CHAPTER 1 : MANAGEMENT SUPPORT SYSTEMS: AN OVERVIEW

MANAGERS AND COMPUTERIZED SUPPORT The impact of computer technology on organizations and society is increasing as new technologies evolve and existing technologies expand. The interaction and cooperation between people and machines are rapidly growing to cover more and more aspects of organizational activities. From traditional uses in payroll and bookkeeping functions. computerized systems are now penetrating complex managerial areas ranging from the design and management of automated factories to the evaluation of proposed mergers and acquisitions (see DSS in Focus 1.1). According to Caldwell [1995], nearly all business executives say that information technology is vital to the business and they are using technologies extensively (see also Morrison [1994]). Computer applications are moving from transaction (or backroom) processing and monitoring activities to problem analysis and solution applications. Topics such as data access, online analytical processing, and use of the Internet and intranets for decision support are becoming the cornerstones of modern management as we approach the twenty-first century. There is a trend to provide managers with information systems that can assist them directly in their most important task: making decisions (see DSS in Focus 1.3).

THE NEED FOR COMPUTERIZED DECISION SUPPORT AND THE SUPPORTING TECHNOLOGIES A computerized decision support system may be needed for various reasons. Here are some common ones: Speedy computations. The computer allows the decision maker to perform large numbers of computations very quickly and at a low cost. Timely decisions are critical for many situations, ranging from a physician's decision in an emergency room to that of a stock trader. Overcoming cognitive limits in processing and storage. According to Simon [1977], the human mind is limited in its ability to process and store information. Also, people may have difficulty in recalling information, in an error-free fashion, whenever needed. Cognitive limits. An individual's problem-solving capability is limited when diverse information and knowledge are required. Pooling several individuals may help. but problems of coordination and communication may be created in workgroups. Computerized systems can enable people to quickly access and process vast amounts of stored information. Computers can also help in easing the coordination and communication of groupwork, as is demonstrated in Chapters 9 and 10. Cost reduction. Assembling a group of decision makers, especially experts, may be costly. Computerized support can reduce the size of the group and enable the group to communicate from different locations (saving travel costs). Also, the productivity of staff support (such as financial and legal analysts) may be increased. Such support is needed by the decision makers: Increased productivity means lower cost. Technical support. Many decisions involve complex computations. Data may be stored in different databases, possibly outside the organization. The data may include sounds and graphics and there may be a need to transmit them quickly from distant locations. Computers can search, store, and transmit needed data quickly and economically. Quality support. Computers can improve the quality of the decisions made. For example, more alternatives can he evaluated, risk analysis can be performed quickly, views of experts (some of whom are in remote locations) may be collected quickly and at a lower cost. Such expertise may even be derived directly by a computer system. Using computers, decision makers can perform complex simulations, checking many possible scenarios, and assess diverse impacts quickly and economically. All these capabilities lead to better decisions. Competitive edge: business process reengineering and empowerment. Competitive pressures make the job of decision making difficult. Competition is not just on price, but also on quality, timeliness, customization of products, and customer support. Organizations must be able to frequently and rapidly change their mode of operations. reengineer processes and structures, empower employees, and innovate. Decision support technologies such as expert systems may enable meaningful empowerment by allowing people to make good decisions quickly, even if they lack some

knowledge. Decision support systems are used in business process reengineering: Research into competitors' activities, customization of products, and customer services can he facilitated by computerized voice systems (see Turban et al. [1996]).

A FRAMEWORK FOR DECISION SUPPORT Before describing the specific management support technologies, we present a classic framework for decision support. This framework provides us with several major concepts used in the forthcoming definitions. It also helps us cover several additional issues, such as the relationship among the technologies and the evolution of computerized systems. This framework, shown as Figure 1.2, was proposed by Gorry and Scott Morton [1971], who combined the work of Simon [1977] andAnthony [1965]. The details of this framework follow.

Type of Control Operational Control Managerial Control Strategic Planning Technology Support Needed

Type of Decision Structured

Accounts receivable, order entry

[:11 Budget 2 analysis, short-term forecasting, personnel reports, make-or-buy

4

Financial Management management ___ information (investment), __. system, warehouse operations location, distriresearch models, bution systems transaction processing
6 Building new plant, mergers and acquisitions, new product planning, compensation planning, quality assurance planning

Semistructured

Production scheduling, inventory control

Credit 5 evaluation, budget preparation, plant layout, project scheduling, reward system design Negotiating, 18 recruiting an executive, buying hardware, lobbying Management science, DSS, ES, EIS

DSS

Unstructured

Selecting a 1 7. cover for a magazine, buying software, approving loans Management information system, managment science

R& D planning, new technology development, social responsibility planning EIS, ES, neural networks

