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CHAPTER 2

ORGANIZATIONS AND
INFORMATION TECHNOLOGY
SUPPORT
Learning Objectives
• Discuss major information
systems concepts such as
architecture and infrastructure.
• Describe the hierarchical
structure of organizations and
the corresponding information
systems.
• Define various information
systems and their evolution, and
categorize specific systems.
• Describe the support provided to
Chapter Overview
Information
Systems Evolution and IT Support at Managing
Infrastructure Organizations: Types of Different Information
and Structure and Information Organizational Technology in
Architecture Support Systems Levels Organizations
• Information • Organizational • Transaction • Managers • Which resources
Infrastructure Structure Processing • Knowledge are managed by
• Information • Corresponding Systems Workers whom?
Architecture Information • Management • Clerical • What is the role
• Traditional System Information Staff of the information
Architectures Systems systems department?
• New • Support • Who runs the ISD
Architectures Systems and to whom does
the department report?
• What are the
relationships between
ISD and end users?
Case : Burlington Coat Factory
• The Business Problem
Burlingion is the largest retailer of coats
in the United States
sells clothes, linens, luggage, jewelry, baby furniture
and accessories
faces extremely strong competition
wants to offer up to 60% off department store prices
needs information to respond to demand
needs to communicate and collaborate with both
store mangers and suppliers quickly and effectively
Case (continued…)
 The Solution
– a corporate computer-based communication
system
– networks to a main processor
– transfers sales data by satellite technology
– executes routine transactions on the
headquarters’ computer
– feeds information from the corporate
databases into spreadsheets or word
processors
The Results on desktop computers for end-
user computing and decision support
dramatic decrease in communication problems
steady increase in sales volume and profits
Case (continued…)
• What have we learned from this
case??
Characteristics of a networked corporate
information system that are usually found
in organizations
» several different information systems exist in one
organization
» some of these systems may be completely independent, but
most are interconnected
» information systems are connected by means of electronic
networks
» the information system is composed of large and small
computers and other hardware connected by different types
of networks
» many information systems use client/server architecture
Information Systems
Architecture
• Physical facilities, hardware,
software, databases services, and
management that support all
computing resources in an
organization
• Five major components of
infrastructure
– computer hardware
– general-purpose software
– networks and communication facilities
– database
– information management personnel
Information Systems
Architecture (continued …)
• Information Architecture
a high-level map or plan of the information
requirements
a manner in which these requirements will be satisfied
a guide for current IT operations
a blueprint for future IT directions
meets the organization’s strategic business needs
must tie together the information requirements, the
infrastructure, and the applications
similar to the conceptual planning of a house
Information Systems
Architecture (continued …)
• Traditional Architectures
mainframe environment
» processing is done by a mainframe computer - a relatively
large computer built to handle large amounts of data,
thousands of user terminals, and millions of transactions
» modern versions of this architecture : personal computers
(PCs) and network computing (NC)
PC environment
» PCs form the hardware architecture
distributed environment
» divides the processing work between two or more computers
» the participating computers can be all mainframe, all PCs, or
(usually) a combination of the two
Information Systems
Architecture (continued …)
• New Architectures
client/server architecture
» several computers share resources and are able to
communicate with many other computers
» a client - a computer such as a PC attached to the
network, which is used to access shared network
resources
» a server - a machine that is attached to the same
network and provides clients with these services
» purpose : optimize the use of computer resources
Information Systems
Architecture (continued …)
• Enterprisewide Architectures
access to data, applications, services, and real-time
flows of data in different LANs or databases
use client/server architecture to create a cohesive,
flexible, and powerful computing environment
provide total integration of departmental and
corporate IS resources
increase the availability of information and
thereby maximize the value of an organization
Information Systems
Architecture (continued …)
• Internet-based Architectures
based on the concepts of client/server architecture
and enterprisewide computing
the Internet is the basis for a network connection
from the outside world to the company, as well as
with the organization’s web site
organization’s internal private Internet (intranet) -
useful for distributing information throughout the
organization
Market
Distributors
Professional
Non-Company Associations, large
Retailers Corporate suppliers, competitors
Corporate Toy Industry
Extranet Intranet Extranet
Non-Company
Manufacturers
Toys Inc Head Quarter
Suppliers Other
Manufacturing Retail Stores
(Purchasing) Extranets
Employees
Liquidators
contractors EDI, VAN

