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c h a p t e r
33INFORMATION SYSTEMS, INFORMATION SYSTEMS,
ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT AND MANAGEMENT AND
STRATEGYSTRATEGY
What is an organization? (1)
• Technical definition• A stable, formal, social structure
• Takes resources from environment, processes them and produces outputs
What is an organization? (2)
• Behavioural Definition– A collection of rights, privileges, obligations,
responsibilities – Delicately balanced through conflict and conflict
resolution
Environmental
resources
Environmental
outputs
Common Structural Features of Organizations
• Clear division of labour
• Hierarchy
• Explicit rules and procedures
• Impartial judgment
• Technical qualifications for positions
• Maximum organizational efficiency
Additional Common Features of Organizations
• Standard Operating Procedures (SOPs)
• Organizational Politics
• Organizational Culture
Unique Features of Organizations
• Different organizational types
• Organizations and environments
• Other differences
•Goals •Leadership
•Power •Tasks
•Constituencies •Technology
•Function •Business processes
Five Basic Kinds of Organizations
• Entrepreneurial: Young, small, fast-changing
• Machine bureaucracy: large, slow-changing, centralized
• Divisionalized bureaucracy: combination of machine bureaucracies, one central headquarters
• Professional bureaucracy:knowledge-based, weak centralized authority
• Adhocracy: large groups of specialists, teams, task-forces
Delivery of IT Services
• The information systems department– PROGRAMMERS: Write software– SYSTEMS ANALYSTS: Translate business problems
into solutions– IS MANAGERS: Department & team leaders– END USERS: Department reps for whom applications
are developed– CHIEF INFORMATION OFFICER (CIO): senior
manager of IS department
How IS Affect Organizations: Economic Theories
• Microeconomic model • IT can be substituted for capital and labour
• IT should result in fewer middle managers
• Transaction cost theory• IT should reduce transaction costs
• IT should help firms constrict in size
• Agency theory• IT can reduce costs of acquiring information
• Managers can oversee more employees, reduce management costs
Transaction Cost Theory
Agency Cost Theory
How IS Affect Organizations: Behavioural Theories
• IT can affect hierarchy of decision-making
– Lower costs of obtaining information– Allow broader distribution of information– Reduce need for middle management &
clerical support, allow flattening of organization
Implementing Change
Source: Leavitt, 1965
Changes in IT are absorbed, deflected, and defeated by task arrangements, structures and people
The Internet and Organizations
• Impacts relationship between firms and external entities
• Impacts internal business processes
• Can lower transaction and agency costs
Implications for IS Design and Understanding
• Environment• Org. structure• Org. culture and
politics• Type of organization• Leadership style• Top management’s
understanding of IS
• Principal interest groups affected by IS
• Kinds of tasks, decisions & processes
• Attitudes of workers
• History of IS in the organization: existing skills, human resources
Managers, Decision-Making & Information Systems
Two models of managerial role• CLASSICAL:
– Describe functions -- plan, organize, coordinate, decide, control
• BEHAVIORAL: – Based on observations of managers on the job
– Managers are more informal, less reflective, more reactive, less organized than expected
Three Managerial Activities
• Managers spend time establishing personal agendas, long- and short-term goals
• Managers spend time building an interpersonal network
• Managers use their personal network to execute personal agendas to accomplish their own goals
Managerial Roles
• Interpersonal– Act as figureheads, leaders, and liaisons
• Informational– Act as nerve centres, disseminator and
spokespersons
• Decisional– Act as entrepreneurs, disturbance handlers,
resource allocators
Managers and Decision-Making
TPSOAS MIS
KWS
DSS
ESS
ORGANIZATIONAL LEVELORGANIZATIONAL LEVELTYPE OFTYPE OFDECISIONDECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC
STRUCTURED ACCOUNTS RECEIVABLE
ELECTRONIC PRODUCTIONSCHEDULING COST OVERRUNS
SEMI- BUDGETSTRUCTURED PREPARATION
PROJECTSCHEDULING
FACILITYLOCATION
UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTSNEW MARKETS
Stages of Decision-Making
INTELLIGENCE: Collect information; identify problem
DESIGN: Conceive alternatives; select criteria
CHOICE: Use criteria to evaluate alternatives; select
IMPLEMENTATION: Put decision into effect; allocate resources; control
Individual Models of Decision-Making
• Rational– Comprehensive rationality; evaluate all alternatives
• Systematic– Structured, formal method
• Intuitive– Trial & error, unstructured, multiple approach
Organizational Models of Decision-Making
• Bureaucratic– Follow standard operating procedures (SOP)
• Political– Key groups compete and bargain
• “Garbage can”– Organizations not rational; solutions accidental
Strategic Information Systems
• Change the goals, products, operations, services or environmental relationship of organizations
• Help organization achieve competitive advantage– Being ahead of the competition by cost/price,
market share, etc.
Value Chain Model
• Highlights primary or support activities where information systems can best be applied to achieve a competitive advantage
• E.g. Inbound logistics, sales and marketing, customer services
Role of IT at Business Level
• Reduce costs
• Differentiate product– Create loyalty by developing new and unique
products/services, not easily duplicated
• Serve new markets– Focus on a market niche
Lock In Customers & Suppliers
• SUPPLY CHAIN MANAGEMENT– Stockless inventories, continuous
replenishment, just-in-time delivery
• INTRA FIRM STRATEGY– Product differentiation, focused differentiation,
low-cost producer
• EFFICIENT CUSTOMER RESPONSE– Point-of-sale systems, datamining
Industry-Level Strategy and IT
• Information Partnerships– Air Canada and credit card companies have
arrangements to award frequent-flyer points
• Competitive Forces Model
• Network Economics
Network Economics
• New model of competitive forces
• Internet builds communities of users
• The marginal costs of adding another participant are negligible while the marginal gain is much larger
Management Issues
• Managing strategic transitions
• Sustaining competitive advantages
International Information Systems
General Cultural Factor Specific Business Factor
Global communication and transportation technologies
Global markets
Development of global culture Global production and operations
Emergence of global social and educational norms
Global coordination
Political stability or instability Global workforce
Global knowledge base Global economies of scale
Organizing International IS
• Domestic exporter
• Multinational
• Franchiser
• Transnational
Global Strategy
Business Function
Domestic Exporter
Multinational Franchiser Transnational
Production Centralized Decentralized Networked Networked
Finance/ Accounting
Centralized Centralized Centralized Networked
Sales/ Marketing
Mixed Decentralized Networked Networked
Human Relations
Centralized Centralized Networked Networked
Strategic Management
Centralized Decentralized Centralized Networked