Decision Support Systems

The decision support systems option educates the student in the design, implementation and use
of computerized systems that support business managers in the decision-making process. A
decision support system (DSS) is a computer system that typically encompasses mathematical
models as well as informational databases and a user interface in order to provide recommended
decisions to manager-users. A DSS differs from a traditional information system (IS) or
management information system (MIS) in that it not only provides the user with information,
databases or reports, as does an IS or MIS, but it also provides answers to user queries, i.e.,
decisions, through its modeling component. In essence a DSS is a computer system that helps
managers make decisions.

Students in the DSS option take a variety of specialized courses in the information technology
field that enhances their ability to develop computer decision support systems. Course topics
include information systems, database management, networks and telecommunications, security,
decision support system development and implementation, visual interface design, artificial
intelligence, client/server systems, internet systems development, and simulation as well as
various mathematical modeling techniques. Specific computing language skills include C++,
Visual Basic (VB.net) and JAVA.

The job market for graduates of the DSS option is excellent. Over 100 companies and
government organizations annually interview BIT seniors. DSS graduates typically obtain jobs in
the information technology field. Job titles include consultant, technical consultant, systems
analyst, systems developer, network administrator, management analyst, programmer analyst,
project analyst, database developer, software developer, programming consultant, information
manager, applications developer, and information management consultant, among many others.

The largest single type of employer of DSS option graduates is typically consulting firms such as
Accenture, KPMG, CGI, Deloitte & Touche, PricewaterhouseCoopers, Booz Allen Hamilton,
among many others. However, numerous other types of companies and organizations hire DSS
graduates to work in various IT-related jobs.

Types of Decision Support Systems (DSS)

 

by Dan Power

Decision Support Systems (DSS) are a class of computerized information system that support
decision-making activities. DSS are interactive computer-based systems and subsystems
intended to help decision makers use communications technologies, data, documents, knowledge
and/or models to complete decision process tasks.

A decision support system may present information graphically and may include an expert
system or artificial intelligence (AI). It may be aimed at business executives or some other group
of knowledge workers.
Typical information that a decision support application might gather and present would be, (a)
Accessing all information assets, including legacy and relational data sources; (b) Comparative
data figures; (c) Projected figures based on new data or assumptions; (d) Consequences of
different decision alternatives, given past experience in a specific context.

There are a number of Decision Support Systems. These can be categorized into five types:

 Communication-driven DSS
Most communications-driven DSSs are targetted at internal teams, including partners. Its
purpose are to help conduct a meeting, or for users to collaborate. The most common
technology used to deploy the DSS is a web or client server. Examples: chats and instant
messaging softwares, online collaboration and net-meeting systems.
 Data-driven DSS
Most data-driven DSSs are targeted at managers, staff and also product/service suppliers.
It is used to query a database or data warehouse to seek specific answers for specific
purposes. It is deployed via a main frame system, client/server link, or via the web.
Examples: computer-based databases that have a query system to check (including the
incorporation of data to add value to existing databases.
 Document-driven DSS
Document-driven DSSs are more common, targeted at a broad base of user groups. The
purpose of such a DSS is to search web pages and find documents on a specific set of
keywords or search terms. The usual technology used to set up such DSSs are via the web
or a client/server system. Examples:
 Knowledge-driven DSS:
Knowledge-driven DSSs or 'knowledgebase' are they are known, are a catch-all category
covering a broad range of systems covering users within the organization seting it up, but
may also include others interacting with the organization - for example, consumers of a
business. It is essentially used to provide management advice or to choose
products/services. The typical deployment technology used to set up such systems could
be slient/server systems, the web, or software runnung on stand-alone PCs.
 Model-driven DSS
Model-driven DSSs are complex systems that help analyse decisions or choose between
different options. These are used by managers and staff members of a business, or people
who interact with the organization, for a number of purposes depending on how the
model is set up - scheduling, decision analyses etc. These DSSs can be deployed via
software/hardware in stand-alone PCs, client/server systems, or the web.
DECISION SUPPORT SYSTEMS

Decision support systems (DSS) are a diverse group of interactive computer tools—primarily
customizable software —designed to assist managerial decision making. They fall into a broader class
known as management support systems (MSSs). The goal of a DSS is to make management more
efficient and effective, particularly with ad hoc and discretionary decisions (versus routine or
programmatic ones that require little judgment). Interactivity is key; unlike related expert systems and
many artificial intelligence tools (see Figure 1), DSS generally do not attempt to make the decision
themselves, but rather present information in a manner that is conducive to making an informed and
efficient decision.

EVOLUTION OF DSS

DSS were introduced in the 1970s and gained mainstream attention in the 1980s. Originally run largely
on mainframes, they were seen as an evolutionary step from management information systems, which
at the time were relatively inflexible storehouses of corporate data. In that environment, DSS were high-
end applications reserved for occasional, non-recurring strategic decisions by senior management.

