Chapter 12Enhancing Decision Making
◦ Unstructured: Decision maker must provide judgment, evaluation, and insight to solve problem
◦ Structured: Repetitive and routine; involve definite procedure for handling so they do not have to be treated each time as new
◦ Semistructured: Only part of problem has clear-cut answer provided by accepted procedure
Types of decisions
Senior managers:◦ Make many unstructured decisions◦ E.g. Should we enter a new market?
Middle managers:◦ Make more structured decisions but these may include unstructured
components◦ E.g. Why is order fulfillment report showing decline in Minneapolis?
Operational managers, rank and file employees◦ Make more structured decisions◦ E.g. Does customer meet criteria for credit?
Types of Decisions by Level
Decision Making Process
The decision-making process is broken down into four stages.
Three main reasons why investments in information technology do not always produce positive results1. Information quality (see table 12-3 page 460)2. Management filters3. Organizational inertia and politics
High velocity automated decision making◦ Automate those structured, routine decision
making
Decision Making and Information
Business intelligence◦ Infrastructure for collecting, storing, analyzing data produced
by business◦ Databases, data warehouses, data marts
Business analytics◦ Tools and techniques for analyzing data◦ OLAP, statistics, models, data mining
Business intelligence vendors◦ Top five vendors SAP, Oracle, IBM, SAS Institute, and Microsoft
(manage big data)
Business Intelligence
Business Intelligence Environment
Main functionalities of BI systems1. Production reports2. Parameterized reports3. Dashboards/scorecards4. Ad hoc query/search/report creation5. Drill down6. Forecasts, scenarios, models
Pre-defined/prepackaged production reports most widely used (see table 12-5)
Business Intelligence and Analytics Capabilities
Examples of BI applications◦ Predictive analytics
Use patterns in data to predict future behavior E.g. Credit card companies use predictive analytics to determine
customers at risk for leaving◦ Data visualization
Help users see patterns and relationships that would be difficult to see in text lists (dashboards help)
◦ Geographic information systems (GIS) Ties location-related data to maps
Business Intelligence and Analytics Capabilities (cont)
Use mathematical or analytical models◦Allow varied types of analysis “What-if” analysis Sensitivity analysis (see page 472) Backward sensitivity analysis Multidimensional analysis / OLAP
E. g. pivot tables (see page 473) Use Management Information Systems (MIS)
Structured and semistructured decisions; data flow reports; routine production reports; exception reports
Decision Support Systems(Operational and Middle Mgmt)
Use Executive Support Systems (ESS)◦ Help executives focus on important performance information;
allow them to drill down to detailed views of data
Methodology◦ Balanced scorecard method:
Measures outcomes on four dimensions: 1. Financial2. Business process3. Customer4. Learning & growth
Key performance indicators (KPIs) measure each dimension◦ Business Performance Management (BPM)
Decision Support Systems (Senior Management)
Decision Support Systems(Groups)
Group Decision Support Systems (GDSS)◦ Used for tasks involving idea generation, complex
problems, large groups
◦ Example
Top Related