INFS 1602 Chapter 5 summary

notes
5.1 Business processes and information systems
Business processes

Refers to the manner in which work is organised, coordinated and focused

to produce a valuable product or service
Business process can be a competitive advantage if they enable the
company to innovate or to execute better than its rivals
Business process can also be a liability when they are based on out-dated
ways of working that hinders efficiency

How information technology enhance the business process

Information systems automate many processes that were once manually

performed e.g. checking clients credit, generating invoices and shipping
order
They can also replace sequential steps with tasks that can be performed
simultaneously and eliminating delays in decision making

5.2 Types of information systems

Large cross functional systems integrate the activities of related business

processes and organizational units (the four main being; manufacturing
and production, finance and accounting, sales and marketing and human
resource).
Each level of management uses a specific type of system to support the
decisions

Transaction processing systems (TPS)

TPS provide the necessary kind of information used by operational

managers to keep track of the elementary activities and transactions e.g.
sales, receipts etc.
The purpose of such an information processing system at this level is to
answer routine questions and to track the flow of transactions through the
organisation.
This operational system has tasks, resources and goals that are predefined and highly structured for fast, current and accurate retrieval of
information.
TPS is required to monitor the status of internal operations and the firms
relations with the external environment.

Management information systems and decision-support systems

Middle management requires information systems which will help monitor,

control and help make decisions and admin activities informs middle
management on current performance
Management information systems (MIS) is term for the IS which serves the
middle management
MIS summarises and reports the data supplied from the transaction
processing systems (TPS)
Deal with questions that are specified in advance and have a predefined
procedure for answering them.
Uses simple routine decision making tasks
The Decision-support Systems (DSS) supports non-routine decision
making for middle management
DSS are used for unique and rapidly changing procedures where the
solutions are not completely pre-defined.
It is user friendly and uses information from external sources e.g. stock
market
DSS is also referred to as an business intelligence system because they
focus on helping users make better business decisions

Executive support systems for senior management

Senior managers need systems that address strategic issues and longterm trends both in the internal and external environment.
Executive support systems (ESS) helps senior managers make such
decisions
ESS works on non-routine decisions requiring judgement, evaluation and
insight
Data is provided to managers via a portal which uses a web interface to
present integrated personalised business content.
Incorporate external information e.g. new tax laws as well as summarised
data from MIS and DSS

5.3 Decision making and information systems

Business value of improved decision making

Decision making is done at all levels of a business.

Adding all small changes to improve decision making can become a very
large investment (profit/gain) for the company in terms of revenue and
profit.

Types of decisions

Unstructured decision those that require the judgement, evaluation and

insight to solve the problem.
Structured decision repetitive and routine which involve a definite
procedure for handling them.
Semi-structured decisions only part of the problem has clear-cut
answers.

The decision making process

4 stages in the process: intelligence, design, choice and implementation

Intelligence identifying the problem, why, where and what effects it has
on the firm
Design possible solutions for the problem
Choice best solution
Implementation how well is the solution working and ways of improving
the solution

Managers and decision making in the real world

Managerial roles

Classic model of management their role is to plan, organise, coordinate,

decide and control
Behavioural models perform a great deal of work that is around 9 min
each (only 10% of the work last for about an hour), prefer ad hoc and
specific information, prefer oral presentation of information rather than
written work and they give high priority to maintaining diverse and
complex web of contacts that helps them execute short and long term
goals.
Managerial roles fell into 3 categories;
- Interpersonal roles act as figureheads for the organisation when they
are representing the company to the public
- Informational roles act as nerve centres where they receive up to
date information and transfer it to places that require the information
- Decisional roles make decisions, initiate new activities and handle
disturbances that arise in the organisation.

Real-world decision making

There are 3 reasons why information technology does not always produce
positive results:
- Information quality requires high quality information to make the high
quality decisions
- Management filters managers can absorb only certain information
and filter out the rest. They are used to focusing on certain kinds of
problems and solutions and reject information that does not conform to
their prior conceptions.
- Organisational inertia and politics when making major changes in the
business, decisions are often taken by balancing the various interest
groups rather than the best solution to the problem

5.4 Systems for decision support

Group decision-support systems (GDSS) enable managers and teams to

work collectively and make decisions and design solutions for unstructured
and semi-structured problems in an electronic environment

Management Information Systems (MIS)

MIS not only summarise and report data collected but also highlight
exceptional conditions e.g. when sales quota falls below average.

Decision-Support Systems (DSS)

Some contemporary DSS are data-driven

Data-driven DSS support decision making by enabling users to extract
useful information that was previously buried in large quantities of data.

Components of DSS

DSS database collection of current or historical data. The databases are

generally extracts or copies of production databases so that using the DSS
does not interfere with critical operational systems.
DSS user interface allows for easy interaction between users and the
software tools (now popular to do graphical displays in terms of web
interface)
DSS software system contains tools used for data analysis.
Statistical modelling helps establish relationships optimizing models
determine optimal resource allocation to maximize or minimize specified
variables e.g. cost and time
Sensitivity analysis model deals with what-if analysis.

