Information System in Decision Making

Decision-making

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Success of a firm depends on the quality of the decisions managers makes

When amount of information is large & processes are complex

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CBIS can make the process effective and efficient in decision making

IS that supports decision making:

DSS, EIS, GIS, & Expert System

Decision-Making process PHASES By Herbert Simon (researcher of management & decision making)

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Intelligence. Collect facts, beliefs, & ideas.

Design. Design the method by which we will consider data. Methods are sequences of steps, formulas, models & other tools that enable us to systematically reduce the alternatives to a manageable number.

Choice. Make a choice from alternatives

Types of Problems

Structured. Optimal solution can be reached through a single sets of steps.

most physical & mathematical problems are structured. A formula or sequence is followed

Algorithm sequence of steps

Unstructured. No algorithm to follow to reach an optimal solution.

solution

not enough information about the factors that may affect the solution

Many potential factors that no algorithm can be formulated to guarantee a unique optimal

Semistructured. Neither fully structured nor totally unstructured

An unstructured problem can become semistructured by experts in the field

Because experts may have enough knowledge to narrow down number of possible solutions, \but not enough to guarantee 100% certainty of producing an optimal solution

Programmable problems

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Structured problems are programmable

Unstructured are not programmable

Semistructured problems

Managers face daily in different industries & in different business functions

Managers chooses one alternative from many multiple possible courses of action.

Decision support system (DSS)

A CBIS designed to help managers select one of many alternative solutions to a problem & help the corporations increase market share, reduce costs, increase profitability, and enhance product quality.

DSS Components

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Data management module

Model management module

Dialog module

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These modules:

Help the user enter a request in a convenient manner

Search vast amount of data to focus on the relevant facts

Process the data through desired models

Present the results in one or several manners so the output can be easily understood.

Data Management module

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Database or data warehouse

Allows a decision maker to conduct the intelligence phase of decision making

Model Management Module

Collection of models the DSS draws upon to assist in decision making

User must select a model in order to turn data into information

DIALOG MODULE

Part of DSS that allow the user to interact with DSS

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Prompts the user to select a model.

Allows the user to access the database and select data for the decision process, Lets user enter parameters and change them to see how the change affects the result of the analysis

Maybe in the form of commands, menus, dialog boxes, or any other approach. Simply, it is the interface.

Types of DSS

Differ in degree of sophistication and the manner in which they are used

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Personal DSS. Built for the use of the individual knowledge worker in his/her daily work

Group DSS. Usually installed in conference room settings or through a group of networked computers. Designed to take input from multiple users interacting with the program at the same time and converging on decision as a group

Executive Information system

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Are decision-aids especially designed for high ranking managers, to provide them with the most essential information for running the organization.

Useful to executives who almost always suffer from information overload Information overload is the phenomenon whereby the very volume of information creates the additional burden of having to decide what is important, rather than helping to solve problems and make decisions.

High level managers makes decisions based on highly summarized information

EIS display data graphically so exemptions can be easily spotted.

MEIS do not require user to enter the values of any parameter like DSS do

Features of an effective EIS

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Easy-to-use and easy-to-learn GUI

On request drill down capability that allows the executive to reach information in further detail

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On-demand financial and other ratios & indicators to reflect organizational strengths & weaknesses

Easy-to-use but sophisticated tools to allow navigation in databases and data warehouses

Statistical analysis tools

Ability to respond to ad hoc queries and sensitivity analyses

Access to external data pools

Ability to solve diverse business solutions

Geographic Information system

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A set of tools for collecting, storing, retrieving, transforming and display of spatial data from the real world.

famous IT application tool which can provide best decision support to bridge the gap between the requirements and the reality.

Integrates hardware, software, and data for capturing, managing, analyzing, and displaying all forms of geographically referenced information.

allows us to view, understand, question, interpret, and visualize data in many ways that reveal relationships, patterns, and trends in the form of maps, globes, reports, and charts.

Why GIS?

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To inventory and monitor resources

To test the sensitivity of the analysis assumptions

To simulate potential impacts of management alternatives

To make the map the 2nd time, the 50th time, the 100th time...

GIS in business Source: Lofty Azaz, International Conference on Humanities, Geography and Economics (ICHGE'2011) Pattaya Dec. 2011

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Use for management functions such as logistics, site and facilities management, marketing, decision making, & planning

Help retail business locate the best site for its next store Help marketers find new prospects Highlights where the firm has many customers by placing data on the map

Use for a variety of routine decision support and analysis applications (eg. Market & demographic analyses)

GIS FUNCtions & Application(Mennecke, 2000) GIS functions

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Spatial Imaging - representing displays of data and information within a spatially defined coordinate system.

