BUSS110 Introductory Business Computing A

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BUSS110Introductory Business Computing A

• Module III
• 5. Management Decision Making

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Learning Objectives

• To explain how IS can improve management decision
  making effectiveness
• To describe the characteristics of information
  needed by manages for decision making at
  different levels of an organisation
• To describe the structure of MIS
• To describe the structure of DSS
• To explain the purpose of EIS
• To explain how expert systems can provide expert
  advice

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Improving Management Decision-Making
Effectiveness

• Information systems support business operation
  and management

• Some information systems support management
  decision making

• A decision is a choice between 2 actions

• Decisions involve uncertaintyBUT

• Information can reduce uncertainty

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Management Decisions

• Levels

(Contd)
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Management Decisions

• Characteristics

(Contd)
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Management Decisions

• Information Needs

(Contd)
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Management Decisions

• Management support information systems

(Contd)
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Management Decisions

• Management support information systems (contd)
  general types

• Management information systems

• Decision support systems

• Executive support systems

• Expert systems

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Management Information Systems

• Structure

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Sources of Managerial Information
Figure 9.1
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Sample Reports Generated by an MIS
Figure 9.2
(Contd)
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Sample Reports Generated by an MIS
Figure 9.2 continued
(Contd)
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Sample Reports Generated by an MIS
Figure 9.2 continued
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Decision Support Systems(DSS)

• Management Decision Support

• A DSS analyzes data and provides results of
  analysis to managers

• DSS supports tactical, strategic decisions

• DSS does not make decisions, only supports them

• DSS performs several types of analysis

(Contd)
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Decision Support Systems(DSS)

• Management decision support (contd)

• Statistical calculations data is manipulated to
  determine its characteristics or draw conclusions

• Mathematical modeling/simulation models
  represent reality, and are used to predict
  decision results through simulation of various
  conditions

(Contd)
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Decision Support Systems(DSS)

• Structure

(Contd)
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Decision Support Systems(DSS)

• Structure (contd)

• Best for semi- or unstructured decisions

• What-if trial and error

• Goal seeking finding values that produce a
  certain result

• Sensitivity analysis checking for effect of
  small changes on results

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Decision Making A Problem Solving Component

• Figure 10.1

• Decision-making phase

• Intelligence stage

• Design stage

• Choice stage

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Capabilities of a DSS

• Support for different problem structures

• Highly structured problems

• Straightforward known facts/relationships

• Semi-structured or unstructured problems

• Complex unclear data relationships data in
  various formats data difficult to manipulate or
  obtain

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A Comparison of DSS and MIS

• Problem type

• DSS Handles unstructured problems that cannot
  be easily programmed

• MIS Used with more structured problems

• Users

• DSS Supports individuals, small groups, and
  entire organization users have more control

• MIS Supports the organization

(Contd)
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A Comparison of DSS and MIS

• Support

• DSS Supports decisions made by people

• MIS Can make decisions and replace decision
  maker

• Emphasis

• DSS Emphasizes actual decisions and
  decision-making styles

• MIS Emphasizes information only

(Contd)
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A Comparison of DSS and MIS

• Approach

• DSS Direct support system that provides
  interactive reports on computer screens

• MIS Indirect support system that uses regularly
  produced reports

• System

• DSS Usually provides immediate results

• MIS May not provide immediate results

(Contd)
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A Comparison of DSS and MIS

• Speed

• DSS Takes less time to develop able to respond
  to user requests

• MIS Not as flexible

• Output

• DSS Usually screen oriented with ability to
  generate reports on a printer

• MIS Typically oriented toward printed reports
  and documents

(Contd)
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A Comparison of DSS and MIS

• Development

• DSS More user involvement usually provides
  superior support

• MIS Frequently several years old often
  developed for people who are no longer performing
  the work supported by the MIS

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Conceptual Model of a DSS
Figure 10.9
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The Group Decision Support Systems

• Consists of most of the elements in a DSS, plus
  GDSS software to support group decision making

