Focus on Change
This module is about how people use information to make decisions. Technology
has provided decision makers with new sources of information and tools for analysis.
Consider the phenomenon of the Internet and the vast amount of information
available, often at no charge, to people facing a decision.
If you plan to buy an automobile, there are at least three Web sites that provide retail sticker prices and dealer invoice car prices.
In organizations, vast databases contain information and knowledge about the firm. The decision maker uses powerful software packages and workstations connected to networks to access data and perform complex analyses. Information technology has had a profound impact on the way we make decisions.
The Nature of Information
The last module described the broad categories of change stimulated by technology. Many of the contributions of IT involve people and their use of information.
Individuals seek information for many reasons, for example, to make decisions, evaluate a proposal, answer questions from a customer, and so on.
Too many information systems have failed, not because of their underlying technology, but because they did not contribute much to solving user problems.
These systems may have provided inappropriate or inaccurate information, addressed the wrong problem, or suffered from other flaws that came about because designers did not understand how managers make decisions and use information.
The objective of this chapter is to discuss information and decision making before we delve heavily into the technology used to support it.
What Is Information?
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 our uncertainty about whether an event 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 a 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.
What is Information?
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 decisions" (Davis and Olson, 1985, p. 6).
This definition of information systems stresses that data must be processed in
some way to produce information; information is more than raw data. In this module we focus on information and its interpretation.