Introduction to Information Technology

Turban, Rainer and Potter

Chapter 10 Data, Knowledge, and Decision Support

CHAPTER 10
DATA, KNOWLEDGE,
AND DECISION SUPPORT
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Learning Objectives
Describe the concepts of managerial decision making and
computerized support decision making
Understand the life cycle of processing data into information
and knowledge for use in decision support
Describe the framework for computerized decision support
and the concept of decision support systems
Describe executive information systems and group support
systems, and analyze their roles in management support
Describe data presentation methods and explain geographical
information systems as a decision support tool
Explain the concepts of knowledge management and
organizational databases
Describe knowledge discovery, online analytical processing,
and data mining
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Chapter Overview
Management and Data Management Decision Support Systems
Decision Making Life Cycle
• The Manager’s • The Data Life Cycle Process • The Decision Support Process
Job • Data Sources and Collection • Modeling
• Why Managers • Data Quality • A Framework for Computerized DSS
Need IT • Data Storage and • DSS Concepts, Characteristics, and
Support Management Capabilities
• Document Management • Components and Structure of DSS
• Analytical Processing
Enterprise Decision Data Visualisation Knowledge Management Knowledge Discovery
Support Technologies and Organization and Analysis
Knowledge Bases
•Executive •Data •What is knowledge •The Foundations of
Information Support Visualization Management? Knowledge
•Supporting Idea •Visual Interactive •IT Support of Discovery
•Online Analytical
Generation and Decision Making Knowledge Processing
Creativity •Geographical Management Activities •Data Mining for
•Group Decision Information •Implementing Decision Support
Support Systems Systems Knowledge •Ethical and Legal
(GDSS) Management Issues
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support
Case: Managing Global Business
at 3M Corporation
 The Business Problem
The company had difficulties responding to
new customers and markets in the global
economy as each business unit kept separate databases and
conducted independent decision support activities
The Solution
The Company created a global enterprise data warehouse
(GEDW)
The Results
Distributors and retailers, as well as end-users, now receive
information in minutes instead of weeks or months,
including the delivery of rich multimedia
Customers can find all their information in one place
Inventories are lower, and better and quicker inventory
decisions are made, even in globally remote locations
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Case (continued…)
What have we learned from this case??
The case demonstrates the existence of
vast amounts of important data in
organizations, and the importance of
organizing that data for optimum use
The case shows the need to share a company’s
data internally and with business partners and
customers, and to make it available in a format
that enables end users to process data quickly
The case explains the data warehouse, and its
role in supporting managerial decision making
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support
Management and
Decision Making
Management
a process by which certain goals are achieved
through the use of resources
Managers - make decisions in every step of the
process
interpersonal roles : figurehead, leader, liaison
informational roles : monitor, disseminator,
spokesperson
decisional roles : entrepreneur, disturbance
handler, resource allocator, negotiator
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support
Management and
Decision Making (continued …)
Why Managers Need IT Support
processing information manually is growing
increasingly difficult
computerized modeling
examining numerous alternatives very quickly
providing a systematic risk analysis
being integrated with communication systems
and databases
being used to support group work
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

The Data Management

Life Cycle Process
Data Sources Direct Use End Users:
(databases) Decision Making and other Tasks;
Data Visualization
Data
Direct Organization; Use of
Use Storage Use Knowledge
Data Warehouse
(storage) Generate
Use Knowledge
Analytical Processing, Use
Data Mining Storage
Purchased Organizational
Knowledge Storage Knowledge Bases
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

The Data Management

Life Cycle (continued …)
Data Sources and Collection
Internal Data - generated by the corporate transaction
processing systems, functional user information systems,
and other functions and individuals
Personal Data - created for IS users or other corporate
employees documenting their own expertise
External Data - generated outside and organization, but
relevant portions of it flow into the organization
Methods for Collecting Raw Data
manually or by instruments and sensors
scanned or transferred electronically
in the field; other times from within the organization or
from people
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

The Data Management

Life Cycle (continued …)
Data Quality
an extremely important issue since
quality determines the data’s
usefulness as well as the quality of the
decisions based on these data
need to be : accurate, secure, relevant,
timely, complete, and consistent
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

The Data Management

Life Cycle (continued …)
Data Storage
databases or in data warehouse and data marts
Data Management
difficulties in data management
exponential increases of data with time
data collected by several methods and devices
various sources of raw data
only small portions are relevant
an ever-increasing amount of external data
different legal requirements relating to data
selecting data management tools - a problem
data security, quality, and integrity
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

The Data Management

Life Cycle (continued …)
Document Management
Document Management System (DMS)
automates the control of electronic documents through
their entire life cycle within an organization, from initial
creating to final archiving
retains an image of an electronic document
creates an index of key-words
puts the entire document into computer readable format
manages (and limits) distribution
Functions
document identification, storage, and retrieval; tracking
version control’ workflow management’ and presentation
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

