LECTURE 2: HISTORY OF DECISION SUPPORT SYSTEMS

2.1. Evolution of decision support systems

During the late 1970s the term “decision support systems” was first coined by P. G. W. Keen, a
British Academic then working in the United States of America. In 1978, Keen and Scott Morton
published a book entitled, Decision Support Systems: An Organizational Perspective (Keen &
Scott Morton, 1978), wherein they defined the subject title as computer systems having an
impact on decisions where computer and analytical aids can be of value but where the
manager’s judgment is essential. There has been confusion and controversy in respect of the
interpretation of the decision support system notion and the origin of this notion originated in the
following terms:

Decision emphasizes the primary focus on decision-making in a problem situation

rather than the subordinate activities of simple information retrieval, processing or
reporting.
Support clarifies the computer’s role in aiding rather than replacing the decision
maker.
System highlights the integrated nature of the overall approach, suggesting the wider
context of machine, user and decision environment.

DSS deal with semi-structured and some unstructured problems. Recently, because of
technological developments, managers have become more enthusiastic about implementing
innovative decision support projects. This is a positive development, but both managers and MIS
practitioners need to discuss and review their expectations about Decision Support Systems
before they begin important projects. Anecdotes and research demonstrate that computer-based
Decision Support Systems can provide managers with analytical capabilities and information that
improves decision-making. In pursuing this goal, many different types of computerized Decision
Support Systems have been built to help decision teams and individual decision makers. Some
systems provide structured information directly to managers. Other systems help managers and
staff specialists analyze situations using various types of models. Some DSS store knowledge
and make it available to managers. Some systems support decision-making by small and large
groups. Companies even develop DSS to support the decision-making of their customers and
suppliers.

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In the 1960s, researchers began systematically studying the use of computerized quantitative
models to assist in decision making and planning (Raymond, 1966; Turban, 1967; Urban, 1967,
Holt and Huber, 1969). Ferguson and Jones (1969) reported the first experimental study using a
computer aided decision system. They investigated a production scheduling application running
on an IBM 7094.

In retrospect, a major historical turning point was Michael S. Scott Morton's (1967) dissertation
field research at Harvard University. Scott Morton’s study involved building, implementing and
then testing an interactive, model-driven management decision system.

During 1966, Scott Morton (1971) studied how computers and analytical models could help
managers make a recurring key business planning decision. He conducted an experiment in which
managers used a Management Decision System (MDS). Marketing and production managers used
an MDS to coordinate production planning for laundry equipment.

In 1952, Dantzig became a research mathematician at the Rand Corporation, where he began
implementing linear programming on its experimental computers.

In the mid-1960s, Engelbart and colleagues developed the first hypermedia—groupware system
called NLS (oNLine System). NLS facilitated the creation of digital libraries and the storage and
retrieval of electronic documents using hypertext.

Professor Forrester, was involved in building the SAGE (Semi-Automatic Ground Environment)
air defense system for North America completed in 1962. SAGE is probably the first computerized
data-driven DSS.

By April 1964, the development of the IBM System 360 and other more powerful mainframe
systems made it practical and cost-effective to develop Management Information Systems (MIS)
for large companies. These early MIS focused on providing managers with structured, periodic
reports and the information was primarily from accounting and transaction processing systems,
but the systems did not provide interactive support to assist managers in decision making.

Around 1970 business journals started to publish articles on management decision systems,
strategic planning systems and decision support systems (Sprague and Watson 1979). The first use
of the term decision support system was in Gorry and Scott-Morton’s (1971) Sloan Management

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Review article. They argued that Management Information Systems primarily focused on
structured decisions and suggested that the supporting information systems for semi-structured and
unstructured decisions should be termed “Decision Support Systems”.

John D.C. Little at Massachusetts Institute of Technology, was studying DSS for marketing. Little
and Lodish (1969) reported research on MEDIAC, a media planning support system.
Also, Little (1970) identified criteria for designing models and systems to support management
decision-making. His four criteria included: robustness, ease of control, simplicity, and
completeness of relevant detail. All four criteria remain relevant in evaluating modern Decision
Support Systems.

