Organizations are involved in myriads of decisions in their daily activities and their long-term planning. In making successful decisions, the organizations must be informed and must have relevant and appropriate information, which will be used to evaluate the available choices. To support these decisions, the organizations maintain support systems that provide the appropriate, integrated, and accurate data to enhance decision-making. Decision support systems are able to consolidate data from different sources like facts, impressions, numbers, sounds, and pictures. In the current business environment, organizations are utilizing various kinds of information system. They include the decision support system, online analytical processing, and executive information system. Business intelligence system refers to the technological systems that enhance business to extract critical information from the past and current data. This data facilitates the organization with meaningful information on the operations of their business and the industry in general (Castellanos, et al 2012).
There is a very thin line between decision support system and business intelligence. Decision support system is seen as a whole while the business intelligence system is seen as part of the decision support system. Business intelligence system involves the use of the data in the decision support system, which makes be easily confused with the decision support system. In this paper, we will seek to analyze the decision support system and the business intelligence systems. Understanding the key components of each of the systems will be critical in understanding their differences. The similarities of the decision support system and the business intelligence system will be analyzed.
Decision Support Systems
Decision support system is a computerized information system that aids organizations and business in decision-making processes. The decision support system is able to merge information from different sources, which will be useful in the process of making decision. One characteristic of decision support system is that it accesses data from many sources in the organization and externally. For example, when the firm is making a decision on the on demand of certain product, the decision will require information from various departments of the organization. These departments include information from the sales department to facilitate prediction of sales, procurement office to determine the source of the required raw materials, and the department of finance in determining availability of funds (Power, 2004).
Another characteristic of the decision support system is that it facilitates choice of decisions from the various choices. All the data that the decision support system collects provide information of the best decision that the firm should take after evaluation of the pros and cons of each type of decision. The decision support system should facilitate the organization to transform large amounts of data into useful information that will enhance decision-making. The decision support system may involve mathematical models or data analysis models. These are the instruments, which the decision support system utilizes when working with the data to provide useful information (Vine, 2000).
The decision support system should provide a simple user interface, which users can navigate easily and facilitate association of different users. This system uses data from various external sources and departments. The users from various departments should be able to use the decision support system easily and interact with various users of the system. This is because for the organization to work as a whole structural unit, there must be cooperation in the different departments of the organization. Therefore, the decision support system should provide proper framework upon which the different departments of the organization are coordinated. The decision support system should be able to identify the roles of each department in the process of decision-making (Sauter, 2010).
The decision support system is comprised of three components. These components include the database management systems, model base management system, and the user interface. The database management system (DTBS) facilitates access to all data. It also contains the control programs that ensure that data is available in the form it will be appropriate for analyses. Most of the data base management systems are complicated to facilitate location of data and merge data from different sources. This will ensure that data from different sources is merged to provide information appropriate for decision-making. Model base management system performs similarly like the models in a decision support. It ensures transformation of data in a format that can be used for analysis. The model base management systems also provide links between different models such that the inputs of one model can be outputs of another model. It further provides a framework for sensitivity analyses for the model and context to ensure user satisfaction of the appropriateness of the model to be relied on in the decision making process (Power, 2004).
The decision support system can be used in monitoring the organization business environment, identifying problems in the system, and the available opportunities. The organization is able to make a decision from the available alternatives. The model is able to evaluate the available alternatives by using the sensitivity analysis. Organizations can increase their performance through the decision support system. Since they have information relating to all departments of the organization, they are able to identify departments or the specific operations that the organization can use to reduce the costs. Organizations also use the decision support systems in setting their objectives, making decisions based on the available best alternatives. The decision support system merges the business intelligence systems with the models to evaluate the available opportunities and define the problems. Effective decision support systems working with the right data facilitate rational decision-making process (Burstein & Holsapple, 2008).
Business Intelligence Systems
Business runs more effectively and properly when the business is operated using improved systems. Businesses operate using different systems as discussed above. Business keeps trying to come up with more improved systems to improve their services with the customers. Due to the open economy that businesses are exposed to, it has led many businesses to embark on minimizing the costs and maximizing profit. However, this has to be done in a logical way that will ensure customer satisfaction is put at the forefront. Business people aim at making better understanding of their operation. The latest of the business operation system is the business intelligent system (BIS).
The business intelligent system enables business people to get an understanding of business operation. The system is able to leverage on the company asserts and enables the company to substantial profit. Business people are able to maximize the value of asserts using the intelligent systems and hence able to make some returns on their investment. Though the business intelligent seems to be a new concept in the business world, its concepts and ideas date back to one decade ago. Business intelligent has been made very accessible through the Internet, data mining, data warehousing, and the World Wide Web. It enables the decision makers to be able to organize, accumulate, and access it. The use of business intelligent system enables business people to monitor every move of their business. This will enable the business person to detect any problem in the business early enough before the problem runs out of hand. The spread of the business intelligent to many business people has been very high and easy. This can be attributed to the fact that software is good, and its price is low (Castellanos, et al, 2012).
The hardware required to be used together with this software is also being cheaper compared to earlier situation. The business intelligent system has been used by many businesses to gain competitive advantage. When the business intelligent system is constantly renewed and enhanced, it becomes a competitive advantage. For instance, in e-commerce, where parameters of the competition are changing day by day, business intelligent software is very crucial. Formally, computer was just seen as a machine to keep data and information but through the development of the intelligent system, the machine is used for various other purposes including working out numerical values at the business. Further, through the Internet customers are able to access products that businesses offer (Vine, 2000).
