Organization Management... 100 Slides
Strategic Apex
Support Staff
Technostructure Middle Apex
Operating Core
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Key Words... Organization Model – Scientific Management – Motivation Framework – Maslow’s Hierarchy – ERG Theory – Intrinsic/Extrinsic Rewards – Compensation Management – Job Enrichment – Group Performance – Linking Pin Organization – Likert’s Overlapping – Mintzberg’s Coordinating Mechanisms – Matrix Organization – Network Organization – Change Management – Hierarchical Structures – Formal Organization – Role Diagram – Job Description – Divisional Structures – Project Organization – Value Chain Management – Span of Control – Task Force – Organization Development – Growth Management – Learning Organization – Virtual Organization
A Basic Organization Model
Environment
Human Behavior in Organizational Settings The Individual – Organization Interface
The Organization
Environment
Phases of Scientific Management I Phase 1: A Task, a Manager, and a Pool of Workers Manager Task Worker
Worker
Worker
Worker
Phase 2: Task Analysis, Breakdown, and Job Specialization by Manager T1
T3 Manager
T2
T4
Worker
Worker
Worker
Worker
Phases of Scientific Management II Phase 3: Task Assignment and Training T1
T3
Worker
Worker
Manager T2
T4
Worker
Worker
Phase 4: Continued Supervision, Coordination, and Planning by Manager Manager T1
T3
T2
T4
Worker
Worker
Worker
Worker
The Basic Motivation Framework
1 Need Deficiencies
6 Need Deficiencies Reassessed by the Employee
2 Search for Ways to Satisfy Needs
The Employee 5 Rewards or Punishments
3 Goal-Directed Behaviors
4 Performance
Maslow‘s Hierarchy of Human Needs
GENERAL EXAMPLES Achievement
ORGANIZATIONAL EXAMPLES SelfActualization Needs
Challenging Job
Status
Esteem Needs
Job Title
Friendship
Belongingness Needs
Friends in Work Group
Stability
Security Needs
Pension Plan
Shelter
Physiological Needs
Base Salary
Parallels Among Need Theories of Motivation Herzberg‘s Two-Factor Theory
Motivation Factors
Hygiene Factors
Maslow‘s Hierarchy of Needs
Achievement Work Itself Responsibility Advancement and Growth
Self-Actualization Needs
Recognition
Self-Esteem Esteem Needs Respect of Others
Supervision Interpersonal Relations
Belongingness Needs
Security Company Policies
Interpersonal Security Security Needs Physical Security
Pay Working Conditions
Physiological Needs
Alderfer‘s ERG Theory
Other Key Needs Need for Achievement
Growth Needs
Relatedness Needs
Existence Needs
Need for Power
Need for Affiliation
The Individual-Organization Exchange Process
contributes
The Employee
for which
• Time • Effort • Knowledge • Skills • Creativity • Energy
to
The Organization
• Pay • Benefits • Vacation • Status • Opportunities for Creativity • Occasions for Social Contributions
which rewards with
The Meaning of Organizational Rewards
Intrinsic and Extrinsic Rewards
The Individual
Surface Value
Symbolic Value
Attitudes and Behaviors
A Total Compensation Package Annual Compensation for an Employee
Awards Perquisites
Incentives Benefits
Salary
The Historical Development of Job Design
Scientific Management
High
Job Enlargement Job Rotation
DEGREE OF JOB SPECIALIZATION
Low
Specialized Craft Jobs
Job Enrichment Job Characteristics Theory Social Information Processing Autonomous Work Groups
General Craft Jobs To 1900s
Around 1900 to Late 1940s
Late 1940s to Early 1960s TIME
Early 1960s to Present
Four Factors that Affect Group Performance
Group Performance
Likert‘s Overlapping Work Groups (The Linking Pin Organization)
Mintzberg‘s Five Coordinating Mechanisms M Manager
M
Analyst A
O Operator
A
O Operator
O
(1) MUTUAL ADJUSTMENT
O
(2) DIRECT SUPERVISION M
A
O INPUT SKILLS (3)
WORK PROCESSES (4) STANDARDIZATION
O OUTPUTS (5)
A Matrix Design FUNCTIONAL DEPARTMENTALIZATION Marketing Department Manager
Research and Development Department Manager
Purchasing Department
Production Department
Manager
Manager
PROJECT DEPARTMENTALIZATION Alpha Project
Project Leader
E
E
E
E
Beta Project
Project Leader
E
E
E
E
Gamma Project
Project Leader
E
E
E
E
Basic Communication Process SENDING
Encoding
Transmission
Decoding
Receiver/ Responder
Noise
Source
Decoding
Medium
