Chapter Six


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Chapter Six

  1. 1. Intro to Information Technology <ul><li>Wednesday, Nov 20th </li></ul><ul><li>Assignment #3 is due today </li></ul><ul><li>Assignment #4 is due on Dec 4th </li></ul><ul><li>Final Exam is on Dec 11 from 7 – 10 pm </li></ul><ul><li>Chapter Six: E-Business Decision Support </li></ul>
  2. 2. E-Business Decision Support <ul><li>Using info systems to support business decision making is one of the primary reasons for business use of information technology </li></ul><ul><li>The type of information required by decision makers in a company is directly related to the level of management decision making and the amount of structure in the decision situations that they face </li></ul>
  3. 3. E-Business Decision Support <ul><li>Levels of management decision making still exist, but have changed as organizational structures have changed </li></ul><ul><li>The levels of managerial decision making that must be supported by information technology in a successful organization are: </li></ul><ul><ul><ul><li>Strategic Management </li></ul></ul></ul><ul><ul><ul><li>Tactical Management </li></ul></ul></ul><ul><ul><ul><li>Operational Management </li></ul></ul></ul>
  4. 4. Strategic Management <ul><li>A board of directors and an executive committee of the CEO and top executives develop overall organizational goals, strategies, policies, and objectives as part of a strategic planning process </li></ul><ul><li>They also monitor the strategic performance of the organization and its overall direction in political, economic, and competitive business environment </li></ul>
  5. 5. Tactical Management <ul><li>Business professionals in self-directed teams develop short and medium range plans, schedules, and budgets and specify the policies, procedures, and business objectives for their subunits of the company </li></ul><ul><li>They also allocate resources and monitor the performance of their subunits including depts, divisions, process teams, project teams, and other workgroups </li></ul>
  6. 6. Operational Management <ul><li>The members of self-directed teams or operating managers develop short range plans such as weekly production schedules </li></ul><ul><li>They direct the use of resources and the performance of tasks according to procedures and within budgets and schedules they establish for teams and other workgroups </li></ul>
  7. 7. Decision Structure <ul><li>Decisions at operational management level tend to be more structured </li></ul><ul><li>Decisions at tactical management level more semi-structured </li></ul><ul><li>Decisions at strategic management level tend to be unstructured (not possible to specify in advance most of the decision procedures to follow) </li></ul>
  8. 8. Decision Structure <ul><li>Info systems must be designed to produce a variety of information products to meet the changing needs of decision makers throughout an organization </li></ul><ul><li>I.e. unscheduled reports for unstructured decisions vs pre-specified internal reports for more structured decisions </li></ul>
  9. 9. Management Info Systems <ul><li>Produces information products that support many of the day-to-day decision-making needs of managers and business professionals </li></ul><ul><li>Decision makers specify in advance which information products will fulfill their needs </li></ul><ul><li>They have a good idea about what info they need to manage performance </li></ul><ul><li>They request info at their workstations </li></ul>
  10. 10. Management Info Systems <ul><li>Four Major Reporting Alternatives </li></ul><ul><ul><li>Periodic Scheduled Reports </li></ul></ul><ul><ul><ul><li>Pre-specified format to provide info on a regular basis. I.e. daily sales reports </li></ul></ul></ul><ul><ul><li>Exception Reports </li></ul></ul><ul><ul><ul><li>Reports are only produced when exception conditions occur. I.e. the names of customers who have exceeded their credit limit </li></ul></ul></ul><ul><ul><ul><li>Reduces information overload </li></ul></ul></ul>
