1. Chapter 1: DECISION SUPPORT SYSTEMS AND BUSINESS INTELLIGENCE
DECISION SUPPORT SYSTEMS AND BUSINESS INTELLIGENCE , Eighth Edition

2. Changing Business Environments and Computerized Decision Support
The business pressures-responses-support model
The business environment
Business environment factors divided into four categories: markets, consumer demands, technology, and societal.
Decision Support and Business Intelligence Systems, Eighth Edition

3. Changing Business Environments and Computerized Decision Support (cont
Organizational responses: be reactive, anticipative, adaptive, and proactive
Employ strategic planning
Use new and innovative business model
Restructure business process
Use new IT to improve communication. :
Decision Support and Business Intelligence Systems, Eighth Edition

4. Changing Business Environments and Computerized Decision Support (cont
Computerized support
It used to facilitate closing the gap between the current performance and the desired performance.
Decision Support and Business Intelligence Systems, Eighth Edition

5. Changing Business Environments and Computerized Decision Support (cont
Decision Support and Business Intelligence Systems, Eighth Edition

6. Management Support Systems (MSS)
Four major information technologies have been successfully used to support managers.
DSSs: provide support primarily to analytical, quantitative types of decisions.
Executive (enterprise) support systems: support the informational roles of executives.
Group decision support systems: support managers working in groups.
Intelligent systems: provide mulitfunctional support.
Decision Support and Business Intelligence Systems, Eighth Edition

7. DSS Definition
Decision support system (DSS) are used to make business decision often based on data collected by On-Line-Analytical-Processing system (OLAP)
Example of data used for making decision :
Retail sales transaction detail
DSS as an Umbrella term: Describes any computerized system that supports decision making in an organization
Decision Support and Business Intelligence Systems, Eighth Edition

8. Why Use of DSS Why use decision support systems? Speedy computations
Improved communication and collaboration
Increased productivity of group members
Improved data management
Managing giant data warehouses
Quality support
Overcoming cognitive limits in processing and storing information
Decision Support and Business Intelligence Systems, Eighth Edition

9. Why Use of DSS(cont.) Using the Web Anywhere, anytime support
Decision Support and Business Intelligence Systems, Eighth Edition

10. Decision Making and Management
Management is a process by which organizational goals are achieved through the use of resources (people, money, energy, materials, space, time).
These resources are considered to be inputs, and the attainment of the goals is viewed as the output of the process.
Measuring success:
Productivity= output/input
Decision Support and Business Intelligence Systems, Eighth Edition

11. Decision Making and Management (cont.)
Management is decsion making
The manager is decsion maker
Decision Support and Business Intelligence Systems, Eighth Edition

12. Decision Making and Management (cont.)
The nature of managers’ work
Interpersonal : figurehead, leader, liaison.
Informational: monitor, disseminator,
spokesperson.
Decisional: entrepreneur, disturbance handler,
resource allocator, negotiator.
Decision Support and Business Intelligence Systems, Eighth Edition

13. Decision Making and Management (cont.)
Why Managers Need IT Support
processing information manually is growing increasingly difficult
computerized modeling
examining numerous alternatives very quickly
providing a systematic risk analysis
being integrated with communication systems and databases
being used to support group work
Decision Support and Business Intelligence Systems, Eighth Edition

14. Phases of the Decision Making
Intelligence Phase
Design Phase
Choice Phases
REALITY
Implementation
of Solution 
SUCCESS
FAILURE
Verification, Testing of Proposed Solution
Verification of the Model
Examination
Decision Support and Business Intelligence Systems, Eighth Edition

15. Phases of the Decision Making (cont.)
Intelligence phase
Organizational objectives
Search and scanning procedures
Data collection
Problem identification
Problem classification
Problem statement
Result:
Reality is examined
The problem is identified and defined
Decision Support and Business Intelligence Systems, Eighth Edition

16. Phases of the Decision Making(cont.)
Design phase
Formulate a model (Assumption)
Set criteria for choice
Search for alternative
Predict and measure outcomes
Result:
Representative model is constructed
The model is validated and evaluation criteria are set
Decision Support and Business Intelligence Systems, Eighth Edition

17. Phases of the Decision Making(cont.)
Choice phase
solution to the model
Sensitivity analysis
Selection of Best (Good) alternative
Plan for implementation
Design of control system
Result:
Proposed solution is included to the model
If reasonable, move to implementation phase.
Decision Support and Business Intelligence Systems, Eighth Edition

18. Phases of the Decision Making(cont.)
Implementation phase
Put solution into action
Result:
Solution to the original problem
Decision Support and Business Intelligence Systems, Eighth Edition

