Decision Support Systems (DSS)

Decision Support Systems (DSS) help executives make better decisions by using historical and current data from internal Information Systems and external sources. By combining massive amounts of data with sophisticated analytical models and tools, and by making the system easy to use, they provide a much better source of information to use in the decision-making process.

Decision Support Systems (DSS) are a class of computerized information systems 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 successfully complete decision process tasks.

While many people think of decision support systems as a specialized part of a business, most companies have actually integrated this system into their day to day operating activities. For instance, many companies constantly download and analyze sales data, budget sheets and forecasts and they update their strategy once they analyze and evaluate the current results. Decision support systems have a definite structure in businesses, but in reality, the data and decisions that are based on it are fluid and constantly changing.

Types of Decision Support Systems (DSS)

  1. Data-Driven DSS take the massive amounts of data available through the company’s TPS and MIS systems and cull from it useful information which executives can use to make more informed decisions. They don’t have to have a theory or model but can “free-flow” the data. The first generic type of Decision Support System is a Data-Driven DSS. These systems include file drawer and management reporting systems, data warehousing and analysis systems, Executive Information Systems (EIS) and Spatial Decision Support Systems. Business Intelligence Systems are also examples of Data-Driven DSS. Data-Driven DSS emphasize access to and manipulation of large databases of structured data and especially a time-series of internal company data and sometimes external data. Simple file systems accessed by query and retrieval tools provide the most elementary level of functionality. Data warehouse systems that allow the manipulation of data by computerized tools tailored to a specific task and setting or by more general tools and operators provide additional functionality. Data-Driven DSS with Online Analytical Processing (OLAP) provide the highest level of functionality and decision support that is linked to analysis of large collections of historical data.
  2. Model-Driven DSS A second category, Model-Driven DSS, includes systems that use accounting and financial models, representational models, and optimization models. Model-Driven DSS emphasize access to and manipulation of a model. Simple statistical and analytical tools provide the most elementary level of functionality. Some OLAP systems that allow complex analysis of data may be classified as hybrid DSS systems providing modeling, data retrieval and data summarization functionality. Model-Driven DSS use data and parameters provided by decision-makers to aid them in analyzing a situation, but they are not usually data intensive. Very large databases are usually not needed for Model-Driven DSS. Model-Driven DSS were isolated from the main Information Systems of the organization and were primarily used for the typical “what-if” analysis. That is, “What if we increase production of our products and decrease the shipment time?” These systems rely heavily on models to help executives understand the impact of their decisions on the organization, its suppliers, and its customers.
  3. Knowledge-Driven DSS The terminology for this third generic type of DSS is still evolving. Currently, the best term seems to be Knowledge-Driven DSS. Adding the modifier “driven” to the word knowledge maintains a parallelism in the framework and focuses on the dominant knowledge base component. Knowledge-Driven DSS can suggest or recommend actions to managers. These DSS are personal computer systems with specialized problem-solving expertise. The “expertise” consists of knowledge about a particular domain, understanding of problems within that domain, and “skill” at solving some of these problems. A related concept is Data Mining. It refers to a class of analytical applications that search for hidden patterns in a database. Data mining is the process of sifting through large amounts of data to produce data content relationships.
  4. Document-Driven DSS A new type of DSS, a Document-Driven DSS or Knowledge Management System, is evolving to help managers retrieve and manage unstructured documents and Web pages. A Document-Driven DSS integrates a variety of storage and processing technologies to provide complete document retrieval and analysis. The Web provides access to large document databases including databases of hypertext documents, images, sounds and video. Examples of documents that would be accessed by a Document-Based DSS are policies and procedures, product specifications, catalogs, and corporate historical documents, including minutes of meetings, corporate records, and important correspondence. A search engine is a powerful decision aiding tool associated with a Document-Driven DSS.
  5. Communications-Driven and Group DSS Group Decision Support Systems (GDSS) came first, but now a broader category of Communications-Driven DSS or groupware can be identified. This fifth generic type of Decision Support System includes communication, collaboration and decision support technologies that do not fit within those DSS types identified. Therefore, we need to identify these systems as a specific category of DSS. A Group DSS is a hybrid Decision Support System that emphasizes both the use of communications and decision models. A Group Decision Support System is an interactive computer-based system intended to facilitate the solution of problems by decision-makers working together as a group. Groupware supports electronic communication, scheduling, document sharing, and other group productivity and decision support enhancing activities We have a number of technologies and capabilities in this category in the framework – Group DSS, two-way interactive video, White Boards, Bulletin Boards, and Email.

