The Decision Making Process with EC2000-Keypad and Internet Versions

Copyright Expert Choice Inc. Pittsburgh, PA 2 Expert Choice 2000 The Decision Making Process Expert Choice is a group meta decision support software product based on the world’s most successful decision-making methodology, the Analytic Hierarchy Process (AHP), developed by Dr. Thomas Saaty. It adapts to your decision-making style for you and your team to: 1. Facilitate identification of your objectives, 2. Facilitate identification of a full range alternative solutions, 3. Evaluate key trade-offs among your objectives and alternatives and 4. Enable you and your team to walk away with a decision that is fully understood and supported by your team.

Copyright Expert Choice Inc. Pittsburgh, PA 3 Expert Choice 2000 Common Applications Strategic Planning Information Technology Selection Decisions Information Technology Portfolio Management Budget Allocation Human Resource Management Trade Studies Marketing Decisions Vendor/Source Selection Site Selection Project/Risk Management

Copyright Expert Choice Inc. Pittsburgh, PA 4 Expert Choice 2000 Slide Show Overview This slide show has been designed to show you the major features of Expert Choice We show this in order to help you understand the power and versatility of Expert Choice. The sample model shown here is information technology portfolio management. To learn more about these capabilities try the Quick Start Guide and/or Tutorials that are the Expert Choice CD. The same information is available with our trial version of the software.

Copyright Expert Choice Inc. Pittsburgh, PA 5 First define your goal or decision problem

Copyright Expert Choice Inc. Pittsburgh, PA 6 Structuring is a freestyle, interactive technique for building a decision model. The Clusterview, seen above, is where decision makers brainstorm and cluster decision objectives. Alternatively, you can add alternatives and/or define pros and cons that point to objectives. Then build your decision model or problem.

Copyright Expert Choice Inc. Pittsburgh, PA 7 The hierarchy is automatically built from the ClusterView and is shown in the TreeView. It displays decision objectives that will be used for prioritization and evaluation of alternatives. Information documents capture definitions and qualitative documentation and can house files from MS Excel, MS Word and other applications. Next view the hierarchy of decision objectives.

Copyright Expert Choice Inc. Pittsburgh, PA 8 There are three modes of pairwise comparisons available to prioritize objectives and alternatives. The graphical mode is shown here. Decision-makers populate a judgment matrix with ratios derived from each graphic comparison. Once comparisons are made EC2000 calculates priorities for your objectives. Make paired comparisons of the objectives.

Copyright Expert Choice Inc. Pittsburgh, PA 9 In a group session, decision-makers can enter judgments using radio frequency keypads or remotely via the internet. In this example, Betty and Sean said that ROI is more important. Mike, Jon and Jimmy said that Improving Customer Satisfaction is more important. The geometric average is used as the groups overall judgment. Results of Group/Team Verbal Paired Comparisons.

Copyright Expert Choice Inc. Pittsburgh, PA 10 The Priorities Graph, shows the priorities derived from the pairwise comparisons relative to the importance to each objective. These priorities are a corporate perception of what is important. Priorities Graph of Paired Comparisons The inconsistency ratio measures how consistent the group was in judgments concerning the relative importance of the objectives. If inconsistency is greater than.10, the judgments should be reviewed for accuracy.

Copyright Expert Choice Inc. Pittsburgh, PA 11 With EC2000’s Internet capability decision-makers can enter judgments and qualitative descriptions to completely document the decision from remote sites around the world. Here Betty is entering information that can be seen by other decision-makers over the Internet. Note taking capability is available in any of our versions.

Copyright Expert Choice Inc. Pittsburgh, PA 12 The Data Grid is used to evaluate alternatives using data where available and verbal ratings intensities where data does not exist. EC2000 synthesizes the priorities of the objectives, data and ratings to determine the overall priorities of the alternatives. The weights of the objectives are shown in a spreadsheet format in the Data Grid. The Data Grid

Copyright Expert Choice Inc. Pittsburgh, PA 13 Data Grid Formulas Ratings Step Function Increasing or Decreasing Utility Curve Direct Entry of Priorities These formulas are used to convert raw data of the alternatives to priorities. This was shown on the previous slide. The priorities are represented by the bars while the data is represented by numbers and Ratings by words.

Copyright Expert Choice Inc. Pittsburgh, PA 14 The utility curve function is used to convert raw data to prioritized information. The curve can be linear, convex or concave. Raw data is interpreted for its value to the organization. The x- axis shows the range of data for a given decision objective. The y–axis shows the utility decision-makers get from the data metrics on each alternative choice. Decreasing Curve Increasing Curve

Copyright Expert Choice Inc. Pittsburgh, PA 15 When you do not have data for an objective, EC2000 guides you to build a customized ratings scale. This slide shows the derived priorities that are based on decision-makers paired comparisons. This process assures numerically accurate representations of each rating intensity A Ratings Scale Other types of ratings scales such as 1-10 are inaccurate since 2 can be interpreted as twice as good as 1 and a 3 is only 50% better than a 2, and so on.

Copyright Expert Choice Inc. Pittsburgh, PA 16 Using the Individual Ratings Assessment window, stakeholders enter a ratings intensity for each alternative with respect to each objective. Stakeholders can be anonymous; here we show the decision-makers as the group can discuss how each participant arrived at their rating for this alternative. Group/Team Window Illustration

Copyright Expert Choice Inc. Pittsburgh, PA 17 After making judgments about the relative importance of objectives, sub- objectives and alternatives, EC’s powerful sensitivity graphs enable you to test the sensitivity of the decision to changes in priorities by changing the weights of your objectives to instantly see the impact on your alternatives. By dragging the objective’s priorities back and forth in the left column, the priorities of the alternatives will change in the right column. If a decision-maker thinks an objective might be more or less important than originally indicated, the decision-maker can drag that objective's bar to the right or left to increase or decrease the objective’s priority and see the impact on alternatives. The component view of the Dynamic Sensitivity graph is seen here.

Copyright Expert Choice Inc. Pittsburgh, PA 18 Sensitivity graphs help you see the relative importance for a set of alternatives and why the choices scored the way they did against each objective. The performance graph shows the weights of the objectives as the vertical bars using the left axis. The relative scores of the alternatives as the colored lines are read using the right axis. The head-to-head graph shows a one- to-one comparison of any pair of alternatives you select. Here the Financial Management System is better at supporting Strategic goals, but the HRIS system is better everywhere else leading it to a higher overall score.

Copyright Expert Choice Inc. Pittsburgh, PA 19 Optimization and Expert Choice For resource allocation Using Excel The following slide briefly shows this process. For more information, see the book, Decision by Objectives, found on our home page.

Copyright Expert Choice Inc. Pittsburgh, PA 20 EC2000 benefit priorities from the Data Grid export directly into its Excel optimization add-on tool to help organizations with investment portfolio management. Above is a simple fund or not fund model where the projects with the highest overall benefit for their costs will be fully funded. More complex budget constraints can easily be included. The highest overall portfolio benefit is for the budget of $1.5 Million. The additional budget spent would yield decreasing marginal returns on investment. Total Portfolio Benefit Score