Kinds of Information Systems

Module 2
 Topics to be covered
• Transaction Processing Systems (TPS)
• Office Automation Systems (OAS)
• Management Information Systems (MIS)
• Decision Support Systems (DSS)
• Group Decision Support Systems (GDSS)
• Expert Systems (ES)
• Executive Support Systems (ESS or EIS)
 Information Systems enhance
business processes in two ways

• Increasing the efficiency of existing

processes
• Enabling entirely new processes that
are capable of transforming the
business
 Types of Information
Systems

Support of
Support of Managerial
Business Decision
Operations Making

Processing Control of Team and Prespecified Interactive Information

Business Industrial workgroup Reporting for decision tailored for
Transactions processes collaboration managers support executives
1. How a business can manage all
the information in these different
systems?
2. How costly it is to maintain so
many different systems?
3. How these different systems can
share information?

Enterprise
systems
 TPS,MIS/DSS and Special
Information systems

Information Special More Less More

Less
Information
Systems
Routine Decision I/P & O/P Sophistication
MIS/DSS &Complexity of
Support
processing and
analysis
TPS

More More
Data Less Less
 Transactions
• Transactions…
• Basic business operations such as customer
orders, purchase orders, receipts, time
cards, invoices, and payroll checks in an
organization
• Transaction processing systems
(TPS)
• Perform routine operations and serve as a
foundation for other systems
 Batch vs. On-Line
Transaction Processing
• Two types of TPS:
– Batch processing
• 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 (OLTP)
• A system whereby each transaction is
processed immediately, without the delay
of accumulating transactions into a batch
 Batch Schematic

Data entry
Input
of accumulated Output
transactions (batched)
 On-line Schematic

Terminal
Terminal Terminal

Output

Terminal
Immediate
processing
of each
transaction

Terminal
Terminal
Integration of TPSs

[ ]Applications
software

People
xn=
Schematic
 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 labour efficiency
– Help provide increased and enhanced service
– Help build and maintain customer loyalty
– Achieve competitive advantage
 Simplified Overview of a
Transaction Processing System

Schematic
Data entry & input

Documents
Processing
& reports

Documents:
Documents:
Internally
Internallygenerated
generated
transactions: •• pick
picklist
list
transactions:
Database •• cheques
••shipped
shippedorders
orders chequestotovendors
vendors
••purchase •• receiving
receivingnotices
purchaseorders
orders notices
Database
Databaseupdate:
update: •• paycheques
••employee
employeetime
timecards
cards paycheques
••customer
customerorders
orders
Externally
Externallygenerated
generated Operational
Operationalreports:
reports:
transactions:
transactions: ••inventory
inventory •• finished
finishedproduct
product
••customer
customerorders
orders ••purchase
purchaseorders
orders inventory
inventorystatus
status
••vendor ••customers •• raw
rawmaterials;
materials;packing
vendorinvoices
invoices customers packing
materials;
materials;spare
spareparts;
parts;
••customer
customerpayments ••suppliers
suppliers inventory
payments inventorystatus
status
 Data Processing Activities
Common to TPSs
• A transaction processing cycle
• Data collection
• Data editing
• Data correction
• Data manipulation
• Data storage
• Document production

Schematic
 Original data

Data
collection

Data
edit

Data
Data manipulation
correction

Data
storage

Document
production
 Source Data Automation
• Source data automation
• The process of capturing data at its source
with minimal manual effort
• Data are entered directly into the computer
 Point-of-Sale Transaction
Processing System
Customer’s
receipt Management Exception
Inventory information report
database system
UPC and
Point-of-sale quantity
UPC transaction
Scanner
Quantity, processing
Date, system Item, quantity,
time date, time, price

UPC Price Purchases

database

Item
database
 Control and Management
Issues
• Business resumption planning
• The process of anticipating and providing for
disasters.
• Disaster recovery
• The implementation of the business resumption plan.
• Transaction processing system audit
• An examination of the TPS in an attempt to answer
three basic questions
– Does the system meet the business need?
– What procedures and controls have been established?
– Are the procedures and controls being properly used?
 Traditional TPS –
Order Processing
• Order processing
– Processing an order from entry to
delivery, including traditional
accounting transactions

Schematic
 Invoice
Customer
Products Customer order in person or via
mail, phone, EDI, internet

Inventory status Order entry/

sales configuration

Orders
Planned
Finished Shipment shipments
product Routing
planning
inventory
Pick list Planned
Stock no.
Qty picked
shipments
Shipment & routes
execution

Shipped orders Scheduling

Accounts receivable

Customer payment
Data Flow Diagram of an
Order Entry System

Schematic
D6 Inventory D1 Products/prices D2 Customer payment history
Product numbers, Products, price
inventory levels information Credit status

2. Verify
Open
1. Collect product
Orders Orders 3. Authorize orders
order numbers
credit
D3 New orders
info & stock
on hand
Rejected,
partly filled
orders

Back
Back orders 4. Notify orders
customer
D4 Back orders

Customer notification
Customer Rejected
orders

D5 Rejected orders
Order Processing Support Systems
- Sales Configuration
• Sales configuration
• Ensures that products and services ordered
are sufficient to accomplish customer’s
objectives and will work well together
 Order Processing Support Systems
- Shipment Planning
• Shipment planning
• A system that determines which open
orders will be filled and from which location
they will be shipped
• E.g., (from Figure 8.9)

LOC LINK ITEM NUMBER DESCRIPTION ORDERED SHIPPED

8 105 10 L1L16028 FASENTING TOOL 3 EACH 3

20 S8276 STAPLE ¾ INCH 15 CASE 15
30 S8279 STAPLE 1 INCH 15 CASE 12
40 SHIPPING CHARGE
Order Processing Support Systems
- Shipment Execution
• Shipment execution
• A system that coordinates the outflow of all
products and goods from the organization,
with the objective of delivering quality
products on time to customers
Order Processing Support Systems
- Inventory Control
• Inventory control
• A system that updates the computerized
inventory records to reflect the exact
quantity on hand of each stock keeping unit
• Status reports
– Summarize all inventory items in stock, or
shipped over a specified period of time
Order Processing Support Systems
- Invoicing
• Invoicing
• Generates customer invoices based on
records received from the shipment
execution TPS
 Order Processing Support Systems -
Customer Interaction System

