SITD

Sistemas de Información para
la Toma de Decisiones
Tema 9 - Capitulo 10
Supporting Management
& Decision Making
1
Learning Objectives
!  Describe the concepts of management, decision making, and
computerized support for decision making.
!  Justify the role of models in decision making.
!  Describe the framework for computerized decision support &

classify problems & support according to the framework.
!  Describe decision support systems and their benefits, and analyze

their role in management support.
MTI. Carlos J. Duarte Camacho Sistemas de Información para la Toma de Decisiones. Tema 9 Diapositiva 2
Learning Objectives (cont.)
!  Compare regular (personal) decision support systems with group
and organizational decision support systems and analyze the major
differences.
!  Describe enterprise and executive information systems, and

analyze their role in management support.
!  Explain how networks and the Web can enhance managerial

decision making.
Case: Web-based Data Analysis at Shopko
Problem:
!  The information systems that supported ShopKo’s business in the past
were highly fragmented, ineffective, and inflexible.
!  Forecasts were inaccurate, and wrong decisions were frequently made.
Solution:
!  The company installed comprehensive decision support system (DSS)
software (DSS Agent, from MicroStrategy).
!  This system includes a data warehouse and online analytical processing.
Results:
!  ShopKo’s investment into sophisticated web-based data analysis
enabled stores to carry the right merchandise at the right place & time.
Lessons from the Case
!  A solution to complex decisions can be enhanced with the use
of computer programs called a decision support system (DSS).
!  Decisions are supported both in the sales and inventory areas.
!  Much of the support is based around the concepts of data

warehousing and online analytical processing.
! 
!  The Web is playing an increasing role in facilitating purchasing.
Managers & Decision Making
!  Management is a process by which organizational goals are

achieved through the use of resources (people, money, energy,
materials, space, time).
!  These resources are considered to be inputs, and the attainment

of the goals is viewed as the output of the process.
!  Managers oversee this process in an attempt to optimize it.
The Manager s Job
3 Categories
(Mintzberg ,1973)
1. Interpersonal roles: figurehead,

leader, liaison.
2. Informational roles: monitor,

disseminator, spokesperson.
3. Decisional roles: entrepreneur,
disturbance handler, resource
allocator, negotiator.
The Manager s Decision Role
Managerial Decisions & Computerized Support
!  The success of management depends on the skillful execution of
managerial functions such as planning, organizing, directing, and
controlling.
!  To carry out these functions, managers engage in the continuous

process of making decisions.
!  Managers must learn how to use the new tools and techniques
that can help them make decisions.
"  Computerized techniques support qualitative and quantitative decision
making.
The Decision Making Process
Modeling & Models
!  A model (in decision making) is a simplified representation or
abstraction of reality.
!  With modeling, one can perform virtual experiments and an
analysis on a model of reality, rather than on reality itself.
!  Some Benefits of Modelling:

"  The cost of virtual experimentation is much lower than the cost of
experimentation conducted with a real system.
"  Models allow for the simulated compression of time.
"  Manipulating the model (by changing variables) is much easier than
manipulating the real system.
"  The cost of making mistakes during a real trial-and-error experiment is
much lower.
4 Types of Models
#  Iconic (Scale) Models. An #  Mathematical (Quantitative)
iconic model—the least abstract Models. The complexity of
model—is a physical replica of a relationships in many systems
system, usually based on a cannot conveniently be
different scale from the original. represented. A more abstract
model is possible with the aid of
mathematics.
#  Analog Models. An analog
model, in contrast to an iconic
model, does not look like the real #  Mental models provide a
system but behaves like it. subjective description of how a
person thinks about a situation.
Why do Managers Need the Support of IT?
Making decisions while processing information manually is growing
increasingly difficult due to the following trends:
1.  The number of alternatives to be considered is ever increasing.
2.  Many decisions must be made under time pressure.
3.  Due to increased fluctuations & uncertainty in the decision
environment, it is frequently necessary to conduct a sophisticated
analysis to make a good decision.
4.  It is often necessary to access remote information, consult with

experts, or have a group decision-making session, all quickly & in
expensively.
Determining the Information Needs of Managers
!  Wetherbe approach (1991): Two-phase process.
"  Phase I: a structured interview is conducted to determine managers’
perceived information needs.
"  Phase I: a prototype of the information system is quickly constructed.
!  Critical success factor (CSF) approach

