The Role of IT in Decision Making

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For effective decision making, two major inputs are needed. First is the “information” and the second is the “opinions”. Information can be compared to the head while opinion can be compared to the heart. Both head and heart should contribute effectively for the right decision to emerge.

It is in the area of information that IT contributes immensely in the decision making process. Information can include the past records, current status and projected calculations and forecasts.

When a manager wants to decide on the pricing of say, a new product, he should know how in the past, previous product releases have performed, the volumes they had generated and the profitability obtained. Under current status, the manager requires current costs of production, pricing of competitive products in the market etc. And in assessing the future, he may have to rely on feed back on market surveys, mathematical models to project expected volumes of sales etc.

In all these data collection and information processing, IT can be of immense help because in all these activities, there are databases involved, data filtering and presentation in the required format are involved and obviously and undoubtedly lots of number-crunching too.

Computers are essentially number crunching machines that can process data at unimaginable speeds when compared to manual calculations of the past. Software on RDBMS, spreadsheets, financial accounting, cost accounting, project planning, design analysis, simulations and a plethora of such tools are available for the present day managers, thanks to the rapid developments in the field of IT.

Thanks to the mind boggling development taking place in the field of Internet, news, facts, figures, data, statistics etc are available instantaneously across the globe, cutting aside regional and continental barriers.

IT has developed to such a fine level that practically every activity inside the organizations are instantly keyed in to the centralized databases and managers need not really wait for any cutoff date (say month end, half-year closing or financial year end) to get the figures they want. With a well planned and developed MIS (Managerial Information System), managers can access whatever critical data and information they require almost instantaneously through IT.

If, in a typical decision making, let us say, the importance of information is 70% and opinions is 30%. The present day manager, unlike his predecessors in the past, can effectively gather even up to 80% of accurate and timely information to aid him in the decision making process. This will be in stark contrast to the past managers, who had to manage with whatever information they can gather, which could perhaps be only 50% accurate and timely, in the absence of a well knit IT network.

Thus present day managers are better equipped with a large chunk of input in the decision making process than the past managers.

A word of warning – beware of information overkill

Having eulogized the advantage of IT in information gathering and processing, a negative effect of it cannot be ignored and it is information overkill. Reports, charts, projections, trends – a deluge of excessive information has every potential to gag the present day manager. With excessive information and analysis through IT, glaring contradictions and high confusing statistics can overpower a manager and make his decision making exercise more complicated and daunting.

Facts, figures and computer generated projections have to be rightly balanced with the considered opinions and hunch feelings of experienced persons in the organization who had weathered many a storm in the past. Over dependence on the intimidating data provided by computers have to be cautiously avoided.

    Whatever be the advancement in computer technology or in IT, the final decision making has to be done with a human brain with due consideration to the human heart. Use the IT as a brilliant subordinate who is instantly available at your service. Never allow the sub-ordinate to boss over you.

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