• Customer interaction
• A system that monitors and tracks each
customer interaction with the company
Order Processing Support Systems
- Routing and Scheduling
• Routing
• A system that determines the best way to
get goods and products from one location to
another
• Scheduling
• A system that determines the best time to
deliver goods and services
Purchasing System

Schematic
 Raw materials
Packing materials
Spare parts
Inventory control
Inventory control
Purchase status report
order
request Purchase order
Employees
processing
Purchase
order
Purchase
order

Material
Receiving Supplier

Receiving Invoice
notice

Accounts Cheque
payable
 Purchasing System
• Inventory control
• Maintains stock of items such as raw materials, packing
materials, spare parts, and supplies
• Purchase order (P.O.) processing
• A system that helps purchasing department complete
transactions quickly and efficiently
• Receiving
• A system that creates a record of expected and actual
receipts
• Reconciles purchase orders with what is actually received
• Accounts payable
• A system that increases an organization’s control over
purchasing, improves cash flow
• increases profitability, and provides more effective
management of current liabilities
 P.O. Example
• (Click to view)
 Accounting System
• Accounting systems
– Consist of…
• Budget
• Accounts receivable
• Accounts payable
• Payroll
• Asset management
• General ledger
 Accounts Payable Example
• (Click to view)
Financial Systems

Schematic
 Asset
Customer
management

Cost of assets
Payments
Accounts Accounts
receivable payable

Amounts owed by customers Amounts owed by company

Amounts paid by customers Amounts paid by company

Labour costs General

Payroll
ledger Asset depreciation

Time cards Expense

Pay transactions
Cheques

Employees Budget
 Financial Systems -
Accounts Receivable
• Accounts receivable
• A system that manages the cash flow of the
company by keeping track of the money
owed the company on charges for goods
sold and services performed
 ‘Statement of Account’
Example
• (Click to view)
 Financial Systems –
Accounts Receivable
• Accounts receivable aging report
• Tells managers what bills are overdue,
either customer by customer or in a
summary format
 ‘Aging Report’ Example
• (Click to view)
 Financial Systems - Payroll

• Payroll…
• Generates payroll checks and stubs, as well
as W-2 statements at the end of the year
for tax purposes
 Financial Systems - Payroll

• Payroll journal
• Helps managers monitor total payroll costs
for an organization and the impact of those
costs on cash flow
 Financial Systems -
Asset Management
• Asset management transaction
processing system
• A system that controls investments in
capital equipment and manages
depreciation for maximum tax benefits
Financial Systems - General
Ledger
 Office Automation Systems
• Office automation systems (OAS) are configurations of networked
computer hardware and software. A variety of office automation
systems are now applied to business and communication functions
that used to be performed manually or in multiple locations of a
company, such as preparing written communications and strategic
planning. In addition, functions that once required coordinating the
expertise of outside specialists in typesetting, printing, or electronic
recording can now be integrated into the everyday work of an
organization,
• saving both time and money.
• Types of functions integrated by office automation systems include
(1) electronic publishing; (2) electronic communication; (3) electronic
collaboration; (4) image processing; and (5) office management.
• At the heart of these systems is often a local area network (LAN) .
The LAN allows users to transmit data, voice, mail, and images
across the network to any destination, whether that destination is in
the local office on the LAN, or in another country or continent,
through a connecting network.
• An OAS makes office work more efficient and increases productivity.
• Electronic Publishing
• Electronic publishing systems include word processing and desktop
publishing. Word processing software, (e.g., Microsoft Word, Corel
Word-Perfect) allows users to create, edit, revise, store, and print
documents such as letters, memos, reports, and manuscripts.
Desktop publishing software (e.g., Adobe Pagemaker, Corel
VENTURA, Microsoft Publisher) enables users to integrate text,
images, photographs, and graphics to produce high-quality printable
output. Desktop publishing software is used on a microcomputer
with a mouse, scanner, and printer to create professional-looking
publications. These may be newsletters, brochures, magazines, or
books.
• Electronic Communication
• Electronic communication systems include electronic mail (e-mail),
voice mail, facsimile (fax), and desktop videoconferencing.
• Electronic Mail.
• E-mail is software that allows users, via their computer
keyboards, to create, send, and receive messages and
files to or from anywhere in the world.
• Most e-mail systems let the user do other sophisticated
tasks such as filter, prioritize, or file messages; forward
copies of messages to other users; create and save
drafts of messages; send "carbon copies"; and request
automatic confirmation of the delivery of a message. E-
mail is very popular because it is easy to use, offers fast
delivery, and is inexpensive.
• Examples of e-mail software are Eudora, Lotus Notes,
and Microsoft Outlook.
• Voice Mail.

