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RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES


What do managers need to know about organizations in order to build and use information systems successfully? What impact do information systems have on organizations? How do information systems support the activities of managers in organizations?. . OBJECTIVES. Sustainability of competitive advantage. Fitting technology to the organization ( or vice-versa).

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RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES

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RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES


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OBJECTIVES

  • What do managers need to know about organizations in order to build and use information systems successfully?

  • What impact do information systems have on organizations?

  • How do information systems support the activities of managers in organizations?


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MANAGEMENT CHALLENGES

  • Sustainability of competitive advantage.

  • Fitting technology to the organization( or vice-versa)


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INFORMATION TECHNOLOGY

ORGANIZATIONS

ORGANIZATIONS AND INFORMATION SYSTEMS

The Two-Way Relationship Between Organizations and Information Technology

MEDIATING FACTORS:Environment Culture Structure Standard Procedures Politics Management Decisions Chance

Figure 3-1


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ORGANIZATIONS AND INFORMATION SYSTEMS

  • Organization:

  • Stable, formal structure

  • Takes resources from environment and processes them to produce outputs


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Figure 3-2

ORGANIZATIONS AND INFORMATION SYSTEMS

Technical Microeconomic Definition of the Organization


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ORGANIZATIONS AND INFORMATION SYSTEMS

  • Behavioral definition of Organization:

  • Collection of rights, privileges, obligations, responsibilities

  • Delicately balanced

  • Conflict resolution


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Figure 3-3

COMMON FEATURES OF ORGANIZATIONS

The Behavioral View of Organizations


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ORGANIZATIONS AND INFORMATION SYSTEMS

Common Features of Organizations

  • 1. Organizations are bureaucracies that have certain structural features

  • 2. Structural Characteristics of Organizations:

  • Clear division of labor

  • Hierarchy

  • Explicit rules and procedures

  • Impartial judgments


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ORGANIZATIONS AND INFORMATION SYSTEMS

Common Features of Organizations

  • Structural Characteristics of Organizations (cont.):

  • Technical qualifications for positions

  • Maximum organizational efficiency


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ORGANIZATIONS AND INFORMATION SYSTEMS

Common Features of Organizations

  • Standard Operating Procedures:

  • Precise rules, procedures, and practices

  • Enable organizations to cope with all expected situations


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ORGANIZATIONS AND INFORMATION SYSTEMS

Common Features of Organizations

  • Organizational Politics:

  • Divergent viewpoints leads to political struggle, competition, and conflict

  • Hamper organizational change


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ORGANIZATIONS AND INFORMATION SYSTEMS

Common Features of Organizations

  • Organizational Culture: A set of

  • fundamental assumptions about:

  • What products the organization should produce

  • How and where it should produce them

  • For whom they should be produced


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ORGANIZATIONS & INFORMATION SYSTEMS

Unique Features of Organizations

All organizations have different:

  • Structures/Organizational types

  • Goals

  • Constituencies

  • Leadership Styles, Tasks

  • Surrounding Environment


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ORGANIZATIONS & INFORMATION SYSTEMS

Organizational Structures

  • Entrepreneurial: Start up business

  • Machine bureaucracy: Midsize manufacturing firm

  • Divisionalized bureaucracy: Fortune 500

  • Professional bureaucracy: Law firms, hospitals, school systems

  • Adhocracy: Consulting firm


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Figure 3-4

ORGANIZATIONS & INFORMATION SYSTEMS

Organization and Its Environment


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ORGANIZATIONS AND INFORMATION SYSTEMS

Other Differences Among Organizations

  • Ultimate goal

  • Different groups and constituencies

  • Nature of leadership

  • Tasks and technology


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Information Technology Infrastructure and Information Technology Services

Information systems department:

  • Formal organizational unit

  • Responsible for information systems in the organization


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Figure 3-5

THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Information Technology Services


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Information Technology Infrastructure and Information Technology Services

Includes specialists:

  • Programmers: Highly trained, write software

  • Systems analysts: Translate business problems into solutions, act as liaisons between the information systems department and rest of the organization


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Information Technology Infrastructure and Information Technology Services

Specialists (cont.):

  • Information system managers: Leaders of various specialiststeams

  • Chief information officer (CIO): Senior manager in charge of information systems function in the firm

  • End users: Department representatives outside the information system department for whom applications are developed


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

How Information Systems Affect Organizations

ECONOMIC IMPACTS

Economic Theories :

  • Information technology is a factor of production, like capital and labor.

    Transaction Cost Theory:

  • Firms can conduct marketplace transactions internally more cheaply to grow larger.


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Figure 3-6

THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Transaction Cost Theory


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

How Information Systems Affect Organizations

ECONOMIC IMPACTS (contd.)

  • Agency Cost Theory:Firm is nexus of contracts among self-interested parties requiring supervision.


