Information Systems & Enhancing Decision Making for the Digital Firm Rashedul Hasan

Business Decision Making and the Decision-Making Process Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm DECISION MAKING AND DECISION-SUPPORT SYSTEMS Business Decision Making and the Decision-Making Process Decision-Making Levels: Senior management Middle management and project teams Operational management and project teams Individual employees

Types of Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Types of Information Systems Figure 2-1

Different Kinds of Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Different Kinds of Systems Three main categories of information systems serve different organizational levels: Operational-level systems: support operational managers, keeping track of the elementary activities and transactions Management-level systems: serve the monitoring, controlling, decision-making, and administrative activities Strategic-level systems: help senior management tackle and address strategic issues

Information Requirements of Key Decision-Making Groups in a Firm Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm DECISION MAKING AND DECISION-SUPPORT SYSTEMS Information Requirements of Key Decision-Making Groups in a Firm Figure 13-2

Unstructured decisions: Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm DECISION MAKING AND DECISION-SUPPORT SYSTEMS Types of Decisions Unstructured decisions: Novel, non-routine decisions requiring judgment and insights Examples: Approve capital budget; decide corporate objectives

Types of Decisions (Continued) Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm DECISION MAKING AND DECISION-SUPPORT SYSTEMS Types of Decisions (Continued) Structured decisions: Routine decisions with definite procedures Examples: Restock inventory; determine special offers to customers Semi-structured decisions: Only part of decision has clear-cut answers provided by accepted procedures Examples: Allocate resources to managers; develop a marketing plan

Transaction Processing Systems (TPS) Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Major Types of Systems Transaction Processing Systems (TPS) Management Information Systems (MIS) Decision-Support Systems (DSS) Executive Support Systems (ESS)

The Four Major Types of Information Systems Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS The Four Major Types of Information Systems Figure 2-2

Stages in Decision Making Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm DECISION MAKING AND DECISION-SUPPORT SYSTEMS Stages in Decision Making Figure 13-3

Transaction Processing Systems (TPS) Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Transaction Processing Systems (TPS) Basic business systems that serve the operational level A computerized system that performs and records the daily routine transactions necessary to the conduct of the business

A Symbolic Representation for a Payroll TPS Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS A Symbolic Representation for a Payroll TPS Figure 2-3

Typical Applications of TPS Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Typical Applications of TPS Figure 2-4

Management Information Systems (MIS) Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) Management level Inputs: High volume transaction level data Processing: Simple models Outputs: Summary reports Users: Middle managers Example: Annual budgeting

Management Information Systems (MIS) (continued) Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) (continued) Figure 2-5

Management Information Systems (MIS) (continued) Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Management Information Systems (MIS) (continued) A sample MIS report Figure 2-6

Decision-Support Systems (DSS) Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) Management level Inputs: Transaction level data Processing: Interactive Outputs: Decision analysis Users: Professionals, staff Example: Contract cost analysis

Decision-Support Systems (DSS) (Continued) Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Decision-Support Systems (DSS) (Continued) Voyage-estimating decision-support system Figure 2-7

EXECUTIVE SUPPORT SYSTEMS (ESS): Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS): Inputs: Aggregate data Processing: Interactive Outputs: Projections Users: Senior managers Example: 5 year operating plan

Model of a Typical Executive Support System Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Model of a Typical Executive Support System Figure 2-8

EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued) Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued) Top Level Management Designed to the individual senior manager Ties CEO to all levels Very expensive to keep up Extensive support staff

Relationship of Systems to One Another Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another Interrelationships among systems Figure 2-9

Relationship of Systems to One Another Management Information Systems Chapter 2 Information Systems in the Enterprise MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS Relationship of Systems to One Another In contemporary digital firms, the different types of systems are closely linked to one another. This is the ideal. In traditional firms these systems tend to be isolated from one another, and information does not flow seamlessly from one end of the organization to the other. Efficiency and business value tend to suffer greatly in these traditional firms

The Difference between MIS and DSS Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT The Difference between MIS and DSS Management Information Systems: Primarily address structured problems Provides typically fixed, scheduled reports based on routine flows of data and assists in the general control of the business

Decision Support Systems: Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Decision Support Systems: Support semistructured and unstructured problems Greater emphasis on models, assumptions, ad-hoc queries, display graphics Emphasizes change, flexibility, and a rapid response

Types of Decision-Support Systems Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Types of Decision-Support Systems Model-driven DSS: Primarily stand-alone systems Use a strong theory or model to perform “what-if” and similar analyses

Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Components of DSS DSS database: A collection of current or historical data from a number of applications or groups DSS software system: Contains the software tools for data analysis, with models, data mining, and other analytical tools DSS user interface: Graphical, flexible interaction between users of the system and the DSS software tools

Support decision making by enabling user to extract useful information Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Data-driven DSS: Integrated with large pools of data in major enterprise systems and Web sites Support decision making by enabling user to extract useful information Data mining: Can obtain types of information such as associations, sequences, classifications, clusters, and forecasts

Sensitivity analysis (“what-if” models) Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Model: An abstract representation that illustrates the components or relationships of a phenomenon Statistical models Optimization models Forecasting models Sensitivity analysis (“what-if” models)

Overview of a Decision-Support System Management Information Systems Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Overview of a Decision-Support System Figure 13-4

Sensitivity Analysis Management Information Systems Figure 13-5 Chapter 13 Enhancing Decision Making for the Digital Firm SYSTEMS FOR DECISION SUPPORT Sensitivity Analysis Figure 13-5