Computer Science Centre University of Indonesia Chapter 1 Introduction to Decision Support Systems Mallach, 2000

Discussions Definition Evolution of DSS DSS position in IS How all IS can be used for decision support Benefits of DSS

History of DSS 1950: Electronic data processing (EDP) Transaction processing: repetitive processing of common business events Information reporting system: manager were given thick reports every week!

Cont’d… Management Information System (MIS), storing and process all firm’s data: customers, orders, inventory, production, employees, suppliers, etc for non-technical managers.

Cont’d… In 1970, manager saw that they do not need the whole MIS report… Specific information systems were developed, called DSS 1990 saw the birth of data warehouse

Flow of transaction data to DSS Transaction Processing Systems Decision Support Systems Corporate Database Decision Maker Transaction User

Comparison of TPS and DSS System Characteristic Transaction Processing System Decision Support System UserClericalIndividual knowledge worker & all management levels Reason for development Cost savingImprove decision making effectiveness Processing efficiencyYesNo Ease of useLowHigh Usage volume / frequency HighModerate to low Database useHeavy updating, few reading Primarily read only

All IS are DSS…? TPS: whether to reorder inventory today or not Expert system: doctors in a hospital is given several disease possibilities given a set of symptoms Personal information manager: a worker must prioritize what to do next using a To-Do-List software Workgroup: a marketing team must decide when to arrange meeting or vote on a decision

What is a DSS? Sprague’79, “IS featuring an integrated system composed of decision models, database and decision maker to support decision making” Kroenke’92, “… a set of tools, data, models and other resource that managers and analyst use to understand, evaluate and solve problems… in unstructured problem domains.” Many others!

Sprague’s DSS Characteristics Tent to be aimed to less structured problems that typical managers face Combines the use models with data retrievals Easy to use and interactive Emphasize in flexibility to accommodate changes in decision making approach of the user

Mallach’s DSS Characteristics Common characteristics: –Are information systems –Used by knowledge workers –Used in making decisions –Support but do not replace people Optional characteristics: –Used in semi-structured decisions –Incorporate models –Incorporate database

DSS are used by knowledge workers Knowledge workers include non- management staff such as stock brokers, financial analyst, production coordinators, city planners, etc.

DSS is used for decision making What products should we sell in the future? How should we market and sell them? What is the best way to provide customer satisfaction? How should we invest? How do we get maximum return?

Needs human! DSS is not a decision-making system!

Lack of structure… Essentially we can not program a computer to make a decision to our total satisfaction in all cases. It requires human judgment If the computer can make the decision, we do not need DSS!

Models A computer representation of a real life system that lets us investigate the impact of possible decision affecting that system Forecast of the impact of several option of decision is very useful… Example: –Linear programming –Statistics –Simulation –Probability –Queuing

Efficiency vs. Effectively Generally IS are used to reduce cost Example: accounting information systems, academic information systems But DSS has high impact for organization’s life in the future! It allows the organization to do strategic moves…

Who are the users? Top Executives Middle Managers Clerical workers Executive Inf. Sys. DSS TPS

Benefits of DSS Improving personal efficiency Improving problem solving Facilitating communication Promoting learning or training Increasing organizational control

Improving personal efficiency Budgeting are still the same as 200 years ago Who wants to revert to manual calculation when we have spreadsheets?

Improve problem solving DSS can make people solve a problem better instead just faster Marketing manager who can see more factors influencing sales & promotion, surely outperforms “non-DSS” managers

Facilitate communication As tool for persuasion: –Offensive use, to persuade certain actions –Defensive use, to justify actions that were already taken New form: groupware

Promote learning Over time lets the DSS user see the result of their previous decisions in certain environment

Increase organization control It also standardizes the way multiple managers calculate things! Example: credit analysts in a bank, making decision for a loan application Less corruption…