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Figure 3-7

THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Agency Cost Theory


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

How Information Systems Affect Organizations

ORGANIZATIONAL AND BEHAVIORAL IMPACTS

Behavioral Changes :

  • Information technology could change hierarchy of decision making

  • Lower cost of information acquisition

  • Broadens the distribution of information


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

How Information Systems Affect Organizations

Organizational & Behavioral Impact (contd.)

Virtual Organization:

  • Task force networked organizations.

  • Uses networks to link people, assets, and ideas to create and distribute products and services without being limited to physical locations


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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

How Information Systems Affect Organizations

Organizational & Behavioral Impacts (cotd.)

Increasing the Flexibility of Organization

1. Increasing the ability :

  • To sense and respond to changes in marketplace.

  • To take advantage of new opportunities,

    2. Mass customization,

    3. Micromarketing for niche products


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Figure 3-8

THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Implementing Change and Managing Organizational Resistance Made Easier


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

1. I.T. has reduced information uncertainty.

2. Affect on Roles of Managers in Organizations :

  • Interpersonal: Managers act as figureheads and leaders

  • Informational: Managers receive and disseminate critical information, nerve centers

  • Decisional: Managers initiate activities, allocate resources, and negotiate conflicts


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Managers and Decision Making

Process of Decision Making at Various Management levels :

  • Strategic Decision Making:Determines long-term objectives, resources, and policies.

  • Management Control: Monitors effective or efficient usage of resources and performance of operational units


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Managers and Decision Making

Process of Decision Making at Various Management Levels (contd.)

  • Operational Control: Determines how to perform specific tasks set by strategic and middle-management decision makers

  • Knowledge-level Decision Making: Evaluates new ideas for products, services, ways to communicate new knowledge, ways to distribute information


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Managers and Decision Making

Decisions are classified as:

  • Unstructured:Non routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making.

  • Structured:Repetitive, routine, handled using a definite procedure.


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

TYPE OF

DECISION

OPERATIONAL

KNOWLEDGE

MANAGEMENT

STRATEGIC

ACCOUNTS

STRUCTURED

RECEIVABLE

PRODUCTION

ELECTRONIC

COST OVERRUNS

SCHEDULING

TPS

OAS

MIS

BUDGET

SEMI-

PREPARATION

STRUCTURED

PROJECT

DSS

SCHEDULING

FACILITY

ESS

LOCATION

KWS

NEW PRODUCTS

UNSTRUCTURED

PRODUCT DESIGN

NEW MARKETS

Different Kinds of Information Systems

Organizational Level

Figure 3-9


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Stages of Decision Making (all supported by IT)

  • Intelligence: Collect information, identify problem.

  • Design: Conceive alternative solution to a problem

  • Choice: Select among the alternative solutions

  • Implementation: Put decision into effect and provide report on the progress of solution


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Figure 3-10

Decision-Making Process


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Models of Decision Making

  • Rational Model: Choosing best alternative rationally.

  • Organizational Model : Group decision.

  • Bureaucratic Model : Based on SOP

  • Political Model : Compromises.


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Implications for the Design and Understanding of Information Systems

Factors to consider while planning a

new system:

  • Organizational environment

  • Organizational structure, hierarchy, specialization, standard operating procedures


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Factors to Consider while Planning a New Systems (contd.)

  • Culture and politics of the organization

  • Type of organization and its style of leadership.

  • Groups affected by the system and the attitudes of workers who will be using the system.

  • Kinds of tasks, decisions, and business processes, information system is designed to assist.


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Implications for the Design and Understanding of Information Systems

System Characteristics to be kept in mind while designing new systems:

  • Flexibility and multiple options for handling data and evaluating information

  • Capability to support a variety of styles, skills, and knowledge


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IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING

Implications for the Design and Understanding of Information Systems

System Characteristics to be kept in mind while designing new systems:

  • Capability to keep track of many alternatives and consequences

  • Sensitivity to the organization’s bureaucratic and political requirements.


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MANAGEMENT CHALLENGES IN COMPLEX RELATIONSHIP BETWEEN I.S. AND ORGANIZATIONAL PERFORMANCE

  • 1. Difficulties in Sustaining Competitive Advantage :-

  • - Advantage is for a significant period of time,

  • - Experience and knowledge helps in new investment.

  • Difficulties in Managing System Related Change :

  • - Change is slowed due to inertia of organizations

  • - Process of change is complicated and slow.


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MANAGEMENT CHALLENGES IN COMPLEX RELATIONSHIP BETWEEN I.S. AND ORGANIZATIONAL PERFORMANCE

  • Solution Guidelines :

  • Perform a Strategic System Analysis :

  • - Study competitive structure of industry of firm,

  • - Analyze current business, industry and firm’s value chain

  • Managing Strategic Transitions ( Changes in goals , relationships with customers / suppliers, internal operations and information architecture) :

  • - Devise new business processes for successful transitions


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RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES