Page 491 -

490 Part Three Key System Applications for the Digital Age

Real-World Decision Making
We now see that information systems are not helpful for all managerial roles.
And in those managerial roles where information systems might improve
decisions, investments in information technology do not always produce
positive results. There are three main reasons: information quality, manage-
ment filters, and organizational culture (see Chapter 3).
Information Quality. High-quality decisions require high-quality informa-
tion. Table 12.3 describes information quality dimensions that affect the quality
of decisions.
If the output of information systems does not meet these quality criteria,
decision-making will suffer. Chapter 6 has shown that corporate databases and
files have varying levels of inaccuracy and incompleteness, which in turn will
degrade the quality of decision making.
Management Filters. Even with timely, accurate information, some manag-
ers make bad decisions. Managers (like all human beings) absorb information
through a series of filters to make sense of the world around them. Managers
have selective attention, focus on certain kinds of problems and solutions, and
have a variety of biases that reject information that does not conform to their
prior conceptions.
For instance, Wall Street firms such as Bear Stearns and Lehman Brothers
imploded in 2008 because they underestimated the risk of their investments
in complex mortgage securities, many of which were based on subprime loans
that were more likely to default. The computer models they and other financial
institutions used to manage risk were based on overly optimistic assumptions
and overly simplistic data about what might go wrong. Management wanted
to make sure that their firms’ capital was not all tied up as a cushion against
defaults from risky investments, preventing them from investing it to generate
profits. So the designers of these risk management systems were encouraged
to measure risks in a way that minimzed their importance. Some trading desks
also oversimplified the information maintained about the mortgage securities
to make them appear as simple bonds with higher ratings than were warranted
by their underlying components.
Organizational Inertia and Politics. Organizations are bureaucracies
with limited capabilities and competencies for acting decisively. When
environments change and businesses need to adopt new business models to

TABLE 12.3 INFORMATION QUALITY DIMENSIONS

QUALITY DIMENSION DESCRIPTION
Accuracy Do the data represent reality?

Integrity Are the structure of data and relationships among the entities and
attributes consistent?
Consistency Are data elements consistently defined?

Completeness Are all the necessary data present?
Validity Do data values fall within defined ranges?
Timeliness Area data available when needed?

Accessibility Are the data accessible, comprehensible, and usable?

MIS_13_Ch_12 global.indd 490 1/17/2013 2:30:30 PM