Exam 3 MIS

Benchmark Ratio

% that B occurs overall So number of B's bought/ total number of transactions

Confidence levels

(Bought A & B)/ (Bought A) Remember to divide the Bought A and Bought B's by the total number of transactions then add the ratio together

What are the tasks that are associated with the software PM phases known as Inception, Analyze, Design, Build, Test, Implement?

(Requirements, design, code, test, operation) ^These things are all part of the development phase (Bottom-up approach)

Software PM: Test System

*Confirm it all works as expected: -AKA quality assurance *Catch bugs before they get to the user *CRITICAL TO SUCCESS *Methods for testing --Test Scripts: ----->scripted scenarios to validate system works properly ----->Positive: how it should work testing ------>Negative Testing must be considered (try to break it) -Beta testing: ------> small group of future system users try out system first

What is the relationship between transactional / operational data and Business Intelligence?

Use data and turn it into information to make better business choices

Classification Tree (predictive method)

Uses clustering analysis to make predictions Ex. Predict wine based on alcohol content

Clustering Analysis (descriptive method)

-Helps us see patterns and groupings in data based on different field values -So you can predict using a classification tree

Knowledge Management System

-Collect and share human knowledge -Create value from intellectual capital -Foster innovation -Supported by 5 components of IS -Increase company organizational responsiveness Ex. You land a project in consulting and want to track competitive prices in the office supply. You want to have automated price changes based on the price of competitors. You go on to the knowledge management system to know what people in your consulting company have already done related to this issue.

BI System: Reporting Systems

-Integrate data from multiple sources -Process data by sorting, grouping, summing, averaging, and comparing -Results formatted into reports -Improve decision making by providing right information to right user at right time Ex. A reporting system would allow you to total yesterdays sales from all Starbucks in the world

What are methods to encourage innovative thinking? (see slides) - e.g. Look for role models outside company or industry. Challenge what is a given or taken for granted.

-Look for role models outside of your company (Ex. Taco Bell: restaurant or manufacturer) increased consistency and customer experience -Defy constraining assumptions (Ex. Cross-docking defies a ware-HOUSE) -Make a special case into the norm -Reverse your thinking and think outside the box (random entry, exaggeration) -Rethink critical dimensions of work

What is System Development?

-Process of analyzing, designing, building, testing, deploying, and supporting your new or updated IT system -Development involves all 5 IS components (Hardware, software, data, procedure, people). Computer programming is concerned with programs and some data

Why do we care about Business Process Management (BPM)?

-Processes are ingrained in all parts of the business value chain and IT -In order for businesses to evolve and adapt, we must understand how we do things and how we do things better -Just like strategy comes before technology, the process comes before Info Systems. Technology is used to help make process more efficient or automated

To Produce the R (Recently Score)

-Program first sorts customer purchase records by date of most recent (R) purchase -Divides customers into five groups and scores customers 1 - 5 -Top 20% of recent orders - R score = 1 (1 = highest, ..., 5 = lowest)

To Produce the F (Frequency Score)

-Re-sorts customers by order frequency -Top 20% of most frequent - F score = 1 ( 1= most frequent; 5 = least frequent)

To produce M (Money Score)

-Sorts customers according to amount spent (M) -20% of biggest spenders - M score = 1 (1 = biggest spender; 5 = smallest spender)

Business Process Management

-Systematic way of creating, assessing, and altering business processes as needed -Many methods but concept stays the same

System Development requires more than technical experience

-What are the goals of the system? -Setting up the project: the team, the timeline, the logistics of the project -Requires business KNOWLEDGE & MANAGEMENT SKILL

Reimagining Processes

-What results from work (Progressive informed customers of competitor pricing to increase market share) -Who preforms the work (Shell improved order fulfillment time by having one person manage all aspects of an order) -Where the work is preformed (Taco Bell cut costs by preparing food in commissary instead of restaurants) -Whether the work is performed (Wal-Mart cut costs and improved replenishment time by no long "housing" inventory in warehouse and just sorting directly onto trucks)

5 Models for Analyzing Business

1). Examine industry structure - Porter's Five Forces Model 2). Choose your competitive strategy - Porter's Model of Competitive Strategy 3). Link the parts of the value chain - Porter's Value Chain Model 4). Streamline business processes - any business process diagram 5). Design information system - 5-Component IS Framework -Enable business processes -Improve value chain links to increase efficiency -Support competitive strategy -Influence industry structure

Most important factors of project management? (Triple constraint)

1). Scope 2). Resources 3). Schedule (time)

Why is PM (project manager) Development Difficult?

