mis ch 12
DESCRIPTION
nTRANSCRIPT
PowerPoint PresentationBusiness value of improved decision
making
Improving hundreds of thousands of “small” decisions adds up to large annual value for the business
Types of decisions:
Unstructured: Decision maker must provide judgment, evaluation, and insight to solve problem
Structured: Repetitive and routine; involve definite procedure for handling so they do not have to be treated each time as new
*
This slide discusses the importance of improved decision-making and describes the three types of decisions that are made in an organization. Table 12-1 in the text illustrates how a small decision made hundreds of times a year can be just as valuable as a single decision made once a year. For example, the decision to schedule production to fill orders, made 150 times a year, with a value of $10,000 if this decision is improved, can mean an annual value of $1.5 million. The different levels in an organization tend to make different types of decisions, and require different types of support to make these decisions. Ask students to provide examples of each type of decision. Give students examples of decisions and ask what category the decision fall into and why.
Senior managers:
Middle managers:
Make more structured decisions but these may include unstructured components
E.g., Why is order fulfillment report showing decline in Minneapolis?
Operational managers, rank and file employees
Make more structured decisions
Decision Making and Information Systems
*
This slide describes the types of decisions being made at the different levels within an organization. Semi-structured decisions contain a portion that is unstructured and a portion that is structured. Which portion, of the example question for middle managers, is structured and which is unstructured? What would make this question a fully structured question? Ask students to come up with additional examples of decisions at the executive, middle management, and operational levels of the organization, for companies they have worked for.
Information Requirements of Key Decision-Making Groups in a Firm
Senior managers, middle managers, operational managers, and employees have different types of decisions and information requirements.
Decision Making and Information Systems
*
This graphic illustrates the three types of decision-makers within an organization. Ask students to describe in their own words how to tell what category a decision falls into. If a structured decision is given separately to two employees, should they each come up with the same answer? What about semistructured decisions? Unstructured decisions? Which of the types of decisions could most easily be handled by computer software?
Four stages of decision making
Intelligence
Design
Choice
Implementation
Making chosen alternative work and continuing to monitor how well solution is working
Decision Making and Information Systems
*
This slide describes the process of decision-making as a series of four stages. It is important to note that if an implemented solution doesn’t work, the decider can return to an earlier stage in the process and repeat as needed. Give the students an example decision, such as “what college should I apply to” and ask them to describe the actions taken at each of the four stages.
Stages in Decision Making
Decision Making and Information Systems
*
This graphic illustrates the four stages of decision making introduced in the previous slide, emphasizing that steps can be repeated as needed, depending on the outcome at each stage.
Information systems can only assist in some of the roles played by managers
Classical model of management
Five functions of managers
More contemporary behavioral models
Actual behavior of managers appears to be less systematic, more informal, less reflective, more reactive, and less well organized than in classical model
Mintzberg’s behavioral model of managers defines 10 managerial roles falling into 3 categories
Decision Making and Information Systems
*
This slide discusses the idea that, while information systems can assist in making decisions by providing information and tools for analysis, they cannot always improve on decisions being made. Ask the students to provide examples of decisions that an information system might not be able to assist in. Is there any similarity among these example decisions, and what does this say about the types of decisions an information system can help with?
You can understand the complexity and breadth of some of the decisions being made within an organization by looking at the activities of its managers. While the classical model of management sees five functional roles of managers, real-life observation of managers sees far more complexity in managerial activities. Ask the students to recall the five attributes listed in the book as differing greatly from the classical description. Managers (1) perform a great deal of work at an unrelenting pace (2) managerial activities are fragmented; lasting for less than 9 minutes (3) managers prefer current, specific, ad hoc information; (4) manager prefer oral forms of communication and (5) managers give high priority to maintaining a complex web of contacts as an informal information system. Ask students to explain attributes 3, 4, and 5.
