Unit – 1

Decision Support Systems

Information System, DSS,
Business Intelligence

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 Outline
• Introduction
• Meaning of Data, Information, and
Knowledge
• Characteristics of Valuable Information
• Characterstics of information systems
• Types of Information systems
• History of DSS, Types of DSS
• Herbert Simon Model for Decision Making
• Introduction to BIA
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 Data, Information, and Knowledge
• Data:
– Raw facts
• Information:
– Collection of facts organized in such a way that they have value beyond the
facts themselves
• Process:
– Set of logically related tasks
• Knowledge:
– An awareness and understanding of a set of information and how that
information can be made useful to support a specific task
• Knowledge base
– The collection of data, rules, procedures, and relationships that must be
followed to achieve value or the proper outcome
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 Data, Information, and Knowledge
(continued)

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 Attributes of Information
Quality

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 The Value of Information
• Directly linked to how it helps decision makers
achieve their organization’s goals
• Valuable information:
– Can help people and their organizations perform tasks
more efficiently and effectively
• If an organization’s information is not accurate or
complete:
– People can make poor decisions, costing thousands, or
even millions, of dollars
• Depending on the type of data you need:
– Some characteristics become more important than others
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 Characteristics of Valuable Information

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 System
• System
– A set of elements or components that interact to
accomplish goals
– A combination of components working together
• Elements of a System are
– Inputs
– Processing mechanisms
– Outputs

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 System Components and Concepts

• System boundary
– Defines the system and distinguishes it from everything
else
• System types
– Simple vs. complex
– Open vs. closed
– Stable vs. dynamic
– Adaptive vs. nonadaptive
– Permanent vs. temporary

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 System Performance and
• Efficiency
Standards
– A measure of what is produced divided by what is
consumed
• Effectiveness
– A measure of the extent to which a system achieves its
goals
• System performance standard
– A specific objective of the system

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 Introduction
• Information system (IS):
– A set of interrelated components that collect,
manipulate, and disseminate data and
information and provide feedback to meet an
objective
• Businesses:
– Can use information systems to increase
revenues and reduce costs

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 What is an Information
System?
• Information system (IS) is a set of interrelated elements that:
– Collect (input)
– Manipulate (process)
– Store
– Disseminate (output) data and information
– Provide a corrective reaction (feedback mechanism) to meet an
objective

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 Input, Processing, Output,
Feedback
• Input:
– Activity of gathering and capturing raw data
• Processing:
– Converting data into useful outputs
• Output:
– Production of useful information, usually in the
form of documents and reports
• Feedback:
– Information from the system that is used to make
changes to input or processing activities
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 Manual and Computerized
Information Systems
• An information system can be:
– Manual or computerized
• Example:
– Investment analysts manually draw charts and
trend lines to assist them in making investment
decisions
• Computerized information systems:
– Follow stock indexes and markets and suggest
when large blocks of stocks should be purchased
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or sold BIA Ms-204 14
 Computer-Based Information
Systems (CBIS)
• Single set of hardware, software, databases,
telecommunications, people, and procedures:
– That are configured to collect, manipulate, store,
and process data into information
• Technology infrastructure:
– Includes all hardware, software, databases,
telecommunications, people, and procedures
• Configured to collect, manipulate, store, and process
data into information

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 Components of CBIS

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 Computer-Based Information
Systems (continued)
• Hardware:
– Consists of computer equipment used to perform input, processing, and
output activities
• Software:
– Consists of the computer programs that govern the operation of the
computer
• Database:
– Organized collection of facts and information, typically consisting of two or
more related data files
• People:
– The most important element in most computer-based information systems
• Procedures:
– Include strategies, policies, methods, and rules for using the CBIS
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 Computer-Based Information
Systems (continued)
• Telecommunications, networks, and the Internet:
– The electronic transmission of signals for communications
• Networks:
– Connect computers and equipment to enable electronic communication
• Internet:
– World’s largest computer network, consisting of thousands of
interconnected networks, all freely exchanging information
• Intranet:
– Internal network that allows people within an organization to exchange
information and work on projects
• Extranet:
– Network that allows selected outsiders, such as business partners and
customers, to access authorized resources of a company’s intranet
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 Classification of CBIS

CBIS

Operations Support
System Management Support
System

Transaction Office Management Decision Executive

Process control automation support
processing systems information information
systems systems systems systems systems

