Chapter 3 - Strategic Use of Information Resources

Chapter 3 - Strategic Use of Information Resources

Managing and Using Information Systems: A Strategic Approach Fifth Edition Keri Pearlson & Carol Saunders Ch a pt er 3 Organizational Strategy & Information Systems PowerPoint Files by Michelle M. Ramim Huizenga School of Business and Entrepreneurship Nova Southeastern University Pearlson and Saunders 5th Ed. Chapter 3 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. 3-2 Pearlson and Saunders 5th Ed. Chapter 3 Real World Example Cognizant Technology Solutions grew fast to become a $1.4 billion revenue company providing IT outsourcing services.

A quick growth required that they reinvent their organization move from a cost based to a relationship based structure. Managers had to interact with customers and developers in different locations. A tremendous strain was put on managers because they had to work day and night. Some of the units adopted a matrix structure sharing managerial responsibilities. 3-3 Pearlson and Saunders 5th Ed. Chapter 3 Real World Example - (Cont.) Tata Consultancy Services (TCS), the largest outsourcing company and software exporter in India, chose a different organization structure designed to focus on customers and boost revenue growth.

Added a new layer of leaders to oversee the businesses and free up the CEOs time to work on strategy. Different organizational structures reflect different organizational strategies that are used by organizations to implement their business strategies and accomplish organizational goals. 3-4 Pearlson and Saunders 5th Ed. Chapter 3 Organizational Strategy Includes the organizations 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 firms values and culture. Figure 3.3 summarizes complementary design variables from the managerial levers framework.

Three types of managerial levers:: organizational, control, cultural. 3-5 Figure 3.1 Organizational design variables. Variable Description Pearlson and Saunders 5th Ed. Chapter 3 Organizational variables Decision rights Authority to initiate, approve, implement, and control various types of decisions necessary to plan and run the business. Business processes The set of ordered tasks needed to complete key objectives of the business. Formal reporting relationships The structure set up to ensure coordination among all units within the organization. Informal networks

Mechanism, such as ad hoc groups, which work to coordinate and transfer information outside the formal reporting relationships. Control variables Data The information collected, stored, and used by the organization. Planning The processes by which future direction is established, communicated, and implemented. Performance measurement and evaluation Incentives 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 non-monetary devices used to motivate behavior within an organization. Cultural variables Values The set of implicit and explicit beliefs that underlie decisions made and actions taken.

3-6 Pearlson and Saunders 5th Ed. Chapter 3 IS and Organizational Design IS in the organizational designs: o Defines the flow of information throughout the organization. o Facilitate management control at the organizational and individual levels. Culture impacts IS and organizational performance. IS in the organizations physical structure is designed to facilitate the communication and work processes necessary to accomplish the organizations goals. The organization structures of Cognizant and TCS, while very different, reflect and support the goals of each company. 3-7

Pearlson and Saunders 5th Ed. Chapter 3 Decision Rights Who in the organization has the responsibility to initiate, supply information, approve, implement, and control various types of decisions. Ideally the person with the most information and in the best position should have these rights. (i.e. senior leaders). Organizational design focus on making sure that decision rights are properly allocated. Zara - decision rights moved to the store managers, providing for quicker responses to their local customer base. 3-8 Pearlson and Saunders 5th Ed. Chapter 3 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. (Fig. 3.4). The networked structure is a newer organizational form. Social networks and virtual communities. 3-9 Pearlson and Saunders 5th Ed. Chapter 3 Figure 3.4 Comparison of organizational structures Hierarchical

Flat Description Bureaucratic w/ defined levels of management Decisionmaking pushed down to lowest level Workers assigned to 2 or more supervisors Characteristics Division of labor specialization, unity of command Informal roles, planning and control; often sm.,young orgs. Dual reporting

based on function/purpose Unstable Uncertain Unstable Uncertain Unstable Uncertain Functions and purpose Networks Distributed Distributed Networks Intranets and Internet Type of Environment Best Supported Basis of

Structuring Power Structure Key Tech. Supporting this Stable Certain Primary function Centralized Mainframe, centralized data and processing Primary function Matrix Centralized Personal computers Networked Formal/informal communication networks that connect all

Known for flexibility and adaptability 3-10 Pearlson and Saunders 5th Ed. Chapter 3 Hierarchical Organizational Structure Growing need to devise systems for processing and storing information (clerical workers). Max Weber developed the bureaucracy model. Hierarchical organization structure - an organizational form based on the concepts of division of labor, specialization, spans of control, and unity of command. Key decisions are made at the top and filter down through the organization. Middle managers do the primary information processing and communication.

