Decision Matrix Analysis

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Imagine that your boss has put you in charge of taking on a new outsourced IT supplier. You've already identified several different suppliers, and you now need to decide which one to use.

You could decide to go with the low-cost option. But you don't want to make your decision on cost alone – factors such as contract length, underlying technology, and service levels need to be taken into consideration. So how can you make sure you make the best decision, while taking all of these different factors into account?

Decision Matrix Analysis is a useful technique to use for making a decision. It's particularly powerful where you have a number of good alternatives to choose from, and many different factors to take into account. This makes it a great technique to use in almost any important decision where there isn't a clear and obvious preferred option.

Being able to use Decision Matrix Analysis means that you can take decisions confidently and rationally, at a time when other people might be struggling to make a decision.

How to Use the Tool

Decision Matrix Analysis works by getting you to list your options as rows on a table, and the factors you need consider as columns. You then score each option/factor combination, weight this score by the relative importance of the factor, and add these scores up to give an overall score for each option.

While this sounds complex, this technique is actually quite easy to use. Here's a step-by-step guide with an example. Start by downloading our free worksheet. Then work through these steps.

Step 1

List all of your options as the row labels on the table, and list the factors that you need to consider as the column headings. For example, if you were buying a new laptop, factors to consider might be cost, dimensions, and hard disk size.

Step 2

Next, work your way down the columns of your table, scoring each option for each of the factors in your decision. Score each option from 0 (poor) to 5 (very good). Note that you do not have to have a different score for each option – if none of them are good for a particular factor in your decision, then all options should score 0.

Step 3

The next step is to work out the relative importance of the factors in your decision. Show these as numbers from, say, 0 to 5, where 0 means that the factor is absolutely unimportant in the final decision, and 5 means that it is very important. (It's perfectly acceptable to have factors with the same importance.)

Tip:

These values may be obvious. If they are not, then use a technique such as Paired Comparison Analysis Add to My Personal Learning Plan to estimate them.

Step 4

Now multiply each of your scores from step 2 by the values for relative importance of the factor that you calculated in step 3. This will give you weighted scores for each option/factor combination.

Step 5

Finally, add up these weighted scores for each of your options. The option that scores the highest wins!

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