UNIT -II (6 Hours)

Information, Management and Decision Making - Attributes of information and its relevance to
Decision Making, Types of information. Models of Decision Making - Classical, Administrative
and Herbert Simon's Models. Management Support Systems: Decision Support Systems, Group
Decision Support Systems, and Executive Information Systems.
Decision Making Models
Information Requirement in Management
The common thread of activity in all the management functions is information management.
Every manager today has to manage loads of information some for the purpose of reporting and
some for taking actionable decisions. A marketing manager trying to fine-tune a sales strategy
would be doing it only after analyzing a lot of relevant information about the market, the
customer profile, the product profile and competitor’s pricing strategy.

Similarly, a human resource manager trying to recruit someone for the organization would do a
lot of information analysis regarding the job profile, suitability of the candidate for the job, the
job market dynamics, etc. The competitive environment that exists in today’s time makes this
task of management even more challenging. Decisions have to be taken very fast and after
analyzing a lot of data.

It is precisely due to these reasons that more and more information technology (IT) intervention
is being used in modern management functions. However, Information management using
technology has itself transformed dramatically over the years. From being just a support function
it has become a key resource for gaining competitive advantage.

More and more corporations are investing in acquiring the latest management information
system tools like enterprise (wide) resource planning (ERP), customer relationship management
(CRM), knowledge management (KM), decision support system (055), business intelligence (81)
suites data warehouse (OW) facility as they are convinced of the benefits of such huge
investments.

Information Needs for the Different Levels of Management

Even though the broad objectives of management as an entity may be same, like increasing
shareholder value, it is by no means a monolithic entity. As has already been discussed, there are
different levels of management and each performs its specific purpose. The top level deals with
strategy, the middle level with tactical issues and the bottom level with operational issues. The
top level that deals with strategy will be taking strategic decisions, middle level will take tactical
decisions and entry level will take operational decisions. Now in order to take such decisions,
contextual information will need to be provided.

Information Needs of Different Levels of Management

Levels of
Problems handled/ Decisions made Type of information required
Management

Top level

Unstructured problems. Strategic information from within the organiza

outside.
Decisions are based on situations not/rarely
handled in the past. Information about likely scenarios. Information
analyzed in different ways.
Middle level Decision-making variable not clearly defined.
Exception reports
Semi structured/structured problems.
Regular summarized reports.
Decisions on regular issues.
Information that can be drilled deeper for insig
Decisions on tactical issues.
Information to help find out exceptions so that
reported to top management
Structured problems
Operational information
Structured decision-making
Rule based information, guidelines, handbook
Operational level Decision-making on the basis of set rules information

A manager at the top level who is deciding on the location of a new factory of the organization
has strategic consideration like the labor costs of the location, proximity of the location to the
market and long-term growth prospects in mind. He/she is not bothered about the shop floor
level operational details like the reason for absence of a worker. He/she will have a strategic
view and would need only such information that helps him to take correct decisions. Information
is only a resource to him if it can help him to improve the quality of his strategic decision-
making. Similarly for other tiers, information is only a resource if one can derive value from it.

Information Management

The business of information which is today a multibillion dollar industry first started when a firm
called Bloomberg started compiling important information about US companies and their
balance sheets and selling them to stock brokers. This was the first open trade in information as a
resource in modern times. From then on, information (external) has been regarded as a resource
that is traded10 sometimes freely and openly as in published literature and sometimes
clandestinely in the form of corporate intelligence reports. Also, internal information is seen as
equally valuable and every effort is made to derive more value from it and to ensure that this
internal information does not find its way outside the organization.

The idea of information management is based on the fundamental premise that information is a
resource that is valuable for an organization. The entire subject of information management is
about how to derive more and more value from this precious resource. However, unlike most
other resources that have to be procured from the outside environment, most information
resource is available within the organization if an effort has been made for its safekeeping.
Detailed logs of transactions of an organization with its external and internal customers over a
period mostly form the basic ingredient of a good quality information resource. This basic
information repository is then drilled and analyzed for actionable information, this is one aspect
of information management in which strategies are used to derive greater value from the internal
repository of data and information. The other aspect of information management is to ensure that
this internal information is not ‘leaked’ to the outside world of competitors.

Relevance of Information in Decision Making

Management information systems combine hardware, software and network products in an
integrated solution that provides managers with data in a format suitable for analysis,
monitoring, decision-making and reporting. The system collects data, stores it in a database and
makes it available to users over a secure network.

Information Access

Managers need rapid access to information to make decisions about strategic, financial,
marketing and operational issues. Companies collect vast amounts of information, including
customer records, sales data, market research, financial records, manufacturing and inventory
data, and human resource records. However, much of that information is held in separate
departmental databases, making it difficult for decision makers to access data quickly. A
management information system simplifies and speeds up information retrieval by storing data in
a central location that is accessible via a network. The result is decisions that are quicker and
more accurate.