Using spread sheet pivot tables to support decision making

Pivot table displays two or more dimensions of data in a convenient

format e.g. payment type and region, to effectively answer what-if
queries from a large database in order to make decisions.

5.5 Executive support systems (ESS) and the balanced scorecard

framework

Two critical parts that need to be addressed for an effective ESS; first is
the need for a methodology for understanding what exactly is the right
information for the firm and the second is to develop a system that is
capable of delivering this information to the right people at the right time.
Leading methodology currently is balanced scorecard method which
focuses on measurable outcomes on four dimensions of firms
performance (finance, process, customer and growth).
Performance on each dimension is measured via the key performance
indicators (KPIs) measured against standards set by the
executives

The role of executive support systems in the firm

Challenge faced by executive support systems is to integrate data from

systems designed for different purposes so the management can have a
firm-wide view of the organisation

5.6 The knowledge management landscape

Knowledge that is shared is useless and therefore knowledge management

systems are used
Knowledge management is a key aspect of businesses which is said to
improve the stock market value of the company

Important dimensions of knowledge

Data flow of transactions that is captured by the companys systems

To turn data into information, the company the resources must be
organised into categories of understanding
To turn information into knowledge, the company has to discover patterns
and expend additional resources
Wisdom is thought to be the collective and individual experience of
applying knowledge to the solution to problems and how knowledge is
applied to resolve the problem
Non documented knowledge is called tactic knowledge
Documented knowledge is called explicit knowledge
Knowledge is situational and contextual
Knowledge is a firms non-tangible asset

Organisational learning and knowledge

Organisation gains experience on how to store knowledge by trial and

error, planned activities and feedback from customers
These skills above are implemented into the business process where
companies actively change the way in which business decisions are made
process called organisation learning

The knowledge management value chain

Knowledge management refers to the set of business processes developed

in an organisation to create, store, transfer, and apply knowledge.
Allows companies to learn from the environment and implement it into
their business process
Each part of the value chain adds value to data and information so it
becomes knowledge useful for the business process
20% of the value chain is information systems and the rest 80% is
management and organisational activities

VALUE CHAIN
Knowledge acquisition

Can be done in several ways depending on the type of information that

the company seeks
E.g. build corporate repositories in which documents, e-mails , reports etc.
can be managed
E.g. build online expert network so that employees can find the expert of
the company who has the knowledge in his or her head
At other times, companies have to learn or discover new knowledge e.g.
engineers

Knowledge storage

Usually done in a database

Expert systems also help corporations preserve the knowledge that is
acquired by incorporating that knowledge into organisational processes
and cultures

Knowledge dissemination

How to find the right knowledge and information from a sea of data
available. This is done via informal networks, shared management
experience communication and training programs that help the managers
focus their attention on the important knowledge and information

Knowledge application

Organisational knowledge must become a systematic part of management

decision making and become situated in decision-support systems

Building organisational and management capital: collaboration,

communities of practice, and office environments

Communities of practice are informal social networks of professionals and

employees within and outside the firm who have similar work-related
activities and interests.
COPs can make it easier For people to reuse knowledge by pointing
community members to useful documents, and filtering information for
newcomers

Types of knowledge management systems

3 types of knowledge management systems; enterprise-wide knowledge

management systems, knowledge work systems, and intelligent
techniques
Enterprise-wide knowledge management systems are general-purpose
firm wide efforts to collect, store, distribute and apply digital content and
knowledge
Knowledge work systems was brought about to help engineers discover
new knowledge e.g. computer-aided design, simulation and virtual reality
systems

Knowledge work systems are specialised systems built for engineers,

scientists and other knowledge workers charged with discovering and
creating new knowledge for a company
Knowledge management also includes a diverse group of intelligent
techniques each with different objectives

5.7 Enterprise-wide knowledge management systems

Deals with knowledge that is in a structured form (e.g. text documents),

semi structured (e.g. e-mails) and other kinds of information that resides
in the minds of employees minds

Enterprise content management systems

These systems help with knowledge capture, storage, retrieval,

distribution and preservation of structured, semi structured and
unstructured knowledge
Major enterprise content management systems also allow users to access
external sources of information
Key problem in managing knowledge is the creation of an appropriate
classification scheme or taxonomy (place knowledge in appropriate
categories for easy use)
Digital asset management systems help companies classify, store, and
distribute these digital objects e.g. for Coca Cola company for it to
transport the brand logo across the world to reduce redundancy

Knowledge network systems

Addresses problem of storing knowledge that is not in digital form but

rather in the minds of experts
It provides an online directory to make it easy for employees to find the
appropriate expert in the company
Some systems go even further and store frequently asked questions and
solutions in a database

Collaboration tools and learning management systems

Commercial software vendor are used for collaboration within the

enterprise e.g. blogs and Microsoft SharePoint
Social bookmarking allows users to bookmark web pages and create a list
that can be shared among the employees hence allowing collaboration
Learning management system (LMS) helps with employee learning and
training