Information systems and management in business

Chapter 6Using Information Systems in Management Decision Making

6.1 Business and Professional Decision Making

Introduction business solving problems and making decision a

common and frequent activities made by businesses managers and professionals

Decisions are made at all levels of the management hierarchy

Operational, tactical and strategic levels Business decisions tend to have far reaching

consequences Business problems varies in structure

Semi structured, structured or unstructured Various models exist for decision making

The rational model, bounded rationality or the intuitive model

6.2 Problems Solving and Decision Making Basics

What are Problems Solving and Decision Making? Essentially when a person is problems

solving, he or she is basically engaged in decision making

May be defines as making a choice from a set of alternative solutions or options

6.2 Problems Solving and Decision Making Basics

Decision Making Approaches A number of approaches that are used by

decision makers to solve problems The Rationality Model

The decision maker is assumed to be: rational and logical in his or her approach to thinking and identifying the problem and has all the information needed

The Bounded Rationality Model Real life decision making Employ heuristics and Satisficing

Intuition Common sense and gut feelings deployed to solve

a problem

6.2 Problems Solving and Decision Making Basics

The Decision Making Process A formal process that involves 4 steps or phases as

defined by Herbert Simon Intelligence

Searching the environment by the manager for an opportunity to be seized or a problem to be solved.

Design Development and generation of alternative solutions to

the problem. Choice

Selection of the appropriate solution alternative from those developed in the design phase

Review Evaluation and modification of the chosen solution is

implemented

6.3 Decision Making in the Real World

Why Good Managers and Professionals Make Bad Decisions A number of road blocks that either collectively

or individually may contribute to bad decision making or the making of less than optimal decisions by managers

Work stresses Social pressures Human cognition Personal biases

6.4 Business Decisions (Problems) Structure, Management levels and the Process of Decision Making

Overview Problems types

Structured, semi-structured and unstructured Decision Types Structured Decisions

The decision maker usually understands all of the problems elements and the relationships that exit between them – pay roll for example

Unstructured Decisions Consist of no elements and the relationship between

elements cannot be identified - Budget analysis and preparation

Semi-structured Decisions Some of the elements of the problem are known to the

problem solver but not all of them - Merger deals negotiation

6.4 Business Decisions (Problems) Structure, Management levels and the Process of Decision Making

Management Levels and Decision Making in Business Three primary levels of management were identified

and explained by Robert Anthony in 1965 Operational

Short term effect , Structured in nature, happen frequently, rely mainly on internal and detailed information

Managerial or administrative (Tactical) Medium term effect, semi structured in nature, happen

semi frequently, rely on summarized internal and external information

Strategic Long term effect, unstructured in nature, take place

infrequently, and often deals with limited information

6.5 How Information Systems enhances the quality of the decision making process

Information systems support and enhance the decision making process through a number of associated features Data storage and retrieval easily and quickly Multi-tasking Information filtering Identify correlation and causality Information presentation in various formats Eliminate personal biases

6.6 Management Information Systems (MIS)

What is an MIS A specific type of organizational information

system Typically used to support the management

decision making process at all levels of the organizational structure (operational, tactical and strategic)

Mainly used by most managers in the various business functions

Provide three types of reports Scheduled or periodic, exception and

response to queries (demands) reports

6.6 Management Information Systems (MIS)

MIS Data Essential for MIS goals Three main sources

Internal data User’s data External data

6.6 Management Information Systems (MIS)

MIS Drilling Down concept MIS reports provide summarized

information In-depth analysis of the summarized

information can be achieved via drilling down

Drilling down enhances the understanding of problems and improve the quality of decision making

6.7 Management Information Systems Architecture

The general MIS architecture make up comprises three main functions Input

Facilitate interaction with the user, collect and validate data entered by the user

Output Generates summarized reports which are

presented in a variety of formats using charts and tabular styles

Processing Consist of a programming logic which is used

to access databases; carry out mathematical and other forms of computations necessary to produce the required management reports

6.7 Management Information Systems Architecture

MIS architecture make up illustration http://www.halaeducation.com/BookIma

ges/Ch6/fig1.jpg

6.8 Executive Information Systems (EIS) - Dashboards

Goals and Use Provides performance data that act as indicators for use by

executives to monitor their organization Architecture

Three tier architecture, input, output and processing functions Input

Facilitates interaction with the user through highly visual input control elements with minimal hard data entry. Heavy reliance on objects that could be pointed to or clicked for results

Output Highly summarized reports that are presented in a variety of

charts and tabular formats Processing

Computation and data processing Benefits

Ease and speed of access to cooperate data Provision for the big picture viewing

6.8 Executive Information Systems (EIS)

EIS report example http://www.halaeducation.com/BookIma

ges/Ch6/fig2.jpg