Decision Support Systems Decision support systems (DSS) are interactive software-based

systems intended to help managers in decision-making by accessing large volumes of

information generated from various related information systems involved in organizational
business processes, such as office automation system, transaction processing system, etc. DSS
uses the summary information, exceptions, patterns, and trends using the analytical models. A
decision support system helps in decision-making but does not necessarily give a decision itself.
The decision makers compile useful information from raw data, documents, personal knowledge,
and/or business models to identify and solve problems and make decisions.

Programmed and Non-programmed Decisions: There are two types of decisions -

programmed and non-programmed decisions.

Programmed decisions are basically automated processes, general routine work, where –
 These decisions have been taken several times.
 These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.

Non-programmed decisions occur in unusual and non-addressed situations, so −

 It would be a new decision.
 There will not be any rules to follow.
These decisions are made based on the available information. These decisions are based on the
manger's discretion, instinct, perception and judgment. For example, investing in a new
technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions. Therefore, there will be
no exact report, content, or format for these systems. Reports are generated on the fly.

Attributes of a DSS:
 Adaptability and flexibility
 High level of Interactivity
 Ease of use
 Efficiency and effectiveness
 Complete control by decision-makers
 Ease of development
 Extendibility
 Support for modeling and analysis
 Support for data access
 Standalone, integrated, and Web-based

Characteristics of a DSS:

 Support for decision-makers in semi-structured and unstructured problems.

 Support for managers at various managerial levels, ranging from top executive to line
managers.

 Support for individuals and groups. Less structured problems often requires the involvement
of several individuals from different departments and organization level.

 Support for interdependent or sequential decisions.

 Support for intelligence, design, choice, and implementation.

 Support for variety of decision processes and styles.

 DSSs are adaptive over time.

Benefits of DSS:

 Improves efficiency and speed of decision-making activities.

 Increases the control, competitiveness and capability of futuristic decision-making of the

organization.

 Facilitates interpersonal communication.

 Encourages learning or training.

 Since it is mostly used in non-programmed decisions, it reveals new approaches and sets up
new evidences for an unusual decision.

 Helps automate managerial processes.

Components of a DSS: Following are the components of the Decision Support System –

Database Management System (DBMS) − To solve a problem the necessary data may come
from internal or external database. In an organization, internal data are generated by a system
such as TPS and MIS. External data come from a variety of sources such as newspapers, online
data services, databases (financial, marketing, human resources).

Model Management System − It stores and accesses models that managers use to make
decisions. Such models are used for designing manufacturing facility, analyzing the financial
health of an organization, forecasting demand of a product or service, etc.

Support Tools − Support tools like online help; pulls down menus, user interfaces, graphical
analysis, error correction mechanism, facilitates the user interactions with the system.
Classification of DSS: There are several ways to classify DSS. Hoi Apple and Whinstone
classifies DSS as follows −

 Text Oriented DSS − It contains textually represented information that could have a bearing
on decision. It allows documents to be electronically created, revised and viewed as needed.

 Database Oriented DSS − Database plays a major role here; it contains organized and highly
structured data.

 Spreadsheet Oriented DSS − It contains information in spread sheets that allows create, view,
modify procedural knowledge and also instructs the system to execute self-contained
instructions. The most popular tool is Excel and Lotus 1-2-3.

 Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure written for
performing certain calculations and particular program type.

 Rules Oriented DSS − It follows certain procedures adopted as rules.

 Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is the
example.

 Compound DSS − It is built by using two or more of the five structures explained above.

Types of DSS: Following are some typical DSSs −

Status Inquiry System − It helps in taking operational, management level, or middle level
management decisions, for example daily schedules of jobs to machines or machines to
operators.

Data Analysis System − It needs comparative analysis and makes use of formula or an
algorithm, for example cash flow analysis, inventory analysis etc.

Information Analysis System − In this system data is analyzed and the information report is
generated. For example, sales analysis, accounts receivable systems, market analysis etc.

Accounting System − It keeps track of accounting and finance related information, for example,
final account, accounts receivables, accounts payables, etc. that keep track of the major aspects
of the business.

Model Based System − Simulation models or optimization models used for decision-making are
used infrequently and creates general guidelines for operation or management.
Executive support systems: Executive support systems are intended to be used by the senior
managers directly to provide support to non-programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope and context
of such information is often not known beforehand.

