Enhancing Decision Making for the Digital Firm

Transcription

1 Chapter 13 OBJECTIVES Enhancing Decision Making for the Digital Firm Describe different types of decisions and the decision-making process Evaluate the role of information systems in helping people working individually and in a group make decisions more efficiently Demonstrate how executive support systems can help senior managers make better decisions OBJECTIVES (Continued) Assess how systems that support decision making can provide value for the firm Identify the challenges posed by decision-support systems, group decision-support systems, and executive support systems and management solutions Business Intelligence and Decision Support Human intelligence enables people to: Amass new information Combine new info w/ existing knowledge Change behavior to adapt to new situations, succeed at tasks Make high-quality decisions Business Intelligence and Decision Support Business intelligence enables firms to: Amass (quality) information Develop knowledge about operations Change decision-making behavior to achieve profitability and other business goals Make high-quality decisions Systems and Technologies for Business Intelligence Enterprise Apps interact with DSS Figure

2 Business Value of Improved Decision Making 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 Information Requirements of Key Decision-Making Groups in a Firm Unstructured decisions: Types of Decisions Novel, non-routine decisions requiring judgment and insights Examples: Approve capital budget; decide corporate objectives; new products; acquisitions 13.9 Figure 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 Systems for Decision Support There are four kinds of systems that support the different levels and types of decisions: (MIS) Decision-Support Systems (DSS) including (GIS) Executive Support Systems (ESS) Group Decision-Support Systems (GDSS)

3 Simon s Stages in Decision Making Iteration between stages Figure 13-3 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 (basically, people don t trust the information) Management filters : Suggestions may not conform to prior conceptions (e.g. a Pollyanna view of the world) Organizational inertia: Strong forces within organization that resist change (may mean lay-offs) Solution: Training, education, open mindedness Trends in Decision Support and Business Intelligence The rise of client/server computing, the Internet, and Web technologies made a major impact on systems that support decision making. Six Major Trends: 6 Trends in Decision Support and Business Intelligence 1. Detailed enterprise-wide data from Enterp. Apps. 2. Broadening decision rights and responsibilities 3. Intranets and portals enhance info. flow 4. Personalization and customization of information speed decision making via filtering 5. Extranets and collaborative commerce Team support tools The Difference between MIS and DSS : MIS Primarily address structured problems MIS Provides typically fixed, scheduled reports based on routine flows of data and assists in the general control of the business (also reports exceptions) 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

4 Types of Decision-Support Systems Model-driven DSS: In the past, they were primarily stand-alone systems (model-driven now incorporated into many Enterprise Apps) Use a strong theory or model to perform what-if and similar analyses Data-driven DSS Mix of Model & Data driven DSS 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 (also filters info) Data mining: Can obtain types of information such as associations, sequences, classifications, clusters, and forecasts 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 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 Analytics: Sensitivity Analysis (two-way Data Table in Excel) Data Analytics Graphics Software System Users Figure Figure

5 Data Mining Associations: does a single event cause change? Sequences: are some events linked over time? Classification: what patterns describe a group? Clustering: What are best groupings (cliques)? kind of like team building Forecasting: Estimating future values Business Value of DSS Providing fine-grained information for decisions that enable the firm to coordinate both internal and external business processes much more precisely Helping with quality decisions in Supply chain management Customer relationship management Pricing Decisions Asset Utilization Many others A DSS for Customer Analysis and Segmentation Business Value of DSS (Continued) 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 Figure Data Visualization & Geographic IS Data Visualization GIS used to show effect of land use over time GIS helps place patrolmen in proper areas by targeting high-crime areas

6 What Is a GDSS? GROUP DECISION-SUPPORT SYSTEMS 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. 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) Group System Tools 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 Source: From Nunamaker et al., Electronic Meeting Systems to Support Group Work, Commu nic ation of the ACM, Ju ly Reprinted with perm ission Figure 13-7 Not necessarily better than face-to-face meetings 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. Has many filters, graphical summarizations It tries to avoid the problem of data overload so common in paper reports EXECUTIVE SUPPORT IN THE ENTERPRISE The Role of Executive Support Systems in the Firm 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. (Remember Snippets demo?) Can integrate comprehensive firm-wide information and external data in timely manner Inclusion of modeling and analysis tools usable with a minimum of training (has to be easy to learn/use or managers typically won t use it)

7 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. Management Opportunities: Decision-support systems provide opportunities for increasing precision, accuracy, and rapidity of decisions and thereby contributing directly to profitability Timeliness and availability of data enables more timely decision making, helping businesses move toward a sense-and-respond strategy Management Challenges: Building systems that can actually fulfill Executive Information Requirements Changing management thinking to make better use of systems for decision support Solution Guidelines: Flexible Design and Development: Users must work with IS specialists to identify a problem and a specific set of capabilities that will help them arrive at decisions about the problem. (intelligence and design phase) Organizational resistance The system must be flexible, easy to use, and capable of supporting alternative decision options (give them choices and/or explain solution) Solution Guidelines (Continued) Training and Management Support: User training, involvement, and experience; top management support; and length of use are the most important factors in the success of management support systems