Decision Support systems and Business Intelligence

• Business environment is becoming more and more complex and rapidly changing, making decision making more difficult

• Must respond and adapt by making faster and better decision.

• Intuition may not be enough, hence computerised systems are required.

• "Business Intelligence is a set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making."[6]

• 1958 researcher conned this term intelligence, IBMs hans peter Luhn "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal."[4]

Car company case scenario

• car company fictitious case:• car logistics • problem:increasing costs• increasing issues, delays , data entry errors. some

issues resolved with data analysis• more managers could see problems of overbilling

and delays• sample indicates: multiple things: flow of

information, fast decisions, vast amounts of data, collaboration:

The Business Environment

• because of the modern factors, decision making is become complex requiring knowledge of business, data, data representation; hence a computerized system is required.

Different actions taken by managers to counter

the pressure:

• Employee strategic planning

• Use new and innovative business models

• Restructure business processes

• Participate in business alliances

• Improve corporate information system

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• Improve partnership relationships

• Encourage innovation and creativity

• Improve customer service and relationships

• Move to electronic commerce(e-commerce)

• Move to make-to-order production and on-demand manufacturing and services

• Use new IT to improve communication, data access(discovery of information)

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• Respond quickly to competitor’s actions(e.g. in pricing, promotion, new products and services)

• Automate many tasks of white-collar employees

• Automate certain decision processes, especially those dealing with customers

• Improve decision making

Why we use computerized Decision Support System

• Speedy computations

• Improved communication and collaboration

• Increased productivity of group members

• Improved data management

• Managing giant data warehouses

• Quality support

• Agility support

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• Overcoming cognitive limits in processing and storing information

• Using the web

• Anywhere, anytime support

Decision Support Frameworks(goryand scott morton[1971]

Simon’s Decision Making Process

• Decision making process:

Intelligence(searching for conditions

•Design

•Choice

•Implementation

Computerized Decision Support

• Computer support for Structured decision

-Automated Decision making(rulebased system, price determination; loan or not, price optimsation)

• Computer support for unstructured decision

• Computer support for semi structured problems

Automated Decision-Making Framework

Decision Support System(DSS)

• “Decision support system couple the intellectual resources of individuals with the capabilities of the computer to improve the quality of decisions. It is a computer-based support system for management decision makers who deal with semi structured problems”

-By Keen and Scott-Morton(1978)

Architecture of DSS

• Types of DSS

1.Model-oriented DSS

2.Data-oriented DSS

1 – model is quantitative

D- data oriented : adhocqueries and reporting

Framework for Business Intelligence(BI)

What is BI?• An umbrella that combines architectures, tools,

database, analytical tools, applications and methodologies.

• Content-free expression• Objective:1.To enable interactive access to data

2.To enable manipulation of data3.To give managers & analyst the ability

to conduct appropriate analysis.

The Architecture of BI

Components Of BI system

BI system has four major components:

• Data warehouse: Source data

• Business Analytics: a collection of tools for manipulating, mining, and analyzing the data in the data warehouse

• Business performance management: for monitoring & analyzing performance

• User interface: Dashboard & other information broadcasting tools

Benefits of BI

The major benefits of BI:• Faster, more accurate reporting• Improved decision making• Improved customer service• Increased revenueApart from these, there are several other like-• Time saving• Single version of the “truth”• Better strategies and plans• More efficient process

• Cost saving

Bperformance mgmt

• Adds management and feedback to core BI

• Top – bottm process

• Balanced scorecard and dashboards

Summary• Similar architecture because BI evolved from DSS.• DSS are constructed to directly support specific

decision making while BI are for indirect support.• BI has an executive & strategic orientation while DSS is

oriented toward analyst.• BI are constructed with commercially available tools &

components while DSS is constructing solutions to unstructured problems.

• DSS were mostly in the academic world.BI were developed by software companies.

• Many of the tools that BI uses are also considered DSS tools.

Management Support System

• Combination of DSS and BI tools.

• Technology that supports managerial tasks in general and decision making in particular.

• MSS use when the nature of the technology involved is not clear, and use it interchangeably with the combined term DSS/BI.

• Vendor names: Microstrategy, microsoft, IBM, oracle, Hyperion, cognos, Business objects,SAS,exsys,SAP

Work system view

• Remove systems from DSS

• Improve decision making

• Alter(2004)

Process, particpants, info,tech,product,customers.infra,environment,strategy

• Case study on microstrategy

• Microsoft BI offering