MGT 300

IT IN BUSINESS

Enabling the Organization Decision

Making
PN. INTAN LIANA SUHAIME
 Learning Outcomes

9.1 Define the systems organizations use to

make decisions and gain competitive
advantages

9.2 Describe the three quantitative models

typically used by decision support systems

9.3 Describe the relationship between digital

dashboards and executive information
systems
 Learning Outcomes

9.4 List and describe four types of artificial

intelligence systems

9.5 Describe three types of data-mining

analysis capabilities
 Decision Making

Reasons for the growth of decision-making

information systems
People need to analyze large amounts of
information
People must make decisions quickly
People must apply sophisticated analysis
techniques, such as modeling and forecasting, to
make good decisions
People must protect the corporate asset of
organizational information
 Decision Making

Model a simplified representation or

abstraction of reality
IT systems in an enterprise
 Transaction Processing Systems

Moving up through the organizational pyramid users move

from requiring transactional information to analytical
information
 Transaction Processing Systems

Transaction processing system - the basic business

system that serves the operational level (analysts) in an
organization

Online transaction processing (OLTP) the capturing of

transaction and event information using technology to (1)
process the information according to defined business
rules, (2) store the information, (3) update existing
information to reflect the new information

Online analytical processing (OLAP) the manipulation

of information to create business intelligence in support of
strategic decision making
 Decision Support Systems

Models information to support

managers and business
professionals during the decision-
making process
 Decision Support Systems

Three quantitative models used by DSSs include:

1. Sensitivity analysis the study of the impact that

changes in one (or more) parts of the model have on
other parts of the model. Eg: What will happen to the
supply chain if a tsunami in Sabah reduces holding
inventory from 30% to 10%?
2. What-if analysis checks the impact of a change in an
assumption on the proposed solution. Eg: Repeatedly
changing revenue in small increments to determine it
effects on other variables.
3. Goal-seeking analysis finds the inputs necessary to
achieve a goal such as a desired level of output. Eg:
Determine how many customers must purchase a new
product to increase gross profits to $5 million.
 Executive Information Systems

A specialized DSS that supports

senior level executives within
the organization
 Executive Information Systems

Most EISs offering the following capabilities:

Consolidation involves the aggregation of
information and features simple roll-ups to complex
groupings of interrelated information. Eg: Data for
different sales representatives can be rolled up to
an office level. Then state level, then a regional
sales level.
Drill-down enables users to get details, and
details of details, of information. Eg: From regional
sales data then drill down to each sales
representatives at each office.
Slice-and-dice looks at information from different
perspectives. Eg: One slice of information could
display all product sales during a given promotion,
another slice could display a single products sales
for all promotions.
 Executive Information Systems

Digital dashboard integrates information

from multiple components and presents it in a
unified display
 Artificial Intelligence (AI)

Intelligent system various commercial

applications of artificial intelligence

Artificial intelligence (AI) simulates

human intelligence such as the ability to
reason and learn
Advantages: can check info on competitor
 Artificial Intelligence (AI)

The ultimate goal of AI is the ability to build a

system that can mimic human intelligence
 Artificial Intelligence (AI)

Four most common categories of AI include:

* Expert system computerized advisory

programs that imitate the reasoning processes
of experts in solving difficult problems. Eg:
Playing Chess.
* Neural Network attempts to emulate the
way the human brain works. Eg: Finance
industry uses neural network to review loan
applications and create patterns or profiles
of applications that fall into two categories
approved or denied.
Fuzzy logic a mathematical method of
handling imprecise or subjective information. Eg:
Washing machines that determine by themselves
how much water to use or how long to wash.
 Artificial Intelligence (AI)

Genetic algorithm an artificial intelligent

system that mimics the evolutionary, survival-of-
the-fittest process to generate increasingly
better solutions to a problem.

Eg: Business executives use genetic algorithm

to help them decide which combination of
projects a firm should invest.
* Intelligent agent special-purposed
knowledge-based information system that
accomplishes specific tasks on behalf of its
users
Multi-agent systems
Agent-based modeling

Eg: Shopping bot: Software that will search several

retailers websites and provide a comparison of
each retailerss offering including prive and
availability.
 Data Mining

Data-mining software includes many forms of

AI such as neural networks and expert
systems
 Data Mining

Common forms of data-mining analysis

capabilities include:
Cluster analysis
Association detection
Statistical analysis
 Cluster Analysis
Cluster analysis a technique used to divide
an information set into mutually exclusive
groups such that the members of each group
are as close together as possible to one
another and the different groups are as far
apart as possible
CRM systems depend on cluster analysis to
segment customer information and identify
behavioral traits
Eg: Consumer goods by content, brand loyalty
or similarity
 Association Detection
Association detection reveals the
degree to which variables are related and
the nature and frequency of these
relationships in the information
Market basket analysis analyzes such
items as Web sites and checkout scanner
information to detect customers buying
behavior and predict future behavior by
identifying affinities among customers
choices of products and services
Eg: Maytag uses association detection to ensure
that each generation of appliances is better
than the previous generation.
 Statistical Analysis
Statistical analysis performs such
functions as information correlations,
distributions, calculations, and variance
analysis
Forecast predictions made on the basis of
time-series information
Time-series information time-stamped
information collected at a particular frequency
Eg: Kraft uses statistical analysis to assure
consistent flavor, color, aroma, texture, and
appearance for all of its lines of foods
THANK YOU