Topics Lesson 9 Support Systems MIS DSS ESS

Decision Making and Problem Solving Before looking at the information systems designed to help decision makers and problem solvers, we should understand the decision making and problem solving processes.

Decision Making as a Component of Problem Solving Figure 10.1: How Decision Making Relates to Problem Solving Principles of Information Systems, Eighth Edition

Programmed versus Nonprogrammed Decisions Structured situations with well defined relationships Quantifiable Management information system When selecting an alternative in the choice stage, various factors affect the decision. We saw in the airport transportation example that resource constraints, such as time, money, or availability, are factors. Another factor is whether the decision can be programmed. Programmed decisions are made by following rules, procedures or quantitative methods that can be described in advance and regularly used, since the situations are recurring and well-structured. Management information systems are designed to provide information to address programmed decisions. Many simple programmed decisions can be completely automated – for example, inventory control systems can be programmed with reorder points and automatically trigger an order for more merchandise when the reorder point is reached.

Programmed versus Nonprogrammed Decisions Ill-structured situations with vague or changing relationships between variables Not easily quantifiable in advance Decision support systems Nonprogrammed decisions involve unusual, continually changing, or novel circumstances and poorly structured situations. It is usually difficult or impossible to quantify nonprogrammed decisions or to develop rules or procedures to follow to solve the problem. An example of a nonprogrammable or poorly structured situation would be deciding where to locate a new regional airport. This is not a decision that is made often, and each time such a decision is made, it involves a different locale, different economic conditions, different population concerns, and so on. Decision support systems are designed to help decision makers with nonprogrammed or ill-structured problems.

Problem Solving Approaches Optimization: find the best solution Satisficing: find a good solution Heuristics: use rules of thumb Computerized decision support systems can usually be used for both optimization and satisficing modeling. An optimization model finds the best solution in relation to the constraints, assumptions, and goals it was given. For example, an optimization model can find the optimal labor cost to produce a particular product and meet a specific level of profit, subject to the cost of raw materials and machinery. Profit level is a goal and costs are a constraint in the model. A satisficing model finds a good, but not necessarily the best, solution. Satisficing is used when optimization is too difficult, costly, or complex. Satisficing looks only at solutions that are likely to produce a good solution and can thus be done more easily and quickly than optimization, which involves an exhaustive search of all possible solutions. Heuristics, or rules of thumb, are often used in decision making. Heuristics are generally accepted guidelines, or guidelines developed through experience, that usually find a good solution. For example, you might follow a heuristic of taking an umbrella if it is cloudy, windy, and humid when you leave the house. Your experience has shown you that generally this results in having an umbrella when it rains. However, this isn’t an optimal solution – since sometimes you carry an umbrella unnecessarily and sometimes it rains on days when you don’t have an umbrella. But the cost of finding an optimal solution is far too great in terms of time and money.

An Overview of Management Information Systems Management information systems provides decision-makers information and feedback on daily operations. Additionally, management information systems can be used strategically, often incorporating Web technology.

Management Information Systems in Perspective Figure 10.3: Sources of Managerial Information Principles of Information Systems, Eighth Edition

Outputs of a Management Information System Figure 10.4: An Executive Dashboard Principles of Information Systems, Eighth Edition

Outputs of a Management Information System (continued) Scheduled report: produced periodically, or on schedule, such as daily, weekly, or monthly Key-indicator report: summary of previous day’s critical activities Demand report: developed to give certain information at someone’s request Exception report: automatically produced when a situation is unusual or requires management action Drill-down reports: provide increasingly detailed data about a situation Principles of Information Systems, Eighth Edition

Outputs of a Management Information System (continued) Figure 10.5: Reports Generated by an MIS Principles of Information Systems, Eighth Edition

Characteristics of an MIS Fixed format, standard reports Hard-copy or soft-copy reports Uses internal data User-developed reports Users must request formal reports from IS department As mentioned earlier, all reports from an MIS have been predetermined – that is, management information systems do not generally produce ad hoc reports, or unique reports done only once. Most recipients get the same report, although they may use it for different purposes. Output from an MIS may be printed, or hard-copy, or viewed on a screen, called soft-copy. Most output from an MIS is hard copy. The primary source of input data for an MIS is internal data stored in internal databases, generally data collected and maintained by a transaction processing system. Sometimes data from external databases is added, such as general economic data or data about competitors’ actions. Since an MIS create an application database, end users can request their own simple reports to access the information stored in it. However, if many users develop the same report, it may be more efficient for the IS department to produce it. More complex reports are generally requested from the IS department and developed by specialists.

