A Measurement Model of Value of Data for Decision Making in the Digital Era

Abstract

Despite burgeoning opportunities for data-driven decisions, research shows that decision makers are failing to make sense of data within a broader context of organisational change which presents the following pertinent questions: 1) How can decision makers measure the value of data by giving a holistic account?; 2) How should the organisation-specific blending of machine and human rationality be factored in the measurement model? This study tackles these questions by proposing a novel approach that combines system dynamics and the ability to incorporate data science methods. In addition to a conceptual description, this paper also describes a feasibility test conducted on a small-scale prototype set in a supply chain context. The results show that the use of sophisticated models that have a local scope ('locally rational') might have unintended global consequences. It underscores the need for a holistic model in the decision makers' toolkit providing the ability to run targeted simulations to assess digital investments.