Essay on Artificial Intelligence and Business

Here is a compilation of essays on ‘Artificial Intelligence and Business’ for class 11 and 12. Find paragraphs, long and short essays on ‘Artificial Intelligence and Business’ especially written for school and college students.

Essay # 1. Meaning of Information Systems:

Expert systems assist in decision making for a very specific and limited domain of human expertise. They are Information Systems which can be defined technically as a set of interrelated components which collect (or retrieve), process, store and distribute information to support decision making and control in an organisation. In addition to supporting decision making, co-ordinate and control, Information Systems also help managers and workers analyse problems, visualise complex subjects and create new products.

Information systems contain information about significant people, places and things within an organisation or in the environment surrounding it. By information we mean data which have been shaped into a form which is meaningful and useful to human beings. Data, in contrast are streams of raw facts representing events occurring in organisations or physical environment before they have been organised and arranged into a form which people can understand and use.

Three activities in an information system produce the information which the organisations need for making decisions, controlling operation, analysing problems and creating need products or services. These activities are Input, Processing and Output. Input captures or collects raw data from within organisation and/or from its external environment.

Processing converts this raw input data into a more meaningful form. Output transfers the processed information to the people or activities where it will be used. Information systems also require feedback which is the output and is returned to the appropriate members of the organisation to help them evaluate or correct the input stage.

An information system can be formal or informal. A formal system rests on accepted and fixed definitions of data and procedures for collecting, storing, processing, disseminating and using these data.

The formal systems are generally structured, that is, they operate in conformity with predefined rules which are relatively fixed and not easily changed. Informal systems, on the other hand, rely on only implicit agreements and unstated rules of behaviour. Information systems are essential for the life of an organisation, but an analysis of their qualities is tedious for our purpose.

An information system which relies on computer hardware and software for processing and disseminating information is called computer-based information system (CBIS) and is what is useful as contrasted to manual system making use of paper and pencil technology.

From a business perspective, an information system is an organisational and management solution, based on information technology, to a challenge posed by the environment. To understand an information system, a manager must understand the broader organisation, management and information technological aspects of systems (Fig. 12.22) and their power to provide solutions to challenges and problems in the business environment.

An organisation requires many different kinds of skills and people. In addition to managers, knowledge workers (such as computer engineers architects and scientists) process the organisation’s paper work. The culture of the organisation is found embedded in its information systems.

Managers perceive business challenges in the environment: they set the organisational strategy for responding and they allocate the human and financial resources to achieve the strategy and co-ordinate the work. In addition to managing what already exists managers must create new products and services and even reharse the organisation from time to time. Information technology plays a vital role in redirecting and redesigning the organisation.

Managerial roles and decisions vary at different levels of the organisation Senior managers make long range strategic decisions about products and services to produce. Middle level managers carry out programs and plans of senior management. Operational managers are responsible for monitoring the organisation’s daily activities. Each level of management has different information needs and information system requirements. Information technology is one of the many tools available to managers for coping with change.

The technical approach to information systems emphasises mathematically based normative models to study information systems, as well as physical technology and formal capabilities of these systems. The disciplines which contribute to technical approach are computer scientists, management science and operations research.

Computer science is concerned with establishing theories of computability, methods of computation and methods of efficient data storage and access. Management service emphasises the development of models for decision making and management practices. Operations research focuses on mathematical techniques for optimising selected parameters of organisation, such as transportation, inventory control and transaction cost.

Essay # 2. Components of Information Systems:

The basic components of an information system are:

1. Hardware:

A set of devices such as a processor, monitor, keyboard, and printer which accept data and information, processes them, and displays them.

2. Software:

A set of computer programs which enable the hardware to process data.

3. Database:

An organised collection of related files, records, etc. which stores data and the associations among them.

4. Network:

A connecting system which permits the sharing of resources among different computers.

5. Procedure:

The strategies, policies, methods, and rules for using the information system.

6. People:

The most important element in information systems; include those persons who work with the information system or use its output.

