enhancingmanagementdecision-making for the digital firm

ENHANCINGENHANCING

MANAGEMENTMANAGEMENT

DECISION-MAKINGDECISION-MAKING

FOR THE DIGITAL FIRMFOR THE DIGITAL FIRM

• How can information systems help individual managers make How can information systems help individual managers make better decisions when the problems are non-routine and better decisions when the problems are non-routine and constantly changing?constantly changing?

• How can information systems help people working in a group How can information systems help people working in a group make decisions more efficiently?make decisions more efficiently?

• Are there any special systems that can facilitate decision-Are there any special systems that can facilitate decision-making among senior managers? Exactly what can these making among senior managers? Exactly what can these systems do to help high-level management?systems do to help high-level management?

• What benefits can systems that support management decision-What benefits can systems that support management decision-making provide for the organization as a whole?making provide for the organization as a whole?

OBJECTIVES

• Building information systems that can actually fulfill executive Building information systems that can actually fulfill executive information requirementsinformation requirements

• Create meaningful reporting and management decision-making Create meaningful reporting and management decision-making processesprocesses

MANAGEMENT CHALLENGES

• Computer system at the management level of an organizationComputer system at the management level of an organization

• Combines data, analytical tools, and models Combines data, analytical tools, and models

• Supports semi-structured and unstructured decision-makingSupports semi-structured and unstructured decision-making

DECISION-SUPPORT SYSTEMS (DSS)


MIS and DSS

MIS DSS

Structured decisions Semistructured, unstuctured decisions

Reports based on routine flows of data Focused on specific decisions or classes of decisions

General control of organization End-user control of data, tools, and sessions

Structured information flows Emphasizes change, flexibility, quick responses

Presentation in form of reports Presentation in form of graphics

Greater emphasis on models, assumptions, ad hoc queries

Traditional systems development Develop through prototyping; iterative process

Model-driven DSSModel-driven DSS• Primarily stand-alone Primarily stand-alone • Uses model to perform “what-if” and other kinds of analysisUses model to perform “what-if” and other kinds of analysis• These systems rely heavily on models to help executives These systems rely heavily on models to help executives

understand the impact of their decisions on the organization, its understand the impact of their decisions on the organization, its suppliers, and its customers.suppliers, and its customers.

Data-driven DSSData-driven DSS

• Allows users to extract and analyze useful information from Allows users to extract and analyze useful information from large databases. large databases. By using By using datamining datamining , executives can get , executives can get more information than ever before from their data.more information than ever before from their data.

• Datamining : Finds hidden patterns and relationships in Datamining : Finds hidden patterns and relationships in large large databases to infer rules databases to infer rules


Types of Decision-Support Systems

Five types of information you can get from datamining customer Five types of information you can get from datamining customer information:information:

• Associations: Immediate links between one purchase and another Associations: Immediate links between one purchase and another purchase purchase

• Sequences: Phased links; because of one purchase, another purchase Sequences: Phased links; because of one purchase, another purchase will be made at a later time will be made at a later time

• Classification: Predicting purchases based on group characteristics and Classification: Predicting purchases based on group characteristics and then targeting marketing campaigns then targeting marketing campaigns

• Clustering: Predicting consumer behavior based on demographic Clustering: Predicting consumer behavior based on demographic information about groups to which individuals belonginformation about groups to which individuals belong

• Forecasting: Use existing values to determine what other values will be Forecasting: Use existing values to determine what other values will be


DECISION-SUPPORT SYSTEMS (DSS)CargoBookingAgent

Request

Cargo Size,Rate Data

Cargo

Availability

Forecast

Passenger

Forecast Data

Confirm/Reject

1CARGO

RESERVATIONSYSTEM

2

FLIGHTSCHEDULE

SERVER

5

PASSENGERRESERVATION

SYSTEM

4

xxx

Availability/Minimum Price

PassengerBookingAgent

CARGOPROFREVENUE

MANAGEMENT SYSTEM

3

DECISION-SUPPORT SYSTEMS (DSS)Overview of a Decision-Support System (DSS)

• DSS database: collection of current or historical dataDSS database: collection of current or historical data• DSS software system: collection of software tools/mathematical and DSS software system: collection of software tools/mathematical and

analytical models analytical models • User interface: easy interaction User interface: easy interaction • Model : Abstract representation illustrating components or relationships Model : Abstract representation illustrating components or relationships

Sensitivity analysisSensitivity analysis

• Asks “what-if” questions repeatedly to determine the impact of changeAsks “what-if” questions repeatedly to determine the impact of change

• Executives don't make decisions based solely on intuition. The more Executives don't make decisions based solely on intuition. The more information they have, the more they experiment with different outcomes information they have, the more they experiment with different outcomes

in a safe mode, the better their decisions. That's the benefit of the models in a safe mode, the better their decisions. That's the benefit of the models used in the software tools.used in the software tools.


