Business Support Systems

IS for Managers

Phases of Decision Making

Decision making process involves the following three phases:

Intelligence - During this phase the decision maker searches for conditions calling for a decision - The decision maker may be reacting to problems or may recognize opportunities - In either case a gap between the existing state and a desired state is a must for the existence of a decision problem
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Contd. Design - This is the second phase of the decision making process - During this phase the decision maker develops and analyzes alternative courses of action by either searching for ready-made alternatives or developing a custom-made solution Choice - During this third phase, the decision maker selects the best alternative
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DECISION MAKING PROCESS

INTELLIGENCE

DESIGN

CHOICE

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Intelligence and Design Phase

These two phases constitute of the following three aspects: Problem finding Problem formulation Development of alternatives

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Problem Finding

This can conceptually be defined as finding out the difference between some current situation and some desired state What is desired is then compared with reality Then differences are identified and evaluated to find out if that is a problem

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Problem Formulation

The main purpose here after identifying the problem is to clarify the problem such that design and choice activities are carried out for the correct problem The following four strategies are generally adopted to reduce the complexity of the problems and at the same time make the problem manageable: - Determining the boundaries - Examining the changes that resulted in the problem - Dividing the problem into sub problems - Focusing on the controllable elements
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Development of Alternatives

This requires lot of creativity Basic creativity can be enhanced upon by alternative-generation procedures and support mechanisms. E.G being scenarios, analogies, brainstorming, checklists, templates of decision process etc There should be enough knowledge about the problem, its boundaries and there should be proper motivation to solve the problem
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Types of Decision Problems

Problems are structured or semi structured depending on how familiar the decision maker is with the existing state, the desired state, and the transformation necessary to get from one state to the other Structured problems are well understood They are routine and can be addressed using standard operating procedures in the form of algorithms or heuristics or the rules of thumb that offer procedures or outlines for solutions
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Contd.

Programmed and nonprogrammed decisions: - programmed decisions are the ones which can be prespecified by a set of rules or decision procedures - These appear in rule books, decision tables etc and are generally used under certainty where outputs must be known - On the other hand nonprogrammed decisions have no such predefined rules which generally could be one time decision in case of crisis or problems occurring on regular basis with conditions changing
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Criteria for Decision Making

The models of decision making that tells the decision makers as to how to make a class of decisions is normative or perspective. These are generally developed by the economists and management experts, e.g., Linear programming, Game Theory, Capital Budgeting and Statistical decision theory On the other side the models that describe how decision makers actually make decisions are descriptive models, e.g., Satisficing, etc.
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Methods for Deciding Among Alternatives

Optimizing techniques used under certainty: e.g. Linear programming, integer programming, dynamic programming, queuing models, inventory models, capital budgeting analysis, break even analysis etc. Payoff matrices in statistical decision theory Utility and indifference curves Decision trees Ranking, weighting or eliminating Game theory Classical statistical inferences
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Attributes of Decision Maker

The attributes of decision makers also affect the types of decision strategy used. Some of these attributes include: Perceptual ability Information capacity Risk-taking propensity Aspiration level

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Strategies for Decision Making

The type of decision problem and the attributes of the decision maker determine which of the following strategies would be used: Maximizing - When the outcome of the decision is clear and the alternatives are well established, the decision maker will make the decision that maximizes the desired outcome - The maximizing approach assumes that the decision maker is rational and is aware of the probabilities of each alternative
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Contd.

Satisficing - A decision maker sets up a reasonable aspiration level and search for possible alternatives until he finds one that achieves his level - The decision maker terminates his search as soon as he finds a satisfactory alternative Incrementalization - The decision maker attempts to take small steps away from the existing state towards a desired state
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The Tools of Decision Support

Database software: e.g., Access, paradox, approach etc Model-based software: e.g., Excel, Lotus1-2-3 etc Statistical software: e.g., SAS-pc, SPSS-pc etc Display based software: e.g., Power point, Freelance Graphics

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Decisions
Decision Characteristics
Unstructured Strategic Management

Semi-structured
Tactical Management

Structured

Operational Management
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Transaction Processing Systems: An Overview

