Week 7 8 & 10 ch10 c

Principles of Information
Systems
Eighth Edition
Chapter 10
Information and Decision Support
Systems

2Principles of Information Systems, Eighth Edition
Principles and Learning Objectives
• Good decision-making and problem-solving skills
are the key to developing effective information and
decision support systems
– Define the stages of decision making
– Discuss the importance of implementation and
monitoring in problem solving

(continued)
• The management information system (MIS) must
provide the right information to the right person in
the right format at the right time
– Explain the uses of MISs and describe their inputs
and outputs
– Discuss information systems in the functional areas
of business organizations

(continued)
• Decision support systems (DSSs) are used when
the problems are unstructured
– List and discuss important characteristics of DSSs
that give them the potential to be effective
management support tools
– Identify and describe the basic components of a
DSS

(continued)
• Specialized support systems, such as group
support systems (GSSs) and executive support
systems (ESSs), use the overall approach of a
DSS in situations such as group and executive
decision making
– State the goals of a GSS and identify the
characteristics that distinguish it from a DSS
– Identify the fundamental uses of an ESS and list the
characteristics of such a system

Decision Making and Problem Solving
• Every organization needs effective decision making
• In most cases, strategic planning and overall goals
of the organization set the course for decision
making
• Information systems can assist with strategic
planning and problem solving

Decision Making as a Component of
Problem Solving
• Decision-making phase: first part of problem-
solving process
– Intelligence stage: potential problems or
opportunities are identified and defined
– Design stage: alternative solutions to the problem
are developed
– Choice stage: requires selecting a course of action

8
Decision Making as a Component of Problem
Solving (continued)
Figure 10.1: How Decision Making Relates to Problem Solving

Decision Making as a Component of
Problem Solving (continued)
• Problem solving: goes beyond decision making to
include implementation and monitoring stages
• Implementation stage: a solution is put into effect
• Monitoring stage: decision makers evaluate the
implementation

Programmed Versus Nonprogrammed
Decisions
• Programmed decision
– Decision made using a rule, procedure, or quantitative
method
– Easy to computerize using traditional information
systems
• Nonprogrammed decision
– Decision that deals with unusual or exceptional
situations
– Not easily quantifiable

Optimization, Satisficing, and Heuristic
Approaches
• Optimization model: find the best solution, usually
the one that will best help the organization meet its
goals
• Satisficing model: find a good—but not
necessarily the best—problem solution
• Heuristics: commonly accepted guidelines or
procedures that usually find a good solution

12
Principles of Information Systems, Eighth Edition
Optimization, Satisficing, and Heuristic Approaches
(continued)
Figure 10.2: Optimization Software

An Overview of Management
Information Systems
• Management information system (MIS)
– Integrated collection of people, procedures,
databases, and devices
– Provides managers and decision makers with
information to help achieve organizational goals
– Can give the organization a competitive advantage
– Providing the right information to the right people in
the right format and at the right time

Management Information Systems in
Perspective
• Management information system (MIS) (continued)
– Provides managers with information that supports
effective decision making and provides feedback on
daily operations
• Use of MISs spans all levels of management

Management Information Systems in Perspective
(continued)
Figure 10.3: Sources of Managerial Information

Inputs to a Management Information
System
• Internal data sources
– TPSs and ERP systems and related databases
– Data warehouses and data marts
– Specific functional areas throughout the firm
• External data sources
– Customers, suppliers, competitors, and stockholders
whose data is not already captured by the TPS
– Internet
– Extranets

Outputs of a Management Information
System (continued)
• Scheduled report: produced periodically, or on
schedule, such as daily, weekly, or monthly
• Key-indicator report: summary of previous day’s
critical activities
• Demand report: developed to give certain
information at someone’s request
• Exception report: automatically produced when a
situation is unusual or requires management action
• Drill-down reports: provide increasingly detailed
data about a situation

Outputs of a Management Information System
(continued)
Figure 10.5: Reports Generated by an MIS

Outputs of a Management Information System
(continued)
Table 10.1: Guidelines for Developing MIS Reports

