Chapter 2

Information Systems in
Organizations
ITEC 1010 Information and Organizations
 Organizations and Information
Systems
 Organization
 A formal collection of people and other
resources established to accomplish a set of
goals

ITEC 1010 Information and Organizations

 General Model of an
Organization
 (next slide)

ITEC 1010 Information and Organizations

ITEC 1010 Information and Organizations
 Value Chain
 Term coined by Michael Porter in a 1965
article in the Harvard Business Review
 Def: a series of activities that includes
inbound logistics, warehouse and storage,
production, finished product storage,
outbound logistics, marketing and sales,
and customer service
Schematic

ITEC 1010 Information and Organizations

ITEC 1010 Information and Organizations
 Organizations
 Organizational structure
 Organizational subunits and the way they are
related to the overall organization
 Traditional organizational structure
 Major department heads report to a president
or top-level manager

Schematic

ITEC 1010 Information and Organizations

 A.Bailey, S. Burry,
Legal counsel President

C.Rodrig, V. Cisborn,
B. Wong, R. Henderson, K. Kelly,
VP Information VP Human
VP Accounting VP Marketing VP Production
Systems Resources

S. Samuel L. Bashran,
Supervisor Supervisor
Traditional Organizational Structure

ITEC 1010 Information and Organizations

 Terminology (1)
 Hierarchical organizational structure
 See previous slide
 Series of levels
 Those at high levels have more power and
authority within an organization
 Flat organizational structure
 An organizational structure with a reduced
number of layers of management
ITEC 1010 Information and Organizations
 Terminology (2)
 Empowerment
 Giving employees and their managers more
power, responsibility, and authority to make
decisions, take certain actions, and have more
control over their jobs

ITEC 1010 Information and Organizations

 Other Organizational Structures (1)
 Project organizational structure Schematic

 An organization structure centred on major

products or services
 Contrast with traditional structure
 Team organizational structure
 An organizational structure centred on work
teams or groups

ITEC 1010 Information and Organizations

 B. Woods,
President
Air & Aerospace Co.

O. Teco,
T. Walker, W. Butler,
Senior VP,
Senior VP, Senior VP,
Communications &
Aircraft Division Aerospace Division
Satellite Division

VP, VP, VP, VP, VP, VP, VP, VP, VP, VP, VP,
Finance Marketing Production Sales Finance Marketing Production Sales Finance Marketing Production

Project Organizational Structure

ITEC 1010 Information and Organizations

 Other Organizational Structures (2)
 Multidimensional organizational structure
 A structure that may incorporate several
structures at the same time Schematic

ITEC 1010 Information and Organizations

 Vice President, Vice President, Vice President,
Marketing Production Finance

Publisher, Marketing Production Finance

College Division Group Group Group

Publisher, Marketing Production Finance

Trade Division Group Group Group

Publisher,
Marketing Production Finance
High School Group Group Group
Division

Multidimensional Organizational Structure

ITEC 1010 Information and Organizations

 Other Organizational Structures (3)
 Advantages and disadvantages of different
organizational structures
 Read the book!

ITEC 1010 Information and Organizations

 Organizational Culture
and Change (1)
 Culture
 A set of major understandings and assumptions
shared by a group
 Organizational culture
 The major understandings and assumptions for
a business, a corporation, or an organization

ITEC 1010 Information and Organizations

 Organizational Culture
and Change (1)
 Organizational change
 Deals with how for-profit and non-profit
organizations plan for, implement, and handle
change
 Organizational learning
 The way organizations adapt to new conditions
or alter their practices over time

ITEC 1010 Information and Organizations

 Models of Change
 ‘Change model’
 A representation of change theories developed
by Kurt Lewin and Edgar Schein in 1969
 Three-stage approach
• Unfreezing
• Moving
• Refreezing
Schematic

ITEC 1010 Information and Organizations

 Change Model

ITEC 1010 Information and Organizations

 Reengineering
 Also called ‘Process redesign’
 The radical redesign of business processes,
organizational structures, information systems, and
values of the organization to achieve a breakthrough in
business results
 For example, to…
• Reduce delivery time
• Increase product and service quality
• Improve customer satisfaction
• Increase revenues and profitability
ITEC 1010 Information and Organizations
 Rules, Rules, Rules
 Reengineering requires finding and
vigorously challenging old rules
Rule Original rationale Potential problem
Small orders held Reduce delivery Customer deliver is
until full truckload costs delayed
No order accepted Reduce potential for Customer service is
until credit approved bad debt poor
All product decisions Reduce number of Perception of limited
made at headquarters items in inventory product selection
ITEC 1010 Information and Organizations
 Other Models
 Continuous improvement
 Constantly seeking ways to improve the
business processes to add value to products
and services