Mintzberg’s 10 managerial roles
Interpersonal roles: Figurehead
*
This slide expands on the behavioral model of managers and lists Mintzberg’s 10 managerial roles that fall into three categories. Which of these roles can be assisted by information systems and which cannot?
Three main reasons why investments in information technology do not always produce positive results
Information quality
Management filters
Managers have selective attention and have variety of biases that reject information that does not conform to prior conceptions
Organizational culture
Strong forces within organizations resist making decisions calling for major change
Decision Making and Information Systems
*
Even in decision-making situations that can be helped by information systems, the information system may fail in helping to solve the problem or lead to a better decision. This slide describes the three main reasons why investments in information systems do not always produce positive results. What is meant by information quality? The text lists seven quality dimensions: accuracy, integrity, consistency, completeness, validity, timeliness, accessibility. Ask students to identify and/or describe these dimensions?
Ask students to provide an example of what a management “filter” might be. Have they ever witnessed someone in a managerial position be unable to recognize or handle a problem because of a “filter?”
Ask students why people within an organization would resist using an information system.
Systems for Decision Support
Management information systems (MIS)
Decision support systems (DSS)
Executive support systems (ESS)
*
This slide introduces the four types of systems that are designed to support decision-making. Some of these systems were briefly introduced in chapter 2. GDSS are specialized systems that provide a group electronic environment for collective decision making. Ask students to distinguish between MIS, DSS, and ESS. Why are TPS not considered a decision-support system?
Management information systems (MIS)
Help managers monitor and control business by providing information on firm’s performance and address structured problems
Typically produce fixed, regularly scheduled reports based on data from TPS
E.g., exception reports: Highlighting exceptional conditions, such as sales quotas below anticipated level
E.g., California Pizza Kitchen MIS
For each restaurant, compares amount of ingredients used per ordered menu item to predefined portion measurements and identifies restaurants with out-of-line portions
Systems for Decision Support
*
This slide describes MIS, which were discussed at longer length in chapter 2. Other examples of MIS discussed in the text include PharMark’s extranet MIS, identifying patients with drug-use patterns that place them at risk for adverse outcomes; Black & Veatch’s intranet MIS that tracks construction costs for various projects across the U.S., and Taco Bell’s TACO system that provides information on food, labor, and period-to-date costs for each restaurant.
Decision-support systems (DSS)
Model-driven DSS
Data-driven DSS
Some contemporary DSS are data-driven
Use OLAP and data mining to analyze large pools of data
E.g., business intelligence applications (Chapter 6)
Systems for Decision Support
*
This slide discusses DSS, which were introduced in Chapter 2. Ask students to differentiate between ESS and DSS. What types of decisions might be handled better by using a model, and what types better by mining data?
Components of DSS
Current or historical data from number of applications or groups
May be small database or large data warehouse
User interface
Systems for Decision Support
*
This slide describes the three main components of a DSS. It is important to note that, because of the need for analyzing and manipulating data, DSS typically operate with extracts or copies of production databases so that using the DSS does not interfere with critical operational systems.
Overview of a Decision-Support System
The main components of the DSS are the DSS database, the user interface, and the DSS software system. The DSS database may be a small database residing on a PC or a large data warehouse.
Systems for Decision Support
*
This graphic illustrates the components of the DSS, and emphasizes the source of DSS data- primarily TPS data and external data, typically in a database separate from production databases.
Model:
Statistical models
Optimization models
Forecasting models
*
This slide describes what models are. Ask students what types of situations each are used in. A statistic al model helps establish relationships, such as relating product sales to differences in age, income or other factors. Optimization models determine optimal resource allocation to maximize or minimize specific variables such as cost and time. Forecasting models are used to forecast future conditions, such as sales, given a range of historical data. Sensitivity analysis models ask “what if” questions to determine the impact of changes in one or more factors.
Sensitivity Analysis
This table displays the results of a sensitivity analysis of the effect of changing the sales price of a necktie and the cost per unit on the product’s break-even point. It answers the question, “What happens to the break-even point if the sales price and the cost to make each unit increase or decrease?”