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 Other Categories
a) Expert systems - knowledge-based systems that provides
expert advice and act as expert consultants to the users
b) End user computing systems - support the direct, hands on use
of computers by end users for operational and managerial
applications
c) Business information systems - support the operational and
managerial applications of the basic business functions of a firm
d) Strategic information systems - provide a firm which strategic
products, services, and capabilities for competitive advantage

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 Challenges & Opportunities
1. Challenges
• Workforce downsizing
• Information overload
• Employee mistrust
• Difficult to built
• Security breaches

2. Opportunities
• Enhanced global competitiveness
• Capture market opportunities
• Support corporate strategy
• Enhance worker productivity
•
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Improve quality of goodsBIA
and services
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 Enterprise Resource Planning
(ERP)
• Integrated programs that can manage a
company’s entire set of business
operations
• Often coordinate planning, inventory
control, production and ordering

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 Types of Information Systems

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 Types of Information Systems

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Decision Making Concepts

BBA-307 MIS
25
22/05/18
 Transactions Processing Systems
• Transaction
– Any business-related exchange
– E.g., generating a weekly payroll
• Transaction processing system (TPS)
– An organized collection of people, procedures, software,
databases, and devices used to record completed for for
business related exchanges
– Payroll Example

Hours
worked
Payroll transaction Payroll
processing checks
Pay
rate
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 Types of TPS Systems

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 Management Information Systems
• An MIS is…
– An organized collection of people, procedures,
software, databases, and devices used to provide
routine information to managers and decision
makers

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 Schematic of MIS

Marketing Manufacturing
management management
information Information
system system

Common
databases
Financial Order
management management
Information information
system system
TPS

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 Decision Support Systems
• A DSS is…
– An organized collection of people, procedures,
software, databases, and devices used to support
problem-specific decision making

• A DSS helps a manger “do the right thing”

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 Decision Support Systems
(Contd…)

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 Executive Information Systems
• Combine many features of MIS and DSS
• Provide top executives with immediate and easy
access to information
• About the factors that are critical to
accomplishing an organization’s strategic
objectives (Critical success factors)
• So popular, expanded to managers, analysts and
other knowledge workers
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 Features of an EIS
• Information presented in forms tailored to the
preferences of the executives using the system
– Customizable graphical user interfaces
– Exception reporting
– Trend analysis
– Drill down capability

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 Expert Systems
• An expert system is…
– A knowledge-based information system (KBIS) that
performs a task that would otherwise be performed by a
human expert
– a system that adds a knowledge base to the other
components on an IS
– gives the computer the ability to make suggestions and to
act like an expert in a particular field
– Examples: diagnose human illnesses, make financial
forecasts, schedule routes for delivery vehicles
• Expert systems typically include “artificial
intelligence”
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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE
Sales and Marketing Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

ORDER PROCESSING ENTER, PROCESS, TRACK ORDERS OPERATIONAL

MARKET ANALYSIS IDENTIFY CUSTOMERS & MARKETS KNOWLEDGE

PRICING ANALYSIS DETERMINE PRICES MANAGEMENT

SALES TRENDS PREPARE 5-YEAR FORECASTS STRATEGIC

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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE (Contd…)
Manufacturing and Production Systems

Major functions of systems:

• Scheduling, purchasing, shipping, receiving,
engineering, operations

Major application systems:

• Materials resource planning systems, purchase
order control systems, engineering systems,
quality control systems

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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE (Contd…)
Manufacturing and Production Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

MACHINE CONTROL CONTROL ACTIONS OF EQUIPMENT OPERATIONAL

COMPUTER-AIDED-DESIGN DESIGN NEW PRODUCTS KNOWLEDGE

PRODUCTION PLANNING DECIDE NUMBER, SCHEDULE OF PRODUCTS MANAGEMENT

FACILITIES LOCATION DECIDE WHERE TO LOCATE FACILITIES STRATEGIC

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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE (Contd…)
Financing and Accounting Systems

Major functions of systems:

• Budgeting, general ledger, billing, cost accounting

Major application systems:

• General ledger, accounts receivable, accounts
payable, budgeting, funds management systems

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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE (Contd…)
Financing and Accounting Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

ACCOUNTS RECEIVABLE TRACK MONEY OWED TO FIRM OPERATIONAL

PORTFOLIO ANALYSIS DESIGN FIRM'S INVESTMENTS KNOWLEDGE

BUDGETING PREPARE SHORT TERM BUDGETS MANAGEMENT

PROFIT PLANNING PLAN LONG-TERM PROFITS STRATEGIC

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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE (Contd…)
Human Resource Systems

Major functions of systems:

• Personnel records, benefits, compensation, labor
relations, training

Major application systems:

