Introduction to e-Business Systems: Functional Business, Cross Functional Enterprise Systems, Applications in Business and Management: a) Enterprise e-Business Systems - Customer Relationship Management; the Business Focus, Enterprise Resource Planning; The Business Backbone, Supply Chain Management; the Business Network, b) Electronic Commerce Systems: Electronic Commerce Fundamentals , its Applications and Issues, c) Decision Support Systems: Decision Support in Business , Artificial Intelligence Technologies in Business
Unit - 3
Chapter 10
Information and Decision
Support System
Decision Making and Problem Solving
Every organization needs effective decision making.
In most cases, strategic planning and overall goals of the organization set the course for decision making.
In business the highest complement one can receive is to be a “real problem solver.”
Decision Making as a Component of
Problem Solving (continued)
Decision Making as a Component of Problem Solving
Decision-making phase:
Intelligence stage: The first stage of decision making in which we identify and define potential problems or opportunities.
Investigate resource and environment constraints.
Design stage: Second stage of decision making in which we develop alternative solutions to the problem and evaluate their feasibility.
Choice stage: The third stage of decision making which requires selecting a course of action.
Decision Making as a Component of Problem Solving (continued)
Problem solving: A process that goes beyond decision making to include the implementation stage.
Implementation stage: A stage of problem solving in which a solution is put into effect.
Monitoring stage: The final stage of problem solving process in which decision makers evaluate the implementation.
Example of Accidents & Emergency
Intelligence
• Condition of some patients become critical because of delay in availability of doctor
Design
• Increase number of doctors
• Prioritize based on triage system
Choice
• Adopt triage system
Implementation
• Arrange triage system
• Inform and train staff
• Specify schedules
Monitoring
• Nurses making wrong decisions so change the system or schedule a doctor instead
Triage: The process of sorting people based on their need for immediate medical treatment as compared to their chance of benefiting from such care. Triage is done in emergency rooms, disasters, and wars, when limited medical resources must be allocated to maximize the number of survivors.
Programmed versus Non-programmed Decisions
Programmed decisions (for structured problems):
are made using a rule, procedure, or quantitative method.
Easy to computerize using traditional information systems.
For example: Order more inventory when the number of units falls below 100 is a programmed decision because it adheres to a rule.
Non-programmed decisions (for unstructured problems): are decisions that deal with unusual or exceptional situations.
These decisions are difficult to quantify.
Standard rules or procedures might not apply to them.
For example: Developing a new type of product line, deciding the best location for a manufacturing plant etc.
Optimization, Satisficing, and Heuristic Approaches
Optimization model: Finds the best solution, usually the one that will best help the organization meet its goals.
OM uses problem constraints e.g. number of available workers or time.
Example: an OM can find the best route to ship products to markets, given certain conditions and assumptions.
.
Optimization s/w allows decision makers to explore various alternatives. Eg: MS-Excel has also optimizing routines.
Satisficing model: Finds a good, but not necessarily the best, problem solution.
It normally does not look at all possible solutions but only at those likely to give good result.
It is a good alternative method because it is sometimes to expensive to analyze every alternative to find the best solution.
Optimization, Satisficing, and Heuristic Approaches
It is used when finding the best solution is too difficult, complex or costly.
Heuristics: Rules of thumb or commonly accepted guidelines or procedures that usually find a good solution.
Making rules for a team to win the game is the example of Heuristics.
Example: Symantec Anti virus software is based on heuristics.
An Overview of Decision Support Systems
DSS: Organized collection of people, procedures, software, databases, and devices used to help make decisions that solve problems.
Focus of a DSS is on decision-making effectiveness regarding unstructured or semi-structured business problems.
DSS offers the potential to generate higher profits, lower costs and better product & services.
Characteristics of a Decision Support System
DSS have many characteristics that allow them to be effective management support tools. Some important characteristics are:
Provide rapid access to information
Handle large amounts of data from different sources
Provide report and presentation flexibility
Offer both textual and graphical orientation
Support drill-down analysis
Characteristics of a Decision Support System
Perform complex, sophisticated analyses and comparisons using advanced software packages.
