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Information Systems in Organizations

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1 Information Systems in Organizations
Chapter 2 Chapter 2: Information Systems in Organizations This chapter looks at how information systems are used in organizations, as well as how they shaped, and are shaped, by the organization. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

2 Principles and Learning Objectives
The use of information systems to add value to the organization is strongly influenced by organizational structure, culture, and change. Identify the value-added processes in the supply chain and describe the role of information systems within them. Provide a clear definition of the terms organizational structure, culture, and change and discuss how they affect the implementation of information systems. After completing Chapter 2, you should be able to accomplish the objectives on the next 3 slides. Information systems add value to organizations, yet their use is strongly influenced by the structure and culture of the organization. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

3 Principles and Learning Objectives
Because information systems are so important, businesses need to be sure that improvements or completely new systems help lower costs, increase profits, improve service, or achieve a competitive advantage. Identify some of the strategies employed to lower costs or improve service. Define the term competitive advantage and discuss how organizations are using information systems to gain such an advantage. Discuss how organizations justify the need for information systems. Organizations must ensure that new information systems or changes to existing systems help the business compete by lowering costs, increasing profits, improving service or sustaining a competitive advantage. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

4 Principles and Learning Objectives
Information systems personnel are the key to unlocking the potential of any new or modified system. Define the types of roles, functions, and careers available in information systems. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

5 Organizations & Information Systems
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

6 MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan
Value Chain MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

7 Organizational Structure
Organizational subunits and their relationship with the overall organization Categories of organizational structure: Team Traditional Multidimensional Project Virtual MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

8 Traditional Organizational Structure
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

9 Traditional Organizational Structure
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

10 Project Organizational Structure
Centered on major products and services Temporary project teams MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

11 Project Organizational Structure
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

12 Team Organizational Structure
Temporary or permanent teams Work groups Various sizes A team organizational structure centers on work groups. These teams may be large or small. Usually, the team leader reports to a high level manager, so they are fairly independent. As in a project structure, information systems are used for horizontal communication, facilitating workgroup collaboration. As businesses become more global, teams are often not co-located. Information systems and technologies become very important in coordinating work. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

13 Multidimensional Organizational Structure
May incorporate several structures at the same time Advantage: ability to simultaneously stress both traditional corporate areas and important product lines Disadvantage: multiple lines of authority MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

14 Multidimensional Organizational Structure
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

15 Virtual Organizational Structure
Employs business units in geographically dispersed areas People may never meet face to face Can be permanent or temporary MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

16 Organizational Culture and Change
New or modified information systems are a change for employees and may change an organization’s culture. Conversely, the information system may be shaped by employees or the corporate culture. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

17 Organizational Culture
Shared understandings, values, and assumptions in an organization Influences information systems An organization’s culture includes the major understandings, values, assumptions, and procedures in a business. These are often not formally stated. Employees in a particular organization might be expected to dress in “business formal” or “business casual” or they may be expected to behave in certain ways with clients. An organization’s culture influences the development and deployment of information systems. For example, if a Monday morning sales meeting in which the Vice President of Sales reports last weeks’ numbers is part of the organization’s culture, there may be resistance to developing an information system that allows employees to view those statistics on their desktop computers. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

18 Organizational Change
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

19 MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan
Reengineering MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

20 MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan
Reengineering MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

21 Continuous Improvement
Constantly seeking ways to improve business processes Benefits: Increased customer loyalty Reduction in customer dissatisfaction Reduced opportunity for competitive inroads MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

22 Continuous Improvement vs. Reengineering
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

23 Technology Diffusion, Infusion, and Acceptance
Technology diffusion - measure of widespread use of technology Technology infusion - extent to which technology permeates a department Technology Acceptance Model (TAM) - specifies factors that can lead to higher usage of technology MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

24 Total Quality Management (TQM)
Quality: ability of a product or service to meet or exceed customer expectations TQM: approaches and techniques used to achieve quality throughout the organization The concept of quality has evolved beyond a product or service merely meeting specifications and performing its intended function to its ability to meet or surpass customer expectations. A website performs its function if it provides product information and takes your order correctly. But we expect more from a website today. We expect it to be easy to use, aesthetically pleasing and to provide features or information not provided by other websites. Drugstore.com is such an example. The website provides a variety of information and additional features, such as a quick price lookup feature. TQM is a collection of tools, techniques and processes supporting an organization-wide commitment to quality. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

25 Outsourcing and Downsizing
Outsourcing: contracting with outside professionals Downsizing: cutting the number of employees One way to stay competitive is for a business to control costs. Some organizations control costs by cutting the number of employees and outsourcing their functions. Outsourcing involves using external contractors to meet specific business needs. With the current shortage of technical personnel, many functions relating to information systems are now outsourced. For example, network management and support or writing code is often outsourced. Companies find this more cost effective than paying the ongoing high salaries and benefits required to employ technical specialists. However, contracts must be carefully written in order for outsourcing to actually lower costs. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

26 Competitive Advantage
Significant, long-term benefit to a company over its competition Ability to establish and maintain a competitive advantage is vital to the company’s success MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

