Organization and IS Soetam Rizky

Organization and IS ? Organization Information System

Organization Stable, formal social structure Takes resources from the environment and processes them to produce outputs Stable, formal social structure Takes resources from the environment and processes them to produce outputs Collection of rights, privileges, obligations, and responsibilities Delicately balanced over a period of time through conflict Collection of rights, privileges, obligations, and responsibilities Delicately balanced over a period of time through conflict Clear division of labor, Hierarchy Explicit rules and procedures Impartial judgments Technical qualifications for positions Maximum organizational efficiency Clear division of labor, Hierarchy Explicit rules and procedures Impartial judgments Technical qualifications for positions Maximum organizational efficiency Business Process Business Process

Organization Small start- up businessEntrepreneurial structure: Small start- up business Machine bureaucracy: Midsize manufacturing firm Divisionalized bureaucracy: Fortune 500 firms Professional bureaucracy: Law firms, school systems, hospitals Adhocracy: Consulting firms Small start- up businessEntrepreneurial structure: Small start- up business Machine bureaucracy: Midsize manufacturing firm Divisionalized bureaucracy: Fortune 500 firms Professional bureaucracy: Law firms, school systems, hospitals Adhocracy: Consulting firms Organizations and environments have a reciprocal relationship. Organizations are open to, and dependent on, the social and physical environment. Organizations can influence their environments. Organizations and environments have a reciprocal relationship. Organizations are open to, and dependent on, the social and physical environment. Organizations can influence their environments. Business Process Business Process

Before we continue…… Whos responsible for business process making ? IT, Board of Director or Manager ?

Transaction Cost of Theory Firms seek to economize on the cost of participating in markets (transaction costs).Firms seek to economize on the cost of participating in markets (transaction costs). IT lowers market transaction costs for firm, making it worthwhile for firms to transact with other firms rather than grow the number of employeesIT lowers market transaction costs for firm, making it worthwhile for firms to transact with other firms rather than grow the number of employees IT Needed from Economic Impact View

Agency theory Firm is nexus of contracts among self- interested parties requiring supervision.Firm is nexus of contracts among self- interested parties requiring supervision. Firms experience agency costs (the cost of managing and supervising).Firms experience agency costs (the cost of managing and supervising). Firm is nexus of contracts among self- interested parties requiring supervision.Firm is nexus of contracts among self- interested parties requiring supervision. Firms experience agency costs (the cost of managing and supervising).Firms experience agency costs (the cost of managing and supervising). IT can reduce agency costs, making it possible for firms to grow without adding to the costs of supervising, and without adding employees.IT can reduce agency costs, making it possible for firms to grow without adding to the costs of supervising, and without adding employees. IT Needed from Economic Impact View

Flatten Organizati on Facilitates flattening of hierarchies Broadens the distribution of timely information Increases the speed of decision making Facilitates flattening of hierarchies Broadens the distribution of timely information Increases the speed of decision making Empowers lower-level employees to make decisions without supervision and increase management efficiency Management span of control (the number of employees supervised by each manager) will also grow Empowers lower-level employees to make decisions without supervision and increase management efficiency Management span of control (the number of employees supervised by each manager) will also grow IT Needed from Economic Impact View

Quick Summary Agency Theory : Reduce supervising cost

Before we continue…… So, IT department become more and more important for the organization So, what happen if there is no IT department ? So, what is the relationship between IT and organization ?

Virtual Firms Information technology encourages task force-networked organizations Use networks to link people, assets, and ideas Can ally with suppliers, customers to create and distribute new products and services Not limited to traditional organizational boundaries or physical locations

More Flexible Organization Large organizations use information technology to achieve some of the agility and responsiveness of small organizations. Customization and personalization: IT makes it possible to tailor products and services to individuals. Large organizations use information technology to achieve some of the agility and responsiveness of small organizations. Customization and personalization: IT makes it possible to tailor products and services to individuals. Virtual Firms Information systems give both large and small organizations additional flexibility to overcome the limitations posed by their size. Small organizations use information systems to acquire some of the muscle and reach of larger organizations. Information systems give both large and small organizations additional flexibility to overcome the limitations posed by their size. Small organizations use information systems to acquire some of the muscle and reach of larger organizations.

Constraints Information systems potentially change an organizations structure, culture, politics, and work. Most common reason for failure of large projects is due to organizational and political resistance to change. Information systems potentially change an organizations structure, culture, politics, and work. Most common reason for failure of large projects is due to organizational and political resistance to change. Resistance of Organization Information systems become bound up in organizational politics because they influence access to a key resource

Quick Summary Flexible Organization: Larger and customizable

Implications for the Design and Understanding of Information Systems Factors to consider while planning a new system: Organizational environment Organizational structure, hierarchy, specialization, routines, and business processes The organizations culture and politics

Implications for the Design and Understanding of Information Systems Factors to consider while planning a new system: The type of organization and its style of leadership Groups affected by the system and the attitudes of workers who will be using the system The kinds of tasks, decisions, and business processes that the information system is designed to assist

Flexibility and multiple options for handling data and evaluating information managementCapability to support a variety of management styles, skills, and knowledge Flexibility and multiple options for handling data and evaluating information managementCapability to support a variety of management styles, skills, and knowledge While Designing A System Capability to keep track of many alternatives and consequences Sensitivity to the organizations bureaucratic and political requirements Capability to keep track of many alternatives and consequences Sensitivity to the organizations bureaucratic and political requirements Characteristics

Quick Summary Implication: -Leadership type -Group task

Before we finish…… Organization and IS ? Business process ? IT impacts for organization : Cost, Agency, Flatten Implication in desiging IS : Culture, Group, Resistancy, Leadership type, Sensitivity, Flexibility Can we have the ideal situation ?

Questions / Comments ?