DSS, ES, neural networks

Technology Support Needed

The left side of the figure is based on Simon's idea that decision-making processes fall along a continuum that ranges from highly structured (sometimes called programmed) to highly unstructured (nonprogrammed) decisions. Structured processes are routine and repetitive problems for which standard solutions exist. Unstructured processes are fuzzy, complex problems for which there are no cut-and-dried solutions. Simon also described the decision-making process as a three-phase process of intelligence, design, and choice (details in Chapter 2). An unstructured problem is one in which none of the three phases is structured. Decisions where some but not all of the phases are structured are called semistructured by Gorry and Scott Morton. In a structured problem, the procedures for obtaining the best (or at least a good enough) solution are known. Whether the problem involves finding an appropriate inventory level or choosing an optimal investment strategy, the objectives are clearly defined. Common objectives are cost minimization or profit maximization. The manager can use the support of clerical, data processing, or management science models. Management support systems such as DSS and ES can be useful at times. In an unstructured problem, human intuition is often the basis for decision making. Typical unstructured problems include planning new services, hiring an executive, or choosing a set of R D projects for next year. Semi-structured problems fall between the structured and the unstructured, having some structured elements and

some unstructured elements. Solving them involves a combination of both standard solution procedures and human judgment. Keen and Scott Morton [1978] give the following examples of semistructured problems: trading bonds, setting marketing budgets for consumer products, and performing capital acquisition analysis. Here, a DSS can improve the quality of the information on which the decision is based by providing not only a single solution but a range of alternative solutions. These capabilities, described later, allow managers to understand the nature of problems better, so they can make better decisions. The second half of this framework (the top of Figure 1.2) is based on Anthony's taxonomy [1965], which defines three broad categories that encompass all managerial activities: strategic planning, or the long-range goals and the policies for resource allocation: management control, or the acquisition and efficient use of resources in the accomplishment of organizational goals: and operational control. or the efficient and effective execution of specific tasks. Anthony's and Simon's taxonomies are combined in a nine-cell decision support framework. The right-hand column and the bottom row indicate the technologies needed to support the various decisions. Gorry and Scott Morton suggested. for example, that for semistructured and unstructured decisions, conventional management information systems (MIS) and management science approaches are insufficient. They proposed the use of a supportive information system, which they called a decision support system (DSS). The more structured and operational control-oriented tasks (cells 1, 2, and 4) are performed by low-level managers, whereas the tasks in cells 6, 8, and 9 are the responsibility of top executives. This means that DSS, EIS, neural computing, and ES are more often applicable for people tackling specialized, complex problems. The Gorry and Scott Morton framework is used for classifying problems and selecting appropriate tools. However, modifications may be needed due to special

Computer Support for Structured Decisions Structured and some semistructured decisions, especially of the operational and managerial control type, have been supported by computers since the 1960s. Decisions of this type are made in all functional areas, especially in finance and production (operations management). Such problems, which are encountered fairly often, have a high level of structure. It is therefore possible to abstract and analyze them, and classify them into prototypes. For example, a make-or-buy decision belongs to this category. Other examples are capital budgeting, allocation of resources, distribution problems, procurement, planning, and inventory control. For each type of problem, a prescribed solution was developed through the use of some quantitative formulas or models. This approach is called management science (MS) or operations research (OR). Management Science The management science approach adopts the view that managers follow a fairly systematic process in solving problems. Therefore, it is possible to use a scientific approach to automate portions of managerial decision making. The systematic process involves the following steps: 1. 2. 3. 4. 5. Defining the problem (a decision situation that may deal with some trouble or with an opportunity). Classifying the problem into a standard category. Constructing a mathematical model that describes the real-world problem. Finding potential solutions to the modeled problem and evaluating them. Choosing and recommending a solution to the problem.

The above process is centered around modeling. Modeling involves the trans-formation of the real-world problem into an appropriate prototype structure. There are computerized methodologies that help find solutions to the model quickly and efficiently. Less structured problems can be handled only by a DSS that includes modeling capabilities.

CHAPTER 2 : DECISION MAKING, SYSTEMS, MODELING, AND SUPPORT

MODELS A major characteristic of decision support systems is the inclusion of at least one model. The basic idea is to perform the DSS analysis on a model of reality rather than on the real system itself. A model is a simplified representation or abstraction of reality. It is usually simplified because reality is too complex to copy exactly and because much of the complexity is actually irrelevant in solving the specific problem. The representation of systems or problems by models can be done with various degrees of abstraction; therefore, models are classified into three groups according to their degree of abstraction: iconic, analog, and mathematical.

Iconic (Scale) Models An iconic modelthe least abstract modelis a physical replica of a system, usually on a different scale from the original. Iconic models may appear in three dimensions. such as that of an airplane, car, bridge, or production line. Photographs are another type of iconic scale model, but in only two dimensions. Graphical user interfaces and objectoriented programming are other examples of the use of icons (see Chapters 4 and 7).

Analog Models An analog model does not look like the real system, but behaves like it. It is more abstract than an iconic model and is a symbolic representation of reality. These are usually two-dimensional charts or diagrams; they could be physical models, but the shape of the model differs from that of the actual system. Some examples include Organization charts that depict structure, authority, and responsibility relationships A map in which different colors represent objects such as bodies of water or mountains Stock market charts that represent the price movements of stocks Blueprints of a machine or a house A speedometer A thermometer

Mathematical (Quantitative) Models The complexity of relationships in many organizational systems cannot be represented with icons or analogically, or such representation may be cumbersome and time-consuming to use. Therefore, more abstract models are described mathematically. Most DSS analyses are performed numerically with mathematical or other quantitative models.

