Enhancing Management Decision Making

Classification of Decision Making Groups Categorised into three main characteristics: Structured Structured Semistructured Semistructured Unstructured Unstructured

Unstructured: Senior Management (Referred to as Strategic Decision Makers) Unstructured: Senior Management (Referred to as Strategic Decision Makers) The Decision Maker must provide judgment, evaluation, and insight to solve the problem e.g. Senior Executives/Managers face many unstructured decision situations. For instance: while establishing firms or during accomplishment of a particular Goal/Target Titles: CEO, COO,CFO,CIO etc.

Semistructured: Middle Management Level (Referred to as Tactical Decision Makers) Semistructured: Middle Management Level (Referred to as Tactical Decision Makers) This Management Level is somewhat on the border of both structured and unstructured. They deal with predefined procedures set by Executives as well as there is some right for Decision Making.

e.g. From what source to purchase PCs, Deciding how many units of a particular item should be kept in the inventory. Titles: MIS Manager, Division Manager, Branch Manager, etc.

Structured: Operational Management, Individual Employee or Team (Referred to as Structured Decision Makers) Structured: Operational Management, Individual Employee or Team (Referred to as Structured Decision Makers) It’s the Lowest level Management Also Called Supervisory Management In comparison, they do the routine work which has a definite procedure set by semistructured normally or unstructured rarely.

Actualizes the plan of Middle Management and Controls Daily Operations e.g. A Stores Floor Manager’s Decision: Whether to Accept or Reject a customers credit card; standard procedures:  Check ID  Validity of the card  Follow the procedure if the card declines etc… Title: Warehouse Manager, Inventory Manager, Supervisors, etc.

Information Requirements Of Key Decision-making Groups in a Firm

Intelligence: discovering, identifying, and understanding the problems occurring in the organization—why a problem exists, where, and what effects it is having on the firm. Intelligence: discovering, identifying, and understanding the problems occurring in the organization—why a problem exists, where, and what effects it is having on the firm. Design: Identifying and exploring various solutions to the problem. Design: Identifying and exploring various solutions to the problem. Choice: Selection among alternative solutions. Choice: Selection among alternative solutions. Stages In Decision Making

Implementation: Making the selected alternative work with continuous monitoring, how well the solution is working? Implementation: Making the selected alternative work with continuous monitoring, how well the solution is working? If the Selected solution Doesn’t Work then Repeat the Process to find better Solution If the Selected solution Doesn’t Work then Repeat the Process to find better Solution Stages In Decision Making

Business Intelligence & Business Analytics Business Intelligence: A term used by hardware and software vendors and IT Consultants. Business Intelligence: A term used by hardware and software vendors and IT Consultants. Describes the infrastructure for warehousing, integrating, reporting, and analysing data, extracted from the business environment. Describes the infrastructure for warehousing, integrating, reporting, and analysing data, extracted from the business environment. This structure gathers, stores, cleans, and makes relevant information available to managers. This structure gathers, stores, cleans, and makes relevant information available to managers.

Business Analytics: Also a vendor-defined term Business Analytics: Also a vendor-defined term Focuses on tools and techniques for analysing and understanding data. Focuses on tools and techniques for analysing and understanding data. e.g. Online Analytical Processing (OLAP) tool used for statistics and data mining etc. e.g. Online Analytical Processing (OLAP) tool used for statistics and data mining etc. Business Intelligence & Business Analytics

An Introduction to Information Systems In order to understand the term Information System some related terminologies require clarification with appropriate definitions

What is Information Technology? Technologies that entail to gather Information, its processing, distribution and finally its usage, although certainly differs from Information Systems (IS), is known as Information technology (IT). Information Technology: Hardware, Software, Databases and Network Communication Technology.

IS existence was well before IT's discovery However, IT contributed in its enhancement and effectiveness, in such a way that was probably not possible with the manual procedures by on its own, Human Activity System (HAS) (Beynon-Davies, 2002 p. 5). What is Information Technology?

What is Human Activity System? Human Activity System (HAS) also known as Soft Systems, is a rational set of activities carried out by a group of people with various aims to accomplish within the organisations (Beynon-Davies, 2002 p. 4, 66).

What is Information System? A practice, which involves a combination of Human Activity System (HAS) and Information Technology, applied among the organisations for Communication Infrastructure purposes. In other words, a means of methodology that transmute data into information and knowledge, required by the users in the organizations. The system actually comprise information, work practice, personnel and technologies in a certain discipline to achieve organizational aims (Beynon-Davies, 2002 p. 4, 66).

Generally Information Systems are differentiated by Five Major Groups Office Information Systems Transaction Processing Systems Management Information Systems Decision Support Systems Expert Systems (Shelly, Cashman, & Vermaat, 1999).

Office Information Systems (OIS) OIS includes hardware, software and network communication technologies to provide services among organizations employees rather than adopting manual procedures. OIS is beneficial to all levels (lower to higher management) Technologies Include: thousands of customized business application software, s, database availability, Internet Browsing, Voice over Internet Protocol (VoIP) telephone system, printers, fax, scanners and the list goes on…….. (Shelly, Cashman, & Vermaat, 1999).

