What are the characteristics of the decision support system?

An information system that aids a business in decision-making activities that require judgment, determination, and a sequence of actions

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Purpose of a Decision Support System
Components of a Decision Support System
Types of Decision Support Systems
Advantages of a Decision Support System
Disadvantages of a Decision Support System
Related Readings

A decision support system (DSS) is an information system that aids a business in decision-making activities that require judgment, determination, and a sequence of actions. The information system assists the mid- and high-level management of an organization by analyzing huge volumes of unstructured data and accumulating information that can help to solve problems and help in decision-making. A DSS is either human-powered, automated, or a combination of both.

Purpose of a Decision Support System

A decision support system produces detailed information reports by gathering and analyzing data. Hence, a DSS is different from a normal operations application, whose goal is to collect data and not analyze it.

In an organization, a DSS is used by the planning departments – such as the operations department – which collects data and creates a report that can be used by managers for decision-making. Mainly, a DSS is used in sales projection, for inventory and operations-related data, and to present information to customers in an easy-to-understand manner.

Theoretically, a DSS can be employed in various knowledge domains from an organization to forest management and the medical field. One of the main applications of a DSS in an organization is real-time reporting. It can be very helpful for organizations that take part in just-in-time (JIT) inventory management.

In a JIT inventory system, the organization requires real-time data of their inventory levels to place orders “just in time” to prevent delays in production and cause a negative domino effect. Therefore, a DSS is more tailored to the individual or organization making the decision than a traditional system.

Components of a Decision Support System

The three main components of a DSS framework are:

1. Model Management System

The model management system S=stores models that managers can use in their decision-making. The models are used in decision-making regarding the financial health of the organization and forecasting demand for a good or service.

2. User Interface

The user interface includes tools that help the end-user of a DSS to navigate through the system.

3. Knowledge Base

The knowledge base includes information from internal sources (information collected in a transaction process system) and external sources (newspapers and online databases).

Types of Decision Support Systems

Communication-driven: Allows companies to support tasks that require more than one person to work on the task. It includes integrated tools such as Microsoft SharePoint Workspace and Google Docs.
Model-driven: Allows access to and the management of financial, organizational, and statistical models. Data is collected, and parameters are determined using the information provided by users. The information is created into a decision-making model to analyze situations. An example of a model-driven DSS is Dicodess – an open-source model-driven DSS.
Knowledge-driven: Provides factual and specialized solutions to situations using stored facts, procedures, rules, or interactive decision-making structures like flowcharts.
Document-driven: Manages unstructured information in different electronic formats.
Data-driven: Helps companies to store and analyze internal and external data.

Advantages of a Decision Support System

A decision support system increases the speed and efficiency of decision-making activities. It is possible, as a DSS can collect and analyze real-time data.
It promotes training within the organization, as specific skills must be developed to implement and run a DSS within an organization.
It automates monotonous managerial processes, which means more of the manager’s time can be spent on decision-making.
It improves interpersonal communication within the organization.

Disadvantages of a Decision Support System

The cost to develop and implement a DSS is a huge capital investment, which makes it less accessible to smaller organizations.
A company can develop a dependence on a DSS, as it is integrated into daily decision-making processes to improve efficiency and speed. However, managers tend to rely on the system too much, which takes away the subjectivity aspect of decision-making.
A DSS may lead to information overload because an information system tends to consider all aspects of a problem. It creates a dilemma for end-users, as they are left with multiple choices.
Implementation of a DSS can cause fear and backlash from lower-level employees. Many of them are not comfortable with new technology and are afraid of losing their jobs to technology.

Thank you for reading CFI’s guide on Decision Support System (DSS). To keep advancing your career, the additional CFI resources below will be useful:

Operations Management
Opportunity Cost
Quality Management
Systemic Risk

A decision support system (DSS) is a computerized program used to support determinations, judgments, and courses of action in an organization or a business. A DSS sifts through and analyzes massive amounts of data, compiling comprehensive information that can be used to solve problems and in decision-making.

Typical information used by a DSS includes target or projected revenue, sales figures or past ones from different time periods, and other inventory- or operations-related data.

A decision support system (DSS) is a computerized system that gathers and analyzes data, synthesizing it to produce comprehensive information reports.
A decision support system differs from an ordinary operations application, whose function is just to collect data.
Decision support systems allow for more informed decision-making, timely problem-solving, and improved efficiency in dealing with issues or operations, planning, and even management.

A decision support system gathers and analyzes data, synthesizing it to produce comprehensive information reports. In this way, as an informational application, a DSS differs from an ordinary operations application, whose function is just to collect data.

The DSS can either be completely computerized or powered by humans. In some cases, it may combine both. The ideal systems analyze information and actually make decisions for the user. At the very least, they allow human users to make more informed decisions at a quicker pace.

The DSS can be employed by operations management and other planning departments in an organization to compile information and data and synthesize it into actionable intelligence. In fact, these systems are primarily used by mid- to upper-level management.

For example, a DSS may be used to project a company's revenue over the upcoming six months based on new assumptions about product sales. Due to a large number of factors that surround projected revenue figures, this is not a straightforward calculation that can be done manually. However, a DSS can integrate all the multiple variables and generate an outcome and alternate outcomes, all based on the company's past product sales data and current variables.

A DSS can be tailored for any industry, profession, or domain including the medical field, government agencies, agricultural concerns, and corporate operations.

The primary purpose of using a DSS is to present information to the customer in an easy-to-understand way. A DSS system is beneficial because it can be programmed to generate many types of reports, all based on user specifications. For example, the DSS can generate information and output its information graphically, as in a bar chart that represents projected revenue or as a written report.

As technology continues to advance, data analysis is no longer limited to large, bulky mainframe computers. Since a DSS is essentially an application, it can be loaded on most computer systems, whether on desktops or laptops. Certain DSS applications are also available through mobile devices.

The flexibility of the DSS is extremely beneficial for users who travel frequently. This gives them the opportunity to be well-informed at all times, providing them the ability to make the best decisions for their company and customers on the go or even on the spot.

In organizations, a decision support system (DSS) analyzes and synthesizes vast amounts of data to assist in decision-making. With this information, it produces reports that may project revenue, sales, or manage inventory. Through the integration of multiple variables, a DSS can produce a number of different outcomes based on the company’s previous data and current inputs.

Many different industries, from medicine to agriculture, use decision support systems. To help diagnose a patient, a medical clinician may use a computerized decision support system for diagnostics and prescriptions. Combining clinician inputs and previous electronic health records, a decision support system may assist a doctor in diagnosing a patient.

Broadly speaking, decision support systems help in making more informed decisions. Often used by upper and mid-level management, decision support systems are used to make actionable decisions, or produce multiple possible outcomes based on current and historical company data. At the same time, decision support systems can be used to produce reports for customers that are easily digestible and can be adjusted based on user specifications.