SESSION 11SESSION 11
ENHANCING MANAGEMENTENHANCING MANAGEMENT
DECISION-MAKINGDECISION-MAKING
FOR THE DIGITAL FIRMFOR THE DIGITAL FIRM
• Computer system at the management level of Computer system at the management level of an organizationan organization
• Combines data, analytical tools, and models Combines data, analytical tools, and models
• Supports semi-structured and unstructured Supports semi-structured and unstructured decision-makingdecision-making
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
MISMIS
• Provides reports based on routine flow of Provides reports based on routine flow of datadata
• Assists in general control of the Assists in general control of the organizationorganization
• Address structured problemsAddress structured problems
MIS and DSS
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
DSSDSS
• Provides new sets of capabilities for Provides new sets of capabilities for nonroutine decisions and user controlnonroutine decisions and user control
• Emphasizes change, flexibility, rapid Emphasizes change, flexibility, rapid response, models, assumptions, ad hoc response, models, assumptions, ad hoc queries, and display graphicsqueries, and display graphics
• Support semistructured and unstructured Support semistructured and unstructured problem analysisproblem analysis
MIS and DSS
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
Model-driven DSSModel-driven DSS
• Primarily stand-alone Primarily stand-alone
• Uses model to perform “what-if” and other Uses model to perform “what-if” and other kinds of analysiskinds of analysis
Types of Decision-Support Systems
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
Data-driven DSSData-driven DSS
• Allows users to extract and analyze useful Allows users to extract and analyze useful information from previous databasesinformation from previous databases
DataminingDatamining
• Finds hidden patterns and relationships in Finds hidden patterns and relationships in large databases to infer ruleslarge databases to infer rules
Types of Decision-Support Systems
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
• AssociationsAssociations
• SequencesSequences
• ClassificationClassification
• ClusteringClustering
• ForecastingForecasting
Types of information yielded from datamining
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
Overview of a Decision-Support System (DSS)
Figure 12-1
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
DSS database DSS database
• Collection of current or historical dataCollection of current or historical data
DSS software systemDSS software system
• Collection of software tools/mathematical Collection of software tools/mathematical and analytical models and analytical models
Components of Decision-Support Systems
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
ModelModel
• Abstract representation illustrating Abstract representation illustrating components or relationships components or relationships
• Sensitivity analysisSensitivity analysis
• Asks “what-if” questions repeatedly to Asks “what-if” questions repeatedly to determine the impact of changedetermine the impact of change
Components of Decision-Support Systems
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
Sensitivity Analysis
Figure 12-2
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
• Comprehensive examination of supply Comprehensive examination of supply management chain management chain
• Searches for most efficient and cost-Searches for most efficient and cost-effective combinationeffective combination
• Reduces overall costsReduces overall costs
• Increases speed and accuracy of filling Increases speed and accuracy of filling customer orderscustomer orders
DSS for Supply Chain Management
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
• Uses data mining to guide decisions Uses data mining to guide decisions
• Consolidates customer information into Consolidates customer information into massive data warehousesmassive data warehouses
• Uses various analytical tools to slice Uses various analytical tools to slice information into small segments information into small segments
DSS for Customer Relationship Management
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
DSS for Customer Analysis and Segmentation
Figure 12-3
DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)
• Interactive computer-based system Interactive computer-based system
• Facilitates solution to unstructured Facilitates solution to unstructured problems by a set of decision makers problems by a set of decision makers working together as a groupworking together as a group
GROUP DECISION-SUPPORT SYSTEMS (GDSS)
What Is a GDSS?
• Improved preplanningImproved preplanning
• Increased participation Increased participation
• Open, collaborative meeting atmosphereOpen, collaborative meeting atmosphere
• Criticism-free idea generationCriticism-free idea generation
• Evaluation objectivityEvaluation objectivity
How GDSS can Enhance Group Decision-Making
GROUP DECISION-SUPPORT SYSTEMS (GDSS)
• Idea organization and evaluationIdea organization and evaluation
• Setting priorities and making decisionsSetting priorities and making decisions
• Documentation of meetingsDocumentation of meetings
• Access to external informationAccess to external information
• Preservation of “organizational memory”Preservation of “organizational memory”
How GDSS can Enhance Group Decision-Making
GROUP DECISION-SUPPORT SYSTEMS (GDSS)
Executive Support Systems (ESS):Executive Support Systems (ESS):
• Information system at strategic level of an Information system at strategic level of an organizationorganization
• Addresses unstructured decision-making Addresses unstructured decision-making through advanced graphics and through advanced graphics and communicationscommunications
EXECUTIVE SUPPORT IN THE ENTERPRISE
• Brings together data from the entire Brings together data from the entire organization organization
• Allows managers to select, access, and Allows managers to select, access, and tailor data using analytical tools and tailor data using analytical tools and online-data displaysonline-data displays
The Role of Executive Support Systems in the Organization
EXECUTIVE SUPPORT IN THE ENTERPRISE
• Provides data and tools without addressing Provides data and tools without addressing specific problemsspecific problems
• Provides greater clarity and insight into dataProvides greater clarity and insight into data
• Capabilities for highlighting trends and drilling Capabilities for highlighting trends and drilling down speed up decision-makingdown speed up decision-making
• Improves performance monitoring of the firmImproves performance monitoring of the firm
• Increases management’s span of control and Increases management’s span of control and better monitoring of activitiesbetter monitoring of activities
Benefits of Executive Support Systems
EXECUTIVE SUPPORT IN THE ENTERPRISE
ESS for business intelligence:ESS for business intelligence:
• Identifies changing market conditions, Identifies changing market conditions, formulate responses, track formulate responses, track implementation efforts abd learn from implementation efforts abd learn from feedbackfeedback• Ex: BP Sony NV, the Netherlands banchEx: BP Sony NV, the Netherlands banch
Executive Support Systems and the Digital Firm
EXECUTIVE SUPPORT IN THE ENTERPRISE
Monitoring corporate performance: Monitoring corporate performance: balanced scorecard systemsbalanced scorecard systems
• Model for analyzing firm performanceModel for analyzing firm performance
• Supplements traditional financial Supplements traditional financial measures with measurements from measures with measurements from additional business perspectivesadditional business perspectives • Ex: ING BankEx: ING Bank
Executive Support Systems and the Digital Firm
EXECUTIVE SUPPORT IN THE ENTERPRISE