Essential Elements of the Business Intelligent Systems
The business intelligent system requires various elements that enable it to work effectively. The elements enable the business person to be able to understand the business problem and develop or come up with the required strategies and opportunities for business. This will enable the decision maker to be able make informed decision by determining the present and future conditions along with identifying the future opportunities that result from the problem. The first element is the information system that needs to upgrade to business intelligence. They may include decision support system, executive information systems, on-line analytical processing, and the knowledge management systems. These systems simply enable the businessperson to access more information, data, and knowledge in a better way that was not possible before. The second element of the business intelligent systems is the use of the proper software to obtain the required information, data, and knowledge. It comes up with the required intelligent and gives an opportunity to share this information with others. The third element is building on appropriate data, information, and knowledge infrastructure that relate to data mapping, data warehousing, and operational database. It is important to have a massive amount of the data, information, and knowledge that is a bit old to be able to solve the problem at the current or in the future. The same idea is used when looking at the current and the future opportunities. The forth element of the business intelligent system is the use of the computer networking to be able to connect the firm’s intranet, extranets, the Internet, and the world wide web. The connection will enable the firm to be able to work and perform e-business. These have improved the way the firm deals with their customers, suppliers, and employees. When this system is used properly, it enables the firm to make its operations very simple, and customers are able to access better services. The network system also allows the firms’ information systems to communicate to one another thus creating a road map to the future. Further, electronic commerce enables business people to streamline their activities and operations and enable dissemination of business intelligent to the required people or parties (Vine, 2000).
The dissemination of the information can facilitate the work of parties whether they are within the organization or not. The essential elements of the business intelligent system are the key factors in the organization that turn the chosen data, information, and knowledge into the required intelligence necessary for the business benefits. The business intelligent systems and its software are situational in nature. They are employed according to the current situation in the business. The system usually works with analytical and collaborative equipment and makes use of the database infrastructure. Further, the business intelligent system provides the business people with data, information, and knowledge in time to be able to solve the problems in the business and detect any problem likely to be witnessed in future. Business people are able to understand the business operations. Decision makers are able to understand the relationship of the facts and hence able to analyze them critically for the benefits of business at large (Sauter, 2010).
Differences between Decision Support System and Business Intelligence System
Decision support system is the system that facilitates business in the decision-making process. The systems utilize data from many sources and integrate it to ensure proper decisions are made. On the other hand, business intelligence is the activity of monitoring the external environment providing data that is instrumental in the decision making process. Therefore, business intelligence system is like a component of the whole decision support system, which provides external data and information to the whole decision support system. Business intelligence systems ensure competitiveness of the organization. Decision support system not only ensures competiveness of the organization but also facilitates the running of the general activities of the organization (Burstein & Holsapple, 2008).
The decision support system enhances setting and achievement of organization objectives. The business intelligence system presents a comprehensive system, which can be used to define new market, assess the economic conditions, and find the appropriate technology. Therefore, business intelligence will gather information that will enhance identification of new opportunities or threats that may face the organization in the prior to their occurrences. The business intelligence system provides business with intelligence to facilitate decision making that will produce competitive advantage for the company. The business intelligence is similar to the organization critical success factors (Power, 2004).
Decision support system makes use of both internal sources of information and the external sources of information. Therefore, decision support system is one of the major sources of information to the decision support system. The decision support system utilizes the intelligence provided by business intelligence system to make a decision that will ensure the organization gains a competitive advantage above its competitors. The business intelligence systems utilize the strength, weaknesses, opportunities, and threats (SWOT) analysis system to identify the strength, weaknesses, opportunities, and threats facing an organization. The decision support system uses data base management information system to locate data. Model base management information systems are used in sensitivity analysis and in comparing different models. The user interface provides a framework upon which the different users are able to interact with each other. It enhances operations of the organization through coordination of various departments for the organization to work as a whole functional unit (Sauter, 2010).
The business intelligence systems utilize the data mining, data warehousing, and the Internet to gather information which may enhance the organization to gain a competitive advantage. Data mining is the location of data from a large volume of data. This can be utilized in the data base information system to locate data that is needed from a large database. Data warehousing is the mass storage of data. Therefore, database information system and the decision support system are facilitated by the data mining and data warehousing in obtaining the information required for decision makings (Power, 2004).
Similarities between the Business Intelligent System and the Decision Support System
As discussed above the business intelligent system and the decision support system have minor differences. Both systems have been developed to aid in the operation of the business activities with the intention of minimizing costs and increasing the benefits of firms. Business intelligent system was developed from the decision support systems. This simply means that the idea of decision supports system came first before the business intelligent systems. However, the two systems have many similarities as pertaining to their functions. Decision support system aims at getting the data, information, and knowledge from outside and within the organization. At the same time, business intelligent system gets the information, data and knowledge mainly from outside the organization. The decision makers analyze the information and are able to predict what is likely to happen in the future. The two systems also ensure that the decision makers get the information required to make their decision in time. This is very important element of the two systems because business people are able to solve the problem.. The other similarity is that the both systems make use of the computers systems in the business. Decision support system will require the computer user interface to connect all the computer systems in the organization to ensure they share the information. On the other hand, the business intelligent system will also use computer hardware to mine the data or gather the data, store it and be able to process the information (Sauter, 2010).
In conclusion, many business people have gone out of their ways to improve the services they give to their customers. Various methods have been defined to better the way customers are being served in the business. It is critical to note that business activities and growth are changing very fast. Managers are looking for better and faster methods to solve their problems in the business. Time serving the customer should be reduced to the lowest values possible. Time in the business is money. Therefore, real time information is required. Achievement of stable, current, and integrated sources of data, information, and knowledge requires ensuring that data is transformed to information that is important for decision-making process. The competition in the business may result to more improved methods of serving customers than before.