Information Systems and Decision Making

     This chapter has examined two topics: information systems and the computer. Many information systems are computerized, but this is not universal. Nevertheless the two areas have one common characteristic: They help relate the departments and units of the organization into a harmonious system.

     The primary goal of any information system is to provide decision making information to the manager. For this reason, a well-designed system must be planned with the needs of management in mind and must follow a from-the-top-down philosophy. In addition, the system must discriminate by organization level, providing the right kinds of information to each. For example, top management will need general information from which to formulate strategic plans. Middle management will need more specific data for drawing up budgets and measuring and appraising managerial performance Lower-level management will need very specific data for use in areas such as production scheduling and inventory control.

     The modern computer is often employed as part of an information system, providing necessary information to managers throughout the hierarchy. In addition to performing bookkeeping and arithmetic functions, it is also being used for such functions as inventory control and airline reservations processing. Another one of its latest applications is answering "what if" questions through simulation.

     Despite their great value computers have some important drawbacks, of which management must be aware. First, many companies tend to buy more complex computers than they need. Second, many managers place too much faith in computer printout results. Third, many managers tend to overrate the capabilities of the computer. There are a large number of things people still do much better than any machine and qualitative decision making is one of them.

     The introduction of an information system into an organization can bring about dysfunctional behavior such as aggression, projection, and avoidance. In order to overcome these problems, management must be willing to adopt a participative decision-making approach that introduces the new system, relates its advantages to the personnel, and assures that any persons replaced because of it will have employment secured for them elsewhere.

     This chapter has also noted how management information and computer systems help managers do better planning and controlling, thereby establishing the fact that there is a link between the quantitative and process schools. Likewise, it has been noted that information systems can bring about dysfunctional behavior, thus illustrating that any advocate of the quantitative school must also be aware of the behavioral side of  enterprise; there is thus a link between the quantitative and behavioral schools. Another area where many of these decision-making ideas are put into action is that of operations research. This will be the focus of our attention in the next chapter.