Chapter 2
Chapter 2
Information Systems Defined
Basic definitions and foundational Information Systems concepts
1
Course Roadmap
• Part I: Foundations
– Chapter 1: Introduction
– Chapter 2: Information Systems Defined
– Chapter 3: Organizational Information Systems and Their
Impact
• Part II: Competing in the Internet Age
• Part III: The Strategic use of Information Systems
• Part IV: Getting IT Done
2
Learning Objectives
1. The definition of information system (IS) and information technology (IT), and the
difference between the two concepts.
2. The definition of information system success and information system failure.
3. The principal reasons why modern firms create and deploy information systems.
4. The influence of the firm’s context and the external environment in which it is
embedded on organizational information systems.
5. The four components that make up an information system and the manner in
which they interact.
6. How to design successful information systems and how to troubleshoot
problematic information systems implementations.
3
Introduction
• Organizations around the world continue to
spend significant amounts of money on IT,
lured by its promise to yield efficiencies and
improved competitive positioning
• It is critical that firms are able to wring value
from these investments
• Having a narrow focus on your IT investments
alone is problematic, but dangerous
4
Information System: Definition
Formal, socio-technical, organizational systems
designed to collect, process, store, and
distribute information
5
Formal vs. Informal
6
IS ≠ IT
• Hilton Hotels
– 1919: Opened
– 1963: First implementation
of computers in hospitality
(New York Hilton)
Did they have an IS in 1907?
7
IS ≠ IT
• Ricasoli Winery
– 1141: Opened
– Fact: oldest family
owned winery in Italy,
producing wine in the
heart of the Chianti
region since obtaining
ownership of the Brolio
Castle
Did they have an I/S in 1907?
8
9
Four Components of an Information
System
•
•
•
•
Technology
Process
People
Structure
10
Value to Managers
• A solid understanding of the characteristics of each
of the four components
• An appreciation of how they relate and interact with
one another
• Appropriate business decisions as a general or
functional manager
11
Component #1:
Information Technology
• Hardware Devices
– Computer, other devices
• Software Tools
– Microsoft Office
• Telecommunication Devices
– Internet
• This component is a cornerstone of any
modern IS, enabling and constraining
action through rules of operation that
stem from its design
12
Don’t Forget!
• The design of IT enables and constrains
the behavior of the Information System
Software, particularly a custom
developed application, is an
opinion of how data should be
represented, organized, and
manipulated
13
Component #2:
Process
• The series of steps necessary to complete a
business activity
• Examples:
– Check-in at a hotel
– Credit approval at a bank
– Paying bills online
• There are multiple ways to perform an
activity: Every process is designed to be
efficient & effective
14
Don’t Forget!
Official business
process
Informal process
15
Comparison
Business Process
• check the inventory and identify
the needed items
• call individual suppliers for quotes
and delivery dates
• compare the various quotes
• select one or more suppliers for
each of the needed items based
on the terms of the agreement
• call these suppliers and place the
orders
• receive the goods upon delivery,
checking the accuracy and quality
of the shipped items
• pay the suppliers.
Informal Process
Restocking the inventory
16
Component #3:
People
• Those individuals or groups directly
involved in the information system
– End-users
– Managers
• Addressing their needs are a critical
concern in designing and
implementing a new Information
System
• Failure to do will result in the failure of
your information systems
17
Component #4:
Structure
• The organizational structure
component (structure for short)
encompasses:
– The organizational design
• Hierarchy, decentralized, loose coupling
– The reporting configuration
• Functional, divisional, matrix
– The organizational relationships
• Communication and reward mechanisms
• Culture
18
Systemic Effects: Components Working
Together
• The four components of an Information
System are Interdependent
• Changes in on component may affect all
others
• Success is based
on the proper
interaction of IT with
the other
components
19
The Purpose of Information Systems
• Fulfilling organizational processing needs
• Improve efficiency and effectiveness while
reducing cost
• Achieve a (specified) Information System goal.
– Example: Movie theatres
– Goal: By offering customers the ability to purchase
tickets online will improve the effectiveness of the
theatre by reducing the number of people needed
to the ticket counter
20
Information Systems Success
• Has the system delivered expected
results?
• What are some of the unintended results?
– Positive
– Negative
21
IS Success is often Elusive
22
Don’t Forget!
• Every organization is unique
• Even fierce competitors often have different:
– Firm strategy: The manner in which the organization
intends to achieve its objectives.
– Firm culture: The collection of beliefs, expectations,
and values shared by the members of an
organization.
– Infrastructure: The technological backbone of the
firm. It constrains and enables opportunities for
future information systems projects.
23
External Environment
• External environment:
– The legal and regulatory context
– The competitive landscape
– The general business and social trends
surrounding the organization
24
Bringing it all Together:
Information Systems in Context
25
Information Systems and Organizational
Change
First Order
Change:
Automate
Second
Order
Change:
Informate
Third Order
Change:
Transform
First Order Change: Automate
• First order change only
affects the technical
subsystem
• Thus, it is:
– Easiest to envision
– Easiest to justify
– Easiest to manage.
