RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES

1. RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES

2. 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?

3. MANAGEMENT CHALLENGES • Sustainability of competitive advantage. • Fitting technology to the organization( or vice-versa)

4. 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

5. ORGANIZATIONS AND INFORMATION SYSTEMS • Organization: • Stable, formal structure • Takes resources from environment and processes them to produce outputs

6. Figure 3-2 ORGANIZATIONS AND INFORMATION SYSTEMS Technical Microeconomic Definition of the Organization

7. ORGANIZATIONS AND INFORMATION SYSTEMS • Behavioral definition of Organization: • Collection of rights, privileges, obligations, responsibilities • Delicately balanced • Conflict resolution

8. Figure 3-3 COMMON FEATURES OF ORGANIZATIONS The Behavioral View of Organizations

9. ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations • 1. Organizations are bureaucracies that have certain structural features • 2. Structural Characteristics of Organizations: • Clear division of labor • Hierarchy • Explicit rules and procedures • Impartial judgments

10. ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations • Structural Characteristics of Organizations (cont.): • Technical qualifications for positions • Maximum organizational efficiency

11. ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations • Standard Operating Procedures: • Precise rules, procedures, and practices • Enable organizations to cope with all expected situations

12. ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations • Organizational Politics: • Divergent viewpoints leads to political struggle, competition, and conflict • Hamper organizational change

13. ORGANIZATIONS AND INFORMATION SYSTEMS Common Features of Organizations • Organizational Culture: A set of • fundamental assumptions about: • What products the organization should produce • How and where it should produce them • For whom they should be produced

14. ORGANIZATIONS & INFORMATION SYSTEMS Unique Features of Organizations All organizations have different: • Structures/Organizational types • Goals • Constituencies • Leadership Styles, Tasks • Surrounding Environment

15. ORGANIZATIONS & INFORMATION SYSTEMS Organizational Structures • Entrepreneurial: Start up business • Machine bureaucracy: Midsize manufacturing firm • Divisionalized bureaucracy: Fortune 500 • Professional bureaucracy: Law firms, hospitals, school systems • Adhocracy: Consulting firm

16. Figure 3-4 ORGANIZATIONS & INFORMATION SYSTEMS Organization and Its Environment

17. ORGANIZATIONS AND INFORMATION SYSTEMS Other Differences Among Organizations • Ultimate goal • Different groups and constituencies • Nature of leadership • Tasks and technology

18. 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

19. Figure 3-5 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Information Technology Services

20. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Information Technology Infrastructure and Information Technology Services Includes specialists: • Programmers: Highly trained, write software • Systems analysts: Translate business problems into solutions, act as liaisons between the information systems department and rest of the organization

21. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Information Technology Infrastructure and Information Technology Services Specialists (cont.): • Information system managers: Leaders of various specialiststeams • Chief information officer (CIO): Senior manager in charge of information systems function in the firm • End users: Department representatives outside the information system department for whom applications are developed

22. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations ECONOMIC IMPACTS 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.

23. Figure 3-6 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Transaction Cost Theory

24. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations ECONOMIC IMPACTS (contd.) • Agency Cost Theory:Firm is nexus of contracts among self-interested parties requiring supervision.

25. Figure 3-7 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Agency Cost Theory

26. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations ORGANIZATIONAL AND BEHAVIORAL IMPACTS Behavioral Changes : • Information technology could change hierarchy of decision making • Lower cost of information acquisition • Broadens the distribution of information

27. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations Organizational & Behavioral Impact (contd.) Virtual Organization: • Task force networked organizations. • Uses networks to link people, assets, and ideas to create and distribute products and services without being limited to physical locations

28. THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS How Information Systems Affect Organizations Organizational & Behavioral Impacts (cotd.) Increasing the Flexibility of Organization 1. Increasing the ability : • To sense and respond to changes in marketplace. • To take advantage of new opportunities, 2. Mass customization, 3. Micromarketing for niche products