27 Competitive Advantage
Five forces motivate firms to seek competitive advantage Rivalry among existing competition Threat of new entrants Threat of substitutions Buyers’ bargaining power Suppliers’ bargaining power A competitive advantage is a significant and sustainable benefit to a firm over its competition. Establishing and keeping a competitive advantage is necessary to a business’s survival. A management theorist, Michael Porter, identified 5 market forces that motivate firms to seek competitive advantage. First, the greater the rivalry among existing competitors, the greater the pressure on a firm to gain competitive advantage. The more competitive the industry, the more firms are fighting to gain a competitive advantage. The greater the threat of new entrants into an industry, the greater the pressure to gain and keep a competitive advantage. The threat of new entrants largely depends on the costs (or other barriers) to entering the industry, as well as exit costs. The lower the costs associated with entering an industry, the more new entrants will be attracted to it. For example, it requires relatively little investment to put a small business on the Internet, thus little is lost if the business fails. We see many Internet businesses come & go. The easier it is for your customers to use a substitute product or service instead of yours, the greater the pressure on your company to gain competitive advantage. This usually happens with fairly homogeneous products or services. For example, it doesn’t matter to most consumers which brand of gas they use in their cars. For many people, tea is an easy caffeine substitute when the price of coffee gets too high. Competitors in these industries would feel pressure to gain a competitive advantage, perhaps by lowering their costs so they can offer a lower price. If there are many suppliers of a certain product, say widgets, then a large buyer of widgets would have a lot of bargaining power with its suppliers. If the buyer didn’t like a particular suppliers terms, it would take its business elsewhere. On the other hand, if there are few suppliers of a product, then the suppliers have more power to control price and other terms, since buyers cannot easily find another supplier. The lower a particular firm’s power is with regard to its customers or suppliers, the more pressure that firm feels to seek and hold competitive advantage in other areas. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

28 Strategic Planning for Competitive Advantage
Change the structure of the industry Create new products or services Improve existing products or services Use information systems for strategic planning In order for a business to be competitive, its information systems strategy must be aligned with its business strategy and objectives. Porter described 3 strategies that businesses can use to gain competitive advantage in the face of the 5 forces: changing the industry structure, creating new products or services, and improving existing products or services. Recently, product differentiation and using information technology for strategic purposes have been added to these core strategies. When a firm alters the industry structure, the industry becomes more favorable to them. Developing an expensive new process or technology that improves your product or service raises the cost of entry to your industry. For example, ATMs changed the structure of the banking industry in the 1970s by increasing the investment in technology required. Entering into strategic partnerships with other firms also makes it more difficult for others to compete. Finding a market niche means obtaining real or perceived differentiation of your product or service. Using information technology for strategic purposes involves gaining competitive advantage through the use of technology. For example the use of information systems or technology to mass customize a product such as athletic shoes, jeans, or suits would involve using information technology to compete. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

29 Strategic Planning for Competitive Advantage
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

30 Performance-Based Information Systems
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

31 MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan
Productivity A measure of output achieved divided by input required Higher level of output for a given level of input means greater productivity MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

32 Return on Investments and the Value of Information Systems
Earnings growth Market share Customer awareness and satisfaction Total cost of ownership MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

33 Justifying Information Systems
Ensure that the system supports business needs Assess risks Identify benefits When planning a new information system it is necessary to consider how well the proposed project meets a business need. Additionally the risks accompanying the information systems project should be identified, as should the benefits. When considering the cost of an information system many companies now consider TCO, or the total cost of ownership,rather than just acquisition cost. The total cost of ownership includes not only the cost to acquire the technology but also accompanying administrative and support costs, training costs, and replacement costs. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

34 Justifying Information Systems
Assessment of Risk: How well are the requirements understood? To what degree does the project require pioneering effort in technology? Is there a risk of severe business repercussions if the project is poorly implemented? MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

35 Justifying Information Systems
Most IS projects fall into one of the following categories: Tangible Savings Intangible Savings Legal Requirement Modernization Pilot Project These risks must be balanced with benefits accruing from the information. These include quantifiable, or tangible benefits, such as decreased production costs, as well as intangible benefits, such as improved employee morale. A cost benefit analysis, however, is not always applicable. For example, a particular information system may be required by state or federal law, a business may implement a new system just to gain experience in a new technology, or implementing a new system or technology may be a competitive necessity. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

36 The 10 Best Places to Work for IS
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

37 Roles, Functions, and Careers in Information Systems Department
Operations - focuses on the efficiency of information Systems development - focuses on specific development projects and ongoing maintenance and review Support - provides user assistance MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

38 The Three Primary Responsibilities of Information Systems
MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

39 Typical IS Titles and Functions
Chief Information Officer (CIO) - employs the IS department’s equipment and personnel to help the organization attain its goals LAN administrators - set up and manage the network hardware, software, and security processes There are numerous job titles and job descriptions in information systems. Many businesses employ a chief information officer, a CIO, to oversee that information systems and technology needs of the entire business. The chief information officer is responsible for the corporate planning, management, and deployment of information systems. Typically the CIO is a senior manager at the vice presidential level who works in conjunction with other senior management to ensure that information systems support business goals and needs. With the growth of computer networks, administrators of both wide area and local area networks are becoming increasingly important. Network administrators manage network infrastructure, security, and use, as well as identifying and correcting problems. Similarly, with the growth of the Internet and e-commerce, the need for Internet personnel is growing. A new position of chief Internet officer has been suggested for companies with critical Internet operations. Major consulting firms such as EDS and Andersen also require skilled information systems personnel with excellent communication and project management skills in addition to technical skills. Often information systems personnel get some type of certification. Certification is achieved by passing specified skill & knowledge tests. Some of the more popular certifications include Novell’s certified network engineer, Microsoft certified systems engineer, and Cisco’s certified internetwork expert. MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

40 Typical IS Titles and Functions
Internet careers Strategists Programmers Website operators Chief Internet Officer Consulting firms MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan

41 MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan
Summary Value-added processes increase the relative worth of combined inputs on their way to becoming final outputs Business process reengineering involves the radical redesign of business processes, organizational structures, and information systems Information systems personnel typically work in an information systems department that employs a chief information officer, systems analysts, and computer programmers MSIS 110: Introduction to Computers; Instructor: S. Mathiyalakan


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