By 1975, Little was expanding the frontiers of computer-supported modeling.

His DSS called Brandaid was designed to support product, promotion, pricing and advertising
decisions. Little also helped develop the financial and marketing modeling language known as
EXPRESS.

In 1974, Gordon Davis, a Professor at the University of Minnesota, published his influential text
on Management Information Systems. He defined a Management Information System as "an
integrated, man/machine system for providing information to support the operations, management,
and decision-making functions in an organization.

In the mid- to late 1970s, both practice and theory issues related to DSS were discussed at
academic conferences including the American Institute for Decision Sciences meetings and the
ACM SIGBDP Conference on Decision Support Systems in San Jose, CA in January 1977.

Donovan and Madnick (1977) classified DSS as institutional or ad hoc. Institutional DSS support
decisions that are recurring. An ad hoc DSS supports querying data for one time
requests. Hackathorn and Keen (1981) identified DSS in three distinct yet interrelated categories:
Personal DSS, Group DSS and Organizational DSS.

In 1979, John Rockart of the Harvard Business School published a ground breaking article that
led to the development of executive information systems (EISs) or executive support systems
(ESS). Rockartdeveloped the concept of using information systems to display critical success
metrics for managers.

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Beginning in about 1980 many activities associated with building and studying DSS occurred in
universities and organizations that resulted in expanding the scope of DSS applications. These
actions also expanded the field of decision support systems beyond the initial business and
management application domain. These diverse systems were all called Decision Support
Systems. From those early days, it was recognized that DSS could be designed to support
decision-makers at any level in an organization.

A model-driven DSS emphasizes access to and manipulation of financial, optimization and/or

simulation models. Simple quantitative models provide the most elementary level of
functionality. Model-driven DSS use limited data and parameters provided by decision makers to
aid decision makers in analyzing a situation, but in general large data bases are not needed for
model-driven DSS.

A data-driven DSS emphasizes access to and manipulation of a time-series of internal company

data and sometimes external and real-time data. Simple file systems accessed by query and
retrieval tools provide the most elementary level of functionality. Data warehouse systems that
allow the manipulation of data by computerized tools tailored to a specific task and setting or by
more general tools and operators provide additional functionality.

Communications-driven DSS use network and communications technologies to facilitate

decision-relevant collaboration and communication. In these systems, communication
technologies are the dominant architectural component. Tools used include groupware, video
conferencing and computer-based bulletin boards.

A document-driven DSS uses computer storage and processing technologies to provide

document retrieval and analysis. Large document databases may include scanned documents,
hypertext documents, images, sounds and video. Examples of documents that might be accessed
by a document-driven DSS are policies and procedures, product specifications, catalogs, and
corporate historical documents, including minutes of meetings and correspondence.

Knowledge-driven DSS can suggest or recommend actions to managers. These DSS are person-
computer systems with specialized problem-solving expertise. The "expertise" consists of
knowledge about a particular domain, understanding of problems within that domain, and "skill"
at solving some of these problems.

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2.2. Decision support systems definitions in history

A model based set of procedures for processing data and judgements to assist a manager
in his decision making, Little(1970).
Decision support system couple the intellectual resources of individuals with the
capabilities of the computer to improve the quality of decisions. Keen & Scott(1978).
A computer-based information system consisting of hardware/software and the human
element designed to assist any decision-maker at any level, Bidgoli (1989).
DSS as computer-based systems that help decision makers confront ill-structured
problems through direct interaction with data and analysis models, Sprague and Watson
(1996)
A Computer-based system that bring together information from a variety of sources,
assist in the organization and analysis of information and facilitate the evaluation of
assumptions underlying the use of specific models, Sauter (1997).

A computer-based information system that combines models and data in an attempt to

solve semi-structured and some unstructured problems with extensive user involvement,
Turban, Rainer, and Potter (2005).
From all these definitions, DSS has been developed from the perceptions of what a DSS does
(e.g., support decision-making in semi-structured or unstructured problems) and from ideas
about how a DSS’s objectives can be accomplished (e.g., the components required and the
necessary development processes).

