Week Three Questions

1. Define TPS & DSS, and explain how an organisation can use these systems to make decisions and gain competitive advantages

An informed decision can be made when all aspects are looked at and when all information is presented and analyzed. IT has helped improve the decisions –making process by providing relevant information so efficiently however; it has also made it harder these days with the amount of information being produced so rapidly.

An Organisation will use various information technology systems such as ‘Transaction processing systems’ (TPS) and ‘Decision support systems’ (DSS) in order to sort through this information and make the best informed decision for their company based on the information.

TPS is an information system that involves gathering, recording and analysing the different transactions of a company for example sales of product, analysing daily sales reports, inventory etc. ‘It is the basic business system that serves the operational level in an Organisation.’(Baltzan, Phillips, Lynch, Blakey 2010 pp 58)

TPS is part of Analytical information a company gathers and has a primary purpose of supporting the performing of daily operations. The systems generate information about sales of products, cash withdrawals and purchasing shares. This information allows for managers to understand their market and business and be able to make various decisions about it e.g. whether or not to opening a new store, hiring a new person or entering a new market etc.

E.g TPS can be used when analysing sales of a product- through analysing the sales of a product the business can determine how much stock to carry allowing for the product to be readily available for consumers.

Through using TPS within an organisation the company can keep a competitive edge in their industry. Having this business intelligence allows them to know trends within the company, sales records etc; this can then be evaluated and fixed if needed. TPS can identify issues and help improve the efficiency of the company- keeping their competitive edge.

E.g. the bank records how many ATM transactions occur in the day- they will analyse whether or not their system can handle it and if it can’t, how can they fix it?

Knowing various transactions about a company allows the business to know their strengths and weaknesses and able to fix and market them. Industries have set benchmarks for various things and TPS’ can allow businesses to know where they stand in the industry. If the bench mark for a an online transaction is 2.5 seconds through TPS analysis a company can find out their transaction process is 1.5 seconds- this can be marketed and competitive advantage is found.

DSS is a group of information systems that support managers when making decisions. There are three quantitative models that are typically used by DSS they are: Sensitivity analysis, what-if analysis and goal seeking analysis. This system takes the transaction information from TPS and summaries them and combines them to help assist with decision-making. It allows managers to predict future outcomes of a particular part of the business and this allows them to keep a competitive edge on their competitors.

Through knowing information provided by DSS businesses can understand their organisation more and understanding their environment. DSS allows companies to analyse process models within their organisation and make changes accordingly. The sensitivity analysis allows an Organisation to make slight changes within the business in order to improve it.

The ‘what if analysis’ allows for managers to create scenarios that may affect the business ensuring that they are able significantly lower any harm these situations may have towards the business. This keeps a competitive edge for the company as they have foreseen the future and developed plans and strategies if these scenarios pan out.

Finally the goal setting analysis allows for targets to be set and met within a business. This keeps focus on the business and keeps them constantly developing their processes. With technology constantly changing, through setting goals companies can continue to move forward, develop innovative products and keep their competitive edge.

(Picture) IT Systems in an organisation

2. Describe the three quantitative models typically used by decision support systems.

1. Sensitivity analysis- is when an Organisation changes one or more aspect of the model and analysing what happens to it.

e.g. what will happen if we add three more lanes to the check out process.

2. What-if analysis- This is where you analyse the impact of situations on your business. Foreseeing future situations that may occur affecting business- the situations range from best case to worst case scenarios

e.g. what impact will petrol increase have on our taxi business.

3.goal-seeking analysis- is where managers set goals and targets for their business and tweaks other variables in order to get there.

e.g. We want to increase the sales of our bike how will we do that.

3. Describe a business processes and their importance to an organisation.

Business processes are the different activities a company does to reach their goals and objective. Business processes are standard activities that meet certain tasks. A business stays competitive in the industry when they minimize the cost of things and make their business process more effective and efficient. Business processes are so important to a company because it outlines the way it should work. These processes make the operation of the business more effective and efficient if carried out appropriately.

An example of a business process is the distribution of products from an online source. If the business does not meet their 7 working day delivery they have not met the customers needs and the customers can seek to go elsewhere. It is so important that this process works effectively in a company so the customer can be satisfied and continue to buy your products.

Business processes are also so important because they help with efficiency within the business. Examining business processes helps an organisation to anticipate bottlenecks, eliminate duplicate activities, combine related activities and identify smooth-running processes’ (Baltzan and Phillips 2010 pp 70) These processes allow for a smooth running business which can increase profits and benefit the company greatly. A business process should be regularly monitored and assessed for improvments.

4. Compare business process improvement and business process re-engineering.

Business process improvement, seeks to understand the current processes of the company evaluate it and make changes and improvements to it where needed. This is so important for a business to constantly do so they are able to improve their organisation and stay competitive. Because of technology customers have a range of products to choose from so if they are not happy with your service then they can easily go elsewhere, this is why business process improvements are extremely important.

Whilst business process improvement is the improving of current models within the business, business process re-engineering is about analysing the current model and reworking, re-designing it to meet the needs. Before undertaking BPR the organisation must think if the model doesn’t work any more of will this new model work. The world is constantly changing so a company must frequently conduct BPR in order to stay competitive in the market and meet their customer’s needs. It not only helps the company serve customers better but it also sets benchmarks for the industry; evolving it over time.

A model can only be improved to a certain degree, when times change and competitive advantage is needed reengineering of a model may be required.

5. Describe the importance of business process modelling (or mapping) and business process models.

Business process modelling (or mapping) is the creation of a flow chart outlining work process, inputs, activities and tasks in sequential way. Business process models are the actual graphic description of this process, showing the sequence of tasks from a specific viewpoint.

Through mapping out the business processes a company is able to do a sensitivity analysis and tweak various aspects of it improving their processes and models. Mapping also allows for various aspects of the business it can help managers understand complex aspects of projects and allows for analysis and decisions about various points and variables. It is important for accuracy, analysis and details. It allows for focused attention of the process model interfaces and it lays out processes in an easy to understand manner.

Business process models are important because it outlines how the process will be achieved. It in a way gives direction to the business process models. There are both ‘As-is process’ models, which show the current state of the operation that has been mapped out with no specific improvements or changes. There is also a ‘To-Be process’ model, which shows the impact of applying change and improvements to the ‘as-is’ model. The results from this ensure that all details of the process are understood before all the final details are decided on.

They are both so important in the planning of new or improved processes as it gives direction to decision makers and outlines the plan in a clear and effective way.

Below the video explains how to effctivley manage business processes and improve your business that way. It also explains business process management (BPM)

Reference List:

Baltzan, P. Phillips, A. Lynch, K. & Blakey, P. , 2010, 'Business Driven Information Systems', 1st edt, Mc Graw Hill, North Ryde, Australia