Chapter 2Information Systems Defined

Basic definitions and foundational Information Systems concepts

Chapter 2

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Course Roadmap

• Part I: Foundations– Chapter 1: Introduction– Chapter 2: Information Systems Defined– Chapter 3: Organizational Information Systems and Their

Impact

• Part II: Competing in the Internet Age• Part III: The Strategic use of Information Systems• Part IV: Getting IT Done

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Learning Objectives

1. The definition of information system (IS) and information technology (IT), and the difference between the two concepts.

2. The definition of information system success and information system failure.3. The principal reasons why modern firms create and deploy information systems.4. The influence of the firm’s context and the external environment in which it is

embedded on organizational information systems.5. The four components that make up an information system and the manner in

which they interact.6. How to design successful information systems and how to troubleshoot

problematic information systems implementations.

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Introduction

• Organizations around the world continue to spend significant amounts of money on IT, lured by its promise to yield efficiencies and improved competitive positioning

• It is critical that firms are able to wring value from these investments

• Having a narrow focus on your IT investments alone is problematic, but dangerous

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Information System: Definition

Formal, socio-technical, organizational systems designed to collect, process, store, and

distribute information

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Formal vs. Informal

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IS ≠ IT

• Hilton Hotels– 1919: Opened – 1963: First implementation

of computers in hospitality (New York Hilton)

Did they have an IS in 1907?

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IS ≠ IT

• Ricasoli Winery – 1141: Opened – Fact: oldest family

owned winery in Italy, producing wine in the heart of the Chianti region since obtaining ownership of the Brolio Castle

Did they have an I/S in 1907?

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Four Components of an Information System

• Technology• Process• People• Structure

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Value to Managers• A solid understanding of the characteristics of each

of the four components • An appreciation of how they relate and interact with

one another

• Appropriate business decisions as a general or functional manager

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Component #1: Information Technology

• Hardware Devices– Computer, other devices

• Software Tools– Microsoft Office

• Telecommunication Devices – Internet

• This component is a cornerstone of any modern IS, enabling and constraining action through rules of operation that stem from its design

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Don’t Forget!

• The design of IT enables and constrains the behavior of the Information System

Software, particularly a custom developed application, is an

opinion of how data should be represented, organized, and

manipulated

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Component #2: Process

• The series of steps necessary to complete a business activity

• Examples:– Check-in at a hotel – Credit approval at a bank– Paying bills online

• There are multiple ways to perform an activity: Every process is designed to be efficient & effective

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Don’t Forget!

Official business process

Informal process

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Comparison

Business Process• check the inventory and identify

the needed items• call individual suppliers for quotes

and delivery dates• compare the various quotes• select one or more suppliers for

each of the needed items based on the terms of the agreement

• call these suppliers and place the orders

• receive the goods upon delivery, checking the accuracy and quality of the shipped items

• pay the suppliers.

Informal ProcessRestocking the inventory

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Component #3:People

• Those individuals or groups directly involved in the information system– End-users– Managers

• Addressing their needs are a critical concern in designing and implementing a new Information System

• Failure to do will result in the failure of your information systems

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Component #4: Structure

• The organizational structure component (structure for short) encompasses: – The organizational design

• Hierarchy, decentralized, loose coupling – The reporting configuration

• Functional, divisional, matrix – The organizational relationships

• Communication and reward mechanisms• Culture

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Systemic Effects: Components Working Together

• The four components of an Information System are Interdependent

• Changes in on component may affect all others

• Success is based on the proper interaction of IT with the other components

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The Purpose of Information Systems

• Fulfilling organizational processing needs• Improve efficiency and effectiveness while

reducing cost• Achieve a (specified) Information System goal.

– Example: Movie theatres– Goal: By offering customers the ability to purchase

tickets online will improve the effectiveness of the theatre by reducing the number of people needed to the ticket counter

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Information Systems Success

• Has the system delivered expected results?

• What are some of the unintended results?– Positive– Negative

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IS Success is often Elusive

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Don’t Forget!

• Every organization is unique• Even fierce competitors often have different:

– Firm strategy: The manner in which the organization intends to achieve its objectives.

– Firm culture: The collection of beliefs, expectations, and values shared by the members of an organization.

– Infrastructure: The technological backbone of the firm. It constrains and enables opportunities for future information systems projects.

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External Environment

• External environment: – The legal and regulatory context– The competitive landscape– The general business and social trends

surrounding the organization

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Bringing it all Together: Information Systems in Context

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Information Systems and Organizational Change

First Order Change:

Automate

Second Order

Change: Informate

Third Order Change:

Transform

First Order Change: Automate

• First order change only affects the technical subsystem

• Thus, it is:– Easiest to envision– Easiest to justify– Easiest to manage.

