ENHANCING MANAGEMENT DECISION MAKING FOR THE DIGITAL FIRM

11.1 © 2004 by Prentice Hall

Management Information Systems 8/eManagement Information Systems 8/eChapter 11 Enhancing Management Decision-Making for the Digital FirmChapter 11 Enhancing Management Decision-Making for the Digital Firm1111

ENHANCINGENHANCING

MANAGEMENTMANAGEMENT

DECISION MAKINGDECISION MAKING

FOR THE DIGITAL FIRMFOR THE DIGITAL FIRM

Chapter


Management Information Systems 8/eManagement Information Systems 8/eChapter 11 Enhancing Management Decision-Making for the Digital FirmChapter 11 Enhancing Management Decision-Making for the Digital Firm

• Building information systems that can Building information systems that can actually fulfill executive information actually fulfill executive information requirementsrequirements

• Create meaningful reporting and management Create meaningful reporting and management decision-making processesdecision-making processes

MANAGEMENT CHALLENGES



• Computer system at the management level of Computer system at the management level of an organizationan organization

• Combines data, analytical tools, and models Combines data, analytical tools, and models

• Supports semistructured and unstructured Supports semistructured and unstructured decisionmakingdecisionmaking

DECISION-SUPPORT SYSTEMS (DSS)



MISMIS

• Provides reports based on routine flow Provides reports based on routine flow of dataof data

• Assists in general control of the Assists in general control of the organizationorganization


MIS and DSS



DSSDSS

• Emphasizes change, flexibility, rapid Emphasizes change, flexibility, rapid response, models, assumptions, ad hoc response, models, assumptions, ad hoc queries, and display graphicsqueries, and display graphics


MIS and DSS



Model-driven DSSModel-driven DSS

• Primarily stand-alone Primarily stand-alone

• Uses model to perform “what-if” and other Uses model to perform “what-if” and other kinds of analysiskinds of analysis


Types of Decision-Support Systems



Data-driven DSSData-driven DSS• Allows users to extract and analyze useful Allows users to extract and analyze useful

information from large databasesinformation from large databases

DataminingDatamining• Finds hidden patterns and relationships in Finds hidden patterns and relationships in

large databases to infer ruleslarge databases to infer rules• Knowledge discoveryKnowledge discovery


Types of Decision-Support Systems









DSS database: DSS database: ccollection of current or ollection of current or historical datahistorical data

DSS software system: DSS software system: ccollection of ollection of software tools/mathematical and analytical software tools/mathematical and analytical models models

User interface:User interface: easy interaction easy interaction


Components of Decision-Support Systems



ModelModel

• Abstract representation illustrating Abstract representation illustrating components or relationships components or relationships

Sensitivity analysisSensitivity analysis

• Asks “what-if” questions repeatedly to Asks “what-if” questions repeatedly to determine the impact of changedetermine the impact of change


Components of Decision-Support Systems






• General Accident Insurance:General Accident Insurance: Customer buying patterns and fraud Customer buying patterns and fraud detectiondetection

• Bank of America:Bank of America: Customer profilesCustomer profiles

• Frito-Lay, Inc.:Frito-Lay, Inc.: Price, advertising, and Price, advertising, and promotion selectionpromotion selection


DSS Applications and the Digital Firm



• Burlington Coat Factory:Burlington Coat Factory: Store Store location and inventory mixlocation and inventory mix

• Keycorp:Keycorp: Targeting direct mail marketing Targeting direct mail marketing customerscustomers

• National Gypsum:National Gypsum: Corporate planning Corporate planning and forecastingand forecasting





• Southern Railway:Southern Railway: Train dispatching Train dispatching and routingand routing

• Texas Oil and Gas Corporation:Texas Oil and Gas Corporation: Evaluation of potential drilling sitesEvaluation of potential drilling sites

• United Airlines:United Airlines: Flight scheduling, Flight scheduling, passenger demand forecastingpassenger demand forecasting





• U.S. Department of Defense:U.S. Department of Defense: Defense Defense contract analysiscontract analysis





• Comprehensive examination of supply Comprehensive examination of supply management chain management chain

• Searches for most efficient and cost-Searches for most efficient and cost-effective combinationeffective combination

• Reduces overall costsReduces overall costs

• Increases speed and accuracy of filling Increases speed and accuracy of filling customer orderscustomer orders


DSS for Supply Chain Management



• Uses data mining to guide decisions Uses data mining to guide decisions

• Consolidates customer information into Consolidates customer information into massive data warehousesmassive data warehouses

• Uses various analytical tools to slice Uses various analytical tools to slice information into small segments information into small segments


DSS for Customer Relationship Management






Geographic Information Systems (GIS)Geographic Information Systems (GIS)

• Software for analyzing and displaying data Software for analyzing and displaying data using digitized mapsusing digitized maps

• Enhances planning and decision makingEnhances planning and decision making

• Use data visualization technologyUse data visualization technology


DSS for Simulating Business Scenarios



Customer Decision-Support Systems Customer Decision-Support Systems (CDSS)(CDSS)

• Support decision-making process of an Support decision-making process of an existing or potential customerexisting or potential customer


Web-Based Customer Decision-Support Systems



• Interactive computer-based system Interactive computer-based system

• Facilitates solution to unstructured Facilitates solution to unstructured problems problems

• Set of decision makers working together Set of decision makers working together as a groupas a group

GROUP DECISION-SUPPORT SYSTEMS (GDSS)

What Is a GDSS?



