Kinds of Systems in Organizations PART2.

2.6 Decision Support System

Decision-support systems provide material for analysis for the solution of semi-structured problems, which often are unique or rapidly changing. Typically, they provide the ability to do “what if” analysis. DSS will often use data from external sources, as well as data from TPS and MIS. DSS supports “right now” analysis rather than the long-term structured analysis of MIS. DSS are designed for analytical purposes and are flexible in nature. DSS provide sophisticated analytical models and data analysis tools to support semi-structured and unstructured decision- making activities. DSS use data from TPS, MIS, and external sources, provide more analytical power than other systems and interactive.

The impact is on decisions in which there is sufficient structure for computer and analytic aids to be of value but where manager’s judgment is essential.

A DSS is an organized collection of people, procedures, software databases and devices, used to support problem/specific decision making and lead to problem solving. The focus of a DSS is on decision making effectiveness when faced with unstructured or semi structured business problems.

The motion of decision support as a formal concept was coined by G.Anthony Gorry and Michael S.Scott Morton. They felt a need for a framework to channel computer applications towards management decision making and developed a grid known as the Gorry and Scott Morton grid.

2.61 Characteristics of decision support system

The main characteristics of DSS are

1. DSS help managers make decisions that are semi-structured, unique, or rapidly changing, and not easily specified in advance.

2. DSS are responsive enough to run several times a day in order to correspond to changing conditions.

3. DSS make use of both internal information (from TPS and MIS) and also from external sources, such as current stock prices or product prices of competitors.

4. DSS offer users flexibility, adaptability, and a quick response.

5. DSS allow users to initiate and control the input and output.

6. DSS operate with little or no assistance from professional programmers.

7. DSS provide support for decisions and problems whose solutions cannot be specified in advance.

8. DSS use sophisticated analysis and modelling tools.

9. DSS shall support the manager but not replace his/her judgment. It should therefore neither try to provide the answers nor impose a predetermined or predefined sequence of analysis.

10. DSS requires the decision maker’s insight and judgment to control the process and solution.

2.62 Four Core Capabilities of a DSS

1. Representations: Conceptualisations of information used in making decisions, such as graphs, charts, lists, reports and symbols to control operations.

2. Operations: Logical and mathematical manipulations of data, such as gathering information, generating lists, preparing reports, assigning risks and values, generating statistics and simulating alternatives.

3. Memory Aids: Databases, views of data, work spaces, libraries, link among work spaces and libraries, and other capabilities to refresh and update memory.

4. Control Aids: Capabilities that allow the user to control the activities and functions of the DSS.

2.64 Differences between DSS and MIS

A DSS differs from an MIS in numerous ways, including the types of problems solved; the support given to users; the decision emphasis and approach; and the type, speed, output and development of the system used.

MIS supports the management level by providing routine summary reports and exception reports for various purposes, including planning, controlling, and decision making while DSS provide material for analysis for the solution of semi-structured problems, which often are unique or rapidly changing.

DSS will often use data from external sources, as well as data from TPS and MIS. DSS are designed for analytical purposes and are flexible and supports “right now” analysis rather than the long-term structured analysis of MIS.

2.65 Decision-Support Systems (DSS)

Management level

• Inputs: Transaction level data

• Processing: Interactive

• Outputs: Decision analysis

• Users: Professionals, staff

Example: Contract cost analysis

2.66 Functions of a DSS

There are five functions of a DSS facilitating managerial decision making. They are:

1. Model building – allows decision makers to identify the most appropriate model for solving the problem at hand.

2. What is analysis – is the process of assessing the impact of changes to model variables,

the value of the variable or the interrelationships among variables.

3. Goal seeking – is the process of determining the input values required to achieve a certain goal.

4. Risk analysis – is a function of DSS that allows managers to assess the risks associated

with various alternatives.

5. Graphical analysis – helps managers to quickly digest large volume of data and visualize the impacts of various courses of action.

2.68 Components of DSS

1. DSS Database: A collection of current or historical data from a number of applications or groups.

2. Model Base: A collection of mathematical and analytical models that can easily be made accessible to the DSS server.

3. Model: An abstract representation that illustrates the components or relationships of a phenomenon.

4. DSS Software System: DSS component that permits easy interaction between the users of the system and the DSS database and model base.

2.7 Executive support systems (ESS)/ Executive Information System (EIS)

Senior managers use ESS to make decisions, ESS serve the strategic level of organization. They address non-routine decisions requiring judgment, evaluation and insight because there is no agreed on procedure for arriving at a solution.

