MBA 601

Business Information System

Department of Management
Admas University
Decision Support In Business

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 Content
 Introduction
 Barriers to good decision making
 Trends in Information System
 Types of Information System
g Transaction Processing Systems
g Decision Support Systems
g Executive information
g Expert Systems
 The Role of e-Business in Business

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 Introduction
 Business decisions are increasingly difficult to make
 Dramatic increase in the internal business data available to
managers
 Globalization
 The speed of commerce
 The increased number of business choices available
 Group decision making
 Teams may include members from many companies
 Members may have different backgrounds and opinions
 Difficult to reach consensus

 Levels of managerial decision making: strategic

management, tactical management, and operational
management

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 Barriers to Good Decision Making
 1. Human cognition
 Our mental ability to comprehend and understand something
 2. Human perception
 Difficulty isolating problems
 Tend to think of only narrow range of possible solution
 3. Human bias
 Tendency to shape responses based on stereotypes, memory, and
current position
 4. How to overcome the barriers?
 Use information systems that support the diverse information and
decision-making needs of managers and business professionals.

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Trends in Information System

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Types of Information System

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 A. Types of Operations Support
Systems
1. Transaction Processing Systems
 Record and process data from business transactions
 Are designed to process day to day and routine transactions
efficiently and accurately.
Examples: sales processing, inventory systems, accounting
systems
TPS processing transaction into two ways:-
A. Batch Processing:- Data is accumulated over a period time and
processed periodically. E.g. a bank processes all checks received in a
batch at night
B. Real Time Processing: Data is immediately processed after a
transaction occurs.
E.g. 1: Sales and Inventory Processing
E.g. 2 transfers funds from a customer’s bank account to a retail outlet’s
account after scanning a customer’s debit card.

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Types of Operations Support Systems
2. Process Control Systems
 Monitor and control physical processes
Example:
 in a petroleum refinery use sensors to monitor chemical processes
 power generation and steel production systems

3. Enterprise Collaboration Systems

 Enhance team and work group communications
Examples: e-mail, chat, and videoconferencing

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 B. Types of Management Support
Systems
1. Management Information Systems (MIS)
 Provide information in the form of reports and displays to managers
 MIS summarize and report on the company’s basic operations
using data supplied by transaction processing systems.
Example: daily sales analysis reports
2. Decision Support Systems (DSS)
 Provide interactive ad hoc support for decision making
 Although DSS use internal information from TPS and MIS, they
often bring in information from external sources, such as current
stock prices or product prices of competitors.
Example: A production manager may use a DSS to decide how much
product to manufacture, based on the expected sales associated with
a future promotion and the location and availability of the raw
materials necessary to manufacture the product.

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 Cont’d

HOW MANAGEMENT INFORMATION SYSTEMS OBTAIN THEIR DATA

FROM THE ORGANIZATION’S TPS

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Cont’d

SAMPLE MIS REPORT

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 Cont’d
3.Executive Information Systems (EIS)
g An Information System that provides Strategic information
tailored to the needs of executives and other decision makers
(top management).
 It gathers, analyses and summarizes the key internal(from
MIS and DSS) and external information(e.g. new tax laws or
competitors) used in the business.
g It provides top management with immediate and easy access
to select information about key factors that are critical to
organizational strategic objectives.
g E.g. The top level executives may use the touch screen to
instantly view text and graphics that display the key areas of the
organization.

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 Cont’d

Dundas Data Visualization’s

digital dashboard delivers
comprehensive and accurate
information for decision
making. The graphical
overview of key performance
indicators helps managers
quickly spot areas that need
attention.

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 Operational or Management Systems
 Expert Systems
 Provide expert advice
Example: credit application advisor
 Knowledge Management Systems
 Support creation, organization and dissemination of business
knowledge throughout company
Example: Intranet access to best business practices

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 Classifications of IS by scope
 1. Functional business systems
 Focus on operational and managerial applications of basic
business functions
Examples: support accounting, finance or marketing
 2. Strategic information systems
 apply information technology to a firm’s products, services, or
business processes to help it gain a strategic advantage over
its competitors.
Examples: shipment tracking, e-commerce web systems
 3. Cross-functional information systems
 Systems that are combinations of several types of information
systems
 Provide support for many functions

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 The Role of e-Business in Business
 The Internet and related technologies and applications have
changed the ways businesses operate and people work, as well
as how information systems support business processes,
decision making, and competitive advantage.
 E-Business:
 Use of digital technology and the Internet to execute the major
business processes in the enterprise. E-business includes activities
for the internal management of the firm and for coordination with
suppliers and other business partners.
 companies rely on e-business applications to:
 reengineer internal business processes,
 implement e-commerce systems with their customers and
suppliers, and
 promote enterprise collaboration among business teams and
workgroups.

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e-business applications
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 Cont’d
 Enterprise Collaboration Systems:
 Support communication, coordination, and collaboration
among networked teams/workgroups.
 E-Commerce:
 Is the part of e-business that deals with buying, selling,
marketing and servicing products, services, and information
over computer networks.

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E-commerce: Digital Markets,
Digital Goods
 E-commerce is about digitally enabled commercial
transactions between and among organizations and
individuals.
 E-commerce began in 1995 when Netscape.com
accepted the first ads
 What makes E-commerce different?
 Ubiquity - available just about everywhere, at all times
 Global reach - the technology reaches across national
boundaries, around the Earth
 Richness - Video, audio, and text messages are possible

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 Cont’d
 Information Density. The technology reduces information costs and
raises quality
 Information processing, storage, and communication costs drop
dramatically, whereas currency, accuracy, and timeliness improve greatly.
Information becomes plentiful, cheap, and more accurate.
 Personalization/Customization. The technology allows personalized
messages to be delivered to individuals as well as groups
 Social technology. User content generation and social networking.
 Allow users to create and share content with their personal friends

 Allows manufactures to sell directly to the consumer

 Eliminate intermediaries - can significantly lower costs(in a
traditional distribution channel, a product may have to be priced as
high as 135 percent of its original cost)
 Companies are able to raise profits while charging lower prices
 Digital goods are goods that can be delivered over a digital
network. E.g. Music, movie, newspaper, books

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 Cont’d

THE BENEFITS OF DISINTERMEDIATION TO THE CONSUMER

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 Types of E-commerce
 Based on nature of the participants in the electronic
commerce transaction:
 Business-to-consumer (B2C) e-commerce involves retailing
products and services to individual shoppers.
 Business-to-business (B2B) e-commerce involves sales of
goods and services among businesses.
 Consumer-to-consumer (C2C) e-commerce involves
consumers(as well as business) selling directly to consumers.
E.g. eBay

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 E-commerce Revenue Model
 Advertising Revenue Model
 Sales Revenue Model E.g. Amazon
 Subscription Revenue Model E.g. Netflix, The Wall
Street Journal, Microsoft’s Xboxlive.com (video
games), etc
 Free/Freemium Revenue Model - offer basic services
or content for free, while charging a premium for
advanced or special features
 One problem with this model is converting people from being
“free loaders” into paying customers. “Free” can be a powerful
model for losing money.
 Transaction Fee Revenue Model E.g. eBay
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