Essay # 3. Types of Information Systems:

Four main types of information systems serve different organisational levels:

a. Operational level systems

b. Knowledge level systems

c. Management level systems

d. Strategic level systems.

a. Operational Level Systems:

They support operational managers by keeping track of the elementary activities and transactions of the organisation, such as sales, receipts, cash deposits, payroll, flow of material in a factory.

b. Knowledge Level Systems:

They support knowledge and data workers in an organisation. The procedure of knowledge level support is to help the business firm discover, organise and integrate new knowledge into the business and help the organisation control the flow of paper work. Also promotional displays for the firm’s products is done by such systems.

c. Management Level Systems:

They are designed to serve the monitoring, controlling, decision making and administrative activities of middle managers. They provide periodic reports rather than instant information on operations. They may support non-routine decision making and focus on less structured decisions for which information requirements are not always clear. These systems often answer “what if” questions, for example, tracking monthly reports.

d. Strategic Level Systems:

They help senior management tackle and address strategic issues and long term trends, both in the firm and the external environment. Their principal concern is matching changes in the external environment with existing organisation capability, for example, to forecast a 5-year employment requirement.

Information systems may also be differentiated by functional speciality. Major organisational functions, such as sales and marketing, manufacturing, finance, accounting and human resources are each served by their own information system.

Different organisations have different information for the same functional areas, because no two organisations have exactly the same objectives, structures or interests. Information systems must be custom made to fit the unique characteristics of each. There is no such thing as a universal information which can fit all organisations. Every organisation does the job somewhat differently.

Broadly speaking there are six types of systems:

1. Transaction Processing Systems at Operational Level.

2. Knowledge Work Systems and Office Automation Level System at Knowledge Level.

3. Management Information Systems

4. Decision Support Systems at Knowledge Level.

5. Executive Support Systems at Strategic Level.

6. Geographical Information System

1. Transaction Processing Systems:

Transaction Processing Systems (TPS) are the basic business systems which serve the operational level of the organisation. TPS is a computerised system which performs and records the daily routine transactions necessary to conduct the business, for example, sales order, hotel reservation system payroll, employee record keeping and delivering. TPS are often so central to a business that a TPS failure for a few hours can spell the demise of a firm and perhaps the other firms linked to it. Managers need TPS to monitor the status of internal operations and the firm’s relations with the external environment.

2. Knowledge Work and Office Automation System:

Both the Knowledge Work Systems (KWS) and Office Automation Systems (OAS) serve the information needs at the knowledge level of the organisation. Knowledge work systems aid knowledge workers, whereas office automation systems primarily aid data workers. In general, knowledge workers are people who are well qualified (hold degree in engineering, science, law etc.).

Their jobs consist primarily of creating new information and knowledge. A knowledge work systems promotes the creation of new knowledge and ensures that the new knowledge and technical expert size are properly integrated into the business.

Data workers typically have less formal advanced educational degree and tend to process rather than create information. They comprise secretaries accountants, filing clerks or managers whose jobs are principally to use manipulate or disseminate information.

An Office Automation System (OAS) is an information technical application designed to increase the productivity of the data workers in the office by supporting the coordinating and communicating activities of the typical office. These systems communicate with customers, suppliers and other organisations of the firm and serve as a clearing house for information and knowledge flows.

3. Management Information Systems:

Management Information Systems (MIS) serve the manager level of organisation, providing managers with reports and in some cases with on-line access to or the organisation’s current performance and historical records. These systems are oriented to almost exclusively to internal environmental or external events. MIS primarily serve the functions of planning, controlling and decision making at the management level. Generally these systems are dependent on underlying TPS for their data and follow traditional system development methodology.

MIS summarise and report on the basic operation of the company. The basic transaction data from TPS are pressed and are usually presented in long reports which are produced on a regular schedule. MIS generally serve the managers interested in weekly, monthly and yearly results, not day to day activities and generally address structured questions which are known well in advance.

