Ch. 3 IS ,Organizations ,Mgmt and Strategy 1) Organization and Information System Is and organization system influence one another.

. Information system must be aligned with the organization to provide information that important groups within the organization need. On The other hand organization must be aware of IS in order to benefit from new technology.

 Manager cannot successfully design new system or understand existing system without understanding organizations. Manager decide what system will be built , what they will do , how they will be implemented etc. What is An Organization ? An organization is a stable , formal ,social structure that takes resources from the environment and processes them to produce outputs. This technical Def. focuses on three elements of an organization.

 Capital and labor are primary production factor provided by the environment. The Organization transforms these inputs into products and services in a production function. The product and service are consumed by environments in return for supply inputs. In this behavioral view of the firm , people who works in organizations develop customer ways of working, they make arrangement with subordinates and superiors about how work will be done , how much work will be done , and under what conditions.

 How do these definition of organization relate to information system technology ? A technical view of organization encourages us to focus on the way inputs are combined into outputs when technology changes are introduced into the company. The firm is seen infinitely , with capital and labor. But the behavioral definition of an organization suggest that building new information system or rebuilding old ones like machines or workers. The technical definition tells us how thousand of firms competitive markets combine capital , labor and information technology.

 The behavioral model takes us inside the individual firm to see how each of these definition of organizations inner working.
Structure

Hierarchy
Division of labor Rules ,Procedures Environmental Resources Business Process Process Rights Responsibilities

Environmental Outputs

Values
Norms People Behavioral organization

 Common Features Of Organizations 1) Standard Operating Procedure :* Organization that survive over time become very efficient ,producing a limited number of products and service by following standard routine. * this standard routine codified into reasonable precise rules , procedures and practice called standard operating procedures(SOPs) * these SOPs have great deal to do with the efficiency that modern organization attain.

2) Organizational Politics : People in organization occupy different position with different specialties, concerns. As a result they naturally have divergent viewpoints about how resources , rewards. They different matter both in manager and employee and they result in political struggle , competition , and conflict within every organization. Virtually all information system that bring about significant changes in goals , procedure , productivity , and personnel are politically charged.

3) Organizational Culture : All organizations have bedrock , unassailable , unquestioned assumptions that define their goals and products. Organizational culture is this set of fundamental assumptions about what products the organization should produce , how it should produce them , where and for whom.

Structural Characteristics of all organizations. Clear division of labor Hierarchy Explicit rules and procedures Impartial judgments Technical qualification for position Maximum organizational efficiency

 Unique Features Of Organization :- Organization type, Environments , goals , power , function , leadership , tasks, technology , business process 1) Organizations And Environments Organization reside in environments from which they draw resources and to which they supply goods and services. Organization and environments have a reciprocal relationship. Is play an important role in helping organizations perceive changes in their environments. Is are key instruments for environmental scanning , helping manager identify external changes that might require an organizational response.

 The Organization and its Environments

Environmental Resources Governments Competitors Customers Financial Institutions E Culture Knowledge The Firm

Technology

Information System

2) Different Organization Types : Entrepreneurial Structure :- Young , small firm in a fast changing environment. It has a simple structure and is managed by as its single chief executive officer. E.g. Small start-up Business Machine Bureaucracy :- Large bureaucracy existing in a slowly changing environment , producing standard products. It is centralized Mgmt team and centralized decision making. E.g. Midsize manufacturing firm

 Divisionalized Bureaucracy :- Combination of multiple machine bureaucracy , each producing a different products or service. E.g. Fortune 500 firms such as general motors. Professional Bureaucracy :- Knowledge based organization where goods and services depend on the expertise and knowledge of professionals. E.g. Law firms , school system , hospital etc. Adhocracy :- Task Force organization that must respond to rapidly changing environment. Consist of large specialists organized into multidisciplinary team. E.g. Consulting firm such as Rand Corporation.

 Other Differences Among Organizations 2) The Changing Role Of IS In Organizations IT Infrastructure and It Service :* Todays new IT Infrastructure is designed to make information flow across the enterprise and include links to customers and public infrastructures , including the internet. The IS Dept is responsible for maintain the H/W , S/W , Data Storage , Network that comprise the firms IT Infrastructure. The IS Dept consists of specialists such as Programmer , System Analyst , Project Leader and IS Manager.

 End user representatives of departments outside of the IS Groups for whom IS system applications are developed. The IS Department suggest new business strategies and new IT Based products and service and coordinates both the development of the technology and the planned changes in the organization.

 How IS Affect Organizations How have changes in IT affected Organizations ? To find answer we draw theory based on Economic and behavioral approaches. Economic Theories :- From an economic standpoint , Information technology system can be viewed as factor of production that can be freely substituted for capital and labor. * Information technology reduce transaction costs the costs incurred when a firm buys on the market place what it cannot make itself. Using markets is expensive because of costs such as locating and communicating with distant suppliers , monitoring contract compliance , obtaining information on product etc.