Customers Internet Banks and other


Travel Public business partners
agency
Government
Sales peoples
and other Small
Small customers
mobile retailers
employees Small
vendors
The network organization:
How a company uses the Internet, intranet and extranet
Organizations :
Structure and IT Support
 Organizations
the nature of organizations determines their
activities, the information support they need, and the
type of information systems they use
profit-making business versus not-for-profit
organizations exist
manufacture goods versus services are delivered
can be located in one place or in several places,
some are global or multinational organizations
Organizations : Structure

 Organizational Structure
departmental functional structure
» specialize in the delivery of a certain function
» typical departments in an organization:
» Accounting
» Finance
» Marketing and Sales
» Production or Operations Management (POM)
» Human Resources Management (HRM)
» Information Systems and Technology
Organizations : Structure
 Hierarchical Structure
Headquarters

Division A Division B Overseas


Division

Plant C Plant D Plant E Plant F


Administration
Services
(legal, etc.)

POM Accounting Marketing Finance HRM


Organizations : IT Support

 The Corresponding Information Systems


Departmental Information Systems
Plant Information Systems
Divisional Information Systems
Enterprisewide Information Systems
Interorganizational Information Systems (IOS)
Global Information System for an International
or Multinational Corporation
Types of Information Systems

 Transaction Processing Systems


organizations perform routine, repetitive tasks
a TPS supports the monitoring, collection,
storage, processing, and dissemination of the
organization’s basic business transactions
frequently, several transaction processing
systems exist in one company
today’s transaction processing systems are much
more sophisticated and complex
Types of Information Systems
(continued …)

 Management Information Systems (MIS)


provides periodic reports
generates weekly and monthly summaries by
product, customer, or salesperson
initially, MIS had an historical orientation
today, MIS reports may include summary reports, for
the current period or for any number of previous
periods - used for monitoring, planning, and control
functional management information systems (MIS)
» access, organize, summarize, and display information for
supporting routine decision making in the functional areas
» geared toward middle managers
Types of Information Systems
(continued …)

• Major Outputs of a Functional


Management Information System
OUTPUT DESCRIPTION
Statistical summaries Summaries of raw data such as daily production,
and weekly and monthly usage of electricity.
Exception reports Highlights of data items that are larger or
smaller than designated levels.
Periodic reports Statistical summaries and exception reports
provided at scheduled, regular periods.
Ad hoc reports Special, unscheduled reports provided on
demand.
Comparative analysis Performance comparison to that of competitors,
past performance, or industry standards.
Projections Advance estimates of trends in future sales,
cash flows, market share, etc.
Types of Information Systems
(continued …)

 Support Systems
office automation systems (OAS)
» word processing systems
computer-aided design and manufacturing (CAD/CAM)
decision support systems (DSS)
end-user computing
executive information systems (EIS)
group support systems (GSS)
 Intelligent Systems
expert systems (ES)
artificial neural network (ANN)
Types of Information Systems
(continued …)
 Integrating Systems
various computerized systems are being
integrated to increase their functionalities
one popular form of integrated system is
enterprise resources planning (ERP)
ERP plans and manages all of an organization’s
resources and their use, including contacts with
business partners
The Evolution
Computer Based Information Systems
1940 Scientific, military applications
1950 Routine business applications, TPS
1960 MIS, office automation
1970 DSS, LANs
Client/server executive information system,
1980 PC’s, AI, Groupware
Integration, intelligent systems
1990 the Web, intranets, extranets, ERP software

