Decision Support Systems

Decision- Making and Senior Decision- Making and Senior ManagersManagers

Complex, non-repetitive and significant in terms of the organisational implications

Competition

Markets

Costs

Technology

Decision Making and Senior Decision Making and Senior ManagersManagers

Uncertain Fast Moving Business Environment Increased Velocity of Decision MakingShort Feedback LoopsResponsive Information Systems

Conflicting Objectives, Uncertainty of Outcome and Lack

of Comprehensive Information

Decision Making and Senior Decision Making and Senior ManagersManagers

• Dangerous to make a prior judgement as to the information which a

decision maker is likely to need.

• “ Since [systems developers] and to a large extent managers

themselves do not know how they make their decisions ... it would

seem sensible to allow the manager more freedom to build up the

information system on a trial and error basis and to study these

systems in the light of their effectiveness”.

Critisms of Traditional Reporting Critisms of Traditional Reporting ApproachesApproaches

• Dominated by Financial Control Considerations

• Cyclical and Scheduled Reporting

• Dominance of Internal Operational Information

• Long Feedback loop

• Short Termism

• Absence of Non Financial Measures

• Non Responsive Technologies & Technologists

• Poor Support for Work Groups and Departmental Systems

Critisms of Traditional ReportingCritisms of Traditional ReportingApproachesApproaches

• Failure to reflect Changing Corporate Strategy

• Lack of support for Flexible Organisational Structures

• Need to Support Planning, Direction Setting, and Forecasting

• Existing Reporting Structures Rigid

• Cost Reduction Programmes

Decision Support SystemsDecision Support Systems

• DSS - An attempt by computer professionals and

management scientists to make an important contribution

to the improvement of the managerial function within

organisations.

• A discipline which focuses specifically on supporting managerial activities

• Components of DSS– Decision Support Technology, Database, Modelbase and Interface

– Decision Support personnel

• Grew out of the perceived need to develop systems that could cater for the demands of senior management

Definitions of a Decision Support System

General definition - a system providing both problem-solving and communications capabilities for semistructured problems

Specific definition - a system that supports a single manager or a relatively small group of managers working as a problem-solving team in the solution of a semistructured problem by providing information or making suggestions concerning specific decisions.

Degree ofDegree ofproblemproblemstructurestructure

The Gorry and Scott Morton GridThe Gorry and Scott Morton GridManagement levelsManagement levels

StructuredStructured

SemistructuredSemistructured

UnstructuredUnstructured

OperationalOperational controlcontrol

ManagementManagement controlcontrol

StrategicStrategicplanningplanning

Accountsreceivable

Order entry

Inventory control

Budget analysis--engineered costs

Short-term forecasting

Tanker fleet mix

Warehouse andfactory location

Productionscheduling

Cashmanagement

PERT/COST systems

Variance analysis-- overall budget

Budget preparation

Sales and production

Mergers and acquisitions

New product planning

R&D planning

Characteristics of DSS

• Observed characterisitics of DSS which have evolved from the work of Alter and others include:

• they tend to be aimed at the less well structured underspecified problems that upper level managers typically face;

• they attempt to combine the use of models or analytic techniques with traditional data access and retrieval functions;

• they specifically focus on features which make them easy to use by noncomputer people in an interactive mode; and

• they emphasize flexibility and adaptability to accommodate changes in the environment and the decision making approach of the user.

Decision Support Systems

• decision focused, aimed at top managers and executive decision makers

• emphasis on flexibility, adaptability and quick response

• user initiated and controlled; and

• support for the personal decision making styles of individual decision makers.

Retrieve Retrieve information information

elementselements

Analyze Analyze entire entire filesfiles

Prepare Prepare reports reports

from from multiple multiple

filesfiles

Estimate Estimate decision decision

consequen-consequen-cesces

Propose Propose decisionsdecisions

Degree Degree of of problem problem solving solving supportsupport

Degree of Degree of complexity of the complexity of the problem-solving problem-solving

systemsystem

LittleLittle MuchMuch

Alter’s DSS TypesAlter’s DSS Types

Make Make decisionsdecisions

Manager + Computer(DSS)

Solution

ComputerSolution

ManagerSolution

Structured Semistructured Unstructured

DEGREE OF PROBLEM STRUCTUREDEGREE OF PROBLEM STRUCTURE

The DSS Focuses on Semistructured ProblemsThe DSS Focuses on Semistructured Problems

Peter Keen Believes That a DSS Should:

1. Assist in solving semistructured problems

2. Support, not replace, the manager

3. Contribute to decision effectiveness, rather than efficiency

DSS Components

DATABASE Modelbase

User interface

Database Component

* the ability to combine a variety of data sources through a data capture and extraction process;

* the ability to add and delete data sources quickly and easily;

* the ability to portray logical data structures in user terms so the user understands what is available and can specify needed additions and deletions;

* the ability to handle personal and unofficial data so the user can experiment with alternatives based on personal judgment; and

* the ability to manage this wide variety of data with a full range of data management functions.

