Lecture - 2 1.

3 The New Role of Information Systems in Organizations

Managers can't ignore technology any more and pass it off to secretaries or clerical workers or the Information Technology department. Information Systems are critical to the success of an organization at all managerial levels.

The Widening Scope of Information Systems

FIGURE 1.7

If you take a look at Figure 1.7 you can understand the evolution of Information Systems in organizations. Technology was considered, well, too technical for the rest of us to understand. Computers were relegated to the back room with a few technicians running around in white coats. No one else understood what these people did or how they did it. It was a different world and actually seemed disconnected from the mainstream operations of the company. As the time line indicates, technology and its associated Information Systems are now integrated throughout the organization. Everyone is concerned about technologys role and impact on their work activities. End users take on greater responsibilities for the success of Information Systems and are actually doing a lot of the work that once belonged to the techies. Even the executive levels of an organization can no longer ignore the technology and pretend that it belongs to someone else. We are constantly bombarded with new tools, new technology, and new methods of doing business. It almost seems as though just as you master a word processing program,

here comes a whole new program you have to learn from scratch. But the plain fact is that organizations, especially larger ones, just can't change as fast as the technology. Companies make huge investments not just in hardware, but in software and persware. Training people, building new operating procedures around technology, and changing work processes take far longer than the technological pace will allow. The introduction of new technology can severely disrupt organizations. Productivity naturally slips. Learning curves cost time and money. Most system installations or changes used to affect mainly data workers or production workers. Now they affect every level of the organization, even the management and strategic levels. Every part of the organization is involved in the introduction or change of technology and everyone plays a part in its success.

The Network Revolution and the Internet

Even though the Internet as a whole has existed since 1969, the World Wide Web didn't exist until around 1993-1994. That's less than 10 years. Now you can't pick up a magazine or a newspaper, turn on the television or radio, even drive by a billboard, without some kind of reference to "dot com." Businesses are rushing to the Internet in an effort to keep up with the competition or to create whole new businesses. Now organizations struggle with such issues as how to design and develop a Web site or how to determine a fair email policy for employees. The fastest and biggest change in modern computing is the Internet. To say that the Internet is transforming the way we live, work, and play is probably the greatest understatement in years. Businesses can create new opportunities but they can also lose opportunities just as quickly. Now an organization has to design new systems, or transform old ones, with not just the company in mind, but 100 million other users of the Internet, Extranets, and Intranets. They have to decide how much or how little information to provide in what way, with what level of access, how best to present it, etc. It's a huge job!

New Options for Organizational Design: The Networked Enterprise

Many of the job losses of the 1990s occurred because technology allowed organizations operate efficiently with flatter organizations - with fewer levels of bureaucracy. One manager can now oversee a larger group of people. More important, technology increases the span of communication a manager can accomplish with a single email. You can make information available to a greater number of people much more easily than ever before. But wait. You can make that information available to more people, but you have to train them how to use it, and when it's appropriate to use it and with what latitude they can use it. Again, it all comes back to the "persware" portion of the triangle. Yes, your hardware enables more people to connect to the Information System, and the software is becoming much easier to use and more widespread than ever before. But you still have to concentrate on the people who are using the software to connect to the hardware.

Technology now allows workers to work from anywhere. It's becoming common for companies to literally shift their work through time zones. That is, the person in New York will shift blueprints for a new product to a worker in California. The Californian can then collaborate on the product for an additional three hours before zipping it to another person across the ocean who will work on it while the others sleep. Talk about telecommuting! Technology now allows companies in foreign countries to merge their organizations in ways never before possible. Think of Daimler from Germany and Chrysler in Michigan. Opportunities for new products and new production methods exist with this merger. However, think of the challenges it poses to management information systems and employees.

FIGURE 1.9

The figure you see depicts the possibilities of virtual organizations. XYZ and ABC companies can team up, work on a project, and then go their separate ways. ABC could then seek out LMN corporation to develop a new technology from which both will gain

but which neither could accomplish on their own. This is happening more and more in technology companies. In November 1998, America Online purchased Netscape. At the same time AOL announced a collaboration with Sun Microsystems to develop and deliver enhanced technology that AOL couldn't produce on its own. A few years ago, virtual organizations were difficult to develop and even more difficult to manage. New technologies and new management information systems now make such partnerships easier and more productive than ever before. As we'll see in future chapters, new technology allows businesses to reorganize their work flows, allowing them to become more efficient and to meet new challenges. The potential for saving money is tremendous, and so are the opportunities to better meet customer demands. A few years ago we couldn't imagine having Levi Strauss make a pair of jeans just for us. It wasn't possible for a gardening company to produce a catalog strictly for our own backyard. There was no way for an airline reservation company to know your favorite city to visit and send you special ticket deals for a weekend getaway in a weekly email message. All that is now possible thanks to the newer management information systems. But with all these new opportunities come new challenges and problems. How do you keep all that data straight? How do you keep from getting Suzy's order in New York mixed up with Bobby's order in Dallas? How do you know that Mike lives in sunny Arizona and not snowy Michigan? (See mass customization) Enterprise Resource Planning, which we'll talk about in other chapters, is only possible through new and improved technology. Companies are realizing that they can't afford "islands of information" and must have the means to share information resource across all boundaries. And speaking of boundaries, most of those are either rearranged or eliminated because of technological changes. Suppliers, customers, and governmental agencies are now linked electronically to organizations that increase the efficiency and decrease the cost of operations in what are called interorganizational systems. One common mistake with many organizations wanting to do business on the Internet is the idea that they can simply throw up a Web site, add an email software program for customer communication, and voil they are ready to do business in cyberspace. They haven't addressed any of their internal processes and possible changes to the way they do business. They've spent hundreds of thousands or millions of dollars and can't get enough sales to support a day's worth of expenses.