Data Collection

Management information systems bring together data from inside and outside the organization.
By setting up a network that links a central database to retail outlets, distributors and members of
a supply chain, companies can collect sales and production data daily, or more frequently, and
make decisions based on the latest information.

Collaboration

In situations where decision-making involves groups, as well as individuals, management

information systems make it easy for teams to make collaborative decisions. In a project team,
for example, management information systems enable all members to access the same essential
data, even if they are working in different locations.
Interpretation

Management information systems help decision-makers understand the implications of their

decisions. The systems collate raw data into reports in a format that enables decision-makers to
quickly identify patterns and trends that would not have been obvious in the raw data. Decision-
makers can also use management information systems to understand the potential effect of
change. A sales manager, for example, can make predictions about the effect of a price change
on sales by running simulations within the system and asking a number of “what if the price
was” questions.

Presentation

The reporting tools within management information systems enable decision-makers to tailor
reports to the information needs of other parties. If a decision requires approval by a senior
executive, the decision-maker can create a brief executive summary for review. If managers want
to share the detailed findings of a report with colleagues, they can create full reports and provide
different levels of supplementary data.

MIS: Sources and Types of Information

Information/Data Collection Techniques

The most popular data collection techniques include:

 Surveys: A questionnaires is prepared to collect the data from the field.

 Secondary data sources or archival data: Data is collected through old records,
magazines, company website etc.
 Objective measures or tests: An experimental test is conducted on the subject and the
data is collected.
 Interviews: Data is collected by the system analyst by following a rigid procedure and
collecting the answers to a set of pre-conceived questions through personal interviews.

Classification by Characteristic

Based on Anthony’s classification of Management, information used in business for decision-

making is generally categorized into three types −

 Strategic Information: Strategic information is concerned with long term policy

decisions that defines the objectives of a business and checks how well these objectives
are met. For example, acquiring a new plant, a new product, diversification of business
etc, comes under strategic information.
 Tactical Information: Tactical information is concerned with the information needed for
exercising control over business resources, like budgeting, quality control, service level,
inventory level, productivity level etc.
  Operational Information: Operational information is concerned with plant/business
level information and is used to ensure proper conduction of specific operational tasks as
planned/intended. Various operator specific, machine specific and shift specific jobs for
quality control checks comes under this category.

Classification by Application

In terms of applications, information can be categorized as −

 Planning Information: These are the information needed for establishing standard
norms and specifications in an organization. This information is used in strategic, tactical,
and operation planning of any activity. Examples of such information are time standards,
design standards.
 Control Information: This information is needed for establishing control over all
business activities through feedback mechanism. This information is used for controlling
attainment, nature and utilization of important processes in a system. When such
information reflects a deviation from the established standards, the system should induce
a decision or an action leading to control.
 Knowledge Information: Knowledge is defined as “information about information”.
Knowledge information is acquired through experience and learning, and collected from
archival data and research studies.
 Organizational Information: Organizational information deals with an organization’s
environment, culture in the light of its objectives. Karl Weick’s Organizational
Information Theory emphasizes that an organization reduces its equivocality or
uncertainty by collecting, managing and using these information prudently. This
information is used by everybody in the organization; examples of such information are
employee and payroll information.
 Functional/Operational Information: This is operation specific information. For
example, daily schedules in a manufacturing plant that refers to the detailed assignment
of jobs to machines or machines to operators. In a service oriented business, it would be
the duty roster of various personnel. This information is mostly internal to the
organization.
 Database Information: Database information construes large quantities of information
that has multiple usage and application. Such information is stored, retrieved and
managed to create databases. For example, material specification or supplier information
is stored for multiple users.

Information is a vital resource for the success of any organization. Future of an organization lies
in using and disseminating information wisely. Good quality information placed in right context
in right time tells us about opportunities and problems well in advance.

Good quality information − Quality is a value that would vary according to the users and uses
of the information.

According to Wang and Strong, following are the dimensions or elements of Information Quality
−
  Intrinsic− Accuracy, Objectivity, Believability, Reputation
 Contextual− Relevancy, Value-Added, Timeliness, Completeness, Amount of
information
 Representational− Interpretability, Format, Coherence, Compatibility
 Accessibility− Accessibility, Access security

Various authors propose various lists of metrics for assessing the quality of information. Let us
generate a list of the most essential characteristic features for information quality

 Reliability− It should be verifiable and dependable.

 Timely− It must be current and it must reach the users well in time, so that important
decisions can be made in time.
 Relevant− It should be current and valid information and it should reduce uncertainties.
 Accurate− It should be free of errors and mistakes, true, and not deceptive.
 Sufficient− It should be adequate in quantity, so that decisions can be made on its basis.
 Unambiguous− It should be expressed in clear terms. In other words, in should be
comprehensive.
 Complete− It should meet all the needs in the current context.
 Unbiased− It should be impartial, free from any bias. In other words, it should have
integrity.
 Explicit− It should not need any further explanation.
 Comparable− It should be of uniform collection, analysis, content, and format.
 Reproducible− It could be used by documented methods on the same data set to achieve
a consistent result.

