CHAPTER 9

Chapter 9 – Enabling the Organization-Decision Making

Decision Making

Ø  Reasons for Growth of Decision Making Information System

-          People need to analyze large amounts of information – Improvements in technology itself, innovations in communication, and globalization have resulted in a dramatic increase in the alternatives and dimensions people need to consider when making a decision or appraising an opportunity

-          People must make decisions quickly – Time is of the essence and people simply do not have time to sift through all the information manually

-          People must apply sophisticated analysis techniques, such as modeling and forecasting, to  make good decisions – Information systems substantially reduce the time required to perform these sophisticated analysis techniques

-          People must protect the corporate asset of organizational information – Information systems offer the security required to ensure organizational information remains safe.

Ø  Model – A simplified representation or abstraction of reality

Ø  IT systems in an enterprise

Transaction Processing System

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

Ø  Transaction processing system – the basic business system that serves the operational level (analysis) in an organization

Ø  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

Ø  Online analytical processing (OLAP) – the manipulation of information to create business intelligence in support of strategic decision making

Decision support systems

Ø  Decision support system (DSS) – models information to support managers and business professionals during the decision-making process

Ø  Three quantitative models used by DSSs include;

1.       Sensitivity analysis – the study of the impact that changes in one (or more) parts of the model have on other parts of the model

2.       What-if analysis – checks the impact of a change in an assumption on the proposed solution

3.       Goal-seeking analysis – finds the inputs necessary to achieve a goal such as a desired level of outputs

What-if analysis

Goal-seeking analysis

Executive information system

Ø  Executive information system (EIS) – A specialized DSS that supports senior level executives within the organization

Ø  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 information

-          Slice-and-dice – looks at information from different perspectives

Ø  Interaction between a TPS and an EIS

Ø  Interaction between a TPS and a DSS

Ø  Digital dashboard – integrates information from multiple components and presents it in a united display

Artificial intelligence (AI)

Ø  The ultimate goal of AI is the ability to build a system that can mimic human intelligence

Ø  Intelligent system – various commercial applications of artificial intelligence

Ø  Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn

Ø  Four most common categories of AI include;

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

o   Fuzzy logic – a mathematical method of handling imprecise or subjective information

3.       Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem

4.       Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users

Data Mining

Ø  Data-mining software includes many forms of AI such as neutral networks and expert systems

CHAPTER 8

Chapter 8 – Accessing Organizational Information – Data Warehouse

What is Data Warehouse?

• Defined in many different ways, but not rigorously

-          A decision support database that is maintained separately from the organization’s operational database.

-          A consistent database source that bring together information from multiple sources for decision support queries.

-          Support information processing by providing a solid platform of consolidated, historical data for analysis.

History of Data Warehousing

• 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, because;

-          Operational information is mainly current – does not include the history for better decision making

-          Issues of quality information

-          Without information history, it is difficult to tell how and why things change over time

Data warehouse fundamentals

Ø  Data warehouse – A logical collection of information – gathered from many different operational databases – that supports business analysis activities and decision-making takes

Ø  The primary purpose of a data warehouse is to combined information throughout an organization into a single repository for decision-making purposes – data warehouse support only analytical processing

Data warehouse model

Ø  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.

Ø  Data warehouse then send subsets of the information to data mart.

Ø  Data mart – contains a subset of data warehouse information.

Multidimensional Analysis and Data Mining

Ø  Relational Database contains information in a series of two-dimensional tables.

Ø  In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows

-          Dimension – A particular attribute of information

Ø  Cube – common term for the representation of multidimensional information

Ø  Once a cube of information is created, users can begin to slice and dice the cube to drill down into the information.

Ø  Users can analyze information in a number of different ways and with number of different dimensions.

Ø  Data Mining – the process of analyzing data to extract information not offered by the raw data alone. Also known as “knowledge discovery” – computer-assisted tools and techniques for sifting through and analyzing vast data stores in order to finds trends, patterns and correlations that can guide decision making and increase understanding

Ø  To perform data mining users need data-mining tools

-          Data-mining tool – uses a variety of techniques to finds patterns and relationships in large volumes of information. Eg: retailers and use knowledge of these patterns to improve the placement of items in the layout of a mail-order catalog page or Web page.

