LECTURE 2 ORGANIZATIONS AND INFORMATION TECHNOLOGY SUPPORT

Learning Objectives Discuss major information systems concepts such as architecture and infrastructure. Describe the hierarchical structure of organizations and the corresponding information systems. Define various information systems and their evolution, and categorize specific systems. Describe the support provided to different types of employees in an organization. Describe how information resources are managed.

Chapter Overview Information Systems Infrastructure and Architecture Organizations: Structure and Support Evolution and Types of Information Systems IT Support at Different Organizational Levels Managing Information Technology in Organizations Information Infrastructure Architecture Traditional Architectures New Organizational Structure Corresponding Information System Transaction Processing Systems Management Information Support Managers Knowledge Workers Clerical Staff Which resources are managed by whom? What is the role of the information systems department? Who runs the ISD and to whom does the department report? What are the relationships between ISD and end users?

Case : Burlington Coat Factory The Business Problem Burlingion is the largest retailer of coats in the United States sells clothes, linens, luggage, jewelry, baby furniture and accessories faces extremely strong competition wants to offer up to 60% off department store prices needs information to respond to demand needs to communicate and collaborate with both store mangers and suppliers quickly and effectively

Case (continued…) The Solution The Results a corporate computer-based communication system networks to a main processor transfers sales data by satellite technology executes routine transactions on the headquarters’ computer feeds information from the corporate databases into spreadsheets or word processors on desktop computers for end-user computing and decision support The Results dramatic decrease in communication problems steady increase in sales volume and profits

Case (continued…) What have we learned from this case?? Characteristics of a networked corporate information system that are usually found in organizations several different information systems exist in one organization some of these systems may be completely independent, but most are interconnected information systems are connected by means of electronic networks the information system is composed of large and small computers and other hardware connected by different types of networks many information systems use client/server architecture

Information Systems Architecture Physical facilities, hardware, software, databases services, and management that support all computing resources in an organization Five major components of infrastructure computer hardware general-purpose software networks and communication facilities database information management personnel Tells how specific computing resources are arranged, operated, and managed

Information Systems Architecture (continued …) Information Architecture a high-level map or plan of the information requirements a manner in which these requirements will be satisfied a guide for current IT operations a blueprint for future IT directions meets the organization’s strategic business needs must tie together the information requirements, the infrastructure, and the applications similar to the conceptual planning of a house

Information Systems Architecture (continued …) Traditional Architectures mainframe environment processing is done by a mainframe computer - a relatively large computer built to handle large amounts of data, thousands of user terminals, and millions of transactions modern versions of this architecture : personal computers (PCs) and network computing (NC) PC environment PCs form the hardware architecture distributed environment divides the processing work between two or more computers the participating computers can be all mainframe, all PCs, or (usually) a combination of the two

Information Systems Architecture (continued …) New Architectures client/server architecture several computers share resources and are able to communicate with many other computers a client - a computer such as a PC attached to the network, which is used to access shared network resources a server - a machine that is attached to the same network and provides clients with these services purpose : optimize the use of computer resources

Information Systems Architecture (continued …) Enterprisewide Architectures access to data, applications, services, and real-time flows of data in different LANs or databases use client/server architecture to create a cohesive, flexible, and powerful computing environment provide total integration of departmental and corporate IS resources increase the availability of information and thereby maximize the value of an organization

Information Systems Architecture (continued …) Internet-based Architectures based on the concepts of client/server architecture and enterprisewide computing the Internet is the basis for a network connection from the outside world to the company, as well as with the organization’s web site organization’s internal private Internet (intranet) - useful for distributing information throughout the organization

The network organization: Non-Company Manufacturers Customers Sales peoples and other mobile employees Distributors Market Non-Company Retailers Suppliers (Purchasing) Liquidators contractors Toy Industry Extranet Other Extranets Banks and other business partners Professional Associations, large suppliers, competitors Corporate Extranet Head Quarter Retail Stores Employees Manufacturing Toys Inc Corporate Intranet Public Travel agency Small customers Small retailers Small vendors Government EDI, VAN Internet The network organization: How a company uses the Internet, intranet and extranet

Organizations : Structure and IT Support the nature of organizations determines their activities, the information support they need, and the type of information systems they use profit-making business versus not-for-profit organizations exist manufacture goods versus services are delivered can be located in one place or in several places, some are global or multinational organizations

Organizations : Structure Organizational Structure departmental functional structure specialize in the delivery of a certain function typical departments in an organization: Accounting Finance Marketing and Sales Production or Operations Management (POM) Human Resources Management (HRM) Information Systems and Technology

Organizations : Structure Hierarchical Structure Headquarters Division A Division B Overseas Division Plant C Plant D Plant E Plant F POM Accounting Marketing Finance HRM Administration Services (legal, etc.)

