The Evolving Role of Information Systems

and Technology in Organizations:

Introduction
IT is an accepted and expected tool for
supporting business
IS/IT source of Competitive Advantage

Influencing Factors
The pace and effectiveness of progress
using IS/IT as well as business benefits
obtained, are influenced by a number of
strategically important forces
The capabilities of the technology
The economics of deploying the technology
The applications that are feasible
The skill and abilities available to develop and use
the applications (in-house, outsource)
The pressures on the particular organization or its
industry to improve performance
3

IS and IT: the same or different?

IS IT;
IT (information technology) or ICT
Refers to technology (HW, SW, telcom n/works);
Tangible (eg servers, PCs, routers, cables), and
Intangible (eg software)

IS (information systems)
Broader, has existed long before IT, may even not
include technology
People and organizations use IT to gather, process,
store, use and disseminate information
4

A Definition of IS (Davis, 1999)

Explained in terms of its various elements and in terms
of the various organizational context :
A system in the organization that delivers information and
communication services needed by the organization;
Consists of IT infrastructure, applications systems, and
personnel that employ IT to deliver information and
communication services for transaction processing/operations
and admin/mgmt of an organization; the system utilizes
computers & communication HW/SW, manual procedures, and
internal and external repositories of data; the systems apply a
combination of automation, human actions and user-machine
interactions;

Deals with the nature of Data, Information and

Knowledge
5

Data, Information and Knowledge

Data:
representations of events, people, resources or
conditions
Information:
result of processing data;
Knowledge:
information organized and processed to convey
understanding, experience, accumulated learning,
and expertise;
provides basis for action;
6

A Definition of Application
The use of IT to address a business activity or
process;
Two types:
General uses of IT hardware and software to carry out
particular tasks such as word processing, electronic
mail, presentation;
Uses of technology to perform specific business activity
or processes such as general accounting, production
scheduling or order processing;
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Why organizations fail to realize benefits

from investments in IT
Investments made only in technology;
Not understanding or analyzing nature of
activities the technology is to support
strategically or operationally in the
organization;

E-Business and E-Commerce: the same

or different?
E-Business E-Commerce;
E-Commerce is conduct of commerce or
business electronically, using Internet
technologies;
M-Commerce is the use of mobile devices for the
conduct of business transactions;

E-Business is the automation of an

organizations internal business processes using
Internet and browser technologies;
9

How should the Internet be viewed?

As an enabling technology a powerful set of
tools that can be used in almost any industry
and as part of almost any strategy;
Internet is not the business strategy;
Interactive, a new medium the market space;

10

Early Views and Models of IS/IT in

Organisation (1/2)
Early 1950s: use of computers in business
Mid to late 1960s: use became more
significant with the development of multipurpose mainframe computers
Batch processing of tasks and activities in
organizations became possible through
Increase in processing speed
Cheaper memory
Useful of magnetic disc and tape storage
Better programming language
11

Early views and models of IS/IT in

Organisation (2/2)
1970s: Minicomputers used for a variety of
business applications
But IS/IT still viewed as a centralized,
integrated concept derived from mainframe
Gibson and Nolan (1974) modeled evolution
of IS/IT in an organization, based on
Anthonys (1965) hierarchical application
portfolio model.
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Anthonys (1965) hierarchical

application portfolio model
Structure of information system in an
organization is based on a stratification of
management activity into different levels:
Strategic planning
Management control
Operational control

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Applications supporting the planning,

control and operational systems
Planning
System

Control
System

Operational
System

Sales forecasting operating plan,

capacity planning, profit/earning
forecasts, business mix analysis,
manpower planning, financial
modeling
Sales analysis, budgetary control, management
accounting, inventory management, quality
analysis, expense reporting, market
research/statistics, WIP control, requirement
planning, supplier analysis, etc.