• Payroll, employee records, benefit systems, career
path systems, personnel training systems

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 SYSTEMS FROM A FUNCTIONAL
PERSPECTIVE (Contd…)
Human Resource Systems

SYSTEM DESCRIPTION ORGANIZATIONAL LEVEL

TRAINING & DEVELOPMENT TRACK TRAINING, SKILLS, APPRAISALS OPERATIONAL

CAREER PATHING DESIGN EMPLOYEE CAREER PATHS KNOWLEDGE

COMPENSATION ANALYSIS MONITOR WAGES, SALARIES, BENEFITS MANAGEMENT

HUMAN RESOURCES PLANNING PLAN LONG-TERM LABOR FORCE NEEDS STRATEGIC

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 Decision Support Systems

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 Decision Support System
• A Decision Support System (DSS) is an interactive
computer-based system or subsystem intended to help
decision makers use communications technologies, data,
documents, knowledge and/or models to identify and
solve problems, complete decision process tasks, and
make decisions.

• Decision Support System is a general term for any

computer application that enhances a person or group’s
ability to make decisions.

• Also, Decision Support Systems refers to an academic

field of research that involves designing and studying
Decision Support Systems in their context of use.
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 History of DSS

Goal: Use best parts of IS, OR/MS, AI & cognitive science to support
more effective decision
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 A Multidiscipline Study
• It is clear that DSS belong to an environment
with multidisciplinary foundations, including
(but not exclusively):
– Database research,
– Artificial intelligence,
– Human-computer interaction,
– Simulation methods,
– Software engineering, and
– Telecommunications.
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 Why DSS?
• Increasing complexity of decisions
– Technology
– Information:
• “Data, data everywhere, and not the time to think!”
– Number and complexity of options
– Pace of change
• Increasing availability of computerized support
– Inexpensive high-powered computing
– Better software
– More efficient software development process
• Increasing usability of computers

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 Perceived benefits

– Decision quality
– Improved communication
– Cost reduction
– Increased productivity
– Time savings
– Improved customer and employee satisfaction

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 Types of Problems
• Structured: situations where the procedures to follow when a
decision is needed can be specified in advance
– Repetitive
– Standard solution methods exist
– Complete automation may be feasible
• Unstructured: decision situations where it is not possible to
specify in advance most of the decision procedures to follow
– One-time
– No standard solutions
– Rely on judgment
– Automation is usually infeasible
• Semi-structured: decision procedures that can be pre specified,
but not enough to lead to a definite recommended decision
– Some elements and/or phases of decision making process have repetitive
elements
DSS most useful for repetitive aspects of semi-structured problems
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 Approaches to the design and
construction of DSS
• Studies on DSS development conducted during the last 15
years have identified more than 30 different approaches to
the design and construction of decision support methods
and systems.
• Interestingly enough, none of these approaches
predominate and the various DSS development processes
usually remain very distinct and project-specific.
• This situation can be interpreted as a sign that the field of
DSS development should soon enter in its formalization
stage.

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 Model-driven DSS
• A model-driven DSS emphasizes access to and manipulation of a
statistical, financial, optimization, or simulation model. Model-driven
DSS use data and parameters provided by users to assist decision
makers in analyzing a situation; they are not necessarily data intensive.
Dicodess is an example of an open source model-driven DSS generator
(Gachet 2004).
• Other examples:
– A spread-sheet with formulas in

– A statistical forecasting model

– An optimum routing model

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 Data-driven (retrieving) DSS
• A data-driven DSS or data-oriented DSS emphasizes access to and
manipulation of a time series of internal company data and, sometimes,
external data.
• Simple file systems accessed by query and retrieval tools provides the
elementary level of functionality. Data warehouses provide additional
functionality. OLAP provides highest level of functionality.
• Examples:
– Accessing AMMIS data base for all maintenance Jan89-Jul94 for CH124

– Accessing INTERPOL database for crimes by …….

– Accessing border patrol database for all incidents in Sector ...

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 Model and data-retrieving DSS
• Examples:
– Collect weather observations at all stations and
forecast tomorrow’s weather

– Collect data on all civilian casualties to predict

casualties over the next month

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 Communication-driven DSS
• A communication-driven DSS use network
and comminication technologies to faciliate
collaboartion on decision making. It supports
more than one person working on a shared
task.
• examples include integrated tools like
Microsoft's NetMeeting or Groove (Stanhope
2002), Vide conferencing.
• It is related to group decision support systems.

