Information Systems in Organizations Chapter 2 Information Systems in Organizations

Organizations and Information Systems A formal collection of people and other resources established to accomplish a set of goals

General Model of an Organization (next slide)

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

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

Traditional Organizational Structure S. Burry, President Bailey, Legal counsel B. Wong, VP Accounting C.Rodrig, VP Information Systems R. Henderson, VP Marketing K. Kelly, VP Production V. Cisborn, VP Human Resources S. Samuel Supervisor L. Bashran, Supervisor Traditional Organizational Structure

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

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

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

Project Organizational Structure B. Woods, President Air & 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, Sales VP, Finance VP, Marketing VP, Production VP, Sales VP, Finance VP, Marketing VP, Production Project Organizational Structure

Other Organizational Structures (2) Multidimensional organizational structure A structure that may incorporate several structures at the same time Schematic

Vice President, Marketing Vice President, Production Vice President, Finance Publisher, College Division Marketing Group Production Group Finance Group Publisher, Trade Division Publisher, High School Division Multidimensional Organizational Structure

Other Organizational Structures (3) Advantages and disadvantages of different organizational structures Read the book!

Organizational Culture and Change (1) 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

Organizational Culture and 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

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

Change Model

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

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

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

Continuous Improvement vs. Reengineering 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

Total Quality Management 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

Outsourcing and Downsizing 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

Competitive Advantage A position, product, service, etc., within a business that improves a position within a market with respect to competitors Porter’s ‘Five force’ model of competitive advantage Identifies factors that lead to competitiveness Schematic

Substitute Products Buyer Power Supplier Power Rivalry New Entrants Porter’s Five-force Model

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

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)

Performance-based Information Systems Productivity A measure of the output achieved divided by the input required Productivity = Output achieved Input required

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

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 represents

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

Justifying IS Categories: Tangible savings Intangible savings Legal requirements Modernization Pilot project

Roles, Functions, and Careers in the IS Department Categories: Operations Systems development Support Liaisons (information service units) Schematic

IS Department CEO CIO Other functional areas Operations Information Resource Management Functions Operations Systems development Support Information service unit Computer facility operations Systems analysis & design Data administration Data entry Information centre Programming Information technololgy Local Area network operations IS Department

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

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

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

Other IS Roles Database Administrator Systems Programmer Network Specialist LAN Administrator Webmaster Trainer

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

End of Chapter 2 Chapter 3