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12.1 © 2007 by Prentice Hall
1212ChapterChapter
Enhancing Enhancing Decision MakingDecision Making
Enhancing Enhancing Decision MakingDecision Making
12.2 © 2007 by Prentice Hall
LEARNING OBJECTIVES
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
• Describe different types of decisions and the decision-making process.
• Assess how information systems support the activities of managers and management decision making.
• Demonstrate how decision-support systems (DSS) differ from MIS and how they provide value to the business.
12.3 © 2007 by Prentice Hall
LEARNING OBJECTIVES (cont’d)
• Demonstrate how executive support systems (ESS) help senior managers make better decisions.
• Evaluate the role of information systems in helping people working in a group make decisions more efficiently.
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
12.4 © 2007 by Prentice Hall
Procter & Gamble Restructures Its Supply Chain
• Problem: Cost pressures, complex supply chain.
• Solutions: Deploy modeling and optimization software to maximize return on investment and predict the most successful supply chain.
• Modeling software fueled with data from Oracle data warehouse improved efficiency and reduced costs.
• Demonstrates IT’s role in restructuring a supply chain.
• Illustrates digital technology improving decision making through information systems.
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
12.5 © 2007 by Prentice Hall
Business Decision Making and the Decision-Making Process Business Decision Making and the Decision-Making Process
• Senior management
• Middle management and project teams
• Operational management and project teams
• Individual employees
Decision-Making Levels:
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
12.6 © 2007 by Prentice Hall
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Information Requirements of Key Decision-Making Groups in a Firm
Figure 12-1
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision Making Chapter 12 Enhancing Decision Making
12.7 © 2007 by Prentice Hall
Unstructured decisions:
Types of Decisions
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
• Novel, non-routine decisions requiring judgment and insights
• Examples: Approve capital budget; decide corporate objectives
12.8 © 2007 by Prentice Hall
Structured decisions:
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
• Routine decisions with definite procedures
• Examples: Restock inventory; determine special offers to customers
Semistructured decisions:
• Only part of decision has clear-cut answers provided by accepted procedures
• Examples: Allocate resources to managers; develop a marketing plan
Types of Decisions (Continued)
12.9 © 2007 by Prentice Hall
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)
• Group Decision-Support Systems (GDSS)
Systems for Decision SupportSystems for Decision Support
There are four kinds of systems that support the different levels and types of decisions:
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
12.10 © 2007 by Prentice Hall
Stages in Decision Making
Figure 12-2
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
12.11 © 2007 by Prentice Hall
• Information quality: Accuracy, integrity, consistency,
completeness, validity, timeliness, accessibility
Decision Making in the Real WorldDecision Making in the Real World
In the real world, investments in decision-support systems do not always work because of
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision Making for the Digital Firm Chapter 12 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
12.12 © 2007 by Prentice Hall
• Management filters: Biases and bad decisions of managers
• Organizational inertia: Strong forces within organization that resist change
Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Decision Making in the Real World (Continued)
12.13 © 2007 by Prentice Hall
• 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 SUPPORT
The Difference between MIS and DSS The Difference between MIS and DSS
Management Information SystemsManagement Information SystemsChapter 12Enhancing Decision MakingChapter 12Enhancing Decision Making
Management Information Systems:
12.14 © 2007 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision Making for the Digital Firm Chapter 12 Enhancing Decision Making for the Digital Firm
Decision Support Systems:
12.15 © 2007 by Prentice Hall
Model-driven DSS:
SYSTEMS FOR DECISION SUPPORT
Types of Decision-Support Systems Types of Decision-Support Systems
Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm
• Primarily stand-alone systems
• Use a strong theory or model to perform “what-if” and similar analyses
12.16 © 2007 by Prentice Hall
Data-driven DSS:
SYSTEMS FOR DECISION SUPPORT
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
• 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
12.17 © 2007 by Prentice Hall
• 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 SUPPORT
Components of DSS Components of DSS
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
12.18 © 2007 by Prentice Hall
SYSTEMS FOR DECISION SUPPORT
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
• Statistical models
• Optimization models
• Forecasting models
• Sensitivity analysis (“what-if” models)
Model: An abstract representation that illustrates the components or relationships of a phenomenon
12.19 © 2007 by Prentice Hall
Overview of a Decision-Support System
Management Information SystemsManagement Information SystemsChapter 12Enhancing Decision MakingChapter 12Enhancing Decision Making
Figure 12-3
SYSTEMS FOR DECISION SUPPORT
12.20 © 2007 by Prentice Hall
• 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 SUPPORT
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
Business Value of DSS
12.21 © 2007 by Prentice Hall
• 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 Web-Based Customer Decision-Support Systems
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
12.22 © 2007 by Prentice Hall
• 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.
SYSTEMS FOR DECISION SUPPORT
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
Web-based Customer Decision-Support Systems (Continued)
12.23 © 2007 by Prentice Hall
• 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 SYSTEMS
What Is a GDSS? What Is a GDSS?
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
12.24 © 2007 by Prentice Hall
• Hardware (conference facility, audiovisual equipment, etc.)
• Software tools (Electronic questionnaires, brainstorming tools, voting tools, etc.)
• People (Participants, trained facilitator, support staff)
Three Main Components of GDSS: Three Main Components of GDSS:
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
12.25 © 2007 by Prentice Hall
• 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.
Overview of a GDSS Meeting
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
12.26 © 2007 by Prentice Hall
• 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.
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Overview of a GDSS Meeting (Continued)Overview of a GDSS Meeting (Continued)
12.27 © 2007 by Prentice Hall
Group System ToolsGroup System Tools
Figure 12-9
The sequence of activities and collaborative support tools used in an electronic meeting system facilitate communication among attendees and generate a full record of the meeting.
Source: From Nunamaker et al., “Electronic Meeting Systems to Support Group Work,” Communications of the ACM, July 1991. Reprinted by permission.
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
Group Decision-Support Systems (GDSS)
12.28 © 2007 by Prentice Hall
• 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.
Business Value of GDSS
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
12.29 © 2007 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Business Value of GDSS (Continued)Business Value of GDSS (Continued)
12.30 © 2007 by Prentice Hall
• 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.
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
The Role of Executive Support Systems in the Firm
EXECUTIVE SUPPORT IN THE ENTERPRISE
12.31 © 2007 by Prentice Hall
• 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
Management Information SystemsManagement Information SystemsChapter 12Enhancing Decision MakingChapter 12Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
The Role of Executive Support Systems in the Firm (Continued)
12.32 © 2007 by Prentice Hall
• 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.
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
Business Value of Executive Support Systems
EXECUTIVE SUPPORT IN THE ENTERPRISE
12.33 © 2007 by Prentice Hall
• 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 Information SystemsManagement Information SystemsChapter 12Enhancing Decision MakingChapter 12Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
Business Value of Executive Support Systems Business Value of Executive Support Systems (Continued)(Continued)
12.34 © 2007 by Prentice Hall
• Decision-support systems provide opportunities for
increasing precision, accuracy, and rapidity of
decisions and thereby contributing directly to
profitability
Management Information SystemsManagement Information SystemsChapter 12 Enhancing Decision MakingChapter 12 Enhancing Decision Making
Management Opportunities:
MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONS