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IS in

1. Economics of Information
2. IS in the organisational context
3. Business Processes
4. IS and Organisational change

KA Johnston
• Economics is basically the study of how
people (and institutions) act in a society
with limited resources (in other words
– The choices are more diverse than simply
money – also time, work, savings
– Driving principle is that people optimize the
utility (satisfaction) of goods and services

Information/New Economy
• No standard definitions
• What is an “Information Economy”?
– One Definition: “An economy based on the
exchange of knowledge information and
services rather than physical goods and
services” – Australian Government, 2001
• What is the “New” Economy?
– One Definition: The new economy is an
integration of free-market economies,
globalization and Information Technology (IT)
Economics of Information
• Use whatever label you want…the makeup
of the economy has changed
• Information is a good, and IT/IS have
replaced goods made of atoms and
technologies resting on muscle
• Expensive to produce
• Inexpensive to re-produce
• Information can be biased / incorrect
• Economy is increasingly reliant on IT/IS &
What is information?

• Information can take many forms – text,

numbers, images, audio clips and video
clips are all examples
• Information is a collection of facts
• Anything that can be digitized is an
“information good”
• To be useful, information is interpreted
and applied (used), leading to knowledge
Stair et al; Benson & Standing; Turban et al; Post & Anderson; Rainer et al KJ-5
Information evaluation
• Information can be biased /
incorrect / poor quality
• Information evaluation is the
systematic determination of
the merit and worth of
• The responsibility shifts to
the information consumer
• Is information useful &
Data, Information, Knowledge & Wisdom
Insight to create new
K, to adapt

Global warming
Understand meaning of Info

What can I do?
+670 planes +2700
Temperature anomaly
Data Data in context
Eg 1980 i ng
ce ss
Data & Information = What; Knowledge = How; Wisdom = Why KJ-7
Key Discovery

For the first time, CEOs identified technology as the most

important external force impacting their organizations
Q. “What are the most important external forces that will impact your
organization over the next 3 to 5 years?”
External forces broadly classified as: Market/Economic, ICT, Socio-Political
2004 2006 2008 2010 2012
71% Technology factors

69% People skills

68% Market factors

62% Macro-economic factors

58% Regulatory concerns

43% Globalization

37% Socio-economic factors

30% Environmental issues

23% Geopolitical factors

Dumont (2012) KJ-7

External Forces & Responses
$$$ Cost Controls
$$ Return on Investment (ROI)
Customer Choice Customer self service (ATM)
Globalization Customer Relationship Mgt (CRM)
Market Changing Workforce Training & Reskilling
Economic Total Quality Mgt (TQM)
Costs Knowledge Management (KM)
Growth Innovation
Integration Speed
Information overload Business Accounting Information System (AIS)
Just In Time (JIT)
ICT ICT Obsolescence
ICT Innovation
Document Mgt Systems (DMS)
ECommerce/MC Supply Chain Mgt (SCM)
Regulations Radio Frequency ID (RFID)

Social Responsibility E/M Commerce & E Business

Ethics Decision Support Systems (DSS)
Deregulation Executive Info Systems (EIS)
Enterprise Resource Planning (ERP)
Electronic Funds Transfer (EFT)
BBBEE Benson & Standing; Chaffey & Wood; Turban et al; Rainer et al KJ-9
External Forces & Responses
Continuous Process Improvement (CPI)
Customer Choice Disaster Recovery Planning (DRP)
Globalization Risk management
Market Changing Workforce Business Process Reengineering (BPR)
Economic Business Process Management (BPM)
Costs Point of Sale (POS)
Growth Business to Business (B2B/C2C)
Integration Database Management (DBM)
Information overload Data warehousing
Open Source Software (OSS)
ICT ICT Obsolescence
Object Oriented Programming (OOP)
ICT Innovation
Project Management (PM)
ECommerce/MC Rapid Application Development (RAD)
Regulations Application Service Provider (ASP)

Social Responsibility Artificial Intelligence (AI)

Ethics Computer Aided software engineering (CASE)
Deregulation Data Mining
Soft Systems Methodology (SSM)
Restructuring & Transforming
BBBEE Benson & Standing; Chaffey & Wood; Turban et al; Rainer et al KJ-10
Organisations are open
systems (interact with External Context
their environment)


Input (5 M’s) Output

• Money Managing • Goods
• Manpower change • Services
• Materials process • Reputation
• Machinery • Waste
• Methods • Etc.

Organisations draw resources from environment (Inputs) change them
and pass them back to environment as Outputs
Value obtained for outputs (money, reputation etc) enables them to continue
attracting Inputs (feedback arrows from Output to Input)
Role of IS in organisations
People managing External Context
organisations need
various kinds of

Input (5 M’s) Output

• Money Managing • Goods
• Manpower change • Services
• Materials process • Reputation
• Machinery • Waste
• Methods • Etc.

People need to add value to Inputs; to do so need information (about inputs,
change process, outputs, costs, availability, capacity, schedules, quality etc)
Businesses (and individuals) use information and IS to communicate
Businesses (and individuals) use information and IS for decision making
Businesses use information and IS to support business processes
Some Businesses use information and IS as a product KJ-12
Some IS Apps (A-H)
• ANN – Artificial Neural Network IT/IS can
be disrup
• AI – Artificial Intelligence socially tive, econ
• BI – Business Intelligence &
• CAD/M – Computer Aided Design/Manufacturing
• CRM – Customer Relationship Management (eg SAP, Oracle)
• Data Mining Software
• DMS – Document Management System
• DSS – Decision Support Systems, and GDSS - Group DSS
• EC – Electronic Commerce
• EDM - Electronic Document Management
• EFT- Electronic Funds Transfer or EBT – Electronic Benefits Transfer
• EIS – Executive Information System
• ERP – Enterprise Resource Planning (eg SAP, Oracle)
• ES – Expert System
• ESS – Employee Self Service
• ESS – Executive Support System
• Functional Systems such as Accounting, HR, Maintenance, Marketing,
Manufacturing, Scheduling etc
• GIS – Geographical Information System, GPS – Global positioning System
• HRM – Human Resource Management

• IOS – Interorganisational Information System

Inventory management systems
IVR – Interactive Voice Response
Some IS
• JIT – Just in Time inventory scheduling system
• KMS – Knowledge Management System
• LMS - Learning Management System (eg. Vula)

MC – Mobile Commerce
MIS – Management Information System (I-Z)
• NMS – Network Management Software
• OAS – Office Automation System
• POS – Point of Sale IT/IS can
be disrup
• QBE – Query by example s o cially tive, econ
• RFID – Radio Frequency Identification &
• Search Systems (eg Google)
• SCM – Supply Chain Management (eg SAP, Oracle)
• SNS – Social Networking System (eg. Facebook, twitter)
• TPS – Transaction Processing Systems
• Transport management systems
• UMTS - Universal Mobile Telephone System
• VAN – Value added Network
• Workflow Systems
• xRM – (Employee, Supplier, Government, Shareholder, Partner ) Relationship Mgt
• z/OS

Optimise the utility (satisfaction)
Information quality
of goods and services . Completeness
. Ease of understanding
. Personalization
• A measurement of the success of Information . Relevance
. Security
Systems is the Delone & McLean Model Systems quality
• QUALITY of Information, System and Service . Adaptability
. Availability
determine INTENTION TO USE, and USER . Reliability
. Response time
• USE and USER SATISFACTION determine NET Service quality
. Assurance
BENEFITS . Empathy
. Responsiveness
. Nature of use
. Navigation patterns
. Number of site visits
. Number of transactions executed
User satisfaction
. Repeat purchases
. Repeat visits
. User surveys
Net benefits
. Cost savings
. Expanded markets
. Incremental additional sales
. Reduced search costs
. Time savings
1 minute in the life of a Wal-Mart shopper

Obtain prices
5 x Mars Bars
2 x 1 Lt Milk Check payment
1 x Dilmah tea Customers
Display Total - RECEIPT Accept Payment & Bank
Adjust inventory
Check Payment Commit transaction Transfer money
Accept Payment
Inventory # Min Max
Mars Bar 496 500 800
Reorder inventory Milk 300 250 350
200 Mars Bars Dilmah 419 300 600

