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Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 1 of 8

Introduction

This lesson will discuss Decision Support Systems (DSS) and their relevance to structured,
semi-structured, and non-structured decision-making patterns. In addition, this lesson will
explain the types of skills and qualities that teams need to best utilize a DSS. Finally, the
relationship between a DSS and a company’s competitive advantage will be reviewed and the
following question broached: Do these systems help companies gain a competitive edge that
offsets their costs?

Decision Support System (DSS)

A Decision Support System, or DSS, can be defined as a series of linked computerized
procedures that aid in the important process of leadership and management decision-making.
But why is a DSS so necessary?

Here is an example of how the pharmaceutical industry uses such a system:

The cost of bringing a new drug to market is significant—as much as $800 million over
15 years. Consequently, pharmaceutical companies must rely on methods to make
better decisions about which drugs hold the best chances for success, how to bring
products to market faster, and to support a product and monitor its performance after it’s
on the market. Advances in analytic business intelligence have produced tools for
improved pharmaceutical decision support (Spotfire, 2006, para. 1).

People have always made decisions — decisions regarding how to eat, how to build better
homes, how to develop tools to automate processes, and so forth.

Even in the early ages when cave dwellers led more simple lives, they made decisions
regarding how to light fires, how to build helpful tools, how to find food, etc. Yet, they do not
appear to have needed sophisticated decision-making databases or tools.

Now, consider the decision-making diagram below. This diagram shows the flowcharts that
control the decision-making processes in many businesses today. Essentially, such diagrams
tell companies what to do in order to be most effective and efficient when choosing a
combination of resources to enjoy maximum output. Companies invest much of their time in
coming up with these decision trees to avoid long-term losses.

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 2 of 8

But the question remains: What caused decision-making to become a science? In short,
historically, decisions were not as numerous or complex as they are today, due to humanity’s
ever increasing knowledge and freedoms. The more choices the world has, the more complex
business decisions become. Furthermore, in order to compete in the 21st century marketplace,
companies must seek to utilize their resources in the best combination possible. Below are
some of the questions companies ask today:

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 3 of 8

 Should a company stay with its current products and services? Alternatively, what if the

company extends its product differentiation strategy and produces a variety of items?

 What if the company invests more in technology and reduces its current human capital

investment?

 What if the company keeps employee raises at a minimum but increases the benefits such
as gym privileges, cafeteria quality, and better health coverage? Will such changes
psychologically improve employee motivation?

These are only a few of the “what if” questions asked by leadership and management daily,
monthly, quarterly, and annually. Now, imagine if a company had to implement these ideas in
order to understand their pros and cons? Such a high level of trial and error would take up
massive amounts of company time and money. As such, DS Systems came into being to help
companies answer these “what if” questions in a more informed and cost-effective manner.

There is no question that a DSS adds benefit to an organization. One article, entitled “Improving
Clinical Practice Using Clinical Decision Support Systems,” addresses the effect DSS has had
on clinical practice states and offers that “Decision support systems significantly improved
clinical practice in 68% of trials” (Kawamoto et al., 2005, “Results”).

Decision-making Patterns

What type of DSS does a company need to support its decision-making needs? Prior to
answering this question, one has to first understand the types of decision-making patterns that
exist within a company.

For the most part, a company has three layers of decision-makers:

 Executive Leadership

 Middle Level Management

 Front-line Management

As one moves from the top to the bottom, one finds the following patterns in relation to decision-
making. Consider the following diagram:

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 4 of 8

Effectively, the length of the decision span (long, mid-range, short) that each level of leadership
(executive, middle, front-line) is responsible for determines the pattern (unstructured, semi
structured, structured) of decision-making. The following further explains this concept from a
more practical perspective.

Executive Leadership sees the whole, knows the vision, and formulates the mission to reach the
vision. Its decisions are normally made anywhere from two to ten years in advance in order to
plan effectively. Predictions are made, and many alternatives have to be considered in order to
make effective long-term decisions. As such, decisions present more doubt, more margins for
inaccuracy, and so forth. Persons make predictions based on alternatives, a process that relies
on sophisticated tools. So, for these reasons, the time of the decision-making is long-term and
the pattern unstructured because of the level of prediction. An example of a question Executive
Leadership might ask is, “What do we want the company to look like in five years in relation to
revenues?”

Middle Management sees the whole of its department and can be expected to make decisions
as far out as one to five years. While these managers need to see the whole in order to
effectively lead/manage their teams, their focus is on a section of the organization. As such,
decisions deal with more mid-ranged timetables. Thus, as Middle Management decisions are
not as unstructured as Executive Leadership decisions or as structured as Frontline
Management decisions, their decision-making style is referred to as semi-structured. An
example of a question a Middle Management employee might ask is, “During May and June,
how many service calls need to come in order to keep all workers busy?”

