Information Systems in Organizations

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Chapter 2
Information Systems in Organizations
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Organizations and Information Systems

• Organization
• A formal collection of people and other resources
  established to accomplish a set of goals

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General Model of an Organization

• (next slide)

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Value Chain

• Term coined by Michael Porter in a 1965 article
  in the Harvard Business Review
• Def a series of activities that includes inbound
  logistics, warehouse and storage, production,
  finished product storage, outbound logistics,
  marketing and sales, and customer service

Schematic
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Organizations

• Organizational structure
• Organizational subunits and the way they are
  related to the overall organization
• Traditional organizational structure
• Major department heads report to a president or
  top-level manager

Schematic
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S. Burry, President

1. Bailey,Legal counsel

B. Wong, VP Accounting
C.Rodrig,VP InformationSystems
R. Henderson,VP Marketing
K. Kelly,VP Production
V. Cisborn,VP HumanResources
S. SamuelSupervisor
L. Bashran,Supervisor
Traditional Organizational Structure
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Terminology (1)

• Hierarchical organizational structure
• See previous slide
• Series of levels
• Those at high levels have more power and
  authority within an organization
• Flat organizational structure
• An organizational structure with a reduced number
  of layers of management

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Terminology (2)

• Empowerment
• Giving employees and their managers more power,
  responsibility, and authority to make decisions,
  take certain actions, and have more control over
  their jobs

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Other Organizational Structures (1)
Schematic

• Project organizational structure
• An organization structure centred on major
  products or services
• Contrast with traditional structure
• Team organizational structure
• An organizational structure centred on work teams
  or groups

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B. Woods, PresidentAir Aerospace Co.
T. Walker, Senior VP,Aircraft Division
W. Butler,Senior VP,Aerospace Division
O. Teco,Senior VP, Communications Satellite
Division
VP, Finance
VP, Marketing
VP, Production
VP, Finance
VP, Marketing
VP, Production
VP, Sales
VP, Finance
VP, Marketing
VP, Production
VP, Sales
Project Organizational Structure
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Other Organizational Structures (2)

• Multidimensional organizational structure
• A structure that may incorporate several
  structures at the same time

Schematic
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Vice President,Marketing Vice President,Production Vice President,Finance
Publisher,College Division MarketingGroup ProductionGroup FinanceGroup
Publisher,Trade Division MarketingGroup ProductionGroup FinanceGroup
Publisher, High SchoolDivision MarketingGroup ProductionGroup FinanceGroup
Multidimensional Organizational Structure
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Other Organizational Structures (3)

• Advantages and disadvantages of different
  organizational structures
• Read the book!

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Organizational Cultureand Change (1)

• Culture
• A set of major understandings and assumptions
  shared by a group
• Organizational culture
• The major understandings and assumptions for a
  business, a corporation, or an organization

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Organizational Cultureand Change (1)

• Organizational change
• Deals with how for-profit and non-profit
  organizations plan for, implement, and handle
  change
• Organizational learning
• The way organizations adapt to new conditions or
  alter their practices over time

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Models of Change

• Change model
• A representation of change theories developed by
  Kurt Lewin and Edgar Schein in 1969
• Three-stage approach
• Unfreezing
• Moving
• Refreezing

Schematic
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Change Model
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Reengineering

• Also called Process redesign
• The radical redesign of business processes,
  organizational structures, information systems,
  and values of the organization to achieve a
  breakthrough in business results
• For example, to
• Reduce delivery time
• Increase product and service quality
• Improve customer satisfaction
• Increase revenues and profitability

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Rules, Rules, Rules

• Reengineering requires finding and vigorously
  challenging old rules

Rule Original rationale Potential problem
Small orders held until full truckload Reduce delivery costs Customer deliver is delayed
No order accepted until credit approved Reduce potential for bad debt Customer service is poor
All product decisions made at headquarters Reduce number of items in inventory Perception of limited product selection
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Other Models

• Continuous improvement
• Constantly seeking ways to improve the business
  processes to add value to products and services

