Chapter 8 Models and Decision Support The Strategic Management of Information Technology

Chapter 8Chapter 8Models and Decision SupportModels and Decision Support

The StrategicManagement of

InformationTechnology

Transaction Processing Transaction Processing SystemSystem

Input OutputProcess

Information

Communication

Systems Development

Software Design

ModelModel Specific Way of Looking at the World

– specific and concrete– mathematical equations– subjective descriptions– financial models– consumer models– management models

Assist in Understanding More Complex Issues– enable comparison between model and actual results

Some Processes Defy Modeling– Too much variability or complexity

Uses of ModelsUses of Models

Optimization Prediction Description Simulation

Dangers of ModelsDangers of Models

Number of Alternatives Expense Time Difficulty to Mirror Reality

Biases in Decision-MakingBiases in Decision-Making

Acquisition (input) Processing Output Feedback

Re-EngineeringRe-Engineering

Analyze and Model the Entire Company Make Major Changes to the Operation

of the Business Small Changes over Time can Actually

cause a business to be misaligned with its Target

Object-Oriented ModelsObject-Oriented Models Specify Attributes and Functions of Each Object

– Add New Attributes to Portray Actual Movement Capacity Time Required to Complete a Job Cost

Physical Objects– Customer– Order Entry Department– Inventory– Shipping

Data Objects– Purchase Orders– Routing Slips– Parts Lists– Shipping Schedules– Invoices

Operations ProblemsOperations Problems

Operations Problems– Well-Defined, Easy to Solve– Transaction Processing Systems Collect

the Data– Decision Affects Business for a Day or Two

Decision Support SystemsDecision Support Systems Database

– Collects Model

– Evaluates

– Model should Directly Access Database

– Different Brands of Software are Used for Each Component

Output

– Produces

– Graphs

Input and Output VariablesInput and Output Variables Input Variables

– To Receive Data

– Quantities of Raw Materials

– Labor Hours

– Money Invested in Capital Equipment

– Identified by Statistical Techniques Process Data Output Variables

– Profit

– Quantity Produced

– Quality Ratings

Software and ModelsSoftware and Models

Generic Modeling Tools SPSS or SAS Decision Support System Database Management System Spreadsheets

GroupWareGroupWare

Group Decision Support System Lotus Notes Executive Information System

– connected to transaction processing system

Enterprise WideEnterprise WideDecision Support SystemsDecision Support Systems

Data Warehouse– focuses on single large server or mainframe that

provides consolidation point for enterprise data from diverse production systems

– architecture, usually based on relational database management system, used to maintain historical data that has been extracted from the operational data store

Data Mart– focuses exclusively on serving a distinct community

of knowledge workers

Steps to a Data WarehouseSteps to a Data Warehouse Determine needs of end users and model data that the data

warehouse should contain Identify necessary data sources from among the many corporate

data sources Analyze corporate data sources in depth, documenting functions and

processes Use information about corporate data sources to decide the

transformation/integration logic Develop the metadata, which identifies the source data, describes

the transformation and integration, and defines the data model Construct the physical data-warehouse database; populate

Warehouse from various sources Generate necessary end-user applications

Data WarehouseData Warehouse

Not Repositories for all Corporate Data Not Separate, Read-Only Data Stores Do not Require Relational Databases Not always big

Four Processes for the Delivery Four Processes for the Delivery of Decision Support Dataof Decision Support Data

Extract all data relevant to the business decision-making processes of groups of knowledge workers for the specific production systems responsible for capturing that information.

Store the resulting data sets in one location: the data warehouse.

Develop a unique cut or series of cuts of the data warehouse for each knowledge worker community.

Supply the decision-support tools appropriate to the knowledge workers’ style of computing.

OODBMS

An object oriented database management system, (OODBMS), is the integration of the object oriented paradigm and database management systems.

OODBMS The integration of the object oriented

paradigm and database management systems:– In programming languages, where the object

oriented concepts evolved from encapsulation and information hiding of abstract data types.

– In artificial intelligence within Minksy’s “frame” concept in knowledge representation.

– In databases, where research in semantic data models led to object oriented concepts.

Objects and Classes Each real world entity is modeled by an

“object.” Each object has existence independent of its value and is assigned an object identifier, (concept of “object identity”). Each object has a set of instance attributes (instance variables) and methods. Flow control in object oriented systems comes from sending messages between objects. Data abstraction prevents an object’s data from being directly manipulated.

ClassesClassesClass Inheritance: A “class” is a group of objects that share the

same structure and behavior.

Overloading: In overloading the same operator is allowed

to present multiple operations on different data types.

