Chapter 7

Decision Support System

o These are specific class of computerized information system that supports business and organizational decisionmaking activities. A properly designed DSS is an interactive software-based system intended to help decision makers compile useful information from raw data, documents, personal knowledge, and/or business models to identify and solve problems and make decisions. It constitutes a class of computer-based information systems including knowledge-based systems that support decision-making activities.

Taxonomies Taxonomy for DSS has been created by Daniel Power. Using the mode of assistance as the criterion. He differentiates the following: 1. Model-driven DSS Emphasizes access to and manipulation of a statistical, financial, optimization, or simulation model. Model-driven DSS use data and parameters provided by users to assist decision makers in analyzing a situation; they are not necessarily data-intensive. 2. Communication-driven DSS Supports more than one person working on a shared task; examples include integrated tools like Microsofts NetMeeting or Groove. 3. Data-driven DSS or Data-oriented DSS Emphasizes access to and manipulation of a time series of internal company data and sometimes, external data. 4. Document-driven DSS Manages, retrieves, and manipulates unstructured information in a variety of electronic formats. 5. Knowledge-driven DSS Provides specialized problem-solving expertise stored as facts, rules, procedures, or in similar structures. A DSS Can and Cannot Do. . . 1. 2. 3. 4. 5. 6. The DSS is expected to extend the decision makers capacity to process information. It solves the time-consuming portions of a problem, saving time for the user. Using the DSS can provide the user with alternatives that might go unnoticed. It is constrained, however, by the knowledge supplied to it. A DSS also has limited reasoning processes. A Universal DSS does not exist.

Benefits of DSS 1. 2. 3. 4. 5. 6. 7. 8. 9. Improves personal efficiency Expedites problem solving Facilitate interpersonal communication Promotes learning or training Increases organizational control Generates new evidence in support of a decision Creates a competitive advantage over competition Encourages exploration and discovery on the part of the decision maker Reveals new approaches to thinking about the problem space.

7.1 DECISION SUPPORT IN BUSINESS

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Companies are investing in data-driven decision support application frameworks to help them respond to: Changing market conditions Customer needs This is accomplish by several types of Management information Decision Support Other information systems CASE 1 Dashboard for Executives 1. Web-based dashboards a. Displays critical information in graphic form. b. Assembled from data pulled in real time from corporate software and databases. c. Managers see changes almost instantaneously. d. Now available in smaller companies. 2. Potential Problems a. Pressure on employees b. Divisions in the office c. Tendency to hoard information.

7.1.1

INTRODUCTION TO DECISION SUPPORT SYSTEM Identify the changes taking place in the form and use of decision support in business. Identify the roles and reporting alternatives of MIS Describe how online analytical processing can meet key information needs of managers. Explain the decision support system concept and how it differs from traditional MIS. Explain how the following IS can support the information needs of executives, managers, and business professionals: Executive information systems. Identify how neural networks, fuzzy logic, genetic algorithms, virtual reality and intelligent agents can be used in business. Give examples of several ways expert systems can be used in business decision-making situations.

LEVELS OF MANAGERIAL DECISION MAKING Information Quality

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Information products made more valuable by their attributes, characteristics, or qualities o Information that is outdated, inaccurate or hard to understand has much less value. Information has three dimensions 1. Time 2. Content 3. Form

Attributes of Information Quality

Decision Structure a. Structured (operational) The procedure to follow when decision is needed can be specified in advance. b. Unstructured (strategic) It is not possible to specify in advance most of the decision procedures to follow. c. Semi-structured (tactical) Decision procedures can be pre-specified, but enough to lead to the correct decision.

7.1.2 DECISION SUPPORT TRENDS The emerging class of application focuses on 1. Personalized decision support 2. Modeling 3. Information retrieval 4. Data warehousing 5. What-if scenarios 6. Reporting

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Business Intelligence Applications

7.1.3 DECISION SUPPORT SYSTEMS Decision support systems use the following to support the making of semi-structured business decisions 1. Analytical models 2. Specialized databases 3. A decision-makers own insights and judgments 4. An interactive, computer-based modeling process. Decision Support Systems are designed to be ad hoc, quick response systems that are initiated and controlled by decision makers.

