Chapter 7 – Operational Systems
Principles
 An organization must have information systems that support the routine, day-to-day
activities occurring in the normal course of business, and help a company add value to its
products and services.
 Traditional TPS (transaction processing systems) support the various business functions of
organizations;
 particularly those that have not yet implemented the Enterprise Resource Planning
systems; (abbreviated as ERP systems).
 An organization that implements an ERP system is creating a highly integrated set of
systems, which can lead to many business benefits.
 Electronic commerce and Mobile commerce allow transactions to be made by the
customer, with less need for sales staff, and therefore open up new opportunities for
conducting business
 abbreviated as E-commerce & M-commerce
Enterprise and Resource Planning
•
ERP and its overview:
–
ERP is a set of integrated programs that manage a company’s vital business
operations for an entire multisite, global organization.
–
ERP systems evolved from materials requirement planning (MRP) systems.
•
In the 1970s:
•
–MRP system was in use extensively before ERP came in the picture.
•
–MRP system was used to manage manufacturing processes such as production planning,
scheduling, and inventory control.
•
–MRP system was also used for calculating the materials and components needed to
manufacture a product.
•
Not all MRP systems are software-based; i.e. others are conducted by hand.
•
All types of MRPs allowed companies to plan out how much raw material they would need
at a certain time in the future, plan their production, control their inventory, and manage
their processes of purchasing.
•
i.e. For manufacturing organizations, MRPs tied together essential business functions of
production planning, inventory control, and purchasing.
•
Then, from late 1980s to early 1990s --- the recognition that legacy transaction processing
systems (TPS) lacked the necessary integration for information sharing…..
•
– necessitated an upgrade of the system; hence the shift from MRP to ERP.
•
Therefore, ERP systems came through to optimise manufacturing processes through
integration of accounting functions and customer ordering data
Advantages of ERP
1) Improved access to data for operational decision making;
2) Elimination of costly, inflexible legacy systems;
3) Improvement of work processes that are based on best practices;
4) Upgrade of technology infrastructure.
1) Improved access to data for operational decision making
•
ERP systems operate via an integrated database, using one set of data to support all
business functions.
•
The systems can support decisions on optimal sourcing, or cost accounting.
 i.e. greater customer service, strengthened relationships with customers and
suppliers, & new business opportunities.
2.) Elimination of costly, inflexible legacy systems
•
An ERP system enables an organization to eliminate dozens of separate systems and replace
them with a single integrated set of applications for the entire enterprise.
•
Often, systems are normally decades old, the original developers have long gone, and
therefore the systems are poorly documented.
•
Hence, the systems become extremely difficult to fix when they break, and adapting them
to meet newer needs of business takes too long.
3.) Improvement of work processes based on best practices
•
Competition requires companies to structure their business processes to be as effective and
customer oriented as possible.
•
ERP vendors gather the requirements of leading companies within an industry and combine
them with findings from research institutions and consultants.
•
ERP system is then designed to support these best practices, which should be one of the
most efficient and effective ways to complete a business process.
3.) Improvement of work processes based on best practices
•
This increased efficiency ensures that everyday business operations follow the optimal
chain of activities, with all users being supplied with the information and tools they need to
complete each step.
4.) Upgrade of technology infrastructure
•
When implementing an ERP system, an organization has an opportunity to upgrade the
information technology (hardware, operating systems, databases, etc.) that it uses.
•
While centralizing and formalizing these decisions, the organization can eliminate the
multiple hardware platforms, operating systems and databases it is currently using – (most
likely from a variety of vendors)
– and standardize on fewer technologies and fewer vendors…..
•
That is, this increased efficiency ensures that everyday business operations follow the
optimal chain of activities, with all users being supplied with the information and tools they
need to complete each step.
This reduces ongoing maintenance and support costs, as well as the training load for those who
must support the infrastructure
Disadvantages of ERP
1. Expense and time in implementation;
2. Difficulty implementing change;
3. Difficulty integrating with other systems;
4. Difficulty in Loading Data into New ERP System;
5. Risks in using one vendor;
6. Risk of implementation failure.
 i.e. the difficulties linked to implementing ERP systems can disrupt current business
practices.
