Bahçeşehir University Social Science Institutions Ph D. Business Program Management & Organization

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Bahçeşehir UniversitySocial Science InstitutionsPh D. Business ProgramManagement & OrganizationOrganizational TheoryProf. Dr. Atilla DİCLE

Information Technoloy and ControlPrep. by: İlhan ÇİFTÇİ

Bahçeşehir University - Organizational Theory

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Information Technology Necessity

Why Organizations use Computer?

Why computer – based operational activites are important?

Spend more money for computirazed System is logical?

What is the meaning of CRM, ERP, SCH, etc?

Quick entry

Easily gather huge amounts of information

Easily taken a report

Easily Follow up organizational activities

Easily follow the financial perforrmance

Easily search for new information

.....

Some of the Advantages


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3- Adding Strategic Values

Internal Coordination External Relatioships

Intranets Intagred EnterpriseEnterprise resources E - businessPlanningKnowledge management Customer

RelationshipManagemet

2 – Decision Making and

Control Management

information systems Decision support

systems Executive

information systems Management control systems

Balanced scorecard1 – Operations

Transaction processing systemData warehousingData mining

Management Level

System Complexity

Direction of Information System

Evolution

Evaluation of Organizational Applications of IT

Low High


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Information Technology Evolution

Initially, IT systems is organizations were applied to operations, Current operations could be more performed more efficiently with the use of computer technolgy. The

goal was reduce to labor costs by having computers take over some tasks. These systems became known as transaction processing systems (TPS)

A TPS collects data from transactions such as sales, purchases from suppliers and inventory

changes and stores them in database.


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Information Technology EvolutionData Warehousing – Data Mining

Data warehousing

The use of huge databases that

combine all of the company’s data and allow users to access

the data directly, create reports, and obtain reponses to what – if questions.

Data mining:

Business intelligence searching out and analyzing data from multiple sources across the enterprise, and sometimes from outside

sources as well to identify patterns and relationships that might be significant.


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Information for Decision Making and Control

Through the application of more sophisticated computer – based systems, managers have

tools to improve the performance of departments

and the organization as a whole.

These applications use information stored in corporate

datebases to help managers control the organization and

make important decision.


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Information system for Managerial Control and Decision Making

Corporate Databases

Management Information System

Feedback Control Systems

Information for Decision Making

Information for control

Reporting Systems Decision Support

Systems

Executive Information

System

Management Control Systems

Balanced Scorecard


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Organizational Decision Making Systems

Computer - based system that provides information and support for managerial decision making.

It is supported by organization’s transaction processing systems and by organizational and external databases.

Management Information System (MIS)


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Organizational Decision Making Systems

Most common form of MIS.

It provides mid level managers with reports that summarize data of MIS, provides mid level managers with reports that summarize data and support day to day decision making

Information Reporting System (IRS)


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Higher level application that facilitates decision making at the highest levels of management

These systems are typically based on software that can convert large amounts of complex data into pertinet, information and provide that information to top managers in a timely fashion.

Organizational Decision Making SystemsExecutive Information System (EIS)


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DSS provides spesific benefits to managers at all levels of the organization. These interactive, computer based systems rely on decision models and integrated databases.

Using decision support software, users can pose a series of what – if questions to test possible alternatives.

Organizational Decision Making SystemsDecision Support System (DSS)


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The cycle of control includes setting strategic goals for departments or the organization as whole.

FCS helps managers make needed adjustments in work activities, standarts of performance, or goals to help the organization be successful.

Information for ControlFeedback Control System (FCS)

1. Set Strategic Goal

2. Establish metrics and standarts of performance

3. Compare metrics of

performance to standarts

4. Take a corrective action

as needed


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MCS are broadly defined as the formmal routines, reports, and procedures that use information to maintain or alter patterns in organization activities.

These control systems include the formalized information – based activities for planning, budgeting, performance evaluation, resource allocation and employee rewards. Targets are set in advance, outcomes compared to targets, and variance reported to managers for corrective action.

Subsystem Content and Frequency

Budget, financial reports, statistical reports

Financial, resource expenditures, profit and loss; monthly nonfin. Outputs; weekly or monthly , often computer based

Reward systems Evaluation of managers based on deparment goals and performance, set rewards; yearly

Quality control systems

Participation, benchmarking guidelines, Six Sigma goals; continuous

Information for ControlManagement Control Systems (MCS)


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Information for ControlManagement Control Systems (MCS)

1- BudgetBudget is used primarily to allocate resource inputs.Managers use the budget for planning the future and reducing uncertanity about the availability of human and material resources needed to perform department tasks.

2- Computer Based Statistical ReportIt is used for control outputs.It contains data about output volume and quality and other indicators that provide feedback to middle management about departmental results.

3- Reward System is directed at the production

process Quality control systems specify

standarts for employee participation, teamwork and

problem solving

4- Quality Control Systems is directed at the production processReward systems provide şncentives to

meet goals and can heşp guide and correct employee behavior

Managers also use direct supervision to keep deparmentak work activities

within desired limits.


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It contains 4 major perspective

Financial Performance

Customer Service Internal Business

Process Organization’s

capacity for learning and growth

Managers identify KPIs’ the

organization will track.

Balanced ScorecardInformation for Control

In the past, most organizations relied largely on financial accounting measures as the primary basis

for measuring organizational performance, but today’s companies realize that a balanced view of both financial and operational measures is needed

for successful organizational control.

