Theory of decision support systems portfolio evaluation

Abstract A theory is developed for the evaluation of Decision Support System portfolios in a for-profit firm. The critical relationship captured in this theory is between what Decision Support Systems do (increase the efficiency and effectiveness of search for structures for unstructured problems) and what they accomplish for the firm (solve unstructured problems). The resulting theory is used to develop testable hypotheses, some of which are counterintuitive. For example, we suggest that increasing the effectiveness of a DSS should lower its use, but increasing the efficiency of DSS should increase its use. A solution technique for finding a profit maximizing portfolio of Decision Support Systems is proposed. The solution technique is used to solve an example problem, which illustrates the important relationship between scope and scale in the evaluation of Decision Support Systems.

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