The Benefits of Models An MSS (Management Support System) uses models for the following reasons:

Models enable the compression of time. Years of operations can be simulated in minutes or seconds of computer time. Model manipulation (changing decision variables or the environment) is much easier than manipulating the real system. Experimentation is therefore easier to conduct and does not interfere with the daily operation of the organization. The cost of modeling analysis is much less than the cost of a similar experiment conducted on a real

system.

The cost of making mistakes during a trial-and-error experiment is much less when models are used rather than real systems. Today's environment involves considerable uncertainty. With modeling, a manager can calculate the risks involved in specific actions. The use of mathematical models enables the analysis of a very large, sometimes infinite number of possible solutions. With today's advanced technology and communications, managers often have a large number of alternatives from which to choose. Models enhance and reinforce learning and training.

Note: Recent advances in computer graphics have led to an increased tendency to use iconic and analog models to complement MSS mathematical modeling. For example, visual simulation (see Chapter 5) combines all three types of models.

THE MODELING PROCESS: A PREVIEW

2.6 THE INTELLIGENCE PHASE Intelligence entails scanning the environment, either intermittently or contini ously. It includes several activities aimed at identifying problem situations or opportunities. Finding the Problem The intelligence phase begins with the identification of organizational goals an objectives and determination of whether they are being met. Problems arise out dissatisfaction with the way things are going. Such dissatisfaction is the result of difference between what we desire and what is (or is not) happening. In this phas one attempts to determine whether a problem exists, identify its symptoms, dete mine its magnitude, and explicitly define the problem. Often, what is described a problem (such as excessive costs) may be only a symptom of a problem (such improper inventory levels). Because real-world problems are usually complicate by many interrelated factors, it is sometimes difficult to distinguish between tI symptoms and the real problem. The existence of a problem in an organization can be appraised by monito ing and analyzing the organization's productivity level. The measurement of pr( ductivity and the construction of the model are based on data. The collection ( existing data and the estimation of future data are among the most difficult stet in the analysis. Some issues that may arise during data collection and estimatic are as follows: Outcome (or results) may occur over an extended period of time. As a result, revenues, e penses, and profits will be recorded at different points in time. To overcome this difficult a present-value approach should be used, if the results are quantifiable. It is often necessary to use a subjective approach to data estimation. It is assumed that future data will be similar to historical data. If not, it is necessary to pr dict the nature of the change and include it in the analysis. Once the preliminary investigation is completed it is possible to determir whether a problem really exists, where it is located, and how significant it is.

Problem Classification This activity is the conceptualization of a problem in an attempt to classify it in a definable category. An important classification is according to the degree structuredness evident in the problem. Herbert A. Simon [1977] has distinguished two extreme situations regarding structuredness of decision problems. At one end of the spectrum are the well-structured problems that are repetitive and routine, and for which standard mod-els have been worked out. Simon called these programmed problems. Examples of such problems are weekly scheduling of employees, monthly determination of cash flow, and selection of an inventory level for a specific item. At the other end of the spectrum are the poorly structured or nonprogrammed problems, which are novel and nonrecurrent. For example, merger and acquisition decisions, undertaking a complex research and development project. reengineering a corporation, and opening a university are all nonstructured problems. Semistructured problems fall between the two extremes.

Problem Decomposition Many complex problems can be divided into subproblems. Solving the simpler sub-problems may help in solving the complex problem. Also, some seemingly poorly structured problems may have some highly structured subproblems. Such an approach also facilitates communication between the people involved in the solution process.

Problem Ownership In the intelligence phase, it is important to establish the ownership problem. A problem exists in an organization only if someone or some group is willing to take the responsibility to solve it and if the organization has the capability to solve

it. For example, many companies feel that they have a problem because interest rates are too high. Because interest rate levels are determined at the national level and most companies can do nothing about them, high interest rates are the problem of the federal government, not of a specific company. The problem companies face is how to operate in an environment in which the interest rate is high. For the individual company the interest rate level is an uncontrollable factor. The intelligence phase ends with a problem statement. At that time, the design phase can be started.

THE DESIGN PHASE The design phase involves generating, developing, and analyzing possible courses of action. This includes activities such as understanding the problem and testing solutions for feasibility. Also in this phase, a model of the problem situation is constructed, tested, and validated. Modeling involves the conceptualization of the problem and its abstraction to quantitative and/or qualitative forms. For a mathematical model, the variables are identified and the equations describing their relationships are established. Simplifications are made. whenever necessary, through a set of assumptions. For example, a relationship between two variables may be assumed to be linear, even though in reality there may be a slight nonlinear effect (such as in the model of a pendulum). A proper balance between the level of model simplification and the representation of reality must be obtained. A simpler model leads to easier manipulation and faster solution, but is less representative of the real problem.

The task of modeling involves a combination of art and science. We present the following topics of modeling as they relate to quantitative models (mathematical, financial, and so on): The components of the model The structure of the model Selection of a principle of choice (criteria for evaluation) Developing (generating) alternatives Predicting outcomes Measuring outcomes Scenarios

THE CHOICE PHASE The boundary between the design and the choice phases is often unclear because certain activities may be performed both during the design and the choice phases and because one may return frequently from the choice activities to the design. For example, one may generate new alternatives while performing an evaluation of existing ones. The choice phase includes search, evaluation, and recommending an appropriate solution to the model. A solution to a model is a specific set of values for the decision variables in a selected alternative. Note: Solving the model is not the same as solving the problem that the model represents. The solution to the model yields a recommended solution to the problem. Only if this recommended solution is successfully implemented is the problem considered to be solved.

