ENHANCINGMANAGEMENTDECISION-MAKING FOR THE DIGITAL FIRM

How can information systems help individual managers make better decisions when the problems are non-routine and constantly changing?How can information systems help individual managers make better decisions when the problems are non-routine and constantly changing? How can information systems help people working in a group make decisions more efficiently?How can information systems help people working in a group make decisions more efficiently? Are there any special systems that can facilitate decision- making among senior managers? Exactly what can these systems do to help high-level management?Are there any special systems that can facilitate decision- making among senior managers? Exactly what can these systems do to help high-level management? What benefits can systems that support management decision- making provide for the organization as a whole?What benefits can systems that support management decision- making provide for the organization as a whole? OBJECTIVES

Building information systems that can actually fulfill executive information requirementsBuilding information systems that can actually fulfill executive information requirements Create meaningful reporting and management decision-making processesCreate meaningful reporting and management decision-making processes MANAGEMENT CHALLENGES

Computer system at the management level of an organizationComputer system at the management level of an organization Combines data, analytical tools, and modelsCombines data, analytical tools, and models Supports semi-structured and unstructured decision-makingSupports semi-structured and unstructured decision-making DECISION-SUPPORT SYSTEMS (DSS)

MIS and DSS

Model-driven DSS Primarily stand-alonePrimarily stand-alone Uses model to perform “what-if” and other kinds of analysisUses model to perform “what-if” and other kinds of analysis These systems rely heavily on models to help executives understand the impact of their decisions on the organization, its suppliers, and its customers.These systems rely heavily on models to help executives understand the impact of their decisions on the organization, its suppliers, and its customers. Data-driven DSS Allows users to extract and analyze useful information from large databases. By using datamining, executives can get more information than ever before from their data.Allows users to extract and analyze useful information from large databases. By using datamining, executives can get more information than ever before from their data. Datamining : Finds hidden patterns and relationships in large databases to infer rulesDatamining : Finds hidden patterns and relationships in large databases to infer rules DECISION-SUPPORT SYSTEMS (DSS) Types of Decision-Support Systems

Five types of information you can get from datamining customer information: Associations: Immediate links between one purchase and another purchaseAssociations: Immediate links between one purchase and another purchase Sequences: Phased links; because of one purchase, another purchase will be made at a later timeSequences: Phased links; because of one purchase, another purchase will be made at a later time Classification: Predicting purchases based on group characteristics and then targeting marketing campaignsClassification: Predicting purchases based on group characteristics and then targeting marketing campaigns Clustering: Predicting consumer behavior based on demographic information about groups to which individuals belongClustering: Predicting consumer behavior based on demographic information about groups to which individuals belong Forecasting: Use existing values to determine what other values will beForecasting: Use existing values to determine what other values will be DECISION-SUPPORT SYSTEMS (DSS)

Overview of a Decision-Support System (DSS)

DSS database: collection of current or historical dataDSS database: collection of current or historical data DSS software system: collection of software tools/mathematical and analytical modelsDSS software system: collection of software tools/mathematical and analytical models User interface: easy interactionUser interface: easy interaction Model : Abstract representation illustrating components or relationshipsModel : Abstract representation illustrating components or relationships Sensitivity analysis Asks “what-if” questions repeatedly to determine the impact of changeAsks “what-if” questions repeatedly to determine the impact of change Executives don't make decisions based solely on intuition. The more information they have, the more they experiment with different outcomesExecutives don't make decisions based solely on intuition. The more information they have, the more they experiment with different outcomes in a safe mode, the better their decisions. That's the benefit of the models used in the software tools. DECISION-SUPPORT SYSTEMS (DSS) Components of Decision-Support Systems

DECISION-SUPPORT SYSTEMS (DSS) Sensitivity Analysis

General Accident Insurance:Customer buying patterns and fraud detectionGeneral Accident Insurance: Customer buying patterns and fraud detection Bank of America:Customer profilesBank of America: Customer profiles Frito-Lay, Inc.:Price, advertising, and promotion selectionFrito-Lay, Inc.: Price, advertising, and promotion selection DECISION-SUPPORT SYSTEMS (DSS) DSS Applications and the Digital Firm