The Data Management

Life Cycle (continued …)
Analytical Processing - the activity
of analyzing accumulated data
work directly with the existing
operational systems, using software
tools and components known as front-
end tools
work with the data warehouse
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Decision Support Systems (DSS)

The Decision Support Process
REALITY Examination
Intelligence Phase
 Verification
of the Model
Design Phase
Verification, Testing

SUCCESS
of Proposed Solution Choice Phases

Implementation
of Solution

FAILURE 
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
Modeling in DSS
Iconic (scale) models
a physical replica of a system, usually based on
a different scale form original
Analog models
a physical model, but the shape of the model
differs from that of the actual system
Mathematical (qualitative) model
models complex relationships and conducts
experimentations with them
Mental models
provide a description of how a person thinks
about a situation
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
A Framework for Computerized Decision Support
Problem Complexity
decision making processes fall along a continuum that
ranges from highly structured to highly unstructured
decisions
Nature of Decisions
strategic planning - the long-range goals and policies for
resource allocation
management control - the acquisition and efficient
utilization of resources in the accomplishment of
organizational goals
operational control - the efficient and effective execution
of specific tasks
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
Decision Support Framework
Type of Control
Type of Operational Managerial Strategic Support
Decision Control Control Planning Needed
Structured Accounts 1 Budget analysis, 2Financial 3 MIS
Receivable short-term forecasting, management , MS models
Order entry personnel reports, warehouse location, F&S
make-of-buy analysis distribution systems models
Semi- Production 4 Credit evaluation, 5 Building new plant, 6 DSS
structured scheduling Budget Preparation, mergers and acquisitions,
inventory plan layout, project new product planning,
control scheduling, rewarded compensation planning,
systems design quality assurance
planning
Unstructured Selecting a 7 Negotiating, 8 R & D planning, new 9 DSS
cover for a recruiting and technology development ES
magazine, executive, social responsibility Neural
buying software buying hardware, planning Networks
approving loans lobbying
Support MIS, MS, DSS, EIS, ES EIS, ES,
Needed MS Neural Networks
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
Computer Support for Structured decision
support the nine cells, especially to the operational and
managerial control type
lower-level managers encounter on a regular basis
typically have a high level of structure
Management Science - adopts the view that managers
can follow a fairly systematic process for solving problems
Define the problem
Classify the problem into a standard category
Construct a standard mathematical model
Find potential solutions
Choose and recommend a specific solution
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
Concepts
an approach or a philosophy rather than a precise
methodology
Characteristics and Capabilities
support decision makers at all managerial levels
support several interdependent and/or sequential decisions
support all phases of decision making and variety of
decision-making processes and styles
can be adopted over time to deal with changing conditions
easy to construct
utilize models
integrate systems
execute sensitivity analysis
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
Sensitivity Analysis
the study of the effect that changes in one
or more parts of a model have on other
parts of the model
What-if Analysis
checks the impact of a change in the
assumptions or other input data on the
proposed solution
Goal-seeking Analysis
find the value of the inputs necessary to
achieve a desired level of output
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

DSS (continued …)
Components and Structure of DSS
Data Management
includes the database(s), which contains relevant
data for the decision situation
User Interface
enables the users to communicate with and
command the DSS
Model Management
includes software with financial, statistical,
management science, or other quantitative
models
Knowledge Management
supports any of the other subsystems or act as an
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Enterprise Decision Support

Executive Information Support
Capabilities of EIS
Drill down
Critical success factors and key performance indicators
Status access
Trend analysis
Ad hoc analysis
Exception reporting
Intelligent EIS
Integration with DSS
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Enterprise Decision Support

(continues …)
DSS, EIS, and the Internet
The DSS/EIS builder can access Web pages
and view data that are related to the DSS
project; thus saving time
The Web supports interactive DSS-related
queries and ad hoc report generation.
Users have the capabilities of advanced DSS
application without requiring special software
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Enterprise Decision Support

(continues …)
Supporting Idea Generation and
Creativity
Generate ideas or be creative in order to
generate alternative solutions for semi
structured and unstructured situations
Idea-generation software
stimulates a single user or a group to
produce new ideas, options, and choices
encourages and pushes, something like a
personal trainer
increases the flow of ideas to the user
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Enterprise Decision Support

(continues …)
Group Decision Support Systems (GDSS)
an interactive computer-based system that facilitates
the solution of semi structured and unstructured
problems by a group of decision makers
supports face-to-face meetings - decision room
as well as meetings where members are in different
locations
to improve the productivity of decision making
meetings, either by speeding up the decision-making
process or by improving the quality of the resulting
decisions, or both
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Data Visualization Technologies

Data Visualization
presents data by technologies such as digital
images, geographical information systems,
graphical user interfaces, multidimensional
tables, and graphs, virtual reality, three-
dimensional presentations, and animation
allows people to spot problems that have
existed for years, undetected by standard
analysis methods
can be integrated among themselves to create
a variety of presentations
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Data Visualization Technologies