 So, Firm have tried to reduce transaction costs by getting bigger , hiring more employee or buying their own supplier and distributors. Information technology especially the use of networks can help firm lower the cost of market participation (transaction costs). E.g. by using computer links to external suppliers, the Chrysler Corporation can achieve economics by obtaining 70% of its parts from the outside. Information technology also can reduce the internal management costs. As firms grow in size and scope , agency costs or coordination costs rise , because owner must expend more and more effort supervising and managing employees.

 Behavioral Theories Economic theories try to explain how large numbers of firms act in the marketplace , behavioral theories from sociology ,psychology and political science are more useful for describing the behavior of the individual firms. Information technology could bring information directly from operating units to senior managers , Alternatively , information technology could distribute information directly to lower level workers , who could then make their own decision based on their own knowledge and information without any Mgmt and intervation.

 The shape of organization should flatten because professional workers tend to be self decision making power. Information technology may encourage adhocracies and task force network organization in which groups of professionals come together face-to-face or electronically for short period of time to accomplish a specific task(E.g. Designing a new automobile); once the task is accomplished , the individual join other task. More firm use virtual organizations. This organization use network to link people , assets and ideas. E.g. Calyx and Corolla is a networked virtual organization selling fresh flowers directly to the customers , by passing traditional florists. The firms take orders via telephone or from its websites and transmits them to grower farms which ship them in Federal Express Vans directly to the customers.

 Another behavioral approach views information system as the outcomes of political competition between organizational subgroups for influence over the organizations politics , procedures, and resources. The Internet and Organizations The Internet , especially the www , is beginning to have an important impact on the relationship between firms and external entities , and even the organization of business process inside the firm. The internet increase the accessibility , storage and distribution of information and knowledge for organizations. Business are rapidly rebuilding some of their key business processes based on internet technology and making this technology a key component of their IT Infrastructure.

 Implications For The Design And Understanding Of Information Systems The Central Organizational factors to consider when planning a new system are these: * The Environment in which the organization must function The structure of the organization :hierarchy, specialization, standard operating procedures. The Organizations culture and politics. The Type of Organization. The nature and style of Leadership. The extent of top Mgmt support and understanding. The Principle interest groups affected by the system.

 The kind of tasks , decision , and business process that the information system is designed to assist. The sentiments and attitude of workers in the organizations who will be using the information system. The history of the organization : past investments in the information technology, existing skills , important programs and human resources.

3) Managers , Decision Making , And IS * To determine how IS can benefit managers , examine that what manager do and what information they need for their decision making and other function. * The Role Of Managers In Organization * Manager play key role in organizations. Their responsibilities range from making decisions , to writing Reports , to attending meetings etc. * To better understand managerial function and role by examining classical and contemporary models of managerial behavior.

 Classical Description Of Management The classical model of management , which describes what managers do , was largely unquestioned for the more than 70 years since 1920s. Henri Fayol and other early writer first described the five classical functions of managers as planning , organizing , coordinating , deciding , and controlling. This terms actually describe managerial functions , they are unsatisfactory as a description of what manager actually do, the terms do not address what manager do when they plan , decide things , and control the work of others.

 Behavioral Models : For example , describes the morning activities of the president of an investment management firm. Behavioral models state that the actual behavior of manager appears to be less systematic , more informal , less reflective , more reactive ,less well organized. Observer fin that managerial behavior actually has five attributes that differ greatly from the classical description : First manager engage in more that 600 different activities each day , with no break in their pace.

 Second ,managerial activities are fragmented; most activities last or less than nine minutes; only 10% of the activities exceed one hour in duration. Third , manager prefer speculation , gossip they want current , specific , and ad hoc information. Fourth, they prefer oral forms of communication because oral media provide greater flexibility , require less effort , and bring faster response. Fifth, managers give high priority to maintaing a diverse and complex web contract that acts as an informal information system. But in real world observations Kotter argues that , Effective managers actually involved in only three critical activities :

 First, general managers spend significant time establishing personal agendas and both short and long tem goal. Second , Most important effective manager spend a great deal of time building an interpersonal network composed of people at virtually all organizational levels , from warehouse staff to clerical support personnel to other managers and senior management. Third, Manager use their networks to execute personal agendas to accomplish their own goals. Analyzing managers day-to-day behavior , Mintzberg found that these managerial roles fell into three categories:

1) Interpersonal Roles :- manager act as figurehead for the organization when they represent their companies to the outside world and perform symbolic duties such as giving out employee award. Manager act as leaders , attempting to motivate , counsel , and support subordinates. 2) Informational Roles :- Manager act as the nerve centers of their organization , receiving the most concrete ,up-to-date information and redistributing it to those who need to be aware of it. Manager are information disseminators and spokespersons for their organization.

