INFORMATION SYSTEMS, ORGANIZATIONS, & BUSINESS PROCESSES
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INFORMATION SYSTEMS, ORGANIZATIONS, &
BUSINESS PROCESSES
INFORMATION SYSTEMS, ORGANIZATIONS, &
BUSINESS PROCESSES
Learning ObjectivesLearning Objectives
• Define the formal elements of an organizationDefine the formal elements of an organization
• Define the informal elements of an organizationDefine the informal elements of an organization
• Examine how IT can impact these formal and informal Examine how IT can impact these formal and informal elements - the notion of elements - the notion of multi-finalitymulti-finality
• Contrast theories and models to analyze the impacts Contrast theories and models to analyze the impacts of IT on business networks, organizations, and of IT on business networks, organizations, and processesprocesses
• Define business process characteristics to be Define business process characteristics to be considered in IT-enabled process innovation considered in IT-enabled process innovation
• Contrast scope and type of IT-enabled process Contrast scope and type of IT-enabled process innovationsinnovations
• Examine strategies and implementation issues Examine strategies and implementation issues associated with IT-enabled process innovationassociated with IT-enabled process innovation
O rga niza tion of C oncepts
F orm a l S tru c tu reS O P sP o lit ic sC u ltu re
Com m on Features
O rg . Typ eE n viron m en tsG oa lsP ow erC om m u n ica tion sF u n c tionL ead ersh ipTasksTech n o log yB u s in ess P rocessesL eve ls
Unique Features
Properties of Organization
M icorecon om icTran sac tion C os tA g en cy
Econom ic Theories
D ec is ion /C on tro lS oc ia l S c ien ceP os tin d u s tria l
Behavioral Theories
V alu e ch a inN etw ork E con om icsC om p etit ive F orces M od e l
Th eore tica l F ocu s o f M od e ls
M odels
T heories & M odels for Analysis
Characteristics
Objectives
S cop e o f E ffo rt an d R o le o f IT
In c rem en ta lM od u la rA rch itec tu ra lR ad ica l
Typ e o f C h an g e
Process Im provem ent
K ey Issu es as p er Th eories /M od e lsA p p lica tion D e live ry S tra teg yIm p lem en ta tion M an ag em en t
M anagem ent of Process Innovation
Business Processes
A na lyzing Inform ation T echnology Im pactsa t D iffe rent Units of A na lys is
INFORMATION INFORMATION TECHNOLOGYTECHNOLOGY
ORGANIZATIONS & INFORMATION TECHNOLOGY
ORGANIZATIONS & INFORMATION TECHNOLOGY
MEDIATING FACTORS: MEDIATING FACTORS: Environment Environment Culture Culture
Structure Structure Standard Procedures Standard Procedures Politics Politics Management Decisions Management Decisions ChanceChance
ORGANIZATIONSORGANIZATIONS
STRUCTURAL CHARACTERISTICS OF ALL ORGANIZATIONS
STRUCTURAL CHARACTERISTICS OF ALL ORGANIZATIONS
• CLEAR DIVISION OF LABORCLEAR DIVISION OF LABOR• HIERARCHYHIERARCHY• EXPLICIT RULES & PROCEDURESEXPLICIT RULES & PROCEDURES• IMPARTIAL JUDGMENTSIMPARTIAL JUDGMENTS• TECHNICAL QUALIFICATIONSTECHNICAL QUALIFICATIONS• MAXIMUM ORGANIZATIONAL MAXIMUM ORGANIZATIONAL
EFFICIENCYEFFICIENCY
**
ORGANIZATIONAL STRUCTURESORGANIZATIONAL STRUCTURES
• ENTREPRENEURIAL: Start up businessENTREPRENEURIAL: Start up business• MACHINE BUREAUCRACY: Mid-sized MACHINE BUREAUCRACY: Mid-sized
manufacturing firmmanufacturing firm• DIVISIONALIZED BUREAUCRACY: Fortune DIVISIONALIZED BUREAUCRACY: Fortune
500500• PROFESSIONAL BUREAUCRACY: Law PROFESSIONAL BUREAUCRACY: Law
firms, hospitalsfirms, hospitals• ADHOCRACY: Consulting firmADHOCRACY: Consulting firm