Burlington Coat Factory:Store location and inventory mixBurlington Coat Factory: Store location and inventory mix Keycorp:Targeting direct mail marketing customersKeycorp: Targeting direct mail marketing customers National Gypsum:Corporate planning and forecastingNational Gypsum: Corporate planning and forecasting Southern Railway:Train dispatching and routingSouthern Railway: Train dispatching and routing Texas Oil and Gas Corporation:Evaluation of potential drilling sitesTexas Oil and Gas Corporation: Evaluation of potential drilling sites United Airlines:Flight scheduling, passenger demand forecastingUnited Airlines: Flight scheduling, passenger demand forecasting U.S. Department of Defense:Defense contract analysisU.S. Department of Defense: Defense contract analysis DECISION-SUPPORT SYSTEMS (DSS) DSS Applications and the Digital Firm

Comprehensive examination of supply management chainComprehensive examination of supply management chain Searches for most efficient and cost-effective combinationSearches for most efficient and cost-effective combination Reduces overall costsReduces overall costs Increases speed and accuracy of filling customer ordersIncreases speed and accuracy of filling customer orders DECISION-SUPPORT SYSTEMS (DSS) DSS for Supply Chain Management

Uses data mining to guide decisionsUses data mining to guide decisions Consolidates customer information into massive data warehousesConsolidates customer information into massive data warehouses Uses various analytical tools to slice information into small segmentsUses various analytical tools to slice information into small segments DECISION-SUPPORT SYSTEMS (DSS) DSS for Customer Relationship Management

DECISION-SUPPORT SYSTEMS (DSS) DSS for Customer Analysis and Segmentation

Geographic Information Systems (GIS) Software for analyzing and displaying data using digitized mapsSoftware for analyzing and displaying data using digitized maps Enhances planning and decision-makingEnhances planning and decision-making Use data visualization technologyUse data visualization technology DECISION-SUPPORT SYSTEMS (DSS) DSS for Simulating Business Scenarios

Customer Decision-Support Systems (CDSS) Support decision-making process of an existing or potential customerSupport decision-making process of an existing or potential customer DECISION-SUPPORT SYSTEMS (DSS) Web-Based Customer Decision-Support Systems

Interactive computer-based systemInteractive computer-based system Facilitates solution to unstructured problemsFacilitates solution to unstructured problems Set of decision makers working together as a groupSet of decision makers working together as a group GROUP DECISION-SUPPORT SYSTEMS (GDSS) What Is a GDSS?

Hardware: Conference facility, electronic hardwareHardware: Conference facility, electronic hardware Software tools: Tools for organizing ideas, gathering information, and ranking and seeking prioritiesSoftware tools: Tools for organizing ideas, gathering information, and ranking and seeking priorities People: Participants, trained facilitator, staff supporting hardware and softwarePeople: Participants, trained facilitator, staff supporting hardware and software GROUP DECISION-SUPPORT SYSTEMS (GDSS) Characteristics of GDSS

Electronic questionnairesElectronic questionnaires Electronic brainstorming toolsElectronic brainstorming tools Idea organizersIdea organizers Questionnaire toolsQuestionnaire tools Tools for voting or setting prioritiesTools for voting or setting priorities Stakeholder identification and analysis toolsStakeholder identification and analysis tools GROUP DECISION-SUPPORT SYSTEMS (GDSS) GDSS Software Tools

Group Interaction Session Manager Session Planning Idea Generation Idea Organization Prioritizing Policy Development Brainstorming Topic Commenter Group Outliner Idea Organizer Issue Analyzer Group Writer Vote Selection Alternative Eval. Questionnaire Group Matrix Policy Formation Stakeholder ID. Organizational Memory Enterprise Analyzer Graphical Browser Group Dictionary Brief Case Access to information Personal productivity GROUP DECISION-SUPPORT SYSTEMS (GDSS)

