ITS674:INTELLIGENT DECISION MAKING SUPPORT SYSTEMS

Overview of
Decision Support

HASLINDA BINTI NORADZAN

UiTM CAWANGAN N.SEMBILAN KAMPUS SEREMBAN
Lesson Outcomes
o Understand today's turbulent business environment and describe
how organizations survive and excel
o Understand the need for computerized support of managerial
decision making
o Understand an early framework for managerial decision making
o Learn the conceptual foundations of the decision support systems
(DSS)
o Describe the business intelligence (BI) methodology and concepts
and relate them to DSS

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Business Pressures-
Responses-Support
Model
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 Business Environment Factors
▸ Markets
▹ Strong competition
▹ Expanding Global Markets
▹ Blooming electronic markets on
Internet
▹ Innovative marketing methods
▸ Consumer Demand
▹ Desire for customization
▹ Desire for quality, diversity of
products, and speed of delivery
▹ Customer getting powerful and less
loyal

▹ Opportunities for outsourcing with IT

support
▹ Need for real-time, on-demand
transaction

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 Business Environment Factors
▸ Technology
▹ More innovations, new products, and
new services
▹ Increasing obsolescence rate
▹ Increasing information overload
▹ Social networking, Web 2.0 and beyond
▸ Societal
▹ Growing government regulation and
deregulation
▹ Workforce more diversified, older and
composed of more women
▹ Prime concerns of homeland security,
and terrorist attacks
▹ Increasing social responsibility of
companies
▹ Greater emphasis on sustainability
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Organizational Responses
▸ Be reactive, anticipative, adaptive, and proactive
▸ Managers may take actions:
▹ Employ strategic planning
▹ Use new and innovative business models
▹ Restructure business processes
▹ Participate in business alliances
▹ Improve corporate information systems
▹ Improve partnership relationships
▹ Encourage innovation and creativity

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Organizational Responses
▹ Improve customer service and relationships
▹ Move to electronic commerce (e-commerce)
▹ Move to make-to-order production and on-demand manufacturing and
services
▹ Use new IT to improve communication, data access (discovery of
information), and collaboration
▹ Respond quickly to competitors' actions (e.g., in pricing, promotions,
new products and services)
▹ Automate many tasks of white-collar employees
▹ Automate certain decision processes
▹ Improve decision making by employing analytics
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Closing the Strategy Gap
▸ One of the major objectives of computerized decision
support is:
▹ To facilitate closing the gap between the current
performance of an organization and its desired
performance
▸ As expressed in its mission, objectives, and goals, and the
strategy to achieve them

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Managerial Decision Making
▸ Management = Decision Making
▸ Decision making: selecting the best solution from two or more
alternatives
▸ Management is a process by which organizational goals are
achieved by using resources
▹ Inputs: resources
▹ Output: attainment of goals
▹ Measure of success: outputs / inputs

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Mintzberg’s 10 Managerial Roles
▸ Interpersonal
▹ Figurehead ▸ Informational
▹ Leader ▹ Monitor ▸ Decisional
▹ Liaison ▹ Disseminator ▹ Entrepreneur
▹ Spokesperson ▹ Disturbance
Handler
▹ Resource
Allocator
▹ Negotiator

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Scientific Approach for
Decision Making Process
 • Define the problem or opportunity
1

• Construct a model that describes the real-world

2 problem

• Identify possible solutions to the modelled problem

3 and evaluate the solution

• Compare, choose and recommend a potential

4 solution to the problem

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Why decision making is
difficult?
 Decision are the hardest

“ thing to make, especially

when it is a choice
between where you should
be and where you want to
be
-unknown
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 Decision making is a skill.

