MANAGING INFORMATION SYSTEM

LESSON 19: ORGANIZATIONAL GOAL ORIENTATION

Objective
The objective of this lesson is to give you an insight into:
What makes an organization goal oriented? Why there exist a very prominent need of change in

Values All organizations operate according to some values and priorities in order to carry out their activities. These values identify the personality and culture of the organization. Strategies: Organizations follow several general approaches and methods to reach their goals. These approaches and methods are called as strategies of the organizations.

functioning of an organization
What makes an organization goal oriented? How an existing organization can update its working to

meet the present and future requirement and to diminish present shortcomings?

Organization Change
Whats Organization Change? Is there exist any need of organization change? Whats make a running organization to suddenly change its strategy and the work environment? There are so many questions comes in mind when we try to explore a particular aspect of a system. So lets explore the answers of maximum of these questions and try ourselves best to become more comfortable with the major requirement of any organization i.e., organization change. The concept of organizational change is in regard to organization-wide change, as opposed to smaller changes such as adding a new person, modifying a program, changing the working hours, changing a schedule of a manager etc. Though these are changes but they cant be termed as organizational change because of the small dimension they are having or more or less these can be called as personal change as these small changes might not affect the organization as a whole. An Organizational change is one, which effects the complete organization or the mass of people working in that organization. These changes are adopted by the organization thinking that their goals could be achieved fast. Examples of organization-wide change might include a change in mission, restructuring of operations, adopting new technologies, merging the organization, major collaborations, automating the organization, adding a new department etc.

Introduction
We all see a lot of organizations around us. Some of these are so popular that we always talk about them. Theyre work culture, their working strategies, the way they are making profits, their marketing strategies just fascinates the aspiring manager. Most of these organizations are quite young, hardly 10-20 years old and on the other hand many of these are 40-50 years old even or more. We all know about their stability. But we never thought that most of these might have faced organizations change in this much span of time. So what an organization change is, why that is required etc, are some of the many questions which are to be explored in this chapter.

Organizations Goal Orientation

In the previous lectures we have already explored the definition and function of an organization. So better to not to repeat it again and again. Lets move ahead and find out what are the qualities an organization holds that makes an organization to totally different system when compared with another. Definition : Basically, an organization is a group of people intentionally organized to accomplish an overall, common goal or set of goals. Business organizations can range in size from two people to tens of thousands. This group of people has gathered together for achieving the goals they have set. These people work hard and coordinate together to achieve these goals some are explicit goals i.e., recognized and understood by everybody in the organization. But some of these goals are implicit i.e., they are recognized whenever the organization is in the development process. Organizations achieve these goals keeping in mind the following point.
Vision

Need for Organization Change

Most of the time organization changes are done believing in the fact that if they are going to adopt these changes then they will be able to accomplish their goals easily and faster than before. Some times these changes are required to cope up with some new trends emerging in the market. These changes are also required to keep ones organization ahead in technologies and then gained profit. Sometimes substantial cuts in funding also promote organization change. Lets discuss some of the cases as to give you a better picture what are the major factors that forces an organization change. Some Cases where organizations adapted change are as follows:(In reference to Information system Development and Management by C.Avgerou)

Members of the organization often have some image in their minds about how the organization should be working and how it should work when things are going well and in adverse situation.
Mission

