The role of ‘gut instinct’ in IS evaluation

28 Nov

According to Bannister and Remenyi (2000), Gut feeling, Instinct or intuition is often a different and subtler kind of reasoning; it takes into account of how the world really is rather than simply what the spreadsheets say. They described that as the limitations of investment  appraisal methods become more evident, decision-makers are falling back on ‘gut feel’ and other non formal/rigorous ways of making IS investment decisions.  They went ahead to say that due to the complexity of the determination of costs and benefits and the difficulty to predict the future success of new technology or new business models and the competitive reaction, top management is asked to commit to those strategic projects as an act of faith. Gut feeling sometimes called ‘vision’ or ‘strategic insight’, replaces qualitative analysis.

Many researchers that have investigated on the practice of IT investment decision making have also found that, when it comes to very complex decisions, managers often rely on methods which do not fall within the traditional boundaries of so-called rational decision making.

Leimeister et al (2008) also pointed out that although a significant amount of work is put into formal evaluations the investment decision itself is often not based on the formal results. They also said that corresponding to other research by (Bannister & Remenyi, 2000; Fabrey et al, 1999) they observed that many decisions are justified as ‘acts of faith’ and the reason behind that could be that, the executives mistrust towards benefit evaluation methods or generally an inconsistent understanding of how IT value is defined.

Also Mercken (2005) said that in a lot of cases the purposes of the evaluation is not to choose in a perfect positivist view the best solution out of a limited list of alternatives, but rather to justify a project that has already, on a basis of gut feeling been likely to be the best choice.

When managers are not relying on their intuition or instincts, studies of decision practise have indicated that managers frequently fall back on a relatively techniques involving some variety of relatively simplistic cost benefit analysis (Willcocks and Lester, 1994; Ballantine and Stray, 1998)

Irrespective of the evaluation approach that has been taken to the IS/IT investment analysis, in due course a decision must be made and instinct plays a role because it is a central part of decision making.

ronnoc90, 1rguru and Mirra2 have also explained on their blogs the importance of the balance of gut instinct and rational decision making in evaluating investment decisions.

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