The Decision Making Process as It Relates to Planning

Topics: Accounting software, Enterprise resource planning, Decision making Pages: 5 (1431 words) Published: November 26, 2006
"Decision making is the cognitive process leading to the selection of a course of action among alternatives." Usually the decision making process is implemented resulting from an identified problem that needs to be addressed and remedied. Each decision making process produces a final choice, which is called a decision. Planning is an integral part of the process. Without an organized plan, a final decision will be very difficult to achieve.

Planning and decision making are very similar, yet very distinct processes by which organizational goals are met. If the two processes are implemented properly, they can complement each other so that goals can be realized in the most efficient and effective manner possible. Planning involves identifying the organization's goals, an overall strategy to achieve these goals and a complete set of plans to incorporate and coordinate organizational work. As with any feat, problems arise and prevent goals from being realized.

The first step in the decision making process, as stated earlier, is to clearly identify the problem. For example, at my office we purchased a new accounting system, as the current accounting system limited reporting capabilities. It was an organizational goal to be able to report on very specific information; however the current system would not allow us to meet this goal. To tackle this problem, management decided to purchase a new accounting system. Purchasing a program that will structure financial information as required by the federal government does not come cheap and will result in a significant financial investment.

Once management decided to make the investment in the new system, the finance department was tasked with developing an operational plan that would specify the details of how the goal was to be achieved. The first step of the plan was to identify the breadth, or extent, of the plan. The finance department had restructured the accounting system once before and had a good idea of what the process would entail. It was determined that the process would take anywhere from four to six months to decide on a product, convert current information, implement the new system and train the users. Since instituting a new system will have a very specific effect on the day-to-day operations of the accounting and finance department, the plan is defined as an operational plan. Operational plans are short-term, specific and standing.

Implementing the new system will require very detailed or specific plans which are clearly defined and leave no room for interpretation. Additionally, the specific plans relate very closely to the decision making process in that the decision making process is comprised of eight sequential steps: identification of a problem, identification of decision criteria, allocation of weights to criteria, development of alternatives, analysis of alternatives, selection of an alternative, and implementation of the alternative.

In resolving the problem, decision criteria will define what is relevant to the decision. In this example, there were four established criteria which assisted the organization in determining alternative accounting system candidates. Price, system qualifications, ease of use and training and support are the factors that directed the decision made.

Step three of the decision making process allocates the weight of each criteria in order to give them the correct priority in the decision. System qualifications qualified as the most important criterion. If the system could not provide the reports that are needed, then there would be no reason to change systems. The ease of use qualified as the second most important criterion. Our current system can provide the information that we need, but with difficultly. The objective was to reduce the time and painstaking process that it took to view the information as needed. Training and support was the third most important criterion. It takes time to...
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