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 Document-driven DSS
• A document-driven DSS uses storage and
processing technologies to document retrieval
and analysis. It manages, retrieves and
manipulates unstructured information in a
variety of electronic formats.
• Document database may include: Scanned
documents, hypertext documents, images,
sound and video.
• A search engine is a primary tool associated
with document drivel DSS.
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 Knowledge-driven DSS
• A knowledge-driven DSS provides specialized
problem solving expertise stored as facts,
rules, procedures, or in similar structures. It
suggest or recommend actions to managers.
• MYCIN: A rule based reasoning program which
help physicians diagnose blood disease.

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 High-level Architecture of a DSS

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 Decision making characteristics
• Decision is made based on the information
available.
• At each part of the assessment, there may
have to be iterative development to take
account improvement in data that take place
as the project proceeds.
• A project will not go ahead unless there is
adequate funding.

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 Architecture
• Three fundamental components of DSS:
– the database management system (DBMS),
– the model management system (MBMS), and
– the dialog generation and management system (DGMS).
• the Data Management Component stores information (which can be
further subdivided into that derived from an organization's traditional
data repositories, from external sources such as the Internet, or from
the personal insights and experiences of individual users);
• the Model Management Component handles representations of
events, facts, or situations (using various kinds of models, two
examples being optimization models and goal-seeking models); and
• the User Interface Management Component is of course the
component that allows a user to interact with the system.

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 DSS Components

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 A Detailed Architecture
• Even though different authors identify different
components in a DSS, academics and practitioners
have come up with a generalized architecture
made of six distinct parts:
– the data management system,
– the model management system,
– the knowledge engine,
– The user interface,
– the DSS architecture and network, and
– the user(s)

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 Typical Architecture
• TPS: transaction
processing system
• MODEL: DSS DATA EXTERNAL
representation of a TPS DATA
BASE
problem
• OLAP: on-line
analytical processing
• USER INTERFACE: how
user enters problem &
receives answers
• DSS DATABASE: DSS SOFTWARE SYSTEM
current data from MODELS
USER
applications or groups
INTERFACE OLAP TOOLS
• DATA MINING:
technology for finding DATA MINING TOOLS
relationships in large
data bases for
prediction
USER

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 DSS Model base
• Model base
– A software component that consists of models
used in computational and analytical routines that
mathematically express relations among variables
• Examples:
– Linear programming models,
– Multiple regression forecasting models
– Capital budgeting present value models

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 Applications
• There are theoretical possibilities of building such systems in any
knowledge domain.
– Clinical decision support system for medical diagnosis.
– a bank loan officer verifying the credit of a loan applicant
– an engineering firm that has bids on several projects and wants to
know if they can be competitive with their costs.
– DSS is extensively used in business and management. Executive
dashboards and other business performance software allow faster
decision making, identification of negative trends, and better
allocation of business resources.
– A growing area of DSS application, concepts, principles, and
techniques is in agricultural production, marketing for sustainable
development.
– A specific example concerns the Canadian National Railway system,
which tests its equipment on a regular basis using a decision support
system.
– A DSS can be designed to help make decisions on the stock market, or
deciding which area or segment to market a product toward.
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 Characteristics and Capabilities
of DSS
• The key DSS characteristics and capabilities are as follows:
1. Support for decision makers in semistructured and unstructured
problems.
2. Support managers at all levels.
3. Support individuals and groups.
4. Support for interdependent or sequential decisions.
5. Support intelligence, design, choice, and implementation.
6. Support variety of decision processes and styles.
7. DSS should be adaptable and flexible.
8. DSS should be interactive ease of use.
9. Effectiveness, but not efficiency.
10. Complete control by decision-makers.
11. Ease of development by end users.
12. Support modeling and analysis.
13. Data access.
14. Standalone, integration and Web-based
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 MIS vs. DSS
Management Decision Support
Information Systems
Systems
Decision Provide information about Provide information and
support the performance of the techniques to analyze
provided organization specific problems
Information Periodic, exception, Interactive inquiries and
form and demand, and push reports responses
frequency and responses
Information Prespecified, fixed format Ad hoc, flexible, and
format adaptable format

Information Information produced by Information produced by

processing extraction and manipulation analytical modeling of
methodology of business data business data
 Knowledge Management
Systems
• The use of information technology to help
gather, organize, and share business knowledge
within an organization

• Enterprise Knowledge Portals

– EIPs that are the entry to corporate intranets that
serve as knowledge management systems

