Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.1 © 2005 by Prentice Hall Enhancing Management Decision Making for the Digital Firm Chapter 12

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.2 © 2005 by Prentice Hall Objectives 1.How can information systems help individual managers make better decisions when the problems are nonroutine and constantly changing? 2.How can information systems help people working in a group make decisions more efficiently?

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.3 © 2005 by Prentice Hall Objectives 3.Are there any special systems that can facilitate decision making among senior managers? Exactly what can these systems do to help high-level management? 4.What value can systems to support management decision making provide for the organization as a whole?

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.4 © 2005 by Prentice Hall Management Challenges 1.Building information systems that can actually fulfill executive information requirements 2.Create meaningful reporting and management decision-making processes

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.5 © 2005 by Prentice Hall Decision-Support Systems (DSS) Computer system at the management level of an organization Combines data, analytical tools, and models Supports semistructured and unstructured decision making

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.6 © 2005 by Prentice Hall Decision-Support Systems (DSS) MIS Provides reports based on routine flow of data Assists in general control of the organization MIS and DSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.7 © 2005 by Prentice Hall Decision-Support Systems (DSS) DSS Emphasizes change, flexibility, rapid response, models, assumptions, ad-hoc queries, and display graphics MIS and DSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.8 © 2005 by Prentice Hall Decision-Support Systems (DSS) Model-Driven DSS Primarily stand-alone Uses model to perform “what-if” and other kinds of analysis Types of Decision-Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm 12.9 © 2005 by Prentice Hall Decision-Support Systems (DSS) Data-driven DSS: Supports decision making by allowing users to extract and analyze useful information previously buried in large databases Datamining: Finds hidden patterns and relationships in large databases to infer rules from them and predict future behavior Types of Decision-Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Data Drive Customer Care at Intrawest How does this customer care DSS help Intrawest make decisions? How has it provided value for the firm? Window on Organizations

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Cargo revenue optimization of Continental Airlines Figure 12-1

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Associations: Occurrences linked to a single event Sequences: Events linked over time Types of Decision-Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Classification: Recognizing patterns that describe the group to which an item belongs Clustering: Similar to classification when no groups have yet been defined. Discovers different groupings within data Types of Decision-Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Overview of a decision-support system (DSS) Figure 12-2

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) DSS Database: Collection of current or historical data from a number of applications or groups. Can be a small PC database or a massive data warehouse Components of DSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) DSS Software System: Collection of software tools used for data analysis, such as OLAP tools, datamining tools, or a collections of mathematical and analytical models Components of DSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Model: Abstract representation illustrating components or relationships of a phenomenon Sensitivity Analysis: Models that ask “what-if” questions repeatedly to determine the impact of changes in one or more factors on the outcomes Components of DSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Sensitivity analysis Figure 12-3

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Examples of Decision-Support Systems General Accident Insurance: Customer buying patterns and fraud detection Bank of America: Customer profiles Frito-Lay, Inc.: Price, advertising, and promotion selection DSS Applications and the Digital Firm

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Examples of Decision-Support Systems Southern Railway: Train dispatching and routing Texas Oil and Gas Corporation: Evaluation of potential drilling sites The Gap: Inventory stocking and merchandising DSS Applications and the Digital Firm

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Examples of Decision-Support Systems United Airlines: Flight scheduling, passenger demand forecasting U.S. Department of Defense: Defense contract analysis DSS Applications and the Digital Firm

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) By analyzing several years of sales data for similar items, the software estimates a “seasonal demand curve” for each item and predicts how many units would sell each week at various prices. The software uses sales history to predict how sensitive customer demand will be to price changes DSS for Pricing Decisions

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Can help firms model inventory stocking levels, production schedules, or transportation plans Can provide firms with information on key performance indicators such as lead time, cycle time, inventory turns, or total supply chain costs DSS for Supply Chain Management

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) A DSS Makes Subaru More Parts-Savvy How does the Servigistics system provide value for Subaru of New England? How did it change the way the company ran its business? Window on Technology

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) DSS for customer analysis and segmentation Figure 12-4

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Predictive Analysis Use of datamining techniques, historical data, and assumptions about future conditions to predict outcomes of events DSS for Customer Relationship Management

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Data Visualization: Technology for helping users see patterns and relationships in large amounts of data by presenting the data in graphical form Geographic Information System (GIS): System with software that can analyze and display data using digitized maps to enhance planning and decision making Data Visualization and Geographic Information Systems (GIS)

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Decision-Support Systems (DSS) Customer Decision-Support System (CDSS) System to support the decision-making process of an existing or potential customer Web-Based Customer Decision-Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Group Decision-Support System (GDSS): An interactive computer-based system to facilitate the solution to unstructured problems by a set of decision makers working together as a group What is a GDSS?