Organizations : IT Support The Corresponding Information Systems Departmental Information Systems Plant Information Systems Divisional Information Systems Enterprisewide Information Systems Interorganizational Information Systems (IOS) Global Information System for an International or Multinational Corporation

Types of Information Systems Transaction Processing Systems organizations perform routine, repetitive tasks a TPS supports the monitoring, collection, storage, processing, and dissemination of the organization’s basic business transactions frequently, several transaction processing systems exist in one company today’s transaction processing systems are much more sophisticated and complex

Types of Information Systems (continued …) Management Information Systems (MIS) provides periodic reports generates weekly and monthly summaries by product, customer, or salesperson initially, MIS had an historical orientation today, MIS reports may include summary reports, for the current period or for any number of previous periods - used for monitoring, planning, and control functional management information systems (MIS) access, organize, summarize, and display information for supporting routine decision making in the functional areas geared toward middle managers

Types of Information Systems (continued …) Major Outputs of a Functional Management Information System OUTPUT DESCRIPTION Statistical summaries Summaries of raw data such as daily production, and weekly and monthly usage of electricity. Exception reports Highlights of data items that are larger or smaller than designated levels. Periodic reports Statistical summaries and exception reports provided at scheduled, regular periods. Ad hoc reports Special, unscheduled reports provided on demand. Comparative analysis Performance comparison to that of competitors, past performance, or industry standards. Projections Advance estimates of trends in future sales, cash flows, market share, etc.

Types of Information Systems (continued …) Support Systems office automation systems (OAS) word processing systems computer-aided design and manufacturing (CAD/CAM) decision support systems (DSS) end-user computing executive information systems (EIS) group support systems (GSS) Intelligent Systems expert systems (ES) artificial neural network (ANN)

Types of Information Systems (continued …) Integrating Systems various computerized systems are being integrated to increase their functionalities one popular form of integrated system is enterprise resources planning (ERP) ERP plans and manages all of an organization’s resources and their use, including contacts with business partners

The Evolution Computer Based Information Systems 1940 Scientific, military applications 1950 Routine business applications, TPS 1960 MIS, office automation 1970 DSS, LANs 1980 Client/server executive information system, PC’s, AI, Groupware 1990 Integration, intelligent systems the Web, intranets, extranets, ERP software 2000 Internet, Electronic commerce, Smart systems

IT Support at Different Organizational Levels Office Automation and Communication Systems Clerical Staff Operation Systems Line Managers, Operators Managerial Systems Middle Managers Staff Support Knowledge Workers, Professionals Strategic Systems Top Managers Information Infrastructure and TPS The information systems support of people in organizations

Knowledge Workers People who create information and knowledge and integrate it into the business Engineers, financial and marketing analysts, production planners, lawyers, and accountants Responsible for finding or developing new knowledge for the organization and integrating it with existing knowledge Act as advisors and consultants to the members of the organization Act as change agents by introducing new procedures, technologies, or processes 60 to 80 percent of all workers are knowledge workers Supported by a large variety of information systems from Internet search engines to expert systems, to computer-aided design, and by knowledge bases

Clerical Staff Support managers at all levels Data workers - use, manipulate, or disseminate information bookkeepers, secretaries who work with word processors, electronic file clerks, and insurance claim processors Supported by office automation and groupware, including document management, workflow, e-mail, and other personal productivity software

IT Support at Different Organizational Levels : A Summary System Employees Supported Office automation Office workers Communication All employees Group support system People working in groups Decision support system Decision makers, managers Executive information Executives, top managers TPS Line managers and employees MIS Middle management Intelligent systems Knowledge workers

Managing IT Resources IT resources are scattered throughout the organization Information systems have enormous strategic value Some IT resources change frequently. It may be rather difficult to manage IT resources It is essential to manage information systems properly The responsibility for the management of information resources is divided between a usually centralized information systems department (ISD) and the end users Which resources are managed by whom? Generally speaking, ISD is responsible for corporate-level and shared resources, and the end users are responsible for departmental resources

Managing IT Resources(continued …) What is the role of the information systems department? Traditional major IS functions: Managing systems development and systems project management Managing computer operations, including the computer center Staffing, training, and developing IS skills Providing technical services

Managing IT Resources (continued …) What is the role of the information systems department? (continued) New (additional) major IS functions: Initiating and designing specific strategic information systems Infrastructure planning, development, and control Incorporating the Internet and electronic commerce into the business Managing system integration including the Internet, intranets, and extranets Educating the non-IS managers about IT Educating the IS staff about the business Supporting end-user computing Partnering with the executive level that runs the business Actively participating in business processes reengineering Proactively using business and technical knowledge to the line with innovative ideas about IT Creating business alliances with vendors and IS departments in other organizations

Managing Information Technology Key MIS issues in two recent time periods Key Issues, 1994/1995 Key Issues, 1997 1. Building a responsive IT infrastructure 1. Improving productivity 2. Facilitating and managing business process redesign 2. Reducing costs 3. Developing and managing distributed systems 3. Improving decision making 4. Developing and implementing an information architecture 4. Enhancing customer relationships 5. Planning and managing communication networks 5. Developing new strategic applications

Managing Information Technology (continued …) Who Runs the ISD and to whom does ISD Report? run by MIS Director, Manager of Computing Services, Manager of Information Technology, or Chief Information Officer (CIO) reports to Chief Executive officer Functional Vice President Senior vice president Chief knowledge officer (CKO) - the director assigned to capture and make effective use of IT knowledge for an organization The executive committee provides the top-level oversight for the organization’s information resources. It guides the IS steering committee, which is usually chaired by the CIO.

Managing Information Technology (continued …) What are the relationships between the ISD and end users? A steering committee that represents all end users and the ISD. This committee sets IT policies, decides on priorities, and coordinates IS projects. Joint ISD/end-user project teams for planning, budgeting, applications development, and maintenance ISD representation on the top corporate executive committee Service agreements that define computing responsibilities and provide a framework for services rendered by the ISD to end users Technical and administrative support (including training) for end users A conflict resolution unit established by the ISD to handle end-user complaints quickly and resolve conflicts as soon as possible An information center that acts as help center to end users regarding purchase, operations, and maintenance of hardware and software

What’s in IT for Me? For Accounting For Finance For Marketing Many of the transactions handled in a TPS are data that the accounting department records and tracks For Finance Financial departments often use specialized DSS for forecasting and portfolio management For Marketing Marketing uses such IT-related concepts as customer databases, marketing decision making, sales automation, and customer relationship management (CRM)

What’s in IT for Me? (continued …) For Production/Operations Management Organizations are competing on price, quality, time (speed), and customer service which are enhanced and supported by IT For Human Resources Management Intranets help to disseminate relevant information throughout the organization. Internets are used for recruiting For MIS IS management function continues to grow in strategic value For Non-Business In all organizations, IT provides essential support to all functional areas`

INFORMATION SYSTEM MANAGEMENT INFORMATION TECHNOLOGY ORGANIZATION BUSINESS CHALLENGE SOLUTIONS MANAGEMENT INFORMATION TECHNOLOGY ORGANIZATION MANAGING CHANGE FITTING TECHNOLOGY TO ORGANIZATION LIMITS OF TECHNOLOGY

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

MICROECONOMIC DEFINITION OF ORGANIZATION INPUT FROM ENVIRONMENT PRODUCTION PROCESS OUTPUT TO ENVIRONMENT FEEDBACK

BEHAVIORAL VIEW OF ORGANIZATIONS STRUCTURE: Hierarchy Division of labor Rules, Procedures PROCESS: Rights/Obligations Privileges/Responsibilities Values Norms People * ENVIRONMENTAL RESOURCES ENVIRONMENTAL OUTPUTS

STRUCTURAL CHARACTERISTICS OF ALL ORGANIZATIONS CLEAR DIVISION OF LABOR HIERARCHY EXPLICIT RULES & PROCEDURES IMPARTIAL JUDGMENTS TECHNICAL QUALIFICATIONS MAXIMUM ORGANIZATIONAL EFFICIENCY *

ORGANIZATIONAL STRUCTURES ENTREPRENEURIAL: Start up business MACHINE BUREAUCRACY: Mid-sized manufacturing firm DIVISIONALIZED BUREAUCRACY: Fortune 500 PROFESSIONAL BUREAUCRACY: Law firms, hospitals ADHOCRACY: Consulting firm *

SALIENT FEATURES OF ORGANIZATIONS COMMON FEATURES: FORMAL STRUCTURE STANDARD OPERATING PROCEDURES POLITICS CULTURE * 3.8

ORGANIZATION & ITS ENVIRONMENT THE FIRM INFORMATION SYSTEMS

ORGANIZATION & ITS ENVIRONMENT THE ENVIRONMENT: RESOURCES & CONSTRAINTS GOVERNMENTS COMPETITORS FINANCIAL INSTITUTIONS CULTURE KNOWLEDGE TECHNOLOGY THE FIRM INFORMATION SYSTEMS

ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS INDIVIDUAL GROUP DEPARTMENT ORGANIZATION INTERORGANIZATION ORGANIZATIONAL NETWORK *

ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS INDIVIDUAL: ACTIVITY: Job, task SUPPORT: Client database, DSS GROUP: ACTIVITY: Project SUPPORT: Product scheduling, access to TPS, external sources, dynamic info needs, group DSS *

ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS DEPARTMENT: ACTIVITY: Major function SUPPORT: Accounts payable; payroll; marketing; MIS; TPS DIVISION: ACTIVITY: Major product, service SUPPORT: Systems to support functions; MIS; TPS; on-line *

ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS ACTIVITY: Multiple products, services, goals SUPPORT: Integrated on-line, interactive financial & planning systems; MIS; ESS *

ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS INTERORGANIZATION: ACTIVITY: Alliance; competition; exchange; contact SUPPORT: Communication systems; intelligence, observation, monitoring systems *

ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS ORGANIZATIONAL NETWORK: ACTIVITY: Sector of economy; related products, services; interdependencies SUPPORT: Informal communication systems; industry / sector-level formal reporting systems *

WORK GROUPS, PROBLEMS, SUPPORT TYPES: HIERARCHICAL INTERDEPARTMENTAL COMMITTEES PROJECT TEAMS COMMITTEES TASK FORCES PEER GROUPS / SOCIAL NETWORKS *

WORK GROUPS, PROBLEMS, SUPPORT PROBLEMS: MAKING ARRANGEMENTS ATTENDING MEETINGS LONG AGENDAS COST OF MEETINGS BETWEEN-MEETING ACTIVITIES *

WORK GROUPS, PROBLEMS, SUPPORT SUPPORT: HIERARCHICAL: Video conferencing; e-mail INTERDEPARTMENTAL COMMITTEES: Electronic messaging *

WORK GROUPS, PROBLEMS, SUPPORT SUPPORT: PROJECT TEAMS: Scheduling software; Meeting support tools; Documents; Intranet COMMITTEES: e-bulletin boards; Video conferencing; e-mail; Computer conferencing *

WORK GROUPS, PROBLEMS, SUPPORT SUPPORT: TASK FORCES: Graphics display; Info utility; Documents; Meeting support tools PEAR GROUPS / SOCIAL NETWORKS: Telephone; e-mail; Correspondence *

THE COMPUTER PACKAGE ORGANIZATION: Senior Management; Major end users INFORMATION SYSTEMS DEPARTMENT Technology: Hardware; Software Information Systems Specialists *

THE COMPUTER PACKAGE Managers Systems analysts Systems designers INFORMATION SPECIALISTS: Managers Systems analysts Systems designers Systems programmers Applications programmers Maintenance programmers Database administrator *

WHAT SOME SPECIALISTS DO PROGRAMMERS: Write software SYSTEMS ANALYSTS: Translate business problems into solutions IS MANAGERS: Department leaders END USERS: Department reps for whom applications are developed

SYSTEM DEVELOPMENT PROCESS INTERNAL Values Norms Interests EXTERNAL Uncertainties Opportunities SYSTEM DEVELOPMENT Adoption Utilization Management

HOW INFO SYSTEMS AFFECT ORGANIZATIONS MICROECONOMIC THEORY: Info technology is a factor of production, like capital & labor TRANSACTION COST THEORY: Firms attempt to minimize transaction costs internally & externally *

HOW INFO SYSTEMS AFFECT ORGANIZATIONS AGENCY THEORY: Firm is nexus of contracts among agents who make decisions; IS shrink number of agents & reduce cost BEHAVIORAL THEORIES: Concepts from Sociology, Psychology, Political Science; Organizations & Information Technology mutually influence each other *

HOW INFO SYSTEMS AFFECT ORGANIZATIONS DECISION & CONTROL THEORY: Decisions are made under conditions of risk & uncertainty; centralization & hierarchy reduce uncertainty SOCIOLOGICAL THEORY: Bureaucracy, SOPs help stabilize organizations, but slow ability to change *

HOW INFO SYSTEMS AFFECT ORGANIZATIONS POSTINDUSTRIAL THEORY: Flatter organizations; dominated by knowledge workers; decentralized decision making CULTURAL THEORY: Info technology must fit organization’s culture to be accepted *

HOW INFO SYSTEMS AFFECT ORGANIZATIONS POLITICAL THEORY: Info systems are outcome of political competition for policies, procedures, resources *

IMPLEMENTING CHANGE TASK RESISTANCE TECHNOLOGY PEOPLE MUTUAL ADJUSTMENT STRUCTURE Source: Leavitt, Handbook of Organization (1965)

HOW WEB AFFECTS ORGANIZATIONS MORE INFO, ANYWHERE, ANYTIME MORE SCOPE, DEPTH, RANGE OF KNOWLEDGE: Global encyclopedia LOWERS COST, RAISES QUALITY OF INFO DISTRIBUTION: Enhances attention span of vendors, customers, employees *

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