Chapter11: Enhancing management decision-making for the digital firm

11.1 © 2003 by Prentice Hall

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ENHANCINGENHANCING

MANAGEMENTMANAGEMENT

DECISION-MAKINGDECISION-MAKING

FOR THE DIGITALFOR THE DIGITAL

FIRMFIRM

Chapter


• How can information systems help How can information systems help individual managers make better individual managers make better decisions when the problems are non-decisions when the problems are non-routine and constantly changing?routine and constantly changing?

• How can information systems help people How can information systems help people working in a group make decisions more working in a group make decisions more efficiently?efficiently?

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 11 Enhancing Management Decision-Making for the Digital FirmChapter 11 Enhancing Management Decision-Making for the Digital Firm

OBJECTIVES


• Are there any special systems that can facilitate Are there any special systems that can facilitate decision-making among senior managers? decision-making among senior managers? Exactly what can these systems do to help high-Exactly what can these systems do to help high-level management?level management?

• What benefits can systems that support What benefits can systems that support management decision-making provide for the management decision-making provide for the organization as a whole?organization as a whole?

OBJECTIVES



• Building information systems that can Building information systems that can actually fulfill executive information actually fulfill executive information requirementsrequirements

• Create meaningful reporting and management Create meaningful reporting and management decision-making processesdecision-making processes

MANAGEMENT CHALLENGES



• Computer system at the management level of Computer system at the management level of an organizationan organization

• Combines data, analytical tools, and models Combines data, analytical tools, and models

• Supports semi-structured and unstructured Supports semi-structured and unstructured decision-makingdecision-making

DECISION-SUPPORT SYSTEMS (DSS)



MISMIS

• Provides reports based on routine flow of Provides reports based on routine flow of datadata

• Assists in general control of the Assists in general control of the organizationorganization



MIS and DSS


DSSDSS

• Emphasizes change, flexibility, rapid Emphasizes change, flexibility, rapid response, models, assumptions, ad hoc response, models, assumptions, ad hoc queries, and display graphicsqueries, and display graphics



MIS and DSS


Model-driven DSSModel-driven DSS

• Primarily stand-alone Primarily stand-alone

• Uses model to perform “what-if” and other Uses model to perform “what-if” and other kinds of analysiskinds of analysis



Types of Decision-Support Systems


Data-driven DSSData-driven DSS

• Allows users to extract and analyze useful Allows users to extract and analyze useful information from previous databasesinformation from previous databases

DataminingDatamining

• Finds hidden patterns and relationships in Finds hidden patterns and relationships in large databases to infer ruleslarge databases to infer rules



Types of Decision-Support Systems




Overview of a Decision-Support System (DSS)

Figure 11-1


DSS database DSS database

• Collection of current or historical dataCollection of current or historical data

DSS software systemDSS software system

• Collection of software tools/mathematical Collection of software tools/mathematical and analytical models and analytical models


Components of Decision-Support Systems



ModelModel

• Abstract representation illustrating Abstract representation illustrating components or relationships components or relationships

Sensitivity analysisSensitivity analysis

• Asks “what-if” questions repeatedly to Asks “what-if” questions repeatedly to determine the impact of changedetermine the impact of change


Components of Decision-Support Systems




Sensitivity Analysis

Figure 11-2



• General Accident Insurance:General Accident Insurance: Customer buying patterns and fraud Customer buying patterns and fraud detectiondetection

• Bank of America:Bank of America: Customer profilesCustomer profiles

• Frito-Lay, Inc.:Frito-Lay, Inc.: Price, advertising, and Price, advertising, and promotion selectionpromotion selection


DSS Applications and the Digital Firm



• Burlington Coat Factory:Burlington Coat Factory: Store Store location and inventory mixlocation and inventory mix

• Keycorp:Keycorp: Targeting direct mail marketing Targeting direct mail marketing customerscustomers

• National Gypsum:National Gypsum: Corporate planning Corporate planning and forecastingand forecasting





• Southern Railway:Southern Railway: Train dispatching Train dispatching and routingand routing

• Texas Oil and Gas Corporation:Texas Oil and Gas Corporation: Evaluation of potential drilling sitesEvaluation of potential drilling sites

• United Airlines:United Airlines: Flight scheduling, Flight scheduling, passenger demand forecastingpassenger demand forecasting





• U.S. Department of Defense:U.S. Department of Defense: Defense Defense contract analysiscontract analysis





• Comprehensive examination of supply Comprehensive examination of supply management chain management chain

• Searches for most efficient and cost-Searches for most efficient and cost-effective combinationeffective combination

• Reduces overall costsReduces overall costs

• Increases speed and accuracy of filling Increases speed and accuracy of filling customer orderscustomer orders


DSS for Supply Chain Management



• Uses data mining to guide decisions Uses data mining to guide decisions

• Consolidates customer information into Consolidates customer information into massive data warehousesmassive data warehouses

• Uses various analytical tools to slice Uses various analytical tools to slice information into small segments information into small segments


DSS for Customer Relationship Management




DSS for Customer Analysis and Segmentation


Figure 11-3


Geographic Information Systems (GIS)Geographic Information Systems (GIS)

• Software for analyzing and displaying data Software for analyzing and displaying data using digitized mapsusing digitized maps

• Enhances planning and decision-makingEnhances planning and decision-making


DSS for Simulating Business Scenarios



Customer Decision-Support Systems Customer Decision-Support Systems (CDSS)(CDSS)

• Support decision-making process of an Support decision-making process of an existing or potential customerexisting or potential customer


Web-Based Customer Decision-Support Systems



• Interactive computer-based system Interactive computer-based system

• Facilitates solution to unstructured Facilitates solution to unstructured problems problems

• Set of decision makers working together Set of decision makers working together as a groupas a group

GROUP DECISION-SUPPORT SYSTEMS (GDSS)

What Is a GDSS?