This information is intelligence based −

 Market intelligence
 Investment intelligence
 Technology intelligence

Examples of Intelligent Information: Following are some examples of intelligent information,

which is often the source of an ESS −
 External databases
 Technology reports like patent records etc.
 Technical reports from consultants
 Market reports
 Confidential information about competitors
 Speculative information like market conditions
 Government policies
 Financial reports and information

Advantages of ESS:
 Easy for upper level executive to use
 Ability to analyze trends
 Augmentation of managers' leadership capabilities
 Enhance personal thinking and decision-making
 Contribution to strategic control flexibility
 Enhance organizational competitiveness in the market place
 Instruments of change
 Increased executive time horizons.
 Better reporting system
 Improved mental model of business executive
 Help improve consensus building and communication
 Improve office automation
 Reduce time for finding information
 Early identification of company performance
 Detail examination of critical success factor
 Better understanding
 Time management
 Increased communication capacity and quality

Disadvantage of ESS:
 Functions are limited
 Hard to quantify benefits
 Executive may encounter information overload
 System may become slow
 Difficult to keep current data
 May lead to less reliable and insecure data
 Excessive cost for small company

COMPONENTS OF AN ESS: They are as following:-

Hardware : The basic computer hardware needed for a typical EIS includes four components:
Input data-entry devices. These devices allow the executive to enter, verify, and update data
immediately.
The central processing unit (CPU), which is the kernel because it controls the other computer
system components.
Data storage files. The executive can use this part to save useful business information, and this
part also help the executive to search historical business information easily.
Output devices, which provide a visual or permanent record for the executive to save or read.
This device refers to the visual output device or printer.

Software: The basic software needed for a typical EIS includes four components:
Text base software. The most common form of text are probably documents;
Database. Heterogeneous databases residing on a range of vendor-specific and open computer
platforms help executives access both internal and external data;
Graphic base. Graphics can turn volumes of text and statistics into visual information for
executives. Typical graphic types are: time series charts, scatter diagrams, maps, motion
graphics, sequence charts, and comparison-oriented graphs (i.e., bar charts);
Model base. The EIS models contain routine and special statistical, financial, and other
quantitative analysis.

User Interface: Several types of interfaces can be available to the EIS structure, such as
scheduled reports, questions/answers, menu driven, command language, natural language, and
input/output. The ideal interface for an EIS would be simple to use and highly flexible, providing
consistent performance, reflecting the executive’s world, and containing help information.

Telecommunication: As decentralizing is becoming the current trend in companies,

telecommunications will play a pivotal role in networked information systems. Transmitting data
from one place to another has become crucial for establishing a reliable network. In addition,
telecommunications within an EIS can accelerate the need for access to distributed data.
What is a Transaction Processing System: It is an information processing system that captures
and processes every single transaction that takes place within the organization. These
transactions include activities involving collection, retrieval, modification, and all other sets of
activities that trigger the retrieval of all transactions. A transaction processing system is highly
reliable, consistent, and efficient. Transaction processing systems may also be referred to as real-
time processing systems. Transaction processing is often compared with batch processing. These
two are fundamentally different processing systems that vary in their speed, processing manner,
and accuracy of the events.

Since a TPS is a real-time processing system, all the events and transactions that occur in the
organization or over the system are processed immediately causing no delay. It is one of the most
used technologies in all online transactions and is called an Online Transaction Processing
System (OLTP).

Importance: An ideal TPS is crucial in taking care of the following two aspects:

 Handling and Managing Operations: TPS is an excellent technology in handling and

managing the everyday operations of any given organization. It allows multitasking at a
wider level with an unmatched ability to process thousands of transactions at the same time
without any delay or break-down.

 Tapping the Raw Markets: TPS is a carrier tool for any business since it gives businesses
the freedom to operate in different segments of society by working remotely. This operability
gives the businesses an opportunity to tap, exist and grow in newer markets that are raw and
full of opportunities.

Different Types of Transaction Processing System: There are basically two types of
transaction processing:

Batch Processing: As the name suggests, the processing of transactions takes place over
batches. These batches can be customized as per organization requirements. For example, a
company may want to process the payroll of its employees in a weekly or bi-weekly manner,
thus the batches of employee salaries will be processed over a span of one and two weeks
respectively. There is generally a time delay in this type of processing.

Real-time Processing: Under real-time processing, every single transaction is processed with
immediate effect. There is no time delay in the real-time processing system. In real-time
processing, all transactions are automatically processed as they are made. There are no delays.
As such, all data in the system always indicates the current transaction status. An example would
be what happens in an online ticketing system. It always shows the number of tickets available or
the seats that are already taken. All changes are immediately reflected in the system. In some
cases, real-time transaction processing systems provide more efficient and reliable data. But,
there may be cases when batch processing may be more effective.

