Transcript Power Point Slides for Chapter 12

Chapter 12
Enhancing
Decision Making
12.1
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
LEARNING OBJECTIVES
• 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.
12.2
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.3
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.4
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Business Decision Making and the Decision-Making Process
Decision-Making Levels:
• Senior management
• Middle management and project teams
• Operational management and project teams
• Individual employees
12.5
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Information Requirements of Key Decision-Making Groups in a
Firm
12.6
Figure 12-1
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Types of Decisions
Unstructured decisions:
• Novel, non-routine decisions requiring judgment and
insights
• Examples: Approve capital budget; decide corporate
objectives
12.7
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Types of Decisions (Continued)
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
12.8
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Systems for Decision Support
There are four kinds of systems that support the different
levels and types of decisions:
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)
• Group Decision-Support Systems (GDSS)
12.9
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Stages in Decision Making
12.10
Figure 12-2
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Decision Making in the Real World
In the real world, investments in decision-support systems
do not always work because of
• Information quality: Accuracy, integrity, consistency,
completeness, validity, timeliness, accessibility
12.11
© 2007 by Prentice Hall
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Decision Making in the Real World (Continued)
• Management filters: Biases and bad decisions of
managers
• Organizational inertia: Strong forces within
organization that resist change
12.12
© 2007 by Prentice Hall
Management Information Systems
Chapter 12Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
The Difference between MIS and DSS
Management 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
12.13
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Decision Support Systems:
• Support semistructured and unstructured problems
• Greater emphasis on models, assumptions, ad-hoc
queries, display graphics
• Emphasizes change, flexibility, and a rapid response
12.14
© 2007 by Prentice Hall
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Types of Decision-Support Systems
Model-driven DSS:
• Primarily stand-alone systems
• Use a strong theory or model to perform “what-if” and
similar analyses
12.15
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
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
12.16
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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
12.17
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Model: An abstract representation that illustrates the
components or relationships of a phenomenon
• Statistical models
• Optimization models
• Forecasting models
• Sensitivity analysis (“what-if” models)
12.18
© 2007 by Prentice Hall
Management Information Systems
Chapter 12Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Overview of a Decision-Support System
12.19
Figure 12-3
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Business Value of DSS
• 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
12.20
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.21
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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, email, 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.
12.22
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
What 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.
12.23
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Three 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)
12.24
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.25
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.26
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
Group Decision-Support Systems (GDSS)
Group System Tools
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.
12.27
Figure 12-9
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.28
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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
12.29
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing 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.
12.30
© 2007 by Prentice Hall
Management Information Systems
Chapter 12Enhancing Decision Making
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
12.31
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
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.
12.32
© 2007 by Prentice Hall
Management Information Systems
Chapter 12Enhancing Decision Making
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.
12.33
© 2007 by Prentice Hall
Management Information Systems
Chapter 12 Enhancing Decision Making
MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONS
Management Opportunities:
• Decision-support systems provide opportunities for
increasing precision, accuracy, and rapidity of
decisions and thereby contributing directly to
profitability
12.34
© 2007 by Prentice Hall