Decision Support Systems in Management - Report Example

DECISION SUPPORT SYSTEMS Decision Support Systems Affiliation In the past few years, there have emerged a large number of modern tools technologies to support business operations and processes. In fact, the majority of business organizations is effectively making use of these tools and technologies in order to survive and run their businesses in this ever-increasing competitive environment. In this scenario, information systems are most useful tools that business organizations widely use to run and manage their businesses. There are many kinds of information systems and each kind serves specific organizational department or task. For instance, management information systems are commonly used systems which are used to run daily business tasks. On the other hand, decision support systems are particularly developed to support the decision making process. This report presents the most valuable business technology systems regarding better and effective business decision making that is known as the decision support systems (DSS). The main intention of this research is to offer a deep and compliance overview of the decision support systems and its implementation in the effective corporate working and operational structure management. This report will also discuss some of the success stories to prove effectiveness of these systems. Purpose of the report In the past few years, the business environment has turned out to be more competitive than ever before. In order to survive in this competitive environment the organizations have always been looking for modern tools and technologies. In this scenario, modern information systems such as decision support systems provide an excellent support for the management decision making at every level of the organization. The basic purpose of this report is to present a detailed analysis of decision support systems. This report will discuss some of the success stories of businesses that have been taking advantage of these decision support systems. The basic purpose of this report is to prove the usefulness of the decision support systems. Decision Support Systems (DSSs) As discussed above, a decision support system is a kind of information system. In this scenario, (Turban, Leidner, McLean, & Wetherbe, 2005, p. 18) define “an information system as a mechanism for the collection, processing, storage, evaluation, and distribution of information for completing a specific organizational task”. However, in many books and research paper “an information system is technically referred as a set of interconnected components that work in cooperation, process, store, and distribute information to support business processes and management decision making and control in an organization”. In addition, “the majority of business organizations makes use of these information systems to keep records of information about important people, places, and things inside the corporation or in the set up surrounding it” (Hoffer, Prescott, & McFadden, 2007, p. 429; Laudon & Laudon, 1999, p. 7). In the same way, “a decision support system is a significant function or use of an information system that provides an excellent support for the users with decision-oriented information when a decision-making situation takes place (Whitten, Bentley, & Dittman, 2000, p. 47). Basically, a decision support system is implemented by a business organization to deal with decision making issues. In this scenario, decision support systems are developed by combining a wide variety of data and information, user-friendly interface and appropriate logical models, tools and techniques into a single commanding system that is equally supportive for both the semi structured and unstructured decision making. Moreover, decision support systems comprise easy to use tools and applications for identifying key blocks of data (Laudon & Laudon, 1999, p. 468; Whitten, Bentley, & Dittman, 2000, p. 47). A decision support system is implemented keeping in mind the particular needs and requirements of business management. According to (Whitten, Bentley, & Dittman, 2000, p. 47), through the implementation of a DSS the business organizations can have one or more of the following types of capabilities: Resolving issues or decision-making opportunity (like exception reporting) Finding suitable solutions or taking appropriate decisions Finding the information required to resolve an issue or making a decision Evaluating decisions or of variables that will have an effect on a decision. Imitation of possible decisions and their possible outcomes. Furthermore, a DSS can be used in different ways to facilitate management in decision making. As discussed above, at the present the majority of business organizations use these decision support systems for dealing with different decision making situations. In this scenario, Table 1 outlines some of the major organizations and the purposes for which they use these decision support systems (Laudon & Laudon, 1999, p. 468): Table 1. Examples of Decision-Support Systems, Table source: (Laudon & Laudon, 1999, p. 468) Organization DSS Application American Airlines American Airlines use decision support systems at various levels. The basic purpose of using a decision support system is to set a price and select appropriate routes for the flights Equico Capital Corporation In view of the fact that a decision support system support decision making processes regardless of the nature of the business organizations. Hence, it is widely used in the banking sector where business organizations have to deal with huge investments. In the same way, Equico Capital Corporation uses the decision support system for the evaluation of investment decisions General Accident Insurance General Accident Insurance makes effective use of decision support systems for identifying customer buying patterns and detecting frauds Bank of America Bank of America makes use of a decision support system for keeping track and identification of customer profiles Frito-Lay, Inc. This organization heavily relies