Order entry, processing, tracking shipping documents,

vehicle scheduling/loading, invoicing, sales and
purchase ledger, cost accounting, stock control, shop for
scheduling, bill of material, purchase orders receiving,
employee records, payroll, word processing
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Six Aspects/Benchmarks of IS/IT and its

Management used in the Analysis
The rate of IS/IT expenditure
The technological configuration
The applications portfolio
The Data Processing (DP) or IT organization
DP/IT planning and control approaches
User-awareness characteristics

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Stage of evolution of IS/IT in relation to

expenditure (Nolan, 1979)
Level Of IS/IT
Expense

Transition
point

Information
(system)
management

Computer (DP)
management
I

II

III

IV

VI

Initiation

Contagion

Control

Integration

Data Mgmt.

Maturity
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Stage of evolution of IS/IT in relation to

expenditure (Nolan, 1979)
Initiation: batch processing to automate clerical operations to
achieve cost reduction, purely operational system focus, lack of
management interest.
Contagion: rapid growth as users demand more applications
based on high expectations of benefits, move to on-line
systems, high rate expense as DP tries to satisfy all user
demands. Little control if any, except a drive to centralize in
order to control.
Control: in response to management concern about costs,
systems projects are expected to show a return, plans are
produced and methodologies/standards enforced. Often
produces a backlog of applications and dissatisfied users.
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Stage of evolution of IS/IT in relation to

expenditure (Nolan, 1979)
Integration: considerable expenditure on integrating (via
database) existing systems. User accountability for system
established DP provides a service to user not just to the
problems.
Data Administration: information requirement rather than
processing drive the application portfolio and information is
shared within the organization. Database capability exploited as
user understand the value of the information.
Maturity: the planning and development of IS/IT in the
organization is closely coordinated with business development.

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Critique of the Nolan 6 Stage Model

Weak and inconclusive empirical support;
Benchmarks did not map consistently on to the
stages;
Too simple to reflect complexity of real world;
Assumptions made too simplistic to be useful;
Provide little help for CIO to create successful IS
unit in an organization;
Detail of each phase problematic;
YET, very popular and influential, because of its
simplicity.
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Era of DP Management
Main concern is on managing the activities
(operations, programming, data collection);
Set up a separate organizational unit (DP dept) for a
variety of types of application, over an extended life
cycle;
The dept managed as a coordinated set of
resources planned to meet future requirements;
Use of computers depends on effectiveness of
r/ships with users, not on business priorities;
Not much regard for value to the business of the
applications.
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Era of IS Management
Requires top-down approach
Requires strategy for the management of
IS/IT, associated activities and resources
throughout the organization;
Based on defined role of IS in relation to the
outside world;

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Three-stage Model of Transition from DP

Management to IS Management (Hirschheim et al., 1988)
Delivery Stage: IS issues mainly internal, ie improve ability
to deliver and support the IS/IT; main objective is achieving
top-mgmt credibility ie improving delivery performance, vs
provide what is needed;
Reorientation Stage: establish good r/ships with main
business ftns, support business demands through provision
of a variety of IS services; issues focus extended to outside
the DP dept; key obj is to provide valued service to all
business ftns mgmt; different areas benefit differently
without regard to business importance;
Reorganization Stage: Reorganization of responsibilities
to achieve integration of IS investment with business
strategy and across business ftns; key obj is best way to
satisfy each differing business needs through coalition of
responsibilities for managing IS/IT;
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Early Views and Models: Up to 1980

Traditional (operational and control) systems essentially
of two types, focus on processing of data:
Monitoring: Transaction handling and control
Exception: triggered reporting and/or action
Advent of PCs and a new set of software tools enable
end-user computing plus office automation to take off,
enabling two additional functions:.
Enquiry: flexible access to data and info initiated by
user request
Analysis: decision support, with flexible processing of
data and info.
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DP Era (60s onwards) vs MIS Era (70s onwards)