!  Watson and Frolick approach (1992): is based on the following
strategies:
"  determining information requirements
"  asking (the interview approach)
"  deriving the needs from an existing information system
"  synthesizing from characteristics of the systems
"  and discovering via evolving systems (prototyping)
Management Support Systems (MSS]
#  Four major information technologies have been successfully
used to support managers.
!  DSSs: provide support primarily to analytical, quantitative
types of decisions.
!  Executive (enterprise) support systems: support the

informational roles of executives.
!  Group decision support systems: support managers
working in groups.
!  Intelligent systems: provide mulitfunctional support.
Framework for Computerized Decisions
#  Managerial problems fall under 3 categories (Source: Simon,
1977):
!  Structured problems: all phases—intelligence, design, and choice
—are structured & the procedures for obtaining the best solution
are known.
!  Unstructured problems: none of the three phases—intelligence,

design, or choice—is structured, and human intuition is frequently
the basis for decision making.
!  Semistructured problems: requires a combination of standard

solution procedures and individual judgment.
Framework for Computerized Decisions (cont.)
#  There are 3 broad categories that encompass all managerial
activities (Part ii Source: Anthony,1965):
!  Strategic planning — the long-range goals & policies for

resource allocation;
!  Management control — the acquisition & efficient
utilization of resources in the accomplishment of
organizational goals
!  Operational control — the efficient & effective execution of

specific tasks.
Management Science
!  The Management Science approach maintains that managers
can follow a fairly systematic process for solving problems.
!  Defining the problem (a decision situation that may deal with a
setback or with an opportunity).
!  Classifying the problem into a standard category.
!  Constructing a standard mathematical model that describes the

real-life problem.
!  Finding potential solutions to the modeled problem and evaluating

them.
!  Choosing & recommending a solution to the problem.
Decision Support Systems [DSS]
#  Decision Support System (DSS) = a computer-based information
system that combines models and data in an attempt to solve
semistructure problems with extensive user involvement.
#  The term decision support systems (DSS), like the terms MIS and
MSS, means different things to different people.
#  DSS can be viewed as an approach or a philosophy rather than a

precise methodology.
Case: Using DSS to Determine Risk
Problem:
!  Houston Oil & Minerals Corporation was interested in a proposed joint
venture but requried a risk analysis.
Solution:
!  Houston Oil built a DSS by means of a specialized planning
language. The results suggested that the project be accepted.
Results:
!  The executive vice president, using his experience, judgment, and
intuition, decided to reverse the decision and rejected the project.
"  The DSS was flexible and responsive enough to allow managerial
intuition and judgment to be incorporated into the analysis.
Characteristics of DSSs
#  Provides support for decision makers at all management levels,
.
whether individuals or groups, by bringing together human judgment
and objective information.
#  Supports several interdependent and/or sequential decisions.
#  Supports all phases of the decision-making process— intelligence,

design, choice, and implementation—as well as a variety of
decision-making processes and styles.
#  Is adaptable by the user over time to deal with changing conditions.
Characteristics of DSSs (cont.)
#  Is easy to construct and use in many cases.
#  Promotes learning, which leads to new demands & refinement of the
application, which leads to additional learning, and so forth.
#  Utilizes quantitative models (standard and/or custom made).
#  Advanced DSSs are equipped with a knowledge management

component that allows the efficient and effective solution of very complex
problems.
#  Can be disseminated for use via the Web.
#  Allows the easy execution of sensitivity analyses.
Components of a DSS System
!  Data Management Subsystem contains all the necessary data
that flow from several sources and are extracted prior to their
entry to a DSS database.
!  Model Management Subsystem contains completed models &
models’ building blocks necessary to develop DSS applications.
!  This includes standard software with financial, statistical, management
science, or other quantitative models.
!  Model Base Management System (MBMS) creates DSS

models easily and quickly, either from scratch, existing models,
or building blocks.
DSS Users
"  Staff Assistant. This person has "  Business (System) Analyst. This
specialized knowledge about person has a general knowledge
management problems and some of the application area, formal
experience with decision support business administration education,
technology. and considerable skill in DSS
construction tools.
"  Expert Tool User. This person is
skilled in the application of one or "  Group Facilitator. When group
more types of specialized decisions are supported by IT, it is
problem-solving tools. This user frequently beneficial to use a
performs tasks for which the process facilitator.
manager does not have the
necessary skills or training.
The DSS Model
Group Decision Support Systems
!  Group decision support system (GDSS) = an interactive computer-
based system that facilitates the solution of semistructured and
unstructured problems by a group of decision makers.
!  The goal of GDSS is to improve the productivity of decision-making