  11. 11. Management Info Systems <ul><li>Four Major Reporting Alternatives continued… </li></ul><ul><ul><li>Demand Reports and Responses </li></ul></ul><ul><ul><ul><li>Information is available whenever a manager requests it </li></ul></ul></ul><ul><ul><ul><li>Get customized reports instead of waiting for periodic reports </li></ul></ul></ul><ul><ul><li>Push Reporting </li></ul></ul><ul><ul><ul><li>Info is pushed to the managers networked workstation </li></ul></ul></ul><ul><ul><ul><li>Selectively broadcast reports </li></ul></ul></ul>
  12. 12. Online Analytical Processing <ul><li>OLAP enables managers and analysts to interactively examine and manipulate large amounts of detailed and consolidated data from many perspectives to discover patterns, trends, and exception conditions </li></ul><ul><li>An OLAP session takes place in real-time with rapid responses to queries </li></ul>
  13. 13. Online Analytical Processing <ul><li>Several basic analytical operations </li></ul><ul><ul><li>Consolidation </li></ul></ul><ul><ul><ul><li>Aggregation of data </li></ul></ul></ul><ul><ul><ul><li>Can involve simple rollups or complex groupings of inter-related data </li></ul></ul></ul><ul><ul><li>Drill Down </li></ul></ul><ul><ul><ul><li>Display detail data that comprises the consolidated data </li></ul></ul></ul>
  14. 14. Online Analytical Processing <ul><li>Several basic analytical operations continued… </li></ul><ul><ul><li>Slicing and Dicing </li></ul></ul><ul><ul><ul><li>Ability to look at database from different viewpoints </li></ul></ul></ul><ul><ul><ul><li>Ex. Show sales of all products within one region </li></ul></ul></ul><ul><ul><ul><li>Ex. Show sales of one product in all regions </li></ul></ul></ul>
  15. 15. Decision Support Systems <ul><li>Decision support systems are computer based systems that provide interactive information support to managers and business professionals during the decision making process </li></ul><ul><li>They are quick response systems that are initiated and controlled by decision makers </li></ul>
  16. 16. Decision Support Systems <ul><li>They use the following to support the making of semi-structured and unstructured business decisions </li></ul><ul><ul><li>Analytical models </li></ul></ul><ul><ul><li>Specialized databases </li></ul></ul><ul><ul><li>Decision maker’s insights and judgements </li></ul></ul><ul><ul><li>An interactive computer-based modelling process </li></ul></ul>
  17. 17. Decision Support Systems <ul><li>DSS Model bases </li></ul><ul><ul><li>A software component that consists of models used in computational and analytical routines that mathematically express relationships among variables </li></ul></ul><ul><ul><li>Ex. Simple accounting relationship such as Revenue – Expenses = Profit </li></ul></ul><ul><ul><li>DSS software can come with built-in models as well as ability to create your own </li></ul></ul>
  18. 18. Decision Support Systems <ul><li>Geographic Info Systems </li></ul><ul><ul><li>GIS are used to display maps and other graphic info that support decisions affecting the geographic distribution of people and other resources </li></ul></ul><ul><ul><li>Data visualization </li></ul></ul><ul><ul><ul><li>Represents complex data using interactive 3-D graphical forms such as charts, graphs and maps </li></ul></ul></ul><ul><ul><ul><li>Helps users discover patterns, links, and anomalies in business or scientific data </li></ul></ul></ul>
  19. 19. Decision Support Systems <ul><li>Using Decision Support Systems </li></ul><ul><ul><li>Interactive modeling process </li></ul></ul><ul><ul><li>Users are exploring possible alternatives </li></ul></ul><ul><ul><li>They do not have to specify their information needs in advance </li></ul></ul><ul><ul><li>They use the DSS to find the information that they need </li></ul></ul>
  20. 20. Decision Support Systems <ul><li>Four types of analytical modeling </li></ul><ul><ul><li>What-If Analysis </li></ul></ul><ul><ul><ul><li>User makes changes to variables or relationships and observes the resulting changes to other variables </li></ul></ul></ul><ul><ul><ul><li>This type of analysis would be repeated until the manager was satisfied with with what the results revealed about the effects of the possible decisions </li></ul></ul></ul>
