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Enhancing Decision Making

Enhancing Decision Making. Information driven management for better performance thru better decisions. What to sell? What price to charge? Starbucks Software to analyze How demand responds to changes in price Duane Reade drugstore chain

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Enhancing Decision Making

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  1. Enhancing Decision Making Information driven management for better performance thru better decisions

  2. What to sell? What price to charge? • Starbucks • Software to analyze • How demand responds to changes in price • Duane Reade drugstore chain • Able to raise diapers for new born infants without losing sales • Business analytics software

  3. HauteLook • Fashion Web site • Southerners • Buy more white, green, and pink • Women are thinner on both coasts • 1-800-flowers • SAS Inc. • Tailor “specials” to target real customer needs

  4. Software to improve profitability • What price to charge • What items to sell

  5. Decision Making & Information Systems • Business Intelligence in the Enterprise • Business Intelligence Constituencies

  6. Decision Making & Info Systems • Business value of improved decision making

  7. Types of Decisions • Unstructured decisions • Judgment, evaluation, insight • Structured decisions • Repetitive and routine • Definite procedure • Semistructured

  8. The Decision-Making Process

  9. Managers & Decision Making in the real world • Managerial functions & roles • Classical model • Planning • Organizing • Coordinating • Deciding • controlling

  10. Behavioral model • Managers perform a great deal of work • Managerial activities are fragmented • Managers prefer current, specific, and ad hoc info • Managers prefer oral forms of communication • Flexible, fast response • Managers maintain diverse and complex web of contacts

  11. Mintzberg’s 10 managerial roles • Interpersonal roles • Figurehead (telepresence systems) • Leader (telepresence, social networks) • Liaison (smartphones, social networks) • Informational roles • Nerve center (MIS, ESS) • Disseminator (email, social networks) • Spokesperson (Webinars, telepresence) • Decisional roles • Entrepreneur (None exist) • Disturbance handler (None exist) • Resource allocator (Business intelligence, DSS) • Negotiator (None exist)

  12. Real world decision making • Factors affect information technology to produce positive results • Information quality • High quality decisions requires high quality info • Accuracy • Integrity • Consistency • Completeness • Validity • Timeliness • Accessibility

  13. Management filters • Human being absorb info through a series of filters • Selective attention • Focus on certain kinds of problems and solutions • Variety of biases • Lehman Brothers • Intentionally underestimate the risk of mortgage securities • Overly optimistic assumption • Overly simplistic data

  14. Organizational Inertia and Politics • Organizations are bureaucracies • with limited capabilities and competencies for acting decisively • Balance various interest groups

  15. High-velocity automated decision making • Organization decision are not made by human. • Google’s search • The New York Stock Exchange • Decisions are highly structured • Decision making process are captured by the software algorithms • May 6, 2010, Dow Jones lost 600 points in minutes

  16. Decision Making & Information Systems • Business Intelligence in the Enterprise • Business Intelligence Constituencies

  17. What is Business Intelligence • Ability to take data • Understand the meaning and significance • Act appropriately

  18. Business Intelligence & Business Analytics • Business Intelligence • The infrastructure • Warehousing • Integrating • Reporting • Analyzing data from business environment

  19. Business Analytics • Tools and techniques • Analyzing • Understanding data • Hallmark Cards • SAS Analytics Software • Customers segments • Direct mails • emails

  20. Business intelligence vendors • SAP • Oracle • IBM • SAS • Microsoft

  21. The business intelligence environment

  22. Business intelligence & analytics capabilities • Production reports • Parameterized reports • Starbucks • Sales by region and time • Dashboards/scorecards • Ad hoc query/search/report creation • Drill down • Forecast, scenarios, models

  23. Business intelligence users

  24. Examples of BI applications • Predictive analytics • Capital One • Identify the best potential customers for credit cards • Identify customers who are at risk for leaving • FedEx • How customers will respond to price changes

  25. Data visualization and Geographic Information Systems • Data visualization • In visual form • In list and text • Human capital management systems • Determine when and where to reassign workers

  26. GIS • Visualize geographic distribution of people & resources • Manage natural disasters and emergencies

  27. Management strategies for developing BI & BA capabilities • One-stop integrated solutions • IBM, HP, Oracle • Advantage: deal with a single dealer • Disadvantage: dependent to one vendor • Best-of-breed vendor solutions • SAP, SAS, Microsoft

  28. Decision Making & Information Systems • Business Intelligence in the Enterprise • Business Intelligence Constituencies

  29. Business constituencies • Operational management • Middle management • Senior management each has different responsibilities, each has different needs

  30. Operational & Middle management • Monitor the performance of key aspects of the business • Downtime of machines • Daily, weekly sales of franchise stores • Exceptional conditions (reports) • Fall below an anticipated level • Exceed the spending limits

  31. Support for semi-structured decisions • Super users & Keen business analysts • Create their own report • Use more sophisticated analytics and models • Find patterns, • Test specific hypotheses • Sensitivity analysis • Pivot table • 樞紐分析

  32. Sensitivity analysis

  33. Pivot table 樞紐分析

  34. Progress Insurance • Small group of customers, “Cells” • Motorcycle riders • Age 30 or older • College education • Credit scores over a certain level • No accidents set prices for each cell • Profitably insure traditional high risk categories

  35. Decision support for senior management • Balanced scorecard • Enterprise performance management affect the overall profitability and success of the firm • ESS • Find the really important performance info • Develop systems capable of delivering the info

  36. Balanced scorecard methods

  37. Business performance management • Firms strategies • Differentiation • Low-cost producer • Market share growth • Scope of operation • Operational strategies • KPI • Info drawn from the enterprise database systems

  38. Information driven management • Management by facts • Real time management • Info drawn from the enterprise database systems

  39. Group decision support systems • Interactive computer-based system • Collaboration system • Video conferencing • Communication Group decision making

  40. Electronic meeting software • Collect • Document • Rank • Edit • Store ideas

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