Information Systems and Organizations Yinglei Wang, Ph.D. Assistant Professor FC Manning School of Business yinglei.wang@acadiau.ca

Learning Objectives Features of organizations The impacts of IT/IS on organizations “The world is flat” “Here comes everybody: The power of organizing without organizations”

Two-Way Relationship

Organization?

The Technical Microeconomic View Stable, formal social structure that takes resources from environment and processes them to produce outputs

The Behavioural View A collection of rights, privileges, obligations, and responsibilities that is delicately balanced over a period of time through conflict and conflict resolution

Features of Organizations Routines and business processes Organizational politics Organizational culture Organizational environments Organizational structure

Routines and Business Processes

IT Enhances Business Processes Increasing efficiency of existing processes Automating steps that were manual Enabling entirely new processes that are capable of transforming the businesses Change flow of information Replace sequential steps with parallel steps Eliminate delays in decision making

Organizational Politics and Culture Divergent viewpoints lead to political struggle, competition, and conflict Political resistance greatly hampers organizational change Organizational culture Encompasses a set of assumptions that define goals and behaviors May be powerful unifying force as well as restraint on change

Resistance to Change Information systems become bound up in organizational politics because they influence access to a key resource – information. Information systems potentially change assumptions about goals and behaviours in organizations. The most common reason for failure of large projects is due to organizational and political resistance to change.

Example: Electronic Health Records “Most Doctors Aren’t Using Electronic Health Records” – The New York Times http://www.youtube.com/watch?v=t9ATw1TjJbs&feature=related http://upload.wikimedia.org/wikipedia/en/8/8f/VistA_Img.png

Organizational Environments Organizations and environments have a reciprocal relationship Environments generally change faster than organizations Information systems can be instrument of environmental scanning, act as a lens

IS as A Lens

Disruptive Technologies Technology that brings about sweeping change to businesses, industries, markets Examples: personal computers, word processing software, the Internet, the PageRank algorithm First movers and fast followers First movers – inventors of disruptive technologies Fast followers – firms with the size and resources to capitalize on that technology

Organizational Structure Five basic kinds of structure (Mintzberg, 1979) Entrepreneurial: Small start-up business Machine bureaucracy: Manufacturing firm Divisionalized bureaucracy: Fortune 500 firms Professional bureaucracy: Law firms, school systems Adhocracy: Consulting firms

Large and Entrepreneurial? http://www.mochatini.org/2009/02/20/google-offices/

Actual Impacts?

Transaction Cost Theory Firms seek to economize on cost of participating in market (transaction costs). When it is cheaper to own, firms include functions/services into their boundaries; otherwise, they buy from the market. IT lowers market transaction costs for firm, making it worthwhile for firms to transact with other firms rather than grow the number of employees.

The Effect of IT IT potentially reduces transaction costs for a given size. Third party

Agency Theory Firm is nexus of contracts among self-interested parties requiring supervision. Firms experience agency costs (the cost of managing and supervising) which rise as firm grows. IT can reduce agency costs, making it possible for firms to grow without adding to the costs of supervising, and without adding employees.

The Effect of IT IT enables firms to economize on managers through better coordination and communication.

Organizational/Behavioural Impacts Empowerment Decision making pushed to lower levels Fewer managers needed (IT enables faster decision making and increases span of control) Postindustrial organizations In postindustrial societies, authority increasingly relies on knowledge and competence rather than formal positions

Flattening Organizations

The Internet and Organizations The Internet increases the accessibility, storage, and distribution of information and knowledge for organizations The Internet can greatly lower transaction and agency costs It seems the flattening trend has been strengthened by the Internet

“The World Is Flat” http://www.youtube.com/watch?v=DvXnXcDhRA0 Source: http://seeker401.wordpress.com/2009/05/25/the-world-is-flat-thomas-friedman/ http://www.youtube.com/watch?v=DvXnXcDhRA0

“Here Come Everybody…” Clay Shirky Soure;http://s3.amazonaws.com/adaptiveblue_img/books/here_comes_everybody_power_of_organizing_without_organizations/clay_shirky http://i.zdnet.com/blogs/clay_shirky.jpg

Takeaways There is a two-way interaction between organizations and IT/IS. IT/IS can change a number of organizational characteristics. The Internet has profound impacts on how we collaborate.