These are the systems that process the detailed data necessary to update records about the fundamental business operations of the organization The input of these systems includes basic business transactions The result of processing business transactions is the updation of organizations records to reflect the status of the operation at the time of the last processed transaction
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Transaction Processing Methods

Batch processing system: it is a system whereby business transactions are accumulated over a period of time and prepared for processing as a single unit or batch On-line transaction processing: in this system each transaction is processed immediately without the delay of accumulating the transactions into a batch On-line entry with delayed processing: it is a compromise between the above two. Transactions are entered into the system as they occur but processed later

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Objectives of TPS Process data generated by and about transactions Maintain a high degree of accuracy Ensure data and information integrity and accuracy Produce timely documents and reports Increase labor efficiency Help provide increased and enhanced service Help build and maintain customer loyalty Achieve competitive advantage
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Transaction Processing Activities

The business data goes through a transaction processing cycle that consists of the following activities: Data collection: this is the process of capturing and gathering all data necessary to complete transactions Data editing: this is the process of checking data for validity and completeness to detect any problems with the data Data correction: this involves the process of reentering miskeyed data which are found during data editing
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Contd.

Data manipulation: it is the process of performing calculations and other data transformations related to business transactions. This can include classifying data, sorting data into categories, performing calculations, summarizing results and storing data in the database Data storage: it is the process of updating the databases with new transactions Document production: it is the process of generating output records and reports
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Transaction Processing Applications

Common TPS support the following processes: Order processing systems Purchasing Accounting business processes

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Order Processing Systems

Order processing systems include the following: Order entry: it is a system that is used for capturing the basic data need to process a customer order Sales configuration: this system ensures that the products and services ordered are sufficient to accomplish the customers objectives Shipment planning system: it determines which open orders will be filled and from which location they will be shipped
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Contd.

Shipment execution system: this system coordinates the outflow of all products and goods from the organization with the objective of delivering quality products on time to the customers Inventory control system: it updates the computerized inventory records to reflect the exact quantity on hand of each stock keeping unit Invoicing: this application encourages follow-up on existing sales activities, increase profitability and improves customer service
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Contd.

Customer interaction: this system monitors and tracks each customer interaction with the company Routing and scheduling: routing determine the best way to get goods and products from one location to another. The scheduling system determines the best time to deliver goods and services
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Purchasing Systems

Purchasing systems include the following: Inventory control: this is used to keep track of the finished goods as well as raw materials, packing materials and maintenance materials Purchase order processing: this system helps purchasing departments complete their transactions quickly and efficiently Receiving: this helps in keeping records of the expected and actual receipts. Quality control by inspection is also one of the important functions
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Contd.

Accounts payable system: it is the system that increases an organizations control over purchasing, improves cash flow, increases profitability and provides more effective management of current liabilities

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Accounting Systems
Accounting systems include the following: Budget: it is a system that automates many of the tasks required to amass budget data, distribute it to the users and consolidate the prepared budgets Accounts receivables: manages the cash floe\w of the company by keeping track of the money owed the company on charges for goods sold and services performed
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Contd.

Payroll: it is used for keeping record of all payroll transaction Asset management: it is a system that controls investments in capital equipment and manages depreciation for maximum tax benefits General ledger: this system produces a detailed list of business transactions designed to automate financial reporting and data entry

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Architecture of Transaction Processing System

As and when a business transaction takes place, source document describing the transaction is created This source document serves as an input for the tps from some external source These source documents can then be processed online or in batches Processing then gives the desired output

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Contd.

Information can be entered into a TPS one of the following three ways - Manual - Semi automated - Fully automated The processing that is done on the source document happens to be one of the following - Recording - Summarizing - Sorting - Updating - Merging
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Contd. The output from TPS can serve one of the following purposes: - Counts and summary reports - Inputs to other information system - Feedback to system operator or customer The main objective of TPS is to automate repetitive information processing activities within organizations to increase speed and accuracy and to lower the cost of processing each transaction
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Management Information Systems

MIS assist managers in decision making and problem solving They draw on data stored as a result of transaction processing Decisions must be made on many issues that recur regularly and require a certain set of information to make the decision Provides input to be used in the managerial decision process It deals with supporting well structured decision situations. Typical information requirements can well be anticipated
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Executive Information System (EIS): An Overview Information systems designed to support the highest organizational managers are called executive information systems An EIS consists of technology and the people needed to consolidate information and support users to assist executive level decision making The information is provided in a very highly aggregated form so that they can scan information quickly for trends and anomalies
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Contd.