on decision support systems for decision making regarding price, marketing strategies, advertising, and promotion choice Burlington Coat Factory Burlington Coat Factory uses a decision support system to keep track of store locations and inventory National Gypsum National Gypsum makes effective use of a decision support system for corporate planning and forecasting Southern Railway Southern Railway has implemented a decision support system to determine routes for trains Texas Oil and Gas Corporation This firm has been making use of a decision support system for the evaluation of potential drilling sites United Airlines Like American Airlines, United Airlines also uses a decision support system for scheduling flights U.S. Department of Defense This is a huge organization that widely makes use of decision support systems for defense contract analysis In addition, software development teams put great effort to make decision support system them more resilient and flexible as compared to management information systems and to provide them the capability to facilitate decision makers in various conditions (Stair & Reynolds, 2003, p. 439). In their book, (Stair & Reynolds, 2003, p. 439) present a table that outlines various DSS applications. Table1 outlined the examples of organizations that are currently using decision support systems. However, table2 outlines the examples of organizations along with the ways these decision support systems are being used by these business organizations: Table 2 Applications of DSS, Table source: (Stair & Reynolds, 2003, p. 439) Company or Application Description Cinergy Corporation This organization developed a DSS to diminish lead time and endeavor needed to make decisions in buying coal. RCA This organization developed a DSS acknowledged as Industrial Relation Information System (IRIS) to assist in workers problems and conflicts. U.S. Army They developed a DSS to assist hire, guide, and instruct selected forces. The DSS makes use of the simulation that integrates what-if features. National Audubon Society This society developed a DSS known as Energy Plan (EPLAN) to measure the effect of U.S. energy policy on the atmosphere. Hewlett-Packard This is a computer corporation which developed a DSS acknowledged as a Quality Decision Management to assist in improving the features of its products and services. Virginia The state of Virginia developed the Transportation Evacuation Decision Support System (TEDSS) to find out the most excellent method to evacuate people in case of a nuclear tragedy at its nuclear power plants. Below is a classic case of effective implementation of DSS, which took place long ago, up till now the situation is typical, as revealed in IT at work (below case study) (Turban, Leidner, McLean, & Wetherbe, 2005, p. 550). This case outlines a wide variety of features of decision support systems. The risk investigation carried out first was based on the decision maker’s preliminary description of the circumstances, making use of a management science view. After that, the executive vice president, utilizing his knowledge, finding, and perception, thought that the model should be customized. The preliminary model, however mathematically accurate, was deficient. With a usual simulation system, an alteration to the computer program would have taken enough time; however the DSS offered a rapid analysis. Additionally, the DSS was elastic and approachable sufficient to facilitate managerial perception and finding to be included in the investigation (Turban, Leidner, McLean, & Wetherbe, 2005, p. 550): Table 3Case Study: Implementation of DSS, Table Source: (Turban, Leidner, McLean, & Wetherbe, 2005, p. 550) IT at work USING A DSS TO DETERMINE RISK An oil and minerals organization located in Houston, Texas was assessing a suggested joint venture with a petrochemical company to build a chemical plant. Houston’s executive vice president in charge for the decision needed analysis of the risks encompassing different attributes such as prices supplies and demand. Bob Sampson, who is a manager of planning and administration, and his developers developed a decision support system in short time using a specific planning language. The output forcefully recommended that the projects should be approved. Afterward, it was time for the actual test. However, the managerial vice president approved and validated the strength and worth of the output; but he was concerned about the possible negative aspect of the project, the possibility of a disastrous result. Sampson clarifies that the managerial vice president said something this way: “I understand the amount of work you have already completed; also I am 99% certain about it. However I would be happy to see this in a different light. I recognize we have no more time and we have to inform our partners whether we accept this project or reject.” Sampson answered that the vice president could have the risk assessment he required in less than one hour. As Sampson clarified, “It took less than 20 minutes, there in the executive boardroom; we were determining the output of his what-if questions. Those outcomes took us to the final dismissal of the project, which we otherwise would almost certainly have taken or approved.” The significance of using DSS tools and main contributions At the present, the majority of organizations use decision support systems. These systems offer a wide variety of advantages for every kind of business. The enduring execution an accomplishment of a business organization heavily depends on the satisfactoriness of its tactical plans and business strategies. In view of the fact that the information systems offer an excellent support for building business strategies to survive in the business environment thus in the present, the majority of business organizations makes use of information systems to build and implement strategic plans as well as make decisions for the company’s long life and success. In this scenario, business organizations make use of their information systems to assess information from a wide variety of sources, comprising