Textbook Notes (362,820)
Canada (158,064)
ITM 102 (293)
Chapter 2

Chapter 2- Textbook Notes.docx

11 Pages
Unlock Document

Ryerson University
Information Technology Management
ITM 102

Chapter 2 – Decision Making and Business Processes 2.1 Decision making and information systems D ECISIONM AKING - The more information a business acquires, the more difficult it becomes to make decisions - Today, there is massive volumes of available information so it’s impossible to make decisions without aid of information systems o Dependence on information systems to make decisions is growing and will continue to grow - Value of information is the ability to lower a company’s handicap - A typical organization is similar to a pyramid with 3 different level: o Operational o Managerial o Strategic Operational - Employees develop, control and maintain core business activities require to run day-to- day operations - Structured decision o Established processes offer potential solutions o Made frequently o Repetitive in nature o Affects short term business strategies o Ex: reordering, creating employee staffing, weekly production schedules Managerial - Cover short and medium range plans, schedules and budgets, along with policies, procedures, and business objectives for the firm - Allocate resources and monitor the performance of organizational sub-units - Semi-structured decisions o Occur in situations in which a few establishes processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision o Ex: decisions about producing new products, changing employee benefits range Strategic - Develop overall business strategies, goals and objectives here - Highly unstructured decisions o No procedures or rules exist to guide decision makers towards correct choice o Infrequent, and extremely important o Long-term business strategy o Ex: decision to enter a new market or even a new industry TRANSACTIONAL DATA AND ANALYTICAL INFORMATION - Need to understand how organizations use data and information to make decisions - Need to understand difference between transactional data and analytical information - Transactional data: o all the raw facts contained within a single business process or unit of work o purpose is to support performing daily operational tasks o organizations use transactional data when performing operational tasks and routine decisions - analytical information: o all summarized or aggregated transactional data o purpose to support performing analysis tasks o analytical info includes external info - two different types of processing occur in an organization with respect to transactional data and analytical information: online transaction processing and online analytical processing - online transaction processing: OLTP o Operational level o Capturing of transactions and event data using information systems  1. Process the data according to defined business rules  2. Store the data  3. Update existing data to reflect the new data entered o During OLTP, every detail must be captured o Working with more “fine” information - online analytical processing : OLAP o the analysis of summarized or aggregated information sourced from transaction processing systems data and sometimes external info o Managerial and strategic level o Deals less with raw transactional detail and more with meaningful aggregations of data o Data given context, becomes meaningful, and is turned into information o Working with more “coarse” information o Buisness intelligence: broad generic term describing information that people use to support their analytical and strategic decision-making efforts  Capabilities associated with OLAP Include: • Consolidation • Drill-Down • Slice and Dice M EASURING D ECISIONS UCCESS - Key performance indicators (KPIs) o Measures tied to business drivers. Metrics are the detailed measures that feed those KPIs Efficiency and Effectiveness Metrics - Organizations spend soooo much money on IS. To justify this, an organization must measure the payoff of these investments, their impact on business performance, and the overall business value gained - Efficiency and Effectiveness metrics are 2 primary types of metrics o Efficiency IS metrics  Measure the performance of the IS itself such as throughput, speed and availability  Doing things right- getting the most from resources o Effectiveness IS metrics  Measure the impact IS has on business processes and activities including customer satisfaction, conversion rates, and sell-through increases  Do the right thing- setting the right goals and objectives and ensuring they are accomplished - Efficiency focuses how well organizations is using its resources and effectiveness is how well an organization is achieving its goals and objectives Benchmarking­ baseline metrics - Benchmarks: baseline values the system seeks to attain - Benchmarking: process of continuously measuring system results, comparing those results to optimal system performance (benchmark values) and identifying steps and procedures to improve system performance Common types of efficiency IS metrics: - Throughput - Transaction speed - System availability - Web traffic - Response time Common types of effectiveness IS metrics - Usability - Customer satisfaction - Conversion rates - Financial - The interrelationships between efficiency and effectiveness graph o Ideally, an organization should operate in upper right-hand corner of the graph o However, operating in upper left hand corner or lower right hand corner may be in line with an organizations strategy o Don’t want to be in lower left hand corner for any organization TPS, DSS, AND EIS - Where does the information to make decisions and measure performance come from? - Comes from 3 major classes of information systems found in organization: o TPS – Transaction processing systems o DSS- decision support systems o EIS- executive information systems TPS: - Basic business system - Serves operational level in an organization - Ex: payroll system, order-entry system DSS: - Models data and information to support managers, analysts and other business professionals during the decision-making process for more analytical purposes - 3 quantitative models often used by DSS : o Sensitivity analysis  Study of impact that changes in one part of the model have on other parts of the model o What-if analysis  Checking the impact of a change in an assumption on the proposed solution o Goal-seeking analysis  Finding the inputs necessary to achieve a goal such as a desired level of output EIS - Specialized DSS - Support senior-level executives within the organization - Differs from DSS because it connects information from external sources as well as information from internal data sources - Contains primarily very coarse information and is used for strategic purposes o Digital dashboards is a common feature of EIS
More Less

Related notes for ITM 102

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.