CHAPTER 3 : DECISION SUPPORT SYSTEMS: AN OVERVIEW

WHAT IS A DSS? Little [1970] defines DSS as a "model-based set of procedures for processing data and judgments to assist a manager in his decision making." He argues that to be successful, such a system must be simple. robust, easy to control, adaptive, complete on important issues, and easy to communicate with. Implicit in this definition is the assumption that the system is computer-based and serves as an extension of the user's problem-solving capabilities. Alter [1980] defines DSS by contrasting them with traditional Electronic Data Processing (EDP) systems on five dimensions, as shown in Table 3.1. Moore and Chang [1980] argue that the structuredness concept, so much a part of early DSS definitions (that is. that DSS can handle semistructured and unstructured situations), is not meaningful in general; a problem can be described as structured or unstructured only with respect to a particular decision maker (that is. structured decisions are structured because we choose to treat them that way).Thus, they define DSS as extendible systems capable of supporting ad hoc data analysis and decision modeling, oriented toward future planning, and used at irregular, un-planned intervals. Bonczek et al. [1980] define a DSS as a computer-based system consisting of three interacting components: a language system (a mechanism to provide communication between the user and other components of the DSS), a knowledge sys-tem (the repository of problem domain knowledge embodied in DSS, either as data or procedures). and a problemprocessing system (the link between the other two components, containing one or more of the general problemmanipulation capabilities required for decision making). The concepts provided by this definition are important for understanding the structures of DSS and ES and the relationship between the two technologies. Finally, Keen [1980] applies the term DSS "to situations where a 'final' system can be developed only through an adaptive process of learning and evolution." Thus, he defines DSS as the product of a developmental process in which the DSS user, the DSS builder, and the DSS itself are all capable of influencing one another. resulting in system evolution and patterns of use. These definitions are compared and contrasted by examining the various concepts used to define DSS (see Table 3.2). It seems that the basis for defining DSS has been developed from the perceptions of what a DSS does (such as support decision making in unstructured problems) and from ideas about how the DSS's objective can be accomplished (such as components required, appropriate usage pattern, and the necessary development processes). Unfortunately, the formal definitions of DSS do not provide a consistent focus because each tries to narrow the population differently. Furthermore, they collectively ignore the central issue in DSS: that is, to support and improve decision making. In later DSS definitions, the focus seems to be on the inputs rather than the outputs. A very likely reason for this change in emphasis is the difficulty of measuring the outputs of a DSS (such as decision quality or more confidence in the decision made). In DSS in Focus 3.1 we provide a working definition that defines a range, from a basic to an ideal DSS. Later in this chapter the various configurations of DSS are explored. However, it is beneficial first to deal with the characteristics and capabilities of DSS, which we present next.

CHARACTERISTICS AND CAPABILITIES OF DSS Because there is no consensus on exactly what a DSS is, there is obviously no agreement on standard characteristics and capabilities of DSS. The list in Figure 3.1 is an ideal set. 1. DSS provide support for decision makers mainly in semistructured and unstructured situations by bringing together human judgment and computerized information. Such problems cannot be solved (or cannot be solved conveniently) by other computerized systems or by standard quantitative methods or tools. 2. Support is provided for various managerial levels, ranging from top executives to line managers.

3. Support is provided to individuals as well as to groups. Less structured problems often require the involvement of several individuals from different departments and organizational levels. 4. DSS provide support to several interdependent and/or sequential decisions. 5. DSS support all phases of the decision-making process: intelligence, design, choice, and implementation. 6. DSS support a variety of decision-making processes and styles. 7. DSS are adaptive over time. The decision maker should be reactive, able to confront changing conditions quickly, and adapt the DSS to meet these changes. DSS are flexible, so users can add, delete, combine, change, or rearrange basic elements. 8. Users must feel at home with DSS. User-friendliness, strong graphic capabilities, and an English-like interactive humanmachine interface can greatly increase the effectiveness of DSS. 9. DSS attempts to improve the effectiveness of decision making (accuracy, timeliness, quality), rather than its efficiency (cost) of making decisions. 10. The decision maker has complete control over all steps of the decision-making process in solving a problem. A DSS specifically aims to support and not to replace the decision maker.

COMPONENTS OF DSS DSS is composed of the following subsystems: Data management subsystem. The data management subsystem includes the database. which contains relevant data for the situation and is managed by software called the data-base management system (DBMS).' Model management subsystem. A software package that includes financial, statistical, management science, or other quantitative models that provide the system's analytical capabilities, and appropriate software management. Modeling languages for building custom models are also included. This software is often called a model base management system (MBMS). Knowledge management subsystem. This subsystem can support any of the other subsystems or act as an independent component. It provides intelligence to augment the decision maker's own. User interface subsystem. The user communicates with and commands the DSS through this subsystem. The user is considered to be part of the system. Researchers assert that some of the unique contributions of DSS are derived from the intensive interaction between the computer and the decision maker.