meetings, either by speeding up the decision-making process or by
improving the quality of the resulting decisions, or both.
!  The first generation of GDSS was designed to support face-to-face

meetings in what is called a decision room.
!  Such a GDSS is composed of hardware, software, people and
procedures.
GDSS Components
Hardware. A group can use two types People. The group members and
of hardware configurations. a facilitator.
"  a GDSS facility designed for
electronic meetings.
"  a collection of PCs, equipped
with keypads for voting and
other groupware activities.
Software. Typical GDSS software is a Procedures. The procedures that

collection of about a dozen tools or allow for ease of operation and
packages, which are integrated into effective use of the technology
a comprehensive system. by group members.
Case: The World Economic Forum (WEF)
Problem:
!  WEF is a consortium of top business, government, academic, and
media leaders from virtually every country in the world.
!  Until 1998 the members conferred privately or debated global issues at
meetings. Follow-up was difficult.
Solution:
!  WEF developed a collaborative computing system called the World
Electronic Community (WELCOM).
!  Provides members with a secure channel to send e-mail, read reports &
communicate in videoconferences.
Results:
!  By 2001 the system was completely on the Web.
Enterprise Decision Support
There are two main types of enterprise decision support system:
!  Organizational decision support systems (ODSS) which focus

on an organizational task or activity involving a sequence of
operations and decision makers
"  Computer-based systems can be developed to provide decision support
at the individual group or organization levels (Hackathorn and Keen,
1981).
!  Executive information system (EIS), also known as an

Executive support system (ESS), is a technology designed in
response to managers’ specific needs.
Characteristics of EISs
#  The drill down capability enables #  Trend analysis can be done using
users to get details, and details of forecasting models, which are
details, of any given information. included in many ESSs
#  Critical success factors (CSFs) & #  Executive support systems provide

Key Performance Indicators are for ad hoc analysis capabilities, in
identified. which executives can make specific
requests for data analysis as
#  In a status access mode, the needed.
latest data or reports on the status
of key indicators or other factors
can be accessed at any time.
Characteristics of EISs (cont.)
#  Exception reporting is based on #  Integration with DSS. Executive
the concept of management by information systems are useful in
exception, in which an executive identifying problems and
gives attention to significant opportunities.
deviations from standards.
#  In order to save the executive’s #  With the introduction of the Intranet

time in conducting a drill down, & corporate portals, the traditional
finding exceptions, or identifying EIS has become a part of an
trends, an intelligent EIS has been enterprise information system, and
developed. it now often appears under the
name of business intelligence.
Benefits of DSS for the User
!  Users can access DSS from anywhere.
!  Many DSSs are now deployed on the corporate Intranet, making them
accessible to all employees.
!  The Web supports interactive DSS-related queries and ad hoc report
generation.
"  Users can select a list of variables from a pull-down menu when executing
a predefined query or report.
!  Web-based application servers can download Java applets that

execute functions on desktop DSS programs.
"  This gives users the capabilities of advanced DSS applications without
requiring client software to be loaded.
Benefits of DSS for the Builder
!  A DSS developer (builder) can access Web pages with data related to
the project, the software used, the users etc., thus cutting development
time.
!  A DSS developer can collaborate with end-users for quicker

prototyping of DSS applications.
!  A DSS developer can collaborate with vendors over the Web.

"  DSS software and applications are available from ASPs over the Web. In
such a case there is no need to program the DSS, but the developer must
work with the vendor.
Benefits Web-Based DSSs
#  Able to reach rich resources #  Contributes to better decision
of data with simple data entry making.
& analysis procedure.
#  Can easily retrieve data in #  Enables easier use of ready-
sophisticated ways. made DSS.
#  Is easy to use.
#  Cuts development costs.
#  Reduces paperwork
Requirements for Web-Based DSS
#  A study by Business Objects Corporation (businessobjects.com)
identified five key requirements for the successful delivery of Web-
based DSS.
"  Self-service data access

