INFORMATION SYSTEMS, ORGANIZATIONS and STRATEGY

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INFORMATION SYSTEMS, ORGANIZATIONS and STRATEGY
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Learning Objectives

• Identify salient characteristics of organizations
• Discuss the idea of business functions
• Review the types of systems that support business
  functions
• Talk about the issues associated with functional
  systems
• Evaluate how information systems support business
  strategy
• Discuss cross-functional systems (a major focus
  of this course)

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What is an organization?

• Technical definition
• A stable, formal, social structure
• Takes resources from environment, processes them
  and produces outputs

Examples?
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Summary Organizational Features

• Common Features
• Formal Structure
• SOPs
• Politics
• Culture

• Unique Features
• Organizational Type
• Environment
• Goals
• Power
• Constituencies
• Functions/Processes
• Leadership
• Technology

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Formal Structure

• Clear division of labour
• Hierarchy
• Explicit rules and procedures (SOPs)
• Impartial judgment
• decisions made based on facts and established
  rules
• Technical qualifications for positions
• Workers only qualify for jobs if they have the
  right skills and experience
• Maximum organizational efficiency
• The organization is set up to be efficient,
  organizations always trying to become more
  efficient
• Does X have Formal Structure?

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Standard Operating Procedures

• Standard Operating Procedures (SOPs)
• Standard routines used within the organization to
  deal with expected situations
• Some formal, some rules of thumb
• Process an order, deal with a customer complaint
• Assist with efficiency why?
• What are examples of SOPs at X?

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Organizational Politics

• Politics exist in all organizations
• Different interests and viewpoints
  disagreements, conflicts, struggles politics
• Political resistance change
• Do you think there are Politics at X?

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Organizational Culture

• Fundamental beliefs in an organization about the
  reason for being for an organization
• Products
• Way people should be treated
• Culture can constrain politics (make sure people
  understand acceptable behavior)
• All organizations have a culture..
• What are some key characteristics of St FX
  culture?

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How do organizations gain competitive advantage
using information systems?

• Businesses determine competitive strategies
• Create processes to achieve strategies
• Information systems developed to support business
  processes
• Help organizations achieve competitive advantage
• Need to avoid creating systems that are unrelated
  to organizations strategy

The only reason to build Information Systems is
to solve business problems!
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Case Study

• New wave enterprises is a relatively new company,
  founded in 2004, that manufactures and sells snow
  and surf boards. It has one retail location
  (Halifax) and sells its products through
  specialty shops through Atlantic Canada and New
  England. Its manufacturing operations are in
  Wolfville NS, it employs about 100 people. New
  wave has been growing rapidly. The management is
  trying to determine how technology can help them.
  

• Questions
• What do you think New Waves major business
  functions (activities) are? In other words, what
  are the different departments that New Wave has?
• What do you think some of the business problems
  are in each of the functions you identified? In
  other words, what would New Wave have to do very
  well in order to be successful?

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What are business functions (activities)

• Reorganized Porter Value Chain Model shows the
  scope and purposes of different types of
  functions within the organization

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Value Chain Activities

• Primary activities
• Relate directly to organizations customers and
  products
• Marketing and sales
• Inbound logistics
• Operations and manufacturing
• Outbound logistics
• Service and support
• Facilitated by support activities
• Human resource
• Accounting and infrastructure
• Procurement
• Technology activities

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What are business functions (activities)

• Relating model back to the basic definition of
  organizations

Input
Processing
Output
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What are the fundamental types of information
systems?
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Calculation Systems

• Antiquated systems
• Relieved workers of repetitive calculations
• Labor-saving devices
• Produced little information
• Examples systems that computed payroll and wrote
  paychecks inventory tracking

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Functional Systems

• Facilitated the work of single department or
  function
• Functions added to calculation system programs to
  provide more value
• e.g. payroll expanded to become human resources
• Islands of automation
• Work independently from each other
• Effective as independent functions
• Inefficient working in cooperation with other
  processes across entire business
• Examples human resources financial reporting

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Basic Types of Functional Systems

• Marketing and Sales systems
• Operations systems
• Manufacturing systems
• Human Resource systems
• Accounting and Finance systems