Systems for Decision Support
*
This graphic illustrates the results of a sensitivity analysis of changing the sales price of a necktie – it answers the question “What happens to the break-even point if the sales price and the cost to make each unit increase or decrease?”
1.psd
Data visualization tools:
Help users see patterns and relationships in large amounts of data that would be difficult to discern if data were presented as traditional lists of text
Geographic information systems (GIS):
Category of DSS that use data visualization technology to analyze and display data in form of digitized maps
Used for decisions that require knowledge about geographic distribution of people or other resources, e.g.:
Helping local governments calculate emergency response times to natural disasters
Help retail chains identify profitable new store locations
Systems for Decision Support
*
This slide discusses data visualization, which can greatly help in the user comprehending patterns and relationships within data. When the data visualization tool analyzes data to present in relation to digitized maps, this is a GIS, a type of DSS. What kind of information could a GIS produce that would be useful to a pizza chain? What about a hospital?
Web-based customer decision-support systems (CDSS):
Support decision-making process of existing or potential customer
Use Web information resources and capabilities for interactivity and personalization to help users select products and services
E.g., search engines, intelligent agents, online catalogs, Web directories, newsgroup discussions, other tools
Automobile companies that use CDSS to allow Web site visitors to configure desired car
Financial services companies with Web-based asset-management tools for customers
Systems for Decision Support
*
This slide discusses a type of DSS, one that is geared to customer decision-making and is typically offered over the Web. What CDSS have students encountered online? Did they find them useful? Why or why not? Are there any drawbacks to using a CDSS?
Group decision support systems (GDSS)
Interactive system to facilitate solution of unstructured problems by group of decision makers
Hardware – computer and networking hardware, overhead projectors, display screens
GDSS software collects, documents, ranks, edits and stores participant ideas, responses
May require facilitator and staff
Enables increasing meeting size and increasing productivity
Promotes collaborative atmosphere, guaranteeing anonymity
Follow structured methods for organizing and evaluating ideas and preserving meeting results
Systems for Decision Support
*
This slide discusses GDSS, a third type of system that support decision-making. What types of problems might a group encounter, when trying to make a decision as a group? What kinds of decisions might need to be made as a group?
Executive Support Systems (ESS)
Executive support systems (ESS)
Balanced scorecard method:
Financial
Key performance indicators (KPIs) measure each dimension
*
This slide describes ESS, the fourth type of system used to support decision-making. ESS are designed to give managers an overview of their company. What is “balanced” about the balanced scorecard method? An example of a KPI for an online retail firm is the average length of time to deliver a package to a consumer. Ask students to come up with KPIs for sample companies, for example, a laundromat, a university, a video game software manufacturer.
Role of ESS in the firm
Used by both executives and subordinates
Drill-down capability: Ability to move from summary information to finer levels of detail
Integrate data from different functional systems for firm-wide view
Incorporate external data, e.g. stock market news, competitor information, industry trends, legislative action
Include tools for modeling and analysis
Primarily for status, comparison information about performance
Executive Support Systems (ESS)
*
This slide describes the functions of an ESS, and its role as giving management an overview of the firm and its environment. Ask students why the drill-down capability would be important to management.
Business value of executive support systems
Enables executive to review more data in less time with greater clarity than paper-based systems
Needed actions identified and carried out earlier
Improves management performance
Increases upper management’s span of control
Also enables decision making to be decentralized and take place at lower operating levels
Increases executives’ ability to monitor activities of lower units reporting to them
Executive Support Systems (ESS)
*
This slide describes the business value of ESS. Much of the value of ESS is found in their flexibility and ability to analyze, compare, and highlight trends. Using an ESS brings a much greater amount of information about the company and external influences, and in a timelier fashion, to management, and greatly improves management performance. It can also change the role of management, in enabling decisions to be made at lower levels as well as the ability to review lower-level performance more easily. In what cases would pushing decisions to a lower level be an advantage and in what scenarios might this prove unwise?
