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Book Contents

Ch. 3
Analyzing Business Decision Processes

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Redesigning Decision Processes

Hammer and Champy (1993) defined business process reengineering as the fundamental rethinking and redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed. In some situations reengineering has succeeded, but many failures have also occurred. We do not need to focus only on grand efforts to reengineer corporations, what we do need is redesigned business decision processes that better use information technologies and Decision Support Systems.

Business Process Reengineering

In a now classic Harvard Business review article, Michael Hammer (1990) asserted companies rarely achieve radical performance improvements when they invest in information technology. Most companies use computers to speed up, not break away from, business processes and rules that are decades, if not centuries, out of date. Hammer said the power of computers can be released by "reengineering" work. Managers can use computers and DSS to achieve the important business goals of increasing speed, quality, and flexibility, while lowering business costs. Redesigned decision processes and new DSS can help achieve all of these goals.

A business process is a group of activities that create value for a customer. Letís briefly examine the process of fulfilling a customer order. Order fulfillment is a process that consists of many activities, from order entry, picking products from inventory, dealing with back orders, shipping products and dealing with returns. A number of decisions are made during the process, but they are primarily routine and recurring. Some meta-decisions about product quality or employee performance are also made periodically. If we reengineer this process our goal is dramatic improvement in results. Hammer argues that dramatic improvement means a quantum leap in performance, a tenfold increase in productivity or an 80 percent reduction in cycle time.

According to Hammer and others, business process reengineering typically creates an organization with a particular set of characteristics:

  1. Processes are simple instead of complex.
  2. People perform a broad ranges of tasks.
  3. People become empowered, rather than controlled.
  4. The emphasis is a team and not an individual.
  5. Organizational structure shifts to a flat structure.
  6. Key figures are professionals, rather than managers.
  7. The new focus is on the end-to-end business process.
  8. The basis for performance measurement shifts from activity to result.
  9. Managers serve as coaches, facilitators and decision-makers for exceptions.
  10. People in the organization focus on pleasing the customer.

These 10 consequences of Business Process Reengineering are desirable results and many of them can be realized by more modest efforts to redesign business decision processes. Many of characteristics are attitudes that managers need to develop, rather than new processes or structures.

Redesigning Business Decision Processes

Managers can be logical and intentionally rational in their decision-making and yet make the wrong decision. The following tips for redesigning decision processes and developing a new DSS should help insure that the decision-maker who uses a Decision Support System will benefit from using it.

Begin by defining the business decision process. Determine if a DSS can help gather and organize information systematically. Decision-makers must understand how the information in a proposed DSS is defined and organized. The greater the time pressure to make a decision, the worse a manager's decision is likely to be. Therefore, a DSS should help a manager obtain enough information to make a high quality decision in both high time pressure and low time pressure situations. A DSS should help managers analyze information thoroughly, help get other people involved, and help explore available options. The process analysis should look for these opportunities.

A DSS should help decision makers and groups act to make timely decisions and to communicate them. In general if managers delay making a decision past some vague critical point, a decision may lose some or all of its effectiveness. If possible a DSS should provide information to help assess the urgency of the decision situation. Managers need to consider factors such as competitors' actions, how long the opportunity will last, how reversible the decision is, and the amount of risk. A DSS should help a manager deal with ambiguity. The worst decision-makers suffer from analysis paralysis. DSS should help a manager conduct appropriate analyses, but it should not promote excessive analysis.

Some DSS should incorporate soft data and encourage managers to engage in qualitative data collection. Decision-makers need to concentrate on what others are saying, ask questions, provide feedback, avoid stereotypes, and try to build a consensus from the input they receive. A DSS should enhance a decision-maker's confidence. Confident decision-makers successfully deal with opportunities and risks. Managers need to use their decision-making skills to make the right decision and then use persuasion skills to sell the decision. A DSS should reinforce a manager's values. A DSS should not be designed to help managers rationalize decisions, but rather to make more intentionally rational decisions. Analyzing goals and values is an important part of decision-making and DSS should not diminish the importance of values and the importance of assuming responsibility for the decisions that are made.

A DSS should encourage creativity. All solutions are not clearly identified in decision situations. DSS should not impose too much structure in situations that are unstructured or ambiguous.

To develop an effective Decision Support System of any type, managers and analysts must focus on the interface between the decision-maker and the computer. A new DSS will impact the business process, related decision-making and the behavior of the decision makers. The actual impact is primarily a function of the DSS user interface. DSS can only increase efficiency and effectiveness of decision-making if the user interface is accepted and responsive to user needs. The interface must be responsive rather than efficient because what will help managers most may not be the "most efficient". For example, program commands may be efficient but not responsive to user needs.

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