• Hardware: Hardware: Conference facility, electronic Conference facility, electronic hardwarehardware

• Software tools: Software tools: Tools for organizing ideas, Tools for organizing ideas, gathering information, and ranking and gathering information, and ranking and seeking prioritiesseeking priorities

• People: People: Participants, trained facilitator, Participants, trained facilitator, staff supporting hardware and softwarestaff supporting hardware and software


Characteristics of GDSS



• Electronic questionnairesElectronic questionnaires

• Electronic brainstorming toolsElectronic brainstorming tools

• Idea organizersIdea organizers

• Questionnaire toolsQuestionnaire tools


GDSS Software Tools



• Tools for voting or setting prioritiesTools for voting or setting priorities

• Stakeholder identification and analysis Stakeholder identification and analysis toolstools


GDSS Software Tools



Electronic Meeting System (EMS):Electronic Meeting System (EMS):

• Collaborative GDSS Collaborative GDSS

• Makes group meetings more productiveMakes group meetings more productive

• Supports meetingsSupports meetings

• Facilitates communication and decision-Facilitates communication and decision-makingmaking


Overview of a GDSS Meeting



• Improved preplanningImproved preplanning

• Increased participation Increased participation

• Open, collaborative meeting atmosphereOpen, collaborative meeting atmosphere

• Criticism-free idea generationCriticism-free idea generation

• Evaluation objectivityEvaluation objectivity


How GDSS can Enhance Group Decision-Making



• Idea organization and evaluationIdea organization and evaluation

• Setting priorities and making decisionsSetting priorities and making decisions

• Documentation of meetingsDocumentation of meetings

• Access to external informationAccess to external information

• Preservation of “organizational memory”Preservation of “organizational memory”


How GDSS can Enhance Group Decision-Making



Executive Support Systems (ESS):Executive Support Systems (ESS):

• Information system at strategic level of an Information system at strategic level of an organizationorganization

• Addresses unstructured decision-making Addresses unstructured decision-making through advanced graphics and through advanced graphics and communicationscommunications

EXECUTIVE SUPPORT IN THE ENTERPRISE



• Brings together data from the entire Brings together data from the entire organization organization

• Allows managers to select, access, and Allows managers to select, access, and tailor data tailor data

• Enables executive and any subordinates Enables executive and any subordinates to look at the same data in the same wayto look at the same data in the same way


The Role of Executive Support Systems in the Organization



Developing ESS: Developing ESS:

• Ease of useEase of use

• Facility for environmental scanningFacility for environmental scanning

• External and internal sources of External and internal sources of information to be used for environmental information to be used for environmental scanning scanning


The Role of Executive Support Systems in the Organization



• Analyzes, compares, and highlights trendsAnalyzes, compares, and highlights trends

• Provides greater clarity and insight into Provides greater clarity and insight into datadata

• Speeds up decision-makingSpeeds up decision-making


Benefits of Executive Support Systems Benefits of Executive Support Systems



• Improves management performance Improves management performance

• Increases management’s span of controlIncreases management’s span of control

• Better monitoring of activitiesBetter monitoring of activities


Benefits of Executive Support Systems



ESS for business intelligence:ESS for business intelligence:

• Identifies changing market conditionsIdentifies changing market conditions

• Formulates responsesFormulates responses

• Tracks implementation effortsTracks implementation efforts

• Learns from feedbackLearns from feedback


Executive Support Systems and the Digital Firm



Monitoring corporate performance: Monitoring corporate performance:

balanced scorecard systemsbalanced scorecard systems

• Model for analyzing firm performanceModel for analyzing firm performance

• Supplements traditional financial Supplements traditional financial measures with measurements from measures with measurements from additional business perspectivesadditional business perspectives


Executive Support Systems and the Digital Firm



Strategic performance management tools Strategic performance management tools

for enterprise systemsfor enterprise systems

• SAP:SAP: Web-enabled mySAP.com™, Web-enabled mySAP.com™, Management CockpitManagement Cockpit

• PeopleSoft:PeopleSoft: Web-enabled Enterprise Web-enabled Enterprise Performance Management (EPM) Performance Management (EPM)

• Oracle:Oracle: Strategic Enterprise Management Strategic Enterprise Management


Enterprise Wide Reporting and Analysis



1111

ENHANCINGENHANCING

MANAGEMENTMANAGEMENT

DECISION-MAKINGDECISION-MAKING

FOR THE DIGITALFOR THE DIGITAL

FIRMFIRM

Chapter

Chapter11: Enhancing management decision-making for the digital firm

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