An organization operates according to the purpose and mission

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MANAGING

Activity 1 : Case 1
The Revenue Department of the Ministry of Finance in a European country needs to modernize its Taxes Data Processing System. The existing system is quite efficient, but it is quite old and it was operating in a completely Centralized manner. In the meantime the governments new policy against tax evasion requires local offices to become more active in citizens declare income and property. This made department to shift a distributed system spread nationwide. This system is needed to let Computerization Project (TCP) is given high priority by the government because that will allow government to collect tax property as well as government is shifting towards egovernment. The TCP is more than a software development project because it aims to introduce new roles for civil servants in the local offices and to support interaction between the Department and taxpayers. It will need to design a new platform of operations for the collection of taxes from citizens: new forms, new regulations and arrangements for payments. Now neither the department nor the governmental central Computerization institute has the necessary expertise for the TCP and therefore they need to trust on the private IT service sector. But they decide that this project couldnt be given to the private house as it is. Therefore they made a new department that is going to handle the main responsibility with the private IT service provider to develop a suitable distributed system. The TCP is planned to begin operations in 18 months and fully operational throughout the country in 30 months. Presentation 1 : So you all must have got the overview of the requirement of the TCP in the above given case. Now your task is to work in group of 8 and prepare the white papers on the above case. You can take any assumptions on the population, tax payers, percentage of tax as per their pay etc. You also have a freehand on the hardware and software requirement of the system and the management control activities in which it will be working. You are not suppose to go into the detail analysis but on the other hand you have to just prepare the blue print on the working of the system.

tion. The data of the enterprise was in multiple locations that is the major source of waste of resources and risk of confusion. It was impossible for top management to co-ordinate accurately the ordering of material, the maintenance of equipment for production, the sales and marketing of the product. Surplus production in one plant was occupying storage space for weeks while other plant was struggling to satisfy orders in given region and losing customers. Such problems were leading to profit drops of the company. So the IT director proposed a program for the implementation of the Enterprise Resource Planning (ERP) system to create an integrated infrastructure for the whole multinational corporation. But the whole range of work practices and management structures would need to be redesigned before the enterprise could begin operating the integrated infrastructure. Now to convince the Board, the IT director brought to their attention the fact that one of their competitors have already adopted this technology and implemented such an ERP system with great success. The program was approved but with the parallel launching of Business Process Re-engineering (BPR). Five years later in 2001, Drinkos ERP was a great success. Though it had cost four million dollars more than initially planned, it made the managers confident that the corporation was now capable of responding effectively to customer demand. Building this success, the IT director made a proposal to the Board to expand their ERP network to their main suppliers. Do you agree with the above fact that even after spending four million dollars extra than initial plan Drinko will eager to go with further expansion of its ERP software. If you being the Chairperson of the company what steps you would have taken up so as to make sure that IT manager implements the Enhanced ERP package in all the major and minor suppliers while keeping the cost in budget.

INFORMATION SYSTEM

Activity 3 : Case 3
Electronic Controls, an engineering company, has a maintenance department with 75 employees responding to customer calls for troubleshooting. Initially, these employees trust and rely on their good engineering knowledge and past experience to understand the reported problem and to advise customers how to resolve the problems themselves, or to decide whether the problem requires the dispatch of an engineer. These people use the computers to access the company databases for getting the full specification of the reporting customer equipment. The Manager found that most of the time each and every employee is solving near about the same problem at his or her end. The manager of the department decided to introduce computer tools to support more systematic collaboration and the sharing of the accumulated knowledge on reported cases. There are various such systems of tools, known as Computer Supported Collaborative Work (CSCW) systems. As soon as this system was installed the manager arranged for the training of the employee on the software. Within a month the Company was ready to support their customers in a much better way sitting at their end.

Activity 2: Case 2
Over the years, Drinko, a large manufacturing and distributor of soft drinks, with head quarters in Spain and Production, bottling and distribution sites in many countries in Europe, America and Asia has spent hundred of millions of dollars and developed a complex set of Information systems and software applications to support all aspects of its production, distribution and management functions. It has also developed an elaborate structure of information system units in all business units to manage its systems development. Each of these units depends heavily on the local market of IT services for supply and maintenance of their various activities. But in 1996, IT director at the headquarters was laying emphasis in changing the working strategy of the company. His concern was that the systems of the company were fragmented. For e.g. systems of production were not linked to system of distribu-

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MANAGING INFORMATION SYSTEM

What other steps would you like to take up being as the Manager to further strengthen the customer satisfaction rate and the employees satisfaction?

