Chapter 8 Introduction

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Chapter 8 Introduction

• Decision Support Systems

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Database Project Lab

• Will meet next Tuesday in Social Science I room
• 135.
• Will provide an Access tutorial in the lab.
• Important to come prepared in terms of a data
  plan.

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This chapter explores how information systems can
support the diverse information and
decision-making needs of managers.
Section I Decision Support (Assist) in
E-Business
Section II Artificial Intelligence Technologies
in Business
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Important Topics

• Information, decisions, management (and
  leadership).
• Changes in the form and use of decision support
  in an enterprise.
• The multiple types of decision support systems.
• Reporting alternatives of management information
  systems.

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Two Important Premises
The support of decision making is fundamental to
the role of information systems within an
organization.
Information Systems can support a variety of
management decision-making levels and decisions.
(including empowered employees)
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Objective for Information Systems
1. Provide Access to Information. 2. Enhance
Communications. 4. Provide Decision Assist. 5.
Be a Business Process Partner.
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Information Systems Organization Mission
Statement
To assure that the corporation's present as
well as future demands for information,
information processes, information systems and
computer-based technologies are provided in such
a manner that the daily conduct of the business
will not be impacted and that the future business
opportunities can be capitalized on and managed
by the corporation.
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Basic Question
Which types and phases of decision making are the
most critical to a companys on-going business
success?

• Major threat from a competitor?
• Quality problems with a vendor?
• Dissatisfied major customer?
• Not enough cash to pay your employees?

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An Important Perspective
1. Who Makes Competitive Strategy Decisions?
2. Who Makes Competitive Strategy Decisions
When the Process is Built on a Computer Base?
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Information Requirements by Management Level
Directly related to level of management decision
making and the structure of decisions that they
need to make.
Strategic Management (unstructured)
Tactical Management (semi-structured)
Decisions
Information
Operational Management (structured)
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Three Levels of Decision Making

1) Strategic Example new product plan 2)
Tactical Example Educate all employees on a new
production scheduling process in three months.
3) Operational Example Increase production
level of a specific product.
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Types of Decisions
Structured Repetitive definite procedure have
a high level of certainty could even be called
routine.
Semi-structured One or more factors are not
structured the more unstructured, the higher the
risk.
Unstructured Unique non-routine has definite
uncertainty requires experience and judgment.
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Unstructured
Structured

• Ad hoc
• Unscheduled
• Summarized
• Infrequent
• Forward looking
• External
• Wide Scope

• Pre-specified
• Scheduled
• Detailed
• Frequent
• Historical
• Internal
• Narrow Focus

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Major Types of Decision Assist Information Systems

• Management Information System Supports
• much of the day-to-day decision making.
• Decision Support System Provides interactive
• information support to managers during the
• decision making process.
• Executive Information System Combine many of
  the
• features of the above two systems with a focus
  on
• strategic information needs.

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Management Information System Reports
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Report Formats
Influenced by Volumes Timing Complexity
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Frito-Lay Example
Ten years ago I could have told you how Doritos
were selling west of the Mississippi. Today, not
only can I tell you how well Doritos are selling
in the west but how they are selling in
California, in Orange County, in the town of
Irvine, in the local Vons supermarket, in a
special promotion, at the end of Aisle 4, on
Thursday.
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Change!?
How does a company go from where it is today to
where it wants to be in a highly competitive
environment?
This often means New Systems based on new
business processes based on new business
strategies.
Key factors to accomplish this are People--manage
rs and employees, company culture and the
resource and cost implications.
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Business Leadership

• The purpose of business leadership is to
• mobilize knowledge and capabilities to create
• a competitive organization. This requires
• Speed within the organization
• Integration of the organization
• Innovation including how to react quickly.
• Flexibility in how to get things done.

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Problem Solvingand IS Support
Problem
Decisions to understand the problem
Information
Decisions to evaluate alternative solutions
Information
Decisions to implement the solution
Information
Solution
Decisions to follow-up the solution
Information
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Ways to Solve Business Problems
Absolution Ignore it and hope it will go away.
Dissolution Redesign to eliminate the problem.
Resolution Do something that yields an outcome
that is good enough emphasizing past experience.
Solution Involves research and relies heavily
on experimentation, quantitative analysis and
both common and uncommon sense.
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Speed
To market competitive, market
position, market leadership To decision
consensus, commitment, responsive To
task completion productivity
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How Are Decisions Made?
Depends on the significance of the decision.

• Little Deal
• Routine based on past experience (habit).
• Quick decision since consequences are minimal.
• Individual versus consensus decision.

• Big Deal
• Research and get as much data as possible.
• Evaluate as long as time permits.
• Consensus decision by key participants.

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At what level should decisions be made?
IBM CEO
Corporate Staff
Group Executives
Divisional General Managers
Operational Managers in San Jose with a business
opportunity suggestion
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Management Role
Much of what managers do is through decision
making.

