Information Systems in Organizations

Information Systems in Organizations 

ORGANIZATION 

• Organization is a formal collection of people and other resources established to accomplish a set of goals. 

• The primary goal of a profit organization is to maximize shareholder value, often measured by the price of the company stock. 

• An organization is a system, which means that it has inputs, processing mechanisms, outputs, and feedback.  

• An organization constantly uses money, people, materials, machines and other equipment, data, information, and decisions.

A GENERAL MODEL OF AN ORGANIZATION  




                    


FUNCTIONS OF AN ORGANIZATION 


• Design and Production 
• Finance 
• Human Resources 
• Sales and Marketing 
• Administration 
• Research and Development 


VALUE CHAIN OF AN ORGANIZATION 


• Value chain views the firm as a series or chain of activities that add value to a firm’s products and services. 

• It includes inbound logistics, warehouse and storage, production, finished product storage, outbound logistics, marketing and sales, and customer service. 



• Primary activities are most directly related to the production and distribution of the firm’s products and services. 

• Support activities make the delivery of the primary activities possible. 

VALUE CHAIN OF A MANUFACTURING COMPANY 


• Upstream management: Managing raw materials, inbound logistics, and warehouse and storage facilities is called upstream management.  


• Downstream management: Managing finished product storage, outbound logistics, marketing and sales, and customer service is called downstream management. 

ROLE OF INFORMATION SYSTEMS WITHIN FIRM’S VALUE CHAIN 


                         



ROLE OF INFORMATION SYSTEMS WITHIN FIRM’S VALUE CHAIN 


                            

VALUE CHAIN FOR SERVICES  


• Value chain for services might not be activities but attributes. 

• This will assure customer satisfaction and reliable feedback at any point in time

• The attributes need to be highly coordinated so for them to operate as a system (synergy).  


                             


ORGANIZATIONAL STRUCTURES 

• Organizational structure: organizational sub units and the way they relate to the overall organization.  

• Organizational structure is a system used to define a hierarchy within an organization. It identifies each job, its function and where it reports to within the organization. 

• Categories of organizational structure: 

(1) Traditional organizational structure 
(2) Project and Team organizational structure 
(3) Matrix organizational structure 
(4) Virtual organizational structure 

1) Traditional Organizational Structure 


• It is a hierarchical structure 

• Major department heads report to a president or top-level manager 

• It is a managerial pyramid where the hierarchy of decision making and authority flows from the strategic management (at the top), down to operational management and non management employees.

 



2) Project and Team organizational structure 

Project organizational structure 

• A project organizational structure is centred on major products or services.  

• For example,

 • In a manufacturing firm that produces baby food and other baby products, each line is produced by a separate unit.  

• Traditional functions such as marketing, finance, and production are positioned within these major units.  

• Many project teams are temporary, when the project is complete, the members go on to new teams formed for another project. 

                         



Team organizational structure 

• The team organizational structure is centred on work teams or groups.  

• In some cases, these teams are small; in others, they are very large.  

• Typically, each team has a leader who reports to an upper-level manager.  

• Depending on its tasks, the team can be temporary or permanent. 

 • Teams that include members from different functions are known as cross-functional teams. 

3) Matrix organizational structure  


• A matrix structure provides for reporting levels both horizontally as well as vertically.  

• Employees may be part of a functional group (i.e. engineer) but may serve on a team that supports new product development (i.e. new album).  

• This kind of structure may have members of different groups working together to develop a new product line. 

• For example, a recording engineer who works for a music publisher, may have engineers who report to him but may also use his expertise and work with teams to develop new music albums. 

                           


4) Virtual Organizational Structure 

• A structure that employs individuals, groups, or complete business units in geographically dispersed areas to work together. 

• It can last for a few weeks or years,  

• Uses information technology, telecommunications or the Internet to communicate and coordinate the work. 

• These people might be in different countries, operating in different time zones.  

• In other words, virtual organizational structures allow work to be separated from location and time. 

• Work can be done anywhere at anytime. 

• People may never meet face to face. 

ORGANIZATIONAL CULTURE AND CHANGE 


• Organizational culture – Organizational culture is defined as the shared values, norms and expectations that govern the way people approach their work and interact with each other.  

– In other words it's "what am I expected to do in order to fit in and get ahead here".  

– It can also have a positive affect on the successful development of new information systems that support the organization’s culture. 

• Organizational change 

– How organizations plan, implement, and handle for changes. 

– Organizational change also occurs when two or more organizations merge.  

– When organizations merge, however, integrating their information systems can be critical to future success. 

OUTSOURCING

• Outsourcing involves contracting with outside professional services to meet specific business needs.  

• Often, companies outsource a specific business process, such as recruiting and hiring employees, developing advertising materials, promoting product sales, or setting up a global telecommunications network.  

DOWNSIZING 

• Downsizing involves reducing the number of employees to cut costs. 

ON-DEMAND COMPUTING 



• On-demand computing is an extension of the outsourcing approach, and many companies offer it to business clients and customers. 

• Involves rapidly responding to the organization’s flow of work as the need for computer resources varies. 

• On-demand computing (ODC) is in which resources are provided on an as and when needed basis.  

• ODC make computing resources such as storage capacity, computational speed and software applications available to users as and when needed for specific temporary projects, known or unexpected workloads, routine work, or long-term technological and computing requirements. 

COMPETITIVE ADVANTAGE 


• This is known as the advantage that a firm has over its competitors. 

• It allows to generate greater sales or margins and retain more customers than its competition and can result in higher-quality products, better customer service, and lower costs.  

• A competitive advantage is a significant and (ideally) long-term benefit to a company over its competition. 

• An organization often uses its information system to help achieve a competitive advantage. 

• Establishing and maintaining a competitive advantage is complex, but a company’s survival and prosperity depend on its success in doing so.  



STRATEGIC PLANNING FOR COMPETITIVE ADVANTAGE 



• To be competitive, a company must be fast, nimble, flexible, innovative, productive, economical, and customer oriented.  

• It must also align its IS strategy with general business strategies and objectives. 

• Some strategies are: 

• Cost leadership 
• Differentiation 
• Niche strategy (Focused) 
• Altering the industry structure 
• Creating new products and services

Cost leadership 

• Deliver products and services at very low prices.   

Example: Wal-Mart and other discount retailers have used this strategy for years.  

• Cost leadership is often achieved by; 

• reducing the costs of raw materials through aggressive negotiations with suppliers 
• becoming more efficient with production and manufacturing processes 
• reducing warehousing and shipping costs, etc.  

 Differentiation 

• Deliver different products and services.  

• This strategy can involve producing a variety of products, giving customers more choices, or delivering higher quality products and services. 


   Niche strategy (Focused) 

• Deliver to only a small, niche market. For example: Rolex only makes high-quality, expensive watches. It doesn’t make inexpensive, plastic watches that can be purchased for $20 or less. 

 Creating new products and services 

• Introduce new products and services periodically or frequently. 


   Improving existing product lines and services 

• Make real or perceived improvements to existing product lines and services


Other strategies 

• First to market 

• Customizing products and services 

• Hiring the best people  



RELATIONSHIP – IS AND ORGANIZATION 


• This complex two-way relationship is mediated by many factors, such as decisions  made or not made by managers and other factors mediating the relationship include the organizational culture, structure, politics, business processes and environment.