FEEDBACK LOOP (Verification)
Encoding
Small Group Communication Networks WHEEL
CIRCLE
CHAIN
ALL CHANNEL
Four Major Problems in Change Management RESISTANCE
People
POWER
Organization as Social System
Structure
Information Systems
Tasks
CONTROL
REDEFINITION
Hierarchy and Decision Making
Increasing number of Increasing reward people
Decreasing Increasing power in decision stature making
Cellular Structures Placed into Hierarchical Structures
The Non-Linearity of Power and Decision Load Managerial and Organizational Integration Within the Organic Enterprise Decreasing power; extreme narrowing A of responsibilities
A
B
B
Increasing responsibility importance of decision making; perceptual requirements
Responsibility Information load Cost of wrong decisions Level B
Level A HIERARCHICAL LEVEL
Technological Innovation as a Result of Complex Interactions EXTERNAL ENVIRONMENT
INNOVATIVE INTERNAL ENVIRONMENT
Idea
Creativity
Project champion
Project proposal
Project Evaluation Project management systems • R&D • Analysis • Design • Strategic • Production considerations • Marketing
R&D Dept.
Marketing Dept. THE COMPANY
Scientific and technological knowledge
Product
Knowledge of market needs
Innovation
Further Developments of Multidirectional Communication and Involvement Strategic analysis Marketing department
R&D
Financial control and analysis
Process development
Maintenance and services
Design Product planning
Organizational Effectiveness
Organization Resource inputs
Internal activities and processes
System resource approach
Internal process approach
Product and service outputs
Goal approach
Formal and Informal Organization
Structure Hierarchy Task and role definition Performance measurement Coordination and control Rules and procedures Routines Norms, values Group / inter-group behavior Coalitions, alliances, power Perceptions, mental maps Organizational culture
Optimum Degree of Formal Organization
Organizational effectiveness
Degree of formal organization
Contingency Framework for Organization Design environment fit task
strategy
differentiation
integration
organizational effectiveness
member characteristics
contingency factors
organization design
outcome
Organization Chart, Role Diagram, Job Description
Position Tasks Competencies Responsibilities Reporting relationships ...
Processes
Positions
Who does what in which process? (action, decision, information, ...)
Levels of Organization Design
multibusiness
CEO
SBU A functional unit
SBU B
SBU C
R&D
R&D
R&D
Prod.
Prod.
Sales
Sales
Sales
single business
=> different design issues on different levels
Functional, Divisional, Multidivisional Structures CEO
CEO
Controlling
Logistics
Manufacturing
Sales
Finance Cement
CEO
R&D
Concrete
Chemicals
Europe
North America
CEO
Europe
North America
Asia
Motor
Motor
Motor
Marine
Marine
Marine
Fire
Fire
Cement
Concrete
Chemicals
Asia
Project Structures CEO CEO Project
Unit A
Unit B
Unit C
Project Unit A
Unit B
CEO
Strategy
Project 1
Project 2
Project 3
Finance
IT
Unit C
Mechanistic vs. Mechanic Designs in Context Low Uncertainty
Stable
ENVIRONMENTAL CHANGE
Unstable
1. Mechanistic structure; formal, centralized 2. Few departments 3. No integrating roles 4. Little imitation 5. Current operations orientation
High-Moderate Uncertainty 1. Organic structure, teamwork; participative, decentralized 2. Few departments, boundary spanning 3. Few integrating roles 4. Quick to imitate 5. Planning orientation
Simple
Low-Moderate Uncertainty 1. Mechanistic structure; formal, centralized 2. Many departments, some boundary spanning 3. Few integrating roles 4. Some imitation 5. Some planning
High Uncertainty 1. Organic structure, teamwork; participative, decentralized 2. Many departments: differentiated, extensive boundary spaning 3. Many integrating roles 4. Extensive imitation 5. Extensive planning, forecasting
Complex
ENVIRONMENTAL COMPLEXITY
Problems of Traditional Organization Design
=
+ hierarchical boundaries
functional boundaries => filtering of information => functional closure => leadership problems => coordination problems
operational islands
Link between Structure and Process CEO
Procurement
Production
Sales
Transportation Inventory operation
Order documents
