1 Information Systems, Ninth Edition Chapter 2 Information Systems in Organizations

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 Principles of Information Systems, Ninth Edition2

Principles and Learning Objectives (continued) 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 Principles of Information Systems, Ninth Edition3

Principles and Learning Objectives (continued) Cooperation between business managers and IS personnel is the key to unlocking the potential of any new or modified system –Define the types of roles, functions, and careers available in the field of information systems Principles of Information Systems, Ninth Edition4

5 Organizations and Information Systems Organization –Formal collection of people and other resources established to accomplish a set of goals –A system –Constantly uses money, people, materials, machines and other equipment, data, information, and decisions

Principles of Information Systems, Ninth Edition6 Organizations and Information Systems (continued)

Principles of Information Systems, Ninth Edition7 Organizations and Information Systems (continued) Value chain –Series (chain) of activities that includes inbound logistics and warehouse and storage Supply chain management (SCM) –Determines: What supplies are required for value chain What quantities are needed to meet customer demand How supplies should be processed into finished goods and services How shipment of supplies and products to customers should be scheduled, monitored, and controlled

Principles of Information Systems, Ninth Edition8 Organizations and Information Systems (continued)

Principles of Information Systems, Ninth Edition9 Organizations and Information Systems (continued) Customer relationship management (CRM) programs –Help companies manage all aspects of customer encounters –Can help a company collect customer data, contact customers, and educate them about new products

Organizational Structures Organizational structure –Organizational subunits and the way they relate to the overall organization Categories of organizational structure –Traditional –Project –Team –Virtual Principles of Information Systems, Ninth Edition10

Principles of Information Systems, Ninth Edition11 Traditional Organizational Structure Hierarchical structure Major department heads report to a president or top-level manager Flat organizational structure –Empowers employees at lower levels Empowerment –Gives employees and their managers more responsibility and authority to make decisions

Principles of Information Systems, Ninth Edition12 Traditional Organizational Structure (continued)

Principles of Information Systems, Ninth Edition13 Traditional Organizational Structure (continued)

Project and Team Organizational Structures Project organizational structure –Centered on major products or services –Many project teams are temporary Team organizational structure –Centered on work teams or groups –Team can be temporary or permanent, depending on tasks Principles of Information Systems, Ninth Edition14

Principles of Information Systems, Ninth Edition15 Project and Team Organizational Structures (continued)

Principles of Information Systems, Ninth Edition16 Virtual Organizational Structure and Collaborative Work Virtual organizational structure –Employs business units in geographically dispersed areas –People may never meet face to face –Allows collaborative work Managers and employees can effectively work in groups, even those composed of members from around the world

Principles of Information Systems, Ninth Edition17 Organizational Culture and Change Organizational culture –Major understandings and assumptions –Influences information systems Organizational change –How organizations plan for, implement, and handle change Change model –Represents change theories by identifying phases of change and the best way to implement them

Principles of Information Systems, Ninth Edition18 Organizational Culture and Change (continued) Unfreezing –Ceasing old habits and creating a climate that is receptive to change Moving –Learning new work methods, behaviors, and systems Refreezing –Involves reinforcing changes to make the new process second nature, accepted, and part of the job

Principles of Information Systems, Ninth Edition19 Organizational Culture and Change (continued)

Principles of Information Systems, Ninth Edition20 Reengineering and Continuous Improvement Reengineering –Process redesign –Radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results Continuous improvement –Constantly seeking ways to improve business processes

Principles of Information Systems, Ninth Edition21 Reengineering and Continuous Improvement (continued)

Principles of Information Systems, Ninth Edition22 Reengineering and Continuous Improvement (continued)

Principles of Information Systems, Ninth Edition23 Reengineering and Continuous Improvement (continued)

Principles of Information Systems, Ninth Edition24 User Satisfaction and Technology Acceptance Technology acceptance model (TAM) –Specifies the factors that can lead to better attitudes about the information system Technology diffusion –Measure of how widely technology is spread throughout an organization Technology infusion –Extent to which technology permeates a department

