Class 5 Systems Support Decision Making Asper School of Business - MBA Program MIS 6150 Management of Information Systems & Technology April-June 2009 Instructor: Bob Travica Updated May Management of Information Systems and Technology

1 of 13 Outline How We Usually Think about Decision Making/Problem Solving (Rational, scientific model; our analytical model) How Decision Making Usually Happens (3 models) IT/IS Change and Decision Making Decision Making Systems (problem types, system types, capabilities & limitations) Messages for change leadership

6150 Management of Information Systems and Technology 2 of 13 How We Usually Think about Decision Making: Rational Model 1. Identify problem ? i 4. Implement solution % 2. Create optional solutions 5. Evaluate/Adjust solution   3. Select best solution   (Simon, 1950s)  

6150 Management of Information Systems and Technology 3 of 13 Satisfycing decision making How Decision Making Usually Happens Assumption: Decisional making made under significant constraints Define the problem the best you can in the circumstances Simon supplanted Rational Model; necessary evil due to human & organizational limitations ): Making a choice that is good enough More ? ? Consider some alternative solutions Select the first alternative that meets some important evaluation criteria (“good enough”)

6150 Management of Information Systems and Technology 4 of 13 Lindblom; public organizations – different agendas, competition for budgets, political coalitions) What is the problem? Different things for different groups! Problem defining is a political process, result of maneuvering Alternative solutions defined tentatively Implement some part of one solution. If blocked, turn to alternative solution; later might be back to the first one. Assumption: Politics key factor in decision making. Zig-Zag Decision Making (“Muddling Through”) A B A’ C More

Garbage Can Decision Making Problems (new & old) Solutions (old & new) Limitations Blockages Decision Makers Resources Opportunities Decisions 5 of Management of Information Systems and Technology Assumption: Organizations as soap boxes of limitations and opportunities.

IT/IS Change and Decision Making IT/IS Reinforces existing decision making power (e.g., computerization of American city administration) Obstructs existing decision makers and promote new ones (e.g., defeat of divisional accountants by centralized accounting with a new system) IT/IS Breaks against establishment (e.g., EMR system in Quebec hospitals) 6150 Management of Information Systems and Technology6 of 13

6150 Management of Information Systems and Technology 7 of 13 Well-structured Problems : Stable context Common, Repeatable issues Most information accessible Known decision procedure Ill-structured Problems: Unstable context Atypical, Discrete issues Incomplete information Ambiguous decision procedure Decision Making Systems and Two Types of Problems Controlling inventory New product Planning R+D projects Low Uncertainty High Management Hierarchy

8 of 13 Types of Systems for Decision Making Western Digital mini case – diagram of systems hierarchy Mid-Level Management – Decision Support Systems Executive Management - Executive Support Systems Supervisory Level – Transactions Processing Systems & Reporting Systems (old name: MIS) Management Hierarchy

6150 Management of Information Systems and Technology Transaction Processing Systems (TPS)  Information foundation in organizations. Source for Reporting systems and others up the hierarchy.  TPS records data on daily, routine activities (transactions, single events) – data management via Database Systems (Ch. 7)  Examples: time at/out of work, purchases, sales, inventory payroll, customer call…  TPS is indispensable for monitoring operations 9 of 13 Sales Inventory Purchases

6150 Management of Information Systems and Technology  Extends TPS, querying and reporting modules in databases systems (information management)  RS delivers scheduled, summary reports or exception reports (deviations from routine operations)  Examples: master case, Western Digital  RS focuses on what happened in organization  RS improves control, operational efficiency, and operational planning Reporting Systems (old name: Management Information Systems) 10 of 13 Sales Inventory Purchases

11 of Management of Information Systems and Technology Decision Support Systems  Supports higher Mgmt levels, ill-structured problems; Fig  DSS focus: Mid-range future, organization & environment  DSS contributes to mid-range forecasting and planning and effectiveness in decision making  Model Component: Processes data using different transformation methods (optimization, simulation, data mining – Major Services Co., Harrah’s, Real-time CRM); Sales Inventory ENVIRON- MENT modeling  DSS uses data from RS, and external systems

6150 Management of Information Systems and Technology Executive Support Systems  Non-routine decision-making (strategic, long-range, entrepreneurial decisions, disturbance handling)  Use visual information of key summary information (e.g., finance ratios)  Must be easy to use  Uses data from within organizations (RS, DSS) and outside (more than DSS)  ESS has drill-down capability to find what is behind summary information  Organization’s status reports (“dashboards” – Western Digital), environment scans  ESS Contributes to executives’ effectiveness, right strategic moves 12 of 13

6150 Management of Information Systems and Technology Decision Making Cycle and Systems Support Decision making always requires human intelligence. 13 of Identify problem (collect information via RS & via DSS, ESS for strategic decisions; GDSS for locating/framing problem) ? i 4. Implement solution % 2. Create optional solutions (DSS, ESS) 5. Evaluate/Adjust solution   3. Select best solution (DSS, ESS)    

15 of Management of Information Systems and Technology Messages for Change Leadership Manage Obsolescence – do not let it manage you/your company. Make a change while you can manage the transition – not when you reach a crisis. If a company pretends to be branded a technology innovator, it needs to stay continually on the technology edge. Sometimes when a big technology change is due, one can’t manage by consensus and must keep decisions at executive level. For transaction processing/reporting systems, consider broader options – buy, buy/build/customize, outsource.