Chapter 3: IT Impact on
Organizations
Summarize from: Lynda Applegate, Robert D.
Austin, and Deborah L. Soule, Corporate
Information Strategy And Management: Text
and Cases, McGraw Hill, 8th Edition, 2009.
Last updated: September, 2015
Learning objectives
 Recognize
that IT impacts the
business model (through its effects on
organizational capabilities)
 Learn how to analyze IT for its
potential to enable new capabilities啟
用新功能
 e.g.
facilitate促進new and improved
organizational structures and processes
Organizational capabilities
Direct quote from:
http://www.businessdictionary.com/definition/organizational-capability.html

“Ability and capacity of an organization
expressed in terms of its (1) Human resources:
their number, quality, skills, and experience, (2)
Physical and material resources: machines,
land, buildings, (3) Financial resources: money
and credit, (4) Information resources: pool of
knowledge, databases, and (5) Intellectual
resources: copyrights版權, designs, patents專
利, etc.”
Back
What is the problem with
organization? (1)
Inadequacy in traditional organizational
design for coping with today’s business
turbulent動蕩and increasingly networked
world.
 Large organizations want to be



more agile敏捷, innovative and
entrepreneurial企業家
Small organizations want to

tap into an extended network of partners打
入一個擴展的合作夥伴網絡
Entrepreneur


“The person who perceives an opportunity
and create an organization to pursue it.”
Creates “new business may, in a few rare
instances, be the revolutionary sort that
rearranges the global economic order, as
Walmart, FedEx, Apple, Microsoft, Google,
eBay, and Amazon.com … Facebook and
Twitter”
Source: William D. Bygrave, and Andrew Zacharakis,
Entrepreneurship, John Willey &Sons, Inc., 3rd Edition, 2014. (p: 2)
Entrepreneur (latest example…)

Alibaba:


“Alibaba Holdings Ltd. IPO, .. the Chinese e-commerce giant
is now worth $230 billion, making it the fourth-largest tech
company in the world behind Apple, Google and Microsoft, in
terms of market capitalization市場資本.
The public offering raised $21.8 billion公開發行籌集了218億美
元for Alibaba, more than Visa's $17.8 billion in 2008 and more
than Facebook's $16 billion in 2012. After briefly soaring close
to $100 a share接近每股100美元, the stock settled back in the
$91 to $91 range and closed at $93.89, slightly higher than
the $92.70 opening price開盤價, but up 38 percent from the
IPO price發行價of $68.”
Direct quote Source: International Business Times,
http://www.ibtimes.com/, 19 Sept. 2014, Accessed: 22 Sept. 2014.)
The Entrepreneurship Process
(Source: William D. Bygrave, and Andrew Zacharakis, Entrepreneurship, John
Willey &Sons, Inc., 3rd Edition, 2014. )
The Entrepreneurship Process
(Source: William D. Bygrave, and Andrew Zacharakis, Entrepreneurship, John
Willey &Sons, Inc., 3rd Edition, 2014. (p.:51) )
What this chapter proposes?
IT is an important enabler推動者for
developing the best-in-class capabilities
required for success
IS/IT capabilities
Direct quote from: Ng, C.S-P., and Chang, P.C. 2009. "Exploring the Links between
Competitive Advantage and Enterprise Resource Planning (ERP) Upgrade Decision: A Case
Study Approach," 16th ISPE International Conference on Concurrent Engineering, Taipei:
Springer, pp. 179-191.

“IS resources can be broadly divided into IS
assets (technology-based) and IS capabilities
(system-based) [42]. … Wade and Hulland [42]
classify IS resources into eight major resources:
(1) external relationship management, (2) market
responsiveness, (3) IS-business partnerships, (4)
IS planning and change management, (5) IS
infrastructure, (6) IS technical skills, (7) IS
development, and (8) cost effective IS operations”
(pg. 181-182).
Back
IT Capabilities transformation
[IS resource]  [IS capability]
 Include







(CRM, SCM)  External relationship management capabilities 
Financial resources capabilities, intellectual resources capabilities
(CRM, ESS, BI)  Market responsiveness capabilities 
information resources capabilities, financial resources capabilities
(ERP)  Cost effective IS operations capabilities  information
resources capabilities
….
(Data analytics software)  processing of big data  information
resources capabilities, intellectual resources capabilities
(Social media sites)  networking and marketing  information
resources capabilities, human resources capabilities
Defining Big Data: The Big Data
Institute (TBDI)

Big Data Institute (TBDI; www.the-bigdatainstitute.com)
 Defines Big Data as vast datasets數據集that:
 Exhibit variety各種各樣;
 Include structured, unstructured, and semi-structured data;
 Are generated at high velocity with an uncertain pattern不確
定模式;
 Do not fit neatly into traditional, structured, relational
databases; and
 Can be captured, processed, transformed, and analyzed in
a reasonable amount of time only by sophisticated
information systems.
Source: Rainer, Kelly, Prince, Brad and Watson, Hugh, Management
Information Systems: Moving Business Forward, John Willey & Sons,
Inc.: New Jersey, 3rd Edition, 2015
Next
Big Data (1)
Source:
http://www.ne
xtgov.com/big
data/2014/08
/infographicbig-datawhere-doesitcome/92561/
Back
Big Data (2)
Source:
http://www.ne
xtgov.com/big
data/2014/08
/infographicbig-datawhere-doesitcome/92561/
Back
Source:
https://en.wikipedia.org/wiki/Social_media_marketing
Back
IT impacts of business model:
Stages of dev. and contri. of IT to firm