3-11 Pearlson and Saunders 5th Ed. Chapter 3 Hierarchical Organizational Structure - (Cont.) At the new TCS, control was lowered by adding a new layer with only a few leaders reporting directly to the CEO. Unity of command - each person has a single supervisor, who in turn has a supervisor. Rules are established to handle the routine work performed by employees of the organization. Workers turn to rules for guidance, or to the supervisor. Key decisions are made at the top and filter down through the organization in a centralized fashion. IS supports this hierarchy. Appropriate for stable organization, where the top-level executives are in

command of the information needed to make critical decisions quickly. 3-12 Pearlson and Saunders 5th Ed. Chapter 3 Hierarchical Organizational Structure and IS IS are typically used to store and communicate information along the lines of the hierarchy in a centralized structure. IS facilitates the decisions of top managers downward and provide a hierarchy of reports to support organizational operations. Data from the operations is sent upward through the hierarchy using IS. Data from operations that have been captured at lower levels need to be consolidated, managed and made secure at a higher level. The data is integrated into databases that are designed to enable employees at all levels of the organization can see the information that they need when they need it.

3-13 Pearlson and Saunders 5th Ed. Chapter 3 Flat Organization Structure Horizontal, less well-defined chain of command. Fewer employees, everyone does whatever needs to be done in order to complete business. Respond quickly to dynamic, uncertain environments. Appropriate for entrepreneurial and smaller organizations. Teamwork is important to increase flexibility and innovation. Decision rights may not be clearly defined, often decentralized.

IS is utilized to off-load certain routine work in order to 3-14 Pearlson and Saunders 5th Ed. Chapter 3 Matrix Organization Structure Work is organized into small work groups and integrated regionally and nationally/globally. Each supervisor directs a different aspect of the employees work. Difficult for managers to achieve their business strategies Managers are flooded with more information than they can process. Decision rights are shared between the managers. Appropriate for complex decision making and dynamic and uncertain environments. IS reduces operating complexities and expenses by allowing information to be easily shared among different managerial functions.

3-15 Pearlson and Saunders 5th Ed. Chapter 3 Networked Organization Structure Feel flat and hierarchical at the same time. Appropriate for dynamic, unstable environments. Highly decentralized decision rights. Utilize distributed information and communication systems to replace inflexible hierarchical controls with controls based in IS. Employees share their knowledge and experience, and participate in making key organizational decisions. IS are fundamental to process design, improve process efficiency, effectiveness, and flexibility. 3-16 Pearlson and Saunders 5th Ed. Chapter 3 Networked Organization Structure

and IS Data are gathered and stored in centralized data warehouses for use in analysis and decision making. Decision making is more timely and accurate because data are collected and stored instantly. Extensive use of communication technologies and networks. IT is used primarily as a communication vehicle. IT ties together people, processes, and units. Technological leveling - technology enables individuals from all parts of the organization to reach all other parts of the organization. 3-17 Pearlson and Saunders 5th Ed. Chapter 3 Informal Networks Organization chart reflects the authority derived from formal reporting relationships in the organizations formal structure.

Some informal relationships are designed by management: o Working on a project. o Job rotation program o Call upon their past co-workers when a situation arises Unintended networks are formed throughout an organization : o Work proximity o Shared interest o Family ties

o Politics crossing organizational boundaries. 3-18 Pearlson and Saunders 5th Ed. Chapter 3 Social Network Computer and information technologies facilitate collaboration across distances, social networks and virtual communities are formed. Useful in getting a job done, even if not all of the members of the network belong to the same organization. (i.e. LinkedIn) Social network is an IT-enabled network that links individuals together in ways that enables them to find experts, get to know colleagues, and see who has relevant experience for projects across traditional organization lines. 3-19 Pearlson and Saunders 5th Ed. Chapter 3

IS and Management Control Concerned with how planning is performed in organizations and how people and processes are monitored, evaluated, and compensated or rewarded. Senior leaders ensure the things that are supposed to happen actually happen. Management control systems must respond to goals established through planning, periodically adjusted. IS plays three important roles in management control processes: o Data collection, Evaluation, and Communication. IS collect, evaluate, and communicate information, leaving managers with more time to make decisions. 3-20

Pearlson and Saunders 5th Ed. Chapter 3 Planning and Information Systems Information technology can play a role in planning in three ways: o IS can provide the necessary data to develop the strategic plan. Collecting data from organizational units and integrating the it into information for the strategic decision makers. o Provide scenario and sensitivity analysis through simulation and data analysis. o Automate the planning process where appropriate. o IS can lie at the heart of a strategic initiative. o IS can be used to gain strategic advantage. 3-21

Pearlson and Saunders 5th Ed. Chapter 3 Data Collection and IT Monitoring work using information technologies: IS make it possible to collect data by: o Number of keystrokes. o Precise time spent on a task. o Exactly who was contacted. o Specific data that passed through the process. Organizational design challenge in data collection : o Embed monitoring tasks within everyday work.

