ch 3 is,org,mgmt

7/29/2019 Ch 3 IS,Org,Mgmt

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Ch. 3 IS ,Organizations ,Mgmt and Strategy

1) Organization and Information System Is and organization system influence one

another.

Information system must be aligned with theorganization to provide information thatimportant groups within the organizationneed.

On The other hand organization must beaware of IS in order to benefit from newtechnology.


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Manager cannot successfully design newsystem or understand existing systemwithout understanding organizations.Manager decide what system will be built ,what they will do , how they will beimplemented etc.

What is An Organization ? An organization is a stable , formal ,social

structure that takes resources from the

environment and processes them to produceoutputs.

This technical Def. focuses on threeelements of an organization.


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Capital and labor are primary productionfactor provided by the environment. TheOrganization transforms these inputs into

products and services in a productionfunction. The product and service areconsumed by environments in return for

supply inputs. In this behavioral view of the firm , people

who works in organizations develop customerways of working, they make arrangement with

subordinates and superiors about how workwill be done , how much work will be done ,and under what conditions.


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How do these definition of organization relate to

information system technology ?

A technical view of organization encourages us to

focus on the way inputs are combined into outputs

when technology changes are introduced into the

company. The firm is seen infinitely , with capital

and labor. But the behavioral definition of an organization

suggest that building new information system or

rebuilding old ones like machines or workers.

The technical definition tells us how thousand offirms competitive markets combine capital , labor

and information technology.


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The behavioral model takes us inside the

individual firm to see how each of these

definition of organizations inner working.Structure

Hierarchy

Division of labor

Rules ,Procedures

Business Process

Process

Rights

Responsibilities

Values

Norms

People

Environmental

ResourcesEnvironmental

Outputs

Behavioral

organization


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Common Features Of Organizations

1) Standard Operating Procedure :-

* Organization that survive over time becomevery efficient ,producing a limited number of

products and service by following standard

routine.* this standard routine codified into

reasonable precise rules , procedures and

practice called standard operatingprocedures(SOPs)

* these SOPs have great deal to do with the

efficiency that modern organization attain.


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2) Organizational Politics :-

People in organization occupy different position

with different specialties, concerns. As a result they naturally have divergent viewpoints

about how resources , rewards.

They different matter both in manager and

employee and they result in political struggle ,

competition , and conflict within every organization.

Virtually all information system that bring about

significant changes in goals , procedure ,productivity , and personnel are politically charged.


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3) Organizational Culture :-

All organizations have bedrock , unassailable

, unquestioned assumptions that define theirgoals and products.

Organizational culture is this set of

fundamental assumptions about whatproducts the organization should produce ,

how it should produce them , where and for

whom.


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Structural Characteristics of all organizations.

Clear division of labor

Hierarchy

Explicit rules and procedures

Impartial judgments

Technical qualification for position

Maximum organizational efficiency


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Unique Features Of Organization :- Organization

type, Environments , goals , power , function ,

leadership , tasks, technology , business process

1) Organizations And Environments

Organization reside in environments from which

they draw resources and to which they supply

goods and services. Organization and environments have a reciprocal

relationship.

Is play an important role in helping organizationsperceive changes in their environments.

Is are key instruments for environmental scanning ,

helping manager identify external changes that

might require an organizational response.


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The Organization and its Environments

E

Environmental Resources

Governments

Competitors

Customers

Financial Institutions

Culture

Knowledge

Technology Information System

The Firm


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2) Different Organization Types :-

Entrepreneurial Structure :- Young , small

firm in a fast changing environment. It has asimple structure and is managed by as its

single chief executive officer.

E.g. Small start-up Business Machine Bureaucracy :- Large bureaucracy

existing in a slowly changing environment ,

producing standard products. It is centralizedMgmt team and centralized decision making.

E.g. Midsize manufacturing firm


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Divisionalized Bureaucracy :- Combination of

multiple machine bureaucracy , each producing a

different products or service.

E.g. Fortune 500 firms such as general motors.

Professional Bureaucracy :- Knowledgebased

organization where goods and services depend on

the expertise and knowledge of professionals. E.g. Law firms , school system , hospital etc.

Adhocracy :- Task Force organization that must

respond to rapidly changing environment. Consist of

large specialists organized into multidisciplinary

team.

