12.

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2007 by Prentice Hall
12 Chapter
Enhancing
Decision Making
12.2
2007 by Prentice Hall
LEARNING OBJECTIVES
Management Information Systems
Chapter 12 Enhancing Decision Making
Describe different types of decisions and the
decision-making process.
Assess how information systems support the
activities of managers and management decision
making.
Demonstrate how decision-support systems (DSS)
differ from MIS and how they provide value to the
business.
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LEARNING OBJECTIVES (contd)
Demonstrate how executive support systems (ESS)
help senior managers make better decisions.
Evaluate the role of information systems in helping
people working in a group make decisions more
efficiently.
Management Information Systems
Chapter 12 Enhancing Decision Making
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2007 by Prentice Hall
Procter & Gamble Restructures Its Supply Chain
Problem: Cost pressures, complex supply chain.
Solutions: Deploy modeling and optimization
software to maximize return on investment and
predict the most successful supply chain.
Modeling software fueled with data from Oracle data
warehouse improved efficiency and reduced costs.
Demonstrates ITs role in restructuring a supply
chain.
Illustrates digital technology improving decision
making through information systems.






Management Information Systems
Chapter 12 Enhancing Decision Making
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2007 by Prentice Hall
Business Decision Making and the Decision-Making Process
Senior management

Middle management and project teams

Operational management and project teams

Individual employees
Decision-Making Levels:
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Management Information Systems
Chapter 12 Enhancing Decision Making
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2007 by Prentice Hall
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Information Requirements of Key Decision-Making Groups in a
Firm
Figure 12-1
Management Information Systems
Chapter 12 Enhancing Decision Making
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2007 by Prentice Hall
Unstructured decisions:
Types of Decisions
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Management Information Systems
Chapter 12 Enhancing Decision Making
Novel, non-routine decisions requiring judgment and
insights

Examples: Approve capital budget; decide corporate
objectives
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Structured decisions:
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Management Information Systems
Chapter 12 Enhancing Decision Making
Routine decisions with definite procedures

Examples: Restock inventory; determine special offers
to customers
Semistructured decisions:
Only part of decision has clear-cut answers provided
by accepted procedures

Examples: Allocate resources to managers; develop a
marketing plan
Types of Decisions (Continued)
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Management Information Systems (MIS)

Decision-Support Systems (DSS)

Executive Support Systems (ESS)

Group Decision-Support Systems (GDSS)
Systems for Decision Support
There are four kinds of systems that support the different
levels and types of decisions:
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
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2007 by Prentice Hall
Stages in Decision Making
Figure 12-2
Management Information Systems
Chapter 12 Enhancing Decision Making
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
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2007 by Prentice Hall
Information quality: Accuracy, integrity, consistency,
completeness, validity, timeliness, accessibility
Decision Making in the Real World
In the real world, investments in decision-support systems
do not always work because of
Management Information Systems
Chapter 12 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
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Management filters: Biases and bad decisions of
managers

Organizational inertia: Strong forces within
organization that resist change
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Decision Making in the Real World (Continued)
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Primarily address structured problems

Provides typically fixed, scheduled reports based on
routine flows of data and assists in the general control
of the business
SYSTEMS FOR DECISION SUPPORT
The Difference between MIS and DSS
Management Information Systems
Chapter 12Enhancing Decision Making
Management Information Systems:
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2007 by Prentice Hall
Support semistructured and unstructured problems

Greater emphasis on models, assumptions, ad-hoc
queries, display graphics

Emphasizes change, flexibility, and a rapid response
SYSTEMS FOR DECISION SUPPORT
Management Information Systems
Chapter 12 Enhancing Decision Making for the Digital Firm
Decision Support Systems:
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2007 by Prentice Hall
Model-driven DSS:
SYSTEMS FOR DECISION SUPPORT
Types of Decision-Support Systems
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
Primarily stand-alone systems

Use a strong theory or model to perform what-if and
similar analyses
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2007 by Prentice Hall
Data-driven DSS:
SYSTEMS FOR DECISION SUPPORT
Management Information Systems
Chapter 12 Enhancing Decision Making
Integrated with large pools of data in major enterprise
systems and Web sites

Support decision making by enabling user to extract
useful information

Data mining: Can obtain types of information such as
associations, sequences, classifications, clusters, and
forecasts
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DSS database: A collection of current or historical data
from a number of applications or groups

DSS software system: Contains the software tools for
data analysis, with models, data mining, and other
analytical tools

DSS user interface: Graphical, flexible interaction
between users of the system and the DSS software
tools
SYSTEMS FOR DECISION SUPPORT
Components of DSS
Management Information Systems
Chapter 12 Enhancing Decision Making
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2007 by Prentice Hall
SYSTEMS FOR DECISION SUPPORT
Management Information Systems
Chapter 12 Enhancing Decision Making
Statistical models

Optimization models

Forecasting models

Sensitivity analysis (what-if models)
Model: An abstract representation that illustrates the
components or relationships of a phenomenon
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Overview of a Decision-Support System
Management Information Systems
Chapter 12Enhancing Decision Making
Figure 12-3
SYSTEMS FOR DECISION SUPPORT
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Data Visualization: Presentation of data in graphical
forms, to help users see patterns and relationships

