Part 1: MIS and You

Chapter 2

Business Processes and

Decision Making

Copyright 2016 Pearson Canada Inc.

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 Running Case
Josie is helping his grandparents with
running their coffee shop
His grandparents are worried about franchise
while Josie is thinking of competitive
advantage
There is idea of introducing Internet service
to the coffee shop
Josies grandparents seek to understand the
benefits of Wi-Fi

Copyright 2016 Pearson Canada Inc. 2-2

 Study Questions
1. How did this stuff get here?
2. What is a business process?
3. What are the components of a business process?
4. What is information?
5. What is the role of information in business
processes?
6. How do information systems support business
processes?
7. How do information systems support decision
making?
8. What is your role?
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How did this stuff get here?
Business processes must work together
Each business must
Obtain payment
Cover costs
Make profit
A cup of coffee and a muffin at the Tim Hortons
Ordering
Receiving
Storing
Paying

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 What is a business process?
A business process is a series of activities,
tasks or steps designed to produce a product
or service
The example of business process includes
sales, purchasing, and inventory
management processes
These elements are often considered part of
an overall supply chain for an organization

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 Business System
A business process is a system, and
sometimes business processes are also
referred to as business systems

Examples:
inventory management processes
manufacturing processes
sales processes
customer support processes

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Model of an Inventory Management
Business Process

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 What are the components of a business
process?

A business process consists of:

Activities
Resources
Facilities
Information

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 Activities
Activities transform resources and
information of one type into resources and
information of another type
Follow rules and procedures
Can be manual, automated, or combination
Example:
Payment (activity) transforms quantity received
(information) and shipping invoice (information)
into supplier payment (resource)

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 Resources
Resources are items of value
Can be external to organization
Examples:
Cash
Workers
Customers
Suppliers

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Facilities
Facilities are structures used within the
business process
Resources can be stored within facilities
Examples:
Factories
Equipment
Inventories
Databases

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Information
Information is the fourth element of a
business process
Activities use information to determine how to
transform the inputs received into the outputs
produced
Business processes create information

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What is information?
Knowledge derived from data
Data presented in a meaningful context
Processed data
Processed by summing, ordering, averaging,
grouping, comparing, or other similar operations
A difference that makes a difference
If you get new information and it does not make a
difference to your decision, is what you received
really information?

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Data
Recorded facts or figures

Not meaningful on its own

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Characteristics of Good Information

Accurate
Correct and complete
Crucial for management
Cross-check information to ensure accuracy
Timely
Produced in time for intended use
Relevant
To context
To subject

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Characteristics of Good Information ,
continued

Just Barely Sufficient

Sufficient for purpose for which generated
Do not need additional, extraneous information
Knowing what information to ignore is difficult
Worth Its Cost
Relationship between cost and value
Information systems cost money to develop,
maintain, and use
Must be worth the cost

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 What is the role of information in business
processes?
Business process of moving actual goods and
providing services to real people
Data and information are always created
For any physical flow, there is potential to capture a
flow of information
For any flows of service, there is potential flow of
data and information
Business process generates information
Brings together important items of data in a context

Information is useful to manage business

processes
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 Business Process Management (BPM)

A field of management that promotes the

development of effective and efficient
processes through continuous improvement
and innovation
Methods of BPM
Total Quality Management (TQM)
Six Sigma
Lean Production
Information about the process helps to better
manage the process itself
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 How do information systems support
business processes?

Used by activities in a business process

Several activities may use one system
Activity may have own system
Activity may use several systems

Systems designers determine relationship of

activities to information systems
Relationship determined during systems analysis

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 What Does It Mean to Automate a Process
Activity?