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 Using DSS
• What-if Analysis
– End user makes changes to variables, or
relationships among variables, and observes the
resulting changes in the values of other variables
• Sensitivity Analysis
– Value of only one variable is changed repeatedly
and the resulting changes in other variables are
observed

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 Using DSS
• Goal-Seeking
– Set a target value for a variable and then repeatedly
change other variables until the target value is
achieved
• Optimization
– Goal is to find the optimum value for one or more
target variables given certain constraints
– One or more other variables are changed repeatedly
until the best values for the target variables are
discovered
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 Decision Support in Business
Companies invest
in data-driven Changing marketing conditions
decision support
application
Customer needs
frameworks to help
them respond to

Management information
Accomplished by
Decision support
several types of
Other information systems

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 Decision Structure
Structured The procedures to follow when a
(operational) decision is needed can be
specified in advance

Unstructured It is not possible to specify in

(strategic) advance most of the decision
procedures to follow

Semi-structured Decision procedures can be

(tactical) pre-specified, but not enough to
lead to the correct decision

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 Information Quality

Information products are made more valuable

by their attributes, characteristics, or qualities
Outdated, inaccurate, or hard to understand
information has much less value

Information has three dimensions

Time Content Form

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 DSS vs. BI
Business Intelligence
• BI is more appropriate for
large organizations (DWH is
expensive)
• BI implies to use data
warehouse.
• It provide accurate and
timely information and
support DSS.
• It has an executive &
strategy orientation,
especially in BPM and
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dashboards
Decision Support System
• DSS can be appropriate to
any type of organization.
• DSS may or may not have
such feature.
• DSS are constructed to
directly support specific
decision making.
• DSS is oriented towards
analysts.
Ms-204 72
 Business Intelligence Decision Support System

• BI is constructed with • They may have constructing

commercial available tools solutions to very
and components. unstructured problem. In
this more programming may
be needed to customize
solution.
• DSS methodologies & even
• BI methodologies and tools some tools were developed
were developed mostly by mostly in academic world.
software companies.

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 Decision Making as a Component
of Problem Solving
Intelligence

Decision
making Design

Problem
Choice solving

Implementation

Monitoring

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 Solution Types
• Optimization model
– Finding the best solution
• Satisficing model
– Finding a good -- but not necessarily the
best -- solution to a problem
• Heuristics
– Commonly accepted guidelines or
procedures that usually find a good
solution

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 Problem Solving Factors
• Multiple decision objectives
• Increased alternatives
• Increased competition
• The need for creativity
• Social and political actions
• International aspects
• Technology
• Time compression
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 Characteristics of a DSS (1)
• Handles large amounts of data from different
sources

• Provides report and presentation flexibility

• Offers both textual and graphical orientation

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 Characteristics of a DSS (2)
• Supports drill down analysis

• Performs complex, sophisticated analysis and

comparisons using advanced software
packages

• Supports optimization, satisfying, and

heuristic approaches
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 Characteristics of a DSS (3)
• Performs different types of analyses
– “What-if” analysis
• Makes hypothetical changes to problem and observes
impact on the results
– Simulation
• Duplicates features of a real system
– Goal-seeking analysis
• Determines problem data required for a given result

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 Capabilities of a DSS (1)

• Supports
– Problem solving phases
– Different decision frequencies

Merge with How many

another widgets
company? should I order?

low high
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 Capabilities of a DSS (2)
• Highly structured problems
– Straightforward problems, requiring known
facts and relationships.
• Semi-structured or unstructured problems
– Complex problems wherein relationships
among data are not always clear, the data may
be in a variety of formats, and are often
difficult to manipulate or obtain

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 Standalone Semi structured Support managers
Integration and and at all levels
Web- based Unstructured
problems

Support individuals
Data access
and groups

Modeling
and analysis Interdependent or
Sequential decisions

DSS
Ease of Support
development Intelligence,
by end users design, choice,
implementation

Human control Support variety

the process Of decision
processes and styles

Effectiveness, Interactive ease Adaptable and

not efficiency of use flexible
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 Decision Making Levels

Strategic
Strategic-level managers
involved with long-term
Tactical decisions

Operational-level
managers involved with
Operational
daily decisions
High Low

Decision Frequency

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 Integration of TPS, MIS, and
DSS
• In many organizations they are integrated
through a common database
• Separation of DSS transactions in the
database from TPS and MIS transactions
may be important for performance reasons

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 DIFFERENCE BETWEEN MIS
AND DSS
Management Information Decision Support Systems
Systems
Decision Provide information about the Provide information and
support performance of the techniques to analyze
provided organization specific problems

