Look, Read, Understand, Apply


Supporting Decision Making

Supporting Decision Making

Companies, organizations need information system that support the different kinds of information and decision-making needs of the employees and business professionals. Ease and efficient access to the pertinent information is of utmost importance for all the managers and business professionals of the organizations. Understanding the role of Internet, intranet, extranet and other Web-enabled information technologies has become very necessary as these technologies have significantly strengthened the role of information systems.

The nature and complexity of information is highly dependent on the level of management and the amount of the structure of the decision problems. The framework of the classic managerial pyramid helps to understand information needs of the manager of different level of management; the theory of managerial pyramid is still relevant to the downsized and flattened organizations. There are in general three different levels of management that need to be supported by the information technology:

  • Strategic Management: The board members, CEO and top executives belong to the strategic management. They develop and specify the goals and objectives of the organization; make strategies, policies to achieve their goals and objectives. They monitor overall performance of the organization.
  • Tactical Management: Organizations have self-directed teams who develop short- and medium-range plans, schedules, budgets and form policies, procedures and objectives; allocate resources for the subunits of the organization and also monitors the performances of the subunits.
  • Operational Management: The members of the self-directed teams make short-term plans and schedules, direct use of the resources.
Quality of Information

Value and usefulness of the information depends on the following characteristics of the information:

  • Timeliness
  • Currency
  • Frequency
  • Time Period
  • Accuracy
  • Relevance
  • Completeness
  • Conciseness
  • Scope
  • Performance
  • Clarity
  • Detail
  • Order
  • Presentation and Media
Decision Structure

The information is needed to solve problems and issues. Different variables play role in the problems and issues; if information about the variables of the decision situation is available or known then decision making will be easy. Based on the availability of information about the variables of decision situation, decisions can be categorized on following types:

  • Structured: Decisions made at the operational level are structured; information about the decision problem is available or method of obtaining solution to the problem is known in advance.
  • Semi-Structured: Decisions made at the tactical level tends to be semi-structured; complete information about the decision problem is not available, also method for obtaining solution to be problem is not clearly known
  • Unstructured: Decisions made at the strategic level are unstructured in nature; the executives face problems and issues which are not clear, lack information, data or sometimes no information is available. The decision situations are complex in nature.
Business Intelligence

Business intelligence (BI) is a system consisting of several concepts and methods which uses fact-based decision support system to improve business decision making processes.

Business Analytics

Business Analytics (BA) is more action-oriented than Business Intelligence. Business analytics investigate historical data iteratively to gain insight about the performance of the business and focuse on using skills, technologies, practices to the continuous growth of the business. It focuses in developing new insights and strategies to achieve goals and objectives of the business organization. Business intelligence uses predefined set of metrices to measure past performance and guide business planning.

Decision support systems

Decision support systems (DSSs) are information systems that provide interactive interface for the managers to support them during the decision-making process. DSS is ad-hoc, quick-response system initiated and controlled by the decision makers. Decision support systems uses:

  • Analytical model
  • Specialized databases
  • A decision maker’s own insights, knowledge and judgments
  • An interactive computer-based interface to support semi-structured business decisions

DSS relies on model bases and databases. A DSS model base is a software containing models for computing and analyzing relationships among variables. DSS software contains built in analytical models (what-if and goal-seeking) and also allows user to create their own models.

Management Information System

Management Information system (MIS) produces information that support several daily occurring decision-making needs of managers and business users. Pre-defined reports, displays, responses are products of MIS which satisfy information requirement of decision makers at the operational and tactical levels; these reports, displays help to address structured types of decision situations. Four different types of reports provided by MIS are:

  • Periodic Scheduled Reports: Reports with prespecified format designed to provide information for managers on a regular basis.
  • Exception Reports: Reports containing information about the exception conditions; these reports are produced only when exceptional conditions occur.
  • Demand Reports and Responses: These reports are made available whenever managers demand.
  • Push Reporting: Information is pushed to the computers of the managers
Online Analytical Processing

Online Analytical Processing (OLAP) helps to examine and manipulate large amounts of data from several perspectives. OLAP involves analyzing relationships among thousands or millions of records stored in the data warehouse, data marts; it discovers patterns, trends and exceptions from the data. OLAP involves following analytical operations:

  • Consolidation (Roll up): Aggregating data by different attributes
  • Drill-down:Displaying detailed data by different attributes
  • Slicing and Dicing: Slicing and Dicing enables users to view data from different perspectives.
Using Decision Support Systems

A DSS includes an interactive analytical modeling process. DSS involves four basic types of analytical modeling activities:

  • What-if analysis: User observes the effect of changing values of variables or relationship among variables.
  • Sensitivity analysis:User changes value of only one variable repeatedly and observes the resulting changes on other variables.
  • Goal-seeking analysis:Goal seeking sets a target value for a variable and makes changes on other variables until the target value is achieved.
  • Optimization analysis: One or more variables are changed repeatedly to get the optimum value for one or more target variables.
Executive Information System

Executive Information System (EIS): combines many features of MIS and DSS. They are initially designed to meet the strategic needs of the top management; it is supposed to provide easy to retrieve and use immediate information about the critical success factors (CSFs) of the organization.

Enterprise Portals and Decision support

Enterprise Portals and Decision support: Enterprise Information Portals (EIPs) are integration of MIS, DSS, EIS and other technologies for providing access to variety of applications and services to all the users (both intranet and extranet) of the organization. It is a Web-based interface. EIPs are designed to provide data/information needs of individual users or groups in the form of digital dashboard.