• Also known as a computerized collaborative work
  system

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Executive Support Systems(ESS)

• ESS or executive information systems (EIS)

• Provide information for top-level management
  decision making

• Different from other MIS

• Supports strategic planning

(Contd)
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Executive Support Systems(ESS)

• Executive Information Needs

• Drilling down

(Contd)
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Executive Support Systems(ESS)

• Executive Information Needs (contd)

• Top managers need external data

• Helps them understand the businesss operating
  environment

• Examples economic trends, changing market
  demographics, competitor prices

(Contd)
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Executive Support Systems(ESS)

• Capabilities

• Online access to reports

• Ability to query the database for information not
  usually in reports

• Ability to access external databases

• Ability to analyze and summarize data from
  reports and queries

(Contd)
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Executive Support Systems(ESS)

• Capabilities (contd)

• View analysis results graphically

• Electronic mail

• Electronic appointment calendar

• Basic word processing capabilities for memos and
  other simple communications

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Layers of Executive Decision Making
Figure 10.17
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ESS in Perspective

• Designed to support higher-level decision making
  in an organization

• DSS

• Allows users to answer questions

• ESS

• Allows executives to ask the right question

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Characteristics of an ESS

• Tailored to individual executives

• Can help with situations that have a high
  degree of uncertainty

• Easy to use

• Have a futures orientation

• Offer drill-down abilities

• Linked with value- added business processes

• Support the need for external data

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Capabilities of an ESS

• Support for defining an overall vision

• Support for strategic planning

• Support for strategic organizing and staffing

• Support for strategic control

• Support for crisis management

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Expert Systems(ES)

• An information system that gives expert advice to
  the decision maker

• Mimic the way a human expert would analyze a
  situation, then recommend a course of action

• Use techniques from the field of artificial
  intelligence

• Early example Mycin, Stanford, 1970s

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Expert Systems(contd)

• Expert Advice

• Experts may have experience or formal education
  in their field

• May be self taught

• Expert advice is used most commonly at the
  tactical and operational level

• All businesses use expert advice

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Expert Systems(contd)

• Software

• Developed by knowledge engineers (KE)

• KEs use languages like LISP, PROLOG

• Construct knowledgebases with rules

• Expert system shells are a starting point

• Examples ReSolver, VP-Expert, Guru

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Expert Systems(contd)

• Other Artificial Intelligence (AI) Applications

• Neural Networks

• Create a model of the brain

• Mimic the way humans think

• Consist of software elements that act like human
  brain neurons

• Elements are interconnected in patterns

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Expert Systems(contd)

• Other Artificial Intelligence (AI) Applications

• Neural Networks (contd)

• Each neuron sends and receives information from
  other neurons

• Can learn from experiences

• Can modify themselves by comparing current
  experiences with know experiences and storing the
  differences

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Expert Systems(contd)

• Other Artificial Intelligence (AI) Applications

• Neural Networks (contd)

• By learning how to respond to different inputs,
  it can adapt to unknowns

• Used for detecting credit card fraud, predicting
  stock market trends, making financial forecasts

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Expert Systems(contd)

• Other Artificial Intelligence (AI) Applications

• Intelligent Agents

• A program that acts for a person based on learned
  (by the agent) preferences

• Keep track of user-entered preferences, and
  adjust its behavior accordingly

• Example Internet search agents that find
  information based on user needs

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Major Branches of Artificial Intelligence

• Expert systems

• Robotics

• Vision systems

Figure 11.2

• Natural language processing

• Learning systems

• Neural network

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Major Branches of Artificial Intelligence
(contd)

• Expert systems

• Hardware and software that stores knowledge and
  makes inferences, similar to a human expert

• Robotics

• Mechanical or computer devices that perform tasks
  requiring a high degree of precision or
  repetitive hazardous tasks

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Major Branches of Artificial Intelligence
(contd)

• Vision systems

• Hardware and software that permit computers to
  capture, store, and manipulate visual images and
  pictures almost as precisely as human experts