1.Difficulty of determining requirements (What they want) 2.Requirements change as system develops 3.Schedule and budget difficult to estimate a.They change as project scope changes 4.Communication with large teams isn't easy 5.Technology Changes→ how do you adapt? a.Change when technology changes? b.Keep re-starting? 6. Diseconomies of scale a.As development teams grow average contribution per worker decreases and project is harder to manage b.BROOK's LAW: adding more people makes the project later (AKA too many cooks in the kitchen) 7.Unexpected events (like hurricane)

Lift ratio

= Confidence/ Benchmark ratio

What is a Business Process?

A process is a sequence of activities to accomplish an objective (can be visually mapped)

Analytics

A term describing the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions. Diving into data.

What are the advantages and disadvantages of vertical integration? What are the advantages and disadvantages of contract manufacturing?

Advantages: Contract Manufacturing Lower costs, allows for focus on main company issues Disadvantages: Contract manufacturing Need to audit the company hired to make sure they are doing everything legally (extra cost) Takes longer to get product back Advantages Vertical: Allows for better communication between sections Quicker turn around Better control

Implement business process activities for a gym

Alternatives (for a local gym): 1). Entirely manual - e.g. using paper or MS Word to record sign-in data, prep invoices for client, and outlook to manually email them about things 2). Automated and manual - use spreadsheet or database to track billing easier. Still have to manually print and send invoices and keep track of billing cycle 3).Entirely automated - use a Customer Relationship Management system (aka CRM). Clients signup for classes online and are automatically billed on dates.

Value of BI Tools

Analyze data, look for patterns, use these patterns to make business decisions Ex. Manage inventory (seasonal or regional buying decisions); drop items from inventory Ex. Design marketing and advertising strategies around trends (Back to school)

RFM Analysis= (Recency + Frequency + Money)

Analyzing & ranking customers according to purchasing patterns Considers.... How Recently (R) customer ordered How Frequently (F) customer orders How much money (M) customer spends per order

Expert System (Produces If/then rules)

Artificial intelligence systems that leverage rules or examples to perform a task in way that mimics applied human expertise. Improved diagnosis and decision making by non experts E.g making medical diagnosis using WebMD: IF you have certain symptoms, THEN you have X disease/virus/infection. E.g Longevity game (the one we played in class) After asking a series of questions such as how much do you workout, if you smoke, number of car accidents in the past, it says how long you will live.

Dis-economies of Scale

As development teams grow, average contribution per worker decreases and project is harder to manage (Brook's Law)

Automation vs Transformation Based on-->Other key decision factors: - Strategy: The strategic positioning - People: The importance of human intervention -Process: Uniqueness or standardization of processes -Financial: What are cost savings or revenue increases? -Cultural: How will change be received by company?

Automation Processes: processes are digitized and turn into program codes of software (moves work from the human side (processes and people) to the technology side)--> automated checkout Transformation Processes: processes are redesigned and restructured to fit the logic within the software (CHANGES THE HUMAN SIDE TO FIT THE TECHNOLOGY SIDE)

Incremental Development

Build parts at a time

Organizational Inertia

Companies that stay stagnant and do not improve or change; Bad for companies because they are ensuring a faster death The larger the organization is, the harder it is to change

What are some problems with operational data?

Data is in too many places & too much of it exists Data is DIRTY (missing values) Data is not maintained consistently Data is hard to retrieve from the "legacy system"

What is a critical last step in process management?

Create policy for ongoing effectiveness assessment

Prototyping

Creating a model/mock-up of a product

Unlike Social Analytics (which leverages social data), Business Analytics or Intelligence leverages data from which source?

Customers and their actions supply the data From business systems running a company (ERP, inventory, sales, manufacturing) internal analyzing business data. First word is the source and analytics

Data Who supplies this Data: YOU Data --> Information --> Knowledge

Data fuels better ads on Google and Facebook and it is getting cheaper to keep data because storage capacity is increasing as cost is decreasing. Important patterns of relationships are buried in data and these patterns can yield valuable information to help businesses make better choices. Data gives insight to help Apple/Amazon sell more

What are the problems with transactional (operational) data? What is the dilemma many companies are in that have multiple databases built on different types incompatible systems.

