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33

INFORMATION INFORMATION SYSTEMS, SYSTEMS,

ORGANIZATIONS, ORGANIZATIONS, MANAGEMENT, MANAGEMENT, AND STRATEGYAND STRATEGY

Chapter

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Four types of Information SystemsFour types of Information Systems

• OperationalOperational• Decision SupportDecision Support• ManagerialManagerial• ExecutiveExecutive• Decision-making becomes more Decision-making becomes more

complex the more executive the levelcomplex the more executive the level• Operational systems have been around a Operational systems have been around a

long time and tend to have good ROI’slong time and tend to have good ROI’s

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Strategic Information SystemsStrategic Information Systems

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Strategic Information SystemStrategic Information System

• Technology used to gain an edge over Technology used to gain an edge over an organization’s competitionan organization’s competition

• Can be used at all levels of an Can be used at all levels of an organization or just a feworganization or just a few

• Makes a differenceMakes a difference• Profoundly alters the way an Profoundly alters the way an

organization does businessorganization does business• Sustained strategic, competitive Sustained strategic, competitive

advantageadvantage

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Examples of Strategic Information SystemsExamples of Strategic Information Systems

• American AirlinesAmerican Airlines• Fed ExFed Ex• CitibankCitibank• Wal-MartWal-Mart• Abitibi Abitibi

ConsolidatedConsolidated• Simonton Simonton

Windows (SBR)Windows (SBR)

• USA TodayUSA Today• BenettonBenetton• SheetzSheetz• PNC CorporationPNC Corporation• PriceWaterhouse PriceWaterhouse

CoopersCoopers• Baxter HealthcareBaxter Healthcare

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• What do managers need to know about organizations What do managers need to know about organizations in order to build and use information systems in order to build and use information systems successfully?successfully?

• What impact do information systems have on What impact do information systems have on organizations?organizations?

• How do information systems support the activities of How do information systems support the activities of managers in organizations?managers in organizations?

• How can businesses use information systems for How can businesses use information systems for competitive advantage?competitive advantage?

• Why is it so difficult to build successful information Why is it so difficult to build successful information systems, including systems that promote competitive systems, including systems that promote competitive advantage?advantage?

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

OBJECTIVES

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ORGANIZATIONS AND INFORMATION SYSTEMS

Figure 3-1

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

MEDIATING FACTORS:MEDIATING FACTORS: Environment Environment Culture CultureStructure Structure Standard Procedures Standard Procedures Politics Politics Management Management Decisions ChanceDecisions Chance

ORGANIZATIONSORGANIZATIONS INFORMATION INFORMATION TECHNOLOGYTECHNOLOGY

The Two-Way Relationship Between Organizations and Information Technology

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IT and the OrganizationIT and the Organization

• IT and Strategic AlignmentIT and Strategic Alignment

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Organization:Organization:• Stable, formal structureStable, formal structure• Takes resources from environment and Takes resources from environment and

processes them to produce outputsprocesses them to produce outputs

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

ORGANIZATIONS AND INFORMATION SYSTEMS

Common FeaturesCommon Features•Formal structureFormal structure•SOPsSOPs•PoliticsPolitics•CultureCulture

Unique FeaturesUnique Features•Organizational TypeOrganizational Type•EnvironmentsEnvironments•GoalsGoals•PowerPower•ConstituenciesConstituencies•FunctionsFunctions•LeadershipLeadership

•TasksTasks•TechnologyTechnology•Business processesBusiness processes

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THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Information systems department:Information systems department:

• Formal organizational unitFormal organizational unit

• Responsible for information systems in Responsible for information systems in the organizationthe organization

Information Technology Infrastructure and Information Technology Services

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Figure 3-5

THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

Information Technology Services

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Economic theories: Economic theories: Information technology is a Information technology is a factor of production, like capital and laborfactor of production, like capital and labor– Transaction cost theory: Firms can conduct

marketplace transactions internally more cheaply to grow larger

– Agency theory: Firm is nexus of contracts among self-interested parties requiring supervision

Behavioral theories:Behavioral theories: – Information technology could change hierarchy

of decision making– Lower cost of information acquisition– Broadens the distribution of information– Virtual organizations

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

THE CHANGING ROLE OF INFORMATION SYSTEMS IN ORGANIZATIONS

How Information Systems Affect Organizations

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

The Role of Managers in OrganizationsClassical model of management:Classical model of management:

– Traditional description of management– Focuses on formal functions: plan, organize, coordinate,

decide, control

Behavioral model of management: Behavioral model of management: Describes management based on observations of managers on the job– Managerial Roles:

• Interpersonal: Interpersonal: Managers act as figureheads and Managers act as figureheads and leaders leaders

• Informational: Informational: Managers receive and disseminate Managers receive and disseminate critical information, nerve centerscritical information, nerve centers

• Decisional: Decisional: Managers initiate activities, allocate Managers initiate activities, allocate resources, and negotiate conflictsresources, and negotiate conflicts

MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS

How Information Systems Affect Managers

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

TPSOAS MIS

KWS

DSS

ESS

Organizational LevelTYPE OFTYPE OFDECISIONDECISION OPERATIONAL KNOWLEDGE MANAGEMENT STRATEGIC

STRUCTURED ACCOUNTS RECEIVABLE

ELECTRONIC PRODUCTIONSCHEDULING COST OVERRUNS

SEMI- BUDGETSTRUCTURED PREPARATION

PROJECTSCHEDULING

FACILITYLOCATION

UNSTRUCTURED PRODUCT DESIGN NEW PRODUCTSNEW MARKETS

Figure 3-9

MANAGERS, DECISION MAKING, AND INFORMATION SYSTEMS

Different Kinds of Information Systems

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INFORMATION SYSTEMS AND BUSINESS STRATEGY

• Computer system at any level of an Computer system at any level of an organization organization

• Changes goals, operations, products, Changes goals, operations, products, services, or environmental relationshipsservices, or environmental relationships

• Helps organization gain a competitive Helps organization gain a competitive advantageadvantage

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

What is Strategic Information System

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INFORMATION SYSTEMS AND BUSINESS STRATEGY

Value Chain Model:Value Chain Model:

• Highlights the primary or support Highlights the primary or support activities adding a margin of value to activities adding a margin of value to products or servicesproducts or services

• Helps achieve a competitive advantageHelps achieve a competitive advantage

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Business Level Strategy and the Value Chain Model

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INFORMATION SYSTEMS AND BUSINESS STRATEGY

Primary Activities:Primary Activities: • Directly related to the production and Directly related to the production and

distribution of a firm’s products or servicesdistribution of a firm’s products or services

Support Activities:Support Activities:• Make the delivery of primary activities Make the delivery of primary activities

possiblepossible• Consist of the organization’s infrastructure, Consist of the organization’s infrastructure,

human resources, technology, and human resources, technology, and procurementprocurement

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Business Level Strategy and the Value Chain Model

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

INFORMATION SYSTEMS AND BUSINESS STRATEGY

Firm Value Chain

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

INFORMATION SYSTEMS AND BUSINESS STRATEGY

The Value System Model is used to:The Value System Model is used to:

• Evaluate a company’s process and Evaluate a company’s process and competencies.competencies.

• Investigate whether adding IT Investigate whether adding IT supports the supports the value chain. value chain.

• Enable managers to assess the Enable managers to assess the information information intensity and the role intensity and the role of IT.of IT.

3.27© 2005 by Prentice Hall With additions by Kleist

INFORMATION SYSTEMS AND BUSINESS STRATEGY

Core Competency:Core Competency:

• Activity at which a firm excels as a world-Activity at which a firm excels as a world-class leaderclass leader

• Information system encouraging the Information system encouraging the sharing of knowledge across business sharing of knowledge across business units enhances competencyunits enhances competency

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Firm-Level Strategy and Information Technology

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INFORMATION SYSTEMS AND BUSINESS STRATEGY

Information partnership:Information partnership:• Cooperative alliance formed between two or more Cooperative alliance formed between two or more

corporations for sharing information to gain strategic corporations for sharing information to gain strategic advantageadvantage

• Help firms gain access to new customers, creating new Help firms gain access to new customers, creating new opportunities for cross-selling and targeting productsopportunities for cross-selling and targeting products

The competitive forces model:The competitive forces model:• Describes the interaction of external influences, specifically Describes the interaction of external influences, specifically

threats and opportunities, affecting an organization’s threats and opportunities, affecting an organization’s strategy and ability to competestrategy and ability to compete

Network Economics:Network Economics:• Model of strategic systems at the industry level Model of strategic systems at the industry level • Based on the concept of a network Based on the concept of a network • Adding another participant entails zero marginal costs but Adding another participant entails zero marginal costs but

can create much larger marginal gaincan create much larger marginal gain

Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Industry-Level Strategy and Information Systems

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Essentials of Management Information SystemsEssentials of Management Information SystemsChapter 3 Information Systems , Organizations, Management, and StrategyChapter 3 Information Systems , Organizations, Management, and Strategy

Porter’s Model for Wal-Mart (Callon, 1996)

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Some Problems from IT for Competitive Some Problems from IT for Competitive AdvantageAdvantage

• The productivity paradoxThe productivity paradox• Tangible vs. intangible benefits from ITTangible vs. intangible benefits from IT• Future cash flows analysisFuture cash flows analysis• Unique vs. staying even with Unique vs. staying even with

competitioncompetition• Value from simple automation projectsValue from simple automation projects• Value from highly risky, but strategic IT Value from highly risky, but strategic IT

projectsprojects• Risk vs. return issuesRisk vs. return issues

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Technology Life Cycle Technology Life Cycle (Little, 1981)(Little, 1981)

• Emerging techno- Not demonstrated Emerging techno- Not demonstrated potentialpotential

• Packing techno- Has demonstrated Packing techno- Has demonstrated potentialpotential

• Key techno- Embedded, major impact, Key techno- Embedded, major impact, proprietaryproprietary

• Base techno- Minor impactBase techno- Minor impact• Can a technology cause innovation? Can a technology cause innovation?

Leadership?Leadership?

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