Post 2

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

Transactional process systems (TPS) are the basic business systems that serve the operational level in an organisation, and the primary purpose for transactional information is to support the performing of daily operational tasks. Organisations use transactional information when performing operational tasks and repetitive decisions such as analysing daily sales reports to determine how much inventory to carry.
Decision support systems (DSS) model information to support managers and business professionals during the decision making process. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions

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

1.     Sensitivity analysis- is the study of the impact that changes in one or more parts of the model have on the other parts of the model. Users change the value of one variable constantly and view the resulting changes in other variables.

2.     What-if analysis- checks the impact of a change in an assumption on the proposed solution. Users repeat this analysis until they understand all the effects of different conditions

3.     Goal-seeking analysis- finds the inputs necessary to achieve a goal such as a desired level of output. Goal seeking analysis sets a target value for a variable and then repeatedly changes other variables until the target value is achieved.

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

A business process is a standardised set of activities that accomplish a specific task, such as processing a customer’s order. They change a set of inputs into a set of outputs. Automatic checkout systems at a supermarket are an excellent example of business process improvement. Investigating business processes help organisations to anticipate bottlenecks, eliminate duplicate activities and combine related activities.  Organisations are only as effective as their business processes.

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

Business process improvement attempts to understand and measure the current process and make performance improvements in view of that. Organisations start by documenting what they currently do; then they establish a way to measure the process, follow the process, measure the performance and finally, identify improvement opportunities based on the collected information. This method for improving business processes is effective in obtaining gradual incremental improvement. New technologies such as the internet and wireless rapidly bring new capabilities to businesses, thereby raising the competitive bar and the need to improve business processes.

Business process re-engineering (BPR) is the analysis and redesign of work flow within and between enterprises. BPR relies on a different school of thought than business process improvement. BPR supposes that the current process is irrelevant, does not work, or is broken and must be repaired from scratch. Organisations frequently strive to improve their business processes by performing tasks faster and cheaper and better. Creating value for the customer is the leading factor for setting up BPR, and IT often plays a vital enabling position. A true BPR attempt does more for a company than simply improve it by performing a process better, faster and cheaper; it can redefine best practices for its whole industry.

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

After choosing to redesign the business processes, an organisation must decide the most efficient way to begin to restore the processes. They must create process models documenting a step-by-step process sequence for the activities that are necessary to convert input to outputs for the process.

Business process modelling (or mapping)is the activity of creating a detailed flowchart or process map of a work process, showing inputs, tasks and activities in a  structured sequence. A business process model is a graphic description of a process, showing the sequence of tasks which is developed for a specific purpose. The purpose of a process model is to expose process detail gradually and in a controlled manner, encourage conciseness and accuracy, focus attention on process model interfaces and provide powerful process analysis.
As-is process models represent the current state of the operation that has been mapped , without any changes to existing processes. To-be process models show the result of applying change improvement opportunities t the current as-is process model. As-is and To-be process models are integral in process re-engineering projects.

Post 1

1.      Explain information technology’s role in business and describe how you measure success?

Information technology has an effect on business and also the potential to transform it. Information technology can reduce costs, improve productivity and generate growth. To achieve these general business goals the organisation needs to take on enterprise-wide initiatives. By assisting communication and amplifying business intelligence, information technology plays a significant role in arranging these initiatives. Across an organisation, employees must work collectively to develop strategic initiatives that create competitive advantages. Information technology can allow departments to perform their business operations more efficiently and effectively.
I.T success is very difficult to measure. But how does a company decide if an information system helps make a business successful? Key performance indicators (KPIs) are measures tied to business drivers, and metrics are the thorough measures that supply those KPIs.
Efficiency and effectiveness metrics are primary types of IT metrics. Efficiency measures the performance of the system itself ie how fast the system is running or the capacity of the system. Effectiveness IT metrics measure the impact IT has on business and are determined according to organisations goals, strategies and objectives.
There must be benchmarks or baseline values that the system tries to achieve, despite what is measured and if it is for the sake of efficiency or effectiveness. Benchmarking is a process of continuously measuring system results, comparing those results to benchmark values and recognise steps and procedures to advance system performance.

2.      List and describe each of the forces in Porter’s Five Forces Model?

1.      Buyer power- Is high when there are many sellers, and low when there are a few. Buyer power is mirrored by their ability to impact the price they are willing to pay for an item. Monopsony is when a market has only one buyer but many suppliers, so the buyer sets the price, meaning the buyer has all the power. To reduce buyer power companies often create a loyalty program to reward customers based on the amount of business they do with a certain organisation.

2.      Supplier power – An organisation will be both a supplier (to customer) and a customer (of other organisation), in a typical supply chain. Supply power is high when a supplier has concentrated power over an industry. The supplier can influence the industry if the supplier power is high by charging higher prices, limiting quality or services and shifting costs to industry participants. When supplier power is high, buyers lose revenue because they cannot pass on the price to their customers.

3.      Threat of substitute products or services – is high when they are many options to a product or services and low when there are little options to choose from. A market where there are few substitutes for the product is an ideal market for an organisation.

4.      Threat of new entrants- The threat of new entrants is high when it is easy for new competitors to join the market and low when there are many barriers to entering a market. An entry barrier is a product or feature that customers expect from an organisation by a particular industry, and must therefore be offered when entering an industry to survive. E.g. – A bank must offer IT enabled services such as ATMs and online bill paying. These are barriers to entering the banking market.

5.      Rivalry among existing competitors – is high when competition is intense and low when competition is more complacent in a market. The overall trend in almost every industry is towards increased competition. One way to reduce rival power i.e. between Coles and Woolworths is by switching costs. This can make customers more unwilling to switch to another product or service.

3.      Describe the relationship between business processes and value chains?

A business process is a standardised set of activities that achieve precise tasks, such as processing a customer’s order. An organisation can use Michael Porter’s value chain approach to evaluate the effectiveness of its business process. The value chain approach views an organisation as a series of processes, each adding to the value of the product for each customer. The value chain must enable the organisation to provide sole value to its customers to create competitive advantage. To achieve this, a firm must carry out one or more value creating activities that creates more overall value than do competitors. Lower costs or superior benefits (differentiation) are a way to create added value. Identifying important activities that add value for a customer and then finding IT systems that support those activities is what can be achieved by examining the organisation as a value chain.

4.      Compare Porter’s three generic strategies?

(http://www.smartersolutions.com/blog/forrestbreyfogle/2010/08/04/michael-porter-generic-strategies-and-an-enhanced-business-management-system/)

Porter’s three generic strategies are broad cost leadership, broad differentiation and focused strategy.
Cost leadership and differentiation are broad strategies; therefore they reach a large market segment, while focused strategies target a smaller market, concentrating on either cost or differentiation.
Cost leadership calls for being the low cost producer in an industry for a given level of quality. The organisation sells its product at an average industry price to earn the profit higher that of its rivals or below average industry prices to gain market share. This is different to broad differentiation as it calls for the development of a product with unique attributes that customers perceive to be better than or different to other products of the competition. Focused strategy focuses on a narrow segment and within that segment attempts to create either cost advantage or differentiation.