The balanced scorecard is a comphrehensive management control system that bakances

traditional financial measures with operational measures relating to a company’s critical success

factors.


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1- Financial Performance: Concern that the organization’s activities contribute to improving short – and long term financial performance.It includes traditional measures such as net income and return on investment.,

2-Customer service: Measure such things as how customers view the organization, as well as customer retention and satisfaction.

3-Business Process: Focus on production and operating statistics, such as order fulfilment or cost per order.

4-Organizations: Potential for learning and growth, focusing on how well resources and human capital are being managed for the company’s future.

Information for ControlBalanced Scorecard


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Information for ControlBalanced Scorecard

Managers can use the scorecard to set goals, allocate resources, plan budgets, and determine rewards. It is not sufficient to use this system for small entities and also, It

has become the core management control system for many organizations today, including


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Adding Strategic Value, Strenghening Internal Coordination

Knowledge Managemet

System

ERP

Intranet

Three Primary IT tools for internal coordination are represented the figure.


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Networking, which links people and deparments within a particular building or across corporate offices, enabiling them to share information and cooperate on projects, has become an important strategic tools for many companies.

Intranets can improve internal communications and unlock hidden information.

They enable employees to keep in touch with what’s going on around the organization, quickly and easily find information they need, share ideas, and work on projecrs collaboratively.

Adding Strategic Value, Strenghening Internal Coordination Intranet


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ERP system can serve as the backbone for an entire organization by integrating and optimizing all the various business process across the entire firm.

The key is that ERP weaves all of the systems together so people can see the big picture and act quickly, helping the organization be smarter and more effective.


Enterprise Resource Planning (ERP)

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Order Received

Transferred to Production Side Delivery

Accounts Rec. Master Data

Customer Feedback Model

The ERP system replicates organizational process in

software, guides employees through the process step – by – step, and automates as many of

them as possible

Enterprise Resource Planning (ERP)


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Knowledge management is a new way to think about organizing and sharing an organization’s intellectual and creative resources.

It refers to the efforts to systematically find, organize, and make avaliable a company’s intellectual capital and to foster a culture of continuous learning and knowledge sharing so that organizational activities bbuild on what is already known.

The company’s intellectual capital is the sum of its knowledge, experince, understanding, relationships, processes, innovations, and discoveries


Knowledge Management


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ExplicitProvide high – quality, reliable, and fast information systems for access of

codified, reusable knowledge

People – to – documents approachDevelop an electronic document system that codifies, stores, disseminates,and allows reuse of knowledge

Invest heavily information technology, with a goal of connecting people with reusable, codified knowledge

TacitChannel individual expertise to provide creative advice on strategic problems

Person – to – person approachDevelop networks for linking people so taht tacit knowledge can be shared.

Invest moderately in information technology with a goal of facilitating conversations and the personal exchange of tacit knowledge




Stratagy.

Information Tec. App.

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Supply Chain Management

Intagrated Enterprise..

Customer Relationship Management (CRM)

E –Business Organization Design

Adding Strategic Value, Strenghening External Relationship

External Applications of IT for strengthening relationships with customers, suppliers, and partners include systems

below:


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Extranets play a critical role in today’s integrated enterprise. The integrated enterprise is an organization that uses advanced IT so enable close coordination within the company as well as with suppliers, customers, and partners.

An important aspect of the integrated enterprise is supply chain management, which means managing the sequence of suppliers and purchases covering all stages of processing from obtaining raw materials to distributing finished goods to consumers.


Intagrated Enterprise


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CRM system helps coodinates sales, marketing, and costumer service departments so that all are smoothly working together.AdvantegesProvide Better Customer Service with a customer master dataDiscover New CustomersHelp Sales Staff Close Deals FasterMake Call Centers More EfficientSo forh...


Customer Relationship Management (CRM)


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E – Business can be defined as any business taht takes places by digital processes over a computer network rather than in a physical space.

Most commonly, e –business refers to electornic linkages over the Internet with customers, partners, suppliers, employess or other key constituents.

In the early days, of e – business many organizaitions set up dot – com initiatives with little understanding of how those activities could and should be integrated with their overall business. As the reality of e –business has evolved, companies have gained valuable lessons in how to merge online and offline activities.


E – Business Organization Design


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An In - house division offers tight integration between the Internet operation and the organization’s traditional operation. The organization creates separate units within the company that functions within the structure and guidance of the traditional organization.


E – Business Organization Design – Inhouse Division


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E – Business Organization Design – Spin - Off

SeparateE -BusinessCompany

To give the internet operations greater organizational autonomy, felexibility, and focus, some organizations choose to create a separate spin – off company.Exp.Barnes & NobleWhirpool (Brandwise.com)Magic Tricks


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E – Business Organization Design – Partnership

Partnerships, whether through joint ventures or alliances, offer a middle ground, enabling organizations to attain some of the advantages and overcome some of the disadvantes of the purely in –house or spin off options


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3- Adding Strategic Values

Internal Coordination External Relatioships

Intranets Intagred EnterpriseEnterprise resources E - businessPlanningKnowledge management Customer

RelationshipManagemet

2 – Decision Making and

Control Management

information systems Decision support

systems Executive

information systems Management control systems

Balanced scorecard1 – Operations

Transaction processing systemData warehousingData mining

Management Level

System Complexity

Direction of Information System

Evolution

Summary

Low High


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Questions and Explanations

Documents

Bahçeşehir University Social Science Institutions Ph D. Business Program Management & Organization