Over Simplified – but notice people, information,
business processes & technology

Next Step – Using RFID at POS KJ-16

Some IS in the life of a Wal-Mart shopper

HR Prices
Obtain prices
5 x Mars Bars
2 x 1 Lt Milk Check payment
1 x Dilmah
Pointtea of Sale Accounting Customers
Display Total - RECEIPT Accept Payment & Adjust inventory
Commit transaction
Check Payment Transfer money
Accept Payment
Inventory # Min Max
Mars Bar 496 500 800
Reorder inventory
Order Milk 300 250 350
200 Mars Bars Dilmah 419 300 600 Finance
Over Simplified – but notice people, information,
business processes & technology

Next Step – Using RFID at POS KJ-17

Evolution of IS in Organisations

Blurring org. boundaries &

Value chain redefinition
Stage 6

Using IS to transcend
Org. borders & to
Integrate BPs with partners
Stage 5
Using IS to redesign
& integrate BPs
Stage 4
Linking n functions
& using 1 corp DB
Stage 3
Note: change from Functions to
Automating n Business Processes in stage 4
Business functions
Stage 2
Automating 1
Business function
Stage 1

Boddy et al

Common Business functions change

• Accounting Records and reports financial information.

Records data about assets (cash, buildings, equipment) and
liabilities (debts), revenues and expenses. Recording the past
• Finance Plans what money is needed, finds best way to
obtain money, decides how money should be used. Present &
• Operations Responsible for running back office or support
functions, administration, legal, audit, IS
• Marketing Determines what products/services to sell, at
what price, to which markets. It promotes by advertising
• Sales Make the sales and distribute the products
• Production Sourcing raw materials, producing or making
• R&D Responsible for developing new products
• IS Responsible for providing IT support and IS
• HRM Recruiting, selecting, hiring, training and
development, compensating and terminating employees
Benson & Standing; Rainer et al KJ-19
Simplified C-level
Organizational Chart

CEO Chief Executive Office


Chief Financial Operations Marketing Production Information Human Resources

Business Process (BP) change
• “An activity undertaken to develop & deliver
products or services to customers” (internal or
• “Unique ways in which organisations coordinate and
organise work activities, information, and knowledge
to produce a product or service”
• A collection of activities (steps or procedures) that
takes one or more inputs and creates an output
(outcome) that is of value to the customer
– The customer may be the traditional external customer
who buys the product or service, or
– an internal customer (a colleague in another department)
– Several business functions are involved in business
processes Gelinas et al; Chaffey & Wood; Laudon & Laudon; Rainer et al; Boddey et al
Business Processes Across Functional

Turban et al KJ-21
Org structure # BP


Shipping Billing
Posts a Bill to customer

Sales Just 1 BP
Re Pa
m ym
in en
r t
1. Customer places an order


Business Process flow does not follow O.Structure

Components of Business Process
1. Management Processes
consist of people, authority,
org, policies & procedures
whose objective is to
control operations (1,2)
2. Operations Processes
consist of people,
equipment, org, policies &
procedures whose
objective is to do work
(production, marketing,
sales, accounts, finance,
warehousing, distribution)
3. IS Processes include collect,
store & manage data, and
to provide output info to
users (4, 5, 6, 9, 10)
4. Customers (3) & Suppliers

Gelinas et al KJ-23
Problems surrounding
Business Processes
1. Much more difficult to classify or describe than
organisational structures or functions
2. Often invisible, are neither named or described
3. Cross traditional departmental boundaries – co-
operation / accountability problems
4. Processes only work when people realise they need to
work together to achieve the result promised to the
5. Current generation has “grown up with technology” and as
such has an “information-age mindset” which believes that
the computer is not a technology but an assumed part of life
and expect BPs to be customer centric

