical success factors.

• Turnover rates of employees.

• Number of product returns.
• Number of new customers.
• Average customer spending.

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 MEASURING ORGANIZATIONAL BUSINESS
DECISIONS 4

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 EFFICIENCY AND EFFECTIVENESS METRICS 1
• Efficiency MIS metrics – Measure the
performance of MIS itself, such as
throughput, transaction speed, and system
availability.

• Effectiveness MIS metrics – Measures the

impact MIS has on business processes and
activities, including customer satisfaction and
customer conversation rates.

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 EFFICIENCY AND EFFECTIVENESS METRICS 2

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 THE INTERRELATIONSHIP BETWEEN EFFICIENCY
AND EFFECTIVENESS METRICS 1
• Ideal Operation Occurs in
the Upper Right Corner.

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 THE INTERRELATIONSHIP BETWEEN EFFICIENCY
AND EFFECTIVENESS METRICS 2
• Benchmark – Baseline values the
system seeks to attain.

• Benchmarking – A process of
continuously measuring system
results, comparing those results to
optimal system performance
(benchmark values), and identifying
steps and procedures to improve
system performance.

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 USING MIS TO MAKE BUSINESS DECISIONS 1
Model – A simplified representation or
abstraction of reality.

Models help managers to

• Calculate risks.
• Understand uncertainty.
• Change variables.
• Manipulate time to make decisions.

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 USING MIS TO MAKE BUSINESS DECISIONS 2
• Types of Decision-Making
MIS Systems.

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 OPERATIONAL SUPPORT SYSTEMS 1
Transactional Information – Encompasses all of the
information contained within a single business process
or unit of work, and its primary purpose is to support
the performing of daily operational or structured
decisions.

• Transaction processing system (TPS) – Basic business

system that serves the operational level and assists in
making structured decisions.

• Online transaction processing (OLTP) – Capturing of

transaction and event information using technology to
process, store, and update.

• Source document – The original transaction record.

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 OPERATIONAL SUPPORT SYSTEMS 2
• Systems
Thinking
View of a
TPS.

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 MANAGERIAL SUPPORT SYSTEMS 1
• Analytical Information – Encompasses all
organizational information, and its primary purpose
is to support the performing of managerial analysis
or semistructured decisions.

• Online analytical processing (OLAP) –

Manipulation of information to create business
intelligence in support of strategic decision making.

• Decision support system (DSS) – Models

information to support managers and business
professionals during the decision-making process.

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 MANAGERIAL SUPPORT SYSTEMS 2
• Systems
Thinking View
of a DSS.

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 MANAGERIAL SUPPORT SYSTEMS 3
• Interaction
Between a TPS
and DSS.

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 STRATEGIC SUPPORT SYSTEMS 1
Executive information system (EIS) – A specialized DSS that supports senior-
level executives and unstructured, long-term, nonroutine decisions requiring
judgment, evaluation, and insight.

• Granularity – Refers to the level of detail in the model or the decision-

making process.

• Visualization: Produces graphical displays of patterns and complex

relationships in large amounts of data.

• Infographic (information graphic): A representation of information in a

graphical format designed to make the data easily understandable at a
glance.

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 STRATEGIC SUPPORT SYSTEMS 2
• Organization
Information
Levels.

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 STRATEGIC SUPPORT SYSTEMS 3
• Interaction
Between a TPS
and EIS.

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 STRATEGIC SUPPORT
SYSTEMS 4
• Digital dashboard –
Tracks KPIs and
CSFs by compiling
information from
multiple sources and
tailoring it to meet
user needs.

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 USING AI TO MAKE BUSINESS DECISIONS 1
• Artificial intelligence (AI) – Simulates human intelligence such as the ability to
reason and learn.
• Transforming inputs to outputs with AI:

INPUT OUTPUT

Email Determine if the email is spam

Audio clip Text transcript of the audio

English sentence Chinese sentence

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 USING AI TO MAKE BUSINESS DECISIONS 2
• Expert Systems – Computerized advisory programs that
imitate the reasoning processes of experts in solving
difficult problems.

• Algorithms – Mathematical formulas placed in software

that perform an analysis on a data set.

• Genetic Algorithm – An artificial intelligent system that

mimics the evolutionary, survival-of-the-fittest process to
generate increasingly better solutions to a problem.

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 USING AI TO MAKE BUSINESS DECISIONS 3

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 MACHINE LEARNING
Machine learning – A type of artificial intelligence
that enables computers to both understand concepts
in the environment and also to learn.
• Supervised machine learning.
• Unsupervised machine learning.
• Transfer machine learning.

Data augmentation – Occurs when adding

additional training examples by transforming existing
examples.

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 MACHINE LEARNING TRAINING
• Overfitting – Occurs when a machine learning
model matches the training data so closely that
the model fails to make correct predictions on
new data.

• Underfitting – Occurs when a machine learning

model has poor predictive abilities because it did
not learn the complexity in the training data.

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 MACHINE LEARNING BIAS 1
Bias - A disproportionate weight in favor of or against an idea or thing, usually in
a way that is closed-minded, prejudicial, or unfair.

• Affinity bias - A tendency to connect with, hire, and promote those with
similar interests, experiences, or backgrounds.

• Conformity bias - Acting similarly, or conforming to those around you,

regardless of your own views.

• Confirmation bias - Actively looking for evidence that backs up

preconceived ideas about someone.

• Name bias - The tendency to prefer certain types of name.

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 MACHINE LEARNING BIAS 2
The four types of bias in machine learning include:

• Sample bias – A problem with using incorrect training data to

train the machine.

• Prejudice bias – A result of training data that are influenced by

cultural or other stereotypes.

