Information Systems and Organisations Lecture1: Organisations and Information Systems NCC Education - Title Master

Scope and Coverage This topic will cover: Data, Information and Knowledge Uses and importance of Information Systems (IS) to organisations NCC Education - Slide Master

Learning Outcomes By the end of this topic students will be able to: Explain ways in which data, information and knowledge are used in organisations Appreciate how Information Systems influence the nature and success of organisations

Contents Organisational forms and functions Definitions of data, information and knowledge Information Systems and organisations

Organisations and IS We develop the approach to information systems in this module based upon the idea that information systems are used to support the processes that businesses carry out. And an important part of this is support to managers making decisions that enables the business to survive and thrive. All businesses are organized in a particular way. They have strategies, structures and systems (processes) that allow them to do what they do. Managerial intent and form of organization are supported by technologies to enable objectives to be achieved. Thus, the information systems that are used by business emerge from the influence of management, organization. and technology.

How IS becomes important in an organisation? Management Management have requirements for information that arise from problems in the business and its environment. If businesses performed perfectly and there were no changes in the environment, managers would be unnecessary. In reality things change continually, both inside and outside the business. Change brings business problems that management must deal with. For example, sales of products or services are declining. Managers ask, why is this? What can we do about it? Management can only detect changes and work out how to respond to them through the use of information. Also, if they want to change things, for example the way products are sold, they must have information about the performance of existing sales channels.

Organization The design and re-design of organization results from what managers decide about the future direction of the business in response to business problems. Redesigned organizations need new information to support them. For example, if a business decides to open a new sales channel on the Internet this will need changed information systems to record orders.

Technology To the influences of management aspirations and the changes in organization, the influence of available technologies must be added. This makes new sorts of information system to support the business possible. For example, if a company implements a new Internet based sales channel there will be a wide variety of options as to what software applications and methods of deployment to use. The aim ultimately is to implement a new information system that addresses the original business problem. And this is how new and modified information systems come about.

Summary and Other Thoughts The types of information systems we have in businesses are the result of a response to business problems. These drive the need for information to understand the problems and control the business. Changes in organization generate requirements for additional information and systems to provide it. Technological possibilities influence the type of information system that result. If we think of the business environment in economic terms it is clear that, over time, new technologies are what drives change. And, in our digital age, information technologies lie at the heart of this. The 3 dimensions of information systems, management, organization and technology create the environment for all the businesses. One company’s digital initiative creates competitive pressure on all the other businesses within a particular market sector and drives change and adaptation in a relentless manner.

It is clear that any change in the organization of business or adoption of new information technologies is determined by decisions made by managers. But not all managers make the same kinds of decisions. We find it useful to think of three levels of decision and problem in a business. These levels correspond to different groups of managers. Operational Managers – concerned with day to day management Middle Managers – concerned with the management of performance of the business Senior Management – concerned with managing the businesses future

Organisational Forms and Functions Organisations differ in form and structure, how they are managed.... and how the people in them work ‘in practice’ All of these are important when considering the use of Information Systems in organisations

Specialisation in Organisations Once organisations grow beyond a certain size, specialisation is essential for them to be effective This leads to departments with specialist functions (finance, human resources, sales...) In larger and multi/transnational organisations, divisions based upon different markets may develop All need information systems, and these tend to fall into certain broad classifications

Organisational Hierarchies Strategic Planning Budgets Tactical Profit measures Credit control Knowledge Operational Financial transactions HR FINANCE MARKETNG ….. ….. e.t.c. Functional Activities

The table below is based upon the hierarchy of managerial decision making. It shows 4 functional areas within a company that runs a chain of restaurants. Middle managers each manage a group of restaurants, operational managers manage individual restaurants.

Ways of Thinking About Data, Information and Knowledge PYRAMID Data Information Knowledge FUNNEL Data Information Knowledge

Data, Information and Knowledge Numbers Processed data Meaningful for decisions Account balance Account credit history Choices for ‘chasing’ payment

DIKAR Model This simple model shows the process by which Data is processed to generate Information which is interpreted to create Knowledge which leads to Action that will drive the business Results. Organizations can also move backwards through this process when they strategize. Data Information Knowledge Actions Results

DIKAR – SIMPLE MODEL

Management View Board Departmental Managers Branch/Department Managers Environmental Information Future Direction Board Senior Management Set Targets Measure Performance Departmental Managers Middle Management Set Targets Measure Performance Branch/Department Managers Operational Management

MIS in Essence (Traditional) Transaction Costs Transaction Recording Performance Monitoring Margins & Profitability Customer Information Enterprise Analysis

Departmental Information Systems Monthly Sales Weekly/Monthly Tactical Credit Control Knowledge Daily/Hourly Financial transactions Operational Departments Finance HR Operations Sales ... e.t.c. Financial Accounts Personnel Records Sales Stock Control MRP Forecasting Ledger Enterprise System

Broad Classification of Information Systems - 1 Operational Monitoring Decision Support Communication

Broad Classification of Information Systems - 2 Used by: Individuals Groups/Departments Whole Organisations Inter-organisation Communities

A New IS Affects All Users Individuals Groups/Departments Whole Organisations Inter-organisation Communities ... Through Automating information tasks Eliminating need for management intervention Providing new communications paths Routine decision-making

Examples Individual – Use Group/Department Whole Organisation Inter-organisation Communities e.g. Office’ software e.g. Workflow Management e.g. Enterprise Systems e.g. Business to Business, eCommerce e.g. Websites, Portals and CRM

Organisational Impacts Downsizing Outsourcing Restructuring Removing management layers Changing and eliminating work processes Changed behaviours (e.g. Information sharing) New modes of working (e.g. ‘virtual’ and home-working, hot-desking, mobile working etc.)

Interacting Components – P O T People Organisation Technology with acknowledgements to Laudon and Laudon

References Boddy, D., Boonstra ,A., Kennedy, G. (2008) Managing Information Systems : strategy and organisation 3rd ed. FT Pearson. ISBN-13: 978-0273716815

Lecture 1 – Organisations and Information Systems Any Questions? NCC Education - End Slide Master