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Unit-1
Introduction to Decision support systems
and Business intelligence
Prepared By: Prof. V. K. Wani
 What is Data?
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 Raw Materials
 Recorded by means of some event or Activity

Data forms.
 alphanumeric (text, numbers and symbols)
 it can also consist of images or sound.

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 What is Information?
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 Information = Data + Context

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 What is Knowledge?
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•Knowledge is the capability of understanding the relationship

between pieces of information.
•Knowledge is the View, Experience, ides from People useful for
Decision Making.

Figure: DIK Pyramid

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 Architecture of systems:
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External
Condition

Input Output
System Transformation Product
Material Process Service
Service
Information

System
Performance

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 Decision support systems:
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 Decision-support systems are used to make business decisions, often

based on data collected by on-line transaction-processing systems.
 Decision support systems (DSS) are interactive software-based systems
intended to help 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.

Prepared By: Prof. V. K. Wani

 Decision support systems:
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➢ Examples of business decisions:

1. –What items to stock?
2. –What insurance premium to change?
3. –To whom to send advertisements?
➢ Examples of data used for making decisions
1. – Retail sales transaction details
2. – Customer profiles (income, age, gender, etc.)

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 Decision support systems:
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➢ Types of Decision
➢ 1 Structured
➢ 2. Unstructured
➢ 3. Semi-Structured

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 Steps of Decision Making Process
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1. Identify the Problem

2. Information Gathering

3. Identify the alternatives

4. Analyze different Choices

5. Evalution of Alternatives

6. Select Best Alternatives

7. Execute the Decision

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 Steps of Decision Making Process
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Step 1: Identification of the purpose of the decision In this step, the problem is
thoroughly analysed. There are a couple of questions one should ask when it comes to
identifying the purpose of the decision.
1. What exactly is the problem?
2. Why the problem should be solved?
3. Who are the affected parties of the problem?
4. Does the problem have a deadline or a specific time-line?

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 Steps of Decision Making Process
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Step 2: Information gathering

A problem of an organization will have many stakeholders. In addition, there can be
dozens of factors involved and affected by the problem.

In the process of solving the problem, you will have to gather as much as information
related to the factors and stakeholders involved in the problem. For the process of
information gathering, tools such as 'Check Sheets' can be effectively used.

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 Steps of Decision Making Process
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➢ Step 3: Principles for judging the alternatives

➢ In this step, the baseline criteria for judging the alternatives should be set up.
When it comes to defining the criteria, organizational goals as well as the corporate
culture should be taken into consideration.

➢ As an example, profit is one of the main concerns in every decision making process.
Companies usually do not make decisions that reduce profits, unless it is an
exceptional case. Likewise, baseline principles should be identified related to the
problem in hand.

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 Steps of Decision Making Process
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➢ Step 4: Brainstorm and analyse the different choices

➢ For this step, brainstorming to list down all the ideas is the best option. Before the
idea generation step, it is vital to understand the causes of the problem and
prioritization of causes.

➢ For this, you can make use of Cause-and-Effect diagrams and Pareto Chart tool.
Cause-and-Effect diagram helps you to identify all possible causes of the problem
and Pareto chart helps you to prioritize and identify the causes with highest effect.

➢ Then, you can move on generating all possible solutions (alternatives) for the
problem in hand.

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 Steps of Decision Making Process
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➢ Step 5: Evaluation of alternatives

➢ Use your judgement principles and decision-making criteria to evaluate each
alternative. In this step, experience and effectiveness of the judgement principles
come into play. You need to compare each alternative for their positives and
negatives.

➢ Step 6: Select the best alternative

➢ Once you go through from Step 1 to Step 5, this step is easy. In addition, the
selection of the best alternative is an informed decision since you have already
followed a methodology to derive and select the best alternative.

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 Steps of Decision Making Process
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➢ Step 7: Execute the decision

➢ Convert your decision into a plan or a sequence of activities. Execute your plan by
yourself or with the help of subordinates.

➢ Step 8: Evaluate the results

➢ Evaluate the outcome of your decision. See whether there is anything you should
learn and then correct in future decision making. This is one of the best practices
that will improve your decision-making skills.

