Four Levels of Organizational Hierarchy

• Operational Level– TPS: order tracking, payroll, sales, marketing

• Knowledge Level– CAD/CAM, Lotus Notes, spreadsheet/financial planning, OA

• Management Level– decision support/mis: budgeting, cost analysis, production

mix/scheduling,

• Strategic Level:– ESS: forecasting, profit planning, manpower planning

Major types of information systems

• TPS: lower level work (order entry)• OA: document management (WP/storage)• KWS: design and analysis• DSS: cost analysis, pricing analysis• MIS: inventory control, capital budgeting• ESS: strategic planning, profit planning

TPS: Types

• Sales/marketing systems• Manufacturing/production systems• Human resources systems• Industry specialized (vertical markets)

Knowledge Work Systems & OA Systems

• KWS: Engineers, data analysts (Wall Street “rocket scientists”), scientists– Example: MRIs and CAT scans, biomedical

• OAS: knowledge workers, managers– Word processing/desktop publishing/presentation

programs, – document imaging/management

MIS

• MIS: supports management level by providing routine summary reports and exception reports:– Example: Which students were here in the Fall

who did not choose to return in the Spring?

DSS

• DSS provides material for analysis for the solution of semi-structured problems, unique or rapidly changing problems– provides the ability to do “what if” analysis

• DSS uses the data from MIS but is:– more a “right now” analysis than a long-term

structure like MIS

MIS vs. TPS

• MIS differs from TPS in that MIS deals with summarized and compressed data from the TPS.

• TPS (data) to MIS (information)

DSS vs. ESS

• DSS: provides material for analysis for:– semi-structured problems, unique or rapidly

changing problems– Ability to do “what if” analysis

• ESS: supports senior managers with unstructured decision-making.– Less analytical than DSS with less use of

models (linear or forecasting)

Strategic Information System vs. Strategic-Level System

• Strategic information system:– Changes the goals, operations, products, services,

environmental relationships of organizations– Changes the very nature of the firm’s business

• Strategic-level system:– Provide long-term planning information to senior

executives– Not as far reaching and deeply rooted– Does not transform the organization itself (fundamentally)

Value chain vs. competitive forces Models

• Both models complement each other• Both models are used to aid firms in identifying

where information systems can provide a competitive advantage– Competitive force model examines external

environment to identify threats/opportunities– Value chain model highlights specific activities

within firm to identify where competitive strategies can be best applied.

Four Basic Competitive Strategies

• Product differentiation:– Unique products/services– Distinct from competititor

• Focused differentiation:– “Mine” information to focus on previously unexploited market

niche– The new, under 14 millionaires (bacon holder)

• Tight linkages to customers/suppliers:– Lock in customers and suppliers– facilitate purchasing/raise switching costs

• Low-cost producer:– produce goods and services at a lower price or with greater

efficiency than competitors

Strategic Systems???

• Strategic systems are difficult to build:– Entail massive sociotechnical changes within the

organization– Organizational boundaries between firm and customer

and suppliers and departments must be broken down– New relationships among parts of the company and

customers and suppliers must be redefined.• An entirely new organizational structure (Saturn & GM• Resistance to change impacts responsibilities and jobs

Information Partnerships: Do they work?

• Retailers cooperate with airlines to award frequent flier miles

• Each gains access to customers of the others and information on good customers

• Does this relationship benefit the customer?

Universal Characteristics of organizations

• Clear division of labor• Hierarchy• Explicit rules and procedures• Impartial judgments• Technical Qualifications for positions• Maximum organizational efficiency

Organizational Differences

• Organizational type• Environment• Goals• Power• Constituencies• Function• Leadership• Tasks• Technology

Environmental and Institutional Model of Information Systems

• Environmental: (Constraints and Opptys)– Rising cost of labor, competitive action of other

organizations, changes in govt regulations– New technologies, new sources of capital,

demise of competitor, new govt program• Institutional:

– Values, norms, vital strategic interests

The modern manager in an IS environment

• Highly fragmented activities• Changing activities rapidly• Spending time pursuing personal goals• Shying away from sweeping policy

decisions

IS Management Support: Strengths and Weaknesses

• Strengths:– Nerve center (email, information)– disseminator– spokesman– resource allocator

• Weaknesses:– figurehead– leader– disturbance handler– negotiator roles

Structured vs. Unstructured Decisions

• Unstructured:– Nonroutine decisions in which decision maker must provide

judgment and evaluations for which there is no standard procedure for doing so.

• Example: a decision to invest in a country of an untested product history

• Structured:– Repetitive and routine with standard operating solutions.

Example: product mix, plant scheduling

Four Stages of Decision Making by Simon

• Intelligence: data and information gathering

• Design: Alternatives are established• Choice: Make the choice among the

alternatives• Implementation: Put decision into effect

Organizational Choice ModelsRational Model Assumes that human and

organizational behavior is basedin value-maximizing calculationwith certain constraints

Bureaucratic Model The most important goal is thepreservation of the organization,with reduction of uncertainty amajor goal

Political Model What occurs in the organizationis the result of power relationsand political bargains interestgroups

Garbage Can Model Assumes that organizations arenot rational and decisions areaccidental

Assignments

• Proctor and Gamble• Greyhound• Group Quiz• To be Announced (info processing)