Organizational Structures for the Networked Business Ken Peffers UNLV October 2004

Ford Motor Co, 1910 General Motors Corp, 1925 Division Structure

Organizational Structures Ford Motor Company, 1910 Hierarchy Manage complexity by minimizing it Detailed work descriptions General Motors Division Structure Separate Strategic from day to day management Matrix Organization Overwhelming information overload Redundancy

Why isn’t there just one big company that controls all of the business in the world?

Categories of Benefits Goals and Measures Table 4-2: The IT Business Value Scorecard Categories of Benefits Goals and Measures Internal External Type I: Benefits from Investments in a Networked IT Infrastructure Functionality and Flexibility Improve infrastructure performance; increase the functionality and range of strategic options that can be pursued Sample Measures: Decrease the cost and/or improve the performance of internal IT operations; enable new IT applications to be created at lower cost, in less time, and with less risk; expand the range of internal IT initiatives Create an efficient, flexible online/offline platform for doing business with customers, suppliers, and partners Sample Measures: Decrease the cost and/or improve the performance of doing business online; decrease the time, cost and risk of launching new online business initiatives; expand the reach of existing IT enabled businesses and the range of business opportunities that can be pursued. Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information and Strategy Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.

Categories of Benefits Goals and Measures Internal External Type II: Benefits from Doing Business on a Networked IT Infrastructure Commerce Improve internal operating efficiency and quality Sample Measures: Internal process performance and work flow improvements; cost savings or cost avoidance; increased quality; decreased cycle time Streamline and integrate channels to market, create new channels, and integrate multiple online/offline channels Sample Measures: Supply chain or distribution channel performance improvements; cost savings or cost avoidance for the organization and its customers, suppliers, or partners; decrease time to market or just-in-time order replenishment; enable new channels to market and/or extend the reach and range of existing channels Content / Knowledge Improve the performance of knowledge workers and enhance organizational learning Sample Measures: Enable individuals to achieve and exceed personal performance goals; increase the speed and effectiveness of decision making; increase the ability of the organization to respond quickly and effectively to threats and opportunities Improve the performance of knowledge workers in customer, supplier, and partner organizations; add “information value” to existing products and services; create new information-based products and services Sample Measures: Provide information to customers, suppliers, and partners that enables better decision-making; charge a price premium for products and services based on information value-added; launch new information-based products and services; increase revenue per users and add new revenue streams

Categories of Benefits Goals and Measures Internal External Type II: Benefits from Doing Business on a Networked IT Infrastructure Community Attract and retain top talent; increase satisfaction, engagement, and loyalty; create a culture of involvement, motivation, trust, and shared purpose Sample Measures: Length of time to fill key positions; attrition rate, trends in hiring and retaining top talent (over time, by industry, by region) Attract and retain high quality customers, suppliers, partners, and investors; increase external stakeholders satisfaction, engagement, and loyalty Sample Measures: Customer, supplier, partner satisfaction and lifetime value; average revenues per customer and trend over time; level of personalization available and % that use it; churn rate

Table 4-3: Comparing the Three Eras of IT Evolution Since it was first introduced in organizations, IT has progressed through three eras. During the Mainframe Era, IT was primarily used to automate back office activities. During the Microcomputer Era, IT savvy individuals used personal computers, spreadsheets, and word processing to support decision making and individual work. The Network Era began with early client-server technologies where attempts were made to integrate the islands of automation that arisen during the first two eras and, in the process, to streamline and integrate core IT-enabled business processes. The commercialization of the Internet, browsers, and the World Wide Web, enabled full realization of anywhere, anytime, anyplace computing that is transforming global business, society, and policy. As technology evolved, so too did the benefits and impacts. Yet, the benefits of earlier eras did not go away when we transitioned to a new era. Instead, new opportunities emerged. Timeframe Mainframe Era 1950s to 1970s Microcomputer Era 1980s & Early 1990s Network Era 1990s to present Dominant Technology Mainframe, stand-alone applications, databases Stand-alone microcomputer and end-user tools (e.g., word processing, spreadsheets) Client-server, Internet, browser and hypertext “Data Management” “Information Management” “Knowledge Management” Organization Metaphor Hierarchy Entrepreneurial Organization Networked Business Community “Centralized Intelligence” “Decentralized Intelligence” “Shared Intelligence” Primary IT Role Automate back-office activities Provide information and tools to improve decision making and knowledge worker performance Transform organizations and markets to create business value Typical User IT specialists IT literate business analysts Everyone Location of Use Computer room Desktop Everywhere Planning Process Yearly budgeting Individual expense Business development and strategic planning Justification Cost savings Increased decision quality and personal performance Business value Implementation Independent projects Ad-hoc Strategic initiatives Source: Applegate, Lynda M., Robert D. Austin, and F. Warren McFarlan, Corporate Information and Strategy Management. Burr Ridge, IL: McGraw-Hill/Irwin, 2002.