Note: There are at least four types of transaction processing systems and they differ in terms of
primary function and application.

 Sales and Marketing Systems: A sales and marketing transaction processing system
handles customer service, sales management, promotion tracking, pricing changes, and dealer
communications. Examples include sales order information, sales commission, and sales
support systems.

 Manufacturing and Production Systems: Manufacturing and production transaction

processing systems manage scheduling, purchasing, shipping or receiving, and operations
processes. Examples include machine control, purchase order, and quality control systems.

 Finance and Accounting Systems: A finance and accounting transaction processing system
tackles general ledger-, billing-, and cost accounting-related operations. Examples include
general ledger, payroll, accounts receivable and payable, and funds management systems.

 Human Resources (HR) Systems: HR transaction processing systems ease the management
of personnel records, benefits, compensations, labor relations, and training. Examples include
employee records, employee benefits, and employee skills inventory systems. The
transaction processing systems that academic institutions and other kinds of organizations
use fall under “Others.”

Main Features of a Transaction Processing System: A transaction processing system has the
following features:

Reliability: One of the biggest advantages of using a transaction processing system is that it is a
highly reliable system that manages and handles the important transactions of an organization.
Since the revenue system is completely dependent on the TPS, it is crucial to the seamless
working of any organization.

Fast Response: The biggest differentiating factor between a real-time processing system and a
batch processing system is its speed and accuracy. Rapid response time ensures that your
customers do not have to wait for their transactions to be processed.

Similar Structure and Integrity: There are certain features of the TPS that need to stay intact to
work the way it is supposed to. In order to ensure that the processing system works exactly the
same way for every organization every single time, the structure must stay intact.

Authorized Control: A good and ideal TPS allows only the authorized personnel to conduct the
processing activities anytime. With the recent advancements, the newer versions even allow
authorized personnel to gain access from a remote location as well but with high and stringent
security checks.
User-friendliness: A good TPS must be easy to use and user-friendly in order to promote
increased usage of it. An easily operable TPS would also ensure there are minimal errors in the
inputting data and conducting the processing activities.

How does a Transaction Processing System work: The working of a transaction processing
system can be conducted in two ways:

 Processing in a Batch: Batch processing is the traditional way of processing transactions. In

this method, the transactions are collected, combined, and grouped in batches. These batches
can be identified based on several parameters. Generally, the FIFO method is followed to do
so. These batches are collected and stored and can be processed at any time. There is usually
some time delay in the batch processing method.

 Processing in real-time: Real-time processing is a fruit of technological advancements. It

was developed to cater to the needs to fast processing and real-time reflection of revenue
entries for an organization. The time delay in the batch processing method accounted for a
fair amount of loss in the revenues. Under this method, the transactions are processed in real-
time and provide instant verification for the same as well. A real-time TPS can be accessed
remotely as well over the cloud.

Primary Components of a Transaction Processing System (TPS): They are as following:

 Inputs: The source documents fetched from the transactions made by customers or
organizations and contain information regarding money. These may be bills, invoices,
coupons, customer orders, etc.

 Outputs: The documents generated after the complete processing of the inputs are called
outputs.

 Processing units: Processing refers to the step where the information provided at the input
step is broken down into segments to be processed into relevant output.

 Storage: The location in the memory where all the desired information is stored is called
memory. Generally, the information is stored in the form of ledgers.

Main Functions of a TPS(Transaction Processing System): The main functions of a TPS are
conducted by the above-mentioned primary components. These include:

 Input functions: Securing and inputting the data of the transactions that have taken place.

 Output functions: Producing the report and record of the input data to be used for future
references and validating the transaction.
 Storage functions: Storing the data from both input and output operations and ensuring the
availability of data for operations like information access, retrieval, sorting, and updating.

 Processing functions: Computing, calculating, sorting, and defining the input data to get the
desired results.

Examples of Transaction Processing System:

 Hotel reservation: It is extremely useful in reservations of all types wherein the customer
needs an instant verification of the request.

 Cheque Clearance: Like in physical banks, all the cheques are collected in dropbox and
processed together as a batch with a certain delay (batch processing).

 POS(Point of Sale): IT reduces the work of sales executives as once the product is tagged
and the related information is entered into the system, the executive only needs to scan the
code and the complete information will be withdrawn from the database.

Advantages:
 It is a highly cost-effective and fast solution to all the revenue-related operations of
any given organization.
 It works through a highly stable and reliable database that stores and reflects the
information as and when desired without any risk of information loss.
 It allows for a quick recovery from any operational failure causing a very little delay
in the transaction processing.
 It allows remote functioning giving the freedom of free operation to businesses who
want to grow across the globe.
 It can be used both in a real-time manner and batch-processing manner.