o Reduce the negative impacts to workers being monitored. 3-22 Pearlson and Saunders 5th Ed. Chapter 3 Monitoring and Performance Software Software collecting monitoring data directly from work 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. 3-23 Pearlson and Saunders 5th Ed. Chapter 3 Performance Measurement,

Evaluation, and IT IS make it possible to evaluate actual performance data against reams of standard or historical data. Use models and simulations. Managers can easily understand work progress and performance. Analysis paralysis - analyzing too much or too long How the information is has significant organizational consequences. Information collected for evaluation may be used to provide feedback o Worker can improve personal performance. o Determine rewards and compensation. 3-24 Pearlson and Saunders 5th Ed. Chapter 3 Performance Measurement, Evaluation and IT (Cont.)

How feedback is communicated in the organization plays a role in affecting behavior. Many companies do a 360-degree feedback, into which the individuals supervisors, subordinates, and coworkers all provide input. IS enables soliciting feedback from anyone who has access to the system and report it anonymously. Quick feedback enables faster improvements. 3-25 Pearlson and Saunders 5th Ed. Chapter 3 Incentives and Rewards and IT Enables organizations to encourage good performance. Done properly, can make employees feel good without paying them more money.

Organizations use their Web sites to recognize high performers. o Using electronic badges that are displayed on the social network to identify the award recipients. o Reward with allocation of new technology. IS makes it easy to design complex reward systems (shared or team based). Managers must consider both the metrics and qualitative data in assigning compensation and rewards. 3-26 Pearlson and Saunders 5th Ed. Chapter 3 Information Systems and Culture

Plays an increasingly important role in IS development and use. Culture is defined as a shared set of values and beliefs that a group holds and that determines how the group perceives, thinks about, and appropriately reacts to its various environments. Culture is a collective programming of the mind that distinguishes not only societies (or nations) but also industries professions, and organizations. Beliefs are the perceptions that people hold about how things are done in their community. 3-27 Pearlson and Saunders 5th Ed. Chapter 3 Information Systems and Culture (Cont.) Values reflect the communitys aspirations about the way things should be done.

Culture may change over time depending on the environment and internal operations. Culture has layers: observable artifacts, values, and assumptions. Observable and espoused values. Assumptions are unobservable, reflect organizational values that have become so taken for granted that they guide organizational behavior without any of the group members thinking about them. 3-28 Pearlson and Saunders 5th Ed. Chapter 3 Levels of Culture and IT Culture can be found in countries, organizations, or even within organizations. IS development and use can be impacted by culture at all levels within the organization. Both national and organizational cultures can affect the IT issues and vice versa.

Differences in national culture may affect IT in a variety of ways: impacting IS development, technology adoption and diffusion, system use and outcomes, and management and strategy. Figure 3.5 and describe the model for the impact culture of on IT issues. 3-29 Pearlson and Saunders 5th Ed. Chapter 3 Figure 3.5 Levels of culture. 3-30 Pearlson and Saunders 5th Ed. Chapter 3 Organizatinal Culture and Information Technology Management Differences in culture result in differences in the use and outcomes of IT.

At the organizational level, cultural values are often related to satisfied users, successful IS implementations, or knowledge management success. Culture affects planning, governance, and perceptions of service quality at the national and organizational levels o Having planning cultures at the top levels, signal that strategic systems investment is important. 3-31 Pearlson and Saunders 5th Ed. Chapter 3 National Cultural Dimensions and Their Application Hofstede originally identified four major dimensions of national culture: o Power distance o Uncertainty Avoidance

o Individualism-collectivism o Masculinity-femininity o Confusian Work Dynamism (a new dimension) or short-term vs. long-term orientation. 3-32 Pearlson and Saunders 5th Ed. Chapter 3 Hofstede Dimensions and the GLOBE Dimensions The GLOBE (Global Leadership and Organizational Behavior Effectiveness) research program uncovered nine cultural dimensions, six of which have their origins in Hofstedes pioneering work (Figure 3.6). Some leadership traits are seen as universally acceptable across cultures: o

Being trustworthy Just and honest. o Having foresight and planning ahead. o Being positive, dynamic encouraging, and motivational. o Being communicative and informed 3-33 Pearlson and Saunders 5th Ed. Chapter 3 Figure 3.5 National cultural dimensions GLOBE DIMENSIONS DESCRIPTION RELATIONSHIP TO HOFSTEDE DIMENSION UNCERTAINTY AVOIDANCE EXTENT TO WHICH MEMBERS OF AN ORGANIZATION

