Chapter 2
Information Systems in
Organizations
ITEC 1010
Information and Organizations
Organizations and Information
Systems
 Organization
 A formal collection of people and other
resources established to accomplish a set of
goals
ITEC 1010
Information and Organizations
General Model of an
Organization
 (next slide)
ITEC 1010
Information and Organizations
ITEC 1010
Information and Organizations
Value Chain
 Term coined by Michael Porter in a 1965
article in the Harvard Business Review
 Def: a series of activities that includes
inbound logistics, warehouse and storage,
production, finished product storage,
outbound logistics, marketing and sales,
and customer service
Schematic
ITEC 1010
Information and Organizations
ITEC 1010
Information and Organizations
Organizations
 Organizational structure
 Organizational subunits and the way they are
related to the overall organization
 Traditional organizational structure
 Major department heads report to a president
or top-level manager
Schematic
ITEC 1010
Information and Organizations
A.Bailey,
Legal counsel
B. Wong,
VP Accounting
C.Rodrig,
VP Information
Systems
S. Burry,
President
R. Henderson,
VP Marketing
K. Kelly,
VP Production
S. Samuel
Supervisor
Traditional Organizational Structure
ITEC 1010
Information and Organizations
V. Cisborn,
VP Human
Resources
L. Bashran,
Supervisor
Terminology (1)
 Hierarchical organizational structure
 See previous slide
 Series of levels
 Those at high levels have more power and
authority within an organization
 Flat organizational structure
 An organizational structure with a reduced
number of layers of management
ITEC 1010
Information and Organizations
Terminology (2)
 Empowerment
 Giving employees and their managers more
power, responsibility, and authority to make
decisions, take certain actions, and have more
control over their jobs
ITEC 1010
Information and Organizations
Other Organizational Structures (1)
Schematic
 Project organizational structure
 An organization structure centred on major
products or services
 Contrast with traditional structure
 Team organizational structure
 An organizational structure centred on work
teams or groups
ITEC 1010
Information and Organizations
B. Woods,
President
Air & Aerospace Co.
T. Walker,
Senior VP,
Aircraft Division
VP,
Finance
VP,
VP,
Marketing Production
O. Teco,
Senior VP,
Communications &
Satellite Division
W. Butler,
Senior VP,
Aerospace Division
VP,
Sales
VP,
Finance
VP,
VP,
Marketing Production
VP,
Sales
Project Organizational Structure
ITEC 1010
Information and Organizations
VP,
Finance
VP,
VP,
Marketing Production
Other Organizational Structures (2)
 Multidimensional organizational structure
 A structure that may incorporate several
structures at the same time
ITEC 1010
Information and Organizations
Schematic
Vice President,
Marketing
Vice President,
Production
Vice President,
Finance
Publisher,
College Division
Marketing
Group
Production
Group
Finance
Group
Publisher,
Trade Division
Marketing
Group
Production
Group
Finance
Group
Publisher,
High School
Division
Marketing
Group
Production
Group
Finance
Group
Multidimensional Organizational Structure
ITEC 1010
Information and Organizations
Other Organizational Structures (3)
 Advantages and disadvantages of different
organizational structures
 Read the book!
ITEC 1010
Information and Organizations
Organizational Culture
and Change (1)
 Culture
 A set of major understandings and assumptions
shared by a group
 Organizational culture
 The major understandings and assumptions for
a business, a corporation, or an organization
ITEC 1010
Information and Organizations
Organizational Culture
and Change (1)
 Organizational change
 Deals with how for-profit and non-profit
organizations plan for, implement, and handle
change
 Organizational learning
 The way organizations adapt to new conditions
or alter their practices over time
ITEC 1010
Information and Organizations
Models of Change
 ‘Change model’
 A representation of change theories developed
by Kurt Lewin and Edgar Schein in 1969
 Three-stage approach
• Unfreezing
• Moving
• Refreezing
Schematic
ITEC 1010
Information and Organizations
Change Model
ITEC 1010
Information and Organizations
Reengineering
 Also called ‘Process redesign’
 The radical redesign of business processes,

ITEC 1010
organizational structures, information systems, and
values of the organization to achieve a breakthrough in
business results
For example, to…
• Reduce delivery time
• Increase product and service quality
• Improve customer satisfaction
• Increase revenues and profitability
Information and Organizations
Rules, Rules, Rules
 Reengineering requires finding and
vigorously challenging old rules
Rule
Original rationale
Potential problem
Small orders held
until full truckload
Reduce delivery
costs
Customer deliver is
delayed
No order accepted
until credit approved
Reduce potential for
bad debt
Customer service is
poor
All product decisions Reduce number of
made at headquarters items in inventory
ITEC 1010
Information and Organizations
Perception of limited
product selection
Other Models
 Continuous improvement
 Constantly seeking ways to improve the
business processes to add value to products
and services
ITEC 1010
Information and Organizations
Continuous Improvement vs.
Reengineering
Reengineering
Strong action to solve serious problem
Continuous Improvement
Routine action
Driven by senior executives
Worker-driven
Broad in scope; cuts across
organizations
Narrow in scope
Goal to achieve a major breakthrough
Continuous, gradual
Often led by outsiders
Led by workers
IS integral to the solution
IS provides data to guide
ITEC 1010
Information and Organizations
Total Quality Management
 Quality
 The ability of a product (including service) to
meet or exceed customer expectations
 TQM
 A collection of approaches, tools, and
techniques, that offers a commitment to quality
throughout the organization
ITEC 1010
Information and Organizations
Outsourcing and Downsizing
 Outsourcing
 Contracting with outside professional services to meet
specific business needs
E.g., advertising, hiring

