Chapter 2
Information Systems in Organizations ITEC 1010
Information and Organizations
Organizations and Information Systems ď ą Organization
 A formal collection of people and other resources established to accomplish a set of goals
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Information and Organizations
General Model of an Organization ď ą (next slide)
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Value Chain ď ą Term coined by Michael Porter in a 1965 article in the Harvard Business Review ď ą 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 ITEC 1010
Information and Organizations
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Information and Organizations
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 ITEC 1010
Information and Organizations
A.Bailey, Legal counsel
B. Wong, VP Accounting
C.Rodrig, VP Information Systems
S. Burry, President
R. Henderson, VP Marketing
K. Kelly, VP Production
S. Samuel Supervisor
Traditional Organizational Structure ITEC 1010
Information and Organizations
V. Cisborn, VP Human Resources
L. Bashran, Supervisor
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 ITEC 1010
Information and Organizations
Terminology (2) ď ą 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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Information and Organizations
Other Organizational Structures (1) Project organizational structure
Schematic
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 ITEC 1010
Information and Organizations
B. Woods, President Air & Aerospace Co.
T. Walker, Senior VP, Aircraft Division
VP, Finance
VP, VP, Marketing Production
O. Teco, Senior VP, Communications & Satellite Division
W. Butler, Senior VP, Aerospace Division
VP, Sales
VP, Finance
VP, VP, Marketing Production
VP, Sales
Project Organizational Structure ITEC 1010
Information and Organizations
VP, Finance
VP, VP, Marketing Production
Other Organizational Structures (2) ď ą Multidimensional organizational structure
 A structure that may incorporate several structures at the same time
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Information and Organizations
Schematic
Vice President, Marketing
Vice President, Production
Vice President, Finance
Publisher, College Division
Marketing Group
Production Group
Finance Group
Publisher, Trade Division
Marketing Group
Production Group
Finance Group
Publisher, High School Division
Marketing Group
Production Group
Finance Group
Multidimensional Organizational Structure ITEC 1010
Information and Organizations
Other Organizational Structures (3) ď ą Advantages and disadvantages of different organizational structures
 Read the book!
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Information and Organizations
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 ITEC 1010
Information and Organizations
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 ITEC 1010
Information and Organizations
Change Model ITEC 1010
Information and Organizations
Reengineering Also called ‘Process redesign’ The radical redesign of business processes,
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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
Rules, Rules, Rules ď ą Reengineering requires finding and vigorously challenging old rules Rule
Original rationale
Potential problem
Small orders held until full truckload
Reduce delivery costs
Customer deliver is delayed
No order accepted Reduce potential for until credit approved bad debt
Customer service is poor
All product decisions Reduce number of made at headquarters items in inventory
Perception of limited product selection
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Other Models ď ą 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
Continuous Improvement
Strong action to solve serious problem
Routine action
Driven by senior executives
Worker-driven
Broad in scope; cuts across organizations
Narrow in scope
Goal to achieve a major breakthrough
Continuous, gradual
Often led by outsiders
Led by workers
IS integral to the solution
IS provides data to guide
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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 ITEC 1010
Information and Organizations
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
Porter’s ‘Five force’ model of competitive advantage
Identifies factors that lead to competitiveness Schematic ITEC 1010
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Substitute Substitute Products Products
Buyer Buyer Power Power
Rivalry Rivalry
New New Entrants Entrants Porter’s Five-force Model ITEC 1010
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Supplier Supplier Power Power
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.
2.
3.
4.
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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 Creating new goods or services A company may become stagnant without the introduction of new goods and/or services E.g., Compaq, Dell Improving existing goods or services Small variations to existing goods or services, and/or complete modifications E.g., “light” foods Using information systems for strategic purposes IS for improving organizational effectiveness E.g., SABRE (airline reservation system) Information and Organizations
Performance-based Information Systems ď ą Productivity
 A measure of the output achieved divided by the input required
Output achieved Productivity =
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Input required
Information and Organizations
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 ď ą 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 Oneof ofmy myfavourite favouritequotes: quotes: When Whenyou youcannot cannotmeasure, measure,your yourknowledge knowledgeisis of ofaameager meagerand andunsatisfactory unsatisfactorykind. kind. Kelvin Kelvin ITEC 1010
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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 ITEC 1010
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CEO
Information Resource Management Functions
Operations
Computer facility operations Data entry Local Area network operations
CIO
Other functional areas
Systems development
Information service unit
Support
Systems analysis & design
Data administration
Programming
Information centre Information technololgy
IS Department ITEC 1010
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Information Centre ď ą 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 ITEC 1010
Information and Organizations
End of Chapter 2 Chapter 3 ITEC 1010
Information and Organizations