The Impact of IT on Hospitals

Dr. Hsin-Ginn Hwang

Graduate Institute of Information Management

National Chung Cheng University

mishgh@mis.ccu.edu.tw

0939-318-863

Introduction

• Hospitals are also organizations

• IT improves medical quality

• IT improves the efficiency and effectiveness of hospital operations

Facts to Remind

• IT offers new ways to change the structure of an existing organization or design an entirely new non traditional one

• IT can substitute for physical proximity and contact in a number of situations

• Top management has a key role to play in the management of information processing activities in the organization

What are Information Systems?

• Information systems exist in the context of an organization; they do not operate in isolation

What are Hospitals?

• An organization is a rational coordination of activities of a group of people for the purpose of achieving some goal

• How about “Hospitals?”

Modern Organizations

• They are many factors that influence the structure and design of modern organizations– Uncertainty– Specialization– Coordination– Interdependence

Uncertainty

• Managers try to eliminate or reduce uncertainty

• Where “Uncertainty” comes from?– Outside or inside of an organization?

• There is some evidence that uncertainty is most effectively handled by decentralizing decision making to management level in the organization with information to resolve it

Specialization

• Why specialization can influence the structure and design of modern organizations?

Coordination

• When there is specialization, one task of management is to coordinate the diverse specialties to achieve the goals of the organization

• Management must balance differing orientation and resolve disputes between specialized subunits

Interdependence

• The type of interdependence affects the amount of power one unit has in the organization

• Three types of mutual dependence– Pooled interdependence– Sequential interdependence– Reciprocal interdependence

What Is Organization Flexibility?

• Flexibility is the ability to adapt when confronted with new circumstances

• A flexible organization defends quickly against threats and moves rapidly to take advantage of opportunities

IT and Organizational Flexibility

• IT has the ability to change the pace of work and to alter time and space boundaries for work

• With properly designed systems, the organization can increase its ability to respond to customers, competitors, and the environment in general

MIS Belief

• The purpose of employing any technology is to obtain an advantage over old ways of doing business

Framework

• A framework provides you with a view to organize your thoughts and analyze a problem

• A framework is not necessary accepted by everyone

Anthony’s Framework of MIS

• MIS support management activity, that is, the structure of IS can be classified in terms of hierarchy of management planning and control activities (Anthony, 1965)

Simon’s Framework of DM

• The decision making stages of intelligence, design, and choice proposed by Simon (1965)

• Programmed and Nonprogrammed decisions

Gorry and Scott Morton’s Framework of MIS

• A framework synthesizing the work of Anthony and Simon is very appealing because it helps us classify a variety of systems (Gorry and Scott Moton, 1971)

Harold Leavitt’s Framework for IT Applications

• An organization develops some internal structure so the people who work in the organization can perform their tasks

• People undertake these tasks so the firm can accomplish its mission or purpose

Harold Leavitt’s Framework for IT Applications

Organizational Structure

People

Firm’s Technology

Environment

Information Technology

Task

Environment

Contemporary Framework for IT Applications

• IT supports individuals, workgroups, organizations, and linkages among organizations

• The changing technology enables the organization to develop applications to support all the tasks involved in managing the firm

Contemporary Framework for IT Applications

• A focus on the organization as the most important component of the study of IT

• The role of technology in supporting managerial tasks

• The pervasive nature of technology in the organization

Decision Support, Executive IS, and Expert Systems

• Decision Support Systems

• Executive Information Systems

• Expert Systems

• Group Support Systems

Knowledge Work Support

• Personal Computers

• Office Software

• Portable Computer: – Notebooks – PDAs (Personal Digital Assistants)

Supporting Groups and Cooperative Work - Groupware

• Groupware such as Lotus Notes can provide the coordination mechanism among individuals in different locations.

• Groupware support individuals in different locations can share information on a distributed network.

Interorganizational Systems

• Partnerships and strategic alliances are created and enhanced with interorganizational systems. (IOSs)

• IOSs can vary from e-mail connections to full system-to-system connections.

