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

Despite burgeoning opportunities for data-driven decisions, research shows that decision-makers are failing to make sense of data within a broader context of organizational 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 organization-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.