Disadvantages:
 Every business has different needs that must be dealt with exclusively. This calls for
designing a customized solution for every single business that has some specific
requirements.
 Though it is a cost-effective solution, the initial cost of setting up and installation can
be on the higher side.
 Even with a highly sophisticated setup, you may need to deploy a large number of
workforces for data input, managing and recording inventory, etc.
 Though TPS is designed for handling a lot of data and work, overloading may lead to
a system crash.
 We need to have a certain specification of the hardware for TPS software to work
smoothly.
Meaning of Office Automation System:
office automation is the process of setting and watching data flow around by itself such that
there’s no human intervention, errors, and inaccuracies of any kind. For this to happen, there
needs to be an office tool responsible for collecting, organizing, storing, analyzing, and
disseminating the data. Such tools are designed to be reliable and can be trusted in the handling
of confidential organizational data.
Technology is revolutionizing how work is done in the office and organizational settings.
Traditional systems and office practices quickly become employees’ mistakes extinct with the
infiltration of new and seamless technologically advanced tools that improve efficiency, save on
costs and enhance quality. For instance, email communication has taken the place of memos,
shared drives have kicked cabinet filing through the window and employee timesheet stamping
has been rendered useless by biometrics.

What Is an Office Automation System:

It’s defined as the tool that facilitates the movement of data from one system to another by itself
without the intervention of human mechanisms or inaccuracies. Such tools provide tremendous
assistance in collecting data, secure analysis, and accomplishing everyday tasks with ease. The
goal of such tools is to automate and optimize all the business procedures and processes.

Advantages of Office Automation System:

 Mobile Compatibility: Companies and businesses are quickly adapting to the new normal
by adopting remote working. Many of them have implemented mobile office systems, which
has enabled many of their employees to work. All this wouldn’t have been possible without
the input of office automation systems. And it doesn’t need to be employees working who
benefit from this automation. In other words, it’s now possible to work from anywhere. You
could be seated at the airport waiting to get onto your next flight and need to check in to see
how things are running.
 Saves Time and Resources: Automation, in other words, means getting more done with
fewer resources while saving time. It means getting rid of the highly tedious, complex, and
sometimes monotonous tasks so that the workforce can focus their energy and time
elsewhere. For instance, the paperless filing system that staff doesn’t need to waste a lot of
time cruising the file cabinets back and forth just to find a single file.
 Availability of Reports and Analytics: There’s only one way to tell if your investment in
office automation systems is generating a favorable ROI; data. Factors like employee
motivation could be a pointer, but it doesn’t necessarily mean that things are working out
according to projections and plans. Data, on the other hand, makes all the difference. It
makes it possible to compare the process history, actual vs. anticipated outcomes, speed of
delivery, and many other metrics. By adopting a single piece of multifaceted software, it’s
possible to synchronize and harmonize all operations that entail everything from collection,
organization, analysis, and storage of data, generation and sharing of reports.
 Minimal Errors: We know what they say; humans are to error. But a properly implemented
office automation system will rid you of that worry. One thing about errors is that they lead
 to production delays since they have to be rectified, cross-checked again before they can
proceed to the next level. In many cases, a single task will take twice or even thrice the
amount of time it should have taken if you did everything right. The worst news is that some
of these errors are costly. It may be a simple one, such as adding a single or couple of digits
when paying vendors or employees. But the outcomes are often devastating if these aren’t
spotted and corrected.
 Compatibility with Other Software: We can easily integrate office automation software
with other systems such as CRM, internal database and accounting software. It’s important
that when you’re implementing automation in your organization, you choose a system that
will not make you spend a lot of time pushing data from one system to another. If it’s not
compatible with the already established systems, then it’s probably not worth your time and
efforts.
 Facilitates Easier Creation of Workflows: A good and effective workflow automation
system is one that’s designed with the business in mind. Before settling on one, you need to
ensure that it gives you an easy time when you want to create your workflows, e.g., create a
sequence of relevant tasks needed to complete a process. Ideally, this is a process that
shouldn’t take you more than five minutes to figure out, even if it’s your first encounter with
the software. Above all, you know it’s the right choice when it fits into your already
established processes instead of complicating things and forcing you to overhaul many
already established systems.

Functions of Office Automation System:

 Eliminates paperwork
 Requires less storage space
 Minimizes errors
 It makes data storage and retrieval easy
 Allows several people to access data
 Retrieves information instantly
 eliminates data redundancy