Howe & Strauss; KJ-25

• A BP is more natural than a hierarchy and is
of use to the customer
• Organisational structures (functional areas)
vary, but all Business Processes are similar
– Industries share common Business Processes
– BP of HR for one industry can be very similar to
• You can measure the costs, outputs,
efficiency, quality & customer satisfaction KJ-26
Scott Morton's forces of Org. Change
KEY: If any one of the
8 forces changes, the
others are affected Technological
Individuals& Environment
Roles. Staff, cust, suppliers innovation, vendors,
substitutes, alternatives

Business Information &

Strategy Processes Technology
Plans & actions Design, develop, test,
deliver product/service to custs
install, maintain

External Organisation
Socioeconomic Organisational Boundary
Environment Structure
Costs, Govts, regulations, cust choice, who reports to who
social responsibility, ethics, deregulation,
globalisation, growth, new markets, staff Culture KJ-26
Scott Morton; Turban et al
Characteristics of Org. Change
Incremental Discontinuous

Tuning Re-orientation

Reactive Adaptation Re-creation

• Tuning – incremental when no immediate need for change

• Adaptation – incremental but as response to threat or
• Re-orientation – significant change due to discontinuous
change. Not immediate need, but in anticipation
• Re-creation – fundamental change to way operate
• Challenge of managing change greatest for discontinuous
Chaffey & Wood
Three guidelines for dealing
with Change in Organisations
1. Institute Change Management Policies –
create clearly defined policies & procedures
that must be followed each time a change
request is received
2. Anticipate change – view change as an
opportunity & embrace it Do you
have to?

3. Seek change – every 6-12 months look for

changes that may be windows of opportunity
• Review successes & failures
Baltzan & Phillips
Organizational Change
• Evolutionary process Stakeholders
• Takes place within historical &
contemporary context
• Past decisions shaped org as is, and
effect how easy it is to change
• Past affects whether people are willing &
able to change
• Managing every IS project is org change
project, need to consider in org. context
Boddy et al
Organizational Change
• Arises from environmental changes
(Technology, competitors, society, government, economy etc)
• Technology & Socio-economic environment
• People -greatest instigator/hinderance Stake-
• BP, Strategy, IT & OS other instigators Artifacts
• Diagnosis of present and potential problems
- involves collection of information

HR Techno
Strat BP IT
Socio-e OS
HR Techno

ICT can Cause change to Strat



• BP – eliminate/improve/create, BPR, speed

• HR – job content/creation/destruction
• OS – shape/size/function/partnerships
• Strategy – new, speed, reach, OSS, SaaS
• IT – innovation/obsolesce/hype
• Techo – innovation/competitors/sourcing
• Socio-e – customers/communication/socialising
• Culture – Power-distance (collab), Uncertainty
avoidance(uncertain), Individual/collective(either),
M/F(either), time (short)
• Denning, S. (2010). The Leader’s Guide to Radical Management: Re-inventing the Workplace for
the 21st Century. San Francisco: Jossey-Bass.
• Denning, S. (2010). Why Change Programs Fail: Ten Principles For Getting It Right. Greenwich,
Connecticut: Stephen Denning.
• Grant K, Hackney R, Edgar D (2010). Strategic Information Systems Management. Andover.
Cengage Learning.
• Harmon, P.(2007). Business Process Change. Burlington: Morgan Kaufmann.
• Ján, Z., & Lukáš, T. (2010). Simulation and its purpose in implementing of business process
management. Advances in Management, 3(3), 9-12
• Luftman, J, Zadeh, H.S., Derksen, B., Santana, M., Rigoni, E.H., & Huang, Z. (2013). Key
information technology and management issues 2012–2013: an international study. Journal of
Information Technology (2013) 28, 354–366
• Scott Morton MS (ED) (1991), The corporation of the 1990s, Information Technology and
Organizational Transformation, Oxford University Press, Oxford
• Smart, P. A., Maddern, H., &Maull, R. S. (2009). Understanding business process management:
Implications for theory and practice. British Journal of Management, 20(4), 491-507.
• Stacey, R. (2009). Complexity and Organizational Reality: Uncertainty and the need to rethink
management after the collapse of investment capitalism. London: Routledge.
• Stacey, R. D. (2001). Complex responsive processes in organizations: learning and knowledge
creation. London: Routledge