MIS & Decision Making Concepts

Process and Modeling in Decision Making

There are two basic models in decision making:

 Rational models
 Normative model

The rational models are based on cognitive judgments and help in selecting the most logical and
sensible alternative. Examples of such models include – decision matrix analysis, Pugh matrix,
SWOT analysis, Pareto analysis and decision trees, selection matrix, etc.

A rational decision making model takes the following steps:

 Identifying the problem

 Identifying the important criteria for the process and the result
 Considering all possible solutions
  Calculating the consequences of all solutions and comparing the probability of satisfying
the criteria
 Selecting the best option

The normative model of decision-making considers constraints that may arise in making
decisions, such as time, complexity, uncertainty, and inadequacy of resources.

According to this model, decision-making is characterized by:

 Limited information processing: A person can manage only a limited amount of

information.
 Judgmental heuristics: A person may use shortcuts to simplify the decision making
process.
 Satisfying: A person may choose a solution that is just “good enough”.

Dynamic Decision Making

Dynamic decision-making (DDM) is synergetic decision-making involving interdependent

systems, in an environment that changes over time either due to the previous actions of the
decision-maker or due to events that are outside of the control of the decision-maker.

These decision-makings are more complex and real-time.

Dynamic decision-making involves observing how people used their experience to control the
system’s dynamics and noting down the best decisions taken thereon.

Sensitivity Analysis

Sensitivity analysis is a technique used for distributing the uncertainty in the output of a
mathematical model or a system to different sources of uncertainty in its inputs.

From business decision perspective, the sensitivity analysis helps an analyst to identify cost
drivers as well as other quantities to make an informed decision. If a particular quantity has no
bearing on a decision or prediction, then the conditions relating to quantity could be eliminated,
thus simplifying the decision making process.

Sensitivity analysis also helps in some other situations:

 Resource optimization
 Future data collections
 Identifying critical assumptions
 To optimize the tolerance of manufactured parts

Static and Dynamic Models

Static Models:

 Show the value of various attributes in a balanced system.

 Work best in static systems.
 Do not take into consideration the time-based variances.
 Do not work well in real-time systems however, it may work in a dynamic system being
in equilibrium
 Involve less data.
 Are easy to analyze.
 Produce faster results.

Dynamic Models:

 Consider the change in data values over time.

 Consider effect of system behavior over time.
 Re-calculate equations as time changes.
 Can be applied only in dynamic systems.

Simulation Techniques

Simulation is a technique that imitates the operation of a real-world process or system over time.
Simulation techniques can be used to assist management decision making, where analytical
methods are either not available or cannot be applied.

Some of the typical business problem areas where simulation techniques are used are:

 Inventory control
 Queuing problem
 Production planning

Operations Research Techniques

Operational Research (OR) includes a wide range of problem-solving techniques involving

various advanced analytical models and methods applied. It helps in efficient and improved
decision-making.

It encompasses techniques such as simulation, mathematical optimization, queuing theory,

stochastic-process models, econometric methods, data envelopment analysis, neural networks,
expert systems, decision analysis, and the analytic hierarchy process.

OR techniques describe a system by constructing its mathematical models.

Heuristic Programming
Heuristic programming refers to a branch of artificial intelligence. It consists of programs that
are self-learning in nature.

However, these programs are not optimal in nature, as they are experience-based techniques for
problem solving.

Most basic heuristic programs would be based on pure ‘trial-error’ methods.

Heuristics take a ‘guess’ approach to problem solving, yielding a ‘good enough’ answer, rather
than finding a ‘best possible’ solution.

Group Decision Making

In group decision-making, various individuals in a group take part in collaborative decision

making.

Group Decision Support System (GDSS) is a decision support system that provides support in
decision making by a group of people. It facilitates the free flow and exchange of ideas and
information among the group members. Decisions are made with a higher degree of consensus
and agreement resulting in a dramatically higher likelihood of implementation.

Following are the available types of computer based GDSSs:

 Decision Network: This type helps the participants to communicate with each other
through a network or through a central database. Application software may use
commonly shared models to provide support.
 Decision Room: Participants are located at one place, i.e. the decision room. The purpose
of this is to enhance participant’s interactions and decision-making within a fixed period
of time using a facilitator.
 Teleconferencing: Groups are composed of members or sub groups that are
geographically dispersed; teleconferencing provides interactive connection between two
or more decision rooms. This interaction will involve transmission of computerized and
audio visual information.

The Classical Model

On confrontation of a manager with a certain decision making situation, the manager would
collect all the critical information and the data that is required for performing a particular activity
and also would take the decision that will certainly be for the betterment of the organization.