• Voice mail is a sophisticated telephone answering machine. It

digitizes incoming voice messages and stores them on disk. When
the recipient is ready to listen, the message is converted from its
digitized version back to audio, or sound. Recipients may save
messages for future use, delete them, or forward them to other
people.
• Facsimile.
• A facsimile or facsimile transmission machine (FAX) scans a
document containing both text and graphics and sends it as
electronic signals over ordinary telephone lines to a receiving fax
machine. This receiving fax recreates the image on paper. A fax can
also scan and send a document to a fax modem (circuit board)
inside a remote computer. The fax can then be displayed on the
computer screen and stored or printed out by the computer's printer.
• Desktop Videoconferencing
• Desktop videoconferencing is one of the fastest growing
forms of videoconferencing. ﾀ Desktop
videoconferencing requires a network and a desktop
computer with special application software (e.g.,
CUSeeMe) as well as a small camera installed on top of
the monitor.
• Images of a computer user from the desktop computer
are captured and sent across the network to the other
computers and users that are participating in the
conference.
• This type of videoconferencing simulates face-to-face
meetings of individuals.
• Electronic Collaboration
• Electronic collaboration is made possible through electronic meeting and
collaborative work systems and teleconferencing. Electronic meeting and
collaborative work systems allow teams of coworkers to use networks of
microcomputers to share information, update schedules and plans, and
cooperate on projects regardless of geographic distance. Special software called
groupware is needed to allow two or more people to edit or otherwise work on
the same files simultaneously.
• Teleconferencing is also known as videoconferencing. As was mentioned in the
discussion of desktop videoconferencing earlier, this technology allows people in
multiple locations to interact and work collaboratively using real-time sound and
images. Full teleconferencing, as compared to the desktop version, requires
special-purpose meeting rooms with cameras, video display monitors, and audio
microphones and speakers.
 Image Processing
• Image processing systems include electronic document management,
presentation graphics, and multimedia systems. Imaging systems convert text,
drawings, and photographs into digital form that can be stored in a computer
system. This digital form can be manipulated, stored, printed, or sent via a
modem to another computer. Imaging systems may use scanners, digital
cameras, video capture cards , or advanced graphic computers.
• Companies use imaging systems for a variety of documents such as insurance
forms, medical records, dental records, and mortgage applications.
• Presentation graphics software uses graphics and data from other software tools
to create and display presentations. The graphics include charts, bullet lists, text,
sound, photos, animation, and video clips.
• Examples of such software are Microsoft Power Point, Lotus Freelance Graphics,
and SPC Harvard Graphics.
• Multimedia systems are technologies that integrate two or more types of media
such as text, graphic, sound, voice, full-motion video, or animation into a
computer-based application. Multimedia is used for electronic books and
newspapers, video conferencing, imaging, presentations, and web sites.
• Office Management
• Office management systems include electronic office accessories,
electronic scheduling, and task management.
• These systems provide an electronic means of organizing people,
projects, and data. Business dates, appointments, notes, and client
contact information can be created, edited, stored, and retrieved.
• Additionally, automatic reminders about crucial dates and
appointments can be programmed. Projects and tasks can be
allocated, subdivided, and planned.
• All of these actions can either be done individually or for an entire
group.
• Computerized systems that automate these office functions can
dramatically increase productivity and improve communication within
an organization.
 Telecommuting and Collaborative Systems
• Telecommuters perform some or all of their work at home instead of
traveling to an office each day, usually with the aid of office automation
systems, including those that allow collaborative work or meetings.
• A microcomputer, a modem, software that allows the sending and
receiving of work, and an ordinary telephone line are the tools that make
this possible.
• Telecommuting is gaining in popularity in part due to the continuing
increase in population, which creates traffic congestion, promotes high
energy consumption, and causes more air pollution. Telecommuting can
help reduce these problems. Telecommuting can also take advantage of
the skills of homebound people with physical limitations.
• Studies have found that telecommuting programs can boost employee
morale and productivity among those who work from home. It is necessary
to maintain a collaborative work environment, however, through the use of
technology and general employee management practices, so that neither
on-site employees nor telecommuters find their productivity is
compromised by such arrangements.
• The technologies used in electronic communication and teleconferencing
can be useful in maintaining a successful telecommuting program.
 Decision
Making
Management Information Systems
Management Information Systems
(MIS)
• Management information system
(MIS)
• An MIS provides managers with information
and support for effective decision making, and
provides feedback on daily operations
• Output, or reports, are usually generated
through accumulation of transaction
processing data
• Each MIS is an integrated collection of
subsystems, which are typically organized
along functional lines within an organization
Sources of Management
Information

Schematic
 Employees

Corporate
Databases Corporate
databases
of intranet
of
external
internal
data
data Decision
support
systems

Transaction Databases Management Executive

Business processing of information Application support
transactions systems valid systems databases systems
transactions

Drill-down reports Expert

Exception reports systems
Demand reports
Operational Key-indicator reports
databases
Input and Scheduled
error list reports
 Outputs of a
Management Information System
• Scheduled reports
• Produced periodically, or on a schedule (daily,
weekly, monthly)
• Key-indicator report
• Summarizes the previous day’s critical activities
• Typically available at the beginning of each day
• Demand report
• Gives certain information at a manager’s request
• Exception report
• Automatically produced when a situation is unusual
or requires management action
Scheduled Report Example

Daily Sales Detail Report

Prepared: 08/10/xx
Order Customer Sales Rep Ship
# ID ID Date Quantity Item # Amount
P12453 C89321 CAR 08/12/96 144 P1234 $3,214
P12453 C89321 CAR 08/12/96 288 P3214 $5,660
P12453 C03214 GWA 08/13/96 12 P4902 $1,224
P12455 C52313 SAK 08/12/96 24 P4012 $2,448
P12456 C34123 JMW 08J/13/96 144 P3214 $720
 Key Indicator Report
Example

Daily Sales Key Indicator Report

This Last Last

Month Month Year
Total Orders Month to Date $1,808 $1,694 $1,014

Forecasted Sales for the Month $2,406 $2,224 $2,608

Demand Report Example

Daily Sales by Sales Rep Summary Report

Prepared: 08/10/xx
Sales Rep ID Amount
CAR $42,345
GWA $38,950
SAK $22,100
JWN $12,350
 Exception Report Example

Daily Sales Exception Report – ORDERS OVER $10,000

Prepared: 08/10/xx
Order Customer Sales Rep Ship
# ID ID Date Quantity Item # Amount
P12453 C89321 CAR 08/12/96 144 P1234 $13,214
P12453 C89321 CAR 08/12/96 288 P3214 $15,660
P12453 C03214 GWA 08/13/96 12 P4902 $11,224
… … … … … … …
… … … … … … …
 Outputs of a Management
Information System
Earnings by Quarter (Millions)
Actual Forecast Variance
2ND Qtr 1999 $12.6 $11.8 6.8%
Drill Down Reports
Provide detailed data 1st Qtr 1999 $10.8 $10.7 0.9%
about a situation.
4th Qtr 1998 $14.3 $14.5 -1.4%
3rd Qtr 1998 $12.8 $13.3 -3.0%

