c h a p t e r 3 3 information systems, organizations, management and strategy

c h a p t e r

33INFORMATION SYSTEMS, INFORMATION SYSTEMS,

ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT AND MANAGEMENT AND

STRATEGYSTRATEGY

What is an organization? (1)

• Technical definition• A stable, formal, social structure

• Takes resources from environment, processes them and produces outputs

What is an organization? (2)

• Behavioural Definition– A collection of rights, privileges, obligations,

responsibilities – Delicately balanced through conflict and conflict

resolution

Environmental

resources

Environmental

outputs

Common Structural Features of Organizations

• Clear division of labour

• Hierarchy

• Explicit rules and procedures

• Impartial judgment

• Technical qualifications for positions

• Maximum organizational efficiency

Additional Common Features of Organizations

• Standard Operating Procedures (SOPs)

• Organizational Politics

• Organizational Culture

Unique Features of Organizations

• Different organizational types

• Organizations and environments

• Other differences

•Goals •Leadership

•Power •Tasks

•Constituencies •Technology

•Function •Business processes

Five Basic Kinds of Organizations

• Entrepreneurial: Young, small, fast-changing

• Machine bureaucracy: large, slow-changing, centralized

• Divisionalized bureaucracy: combination of machine bureaucracies, one central headquarters

• Professional bureaucracy:knowledge-based, weak centralized authority

• Adhocracy: large groups of specialists, teams, task-forces

Delivery of IT Services

• The information systems department– PROGRAMMERS: Write software– SYSTEMS ANALYSTS: Translate business problems

into solutions– IS MANAGERS: Department & team leaders– END USERS: Department reps for whom applications

are developed– CHIEF INFORMATION OFFICER (CIO): senior

manager of IS department

How IS Affect Organizations: Economic Theories

• Microeconomic model • IT can be substituted for capital and labour

• IT should result in fewer middle managers

• Transaction cost theory• IT should reduce transaction costs

• IT should help firms constrict in size

• Agency theory• IT can reduce costs of acquiring information

• Managers can oversee more employees, reduce management costs

Transaction Cost Theory

Agency Cost Theory

How IS Affect Organizations: Behavioural Theories

• IT can affect hierarchy of decision-making

– Lower costs of obtaining information– Allow broader distribution of information– Reduce need for middle management &

clerical support, allow flattening of organization

Implementing Change

Source: Leavitt, 1965

Changes in IT are absorbed, deflected, and defeated by task arrangements, structures and people

The Internet and Organizations

• Impacts relationship between firms and external entities

• Impacts internal business processes

• Can lower transaction and agency costs

Implications for IS Design and Understanding

• Environment• Org. structure• Org. culture and

politics• Type of organization• Leadership style• Top management’s

understanding of IS

• Principal interest groups affected by IS

• Kinds of tasks, decisions & processes

• Attitudes of workers

• History of IS in the organization: existing skills, human resources

Managers, Decision-Making & Information Systems

Two models of managerial role• CLASSICAL:

– Describe functions -- plan, organize, coordinate, decide, control

• BEHAVIORAL: – Based on observations of managers on the job

– Managers are more informal, less reflective, more reactive, less organized than expected

Three Managerial Activities

• Managers spend time establishing personal agendas, long- and short-term goals

• Managers spend time building an interpersonal network

• Managers use their personal network to execute personal agendas to accomplish their own goals

Managerial Roles

• Interpersonal– Act as figureheads, leaders, and liaisons

• Informational– Act as nerve centres, disseminator and

spokespersons

• Decisional– Act as entrepreneurs, disturbance handlers,

resource allocators

Managers and Decision-Making

TPSOAS MIS

KWS

DSS

ESS

ORGANIZATIONAL LEVELORGANIZATIONAL LEVELTYPE OFTYPE OFDECISIONDECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC

STRUCTURED ACCOUNTS RECEIVABLE

ELECTRONIC PRODUCTIONSCHEDULING COST OVERRUNS

SEMI- BUDGETSTRUCTURED PREPARATION

PROJECTSCHEDULING

FACILITYLOCATION

UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTSNEW MARKETS

Stages of Decision-Making

INTELLIGENCE: Collect information; identify problem

DESIGN: Conceive alternatives; select criteria

CHOICE: Use criteria to evaluate alternatives; select

IMPLEMENTATION: Put decision into effect; allocate resources; control

Individual Models of Decision-Making

• Rational– Comprehensive rationality; evaluate all alternatives

• Systematic– Structured, formal method

• Intuitive– Trial & error, unstructured, multiple approach

Organizational Models of Decision-Making

• Bureaucratic– Follow standard operating procedures (SOP)

• Political– Key groups compete and bargain

• “Garbage can”– Organizations not rational; solutions accidental

Strategic Information Systems

• Change the goals, products, operations, services or environmental relationship of organizations

• Help organization achieve competitive advantage– Being ahead of the competition by cost/price,

market share, etc.

Value Chain Model

• Highlights primary or support activities where information systems can best be applied to achieve a competitive advantage

• E.g. Inbound logistics, sales and marketing, customer services

Role of IT at Business Level

• Reduce costs

• Differentiate product– Create loyalty by developing new and unique

products/services, not easily duplicated

• Serve new markets– Focus on a market niche

Lock In Customers & Suppliers

• SUPPLY CHAIN MANAGEMENT– Stockless inventories, continuous

replenishment, just-in-time delivery

• INTRA FIRM STRATEGY– Product differentiation, focused differentiation,

low-cost producer

• EFFICIENT CUSTOMER RESPONSE– Point-of-sale systems, datamining

Industry-Level Strategy and IT

• Information Partnerships– Air Canada and credit card companies have

arrangements to award frequent-flyer points

• Competitive Forces Model

• Network Economics

Network Economics

• New model of competitive forces

• Internet builds communities of users

• The marginal costs of adding another participant are negligible while the marginal gain is much larger

Management Issues

• Managing strategic transitions

• Sustaining competitive advantages

International Information Systems

General Cultural Factor Specific Business Factor

Global communication and transportation technologies

Global markets

Development of global culture Global production and operations

Emergence of global social and educational norms

Global coordination

Political stability or instability Global workforce

Global knowledge base Global economies of scale

Organizing International IS

• Domestic exporter

• Multinational

• Franchiser

• Transnational

Global Strategy

Business Function

Domestic Exporter

Multinational Franchiser Transnational

Production Centralized Decentralized Networked Networked

Finance/ Accounting

Centralized Centralized Centralized Networked

Sales/ Marketing

Mixed Decentralized Networked Networked

Human Relations

Centralized Centralized Networked Networked

Strategic Management

Centralized Decentralized Centralized Networked