Chapter 9 Organizational Use of Information Systems IrwinMc

Chapter 9 Organizational Use of Information Systems Irwin/Mc. Graw-Hill The Mc. Graw-Hill Companies, Inc. 2002. All rights reserved.

Chapter Objectives • To understand how businesses are organized and what general functions they need to perform. • To understand how information systems can be used to support organizational functions and activities, regardless of how the organization is structured. • To understand potential vulnerabilities arising from the use of information systems, including ethical vulnerabilities. 2

Organizations and Organizational Structure • Organizational structure provides stability, regularity, and predictability. • Organizational structure is not static. • Organizational structure deals with reporting relationships, working relationships, and communication channels among departments. 3

Traditional View of Organization • The traditional view of an organization is that of hierarchy. – An individual or small group reside at the top. – The number increases with each successive group. – See Figure 9. 1 4

Business Functions • One way to divide the organization is based on business functions. – – – – Accounting Finance Marketing and Sales Production and Operations Management Customer Support Human Resource Management Information Services 5

Business Functions • Accounting – Score keeping function. – Records details of company transactions. – Allows organization to keep track of revenue. – Allows organization to keep track of Inventory. – Software to support Accounting Function • Peachtree and Great Plains (Microsoft) 6

Business Functions • Finance – Responsible for acquiring and managing the financial capital (money) for the organization. – Determines source of capital • Issue common stock • Issue bonds • Re-invest profits – Typically works close with accounting. 7

Business Functions • Marketing and Sales – Involves all activities involved with identifying potential customers and customer preferences. – Customer Relationship Management • Data Mining tools are used to track customer preferences. – Order processing systems record customer orders. – Sales tracking systems monitor sales activities. 8

Business Functions • Production and Operations Management – Concerned with the acquisition of raw materials and the conversion of those materials into finished products. – Numerous information systems are needed to keep track of inventories. – Bar code tags are used to track inventory. – Radio frequency identification is also used to track inventory. 9

Business Functions • Customer Support – Involves answering all customer questions prior to purchase. – Involves handling all returns and customer complaints. – Customer Relationship Management 10

Business Functions • Human Resource Management – Responsible for hiring, developing, administering compensation and training plans, and terminating employees. – Systems to submit claims electronically. – Web-based systems to accept resumes. 11

Business Functions • Information Services – Responsible for providing the computing and communications support for the rest of the organization. – Acquires computers, networks, and telecommunications systems. – Designs and maintains databases. – Develops or acquires software programs and applications. 12

Business Processes • Business functions are dependant on the sharing of data and information. • The Business cycle – Starts when marketing delivers a message to a potential customer. – Customer places an order. – Marketing transmits sales information to production. – Production ships the goods to the customer and information to accounting. – Accounting sends the customer a bill. 13

Process View of Organization • An alternative to the functional organizational structure is the process view of an organization. – A process is a clearly defined and structured series of inputs and outputs. – Every process has an output. – A process is a composition of activities for satisfying a customer need. 14

Process View of Organization • A process view of organizations implies an emphasis on how work is done. – Looks at what the organization does. – A process view of organizations cut across functional areas. – A process view differs significantly from the hierarchy view in terms of authority, and responsibility. – The process view coordinates the expertise of the functional areas to meet the common goal of satisfying the customer. 15

I/S to Support Organizational Processes • Different information systems are required to support the different functions. – Lower-levels may use transaction processing systems. – Mid-level managers may use decision support systems. – Executives may use executive information systems. 16

I/S to Support Organizational Processes • The term interorganizational system (IOS) is used to describe a networked system used by two or more organizations. – EDI (Electronic Data Interchange) – XML (Extensible Markup Language) – ERP (Enterprise Resource Planning) system 17

The Virtual Organization • When members of an organizational team cut across functional areas using electronic mail and other similar methods of communication to achieve the same goal this is known as a virtual team. – They exists only in cyber space. – Members rarely meet face to face. – Members may be different locations. • The virtual organization can be viewed as an extension of the virtual team. 18

Cautions on the Use of IT • Information technology may not be able to sustain a competitive advantage. – Regulatory Issues • SABRE and Apollo – Bad Timing • Fed. Ex’s Zapmail – Waking Sleeping Giant • Wal-mart – Cultural Issues • Short Messaging Service (Popular in Japan) 19

Ethical Vulnerabilities • Ethical vulnerabilities refers to the risks a company has in collecting, using , and storing confidential and personal data. – Competitors may attempt to copy your system. – Companies buy and sell customer and potential customer data. – Companies “profile” customers. – The right to know versus the right to privacy. – Efforts to increase efficiency may dehumanize the workplace. 20

Policies on Ethics and Use of IT • Laws relating to social and ethical issues are ambiguous and open to interpretation. • New technologies impact existing laws on an on-going basis. • Responsibilities of management. – Information access – Information Stewardship (See Table 9. 10) 21

Analyzing Ethical Dilemmas Stakeholder analysis Identify all parties with a stake in the issue. Goal-based analysis Select option that promises greatest good for greatest number. Rights-based analysis Identify data that might violate rights. Duty-based analysis Identify basic ethical duties, honesty, fairness ect. 22