Every day, managers are faced with decisions about how best to run their organizations in order to gain or maintain a competitive edge. Although some decisions are simple, many are quite complex and require the manager to consider many variables. To help managers in decision making processes, many organizations employ the use of computer-aided decision support systems. These systems can help managers make decisions about semi-structured and even unstructured problems where not all the information is known in advance. Several different types of decision support systems are available. These include model-driven systems, data-driven systems, knowledge-driven systems, and group support systems. These decision support systems can be quite effective in aiding managers in making decisions and improving the effectiveness and performance of organizations.
Keywords Artificial Intelligence (AI); Database; Decision Support System (DSS); Executive Information System; Expert System; Groupware; Spreadsheet; Systems Theory
Information Technology: Decision Support Systems
The world around us is constantly changing. Market needs are shaped by numerous factors including political realities, advances in technology, and changing cultural expectations. To be competitive in this environment, businesses cannot be static, but need to grow and change to meet the needs of the marketplace. To do this, businesses need to be able to make good decisions in response to the changing needs of their environment. In some cases, these are simple decisions: Do we produce more widgets in response to increase market demand? Should we order more raw materials so that we can continue to produce gizmos? In other cases, however, the decision is not so simple. The demands of the marketplace may not be easily deciphered. As exemplified by the 8-track tape systems and the Beta video recorder of the latter half of the 20th century, decoding trends and translating them into business strategies is neither a simple nor an obvious process. In addition, management decisions can have far reaching impact within the organization. For example, the decision to increase the production of widgets may mean that more employees are needed for the widget production line. Management is now faced with another decision: Should new production workers be hired or should employees be transferred from the gizmo production line? If the former decision is made, where does the money come from to hire the new workers? If the latter decision is made, what is the impact on the gizmo production line? Considerations of the production rate for new gizmos or even the viability of the gizmo line also need to be taken into account in order to understand the ramifications of the decision in context.
In most complex business situations, it is important to understand the factors of decision making in context. Organizational behavior theorists tend to view the organization as a system, where changes in one subsystem can have far ranging impact throughout the organization as a whole. In this view, an organization is an interactive system in which the actions of one part influence the functioning of another. Rather than merely focusing on the needs of one part or subsystem within the organization in isolation (e.g., the widget production line) when making a decision, it is important to look at the impact of the decision on all subsystems and levels within the organization.
According to systems theory, organizations are systems comprising numerous subsystems. Rather than viewing an organization as a collection of disassociated parts acting independently, systems theory posits that the functioning of each subsystem impacts the functioning of the other subsystems. For example, in the illustration above, the decision to increase production of widgets can affect other parts of the organization. If more production workers are hired for the widget line, there might also be a concomitant need to hire more human resources and accounting personnel to take care of issues and tasks related to a larger work force. Other considerations in the decision might include whether or not suppliers could deliver sufficient raw materials to make the widgets or sufficient boxes to package the widgets so that they could be sold to consumers. In addition to hiring more workers for the widget production line, the organization would also more than likely also have to hire additional supervisors or managers for the new production lines. The increase in workers for the widget line might also cause conflict between the new workers and the workers already working on the widget production line or between the widget workers and the gizmo workers. Such conflict or job dissatisfaction could affect the functioning of the organization as a whole. Personnel issues are not the only factor that needs to be taken into account in this decision. Management would also have to consider where the new production lines would be located. If there was insufficient room in the current production plants, new facilities would need to be bought or leased. Similarly, new lines would probably require additional equipment. If, on the other hand, the organization decides that it is not cost effective to incur the expenses associated with starting new production lines, there would be other impacts on the organization. If workers are transferred from the gizmo line to make widgets, what happens to the gizmo product line? Even if the organization's management decides to convert some of the gizmo lines into widget lines and transfer some of the existing employees to the new line, these employees would have to be trained to become widget line operators; a necessary activity that would also cost the organization money. Each subsystem within the organization (e.g., the various production groups, accounting, human resources, management) affects the ability of the other groups — as well as of the organization as a whole — to do their jobs. Systems theory also recognizes that the organization is not only made up of interlocking subsystems, but is also part of a larger system itself that depends on inputs of raw materials, human resources, and capital and that needs to export goods or services, employee behavior, and capital in order to continue to the viability of other organizations.