Information Cleansing or Scrubbing

Ø  An organization must maintain high-quality data in the data warehouse

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

Ø  Occurs during ETL process and second on the information once if is in the data warehouse

Ø  Contract information in an operational system

Ø  Standardizing Customer  name from Operational Systems

Ø  Information cleansing activities

-          Missing Records or Attributes

-          Redundant Records

-          Missing Keys or Other Required Data

-          Erroneous Relationships or References

-          Inaccurate Data

Ø  Accurate and complete information

Business Intelligence

Ø  Business Intelligence – refers to applications and technologies that are used to gather, provides access, analyze data and information to support decision making efforts

Ø  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

Ø  Eg; Excel, Access

CHAPTER 7

Chapter 7 - Storing Organizational Information - Database

RELATIONAL DATABASE FUNDAMENTALS

 -    Information is everywhere in an organization

-  Information is stored in databases

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

 -     Database models include;

Ø   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.

         Ø  Network database model – a flexible way of representing objects and their relationships

        Ø  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

Ø  The rows in each table contains the entities

-    Attributes (fields, columns) – characteristics or properties of an entity class

Ø  The columns in each table contain the attributes

KEYS AND RELATIONSHIPS

-    Primary keys and foreign keys identity the various entity classes (tables) in the database

Ø  Primary key – a fields (or group of fields) that uniquely identities a given entity in a table

Ø  Foreign key – a primary key of one table that appears an attribute in another table and acts to provide a logical relationships among the two tables 

RELATIONAL DATABASE ADVANTAGES

-    Database advantages from a business perspective include;

Ø  Increased flexibility

Ø  Increased scalability and performance

Ø  Reduced information redundancy

Ø  Increased information integrity (quality)

Ø  Increased information security

INCREASED FLEXIBILITY

-     A well-designed database should;

Ø  Handle changes quickly and easily

Ø  Provide users with different views

Ø  Have only one physical views

§  Physical view – deals with the physical storage of information on a storage device

Ø  Have multiple logical views

§  Logical view – focuses on how users logically access information

INCREASED SCALABILITY AND PERFORMANCE

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

Ø  Scalability – refers to how well a system can adapt to increased demands

Ø  Performance – measures how quickly a system performs a certain process or transaction

REDUCED INFORMATION REDUNDANCY

-      Databases reduce information redundancy

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

-     Inconsistency is one of the primary problems with redundant information

INCREASED INFORMATION SECURITY

-      Information is an organization asset and must be protected

-      Databases offer several security features including;

Ø  Password – provides authentication of the user

Ø  Access level – determines who has access to the different types of information

Ø  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 WEB SITES

-       Data-driven Web sites – an interactive Web site kept constantly updated and relevant to the needs of its   customers through the use of database

DATA-DRIVEN WEB SITE BUSINESS ADVANTAGES

-         Development

-         Content Management

-         Future Expandability

-         Minimizing Human Error

-         Cutting Production and Update Costs

-         More Efficient

-         Improved Stability

DATA-DRIVEN BUSINESS INTELLIGENT

-         BI in a data-driven Web site

INTEGRATING INFORMATION AMONG MULTIPLE DATABASES

-      Integration – allows separate systems to communicate directly with each other

Ø  Forward integration – takes information entered into a given system and sends it automatically to all downstream systems and processes

          Ø  Backward integration – takes information entered into a given system and sends it automatically to    all upstream systems and processes

 -          Building a central repository specifically for integrated information

CHAPTER 6

Organizational information comes at different levels and in different formats and granularities. Information granularities refers to the extent of details within the information. The organizational must know what kind of information that they want for. Make sure the information gives the best quality or high quality for that organizational itself.

Employees must be able to differentiate the levels of the information, formats, and granularities of information when making a decision. If the employees can knows how to use the information with different levels of information or format then, the information can be a values to the sender or receiver of the information.

Successfully collecting, compiling, sorting, and finally analyzing information from multiple levels, in varied formats, exhibiting different granularity can provide tremendous insight how an organization is performing.

TRANSACTIONAL INFORMATION

There are hundreds of transactions that go through organizations every day. The result of these transactions is transactional information. Transactional information is all the information contained within a business unit. The primary purpose of transactional information is to support day-to-day operations of the unit. Examples of transactional information include: sales receipt, packing slip, purchase confirmation, etc. So transactional information is the result of performing daily operating tasks. In addition, every time a cash register rings up a sale, a deposit or withdrawal is made from an ATM, or a receipt is given at the gas pump, capturing and storing of the transactional information are required.

            Databases that can handle transactions are known as transactional databases. The main purpose of a database is to ensure accuracy and integrity of information.

ANALYTICAL INFORMATION

 In contrast to transactional information, analytical information is used for managerial analysis decision making. People who are higher up in the hierarchy of the company usually do not need all the details of transactional information. They need the bigger picture. Here is where analytical information is used. An example of analytical information is used. An example of analytical information is a report on monthly sales.

