Lecture 9: ICT in Business Decision-Making
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Questions and Answers

Which type of decision requires judgment, evaluation, and insight from the decision maker?

  • Semistructured decisions
  • Routine decisions
  • Structured decisions
  • Unstructured decisions (correct)

    • Structured decisions are repetitive and do not follow a definite procedure.

    False

    What is the primary benefit of improved decision making in a business context?

    Adding large annual value through improved small decisions.

    A decision is termed ________ when only part of the problem has a clear-cut answer provided by an accepted procedure.

    <p>semistructured</p> Signup and view all the answers

    Match the type of decision with its description:

    <p>Unstructured = Judgment and insight required Structured = Definite procedure followed Semistructured = Partially predefined answers</p> Signup and view all the answers

    What type of decisions do senior managers primarily make?

    <p>Unstructured decisions</p> Signup and view all the answers

    Operational managers make both structured and unstructured decisions.

    <p>False</p> Signup and view all the answers

    List the stages in the decision-making process.

    <p>Intelligence, Design, Choice, Implementation</p> Signup and view all the answers

    The _____ model of management includes five functions: planning, organizing, coordinating, deciding, and controlling.

    <p>classical</p> Signup and view all the answers

    Match the managerial roles with their corresponding descriptions:

    <p>Figurehead = Interpersonal role that represents the organization Nerve center = Informational role serving as the central communication point Entrepreneur = Decisional role focused on initiating change Liaison = Interpersonal role connecting the organization with external parties</p> Signup and view all the answers

    Which of the following is NOT a reason why investments in IT may fail to produce positive results?

    <p>Organizational efficiency</p> Signup and view all the answers

    High-velocity automated decision-making involves putting humans in the center of decision processes.

    <p>False</p> Signup and view all the answers

    What are the three main reasons why investments in IT do not always yield positive results?

    <p>Information quality, management filters, organizational inertia and politics</p> Signup and view all the answers

    What is the primary function of the Internet of Things (IoT) in predictive maintenance?

    <p>To collect data from various sensors and devices</p> Signup and view all the answers

    Geographic Information Systems (GIS) cannot be used to improve disaster response times.

    <p>False</p> Signup and view all the answers

    Which of the following is NOT a component of the business intelligence infrastructure?

    <p>Customer Relationship Management (CRM)</p> Signup and view all the answers

    What are the four dimensions measured by the Balanced Scorecard method?

    <p>Financial, Business process, Customer, Learning and growth</p> Signup and view all the answers

    Predictive analytics uses historical data to predict future trends and behaviors.

    <p>True</p> Signup and view all the answers

    Land O’Lakes uses geographic information data to manage its ______ strategically.

    <p>assets</p> Signup and view all the answers

    What is the primary purpose of business intelligence systems?

    <p>To deliver accurate real-time information to decision makers.</p> Signup and view all the answers

    Match the terms with their descriptions:

    <p>Sensitivity Analysis = Examines how changes in input variables affect outcomes OLAP = Facilitates multidimensional analysis of data Predictive Maintenance = Uses IoT and analytics to predict equipment failures Balanced Scorecard = Measures organizational performance across four dimensions</p> Signup and view all the answers

    The process of analyzing past data trends to predict future behaviors is known as __________.

    <p>predictive analytics</p> Signup and view all the answers

    Which of the following is NOT a benefit of using Decision Support Systems (DSS)?

    <p>Imposes strict decision-making processes</p> Signup and view all the answers

    Business Performance Management (BPM) connects a firm’s strategies to operational targets.

    <p>True</p> Signup and view all the answers

    Match each business functional area with its relevant production reports:

    <p>Sales = Forecast sales Service/call center = Customer satisfaction Marketing = Campaign effectiveness Financials = General ledger</p> Signup and view all the answers

    Give an example of how predictive maintenance could be used in the transportation industry.

    <p>Monitoring vehicle conditions to predict maintenance needs before breakdowns occur.</p> Signup and view all the answers

    Which of the following best describes operational intelligence?

    <p>Monitoring real-time business operations</p> Signup and view all the answers

    Big data analytics is used exclusively for financial reporting.

    <p>False</p> Signup and view all the answers

    Name one analytic functionality of BI systems.

    <p>Dashboards/scorecards.</p> Signup and view all the answers

    Data visualization tools are part of the __________ in the business intelligence environment.

