Chapter 11 Enhancing Management Decision Making

1. Chapter 11 Enhancing Management Decision Making

2. Decision Support System enhance management decision making by bring the organizations information resources together for analysis. Management can make better decisions with specialized decision support systems designed specifically for management roles.

3. Decision Support Systems Decision Support Systems (DSS) Combines data, analytical tools, and models to support semi structured, and unstructured decision making.

4. Decision Support Systems Management Information System (MIS) Used to gather information about organizations performance, which is used to monitor and control the organization. This can be done by extracting data from the underlying transaction processing systems.

5. Some of the information found in Management Information Systems can be found, and extracted from intranets. Provide routine information about daily operations.

6. Structured ? Problems that are repetitive, and routine. Thus there are known solutions to these problems.   Semi-structured ? Fall between structured and unstructured

7. Unstructured ? Nonroutine problems that usually have no known solutions.   MIS are used for structured decisions DSS for semi and unstructured

8. Types of DSS Systems Model Driven Stand alone system that were isolated to certain departments, isolated from organizational information systems, working from a what-if model to analyze different data.

9. Types of DSS Systems Data Driven Analyze large pools of data found in large information systems, allowing users to extract useful data that would otherwise be buried within large groups of data. Examples TPS data extracted to a data warehouse and analyzed through data mining.

10. Data mining Used to find hidden patterns and relationships in large databases and inferring rules from them to predict future behavior.

11. Data mining What can be found by data mining Associations Occurrences that are linked to a single event Consumers buy other products because of a promotion. Sequences Events are linked over time. Appliance purchase due to purchase of a new home

12. Data mining Classification Recognized patterns that describe the group to which an item belongs by examining existing items that have been classified and by inferring a set of rules. Motivation to retain customers that would most likely purchase other products instead of yours.

13. Data mining Clustering Works in a manner similar to classification when no groups have yet been defined Grouping inferring new rules for these groups   Forecasting Uses existing values to forecast what other values will be What future sales may be based on current sales.

14. DSS Components DSS Database Collection of current or historical data from a number of applications or groups. Small PC or large organizational database.

15. DSS Components DSS Software system Collection of software tools that are used for data analysis Data mining tools, mathematical, and analytical models

16. Model An abstract representation that illustrates the components or relationships of a phenomenon. Mathematical equation, description of a procedure, statistics Statistical modeling can be used to analyze data, and give numerical outcomes. Associating product sales to age groups

17. Sensitivity Analysis Model Ask “what-if” question repeatedly to determine the impact of change in one or more factors on outcomes. What if? Raise the price of a product Spend more on Advertising Increase production for new market areas

18. Supply Chain Management Who, What and Where Purchasing Transporting Materials Manufacturing and Distribution Goal is to increase efficiency while lowering overall costs. More output with less input

19. DSS Applications WEB-BASED DSS: Users can use the internet, and application software to access databases, and information .   •CUSTOMER DSS (CDSS): Helps organizations tailor products to consumer needs. Personalized product offers, consumer profiling, customer history.

20. DSS Applications •GEOGRAPHIC INFORMATION SYSTEM (GIS): Software to analyze and display data as it pertains to geographical areas, tying in to different locations, points, lines, and displaying data on digitized maps.

21. DSS Applications Distribution of people in a given area Implementation of emergency planning Search for new business locations Identify criminal activity in a given area.

22. Group Decision Support systems Facilitates solutions to unstructured problems by a SET of decision makers working together as a group.   Groupware and web based technologies have been instrumental in the development of GDSS

23. Meeting Elements Managers spend 35 to 70 percent of their time in meetings. Meeting Elements Improved preplanning To make meetings more effective and efficient.

24. Meeting Elements Increased participation So that all attendees will be able to contribute fully even if the number of attendees is large. ( Free riding – attending the meeting but not contributing) Open Collaborative Meeting Atmosphere In which attendees from various organizational levels feel able to contribute freely, without the pressure of being judged by their management, and manager should be able to participate without dominating the meeting.

25. Meeting Elements Criticism-free idea generation Allowing attendees to contribute without undue fear of felling personally criticized.   Evaluation Objectivity Creating an atmosphere in which an idea will be evaluated on its merits rather than on the basis of the source of the idea.

26. Meeting Elements Idea Organization and Evaluation Which require keeping the focus on the meeting objectives , finding efficient ways to organize the man y idea that can be generated in a brainstorming session and evaluating those ideas not only on there merits, but also within appropriate time constraints.   Setting Priorities and Making Decisions Which require finding ways to encompass the thinking of all the attendees in making these judgments.