THE DATA MANAGEMENT SUBSYSTEM The data management subsystem is composed of the following elements: DSS database Database management system Data directory Query facility These elements are shown schematically in Figure 3.3 (in the shaded area). The figure also shows the interaction of the data management subsystem with the other parts of the DSS, as well as the interaction with several data sources. A brief discussion of these elements and their function follows; further discussion is in Chapter 4. The Database A database is a collection of interrelated data organized to meet the needs and structure of an organization and can be used by more than one person for more than one application. There are several possible configurations for a database. For large DSS, the database is basically included in the data warehouse (Chapter 4). For some DSS applications, a special database is constructed as needed. Several databases may be used in one DSS application, depending on the data sources. The data in the DSS database, as shown in Figure 3.3, is extracted from internal and external data sources, as well as personal data belonging to one or more users. Internal data come mainly from the organization's transaction processing system. A typical example of such data is the monthly payroll. Depending on the needs of the DSS, operational data from functional areas, such as marketing, might be included. Examples of other internal data are machine maintenance scheduling, forecasts of future sales. cost of outof-stock items, and future hiring plans. Some-times internal data are made available through Web browsers over an intranet, an internal Web-based system (see Bayles [1996]). External data may include industry data, marketing research data, census data, regional employment data, government regulations, tax rate schedules, or national economic data. These data might come from the U.S. government, trade associations, marketing research firms, econometric forecasting firms, and the organization's own efforts in collecting external data. Like internal data. the external data may be maintained in the DSS database or may be entered when the DSS is used. External data are provided, in many cases, over the (Web) Internet or from computerized online services. Private data may include guidelines used by specific decision makers and as-sessments of specific data and/or situations. Data Organization Should a DSS have an independent database? It depends. In small ad hoc DSS, data can be entered directly into models sometimes extracted directly from larger databases. The organization's data warehouse (Inmon [1996]. Poe [1996]) is often used for building DSS applications. Some large DSS have their own fully in-tegrated, multiple-source DSS databases. A separate DSS database need not be physically separate from the corporate database. They can be physically stored together for economic reasons. A DSS database can also share a DBMS with other systems. A DSS database may include multimedia objects (such as pictures, maps, or sounds) (Burger [1995], Ghafoor [1995], Larson [1995]). An object-oriented database is found in some recent DSS (Chen [1996], Wolf [1994]). Extraction To create a DSS database, or a data warehouse, it is often necessary to capture data from several sources. This operation is called extraction. It is basically the importing of files, summarization, filtration, and condensation of data. Extraction also occurs when the user produces reports from the data in the DSS database. The extraction process is managed by a DBMS.

Database Management System The database is created, accessed. and updated by a DBMS. Most DSS are built with a standard commercial DBMS that provides capabilities such as those shown in DSS in Focus 3.2. An effective database and its management can support many managerial activities; general navigation among records, support for creating and maintaining a diverse set of data relationships, and report generation are typical examples. However, the real power of DSS occurs when the database is integrated with its models.

The Query Facility In building and using DSS, it is often necessary to access, manipulate, and query the data. The query facility performs these tasks. It accepts requests for data from other DSS components (see Figure 3.3), determines how these requests can be filled (consulting the data directory, if necessary), formulates the detailed requests, and returns the results to the issuer of the request. The query facility includes a special query language. Important functions of a DSS query system are the selection manipulation operations (for example, the ability to follow an instruction such as "search for all sales in zone B during January 1997 and summarize sales by sales-person").

The Directory (Dictionary) The data directory is a catalog of all the data in the database. It contains the data definitions, and its main function is to answer questions about the availability of data items, their source, and their exact meaning. The directory is especially appropriate for supporting the intelligence phase of the decision-making process by helping to scan data and identify problem areas or opportunities. The directory, like any other catalog, supports the addition of new entries, deletion of entries, and re-trieval of information on specific objects.

THE MODEL MANAGEMENT SUBSYSTEM The model management subsystem of the DSS is composed of the following elements: Model base Model base management system Modeling language Model directory Model execution, integration, and command processor

These elements and their interface with the other DSS components are shown in Figure 3.4. The definition and function of each of these elements are described next.

Model Base A model base contains routine and special statistical, financial, forecasting, management science, and other quantitative models that provide the analysis capabilities in a DSS. The ability to invoke, run, change, combine, and inspect models is a key DSS capability that differentiates it from other CBIS. The models in the model base can be divided into four major categories: strategic. tactical, operational, and model-building blocks and routines.

Strategic models are used to support top management's strategic planning re-sponsibilities. Potential applications include developing corporate objectives, planning for mergers and acquisitions, plant location selection, environmental impact analysis. and nonroutine capital budgeting. Strategic models tend to be broad in scope, with many variables expressed in an aggregated form. Mostly external data are used. The GLSC opening vignette includes a long-range planning model. Tactical models are used mainly by middle management to assist in allocating and controlling the organization's resources. Examples of tactical models include labor requirement planning, sales promotion planning. plant layout determination. and routine capital budgeting. Tactical models are usually applicable only to an organizational subsystem such as the accounting department. Their time horizon varies from 1 month to less than 2 years. Some external data are needed, but the greatest requirements are for internal data. The GLSC vignette includes some tactical models for its 15-month plan. Operational models are used to support the day-to-day working activities of the organization. Typical decisions are approving personal loans by a bank. production scheduling, inventory control, maintenance planning and scheduling, and quality control. Operational models support mainly first-line managers' decision making with a daily to monthly time horizon. These models normally use internal data. The models in the model base can also be classified by functional areas (such as financial models or production control models) or by discipline (such as statistical models or management science allocation models). The number of models in a DSS can vary from a few to several hundred. Model Building Blocks and Routines In addition to strategic. tactical, and operational models, the model base can contain model building blocks and routines. Examples include a random number generator routine, curveline fitting routine, present-value computational routine, or regression analysis. Such building blocks can be used in several ways. They can be used on their own for applications such as data analysis. They can also be used as components of larger models. For example, a present-value component can be part of a make-or-buy model. Some of these building blocks are used to determine the values of variables and parameters in a model, as in the use of regression analysis to create trend lines in a forecasting model. Such building blocks are available in DSS commercial development software.

