Management information

systems
Unit 2
DSS
ESS
GDSS
KNOWLEDGE MANAGEMENT
EXPERT SYSTEMS
 DECISION MAKING

Decision making is the process of making choices by setting

goals, gathering information and assessing alternatives.

The thought process of selecting a logical choice from the

available options.

For effective decision making, a person must be able to forecast

the outcome of each option as well, and based on all these items,
determine which option is the best for that particular situation.
 DECISION MAKING PROCESS A Framework

Intelligence Design Choice Implementation

TYPES OF DECISIONS
 TYPES OF DECISIONS
A. Unstructured decisions:
Are those in which the decision maker must provide judgment,
evaluation and insight to solve the problems which are non routine but
important. There will be no well-understood or agreed-on procedure
for making these decisions.

B. Structured decisions
Are repetitive and routine.
They involve a definite procedure for handling and need not be treated
as if they were new.

C. Semi structured decisions

Many decisions have elements of both Structured and Unstructured
decisions, where only part of the problem has a clear cut answer
provided by an accepted procedure.
 DECISION SUPPORT SYSTEMS (DSS)

Computer based information systems that provide interactive

information support to managers and business professionals during
the decision making process.
DSS use
1) Analytical models. (Mathematical and Statistical models)
2) Specialized databases - collections on particular subjects.
E.g.: company financial data, court decisions, census data, patents,
medical journal article abstracts etc.
3) A decision makers own insights and judgments; and
4) An interactive computer based modeling process to support
semi-structured business decisions.
 MIS AND DECISION MAKING CONCEPTS
MIS provides a variety of information products to managers.
Three major reporting alternatives provided by MIS are :
Periodic scheduled reports.
E.g.: Daily,/weekly/monthly sales reports; Monthly financial
statements.
Exception reports
Reports produced only when exceptional conditions occur.
Reduces information overload.
Demand reports and responses.
Information available whenever a manager demands it.
To find and obtain customised reports as a result of their
requests for the information they need.
Thus, managers do not have to wait for periodic reports to
arrive as scheduled.
EXECUTIVE INFORMATION SYSTEMS (EIS)

Also known as Executive Support Systems (ESS) and Enterprise

Information Systems .

Combines many of the features of MIS and DSS, providing top

executives immediate and easy access to information about the
firms Critical Success Factors (CSFs) or key factors that are
critical to accomplishing their strategic objectives.
 FEATURES OF EXECUTIVE INFORMATION
SYSTEMS (EIS)

In an EIS, information is presented in forms tailored to the

preferences of the executives using the system.

Information presentation methods used by EIS mostly include

graphics displays, exception reporting and trend analysis, usually
customized to the information preferences of executives using the
EIS.

The ability to drill down, which allows executives to retrieve

displays of related information quickly at lower levels of detail, is
another important capability.
 DEVELOPING ESS

There are two parts to developing ESS :

1) Need a methodology for understanding exactly what is the

really important performance information for a for that
executives need; and

2) Need to develop systems capable of delivering this

information to the right people in a timely fashion.
 DEVELOPING ESS - BSC

The most common methodology for understanding the really

important information needed by a firms executives is called the
Balanced Score Card Method (Kaplan and Norton)
It is framework for operationalizing a firms strategic plan by
focusing on measurable outcomes on four dimensions of firms
performance :
a) Financial
b) Business Process
c) Customer; and
d) Learning and Growth.

Performance of each dimension is measured using Key

Performance Indicators (KPIs); which are the measures proposed
by senior management for understanding how well the firm is
performing along any given dimension.
BALANCED SCORE CARD FRAME WORK
BALANCED SCORE CARD FRAME WORK
 DEVELOPING ESS

The Balanced Score Card frame work is thought to be

balanced because it causes managers to focus on more than
just financial performance.

In this view, financial performance is past history the result of

past actions and managers should focus on things they are able
to influence today, such as business process efficiency, customer
satisfaction and employee training.
 DEVELOPING ESS

Once a score card is developed by consultants and senior

executives, the next step is automating a flow of information to
executives and other managers for each of key performance
indicators.

There are hundreds of software firms that offer these

capabilities.

Once these systems are implemented, they are often referred to

as ESS.
 DEVELOPING ESS - BPM

Another important management methodology used for

understanding the really important information needed by a
firms executives is Business Performance Management(BPM).
Its originally defined by an industry group led by Oracle, SAP and
IBM; in 2004.
BPM attempts to systematically translate a forms strategies
(e.g.: Differentiation, low-cost producer, market share growth and
scope of operation) into operation targets.
Once the strategies and targets identified, a set of KPIs are
developed that measure progress towards the targets.
The firms performance is then measured with information
drawn from the firms enterprise database systems.
BPM uses the same ideas as BSC, but with a stronger strategy
flavor.
 BENEFITS OF ESS

Well designed ESS enhance management effectiveness by helping

senior executives monitor organizational performance, track
activities of competitors, recognize changing market conditions
and identify problems and opportunities.