Thank You
Improving hundreds of thousands of “small” decisions adds up to large annual value for the business
Types of decisions:
Unstructured: Decision maker must provide judgment, evaluation, and insight to solve problem
Structured: Repetitive and routine; involve definite procedure for handling so they do not have to be treated each time as new
*
This slide discusses the importance of improved decision-making and describes the three types of decisions that are made in an organization. Table 12-1 in the text illustrates how a small decision made hundreds of times a year can be just as valuable as a single decision made once a year. For example, the decision to schedule production to fill orders, made 150 times a year, with a value of $10,000 if this decision is improved, can mean an annual value of $1.5 million. The different levels in an organization tend to make different types of decisions, and require different types of support to make these decisions. Ask students to provide examples of each type of decision. Give students examples of decisions and ask what category the decision fall into and why.
Senior managers:
Middle managers:
Make more structured decisions but these may include unstructured components
E.g., Why is order fulfillment report showing decline in Minneapolis?
Operational managers, rank and file employees
Make more structured decisions
Decision Making and Information Systems
*
This slide describes the types of decisions being made at the different levels within an organization. Semi-structured decisions contain a portion that is unstructured and a portion that is structured. Which portion, of the example question for middle managers, is structured and which is unstructured? What would make this question a fully structured question? Ask students to come up with additional examples of decisions at the executive, middle management, and operational levels of the organization, for companies they have worked for.
Information Requirements of Key Decision-Making Groups in a Firm
Senior managers, middle managers, operational managers, and employees have different types of decisions and information requirements.
Decision Making and Information Systems
*
This graphic illustrates the three types of decision-makers within an organization. Ask students to describe in their own words how to tell what category a decision falls into. If a structured decision is given separately to two employees, should they each come up with the same answer? What about semistructured decisions? Unstructured decisions? Which of the types of decisions could most easily be handled by computer software?
Four stages of decision making
Intelligence
Design
Choice
Implementation
Making chosen alternative work and continuing to monitor how well solution is working
Decision Making and Information Systems
*
This slide describes the process of decision-making as a series of four stages. It is important to note that if an implemented solution doesn’t work, the decider can return to an earlier stage in the process and repeat as needed. Give the students an example decision, such as “what college should I apply to” and ask them to describe the actions taken at each of the four stages.
Stages in Decision Making
Decision Making and Information Systems
*
This graphic illustrates the four stages of decision making introduced in the previous slide, emphasizing that steps can be repeated as needed, depending on the outcome at each stage.
Information systems can only assist in some of the roles played by managers
Classical model of management
Five functions of managers
More contemporary behavioral models
Actual behavior of managers appears to be less systematic, more informal, less reflective, more reactive, and less well organized than in classical model
Mintzberg’s behavioral model of managers defines 10 managerial roles falling into 3 categories
Decision Making and Information Systems
*
This slide discusses the idea that, while information systems can assist in making decisions by providing information and tools for analysis, they cannot always improve on decisions being made. Ask the students to provide examples of decisions that an information system might not be able to assist in. Is there any similarity among these example decisions, and what does this say about the types of decisions an information system can help with?
You can understand the complexity and breadth of some of the decisions being made within an organization by looking at the activities of its managers. While the classical model of management sees five functional roles of managers, real-life observation of managers sees far more complexity in managerial activities. Ask the students to recall the five attributes listed in the book as differing greatly from the classical description. Managers (1) perform a great deal of work at an unrelenting pace (2) managerial activities are fragmented; lasting for less than 9 minutes (3) managers prefer current, specific, ad hoc information; (4) manager prefer oral forms of communication and (5) managers give high priority to maintaining a complex web of contacts as an informal information system. Ask students to explain attributes 3, 4, and 5.
Mintzberg’s 10 managerial roles
Interpersonal roles: Figurehead
*
This slide expands on the behavioral model of managers and lists Mintzberg’s 10 managerial roles that fall into three categories. Which of these roles can be assisted by information systems and which cannot?
