Chapter 1 Decision Support and Business Intelligence Organization works in a dynamic environment change continuously amp rapidly more amp more complex ID: 1029307
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1. Decision Support and Business Intelligence SystemsChapter 1 Decision Support and Business Intelligence
2. Organization works in a dynamic environment change continuously & rapidly more & more complexForces in the external environment includes:1. Economic 2. Technology 3. culture 4. Social 5. customers 6. competitors 7. Government rules & regulations 8. suppliersThese forces put the organization (public & private) under pressures to respond quickly and rapidly to these changesIntroduction
3. The response…..through frequent & quick (strategies, tactical & operational decisions)…..complex decisions …. Requires Data, information & Knowledge in order to make a decisionThe decisions must be done quickly & frequently in real time Some times…complex decisions require computerized supportCont.
4. Globalization global companies environment (competitive market) move to computerized support The reasons … Business Pressures – Responses – Support model Changing business environment & computerized decision support
5. Pressures results from today’s business climateResponses actions taken by companies to (meet/counter/face) the pressures OR take advantages of opportunities available in the external environmentComputerized Support facilitate the monitoring of the environment + enhances the response actions taken by the organizationThe Business Pressures-Responses-Support Model
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7. Intensity of most of the environmental factors increases with time …Leading to more pressures, more competition Organizations & departments face decreased budgets … increase performance & profitThe Business environment
8. Managers may take actions :1. Employ strategic planning2.Use new & innovation business models3. Alliances4. Improve information systems5. Encourage innovation & creativity6. Move to electronic commerce7. Improve customer services & relationships8. Move to make-to-order production9. Use new IT to improve communication, data access10. Respond quickly to competitors’ actions11.Improve decision makingOrganizational Responses
9. Closing the strategy GAP: One of the major objectives of computerized decision support (CDS) is to facilitate closing the gap between the current performance & the desired performance as expressed in mission, objectives and goals in addition to strategy to achieve them.Decisions & Support
10. Management is a process by which organizational goals are achieved by using resources.The degree of success of the organization and the manager is often measured by the ratio of output to input… PRODUCTIVITY – ORGNIZATIONAL & MANAGERIAL PERFORMANCE.Managerial Decision Making
11. The level of productivity depends on the performance of managerial functions, such as planning, organizing, directing and controlling….in order to perform their functions, managers are engaged in a continuous process of making decisions.Making a decision means selecting the best alternative from 2 or more solutions.
12. Managers perform 10 major roles that can be classified into 3 major categories:Interpersonal, Informational & Decisional Managerial Roles
13. FigureheadLeaderLiaisonInterpersonal Role
14. MonitorDisseminatorSpokespersonInformational Role
15. EntrepreneurDisturbance handlerResource allocatorNegotiatorDecisional Role
16. In order to perform these roles, managers need information…Delivered by networks…Web technologyUse computers directly to support & improve decision making
17. Management was considered an art because a variety of individual styles could be used in approaching and successfully solving the managerial problems.Styles based on … Creativity, Judgment, Intuition and experience rather than on quantitative methods.The Decision-Making Process
18. 1. Define the problem2. Construct a model that describe the real-world problem3. Identify possible solutions to the problem & Evaluate the solution4. Compare, Choose and recommend a potential solution to the problemSteps
19. - The sufficient alternative solutions must be consider.- The consequences of using these alternatives can be reasonably predicted.- The comparisons are done properly.
20. 1. Payroll2. Bookkeeping3. Design4. Application of artificial intelligence5. EvaluationComputerized support for decision making
21. Computer applications have moved from transaction processing & monitoring activities to: Problem analysis & Solution applicationsComputerized support for decision making
22. 1. Speedy computations.2. Improved communication & collaboration.3. Increased productivity of group members. Why We Use Computerized Decision Support Systems
23. 4. Improved data management5. Managing giant data warehouses6. Quality support7. Agility support
24. 8. Overcoming cognitive limits in processing and storing information.9. Using the web10. Anywhere, anytime support.