Executive support systems function at the strategic level, support unstructured decision making, and use advanced graphics and communications. Examples of executive support systems include sales trend forecasting, budget forecasting, and personnel planning.

ESS is designed to incorporate data about external events such as new tax laws or competitors, but they also draw summarized information from internal MIS and DSS. They filter, compress and track critical data, emphasizing he reduction of time and effort required to obtain information useful to executives. ESS employ most advanced graphics S/W and can deliver graphs and data from many sources immediately to a senior executive office.

ESS combines many features of MIS and DSS and Provide top executives with immediate and easy access to information. ESS help to Identify factors that are critical to accomplishing strategic objectives (critical success factors) and hence provide a generalized computing and communications environment that help senior managers address strategic issues and identify long-term trends in the firm and its environment.

ESS addresses non-routine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution.

ESS present graphs and data from many internal and external sources through an interface that is easy for senior managers to use. Information presented in forms tailored to the preferences of the executives using the system. ESS provides out put as desired by the end- user in the forms like Customizable graphical user interfaces, Exception reports, Trend analysis etc.,

2.71 Model of ESS

2.73 EXECUTIVE SUPPORT SYSTEMS (ESS) as a system

ESS may be viewed from a system‘s perspective as indicated below.

• Inputs: Aggregate data

• Processing: Interactive

• Outputs: Projections

Users: Senior managers

1. Top Level Management

2. Designed to the individual senior manager

3. Ties CEO to all levels

4. Very expensive to keep up

5. Extensive support staff

2.74 Features of ESS

. Contemporary ESS bring together data from all parts of the firm and enable managers to select, access, and tailor them as needed using easy-to-use desktop analytical tools and online data displays.

. Through their ESS, many managers have access to public data, such as news services, financial market databases, and economic information.

. ESS has the ability to drill down, moving from a piece of summary data to lower and lower levels of detail.

. Contemporary ESS includes tools for modeling and analysis.

. Whereas DSS use such tools primarily for modeling and analysis in a fairly narrow range of decision situations, ESS use them primarily to provide status information about organizational performance.

. Well-designed ESS also have some facility for environmental scanning.

. A key information requirement of managers at the strategic level is the ability to detect signals of problems in the organizational environment that indicate strategic threats and opportunities.

. Ability to analyze, compares, and highlight trends.

. The easy use of graphics enables the user to look at more data in less time with greater clarity and insight than paper-based systems provide.

. The timeliness and availability of the data result in needed actions being identified and carried out earlier than previously could have been done

. Problems are handled before they become too damaging; opportunities are also identified earlier.

. Immediate access to so much data also enables executives to better monitor activities of lower units reporting to them.

. That very monitoring ability enables decision making to be decentralized and to take place at lower operating levels.

2.75 Benefits of EIS

.Helps in competitive intelligence gathering.

. Help managers identify changing market conditions, formulate responses, track implementation efforts, and learn from feedback.

. ESS is configured to summarize and report on key performance indicators for senior management in the form of a digital dashboard or "executive dashboard."

. The dashboard displays on a single screen all of the critical measurements for piloting a company, similar to the cockpit of an airplane or an automobile dashboard.

. Many firms are now implementing a balanced scorecard model that supplements traditional financial measures with measurements from additional perspectives, such as customers, internal business processes, and learning and growth.

. Managers use balanced scorecard systems to see how well the firm is meeting its strategic goals.

2.76 Interrelationships among systems

In contemporary digital firms, the different types of systems are closely linked to one another. This is the ideal. In traditional firms these systems tend to be isolated from one another, and information does not flow seamlessly from one end of the organization to the other. Efficiency and business value tend to suffer greatly in these traditional firms. The interrelation ship between major kinds of system in an organization is depicted in figure 2.6.

The various types of systems in the organization exchange data with one another. TPS are a major source of data for other systems, especially MIS and DSS. TPS are operational- level systems that collect transaction data. Examples of these are payroll or order processing that track the flow of the daily routine transactions that are necessary to conduct business. TPS provide data that are required by office systems, KWS, MIS and DSS, although these systems may also use other data. KWS and office systems not only use data from TPS but also from MIS. DSS not only use data from TPS but also from KWS, office systems, and MIS. MIS rely heavily on data from TPS but also use data from KWS and office systems. ESS obtains most of their internal data from MIS and DSS.