Chapter 1: DECISION SUPPORT SYSTEMS AND BUSINESS INTELLIGENCE

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Chapter 1DECISION SUPPORT SYSTEMS AND BUSINESS
INTELLIGENCE

• DECISION SUPPORT SYSTEMS AND BUSINESS
  INTELLIGENCE , Eighth Edition

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Changing Business Environments and Computerized
Decision Support

• The business pressures-responses-support model
• The business environment
• Business environment factors divided into four
  categories markets, consumer demands,
  technology, and societal.

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Changing Business Environments and Computerized
Decision Support (cont.)

• Organizational responses be reactive,
  anticipative, adaptive, and proactive
• Employ strategic planning
• Use new and innovative business model
• Restructure business process
• Use new IT to improve communication.

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Changing Business Environments and Computerized
Decision Support (cont.)

• Computerized support
• It used to facilitate closing the gap between the
  current performance and the desired performance.

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Changing Business Environments and Computerized
Decision Support (cont.)
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Management Support Systems (MSS)

• Four major information technologies have been
  successfully used to support managers.
• DSSs provide support primarily to analytical,
  quantitative types of decisions.
• Executive (enterprise) support systems support
  the informational roles of executives.
• Group decision support systems support
  managers working in groups.
• Intelligent systems provide mulitfunctional
  support.

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DSS Definition

• Decision support system (DSS) are used to make
  business decision often based on data collected
  by On-Line-Analytical-Processing system (OLAP)
• Example of data used for making decision
• Retail sales transaction detail
• DSS as an Umbrella term Describes any
  computerized system that supports decision making
  in an organization

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Why Use of DSS

• Why use decision support systems?
• Speedy computations
• Improved communication and collaboration
• Increased productivity of group members
• Improved data management
• Managing giant data warehouses
• Quality support
• Overcoming cognitive limits in processing and
  storing information

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Why Use of DSS(cont.)

• Using the Web
• Anywhere, anytime support

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Decision Making and Management

• Management is a process by which organizational
  goals are achieved through the use of resources
  (people, money, energy, materials, space, time).
• These resources are considered to be inputs, and
  the attainment of the goals is viewed as the
  output of the process.
• Measuring success
• Productivity output/input

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Decision Making and Management (cont.)

• Management is decsion making
• The manager is decsion maker

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Decision Making and Management (cont.)

• The nature of managers work
• Interpersonal figurehead, leader, liaison.
• Informational monitor, disseminator,
• spokesperson.
• Decisional entrepreneur, disturbance handler,
• resource allocator, negotiator.

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Decision Making and Management (cont.)

• Why Managers Need IT Support
• processing information manually is growing
  increasingly difficult
• computerized modeling
• examining numerous alternatives very quickly
• providing a systematic risk analysis
• being integrated with communication systems and
  databases
• being used to support group work

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Phases of the Decision Making
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Phases of the Decision Making (cont.)

• Intelligence phase
• Organizational objectives
• Search and scanning procedures
• Data collection
• Problem identification
• Problem classification
• Problem statement

• Result
• Reality is examined
• The problem is identified and defined

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Phases of the Decision Making(cont.)

• Design phase
• Formulate a model (Assumption)
• Set criteria for choice
• Search for alternative
• Predict and measure outcomes

• Result
• Representative model is constructed
• The model is validated and evaluation criteria
  are set

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Phases of the Decision Making(cont.)

• Choice phase
• solution to the model
• Sensitivity analysis
• Selection of Best (Good) alternative
• Plan for implementation
• Design of control system

• Result
• Proposed solution is included to the model
• If reasonable, move to implementation phase.

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Phases of the Decision Making(cont.)

• Implementation phase
• Put solution into action

• Result
• Solution to the original problem

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Decision Making Processes

• The process of decision making
• Defining the problem (i.e., a decision situation
  that may deal with some difficulty or with an
  opportunity)
• Constructing a model that describes the
  real-world problem
• Identifying possible solutions to the modeled
  problem and evaluating the solutions
• Comparing, choosing, and recommending a potential
  solution to the problem

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Decision makers Who are They?

• Decision maker classification
• Individual decision makers can be single person
  or a computer system
• Multiple decision makers can be
• Team where members support a single decision
  maker
• Groups where all members have a say in the
  decision
• Organization where global agreement is needed.

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Framework for Computerized Decision Support
Support Needed
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Framework for Computerized Decision Support
(cont.)

• Three type of decision
• 1- Structured problems are routine problems for
  which standard solution method exist.
• Procedure for obtaining the best solution are
  known
• Objective are clearly defined

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Framework for Computerized Decision Support
(cont.)

• 2- Unstructured problems are fuzzy, complex
  problem for which there are no cut-and direct
  solution methods.
• Have no structure phase
• Often solved with human intuition
• 3- Semi-structured problem is a decision problem
  in which some but not all phases are structured.
• In between solve with standard solution procedure
  and human judgment

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Framework for Computerized Decision Support
(cont.)

• Types of control in all managerial activities
• Strategic planning
• the long-range goals policies for resource
  allocation
• Management control
• the acquisition efficient utilization of
  resources in the accomplishment of organizational
  goals
• Operational control
• the efficient effective execution of specific
  tasks.

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Framework for Computerized Decision Support
(cont.)

