Chapter Seven

Information Technology and Knowledge Management

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

7-1

Evolution of Organizational Applications of Information Technology
TOP (strategy, plans, non-programmed)

3. Strategic Weapon
INTERNAL EXTERNAL • Networking • Extranets • Intranets • E-Commerce • Enterprise resource • Network planning structure

2. Business Resource
MANAGEMENT LEVEL
• Management Information systems • Decision Support Systems • Executive information systems

1. Operations
• Transaction processing systems • Data warehousing FIRST-LINE (operational, past, LOW programmed)

Direction of Information System Evolution

SYSTEM COMPLEXITY
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

HIGH
7-2

Strategic Advantages from Information Technology
• Low-Cost Leadership
– Operational efficiency – Interdepartmental coordination – Rapid re-supply

• Differentiation
– Lock in customers – Customer service – Product development, market niches

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

7-3

Electronic Data Interchange for International Transactions
Manufacturer’s Bank’ Customer’s Bank

Suppliers

MANUFACTURER

Customer

Export Freight Forwarder

Import Clearing Agent

Export Customs

Import Customs

©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

7-4

The Dynamic Network Organization Structure
Distribution Manufacturing

Health Products, Inc.
(Central Hub)

Accounts Receivable Public Relations
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Marketing

7-5

Key Characteristics of Traditional vs. Emerging Inter-organizational Relationships
Traditional Inter-organizational Relationships
Arm’s-length relationship Suppliers

Emerging Inter-organizational Relationships
Interactive, electronic relationship Electronic ordering, invoicing, payments Direct access to manufacturer, real-time information exchange Electronic access to product information, consumer ratings, customer service data
7-6

Use of telephone, mail, some EDI for ordering, invoicing, payments

Customers

Limited communication with manufacturer Mix of phone response, mail hard copy information
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e

Source: Based on Charles V. Callahan and Bruce A. Pasternack, “Corporate Strategy in the Digital Age,” Strategy & Business, Issue 15, Second Quarter 1999, 10-14.

Two Approaches to Knowledge Management
Provide high-quality, reliable, and fast information systems for access of codified reusable knowledge

Explicit

Channel individual expertise to provide creative advice on strategic problems

Tacit

People-to-documents
Develop an electronic document system that codifies, stores, disseminates, and allows reuse of knowledge Invest heavily in information technology, with a goal of connecting people with reusable codified knowledge Data warehousing Knowledge mapping Electronic libraries Intranets, networks
Source: Based on Morten T. Hansen, Nitin Nohria, and Thomas Tierney, “What’s Your Strategy for Managing Knowledge?” Harvard Business Review, March-April 1999, 106-116.

Person-to-person

Knowledge Management Strategy Technology

Develop networks for linking people so that tacit knowledge can be shared Invest moderately in information technology, with a goal of facilitating conversations and the exchange of tacit knowledge Dialogue Learning histories and storytelling Communities of practice
7-7

Mechanisms
©2000 South-Western College Publishing Cincinnati, Ohio Daft, Organizational Theory and Design, 7/e