In your initial post, share an analogy that illustrates how IS strategy supports the three components of organizational strategy. What are some of the ways in which IS strategy has improved business processes in various industries? Explain which strategies have worked in your own organization or provide an example of how these have worked in another organization.
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Linking information systems (IS) to organizational strategy is vital to accomplishing organizational goals. IS should optimize performance when used effectively to leverage labor and resources in alignment with business goals. Because organizations are structured differently, depending on their needs, different strategies will be used to meet strategic goals. Regardless of structure, organizational strategies should be well aligned with IS strategies. Businesses that strive to effectively negotiate the relationship between IS and the organization typically realize higher levels of productivity and efficiency.
Organizations need to design strategy in consideration of the IS that are developed, acquired, and/or implemented in support of strategy. Three groups of organizational design variables reinforce the interrelationship between IS and the organization:
Organizational variables: These variables define the roles and responsibilities of those in charge of making decisions at each level. Formal reporting structures are determined, as well as how to assign decision rights in informal networks. There are several organizational structures that help determine the flow of information and are based on organizational goals and maturity; however, many organizations may create hybrid structures or even employ a different type of structure in each department.
Control variables: These variables define management control systems. Senior leadership periodically evaluates and measures people and processes to ensure planned goals are met. Depending on the information received through evaluation, communication, and raw data collection, adjustments are made to achieve the desired results. In addition, managers are able to leverage IS to determine compensation and rewards. Employees can be measured based on compliance with service-level agreements and rewarded for improvements in performance.
Cultural variables: Culture can play a significant role in the design, implementation, and governance of information systems. Technology adoption and use may have major implications for an organization, so the need to espouse a set of collective values and belief systems can be vital to problem solving, group efficiency, security, and even individual performance. Regarding IT project management, risk aversion, work ethic, and management behavior can all be affected by the interpretation of group and individual values based on culture.
Managers are often responsible for pairing organizational design variables with technology to remove, disqualify, or mitigate impediments and positively affect change. Selecting an incompatible business process design, or redesign, can have seemingly insurmountable financial and operational implications for the organization. Managers need to be aware of the impact an IS may have on a business, have knowledge of the type of business process perspective that will be necessary to facilitate the flow of information, and possess a transformative mind-set that is willing to challenge and replace legacy ideologies and perspectives that contribute to underperformance.
There are two major types of business process approaches:
Functional: This structure is the one most organizations employ. The modularity of this structure allows each department to function as a silo to expertly complete tasks. There are several advantages to a functional perspective including organizational benchmarking, reducing redundancy, and creating growth through learning from an informal network. Unfortunately, hierarchically structured organizations also suffer from duplication of effort with other departments, prioritizing local goals ahead of organizational goals, and communication issues resulting in loss of information between departments.
Process-oriented: This approach is designed to keep managers and employees focused on the global perspective. Managers have the ability to create value by prioritizing cross-functional tasks optimally based on the larger picture. To accomplish this balance, managers need to consider the stakeholders, define the requirements, identify how each step in the process adds value, and focus the process by sharing their perspective.
An enterprise system is a common toolset employed by organizations to coordinate departments and facilitate the flow of information in support of the selected business process approach. Because many legacy systems did not interface with newer systems, data was often duplicated or lost. Enterprise systems are typically composed of several IS used to support several business areas, such as customer relationship management (CRM) and supply chain management (SCM). The two largest enterprise system developers are SAP and Oracle, each with their own set of process modules. Organizations that employ an enterprise system can realize significant benefits. All modules included in the system are designed to communicate with one another, and systems with overlapping functions operate more efficiently. The drawback, however, is the amount of preparation that must be completed up front to allow information to be shared between systems that previously stored and processed information in different forms, or with different labels. Many times deploying a new enterprise system requires a completed business process redesign.
Module Three will use the organizational design variables as input to a work design framework (WDF) to define roles and responsibilities, create tasks, and consider the impact of technology on the work environment.
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