Information systems and management in business Chapter 6 Using Information Systems in Management Decision Making

6.1Business and Professional Decision Making  Introduction  business solving problems and making decision a common and frequent activities made by businesses managers and professionals  Decisions are made at all levels of the management hierarchy  Operational, tactical and strategic levels  Business decisions tend to have far reaching consequences  Business problems varies in structure  Semi structured, structured or unstructured  Various models exist for decision making  The rational model, bounded rationality or the intuitive model

6.2Problems Solving and Decision Making Basics  What are Problems Solving and Decision Making?  Essentially when a person is problems solving, he or she is basically engaged in decision making  May be defines as making a choice from a set of alternative solutions or options

6.2Problems Solving and Decision Making Basics  Decision Making Approaches  A number of approaches that are used by decision makers to solve problems  The Rationality Model  The decision maker is assumed to be: rational and logical in his or her approach to thinking and identifying the problem and has all the information needed  The Bounded Rationality Model  Real life decision making  Employ heuristics and Satisficing  Intuition  Common sense and gut feelings deployed to solve a problem

6.2Problems Solving and Decision Making Basics  The Decision Making Process  A formal process that involves 4 steps or phases as defined by Herbert Simon  Intelligence  Searching the environment by the manager for an opportunity to be seized or a problem to be solved.  Design  Development and generation of alternative solutions to the problem.  Choice  Selection of the appropriate solution alternative from those developed in the design phase  Review  Evaluation and modification of the chosen solution is implemented

6.3 Decision Making in the Real World  Why Good Managers and Professionals Make Bad Decisions  A number of road blocks that either collectively or individually may contribute to bad decision making or the making of less than optimal decisions by managers  Work stresses  Social pressures  Human cognition  Personal biases

6.4Business Decisions (Problems) Structure, Management levels and the Process of Decision Making  Overview  Problems types  Structured, semi-structured and unstructured  Decision Types  Structured Decisions  The decision maker usually understands all of the problems elements and the relationships that exit between them – pay roll for example  Unstructured Decisions  Consist of no elements and the relationship between elements cannot be identified - Budget analysis and preparation  Semi-structured Decisions  Some of the elements of the problem are known to the problem solver but not all of them - Merger deals negotiation

6.4Business Decisions (Problems) Structure, Management levels and the Process of Decision Making  Management Levels and Decision Making in Business  Three primary levels of management were identified and explained by Robert Anthony in 1965  Operational  Short term effect, Structured in nature, happen frequently, rely mainly on internal and detailed information  Managerial or administrative (Tactical)  Medium term effect, semi structured in nature, happen semi frequently, rely on summarized internal and external information  Strategic  Long term effect, unstructured in nature, take place infrequently, and often deals with limited information

6.5 How Information Systems enhances the quality of the decision making process  Information systems support and enhance the decision making process through a number of associated features  Data storage and retrieval easily and quickly  Multi-tasking  Information filtering  Identify correlation and causality  Information presentation in various formats  Eliminate personal biases

6.6Management Information Systems (MIS)  What is an MIS  A specific type of organizational information system  Typically used to support the management decision making process at all levels of the organizational structure (operational, tactical and strategic)  Mainly used by most managers in the various business functions  Provide three types of reports  Scheduled or periodic, exception and response to queries (demands) reports

6.6Management Information Systems (MIS)  MIS Data  Essential for MIS goals  Three main sources  Internal data  User’s data  External data

6.6Management Information Systems (MIS)  MIS Drilling Down concept MIS reports provide summarized information In-depth analysis of the summarized information can be achieved via drilling down Drilling down enhances the understanding of problems and improve the quality of decision making

6.7Management Information Systems Architecture  The general MIS architecture make up comprises three main functions  Input  Facilitate interaction with the user, collect and validate data entered by the user  Output  Generates summarized reports which are presented in a variety of formats using charts and tabular styles  Processing  Consist of a programming logic which is used to access databases; carry out mathematical and other forms of computations necessary to produce the required management reports

6.7Management Information Systems Architecture  MIS architecture make up illustration  ages/Ch6/fig1.jpg ages/Ch6/fig1.jpg

6.8Executive Information Systems (EIS) - Dashboards  Goals and Use Provides performance data that act as indicators for use by executives to monitor their organization  Architecture Three tier architecture, input, output and processing functions  Input Facilitates interaction with the user through highly visual input control elements with minimal hard data entry. Heavy reliance on objects that could be pointed to or clicked for results  Output Highly summarized reports that are presented in a variety of charts and tabular formats  Processing Computation and data processing  Benefits Ease and speed of access to cooperate data Provision for the big picture viewing

6.8Executive Information Systems (EIS)  EIS report example  ages/Ch6/fig2.jpg ages/Ch6/fig2.jpg