Information, Information Technologyand Decision Making Process1.Data and Information2. Implication of IT in Organization3.Link of Business Environment in Decision4.Model of Decision Making Process5.Rationality in Decision Making

Lecture 4

Data and Information

What is useful information?– Data.

• Raw facts and observations.– Information.

• Data made useful for decision making.– Information drives management functions.– Characteristics of useful information:

• Timely.• High quality.• Complete.• Relevant.• Understandable.

Information Technology

Data vs Information

Data Information Decisionmaking

Quantitative

Qualitative

Processingdata

Analyzeinformation

1. Facilitation of communication and information sharing.

2. Operating with fewer middle managers.3. Flattening of organizational structures.4. Faster decision making.5. Increased coordination and control.

Implication of IT in Organization

Organizations are flatter as IT replaces

management levels

ITbreak

barrier

People, teams anddepartments are better

connected by IT

SuppliersCustomers

StrategicPartners

Supply chain management is improved by IT

connections

Customer relationship management is improved

by IT connections

More things are done byoutsourcing and

partnerships using IT

How IT Breaks Barriers

Certain environmentP = 0 or 1

Risk environmentP = between 0 - 1

Uncertain environmentP = unknown

Low Risk of failure High

Programmed Type of decisions Non-programmed

Structured Type of problems Unstructured

Link of Business Environment to Decision

Model of Decision Making Process

FindProblem

Generatealternatives

Makedecision

Implementdecision

Evaluateresult

FindProblem

FindRoot cause

Generatealternatives

Makedecision

Implementdecision

Evaluateresult

Evaluatealternatives

Findpotentialproblem

Manager asdecision maker

RationalityActs in perfect world

Bounded rationality Acts with cognitive limitations

Act in real world

•Structured problem •Clearly defined•Certain environment•Complete information•All alternatives andconsequences known

Optimizing DecisionChoose absolute best among alternatives

•Unstructured problem•Not clearly defined•Uncertain environment•Incomplete information•Not all alternatives andconsequences known

Satisficing DecisionChoose first “satisfactory”alternative

Classical Model Behavioral Model

Rationality in Decision Making

Limited information due toTime, Resource, Competency

(Manager Mindset)

Unlimited information(Researcher Mindset)

Mendesak Tidak mendesak

Penting

TidakPenting

Masalah yang Aku Hadapi

K 1 K 2

K 4 K 3

What is a Case?

1. A case is a business situation requires you to make a decision

2. You have to use systematic thinking so that it can be understood easily by other people Follow Decision Making Model

3. In your analysis, use data in your case, business concept/model, and your experience