1 TYPES, STRATEGIC ROLE & IMPACT BY CHANDRA S. AMARAVADI INFORMATION SYSTEMS IN ORGANIZATIONS - II

2 IN THIS PRESENTATION l Definition of organization l Type of organizations and defining features l An overview of the different functional areas l The different types of information systems l TP, “MIS”, DSS, OIS, ESS l The firm and its environment l IT and business strategy l Impact of information systems

3 INFORMATION SYSTEMS AND THE ENVIRONMENT

4 THE ENVIRONMENT What is the business environment? What property/properties does it exhibit? From this point of view, how are organizations characterized?

organi- zation competition supplier customer government banks trade groups policy making bodies ENVIRONMENT OF AN ORGANIZATION general environment

ENVIRONMENT concerned with inputs and outputs (e.g. customers, suppliers, competitors) governs rules of the game (e.g. banks, special groups, government) General environment concerned with socio economic trends (e.g. cultural characteristics, demographics etc.) Task environment Institutional environment

Change Structure Change Strategy Change SOPs How viable are these methods? ENVIRONMENTAL CHANGE ADAPTATION MECHANISMS

8 ADAPTATION MECHANISMS.. How does a typical consumer products company adapt, if a) gas prices increase? b) one of its products misses a sales target? c) there are tax laws that favor business expansion? d) there are permanent, industry-wide labor shortages? e) if it has to market globally instead of locally?

Strategy is concerned with achieving a fit with the environment  Business level -- What products should the firm offer? -- “Product mix”, What markets?  Industry level -- How should the firm compete? by marketing? by raising prices? How is strategic planning carried out? STRATEGY

TASK ENVIRONMENT ENVIRONMENTAL CHANGE STRATEGIC CHANGES ORGANIZATION RELATIONSHIP BETWEEN ENV. ORGANIZATION & STRATEGY Competitor Customer Competitor

11 THE ROLE OF IS ENVIRONMENT STRATEGY, SOPS.. ORGANIZATION The Role of IS/IT is mainly to support strategy env. changes changes influence

12 INFORMATION SYSTEMS AND BUSINESS STRATEGY

13 How can information systems support corporate strategy? INFORMATION SYSTEMS AND BUSINESS STRATEGY

14 INFORMATION SYSTEMS AND BUSINESS STRATEGY Business level Value chain Supply chain management IT based products/services Industry level Information partnerships Competitive forces

15 l Value chain l IT-based products and services l Supply Chain management & ECR BUSINESS LEVEL STRATEGY

16 l PRIMARY: Directly related to production & distribution. l SUPPORT: Infrastructure, human resources, technology, procurement VALUE CHAIN Activities that add value to products, services Contributes to product or service life cycle

17 PORTER – Support value chain Purchasing, warehousing, production, distribution Support activities: accounting, HR Support activities: finance VALUE CHAIN.. What is the value chain for a law firm?

18 SUPPLY CHAIN MANAGEMENT & ECR Integration of supplier, distributor, and customer logistics Requirements into one cohesive process Supply Chain Management The collection of entities (manufacturing plants, distribution centers, conveyances, retail outlets, people, and information), which are linked together into processes supplying goods or services from source to consumption. Supply Chain Systems linking customers needs to production and distribution. Efficient Customer Response Systems

19 IT BASED PRODUCTS/SERVICES : CBT : Credit cards : Financial products : I2 example Those where information/IT is a major component of the product.

20 l Information partnerships l Competitive forces INDUSTRY-LEVEL STRATEGIES

21 INFORMATION PARTNERSHIPS : Industry level collaborations : Involves information sharing : A limited collaboration : Credit cards and frequent flier programs : Code sharing?

22 THE FIRM TRADITIONAL COMPETITION NEW MARKET ENTRANTS SUPPLIERS CUSTOMERS SUBSTITUTE PRODUCTS & SERVICES COMPETITIVE FORCES

23 COMPETITIVE FORCES MODEL.. : Compete by raising entry-barriers : Discourage switching to substitutes : Use IT-supported standards : Tie-in customers using IT products : Examples?

24 IMPACT OF INFORMATION SYSTEMS

25 ORGANIZATIONS & INFORMATION TECHNOLOGY l Impact of information systems on the organization l Strategic (already discussed) l Impact of the organization on the IS

26 MEDIATING FACTORS: Environment Culture Structure Standard Procedures Politics Management Decisions ORGANIZATIONS & INFORMATION TECHNOLOGY ORGANIZATIONS INFORMATION TECHNOLOGY

27 IMPACT OF THE ORGANIZATION ON THE IT FUNCTION l Organization of IS (how IT is organized) l Decides role of IS (what IT will do for the org.) Concerned with how the organization controls IT department

28 THE END