FREE online courses on Information Technology - Chapter 1 INFORMATION
TECHNOLOGY - THE NATURE OF INFORMATION AND DECISION MAKING
Decision making is a key activity for management.
Unfortunately, the early information systems developed during the 1960s and
1970s often had few implications for decision making. Today, firms routinely
monitor a variety of activities, for example, sales and production. A Company is
very likely to purchase and store information on its competitors' sales as well.
Given the wealth of information kept in corporate databases, there are many
opportunities today to use information technology to aid decision making.
We define information as some tangible or intangible entity
that reduces uncertainty about some state or event. As an example, consider a
weather forecast predicting clear and sunny skies tomorrow. This information
reduces out uncertainty about whether an even such as a baseball game will be
held. Information that a bank has just approved a loan for our firm reduces our
uncertainty about whether we shall be in state of solvency or bankruptcy next
month. Information derived from processing transactions reduces uncertainty
about a firm's order backlog or financial position. Information used primarily
for control in the organization reduces uncertainty about whether the firm is
performing according to plan and budget.
Another definition of information has been suggested:
“Information is data that has been processed into a form that is meaningful to
the recipient and is of real perceived value in current or prospective
decision”. This definition of information systems stresses the fact that data
must be processed in some way to produce information; information is more than
raw data. In later chapter we discuss information systems that process data to
produce information. In this chapter, how ever, we focus on information and its
interpretation.
A classic article on information systems suggested in part
that an information system serves an individual with a certain cognitive style faced with a particular
decision problem in some organizational setting (Mason and Mitroff 1973). In
addition to these variables, we suggest the importance of personal and
situational factors in the interpretation of information. We shall examine each
of these factors to see how they influence the interpretation process.
Clearly, the nature of the problem influences the way we
interpret information. How serious is the decision? What are the consequences of an incorrect
decision, and how do they compare with the benefits of a correct one? An
important decision may require more care in analyzing data than would a minor
decision. For example, an oil company's decision to enter the information
processing field is more important than its decision to enter the information
processing field is more important than its decision to lease additional office
space. In such a strategic decision as whether to diversify, the consequences
and costs involved, plus the impact on the organization, require that
information be scrutinized much more closely.
The organization itself affects the interpretation of
information. Studies have shown that the individual becomes socialized by the
organization. Over time we are influenced by our organizations in the way we
approach problems. Thus, in most instances, the attitudes of a new employee will
differ substantially from those of the chairman of the board. As the new
employee associates over the years with other employees of the firm, he or she
is influenced by their attitudes and by the environment of the workplace.
Gradually, new employees begin to change their attitudes to be more consistent
with those of their associates.
People who have different ideas interpret information
differently. Again, many of a person's ideas are influenced by peers and by the
socialization process in the particular organization where the individual works.
Several individuals trying to influence the government to regulate prices in an
industry may use the same information. However, the head of a corporation in the
industry, the leader of a consumer group, and a government decision maker in a
regulatory agency will probably interpret the same information differently.