Production Shipping
Procurement order
Administration
Production order
Order Customer
Billing
Organizational Value Chain Company infrastructure Human Resource Management
Support processes
Technology development Procurement
Entry logistics
Operations
Marketing and sales
Primary processes
Exit logistics
Customer service
The Development of Organization Design over Time collaboration
large
Size of Organization
coordination "?" delegation
red tape direction
control
creativity
autonomy small
leadership young
mature
Age of Organization
The Five Basic Parts of Organizations
Strategic Apex
Support Staff
Technostructure Middle Apex
Operating Core
The Flow of Formal Authority
Structures to Deal with Residual Interdependencies
(a) Hierarchical Structure
(c) Liaison Overlay Structure (e.g., Task Force)
(b) Line and Staff Structure
(d) Matrix Structure
A Continuum of Liaison Devices Decisional Power with the Market Managers
Decisional Power with the Functional Managers
Pure Liaison functional positions structure superimposed on a functional structure
Task forces and standing committees superimposed on a functional structure
Liaison positions superimposed on a market structure
Matrix structure
Integrated managers superimposed on a functional structure
Integrated managers superimposed on a market structure
Pure market structure
Span of Control
Functional Specialization
President
Vice President Industrial Relations
Vice President Engineering
Vice President Manufacturing
Vice President Marketing
Vice President Finance
Process Specialization
President
Vice President Industrial Relations
Vice President Engineering
Vice President Manufacturing
Vice President Marketing
Vice President Finance
Shaping Department Manager
Stamping Department Manager
Painting Department Manager
Assembly Department Manager
Shipping Department Manager
Product Specialization
President
Vice President Tricycle Division
Vice President Bicycle Division
Vice President Motor Scooter Division
Vice President Motorcycle Division
Vice President Snowmobile Division
Customer Specialization President
Senior Vice President Marketing
Vice President Industrial Relations
Director Wholesale Marketing
Vice President Engineering
Director Institutional Marketing
Vice President Marketing
Director Consumer Marketing
Vice President Finance
Director Government Marketing
Geographic Specialization
President
Vice President Domestic Division
Vice President European Division
Director Northeast Director Midwest Director Southern Director Western
Vice President Latin American Division
Vice President Pacific Division
Various Forms of Specialization in a Single Organization President
Assistant to President
Executive Vice President
Vice President Industrial Relations
Vice President Finance
Vice President Domestic Marketing
Executive Vice President
Vice President International Marketing
Vice President Tricycle Division
Vice President Bicycle Division
Vice President Motor Scooter Division
Director Institutional Marketing
Director Europe Marketing
Shaping Department
Director Government Marketing
Director Latin America Marketing
Stamping Department
Director Wholesale Marketing
Director Pacific Marketing
Painting Department Assembly Department
Northeast
Midwest
Southern
Western
Shipping Department
Vice President Motorcycle Division
Vice President Snowmobile Division
Multiform Organization
Democratic
Specialists Traditional
Bureaucratic Managers
Matrix
Contemporary
What Type of Intervention?
Strong
Taks Force
Top-down Initiatives
Weak
Participative
Buttom-up Initiatives
RESISTANCE
Weak
Strong EXTERNAL FORCES
Typical Improvement Actions • Bureaucracy Elimination • Duplication Elimination • Value-Added
• Automation • Big Picture Improvement • Customer/Supplier Partnership
Reduce 1 Change 2
Innovate 4 3 Prevent
• Error Proofing • Standardization • Simple Language • Upgrading
• Simplification • Process Cycle-Time Reduction
Improvement Agenda PACE OF CHANGE
Tactical
Fast
Measured
Focused Improvement
Continuous Improvement (TQM)
DEGREE OF CHANGE
MEASUREMENT
Strategic
Focused Restructuring
Business Process Innovation
ORGANIZATIONAL CHANGE MANAGEMENT
Assessment Management
CORPORATE STRATEGY
Good
Good
Poor
What happened?
