Management Information Systems: Lecture 2
Dr. Guohua WAN
FBA, University of Macao
January 2003
Organizations, Business Processes and IS
Organization
Definitions: two different views
Technical view: A stable, formal social structure, taking resource and processing them to produce products/services
Behavior view: A collection of rights, privileges; obligations and responsibilities, deliberately balanced over time through conflicts and their resolution
Organization and its environment: reciprocal relationship
Organization
Input from
environment
Output to
environment
Operations
process
Structure
Hierarchy
Division of labor
Rules, procedures
Business Processes
Process
Rights/obligations
Privilege/responsibility
Values
Norms
People
Organization
Input from
environment
Output to
environment
Behavioral views
of organization
Technical views
of organization
Governments
Competitors
Customers
Financial institutions
Culture
Knowledge
Technology
The firm
Information systems
The environment: Resources & Constraints
Common features of organizations
Bureaucracy: Clear division & labor; Hierarchy
Standard operating procedures
Organizational politics and culture
Unique features of organizations
Different organization types
Entrepreneurial: startup business
Machine bureaucracy: mid-sized manufacturing firm
Divisionalized bureaucracy: Fortune 500
Professional bureaucracy: law firms, hospitals
Adhocracy: consulting firm
Other differences
Business goals and power to achieve the goals: Coercive; Utilitarian; Normal
Nature of leadership: Democracy; Authorization; Laissez-faire; Technocraitic; Bureaucratic
Tasks performed and technology used: Routine work; Judgmental work
Business process
Definition: the manner in which work is organized, coordinated, and focused to produce a valuable product or service in an organization
Concrete flow of materials, information & knowledge
Ways to manage flow of materials, information and knowledge
Strategic success depends on low cost, high quality business processes
Business process: cross business functions
Business process reengineering
The two-way relationship between organization and information systems
Mutual influence
IS: be aligned with organization
Organization: be aware of IS and open to IS for organizational benefits
Mediated by many factors
Managerial decisions
Other factors: environment, structure, SOP, culture, politics, business fashion, pure chance
MEDIATING FACTORS Environment Management Decisions
Structure Standard Procedures Culture Politics Business fashion Pure Chance
Organizations
Information Systems
Two-way relationship
Impacts of organization on IS
Evolution of IS in organizations
Dramatic changes in the technical and organizational configuration of IS
1950s’ and 1960s’: a few critical functions
1970s’ and 1980s’: large centralized systems and information services
1990s’ to present: enterprise-wide information utility, connected to vendors and customers through network/Internet
How do organizations use IS?
Workgroups, problems call for information systems support (See table)
The way of adoption, design and use of IS
Management
Accounting
& Finance
Production
Marketing
Human
Resource
50‘s
EAC
Management
Accounting
& Finance
Production
Marketing
Human
Resource
60‘s
Data
Processing
TPS
Management
Accounting
& Finance
Production
marketing
Human
Resource
70‘s
Information
System
Minicomputer
Minicomputer
Online systems
Management
Accounting
& Finance
Production
marketing
Human
Resource
80‘s
Information
System &
Services
Minicomputer
Minicomputer
Microcomputer
Management
Accounting
& Finance
Production
Marketing
Human
Resource
90‘s-
PC
LAN
Information
Utility
Information
Center
Corporate
Website
Work
Stations
PC
LAN
PC
LAN
Internet
Environmental factors
Competition
Opportunities
Uncertainties
Institutional factors
Values
Norms
Interests
System development
Adoption
Utilization
Management
External
Internal
Making arrangement; Attending meetings; Long agendas; Cost of meeting; Between-meeting activities
Problems of all work groups
Telephone; E-mail
Intense personal communications
Informally groups of similar status
Peer Groups/ Social Networks
Graphics tools; Document interchange Group meeting systems
Rapid communications; Access to internal/ external data
Formally defined single-purpose groups
Task Forces
E-bulletin board; Video conference; E-mail
High-peak load; Communications; Intermittent meetings
Formally defined groups; Occasional interaction
Committees
Scheduling tools; Group meeting systems; Document interchange
Meeting scheduling
Formally defined groups; Close day to day interaction
Project Teams
E-messaging
Occasional direct communications
Sequential activities; "Expediters"; "Fixers"
Interdepartmental Committees
E-mail; E-conference
Frequent meetings; dispersed work environments
