Decision support system

Interactive computer-based systems that help people use computer communications, data, documents, knowledge and models to solve problems and make decisions. Need good information and provide information that improves decisionmaking. Companies use DSS to support the decision making of customers and suppliers.

Combine information portals, knowledge management, business intelligence in an integrated web environment.

Type of decisions
Programmed decisions
repetitive and routine have a definite procedure

Nonprogrammed decisions
Novel and unstructured No cut-and-dried method for handling problem

Problem solving phases

Intelligence

Searching environment for conditions calling for a solution

Inventing, developing, and analyzing possible courses of action Selecting a course of action from those available Assessing past choices

Design

Choice

Review

Characteristics of DSS
Should support rather than automate decision making Should respond quickly to changing moods of decision makers Specific types of DSS business intelligence, - data mining, data warehousing, knowledge management and on-line analytical processing, - e-business technologies, world-wide web and information technologies

Characteristics of DSS
The computer must support the manager and not replace his judgment. Semi-structured problem where parts if analysis can be systematized by computer Effective problem solving is interactive by a dialogue between user and system

Characteristics of DSS
Supports decision making at any level in an organization (operations, financial management and strategic decisionmaking) DSS can support a manager using a single PC or a large group of managers in a networked client-server or web environment

Characteristics of DSS
DSS include a wide variety of analytical information systems, DSS provide managers more control of their data, access to analytical tools capabilities for consulting and interacting with a distributed group of staff. linked with a large data warehouse and serves many managers within one company

DSS
Operational Control Degree of Problem Structured Structure Accounts Receivable Order entry Inventory control Production scheduling Management Control Budget analysisengineered costs Strategic planning

Warehouse and factory location

Short-term forecasting
Variance analysis overall budget Mergers and acquistions

Semi-structured

Unstructured

Cash Management

Sales and production

New Product planning R&D planning

Components of DSS
Database Management System. DBMS manipulates, updates, maintains and disseminates data. -internal data generated by TPS -external data from newspapers,census data, tax codes, census figures, competitors -online data services -databases (finance, marketing, HR and others)

Components of DSS
Model Management systems Stores and accesses models that managers use to make decisions e.g. manufacturing facility,analysing financial status, forecasting demand for product or service, determining quality of products. Expert knowledge Expert systems (Artificial Neural Network knowledge based) Support tools -Online help, pull-down menus,user interfaces, graphical analyses, error-correction mechanisms facilitates users interactions with the system. Interfaces important support tools -

DSS Types

Retrieve information elements

Analyze entire files

Prepare reports from multiple files

Estimate decision consequences

Propose decisions

Make decisions

Degree of problem solving support

Little

Degree of complexity of the problem-solving system

Much
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Three DSS Objectives

1. Assist in solving semistructured problems 2. Support, not replace, the manager 3. Contribute to decision effectiveness, rather than efficiency

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Functions of a DSS
Model building Decision makers identify input variables, interrelationsips amongst variables, problem assumptions and constraints E.g. sales forecasting- input variables such as demand, cost and profit, assumptions (e.g. prices of raw materials increase by 5% over forecasting period), identify constraints e.g. production capacity of plant. All information integrated within system

Functions of a DSS
What-if-analysis Assess Impact of changes to model variables. Used for semi-structured and unstructured problems. Develop(best-case scenario, worst-case scenario and realistic scenario) -Spreadsheet packages such as Excel, Lotus 12-3

Functions of a DSS
Goal seeking determining input values to achieve goals Risk analysis-Assess risks. Decisions can be low-risk, medium-risk and highrisk. Graphical analysis-Visualize impacts of action, forecast activities, detect trends - e.g. line or bar charts, grouped line or bar charts

Development of a DSS
SQL relational database systems such as ORACLE, ACCESS 3 methods of developing a DSS -DSS generator- data management tools, spreadsheets, report generators,statistical packages, graphical packages, model-building tools - Excel -DSS shells Program to build customized DSS e.g. financial software to forecast incomes,project cash flow, balance sheets, analyze financial data -Custom made software- Use language such as C to develop procedures. Expensive and time-consuming