Information Periodic, exception, demand, Interactive inquiries and

form and and push reports and responses
frequency responses

Information Pre-specified, fixed format Ad hoc, flexible, and

format adaptable format

Information Information produced by Information produced by

processing extraction and manipulation of analytical modeling
methodology business data of business data

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 Web-Based
Decision Support Systems
• Web-based decision support systems
– Decision support system software provides
business intelligence through web browser
clients that access databases either through
the Internet or a corporate intranet

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 Database Model base

DBMS MMS

Access to the
internet, networks, External database External
and other computer access databases
systems

Dialogue manager

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 Model Base
• Model Base
– Provides decision makers with access to a variety of models and assists
them in decision making

• Models
– Financial models
– Statistical analysis models
– Graphical models
– Project management models

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 Advantages and Disadvantages
of Modeling
– Advantages
• Less expensive than custom approaches or real systems.
• Faster to construct than real systems
• Less risky than real systems
• Provides learning experience (trial and error)
• Future projections are possible
• Can test assumptions
– Disadvantages
• Assumptions about reality may be incorrect
• Accuracy of predications often unreliable
• Requires abstract thinking

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 TYPES of DSS

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 File Drawer Systems
• They are the simplest type of DSS
• Can provide access to data items
• Data is used to make a decision
• ATM Machine
• Use the balance to make transfer of funds
decisions

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 Data Analysis Systems
• Provide access to data
• Allows data manipulation capabilities
• Airline Reservation system
• No more seats available
• Provide alternative flights you can use
• Use the info to make flight plans

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 Analysis Information Systems
• Information from several files are combined
• Some of these files may be external
• We have a true “data base”
• The information from one file, table, can be
combined with information from other files
to answer a specific query.

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 Accounting Models
• Use internal accounting data
• Provide accounting modeling capabilities
• Can not handle uncertainty
• Use Bill of Material
– Calculate production cost
– Make pricing decisions

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 Representational Model
• Can incorporate uncertainty
• Uses models to solve decision problem using
forecasts
• Can be used to augment the capabilities of
Accounting models
• Use the demand data to forecast next years
demand
• Use the results to make inventory decisions.

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 Optimization Systems
• Used to estimate the effects of different
decision alternative
• Based on optimization models
• Can incorporate uncertainty
• Assign sales force to territory
• Provide the best assignment schedule

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 Suggestion Systems
• A descriptive model used to suggest to the
decision maker the best action
• A prescriptive model used to suggest to the
decision maker the best action
• May incorporate an Expert System
• Use the system to recommend a decision
• Ex: Applicant applies for personal loan

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 DSS Categories
• Support-based categories (Alter 1980)
– Data-based DSS
– Model-based DSS
• Nature of the decision situation (Donovan &
Madnick 1977)
– Institutional
– Ad hoc
• User-based categories (Keen 1980)
– Individual
– Multi-individual
– Group

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 DSS Categories
 Support based DSS
 Data-based DSS
 Model-based DSS

Structured

Model-based
Semi-structure DSS
Data-based
DSS
Unstructured

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 DSS Categories
 Based on the nature of the decision situation
 Institutional
 Culture of the organization
 Regularly used
 Used by more than one persons
 Ad hoc
 One of kind
 One-time use
 Used by single individual

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 DSS Categories
 Based on number of users
 Individual
 Multi-individual
 Group

Benefits Individual Multi- Group

individual
Improving personal efficiency H H L
Expediting problem solving L M H
Facilitating communication L L H
Promoting learning M H H
Increasing control L H M
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 Need of Computerized Decision
Support Systems
• Speedy communications
• Improved communication and collaboration
• Increased productivity of group members
• Improved data management
• Managing giant data warehouses
• Quality support
• Agility support
• Overcoming cognitive limits in processing and storing
information.
• Using the Web
• Anywhere anytime support
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 An Early Framework for
Computerized Decision Support

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 Herber A. Simon’s Model

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 Herber A. Simon’s Model
External Internal

Intelligence AI, EIS

Problem Identification

DSS DbDSS,
ES Qualitative Quantitative
Design MbDSS
Analysis Analysis

GDSS

Decision ES
Choice

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 Automated Decision Making Framework

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 Usage Modes
• Subscription Mode
• Terminal Mode
• Clerk Mode
• Intermediary Mode

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 Subscription Model
• Decision maker receives outputs from the
DSS on regular basis

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 Terminal Mode
• Direct use of the DSS by the decision maker
• Access is through individual terminals
• May be user specific requirements