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 Structure of Decision Support Systems
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 Structure of Decision Support Systems
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Decision support system components: A DSS consists of three different parts:
Knowledge base (D/B):
➢ A knowledge base is an integral part of a decision support system database, containing
information from both internal and external sources.
➢ It is a library of information related to particular subjects and is the part of a DSS that
stores information used by the system's reasoning engine to determine a course of
action.
Software system.
➢ The software system is composed of model management systems. A model is a
simulation of a real-world system with the goal of understanding how the system works
and how it can be improved.
➢ Organizations use models to predict how outcomes will change with different
adjustments to the system.
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 Structure of Decision Support Systems
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User interface.
➢ The user interface enables easy system navigation.
➢ The primary goal of the decision support system's user interface is to make it
easy for the user to manipulate the data that is stored on it.
➢ Businesses can use the interface to evaluate the effectiveness of DSS
transactions for the end users.
➢ DSS interfaces include simple windows, complex menu-driven interfaces and
command-line interfaces.

➢ In addition to these components Users can also bake artificial intelligence (AI)
into decision support systems. Called intelligent decision support systems (IDSS),

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 Structure of Decision Support Systems
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Intelligent decision support system (IDSS)
➢ The AI mines and processes large amounts of data to get insights and make
recommendations for better decision-making.
➢ It does this by analyzing multiple sources of data and identifying patterns, trends
and associations to emulate human decision-making capabilities.

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 Extended Decision Support Systems
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 Extended Decision Support Systems
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Data warehouse:
➢ Database generally provides current information about t organization relating to the
underlying transactional processes, but it fails to provide historical, contend rich
information that are often more important to the decision making process than
standalone islands of information.
➢ The data warehouse fills this gap by capturing operational data and presenting it in a
more meaningful format, using a relational database and ultimately complimenting
the functions of the DB used in the DSS.
➢ Thus the data warehouse and the DB coexists to provide synergistic outcomes which
supports information requirement of the DSS superimposed on the systems
platform.

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 Extended Decision Support Systems
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Data mart:
➢ is a subset of the data warehouse.
➢ Data mart is usually assigned to a specific business unit within the enterprise.
➢ Data mart is used to slice data warehouse into a different business unit. Typically,
ownership of the data mart is given to that particular business unit or department.

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 Simon’s Model of Decision-Making
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 Simon’s Model of Decision-Making
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1. Intelligence Activity Stage:

➢ At this stage, people identify the problems in an organization and the upper
management analyzes the organizational environment to work toward a solution.
2. Design/Modelling Activity Stage:
➢ In order to identify possible solutions to problems, the upper management looks
for suitable strategies.
➢ They further analyze the merits and demerits to select a particular course of action.
3. Choice Activity Stage
➢ After making a list of alternatives, the choice activity stage begins.
➢ It critically examines and evaluates the various consequences of all alternatives and
the most suitable course of action is selected.
➢ This stage requires creativity, judgment and quantitative analysis skills.
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 Simon’s Model of Decision-Making
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4. Implementation Activity Stage:

➢ In this stage the optimal choice of solution made in previous stage is implemented
to get the success.
➢ If we fail to get the success then we go back to the earlier stage to make an
alternative choice.

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 Classification of DSS
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1. Model-driven DSS:
2. Data-driven DSS
3. Communication-driven DSS
4. Document-driven DSS
5. Knowledge-driven DSS
6. Web-based DSS

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 Classification of DSS
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1. Model-driven DSS:
➢ A model-driven DSS was based on simple quantitative models.
➢ It used limited data and emphasized manipulation of financial models.
➢ A model-drive DSS was used in production planning, scheduling and management.
➢ It provided the most elementary functionality to manufacturing concerns.
2 Data-driven DSS:
Data-driven DSS emphasized the access and manipulation of data tailored to specific
tasks using general tools.
While it also provided elementary functionality to businesses, it relied heavily on
time-series data.

