CHAPTER 8 Enterprise Decision Support Systems

Enterprise Decision Support Systems n DSS to provide enterprise-wide support n Executives and other senior level personnel n Many decision makers in different locations n Enterprise Resource Planning (ERP) systems

Enterprise Systems: Concepts and Definitions n Executive information systems (EIS) n Executive support systems (ESS) n Enterprise information systems (EIS)

Executive Information System (EIS) n A computer-based system that serves the information needs of top executives n Provides rapid access to timely information and direct access to management reports n Monitoring and control n Very user-friendly, supported by graphics n Provides exceptions reporting n Drill down n Easily connected to the Internet

Executive Support System (ESS) Comprehensive support system includes EIS capabilities but goes beyond EIS to include n Communications –Collaborative support with other executives n Analysis support –“A DSS for Executives” n Intelligence –Search capabilities –Expert systems

Enterprise Information System n Corporate-wide system –What defines a “senior executive”? It’s evolving. n Provides holistic information –“the big picture;” a corporate view n Part of enterprise resource planning (ERP) systems n For business intelligence n Leading up to enterprise information portals and knowledge management systems

Executives’ Role and Information Needs n Decisional Executive Role (2 Phases) 1. Identification of problems and/or opportunities 2. The decision of what to do about them  EIS can do this well with its monitoring, i.e., exception reporting, and controlling capabilities n Flow chart and information flow (Figure 8.1) –Internal information –External information –Evaluation and analysis of information –Crucial for today’s competitive environment n Use phases to determine executives’ information needs –What info is needed to scan and interpret (Phase 1) and what to do (Phase 2)

Methods for Finding Information Needs n IBM’s Business Systems Planning n Rockart’s Critical Success Factors

Business Systems Planning n Business Systems Planning (BSP) n Early strategic planning effort by IBM n Examine business processes and classes of data which become the basis for information architecture (IA) n In turn, IA leads to applications n Top-down approach n Some relationship to BPR with its emphasis on processes

Business Systems Planning (BSP)

Critical Success Factors n Late 1970s by John Rockart from MIT n Senior managers not receiving information from computer systems they need n CSFs – few things in organization that must go right if organization is to succeed n CSF characteristics –Measurable –Have business value –Easily understood –Can change over time; priorities can change –Differ for persons in an organization and for organizations in an industry

Critical Success Factors (CSFs) n Sources of CSFs –Industry –Company –Environment –Temporal – not previously important but are now n Use CSFs to examine information needs

Critical Success Factors (CSF) Monitored by five types of information 1.Key problem narratives 2.Highlight charts 3.Top-level financials 4.Key factors (key performance indicators (KPI)) 5.Detailed KPI responsibility reports Do the EIS, ESS, etc. have appropriate information for executives/managers?

Characteristics of EIS n Drill down n Critical success Factors (CSF) n Status access –More up-to-date, perhaps realtime access to key indicator data n Analysis –with ESS capability/add-on –Intelligent agents n Exception reporting –Management by exception (MBO) n Colors and audio n Navigation of information –Intelligent agents n Communication with GSS capabilities integrated n Numerous benefits as shown in Table 8.1

EIS Issues/Pitfalls n Executive versus operating sponsor n Tie EIS/ESS to business, not to technology –More experienced users today –Users need IT that helps in a business sense n Use CSFs as an approach to identify executive information needs –Often difficult to specify information needs –Often executives may be unable to specify what information they want –May be unwilling to devote the time to this process n Other reasons why EIS can fail –Lack of commitment –Difficult to learn or use system –Does not satisfy executive needs –No sponsor –No follow through or expectations too high

n EIS vendors - easy interfaces with GSS n Some EIS built in Lotus Domino / Notes n Comshare Inc. and Pilot Software, Inc. - Lotus Domino/Notes-based enhancements and Web/Internet/Intranet links n More “enterprise” orientation today, as opposed to “executive” Integrating EIS and Group Support Systems