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 Clerk Mode
• Decision maker fills out a form requesting
output from DSS
• A clerk accesses the DSS
• Sends the output to the decision maker

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 Intermediary Mode
• Decision maker uses the DSS with the help
of a professional, knowledgeable assistant
• The assistant can be either a:
– Staff Assistant
– Technical Support Staff
– Business Analyst

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Components and Structure of DSS

112
 Components and Structure of DSS
• Data Management
– Includes the database(s) containing relevant data for the
decision situation
• User Interface
– Enables the users to communicate with and command
the DSS
• Model Management
– Includes software with financial, statistical,
management science, or other quantitative models
• Knowledge Management
– Provides knowledge for solution of the problem;
supports any of the other subsystems or act as an
independent component
113
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 Step 1
• The conceptual need for a project arise mainly as a result
of an basement of future requirements.
• It may be made by a team of experts.
• Typically a conceptual study will identify the technical
solution required, the economic merits, and acceptability
of project in socio political terms.
• It may require discussion with financial institutions
wither or not they will provide necessary funds.

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 Step 2
• Assuming the decision has been made to develop the project further
then a detailed assessment will have to be made of all technical,
economic and socio-political factors.
• The details may be quantitative and based on subjective knowledge.
• A major decision making is about novelty of project.
– A project may technically be novel ( making a new airplane ).
– The project may employ an established technology in novel environment (
using electrical train in third world country).
• In this step the degree of uncertainty associated with each factor will
begin to emerge.
• An understanding of uncertainty associated with any proposal is
essential for a feasible decision making.

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 Step 3
• If the outcome of step 2 is to proceed the project, then a tender
specification has to be prepared.
• It should define, exactly what work the tender is required to do. Ideally
it has to define every thing that has to be done.
• The magnitude of uncertainty associated with this stage is a reason for
possible variations in cost and duration of projects.
• Before a tender specification is issued it is prudent to confirm that the
project is acceptable to regulatory authorities and that the adequate
finance is available.
• The financer need to be convinced that the project is viable, that the
proposer is sound and has the experience and capability to derive the
project to a successful conclusion.

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 Step 4 ,5
• Step 4
– The first action is to decide if one of the tender should be
accepted.
– The tenderer should have the appropriate experience, capability
and adequate financial resources.
• Step 5
– Assuming all steps completed satisfactorily, a decision has to be
taken to start the project.
– Even if the project starts, it might have to be stopped if the
environment it operates is changed.

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 Business Intelligence (BI)
• BI is an umbrella term that combines architectures, tools,
databases, analytical tools, applications, and methodologies that
help to change data into information, information into knowledge
and knowledge into plans that guide organization
• Like a DSS, a content-free expression, so it means different things
to different people.
• Major objectives:
– To enable interactive access to data
– To enable manipulation of data
– To give business managers and analysts the ability to conduct appropriate
analysis.
– Decision makers get valuable insights that enable them to make more
informed and better decisions
• The process of BI is based on the transformation of data to
information, then to decisions and finally to actions.
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 Business Intelligence (BI)
(Contd.)
• It provide to access data for professionals and help them
make better business decisions.
• The ability of depth analysis and data mining of detailed
business data to provide real and significant information to
users.

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 Evolution of BI
• The term BI was coined by Gartner Group in mid-1990s
• It has roots in the MIS reporting systems of the 1970s.
• In early 1980s, Executive Information System (EIS)
emerged.
• The original concept of EIS was transformed into BI.
• By 2005, BI systems started to include Artificial
Intelligence (AI) capabilities as well as powerful
analytical capabilities.
• Sometimes, linked with the buzzword, Business
Performance Management (BPM)

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 Evolution of BI

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 Architecture of BI

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 Why BI?

What happened? Past

What is happening?
Why did it happen? Present
What will happen?
What do I want to happen? Future

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 Why do we need BI?
• BI implementation, businesses can make decisions and feel
comfortable that they are provided with the proper tools and
data needed to believe in their decisions.
• Without correct BI solution even well planned and executed
data warehouse architectures can fail.
• BI is DSS and database that can provide professional with the
information they need to make the most effective decisions
for their organization.
• It also provides data about the organizations details, such as
customers , product, and services.
• When one action rapidly it take appropriate action or make
the right decision business success is realized.
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 Business Intelligence
Applications

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 Benefits
• Improve Operational efficiency
• Eliminate report backlog and delays
• Find root causes and take action
• Negotiate better contracts with suppliers and customers
• Identify wasted resources and reduce inventory costs
• Sell information to customers, partners, and suppliers
• Improve strategies with better marketing analysis
• Give users the means to make better decisions
• Single point of access to information
• Timely answers to Business questions
• Faster, more accurate reporting
• Improved customer service
• Increased revenue
• Many of the benefits of BI are intangible.
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 Limitations

• Very high software cost.

