Making Better Decisions
• Decision-Making Concepts
• Model-Driven Decisions
• Data-Driven Decisions
• Group Decisions
WHY THIS CHAPTER MATTERS
e success of any business depends on decisions that its managers make. Good decisions
about who to hire, how to raise capital, where to locate, what to produce, and how to mar-
ket it, lead to success. Bad decisions lead to failure.
Intelligent use of information systems helps companies make better decisions. Being
able to use information systems for this purpose is important to successful companies and
to those that want to be. Businesspeople who can use information systems to make better
decisions will make their companies more successful and will have more successful careers
As you read this chapter, focus on these key concepts to use on the job:
1. Decisions can be categorized in useful ways.
2. When decisions have structure, models can help make good decisions.
3. When decisions have little or no structure, proper access to and presentation of data
can help make good decisions.
4. Data warehouses, which can be used in several ways, provide a good way to access data.
308 ◾ Information Systems: What Every Business Student Needs to Know
Life is full of choices. at is as true in business as it is in your personal life.
Choices have consequences. at is even more true in business than it is in personal life.
erefore, it is important to make business choices carefully. Since decisions should be based
on information, it stands to reason that information systems can help make good decisions.
A decision is a choice among two or more options. Before you make any business deci-
sion, you need a clear decision statement*: what do you want to decide? A decision state-
ment should dene a decision as narrowly as possible, but no more narrowly than that.
“Where should we go for lunch?” is narrower than “what should we do for lunch?” but
should be used only if you want to rule out cooking, ordering take-out food, or skipping
All parties involved in a decision must agree on the decision statement. If they don’t, dis-
agreements that seem be about the decision might actually be over what is being decided.
Before we can understand how information systems can help people make decisions, we
should see how decisions are made.
The Decision-Making System
Few decisions can be made by computers alone. Even when we think one can be, people
may want to review it in case it is aected by factors the computer wasn’t programmed to
consider. However, computers can improve both the quality (eectiveness) of decisions and
the eciency with which they are reached. e entire decision-making system then consists
of both technology and people, as shown in Figure 9.1. e outer circle shows the system
boundary. Information crosses this boundary in both directions, into it and out of it.
is diagram shows some inputs coming to the electronic part of the decision-making
system. ey come from internal and external databases, unstructured sources such as
Twitter feeds, responses to external queries such as requests for bids on a part, and more.
Other inputs come to the person or people who will make these decisions. ose inputs are
is term has a dierent meaning in computer programming. Use context to know which is meant.
FIGURE 9.1 Human + machine decision-making system.