Decision Support Systems & Knowledge Management Systems
OBJECTIVES• Describe different types of decisions and the decision-making process• Evaluate the role of information systems in helping people working individually and in a group make decisions more efficiently• Demonstrate how executive support systems can help senior managers make better decisions
OBJECTIVES (Continued)• Assess how systems that support decision making can provide value for the firm• Identify the challenges posed by decision-support systems, group decision-support systems, and executive support systems and management solutions
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Business Intelligence and Decision SupportBusiness intelligence enables firms to:• Amass information• Develop knowledge about operations• Change decision-making behavior to achieve profitability and other business goals
Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm DECISION MAKING AND DECISION-SUPPORT SYSTEMSSystems and Technologies for Business Intelligence Figure 7-1
DECISION MAKING AND DECISION-SUPPORT SYSTEMSBusiness Decision Making and the Decision-Making Process Decision-Making Levels: • Senior management • Middle management and project teams • Operational management and project teams • Individual employees
DECISION MAKING AND DECISION-SUPPORT SYSTEMSInformation Requirements of Key Decision-Making Groups in a Firm Figure 7-2
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Types of DecisionsUnstructured decisions:• Novel, non-routine decisions requiring judgment and insights• Examples: Approve capital budget; decide corporate objectives
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Types of Decisions (Continued)Structured decisions: • Routine decisions with definite procedures • Examples: Restock inventory; determine special offers to customersSemistructured decisions: • Only part of decision has clear-cut answers provided by accepted procedures • Examples: Allocate resources to managers; develop a marketing plan
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Systems for Decision SupportThere are four kinds of systems that support the differentlevels and types of decisions: • Management Information Systems (MIS) • Decision-Support Systems (DSS) • Executive Support Systems (ESS) • Group Decision-Support Systems (GDSS)
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Stages in Decision Making Figure 7-3
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Decision Making in the Real WorldIn the real world, investments in decision-support systemsdo not always work because of• Information quality: Accuracy, integrity, consistency, completeness, validity, timeliness, accessibility• Management filters: Biases and bad decisions of managers• Organizational inertia: Strong forces within organization that resist change
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Trends in Decision Support and Business IntelligenceThe rise of client/server computing, the Internet, and Webtechnologies made a major impact on systems that supportdecision making.Six Major Trends:• Detailed enterprise-wide data• Broadening decision rights and responsibilities
DECISION MAKING AND DECISION-SUPPORT SYSTEMS Trends in Decision Support and Business Intelligence (Continued)• Intranets and portals• Personalization and customization of information• Extranets and collaborative commerce• Team support tools
SYSTEMS FOR DECISION SUPPORT The Difference between MIS and DSSManagement Information Systems:• Primarily address structured problems• Provides typically fixed, scheduled reports based on routine flows of data and assists in the general control of the business
SYSTEMS FOR DECISION SUPPORTDecision Support Systems:• Support semistructured and unstructured problems• Greater emphasis on models, assumptions, ad-hoc queries, display graphics• Emphasizes change, flexibility, and a rapid response
SYSTEMS FOR DECISION SUPPORT Types of Decision-Support SystemsModel-driven DSS:• Primarily stand-alone systems• Use a strong theory or model to perform “what-if” and similar analyses
SYSTEMS FOR DECISION SUPPORTData-driven DSS:• Integrated with large pools of data in major enterprise systems and Web sites• Support decision making by enabling user to extract useful information• Data mining: Can obtain types of information such as associations, sequences, classifications, clusters, and forecasts
SYSTEMS FOR DECISION SUPPORT Components of DSS• DSS database: A collection of current or historical data from a number of applications or groups• DSS software system: Contains the software tools for data analysis, with models, data mining, and other analytical tools• DSS user interface: Graphical, flexible interaction between users of the system and the DSS software tools
SYSTEMS FOR DECISION SUPPORTModel: An abstract representation that illustrates thecomponents or relationships of a phenomenon • Statistical models • Optimization models • Forecasting models • Sensitivity analysis (“what-if” models)
SYSTEMS FOR DECISION SUPPORTOverview of a Decision-Support System Figure 7-4
SYSTEMS FOR DECISION SUPPORT Sensitivity Analysis Figure 7-5
SYSTEMS FOR DECISION SUPPORT Business Value of DSS• Providing fine-grained information for decisions that enable the firm to coordinate both internal and external business processes much more precisely• Helping with decisions in • Supply chain management • Customer relationship management
SYSTEMS FOR DECISION SUPPORT Business Value of DSS (Continued)• Pricing Decisions• Asset Utilization• Data Visualization: Presentation of data in graphical forms, to help users see patterns and relationships• Geographic Information Systems (GIS): Special category of DSS that display geographically referenced data in digitized maps
SYSTEMS FOR DECISION SUPPORTA DSS for Customer Analysis and Segmentation Figure 7-6
SYSTEMS FOR DECISION SUPPORT Web-Based Customer Decision-Support Systems• DSS based on the Web and the Internet can support decision making by providing online access to various databases and information pools along with software for data analysis• Some of these DSS are targeted toward management, but many have been developed to attract customers.
