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Importance of Management Support Systems, for Business Enterprises, Importance of Management Support Systems for Business Enterprises!, , Management support systems focus on managerial uses of information resources. These systems, provide information to manage for planning and decision making. The information provided by, these systems is based on both the internal and external data using various data analysis tools., They also offer a choice to the user to select out of these tools for the purpose of data analysis., These systems serve the information needs of managers at middle and top levels in the, managerial hierarchy., There are three types of management support systems, namely:, a) Decision Support Systems,
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b) Executive Information (support) Systems and, c) Expert Systems., , Decision Support Systems:, , Decision support systems (DSS) are designed to support the decision making process of, managers to improve their effectiveness and thereby efficiency of the enterprise. They are based, on the premise that managerial judgment cannot be replaced by any computer based solution., However, by offering the support of data and models, it is possible to improve the decision, making process even in the case of semi-structured and unstructured problems., The basic purpose of DSS is to extend the capability of a manager’s decision making process by, supporting tools and data made available to him under his direct control. DSS neither, presupposes specific information requirements and predefined tools for analysis for different, types of decisions nor does it impose any solutions on a manager., Thus, it gives flexibility to the manager to decide the input data, tool of analysis, depth of, analysis and reliance on the outcome of Analysis for decision making. DSS offers an interactive, environment for users and thus permits manager to experiment with data and models to develop, the optimal decision making strategy in a given situation., DSS are also described as interactive information systems that help managers utilise data, analysis models to solve unstructured problems. DSS uses technologies that may be termed as its, building blocks. They are represented in Figure 10.3., , Types and features of DSS:, DSS may be data oriented or model oriented. The data oriented DSSs have greater input of data, retrieval and data analysis. The model oriented DSS has powerful facilities for simulation of, decision scenarios by estimating the outcome of an action and generating suggestions. In fact, it
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is difficult to find a DSS exclusively for data retrieval and analysis or, simply, for modelling. In, fact, most DSSs contain a mix of both types of facilities., DSSs have the following features that make them distinct from other types of information, systems:, a) DSS does not aim at any specific type of decisions. It has the flexibility of use in various, unexpected decision situations., b) The user friendly interface of DSS makes it different from other types of information systems., Once a manager has used a DSS for some time, its irregular use does not adversely affect the, ease of use., c) The report generators and graphic facilities in DSS provide better ways of representing the, information generated by use of models in DSS. These facilities add value to the information., d) DSS offers any user complete control over the system. The input, method of processing and, output are controlled by the user., Benefits from DSS:, An Information system must have its own justification to be a candidate worth considering for, inclusion in the applications portfolio of an enterprise. The justifications are generally in terms of, the benefits in generating information to assist in external reporting and managerial decision, making process. The benefit that a DSS can offer includes:, a. Evaluation of a larger number of alternatives as the facilities in DSS reduce the time and effort, in collecting and analysis of data for different alternatives., b. Modeling and forecasting becomes easy for managers using DSS enabling them to get more, insight into the business processes., c. Usefulness in intra-group and inter-group communication because it makes it possible to, explain to others, how one has arrived at a particular conclusion. The rationale assigns, respectability to conclusions and earns the backing of others in the enterprise., d. Facilities for quicker analysis of data for unstructured decision making, thereby, improving the, speed of response in unexpected decision making situations., e. Quicker spotting of variances and exceptions. Frequent users of DSS have found that DSS, enables them to anticipate outcomes with the help of efficient ad hoc query facility., f. In-depth analysis of data and therefore, more effective use of data resource.
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Applications of DSS:, DSS have found success in enterprises of medium to large size and in decision scenarios, requiring in-depth analysis of internal and external data. The success of DSS depends, to a large, extent, on top management support, regularity and length of use, training of managers and, variety of decision making situations., If the business process is simple and repetitive in nature, DSS may not be able to justify its costs., DSS applied to structured decisions only add to costs and confusion. DSS have been found to be, useful in decision areas where flexibility in data and modeling is required for better decision, making. The typical areas of application of DSS in production and finance functions of business, are:, Production:, Procurement analysis, cost estimation and analysis, production planning and scheduling, make or, buy decisions, inventory planning and control, manpower loading, etc., Finance:, Capital budgeting, financial planning and analysis, tax planning, strategic financial planning,, budgeting, cash and working capital management, debt and equity financing analysis, foreign, exchange risk management, financial performance analysis, variance analysis, etc., The decision support systems are developed using a process different from the traditional system, development process as they are supposed to process internal as well as external data. They need, to be independent and interactive., Executive Information Systems:, , DSS are designed to cater to the information needs of managers at middle to top levels. They, relate to rule-based work doing modeling and analysis of data in order to make it useful in, decision making., However, at the top of managerial level, there is a need to focus more on packaging and delivery, of information than on generation of information. The top manager deserves better environment, for information access than that provided by DSS., The top executives need fast access to up-to-date, concise information and exception reports with, facilities to personalized information and analysis. The information systems designed to cater to, such needs of top executives are called Executive Information Systems (EIS) or Executive, Support Systems., These systems act as electronic briefing systems and offer tremendous flexibility in use. EIS uses, internal as well as external information and offers an interactive and a user friendly operating, environment.