Contents of the Database are Used by Three Software Subsystems

• Report writers (including COBOL)

• Mathematical models

• GDSS -- contributes to communications effectiveness

Model Base Component

* the ability to create new models quickly and easily;

* the ability to catalog and maintain a wide range of models supporting all levels of management;

* the ability to interrelate these models with appropriate linkages through the database;

* the ability to access and integrate model building blocks; and

* the ability to manage the model base with management functions analogous to database management (e.g. for storing etc)

GDSS software

MathematicalMathematicalModelsModels

OtherOther group group membersmembers

DatabaseDatabase

GDSSGDSSsoftwaresoftware

EnvironmentEnvironment IndividualIndividual problemproblem solverssolvers

Decision support system

EnvironmentEnvironment

Legend:Data Information Communication

A DSS ModelA DSS Model

ReportReportwritingwriting

softwaresoftware

User Interface

* the ability to handle a variety of dialogue styles with the ability to shift among them at the user's choice;

* the ability to accommodate user actions in a variety of media;

* the ability to present data in a variety of formats and media; and

* the ability to provide flexible support for the users' knowledge base.

Decision Support PeopleDecision Support People

• Interdisciplinary Team - Diverse Backgrounds

• Strong Interpersonal Skills

• High Levels of Business Awareness &

Understanding

• Strong Modelling and Analysis Capabilities

• Institutionalised and Ad hoc Analysis

Decision Support TechnologiesDecision Support Technologies

• Microcomputer Based Modelling and Analysis

• Workgroup Local Area Networks

• "Scrubbing" of Larger Mainframe Based Datasets

• Graphics and Presentation Focus

Decision Support SystemsExamples

Decision Support SystemsExamples

• Aer Rianta International

• Shell Tankers

• Marshall

• Waterford Crystal

• Others

Long Run Decisions - Capital Investment Appraisal

• Example: Aer Rianta International

• Operations in Russia, Poland, Thailand, Bahrain etc

• Turnover £100ml Revenues £7 ml

• Airport management

• Duty Free

Aer Rianta International - EUROTUNNEL

Aer Rianta International - EUROTUNNEL

Calais

Folstone

•Duty Free Concession until 2000

•10 Million Passengers p.a.

Passenger NumbersOpening HoursSize of outlet Aer Rianta International

EuroTunnel

Suppliers Margins

GovernmentRegulations Duties

Tariffs

DowntownOutlets

ARIPersonnel

Newspaer &Journals

Other ARIFunctions

Business DevelopmentUnit

Prices &Volumes

On Line Databases

Lotus 1-2-3

Aer Rianta International - EUROTUNNEL

Aer Rianta International - EUROTUNNEL

Short Run Decision Making and Control

• Example :Shell International Tankers – Biggest Fleet in the world

– Gas, Crude Oil, Product i.e. Naphtha, Gasoil, Jet Fuel

Shell International TankersShell International Tankers

IVMS

Traders EngineeringSuperintendants

OperationsSuperintendants

Updated PerformanceParameters

ExcelSmartWord

Performance Analysis

Monthly Management Accounting

Monthly Management Accounting

• Example Waterford Crystal– Profit and Loss

– Overhead analysis

– Margin Analysis

– Cash Flow

Lotus 1-2-3

The Blue Book

BPCSManufacturing

System

Printed TrialBalance

Keypunch

Fifty Pages Financial & Non Financial

Other FunctionsPersonnel

Other FunctionsQuality

Other FunctionsProduction

MarshallMarshall

• Leaders in Servicing Transport Refridgeration

• UK Wide Network

• Large Market Share

• Diverse Customer Needs

• Standard Price Card

Lotus 1-2-3

Details of the Vechiles and

the Units customer is running

Service history of the units & work carried out in the

past

Locations &Estimates of

TravelCosts

Servic e History of theTypes of \units Customer

is runningDatabase of 2,000

units

Contract Maintenance

Matrix 1995

Current costs ofServicing

US ManufacturerEstimates of lif

of Parts etc

Agreed Fixed Price 4 yr

Contract ServicingPrice

Excel

GMS Mainframe

QuarterlyUpdates on Diskette

8000 Records

Analysis of Drug Costs etc

Dept of Health

Weekly Performance Measurement

Weekly Performance Measurement

• Cross Functional Measures

• Scrubbing of Large Databases

• Cross Platform Links

• Manual Inputs

Lotus 1-2-3

BPCS ManufatcuringSystem

InventoryLevels

QualityMeasures

OutstandingOrders

FinancialPerformance

PersonnelHeadcounts

Marketing

Weekly ManufacturingReport

Excel

General LedgerSystem

Budgets

Hard Copy Input

Shared LANFiles

Floppy Disks

Populate GeneralLedger Budegt Codes

MAPS Market Analysis and Planning System

Demographic ProfilesCatchment Area AnalysisDirect marketingPerformance Evaluation

OthersOthers

• Securitisation of Mortages

• Capital Investment Appraisal

• Branch Profiling

• Island Ferry Analysis

Conclusions Conclusions

• Unsolicited Analysis

• Core Business Understanding

• Value Added Interpretation and Commentary

• Provider of Modelling and Analysis Capabilities

• Information Gatekeepers and Data Warehousing

• Business Driven Responsive Information Systems

• DSS - Multidimensional Activity

• DSS - Ad Hoc and Institutionalised

• Formal Feedback mechanisms for DSS Process

• Awareness of Emerging Concepts, SIS, Groupware, EIS

• Presentation and Interpersonal Skills

• Multidimensional Performance Measurement

• Improved Data Set handling

• Clarity of Role as DSS Personnel

Conclusions Conclusions