Etc. See Figure 9.2

 Characteristics of a
Management Information
System
• Provides reports with fixed and
standard formats
• Hard-copy and soft-copy reports
• Uses internal data stored in the
computer system
• End users can develop custom
reports
• Requires formal requests from users
 Management Information
Systems for Competitive
Advantage
• Provides support to managers as
they work to achieve corporate goals
• Enables managers to compare
results to established company goals
and identify problem areas and
opportunities for improvement
 Guidelines for developing
MIS reports
• Tailor each report to user needs
• Spend time and effort producing only
reports that are useful
• Pay attention to report content and layout
• Use management by exception reporting
• Set parameters carefully
• Produce all reports in a timely fashion
• Periodically review reports
 MIS and Web Technology
• Data may be made available from
management information systems
on a company’s intranet
• Employees can use browsers and
their PC to gain access to the data
 Functional Aspects
• MIS is an integrated collection of
functional information systems, each
supporting particular functional
areas.

Schematic
 Internet
Internet An Organization’s
MIS

Financial
MIS
Business
transactions

Drill down reports

Accounting
Transaction Databases MIS Exception reports
processing of
Demand reports
systems valid
transactions Key-indicator reports
Marketing
MIS Scheduled reports

Business
transactions Databases Human
of
Resources Etc.
external
data MIS
Extranet
Extranet
Etc.

Figure 9.3
 Financial MIS
• Provides financial information to all
financial managers within an
organization.

Schematic
 Databases of Financial
Databases of
internal data external data DSS

Business
transactions
Transaction Databases
processing of valid
Financial
systems transactions MIS Financial
for each applications
TPS databases
P&L and Cost Systems,
Auditing,
Business
transactions Use and Mgt of Funds
Financial statements
Financial
Operational Uses and management ES
Internet databases
Internetoror of funds
Extranet
Extranet Financial statistics
for control

Business Customers,
transactions Suppliers
Figure 9.3
 Inputs to the Financial
Information System
• Strategic plan or corporate policies
– Contains major financial objectives and often
projects financial needs.
• Transaction processing system (TPS)
– Important financial information collected from
almost every TPS - payroll, inventory control,
order processing, accounts payable, accounts
receivable, general ledger.
– External sources
– Annual reports and financial statements of
competitors and general news items.
 Financial MIS Subsystems
and Outputs
• Financial subsystems
– Profit/loss and cost systems
– Auditing
• Internal auditing
• External auditing
– Uses and management of funds
Manufacturing MIS

Schematic
 Databases of Manufacturing
Databases of
internal data external data DSS

Business
transactions
Transaction Databases
processing of valid
Manufacturing
systems transactions MIS Manufacturing
for each applications
TPS databases

Business Quality control reports

transactions
Process control reports Manufacturing
Operational ES
JIT reports
Internet databases
Internetoror MRP reports
Extranet
Extranet
Production schedule
CAD output

Business Customers,
transactions Suppliers
Figure 9.6
Inputs to the Manufacturing
MIS

• Strategic plan or corporate policies.

• The TPS:
– Order processing
– Inventory data
– Receiving and inspecting data
– Personnel data
– Production process
• External sources
 Manufacturing MIS
Subsystems and Outputs
• Design and engineering
• Master production scheduling
• Inventory control
• Manufacturing resource planning
• Just-in-time inventory and manufacturing
• Process control
• Computer-integrated manufacturing
(CIM)
• Quality control and testing
 Marketing MIS
• Supports managerial activities in
product development, distribution,
pricing decisions, and promotional
effectiveness

Schematic
 Databases of Manufacturing
Databases of
internal data external data DSS

Transaction Databases
Business processing of valid
Marketing
transactions systems transactions MIS Marketing
for each applications
TPS databases

Sales by customer

Sales by salesperson Manufacturing

Operational Sales by product ES
databases Pricing report
Total service calls
Customer satisfaction

Figure 9.9
 Inputs to Marketing MIS
• Strategic plan and corporate policies
• The TPS
• External sources:
– The competition
– The market
 Marketing MIS
Subsystems and Outputs
• Marketing research
• Product development
• Promotion and advertising
• Product pricing
 Human Resource MIS
• Concerned with all of the activities
related to employees and potential
employees of the organization
 Databases of Manufacturing
Databases of
internal data external data DSS

Transaction Databases Human

Business processing of valid Resource Human
transactions systems transactions resource
for each MIS applications
TPS databases

Benefit reports

Salary surveys Manufacturing

Operational Scheduling reports ES
databases Training test scores
Job applicant profiles
Needs and planning
reports

Figure 9.12
 Inputs to the Human
Resource MIS
• Strategic plan or corporate policies
• The TPS:
– Payroll data
– Order processing data
– Personnel data
• External sources
 Human Resource MIS
Subsystems and Outputs
• Human resource planning
• Personnel selection and recruiting
• Training and skills inventory
• Scheduling and job placement
• Wage and salary administration
 Other MISs
• Accounting MISs
– Provides aggregated information on
accounts payable, accounts receivable,
payroll, and other applications.
• Geographic information systems (GISs)
– Enables managers to pair pre-drawn maps
or map outlines with tabular data to
describe aspects of a particular geographic
region.
 Module 2
Decision Support Systems
 Definitions of a Decision
Support System
General definition - a system providing both
problem-solving and communications capabilities
for semi-structured problems
Specific definition - a system that supports a
single manager or a relatively small group of
managers working as a problem-solving team in
the solution of a semi-structured problem by
providing information or making suggestions
concerning specific decisions.
 Decision Making
■ Simon’s types of decisions
– Programmed
– Non-programmed
■ Simon’s phases (activities) of decision making
– Intelligence
– Design
– Choice
– Implementation
 The Decision Support System
Concept
■ Gory and Scott-Morton coined the phrase ‘DSS’ in
1971, about ten years after MIS became popular
■ Structured problems could be solved by algorithms
and decision rules
■ Unstructured problems have no structure in Simon’s
phases
■ Semi-structured problems have structured and
unstructured phases
 The Gorry and Scott Morton Grid
Management levels
Operational Management Strategic
control control planning
Structured Accounts Budget analysis-- Tanker fleet
receivable engineered costs mix
Degree of Order entry Short-term Warehouse and
problem forecasting factory location
structure Inventory
control