**
SALIENT FEATURES OF ORGANIZATIONS
SALIENT FEATURES OF ORGANIZATIONS
COMMON FEATURES:COMMON FEATURES:
• FORMAL STRUCTUREFORMAL STRUCTURE
• STANDARD OPERATING STANDARD OPERATING PROCEDURESPROCEDURES
• POLITICSPOLITICS
• CULTURECULTURE
**
SALIENT FEATURES OF ORGANIZATIONS
SALIENT FEATURES OF ORGANIZATIONS
UNIQUE FEATURES:UNIQUE FEATURES:
• ORGANIZATIONAL TYPEORGANIZATIONAL TYPE
• ENVIRONMENTS, GOALS, POWERENVIRONMENTS, GOALS, POWER
• CONSTITUENCIES, FUNCTIONCONSTITUENCIES, FUNCTION
• LEADERSHIP, TASKSLEADERSHIP, TASKS
• TECHNOLOGYTECHNOLOGY
• LEVELSLEVELS
**
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
• MICROECONOMIC THEORY: MICROECONOMIC THEORY: Info Info technology is a factor of production, technology is a factor of production, like capital & laborlike capital & labor
• TRANSACTION COST THEORY: TRANSACTION COST THEORY: Firms attempt to minimize Firms attempt to minimize transaction costs internally & transaction costs internally & externallyexternally
**
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
• AGENCY THEORY: AGENCY THEORY: Firm is nexus of Firm is nexus of contracts among agents who make contracts among agents who make decisions; IS shrink number of agents & decisions; IS shrink number of agents & reduce costreduce cost
• BEHAVIORAL THEORIES: BEHAVIORAL THEORIES: Concepts from Concepts from Sociology, Psychology, Political Science; Sociology, Psychology, Political Science; Organizations & Information Technology Organizations & Information Technology mutually influence each othermutually influence each other
**
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
• DECISION & CONTROL THEORY: DECISION & CONTROL THEORY: Decisions are made under conditions of Decisions are made under conditions of risk & uncertainty; centralization & risk & uncertainty; centralization & hierarchy reduce uncertaintyhierarchy reduce uncertainty
• SOCIOLOGICAL THEORY: SOCIOLOGICAL THEORY: Bureaucracy, Bureaucracy, SOPs help stabilize organizations, but SOPs help stabilize organizations, but slow ability to changeslow ability to change
**
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
• POSTINDUSTRIAL THEORY:POSTINDUSTRIAL THEORY: Flatter Flatter organizations; dominated by organizations; dominated by knowledge workers; decentralized knowledge workers; decentralized decision makingdecision making
• CULTURAL THEORY: CULTURAL THEORY: Info Info technology must fit organization’s technology must fit organization’s culture to be acceptedculture to be accepted
**
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
HOW INFO SYSTEMS AFFECT ORGANIZATIONS
• POLITICAL THEORY:POLITICAL THEORY: Info systems Info systems are outcome of political competition are outcome of political competition for policies, procedures, resourcesfor policies, procedures, resources
**
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
• INDIVIDUALINDIVIDUAL
• GROUPGROUP
• DEPARTMENTDEPARTMENT
• ORGANIZATIONORGANIZATION
• INTERORGANIZATIONINTERORGANIZATION
• ORGANIZATIONAL NETWORKORGANIZATIONAL NETWORK
**
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
INDIVIDUAL:INDIVIDUAL:• ACTIVITY: Job, taskACTIVITY: Job, task• SUPPORT: Client database, DSSSUPPORT: Client database, DSS
GROUP:GROUP:• ACTIVITY: ProjectACTIVITY: Project• SUPPORT: Product scheduling, access to SUPPORT: Product scheduling, access to
TPS, external sources, dynamic info needs, TPS, external sources, dynamic info needs, group DSSgroup DSS
**
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
