Decision support system; why is it important? You may have already asked yourself: how could I solve my company’s problems in an agile and precise way? Designing a decision support system can be essential for solving problems quickly and with a business focus.
Next, we introduce the concept and explain how a decision support system works. In addition, we will see how technology can help organize this process.
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What is a decision support system?
A decision support system ( DSS) is an information system that supports business or organizational decision-making activities. DSSs address an organization’s management, operations, and planning levels and help people make decisions about issues that may be rapidly changing and not easily diagnosed in advance.
Decision support systems can be manual, fully computerized, or a combination. Some scholars in the field have expanded the definition of DSS to include any system that can support decision-making. Some DSS include a software component for decision-making.
A properly designed DSS is an interactive, software-based system created to help decision-makers gather actionable information from raw data, documents, and personal knowledge or business models to identify, solve, and make decisions.
Functions of a decision support system
- Quick response time: thanks to the fact that all the data is ideally stored and converted into reports, with all kinds of details depending on each need, the decision support system tools will be able to speed up your decision-making.
- Integration of all departments: the data it uses comes from all the processes and areas of the company to offer a perfect global analysis.
- Historical data: In personal processing data, in a decision support system, you can compare current data with information from previous periods to analyze trends, detect incidents, etc.
How does a decision support system work?
A decision support system has three fundamental components:
- The database;
- The model (i.e., the decision context and user criteria);
- The user interface.
Also, a decision support system can work in different ways. Using the relationship with the user as a criterion, Haettenschweiler differentiates 3 types of DSS: passive, active, and cooperative.
- Passive DSS: This system assists decision-making but cannot generate explicit decision suggestions or solutions.
- Active DSS: You can generate such decision suggestions or solutions.
- Cooperative DSS: Allows an iterative process between the human and the system towards achieving a consolidated solution: the decision maker (or another management person) can modify, complete or refine the decision suggestions provided by the system before sending them back to the system for validation. And in the same way, the system again improves, completes, and refines the suggestions of the decision maker and sends them back for confirmation.
Dan Power has created another definition of a decision support system. For him, we can distinguish the DSS in a support system based on communications, data, documents, knowledge, and models.
Here are some examples of support systems:
- Communication-driven DSS: enables cooperation, supporting more than one person working on a shared task; examples include built-in tools like Google Docs.
- Data-Driven DSS (or Data-Driven Support System): Emphasizes accessing and manipulating a time series of internal company data and sometimes external data.
- Document-Based DSS – Manages, retrieves, and manipulates unstructured information in various electronic formats. Already the knowledge-driven support system provides specialized problem-solving expertise stored as facts, rules, procedures, or in similar structures such as interactive decision trees and flowcharts.
- Model-Based DSS: Emphasizes accessing and manipulating a statistical, financial, optimization, or simulation model. This support system uses data and parameters provided by users to help decision makers analyze a situation; they are not necessarily data intensive.
What are the benefits of a decision support system?
Generally speaking, support systems help make more informed decisions. Typically used by upper and middle-level management, DSSs are used to make actionable decisions or produce multiple possible outcomes based on current and historical company data.
At the same time, we can also use decision support systems to produce reports for clients that are easily understandable and can be adjusted based on user specifications.
Decision support system tools
Below are three simple tools that can be used as a basis and examples for decision support systems:
1. Decision matrix
This tool is used based on an analysis of the strengths and weaknesses of each objective.
It should be done as follows:
- Create a table with 5 columns;
- List the main ideas in the first column;
- In the other columns, set the evaluation criteria. We can highlight the impact, vision, effort, and profitability;
- Each picture must score from 1 to 5 according to the requirements.
Add the vision, benefit, and impact criteria and subtract them from the effort score.
The idea with the highest score will be the priority.
2. GUT matrix (severity, urgency, and trend)
It is a tool of the that helps the manager establish the priorities in the processes.
Problems are classified into three categories: urgency, severity, and trend.
A score from 1 to 5 indicates the priority of the problem presented.
3. Eisenhower Matrix
Among the decision-making support tools, we must also include one that helps to establish the priority of the tasks to be carried out: the Eisenhower matrix.
It works like this:
- Organize tasks into 4 quadrants along two axes: urgency and importance;
- Each space related to each job will be defined by actions, such as schedule, do now, delete or delegate;
- Set the priority of the job according to the following rules:
- The position is urgent and essential: do it now
- The work is necessary but not compulsory: schedule
- The result is binding but not crucial: delegate
- The result is neither critical nor important: delegate
Support system x BI: relationships and differences
It is important to note that the support system and Business Intelligence (BI) differ. Business Intelligence uses applications, services, and technologies to collect, store, analyze and access data to provide information for the leader to make a strategic decision.
However, the architecture of a BI solution is not stable, and vendors can develop a tool based on specific functionality and expand it based on customer needs.
Regardless of demand, BI applications will offer the ability to turn data into better customer relationships and new business opportunities and anticipate consumer demands and pains.
In the meantime, a DSS solution will solve, or provide options to solve, a particular problem. The decision process is structured hierarchically. The manager enters various parameters, and the support system assesses the relative impact of following one path over another.