These systems are not flexible and have analytical capability. Most of these systems use simple routines such as summaries and comparison, as opposed to sophisticated mathematical model or statistical techniques. Computer Based Information System (CBIS) is the umbrella term for MIS and are dedicated to the management level functions.

4. Decision Support System:

Decision support systems (DSS) also serve the management level of the organisation. DSS help the managers take decisions which are unstructured, semi-structured, unique or rapidly changing and not easily specified in advance. Although DSS use information from TPS and MIS they often bring in information from external sources such as current stock prices or product prices of competitors.

By design DSS is consciously iterative and have more analytical power than other systems. They are built explicitly with a variety of models to analyze data or they condense large amount of data into a form where they can be analysed by the decision makers. They use user friendly software to interact with the user, to change assumptions, ask new questions and include new data. Out of all information systems DSSs are most potential, so are described in a greater detail.

Components of DSS:

Every DSS contains at least three components: data management, user interface, and model management, a few advanced DSSs also contain a knowledge management components.

What does each component (sub-system) consist of?

a. Data Management:

Data management components include the database(s), which contains relevant data for the decision situation, managed by database management system (DBMS). Data can also be obtained directly from the corporate data warehouse, from regular databases, or from other sources.

b. User Interface (or Human-Machine Communication):

The user interface subsystem enables the user to communicate with and command the DSS.

c. Model Management:

Model management components include software with financial, statistical, management science, or other quantitative models which provide the system’s analytical capabilities and an appropriate software management program to manage the models. Some of the models are preprogrammed; others are built by the DSS builder or end user.

d. Knowledge Management:

The knowledge management sub-system can support any of the other sub-systems or act as an independent component, providing knowledge for the solution of the specific problem. This sub-system is available in only a few.

These components constitute the software portion of the DSS (Fig. 12.24). They are housed in a computer and can be facilitated by additional software. DSS runs on standard hardware for computers ranging from PCs to mainframes.

The components are put together for DSS either by programming them from scratch, by “gluing” together existing components, or by using integrated DSS tools. Some DSS are available commercially for specific applications in certain industries such as banks, hospitals, and manufacturing. End-user constructed DSSs are usually built with integrated tools, such as Excel or Lotus 1-2-3, which include word processors, spreadsheets, graphics and database management systems.

There is a fifth component of DSS which we have not included in the list of software components above and that is the user. The user can be an individual, a group, or several independent users. The end user is considered an integral part of the DSS since he, she, or they interact and contribute to the development of the system.

Types of Decision Support Systems:

The earliest decision support systems intended to draw on small subsets of corporate data and were heavily model driven, but with the advancement in computer processing and data base management systems the DSS developed in 1970s were primarily stand alone systems isolated form major organisational information systems, which used some types of model to perform “what-if type of analysis. Such systems were developed by the end-user divisions or groups not under central information system control. Their analysis capabilities were based on a strong theory or model combined with a good-user interface which made the model easy to use.

The second type of DSS is data driven DSS. These systems analyse large pools of data in major organisational system. They support decision making by allowing users to extract useful information which was previously buried in large quantities of data. Often data from various transaction processing systems are collected in date warehouses for this purpose. On line Analytical Processing (OLAP) and data mining can be used to analyse data.

Group Decision Support System (GDSS) is an interactive computer-based system to facilitate the solution of unstructured problems by a set of decision makers working together as a group.

5. Executive Support Systems:

Senior managers use a category of information systems called Executive Support System (ESS) or Executive Information Systems (EIS) to make decisions. ESS serve the strategic level of the organisation.

They address unstructured decisions and create generalised commutating and communication environment rather than providing any fixed application or specific capability. Executive support systems are designed to incorporate data about external events such as new tax laws or competitors, but they also draw summarised information from internal MIS and DSS.

These systems filter, compress, other critical data, emphasising the reduction of time and effort required to obtain information useful to executives. They employ the most advanced graphics software and can deliver graphs and data from many sources immediately to senior executive office.

