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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 nonstructured 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 computerbased 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 corporatewide strategy