Information Systems in Organizations

1. Information Systems in Organizations Chapter 2 Principles of Information Systems, Sixth Edition

2. Chapter 2 Outline • Organizations and Information Systems • Competitive Advantage • Performance-Based Information Systems • Careers in Information Systems Principles of Information Systems, Sixth Edition

3. Organizations & Information Systems Principles of Information Systems, Sixth Edition

4. Value Chain Principles of Information Systems, Sixth Edition

5. Porter’s Firm Value Chain* Support Activities Firm Infrastructure Human Resource Management Technology Development Procurement Outbound Logistics Marketing & Sales Inbound Logistics Operations Service Product Pricing Promotion Place Customer service Repair Materials handling delivery Mfg. & assembly Order processing Shipping Primary Activities Principles of Information Systems, Sixth Edition

6. “The Value System”: interconnecting Relationships between organizations* Firm’s value chain Supplier’s value chain Channel’s value chains Buyer’s value chains Principles of Information Systems, Sixth Edition

7. Example of strategic targets* Principles of Information Systems, Sixth Edition

8. Organizational Structure • Organizational subunits and their relationship with the overall organization • Categories of organizational structure: • Team • Traditional • Multidimensional • Project • Virtual Principles of Information Systems, Sixth Edition

9. Traditional Organizational Structure Principles of Information Systems, Sixth Edition

10. Traditional Organizational Structure Principles of Information Systems, Sixth Edition

11. Hierarchical (Traditional) Organizational Structures* • In hierarchical (traditional) organizations, middle managers tell subordinates what to do and tell superiors the outcomes. • The information system supports this hierarchy. Principles of Information Systems, Sixth Edition

12. Project/Team Organizational Structure • (Here, we will assume project & team organizational structure are the same). • Organizational unit is often temporary project-based teams assembled from members of various functional areas, then disbanded at the end of the project • Project teams vary in size, often work groups • Projects are usually based on major products and services Principles of Information Systems, Sixth Edition

13. Project Organizational Structure Principles of Information Systems, Sixth Edition

14. Multidimensional Organizational Structure • May incorporate several structures at the same time • Advantage: • ability to simultaneously stress both traditional corporate areas and important product lines • Disadvantage: • multiple lines of authority Principles of Information Systems, Sixth Edition

15. Multidimensional Organizational Structure Principles of Information Systems, Sixth Edition

16. Matrix Organizational Structure* • In matrixed organizations, work is organized in small work groups and integrated regionally and nationally/globally. • IS reduces operating expenses by allowing information to be easily shared among different managerial functions. Principles of Information Systems, Sixth Edition

17. Virtual Organizational Structure* • Virtual organization refers to the extensive use of IS and electronic links to create an extremely flexible organization • Employs business units in geographically dispersed areas • People may never meet face to face • Can be permanent or temporary Principles of Information Systems, Sixth Edition

18. Virtual Organizations* • IT has made it possible for an individual to work for an organization and live anywhere • Virtual organization structure is “networked”. Extensive collaboration takes place electronically, esp. e-mail • Managers in a virtual environment monitor results, not progress • Forms are electronic, tech. support through a web interface • Business processes are also usually through the Web Principles of Information Systems, Sixth Edition

19. Flat Organizational Structures* • In flat structured organizations, work is more flexible and employee do whatever is needed. • IS allows offloading extra work and supports intra-firm communications. Principles of Information Systems, Sixth Edition

20. The “Networked” Virtual Organization* Instead of rigid hierarchies, all parts of the company are connected by formal and informal communications. Principles of Information Systems, Sixth Edition

21. Organizational Culture and Change Principles of Information Systems, Sixth Edition

22. Organizational Culture • Shared understandings, values, and assumptions in an organization • Influences information systems Principles of Information Systems, Sixth Edition

23. Organizational Change Principles of Information Systems, Sixth Edition

24. Reengineering Principles of Information Systems, Sixth Edition

25. Reengineering Principles of Information Systems, Sixth Edition

26. Continuous Improvement • Constantly seeking ways to improve business processes • Benefits: • Increased customer loyalty • Reduction in customer dissatisfaction • Reduced opportunity for competitive inroads Principles of Information Systems, Sixth Edition

27. Continuous Improvement vs. Reengineering Principles of Information Systems, Sixth Edition

28. Technology Diffusion, Infusion, and Acceptance • Technology diffusion - measure of widespread use of technology • Technology infusion - extent to which technology permeates a department • Technology Acceptance Model (TAM) - specifies factors that can lead to higher usage of technology Principles of Information Systems, Sixth Edition

29. Total Quality Management (TQM) • Quality: ability of a product or service to meet or exceed customer expectations • TQM: approaches and techniques used to achieve quality throughout the organization Principles of Information Systems, Sixth Edition

