Information Systems in Decision Making

Chapter 2: Information System Facilitating Organizational Decision Making

• Information systems collect information from various sources, organize work activities, and enable businesses to manage information and make better decisions.
• Business processes are how work is organized and coordinated. They involve collections of activities to produce products or services. This includes the flow of physical, intellectual, and information. Knowledge and expertise among participants are critical. Processes can be functional or cross-functional. Smooth execution results in business assets; poor execution leads to liabilities. Examples include university processes (admission, hiring) and manufacturing (product assembly).
• Information technology (IT) enhances business by automating steps, increasing access to and sharing of information, replacing sequential steps with parallel, and reducing decision-making delays.

Systems for Different Management Groups

• Operational, middle, and senior managers have different information needs and require different systems to support their decision-making activities.
• Senior management needs general, broad-scope, real-time, and ad-hoc information from internal and external sources.
• Middle management needs focused, specified, internal, real-time, and scheduled information.
• Operational management needs specific, narrow, internal, and detailed information.

Types of Decisions

• Unstructured decisions require judgment and insights (e.g., approving capital budgets, launching new products).
• Semi-structured decisions have some clear answers provided by procedures (e.g., allocating resources for a marketing plan).
• Structured decisions follow definite procedures (e.g., restocking inventory, delivering a shipment).

Types of Management Information Systems

• Transactional Processing Systems (TPS) support daily routine transactions required for conducting business (e.g., sales, payroll, payments).
• Management Information Systems (MIS) produce reports on current performance, answer basic questions, and track routine tasks. They rely on data from TPS, making predefined decisions, but offer limited analytical capabilities.
• Decision Support Systems (DSS) help managers with non-routine decisions, using models and insights from external and internal data to analyze situations, create numerous possible solutions, and test these scenarios for best results.
• Group Decision Support Systems (GDSS) support collaborative problem solving using interactive computer systems. Facilitates input and discussion from multiple people involved in the decision making process.

Business Intelligence and Decision Support Systems

• Business intelligence uses data collection, organization, and analysis that support managerial decision making. Information is gathered from internal and external sources for use in reports and visualization tools (dashboards).
• A management information system provides reports on current operations to middle managers for operational control. Also utilized for generating data-driven reports for decision making.

Knowledge Management Systems (KMS)

• Knowledge management systems (KMS) improve business decisions by storing, retrieving, and sharing organizational knowledge. Explicit knowledge—codified data, policies, and procedures—is easily shared. Tacit knowledge—knowledge gained from experience and intuition—is harder to share.
• Knowledge creation relies on several modes, such as socialization, externalization, combination, and internalization.

Knowledge Storage and Sharing

• Knowledge is stored in a knowledge repository and shared using IT systems. Systems should be designed and formatted in ways that meet the organization's requirements.
• Knowledge sharing can occur through various means, such as face-to-face interactions, documentation, and communication channels.
• Effective knowledge storage and sharing improve efficiency by eliminating the need for repeated discovery and retrieval of information.

Systems for Collaboration and Teamwork

• Collaboration involves multiple people working together toward a common goal (e.g., business operations, customer service, or product development), using tools like email, instant messaging systems, shared workspaces, social media, and collaboration software..
• Effective collaboration requires a supportive organizational structure that encourages participation in decisions
• Social business relies on social networking, internal and external platforms to support employee interactions, customer relationships, and collaboration with external stakeholders.

IT Infrastructure

• IT infrastructure encompasses the physical and software components needed for enterprise operations. Including: hardware platforms, operating systems (OS), enterprise software applications, data management systems, networking and communications platforms, and internet platforms.
• IT consulting services help organizations implement and manage their IT infrastructure, providing necessary systems integrations and maintenance advice.

Cloud Computing

• Cloud computing provides access to computing resources and services over a network, usually the internet. Companies can reduce capital expenditures by outsourcing IT functions.
• Key characteristics of cloud computing are "on-demand" self-service, broad network access, resource pooling, rapid elasticity, and measured service.
• Types of cloud computing include Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS).
• Important factors to consider while choosing a cloud computing option include organization's operational requirements, security risks, and business costs.