Data management - store, manipulate, and provide access to data.

Decision modelling used to provide support for analysis and decision-making.

Design and Planning - used to create, design, and plan.

GIS Applications in business

a.

Digital Mapping

First purpose: capturing spatial data to generate maps automatically

provides managers with the ability to generate spatial data in-house

Use of Remote sensing and global positioning systems (GPS) allow more accurate map production

Companies in petroleum business uses digital maps

b.

Facilities Management

provides managers with a powerful tool for supporting real-time monitoring of facilities and is

routinely used for emergency management, security, and other applications.

Utility firms represent one of the largest private-sector GIS end-user groups

c.

Market and demographic Analysis

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a powerful market analysis tool because:

it provides a platform for representing the spatial relationship between the components of the market; that is, the customers, suppliers, and competitors.

it also provides a way to bring together data from multiple sources and link them based on spatial attributes.

d.

Transportation and Logistics


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critical tool for addressing logistics and transportation problems.

Some tools that fits in this category:

Vehicle routing system & navigation system

intelligent vehicle highway systems (IVHS)

dispatch systems

production control systems

inventory systems

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Design and Engineering

Expert Systems and AI

can be used to design plans, layouts, and maps.

make use of both the imaging and the planning functions of GIS.

commonly used in landscape engineering, environmental restoration, commercial and

residential construction and development, and a host of other design activities.

Some telecom companies use GIS to support expansion...

Intelligence ability to learn and think It includes:

making associations between a previous experience and a new situation

Drawing conclusions in a systematic manner

Quickly adopting new ways to solve problems

Determine what tools can or cannot help in handling complex situation

AI - Coined in 1956 in seminar @ Dartmouth College

in 25 years Projected that intelligent machines would do physical and intellectual work for

human beings

today, It was not materialized but continuous research on AI is done.

Researchers try to search on how machines emulate the human mind

AI Categories (fields)

a. b. c.

Robotics design machines to perform useful work

Robots dont look like humans but do human works

Artificial Vision ability of a machine to see its environment, and to recognize visual input (ex: handwriting) according to general patterns

Natural Language Processing programs designed to take human language as input and translate it into a standard set of statements that a computer can execute

Goal: to eliminate programming...

d. e. f. g. h.

Neural Networks designed to mimic the way the human brain operates the way it links facts, draws conclusions and use experience to learn & to understand how new facts relate to each other.

Fuzzy Logic based on logic that do not have discrete boundaries but lie along a continuum, enabling a system to better deal with ambiguity.

Allows computer applications to solve problems in a manner that is more humanlike

Genetic Algorithms math functions that use Darwinian principles to improve application.

Software mimics a living organisms improve through mutation and natural selection,

based on their success or failure surviving the physical environment.

Intelligent Agents computer programs that automatically wade through massive amounts of data and select and deliver the most suitable information for the user, according to the contextual or specific requirements.

Examples:

Major application is on the web

EXPERT SYSTEMS

Programs to solve problems in specific areas by utilizing experts knowledge and

reasoning.

Purpose: replicate the unstructured and undocumented knowledge the few (experts), and

put it at the disposal of others.

Formulated based on the experience of experts

DENDRAL identifies molecules from spectroscopic data (Stanford U in 1965)

MACSYMA solver of complex mathematical problems (MIT in 969)

MYCIN system for diagnosis of bacterial diseases (Stanford U in 1973)

PROSPECTOR software to target sites for molybdenum exploration based on geological

data input (SRI Int. 1980)

Contribution of Expert Systems

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Enhance product/service quality

Enforce consistent reasoning

Gain more insight into decision making process

Better control complex systems

Distribute scarce expertise

Preserve expertise

Train less-experienced employees

Reduce costs

Monitor vast amounts of information

AREAS where Es can help in business

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Planning. It can use information from previous projects to improve subsequent plans. Example: by cautioning the planner against pitfalls that may cause budget and time overruns.

Decision making. Supports decision making by bringing input from several experts, thereby providing the organization with a true strategic weapon.

Monitoring. Monitor industrial processes, cash management & employee activities

Diagnosis. Diagnosing different conditions like malfunctioning equipment, products or processes; or hardware problems & their solutions

Training. Contain an explanation facility that describes the logic being used to address the problem at hand. Teach users decision rules.

Incidental learning. While users use ES in their regular work, they internalize how the system reaches decisions; thereby increasing their own expertise and makes them better decision makers.

Replication of expertise. Since it is software, it can be replicated and disseminated, thereby implementing the same expertise in the organization

Timely response. ready at all times to provide immediate support and to perform processes.

