CHAPTER 9: ENABLING THE ORGANIZATION – DECISION MAKING

•   Reasons for the growth of decision-making information systems:

• Model – a simplified representation or abstraction of reality.
• IT systems in an enterprise:

 Transaction Processing Systems(TPS)

• Moving up through the organizational pyramid users move from requiring transactional information to analytical information.

• Transaction processing system - the basic business system that serves the operational level (analysts) in an organization
• Online transaction processing (OLTP) – the capturing of transaction and event information using technology to (1) process the information according to defined business rules, (2) store the information, (3) update existing information to reflect the new information
• Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

Decision Support Systems(DSS)

• Models information to support managers and business professionals during the decision-making process.
• Three quantitative models used by DSSs include:
• Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model. 
• What-if analysis – checks the impact of a change in an assumption on the proposed solution.
• Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of output. 
• Interaction between TPS and DSS

Executive Information Systems

• A specialized DSS that supports senior level executives within the organization
• Most EISs offering the following capabilities:
• Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information.
• Drill-down – enables users to get details, and details of details, of information. 
• Slice-and-dice – looks at information from different perspectives.
• Interaction between a TPS and an EIS

• Digital dashboard – integrates information from multiple components and presents it in a unified display

• Intelligent system – various commercial applications of artificial intelligence
• Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn

•  Four most common categories of AI include:
• Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems. Eg: Playing Chess.
• Neural Network – attempts to emulate the way the human brain works. Eg: Finance industry uses neural network to review loan applications and create patterns or profiles of applications that fall into two categories – approved or denied.
• Fuzzy logic – a mathematical method of handling imprecise or subjective information. Eg: Washing machines that determine by themselves how much water to use or how long to wash.
• Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem.
• Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

• Data Mining - includes many forms of AI such as neural networks and expert systems.

- END OF CHAPTER 9-

CHAPTER 8: ACCESSING ORGANIZATIONAL INFORMATION DATA—WAREHOUSE

HISTORY OF DATA WAREHOUSING

• Data warehouses extend the transformation of data into information
• In the 1990’s executives became less concerned with the day-to-day business operations and more concerned with overall business functions
• The data warehouse provided the ability to support decision making without disrupting the day-to-day operations

DATA WAREHOUSE FUNDAMENTALS

• Data warehouse – a logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making tasks
• The primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository for decision-making purposes
• Extraction, transformation, and loading (ETL) – a process that extracts information from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse
• Data mart – contains a subset of data warehouse information

MULTIDIMENSIONAL ANALYSIS AND DATA MINING

Databases contain information in a series of two-dimensional tables
In a data warehouse and data mart, information is multi-dimensional; it contains layers of columns and rows

• Dimension – a particular attribute of information
• Cube – common term for the representation of multidimensional information
• Data mining – the process of analyzing data to extract information not offered by the raw data alone
• To perform data mining users need data-mining tools
• Data-mining tool – uses a variety of techniques to find patterns and relationships in large volumes of information and infers rules that predict future behavior and guide decision making

INFORMATION CLEANSING OR SCRUBBING

Information cleansing or scrubbing – a process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information

• Contact information in an operational system
• Standardizing Customer name from Operational System
• Information cleansing activities
• Accurate and complete information

BUSINESS INTELLIGENCE

• Business intelligence – refers to applications and technologies that are used to gather, provide access, analyze data, and information to support decision making effort. 
• These systems will illustrate business intelligence in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis to name a few
• Eg: Excel, Access

• Principle BI enablers include:
• Technology
• People
• Culture

CHAPTER 7: STORING ORGANIZATIONAL INFORMATION—DATABASES

RELATIONAL DATABASE FUNDAMENTALS

• Information is everywhere in an organization
• Information is stored in databases

Database – maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)

RELATIONAL DATABASE FUNDAMENTALS

Database models include:

• Hierarchical database model – information is organized into a tree-like structure (using parent/child relationships) in such a way that it cannot have too many relationships
• Network database model – a flexible way of representing objects and their relationships
• Relational database model – stores information in the form of logically related two-dimensional tables

Entities and Attributes

• Entity – a person, place, thing, transaction, or event about which information is stored
• The rows in each table contain the entities
• Attributes (fields, columns) – characteristics or properties of an entity class
• The columns in each table contain the attributes
• Keys and Relationships
• Primary keys and foreign keys identify the various entity classes (tables) in the database
• Primary key – a field (or group of fields) that uniquely identifies a given entity in a table
• Foreign key – a primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables

RELATIONAL DATABASE ADVANTAGES

Database advantages from a business perspective include

• Increased flexibility
• Increased scaleability and performance
• Reduced information redundancy
• Increased information integrity (quality)
• Increased information security
• Increased Flexibility

A well-designed database should:

• Handle changes quickly and easily
• Provide users with different views
• Have only one physical view

Increased Scalability and Performance

A database must scale to meet increased demand,  while maintaining acceptable performance levels

• Scalability – refers to how well a system can adapt to increased demands
• Performance – measures how quickly a system performs a certain process or transaction

Reduced Information Redundancy

Databases reduce information redundancy

• Redundancy – the duplication of information or storing the same information in multiple places

