When there is no well-understood or Agreedon procedure for making a decision it is said to be :\?

Decisions are classified as structured, semistructured, and unstructured. Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insight to solve the problem. Each of these decisions is novel, important, and nonroutine, and there is no well-understood or agreed-on procedure for making them. Structured decisions, by contrast, are repetitive and routine, and they involve a definite procedure for handling them so that they do not have to be treated each time as if they were new. Many decisions have elements of both types of decisions and are semistructured, where only part of the problem has a clear-cut answer provided by an accepted procedure. In general, structured decisions are more prevalent at lower organizational levels, whereas unstructured problems are more common at higher levels of the firm.

Making a decision is a multistep process. Simon (1960) described four different stages in decision making: intelligence, design, choice, and implementation.

• Intelligence consists of discovering, identifying, and understanding the problems occurring in the organization—why a problem exists, where, and what effects it is having on the firm.
• Design involves identifying and exploring various solutions to the problem.
• Choice consists of choosing among solution alternatives.
• Implementation involves making the chosen alternative work and continuing to monitor how well the solution is working.

MANAGERS AND DECISION MAKING IN THE REAL

WORLD

Managers play key roles in organizations. Their responsibilities range from making decisions, to writing reports, to attending meetings, to arranging birthday parties. We are able to better understand managerial functions and roles by examining classical and contemporary models of managerial behavior. The classical model of management, which describes what managers do, was largely unquestioned for the more than 70 years since the 1920s. Managerial roles are expectations of the activities that managers should perform in an organization. Mintzberg found that these managerial roles fell into three categories: interpersonal, informational, and decisional.

Interpersonal Roles. Managers act as figureheads for the organization when they represent their companies to the outside world and perform symbolic duties, such as giving out employee awards, in their interpersonal role. Managers act as leaders, attempting to motivate, counsel, and support subordinates. Managers also act as liaisons between various organizational levels; within each of these levels, they serve as liaisons among the members of the management team. Managers provide time and favors, which they expect to be returned.

Informational Roles. In their informational role, managers act as the nerve centers of their organizations, receiving the most concrete, up-to-date information and redistributing it to those who need to be aware of it. Managers are therefore information disseminators and spokespersons for their organizations.

Decisional Roles. Managers make decisions. In their decisional role, they act as entrepreneurs by initiating new kinds of activities; they handle disturbances arising in the organization; they allocate resources to staff members who need them; and they negotiate conflicts and mediate between conflicting groups. Information systems are not helpful for all managerial roles. And in those managerial roles where information systems might improve decisions, investments in information technology do not always produce positive results. There are three main reasons: information quality, management filters, and organizational culture. Information Quality. High-quality decisions require high-quality information. Management Filters. Even with timely, accurate information, some managers make bad decisions. Managers (like all human beings) absorb information through a series of filters to make sense of the world around them. Managers have selective attention, focus on certain kinds of problems and solutions, and have a variety of biases that reject information that does not conform to their prior conceptions. Organizational Inertia and Politics. Organizations are bureaucracies with limited capabilities and competencies for acting decisively.

At the foundation of all of these decision support systems are business intelligence and business analytics infrastructure that supplies the data and the analytic tools for supporting decision making.

In this section, we want to answer the following questions:

• What are business intelligence (BI) and business analytics (BA)
• Who makes business intelligence and business analytics hardware and

software?

• Who are the users of business intelligence?
• What kinds of analytical tools come with a BI/BA suite?
• How do managers use these tools?
• What are some examples of firms who have used these tools?
• What management strategies are used for developing BI/BA capabilities?