DP Era

MIS Era

Objective

Efficient transaction
handling and effective
resource control

Effective problem
resolution and support for
decision making

Life cycle

3-12 years, depending on

rate of change

From hours to months and

occasionally recurring

Information time frame

Recent history, current

and short-term future

Consolidated history,
current and extended
future

Information source

Internal plus external

transaction

Internal plus external

research data

Logical processes user

Strictly algorithmic
operators, clerical staff
and first line supervisor

Professionals and middle

to senior managers

Technology

Mainframe/mini-computer
controlled processing at
workstations

Local processing linked to

information resources.
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Three Evolution in DP and MIS Eras

Enabling Development of Improved IS
Hardware reducing size, improving reliability and
connectivity, enabling the system to be install closer
to the business problem
Software more comprehensive and flexible
operating software and improve languages, enabling
more to be produced, more quickly, with greater
correctness and with less experience
Methodology ways of organizing and carrying out
the multiplicity of task, in a more coordinated, better
synchronized and more efficient way to enable ever
more complex systems to be implemented and large
projects to be managed successfully.
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DP Era
Philosophy is on improving efficiency and achieving ROI
benefits;
Approach is problem/task/process focused ensuring
automation of tasks;
Automation also produces competitive advantage (eg
Aalsmer Flower Auction case study).

26

MIS Era
Use of stored data increases effectiveness of decision
making;
DB software, with online enquiry and analysis systems,
combined with modeling tools, lead to DSS.
Emergence of Information Centre: to support and
encourage, but minimize risks of EUC.
Gap between Users and IT Profesionals;
Fragmentation of applications;
Office automation + multimedia: provide more
comprehensive matching of technology to manager
tasks;
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Lessons from DP Era: Need

To understand process of developing complete
IS vs programs to process data.
More thorough requirement & data analysis, and
more engineered approach to systems design.
More appropriate justification of investments by
assessing efficiency gains and convert to ROI.
More structured approaches to programming,
testing and documentation.
Extended project mgmt for coordinating users
and DP functions;
Better planning of systems required by the org.

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Lessons from MIS Era:

IS investment justification not solely matter of
ROI or Financial Analysis
Need for data integration (restructuring projects
& heavy user involvement in data definition);
Move of IS resource from production to service
orientation (Info Centre concept)
Need for organizational policies, not just DP
methodologies;
PC and OA enable improved IS, but both users
and specialists must focus on info rather than
technology needs.
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IS/IT Eras: The Three Era Model

Data Processing Era (DP era) to improve
operational efficiency by automating information
based processes (1960s onwards)
Management Information System Era (MIS era)
to increase management effectiveness by
satisfying their information requirements (1970s
onwards)
Strategic Information System Era (SIS era) to
improve competitiveness by changing the nature
or conduct of business (1980s - ?)
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Extended application portfolio model

Function

Transaction and
Exception
Processing
Information
Enquiry and
Analysis

Automate
Basic
Processes
(efficiency)

Satisfy
Information
Needs
(effectiveness)

DATA
PROCESSING

MANAGEMENT
INFORMATION
SYSTEM

Affect
Business
Strategy
(competitiveness)

STRATEGIC
INFORMATION
SYSTEMS

Use
(Objective)

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Strategic uses of IS/IT: Classification and Factors

For Success
Four main types of strategic systems:
Share information through technology based system with
customer/consumers and/or supplier and change the nature
of the relationship
Produce more effective integration of the use of information
in the organizations value adding process
Enable the organization to develop, produce, market and
deliver new or enhanced product or service based on
information
Provide executive management with information to support
the development and implementation of strategy.

32

Trends in the Three Eras (Galliers and

Somogyi, 1987)
ASPECTS

DP ERA

MIS ERA

SIS ERA

Nature of
technology

Computers
Fragmented
HW limitation

Distributed Process
Interconnected
SW limitation

Networks
Integrated
People/Vision limitation

Nature of
Operations

Remote from users

controlled by DP

Regulated by
management services

Available and
supportive to users

Issues in systems
development

Technical issues

Support business users

needs

Relate to business
strategy?

