C3 Information Systems, Organizations, and Strategy

IS and the Org.- influences each other Organizations need to be aware of influences of IS to benefit from new technologies Many factors: organization's structure, standard operating procedures, politics, culture etc. IT often change Organizations –organizational balance of rights, responsibilities. Key elements include who owns information who has access to and can update information who makes decisions about whom, what, when and how

Organizational features Routines and business processes –standard operating procedures: precise rules to cope with all expected situations; BPs as collections of routines Organizational politics –IT investments bring about significant changes = politically charged events –managers need to know how to work with the politics Organizational culture Organizational environments Organizational structure –Clear division of labour –Hierarchy –Explicit rules and procedures We will examine business processes to understand how they might be changed or replaced by using IT to achieve greater efficiency

Difference in Organizations Size and types –large, small firms Environments –government, competitors, customers, financial institutions Organizational culture –set of fundamental assumptions about what products organization should produce

IT resistance New technology puts strains on culture, politics and people if IT change threatens commonly held cultural assumptions --> resistance

3-11 IS Impact Economic impacts –IT can help lower transaction costs e.g. computer links to external suppliers –reduce agency costs with IT Organizational and behavioural impacts –IT flattens organizations Post-industrial organizations Organizational resistance to change The Internet and organizations –Implications for the design and understanding of information systems

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Internet changed IS The Internet –important impact on relation between firms and external entities and on the organization of business processes, inside a firm Prior to the Internet –business decisions had limited, delayed or inaccurate knowledge of customers, delivery etc. –large warehouses of information used

Planning for an IS- Factors Organizational environment Organizational structure –hierarchy, specialization, routines, and business processes Organizational culture and politics The type of organization and its style of leadership Groups affected by the system and the attitudes of workers who will be using the system The kinds of tasks, decisions, and business processes that the IS is designed to assist

Characteristics of IT They are flexible and provide many options for handling data and evaluating information They are capable of supporting a variety of management styles, skills, and knowledge They are sensitive to the organization’s bureaucratic and political requirements Keep in mind when designing systems:

3-17 IS for Competitive Advantage Porter’s Competitive Forces Model Traditional competitors New market entrants Substitute products and services Customers Suppliers

In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers. Porter’s Competitive Forces Model Figure Using Information Systems to Achieve Competitive Advantage

3-22 IS strategies Deal with competitive forces Low-cost leadership Product differentiation Focus on market niche Strengthen customer and supplier intimacy Competitive Advantage is gained when organizations provide more value to customers or same value at lower price The Internet’s impact on competitive advantage

Figure 3-11 Value Chain Model 3-19 Primary activities- products and services, value for customers Secondary activities- infrastructure: administration, human ressources, etc. Value Chain Model

Competitive Advantage … Specific activities in the business where competitive strategies can best be applied –Primary activities: sales and marketing, production –Support activities: administration, decision making about IT, HR How can we use information systems to –Improve efficiency, cost –Improve relations with those outside the firm: customers, suppliers, etc.

Figure The value web The value web is a networked system that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand.

3-26 Synergies, core competencies, and network- based strategies Synergies Enhancing core competencies Network-based strategies network economics

IS and business strategy Business a single firm producing a set of related products and services Firm a collection of businesses that make up a single, multidivisional firm Industry a collection of firms that make up an industrial environment or ecosystem Firm Level Strategy firm as collection of businesses IT to improve each business unit synergies core competencies Industry Level Strategy firms together --> industry information partnerships: eg Air Canada, CIBC (Aeroplan)

Figure