MBIS401 INFORMATION

SYSTEMS & STRATEGY

Lecture 7
Enhancing Decision Making

Textbook Reading:
Chapter 12
Learning Objectives

• What are the different types of decisions, and how

does the decision-making process work?
• How do information systems support the activities
of managers and management decision making?
• How do business intelligence and business analytics
support decision making?
• How do different decision-making constituencies in
an organisation use business intelligence, and what
is the role of information systems in helping people
working in a group make decisions more efficiently?
Big Data and the Internet of
Things Drive Precision
Agriculture
• Problem
• Explosive population growth
• Opportunities from new technology
• Solutions
• Identify technologies
• Develop improvements for farmer processes
• IoT wireless sensors
• Supercomputer processing
• Analytic software
• Web links to farmers
The Internet of Things for
Precision Agriculture
The following video will show you the application of
IoT for Precision Agriculture:
https://www.youtube.com/watch?v=U4IWuZjCq3s
What Are the Different Types of
Decisions, and How Does the Decision-
Making Process Work?
• Senior managers
• Make many unstructured decisions
• Middle managers
• Make more structured decisions but these may include
unstructured components
• Operational managers and rank and file employees
• Make more structured decisions
Information Requirements of
Key Decision-Making Groups in
a Firm
The Decision-Making Process

• Intelligence
• Discovering, identifying, and understanding the problems
occurring in the organisation
• Design
• Identifying and exploring solutions to the problem
• Choice
• Choosing among solution alternatives
• Implementation
• Making chosen alternative work and continuing to
monitor how well solution is working
Stages in Decision Making
Managerial Roles

• Information systems can only assist in some of the

roles played by managers
• Classical model of management: five functions
• Planning, organising, coordinating, deciding, and
controlling
• More contemporary behavioural models
• Actual behaviour of managers appears to be less
systematic, more informal, less reflective, more reactive,
and less well organised than in classical model
Mintzberg’s 10 Managerial
Roles (1 of 2)
• Interpersonal roles
• Figurehead
• Leader
• Liaison
• Informational roles
• Nerve center
• Disseminator
• Spokesperson
Mintzberg’s 10 Managerial
Roles (1 of 2)
• Decisional roles
• Entrepreneur
• Disturbance handler
• Resource allocator
• Negotiator
Real-World Decision Making

• Three main reasons why investments in IT do not

always produce positive results
• Information quality
• High-quality decisions require high-quality information
• Management filters
• Managers have selective attention and have variety of biases
that reject information that does not conform to prior
conceptions
• Organisational inertia and politics
• Strong forces within organizations resist making decisions
calling for major change
High-Velocity Automated
Decision Making
• Made possible through computer algorithms
precisely defining steps for a highly structured
decision
• Humans taken out of decision
• For example: High-speed computer trading
programs
• Trades executed in 30 milliseconds
• Require safeguards to ensure proper operation and
regulation
What is Business Intelligence?
1of 2
• Business intelligence
• Infrastructure for collecting, storing, analysing data
produced by business
• Databases, data warehouses, data marts
• Business analytics
• Tools and techniques for analysing data
• OLAP, statistics, models, data mining
• Business intelligence vendors
• Create business intelligence and analytics purchased by
firms
What is Business Intelligence?
2 of 2
• The following video will explain what Business
Intelligence (BI) is:
https://www.youtube.com/watch?v=hDJdkcdG1iA
The Business Intelligence
Environment
• Six elements in the business intelligence
environment
• Data from the business environment
• Business intelligence infrastructure
• Business analytics toolset
• Managerial users and methods
• Delivery platform
• MIS, DSS, ESS
• User interface
• Data visualisation tools
Business Intelligence and
Analytics for Decision Support
Business Intelligence and
Analytics Capabilities
• Goal is to deliver accurate real-time information to
decision makers
• Main analytic functionalities of BI systems
• Production reports
• Parameterised reports
• Dashboards/scorecards
• Ad hoc query/search/report creation
• Drill down
• Forecasts, scenarios, models
Examples of Business Intelligence
Predefined Production Reports
Predictive Analytics 1 of 2