• Also important are interpersonal capabilities and
  an appreciation for the importance of
  information.

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Managers are Different
Corporate Executives
Operational Managers
There can be a significant difference between
managers and leaders.
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Leadership A Popular Topic
Frequently Heard Comments
He/she is a great leader.
Leaders are born, not made.
Leadership is difficult to define but you will
know it when you see it.
An important factor to train future leaders is to
have good role models that they can observe and
emulate.
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Leadership Definition
Leadership is a function of knowing yourself,
having a vision that is well communicated,
building trust among colleagues and taking
effective action to realize your own leadership
potential. Warren Bennis
Leadership is the process of persuasion and
example by which an individual (or leadership
team) induces a group to take action that is in
accord with the leaders purpose or the shared
purposes of all. John Gardner
High level definitions with an unclear
information role.
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Leadership
A process that includes influencing the task
objectives, and strategies of a group or
organization, influencing the people in the
organization to implement the strategies and
achieve the objectives, influencing the group
maintenance and identification and influencing
the culture of the organization.
Objectives and strategies suggest the need for
and use of information to influence and lead
people.
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Conclusions
1. There can be a close relationship between
effective management and decision making. 2.
Like decision making, the closer the manager is
to the operational level, the more likely the use
of operational data to support determining the
company direction. 3. If the focus of the manager
is on high level strategies that deal with
reshaping or refocusing the organization with new
strategies there is likely to be less of a role
for information systems.
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Changing Times
Senior management no longer runs a company. It
is the young people who run the company senior
management runs relationships. (determines and
creates infrastructure)
Peter Drucker Feb. 1998
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Empowerment of People
Help run the business better. Encourage ideas
on how to do this. Encourage people to take
risks. Avoid having middle managers who think
that their job is to say no to anything and
everything. Avoid excessive filtering of input
from people who really understand the issue, the
problem, the opportunity.
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A New Business Approach
Senior Management
Vision
Business Uncertainties
and Macro Strategies
Empowered Implementers
Company Culture
Micro Strategies, Tactics and Operational
Decisions
Risks to be Avoided
Critical Performance Factors
Key Enterprise Business Processes
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Solution Selection Criteria
1. Risk including the odds.
2. Economy of effort greatest results with
least effort or needed change with least
disturbance.
3. Timing based on urgency which is difficult
to systematize.
4. Limitation of Resources relative to those
that must carry out the decision. No decision
is better than the people that must carry it
out.
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Enterprise Information Portals and Decision
Support System
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Decision Support Systems

• Major category of management support systems.
• Computer-based information systems that provide
  interactive information support to managers
  during the decision-making process.
• Designed to be a quick response systems that are
  initiated and controlled by managerial end users

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Decision Support Systems
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Decision Support System Use

• Analytical models.
• Specialized databases.
• A decision makers own insights and judgements
• Interactive, computer-based modeling process to
  support the making of semi-structured and
  unstructured decisions by individual managers.

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Models and Software

• DSS relies on model bases as vital system
  resources.
• A DSS model base is a software component that
  consists of models used in computational and
  analytical routines that mathematically express
  relationships among variables.

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Decision Support Systems Design Criteria

• Flexibility
• Needs to support a variety of styles, skills and
  knowledge.
• Needs features to support diverse interests.
• Needs to include multiple analytical models.

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Building a Decision Support System
Needs significant user participation.
Needs to be flexible and have the ability to
evolve.
Suggests prototyping approach.
Underlying data availability from operational
systems is a given.
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Online Analytical Processing
Online Analytical Processing (OLAP) is a
capability of management, decision support, and
executive information systems that enables
managers and analysts to interactively examine
and manipulate large amounts of detailed and
consolidated data from many perspectives.
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Online Analytical Processing
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OLAP
Consolidation - Intelligent aggregation of
data. Drill-down - Big picture to detail and
further down to desired level of detail. Slicing
and dicing - Looking at data from different
perspectives.
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Data Mining
Data mining tools use statistical and machine
learning methods to search databases for patterns
that describe relationships in the data or
predict future values or behavior.
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Data Mining
What is the profitability of specific or
categories of customers? Which products are
normally sold together to different categories
of customers? Which customers are likely to
become non-customers?
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Data Mining Tool Capabilities

• Basic Preparation
• Data Cleaning
• Data Description
• Data Selection
• Data Transformation
• Performance
• How fast a model is built.
• How fast a predictive model can evaluate the
  data.

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Data Mining Tools

• Model Evaluation and Interpretation
• Measures for accuracy and significance.
• Graphic output.
• Interfaces to Other Products
• Many tools like query and reporting, graphics and
  visualization and online analysis can help to
  understand data before and after building a model.

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Data Mining Products
KnowledgeSeeker Angoss Software DataCruncher Da
taMind Intelligent Miner IBM Decision
Series NeoVista Solutions Data Mining
Solution SAS Institute MineSet Silicon
Graphics Darwin Thinking Machines Pattern
Recognition Unica Technologies
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Data Mining People Skills
People who A. Are familiar with the data. B.
Know the application. C. Understand model
building.
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Relatively New Terms

• Web-enabled decision support
• Enterprise information portals and decision
  support.

