Chapter 10 Information and Decision Support Systems

DSS Datebase Mangement System

(a database and a model base are at the CORE of a DSS) The DSS database management system allows managers and decision makers to person QUALITATIVE ANALYSIS ON DATA STORED in company's databases, data warehouses, and data marts, using data mining and business intelligence -can also be used to connect to external databases

Model Base

(a database and a model base are at the CORE of a DSS) the MODEL BASE allows managers and decision makers to perform QUANTITATIVE ANALYSIS ON BOTH INTERNAL AND EXTERNAL DATA (internal TPS and ERP) (external customers, suppliers, stockholders whose data is NOT captured by TPS and ERP)

Capabilities of a Decision Support System (DSS)

-SUPPORT PROBLEM-SOLVING PHASES -a specific DSS might support only one or a few phases -SUPPORT VARIOUS DECISION FREQUENCIES -Ad hoc DSS is concerned with situations or decisions that come up only a few times -Institutional DSS handles situations or decisions that occur more than more SUPPORT VARIOUS PROBLEM STRUCTURES -highly structured problems are straightforward, requiring known facts and relationships -semistructured or unstructured problems are more complex SUPPORT VARIOUS DECISION-MAKING LEVELS -provide help for managers at various levels-operational, tactical, and strategic

Group Support System (GSS)

-also called group decision support system and a computerized COLLABORATIVE WORK SYSTEM -consists of most elements in a DSS, plus software to provide effective support in group decision making setting CHARACTERISTICS OF GSS that enhance decision making: -special design -ease of use and flexibility -decision-making support -Delphi approach -brainstorming -group consensus approach -nominal group technique (NGT) -multivoting -anonymous input -reduction of negative group behavior -parallel and unified communication -automated record keeping GSS software is also called GROUPWARE or WORKGROUP SOFTWARE GSS ALTERNATIVES: Decision room: -decision makers are located in the same area -combines face to face verbal interaction with technology Local area decision network - group members are located in the same area under conditions where group decision making is FREQUENT Teleconferencing -decision frequency is low -location of group members is DISTANT WIDE area decision network -decision frequency is HIGH -location of group members is DISTANT

Other MIS of the business

ACCOUNTING MIS -provides aggregate information on accounts payable, accounts receivable, payroll, and other applications GEOGRAPHIC INFORMATION SYSTEM (GIS) -Capable of assembling, storing, manipulating, and displaying geographically referenced information

Information System

Assist with problem solving, helping people make better decisions and meeting corporate goals. -(make more informed decisions which can result in an increase in revenue, reduce costs, and new opportunities

How can Business Transaction enter the organization?

Business transactions can enter the organization through traditional methods, or via the internet, or via an extranet

How decision making relates to problem solving

DECISION MAKING: -Intelligence -Design -Choice PROBLEM SOLVING (includes and goes beyond decision making w/ implementation and monitoring) -Intelligence -Design -Choice -Implementation -Monitoring DECISON MAKING (~+problem solving) 1) Intelligence stage: identify and define potential problems or opportunities 2) Design stage: develop alternatives solutions to the problem and evaluate their feasibility 3) Choice stage: select a course of action IMPLEMENTATION STAGE: A stage of problem solving in which a solution is put into effect MONITORING STAGE: The FINAL stage of the problem solving process in which decision makers EVALUATE THE IMPLEMENTATION

Decision Support Systems (DSS)

DSS: an organized collection of people, procedures, software, databases, and devices used to help make DECISIONS that solve problems the focus of a DSS is on decision making effectiveness regarding UNSTRUCTURED OR SEMISTRUCTURED business problems CHARACTERISTICS OF DSS: -provide rapid access to information -handle large amounts of data from different sources -provide report and presentation flexibility -offer both textual and graphical orientation -support drill down analysis -perform complex, sophisticated analysis and comparisons using advanced software -support optimization, satisficing, and heuristics approaches -perform simulation analysis -forecast a future opportunity or problem A database and a model base are at the CORE OF A DSS A user interface (dialogue manager) allows decision makers to -easily access and manipulate the DSS -use common business terms and phase Access to the internet, networks, and other computer based systems

Delphi Approach

Delphi approach is a structured, interactive decision-making method that relies on inputs from a panel of experts

Financial Management Information Systems (and financial MIS subsystems and outputs)

Financial MIS: an information system that provides financial information to executives and others -Some financial MIS subsystems and outputs include -profit/loss and cost systems -auditing -uses and management of funds

Human Resource MIS

HUMAN Resource MIS concerned with activities related to previous, current and potential EMPLOYEES subsystems: -human resource planning -personnel selection and recruiting -training and skills inventory -scheduling and job placement -wage and salary administration -outplacement

Inputs to a MIS : Internal and External Data Sources

INTERNAL data sources: -TPS (transaction process system) and ERP (enterprise resource planning) and related databases -Data warehouses and data marts -Specific functional area throughout the firm EXTERNAL data sources: -Customers, suppliers, competitors, and stockholders whose data is NOT already captured by the TPS and ERP systems -the internet

Manufacturing MIS subsystems and outputs

MANUFACTURING MIS subsystems and outputs are used to monitor and CONTROL THE FLOW of MATERIAL, PRODUCTS, and services through the organization Common information subsystems and outputs used in manufacturing: -design and engineering -master production scheduling -inventory control -process control -quality control and testing

