Chapter 2 Information Systems Defined

1. Chapter 2 Chapter 2Information Systems Defined Basic definitions and foundational Information Systems concepts

2. Course Roadmap • Part I: Foundations • Chapter 1: Introduction • Chapter 2: Information Systems Defined • Chapter 3: Organizational Information Systems and Their Impact • Part II: Competing in the Internet Age • Part III: The Strategic use of Information Systems • Part IV: Getting IT Done

3. Learning Objectives • The definition of information system (IS) and information technology (IT), and the difference between the two concepts. • The definition of information system success and information system failure. • The principal reasons why modern firms create and deploy information systems. • The influence of the firm’s context and the external environment in which it is embedded on organizational information systems. • The four components that make up an information system and the manner in which they interact. • How to design successful information systems and how to troubleshoot problematic information systems implementations.

4. Introduction • Organizations around the world continue to spend significant amounts of money on IT, lured by its promise to yield efficiencies and improved competitive positioning • It is critical that firms are able to wring value from these investments • Having a narrow focus on your IT investments alone is problematic, but dangerous

5. Information System: Definition Formal, socio-technical, organizational systems designed to collect, process, store, and distribute information

6. Formal vs. Informal

7. IS ≠ IT • Hilton Hotels • 1919: Opened • 1963: First implementation of computers in hospitality (New York Hilton) Did they have an IS in 1907?

8. IS ≠ IT • Ricasoli Winery • 1141: Opened • Fact: oldest family owned winery in Italy, producing wine in the heart of the Chianti region since obtaining ownership of the Brolio Castle Did they have an I/S in 1907?

10. Four Components of an Information System • Technology • Process • People • Structure

11. Value to Managers • A solid understanding of the characteristics of each of the four components • An appreciation of how they relate and interact with one another • Appropriate business decisions as a general or functional manager

12. Component #1: Information Technology • Hardware Devices • Computer, other devices • Software Tools • Microsoft Office • Telecommunication Devices • Internet • This component is a cornerstone of any modern IS, enabling and constraining action through rules of operation that stem from its design

13. Don’t Forget! • The design of IT enables and constrains the behavior of the Information System Software, particularly a custom developed application, is an opinion of how data should be represented, organized, and manipulated

14. Component #2: Process • The series of steps necessary to complete a business activity • Examples: • Check-in at a hotel • Credit approval at a bank • Paying bills online • There are multiple ways to perform an activity: Every process is designed to be efficient & effective

15. Official business process Informal process Don’t Forget!

16. Comparison Business Process Informal Process Restocking the inventory • check the inventory and identify the needed items • call individual suppliers for quotes and delivery dates • compare the various quotes • select one or more suppliers for each of the needed items based on the terms of the agreement • call these suppliers and place the orders • receive the goods upon delivery, checking the accuracy and quality of the shipped items • pay the suppliers.

17. Component #3:People • Those individuals or groups directly involved in the information system • End-users • Managers • Addressing their needs are a critical concern in designing and implementing a new Information System • Failure to do will result in the failure of your information systems

18. Component #4: Structure • The organizational structure component (structure for short) encompasses: • The organizational design • Hierarchy, decentralized, loose coupling • The reporting configuration • Functional, divisional, matrix • The organizational relationships • Communication and reward mechanisms • Culture

19. Systemic Effects: Components Working Together • The four components of an Information System are Interdependent • Changes in on component may affect all others • Success is based on the proper interaction of IT with the other components

20. The Purpose of Information Systems • Fulfilling organizational processing needs • Improve efficiency and effectiveness while reducing cost • Achieve a (specified) Information System goal. • Example: Movie theatres • Goal: By offering customers the ability to purchase tickets online will improve the effectiveness of the theatre by reducing the number of people needed to the ticket counter

21. Information Systems Success • Has the system delivered expected results? • What are some of the unintended results? • Positive • Negative

22. IS Success is often Elusive

23. Don’t Forget! • Every organization is unique • Even fierce competitors often have different: • Firm strategy: The manner in which the organization intends to achieve its objectives. • Firm culture: The collection of beliefs, expectations, and values shared by the members of an organization. • Infrastructure: The technological backbone of the firm. It constrains and enables opportunities for future information systems projects.

24. External Environment • External environment: • The legal and regulatory context • The competitive landscape • The general business and social trends surrounding the organization

25. Bringing it all Together: Information Systems in Context

26. Third Order Change: Transform Second Order Change: Informate First Order Change: Automate Information Systems and Organizational Change

27. First Order Change: Automate • First order change only affects the technical subsystem • Thus, it is: • Easiest to envision • Easiest to justify • Easiest to manage.

