Information Systems in

Organizations
Chapter 2

Principles and Learning Objectives

Identify the value-added processes in the supply chain and
describe the role of information systems within them.
Provide a clear definition of the terms organizational structure,
culture, and change and discuss how they affect the
implementation of information systems.
Identify some of the strategies employed to lower costs or
improve service.
Define the term competitive advantage and discuss how
organizations are using information systems to gain such an
advantage.
Discuss how organizations justify the need for information
systems.
Define the types of roles, functions, and careers available in
information systems.
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Organizations & Information Systems

Value Chain

Organizational Structure
Organizational subunits and their relationship with the
overall organization
Categories of organizational structure:
Team
Traditional
Multidimensional
Project
Virtual

Traditional Organizational Structure

Traditional Organizational Structure

Project Organizational Structure

Centered on major products and services

Temporary project teams

Project Organizational Structure

Team Organizational Structure

Temporary or permanent teams
Work groups
Various sizes

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Multidimensional Organizational
Structure
May incorporate several structures at the same
time
Advantage:
ability to simultaneously stress both traditional
corporate areas and important product lines
Disadvantage:
multiple lines of authority
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Multidimensional Organizational
Structure

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Virtual Organizational Structure

Employs business units in geographically
dispersed areas
People may never meet face to face
Can be permanent or temporary

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Organizational Culture and

Change

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Organizational Culture
Shared understandings, values, and
assumptions in an organization
Influences information systems

15

Organizational Change

16

Reengineering
(process redesign)
The radical redesign of business processes,
organizational structures, information
systems, and organizational values to
achieve a breakthrough in business
outcomes.

17

Reengineering

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Continuous Improvement
Constantly seeking ways to improve business
processes to add value to its outputs.
Benefits:
Increased customer loyalty
Reduction in customer dissatisfaction
Reduced opportunity for competitive inroads

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Continuous Improvement vs.

Reengineering

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Technology Diffusion, Infusion, and

Acceptance
Technology diffusion - measure of
widespread use of technology
Technology infusion - extent to which
technology permeates a department
Technology Acceptance Model (TAM) specifies factors that can lead to higher usage of
technology (Davis Model homework).
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Total Quality Management (TQM)

Quality: ability of a product or service to meet or
exceed customer expectations
TQM: approaches and techniques used to
achieve quality throughout the organization

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Outsourcing and Downsizing

Outsourcing: contracting with outside
professionals to meet business needs.
Downsizing: cutting the number of employees
to reduce costs.

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Competitive Advantage
Significant, long-term benefit to a company over
its competitors.
Ability to establish and maintain a competitive
advantage is vital to the companys success

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Competitive Advantage
Five forces motivate firms to seek
competitive advantage (Porter model):
Rivalry among existing competition
Threat of new entrants
Threat of substitutions
Buyers bargaining power
Suppliers bargaining power

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Strategic Planning for Competitive

Advantage
Porters proposed three general strategies to attain
competitive advantage:
Changing the structure of the industry (vertical
growth, strategic alliances, partnership)
Creating new products or services
Improving existing products or services
An extension of these include:
The use information systems for strategic planning
(to differentiate our product or service or to
reduce the cost)
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Three stages in the business use of

IS
Cost reduction and productivity (1960s).
Competitive advantage (1980s).
Performance-based IS (strategic
advantage and costs saving).

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Justifying IS
An organization is best seen as a system that
has inputs, processing and outputs. By
processing of inputs we add value to them. This
added value enables the organization to achieve
its objectives. In for-profit organizations, the
objectives are measured by the difference
between the financial cost of the inputs and the
value of the outputs. This difference is usually
called profit the major function that is necessary
to transform inputs into outputs is the decision
making function.
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 An organization makes decisions to get the

inputs and makes decisions to decide on the
mechanism of transformation and then
makes decisions to export the outputs or
transfer them into the environment. All these
decisions cant be made without information.
Then, the value of IS for the organization is
generated from the value of information for
the process of DM.

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Objectives

Decisions

Information

Information Systems
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The Benefits of IS
1.
2.
3.
4.
5.
6.

Gaining competitive advantage

Improve product quality
Shorter product Cycle
Increase productivity
Automation of Decisions
Reducing the overall cost

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7. Developing new forms of

organizations and new paradigms of
management practices.
Virtual organizations.
Teleworking.
Innovative management.

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Justifying Information Systems

Most IS projects fall into one of the following
categories:
Tangible Savings
Intangible Savings
Legal Requirement
Modernization
Pilot Project

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Roles, Functions, and Careers in

Information Systems Department
Operations - focuses on the efficiency of
information
Systems development - focuses on specific
development projects and ongoing maintenance
and review
Support - provides user assistance

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The Three Primary Responsibilities of

Information Systems

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Typical IS Titles and Functions

Chief Information Officer (CIO) - employs
the IS departments equipment and personnel
to help the organization attain its goals
LAN administrators - set up and manage
the network hardware, software, and security
processes

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