Types of Decisions and how IS helps make these decisions

2 Mar

In this post I will discussing the different types of decisions an organization might have to make and how Information Systems (IS) can be used to help make these decisions. I will first discuss the different types of decisions that an organization faces and then begin to see how information systems are used by the different levels of an organisation in order to help decision-making.

The first type of decision that I will discuss is Structured Decisions. These are decisions that are generally routine and repetitive, with convergent solutions which involve  definitive procedures for answering. within well-defined parameters. Therefore they do not need to be treated as new each time. Structured Decisions give insight into how well a companies objectives may be satisfied by potential alternative courses of action. Operation Managers and Employees would generally have to make Structured Decisions. This might include whether a customer meets the criteria for credit. Structured Decision Making (SDM) is currently being trialled in the Community Services child protection system. SDM is a process that ensures that each key decision in child protection is informed by information known through research to be relevant to that decision. This is an example of an Information System used to aid in structured decision-making.

I will next discuss Unstructured Decisions, which are generally used by middle managers. Unstructured Decisions require judgement, evaluation and insight to solve a problem. These problems contain multiple solutions, solution paths, and fewer parameters that are less manipulative and contain uncertainty about the concepts and rules. Unlike structured decisions unstructured are seen as novel, important and non-routine. Generally, unstructured decisions occur in instances in which all elements of the business environment are not completely understood. Unstructured decision systems typically focus on the individual or team that will make the decision. These decision makers are usually entrusted with decisions that are unstructured because of their experience or expertise, and therefore it is their individual ability that is of value. One approach to support systems in this area is to construct a program that simulates the process used by a particular individual. In essence, these systems—commonly referred to as “expert systems”—prompt the user with a series of questions regarding a decision situation. The main disadvantage of this decision aid is that  it allows managers to use the collective knowledge of users in this decision realm.

Finally, I will discuss Semi-Structured Decisions, which have elements of both types of previous decisions. These decisions are where most of the Decision Support Systems are thought to be focused. Only part of the problem has a clear cut answer provided by accepted procedure. Decisions of this type are characterized as having some agreement on the data, process, and/or evaluation to be used, but are also typified by efforts to retain some level of human judgement in the decision making process. Unstructured and Semi-Structured decisions can prove to be very problematic for small business’ which often have limited technological and work force resources. This is why many small business’ have turned to DSS to provide them with business and management guidance.

This diagram will show you the Information Requirements of Decision Making groups:

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