1. Streamlining Business Operations
UNIT THREE
Streamlining Business Operations

2. UNIT THREE Chapter Nine – Enabling the Organization— Decision Making
Chapter Ten – Extending the Organization— Supply Chain Management
Chapter Eleven – Building a Customer-centric Organization—Customer Relationship Management
Chapter Twelve – Integrating the Organization from End to End—Enterprise Resource Planning

3. UNIT THREE
Decision-enabling, problem-solving, and opportunity-seizing systems
Decision making and problem solving encompass large-scale, opportunity-oriented, strategically focused solutions
Organizations today can no longer use a “cook book” approach to decision making
This Unit focuses on technology to help make decisions, solve problems, and find new innovative opportunities
Decision support systems
Executive information systems
Artificial intelligence (AI)
Data mining
Customer relationship management
Supply chain management
Enterprise resource planning

4. Enabling the Organization—Decision Making
CHAPTER 9
Enabling the
Organization—Decision Making
CLASSROOM OPENER
GREAT BUSINESS DECISIONS – Walt Disney Decides to Call His Mouse Cartoon Character Mickey, not Mortimer
Sunday, November 18, 1928, is a historic moment in time since it is the day that the premier of Steamboat Willie debuted, a cinematic epic of seven minutes in length. This was the first cartoon that synchronized sound and action.
Like all great inventions, Mickey Mouse began his life in a garage.
After going bankrupt with the failure of his Laugh O Gram Company, Walt Disney decided to rent a camera, assemble an animation stand, and set up a studio in his uncle’s garage.
At the age of 21, Walt and his older brother Roy launched the Disney Company in 1923.
The company had a rocky start. Its first film, Alice, hardly made enough money to keep the company in business.
His second film, Oswald the Rabbit, was released in 1927 with small fanfare.
Then Disney’s luck changed and in 1928 he released his seven minute film about a small mouse named Mickey. Disney never looked back.
The truth is Mickey Mouse began life as Mortimer Mouse. Walt Disney’s wife, Lilly, did not like the name and suggested Mickey instead. Walt Disney has often been heard to say “I hope we never lose sight of one fact – that this was all started by a mouse.”
Would Mortimer have been as successful as Mickey? Would Mortimer have been more successful than Mickey? How could Walt Disney have used technology to help support his all-important decision to name his primary character? There are many new technologies helping to drive decision support systems, however it is important to note that some decisions, such as the name of a mouse, are made by the most complex decision support system available, the human brain.

5. LEARNING OUTCOMES
9.1 Define the systems organizations use to make decisions and gain competitive advantages 9.2 Describe the three quantitative models typically used by decision support systems
9.1 Define the systems organizations use to make decisions and gain competitive advantages
Decision support system (DSS) – models information to support managers and business professionals during the decision-making process
Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization
Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
Data mining – typically includes many forms of AI such as neural networks and expert systems. Data mining tools apply algorithms to information sets to uncover inherent trends and patterns in the information
9.2 Describe the three quantitative models typically used by decision support systems
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

6. LEARNING OUTCOMES
9.3 Describe the relationship between digital dashboards and executive information systems 9.4 List and describe four types of artificial intelligence systems
9.3 Describe the relationship between digital dashboards and executive information systems
An executive information system (EIS) is a specialized DSS that supports senior level executives within the organization
A digital dashboard integrates information from multiple components and present it in a unified display
A digital dashboard is a form of EIS
9.4 List and describe four types of artificial intelligence systems
The three most common categories of AI include:
Expert systems – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
Neural Networks – attempts to emulate the way the human brain works
Intelligent agents – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its user

7. DECISION MAKING What is the value of information?
The answer to this important question varies depending on how the information is used
Ask your students why two people looking at the exact same pieces of information could extract completely different value from the information
Ans: One way that people can extract different value from similar information is by the information technology tools they use to analyze the information
Also, people’s personal experience and expertise will determine how they view and analyze information
Reasons for growth of decision-making information systems
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.

8. DECISION MAKING
Model – a simplified representation or abstraction of reality
IT systems in an enterprise
Models can calculate risks, understand uncertainty, change variables, and manipulate time
Ask your students if any of them have ever worked with a DSS, EIS, or AI system
Ans: Many of your students have worked with a DSS and might not know it. Excel is a DSS. You can use many of the tools found in Excel, such as Scenario Manager, Goal Seek, Solver, and Pivot Tables to support DSS activities
Decision support system (DSS) – models information to support managers and business professionals during the decision-making process
Executive information system (EIS) – a specialized DSS that supports senior level executives within the organization
Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
Data mining – typically includes many forms of AI such as neural networks and expert systems. Data mining tools apply algorithms to information sets to uncover inherent trends and patterns in the information.

