Fundamentals of Information Systems Fourth Edition Chapter 6 Information and Decision Support Systems

Principles and Learning Objectives Good decision-making and problem-solving skills are the key to developing effective information and decision support systems Define the stages of decision making Discuss the importance of implementation and monitoring in problem solving Fundamentals of Information Systems, Fourth Edition

Principles and Learning Objectives (continued) The management information system (MIS) must provide the right information to the right person in the right format at the right time Explain the uses of MISs and describe their inputs and outputs Discuss information systems in the functional areas of business organizations Fundamentals of Information Systems, Fourth Edition

Principles and Learning Objectives (continued) Decision support systems (DSSs) are used when the problems are unstructured List and discuss important characteristics of DSSs that give them the potential to be effective management support tools Identify and describe the basic components of a DSS Fundamentals of Information Systems, Fourth Edition

Principles and Learning Objectives (continued) Specialized support systems, such as group support systems (GSSs) and executive support systems (ESSs), use the overall approach of a DSS in situations such as group and executive decision making State the goals of a GSS and identify the characteristics that distinguish it from a DSS Identify the fundamental uses of an ESS and list the characteristics of such a system Fundamentals of Information Systems, Fourth Edition

Why Learn About Information and Decision Support Systems? True potential of ISs is to help employees make more informed business decisions These systems can cut costs, increase profits, uncover new opportunities Examples Transportation coordinator can find least expensive way to ship products Loan manager can determine creditworthiness Store managers can better maintain inventory Fundamentals of Information Systems, Fourth Edition

Decision Making and Problem Solving: Decision Making as a Component of Problem Solving Decision-making phase: first part of problem-solving process Intelligence stage: identify and define potential problems or opportunities Design stage: develop alternative solutions to the problem Choice stage: select a course of action Fundamentals of Information Systems, Fourth Edition

Decision Making as a Component of Problem Solving (continued) Figure 6.1: How Decision Making Relates to Problem Solving Fundamentals of Information Systems, Fourth Edition

Decision Making as a Component of Problem Solving (continued) Problem solving: includes decision making and the implementation and monitoring stages Implementation stage: solution is put into effect Monitoring stage: decision makers evaluate the implementation Fundamentals of Information Systems, Fourth Edition

Programmed Versus Nonprogrammed Decisions Decision made using a rule, procedure, or quantitative method Easy to computerize using traditional information systems Fundamentals of Information Systems, Fourth Edition

Programmed Versus Nonprogrammed Decisions (continued) Decision that deals with unusual or exceptional situations Not easily quantifiable Fundamentals of Information Systems, Fourth Edition

Optimization, Satisficing, and Heuristic Approaches Optimization model: process to find the best solution, usually the one that will best help the organization meet its goals Satisficing model: find a good—but not necessarily the best—problem solution Heuristics: commonly accepted guidelines or procedures that usually find a good solution Fundamentals of Information Systems, Fourth Edition

Optimization, Satisficing, and Heuristic Approaches (continued) Figure 6.2: Optimization Software Fundamentals of Information Systems, Fourth Edition

Sense and Respond Sense and Respond (SaR): determining problems or opportunities (sense) and developing systems to solve the problems or take advantage of the opportunities (respond) Requires nimble organizations with lines of authority that are flexible and dynamic Fundamentals of Information Systems, Fourth Edition

An Overview of Management Information Systems Management information system (MIS): integrated collection of people, procedures, databases, and devices Provides managers and decision makers with information to help achieve organizational goals Can give companies a competitive advantage by providing the right information to the right people in the right format and at the right time Fundamentals of Information Systems, Fourth Edition

Management Information Systems in Perspective MIS provides managers with information that supports effective decision making and provides feedback on daily operations Use of MISs spans all levels of management Fundamentals of Information Systems, Fourth Edition

Management Information Systems in Perspective (continued) Figure 6.3: Sources of Managerial Information Fundamentals of Information Systems, Fourth Edition

Inputs to a Management Information System Internal data sources TPSs and ERP systems and related databases Data warehouses and data marts Specific functional areas throughout the firm External data sources Customers, suppliers, competitors, and stockholders whose data is not already captured by the TPS The Internet Extranets Fundamentals of Information Systems, Fourth Edition

Outputs of a Management Information System Figure 6.4: An Executive Dashboard Fundamentals of Information Systems, Fourth Edition

