The use of information systems to add value to the organization is strongly influenced by organizational structure, culture, and change Identify the value-added processes in the supply chain and describe the role of information systems within them Provide a clear definition of the terms organizational structure, culture, and change and discuss how they affect the implementation of information systems Principles of Information Systems, Seventh Edition

Because information systems are so important, businesses need to be sure that improvements or completely new systems help lower costs, increase profits, improve service, or achieve a competitive advantage Identify some of the strategies employed to lower costs or improve service Define the term competitive advantage and discuss how organizations are using information systems to gain such an advantage Discuss how organizations justify the need for information systems Principles of Information Systems, Seventh Edition

Information systems personnel are the key to unlocking the potential of any new or modified system Define the types of roles, functions, and careers available in information systems Principles of Information Systems, Seventh Edition

Organizations and Information Systems Organization: a formal collection of people and other resources established to accomplish a set of goals An organization is a system Inputs to the system: resources such as materials, people, and money Outputs to the environment: goods or services Principles of Information Systems, Seventh Edition

Figure 2.1: A General Model of an Organization Principles of Information Systems, Seventh Edition

Organizations and Information Systems (continued) Value chain: a series (chain) of activities that includes inbound logistics, warehouse and storage, production, finished product storage, outbound logistics, marketing and sales, and customer service Upstream management: management of raw materials, inbound logistics, and warehouse and storage facilities Downstream management: management of finished product storage, outbound logistics, marketing and sales, and customer service Principles of Information Systems, Seventh Edition

Figure 2.2: The Value Chain of a Manufacturing Company Principles of Information Systems, Seventh Edition

Organizational Structure Organizational structure: organizational subunits and their relationship with the overall organization Categories of organizational structure: Traditional Project Team Multidimensional Virtual Principles of Information Systems, Seventh Edition

Traditional Organizational Structure A hierarchical structure Major department heads report to a president or top-level manager A managerial pyramid shows the hierarchy of decision making and authority Principles of Information Systems, Seventh Edition

Figure 2.3: A simplified organizational model, showing the managerial pyramid Principles of Information Systems, Seventh Edition

Figure 2.4: A Traditional Organizational Structure Principles of Information Systems, Seventh Edition

Project Organizational Structure Centered around major products or services Temporary project teams Principles of Information Systems, Seventh Edition

Figure 2.5: A Project Organizational Structure Principles of Information Systems, Seventh Edition

Team Organizational Structure Centered on work teams or groups Temporary or permanent teams Various sizes Principles of Information Systems, Seventh Edition

Multidimensional Organizational Structure May incorporate several structures at the same time Advantage: ability to simultaneously stress both traditional corporate areas and important product lines Disadvantage: multiple lines of authority Principles of Information Systems, Seventh Edition

Figure 2.6: A Multidimensional Organizational Structure Principles of Information Systems, Seventh Edition

Virtual Organizational Structure and Collaborative Work Employs individuals, groups, or business units in geographically dispersed areas People may never meet face to face Can be permanent or temporary Collaborative work: managers and employees can effectively work in groups around the world Principles of Information Systems, Seventh Edition

Organizational Culture and Change Organizational culture: Major understandings and assumptions for a business, corporation, or organization Organizational culture can significantly influence information systems Organizational change: deals with how organizations plan for, implement, and handle change Principles of Information Systems, Seventh Edition

Reengineering Process redesign Radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results Principles of Information Systems, Seventh Edition

Figure 2.8: Reengineering Principles of Information Systems, Seventh Edition

Continuous Improvement Constantly seeking ways to improve business processes Benefits: Increased customer loyalty Reduced customer dissatisfaction Reduced opportunity for competitive inroads Principles of Information Systems, Seventh Edition

Table 2.2: Comparing Business Process Reengineering and Continuous Improvement Principles of Information Systems, Seventh Edition