9. TRANSACTION PROCESSING SYSTEMS
Moving up through the organizational pyramid users move from requiring transactional information to analytical information
The structure of a typical organization is similar to a pyramid
Organizational activities occur at different levels of the pyramid
People in the organization have unique information needs and thus require various sets of IT tools (see Figure)
At the lower levels of the pyramid, people perform daily tasks such as processing transactions
Moving up through the organizational pyramid, people (typically managers) deal less with the details (“finer” information) and more with meaningful aggre­gations of information (“coarser” information) that help them make broader decisions for the organization
Granularity refers to the extent of detail in the information (means fine and detailed or “coarse” and abstract information)

10. TRANSACTION PROCESSING SYSTEMS
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
Analysts typically use TPS to perform their daily tasks
What types of TPS are used at your college?
Payroll system (Tracking hourly employees)
Accounts Payable system
Accounts Receivable system
Course registration system
Human resources systems (tracking vacation, sick days)

11. DECISION SUPPORT SYSTEMS
Decision support system (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
In a DSS, data is first queried and collected from the knowledge database
Results from the query are then checked and analyzed against decision models
Once checked against the decision models, the results are then generated for review to find a “best” solution for the situation
One national insurance company uses DSSs to analyze the amount of risk the company is undertaking when it insures drivers who have a history of driving under the influence of alcohol. The DSS discovered that only 3 percent of married male homeowners in their forties received more than one DUI. The company decided to lower rates for customers falling into this category, which increased its revenue while mitigating its risk.
CLASSROOM EXERCISE
DSSs All Around
Break your students into groups and ask them to compare sensitivity analysis, what-if analysis, and goal-seeking analysis and to provide a business example of when they would use each type?
Sensitivity analysis – studies the impact on a single change in a current model. For example – if we continually change the amount of inventory we carry, how low can our inventories go before issues start occurring in other parts of the supply chain? This would require changing the inventory level and watching the model to see “how sensitive” it is to inventory levels.
What-if analysis – determines the impact of change on an assumption or an input. For example – if the economic condition improves, how will it affect our sales?
Goal-seeking analysis – solves for a desired goal. For example – we want to improve revenues by 30 percent, how much does sales have to increase and costs have to decrease to meet this goal?

12. DECISION SUPPORT SYSTEMS
What-if analysis
This figure displays Excel being used as a DSS to determine “what-if” analysis by using Excel’s Scenario Manager to determine what will happen to total sales as the price and quantity of units sold changes
If your students are interested in learning more about Excel DSS tools, such as Scenario Manager, have them review the Excel technology plug-ins

13. DECISION SUPPORT SYSTEMS
Goal-seeking analysis
This figure displays Excel being used as a DSS to determine “goal-seeking” by using Excel’s Goal Seek tool to determine how much money a person can borrow with an interest rate of 5.5% and a monthly payment of $1,300
If your students are interested in learning more about Excel DSS tools, such as Goal Seek and Solver, have them review the Excel technology plug-ins
Goal Seek and Solver offer similar functionality
Solver is more advanced than Goal Seek as Solver allows the user to enter in many additional constraints on the end result

14. DECISION SUPPORT SYSTEMS
Interaction between a TPS and a DSS
The TPS supplies transaction-based data to the DSS
The DSS summarizes and aggregates the information from the many different TPS systems, which assists managers in making informed decisions. Burlington Northern and Santa Fe Railroad (BNSF) regularly tests its railroad tracks
Each year hundreds of train derailments result from defective tracks
Using a DSS to schedule train track replacements helped BNSF decrease its rail-caused derailments by 33 percent

15. EXECUTIVE INFORMATION SYSTEMS
Executive information system (EIS) – 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
Can you name a few different situations when you would use consolidation, drill-down, and slice-and-dice?
Consolidation would occur when grouping multiple store sales together to get a total for the company
Drill-down would occur when digging into the numbers on the balance sheet or income statement, such as revenues broken down into individual product revenues for each store during different dates and times
Slice-and-dice would occur when users begin looking at information with different dimensions, similar to the cubes of information