Increase Information Integrity (Quality)

Information integrity – measures the quality of information

Integrity constraint – rules that help ensure the quality of information

• Relational integrity constraint
• Business-critical integrity constraint

Increased Information Security

Information is an organizational asset and must be protected

Databases offer several security features including:

• Password – provides authentication of the user
• Access level – determines who has access to the different types of information
• Access control – determines types of user access, such as read-only access

DATABASE MANAGEMENT SYSTEMS

Database management systems (DBMS) – software through which users and application programs interact with a database

DATA-DRIVEN WEBSITES

Data-driven websites – an interactive website kept constantly updated and relevant to the needs of its customers through the use of a database

DATA-DRIVEN WEBSITE BUSINESS ADVANTAGES

• Development
• Content Management
• Future Expandability
• Minimizing Human Error: 
• Cutting Production and Update Costs
• More Efficient
• Improved Stability

DATA-DRIVEN BUSINESS INTELLIGENCE

BI in a data-driven website

INTEGRATING INFORMATION AMONG MULTIPLE DATABASES

• Integration – allows separate systems to communicate directly with each other
• Forward integration – takes information entered into a given system and sends it automatically to all downstream systems and processes
• Backward integration – takes information entered into a given system and sends it automatically to all upstream systems and processes

Forward integration and backward integration

Building a central repository specifically for integrated information

-END OF CHAPTER 7-

CHAPTER 6: VALUING ORGANIZATIONAL INFORMATION

ORGANIZATIONAL INFORMATION

• Information is everywhere in an organization.
• Employees must be able to obtain and analyze the many different levels, formats and granularity of organizational information to make decisions.
• Successfully collecting, compiling, sorting and analyzing information can provide tremendous insight into how an organization is performing.
• Levels, formats and granularity of organizational information.

THE VALUE OF TRANSNATIONAL AND ANALYTICALLY INFORMATION

• Transaction information verses analytically information.

THE VALUE OF TIMELY INFORMATION

• Timeliness is an aspect of information that depends on the situation.
• Real-time information – immediate, up-to-date information.
• Real-time system – provides real-time information in response to query requests.

THE VALUE OF QUALITY INFORMATION

• Business decisions are only as good as the quality of the information used to make the decisions
• You never want to find yourself using technology to help you make a bad decision faster
• Characteristics of high-quality information include

•  Low quality information

UNDERSTANDING THE COSTS OF POOR INFORMATION

• The four primary sources of low quality information include:
• Online customers intentionally enter inaccurate information to protect their privacy 
• Information from different systems have different entry standards and formats 
• Call center operators enter abbreviated or erroneous information by accident or to save time 
• Third party and external information contains inconsistencies, inaccuracies and errors

• Potential business effects resulting from low quality information include:
• Inability to accurately track customers
• Difficulty identifying valuable customers 
• Inability to identify selling opportunities 
• Marketing to nonexistent customers 
• Difficulty tracking revenue due to inaccurate invoices 
• Inability to build strong customer relationships

UNDERSTANDING THE BENEFITS OF GOOD INFORMATION

• High quality information can significantly improve the chances of making a good decision.
• Good decisions can directly impact an organization’s bottom line.

CHAPTER 5: ORGANIZATIONAL STRUCTURES THAT SUPPORT STRATEGIC INITIATIVES

Organizational Structures

• Organizational employees must work closely together to develop strategic initiatives that create competitive advantages.
• Ethics and security are two fundamental building blocks that organizations must base their business upon.

IT Roles and Responsibilities

• IT is a relatively new functional area.
• Recent IT-related strategic positions:
• Chief Information Officer (CIO)
• oversees all uses of IT and ensures the strategic alignment of IT with business goals and objectives.
• Broad CIO functions include:
1. Manager
2. Leader
3. Communicator

• Chief Technology Officer (CTO)
• responsible for ensuring the throughput, speed, accuracy, availability, and reliability of IT.

• Chief Security Officer (CSO)
• responsible for ensuring the security of IT systems.

• Chief Privacy Officer (CPO)
• responsible for ensuring the ethical and legal use of info.

• Chief Knowledge Office (CKO)
• responsible for collecting, maintaining, and distributing the organization's knowledge.

GRAPH 1: Skills pivotal for success in executive IT roles

The Gap Between Business Personnel and IT Personnel

• Business personnel possess expertise in functional areas such as marketing, accounting, and sales.
• IT personnel have the technological expertise.
• The typically causes a communications gap between the business personnel and IT personnel.

Improving Communications

• Business personnel must seek to increase their understanding of IT.
• IT personnel must seek to increase their understanding of the business.
• It is the responsibility of the CIO to ensure effective communication between business personnel and IT personnel.

Organizational Fundamentals - Ethics and Security

• Ethics - the principles and standards that guide our behaviour toward other people.

• Privacy is a major ethical issue. Privacy means the right to be left alone when you want to be, to have control over your own personal possessions, and not to be observed without your consent.