Since then, the rapid advances in personal computers ushered in a new breed of simple and widely used
DSS. Indeed, some experts
consider the built-in

Figure 1 Decision support

Systems Versus Other
Management Tools

Figure 1

Decision support Systems Versus

Other Management Tools

analytic functions in popular

spreadsheet programs, such as
Microsoft Excel and Lotus 1-2-3,
to be mini-DSS. As a result, many
DSS today are simple, informal
PC software tools that users
create themselves with the help of templates, macros, user-programmed modules, and other
customizable features.

While a simple DSS for an individual may cost a couple hundred dollars and some programming time,
sophisticated ones continue to be significant business investments. At their inception they were
exceptionally expensive to develop, and thus only large companies could afford them. Although relative
prices have come down, they still tend to cost anywhere from $30,000 to $500,000 or more to
implement company-wide. Premium systems are offered by such firms as IBM, SAS Institute, SPSS, and a
host of more specialized vendors.

COMPONENTS OF A DSS

There are three basic components in a DSS:

* a database

* a model base

* a user interface

Depending on the system, each of these components may be very simple or highly elaborate. The
database, or in advanced systems, a database management system (DBMS) or a data warehouse,
consists of structured, real-life information, such as customer account records, product sales history,
employee schedules, or manufacturing process statistics. The model base, or model base management
system (MBMS), contains one or more models for the kind of analysis the system will perform. For
example, if the purpose of the system is to supply sales projections under different conditions, one
model might be a linear regression formula derived from past sales and other factors. The user interface
integrates the two into a coherent system and provides the decision maker with controls for—and
possibly feedback about—managing the data and the models.

ANATOMY OF A DECISION

In order to discuss the support of decisions and what these tools can or should do, it is necessary to
have a perspective on the nature of the decision process and thus what it means to support it. One way
of looking at a decision is in terms of three areas or components. The first component is the data
collected by a decision maker to be used in making the decision. The second component is the process
selected by the decision maker to combine this data. Finally, there is an evaluation or learning
component that compares decisions and examines them to see if there is a need to change either the
data being used or the process that combines the data. These components of a decision interact with
the characteristics of the decision being made. One approach to categorizing decisions is to consider the
degree of structure in the decision-making activity.

THE STRUCTURE OF DECISIONS

STRUCTURED DECISIONS.

A structured decision is one in which all three components can be fairly well specified, i.e., the data,
process, and evaluation are determined. Usually structured decisions are made regularly and therefore
it makes sense to place a comparatively rigid framework around the decision and the people making it.
An example of this type of decision may be the routine credit-granting decision made by many
businesses. It is probably the case that most firms collect rather similar sets of data for credit granting
decision makers to use. In addition the way in which the data is combined is likely to be consistent (for
instance, household debt must be less than 25 percent of gross income). Finally, this decision can also
be evaluated in a very structured way (specifically when the marginal cost of relaxing credit
requirements equals the marginal revenue obtained from additional sales). For structured decisions it is
possible and desirable to develop computer programs that collect and combine the data, thus giving the
process a high degree of consistency. However, because these tend to be routine and predictable
choices, a DSS is typically not needed for highly structured decisions. Instead, there are any number of
automated tools that can make the decision based on the predefined criteria.

UNSTRUCTURED DECISIONS.

At the other end of the continuum are unstructured decisions. These decisions have the same
components as structured ones; however, there is little agreement on their nature. For instance, with
these types of decisions, each decision maker may use different data and processes to reach a
conclusion. In addition, because of the nature of the decision there may also be few people that are
even qualified to evaluate the decision. These types of decisions are generally the domain of experts in a
given field. This is why firms hire consulting engineers to assist their decision-making activities in these
areas. To support unstructured decisions requires an appreciation of individual approaches, and it may
not be terribly beneficial to expend a great deal of effort to support them.

Generally, unstructured decisions are not made regularly or are made in situations in which the
environment is not well understood. New product decisions may fit into this category for either of these
reasons. To support a decision like this requires a system that begins by focusing on the individual or
team that will make the decision. These decision makers are usually entrusted with decisions that are
unstructured because of their experience or expertise, and therefore it is their individual ability that is of
value. One approach to support systems in this area is to construct a program that simulates the process
used by a particular individual. These have been called "expert systems." It is probably not the case that
an expert decision maker would be replaced by such a system, although it may offer support in terms of
providing another perspective of the decision. Another approach is to monitor and document the
process that was used so that the decision maker(s) can readily review what has already been examined
and concluded. An even more novel approach used to support these decisions is to provide
environments that are specially designed to give these decision makers an atmosphere that is conducive
to their particular tastes, a task well suited for a DSS. The key to support of unstructured decisions is to
understand the role that individual experience or expertise plays in the decision and to allow for
individual approaches.

SEMI-STRUCTURED DECISIONS.

In the middle of the continuum are semi-structured decisions, and this is where most of what are
considered to be true decision support systems are focused. Decisions of this type are characterized as
having some agreement on the data, process, and/or evaluation to be used, but there is still a desire not
to place too much structure on the decision and to let some human judgment be used. An initial step in
analyzing which support system is required is to understand where the limitations of the decision maker
may be manifested, i.e., will it be in the data acquisition portion, or in the process component, or
possibly in the evaluation of outcomes. For instance, suppose an insurance executive is trying to decide
whether to offer a new type of product to existing policyholders that will focus on families with two or
more children that will be ready to attend college in six to nine years. The support required for this
decision is essentially data oriented. The information required can be expressed in terms of the
following query on the insurance company's database: "Give me a list of all of our policyholders that
have a college education and have more than two children between ages 10 and 12."

