CHAPTER 12 –
ENHANCING DECISION MAKING
WHAT ARE THE DIFFERENT TYPES OF DECISIONS AND HOW DOES
THE DECISION-MAKING PROCESS WORK? HOW DO INFORMATION
SYSTEMS SUPPORT THE ACTIVITIES OF MANAGERS AND
MANAGEMENT DECISION MAKING?
Business Value of Improved Decision Making
o Improved decision making may add value to the business (in form of
cost savings or increased revenue).
o Improving decisions at all levels adds up to a large annual value for
the business.
Types of Decisions
o Unstructured - the decision maker must provide judgment,
evaluation, and insight to solve the problem
o Structured - involve a defnite procedure for handling them so that
they do not have to be treated each time as if they were new
o Semistructured - only part of the problem has a clear-cut answer
provided by an accepted procedure
The Decision Making Process (4 stages)
1. Intelligence - discovering, identifying, and understanding the
problems occurring in the organization
2. Design - identifying and exploring various solutions to the problem
3. Choice - choosing among solution alternatives
4. Implementation - making the chosen alternative work and continuing
to monitor how well the solution is working
Managers and Decision Making in the Real World
o Managerial Roles
The expectations of the activities that managers should perform in
an organization.
Classical model - the fve classical functions of managers as
planning, organizing, coordinating, deciding, and controlling
Behavioral model - state that the actual behavior of managers
appears to be less systematic, more informal, less refective, more
reactive, and less well organized
Interpersonal roles = managers act as fgureheads for the
organization when
they represent their companies and perform symbolic duties
Informational roles = managers act as the nerve centers of their
organizations, receiving information and redistributing it to those
who need to be aware of it
, Decisional roles = managers act as decision makers to handle
entrepreneurship, disturbance, resource allocation, and
negotiation
o Real-World Decision Making
Information Quality - If the output of information systems does not
meet quality criteria, decision making will sufer
Management Filters – Managers have selective attention, focus on
certain kinds of problems and solutions, and have a variety of
biases that reject information
Organizational Inertia & Politics - Organizations are bureaucracies
with limited capabilities and competencies for acting decisively
High-Velocity Automated Decision Making
o Today, many decisions made by organizations are not made by
managers, or any humans.
o The class of decisions that are highly structured and automated is
growing rapidly.
HOW DO BUSINESS INTELLIGENCE AND BUSINESS ANALYTICS
SUPPORT DECISION MAKING?
Business Intelligence
o “Business intelligence (BI)” is a term used by hardware and
software vendors and information technology consultants to describe
the infrastructure for warehousing, integrating, reporting, and
analyzing data that come from the business environment, including
big data. “Business analytics (BA)” is also a vendor-defned term
that focuses more on tools and techniques for analyzing and
understanding data.
o Business intelligence and analytics are essentially about integrating
all the information streams produced by a frm into a single, coherent
enterprise-wide set of data, and then, using modeling, statistical
analysis tools (like normal distributions, correlation and regression
analysis, Chi square analysis, forecasting, and cluster analysis), and
data mining tools to make sense out of all these data so managers
can make better decisions and plans.
The Business Intelligence Environment
o There are six elements in this business intelligence environment:
Data from business environment
Business intelligence infrastructure
Business analytics toolset
Managerial users and methods
Delivery platform – MIS, DSS, ESS
User interface
Business Intelligence and Analytics Capabilities
2
ENHANCING DECISION MAKING
WHAT ARE THE DIFFERENT TYPES OF DECISIONS AND HOW DOES
THE DECISION-MAKING PROCESS WORK? HOW DO INFORMATION
SYSTEMS SUPPORT THE ACTIVITIES OF MANAGERS AND
MANAGEMENT DECISION MAKING?
Business Value of Improved Decision Making
o Improved decision making may add value to the business (in form of
cost savings or increased revenue).
o Improving decisions at all levels adds up to a large annual value for
the business.
Types of Decisions
o Unstructured - the decision maker must provide judgment,
evaluation, and insight to solve the problem
o Structured - involve a defnite procedure for handling them so that
they do not have to be treated each time as if they were new
o Semistructured - only part of the problem has a clear-cut answer
provided by an accepted procedure
The Decision Making Process (4 stages)
1. Intelligence - discovering, identifying, and understanding the
problems occurring in the organization
2. Design - identifying and exploring various solutions to the problem
3. Choice - choosing among solution alternatives
4. Implementation - making the chosen alternative work and continuing
to monitor how well the solution is working
Managers and Decision Making in the Real World
o Managerial Roles
The expectations of the activities that managers should perform in
an organization.
Classical model - the fve classical functions of managers as
planning, organizing, coordinating, deciding, and controlling
Behavioral model - state that the actual behavior of managers
appears to be less systematic, more informal, less refective, more
reactive, and less well organized
Interpersonal roles = managers act as fgureheads for the
organization when
they represent their companies and perform symbolic duties
Informational roles = managers act as the nerve centers of their
organizations, receiving information and redistributing it to those
who need to be aware of it
, Decisional roles = managers act as decision makers to handle
entrepreneurship, disturbance, resource allocation, and
negotiation
o Real-World Decision Making
Information Quality - If the output of information systems does not
meet quality criteria, decision making will sufer
Management Filters – Managers have selective attention, focus on
certain kinds of problems and solutions, and have a variety of
biases that reject information
Organizational Inertia & Politics - Organizations are bureaucracies
with limited capabilities and competencies for acting decisively
High-Velocity Automated Decision Making
o Today, many decisions made by organizations are not made by
managers, or any humans.
o The class of decisions that are highly structured and automated is
growing rapidly.
HOW DO BUSINESS INTELLIGENCE AND BUSINESS ANALYTICS
SUPPORT DECISION MAKING?
Business Intelligence
o “Business intelligence (BI)” is a term used by hardware and
software vendors and information technology consultants to describe
the infrastructure for warehousing, integrating, reporting, and
analyzing data that come from the business environment, including
big data. “Business analytics (BA)” is also a vendor-defned term
that focuses more on tools and techniques for analyzing and
understanding data.
o Business intelligence and analytics are essentially about integrating
all the information streams produced by a frm into a single, coherent
enterprise-wide set of data, and then, using modeling, statistical
analysis tools (like normal distributions, correlation and regression
analysis, Chi square analysis, forecasting, and cluster analysis), and
data mining tools to make sense out of all these data so managers
can make better decisions and plans.
The Business Intelligence Environment
o There are six elements in this business intelligence environment:
Data from business environment
Business intelligence infrastructure
Business analytics toolset
Managerial users and methods
Delivery platform – MIS, DSS, ESS
User interface
Business Intelligence and Analytics Capabilities
2