Functional Aspects of the MIS Each management information system is an integrated collection of subsystems, often organized along functional lines of an organization.

Functional Aspects of the MIS Figure 10.6: An Organization’s MIS Principles of Information Systems, Eighth Edition

Financial Management Information Systems Financial MIS: provides financial information to executives and others Some financial MIS subsystems and outputs Profit/loss and cost systems: profit and revenue centers Auditing: internal and external Uses and management of funds Principles of Information Systems, Eighth Edition

Financial Management Information Systems (continued) Figure 10.7: Overview of a Financial MIS Principles of Information Systems, Eighth Edition

Manufacturing Management Information Systems Manufacturing MIS subsystems and outputs monitor and control the flow of materials, products, and services through the organization Design and engineering: CAD systems Master production scheduling and inventory control Methods: EOQ, MRP, JIT Process control Techniques: CAM, CIM, FMS Quality control and testing Principles of Information Systems, Eighth Edition

Manufacturing Management Information Systems (continued) Figure 10.8: Overview of a Manufacturing MIS Principles of Information Systems, Eighth Edition

Marketing Management Information Systems Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, and promotional effectiveness Subsystems Marketing research Product development Promotion and advertising Product pricing Sales analysis Principles of Information Systems, Eighth Edition

Marketing Management Information Systems (continued) Figure 10.9: Overview of a Marketing MIS Principles of Information Systems, Eighth Edition

Marketing Management Information Systems (continued) Figure 10.10: Reports Generated to Help Marketing Managers Make Good Decisions Principles of Information Systems, Eighth Edition

Human Resource Management Information Systems Human resource MIS: concerned with activities related to employees and potential employees Subsystems Human resource planning Personnel selection and recruiting Training and skills inventory Scheduling and job placement Wage and salary administration Outplacement Principles of Information Systems, Eighth Edition

Human Resource Management Information Systems (continued) Figure 10.11: Overview of a Human Resource MIS Principles of Information Systems, Eighth Edition

Other Management Information Systems Accounting MIS: provides aggregate information on accounts payable, accounts receivable, payroll, and many other applications Geographic information system (GIS): capable of assembling, storing, manipulating, and displaying geographic information Principles of Information Systems, Eighth Edition

An Overview of Decision Support Systems Decisions support systems are people, procedures, software, databases, and devices that are used in problem-specific decision-making and problem-solving. Decision support systems are particularly useful when dealing with semi-structured, poorly structured, or unstructured situations. Although decision support systems are used most often at higher levels of management, all employees may use them to assist in even programmable decisions.

An Overview of Decision Support Systems DSS: organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems Focus of a DSS is on decision-making effectiveness regarding unstructured or semistructured business problems Used by managers at all levels Principles of Information Systems, Eighth Edition

Characteristics of a Decision Support System Provide rapid access to information Handle large amounts of data from different sources Provide report and presentation flexibility Offer both textual and graphical orientation Support drill-down analysis Principles of Information Systems, Eighth Edition

Characteristics of a Decision Support System (continued) Perform complex, sophisticated analysis and comparisons using advanced software packages Support optimization, satisficing, and heuristic approaches What-if analysis: making hypothetical changes to problem data and observing impact on results Goal-seeking analysis: determining problem data required for a given result Simulation: ability of the DSS to duplicate features of a real system Principles of Information Systems, Eighth Edition

Characteristics of a Decision Support System (continued) Figure 10.13: With a spreadsheet program, a manager can enter a goal, and the spreadsheet will determine the input needed to achieve the goal. Principles of Information Systems, Eighth Edition

Capabilities of a Decision Support System Support problem-solving phases Support different decision frequencies Ad hoc DSS Institutional DSS Support different problem structures Highly structured problems Semistructured or unstructured problems Support various decision-making levels Principles of Information Systems, Eighth Edition

Capabilities of a Decision Support System (continued) Figure 10.14: Decision-Making Level Principles of Information Systems, Eighth Edition

A Comparison of DSS and MIS Table 10.3: Comparison of DSSs and MISs Principles of Information Systems, Eighth Edition

A Comparison of DSS and MIS (continued) Table 10.3: Comparison of DSSs and MISs (continued) Principles of Information Systems, Eighth Edition

Components of a DSS Decision support systems are composed of several interrelated parts.

