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Page 1: chapter 10

Introduction to Information TechnologyTurban, Rainer and Potter

Chapter 10 Data, Knowledge, and Decision Support

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CHAPTER 10DATA, KNOWLEDGE,

AND DECISION SUPPORT

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Introduction to Information TechnologyTurban, Rainer and Potter

Chapter 10 Data, Knowledge, and Decision Support

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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

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Chapter OverviewManagement and Decision Making• The Manager’s Job • Why Managers Need IT Support

Data Management Life Cycle• The Data Life Cycle Process • Data Sources and Collection • Data Quality• Data Storage and Management • Document Management• Analytical Processing

Decision Support Systems

• The Decision Support Process• Modeling• A Framework for Computerized DSS• DSS Concepts, Characteristics, and Capabilities• Components and Structure of DSS

Enterprise Decision Support

•Executive Information Support•Supporting Idea Generation and Creativity•Group Decision Support Systems (GDSS)

Data Visualisation Technologies

•Data Visualization•Visual Interactive Decision Making•Geographical Information Systems

Knowledge Management and Organization Knowledge Bases•What is knowledge Management?•IT Support of Knowledge Management Activities•Implementing Knowledge Management

Knowledge Discovery and Analysis

•The Foundations of Knowledge Discovery•Online Analytical Processing•Data Mining for Decision Support•Ethical and Legal Issues

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Case: Managing Global Business at 3M Corporation

The Business Problem

The Solution The Company created a global enterprise data warehouse

(GEDW)

The company had difficulties responding to new customers and markets in the globaleconomy as each business unit kept separate databases and conducted independent decision support activities

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

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What have we learned from this case??

Case (continued…)

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

The case demonstrates the existence of vast amounts of important data in organizations, and the importance of organizing that data for optimum use

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Management andDecision 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

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Management andDecision 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

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The Data ManagementLife Cycle Process

Data Sources (databases)

End Users:Decision Making and other Tasks;

Data Visualization

Data Warehouse(storage)

Analytical Processing,Data Mining

Generate Knowledge

Organizational Knowledge Bases

Purchased Knowledge Storage

Direct Use

Data Organization; Storage

Direct Use

Use

Use

Use

Use of Knowledge

Storage

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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

The Data ManagementLife Cycle (continued …)

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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

The Data ManagementLife Cycle (continued …)

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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

The Data ManagementLife Cycle (continued …)

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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

The Data ManagementLife Cycle (continued …)

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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

The Data ManagementLife Cycle (continued …)

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The Decision Support Process

Decision Support Systems (DSS)

Intelligence PhaseIntelligence Phase

Design PhaseDesign Phase

Choice PhasesChoice Phases

REALITY

Implementationof Solution

Implementationof Solution

SUCCESS

FAILURE

Verification, Testing of Proposed Solution

Verification of the Model

Examination

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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

DSS (continued …)

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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

DSS (continued …)

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Decision Support Framework

DSS (continued …)

Type of Control

Type of Decision

Operational Control

Managerial Control

StrategicPlanning

SupportNeeded

Structured

Semi-structured

Unstructured

Accounts Receivable Order entry

Production scheduling inventory control

Selecting a cover for a magazine, buying software approving loans

Support Needed

Budget analysis,short-term forecasting, personnel reports, make-of-buy analysis

Credit evaluation, Budget Preparation, plan layout, project scheduling, rewarded systems design

Negotiating,recruiting and executive,buying hardware,lobbying

Financialmanagement ,warehouse location, distribution systems

Building new plant, mergers and acquisitions, new product planning, compensation planning, quality assurance planningR & D planning, new technology development social responsibility planning

MISMS modelsF & S models

DSS

DSSES Neural Networks

MIS,MS

MS, DSS, EIS, ES EIS, ES, Neural Networks

1 2 3

4 5 6

7 8 9

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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

DSS (continued …)

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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

DSS (continued …)

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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

DSS (continued …)

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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

independent component

DSS (continued …)

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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

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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

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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

Enterprise Decision Support (continues …)

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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

Enterprise Decision Support (continues …)

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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

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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

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Geographical Information System (GIS)

GIS Categories

GIS

Spatial Imaging Function

Design and Planning Function

Database Management

Function

Decision Modelling Function

Surveying and MappingDesign and Engineering

Facilities Management

Strategic Planning and

Decision Making

Demographic and Market

AnalysisTransportation and Logistics

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GIS (continued …) GIS Applications and Decision Making

Company What the Application DoesHelps select new Taco Bell and Pizza Hut restaurants, by combining demographic data and traffic patterns

PepsiCo, Inc.

Answers such questions as “How many CIGNA-affiliated physicians are within an 8-mile radius of a business?”

CIGNA (health insurance)

Creates a detailed demographic profile of store’s neighborhood to determine the store’s best product mix

Western Auto (a subsidiary of Sears)

Supports planning of truck routesSears, Roebuck & Co.Tracks cancer rate to determine clinics’ expansion strategy and allocation of expensive equipment

Health maintenance organizations

Maps neighborhoods where temporary workers live; used for locating marketing and recruiting efforts in cities

Wood Personnel Services (employment agency)

Designs optimal sales territories and routes for their clients, reducing travel costs by 15 percent

Wilkening & Co.(consulting services)

Maps its entire cellular network to identify clusters of call disconnects and to dispatch technician accordingly

CellularOne Corp.

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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

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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

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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

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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

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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 databases, and online analytical processing

Knowledge Discovery and Analysis

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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 Respond quickly to users requests

Online Analytical Processing (OLAP)

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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

Data Mining for Decision Support

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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

Data Mining (continues ...)

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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

Data Mining (continues ...)

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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

What’s in IT for Me?

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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