Change the Top
Support the management
Why are they still alive?
IMPLEMENTATION SKILLS
Poor
The Initial Decision Matrix
STRATEGIC RELEVANCE
High
Low
Positive
Keep as is
Sell
Negative
Restructure
Close Dispose of
PROFITABILITY
Organizational Practices in the Five Phases of Growth CATEGORY
PHASE 1
PHASE 2
PHASE 3
PHASE 4
PHASE 5
Management Focus
Make and sell
Efficiency of operations
Expansion of market
Consolidation of organization
Problem solving and innovation
Organizational Structure
Informal
Centralized and functional
Decentralized Line staff and and geographical product groups
Matrix of teams
Top-Management Style
Individualistic and entrepreneurial
Directive
Delegative
Watchdog
Participative
Control System
Market results
Standards and cost centers
Reports and profit centers
Plans and investment centers
Mutual goal setting
Management Reward Emphasis
Ownership
Salary and merit increases
Individual bonus
Profit sharing and Team bonus stock options
Imaginary Organization and Relationship Marketing - Two Perspectives
Relationship Marketing
Imaginary Organization
Delivery Systems
PARTNER BASE
IOLeader
CUSTOMER BASE
Core Market Compe- Communication Customers tence Transactions
LEARNING ORGANIZATION
Relations
Imaginary Organizations and Some Related Concepts LEARNING ORGANIZATIONS THE CLIENT-DRIVEN FIRM CONTINUOUS IMPROVEMENT
Learning
CORE VS. PERIPHERY
Transactions MARKETS VS. HIERARCHY
Imaginary Organizations
Organizations as Processes CORE SYSTEMS SERVICE DELIVERY PARTNERSHIP
Relations
NETWORKS, RELATIONSHIP MARKETING, VALUE CONSTELLATION
Role of Virtual Organizing and Knowledge Management in Business Networking BUSINESS NETWORKING STRATEGIES
Electronic Commerce
Supply Chain Mgmt
Customer Interaction DIMENSIONS OF VIRTUAL ORGANIZING
Asset Configuration
Knowledge Leverage
Relationship Mgmt
Business Engineering Model Applied to Business Networking Strategy level
Business unit Cooperation strategy
Business network
Process level
Business process
IS network
Business process Transactions and coordination techniques
Process network
IS level
Business unit
Information system
Information system Communication link
Major Strategy Decision
ORGANIZATIONAL RESOURCE DECISION
Outsourcing Electronic Commerce
NETWORKING DECISION
Supply Chain Management
Relationship Management
Virtual Organization
Insourcing
eProcurement for C goods
Content Management for Z catalogs
SCM for X parts with Y partners
Virtual Organizations and Virtual Cultures
E-Market Culture E-Business Culture
Virtual Organization Culture
Models of Virtuality
The Virtual Face
Star-alliance Model
Co-alliance Model
Value-alliance Model
Virtual Alliance Models Autonomy/Substitutability or virtual links High
Low
virtuality
Interdependence/ Strength of Organizational Links • colocation • culture • synchronicity • shared risks
star
High
satelite Virtual- costarFace alliance alliance
value
market
virtual broker
Virtual Organizational Change Model (VOCM) Electronic Market Ecosystems
e-Business
Strategy
Structual Alliances
ICT
Virtual Culture
Knowledge Management
The Cycle of Knowledge Creation
(1) An employee comes up (4) The new employee with & posts an idea to discusses the process improve response to with a colleague over service calls coffee and it provokes a further improvement idea
Conversation TACIT KNOWLEDGE
Codification
ď ą
Learning & Internalization
Re-Use & Combination
(3) A new Call Center employee uses the process and gets complimented by the customer
(2) The idea gets built into the company‘s automated Call Response System processes
EXPLICIT KNOWLEDGE
Knowledge Management Life Cycle
CREATE
EVOLVE
APPLY
Class II Expanded View (performative)
ORGANIZE
Class I Localized View FORMALIZE (supportive)
DISTRIBUTE
Knowledge Management
Organization
Process
Technology
Knowledge Management
Choosing Pilot Groups
High Visibility
Willing to Share Info
Pilot Group
Big Impact on Revenue
Group Works with Current Info
KWorld
Consultants (The Right People)
Scheduling (The Right Time)
KWorld
Knowledge Base (The Right Problem)
Consultant Network
Best Practices
Skills
Solutions
Availability
A Typical Knowledge-Management Platform