Outputs of a Management Information System (continued) Scheduled report: produced periodically, or on a schedule Key-indicator report: summary of the previous day’s critical activities Demand report: developed to give certain information at someone’s request Exception report: automatically produced when a situation is unusual or requires management action Drill-down report: provides increasingly detailed data about a situation Fundamentals of Information Systems, Fourth Edition

Outputs of a Management Information System (continued) Figure 6.5: Reports Generated by an MIS Fundamentals of Information Systems, Fourth Edition

Outputs of a Management Information System (continued) Table 6.1: Guidelines for Developing MIS Reports Fundamentals of Information Systems, Fourth Edition

Functional Aspects of the MIS Most organizations are structured along functional lines or areas MIS can be divided along functional lines to produce reports tailored to individual functions Fundamentals of Information Systems, Fourth Edition

Functional Aspects of the MIS (continued) Figure 6.6: An Organization’s MIS Fundamentals of Information Systems, Fourth Edition

Financial Management Information Systems Financial MIS: provides financial information not only for executives but also for a broader set of people who need to make better decisions on a daily basis Profit/loss and cost systems Internal and external auditing Uses and management of funds Fundamentals of Information Systems, Fourth Edition

Financial Management Information Systems (continued) Figure 6.7: Overview of a Financial MIS Fundamentals of Information Systems, Fourth Edition

Manufacturing Management Information Systems Manufacturing MIS subsystems and outputs monitor and control the flow of materials, products, and services through the organization Some common information subsystems and outputs used in manufacturing Design and engineering Master production scheduling and inventory control Process control Quality control and testing Fundamentals of Information Systems, Fourth Edition

Manufacturing Management Information Systems (continued) Figure 6.8: Overview of a Manufacturing MIS Fundamentals of Information Systems, Fourth Edition

Marketing Management Information Systems Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, promotional effectiveness, and sales forecasting Subsystems for marketing MIS include: Marketing research Product development Promotion and advertising Product pricing Sales analysis Fundamentals of Information Systems, Fourth Edition

Marketing Management Information Systems (continued) Figure 6.9: Overview of a Marketing MIS Fundamentals of Information Systems, Fourth Edition

Marketing Management Information Systems (continued) Figure 6.10: Reports Generated to Help Marketing Managers Make Good Decisions Fundamentals of Information Systems, Fourth Edition

Human Resource Management Information Systems Human resource MIS: concerned with activities related to employees and potential employees of an organization Outputs of the human resource MIS include: Human resource planning Personnel selection and recruiting Training and skills inventory Scheduling and job placement Wage and salary administration Outplacement Fundamentals of Information Systems, Fourth Edition

Human Resource Management Information Systems (continued) Figure 6.11: Overview of a Human Resource MIS Fundamentals of Information Systems, Fourth Edition

Other Management Information Systems Accounting MIS: provides aggregate information on accounts payable, accounts receivable, payroll, and many other applications Geographic information system (GIS): capable of assembling, storing, manipulating, and displaying geographic information, i.e., data identified according to its location Fundamentals of Information Systems, Fourth Edition

An Overview of Decision Support Systems DSS is an organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems Focus of a DSS is on decision-making effectiveness when faced with unstructured or semistructured business problems Fundamentals of Information Systems, Fourth Edition

Capabilities of a Decision Support System Support for problem-solving phases Support for different decision frequencies Ad-hoc, institutional Support for different problem structures Highly structured, semistructured, or unstructured Support for various decision-making levels Operational, tactical, strategic Fundamentals of Information Systems, Fourth Edition

Capabilities of a Decision Support System (continued) Figure 6.13: Decision-Making Level Fundamentals of Information Systems, Fourth Edition

A Comparison of DSS and MIS Table 6.3: Comparison of DSSs and MISs Fundamentals of Information Systems, Fourth Edition

Components of a Decision Support System Components of a decision support system are: Database Model base Dialogue manager Access to the Internet, networks, and other computer-based systems Fundamentals of Information Systems, Fourth Edition

Components of a Decision Support System (continued) Figure 6.14: Conceptual Model of a DSS Fundamentals of Information Systems, Fourth Edition

The Database Data-driven DSS Primarily performs qualitative analysis based on the company’s databases Taps into vast stores of information contained in the corporate database, retrieving information on inventory, sales, personnel, production, finance, accounting, and other areas Often uses data mining and business intelligence Fundamentals of Information Systems, Fourth Edition