Immediate access to data or real time data enables decision

making to be decentralized and to take place at lower operating
levels, increasing managements span of control.

Contemporary business intelligence and analytics technology has

enabled a whole new style and culture of management called
Information driven management or Management by
facts.

Here information is captured at the factory floor or point of

sales level in real time which can be utilized to real time decision
making.
 GROUP DECISION SUPPORT SYSTEMS
(GDSS)

The DSS we have discussed so far focus primarily on individual

decision making.

A GDSS 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 guided meetings can take place in conference rooms with

special hardware such as computers, networking equipments,
overhead projectors, display screens etc and adequate software
tools.
 COMPONENTS OF GDSS

A GDSS is composed of 3 main components; namely hardware,

software tools, and people.

1) Hardware:

It includes electronic hardware like computer, equipment used for

networking, electronic display boards and audio visual equipment.

It also includes the conference facility, including the physical setup

the room, the tables and the chairs laid out in such a manner
that they can support group discussion and teamwork.
 GROUP DECISION SUPPORT SYSTEMS
(GDSS)

2) Software tools used in GDSS :

Electronic Questionnaire: The information generated using

the questionnaires helps the organizers of the meeting to identify
the issues that need immediate attention, thereby enabling the
organizers to create a meeting plan in advance.

Electronic Brainstorming Tools: It allows the participants to

simultaneously contribute their ideas on the subject matter of
the meeting. As identity of each participant remains secret,
individuals participate in the meeting without the fear of
criticism.

Idea Organizer: It helps in bringing together, evaluating and

categorizing the ideas that are produced during the
brainstorming activity.
 GROUP DECISION SUPPORT SYSTEMS
(GDSS)

Tools for Setting Priority: It includes a collection of

techniques, such as simple voting, ranking in order and some
weighted techniques that are used for voting and setting
priorities in a group meeting.

Policy Formation Tool: It provides necessary support for

converting the wordings of policy statements into an agreement.
 COMPONENTS OF GDSS

3) People:

It compromises the members participating in the meeting, a

trained facilitator who helps with the proceedings of the
meeting and an expert staff to support the hardware and
software.

The GDSS components together provide a favorable environment for

carrying out group meetings.
 FEATURES OF GDSS

1) Ease of Use:

It consists of an interactive interface that makes working with

GDSS simple and easy.

2) Better Decision Making:

It provides the conference room setting and various software tools

that facilitate users at different locations to make decisions as a
group resulting in better decisions.

3) Emphasis on Semi-structured and Unstructured Decisions:

It provides important information that assists middle and higher

level management in making semi-structured and unstructured
decisions.
 FEATURES OF GDSS
4) Specific and General Support:

The facilitator controls the different phases of the group decision

support system meeting (idea generation, discussion, voting and
vote counting etc.) what is displayed on the central screen and the
type of ranking and voting that takes place, etc. In addition, the
facilitator also provides general support to the group and helps
them to use the system.

5) Supports all Phases of the Decision Making:

It can support all the four phases of decision making, viz

intelligence, design, choice and implementation.

6) Supports Positive Group Behavior:

In a group meeting, as participants can share their ideas more

openly without the fear of being criticized, they display more
positive group behavior towards the subject matter of the meeting.
KNOWLEDGE
MANAGEMENT
 Dimensions of Knowledge
Data Information Knowledge Wisdom
Knowledge : To transform information into knowledge, firm must
expend additional resources to discover patterns, rules, and contexts
where knowledge works
Wisdom : Its a Collective and individual experience of applying
knowledge to solve problems. It Involves where, when, and how to
apply knowledge.
Knowing how to do things effectively and efficiently in ways others
cannot duplicate is prime source of profit and competitive advantage
Knowledge is both an individual attribute and a collective attribute
of the firm.
Knowledge is a cognitive, physiological event that takes place inside
peoples heads.
Its stored in libraries & records as well as in the form of business
processes and employee knowhow.
Knowledge residing in the minds of employees that has not been
documented is called tacit knowledge.
Knowledge that is documented is called explicit knowledge.
Knowledge is situational and contextual : One must know when to
perform a procedure as well as how to perform it.
Dimensions of Knowledge
 The Knowledge Management Landscape
Knowledge management systems among fastest growing areas of
corporate and government software investment.
Knowledge that cannot be communicated and shared with others is
nearly useless.
Knowledge becomes useful and actionable when shared throughout
the firm.
Knowledge management has become an important theme at many
large firms, as managers realise that much oftheir firms value depends
on the firms ability to create and manage knowledge.
Substantial part of a firms stock market value is related to intangible
assets: knowledge, brands, reputations, and unique business processes.
More than half the value of all stocks listed on the New York Stock
Exchange is attributed to intangible assets like knowledge and know-
how.
Well-executed knowledge-based projects can produce extraordinary
ROI, although the impacts of knowledge based investments are
difficult to measure.
Information economy
55% U.S. labor force: knowledge and information workers
60% U.S. GDP from knowledge and information sectors
 Organisational Learning