To help management make such complex decisions, many organizations use decision support systems. Although there is no universally accepted definition of the term, in general a decision support system is an interactive computer-based system that helps managers and others make decisions. Decision support systems are used both by individuals and groups, and can be stand alone systems, integrated systems, or web-based.
Decision support systems are used when organizations are faced with unique, complex situations where a decision needs to be made. Decision support systems help decision makers better understand the issues underlying the situation and to make decisions in situations where the extent to which certain variables influence the activity or outcome are not initially clear or only part of the information is available in advance. This condition is referred to as an unstructured situation. To answer unstructured questions, decision support systems must be flexible so that the impact of various variables and conditions can be tested and the analysis returned to the user in a form that is useful for the specific situation. The unstructured nature of the problem also means that the use of a decision support system is an iterative process: The answers to the questions are not ends in themselves, but raise other questions for consideration that need to be run through the decision support system.
Decision support systems can help decision makers in such situations by providing the information and structure needed to make a rational decision. The decision support system creates a quantitative model of the situation and then processes data to show the impact of the variables under consideration on the outcomes. Decision support systems can help decision makers answer questions concerning conditions under which an outcome might occur, what might happen if the value of a variable changes, or how many potential customers have certain characteristics. Decision support systems can also help to trim inefficiencies from organizational systems, such as the supply chain, which further can take into account other company priorities such as carbon emmissions reduction. Frequently, decision support systems require the processing of data from multiple files and databases.
Decision Support Systems In Organizational Decision Making
Decision Support Systems in Organizational Decision Making
Decision making refers to the process of finding and selecting options according to the priorities and values of the person making the decision. Since there are many choices involved, it is important to identify as many options as possible so as to pick the option that best fits a company’s target, goals, values and vision. Due to the integral role of decision making in company growth and financial progress, many firms such as Amazon.com and EBay are pumping in huge investments in business intelligence systems, which are made up of certain technological tools and technological applications that are created for the purpose of facilitating improved decision making process in business. In this paper, I take a critical look at Decision Support Systems and how they affect organizational Decision making.
Advantages of Decision Support Systems
Decision Support Systems (DSS) help with time management. All groups of DSS enhance reduced time circle involved in the decision making process. At Amazon.com, DSS enhance the productivity of employees and facilitate timely acquisition of information that is necessary for the decision making process.
DSS facilitate enhanced interpersonal communication among those responsible for decision making. Communication-Driven Decision Support Systems and Group Decision Support Systems lead in more lubricated communication process and sharing of information. Moreover, Model-Based Decision Support systems offer a platform for sharing certain facts and suppositions regarding the decision making process. At Amazon.com Data-driven Decision make certain information about the company available to managers to make it easy for them to make decisions that ensure the company’s growth and continued success.
DSS improve the effectiveness of decision making and leads to informed, and applicable decisions. The quality of decisions made and effectiveness of the effectiveness of the decision making process are, however, not easily computable. DSS also provide companies like Amazon.com with competitive age over their rivals. Web-based DSS used at Amazon.com, for instance, provides the company with original, high risk, company-wide DSS that ease decision making and company growth in the highly competitive e-commerce market.
DSS also increase the satisfaction level of the decision maker by minimizing the frustrations involved in the process. In addition, DSS also reduce the costs associated with decision making in a company. This is good news to managers and decision makers. DSS (especially Data-driven Decision Support Systems) also increase the level of control that managers and decision makers have over the company.
Decision Support Systems promote a learning culture in an organization. Employees and managers learn new concepts and more efficient ways of improving the organization, either as a byproduct of the application of DSS or from the...
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