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Book Contents

Ch. 1
Supporting Business Decision-Making

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What is a system?

The term system is used in many technology-related concepts including Decision Support System and Transaction Processing System -- both are computing or information systems. Managers and MIS specialists use the concept of a system frequently and yet it is hard for most of us to define and understand the concept.

Letís begin exploring this key term by defining a system as an interrelated set of components including people, activities, technology and procedures that are designed or intended to achieve a predefined purpose. A system receives input from its environment and the various subsystems or components of the system interact to produce outputs. Systems are defined in terms of their components. System components are surrounded by an imaginary boundary that separates a specific system from its environment. A system designer identifies both inputs from the environment as well as the outputs from the system. Systems also have feedback mechanisms to provide a means of controlling the operation of the system. Feedback is an output from a system that later reenters the system as an input.

Letís examine a simple conceptual specification of a system. The initial input into the system is a bank customer requesting a loan. The customer makes a request to a bank officer. The bank officer collects information from the customer and enters that information into a computerized form. A loan approval model is built into a computerized decision aid. Some people identify the computerized model as the actual decision support system. The banker uses the result from the computerized loan approval model to finalize the decision to approve or deny the loan. In some cases the loan information will need to be shared with a loan committee possibly using a group support system. The actual decision is then communicated to the customer either face-to-face or by a formal letter that may be generated by a computerized decision aid. Feedback comes from the customer.

This decision process and the overall conceptual system may include various Decision Support Systems. The bankís Transaction Processing System would be updated when the loan was made and the funds distributed. The loan is the primary transaction. Making the loan is the decision process. DSS can support making loans or a DSS can help analyze lending activity at the bank or predict lending activity and interest rates.

In a Decision Support System, the primary focus is often on the computerized components of the system. This is a narrow perspective for defining the components of a system; it is often helpful to define the DSS boundary to include a broader decision process that may involve people performing non-computerized tasks as well as more routine data gathering tasks. The users of the computerized tools are also part of the broader system. Finally, note that the actual communication or transmission of decisions may not occur using computerized systems. This step in a decision process needs to be considered in the design of the DSS and it should be included within the boundary of the system.

We need to define Decision Support Systems on both a conceptual level and a concrete, technical level. Both managers and DSS designers need to understand what they are trying to accomplish. The specific purpose of a proposed Decision Support System and its components need to be defined early in the design and development process.

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