E.g. Consulting firm such as Rand Corporation.


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Other Differences Among Organizations

2) The Changing Role Of IS In Organizations

IT Infrastructure and It Service :-* Todays new IT Infrastructure is designed to make

information flow across the enterprise and include

links to customers and public infrastructures ,

including the internet. The IS Dept is responsible for maintain the H/W ,

S/W , Data Storage , Network that comprise the

firms IT Infrastructure.

The IS Dept consists of specialists such as

Programmer , System Analyst , Project Leader and

IS Manager.


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End user representatives of departments outside of

the IS Groups for whom IS system applications are

developed.

The IS Department suggest new business strategies

and new IT Based products and service and

coordinates both the development of the technology

and the planned changes in the organization.


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How IS Affect Organizations

How have changes in IT affected Organizations ? To

find answer we draw theory based on Economic and

behavioral approaches.

Economic Theories :- From an economic standpoint ,

Information technology system can be viewed as

factor of production that can be freely substituted forcapital and labor.

* Information technology reduce transaction costs

the costs incurred when a firm buys on the market

place what it cannot make itself. Using markets isexpensive because of costs such as locating and

communicating with distant suppliers , monitoring

contract compliance , obtaining information on

product etc.


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So, Firm have tried to reduce transaction costs bygetting bigger , hiring more employee or buyingtheir own supplier and distributors.

Information technology especially the use ofnetworks can help firm lower the cost of marketparticipation (transaction costs).

E.g. by using computer links to external suppliers,

the Chrysler Corporation can achieve economics byobtaining 70% of its parts from the outside.

Information technology also can reduce the internalmanagement costs.

As firms grow in size and scope , agency costs orcoordination costs rise , because owner mustexpend more and more effort supervising andmanaging employees.


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Behavioral Theories

Economic theories try to explain how large numbers

of firms act in the marketplace , behavioral theories

from sociology ,psychology and political science are

more useful for describing the behavior of the

individual firms.

Information technology could bring informationdirectly from operating units to senior managers ,

Alternatively , information technology could

distribute information directly to lower level workers

, who could then make their own decision based ontheir own knowledge and information without any

Mgmt and intervation.


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The shape of organization should flatten because

professional workers tend to be self decision making power.

Information technology may encourage adhocracies and

task force network organization in which groups ofprofessionals come together face-to-face or electronically

for short period of time to accomplish a specific task(E.g.

Designing a new automobile); once the task is accomplished

, the individual join other task.

More firm use virtual organizations. This organization use

network to link people , assets and ideas.

E.g. Calyx and Corolla is a networked virtual organization

selling fresh flowers directly to the customers , by passing

traditional florists. The firms take orders via telephone or

from its websites and transmits them to grower farms which

ship them in Federal Express Vans directly to the customers.


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Another behavioral approach views information system as

the outcomes of political competition between organizational

subgroups for influence over the organizations politics ,

procedures, and resources. The Internet and Organizations

The Internet , especially the www , is beginning to have an

important impact on the relationship between firms and

external entities , and even the organization of businessprocess inside the firm.

The internet increase the accessibility , storage and

distribution of information and knowledge for organizations.

Business are rapidly rebuilding some of their key businessprocesses based on internet technology and making this

technology a key component of their IT Infrastructure.


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Implications For The Design And Understanding OfInformation Systems

The Central Organizational factors to consider when

planning a new system are these:* The Environment in which the organization must

function

The structure of the organization :hierarchy,

specialization, standard operating procedures.

The Organizations cultureand politics.

The Type of Organization.

The nature and style of Leadership. The extent of top Mgmt support and understanding.

The Principle interest groups affected by thesystem.


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The kind of tasks , decision , and business process

that the information system is designed to assist.

The sentiments and attitude of workers in the

organizations who will be using the information

system.

The history of the organization : past investments in

the information technology, existing skills , importantprograms and human resources.


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3) Managers , Decision Making , And IS

* To determine how IS can benefit managers ,

examine that what manager do and what

information they need for their decision making and

other function.

* The Role Of Managers In Organization

* Manager play key role in organizations. Theirresponsibilities range from making decisions , to

writing Reports , to attending meetings etc.

* To better understand managerial function and role

by examining classical and contemporary models of

managerial behavior.


