question - business intelligence

Chapter 1 • Overview of Business Intelligence, Analytics, Data Science, and Artificial Intelligence 9

data-driven support for any decision extends not just to managers but also to con- sumers. We will first study an overview of technologies that have been broadly referred to as BI. From there we will broaden our horizons to introduce various types of analytics.

• Innovation and artificial intelligence. Because of the complexities in the decision-making process discussed earlier and the environment surrounding the process, a more innovative approach is frequently need. A major facilitation of innovation is provided by AI. Almost every step in the decision-making process can be influenced by AI. AI is also integrated with analytics, creating synergy in making decisions (Section 1.8).

u SECTION 1.2 REVIEW QUESTIONS

1. Why is it difficult to make organizational decisions? 2. Describe the major steps in the decision-making process. 3. Describe the major external environments that can impact decision making. 4. What are some of the key system-oriented trends that have fostered IS-supported

decision making to a new level?

5. List some capabilities of information technologies that can facilitate managerial deci- sion making.

1.3 DECISION-MAKING PROCESSES AND COMPUTERIZED DECISION SUPPORT FRAMEWORK

In this section, we focus on some classical decision-making fundamentals and in more detail on the decision-making process. These two concepts will help us ground much of what we will learn in terms of analytics, data science, and artificial intelligence.

Decision making is a process of choosing among two or more alternative courses of action for the purpose of attaining one or more goals. According to Simon (1977), mana- gerial decision making is synonymous with the entire management process. Consider the important managerial function of planning. Planning involves a series of decisions: What should be done? When? Where? Why? How? By whom? Managers set goals, or plan; hence, planning implies decision making. Other managerial functions, such as organizing and controlling, also involve decision making.

Simon’s Process: Intelligence, Design, and Choice

It is advisable to follow a systematic decision-making process. Simon (1977) said that this involves three major phases: intelligence, design, and choice. He later added a fourth phase: implementation. Monitoring can be considered a fifth phase—a form of feedback. However, we view monitoring as the intelligence phase applied to the imple- mentation phase. Simon’s model is the most concise and yet complete characterization of rational decision making. A conceptual picture of the decision-making process is shown in Figure 1.1. It is also illustrated as a decision support approach using modeling.

There is a continuous flow of activity from intelligence to design to choice (see the solid lines in Figure 1.1), but at any phase, there may be a return to a previous phase (feedback). Modeling is an essential part of this process. The seemingly chaotic nature of following a haphazard path from problem discovery to solution via decision making can be explained by these feedback loops.

The decision-making process starts with the intelligence phase; in this phase, the decision maker examines reality and identifies and defines the problem. Problem owner- ship is established as well. In the design phase, a model that represents the system is constructed. This is done by making assumptions that simplify reality and by writing down