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
Organizations and IS
IS and Economic Effects
Organizational Design
(structure, processes,
political, culture)
INFORMATION SYSTEMS
Economic
Effects
Efficiency of
operations
Organizations and IS
Effectiveness of
business
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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!
Organizations and IS
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Porter’s Value Chain Model
• Model can help to determine possible savings – efficiency targets
• IS should be the vehicle for reaching efficiency targets
Organizations and IS
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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 support it.
Organizations and IS
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Porter’s Competitive Forces Model
SUBSTITUTE
PRODUCTS &
SERVICES
NEW MARKET
ENTRANTS
THE INDUSTRY
Focus
THE FIRM
SUPPLIERS
TRADITIONAL
INDUSTRY
COMPETITORS
Old model of
competition
CUSTOMERS
• 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)
Organizations and IS
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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)
Organizations and IS
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Character of IS Effects
•
Important! IS is not a magic wand that automatically efficiency & effectiveness at the
organizational level.
Information
System
User/Worker
(information, knowledge)
Task
Organized
data
Production Core
Organization’s
products (goods, services)
measured from efficiency
and effectiveness
perspectives
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. **
Organizations and IS
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