ISYS6312 – Information System

Strategy, Management and

Acquisition
Week 3
Organizational Strategy and Information
Systems
 Learning Outcomes
• LO1: Explain the key issues on IS Strategy.
 References

 Pearlson, K. E. and Saunders, C. S. (2015). Managing and Using

Information Systems: A Strategic Approach. John Wiley and Sons.
Chapter. 3.
 David Kroenke, Randall J. Boyle, (2017). Using MIS. Chapter 3.
 Sub Topics

Organizational Strategy

Information System and Organizational

Design

Information Systems and Management

Control Systems

Information Systems and Culture

 Learning Objectives

• Understand how the use of information technology impacts

an organization.
• Identify the type of organizational structure that tends to be
most willing to embrace technological change and
sophistication.
• List the advantages and disadvantages of the networked
organizational structure.
• Discuss how IT has changed the way managers monitor and
evaluate
• Define and explain the concept and importance of virtual
organizations.
• Identify the challenges that are faced by virtual teams.

5
 Who/What Delivers IT Value?

Technology
IT Value is a function P
people ______
of ______, process,
e
technology
and _________. o
p
l
IT Value is also a e
function of
Process
organizational
___________ value.
Organizational design variables

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ORGANIZATIONAL STRATEGY
 Organizational Ware

Strategy
HW
Structure
Organizational
Ware Infra-structure

SW • SOM (Social Operating Mechanism)

• Reward/ assessment

Culture (SOS)
SOM is a key process to help groups come together
to plan and take effective action for change.
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 Organizational Strategy

• the organization’s design, as well as the managerial choices it

makes to define, set up, coordinate, and control its work
processes
• Optimized organizational design and management control
systems support optimal business processes which reflect the
firm’s values and culture.
business diamond and
• Models used: _____________________
managerial levers
__________________ (see chapter 1)
• This chapter builds on the managerial levers model discussed in
chapter 1.
– Three types of managerial levers: organizational, control, cultural.
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 Key Characteristics
• Includes the organization’s design, as well as the
managerial choices that define, set up,
coordinate, and control its work processes
• Optimized organizational design and management
control systems support optimal business
processes which reflect the firm’s values and
culture
• This chapter builds on the managerial levers
model discussed in chapter 1.
• Figure 3.1 summarizes complementary design
variables from the managerial levers framework.
11
 Figure 1.5 The Leavitt Business
Diamond

Structure

Tasks Information
and Control

People

(Source: Hammer et al, 1994)

12
 FIGURE 1.6 MANAGERIAL LEVERS AND
FIGURE 3.3 ORGANIZATIONAL DESIGN VARIABLES

Execution What is the

objective of the
Control model?
Decision
Organization rights
(Design) Business
processes Data

Formal
reporting Organizational
Strategy relationships People, Planning effectiveness
Information, and
What are the Technology
“THREE” Informal
networks Performance
variables in the measurement
Give the manager
“Managerial and a set of
Levers” model Incentives
evaluation frameworks to use
Values and in evaluating
that are used by
rewards various aspects of
decision makers?
organizational
design.
Culture
Source: Cash, et al., 1994
INFORMATION SYSTEM AND
ORGANIZATIONAL DESIGN
 IS and Organizational Design

• IS in the organizational designs:

– Defines the flow of information throughout the
organization.
– Facilitate management control at the organizational and
individual levels.
• Culture impacts IS and organizational performance.
• IS in the organization’s physical structure is designed to
facilitate the communication and work processes necessary
to accomplish the organization’s goals.
• The organization structures of Cognizant and TCS, while very
different, reflect and support the goals of each company.
 Formal Reporting
Relationships and
Organization Structures
• Organization structure is the way of
designing an organization so that decision
rights are correctly allocated.
• The structure of reporting relationships
typically reflects the flow of communication
and decision making throughout the
organization.
• Traditional organizations are hierarchical,
flat or matrix in design (Fig. 3.2).
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 Formal Reporting Relationships and
Organization Structures (cont.)

• In hierarchical organizations, middle managers tell

subordinates what to do and tell superiors the
outcomes. IS supports this hierarchy.
• In flat structured organizations, work is more flexible and
employees do whatever is needed. IS allows offloading
extra work and supports intra-firm communications.
• In matrix organizations, work is organized into small work
groups and integrated regionally and nationally/globally.
– IS reduces operating complexities and expenses by allowing
information to be easily shared among different managerial
functions.

