SESSION 11 ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

Computer system at the management level of an organizationComputer system at the management level of an organization Combines data, analytical tools, and modelsCombines data, analytical tools, and models Supports semi-structured and unstructured decision-makingSupports semi-structured and unstructured decision-making DECISION-SUPPORT SYSTEMS (DSS)

MIS Provides reports based on routine flow of dataProvides reports based on routine flow of data Assists in general control of the organizationAssists in general control of the organization Address structured problemsAddress structured problems MIS and DSS DECISION-SUPPORT SYSTEMS (DSS)

DSS Provides new sets of capabilities for nonroutine decisions and user controlProvides new sets of capabilities for nonroutine decisions and user control Emphasizes change, flexibility, rapid response, models, assumptions, ad hoc queries, and display graphicsEmphasizes change, flexibility, rapid response, models, assumptions, ad hoc queries, and display graphics Support semistructured and unstructured problem analysisSupport semistructured and unstructured problem analysis MIS and DSS DECISION-SUPPORT SYSTEMS (DSS)

Model-driven DSS Primarily stand-alonePrimarily stand-alone Uses model to perform “what-if” and other kinds of analysisUses model to perform “what-if” and other kinds of analysis Types of Decision-Support Systems DECISION-SUPPORT SYSTEMS (DSS)

Data-driven DSS Allows users to extract and analyze useful information from previous databasesAllows users to extract and analyze useful information from previous databasesDatamining Finds hidden patterns and relationships in large databases to infer rulesFinds hidden patterns and relationships in large databases to infer rules Types of Decision-Support Systems DECISION-SUPPORT SYSTEMS (DSS)

AssociationsAssociations SequencesSequences ClassificationClassification ClusteringClustering ForecastingForecasting Types of information yielded from datamining DECISION-SUPPORT SYSTEMS (DSS)

Overview of a Decision-Support System (DSS) Figure 12-1 DECISION-SUPPORT SYSTEMS (DSS)

DSS database Collection of current or historical dataCollection of current or historical data DSS software system Collection of software tools/mathematical and analytical modelsCollection of software tools/mathematical and analytical models Components of Decision-Support Systems DECISION-SUPPORT SYSTEMS (DSS)

Model Abstract representation illustrating components or relationshipsAbstract representation illustrating components or relationships Sensitivity analysisSensitivity analysis Asks “what-if” questions repeatedly to determine the impact of changeAsks “what-if” questions repeatedly to determine the impact of change Components of Decision-Support Systems DECISION-SUPPORT SYSTEMS (DSS)

Sensitivity Analysis Figure 12-2 DECISION-SUPPORT SYSTEMS (DSS)

Comprehensive examination of supply management chainComprehensive examination of supply management chain Searches for most efficient and cost- effective combinationSearches for most efficient and cost- effective combination Reduces overall costsReduces overall costs Increases speed and accuracy of filling customer ordersIncreases speed and accuracy of filling customer orders DSS for Supply Chain Management DECISION-SUPPORT SYSTEMS (DSS)

Uses data mining to guide decisionsUses data mining to guide decisions Consolidates customer information into massive data warehousesConsolidates customer information into massive data warehouses Uses various analytical tools to slice information into small segmentsUses various analytical tools to slice information into small segments DSS for Customer Relationship Management DECISION-SUPPORT SYSTEMS (DSS)

DSS for Customer Analysis and Segmentation Figure 12-3 DECISION-SUPPORT SYSTEMS (DSS)

Interactive computer-based systemInteractive computer-based system Facilitates solution to unstructured problems by a set of decision makers working together as a groupFacilitates solution to unstructured problems by a set of decision makers working together as a group GROUP DECISION-SUPPORT SYSTEMS (GDSS) What Is a GDSS?

Improved preplanningImproved preplanning Increased participationIncreased participation Open, collaborative meeting atmosphereOpen, collaborative meeting atmosphere Criticism-free idea generationCriticism-free idea generation Evaluation objectivityEvaluation objectivity How GDSS can Enhance Group Decision-Making GROUP DECISION-SUPPORT SYSTEMS (GDSS)

Idea organization and evaluationIdea organization and evaluation Setting priorities and making decisionsSetting priorities and making decisions Documentation of meetingsDocumentation of meetings Access to external informationAccess to external information Preservation of “organizational memory”Preservation of “organizational memory” How GDSS can Enhance Group Decision-Making GROUP DECISION-SUPPORT SYSTEMS (GDSS)

Executive Support Systems (ESS): Information system at strategic level of an organizationInformation system at strategic level of an organization Addresses unstructured decision-making through advanced graphics and communicationsAddresses unstructured decision-making through advanced graphics and communications EXECUTIVE SUPPORT IN THE ENTERPRISE

Brings together data from the entire organizationBrings together data from the entire organization Allows managers to select, access, and tailor data using analytical tools and online-data displaysAllows managers to select, access, and tailor data using analytical tools and online-data displays The Role of Executive Support Systems in the Organization EXECUTIVE SUPPORT IN THE ENTERPRISE

Provides data and tools without addressing specific problemsProvides data and tools without addressing specific problems Provides greater clarity and insight into dataProvides greater clarity and insight into data Capabilities for highlighting trends and drilling down speed up decision-makingCapabilities for highlighting trends and drilling down speed up decision-making Improves performance monitoring of the firmImproves performance monitoring of the firm Increases management’s span of control and better monitoring of activitiesIncreases management’s span of control and better monitoring of activities Benefits of Executive Support Systems EXECUTIVE SUPPORT IN THE ENTERPRISE

ESS for business intelligence: Identifies changing market conditions, formulate responses, track implementation efforts abd learn from feedbackIdentifies changing market conditions, formulate responses, track implementation efforts abd learn from feedback Ex: BP Sony NV, the Netherlands banchEx: BP Sony NV, the Netherlands banch Executive Support Systems and the Digital Firm EXECUTIVE SUPPORT IN THE ENTERPRISE

Monitoring corporate performance: balanced scorecard systems Model for analyzing firm performanceModel for analyzing firm performance Supplements traditional financial measures with measurements from additional business perspectivesSupplements traditional financial measures with measurements from additional business perspectives Ex: ING BankEx: ING Bank Executive Support Systems and the Digital Firm EXECUTIVE SUPPORT IN THE ENTERPRISE