Fundamentals of Information Systems Fourth Edition

1
Fundamentals of Information SystemsFourth Edition

• Chapter 6
• Information and Decision Support Systems

2
Principles and Learning Objectives

• Good decision-making and problem-solving skills
  are the key to developing effective information
  and decision support systems
• Define the stages of decision making
• Discuss the importance of implementation and
  monitoring in problem solving
• A good plan for decision making has no value
  unless it can be effectively implemented

3
Principles and Learning Objectives (continued)

• The management information system (MIS) must
  provide the right information to the right person
  in the right format at the right time
• Explain the uses of MISs and describe their
  inputs and outputs
• Discuss information systems in the functional
  areas of business organizations
• Why is it important that different functional
  areas of the business (operations, sales,
  accounting, etc) have different information
  systems?

4
Principles and Learning Objectives (continued)

• Decision support systems (DSSs) are usually used
  when the problems are semistructured or
  unstructured
• List and discuss important characteristics of
  DSSs that give them the potential to be effective
  management support tools
• Identify and describe the basic components of a
  DSS

5
Principles and Learning Objectives (continued)

• Specialized support systems, such as group
  support systems (GSSs) and executive support
  systems (ESSs), use the overall approach of a DSS
  in situations such as group and executive
  decision making
• State the goals of a GSS and identify the
  characteristics that distinguish it from a DSS
• Identify the fundamental uses of an ESS and list
  the characteristics of such a system

6
Why Learn About Information and Decision Support
Systems?

• True potential of ISs is to help employees make
  more informed business decisions
• These systems can cut costs, increase profits,
  uncover new opportunities
• Examples
• Transportation coordinator can find least
  expensive way to ship products
• Loan manager can determine creditworthiness
• Store managers can better maintain inventory

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Decision Making and Problem Solving Decision
Making as a Component of Problem Solving

• Decision-making phase first part of
  problem-solving process
• Intelligence stage identify and define potential
  problems or opportunities
• Design stage develop alternative solutions to
  the problem
• Choice stage select a course of action the
  best choice may be the one in your budget, the
  quickest to implement, etc. The best is not
  always about profit of that particular
  information system

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Decision Making as a Component of Problem Solving
(continued)
It is critical to understand the difference
between symptoms and problems/opportunities
Figure 6.1 How Decision Making Relates to
Problem Solving
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Decision Making as a Component of Problem Solving
(continued)

• Problem solving includes decision making and the
  implementation and monitoring stages
• Implementation stage solution is put into effect
• Monitoring stage decision makers evaluate the
  implementation

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Programmed Versus Nonprogrammed Decisions

• Programmed decision
• Decision made using a rule, procedure, or
  quantitative method these are created by
  decision-makers
• Easy to computerize using traditional information
  systems
• Making programmed decisions on routine decisions
  frees managers for more productive tasks

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Programmed Versus Nonprogrammed Decisions
(continued)

• Nonprogrammed decisions
• Decision that deals with unusual or exceptional
  situations
• Not easily quantifiable

12
Optimization, Satisficing, and Heuristic
Approaches

• Optimization model process to find the best
  solution, usually the one that will best help the
  organization meet its goals
• Satisficing model find a goodbut not
  necessarily the bestproblem solution typically
  used when it takes too much time or too many
  resources to reach optimal approach
• Heuristics commonly accepted guidelines or
  procedures that usually find a good solution

Be able to differentiate these 3 types on the exam
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Optimization, Satisficing, and Heuristic
Approaches (continued)
Figure 6.2 Optimization Software
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Sense and Respond

• Sense and Respond (SaR) determining problems or
  opportunities (sense) and developing systems to
  solve the problems or take advantage of the
  opportunities (respond)
• Requires nimble organizations with lines of
  authority that are flexible and dynamic

15
An Overview of Management Information Systems

• Management information system (MIS) integrated
  collection of people, procedures, databases, and
  devices
• Provides managers and decision makers with
  information to help achieve organizational goals
• Can give companies a competitive advantage by
  providing the right information to the right
  people in the right format and at the right time

16
Management Information Systems in Perspective

• MIS provides managers with information that
  supports effective decision making and provides
  feedback on daily operations (like the meter
  reader project on page 255)
• Use of MISs spans all levels of management

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Management Information Systems in Perspective
(continued)
DSS
external?
MIS
Transaction/ERP
Figure 6.3 Sources of Managerial Information
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Inputs to a Management Information System