 3) Decision Roles :- Manager make decision ,they handle disturbances arising in the organization ; they allocate resources to staff members who need them etc.

 Managers And Decision Making Decision making is often a managers most challenges role. IS helped managers to communicate and distribute information. The Process of Decision Making Decision making can be classified by organizational level , corresponding to the strategic , management , knowledge , and operational level of the organization. Strategic Decision Making determine the objective , resources , and policies of the organization. Decision making for Management Control is principally concerned with how efficiently and effectively resources are used and how well operational units are performing.

 Operational control decision making determines how to carry out the specific tasks set forth by strategic and middle-management decision makers. Knowledge level decision making deals with evaluating new ideas for products and services , ways to communicate new knowledge , and ways to distribute information throughout the organization. Within each of these level of decision making , researchers classify decision as structured and unstructured. Unstructured decision are those is which the decision maker must provide judgment , evaluation and insight into the problem definition.

 Each of these decision are novel , important , and nonroutine and there is no well understood or agreed on-procedure for making them. Structured Decisions, by contrast , are repetitive and routine and involve a definite procedure for handling them so that they do not have to be treated each time as if they were new. Some decision are Semi structured ; in such cases , only part of the problem has a clear-cut answer provided by an accepted procedure.


Types Of Decision Structured

Organizational Level
Operational Knowledge Management Strategic Account Receivable

TPS

Electronic Schedule Budget prepare Office System MIS Production Facility location

Semi Structured

Project Scheduling

DSS

ESS Unstructured KWS New Product Product design

 Stages Of Decision Making Intelligence :- Consists of identifying and understanding the problems occurring in the organization why the problem , where , and with what effect. Traditional MIS system that deliver a wide variety of detailed information can help identify problems. Design :- The individual designs possible solutions to the problems. Choice :- consist of choosing among solution alternatives. Here the decision maker might need a larger DSS system to develop more extensive data on a variety of alternatives and complex models or data analysis tools to account for all of the costs , consequences , and opportunities.

 Implementation :- During solution implementation , when the decision is put into the effect , managers can use a reporting system that delivers routine reports on the progress of a specific solution.

Is there a problem ?

Intelligence

What are the alternatives ?

Design

Which should you choose ?

Choice

Is the Choice Working ?

Implementation

 Individual Model of Decision Making A number of models attempt to describe how people make decision. Rational Model :- This model of human behavior is built on the idea that people engage is basically consistent , rational , value maximizing calculations. Under this model an individual goal , ranks all possible alternatives action by their contributions to those goals , and choose the alternative that contributes most to those goals. Criticism of this model show that in fact people cannot specify all of the alternatives , and unable to rank all alternatives.

 Many decision are so complex that calculating the choice even if done by computer is virtually impossible. One modification to the rational model states that instead of searching through all alternative , people actually choose the first available alternative that moves them toward their ultimate goal. Another modification alters the rational model by suggesting that in making policy decision. Modern psychology define different style like, Cognitive style :- The selection of alternatives , and the evaluation of consequences. McKenny and Kenn describe two decision making cognitive style.

 Systematic Decision Makers :- approach a problem by structuring it in terms of some formal method. They evaluate and gather information in terms of their structured method. Intuitive Decision Makers :- approach as problem with multiple method , using trial and error to find a solution. Organizational Models Of Decision Making Decision making often is not performed by a single but by entire groups or organizations. There are three types of organization models define following,

 Bureaucratic Model :- according to this model of decision making , an organizations most important goal is the preservation of the organization itself. In this model using SOPs organization rarely change these SOPs , because they ay have to change personnel and incur risks. Although senior management and leader are hired to coordinate and lead the organization . Political Models of Organizational Choice : Power in organization is shared ; even the lowest level workers have some power. In political models of decision making , what an organization does is a result of political bargains struck among key leaders and interest groups.

 Organization do not come up with the solutions that are chosen to solve some problems. They come up with the compromises that reflect the conflicts , the unequal power and the confusion that constitute politics. Garbage Can Model :- This model state that organizational are not rational . Decision making is largely accidental and is the product of a stream of solutions , problems , and situation that are randomly associated. If this model is correct , it should not be surprising that the wrong solution are applied to the wrong problems in an organization a larger number of organizations make critical mistakes that lead to their demise.

 Implication For system design :- system must be built to support group and organizational decision making. As a general rule , information systems designer should be design systems that have the following characteristics: They are flexible and provide any option for handling data. They are capable of supporting a variety of style , skills and knowledge. They are powerful in the sense of having multiple analytical and intuitive models for the evaluation of data.

