CHAPTER 12: ENHANCING DECISION MAKING

     ENHANCING DECISION MAKING           

            The decision making which is required in many levels of organization (strategic, management, operational) are difference. Decision making in businesses used to be limited to management. Today, lower-level employees are responsible for some of these decisions, as information systems make information available to lower levels of the business. Decisions can be structured, semistructured, or unstructured, with structured decisions clustering at the operational level of the organization and unstructured decisions at the strategic level. Decision making can be performed by individuals or groups and includes employees as well as operational, middle, and senior managers. There are four stages in decision making: intelligence, design, choice, and implementation.

              Systems to support decision making do not always produce better manager and employee decisions that improve firm performance because of problems with information quality, management filters, and organizational culture. Early classical models of managerial activities stress the functions of planning, organizing, coordinating, deciding, and controlling. Contemporary research looking at the actual behavior of managers has found that managers’ real activities are highly fragmented, variegated, and brief in duration and that managers shy away from making grand, sweeping policy decisions.

              Information technology provides new tools for managers to carry out both their traditional and newer roles, enabling them to monitor, plan, and forecast with more precision and speed than ever before and to respond more rapidly to the changing business environment. Information systems have been most helpful to managers by providing support for their roles in disseminating information, providing liaisons between organizational levels, and allocating resources.

              However, information systems are less successful at supporting unstructured decisions. Where information systems are useful, information quality, management filters, and organizational culture can degrade decision-making. Business intelligence and analytics promise to deliver correct, nearly real-time information to decision makers, and the analytic tools help them quickly understand the information and take action. A business intelligence environment consists of data from the business environment, the BI infrastructure, a BA toolset, managerial users and methods, a BI delivery platform (MIS, DSS, or ESS), and the user interface.

              There are six analytic functionalities that BI systems deliver to achieve these ends: pre-defined production reports, parameterized reports, dashboards and scorecards, ad hoc queries and searches, the ability to drill down to detailed views of data, and the ability to model scenarios and create forecasts. Operational and middle management are generally charged with monitoring the performance of their firm.

              Most of the decisions they make are fairly structured. Management information systems (MIS) producing routine production reports are typically used to support this type of decision making. For making unstructured decisions, middle managers and analysts will use decision-support systems (DSS) with powerful analytics and modeling tools, including spreadsheets and pivot tables. Senior executives making unstructured decisions use dashboards and visual interfaces displaying key performance information affecting the overall profitability, success, and strategy of the firm.

              The balanced scorecard and business performance management are two methodologies used in designing executive support systems (ESS). Group decision-support systems (GDSS) help people working together in a group arrive at decisions more efficiently. GDSS feature special conference room facilities where participants contribute their ideas using networked computers and software tools for organizing ideas, gathering information, making and setting priorities, and documenting meeting sessions.

Sources: Kenneth C. Laudon and Jane P. Laudon. 2012. Management Information Systems:  Managing the Digital Firm. Twelfth Edition: Pearson.