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Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta

Chapter 3 Organizational Strategy and IT

Comparing Cognizant and Tata

• What is similar about the two firms?

• Why are they organized differently?

Cognizant Tata

Figure 3.3 Organizational design variables.

Variable Description

Organizational variables

Decision rights Authority to initiate, approve, implement, and control decisions

necessary to plan and run the business

Business processes Ordered tasks to complete key business objectives

Formal reporting

relationships

Structure set up to coordinate organizational units

Informal networks Mechanism, such as ad hoc groups, to coordinate and

transfer information outside formal reporting relationships.

Control variables

Data Facts collected, stored, and used by the organization

Planning Processes by which future direction is established,

communicated, and implemented

Performance measurement

and evaluation

Measures to assess successful execution of plans then using

the measures to improve the quality of work

Incentives Monetary and non-monetary devices to motivate behavior

Cultural variables

Values Implicit and explicit beliefs that underlie decisions and actions

Organizational Design

• Different designs accomplish different goals

• Decision rights will differ according to the design

• Different reporting relationships and organizational structure will allocate decision rights in different ways

• Four major organizational designs are: • Hierarchical

• Flat

• Matrix • Networked

Hierarchical Organizational Structure

•Orders go down and information goes up • IT provides communication/memory in both

directions • Also known as a bureaucracy • First observed by Max Weber in the Catholic Church

and German army and applied to early factories and offices • Features include

• Unity of command (one boss for each person)

• Span of control (measures the number of subordinates for each boss)

• Clear lines of authority and reporting duties

Flat Organizational Structure

• Also known as horizontal organizational structure

• Features: • Decentralized decision making • Less well-defined chain of command

• Less clear decision rights • Few middle managers

• IT glues together the organization

• IT allows rapid response; supports internal communications

Matrix Organization • Assigns employees to two or more supervisors to

integrate multiple dimensions of a firm • Features:

• Work is organized into small work teams • Allows organizations to concentrate on functions and

purpose

• IT reduces operating complexity and expense by allowing information to be easily shared among different managerial functions • Shortcomings:

• Sometimes frustrating and confusing • Require frequent meetings • Information overload

Networked Organizational Structure

• Feel flat yet hierarchical

• Work well in dynamic, unstable environments

• Features: • Highly decentralized decision rights

• Information systems replace hierarchical controls • Formal and informal communication networks connect

everyone • Promote creativity and flexibility while maintaining

operational process control

• Extensive use of communication technologies and networks: • Allows coordination across functional boundaries • Enables quick and more accurate decision making

The networked organization.

Hierarchical Flat Matrix Networked

Description

Characteristics

Type of

Environment Best Supported

Basis of Structuring

Power Structure

Key Tech. Supporting this

Bureaucratic w/

defined levels of management

Division of labor specialization,

unity of command

Stable

Certain

Primary functional

Centralized

Mainframe,

centralized data and processing

Decision-making

pushed down to lowest level

Informal roles; often small, young

organizations

Dynamic

Uncertain

Very loose

Decentralized

PCs

Workers assigned

to 2 or more supervisors

Dual reporting based on

function/purpose

Dynamic

Uncertain

Functions and purpose

Distributed

Networks

Formal/informal

communication networks that connect all

Known for flexibility

and adaptability

Dynamic

Uncertain

Networks

Distributed

Intranets and

Internet

Comparison of Organizational Structures

Emerging Organizational Forms

•Hybrid structure (differs throughout the organization) •New forms are beginning to emerge: • Adaptive Organization • Zero-Time Organization • Elastic Enterprise

•What is common among those? • Flexible, agile, responsive configurations over time • React to changing needs • Use of IT and networks to enable these

configurations

New Options

•Social networks – used for: • Finding experts • Getting to know colleagues • Seeing who has relevant experience for projects

across functions and geography

INFORMATION TECHNOLOGY AND MANAGEMENT CONTROL

SYSTEMS

IT Changes Management Functions

•IT changes the way managers: • Monitor: new ways to track performance and

behavior • Evaluate: easier to understand progress and

performance • Provide Feedback: rapid feedback possible • Compensate & Reward: team-based efforts can be

evaluated and complex formulas used • Control Processes: easier to

• Collect data • Analyze • Communicate results

Management Control

• IS profoundly affect control

• People & processes are monitored in ways that were not possible only a decade ago.