DSS Components

DSS Model Base

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Model Base A software component that consists of models used in computational and analytical routines that mathematically express relation among variables. Spreadsheet Examples Linear programming Multiple Regression forecasting Capital budgeting present value

Applications of statistics and Modeling Supply Chain Simulate and optimized supple chain flows, reduce inventory, reduce stock-outs Pricing Identify the price that maximizes yield or profit Product and Service Quality Detect quality problems early in order to minimized them Research and development Improve the quality, efficacy, and safety of products and services.

7.1.4 MANAGEMENT INFORMATION SYSTEMS It is a subset of the overall internal controls of a business covering the application of people, documents, technologies, and procedures by management accountants to solving business problems such as costing a product, service or a business-wide strategy. Are distinct from regular information system in that they are used to analyze other information systems applied in operational activities in the organization. MIS term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making, e.g. Decision Support System, Expert Systems, and Executive Information Systems. The original type of information system that supported managerial decision making Produces information products that support many day-to-day decision-making needs Produces reports, displays, and responses Satisfies needs of operational and tactical decision makers who face structured decisions.

Management Reporting Alternatives a. Periodic Scheduled Reports Pre-specified format on a regular basis b. Exception Reports Reports about exceptional conditions May be produced regularly or when an exception occurs. c. Demand Reports and Responses Information is available on demand d. Push Reporting Information is pushed to a networked computer 7.1.5 ONLINE ANALYTICAL PROCESSING (OLAP) It is an approach to quickly answer multi-dimensional analytical queries. OLAP is part of the broader category of business intelligence, which also encompasses relational reporting and data mining.

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 Types

Applications of OLAP are in business reporting for sales, marketing, management reporting, business process management (BPM), budgeting and forecasting, financial reporting and similar areas. The term OLAP was created as a slight modification of the traditional database term OLTP (Online Transaction Processing) Enables managers and analysts to examine and manipulate large amount of detailed and consolidated data from many perspectives Done interactively, in real time, with rapid response to queries

1. Multidimensional (MOLAP) Is the classic form of OLAP Sometimes referred to as just OLAP. It uses database structures that are generally optimal for attributes such as time period, location, product or account code. The way that each dimension will be aggregated is defined in advance by one or more hierarchies. 2. Relational (ROLAP) It works directly with relational databases. The base data and the dimension tables are stored as relational tables and new tables are created to hold the aggregated information. It depends on a specialized schema design 3. Hybrid (HOLAP) A database will divide data between relational and specialized storage. Example: For some vendors, a HOLAP database will use relational tables to hold the larger quantities of detailed data, and use specialized storage for at least some aspects of the smaller quantities of moreaggregated or less-detailed data. Other Types 1. Web-based OLAP (WOLAP) 2. Desktop OLAP (DOLAP) 3. Real-Time OLAP (RTOLAP) Comparison Some OLAP implementations are prone to database explosion. Database explosion is a phenomenon causing vast amounts of storage space to be used by MOLAP databases when certain common conditions are met: high number of dimensions, pre-calculated results and sparse multidimensional data. The typical mitigation technique for database explosion is not to materialize all the possible aggregation, but only the optimal subset of aggregations based on the desired performance vs. storage trade off. MOLAP generally delivers better performance due to specialized indexing and storage optimizations. MOLAP also needs less storage space compared to ROLAP because the specialized storage typically includes compression techniques. ROLAP is generally more scalable. However, large volume pre-processing is difficult to implement efficiently so it is frequently skipped. ROLAP query performance can therefore suffer tremendously. Since ROLAP relies more on the database to perform calculations, it has more limitations in the specialized functions it can use. HOLAP encompasses a range of solutions that attempt to mix the best of ROLAP and MOLAP. It can generally pre-process quickly, scale well, and offer good function support.

Online Analytical Operations a. Consolidation

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 Aggregation of data Example: data about sales offices rolled up to the district level b. Drill-Down Displays underlying detail data Example: sales figures by individual product c. Slicing and Dicing Viewing database from different viewpoints Often performed along a time axis 7.1.6 USING DECISION SUPPORT SYSTEMS Using a decision support system involves an interactive analytical modeling process Decision makers are not demanding pre-specified information They are exploring possible alternatives What-If Analysis Observing how changes to selected variables affect other variables Sensitivity Analysis Observing how repeated changes to a single variable affect other variables Goal-seeking Analysis Making repeated changes to selected variables until a chosen variable reaches a target value Optimization Analysis Finding an optimum value for selected variables, given certain constraints