Data is in too many places (different systems that manage different parts of a company may not always store data in uniform ways) --> Makes it hard to utilize data all at once Data is "dirty" or missing values (incomplete or disorganized data is not useful) Not maintained consistently Hard to retrieve from the "legacy system" Too much data

Data Visualization

Data visualization is the "new reporting"

Inception Phase

Define system goals Determine project scope Assess feasibility of project/proof of concept

Software PM: 1). Inception Phase

Define system goals: -facilitate organization's competitive strategy -support business processes -improve decision making Determine project scope: -agree to it and then document it!!! Why? -avoid "scope creep" unless formally approved Assess feasibility of project (Time and Resources): -Stakeholders Analysis: understand all affected by project & design best approach to communicate & work with them -Root Cause Analysis: figure out actual problem to solve by asking why about symptoms -Risk Analysis: identify areas of risk and plan to mitigate -Planning: put together milestones and plans -Early prototypes (depiction of system) and high-level design

Association Rules

Derived from if-then format confidence & lift Ex. Best Buy is interested in knowing what its customers typically buy so it can target right customers with coupons, promotions, or even adjusted store layouts.

Software PM: 2). Analysis Phase

Determine and document features and functions: -interview users -document requirements for each piece ------> examine existing systems (As-Is Process) ------> Prototyping, web flows, process mapping --------> security, scalability, org impact -approve requirement (To-Be process) Less expensive to change system in the phase -important lesson: why? -remember: the closer to go-live an issue is found the more expensive it can be to fix -your role: responsible for requirements!

Market basket analysis (aka Association Rules) -Shows the products customers tend to buy together

Determining which products customers buy together and how an organization can use this information to cross-sell more products or services -Uses Association Rules (if-then statements; confidence; lift ratio)

Software PM: 3). Design Phase

Develop and evaluate alternatives -accurate requirements critical HARDWARE design determined by by project team SOFTWARE design depends on source: -packaged (aka "off the shelf:) -custom-developed programs -rent (SaaS) DATABASE: is designed PROCESSES designed for your system Job descriptions created for users and operations personnel

What is one of the biggest reasons for project failures? Also what are reasons that Software PM is so difficult

Difficulty determining requirements Requirements change as system develops Overall schedule and budget difficult to estimate Technology changes The larger the team the harder to communicate Diseconomies of scale Unexpected events (florida during hurricane season) ***Resistance to change is the biggest reason for project failure

Software PM: 6). Maintain/Support the System

Fixing or adapting system -LOG=need method to track system failures and enhancements -PRIORITIZE= work on corrections to bugs based on priority (P1=system crash; P2=misspelling); must generate a reasonable rate of return (ROI); decision to restart system development processes are costly -MAKE UPDATES- (fixes, enhancements)

What does IT do?

Gives support to all organizations in a business (FIN, ACC, MKT, CEO, HR, OPS)

How does Zara's approach differ from the conventional wisdom in fashion retail? How does the firm's strategic use of information technology influence design and product offerings, manufacturing, inventory, and logistics?

Has vertical integration that allows for more control and faster output Doesn't believe in ads and sales Takes 3 weeks to design and build and get into stores Just-in-time manufacturing (makes it as soon as order comes in can go on shelf, popular now not future) Process driven by customer satisfaction

Most critical part of the project is ___________________________

How it starts

Lift

How much more likely is it that a person who buys product A + B together than the likelihood that anyone who walks into the store will buy product B

What is the user's role in the requirements phase? What happens if users do not participate in this phase?

If the user is not available, the company will not know what the users want and therefore will be subjected to more possible changes which can affect the project's success

How are business processes inherent in Information Systems? How does this affect the way we design them, use them, and maintain them?

In order to have a successful business you have to have all 5 things (hardware, software, data, process, & people). You have to have technology that hosts and holds the information for you. Data may include inventory, purchases, and more. There's a process to pay for the things you sell and for how you get the things you sell to the person who bought it. Then there are people involved in your business who do each of these things.

How is process innovation different from process improvement? Which is harder to do and why?

Innovation is harder because it's disruptive by its nature (creating a new system or idea) whereas improvement builds off a previous or already made. Innovation: - has Organizational Inertia and Cultural Lock-in. People don't always happily accept change. -Top down approach is hard. Must be a cultural shift. -Few C-levels come from Ops (Finance, Accounting) -No real home for innovation in a company

Data Warehouse

It's job is to pull data from different systems and compile it into one system to make data more efficient Like a database but its larger and its whole goal is to pull data and put it into a uniform format and can use it for decision-making Information from operational databases + Other internal data + external data=(Data Extraction/Cleaning/Preparation Programs)

What is the difference between Confidence and Lift? Which would or would not drive your decision on what product to cross-sell and why?

