Decisions are made at all levels of an
organization as IS has made information available to these levels. Decisions can be classified as structured,
semistructured, and unstructured.
Structured decisions are repetitive and routine and they involve a
definite procedure for handling them so that they do not have to be treated
each time as if they were new. Operational management focuses these types of
decisions. Unstructured decisions are
nonroutine decisions in which the decision maker must provide judgment,
evaluation, and insights into the problem definition, and there is no
well-understood or agreed-on procedure for making them. Middle management focuses these types of
decisions. Semistructured decisions have
elements of both structured and nonstructured decisions and are where only part
of the problem has a clear-cut answer provided by an accepted procedure. Senior management focuses these types of
decisions.
The decision-making process is broken down into
four stages: intelligence design,
choice, and implementation. Intelligence
is discovering, identifying, and understanding the problems occurring in the
organization. Design is identifying and
exploring various solutions to the problem.
Choice is choosing among solution alternatives. Implementation is making the chosen
alternative work and continuing to monitor how well the solution is
working. If the solution does not work,
return to an earlier stage in the process and repeat it.
Managers play a key role in the organization
with a wide range of responsibilities.
The classical model of management describes formal managerial functions
but does not address what exactly managers do when they plan, decide things,
and control the work of others. The
contemporary model addresses that the actual behavior of managers appears to be
less systematic, more informal, less reflective, more reactive, and less well
organized than the classical model. Managers’
day-to-day behavior can be classified into 10 managerial roles. Managerial roles are the expectations of the
activities that managers should perform in an organization. These roles fall into three categories: interpersonal, informational, and
decisional. Managers act as figureheads,
leaders, and liaisons in their impersonal role. Managers act as the nerve centers,
disseminators, and spokes person in their informational roles. Managers act as entrepreneurs, disturbance
handlers, resource allocators, and negotiators in their decisional roles.
Investments in information technology do not
always produce positive results in managerial roles where information systems
might improve decision. Three reasons
for this include information quality (high-quality decisions require
high-quality information), management filters (managers absorb information
through a series of filters to make sense of the world around them), and
organizational culture (a firm’s decisions represent a balancing of the firm’s
various interest groups rather than the best solution to the problem).
Decisions today are not always made by
management, but are often made by the Internet.
The class of decisions that are highly structured and automated is
growing rapidly. Organizations are
making decisions faster than what managers can monitor or control.
Business intelligence is the infrastructure for
warehousing, integrating, reporting, and analyzing data that comes from the
business environment. Business
intelligence and analytics are about integrating all the information streams
produced by a firm into a single, coherent enterprise-wide set of data, and
then, using modeling, statistical analysis tools, and data mining tools, to
make sense out of all these data so managers can make better decisions and
better plans, or at least know quickly when their firms are failing to meet
planned targets. A business intelligent
environment consists of data from the business environment, a business
intelligence infrastructure, a business analytics toolset, managerial users and
methods, MIS, DSS, and ESS delivery platforms, and user interface. Analytic functionalities that BI systems
deliver to achieve these ends include production reports; parameterized
reports; dashboards and scorecards; ad hoc query, search, report creation;
drill down; and forecasts, scenarios, and models.
Over 80 percent of the people who use BI consist
of casual users who rely largely on production reports. Senior executives use it to monitor firm
activities using visual interfaces, such as dashboards and scorecards. Middle managers and analysts use the data and
software, entering queries and slicing and dicing the data along different
dimensions. Operational employees,
customers, and suppliers are looking mostly at prepackaged reports.
Pre-packaged production reports are the most
widely used output of a BI suite of tools.
Examples of BI applications include predictive analytics, data
visualization and geographic IS.
Predictive analytics are being built into mainstream applications for
everyday decision making by all types of employees, especially in finance and
marketing. It uses data mining techniques,
historical data, and assumptions about future conditions to predict outcomes of
events. Data visualization is technology
for helping users see patterns and relationships in large amounts of data by
presenting the data in graphical form.
Geographic information systems (GIS) helps decision makers visualize
problems requiring knowledge about the geographic distribution of people or
other resources.
Two different strategies for adopting BI and BA
capabilities for the organization are the one-stop integrated solution and the
multiple best-of-breed vendor solution. The
one-stop integrated solution is where a single vendor provides a firm’s total
hardware and software solution, making the firm dependent on its pricing
power. The multiple best-of-breed vendor
solution offers greater flexibility and independence, but with the risk of
potential difficulties integrating the software to the hardware platform, as
well as to other software.
Many different constituencies make up a modern
business firm. Each of the management
groups (operational management, middle management, and senior management) has
different responsibilities and different needs for information and business
intelligence, with decisions becoming less structured among higher levels of
management.
Operational and middle management are usually
charged with monitoring the performance of key aspects of the business and most
decisions they make are fairly structured.
MIS are typically used by middle managers to support this type of
decision making, and their primary output is a set of routine production
reports based on data extracted and summarized from the firm’s underlying
transaction processing systems. Decision
support systems (DSS) are the BI delivery platform for the managers who
consider themselves “super users.”
Senior management uses the balanced scorecard
and enterprise performance management methods.
The balanced scorecard focuses on measurable outcomes on four dimensions
of a firm’s performance: financial,
business process, customer, and learning and growth. Performance on each of these dimensions is
measured using key performance indicators.
These are the measures proposed by senior management for understanding
how well the firm is performing along any given dimension. The business performance management attempts
to systematically translate a firm’s strategies into operational targets. Once identified, a set of key performance
indicators are developed that measure progress towards the targets. The firm’s performance is then measured with
information drawn from the firm’s enterprise database systems.
Group decision-support systems (GDSS) have been
developed to support group and organizational decision-making. It is an interactive computer-based system
for facilitating the solution of unstructured problems by a set of decision
makers working together as a group in the same location or in different
locations. GDSS provide tools and
technologies geared explicitly toward group decision-making.
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