Formal working relationship between manager and staff
Hierarchical
System examples
Problems
Description
Work Group
Impacts of IS on organization
Functions of IS in organizations
Transaction processing
Monitoring/performance evaluation
Communication/documentation
Decision support
Various IS/IT and their business impacts (See table)
The Internet and organizations
The Internet dramatically increases accessibility, storage, and distribution of information and knowledge
The Internet changes business models and business strategies
Connect two parties within a process
Disintermediation (C)
Allow detailed tracking of task status, input and output
Tracking (M)
Allow capture and dissemination of knowledge and expertise to improve the process
Knowledge Management (D)
Enable changes in the sequence of tasks in a process
Sequential (T)
Bring vast amounts of detailed information into a process
Informational (C)
Bring complex analytical methods to bear on a process
Analytical (M, D)
Replace or reduce human labor in a process
Automation (T)
Transfer data quickly and easily across large distance
Geographical (C)
Transform unstructured processes into routine transactions
Transactional (T)
Impacts/Benefits
Capability of IS/IT
Theoretical analysis
Economic theories
Microeconomic model: IS substitutes capital and labor
Transaction cost theory: reduces transaction costs
Agency theory: reduce internal management cost
Behavior theories
IS change hierarchy of decision making by lowering costs of information acquisition and broadening distribution of information
Organizational politics and resistance to change
Implications for design and use of IS
How to manage many factors affecting adoption, design and use of IS
How to measure benefits of IS
Planning organizational changes for IS development
Linking IS plan with business plan
1. Purpose of IS plan; 2. Strategic business plan; 3. Current system; 4. New developments; 5. Management strategy; plan; 7. Budget requirements
Establishing information requirements
Understanding of long-term/short-term information requirements
Enterprise analysis (Business System Planning)
Information requirements coming from organizational units, functions, processes, and data elements
Large survey and U/C matrix
Information Systems Strategic Grid
Low
High
Low
High
IS impact on core strategy
IS impact on core operations
Factory
Support
Turnaround
Strategic
Strategic analysis (Critical Success Factors)
Interview
Analysis: profit/nonprofit concerns, their goals and the critical factors
Cost/benefit analysis of IS development
Capital budgeting model
The payback method; ROI (Return On Asset); The cost/benefit method; Net present value; The profitability index; The internal rate of return
IS as a capital project
Costs: hardware; Telecommunications; Software; Services; Personnel
Benefit: tangible (cost savings) and intangible
Non-profit and strategic considerations
Portfolio analysis: balances risk and benefits
Scoring model for strategic considerations
IS development & organizational change
Spectrum of changes
Process Automation: using IT to improve the efficiency of existing tasks
Procedure Rationalization: streamlining the standard operating procedures, eliminate obvious bottleneck to improve the effectiveness of operating procedures
Business Reengineering: radical redesign business processes, combining steps to cut waste and eliminating repetitive, paper-intensive tasks to improve cost, quality and service and maximize the benefit of IS
Paradigm Shifts: radical re-conceptualization of the nature of business and organization
Business process reengineering
Work flow management
The process of streamline the business procedure so that documents are move effectively and efficiently from one location to another
Redesign business process through IS
Streamline and consolidate business
Analytical tools and knowledge management
Decentralized decisions and operations
Centralized information for control
Steps of effective reengineering
A broad strategic vision; Identify and focus on core business processes; Measure the performance of the processes; Create new business processes
Process improvement and total quality management (TQM)
Total quality management
Make quality the responsibility of all people and functions within the organization
IS for process improvement
Simplifying production process
Performance benchmarking
IS capability of customization for TQM
Reducing cycle time
Improving quality and precision of product design to improve quality
Increasing precision of production
Summary
Organizations, Business Processes and IS
Features of organizations
Business process and reengineering
Mutual impacts between Organizations, and IS
Redesign organization with IS
Planning organizational change for IS development
IS impact on business process and TQM
Questions?
