Mgt 20600: IT Management

1
Mgt 20600 IT Management ApplicationsDecision
Support Systems

• Tuesday
• April 11, 2006

2
Reminders

• Reading
• For today
• Fundamentals text, Chapter Six, Information and
  Decision Support Systems
• For next class on April 18th
• Fundamentals text, Chapter Five, Electronic
  Commerce and Transaction Processing Systems
• Homework
• Homework Four
• Databases
• Due this Thursday, April 14th, by 5pm
• Homework Five
• Decision Support Systems
• Due Friday, April 21st by 5pm
• Exam 2
• Tuesday, April 25th
• 75 points
• Similar types of questions as on Exam 1
• Covers Telecom Networks, Databases, Decision
  Support Systems
• Next week Electronic Commerce

3
Data Warehouses, Data Marts, and Data Mining

• Data warehouse collects business information
  from many sources in the enterprise
• Data mart a subset of a data warehouse
• Data mining an information-analysis tool for
  discovering patterns and relationships in a data
  warehouse or a data mart

4
Data Warehouses, Data Marts, and Data Mining
Elements of a Data Warehouse
5
Data Warehouse Example

• Home Depot in 2002 launched a 48 terabyte IBM DB2
  data warehouse
• Contains three years of sales history
• The warehouse is intended to take the guesswork
  out of labor scheduling as well as inventory
  planning
• Lowe's has had a Teradata warehouse with that
  functionality since 2000

6
Data Warehouse Example

• Premier Inc. sells access to clinical data it
  gathers from 400 hospitals to pharmaceutical
  manufacturers
• Last year, the company's IBM Red Brick data
  warehouse had grown to 3TB
• One table included 3 billion entries
• "When you go through 3 billion rows of data, you
  get long runtimes," says Chris Stewart, director
  of data warehouse architecture.
• The problem wasn't just the size of the database,
  however, but how clients used the data.
• "Our users want to access all of the data from
  top to bottom," says Stewart
• The complex, multipass queries created by
  Premier's 4,000 users each week were slowing
  performance. Some wouldn't run at all
• Stewart brought in an all-inclusive data
  warehouse appliance from Netezza Corp. in
  Framingham, Mass
• Some calculations that took one or two days now
  finish in six to eight minutes on the appliance's
  108 processors

7
Data Mart Example

• ACNielsen's Paris offices
• Customers are interested in very specific subsets
  of data and specific aggregations
• ACNielson has produced thousands of data marts as
  part of a project called the Data Mart Factory
• 4TB master data warehouse that includes regularly
  updated data from retailers
• Runs it through a system that cranks out 3,000
  client-specific data marts that ACNielsen
  presents to 1,000 customers in the retailing and
  consumer product manufacturing industries
• Each data mart is refreshed weekly

8
Data Warehouses, Data Marts, and Data Mining
Common Data-Mining Applications
9
Data Mining Example7-Eleven

• Keyes' eyes were opened to the strategic
  importance of IT during a trip he made in 1990 to
  visit 7-Eleven's licensees in Japan
• Stores customized their offerings to local demand
  and by the assortment of fresh foods they
  offered, from sushi to sandwiches
• The Japanese did it with scanning data,
  rudimentary data warehouses and a nascent
  in-store ordering system
• When he became CEO, Keyes knew that the U.S.
  stores had to do the same

10
Data Mining Example

• Online retailer Overstock.com Inc. has begun
  connecting users to a real-time data warehouse it
  completed last month
• The project's goal is to help employees gain
  insight into the effectiveness of the company's
  online and e-mail advertising campaigns.
• Overstock is using transactional data management
  tools from GoldenGate Software Inc. to pull
  information directly from its business systems
  into the data warehouse
• Now the data warehouse receives Web site
  clickstream data in real time, financial and
  product-sales data every 15 minutes and other
  information hourly.
• "When we launch campaigns now, we can look within
  five minutes and see if they are producing lift
  or revenue that would not normally have
  happened," Garcella said.
• "You can't wait until the next day or three hours
  later to get that data."

