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Information Systems and Organizations: Impact, Management, and Strategy

This chapter explores the concept of an organization, its structural features, types, and the impact of information systems on organizations. It also covers managerial roles, decision-making processes, and strategic information systems.

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Information Systems and Organizations: Impact, Management, and Strategy

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  1. c h a p t e r 3 INFORMATION SYSTEMS, ORGANIZATIONS, MANAGEMENT AND STRATEGY

  2. What is an organization? (1) • Technical definition • A stable, formal, social structure • Takes resources from environment, processes them and produces outputs

  3. What is an organization? (2) • Behavioural Definition • A collection of rights, privileges, obligations, responsibilities • Delicately balanced through conflict and conflict resolution Environmental resources Environmental outputs

  4. Common Structural Features of Organizations • Clear division of labour • Hierarchy • Explicit rules and procedures • Impartial judgment • Technical qualifications for positions • Maximum organizational efficiency

  5. Additional Common Features of Organizations • Standard Operating Procedures (SOPs) • Organizational Politics • Organizational Culture

  6. Unique Features of Organizations • Different organizational types • Organizations and environments • Other differences

  7. Five Basic Kinds of Organizations • Entrepreneurial: Young, small, fast-changing • Machine bureaucracy: large, slow-changing, centralized • Divisionalized bureaucracy: combination of machine bureaucracies, one central headquarters • Professional bureaucracy:knowledge-based, weak centralized authority • Adhocracy: large groups of specialists, teams, task-forces

  8. Delivery of IT Services • The information systems department • PROGRAMMERS: Write software • SYSTEMS ANALYSTS: Translate business problems into solutions • IS MANAGERS: Department & team leaders • END USERS: Department reps for whom applications are developed • CHIEF INFORMATION OFFICER (CIO): senior manager of IS department

  9. How IS Affect Organizations: Economic Theories • Microeconomic model • IT can be substituted for capital and labour • IT should result in fewer middle managers • Transaction cost theory • IT should reduce transaction costs • IT should help firms constrict in size • Agency theory • IT can reduce costs of acquiring information • Managers can oversee more employees, reduce management costs

  10. Transaction Cost Theory

  11. Agency Cost Theory

  12. How IS Affect Organizations: Behavioural Theories • IT can affect hierarchy of decision-making • Lower costs of obtaining information • Allow broader distribution of information • Reduce need for middle management & clerical support, allow flattening of organization

  13. Implementing Change Changes in IT are absorbed, deflected, and defeated by task arrangements, structures and people Source: Leavitt, 1965

  14. The Internet and Organizations • Impacts relationship between firms and external entities • Impacts internal business processes • Can lower transaction and agency costs

  15. Environment Org. structure Org. culture and politics Type of organization Leadership style Top management’s understanding of IS Principal interest groups affected by IS Kinds of tasks, decisions & processes Attitudes of workers History of IS in the organization: existing skills, human resources Implications for IS Design and Understanding

  16. Managers, Decision-Making & Information Systems Two models of managerial role • CLASSICAL: • Describe functions -- plan, organize, coordinate, decide, control • BEHAVIORAL: • Based on observations of managers on the job • Managers are more informal, less reflective, more reactive, less organized than expected

  17. Three Managerial Activities • Managers spend time establishing personal agendas, long- and short-term goals • Managers spend time building an interpersonal network • Managers use their personal network to execute personal agendas to accomplish their own goals

  18. Managerial Roles • Interpersonal • Act as figureheads, leaders, and liaisons • Informational • Act as nerve centres, disseminator and spokespersons • Decisional • Act as entrepreneurs, disturbance handlers, resource allocators

  19. ORGANIZATIONAL LEVEL TYPE OF DECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC ACCOUNTS STRUCTURED RECEIVABLE PRODUCTION ELECTRONIC COST OVERRUNS SCHEDULING TPS MIS OAS SEMI- BUDGET STRUCTURED PREPARATION PROJECT DSS SCHEDULING FACILITY LOCATION ESS KWS UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTS NEW MARKETS Managers and Decision-Making

  20. Stages of Decision-Making INTELLIGENCE:Collect information; identify problem DESIGN:Conceive alternatives; select criteria CHOICE:Use criteria to evaluate alternatives; select IMPLEMENTATION:Put decision into effect; allocate resources; control

  21. Individual Models of Decision-Making • Rational • Comprehensive rationality; evaluate all alternatives • Systematic • Structured, formal method • Intuitive • Trial & error, unstructured, multiple approach

  22. Organizational Models of Decision-Making • Bureaucratic • Follow standard operating procedures (SOP) • Political • Key groups compete and bargain • “Garbage can” • Organizations not rational; solutions accidental

  23. Strategic Information Systems • Change the goals, products, operations, services or environmental relationship of organizations • Help organization achieve competitive advantage • Being ahead of the competition by cost/price, market share, etc.

  24. Value Chain Model • Highlights primary or support activities where information systems can best be applied to achieve a competitive advantage • E.g. Inbound logistics, sales and marketing, customer services

  25. Role of IT at Business Level • Reduce costs • Differentiate product • Create loyalty by developing new and unique products/services, not easily duplicated • Serve new markets • Focus on a market niche

  26. Lock In Customers & Suppliers • SUPPLY CHAIN MANAGEMENT • Stockless inventories, continuous replenishment, just-in-time delivery • INTRA FIRM STRATEGY • Product differentiation, focused differentiation, low-cost producer • EFFICIENT CUSTOMER RESPONSE • Point-of-sale systems, datamining

  27. Industry-Level Strategy and IT • Information Partnerships • Air Canada and credit card companies have arrangements to award frequent-flyer points • Competitive Forces Model • Network Economics

  28. Network Economics • New model of competitive forces • Internet builds communities of users • The marginal costs of adding another participant are negligible while the marginal gain is much larger

  29. Management Issues • Managing strategic transitions • Sustaining competitive advantages

  30. International Information Systems

  31. Organizing International IS • Domestic exporter • Multinational • Franchiser • Transnational

  32. Global Strategy

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