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Applications of EIS:, Executive Briefing:, EIS offers up-to-date information on different aspects of the executive’s interest. The briefing is,, generally, related to the performance of various profit centers and offers status reports on various, activities of the enterprise. Though a certain amount of briefing takes place in DSS as well the, information comes as and when it is asked for, from the databases., In EIS, the information is automatically downloaded periodically from databases in the form of, finished reports. This automatic downloading ensures that executive does not remain out of touch, for long during the days of extreme pressure of workload., Personalized Analysis:, EIS offers facilities for data analysis using the models of user’s choice. Spreadsheets and, statistical techniques are available in EIS for asking. The difference, here, is that EIS not only, helps the user in analysis of data, but also in interpretation of the outcome of the analysis., Exceptions Reporting:, An important component of EIS is the exception reporting module. EIS caters to this requirement, of executives effectively and forewarns the executive of the substantial variations from the plans., They permit, with varying degrees, further investigation into the reasons for deviations and, possible impact of proposed salvage operations. This ability to probe into the matter to get a little, more than just the exception makes EIS a very useful tool for the executive in the efficient, discharge of his functions., Model Based Analysis:, EIS has facilities for model based information analysis and this feature is common with DSS., But, the model based analysis in EIS is different from that in DSS in the sense that the input data, in EIS is limited and obtained from both internal and external sources., It may be noted that EIS is not an isolated collection of computer reports of information for, executive. EIS is a set of integrated tools and technologies woven into the total information, system environment of the enterprise., It may be noted that EIS supports all the users and not necessarily the top executives of the, enterprise. All those who help top executives should have access to EIS and it must cater to the, information needs of all such people.
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DSS and EIS:, Some of the facilities in EIS are also found in DSS and, as such, the line of distinction sometimes, becomes blurred. The overlapping cannot be ruled out in such systems. Figure 10.4 shows the, types of information support that these two systems provide to a manager., , Benefits of EIS:, EIS offers the following benefits to a business enterprise:, a) Information support for strategic decisions:, EIS helps executives in relying more on facts than on intuition and business judgement for their, strategic decisions., b) Changing the focus:, A top executive’s frequent queries regarding a set of critical success factors have an impact on, the priorities of people at lower levels of management. Thus, it is easier for an executive using, EIS to pass on the message to functional managers regarding the need to maintain quality, standards, just by making frequent queries from EIS regarding-the quality of products. The, executive’s queries can set the thrust of activities in the enterprise and thus change the priorities, in the enterprise.
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EIS is said to be one of the important information systems that present an opportunity for the top, management to get a real feel of the usefulness of information systems in strategic decision, making., Such a system in an enterprise is also likely to promote understanding between top management, and IT professionals and improve communication between these important players in development of IT infrastructure., Successful EIS can provide the visibility and credibility to information systems as a whole and, help in implementing other information systems in the enterprise., Critical success factors in EIS implementation:, EIS intends to provide firsthand knowledge to top executives regarding the potential benefits of, information systems in the enterprise. Therefore, it is necessary to ensure that EIS, once planned,, must be implemented successfully., The problems of implementation in EIS can be numerous but a few of the common ones are, as follows:, a) Difficulty in system specification:, The target users of EIS are neither clear about their specific information requirement nor have, the time to chalk out the specifications of the information system. The users, thus, deserve a few, options to try out before they are able to specify the services required by them. Prototyping is, considered to be a better strategy in the design of EIS., b) Large volumes of data:, Ad hoc Query facilities demand access to a large volume of data. The satisfaction of such queries, may require use of statistical tools processing bulk data before it can meet the requirement of, information in the query. This may take time and the response of the system may be slow., It is, therefore, essential to anticipate the broad issues on which the queries are likely to focus, and information regarding such issues may be regularly generated and stored separately for, access to EIS., c) Resistance from lower levels:, EIS is likely to face resistance also from the people at almost all levels and more from managers, at lower java levels. It is so because now the boss has access to latest information ach regarding, the day-to-day functioning in each department even before the departmental heads have gone, through and understood it. Rochartat a anticipates serious implications of such access to, databases on the new politics of data ownership among the managers. However, a data- the base, manager can address this problem by carefully handling distributions button of data.
