Chapter 2

Information Systems in OrganizationsOrganizations and Information SystemsOrganizationA formal collection of people and other resources established to accomplish a set of goals

General Model of an OrganizationOrganizations structuresOrganizational structure Organizational subunits and the way they are related to the overall organizationTypes Traditional organizational structureMajor department heads report to a president or top-level managerContinue Hierarchical organizational structureSeries of levelsThose at high levels have more power and authority within an organizationVirtual organizational structureAn organizational structure with a reduced number of layers of managementManagers and employees work in collaborative waycontinueProject organizational structureAn organization structure centred on major products or servicesContrast with traditional structureTeam organizational structureAn organizational structure centred on work teams or groupsOther Organizational Structures Multidimensional organizational structureA structure that may incorporate several structures at the same timeOrganizational Culture and Change CultureA set of major understandings and assumptions shared by a groupOrganizational cultureThe major understandings and assumptions for a business, a corporation, or an organizationOrganizational Culture and Change Organizational changeDeals with how for-profit and non-profit organizations plan for, implement, and handle changeOrganizational learningThe way organizations adapt to new conditions or alter their practices over time

Models of ChangeChange modelA representation of change theories developed by Kurt Lewin and Edgar Schein in 1969Three-stage approachUnfreezingMovingRefreezing

Change ModelReengineeringAlso called Process redesignThe radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results

For example, toReduce delivery timeIncrease product and service qualityImprove customer satisfactionIncrease revenues and profitability

RulesReengineering requires finding and vigorously challenging old rulesRuleOriginal rationalePotential problemSmall orders held until full truckloadReduce delivery costsCustomer deliver is delayedNo order accepted until credit approvedReduce potential for bad debtCustomer service is poorAll product decisions made at headquartersReduce number of items in inventoryPerception of limited product selectionOther ModelsContinuous improvementConstantly seeking ways to improve the business processes to add value to products and servicesContinuous Improvement vs.ReengineeringReengineeringContinuous ImprovementStrong action to solve serious problemRoutine actionDriven by senior executivesWorker-drivenBroad in scope; cuts across organizationsNarrow in scopeGoal to achieve a major breakthroughContinuous, gradualIS integral to the solutionIS provides data to guideTotal Quality ManagementQualityThe ability of a product (including service) to meet or exceed customer expectationsTQMA collection of approaches, tools, and techniques, that offers a commitment to quality throughout the organizationOutsourcing and DownsizingOutsourcingContracting with outside professional services to meet specific business needsE.g., advertising, hiringDownsizingReducing the number of employees to cut costsAlso called rightsizingMay have serious side effectsE.g., low employee morale, a need for expensive consultants, lost time, waning productivityCompetitive AdvantageCompetitive advantageA position, product, service, etc., within a business that improves a position within a market with respect to competitors Porters Five force model of competitive advantageIdentifies factors that lead to competitiveness

Porters Five-force ModelSubstituteProductsSupplierPowerNewEntrantsBuyerPowerRivalryStrategic Planning for Competitive AdvantageFour techniques: Strategic alliances (aka strategic partnerships)Creating new goods or servicesImproving existing goods or servicesUsing information systems for strategic purposes

Strategic allianceAn agreement between two or more companies that involves the joint production and distribution of goods and servicesE.g., Chrysler + Daimler BenzCreating new goods or servicesA company may become stagnant without the introduction of new goods and/or servicesE.g., Compaq, DellImproving existing goods or servicesSmall variations to existing goods or services, and/or complete modificationsE.g., light foodsUsing information systems for strategic purposesIS for improving organizational effectivenessE.g., SABRE (airline reservation system)

Performance-based Information SystemsProductivityA measure of the output achieved divided by the input requiredProductivity = Output achievedInput requiredReturn on Investments (ROI) and the Value of ISReturn on investment (ROI)A measure of IS value that represents the additional profits or benefits that are generated as a percentage of the investment in information systems technology

Measures of IS ValueEarnings growthMarket shareTotal costCustomer awareness and satisfaction