The outermost components of information

system, hardware and people, are both
actors; they can take actions
The software and procedure components are
both sets of instructions: software is
instructions for hardware, and procedures are
instructions for people
Finally, data is the bridge between the
computer side on the left and the human side
on the right
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 Characteristics of the Five Components

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Automation of Process Activity
Automation of processes
Transfer work done by people to computers
People follow procedures
Computers follow software instructions

Moving work from human side to computer

side

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 Information System Supporting Counter
Sales

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 Information System Supporting Counter
Sales, continued

Fully automated
Cashiers do not require extensive training
Cashiers are trained only in how to use cash
register
Cashiers do not work directly with programs on
computer
Computer in cash register communicates
with computer that hosts Inventory Database
Programs record sales and makes changes

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 Information System to
Support Payment

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 Information System to Support Payment,
continued

Payment receives Quantity Received and

Shipping Invoice and produces Supplier
Payment

Mostly manual
Accounts Payable Clerk reads documents and
issues payment or investigates discrepancies
Processing exceptions complicated
Programming expensive
Probably not effective

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Information System to Support Purchasing

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Information System to Support Purchasing,
continued

Purchasing clerk computer runs program that

queries database and identifies stock levels
and generates Purchase Order

Designers balanced work between

automation and manual activity
Searching database is repetitive
Automated process
Selecting suppliers is complicated
Manual process

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 How do information systems support
decision making?

Data are an important part of any information

system
Data can be transformed into information
Information is an important starting point for
decision making in many organizations
IS support decision making by providing the
informationthe raw materialfor many
decisions
Decision making in organization is varied and
complex
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Decisions Vary by Level
Operational decisions concern day-to-day
activities
Supported by transaction processing systems
(TPS)
Managerial decisions concern the allocation
and utilization of resources
Supported by management information systems
(MIS)
Strategic decisions concern broader-scope,
organizational issues

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Decisions Vary by Structure
A structured decision is one for which there
is an understood and accepted method for
making the decision
An unstructured decision process is one for
which there is no agreed-on decision-making
method
Note: terms structured and unstructured refer
to the decision process/method, not to the
underlying subject/problem
Example of Structured - weather forecasting
Example of Unstructured weather itself

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Supporting Decision Making

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Decision-Making Steps

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What is your role?
You are part of every information system
(people)

Remember the five components of IS

Most important component of IS - people

Must be able to use information system
Quality of your thinking

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MIS in Use

Helm: Software Making Waves

Several years of work with tugboat
companies resulted in developing HELM
Marine Operations Software to automate
several manual business processes in this
industry
The hardware and software are used to save
time for the dispatchers, captains, and
accounting staff

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MIS in Use Questions

1. What are the primary benefits realized by

the use of HELM software?
2. Could HELM also result in increased
revenue? Explain your answer.
3. Can you think of other benefits that might
arise from the use of the software? For
example, it is hard to find experienced
dispatchers in the industry. Could the
system help meet this challenge?

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What Do YOU Think?

Your Personal Competitive Advantage

Create a list of skills that set you apart from the
competition
Get on the internet and find examples of the use
of IS in the industry you are interested in
Develop a working relationship co-op or
internship
Start networking with your students in your class
Search the web to find out what job
opportunities are available in other cities,
regions, and countries

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 What Do YOU Think?

1. Summarize the efforts you have taken thus

far to build an employment record that will
lead to job offers after graduation.
2. Describe one way in which you have a
competitive advantage over your
classmates. If you do not have such
competitive advantage, describe actions you
can take to obtain one.

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 What Do YOU Think?
3. To build your network, you can use your status as a
student to approach business professionals. That
is, you can contact them for help with an
assignment or for career guidance. For example,
suppose you want to work in banking and you know
that your local bank has a customer information
system. You could call the bank manager and ask
him or her how that system creates a competitive
advantage for the bank. Also, you could ask to
interview other employees. Describe two specific
ways in which you can use your status as a student
to build your network in this way.
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 What Do YOU Think?

4. Describe two ways you can use student

alliances to obtain a job. How can you use
information systems to build, maintain, and
operate such alliances?

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