Components of Decision Support Systems (DSS)

Traditionally, academics and MIS staffs have discussed building Decision Support Systems in terms of four major components:

  • The user interface
  • The database
  • The models and analytical tools and
  • The DSS architecture and network

This traditional list of components remains useful because it identifies similarities and differences between categories or types of DSS. The DSS framework is primarily based on the different emphases placed on DSS components when systems are actually constructed.

Data-Driven, Document-Driven and Knowledge-Driven DSS need specialized database components. A Model- Driven DSS may use a simple flat-file database with fewer than 1,000 records, but the model component is very important. Experience and some empirical evidence indicate that design and implementation issues vary for Data-Driven, Document-Driven, Model-Driven and Knowledge-Driven DSS.

Multi-participant systems like Group and Inter- Organizational DSS also create complex implementation issues. For instance, when implementing a Data-Driven DSS a designer should be especially concerned about the user’s interest in applying the DSS in unanticipated or novel situations. Despite the significant differences created by the specific task and scope of a DSS, all Decision Support Systems have similar technical components and share a common purpose, supporting decision- making.

A Data-Driven DSS database is a collection of current and historical structured data from a number of sources that have been organized for easy access and analysis. We are expanding the data component to include unstructured documents in Document-Driven DSS and “knowledge” in the form of rules or frames in Knowledge-Driven DSS. Supporting management decision-making means that computerized tools are used to make sense of the structured data or documents in a database.

Mathematical and analytical models are the major component of a Model-Driven DSS. Each Model-Driven DSS has a specific set of purposes and hence different models are needed and used. Choosing appropriate models is a key design issue. Also, the software used for creating specific models needs to manage needed data and the user interface. In Model-Driven DSS the values of key variables or parameters are changed, often repeatedly, to reflect potential changes in supply, production, the economy, sales, the marketplace, costs, and/or other environmental and internal factors. Information from the models is then analyzed and evaluated by the decision-maker.

Knowledge-Driven DSS use special models for processing rules or identifying relationships in data. The DSS architecture and networking design component refers to how hardware is organized, how software and data are distributed in the system, and how components of the system are integrated and connected. A major issue today is whether DSS should be available using a Web browser on a company intranet and also available on the Global Internet. Networking is the key driver of Communications- Driven DSS.

Advantages of Decision Support Systems (DSS)

  • Time savings. For all categories of decision support systems, research has demonstrated and substantiated reduced decision cycle time, increased employee productivity and more timely information for decision making. The time savings that have been documented from using computerized decision support are often substantial. Researchers, however, have not always demonstrated that decision quality remained the same or actually improved.
  • Enhance effectiveness. A second category of advantage that has been widely discussed and examined is improved decision making effectiveness and better decisions. Decision quality and decision making effectiveness are however hard to document and measure. Most researches have examined soft measures like perceived decision quality rather than objective measures. Advocates of building data warehouses identify the possibility of more and better analysis that can improve decision making.
  • Improve interpersonal communication. DSS can improve communication and collaboration among decision makers. In appropriate circumstances, communications- driven and group DSS have had this impact. Model-driven DSS provides a means for sharing facts and assumptions. Data-driven DSS make “one version of the truth” about company operations available to managers and hence can encourage fact-based decision making. Improved data accessibility is often a major motivation for building a data-driven DSS. This advantage has not been adequately demonstrated for most types of DSS.
  • Competitive advantage. Vendors frequently cite this advantage for business intelligence systems, performance management systems, and web-based DSS. Although it is possible to gain a competitive advantage from computerized decision support, this is not a likely outcome. Vendors routinely sell the same product to competitors and even help with the installation. Organizations are most likely to gain this advantage from novel, high risk, enterprise-wide, inward facing decision support systems. Measuring this is and will continue to be difficult.
  • Cost reduction. Some researches and especially case studies have documented DSS cost saving from labor savings in making decisions and from lower infrastructure or technology costs. This is not always a goal of building DSS.
  • Increase decision maker satisfaction. The novelty of using computers has and may continue to confound analysis of this outcome. DSS may reduce frustrations of decision makers, create perceptions that better information is being used and/or creates perceptions that the individual is a “better” decision maker. Satisfaction is a complex measure and researchers often measure satisfaction with the DSS rather than satisfaction with using a DSS in decision making. Some studies have compared satisfaction with and without computerized decision aids. Those studies suggest the complexity and “love/hate” tension of using computers for decision support.
  • Promote learning. Learning can occur as a by-product of initial and ongoing use of a DSS. Two types of learning seem to occur: learning of new concepts and the development of a better factual understanding of the business and decision making environment. Some DSS serve as “de facto” training tools for new employees. This potential advantage has not been adequately examined.
  • Increase organizational control. Data-driven DSS often make business transaction data available for performance monitoring and ad hoc querying. Such systems can enhance management understanding of business operations and managers perceive that this is useful. What is not always evident is the financial benefit from increasingly detailed data.