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Classical Description Of Management

The classical model of management , which

describes what managers do , was largely

unquestioned for the more than 70 years since

1920s.

Henri Fayol and other early writer first described

the five classical functions of managers as planning, organizing , coordinating , deciding , and

controlling.

This terms actually describe managerial functions ,

they are unsatisfactory as a description of whatmanager actually do, the terms do not address

what manager do when they plan , decide things ,

and control the work of others.


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Behavioral Models :

For example , describes the morning activities of

the president of an investment management firm.

Behavioral models state that the actual behavior of

manager appears to be less systematic , more

informal , less reflective , more reactive ,less well

organized. Observer fin that managerial behavior actually has

five attributes that differ greatly from the classical

description :

First manager engage in more that 600 different

activities each day , with no break in their pace.


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Second ,managerial activities are fragmented; most

activities last or less than nine minutes; only 10% of

the activities exceed one hour in duration.

Third , manager prefer speculation , gossip they

want current , specific , and ad hoc information.

Fourth, they prefer oral forms of communication

because oral media provide greater flexibility ,require less effort , and bring faster response.

Fifth, managers give high priority to maintaing a

diverse and complex web contract that acts as an

informal information system.

But in real world observations Kotter argues that ,

Effective managers actually involved in only three

critical activities :


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First, general managers spend significant time

establishing personal agendas and both short and

long tem goal.

Second , Most important effective manager spend

a great deal of time building an interpersonal

network composed of people at virtually all

organizational levels , from warehouse staff toclerical support personnel to other managers and

senior management.

Third, Manager use their networks to execute

personal agendas to accomplish their own goals.

Analyzing managers day-to-day behavior ,

Mintzberg found that these managerial roles fell into

three categories:


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1) Interpersonal Roles :- manager act as figurehead

for the organization when they represent their

companies to the outside world and perform

symbolic duties such as giving out employeeaward.

Manager act as leaders , attempting to motivate ,

counsel , and support subordinates.2) Informational Roles :- Manager act as the nerve

centers of their organization , receiving the most

concrete ,up-to-date information and redistributing

it to those who need to be aware of it. Manager are information disseminators and

spokespersons for their organization.


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3) Decision Roles :- Manager make decision ,they

handle disturbances arising in the organization ;

they allocate resources to staff members who need

them etc.


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Managers And Decision Making

Decision making is often a managers mostchallenges role. IS helped managers to

communicate and distribute information. The Process of Decision Making

Decision making can be classified byorganizational level , corresponding to the strategic

, management , knowledge , and operational levelof the organization.

Strategic Decision Making determine the objective, resources , and policies of the organization.

Decision making for Management Control isprincipally concerned with how efficiently andeffectively resources are used and how welloperational units are performing.


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Operational control decision making determineshow to carry out the specific tasks set forth bystrategic and middle-management decision

makers. Knowledgelevel decision making deals with

evaluating new ideas for products and services ,ways to communicate new knowledge , and ways

to distribute information throughout theorganization.

Within each of these level of decision making ,researchers classify decision as structured and

unstructured. Unstructured decision are those is which the

decision maker must provide judgment , evaluationand insight into the problem definition.


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Each of these decision are novel , important , and

nonroutine and there is no well understood or

agreedon-procedure for making them.

Structured Decisions, by contrast , are repetitiveand routine and involve a definite procedure for

handling them so that they do not have to be

treated each time as if they were new.

Some decision are Semi structured ; in such cases

, only part of the problem has a clear-cut answer

provided by an accepted procedure.


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Organizational LevelOperational Knowledge Management StrategicTypes Of

Decision

Structured

Semi

Structured

Unstructured

TPS

Office

SystemMIS

DSS

ESS

KWS

Account ReceivableElectronic Schedule

Product design

Project Scheduling

Budget prepare

Production Facility

location

New Product

St Of D i i M ki


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Stages Of Decision Making

Intelligence :- Consists of identifying andunderstanding the problems occurring in the

organization why the problem , where , and withwhat effect.

Traditional MIS system that deliver a wide variety ofdetailed information can help identify problems.

Design :- The individual designs possible solutionsto the problems.

Choice :- consist of choosing among solutionalternatives. Here the decision maker might need a

larger DSS system to develop more extensive dataon a variety of alternatives and complex models ordata analysis tools to account for all of the costs ,consequences , and opportunities.


