other n of people or , and areas on a map. Some GIS have modeling capabilities for changing the data and automatically revising business scenarios. GIS might be used to help state and local governments calculate response times to natural disasters and other emergencies, to help banks identify the best location for new branches or ATM terminals, or to help police forces pin- point locations with the highest incidence of crime. 12-4 How do different decision-making constituencies in an organization use business intelligence, and what is the role of information systems in helping people working in a group make decisions more efficiently? Earlier in this text and in this chapter, we described the different information constituencies in business firms-from senior managers to middle managers, analysts, and operational employees. This also holds true for BI and BA systems (see Figure 12.4). More than 80 percent of the audience for BI consists of casual users who rely largely on production reports. Senior executives tend to use BI to monitor firm activities using visual interfaces like dashboards and scorecards. Middle managers and analysts are much more likely to be immersed in the data and software, entering queries and slicing and dicing the data along different dimensions. Operational employees will, along with customers and suppliers, be looking mostly at prepackaged reports. Decision Support for Operational and Middle Management Operational and middle management are generally charged with monitoring the performance of key aspects of the business, ranging from the downtime of machines on a factory floor to the daily or even hourly sales at franchise food76 Part Three Key System Applications for the Digital Age FIGURE 12.4 BUSINESS INTELLIGENCE USERS Casual users are consumers of BI output, while intense power users are the producers of reports, new analyses, models, and forecasts. Casual Users: Power Users: Capabilities Consumers Producers 80% of employees) (20% of employees) Production Reports Customers/suppliers IT developers Operational employees Parameterized Reports Super users Senior managers Dashboards/Scorecards Business analysts Ad hoc queries; Drill down Managers/Staff Search/OLAP Analytical modelers Forecasts; What if Business analysis Analysis; statistical models stores to the daily traffic at a company's website. Most of the decisions these managers make are fairly structured. Management information systems (MIS), which we introduced in Chapter 2, are typically used by middle managers to support this type of decision making. Increasingly, middle managers receive these reports online and are able to interactively query the data to find out why events are happening. Managers at this level often turn to exception reports, which highlight only exceptional conditions, such as when the sales quotas for a specific territory fall below an anticipated level or employees have exceeded their spending limits in a dental care plan. Table 12.6 provides some examples of MIS for business intelligence. Support for Semi-structured Decisions Some managers are "super users" and keen business analysts who want to create their own reports and use more sophisticated analytics and models to find patterns in data, to model alternative business scenarios, or to test specific hypotheses. Decision-support systems (DSS) are the BI delivery plat- form for this category of users, with the ability to support semi-structured decision making. DSS rely more heavily on modeling than MIS, using mathematical or ana- lytical models to perform what-if or other kinds of analysis. "What-if' staly- sis, working forward from known or assumed conditions, allows the user to vary certain values in test results to predict outcomes if changes occur in Chase TABLE 12.6 EXAMPLES OF MIS APPLICATIONS COMPANY MIS APPLICATION California Pizza Kitchen Inventory Express application "remembers" each restaurant's ordering patterns and compares the amount of ingredients used per menu item to predefined portion measurements established by management. The system identifies restaurants with out-of-line portions and notifies their managers so that corrective actions will be taken. Black & Veatch Taco Bell Intranet MIS tracks construction costs for various projects across the United States. Total Automation of Company Operations (TACO) system provides information on food, labor, and period-to-date costs for each restaurant.FIGURE 12.5 SENSITIVITY ANALYSIS Chapter 12 Enhancing Decision Making 477 S of figure displays the results of a sensitivity analysis of the effect of changing the sales price of a necktie and the cost this init on the products break-even point. It answers the question: What happens to the break-even point if the sales face and the cost to make each unit increase or decrease? Total fixed costs Variable cost per unit 19000 Average sales price 3 Contribution margin 17 Break-even point 14 1357 Sales 1357 Variable Cost per Unit Price 2 14 1583 4 5 15 1727 1900 6 1462 211 16 1583 1727 2375 1357 1900 1462 2111 17 1583 1267 1727 18 1357 1900 1462 1188 1583 1267 1727 1357 1462 1583 values. What happens if we raise product prices by 5 percent or increase the advertising budget by $1 million? Sensitivity analysis models ask what-if ques- tions repeatedly to predict a range of outcomes when one or more variables are hese changed multiple times (see Figure 12.5). Backward sensitivity analysis helps MIS) decision makers with goal seeking: If I want to sell 1 million product units next s to year, how much must I reduce the price of the product? eive Chapter 6 described multidimensional data analysis and OLAP as key busi- why orts, ness intelligence technologies. Spreadsheets have a similar feature for multi- s for dimensional analysis called a pivot table, which manager "super users" and eded analysts employ to identify and understand patterns in business information ples that may be useful for semi-structured decision making. Figure 12.6 illustrates a Microsoft Excel pivot table that examines a large list of order transactions for a company selling online management training videos at to FIGURE 12.6 A PIVOT TABLE THAT EXAMINES CUSTOMER REGIONAL dels DISTRIBUTION AND ADVERTISING SOURCE test In this pivot table, we are able to examine where an online training company's customers plat- ured come from in terms of region and advertising source. Courtesy of Microsoft Corpora ana- MI523 Figure 12-6 [Compatibility Model . Microsoft Excel PivotTable Tools naly- Hance New Tab Insert Page Layout Formulas Data Review View Developer Options Design er to 10 . A & = = = . wrap Ted General BIN . . . A. EX Marge & Center . 5 . 9% . |74 2 Conditional Format as Cell Insert Delite format hose A fx Count of Cust ID K D G Region Count of Cust D com Web Grand of sion Payment Source Amount Product Time Of Day North 28 10002 W Paypal Web PivotTable Field List South 57 154 Web West [Grand Total 142 10904 VO Web Choose fields to add to report : 15 South Paypal Email Cust 10 Paypal D Region Credit a Payment b Source Web ers Paypal Web Product Web Time of Day 10013 1 Creda Email 1014 EX Web Web Web Drag fields between areas below Column Labels Web Report Filter Web Source I Values Row Labels Count of Cust 10 R (P e ( 2:03 PM RegionChapter 12 Enhancing D FIGURE 12.7 THE BALANCED SCORECARD FRAMEWORK In the balanced scorecard framework, the firm's strategic objectives are operationalized along four dimensions: financial, business process, customer, and learning and growth. Each dimension is measured using several KPIs. Financial . Cash flow . Return on investment . Financial result Return on capital employed . Return on equity T Customers Business Processes Delivery performance . Number of activities Firm Strategy . Quality performance . Process execution time and Customer satisfaction Accident ratios Objectives . Customer loyalty . Resource efficiency . Customer retention . Equipment downtime Learning and Growth Investment rate . Illness rate Internal promotions % Employee turnover . Gender ratios The balanced scorecard framework is thought to be "balanced" because it Causes managers to focus on more than just financial performance. In this view , financial performance is past history-the result of past actions-and managers should focus on the things they are able to influence today, such business process efficiency, customer satisfaction, and employee training. once a scorecard is developed by consultants and senior executives, the next step is automating a flow of information to executives and other managers or each of the key performance indicators (see the Interactive Session on Management). Once these systems are implemented, they are often referred to as