27. Meeting Elements Documentation of Meetings So that attendees will have as complete an organized a record of the meeting as may be needed to continue the work of the project.   Access to External Information Which will allow significant, factual disagreements to be settled in a timely fashion, thus enabling the meeting to continue productively

28. Meeting Elements Preservation of “Organizational Memory” So that those who do not attend the meeting can also work on the project. Organizational memory is the stored information from an organizations history that can be used for decision making and other purposes .

29. How GDSS Help Groups Three Basic Elements Hardware The conference facility The room The tables, chairs   The room must be able to accommodate the needs of the group.  Should have audio visual equipment, computers, and network connectivity

30. How GDSS Help Groups Software Tools Collaborative software tools that help gather, and organize information, rank, and set priorities, and help make decisions.   People Trained meeting facilitator, as well as professionals that support the hardware and software needed.

31. GDSS Software Tools GDSS tools were originally developed for use where all group members were in the same room. These same tools can be used to connect members from different locations. Electronic Questionnaires Aid the organizers in premeeting planning by identifying issues of concern and by helping to ensure that key planning information is not overlooked

32. GDSS Software Tools Electronic Brainstorming Tools Allow individuals simultaneously and anonymously to contribute ideas on the topics of the meeting.   Idea Organizers Facilitate the organized integration and synthesis of ideas generated during brainstorming.

33. GDSS Software Tools Questionnaire Tools Support the facilitators and group leaders as they gather information before and during the process of setting priorities. Tools for voting or Setting Priorities Make available a range of methods from simple voting, to ranking in order, to a range of weighted techniques for setting priorities or voting

34. GDSS Software Tools Stakeholder Identification and Analysis Tools Use structured approaches to evaluate the impact of an emerging proposal on the organization and to identify stakeholders and evaluate the potential impact of those stakeholders on the proposed project. Policy Formation Tools Provide structured support for developing agreement on the wording of policy statements.

35. GDSS Software Tools Group Dictionaries Document group agreement on definitions of words and terms central to the project.   Electronic Meeting System Collaborative GDSS that uses information technology to make group meetings more productive by facilitating communication as well as decision making.

36. GDSS Software Tools Meetings can be held in same, or different place, and time.   Attendees send files to the group, which is stored on a server   Members can input their data, without anyone else have access to their screen.

37. Enhancing Group Decisions Improved Preplanning Electronic Questionnaires Supplemented by word processors Outlining Software Availability of information at the meeting

38. Enhancing Group Decisions Increased Participation Attendee population is larger with GDSS Attendees are able to contribute simultaneously More productive, more efficient  Open Collaborative Meeting Atmosphere Anonymity of input is guaranteed Individual can give input without fear of judgment Pressures of social cues eliminated

39. Enhancing Group Decisions Criticism-free idea generation Anonymity ensures contributors that they will not be criticized, personally, or based on their identity. Idea Organization and Evaluation GDSS allow individuals to organize information, and submit results to the group The group then collaborates to make changes to produce a finished product.

40. Enhancing Group Decisions Setting Priorities and Making Decisions Anonymity helps lower level members have their idea taken into consideration along with higher level members. Documentation of Meetings Attendees use meeting data to continue the work they started.

41. Enhancing Group Decisions Access to External Information A great deal of meeting time can be devoted to factual disagreements, GDSS may help improve this problem. Preservation of “organizational memory” Non attendees can use needed meeting information after the meeting Other locations can access information and use it as a guide to their meeting.

42. Executive Support Systems (ESS) Help managers, on the strategic level, with unstructured problems that include information that are internal and external to the organization by using graphics, and communications to arrive at a decision. Help identify strengths, weaknesses, and opportunities.

43. Role of ESS Managers have the ability to use analytical tools to view, and analyze data in a graphical way.   ESS systems have the ability to “drill down” information Drill down ? moves from one piece of the summary data, and moves down to lower levels of detail.

44. Role of ESS Managers use data from in ESS from other systems in the organization   Linked to news, stock reports, financial market databases, industry trends.

45. Developing ESS Ease of use Facility for environmental scanning External and internal sources of information to be used for environmental scanning

46. Developing ESS Developers must build a prototype that will work at the time it is tested by the user Executives must be able to learn the new system at a rapid pace.

47. Developing ESS If the prototype does not perform the way the executive wants, it will be rejected.   The system must be able to have access to scan the internal and external environment to spot weaknesses and opportunities.

48. ESS Benefits Put the tools in the hands of the executive to help them make more rapid decisions. They are just a tool, they don’t make the decisions for them. Ability to highlight trends Use of graphics to view more data in less time Executives can monitor specific operations to identify problems, and correct them quickly Allows them to push decision making down to lower levels in the organization.

49. ESS for business intelligence Identifies changing market conditions Formulates responses Tracks implementation efforts Learns from feedback

50. ESS for business intelligence Monitoring corporate performance: balanced scorecard systems Model for analyzing firm performance Supplements traditional financial measures with measurements from additional business perspectives