Front-line Management leads the team that interacts with the customers daily. As such, the
decision-making timeline for these managers can be daily, weekly, or monthly. These managers
have more control over the short-term questions that need to be answered, such as, “How many
customers need to be served this week or this month?”

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 5 of 8

DSS and Decision-making Patterns

Keep in mind that a DSS houses a variety of data based on past and current trends, etc. It also
includes built-in formats and procedures that manipulate the data. These are the tools used to
help managers play with alternatives. Below are some of the most popular types of DS
Systems:

1. Data-driven DSS

 These help users query a variety of unknowns based on the fields available in the
database.

2. Communication-driven DSS

 These could include instant messages, threaded discussions, emails, synchronous
chats, etc.

3. Knowledge-driven DSS

 These provide the type of information necessary to help management choose
certain alternatives over others and guide them towards the best combination of
products and services.

4. Document-driven DSS

 These are research-and-find type systems, such as the Web, in which users can
electronically search for documents relating to their topics of interest.

Now, who should use which of the above four system to yield the best outcomes?

 Executive Leadership
o This level of leadership can use all 4 types of DS Systems. The amount of data

employed in these systems
may be more extensive that
that used by middle
management because
Executive Leadership makes
decision over a longer period
in an unstructured
environment. These DS
Systems not only house a
variety of data, but also lots of
alternative analyses tools that
answer the many “what if’
questions posed by this
leadership group.

 Middle Level Management
o This level of management can use all 4 types of systems as well. As shared

above, while middle level management also utilizes all four types of DS Systems,

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 6 of 8

they are used at another level — one that will offer prediction, calculations, etc. in
a shorter timeframe.

 Front-line Management
o This group can use mainly 1 and 3 system types. This group best utilizes data

and knowledge-driven databases because it deals with decisions on a very short-
term basis. Rarely will you find these front-line supervisors sitting in their offices,
sending extensive emails, and surfing the Web. They are oftentimes in the field
or in the front office ensuring that their team is meeting the daily needs of the
customers. They use DS Systems mostly for scheduling purposes and in order to
explore the services and product needs of their customers over a short period of
time.

These systems are not inexpensive. Due to the cost, companies should seek to ensure a high
enough ROI before using them. Then, proper analyses must be done in order for each team to
clearly and definitively understand what type of information is needed to assist with the level of
decision-making required of them.

Skills and Qualities Teams Need to Utilize a DSS

All levels of an organization must prepare themselves for the implantation of a DSS.

 Executive Team
o In this case, oftentimes a change in mindset must occur. Not all leaders

naturally see the need and value of having a DSS, especially when they view
the costs.

o Leaders need to be flexible, risk-takers, analytical, computer savvy, and patient.
o It is important that all members of leadership are fully educated on the cost-

benefit analysis regarding these systems.
o Leadership is integral in setting the culture of an organization. As such, it is

strongly advised that top leadership take as long as they need to agree on the
types of DS Systems needed for the organization. This unity will be felt by the
rest of the organization.

 Middle Management Team
o What happens with Executive Leadership must be

shared with this team so that shared vision and mission
exist in relation to this endeavor.

o This team needs to be open, trustworthy of leadership,
computer savvy, flexible, and keenly aware of its
departments’ needs.

 Front-line Management Team
o Front-line workers need to be computer savvy as well.
o They need to have confidence that these systems can

better their daily job duties.

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 7 of 8

o Since this team is held responsible for the direct care of the customer, its
members may also need to be assured that the system will help them improve
customer service

DSS and a Company’s Competitive Advantage

DS Systems can help companies meet their zeniths in competitive advantage. The key here is
for an organization to clearly outline its goals and, then, to use the systems to help it meet these
goals. While companies rely on these systems to answer their questions, a clear vision and
mission are the foundations on which such systems should be built. Moreover, companies
should also realize that, while DSSs are becoming more and more popular, they are not miracle
workers. They respond to data entered and the types of queries and alternatives sought.

A report entitled “Midwest Watershed Management Geo-Spatial and Decision Support System”
clearly shows what a quality DSS proposal looks like. The report’s details reveal that the
company “knows” what it wants to achieve in a five-year period:

The purpose of our 5-year project is to:

 Improve the management of watersheds in Region 5 through the development,
promotion, and use of a Web-based, user-friendly, geo-spatial watershed
management data and decision support system (WMDDSS).

 Set the standard for other watershed management programs for the country
(Midwest Watershed Management Company, 2002, “Objectives/Purposes”).

In closing, experience has shown that, when utilized correctly, the benefits of DS Systems far
outweigh their costs. In this 21st century of fierce competition, it can almost be assumed that
companies no longer have a choice but to invest in these DS Systems that can work as an
extension of their own analytical capacity and increase competitive advantage.

Copyright © 2007 by Learning House, Inc What are Decision Support Systems? Page 8 of 8

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