2.3. Characteristics of DSS

A DSS includes a body of knowledge that describes some aspects of the decision-maker's
world, that specifies how to accomplish various tasks, that indicates what conclusions are valid
in various circumstances, and so forth.
A DSS has an ability to acquire and maintain descriptive knowledge (i.e., record keeping)
and other kinds of knowledge as well (i.e., procedure keeping, rule keeping, etc.).
A DSS has ability to present knowledge on an ad hoc basis in various customized ways
as well as in standardized reports.

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 A DSS has an ability to select any desired subset of stored knowledge for either
presentation or deriving new knowledge in the course of problem recognition and/or problem
solving.
A DSS can interact directly with a decision maker or a participant in a decision in such a
way that the user has a flexible choice and sequence of knowledge-management activities.

Some DSS help managers by expediting access to information that would otherwise be
unavailable or difficult to obtain; others contain explicit models that provide structure for
particular decisions. Some systems are primarily tools for individuals working more or less alone
on decision tasks; others serve primarily to support communication among people whose work
must be coordinated.

Many terms are used for specific types of DSS including business intelligence, collaborative
systems, data mining, data warehousing, knowledge management and on-line analytical
processing. Software vendors use these more specialized terms for both descriptive and marketing
purposes. What term we use for a system or software package is a secondary concern. Our primary
concern is finding software and systems that meet a manager’s decision support needs and provide
appropriate management information.

2.4. Management Information

Managers and their support staffs need to consider what information and analyses are actually
needed to support management and business activities. Some managers need both detailed
transaction data and summarized data. Most managers only want summaries of transactions.
Managers usually want lots of charts and graphs; a few only want tables of numbers. Many
managers want information provided routinely or periodically and some want information
available on-line and on demand. Managers want financial analyses and some managers want
primarily "soft", non-financial or qualitative information.

In general, an Information System can provide business transaction information and it can help
managers understand many business operations and performance issues. For example, a
computerized system can help managers understand the status of operations, monitor business

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results, review customer preference data and investigate competitor actions. In all of these
situations, management information and analyses should have a number of characteristics.
Information must be both timely and current.

These characteristics mean the information is up-to-date and available when managers want it.
Also, information must be accurate, relevant and complete. Finally, managers want information
presented in a format that assists them in making decisions. In general, management information
should be summarized and concise and any support system should have an option for managers
to obtain more detailed information.

Decision Support Systems need to provide current, timely information that is accurate,
relevant and complete. A specific DSS must present information in an appropriate format that
is easy to understand and manipulate. The information presented by a DSS may result from
analysis of transaction data or it may be the result of a decision model or it may have been
gathered from external sources. DSS can present internal and external facts, informed opinions
and forecasts to managers. Managers want the right information, at the right time, in the right
format, and at the right cost.
2.5. Revision questions

a) Discuss the concept of decision support systems.

b) Explain the reason why it is difficult to give a historical chronology about decision support
systems.
c) Describe three characteristics of a decision support system.
d) Briefly outline important historical developments in DSS in the time lines shown in the table
below.
Timeline Important developments
1950s- 1960s
1970s- 1980s
1990s-Present

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2.6. Summary

In, this lesson we have learnt that computerized decision support systems became practical
with the development of minicomputers, timeshare operating systems and distributed
computing. The history of the implementation of such systems begins in the mid-1960s. In a
technology field as diverse as DSS, chronicling history is neither neat nor linear. Different
people perceive the field of Decision Support Systems from various vantage points and report
different accounts of what happened and what was important. As technology evolved new
computerized decision support applications were developed and studied. Researchers used
multiple frameworks to help build and understand these systems. Today one can organize the
history of DSS into the five broad DSS categories:

Communications-driven decision support systems

Data-driven decision support systems
Document driven decision support systems
Knowledge-driven decision support systems
Model-driven decision support systems.