The Model Base Model base: part of DSS that provides decision makers access to a variety of models and assists them in decision making Allows managers and decision makers to perform quantitative analysis on both internal and external data Model management software: software that coordinates the use of models in a DSS Fundamentals of Information Systems, Fourth Edition

The User Interface or Dialogue Manager User interface or dialogue manager allows users to interact with the DSS to obtain information Assists with all aspects of communications between the user and the hardware and software that constitute the DSS Fundamentals of Information Systems, Fourth Edition

Group Support Systems Group support system (GSS) Consists of most elements in a DSS, plus software to provide effective support in group decision making Also called group decision support system or computerized collaborative work system Fundamentals of Information Systems, Fourth Edition

Group Support Systems (continued) Figure 6.15: Configuration of a GSS Fundamentals of Information Systems, Fourth Edition

Characteristics of a GSS That Enhance Decision Making Special design Procedures, devices, and approaches for creative thinking and effective communication Ease of use Complex systems will seldom be used by groups Flexibility Takes different decision-making styles and preferences into account Decision-making support for different approaches Delphi, brainstorming, group consensus, nominal group Fundamentals of Information Systems, Fourth Edition

Characteristics of a GSS That Enhance Decision Making (continued) Anonymous input Helpful in ranking performance of managers Reduction of negative group behavior Avoids dominance of one member, sidetracking, and groupthink Parallel communication Speeds meeting times and results in better decisions Automated record keeping Provides efficient voting, ranking, future review, and analysis Fundamentals of Information Systems, Fourth Edition

GSS Software Often called groupware or workgroup software Helps with joint work group scheduling, communication, and management Examples: Lotus Notes, Microsoft’s NetMeeting, Microsoft Exchange, IBM’s Workplace, NetDocuments Enterprise, Collabra Share, OpenMind, TeamWare Some transaction processing and enterprise resource planning packages include collaboration software Fundamentals of Information Systems, Fourth Edition

GSS Alternatives GSS alternatives include: Decision room: decision makers in same geographic area; GSS is used occasionally Local area decision network: decision makers in same geographic area; GSS is used frequently Teleconferencing: decision frequency is low; location of group members is distant Wide area decision network: decision frequency is high; location of group members is distant Use virtual workgroups Fundamentals of Information Systems, Fourth Edition

GSS Alternatives (continued) Figure 6.17: The GSS Decision Room Fundamentals of Information Systems, Fourth Edition

Executive Support Systems Executive support system (ESS): specialized DSS that includes all hardware, software, data, procedures, and people used to assist senior-level executives within the organization Fundamentals of Information Systems, Fourth Edition

Executive Support Systems (continued) Figure 6.18: The Layers of Executive Decision Making Fundamentals of Information Systems, Fourth Edition

Executive Support Systems in Perspective General characteristics of ESSs Tailored to individual executives Easy to use Drill-down abilities Support need for external data Can help when uncertainty is high Future-oriented Linked with value-added business processes Fundamentals of Information Systems, Fourth Edition

Capabilities of Executive Support Systems Support for defining an overall vision Support for strategic planning Determine long-term objectives based on analyzing current strengths and weaknesses, predicting future trends, and projecting development Support for strategic organizing and staffing Support for strategic control Monitoring, managing, goal seeking Support for crisis management Strategic emergency plans Fundamentals of Information Systems, Fourth Edition

Summary Decision-making phase of the problem-solving process includes three stages: intelligence, design, and choice Management information system (MIS): provides managers with information that supports effective decision making and provides feedback on daily operations Financial MIS: provides financial information not only for executives but also for a broader set of people who need to make better decisions on a daily basis Fundamentals of Information Systems, Fourth Edition

Summary (continued) Manufacturing MIS subsystems and outputs: monitor and control the flow of materials, products, and services through the organization Marketing MIS: supports managerial activities in product development, distribution, pricing decisions, promotional effectiveness, and sales forecasting Human resource MIS: activities related to employees and potential employees Geographic information system (GIS): assembling, storing, manipulating, and displaying geographic information Fundamentals of Information Systems, Fourth Edition

Summary (continued) Decision support system (DSS): organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems Group support system (GSS): includes elements in a DSS, plus software to provide effective support in group decision making Executive support system (ESS): specialized DSS that includes all hardware, software, data, procedures, and people used to assist senior-level executives within the organization Fundamentals of Information Systems, Fourth Edition