  21. 21. Decision Support Systems <ul><li>Four types of analytical modeling </li></ul><ul><ul><li>Sensitivity Analysis </li></ul></ul><ul><ul><ul><li>User makes changes to value of one variable repeatedly observing the results </li></ul></ul></ul><ul><ul><ul><li>This is used when decision makers are uncertain about the assumptions made is estimating values of certain key variables </li></ul></ul></ul>
  22. 22. Decision Support Systems <ul><li>Four types of analytical modeling </li></ul><ul><ul><li>Goal-Seeking Analysis </li></ul></ul><ul><ul><ul><li>A target value is set for a variable and other variables are changed repeatedly until the goal is met </li></ul></ul></ul><ul><ul><ul><li>This would help answer the question “How can we achieve 2 million dollars in revenue after taxes?” </li></ul></ul></ul>
  23. 23. Decision Support Systems <ul><li>Four types of analytical modeling </li></ul><ul><ul><li>Optimization Analysis </li></ul></ul><ul><ul><ul><li>Goal is to find optimum value for one or more target variables given certain constraints </li></ul></ul></ul><ul><ul><ul><li>One or more of the variables are changed repeatedly until the best values are reached </li></ul></ul></ul><ul><ul><ul><li>Constraints would be something like limited financing </li></ul></ul></ul>
  24. 24. Decision Support Systems <ul><li>Data Mining for Decision Support </li></ul><ul><ul><li>Data mining attempts to discover patterns, trends and correlations hidden in the data to give a company a strategic advantage </li></ul></ul><ul><ul><ul><li>Highlight buying patterns </li></ul></ul></ul><ul><ul><ul><li>Reveal customer tendencies </li></ul></ul></ul><ul><ul><ul><li>Cut redundant costs </li></ul></ul></ul><ul><ul><ul><li>Uncover unseen profitable relationships and activities </li></ul></ul></ul><ul><ul><li>Data mining software can perform regression, decision tree, neural network, cluster detection, or market basket analysis for a business </li></ul></ul>
  25. 25. Executive Information Systems <ul><li>EIS are info systems that combine many of the features of management info systems and decision support systems </li></ul><ul><li>First goal was to provide top execs with immediate and easy access to information about a firm’s critical success factors </li></ul><ul><li>However, now all levels of management make use of EIS </li></ul>
  26. 26. Executive Information Systems <ul><li>Info is presented in forms tailored to the preferences of the execs using the system </li></ul><ul><li>Graphical user interfaces are important, as well as the ability to drill-down quickly to lower levels of information that may be important </li></ul><ul><li>A business user can quickly discover the direction key factors are heading and the extent to which they are deviating from desired results </li></ul>
  27. 27. Enterprise Information Portals <ul><li>EIP are ways companies are providing web-enabled information, knowledge, and decision support to their executives, managers, employees, suppliers, customers, and other business stakeholders </li></ul><ul><li>Can give a user secure access to DSS, data mining, and OLAP tools </li></ul><ul><li>Can also be called Enterprise Knowledge Portals </li></ul>
  28. 28. Artificial Intelligence <ul><li>Three major domains of AI </li></ul><ul><ul><li>Cognitive Science </li></ul></ul><ul><ul><ul><li>Expert systems </li></ul></ul></ul><ul><ul><ul><li>Learning Systems </li></ul></ul></ul><ul><ul><ul><li>Fuzzy Logic </li></ul></ul></ul><ul><ul><ul><li>Genetic Algorithms </li></ul></ul></ul><ul><ul><ul><li>Neural Networks </li></ul></ul></ul><ul><ul><ul><li>Intelligent Agents </li></ul></ul></ul>
  29. 29. Artificial Intelligence <ul><li>Three major domains of AI </li></ul><ul><ul><li>Robotics </li></ul></ul><ul><ul><ul><li>Visual Perception </li></ul></ul></ul><ul><ul><ul><li>Tactility </li></ul></ul></ul><ul><ul><ul><li>Dexterity </li></ul></ul></ul><ul><ul><ul><li>Locomotion </li></ul></ul></ul><ul><ul><ul><li>Navigation </li></ul></ul></ul>
  30. 30. Artificial Intelligence <ul><li>Three major domains of AI </li></ul><ul><ul><li>Natural Interface </li></ul></ul><ul><ul><ul><li>Natural languages </li></ul></ul></ul><ul><ul><ul><li>Speech recognition </li></ul></ul></ul><ul><ul><ul><li>Multisensory interfaces </li></ul></ul></ul><ul><ul><ul><li>Virtual Reality </li></ul></ul></ul>