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Continuous Improvement vs.Reengineering
Reengineering Continuous Improvement
Strong action to solve serious problem Routine action
Driven by senior executives Worker-driven
Broad in scope cuts across organizations Narrow in scope
Goal to achieve a major breakthrough Continuous, gradual
Often led by outsiders Led by workers
IS integral to the solution IS provides data to guide
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Total Quality Management

• Quality
• The ability of a product (including service) to
  meet or exceed customer expectations
• TQM
• A collection of approaches, tools, and
  techniques, that offers a commitment to quality
  throughout the organization

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Outsourcing and Downsizing

• Outsourcing
• Contracting with outside professional services to
  meet specific business needs
• E.g., advertising, hiring
• Downsizing
• Reducing the number of employees to cut costs
• Also called rightsizing
• May have serious side effects
• E.g., low employee morale, a need for expensive
  consultants, lost time, waning productivity

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Competitive Advantage

• Competitive advantage
• A position, product, service, etc., within a
  business that improves a position within a market
  with respect to competitors
• Porters Five force model of competitive
  advantage
• Identifies factors that lead to competitiveness

Schematic
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SubstituteProducts
SupplierPower
BuyerPower
Rivalry
NewEntrants
Porters Five-force Model
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Strategic Planning for Competitive Advantage

• Four techniques
• Strategic alliances (aka strategic partnerships)
• Creating new goods or services
• Improving existing goods or services
• Using information systems for strategic purposes

Next slide
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• Strategic alliance
• An agreement between two or more companies that
  involves the joint production and distribution of
  goods and services
• E.g., Chrysler Daimler Benz
• Creating new goods or services
• A company may become stagnant without the
  introduction of new goods and/or services
• E.g., Compaq, Dell
• Improving existing goods or services
• Small variations to existing goods or services,
  and/or complete modifications
• E.g., light foods
• Using information systems for strategic purposes
• IS for improving organizational effectiveness
• E.g., SABRE (airline reservation system)

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Performance-based Information Systems

• Productivity
• A measure of the output achieved divided by the
  input required

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Productivity

• An example is given in the top paragraph on p. 65
• This is a bad example!
• Why?

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Return on Investments (ROI) and the Value of IS

• Return on investment (ROI)
• A measure of IS value that investigates the
  additional profits or benefits that are generated
  as a percentage of the investment in information
  systems technology

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Measures of IS Value

• Earnings growth
• Market share
• Customer awareness and satisfaction

One of my favourite quotes When you cannot
measure, your knowledge is of a meager and
unsatisfactory kind. Kelvin
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Justifying IS

• Categories
• Tangible savings
• Intangible savings
• Legal requirements
• Modernization
• Pilot project

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Roles, Functions, and Careers in the IS Department

• Categories
• Operations
• Systems development
• Support
• Liaisons (information service units)

Schematic
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CEO
CIO
Other functional areas
InformationResourceManagementFunctions
Operations
Systemsdevelopment
Support
Informationservice unit
Data administration
Systems analysis design
Computer facility operations
Information centre
Data entry
Programming
Information technololgy
Local Area network operations
IS Department
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Information Centre

• Information centre
• Provides users with assistance, training,
  application development, documentation, equipment
  selection and setup, standards, technical
  assistance, and troubleshooting

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Information Service Unit

• Information service unit
• Attached to a functional area of the business.
• Acts as a local information support organization
  within a functional area.
• Performs the critical role of liaison between the
  functional area and IS

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Chief Information Officer (CIO)

• Chief Information Officer (CIO)
• A manager at the vice-president level responsible
  for IS planning, policy, and standards
• Focused on supporting corporate goals

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Other IS Roles

• Database Administrator
• Systems Programmer
• Network Specialist
• LAN Administrator
• Webmaster
• Trainer

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IS Principles

• Use of IS strongly influenced by organizational
  structure and problem orientations
• IS are often intertwined within the value-added
  processes
• IS usage may require change that could meet with
  resistance
• Value-added IS needs to be continually sought

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End of Chapter 2
Chapter 3