The Administrative Model

a. In such a model, the manager has more concern for himself.
b. On confrontation of a manager with a certain decision making situation, the manager would
collect what ever information or the data that will be available and then will take a decision,
which may not be in the best interests of the organization but will certainly be good for fulfilling
his personal interests.
c. Expediency and the opportunism, both act as the hallmarks of the Administrative Model.

The Herbert Simon Model

a. This model is linked with the decision making process.
b. Explains the core of the decision making.
c. Used as the base for explaining the decision making process.
d. According the Herbert Simon Model, the process of the decision making consists of the
following phases:

A) The Intelligence Phase

In this phase, the various activities for finding out the problems related to the searching of the
operating environment are involved. By this, the identification of the various conditions can be
done which ultimately helps in taking the decisions at the different levels. Extensive and the
comprehensive database is must for the intelligence phase, making this phase very suitable for
searching or scanning of the environment.

In this phase, the type of the environment forms a very major factor and hence the types of the
environment can be categorized as the follows:

1. The Societal Environment: Mainly includes the economic, the legal and the social
environment and it is this type of the environment in which the organization operates.
2. The Competitive Environment: Includes the understanding and the analyzing of the
characteristics, the trends and the behavior of or at the market place and also the various
players of the market in which the organization operates.
3. The Organizational Environment: Includes the various capabilities, the strengths, the
weaknesses, the constraints and the various other factors that affect the ability of the
organization to discharge or operate its various types of the activities.

B) The Design Phase

 The inventing, the developing and the analyzing of the various alternatives or the
solutions to the particular problem forms a major part of this phase. The various steps that
are to be followed in this phase can be summarized as the follows:
  Support in getting the in depth knowledge of the problem.
A correct model of the situation can be made and the assumptions of the model need to
be tested.
Support for the generation of the solutions can be obtained by:
I. Manipulation of the model for the development of the insights.
II. Creation of the database retrieval system.
 Support for testing the feasibility of the solutions.

C) The Choice Phase

The selection of a specific alternative or the course of the action from the ones which have been
generated and considered during the design phase, takes place during this phase. The choice
procedure and the implementation of the chosen alternative form a very major part of the Choice
phase.

The flow of the activities takes place from the intelligence phase to the design phase and then
finally to the choice phase. But one very important point that must be remembered here is that at
any phase there may be a return to a previous phase.

Limitations of the Simon Model

1. This model does not go further than the choice model.
2. Does not include the cognizance of the implementation and also of the feedback aspects.

Main types

There are many types of decision making and these can be easily categorized into the following 4
groups:

 Rational
 Intuitive
 Combinations
 Satisficing
 Decision Support Systems
 Recognition primed decision making

Types

Rational

Rational decision making is the commonest of the types of decision making that is taught and
learned when people decide that they want to improve their decision making. These are logical,
sequential models where the emphasis is on listing many potential options and then working out
which is the best. Often the pros and cons of each option are also listed and scored in order of
importance.
The rational aspect indicates that there is considerable reasoning and thinking done in order to
select the optimum choice. Because we put such a heavy emphasis on thinking and getting it
right in our society, there are many of these models and they are very popular. People like to
know what the steps are and many of these models have steps that are done in order.

People would love to know what the future holds, which makes these models popular. Because
the reasoning and rationale behind the various steps is that if you do x, then y should happen.
However, most people have personal experience that the world usually doesn’t work that way!

Intuitive

The second of the types of decision making are the intuitive models. The idea here is that there
may be absolutely no reason or logic to the decision making process. Instead, there is an inner
knowing, or intuition, or some kind of sense of what the right thing to do is.
And there are probably as many intuitive types of decision making as there are people. People
can feel it in their heart, or in their bones, or in their gut and so on. There are also a variety of
ways for people to receive information, either in pictures or words or voices.

People talk about extra sensory perception as well. However, they are still actually picking up
the information through their five senses. Clair sentience is where people feel things, clair
audience is hearing things and clairvoyance is seeing things.

And of course we have phrases such as ‘I smell a rat’, ‘ it smells fishy’ and ‘I can taste success
ahead’.

Other types of decision making in the intuitive category might include tossing a coin, throwing
dice, tarot cards, astrology, and so on.

Decision wheels are usually more humorous than intuitive but they do have a serious application.

Combinations
Many decisions are actually a result of combinations of rational and intuitive processes. This can
be deliberate where a person combines aspects of both, or it can occur unwittingly.

For example, a person has listed the pros and cons of the options, assigned numerical values and
added them all up. (The rational part.) But the end result is not really satisfactory, they are
uneasy somehow (the intuitive part), so they change the parameters, and the numbers add up
differently. This new result is more ‘satisfactory’, so they go with that one.

Satisficing

Instead of evaluating all the possible options and choosing the best, satisficing is where we pick
the first one that will give us the result. We choose an option that is ‘good enough’, one that
satisfies our needs and sacrifices other potentially better options. Hence, satisfice.