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Second Order Change: Informate

• Second order change affects the people component

• It thus provides more of a challenge to implementation

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Third Order Change: Transform

• Third order change affects organizational structures

• It seeks to transform how the organization operates

• It requires significant managerial and executives’ involvement

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Culture & IS

• Culture: the unwritten rules of the social game that are shared by the members of some group

• National Culture• Organizational Culture

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Theories of Culture

• Hall’s Low-Context, High-Context Approach• Cultural Cluster Approach• Hofstede’s Five Dimensions

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Hall’s Low-Context, High-Context Approach

• Low-context: – words used by speaker explicitly convey speaker’s

message

• High-context: – the context in which a conversation occurs is just as

important as the words spoken; – cultural clues are critical to communication

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High- and Low-Context Cultures

Ger

man

Sw

iss

Sca

ndin

avia

n

U.S

./ C

anad

ian

Brit

ain

Ital

ian

Spa

nish

Gre

ek

Ara

b

Vie

tnam

ese

Japa

nese

Kor

ean

Chi

nese

LowContext

HighContext

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A Synthesis of Country Clusters

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Hofstede’s Five Dimensions• Social Orientation• Power Orientation• Uncertainty Orientation• Goal Orientation• Time Orientation

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Geert Hofstede Cultural Dimensions

• Prof. Geert Hofstede conducted comprehensive study of how values in the workplace are influenced by culture.

• Geert Hofstede analyzed a large data base of employee values scores collected by IBM between 1967 and 1973 covering more than 70 countries

• Subsequent studies validating the earlier results have included – commercial airline pilots and students in 23 countries, – civil service managers in 14 counties, – 'up-market' consumers in 15 countries and – elites' in 19 countries.

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• Hofstede developed a model that identifies four primary Dimensions to assist in differentiating cultures: – Power Distance - PDI, – Individualism - IDV, – Masculinity - MAS, and – Uncertainty Avoidance - UAI.

• Fifth Dimension added after conducting an additional international study with a survey instrument developed with Chinese employees and managers. – Long-Term Orientation - LTO – applied to 23 countries– based on Confucian dynamism.

Geert Hofstede Cultural Dimensions

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Hofstede Overview

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PDI

• PDI (Power Distance Index) - the PDI score relates to the degree of equality or inequality between people in a country's society.

• High PDI score indicates that inequalities of power and wealth exist in a country

• Low PDI score countries there is more social equality.

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IDV

• IDV (Individualism) - the individualism score focuses on the degree to which a culture values and reinforces the importance of the individual as opposed to the group.

• High PDI scoring country will view individuality and individual rights as critical.

• Low PDI scoring countries will value the group, i.e. family, tribe, etc.

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MAS

• MAS (Masculinity) - masculinity focuses on the degree to which a culture reinforces the traditional role of males vs females.

• High MAS scoring country will have a more acute degree of gender differentiation

• Low MAS scoring countries there is less differentiation and discrimination between genders.

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UAI

• UAI (Uncertainty Avoidance) - uncertainty avoidance looks at the level of tolerance for uncertainty and ambiguity within a culture.

• High UAI score will have a low tolerance for uncertainty and ambiguity. A more rule-oriented society that institutes laws, rules, regulations.

• Low UAI scoring country is less concerned about ambiguity and uncertainty and is less rule-oriented, more ready to accept change, consider new ideas and take more and greater risks.

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• These five Hofstede Dimensions correlate with other country, cultural, and religious paradigms.

• http://www.kwintessential.co.uk/intercultural/dimensions.html• http://geert-hofstede.com/countries.html • http://www.kwintessential.co.uk/intercultural/management/guide.html

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Geert Hofstede Cultural Dimensions

High Context/Low Context VS

Hofstede Measures

PDI IDV MAS UAI1 German 35 65 65 652 Swiss 34 68 70 603 Scandinavian 31 70 5 304 U.S./ Canadian 40 91 62 465 Britain 35 89 65 35 6 Italian 50 78 70 787 Spanish 57 52 42 858 Greek 60 35 59 1109 Arab 60 42 43 60

10 Vietnamese 11 Japanese 54 45 90 9012 Korean 60 18 39 8513 Chinese 80 20 50 30

Low Context

High Context44

Organizational Culture

• Firms have a culture• They assume an organization culture that fits

with an individualistic, egalitarian, uncertainty tolerant mindset

• There has to be a fit between organizational culture and the IS design in order for the IS to be effective in the firm

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SUMMARY

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Implications

• IT should NOT be the start of your Information System design process– Strategy may be inspired by IT but– IT selection is a point of arrival not departure

• Never forget Systemic Effects– components of an IS mutually influence one

another • Anticipate the Ripples

– Successful introduction a of new IS can only occur of your team can anticipate & manage the ripples

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Implications

• Design and use of an IS is iterative – cyclical evaluation of individual IS components – assessment of how different organizational

systems work together to support the business• Optimize the Information System

– as a whole, not the components individually• Organizations are dynamic

– They need to be re-evaluate often

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The Recap• Information systems are designed and built with the

objective of improving the firm’s efficiency and effectiveness by fulfilling its information processing needs.

• Success can only occur when the systems that are used achieves their intended goals

• Information systems exist in an organizational context, characterized by the firm strategy, culture, and IT infrastructure.

• Every organization is subject to the influences of a ever-changing external environment, including regulatory requirements, social and business trends, and competitive pressures.

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The Recap• Information systems are subject to systemic

effects• You will need to overcome these effects us in

order to ensure that your information system achieves its goals

• There is a direct link between organizational change and the introduction of new information technologies.

• Any change requires sponsorship and commitment as the result of the change in technology

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What We Learned

1. The definition of information system (IS) and information technology (IT) and the difference between the two.

2. The definition of information system success and information system failure.

3. The principal reasons why modern firms create and deploy information systems.

4. The influence of the firm’s context and the external environment in which it is embedded on organizational information systems.

5. The four components that make up an information system and the manner in which they interact.

6. How to design successful information systems and how to troubleshoot problematic information systems implementations.

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