• Uses variety of data, techniques to predict future

trends and behaviour patterns
• Statistical analysis
• Data mining
• Historical data
• Assumptions
• Incorporated into numerous BI applications for
sales, marketing, finance, fraud detection, health care
• Credit scoring
• Predicting responses to direct marketing campaigns
Predictive Analytics 2 of 2

What is predictive analytics? Transforming data into

future insights
https://www.youtube.com/watch?v=cVibCHRSxB0
Big Data Analytics 1 of 2

• Big data: Massive datasets collected from social

media, online and in-store customer data, and so on
• Help create real-time, personalised shopping
experiences for major online retailers
• Smart cities
• Public records
• Sensors, location data from smartphones
• Ability to evaluate effect of one service change on
system
Big Data Analytics 2 of 2

What is Big Data Analytics?

https://www.youtube.com/watch?v=aeHqYLgZP84
Operational Intelligence and
Analytics
• Operational intelligence: Business activity
monitoring
• Collection and use of data generated by sensors
• Internet of Things
• Creating huge streams of data from web activities,
sensors, and other monitoring devices
• Software for operational intelligence and analytics
enable companies to analyse their big data
Location Analytics and
Geographic Information
Systems
• Location analytics
• Ability to gain business insight from the location
(geographic) component of data
• Mobile phones
• Sensors, scanning devices
• Map data
• Geographic information systems (GIS)
• Ties location-related data to maps
• Example: For helping local governments calculate
response times to disasters
Business Intelligence Users
Support for Semi structured
Decisions
• Decision-support systems
• Support for semi structured decisions
• Use mathematical or analytical models
• Allow varied types of analysis
• “What-if” analysis
• Sensitivity analysis
• Backward sensitivity analysis
• Multidimensional analysis / OLAP
• For example: pivot tables
Sensitivity Analysis
A Pivot Table That Examines Customer
Regional Distribution and Advertising
Source
Decision Support for Senior
Management (1 of 2)
• ESS: decision support for senior management
• Help executives focus on important performance
information
• Balanced scorecard method
• Measures outcomes on four dimensions
• Financial
• Business process
• Customer
• Learning and growth
• Key performance indicators (KPIs) measure each
dimension
The Balanced Scorecard
Framework
Decision Support for Senior
Management (2 of 2)
• Business performance management (BPM)
• Translates firm’s strategies (e.g., differentiation, low-cost
producer, scope of operation) into operational targets
• KPIs developed to measure progress toward targets
• Data for ESS
• Internal data from enterprise applications
• External data such as financial market databases
• Drill-down capabilities
Characteristics of a Decision
Support System 1 of 2
• Provide rapid access to information.
• Handle large amounts of data from different
sources.
• Provide report and presentation flexibility.
• Offer both textual and graphical orientation.
• Support drill-down analysis.
Characteristics of a Decision
Support System 2 of 2
• Perform complex, sophisticated analysis and
comparisons using advanced software packages.
• Support optimisation, satisficing, and heuristic
approaches.
• Perform simulation analysis—the ability of the DSS
to duplicate the features of a real system, where
probability or uncertainty is involved.
Characteristics of an Executive
Support System (ESS)
• ESS is tailored to individual executives
• Are easy to use
• Have drill-down abilities
• Support the need for external data
• Can help with situations that have a high degree of
uncertainty
• Have a future orientation
• Are linked with value-added business processes
Group Decision-Support
Systems (GDSS)
• Interactive system to facilitate solution of
unstructured problems by group
• Specialised tools
• Virtual collaboration rooms
• Software to collect, rank, edit participant ideas and
responses
• Promotes collaborative atmosphere, anonymity
• Cisco’s Collaboration Meeting Rooms Hybrid
(CMR)
• Skype for Business
Summary

• Different Types of Decisions, and How Does the

Decision-Making Process Work
• The Decision-Making Process
• Mintzberg’s 10 Managerial Roles
• Business Intelligence and Analytics Capabilities
• Predictive Analytics
• Big Data Analytics