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Decision Support Systems. Decision- Making and Senior Managers Complex, non-repetitive and significant in terms of the organisational implications Competition.

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Presentation on theme: "Decision Support Systems. Decision- Making and Senior Managers Complex, non-repetitive and significant in terms of the organisational implications Competition."— Presentation transcript:

1 Decision Support Systems

2 Decision- Making and Senior Managers Complex, non-repetitive and significant in terms of the organisational implications Competition Markets Costs Technology

3 Decision Making and Senior Managers  Uncertain Fast Moving Business Environment  Increased Velocity of Decision Making  Short Feedback Loops  Responsive Information Systems  Conflicting Objectives, Uncertainty of Outcome and Lack of Comprehensive Information

4 Decision Making and Senior Managers 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”.

5 Critisms of Traditional Reporting Approaches 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

6 Critisms of Traditional Reporting Approaches 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

7 Decision 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

8 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.

9 Degree of problemstructure The Gorry and Scott Morton Grid Management levels Structured Structured Semistructured Unstructured Unstructured Operational control controlManagement Strategicplanning Accounts receivable Order entry Inventory control Budget analysis-- engineered costs Short-term forecasting Tanker fleet mix Warehouse and factory location Production scheduling Cash management PERT/COST systems Variance analysis-- overall budget Budget preparation Sales and production Mergers and acquisitions New product planning R&D planning

10 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.

11 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.

12 Retrieve information elements Analyze entire files Prepare reports from multiple files Estimate decision consequen- ces Propose decisions Degree of problem solving support Degree of complexity of the problem-solving system LittleMuch Alter’s DSS Types Make decisions

13 Manager + Computer (DSS) Solution Computer Solution Manager Solution Structured Semistructured Unstructured DEGREE OF PROBLEM STRUCTURE The DSS Focuses on Semistructured Problems

14 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

15 DSS Components DATABASEModelbase User interface

16 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.

17 Contents of the Database are Used by Three Software Subsystems Report writers (including COBOL) Mathematical models GDSS -- contributes to communications effectiveness

18 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)

19 GDSS software MathematicalModels Other group members group members Database GDSSsoftware Environment Individual problem problem solvers solvers Decision support system Environment Environment Legend : DataInformation Communication A DSS Model Reportwritingsoftware

20 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.

21 Decision 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

22 Decision Support Technologies Decision Support Technologies Microcomputer Based Modelling and Analysis Workgroup Local Area Networks "Scrubbing" of Larger Mainframe Based Datasets Graphics and Presentation Focus

23 Decision Support Systems Examples Aer Rianta International Shell Tankers Marshall Waterford Crystal Others

24 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

25 Aer Rianta International - EUROTUNNEL Calais Folstone Duty Free Concession until 2000 10 Million Passengers p.a.

26 Passenger Numbers Opening Hours Size of outlet Aer Rianta International EuroTunnel Suppliers Margins Government Regulations Duties Tariffs Downtown Outlets ARI Personnel Newspaer & Journals Other ARI Functions Business Development Unit Prices & Volumes On Line Databases Lotus 1-2-3 Aer Rianta International - EUROTUNNEL

27 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

28 Shell International Tankers

29 IVMS Traders Engineering Superintendants Operations Superintendants Updated Performance Parameters Excel Smart Word Performance Analysis

30 Monthly Management Accounting Example Waterford Crystal –Profit and Loss –Overhead analysis –Margin Analysis –Cash Flow

31 Lotus 1-2-3 The Blue Book BPCS Manufacturing System Printed Trial Balance Keypunch Fifty Pages Financial & Non Financial Other Functions Personnel Other Functions Quality Other Functions Production

32 Marshall Leaders in Servicing Transport Refridgeration UK Wide Network Large Market Share Diverse Customer Needs Standard Price Card

33 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 Travel Costs Servic e History of the Types of \units Customer is running Database of 2,000 units Contract Maintenance Matrix 1995 Current costs of Servicing US Manufacturer Estimates of lif of Parts etc Agreed Fixed Price 4 yr Contract Servicing Price

34 Excel GMS Mainframe Quarterly Updates on Diskette 8000 Records Analysis of Drug Costs etc Dept of Health

35 Weekly Performance Measurement Cross Functional Measures Scrubbing of Large Databases Cross Platform Links Manual Inputs

36 Lotus 1-2-3 BPCS Manufatcuring System Inventory Levels Quality Measures Outstanding Orders Financial Performance Personnel Headcounts Marketing Weekly Manufacturing Report

37 Excel General Ledger System Budgets Hard Copy Input Shared LAN Files Floppy Disks Populate General Ledger Budegt Codes

38 MAPS Market Analysis and Planning System Demographic Profiles Catchment Area Analysis Direct marketing Performance Evaluation

39 Others Securitisation of Mortages Capital Investment Appraisal Branch Profiling Island Ferry Analysis

40 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

41 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

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