Principles of Information Systems, Seventh Edition2 The use of information systems to add value to...
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Principles of Information Systems, Seventh Edition 2
• The use of information systems to add value to the organization is strongly influenced by organizational structure, culture, and change
• 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
Principles of Information Systems, Seventh Edition 3
• Because information systems are so important, businesses need to be sure that improvements or completely new systems help lower costs, increase profits, improve service, or achieve a competitive advantage
• 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
Principles of Information Systems, Seventh Edition 4
• Information systems personnel are the key to unlocking the potential of any new or modified system
• Define the types of roles, functions, and careers available in information systems
Principles of Information Systems, Seventh Edition 5
Organizations and Information Systems
• Organization: a formal collection of people and other resources established to accomplish a set of goals
• An organization is a system
• Inputs to the system: resources such as materials, people, and money
• Outputs to the environment: goods or services
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Figure 2.1: A General Model of an Organization
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Organizations and Information Systems (continued)
• Value chain: a series (chain) of activities that includes inbound logistics, warehouse and storage, production, finished product storage, outbound logistics, marketing and sales, and customer service
• Upstream management: management of raw materials, inbound logistics, and warehouse and storage facilities
• Downstream management: management of finished product storage, outbound logistics, marketing and sales, and customer service
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Figure 2.2: The Value Chain of a Manufacturing Company
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Organizational Structure
• Organizational structure: organizational subunits and their relationship with the overall organization
• Categories of organizational structure:
• Traditional
• Project
• Team
• Multidimensional
• Virtual
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Traditional Organizational Structure
• A hierarchical structure
• Major department heads report to a president or top-level manager
• A managerial pyramid shows the hierarchy of decision making and authority
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Figure 2.3: A simplified organizational model, showing the managerial pyramid
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Figure 2.4: A Traditional Organizational Structure
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Project Organizational Structure
• Centered around major products or services
• Temporary project teams
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Figure 2.5: A Project Organizational Structure
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Team Organizational Structure
• Centered on work teams or groups
• Temporary or permanent teams
• 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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Figure 2.6: A Multidimensional Organizational Structure
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Virtual Organizational Structure and Collaborative Work
• Employs individuals, groups, or business units in geographically dispersed areas
• People may never meet face to face
• Can be permanent or temporary
• Collaborative work: managers and employees can effectively work in groups around the world
Principles of Information Systems, Seventh Edition 19
Organizational Culture and Change
• Organizational culture: Major understandings and assumptions for a business, corporation, or organization
• Organizational culture can significantly influence information systems
• Organizational change: deals with how organizations plan for, implement, and handle change
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Reengineering
• Process redesign
• Radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results
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Figure 2.8: Reengineering
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Continuous Improvement
• Constantly seeking ways to improve business processes
• Benefits:
• Increased customer loyalty
• Reduced customer dissatisfaction
• Reduced opportunity for competitive inroads
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Table 2.2: Comparing Business Process Reengineering and
Continuous Improvement
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Technology Diffusion, Infusion, and Acceptance
• Technology diffusion: measure of how widespread the use of technology is in an organization
• Technology infusion: extent to which technology permeates a department
• Technology Acceptance Model (TAM): specifies factors that can lead to higher usage of technology in an organization
Principles of Information Systems, Seventh Edition 25
Total Quality Management
• Quality: ability of a product or service to meet or exceed customer expectations
• Total quality management (TQM): approaches, tools, and techniques that foster a commitment to quality throughout the organization
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Outsourcing, On-Demand Computing, and Downsizing
• Outsourcing: contracting with outside professionals
• On-demand computing: contracting for computer resources to rapidly respond to an organization’s varying workflow
• Downsizing: reducing the number of employees in an organization to cut costs
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Organizations in a Global Society
• As companies rely more heavily on virtual structures and outsourcing, businesses can operate around the world
• Challenges to operating in a global society:
• Every country has a set of customs, cultures, standards, politics, and laws
• Language
• Difficulty in managing and controlling operations in different countries
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Competitive Advantage
• Competitive advantage: significant, long-term benefit to a company over its competition
• Ability to establish and maintain a competitive advantage is vital to a company’s success
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Factors That Lead Firms to Seek Competitive Advantage
• Rivalry among existing competition
• Threat of new entrants
• Threat of substitute products and services
• Bargaining power of customers and suppliers
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Strategic Planning for Competitive Advantage
• Change the structure of the industry
• Create new products or services
• Improve existing products or services
• Use information systems for strategic purposes
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Table 2.4: Competitive Advantage Factors and Strategies
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Table 2.4: Competitive Advantage Factors and Strategies (continued)
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Performance-Based Information Systems
• Considers both strategic advantage and costs
• Uses productivity, return on investment (ROI), net present value, and other measures of performance
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Figure 2.9: Three Stages in the Business Use of Information Systems
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Productivity
• A measure of output achieved divided by input required
• Higher level of output for a given level of input means greater productivity
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Return on Investment and the Value of Information Systems
• Earnings growth
• Market share
• Customer awareness and satisfaction
• Total cost of ownership
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Careers In Information Systems
• Degree programs:
• Degrees in information systems
• Business degrees with a global or international orientation
• Computer systems are making information systems professionals’ work easier
• Opportunities in information systems are not confined to single countries
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Roles, Functions, and Careers in the Information Systems Department
• Primary responsibilities in information systems
• Operations: focuses on the efficiency of information systems functions
• Systems development: focuses on specific development projects and ongoing maintenance and review
• Support: provides user assistance
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Typical Information Systems Titles and Functions
• Chief Information Officer (CIO): employs the IS department’s 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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Typical IS Titles and Functions (continued)
• Internet careers:
• Strategists
• Programmers
• Web site operators
• Chief Internet Officer
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Summary
• An organization is a system
• Categories of organizational structure: traditional, project, team, multidimensional, and virtual
• Organizational culture: major understandings and assumptions of an organization
• Reengineering: radical redesign of business processes, organizational structures, information systems, and values of the organization to achieve a breakthrough in business results
Principles of Information Systems, Seventh Edition 42
• Continuous improvement: constantly seeking ways to improve business processes
• Outsourcing: contracting with outside professionals
• Downsizing: reducing number of employees to cut costs
• Competitive advantage: significant, long-term benefit to a company over its competition
• Performance-based information systems considers both strategic advantage and costs
Summary (continued)
Principles of Information Systems, Seventh Edition 43
• Productivity: a measure of output achieved divided by input required
• Primary responsibilities in information systems: operations, systems development, and support
• Typical information systems titles: Chief Information Officer (CIO), LAN administrator
Summary (continued)