1.) Expense and time in implementation
•
Getting the full benefits of ERP takes time and money.
•
Although ERP offers many strategic advantages by streamlining a company’s TPS, large
companies typically need three to five years;
•
Large companies often spend millions of money to finally implement a successful ERP
system.
2.) Difficulty implementing change
•
In some cases, a company has to radically change how it operates to conform to work
processes of ERP system – (i.e. to ERP’s best practices).
•
These changes can be too drastic to long- time employees, such that they may either retire
or quit rather than go through the drastic change.
3.) Difficulty integrating with other systems
•
Most companies have other systems that must be integrated with the ERP system, such as
financial analysis programs, e-commerce operations and other applications.
•
Many companies have experienced difficulties making these other systems operate with
their ERP system.
•
Other companies need additional software to create the necessary link.
4.) Difficulty in Loading Data into New ERP System
•
The new ERP system may have the capability to store hundreds or even thousands of data
items (e.g. customer name, bill to address, product description).
•
Data mapping is the examination of each data item required for the new ERP system and
determining where that data item will come from.
•
Data clean-up is required because the legacy systems are likely to contain data that is
inaccurate, incomplete or inconsistent.
•
That is, while most of the data for the new system will come from the files of existing legacy
systems, some data items may need to be pulled from manual systems, or may even need
to be created for the new system;
•
Therefore data cleanup is required.
5.) Risks in using one vendor
•
The high cost to switch to another vendor’s ERP system makes it extremely unlikely that a
firm will do so.
•
After a company has adopted an ERP system, the vendor has less incentive to listen and
respond to customer concerns.
•
The high cost to switch also comes with the risk that the ERP vendor allows its product to
become outdated or goes out of business.
•
Therefore, selecting an ERP system involves not only choosing the best software product,
but also the right long-term business partner.
6.) Risk of implementation failure
•
Implementing an ERP system for a large organization is extremely challenging and requires
tremendous amounts of resources:
 e.g. the best Information System (IS)
of management support.
•
&
business people, as well as plenty
Unfortunately, large ERP installations occasionally fail, and problems with an ERP
implementation can require expensive solutions.
ERP for small & medium enterprises
•
(Small & Medium-Sized Enterprises: SMEs)
•
Many of the SMEs elected to implement open- source ERP systems.
 With open-source software, anyone can see and hence modify the source code to
customize it to meet their own needs.
 Such systems are much less costly to acquire and are relatively easy to modify for
meeting business needs.
 A wide range of organizations can perform the system development and
maintenance.
Transaction Processing Systems
•
•
Transaction processing systems (TPSs) update records:
–
i.e. Process detailed data necessary to update records about fundamental business
operations to reflect current status;
–
e.g. order entry, inventory control, payroll, accounts payable, accounts receivable,
general ledger, etc.
Input data for other essential business processes:
– e.g. TPS collects data that becomes input to Management Information System (MIS) and/or
Decision Support System (DSS) and/or Executive Support System (ESS) and/or Special-purpose
Information System (SIS).
TPS, MIS/DSS & ESS in Perspective:
•
Because TPS often performs activities related to customer contacts, it plays a critical role in
providing value to the customer…
 TPS mainly supports routine operations of business.
 e.g. capturing and tracking the movement of each package, shippers such as FedEx can
provide timely and accurate data on the exact location of a package.
Transactional transaction processing methods and objectives
•
Batch processing system:
– Computerized processing in which transactions of business are accumulated to form a batch
over a period of time before being prepared for processing as a single unit; i.e. only update
records after batch-processing
•
OLTP(Online transaction processing):
–
Consequently, at any time, the data in an online system reflects the current status
because there are no delays between capturing and reflecting the information on system.
 For many applications, batch processing is more appropriate and cost effective.
 Type of business becomes the determining factor for appropriateness of
application used.
Expectations of Organizations from their TPS:
1. Process data generated by/about transactions
2. Maintain a high degree of accuracy and integrity
3. Avoid processing fraudulent transactions
4. Produce timely user responses and reports
5. Increase labour efficiency
6. Help improve customer service
7. Help build and maintain customer loyalty
8. Achieve competitive advantage
Transaction processing activities
•
TPS:
–
Captures and processes data that describes fundamental business transactions;
–
Updates databases;
–
Produce a variety of necessary reports for various forms of decision-making.
