Data Management, Information Management…then Decision Management

Posted by Muneeswara C Pandian
October 11th, 2011

In the architectural set up of a Data Warehouse (or Business Intelligence/BI) system, we can define two layers, they are

  • Data Management and
  • Information Management

Data Management performs the function of data collection from Business Transaction systems, validation of data, integration of data and provisioning the data for analysis and interpretation.

Information Management performs the function of deriving information from the data stored in the Data Management layer and presenting them as analytical reports and dashboards.

Decision Management is a new layer that gets added into a Data Warehouse landscape acting as a connector between the Information Management layer and the Business Transaction Systems.

To understand further on Decision Management, let us define what is decision and types of decisions.

What is Decision? Decision is defined as ‘a solution or direction provided to resolve a problem’. A decision leads to an action and in a Business context action invokes a business process. Some examples of decisions in a business are

  1. A manager initiating a training program for resources on observing quality issues in deliverable
  2. A store manager providing the discounted price for preferred customers on observing lesser stock and faster movement of products
  3. An accountant sending an e-mail note to supplier on seeing a repeated delay in delivery

What is Decision Management? Managing the ‘data of decisions’. Being able to capture and understand the decisions that have been taken is called Decision Management.

What ‘Decisions’ can be Managed? There are three types of Decisions, they are

  • Strategic
  • Tactical
  • Operational

Strategic Decisions are made by Senior Management and CXO’s; these are long term in nature and are dependent on the market conditions. These are not covered by the Decision Management Systems.

Tactical Decisions are made by Managers who work on predefined target values set against a metric and have continuous monitoring process over the metrics. Metrics are measures which define performance of a business process like revenue per sales person. The decisions here are based on how a metric is performing against a target value. These decisions are covered by the Decision Management Systems.

Operational Decisions are made by customer facing personnel who work on predefined processes and the decision options related to that. The processes and the decision options are usually defined and controlled by the Managers. These are covered by the Decision Management System.

Tactical and Operational decisions have a higher dependency on the data processed within the Business Transaction systems; hence they play a much larger role in the Decision Management Systems.

Why Decision Management Now?

Existing BI applications (or decision support systems) enable decision making process, but do not capture the decisions and their actions. Benefits of a Decision Management System are

  • Decision making is still an ‘person’ based activity, tends to be subjective and depends on an individual; capturing the actions along with the ‘data in context’ will act as a reference in future situations of ‘decision making’ and will lead towards decision as a ‘process’ based activity
  • Decisions are to be taken in a much shorter timeframe and more frequently. Hence the need to automate decision making is becoming more relevant.  Having a ‘repository of decisions’ will enable predictive modeling process to look at historical data and ‘data in context’ to automate decision making process
  • With the increase in the regulatory requirements, enforcement on data trail and auditing is becoming very vital for every decisions being made in the business. In the future organizations will have Decision Management as one of their key initiatives to address regulatory requirements.

Current products in the market serving ‘Decision Management’ area look at automation of the decision process and do not to define process or tools to ‘capture and store the decisions’. To build an effective Decision Management System, a repository of ‘Decisions’ is very essential.

Thanks for reading, let me know your observations.

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