Knowledge Desktop
Knowledge Portal Knowledge Tools
Search and Deliver
Knowledge Services
Collaboration
Data Warehousing Document and Management Business Intelligence (Data Analysis)
Tracking and Workflow
System
Business Logic Security Communication Directory
Replication Administration
Pre-requisites
Complete Intranet
Messaging and Collaboration
(Data Warehousing and Business Intelligence)
Data Analysis
Real Time Collaboration
(Publish&Metadata)
Content Management
Portals and Search
Communities, Teams and Experts
Knowledge-Management Modules KM Enabling Modules
Graph of Evolving Technology and Knowledge Management Over Time The KM-Enabled Enterprise Knowledge management Application Integration Publishing and Approval LEVEL OF INTEGRATION
Platform Integration
Sophisticated Comprehensive Workflow and Tracking
Content management Communities, Teams and Experts Portals and Search Data Analysis (Real Time Collaboration)
Subscription Document Data Warehouse, and Notification Management Complete Catalog Services Real Time Collaboration Complete Intranet
Basic Intranet Search
Meta Directory
Metadata
Messaging and Collaboration Pragmatic
Visionary INFRASTRUCTURE OVER TIME
Graph of Technology and its Effectiveness The KM-Enabled Enterprise Knowledge management Content management Communities, Teams and Experts Portals and Search Data Analysis (Real Time Collaboration)
LEVEL OF INTEGRATION User Usability Ratio
Messaging Integration
EFFECTIVENESS OF THE KM SYSTEM
The Five C‘s that Differentiate Data from Information
Condensation
Contextualization
Calculation
Data Data
Categorization
Correction
Information
The Basic Elements of Knowledge Utilization and Typical Technology Tools
Databases
Utilization
• Browser • Web Pages • Document Distribution Systems • Collaborative Tools
Acquisition
Databases and Capture Tools
Elements of knowledge utilization and basic technology support
Sharing • Sharing Tools • Collaborative Tools • Communications • Links • Networks • Intranets
The Four Levels of Knowledge, Levels of Leverage Derived, and Possibilities of Technology Support Desirable
Care-Why
Know-Why
KNOWLEDGE STAGE
Knowledge management system supported Know-How
Know-What Current State of Most Companies Initial LEVEL OF KNOWLEDGE
Desirable LEVERAGIBILITY
The Framework of Technologies Required to Support Knowledge Management and their Functionality Transparent Capture tools e.g., Crosspads
Workflow Document Management
Publishing Control Distribution Project Management
Activity
Routing Electronic Conversation
Informal Capture
Web Conferencing Expertise Pointers
Dialog Conversation
Telephones
Informal Conversation Making
Knowledge Management Technologies
Operational Distribution Data Knowledge Connectivity Collaboration Discover Validation Publishing Cleansing
Brainstorming Tacit Knowledge Capture
Data Warehouse
Digital Whiteboards
Intranets GroupWare
Conversation
Watercoolers
Problem Solving Decision Support Systems Case-based Reasoning
Informal Capture Data Mining Document Exchange Data Cleansing Collaboration Validating
Independent Thought Mind Maps Visual Thinking Tools
Connecting Islands of Data with a Knowledge Server
File Servers Intranet
Exchange Servers
ďƒ‚
Centralized Knowledge Server Public Sites & Information Services
Notes-type Discussion Databases
Telecommuters
Nonaka‘s SECI Model and the Places where IT Support Fit in Externalization
• Face-to-Face Communications • Video Conferencing Tools • Web Cams • Virtual Reality Tools
I
• Process Capture Tools • Traceability • Reflective Peer-to-Peer networks • Expert Systems • Discussion Platforms
I I
Internalization
S
E
I
C
• Collective Knowledge Networks • Notes Databases / Org Memory • Pattern Recognition • Neural Networks
C G
I
Legend C: Company‘s Knowledge G: Group or Team Knowledge I: Individual Employee‘s Knowledge
I
I Combination
• Systematic Knowledge Tools • Collaborative Computing Tools • Intranets, Groupware • Discussion Lists • Web Forums • Best Practice Databases
C G
G
Explicit >> Explicit
Explicit >> Tacit
G
I
Tacit >> Explicit
Tacit >> Tacit
Socialization
Customer Valuation, Interactivity, and the Need for Relationship Management Differential
