1. CHAPTER NINE ENABLING THE ORGANIZATION DECISION MAKING What is the value of the decisions we make? The answer is simple: it depends on the value of the information we base our decisions on. “…the value of information is its ability to lower a company’s handicap” (Karsen Solheim).

2. Model Decision-making information systems build Decision-making information systems build models out of organizational information to lend insight into important business issues and opportunities. A model is a simplified representation of reality. A model can calculate risks, understand uncertainty, change variables, and manipulate time. The model only works when information systems are in place.

3. Information Systems Executive Information systems (EIS) Decision Support systems (DSS) Transaction Processing System (TPS) Executive Managers Analysts

4. Transaction Processing Systems The structure of a typical organization looks like a pyramid. Organizational activities occur at three levels of the pyramid. ▬ People at the lower level of the pyramid perform daily tasks. ▬ Online transaction processing (OLTP) is the capturing of information using technology to (1) process info according to defined business rules, (2) store info, and (3) update existing info to reflect new information. ▬ At the second level, people (mangers’) deal less with details. Online Analytical Processing (OLAP) is the manipulation of info to create business intelligence in support of strategic moves

5. Decision Support Systems DSS uses three quantitative models: DSS uses three quantitative models: Sensitivity Analysis, What-if analysis, and goal-seeking analysis. Sensitivity Analysis is the study of the impact that changes at every level. What-if analysis checks the impact of a change with proposed solutions. goal-seeking analysis finds the inputs necessary to achieve goals.

6. Executive Information Systems EIS is a specialized DSS that supports senior- EIS is a specialized DSS that supports senior- level executives in the organization. The only difference is that EIS contains both external and internal data. There are two primary types of EIS:- Artificial Intelligence and Data Mining.

7. Artificial Intelligence (AI) EIS take advantage of Artificial Intelligence (AI) EIS take advantage of Artificial Intelligence (AI) to help executive make strategic decisions. AI simulates human intelligence such as the ability to reason and learn. AI increases the speed and consistency of decision making with the use of four most popular systems: expert system (computerized advisory program), neural networks (attempts to emulate how human brain works), generic algorithm (evolutionary survival-of-the-fittest process to generate better solutions) and intelligent agents (a knowledge-based info system to do special tasks).

8. Data Mining Data mining software typically includes many Data mining software typically includes many forms of IA such as neural network, expert systems. Data mining tools apply algorithm to info to uncover trends and patterns in the info, which analysts use to develop business strategies. Data mining capabilities: Cluster analysis, Association detection and statistical analysis.