Fall 2009

I have had the privilege of providing decision analysis support to senior decision-makers in both the government and industry for almost 20 years. Over that time I have found three things to be almost universally true when I walk in the door to meet with either a senior leader or their staff at the beginning of a project. First, the decision situation is important to the organization and is likely something that is very different from their prior experiences. Otherwise they would not be spending the money. Second, there are multiple stakeholders involved with many different perspectives, including competing demands for limited resources and differing areas of expertise relating to the decision situation they face. Third, the goals they are attempting to achieve, the information they are using to inform their decisions and the possible courses of action are:

• Dan Maxwell

The information revolution has reached a stage where business managers are seeking to extract intelligence from their large and growing transactional databases. After a 40-year nascent period, the revolution took off in the 1980s with the introduction of PCs and supporting software that put computing in the hands of much wider and diversified populations of users. The acceleration continued in the 1990s with significant advances in Internet technologies and the introduction of enterprise resource planning (ERP) systems and other transactional data management systems. Investment in the United States in computers, peripherals and software, measured in 1996 dollars, grew from $20 billion in 1983 to $430 billion in 2000 [1]. Except for mild slow-downs due to the dot.com bubble burst and the recent economic downturn, developments and investments in Internet technologies and ERP systems have continued to grow rapidly during the 2000s.

• Jeremy F. Shapiro

The historical approach is to view information technology (IT) as a cost center. Organizations feel they need to fund IT projects in order to support their business. They believe that, although the IT investment is valuable, the actual value enabled by IT is too difficult and too controversial to quantify. They therefore ignore value or treat it qualitatively. This approach leaves IT investments as costs and management’s task to minimize costs, leaving IT vulnerable to cost cutting, especially in an economic downturn. With this focus on IT cost savings, management does not attempt to understand or financially assess the real value enabled by IT projects, thus losing sight of IT’s largest value proposition, the benefits to the business gained by leveraging a new capability created by the IT project. These business benefits are typically several orders of magnitude larger than any IT cost savings. Project teams that do not look for this business value proposition may not be looking at the right project objectives.

• Gerald Lieberman

Even the fabled enterprise cannot surpass the bold new worlds that simulation software can go, beyond what anyone can witness and only limited by what can be imagined. For over 50 years, simulation has truly been used to explore strange new worlds and re-examine the ones that we knew, to make predictions, for insight, or simply for pure entertainment.

• James J. Swain

Economists love to say that there is no such thing as a free lunch. But the Chilean government agency responsible for school grants, Junta Nacional de Auxilio Escolar y Becas (JUNAEB), is an exception to the rule. During the school year, JUNAEB provides breakfast and lunch for 2 million children in primary and secondary public schools. In a developing country where about 14 percent of children under the age of 18 live below the poverty line, many students depend on these free meals as a key source of nutrition.

• Jaime Catalan
• Rafael Epstein
• Mario Guajardo
• Daniel Yung
• Lysette Henriquez
• Cristian Martínez
• Gabriel Weintraub

In the first few years of the 21st century, events like terrorist attacks, Hurricane Katrina and the financial crisis have focused much attention on risk management. Did risk analysis itself fail? Were the analyses right, but not heeded? Was the whole cascade of events beyond anyone’s ability to predict? While the definitive answer may be years away, we can say, based on substantial evidence, that many methods used in risk assessment do not work, even if they seem useful at the time they are applied. Of course, risk analysis is really just a subset of decision analysis and the same observations can apply.

• Douglas Hubbard
• Doug Samuelson