Technology Diffusion, Infusion, and Acceptance Technology diffusion: measure of how widespread the use of technology is in an organization Technology infusion: extent to which technology permeates a department Technology Acceptance Model (TAM): specifies factors that can lead to higher usage of technology in an organization Principles of Information Systems, Seventh Edition

Total Quality Management Quality: ability of a product or service to meet or exceed customer expectations Total quality management (TQM): approaches, tools, and techniques that foster a commitment to quality throughout the organization Principles of Information Systems, Seventh Edition

Outsourcing, On-Demand Computing, and Downsizing Outsourcing: contracting with outside professionals On-demand computing: contracting for computer resources to rapidly respond to an organization’s varying workflow Downsizing: reducing the number of employees in an organization to cut costs Principles of Information Systems, Seventh Edition

Organizations in a Global Society As companies rely more heavily on virtual structures and outsourcing, businesses can operate around the world Challenges to operating in a global society: Every country has a set of customs, cultures, standards, politics, and laws Language Difficulty in managing and controlling operations in different countries Principles of Information Systems, Seventh Edition

Competitive Advantage Competitive advantage: significant, long-term benefit to a company over its competition Ability to establish and maintain a competitive advantage is vital to a company’s success Principles of Information Systems, Seventh Edition

Factors That Lead Firms to Seek Competitive Advantage Rivalry among existing competition Threat of new entrants Threat of substitute products and services Bargaining power of customers and suppliers Principles of Information Systems, Seventh Edition

Strategic Planning for Competitive Advantage Change the structure of the industry Create new products or services Improve existing products or services Use information systems for strategic purposes Principles of Information Systems, Seventh Edition

Table 2.4: Competitive Advantage Factors and Strategies Principles of Information Systems, Seventh Edition

Table 2.4: Competitive Advantage Factors and Strategies (continued) Principles of Information Systems, Seventh Edition

Performance-Based Information Systems Considers both strategic advantage and costs Uses productivity, return on investment (ROI), net present value, and other measures of performance Principles of Information Systems, Seventh Edition

Figure 2.9: Three Stages in the Business Use of Information Systems Principles of Information Systems, Seventh Edition

Productivity A measure of output achieved divided by input required Higher level of output for a given level of input means greater productivity Principles of Information Systems, Seventh Edition

Return on Investment and the Value of Information Systems Earnings growth Market share Customer awareness and satisfaction Total cost of ownership Principles of Information Systems, Seventh Edition

Careers In Information Systems Degree programs: Degrees in information systems Business degrees with a global or international orientation Computer systems are making information systems professionals’ work easier Opportunities in information systems are not confined to single countries Principles of Information Systems, Seventh Edition

Roles, Functions, and Careers in the Information Systems Department Primary responsibilities in information systems Operations: focuses on the efficiency of information systems functions Systems development: focuses on specific development projects and ongoing maintenance and review Support: provides user assistance Principles of Information Systems, Seventh Edition

Typical Information Systems Titles and Functions Chief Information Officer (CIO): employs the IS department’s equipment and personnel to help the organization attain its goals LAN administrators: set up and manage the network hardware, software, and security processes Principles of Information Systems, Seventh Edition

Typical IS Titles and Functions (continued) Internet careers: Strategists Programmers Web site operators Chief Internet Officer Principles of Information Systems, Seventh Edition

Summary An organization is a system Categories of organizational structure: traditional, project, team, multidimensional, and virtual Organizational culture: major understandings and assumptions of an organization Reengineering: radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results Principles of Information Systems, Seventh Edition

Summary (continued) Continuous improvement: constantly seeking ways to improve business processes Outsourcing: contracting with outside professionals Downsizing: reducing number of employees to cut costs Competitive advantage: significant, long-term benefit to a company over its competition Performance-based information systems considers both strategic advantage and costs Principles of Information Systems, Seventh Edition

Summary (continued) Productivity: a measure of output achieved divided by input required Primary responsibilities in information systems: operations, systems development, and support Typical information systems titles: Chief Information Officer (CIO), LAN administrator Principles of Information Systems, Seventh Edition