1. 3.1 © 2005 by Prentice Hall With additions by Kleist 3 3 INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT, AND STRATEGY Chapter

2. 3.2 © 2005 by Prentice Hall With additions by Kleist

3. 3.3 © 2005 by Prentice Hall With additions by Kleist Four types of Information Systems OperationalOperational Decision SupportDecision Support ManagerialManagerial ExecutiveExecutive Decision-making becomes more complex the more executive the levelDecision-making becomes more complex the more executive the level Operational systems have been around a long time and tend to have good ROI’sOperational systems have been around a long time and tend to have good ROI’s

4. 3.4 © 2005 by Prentice Hall With additions by Kleist

5. 3.5 © 2005 by Prentice Hall With additions by Kleist

6. 3.6 © 2005 by Prentice Hall With additions by Kleist Strategic Information Systems

7. 3.7 © 2005 by Prentice Hall With additions by Kleist Strategic Information System Technology used to gain an edge over an organization’s competitionTechnology used to gain an edge over an organization’s competition Can be used at all levels of an organization or just a fewCan be used at all levels of an organization or just a few Makes a differenceMakes a difference Profoundly alters the way an organization does businessProfoundly alters the way an organization does business Sustained strategic, competitive advantageSustained strategic, competitive advantage

8. 3.8 © 2005 by Prentice Hall With additions by Kleist Examples of Strategic Information Systems American AirlinesAmerican Airlines Fed ExFed Ex CitibankCitibank Wal-MartWal-Mart Abitibi ConsolidatedAbitibi Consolidated Simonton Windows (SBR)Simonton Windows (SBR) USA TodayUSA Today BenettonBenetton SheetzSheetz PNC CorporationPNC Corporation PriceWaterhouse CoopersPriceWaterhouse Coopers Baxter HealthcareBaxter Healthcare

9. 3.9 © 2005 by Prentice Hall With additions by Kleist

10. 3.10 © 2005 by Prentice Hall With additions by Kleist What do managers need to know about organizations in order to build and use information systems successfully?What do managers need to know about organizations in order to build and use information systems successfully? What impact do information systems have on organizations?What impact do information systems have on organizations? How do information systems support the activities of managers in organizations?How do information systems support the activities of managers in organizations? How can businesses use information systems for competitive advantage?How can businesses use information systems for competitive advantage? Why is it so difficult to build successful information systems, including systems that promote competitive advantage?Why is it so difficult to build successful information systems, including systems that promote competitive advantage? Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy OBJECTIVES

11. 3.11 © 2005 by Prentice Hall With additions by Kleist ORGANIZATIONS AND INFORMATION SYSTEMS Figure 3-1 Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy MEDIATING FACTORS: Environment Culture Structure Standard Procedures Politics Management Decisions Chance ORGANIZATIONS INFORMATION TECHNOLOGY The Two-Way Relationship Between Organizations and Information Technology

12. 3.12 © 2005 by Prentice Hall With additions by Kleist IT and the Organization IT and Strategic AlignmentIT and Strategic Alignment

13. 3.13 © 2005 by Prentice Hall With additions by Kleist Organization: Stable, formal structureStable, formal structure Takes resources from environment and processes them to produce outputsTakes resources from environment and processes them to produce outputs Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy ORGANIZATIONS AND INFORMATION SYSTEMS Common Features Formal structureFormal structure SOPsSOPs PoliticsPolitics CultureCulture Unique Features Organizational TypeOrganizational Type EnvironmentsEnvironments GoalsGoals PowerPower ConstituenciesConstituencies FunctionsFunctions LeadershipLeadership TasksTasks TechnologyTechnology Business processesBusiness processes

14. 3.14 © 2005 by Prentice Hall With additions by Kleist THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Information systems department: Formal organizational unitFormal organizational unit Responsible for information systems in the organizationResponsible for information systems in the organization Information Technology Infrastructure and Information Technology Services

15. 3.15 © 2005 by Prentice Hall With additions by Kleist

16. 3.16 © 2005 by Prentice Hall With additions by Kleist

17. 3.17 © 2005 by Prentice Hall With additions by Kleist Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Figure 3-5 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Information Technology Services

18. 3.18 © 2005 by Prentice Hall With additions by Kleist Economic theories: Information technology is a factor of production, like capital and labor –Transaction cost theory: Firms can conduct marketplace transactions internally more cheaply to grow larger –Agency theory: Firm is nexus of contracts among self-interested parties requiring supervision Behavioral theories: –Information technology could change hierarchy of decision making –Lower cost of information acquisition –Broadens the distribution of information –Virtual organizations Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations

19. 3.19 © 2005 by Prentice Hall With additions by Kleist Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy The Role of Managers in Organizations Classical model of management: –Traditional description of management –Focuses on formal functions: plan, organize, coordinate, decide, control Behavioral model of management: Behavioral model of management: Describes management based on observations of managers on the job –Managerial Roles: Interpersonal: Managers act as figureheads and leadersInterpersonal: Managers act as figureheads and leaders Informational: Managers receive and disseminate critical information, nerve centersInformational: Managers receive and disseminate critical information, nerve centers Decisional: Managers initiate activities, allocate resources, and negotiate conflictsDecisional: Managers initiate activities, allocate resources, and negotiate conflicts MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS How Information Systems Affect Managers