Modeling Languages Because DSS deal with semistructured or unstructured problems. it is often necessary to customize models. This can be done with high-level languages. Some examples of these are COBOL, with a spreadsheet or with other fourthgeneration languages. and special modeling languages such as IFPS/Plus (see Chapters 5 and 8).

The Model Base Management System (MBMS) The functions of the model base management system (MBMS) software are model creation using subroutines and other building blocks, generation of new routines and reports, model updating and changing, and model data manipulation. The MBMS is capable of interrelating models with the appropriate linkages through a database (see DSS in Focus 3.3.)

The Model Directory The role of the model directory is similar to that of a database directory. It is a catalog of all the models and other software in the model base. It contains the model definitions, and its main function is to answer questions about the availability and capability of the models.

Model Execution, Integration, and Command The following activities are usually controlled by model management:

 Model execution is the process of controlling the actual running of the model. Model integration means combining the operations of several models when needed (such as directing the output of one model to be processed by another one). A model command processor is used to accept and interpret modeling instructions from the dialog component and to route them to the MBMS, the model execution, or the integration functions. An interesting issue in a DSS might be, "Which models should be used for what situation?" Such model selection cannot be done by the MBMS because it requires expertise and therefore is done manually. This is a potential automation area for a knowledge component assisting the MBMS.

THE KNOWLEDGE MANAGEMENT SUBSYSTEM Many unstructured and semistructured problems are so complex that they require expertise for their solution in addition to the regular DSS capabilities. Such expertise can be provided by an expert system or other intelligent system. Therefore, the more advanced DSS are equipped with a component called knowledge management. Such a component can provide the required expertise for solving some aspects of the problem and providing knowledge that can enhance the operation of other DSS components. An example of the role of the knowledge management subsystem is provided by Silverman [1995], who suggests three ways for knowledge-based expert systems to be integrated with mathematical modeling: knowledge-based decision aids that support the steps of the decision process unaddressed by mathematics; intelligent decision modeling systems that help users build, apply, and manage libraries of models: and decision analytic expert systems that integrate theoretically rigorous methods of uncertainty into the expert system knowledge bases. The knowledge component consists of one or more intelligent systems. Like data and model management. knowledge management software provides the necessary execution and integration of the intelligent system. A decision support system that includes such a component is called an intelligent DSS, a DSS/ES, expert support system. or knowledge-based DSS (see DSS in Action 3.4). The current generation of data mining applications (systems that identify potentially profitable patterns in data warehouses) include ANN (see Bort [1996] and Newquist [1996]).

THE USER INTERFACE (DIALOG) SUBSYSTEM The term user interface covers all aspects of communication between a user and the MSS. It includes not only the hardware and software, but also factors that deal with ease of use, accessibility, and humanmachine interactions. Some MSS experts feel that the user interface is the most important component because much of th power, flexibility, and ease-of-use characteristics of MSS are derived from this corn ponent (see Sprague and Watson [1996]). Others state that because the user sees only this part of the MSS. to him or her, the user interface is the system (Whitten and Bentley [1997]). An inconvenient user interface is one of the major reasons why managers have not used computers and quantitative analyses to the extent that these technologies have been available. Management of the User Interface Subsystem The user interface subsystem is managed by software called the user interface management system (UIMS). The UIMS is composed of several programs that provide the capabilities listed in DSS In Focus 3.5. The UIMS is also known as the dialog generation and management system, and is further discussed in Chapter 7.