Activity 4: Case 4:
Neptune, a chain of sea sports, has decided to introduce electronic commerce. The company has already got a catalogue service and therefore believes that it has the necessary know how to respond effectively to orders from remote customers. It has place a reliable and effective ICT support for the whole range of its business process, which is managed by a very small IS department. Basically Neptune relies on various subcontractors for this change in the organizations working and even for the maintenance of its existing system. Yet, it decided that the development of its electronic commerce cannot be outsourced completely and so it made a new department staffed by analysts, web designers and web programmers. 10 months later it launched the new service without the major disaster and was considered by the management as the satisfactory success. Although the e-commerce operated at loss but it was considered promising for the future and the company continued investing in development the new information system for the organization. So what all these activities and cases want to stress? The answer is as might have judged : It is clear to see that all these cases involve the following three aspects : Change in the work processes of the concerned organizations. The introduction and the use of new technology components. Management responsibilities to decide on the introduction of new technology components in a proper planned manner and also to decide for their maintenance strategies. In general the following benefits are expected from the changes done in the organization Increased Productivity and efficiency This is often the main objective of associated with the change. The new technologies are most of the time introduced with the productivity in mind. Through productivity gains a firm may achieve cost leadership, which is an important mechanism to gain competitive advantage. Drinko had very clear expectations to increase productivity from implementing ERP in order to stay competitive.
Enhanced business competitiveness

team knowledge work, as in the Electronic Controls CSCW case. It is really difficult to measure the quantity and quality of decision making process which Organization Change provide. But still it is sure that if proper managers are there for organization change then this change helps them a lot for effective decision making.
Systems Development

Till now we have stressed that the moment you implement a new future oriented system all will go well in near future. A companys organization profits will rise; there will be remarkable increase in customer and employee satisfaction and so forth. But dont you think that change is always that not much easy? Does implementing technology will bear fruits always? Dont you think that we have to apply the proper strategy and plan before we actually go into its implementation? Lets find out what are the steps an organization has to be kept in mind before and after it goes into automation. New information systems can be powerful instruments for organizational change.
Automation

The most common form of IT enabled organizational change is automation (Using the computer to speed up the performance of existing tasks). The first applications of information technology involved assisting employees perform their taks more efficiently and effectively. Calculating pay checks and payroll registers; giving bank tellers instant access to customer deposit records, and developing a nationwide network of airline reservation terminals for airline reservation agents are all examples of early automation. Automation is akin to putting a larger motor in an existing automobile.
Rationalization

The use of new technologies affect the firms relative position in relation to competitors, suppliers and customers. Gone the days where people think about purchasing the products cheap enough. Today people need assurance to quality and service. They are ready to pay more for this. Thus use of new technology enhances business competitiveness.
Improved work arrangements

Use of new technology provides opportunities to engage people in more meaningful work tasks. Even some new opportunitites for work arrangements emerge.
Improved management and decision making

This happens because organization change helps in effective distribution of information and support for individual or

A deeper form of organizational change one that follows quickly from early automation is rationalization of procedures. (The streamlining of standard operating procedures, eliminating obvious bottlenecks, so that automation makes operating procedures more efficient.) Automation frequently reveals new bottlenecks in production and makes the existing arrangement of procedures and structures painfully cumbersome. Rationalization of procedures is the streamlining of standard operating procedures eliminating obvious bottlenecks, so that automation can make operating procedures more efficient. For example, the New Zealland Inland Revenue Departments system is effective not just because it utilizes state of the art computer technology but because its design allows the IRD to operate more efficiently. The procedures of IRD or of any organization must be rationally structured to achieve this result. Before the IRD could automate its tax filing system, it had to have identification numbers for all taxpayers and standards rules for calculating and submitting tax payments in either paper or electronic form. Without a certain amount of rationalization in the Inland Revenue Departments

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organization, its computer technology would have been useless.