 Transactions take a cyclic form…
Transaction processing cycle is the process of:
•
Data collection
•
Data editing
•
Data correction
•
Data manipulation
•
Data storage
•
Document production
Data collection
•
The gathering and capturing of all data, which is necessary to complete the processing of
transactions:
•
Data collection can be:
–
Manual (e.g. collecting handwritten sales orders)
–
Automated via special input devices
(e.g. barcode scanners, point-of-sale devices, and
terminals)
•
Data collection should be:
–
Done at source (e.g. taking a customer order)
–
Recorded accurately, in a timely fashion
 (i.e. ‘source data automation’)
Data editing
•
Checking data for validity and completeness to detect problems…
•
Examples:
–
Quantity and cost data must be numeric
–
Names must be alphabetic
–
Verification that codes associated with an individual transaction are present in a
database containing valid codes;
 e.g. when a system checks whether a customer has entered a correctlyformatted email address, and will not allow the transaction to proceed until
all records are correct.
Data Correction
•
The process of re-entering data that was not typed or scanned properly:
•
If invalid data is detected, the system should provide error messages to alert those
responsible for editing the data.
– Error messages must specify the problem so that proper corrections can be made.
•
Software tools can be used to identify bad data;
 e.g. shop assistant gets some indication that serves as an instruction to rescan the
item or type the information manually
Data Manipulation
•
The process of performing calculations and other transformations of data, which are related
to business transactions:
•
Can include…
–
Classifying data
–
Sorting data into categories
–
Performing calculations
–
Summarizing results
–
Storing data in the organization’s database for further processing
 e.g. Multiplying an employee’s hours worked by the hourly pay rate.
 e.g. Calculation of overtime-pay and tax-deductions.
Data Storage
•
The process of updating one or more databases with new transactions;
•
After being updated, this data can be further processed and manipulated by other systems;
 For example:
making.
so that the data is available for management reporting and decision
 What does this imply about the transaction databases?
Data production and reports
•
The process of generating output records and reports:
–
i.e. Producing hard-copy paper reports
–
Displaying on computer screens
and/or
•
Results from one TPS can be inputs to another system;
 Typical uses:
 Checks and invoices,
 Management information,
 Decision support, and
 Compliance with regulations (either local or state)
TPS applications
•
Order Processing Systems include order entry, sales configuration, shipment planning,
shipment execution, inventory control, and accounts receivable.
•
Purchasing Systems include:
 Inventory control,
 Purchase order processing,
 Receiving,
&
 Accounts payable
Accounting Systems
 include:
 the budget, accounts receivable, payroll, asset management, &
 general ledger
Electronic Commerce
•
E-commerce is conducting a business transaction electronically over computer networks
(e.g. distribution, buying, selling, and servicing).....
primarily the Internet, but also extranets & corporate networks.
•
B2C – (business-to-consumer) allows customers to place orders, with order processing
system of the business.
•
B2Me – A form of e-commerce where the business treats each customer as a separate
market segment. Typical B2Me features include customizing a website for each customer,
perhaps based on their previous purchases and personalized (electronic) marketing
literature.
•
B2B – (business-to-business):
i.e. the customer is another business.
 Example: Travel agents --- (flights and hotel bookings)
•
C2C – (consumer-to-consumer):
allowing consumers to sell to other consumers.
 Example:
 eBay is an e-commerce site that enables customers to buy and sell items
directly with each other through the site.
 E-government – the use of ICT to simplify the processes of sharing information, speed-up
formerly paper-based processes
&
improve the relationship between citizens
and government.
 Government-to-consumer (G2C) e.g. tax returns (online)
 Government-to-business (G2B) e.g. bidding on government contracts
 Government-to-government (G2G)
(improve communications between various levels of government)
Mobile commerce
•
M-commerce relies on the use of wireless devices, such as personal digital assistants,
mobile phones, and smartphones, to transact.