Improved preplanning: Forces an agenda to keep the meeting on track.Improved preplanning: Forces an agenda to keep the meeting on track. Increased participation: Increases the number of people who can effectively contribute to the meeting.Increased participation: Increases the number of people who can effectively contribute to the meeting. Open, collaborative meeting atmosphere: Non judgmental input by all attendees.Open, collaborative meeting atmosphere: Non judgmental input by all attendees. Criticism-free idea generation: Anonymity can generate more input and better ideas.Criticism-free idea generation: Anonymity can generate more input and better ideas. Evaluation objectivity: The idea itself is evaluated and not the person contributing the idea.Evaluation objectivity: The idea itself is evaluated and not the person contributing the idea. Idea organization and evaluation: Organized input makes it easier to comprehend the results of the meeting.Idea organization and evaluation: Organized input makes it easier to comprehend the results of the meeting. GROUP DECISION-SUPPORT SYSTEMS (GDSS) How GDSS can Enhance Group Decision-Making

Setting priorities and making decisions: All management levels are on equal footing.Setting priorities and making decisions: All management levels are on equal footing. Documentation of meetings: Results of meeting are available soon after for further use and discussion.Documentation of meetings: Results of meeting are available soon after for further use and discussion. Access to external information: Reduces amount of disagreements by having the facts.Access to external information: Reduces amount of disagreements by having the facts. Preservation of "organizational memory:" Information is available to other groups within the organization.Preservation of "organizational memory:" Information is available to other groups within the organization. How GDSS can Enhance Group Decision-Making (cont’d) GROUP DECISION-SUPPORT SYSTEMS (GDSS)

Executive Support Systems (ESS): Information system at strategic level of an organizationInformation system at strategic level of an organization Addresses unstructured decision-making through advanced graphics and communicationsAddresses unstructured decision-making through advanced graphics and communications EXECUTIVE SUPPORT IN THE ENTERPRISE

Brings together data from the entire organizationBrings together data from the entire organization Allows managers to select, access, and tailor dataAllows managers to select, access, and tailor data Enables executive and any subordinates to look at the same data in the same wayEnables executive and any subordinates to look at the same data in the same way Developing ESS:Developing ESS: Ease of useEase of use Facility for environmental scanningFacility for environmental scanning External and internal sources of information to be used for environmental scanningExternal and internal sources of information to be used for environmental scanning The Role of Executive Support Systems in the Organization EXECUTIVE SUPPORT IN THE ENTERPRISE

Analyzes, compares, and highlights trendsAnalyzes, compares, and highlights trends Provides greater clarity and insight into dataProvides greater clarity and insight into data Speeds up decision-makingSpeeds up decision-making Improves management performanceImproves management performance Increases management’s span of controlIncreases management’s span of control Better monitoring of activitiesBetter monitoring of activities Benefits of Executive Support Systems EXECUTIVE SUPPORT IN THE ENTERPRISE

ESS for business intelligence: Identifies changing market conditionsIdentifies changing market conditions Formulates responsesFormulates responses Tracks implementation effortsTracks implementation efforts Learns from feedbackLearns from feedback Executive Support Systems and the Digital Firm EXECUTIVE SUPPORT IN THE ENTERPRISE

Monitoring corporate performance: balanced scorecard systems Model for analyzing firm performanceModel for analyzing firm performance Supplements traditional financial measures with measurements from additional business perspectivesSupplements traditional financial measures with measurements from additional business perspectives Executive Support Systems and the Digital Firm EXECUTIVE SUPPORT IN THE ENTERPRISE

Strategic performance management tools for enterprise systems SAP: Web-enabled mySAP.com™, Management CockpitSAP: Web-enabled mySAP.com™, Management Cockpit PeopleSoft: Web-enabled Enterprise Performance Management (EPM)PeopleSoft: Web-enabled Enterprise Performance Management (EPM) Oracle: Strategic Enterprise ManagementOracle: Strategic Enterprise Management Enterprise Wide Reporting and Analysis EXECUTIVE SUPPORT IN THE ENTERPRISE