11
Online Analytical Processing (OLAP)

• Software that allows users to explore data from a
  number of different perspectives

Comparison of OLAP and Data Mining
12
OLAP in Depth

• One core software tool is online analytical
  processing (OLAP)
• Extracts, structures and stores warehoused data
  to enable quick, multidimensional analysis
• A dimension can be any variable your company
  tracks customer locations, sales volumes,
  product development costs and so on
• An OLAP data set is made up of dimensions and
  measures, which can then be used for queries to
  elicit detailed data breakdowns and information
  on associations among variables
• For example, a grill manufacturer could use an
  OLAP query to correlate grill sales with weather
  conditions across various locations, to determine
  how heat waves affect its business in different
  regions.

13
Business Intelligence

• Business intelligence (BI) gathering the right
  information in a timely manner and usable form
  and analyzing it to have a positive impact on
  business
• Knowledge management capturing a companys
  collective expertise and distributing it wherever
  it can help produce the biggest payoff

14
Business Intelligence Example

• Continental Airlines Inc. from worst to first.
• BI that Continental gleaned from its customers
  helped move it from last place in travelers'
  opinions nine years ago to the winner of this
  year's award for best airline from London-based
  OAG Worldwide Ltd.
• The first move Continental made to improve
  frequent-flier relations back in the mid-'90s was
  to consolidate 55 databases worldwide into a
  single Teradata data warehouse
• "We wanted one voice of the customer
• The goal was to identify high-yield customers,
  create loyalty programs and get more immediate
  data on the cost of each flight
• Flight attendants now receive information from
  the data warehouse about high-value customers on
  a flight so they can personally express the
  airline's interest in and knowledge about the
  customers' recent flying experiences with
  Continental
• The company's financial analysts can get
  information about the profitability of each
  flight instantly after "wheels up," Cook says.
• In the future, Continental wants the data
  warehouse to use real-time clickstream data to
  automatically generate targeted offers to
  Continental's Web site visitors.

15
Business Intelligence Example

• Data warehouse cuts costs for ... cost-conscious
  Southwest Airlines Co
• The Dallas-based carrier centralized its BI group
  two years ago around a Teradata data warehouse in
  order to keep a lid on IT costs through better
  systems management and more efficient staffing
  policies
• "We're the low-cost airline, so we should have a
  low-cost infrastructure"
• Besides helping to hold down IT spending, the 2TB
  data warehouse helps business analysts cut
  corporate costs
• Annual savings from ideas generated through use
  of the data warehouse at between 1.2 million and
  1.4 million
• As a result of that success, the data warehouse
  is destined to grow. It will increase to 3TB by
  next summer and possibly double that volume by
  2007.
• IT team is developing better ways of handling ad
  hoc query requests from end users and creating
  dashboard-style tools for the airline's
  executives.

16
Management Information Systems in Perspective

• A management information system (MIS) provides
  managers with information that supports effective
  decision making and provides feedback on daily
  operations
• The use of MISs spans all levels of management

17
Management Information Systems in Perspective
Sources of Managerial Information
18
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

19
Outputs of a Management Information System

• Scheduled report produced periodically, or on a
  schedule
• 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

20
Functional Aspects of the MIS

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

21
Functional Aspects of the MIS
The MIS is an integrated collection of functional
information systems, each supporting particular
functional areas.
22
Financial Management Information Systems

• Financial MIS provides financial information to
  all financial managers within an organization
• Profit/loss and cost systems
• Auditing
• Uses and management of funds

23
Financial Management Information Systems
Overview of a Financial MIS
24
Manufacturing Management Information Systems

• The manufacturing MIS subsystems and outputs
  monitor and control the flow of materials,
  products, and services through the organization
• Design and engineering
• Production scheduling
• Inventory control
• MRP (material requirements planning)
• Process control
• Quality control

25
Manufacturing Management Information Systems
Overview of a Manufacturing MIS
26
Marketing Management Information Systems

• Marketing MIS supports managerial activities in
  product development, distribution, pricing
  decisions, promotional effectiveness, and sales
  forecasting
• Marketing research
• Product development
• Promotion and advertising
• Product pricing

27
Marketing Management Information Systems
Overview of a Marketing MIS
28
Human Resource Management Information Systems

• Human resource MIS concerned with activities
  related to employees and potential employees of
  an organization
• Needs and planning assessments
• Recruiting
• Training and skills development
• Scheduling and assignment
• Employee benefits
• Outplacement

29
Human Resource Management Information Systems
Overview of a Human Resource MIS
30
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

31
Decision Making as a Component of Problem Solving
How Decision Making Relates to Problem Solving
32
Decision Making as a Component of Problem Solving