Semi-structured Production Variance analysis-- Mergers and

scheduling overall budget acquisitions
Cash Budget
management New product
preparation planning
PERT/COST Sales and
Unstructured systems R&D planning
production
 Alter’s DSS Types
■ The least degree of problem-solving support
comes from retrieval of information
elements
■ More support comes from retrieving
information files
■ Still more support comes from reports from
multiple files
 Alter’s DSS Types (continued)
■ Even more support from systems that can
estimate decision consequences
■ More support from systems that can
propose decisions
■ And the most support comes from systems
that can make decisions
 Alter’s DSS Types

Degree
of
problem
Retrieve Analyze Prepare Estimate Propose Make solving
information entire reports decision decisions decisions support
elements files from consequen-
multiple ces
files

Degree of
Little Much
complexity of the
problem-solving
system
The DSS Focuses on Semistructured Problems

Computer Manager + Computer Manager

Solution (DSS) Solution
Solution

Structured Semistructured Unstructured

DEGREE OF PROBLEM STRUCTURE
 Peter Keen Believes That
a DSS Should:
1. Assist in solving semi-structured
problems
2. Support, not replace, the manager
3. Contribute to decision effectiveness,
rather than efficiency
 Working Definition of DSS
■ A DSS is an interactive, flexible, and adaptable CBIS, specially
developed for supporting the solution of a non-structured
management problem for improved decision making. It utilizes
data, it provides easy user interface, and it allows for the decision
maker’s own insights

■ DSS may utilize models, is built by an interactive process

(frequently by end-users), supports all the phases of the decision
making, and may include a knowledge component
 Characteristics and
Capabilities of DSS
1. Provide support in semi-structured and unstructured
situations, includes human judgment and computerized
information
2. Support for various managerial levels
3. Support to individuals and groups
4. Support to interdependent and/or sequential decisions
5. Support all phases of the decision-making process
6. Support a variety of decision-making processes and
styles
(more)
7. Are adaptive
8. Have user friendly interfaces
9. Goal: improve effectiveness of decision making
10. The decision maker controls the decision-making process
11. End-users can build simple systems
12. Utilizes models for analysis
13. Provides access to a variety of data sources, formats, and types

Decision makers can make better, more consistent decisions in a

timely manner
 DSS Components
1. Data Management Subsystem
2. Model Management Subsystem
3. Knowledge-based (Management) Subsystem
4. User Interface Subsystem
5. The User
 DSS Components
User

User Interface

KBS1

DBMS MBMS

KBS2 KBS3
 The Data Management
Subsystem

■ DSS database
■ Database management system
■ Data directory
■ Query facility
 DSS Database Issues
■ Data warehouse
■ Data mining
■ Special independent DSS databases
■ Extraction of data from internal, external, and private sources
■ Web browser data access
■ Web database servers
■ Multimedia databases
■ Special GSS databases (like Lotus Notes / Domino Server)
■ Online Analytical Processing (OLAP)
■ Object-oriented databases
■ Commercial database management systems (DBMS)
 The Model Management
Subsystem
■ Analog of the database management
subsystem

■ Model base
■ Model base management system
■ Modeling language
■ Model directory
■ Model execution, integration, and
command processor
 Model Management Issues

■ Model level: Strategic, managerial (tactical), and

operational

■ Modeling languages

■ Lack of standard MBMS activities. WHY?

■ Use of AI and fuzzy logic in MBMS

 The Knowledge Based
(Management) Subsystem
■ Provides expertise in solving complex
unstructured and semi-structured problems
■ Expertise provided by an expert system or other
intelligent system
■ Advanced DSS have a knowledge based
(management) component
■ Leads to intelligent DSS
■ Example: Data mining
 The User Inter face (Dialog)
Subsystem
■ Includes all communication between a user and
the MSS
■ Graphical user interfaces (GUI)
■ Voice recognition and speech synthesis possible

■ To most users, the user interface is the system

 The User

Different usage patterns for the user, the

manager, or the decision maker

■ Managers
■ Staff specialists
■ Intermediaries
1. Staff assistant
2. Expert tool user
3. Business (system) analyst
4. GSS Facilitator
 DSS Hardware
Evolved with computer hardware and
software technologies

Major Hardware Options

■ Mainframe
■ Workstation
■ Personal computer
■ Web server system
– Internet
– Intranets
– Extranets
 Distinguishing DSS from
Management Science and MIS

■ DSS is a problem-solving tool and is

frequently used to address ad hoc and
unexpected problems
■ Different than MIS
■ DSS evolve as they develop
 DSS Components
1. Data Management Subsystem
2. Model Management Subsystem
3. Knowledge-based (Management) Subsystem
4. User Interface Subsystem
5. The User
 DSS Components
User

User Interface

KBS1

DBMS MBMS

KBS2 KBS3
 Data Driven, Model Driven DSS
Data Driven DSS Model driven DSS
■ Online Analytical ■ Uses some type of model
Processing, Data Mining – to perform “What –If” and
To analyze large pols of other kinds of analyses
data ■ Based on strong theory or
■ Enable users to extract model +good user
useful information that interface
was previously buried in ■ E.g. P&G’s SC
large quantities of data restructuring systems
■ E.g. Spreadsheet Pivot
table applications
 Range of DSS capabilities

■ For pricing decisions

■ For profitability Analysis
■ For CRM
■ Data Visualization and Geographic
Information system
■ Web based customer DSS
 Module 2

Group Decision Making Systems

(GDSS)

122
 Collaborative Computing
Technologies: Group Support
Systems

People

 Perform groupwork
 Need to collaborate
 Need to communicate

123
 Example:
Chrysler SCORES with Groupware

 Chrysler used groupware to enhance

collaboration and communication with
suppliers
 Identify waste in the Value Chain
 Eliminate the waste