Data Mining Provides decision support through knowledge discovery Analyzes vast stores of historical business data Looks for patterns, trends, and correlations Goal is to improve business performance Types of Analysis Regression Decision tree Neural network Cluster detection Market basket analysis

7.1.7 EXECUTIVE INFORMATION SYSTEM (EIS) It is a type of Management Information System intended to facilitate and support the information and decisionmaking needs of senior executives by providing easy access to both internal and external information relevant to meeting the strategic goals of the organization. It is commonly considered as a specialized form of a Decision Support System (DSS). Combines many features of MIS and DSS Provide top executives with immediate and easy access to information Identify factors that are critical to accomplishing strategic objectives (critical success factors) So popular that it has been expanded to managers, analysis, and other knowledge workers

Features of an EIS Information presented in forms tailored to the preference of the executives using the system

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Customizable graphical user interface Exception reports Trend analysis Drill down capacity

Advantage and Disadvantages Advantages Easy for upper-level executives to use, extensive computer experience is not required in operations. Provides timely delivery of company summary information Information that is provided is better understood Filters data for management Improves to tracking information Offers efficiency to decision makers

Disadvantages Functions are limited, cannot perform complex calculations Hard to quantify benefits and to justify implementation of an EIS Executives may encounter information overload System may become slow, large, and hard to manage Difficult to keep current data May lead to less reliable and insecure data Small companies may encounter excessive costs for implementation Too detailed oriented

7.1.8 ENTERPRISE INFORMATION PORTALS (EIP) Also called as Enterprise Portal or Corporate Portal. It is a framework for integrating information, people, and processes across organizational boundaries. It provides a secure unified access point, often in the form of a web-based user interface, and is designed to aggregate and personalize information through application-specified portlets. One hallmark of enterprise portals is the de-centralized content contribution and content management, which keeps the information always updated. It is a Web-based interface and integration of MIS, DSS, EIS, and other technologies Available to all intranet users and selected extranet users Provides access to a variety of internal and external business applications and services Typically tailored or personalized to the user or groups of users Often has a digital dashboard Also called enterprise knowledge portals

Fundamental Features 1. Single Point of Entry Enterprise portals can provide single sign-on capabilities between their users and various other systems. This requires a user to authenticate only once. Access control lists manage the mapping between portal content and services over the portal user base. 2. Integration The connection of functions and data from multiple systems into new component/portlets. 3. Federation DECISION SUPPORT SYSTEM Page 8 Of 11

The integration of contents provided by other portals, typically through the use of WSRP or similar technologies. 4. Personalization Users can customize the look and feel of their environment. Customers who are using EIPs can edit and design their own personality and own style; they can also choose the specific content and services they prefer. Also refers to the ability to prioritize most appropriate content based on attributes of the user and metadata of the available content. 5. Permissioning The ability for portal administrators to limit specific types of content and services users has access to. For example, a companys proprietary information can be entitled for only company employee access. Enterprise Information Portal Components

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Enterprise Knowledge Portal

Methods of Knowledge Representation 1. Case-Based Knowledge organized in the form of cases Cases are examples of past performances, occurrences, and experiences 2. Frame-Based Knowledge organized in a hierarchy or network of frames A frame is a collection of knowledge about an entity, consisting of a complex package of data values describing its attributes. Methods of Knowledge Representation 1. Object-Based Knowledge represented as a network of objects An object is a data element that includes both data and the methods or processes that act on those data 2. Rule-Based Knowledge represented in the form of rules and statements of fact Rules are statements that typically take the form of a promise and conclusion (if, then).

7.1.9 KNOWLEDGE MANAGEMENT SYSTEM (KM SYSTEM)

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It refers to a (generally IT based) system for managing knowledge in organizations, supporting creation, capture, storage and dissemination of information. It can comprise a part (either necessary or sufficient) of a Knowledge Management initiative. The idea of Km system is to enable employees to have ready access to the organizations documented base of facts, sources of information, and solutions,

Benefits of KM Systems Some advantages claimed for KM systems are. . 1. 2. 3. 4. Sharing of valuable organizational information Can avoid re-inventing the wheel, reducing redundant work May reduce training time for new employees Retention of intellectual property after the employee leaves if such knowledge can be codified.

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