Three main reasons why investments in information technology do not always produce positive results
Information quality
Management filters
Managers have selective attention and have variety of biases that reject information that does not conform to prior conceptions
Organizational culture
Strong forces within organizations resist making decisions calling for major change
Decision Making and Information Systems
*
Even in decision-making situations that can be helped by information systems, the information system may fail in helping to solve the problem or lead to a better decision. This slide describes the three main reasons why investments in information systems do not always produce positive results. What is meant by information quality? The text lists seven quality dimensions: accuracy, integrity, consistency, completeness, validity, timeliness, accessibility. Ask students to identify and/or describe these dimensions?
Ask students to provide an example of what a management “filter” might be. Have they ever witnessed someone in a managerial position be unable to recognize or handle a problem because of a “filter?”
Ask students why people within an organization would resist using an information system.
Systems for Decision Support
Management information systems (MIS)
Decision support systems (DSS)
Executive support systems (ESS)
*
This slide introduces the four types of systems that are designed to support decision-making. Some of these systems were briefly introduced in chapter 2. GDSS are specialized systems that provide a group electronic environment for collective decision making. Ask students to distinguish between MIS, DSS, and ESS. Why are TPS not considered a decision-support system?
Management information systems (MIS)
Help managers monitor and control business by providing information on firm’s performance and address structured problems
Typically produce fixed, regularly scheduled reports based on data from TPS
E.g., exception reports: Highlighting exceptional conditions, such as sales quotas below anticipated level
E.g., California Pizza Kitchen MIS
For each restaurant, compares amount of ingredients used per ordered menu item to predefined portion measurements and identifies restaurants with out-of-line portions
Systems for Decision Support
*
This slide describes MIS, which were discussed at longer length in chapter 2. Other examples of MIS discussed in the text include PharMark’s extranet MIS, identifying patients with drug-use patterns that place them at risk for adverse outcomes; Black & Veatch’s intranet MIS that tracks construction costs for various projects across the U.S., and Taco Bell’s TACO system that provides information on food, labor, and period-to-date costs for each restaurant.
Decision-support systems (DSS)
Model-driven DSS
Data-driven DSS
Some contemporary DSS are data-driven
Use OLAP and data mining to analyze large pools of data
E.g., business intelligence applications (Chapter 6)
Systems for Decision Support
*
This slide discusses DSS, which were introduced in Chapter 2. Ask students to differentiate between ESS and DSS. What types of decisions might be handled better by using a model, and what types better by mining data?
Components of DSS
Current or historical data from number of applications or groups
May be small database or large data warehouse
User interface
Systems for Decision Support
*
This slide describes the three main components of a DSS. It is important to note that, because of the need for analyzing and manipulating data, DSS typically operate with extracts or copies of production databases so that using the DSS does not interfere with critical operational systems.
Overview of a Decision-Support System
The main components of the DSS are the DSS database, the user interface, and the DSS software system. The DSS database may be a small database residing on a PC or a large data warehouse.
Systems for Decision Support
*
This graphic illustrates the components of the DSS, and emphasizes the source of DSS data- primarily TPS data and external data, typically in a database separate from production databases.
Model:
Statistical models
Optimization models
Forecasting models
*
This slide describes what models are. Ask students what types of situations each are used in. A statistic al model helps establish relationships, such as relating product sales to differences in age, income or other factors. Optimization models determine optimal resource allocation to maximize or minimize specific variables such as cost and time. Forecasting models are used to forecast future conditions, such as sales, given a range of historical data. Sensitivity analysis models ask “what if” questions to determine the impact of changes in one or more factors.
Sensitivity Analysis
This table displays the results of a sensitivity analysis of the effect of changing the sales price of a necktie and the cost per unit on the product’s break-even point. It answers the question, “What happens to the break-even point if the sales price and the cost to make each unit increase or decrease?”
