Decision Support System and Business Intelligence - Essay Example

Decision support system and business intelligence Grade (Feb. 12th, Decision support system and business intelligence Decision support system (DSS) refers to a computer application program that is used to analyze and present data, so that the users of such data can then apply the results to make business decisions. A Decision support system is categorized as an informational application program, since it is involved in the collection of data in the course of routine business transactions, and then analyses such data to arrive at well processed data that is therefore easy to use by the business management, to make the relevant business decisions. Thus to arrive at the desired data analysis results, a Decision support system can be either fully computerized, fully human operated, or a combination of both, where a person can feed data into the Decision support system program, and then run the program so that it generates the desired data for use in decision making. An example of a fully computerized Decision support system is a system that is applied to compare the sales figure of one week from the other, after having collected data regarding all the sales figures of the business throughout the week from the system. A Decision support system that provides projected sales and revenue figures for the future, after assumption figures regarding the same are fed into the computer application program forms a human-computer combined DSS, while an application program that is used to analyze the effect of adapting certain decisions as opposed to others forms an example of a fully human DSS. The analysis function of the Decision support system serves to make the decision-making process for the management easier, since it simplifies bulk data and makes it more understandable. Business intelligence (BI) Business intelligence refers to the methodologies, technologies, architecture, theories and techniques that are combined under one umbrella, to change raw data into simplified and useful information that has some meaningful business sense, which is then applied by the management of a business to make various decisions regarding its operations. This combined set of mechanisms takes in some unstructured data and sorts it out, to help identify the existing opportunities for a business, or even to develop such new opportunities, which the business can then take advantage of to continue its growth strategy, while achieving a competitive edge over the others. Business intelligence provides a range of processed and analyzed information ranging from the historical, current and future projections of business operations and then reports the same to the management of the business to take the necessary actions. The essence of the combined set of mechanism under business intelligence is to undertake data mining by collecting unstructured data from the business systems, processing the data for relevance. This is achieved through associating the data with normal business operations in the past, currently and predictive data analysis to generate the future projections. Such data are then combined from the online analyzed and processed data, to give rise to useful information that informs the business regarding its operations in an all-round manner, enabling the business to spot new opportunities, to cut down costs and to make appropriate decisions and strategies for reinforcing the business performance and competitiveness. The connection between Decision support system (DSS) and Business Intelligence (BI) The connection between Decision support system (DSS) and Business Intelligence (BI) is that; business intelligence serves to supplement Decision support system (DSS). Both the Decision support system (DSS) and Business Intelligence (BI) are closely related, considering that they are supportive systems for business decision making, through collecting, processing and analyzing raw data to generate useful and meaningful information that can be applied by a business to evaluate its performance, predict the future performance and generate new opportunities and strategies for progress. The other similarity that exists between Decision support system (DSS) and Business Intelligence (BI) is that; both systems are supported by interrelated technologies, which allows them to generate useful information for the business from raw and unprocessed data. Further, there exists some connection between the two mechanisms, considering that; while the Decision support system (DSS) is purely intended for supporting the process of making business decisions by the management of a business organization, the Business Intelligence (BI) plays both the role of aiding the decision-making process and that of gathering intelligence that eventually generates new opportunities and strategies for the business. This enables the business take advantage of newly arising opportunities, and thus strategize for competitiveness in the market. Additionally, the two mechanisms of supporting a business to make sense of raw and processed data are connected by the fact that; while the Decision support system (DSS) is model driven, meaning it applies limited data set to generate productive and supportive information for business decision-making, Business Intelligence (BI) is data-driven, meaning it analyses a large pool of raw data that is accumulated for a long period of time. Is the managerial decision making Art or science? Managerial decision making is both an Art and a science. Management is a science due to the fact that it applies well established principles and procedures, through the use of analyzed and processed data, which enables the management to reach a conclusive decision. Thus, the science of management emanates from the fact that it applies a process of data analysis that can easily be traced back in a reverse manner, right from the final decision that was reached, to the actual data that was analyzed and processed to inform the process of reaching at that decision. The concept of science requires that well established principles are applied, which can be traced by an individual who was not involved in the process, and still reach at the conclusion that was reached back then. This is the exact principle that qualifies management as a science, since some of the decisions made can be traced back to the source data. Management decision making is also an art. This is because; while there are certain principles that guide the process of decision making within an organization, there is still more room for individual choice and self-expression. The management style of different managers is sometimes different, and the process of decision making of one manager may differ from that of the other, even where the same source data is processed and analyzed to inform the decision making process. While the source data can be processed to give same findings for two different managers, one of the managers may opt to make the choice of the riskier option, where he considers it to have new opportunities, while the other may opt to take the safer option and ignore the new opportunities arising from the riskier option, yet both are applying the same results of analyzed and processed source data. Thus, it is the room for self-expression and individual choice that qualifies management decision making as an art. Comparing the following: Planner lab, Solver, Goal Seek and Scenario Manager Planner lab Planner lab is a program that is principally used for financial planning, which is similar to excel but with additional analytical features. The program is developed including components that are missing in excel, with an addition of assumption description languages and answer viewing options, to enable amicable financial analysis for appropriate decision making by organizations. The merit of this program is that it is advanced than excel, and contains features that are missing in the excel worksheet. Scenario Manager It is a component of the excel worksheet, which is applied towards determining the projected outcomes of entered data, through the change of cells. The excel worksheet saves a scenario that has been entered, and later the scenario can be observed for changes, when different data is entered in the worksheet cells, through a what-if analysis. The cells for which values are changed have a reference formula in a different cell, which is the bottom-line scenario. Goal Seek This is a feature component of the excel worksheet, which helps in the what-if analysis, through allowing the user to alter data in a formula, so that the results of the change can be seen. It applies a reversal process of altering the formula to see what the input is likely to be, given a certain predetermined formula and output. Solver This is a feature component of the excel worksheet that is used to find the most optimal solution for varied decision options. This feature allows the user to enter different data sets in relation to a decision problem, which is then processed by the solver technique, to arrive at different outcomes for different data sets, allowing the user to select the most optimal choice for a decision. Explain and justify what method would you prefer for analysis in case of above problem? Planner lab is the best choice for analyzing the problem, considering that it has more advanced features than any of the excel component features of Solver, Goal Seek and Scenario Manager. Additionally, considering that Planner lab is a program that is developed mainly for financial planning, it is therefore suited for the purpose of analyzing the above problem, which is a problem whose nature is primarily financial planning. Further, the Planner lab has the ability of combining both the assumption description languages and answer viewing options, which are additional features from what is already existent in the excel-based features, enabling the user to generate, manipulate and to review different options that underlie the financial decision problem in the question above. The other advantage that makes Planner lab the most appropriate program for the problem given is that; the Planner lab has the ability of combining both the Goal-seek questions and the Scenario Manager-what-if questions and, to be able to generate more visibly appealing answers, but the big advantage is that these two types of questions are easily and instantly answered, making the whole business of analyzing the questions fast and simple. The Planner lab is also better for the question, since it offers two different options for visualization of the data entered and outcomes, which also offer interactive functions for further display of changes in the assumptions entered. The immediate display of the changes in the assumptions, allow the decision maker in such a problem to reach a conclusive decision easily. Read More