INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT, AND STRATEGY

1. 3 Chapter INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT, AND STRATEGY

3. Four types of Information Systems • Operational • Decision Support • Managerial • Executive • Decision-making becomes more complex the more executive the level • Operational systems have been around a long time and tend to have good ROI’s

6. Strategic Information Systems

7. Strategic Information System • Technology used to gain an edge over an organization’s competition • Can be used at all levels of an organization or just a few • Makes a difference • Profoundly alters the way an organization does business • Sustained strategic, competitive advantage

8. American Airlines Fed Ex Citibank Wal-Mart Abitibi Consolidated Simonton Windows (SBR) USA Today Benetton Sheetz PNC Corporation PriceWaterhouse Coopers Baxter Healthcare Examples of Strategic Information Systems

10. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy 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? • How can businesses use information systems for competitive advantage? • Why is it so difficult to build successful information systems, including systems that promote competitive advantage?

11. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy 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

12. IT and the Organization • IT and Strategic Alignment

13. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy ORGANIZATIONS AND INFORMATION SYSTEMS • Organization: • Stable, formal structure • Takes resources from environment and processes them to produce outputs • Unique Features • Organizational Type • Environments • Goals • Power • Constituencies • Functions • Leadership • Common Features • Formal structure • SOPs • Politics • Culture • Tasks • Technology • Business processes

14. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy 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

17. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy Figure 3-5 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Information Technology Services

18. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations 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 • Agency theory: Firm is nexus of contracts among self-interested parties requiring supervision Behavioral theories: • Information technology could change hierarchy of decision making • Lower cost of information acquisition • Broadens the distribution of information • Virtual organizations

19. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS How Information Systems Affect Managers The Role of Managers in Organizations Classical model of management: • Traditional description of management • Focuses on formal functions: plan, organize, coordinate, decide, control Behavioral model of management: Describes management based on observations of managers on the job • Managerial Roles: • 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

20. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy Organizational Level TYPE OF DECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC ACCOUNTS STRUCTURED RECEIVABLE TPS PRODUCTION ELECTRONIC COST OVERRUNS SCHEDULING MIS OAS SEMI- BUDGET STRUCTURED PREPARATION DSS PROJECT SCHEDULING ESS KWS FACILITY LOCATION UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTS NEW MARKETS Figure 3-9 MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS Different Kinds of Information Systems

21. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY What is Strategic Information System • Computer system at any level of an organization • Changes goals, operations, products, services, or environmental relationships • Helps organization gain a competitive advantage

22. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Business Level Strategy and the Value Chain Model Value Chain Model: • Highlights the primary or support activities adding a margin of value to products or services • Helps achieve a competitive advantage

23. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Business Level Strategy and the Value Chain Model Primary Activities: • Directly related to the production and distribution of a firm’s products or services Support Activities: • Make the delivery of primary activities possible • Consist of the organization’s infrastructure, human resources, technology, and procurement

24. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Firm Value Chain

26. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY • The Value System Model is used to: • Evaluate a company’s process and competencies. • Investigate whether adding IT supports the value chain. • Enable managers to assess the information intensity and the role of IT.

27. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Firm-Level Strategy and Information Technology Core Competency: • Activity at which a firm excels as a world-class leader • Information system encouraging the sharing of knowledge across business units enhances competency

28. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy INFORMATION SYSTEMS AND BUSINESS STRATEGY Industry-Level Strategy and Information Systems Information partnership: • Cooperative alliance formed between two or more corporations for sharing information to gain strategic advantage • Help firms gain access to new customers, creating new opportunities for cross-selling and targeting products The competitive forces model: • Describes the interaction of external influences, specifically threats and opportunities, affecting an organization’s strategy and ability to compete Network Economics: • Model of strategic systems at the industry level • Based on the concept of a network • Adding another participant entails zero marginal costs but can create much larger marginal gain

29. Essentials of Management Information Systems Chapter 3 Information Systems , Organizations, Management, and Strategy Porter’s Model for Wal-Mart (Callon, 1996)

31. Some Problems from IT for Competitive Advantage • The productivity paradox • Tangible vs. intangible benefits from IT • Future cash flows analysis • Unique vs. staying even with competition • Value from simple automation projects • Value from highly risky, but strategic IT projects • Risk vs. return issues

32. Technology Life Cycle (Little, 1981) • Emerging techno- Not demonstrated potential • Packing techno- Has demonstrated potential • Key techno- Embedded, major impact, proprietary • Base techno- Minor impact • Can a technology cause innovation? Leadership?