1. Define TPS & DSS, and explain how an organisation can use these systems to make decisions and gain competitive advantages.
A transaction processing system (TPS) is the basic business system that serves the operational level (analysts) in an organisation. The most common example of a TPS is an operational accounting system such as a payroll system or an order-entry system. Transaction information encompasses all of the information contained within a single business process or unit of work, and its primary purpose 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 report to determine how much inventory to carry. The TPS supplies transaction based data to the DSS. The DSS summarises and aggregates the information from the many different TPS systems, which assists managers in making informed decisions. A major difference between TPS and DSS is the general purpose of each type of system. TPS are designed to expedite and automate transaction processing, record keeping, and simple business reporting of transactions.
2. Describe the three quantitative models typically used by decision support systems.
Three quantitative models often used by DSS include:
• Sensitivity analysis, which is the study of the impact that changes in one (or more) parts of the model have on other parts of the model. Users change the value of one variable repeatedly and observe the resulting changes in other variables.
• What-if analysis, which checks the impact of a change in an assumption on the proposed solution. For example, ‘What will happen to the supply chain if a cyclone off Brisbane reduces holding inventory from 30 percent to 10 percent?’ Users repeat this analysis until they understand all the effects of various situations. The tool is calculating the effect of 35 per cent increase in sales on the company’s bottom line.
• Goal-seeking analysis, which finds the inputs necessary to achieve a goal such as a desired variable affect other variables as in what-if analysis, goal seeking anaysis sets a target value (a goal) for a variable and then repeatedly changes other variables until the target value is achieved. For example, ‘How many customers are required to purchase a new product to increase gross profits to $5 million?’ The model is determining how many bikes Hauger will need to sell to break even, or achieve a profit of O: Hauger will need to sell 46 bikes at $3500 each to break even.
3. Describe a 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. Business processes transform a set of inputs into a set of outputs (goods or services) for another person or process by using people and tools. Examining business processes helps an organisation to anticipate bottlenecks, eliminate duplicate activities, combine related activities, and identify smooth-running processes. To stay competitive, organisations must optimise and automate their business processes. Organisations are only as effective as their business processes. Developing logical business processes can help an organisation achieve its goals. Some processes (such as programming process) may be continued wholly within a single department. However, most processes (such as ordering a product) are cross departmental, spanning the entire organisation. Customer-facing processes result in a product or service that is received by an organisation’s external customer. Business facing processes are invisible to the external customer but essential to the effective management of the business and include goal setting, day-to-day planning, performance feedback, rewards, and resource allocation.
4. Compare business process improvement and business process re-engineering.
Business Process improvement is a systematic methodology developed to help an organization make significant advances in the way its business process operate. It will provide a system that will aid in simplifying and streamlining operations, while ensuring that both internal and external customers receive surprisingly good output. The main objective is to ensure that the organization has business processes that eliminate errors, minimize delays, maximise the use of assets, promote understanding, are easy to use, are customer friendly, are adaptable to customers’ changing needs, provide the organization with a competitive advantage and reduce excess head count. The five phases of BPI are organizing for improvement, understanding the process, streamlining, measurements and controls and continuous improvement. Business process re-engineering is the analysis and redesign of workflow within and between enterprises. BPR assumes that the current process is irrelevant, does not work, or is broken and must be overhauled from scratch. Carrying out BPI is a project, so all principles of project management apply.
The first step in BPI is to define the existing structure and process at play (AS-IS).
Then, the BPI process owners should determine what outcomes would add value to the organization's objectives and how best to align its processes to achieve those outcomes (TO-BE).
Once the outcomes are determined, the organization's work force needs to be re-organized to meet the new objectives, using the variety of tools available within the BPI methodology.
Reengineering recognizes that an organization's business processes are usually fragmented into subprocesses and tasks that are carried out by several specialized functional areas within the organization. Often, no one is responsible for the overall performance of the entire process. Reengineering maintains that optimizing the performance of subprocesses can result in some benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient and outmoded. For that reason, reengineering focuses on redesigning the process as a whole in order to achieve the greatest possible benefits to the organization and their customers. This drive for realizing dramatic improvements by fundamentally rethinking how the organization's work should be done distinguishes reengineering from process improvement efforts that focus on functional or incremental improvement.
5. Describe the importance of business process modelling (or mapping) and business process models.
Business process modelling (or mapping) is the activity of creating a detailed flowchart or process map of a work process, showing its inputs, tasks and activities in a structured sequence. A business process model is a graphic description of a process, showing the sequence of process tasks, which is developed for a specific purpose and from a selected viewpoint. A set of one or more process models details the many functions of a system or subject area with graphics and text. The purpose of a process model is to expose process detail gradually and in a controlled manner; encourage conciseness and accuracy in describing the process model; focus attention on the process model interfaces; provide a powerful process analysis and consistent design vocabulary. A business process model typically displays activities as boxes and uses arrows to represent data and interfaces. The aim of modelling is to illustrate a complete process, enabling managers, consultants and staff to improve the flow and streamline the process.
The outcomes of a business process modelling project are essentially:
• value for the customer, and
• reduced costs for the company,
• leading to increased profits.
Other secondary consequences arising from successful Business Process Modelling can be increased competitive advantage, market growth, and better staff morale and retention. There are no absolute rules for the scope or extent of a Business Process Model in terms of departments and activities covered. Before committing lots of resources to Business Process Modelling proper consideration should be given to the usefulness and focus of the exercise - ask the questions:
Does the modelling have the potential to produce gains that will justify the time and effort?
Will the modelling be structured so that people will understand the outputs (not too big and complex as to be self-defeating)?
Do people understand why we are doing it, and "what's in it for them"?
As with other management tools, there is no point producing a fantastically complex model that no-one can understand or use, just as it is a bit daft to spend hundreds of hours analysing anything which is of relatively minor significance. Business Process Modelling is a powerful methodology when directed towards operations which can benefit from improvement, and when people involved are on-board and supportive. Adding value for customers, whether internal or external customers, is at the centre of a Business Process Model. It starts with a customer need and ends with the satisfaction of that need. Unlike a workflow diagram, which is generally focused on departmental activities, a BPM spans departments and the whole organisation.
For further information
http://en.wikipedia.org/wiki/Business_process_reengineering
http://images.google.com.au/imghp?hl=en&tab=wi
http://en.wikipedia.org/wiki/Business_process_improvement
http://www.businessballs.com/business-process-modelling.htm
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