1. 12-1 Copyright © 2013 Pearson Canada Inc. Enhancing Decision Making Oleh : Kundang K Juman Enhancing Decision Making Oleh : Kundang K Juman CHAPTER TWELVE

2. 12-2 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making LEARNING OBJECTIVES After reading this chapter, you will be able to answer the following questions: 1.What are the different types of decisions and how does the decision-making process work? 2.How do information systems support the activities of managers and management decision making? 3.How do business intelligence and business analytics support decision making? Continued …

3. 12-3 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making LEARNING OBJECTIVES (continued) 4.How do different decision-making constituencies in an organization use business intelligence? 5.What is the role of information systems in helping people working in a group make decisions more efficiently?

4. 12-4 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making What to Sell? What Price to Charge? Ask the Data Problem: Chain retailers such as Starbucks, Duane Reade, need to determine what products will sell at what prices at different locations Solutions: Business analytics software to analyze patterns in sales data, create pricing profiles and buyer profiles for different regions, locales, even times of day Demonstrates the use of business intelligence and analysis systems to improve sales and profits Illustrates how information systems improve decision making

5. 12-5 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Decision Making and Information Systems Business Value of Improved Decision Making Types of decisions The decision-making process Managers and decision making in the real world Managerial roles Real-world decision making

6. 12-6 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Types of Decisions Unstructured Decisions Novel, non-routine decisions requiring judgment and insights Examples: Approve capital budget; decide corporate objectives Structured Decisions Routine decisions with definite procedures Examples: Restock inventory; determine special offers to customers Continued … Decision Making and Information Systems

7. 12-7 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Types of Decisions (continued) Semistructured Decisions Only part of decision has clear-cut answers provided by accepted procedures Examples: Allocate resources to managers; develop a marketing plan Decision Making and Information Systems

8. 12-8 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Decision Making and Information Systems

9. 12-9 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making The decision-making process 1.Intelligence Discovering, identifying, and understanding the problems occurring in the organization 2.Design Identifying and exploring solutions to the problem 3.Choice Choosing among solution alternatives 4.Implementation Making chosen alternative work and continuing to monitor how well solution is working Decision Making and Information Systems

10. 12-10 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Decision Making and Information Systems

11. 12-11 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Managers and Decision Making in the Real World Managerial Roles Classical Model of Management Behavioural Models of Management Interpersonal Roles Informational Roles Decisional Roles Continued … Decision Making and Information Systems

12. 12-12 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Managers and Decision Making in the Real World (continued) Real-World Decision Making 1.Information quality High-quality decisions require high-quality information 2.Management filters Managers have selective attention and have variety of biases that reject information that does not conform to prior conceptions 3.Organizational culture Strong forces within organizations resist making decisions calling for major change Decision Making and Information Systems

13. 12-13 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making What is Business Intelligence? Infrastructure for collecting, storing, analyzing data produced by business Databases, data warehouses, data marts Business analytics Tools and techniques for analyzing data OLAP, statistics, models, data mining Business intelligence vendors Create business intelligence and analytics purchased by firms Business Intelligence in the Enterprise

14. 12-14 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Six elements in the business intelligence environment 1.Data from the business environment 2.Business intelligence infrastructure 3.Business analytics toolset 4.Managerial users and methods 5.Delivery platform – MIS, DSS, ESS 6.User interface Business Intelligence in the Enterprise

15. 12-15 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence in the Enterprise

16. 12-16 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence and Analytics Capabilities Production Reports Formalized Reports Dashboards/scorecards Ad hoc/query/search/report creation Drill Down Forecasts, scenarios, models Business Intelligence in the Enterprise

17. 12-17 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence in the Enterprise

18. 12-18 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence in the Enterprise Examples of BI applications –Predictive analytics Use patterns in data to predict future behavior E.g. Credit card companies use predictive analytics to determine customers at risk for leaving –Data visualization Help users see patterns and relationships that would be difficult to see in text lists –Geographic information systems (GIS) Ties location-related data to maps

19. 12-19 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence in the Enterprise Management Strategies for Developing BI and BA Capabilities One-stop integrated solution –Hardware firms sell software that run optimally on their hardware –Makes firm dependent on single vendor – switching costs Multiple best-of-breed solution –Greater flexibility and independence –Potential difficulties in integration –Must deal with multiple vendors

20. 12-20 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making How Can You Close the Deal with Donors? Read the Window on Organizations, and then answer the following questions 1.Identify and describe the problem discussed in the case. 2.How do business intelligence systems provide a solution to this problem? What are the inputs and outputs of these systems? 3.What management, organization, and technology issues have to be addressed by this solution? 4.How successful is this solution? Explain your answer. 5.Should all not-for-profits use such a data-driven approach to fundraising? Why or why not?

21. 12-21 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Decision Support for Operational and Middle Management Support for Semistructured Decisions Decision Support Systems (DSS) Sensitivity Analysis Business Intelligence Constituencies

22. 12-22 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence Constituencies

23. 12-23 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence Constituencies

24. 12-24 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Decision Support for Senior Management: Balanced Scorecard Key Performance Indicators Enterprise Performance Management Models Business Intelligence Constituencies

25. 12-25 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Business Intelligence Constituencies

26. 12-26 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Group decision support systems (GDSS) Interactive system to facilitate solution of unstructured problems by group of decision makers Hardware – computer and networking hardware, overhead projectors, display screens GDSS software collects, documents, ranks, edits and stores participant ideas, responses May require facilitator and staff Enables increasing meeting size and increasing productivity Promotes collaborative atmosphere, guaranteeing anonymity Follow structured methods for organizing and evaluating ideas and preserving meeting results Business Intelligence Constituencies

27. 12-27 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Piloting Valero with Real-Time Management Read the Window on Management, and then answer the following questions: 1.What management, organization, and technology issues had to be addressed when developing Valero’s dashboard? 2.What measures of performance do the dashboards display? Give examples of several management decisions that would benefit from the information provided by Valero’s dashboards. 3.What kinds of information systems are required by Valero to maintain and operate its refining dashboard? Continued …

28. 12-28 Copyright © 2013 Pearson Canada Inc. Management Information Systems Chapter 12 Enhancing Decision Making Piloting Valero with Real-Time Management Read the Window on Management, and then answer the following questions (cont.) 4.How effective are Valero’s dashboards in helping management pilot the company? Explain your answer. 5.Should Valero develop a dashboard to measure the many factors in its environment that it does not control? Why or why not?

29. 12-29 Copyright © 2013 Pearson Canada Inc. Enhancing Decision Making CHAPTER TWELVE