This week we will examine the impact of the changing organization upon the IS department - including changing the very nature of the IS function.  We will also look at how the changing role of information and information  technology is changing the management of the organization. Note the potential symbiosis in these relationships. An increase in the right kind of investment in information systems (and thus its value) causes an increase in the value of the organization. It follows that an increase in organizational value should then support a recognized increase in the investment in information systems.This is what complexity theorist Brian Arthur calls the law of increasing returns. The Causal Loop diagram below demonstrates these relationships

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To whom, when, where, and how do we provide access to information?
How do we define organizational effectiveness?
How much do we invest in IT?
When do we invest in IT?
What are the important elements in insuring that information systems provide value to the organizational or external customer?

In the not too distant past the role of the information systems manager was to provide regular reports concerning past operations to the various branches of the organization. The growth of computing in both the workplace and the home has changed that role. Personal computers are now in 42% of American homes, with 65% of those having Internet access₁. The supply of information has changed from scarce to ubiquitous. Savvy businesses are taking advantage of this prolifereation. And those not heeding the call to the "Third Wave"₂ should read carefully these words from the past:

The thrust of this lesson is to provide a high-level view of how managers utilize information for management and decision making. Inherent in this view is an understanding of the organization - its mission, goals and structure. An IS manager must understand how these mission and goals impact their area of responsibility. Will a change in business areas or how business is conducted have an impact upon the IS area of responsibility? The answer is almost always a clear yes. For example the acquisition of a number of smaller banks by Wells Fargo Bank during the years 1996-1998 necessitated the merger (or in some cases elimination) of a number of disparate banking information systems. The expansion of the business necessitated the merging of a number of systems so that the new organization could function as a seamless whole - so that a Wells Fargo customer would receive equivalent and superior "information" treatment despite their geographical location or their previous banking allegiance.
 

Have any recent changes in your lines of business or business practices necessitated changes in your access to information or the way it is processed ?

The IS manager should also understand how the information delivered by the IS department impacts the organizational mission and goals. How might the IS department best keep the business area mangers - finance, marketing, human resources and operations appraised of how IS can better support the creation, monitoring, or delivery of their associated products? How might better information delivery - internal or external make their products better, faster and cheaper? As an example, the retail business conducted by The Coffee Shack, a small coffee grower in Kona Hawaii tripled when a friend of the owner suggested he put up a web page.
 

Does the organization where you work (or any organization where you are a member) have a mission statement?  Does it have stated goals? Can you draw a causal mapping of that statement or those goals to the mission, tasks, and accomplishments of the IS division?

Reengineering the organization

There is a very high percentage of failures in second generation businesses -- companies passed down from parents to their children. The root cause of this failure is not because the children are not as hard working or as intelligent. It is rather largely because the children continue to practice the business habits of their parents. And while those practices may have worked 20 years ago, the world is constantly changing. To succeed the children must adopt new practices and seek out their changing customer needs.

Successful organizations in today's business climate must reorganize their business areas to take advantage of the new modes and ubiquity of information supply. With information systems playing a greater role, and often now leading the way in new business processes, those not changing cannot survive. In their book₃, Michael Hammer and James Champy cite a number of information technologies that are changing the way business is accomplished. A few examples from their book (pages 92-95) follow. 

Old Rule: Managers make all the decisions
Disruptive Technology: Decision Support Tools
New Rule: Decision making is part of everyone's job

Old Rule: You have to find out where things are
Disruptive Technology: Automatic Identification and Tracking Technology
New Rule: Things tell you where they are

Old Rule: Information can appear in only one place at one time
Disruptive Technology: Shared Databases
New Rule: Information can appear simultaneously in as many places as it is needed

Many questions arise when faced with both changing information technology and with changing business processes. How would a business manager or an IT manager be able to judge what areas in their organization can be better or best served with IT initiatives? What sort of payback might be expected in implementing these initiatives? When should the organization entertain the adoption of new information technology? Interwoven with these questions are the issues of who makes the decisions in your organization and how are they made. Fortunately methods have been developed to help you make these decisions and to avoid what your text (Laudon & Laudon, p 139) terms the "garbage can" model.

Aiding the Decision Maker

Understanding Herbert Simons decision-making model of the phases information, design, choice, and implementation (Laudon & Laudon, p 131) is useful in understanding what constitutes decision making and how it is traditionally accomplished.

Simon's model can be framed by utilizing a simple decision such as deciding what new car to purchase. What are the first steps that you would follow when deciding to purchase an automobile? Likely some actions that you would take would include reading newspaper advertisements and automobile magazines, buying consumer reports, talking with friends about their experiences, and visiting dealerships to take test drives. All this activity roughly corresponds to Simons information stage. After gathering this information you would then mentally formulate and align criteria (such as cost and style) to help you filter out unwanted choices. Perhaps you would write your selections down on a piece of paper with a side by side comparison of items such as horsepower and gas mileage. This is the design stage. An elimination process would yield a single finalist, and signing the purchase contract would be  the choice stage. Finally driving your new car home and becoming accustomed to driving it would be a manifestation of the implementation stage.

In a business environment the information in Simons model for decision-making typically is provided by both internal and external sources. Examples of internal sources include formal information systems, as well as information supplied through an intranet, or through organizational groupware such as Lotus Notes. External information might be supplied by an executive support system, or through an information service such as Dow Jones, or the Garther Group, or perhaps from searches on the Internet.The design and choice functions would be aided through a decision support system.

Next week the focus will be upon applying a specific decision support methodology in support of an IT related decision. We will also look at some basic methods such as ROI for evaluating financial criteria.

References
1. Hall, C. and Visgaitis, G. “PC Homes by Income” USA Today, October 20, 1998.
2. From Toffler, Alvin. The Third Wave. 1981. Toffler’s thesis is that civilization has progressed through three ages or waves – the first agriculture, the second industrialization, and the third (and current wave) information.
3. Hammer, Michael, and Champy, James. Reengineering the Corporation, Harper Business Publishing, 1993.

1. Post, in the "Decisions of the IT Executive" Conference, the types of major decisions you think an IT executive must make.

Organization Analysis Paper Track -  Task 1:

Complete the section of your paper which looks at the vision, mission statement and goals of the IT division in your organization. If these items do not exist for your organization, create them.