Professional Documents
Culture Documents
Systems
1
Learning Objectives
By the end of the lecture you should be able to:
Explain Data and Information
Describe Systems, Information Systems and
Information Technology
List different types of IS and their concepts
Describe what the major elements of a TPS,
MIS and DSS are
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Data and Information
Data
Streams of raw facts representing events
such as business transactions – meaningless
without context
Information
Clusters of facts meaningful and useful to
human beings in processes such as making
decisions
Individuals - Entertainment and enlightenment
Businesses - Decision making, problem solving
3 and control
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Information Quality – cont’d
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What is an Information System (IS)
Information System is becoming the
foundation of business models and
processes
It allows for the distribution of knowledge like
Integrated components processing, storing and
disseminating information in an organisation.
Interdisciplinary study of systems that provide
information to users in organisations
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Data to Information via IS
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Information Systems & Technology
Information System (IS): Acquires, organizes,
stores, manipulates and transmits information.
A Management Information System is the plan and
design of an Information System to provide managers
with information.
Can be paper or computer-based.
Information Technology (IT): Any form of technology
used by people to handle information e.g. acquiring,
organizing, storing, manipulating, and transmitting
information
Information technology power has increased rapidly.
Information and Decisions: managing has to do with
making decisions.
Good Information allows effective decision making.
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Examples of IT and IS
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Examples of IT and IS
Examples of IT
Hardware (PC, UNIX server)
Software (e-mail, Internet, Windows, Word)
Consumer devices (mobiles)
Examples of IS
File systems, databases, e-mail servers /
clients
e-commerce
SAP, student records
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Why is IS Important?
Worldwide changes:
Global economy
Knowledge- or information-based society
Business enterprise
Digital firm
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Global Economy
Growing percentage of economy relies
upon import and export
Need to operate globally
IS can provide global trading infrastructure
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Information Economy
70%
60%
% SERVICE
50%
% WHITE COLLAR
40% % BLUE COLLAR
30% % FARMING
20%
10%
0%
10
60
00
20
30
40
50
70
80
97
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19
19
19
19
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19
YEAR
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Changes to Society
Change of employment profiles:
Less farming
Less ‘blue collar’ – manufacturing
Increased service
Increased ‘white collar’ – office-based
USA: 55% of work force are in knowledge-
or information-based activities
Shift of manufacture to low-wage countries
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Business Enterprise
Change from hierarchical organisations
Now flat, decentralised
Relies on instant information
Flexibility with customer focus, with
increasing importance
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IS - Impact on Organizational Hierarchy
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Digital Firm
An organisation where:
Nearly all relationships with customers,
suppliers and employees is digital
Business processes accomplished through
digital networks
Paperless Office
Flexible
Dependent upon on IT
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Impacts of IS
Horizontal Information Flows: Information networks can
bridge functional departments.
Allow information to flow horizontally between departments.
Can lead to much higher productivity, quality, and innovation.
Virtual products: firms can use their information system
to custom tailor goods and services to each customer.
Virtual showroom, Online business Vs Brick and Mortar
Systems can allow this at no increase in cost
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Impacts of IS
For an organisation to survive and prosper
More locations (networking, Internet)
New products and services
Improve jobs and work flows:
Efficiency
Cost
Accountability
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Components of an information system
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Benefits of Information Systems
Information Systems have provided managers
with better information, enabling better decision
making.
Effective Information Systems can be a source of
competitive advantage.
Computer-based information systems are
associated with decentralization of managerial
decision making.
Flattening the Organization: information systems
reduce the need for the hierarchy to control the firm.
Managers control and coordinate using the
system, not workers
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Who should study IS?
Information Systems Careers
Systems analyst, Specialist in Enterprise Resource Planning
(ERP), Business Consultant, Database Administrator, etc.
Knowledge Workers
Managers and non-managers
Employers seek computer-literate professionals who know how
to use information technology.
Computer Literacy Replacing Traditional Literacy
Key to full participation in western society
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Barriers of IS
Technological factors: consistent standards for
systems do not exist.
Makers of hardware use different standards.
Makes it hard to share information between
systems.
Resistance by Individuals: many managers do
not use the system fully.
Some managers are afraid of technology or do not
understand it.
Political Resistance: the information system
changes the way information flows in the firm
Some managers feel threatened by it.
25 Managers may think they will be laid-off
Limitations of IS
Loss of the human element: information systems
cannot present all kinds of information accurately.
Thick information, which is rich in meaning and not
quantifiable, is best suited to human analysis.