Business re-engineering

Paradigm Shift

MANAGING

A more powerful type of organizational change is business re-engineering (The radical rdesign of business processes, combining steps to cut waste and eliminating repetitive paper intensive tasks in order to improve cost, quality or service, and to maximize the benefits of information technology,) in which business processes are analyzed simplified, and redesigned. Re-engineering involves radically rethinking the flow of work, the business procedures used to produce products and services with a mind to radically reduce the costs of business. A business process is a set of logically related tasks performed to achieve a defined business outcome. Some examples of business processes are developing a new product, ordering goods from a supplier, or processing and paying an insurance claim. A widely cited example of business re-engineering is Ford Motor Companys invoice less processing. Ford, with over 500 people in its North American Accounts Payable organization alone, discovered that the Mazda Motor Corporations accounts payable organization employed only 5 people. When Ford management analyzed the companys existing system, it found out that the accounts payable clerks spent most of their time matching purchase orders against receiving documents and invoices and then issuing payments. Mismatches where the purchase order, receiving document, or invoice disagreed were common, forcing the accounts payable clerks to investigate the discrepancies and delay payments. Ford found that re-engineering its entire accounts payable process could prevent mismatches in the first place. The company instituted invoice less processing where the purchasing department enters a purchase order into an online database that can be checked by the receiving department when the ordered items arrive. If the received goods match the purchase order the system automatically generates a check for accounts payable to send to the vendor. There is no need for vendors to send invoices. After reengineering the accounts payable process, Ford was able to reduce headcount by 75% and produce more accurate financial information (Hammer and Champy, 1993). The limitation of rationalizing procedures and redesigning business processes is that they are limited to specific parts of a business. New information systems can ultimately affect the design of the entire organization by actually transforming how the organization carries out its business or even the nature of the business itself. For instance, Scheneider National, described in Chapter 3, used new information systems to create a competitive on demand shipping service and to develop a new sideline business managing the logistics of other companies. Baxter Internationals stockless inventory system, described in Chapter 2, transformed Baxter into a working partner with hospitals and into a manager of its customers supplies. The new system redrew organizational boundaries, allowing Baxter to take over its customers warehousing functions.

This still more radical form of business change is called a paradigm shift. A paradigm shift involves rethinking the nature of the business and the nature or the re-engineer the jobs of tellers. Instead they may decide to eliminate branch banking altogether and seek less expensive sources of funds, like international borrowing. Retail customers may be forced to use the Internet to conduct all their business, or a proprietary network. A paradigm shift is akin to rethinking not just the automobile, but transportation itself. Of course, nothing is free. Paradigm shifts and reengineering often fail because extensive organizational change is so difficult to orchestrate. Some experts believe that 70% of the time they fail. Why then do so many corporations entertain such radical change? Because the rewards are equally high. In many instances firms seeking paradigm shifts and pursuing re-engineering strategies achieve stunning, order of magnitude increases in their returns on investment (or productivity).
Business Re-engineering

INFORMATION SYSTEM

In the previous section we learnt that business re-engineering is a major strategy for making the organization information systems computerized. Business re-engineering is such a vast and such an important topic that I would like to extend it further so that we can have a better perception of one of the most important aspects of systems development. Many companies today are focusing on building new information systems where they can redesign business processes. If the business process is first redesigned before computing power is applied, organizations can potentially obtain very large payoffs from their investments in information technology. In the past, a mortgage applicant filled out a paper loan application. The bank entered the application transaction into its computer system. Specialists such as credit analysts and underwriters from eight different departments accessed and evaluated the application individually. If the loan application was approved, the closing was scheduled. After the closing, bank specialists dealing with insurance or funds in escrow serviced the loan. This desk to desk assembly line approach took 17 days.

Steps in Business Re-engineering

Develop the business vision and process objectives Identify the processes to be redesigned Understand and measure the performance of existing

processes
Identify the opportunities for applying information

technology
Build a prototype of the new process

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