Reasons for using

the technology

Reducing costs
(technology driven)

Support the business

(user driven)

Enabling the business

(business driven)

Characteristics of
systems

Regimented /
Operational (internal)

Accommodating /
Control

Flexible / Strategic

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Relationship Between the Three Eras

(Wiseman, 1985)
Good MIS rely on good DP systems, likewise,
good SIS rely on good DP or MIS
SIS are not essentially different systems, SIS
functions are the same as DP and MIS; SIS
differ in their impact on the business
SIS may make DP and MIS to be redeveloped
when they inhibit potential benefits of the SIS.

34

SIS Era
The use of IS/IT fundamentally change
how business is conducted, change the
balance of power in the industry with
respect to competitors, customers and
suppliers.
The use of IS/IT directly influencing
competitive position of a business.

35

Three Types of Revolutionary uses of IT

Venkatraman, 1993)
Business process redesign: using IS/IT to realign
business activities and relationships to achieve
performance breakthrough
Business relationship redesign: changing the way
information used by the organization and it trading
partner, thereby changing how the industry overall
carries out the value adding processes
Business scope redefinition: extending the market or
product set based on information or changing the role of
the organization in the industry.

36

Four Main Types of SIS

Those that share info via technology-based
systems with customers and/or suppliers, and
change nature of the r/ship.
Those that produce more effective integration of
the use of info in the organizations value-adding
processes;
Those that enable the organization to develop,
produce, market and deliver new or enhanced
products or services based on information.
Those that provide executive management with
information to support the development and
implementation of strategy.
37

TYPE 1: Links to Customers and

suppliers
Key people sales/marketing, distribution
management at customer end,
purchasing/receiving/quality control manager at the
supplier end.
Overcome traditional barrier to successful IS/IT
application in DP/MIS era: sharing information,
reorganization of role etc.
Require strong drive from management;
Not entirely in organizations power to control
Eg: e-procurement, web-based ordering systems, AHS
order entry distribution system, AA online reservation
system.
38

TYPE 2: Improved Integration of Internal

Processes
Effective integration of the use of information in the
organizations value-adding processes;
Organization must remove traditional barriers to
successful implementation of IS in the DP/MIS eras.
Organizations must reorganize roles, willing to share
info;
Examples: Customer Relationship Management (CRM),
Enterprise Resource Planning (ERP), telemarketing.

39

TYPE 3: Information based product

and service
To achieve advantages require a thorough
knowledge of product of the industry
Understanding of the organization's product and
services and the economic of providing them
Relating customer need and product possibility

40

TYPE 4: Executive information systems

To provide executive management with
information to support strategic decisions;
Eg of strategic info: info about markets,
customers, non-customers, technology in
industries, world finance and economy;

41

Success Factor in SIS (1/7)

External not internal focus
Looking at customers, competitors, suppliers,
other industries, businesss relationship and
similarities with the outside business world.
Traditionally IS/IT has been focus on internal
processes and issues

42

Success Factor in SIS (2/7)

Adding value not cost reduction
Cost reduction may accrue due to business
expansion at reduce marginal costs but doing it
better not cheaper seems to be more important
Consistent with the requirements of companies
to differentiate themselves from competitor in
order to provide better service to succeed.

43

Success Factor in SIS (3/7)

Sharing the benefit
Within the organisation, with suppliers,
customers, consumers, competitor.
Leverage over each department functions

44

Success Factor in SIS (4/7)

Understanding customers
What they do with the products or services
How they obtain the value from it
What are the problems they may encounter gaining that
value

45

Success Factor in SIS (5 & 6/7)

Business-driven innovation, not technology
driven
IS/IT provides or enables business opportunity or ideas

Incremental development
Doing one thing and building on extending the success
by future development
Prototyping of systems obviously has a key role to play
here.

