The Significance of IS
Decision Support Systems
A decision support system (DSS) helps an organization make a specific decision or set of decisions. DSSs can exist at different levels of decision-making within the organization, from the CEO to first level managers. These systems are designed to take inputs regarding a known (or partially-known) decision making process and provide the information necessary to make a decision. DSSs generally assist a management level person in the decision-making process, though some can be designed to automate decision-making.
An organization has a wide variety of decisions to make, ranging from highly structured decisions to unstructured decisions. A structured decision is usually one that is made quite often, and one in which the decision is based directly on the inputs. With structured decisions, once you know the necessary information you also know the decision that needs to be made. For example, inventory reorder levels can be structured decisions. Once your inventory of widgets gets below a specific threshold, automatically reorder ten more. Structured decisions are good candidates for automation, but decision-support systems are generally not built for them.
An unstructured decision involves a lot of unknowns. Many times unstructured decisions are made for the first time. An information system can support these types of decisions by providing the decision makers with information gathering tools and collaborative capabilities. An example of an unstructured decision might be dealing with a labor issue or setting policy for the implementation of a new technology.
Decision support systems work best when the decision makers are having to make semi-structured decisions. A semi-structured decision is one in which most of the factors needed for making the decision are known but human experience and other outside factors may still impact the decision. A good example of an semi-structured decision would be diagnosing a medical condition (see sidebar).
As with collaborative systems, DSSs can come in many different formats. A nicely designed spreadsheet that allows for input of specific variables and then calculates required outputs could be considered a DSS. Another DSS might be one that assists in determining which products a company should develop. Input into the system could include market research on the product, competitor information, and product development costs. The system would then analyze these inputs based on the specific rules and concepts programmed into it. The system would report its results with recommendations and/or key indicators to be used in making a decision. A DSS can be looked at as a tool for competitive advantage because it can give an organization a mechanism to make wise decisions about products and innovations.