c h a p t e r

33INFORMATION INFORMATION

SYSTEMS, SYSTEMS, ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT, MANAGEMENT, AND STRATEGYAND STRATEGY

LEARNING OBJECTIVESLEARNING OBJECTIVES

• IDENTIFY SALIENT CHARACTERISTICS IDENTIFY SALIENT CHARACTERISTICS OF ORGANIZATIONSOF ORGANIZATIONS

• ANALYZE RELATIONSHIP BETWEEN ANALYZE RELATIONSHIP BETWEEN INFO SYSTEM & ORGANIZATIONSINFO SYSTEM & ORGANIZATIONS

**

LEARNING OBJECTIVESLEARNING OBJECTIVES

• CONTRAST THEORIES OF CONTRAST THEORIES OF ORGANIZATIONSORGANIZATIONS

• DESCRIBE DECISION PROCESSESDESCRIBE DECISION PROCESSES

• EVALUATE ROLE OF INFORMATION EVALUATE ROLE OF INFORMATION SYSTEMS IN SUPPORTING BUSINESS SYSTEMS IN SUPPORTING BUSINESS STRATEGYSTRATEGY

**

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

• ORGANIZATIONS & INFORMATION ORGANIZATIONS & INFORMATION SYSTEMSSYSTEMS

• CHANGING ROLES OF SYSTEMS IN CHANGING ROLES OF SYSTEMS IN ORGANIZATIONSORGANIZATIONS

• MANAGERS, DECISION MAKING & MANAGERS, DECISION MAKING & INFORMATION SYSTEMSINFORMATION SYSTEMS

• INFORMATION SYSTEMS & BUSINESS INFORMATION SYSTEMS & BUSINESS STRATEGYSTRATEGY

**

MANAGEMENT CHALLENGESMANAGEMENT CHALLENGES

1. SUSTAINABILITY OF 1. SUSTAINABILITY OF COMPETITIVE ADVANTAGECOMPETITIVE ADVANTAGE

2. FITTING TECHNOLOGY & 2. FITTING TECHNOLOGY & ORGANIZATIONORGANIZATION

**

MEDIATING FACTORS:MEDIATING FACTORS: Environment Environment CultureCultureStructure Structure Standard Procedures Standard Procedures Politics Politics Management Decisions Management Decisions ChanceChance

ORGANIZATIONS & INFORMATION ORGANIZATIONS & INFORMATION TECHNOLOGYTECHNOLOGY

ORGANIZATIONSORGANIZATIONS INFORMATION INFORMATION TECHNOLOGYTECHNOLOGY

VP VP VP

CEOORGANIZATIONORGANIZATION

TECHNICAL DEFINITION:TECHNICAL DEFINITION:

STABLE, FORMAL STRUCTURESTABLE, FORMAL STRUCTURE

• TAKES RESOURCES FROM TAKES RESOURCES FROM ENVIRONMENT AND PROCESSES ENVIRONMENT AND PROCESSES THEM TO PRODUCE OUTPUTSTHEM TO PRODUCE OUTPUTS

**

TECHNICAL MICROECONOMIC DEFINITION TECHNICAL MICROECONOMIC DEFINITION OF ORGANIZATIONOF ORGANIZATION

OUTPUTS TO ENVIRONMENT

ORGANIZATIONORGANIZATION

PRODUCTION PROCESS

INPUTS FROMENVIRONMENT

ORGANIZATIONORGANIZATION

BEHAVIORAL DEFINITION:BEHAVIORAL DEFINITION:

COLLECTION OF:COLLECTION OF:

• RIGHTS, PRIVILEGES, RIGHTS, PRIVILEGES, OBLIGATIONS, RESPONSIBILITIESOBLIGATIONS, RESPONSIBILITIES

• DELICATELY BALANCEDDELICATELY BALANCED

• CONFLICT RESOLUTIONCONFLICT RESOLUTION

**

EN

VIR

ON

ME

NT

AL

RE

SO

UR

CE

SE

NV

IRO

NM

EN

TA

L R

ES

OU

RC

ES

EN

VIR

ON

ME

NT

AL

OU

TP

UT

SE

NV

IRO

NM

EN

TA

L O

UT

PU

TS

FORMAL ORGANIZATIONFORMAL ORGANIZATION

STRUCTURE:STRUCTURE: HierarchyHierarchyDivision of Division of

laborlabor Rules, ProceduresRules, Procedures

PROCESS:PROCESS: Rights/Rights/ObligationsObligations Privileges/ResponsibilitiesPrivileges/Responsibilities ValuesValues