Decision Support Systems

Because computers can process large amounts of data quickly, they were soon put to use to help
make decisions. Decision Support Systems range from a simple spreadsheet to organize
information graphically, to very complex programs organizing info in international companies
and including artificial intelligence that can suggest alternative options and solutions.

There are various types of decision making systems depending on how many people are
involved, the form of the information being processed, what type of result is required, and so on.

There are pros and cons to using computers in this way, and of course, the computer is only as
good as the information that it is processing. Which means that it still comes down to the
humans…!
Gary Klein has spent considerable time studying human decision making and his results are very
interesting. He believes that we make 90 to 95% of our decisions in a pattern recognition way.
He suggests that what we actually do is gather information from our environment in relation to
the decision we want to make. We then pick an option that we think will work. We rehearse it
mentallyand if we still think it will work, we go ahead.

If it does not work mentally, we choose another option and run that through in our head instead.
If that seems to work, we go with that one. We pick scenarios one by one, mentally check them
out, and as soon as we find one that works, we choose it.

He also points out that as we get more experience, we can recognise more patterns, and we
make better choices more quickly.

Of interest here is that the military in many countries have adapted his methods because they are
considerably more effective than any of the types of decision making we’ve discussed already. In
fact, you could say that his model is a combination of the rational and intuitive approaches.

Management Support System (MSS)

Management support systems focus on managerial uses of information resources. These
systems provide information to manage for planning and decision making. The information
provided by these systems is based on both the internal and external data using various data
analysis tools.

They also offer a choice to the user to select out of these tools for the purpose of data analysis.
These systems serve the information needs of managers at middle and top levels in the
managerial hierarchy.

There are three types of management support systems, namely:

1. a) Decision Support Systems,

2. b) Executive Information (support) Systems and
3. c) Expert Systems.

Decision Support Systems:

Decision support systems (DSS) are designed to support the decision making process of
managers to improve their effectiveness and thereby efficiency of the enterprise. They are based
on the premise that managerial judgement cannot be replaced by any computer based solution.
However, by offering the support of data and models, it is possible to improve the decision
making process even in the case of semi-structured and unstructured problems.

The basic purpose of DSS is to extend the capability of a manager’s decision making process by
supporting tools and data made available to him under his direct control. DSS neither
presupposes specific information requirements and predefined tools for analysis for different
types of decisions nor does it impose any solutions on a manager.

Thus, it gives flexibility to the manager to decide the input data, tool of analysis, depth of
analysis and reliance on the outcome of Analysis for decision making. DSS offers an interactive
environment for users and thus permits manager to experiment with data and models to develop
the optimal decision making strategy in a given situation.

Executive Information Systems:

DSS are designed to cater to the information needs of managers at middle to top levels. They
relate to rule-based work doing modelling and analysis of data in order to make it useful in
decision making.

However, at the top of managerial level, there is a need to focus more on packaging and delivery
of information than on generation of information. The top manager deserves better environment
for information access than that provided by DSS.

The top executives need fast access to up-to-date, concise information and exception reports with
facilities to personalised information and analysis. The information systems designed to cater to
such needs of top executives are called Executive Information Systems (EIS) or Executive
Support Systems.

These systems act as electronic briefing systems and offer tremendous flexibility in use. EIS uses
internal as well as external information and offers an interactive and a user friendly operating
environment.

Expert Systems:

The increasing complexities and dynamism in the emerging business environment require greater
interaction of functional’ managers with the experts so as to get timely advice. These experts
would not only sift information from vast pools of diverse information, but also use their
expertise to offer advice.

Traditionally, the expertise available in an organisation has provided an important basis for
achieving, improving and maintaining its competitive position. All other things being equal,
firms without comparable expertise are at a disadvantage.

Human experts may not be able to cope with the new challenges, given the constraints of time
and complexities of the new environment. Besides, there may not be uniformity and consistency
of advice for a given decision situation over a period.

This is so because of the obvious inability of human beings to capture the impact of various
decision variables all the time. The Information Fatigue Syndrome and the limitations of human
experts in the changing business environment have resulted in increasing popularity of business
expert systems (BES).

These systems simulate human activity and keep capturing and systematising business
knowledge, extending the decision making capabilities of expensive and scarce human experts,
so that others can use their decision experiences. They offer the advantage of flexibility in
capturing and representing information of different types in diverse forms.

A business expert system receives a problem from the user, identifies its data requirements,
analyses the relevant data against the decision rules (contained in a knowledge system). Once the
problem is solved, the system through its inference engine reports the solution to the user and is
also able to explain its line of reasoning in reaching that solution.

A business expert system can act as an aid to managerial effectiveness by providing advice. Its
solutions/advices are always consistent, uniform, thorough and methodical. It functions as a
standardised problem solver. The business expert system is able to explain the line of reasoning
it uses for solving a problem.

A user can study the rationale and is free to accept, modify or reject the solution. Unlike other
expert systems in the field of medicine, engineering, etc the objective of the business expert
system is not to replace evaluation by human expert(s) by the computer program.

