c h a p t e r
3
INFORMATION SYSTEMS,
ORGANIZATIONS,
MANAGEMENT AND
STRATEGY
What is an organization? (1)
• Technical definition
• A stable, formal, social structure
• Takes resources from environment, processes
them and produces outputs
What is an organization? (2)
• Behavioural Definition
– A collection of rights, privileges, obligations,
responsibilities
– Delicately balanced through conflict and conflict
resolution
Environmental
resources
Environmental
outputs
Common Structural Features of
Organizations
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Clear division of labour
Hierarchy
Explicit rules and procedures
Impartial judgment
Technical qualifications for positions
Maximum organizational efficiency
Additional Common
Features of Organizations
• Standard Operating Procedures (SOPs)
• Organizational Politics
• Organizational Culture
Unique Features of Organizations
• Different organizational types
• Organizations and environments
• Other differences
•Goals
•Leadership
•Power
•Tasks
•Constituencies
•Technology
•Function
•Business processes
Five Basic Kinds of
Organizations
• Entrepreneurial: Young, small, fast-changing
• Machine bureaucracy: large, slowchanging, centralized
• Divisionalized bureaucracy: combination
of machine bureaucracies, one central headquarters
• Professional bureaucracy:knowledgebased, weak centralized authority
• Adhocracy: large groups of specialists, teams,
task-forces
Delivery of IT Services
• The information systems department
– PROGRAMMERS: Write software
– SYSTEMS ANALYSTS: Translate business problems
into solutions
– IS MANAGERS: Department & team leaders
– END USERS: Department reps for whom applications
are developed
– CHIEF INFORMATION OFFICER (CIO): senior
manager of IS department
How IS Affect Organizations:
Economic Theories
• Microeconomic model
• IT can be substituted for capital and labour
• IT should result in fewer middle managers
• Transaction cost theory
• IT should reduce transaction costs
• IT should help firms constrict in size
• Agency theory
• IT can reduce costs of acquiring information
• Managers can oversee more employees, reduce management
costs
Transaction Cost Theory
Agency Cost Theory
How IS Affect Organizations:
Behavioural Theories
• IT can affect hierarchy of decision-making
– Lower costs of obtaining information
– Allow broader distribution of information
– Reduce need for middle management &
clerical support, allow flattening of
organization
Implementing Change
Changes in IT are
absorbed, deflected,
and defeated by
task arrangements,
structures and
people
Source: Leavitt, 1965
The Internet and Organizations
• Impacts relationship between firms and
external entities
• Impacts internal business processes
• Can lower transaction and agency costs
Implications for IS Design and
Understanding
• Environment
• Org. structure
• Org. culture and
politics
• Type of organization
• Leadership style
• Top management’s
understanding of IS
• Principal interest groups
affected by IS
• Kinds of tasks, decisions
& processes
• Attitudes of workers
• History of IS in the
organization: existing
skills, human resources
Managers, Decision-Making &
Information Systems
Two models of managerial role
• CLASSICAL:
– Describe functions -- plan, organize, coordinate,
decide, control
• BEHAVIORAL:
– Based on observations of managers on the job
– Managers are more informal, less reflective, more
reactive, less organized than expected
Three Managerial Activities
• Managers spend time establishing
personal agendas, long- and short-term
goals
• Managers spend time building an
interpersonal network
• Managers use their personal network to
execute personal agendas to
accomplish their own goals
Managerial Roles
• Interpersonal
– Act as figureheads, leaders, and liaisons
• Informational
– Act as nerve centres, disseminator and
spokespersons
• Decisional
– Act as entrepreneurs, disturbance handlers,
resource allocators
Managers and Decision-Making
ORGANIZATIONAL LEVEL
TYPE OF
DECISION
STRUCTURED
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
Stages of Decision-Making
INTELLIGENCE: Collect
information; identify problem
DESIGN: Conceive
alternatives; select criteria
CHOICE: Use criteria to
evaluate alternatives; select
IMPLEMENTATION: Put
decision into effect; allocate
resources; control
Individual Models of DecisionMaking
• Rational
– Comprehensive rationality; evaluate all alternatives
• Systematic
– Structured, formal method
• Intuitive
– Trial & error, unstructured, multiple approach
Organizational Models of
Decision-Making
• Bureaucratic
– Follow standard operating procedures (SOP)
• Political
– Key groups compete and bargain
• “Garbage can”
– Organizations not rational; solutions accidental
Strategic Information Systems
• Change the goals, products, operations,
services or environmental relationship of
organizations
• Help organization achieve competitive
advantage
– Being ahead of the competition by cost/price,
market share, etc.
Value Chain Model
• Highlights primary or support activities
where information systems can best be
applied to achieve a competitive advantage
• E.g. Inbound logistics, sales and marketing,
customer services
Role of IT at Business Level
• Reduce costs
• Differentiate product
– Create loyalty by developing new and unique
products/services, not easily duplicated
• Serve new markets
– Focus on a market niche
Lock In Customers & Suppliers
• SUPPLY CHAIN MANAGEMENT
– Stockless inventories, continuous
replenishment, just-in-time delivery
• INTRA FIRM STRATEGY
– Product differentiation, focused differentiation,
low-cost producer
• EFFICIENT CUSTOMER RESPONSE
– Point-of-sale systems, datamining
Industry-Level Strategy and IT
• Information Partnerships
– Air Canada and credit card companies have
arrangements to award frequent-flyer points
• Competitive Forces Model
• Network Economics
Network Economics
• New model of competitive forces
• Internet builds communities of users
• The marginal costs of adding another
participant are negligible while the marginal
gain is much larger
Management Issues
• Managing strategic transitions
• Sustaining competitive advantages
International Information
Systems
General Cultural Factor
Specific Business Factor
Global communication and transportation
technologies
Global markets
Development of global culture
Global production and
operations
Emergence of global social and
educational norms
Global coordination
Political stability or instability
Global workforce
Global knowledge base
Global economies of scale
Organizing International IS
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Domestic exporter
Multinational
Franchiser
Transnational
Global Strategy
Business
Function
Domestic
Exporter
Multinational
Franchiser
Transnational
Production
Centralized
Decentralized
Networked
Networked
Finance/
Accounting
Centralized
Centralized
Centralized
Networked
Sales/
Marketing
Mixed
Decentralized
Networked
Networked
Human
Relations
Centralized
Centralized
Networked
Networked
Strategic
Management
Centralized
Decentralized
Centralized
Networked