27
Second Order Change: Informate
• Second order change
affects the people
component
• It thus provides more
of a challenge to
implementation
28
Third Order Change: Transform
• Third order change affects
organizational structures
• It seeks to transform how
the organization operates
• It requires significant
managerial and
executives’ involvement
29
Culture & IS
• Culture: the unwritten rules of the social game
that are shared by the members of some
group
• National Culture
• Organizational Culture
30
Theories of Culture
• Hall’s Low-Context, High-Context Approach
• Cultural Cluster Approach
• Hofstede’s Five Dimensions
31
Hall’s Low-Context,
High-Context Approach
• Low-context:
– words used by speaker explicitly convey speaker’s
message
• High-context:
– the context in which a conversation occurs is just as
important as the words spoken;
– cultural clues are critical to communication
32
Chinese
Korean
Japanese
Vietnamese
Arab
Greek
Spanish
Italian
Britain
U.S./ Canadian
Scandinavian
Swiss
German
High- and Low-Context Cultures
Low
Context
High
Context
33
A Synthesis of Country Clusters
34
Hofstede’s Five Dimensions
•
•
•
•
•
Social Orientation
Power Orientation
Uncertainty Orientation
Goal Orientation
Time Orientation
35
Geert Hofstede Cultural Dimensions
• Prof. Geert Hofstede conducted comprehensive study of
how values in the workplace are influenced by culture.
• Geert Hofstede analyzed a large data base of employee
values scores collected by IBM between 1967 and 1973
covering more than 70 countries
• Subsequent studies validating the earlier results have
included
–
–
–
–
commercial airline pilots and students in 23 countries,
civil service managers in 14 counties,
'up-market' consumers in 15 countries and
elites' in 19 countries.
36
Geert Hofstede Cultural Dimensions
• Hofstede developed a model that identifies four
primary Dimensions to assist in differentiating cultures:
–
–
–
–
Power Distance - PDI,
Individualism - IDV,
Masculinity - MAS, and
Uncertainty Avoidance - UAI.
• Fifth Dimension added after conducting an additional
international study with a survey instrument developed
with Chinese employees and managers.
– Long-Term Orientation - LTO
– applied to 23 countries
– based on Confucian dynamism.
37
Hofstede Overview
38
PDI
• PDI (Power Distance Index) - the PDI score
relates to the degree of equality or inequality
between people in a country's society.
• High PDI score indicates that inequalities of
power and wealth exist in a country
• Low PDI score countries there is more social
equality.
39
IDV
• IDV (Individualism) - the individualism score
focuses on the degree to which a culture
values and reinforces the importance of the
individual as opposed to the group.
• High PDI scoring country will view
individuality and individual rights as critical.
• Low PDI scoring countries will value the
group, i.e. family, tribe, etc.
40
MAS
• MAS (Masculinity) - masculinity focuses on
the degree to which a culture reinforces the
traditional role of males vs females.
• High MAS scoring country will have a more
acute degree of gender differentiation
• Low MAS scoring countries there is less
differentiation and discrimination between
genders.
41
UAI
• UAI (Uncertainty Avoidance) - uncertainty
avoidance looks at the level of tolerance for
uncertainty and ambiguity within a culture.
• High UAI score will have a low tolerance for
uncertainty and ambiguity. A more rule-oriented
society that institutes laws, rules, regulations.
• Low UAI scoring country is less concerned about
ambiguity and uncertainty and is less ruleoriented, more ready to accept change, consider
new ideas and take more and greater risks.
42
Geert Hofstede Cultural Dimensions
• These five Hofstede Dimensions correlate with other country,
cultural, and religious paradigms.
• http://www.kwintessential.co.uk/intercultural/dimensions.html
• http://geert-hofstede.com/countries.html
• http://www.kwintessential.co.uk/intercultural/management/guide.html
43
High Context/Low Context
VS
Hofstede Measures
Low Context
High Context
1
2
3
4
5
6
7
8
9
10
11
12
13
German
Swiss
Scandinavian
U.S./ Canadian
Britain
Italian
Spanish
Greek
Arab
Vietnamese
Japanese
Korean
Chinese
PDI
35
34
31
40
35
50
57
60
60
IDV
65
68
70
91
89
78
52
35
42
MAS
65
70
5
62
65
70
42
59
43
UAI
65
60
30
46
35
78
85
110
60
54
60
80
45
18
20
90
39
50
90
85
30
44
Organizational Culture
• Firms have a culture
• They assume an organization culture that fits
with an individualistic, egalitarian, uncertainty
tolerant mindset
• There has to be a fit between organizational
culture and the IS design in order for the IS to
be effective in the firm
45
SUMMARY
46
Implications
• IT should NOT be the start of your Information
System design process
– Strategy may be inspired by IT but
– IT selection is a point of arrival not departure
• Never forget Systemic Effects
– components of an IS mutually influence one
another
• Anticipate the Ripples
– Successful introduction a of new IS can only occur
of your team can anticipate & manage the ripples
47
Implications
• Design and use of an IS is iterative
– cyclical evaluation of individual IS components
– assessment of how different organizational
systems work together to support the business
• Optimize the Information System
– as a whole, not the components individually
• Organizations are dynamic
– They need to be re-evaluate often
48
The Recap
• Information systems are designed and built with the
objective of improving the firm’s efficiency and
effectiveness by fulfilling its information processing needs.
• Success can only occur when the systems that are used
achieves their intended goals
• Information systems exist in an organizational context,
characterized by the firm strategy, culture, and IT
infrastructure.
• Every organization is subject to the influences of a everchanging external environment, including regulatory
requirements, social and business trends, and competitive
pressures.
49
The Recap
• Information systems are subject to systemic
effects
• You will need to overcome these effects us in
order to ensure that your information system
achieves its goals
• There is a direct link between organizational
change and the introduction of new information
technologies.
• Any change requires sponsorship and
commitment as the result of the change in
technology
50
What We Learned
1.
The definition of information system (IS) and information technology (IT) and
the difference between the two.
2.
The definition of information system success and information system failure.
3.
The principal reasons why modern firms create and deploy information
systems.
4.
The influence of the firm’s context and the external environment in which it is
embedded on organizational information systems.
5.
The four components that make up an information system and the manner in
which they interact.
6.
How to design successful information systems and how to troubleshoot
problematic information systems implementations.
51