29. Figure 3-8 THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS Implementing Change and Managing Organizational Resistance Made Easier

30. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING 1. I.T. has reduced information uncertainty. 2. Affect on Roles of Managers in Organizations : • 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

31. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Managers and Decision Making Process of Decision Making at Various Management levels : • Strategic Decision Making:Determines long-term objectives, resources, and policies. • Management Control: Monitors effective or efficient usage of resources and performance of operational units

32. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Managers and Decision Making Process of Decision Making at Various Management Levels (contd.) • Operational Control: Determines how to perform specific tasks set by strategic and middle-management decision makers • Knowledge-level Decision Making: Evaluates new ideas for products, services, ways to communicate new knowledge, ways to distribute information

33. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Managers and Decision Making Decisions are classified as: • Unstructured:Non routine, decision maker provides judgment, evaluation, and insights into problem definition, no agreed-upon procedure for decision making. • Structured:Repetitive, routine, handled using a definite procedure.

34. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING TYPE OF DECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC ACCOUNTS STRUCTURED RECEIVABLE PRODUCTION ELECTRONIC COST OVERRUNS SCHEDULING TPS OAS MIS BUDGET SEMI- PREPARATION STRUCTURED PROJECT DSS SCHEDULING FACILITY ESS LOCATION KWS NEW PRODUCTS UNSTRUCTURED PRODUCT DESIGN NEW MARKETS Different Kinds of Information Systems Organizational Level Figure 3-9

35. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Stages of Decision Making (all supported by IT) • Intelligence: Collect information, identify problem. • Design: Conceive alternative solution to a problem • Choice: Select among the alternative solutions • Implementation: Put decision into effect and provide report on the progress of solution

36. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Figure 3-10 Decision-Making Process

37. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Models of Decision Making • Rational Model: Choosing best alternative rationally. • Organizational Model : Group decision. • Bureaucratic Model : Based on SOP • Political Model : Compromises.

38. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Implications for the Design and Understanding of Information Systems Factors to consider while planning a new system: • Organizational environment • Organizational structure, hierarchy, specialization, standard operating procedures

39. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Factors to Consider while Planning a New Systems (contd.) • Culture and politics of the organization • Type of organization and its style of leadership. • Groups affected by the system and the attitudes of workers who will be using the system. • Kinds of tasks, decisions, and business processes, information system is designed to assist.

40. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Implications for the Design and Understanding of Information Systems System Characteristics to be kept in mind while designing new systems: • Flexibility and multiple options for handling data and evaluating information • Capability to support a variety of styles, skills, and knowledge

41. IMPACT OF INFORMATION TECHNOLOGY ON MANAGEMENT DECISION MAKING Implications for the Design and Understanding of Information Systems System Characteristics to be kept in mind while designing new systems: • Capability to keep track of many alternatives and consequences • Sensitivity to the organization’s bureaucratic and political requirements.

42. MANAGEMENT CHALLENGES IN COMPLEX RELATIONSHIP BETWEEN I.S. AND ORGANIZATIONAL PERFORMANCE • 1. Difficulties in Sustaining Competitive Advantage :- • - Advantage is for a significant period of time, • - Experience and knowledge helps in new investment. • Difficulties in Managing System Related Change : • - Change is slowed due to inertia of organizations • - Process of change is complicated and slow.

43. MANAGEMENT CHALLENGES IN COMPLEX RELATIONSHIP BETWEEN I.S. AND ORGANIZATIONAL PERFORMANCE • Solution Guidelines : • Perform a Strategic System Analysis : • - Study competitive structure of industry of firm, • - Analyze current business, industry and firm’s value chain • Managing Strategic Transitions ( Changes in goals , relationships with customers / suppliers, internal operations and information architecture) : • - Devise new business processes for successful transitions

44. RELATIONSHIP BETWEEN INFORMATION SYSTEMS, ORGANIZATIONS AND BUSINESS PROCESSES