"  High availability & performance
"  Zero-administration clients
"  Security
"  Unified meta data
Simulation for Decision Makers
!  In DSS, simulation refers to a technique for conducting
experiments with a computer on a model of a management
system.
!  Characteristics of Simulation;
!  While models in general represent reality, simulation usually
imitates it closely.
!  It is a technique for conducting experiments.
" It can describe and/or predict the characteristics of a given system
under different circumstances.
!  It can be used for complex decision making
Case: Simulation Saves Siemens Millions
Problem:
!  Siemens Solar Industries (SSI), the world’s largest maker of solar
electric products, suffered continuous problems in poor material flow,
unbalanced resource use, bottlenecks in throughput & schedule delays.
Solution:
!  SSI built a cleanroom contamination-control technology.
!  The simulation provided a virtual laboratory for engineers to
experiment with various configurations before the physical systems
were constructed.
Results:
!  SSI improved their manufacturing process significantly.
!  The cleanroom facility saved SSI over $75 million/ year.
Advantages of Simulation
1. Allows for inclusion of the real- 4. Can show the effect of
life complexities of problems. compressing time, giving the
manager in a matter of minutes
the long-term effects of various
2. Is descriptive, enabling policies.
managers to ask what-if type
questions.
5. Can be conducted from anywhere
3. Can handle an extremely wide using Web tools on the corporate
variation in problem types, portal or extranet.
such as inventory & staffing,
as well as higher managerial-
level tasks like long-range
planning.
Examples of DSSs
➣  PriceWaterhouseCoopers (pcwglobal.com) offers online DSSs in
retailing, financial services, etc. Of special interest are the risk
management and self insurance decisions.
➣  Microsoft’s Office Small Business edition (microsoft.com) contains

“what-if”wizards that can be used to view the financial impacts of
decisions, such as price and inventory decisions.
➣  IBM (software.ibm.com) offers many tools ranging from market-basket
analysis to financial & manufacturing decision support
➣  Brio’s (brio.com) “revenue optimization application” helps companies

to identify & capture the full potential of revenue across product lines &
market segments.
Frontline Decision Making
!  Frontline decision making is the process by which companies automate
decision processes and push them down into the organization &
sometimes out to partners.
!  Frontline decision making serves business users such as line
managers, sales executives, and call-center representatives by
incorporating decision making into their daily work.
!  Frontline software that started to appear on the market in late 1999 can
solve standard problems
"  According to Forrester Research Inc., such systems are essential for the
survival of many companies, but it is expected to take five years for the
technology to mature.
DSS Failures
!  Over the years there have been many cases of failures of all types of
decision support systems. Here are some examples;
" The ill-fated Challeger Shuttle mission was partially attributed to a

flawed GDSS. NASA used a mismanaged GDSS session in which
anonymity was not allowed and other procedures were violated.
" In an international congress on airports, failures in Denver, Hong

Kong, and Malaysia airports have been attributed to failed DSSs.
" Brezillon and Pomerol (1997) describe some failures in intelligent

DSSs.
Managerial Issues
"  Intangible benefits. Management
support systems are difficult to justify
because they generate mostly
intangible benefits, such as the ability
to solve problems faster.
"  Documenting personal DSS. Many

employees develop their own DSS to "  Security. Decision support systems may
increase their productivity. It is contain extremely important information
advisable to have an inventory of these for the livelihood of organizations.
DSSs so that if the employee leaves
the organization, the productivity tool
remains.
Managerial Issues (cont.)
"  Ready-made commercial DSS. "  Intelligent DSS. Introducing
With the increased use of Web- intelligent agents into a DSS
based system and ASPs, it is application can greatly increase its
possible to find more and more DSS functionality.
applications sold off the shelf,
frequently online.
"  Ethical issues. Corporations with
management support systems may
"  Organizational culture. The more need to address some serious
people recognize the benefits of DSS ethical issues such as privacy &
and the more support is given to it by accountability. Human judgment is
top management, the more DSS will another important issue DSS.
be used.

SITD

Uploaded by

Copyright:

Available Formats

SITD

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

SITD

Uploaded by

Copyright:

Available Formats

Sistemas de Información para

! Justify the role of models in decision making.

! Describe the framework for computerized decision support &

! Describe decision support systems and their benefits, and analyze

! Describe enterprise and executive information systems, and

! Explain how networks and the Web can enhance managerial

! Decisions are supported both in the sales and inventory areas.