• IOSs make possible Virtual Components in which a partner substitutes for some component of your company. (eg. Federal Express)

Key Technology

• Communications• Networking• Database

The Basics of Information Systems

• Some Generic Types of Systems– Transactions Processing Systems– Decision-oriented Systems– Communications-oriented Systems

Transactions Processing Systems

Input

Validate Update Output

Report

User

Database

Workstation

Decision-Oriented Systems

RetrievalSystem

Analysis and

PresentationModel

Management

User

Database

Workstation

Model Base

Communications-oriented Systems

User

Workstation

User

Workstation

Computer

Mail Box

CommunicationsLink

Different Types of Technology

• Simple Batch Systems

• Inquiry

• Fully On-line

• Command and Control

• Internet/Intranet

• Client-Server

Is There Value in IT?

• Various Observers have criticized information technology for not providing a satisfactory return on investment.

• How valid is this criticism?

• The Investment Opportunities Matrix shows that there is not the same likelihood of a return from each IT investment.

What is Value?

• Investment can be measured in– Direct measurement: Money, NPV, ROI,…etc.– Indirect measurement: preventing negative

return, keeping up with a competitor, avoiding loss in market share.

– Indirect measurement is hard to measure

Implications for Management

• Why should you care about different kinds of technology?

• How do you adapt and use a combination of old and new technologies when you work in a business with old technologies?

The Nature of Information

• Information can be defined as some tangible or intangible entity that reduces uncertainty about some state or event

• Information is data that has been processed into a form that is meaningful to the recipient and is of real perceived value in current or prospective decisions

Characteristics of Information

• Time Frame Historical Predictive • Expectation Anticipated Surprise• Source Largely Internal Largely External• Scope Detailed Summary • Frequency Real Time Periodic • Organization Highly Structured Loosely Structured• Precision Highly Precise Not Overly Precise

Decision Type

Operational Control Strategic PlanningManagerial Control

From Information to Knowledge

• Knowledge can be defined as information plus know-how (Kogut and Zander, 1992)

• Information alone is not enough to produce knowledge

• We must also understand the best way to use information to solve a problem, contribute to a product or service, or make a similar contribution to the organization

From Information to Knowledge

• Knowledge builds over time in the heads of employees in the form of past decisions, processes in the organization, characteristics of products, interests of customers, and similar experiences

Explicit Knowledge

• Explicit knowledge is represented by facts.

• Textbook, Manual, Document, …,etc.

Tacit Knowledge

• Tacit knowledge is something we understand but have difficulty explaining.

• Riding bicycle, cooking,…,etc.

Concepts of Decision Making

• Decisions differ in a number of ways

• These differences affect the formulation of alternatives and the choice among them

• They also affect the design of IS support for decision activities

Decision Types

• Four dimensions of decision:– Level of knowledge of outcomes– Level of programmability– Criteria for the decision– Level of decision impact

Knowledge of Outcomes

• If the outcomes are known and the values of outcomes are certain

• The making of decisions under risk, when only the probabilities of various outcomes are known

• Decisions under uncertainty (outcomes known, but not the probabilities)

Programmed versus Nonprogrammed Decisons

• Programmed decisions are those decisions that can be prespecified by a set of rules or decision procedures

• Programmed decisions imply decision making under certainty because all outcomes must be known

• Programmed decisions can be delegated to low levels in an organization or automated

Criteria for Decision Making

• A model of decision making which tells the decision maker how to make a class of decisions is normative or prescriptive– Normative models have generally been developed by

economists and management scientists, such as LP, Game theory, etc

• The criteria for selecting among alternatives in the normative model is maximization or optimization of either utility or expected value

Criteria for Decision Making

• A model which describes how decision makers actually make decisions is descriptive– Descriptive models attempt to explain actual

behavior and therefore have been developed largely by behavioral scientists

• Satisfaction is an alternative view of decision making which comes from the descriptive models

How Do Individuals Make Decisions

• Herbert Simon (1965) suggests a series of descriptive stages for decision making to help understand the decision process– Intelligence– Design– Choice– Implementation

Intelligence

• “Problem finding” is conceptually defined as finding a difference between existing situation and some desire state

• The purpose of “problem formulation” is to clarify the problem, so that design and choice activities operate on the “right” problem

Design

• The act of generating alternatives is creative, and creativity may be taught.

