This document discusses information systems organization and strategy. It covers how organizations and information systems influence each other, and how the interaction between technology and organizations is complex and mediated by factors like structure, processes, politics, culture and environment. It defines organizations technically as entities that take resources and produce outputs, and behaviorally as balances of rights and responsibilities. The technical view focuses on inputs and outputs while the behavioral view emphasizes relationships and structures. The document also discusses organizational routines, politics, culture, environments, structure, and how information systems can impact organizations economically and in terms of structure and behavior by flattening hierarchies and enabling virtual organizations. It introduces models for using IS to achieve competitive advantage, including Porter's competitive forces model and the business value chain

1. Unit 3
Information Systems Organization and Strategy

2. Organizations and information
systems,
● Information systems and organizations influence one another.
● Information systems are built by managers to serve the interests of the
business firm.
● Organization must be aware of and open to the influences of
information systems to benefit from new technologies

3. ● The interaction between information technology and organizations is
complex and is influenced by many mediating factors, including the
organization’s structure, business processes, politics, culture,
surrounding environment, and management decisions.

4. Organization
Technical definition
● Stable, formal social structure that takes resources from environment
and processes them to produce outputs
● A formal legal entity with internal rules and procedures, as well as a
social structure
Behavioral definition
Organization is a collection of rights, privileges, obligations, and
responsibilities delicately balanced over a period of time through
conflict and conflict resolution .

5. Technical View
● In the microeconomic definition of organizations, capital and
labor (the primary production factors provided by the
environment) are transformed by the firm through the production
process into products and services (outputs to the environment).
The products and services are consumed by the environment,
which supplies additional capital and labor as inputs in the
feedback loop.

6. Behavioral View
● The behavioral view of organizations emphasizes group
relationships, values, and structures.

7. ● Technical view encourages us to focus on how inputs are combined to
create output when technology changes are introduced to the firm
● Behavioral view suggests that building new IS or rebuilding old ones,
change the organizational balance of rights, privileges, obligations,
responsibilities and feelings that have been established over a long
time
● Technical view tells us how to combine capital, labor & IT
and behavioral model gives internal view about how IT affects the
organization’s inner workings
● Behavioral definition complement technical

8. Features of Organisation
● Organizations are bureaucracies with clear-cut divisions of labor and
specialization
● Organizations arrange specialists in a hierarchy of authority in which
everyone is accountable to someone and authority is limited to specific
actions governed by abstract rules or procedures
● The organization is devoted to the principle of efficiency: maximizing
output using limited input
● Rules of SOPs create system of impartial decision making
● Firms hire & promote employees of better technical qualifications and
professionalism for positions

9. Routines and business
processes
• Routines are precise rules, procedures, and practices developed to cope
with virtually all expected situations
• As employees learn these routines, they become highly productive and
efficient
• Firm can reduce costs over time
• Business processes are collection of such routines
• Business firm is a collection of business processes
•

10. Organizational Politics
● Employees occupy different positions with different specialties,
concerns and perspectives
● Divergent viewpoints about how resources, rewards and punishments
should be distributed
● This leads to political struggle, competition & conflict
● Political resistance influences organizational change

11. Organizational Culture
● Encompasses set of assumptions that define goal and product
● What products the organization should produce How and where it
should be produced For whom the products should be produced
● Business processes are anchored in & to the culture
● Culture promotes common understanding, agreement on procedures,
and common practices
● Any technological change that threatens commonly held cultural
assumptions confronts strong resistance

12. Organizational environments
● Organizations and environments have a reciprocal relationship.
● Organizations draw resources from and supply output to the
environment
● Respond to legislatives and other govt requirements as well as the
actions of customers & competitors
● Organizations can influence their environments
● Environments change faster than organizations
● Information systems can be an instrument of environmental scanning,
act as a lens

13. ENVIRONMENTS AND ORGANIZATIONS
Information technology plays a critical role in helping organizations perceive environmental change
and act on their environment.

