Decision Support and Business Intelligence Systems

1. Decision Support and Business Intelligence Systems Chapter 1 Decision Support and Business Intelligence

2. Introduction • Organization works in a dynamic environment • change continuously & rapidly • more & more complex • Forces in the external environment includes: • 1. Economic 2. Technology 3. culture 4. Social 5. customers 6. competitors 7. Government rules & regulations 8. suppliers • These forces put the organization (public & private) under pressures to respond quickly and rapidly to these changes

3. Cont. • The response….. • through frequent & quick (strategies, tactical & operational decisions)….. • complex decisions …. • Requires Data, information & Knowledge in order to make a decision • The decisions must be done quickly & frequently in real time • Some times…complex decisions require computerized support

4. Changing business environment & computerized decision support • Globalization global companies • environment (competitive market) • move to computerized support • The reasons … Business Pressures – Responses – Support model

5. The Business Pressures-Responses-Support Model • Pressures results from today’s business climate • Responses actions taken by companies to (meet/counter/face) the pressures OR take advantages of opportunities available in the externalenvironment • Computerized Support facilitate the monitoring of the environment + enhances the response actions taken by the organization

7. The Business environment • Intensity of most of the environmental factors increases with time … • Leading to more pressures, more competition • Organizations & departments face decreased budgets … increase performance & profit

8. Organizational Responses • Managers may take actions : • 1. Employ strategic planning • 2.Use new & innovation business models • 3. Alliances • 4. Improve information systems • 5. Encourage innovation & creativity • 6. Move to electronic commerce • 7. Improve customer services & relationships • 8. Move to make-to-order production • 9. Use new IT to improve communication, data access • 10. Respond quickly to competitors’ actions • 11.Improve decision making

9. Decisions & Support • Closing the strategy GAP: One of the major objectives of computerized decision support (CDS) is to facilitate closing the gap between the current performance & the desired performance as expressed in mission, objectives and goals in addition to strategy to achieve them.

10. Managerial Decision Making • Management is a process by which organizational goals are achieved by using resources. • The degree of success of the organization and the manager is often measured by the ratio of output to input… PRODUCTIVITY – ORGNIZATIONAL & MANAGERIAL PERFORMANCE.

11. The level of productivity depends on the performance of managerial functions, such as planning, organizing, directing and controlling….in order to perform their functions, managers are engaged in a continuous process of making decisions. • Making a decision means selecting the best alternative from 2 or more solutions.

12. Managerial Roles • Managers perform 10 major roles that can be classified into 3 major categories: • Interpersonal, Informational & Decisional

13. Interpersonal Role • Figurehead • Leader • Liaison

14. Informational Role • Monitor • Disseminator • Spokesperson

15. Decisional Role • Entrepreneur • Disturbance handler • Resource allocator • Negotiator

16. In order to perform these roles, managers need information… Delivered by networks…Web technology Use computers directly to support & improve decision making

17. The Decision-Making Process • Management was considered an art because a variety of individual styles could be used in approaching and successfully solving the managerial problems. • Styles based on … Creativity, Judgment, Intuition and experience rather than on quantitative methods.

18. Steps • 1. Define the problem • 2. Construct a model that describe the real-world problem • 3. Identify possible solutions to the problem & Evaluate the solution • 4. Compare, Choose and recommend a potential solution to the problem

19. - The sufficient alternative solutions must be consider. • - The consequences of using these alternatives can be reasonably predicted. • - The comparisons are done properly.

20. Computerized support for decision making • 1. Payroll • 2. Bookkeeping • 3. Design • 4. Application of artificial intelligence • 5. Evaluation

21. Computerized support for decision making • Computer applications have moved from transaction processing & monitoring activities to: Problem analysis & Solution applications

22. Why We Use Computerized Decision Support Systems • 1. Speedy computations. • 2. Improved communication & collaboration. • 3. Increased productivity of group members.

23. 4. Improved data management • 5. Managing giant data warehouses • 6. Quality support • 7. Agility support

24. 8. Overcoming cognitive limits in processing and storing information. • 9. Using the web • 10. Anywhere, anytime support.

