Transcript SOM485CH1CLASSSLIDES

Chapter 1
Skip subsections: 1.1, 1.2, 1.8, 1.10
DECISION SUPPORT
SYSTEMS AND
BUSINESS
INTELLIGENCE
I. DSS: Definitions
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System
Information System
Decision System
Support System
Decisions, decisions, ...
When do you know, you have to make a decision?
How will you go about making the decision?
Why is that intuition and trial&error approaches to
managerial decisions may not be effective in today’s
business environment?
What are some of the tools that can be helpful in making a
decision?
DSS Definitions
No universally accepted definition in literature
• “DSS couples the intellectual resources of individuals with the
capabilities of the computer to improve the quality of decisions.” –
Keen
• “DSS are interactive computer-based systems that help decision
makers utilize data and models to solve unstructured problems.” –
Sprague & Carlson
• “An interactive, flexible, and adaptable computer-based information
system, especially developed for supporting the solution of a nonstructured management problem for improved decision making. It
utilizes data, provides an easy-to-use interface, and allows for the
decision maker’s own insights.” - Turban
Thus, DSS is a multi-disciplinary topic covering:
Database research, AI, human-computer interaction, management
science modeling, software engineering and telecommunications!
Benefits of DSS
– Overcoming cognitive limits in processing and
storing information
– Utilize internal and external data
– Uses robust mathematical/AI models
– Helps understand the problem better
– Speedy computations
– Leads to consistent decisions
– Useful in crisis
– Improved communication and collaboration
Business as a decision-making
entity
• What are the types of managerial control
activities?
• What are the types of decisions?
Decision Characteristics
– Managerial control activities
• Strategic planning: rare, long-term
• Management control: periodic, course corrections
• Operational control : highly repetitive, brings
revenue, short-term
– Types of decisions
• Structured: algorithmic, programmable
• Unstructured: subjective, vague problem space
• Semistructured: combination of above
For
•Structured decisions, use MIS/TPS;
•Semi-structured &Unstructured decisions, use DSS
Gorry & Scott-Morton
Framework of DSS
Which of the cells has
the most computer
systems in use today?
Why?
Any more example
decisions for cells 1-9?
Supporting Managerial Roles
What are some of the ‘roles’ managers play in
their job?
Question:
You are a Public Relations manager for your company.
In what ways can a DSS help you?
Supporting Managerial
Roles: The challenge for DSS
Managerial roles (Mintzberg)
– Interpersonal
– Informational
– Decisional
Question:
How can a computerbased DSS assist a
manager in each of
these roles?
Supporting Decision Styles:
Another challenge for DSS
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Decision style
The manner in which a decision maker thinks and reacts to problems. It
includes perceptions, cognitive responses, and beliefs
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Analytic vs. Intuitive
Autocratic vs, Democratic
Consultative
Cooperative vs. Non-cooperative
What characteristics a DSS should have to support each of these styles?
II. Business Intelligence
• Companies collect a large amount of data from their business
operations.
• To keep track of that information, a business uses disparate
software applications , such as Excel, Access, etc.
• Using multiple software makes it difficult to retrieve information in a
timely manner and to perform analysis of the data.
• Business Intelligence (BI) represents the tools and systems that
play a key role in integrating and analyzing all corporate data.
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• Generally illustrates intelligence in the areas of customer profiling,
market research, product profitability (by product, region, year),
etc.
BI  Custom reports
• Dashboard reports
• Production reports
Analytic Reports
(slice & dice)
Sources of BI
BI Architecture
Consists of 3 system components
– Data warehouse
– Business analytics
– Performance management (BPM)
Data warehouse
– A repository of cleaned and integrated historical
/stable data for the entire business
– Extracted from independent databases (internal &
external)
– Transformed (ie. cleaned and reformatted)
- A subset of a warehouse limited to a business
function is called a Data Mart (eg. Sales).
DW vs. Transaction DBs
• DWs are not designed for performing transaction entries, but only for
planning and analysis
• DWs are not designed for retrieval of individual records; emphasis is
on summarized data
• DWs data pulled and integrated from disparate databases, unlike
Transaction db’s which are individual applications
• Transaction db’s are concerned with ‘now’; DW focuses on activity
over a period
• A transaction db is volatile (eg. an order may be cancelled); In a DW,
data is only added, never deleted (as it maintains a history)
• Transaction db is optimized for rapid retrieval; not DWs
Business analytics
These are tools that help analyze the data towards
finding solutions:
– Reporting and queries (eg. 3-dimensional cubes)
– Advanced analytics (LP, financial, stat, simulation
models)
– Data, text and Web mining and other sophisticated
mathematical and statistical tools (searching for
relationships)
Business performance
management (BPM)
An advanced performance measurement and analysis
approach that embraces planning and strategy
– BPM extends the monitoring, measuring, and
comparing of sales, profit, cost, profitability, and other
performance indicators
– BPM provides a top-down enforcement of corporatewide strategy