1. Chapter 4: Decision Support Systems and Artificial Intelligence Brainpower for Your Business Management Information Systems for the Information Age

2. Chapter 4: Decision Support and AISlide 2 What Makes a Good Businessperson? Your ability to… Work with, motivate, and lead people Identify and capitalize on opportunities Recognize problems and devise solutions Innovate, be creative, and think on the fringe Make DECISIONS, DECISIONS, DECISIONS Success is based on making good decisions: IT can supplement human decision-making IT can replace some human decision-making

3. Chapter 4: Decision Support and AISlide 3 How Do You Make Good Decisions? Understand the Question! I seek not to know the answers, but to understand the questions. I seek not to know the answers, but to understand the questions. Kwai Chang Caine. Gather Good Information! When you are educated, you'll believe only half of what you hear. When you are intelligent, you’ll know which half. When you are educated, you'll believe only half of what you hear. When you are intelligent, you’ll know which half. Jerome Perryman. Learn from Experience! Experience teaches you to recognize a mistake when you've made it again. Experience teaches you to recognize a mistake when you've made it again. Woodrow Wilson.

4. Chapter 4: Decision Support and AISlide 4 Where Does IT Fit In? The Role of IT in Decision-Making: To increase an organization’s knowledgebase and their capability for using this knowledge via intelligent tools such as decision support systems and artificial intelligence software Primary Categories of Computer-Aided Decision Support: Decision Support Decision Support Systems Decision Support Systems Performance Support Systems Performance Support Systems Collaboration Systems Collaboration Systems Geographic Information Systems Geographic Information Systems Artificial Intelligence Expert Systems Expert Systems Neural Networks Neural Networks Genetics Algorithms Genetics Algorithms Intelligent Agents Intelligent Agents

5. Chapter 4: Decision Support and AISlide 5 Four Phases of Decision-Making Understand the similarity to other structured process models, such as: Analysis Design Develop Implement Evaluate

6. Chapter 4: Decision Support and AISlide 6 Types of Decisions: Difficulty Level Structured Decision Set of steps that if followed in a particular way will always yield the correct answer Doesn’t involve any feel or intuition Easily programmed – inputs, processing, outputs Non-Structured Decision One for which there are no rules or criteria that will guarantee a good solution Usually have several “right” answers Both controllable and uncontrollable variables

7. Chapter 4: Decision Support and AISlide 7 Types of Decisions: Frequency Recurring Decisions One that happens repeatedly and, often, periodically (daily, monthly, annually) Usually based on the same set of rules each time Non-Recurring Decisions Ad-hoc or one that you make infrequently Usually based on different criteria for determining the best solution each time

8. Chapter 4: Decision Support and AISlide 8 Types of IT Brainpower Decision Support Systems (DSS) Group Decision Support Systems (GDSS) Geographic Information Systems (GIS) Artificial Intelligence Systems (AI) Expert Systems Neural Networks Genetic Algorithms Intelligent Agents

9. Chapter 4: Decision Support and AISlide 9

10. Chapter 4: Decision Support and AISlide 10 Decision Support Systems (DSS) 1/3 A highly flexible and interactive IT system that is designed to support decision-making when the problem is not structured. A DSS assists you in making a decision, as opposed to making the decision for you.

11. Chapter 4: Decision Support and AISlide 11 Decision Support Systems (DSS) 2/3 Objective is to improve your effectiveness as a decision maker by providing useful and relevant information when and where you need it. But you must know the right questions to ask!

12. Chapter 4: Decision Support and AISlide 12 Decision Support Systems (DSS) 3/3 A DSS can help you… Decide where to spend advertising dollars Forecast market and sales trends Analyze consumer behavior Analyze drug interactions Develop airline schedules Price products

13. Chapter 4: Decision Support and AISlide 13 Components of a DSS Data Management allows you to store and access information i.e., data warehouse or relational database Model Management allows you to store and access models i.e., ANOVA or regression analysis User Interface Management allows you to easily manipulate, ask questions, and interpret responses of models i.e., Microsoft Excel, SPSS, STORM, in-house

14. Chapter 4: Decision Support and AISlide 14 DSS Components Working Together You tell the DSS which model to use on what information

15. Chapter 4: Decision Support and AISlide 15 Choosing the Right DSS Model A model is a representation of some event, fact or situation to represent variables and their relationships The model you use in DSS depends on the decision you are making and, consequently, the kind of analysis you require What-If Analysis Optimization Goal-Seeking Statistical Analysis