Look at Data for patterns with human eye Use association rules Analyze associations Look at confidence Look at lift

What are different methods of installation and what are trade-offs to consider in your chosen approach?

Look at notes---> basically, phased and pilot are best bc they have medium costs and risks

Older Waterfall Approach: Structured approach (Predictive) Familiar to most developers worldwide Works when you're building a house or space shuttle Steps tend to overlap

Newer Iterative (Agile) Approach: -More adaptable to change--> a way of breaking down the software development of a large application into smaller chunks. -In iterative development, feature code is designed, developed and tested in repeated cycles. -Harder to implement since people are used to waterfall approach

Software PM: 4). Construction Phase (Build phase)

Now we're into coding System must be built: -components constructed independent -document and review System must be tested: -individual components tested by coder -system integrated (put together) and tested Users & Data must be converted from old system to new system

Legacy System

Older longevity systems that are often incompatible with other systems, technologies, and ways of conducting business Incompatible legacy systems can be a major roadblock to turning data into information, and they can inhibit firm agility, holding back operational and strategic initiatives

What are the key takeaways of the business process?

Once we have a better process what do we hope for? -Cost savings (efficiency gained, automation) -Increased revenues (production increase) -Less Errors (Could be + for cost and revenue) -Improved customer experience -Process comes before you program the software -Business Process Improvement is important but is continuous

What kinds of business intelligence systems exist? BI Systems--> Provide information for improving decision making (BI systems use data created by other systems to provide reporting and analysis for organizational decision making)

Primary Systems: -Reporting Systems -Data-mining Systems -Knowledge Management Systems -Expert Systems

Data Mining (Extracting useful information from large datasets that would be hard to analyze without an information system)

Process data using statistical technique; can be used in a DESCRIPTIVE way to better understand your data Look for Patterns and relationship in data to predict outcomes E.g., People with bad credit scores are more likely to have accidents. E.g., Can a bank predict your likelihood of credit fraud based on geography of transaction -->Market-basket analysis - Predict cross or up sells Data Mining Systems -->Process data using statistical techniques such as clustering, association rules, and decision tree analysis --> It looks for patterns that can predict future outcomes and trends --> market-based analysis -->Predict donations For data mining to work, the data must be consistent and clean as well as reflect current and future trends.

What kind of discoveries does a data mining system help us uncover? (i.e. Intuitive or non-intuitive)

Process data using statistical techniques such as clustering, association rules and decision tree analysis; It looks for patterns that can predict future outcomes and trends

How do processes interact with software and hardware and data?

Processes rely on the software and hardware

How can you apply the concepts of CAST and RAS to something like process innovation in Progressive or Toyota?

Progressive has had major growth because they invented a whole new process which was their internet, phone service, other additional services besides car insurance, etc. People are also staying with them longer which didn't happen before they started their own innovations. Toyota improved their process by making their assembly line more efficient, and then they changed the process itself for more efficiency and cost effectiveness. Toyota did bottom up approach--> they fixed the problem right there and then!

When does Project Management (PM) get involved on a project? What are tasks of a PM?

Project Management begins at the beginning of a project to the very end of a project. Project Manager Tasks: Manage resources: Monitors schedule and progress. Did a task or phase take longer or need more people? Manages Risk and Issues: Handles project communication - Plans hand-offs between phases Ex: Is the builder okay with the design? Ex: Is the user happy with finished product?

Scope Creep

Project management refers to uncontrolled changes or continuous growth in a project's scope Can occur when the scope of a project is not properly defined, documented, or controlled. It is generally considered harmful.

What BI tools are available to turn data into valuable information? What are examples of these and how they add value?

Query and reporting tools- the idea behind query and reporting tools is to present users with a subset of requested data, selected, sorted, ordered, calculated, and compared, as needed. (sits on top of data warehouse)- copies data into one data system ad Data mining- The process of using computers to identify hidden patterns in, and to build models from large data sets. Knowledge management systems- internal surveys, feedback, help you if workforce quits Expert system- pulls info in and IF/THEN and predictive analysis - if have these symptoms can do predictive analysis (like WebMD) looks at data and known outcomes and feed in new data to see if they know. How BI Tools Add value: Analyze data, Look for patterns, Use patterns to make business decisions

50% of IT projects fail

Resistance to Change -Habits -Job Security -Power Dissipation -Lack of knowledge of the purpose -Disrupted values & culture

What are some techniques for data mining?