Regulations like Sarbanes-Oxley often dictate reporting requirements and hence heavily influence the control information that is made available to managers. On a more ominous note, some DSS provide summary data about decisions made, usage of the systems, and recommendations of the system. Managers need to be very careful about how decision-related information is collected and then used for organizational control purposes. If employees feel threatened or spied upon when using a DSS, the benefits of the DSS can be reduced. More research is needed on these questions.

Disadvantages of Decision Support Systems (DSS)

Decision Support Systems can create advantages for organizations and can have positive benefits, however building and using DSS can create negative outcomes in some situations.

  • Monetary cost. The decision support system requires investing in information system to collect data from many sources and analyze them to support the decision making. Some analysis for Decision Support System needs the advance of data analysis, statistics, econometrics and information system, so it is the high cost to hire the specialists to set up the system.
  • Overemphasize decision making. Clearly the focus of those of us interested in computerized decision support is on decisions and decision making. Implementing Decision Support System may reinforce the rational perspective and overemphasize decision processes and decision making. It is important to educate managers about the broader context of decision making and the social, political and emotional factors that impact organizational success. It is especially important to continue examining when and under what circumstances Decision Support System should be built and used. We must continue asking if the decision situation is appropriate for using any type of Decision Support System and if a specific Decision Support System is or remains appropriate to use for making or informing a specific decision.
  • Assumption of relevance. According to Wino grad and Flores (1986), “Once a computer system has been installed it is difficult to avoid the assumption that the things it can deal with are the most relevant things for the manager’s concern.” The danger is that once DSS become common in organizations, that managers will use them inappropriately. There is limited evidence that this occurs. Again training is the only way to avoid this potential problem.
  • Transfer of power. Building Decision Support Systems, especially knowledge-driven Decision Support System, may be perceived as transferring decision authority to a software program. This is more a concern with decision automation systems than with DSS. We advocate building computerized decision support systems because we want to improve decision making while keeping a human decision maker in the “decision loop”. In general, we value the “need for human discretion and innovation” in the decision making process.
  • Unanticipated effects. Implementing decision support technologies may have unanticipated consequences. It is conceivable and it has been demonstrated that some DSS reduce the skill needed to perform a decision task. Some Decision Support System overload decision makers with information and actually reduce decision making effectiveness.
  • Obscuring responsibility. The computer does not make a “bad” decision, people do. Unfortunately some people may deflect personal responsibility to a DSS. Managers need to be continually reminded that the computerized decision support system is an intermediary between the people who built the system and the people who use the system. The entire responsibility associated with making a decision using a DSS resides with people who built and use the system.
  • False belief in objectivity. Managers who use Decision Support Systems may or may not be more objective in their decision making. Computer software can encourage more rational action, but managers can also use decision support technologies to rationalize their actions. It is an overstatement to suggest that people using a DSS are more objective and rational than managers who are not using computerized decision support.
  • Status reduction. Some managers argue using a Decision Support System will diminish their status and force them to do clerical work. This perceptual problem can be a disadvantage of implementing a DSS. Managers and IS staff who advocate building and using computerized decision support need to deal with any status issues that may arise. This perception may or should be less common now that computer usage is common and accepted in organizations.
  • Information overload. Too much information is a major problem for people and many DSS increase the information load. Although this can be a problem, Decision Support System can help managers organize and use information. Decision Support System can actually reduce and manage the information load of a user. Decision Support System developers need to try to measure the information load created by the system and Decision Support System users need to monitor their perceptions of how much information they are receiving. The increasing ubiquity of handheld, wireless computing devices may exacerbate this problem and disadvantage.

In conclusion, before firms will invest in the Decision Support Systems, they must compare the advantages and disadvantages of the decision support system to get valuable investment.

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About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]

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