Rather, the objective is to acquire the expertise of the human expert and make it available in a
standardised form to human expert(s) and others in the organisation. They work out strategies to
use knowledge in the application areas so as to develop plausible solutions to the problems.

The typical areas of application of expert system in business include:

1. Make or buy decisions

2. New product launch decisions
3. Determining credit limits
4. Product development
5. Investment counselling
6. Performance evaluation
7. Incentive systems
8. Customer query
9. Project evaluations
10. Production scheduling
11. Routing decisions

Decision Support Systems

A decision support system (DSS) is a computerized information system used to support decision-
making in an organization or a business. A DSS lets users sift through and analyze massive
reams of data and compile information that can be used to solve problems and make better
decisions.

The benefits of decision support systems include more informed decision-making, timely
problem solving and improved efficiency for dealing with problems with rapidly changing
variables.

A DSS can be used by operations management and planning levels in an organization to compile
information and data and synthesize it into actionable intelligence. This allows the end user to
make more informed decisions at a quicker pace.

What Can a DSS Analyze?

The DSS is an information application that produces comprehensive information. This is

different from an operations application, which would be used to collect the data in the first
place. A DSS is primarily used by mid- to upper-level management, and it is key for
understanding large amounts of data.

For example, a DSS could be used to project a company’s revenue over the upcoming six months
based on new assumptions about product sales. Due to the large amount of variables that
surround the projected revenue figures, this is not a straightforward calculation that can be done
by hand. A DSS can integrate multiple variables and generate an outcome and alternate
outcomes, all based on the company’s past product sales data and current variables.

How Can a DSS Present the Information?

The primary purpose of using a DSS is to present information to the customer in a way that is
easy to understand. A DSS system is beneficial because it can be programed to generate many
types of reports, all based on user specifications. A DSS can generate information and output it
graphically, such as a bar chart that represents projected revenue, or as a written report.

Where Can a DSS Be Used?

As technology continues to advance, data analysis is no longer limited to large bulky

mainframes. Since a DSS is essentially an application, it can be loaded on most computer
systems, including laptops. Certain DSS applications are also available through mobile devices.
The flexibility of the DSS is extremely beneficial for customers who travel frequently. This gives
them the opportunity to be well-informed at all times, which in turn provides them with the
ability to make the best decisions for their company and customers at any time.

Attributes of a 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.

Components of a DSS

 Database Management System (DBMS): To solve a problem the necessary data may
come from internal or external database. In an organization, internal data are generated
by a system such as TPS and MIS. External data come from a variety of sources such as
newspapers, online data services, databases (financial, marketing, human resources).
 Model Management System: It stores and accesses models that managers use to make
decisions. Such models are used for designing manufacturing facility, analyzing the
financial health of an organization, forecasting demand of a product or service, etc.

Support Tools: Support tools like online help; pulls down menus, user interfaces, graphical
analysis, error correction mechanism, facilitates the user interactions with the system.
Classification of DSS

There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows:

 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.

Types of DSS

 Status Inquiry System: It helps in taking operational, management level, or middle level
management decisions, for example daily schedules of jobs to machines or machines to
operators.
 Data Analysis System: It needs comparative analysis and makes use of formula or an
algorithm, for example cash flow analysis, inventory analysis etc.
 Information Analysis System: In this system data is analyzed and the information report
is generated. For example, sales analysis, accounts receivable systems, market analysis
etc.
 Accounting System: It keeps track of accounting and finance related information, for
example, final account, accounts receivables, accounts payables, etc. that keep track of
the major aspects of the business.
 Model Based System: Simulation models or optimization models used for decision-
making are used infrequently and creates general guidelines for operation or
management.

Group Decision Support and Groupware Technologies

Globalization has not only expanded the product markets. It has also made organizations
geographically more dispersed. Therefore, the way the business is done and decisions are made
has also changed significantly. Collaborative decision-making has become more valuable than
ever.

This is why there is an increased emphasis on developing and implementing communications-

driven group decision support systems. Decision making, in the current business environment, is
a collaborative process with participation from in-house and remotely located teams or
temporary work groups or task forces. In such a scenario, communications-driven group DSS
makes it easier for every participant to send and receive communication and interact with
others in real time, from their respective locations, without meeting physically.

A communications-driven group DSS

 Fosters collaboration between cross functional business teams at same or different

locations
 Allows geographically separated decision makers connect face-to-face in real time
 Allows data sharing with rest of the team members, work groups or task forces

What is Communications-Driven Group Decision Support System ?

Now that we know how a communications-driven group DSS can support decision-making
among geographically dispersed teams using web-based tools, it’s time to understand what
exactly it is.