124
 Solution
 Lotus Notes Application
 Extended Enterprise System
 Incentives for suppliers to contribute
 Vendor relationship system
 Provides a competitive advantage

125
 SCORE Benefits
 Enhanced relationships with suppliers
 Better-quality purchasing practices
 Better quality product
 Lower costs (in 2000: $2 billion)

126
 Groupwork Characteristics
 Group performs a task
 Different places
 Different times
 Same or different organizations
 Permanent or temporary

127
 More Characteristics
 Span managerial levels
 Synergy or conflict
 Productivity gains / losses
 Quick response may be required
 Hard to meet in one place
 Multiple sources of knowledge
 External expertise
128
 Anytime / Anyplace
Collaboration
 Enabled by Web
 Low cost PCs

129
 Meetings
 Joint activity
 Equal or near equal status
 Outcome depends on participant’s knowledge,
etc.
 Outcome depends on group composition
 Outcome depends on decision-making process
 Disagreement settled by rank or negotiation

130
 Groupware
 To support groupwork / meetings …
 Computer-supported cooperative work
(CSCW)
 Software that provides collaborative
support to groups

131
 Communication Support
 Vital
 Needed for collaboration

 Modern information technologies

provide inexpensive, fast, capable,
reliable means of supporting
communication
 Internet / Web
132
 Supporting Communication
 Word of mouth
 Delivery persons
 Horseback
 Snail mail
 Telegraph
 Telephone
 Radio
 Television
 Videoconferencing
 Internet / Web

133
 Nonverbal Communication

 Important Issue
 Not captured by most communication
systems

134
 A Time/Place Framework
■ Same Time / Same Place
Decision Room
■ Same Time / Different Place
Video Conference
■ Different Time / Same Place
via Internet
■ Different Time / Different Place
135
 Time/Place Communication
Framework

Same Time Different Time

GSS in a Decision Room GSS in a Decision Room

Web-based GSS Web-based GSS
Same Multimedia Presentation Workflow management system
Place Systems Document sharing
Whiteboard Email, Vmail
Document sharing

Web-based GSS
Web-based GSS
Whiteboard
Whiteboard
Different Email, Vmail
Document sharing
Place Workflow management system
Videoconferencing
Document sharing
Audioconferencing
Computer conferencing with
Computer conferencing
memory
Email, Vmail

136
 Groupware
 Lotus Notes / Domino Server
Includes Learning Space
 Netscape Collabra Server
 Microsoft NetMeeting
 Novell Groupwise
 GroupSystems
 TCBWorks
 WebEx
137
 Group Support Systems
 Goal: to support groupwork
 Increase benefits / decrease losses of
collaboration
 Based on
 Nominal Group Technique
 Delphi Method
 Electronic Meeting System (EMS)
138
GDSS Alternatives
The GDSS Decision Room
 Important Features of EMS
 Parallelism
 Anonymity

 Lead to process gains and task gains

141
 GSS Process Gains
 Parallel information processing / flow
 Larger groups can participate
 Rapid computer discussions
 Quiet people can participate equally
 Noisy people can’t strongly drive meeting
 Saves travel time (millions $ / year)

142
 GSS Process Losses
 Free-riding
 Flaming

143
 GSS Technologies
 Decision room
 Multiple use facility
 Web-based

144
 The Decision
(Electronic Meeting) Room
 12 to 30 networked personal computers
 Server PC
 Large-screen projection system
 Breakout rooms
 Need a Trained Facilitator for Success

145
 Cool Rooms

US Air Force
Source: Groupsystem.com, Tuscon, AZ, www.groupsystems.com

146
 Cool Rooms

IBM Corp.
Source: Groupsystem.com, Tuscon, AZ, www.groupsystems.com

147
 Cool Rooms

Murraysville School District Bus

Source: Groupsystem.com, Tuscon, AZ, www.groupsystems.com

148
 Few Organizations
Use Decision Rooms
 High Cost
 Need for a Trained Facilitator
 Software Support for Cooperative Tasks,
NOT Conflict Issues
 Infrequent Use
 Different Place / Different Time Needs
 May Need More Than One

149
 Other Technologies
 Multiple Use Facility
 Cheaper
 Still need a facilitator
 Web-based
 Cheaper: no extra hardware needed
 Still need facilitator

150
 GroupSystems
 From Groupsystems.com, Tucson, AZ

 Comprehensive groupware
 Windows & Web versions
 Leading software

151
 GroupSystems Activities
 Agenda
 Electronic Brainstorming
 Group Outliner
 Topic Commenter
 Categorizer
 Idea Organizer
 Vote
Others
152
 GSS Meeting Process
 Idea generation
 Idea organization
 Prioritizing
 Idea generation

Iterate until solution is reached

153
 Why GSS?
 Successful
 Need
 Organizational commitment
 Executive sponsor
 Operating sponsor
 User-seductive interface
 Dedicated well-trained facilitator
 Good planning
154
Example Application - Distance
Learning (DL)
 Nontraditional classroom
 CSCW / GSS / Groupware
 Requires technology
 Not new
 Effective
 Growing fast
 Corporate, too
155
 DL Advantages
 Just as effective or more
 Flexible time
 Student can keep job
 Student can travel in job
 Access anywhere / anytime
 Can present new technology cheaply
 Can focus on specific skills
 Can cost less
 Expand classroom size easily

156
 More DL Advantages
 Add breadth and depth to course
 More one-on-one interaction with instructor
(email)
 Student/faculty contact time increases
 For continuous learners
 Attendance is flexible (Careful!)
 Discussion technologies
 Student attitudes evolve and improve
 Impacts (scores) are higher
157
 DL Disadvantages
 Fewer social interactions
 Less or no on-campus interaction
 Communications problems
 Students MUST BE highly motivated
 Students MUST BE highly disciplined
 Students MUST have effective time
management skills
 Students MUST be extremely dedicated

158
 More DL Disadvantages
 Takes more faculty and staff time
 Learner must be more responsible
 Students MUST work hard!