• Expensive and time consuming training.
• A wide variety of technology experts.
• Extensive system upgrade and maintenance.
• Movement of data between disparate data
source.
• Queries done out of BI systems can be
cumbersome and time-consuming to run for end
users

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 DSS and BI
• Architectures are very similar because BI evolved from DSS. However, BI
implies the use of a Data Warehouse, whereas DSS may or may not.
Hence, BI is more appropriate for large organizations but DSS can be
appropriate to any type of organization.
• Most DSS are constructed to directly support specific decision making . BI
systems provide accurate and timely information and they support
decision support indirectly.
• BI has an executive and strategy orientation whereas DSS is oriented
towards analysts.
• Most BI systems are constructed with commercially available tools and
components that are fitted to the needs of organizations whereas DSS
may be in constructing solutions to very unstructured problems.
• Methodologies and tools of DSS were developed mostly in the academic
world whereas of BI were developed mostly by software companies.
• Many of the tools that BI uses are also considered DSS tools. e.g. data
mining and predictive analysis.
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 DSS Analysis
 Sensitivity Analysis
◦ The study of the effect that changes in one or more parts of a
model have on other parts of the model

 What-if Analysis
◦ Checks the impact of a change in the assumptions or other input
data on the proposed solution

 Goal-seeking Analysis
◦ Find the value of the inputs necessary to achieve a desired level
of output
131
 Executive Decision
Support System (EDSS)

BBA-307 MIS 22/05/18 132

 EDSS

 Help senior managers with unstructured problems that

occur at the strategic level of the firm.
 Combining the internal and external sources.

 Helps to monitor :
 organizational performance,
 Track activities of competitors,
 Spot problems,
 Identify opportunities
 Forecast trends.

133
 EDSS

 It is also known as
• Executive Support Systems(ESS)
• Executive Information Systems(EIS)
o Benefits
o Increases organizational control.
o Reveals new approaches to thinking about the problem space.
o Encourages exploration and discovery on the part of the decision maker.
o Creates a competitive advantage over competition

134
 EDSS Capabilities
• Drill down-ability to go to details at several levels
• Critical success factors-most critical for success of business
• Key performance indicator
• Status access-latest data available on Knowledge Process (KP)
• Trend analysis-short , medium and long term trend on KP
• Adhoc analysis-analysis made anytime upon demand
• Exception reporting-report that highlight deviations larger than certain threshold

135
EDSS

136
INTERRELATIONSHIPS AMONG SYSTEMS

137
 Summary
• Decision-making phase - includes intelligence, design, and
choice

• Problem solving - also includes implementation and

monitoring

• Decision approaches - optimization, satisficing, and heuristic

• Management information system - an integrated collection of

people, procedures, databases, and devices that provide
managers and decision makers with information to help
achieve organizational goals

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 Summary

• Decision support system (DSS) - an organized collection of

people, procedures, software, databases, and devices working
to support managerial decision making

• Group decision support system (GDSS) - also called a

computerized collaborative work system, consists of most of
the elements in a DSS, plus software needed to provide
effective support in group decision-making settings

• Executive support systems (ESSs) - specialized decision

support systems designed to meet the needs of senior
management

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 DSS in Summary
• A MANAGEMENT LEVEL COMPUTER SYSTEM Which:
– COMBINES DATA,
– MODELS,
– USER - FRIENDLY SOFTWARE
FOR SEMISTRUCTURED & UNSTRUCTURED DECISION
MAKING.
• It utilizes data, provides an easy-to-use interface, and
allows for the decision maker's own insights.

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 A summary of commercial DSS
system
• A summary of commercial DSS system show seven types of DSS:
– File Drawer Systems, that provide access to the data items.
– Data Analysis systems, that support manipulation of data by
computerized tools for a specific task.
– Analysis Information systems, that provide access to a series of
decision oriented databases and small models.
– Accounting and financial models, that calculates the consequences of
possible actions.
– Representational model, that estimates the consequences of actions
based on simulation models.
– Optimization models, that provide guidelines for action by generating
an optimal solution
– Suggestion models, that perform the logical processing to a specific
suggested decision for a task.

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Thank You

142