17
Figure 3.2 Hierarchical, Flat and Matrix Organization
Structures

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 Networked Organizational
Structure
• Made possible by new information systems.
• They feel flat and hierarchical at the same time.
• Decision rights are decentralized in this structure.
• Defined by their ability to promote creativity and
flexibility while maintaining operational process
control, which is achieved by substituting
hierarchical controls with controls based on IS
• Extensive use of communication technologies and
networks also makes it easier to coordinate across
functional boundaries
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Figure 3.4 The Networked Organization

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 Traditional

Hierarchical Flat Matrix Networked

Description Bureaucratic w/ Decision-making Workers assigned Formal/informal
defined levels of pushed down to to 2 or more communication
management lowest level supervisors networks that
connect all
Division of labor Informal roles, Known for
Characteristics
specialization, planning and Dual reporting flexibility and
unity of command control; often based on adaptability
sm.,young orgs. function/purpose

Type of Stable Unstable

Environment Best
Certain Uncertain Unstable Unstable
Supported
Uncertain Uncertain
Basis of Primary function
Structuring Primary function Networks
Functions and
Power Structure Centralized Centralized purpose
Distributed
Key Tech. Mainframe, Personal Distributed
Supporting this centralized data computers Intranets and
and processing Networks Internet

Figure 3.4 Comparison of Organizational Structures

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 Informal Networks

• Informal relationships exist and can play an

important role in the functioning of an organization.
• Some informal relationships are designed by
management:
– Working on a project.
– Job rotation program, etc.
• Unintended networks are formed throughout an
organization by:
– Proximity
– Shared interest
– Family ties, etc.
• Some even cross organizational boundaries.

Copyright 2010 John Wiley & Sons, Inc. 22

 What is Organization
Transformation?

• Organization transformation is a comprehensive

organization-wide change initiative that results in
change in the “deep structure” of the firm, radically
altering strategy, structure, systems, processes,
human resource requirements, and core values and
beliefs.
• With the overall change initiative resulted in radical
change, the implementation process proceeded
through overlapping episodes of incremental and
radical change consistent with the change process.

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 DILEMMA IN ORGANIZATION DESIGN

Complex ???

Hierarchy
(Control)
Organization

Entrepreneurial
(Autonomy)
Simple
Stable Environment Dynamic
Certain Uncertain
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 THE IT DESIGN CHALLENGE PARALLELS THE
ORGANIZATION DESIGN CHALLENGE
Main Frame
Complex

“Networked Intelligence”
Organization (Collaboration/ Distributed) 1990s and beyond
“Centralized Intelligence”
Mainframe
(Control) 1960s, 1970s

“Decentralized Intelligence”
Simple Microcomputer
(Autonomy) 1980s
Stable Environment Dynamic
Certain Uncertain 25
 THE EMERGING INFORMATION AGE
ORGANIZATION
Information/Knowledge Age

Complex
Standardization Learning
Hierarchy
Supervision Flexibility
(compliance)
Shared Collaboration
understanding (commitment)

Organization Shared
People purpose

Information
Work Technology Autonomy

Simple
Entrepreneurial
Stable Environment Dynamic
Certain Uncertain
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 Transitions in
Organization Design
Learning
• From Control to __________
– Promote flexibility, creativity, and learning while
continuing to enable tight control of operating process
Collaboration / Co-opetition
• From Autonomy to ___________
– Line mangers are empowered to make decisions
– Timely, quality distributed information and new
communication technologies (e.g., video conferencing)
are important factors that are enabling dramatic
changes in organization redesign.

