Analyse the role of information business systems in decision-making process

Topic: Analyse the role of information business systems in decision-making process

Date: 16th August, 2013

Word Count: 1002

Recently, Schneider Electric SA which is a France-based energy management multinational corporation agreed to buy the Invensys Plc which is a UK-based global IT company for 3.4 billion pounds (approximately $6.5 billion NZD) to improve industry software and control systems. This purchase is helping Schneider extend their automation products to the automotive, aerospace, food and feed industry penetration. At the same time, Invensys automation software and hardware can also be used in power station, oil refineries and chemical plants. As a business manager, they should consider some questions before buying. For example, they should consider about the price of software, after-sale service and on-site service. In addition, they also should compare with other software product. As a result, that sample business case is leading to decision-making process for information business systems. This essay will discuss several cases which include three different factors involved decision processes.

The first factor involved decision process is that technical factor. That means business manager should know some essential terminology and software concepts to help them to make a decision buying software and training staff for the company. According to a recent study (Kroenke & Hooper, 2011) showed that business manager should consider the operating system and application program that used to improve business management. The example is Schneider buying software is for improve software system, so they should consider the software quality and quantity. Johnson (n.d.) introduced some questions that the company should consider before them buying, such as the price of software, software satisfaction and software scalable design, etc. So business manager should make a decision for buying software product. Beaupup & Pashley (2013) showed that Invensys will help Schneider’s automation technology to solve European construction recession problem. For the Schneider buying IT company, they use advanced software is for improving their production technology.

The second factor is that organizational factor. That means the company should consider the pros and cons for the company that they want to buy. The example is Schneider, which is an energy company that focus on data centre and network, energy and infrastructure construction, energy optimization and provide energy solutions. And also for Invensys, which is an IT company that deals with the production technology and energy management. As a result, the Invensys has a technology that Schneider wants to have. So Schneider could use Invensys resources to complementary customer bases and scales up the customer size. According to Harvard Business School guide, the company should also consider the social influence when they make a decision (Harvard Business School, 2006, p.117). For example, they should avoid conflict for different opinions and avoid criticism another unpopular opinions. In my opinion, Schneider probably has some different voices for buying Invensys, such as employee benefit and changes in top management. Because Schneider has 105,000 employees around 106 counties (http://www.schneider-electric.co.nz/sites/new-zealand/en/company/company.page) and the Invensys have 16,500 employees around 43 countries from their website (http://www.invensys.com/en/aboutus/). The employee benefit is related to the company earnings and the number of employee. And top management will be a challenge for Schneider caused by functional distribution is related to the number of management. So this is a decision-making for the Chief Executive Officer (CEO) of Schneider, he should consider those problems before buying.

As a result of decision making could be effect by technical and organizational factors, but the result was indirect effect the final decision. The human factor will ultimately effect the decision making result.

The third factor is that human factor. That means the manager should make a final decision on the company purchases. A recent study showed that human behaviours can also effect decision (Harvard Business School, 2006, p.99). It introduced server human behaviours could make a wrong decision or a bad decision. First of all, anchoring usually will take place the process of negotiations and discussions when make a decision. A “psychological anchor point” is generally building on the first people present an opinion (Harvard Business School, 2006, pp. 99-100). Secondly, overconfident usually happened when executives overconfident about their management ability. And also, this overconfidence usually will make a wrong decision. We could solve this problem by setting the number decision makers to challenge his/her decisions (Harvard Business School, 2006, pp.101-104). Thirdly, the past could also influence the decision maker, for example, sunk costs. Sunk costs was defined by has occurred or promised money that cannot be recovered costs (Harvard Business School, 2006, p.107). Finally, false analogies usually influence the decision maker about the experience that they learned before. They use their experience to help make a decision, but it also will guide their work and decision (Harvard Business School, 2006, pp.109-112). In a recent study, Higgs, Smith & Mechling (2010) showed that if business manager make decisions within business organisation could lead to undesirable consequences.

Ultimately, the three factors link to three decision levels. Kroenke & Hooper (2011) indicated that three decision level in organizations: operational, managerial and strategic. As a result, operational decisions are related to daily activities, and also this decision level is concerned technical factor. Strategic decisions are related to organizational issues, and also this decision level is concerned organizational factor. Managerial decisions are related to distribution and exploitation of resources, and also this decision level is concerned human factor in decision-making process.

This essay examines the role of decision-making in three factors that involved in information business systems, which are also linked to three decision levels in the organization. The decision-making process is an important business activity in organization, which the organizations usually have economics consultants in the process of buying product. In general, business manager should consider the three factors when they make a decision to buy new software or hardware or both. Perhaps, the organization should set up specific department like IT department to investigate software or hardware that they want to buy. However, the final decision was made by the groups, as well as information business systems to make it more efficiency for groups to make collaborative decisions.  

References:

Beaupup, F. & Pashley, A. (2013). Schneider to Buy Invensys for $5.2 Billion on Software. Retrieved from http://www.bloomberg.com/news/2013-07-31/schneider-agrees-to-buy-invensys-in-5-2-billion-takeover.html

Harvard Business School. (2006). Harvard business essentials: Decision making: 5 steps to better results. Boston, Mass: Harvard Business School Press.
Higgs, R. C., Smith, M. E., & Mechling, G. W. (2010). Making better business decisions. Supervision, 71(2), 12.

Johnson, B. (n.d.). 10 Questions to Ask Before Buying Software. Retrieved from http://www.businessknowhow.com/manage/software.htm
Kroenke, D., & Hooper, T. (2011). Using MIS. North Shore, N.Z: Pearson.