Decision support

systems
BY Mr. Aakash Verma
System Definition
● A system comprises interacting parts cooperating to
accomplish a single objective or a group of related
goals.
● These elements can be biological, physical, or
abstract, but they are all linked by some contact or
relationship that enables them to work together
harmoniously.
Open and closed systems
● Systems can be divided into open and closed categories based on
their interaction with their surroundings.
● An open system is one in which the system and its surroundings
constantly exchange energy, materials, or information.
● Living things, ecosystems, & social systems are all examples of
open systems. In contrast, there is no interaction with the
environment in a closed system.
● A pendulum clock, a capped water bottle, and a computer
program are all closed systems.
What is a Business Intelligence System?
● A Business Intelligence System (BI) covers the process of collecting,
analyzing and processing data into usable information and their
presentation.
● For this purpose, it comprises a variety of tools, applications and
methods that enable the company to collect, prepare and analyse
information from internal systems and external sources.
● Collected data can be stored detached from operative systems in a
data warehouse, not only to create a uniform data basis for analyses,
but also to avoid slowing down operative systems through data-
What is a Business Intelligence System?

● The information obtained is made available to decision-makers and

company employees in visual form in reports and dashboards.
● In this way, BI can be used to provide key figure-based decision
support both for ongoing business processes and for strategic
decisions.
● On this basis, parts of the company can be optimised, profitability and
sales increased and productivity improved.
● Furthermore, operational efficiencies can be increased and future
market trends can be identified. Thus, the use of BI can help
What is a Decision Support System?
● A decision support system (DSS) is an analytics software program
used to gather and analyze data to inform decision-making.
● There are many different types of decision support systems, from
modern business intelligence which uses AI and machine learning to
suggest insights and analyses for humans to perform, to model-
based DSS systems which use predefined criteria to perform
automated calculations and deliver best-case decisions.
● For all types, DSS is used in timely problem-solving to improve
efficiency and streamline operations, planning, and company
management.
Traditional vs Modern DSS
● Traditional DSS: Historically, DSS and BI tools relied on
preconfigured, historical data with no ability to drive real-
time decisions and action. With this approach, decisions are
made based on the past.
● Modern DSS: New tools and processes allow for “active
intelligence”, a state of continuous intelligence with an end-
to-end analytics data pipeline delivering real-time, up-to-
date information designed to trigger immediate insights and
actions.
DSS Characteristics
Before decision support systems, organizational leaders
relied heavily on a combination of their experience and
professional training and applied those to thoughtful use
of the advanced insights generated by a data analytics
platform. Decision support systems systematize that by
taking organizational data, analyzing it, and presenting it
for use in company decision-making.
DSS Characteristics
● This DSS approach enables powerful augmented
analytics or modelling to make analysis
recommendations and gameplay the outcomes of
different scenarios.
● By varying considerations, outcomes can be more
accurately predicted and business decisions based on
the best available information. In this way, DSS
supports both predictive and prescriptive analytics.
DSS Characteristics: 3 Key Elements
Three key elements that characterize a decision support
system framework are model management,
organizational data (your knowledge base) and user
interface. Let’s briefly explore each.
● Model Management:
● Organizational Data or Knowledge Base
● User Interface
Model Management
● To make effective decisions, especially those made on an
ongoing basis, companies must develop
key performance indicators (KPIs) from which to evaluate
performance against goals and measure improvements over time.
● These KPIs then form the decision criteria for the information
models used to guide decision-making.
● Having models provides the backbone of consistency every
business needs to sustain success.
● Models can be leveraged by formally coded rules in DSS or
prescriptive analytics software or by analysis using a BI platform.
Organizational Data or Knowledge Base
● Before any DSS can be used, raw data must be
transformed into clean, accurate, and up-to-date
information.
● The graphic below illustrates how different types of
data are combined, cleaned and transformed into
standardized formats.
● The data is then stored in a repository such as a data
lake or data warehouse using a governed data
catalogue.
Organizational Data or Knowledge Base
User Interface
● You’ve stared at enough dense tables of numbers to
appreciate why it’s so necessary to have a more
digestible and user-friendly way to consume data.
● A user interface, complete with digital dashboards,
tables, graphs, widgets or other tools to present
information, enables users to better interact with,
view, and use the data at their disposal.
User Interface
Decision Support System Types
The many types of decision support system software options align to
the various forms that data takes.

1. Communication-Driven DSS: Helps companies manage data

that requires more than one person to collaborate on a task.
2. Model-Driven DSS: These DSS software solutions enable
decision makers to access and manage statistical models used to
run the business. The information is imported to a decision-
making model that will then be used to analyze situations. These
are the models mentioned above in the model management
section.
Decision Support System Types
3. Knowledge-Driven DSS: Uses company data, facts, procedures,
graphical displays, or pre-coded data rules to deliver informed
solutions to specialized company scenarios.
4. Document-Driven DSS: This type of DSS uses unstructured
information available in various electronic formats in company
systems, such as share drives, cloud storage, or other data asset
management (DAM) solutions.
5. Data-Driven DSS: Helps companies save, manage, and analyze
a combination of data that’s both internal to the company and
external to the company.
Decision Support System Examples
Now that we’ve defined what a DSS is, DSS
characteristics, and types of decision support
system solutions, let’s review decision support
system examples to better contextualize DSS
benefits across a range of situational
applications.
Decision Support System Examples
● DSS that Use Historical Data: Historical DSS data tabulates
past performance and surfaces areas for improvement and/or
provides a baseline metric from which to measure.
These can include:
1. Descriptive analytics: Sales, inventory, revenue-related figures.
2. Diagnostic analytics: A combination of the “what” and the
“why” behind data, providing the rationale from which to make
go-forward decisions.
3. Business Intelligence: A range of useful information used to
guide important decisions (as described below).
BI Platform for Decision Making
● Business Intelligence tools are a sub-segment of the
larger decision support system definition, offering a
range of insights, tools and data literacy benefits to
organizations looking to expand data understanding,
especially in the age of big data, AutoML, AI and
machine learning.
BI Platform for Decision Making
● A major benefit of BI systems is that they are far less
expensive and time-intensive to develop and implement
than other DSS approaches.
● Augmented analytics refers to AI and machine learning
processing and making recommendations on large
volumes of data at lightning speed.
● Here’s a demonstration of how a modern BI platform
allows conversational interaction and then suggests
relevant insights.
Manual and Hybrid DSS
● Before there were computer analyses, manual calculations,
spreadsheets and assessments ruled the day.
● These drew upon available information and qualitative
considerations.
● SWOT analyses are an example of this, as are analyses that rely
on subjective judgment, such as performance reviews or
creative/art direction.
● Hybrid DSS combines manual processes with DSS
computational power of software applications to deliver a range
of data for decision making.
Modeling DSS for Data-Driven Decision Making
● This DSS example uses predetermined criteria to populate a query,
then delivers the optimal solution based on the available data.
● This process includes the simultaneous evaluation of many different
scenarios that are then presented for consideration. The better and
more comprehensive the DSS model design, the richer the model
outputs.
● To optimize models, two approaches are typically followed: rules-
based and flexible optimization.
● The rules-based approach follows predetermined, predictable
schedules, such as insurance risk tables. The optimization approach
adapts to dynamic inputs and multiple constraints.
Using Predictive DSS for Future Decisions
These DSS tools tap predictive analytics techniques
capable of anticipating future trends with a high degree
of accuracy. By triangulating past events, current
parameters and a range of external data too complex to
do manually, predictive DSS can help companies make
data-driven decisions about the future.