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Implementation :- During solution implementation ,when the decision is put into the effect , managers

can use a reporting system that delivers routine

reports on the progress of a specific solution.


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Intelligence

Design

Choice

Implementation

Is there a

problem ?

What are the

alternatives ?

Which should

you choose ?

Is the Choice

Working ?

I di id l M d l f D i i M ki


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Individual Model of Decision Making

A number of models attempt to describe how

people make decision.

Rational Model :- This model of human behavior isbuilt on the idea that people engage is basically

consistent , rational , value maximizing calculations.

Under this model an individual goal , ranks allpossible alternatives action by their contributions to

those goals , and choose the alternative that

contributes most to those goals.

Criticism of this model show that in fact people

cannot specify all of the alternatives , and unable to

rank all alternatives.

M d i i l th t l l ti th


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Many decision are so complex that calculating the

choice even if done by computer is virtually

impossible.

One modification to the rational model states thatinstead of searching through all alternative , people

actually choose the first available alternative that

moves them toward their ultimate goal.

Another modification alters the rational model by

suggesting that in making policy decision.

Modern psychology define different style like,

Cognitive style :- The selection of alternatives ,and the evaluation of consequences.

McKenny and Kenn describe two decision making

cognitive style.


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Systematic Decision Makers :- approach aproblem by structuring it in terms of some formal

method. They evaluate and gather information in

terms of their structured method.

Intuitive Decision Makers :- approach as problemwith multiple method , using trial and error to find a

solution. Organizational Models Of Decision Making

Decision making often is not performed by a single

but by entire groups or organizations. There are

three types of organization models define following,

B ti M d l di t thi d l f


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Bureaucratic Model :- according to this model ofdecision making , an organizations most important

goal is the preservation of the organization itself.

In this model using SOPs organization rarelychange these SOPs , because they ay have to

change personnel and incur risks.

Although senior management and leader are hiredto coordinate and lead the organization .

Political Models of Organizational Choice :-

Power in organization is shared ; even the lowest

level workers have some power.

In political models of decision making , what an

organization does is a result of political bargains

struck among key leaders and interest groups.

O i ti d t ith th l ti


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Organization do not come up with the solutions

that are chosen to solve some problems. They

come up with the compromises that reflect the

conflicts , the unequal power and the confusion thatconstitute politics.

Garbage Can Model :- This model state thatorganizational are not rational . Decision making is

largely accidental and is the product of a stream of

solutions , problems , and situation that are

randomly associated.

If this model is correct , it should not be surprisingthat the wrong solution are applied to the wrong

problems in an organization a larger number of

organizations make critical mistakes that lead to

their demise.

I li ti F t d i t t b


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Implication For system design :- system must be

built to support group and organizational decision

making.

As a general rule , information systems designershould be design systems that have the following

characteristics:

They are flexible and provide any option forhandling data.

They are capable of supporting a variety of style ,

skills and knowledge.

They are powerful in the sense of having multiple

analytical and intuitive models for the evaluation of

data.

Th fl t d t di f d


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They reflect understanding of groups and

organizational processes of decision making.

They are sensitive to the bureaucratic andpolitical requirement of system.


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3) Information System And Business Strategy

What Is A Strategic Information System?

Strategic Information System change goals ,operations , products , service ,or environmental

relationships of organizations to help them gain and

edge over competitors.

System that have these effect may even change thebusiness of organization.

For E.g. State Street Bank and Trust Co. Of Boston

transformed its core business form traditionalbanking service , such as customer checking and

its saving accounts and loans , to electronic record

keeping and financial information services etc.

Strategic information system should be


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Strategic information system should be

distinguished from strategic level system for senior

manages that focus on long-term , decision making

problems. Organization may need to change their internal

operations and relationship with customers and

suppliers in order to take advantage of new

information system technology.

BusinessLevel Strategy And The Value Chain

Model

At the business level of strategy , the key questionis How can we compete effectively in the particular

market?

Th t i t t i t thi l l


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The most common generic strategic at this level are

1) to become the lowcost producer. 2) to

differentiate your product or service. 3) to change

the scope competition.

Leveraging Technology in the Value Chain.

At the business level the most common analytic

tool is value chain analysis. The value chain modelhighlights specific activities in the business where

competitive strategic can be applied.