• IS play important roles in management control processes • Data collection • Evaluation

• Communication

• IS play important roles in planning • Can provide the necessary data • Can evaluate scenarios • Can provide analysis and simulation tools

IS and Culture

• Culture is a shared set of values and beliefs”

• It may be held by a group, organization, profession, industry, and/or nation.

• AKA “collective programming of the mind”

• Culture has: • Observable artifacts

• Espoused values

• Assumptions

Data and Information Systems

• IS can streamline data collection through monitoring

• IS can provide analysis tools for that data

• Types of data include • Keystrokes • How long each task takes • Who is contacted during the task • Specific data passing through the process

• Large data stores can be created

• Behavioral issues can result • Stress from monitoring, especially if it seems not to fit the task • Deliberate delaying, distorting or falsifying collected data • Employees should know what is collected and how it is used

Performance Measurement, Evaluation, and IS

• Analytics tools have proliferated, perhaps leading to information overload

• Often it is less threatening/more welcomed to provide feedback for performance improvement than for rewards/compensation

• Incentives and goals need to be carefully administered • Reward for short call duration? You’ll get short calls and perhaps unhappy

customers

• Reward for customer satisfaction? You’ll get happier customers but perhaps calls that are significantly longer than necessary

• Be careful with incentives; you will get what you reward

• IS can easily apply complex formulas and track performance • Multi-dimensional goals (e.g., 50% on efficiency + 50% on satisfaction)

• If most work is done on teams, team performance needs to be added

Impacts of Culture on IT

•Culture is a “collective programming of the mind” involving “shared values and beliefs”

•Culture can: • Color the development of IS • Affect technology adoption/diffusion • Influence system use and outcomes • Impact management practices

Layers of Culture

1. Observable artifacts – most visible layer • For example, dress, acronyms, awards, stories, rituals

2. Espoused values: explicitly stated preferred values • For example: “we have a good work-life balance”

3. Enacted values: reflected in actual behavior, sometimes inconsistent with espoused values • For example “we have a good work-life balance” but

require 12-hour work days plus weekends

4. Assumptions – deepest layer – unobservable; taken for granted • For example, “respect the customer”

Levels of Culture and IT

• In business, culture is often applied at the following levels: • Nations

• Organizations • Work groups

• Sometimes IS developers and clients can have a clash in culture • Clients might want fast turnaround and convenience

• Developers might want slower, more deliberate approach, for stability and control

Levels of Culture

From Leidner and Kayworth, 2006

NATIONAL CULTURE: GLOBE Cultural Dimensions

• Uncertainty avoidance

• Power distance

• Societal collectivism

• In-group collectivism

• General egalitarianism

• Assertiveness

• Future orientation

• Performance orientation

• Humane orientation

How are IT and Culture Linked?

• IT supports cross-cultural communication

• People need to be aware of cultural differences when communicating

• This awareness will lead to: • Better listening and understanding (correctly framed

messages) • Searching for a solution that will be accepted widely • Reduced conflict

Application to IS Training Investments

• Peretz & Rosenblatt found that cultural dimensions impact training.

• Higher training investments were found by firms in countries with: • Low power distance (Germanic countries, Anglo-American countries,

Netherlands, Israel)

• Future orientation (some Asian countries)

• High uncertainty avoidance (some Hispanic countries, Japan, South Korea, Israel, Russia)

• Lower investments were found in firms from countries with • High power distance (some Asian, Latin American, and Middle Eastern

countries) • Why? Perhaps to maintain power differences

• Short-term orientation (some Anglo-American countries)

• Low uncertainty avoidance (the UK, Ireland, Hong Kong, and Singapore)

Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders, and Dennis Galletta