Many of the information systems people interact with each day are powered by decision support systems. Learn more about decision support systems and how they come into play.
What is a decision support system?
A decision support system, or DSS, is a computer-based information system that organizes, collects and analyzes business data that can be used in decision-making activities for the management, operation and planning in an organization or business. The typical types of information that are gathered by a DSS include sales figures, projected revenue and inventory data that has been organized into relational databases, which is a collection of data with predefined relationships, for analysis and comparative sales figures between specific, selected time periods.
A good DSS helps decision-makers with compiling various types of data gathered from several different sources, including documents, raw data, management, business models and personal knowledge from employees.
DSS applications can be used in a vast array of diverse fields, such as credit loan verification, medical diagnosis, business management, and evaluating bids on engineering, agricultural or rail projects.
Types of decision support systems
While there is a DSS application for nearly every decision-making process, most of these tools fall into one of five categories.
These give a user access to databases based on a web search or keywords used in a query. Search engines are one of the most common tools used in these systems. They use searches to find data in documents like profiles, ratings and financial spreadsheets. These systems are typically found online and in electronic files.
These use quality data to determine a course of action based on a systematic process. They strategically break down questions and goals into pieces based on data.
For example, a business owner wanting to purchase additional equipment for operations could use one of these systems by looking at any data that supports this decision. Revenue, how frequently current equipment is used and the efficiency of current operations would be some factors the owner could consider. By using a data-driven DSS, the owner would analyze ways to collect data to assess these factors and use the findings to make a decision on purchasing additional equipment.
These are more generic types of DSSs. They are mainly used among managers to find recommendations or suggestions for detailed problem-solving. These computer-based systems use artificial intelligence and human intellect to look at how issues of a problem are connected. They can also use data-mining methods to make predictions for tests or studies and look at patterns to use for marketing plans.
Making choices and analyzing decisions are at the center of this category. These systems use models in areas like finances, simulations and statistics to consider possible options in making a decision. Managers and staff can use these tools to understand the potential effects of a certain decision.
These systems use databases, but they are typically smaller than ones used in data-driven DSSs. Simple processes use one model to look at basic decisions.
Combining two or more models often makes a process more complicated but can also help with weighing options for complex decisions.
These systems are often made for teams within businesses. They allow people to work together, communicate easily and share information to support the process of making a decision. Software and technology, like video calls, instant messaging, and other network and online platforms, allow teams to consider choices and select options while meeting virtually and receiving quick responses from team members.
Specific uses for DSSs in business
There are many different ways managers can use DSS software to their advantage. Typically, business planners will build a DSS according to their needs and use it to evaluate specific operations. These include inventory, where DSS applications can provide guidance on establishing supply chain movement, and sales, where DSS software helps managers predict how changes may affect results.
To manage inventory
DSSs can come in handy by evaluating inventory to help a business profit by itemizing its assets.
To aid sales optimization and sales projections
Decision support technology can also be a tool that analyzes sales data and makes predictions, or monitors existing patterns. Planners can use the technology to tackle sales numbers using a variety of decision support resources.
To optimize industry-specific systems
There are other uses for this powerful software option, including making good projections on the future for a business or to get a bird's-eye view of events that determine a company's progress. This can come in handy in difficult situations where a lot of financial projection may be necessary when determining expenditures and revenues.
Examples of DSSs
DSSs operate on several levels, and there are many examples of everyday uses. For instance, GPS is used to determine the best and quickest route between two points. GPS systems may also monitor traffic conditions and help the user avoid congestion. One of the easiest ways to understand how DSS works is to consider your computer use. Every time you log on and use a search engine, you've used a DSS to organize a massive amount of information and transform it into images, videos and text files that can help your business. These are some other uses of DSS.
- Agriculture: Farmers use DSS tools for crop planning to help determine the best planting time, as well as when to fertilize and when to harvest.
- Medicine: When a DSS is used in medicine, it is known as a clinical DSS. The technology can be used in a variety of ways, such as maintaining research information about chemotherapy protocols, preventive and follow-up care, and monitoring medication orders. DSSs are also used with medical diagnosis software.
- Weather forecasting: Some states have used DSSs to provide information about potential hazards, such as floods. The system includes real-time weather conditions and may include information, both current and historical, about floodplain boundaries and county flood data.
- Real estate: Real estate companies often use DSSs to manage data on comparable home prices and acreage.
- Education: Universities and colleges rely on DSSs to know how many students are currently enrolled. This helps them predict how many students will register for particular courses or whether the student population is sufficient to meet the university's costs.