• Issues affected by technology advances:
• Intellectual property
• Copyright
• Fair use doctrine
• Pirated software
• Counterfeit software

• Primary reasons privacy issues lost trust for e-business.
• Loss of personal privacy is a top concern for Americans in the 21st century.
• Among Internet users, 37% would be "a lot" more inclined to purchase a product on a Web site that had a privacy policy.
• Privacy/security is the number one factor that would convert Internet researchers into Internet buyers.

• Security 

• Organizational information is intellectual capital - it must be protected.

• Information security is the protection of information from accidental or intentional misuse by persons inside or outside an organization.

• E-business automatically creates tremendous information security risks for organizations.

-END OF CHAPTER 5-

CHAPTER 4: MEASURING THE SUCCESS OF STRATEGIC INITIATIVES

Measuring Information Technology's Success

• Key performance indicator - measures that are tied to business drivers.
• Metrics are detailed measures that feed KPIs.

Efficiency and Effectiveness

• Efficiency IT metric - measures the performance of the IT system itself including throughput, speed, and availability.
• Effectiveness IT metric - measures the impact IT has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases.

Benchmarking - Base Lining Metrics

• 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.

Efficiency IT Metrics

• Efficiency IT metrics focus on technology and include:
• Throughput - the amount of information that can travel through a system at any point.

• Transaction speed - the amount of time a system takes to perform a transaction.

• System availability - the number of hours a system is available for users.

• Information accuracy - the extent to which a system generates the correct results when executing the same transaction numerous times.

• Web traffic - Includes a host of benchmarks such as the number of page views, the number of unique visitors, and the average time spent viewing a Web page.

• Response time - the time it takes to respond to user interactions such as a mouse click.

Effectiveness IT Metrics

• Effectiveness IT metrics focus on an organization's goals, strategies, and objectives and include:
• Usability - the ease with which people perform transactions and/or find information. A popular usability metric on the Internet is degrees if freedom, which measures the number of clicks required to find desired information.

• Customer satisfaction - measured by such benchmarks as satisfaction surveys, percentage of existing customers retained, and increases in revenue dollars per customer.

• Conversion rates - the number of customers an organization "touches" for the first time and persuades to purchase its products or services. 

• Financial - such as return on investment, cost-benefit analysis, and break-even analysis.

The Interrelationships of Efficiency and Effectiveness IT Metrics

• Security is an issue for any organization offering products or services over the internet.
• It is inefficient for an organization to implement Internet security, since it slows down processing.
• Interrelationship between efficiency and effectiveness:

Metrics for Strategic Initiatives

• For measuring and managing strategic initiatives include:

• Web Site Metrics:
• Abandoned registrations
• Abandoned shopping cards
• Click-through
• Conversion rate
• Cost-per-thousand
• Page exposures
• Total hits
• Unique visitors

• Supply Chain Management Metrics:
• Back order
• Customer order promised cycle time
• Customer order actual cycle time
• Inventory replenishment cycle time
• Inventory turns (inventory turnover)

• Customer Relationship Management Metrics:
• Sales metrics
• Service metrics
• Marketing metrics

• Business Process Re-engineering (BPR) and Enterprise Resource Planning (ERP) Metrics:
• The balanced scorecard enables organizations to measure and manage strategic initiatives.

CHAPTER 3: STRATEGIC INITIATIVES FOR IMPLEMENTING COMPETITIVE ADVANTAGES

STRATEGIC INITIATIVES

• Supply Chain Management (SCM)
• Customer Relationship Management (CRM)
• Business Process Reengineering (BPR)
• Enterprise Resource Planning (ERP)

Supply Chain Management

1. Software that involves in managing information flows between and among stages in a supply chain to maximize total supply chain effectiveness and profitability.
2. Four basic components of supply chain:
• Supply chain strategy - managing all resources to meet customer demand.
• Supply chain partner - partners that deliver finished products, raw materials, and services.
• Supply chain operation - schedule for production activities.
• Supply chain logistics - product delivery process.
3. Effective and efficient SCM systems can enable an organization to:
• Decrease the power of its buyer
• Increase its own supplier power

Customer Relationship Management

1. Involves managing all aspects of a customer's relationship with an organization to increase customer loyalty and retention and an organization's profitability.
2. CRM is not just technology, but a strategy, process and business goal that an organization must embrace on an enterprise wide level.
3. CRM can enable an organization to:
• Identify types of customers
• Design individual customer marketing campaigns
• Treat each customer as an individual.
• Understand customer buying behaviours.

Business Process Reengineering

1. Business process - a set of activities that accomplish a specific task, such as processing a customer's order.
2. Business process reengineering (BPR) - the analysis and redesign of workflow within and between enterprises.
3. A company can improve the way it travels the road by moving from foot to horse and then horse to car.

Finding Opportunity Using BPR

1. BPR looks at taking a different path, such as an aeroplane which ignore the road completely.
2. Types of change an organization can achieve, along with the magnitudes of change and the potential business benefit.

Enterprise Resource Planning

1. Integrates all departments and functions throughout an organization into a single IT system so that employees can make decisions by viewing enterprise wide information on all business operations.
2. The keyword in ERP is "enterprise"
3. ERP systems collect data from across an organization and correlates the data generating an enterprise wide view.

- END OF CHAPTER 3 -