(continued …)
Visual Interactive Decision Making
Visual interactive modeling (VIM)
use computer graphic displays to represent the impact of
different management or operational decisions on goals
such as profit or market share
user can intervene in the decision-making process and
see the results of the intervention
Visual interactive simulation (VIS)
the end-user watches the progress of the simulation
model in an animated form using graphics terminals
users may interact with the simulation and try different
decision strategies
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support
Geographical Information
System (GIS)
GIS Categories
Design and Surveying and Mapping Facilities
Engineering Spatial Imaging Management
Function

Design and Database

Planning GIS Management
Function Function

Decision Modelling
Strategic Function Demographic
Planning and and Market
Decision Making Transportation and Logistics Analysis
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

GIS (continued …)
GIS Applications and Decision Making
Company What the Application Does
PepsiCo, Inc. Helps select new Taco Bell and Pizza Hut restaurants,
by combining demographic data and traffic patterns
CIGNA (health insurance) Answers such questions as “How many CIGNA-affiliated
physicians are within an 8-mile radius of a business?”
Western Auto (a subsidiary Creates a detailed demographic profile of store’s
of Sears) neighborhood to determine the store’s best product mix
Sears, Roebuck & Co. Supports planning of truck routes
Health maintenance Tracks cancer rate to determine clinics’ expansion
organizations strategy and allocation of expensive equipment
Wood Personnel Services Maps neighborhoods where temporary workers live; used
(employment agency) for locating marketing and recruiting efforts in cities
Wilkening & Co. Designs optimal sales territories and routes for their
(consulting services) clients, reducing travel costs by 15 percent
CellularOne Corp. Maps its entire cellular network to identify clusters of
call disconnects and to dispatch technician accordingly
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

GIS (continued …)

Emerging GIS Applications

help reengineer the aviation,
transportation, and shipping industries
enables vehicles or aircraft equipped
with a GPS receiver to pinpoint their
location as they move
include railroad car tracking and earth-
moving equipment tracking
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Knowledge Management and

Organizational Knowledge Bases
What is Knowledge Management?
Knowledge assets - regarding markets,
products, technologies, and organizations that a
business owns or needs to own
Best practices - collection of the most
successful solutions and/or case studies
Intellectual capital - collection of knowledge
amassed by an organization over the years
Knowledge system - collects knowledge,
stores it in a database, maintains the database,
and disseminates the knowledge to users
competitive intelligence - collection of
competitive information
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support
IT Support of Knowledge
Management Activities
Knowledge identification - determines what
knowledge (information) is critical to decision making
Knowledge discovery and analysis - using search
engines, databases, and data mining, the proper knowledge
must be found, analyzed, and put into proper context
Establishment of organizational knowledge bases -
it stores organizational knowledge and best practices
Knowledge distribution and use - target audiences
are defined and technologies are put into place to enable
knowledge delivery when needed
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Implementing Knowledge
Management
Reorganize as knowledge-based
organizations
Created a new position, chief knowledge
officer (CKO)
crating knowledge management infrastructure
build a knowledge culture
make it pay off
Facilitate organizational learning
learn from their experiences in order to survive
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Knowledge Discovery and

Analysis
The Foundations of Knowledge
Discovery
identify valid, novel, potentially useful data,
and understand patterns in data
supported by : massive data collection,
powerful multiprocessor computers, and data
mining algorithms
tools : data warehousing and data access,
multidimensionality, data mining, massive
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Online Analytical Processing

(OLAP)
Analysis by end users from their desktop, online
Analyze the relationships between many types of
business elements
Involve aggregated data
Compare aggregated data over hierarchical time
period
present data in different perspectives
Involve complex calculations between data
elements
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Data Mining for Decision

Support
Data Mining searches for valuable
business information in a large database
and “mines a mountain for a vein of
valuable ore”
Two capabilities
automated prediction of trends and
behaviors
automated discovery of previously
unknown patterns and relationships
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Data Mining (continues ...)

Data Mining Tools
Neural computing
learning approach by which historical data
can be examined for patterns by a computer
Intelligent agents
retrieving information from the Internet or
from intranet-based databases
Association analysis
using a specialized set of algorithms that sort
through large data sets and expresses
statistical rules among items
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

Data Mining (continues ...)

Ethical Issues
prohibited valuable data-mined information
accountability for incorrect decisions
human judgment
Legal Issues
discrimination of age or gender for promotions
data security from external snooping or sabotage
data ownership
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

What’s in IT for Me?

For Accounting
play major role in the justification of the creation
of a knowledge base and in its auditing
For Finance
responsible for justifying major investments
can be helped by most DSS applications in
financial management and analysis
For Marketing
use the organization’s knowledge base and will
participate in its creation
 Introduction to Information Technology
Turban, Rainer and Potter
Chapter 10 Data, Knowledge, and Decision Support

What’s in IT for Me? (continued …)

For Production/Operations Management

can get help in scheduling, logistics,
maintenance
For Human Resources Management
use the knowledge base to find out how past
cases were handled
resolve the issue of compensating employees
for contributing their knowledge