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d) Management styles:, It would be difficult to implement EIS in the case of enterprises having an IT averse culture., Some top executives do not favour use of IT in decision making. They have more confidence in, their business judgement and wish to leave data analysis either to their subordinates or to the, domain experts who help them., This problem is quite serious. Therefore, EIS in such environments are aimed at top positions., They are limited, in scope, to services where the success rate is known to be very high. Once the, confidence in IT and EIS is generated EIS may add more services to itself., e) Increased size and cost:, If the manager finds an EIS useful, he expects his subordinates also to use it. Those who do not, use it, find it very difficult to live upto the expectations of their boss in so far as awareness, regarding the business environment is concerned. Thus, the EIS gets overloaded and costs climb, up sharply because the number of users shall grow in geometric proportions., Thus, implementation of EIS should be undertaken very carefully. It is advisableto select an, opportune time for implementation. People resist changes more when the going is smooth and, are more willing to try out something new in a crisis., Therefore, the most opportune time of EIS implementation is when people are searching for new, solutions to their problems. Pilot installation is considered the most suitable installation strategy, for EIS. A selective approach is better in the initial stages of EIS design and new services are, added in EIS only after the initial model is successful. User involvement and support are critical, in the successful implementation of EIS., Expert Systems:, , The increasing complexities and dynamism in the emerging business environment require greater, interaction of functional’ managers with the experts so as to get timely advice. These experts, would not only sift information from vast pools of diverse information, but also use their, expertise to offer advice., Traditionally, the expertise available in an organisation has provided an important basis for, achieving, improving and maintaining its competitive position. All other things being equal,, firms without comparable expertise are at a disadvantage., Human experts may not be able to cope with the new challenges, given the constraints of time, and complexities of the new environment. Besides, there may not be uniformity and consistency, of advice for a given decision situation over a period., This is so because of the obvious inability of human beings to capture the impact of various, decision variables all the time. The Information Fatigue Syndrome and the limitations of human
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experts in the changing business environment have resulted in increasing popularity of business, expert systems (BES)., These systems simulate human activity and keep capturing and systematising business, knowledge, extending the decision making capabilities of expensive and scarce human experts,, so that others can use their decision experiences. They offer the advantage of flexibility in, capturing and representing information of different types in diverse forms., A business expert system receives a problem from the user, identifies its data requirements,, analyses the relevant data against the decision rules (contained in a knowledge system). Once the, problem is solved, the system through its inference engine reports the solution to the user and is, also able to explain its line of reasoning in reaching that solution., A business expert system can act as an aid to managerial effectiveness by providing advice. Its, solutions/advices are always consistent, uniform, thorough and methodical. It functions as a, standardised problem solver. The business expert system is able to explain the line of reasoning, it uses for solving a problem., A user can study the rationale and is free to accept, modify or reject the solution. Unlike other, expert systems in the field of medicine, engineering, etc the objective of the business expert, system is not to replace evaluation by human expert(s) by the computer program., Rather, the objective is to acquire the expertise of the human expert and make it available in a, standardised form to human expert(s) and others in the organisation. They work out strategies to, use knowledge in the application areas so as to develop plausible solutions to the problems., The typical areas of application of expert system in business include:, i. Make or buy decisions, ii. New product launch decisions, iii. Determining credit limits, iv. Product development, v. Investment counselling, vi. Performance evaluation, vii. Incentive systems, viii. Customer query, ix. Project evaluations
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x. Production scheduling, xi. Routing decisions, , Building blocks of business expert systems:, Although the expert system methodology has been developed over the last two decades, it is still, in its infancy when viewed from the viewpoint of a business manager. Thus, there is no standard, model for a business expert system. Holsapple identifies three basic components of BES namely, user interface, inference engine and knowledge system. The relationships among these, components are represented in Figure 10.5., , A user poses a problem before the BES using the user interface. The inference engine tries to, understand the problem, structure it in such a way so that the knowledge system can be used to, solve it. Then it uses the knowledge system to seek solutions to the problem., The knowledge system consists of stored reasoning expertise and is addressed by the inference, engine to seek solutions to the problem. The knowledge system may consist of knowledge representation tools such as rule sets, databases, spreadsheets, frame- oriented structures, case bases,, semantic nets, texts, graphics, etc. The inference engine may interact with users to get more, details regarding the decision making environment.