• Hardware: Hardware: Conference facility, electronic Conference facility, electronic hardwarehardware

• Software tools: Software tools: Tools for organizing ideas, Tools for organizing ideas, gathering information, and ranking and gathering information, and ranking and seeking prioritiesseeking priorities

• People: People: Participants, trained facilitator, Participants, trained facilitator, staff supporting hardware and softwarestaff supporting hardware and software


Characteristics of GDSS



• Electronic questionnairesElectronic questionnaires

• Electronic brainstorming toolsElectronic brainstorming tools

• Idea organizersIdea organizers

• Questionnaire toolsQuestionnaire tools


GDSS Software Tools



• Tools for voting or setting prioritiesTools for voting or setting priorities

• Stakeholder identification and analysis Stakeholder identification and analysis toolstools


GDSS Software Tools




Group Interaction



• Improved preplanningImproved preplanning

• Increased participation Increased participation

• Open, collaborative meeting atmosphereOpen, collaborative meeting atmosphere

• Criticism-free idea generationCriticism-free idea generation

• Evaluation objectivityEvaluation objectivity


How GDSS can Enhance Group Decision-Making



Executive Support Systems (ESS):Executive Support Systems (ESS):

• Information system at strategic level of an Information system at strategic level of an organizationorganization

• Addresses unstructured decision making Addresses unstructured decision making through advanced graphics and through advanced graphics and communicationscommunications

EXECUTIVE SUPPORT IN THE ENTERPRISE



• Brings together data from the entire Brings together data from the entire organization organization

• Allows managers to select, access, and Allows managers to select, access, and tailor data tailor data

• Enables executive and any subordinates Enables executive and any subordinates to look at the same data in the same wayto look at the same data in the same way


The Role of Executive Support Systems in the Organization



Developing ESS: Developing ESS:

• Ease of useEase of use

• Facility for environmental scanningFacility for environmental scanning

• External and internal sources of External and internal sources of information to be used for environmental information to be used for environmental scanning scanning


The Role of Executive Support Systems in the Organization



• Analyzes, compares, and highlights trendsAnalyzes, compares, and highlights trends

• Provides greater clarity and insight into Provides greater clarity and insight into datadata

• Speeds up decision makingSpeeds up decision making


Benefits of Executive Support Systems Benefits of Executive Support Systems



• Improves management performance Improves management performance

• Increases management’s span of controlIncreases management’s span of control

• Better monitoring of activitiesBetter monitoring of activities


Benefits of Executive Support Systems



ESS for business intelligence:ESS for business intelligence:

• Identifies changing market conditionsIdentifies changing market conditions

• Formulates responsesFormulates responses

• Tracks implementation effortsTracks implementation efforts

• Learns from feedbackLearns from feedback


Executive Support Systems and the Digital Firm



Monitoring corporate performance: Monitoring corporate performance:

balanced scorecard systemsbalanced scorecard systems

• Model for analyzing firm performanceModel for analyzing firm performance

• Supplements traditional financial Supplements traditional financial measures with measurements from measures with measurements from additional business perspectivesadditional business perspectives


Executive Support Systems and the Digital Firm



Strategic performance management tools Strategic performance management tools

for enterprise systemsfor enterprise systems

• SAP:SAP: Web-enabled mySAP.com™, Web-enabled mySAP.com™, Management CockpitManagement Cockpit

• PeopleSoft:PeopleSoft: Web-enabled Enterprise Web-enabled Enterprise Performance Management (EPM) Performance Management (EPM)

• Oracle:Oracle: Strategic Enterprise Management Strategic Enterprise Management


Enterprise Wide Reporting and Analysis


Management Information Systems 8/eManagement Information Systems 8/eChapter 11 Enhancing Management Decision-Making for the Digital FirmChapter 11 Enhancing Management Decision-Making for the Digital Firm1111

ENHANCINGENHANCING

MANAGEMENTMANAGEMENT

DECISION-MAKINGDECISION-MAKING

FOR THE DIGITAL FIRMFOR THE DIGITAL FIRM

Chapter



• How can information systems help How can information systems help individual managers make better individual managers make better decisions when the problems are non-decisions when the problems are non-routine and constantly changing?routine and constantly changing?

• How can information systems help people How can information systems help people working in a group make decisions more working in a group make decisions more efficiently?efficiently?

OBJECTIVES



• Are there any special systems that can facilitate Are there any special systems that can facilitate decision making among senior managers? decision making among senior managers? Exactly what can these systems do to help high-Exactly what can these systems do to help high-level management?level management?

• What benefits can systems that support What benefits can systems that support management decision making provide for the management decision making provide for the organization as a whole?organization as a whole?

OBJECTIVES

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ENHANCING MANAGEMENT DECISION MAKING FOR THE DIGITAL FIRM