30. Outsourcing and Downsizing • Outsourcing: contracting with outside professionals • Downsizing: cutting the number of employees Principles of Information Systems, Sixth Edition

31. Outsourcing* • Why Outsource? • Means of cost control: e.g., maintenance • Classic model: only outsource functions that don’t give a competitive advantage • Later (90s): sometime outsourcing even CA functions is a good idea if done by outside experts (but this is risky). • Now, “selective outsourcing”: choose which IT capabilities to retain in-house and which to outsource. Principles of Information Systems, Sixth Edition

32. Factors driving outsourcing* • Cost savings • Highly qualified IT staff are difficult to find and retain • By bringing in outside expertise, management needs to focus less on IS operations and more on the information itself. • Outsourcers are specialists, should understand how to manage IS staff more effectively. • Outsourcers may have larger IS resources that provide greater capacity on demand. Principles of Information Systems, Sixth Edition

33. Disadvantages of outsourcing* • Abdication of control • High switching costs • Lack of technological innovation • Loss of ownership Principles of Information Systems, Sixth Edition

34. Competitive Advantage Principles of Information Systems, Sixth Edition

35. Competitive Advantage • Competitive Advantage: a significant, long-term benefit to a company over its competition • The ability to establish and maintain a competitive advantage is vital to the company’s success Principles of Information Systems, Sixth Edition

36. Competitive Advantage • Five forces motivate firms to seek competitive advantage • Rivalry among existing competition • Threat of new entrants • Threat of substitutions • Buyers’ bargaining power • Suppliers’ bargaining power Principles of Information Systems, Sixth Edition

37. Porter’s competitive forces with potential strategic use of information* • Strategic use • Switching costs • Access to dist. channels • Economics of scale • Strategic use • Cost effectiveness • Market access • Differentiation of • product or service Potential threat of new entrants Industry competitors Bargaining power of buyers Bargaining power of suppliers • Strategic use • Buyer selection • Switching costs • Differentiation • Strategic use • Selection of supplier • Threat of backward • integration Threat of substitutes • Strategic use • Redefine products and services • Improve price/performance Principles of Information Systems, Sixth Edition

38. Strategic Planning for Competitive Advantage Principles of Information Systems, Sixth Edition

39. Strategic Planning for Competitive Advantage • Change the structure of the industry • Create new products or services • Improve existing products or services Principles of Information Systems, Sixth Edition

40. Use information systems for strategic planning • Initially IS used to reduce costs • Later, improve efficiency & meet corp. strategic goals • Usually embodied in a product or service (SABRE is a classic example) • Competitive advantage is often only temporary • This is partly due to companies using IS to compete with others who have created successful IS-based products and services Principles of Information Systems, Sixth Edition

41. Performance-Based Information Systems Principles of Information Systems, Sixth Edition

42. Productivity • Productivity: a measure of output achieved divided by input required • A higher level of output for a given level of input means increased productivity • The text implicitly discusses “labor productivity”, i.e., the level of output for a given unit of labor. Principles of Information Systems, Sixth Edition

43. Return on Investments and the Value of Information Systems • Earnings growth • Market share • Customer awareness and satisfaction • Total cost of ownership (TCO): includes indirect costs Principles of Information Systems, Sixth Edition

44. Justifying Information Systems • Information Systems can be justified by solving the “risk/reward” equation. • Many IS departments try to formally assess and manage risk. • Assess risks • Identify benefits Principles of Information Systems, Sixth Edition

45. Justifying Information Systems • Assessment of Risk: • 1. How well are the requirements understood? • 2. To what degree does the project require pioneering effort in technology? • 3. Is there a risk of severe business repercussions if the project is poorly implemented? Principles of Information Systems, Sixth Edition

46. Justifying Information Systems • The benefits from most IS projects fall into one of the following categories: • Tangible Savings • Intangible Savings • Needed to meet a Legal Requirement • Keep the company modernized • Pilot Project to gain experience in a new area Principles of Information Systems, Sixth Edition

47. Careers in Information Systems Principles of Information Systems, Sixth Edition

48. The 10 Best Places to Work for IS Principles of Information Systems, Sixth Edition

49. Roles, Functions, and Careers in Information Systems Department • Operations - focuses on the efficiency of information • Systems development - focuses on specific development projects and ongoing maintenance and review • Support - provides user assistance Principles of Information Systems, Sixth Edition

50. Typical IS Titles and Functions • Chief Information Officer (CIO) - employs the IS department’s equipment and personnel to help the organization attain its goals • LAN administrators - set up and manage the network hardware, software, and security processes • Internet careers • Strategists • Programmers • Website operators • Chief Internet Officer • Consulting firms Principles of Information Systems, Sixth Edition