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MIS 2000. Organizations and Information Systems – Economic Effects. Outline. Operation Efficiency and IS Porter's Value Chain Model Business Effectiveness and IS Business and IST strategy Porter's Competitive Forces Model Character (indirect) of IST impact on organizations.
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MIS 2000 Organizations and Information Systems – Economic Effects
Outline • Operation Efficiency and IS • Porter's Value Chain Model • Business Effectiveness and IS • Business and IST strategy • Porter's Competitive Forces Model • Character (indirect) of IST impact on organizations
IS and Economic Effects Organizational Design (structure, processes, political, culture) INFORMATION SYSTEMS Economic Effects Efficiency of operations Effectiveness of business
IS and Efficiency • Operation efficiency: Save time & money = work faster, cheaper • Problem with computers: While allowing for faster work on a old tasks, they may create time for: • embellishing the tasks (unnecessary additions; e.g.: more formatting) • adding odd tasks (more processing & data proliferation) • idleness • Manage time & follow efficiency benchmarks for tasks & processes • Costs savings – major way of drawing efficiency benefits of IST!
Porter’s Value Chain Model • Model can help to determine possible savings – efficiency targets • IS should be the vehicle for reaching efficiency targets
IS and Effectiveness • Business Effectiveness – accomplishing competitive targets: • New product (good or service) • Differentiating characteristics of products (high quality, new features, combination of features) • Positioning in market segments & increasing market share • Customer service (speed, coverage, quality) • Effectiveness targets usually formulated in strategic plans (business strategy) • IS can help define business strategy, and should supportit.
NEW MARKET ENTRANTS SUBSTITUTE PRODUCTS & SERVICES THEINDUSTRY THE FIRM TRADITIONAL INDUSTRY COMPETITORS SUPPLIERS CUSTOMERS Porter’s Competitive Forces Model Old model of competition Focus • A firm must uses 5 forces (players) • A firm competes on product differentiation & price (efficiency assumed) • Model can help to determine competitive strategy and use IS for that (see Note)
Efficiency vs. Effectiveness • The ideal is to accomplish both, but… • Efficiency may counter effectiveness (e.g., working faster can be at expense of quality, an aspect of effectiveness; example in Note)* • Realistic goal: Balancing efficiency and effectiveness, at least in certain aspects. • IST can help (e.g., automated checks of data input in word processors, databases, spreadsheets – both speed and data accuracy accomplished)
Character of IS Effects • Important! IS is not a magic wand that automatically efficiency & effectiveness at the organizational level. • IS impact on performance is indirect: IS support professionals, managers, clerks) working on their tasks (informational aspects of tasks, or informational tasks), which support production core of an organization. • IS impact on performance is more direct: When IS used in value chain, or when IS make the production technology and the organization’s product is informational in character (mass information & entertainment media, publishing, software industry). • Differentiate b/w support jobs vs. job-based independent businesses. ** User/Worker (information, knowledge) Organization’s products (goods, services) measured from efficiency and effectiveness perspectives Information System Task Organized data Production Core