• Decision-making phase first part of
  problem-solving process
• Intelligence stage potential problems or
  opportunities are identified and defined
• Design stage alternative solutions to the
  problem are developed
• Choice stage a course of action is selected

33
Decision Making as a Component of Problem Solving

• Problem solving a process that goes beyond
  decision making to include the implementation
  stage
• Implementation stage a solution is put into
  effect
• Monitoring stage decision makers evaluate the
  implementation

34
Programmed Versus Nonprogrammed Decisions

• Programmed decisions
• Decisions made using a rule, procedure, or
  quantitative method
• Easy to computerize using traditional information
  systems
• Example?
• Nonprogrammed decisions
• Decision that deals with unusual or exceptional
  situations
• Not easily quantifiable
• Example?

35
Optimization, Satisficing, and Heuristic
Approaches

• Optimization model a process that finds the best
  solution, usually the one that will best help the
  organization meet its goals
• Satisficing model a process that finds a
  goodbut not necessarily the bestproblem
  solution
• Heuristics commonly accepted guidelines or
  procedures that usually find a good solution

36
An Overview of Decision Support Systems

• A DSS is an organized collection of people,
  procedures, software, databases, and devices used
  to support problem-specific decision making and
  problem solving
• The focus of a DSS is on decision-making
  effectiveness when faced with unstructured or
  semistructured business problems

37
Capabilities of a Decision Support System

• Support all problem-solving phases
• Support different decision frequencies
• Support different problem structures
• Support various decision-making levels

38
Capabilities of a Decision Support System
(continued)
Decision-Making Level
39
A Comparison of DSS and MIS
Comparison of DSSs and MISs
40
A Comparison of DSS and MIS (continued)
Comparison of DSSs and MISs
41
Components of a Decision Support System
Conceptual Model of a DSS
42
Components of a Decision Support System

• Database
• External database access
• Access to the Internet and corporate intranet,
  networks, and other computer systems
• Model base provides decision makers access to a
  variety of models and assists them in decision
  making
• Dialogue manager allows decision makers to
  easily access and manipulate the DSS and to use
  common business terms and phrases

43
Intelligence Phase Support Excel and Access

• Excel
• List capabilities Sorting, filtering
• Pivot tables
• Charting
• Access
• Queries
• Reports

44
Design Phase Support Excel

• Excel
• What if analysis
• Data tables
• Scenario manager

45
Stages of the Decision Making Process Choice

• Selecting a course of action
• Excel
• Solver
• Expert systems
• Intended to perform at the level of a human
  expert in a particular domain
• Decision Tree Analysis
• Add-in to Excel that facilitates construction of
  decision trees

46
Common Expert System Architecture
47
Decision Tree Analysis Output
48
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

49
Characteristics of a GSS That Enhance Decision
Making

• Special design
• Ease of use
• Flexibility
• Decision-making support
• Anonymous input
• Reduction of negative group behavior
• Parallel communication
• Automated record keeping

50
GSS Software

• Often called groupware or workgroup software
• Helps with joint workgroup scheduling,
  communication, and management
• Examples Lotus Notes, Microsofts NetMeeting,
  Microsoft Exchange, NetDocuments Enterprise,
  Collabra Share, OpenMind, TeamWare

51
GSS Alternatives
GSS Alternatives
52
GSS Alternatives
The GSS Decision Room
53
Group Support System Example

• Meeting, Brainstorming, and Decision Making Tools
  for groups

54
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

55
Executive Support Systems in Perspective

• Tailored to individual executives
• Easy to use
• Drill-down capable
• Support the need for external data
• Can help when uncertainty is high
• Future-oriented
• Linked to value-added processes

56
Capabilities of Executive Support Systems

• Support for defining an overall vision
• Support for strategic planning
• Support for strategic organizing and staffing
• Support for strategic control
• Support for crisis management

57
Executive Support Systems

• Xcelsius
• Executive Dashboard
• Identify, track, trend, and correct problems as
  managers evaluate the health of key areas of
  their organization
• Identify operational efficiencies
• Proactively identify and apply corrective measures

58
Executive Dashboard Features
Dashboard Screen The dashboard page displays the
overall health of key performance indicators.
Each box represents a key performance indicator
(KPI) and the health for corresponding periods.
The default executive dashboard shown can be
unique to the individual logged in, or shared by
the entire organization.