Comparing and Integrating EIS and DSS n Tables 8.2 and 8.3 compare the two systems –Table DSS definitions related to EIS Noticeable differences in terms of modeling, usage, type of problem solving –Table Comparison of EIS and DSS Many differences, e.g., type of problems, modeling capabilities, nature of information n Yet, EIS is part of decision support –Alerting to a problem –Intelligence phase of decision making process

Multidimensional Analysis n 3 or more dimensions in analyzing data n Easy to develop an EIS in an OLAP system n Most are Web-ready n Can tap into data in a data warehouse via the Web n Use advanced visualization tools n Numerous SW packages listed in text

Including Soft Information in EIS  Soft information is fuzzy, unofficial, intuitive, subjective, nebulous, implied, and vague  May be especially important to senior executives

Soft Information Used in Most EIS n Predictions, speculations, forecasts, estimates (78.1%) n Explanations, justifications, assessments, interpretations (65.6%) n News reports, industry trends, external survey data (62.5%) n Schedules, formal plans (50.0%) n Opinions, feelings, ideas (15.6%) n Rumors, gossip, hearsay (9.4%) Soft Information Enhances EIS Value

Common Characteristics of ODSS (George, 1991) n Focus is on an organizational task or activity or a decision that affects several organizational units or corporate problems n Cuts across organizational functions or hierarchical layers n Almost always involves computer-based technologies, and may involve communication technologies, intranets, and ERP applications n Can Integrate ODSS with Group DSS and Executive Information Systems n ODSS are an enterprise information system directly concerned with decision support

Supply Chain n The flow of materials, information, and services from raw material suppliers through factories and warehouses to the end customers n Includes the organizations and processes that create and deliver value to the end customers

Supply Chain Management (SCM) n To deliver an effective supply chain and do it effectively n To plan, organize, and coordinate the supply chain’s activities

SCM Benefits n Reduction in uncertainty and risks in the supply chain n Positively affect –inventory levels –cycle time –processes –customer service n Increase profitability

Supply Chain Components n Upstream –An organization’s various suppliers and their suppliers n Internal supply chain –Processes inside the organization; transforming from inputs to outputs n Downstream –Processes to deliver to the customers n Involves product life cycle activities Example (Figure 8.2, p. 325)

Supply Chain

n Related to the Value Chain Model (Porter) n Primary activities –Inbound logistics –Outbound logistics –Operations –Marketing and sales –Service

Porter’s Value Chain

Supply Chain n Support activities –Firm’s infrastructure (accounting, finance, etc.) –Human resource management –R&D –Procurement

Supply Chain Problems n Uncertainty in the demand forecast n Uncertainty in delivery times n Quality problems n Poor customer service n High inventory costs n Low revenue n Extra costs

Solutions to Supply Chain Problems n Outsourcing n Buy, not make n Configure optimal shipping plans n Optimize purchasing n Strategic partnerships with suppliers n Just-in-time delivery of purchases n Reduce intermediaries n Reduce lead times (EDI) n Use fewer suppliers n Improve the supplier-buyer relationships n Build-to-order n Accurate demand by working with suppliers

Computerized Systems n MRP and MRP II –1960s and later –Integrated parts of supply chain but not all n ERP –1990s –More complete integration of the supply chain

Enterprise Resource Planning (ERP) n Objective: integrate all departments and functions across an organization into a single computer system that can serve the entire enterprise’s needs

ERP Software Vendors n SAP n Baan n PeopleSoft n Oracle n J.D. Edwards n Computer Associates

ERP n Very (VERY!) expensive n 2nd generation: doing better n Early 2000: moving to Web n Will fail if an organization’s business processes do not fit the ERP system’s model n HUGE ORGANIZATIONAL COMMITMENT

Application Service Providers and ERP Outsourcing n ASP: software vendor who leases ERP- based applications n Outsourcing n Now via the Web

Future of Executive and Enterprise Support Systems n Toolbox for customized systems n Multimedia support n Better access (via PDFs and cell phones) n Virtual Reality and 3-D Image Displays n Merging of analytical systems (OLAP / multidimensional analysis)) with desktop publishing n Client/server architecture n Web-enabled EIS n Automated support and intelligent assistance n Integration of EIS and Group Support Systems n Global EIS n Integration and deployment with ERP products