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Information Systems in

Organizations

Chapter 2

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Principles and Learning Objectives

Identify the value-added processes in the supply chain anddescribe the role of information systems within them.

Provide a clear definition of the terms organizational structure,culture, and change and discuss how they affect the

implementation of information systems. Identify some of the strategies employed to lower costs or

improve service.

Define the term competitive advantage and discuss howorganizations are using information systems to gain such anadvantage.

Discuss how organizations justify the need for informationsystems.

Define the types of roles, functions, and careers available ininformation systems.

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Value Chain

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Organizational Structure

Organizational subunits and their relationship with the

overall organization

Categories of organizational structure:

Team

Traditional

Multidimensional

Project Virtual

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Traditional Organizational Structure

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Traditional Organizational Structure

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Project Organizational Structure

Centered on major products and services

Temporary project teams

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Project Organizational Structure

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Team Organizational Structure

Temporary or permanent teams

Work groups

Various sizes

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Multidimensional Organizational

Structure

May incorporate several structures at the same

time

Advantage:

ability to simultaneously stress both traditional

corporate areas and important product lines

Disadvantage:

multiple lines of authority

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Virtual Organizational Structure

Employs business units in geographically

dispersed areas

People may never meet face to face Can be permanent or temporary

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Organizational Culture and

Change

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Organizational Culture

Shared understandings, values, and

assumptions in an organization

Influences information systems

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Organizational Change

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Reengineering

(process redesign)

The radical redesign of business processes,

organizational structures, information

systems, and organizational values toachieve a breakthrough in business

outcomes.

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Reengineering

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Continuous Improvement

Constantly seeking ways to improve business

processes to add value to its outputs.

Benefits:

Increased customer loyalty

Reduction in customer dissatisfaction

Reduced opportunity for competitive inroads

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Continuous Improvement vs.

Reengineering

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Technology Diffusion, Infusion, and

Acceptance

Technology diffusion- measure of

widespread use of technology

Technology infusion- extent to which

technology permeates a department

Technology Acceptance Model (TAM)-

specifies factors that can lead to higher usage oftechnology (Davis Model homework).

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Total Quality Management (TQM)

Quality: ability of a product or service to meet or

exceed customer expectations

TQM: approaches and techniques used to

achieve quality throughout the organization

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Outsourcing and Downsizing

Outsourcing: contracting with outside

professionals to meet business needs.

Downsizing: cutting the number of employees

to reduce costs.

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Competitive Advantage

Significant, long-term benefit to a company over

its competitors.

Ability to establish and maintain a competitive

advantage is vital to the companys success

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Competitive Advantage

Five forces motivate firms to seek

competitive advantage (Porter model):

Rivalry among existing competition

Threat of new entrants

Threat of substitutions

Buyers bargaining power

Suppliers bargaining power

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Strategic Planning for Competitive

Advantage

Porters proposed three general strategies to attaincompetitive advantage:

Changing the structure of the industry (verticalgrowth, strategic alliances, partnership)

Creating new products or services

Improving existing products or services

An extension of these include:

The use information systems for strategic planning(to differentiate our product or service or to

reduce the cost)

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Three stages in the business use of

IS

Cost reduction and productivity (1960s).

Competitive advantage (1980s).

Performance-based IS (strategicadvantage and costs saving).

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Justifying IS

An organization is best seen as a system thathas inputs, processing and outputs. Byprocessing of inputs we add value to them. Thisadded value enables the organization to achieveits objectives. In for-profit organizations, theobjectives are measured by the differencebetween the financial cost of the inputs and thevalue of the outputs. This difference is usuallycalled profit the major function that is necessaryto transform inputs into outputs is the decisionmaking function.

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Objectives

Decisions

InformationSystems

Information

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The Benefits of IS

1. Gaining competitive advantage

2. Improve product quality

3. Shorter product Cycle

4. Increase productivity

5. Automation of Decisions

6. Reducing the overall cost

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7. Developing new forms of

organizations and new paradigms ofmanagement practices.

Virtual organizations.

Teleworking. Innovative management.

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Roles, Functions, and Careers in

Information Systems Department

Operations- focuses on the efficiency of

information

Systems development- focuses on specificdevelopment projects and ongoing maintenance

and review

Support - provides user assistance

The Three Primary Responsibilities of

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The Three Primary Responsibilities of

Information Systems

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Typical IS Titles and Functions

Chief Information Officer (CIO)- employsthe IS departments equipment and personnelto help the organization attain its goals

LAN administrators- set up and managethe network hardware, software, and securityprocesses