Systems for Decision Support
*
This graphic illustrates the results of a sensitivity analysis of changing the sales price of a necktie – it answers the question “What happens to the break-even point if the sales price and the cost to make each unit increase or decrease?”
1.psd
Data visualization tools:
Help users see patterns and relationships in large amounts of data that would be difficult to discern if data were presented as traditional lists of text
Geographic information systems (GIS):
Category of DSS that use data visualization technology to analyze and display data in form of digitized maps
Used for decisions that require knowledge about geographic distribution of people or other resources, e.g.:
Helping local governments calculate emergency response times to natural disasters
Help retail chains identify profitable new store locations
Systems for Decision Support
*
This slide discusses data visualization, which can greatly help in the user comprehending patterns and relationships within data. When the data visualization tool analyzes data to present in relation to digitized maps, this is a GIS, a type of DSS. What kind of information could a GIS produce that would be useful to a pizza chain? What about a hospital?
Web-based customer decision-support systems (CDSS):
Support decision-making process of existing or potential customer
Use Web information resources and capabilities for interactivity and personalization to help users select products and services
E.g., search engines, intelligent agents, online catalogs, Web directories, newsgroup discussions, other tools
Automobile companies that use CDSS to allow Web site visitors to configure desired car
Financial services companies with Web-based asset-management tools for customers
Systems for Decision Support
*
This slide discusses a type of DSS, one that is geared to customer decision-making and is typically offered over the Web. What CDSS have students encountered online? Did they find them useful? Why or why not? Are there any drawbacks to using a CDSS?
Group decision support systems (GDSS)
Interactive system to facilitate solution of unstructured problems by group of decision makers
Hardware – computer and networking hardware, overhead projectors, display screens
GDSS software collects, documents, ranks, edits and stores participant ideas, responses
May require facilitator and staff
Enables increasing meeting size and increasing productivity
Promotes collaborative atmosphere, guaranteeing anonymity
Follow structured methods for organizing and evaluating ideas and preserving meeting results
Systems for Decision Support
*
This slide discusses GDSS, a third type of system that support decision-making. What types of problems might a group encounter, when trying to make a decision as a group? What kinds of decisions might need to be made as a group?
Executive Support Systems (ESS)
Executive support systems (ESS)
Balanced scorecard method:
Financial
Key performance indicators (KPIs) measure each dimension
*
This slide describes ESS, the fourth type of system used to support decision-making. ESS are designed to give managers an overview of their company. What is “balanced” about the balanced scorecard method? An example of a KPI for an online retail firm is the average length of time to deliver a package to a consumer. Ask students to come up with KPIs for sample companies, for example, a laundromat, a university, a video game software manufacturer.
Role of ESS in the firm
Used by both executives and subordinates
Drill-down capability: Ability to move from summary information to finer levels of detail
Integrate data from different functional systems for firm-wide view
Incorporate external data, e.g. stock market news, competitor information, industry trends, legislative action
Include tools for modeling and analysis
Primarily for status, comparison information about performance
Executive Support Systems (ESS)
*
This slide describes the functions of an ESS, and its role as giving management an overview of the firm and its environment. Ask students why the drill-down capability would be important to management.
Business value of executive support systems
Enables executive to review more data in less time with greater clarity than paper-based systems
Needed actions identified and carried out earlier
Improves management performance
Increases upper management’s span of control
Also enables decision making to be decentralized and take place at lower operating levels
Increases executives’ ability to monitor activities of lower units reporting to them
Executive Support Systems (ESS)
*
This slide describes the business value of ESS. Much of the value of ESS is found in their flexibility and ability to analyze, compare, and highlight trends. Using an ESS brings a much greater amount of information about the company and external influences, and in a timelier fashion, to management, and greatly improves management performance. It can also change the role of management, in enabling decisions to be made at lower levels as well as the ability to review lower-level performance more easily. In what cases would pushing decisions to a lower level be an advantage and in what scenarios might this prove unwise?
Thank You