High
Frequency Marketing
CRM
Customer Valuation
Interactivity
Mass Marketing
Consistent
Niche Marketing
Customer Needs
Differential
Consistency of Interaction Across all Channels is Key
Sales and Marketing Cross-selling Up-selling
Customer Support Pre-sales Post-sales
Fulfillment
Retention and Loyalty Incentives Offers Rewards
Consistent Interaction
Web
Telephone
Catalog
Brick-andMortar Store
The Evolution of Knowledge-Oriented Business Processes
High
Knowledge-oriented Business Processes
PROCESS COMPLEXITY
Activity-oriented Business Processes
Transaction-oriented Business Processes Low High KNOWLEDGE INTENSITY
New Approaches to Customer Knowledge Management
High KCRM Interactive Marketing Data Mining Interactivity
Database Marketing
Basket Analysis
Low
Loyalty/Reward Programs
Customer-specific Knowledge
High
Market Trends Competitive Threats Regulatory Controls
Impacts
Expression barrier
Environment
Interpretation barrier
The KCRM Strategic Framework
Interpretation barrier
Strategic Context Product/Services Market Opportunities Customer Segments Value Proposition Alliances Expression barrier
Impacts Drives
KCRM Strategy E-Business Strategy Competitive Differentiation Knowledge Digital Capital Adaptability
Enables
Aligns
Implementation barrier
Specification barrier
Influences
Specification barrier
Impacts
Enables
Implementation barrier
KCRM Technology E-Business Infrastructure KCRM Architecture Interaction Channels Integration
Stages of the Customer Relationship Management Process and Knowledge Intensity Advanced Needs Prediction Automatic Replenishment
Community Building Differentiated Customer Service Detailed Customer Profiling
KCRM Level
Profiling of Data
Clicks-&-Mortar Integration
Personalized Recommendations Seamless Partner Integration
Recognize Returning Customers Customizable Web Experience
Registration Enticements
Basic Stage
Identify
Differentiate
Interact
Customize
Responding to Uncertainty – The Organization Design Options Uncertainty and change Creates a need to cope with more information
Create slack resources
Environmental management
Create selfcontainted tasks
• Allow more time • Allow more resources
• Vertical integration • Marketing • Co-operation
• Change from functional task design to group with all necessary resources
Reduce need for information processing
Invest in vertical information systems • Plan much more frequently
Create lateral relations • Move decisionmaking down and across funcional boundaries
Increase capacity to process information
The scope of transformation
Levitt‘s Diamond: The Interaction of Social Forces in an Organization
Task
Structure
People
Technology
Organization Design Parameters Strategy and goals
Structure Factors: • Division of labour • Departmentalization • Horizontal and vertical distribution of power Task Factors:
Information and decision making Factors: • Scope of database • Formalization of process • Frequency • Decision mechanism
• Diversity • Difficulty • Variability
Reward systems Factors:
People Factors:
• Compensation • Promotion • Leadership style • Job design
• Selection • Training and development • Promotion
Matching Management Style and Organizational Model
Entrepreneurial
Pseudoentrepreneurial
Effective entrepreneurial
Efficient bureaucratic
Unstructured unadventurous
Mechanistic
Organic
MANAGEMENT STYLE
Conservative
ORGANIZATIONAL MODEL
Thorn – A Realigned Strategy
Business strategy From an emphasis on administration and cost reduction To an emphasis on marketing, service and growth
Systems strategy From an emphasis on control, administration and cash accounting To an emphasis on decentralization, commitment and added value business activity
Organization strategy From a centralized, mechanistic orientation To a more decentralized, organic and committed orientation
Using CSFs to Generate the Business Vision Business objectives • Raise earnings per share • Increase market share • Improve productivity • Development new businesses • Develop internationally
Critical success factors Create new markets
Develop new products
