Information Systems & Enhancing Decision Making for the Digital Firm Rashedul Hasan

Information Information Systems & Systems & Enhancing Enhancing

Decision Making for the Decision Making for the Digital FirmDigital Firm

Rashedul Hasan

Business Decision Making and the Decision-Making Process Business Decision Making and the Decision-Making Process

• Senior management

• Middle management and project teams

• Operational management and project teams

• Individual employees

Decision-Making Levels:

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Types of Information Systems

Figure 2-1

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Different Kinds of Systems

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

Three main categories of information systems servedifferent organizational levels:

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Information Requirements of Key Decision-Making Groups in a Firm

Figure 13-2

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

Unstructured decisions:

Types of Decisions

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

• Novel, non-routine decisions requiring judgment and insights

• Examples: Approve capital budget; decide corporate objectives

Structured decisions:

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

• 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

Types of Decisions (Continued)

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

The Four Major Types of Information Systems

Figure 2-2

Stages in Decision Making

Figure 13-3

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

A Symbolic Representation for a Payroll TPS

Figure 2-3

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Typical Applications of TPS

Figure 2-4

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS) (continued)

Figure 2-5

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS) (continued)

Figure 2-6

A sample MIS report

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Model of a Typical Executive Support System

Figure 2-8

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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 SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 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

• Primarily address structured problems

• Provides typically fixed, scheduled reports based

on routine flows of data and assists in the general

control of the business

SYSTEMS FOR DECISION SUPPORT

The Difference between MIS and DSS The Difference between MIS and DSS

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

Management Information Systems:

• Support semistructured and unstructured problems

• Greater emphasis on models, assumptions, ad-hoc queries, display graphics

• Emphasizes change, flexibility, and a rapid response

SYSTEMS FOR DECISION SUPPORT

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

Decision Support Systems:

Model-driven DSS:

SYSTEMS FOR DECISION SUPPORT

Types of Decision-Support Systems Types of Decision-Support Systems

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

• Primarily stand-alone systems

• Use a strong theory or model to perform “what-if” and similar analyses

• 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

SYSTEMS FOR DECISION SUPPORT

Components of DSS Components of DSS

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

Data-driven DSS:

SYSTEMS FOR DECISION SUPPORT

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

• 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

SYSTEMS FOR DECISION SUPPORT

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

• Statistical models

• Optimization models

• Forecasting models

• Sensitivity analysis (“what-if” models)

Model: An abstract representation that illustrates the components or relationships of a phenomenon

Overview of a Decision-Support System

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

Figure 13-4

SYSTEMS FOR DECISION SUPPORT

Sensitivity Analysis

Management Information SystemsManagement Information SystemsChapter 13 Enhancing Decision Making for the Digital Firm Chapter 13 Enhancing Decision Making for the Digital Firm

SYSTEMS FOR DECISION SUPPORT

Figure 13-5