Information Systems & Enhancing Decision Making For The Digital Firm and Digital Support System (DSS)

Decision Support System 04-04-2020
Information
Systems & Enhancing
Decision Making for the
Digital Firm and Digital
Support System (DSS)
Dr. D. Dutta B.Tech (H), PGDM (IIM A), Ph.D
Decision Support System (DSS), Dr. D. Dutta, B.Tech (H), PGDM (IIM A), Ph. D 1
Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

Ph.D 1
DECISION MAKING AND DECISION-SUPPORT SYSTEMS
Business Decision Making and the Decision-Making Process
Decision-Making Levels:
• Senior management
• Middle management and project teams
• Operational management and project teams
• Individual employees

Ph.D 2
MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS
Types of Information Systems
Figure 2-1

Ph.D 3
Different Kinds of Systems

Three main categories of information systems serve
different organizational levels:
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

Ph.D 4
Information Requirements of Key Decision-Making Groups

in a Firm
Figure 13-2

Ph.D 5
Types of Decisions
Unstructured decisions:
• Novel, non-routine decisions requiring judgment

and insights
• Examples: Approve capital budget; decide

corporate objectives

Ph.D 6
Types of Decisions (Continued)

Structured decisions:
• 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 7
Decision Support System (DSS), Dr. D. Dutta, B.Tech (H), PGDM (IIM A), Ph. D

Ph.D 7
Major Types of Systems
• Transaction Processing Systems (TPS)
• Management Information Systems (MIS)
• Decision-Support Systems (DSS)
• Executive Support Systems (ESS)

Ph.D 8
The Four Major Types of Information Systems
Figure 2-2

Ph.D 9
Stages in Decision Making
Decision Support System (DSS), Dr.Figure

D. Dutta, 13-3
B.Tech (H), PGDM (IIM A), Ph. D 10
10

Ph.D 10
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
11

Ph.D 11
A Symbolic Representation for a Payroll TPS
Figure 2-3
12

Ph.D 12
Typical Applications of TPS
Figure 2-4 13
13

Ph.D 13
Management Information Systems (MIS)

Management level
• Inputs: High volume transaction level data
• Processing: Simple models
• Outputs: Summary reports
• Users: Middle managers
Example: Annual budgeting

14

Ph.D 14
Management Information Systems (MIS) (continued)
Figure 2-5 15
15

Ph.D 15
Management Information Systems (MIS) (continued)

A sample MIS report
Figure 2-6
16

Ph.D 16
Decision-Support Systems (DSS)
Management level
• Inputs: Transaction level data
• Processing: Interactive
• Outputs: Decision analysis
• Users: Professionals, staff
Example: Contract cost analysis 17

Decision Support System (DSS), Dr. D. Dutta, B.Tech (H), PGDM (IIM A), Ph.
D
17

Ph.D 17
Decision-Support Systems (DSS) (Continued)

Voyage-estimating decision-support system
Figure 2-7
18
18

Ph.D 18
EXECUTIVE SUPPORT SYSTEMS (ESS):
• Inputs: Aggregate data
• Processing: Interactive
• Outputs: Projections
• Users: Senior managers
Example: 5 year operating plan

19
19

Ph.D 19
Model of a Typical Executive Support System
Figure 2-8 20
20

Ph.D 20
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

21

Ph.D 21
Relationship of Systems to One Another

Interrelationships among systems
Figure 2-9 22
22

Ph.D 22
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
23

Ph.D 23
SYSTEMS FOR DECISION SUPPORT
The Difference between MIS and DSS
Management Information Systems:
• Primarily address structured problems
• Provides typically fixed, scheduled reports based

on routine flows of data and assists in the general
control of the business
24

Ph.D 24
Decision Support Systems:

• Support semistructured and unstructured problems
• Greater emphasis on models, assumptions, ad-hoc

queries, display graphics
• Emphasizes change, flexibility, and a rapid

response
25

Ph.D 25
Types of Decision-Support Systems
Model-driven DSS:
• Primarily stand-alone systems
• Use a strong theory or model to perform “what-if”

and similar analyses
26

Ph.D 26
Components of DSS
• 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
27

Ph.D 27
Data-driven DSS:
• 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
28

Ph.D 28
Model: An abstract representation that illustrates the

components or relationships of a phenomenon
• Statistical models
• Optimization models
• Forecasting models
• Sensitivity analysis (“what-if” models)
29

Ph.D 29
Overview of a Decision-Support System
Figure 13-4
30

Ph.D 30
Sensitivity Analysis
Figure 13-5
31

Ph.D 31

Information Systems & Enhancing Decision Making For The Digital Firm and Digital Support System (DSS)

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Decision Support System 04-04-2020

Dr. D. Dutta B.Tech (H), PGDM (IIM A), Ph.D

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Business Decision Making and the Decision-Making Process

• Middle management and project teams

• Operational management and project teams

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Types of Information Systems

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Different Kinds of Systems

1. Operational-level systems: support operational managers,

2. Management-level systems: serve the monitoring,

3. Strategic-level systems: help senior management tackle

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Information Requirements of Key Decision-Making Groups

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

• Novel, non-routine decisions requiring judgment

• Examples: Approve capital budget; decide

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Types of Decisions (Continued)

• Examples: Restock inventory; determine special

• Examples: Allocate resources to managers;

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

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)

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

The Four Major Types of Information Systems

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

DECISION MAKING AND DECISION-SUPPORT SYSTEMS

Stages in Decision Making

Decision Support System (DSS), Dr.Figure

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Transaction Processing Systems (TPS)

• Basic business systems that serve the

• A computerized system that performs and

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

A Symbolic Representation for a Payroll TPS

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Typical Applications of TPS

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Management Information Systems (MIS)

• Inputs: High volume transaction level data

• Processing: Simple models

• Outputs: Summary reports

• Users: Middle managers

Example: Annual budgeting

Dr. D. Dutta, B.Tech (H), PGDM (IIM A),