    <p>user interface</p> Signup and view all the answers

    Which technology is often associated with big data analytics?

    <p>Internet of Things (IoT)</p> Signup and view all the answers

    Study Notes

    Lecture 9: BHMS4472 ICT in Business

    • ICT stands for Information, Communication, and Technology
    • The lecture focuses on enhancing decision-making using information systems
    • Learning objectives include understanding different decision types, information systems support, business intelligence and analytics, and different decision-making constituencies in an organization.

    What Are the Different Types of Decisions, and How Does the Decision-Making Process Work?

    • Improved decision-making is valuable to businesses, as hundreds of thousands of small decisions impact annual value.
    • Decision types:
      • Unstructured: Decision makers use judgments, evaluations, and insights to solve problems.
      • Structured: Repetitive and routine decisions follow established procedures.
      • Semistructured: A portion of the problem involves clear answers from accepted processes.
    • Decision-making levels:
      • Senior managers: Make many unstructured decisions.
      • Middle managers: Make structured decisions, sometimes with component unstructured elements.
      • Operational managers and employees: Make mainly structured decisions.

    Information Requirements of Key Decision-Making Groups in a Firm

    • A hierarchical structure illustrates information needs at different management levels, progressing from unstructured decisions at the senior level to structured decisions at the operational level.
    • Senior management: Decisions involve high-level strategic planning, market entry/exit, and budget approvals.
    • Middle management: Decisions focus on tactical planning, marketing campaigns, and departmental budgets.
    • Operational management: Decisions involve routine tasks, order fulfillment, and re-stocking.

    The Decision-Making Process

    • The decision-making process comprises four stages:
      • Intelligence: Discovering, identifying, and understanding problems in the organization.
      • Design: Identifying and exploring solutions to the problem.
      • Choice: Choosing the best solution among alternatives.
      • Implementation: Implementing the chosen solution and monitoring its effectiveness.

    Managerial Roles

    • Information systems can assist in various managerial roles, though not all.
    • Classical management models involve five functions: planning, organizing, coordinating, deciding, and controlling.
    • Contemporary models show more informal, reactive, and less organized manager behavior compared to the classical models.

    Mintzberg's 10 Managerial Roles

    • Interpersonal roles include figurehead, leader, and liaison.
    • Informational roles include nerve center, disseminator, and spokesperson.
    • Decisional roles include entrepreneur, disturbance handler, resource allocator, and negotiator.

    Real-World Decision Making

    • Three factors hinder IT investment success:
      • Poor information quality: High-quality information is needed for high-quality decisions.
      • Management filters: Managers often use biases and prior conceptions to filter information.
      • Organizational inertia and politics: Organizational structures and politics resist decisions requiring huge changes.

    High-Velocity Automated Decision Making

    • Computer algorithms define precise steps for structured decisions, eliminating human input.
    • Examples include high-speed trading programs, with transactions occurring in nanoseconds.
    • Safeguards are crucial for proper operation and regulation.

    What is Business Intelligence?

    • Business intelligence provides infrastructure for collecting, storing, and analyzing business data.
    • It uses databases, data warehouses, data marts, Hadoop, and analytical platforms.
    • Business analytics utilize tools and techniques for data analysis, including OLAP, statistics, models, and data mining.
    • Business intelligence vendors create and sell BI and analytics tools

    The Business Intelligence Environment

    • The BI environment consists of six elements:
      • Data from the business environment.
      • Business intelligence infrastructure.
      • Business analytics toolset.
      • Managerial users and methods.
      • Delivery platform (MIS, DSS, ESS).
      • User interface (including data visualization tools).

    Business Intelligence and Analytics for Decision Support

    • Business intelligence infrastructure collects data, including call centers, online data, mobile devices, and supplier data.
    • Analytics tools analyze data, including modeling, data mining, OLAP, and reports.
    • Managerial methods include strategy implementation, performance measurement, and forecasting.

    Business Intelligence and Analytics Capabilities

    • BI aims to provide real-time, accurate information to decision-makers.
    • Main functions include production reports, parameterized reports, dashboards/scorecards, ad hoc queries, drill-down, forecasts, and scenarios.