Characteristics of a Management
Information System
• Provide reports with fixed and standard formats
• Produce hard-copy and soft-copy reports
• Use internal data stored in computer system
• Allow users to develop custom reports
• Require user requests for reports developed by
systems personnel

Functional Aspects of the MIS
• Most organizations are structured along functional
lines or areas
• MIS can be divided along functional lines to
produce reports tailored to individual functions

Functional Aspects of the MIS (continued)
Figure 10.6: An Organization’s MIS

Financial Management Information
Systems
• Financial MIS: provides financial information to
executives and others
• Some financial MIS subsystems and outputs
– Profit/loss and cost systems: profit and revenue
centers
– Auditing: internal and external
– Uses and management of funds

Financial Management Information
Systems (continued)
Figure 10.7: Overview of a Financial MIS

Manufacturing Management
Information Systems
• Manufacturing MIS subsystems and outputs
monitor and control the flow of materials, products,
and services through the organization
• Design and engineering: CAD systems
• Master production scheduling and inventory control
– Methods: MRP, JIT
• Process control
– Techniques: CAM, CIM
• Quality control and testing

26
Manufacturing Management
Information Systems (continued)
Figure 10.8: Overview of a Manufacturing MIS

Marketing Management Information
Systems
• Marketing MIS: supports managerial activities in
product development, distribution, pricing
decisions, and promotional effectiveness
• Subsystems
– Marketing research
– Product development
– Promotion and advertising
– Product pricing
– Sales analysis

28
Marketing Management Information Systems (continued)
Figure 10.9: Overview of a Marketing MIS

29
Marketing Management Information Systems
(continued)
Figure 10.10: Reports Generated to Help Marketing Managers Make Good
Decisions

Human Resource Management Information Systems
• Human resource MIS: concerned with activities
related to employees and potential employees
• Subsystems
– Human resource planning
– Personnel selection and recruiting
– Training and skills inventory
– Scheduling and job placement
– Wage and salary administration

Human Resource Management
Information Systems (continued)
Figure 10.11: Overview of a Human Resource MIS

Other Management Information
Systems
• Accounting MIS: provides aggregate information
on accounts payable, accounts receivable, payroll,
and many other applications
• Geographic information system (GIS): capable
of assembling, storing, manipulating, and
displaying geographic information

An Overview of Decision Support
Systems
• DSS: organized collection of people, procedures,
software, databases, and devices used to help
make decisions that solve problems
• Focus of a DSS is on decision-making
effectiveness regarding unstructured or
semistructured business problems
• Used by managers at all levels

Characteristics of a Decision Support
System
• Provide rapid access to information
• Handle large amounts of data from different
sources
• Provide report and presentation flexibility
• Offer both textual and graphical orientation
• Support drill-down analysis

Characteristics of a Decision Support
System (continued)
• Perform complex, sophisticated analysis and
comparisons using advanced software packages
• Support optimization, satisficing, and heuristic
approaches
• What-if analysis: making hypothetical changes to
problem data and observing impact on results
• Goal-seeking analysis: determining problem data
required for a given result
• Simulation: ability of the DSS to duplicate features
of a real system

Characteristics of a Decision Support System
(continued)
Figure 10.13: With a spreadsheet program, a manager can enter a goal, and
the spreadsheet will determine the input needed to achieve the goal.

Capabilities of a Decision Support
System
• Support problem-solving phases
• Support different decision frequencies
– Ad hoc DSS
– Institutional DSS
• Support different problem structures
– Highly structured problems
– Semistructured or unstructured problems
• Support various decision-making levels

Capabilities of a Decision Support System (continued)
Figure 10.14: Decision-Making Level

39
A Comparison of DSS and MIS
Table 10.3: Comparison of DSSs and MISs

A Comparison of DSS and MIS (continued)
Table 10.3: Comparison of DSSs and MISs (continued)

Components of a Decision Support
System
• Database
• Model base
• Dialogue manager: user interface that allows
decision makers to:
– Easily access and manipulate the DSS
– Use common business terms and phrases
• Access to the Internet, networks, and other
computer-based systems

