Information
Systems & Enhancing
Decision Making for the
Digital Firm
Rashedul Hasan
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Business Decision Making and the Decision-Making Process
Decision-Making Levels:
• Senior management
• Middle management and project teams
• Operational management and project teams
• Individual employees
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
Figure 2-1
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Different Kinds of Systems
Three main categories of information systems serve
different organizational levels:
1.
Operational-level systems: support operational managers,
keeping track of the elementary activities and
transactions
2.
Management-level systems: serve the monitoring,
controlling, decision-making, and administrative activities
3.
Strategic-level systems: help senior management tackle
and address strategic issues
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Information Requirements of Key Decision-Making Groups
in a Firm
Figure 13-2
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Types of Decisions
Unstructured decisions:
• Novel, non-routine decisions requiring judgment
and insights
• Examples: Approve capital budget; decide
corporate objectives
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Types of Decisions (Continued)
Structured decisions:
• Routine decisions with definite procedures
• Examples: Restock inventory; determine special
offers to customers
Semi-structured decisions:
• Only part of decision has clear-cut answers
provided by accepted procedures
• Examples: Allocate resources to managers;
develop a marketing plan
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Major Types of Systems
• Transaction Processing Systems (TPS)
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
The Four Major Types of Information Systems
Figure 2-2
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Stages in Decision Making
Figure 13-3
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Transaction Processing Systems (TPS)
• Basic business systems that serve the
operational level
• A computerized system that performs and
records the daily routine transactions necessary
to the conduct of the business
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
A Symbolic Representation for a Payroll TPS
Figure 2-3
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Typical Applications of TPS
Figure 2-4
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS)
Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgeting
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)
Figure 2-5
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Management Information Systems (MIS) (continued)
A sample MIS report
Figure 2-6
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS)
Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Decision-Support Systems (DSS) (Continued)
Voyage-estimating decision-support system
Figure 2-7
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS):
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers
Example: 5 year operating plan
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Model of a Typical Executive Support System
Figure 2-8
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
EXECUTIVE SUPPORT SYSTEMS (ESS) (Continued)
• Top Level Management
• Designed to the individual senior manager
• Ties CEO to all levels
• Very expensive to keep up
• Extensive support staff
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
Interrelationships among systems
Figure 2-9
Management Information Systems
Chapter 2 Information Systems in the Enterprise
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Relationship of Systems to One Another
In contemporary digital firms, the different types of
systems are closely linked to one another. This is
the ideal. In traditional firms these systems tend to
be isolated from one another, and information does
not flow seamlessly from one end of the organization
to the other. Efficiency and business value tend to
suffer greatly in these traditional firms
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
The Difference between MIS and DSS
Management Information Systems:
• Primarily address structured problems
• Provides typically fixed, scheduled reports based
on routine flows of data and assists in the general
control of the business
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Decision Support Systems:
• Support semistructured and unstructured problems
• Greater emphasis on models, assumptions, ad-hoc
queries, display graphics
• Emphasizes change, flexibility, and a rapid
response
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Types of Decision-Support Systems
Model-driven DSS:
• Primarily stand-alone systems
• Use a strong theory or model to perform “what-if”
and similar analyses
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Components of DSS
• DSS database: A collection of current or historical
data from a number of applications or groups
• DSS software system: Contains the software tools
for data analysis, with models, data mining, and
other analytical tools
• DSS user interface: Graphical, flexible interaction
between users of the system and the DSS software
tools
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Data-driven DSS:
• Integrated with large pools of data in major
enterprise systems and Web sites
• Support decision making by enabling user to
extract useful information
• Data mining: Can obtain types of information such
as associations, sequences, classifications,
clusters, and forecasts
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Model: An abstract representation that illustrates the
components or relationships of a phenomenon
• Statistical models
• Optimization models
• Forecasting models
• Sensitivity analysis (“what-if” models)
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Overview of a Decision-Support System
Figure 13-4
Management Information Systems
Chapter 13 Enhancing Decision Making for the Digital Firm
SYSTEMS FOR DECISION SUPPORT
Sensitivity Analysis
Figure 13-5