Example: employee evaluations need face-to-face
communication to convey all information.
Difficult installations: Information systems can be
hard to develop. To avoid problems:
list major organization goals.
build support for the system with workers.
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Porter’s Value Chain and IS
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Value Chain.
It evaluates which value each particular activity adds to the
organizations products or services.
This idea was built upon the insight that an organization is more than a
random compilation of machinery, equipment, people and money.
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Porter’s Generic Value Chain
Infrastructure
Support
Activities Human Resource Management
Technology Development
Procurement
Inbound Operations Outbound Marketing Service
Primary Logistics Logistics & Sales
Activities
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Primary Activities
Primary activities are directly concerned with the
creation or delivery of a product or service.
inbound logistics,
operations,
outbound logistics,
marketing and sales,
and service.
Operations
This is where goods are manufactured or assembled. Individual operations could include room
service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a
new car's engine.
Outbound Logistics
The goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer.
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Secondary Activities
There are four main areas of support
activities:
procurement
technology development (including R&D),
human resource management, and
infrastructure (systems for planning,
finance, quality, information management
etc.).
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Procurement
This function is responsible for all purchasing of goods, services and
materials. The aim is to secure the lowest possible price for purchases of
the highest possible quality.
Technology Development
Technology is an important source of competitive advantage. Companies
need to innovate to reduce costs and to protect and sustain competitive
advantage. This could include production technology, Internet marketing
activities, lean manufacturing, Customer Relationship Management (CRM),
and many other technological developments.
Firm Infrastructure
This activity includes and is driven by corporate or strategic planning. It
includes the Management Information System (MIS), and other mechanisms
for planning and control such as the accounting department. 33
Margin
Margin’ implies that organizations realize a
profit margin that depends on their ability
to manage the linkages between all
activities in the value chain.
organization is able to deliver a product /
service for which the customer is willing to
pay more than the sum of the costs of all
activities in the value chain.
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Typical Value Chain Analysis
Analysis of own value chain – which costs
are related to what activities
Analysis of Customer value chain
Identification of cost advantage
Identification of potential “value” added for the
customer—lower cost/high performance-
where does customer see “value”
“….We have learned that it is NOT technology that creates
a competitive edge, but the management process that
exploits technology…” - Pater Keen an MIS Consultant
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Potential IS Contributions
Service
Inbound Operations Outbound Marketing
Logistics Logistics & Sales
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Business process
Business processes are simply a set of
activities that transform a set of inputs into
a set of outputs (goods or services) for
another person or process using people
and tools.
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BPR
BPR is the
redesign of business processes,
the associated systems and
organizational structures to achieve a
dramatic improvement in business
performance
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Why BPR?
The business reasons:
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BPR
It is the examination and change of five
components of the business:
Strategy
Processes
Technology
Organization
Culture
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Check out process
Purpose of the process is to pay for and bag
your groceries.
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Reengineering Business Processes
Business Business
Improvement Reengineering
Path to
Cultural Cultural Structural
Execution
Primary Enabler Statistical Control Information Technology
Operational dependency occurs when time, volume or
other physical conditions makes IT unique to perform a
task. It is related to the organization's EFFICIENCY.
Strategic impact occurs when a policy, strategy or product
uniquely requires IT for its implementation. It is related to the
organization's EFFECTIVENESS.
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Corporate IS Strategy Objectives
A corporate IS strategy is necessary to define:
what IS services will be provided and to whom;
who is responsible for providing specific IS services;
how these services will be provided;
priorities for provision of new facilities and improvement of existing
facilities;
who has access to what information;
how access to IS services will be distributed and supported;
what common standards should be applied;
what resources are required and how resources available should be
utilized;
mechanisms for understanding and mapping current and future
business processes;
a mechanism for maintaining and renewing the strategy.
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IS Planning Process
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Typical Corporate IS Plan
Section of Plan Section Contents
Tim
i Support
Co ng o Degree of
mm f P From Top
Perceived Need
itm roje Management
en ct Within the
t Firm
- Accept -
- Reject -
- Redefine -
- Postpone -
- Proof of Concept -
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Project Process Flow Model
Current New
System System
1 5
2
“How”
Physical Physical
“What”
Logical Logical
4
3
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Project Feasibility Assessment
Feasibility Assessment Description
Category
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Project Evaluation Criteria
Evaluation Criteria Description of Criteria
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Quantitative vs. Qualitative
Quantitative Benefits Qualitative Benefits
Market share will improve to a sustainable We will be one of the leading suppliers in
minimum of 35%. the market.