“ Wisdom is a leadership
trait.
-Mark Miller

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▸ Technology, information systems, advanced
search engines, and globalization result in
more and more alternatives from which to
choose
▸ Government regulations and the need for
compliance, political instability and terrorism,
competition, and changing consumer demands
produce more uncertainty, making it more
difficult to predict consequences and the
future

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▸ Other factors are the need to make rapid
decisions, the frequent and unpredictable
changes that make trial-and-error learning
difficult, and the potential costs of making
mistakes

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Why – Computerized DSS?
▸ Speedy computations
▸ Improved communication and collaboration
▸ Increased productivity of group members
▸ Improved data management
▸ Overcoming cognitive limits
▸ Quality support; agility support
▸ Using Web; anywhere, anytime support

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A Decision Support Framework
by Gory and Scott-Morten, 1971

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(Also known as Anthony’s and Simon’s
taxonomy)
Anthony

Simon

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Simon’s Decision Making Process

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Concept of Decision
Support Systems
Classical Definitions of DSS
“ Interactive computer-based systems, which
help decision makers utilize data and models
to solve unstructured problems"
Gorry and Scott-Morton, 1971

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 Decision support systems couple the

“ intellectual resources of individuals with the

capabilities of the computer to improve the
quality of decisions. It is a computer-based
support system for management decision
makers who deal with semi structured
problems
Keen and Scott-Morton, 1978
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Concept of Decision
Support Systems
Recent DSS definitions
“ Decision Support Systems (DSS), a type of
information system designed to support
semi-structured or unstructured managerial
activity
Turban et al. 2007

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“ Decision support systems (DSS) is the area
of the information systems (IS) discipline
that is focused on supporting and
improving managerial decision making
Arnott & Pervan 2008

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 Decision Support System

any computerized system that

supports decision making in an
An organization wide organization
knowledge management
system; a decision support
system specific to an
organizational function
(marketing, finance,
accounting, manufacturing,
planning, SCM, etc.)
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DSS as a Specific Application
▸ DSS refers to a process for building customized applications for
unstructured or semi-structured problems
▸ Components of the DSS Architecture
▹ Data, Model, Knowledge/Intelligence, User, Interface (API and/or
user interface)
▹ DSS often is created by putting together loosely coupled
instances of these components

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High-Level Architecture of a DSS

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Types of DSS
▸ Model-oriented DSS
▹ make use of quantitative
models (e.g. decision trees,
multi-criteria models,
optimization models)
▸ Data-oriented DSS
▹ The functionality is resulted from
access to and manipulation of a
large database of structured data
(e.g. file drawer, management
reporting systems, data
warehousing and analysis
systems, EIS, spatial DSS etc.)
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Evolution of DSS into Business
Intelligence
▸ Enabling tools like OLAP, data warehousing, data mining,
intelligent systems, delivered via Web technology have
collectively led to the term “business intelligence” (BI) and
“business analytics”

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Business Intelligence (BI)
▸ combines architectures, tools, databases,
analytical tools, applications, and methodologies
▸ a content-free expression, so it means different
things to different people
▸ Objective : to enable easy access to data (and
models) to provide business managers with the
ability to conduct analysis
▸ helps transform data, to information (and
knowledge), to decisions and finally to action

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The Architecture of BI

Data Business
Warehouse Analytic

Business Performance User Interface

Management 35
A High-Level Architecture of BI

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Styles of BI
▸ MicroStrategy, Corp. distinguishes five styles of BI and offers
tools for:
Report Delivery and Alerting

Enterprise Reporting

Cube Analysis

Ad-hoc queries

Statistics and Data Mining

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Benefits of BI?
A survey by Thompson (2004)
More Improved Improved
Increase
accurate Decision Customer
Revenue
reporting Making Service

81% 78% 56% 49%

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The DSS–BI Connection
▸ architectures are very similar
▸ DSS directly support specific decision making, while BI provides
accurate and timely information, and indirectly support decision
making
▸ BI has an executive and strategy orientation, especially in its BPM and
dashboard components, while DSS, in contrast, is oriented toward
analysts

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The DSS–BI Connection
▸ Most BI systems are constructed with commercially available tools
and components, while DSS is often built from scratch
▸ DSS methodologies and even some tools were developed mostly in
the academic world, while BI methodologies and tools were
developed mostly by software companies
▸ Many of the tools that BI uses are also considered DSS tools (e.g.,
data mining and predictive analysis are core tools in both)

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Conclusion
▸ Some people believe that DSS is a part of BI—one of its
analytical tools
▸ Others think that BI is a special case of DSS that deals mostly
with reporting, communication, and collaboration (a form of
data-oriented DSS)
▸ BI is a result of a continuous revolution and, as such, DSS is one
of BI's original elements

In this course, we separate DSS from BI

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