Choice

• Decision maker selects one of the alternatives.

• The criteria of choice is different among individuals or organizations.

Implementation

• Implementation is a series of executions that ensure the solution is carried out

Organizational Decision Making

• How does an organization make a decision?

• Major concepts used to explain organizational decision making are quasi-resolution of conflict, uncertainty avoidance, problemistic search, organizational learning, and incremental decision making

Quasi Resolution of Conflict

• Conflicts among different units are solved by three methods:– Local rationality– Acceptable level decision rules– Sequential attention to goals (The

organization responds first to one goal, then to another , so that each conflicting goals has a chance to influence organizational behavior)

Uncertainty Avoidance

• The behavioral theory of organizational decision making assumes that the organization will seek to avoid risk and uncertainty at the expense of expected value

• Some legal methods used to reduce or avoid uncertainty are the following:– Short run feedback and reaction cycle– Negotiated environment

Problemistic Search

• The search for solution is problem-stimulated; there is very little planned search for solutions not motivated by problems– Search locally either close to the present

symptom or close to the present solution– If local search fails, expand the search first to

organizationally vulnerable areas before moving to other areas

Organizational Learning

• Organizations change their goals and revise their problem search procedures on the basis of experience

Incremental Decision Making

• An incremental decision making in organization is confined to small changes from existing policy and procedures

• The emphasis is on correcting or improving existing policies and actions

Types of Organizations

• The nature of different organization will influence the decision and the kind of information required

• Three types of Organizations– Bureaucracy– Charismatic– Adaptive

The Influence of the Organization

• Bureaucracies try to survive and to minimize uncertainty; members of these organizations stress in job security

• We would expect decisions in bureaucracies to be conservative and require modest changes to existing procedures

The Influence of the Organization

• The charismatic organization is dominated by a strong leader

• It is safe to say that the leader is likely to make the decision that subordinates then execute

The Influence of the Organization

• The adaptive organization tries to respond quickly to its environment

• The organization stresses rapid response times and does not have a large number of layers of management

The Role of CEO

• A key task of top management is formulating corporate strategy– What opportunities for new directions are

available?– What are competitors doing?

The Role of IT

• IT offers new ways of doing business

• IT can speed up the pace of work and increase the capacity of processing

• IT can alter the space and time boundaries of work

The Value Chain

• The activities in an organization add value to its products or services (Porter and Millan, 1985)

• The primary activities in the value chain include inbound logistics, operations outbound logistics, marketing and sales, and service

The Value Chain

• Each of these activities adds value directly to the firm’s output

• Supporting these primary activities are the firm’s infrastructure, human resource management, technology development, and procurement

The Value Chain

• What is the potential impact of IT on the value chain?– Low-cost producer– Differentiation– Market niche

Four Steps to Take Advantages of IT

• Look for ways to incorporate technology in a product or service

• Seek ways to use technology to connect with other firms

• Look for ways to use technology to make dramatic changes in the way your structure the organization

• Integrate technology with planning

Creating and Sustaining A Competitive Edge

• Using resources to advantage

• Protecting an IT innovation– To sustain an advantage is to overwhelm the

competition with technological leadership

Integrating Technology with the Business Environment

• Managers must consider how technology affects their decisions and how their decisions affect the technology

The Mgmt Challenge of Integrating

Tech

Informationtechnology

Search for newtechnology

(find out whattechnology offers)