Support optimization, satisficing and heuristic approaches.
It is not necessary that all DSS work the same.
Capabilities of a Decision Support System
DSS is more flexible than MIS because DSS assist decision makers in a variety of situations.
DSS can assist with all or most problem solving phases, decision frequencies and varying degree of problem structure.
Broadly classified capabilities are following:
Support problem-solving phases: The objective of most DSS is to assist decision makers with phases of problem solving.
Support various decision frequencies: Decision can range from one-of-a-kind to repetitive decisions.
one-of-a-kind decisions are typically handled by an ad hoc DSS and repetitive decisions are handled by Institutional DSS.
Ad hoc DSS is concerned with situations or decisions that come up only a few times during the life of the organization. e.g. in which part of the country shall we build the new factory.
Institutional DSS handles situations or decisions that occur more than once, usually several times per year or more.
An institutional DSS are used repeatedly and redefined over the years.
Example: System that support portfolio and Investment decisions and production scheduling.
Support various problem structures: DSS supports
highly structured problem to unstructured problem.
Highly structured problems are straightforward, requiring known facts and relationships
Semi-structured or unstructured problems are more complex
Support various decision-making levels: DSSs can provide help for managers at various levels (operational, tactic and strategic i.e. lower, middle &
higher) within the organization.
Components of a Decision Support System
The Model Base (continued)
• The User Interface or Dialogue Manager
Allows users to interact with the DSS to obtain information.
Assists with all aspects of communications between user and hardware and software that constitute the DSS.
An Overview of Management Information Systems
Management information system (MIS):
Integrated collection of people, procedures, databases, and devices.
MIS can give the organization a competitive advantage by providing the right information to the right person in the right format at right time.
Management Information Systems in Perspective
Purpose of an MIS:
To help an organization to achieve its goals.
Provide the right information to the right person in the right format at the right time.
So that they can control, organize and plan more effectively.
Inputs to a Management Information System
Internal data sources:
TPS and ERP systems and related databases.
Data warehouses and data marts.
Specific functional areas throughout the firm.
External data sources:
Customers, suppliers, competitors, and stockholders whose data is not already captured by the TPS and ERP systems.
Internet.
Outputs of a Management Information System
Scheduled reports: Produced periodically, such as daily, weekly, or monthly.
Key-indicator report summarizes the previous day’s critical activities.
Demand reports: Developed to provide certain information upon request.
E.g. production status of a particular item.
Outputs of a Management Information System (continued)
Exception reports: Automatically produced when a situation is unusual or requires management action.
Trigger points should be set carefully.
E.g. list of all the students that score below 60 in more than one subject.
Outputs of a Management Information System (continued)
Drill-down reports: Provide increasingly detailed data about a situation.
E.g. sales figure of a particular product, in a particular branch, during a particular month.
Characteristics of a Management Information System
MISs perform the following functions:
Provide reports with fixed and standard formats.
Produce hard-copy and soft-copy reports.
Use internal data stored in computer system.
Allow users to develop custom reports.
Require user requests for reports developed by systems personnel.
Enterprise Resource Planning and Customer Relationship Management
Enterprise resource planning (ERP): Set of integrated programs that manage a company’s vital business operations for an entire organization.
Business process: Set of coordinated and related activities that takes one or more kinds of input and creates an output of value to the customer of that process.
Enterprise Resource Planning and
Customer Relationship Management
Advantages of ERP
Improved access to data for operational decision making.
Elimination of costly, inflexible legacy systems.
Improvement of work processes.
Upgrade of technology infrastructure.
Disadvantages of ERP Systems
Expense and time in implementation.
Difficulty in implementing changes.
Difficulty in integrating with other systems.
Difficulty in loading data into new ERP system.
Risks in using one vendor.
Risk of implementation failure.
ERP System supports following:
Supply Chain Management.
Financial and Managerial Accounting.
Business Intelligence.
Customer Relationship management.