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Reorganized Porter Value Chain Model and Its
Relationship to Functional Systems
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Marketing and Sales Systems

• Few systems support marketing
• Customer contact management
• Many systems support sales
• Sales Order Processing (selling stuff
  calculating sales amounts, etc.)
• Sales forecasting
• used for planning production, managing inventory,
  financial reporting
• Customer management
• generate follow-on business

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Manufacturing Systems

• Used by companies that transform materials into
  products
• Support production and planning
• Push production planning
• organization creates schedule and pushes goods
  through manufacturing and sales
• Pull production planning
• responds to customer demand
• reduction in inventory triggers production
• One-off producers fall into neither category
• Manufacturing scheduling and operations

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Human Resources Systems

• Payroll
• Compensation systems
• Recruiting
• Assessing employee performance, skills, and
  training
• Human resource planning systems

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Accounting and Finance Systems

• Support organizations accounting activities
• General ledger
• Financial reporting
• Accounts receivable
• Accounts payable
• Cost accounting
• Budgeting
• Cash management
• Treasury management

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Case Study

• Think about the business problems your group
  defined for New Wave. How could information
  systems help solve those problems?

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What are the problems with functional systems?

• Systems provide tremendous benefits, but are
  limited because they operate in isolation
• Data duplication results from each application
  having own database
• potential lack of data integrity
• Business processes disjointed across functions
• produces lack of integrated enterprise
  information
• Limited information available at any one source
• Inefficient decisions based on limited knowledge
• Increased costs to organization

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Major Problems of Isolated Functional Systems
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Whats the difference between a function and a
process?

• Business Function Related sets of specialized
  activities carried out by an organization
• For efficiency keep people who do the same
  thing together
• Often department
• Examples?
• Business Process the way that work is organized
  and coordinated in an organization to add value

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Whats the difference between a function and a
process?
Customer Sale
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Integrated, Cross-Functional Systems

• Cross-departmental systems operate across
  departmental boundaries
• Increased functionality
• Process-based systems support complete business
  processes
• Integrated processing systems are more efficient
• Needs clear line of authority
• Inter-organizational systems are cross-functional
  systems used by two or more related companies

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What are cross-functional systems?

• Cross-functional systems are designed to overcome
  problems in functional systems
• Customer Relationship Management (CRM)
• Support the business processes of attracting,
  selling, managing, delivering, and supporting
  customers
• Direct value chain activities that involve the
  customer
• Integrates four phases of the customer life
  cycle marketing, customer acquisition,
  relationship management, and loss/churn
• All customer data stored in single database
• Enterprise Resource Planning (ERP)
• Support all the primary business processes as
  well as the human resource and accounting support
  processes
• Enterprise-wide systems that integrate sales,
  order, inventory, manufacturing, and customer
  service activities

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CRM Components
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Characteristics of ERP
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Benefits of ERP

• Efficient business processes
• Inventory reduction
• Lead-time reduction
• Improved customer service
• Greater, real-time insight into organization
• Higher profitability

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What are interorganizational systems?

• Systems that cross organizations
• involve selling and purchasing
• integrate multiple-company operations
• Types of Interorganizational Systems
• E-commerce
• Supply Chain Management (SCM)

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E-Commerce

• Buying and selling of goods and services over
  public and private computer networks
• Merchant companies
• that take title to the goods they sell
• buy goods and resell them
• sell services that they provide
• Nonmerchant companies
• arrange for the purchase and sale of goods
  without ever owning or taking title to those
  goods
• sell services provided by others

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E-Commerce Categories
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Benefits of E-Commerce
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Supply Chain Management

• A supply chain is a network of organizations and
  facilities that transforms raw materials into
  products delivered to customers
• Involves customers, retailers, distributors,
  manufacturers, suppliers, transportation
  companies, warehouses, inventories, and some
  means for transmitting messages and information
  among the organizations involved

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Supply Chain Relationships
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Benefits of Information Systems on Supply Chain
Performance

• Reduce costs of buying and selling
• Increase supply chain speed
• Reduce size and cost of inventories
• Improve delivery schedulingenable JIT
• Fix bullwhip effect
• Do not optimize supply chain profitability