19. Decision Making Processes
The process of decision making
Defining the problem (i.e., a decision situation that may deal with some difficulty or with an opportunity)
Constructing a model that describes the real-world problem
Identifying possible solutions to the modeled problem and evaluating the solutions
Comparing, choosing, and recommending a potential solution to the problem
Decision Support and Business Intelligence Systems, Eighth Edition

20. Decision makers: Who are They?
Decision maker classification
Individual decision makers can be single person or a computer system
Multiple decision makers can be:
Team where members support a single decision maker
Groups where all members have a say in the decision
Organization where global agreement is needed.
Decision Support and Business Intelligence Systems, Eighth Edition

21. Framework for Computerized Decision Support
Type of Control
Type of Decision
Operational Control
Managerial Control
Strategic
Planning
Structured
Semi-structured
Unstructured
Accounts Receivable Order entry
Production scheduling inventory control
Selecting a cover for a magazine, buying software approving loans
Support Needed
Budget analysis,
short-term forecasting, personnel reports, make-of-buy analysis
Credit evaluation, Budget Preparation, plan layout, project scheduling, rewarded systems design
Negotiating,
recruiting and executive,
buying hardware,
lobbying
Financial
management ,
warehouse location, distribution systems
Building new plant, mergers and acquisitions, new product planning, compensation planning, quality assurance planning
R & D planning, new technology development social responsibility planning
MIS
MS models
F & S models
DSS ES
Neural Networks
MIS, MS
MS, DSS, EIS, ES
EIS, ES, 1 2 3 4 5 6 7 8 9
Support Needed
Decision Support and Business Intelligence Systems, Eighth Edition

22. Framework for Computerized Decision Support (cont.)
Three type of decision :
1- Structured problems: are routine problems for which standard solution method exist.
Procedure for obtaining the best solution are known
Objective are clearly defined
Decision Support and Business Intelligence Systems, Eighth Edition

23. Framework for Computerized Decision Support (cont.)
2- Unstructured problems: are fuzzy, complex problem for which there are no cut-and direct solution methods.
Have no structure phase
Often solved with human intuition
3- Semi-structured problem: is a decision problem in which some but not all phases are structured.
In between solve with standard solution procedure and human judgment
Decision Support and Business Intelligence Systems, Eighth Edition

24. Framework for Computerized Decision Support (cont.)
Types of control in all managerial activities
Strategic planning
the long-range goals & policies for resource allocation;
Management control
the acquisition & efficient utilization of resources in the accomplishment of organizational goals
Operational control
the efficient & effective execution of specific tasks.
Decision Support and Business Intelligence Systems, Eighth Edition

25. Framework for Computerized Decision Support (cont.)
The decision support matrix
For semistructured decisions and unstructured decisions, conventional MIS and MS tools are insufficient ; BUT Decision support systems (DSS) are used.
Computer support for structured decisions
Management science (MS) or operations research (OR) are used .
Automated decision systems (ADS) is used.
Decision Support and Business Intelligence Systems, Eighth Edition

26. Framework for Computerized Decision Support (cont.)
Management science (MS) or operations research (OR) The application of a scientific approach and mathematical models to the analysis and solution of managerial decision situations (e.g., problems, opportunities)
It adds new step 2 to the process of decision making, that is classify the problem into standard category.
Decision Support and Business Intelligence Systems, Eighth Edition

27. Framework for Computerized Decision Support (cont.)
Automated decision systems (ADS) A business rules-based system that uses intelligence to recommend solutions to repetitive decisions (such as pricing)
Decision Support and Business Intelligence Systems, Eighth Edition

28. Architecture of a decision system
Decision Support and Business Intelligence Systems, Eighth Edition

29. Architecture of a decision system(cont.)
The architecture of DSS
Data
Models manipulate data as related to a specific situation
Knowledge component
User interface
* The user themselves are also important components of the architecture
Decision Support and Business Intelligence Systems, Eighth Edition

30. Structure of a decision system
A SYSTEM is a collection of object such as people, resources, concepts and procedure intended to perform an identifiable function or to serve a goal.
Three Distinct Parts of Systems
Inputs
Processes
Outputs
Decision Support and Business Intelligence Systems, Eighth Edition

31. Structure of a decision system (cont.)
Input(s)
output(s)
Processes
Feedback (flow of information
Decision Support and Business Intelligence Systems, Eighth Edition

32. Structure of a decision system (cont.)
Inputs are the element that enter the system
Processes convert or transform inputs into outputs
Outputs describe finished products or consequences of being in the system
Feedback is the flow of information from the output to decision maker, who many modify the inputs or the processes (closed loop)
The Environment contains the elements that lie outside but impact the system performance
Decision Support and Business Intelligence Systems, Eighth Edition