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Hardware: Conference facility, electronic hardware Software tools: Tools for organizing ideas, gathering information, and ranking and seeking priorities People: Participants, trained facilitator, staff supporting hardware and software Components of GDSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Electronic questionnaires Electronic brainstorming tools Idea organizers Questionnaire tools Components of GDSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Tools for voting or setting priorities Stakeholder identification and analysis tools Policy formation tools Group dictionaries Components of GDSS

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Each attendee has a workstation Workstations are networked and connected to the facilitator’s console Data the attendees forward to the group are collected and saved on a file server Facilitator projects computer images onto the projection screen Overview of a GDSS Meeting

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Group system tools Figure 12-5

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Number of attendees can increase while productivity increases More collaborative atmosphere Software tools follow structured methods for organizing and evaluating ideas and preserving the results of meetings How GDSS Can Enhance Group Decision Making

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Increase the number of ideas generated Can lead to more participative and democratic decision making How GDSS Can Enhance Group Decision Making

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Group Decision-Support Systems (GDSS) Organizational Memory Store learning from an organization’s history that can be used for decision making and other purposes How GDSS Can Enhance Group Decision Making

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Focus on the information needs of senior management Combine data from internal and external sources Create a generalized computing and communications environment that can be focused and applied to a changing array of problems Executive Support Systems (ESS)

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Monitor organizational performance Track activities of competitors Spot problems Identify opportunities Forecast trends Executive Support Systems (ESS)

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Bring together data from the entire organization Allow managers to select, access, and tailor data Enable executive and any subordinates to look at the same data in the same way The Role of Executive Support Systems in the Organization

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Drill Down The ability to move from summary data to lower and lower levels of detail The Role of Executive Support Systems in the Organization

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Developing ESS Ease of use Facility for environmental scanning External and internal sources of information to be used for environmental scanning The Role of Executive Support Systems in the Organization

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Analyze, compare, and highlight trends Provide greater clarity and insight into data Speed up decision making Benefits of Executive Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Improve management performance Increase management’s span of control Better monitoring of activities Benefits of Executive Support Systems

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise ESS for Competitive Intelligence Identify changing market conditions Formulate responses Track implementation efforts Learn from feedback Executive Support Systems and the Digital Firm

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Executive Support Systems and the Digital Firm Balanced Scorecard Model for analyzing firm performance that supplements traditional financial measures with measurements from additional business perspectives, such as customers, internal business processes, and learning and growth

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Enterprise-Wide Reporting and Analysis Strategic performance management tools for enterprise systems SAP: Web-enabled mySAP.com™, Management Cockpit PeopleSoft: Web-enabled Enterprise Performance Management (EPM)

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Executive Support in the Enterprise Enterprise-Wide Reporting and Analysis Activity-Based Costing Model for identifying all the company activities that cause costs to occur while producing a specific product or service so that managers can see which products or services are profitable or losing money and make changes to maximize firm profitability

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Chapter 12 Case Study Harrah’s and Mohegan Sun: A Tale of Two Casino DSS 1.Analyze Harrah’s and Mohegan Sun using the competitive forces and value chain models. 2.Compare the business strategies of Harrah’s and Mohegan sun. What role do customer reward systems play in these strategies? How are they similar? How are they different?

Essentials of Management Information Systems, 6e Chapter 12 Enhancing Management Decision Making for the Digital Firm © 2005 by Prentice Hall Chapter 12 Case Study Harrah’s and Mohegan Sun: A Tale of Two Casino DSS 3.What kind of decision-support systems did Harrah’s and Mohegan Sun develop? How are they related to their business strategy? 4.Are Harrah’s and Mohegan Sun successful? Which casino is more successful? Why? Can its competitive advantage be sustained? Why or why not? 5.Are there any ethical problems raised by these casinos’ use of customer data? Explain your response.