Like humans, organizations create and gather knowledge using a

variety of organizational learning mechanisms such as through
collection of data, measurement, of planned activities, trial and
error experiments, feedback from customers etc and thus
organizations gain experience.
Through such learning, organizations adjust their behavior to reflect
that learning by creating new business processes, by changing
decision making patterns etc.
This process of change is called organizational learning.
Organizations that can sense and respond to their environments
rapidly will survive longer than organizations that have peer
learning mechanisms.
 The Knowledge Management Value Chain
Knowledge management refers to the set of business processes
developed in an organization to create , store, transfer, and apply
knowledge.
It increases the ability of the organization to learn from its
environment & to incorporate knowledge into its business processes.
There are five value adding steps in the knowledge management value
chain, where each stage adds value to raw data and information as
they are transformed into usable knowledge.
The 5 steps are :
Knowledge Acquisition
Knowledge Storage
Knowledge Dissemination
Knowledge Application; and
Feedback
The below figure illustrates the Knowledge Management Value Chain:
The Knowledge Management Value Chain
 The Knowledge Management Value Chain

In the above figure, is activities are separated from related

Management and Organisational activities, with IS activities on the
top of the graphic and Organisational & Management activities
below.

One apt slogan of the knowledge management field is Effective

knowledge management is 80% managerial & organizational , & 20%
technology.
 The Knowledge Management Value Chain

1) Knowledge Acquisition

Organisation acquire knowledge in a number of ways, depending on the

type of knowledge they seek.

Documenting tacit and explicit knowledge:

By storing documents, reports, presentations & best practices.
Storing Unstructured documents (e.g., e-mails)
Developing online expert networks,so that employees can find the
expert in the company who has knowledge in his or her head.

Creating new Knowledge by discovering patterns in corporate data

or by using knowledge workstations where engineers can discover
new knowledge.

By tracking data from Transaction processing systems (eg: tracking

sales, payments, inventory , customers & other vital data) as well as
data from external sources (eg: news feeds, industry reports, legal
opinions, scientific research & govt statistics)
 The Knowledge Management Value Chain
2) Knowledge Storage

Documents, patterns, and experts rules can be stored so they can be

retrieved and used by employees.

Knowledge storage involves the creation of a database.

Document management systems that digitize, index, and tag documents

according to a coherent framework are large databases adept at storing
collections of documents.

Expert system also help corporations preserve the knowledge that is

acquired by incorporating that knowledge into organisational processes
and culture.
Role of management in Knowledge Storage:
Support development of planned knowledge storage systems
Encourage development of corporate-wide schemas for indexing
documents
Reward employees for taking time to update and store documents
properly
 The Knowledge Management Value Chain

3) Knowledge Dissemination

Portals, e-mail, instant messaging , wikis, social networks, & search engine
technologies are used for sharing / disseminating calendars, documents,
data , and graphics.

To help managers to discover required information and knowledge from a

vast deluge or flood of information; -training programs, informal networks
and shared management experience help managers focus attention on
important information.
 The Knowledge Management Value Chain

4) Knowledge Application

Knowledge that is not shared and applied to the practical problems faced
by managers; does not add value to the business.

To provide a return on investment, organisational knowledge must

become systematic part of management decision making & become
situated in decision-support systems.

New knowledge must be built into a firms business processes and key
application systems, including enterprise application for managing key
internal business processes & relationships with customers and suppliers.

Management supports this process by creating- based on new knowledge -

new business practices , new products & services and new markets for the
firm.
 Types of Knowledge Management Systems
3 major types of Knowledge Management Systems:
1. Enterprise-wide knowledge management systems
General-purpose firm-wide efforts to collect, store, distribute,
and apply digital content and knowledge.
2. Knowledge work systems (KWS)
Specialized systems built for engineers, scientists, other
knowledge workers charged with discovering and creating new
knowledge.
3. Intelligent techniques
Diverse group of techniques such as
1) Data mining 4) Fuzzy Logic
2) Expert Systems 5) Genetic Algorithms &
3) Neural Networks 6) Intelligent Agents;
used for various goals:
a) Discovering knowledge (Data Mining & Neural Networks)
b) Distilling knowledge in the form of rules for a computer
program (Expert systems and Fuzzy Logic)
c) Discovering optimal solutions for problems (Genetic Algorithms)
Types of Knowledge Management Systems
 Types of Knowledge Management Systems

To learn more on the three types of KMS; Please refer to pages 432
page 452 of text book : MIS Kenneth C Laudon and Jane P Laudon, 12th
Edition, Pearson Publishers.

This will cover the remaining portions of Unit 3.

Each type of KMS is worth to be asked as Essay questions in Exams