SYSTEMS FOR DECISION SUPPORT Web-based Customer Decision-Support Systems (Continued)• Customer decision making has become increasingly information intensive, with Internet search engines, intelligent agents, online catalogs, Web directories, e- mail, and other tools used to help make purchasing decisions.• Customer decision-support systems (CDSS) support the decision-making process of an existing or potential customer.
GROUP DECISION-SUPPORT SYSTEMSWhat Is a GDSS?• Group Decision-Support System (GDSS) is an interactive computer-based system used to facilitate the solution of unstructured problems by a set of decision makers working together as a group.
GROUP DECISION-SUPPORT SYSTEMSThree Main Components of GDSS: • Hardware (conference facility, audiovisual equipment, etc.) • Software tools (Electronic questionnaires, brainstorming tools, voting tools, etc.) • People (Participants, trained facilitator, support staff)
GROUP DECISION-SUPPORT SYSTEMS Overview of a GDSS Meeting• In a GDSS electronic meeting, each attendee has a workstation.• The workstations are networked and are connected to the facilitator’s console, which serves as the facilitator’s workstation and control panel, and to the meeting’s file server.• All data that the attendees forward from their workstations to the group are collected and saved on the file server.
GROUP DECISION-SUPPORT SYSTEMS Overview of a GDSS Meeting (Continued)• The facilitator is able to project computer images onto the projection screen at the front of the room.• Many electronic meeting rooms have seating arrangements in semicircles and are tiered in legislative style to accommodate a large number of attendees.• The facilitator controls the use of tools during the meeting.
GROUP DECISION-SUPPORT SYSTEMS Group System ToolsSource: From Nunamaker et al.,“Electronic Meeting Systems toSupport Group Work,”Communication of the ACM, July1991. Reprinted with permission. Figure 7-7
GROUP DECISION-SUPPORT SYSTEMS Business Value of GDSS• Traditional decision-making meetings support an optimal size of three to five attendees. GDSS allows a greater number of attendees.• Enable collaborative atmosphere by guaranteeing contributor’s anonymity.• Enable nonattendees to locate organized information after the meeting.
GROUP DECISION-SUPPORT SYSTEMS Business Value of GDSS (Continued)• Can increase the number of ideas generated and the quality of decisions while producing the desired results in fewer meetings• Can lead to more participative and democratic decision making
EXECUTIVE SUPPORT IN THE ENTERPRISE The Role of Executive Support Systems in the Firm• ESS can bring together data from all parts of the firm and enable managers to select, access, and tailor them as needed.• It tries to avoid the problem of data overload so common in paper reports.
EXECUTIVE SUPPORT IN THE ENTERPRISE The Role of Executive Support Systems in the Firm (Continued)• The ability to drill down is useful not only to senior executives but also to employees at lower levels of the firm who need to analyze data.• Can integrate comprehensive firmwide information and external data in timely manner• Inclusion of modeling and analysis tools usable with a minimum of training
EXECUTIVE SUPPORT IN THE ENTERPRISE Business Value of Executive Support Systems• Ability to analyze, compare, and highlight trends• Graphical interface enables users to review data more quickly and with more insight, speeding decision making.• Timeliness and availability of data enables more timely decision making, helping businesses move toward a “sense-and-respond” strategy.
EXECUTIVE SUPPORT IN THE ENTERPRISE Business Value of Executive Support Systems (Continued)• Increases upper management span of control, better monitoring• ESS based on enterprise-wide data can be used for decentralization of decision making or increase management centralization.
MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONSManagement Opportunities: • Decision-support systems provide opportunities for increasing precision, accuracy, and rapidity of decisions and thereby contributing directly to profitability
MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONSManagement Challenges: • Building systems that can actually fulfill Executive Information Requirements • Changing management thinking to make better use of systems for decision support • Organizational resistance
Building a Knowledge-CreatingCompany A knowledge-creating company or learning organization… Consistently creates new business knowledge Disseminates it throughout the company Builds it into its products and services
Two Kinds of Knowledge Explicit Knowledge Data, documents, and things written down or stored in computers Tacit Knowledge The “how-to” knowledge in workers’ minds Represents some of the most important information within an organization A knowledge-creating company makes such tacit knowledge available to others
Knowledge Management Successful knowledge management Creates techniques, technologies, systems, and rewards for getting employees to share what they know Makesbetter use of accumulated workplace and enterprise knowledge
Overview of Enterprise–Wide Knowledge Management Systems
Knowledge Management Systems (KMS) Knowledge management systems A major strategic use of IT Manages organizational learning and know-how Helps knowledge workers create, organize, and make available important knowledge Makes this knowledge available wherever and whenever it is needed Knowledge includes Processes, procedures, patents, reference works, formulas, best practices, forecasts, and fixes
Technologies Used to Support Knowledge Management.• data warehousing and data marts• databases (such as marketing databases• data mining using case-based reasoning or neural computing.• Web-based search and retrieval tools• data visualization, intranets and the Web