 Downsizing
 Reducing the number of employees to cut costs
 Also called ‘rightsizing’
 May have serious side effects
• E.g., low employee morale, a need for expensive consultants,
lost time, waning productivity
ITEC 1010
Information and Organizations
Competitive Advantage
 Competitive advantage
 A position, product, service, etc., within a
business that improves a position within a
market with respect to competitors
 Porter’s ‘Five force’ model of competitive
advantage
 Identifies factors that lead to competitiveness
Schematic
ITEC 1010
Information and Organizations
Substitute
Products
Buyer
Power
Rivalry
New
Entrants
Porter’s Five-force Model
ITEC 1010
Information and Organizations
Supplier
Power
Strategic Planning for
Competitive Advantage
 Four techniques:




Strategic alliances (aka strategic partnerships)
Creating new goods or services
Improving existing goods or services
Using information systems for strategic purposes
Next slide
ITEC 1010
Information and Organizations
1. Strategic alliance
 An agreement between two or more companies that
involves the joint production and distribution of
goods and services
 E.g., Chrysler + Daimler Benz
2. Creating new goods or services
 A company may become stagnant without the
introduction of new goods and/or services
 E.g., Compaq, Dell
3. Improving existing goods or services
 Small variations to existing goods or services, and/or
complete modifications
 E.g., “light” foods
4. Using information systems for strategic purposes
 IS for improving organizational effectiveness
 E.g., SABRE (airline reservation system)
ITEC 1010
Information and Organizations
Performance-based Information
Systems
 Productivity
 A measure of the output achieved divided by
the input required
Output achieved
Productivity =
ITEC 1010
Input required
Information and Organizations
Productivity
 An example is given in the top paragraph
on p. 65
 This is a bad example!
 Why?
ITEC 1010
Information and Organizations
Return on Investments (ROI) and
the Value of IS
 Return on investment (ROI) represents
 A measure of IS value that investigates the
additional profits or benefits that are generated
as a percentage of the investment in
information systems technology
ITEC 1010
Information and Organizations
Measures of IS Value
 Earnings growth
 Market share
 Customer awareness and satisfaction
One of my favourite quotes:
When you cannot measure, your knowledge is
of a meager and unsatisfactory kind.
Kelvin
ITEC 1010
Information and Organizations
Justifying IS
 Categories:
 Tangible savings
 Intangible savings
 Legal requirements
 Modernization
 Pilot project
ITEC 1010
Information and Organizations
Roles, Functions, and Careers in
the IS Department
 Categories:
 Operations
 Systems development
 Support
 Liaisons (information service units)
Schematic
ITEC 1010
Information and Organizations
CEO
Information
Resource
Management
Functions
Operations
Computer
facility
operations
Data
entry
Local
Area network
operations
CIO
Other
functional
areas
Systems
development
Information
service
unit
Support
Systems
analysis
& design
Data
administration
Programming
Information
centre
Information
technololgy
IS Department
ITEC 1010
Information and Organizations
Information Centre
 Information centre
 Provides users with assistance, training,
application development, documentation,
equipment selection and setup, standards,
technical assistance, and troubleshooting
ITEC 1010
Information and Organizations
Information Service Unit
 Information service unit
 Attached to a functional area of the business.
 Acts as a local information support
organization within a functional area.
 Performs the critical role of liaison between
the functional area and IS
ITEC 1010
Information and Organizations
Chief Information Officer (CIO)
 Chief Information Officer (CIO)
 A manager at the vice-president level
responsible for IS planning, policy, and
standards
 Focused on supporting corporate goals
ITEC 1010
Information and Organizations
Other IS Roles
 Database Administrator
 Systems Programmer
 Network Specialist
 LAN Administrator
 Webmaster
 Trainer
ITEC 1010
Information and Organizations
IS Principles
 Use of IS strongly influenced by
organizational structure and problem
orientations
 IS are often intertwined within the value-added
processes
 IS usage may require change that could meet
with resistance
 Value-added IS needs to be continually sought
ITEC 1010
Information and Organizations
End of Chapter 2
Chapter 3
ITEC 1010
Information and Organizations