25. An early framework for computerized decision support • The Gorry & Scott-Morton Classical Framework • Framework: 3-by-3 matrix, includes two dimensions • A. the degree of structured problems • B. type of control

26. Type of Decision (Simon 1977) • Structured Decision (Programmed): Routine & Repetitive problems for which standard solution methods exist. • Semi-structured : fall between structured & unstructured problems. • Unstructured (non-programmed): Fuzzy, complex problem for which there are no clear solution.

27. Decision making process ACCORDING to Simon • 1. Intelligence : this phase involves searching for conditions that call for decisions. • 2. Design: This phase involves inventing, developing and analyzing possible alternative solution

28. 3. Choice : this phase involves selecting a course of action (solution) from among the alternatives • 4. Implementation: this phase involves adapting the selected course of action to the decision situation

29. The Relationships among the four phases

30. Intelligence : Environmental scanning, Benchmarks • Design: Creativity, Finding alternatives, Analyzing solutions • Choice: Compare and select the best solution

31. Implementation: Put solution into action

32. Types of Control • Strategic Planning; which involves defining long-rang goals & policies for resource allocation. • Management Control; the acquisition and efficient use of resources. • Operational Control; the efficient and effective execution of specific tasks.

34. Computer support for structured decisions • Computers have supported structured & some semi-structured decisions, especially those that involve operational & managerial control. • Structured problems: Abstract, analyze and classify problems into specific categories.

35. Management Science (MS) • The management science approach (operations research (OR) approach) • According to this approach, managers should follow 5 step in solving problems 1. Define the problem 2. Classify the problem into a standard category . 3. Construct a model that describes the real-world problem

36. 4. Identify possible solutions to the modeled problem & evaluate the solutions. • 5. Compare, choose and recommend a potential solution to the problem

37. MS is based on mathematical modeling. • Modeling involves transforming a real-world problem into model. • Computerized methodologies can find solutions to the standard category models quickly & efficiently

38. Automated Decision making • A New approach to supporting decision making (Automated Decision Systems (ADS)). • ADS is a Rule-based system, provides a solution, usually in one functional area (finance) to a specific repetitive managerial problem, usually in one industry.

39. Example : how to price products / service. Page 14 “case study”

40. Computer Support for Unstructured Decisions • Unstructured problems can be supported by standard computerized quantitative methods by develop customized solutions. • Such solutions may benefit from: 1. Data & information generated from corporate & external data sources.

41. 2. Intuition and Judgment 3. Computerized communication and collaboration technologies 4. Knowledge management

42. Computer Support for Semi-structured Problems • Solving semi-structured problems may involve a combination of standard solution procedures & human judgment. • DSS can improve the quality of the information by providing a range of alternative solutions with their potential impacts.

43. The concept of DSS • An interactive computer-based systems, which help decision makers utilize data & models to solve unstructured problems. • The term DSS can be used as an umbrella term to describe any computerized system that support decision making in an organization.

44. In DSS, the problem is unstructured, but the initial analysis will based on the decision maker’s structured definition of the situation, using MS approach. • DSS use data available from corporate data sources. • DSS provide a quick what-if analysis. • The DSS is flexible & responsive enough to allow managerial intuition & judgment to be incorporated into the analysis

45. DSS used: • 1. To build customized applications for unstructured or semi-structured problems • 2. According to DSS application itself

46. The Architecture of DSS • 1. Data: • - Every problem that has to be solved & every opportunity or strategy to be analyzed requires some data. • - Data are the first component of the DSS architecture. • - These data can come from many sources such as the Web

47. 2. Models • - Data related to a specific situation are manipulated by using models. • - These models can be: Standard ( Excel function), or Customized.

48. 3. Knowledge (intelligence): • 4. Users:

49. Types of DSS • A. Model-Oriented DSS; using quantitative models to generate a recommended solution to a problem. • B. Data-Oriented DSS; which support ad hoc reporting and queries.

50. Evolution of DSS into Business Intelligence • Managers let their staff do some supportive analysis by using DSS tools. • OLAP • Data warehousing • Data mining • Intelligent systems • delivered via Web technology, added promised capabilities & easy access to tools, models and data