PROCESSING INFORMATION

A major role of DSS is simple information processing; the program makes a large array of facts and
considerations more digestible. They also automate tasks at which humans tend to be slow and
inaccurate, such as sorting and mathematical calculations.

WHAT-IF ANALYSIS.

For instance, the insurance executive who wanted to offer the new product now has to decide on a price
for the product. In order to make this decision, the effect of different variables (including price) on
demand for the product and the subsequent profit must be evaluated. The executive's perceptions of
the demand for the product can be captured in a mathematical formula that portrays the relationship
between profit, price, and other variables considered important. Once the relationships have been
expressed, the decision maker may now want to change the values for different variables and see what
the effect on profits would be. The ability to save mathematical relationships and then obtain results for
different values is a feature of many decision support systems. This is called "what-if' analysis and is a
common application for DSS to automate.

EVALUATING OUTPUT.

Of course, the output from such a system is only as good as the model or data being used; if the demand
model is inaccurate or outdated or based on dissimilar products, the outcome projections may be
worthless. Thus, decision makers must be aware of the risk of potential inaccuracies and understand the
underlying logic behind a DSS's output, as opposed to accepting its output blindly, in order to make an
informed decision. The object of a good DSS is to obtain useful information for human consideration
rather than to let the computer make the decision itself. Advanced DSS may contain safeguards and
pointers to help users avoid misinterpreting output or creating meaningless output.

LEVEL OF INTERACTION.

Systems such as the Statistical Navigator go through a dialogue with the user to determine what the
data's characteristics are and what questions are actually being asked of the data. Then the system
suggests what techniques are most appropriate to use. This approach to supporting decision makers
requires that the DSS possess a great deal more than database or processing capabilities—it should
actually have an understanding of the domain in which the system is being used. The Statistical
Navigator has knowledge of statistical methods and the benefits, assumptions, and problems associated
with each method. A future step would be a system that has an understanding of more processing
options than just statistical methods. This might include linear programming or present value analysis.
As DSS start to include many different processing models in the library of choices, two possibilities exist.

One possibility is that the system will merely allow users to choose different methods within the same
overall DSS. In this instance the user must still supply the knowledge of what is the most appropriate
method and must be able to interpret the results. Another possibility is similar to the approach used in
the Statistical Navigator, which would be to include a knowledge of the methods in the DSS and let it
help the user select among many methods, not just statistical. Of course each approach does have its
problems. There are software packages that allow users to select among different methods, but they do
not offer a great deal of guidance on their use. Thus, as is the case with certain statistical analysis
packages, the conclusions may not be correct because the method was applied incorrectly.
The second possibility presents a very different problem, or perhaps challenge; that is, how much
knowledge to build into the DSS. A single system with general knowledge of most processing methods
would be very popular with most users. However, designers would be confronted with the problem of
what to include in a support system or what decision activities it should support. Should it have simple
knowledge of the processing methods, such as linear programming, statistical regression, and present
value? Or should it have knowledge about decision areas, such as cash budgeting, locating a new plant,
or pricing policies?

This second approach may keep inappropriate data from being used, but then the questions about the
role of the decision maker and how structured decisions may become must be addressed. Is the decision
maker merely an information provider to a DSS that performs many functions, or should the role of the
DSS be simply to make whatever analysis is desired as easy as possible. As software develops more and
more capabilities, designers and users of decision support systems will have to answer the question of
what it actually means to support a decision.

SPECIAL KINDS OF DSS

Although all DSS are designed to tackle fairly specific types of problems, there are a number of
recognized subcategories of DSS. Among them group decision support systems (GDSS) and executive
information systems (EIS). At times these can be hard to distinguish from a "conventional" DSS, but both
continue to enjoy solid backing in corporations and the separate terminology persists.

GROUP DECISION SUPPORT SYSTEMS.

As the name implies, GDSS are used to assist groups of decision makers who have common or
overlapping responsibilities, such as executive committees, task forces, and work teams. Some of these
tools are designed to be used directly when the group is convened. One example is tallying and
processing group member preferences, and then presenting output for the participants to discuss. In
other cases the group may never meet, but a centralized system is available to each member for
common tasks they perform, such as financial monitoring and reporting.

EXECUTIVE INFORMATION SYSTEMS.

EISs are suites of data analysis tools that are meant to be applied to a company's most critical financial
and performance data. In large organizations, usually this means the EIS has the ability to pull and
manipulate data—increasingly in real time instead of waiting days or weeks for the most recent data—
on multiple corporate systems. EISs enjoyed a resurgence in the 1990s in part because of widespread
management interest in activity-based costing, data warehousing, and enterprise resource planning
systems. Software advances have also made EISs less costly and more powerful. Many of the latest
systems are run on client/server technology using a Web browser.

Read more: Decision Support Systems - benefits

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