 They reflect understanding of groups and organizational processes of decision making. They are sensitive to the bureaucratic and political requirement of system.

3) Information System And Business Strategy

What Is A Strategic Information System? Strategic Information System change goals , operations , products , service ,or environmental relationships of organizations to help them gain and edge over competitors. System that have these effect may even change the business of organization. For E.g. State Street Bank and Trust Co. Of Boston transformed its core business form traditional banking service , such as customer checking and its saving accounts and loans , to electronic record keeping and financial information services etc.

 Strategic information system should be distinguished from strategic level system for senior manages that focus on long-term , decision making problems. Organization may need to change their internal operations and relationship with customers and suppliers in order to take advantage of new information system technology. Business Level Strategy And The Value Chain Model At the business level of strategy , the key question is How can we compete effectively in the particular market?

 The most common generic strategic at this level are 1) to become the low cost producer. 2) to differentiate your product or service. 3) to change the scope competition. Leveraging Technology in the Value Chain. At the business level the most common analytic tool is value chain analysis. The value chain model highlights specific activities in the business where competitive strategic can be applied. The value chain model identifies specific , critical leverage points where a firm can use information technology most effectively to enhance its competitive position.

 This model view the firm as a series or chain of basic activities that add a margin of value to a firms products or services. This activities can be categorized as either primary activities or support activities. Primary activities are most directly related to the production and distribution of the firms products and services that create value for the customer. Primary activities include inbound logistics , operations , outbound logistics , sales and marketing , and service. Inbound logistic include receiving and storing materials for distribution to production.

 Operations transformed inputs into finished products. Outbound logistic entail storing and distributing finished products. Marketing and sales includes promoting and selling the firms products. The service activity include maintenance and repair of the firms goods and service. Support Activity make the delivery of the primary activities possible and consist of organization infrastructure (administration and Mgmt) , HR , technology , and procurement.

 Internet tech. has extended the concept of a firms value chain to include all the firms supplier and business partners into a single value WEB. A value web is a collection of independent firms who use information technology to coordinate their behavior so as to collectively produce a product or service for a market. Information System Products and Services Firms can use IS to create unique new products and service that can be easily distinguished from those of competitors. Many of these IT based products and services have been created by financial institutions.

 Citibank developed ATM and bank debit cards in 1977. Citibank became at one time largest bank in the US. Citibank ATMs were so successful that Citibank's competitors were forced to counterstrike with their own ATM Systems. Citibank and any other competitors bank continued to innovate by providing on-line electronic banking services so that customer can do most of their banking transaction with home computer. Manufacturers and retailers are starting to use IS to create products and service that are customtailored to fit the precise specifications of individual customers.

 Dell computer Corporation sells directly to customers using build-to-order manufacturing , individuals , business , and government agencies can buy computer directly from Dell customized with exactly , the features and components they need. System to Focus On Market Niche Business can create new market niches by identifying a specific target for a product or service that it can server in a superior manner. Through focused differentiation the firm can provide a specialized product or service for this narrow target market better than competitors. Sophisticated software tools find pattern in large pools of data and infer rules from them that can be

 For E.g. mining data about purchases at supermarkets might reveal that when potato chips are purchased , soda is also purchased 65 percent of the time. When there is a promotion soda is purchased 85 percent of the time people purchase potato chips. This information can help firms design better sales promotion or product displays.

The cost of acquiring a new customer has been estimated to be five times that of retaining an existing customer.

 SCM and Efficient Customer Response Systems. SCM can not lower inventory costs but can also deliver the products or service more rapidly to the customer. SC can be used to create efficient customer response system that respond to customer demand more efficiently. An efficient customer response links directly links consumer behavior back to distribution , production and supply chains.

Vendors

Customers

The Business Firm

SCM Stockless inventory Continuous replenish Just in time delivery

Intra firm strategy IT Product Data analysis Low cost producer

Efficient Customer Response Point of sale systems Online orders

 Firm Level Strategy And IT In this strategy the question are, How can the overall performance of these business units be achieved ? And How can Information technology contribute? These are two answer in the literature to these questions: synergy and core competency. The idea driving synergies is that when some unit can be used as input to other units , or two organization can pool markets and expertise, these relationship can lower costs and generates profits. E.g. recent Bank and financial firm mergers.

 How can IT be used strategically here ? Like lower retailing costs , increase customer access to new financial products , speed up the process of marketing new instruments. Enhancing Core Competencies : Core competencies may involve being the world best fiber optic manufacturer , the best package delivery service or the best film manufacturer. In general , a core competency relies on knowledge that is gained over many years of experience and first class research organization. How can IT be used to create core competencies ? Give information about new technology and new external knowledge and related market information.