DEPARTMENT:DEPARTMENT:• ACTIVITY: Major function ACTIVITY: Major function • SUPPORT: Accounts payable; payroll; SUPPORT: Accounts payable; payroll;
marketing; MIS; TPSmarketing; MIS; TPS
DIVISION:DIVISION:• ACTIVITY: Major product, serviceACTIVITY: Major product, service• SUPPORT: Systems to support functions; SUPPORT: Systems to support functions;
MIS; TPS; on-lineMIS; TPS; on-line
**
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATION:ORGANIZATION:
• ACTIVITY: Multiple products, ACTIVITY: Multiple products, services, goalsservices, goals
• SUPPORT: Integrated on-line, SUPPORT: Integrated on-line, interactive financial & planning interactive financial & planning systems; MIS; ESSsystems; MIS; ESS
**
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
INTERORGANIZATION:INTERORGANIZATION:
• ACTIVITY: Alliance; competition; ACTIVITY: Alliance; competition; exchange; contactexchange; contact
• SUPPORT: Communication systems; SUPPORT: Communication systems; intelligence, observation, monitoring intelligence, observation, monitoring systemssystems
**
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL LEVELS & SUPPORT SYSTEMS
ORGANIZATIONAL NETWORK:ORGANIZATIONAL NETWORK:• ACTIVITY: Sector of economy; related ACTIVITY: Sector of economy; related
products, services; products, services; interdependenciesinterdependencies
• SUPPORT: Informal communication SUPPORT: Informal communication systems; industry / sector-level systems; industry / sector-level formal reporting systemsformal reporting systems
**
WORK GROUPS, PROBLEMS, SUPPORTWORK GROUPS, PROBLEMS, SUPPORT
TYPES:TYPES:
HIERARCHICALHIERARCHICAL
INTERDEPARTMENTAL COMMITTEESINTERDEPARTMENTAL COMMITTEES
PROJECT TEAMSPROJECT TEAMS
COMMITTEESCOMMITTEES
TASK FORCESTASK FORCES
PEER GROUPS / SOCIAL NETWORKSPEER GROUPS / SOCIAL NETWORKS
**
WORK GROUPS, PROBLEMS, SUPPORTWORK GROUPS, PROBLEMS, SUPPORT
PROBLEMS:PROBLEMS:
MAKING ARRANGEMENTSMAKING ARRANGEMENTS
ATTENDING MEETINGSATTENDING MEETINGS
LONG AGENDASLONG AGENDAS
COST OF MEETINGSCOST OF MEETINGS
BETWEEN-MEETING ACTIVITIESBETWEEN-MEETING ACTIVITIES
**
WORK GROUPS, PROBLEMS, SUPPORTWORK GROUPS, PROBLEMS, SUPPORT
SUPPORT:SUPPORT:
HIERARCHICAL: HIERARCHICAL: Video conferencing; Video conferencing; e-mail e-mail
INTERDEPARTMENTAL COMMITTEES: INTERDEPARTMENTAL COMMITTEES: Electronic messagingElectronic messaging
**
WORK GROUPS, PROBLEMS, SUPPORTWORK GROUPS, PROBLEMS, SUPPORT
SUPPORT:SUPPORT:
PROJECT TEAMS: PROJECT TEAMS: Scheduling Scheduling software; Meeting support tools; software; Meeting support tools; Documents; IntranetDocuments; Intranet
COMMITTEES:COMMITTEES: e-bulletin boards; Video e-bulletin boards; Video conferencing; e-mail; Computer conferencing; e-mail; Computer conferencingconferencing
**
WORK GROUPS, PROBLEMS, SUPPORTWORK GROUPS, PROBLEMS, SUPPORT
SUPPORT:SUPPORT:
TASK FORCES:TASK FORCES: Graphics display; Info Graphics display; Info utility; Documents; Meeting support utility; Documents; Meeting support toolstools
PEAR GROUPS / SOCIAL NETWORKS:PEAR GROUPS / SOCIAL NETWORKS: Telephone; e-mail; CorrespondenceTelephone; e-mail; Correspondence
**
Typology of Process Innovations
Typology of Process Innovations
Relationship Between Process Modules(or Components in Products)
Minor Tweaks Major Changes
Minor Tweaks Incremental ArchitecturalDesign of a ProcessModule (or Componentin Products) Major Changes Modular Radical
Derived from concepts used in product design and innovation (Henderson and Clark)
What Process Characteristics Influence Reengineering Strategy?