• Natural language processing

• Hardware and software that allow computers to
  understand and react to statements and commands
  made in a human (natural) language

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Major Branches of Artificial Intelligence
(contd)

• Learning systems

• A combination of software and hardware that
  allows the computer to change how it functions or
  reacts to situations based on feedback it receives

• Neural network

• A computer system that can act like or simulate
  the functioning of a human brain

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Components of Expert Systems
Figure 11.7
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The Knowledge Base

• Stores all relevant information, data, rules,
  cases, and relationships

• If-then statements
• Rules that suggest certain conclusions

• Purpose To hold relevant facts and information
  for the expert system

continued...
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The Knowledge Base

• Assembling human experts

• One of the challenges in developing a knowledge
  base

• Use of fuzzy logic

• A specialty research area in computer science
  that allows shades of gray, or fuzzy sets

continued...
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The Knowledge Base

• Use of rules

• A conditional statement that links given
  conditions to actions or outcomes

• Use of cases

• Involves finding cases stored in the knowledge
  base that are similar to the problem or situation
  at hand and modifying the solutions to the cases
  to fit the current problem or situation

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The Inference Engine

• Seeks information and relationships from the
  knowledge base and provides answers, predictions,
  and suggestions

• Backward chaining

• Starts with conclusions and works backward to the
  supporting facts

continued...
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The Inference Engine

• Forward Chaining

• Starts with the facts and works to a conclusion

• Reaches conclusions and yields more information
  with fewer queries to the user than backward
  chaining, but requires more processing and a
  greater degree of sophistication

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The Explanation Facility

• Allows users to understand how the system arrived
  at certain conclusions

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The Knowledge Acquisition Facility

• Provides a convenient, efficient means for
  capturing and storing all components of the
  knowledge base

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The User Interface

• Software employed for designing, creating,
  updating, and using expert systems

• Purpose To make development and use of an
  expert system easier for users and decision makers

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Providing A Strategic Impact

• Some information systems may have a strategic
  impact on a business

• These systems provide a business with a
  competitive advantage

• Cost leadership

• Product differentiation

• Niche focus and capture

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Strategic Information Systems (SIS)

• Characteristics

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Strategic Information Systems (contd)

• Characteristics (contd)

• SIS dont stay strategic

• Competitors eventually catch up

• Uniqueness and longevity of idea count!

• SIS may create a barrier to entry

• SIS may create high switching costs

• Example SABRE, Apollo

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Strategic Information Systems (contd)

• Identifying Opportunities

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Interorganizational Information Systems (IOS)
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Interorganizational Information Systems (contd)

• Business alliances and interorganizational systems

• IOS allow information sharing among alliance
  members

• IOS have a strategic impact, and thus may produce
  a competitive advantage

• Example EDI, co-opetition

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Interorganizational Information Systems (contd)

• Characteristics

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Interorganizational Information Systems (contd)

• EDI Systems

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Interorganizational Information Systems (contd)

• EDI Systems (contd)

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Interorganizational Information Systems (contd)

• EDI Systems (contd)

• EDI is NOT the same as paper

• EDI data is usually system input

• Advantages speed, accuracy

• Disadvantages Organizational Culture- (people
  compatibility) and technical problems (hardware
  and software compatibility)

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International Information Systems (IIS)

• Business may produce and sell products in many
  countries

• Management may be central or disbursed

• Domestic information systems operate in one
  country

• International or global information systems
  operate in many countries

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International Information Systems (contd)

• International Activities

• Sales sell products all over the world

• Production save shipping costs

• Product development target markets

• Information Systems Strategic Impact

• Data and information sharing

• Compress time and space

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International Information Systems (contd)

• International Business Strategies

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International Information Systems (contd)

• Characteristics (compared to domestic)

• Telecommunications may require satellites, other
  hardware and software

• Uses phone systems in many countries

• Cultural issues

• Political and legal factors

• Transborder Data Flow (TDF)

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International Information Systems (contd)

• Characteristics (by strategy)

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International Information Systems (contd)

• Characteristics (summary)