25. The Gorry & Scott-Morton Classical FrameworkFramework: 3-by-3 matrix, includes two dimensionsA. the degree of structured problemsB. type of controlAn early framework for computerized decision support
26. Structured Decision (Programmed): Routine & Repetitive problems for which standard solution methods exist.Semi-structured : fall between structured & unstructured problems.Unstructured (non-programmed): Fuzzy, complex problem for which there are no clear solution.Type of Decision (Simon 1977)
27. 1. Intelligence : this phase involves searching for conditions that call for decisions.2. Design: This phase involves inventing, developing and analyzing possible alternative solutionDecision making process ACCORDING to Simon
28. 3. Choice : this phase involves selecting a course of action (solution) from among the alternatives4. Implementation: this phase involves adapting the selected course of action to the decision situation
29. The Relationships among the four phases
30. Intelligence : Environmental scanning, BenchmarksDesign: Creativity, Finding alternatives, Analyzing solutionsChoice: Compare and select the best solution
31. Implementation: Put solution into action
32. Strategic Planning; which involves defining long-rang goals & policies for resource allocation.Management Control; the acquisition and efficient use of resources. Operational Control; the efficient and effective execution of specific tasks.Types of Control
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34. Computers have supported structured & some semi-structured decisions, especially those that involve operational & managerial control.Structured problems: Abstract, analyze and classify problems into specific categories.Computer support for structured decisions
35. The management science approach (operations research (OR) approach) According to this approach, managers should follow 5 step in solving problems1. Define the problem2. Classify the problem into a standard category .3. Construct a model that describes the real-world problemManagement Science (MS)
36. 4. Identify possible solutions to the modeled problem & evaluate the solutions.5. Compare, choose and recommend a potential solution to the problem
37. MS is based on mathematical modeling.Modeling involves transforming a real-world problem into model.Computerized methodologies can find solutions to the standard category models quickly & efficiently
38. A New approach to supporting decision making (Automated Decision Systems (ADS)).ADS is a Rule-based system, provides a solution, usually in one functional area (finance) to a specific repetitive managerial problem, usually in one industry.Automated Decision making
39. Example : how to price products / service. Page 14 “case study”
40. Unstructured problems can be supported by standard computerized quantitative methods by develop customized solutions.Such solutions may benefit from:1. Data & information generated from corporate & external data sources.Computer Support for Unstructured Decisions
41. 2. Intuition and Judgment3. Computerized communication and collaboration technologies4. Knowledge management
42. Solving semi-structured problems may involve a combination of standard solution procedures & human judgment.DSS can improve the quality of the information by providing a range of alternative solutions with their potential impacts.Computer Support for Semi-structured Problems
43. An interactive computer-based systems, which help decision makers utilize data & models to solve unstructured problems.The term DSS can be used as an umbrella term to describe any computerized system that support decision making in an organization.The concept of DSS
44. In DSS, the problem is unstructured, but the initial analysis will based on the decision maker’s structured definition of the situation, using MS approach.DSS use data available from corporate data sources.DSS provide a quick what-if analysis.The DSS is flexible & responsive enough to allow managerial intuition & judgment to be incorporated into the analysis
45. DSS used: 1. To build customized applications for unstructured or semi-structured problems2. According to DSS application itself
46. 1. Data:- Every problem that has to be solved & every opportunity or strategy to be analyzed requires some data.- Data are the first component of the DSS architecture.- These data can come from many sources such as the WebThe Architecture of DSS
47. 2. Models- Data related to a specific situation are manipulated by using models.- These models can be: Standard ( Excel function), or Customized.
48. 3. Knowledge (intelligence):4. Users:
49. A. Model-Oriented DSS; using quantitative models to generate a recommended solution to a problem.B. Data-Oriented DSS; which support ad hoc reporting and queries.Types of DSS
50. Managers let their staff do some supportive analysis by using DSS tools.OLAPData warehousingData miningIntelligent systems delivered via Web technology, added promised capabilities & easy access to tools, models and data Evolution of DSS into Business Intelligence
51. Definitions of BIA Brief History of BIThe Architecture of BIStyles of BIThe Benefits of BIThe Origins & Drivers of BIBusiness Intelligence (BI)
52. Business intelligence (BI): is an umbrella term that combines architectures, tools, data-base, analytical tools, applications and methodologies.Definitions of BI
53. MIS reporting systems (1970s).Executive information system (EIS) (1980s).Business intelligence (1990s).Artificial intelligence (AI)A Brief History of BI
54. BI system has 4 major components:1. Data Warehouse (source data).2. Business analytics (collection of tools for manipulating, mining, and analyzing the data in the data warehouse).The Architecture of BI
55. 3. Business Performance Management (BPM): (for monitoring & analyzing performance).4. User interface (dashboard).
56. Data Warehouse EnvironmentData warehousing environment is mainly the responsibility of technical staffAnalytical Environment Is the realm of business users.
57. Any user can connect to the system via the user interface, such as a browser & top managers may use the BPM component and dashboard.