Executive support systems are not designed primarily to solve the specific problems. Instead they provide a generalised computing and communication capacity which can be applied to a changing array of problems. Because ESSs are designed to be used by senior managers who often have little direct contact or experience with CBIS they incorporate easy-to-use graphic interface.

The Fig. 12.25 illustrates how the various types of systems in an organisation are related to one another. A TSP is typically a major source of data for other systems, where as ESS is primarily a recipient of data from lower level systems. They are also known as executive information system and are very capable of providing ‘exception reporting’ and ‘drill-down’ handling.

Drill Down:

The capability called drill down provides details of any given information. For example, an executive may notice a decline in corporate sales in a weekly report. To find the reason he or she may want to view a detail such as sales in each region. If a problematic region is identified the executive may want to see further details.

In certain cases this drill down process may continue through several layers of detail. An ESS makes it possible for the executive to search for this information through layers of detail, if necessary without needing to consult programmers to serve as intermediaries. This drill down can be achieved by direct query of data

bases and by using a browser just starting to appear are intelligent systems which provide automatic answers to questions as “why did sales decline?” and about the mistake committed in the organisation of the firm!

6. Geographical Information Systems:

A Geographical Information System (GIS) (Fig. 12.25) is a data visualisation technology which captures, stores, checks, integrates, manipulates, and displays data using digitised maps. Its most distinguishing characteristic is that every record or digital object has an identified geographical location. By integrating maps with spatially oriented (geographical location) and other databases, users can generate information for planning, problem solving, and decision making.

A GIS can help increase an organisation’s productivity and the quality of its decisions. Data, such as location of branch offices and percentage of overlapping among branches, can be superimposed on the map using bullets and colours. This demonstrates the old saying that one picture equals a thousand words.

There are four major functions:

i. Spatial imaging,

ii. Design and planning,

iii. Database management, and

iv. Decision modeling.

These functions support six areas of applications, as shown in Fig. 12.26. GIS is particularly helpful in decision support.

Most major GIS software vendors are providing Web access, such as embedded browsers, or a Web/Internet/intranet server which hooks directly into their software. Thus, users can access dynamic maps and data via the Internet or a corporate internet. GIS provides a large amount of extremely useful information which can be analysed and utilised in decision making.

For example, as one market researcher explained: “I can put 80-page spreadsheets with thousands of rows into a single map. It would take a couple of weeks to comprehend all of the information from the spreadsheet; but in a map, the story can be told in seconds”.

For many companies, the intelligent organisation of data within a GIS can provide a framework to support the process of decision making and of designing alternative strategies. There are countless applications of GIS to improve decision making in the public or private sector.

The integration of GIS and Global Positioning Systems (GPS) has the potential to help reengineer the aviation, transportation, and shipping industries. It enables vehicles or aircraft equipped with a GPS receiver to pinpoint their location as they move. Emerging business applications of GPS include railroad car tracking and earth-moving equipment tracking.

A special personal-interest application is mapping systems installed in cars, which allow us to find how to go from where we are to a desired address, to well-known locations, or to the nearest filling station or restaurant. These systems are available in various models of luxury cars even now, and in India too. The police personnel are detecting drivers over speeding.

Essay # 4. Application of Artificial Intelligence to Business:

The following applications of AI (more so of ES) are of great interest to the business:

1. To preserve expertise which may be lost through the retirement, resignation or death of an acknowledged expert.

2. To store the information in an active (-) form to create an organisational knowledge base that many employees can examine much like an electronic textbook or manual, so that other may learn rules of thumb not found in textbooks.

3. To create a mechanism which is not subject to human feelings such as fatigue and tension or worry. This may be especially useful when jobs are environmentally, physically or mentally dangerous to humans.

These systems may also be useful advisors in times of crises such as:

a. To eliminate routine and unsatisfying jobs held by people.

b. To enhance the organisational knowledge base by suggesting solutions to specific problems which are too massive and complex to be analysed by human beings in a short time.