Electronic Commerce and Electronic Business

Electronic Commerce

Amazon.com operates a virtual storefront on the Internet offering more than 3 million book titles for sale. Customers can input their orders via Amazon.com's Web site and have books shipped to them. Travelocity provides a Web site that can be used by consumers for travel and vacation planning. Visitors can find out information on airlines, hotels, vacation packages, and other travel and leisure topics, and they can make airline and hotel reservations on-line through the Web site. Mobil Corporation created a private network based on Internet technology that allows its 300 lubricant distributors to submit purchase orders online.

Electronic Business
Roche Bioscience scientists worldwide use an intranet to share research results and discuss findings. The intranet also provides a company telephone directory and newsletter. Univercity of Texas Medical Branch at Galveston publishes nursing staff policies and procedures on an intranet. The intranet reduces paperwork and enchances the quality of nursing services by providing immediate notification of policy changes. Dream Works SKG uses an intrantet to check the daily status of projects, including animation objects, and to coordinate movie scenes.
TABLE 1.5

Electronic markets are allowing businesses to take advantage of technology to create new methods of buying and selling. For a while it seemed as though the middleman was going out of business because of the direct connection between customers and merchants. While this is true in some industries, new opportunities are springing up for the middleman in other areas. We'll look at this issue in more detail later. Amazon.com, the largest retailer on the Internet selling books and CDs, loses millions of dollars a year and yet is one of the best success stories in E-commerce. Its fiercest rival, Barnes & Noble Books, has also spent millions of dollars converting traditional retailing operations to the Internet. Unfortunately, Barnes & Noble's efforts at E-commerce are considered somewhat of a failure. Why? Because Barnes and Noble hasn't fully changed its core processes to accommodate the changes required for doing business on the Web.

There are many opportunities offered by the Internet, Extranets, and Intranets. Yet there are many problems associated with developing a company's electronic commerce and electronic business. It is easy to put up a Web site - a snazzy, colorful Web site that looks very pretty and may even be easy to use. But you must consider how you're going to incorporate that part of your business with the other, more established methods of doing business. What internal processes must you change or adapt? What new processes must you establish? What training must you do with the people who will run the E-business, both technical and non-technical? "Changes in business processes, customer and supplier relationships, data access, data ownership, distribution strategy, and marketing tactics underpin most Web-commerce efforts." Information Week magazine, Dec 7, 1997, page 53. Bottom Line: Employing new Information Systems in an organization requires changes to old methods and processes. Managing the changes is as important to the success of the new technology as managing the system itself.

1.4 Learning to Use Information Systems: New Opportunities with Technology

Is this new technology worth the headaches and heartaches associated with all the problems that can and will arise? Yes. The opportunities for success are endless. The new technologies do offer solutions to age-old problems. Improvements are possible to the way you operate and do business. The rest of the book and this course will give you tools you can use to be successful with the current and future Management Information Systems. 1. The Strategic Business Challenge: Companies spend thousands of dollars on hardware and software, only to find that most of the technology actually goes unused. "How can that be?" you ask. Usually because they didn't pay attention to the full integration of the technology into the organization. Merely buying the technology without exploiting the new opportunities it offers for doing business smarter and better doesn't accomplish much. Think and rethink everything you do and figure out how you can do it better. Change is inevitable, and information must be managed just as you would any other resource. 2. The Globalization Challenge: The world becomes smaller every day. Competition increases among countries as well as companies. A good Management Information System meets both domestic and foreign opportunities and challenges. How does Daimler/Chrysler integrate its organizations and cultures into one - or almost one? 3. The Information Architecture Challenge: You have to decide what business you are in, what your core competencies are, and what the organization's goals are. Those

decisions drive the technology, instead of the technology driving the rest of the company. Purchasing new hardware involves more than taking the machine out of the box and setting it on someone's desk. Remember the triangle of hardware, software, and persware. Take care of the people and they will take care of the rest! Information architecture describes how to incorporate technology into the mainstream processes in which the business is involved. How will the new Information System support getting the product produced and shipped? How will Advertising and Marketing know when to launch ad campaigns? How will Accounting know when to expect payment? 4. The Information Systems Investment Challenge: Too often managers look at their technological investments in terms of the cost of new hardware or software. They overlook the costs associated with the non-technical side of technology. Is productivity up or down? What is the cost of lost sales opportunities and lost customer confidence from a poorly managed E-Business Web site? How do you determine if your Management Information System is worth it? 5. The Responsibility and Control Challenge: Remember, humans should drive the technology, not the other way around. Too often we find it easier to blame the computer for messing up than to realize it's only doing what a human being told it to do. Your goal should be to integrate the technology into the world of people. Humans do control the technology, and as a manager, you shouldn't lose sight of that. Bottom Line: Management's focus must continually change to take advantage of new opportunities. Changes should take place throughout the organization. They require lots of attention and planning for smooth execution.

Discussion Questions:
1. Why is it important to understand the difference between Computer Literacy and Information Literacy? 2. What are the three elements of an Information System that managers must consider? 3. What are some of the factors managers must consider when considering changes in technology? 4. What are some of the new roles Information Systems are playing in organizations?

The Strategic Role of Information Systems 2.1 Key System Application in the Organization 2.2 Information Systems and Business Strategy 2.3 Using Systems for Competitive Advantage: Management Issues Discussion Questions