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Information Systems for Value Driven Business

Information Systems for Value Driven Business. LEARNING OBJECTIVES. How business make profit ( Value Chain ) How IS create added value How business make decision ( Organizational Pyramid ) How IS help in decision making process. Value Chain & Five Forces Model Revisited. VALUE.

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Information Systems for Value Driven Business

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  1. Information Systems for Value Driven Business

  2. LEARNING OBJECTIVES How business make profit (Value Chain) How IS create added value How business make decision (Organizational Pyramid) How IS help in decision making process

  3. Value Chain & Five Forces Model Revisited

  4. VALUE FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT INBOUND LOGISTICS OPERATIONS OUTBOUND LOGISTIC MARKETING & SALES LOGISTIC SERVICE How Business Survive/Make Profit:Value Chain Model MARGIN COST

  5. How Business Survive/Make Profit:Value Chain Model . . .

  6. Customer-Value-Added Activity (maximize) • a business process that a customer is willing to pay for (utility) • Business-Value-Added Activity (minimize) • a business process that is essential to managing an organization (costs) • Non-Value-Added Activity (eliminate) • customer will not pay for; business value will not be increased (waste) • Goals of a business system: effective(do right thing), efficient(do thing right), competitive (do thing differently). Value-Added Activities

  7. Automating: doing things faster/cheaper • Organizational Learning: doing things better way (from lessons learned) • Supporting Strategy: doing things smarter than competitors to meet customer’s needs. • Contribute to Value Added Activities in Value Chain How Information Systems Add Values ?

  8. IT/IS improves or innovates the use of knowledge in operations of the value chain and value system • IT/IS improves products or services by increasing quality, reducing costs, or adding desirable features • IT/IS provides timely and reliable information to enhance the decision-making process • IT/IS improves communication between internal as well as external business entities to increase efficiency in production and distribution What IT/IS can do

  9. Computer Engineering – Hardware (~ Chemistry) • Computer Science – Software (~ Pharmacy) • Information Systems (~ Medicine) • IS Specialist (~ Physician) • YOU, YOUR BUSINESS (~Patient) • Systems (~over counter vs. prescribed drugs) • Business failures (~ DEATH !!!) What’s in a Name . . .

  10. Combinations of hardware, software, and telecom networks use to process data Combinations of hardware, software, and telecom networks that people build and use to collect, create, and distribute useful data in organizations (for decision making) IT vs. IS

  11. Information Systems Combination of : Hardware Software Data Telecommunications networks People Procedures (business rules)

  12. Decision-Making Levels of an Organization

  13. Executive level • Long-term decisions (Strategies) • Unstructured decisions • Managerial level • Decisions covering weeks and months (Tactics) • Semi-structured decisions • Operational level • Day-to-day decisions (Operations) • Structured decisions Decision-Making Levels of an Organization

  14. Operational Level

  15. IS Architecture

  16. Managerial Level

  17. IS Architecture

  18. MANAGERIAL SUPPORT SYSTEMS

  19. Four quantitative models used by DSSs include • What-if analysis: assess impact of a change in a variable/assumption on the model • Sensitivity analysis: assess impact on other variables when one variable is changed repeatedly • Goal-seeking analysis: find necessary inputs for a desired level of output • Optimization analysis: find optimum value for output when other inputs are changed repeatedly MANAGERIAL SUPPORT SYSTEMS

  20. Executive Level

  21. IS Architecture

  22. Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization • Granularity: level of details in the model/process • Visualization: graphical display of patterns/relationships of large amount of data • Digital dashboard: visual summary for tracking critical success factors and key performance indicators STRATEGIC SUPPORT SYSTEMS

  23. Most EISs offering the following capabilities • Consolidation: aggregation of data • Drill-down: ability to view details of data at different levels of aggregation • Slice-and-dice: ability to look at information at different perspectives. STRATEGIC SUPPORT SYSTEMS

  24. Enhancing Decision Making With Information Systems

  25. Information Systems that Span Organizational Boundaries

  26. Information Systems Supporting the Functional Areas

  27. Functional Area Information Systems

  28. Information Systems inside Organizations

  29. Functional Area Information Systems

  30. Information Technology outside Organization

  31. Capabilities of Information Systems Perform high-speed, high-volume numerical computations Provide fast, accurate communication and collaboration within and among organizations Store huge amounts of information in small space Allow quick, inexpensive access to vast amounts of information worldwide Interpret vast amounts of data quickly and efficiently Increase effectiveness and efficiency of people working in groups in one place or around the world Automate semiautomatic business process and manual tasks

  32. Why Information Systems Important to Organizations & Society ? IT will reduce the number of middle managers. IT will change the manager’s job. IT impacts employees at work. IT provides quality-of-life improvements.

  33. Managerial decision-making challenges • Analyze large amounts of information • Apply sophisticated analysis techniques • Make decisions quickly MAKING BUSINESS DECISIONS

  34. The six-step decision-making process • Problem identification • Data collection • Solution generation • Solution test • Solution selection • Solution implementation DECISION-MAKING PROCESS

  35. 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 METRICS: MEASURING SUCCESS

  36. 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 • External (e.g., market share) vs. Internal KPI (e.g., ROI) METRICS: MEASURING SUCCESS . . .

  37. 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 Efficiency and Effectiveness Metrics

  38. 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 The Interrelationship Between Efficiency And Effectiveness Metrics

  39. Model – A simplified representation or abstraction of reality that helps managers to • Calculate risks • Understand uncertainty • Change variables • Manipulate time to make decisions SUPPORT: ENHANCING DECISION MAKING WITH IS

  40. Artificial intelligence (AI) – Simulates human intelligence such as the ability to reason and learn • Intelligent system – Various commercial applications of artificial intelligence THE FUTURE: ARTIFICIAL INTELLIGENCE (AI)

  41. 1. Expert system – Computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems 2. Neural Network – Attempts to emulate the way the human brain works • Fuzzy logic – A mathematical method of handling imprecise or subjective information ARTIFICIAL INTELLIGENCE (AI)

  42. 3. Genetic algorithm – An artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem - Shopping bot – Software that will search several retailer websites and provide a comparison of each retailer’s offerings including price and availability ARTIFICIAL INTELLIGENCE (AI)

  43. 4. Intelligent agent – Special-purpose knowledge-based information system that accomplishes specific tasks on behalf of its users 5. Virtual reality - A computer-simulated environment that can be a simulation of the real world or an imaginary world ARTIFICIAL INTELLIGENCE (AI)

  44. Businesses gain a competitive edge when they minimize costs and streamline business processes • Customer facing (front-office) process • Business facing (back-office) process EVALUATING BUSINESS PROCESS

  45. The Order-to-Delivery Process EVALUATING BUSINESS PROCESS

  46. Workflow – Includes the tasks, activities, and responsibilities required to execute each step in a business process • 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” vs. “to-be” process model MODELS: MEASURING PERFORMANCE

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