16. EXECUTIVE INFORMATION SYSTEMS
Interaction between a TPS and an EIS
Why would you need interaction between a TPS and EIS?
The EIS needs information from the TPS to help executives make decisions
Without knowing order information, inventory information, and shipping information from the TPSs, it would be very difficult for the CEO to make strategic decisions for the organization

17. EXECUTIVE INFORMATION SYSTEMS
Digital dashboard – integrates information from multiple components and presents it in a unified display
As digital dashboards become easier to use, more executives can perform their own analysis without inundating IT personnel with queries and request for reports
Why, according to Nucleus Research, is there a direct correlation between use of digital dashboards and a company’s return on investment (ROI)?
Digital dashboards, whether basic or comprehensive, deliver results quickly
The quicker employees have information, the quicker they can respond to problems, threats, and opportunities

18. ARTIFICIAL INTELLIGENCE (AI)
Intelligent system – various commercial applications of artificial intelligence
Artificial intelligence (AI) – simulates human intelligence such as the ability to reason and learn
RivalWatch offers a strategic business information service using AI that enables organizations to track the product offerings, pricing policies, and promotions of online competitors
Clients can determine the competitors they want to watch and the specific information they wish to gather, ranging from products added, removed, or out of stock to price changes, coupons offered, and special shipping terms
RivalWatch allows its clients to check each competitor, category, and product either daily, weekly, monthly, or quarterly

19. ARTIFICIAL INTELLIGENCE (AI)
The ultimate goal of AI is the ability to build a system that can mimic human intelligence
Photo one represents an AI Robot at Manchester Airport in England
The Hefner AI Robot Cleaner alerts passengers to security and nonsmoking rules while it scrubs up to 65,600 square feet of floor per day
Photo two displays a SmartPump that keeps drivers in their cars on cold, wet days
The SmartPump can service any automobile built after 1987 that has been fitted with a special gas cap and a windshield-mounted transponder that tells the robot where to insert the pump
Photo three displays the Miami Police Bomb squad’s AI robot that is used to locate and deactivate bombs
Highlight the security and safety that can be gained through the use of AI robots for your class

20. ARTIFICIAL INTELLIGENCE (AI)
Four most common categories of AI include:
Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems
Neural Network – attempts to emulate the way the human brain works
Fuzzy logic – a mathematical method of handling imprecise or subjective information
Expert systems
Human expertise is transferred to the expert system, and users can access the expert system for specific advice
Most expert systems contain information from many human experts and can therefore perform a better analysis than any single human
Ask your students how expert systems could be used in the medical field
Neural networks
Neural networks are most useful for decisions that involve patterns or image recognition
Typically used in the finance industry to discover credit card fraud by analyzing individual spending behavior

21. ARTIFICIAL INTELLIGENCE (AI)
Four most common categories of AI include:
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
Genetic algorithms
Essentially an optimizing system, it finds the combination of inputs that give the best outputs
Intelligent agents
Used for environmental scanning and competitive intelligence
An intelligent agent can learn the types of competitor information users want to track, continuously scan the Web for it, and alert users when a significant event occurs
RivalWatch uses intelligent agents

22. DATA MINING
Data-mining software includes many forms of AI such as neural networks and expert systems
Data-mining tools apply algorithms to information sets to uncover inherent trends and patterns in the information
Analysts use this information to develop new business strategies and business solutions
Ask your students to identify an organization that would “not” benefit from investing in data warehousing and data-mining tools
Ans: None
CLASSROOM EXERCISE
Analyzing Multiple Dimensions of Information
Jump! is a company that specializes in making sports equipment, primarily basketballs, footballs, and soccer balls. The company currently sells to four primary distributors and buys all of its raw materials and manufacturing materials from a single vendor. Break your students into groups and ask them to develop a single cube of information that would give the company the greatest insight into its business (or business intelligence).
Product A, B, C, and D
Distributor X, Y, and Z
Promotion I, II, and III
Sales
Season
Date/Time
Salesperson Karen and John
Vendor Smithson

