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LN4_Managerial_Support_Systems_v3 - MGCR 331 Information...

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MGCR 331 – Information Systems (“IT Impacts on Organizations”) Managerial Support Systems – Lecture Note 4 LEARNING OBJECTIVES 1. Describe the concepts of management, decision making (process and types of decision) and computerized support for decision making 2. Describe two types of managerial support systems (Intelligent systems and Decision support systems) and discuss their capabilities and distinctive features. Summary This lecture note discusses a wide range of systems, referred to as managerial support systems (MSS), intended to support the managerial decision making process. These systems by and large do not process transactions. Instead, they provide information to support decision-making (referred to as decision support systems) or provide recommendation to decision makers (referred to as intelligent systems). They may use data collected and processed by a transaction system, but they analyze these data far differently than the transaction systems. First, we highlight the importance of decision making in managerial work. Next we describe the decision making process and discuss various classifications of decisions. Finally, we describe and discuss different types of managerial support systems and their capabilities. Managers and Decision Making Management is a process by which organizational goals are achieved through the use of resources (people, money, energy, materials, space, time). Managers have three basic roles - Interpersonal roles, Informational roles, and Decisional roles (Mintzberg 1973). Management researchers have emphasized the decision-making nature of management since the 1950s. Certainly, we expect managers to make decisions in many different domains. Important decisions include funding R&D and product development, and the decision to introduce a new product. Many managerial decisions revolve around issues of resource allocation. Almost every organization is confronted with limited resources and competing demands for them. Decision refers to a choice that individuals and groups make among two or more alternatives. Decision-making is a systematic process composed of four major phases: intelligence, design, choice, and implementation (Simon 1977) 1 . The figure below 2 depicts the process and phases in decision-making. 1 1 Implementation phase was added later. 2 2 Source: Rainer and Turban textbook
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Decision Making Process: The decision-making process starts with the intelligence phase, in which managers examine the situation and define the problem (i.e. find what to fix). They find or recognize a problem, need, or an opportunity. In the design phase, decision makers construct a model that simplifies the problem. In this stage managers consider all the possible solutions and means of solving the problem, filling the need, or taking advantage of the opportunity (i.e., find fixes). They do this by making assumptions that simplify reality and by expressing the relationships among all the relevant variables. Managers then validate the model by using test data. Finally, in the choice
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LN4_Managerial_Support_Systems_v3 - MGCR 331 Information...

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