Information Systems for

Managers
Session 13
Module 4
Semester 2
Information System in Business – Decision Support Systems
Business processes and relation to IS
• A business process is a logically related set of activities that defines how
specific business tasks are performed, and it represents a unique way in which
an organization coordinates work, information, and knowledge.

• Managers need to pay attention to business processes because they determine

how well the organization can execute its business, and they may be a source
of strategic advantage.

• There are business processes specific to each of the major business functions,
but many business processes are cross-functional.

• Information systems automate parts of business processes, and they can help
organizations redesign and streamline these processes.
Information system in Business
• A large category of IS
comprises those designed to Executives
support the business of an EIS
organization
Decision Senior Managers
Support
• These systems rely on the System
data obtained by transaction
processing systems, as well Middle
as data and information Management Information managers
acquired outside the System
organization and provided by
business partners, suppliers
and customers Transaction Processing System Workers

Levels of IS
Transaction Processing System
• A small business processes transactions that result from day-to-day business
operations, such as creation of pay checks and purchase orders, using a TPS

• Unlike batch system, requires that users interact with the system in real time
to direct the system to collect, store, retrieve and modify data

• A user enters transaction data means of a terminal, and the system

immediately stores the data in a database and produces any required output

• Example: Checking account balance at any point of time

Management Information System
• IS support all levels of management, from those in charge of short-term
schedules and budgets for small work groups to those concerned with long-
term plans and budgets for the entire organization.
• MIS provide routine, detailed, and voluminous information reports specific to
each manager’s areas of responsibility
• These systems are typically used by first-level supervisors. Generally, such
reports focus on past and present activities, rather than projecting future
performance
• MIS can create prescheduled reports, which company management can use in
strategic , tactical and operational planning and operations.
• Example: MIS reports may be a pie chart that illustrates product sales volume
by territory or a graph that illustrates the percentage increase or decrease in a
product’s sales over time.
Decision Support System
• DSS is an interactive computer-based system to help decision makers use
communications technologies, data, documents, knowledge and/or models to
identify and solve problems, complete decision process tasks, and make decisions.

• 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

• 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.
 DSS FOR DECISION-MAKING
• Decision Preparation
- DSS environments provide data required as input to the decision-making process.
- This is what almost all data mart and data warehousing environments do today.

• Decision structuring
– DSS environments provide tools and models for arranging the inputs in ways that
make sense to frame the decision.
– These tools and models are not pivot tables and other aspects of data
presentation found in query tools.
– They are actual decision-making tools, like fault tree analysis, Bayesian logic and
model-based decision-making based on things like neural networks.
• Context Development
– DSS environments again provide tools, and provide the mechanisms for
capturing information about a decision's constituencies (who are affected by
this decision), outcomes and their probabilities, and other elements of the
larger decision-making context.

• Decision-making
– DSS environments may automate all or part of the decision-making
process and offer evaluations on the optimal decision.
– Expert systems and artificial intelligence environments can do this

• Decision Propagation
– DSS environments take the information gathered about constituencies,
dependencies, outcomes and drive elements of the decision into those
constituencies for action.

• Decision Management
• – DSS environments inspect outcomes days, weeks and months after
decisions to see if the decision was implemented/ propagated and if the
effects of the decision are as expected.
Types of DSS
1. Model-driven

2. Data-driven

3. Communication-driven

4. Document-driven and

5. Knowledge-driven
Model-driven DSS
• A model driven DSS emphasizes access to and manipulation of
financial, optimization and/or simulation models.

• Model driven DSS use limited data and parameters provided by

decision makers to aid them in analyzing a situation.

• Example., Sprinter, Media Evaluation using Dynamic and

Interactive Applications of Computers (MEDIAC) and Brandaid.
Data-driven DSS
• A data driven DSS emphasizes access to and manipulation of a
time series of internal company data and sometimes external and
real time data.

• Simple file systems accessed by query and retrieval tools provide

the most elementary level of functionality.

• Ex. Walmart's data driven DSS had more than 5 terabytes of online
storage.
Communications-driven
• DSS Communications driven DSS use network and
communications technologies to facilitate decision relevant
collaboration and communication.

• In these systems, communication technologies are the dominant

architectural component.

• Tools used include groupware, video conferencing and computer

based bulletin boards.
Document-driven DSS
• Document-driven DSS uses computer storage and processing
technologies to provide document retrieval and analysis.

• Large document databases may include scanned documents,

hypertext documents, images, sounds and video.