Geographic Information Systems (GIS): Special category
of DSS that display geographically referenced data in
digitized maps
SYSTEMS FOR DECISION SUPPORT
Management Information Systems
Chapter 12 Enhancing Decision Making
Business Value of DSS
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2007 by Prentice Hall
DSS based on the Web and the Internet can support
decision making by providing online access to various
databases and information pools along with software for
data analysis

Some of these DSS are targeted toward management,
but many have been developed to attract customers.
SYSTEMS FOR DECISION SUPPORT
Web-Based Customer Decision-Support Systems
Management Information Systems
Chapter 12 Enhancing Decision Making
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Customer decision making has become increasingly
information intensive, with Internet search engines,
intelligent agents, online catalogs, Web directories, e-
mail, and other tools used to help make purchasing
decisions.

Customer decision-support systems (CDSS) support
the decision-making process of an existing or potential
customer.
SYSTEMS FOR DECISION SUPPORT
Management Information Systems
Chapter 12 Enhancing Decision Making
Web-based Customer Decision-Support Systems
(Continued)
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Group Decision-Support System (GDSS) is an interactive
computer-based system used to facilitate the solution of
unstructured problems by a set of decision makers
working together as a group.
GROUP DECISION-SUPPORT SYSTEMS
What Is a GDSS?
Management Information Systems
Chapter 12 Enhancing Decision Making
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Hardware (conference facility, audiovisual
equipment, etc.)

Software tools (Electronic questionnaires,
brainstorming tools, voting tools, etc.)

People (Participants, trained facilitator, support staff)
Three Main Components of GDSS:
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
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In a GDSS electronic meeting, each attendee has a
workstation.

The workstations are networked and are connected to the
facilitators console, which serves as the facilitators
workstation and control panel, and to the meetings file
server.

All data that the attendees forward from their
workstations to the group are collected and saved on the
file server.
Overview of a GDSS Meeting
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
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2007 by Prentice Hall
The facilitator is able to project computer images onto the
projection screen at the front of the room.

Many electronic meeting rooms have seating
arrangements in semicircles and are tiered in legislative
style to accommodate a large number of attendees.

The facilitator controls the use of tools during the
meeting.
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Overview of a GDSS Meeting (Continued)
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Group System Tools
Figure 12-9
The sequence of activities and
collaborative support tools used in an
electronic meeting system facilitate
communication among attendees and
generate a full record of the meeting.
Source: From Nunamaker et al.,
Electronic Meeting Systems to Support
Group Work, Communications of the
ACM, July 1991. Reprinted by
permission.
Management Information Systems
Chapter 12 Enhancing Decision Making
Group Decision-Support Systems (GDSS)
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Traditional decision-making meetings support an optimal
size of three to five attendees. GDSS allows a greater
number of attendees.

Enable collaborative atmosphere by guaranteeing
contributors anonymity.

Enable nonattendees to locate organized information
after the meeting.
Business Value of GDSS
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
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Can increase the number of ideas generated and the
quality of decisions while producing the desired results in
fewer meetings

Can lead to more participative and democratic decision
making
Management Information Systems
Chapter 12 Enhancing Decision Making
GROUP DECISION-SUPPORT SYSTEMS
Business Value of GDSS (Continued)
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2007 by Prentice Hall
ESS can bring together data from all parts of the firm
and enable managers to select, access, and tailor
them as needed.

It tries to avoid the problem of data overload so
common in paper reports.
Management Information Systems
Chapter 12 Enhancing Decision Making
The Role of Executive Support Systems in the Firm
EXECUTIVE SUPPORT IN THE ENTERPRISE
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The ability to drill down is useful not only to senior
executives but also to employees at lower levels of
the firm who need to analyze data.

Can integrate comprehensive firmwide information
and external data in timely manner

Inclusion of modeling and analysis tools usable with a
minimum of training
Management Information Systems
Chapter 12Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
The Role of Executive Support Systems in the Firm
(Continued)
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2007 by Prentice Hall
Ability to analyze, compare, and highlight trends

Graphical interface enables users to review data
more quickly and with more insight, speeding
decision making.

Timeliness and availability of data enables more
timely decision making, helping businesses move
toward a sense-and-respond strategy.

Management Information Systems
Chapter 12 Enhancing Decision Making
Business Value of Executive Support Systems
EXECUTIVE SUPPORT IN THE ENTERPRISE
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2007 by Prentice Hall
Increases upper management span of control, better
monitoring

ESS based on enterprise-wide data can be used for
decentralization of decision making or increase
management centralization.
Management Information Systems
Chapter 12Enhancing Decision Making
EXECUTIVE SUPPORT IN THE ENTERPRISE
Business Value of Executive Support Systems
(Continued)
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2007 by Prentice Hall
Decision-support systems provide opportunities for
increasing precision, accuracy, and rapidity of
decisions and thereby contributing directly to
profitability
Management Information Systems
Chapter 12 Enhancing Decision Making
Management Opportunities:
MANAGEMENT OPPORTUNITIES, CHALLENGES AND DECISIONS