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Procurement options:, A business expert system is a complex system and requires long term commitment on the part of, an enterprise to be able to deliver goods. Due to the dynamics of business, the usefulness of the, BESs may be reduced because of changes in the business environment., Some of the BESs can become obsolete even during the development stage if they are not, properly planned. It is essential to be aware of the procurement options, so that the development, time and cost could be reduced and a balance between flexibility and efficiency could be, maintained in the system., Broadly, there are three procurement options for BES:, a) Acquire a fully developed system:, A number of ready-made BESs are available for different types of problems identified in the list, of applications of BES mentioned earlier. These ready-made solutions have all the three, components fully developed and are in a ready to use state. They have the advantages of being, economical, well tested and quicker implementation but in many decision situations they are not, suitable., b) Acquire artificial intelligence shell:, The artificial intelligence shell consists of a rule set manager and an inference engine. The rule, set manager is provided with the expertise represented by various knowledge representation, tools. Once the expert knowledge is represented, it rules set is tested on the past information and, once found correct, the shell becomes usable with the help of the inference engine., This option gives the flexibility for a manager to define his own rule sets and get a custom made, BES operational in a short period of time. However, such shells that are available in the market, have their own areas of applications that they are most suited for., c) Custom built system:, In case the first two options appear to be infeasible or are considered advisable due to the, uniqueness of the problem, one may opt for custom made BES. They cost more and take a longer, time, but, are very useful in unique or specific kinds of decision making situations., Benefits of expert systems:, BESs are expensive both in terms of money and time required to develop them. It is, therefore,, necessary to be aware of the benefits of BES so that cost benefit analysis could be done before, venturing into acquisition of BES.
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Following are the potential benefits of BESs:, a) Coding of expertise:, The significant benefit of business expert system is that it helps in formalising/codifying the reasoning ability of an organisation. In the process of development of BES, attempts are made to, represent expertise in the form of rules, frames, cases, text and graphs., This leads to compilation of knowledge regarding the expertise so far held firmly to chest by the, experts. Such a store of expertise can provide a basis for better training of human experts in the, organisation besides leading to better decision making., b) Enhanced understanding of business process:, It enhances the understanding of the decision making process that may in turn lead to, improvement in the process. During the development process, the existing ways of decision, making are identified and reviewed. This helps in improving the decision making process., Frequent interaction of experts with BES is a great learning process and results in mutual, enhancement of each other’s problem solving capabilities., c) Timely availability of expertise:, BES is able to provide expertise when a human expert is not available. These systems do not, have problems of availability that is quite common among human experts. BESs are available to, users for consultations at odd hours, have no prior engagements, do not proceed on leave for one, reason or the other and do not resign from the enterprise to join a competitor., d) Easy replication:, The marginal cost of replicating a BES is insignificant. Once a BES is successful at one place, it, can be replicated at other places having similar decision making environments, without loss of, time or opportunity., e) Eliminates routine consultation requests:, BES can help a human expert in reducing his work load by directing the routine type of, consultation requests to BES. This enables the human expert to concentrate on more challenging, problems that are not solved by BES., f) Consistency:, BES offers consistent and uniform advice on problems. Their advice does not suffer from, overlooking some factors, forgetting some of the steps, personal bias or temperamental, problems.
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g) Line of logic:, BES offers a line of logic used along with the solution. This enables manager to critically, examine the solutions and find out whether the line of reasoning used is valid or not. This helps, the manager understand the strength and weaknesses of the solution and apply his business, judgement to arrive at decisions., h) Strategic applications:, The benefits of BES help in product and service differentiation and reduced costs. They also help, in developing niche markets where competitors without such systems may not be effective. Thus,, BESs can provide the strategic edge to an enterprise., Critical success factors in implementation of BES:, The critics of BESs provide numerous reasons for the impracticability of BES. The criticism in, most of the cases is not unfounded. It is essential that the problems relating to development and, implementation are anticipated and necessary precautions are taken to ensure success of BES., The following factors may be kept in view in this connection:, a) Cost effectiveness:, Most of the BESs are very expensive and sometimes it is economical to use human experts. It is, necessary to keep the cost of BES low to ensure that the cost is justified by the potential benefits., The first two procurement options help in keeping the cost of BES at lower levels., b) Selective in scope:, The more ambitious BES may require a longer duration of the development process and heavy, costs. It may be remembered that not all decisions offer the same rate of return on investment in, BES., One should be selective in including applications in BES and a comprehensive BES, perhaps, requires a lot of information system expertise. The artificial intelligence technologies are still, evolving and it may be economically viable to have wider scope for BES., c) User friendliness:, BESs are very complex systems having powerful techniques for data analysis. They require a lot, of training effort before they can be effectively used. It is, therefore, necessary to have more, user-friendly user-interface and more explicit and unambiguous menu structures.
