Lecture 13 Organizing the Information System Function

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Lecture 13Organizing the Information System
Function
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Objectives

• Describe the history, evolution, and the role of
  the IS functions within firms
• Explain the alternative structures and locations
  of the IS function within modern-day
  organizations and what works best under which
  conditions
• Understand the critical issues currently facing
  business managers with respect to the
  organization of the IS function
• Describe the future of the IS function

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The History and Role of the IS Function

• In 1940s and early 1950s computers were giant
  counting machines (UNIVAC ENIAC)
• Before 1950 computer was a job classification
  title
• Changed in 1952 when IBM offered relatively
  affordable business computers
• Increasing the use of computers in business,
  increases the need of managing these resources.

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Management by Structure

• To manage resources, activities, and people in
  organizations, we tend to structure things.
• Organizational structure/chart, includes four key
  characteristics
• Describes the allocation of tasks and
  responsibilities
• Designate formal reporting relationships
• Identifies grouping of individuals into
  departments
• Includes the design of systems for effective
  communication, coordination, and integrations of
  effort in both vertical and horizontal directions.

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An Outgrowth of the Accounting Department

• In a traditional organization, departments were
  organized along functional business lines such as
  manufacturing and accounting.
• Computers adopted in 1950s as electronic
  accounting systems.
• In some other organizations, people are grouped
  together by product line.
• Example for an automobile manufacturer with this
  kind of organizational structure, one group might
  be for smaller, economy cars a second group
  might be for more expensive, luxury cars.

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An Outgrowth of the Accounting Department
Early Beginnings of the IS Function
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Evolution of the IS Function

• The 1960s
• Computers used in each functional areas.
• New departments were created for managing
  computing and the department was named as data
  processing or electronic data processing
  department.
• The 1970s
• The use of different types of computers has
  increased
• From support data processing to complex IS
• Information systems department

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Evolution of the IS Function to Data Processing
Departments
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Evolution of the IS Function to Data Processing
Departments
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Evolution of the IS Function

• The 1980s
• Begin using personal computers
• With telecommunications links both within and
  outside of organizations also growing, it was
  becoming even more difficult to centrally manage
  the computing resources
• Location of computing resources spread throughout
  the firm.
• Late 1980s and 1990s,
• Organizations needed systems integration and
  enterprise-wide information system architecture

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Alternatives Structures for the IS Function

• Technology use now spread throughout the
  organizations.
• Centralized management
• Traditional IS organizational structure
• Strong IS function with CIO
• Decentralized management
• Modern day Organizational structure
• Decision making is spread throughout the
  organization
• Hybrid model
• Structure has centralized and decentralized
  features

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A Centralized IS Structure

• CIO
• Highest-ranking administrator
• Strategic and long-term duties
• IS Director
• Head of department and mid-level manager
• Builds and maintains IS for functional areas
• Performs day-to-day management of IS

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A Centralized Structure
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A Decentralized IS Structure

• Provides services to functional areas that
  develop their own technologies, such as
• Managing the corporate networks in systems
  integration.
• Planning for systems growth and system use.
• Helping to coordinate technology use across the
  firms functional areas.

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A Decentralized IS Structure
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IS Personnel

• CIO - Highest-ranking IS manager
• IS Director - Responsible for managing all
  systems throughout the firm and the day-to-day
  operations of the entire IS unit
• Account Executive - managing the day-to-day
  operations of all aspects of IS within one
  particular division
• Information Center Manager - managing IS services
  such as help desks, hot lines, training,
  counseling and so on
• Development Manager - Responsible for
  coordinating and managing all new systems
  projects

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IS Personnel

• Project Manager - Responsible for managing a
  particular new project
• Maintenance Manager - Responsible for
  coordinating and managing all systems maintenance
  projects
• Systems Manager - Responsible for managing a
  particular existing system
• IS Planning Manager - Responsible for developing
  an enterprise-wide hardware, and networking
  architecture and for planning for systems growth
  and change

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IS Personnel

• Operations Manager - Responsible for supervising
  the day-to-day operations of the data and/or
  computer center
• Programming Manager - Responsible for
  coordinating support for maintenance of all
  systems software
• Webmaster - Responsible for managing the firms
  World Wide Web

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Competencies

• Good IS personnel should have the quality or
  state of being mentally competent for the
  following
• Technical
• Knowledge and skills in hardware, software, and
  networking
• Business
• Knowledge of business functional areas,
  Management and Social knowledge.
• Systems
• Knowledge and skills in systems integration,
  development methodology, critical thinking and
  problem solving.

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Critical Issues for the Locations and Structures
of the IS Function

• From Centralization to Decentralization and
  Hybrid Models.
• Downsizing of Organizations and IS Departments.
• From Ownership and Control to a Consulting
  Organization and a Service Mentality.

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From Centralization to Decentralization and
Hybrid Models

• Centralized or Decentralized / Hybrid
• The extent of which decision-making authority is
  toward the middle and higher ranks
• Centralized
• Strong IS unit that builds all internal systems
• Decentralized
• Development and control of computing resources
  located in functional area units

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When a Decentralized IS Structure Fits

• Strengths
• Fast changes, Client satisfaction, units make the
  decisions, large and complex distributed
  organizations
• Corporate strategy of unrelated diversification
• Focused different business strategy for each
  operating company
• Culture and reward system that emphasizes
  business unit autonomy

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When a Centralized IS Structure Fits

• Strengths
• Economies of scale, In-depth technical
  specialization development, easier to coordinate
  and integrate across business units
• Corporate strategy of related diversification
• History of strong central direction and
  monitoring

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When to Move Away From a Centralized IS Structure

• Corporate restructuring and new corporate
  strategy
• Organic decision processes
• Independent business units
• Decentralized locus of responsibility for many
  corporate functions

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When to Move Toward a More Centralized IS
Structure

• Shared belief in the strategic role of IS
• Dissatisfaction with progress in new system
  development projects
• Deficiencies in IS performance capabilities
• Some of the IS projects are out of control and IS
  budget is too high

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Downsizing of Organizations and IS Departments

• Technology used to streamline business functions
• Shrinks the IS department, along with other parts
  of the firm
• Some people lose their jobs, but many firms are
  forced to do this to remain competitive
• End users are asked to take on many of the
  traditional IS tasks

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From Ownership and Control to a Consulting
Organization

• Early IS departments provided little customer
  service
• Users forced to put up with poor service
• Users began to develop own applications
• IS personnel realized that they needed an
  attitude adjustment
• Modern IS units are more responsive than they
  used to be service mentality

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The Future for the IS Function

• Continued Growth and Development
• Pervasiveness and Spread of IS throughout the
  Organization
• Changing Skill Set and Human Resource Planning
• Career Prospects and Opportunities

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Continued Growth and Development

• Increased importance of technology to the success
  of organizations
• Demand for IS personnel will continue to grow
• Easy to predict growth and change
• Hard to predict what and how things will change

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Pervasiveness and Spread of IS Throughout the
Organization

• IS personnel often have dual reporting
  relationships reporting to both the central IS
  group and the business function they serve
• Organizations are pushing their IS personnel out
  into the business units
• Firms continue to need centralized IS planning,
  deployment, and management

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Changing Skill Set and Human Resource Planning

• Need functional area staff to have technology
  skills
• Need IS staff to know functional business areas
• Any of these people will be hired into and
  located within the IS departments of firms, but
  they are likely to spread a lot of their time
  working out in the business unit with their
  clients

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Career Prospects and Opportunities

• There are now and will continue to be lots of
  jobs related to IS
• Jobs will be found in all industries and all
  market segments
• IS departments will continue to exist and play
  important role in the future.