Consistent solutions. Consistency in decision making, thereby managers makes consistent solutions.

Limitation of expert systems

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Handle only narrow domains

Do not possess common sense

Limited ability to learn

Systems acquisition, Control and Security

Aquisition

a. b.

Traditionally IS is developed in-house

Now many go into:

c. d. e. f.

Outsourcing

IS subsidiaries

Pre-packaged software

Renting the application Either: at-site renting or through the web

g.
Outsourcing

User-developed applications

Contracting with an IT (software) company for the development That the organization trusts all the activities associated with its ISs.

i.

Companies go for long term service (like maintenance) aside from just purchasing the hardware & software.

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Maybe: short-term or long-term contractual relationship.

Advantages of outsourcing

h. i. j. l.

Improve financial planning

Reduce license and maintenance fee

Increased attention to core business

k. m. n. o. p. q. r.

Shorten implementation cycles

Reduction of personnel and fixed costs

Increased access to highly qualified know-how

Availability of ongoing consulting as part of standard support

Increased security

Risk of outsourcing

Loss of control

Loss of experienced employees

Risks of losing a competitive advantage

IS Subsidiary

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IS vendors like other IT consulting firm but they always have a primary client the company that

owns them

Ex: American Airlines, Chevron & Boeing - own an IS subsidiary

Advantage:

u. v.
Purchased applications

The parent company has priority over other clients

Subsidiarys potential to generate additional revenue for the parent.

w. x.

First alternative to consider must be purchasing pre-packaged software

Buyer gains many benefits

y. z. aa. bb.

Immediate system availability

High quality

Low price

Available support

RENTING a SOFTWARE

cc.
i. ii.

Solve the problem on software obsoleteness

dd.

Nowadays, software is good to 2-3 years or even less, another version is introduced

On-site renting rent software in a limited period and pay less than owning a system

Renting through the web application services providers

Information security

ee. ff. gg. hh. ii.

Reduce the risk of systems and organizations ceasing operations

Maintain information confidentiality

Ensure the integrity and reliability of data resources

Ensure the availability of data resources

Ensure compliance with national security laws and privacy policies and law

Risks to Information Systems

jj.

Risk to hardware

Natural disaster

Blackouts and brownouts

Solution: UPS

Vandalism destroy hardware

kk.

Risk to Applications & Data

Controls

Theft of information

solution: key/password

Data alteration and destruction act of mischief (data diddling)

Computer viruses

Unauthorized remote control programs

ll.
i.

Constraints and other measures imposed on a user or a system.

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Common controls:

Program robustness and Data entry controls

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Backup

Access controls

Atomic transactions

Audit trail

Program robustness and Data entry controls

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Robust when a computer program is powerful in what it is intended to do, resists inappropriate usage like incorrect data entry.

It takes every possible misuse or abuse in data entry

It gives a message when data entry violates data parameters and processes

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i. ii.

Backup

Easiest way to protect against loss of data caused by disasters, viruses & human errors. (ex: SPU coop has a backup)

Backing up duplicate data periodically and place it in another storage and even other place

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i. ii. iii.

Access Controls

are measures taken to ensure that only those who are authorized have access to a computer network or to certain apps or data.

Use of UserID and password

Use of biometrics physical access control

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Atomics Transactions

A system supports atomic transactions when its code will only allow the recording of data if they successfully reach their destinations.

It ensures that only full entry occurs in all appropriate files

Example: order system where sale is recorded in shipping file, invoice file, A/R file and commission file.

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i. ii. iii.

Audit Trail

a series of documented facts that help detect who recorded which transactions, at what time, and under whose approval.

Audit log is created

Purposes:

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When abuses are found, they can be traced

Fear of detection will indirectly discourage abuse.s

Integrating Security into development

rr.
i. ii.

Use security standards, such as

Trusted Computer System Evaluation Criteria (TCSEC) the orange book

ISO/IEC (International Electrotechnical Comm) Standard Info Tech-Security Techniques-Evaluation Criteria

ss.
i.

Separation of duties

In systems development

ii.

In using the system

tt.

Network Controls, such as: 1. Callback popular measure against unauthorized remote access. When a modem dials into a system, a special application asks for the tel.no. from which the call has been made... 2. Encryption - Authentication process of ensuring that the person who sends a message to or receives a message from you is indeed that person - Encryption coding a message into a form unreadable to an interceptor. 3. Digital Certificate - Equivalent of a physical ID card containing a public key and a digital signature 4. Firewalls - The best defense against unauthorized access to system over the internet - A software who purpose is to block access to computing resources.