This report describes a study of attempts by organizations to improve decision-making through the use of information, among other interventions. I spoke with 31 managers in 26 organizations about specific initiatives their organizations had undertaken to improve decisions or decision processes.
In each interview I asked about why the initiative had been undertaken, how the decision process varied before and after the intervention, and what steps were taken to provide the decision process and decision-makers with better or more trusted information.
®
Linking Decisions and Information
for Organizational Performance
A Client Study by Thomas H. DavenportWe are entering a new period in the era of business information systems. For most of this five-decade period (beginning in the mid-1950s), the primary focus has been on automating core business processes. The era From the beginning, the idea began with custom-developed narrow-purpose applications and concluded was that better information with broad enterprise system packages provided by external vendors, but would lead to better decisions the purpose was the same: develop control and efficiency over processes by automating and capturing information from key business transactions. and better ways of managing Whether a general ledger entry, a customer order captured, or a vacation organizational processes. balance debited, the transaction has been the primary unit around which If transactions were the focus this world revolved.
of the automation era, then By now, however, we have largely won the transaction war, and a new decisions must be the focus of front is necessary in the war to manage information. While mop-up and this optimization era. If the goal maintenance activity on the transaction and application fronts are still necessary, most large organizations have the basic application functionality of better information and better they need, and their transactions have largely been automated. analysis is ultimately better decisions and actions taken What remains to be done is simply to fulfill the promise of the information age from its beginning. That is to use the accumulated information from based on them, we must renew transaction systems to optimize the management of the business. From our focus on decisions and the beginning, the idea was that better information would lead to better their linkage to information. decisions and better ways of managing organizational processes. Whether this idea was called decision support, executive support, online analytical processing, or business intelligence, there was always another goal waiting to be achieved. Because organizations' efforts and attentions were being spent on automation, to improve decision-making was never the primary focus. Today it has taken center stage.
If transactions were the focus of the automation era, then decisions must be the focus of this optimization era. If the goal of better information and better analysis is ultimately better decisions and actions taken based on them, ...In each interview I asked we must renew our focus on decisions and their linkage to information. about why the initiative had Businesses need to address how decisions are made and executed, how been undertaken, how the they can be improved, and how information is used to support them. And they must look at all types of decisions: from strategic planning decisions decision process varied before made by senior management to everyday operational decisions made by and after the intervention, employees on the front line, or automated by back end systems. and what steps were taken to There are obvious benefits to improving decision processes. Many provide the decision process organizations suffer from poor decision processes and outcomes. There is and decision-makers with better a growing body of knowledge on optimal decision processes and decision or more trusted information. biases to avoid, but it is rarely applied within organizations. Information that is available to inform decisions isn't used, or information is captured and managed that is unsuited for decision purposes. Decisions frequently take too long to make, and involve either too many or too few individuals. We hardly know the extent of the problem and the potential benefits, for most organizations don't identify, assign clear responsibility for, or track the results of their key decisions.
iThis report describes a study of attempts by organizations to improve decision-making through the use of information, among other interventions. I spoke with 31 managers in 26 organizations about specific initiatives their organizations had undertaken to improve decisions or decision processes. In each interview I asked about why the initiative had been undertaken, how the decision process varied before and after the intervention, and what steps were taken to provide the decision process and decision-makers with better or more trusted information.
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