Decision support systems are a set of manual or computer-based tools that assist in some decision-making activity. In today’s business environment, however, decision support systems (DSS) are commonly understood to be computerized management information systems designed to help business owners, executives, and managers resolve complicated business problems and/or questions. Good business support systems can help business people perform a wide variety of functions, including cash flow analysis, concept of ranking, multistage forecasting, product performance improvement, and resource allocation analysis. Previously regarded as primarily a tool for big companies, DSS has in recent years come to be recognized as a valuable tool for small business enterprises as well.

Key DSS Functions

 DSS is predicated on the effective performance of three functions: information management, data quantification, and model manipulation.  Information management refers to the storage, retrieval, and reporting of information in a structured format convenient to the user.  Data quantification is the process by which large amounts of information are condensed and analytically manipulated into a few core indicators that extract the essence of the data. Model manipulation refers to the construction and resolution of various scenarios to answer ‘what if’ questions. It includes the processes of model formulation, alternatives generation and solution of proposed models, often through the use of several operations research/management science approaches.

Entrepreneurs and owners of established enterprises are urged to make certain that their business needs a DSS before buying the various computer systems and software necessary to create one.  Some small businesses, of course, have no need of a DSS. The owner of a car washing machine establishment, for instance, would be highly unlikely to make such an investment. But for those business owners who are guiding a complex operation, a decision support system can be valuable tool. 

Another key consideration is whether the business’s key personnel will ensure that the necessary time and effort is spent to incorporate DSS into the establishment’s operations. After all, even the best decision support system is of little use if the business does not possess the training and knowledge necessary to use it effectively. If, after careful study of questions of DSS utility, the small business owner decides that DSS can help his or her company, the necessary investment can be made, and key managers of the business can begin the process of developing their own DSS applications using available spreadsheet software.

DSS Uncertainties and Limitations

While decision support systems have been embraced by small business operators in a wide range of industries in recent years, entrepreneurs, programmers, and business consultants all agree that such systems are not perfect.

Level of “User-friendliness” – Some observers contend that although decision support systems have become much more user-friendly in recent years,  it remains an issue, especially for small business operators that do not have significant resources in terms of technological  knowhow.

Hard-to -quantify factors – Another limitation that decision makers confront has to do with combining or processing the information that they obtain. In many cases, these limitations are due to the number of mathematical calculations required. For instance, a manufacturer pondering the introduction of a new product cannot do so without first deciding on a price for the product.  In order to make this decision, the effect of different variables (including price) on demand for the product and the subsequent profit must be evaluated. 

The manufacturer’s perceptions of the demand for the product can be captured in a mathematical formula that portrays the relationship between profit, price, and other variables considered important. Once the relationships have been expressed, the decision maker may now want to change the values for different variables and see what the effect on profits would be. The ability to save mathematical relationships and then obtain results for different values is a feature of many support systems. This is called ‘what if’ analysis and today’s spreadsheet software packages are fully equipped to support this decision-making activity. 

Of course, additional factors must be taken into consideration as well as when making business decisions. Hard- to- quantify factors such as future interest rates , new legislation, and hunches about product shelf life may all be considered.  So even though the calculations may indicate that a certain demand for the product will be achieved at a certain price, the decision maker must use his or her judgment in making the final decision.

If the decision maker simply follows the output of a process model, then the decision is being moved toward the structured end of the continuum. In certain corporate environments, it may be easier for the decision maker to follow the prescriptions of the DSS; users of support systems are usually aware of the risks associated with certain choices. If decision makers feel that there is more risk associated with exercising judgment and opposing the suggestion of the DSS than there is in simply supporting the process, the DSS is moving the decision more toward the structured end of the spectrum. Therefore, the way in which a DSS will be used must be considered within the decision-making environment.

Processing Model Limitations – Another problem with the use of support systems that perform calculations is that the user/decision maker may not be fully aware of the limitations or assumptions of the particular processing model.  There may be mistakes in which the decision maker has an idea of the knowledge that is desired, but not necessarily the best way to get that knowledge. 

This problem may be seen in the use of statistical analysis to support a decision. Most statistical packages provide a variety of tests and will perform them on whatever data is presented, regardless of whether or not it is appropriate.  This problem has been recognized by designers of support systems and has resulted in the development of DSS that support the choice of the type of analysis.

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