An EIS provides both soft as well as hard data Soft data include textual news stories or other nonanalytical information whereas hard data include data and numbers which are generally generated by TPS and MIS

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General Features of EIS

Tailored to individual executives Easy to use Have drill down abilities Support the need for external data Can help with situations that have a high degree of uncertainty Have a futures orientation Are linked with value-added business processes
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Activities supported by EIS

Executive level decision making Long-range and strategic planning Monitoring of internal and external resources Crisis management Staffing and labor relations

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Characteristics of EIS

Inputs: aggregate internal data from TPS, MIS and other databases as well as external data Processing: summarizing, graphical interpreting Outputs: summary reports, trends and simulations Typical users: executive level managers

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An overview of Decision Support System

It is an organized collection of people, procedures, software, databases and devices used to used to support problem-specific decision making The focus of a DSS is on decision- making effectiveness when faced with unstructured or semi structured business problems DSS offer the potential to generate higher profits, lower costs and better products and services

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Contd.

DSS, although skewed somewhat towards the top levels of management, are used at all levels DSS are used to bring more structure to the problems to aid the decision making process DSS are often linked with managerial decision making regarding value-added business processes Overall, a DSS should assist decision makers at all levels with all aspects of decision making to solve problems and further corporate goals
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Characteristics of a DSS

Handle large amount of data from different sources Provide report and presentation flexibility Offer both textual and graphical orientation Support drill down analysis Perform complex, sophisticated analysis and comparisons using advanced software packages Perform what-if, simulation and goal-seeking analysis

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Constituents of DSS
At the core of a DSS are a database and a model base In addition, a typical DSS contains a dialogue manager external database access allows the DSS to tap into vast stores of information contained in a corporate database

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The Model Base

The purpose of a model base in a DSS is to give decision

makers access to a variety of models and to assist them in the decision making process The model base can include Model Management Software (MMS) that coordinates the use of models in a DSS The following are the major types of DSS models: - Financial models - Statistical analysis models - Graphical models - Project management models
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Contd.

Financial models: these provide cash flow, internal rate of return and other investment analysis. E.g. Spreadsheets Statistical analysis models: these can provide statistics, trend projections, hypothesis testing and more. Graphical models: these are software packages that assist decision makers in designing, developing and using graphic displays of data and information. Numerous personal computer programs that can perform these tasks are power point, freelance graphics, CAD, CAM etc
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Contd.

Project management models These are used to handle and coordinate large projects. They are also used to identify critical activities and tasks that could delay an entire project Some of these programs can also determine the best way to speed up a project by effectively using additional resources. These models allow decision makers to keep tight control over projects of all sizes and types
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The Dialogue Manager

This allows the users to interact with the DSS to obtain

information It assists with all aspects of communications between the user and the hardware and software that constitute the DSS In practical sense, to most DSS users, the dialogue manager is the DSS

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The Group Decision Support System: (characteristics)

A GDSS also called computerized collaborative work system, consists of most of the elements of DSS Special design: special procedures, devices and approaches are needed that foster creative thinking, effective communications and good group decision-making techniques Ease of use: it must be easy to learn and use Flexibility: it must support the different approaches of taking decisions and also integrate their different perspectives
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Contd.
Decision making support: it can support different

decision making approaches like Delphi approach, brainstorming Anonymous input Reduction of negative group behavior Parallel communication Automated record keeping Cost, control and complexity factors

