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Book Contents

Ch. 2
Gaining Competitive Advantage with DSS

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Risks and Benefits

Development and implementation of Strategic Information Systems, including Decision Support Systems, has many risks. Gaining any advantage may require a large financial investment. Competitors' responses to the innovation may result in a heated race to gain or regain lost market share or provide the new capability. The competitive race can evolve into one of technology one-upmanship rather than one of better meeting customer needs. Sometimes the development of a strategic information system can shift power away from a specific company or an entire industry (cf., Porter and Millar, 1985). Technology risks include picking the wrong vendor, using a new technology too early in the technology life cycle, or using a technology that soon becomes obsolete. The inability to predict human behaviors and reactions, and the basic human instinct to resist change makes people the greatest risk when building new systems. No matter how wonderful a proposed DSS, if people resist the change, then the new system will fail. To gain an advantage a new DSS must work as planned and a company's stakeholders must perceive its strategic significance for the firm.

All categories and types of Decision Support Systems focus on improving the effectiveness of decision-makers rather than on increasing the efficiency of data storage and retrieval. Managers should routinely ask how a proposed computerized Decision Support System would do this? In what ways do any type of computerized support system increase managerial effectiveness? The following are common benefits cited by Steven Alter (1980, pp. 95-106), Udo and Guimaraes (1994), and others for Decision Support Systems:

1. Improve personal efficiency. One of the ways to help people become more effective decision-makers is to help them become more efficient in manipulating data. At a minimum, this should allow a person either to perform the same task in less time or to perform the same task more thoroughly in the same length of time. The result of automating the clerical component of decision-related tasks is often to improve consistency and accuracy, and to allow people to spend more of their time on the substantive rather than clerical aspects of their jobs.

2. Expedite problem solving and improve decision quality. A Data-Driven DSS can provide faster turnaround in retrieving decision relevant information; improve consistency and accuracy; and it may provide better ways of viewing or solving problems. DSS users can obtain answers to non-routine questions more or less immediately. Decision-makers can consider more alternatives. Suggestion DSS may reduce the variability in the application of guidelines and policies. Model-Driven DSS can help managers conduct "what if" analyses and modify their assumptions and scenarios in financial planning. Also, Group DSS can reduce the length of feedback loops and the need to redo analyses. Problems seem to get resolved faster. Also, some managers perceive DSS provide an "impartial" source of information that encourages "fact-based" decision-making. This perception expedites problem solving.

3. Facilitate Interpersonal Communication. DSS provide users with "tools of persuasion" to help them argue to do something based on analysis or to show that "a good job" had been done. Many types of DSS can provide managers in an organization with a vocabulary and a process for decision making and discussion.

4. Promote Learning or Training. Quite frequently learning occurs 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. Some Suggestion DSS and management expert systems reduce the expertise needed by an employee to perform satisfactorily and help newcomers gain expertise. They also preserve expertise that might be lost through loss of an acknowledged expert.

5. Increase Organizational Control. Some DSS provide summary data for purposes of overall organizational control. Summary data can be monitored, retained and analyzed. Managers need to be very careful about how decision-related information is collected and then used for organizational control purposes. Trying to gain increased control of employee decision behavior can be counter-productive if employees feel threatened or spied upon when they are using a DSS.

DSS can have positive benefits, but DSS can create negative outcomes in some situations. For example, some DSS development efforts lead to power struggles over who should have access to data. Also, managers may have personal motives for advocating development of a DSS. A DSS can increase the "visibility" of its sponsor and have positive rewards if it is successful. Some IS staff support DSS implementations so they can experiment with new technology or expand staff rather than because they believe in the proposed DSS. Isolating and identifying hidden agendas is difficult, but DSS proponents in IS and management must attempt to examine them. The successful development and use of DSS requires that people accept the DSS and that they are motivated to help make the project a success. Hidden agendas can hurt the motivation of all of the people involved in a DSS development project.

Some opportunities are better than others. The key task for managers is understanding new technology and being able to develop only those systems that create positive business results, while rejecting those that use "technology for the sake of technology." Using IS/IT to gain competitive advantage definitely has risks.

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