Chapter 1

Skip subsections: 1.1, 1.2, 1.8, 1.10

DECISION SUPPORT
SYSTEMS AND
BUSINESS
INTELLIGENCE
I. DSS: Definitions

• System
• Information System
• Decision System
• Support System
Decisions, decisions, ...

When do you know, you have to make a decision?

How will you go about making the decision?

Why is that intuition and trial&error approaches to

managerial decisions may not be effective in today’s
business environment?

What are some of the tools that can be helpful in making a

decision?
DSS Definitions
No universally accepted definition in literature

• “DSS couples the intellectual resources of individuals with the

capabilities of the computer to improve the quality of decisions.” –
Keen

• “DSS are interactive computer-based systems that help decision

makers utilize data and models to solve unstructured problems.” –
Sprague & Carlson

• “An interactive, flexible, and adaptable computer-based

information system, especially developed for supporting the
solution of a non-structured management problem for improved
decision making. It utilizes data, provides an easy-to-use interface,
and allows for the decision maker’s own insights.” - Turban

Thus, DSS is a multi-disciplinary topic covering:

Database research, AI, human-computer interaction, management
science modeling, software engineering and telecommunications!
Benefits of DSS
– Overcoming cognitive limits in processing and
storing information
– Utilize internal and external data
– Uses robust mathematical/AI models
– Helps understand the problem better
– Speedy computations
– Leads to consistent decisions
– Useful in crisis
– Improved communication and collaboration
Business as a decision-making
entity

• What are the types of managerial control

activities?

• What are the types of decisions?

Decision Characteristics
– Managerial control activities
• Strategic planning: rare, long-term
• Management control: periodic, course corrections
• Operational control : highly repetitive, brings
revenue, short-term
– Types of decisions
• Structured: algorithmic, programmable
• Unstructured: subjective, vague problem space
• Semistructured: combination of above

For
•Structured decisions, use MIS/TPS;
•Semi-structured &Unstructured decisions, use DSS
Gorry & Scott-Morton
Framework of DSS

Which of the cells has

the most computer
systems in use today?
Why?

Any more example

decisions for cells 1-9?
 Supporting Managerial Roles

What are some of the ‘roles’ managers play in

their job?

Question:
You are a Public Relations manager for your company.
In what ways can a DSS help you?
Supporting Managerial
Roles: The challenge for DSS

Managerial roles (Mintzberg)

– Interpersonal
– Informational
– Decisional
Question:

How can a computer-

based DSS assist a
manager in each of
these roles?
Supporting Decision Styles:
Another challenge for DSS

• Decision style
The manner in which a decision maker thinks and reacts to problems. It
includes perceptions, cognitive responses, and beliefs

– Analytic vs. Intuitive

– Autocratic vs, Democratic
– Consultative
– Cooperative vs. Non-cooperative

What characteristics a DSS should have to support each of these styles?

II. Business Intelligence
• Companies collect a large amount of data from their business
operations.

• To keep track of that information, a business uses disparate

software applications , such as Excel, Access, etc.

• Using multiple software makes it difficult to retrieve information in a

timely manner and to perform analysis of the data.

• Business Intelligence (BI) represents the tools and systems that

play a key role in integrating and analyzing all corporate data.
•
• Generally illustrates intelligence in the areas of customer profiling,
market research, product profitability (by product, region, year),
etc.
BI  Custom reports
• Dashboard reports

• Production reports
Analytic Reports (slice & dice)
Sources of BI
 BI Architecture

Consists of 3 system components

– Data warehouse
– Business analytics
– Performance management (BPM)
Data warehouse
– A repository of cleaned and integrated historical /stable data for the entire business
– Extracted from independent databases (internal & external)
– Transformed (ie. cleaned and reformatted)
- A subset of a warehouse limited to a business function is called a Data Mart (eg. Sales).
DW vs. Transaction DBs
• DWs are not designed for performing transaction entries, but only for
planning and analysis

• DWs are not designed for retrieval of individual records; emphasis is

on summarized data

• DWs data pulled and integrated from disparate databases, unlike

Transaction db’s which are individual applications

• Transaction db’s are concerned with ‘now’; DW focuses on activity

over a period

• A transaction db is volatile (eg. an order may be cancelled); In a DW,

data is only added, never deleted (as it maintains a history)

• Transaction db is optimized for rapid retrieval; not DWs

Business analytics
These are tools that help analyze the data towards
finding solutions:

– Reporting and queries (eg. 3-dimensional cubes)

– Advanced analytics (LP, financial, stat, simulation
models)
– Data, text and Web mining and other sophisticated
mathematical and statistical tools (searching for
relationships)
Business performance
management (BPM)
An advanced performance measurement and analysis
approach that embraces planning and strategy

– BPM extends the monitoring, measuring, and

comparing of sales, profit, cost, profitability, and other
performance indicators

– BPM provides a top-down enforcement of corporate-

wide strategy