16. Chapter 4: Decision Support and AISlide 16 Developing Your Own DSS 1.INTELLIGENCE Do you need a DSS? What should it do? What information and models does it need? 2.DESIGN What can you buy/build? 3.CHOICE What will you buy/build? 4.IMPLEMENTATION Build or install DSS Learn, test, and evaluate the DSS

17. Chapter 4: Decision Support and AISlide 17 Group Decision Support Systems (GDSS) Called “Collaboration Systems” in Haag and emphasizes sharing and flow of information A type of decision support system that facilitates the formulation of and solution to problems by a team A GDSS helps a team to generate ideas, identify strengths and weaknesses, choose an alternative, and reach a consensus

18. Chapter 4: Decision Support and AISlide 18 Why Use a GDSS? A GDSS can help you… Determine new product designs Evaluate the impact of new competition Analyze geographical differences Formulate a strategic plan

19. Chapter 4: Decision Support and AISlide 19 Steps in Group Decision-Making Brainstorming Generate ideas Issue Categorization and Analysis Classify and organize the ideas Ranking and Voting Prioritize alternatives and reach consensus

20. Chapter 4: Decision Support and AISlide 20 People in Group Decision-Making GDSS Team: People united by a common goal and connected through information technology GDSS Facilitator: Non-technical role: run the meeting Technical role: manage IT components

21. Chapter 4: Decision Support and AISlide 21 IT in Group Decision-Making Groupware Software than enables teams to share information and work collaboratively DSS Capabilities Software that enables team decision making, including voting and ranking Telecommunications Hardware and software that connects computers

22. Chapter 4: Decision Support and AISlide 22 Meetings Whenever and Wherever Same-Time (Synchronous) Meetings In the same room In the same city On the same planet Different-Time (Asynchronous) Meetings In the same city On the same planet

23. Chapter 4: Decision Support and AISlide 23 Examples of Collaboration Systems Enterprise-wide collaboration Lotus Notes Groupware Microsoft Exchange Supply chain collaboration Extranets and Internet Portals Web-based collaboration Websites, VPNs, virtual workspaces, intranets Peer-to-peer collaboration Groove Networks MSN Messenger

24. Chapter 4: Decision Support and AISlide 24 Geographic Information Systems (GIS) A type of decision support system that works with spatial information Spatial information is any information that can be shown in map form, such as roads, the distribution of populations, and the layout of electrical or telecommunications lines A GIS represents information thematically in overlapping layers, each of which shows a different aspect of the total picture

25. Chapter 4: Decision Support and AISlide 25 Examples of a GIS

26. Chapter 4: Decision Support and AISlide 26 Why Use a GIS? Today GISs are helping businesses: Identify the best site to locate a branch office Target pockets of potential customers Reposition promotions and advertising Determine the optimal location of a new distribution outlet

27. Chapter 4: Decision Support and AISlide 27

28. Chapter 4: Decision Support and AISlide 28 Artificial Intelligence (AI) Whereas DSS systems augment business brain power, Artificial Intelligence mimics or imitates human thinking and behavior Robots are a form of AI: Mechanical devices equipped with simulated human senses and the capability of taking action on its own i.e., a robot lawn mower, called the LawnNibbler, cuts your lawn intelligently – avoiding dogs, kids, fences, and other obstacles

29. Chapter 4: Decision Support and AISlide 29 Is AI Really Being Used? By financial analysts: For managing assets and investing in stocks By hospitals: For scheduling staff and diagnosing illnesses By credit card companies: For detecting credit card fraud By police and security organizations: For predicting criminal behavior patterns

30. Chapter 4: Decision Support and AISlide 30 Types of AI Systems for Business Expert Systems Neural Networks Genetic Algorithms Intelligent Agents 70% of Top 500 Companies use AI as part of their Decision Support

31. Chapter 4: Decision Support and AISlide 31 Expert Systems Also called “knowledge-based systems” or “performance support systems” Captures human expertise and then applies reasoning capabilities to problems and offers advice in the form of a conclusion Useful for: Diagnostic or “what’s wrong” problems Prescriptive or “what should we do” problems

32. Chapter 4: Decision Support and AISlide 32 Expert System vs. DSS A DSS augments or assist you in making the decision, but you must know how to reason through the problem and proceed An Expert System only requires that you input the facts and symptoms of the problem – it contains the know-how for solving the problem (based on human expertise) Visit Whale Watcher

