1. Information systems and management in business Chapter 6 Using Information Systems in Management Decision Making

2. 6.1Business and Professional Decision Making  Introduction  business solving problems and making decision a common and frequent activities made by businesses managers and professionals  Decisions are made at all levels of the management hierarchy  Operational, tactical and strategic levels  Business decisions tend to have far reaching consequences  Business problems varies in structure  Semi structured, structured or unstructured  Various models exist for decision making  The rational model, bounded rationality or the intuitive model

3. 6.2Problems Solving and Decision Making Basics  What are Problems Solving and Decision Making?  Essentially when a person is problems solving, he or she is basically engaged in decision making  May be defines as making a choice from a set of alternative solutions or options

4. 6.2Problems Solving and Decision Making Basics  Decision Making Approaches  A number of approaches that are used by decision makers to solve problems  The Rationality Model  The decision maker is assumed to be: rational and logical in his or her approach to thinking and identifying the problem and has all the information needed  The Bounded Rationality Model  Real life decision making  Employ heuristics and Satisficing  Intuition  Common sense and gut feelings deployed to solve a problem

5. 6.2Problems Solving and Decision Making Basics  The Decision Making Process  A formal process that involves 4 steps or phases as defined by Herbert Simon  Intelligence  Searching the environment by the manager for an opportunity to be seized or a problem to be solved.  Design  Development and generation of alternative solutions to the problem.  Choice  Selection of the appropriate solution alternative from those developed in the design phase  Review  Evaluation and modification of the chosen solution is implemented

6. 6.3 Decision Making in the Real World  Why Good Managers and Professionals Make Bad Decisions  A number of road blocks that either collectively or individually may contribute to bad decision making or the making of less than optimal decisions by managers  Work stresses  Social pressures  Human cognition  Personal biases

7. 6.4Business Decisions (Problems) Structure, Management levels and the Process of Decision Making  Overview  Problems types  Structured, semi-structured and unstructured  Decision Types  Structured Decisions  The decision maker usually understands all of the problems elements and the relationships that exit between them – pay roll for example  Unstructured Decisions  Consist of no elements and the relationship between elements cannot be identified - Budget analysis and preparation  Semi-structured Decisions  Some of the elements of the problem are known to the problem solver but not all of them - Merger deals negotiation

8. 6.4Business Decisions (Problems) Structure, Management levels and the Process of Decision Making  Management Levels and Decision Making in Business  Three primary levels of management were identified and explained by Robert Anthony in 1965  Operational  Short term effect, Structured in nature, happen frequently, rely mainly on internal and detailed information  Managerial or administrative (Tactical)  Medium term effect, semi structured in nature, happen semi frequently, rely on summarized internal and external information  Strategic  Long term effect, unstructured in nature, take place infrequently, and often deals with limited information

9. 6.5 How Information Systems enhances the quality of the decision making process  Information systems support and enhance the decision making process through a number of associated features  Data storage and retrieval easily and quickly  Multi-tasking  Information filtering  Identify correlation and causality  Information presentation in various formats  Eliminate personal biases

10. 6.6Management Information Systems (MIS)  What is an MIS  A specific type of organizational information system  Typically used to support the management decision making process at all levels of the organizational structure (operational, tactical and strategic)  Mainly used by most managers in the various business functions  Provide three types of reports  Scheduled or periodic, exception and response to queries (demands) reports

11. 6.6Management Information Systems (MIS)  MIS Data  Essential for MIS goals  Three main sources  Internal data  User’s data  External data

12. 6.6Management Information Systems (MIS)  MIS Drilling Down concept MIS reports provide summarized information In-depth analysis of the summarized information can be achieved via drilling down Drilling down enhances the understanding of problems and improve the quality of decision making

13. 6.7Management Information Systems Architecture  The general MIS architecture make up comprises three main functions  Input  Facilitate interaction with the user, collect and validate data entered by the user  Output  Generates summarized reports which are presented in a variety of formats using charts and tabular styles  Processing  Consist of a programming logic which is used to access databases; carry out mathematical and other forms of computations necessary to produce the required management reports

14. 6.7Management Information Systems Architecture  MIS architecture make up illustration  http://www.halaeducation.com/BookIm ages/Ch6/fig1.jpg http://www.halaeducation.com/BookIm ages/Ch6/fig1.jpg

15. 6.8Executive Information Systems (EIS) - Dashboards  Goals and Use Provides performance data that act as indicators for use by executives to monitor their organization  Architecture Three tier architecture, input, output and processing functions  Input Facilitates interaction with the user through highly visual input control elements with minimal hard data entry. Heavy reliance on objects that could be pointed to or clicked for results  Output Highly summarized reports that are presented in a variety of charts and tabular formats  Processing Computation and data processing  Benefits Ease and speed of access to cooperate data Provision for the big picture viewing

16. 6.8Executive Information Systems (EIS)  EIS report example  http://www.halaeducation.com/BookIm ages/Ch6/fig2.jpg http://www.halaeducation.com/BookIm ages/Ch6/fig2.jpg