Components of Decision-Support Systems


Sensitivity Analysis

• General Accident Insurance:General Accident Insurance: Customer buying patterns and Customer buying patterns and fraud detectionfraud detection

• Bank of America:Bank of America: Customer profilesCustomer profiles

• Frito-Lay, Inc.:Frito-Lay, Inc.: Price, advertising, and promotion selectionPrice, advertising, and promotion selection


DSS Applications and the Digital Firm

• Burlington Coat Factory:Burlington Coat Factory: Store location and inventory mixStore location and inventory mix• Keycorp:Keycorp: Targeting direct mail marketing customersTargeting direct mail marketing customers• National Gypsum:National Gypsum: Corporate planning and forecastingCorporate planning and forecasting• Southern Railway:Southern Railway: Train dispatching and routingTrain dispatching and routing• Texas Oil and Gas Corporation:Texas Oil and Gas Corporation: Evaluation of potential drilling sitesEvaluation of potential drilling sites• United Airlines:United Airlines: Flight scheduling, passenger demand forecastingFlight scheduling, passenger demand forecasting• U.S. Department of Defense:U.S. Department of Defense: Defense contract analysisDefense contract analysis


DSS Applications and the Digital Firm

• Comprehensive examination of supply management chain Comprehensive examination of supply management chain

• Searches for most efficient and cost-effective combinationSearches for most efficient and cost-effective combination

• Reduces overall costsReduces overall costs

• Increases speed and accuracy of filling customer ordersIncreases speed and accuracy of filling customer orders


DSS for Supply Chain Management

• Uses data mining to guide decisions Uses data mining to guide decisions

• Consolidates customer information into massive data Consolidates customer information into massive data warehouseswarehouses

• Uses various analytical tools to slice information into small Uses various analytical tools to slice information into small segments segments


DSS for Customer Relationship Management


DSS for Customer Analysis and Segmentation

Geographic Information Systems (GIS)Geographic Information Systems (GIS)

• Software for analyzing and displaying data using digitized mapsSoftware for analyzing and displaying data using digitized maps

• Enhances planning and decision-makingEnhances planning and decision-making

• Use data visualization technologyUse data visualization technology


DSS for Simulating Business Scenarios

Customer Decision-Support Systems (CDSS)Customer Decision-Support Systems (CDSS)• Support decision-making process of an existing or potential Support decision-making process of an existing or potential

customercustomer

DECISION-SUPPORT SYSTEMS (DSS)Web-Based Customer Decision-Support Systems

• Interactive computer-based system Interactive computer-based system

• Facilitates solution to unstructured problems Facilitates solution to unstructured problems

• Set of decision makers working together as a groupSet of decision makers working together as a group

GROUP DECISION-SUPPORT SYSTEMS (GDSS)

What Is a GDSS?

• Hardware: Conference facility, electronic hardwareHardware: Conference facility, electronic hardware

• Software tools: Tools for organizing ideas, gathering Software tools: Tools for organizing ideas, gathering information, and ranking and seeking prioritiesinformation, and ranking and seeking priorities

• People: Participants, trained facilitator, staff supporting People: Participants, trained facilitator, staff supporting hardware and softwarehardware and software


Characteristics of GDSS

• Electronic questionnairesElectronic questionnaires• Electronic brainstorming toolsElectronic brainstorming tools• Idea organizersIdea organizers• Questionnaire toolsQuestionnaire tools• Tools for voting or setting prioritiesTools for voting or setting priorities• Stakeholder identification and analysis toolsStakeholder identification and analysis tools


GDSS Software Tools

Group Interaction

SessionManager

SessionPlanning

IdeaGeneration

IdeaOrganization

Prioritizing

PolicyDevelopment

BrainstormingTopic Commenter

Group Outliner

Idea OrganizerIssue AnalyzerGroup Writer

Vote SelectionAlternative Eval.

