Management is a process by which an organization achieves its goals through the use of resources (people, money, materials, and information).
These resources are considered to be inputs. Achieving the organization’s goals is the output of the process.
Managers oversee this process in an attempt to optimize it. A manager’s success often is measured by the ratio between the inputs and outputs for which he or she is responsible.
This ratio is an indication of the organization’s productivity.
The Manager’s Job and Decision Making
To appreciate how information systems support managers, you first must understand the manager’s job.
Managers do many things, depending on their position in the organization, the type and size of the organization, the organization’s policies and culture, and the personalities of the managers themselves.
Despite these variations, however, all managers perform three basic roles:
- Interpersonal roles: figurehead, leader, liaison
- Informational roles: monitor, disseminator, spokesperson, analyzer
- Decisional roles: entrepreneur, disturbance handler, resource allocator, negotiator
Early information systems primarily supported the informational roles. In recent years, information systems have been developed that support all three roles.
A decision refers to a choice among two or more alternatives that individuals and groups make.
Decisions are diverse and are made continuously. Decision making is a systematic process.
Economist Herbert Simon (1977) described decision making as composed of three major phases: intelligence, design, and choice.
Once the choice is made, the decision is implemented. Figure illustrates this process, indicating which tasks are included in each phase. Note that there is a continuous flow of information from intelligence, to design, to choice (bold lines), but at any phase there may be a return to a previous phase (broken lines).
This model of decision making is quite general. Undoubtedly, you have made decisions where you did not construct a model of the situation, validate your model with test data, or conduct a sensitivity analysis.
The model we present here is intended to encompass all of the conditions that might occur when making a decision. For some decisions, some steps or phrases may be minimal, implicit (understood), or absent.
The decision-making process starts with the intelligence phase, in which managers examine a situation and identify and define the problem or opportunity.
In the design phase, decision makers construct a model for the situation. They do this by making assumptions that simplify reality and by expressing the relationships among all the relevant variables.
Managers then validate the model by using test data. Finally, decision makers set criteria for evaluating all of the potential solutions that are proposed. The choice phase involves selecting a solution or course of action that seems best suited to resolve the problem. This solution (the decision) is then implemented. Implementation is successful if the proposed solution solves the problem or seizes the opportunity.
If the solution fails, then the process returns to the previous phases. Computer-based decision support assists managers in the decision making process.