Chapter
3
INFORMATION
SYSTEMS,
ORGANIZATIONS,
MANAGEMENT,
AND STRATEGY
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With additions by Kleist
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With additions by Kleist
Four types of Information Systems
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Operational
Decision Support
Managerial
Executive
Decision-making becomes more
complex the more executive the level
• Operational systems have been
around a long time and tend to have
©
good ROI’s
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Strategic Information Systems
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Strategic Information System
• Technology used to gain an edge
over an organization’s competition
• Can be used at all levels of an
organization or just a few
• Makes a difference
• Profoundly alters the way an
organization does business
• Sustained strategic, competitive
advantage
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With additions by Kleist
Examples of Strategic Information Systems
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American Airlines
Fed Ex
Citibank
Wal-Mart
Abitibi
Consolidated
• Simonton
Windows (SBR)
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USA Today
Benetton
Sheetz
PNC Corporation
PriceWaterhouse
Coopers
• Baxter Healthcare
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
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?
• How can businesses use information systems for
competitive advantage?
• Why is it so difficult to build successful information
systems, including systems that promote competitive
advantage?
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
ORGANIZATIONS AND INFORMATION SYSTEMS
The Two-Way Relationship Between Organizations and Information Technology
ORGANIZATIONS
MEDIATING FACTORS:
Environment
Culture
Structure
Standard Procedures
Politics
Management Decisions
Chance
Figure 3-1
3.11
INFORMATION
TECHNOLOGY
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With additions by Kleist
IT and the Organization
• IT and Strategic Alignment
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
ORGANIZATIONS AND INFORMATION SYSTEMS
Organization:
• Stable, formal structure
• Takes resources from environment and
processes them to produce outputs
Common Features
Unique Features
•Formal structure
•SOPs
•Politics
•Culture
•Organizational Type
•Environments
•Tasks
•Goals
•Technology
•Power
•Constituencies •Business processes
•Functions
•Leadership
3.13
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
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
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS
Information Technology Services
Figure 3-5
3.17
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS
How Information Systems Affect Organizations
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
– Agency theory: Firm is nexus of contracts
among self-interested parties requiring
supervision
Behavioral theories:
– Information technology could change hierarchy
of decision making
– Lower cost of information acquisition
– Broadens the distribution of information
– Virtual organizations
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS
How Information Systems Affect Managers
The Role of Managers in Organizations
Classical model of management:
– Traditional description of management
– Focuses on formal functions: plan, organize, coordinate,
decide, control
Behavioral model of management: Describes management
based on observations of managers on the job
– Managerial Roles:
• 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
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS
TYPE OF
DECISION
STRUCTURED
Different Kinds of Information Systems
Organizational Level
OPERATIONAL
KNOWLEDGE
STRATEGIC
ACCOUNTS
RECEIVABLE
TPS
ELECTRONIC
SCHEDULING
OAS
SEMISTRUCTURED
PRODUCTION
COST OVERRUNS
MIS
BUDGET
PREPARATION
PROJECT
SCHEDULING
DSS
KWS
UNSTRUCTURED
MANAGEMENT
PRODUCT DESIGN
FACILITY
LOCATION
ESS
NEW PRODUCTS
NEW MARKETS
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Figure 3-9
With additions by Kleist
Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
What is Strategic Information System
• Computer system at any level of an
organization
• Changes goals, operations, products,
services, or environmental relationships
• Helps organization gain a competitive
advantage
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Business Level Strategy and the Value Chain Model
Value Chain Model:
• Highlights the primary or support
activities adding a margin of value to
products or services
• Helps achieve a competitive advantage
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Business Level Strategy and the Value Chain Model
Primary Activities:
• Directly related to the production and
distribution of a firm’s products or services
Support Activities:
• Make the delivery of primary activities
possible
• Consist of the organization’s infrastructure,
human resources, technology, and
procurement
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Firm Value Chain
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
The Value System Model is used to:
• Evaluate a company’s process and
competencies.
• Investigate whether adding IT
supports the value chain.
• Enable managers to assess the
information intensity and the role of
IT.
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Firm-Level Strategy and Information Technology
Core Competency:
• Activity at which a firm excels as a worldclass leader
• Information system encouraging the
sharing of knowledge across business
units enhances competency
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With additions by Kleist
Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
INFORMATION SYSTEMS AND BUSINESS STRATEGY
Industry-Level Strategy and Information Systems
Information partnership:
• Cooperative alliance formed between two or more
corporations for sharing information to gain strategic
advantage
• Help firms gain access to new customers, creating new
opportunities for cross-selling and targeting products
The competitive forces model:
• Describes the interaction of external influences, specifically
threats and opportunities, affecting an organization’s
strategy and ability to compete
Network Economics:
• Model of strategic systems at the industry level
• Based on the concept of a network
• Adding another participant entails zero marginal costs but
can create much larger marginal gain
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Essentials of Management Information Systems
Chapter 3 Information Systems , Organizations, Management, and Strategy
Porter’s Model for Wal-Mart
(Callon, 1996)
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Some Problems from IT for Competitive
Advantage
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The productivity paradox
Tangible vs. intangible benefits from IT
Future cash flows analysis
Unique vs. staying even with
competition
• Value from simple automation projects
• Value from highly risky, but strategic IT
projects
• Risk vs. return issues
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Technology Life Cycle
(Little, 1981)
• Emerging techno- Not demonstrated
potential
• Packing techno- Has demonstrated
potential
• Key techno- Embedded, major
impact, proprietary
• Base techno- Minor impact
• Can a technology cause innovation?
Leadership?
© 2005 by Prentice Hall
3.32
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© 2005 by Prentice Hall
3.33
With additions by Kleist
© 2005 by Prentice Hall
3.34
With additions by Kleist