SESSION 11 ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

SESSION 11SESSION 11

ENHANCING MANAGEMENTENHANCING MANAGEMENT

DECISION-MAKINGDECISION-MAKING

FOR THE DIGITAL FIRMFOR THE DIGITAL FIRM

• 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 semi-structured and unstructured Supports semi-structured and unstructured decision-makingdecision-making

DECISION-SUPPORT SYSTEMS (DSS)DECISION-SUPPORT SYSTEMS (DSS)

MISMIS

• Provides reports based on routine flow of Provides reports based on routine flow of datadata

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

• Address structured problemsAddress structured problems

MIS and DSS


DSSDSS

• Provides new sets of capabilities for Provides new sets of capabilities for nonroutine decisions and user controlnonroutine decisions and user control

• 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

• Support semistructured and unstructured Support semistructured and unstructured problem analysisproblem analysis

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 previous databasesinformation from previous databases

DataminingDatamining

• Finds hidden patterns and relationships in Finds hidden patterns and relationships in large databases to infer ruleslarge databases to infer rules

Types of Decision-Support Systems


• AssociationsAssociations

• SequencesSequences

• ClassificationClassification

• ClusteringClustering

• ForecastingForecasting

Types of information yielded from datamining


Overview of a Decision-Support System (DSS)

Figure 12-1


DSS database DSS database

• Collection of current or historical dataCollection of current or historical data

DSS software systemDSS software system

• Collection of software tools/mathematical Collection of software tools/mathematical and analytical models and analytical models

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


Sensitivity Analysis

Figure 12-2


• 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


DSS for Customer Analysis and Segmentation

Figure 12-3


• Interactive computer-based system Interactive computer-based system

• Facilitates solution to unstructured Facilitates solution to unstructured problems by a set of decision makers problems by a set of decision makers working together as a groupworking together as a group

GROUP DECISION-SUPPORT SYSTEMS (GDSS)

What Is a GDSS?

• 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


• Idea organization and evaluationIdea organization and evaluation

• Setting priorities and making decisionsSetting priorities and making decisions

• Documentation of meetingsDocumentation of meetings

• Access to external informationAccess to external information

• Preservation of “organizational memory”Preservation of “organizational memory”

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 using analytical tools and tailor data using analytical tools and online-data displaysonline-data displays

The Role of Executive Support Systems in the Organization


• Provides data and tools without addressing Provides data and tools without addressing specific problemsspecific problems

• Provides greater clarity and insight into dataProvides greater clarity and insight into data

• Capabilities for highlighting trends and drilling Capabilities for highlighting trends and drilling down speed up decision-makingdown speed up decision-making

• Improves performance monitoring of the firmImproves performance monitoring of the firm

• Increases management’s span of control and Increases management’s span of control and better monitoring of activitiesbetter monitoring of activities

Benefits of Executive Support Systems


ESS for business intelligence:ESS for business intelligence:

• Identifies changing market conditions, Identifies changing market conditions, formulate responses, track formulate responses, track implementation efforts abd learn from implementation efforts abd learn from feedbackfeedback• Ex: BP Sony NV, the Netherlands banchEx: BP Sony NV, the Netherlands banch

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 • Ex: ING BankEx: ING Bank

Executive Support Systems and the Digital Firm


SESSION 11 ENHANCING MANAGEMENT DECISION-MAKING FOR THE DIGITAL FIRM

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