CHAPTER 4 : DATA MANAGEMENT: WAREHOUSING, ACCESS, AND VISUALIZATION

NATURE AND SOURCES OF DATA All decision support systems use data, information, or knowledge. These three terms are sometimes used interchangeably, and may have several definitions. A common manner of looking at these is as follows: Data. Data items about things, events, activities, and transactions are recorded, classified. and stored. but are not organized to convey any specific meaning. Data items can be numeric. alphanumeric, figures, sounds, or images. Information. Information is data that has been organized so that it has meaning to the recipient. It confirms something the recipient knows or may have -surprise" value by telling something not known. The recipient interprets the meaning and draws inferences and conclusions. An application processes data items so that the results are meaningful for an intended action or decision. This is a more specific use and adds more value than simple access to the database. Knowledge. Knowledge consists of data items that are organized and processed to convey understanding, experience, accumulated learning, and expertise as they apply to a current problem or activity. A set of data items processed to extract critical implications and to reflect past experience and expertise provides the recipient with organizational knowledge and has very high potential value. Knowledge can be the application of data and information to make a decision. DSS databases, such as data warehouses, may include data. information, and knowledge. Therefore, when a reference is made to data, we actually refer to any or all of these concepts. DSS data may include documents, pictures. maps, sound. and animation. These data can be stored and organized in different ways before and after their use. They also include concepts. thoughts. and opinions. Data may be primary, raw, or summarized. Many DSS applications use summary or extracted data that come from three primary sources: internal, external, and personal. Internal Data Data are stored in one or more places. These data are about people, products, services, and processes. For example, data about the employees and their pay are usually stored in the corporate database. Data about equipment and machinery may be stored in the maintenance department database. Sales data can be stored in several places: aggregate sales data in the corporate database and details at each region. An MSS may use raw data as well as processed data (such as reports and summaries). Internal data are available via an organization's computer network system. External Data There are many sources of external data. They range from commercial databases to data collected by sensors and satellites. Data are available on CD-ROMs. on the Internet, as films, and as music or voices. Pictures, diagrams, atlases, and television are also sources of data. Government reports (either computerized or not are a major source of external data (see DSS in Focus 4.1). The Chamber of Commerce, local banks, research institutions, and the like flood the environment with data and information, resulting in information overload for the MSS user. Data may come from around the globe. Most external data are irrelevant to a specific MSS. Yet much external data must be monitored and captured to ensure that important data are not overlooked. Personal Data The MSS users or other corporate employees may contribute their own ex-pertise by creating personal data. These include subjective estimates of sales. opinions about what the competitors are likely to do. or interpretations of news articles.

DATA WAREHOUSING Two contradictory forces are evidenced in modern business (according to Com-puterWorld, May 17, 1993, p. 53). First, there is a need for specialized, localized hardware and software solutions. Second, there is a need for a cost-effective means of uniting those information resources into a manageable business asset. As managers respond to this challenge. they must cope with the explosme growth in the number and diversity of devices and systems. Enterprise systerw. becoming profoundly more complex. Organizations today have a mixture of olk centralized systems and newer. distributed systems; a wide variety of technoli-voi is provided by an even larger number of vendors. Facing this environment. m: agers must use new concepts in managing information technologies. One such cept is data warehousing (see Fosdick [1992], McFadden and Watson [1996]. [1996a. 1996b]. and Poe [1996]). The Concept The purpose of a data warehouse is to establish a data repository that operational data accessible in a form that is readily acceptable for decision support and executive information system (EIS) applications. As part of this new acr bility, a process must transform detail-level operational data to a relational which makes them more amenable to decision support processing. Only the data needed for decision support processing are carried over from the operational environment. As data pass into the data warehouse, they are transformed or integrated into a consistent structure. Data warehouses allow for the storage of metadata, which can include data summaries that are easier to search for and index. The data are then placed directly into a data repository at the current level of detail. where they are eventually summarized, archived into the older detail data level, or purged. Moving DSS information off the mainframe presents a company with an op-portunity to restructure its DSS strategy. Companies can reinvent the way in which they can shape and form their DSS data. They have an opportunity to make it very amenable to widespread use for decision support. Any kind of EIS requires having good summarized data in different forms. Traditional EIS and DSS applications often failed because the underlying data were difficult or impossible to access. Also. manipulation of the data has traditionally been a part of the EIS. instead of a preliminary data preparation activity. However, in a successful EIS. 90 percent of the work is figuring out the appropriate transformations and summarizations of data before the application is built, and only 10 percent is the actual building of the application. A data warehouse provides data that are already transformed and summarized, therefore making it an appropriate envi-ronment for more efficient DSS and EIS application development and access. Data Warehousing Data warehousing (or information warehousing) is a concept designed to provide a solution to the data access problem described earlier. The data warehouse combines various data sources into a single resource for end-user access. Endusers can perform ad hoc queries, reporting analysis, and visualization of the warehouse in-formation. Data warehousing typically involves combining a variety of technology vendors' products into an integrated solution. There can be several data warehouses in one company.

Benefits A data warehousing solution should increase knowledge worker productivity while supporting all decision makers' data requirements. Additionally, it should provide ready access to critical data. insulate operation databases from ad hoc processing that can slow TPS systems, and provide high-level summary information as well as data drill-down capabilities. These benefits can improve business knowledge, provide competitive advantage, enhance customer service and satisfaction, facilitate decision making. and help in streamlining business processes (see DSS in Action 4.6). Architecture and Process There are several basic architectures for data warehousing. Two common ones are two-tier and three-tier architectures. A three-tier architecture is shown in Figure 4.3. Data from internal (legacy) sources and external sources are extracted,

scrubbed, filtered, and summarized via special software before insertion in the data warehouse. The data then are processed again and deposited in an additional special multidimensional database (the third tier in the architecture), organized for easy multidimensional presentation. The DSS and EIS users can query the new server and perform analysis. In a two-tier architecture, there is no multidimensional database or server.