What Process Characteristics Influence Reengineering Strategy?
Characteristics ofBusiness Processtargeted
Scope of business process (local and functional, to globaland enterprise-wide)
Type of business process: generic and well known vsunique and unknown
Architectural complexity of BP (number of interfaces;heterogeneity of interfaces, frequency of interactions)
Modular Logic (design logic of core modules) Responsiveness (cycle time requirement) Organizational (cuts horizontally across the organization;
cuts only vertically; cuts both ways)
Based on Rai, Ponce De Leon and Melcher, 1999
ERP SystemsERP Systems
• Enterprise systems Enterprise systems – target core business functions target core business functions – integrate information flows across functionsintegrate information flows across functions– integrate information flows with customers, suppliers integrate information flows with customers, suppliers
and other external entitiesand other external entities– Key vendors include SAP, PeopleSoft, Bahn and OracleKey vendors include SAP, PeopleSoft, Bahn and Oracle
• Modular design of ERP products, such as financials, human Modular design of ERP products, such as financials, human resources, payroll, purchasing, etc. resources, payroll, purchasing, etc.
• Well established interfaces across modulesWell established interfaces across modules• Configuration tables specification allows for limited amount Configuration tables specification allows for limited amount
of customization possible to specific organization needs of customization possible to specific organization needs
HOW WEB AFFECTS ORGANIZATIONSHOW WEB AFFECTS ORGANIZATIONS
• MORE INFO, ANYWHERE, ANYTIMEMORE INFO, ANYWHERE, ANYTIME• MORE SCOPE, DEPTH, RANGE OF MORE SCOPE, DEPTH, RANGE OF
KNOWLEDGE: KNOWLEDGE: Global encyclopediaGlobal encyclopedia• LOWERS COST, RAISES QUALITY OF LOWERS COST, RAISES QUALITY OF
INFO DISTRIBUTION: INFO DISTRIBUTION: Enhances Enhances attention span of vendors, customers, attention span of vendors, customers, employeesemployees
**
Management of Process Innovation ProjectsManagement of Process Innovation Projects
• The decision to reengineer is not the most The decision to reengineer is not the most difficult one to make - it is, in fact, obvious very difficult one to make - it is, in fact, obvious very often. often.
• Deciding on an application delivery strategy is Deciding on an application delivery strategy is key key – Do we buy into the process model in a Do we buy into the process model in a
software product? Is this how we want to do software product? Is this how we want to do it?it?
– Do we change the process model in a software Do we change the process model in a software product to meet our needs? product to meet our needs?
– Do we design a process and then build Do we design a process and then build application software for this process? application software for this process?
Management of Process Innovation ProjectsManagement of Process Innovation Projects
• Effectively incorporating the technology to Effectively incorporating the technology to leverage process design and human resource leverage process design and human resource capability is the tough part!capability is the tough part!
• An exercise in knowledge creation and An exercise in knowledge creation and knowledge distribution for the organizationknowledge distribution for the organization
• With increases in scope, the implementation With increases in scope, the implementation challenges increase exponentiallychallenges increase exponentially
• ERP system implementation represent “mega” ERP system implementation represent “mega” projectsprojects
• Do not under-emphasize behavioral, cultural and Do not under-emphasize behavioral, cultural and political issues during the implementation political issues during the implementation process process
IMPLEMENTING CHANGEIMPLEMENTING CHANGE
Source: Leavitt, Handbook of Organization (1965)
TASKTASK
PEOPLEPEOPLETECHNOLOGYTECHNOLOGY
STRUCTURESTRUCTURE
RESISTANCERESISTANCE
MUTUALMUTUALADJUSTMENTADJUSTMENT