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FACTOR PROBLEM TYPE

USERS

SUPPORT EMPHASIS

APPROACH

SYSTEM SPEED

OUTPUT DEVELOPMENT

COMPARISON OF DSS AND MIS DSS MIS HANDLES UNSTRUCTURED NORMALLY USED WITH MORE PROBLEMS THAT CAN'T BE STRUCTURED PROBLEMS EASILY PROGRAMMED SUPPORTS INDIVIDUALS, SUPPORTS PRIMARILY THE SMALL GROUPS AND THE ORGANIZATION ENTIRE ORGANIZATION SUPPORTS ALL ASPECTS AND SUPPORTS ONLY SOME PART AS PHASES OF DECISION MAKING SOME ARE AUTOMATED EMPHASISES ACTUAL USUALLY EMPHASISES DECISIONS AND DECISIONINFORMATION ONLY MAKING STYLES IS A DIRECT SUPPORT SYSTEM IS AN INDIRECT SUPPORT THAT PROVIDES INTERACTIVE SYSTEM THAT USES REPORTS ON THE SCREEN REGULARLY PRODUCED REPORTS USUALLY ON-LINE DO NOT PROVIDE IMMEDIATE RESUL\TS SINCE IT IS FLEXIBLE AND RESPONSE TIME IS USUSLLY CAN BE IMPLEMENTED BY LONGER USERS,IT TAKES LESS TIME TO DEVELOP REPORTS ARE USUALLY ORIENTED TOWARDS PRINTED SCREEN ORIENTED REPORTS AND DOCUMENTS USERS ARE MORE DIRECTLY THE MIS IS RELATIVELY INVOLVED IN DEVELOPMENT OLDER DO NOT RETAIN THE USERS FOR LONG

Artificial Intelligence
Artificial intelligence systems include the people,

procedures, hardware, software, data, and knowledge needed to develop computer systems and machines that demonstrate characteristics of intelligence The objective in developing AI systems is not to replace human decision making completely but to replicate it for some well defined problems The overall purpose of AI systems again is to help the organization achieve its goals
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Major Branches of AI

Expert System: the hardware and software that stores knowledge and makes inferences, similar to human expert Robotics: mechanical or computer devices that perform tasks requiring a high degree of precision or that are tedious or hazardous for humans Vision Systems: the hardware and software that permit computers to capture, store and manipulate visual images and pictures
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Contd.
Natural Language Processing: processing that

allows the computer to understand and react to statements and commands made in natural language Learning System: a combination of software and hardware that allows the computer to change how it functions or reacts to situations based on feedback it receives Neural Network: a computer system that can act like or simulate the functioning of a human brain
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Introduction to Expert Systems

Systems that can replace human experts under certain conditions in restricted areas Expert systems can represent heuristics and uncertain information reason under uncertainty explain their reasoning and results

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Alternative Definitions of Expert System

An expert system uses human knowledge to solve problems that normally requires human intelligence. An expert system is a rule-based AI application program that performs a task that requires expert knowledge. The problem-solving capability of a program stems from its domain knowledge, not merely from the formalisms and reasoning strategies it uses.

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Domain Categories for Expert Systems

Interpretation (weather data) Prediction (weather forecast) Diagnosis Design Planning Debugging and repair Instruction (tutoring) Surveillance (discovery of discrepancies) Control (correction of discrepancies)
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Characteristics of Expert System

Can explain their reasoning or suggested decisions

Can draw conclusions from complex relationships Can provide portable knowledge Can deal with uncertainty Not widely used or tested Difficult to use Limited to relatively narrow problems Possibility of error Difficult to maintain May have high development cost
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Capabilities of Expert Systems

Strategic goal setting Planning Design Decision making Quality control and monitoring Diagnosis

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Components of Expert System

The knowledge base: Stores all relevant information, data, rules, cases and relationships used by the expert system. A knowledge base must be developed for each unique application

The inference engine:

The overall purpose of this engine is to seek information and relationships from the knowledge base and to provide answers, predictions and suggestions the way a human expert would. It delivers the expert advice

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Contd.
The explanation facility: Allows a user to understand how the expert system arrived at certain conclusions or results. Using this facility, can indicate all the facts and rules that were used in reaching the decision

The knowledge acquisition facility:

Through this facility, creating and updating the knowledge base is carried out. The overall purpose is to provide a convenient and efficient means for capturing and storing all components of the knowledge base
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Contd.

