13.1 © 2006 by prentice hall 13 chapter enhancing decision making for the digital firm

13.1 © 2006 by Prentice Hall

13Chapter

Enhancing Decision Making Enhancing Decision Making for the Digital Firmfor the Digital Firm

Enhancing Decision Making Enhancing Decision Making for the Digital Firmfor the Digital Firm


• 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

Management Information SystemsManagement Information SystemsChapter 13 Chapter 13 Enhancing Decision Making for the Digital Firm Enhancing Decision Making for the Digital Firm

OBJECTIVES


• 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

OBJECTIVES (Continued)



• Challenge: Coordinate the daily arrival of 70 rail cars and 500 trucks to ensure just-in-time delivery of car parts

• Solutions: Adopt Transportation Efficiency Support System (TESYS) to synchronize the deliveries with available loading docks and production schedules

• Develop new business processes for coordinating logistics with production needs

• Illustrates the how IT enhances decision making and increases business process efficiency in a manufacturing environment


DaimlerChrysler Bremen Plant CaseDaimlerChrysler Bremen Plant Case


DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Business intelligence enables firms to:

Business Intelligence and Decision Support Business Intelligence and Decision Support

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

• Amass information

• Develop knowledge about operations

• Change decision-making behavior to achieve profitability and other business goals


Systems and Technologies for Business Intelligence


Figure 13-1



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:





Information Requirements of Key Decision-Making Groups in a Firm

Figure 13-2



Unstructured decisions:

Types of Decisions



• Novel, non-routine decisions requiring judgment and insights

• Examples: Approve capital budget; decide corporate objectives


Structured decisions:



• 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)


• 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:




Stages in Decision Making

Figure 13-3




• 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 filters: Biases and bad decisions of managers

• Organizational inertia: Strong forces within organization that resist change



Decision Making in the Real World (Continued)


Six Major Trends:

• Detailed enterprise-wide data

• Broadening decision rights and responsibilities

Trends in Decision Support and Business Intelligence Trends in Decision Support and Business Intelligence

The rise of client/server computing, the Internet, and Web technologies made a major impact on systems that support decision making.




• Intranets and portals

• Personalization and customization of information

• Extranets and collaborative commerce

• Team support tools



Trends in Decision Support and Business Intelligence (Continued)


• 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 Systems:


• Support semistructured and unstructured problems

• Greater emphasis on models, assumptions, ad-hoc queries, display graphics

• Emphasizes change, flexibility, and a rapid response



Decision Support Systems:


Model-driven DSS:


Types of Decision-Support Systems Types of Decision-Support Systems


• Primarily stand-alone systems

• Use a strong theory or model to perform “what-if” and similar analyses


Data-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


• 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


Components of DSS Components of DSS





• Statistical models

• Optimization models

• Forecasting models

• Sensitivity analysis (“what-if” models)

Model: An abstract representation that illustrates the components or relationships of a phenomenon


Overview of a Decision-Support System


Figure 13-4



Sensitivity Analysis



Figure 13-5


• 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


Business Value of DSS Business Value of DSS


• Supply chain management

• Customer relationship management


• 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



Business Value of DSS (Continued)


A DSS for Customer Analysis and Segmentation



Figure 13-6


• 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.


Web-Based Customer Decision-Support Systems Web-Based Customer Decision-Support Systems



• 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.



Web-based Customer Decision-Support Systems (Continued)


• 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?



• 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:




• 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




• 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.



Overview of a GDSS Meeting (Continued)Overview of a GDSS Meeting (Continued)


Group System Tools


Figure 13-7


Source: From Nunamaker et al., “Electronic Meeting Systems to Support Group Work,” Communication of the ACM, July 1991. Reprinted with permission.


• 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




• 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



Business Value of GDSS (Continued)Business Value of GDSS (Continued)


• 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.


The Role of Executive Support Systems in the Firm

EXECUTIVE SUPPORT IN THE ENTERPRISE


• 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



The Role of Executive Support Systems in the Firm (Continued)


• 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.


Business Value of Executive Support Systems



• 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.



Business Value of Executive Support Systems Business Value of Executive Support Systems (Continued)(Continued)


• Four Star Distribution: Uses ESS for competitive

intelligence; global buying trends can be shared with

manufacturers, distributors, sales representatives to

get latest products to customer before selling

season begins


Executive Support Systems and the Digital Firm Executive Support Systems and the Digital Firm





• Verizon Communications and Pharmacia Corporation: Monitoring corporate performance with Digital Dashboards and Balanced Scorecard Systems

• Roadway Express: Enterprise-Wide Reporting and Analysis

Executive Support Systems and the Digital Firm (Continued)


• Decision-support systems provide opportunities

for increasing precision, accuracy, and rapidity

of decisions and thereby contributing directly to

profitability


Management Opportunities:

MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONS


• Building systems that can actually fulfill Executive Information Requirements

• Changing management thinking to make better use of systems for decision support

• Organizational resistance


Management Challenges:Management Challenges:



• Users must work with IS specialists to identify a

problem and a specific set of capabilities that will

help them arrive at decisions about the problem.

• The system must be flexible, easy to use, and

capable of supporting alternative decision options.


Solution Guidelines: Solution Guidelines:


Flexible Design and Development:


• User training, involvement, and experience; top

management support; and length of use are the

most important factors in the success of

management support systems.



Training and Management Support:

Solution Guidelines (Continued)Solution Guidelines (Continued)

13.1 © 2006 by prentice hall 13 chapter enhancing decision making for the digital firm

Documents

enhancing decision making

prentice hall decision

group decisionsupport

prentice hall systems

executive support systems

role of information

digital firm objectives

digital firm novel