Principles of Information Systems1

Chapter 2 Information Systems in Organizations

Principles of Information Systems3 Why Learn About Information Systems in Organizations? Information systems (ISs) can cut costs and increase profits Students in most fields need to know ISs –Management major might be hired to design a system to improve productivity –Biochemistry major might be hired to conduct drug research using computer techniques

Principles of Information Systems4 Organizations Organization: a formal collection of people and other resources established to accomplish a set of goals

Principles of Information Systems5 Organizations and Information Systems An organization is a system - has inputs, processing mechanisms, outputs, and feedback –Inputs to the system: resources such as materials, people, and money –Outputs to the environment: goods or services

Principles of Information Systems6 Organizations and Information Systems (continued) Figure 2.1: A General Model of an Organization

Principles of Information Systems7 Organizations and Information Systems (continued) Value chain: 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 Systems8 Organizations and Information Systems (cont.) Figure 2.2: The Value Chain of a Manufacturing Company

Principles of Information Systems9 Organizational Structures Organizational structure: organizational subunits and the way they relate to the overall organization Categories of organizational structure –Traditional –Project –Team –Virtual

Principles of Information Systems10 Traditional Organizational Structure (continued) Figure 2.4: A simplified model of the organization, showing the managerial pyramid from top-level managers to nonmanagement employees

Principles of Information Systems11 Traditional Organizational Structure A hierarchical structure Major department heads report to a president or top-level manager Managerial pyramid shows the hierarchy of decision making and authority

Principles of Information Systems12 Traditional Organizational Structure (continued) Figure 2.5: A Traditional Organizational Structure

Principles of Information Systems13 Project and Team Organizational Structures Project organizational structure: centered on major products or services –Many project teams are temporary Team organizational structure: centered on work teams or groups –Team can be temporary or permanent, depending on tasks

Principles of Information Systems14 Project and Team Organizational Structures (continued) Figure 2.6: A Project Organizational Structure

Principles of Information Systems15 Virtual Organizational Structure and Collaborative Work Virtual organizational structure –Employs business units in geographically dispersed areas –People may never meet face to face –Allows collaborative work Managers and employees can effectively work in groups, even those composed of members from around the world

Principles of Information Systems16 Organizational Culture and Change Organizational culture –Major understandings and assumptions –Influences information systems Organizational change –How organizations plan for, implement, and handle change Change model –Represents change theories by identifying phases of change and the best way to implement them

Principles of Information Systems17 Organizational Culture and Change (continued) Unfreezing –Ceasing old habits and creating a climate that is receptive to change Moving –Learning new work methods, behaviors, and systems Refreezing –Involves reinforcing changes to make the new process second nature, accepted, and part of the job

Principles of Information Systems18 Organizational Culture and Change (continued)

Principles of Information Systems19 Reengineering and Continuous Improvement Reengineering or 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 Systems20 Reengineering and Continuous Improvement (cont.) Figure 2.8: Reengineering

Principles of Information Systems21 Reengineering and Continuous Improvement (continued) Continuous improvement –Constantly seeking ways to improve business processes to add value to products and services –Benefits Increased customer loyalty Reduction in customer dissatisfaction Reduced opportunity for competitive inroads

Principles of Information Systems22 Reengineering and Continuous Improvement (cont.) Table 2.2: Comparing Business Process Reengineering and Continuous Improvement

Principles of Information Systems23 User Satisfaction and Technology Acceptance User satisfaction and technology acceptance relate to IS attitude and usage User satisfaction with a computer system and the information it generates often depends on the quality of the system and the information The quality information system is flexible, efficient, accessible, and timely Recall the quality information ??

Principles of Information Systems24 User Satisfaction and Technology Acceptance Technology acceptance model (TAM): describes factors that lead to higher levels of acceptance and usage of technology Technology diffusion: measure of how widely technology is spread throughout an organization Technology infusion: extent to which technology permeates a department

Principles of Information Systems25 Quality Quality: ability of a product or service to meet or exceed customer expectations Techniques used to ensure quality –Total quality management (TQM) : involves developing a keen awareness of customer needs and rewardings –Six sigma – means products and services will meet quality standards % of the time