23. OPENING CASE STUDY QUESTIONS SecondLife
How could companies use Second Life to enhance decision making for a new product or service?
How could financial companies use neural networks in Second Life to help their businesses?
1. How could companies use Second Life to enhance decision making for a new product or service?
By gaining feedback on the product or service from Second Life. Many companies are using Second Life to pilot virtual products. In the American Apparel store you can view clothes that are at the real store. Auto manufacturers are using Second Life to allow customers to tour virtual cars. Universities are even using Second Life to offer virtual campus tours and information. The possibilities are endless, and far less expensive then testing products in the real world, with far more diverse customers available on Second Life.
2. How could financial companies use neural networks in Second Life to help their businesses?
A neural network, also called an artificial neural network, is a category of AI that attempts to emulate the way the human brain works. The types of decisions for which neural networks are most useful are those that involve pattern or image recognition because a neural network can learn from the information it processes

24. OPENING CASE STUDY QUESTIONS SecondLife
How could a company such as Nike use decision support systems on Second Life to help its business?
How could an apparel company use Second Life to build a digital dashboard to monitor virtual operations?
3. How could a company such as Nike use decision support systems on Second Life to help its business?
A decision support system (DSS) models information to support managers and business professionals during the decision-making process. Three quantitative models are typically used by DSSs: (1) sensitivity analysis, (2) what-if analysis, and (3) goal-seeking analysis. Nike could use any of these three types of models to help its business. By asking questions to Second Life customers it could run these models to help it make business decisions.
4. How could an apparel company use Second Life to build a digital dashboard to monitor virtual operations?
A common feature of an executive information system is a digital dashboard. Digital dashboards integrate information from multiple components and tailor the information to individual preferences. Digital dashboards commonly use indicators to help executives quickly identify the status of key information or critical success factors. A company could build a digital dashboard on Second Life to monitor a virtual store. It could track and monitor everything that it could track in a real store including:
Number of customers
Types of customers
Time spent in store
Number of items avatar looked at in the store
Number of interactions with store avatars
Number of items purchased
Revenue per sale

25. CHAPTER NINE CASE DARPA Grand Challenge
The DARPA Grand Challenge was designed to leverage American ingenuity to develop autonomous vehicle technologies that can be used by the military
With the goal of saving lives on the battlefield, the DARPA Grand Challenge brings together individuals and organizations from industry, the R&D community, government, the armed services, and academia, and includes students, backyard inventors, and automotive enthusiasts
A few video clips on the Darpa Grand Challenge

26. CHAPTER NINE CASE QUESTIONS
Describe how the DoD is using AI to improve its operations and save lives
Explain why the DoD would use an event, such as the DARPA Grand Challenge, to further technological innovation
1. Describe how the DoD is using AI to improve its operations and save lives.
The DARPA Grand Challenge was designed to leverage American ingenuity to develop autonomous vehicle technologies that can be used by the military. Using AI driven vehicles the DOD will be able to send vehicles into dangerous situations without endangering any soldiers.
2. Explain why the DoD would use an event, such as the DARPA Grand Challenge, to further technological innovation.
By offering a generous prize, along with notoriety the DOD is able to get many of the greatest minds in the country working on creating autonomous vehicles. It is a win-win. The DOD receives the technology and the winning team receives a prize and notoriety.

27. CHAPTER NINE CASE QUESTIONS
Describe how autonomous vehicles could be used by organizations around the world to improve business efficiency and effectiveness
The Ansari X is another technological innovation competition focusing on spacecraft. To win the $10 million Ansari X Prize, a private spacecraft had to be the first to carry the weight equivalent of three people to an altitude of miles twice within two weeks. SpaceShipOne, a privately built spacecraft, won the $10 million Ansari X Prize on October 4, Describe the potential business impacts of the Ansari X competition
3. Describe how autonomous vehicles could be used by organizations around the world to improve business efficiency and effectiveness.
There are numerous ways that autonomous vehicles could be used around by businesses from making deliveries, transporting goods and services to taking employees to and from the airport. The uses are limitless.
4. The Ansari X is another technological innovation competition focusing on spacecraft. To win the $10 million Ansari X Prize, a private spacecraft had to be the first to carry the weight equivalent of three people to an altitude of miles twice within two weeks. SpaceShipOne, a privately built spacecraft, won the $10 million Ansari X Prize on October 4, Describe the potential business impacts of the Ansari X competition.
Space travel is the next exciting frontier. Business impacts could range from vacation trips to the moon to picking up space materials for the production of goods and services. The competition could also inspire other types of competition such as underwater houses and personal flying machines.