• Internal data sources
• TPSs and ERP systems and related databases
• Data warehouses and data marts
• Specific functional areas throughout the firm
• External data sources
• Customers, suppliers, competitors, and
  stockholders whose data is not already captured
  by the TPS
• The Internet
• Extranets

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Outputs of a Management Information System
Figure 6.4 An Executive Dashboard
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Outputs of a Management Information System
(continued)

• Scheduled report produced periodically, or on a
  schedule an event report such as an accident
  report is considered a scheduled report
• Key-indicator report summary of the previous
  days critical activities
• Demand report developed to give certain
  information at someones request
• Exception report automatically produced when a
  situation is unusual or requires management
  action
• Drill-down report provides increasingly detailed
  data about a situation

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Outputs of a Management Information System
(continued)
Figure 6.5 Reports Generated by an MIS
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Outputs of a Management Information System
(continued)
Review the Management Information Systems and
National Security case on page 259
Table 6.1 Guidelines for Developing MIS Reports
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Functional Aspects of the MIS

• Most organizations are structured along
  functional lines or areas
• MIS can be divided along functional lines to
  produce reports tailored to individual functions

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Functional Aspects of the MIS (continued)
Figure 6.6 An Organizations MIS
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Financial Management Information Systems

• Financial MIS provides financial information not
  only for executives but also for a broader set of
  people who need to make better decisions on a
  daily basis
• Profit/loss and cost systems
• Internal and external auditing
• Uses and management of funds

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Financial Management Information Systems
(continued)
Figure 6.7 Overview of a Financial MIS
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Manufacturing Management Information Systems

• Manufacturing MIS subsystems and outputs monitor
  and control the flow of materials, products, and
  services through the organization
• Some common information subsystems and outputs
  used in manufacturing
• Design and engineering
• Master production scheduling and inventory
  control
• Process control
• Quality control and testing

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Manufacturing Management Information Systems
(continued)
Figure 6.8 Overview of a Manufacturing MIS
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Marketing Management Information Systems

• Marketing MIS supports managerial activities in
  product development, distribution, pricing
  decisions, promotional effectiveness, and sales
  forecasting
• Subsystems for marketing MIS include
• Marketing research
• Product development
• Promotion and advertising
• Product pricing
• Sales analysis

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Marketing Management Information Systems
(continued)
Figure 6.9 Overview of a Marketing MIS
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Marketing Management Information Systems
(continued)
Figure 6.10 Reports Generated to Help Marketing
Managers Make Good Decisions
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Human Resource Management Information Systems

• Human resource MIS concerned with activities
  related to employees and potential employees of
  an organization
• Outputs of the human resource MIS include
• Human resource planning
• Personnel selection and recruiting
• Training and skills inventory
• Scheduling and job placement
• Wage and salary administration
• Outplacement

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Human Resource Management Information Systems
(continued)
Figure 6.11 Overview of a Human Resource MIS
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Other Management Information Systems

• Accounting MIS provides aggregate information on
  accounts payable, accounts receivable, payroll,
  and many other applications
• Geographic information system (GIS) capable of
  assembling, storing, manipulating, and displaying
  geographic information, i.e., data identified
  according to its location

35
An Overview of Decision Support Systems

• DSS is an organized collection of people,
  procedures, software, databases, and devices used
  to help make decisions that solve problems
• Focus of a DSS is on decision-making
  effectiveness when faced with unstructured or
  semistructured business problems

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Capabilities of a Decision Support System

• Support for problem-solving phases
• Support for different decision frequencies
• Ad-hoc, institutional
• Support for different problem structures
• Highly structured (not so frequently),
  semistructured, or unstructured
• Support for various decision-making levels
• Operational, tactical, strategic but strategic is
  most important then tactical and then operational
  for decision support systems

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Capabilities of a Decision Support System
(continued)
Figure 6.13 Decision-Making Level
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A Comparison of DSS and MIS
Table 6.3 Comparison of DSSs and MISs
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Components of a Decision Support System

• Components of a decision support system are
• Database
• Model base
• Dialogue manager (usually just called an
  interface)
• Access to the Internet, networks, and other
  computer-based systems

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Components of a Decision Support System
(continued)
Figure 6.14 Conceptual Model of a DSS
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The Database

• Data-driven DSS
• Primarily performs qualitative analysis based on
  the companys databases
• Taps into vast stores of information contained in
  the corporate database, retrieving information on
  inventory, sales, personnel, production, finance,
  accounting, and other areas
• Often uses data mining and business intelligence