QuestionnaireGroup Matrix

Policy FormationStakeholder ID.

Organizational Memory

Enterprise AnalyzerGraphical BrowserGroup Dictionary

Brief Case• Access to information

• Personal productivity


• Improved preplanning: Forces an agenda to keep the meeting on Improved preplanning: Forces an agenda to keep the meeting on track. track.

• Increased participation: Increases the number of people who can Increased participation: Increases the number of people who can effectively contribute to the meeting. effectively contribute to the meeting.

• Open, collaborative meeting atmosphere: Non judgmental input by Open, collaborative meeting atmosphere: Non judgmental input by all attendees. all attendees.

• Criticism-free idea generation: Anonymity can generate more input Criticism-free idea generation: Anonymity can generate more input and better ideas. and better ideas.

• Evaluation objectivity: The idea itself is evaluated and not the Evaluation objectivity: The idea itself is evaluated and not the person contributing the idea. person contributing the idea.

• Idea organization and evaluation: Organized input makes it easier to Idea organization and evaluation: Organized input makes it easier to comprehend the results of the meeting. comprehend the results of the meeting.

GROUP DECISION-SUPPORT SYSTEMS (GDSS)How GDSS can Enhance Group Decision-Making

• Setting priorities and making decisions: All management levels Setting priorities and making decisions: All management levels are on equal footing. are on equal footing.

• Documentation of meetings: Results of meeting are available Documentation of meetings: Results of meeting are available soon after for further use and discussion. soon after for further use and discussion.

• Access to external information: Reduces amount of Access to external information: Reduces amount of disagreements by having the facts. disagreements by having the facts.

• Preservation of "organizational memory:" Information is Preservation of "organizational memory:" Information is available to other groups within the organization.available to other groups within the organization.

How GDSS can Enhance Group Decision-Making (cont’d)


Executive Support Systems (ESS):Executive Support Systems (ESS):

• Information system at strategic level of an organizationInformation system at strategic level of an organization

• Addresses unstructured decision-making through advanced Addresses unstructured decision-making through advanced graphics and communicationsgraphics and communications

EXECUTIVE SUPPORT IN THE ENTERPRISE

• Brings together data from the entire organization Brings together data from the entire organization

• Allows managers to select, access, and tailor data Allows managers to select, access, and tailor data

• Enables executive and any subordinates to look at the same Enables executive and any subordinates to look at the same data in the same waydata in the same way

• Developing ESS: Developing ESS: • Ease of useEase of use• Facility for environmental scanningFacility for environmental scanning• External and internal sources of information to be used for External and internal sources of information to be used for

environmental scanning environmental scanning

The Role of Executive Support Systems in the Organization


• Analyzes, compares, and highlights trendsAnalyzes, compares, and highlights trends

• Provides greater clarity and insight into dataProvides greater clarity and insight into data

• Speeds up decision-makingSpeeds up decision-making

• Improves management performance Improves management performance

• Increases management’s span of controlIncreases management’s span of control

• Better monitoring of activitiesBetter monitoring of activities

Benefits of Executive Support Systems Benefits of Executive Support Systems


ESS for business intelligence:ESS for business intelligence:

• Identifies changing market conditionsIdentifies changing market conditions

• Formulates responsesFormulates responses

• Tracks implementation effortsTracks implementation efforts

• Learns from feedbackLearns from feedback

Executive Support Systems and the Digital Firm


Monitoring corporate performance: balanced scorecard systemsMonitoring corporate performance: balanced scorecard systems

• Model for analyzing firm performanceModel for analyzing firm performance

• Supplements traditional financial measures with measurements Supplements traditional financial measures with measurements from additional business perspectivesfrom additional business perspectives

Executive Support Systems and the Digital Firm


Strategic performance management tools for enterprise systemsStrategic performance management tools for enterprise systems

• SAP: Web-enabled mySAP.com™, Management CockpitSAP: Web-enabled mySAP.com™, Management Cockpit

• PeopleSoft: Web-enabled Enterprise Performance Management (EPM) PeopleSoft: Web-enabled Enterprise Performance Management (EPM)

• Oracle: Strategic Enterprise Management Oracle: Strategic Enterprise Management

Enterprise Wide Reporting and Analysis


enhancingmanagementdecision-making for the digital firm

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