28. Second Order Change: Informate • Second order change affects the people component • It thus provides more of a challenge to implementation

29. Third Order Change: Transform • Third order change affects organizational structures • It seeks to transform how the organization operates • It requires significant managerial and executives’ involvement

30. Culture & IS • Culture: the unwritten rules of the social game that are shared by the members of some group • National Culture • Organizational Culture

31. Theories of Culture • Hall’s Low-Context, High-Context Approach • Cultural Cluster Approach • Hofstede’s Five Dimensions

32. Hall’s Low-Context, High-Context Approach • Low-context: • words used by speaker explicitly convey speaker’s message • High-context: • the context in which a conversation occurs is just as important as the words spoken; • cultural clues are critical to communication

33. High- and Low-Context Cultures Low Context High Context German Swiss Scandinavian U.S./ Canadian Britain Italian Spanish Greek Arab Vietnamese Japanese Korean Chinese

34. A Synthesis of Country Clusters

35. Hofstede’s Five Dimensions • Social Orientation • Power Orientation • Uncertainty Orientation • Goal Orientation • Time Orientation

36. Geert Hofstede Cultural Dimensions • Prof. Geert Hofstede conducted comprehensive study of how values in the workplace are influenced by culture.   • Geert Hofstede analyzed a large data base of employee values scores collected by IBM between 1967 and 1973 covering more than 70 countries • Subsequent studies validating the earlier results have included • commercial airline pilots and students in 23 countries, • civil service managers in 14 counties, • 'up-market' consumers in 15 countries and • elites' in 19 countries.

37. Geert Hofstede Cultural Dimensions • Hofstede developed a model that identifies four primary Dimensions to assist in differentiating cultures: • Power Distance - PDI, • Individualism - IDV, • Masculinity - MAS, and • Uncertainty Avoidance - UAI. • Fifth Dimension added after conducting an additional international study with a survey instrument developed with Chinese employees and managers. • Long-Term Orientation - LTO • applied to 23 countries • based on Confucian dynamism.

38. Hofstede Overview

39. PDI • PDI (Power Distance Index) - the PDI score relates to the degree of equality or inequality between people in a country's society. • High PDI score indicates that inequalities of power and wealth exist in a country • Low PDI score countries there is more social equality.

40. IDV • IDV (Individualism) - the individualism score focuses on the degree to which a culture values and reinforces the importance of the individual as opposed to the group. • High PDI scoring country will view individuality and individual rights as critical. • Low PDI scoring countries will value the group, i.e. family, tribe, etc.

41. MAS • MAS (Masculinity) - masculinity focuses on the degree to which a culture reinforces the traditional role of males vs females. • High MAS scoring country will have a more acute degree of gender differentiation • Low MAS scoring countries there is less differentiation and discrimination between genders.

42. UAI • UAI (Uncertainty Avoidance) - uncertainty avoidance looks at the level of tolerance for uncertainty and ambiguity within a culture. • High UAI score will have a low tolerance for uncertainty and ambiguity. A more rule-oriented society that institutes laws, rules, regulations. • Low UAI scoring country is less concerned about ambiguity and uncertainty and is less rule-oriented, more ready to accept change, consider new ideas and take more and greater risks.

43. Geert Hofstede Cultural Dimensions • These five Hofstede Dimensions correlate with other country, cultural, and religious paradigms. • http://www.kwintessential.co.uk/intercultural/dimensions.html • http://geert-hofstede.com/countries.html • http://www.kwintessential.co.uk/intercultural/management/guide.html

44. High Context/Low Context VSHofstede Measures Low Context High Context

45. Organizational Culture • Firms have a culture • They assume an organization culture that fits with an individualistic, egalitarian, uncertainty tolerant mindset • There has to be a fit between organizational culture and the IS design in order for the IS to be effective in the firm

46. SUMMARY

47. Implications • IT should NOT be the start of your Information System design process • Strategy may be inspired by IT but • IT selection is a point of arrival not departure • Never forget Systemic Effects • components of an IS mutually influence one another • Anticipate the Ripples • Successful introduction a of new IS can only occur of your team can anticipate & manage the ripples

48. Implications • Design and use of an IS is iterative • cyclical evaluation of individual IS components • assessment of how different organizational systems work together to support the business • Optimize the Information System • as a whole, not the components individually • Organizations are dynamic • They need to be re-evaluate often

49. The Recap • Information systems are designed and built with the objective of improving the firm’s efficiency and effectiveness by fulfilling its information processing needs. • Success can only occur when the systems that are used achieves their intended goals • Information systems exist in an organizational context, characterized by the firm strategy, culture, and IT infrastructure. • Every organization is subject to the influences of a ever-changing external environment, including regulatory requirements, social and business trends, and competitive pressures.

50. The Recap • Information systems are subject to systemic effects • You will need to overcome these effects us in order to ensure that your information system achieves its goals • There is a direct link between organizational change and the introduction of new information technologies. • Any change requires sponsorship and commitment as the result of the change in technology