1. Enhancing Decision Making
Chapter 12
Enhancing Decision Making

2. Management Information Systems Chapter 12 Enhancing Decision Making
LEARNING OBJECTIVES
Describe different types of decisions and the decision-making process.
Assess how information systems support the activities of managers and management decision making.
Demonstrate how decision-support systems (DSS) differ from MIS and how they provide value to the business.

3. Management Information Systems
Chapter 12 Enhancing Decision Making
LEARNING OBJECTIVES (cont’d)
Demonstrate how executive support systems (ESS) help senior managers make better decisions.
Evaluate the role of information systems in helping people working in a group make decisions more efficiently.

4. Demonstrates IT’s role in restructuring a supply chain.
Management Information Systems
Chapter 12 Enhancing Decision Making
Procter & Gamble Restructures Its Supply Chain
Problem: Cost pressures, complex supply chain.
Solutions: Deploy modeling and optimization software to maximize return on investment and predict the most successful supply chain.
Modeling software fueled with data from Oracle data warehouse improved efficiency and reduced costs.
Demonstrates IT’s role in restructuring a supply chain.
Illustrates digital technology improving decision making through information systems.

5. Business Decision Making and the Decision-Making Process
Management Information Systems
Chapter 12 Enhancing Decision Making
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

6. Information Requirements of Key Decision-Making Groups in a Firm
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Information Requirements of Key Decision-Making Groups in a Firm
Figure 12-1

7. Unstructured decisions:
Management Information Systems
Chapter 12 Enhancing Decision Making
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

8. Types of Decisions (Continued)
Management Information Systems
Chapter 12 Enhancing Decision Making
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
Semistructured decisions:
Only part of decision has clear-cut answers provided by accepted procedures
Examples: Allocate resources to managers; develop a marketing plan

9. Systems for Decision Support
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Systems for Decision Support
There are four kinds of systems that support the different levels and types of decisions:
Management Information Systems (MIS)
Decision-Support Systems (DSS)
Executive Support Systems (ESS)
Group Decision-Support Systems (GDSS)

10. Stages in Decision Making
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Stages in Decision Making
Figure 12-2

11. Decision Making in the Real World
Management Information Systems
Chapter 12 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Decision Making in the Real World
In the real world, investments in decision-support systems do not always work because of
Information quality: Accuracy, integrity, consistency, completeness, validity, timeliness, accessibility

12. Decision Making in the Real World (Continued)
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Decision Making in the Real World (Continued)
Management filters: Biases and bad decisions of managers
Organizational inertia: Strong forces within organization that resist change

13. The Difference between MIS and DSS
Management Information Systems
Chapter 12Enhancing Decision Making
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

14. Decision Support Systems:
Management Information Systems
Chapter 12 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

15. 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

16. Support decision making by enabling user to extract useful information
Management Information Systems
Chapter 12 Enhancing Decision Making
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

17. Management Information Systems
Chapter 12 Enhancing Decision Making
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

18. Sensitivity analysis (“what-if” models)
Management Information Systems
Chapter 12 Enhancing Decision Making
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)

19. Overview of a Decision-Support System
Management Information Systems
Chapter 12Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Overview of a Decision-Support System
Figure 12-3

20. Management Information Systems
Chapter 12 Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Business Value of DSS
Data Visualization: Presentation of data in graphical forms, to help users see patterns and relationships
Geographic Information Systems (GIS): Special category of DSS that display geographically referenced data in digitized maps

21. Web-Based Customer Decision-Support Systems
Management Information Systems
Chapter 12 Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Web-Based Customer Decision-Support Systems
DSS based on the Web and the Internet can support decision making by providing online access to various databases and information pools along with software for data analysis
Some of these DSS are targeted toward management, but many have been developed to attract customers.

22. Web-based Customer Decision-Support Systems (Continued)
Management Information Systems
Chapter 12 Enhancing Decision Making
SYSTEMS FOR DECISION SUPPORT
Web-based Customer Decision-Support Systems (Continued)
Customer decision making has become increasingly information intensive, with Internet search engines, intelligent agents, online catalogs, Web directories, , and other tools used to help make purchasing decisions.
Customer decision-support systems (CDSS) support the decision-making process of an existing or potential customer.

23. Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
What Is a GDSS?
Group Decision-Support System (GDSS) is an interactive computer-based system used to facilitate the solution of unstructured problems by a set of decision makers working together as a group.

24. Three Main Components of GDSS:
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Three Main Components of GDSS:
Hardware (conference facility, audiovisual equipment, etc.)
Software tools (Electronic questionnaires, brainstorming tools, voting tools, etc.)
People (Participants, trained facilitator, support staff)

25. Overview of a GDSS Meeting
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Overview of a GDSS Meeting
In a GDSS electronic meeting, each attendee has a workstation.
The workstations are networked and are connected to the facilitator’s console, which serves as the facilitator’s workstation and control panel, and to the meeting’s file server.
All data that the attendees forward from their workstations to the group are collected and saved on the file server.

26. Overview of a GDSS Meeting (Continued)
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Overview of a GDSS Meeting (Continued)
The facilitator is able to project computer images onto the projection screen at the front of the room.
Many electronic meeting rooms have seating arrangements in semicircles and are tiered in legislative style to accommodate a large number of attendees.
The facilitator controls the use of tools during the meeting.

27. Group System Tools Management Information Systems Figure 12-9
Chapter 12 Enhancing Decision Making
Group Decision-Support Systems (GDSS)
Group System Tools
The sequence of activities and collaborative support tools used in an electronic meeting system facilitate communication among attendees and generate a full record of the meeting.
Source: From Nunamaker et al., “Electronic Meeting Systems to Support Group Work,” Communications of the ACM, July Reprinted by permission.
Figure 12-9

28. Enable nonattendees to locate organized information after the meeting.
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Business Value of GDSS
Traditional decision-making meetings support an optimal size of three to five attendees. GDSS allows a greater number of attendees.
Enable collaborative atmosphere by guaranteeing contributor’s anonymity.
Enable nonattendees to locate organized information after the meeting.

29. Business Value of GDSS (Continued)
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Business Value of GDSS (Continued)
Can increase the number of ideas generated and the quality of decisions while producing the desired results in fewer meetings
Can lead to more participative and democratic decision making

30. The Role of Executive Support Systems in the Firm
Management Information Systems
Chapter 12 Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
The Role of Executive Support Systems in the Firm
ESS can bring together data from all parts of the firm and enable managers to select, access, and tailor them as needed.
It tries to avoid the problem of data overload so common in paper reports.

31. The Role of Executive Support Systems in the Firm (Continued)
Management Information Systems
Chapter 12Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
The Role of Executive Support Systems in the Firm (Continued)
The ability to drill down is useful not only to senior executives but also to employees at lower levels of the firm who need to analyze data.
Can integrate comprehensive firmwide information and external data in timely manner
Inclusion of modeling and analysis tools usable with a minimum of training

32. Business Value of Executive Support Systems
Management Information Systems
Chapter 12 Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
Business Value of Executive Support Systems
Ability to analyze, compare, and highlight trends
Graphical interface enables users to review data more quickly and with more insight, speeding decision making.
Timeliness and availability of data enables more timely decision making, helping businesses move toward a “sense-and-respond” strategy.

33. Business Value of Executive Support Systems (Continued)
Management Information Systems
Chapter 12Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
Business Value of Executive Support Systems (Continued)
Increases upper management span of control, better monitoring
ESS based on enterprise-wide data can be used for decentralization of decision making or increase management centralization.

34. Management Opportunities:
Management Information Systems
Chapter 12 Enhancing Decision Making
MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONS
Management Opportunities:
Decision-support systems provide opportunities for increasing precision, accuracy, and rapidity of decisions and thereby contributing directly to profitability