Chapter 3: Information Systems, Organizations, and Strategy

Summary:

A more appropriate title for this chapter would have been How organizations utilize information systems for strategic decision making. To best understand this, we must first define what an organization is. The textbook definition is, “a stable, formal social structure that takes resources from the environment and processes them to produce outputs. “  As bastions of collectivity, organizations develop their own culture based off of the unquestioned assumptions that define their goals and products. Other features of organizations include the development of routines, or standard operating procedures, in business processes and the presence of politics brought about by varied viewpoints about resource management. Modern organizations are inherently specialized, hierarchical, and impartial, with the goal being to maximize efficiency. The differences in how an organization uses information systems is influenced by environmental factors such as goals, social roles, leadership styles, types of tasks performed, and type of structure.

The introduction of new Information Systems (IS) in organizations tends to be highly resisted. The very nature of an organization is resistant to change. For effective integration, information systems must be created with the end-user in mind. 4 factors must to be taken into consideration to ensure the successful introduction of a new technology: Tasks of the organization, People (culture, politics), Structure (hierarchy, routine, and business processes), and existing technology.

 Some technologies go so far as to be classified as Disruptive technologies. These are innovations that fundamentally change the business environment that an organization works in. For instance, a substitute product that works better than anything currently produced, like the automobile being substituted for the horse-drawn carriage. These technologies are intended to help an organization achieve a competitive advantage that will make the firm more profitable, productive, and valuable then their competitors. This chapter discusses the impact that the internet has on competitive advantage and further defines some of the different strategies for using information systems to both counter and enable competitive forces in an organizations’ environment.

Finally, Information technology greatly leverages the power of the business ecosystem. Our text describes a business ecosystem as loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms and technology manufacturers. Through the sharing of Information technology based platforms, developed by key firms such as Microsoft or Wal-Mart, entire industries can see enormous growth and profitability while ever-expanding the network of ecosystems in the environment.