33. Modeling in DSS
DSS is “ model-base set of procedures for processing data and judgment to assist manager in his decision making”
A model is simplified representation or abstraction of (complex) reality.
With modeling, one can perform virtual experiments and an analysis on a model of reality, rather than on reality itself.
Decision Support and Business Intelligence Systems, Eighth Edition

34. Modeling in DSS (cont.) Four groups of models: Iconic (scale) Model
 An iconic model—the least abstract model—is a physical replica of a system.
Analog Model
does not look like the real system but behaves like it.
Decision Support and Business Intelligence Systems, Eighth Edition

35. Modeling in DSS (cont.) Mathematical Model Mental models
Use mathematical relationship to represent complexity used in most DSS analysis
Mental models
provide a description of how a person thinks about a situation
Decision Support and Business Intelligence Systems, Eighth Edition

36. Modeling in DSS (cont.) Benefits of Models: Time compression
Low cost construction
Models allow for the simulated compression of time.
Manipulating the model (by changing variables) is much easier than manipulating the real system.
Can model large and extermely complex system with possibly infinite soultion.
Low cosst excustion
Decision Support and Business Intelligence Systems, Eighth Edition

37. Modeling in DSS (cont.) Modeling process and solution approach
Trail and Error
Simulation
Optimization
Heuristics
Decision Support and Business Intelligence Systems, Eighth Edition

38. Decision analysis
Decision analysis allow us to select a decision from set of possible decision alternatives when uncertainties regarding the future exist.
The goal is to optimize the resulting return (payoff) in term of decision criteria.
Decision Support and Business Intelligence Systems, Eighth Edition

39. Decision analysis (cont.)
Type of decision analysis models:
Decision making under certainty
Decision making under uncertainty
Decision making under risk
Decision making with perfect information
Decision making with imperfect information(Bayesian Theory)
Decision making in light of competitive action (Game Theory)
Decision Support and Business Intelligence Systems, Eighth Edition

40. DSS and Data Warehouse Data warehouse is a decision support database.
The data warehouse is an integrated, subject-oriented, time-variant, non-volatile database that provide support for decision making.
Decision Support and Business Intelligence Systems, Eighth Edition

41. DSS and Data Warehouse
Integrated: the data warehouse is centralized, consolidated database that integrates data retrieved from the entire organization.
Subject- oriented: data of data warehouse is arranged and optimized to provide answer to questions coming from diverse functional area within a company.
Decision Support and Business Intelligence Systems, Eighth Edition

42. DSS and Data Warehouse
Time-variant: the data warehouse represent the flow of data through time
Non-volatile: once data enter the data warehouse, they are never removed.
Decision Support and Business Intelligence Systems, Eighth Edition

43. On-Line Analytical Processing (OLAP)
It is an element of DSS.
It is support ad-hoc querying for business analyst.
Multidimensional view of data is foundation of OLAP
Multidimensional data
Decision Support and Business Intelligence Systems, Eighth Edition

44. DSS knowledge base Any true decision requires information.
The knowledge base is where all information is stored.
Decision Support and Business Intelligence Systems, Eighth Edition

45. CASE STUDY
Decision Support and Business Intelligence Systems, Eighth Edition

46. Case: Managing Global Business at 3M Corporation
The Business Problem
The company had difficulties responding
to new customers and markets in the global economy as each business unit kept separate databases and conducted independent decision support activities
The Solution
The Company created a global enterprise data warehouse (GEDW)
Decision Support and Business Intelligence Systems, Eighth Edition

47. Case: Managing Global Business at 3M Corporation (cont.)
The Results
Distributors and retailers, as well as end-users, now receive information in minutes instead of weeks or months, including the delivery of rich multimedia
Customers can find all their information in one place
Inventories are lower, and better and quicker inventory decisions are made, even in globally remote locations
Decision Support and Business Intelligence Systems, Eighth Edition

48. Case: Managing Global Business at 3M Corporation (cont.)
What have we learned from this case??
The case demonstrates the existence of vast amounts of important data in organizations, and the importance of organizing that data for optimum use
The case shows the need to share a company’s data internally and with business partners and customers, and to make it available in a format that enables end users to process data quickly
The case explains the data warehouse, and its role in supporting managerial decision making
Decision Support and Business Intelligence Systems, Eighth Edition

49. Duty # 1
Each group have present one case study; under these conditions:
define organization
Define business problem
Provide possible solutions
The result.
Decision Support and Business Intelligence Systems, Eighth Edition