c h a p t e r 3 3 INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT AND STRATEGY

What is an organization? (1) Technical definition A stable, formal, social structure Takes resources from environment, processes them and produces outputs

What is an organization? (2) Behavioural Definition –A collection of rights, privileges, obligations, responsibilities –Delicately balanced through conflict and conflict resolution Environmental resources Environmental outputs

Common Structural Features of Organizations Clear division of labour Hierarchy Explicit rules and procedures Impartial judgment Technical qualifications for positions Maximum organizational efficiency

Additional Common Features of Organizations Standard Operating Procedures (SOPs) Organizational Politics Organizational Culture

Unique Features of Organizations Different organizational types Organizations and environments Other differences GoalsLeadership PowerTasks ConstituenciesTechnology FunctionBusiness processes

Five Basic Kinds of Organizations Entrepreneurial: Young, small, fast-changing Machine bureaucracy: large, slow- changing, centralized Divisionalized bureaucracy: combination of machine bureaucracies, one central headquarters Professional bureaucracy: knowledge- based, weak centralized authority Adhocracy : large groups of specialists, teams, task-forces

Delivery of IT Services The information systems department –PROGRAMMERS: Write software –SYSTEMS ANALYSTS: Translate business problems into solutions –IS MANAGERS: Department & team leaders –END USERS: Department reps for whom applications are developed –CHIEF INFORMATION OFFICER (CIO): senior manager of IS department

How IS Affect Organizations: Economic Theories Microeconomic model IT can be substituted for capital and labour IT should result in fewer middle managers Transaction cost theory IT should reduce transaction costs IT should help firms constrict in size Agency theory IT can reduce costs of acquiring information Managers can oversee more employees, reduce management costs

Transaction Cost Theory

Agency Cost Theory

How IS Affect Organizations: Behavioural Theories IT can affect hierarchy of decision-making –Lower costs of obtaining information –Allow broader distribution of information –Reduce need for middle management & clerical support, allow flattening of organization

Implementing Change Source: Leavitt, 1965 Changes in IT are absorbed, deflected, and defeated by task arrangements, structures and people

The Internet and Organizations Impacts relationship between firms and external entities Impacts internal business processes Can lower transaction and agency costs

Implications for IS Design and Understanding Environment Org. structure Org. culture and politics Type of organization Leadership style Top management’s understanding of IS Principal interest groups affected by IS Kinds of tasks, decisions & processes Attitudes of workers History of IS in the organization: existing skills, human resources

Managers, Decision-Making & Information Systems Two models of managerial role CLASSICAL: –Describe functions -- plan, organize, coordinate, decide, control BEHAVIORAL: –Based on observations of managers on the job –Managers are more informal, less reflective, more reactive, less organized than expected

Three Managerial Activities Managers spend time establishing personal agendas, long- and short-term goals Managers spend time building an interpersonal network Managers use their personal network to execute personal agendas to accomplish their own goals

Managerial Roles Interpersonal –Act as figureheads, leaders, and liaisons Informational –Act as nerve centres, disseminator and spokespersons Decisional –Act as entrepreneurs, disturbance handlers, resource allocators

Managers and Decision-Making TPS OAS MIS KWS DSS ESS ORGANIZATIONAL LEVEL TYPE OF DECISIONOPERATIONALKNOWLEDGEMANAGEMENTSTRATEGIC STRUCTURED ACCOUNTS RECEIVABLE ELECTRONIC PRODUCTION SCHEDULING COST OVERRUNS SEMI-BUDGET STRUCTUREDPREPARATION PROJECT SCHEDULING FACILITY LOCATION UNSTRUCTUREDPRODUCT DESIGN NEW PRODUCTS NEW MARKETS

Stages of Decision-Making INTELLIGENCE: Collect information; identify problem DESIGN: Conceive alternatives; select criteria CHOICE: Use criteria to evaluate alternatives; select IMPLEMENTATION: Put decision into effect; allocate resources; control

Individual Models of Decision- Making Rational –Comprehensive rationality; evaluate all alternatives Systematic –Structured, formal method Intuitive –Trial & error, unstructured, multiple approach

Organizational Models of Decision-Making Bureaucratic –Follow standard operating procedures (SOP) Political –Key groups compete and bargain “Garbage can” –Organizations not rational; solutions accidental

Strategic Information Systems Change the goals, products, operations, services or environmental relationship of organizations Help organization achieve competitive advantage –Being ahead of the competition by cost/price, market share, etc.

Value Chain Model Highlights primary or support activities where information systems can best be applied to achieve a competitive advantage E.g. Inbound logistics, sales and marketing, customer services

Role of IT at Business Level Reduce costs Differentiate product –Create loyalty by developing new and unique products/services, not easily duplicated Serve new markets –Focus on a market niche

Lock In Customers & Suppliers SUPPLY CHAIN MANAGEMENT –Stockless inventories, continuous replenishment, just-in-time delivery INTRA FIRM STRATEGY –Product differentiation, focused differentiation, low-cost producer EFFICIENT CUSTOMER RESPONSE – Point-of-sale systems, datamining

Industry-Level Strategy and IT Information Partnerships –Air Canada and credit card companies have arrangements to award frequent-flyer points Competitive Forces Model Network Economics

New model of competitive forces Internet builds communities of users The marginal costs of adding another participant are negligible while the marginal gain is much larger

Management Issues Managing strategic transitions Sustaining competitive advantages

International Information Systems General Cultural FactorSpecific Business Factor Global communication and transportation technologies Global markets Development of global cultureGlobal production and operations Emergence of global social and educational norms Global coordination Political stability or instabilityGlobal workforce Global knowledge baseGlobal economies of scale

Organizing International IS Domestic exporter Multinational Franchiser Transnational

Global Strategy Business Function Domestic Exporter MultinationalFranchiserTransnational ProductionCentralizedDecentralizedNetworked Finance/ Accounting Centralized Networked Sales/ Marketing MixedDecentralizedNetworked Human Relations Centralized Networked Strategic Management CentralizedDecentralizedCentralizedNetworked