1. 1 Information Systems in Organizations – Decision Making September 30, 2015

2. 2 Mintzberg’s five 5 organizational parts

3. 3 Types of Organizations An organization is an administrative and functional structure where people work toward a specific goal. Understanding the organization’s IT needs means understanding its administrative and functional structure. – Hierarchical – Matrix – Other

4. 4 IS & Hierarchical Organizational structure.

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6. 6 Administrative Information Systems Transaction Processing Systems (TPS) – Basic business system that serves the operational level (including analysts) in organizations – Capture & process data generated during day-to-day activities Office Automation Systems (OAS) – Systems designed to help office workers in doing their job. Decision Support Systems (DSS) – Systems designed to support middle managers and business professionals during the decision-making process Executive Information Systems (EIS) or Executive Support Systems (ESS) – Specialized DSS that help senior level executives make decisions. GDSS: computer-based systems that facilitate solving of unstructured problems by set of decision makers

7. 7 Organization & IS: another view Top Management Middle Management Lower Management Operational workers Office workers Knowledge workers Types of Information Systems: - Transaction Processing Systems - Office Automation Systems - Knowledge Worker Systems - Management Information Systems - Decision Support Systems - Executive Information Systems Questions

8. 8 Decision Making process Drucker Peter (1954), The Practice of Management, Harper & Brothers, New York Simon’s decision-making process model  Intelligence  Design  Choice  (Implementation) Newell, A., and Simon, H. A. (1972). Human problem solving Englewood Cliffs, Prentice-Hall, New Jersey. Simon, H. (1955), A Behavioral Model of Rational Choice, Quarterly Journal of Economics, vol. 69, 99– 188

9. 9 Intelligence Phase Scan the environment for a problem. Determine if problem is real, important enough, solvable Determine if problem within their scope of influence? Fully define the problem by gathering more information. Scan Environment for problem to be solved or decision to be made Data source Organizational IS & external data Problem ? END Problem within scope of influence? No Yes END No Gather more information about the problem Internal & External data Yes

10. 10 Design Phase Develop a model of the problem. –Determine type of model. Verify model. Develop and analyze potential solutions. Develop a model of problem to be solved Verify that the model is accurate Develop potential solutions

11. 11 Choice Phase Evaluate solutions and select the solution to implement. –More detailed analysis of selected solution might be needed. –Verify initial conditions. –Analyze proposed solution against real-world constraints. Questions

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13. 13 DSS structure  Systems designed to help middle managers make decisions  Major components – Data management subsystem Internal and external data sources – Analysis subsystem Typically mathematical in nature – User interface How the people interact with the DSS Data visualization is the key – Text – Graphs – Charts User Interface Analysis - Sensitivity Analysis - What-if Analysis - Goal-seeking Analysis -Data-driven tools -> Data mining -> OLAP* Data Management - Transactional Data - Data warehouse - Business partners data - Economic data * OLAP: OnLine Analytical Processing

14. 14 DSS Analysis Tools  Simulation is used to examine proposed solutions and their impact – Sensitivity analysis – Determine how changes in one part of the model influence other parts of the model – What-if analysis – Manipulate variables to see what would happen in given scenarios – Goal-seeking analysis – Work backward from desired outcome Determine monthly payment given various interest rates. Works backward from a given monthly payment to determine various loans that would give that payment.

15. 15 Executive Information Systems  Specialized DSS that supports senior level executives within the organization  Most EISs offer the following capabilities:  Consolidation – involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information  Drill-down – enables users to get details, and details of details, of information  Slice-and-dice – looks at information from different perspectives  Digital dashboards are common features

16. 16 Artificial Intelligence (AI) systems Common categories of AI systems: 1.Expert system – computerized advisory programs that imitate the reasoning processes of experts in solving difficult problems 2.Neural Network – attempts to emulate the way the human brain works –Analyses large quantities of info to establish patterns and characteristics in situations where logic or rules are unknown – Uses Fuzzy logic – a mathematical method of handling imprecise or subjective information 3.Genetic algorithm – an artificial intelligent system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem 4.Intelligent agent – special-purposed knowledge-based information system that accomplishes specific tasks on behalf of its users PBS Report on AI in today’s world

17. 17 Expert Systems  Artificial Intelligence systems that codify human expertise in a computer system – Main goal is to transfer knowledge from one person to another – Wide range of subject areas Medical diagnosis Computer purchasing Finance – Knowledge engineer elicits the expertise from the expert and encodes it in the expert system

18. 18 Expert Systems Components  Knowledge base: database of the expertise, often in IF THEN rules.  Inference engine: derives recommendations from knowledge base and problem-specific data  User interface: controls the dialog between the user and the system  Explanation system: Explain the how and why of recommendations Knowledge base Domain Expert Knowledge Engineer Expertise Explanation System Inference Engine User Interface User System Engineer Encoded expertise IF family is albatross AND color is white THEN bird is laysan albatross. IF family is albatross AND color is dark THEN bird is black footed albatross Example of rules - Knowledge engineer codify the human expert’s expertise into the systems’ knowledge base. - System engineer is the IT professional who develop the user interface, the inference engine, and the explanation system.

19. 19 Summary Questions Notes 1)Compare Middle management and lower management tasks in terms of their structure. 2) Compare Middle management and lower management tasks in terms of their repetitiveness. 3) What is the difference between GDSS and DSS in terms of their target users? 4)What is the difference between Decision Support Systems (DSS) and Executive Information Systems (EIS) in terms of their target users. 6)Give an example of TPS. 7)(a) What are the major components in a DSS? (b) What is the function of each? 8)What is an Expert System? What are the main components of an Expert system? What is a knowledge engineer?

20. Mintzberg’s 5 organizational parts Operating core –Those who perform the basic work related directly to the production of products and services. Strategic apex –Charged with ensuring that the organization serve its mission in an effective way, and also that it serve the needs of those people who control or otherwise have power over the organization. Middle line –Managers who stand in a direct line relationship between the strategic apex and the operating core. Techostructure –The analysts who serve the organization by affecting the work of others. They may design it, plan it, change it, or train the people who do it, but they do not do it themselves. Examples: engineers, accountants, planners, researchers, etc. Support staff –The specialists who provide support to the organization outside of its operating workflow. Examples: food service, busing, legal consel, etc.

21. References Drucker Peter (1954), The Practice of Management, Harper & Brothers, New York Hendry, J. (1997). Mintzberg’s theory of organization structure: a critical assessment and extension. Retrieved from http://johnhendry.co.uk/wp/wp- content/uploads/2013/07/Mintzbergs-Theory-of-Organization- Structure.pdf on June 3, 2015. http://johnhendry.co.uk/wp/wp- content/uploads/2013/07/Mintzbergs-Theory-of-Organization- Structure.pdf Herbert S. (1955), A Behavioral Model of Rational Choice, Quarterly Journal of Economics, vol. 69, 99–188 Mintzberg, H. (1980). Structure in 5’s: A synthesis of the research on organization design. Management Science, 26(3), 322-341. Available at: https://www.ics.uci.edu/~corps/phaseii/Mintzberg-StructureIn5s- MgmtSci.pdf https://www.ics.uci.edu/~corps/phaseii/Mintzberg-StructureIn5s- MgmtSci.pdf Newell, A., and Simon, H. A. (1972). Human problem solving Englewood Cliffs, Prentice-Hall, New Jersey.