Principles of Information Systems26 Outsourcing, On-Demand Computing, and Downsizing Strategies to contain costs to hire, train, and compensate talented staff to maintain high-quality goods and services Outsourcing: contracting with outside professional services On-demand computing: contracting for computer resources to rapidly respond to an organization’s varying workflow. Also called –On-demand business –Utility computing Downsizing: reducing number of employees

Principles of Information Systems27 Competitive Advantage A significant and (ideally) long-term benefit to a company over its competition Ability to establish and maintain competitive advantage is vital to the company’s success

Principles of Information Systems28 Factors That Lead Firms to Seek Competitive Advantage Five Forces Model Rivalry among existing competitors Threat of new entrants Threat of substitute products and services Bargaining power of customers Bargaining power of suppliers

Principles of Information Systems29 Strategic Planning for Competitive Advantage Cost leadership Differentiation Niche strategy Altering the industry structure

Principles of Information Systems30 Strategic Planning for Competitive Advantage (continued) Creating new products and services Improving existing product lines and service Other strategies –Growth in sales –First to market –Customizing products and services –Hiring the best people

Principles of Information Systems31 Performance-Based Information Systems Three major stages in using information systems First : To reduce costs and improve productivity Second : Gaining a competitive advantage Third stage : Using performance-based management of information system –Consider both strategic advantage and costs –Use productivity, return on investment (ROI), net present value, and other measures of performance

Principles of Information Systems32 Performance-Based Information Systems (continued) Figure 2.9: Three Stages in the Business Use of Information Systems

Principles of Information Systems33 Productivity A measure of output achieved divided by input required A higher level of output for a given level of input means greater productivity Productivity can be based on factors such as the amount of raw material used, resulting quality, or time to produce the goods or service Productivity = (Output / Input) x 100%

Principles of Information Systems34 Measure of the Value of Information Systems Return on investment (ROI) Earnings growth Market share Customer awareness and satisfaction Total cost of ownership (TCO)

Principles of Information Systems35 Risk Managers must consider risks of designing, developing, and implementing information systems Information system may be a failure Costs of development and implementation of a system can be greater than the returns from it

Principles of Information Systems36 Careers in Information Systems Degree programs –Degrees in information systems –Business degrees with a global or international orientation Computer systems are making IS professionals’ work easier Opportunities in information systems are not confined to single countries

Principles of Information Systems37 Roles, Functions, and Careers in the IS Department Primary responsibilities in information systems –Operations: focuses on the efficiency of IS functions –Systems development: focuses on specific development projects and ongoing maintenance and review –Support: provides user assistance, data administration, user training, and Web administration

Principles of Information Systems38 Typical IS 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 Systems39 Typical IS Titles and Functions (continued) Internet careers –Internet strategists and administrators –Internet systems developers –Internet programmers –Internet or Web site operators Certification –Examples: Microsoft Certified Systems Engineer, Certified Information Systems Security Professional (CISSP), and Oracle Certified Professional

Principles of Information Systems40 Other IS Careers Information security Privacy Cybersecurity Online fraud-fighting Video-game development Working from home Working for a consulting firm Working for a hardware or software vendor developing or selling products

Principles of Information Systems41 Finding a Job in IS Developing an online résumé can be critical to finding a good job Job search approaches –On campus visits –Referrals from professors, friends, and family members –The Internet Online job sites Company Web sites Social networking sites Blogs

Principles of Information Systems42 Summary An organization is a system - has inputs, processing mechanisms, outputs, and feedback Categories of organizational structure: traditional, project, team, and virtual Organizational culture: major understandings and assumptions 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 Systems43 Continuous improvement: constantly seeking ways to improve business processes Outsourcing: contracting with outside professional services Downsizing: reducing number of employees Competitive advantage: significant, and (ideally) long-term benefit to a company over its competition Performance-based information systems: consider both strategic advantage and costs Summary (continued)

Principles of Information Systems44 Productivity: a measure of output achieved divided by input required Primary responsibilities in information systems: operations, systems development, and support Typical IS titles: Chief Information Officer (CIO), LAN administrators, Internet strategists and administrators, Internet systems developers, Internet programmers, and Internet or Web site operators Summary (continued)

Principles of Information Systems45

Principles of Information Systems46 Principles and Learning Objectives 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 Systems47 Principles and Learning Objectives (continued) 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 Systems48 Principles and Learning Objectives (continued) Cooperation between business managers and IS personnel is 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 Systems49 Review question #2

Principles of Information Systems50 ส วั ส ดี