BUSINESS INTELLIGENCE

Business intelligence” is a term used by hardware and software vendors and information technology consultants to describe the infrastructure for warehousing, integrating, reporting, and analyzing data that comes from the business environment. The foundation infrastructure collects, stores, cleans, and makes relevant information available to managers. Think databases, data warehouses, and data marts. “Business analytics” is also a vendor-defined term that focuses more on tools and techniques for analyzing and understanding data. Think online analytical processing (OLAP), statistics, models, and data mining.There are six elements in this business intelligence environment:

• Data from the business environment: Businesses must deal with both structured and unstructured data from many different sources, including mobile devices and the Internet. The data need to be integrated and organized so that they can be analyzed and used by human decision makers.
• Business intelligence infrastructure: The underlying foundation of business intelligence is a powerful database system that captures all the relevant data to operate the business. The data may be stored in transactional databases or combined and integrated into an enterprise-data warehouse or series of interrelated data marts.
• Business analytics toolset: A set of software tools are used to analyze data and produce reports, respond to questions posed by managers, and track the progress of the business using key indicators of performance.
• Managerial users and methods: Business intelligence hardware and software are only as intelligent as the human beings who use them. Managers impose order on the analysis of data using a variety of managerial methods that define strategic business goals and specify how progress will be measured.
• Delivery platform—MIS, DSS, ESS. The results from business intelligence and analytics are delivered to managers and employees in a variety of ways, depending on what they need to know to perform their jobs. MIS, DSS, and ESS.
• User interface: Business people are no longer tied to their desks and desktops. They often learn quicker from a visual representation of data than from a dry report with columns and rows of information. Today’s business analytics software suites emphasize visual techniques such as dashboards and scorecards. Business intelligence and analytics promise to deliver correct, nearly real-time information to decision makers, and the analytic tools help them quickly understand the information and take action. There are 5 analytic functionalities that BI systems deliver to achieve these ends:
• Production reports: These are predefined reports based on industry-specific requirements
• Parameterized reports. Users enter several parameters as in a pivot table to filter data and isolate impacts of parameters. For instance, you might want to enter region and time of day to understand how sales of a product vary by region and time. If you were Starbucks, you might find that customers in the East buy most of their coffee in the morning, whereas in the Northwest customers buy coffee throughout the day. This finding might lead to different marketing and ad campaigns in each region
• Dashboards/scorecards: These are visual tools for presenting performance data defined by users
• Ad hoc query/search/report creation: These allow users to create their own reports based on queries and searches
• Drill down: This is the ability to move from a high-level summary to a more detailed view
• Forecasts, scenarios, models: These include the ability to perform linear forecasting.

DECISION SUPPORT FOR OPERATIONAL AND MIDDLE

MANAGEMENT

Operational and middle management are generally charged with monitoring the performance of key aspects of the business, ranging from the down-time of machines on a factory floor, to the daily or even hourly sales at franchise food stores, to the daily traffic at a company’s Web site. Most of the decisions they make are fairly structured. Management information systems (MIS) are typically used by middle managers to support this type of decision making, and their primary output is a set of routine production reports based on data extracted and summarized from the firm’s underlying transaction processing systems (TPS).

Decision support systems (DSS) are the BI delivery platform for this category of users, with the ability to support semi-structured decision making. DSS rely more heavily on modeling than MIS, using mathematical or analytical models to perform what-if or other kinds of analysis. “What-if” analysis, working forward from known or assumed conditions, allows the user to vary certain values to test results to predict outcomes if changes occur in those values. Sensitivity analysis models ask what-if questions repeatedly to predict a range of outcomes when one or more variables are changed multiple times

The purpose of executive support systems (ESS), is to help C-level executive managers focus on the really important performance information that affect the overall profitability and success of the firm. There are two parts to developing ESS. First, you will need a methodology for understanding exactly what is “the really important performance information” for a specific firm that executives need, and second, you will need to develop systems capable of delivering this information to the right people in a timely fashion.

However, so much work is accomplished in groups within firms that a special category of systems called group decision-support systems (GDSS) has been developed to support group and organizational decision making. A GDSS is an interactive computer-based system for facilitating the solution of unstructured problems by a set of decision makers working together as a group in the same location or in different locations. Collaboration systems and Web-based tools for videoconferencing and electronic meetings described earlier in this text support some group decision processes, but their focus is primarily on communication.