Mainframe computer大型電腦systems


Microcomputer revolution微電腦革命of the 1980s



Support centralized decision making and hierarchical
communication階層式的溝通
Support decentralize information processing分散資訊處理and
improve local decision making地方決策
But technology to support both local and enterprise-wide
information sharing and communication was inadequate
Recent IT – “networked網絡IT revolution” (with the Internet,
and assoc. technological innovation)


Make possible new approaches to communicating and sharing
information --- redefine organizational possibilities possibilities遠景
Create new approach – called “Business On Demand”
IT impacts – example 1:
“LeapFrog” from California

Beginning (small-size)



Eventually (grown to big-size)


Operation: outsource manufacturing to 7 Chinese
factories; and shipping運輸and distribution分銷to
global logistics全球物流公司
From #15 toy company in 2000 to #4 in 2001, and
#3 in 2002
Faces problems of control and talent人才
management
IT was seen as key enabler推動者of


controlling operations, and
providing real-time information and analytical tool

to continue the steady stream不斷of product innovation
IT impacts – example 2:
Con-Way, Inc.


IT can enable agility and control
Example: Con-Way, Inc. (freight貨運transportation and
logistics company) has turned to IT to enable the realtime sense and respond organization and control
systems needed to


Respond quickly while maintaining control of its global
network維持其全球網管制
Implemented




A single IT-enabled operating platform for streamlining,
integrating, and synchronizing operating and management
processes throughout Con-Way, and its network of shippers,
receivers, and carriers貨主，接收，和運營商網.
Began to experiment with Wi-Fi (a std. for wireless LAN) system
Building radio frequency identification (RFID) systems to track
parcel
These systems will provide real-time information and analytical
tools to support decision making, collaboration, and control
IT impacts – example 3:
- Phillips Petroleum (1)

IT can enable accountability and collaboration
 The case of “Phillips Petroleum” (oil and gas
company)


Attempt to maintain control over decentralized
decision making by adding controllers in all
business units to avoid the senior management
oversight疏忽
Over time – ended up having checkers checking
the checkers. As competition and price erosion
increased, slow-to-respond and costly authority
structures and systems become a drag on
innovation and on earnings
IT impacts – example 3:
- Phillips Petroleum (2)

Response:



Create a matrix organization with centralized center of
excellence that provided shared services
Teams of operating managers were given authority for
decision making in the field, and senior executives could
provide the required oversight
Business intelligence system was implemented – to analyze
the production environment for possible performance
improvements to an optimized mix of fuel types, such as
gasoline and jet fuel. For example, if prices are low for
commodity fuel, such as gasoline, the business-intelligence
system can change the "cut points" of the process to boost
the volume of high-margin jet fuel the refinery produces
Fundamental elements基本要
素for success

Two fundamental elements基本要素for success



Hierarchy等級制度– specify a number of structures
and systems that help to safeguard保護a large firm
Authority權力system – limit decision making and
actions行為by strict segregation隔離of responsibility
and duties責任和義務, restricted access to
information and asset
In theory, the hierarchy is designed so that,
short of sabotage破壞, no single employee or
work unit can make a decision or take action
that can immediately threaten威脅the entire
organization
Balancing agility with control (1)

Two mistakes executives often make

(1) Failure to redesign失敗重新設計end-toend processes (with consideration for other
part部分of the organization or on partners,
suppliers and/or customer organizations)

E.g. Frito-Lay, Inc. (a division of PepsiCo, Inc.) in
the mid-1980s attempted to accelerate the rate of
new product development加快新產品開發速度
without ensuring無保證that the supply chain,
manufacturing, and order fulfillment processes訂單
實行流程could handle the increased complexity
Balancing agility with control (2)

(2) Failure to realign faster-cycled operations重新調
整更快運作with organization structure, control,
authority systems, incentives, and culture


E.g. Frito-Lay, Inc. 2nd project to integrate their new
products development process with supply chain,
manufacturing, and order fulfillment processes but failed to
redesign the organization and management systems
needed to control these accelerated, real-time processes
Real-time business intelligence即時商業智能and early
warning for decision-making were not in place,
opportunities were missed, and problems went
undiscovered問題發生未被發現
Balancing agility with control (3)

Thus, the key is to streamline, integrate, and
“time synchronize”精簡，整合和“時間同步”
both operating and management processes in
the business


Operating processes: the activities thru which an
organization designs, produces, markets, delivers,
and supports its products and services
Management processes: the activities thru which
an organization manages the design, production,
marketing, delivery, and supports of its products
and services
Suggestion

Adopt a comprehensive approach全面的做法
to organization design that includes
 Analysis and realignment調整of capabilities within
4 key areas of business model商業模式design





Processes and infrastructure流程和基礎架構
People and partners
Organization and culture
Leadership and governance
Core elements to consider under agility敏捷


Improved access to information
High-capacity networked communication高容量的網絡通信
systems