Transaction Processing Systems (TPS) Generally transactions are related to business activities, For instance: bank related payment deposit, Transfer or Withdrawal From clerical point of view: a registration Customers orders or providing a receipt Accounts related Data management and processing etc.

Transaction Processing Systems (TPS) In fact daily office life activity related to data management and processing in various ways is considered as TPS. TPS has a main role in the advancement of the world’s IS structure: Computerized fast processing left the manual system far behind by reducing clerical staff overheads and providing much superior customer service (Shelly, Cashman, & Vermaat, 1999).

Management Information Systems (MIS) A healthy and satisfactory performance obtained from TPS around the world generated the idea of MIS Managers realized the magnificent ability of computers in data processing. Why not utilize computers for accurate and organized information for managers and other decision makers As it manages the activities in timely manner by generating reports on frequent basis.

Management Information Systems (MIS) MIS is also known as Management Reporting System (MRS). Actual purpose was to integrate the two systems (TPS and MIS) for daily or when required reports which includes graphs etc. for management for rapid decisions (Shelly, Cashman, & Vermaat, 1999).

Decision Support Systems (DSS) TPS and MIS provides regular information, however this information does not relate to the users or a departments need. So, here comes the DSS where managers take decisions when required.

Decision Support Systems (DSS) For instance, a certain annual sales target needs to be set or a Marketing policy requires some changes etc. There are variety of DSS applications, software and ways employed to help make decisions: such as: spreadsheets, statistical analysis capabilities and graphs used for data evaluation.

DSS can use either internal or external sources to locate data. Internal sources: are within the organization's database as marketing, sales, IT, manufacturing, accounts, inventory etc. External sources: data outside the organization such as, cost of raw material, construction cost, IT equipment cost, interest rates etc. Decision Support Systems (DSS)

There is another essential System within DSS called 'Executive Information System' (EIS) It Facilitates Executive Management It provides information in the form of managerial statistics, trends and ratios With the help of charts and tables for executives to take appropriate decisions while planning organizations major strategic goals. Decision Support Systems (DSS)

E.g. the whole IT system upgrade required after few years as it may become obsolete or any major decision concerning the organization. EIS mainly depends on external data sources like trade news, or internet etc. to obtain information regarding economic factors etc. (Shelly, Cashman, & Vermaat, 1999). Decision Support Systems (DSS)

Expert Systems Expert systems are designed for decision making at all levels Storing human expert's knowledge For human logics and decision making processes for the persons who lack expertise. Expert system includes two key ingredients: Knowledge Base and Inference (Conclusion drawn about something using existing information you already have) Rules.

Knowledge Base: Similar to a human replica; based on knowledge and experiences of human experts. Inference Rules: logical opinions applied to knowledge base when user explains a situation to the expert system. e.g. (Consulting Problems such as) Searching the types of mountain bikes, diagnosing a disease, searching a route etc. (Shelly, Cashman, & Vermaat, 1999). Expert Systems

Expert systems are actually the part of computer science's study called Artificial Intelligence (AI) i.e. an application of human intelligence applied to computers, based on previous experience and logical assumptions which fulfil the task after taking suitable action. Effective example: Speech recognition for applications like word processing in computers and smart mobile phones (Shelly, Cashman, & Vermaat, 1999). Expert Systems

Group Decision-support Systems (GDSS) DSS primarily focus individual decision making. DSS primarily focus individual decision making. Group Decision-support Systems (GDSS) has been developed to support group and organizational decision making. Group Decision-support Systems (GDSS) has been developed to support group and organizational decision making. A GDSS is an interactive computer-based system A GDSS is an interactive computer-based system It facilitates unstructured problems by a set of decision makers working together in a group It facilitates unstructured problems by a set of decision makers working together in a group Can be a single location or Multiple locations. Can be a single location or Multiple locations.

Group Decision-support Systems (GDSS) Collaboration systems and Web-based tools for videoconferencing and Electronic Meetings (A host invites the participants to an electronic meeting via ) support some group decision processes. Collaboration systems and Web-based tools for videoconferencing and Electronic Meetings (A host invites the participants to an electronic meeting via ) support some group decision processes. But the focus is mainly on communication. But the focus is mainly on communication. Meetings are conducted in conference rooms with special hardware and software tools to facilitate group decision making. Meetings are conducted in conference rooms with special hardware and software tools to facilitate group decision making.

Group Decision-support Systems (GDSS) Hardware Required: computer and networking equipment, overhead projectors, and display screens. Hardware Required: computer and networking equipment, overhead projectors, and display screens. Special electronic meeting software collects, documents, ranks, edits, and stores the ideas offered in a decision-making meeting. Special electronic meeting software collects, documents, ranks, edits, and stores the ideas offered in a decision-making meeting. e.g. Software: Think Tank and Meetingworks e.g. Software: Think Tank and Meetingworks

Group Decision-support Systems (GDSS) For Instance, Think Tank offers innovations for the following... Risk Assessment Facilitation for Large events Crisis Management Marketing and Branding Training and Education Project Management Hr and Culture Process Improvement Strategic planning Finance and Accounting