 Others …

159
Distance Learning Courseware
 Lotus Notes
 Microsoft NetMeeting
 Novell GroupWise

 Learning Space (Lotus Notes)

 WebCT
 LearnLinc Virtual Classroom

160
 Creativity and Idea Generation

 Creativity: Generally a human trait

 Creativity and innovation

Can create tremendous impacts in

organizations
161
 Idea Generation
 Electronic Brainstorming
 Can be simulated
 Can adjust methods

 Create more ideas (information overload)

 Cognitive maps - useful

162
 Creativity

Software that exhibits creativity

 Intelligent agents (soft bots)

 Copycat (creates analogies)
 AARON (creates painted art)
 Genjam (writes jazz music)
 Kurzweil’s Cybernetic Poet (writes poems)
 CoBrain

163
 Software that Facilitates
Human Creativity
 Project KickStart
 ThoughtPath
 Creative WhackPack
 IdeaFisher

164
 GSS and Collaborative
Computing Issues and
Research
 GSS/EMS methods
 Web groupware
 Distance learning
 Virtual organization

165
 Module 2

Executive Support Systems/

Executive Information Systems (EIS)
The Layers of Executive Decision Making
Executive
 Functions
 Plan
 Set strategies & goals
 Select best course of action to achieve the plan

 Organize
 Tasks necessary for operational plan
 Set these into homogeneous groups - authority delegation

 Initiate
 Execution of plan

 Control
 Performance by avoiding deviations from standard

Decision Making involved in each process

Concept of EIS

■ Optimizing the output of the

organization by connecting the
operating sub-systems through the
medium of information exchange

■ Recipe for a Good Decision

– 90 % Information, 10 % Inspiration
The Place of EIS in the organization

STRATEGI
C

E. I. S.
TACTICAL

OPERATIONAL
Executive Support Systems (ESS) in
Perspective

■ Tailored to individual executives

– Not to managers in other levels
■ Easy to use
■ Drill down capabilities
■ Support need for external data
■ Can help when uncertainty is high
■ Future-oriented
■ Linked to value-added processes
Difference Between DSS and ESS
■ Although executive support systems have much in
common with decision support systems, they have
important differences. Generally, a DSS provides a
number of modeling tools and is designed to help a user
answer a question. Executive support systems allow
executives to ask the right questions. An ESS is
interactive and helps an executive focus, filter and
organize data and information.
■ Unlike a DSS, an ESS is usually customized for a specific
individual. Content and format can both be customized.
■ Since executives are typically busy, an ESS must be easy
to learn and to use – or it won’t be used.
172
 What are Performance Indicators ?

– P.I.’s are based on Critical Success Factors

– A CSF provides an answer to the question:
• What achievement does the organization need to be
successful?
– A proper CSF is:
• Directly related to the organization and the
critical business processes
• Measurable using one or more performance indicators
Characteristics of ESS/ EIS
■ Enterprise wide overview
■ Drill down possibilities
■ Importing data from other systems
■ Different periodicities
■ Seasonal-patterns
■ Presenting reports
■ Based on Corporate & External
database
■ Several graphical presentations
Capabilities of an ESS (1)
■ Support for defining an overall vision
– Organization’s product lines and services
■ Support for strategic planning
– Predict future trends
– Analyze merger possibilities
■ Support for strategic organizing & staffing
– Choice of departments
– Pay raises
Capabilities of an ESS (2)
■ Support for strategic control
– Monitor and manage the overall organization
■ Support for crisis management
– Put together a contingency plan
 Module 2

Artificial Intelligence and

Expert Systems
 Overview of Artificial
Intelligence (1)
 Artificial intelligence (AI)
 Computers with the ability to mimic or
duplicate the functions of the human brain
 Artificial intelligence systems
 The people, procedures, hardware, software,
data, and knowledge needed to develop
computer systems and machines that
demonstrate the characteristics of intelligence
 The Nature of Intelligence
 Intelligent behaviour
 Learn from experience
 Apply knowledge acquired from experience
 Handle complex situations
 Solve problems when important information is missing
 Determine what is important
 React quickly and correctly to a new situation
 Understand visual images
 Process and manipulate symbols
 Be creative and imaginative
 Use heuristics
 Major Branches of AI (1)
 Perceptive system
• A system that approximates the way a human sees, hears, and
feels objects
 Vision system
• Capture, store, and manipulate visual images and pictures
• E.g. Finger print analysis
 Robotics
• Mechanical and computer devices that perform tedious tasks
with high precision
 Expert system
• Stores knowledge and makes inferences
 Major Branches of AI (2)
 Learning system
• Computer changes how it functions or reacts to situations
based on feedback
 Natural language processing
• Computers understand and react to statements and commands
made in a “natural” language, such as English
 Neural network
• Computer system that can act like or simulate the functioning
of the human brain

Schematic
 Artificial
intelligence

Vision Learning
systems systems

Robotics
Expert systems

Neural networks
Natural language
processing
 Artificial Intelligence (1)
The branch of computer science concerned with making computers
behave like humans. The term was coined in 1956 by John McCarthy
at the Massachusetts Institute of Technology. Artificial intelligence
includes
 games playing: programming computers to play games such as
chess and checkers
 expert systems : programming computers to make decisions in real-life
situations (for example, some expert systems help doctors diagnose
diseases based on symptoms)
 natural language : programming computers to understand natural
human languages
 Artificial Intelligence (2)
 neural networks : Systems that simulate intelligence by attempting
to reproduce the types of physical connections that occur in animal
brains
 robotics : programming computers to see and hear and react to
other sensory stimuli

Currently, no computers exhibit full artificial intelligence (that is, are

able to simulate human behavior). The greatest advances have
occurred in the field of games playing. The best computer chess
programs are now capable of beating humans. In May, 1997, an IBM
super-computer called Deep Blue defeated world chess champion Gary
Kasparov in a chess match.
 Artificial Intelligence (3)
In the area of robotics, computers are now widely used in assembly
plants, but they are capable only of very limited tasks. Robots have
great difficulty identifying objects based on appearance or feel, and
they still move and handle objects clumsily.