NormsNormsPeoplePeople

STRUCTURAL CHARACTERISTICS OF ALL STRUCTURAL CHARACTERISTICS OF ALL ORGANIZATIONSORGANIZATIONS

• CLEAR DIVISION OF LABORCLEAR DIVISION OF LABOR• HIERARCHYHIERARCHY• EXPLICIT RULES & PROCEDURESEXPLICIT RULES & PROCEDURES• IMPARTIAL JUDGMENTSIMPARTIAL JUDGMENTS• TECHNICAL QUALIFICATIONSTECHNICAL QUALIFICATIONS• MAXIMUM ORGANIZATIONAL MAXIMUM ORGANIZATIONAL

EFFICIENCYEFFICIENCY

**

COMMON FEATURES OF COMMON FEATURES OF ORGANIZATIONSORGANIZATIONS

• FORMAL STRUCTUREFORMAL STRUCTURE

• STANDARD OPERATING STANDARD OPERATING PROCEDURESPROCEDURES

• POLITICSPOLITICS

• CULTURECULTURE

**

UNIQUE FEATURES OF UNIQUE FEATURES OF ORGANIZATIONSORGANIZATIONS

• ORGANIZATIONAL TYPES ORGANIZATIONAL TYPES

• ENVIRONMENTS, GOALS, POWERENVIRONMENTS, GOALS, POWER

• CONSTITUENCIES, FUNCTIONCONSTITUENCIES, FUNCTION

• LEADERSHIP, TASKSLEADERSHIP, TASKS

• TECHNOLOGYTECHNOLOGY

• BUSINESS PROCESSESBUSINESS PROCESSES

**

ORGANIZATIONAL STRUCTURESORGANIZATIONAL STRUCTURES

• ENTREPRENEURIAL:ENTREPRENEURIAL: Startup business Startup business• MACHINE BUREAUCRACY:MACHINE BUREAUCRACY: Mid-sized Mid-sized

manufacturing firmmanufacturing firm• DIVISIONALIZED BUREAUCRACY:DIVISIONALIZED BUREAUCRACY: Fortune Fortune

500500• PROFESSIONAL BUREAUCRACY:PROFESSIONAL BUREAUCRACY: Law Law

firms, hospitalsfirms, hospitals• ADHOCRACY:ADHOCRACY: Consulting firm Consulting firm

**

ORGANIZATION & ITS ENVIRONMENTORGANIZATION & ITS ENVIRONMENT

THE FIRM

INFORMATION SYSTEMSINFORMATION SYSTEMS

THE ENVIRONMENT:THE ENVIRONMENT:

RESOURCES & CONSTRAINTS

GOVERNMENTS

COMPETITORS

FINANCIAL INSTITUTIONS

CULTURE

KNOWLEDGE

TECHNOLOGY

INFORMATION SYSTEMS DEPARTMENTINFORMATION SYSTEMS DEPARTMENT

• PROGRAMMERS:PROGRAMMERS: Write software Write software

• SYSTEMS ANALYSTS:SYSTEMS ANALYSTS: Translate Translate business problems into solutionsbusiness problems into solutions

• ISIS MANAGERS: MANAGERS: Department leaders Department leaders

• END USERS:END USERS: Department reps for Department reps for whom applications are whom applications are developed developed

**

THE ORGANIZATIONTHE ORGANIZATION SENIOR MANAGEMENTSENIOR MANAGEMENT MAJOR END-USERS (DIVISIONS) MAJOR END-USERS (DIVISIONS)

INFORMATION SYSTEMS DEPARTMENTINFORMATION SYSTEMS DEPARTMENT

IT Infrastructure:IT Infrastructure:

HardwareHardwareSoftwareSoftwareData NetworksData Networks

Information System Information System Specialists:Specialists:

CIOCIOManagersManagersSystem AnalystsSystem AnalystsSystem DevelopersSystem DevelopersProgrammersProgrammersNetwork SpecialistsNetwork SpecialistsDatabase AdministratorDatabase AdministratorClericalClerical

HOW INFO SYSTEMS HOW INFO SYSTEMS AFFECT ORGANIZATIONSAFFECT ORGANIZATIONS

• MICROECONOMIC MODEL:MICROECONOMIC MODEL: Info Info technology is a factor of production, technology is a factor of production, like capital & laborlike capital & labor

• TRANSACTION COST THEORY:TRANSACTION COST THEORY: Firms attempt to minimize Firms attempt to minimize transaction costs internally & transaction costs internally & externallyexternally

**

• AGENCY THEORY:AGENCY THEORY: Firm is nexus of Firm is nexus of contracts among self-interested parties contracts among self-interested parties requiring supervisionrequiring supervision

• BEHAVIORAL THEORIES:BEHAVIORAL THEORIES: Info systems Info systems could change hierarchy of decision could change hierarchy of decision making; reduce need for middle making; reduce need for middle management & clerical support; management & clerical support; distribute informationdistribute information

**

HOW INFO SYSTEMS HOW INFO SYSTEMS AFFECT ORGANIZATIONSAFFECT ORGANIZATIONS

IMPLEMENTING CHANGEIMPLEMENTING CHANGE

Source: Leavitt, Handbook of Organization (1965)