• The decision support matrix
• For semistructured decisions and unstructured
  decisions, conventional MIS and MS tools are
  insufficient BUT Decision support systems (DSS)
  are used.
• Computer support for structured decisions
• Management science (MS) or operations research
  (OR) are used .
• Automated decision systems (ADS) is used.

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Framework for Computerized Decision Support
(cont.)

• Management science (MS) or operations research
  (OR) The application of a scientific approach and
  mathematical models to the analysis and solution
  of managerial decision situations (e.g.,
  problems, opportunities)
• It adds new step 2 to the process of decision
  making, that is classify the problem into
  standard category.

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Framework for Computerized Decision Support
(cont.)

• Automated decision systems (ADS) A business
  rules-based system that uses intelligence to
  recommend solutions to repetitive decisions (such
  as pricing)

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Architecture of a decision system
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Architecture of a decision system(cont.)

• The architecture of DSS
• Data
• Models manipulate data as related to a specific
  situation
• Knowledge component
• User interface
• The user themselves are also important
  components of the architecture

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Structure of a decision system

• A SYSTEM is a collection of object such as
  people, resources, concepts and procedure
  intended to perform an identifiable function or
  to serve a goal.
• Three Distinct Parts of Systems
• Inputs
• Processes
• Outputs

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Structure of a decision system (cont.)
Input(s)
output(s)
Processes
Feedback (flow of information
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Structure of a decision system (cont.)

• Inputs are the element that enter the system
• Processes convert or transform inputs into
  outputs
• Outputs describe finished products or
  consequences of being in the system
• Feedback is the flow of information from the
  output to decision maker, who many modify the
  inputs or the processes (closed loop)
• The Environment contains the elements that lie
  outside but impact the system performance

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Modeling in DSS

• DSS is model-base set of procedures for
  processing data and judgment to assist manager in
  his decision making
• A model is simplified representation or
  abstraction of (complex) reality.
• With modeling, one can perform virtual
  experiments and an analysis on a model of
  reality, rather than on reality itself.

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Modeling in DSS (cont.)

• Four groups of models
• Iconic (scale) Model
•  An iconic modelthe least abstract modelis a
  physical replica of a system.
• Analog Model
• does not look like the real system but behaves
  like it.

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Modeling in DSS (cont.)

• Mathematical Model
• Use mathematical relationship to represent
  complexity used in most DSS analysis
• Mental models
• provide a description of how a person thinks
  about a situation

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Modeling in DSS (cont.)

• Benefits of Models
• Time compression
• Low cost construction
• Models allow for the simulated compression of
  time.
• Manipulating the model (by changing variables) is
  much easier than manipulating the real system.
• Can model large and extermely complex system with
  possibly infinite soultion.
• Low cosst excustion

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Modeling in DSS (cont.)

• Modeling process and solution approach
• Trail and Error
• Simulation
• Optimization
• Heuristics

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Decision analysis

• Decision analysis allow us to select a decision
  from set of possible decision alternatives when
  uncertainties regarding the future exist.
• The goal is to optimize the resulting return
  (payoff) in term of decision criteria.

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Decision analysis (cont.)

• Type of decision analysis models
• Decision making under certainty
• Decision making under uncertainty
• Decision making under risk
• Decision making with perfect information
• Decision making with imperfect information(Bayesia
  n Theory)
• Decision making in light of competitive action
  (Game Theory)

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DSS and Data Warehouse

• Data warehouse is a decision support database.
• The data warehouse is an integrated,
  subject-oriented, time-variant, non-volatile
  database that provide support for decision
  making.

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DSS and Data Warehouse

• Integrated the data warehouse is centralized,
  consolidated database that integrates data
  retrieved from the entire organization.
• Subject- oriented data of data warehouse is
  arranged and optimized to provide answer to
  questions coming from diverse functional area
  within a company.

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DSS and Data Warehouse

• Time-variant the data warehouse represent the
  flow of data through time
• Non-volatile once data enter the data warehouse,
  they are never removed.

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On-Line Analytical Processing (OLAP)

• It is an element of DSS.
• It is support ad-hoc querying for business
  analyst.
• Multidimensional view of data is foundation of
  OLAP

Multidimensional data
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DSS knowledge base

• Any true decision requires information.
• The knowledge base is where all information is
  stored.

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• CASE STUDY

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Case Managing Global Business at 3M Corporation

• The Business Problem
• The company had difficulties responding
• to new customers and markets in the global
  economy as each business unit kept separate
  databases and conducted independent decision
  support activities
• The Solution
• The Company created a global enterprise data
  warehouse (GEDW)

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Case Managing Global Business at 3M Corporation
(cont.)

• The Results
• Distributors and retailers, as well as end-users,
  now receive information in minutes instead of
  weeks or months, including the delivery of rich
  multimedia
• Customers can find all their information in one
  place
• Inventories are lower, and better and quicker
  inventory decisions are made, even in globally
  remote locations

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Case Managing Global Business at 3M Corporation
(cont.)

• What have we learned from this case??
• The case demonstrates the existence of vast
  amounts of important data in organizations, and
  the importance of organizing that data for
  optimum use
• The case shows the need to share a companys data
  internally and with business partners and
  customers, and to make it available in a format
  that enables end users to process data quickly
• The case explains the data warehouse, and its
  role in supporting managerial decision making

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Duty 1

• Each group have present one case study under
  these conditions
• define organization
• Define business problem
• Provide possible solutions
• The result.