Line throughput will increase by 7% within Line throughput will be dramatically
the first quarter and by at least 3% each increased and will continue this trend over
quarter thereafter. time.
Product quality will increase such that Product quality will increase and rework
rework will be reduced more than 12% will decrease.
annually.
Production costs for the auxiliary power Production costs for the auxiliary power
unit will be reduced by at least $3.00 per unit will go down significantly.
unit.
Note: Not all parameters are ‘easily’ measurable e.g. “Goodwill”
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Different types of IS
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Types of IS
Types of Information System in
Organisations:
By organisational level
By function within organisational level
Examples in functional areas
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IS at the Organisational Level
KIND OF SYSTEM GROUPS SERVED
STRATEGIC LEVEL SENIOR MANAGERS
OPERATIONAL OPERATIONAL
LEVEL MANAGERS
SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN
MARKETING RESOURCES
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IS at the Organisational Level
Operational-level
Elementary activities and routine transactions
Data current and accurate
Knowledge-level
Support knowledge and data workers
Integrate new knowledge into the business
Office automation
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IS at the Organisational Level
Management-level
Periodic monitoring, control, decision-making
and administration
Is the business working well?
Strategic-level
Long-term (e.g. 5 year) planning and strategy
Internal and external information
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Examples
What examples can you think of at the
different organisational levels?
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Types of IS
Transaction Processing Systems (TPS)
Knowledge Work Systems (KWS)
Office Automation Systems (OAS)
Management Information Systems (MIS)
Decision-support Systems (DSS)
Executive Support Systems (ESS)
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Transaction Processing Systems
Systems that perform and record daily routine
transactions necessary for business
Operational-level Systems
Order Machine control Securities trading Payroll Compensatio
tracking n
Knowledge-level Systems
Engineering workstations Graphics workstations Managerial workstations
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Office Automation Systems
Systems that are designed to increase the
productivity of data workers
Knowledge-level Systems
Word processing Document imaging E-mail / electronic
calendars
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Management Information Systems
Systems that serve planning, control and decision-
making through routine summary and reports
Management-level Systems
Sales Inventory control Annual budgeting Capital Relocation
management investment analysis
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Decision-support Systems
Systems that combine data, models and analysis
tools for non-routine decision-making
Management-level Systems
Sales region Production Cost analysis Pricing / Contract
analysis scheduling profitability cost analysis
analysis
Sales and Manufacturing Finance Accountin Human
Marketing g Resources
65
Executive Support Systems (1)
Systems that support non-routine decision-making
through advanced graphics and communications
using expert systems, artificial intelligence
Strategic-level Systems
5-year sales 5-year operating 5-year budget Profit Personnel
trend plan forecasting planning planning
forecasting
Sales and Manufacturing Finance Accountin Human
Marketing g Resources
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Executive Support Systems (2)
High level with drill down
Key business and industry data
Structured and unstructured information
Structured: MTD orders
Unstructured: Industry newsfeed
Graphical
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Interrelationships
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Functional Examples
Examples of IS by function:
Sales and marketing
Manufacturing and production
Finance and accounting
Human resources
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Sales and Marketing
System Description Organisational
Level
Order processing Enter, process and Operational
track orders
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Manufacturing and Production
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Finance and Accounting
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Human Resources
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Summary
Looked at the role of IS within organisations
At organisational levels
Looked at the diversity of types of IS within a
business / organisation
Six different types of IS
Looked at relationships between IS and
business functions
Examples by functional area
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Transaction Processing System
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Transaction Processing Systems
Manual or automatic – all businesses
systematically process transactions
Function: process routine, day-to-day
business activities
Computerized TPS:
Batch
Online (real-time, OLTP)
The foundation of business systems
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Batch TPS
Originally, the only available option
Transactions accumulated over period of time
Time period – day, week, month
Transaction records accumulated in files
When batches are processed, what happens?
Update databases
Generate reports
Generate transactions for other systems
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Batch Processing Pros and Cons
Pros
Relatively easy to program, install and
maintain
Batches can be processed during low-activity
periods
Cons
Information is delayed
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Online TPS (OLTP)
Transactions are processed in real time
Required for any “modern” application
where time is critical
Well supported by client/server computing
model
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Hybrid TPS
OLTP applications can feed transactions
to batch systems
Examine: GL only updated once per day
Real time order capture with delayed
processing
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TPS Requirements
Capture, process and store transactions
Produce reports and information about
transactions
Produce transactions for other TPS
Be accurate and timely
Be efficient – require less labor
Increase customer service
Increase competitive advantage
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TPS Activity Model
Data capture
From online entry or “external” system
Data validation
Should be done as close to source as possible
Processing
Data manipulation
Database updating
Generation of transactions for other systems
Archive Transaction
Create documents and reports
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Management Issues
Uptime
How long can the system be “down” before
significant costs are incurred?