• Examples of documents that might be accessed by a document-

driven DSS are policies and procedures, product specifications,
catalogs, and corporate historical documents, including minutes of
meetings and correspondence.
Knowledge-driven DSS
• Knowledge driven DSS can suggest or recommend actions to managers.
• These DSS are man machine systems with specialized problem solving
expertise.
• The "expertise" consists of knowledge about a particular domain,
understanding of problems within that domain, and "skill" at solving some
of these problems.
• Artificial Intelligence (AI) and expert systems have been used for scheduling
in reservoir operation and web based advisory systems.
• In recent years, connecting expert systems technologies to relational
databases with web based front ends has broadened the deployment and use
of knowledge driven DSS
WHEN TO BUILD A DSS ?
• The need for building a DSS depends on the following factors:

• Can the problem be solved effectively by conventional programming?

• Is the domain well-bounded?
• Is there a need and a desire for an expert systems?
• Is there at least one human expert who is willing to cooperate?
• Can the expert explain the knowledge so that it is understandable by the
knowledge engineer?
• Is the problem-solving knowledge mainly heuristic and uncertain?
MIS Vs DSS
MIS DSS
Decision support Provide information Provide information and
provided about the performance techniques to analyze
of the organization specific problems
Information form and Periodic, exception, Interactive inquires and
frequency demand, and push responses
reports and responses
Information format Prespecified, fixed format Ad hoc, flexible and
adaptable format
Information processing Information produced by Information produced by
methodology extraction and analytical modeling of
manipulation of business business data
data
Thank you
 Information Systems for
Managers
Session 14
Module 4
Semester 2
Decision Support Systems – Executive Information Systems – Knowledge Based
System
Attributes of 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.
Classification of DSS
• 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.
The Role of DSS is explained as follows:-
• What - if analysis: - This is the process of assessing the impart of variables.
This helps managers to be proactive rather than reactive in their decision
making. This analysis is critical for semi-structured and unstructured
problems because the data necessary to make such decisions are not available.

• Goal oriented: - It is process of determining the input values required to

achieve a certain goal. For example house buyers determine the monthly
payment they can afford (say for example Rs. 5000/-) and calculate the
number of such payments required to pay the desired house.

• Risk analysis: - Risk is the important factor which affects the business
enterprise. DSS allows managers to assess the risks associated with various
alternatives. Decisions can be classified as low risk, medium risk and high
risk. A DSS is particularly useful in medium risk and high risk environments.
• Model building: - DSS allows decisions markets to identify the
most appropriate model for solving the problems. It takes into
account input variables; inter relationship among the variables
problem assumptions and constraints. For example a marketing
manager of a television manufacturing company is charged with
the responsibility of developing a sales forecasting model for color
TV sets.

• Graphical analysis: - This helps managers to quickly digest large

volumes of data and visualize the impacts of various courses of
action. They recommend the use of graph when:-
a) Seeking a quick summary of data.
b) Forecasting activities.
c) Detecting trends over time.
d) Composing points and patterns at different variables.
EIS
• EIS can be defined as a specialized DSS
• EIS are intended to be used by the executives directly to provide
support to non-programmed decisions in strategic management to
improve the long term performance of the organization
• These information are often external, unstructured and even
uncertain. Exact scope and context of such information is often
not known beforehand
 • Time Management
Why EIS? • Improve office automation
• Easy for upper level executive
to use
• Enhance personal thinking
and decision- making
• Reduce time for finding
information
• Ability to analyze trends
• Contribution to strategic
control flexibility
• Instruments of change
• Better understandings
Limitations
• 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

EIS Vs DSS
Applications of EIS
• Manufacturing
• Marketing is the transformation of the raw materials into finished goods for sale,
or intermediate processes involving the production or finishing of semi-
manufactures
• Marketing
• In an organization, marketing executives’ role is to create the future. The main
duty is managing available marketing resources to create
• Financial
• A financial analysis is one of the most important steps to companies today
• EIS enables executives to focus more on the long-term basis of current year ad
beyond
• Executive needs to use financial ratios and cash flow analysis to estimate the
trend and make capital investment decisions
Knowledge-based system
• A system which is built around a knowledge base. i.e. a collection
of knowledge, taken from a human, and stored in such a way that
the system can reason with it.
• Translating an expert’s knowledge into a machine process
• Computer program that developed by AI researchers that reasons
and uses a knowledge base to solve complex problems
• Replace or aid human experts in complex task
• Represents knowledge explicitly rather than procedure code
• 5 phases: Identification, Conceptualization, Formalization,
Implementation and Validation
Thank you