14. Organizational Structure
● All organizations have a structure or shape.

15. Impacts of IS
(ECONOMIC IMPACTS)
● IT changes both the relative costs of capital and the costs of
information. Information systems technology can be viewed as a factor
of production that can be substituted for traditional capital and labor
● As the cost of information technology decreases, it is substituted for
● labor and other forms of capital such as buildings and machinery,
which remain relatively expensive.
● IT also affects the cost and quality of information and changes the
economics of information. Information technology helps firms contract
in size because t can reduce transaction costs
● Information technology, especially the use of networks, can help firms
lower the cost of market participation.
● Information technology, by reducing the costs of acquiring and
analyzing information, permits organizations to reduce agency costs

16. Impacts of IS
(ORGANIZATIONAL AND BEHAVIORAL IMPACTS)
IT Flattens Organizations
● Information technology facilitates flattening of hierarchies by
broadening the distribution of information to empower lower-level
employees and increase management efficiency
● IT pushes decision-making rights lower in the organization because
lower-level employees receive the information they need to make
decisions without supervision.
● Managers receive so much more accurate information on time, they
become much faster at making decisions, so fewer managers are
required.
● Management costs decline as a percentage of revenues, and the
hierarchy becomes much more efficient.

18. Impacts of IS
(ORGANIZATIONAL AND BEHAVIORAL IMPACTS)
Post Industrial organizations
● Organizations flatten because in postindustrial societies, authority
increasingly relies on knowledge and competence rather than formal
positions
● Information technology may encourage task force-networked
organizations in which groups of professionals come together—face to
face or electronically for short periods of time to accomplish a specific
task.
● Firms may operate as virtual organization in which work no longer is
tied to a geographic location.
● Virtual organizations use networks to link people, assets and ideas

21. Impacts of IS
(ORGANIZATIONAL AND BEHAVIORAL IMPACTS)
Organizational resistance to change
● Information systems become bound up in organizational politics
because they influence access to a key resource – information
● Information systems potentially change an organization’s structure,
culture, politics, and work
● Most common reason for failure of large projects is due to
organizational and political resistance to change

23. USING IS TO ACHIEVE
COMPETITIVE ADVANTAGE
PORTER COMPETITIVE FORCES MODEL
●

24. IS STRATEGIES FOR DEALING
WITH COMPETITIVE FORCES
Low-Cost Leadership
● Use information systems to achieve the lowest operational costs and
the lowest prices.
Product Differentiation
● Use information systems to enable new products and services, or
greatly change the customer convenience in using your existing
products and services. Example:Google
● Manufacturers and retailers are using information systems to create
products and services that are customized and personalized to fit the
precise specifications of individual customers

25. IS STRATEGIES FOR DEALING
WITH COMPETITIVE FORCES
Focus on Market Niche
● Use information systems to enable a specific market focus, and serve
this narrow target market better than competitors
● Information systems support this strategy by producing and analyzing
data for finely tuned sales and marketing techniques. Information
systems enable companies to analyze customer buying patterns,
tastes, and preferences closely so that they efficiently pitch advertising
and marketing campaigns to smaller and smaller target markets.
Strengthen Customer and Supplier Intimacy

26. THE BUSINESS VALUE CHAIN
MODEL
● Porter’s Model is not very specific about what exactly to do, and it does
not provide a methodology to follow for achieving competitive
advantages.
● The value chain model highlights specific activities in the business
where competitive strategies can best be applied (Porter, 1985) and
where information systems are most likely to have a strategic impact
● This model identifies specific, critical leverage points where a firm can
use information technology most effectively to enhance its competitive
position
● The value chain model views the firm as a series or chain of basic
activities that add a margin of value to a firm’s products or services.

27. THE BUSINESS VALUE CHAIN
MODEL
● Primary activities are most directly related to the production and
distribution of the firm’s products and services, which create value for
the customer.
● Support activities make the delivery of the primary activities possible
and consist of organization infrastructure
● Supply chain management systems that coordinate the flow of
resources into your firm, and customer relationship management
systems that coordinate your sales and support employees with
customers, are two of the most common system applications that
result from a business value chain analysis.
● Business value chain model will also cause you to consider
benchmarking your business processes against your competitors or
others in related industries, and identifying industry best practices