Processing Delays / Response Times
How quickly must a transaction be
processed?
What is the worst online response time that is
acceptable
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Management Issues (2)
Disaster Recovery
What plans are in place to recover lost
business data?
What plans are in place to resume business
processing in case of disaster?
Audit
Can you verify the integrity of the system?
How will you know if transactions are not
processed or are processed incorrectly?
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TPS By Function
Order Processing
Procurement & Inventory Control
Accounting
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Order Processing TPS
Order capture
Variety of means
Configuration
Shipment planning and inventory
allocation
Prioritize orders, select shipment locations,
allocate inventory to orders
Shipping and warehousing
Picking, packing, invoicing, reporting
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Procurement
Inventory Control
Raw materials, WIP, FGI, etc
Purchase Order Processing
Generating, transmitting, maintaining
purchase orders
Receiving
Accounts Payable
Boundary between procurement and
accounting
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Accounting
Accounts Payable
Accounts Receivable
Budget
Payroll
General Ledger
Asset Management
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Disadvantages of Functionally
Organized TPS
Data redundancy
Causes integrity problems
Inefficient
Temporal integrity problems
Caused by different times at which
processing occurs
Lack of information coherence
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Management Information System
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Stages of Data Processing
The Four Stages of Data Processing
Input: Data is collected and entered into
computer.
Data processing: Data is manipulated into
information using mathematical, statistical,
and other tools.
Output: Information is displayed or presented.
Storage: Data and information are maintained
for later use.
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Management Information Systems
MIS
The study of information systems focusing on
their use in business and management.
Goals of an MIS
Provide managers with information
Regular, routine operations
Control, organize and plan better
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Typical Inputs and Outputs
Inputs: Information from the TPS
Outputs: hard and softcopy reports
Scheduled reports
On-demand reports
Key-indicator (business fundamentals)
Exception reports
93
Functional Perspectives of MIS
Financial MIS
Will integrate information from multiple
sources
Functions
Costing
P&L reporting
Auditing
Funds management
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Functional Perspectives of MIS
Manufacturing
Design and Engineering
Master Production Scheduling
Inventory Control
Materials Planning
Manufacturing and Process Control
Quality Control
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Functional Perspectives of MIS
Marketing
Market research
Web-based market research
Pricing
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Functional Perspectives of MIS
Transportation and Logistics
Route and schedule optimization
Human Resources
Accounting
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TPS Vs MIS
Transaction Processing Management Information
Systems (TPS) Systems (MIS)
Support operation Provide decision-
Management and making support for
control routine, structured
Routine, normal decisions
operations Closely linked to and
fed by TPS
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Decision Support System
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Decision Making Process
Intelligence gathering
Definition of problem
Data gathered on scope
Constraints identified
Design phase
Alternatives identified and assessed
Choice
Selection of an alternative
Implementation
Is the solution working?
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Structured vs. Unstructured Problems
Structured problems lend themselves to
programmed decisions
The implication is that a repeatable
process can be employed and these
can be automated
Unstructured problems require
unprogrammed decisions - Can be
addressed (or partially addressed) with
Decision Support Systems
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Structured Problems
Can be addressed by an MIS
Three decision models or techniques
Optimization
Find the best solution
Satisficing
Find a solution which meets certain criteria
Heuristics
Rule-based solution generation
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Mintzberg’s Research
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Mintzberg’s Research
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Mintzberg’s Management roles
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Decision Support Systems
Used for unstructured problems
Characteristics
Data from multiple sources internal and
external to organization
Presentation flexibility
Simulation and what-if capability
Support for multiple decision approaches
Statistical analysis
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Dialogue Manager
112 Allows user interaction with DSS
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Group Decision Making Systems
Very interesting field
How can information technology improve how
decisions are made by groups?
Applications
Where time is critical
Where participants are geographically dispersed
Where authority obstructs communication
Military
Business
Government
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Group Decision Making Systems
Common characteristics
Meeting moderation/facilitation
Signed and anonymous comments
Structured deliberations
Presentation period
Comment period
“Voting”