! Much of the support is based around the concepts of data

! Management is a process by which organizational goals are

! These resources are considered to be inputs, and the attainment

! Managers oversee this process in an attempt to optimize it.

1. Interpersonal roles: figurehead,

2. Informational roles: monitor,

! To carry out these functions, managers engage in the continuous

! Some Benefits of Modelling:

4. It is often necessary to access remote information, consult with

! Critical success factor (CSF) approach

! Executive (enterprise) support systems: support the

! Unstructured problems: none of the three phases—intelligence,

! Semistructured problems: requires a combination of standard

! Strategic planning — the long-range goals & policies for

! Operational control — the efficient & effective execution of

! Constructing a standard mathematical model that describes the

! Finding potential solutions to the modeled problem and evaluating

# DSS can be viewed as an approach or a philosophy rather than a

# Supports several interdependent and/or sequential decisions.

# Supports all phases of the decision-making process— intelligence,

# Is adaptable by the user over time to deal with changing conditions.

# Advanced DSSs are equipped with a knowledge management

! Model Base Management System (MBMS) creates DSS

! The goal of GDSS is to improve the productivity of decision-making

! The first generation of GDSS was designed to support face-to-face

Software. Typical GDSS software is a Procedures. The procedures that

! Organizational decision support systems (ODSS) which focus

! Executive information system (EIS), also known as an

# Critical success factors (CSFs) & # Executive support systems provide

# In order to save the executive’s # With the introduction of the Intranet

! Web-based application servers can download Java applets that

! A DSS developer can collaborate with end-users for quicker

! A DSS developer can collaborate with vendors over the Web.

" Self-service data access

➣ Microsoft’s Office Small Business edition (microsoft.com) contains

➣ Brio’s (brio.com) “revenue optimization application” helps companies

" The ill-fated Challeger Shuttle mission was partially attributed to a

" In an international congress on airports, failures in Denver, Hong

" Brezillon and Pomerol (1997) describe some failures in intelligent

" Documenting personal DSS. Many

You might also like

!  Justify the role of models in decision making.

!  Describe the framework for computerized decision support &

!  Describe decision support systems and their benefits, and analyze

!  Describe enterprise and executive information systems, and

!  Explain how networks and the Web can enhance managerial

!  Decisions are supported both in the sales and inventory areas.

!  Much of the support is based around the concepts of data

!  Management is a process by which organizational goals are

!  These resources are considered to be inputs, and the attainment

!  Managers oversee this process in an attempt to optimize it.

!  To carry out these functions, managers engage in the continuous

!  Some Benefits of Modelling:

4.  It is often necessary to access remote information, consult with

!  Critical success factor (CSF) approach

!  Executive (enterprise) support systems: support the

!  Unstructured problems: none of the three phases—intelligence,

!  Semistructured problems: requires a combination of standard

!  Strategic planning — the long-range goals & policies for

!  Operational control — the efficient & effective execution of

!  Constructing a standard mathematical model that describes the

!  Finding potential solutions to the modeled problem and evaluating

#  DSS can be viewed as an approach or a philosophy rather than a

#  Supports several interdependent and/or sequential decisions.

#  Supports all phases of the decision-making process— intelligence,

#  Is adaptable by the user over time to deal with changing conditions.

#  Advanced DSSs are equipped with a knowledge management

!  Model Base Management System (MBMS) creates DSS

!  The goal of GDSS is to improve the productivity of decision-making

!  The first generation of GDSS was designed to support face-to-face

!  Organizational decision support systems (ODSS) which focus

!  Executive information system (EIS), also known as an

#  Critical success factors (CSFs) & #  Executive support systems provide

#  In order to save the executive’s #  With the introduction of the Intranet

!  Web-based application servers can download Java applets that

!  A DSS developer can collaborate with end-users for quicker

!  A DSS developer can collaborate with vendors over the Web.

"  Self-service data access

➣  Microsoft’s Office Small Business edition (microsoft.com) contains

➣  Brio’s (brio.com) “revenue optimization application” helps companies

" The ill-fated Challeger Shuttle mission was partially attributed to a

" In an international congress on airports, failures in Denver, Hong

" Brezillon and Pomerol (1997) describe some failures in intelligent

"  Documenting personal DSS. Many