Components Data warehouses appear in different shapes and sizes. For example, Figure 4.3 may be expanded to include several tiers (more servers). The hardware and software are usually from several vendors. Some companies use all of the components listed here, others just one. Large physical database. This is an actual, physical database into which all the data for the data warehouse are gathered. along with the metadata and the processing logic used to scrub, organize. package. and preprocess the data for end-user access. The logical data warehouse. This contains all the metadata, business rules, and processing logic required to scrub, organize, package. and preprocess the data. In addition, it contains the information required to find and access the actual data, wherever they actually reside. Data mart. A data mart is a subset of the enterprise-wide data warehouse.Typically it performs the role of a departmental. regional, or functional data warehouse. As part of the iterative data warehouse process, the organization builds a series of data marts over time and eventually links them via an enterprise-wide logical data warehouse. Decision support systems and an executive information system. These are not data warehouses but applications that use the data warehouse.

Suitability Data warehousing is most appropriate for organizations where The data are stored in different systems. An information-based approach to management is in use. There is a large, diverse customer base. The same data are represented differently in different systems. Data are stored in highly technical, difficult to decipher formats. Often, the development of a data warehouse is driven by a specific organizational need. such as expanding sales by discovering relationships in customer data.

Characteristics of Data Warehousing Data are organized by detailed subject (for example, by customer, premium. and claim in an insurance company, containing only information relevant for decision support). Integrated. Data in different locations may be encoded differently. For example, gender data may be encoded 0 and 1 in one place and "m" and in another. In the warehouse they are consistent. Time-variant. The data are for 5-10 years and they are used for trends, forecasting. and comparisons. Nonvolatile. Once entered into the warehouse, data are not changed or updated.

OLAP: DATA ACCESS AND MINING, QUERYING, AND ANALYSIS For many years IT concentrated on building mission-critical systems (systems that support corporate transaction processing). Such systems must be virtually fault-tolerant and provide rapid response. An effective solution was provided by online transaction processing (OLTP), which centers on a distributed relational database environment. The latest development in this area is the addition of a client/server architecture. Many tools were created for developing OLTP applications; INFORMIX-OnLine (from Informix, Inc.) is an example of an effective tool. Access to data is often needed both by OLTP applications and by DSS and other MSS. Unfortunately, trying to serve both types of requests may be prob-lematic (see Leinfuss [1993]). Therefore, some companies elect to segregate the databases into online transaction processing (OLTP) types and online analytical processing (OLAP) types. The term online analytical processing (OLAP) refers to DSS and EIS computing done by end-users in online systems (see DSS in Action 4.7). In online transaction processing (OLTP), on the other hand. voluminous data are processed as soon as they are entered. The OLAP is performed by end-users, whereas the OLTP is done by IS professionals. Included in OLAP are activities such as generating queries (see DSS in Focus 4.8). requesting ad hoc reports, conducting statistical analyses, and building multimedia applications. To facilitate OLAP it is necessary to work with the data warehouse (or with the data warehouse or the multidimensional warehouse) and with a set of tools, usually with multidimensional capabilities. These tools can be query tools, spreadsheets, data mining tools, data visualization tools. and the like. (For a list of OLAP tools see Dresner [1993], Tyo [1995a, b], and periodic reviews in the software sections of Datamation, PCWeek, and Software Review.) The major vendors are Lotus Development Corp.. Computer Associates. Cognos, Arbor Software Corp., Information Resources. Comshare, SAS Institute Inc.. Software A&G, Business Objects Inc., Intersolve, and Platinum Technology. Using SQL for Querying Structured query language (SQL) is a data language that is becoming a standard for data access and manipulation in relational database management systems. Data Mining Data mining is a term used to describe knowledge discovery in databases. kn. edge extraction, data archaeology, data exploration, data pattern processing. information nformation harvesting, and software. All these activities are conducted automatically and allow quick discovery even by nonprogrammers.

DATA VISUALIZATION AND MULTIDIMENSIONALITY Online analytical processing involves not only obtaining and analyzing data atH formation, but also presenting it to the user. We discuss this topic next. Data Visualization The emerging visual technologies make pictures worth a thousand numbers, and decision support applications more attractive and understandable to users. Data visualization refers to technologies that support visualization of information. It includes digital images, geographic information systems, graphical user interfaces, multidimensions. tables and graphs, virtual reality, 3-D presentations, and animation. Visualization software packages offer users capabilities for self-guided exploration and visual analysis of large amounts of data. People have reported that by using visual analysis technologies, they have spotted problems that have gone undetected by standard analysis methods for years. See DSS in Action 4.11. These technologies can be integrated to create different information presentations (see Chapter 7). In Chapter 5, we discuss visual spreadsheets and visual interactive simulation. Data visualization is easier to implement when the necessary data are in a data warehouse, or better yet in a multidimensional server. Our discussion here is focused mainly on the concept of multidimensionality. Multidimensionality

Spreadsheet tables have two dimensions. If one needs to present information with three or more dimensions. he or she may use a set of 2-D tables, or a fairly complex table. In decision support, an attempt is made to make information presentation simple and to allow the user to easily and quickly change the structure of tables so they will be more meaningful (for example, by flipping columns and rows or by combining several rows and columns). Multidimensional Presentation Summary data can be organized in different ways for analysis and presentation. A fairly new approach is called multidimensionality. The major advantage of multidimensionality is that data can be organized the way managers like to see them, rather than the way that the system analysts do. Further, different presentations of the same data can be arranged easily and quickly. Three factors are considered multidimensionality: dimensions, measures, and time.