33. Chapter 4: Decision Support and AISlide 33 People in an Expert System Domain Expert The person who knows how to solve the problem without the aid of IT Sometimes called SMEs (subject matter experts) Knowledge Engineer The person who builds the expert system Knowledge Worker The person who uses the expert system to solve a problem

34. Chapter 4: Decision Support and AISlide 34 IT in an Expert System Knowledgebase Stores the rules of the expert system Knowedge acquisition Used to capture and enter the rules Inference engine Takes the problem facts and searches the knowledgebase for rules that fit User interface Used to run the consultation

35. Chapter 4: Decision Support and AISlide 35 What Expert Systems Can Do Handle massive amounts of information Reduce errors Reduce costs Improve customer service Provide consistency in decision making Maintain an organization’s knowledge asset

36. Chapter 4: Decision Support and AISlide 36 What Expert Systems Can’t Do Handle all types of domain expertise Solve problems other than those for which they are designed Apply common sense or judgment to a problem

37. Chapter 4: Decision Support and AISlide 37 Neural Networks A type of artificial intelligence system which is capable of learning because it’s patterned after the human brain A neural network simulates the human ability to classify things based on the experience of seeing many examples; capable of differentiating patterns Visit 20 Questions

38. Chapter 4: Decision Support and AISlide 38 Examples of Neural Networks PDA and Tablet PC handwriting recognition Voice recognition systems like IBM ViaVoice and Dragon Naturally Speaking In business, they are used in: Securities trading Credit-card fraud detection Real estate appraisal Evaluating loan applications Target marketing

39. Chapter 4: Decision Support and AISlide 39 What Neural Networks Can Do Neural networks can: Learn by example Adapt to new concepts and knowledge Cope with huge volumes of information Work without complete or structured information Analyze nonlinear relationships in information Recognize textual, visual, and auditory patterns Most useful for identification, classification, and prediction when a vast amount of information is available

40. Chapter 4: Decision Support and AISlide 40 Types of Neural Networks Self-organizing neural network Finds patterns and relationships in vast amounts of data by itself (form of data mining) i.e., credit-card fraud detection Back-propagation neural network A neural network that is trained by someone i.e., voice recognition

41. Chapter 4: Decision Support and AISlide 41 Genetic Algorithms An artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem Systems that follow trial-and-error processes that optimize systems in such a way that they find the combination of inputs that give the best outputs

42. Chapter 4: Decision Support and AISlide 42 Applying Genetic Algorithms They are used by business executives to help them decide which combination of projects a firm should invest in. They are used by investment firms to help them in trading choices and associated decisions. Used in the garment industry to help solve the problem of laying out pieces of the garment and cutting fabric to ensure as little waste as possible. Used to determine the optimal configuration of fiber optic cable in a network that may include as many as 100,000 connection points

43. Chapter 4: Decision Support and AISlide 43 Concepts of Evolution in Genetic Algorithms Selection Survival of the fittest Crossover Combining portions of good outcomes in the hope of creating an even better outcome Mutation Randomly trying combinations and evaluating the success and/or failure of the outcome

44. Chapter 4: Decision Support and AISlide 44 Intelligent Agents An artificial intelligence system that can move around your computer or network performing repetitive tasks independently, adapting itself to your preferences An intelligent agent is like a travel agent in that it performs tasks that you stipulate

45. Chapter 4: Decision Support and AISlide 45 Types of Intelligent Agents Four types of intelligent agents: Buyer agents or shopping bots User or personal agents Monitoring-and-surveillance or predictive agents Data-mining agents

46. Chapter 4: Decision Support and AISlide 46 In Summary (1/3) Information Technology (IT) can help you be an effective decision maker by assisting you in decision-making tasks with: Decision support systems (DSS) Group decision support systems (GDSS) Geographic information systems (GIS)

47. Chapter 4: Decision Support and AISlide 47 In Summary (2/3) Information Technology (IT) can help you be an effective decision maker by performing tasks for you with AI using: Expert systems Neural networks Genetic algorithms Intelligent agents

48. Chapter 4: Decision Support and AISlide 48 In Summary (3/3) To benefit from the decision support capabilities of Information Technology (IT) you must know: The nature of the problem What questions you want to ask What type of decision support tools can help How to apply the decision support tools to the problem How to interpret the results