• Management Levels & Management Activities

• Types of Decision Problems

• Decision Making Process

• What is a DSS?

• The Role and Characteristics of DSS

• Components of a DSS

• What is an EIS?

• Benefits of EIS

Information Technology for Managerial Decision Making

Anthony’s Management Activities Framework

Anthony’s Management Activities Framework

• Strategic Planning top management determines business goals & strategies and decides on

required resources

• Management Control middle management acquires and executes resources to achieve the goals and

strategies

• Operational Control low-level management manages day-to-day operations to ensure resources are

properly used

Types of Decision ProbelmsTypes of Decision Probelms

Well-structured decisions• routine, repetitive problems• there usually is a procedure to automate problem

solving

Semi-structured decisions• half-way between well-structured and unstructured

decisions

Unstructured decisions• ‘novel’ problems• need to devise a new solution to a problem• there is uncertainty/risk in decision making

Simon’s Decision Making Process ModelSimon’s Decision Making Process Model

Intelligence Stage

Design Stage

Choice Stage

Implementation Stage

What is a DSS?What is a DSS?

• DSS refers to a decision support system

• DSS is defined as a computer-based system that provides analytical modes and data to assist a manager to solve decision problems in an interactive manner

• The system ‘supports’ the decision making process, but the user (or the manager) is responsible for making the decision using his/her insights and judgments.

• DSS is typically suited to quantitative decisions

• relieves the user of the computational/analytical burden, and improves the speed and accuracy of decision making

The Role and Purpose of DSSThe Role and Purpose of DSS

The Role of a DSS assists a manager in making semi-structured decisions supports, not replace, managerial decision making improves the effectiveness, rather than efficiency, of decision m

aking

Efficiency vs. Effectiveness Efficiency: - saved time: cycle time, time-to-market, etc. - saved cost: labor cost, production cost, raw materials cost, etc. - most TPS focus on improving the operational efficiency

Effectiveness: - directly linked to factors influencing the organizational

outcomes. - e.g., market share, sales, profit, competitiveness, growth rate

- often the prime objective of a DSS

Components of a DSSComponents of a DSS

UserInterface

DataManagement

Subsystem

ModelManagement

Subsystem

ModelBase

DataBase

EIS refers to executive information systems

EIS is defined as a computer-based system to provide executives with easy access to both internal and external information related to a company’s critical success factors (Watson et al. 1991)

What is a critical success factor(CSF)? factors that the executives consider important in succeedi

ng in their industry

e.g., CSF’s for automotive industry: style, dealer system, cost control, energy efficiency

What is an EIS?

Information Support for Executives

Quick information updates

Observation of internal and external environments

Data access

Strategic analysis

Use of decision models

Reduction of information overload

Data summarization

MarketingInfo.

System

ProductionInfo.

System

FinancialInfo

Sysem

Data and info. In business envir.

TopManagement

With EIS Without EIS

EIS

Data and info. In business envir.

MarketingInfo.

System

ProductionInfo.

System

FinancialInfo

Sysem

Data and info. In business envir.

Data and info. In business envir.

Characteritics of EIS

typically tailored to the individual user

may extract, filter, focus, and organize business dat

a

easy to use, and is used by the executive

supports the ‘management by exception’ functinos

have ‘drill-down’ capabilities

supports the need for external data

provides various types of information, including gra

phs, tables, text, etc.

Management by Exception

Can compare actual performance against budgeted

performance

EIS can highlight the areas of ‘exception’

Corporate Profitability by DivisionAs of June 30, 1994

Budget Actual Variance %Variance------ ------ -------- ---------

Automotive 1200 1280 80 6.7Electronics 337 158 (179) (53.1)Aerospace 700 712 12 1.7

------ ------ -------- ---------Corporate 2237 2150 (87) (3.9)

Drill-Down Function

Can adjust the level of detail in the information dis

played

Information is presented hierarchically (cf. Hyperc

ard)

Begins with a summary information, and then mo

ves gradually into more specific information

Useful when exploring fundamental causes of a b

usiness problem

Factors Leading to EIS Failure

• Lack of executive support

• Undefined system objectives

• Poorly defined information requirements

• Inadequate support staff

• Poorly planned evolution