OR SOCIETY STRIVE TO AVOID UNCERTAINTY BY RELIANCE ON SOCIAL NORMS, RITUALS, AND BUREAUCRATIC PRACTICES TO ALLEVIATE THE UNPREDICTABILITY OF FUTURE EVENTS. SAME AS UNCERTAINTY POWER DISTANCE DEGREE TO WHICH MEMBERS OF AN ORGANIZATION OR SOCIETY EXPECT AND AGREE THAT POWER SHOULD BE EQUALLY SHARED. SAME AS POWER DISTANCE COLLECTIVISM I: SOCIETAL COLLECTIVSIM DEGREE TO WHICH ORGANIZATIONAL AND SOCIETAL INSTITUTIONAL PRACTICES ENCOURAGE AND REWARD COLLECTIVE DISTRIBUTION OF RESOURCES AND COLLECTIVE ACTION. SAMES AS INDIVIDUALISM/

COLLECTIVISM COLLECTIVISM II: IN-GROUP COLLECTIVISM DEGREE TO WHICH INDIVIDUALS EXPRESS PRIDE, LOYALTY AND COHESIVENESS IN THEIR ORGANIZATIONS OR FAMILIES TYPE OF COLLECTIVISM FOCUSED ON SMALL IN-GROUPS GENERAL EGALITARIANSIM EXTENT TO WHICH AN ORGANIZATION OR SOCIETY MINIMIZES GENDER ROLE DIFFERENCES AND GENDER DISCRIMINATION MODIFIED VERSION OF MASCULINITY/FEMINITY ASSERTIVENESS DEGREE TO WHICH INDIVIDUALS IN ORGANIZATIONS OR SOCIETIES ARE ASSERTIVE, CONFRONTATIONAL AND

AGGRESSIVE IN SOCIAL RELATIONSHIPS MODIFIED VERSION OF MASCULINITY/FEMINITY FUTURE ORIENTATION DEGREE TO WHICH INDIVIDUALS IN ORGANIZATIONS OR SOCIEITES ENGAGE IN FUTURE-ORIENTED BEHAVIORS SUCH AS PLANNING, INVESTING IN THE FUTURE, SIMILAR TO CONFUCIAN WORK DYNAMISM BY HOFSTEDE AND BOND (1988) 3-34 Pearlson and Saunders 5th Ed. Chapter 3 Hofstede Dimensions and the GLOBE Dimensions - (Cont.) A generally accepted view is that the national culture predisposes citizens of a nation to act in a certain way along a Hofstede or GLOBE dimension. (i.e. individualistic way in England, collectivist way in China).

The extent of the influence of a national culture may vary among individuals, and culturally based idiosyncrasies and individual experiences 3-35 Pearlson and Saunders 5th Ed. Chapter 3 Awareness of Cultural Differences Effective communication means listening, framing the message in a way that is understandable to the receiver, and responding to feedback. Effective cross-cultural communication involves all of these plus searching for an integrated solution that can be accepted and implemented by members of diverse cultures. Communication in meetings is also subject to cultural differences. Knowing that a society tends to score high or low on certain dimensions helps a manager anticipate how a person from that society might react.

Without awareness of cultural differences, it is unlikely that IS will be developed or used effectively. 3-36 Pearlson and Saunders 5th Ed. Chapter 3 Chapter 3 - Key Terms Assumptions (p. 90) - unobservable since they reflect organizational values that have become so taken for granted that they guide organizational behavior without any of the group members thinking about them. Beliefs (p. 90) perceptions that people hold about how things are done in their community. Culture (p. 89) a set of shared values and beliefs that a group holds and that determines how the group perceives, thinks about, and appropriately reacts to its various environments. 3-37 Pearlson and Saunders 5th Ed. Chapter 3 Chapter 3 - Key Terms - (Cont.) Enacted values (p. 90) - the values and norms that are actually exhibited or displayed in employee behavior. Espoused values (p. 90)- explicitly stated preferred organizational values.

Flat organization structure (p. 81) - has less well-defined chain of command. Hierarchical organization structure (p. 80) - an organizational form based on the concepts of division of labor, specialization, spans of control, and unity of command. 3-38 Pearlson and Saunders 5th Ed. Chapter 3 Chapter 3 - Key Terms - (Cont.) Networked organization structure (p. 82) characteristically feel flat and hierarchical at the same time. Matrix organization structure (p. 82) - workers are assigned to two or more supervisors in an effort to make sure multiple dimensions of the business are integrated. Observable artifacts (p. 90) physical manifestations such as traditional dress, symbols in art, acronyms, awards, myths and stories told 3-39 Pearlson and Saunders 5th Ed. Chapter 3 Chapter 3 - Key Terms - (Cont.) Organizational strategy (p. 78) - includes the organizations

design, as well as the managerial choices that define, set up, coordinate, and control its work processes. Value (p. 90) - reflect the communitys aspirations about the way things should be done. 3-40 Pearlson and Saunders 5th Ed. Chapter 3 Copyright 2013 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that named in Section 117 of the 1976 United States Copyright Act without the express written consent of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein 3-41

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