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 Classification of DSS
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3. Communication-driven DSS:
➢ As the name suggests, communication-driven DSS uses communication and
network technologies to facilitate decision making.
➢ The major difference between this and the previous classes of DSS was that it
supported collaboration and communication.
➢ It made use of a variety of tools including computer-based bulletin boards, audio
and video conferencing.
4. Web-based DSS:
➢ Web-based DSS is considered most sophisticated decision support system that
extends its capabilities by making use of worldwide web and internet.
➢ The evolution continues with advancement in interne technology.

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 Classification of DSS
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➢ 5. Document-driven DSS:
➢ A document-driven DSS uses large document databases that stores documents,
images, sounds, videos and hypertext docs.
➢ It has a primary search engine tool associated for searching the data.
➢ The information stored can be facts and figures, historical data.
➢ minutes of meetings, catalogs, business correspondences, product specifications,
etc.
➢ 6. Knowledge-driven DSS:
➢ Knowledge-based DSS are human-computer systems that come with a problem-
solving expertise.
➢ These combine artificial intelligence with human cognitive capacities and can
suggest actions to users.
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 Characteristics and Capabilities of DSS
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1.Uses underlying data and model

2. Handles large amounts of data from different sources
3. Provides report and presentation flexibility
4. Offers both textual and graphical orientation
5. Problem structure, used in semi-structured and unstructured decision com
6. Uses underlying data and model

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 Advantages of DSS
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:• Increase organizational control.

• Increase decision maker satisfaction.
• Improve interpersonal communication. DSS can improve communicatio
collaboration among decision makers.
• Increasing productivity

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 What is Business Intelligence?
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➢ Business Intelligence enables the business to make intelligent, fact-based

decisions.

➢ Set of Technology & tools which turns the Business Data in to Intelligence.

➢ Business intelligence (BI) is a technology-driven process for analyzing data.

➢ Business intelligence (BI) refers to the procedural and technical infrastructure

that collects, stores, and analyzes the data produced by a company’s activities.

➢ The Purpose is Better Business Decision Making.

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 What is BI Cont…
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How BI Works?

Aggregate Data Present Enrich Inform a

Data Data Decision

Database, Data Add Context to Decisions are

Mart, Data Create Fact-based and
Warehouse, Reporting Tools, Information, Data-driven
ETL Tools, Dashboards, Static Descriptive
Integration Reports, OLAP Cubes
Tools
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 How Important is BI?
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Top 10 Business and Technology Priorities

1. Cloud computing
2. Virtualization
3. Mobile technologies
4. IT Management
5. Business Intelligence
6. Networking, voice and data communications
7. Enterprise applications
8. Collaboration technologies
9. Infrastructure
10. Web 2.0
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 How Important is BI Cont….
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Time

Data Opinion
(Best Professional
Judgment)
Making Business
Decisions is a Balance

With Business Intelligence, we can get data Accurate and in a timely

manner.

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 Business Intelligence systems
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• EIS - Executive Information Systems

• E-commerce- Electronic and mobile commerce systems
 Transaction processing systems
• DSS - Decision Support Systems
• MIS - Management Information Systems
• GIS - Geographic Information Systems
• OLAP - Online Analytical Processing and multidimensional
analysis
• CRM - Customer Relationship Management

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 Business Intelligence Tools
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 Oracle - Siebel Business Analytics Applications

 SAS - Business Intelligence
 SAP - BusinessObjects XI
 IBM - Cognos 8 BI
 Oracle - Hyperion System 9 BI+
 Microsoft - Analysis Services
 MicroStrategy - Dynamic Enterprise Dashboards
 Pentaho - Open BI Suite
 Information Builders - WebFOCUS Business Intelligence

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 Business Intelligence Tools
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 Spreadsheets: Spreadsheets like Microsoft Excel and Google Docs are some of the
most widely used BI tools.
 Reporting software: Reporting software is used to report, organize, filter, and
display data.
 Data visualization software: Data visualization software translates datasets into
easy-to-read, visually appealing graphical representations to quickly gain insights.
 Data mining tools: Data mining tools "mine" large amounts of data for patterns
using things like artificial intelligence, machine learning, and statistics.
 Online analytical processing (OLAP): OLAP tools allow users to analyze datasets
from a wide variety of angles based on different business perspectives.