TASKTASK

PEOPLEPEOPLETECHNOLOGYTECHNOLOGY

STRUCTURESTRUCTURE

RESISTANCERESISTANCE

MUTUALMUTUALADJUSTMENTADJUSTMENT

INTERNET & ORGANIZATIONSINTERNET & ORGANIZATIONS

• E-mail communicationE-mail communication

• Electronic handbooks published & Electronic handbooks published & revisedrevised

• Interactive training classesInteractive training classes

• Employees review, update personal Employees review, update personal datadata

**

ROLE OF MANAGERSROLE OF MANAGERS

• CLASSICAL:CLASSICAL: Describe functions- Describe functions- plan, organize, coordinate, decide, plan, organize, coordinate, decide, controlcontrol

• BEHAVIORAL:BEHAVIORAL: Based on Based on observations of managers on the jobobservations of managers on the job

**

INFO SYSTEMS, LEVELS, DECISIONSINFO SYSTEMS, LEVELS, DECISIONS

TPSOAS MIS

KWS

DSS

ESS

ORGANIZATIONAL LEVELORGANIZATIONAL LEVELTYPE OFTYPE OFDECISIONDECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC

STRUCTURED ACCOUNTS RECEIVABLE

ELECTRONIC PRODUCTIONSCHEDULING COST OVERRUNS

SEMI- BUDGETSTRUCTURED PREPARATION

PROJECTSCHEDULING

FACILITYLOCATION

UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTSNEW MARKETS

STAGES OF STAGES OF DECISION MAKINGDECISION MAKING• INTELLIGENCE:INTELLIGENCE: Collect Collect information; information;

identify problemidentify problem• DESIGN:DESIGN: Conceive alternatives; select Conceive alternatives; select

criteriacriteria• CHOICE:CHOICE: Use criteria to evaluate Use criteria to evaluate

alternatives; select alternatives; select • IMPLEMENTATION:IMPLEMENTATION: Put decision into Put decision into

effect; allocate resources; controleffect; allocate resources; control

**

SOURCE: Simon, The New Science of Management Decision (1960)

• RATIONAL:RATIONAL: Comprehensive Comprehensive rationality; evaluate all rationality; evaluate all alternativesalternatives

• SYSTEMATIC:SYSTEMATIC: Structured, formal Structured, formal methodmethod

• INTUITIVE:INTUITIVE: Trial & error, unstructured, Trial & error, unstructured, multiple approachmultiple approach

**

INDIVIDUAL MODELS OFINDIVIDUAL MODELS OFDECISION MAKINGDECISION MAKING

• BUREAUCRATIC:BUREAUCRATIC: Follow Follow standard operating procedures standard operating procedures (SOP)(SOP)

• POLITICAL:POLITICAL: Key groups compete and Key groups compete and bargainbargain

• ““GARBAGE CAN”:GARBAGE CAN”: Organizations not Organizations not rational; solutions accidentalrational; solutions accidental

**

ORGANIZATIONAL ORGANIZATIONAL MODELS OF MODELS OF DECISION MAKINGDECISION MAKING

BUSINESSBUSINESS LEVEL STRATEGY LEVEL STRATEGY

LOCK IN CUSTOMERS & SUPPLIERSLOCK IN CUSTOMERS & SUPPLIERS• SUPPLY CHAIN MANAGEMENT:SUPPLY CHAIN MANAGEMENT: Stockless Stockless

inventories, continuous replenishment, just-in-inventories, continuous replenishment, just-in-time deliverytime delivery

• INTRA FIRM STRATEGY:INTRA FIRM STRATEGY: Product Product differentiation, focused differentiation, low-cost differentiation, focused differentiation, low-cost producerproducer

• EFFICIENT CUSTOMER RESPONSE:EFFICIENT CUSTOMER RESPONSE: Point-of- Point-of-sale systems, dataminingsale systems, datamining

**

COMPETITIVECOMPETITIVE FORCES MODEL FORCES MODEL

SUBSTITUTE PRODUCTS &

SERVICES

NEW MARKET ENTRANTS

SUPPLIERS CUSTOMERS

THE FIRMTRADITIONAL

INDUSTRY COMPETITORS

THE THE INDUSTRYINDUSTRY

COMPETITIVECOMPETITIVE FORCES MODEL FORCES MODEL

SUBSTITUTE PRODUCTS &

SERVICES

NEW MARKET ENTRANTS

SUPPLIERS CUSTOMERS

INDUSTRY INDUSTRY SETSET

INDUSTRY COMPETITORS

INDUSTRY 4

INDUSTRY 3

INDUSTRY 2

INDUSTRY 1

c h a p t e r

33INFORMATION INFORMATION

SYSTEMS, SYSTEMS, ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT, MANAGEMENT, AND STRATEGYAND STRATEGY