1. 9.614 Information Age Organizations Instructor: Bob Travica Class 5 Decision Support Systems Chapter 12 Asper School of Business 9.614 Information Age Organizations Part-Time MBA, April 2002 Instructor: Bob Travica

2. 9.614 Information Age Organizations Instructor: Bob Travica Outline Generic Problem Solving/Decision Making Model Specific Models IT/IS for Supporting Managerial Decision Making Organizational benefits

3. 9.614 Information Age Organizations Instructor: Bob Travica Generic Decision Making Model Define problem Create possible solutions (choices, options) Select best solution) Implement solution More…

4. 9.614 Information Age Organizations Instructor: Bob Travica Define problem (what needs to be decided on, acted upon) Define possible solutions (possible options of acting; information search, analysis) Select solution (assess options on some criteria; compare, analyze past/future) Implement solution (decide on related problems conducive to the implementing the decision to start problem) Generic Decision Making Model

5. 9.614 Information Age Organizations Instructor: Bob Travica Specific Decision Making Models Scientific (“rational”; Simon): Define problem with certainty Define A & B options Select A or B so that the choice optimally meets criteria Implement the selection More… The scientific (rational) model is close to the way we usually think about decision making (go/no go decisions, optimal choices, etc.) BUT… Is it the way we always really make decisions?

6. 9.614 Information Age Organizations Instructor: Bob Travica Incremental (doctors’ diagnosing; Etzioni): Define problem with some certainty Define A & optionally B Break A into pieces (A1…An); Implement A1, evaluate, implement A2, evaluate… maybe switch to B Satisfycing decision making (Simon) Define problem with as much certainty as possible Create some optional solutions Evaluate options and pick the first option that meets most or most important evaluation criteria (a “good enough” option) Cognitive, time & organizational limitations are reality

7. 9.614 Information Age Organizations Instructor: Bob Travica Intuitive (“guts feeling”; less intensive information search than in incremental): Define problem subjectively (certainty=?) Define A subjectively based on past experience Implement A Zig-Zag (“muddling through”; Lindblom): Define problem with higher uncertainty Define tentatively A, B…n; Implement some A, if blocked some B, if blocked some A… n Specific Decision Making Models

8. 9.614 Information Age Organizations Instructor: Bob Travica IT/IS for Supporting Decision Making Decision Support Systems (DSS; one instance is GDSS) - support higher management levels - problem definable with less certainty (“ill-structured”) - build on Transaction Processing Systems (databases) & Management Information Systems (reporting systems) - beyond understanding past -- predict future

9. 9.614 Information Age Organizations Instructor: Bob Travica DSS: Data + Analysis Model + User Interface Database, Datawarehouse/Datamart; Mostly internal sources Data format issues Mathematical formula Hybrid numerical+text Expert System (If-Then rules) Neural Nets Datawarehousing Analysis Tools Data Mining Tools GUI, easy to use Graphing cap. Natural language

10. 9.614 Information Age Organizations Instructor: Bob Travica Executive Information Systems (EIS) Supports executives Special design features: Use more external information than DSS Drill-down capability (background of information) Uses: Status Report (in/out of organization) Environmental Scanning (market trends, regulations…) Communications management Specialized tasks (e.g., longer range planning)

11. 9.614 Information Age Organizations Instructor: Bob Travica Organizational Benefits Efficiency in decision making translates into tangible operational benefit of savings on decision makers work hours Effectiveness in decision making (quality of decision, market responsiveness, competitive survival, Accuracy of info for DM…) translates into strategic benefits (tangible & intangible) Trade-offs between efficiency & effectiveness in DM (e.g., perfecting info for DM increases effectiveness of DM but decreases its efficiency)