Seekopportunities

Decision makingPlanningExecution

Technologicalconstraints

Manage existingtechnology

Managedevelopment ofnew technology

+

Constraints Impact Impact

TechnologyOpportunities

Facts

• Visions are rare and difficult to create; leaders are frequently criticized for lack of vision

• For an organization, the vision thing is important, especially given the ability of technology to change the structure of the firm, the nature of its business, and the basis for competition

Facts

• A fundamental responsibility for management is to develop a vision for the business and for the role of IT in achieving that vision

Facts

• The vision should:– Describe the mission of the organization– Identify the products and services it produces

and the markets– Describe plans for mergers, partnerships,

alliances, and acquisitions

Facts

• Firm’s structure is highly related with its strategy

• A significant responsibility of management is to integrate technology with all business decisions

• Integration means that the manager is aware of how new technology can create opportunities

Facts

• A corporate strategic plan comes from the firm’s vision for its future activities

• This plan includes the vision

• It is a road map for bringing about the vision

• IT should be an integral part of the firm’s strategic plan

A Framework for Managing IT

Vision for the Organization& Information Technology

IT and Organization Structure

Corporate Strategic PlanStrategy

Alliances &Partnership

IT InfrastructureIT Initiative Ongoing ITOperations

Integration ofIT and DecisionMaking

System Concepts

• The term “system” is in common use.

• System concepts provide a useful framework for describing and understanding many organizational phenomena.

• Definition of a system

• General model of a system - IPO model

System Concepts

• Subsystems– The use of subsystems as building blocks is

basic to analysis and development of systems

• Principles of building a system from subsystems:– Decomposition– Simplification– Decoupling

System Concepts

– Preventing system entropy– System stress and system change

• A stress is a force transmitted by a system’s suprasystem that causes a system to change, so that the suprasystem can better achieve its goals.

Definition of A System

• Systems can be abstract or physical

• An abstract system is an orderly arrangement of interdependent ideas or constructs

• A physical system is a set of elements which operate together to accomplish an objective

General Model of A System

• A general model of a physical system is input, process, and output

• The system is inside the boundary

• The environment is outside the boundary

• Each system is composed of subsystems which in turn are made up of other subsystems

General Model of A System

• The interconnections and interactions between the subsystems are termed interfaces

• Interfaces occur at the boundary and take the form of inputs and outputs

• A subsystem at the lowest level is often not defined as the the process

• This system is termed a black box

Subsystems

• The use of subsystems as building blocks is basic to analysis and development of systems (Divided and Conquer)

• Decomposition

• Simplification

• Decoupling

Decomposition

• A complex system is difficult to comprehend when considered as a whole

• The process of decomposition is continued with subsystems divided into smaller subsystems until the smallest subsystems are of manageable size

• The subsystems resulting from this process generally form hierarchical structures

Decomposition

• In the hierarchy, a subsystem is one element of a suprasystem

• Decomposition into subsystems is used both to analyze an existing system and to design and implement a new system

Decomposition

• The general principle in decomposition which assumes that system objectives dictate the the process is functional cohesion

• Components are considered to be part of the same subsystem if they perform or are related to the same function

Decomposition

• In design, the identification of functionally cohesive subsystems is the first step

• The boundary then needs to be clearly specified, interfaces simplified, and appropriate connections established among the subsystems

Simplification

• The process of decomposition could lead to a large number of subsystem interfaces to define

• Simplification is the process of organizing subsystems so as to reduce the number of interconnections

Simplification

• Clusters of subsystems are established which interact with each other, then a single interface path is defined from cluster to other subsystems or clusters of subsystems

• Methods are established for decoupling systems so that the need for interconnection is reduced

Decoupling

• If two different subsystems are connected very tightly, very close coordination between them is required

• The solution is to decouple or loosen the connection so that the two process of decoupling and allowing each subsystem some independence in managing its affairs has many benefits, but it is not without costs

System Concepts and Organizations

• Organizations are open systems, since they receive unplanned and unscheduled inputs from their environment and adapt in such a way as to continue their existence

Questions & Discussion