Principles of Information Systems, Ninth Edition25 Quality Ability of a product or service to meet or exceed customer expectations Techniques used to ensure quality –Total quality management –Six Sigma

Principles of Information Systems, Ninth Edition26 Outsourcing, On-Demand Computing, and Downsizing Outsourcing –Contracting with outside professional services On-demand computing –Contracting for computer resources to rapidly respond to an organization’s varying workflow –Also called on-demand business or utility computing Downsizing –Reducing number of employees

Principles of Information Systems, Ninth Edition27 Competitive Advantage Significant and (ideally) long-term benefit to a company over its competition Ability to establish and maintain competitive advantage is vital to the company’s success

Factors That Lead Firms to Seek Competitive Advantage Rivalry among existing competitors Threat of new entrants Threat of substitute products and services Bargaining power of customers and suppliers Principles of Information Systems, Ninth Edition28

Strategic Planning for Competitive Advantage Cost leadership Differentiation Niche strategy Altering the industry structure Principles of Information Systems, Ninth Edition29

Strategic Planning for Competitive Advantage (continued) Creating new products and services Improving existing product lines and service Other strategies –Growth in sales –First to market –Customizing products and services –Hiring the best people Principles of Information Systems, Ninth Edition30

Principles of Information Systems, Ninth Edition31 Performance-Based Information Systems Major stages in the use of information systems –Cost reduction and productivity –Competitive advantage –Performance-based management

Principles of Information Systems, Ninth Edition32 Performance-Based Information Systems (continued)

Principles of Information Systems, Ninth Edition33 Productivity A measure of output achieved divided by input required Higher level of output for a given level of input means greater productivity Productivity = (Output / Input) × 100%

Principles of Information Systems, Ninth Edition34 Return on Investment and the Value of Information Systems Earnings growth Market share and speed to Market Customer awareness and satisfaction Total cost of ownership

Principles of Information Systems, Ninth Edition35 Risk Information systems can sometimes be costly failures Costs of development and implementation can be greater than the returns from the new system

Principles of Information Systems, Ninth Edition36 Careers in Information Systems Degree programs –Degrees in information systems –Business degrees with a global or international orientation Students are increasingly completing business degrees with a global or international orientation Opportunities in information systems are not confined to single countries

Principles of Information Systems, Ninth Edition37 Roles, Functions, and Careers in IS Primary responsibilities in information systems –Operations –Systems development –Support –Information service units

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 Principles of Information Systems, Ninth Edition38

Principles of Information Systems, Ninth Edition39 Typical IS Titles and Functions (continued) Internet careers –Internet strategists and administrators –Internet systems developers –Internet programmers –Internet or Web site operators Certification –Process for testing skills and knowledge resulting in an endorsement by the certifying authority

Principles of Information Systems, Ninth Edition40 Other IS Careers New and exciting careers have developed in security and fraud detection and prevention Other IS career opportunities include being employed by technology companies, such as: –Microsoft ( Google ( Dell ( and many others

Principles of Information Systems, Ninth Edition41 Finding a Job in IS Developing an online résumé can be critical to finding a good job Job search approaches –On campus visits –Referrals from professors, friends, and family members –The Internet Online job sites Company Web sites Social networking sites Blogs

Summary Organizations –Systems with inputs, transformation mechanisms, and outputs Categories of organizational structure –Traditional, project, team, and virtual Organizational culture –Major understandings and assumptions Reengineering –Radical redesign of business processes, organizational structures, information systems, and values of the organization Principles of Information Systems, Ninth Edition42

Summary (continued) Continuous improvement –Constantly seeking ways to improve business processes Outsourcing –Contracting with outside professional services Downsizing –Reducing number of employees Competitive advantage –Significant, and (ideally) long-term benefit to a company over its competition Principles of Information Systems, Ninth Edition43

Summary (continued) Performance-based information systems –Consider both strategic advantage and costs Productivity –Measure of output achieved divided by input required Primary responsibilities in information systems –Operations, systems development, and support Typical IS titles –Chief Information Officer (CIO), LAN administrators, and Internet strategists Principles of Information Systems, Ninth Edition44