Chapter 2

Information Systems in Organizations

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Organizations and Information Systems

Organization A formal collection of people and other
resources established to accomplish a set of goals

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General Model of an Organization

(next slide)

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Value Chain
Term coined by Michael Porter in a 1965 article in the Harvard Business Review Def: a series of activities that includes inbound logistics, warehouse and storage, production, finished product storage, outbound logistics, marketing and sales, and customer service
Schematic
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Organizations
Organizational structure Organizational subunits and the way they are
related to the overall organization

Traditional organizational structure Major department heads report to a president

or top-level manager
Schematic
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A.Bailey, Legal counsel

S. Burry, President

B. Wong, VP Accounting

C.Rodrig, VP Information Systems

R. Henderson, VP Marketing

K. Kelly, VP Production

V. Cisborn, VP Human Resources

S. Samuel Supervisor

L. Bashran, Supervisor

Traditional Organizational Structure

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Terminology (1)
Hierarchical organizational structure See previous slide Series of levels Those at high levels have more power and
authority within an organization

Flat organizational structure An organizational structure with a reduced

number of layers of management
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Terminology (2)
Empowerment Giving employees and their managers more
power, responsibility, and authority to make decisions, take certain actions, and have more control over their jobs

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Other Organizational Structures (1)

Schematic Project organizational structure An organization structure centred on major

products or services Contrast with traditional structure

Team organizational structure An organizational structure centred on work

teams or groups
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B. Woods, President Air & Aerospace Co.

T. Walker, Senior VP, Aircraft Division

W. Butler, Senior VP, Aerospace Division

O. Teco, Senior VP, Communications & Satellite Division

VP, Finance

VP, VP, Marketing Production

VP, Sales

VP, Finance

VP, VP, Marketing Production

VP, Sales

VP, Finance

VP, VP, Marketing Production

Project Organizational Structure

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Other Organizational Structures (2)

Multidimensional organizational structure A structure that may incorporate several
structures at the same time
Schematic

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Vice President, Marketing Publisher, College Division Publisher, Trade Division Publisher, High School Division Marketing Group Marketing Group Marketing Group

Vice President, Production Production Group Production Group Production Group

Vice President, Finance Finance Group Finance Group Finance Group

Multidimensional Organizational Structure

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Other Organizational Structures (3)

Advantages and disadvantages of different organizational structures Read the book!

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Organizational Culture and Change (1)

Culture A set of major understandings and assumptions
shared by a group

Organizational culture The major understandings and assumptions for

a business, a corporation, or an organization

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Organizational Culture and Change (1)

Organizational change Deals with how for-profit and non-profit
organizations plan for, implement, and handle change

Organizational learning The way organizations adapt to new conditions

or alter their practices over time
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Models of Change
Change model A representation of change theories developed
by Kurt Lewin and Edgar Schein in 1969 Three-stage approach Unfreezing Moving Refreezing
Schematic
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Change Model
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Reengineering
Also called Process redesign The radical redesign of business processes,
organizational structures, information systems, and values of the organization to achieve a breakthrough in business results For example, to Reduce delivery time Increase product and service quality Improve customer satisfaction Increase revenues and profitability
Information and Organizations

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Rules, Rules, Rules

Reengineering requires finding and vigorously challenging old rules
Rule Small orders held until full truckload No order accepted until credit approved Original rationale Reduce delivery costs Reduce potential for bad debt Potential problem Customer deliver is delayed Customer service is poor Perception of limited product selection

All product decisions Reduce number of made at headquarters items in inventory

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Other Models
Continuous improvement Constantly seeking ways to improve the
business processes to add value to products and services

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Continuous Improvement vs. Reengineering

Reengineering Strong action to solve serious problem Driven by senior executives Broad in scope; cuts across organizations Goal to achieve a major breakthrough Continuous Improvement Routine action Worker-driven Narrow in scope Continuous, gradual

Often led by outsiders

IS integral to the solution
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Led by workers
IS provides data to guide

Information and Organizations

Total Quality Management

Quality The ability of a product (including service) to
meet or exceed customer expectations

TQM A collection of approaches, tools, and

techniques, that offers a commitment to quality throughout the organization
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Outsourcing and Downsizing

Outsourcing Contracting with outside professional services to meet
specific business needs E.g., advertising, hiring

Downsizing Reducing the number of employees to cut costs Also called rightsizing May have serious side effects
E.g., low employee morale, a need for expensive consultants,
lost time, waning productivity
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Competitive Advantage
Competitive advantage A position, product, service, etc., within a
business that improves a position within a market with respect to competitors

Porters Five force model of competitive advantage Identifies factors that lead to competitiveness
Schematic
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Substitute Products

Buyer Power

Rivalry

Supplier Power

New Entrants
Porters Five-force Model
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Strategic Planning for Competitive Advantage

Four techniques:

Strategic alliances (aka strategic partnerships) Creating new goods or services Improving existing goods or services Using information systems for strategic purposes

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1. Strategic alliance An agreement between two or more companies that involves the joint production and distribution of goods and services E.g., Chrysler + Daimler Benz 2. Creating new goods or services A company may become stagnant without the introduction of new goods and/or services E.g., Compaq, Dell 3. Improving existing goods or services Small variations to existing goods or services, and/or complete modifications E.g., light foods 4. Using information systems for strategic purposes IS for improving organizational effectiveness E.g., SABRE (airline reservation system)
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Performance-based Information Systems

Productivity A measure of the output achieved divided by
the input required

Output achieved Productivity = Input required

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Productivity
An example is given in the top paragraph on p. 65 This is a bad example! Why?

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Return on Investments (ROI) and the Value of IS

Return on investment (ROI) represents A measure of IS value that investigates the
additional profits or benefits that are generated as a percentage of the investment in information systems technology

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Measures of IS Value
Earnings growth Market share Customer awareness and satisfaction
One of my favourite quotes: When you cannot measure, your knowledge is of a meager and unsatisfactory kind. Kelvin
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Justifying IS
Categories: Tangible savings Intangible savings Legal requirements Modernization Pilot project

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Roles, Functions, and Careers in the IS Department

Categories: Operations Systems development Support Liaisons (information service units)

Schematic
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CEO

CIO

Other functional areas Information service unit

Information Resource Management Functions

Operations

Systems development Systems analysis & design

Support

Computer facility operations Data entry Local Area network operations

Data administration Information centre

Programming

Information technololgy

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Information Centre
Information centre Provides users with assistance, training,
application development, documentation, equipment selection and setup, standards, technical assistance, and troubleshooting

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Information Service Unit

Information service unit Attached to a functional area of the business. Acts as a local information support
organization within a functional area. Performs the critical role of liaison between the functional area and IS

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Chief Information Officer (CIO)

Chief Information Officer (CIO) A manager at the vice-president level
responsible for IS planning, policy, and standards Focused on supporting corporate goals

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Other IS Roles
Database Administrator Systems Programmer Network Specialist LAN Administrator Webmaster Trainer

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IS Principles
Use of IS strongly influenced by
organizational structure and problem orientations IS are often intertwined within the value-added processes IS usage may require change that could meet with resistance Value-added IS needs to be continually sought
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End of Chapter 2
Chapter 3
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