  31. 31. Neural Networks <ul><li>Computing systems modeled after the brain’s mesh-like network of interconnected processing elements called neurons </li></ul><ul><li>Processors operate in parallel and interact with each other </li></ul><ul><li>This enables the network to learn from the data it processes </li></ul><ul><li>It becomes able to recognize patterns and relationships in the data, and the more examples the better it learns </li></ul>
  32. 32. Neural Networks <ul><li>The neural network will change the strengths of the interconnections between its processing elements in response to changing patterns in the data </li></ul><ul><li>Ex: Can be trained to learn which credit characteristics result in good or bad loans – eventually after much training it could make credit decisions on its own. </li></ul>
  33. 33. Fuzzy Logic Systems <ul><li>A method of reasoning that resembles human reasoning that allows for approximate data and inferences, and incomplete or ambiguous data </li></ul><ul><li>Terminology such as very high, increasing, somewhat decreased, reasonable, and acceptable </li></ul><ul><li>Allows queries to be stated more naturally and improves extraction of data </li></ul>
  34. 34. Genetic Algorithms <ul><li>Uses Darwinian, randomizing, and other mathematical functions to simulate an evolutionary process that can yield increasingly better solutions to a problem </li></ul><ul><li>Used when there are thousands of solutions possible and must be evaluated to find the optimal solution </li></ul>
  35. 35. Virtual Reality <ul><li>VR allows you to interact with computer-simulated objects, entities, and environments as if they actually exist </li></ul><ul><li>CAD - computer-aided design </li></ul><ul><li>Allows engineers to design and test 3-D models of products </li></ul><ul><li>Virtual surgery, virtual databases, virtual cities, etc </li></ul><ul><li>Limitations are cost of equipment and performance </li></ul>
  36. 36. Intelligent Agents <ul><li>Helps users accomplish many kinds of tasks in E-business and E-commerce </li></ul><ul><li>Uses its built in and learned knowledge base about a person or a process to make decisions and accomplish tasks in a way that fulfills the intentions of a user </li></ul><ul><li>Ex. Wizards in Microsoft software, and Office Assistant in Microsoft Office </li></ul>
  37. 37. Expert Systems <ul><li>An expert system is a knowledge based information system that uses its knowledge about a specific, complex application area to act as an expert consultant to end users </li></ul><ul><li>Provide answers to questions in a specific problem area by making human-like inferences about knowledge stored </li></ul><ul><li>Must also be able to explain reasoning process and conclusions to users </li></ul>
  38. 38. Expert Systems <ul><li>Components </li></ul><ul><ul><li>Knowledge Base </li></ul></ul><ul><ul><ul><li>Facts about a specific area </li></ul></ul></ul><ul><ul><ul><li>Heuristics (rules of thumb) that explain the reasoning procedures of an expert on the subject </li></ul></ul></ul><ul><ul><li>Software Resources </li></ul></ul><ul><ul><ul><li>Inference engine and other programs for refining knowledge and communicating with users </li></ul></ul></ul>
  39. 39. Expert Systems <ul><li>Developing an Expert System </li></ul><ul><ul><li>Software packages called an expert system shell includes software necessary to interact with the knowledge base but not the knowledge base itself </li></ul></ul><ul><ul><li>Users can develop their own knowledge bases and not have to worry about writing the software to interact with it. </li></ul></ul>
  40. 40. Expert Systems <ul><li>Benefits </li></ul><ul><ul><li>Can outperform a single human expert in many problem situations </li></ul></ul><ul><ul><li>Help preserve and reproduce the knowledge of experts </li></ul></ul><ul><ul><li>Effective use of expert systems can allow a firm to significantly improve the efficiency of its business processes or produce new knowledge based products and services </li></ul></ul>
  41. 41. Expert Systems <ul><li>Limitations </li></ul><ul><ul><li>Only excel in very specific areas of knowledge </li></ul></ul><ul><ul><li>Costly to develop and maintain </li></ul></ul><ul><ul><li>Cannot help when making subjective managerial decisions </li></ul></ul><ul><ul><li>Expert systems cannot maintain themselves – must be taught new knowledge </li></ul></ul>