• Measurement bias – Occurs when there is a problem with the

data collected that skews the data in one direction.

• Variance bias – A mathematical property of an algorithm.

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 NEURAL NETWORKS
Neural Network – Attempts to emulate the way the human
brain works.

• Fuzzy logic – A mathematical method of handling

imprecise or subjective information.

• Deep learning – A process that employs specialized

algorithms to model and study complex data sets; the
method is also used to establish relationships among data
and data sets.

• Reinforcement learning – The training of machine

learning models to make a sequence of decisions.

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 VIRTUAL REALITY
• Virtual reality – A computer-simulated environment
that can be a simulation of the real world or an
imaginary world.

• Augmented reality – the viewing of the physical

world with computer-generated layers of information
added to it.

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 SECTION 2.2:
BUSINESS
PROCESS

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 5. Explain the value of business processes for a
company and differentiate between customer-
facing and business-facing processes.

6. Demonstrate the value of business process

modeling and compare As-Is and To-Be models. LEARNING
7. Differentiate among automation, streamlining,
OUTCOMES 2
and reengineering.

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 MANAGING
BUSINESS
PROCESSES 1

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 MANAGING BUSINESS PROCESSES 2
• The Order-to-
Delivery Process.

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 MANAGING BUSINESS PROCESSES 3
• Customer facing process – Results • Business facing process – Invisible
in a product or service that is to the external customer but essential
received by an organization’s external to the effective management of the
customer. business.

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 MANAGING BUSINESS PROCESSES 4

• Business process patent – A patent that protects a specific set of procedures for
conducting a particular business activity.
• Core processes – Business processes, such as manufacturing goods, selling
products, and providing service, that make up the primary activities in a value
chain.
• Dynamic process – Continuously changing; provides business solutions to ever-
changing business operations.
• Static process – Uses a systematic approach in an attempt to improve business
effectiveness and efficiency continuously.

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 BUSINESS PROCESS MODELING 1

• Business Process
Model and
Notation
(BPMN) – A
graphical notation
that depicts the
steps in a business
process.

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 BUSINESS PROCESS MODELING 2
Business process modeling (or mapping) – The activity of creating a
detailed flow chart or process map of a work process showing its inputs,
tasks, and activities, in a structured sequence.

Business process model – A graphic description of a process, showing the

sequence of process tasks, which is developed for a specific.

• As-Is process model – Represent the current state of the operation that
has been mapped, without any specific improvements or changes to
existing processes.

• To-Be process model – Shows the results of applying change

improvement opportunities to the current (As-Is) process model.

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 BUSINESS PROCESS MODELING 3

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 BUSINESS PROCESS MODELING 4

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 USING MIS TO IMPROVE BUSINESS PROCESSES 1
• Workflow – Includes the tasks, activities, and
responsibilities required to execute each step in a
business process.

• Digitization – The automation of existing manual and

paper-based processes and workflows to a digital format.

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 USING MIS TO IMPROVE BUSINESS PROCESSES 2

• Business Process
Driving MIS Choices
– The Best Choice for
Operations.

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 USING MIS TO IMPROVE BUSINESS PROCESSES 3

• MIS Driving
Business Processes –
The Worst Choice for
Operations.

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 USING MIS TO IMPROVE BUSINESS PROCESSES 4

• Types of change an
organization can
achieve, along with
the magnitudes of
change and the
potential business
benefit.

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 OPERATIONAL BUSINESS PROCESSES -
AUTOMATION

• Operational business processes – Static, routine, daily

business processes such as stocking inventory, checking out
customers, or daily opening and closing processes.

• Business process improvement – Attempts to understand and

measure the current process and make performance
improvements accordingly.

• Automation – The process of computerizing manual tasks,

making them more efficient and effective, and dramatically
lowering operational costs.

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 OPERATIONAL BUSINESS PROCESSES – ROBOTIC
PROCESS AUTOMATION

• Robotic process automation – The use of

software with artificial intelligence (AI) and
machine learning capabilities to handle high-
volume, repeatable tasks that previously required
a human to perform.

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 OPERATIONAL BUSINESS PROCESSES –
AUTONOMOUS ROBOTICS
• Autonomous robotics – A robot capable of
making its own decisions and performing an
action accordingly.
• Machine vision – The ability of a computer to
“see” by digitizing an image, processing the data
it contains, and taking some kind of action.
• Machine vision sensitivity – The ability of a
machine to see in dim light or to detect weak
impulses at invisible wavelengths.
• Machine vision resolution – The extent to
which a machine can differentiate between
objects. In general, the better the resolution, the
more confined the field of vision.

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 MANAGERIAL BUSINESS PROCESSES
STREAMLINING
• Managerial business processes – Semidynamic, semiroutine, monthly
business processes such as resource allocation, sales strategy, or
manufacturing process improvements.

• Streamlining – Improves business process efficiencies by simplifying or

eliminating unnecessary steps.

• Bottleneck – Occur when resources reach full capacity and cannot handle
any additional demands.

• Redundancy – Occurs when a task or activity is unnecessarily repeated.

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 STRATEGIC BUSINESS PROCESSES
REENGINEERING 1
• Strategic business processes – Dynamic, nonroutine,
long-term business processes such as financial planning,
expansion strategies, and stakeholder interactions.

• Business process reengineering (BPR) – Analysis and

redesign of workflow within and between enterprises.

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 STRATEGIC BUSINESS PROCESSES
REENGINEERING 2
• A company can improve the way it travels the road by moving from foot to horse and
then horse to car.

• BPR looks at taking a different path, such as an airplane which ignore the road
completely.

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 STRATEGIC BUSINESS PROCESSES
REENGINEERING 3

• Progressive
Insurance
Mobile Claims
Process.

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