•
Content providers recognize that customers want access to their content whenever and
wherever they go;
&
mobile service providers seek out new forms of content to send over their network
•
For m-commerce to work effectively, the interface between the wireless device and its user
needs to improve.
•
Network speed must improve so that users do not become frustrated by delays.
•
Security is also a major concern in two areas: the security of transmission
trust that the transaction is being made with the intended party.
•
Encryption can provide secure transmission. Digital certificates can ensure that transactions
are made between the intended parties.
&
Production & Supply chain management
•
ERP production plan process: draws on the information available in the ERP system
database
Starting the process…..
–
Sales forecasting:
–
Sales and operations plan:
takes demand and current inventory levels to
determine production for future demands
–
Demand management: develops master production schedule as output….. (a
production plan for all finished goods)
estimates future customer demand
–
ERP production plan process (continued)
–
Detailed scheduling:
product to the next
–
Materials requirement planning:
material orders with suppliers
–
Purchasing:
–
Production:
plans the details of running and staffing production operation, using
the detailed schedule
–
schedules production run for each product and from one
determines amount and timing of raw
purchases raw materials and transmits to qualified suppliers
(proof of improved integration)
Customer Relationship Management
•
Abbreviated as CRM system:
–
Helps a company manage all aspects of customer encounters, including:
 Marketing and advertising
 Sales
 Customer service (after the sale)
 Programs to retain loyal customers
 (proof of a bigger goal)
From anticipating the needs of current and potential customers,
retention and loyalty
to increasing customer
Sales Ordering
•
Sales ordering: Set of activities that must be performed to capture a customer sales order,
with steps including the following :
–
Recording items to be purchased
–
Setting sales price
–
Recording order quantity
–
Determining total cost of the order, inclusive of delivery costs
–
Confirming customer’s available credit
 Often necessary to avoid exceeding credit limit
International issues associated with operational systems
•
Challenges that must be met by an operational system of a multinational company include:
–
Different languages and cultures
–
Disparities in IS infrastructure
–
Varying laws and customs rules
–
Multiple currencies
–
ERP software vendors help in meeting these challenges
Chapter 8 – Management Information and Decision Support Systems
Principles
•
Good decision-making and problem-solving skills are the key to developing effective
information and decision support systems
•
A management information system (MIS) must provide the right information to the right
person in the right format at the right time
•
Decision support systems (DSS) support decision- making effectiveness when faced with
unstructured or semi-structured business problems
•
Specialized support systems, such as group support systems (GSS) and executive support
systems (ESS), use the overall approach of a DSS in situations such as group and executive
decision making.
Decision making and problem solving
•
Every organization needs effective decision making
•
In most cases, strategic planning and overall goals of the organization set the course for
decision making
•
Information systems can assist with strategic planning and problem solving, helping top
management make better decisions.
•
A well-known model developed by
Herbert Simon divides the decision-making phase of the problem-solving process into three
stages:
intelligence, design & choice.
Decision making as a component of problem solving
•
Decision-making phase: first part of problem-solving process
–
Intelligence stage: potential problems or opportunities are identified and defined
–
Design stage: alternative solutions to the problem are developed
–
Choice stage: requires selecting a course of action
•
Problem solving: goes beyond decision making to include implementation and monitoring
stages
•
Implementation stage: a solution is put into effect
•
Monitoring stage: decision makers evaluate the implementation
Programmed versus non-programmed decisions
•
•
Programmed decision
–
Decision made using a rule, procedure, or quantitative method
–
Easy to computerize using traditional information systems
Non-programmed decision
–
Decision that deals with unusual or exceptional situations
–
Not easily quantifiable
Optimization, Satisficing and Heuristic approaches
•
Optimization model: find the best solution, usually the one that will best help the
organization meet its goals
•
Satisficing model: find a good problem solution – but not necessarily the best.
•
Heuristics:
commonly accepted guidelines or procedures that usually find a good
solution that are often referred to as ‘rules of thumb’
Sense and Respond
•
Sense and Respond (SaR) approach
–
Determining problems or opportunities (sense)
–
Developing systems to solve the problems or take advantage of the opportunities
(respond)
•
One way to implement SaR is through management information and decision support
systems
•
SaR often requires nimble organizations that replace traditional lines of authority with those
that are flexible and dynamic.