Overriding: An operation of most general type is defined

in the hierarchy lattice, but redefined in some subclasses, overriding the default inheritance of the general type.

– The integration of the object oriented paradigm and database management systems:

– First, in programming languages, where the object oriented concepts evolved from encapsulation and information hiding of abstract data types.

– Then, in artificial intelligence with Minksy’s “frame” concept in knowledge representation.

– Lastly, in databases, where research in semantic data models led to object oriented concepts.

Object-Oriented Database Management System

Class Inheritance: A “class” is a group of objects that share the

same structure and behavior.

Overloading: In overloading the same operator is allowed

to present multiple operations on different data types.

Overriding: An operation of most general type is defined

in the hierarchy lattice, but redefined in some subclasses, overriding the default inheritance of the general type.

Management Processes

Feedback

• Long feedback cycles•Limited understanding of relationships among measures•Sequential & functional •Incomplete feedback; limited to no feedforward

Personnel Control Action Control Results Control

• Rigid contracts with suppliers•Rigid job descriptions, hiring criteria & standardized performance appraisals for employees

•Process & job segmentation•Rigid procedures & policies•Direct supervision

•Primarily financial •Internally oriented•Functional

Management ProcessesFeedback

•Short feedback cycles•Relationships among measures preserved•Interactive & interfunctional

Process ControlInformation-Enabled•Process & work integration•Real-time access to a broad set of process performance•Interfunctional & interorganizational measuresBoundaries and Values•Clearly defined and communicated•Consistently enforced•Early warning systems •Action control for high risk operations

Output Control

•Broad set of internal & external measures•Benchmarking•Interfunctional & interorganizational

Feedforward

•Improved understanding of relationships among inputs, process, and outputs•Predictive models/causal models•Interactive scenario planning

Input Control(includes Personnel Control)

•Supplier certification•Employee certification (advanced degrees, professional) & performance monitoring•Formal business intelligence systems

Management ProcessesFeedback

•Short feedback cycles•Relationships among measures preserved•Interactive & interfunctional

Process ControlInformation-Enabled•Process & work integration•Real-time access to a broad set of process performance•Interfunctional & interorganizational measuresBoundaries and Values•Clearly defined and communicated•Consistently enforced•Early warning systems •Action control for high risk operations

Output Control

•Broad set of internal & external measures•Benchmarking•Interfunctional & interorganizational

Feedforward

•Improved understanding of relationships among inputs, process, and outputs•Predictive models/causal models•Interactive scenario planning

Defining Direction Executing and Adapting Sustaining Value

Environmental context and resources

Purpose, core values, and core competencies

Strategy

Organizational context, resources,

and leadership

Coordinating mechanisms

Units, groupings

Incentives

Formal and informal power

Authority

Information

Boundary systems

Management processes

Operating processes

People

Technology

Work

Control

Values and Behavior

Process Performance •Time •Quality•Cost•Flexibility•Innovation potentialStakeholder Satisfaction•Employees/partners•Customers•Shareholders•SocietyBenchmarks•Best of class•Best of breed•ReputationOther•Sustainability•Resiliency•Flexibility

?

Hierarchy(Control)

Entrepreneurial(Autonomy)

Complex

Organization

Simple

Stable Certain

Environment

Dynamic Uncertain

SCOPE OF CHANGEIncremental Change to a Process or

Function

Intrafunctional Interfunctional Interorganizational

Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture

LOW

Urgency of Stimulus

HIGH

Episode #3

1991-1993Team-based Organization Redesign

1988-1991Business Process Redesign Within Plant

Episode #2

1985-1988Corporatewide Reorganization

Episode #1

SCOPE OF CHANGEIncremental Change to a Process or

Function

Intrafunctional Interfunctional Interorganizational

Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture

LOW

Urgency of Stimulus

HIGH

Episode #21988-1990Quality Mgmt.

Episode #3

1991-1992Business Process Reengineering

1992-1993Bus. Unit #1 Restructuring

1991-1992SBU Restructuring

Episode # 11986-1988Focused Redesign/Key Leveraged Areas

1985Post-takeover Restructuring

SCOPE OF CHANGEIncremental Change to a Process or

Function

Intrafunctional Interfunctional Interorganizational

Radical Change to Organizational or Interorganizational Strategy, Structure, Process, and Culture

LOW

Urgency of Stimulus

HIGH

1978-1980Ideal Sales Org. Study & Ideal Mfg. Org. Study

1983-1986Redesign of Field Sales, Distribution & Mfg. (separate initiatives)

Episode # 1

1991-1992EDI Initiatives

1987-1988Business Process Redesign

1990-1993Area Business Team Reorganized

Episode # 2

Episode # 3