The user interface:

Used for designing, creating, updating and using expert systems. The overall purpose is to make the development and use of the expert system easier for the users and decision makers

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OFFICE AUTOMATION SYSTEMS These are telecommunications-based information systems that collect, process, store and distribute electronic messages, documents, and other forms of communications among individuals, work groups and organizations Such systems improve the collaboration and productivity of end-users and work groups by significantly reducing the time and effort required to produce, share and distribute business communications

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OVERVIEW OF OFFICE AUTOMATION SYSTEMS

Electronic Publishing Systems Electronic Communications Systems Electronic Collaboration Systems Image Processing Systems Office Management Systems

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ELECTRONIC PUBLISHING SYSTEMS

Word Processing - It is the most common office automation application. - It is the use of computer systems to create, edit, revise, and print text material. - It involves manipulating text data (characters, words, sentences and paragraphs) to produce information products in the form of documents (letters, memos, forms and reports)
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Contd.

Desktop publishing - Organizations can use desktop publishing to produce their own printed materials - They can design and print their own newsletters, brochures, manuals and books with several type styles, graphics and colors on each page - The minimum hardware and software required are: a PC with a hard disk, a printer with highquality graphics and software that can do word processing, graphics and page make-up
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ELECTRONIC COMMUNICATIONS SYSTEMS These systems transmit and distribute text and images in electronic form over telecommunications networks These enhances the communications and coordination among workgroups and organizations Electronic communication systems also help reduce the flow of paper messages, letters, memos, documents and reports that flood our present interoffice and postal systems

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TOOLS OF ELECTRONIC COMMUNICATIONS

Electronic mail:
Telecommunications networks are used to transmit, store and distribute electronic text messages among the computer workstations of the end-users. This may also include audio, video and image media

Voice mail:
Telephone system and a voice mail computer is used to transmit, store and distribute digitized voice messages among end-users. The analog message is digitized and stored on the magnetic disk devices of the voice mail computer
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Contd.

Bulletin board systems

This is a service offered by public information networks or the network of businesses and other organizations in which electronic messages and data, programs, and other types of files can be stored by end-users for other end-users to read or copy.

- This serves as a central location to post and pick up messages or upload and download data files or programs
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Contd.

Videotex:
Is a computer-based interactive information service provided over phone lines or cable TV channels to access and selectively view text and graphics.

Facsimile (FAX):
Allows us to transmit images of important documents over telephone or other telecommunication links and reproduce them on paper at the receiving station

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ELECTRONIC COLLABORATION SYSTEMS

-

Electronic meeting systems This involves the use of video and audio communications to allow conferences and meetings to be held with participants who are separated by long distances Major categories of electronic meeting systems are: - Computer conferencing - Desktop videoconferencing - Decision room conferencing
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Contd.
-

Teleconferencing In this case sessions are held in real time, with major participants being televised while participants at the remote sites usually take part with voice input of questions and responses. It can also consist of using closed-circuit television to reach multiple small groups Interactive video telecommunications are used to hold conferences among many participants at remote sites
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Contd.
-

Telecommuting It is the use of telecommunications by workers to replace commuting to work from their homes It also describes the use of telecommunications to carry on work activities from temporary locations other than offices and homes It is also referred to as the creation of virtual office

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IMAGE PROCESSING SYSTEMS Yet another fast-growing area of office automation Allows end-users to electronically capture, store, process and retrieve images of documents that may include numeric data, text, handwriting, graphics and photographs Some of the common image processing systems are as under: - Electronic data management: Is based on image processing technology.

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Contd.
It is just not an electronic image of traditional document but can also take the form of digitized voice note or electronic images for a color graphics presentation Presentation graphics
-

the goal of these graphics is to provide information in a graphical form for better understanding and making better decisions This includes the use of line and bar graphs, pie charts and pictorial charts with various symbols

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Contd.

Multimedia systems - Multimedia methods of presentations give end-users information in a variety of media including text and graphics displays, voice and other digitized audio

- They allow the end-users to select the form and content of the information presented and browse through the information in a random way instead of going sequentially
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OFFICE MANAGEMENT SYSTEMS

These are an important category of office automation systems. They include electronic calendars, tickler files, electronic mail directories, schedulers and task management systems They provide computer-based support services to the managers to help them organize their work activities Office management software computerizes the manual methods of planning

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