27
Dr. Chen, Information, Organization, and Control
 Figure 3.4 Comparison of organizational structures
Hierarchical Flat Matrix Networked

Description Bureaucratic w/ Decision-making Workers assigned Formal/informal

defined levels of pushed down to to 2 or more communication
management lowest level supervisors networks that
connect all
Division of labor Informal roles, Dual reporting Known for flexibility
Characteristics and adaptability
specialization, unity planning and based on
of command control; often function/purpose
sm.,young orgs. Unstable
Type of Stable Unstable Unstable Uncertain
Environment Uncertain
Best Supported Certain Uncertain
Networks
Primary function Primary function Functions and
Basis of
Structuring purpose
Power Structure Distributed
Centralized Centralized Distributed
Key Tech. Intranets and
Supporting this Mainframe, Personal Networks Internet
centralized data and computers
processing
INFORMATION SYSTEMS AND
MANAGEMENT CONTROL SYSTEMS
 INFORMATION SYSTEMS
AND MANAGEMENT
CONTROL SYSTEMS
• Monitor
IT changes the way Managers _______.
• IT changes the way Managers Evaluate.
• IT changes the way Managers Provide Feedback.
• IT changes the way Managers _________
and _______. Compensate
Reward
• IT changes the way Managers Control Processes.

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 Fig 3.1 Organizational design variables
Organizational variables
Decision rights
Business Processes
Formal reporting relationships
Informal networks
Control variables
Data
Planning
Performance measurement
and evaluation
Incentives
Cultural variables
Values
(Managerial Levers)
Authority to initiate, approve, implement, and control various types of
decisions necessary to plan and run the business.
The set of ordered tasks needed to complete key objectives of the
business.
The structure set up to ensure coordination among all units within the
organization.
Mechanism, such as ad hoc groups, which work to coordinate and transfer
information outside the formal reporting relationship.
The information collected, stored, and used by the organization.
The processes by which future direction is established, communicated, and
implemented.
The set of measures that are used to assess success in the execution of
plans and the processes by which such measures are used to improve the
quality of work.
The monetary and nonmonetary devices used to motivate
behavior within an organization.
The set of implicit and explicit beliefs that underlie decisions made and
actions taken.
 ORGANIZATIONAL CHARACTERISTICS OF
INFORMATION AGE ORGANIZATIONS
Dimension Characteristics
Companies have benefits of small and large scale
simultaneously.
Organizational Lg. organizations adopt flexible/dynamic structure
Structure Centralized/decentralized control blur
Focus on projects/process vs. tasks/procedures
Human Resources Workers better trained, autonomous, transient
Work environment exciting, engaging
Management shared, rotated, even part-time
Job descriptions tied to defined tasks non-existent
Compensation tied directly to contribution
Management Processes Decision-making is well understood
Control separated from reporting relationships
Computers support creativity at all levels
IS retain corp. history, experience, expertise
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 Management Control

• IT profoundly affects the way managers control their

organizations.
• People and processes are monitored in ways that
were not possible only a decade ago.
• Managers need to control work done at the process
level.
• The organizational structure will determine the level
of control that a manager must exercise.
• IS plays three important roles in management
control processes:
– Data collection, Evaluation, and Communication.

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 Planning and Information
Technology

• Information technology can play a role in planning in

three ways:
– IS can provide the necessary data to develop the strategic
plan
– Some IS actually automate the planning process
– IS can lie at the heart of a strategic initiative and can be
used to gain strategic advantage

Copyright 2010 John Wiley & Sons, Inc. 34

 Data Collection and IT
• Monitoring work can take on a completely new
meaning with the use of information technologies.
• IS make it possible to collect such data as:
– number of keystrokes
– precise time spent on a task
– exactly who was contacted
– specific data that passed through the process
• Organizational design challenge in data collection is
to:
– embed monitoring tasks within everyday work
– reduce the negative impacts to workers being
monitored.
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 Monitoring and Performance
Software

data directly from work

• Software collecting monitoring _____
tasks, or embedding the creation and storage of
performance information into software used to perform
work is more reliable.
• Monitor “cyberslacking” and “cyberslouching.”
• Monitoring is ethical and in the best interest of business.
• Employees must be informed about monitoring software.
Reward increase in productivity derived from
• __________
monitoring information.
• Balance employees’ right to privacy against the needs of
the business to have surveillance mechanisms in place.
 Performance Measurement,
Evaluation and IT

• IS make it possible to evaluate data against reams of standard or

historical data.
• Managers can more easily understand work progress and
performance.
• However, analysis paralysis (too much data/information) can cause
managers to become overwhelmed.
• How the information is used is important to performance
measurement.
• How feedback is communicated in the organization plays a role in
affecting behavior.
• Key is making sure that the information is handled discreetly and
appropriately.
Supporting activities in the Value Chain.
___________
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INFORMATION SYSTEMS AND
CULTURE
Levels of culture

39
Thank You
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