Big Data
•
Big Data is of interest because of the additional insight it can offer into customer behaviour,
logistics, factory design and a host of other applications.
•
Big Data involves new ways of capturing data, processing it and visualizing the patterns and
trends in it.
•
Often processing Big Data requires many computers operating in parallel.
An overview of Management information Systems
•
Management information system (MIS)
–
Integrated collection of people, procedures, databases, and devices
–
Provides managers and decision makers with information to help achieve
organizational goals
–
Can give the organization a competitive advantage
–
Providing the right information to the right people in the right format and at the
right time
–
Provides managers with information that supports effective decision making and
provides feedback on daily operations
Input to an MIS(see figure 8.2 pg 270)
•
•
Internal data sources
–
TPSs and ERP systems and related databases
–
Data warehouses and data marts
–
Specific functional areas throughout the firm
External data sources
–
Customers, suppliers, competitors, and stockholders whose data is not already
captured by the TPS
–
Internet
–
Extranets
Outputs from an MIS
•
Scheduled report: produced periodically, or on schedule, such as daily, weekly, or monthly
•
Key-indicator report: summary of previous day’s critical activities
•
Demand report: developed to give certain information at someone’s request
•
Exception report: automatically produced when a situation is unusual or requires
management action
•
Drill-down reports: provide increasingly detailed data about a situation
Characteristics of an MIS
•
Provide reports with fixed and standard formats
•
Produce hard-copy and soft-copy reports
•
Use internal data stored in computer system
•
Allow users to develop custom reports
•
Require user requests for reports developed by systems personnel
Financial MIS
•
Financial MIS: A management information system that provides financial information not
only for executives but also for a broader set of people who need to make better decisions
on a daily basis.
•
Some financial MIS subsystems and outputs
–
Profit/loss and cost systems: profit and revenue centres
–
Auditing: internal and external
–
Uses and management of funds
Manufacturing MIS
Manufacturing MIS subsystems and outputs monitor and control the flow of materials, products and
services through the organization
1.
Design and engineering: CAD systems
o For example, Boeing uses a CAD system to develop a complete digital blueprint of an aircraft
before it ever begins its manufacturing process. As mock-ups are built and tested, the digital
blueprint is constantly revised to reflect the most current design. Using such technology helps
Boeing reduce its manufacturing costs and the time to design a new aircraft.
2. Master production scheduling and inventory control
–
Techniques used to minimize inventory costs:
•
Economic Order Quantity (EOQ) - The quantity that should be reordered to
minimize total inventory costs.
•
Material Requirements Planning (MRP) - A set of inventory-control
techniques that help coordinate thousands of inventory items when the
demand of one item is dependent on the demand for another.
•
Just-in-time (JIT) inventory - A philosophy of inventory management in
which inventory and materials are delivered just before they are used in
manufacturing a product.
3. Process control: Managers can use a number of technologies to control and streamline the
manufacturing process. Techniques:
–
Computer-aided Manufacturing (CAM) - A system that directly controls
manufacturing equipment.
–
Computer-Integrated Manufacturing (CIM) - uses computers to link the
components of the production process into an effective system.
–
Flexible Manufacturing System (FMS) - An approach that allows manufacturing
facilities to rapidly and efficiently change from making one product to making
another.
4. Quality control and testing
–
A process that ensures that the finished product meets the customer’s needs.
–
Information systems are used to monitor quality and take corrective steps to
eliminate possible quality problems.
Marketing MIS
•
Marketing MIS: supports managerial activities in product development, distribution, pricing
decisions and promotional effectiveness and sales forecasting.
•
Subsystems
1. Marketing research - a formal study of the market and customer preferences
2. Product development - involves the conversion of raw materials into finished goods
and services and focuses primarily on the physical attributes of the product.
3. Promotion and advertising - Product success is a direct function of the types of
advertising and sales promotion done.
4. Product pricing - Product pricing is an important and complex marketing function.
Retail price, wholesale price and price discounts must be set.
5. Sales analysis - Computerized sales analysis is important to identify products, sales
personnel and customers that contribute to profits and those that do not.