Examples of analytical information

ü  Trends ( information about where the particular market is heading and if the organization should follow the trend)

ü  Sales ( information about if the organization needs to pick up sales in a particular area or if it should cut back on inventory of specific products)

ü  Future growth projections ( information about whether or not the company looks like it will grow, usually if it is taking on a new venture)

THE VALUE OF TIMELY INFORMATION

·         Timeliness is an aspect of information that depends on the situation :

Ø  Real-time information – immediate, up-to-date information

Ø  Real-time system – provides real-time information in responses to query requests

·         Business decisions are only as good as the quality of the information used to make the decisions.

·         You never want to find yourself using to help you make a bad decision faster.

THE VALUE OF QUALITY INFORMATION

·         Characteristics of high-quality information include:

•  Five characteristics of high quality information are accuracy, completeness, consistency, uniqueness, and timeliness. 

•  Information needs to be of high quality to be useful andaccurate.  The information that is input into a data base is presumed to be perfect as well as accurate.  The information that is accessed is deemed reliable. 

•   Completeness is another attribute of high quality information.  Completeness is as necessary as accuracywhen inputting data into a database.

• Consistency is key when entering information into a database.  For example, with a column for a phone number entry 10 digits is the expected length of the field.  Once the fields have been set in the database, a number more or less than 10 digits will not be accepted.  The same applies for any field, whether it is an entry that requires a number, a series of numbers, an address, or a name, etc.  If the fields are not set to a specific limit for information then consistency is even more important. 

•   Uniqueness is the fourth component of high quality information.  In order to add value to any organization, information must be unique and distinctive.  Information is a very essential part of any organization and if used properly can make a company competitive or can keep a company competitive. 

•   A fifth important aspect of information is timeliness.  New and current data is more valuable to organizations than old outdated information.  Especially now, in this era of high technological advances, out-of-date information can keep a company from achieving their goals or from surviving in a competitive arena. Real-time information is an element of timeliness.   

UNDERSTANDING THE COSTS OF POOR INFORMATION

•         The four primary sources of low quality information include:

1.    Online customers intentionally enter inaccurate information to protect their privacy

2.    Information from different systems have different entry standards and formats

3.    Call center operators enter abbreviated or erroneous information by accident or to save time

4.    Third party and external information contains inconsistencies, inaccuracies

·         Bad information can cause serious business ramifications such as :

1.    Loss Of Managerial Control

2.    Hidden Cost

3.    Threat to Security and Confidentiality

4.    Quality problems

5.    Tied to the Financial Well-Being of Another Company

6.    Bad publicity 

UNDERSTANDING THE BENEFITS OF GOOD INFORMATION

Why is Information Technology Important

All our work related applications are now completely automated, thanks to the IT sector. IT professionals are people involved in essential management of sensitive data, exclusive computer networking and systems-engineering. The advancement of the IT sector has resulted in automated:

• Administration of entire systems.
• Production and manipulation of sensitive information.
• Cultural development and communication.
• Streamlining of business processes and timely upgrades.

Advantages of Information Technology

• Globalization
True globalization has come about only via this automated system. The creation of one interdependent system helps us to share information and end linguistic barriers across the continents. The collapse of geographic boundaries has made the world a 'global village'. The technology has not only made communication cheaper, but also possible much quicker and round the clock. The wonders of text messages email and auto-response, backed by computer security applications, have opened up scope for direct communication.

• Cost-effective
Computerized, internet business processes have made many businesses turn to the Internet for increased productivity, greater profitability, clutter free working conditions and global clientèle. It is mainly due to the IT industry that businesses have been able to make their processes more streamlined, thereby becoming more cost-effective and consequently more profitable. People are able to operate their businesses 24x7, even from remote locations only due to the advent of information technology.

• Communication
Quick and effective communication is vital to any business anywhere in the world. Information technology gives an entrepreneur or business the tools, like email, video conferencing, SMS, etc., essential to communicate efficiently and effectively. to the business world, and information technology gives your company the resources it needs to communicate quickly and effectively. Not only do people connect faster with the help of information technology, but they are also able to identify like-minded individuals and extend help, while strengthening ties.

• Storing and Protecting Information
IT provides a low-cost business options to store and maintain information that may be important from a business or service point of view. Virtual vaults and other such security systems not only store vital data but also allow control over the access to such information. IT security systems will also protect virtual data from being hacked or wiped out in case of any technical failure.

• Creation of New Jobs
One of the biggest advantages of IT has been the creation of a whole new field of opportunity for skilled personnel leading to new and interesting jobs. Hardware and software developers, computer programmers, web designers, system analyst, the list of new jobs created could go on. IT has also been attributed to be the major cause of surge in the economies of certain Third World nations too.