Chapter 2: Information Systems in Organizations

Agenda  A General Model of an Organization  The Role of Information Systems to the Value Added Process  Why Firms Seek Competitive Advantage: Porter’s Five-Force Model  How Organizations Change: Reengineering versus Continuous Improvement  What Organizational Issues Affect IS  A Change Model  Strategic Use of Information Systems  Justifying Information Systems  The Value of Information Systems  Roles, Functions, and Careers in IS

A General Model of an Organization An organization is a system. Money, manpower, materials, machines, data, information and decisions are constantly flowing through the organization. The outputs from the transformation are usually goods or services. The goods or services produced are of higher value than the inputs alone. Organizations achieve their goals through the difference in value or worth of the inputs and outputs.

The Role of Information Systems to the Value Added Process  Traditional view: Information systems are used by organizations to control and monitor value-added processes to ensure effectiveness and efficiency.  Contemporary view: Information systems are often so intimately intertwined with the underlying value-added process that are best considered part of the process itself.

Why Firms Seek Competitive Advantage: Porter’s Five-Force Model Rivalry among existing competitors Threat of new entrants Threat of substitute product and services Bargaining power of buyers Bargaining power of suppliers

How Organizations Change: Reengineering versus Continuous Improvement  Reengineering, also called process redesign, involves the radical redesign of business processes, organizational structures, information systems and values of the organization to achieve a breakthrough in business results.  Continuous Improvement, is to constantly seek ways to improve the business processes to add value to products and services.

What Organizational Issues Affect IS  Organizational Structure: There is a trend to reduce the number of management levels of the traditional structure (strategic, tactical, and operational) to the flat structure and to make Information Systems available to employees at lower levels.  Organizational Culture: The Major understandings and assumptions related to the policy and procedure for a business, a corporation, or an organization.  Organizational Change: This deals with how organizations plan for, implement and handle change. To understand and oversee changes can overcome the employee’s resistance to the new Information Systems.

A Change Model A change model identifies the phases of change and the best way to implement it:  Unfreezing is the process of removing old habits and creating a climate receptive to change  Moving is the process of learning new work methods, behaviors and systems  Refreezing involves reinforcing changes to make the new process second nature, accepted and part of the job

Strategic Use of Information Systems Companies may achieve competitive advantage through the following strategies:  Enhance existing products and services (i.e., online banking or online reservation)online bankingonline reservation  Develop new products and services (i.e., Google, iTunes)GoogleiTunes  Change the existing industry and its characteristics (i.e., E*Trade) E*Trade  Create new industries and markets (i.e., the Internet)Internet  Altering the industry structure (i.e., strategic alliance, or strategic partnership)strategic alliance strategic partnership

The Value of Information Systems  Return on Investment (ROI).  Earnings Growth  Market Share  Customer Awareness and Satisfaction  Total Cost of Ownership (TCO)

Justifying Information Systems  Tangible Savings (dollar)  Intangible Savings (impact)  Legal Requirements  Modernization  Pilot Project

Roles, Functions, and Careers in IS

Points to Remember  A General Model of an Organization  The Role of Information Systems to the Value Added Process  Why Firms Seek Competitive Advantage: Porter’s Five-Force Model  How Organizations Change: Reengineering versus Continuous Improvement  What Organizational Issues Affect IS  A Change Model  Strategic Use of Information Systems  Justifying Information Systems  The Value of Information Systems  Roles, Functions, and Careers in IS