46

Success Factor in SIS (7/7)

Using the information gained from the system to
develop the business
Purchasing patterns show by transactions
Providing different, focused, catalogues
Product and market analyses
External market research information

47

From DP/MIS Era to SIS era: Management

Implications
Having strategic vision, and allow IS/IT into senior managements
vision.
Changing Focus: effective application of system and technology to
automating operation and thereby increasing efficiency; planning
focus on systems design;
To MIS Focus: involving user management in considering the
information they used and how they use it; planning focus on
systems integration towards mgmt info;
IS professional had to find new techniques of information analysis to
devise ways of arranging information for effective use by
management..
The portfolio models described overall structure and logic to the
process of IS/IT application to the business.
Contribution and performance of IS/IT in the business become more
significant, hence the level of management involvement required
has been elevated to executive level.
48

Relationship between business, IS and IT Strategies

Business Strategy
Business Decision
Objective and direction
Change
Supports
Business

WHERE is
the
business
going and
WHY

Direction for business

IS Strategy
Business Based
Demand Oriented

WHAT is
required

Application Focused
Infrastructure and
service

Needs and priorities

IT Strategy
Activity Based
Supply Orientated
Technology Focused

HOW it can
be
delivered
49

An Application Portfolio for the Combined Era (adapted

from McFarlans Strategic Grid, 1984) which represents
contribution of IS/IT to the business now and in the future
based on its industry impact
STRATEGIC
applications
which are critical
to sustaining
future business
strategy
Application on
which the
organisation
currently
depends for
success
KEY

OPERATIONAL

HIGH
POTENTIAL
applications
which are critical
to sustaining
future business
strategy
Application which
are valuable but
not critical to
success

SUPPORT
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An Application Portfolio for the Combined

Era
STRATEGIC

HIGH POTENTIAL

Order management

EDI with wholesalers

Link to supplier

Man power planning

MRP II; Sale forecast &

Market analysis;

Decision support

Product profitability
analysis

Expert fault diagnosis

Document processing

Bill of material

Time recording

Inventory management

Budgetary control

Shop floor control

Expense reporting

Maintenance
scheduling

General accounting

Employee DB

KEY OPERATIONAL

etc

SUPPORT

Example portfolio for a manufacturing company

51

What is an IS Strategy?
IS/IT strategy composed of
IS component
IT component

Defines the organizations requirement or demand for

information and systems to support the overall strategy
of the business;
Firmly grounded in the business, considers both
competitive impact and alignment requirements of IS/IT;
Defines and prioritizes req investments to achieve ideal
portfolio, expected benefits, req changes, within
constraints of resources and systems interdependencies;
52

What is an IS Strategy?
IS component
Defines the organizations requirement or demand for
information and systems to support the overall strategy
of the business;
Firmly grounded in the business, considers both
competitive impact and alignment requirements of IS/IT;
Defines and prioritizes req investments to achieve ideal
portfolio, expected benefits, req changes, within
constraints of resources and systems
interdependencies;

53

What is an IT Strategy?
IT component
Concerned with outlining the vision of how technology
can support organizations demand for information and
systems;
Addresses provision of IT capabilities and resources
(HW, SW, Telcom) and services (operations, systems
development, and support).

54

Strategic Alignment based on 4

perspectives
EXT
STRATEGIC INTEGRATION

Business
Strategy

Org infrastructure
& processes

IT
Strategy

IS, infrastructure
& processes

INT
BUS

FUNCTIONAL INTEGRATION

IT
55

12 Components of Alignment (Luftman,

2000)
Business Strategy
Business Scope
Distinctive Competencies
Business Governance
Organizational Infrastructure & Processes
Administrative Structure
Processes
Skills
IT Strategy
Technology Scope
System Competencies
IT governance
IS Infrastructure and Processes
Architecture
Processes
Skills
56

Implications in Not Having IS/IT Strategy

Investments do not support business objectives
Loss of control of IS/IT
Systems not integrated
No priorities for IS projects/resources
No mechanisms to detect optimum resource levels
Poor mgmt of information
Misunderstanding between users and IT specialists
Incoherent technology strategy
Inadequate infrastructure investments
Projects evaluated solely on financial basis
Conflicts due to inappropriate IS/IT investments;
Localized justification of investments counterproductive to overall
business context;
Short systems life

57