A communications-driven group decision support system:

 Is a type of hybrid computer-based interactive decision support system

 That uses communications and network technologies
 To facilitate communication, resource/information sharing, face-to-face meetings and
collaboration
 Among a group of decision makers that are separated by a distance

Group Support Tools

There are a number of tools and technologies that can be incorporated in a GDSS (Group
Decision Support System), in order to promote better decision making. These include:

 Groupware: A software system to enhance collaboration among participants/ decision

makers and support group/s in completing tasks.
 Multimedia Decision Support: An integration of computer, video and decision-support
technologies, facilitating information sharing, group decision tasks, collaboration and
coordination. It offers a smart decision support in which decisions are directly affected by
the way decision makers interact, review information, make choices and take actions.
 Electronic Meeting System: A software system to facilitate creative problem solving
and decision making using electronic technologies.
  Collaborative Workgroup Software: A web-based team collaboration and project
management software facilitating group tasks and live discussions for better decision
making.

Group Decision Support Situations

A group decision support system fosters collaboration and team decision-making in four
different situations:

 Same time, same place

 Same time, different place
 Different time, same place
 Different time, different place

Same Time, Same Place

In this situation, all decision makers are available at same time at same place. The information is
displayed on either computer projection system or on individual computers of participants.

Same Time, Different Place

In this situation, individuals participate in decision-making from geographically different

locations at the same time. A GDSS

 Allows people to see what others at different locations are doing

 Offers video conferencing facilities where participants can see and hear each other in real
time
 Offers support for meeting or interactions via two-way video
 Offers additional facilities, such as screen sharing, chat, audio, white boards

Different Time, Same Place

In this situation, GDSS fosters communication for those who work at same place but have
different shift timings. It offers numerous facilities, including:

 Document sharing
 Workstation software for shift work
 Email

Different Time, Different Place

It’s important to understand how GDSS work in different time and different place situations. It is
a situation where participants are geographically distant and also operate in a different time zone.
It fosters communication, collaboration and team decision making through:

 Conferencing
 Bulletin board
 Voice mail
 Email

A GDSS supports communication and collaboration in all the above situations.

A Managerial Perspective on Group Decision Support

A communications-driven group decision support system is implemented, so that it can support

all activities of a work team or task force, irrespective of the locations and time zones of
participants.

The major concern of investors/users at the time of deciding whether to develop a decision
support system or not must be:

 The type of support a proposed technology can offer

 The extent of support a GDSS will offer
 The technologies it must support to ensure smooth functioning
 The selection of the best technology or system in a given decision-making situation

Therefore, the managers must ask themselves following questions, in order to attain more clarity:

 Should there be an audio conferencing facility? If yes, how many people should be able
to participate in a conference at a given time?
 Will participants be using the technology, like bulletin boards?
 What will be the alternative for web conferencing when participants are at different
locations and in different time zones?
 How frequent will be resource sharing and how participants will access information and
to what extent?
 Do you wish to integrate emailing with the GDSS?
  How can video conferencing be made comfortable for participants?

A lot of thought and planning go into designing and development of a communications-driven

group decision support system.

Contingency Theory

A communications-driven GDSS addresses problems associated with group collaboration,

communication and decision making, when participants are geographically dispersed and operate
in different time zones.

This means the effectiveness of a GDSS directly depends upon its design, user-interface, DSS
architecture, integrated support tools and technical skills possessed by participants who use DSS.

Although managers know that the set of tools that they have chosen for a GDSS are good, but
they may not perform equally good in all circumstances. There is no one best way of making
decisions or supporting group collaboration. A tool or process may work well in some situations
and may terribly fail in others.

In such a scenario, the managers must resort to a contingency approach that focuses on three
main points:

 Task Type: The deciding factors include idea generation, creativity, planning, choosing
alternatives and action. For example, computer mediated communication is a good fit for
idea generation activities, and video and audio conferencing is a good choice when
decision-making is a function of human intellect.
 Group Size: bigger the size, higher the difference between technical abilities, likes and
interests, preferences and judgments. Small groups may not require extensive support or
communication tools while large groups require more sophisticated and automated tools.
 Group Proximity: More sophisticated communications-driven GDSS is required when
the group of decision makers is dispersed and operates in different time zones, while a
simpler system is sufficient for a group operating from the same place and at same time.

A contingency approach depends on task structure, location of team members and difference in
organizational attributes.

Virtual Organizations

A virtual organization is an association of physically and/or professionally detached individuals

working together on a project or to achieve a mission. It doesn’t have any physical existence but
the technology (internet technology, more precisely) makes it look real.