Natural-language processing offers the greatest potential rewards

because it would allow people to interact with computers without
needing any specialized knowledge. You could simply walk up to a
 Artificial Intelligence (4)
computer and talk to it. Unfortunately, programming computers to
understand natural languages has proved to be more difficult than
originally thought. Some rudimentary translation systems that
translate from one human language to another are in existence, but
they are not nearly as good as human translators. There are also
voice recognition systems that can convert spoken sounds into
written words, but they do not understand what they are writing;
they simply take dictation. Even these systems are quite limited --
you must speak slowly and distinctly.
 Artificial Intelligence (5)
In the early 1980s, expert systems were believed to represent the
future of artificial intelligence and of computers in general. To date,
however, they have not lived up to expectations. Many expert
systems help human experts in such fields as medicine and
engineering, but they are very expensive to produce and are helpful
only in special situations.

Today, the hottest area of artificial intelligence is neural networks,

which are proving successful in a number of disciplines such as voice
recognition and natural-language processing.
 Artificial Intelligence (6)
There are several programming languages that are known as AI
languages because they are used almost exclusively for AI
applications. The two most common are LISP and Prolog.
 Overview of Expert Systems
 Can…
 Explain their reasoning or suggested decisions
 Display intelligent behavior
 Draw conclusions from complex relationships
 Provide portable knowledge
 Expert system shell
 A collection of software packages and tools
used to develop expert systems
 Limitations of Expert Systems
 Not widely used or tested
 Limited to relatively narrow problems
 Cannot readily deal with “mixed” knowledge
 Possibility of error
 Cannot refine own knowledge base
 Difficult to maintain
 May have high development costs
 Raise legal and ethical concerns
 Capabilities of Expert Systems
Strategic goal setting Explore impact of strategic goals

Planning Impact of plans on resources

Integrate general design principles and

Design
manufacturing limitations

Decision making Provide advise on decisions

Quality control and monitoring Monitor quality and assist in finding solutions

Diagnosis Look for causes and suggest solutions

When to Use an Expert System (1)
 Provide a high potential payoff or significantly
reduced downside risk
 Capture and preserve irreplaceable human
expertise
 Provide expertise needed at a number of locations
at the same time or in a hostile environment that
is dangerous to human health
 Develop a system more consistent than human
experts
When to Use an Expert System (2)
 Provide expertise that is expensive or rare
 Develop a solution faster than human experts can
 Provide expertise needed for training and
development to share the wisdom of human
experts with a large number of people
 Solve a problem that is not easily solved using
traditional programming techniques
Explanation Inference
facility engine

Knowledge
Knowledge base User
base acquisition interface
facility

Experts User

Components of an Expert System

 Components of an
Expert System (1)
 Knowledge base
 Stores all relevant information, data, rules, cases, and relationships
used by the expert system
 Tools and Techniques for Creating Knowledge Base:
Assembling Knowledge of Human experts
Fuzzy logic
A specialty research area in computer science that allows shades of gray and
does not require everything to be simply yes/no, or true/false
FL rules help computers evaluate imperfect or imprecise conditions they
encounter and make educated guesses based on the probability of correctness
of the decision
Components of ES – Knowledge Base
Contd..
 Rule
 A conditional statement that links given conditions to actions or
outcomes
 Mostly IF_THEN Statements
 Using Cases
 This process involves, finding cases stored in the knowledge base
that are similar to the problem or situation at hand
 Modifying the solutions to the cases to fit or accommodate the
current problem or situation
Rules for a Credit Application
Mortgage application for a loan for $100,000 to $200,000

If there are no previous credits problems, and

If month net income is greater than 4x monthly loan payment, and
If down payment is 15% of total value of property, and
If net income of borrower is > $25,000, and
If employment is > 3 years at same company

Then accept the applications

Else check other credit rules

 Components of an
Expert System (2)
 Inference engine
 Seeks information and relationships from the
knowledge base and provides answers, predictions,
and suggestions in the way a human expert would
 Backward chaining
• A method of reasoning that starts with conclusions and works
backward to the supporting facts
 Forward chaining
• A method of reasoning that starts with the facts and works
forward to the conclusions
 Explanation Facility
 Explanation facility
 A part of the expert system that allows a user
or decision maker to understand how the
expert system arrived at certain conclusions or
results
Knowledge Acquisition Facility
 Knowledge acquisition facility
• Provides a convenient and efficient means of
capturing and storing all components of the
knowledge base

Knowledge
Knowledge acquisition
base facility

Joe Expert
Expert Systems Development
Determining requirements

Identifying experts

Domain
Construct expert system components • The area of knowledge
addressed by the
expert system.
Implementing results

Maintaining and reviewing system

 Expert
system

Knowledge engineer
Domain expert Knowledge user
 Participants in Expert Systems
Development and Use
 Domain expert
 The individual or group whose expertise and
knowledge is captured for use in an expert system
 Knowledge user
 The individual or group who uses and benefits from
the expert system
 Knowledge engineer
 Someone trained or experienced in the design,
development, implementation, and maintenance of an
expert system Schematic
 Evolution of Expert Systems
Software
 Expert system shell
 Collection of software packages & tools to design,
develop, implement, and maintain expert systems

high
Expert system
shells
Ease of use

Special and 4th

generation
Traditional
languages
programming
languages
low
Before 1980 1980s 1990s
 Expert Systems Development
Alternatives
high
Develop
from
scratch
Develop
Development from
costs shell
Use
existing
low package

low high
Time to develop expert system
 Popular ES Products
 Financial Advisor
 G2
 HazMat Loader
 LSI Indicator
 MindWizard
 RAMPART
Applications of Expert Systems and
Artificial Intelligence
• Credit granting
• Information management and retrieval
• AI and expert systems embedded in products
• Plant layout
• Hospitals and medical facilities
• Help desks and assistance
• Employee performance evaluation
• Loan analysis
• Virus detection
• Repair and maintenance
• Shipping
• Marketing
• Warehouse optimization
End of Module 2

Thank You