ITEC 1010 Information and Organizations

 Continuous Improvement vs.
Reengineering
Reengineering Continuous Improvement
Strong action to solve serious problem Routine action
Driven by senior executives Worker-driven
Broad in scope; cuts across Narrow in scope
organizations
Goal to achieve a major breakthrough Continuous, gradual
Often led by outsiders Led by workers
IS integral to the solution IS provides data to guide

ITEC 1010 Information and Organizations

 Total Quality Management
 Quality
 The ability of a product (including service) to
meet or exceed customer expectations
 TQM
 A collection of approaches, tools, and
techniques, that offers a commitment to quality
throughout the organization

ITEC 1010 Information and Organizations

 Outsourcing and Downsizing
 Outsourcing
 Contracting with outside professional services to meet
specific business needs
 E.g., advertising, hiring
 Downsizing
 Reducing the number of employees to cut costs
 Also called ‘rightsizing’
 May have serious side effects
• E.g., low employee morale, a need for expensive consultants,
lost time, waning productivity

ITEC 1010 Information and Organizations

 Competitive Advantage
 Competitive advantage
 A position, product, service, etc., within a
business that improves a position within a
market with respect to competitors
 Porter’s ‘Five force’ model of competitive
advantage
 Identifies factors that lead to competitiveness
Schematic

ITEC 1010 Information and Organizations

 Substitute
Products

Buyer Supplier
Rivalry
Power Power

New
Entrants

Porter’s Five-force Model

ITEC 1010 Information and Organizations

 Strategic Planning for
Competitive Advantage
 Four techniques:
 Strategic alliances (aka strategic partnerships)
 Creating new goods or services
 Improving existing goods or services
 Using information systems for strategic purposes

Next slide

ITEC 1010 Information and Organizations

 1. Strategic alliance
 An agreement between two or more companies that
involves the joint production and distribution of
goods and services
 E.g., Chrysler + Daimler Benz
2. Creating new goods or services
 A company may become stagnant without the
introduction of new goods and/or services
 E.g., Compaq, Dell
3. Improving existing goods or services
 Small variations to existing goods or services, and/or
complete modifications
 E.g., “light” foods
4. Using information systems for strategic purposes
 IS for improving organizational effectiveness
 E.g., SABRE (airline reservation system)
ITEC 1010 Information and Organizations
 Performance-based Information
Systems
 Productivity
 A measure of the output achieved divided by
the input required

Output achieved
Productivity =
Input required

ITEC 1010 Information and Organizations

 Productivity
 An example is given in the top paragraph
on p. 65
 This is a bad example!
 Why?

ITEC 1010 Information and Organizations

 Return on Investments (ROI) and
the Value of IS
 Return on investment (ROI) represents
 A measure of IS value that investigates the
additional profits or benefits that are generated
as a percentage of the investment in
information systems technology

ITEC 1010 Information and Organizations

 Measures of IS Value
 Earnings growth
 Market share
 Customer awareness and satisfaction
One of my favourite quotes:
When you cannot measure, your knowledge is
of a meager and unsatisfactory kind.
Kelvin
ITEC 1010 Information and Organizations
 Justifying IS
 Categories:
 Tangible savings
 Intangible savings
 Legal requirements
 Modernization
 Pilot project

ITEC 1010 Information and Organizations

 Roles, Functions, and Careers in
the IS Department
 Categories:
 Operations
 Systems development
 Support
 Liaisons (information service units)

Schematic

ITEC 1010 Information and Organizations

 CEO

Other
CIO functional
areas

Information Information
Resource Systems
Management Operations Support service
development unit
Functions

Computer Systems
Data
facility analysis
administration
operations & design

Data Information
entry Programming centre

Local Information
Area network technololgy
operations
IS Department

ITEC 1010 Information and Organizations

 Information Centre
 Information centre
 Provides users with assistance, training,
application development, documentation,
equipment selection and setup, standards,
technical assistance, and troubleshooting

ITEC 1010 Information and Organizations

 Information Service Unit
 Information service unit
 Attached to a functional area of the business.
 Acts as a local information support
organization within a functional area.
 Performs the critical role of liaison between
the functional area and IS

ITEC 1010 Information and Organizations

 Chief Information Officer (CIO)
 Chief Information Officer (CIO)
 A manager at the vice-president level
responsible for IS planning, policy, and
standards
 Focused on supporting corporate goals

ITEC 1010 Information and Organizations

 Other IS Roles
 Database Administrator
 Systems Programmer
 Network Specialist
 LAN Administrator
 Webmaster
 Trainer

ITEC 1010 Information and Organizations

 IS Principles
 Use of IS strongly influenced by
organizational structure and problem
orientations
 IS are often intertwined within the value-added
processes
 IS usage may require change that could meet
with resistance
 Value-added IS needs to be continually sought
ITEC 1010 Information and Organizations
 End of Chapter 2

Chapter 3

ITEC 1010 Information and Organizations