Components of a Decision Support System Database Model base Dialogue manager: user interface that allows decision makers to: Easily access and manipulate the DSS Use common business terms and phrases Access to the Internet, networks, and other computer-based systems Principles of Information Systems, Eighth Edition

Components of a Decision Support System (continued) Figure 10.15: Conceptual Model of a DSS Principles of Information Systems, Eighth Edition

Group Support Systems Although decision support systems help individuals make better decisions, many business decisions are made by groups. Higher level managers often spend more than half their decision-making time in meetings. Group decision support systems, also called group support systems or computerized collaborative work systems, are designed to support group decision making. Some types of GDSS software, called groupware or workgroup software, help with group scheduling, communications, and management. Lotus Notes and Microsoft Exchange are examples of such software.

Principles of Information Systems, Eighth Edition Group Support Systems Group support system (GSS) Consists of most elements in a DSS, plus software to provide effective support in group decision making Also called group decision support system or computerized collaborative work system Principles of Information Systems, Eighth Edition

Group Support Systems (continued) Figure 10.16: Configuration of a GSS Principles of Information Systems, Eighth Edition

Characteristics of a GSS That Enhance Decision Making Special design Ease of use Flexibility Decision-making support Delphi approach Brainstorming Group consensus approach Nominal group technique Principles of Information Systems, Eighth Edition

Characteristics of a GSS That Enhance Decision Making (continued) Anonymous input Reduction of negative group behavior Parallel communication Automated record keeping Principles of Information Systems, Eighth Edition

Principles of Information Systems, Eighth Edition GSS Software Often called groupware or workgroup software Helps with joint work group scheduling, communication, and management Examples Virtual Office from Groove Networks Lotus Notes Office Communicator IBM’s Workplace Microsoft’s NetMeeting Principles of Information Systems, Eighth Edition

GSS Software (continued) Examples of groupware products available on the Web WebEx, Genesys Meeting Center, GoToMeeting Corporate GSS software incorporated into existing software packages Principles of Information Systems, Eighth Edition

Principles of Information Systems, Eighth Edition GSS Alternatives Decision room Decision makers are located in the same building or geographic area Decision makers are occasional users of the GSS approach Local area decision network Group members are located in the same building or geographic area Group decision making is frequent Principles of Information Systems, Eighth Edition

GSS Alternatives (continued) Figure 10.18: The GSS Decision Room Principles of Information Systems, Eighth Edition

GSS Alternatives (continued) Teleconferencing Decision frequency is low Location of group members is distant Wide area decision network Decision frequency is high Principles of Information Systems, Eighth Edition

Executive Support Systems Executive support systems, or executive information systems, were developed to provide senior managers the type of information they need, in the format that they need it. Executive support systems include a DSS, as well as other tools, such as office automation.

Executive Support Systems Executive support system (ESS): Specialized DSS Includes hardware, software, data, procedures, and people used to assist senior-level executives Also called an executive information system (EIS) Principles of Information Systems, Eighth Edition

Executive Support Systems (continued) Figure 10.19: The Layers of Executive Decision Making Principles of Information Systems, Eighth Edition

Executive Support Systems in Perspective Tailored to individual executives Easy to use Drill-down capabilities Support need for external data Principles of Information Systems, Eighth Edition

Executive Support Systems in Perspective (continued) Can help with situations that have a high degree of uncertainty Future-oriented Linked to value-added business processes Principles of Information Systems, Eighth Edition

Capabilities of Executive Support Systems Support for defining overall vision Support for strategic planning Determining long-term objectives through analysis of current organization and prediction of future trends Support for strategic organizing and staffing Support for strategic control Support for crisis management Principles of Information Systems, Eighth Edition

Building management support systems Challenges in building management support systems: People: It is difficult to find out exactly what kind of information managers really want and need. Different levels of computer literacy affect how the management support systems are built. Organizational: The cost of building the systems may not justify the benefits, especially when the benefits are intangible. A significant amount of organizational change may be required before the management support systems can be built.

Building management support systems Technology: Compatibility must be established with existing systems in the business Technology often becomes obsolete.

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