20. 3.20 © 2005 by Prentice Hall With additions by Kleist Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy 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 Figure 3-9 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Different Kinds of Information Systems

21. 3.21 © 2005 by Prentice Hall With additions by Kleist INFORMATION SYSTEMS AND BUSINESS STRATEGY Computer system at any level of an organizationComputer system at any level of an organization Changes goals, operations, products, services, or environmental relationshipsChanges goals, operations, products, services, or environmental relationships Helps organization gain a competitive advantageHelps organization gain a competitive advantage Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy What is Strategic Information System

22. 3.22 © 2005 by Prentice Hall With additions by Kleist INFORMATION SYSTEMS AND BUSINESS STRATEGY Value Chain Model: Highlights the primary or support activities adding a margin of value to products or servicesHighlights the primary or support activities adding a margin of value to products or services Helps achieve a competitive advantageHelps achieve a competitive advantage Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

23. 3.23 © 2005 by Prentice Hall With additions by Kleist INFORMATION SYSTEMS AND BUSINESS STRATEGY Primary Activities: Directly related to the production and distribution of a firm’s products or servicesDirectly related to the production and distribution of a firm’s products or services Support Activities: Make the delivery of primary activities possibleMake the delivery of primary activities possible Consist of the organization’s infrastructure, human resources, technology, and procurementConsist of the organization’s infrastructure, human resources, technology, and procurement Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Business Level Strategy and the Value Chain Model

24. 3.24 © 2005 by Prentice Hall With additions by Kleist Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Firm Value Chain

25. 3.25 © 2005 by Prentice Hall With additions by Kleist

26. 3.26 © 2005 by Prentice Hall With additions by Kleist Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY The Value System Model is used to: Evaluate a company’s process and competencies. Evaluate a company’s process and competencies. Investigate whether adding IT supports the value chain. Investigate whether adding IT supports the value chain. Enable managers to assess the information intensity and the role of IT. Enable managers to assess the information intensity and the role of IT.

27. 3.27 © 2005 by Prentice Hall With additions by Kleist INFORMATION SYSTEMS AND BUSINESS STRATEGY Core Competency: Activity at which a firm excels as a world- class leaderActivity at which a firm excels as a world- class leader Information system encouraging the sharing of knowledge across business units enhances competencyInformation system encouraging the sharing of knowledge across business units enhances competency Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Firm-Level Strategy and Information Technology

28. 3.28 © 2005 by Prentice Hall With additions by Kleist INFORMATION SYSTEMS AND BUSINESS STRATEGY Information partnership: Cooperative alliance formed between two or more corporations for sharing information to gain strategic advantageCooperative alliance formed between two or more corporations for sharing information to gain strategic advantage Help firms gain access to new customers, creating new opportunities for cross-selling and targeting productsHelp firms gain access to new customers, creating new opportunities for cross-selling and targeting products The competitive forces model: Describes the interaction of external influences, specifically threats and opportunities, affecting an organization’s strategy and ability to competeDescribes the interaction of external influences, specifically threats and opportunities, affecting an organization’s strategy and ability to compete Network Economics: Model of strategic systems at the industry levelModel of strategic systems at the industry level Based on the concept of a networkBased on the concept of a network Adding another participant entails zero marginal costs but can create much larger marginal gainAdding another participant entails zero marginal costs but can create much larger marginal gain Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Industry-Level Strategy and Information Systems

29. 3.29 © 2005 by Prentice Hall With additions by Kleist Essentials of Management Information Systems Chapter 3 Information Systems, Organizations, Management, and Strategy Porter’s Model for Wal-Mart (Callon, 1996)

30. 3.30 © 2005 by Prentice Hall With additions by Kleist

31. 3.31 © 2005 by Prentice Hall With additions by Kleist Some Problems from IT for Competitive Advantage The productivity paradoxThe productivity paradox Tangible vs. intangible benefits from ITTangible vs. intangible benefits from IT Future cash flows analysisFuture cash flows analysis Unique vs. staying even with competitionUnique vs. staying even with competition Value from simple automation projectsValue from simple automation projects Value from highly risky, but strategic IT projectsValue from highly risky, but strategic IT projects Risk vs. return issuesRisk vs. return issues

32. 3.32 © 2005 by Prentice Hall With additions by Kleist Technology Life Cycle (Little, 1981) Emerging techno- Not demonstrated potentialEmerging techno- Not demonstrated potential Packing techno- Has demonstrated potentialPacking techno- Has demonstrated potential Key techno- Embedded, major impact, proprietaryKey techno- Embedded, major impact, proprietary Base techno- Minor impactBase techno- Minor impact Can a technology cause innovation? Leadership?Can a technology cause innovation? Leadership?

33. 3.33 © 2005 by Prentice Hall With additions by Kleist

34. 3.34 © 2005 by Prentice Hall With additions by Kleist