Sampling is acceptable because it would take days to calculate trends if you used all of the data (also it saves money)

What is Business Process Management (BPM)?

Systematic way of creating, assessing, and altering business processes as needed 1). Creating a picture of the current processes -->As-Is Business Process -->How hardware, software, data, procedures & people interact 2). Identify areas where process is constraining strategy 3).Redesign process or problematic portion of the process to help strategy be better realized -->To-Be Business Process -->How IT can be leveraged as a tool to better process 4).Implement process changes 5).Create policy for ongoing effectiveness assessment -->Adjust and repeat cycles

How has data mining changed business and society?

Targeted ads based on purchases; estimating when a woman is pregnant, even when the baby will be born Amazons if you buy this book then you might like that tool

What are the five components that make up an Information System (IS)? What parts are the hardest to change usually and why?

The five parts are: 1). Hardware--> Technology side 2). Software--> Technology side 3). Data 4). Process--> Human side (hardest) 5). People--> Human side (hardest) Human sides are harder because they are NOT automated. PROCESS would include scanning barcode, weighing produce, taking payment, bagging. PEOPLE would include the cashier, bagger, and customer. On the 1).HARDWARE side there is the cash register computer. The 2).SOFTWARE would be the POS (point-of-sales); the system (recording sales and inventory) The 3).DATA would be the sales data and inventory data. Credit card processing includes the first three.

Quality Assurance (QA) - aka testing

The maintenance of a desired level of quality in a service or product, especially by means of attention to every stage of the process of delivery or production.

What is the impact of process change as a process starts to cross between more than one division or organization in a company?

The more organizations a process crosses, the harder it is to change your process, people, and systems.

Confidence

The percent% likelihood that a person buying product A will also buy product B

Software PM: 5). Implement/ Deploy the new system

There are lots of methods to implement: -Pilot (dad moves in alone) ---> organization implements entire system to limited userbase --->if system fails, it doesn't affect everyone --->reduces exposure risk ---> EX. USAA lets it's employees try app changes first -Phased (whole family moves in but only to the living room and kitchen) -->new system installed in phases -->project is tested and deployed in phases -->turn off old functionality in pieces --->in-parallel (two systems at once) ----> The big bag (direct installation)

What are parts of the business?

There are no IT projects → Business projects have an IT component. REMEMBER: The business runs the business. IT just supports it (IT is a component). IT will affect everybody's life.

Business Process Improvement

To change slight parts of the process

What is the overall purpose of a business intelligence system?

To take data and make sense of it to improve decision making and performance organization MAKE BETTER BUSINESS DECISIONS

Why is inventory management so important? What happens when a retailer has too much inventor? What happens when a retailer has too little inventory?

Too much inventory leads to the business having to put on sales and discount the items to free up storage space Too little inventory leads to the company losing money since they aren't able to sell popular items

Business Process Innovation (To completely redesign the process)

True Innovating is hard -It's disruptive by its nature -Organizational Inertia and Cultural Lock-in. People don't always happily accept change. Top down approach is hard. Must be cultural shift. Few C-levels come from Ops (i.e. Finance, Accting) No real home for innovation in a company

3 V's that describe Big Data (Volume, Variety, Velocity)

Volume - the amount of data we are creating as companies and individuals are greatly increasing Variety - Format and types of data greatly differs (e.g. Business, social, Pics, ALOT) Velocity - New data is being created every millisecond in our world (e.g. Stock Market)

What are examples of how companies can use business intelligence? (Target, Wal-mart, etc...)

Wal-Mart uses data to track sales, replenish inventory, and communicate with over 100,000 vendors

Iterative Development (agile)

a way of breaking down the software development of a large application into smaller chunks. In iterative development, feature code is designed, developed and tested in repeated cycles.

Just-in-time manufacturing

inventory strategy companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs.

Information System

software that helps you organize and analyze data. This makes it possible to answer questions and solve problems relevant to the mission of an organization. An integrated solution that combines five components: hardware, software, data, procedures, and the people who interact with and are impacted by the system. Getting the right mix of these five components is critical to executing a flawless Information System rollout