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Artificial Intelligence
An area of computer science whose long-range goal
is to develop computers that can think, as well
as see, hear, walk, talk and feel.
A major thrust is the development of computer
functions normally associated with human
intelligence, such as reasoning, learning, and
problem solving.
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Section II Artificial intelligence Technologies
in Business
Artificial Intelligence consists of
Cognitive Science
Natural Interfaces
Robotics

• Visual Perception
• Tactility
• Dexterity
• Locomotion
• Navigation

• Natural Languages
• Speech Recognition
• Multisensory Interfaces
• Virtual Reality

• Expert Systems
• Learning Systems
• Fuzzy Logic
• Genetic Algorithms
• Neural Networks
• Intelligent Agents

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• Expert Systems
• A computer-based information system that uses its
  knowledge about a specific complex application
  area to act as an expert consultant to users. The
  system consists of a knowledge base and software
  modules that perform inferences on the knowledge
  and communicate answers to a users questions.

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Expert Systems

• One of the most practical applications of AI is
  the development of expert systems.
• Knowledge-based information system.
• Used in many different fields including medicine
  
• diagnosis, mineral exploration and
• telecommunications.

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Why Expert Systems?
Expertise is scare or unavailable. Used to allow
a practitioner to verify their opinion. To help
accomplish tasks that are under time or cost
pressures. To free up skilled employees from
routine and mundane activities. To help train new
employees through the talents and skills of the
experts/
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Components of Expert Systems
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Telecom Expert Systems

• Fault diagnosis of specific network components
  is a
• primary use.
• Total network management is another major area.

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Expert System Limitations

• Restrictions are set on their limited focus,
  inability to learn, and developmental cost.
• They do well with specific types of operational
  or analytical tasks, but falter at subjective
  managerial decision making.
• May be difficult and costly to develop and
  maintain properly.
• The costs of knowledge engineers, lost expert
  time, and hardware and software resources may be
  too high to offset the expected benefits.
• Cant maintain themselves and must be updated
  and/or modified as appropriate.

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Artificial Intelligence
Cognitive Science focuses on researching how a
human brain works and how humans think and learn.
Such research in human information processing
are the basis for the development of a variety of
computer-based applications in AI. Robotic
Applications This technology produces robot
machines with computer intelligence and
computer- controlled, humanlike physical
capabilities. Natural Interfaces The
development of natural interfaces is considered
a major area of AI applications and is essential
to the natural use of computers by humans.
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Cognitive Science
-Expert Systems -Learning Systems -Fuzzy
Logic -Genetic Algorithms -Neural Networks
-Robotic Applications -Visual
perception -Tactile capabilities -Dexterity -Lo
comotion -Navigation -Natural Interfaces
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Robotics
Computer-based machine tools justified based on
the following logic of machine use 1. To do
repetitive, boring work. 2. To do precession work
under machine control. 3. To do work that has
high safety risk. 4. To do work where machine
control has a major cost benefit.
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Intelligent Agents
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Virtual Reality
Computer-simulated reality. It is a fast-growing
area of AI that had its origins in efforts to
build more natural, realistic, multi-sensory
human /computer interfaces. Basically, it allows
a person to experience computer-simulated
virtual worlds three-dimensionally through
sight, sound, and touch as if they actually
exist.
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Applications of Virtual Reality

• Computer-Aided Design
• Medical Diagnostics and Treatments
• Flight Simulation for Training Pilots
• Entertainment, especially 3-D video arcade games
• CAD is the most widely used industrial VR
  application. It enables architects and other
  designers to design and test electronic 3D models
  of products and structures by entering the models
  themselves and analyzing them.
• Limitations of Virtual Reality Performance and
  cost of the technology

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IS Impact on Decision Making

• Broadens scope of understanding and knowledge of
  the business.
• Emphasizes management by fact.
• Supports empowerment.
• Flattens organizational structure.
• Makes people more accountable.
• Networks among employees at all levels prompts
  more reliance on horizontal relationships than
  hierarchical.
• Expands the scope of opportunity beyond the
  boundaries of the organization.
• Puts more emphasis on interpersonal and
  communication skills.

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Basic Challenges
Building information systems that can actually
fulfill management (decision maker) information
requirements.

• Internal versus external data.
• Structured versus unstructured data.
• Anticipated versus unanticipated information.

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Data Challenges

• Consistency of data
• Availability of data
• Timeliness of data

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Chapter Summary

• Information systems can support a variety of
  management
• decision-making levels and decisions.
• These help the heads of organizations provide
  better business leadership for their firms which
  produces better work efficiency.
• Information systems provide a wide range of
  information
• products to support the different types of
  decisions
• (unstructured, semi-structured, and
  structured) at all levels
• of the organization.