The value chain model identifies specific , critical

leverage points where a firm can use informationtechnology most effectively to enhance its

competitive position.

This model view the firm as a series or chain of


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This model view the firm as a series or chain of

basic activities that add a margin of value to a firms

products or services.

This activities can be categorized as either primaryactivities or support activities.

Primary activities are most directly related to the

production and distribution of the firms productsand services that create value for the customer.

Primary activities include inbound logistics ,

operations , outbound logistics , sales and

marketing , and service. Inbound logistic include receiving and storing

materials for distribution to production.

O ti t f d i t i t fi i h d


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Operations transformed inputs into finished

products.

Outbound logistic entail storing and distributing

finished products.

Marketing and sales includes promoting and selling

the firms products.

The service activity include maintenance and repairof the firms goods and service.

Support Activity make the delivery of the primary

activities possible and consist of organizationinfrastructure (administration and Mgmt) , HR ,

technology , and procurement.

I t t t h h t d d th t f fi


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Internet tech. has extended the concept of a firms

value chain to include all the firms supplier and

business partners into a single value WEB.

A value web is a collection of independent firms

who use information technology to coordinate their

behavior so as to collectively produce a product or

service for a market. Information System Products and Services

Firms can use IS to create unique new products

and service that can be easily distinguished from

those of competitors.

Many of these IT based products and services have

been created by financial institutions.

Citibank developed ATM and bank debit cards in


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Citibank developed ATM and bank debit cards in

1977. Citibank became at one time largest bank in

the US.

Citibank ATMs were so successful that Citibank'scompetitors were forced to counterstrike with their

own ATM Systems. Citibank and any other

competitors bank continued to innovate by

providing on-line electronic banking services so

that customer can do most of their banking

transaction with home computer.

Manufacturers and retailers are starting to use IS tocreate products and service that are custom-

tailored to fit the precise specifications of individual

customers.

Dell computer Corporation sells directly to


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Dell computer Corporation sells directly to

customers using build-to-order manufacturing ,

individuals , business , and government agencies

can buy computer directly from Dell customized withexactly , the features and components they need.

System to Focus On Market Niche

Business can create new market niches byidentifying a specific target for a product or service

that it can server in a superior manner.

Through focused differentiation the firm can provide

a specialized product or service for this narrowtarget market better than competitors.

Sophisticated software tools find pattern in large

pools of data and infer rules from them that can be

used to uide decision makin .

For E g mining data about purchases at


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For E.g. mining data about purchases at

supermarkets might reveal that when potato chips

are purchased , soda is also purchased 65 percent

of the time. When there is a promotion soda ispurchased 85 percent of the time people purchase

potato chips.

This information can help firms design better sales

promotion or product displays.

The cost of acquiring a new customer has

been estimated to be five times that of

retaining an existing customer.

SCM and Efficient Customer Response Systems


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SCM and Efficient Customer Response Systems.

SCM can not lower inventory costs but can also

deliver the products or service more rapidly to the

customer.

SC can be used to create efficient customer

response system that respond to customer demand

more efficiently. An efficient customer response links directly links

consumer behavior back to distribution , production

and supply chains.


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The Business Firm

Vendors Customers

SCM

Stockless inventory

Continuous replenish

Just in time delivery

Intra firm strategy

IT Product

Data analysis

Low cost producer

Efficient CustomerResponse

Point of sale systems

Online orders

Firm Level Strategy And IT


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Firm Level Strategy And IT

In this strategy the question are, How can the

overall performance of these business units be

achieved ? And How can Information technology

contribute?

These are two answer in the literature to these

questions: synergy and core competency. The idea driving synergies is that when some unit

can be used as input to other units , or two

organization can pool markets and expertise, these

relationship can lower costs and generates profits.

E.g. recent Bank and financial firm mergers.

How can IT be used strategically here ? Like lower


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How can IT be used strategically here ? Like lower

retailing costs , increase customer access to new

financial products , speed up the process of

marketing new instruments. Enhancing Core Competencies :-

Core competencies may involve being the world

best fiber optic manufacturer , the best packagedelivery service or the best film manufacturer.

In general , a core competency relies on knowledge

that is gained over many years of experience and

first class research organization. How can IT be used to create core competencies ?

Give information about new technology and new

ch 3 is,org,mgmt

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