Human Resource MIS
•
Human resource MIS: concerned with activities related to employees and potential
employees. Subsystems
1. Human resource planning - Effective human resource planning can require
computer programs to forecast the future number of employees needed and
anticipating the future supply of people for these jobs.
2. Personnel selection and recruiting Companies seeking new employees often
use computers to schedule recruiting efforts and trips, and to test potential
employees’ skills.
3. Training and skills inventory - Some jobs, such as programming, equipment repair
and tax preparation, require very specific training for new employees.
4. Scheduling and job placement - Employee schedules are developed for each
employee, showing his or her job assignments over the next week or month.
5. Wage and salary administration - Another HRMIS subsystem involves determining
salaries and benefits, including medical insurance and pension payments.
Other MIS
•
Accounting MIS: provides aggregate information on accounts payable, accounts receivable,
payroll, and many other applications
•
Geographic information system (GIS): A computer system capable of assembling, storing,
manipulating and displaying geographic information; that is, data identified according to its
location.
Decision Support System
•
A DSS is an organized collection of people, procedures, software, databases, and devices
used to help make decisions that solve problems
•
Focus of a DSS is on decision-making effectiveness regarding unstructured or semistructured business problems
•
Used by managers at all levels
•
Decision support systems offer the potential to generate higher profits, lower costs, and
better products and services.
Characteristics of a DSS
•
Provide rapid access to information - DSSs provide fast and continuous access to
information.
•
Handle large amounts of data from different sources - E.g. Using the Internet, an oil giant
can use a decision support system to save hundreds of millions of euros annually by
coordinating a large amount of drilling and exploration data from around the globe.
•
Provide report and presentation flexibility - Managers can get the information they want,
presented in a format that suits their needs. Output can be displayed on computer screens
or printed.
•
Offer both textual and graphical orientation - DSSs can produce text, tables, line drawings,
pie charts, trend lines and more. By using their preferred orientation, managers can use a
DSS to get a better understanding of a situation and to convey this understanding to others.
•
Support drill-down analysis drilling down through data.
•
Perform complex, sophisticated analysis and comparisons using advanced software
packages- Marketing research surveys, for example, can be analyzed in a variety of ways
using programs that are part of a DSS.
•
Support optimization, satisficing, and heuristic approaches - By supporting all types of
decision- making approaches, a DSS gives the decision maker a great deal of flexibility in
computer support for decision making.
•
o What-if analysis: making hypothetical changes to problem data and observing impact on
results
•
Goal-seeking analysis - the process of determining problem data required for a given result
•
Simulation: ability of the DSS to duplicate features of a real system
A manager can get more levels of detail when needed by
Capabilities of a DSS
•
Support problem-solving phases - By supporting all types of decision-making approaches, a
DSS gives the decision maker a great deal of flexibility in getting computer support for
decision-making activities.
•
Support different decision frequencies -
•
•
o
Ad hoc DSS - A DSS concerned with situations or decisions that come up only a few
times during the life of the organization.
o
Institutional DSS - a DSS that handles situations or decisions that occur more than
once, usually several times per year or more. An institutional DSS is used
repeatedly and refined over the years.
Support different problem structures - decisions can range from highly structured and
programmed to unstructured and non-programmed.
o
Highly structured problems - Problems that are straightforward and require known
facts and relationship.
o
Semi-structured or unstructured problems - in which the relationships among the
pieces of data are not always clear, the data might be in a variety of formats, and
the data is often difficult to manipulate or obtain.
Support various decision-making levels
Components of a DSS
•
Database
•
Model base
•
Dialogue manager: user interface that allows decision makers to:
–
Easily access and manipulate the DSS
–
Use common business terms and phrases
•
Access to the Internet
•
Networks, and other computer-based systems
The database
•
Database management system (DBMS)
–
The DBMS allows managers and decision makers to perform qualitative analysis on
the company’s vast stores of data in databases and data warehouses.
–
DSSs tap into vast stores of information contained in the corporate database,
retrieving information on inventory, sales, personnel, production, finance,
accounting and other areas.
–
Can also be used to connect to external databases to give decision makers more
decision support.