    Examples of Business Intelligence Predefined Production Reports

    • Various business areas, including sales, service, marketing, procurement, supply chain, financials, and human resources, use reports to provide insights.
    • Specific areas, like sales, offer forecasting, cross-selling, sales cycle time, and customer satisfaction insights.

    Predictive Analytics

    • Predictive analytics uses various data sources and techniques to predict future patterns and trends.
    • Includes statistical analysis, data mining, and historical data integration, and incorporated in applications for sales, marketing, finance, fraud detection, and healthcare (including credit scoring)
    • Used to predict responses to direct marketing campaigns.

    Big Data Analytics

    • Big data involves massive datasets collected from diverse sources, like social media, online stores, and in-store interactions.
    • Enables real-time, personalized shopping experiences for major online retail stores.
    • Applications include the use of location data and public records for smart cities for data monitoring.

    Operational Intelligence and Analytics

    • Operational intelligence focuses on monitoring business activity and utilizes sensor data.
    • The Internet of Things (IoT) enables devices to collect vast streams of data, and software tools enable businesses to analyze it.

    Interactive Session: Organizations: Predictive Maintenance in the Oil and Gas Industry

    • The interactive session discusses the importance of predictive maintenance in the oil and gas industry, problems it solves, IoT and Big Data analytics role, BP and Royal Dutch Shell's predictive maintenance applications, and other industry examples.

    Location Analytics and Geographic Information Systems

    • Location analytics uses location data for business insights.
    • Mobile phones, sensors, and scanning devices collect location data and provide insights to local governments.
    • Geographic Information Systems (GIS) ties location data to maps, helping calculate response times to disasters.

    Interactive Session: Management: GIS Helps Land O'Lakes Manage Assets Strategically

    • This interactive session details the importance of geographic location data for Land O'Lakes, categories of geographic information utilized, the improvement of operations and decision-making through GIS, and example decisions enhanced by GIS use.

    Decisional Support for Operational and Middle Management

    • Operational and middle management are responsible for monitoring business activities and using well-structured decision-support systems.
    • Management Information Systems (MIS) are crucial for reporting and analysis and play an increasingly important role in online reporting.
    • Exception reports highlight deviations from normal patterns.

    Business Intelligence Users

    • BI users are categorized into power users (20% of employees, including IT developers), super users, business analysts, and analytical modelers. Casual users (80%) include customers, operational employees, and so on.
    • Users access and utilize various capabilities, like production reports, parameterized reports, dashboards/scorecards, ad hoc queries, and forecasts.

    Support for Semi-structured Decisions

    • Decision support systems (DSS) help in semi-structured decision making using analytical models.
    • DSS allows "what-if" analysis and sensitivity analysis, backward sensitivity analysis, multidimensional analysis, and OLAP are all included in the toolkit. – Pivot tables are a common tool.

    Sensitivity Analysis

    • A decision-making technique analyzing change in variables, like the impact of varying a price on profit margins.
    • Relevant variables (like total fixed costs, unit variable costs, average sale price, contribution margin, and break-even point) are used to construct a table, which displays the results of these changes.

    A Pivot Table That Examines Customer Regional Distribution and Advertising Source

    • Pivot tables allow complex statistical analysis of spreadsheet data to answer business questions. Data is categorized and analyzed, allowing summarization of trends or patterns that would otherwise be hard to discern in a more large format spread sheet.

    Decision Support for Senior Management: Balanced Scorecard and Enterprise Performance Management Methods

    • Executive support systems (ESS) focus senior management on crucial performance information.
    • A balanced scorecard analyzes performance from four perspectives: financial, business processes, customer, and learning and growth.
    • Key performance indicators (KPIs) measure these dimensions.
    • A balanced scorecard framework demonstrates links between strategy and metrics and performance targets.

    The Balanced Scorecard Framework

    • Links corporate strategy with performance measurement and targets.
    • Includes financial, customer, internal business processes, and learning/growth dimensions.

    Decision Support for Senior Management (BPM)

    • Business performance management (BPM) translates firm strategies into operational targets and uses KPIs to track progress.
    • Data sources include internal enterprise applications and external financial databases.
    • Drill-down capabilities provide deeper analysis.

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    Description

    This quiz explores the role of Information, Communication, and Technology in enhancing business decision-making. It covers various types of decisions, the decision-making process, and the significance of information systems in supporting managerial levels. Test your understanding of structured, semistructured, and unstructured decisions in a business context.

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