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 Components OF BI
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 Components OF BI
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Data sources: The sources mostly consist of data belonging to operationalize

systems, but may also include unstructured data, such as emails, and data received
from external providers.
Data warehouse/Data mart: Data warehouses are used to consolidate different
kinds of data into a central location using a process known as extract, transform
and load (ETL) and standardize these results across systems that are allowed to be
queried. Data marts are generally small warehouses that focus on information on a
single department, instead of collecting data across a company. They limit the
complexity of databases and are cheaper to implement than full warehouses.
Data exploration: Data exploration is a passive BI analysis consisting of query
and reporting systems, as well as statistical method.

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 Components OF BI
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Data mining: Data mining is active BI methodologies with the purpose of

information and knowledge extraction from data.
Optimization: Optimization model allows us to determine the best solution out
of a set of alternative actions, which is usually fairly extensive and sometimes even
infinite.
Decisions: When business intelligence methodologies are available and
successfully adopted, the choice of a decision pertains to the decision makers, who
may also take advantage of informal

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 Architecture of BI
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 Architecture of BI
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ETL:

➢ ETL performs three main functions Extraction Transformation and Loading of data
into the data warehouse.

➢ Extraction- Data are extracted from the available internal and external sources.

➢ Transformation- The goal of the cleaning and transformation phase is to improve

the quality of data extracted from the different sources.

➢ Loading- After extraction and transformation, data are loaded into the tables of the
data warehouse.

➢ Using ETL tools, the data originating from different sources are stored in a
database. These databases are usually referred to as data warehouses and data
marts.

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 Architecture of BI
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Logistics: describes the process of coordinating and moving resources—people,

materials, inventory, and equipment—from one location to storage at the desired
destination.

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 Business Intelligence Applications
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1. Measurement-performance matrics & benchmarking

2. Analytics-optimal decision, DM,PM,SA,PA,PA
3. Reporting-Data visualization, EIS, OLAP
4. Collaboration-to work together through data sharing &
electronic data interchange
5. Knowlegde management-leads to learning management

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 Business Intelligence Cycle
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 Business Intelligence Cycle
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Analysis: It is important to recognize and correctly specify the problem in details

Insight: Assisting to conduct team meetings and user’s collaborations.

Decision: Used to give management guidance

Evaluation: A complex system that assist to evaluate the decision made

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 Development of a Business Intelligence System
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The Development process of a Business Intelligence System consist of four main steps
as listed bellow:

1. Analysis

2. Designing:

3. Planning:

4. Implementation:

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 49

Prepared By: Prof. V. K. Wani

 Development of a Business Intelligence System
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1. Analysis:
➢ During the first phase, the needs of the organization relative to the development of a
business intelligence system should be carefully identified.
➢ This preliminary phase is generally conducted through a series of interviews of
knowledge workers performing different roles and activities within the organization.
➢ It is necessary to clearly describe the general objectives and priorities of the project, as
well as to set out the costs and benefits deriving from the development of the business
intelligence system.
2. Design:
➢ The second phase includes two sub-phases and is aimed at deriving a provisional plan
of the overall architecture, taking into account any development in the near future and
the evolution of the system in the midterm

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 Development of a Business Intelligence System
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3. Planning:
➢ The planning stage includes a sub-phase where the functions of the business
intelligence system are defined and described in greater detail. Subsequently, existing
data as well as other data that might be retrieved externally are assessed.
➢ This allows the information structures of the business intelligence architecture, which
consist of a central data warehouse and possibly some satellite data marts, to be
designed.
.

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 Development of a Business Intelligence System
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4. Implementation and control:

➢ The last phase consists of five main sub-phases. First, the data warehouse and each
specific data mart are developed.
➢ represent the information infrastructures that will feed the business intelligence
system. In order to explain the meaning of the data contained in the data warehouse
and the transformations applied in advance to the primary data, metadata archive
should be created.

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 Thank You
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