information from outside environments for instance Bloomberg and Reuters, which present information on the wide-ranging market. In addition, this investigation and assessment of market factors and trends allows business corporations to investigate the satisfactoriness and worth of their strategic plans and decisions (Davoren, 2012; Topi, 2008). Some of the major advantages of these systems are outlined below (Zhykharyev, 2007; Turban, Aronson, & Liang, Decision Support Systems and Intelligent Systems, 7th Edition, 2004; Metaxiotis, Ergazakis, Samouilidis, & Psarras, 2004): When an organization has a huge amount of business data that is not easily understandable for the business management. In this scenario, the implementation of a decision support system makes it simple for the organization to collect, process, and analyze that data to derive effective decisions for the betterment of their organization. Without a doubt, decision support systems combine data from a wide variety of sources so when this data is combined it becomes difficult to understand the purpose and meaning of that data. In this scenario, decision support systems provide easy to use tools that deal effectively with business data coming from different sources and DSS tools make them coherent format A decision support system can combine data coming from other departments such as inventory data, sales data, market research, supplier data A decision support system comprises a wide variety of tools and applications that can be used to format data in order to ensure data consistency. A decision support system also allows the organizations to analyze the database DSS tools offer multiple analysis tools and techniques for different kinds of user These systems offer high quality reporting and analysis capabilities which allow business managers to take effective decisions. The use of decision support systems improves the efficiency of an organization. Without a doubt, the success of a business heavily depends on the decisions that an organization takes for business. In this scenario, a decision support system plays a significant role in the success of an organization. They make it easy for the management to decide for business reporting criteria The use of decision support system simplifies the tasks and jobs of business management. They facilitate the management with cost effective management of business operations One of the most important advantages of these information systems is that they required less learning time and training costs. However, they deliver precious output which can play a significant role in the success of an organization. Conclusion Information systems are playing a significant role in all the fields of life. They are used to perform different jobs depending on the nature of a firm. Basically, an information system is developed by keeping in mind the requirements of a particular organization. There are many kinds of information systems. And each information system performs specific functions. For instance, an accounting information system will be used to deal with accounting and financial related functions. In the same way, a human resource information system can be used to deal with human recourse related operations. A decision support system helps business executives take effective decisions. This report has presented a detailed analysis of decision support systems. This report has discussed the examples of various organizations which have implemented decision support systems to support various business functions and these implementations have proved to be a major success. They have been taking a number of advantages from these implementations. This report has shown that a decision support system is developed for making effective use of the information in a most excellent way. In fact, information itself is a most valuable asset in today’s business environment. So the effective use of this information can make the business on the other hand if this information is not handled effectively it can break the business. This report has also discussed a business case where the use of a decision support system helped the firm drive effective decision. Without a doubt, the future of decision support systems is very bright and in future all the firms will be using information systems to survive in this business world. References Davoren, J. (2012). The Three Fundamental Roles of Information Systems in Business. Retrieved February 24, 2013, from http://smallbusiness.chron.com/three-fundamental-roles-information-systems-business-23681.html Hoffer, J. A., Prescott, M. B., & McFadden, F. R. (2007). Modern Database Management, Eighth Edition. Pearson Education, Inc. Laudon, K. C., & Laudon, J. P. (1999). Management Information Systems,(6th ed.). New Jersey: Prentice Hall. Metaxiotis, K., Ergazakis, K., Samouilidis, E., & Psarras, J. (2004). Decision support through knowledge management: the role of the artificial intelligence. International Journal of Computer Applications in Technology, Volume 9 Issue 2, pp.101-106. Stair, R. M., & Reynolds, G. W. (2003). Principles of Information Systems, Sixth Edition. Toronto : Thomson Learning, Inc. Topi, H. (2008). Role of information systems as a business discipline. ACM SIGCSE Bulletin, Volume 40 Issue 2, pp. 12-14. Turban, E., Aronson, J. E., & Liang, T.-P. (2004). Decision Support Systems and Intelligent Systems, 7th Edition. London: Prentice Hall. Turban, E., Leidner, D., McLean, E., & Wetherbe, J. (2005). Information Technology for Management: Transforming Organizations in the Digital Economy . New York: Wiley. Whitten, J. L., Bentley, L. D., & Dittman, K. C. (2000). Systems Analysis and Design Methods 5th Edition. New York: Irwin/McGraw-Hill. Zhykharyev, A. (2007). The decision support software ERGO from Technology Evaluation Centers (TEC) Inc., which has been used to substantiate decisions with far-reaching consequences, utilizes logic that leads to arbitrary results. Retrieved February 27, 2013, from ValueFocusedDecisions.com: http://valuefocuseddecisions.com/space_agency_and_ERGO.htm Read More