The model base
•
Model base:
allows managers and decision makers to perform quantitative analysis on
both internal and external data.
o
The model base gives decision makers access to a variety of models so that they can
explore different scenarios and see their effects.
o
Ultimately, it assists them in the decision-making process.
o
Allows them to perform quantitative analysis on both internal and external data
The user interface of Dialogue manager
•
The user interface or dialogue manager allows users to interact with the DSS to obtain
information.
•
It assists with all aspects of communications between the user and the hardware and
software that constitute the DSS.
•
Upper-level decision makers are often less interested in where the information came from
or how it was gathered than that the information is both understandable and accessible.
Group Support systems
•
–
Consists of most elements in a DSS, plus software to provide effective support in
group decision making
–
Also called group decision support system or computerized collaborative work
system
Some tactical and strategic-level managers can spend more than half their decision-making
time in a group setting.
Characteristics of a GSS that enhance Decision making
1. Special design - acknowledges that special procedures, needed in group decision-making,
which must foster creative thinking, effective communications and good group decisionmaking techniques.
2. Ease of use -
a GSS must be easy to learn and use.
3. Flexibility - Two or more decision makers working on the same problem might have
different decision- making styles and preferences.
4. A GSS can support different decision-making approaches
-Brainstorming - A decision-making approach that often consists of members offering ideas
‘off the top of their heads’.
-Group consensus approach - a decision-making approach that forces members in the
group to reach a unanimous decision.
-Nominal group technique A decision-making approach that encourages feedback from
individual group members, and the final decision is made by voting, similar to the way
public officials are elected.
5. Anonymous input - Many GSSs allow anonymous input, where group members do not know
which of them is giving the input.
6. Reduction of negative group behaviour - ability to suppress or eliminate group behaviour
that is counterproductive or harmful to effective decision making.
7. Parallel communication every group member can address issues or make comments
at the same time by entering them into a PC or workstation.
8. Automated record keeping - Most GSSs can keep detailed records of a meeting
automatically. Each comment that is entered into a group member’s PC or workstation can
be recorded.
Executive Support Systems
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Executive support system (ESS):
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Specialized DSS
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Includes hardware, software, data, procedures, and people used to assist seniorlevel executives
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Also called an executive information system (EIS)
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supports decision making of members of the board of directors, who are
responsible to stockholders.
ESS Characteristics
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Tailored to individual executives - ESSs are typically tailored to individual executives; DSSs
are not tailored to particular users. They present information in the preferred for- mat of
that executive.
•
Easy to use - An most critical resource is time. Thus, an ESS must be easy to learn and use.
•
Drill-down capabilities An ESS allows executives to drill down into the company to
determine how certain data was produced.
•
Support need for external data - Can extract data useful to the decision maker from a
variety of sources, like the Internet and other electronic publishing sources.
•
Can help with situations that have a high degree of uncertainty - Most executive decisions
involve a high degree of uncertainty. Handling these unknown situations using modelling
and other ESS procedures helps top- level managers measure the amount of risk in a
decision.
•
Future-oriented - The information sources to support future-oriented decision making are
usually informal – from organizing golf partners to tying together members of social clubs
or civic organizations.
•
Linked to value-added business processes - Like other information systems, executive
support systems are linked with executive decision making about value-added business
processes.
Capabilities of ESS
•
Can help with situations that have a high degree of uncertainty - Most executive decisions
involve a high degree of uncertainty. Handling these unknown situations using modelling
and other ESS procedures helps top- level managers measure the amount of risk in a
decision.
•
Future-oriented - The information sources to support future-oriented decision making are
usually informal – from organizing golf partners to tying together members of social clubs
or civic organizations.
•
Linked to value-added business processes - Like other information systems, executive
support systems are linked with executive decision making about value-added business
processes.
•
Support for strategic organizing and staffing - ESSs can be employed to help analyze the
impact of staffing decisions, potential pay raises, changes in employee benefits and new
work rules.
•
Support for strategic control - Effective ESS approaches can help top-level managers make
the most of their existing resources and control all aspects of the organization.
•
Support for crisis management - Strategic emergency plans can be put into place with the
help of an ESS. These contingency plans help organizations recover quickly if an emergency
or crisis occurs.