58. Are the cornerstone of any medium-to-large BI system.Data warehouse included historical data that were organized and summarized, which lets the end user easily view or / & manipulate data & information. Today, data warehouses include current data, which provides real-time decision support.Data Warehousing
59. End user can work with the data & information in a data warehouse by using a variety of tools & techniques.These tools & techniques fit into 2 major categories:1. Reports and Queries.2. Data, text, Web mining, and other mathematical & statistical tools.Business Analytics
60. Data Mining: is a process of searching for unknown relationships or information in large databases or data warehouses, using intelligence tools such as neural computing, predictive analytics techniques or advance statistical methods.Mining can be done on Web data.
61. National Australia Bank page 21Example
62. Corporate Performance Management CPM: Portfolio of applications & methodology that contains evolving BI architecture and tools in its core.BPM provides monitoring, measuring, comparing of sales, profit, cost, profitability and other performance indicators and introducing the concept of management and feedback.BPM provides a top-down enforcement of corporate-wide strategy.Business Performance Management
63. Dashboards provides a comprehensive visual view of corporate performance measures (key performance indicators), trends, and exceptions.Dashboards integrate information from multiple business areas.The User Interface: Dashboards & other information Broadcasting Tools
64. Dashboards present graphs that show actual performance compared to desired metrics.Technologies such as geographical information systems (GIS) play an increasing role in decision support.
65. 1. Report delivery & alerting.2. Enterprise reporting (using dashboards & scorecards)3. Cube analysis (slice-and-dice analysis)4. ad-hoc queries5. Statistics and data mining.Styles of BI
66. To enable interactive access to dataTo enable manipulation of dataTo give business managers and analysts the ability to conduct appropriate analysisEnable decision maker to make more informed and better decisions.The Objective of BI
67. The process of BI is based on the transformation of data to information, then to decision, and finally to actions.
68. 1. Provide accurate information when needed, including a real-time view of the corporate performance and its parts.2. Faster and more accurate reporting3. Improved decision making4. Improved customer service5. Increased revenueThe Benefits of BI
69. Many of the benefits of BI are intangible, so many executives do not insist on a rigorous cost-justification for BI projects.Managers need the right information, at the right time and in the right place
70. 1. Their architectures are very similarA. BI evolved from DSSB. BI implies the use of a data warehouse, whereas DSS may or may not have such a feature.C. BI is appropriate for large organization, but DSS can be appropriate to any type of organization.The DSS-BI connection
71. 2. DSS are constructed to directly support specific decision making, while DSS provide accurate and timely information and they support decision support indirectly.
72. 3. BI has an executive and strategy orientation, while DSS is oriented toward analysts.4. BI systems are constructed with commercially available tools and components that are fitted to the needs of organizations, while in DSS the interest may be in constructing solutions to very unstructured problem
73. 5. DSS methodologies and even some tools were developed mostly in the academic world, while BI methodologies and tools were developed mostly by software companies.
74. 6. Many of the tools that BI uses are also considered DSS tools
75. A technology that supports managerial tasks in general, and decision making in particular.Management Support Systems (MSS)
76. A system in which human participants and/or machines perform a business process, using information, technology, and other resources, to produce product and/or services for internal or external customers.A Work System view of decision support
77. Work system usually has nine elements, each of these elements can be varied or modified in order to provide better organizational performance, decision quality, or business process efficiency.
78. 1.Business Process : Variations in the process rationale, sequence of steps, or methods used for performing particular steps.2. Participants: Better training, better skills, higher levels of commitment, or better real-time or delayed feedback.
79. 3. Information: Better information quality, information availability, or information presentation.4. Technology: Better data storage and retrieval, models, algorithms, statistical or graphical capabilities, or computer interaction.
80. 5. Product and services: Better ways to evaluate potential decisions.6. Customers: Better ways to involve customers in the decision process and to obtain greater clarity about their needs.
81. 7. Infrastructure: More effective use of shared infrastructure, which might lead to improvements.8. Environment: Better methods for incorporating concerns from the surrounding environment.9. Strategy: A fundamentally different operational strategy for the work system
82. A large number of tools and techniques have been developed over the years to support managerial decision making.1. Data management: databases and database management system2. Reporting status tracking: online analytical processing (OLAP) & executive information systems (EIS)The Major tools and techniques of managerial decision support
83. 3. Visualization: Geographical information system (GIS) & Dashboards4. Business analytics: Optimization, data mining, Web mining, and text mining
84. 5. Strategy and performance management: Business performance management, business activity management, dashboards and scorecards.6. communication and collaboration: Group decision support systems, group support systems and collaborative information systems
85. 7. Social networking: Web 2.08. Knowledge management: Knowledge management systems and expert locating systems9. Intelligent systems: expert systems, Artificial neural networks, and automated decision systems.
86. Using several of the tools and techniques of managerial decision support, in order to assist management in solving managerial or organizational problems (opportunities and strategies) faster and better than before without computersHybrid Support Systems