Organizational goals

Organizational effectiveness

Organizational efficiency

Decision-making effectiveness

Decision making efficiency

Quality of use Attittude of DSS Intelligence Quality Information Quality Process Quality

Organizational Measures
Organizational effectiveness greater growth, better innovation, increased profitability, technical excellence, return on investment Organizational Efficiency- Cost savings, increased productivity, greater team work, time savings Decision making effectiveness Ability to carry out ad hoc analysis, examination of alternatives, rationality of process

Organizational Measures
Decision making efficiency- reduction in time taken for decision making, improvements in predictive accuracy, greater focusing on key issues Attitude to DSS- enhanced employee welfare, satisfaction with procedures Quality use of DSS- Application in major problem area, repeat use, widespread use, utilization Information Quality- Accuracy, communication, timeliness

Organizational Measures
Intelligence Quality- Better understanding of organization, generation of ideas Process Quality-Confidence in decision,enhancement of processes such as transparency, equal participation etc Validity-Content validity

A DSS Model
Environment
Individual problem solvers
Other group members

Report writing software

Mathematical Models

GDSS GDSS software software

Database

Decision support system Environment

Legend:
Data Communication Information

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Database Contents
Used by Three Software Subsystems
Report writers
Special reports Periodic reports DBMS

Mathematical models
Simulations Special modeling languages

Groupware or GDSS

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Group Decision Support Systems

Computer-based system that supports groups of people engaged in a common task (or goal) and that provides an interface to a shared environment. Used in problem solving Related areas Electronic meeting system (EMS) -idea generation Idea categorization Software Problem statement entered for comment. Anonymous consolidation of comments, Idea ranking, Voting voting software Computer-supported cooperative work (CSCW) Group support system (GSS) Groupware -network, teleconferencing, web meeting, video
conferencing
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How GDSS Contributes to Problem Solving

Improved communications Improved discussion focus Less wasted time Conducive to decision making Allows all group members to participate Greatly enhances efficiency of group meetings Generates and processes ideas in parallel
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GDSS Environmental Settings

Synchronous exchange
Members meet at same time Committee meeting is an example

Asynchronous exchange
Members meet at different times E-mail is an example

More balanced participation.

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GDSS Types
Decision rooms
Small groups face-to-face Parallel communication Anonymity

Local area decision network

Members interact using a LAN

Legislative session
Large group interaction

Computer-mediated conference
Permits large, geographically dispersed group interaction

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Group Size and Location Determine GDSS Environmental Settings

GROUP SIZE
Smaller Larger

Face-toface

Decision Room

Legislative Session

MEMBER PROXIMITY
Dispersed

Local Area Decision Network

ComputerMediated Conference
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Main Groupware Functions

Function IBM TeamWARE Lotus Workgroup Office Notes Novell GroupWise

Electronic mail X FAX X Voice messaging Internet access X Bulletin board system Personal calendaring X Group calendaring X Electronic conferencing O Task management X Desktop video conferencing O Database access O Workflow routing O Reengineering O Electronic forms O Group documents O
X = standard feature O = optional feature

X X X X X X X X X X X 3 X

X O O O 3 3 O 3 3 3 3 3 3 X

X X X X O X X 3 X

X O O
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3 = third party offering

E-commerce
Buying and selling of products or services over electronic systems such as the Internet and other computer networks. Electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), inventory management

E-commerce
To sell a product - in stock Website connect to back-office operation so that orders are processed as they are placed e-catalog to be changed easily to add new products or change prices

E-commerce
Website Website Customer and vendors Warehouses Electronic catalog

Inventory
Financials Order entry

E-commerce
Website guides customers around site and can help in their making purchases. Electronic catalog -Manages product information so that it is presented to customers in the most attractive and organized way.

E-commerce
Inventory Is the inventory in stock or virtual stock is being sold? E-Commerce system should automatically update inventory count each time an order is received.