Concentrate Develop a Maintain Automate on profitable group image companyproduction activities world-wide wide control
Improve product quality/ reliability
Information systems contributions Develop customer intelligence systems
Develop Install Build profit new flexible analysis DSS products/ manufacturing (Decision services systems Support System)
Investigate electronic links with customers
Enhance financial control reporting system
Develop an online diagnostic service
Positioning an Organization‘s Approach to Strategic Systems Planning
High Beware
Attack
Safe
Explore benefits
POTENTIAL SYSTEMS CONTRIBUTION TO TOTAL VALUE ADDED
Low
Low
High EXISTING SYSTEMS SCALE/EXPERIENCE
The IT Strategic Grid Distinguishes Levels of System Criticality
High
Factory
Strategic
IT is crucial to current business operations, but is not key to the organization‘s strategic development
IT has been critical for business success in the past and will remain so for the future
Support
Turnaround
IT is not critical to the business, either in the past or for the future
IT has not been critical to the business so far, but is vital for the future if the organization is to achieve its strategic objectives
BUSINESS IMPACT OF EXISTING SYSTEMS
Low
Low
High
BUSINESS IMPACT OF APPLICATION DEVELOPMENT PORTFOLIO
Technology Impact on Competitive Forces
Rivals
High
Suppliers IMPACT OF IT ON COMPETITIVE FORCES
Buyers
Entrants Substitutes Low
High RELATIVE IMPORTANCE OF COMPETITIVE FORCES
The Interaction of Strategic Elements in an Organization
Technology
Organization structure and culture
Socio-economic environment
Processes
Strategy
Technological environment
People: individuals and roles
The Potential Impact of IT on Transformation
High
Stage 4 Business re-engineering
Stage 3 Process redesign
POTENTIAL BUSINESS IMPACT
Stage 2 Cross-functional integration
Stage 1 Functional improvements Low
High DEGREE OF BUSINESS REDESIGN
The Emphasis of IT Management Has to Change
Emphasis on management Emphasis on management of data resources: of computers:
EXPLOITATION OF IT FOR BUSINESS BENEFIT
• Centralized computing • Proprietary applications • Minimal connectivity • Technology push
• Distributed computing • Standardization (open systems) • High connectivity • User pull
Second S-curve
First S-curve
TIME
Traditional Approaches to System Design are Technically Focused Open
Technical design process
DESIGN DEGREES OF FREEDOM
Organizational learning Closed Feasibility
Design TIME
Implementation
Traditional Approaches to System Design Allow Little Scope for User Input
Open
Window for user contributions to design
Technical design process
DESIGN DEGREES OF FREEDOM
Organizational learning Closed Feasibility
Design TIME
Implementation
Assessing the Business and Technical Contribution of Applications High Maintain and enhance
Renew
Systems in this category may have These systems are critical to the business and are technically suffered from a lack of maintenance successful – they must be and the organization might suffer if maintained and enhanced to ensure it were to fail their continued success BUSINESS VALUE (USERS)
Reassess Divest Systems may be outdated or not necessary – but consumers scarce resources
Low Low
Such systems might be outmoded in business terms, hence they can be divested, or they may have been developed in advance of the business need or capability, hence a need for user training. Before action is taken on the system, reassessment to determine the business value is necessary
TECHNICAL QUALITY (PROVIDERS)
High
The IS Responsibility Matrix
High Specialist dominance Operational efficiency is primary objective MATURITY OF THE TECHNOLOGY
„Hybrid“ Users need to be in control of the systems strategy, while specialists control systems development
Risk dominance
User dominance
High technical risk with limited business potential suggests the application should not be developed
With a high technical risk and a high strategic impact, applications should be under user control, with a major emphasis on effective exploitation
Low Low
High STRATEGIC IMPACT OF FUTURE SYSTEM APPLICATIONS
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