42
Components of a Decision Support System (continued)
Figure 10.15: Conceptual Model of a DSS

The Database
• Database management system
– Allows managers and decision makers to perform
qualitative analysis on data stored in company’s
databases, data warehouses, and data marts
– Can also be used to connect to external databases

The Model Base
• Model base: provides decision makers with access
to a variety of models and assists them in decision
making
• Model management software (MMS): software
that coordinates the use of models in a DSS

The User Interface or Dialogue
Manager
• Allows users to interact with the DSS to obtain
information
• Assists with all aspects of communications
between user and hardware and software that
constitute the DSS

Group Support Systems
• Group support system (GSS)
– Consists of most elements in a DSS, plus software
to provide effective support in group decision making
– Also called group decision support system or
computerized collaborative work system

Group Support Systems (continued)
Figure 10.16: Configuration of a GSS

Characteristics of a GSS That
Enhance Decision Making
• Special design
• Ease of use
• Flexibility
• Decision-making support
Brainstorming
– Group consensus approach
– Nominal group technique

Characteristics of a GSS That Enhance Decision
Making (continued)
• Anonymous input
• Reduction of negative group behavior
• Parallel communication
• Automated record keeping

GSS Software
• Often called groupware or workgroup software
• Helps with joint work group scheduling,
communication, and management
• Examples
– Virtual Office from Groove Networks
– Lotus Notes
– Office Communicator
– IBM’s Workplace
– Microsoft’s NetMeeting

GSS Software (continued)
• Examples of groupware products available on the
Web
– WebEx, Genesys Meeting Center, GoToMeeting
Corporate
• GSS software incorporated into existing software
packages

GSS Alternatives
• Decision room
– Decision makers are located in the same building or
geographic area
– Decision makers are occasional users of the GSS
approach
• Local area decision network
– Group members are located in the same building or
geographic area
– Group decision making is frequent

GSS Alternatives (continued)
Figure 10.18: The GSS Decision Room

GSS Alternatives (continued)
• Teleconferencing
– Decision frequency is low
– Location of group members is distant
• Wide area decision network
– Decision frequency is high
– Location of group members is distant

Executive Support Systems
• Executive support system (ESS):
– Specialized DSS
– Includes hardware, software, data, procedures, and
people used to assist senior-level executives
– Also called an executive information system (EIS)

56
Executive Support Systems (continued)
Figure 10.19: The Layers of Executive Decision Making

Executive Support Systems in Perspective
• Tailored to individual executives
• Easy to use
• Drill-down capabilities
• Support need for external data

Executive Support Systems in Perspective
(continued)
• Can help with situations that have a high degree of
uncertainty
• Future-oriented
• Linked to value-added business processes

Capabilities of Executive Support
Systems
• Support for defining overall vision
• Support for strategic planning
– Determining long-term objectives through analysis of
current organization and prediction of future trends
• Support for strategic organizing and staffing
• Support for strategic control
• Support for crisis management

Summary
• Decision-making phase: includes intelligence,
design, and choice stages
• Problem-solving process: includes decision-making
phase, and implementation and monitoring stages
• Management information system (MIS): provides
managers with information that supports effective
decision making and provides feedback on daily
operations
• Financial MIS: provides financial information to
executives and others

Summary (continued)
• Manufacturing MIS: monitors and controls flow of
materials, products, and services through the
organization
• Marketing MIS: supports managerial activities in
product development, distribution, pricing
decisions, and promotional effectiveness
• Human resource MIS: concerned with activities
related to employees and potential employees

Summary (continued)
• Accounting MIS: provides aggregate information on
accounts payable, accounts receivable, payroll,
and other applications
• Geographic information system (GIS): capable of
assembling, storing, manipulating, and displaying
geographic information
• DSS: organized collection of people, procedures,
software, databases, and devices used to help
make decisions that solve problems

Summary (continued)
• Group support system (GSS): consists of most
elements in a DSS, plus software to provide
effective support in group decision making
• Executive support system (ESS): specialized DSS;
includes all hardware, software, data, procedures,
and people used to assist senior-level executives

Week 7 8 & 10 ch10 c

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