Information System in Management Decision Making
There are different types of organisations with different modes of operation, therefore, a decision making plan that works for one might not necessarily work for another. In the 1950's, Herbert Simon and James March introduced a different decision making framework for understanding organisational behaviour that focuses on the role of individual work in rational organisations. The model suggests that when an individual makes a decision, he examines a limited set of possible alternatives rather than all available options. He accepts satisfactory rather than go in depth to search until there's a perfect strategy or solution. Simon goes ahead to divide decision making into two basic types:
Non programmed decisions: Which involve decisions that are not as structured as programmed decisions.
Programmed decisions: On the other hand are routine and repetitive decisions which the organization depends on to handle daily activities. Because of the routine nature of these progammed decisions, it would be best to have a Management Information System so that decisions are based off of previous research and are more strategic. (Safari, 2011)
Decision making literature reveals that the core processes of decision making involves six steps which guarantees that a high quality decision will be made can be seen in the image below.
The Information systems play a major role in the organisational hierarchy and decision making process (Safari, 2011) and the different stages a decision making process goes through goes to show the need for an Information System as it will aid making current decisions based on strategies that have been used in similar situations in the past instead of starting the decision making process from the scratch.
Different kinds of information systems have been developed for different purposes depending on what the business needs per time.
Safari, 2011 identified different types of information systems and their purposes. Listed below
- Transaction Process Systems : this is used to process enormous amounts of data for daily business transactions.
- Office Automation System (OAS) and Knowledge Automation System (KWS): While OAS supports people that work with data, KWS supports professional workers.
- Management Information System and Decision Support System: High level systems like MIS and DSS
- At the strategic level of management, we have Executive Support System (ESS) and Group Decision Support System (GDSS)
- Computer Supported Collaborative Work systems (CSCWS) aid group level decision making process of a semi structured or unstructured decision.
Decision Making.
There are different types of decisions that have to be made in an organisation. There are also different decision phases that have to be passed through in order to help management make their decisions in an organisation. These phases are:
Intelligence: the phase where we collect information.
Design: Formation of alternative choices
Choice: Picking a way forward
Implementation: The practice required after making a choice
Monitoring: Required to decide if another decision is necessary.
The decision making process goes through all these stages in order to ensure that it will result in a high quality decision.
Role of Information System in improved Decision Making.
Management information systems play an important role in each phase of the decision making process. It can be defined as an organizational method of providing past, present and projected information related to internal operations and external intelligence . it supports the planning, control and operation functions of an organization by furnishing uniform information in the proper time frame to assist the decision makers.’’
The information that MIS provides contains a detailed description of past, present and future events. The information is then converted into report formats and output of mathematical simulations. This is what managers use to make decisions and solve the organisation's problem.
The role of MIS in supporting decisions is best discussed in relation to the Decision Support System (DSS)
Decision Support System (DSS) which is a computer based system analyzes data for a business and presents it in a way that helps the user make meaningful business decisions more effectively and efficiently. (Nowduri, 2011), The DSS application uses imputed data to answer a given query.
The possible information that DSS could provide include:
-Comparative Sales Figures for one week/month and th next
-Projected revenue figures based on new product sales assumptions
-Consequences of alternative decisions based on past experience.
As it can be seen from the breakdown above, decision making is an integral part of any business and that is why a good information system is needed in order for decisions to be made appropriately and adequately.
(Jahangir, 2005) states that based on the important role that Information systems plays in the choice of the decision to be made, organisations must ensure they have a good management information system. Just in the same way a good MIS propels good decision making, a bad MIS or lack of it means that management will make terrible decisions void of proper guidance.
However, despite the advantages of MIS in decision making, there are also some downsides which include the dynamic nature of MIS which makes it tedious for some organisations to keep up. Running of MIS programs can also be very cost intensive especially for small businesses among others.
In conclusion, combining the efforts of a good decision making system and Management information system, will lead to better customer satisfaction and excellent business processes. MIS should therefore be tailored in such a way that all business goals are achieved.
References
Jahangir, K., 2005. Improving organizational best practice with information systems. Knowledge Management Review, 12.
Nowduri, S., 2011. Management information systems and business decision making: review, analysis, and recommendations. Journal of Management and Marketing Research, 7, p.1.
Asemi, A., Safari, A. and Zavareh, A.A., 2011. The role of management information system (MIS) and Decision support system (DSS) for manager’s decision making process. International Journal of Business and Management, 6(7), pp.164-173.
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