Scope of ERP
Supply Chain Management (SCM)
A system that includes:
Planning, executing, and controlling all activities involved in raw material sourcing and procurement.
Converting raw materials to finished products, warehousing and delivering finished product to customers.
Supply Chain Management (SCM) Activities
Process for developing a production plan:
Sales forecasting
Sales and operations plan (S&OP)
Demand management
Detailed scheduling
Materials requirement planning (MRP)
Purchasing
Production
Sales ordering
Financial and Managerial Accounting and ERP
ERP systems:
Do not work directly with production machines, so they need a way to capture information about what was produced.
Retailers as well as manufacturers:
Use demand forecasting to match production to consumer demand and to allocate products to stores.
General ledger: It is a main accounting record of a business.
ERP system:
Captures transactions entered by workers in all functional areas of the business.
Creates associated general ledger record to track the financial impact of the transaction.
Financial and Managerial Accounting and
ERP (continued)
Financial accounting: Captures and records all transactions that affect a company’s financial state.
Uses these documented transactions to prepare financial statements to external decision makers.
Managerial accounting: Provides data to enable the firm’s managers to make decisions about current and future operations.
Financial and Managerial Accounting and
ERP (continued)
Business Intelligence and ERP
Business intelligence (BI): Gathering enough of the right information to shine a spotlight on the organization’s performance.
BI is an essential component of an organization’s ERP system.
BI tools are used to: Access all the operational data captured in the ERP database, analyze performance on a daily basis.
Highlight areas for improvement, and monitor the results of business strategies.
Customer Relationship Management
Goal is to understand and anticipate the needs of current and potential customers.
Used primarily by people in:
The sales, marketing, and service organizations to capture and view data about customers and to improve communications.
CRM software: Automates and integrates the functions of sales, marketing, and service in an organization.
Customer Relationship Management
Customer Relationship Management
Key features of a CRM system:
Contact management
Sales management
Customer support
Marketing automation
Analysis
Social networking
Access by smart phones
Import contact data
An Overview of Artificial Intelligence
Artificial Intelligence (AI): Computers with the ability to mimic or duplicate the functions of the human brain.
Computer Systems that use the notion of AI:
Help to make medical diagnoses.
Determine what is wrong with mechanical devices.
Assist in designing and developing other computer systems.
Artificial Intelligence in Perspective
Artificial intelligence systems: Include the people, procedures, hardware, software, data, and knowledge needed to develop computer systems and machines that demonstrate characteristics of intelligence.
Example:
TIGER - Intelligent Applications Ltd.
XpertRule - ATTAR Software Ltd
The Nature of Intelligence
Turing Test: Determines whether responses from a computer with intelligent behavior are identical from those from a human being.
No computer has passed the Turing Test, developed by Alan Turing.
Characteristics of intelligent behavior include the ability to:
Learn from experiences and apply knowledge acquired from experience.
Handle complex situations.
The Nature of Intelligence
Solve problems when important information is missing.
Determine what is important.
React quickly and correctly to a new situation.
Understand visual images.
Be creative and imaginative.
Use heuristics.
The Difference Between Natural and Artificial Intelligence
Can computers be programmed to have common sense like human being?
One of the driving forces behind AI research is an attempt to understand how people actually reason and think.
The Difference Between Natural and
Artificial Intelligence
The Major Branches of Artificial
Intelligence
The Major Branches of Artificial Intelligence
Expert Systems: Hardware and software that stores knowledge and makes inferences, similar to a human expert. Used in many business applications.
Robotics: Developing mechanical devices that can:
Paint cars and perform other tasks that require a high degree of precision.
Manufacturers use robots to assemble and paint products.
The Major Branches of Artificial Intelligence
Vision Systems
Hardware and software that permit computers to capture, store, and manipulate visual images and pictures.
Effective at identifying people based on facial features, fingerprints.
The Major Branches of Artificial Intelligence
Natural Language Processing
Processing that allows the computer to understand and react to statements and commands made in a “natural” language, such as English.
Voice recognition
Converting sound waves into words.