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The Model Base

• Model base part of DSS that provides decision
  makers access to a variety of models and assists
  them in decision making
• Allows managers and decision makers to perform
  quantitative analysis on both internal and
  external data
• Model management software software that
  coordinates the use of models in a DSS (models
  are frequently mathematical or statistical)

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The User Interface or Dialogue Manager

• User interface or dialogue manager allows users
  to interact with the DSS to obtain information
• Assists with all aspects of communications
  between the user and the hardware and software
  that constitute the DSS

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Group Support Systems

• Group support system (GSS)
• Consists of most elements in a DSS, plus software
  to provide effective support in group decision
  making
• Also called group decision support system or
  computerized collaborative work system

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Group Support Systems (continued)
Figure 6.15 Configuration of a GSS
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Characteristics of a GSS That Enhance Decision
Making

• Special design
• Procedures, devices, and approaches for creative
  thinking and effective communication
• Ease of use
• Complex systems will seldom be used by groups
• Flexibility
• Takes different decision-making styles and
  preferences into account
• Decision-making support for different approaches
• Delphi, brainstorming, group consensus, nominal
  group

page 277 has wrong definitions for the Delphi
approach to decision making and the group
consensus approach and the nominal group approach
47
Characteristics of a GSS That Enhance Decision
Making (continued)

• Anonymous input can be used
• Helpful in ranking performance of managers
• Reduction of negative group behavior
• Avoids dominance of one member, sidetracking, and
  groupthink
• Parallel communication
• Speeds meeting times and results in better
  decisions
• Automated record keeping
• Provides efficient voting, ranking, future
  review, and analysis

48
GSS Software

• Often called groupware or workgroup software
• Helps with joint work group scheduling,
  communication, and management
• Examples Lotus Notes, Microsofts NetMeeting,
  Microsoft Exchange, IBMs Workplace, NetDocuments
  Enterprise, Collabra Share, OpenMind, TeamWare
• Some transaction processing and enterprise
  resource planning packages include collaboration
  software

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GSS Alternatives

• GSS alternatives include
• Decision room decision makers in same geographic
  area GSS is used occasionally
• Local area decision network decision makers in
  same geographic area GSS is used frequently
• Teleconferencing decision frequency is low
  location of group members is distant (has time
  zone implications)
• Wide area decision network decision frequency is
  high location of group members is distant
• Use virtual workgroups

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GSS Alternatives (continued)
Figure 6.17 The GSS Decision Room
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Executive Support Systems

• Executive support system (ESS) specialized DSS
  that includes all hardware, software, data,
  procedures, and people used to assist
  senior-level executives within the organization

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Executive Support Systems (continued)
Figure 6.18 The Layers of Executive Decision
Making
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Executive Support Systems in Perspective

• General characteristics of ESSs
• Tailored to individual executives
• Easy to use
• Drill-down abilities
• Support need for external data
• Can help when uncertainty is high
• Future-oriented
• Linked with value-added business processes

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Capabilities of Executive Support Systems

• Support for defining an overall vision
• Support for strategic planning
• Determine long-term objectives based on analyzing
  current strengths and weaknesses, predicting
  future trends, and projecting development
• Support for strategic organizing and staffing
• Support for strategic control
• Monitoring, managing, goal seeking
• Support for crisis management
• Strategic emergency plans

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Summary

• Decision-making phase of the problem-solving
  process includes three stages intelligence,
  design, and choice
• Management information system (MIS) provides
  managers with information that supports effective
  decision making and provides feedback on daily
  operations
• Financial MIS provides financial information not
  only for executives but also for a broader set of
  people who need to make better decisions on a
  daily basis

56
Summary (continued)

• Manufacturing MIS subsystems and outputs monitor
  and control the flow of materials, products, and
  services through the organization
• Marketing MIS supports managerial activities in
  product development, distribution, pricing
  decisions, promotional effectiveness, and sales
  forecasting
• Human resource MIS activities related to
  employees and potential employees
• Geographic information system (GIS) assembling,
  storing, manipulating, and displaying geographic
  information

57
Summary (continued)

• Decision support system (DSS) organized
  collection of people, procedures, software,
  databases, and devices used to help make
  decisions that solve problems
• Group support system (GSS) includes elements in
  a DSS, plus software to provide effective support
  in group decision making
• Executive support system (ESS) specialized DSS
  that includes all hardware, software, data,
  procedures, and people used to assist
  senior-level executives within the organization