Communications-driven group decision support systems are best suited for virtual organizations
that require a lot of technological support to foster communication and collaboration and get the
work done.
A GDSS makes a virtual organization:

 Look real
 Work in real time
 Establish innovative relationships among task forces
 Establish professional alliances among participants

A communications-driven GDSS for a virtual organization makes use of various knowledge

management technologies, including:

 Personal computers
 Intranet and extranet
 Wireless technologies
 Collaborative technologies
 Web conferencing
 Groupware
 Worldwide Web

Benefits of Communications-Driven GDSS

 Allows group members contribute significantly in decision making irrespective of their

locations and time zones
 Extracts greater participation from team members, given the availability of support
technologies
 Makes document sharing easier, faster and more secured
 Fosters more concentrated and focused decision-making
 Saves a lot of money and time by allowing participants to contribute from their own
locations (users don’t need to spend time and money in traveling)
 Helps completing tasks fasters
 Reduces the chances of forgetfulness by offering facilities like bulletin boards and
whiteboards
 Encourages input of ideas because of its simplicity of use
 Increases information sharing, which ultimately speeds knowledge capturing and
enhances productivity
 Makes results available easily and immediately
 Makes it easier to understand by displaying information in the form of graphics
 Gives more structure to virtual operations and decision-making

Evaluating Communication and Group Support Tools

Not all group communication and support tools may suit your requirements. In order to choose
the right group support tools for your communication-driven decision support system, it’s
essential to consider these factors:
  Scalability: A tool’s ability to support the needs of all anticipated users is known as
scalability. Plus, it should be easily integrated with existing hardware and software
applications.
 Reliability: A group support tool must be able to perform necessary tasks without failing.
Though decision makers use different technologies at different times in different
situations, but the reliability of a support tool should be evaluated before integrating it
with the system.
 Ease of Installation and Use: A support tool must be easy to install and use. An ideal
tool is the one that requires minimal or no formal training for its users. The decision
makers may consult DSS experts to integrate group support tools that are easy to use.
 Versatility: Versatility of a support tool plays a crucial role. As different DSS users
prefer different platforms, it must be compatible across all platforms. In addition, it must
allow easy customization of features and capabilities.
 Security: As a GDSS fosters resource sharing, a support tool must ensure security of data
transfer by executing it across firewalls.
 Cost: Given the significant expenditure on a GDSS, a support tool must be affordable
enough, so that it doesn’t add much to the basic cost of developing and implementing a
DSS.

It’s important to select the right communication and support tools to promote good decision
making by a team that is physically dispersed. Moreover, a GDSS must be carefully aligned to
the structure of an organization, in order to get the best results.

Groupware Technologies

Groupware is a class of computer programs that enables individuals to collaborate on projects

with a common goal from geographically dispersed locations through shared Internet interfaces
as a means to communicate within the group.

Groupware may also include remote access storage systems to archive frequently used data files.
These can be altered, accessed and retrieved by workgroup members.

Groupware is also known as collaborative software.

The first commercial groupware products emerged in early 1990s when international giants such
as IBM and Boeing began using electronic meeting systems for their internal projects. Further,
Lotus Notes appeared as a major product of this category, further enhancing remote group
collaborations.

Groupware systems are classified based on functions, specifically:

 Computer mediated communication supporting direct participant communication

 Meeting and decision support systems capturing the common understanding of
participants
 Shared applications
  Artifacts supporting the interaction of participants through shared work objects

Groupware is either synchronous or asynchronous in nature. Synchronous groupware is a class of

applications that allows a group of individuals who are physically separated to interact with each
other using shared computational objects in real time. The fundamental requirement of
synchronous groupware is real-time coordination among clients. The user interfaces advocate a
feeling of togetherness. They require shared audio channels for communication.

Asynchronous groupware uses email, structured messages, agents, workflow, computer

conferencing agents, file sharing systems and collaborative writing systems, among others.
Asynchronous collaborations between users are well maintained only if they are allowed to
perform their contributions without any restrictions. This can be accomplished through replicated
data management systems with read any or write any data access. Users can execute concurrent
updates.

The extensive use of groupware on the Internet helped contribute to the development of Web 2.0,
which uses instant messaging, Web conferencing, group calendars, document sharing, etc.

Executive Information System

Executive support systems are intended to be used by the senior managers directly to provide
support to non-programmed decisions in strategic management.

These information are often external, unstructured and even uncertain. Exact scope and context
of such information is often not known beforehand.

This information is intelligence based:

  Market intelligence
 Investment intelligence
 Technology intelligence

Examples of Intelligent Information

Following are some examples of intelligent information, which is often the source of an ESS:

 External databases
 Technology reports like patent records etc.
 Technical reports from consultants
 Market reports
 Confidential information about competitors
 Speculative information like market conditions
 Government policies
 Financial reports and information

Features of Executive Information System

Advantages of ESS
  Easy for upper level executive to use
 Ability to analyze trends
 Augmentation of managers’ leadership capabilities
 Enhance personal thinking and decision-making
 Contribution to strategic control flexibility
 Enhance organizational competitiveness in the market place
 Instruments of change
 Increased executive time horizons.
 Better reporting system
 Improved mental model of business executive
 Help improve consensus building and communication
 Improve office automation
 Reduce time for finding information
 Early identification of company performance
 Detail examination of critical success factor
 Better understanding
 Time management
 Increased communication capacity and quality

Disadvantage of ESS

 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