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d) Multi-user environment:, Most BES are stand alone systems. However, many a time, decision expertise is an outcome of, collective and group activity. BES having multi-user environment are likely to be more, successful than stand alone systems., What a manager needs to know about BES:, BES uses multiples of knowledge engineering tools of which many may be beyond the, comprehension of an ordinary functional manager. However, as a user of the BES, a manager, need not know the technical details of the knowledge system., What he needs to know regarding BES is:, i. The opportunities for application of BES in one’s business activities and relative potential of, each application in formalisation of knowledge., ii. Basic BES technologies and their favourite areas of application., iii. Feasibility of using artificial intelligence shell., iv. Role of BES in supporting people in their activities., v. Technical and economic feasibility of BES., The potential benefits from BES are quite fascinating. Perhaps, what is required is to develop, cost effective tools for building up the BES and willing participation by domain experts in the, development process that is evolutionary in nature., Limitations of business expert systems:, BESs have proven their potential benefits in many applications and quite a few have been very, successful. However, there are a few limitations of BESs. These limitations are due to the, assumptions that BESs make regarding:, i. The availability of a willing domain human expert who is able to articulate knowledge and has, a proven record in making effective decisions. Such experts are rarely available, particularly in, new domains where knowledge is also in a state of evolution., ii. The decision making environment is simple, well structured and not subject to frequent, changes. In reality, decision making takes place in complex, dynamic and a multi-dimensional, environment. As a consequence, articulating knowledge is very difficult., The BESs lack flexibility that is needed in the light of the dynamics of business. Multidimensional decision making environment makes group decision making essential. Getting an, expert who understands all the dimensions of the business problems is becoming increasingly
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difficult. It may be remembered that BESs are well suited for limited type of applications and are, not for totally replacing human experts., As a consequence, BESs are losing their popularity. They are considered suitable for limited type, of applications. The new artificial intelligence tools such as neural networks, fuzzy logic, case, based reasoning, etc. are being added to inference engines to make them more suitable for, changing needs of business., Side by side, attempts are being made to use the AI tools for developing add-on software to perform limited functions. These add-ons are termed as intelligent agents., Intelligent Agents:, Intelligent agents are software components that perform a part of the process using a knowledge, base. They work generally with shared information systems and operate in a semi-autonomous, manner., These programs communicate with users and the information bases to perform self contained, tasks. These programs are integrated into different applications to enhance the information, analysis services of the information system. These agents are being used for a variety of, applications such as:, a) Detection and alarm systems:, The intelligent agents are being used to establish a system of detecting exceptions in the data, bases, communication systems, etc. and issuing necessary alarms to the concerned users., ‘Management by exception’ would find a new dimension in managerial activities when such, intelligent agents start delivering information., b) Information search engines:, Intelligent agents are also being developed to function as information search engines for replying, to the queries received from different types of users. For example, a ministry may get a number, of requests for information, everyday. Intelligent agents can interpret the requests and sift information from the database and send the reply in the appropriate form to the user., Similarly, intelligent agents could add value to the Railways information system by proper, management of passenger enquiries regarding various operations. An intelligent agent links the, Internet, the internal network and CD-ROMs to search filter and deliver personalised, information. A smaller version of such search engine is already available in LOTUS-NOTES.
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c) Desk top applications:, As the availability of intelligent agents becomes common on PCs, they would act as personal, meeting managers, personal librarians, personal financial advisors, etc. These agents would, automatically arrange telephonic contact with clients, fix appointments and issue alarms to, ensure that the appointment is not ignored inadvertently., These agents would look for write-ups on subjects of interest from Internet magazines and, collect information from other sources including electronic libraries and CD-ROMs to provide, information that one gets with the help of secretaries, today.
