C3 Information Systems,
Organizations, and Strategy
IS and the Org.influences each other
• Organizations need to
be aware of
influences of IS to
benefit from new
technologies
• Many factors:
organization's
structure, standard
operating procedures,
politics, culture etc.
• IT often change
Organizations
– organizational balance
of rights,
responsibilities. Key
elements include
• who owns information
• who has access to and
can update information
• who makes decisions
about whom, what,
when and how
Organizational features
• Routines and business processes
– standard operating procedures: precise rules to cope with all
expected situations; BPs as collections of routines
• Organizational politics
– IT investments bring about significant changes = politically
charged events
– managers need to know how to work with the politics
• Organizational culture
• Organizational environments
• Organizational structure
– Clear division of labour
– Hierarchy
– Explicit rules and procedures
We will examine
business processes to
understand how they
might be changed or
replaced by using IT to
achieve greater
efficiency
Difference in Organizations
• Size and types
– large, small firms
• Environments
– government, competitors, customers, financial
institutions
• Organizational culture
– set of fundamental assumptions about what products
organization should produce
IT resistance
• New technology puts strains on culture, politics
and people
• if IT change threatens commonly held cultural
assumptions --> resistance
IS Impact
• Economic impacts
– IT can help lower transaction costs e.g. computer
links to external suppliers
– reduce agency costs with IT
• Organizational and behavioural impacts
– IT flattens organizations
• Post-industrial organizations
• Organizational resistance to change
• The Internet and organizations
– Implications for the design and understanding of
information systems
3-11
3-13
Internet changed IS
• The Internet
– important impact on relation between firms and
external entities and on the organization of business
processes, inside a firm
• Prior to the Internet
– business decisions had limited, delayed or inaccurate
knowledge of customers, delivery etc.
– large warehouses of information used
Planning for an IS- Factors
• Organizational environment
• Organizational structure
– hierarchy, specialization, routines, and business
processes
• Organizational culture and politics
• The type of organization and its style of
leadership
• Groups affected by the system and the attitudes
of workers who will be using the system
• The kinds of tasks, decisions, and business
processes that the IS is designed to assist
Characteristics of IT
• They are flexible and provide many options for
handling data and evaluating information
• They are capable of supporting a variety of
management styles, skills, and knowledge
• They are sensitive to the organization’s
bureaucratic and political requirements
Keep in mind when designing systems:
IS for Competitive Advantage
Porter’s
Competitive
Forces
Model
Traditional competitors
New market entrants
Substitute products and services
Customers
Suppliers
3-17
Using Information Systems to
Achieve Competitive Advantage
Porter’s Competitive Forces Model
In Porter’s competitive forces model, the strategic position of the firm and its
strategies are determined not only by competition with its traditional direct
competitors but also by four forces in the industry’s environment: new market
entrants, substitute products, customers, and suppliers.
Figure 3-10
3-18
IS strategies
Deal with competitive forces
• Low-cost leadership
• Product differentiation
• Focus on market niche
• Strengthen customer and supplier intimacy
Competitive Advantage is gained when organizations provide more value to
customers or same value at lower price
The Internet’s impact on competitive advantage
3-22
Value Chain Model
Primary activities- products and services, value for customers
Secondary activities- infrastructure: administration, human ressources, etc.
3-19
Figure 3-11 Value Chain Model
Competitive Advantage …
• Specific activities in the business where
competitive strategies can best be applied
– Primary activities: sales and marketing, production
– Support activities: administration, decision making
about IT, HR
• How can we use information systems to
– Improve efficiency, cost
– Improve relations with those outside the firm:
customers, suppliers, etc.
The value web
• The value web is a
networked system
that can synchronize
the value chains of
business partners
within an industry to
respond rapidly to
changes in supply
and demand.
Figure 3-13
3-25
• Synergies, core competencies, and networkbased strategies
• Synergies
• Enhancing core competencies
Network-based strategies
• network economics
3-26
IS and business strategy
Business
Firm
Industry
a single firm producing
a set of related products
and services
a collection of
businesses that make
up a single,
multidivisional firm
a collection of firms that
make up an industrial
environment or
ecosystem
Firm Level Strategy
• firm as collection of
businesses
• IT to improve each
business unit
• synergies
• core competencies
Industry Level Strategy
• firms together --> industry
• information partnerships:
eg Air Canada, CIBC
(Aeroplan)
?@#$%^&??
Figure 3-5
3-11