2000 Internet, Electronic commerce, Smart systems


IT Support at Different
Organizational Levels

Strategic
Top Managers
Systems

Staff Support Knowledge Workers, Professionals

Managerial Systems Middle Managers


Operation Systems Line Managers, Operators

Office Automation and Communication Systems Clerical Staff

Information Infrastructure and TPS

The information systems support of people in organizations


Knowledge Workers
• People who create information and
knowledge and integrate it into the business
• Engineers, financial and marketing analysts,
production planners, lawyers, and
accountants
• Responsible for finding or developing new
knowledge for the organization and
integrating it with existing knowledge
• Act as advisors and consultants to the
members of the organization
• Act as change agents by introducing new
procedures, technologies, or processes
• 60 to 80 percent of all workers are knowledge
workers
• Supported by a large variety of information
systems from Internet search engines to
Clerical Staff
• Support managers at all levels
• Data workers - use, manipulate, or
disseminate information
– bookkeepers, secretaries who work
with word processors, electronic file
clerks, and insurance claim processors
• Supported by office automation and
groupware, including document
management, workflow, e-mail, and
other personal productivity software
IT Support at Different
Organizational Levels : A
Summary Detailed
Employees
System Supported Discussion in
Office automation Office workers Chapter 7, 9
Communication All employees Chapter 6, 8
Group support People working in Chapter 10
system groups
Decision support Decision makers, Chapter 10
system managers
Executive information Executives, top Chapter 10
managers
TPS Line managers and Chapter 9
employees
MIS Middle management Chapter 9
Intelligent systems Knowledge workers Chapter 11
Managing IT Resources
• IT resources are scattered throughout the organization
• Information systems have enormous strategic value
• Some IT resources change frequently. It may be rather
difficult to manage IT resources
• It is essential to manage information systems properly
• The responsibility for the management of information
resources is divided between a usually centralized
information systems department (ISD) and the end
users
• Which resources are managed by whom?
– Generally speaking, ISD is responsible for corporate-
level and shared resources, and the end users are
responsible for departmental resources
Managing IT Resources (continued …)

• What is the role of the information


systems department?
– Traditional major IS functions:
• Managing systems development and systems
project management
• Managing computer operations, including the
computer center
• Staffing, training, and developing IS skills
• Providing technical services
Managing IT Resources
(continued …)
• What is the role of the information systems
department? (continued)
– New (additional) major IS functions:
• Initiating and designing specific strategic information systems
• Infrastructure planning, development, and control
• Incorporating the Internet and electronic commerce into the
business
• Managing system integration including the Internet, intranets,
and extranets
• Educating the non-IS managers about IT
• Educating the IS staff about the business
• Supporting end-user computing
• Partnering with the executive level that runs the business
• Actively participating in business processes reengineering
• Proactively using business and technical knowledge to the line
with innovative ideas about IT
• Creating business alliances with vendors and IS departments in
other organizations
Managing Information Technology
• Key MIS issues in two recent time periods
Key Issues, 1994/1995 Key Issues, 1997
1. Building a responsive IT 1. Improving productivity
infrastructure
2. Facilitating and managing 2. Reducing costs
business process redesign
3. Developing and managing 3. Improving decision
distributed systems making
4. Developing and implementing 4. Enhancing customer
an information architecture relationships
5. Planning and managing 5. Developing new
communication networks strategic applications
Managing Information Technology
(continued …)
• Who Runs the ISD and to whom does ISD
Report?
run by MIS Director, Manager of Computing Services,
Manager of Information Technology, or Chief Information
Officer (CIO)
reports to
» Chief Executive officer
» Functional Vice President
» Senior vice president
» Chief knowledge officer (CKO) - the director assigned to capture and
make effective use of IT knowledge for an organization
The executive committee provides the top-level oversight for
the organization’s information resources. It guides the IS
steering committee, which is usually chaired by the CIO.
Managing Information Technology
(continued …)
• What are the relationships between the ISD and
end users?
A steering committee that represents all end users and the ISD. This
committee sets IT policies, decides on priorities, and coordinates IS
projects.
Joint ISD/end-user project teams for planning, budgeting,
applications development, and maintenance
ISD representation on the top corporate executive committee
Service agreements that define computing responsibilities and
provide a framework for services rendered by the ISD to end users
Technical and administrative support (including training) for end
users
A conflict resolution unit established by the ISD to handle end-user
complaints quickly and resolve conflicts as soon as possible
An information center that acts as help center to end users regarding
purchase, operations, and maintenance of hardware and software
What’s in IT for Me?
• For Accounting
– Many of the transactions handled in a TPS are
data that the accounting department records
and tracks
• For Finance
– Financial departments often use specialized
DSS for forecasting and portfolio
management
• For Marketing
– Marketing uses such IT-related concepts as
customer databases, marketing decision
making, sales automation, and customer
relationship management (CRM)
What’s in IT for Me? (continued
…)

• For Production/Operations Management


– Organizations are competing on price, quality, time
(speed), and customer service which are enhanced
and supported by IT
• For Human Resources Management
– Intranets help to disseminate relevant information
throughout the organization. Internets are used for
recruiting
• For MIS
– IS management function continues to grow in
strategic value
• For Non-Business
– In all organizations, IT provides essential support to
all functional areas`