Marketing MIS

MARKETING MIS is a system that uses data GATHERED from both INTERNAL AND EXTERNAL SOURCES to provide REPORTING and aid DECISION MAKING in all areas of MARKETING marketing MIS subsystems: (MPPPS) -marketing research -product developments and delivery -promotion and advertising -product pricing -sales analysis

Management Information Systems (MIS)

MIS: -An integrated collection of people, procedures, databases and devices -provides managers and decision makers with information to help achieve organizations goals -gives organization a competitive advantage PURPOSE OF MIS: -to help an organization achieve its goals by providing managers with insight into the regular operation of the organization -to provide the right INFORMATION to the right PERSON in the right FORMAT at the right TIME CHARACTERISTICS OF MIS: MISs perform the following functions -provide reports with fixed and standard formats -produce hard copy and soft copy reports -use internal data stored in the computer system -allow users to develop custom reports -require user requests for reports developed by systems personnel

Model Management Software (MMS)

Model Management Software (MMS) -coordinates the use of MODELS in a DSS, including financial, statistical analysis, graphical, and project management MODELS

Functional Aspects of the MIS

Most organizations are structured along FUNCTIONAL AREAS functional areas may include: -finance -manufacturing, -marketing -human resources -and other specialized areas of the business MIS can be divided along functional lines to produce reports tailored to individual functions

Nominal Group Technique

Nominal Group Technique is a structured method for BRAINSTORMING that encourages contributions from everyone

3 Approaches to problem solving : Optimization, Satisficing, Heuristics

Optimization model finds the best solution (the one that will best help the organization meet its goals) Satisficing model finds a good but not best solution Heuristics "rules of thumb" -commonly accepted guidelines or procedures that usually find a good solution

Outputs of a MIS

Outputs of a MIS: -Many systems produce an executive dashboard that presents a set of key performance indicators -Scheduled reports are produced periodically, e.g., weekly or monthly -A key-indicator report summarizes the previous day's critical activities -Demand reports are created on request -Exception reports -automatically produced when a situation is unusual or requires management action -trigger points should be set carefully -Drill-down reports provide increasingly detailed date about a situation (DSS supports drill down analysis)

Benefits of Information and Decision Support Systems (positive and negative impact)

Positive Impact: PERFORMANCE (DQ,PC,SD) -Decision quality -Problem Complexity -Speedier decisions Negative Impact: COST (HSDNnIPP) -Hardware -Software -Database -Network and Internet -Personnel -Procedures

Structured, Unstructured and SemiStructured Decisions

STRUCTURED DECISIONS: The variable that COMPRISE the decision are known and CAN be measured quantitatively UNSTRUCTURED DECISIONS: The variable that AFFECTS the decision CAN NOT be measured quantitatively SEMISTRUCTURED DECISIONS: SOME of the variables CAN be measured quantitatively

Decision Making

Strategic planning and overall goals of the organization set the course for decision making DECISION MAKING PHASE HAS 3 STAGES 1) Intelligence stage: identify and define potential problems or opportunities 2) Design stage: develop alternatives solutions to the problem and evaluate their feasibility 3) Choice stage: select a course of action

general ledger

general ledger defines the accounting categories of a business and is a key components of financial MIS

Profit Center

profit center is an independent business unit that is treated as a distinct entity enabling its revenue and expenses to be determined and its profitability to be measured

Comparison of DSS and MIS

ways in which a DSS differs from an MIS -type of problems solved -support given to users -decision emphasis and approach -type, speed, output, and development of the system used APPROACH: DSS- serves as a direct support system that provides interactive reports on computer screens MIS- typically serves as an indirect support support system that uses regularly produced reports DEVELOPMENT DSS- has users who are usually more directly involved in its development. User involvement usually means better systems that provide superior support. For all systems, user involvement is the most important factor for the development of a successful system MIS- is frequently several years old and often was developed for people who are no longer performing the work supported vby the MIS EMPHASIS DSS-emphasizes actual decision and DECISION making styles MIS- emphasizes INFORMATION only OUTPUT DSS- produces reports that are usually screen oriented, with the ability to generate reports on a printer MIS-is oriented toward printed reports and documents PROBLEM TYPE DSS- can handle UNSTRUCTURED problems that cannot be easily programmed MIS- normally used only with STRUCTURED problems SPEED DSS- is flexible and can be implemented by users, so it usually takes less time to develop and is better able to respond to user requests MIS-provides response time usually longer than a DSS SUPPORT DSS- supports all aspects and phases of decision making;it DOES NOT REPLACE THE DECISION MAKER -people still make decisions MIS -in some case, makes automatic decisions and REPLACES THE DECISION MAKER SYSTEM DSS-uses computer equipment that is usually online and related to real time. Computer terminals and display screens are examples -these devices can provide immediate information and answers to questions MIS-uses printed reports that might be delivered to managers once per week, so it CANNOT PROVIDE IMMEDIATE RESULTS USERS DSS-supports INDIVIDUALS, SMALL GROUPS, and the ENTIRE ORGANIZATION. In the short run, users typically have MORE control over a DSS MIS-primarily supports the ORGANIZATION ONLY. in the short run, users have LESS control over an MIS