E-commerce
Order entry Once the order is taken, no need to re-enter it in a different system to process the order. System should automatically and seamlessly pass it through the operation.

E-commerce
Financials -Now that the order has been placed and the inventory has been allocated, it should be able to create a payable, an invoice, and it should post to the General Ledger.

E-commerce
Warehousing Now ordering center must communicate with shipping department. Customers and vendors -Linked to outside world E-business automate sales and accounting, billing, purchasing, inventory, warehousing, and shipping.

E-commerce
How fast is business on the Net growing? How is the Net being used by business? What strategic value is the Net to business? The Business to Business Evolution The Business to Consumer Revolution What will change with E-commerce?

E-business
Delivery of information, products, services and payments electronically. All types of business activity using computers and networks including: Electronic banking Electronic purchasing & inventory management Electronic payment Trade in digital goods & services Custom/customized product ordering

E-business
Advertising Internal employee communications Recruiting and employment Warranty registrationE-business will affect: Customers, competition, customer loyalty geographic boundaries - trading area The laws governing operations and products, ability to deliver product strategies in providing service Critical suppliers

E-business
Enhanced products to include information value Better customer service (24 x 7) Access to greater market Faster product/service delivery Lower transaction costs Competitive advantage Business survival

Evolution of e-business
Shift in power from Seller to Buyer Value is being redefined by the Net Price Competition Becomes a Way of Life Physical value -> Information value Economies of scale Economies of scope Mass production---- Mass customization Local market---- Global market Supplier service----- Self-service Compare prices online and click on bargain prices

B2C versus B2B

B2C Few Web-based purchases Search and research Many different Vendors Registration process Business to Business B2B Many purchases over the Web Known product requirements and marketplace Concentration on a select/established vendors Pre-existing registration

Business to Business
New market spaces Supplier/buyer Expanded marketplace Global New distribution channels Alliances Techniques (auctioning, portals)

Business to Business
New sales channels Web page Push technology New market spaces Expanded marketplace

Business to Business
New distribution channels e.g. A real estate agent uses alliances with tax accountants and lawyers to sell real estate tips on website New sales channels - A website allows for the auctioning of products and services (e-bay)

Business to Business
Faster reaction time Products price controlled Additional products and services Supply chain integration Reduction of investment in inventory Direct shipping Ability for SMEs to compete Geographically - Globally Product lines - Virtual warehouses Size - Value adds over the Internet

B2B
Legal obligations Contracts Governance Business obligations Privacy Disclosure Business imperatives Advertising Website Business plan

B2C
Reasons for Shopping On-line Convenience Not available locally
Better selection Could download product Only available on website Not go through sales agent Lower price Faster delivery

B2C
E.g.Shoppers Buy Books On-line
Books cost less on-line Couldnt find book elsewhere Convenient - did not have to go to store Book shipped directly to buyer Book shipped directly as a gift Buy every other book by the author Web site recommended

Role of internet in shopping

Comparison shopping for products or services which were subsequently purchased elsewhere Purchasing products or services Conducting on-line transactions with a financial institution

Conventional vs e-business
Established controls Private Networks Known/trusted user Safe environment Established standards Predictable population size Specific customer information Established trade laws Local
Public networks Unknown/non-trusted users Hostile environment Commoncustomer profile Emerging trade laws Emerging standards Global Unpredictable population No controls

Conventional vs e-business
Bricks & mortars physical presence Doors, security guards,vaults Proof of identity Checkingcustomersacco unt privileges limits Requesting customers signatures Use of stamps to show confirmation Unique signatures Web sites / Portals / Industry networks Firewall, DMZ High Availability (7X24) Proof of origin Non repudiation proof of destination Digital Authentication Digital signature Authorization

Conventional vs e-business
Personal relationship or recognition Privacy Integrity Confidentiality Trust Independent audit Systems Logs Assurance Services Web Trust Seal Digital identity certificate Encryption Digital Watermarking-