MANAGEMENT INFORMATION SYSTEM

LESSON 7:
MANAGEMENT OF INFORMA TION SYSTEMS AND INFORMATION TECHNOLOGY

Learning Objectives • Minicomputers: Mini-computers have less power and

• To understand the role of Information Technology in capacity than a mainframe but more than a personal
Organisation computer. They were responsible for bringing computing
capacity to a level that smaller companies could afford. Now
• To know about the Inter-Organisational Systems they are used in smaller networks that don’t require the
• To study the impact of Information Technology in Business power and speed of mainframes. While they are still useful
Transformation in many cases, they are sometimes replaced by more powerful
7.1 Introduction workstation and personal computers that are connected to
As a manager you will be in a position to assess how informa- emulate the power of a mini-computer.
tion technology can be used to support business activities. • Workstation computers: The workstation computer can be
Traditionally data processing applications have supported “back easily confused with a personal computer (PC) because it is
office” operations, such as transaction processing. However the configured much the same way. However, this computer has
introduction of information systems which electronically linked more computing capacity in its CPU than a typical personal
purchasing personnel with order-entry system proved that computer. Scientists and engineers are the main users of
businesses could use information technology to gain a competi- workstations, although people who process graphics (or
tive advantage. This lesson shows how businesses can use pictures) find a workstation necessary, since the processors
information technology for competitive advantage and how can handle the huge amounts of data associated with graphic
inter-organisational systems have transformed the competitive files.
market place. • Personal computers: While this class of computer used to
No wonder we agree that we are living in an Information Age be called a microcomputer, and sometimes still is, that label
which is influencing major decisions happening in the Industry gives a false impression of what the machine can do. The
Level and very small decision in your personal lives also. The prices of PCs have dropped drastically in the last two years,
advancement of Technology has given enormous benefits to us while computing capacity and power have continued to
by enabling all our practices more competent because of the increase. Many small businesses find it cheaper and easier to
availability of all kinds of information at a cheaper cost. connect multiple PCs to form a small network than to
Let us see the basic components of Information Technology purchase more expensive equipment. It’s estimated that over
and its way of working first. The understanding of computer 60% of the U.S. population has a personal computer in the
technology is the base really to acquire a better understanding home.
about the Information Systems. • Supercomputers: Because computing capacity and power
7.2 Computers and Computer Processing were increasing so fast and so much with mainframes and
The classification of computers depends on computing capacity other types of computers, many people didn’t see a need for
and data processing speed. Let’s review each of the classifica- supercomputers. As with the mainframes, the increasing use
tions. of networks, with their insatiable appetite for speed and
storage, are allowing supercomputers to make a comeback.
• Mainframes: These are the huge computers you see in a big There are still situations in which the power of
room where people in white coats mill around. Until the
supercomputers is necessary: The National Weather Service
mid-1970s they were the only computers available. With the
uses a supercomputer to store models of weather patterns
invention of the mini-computer and later the personal
to help predict storms or sunny days.
computer, many people said mainframes were too big, too
expensive, and not needed anymore. The Internet and the A few years ago a computer called “Big Blue,” manufactured by
advent of computer networks literally saved the mainframe IBM, played a series of chess games against Garry Kasparov, the
from oblivion. Mainframes have the necessary power and greatest chess player in human history. The interesting part of
speed to process millions of transactions from the Internet this match lies in the fact that the computer used a technology
and networks and have the storage capacity needed for all the called parallel processing. That is, it had thousands of
data captured and processed by larger Information Systems. processors working together to calculate each move it would
America Online, the largest Internet Service Provider in the make and the countermove Kasparov would make. Kasparov,
world, uses many mainframes connected together to process on the other hand, was only using one processor - his brain - to
all the transactions across its network and to provide Internet calculate all the moves by both sides. Kasparov actually beat the
access to the 17 million users who subscribe to the AOL computer for a few rounds but ultimately lost the match. It’s
service. fascinating to think that the computer, able to process millions
and millions of instructions per second, had to use all of its

64
strengths and massive parallel processing to outwit a person Depending on the configuration of the network, a company can

MANAGEMENT INFORMATION SYSTEM

using one single processor. Think about it! save or lose many dollars. What’s most important to remember
is that the Total Cost of Ownership (TCO) should extend past
Computer Networks and Client/Server Computing
the hard dollars spent on hardware and software. The cost
should incorporate such as items as employee training, their
ability to perform necessary functions given the network
configuration, and lost productivity when the network is down.
The TCO should also include the amount of money spent on
communications wiring (telephone wires, fiber optic cable, etc)
and security and access issues.
7.3 Information Technology Trends
The speed and computing capacity of technology continues to
advance at dizzying speeds and in ways we can hardly imagine.
Star Trek is no longer a vision for the 24th century but for next
week.
Interactive Multimedia
Client/server computing One trend highly touted by the experts is that of the “informa-
With the increasing popularity of networks, you need to tion appliance.” Do we need to have a separate device for
understand the server/client structure. Think of an octopus, watching television, another one for listening to music, a
with the body representing the server and the tentacles repre- different one called a telephone, and yet a whole separate device
senting the clients. At the heart of every network is a server. It for computing? Some people say we can do all of that with one
can be a mainframe, mini-computer, workstation, or a souped- central appliance with a variety of input and output devices.
up personal computer. It’s where some of the data, applications If you watch the mergers taking place in the corporate world
software, and other instructions that network users need in between the telephone companies and cable TV companies, you
order to communicate with and process transactions on the can start to understand another major change that may be in
network are stored. The client computer is the node on the store for us. The companies are working toward a convergence
network that users need in order to access and process transac- of the “entertainment outlets” we know as television and the
tions and data through the network. The following figure Internet. Why can’t we download a movie off the Internet
shows some different types of client/server computing. whenever we’re ready to watch it instead of having to follow a
TV channel’s set schedule? This idea may be a reality in a few
years.
The music industry is struggling with the issue of music
downloaded from Web sites. How do the musicians protect
their copyrighted work while making the music more accessible
to the public? How do the music publishing companies protect
their business from disintermediation, the process of eliminat-
ing the middleman from transactions?
Smart Cards and Microminiaturization
Take a credit card out of your wallet and look at the magnetic
strip on the back. The strip may seem too small to hold much
data. You might be surprised to learn that through microminia-
turization, virtually all of your personal information, from
health records to school records to credit records, can be stored
on that small area with room to spare. Some states are now
including vital medical information on the back of driver’s
Types of client/server computing licenses which can be accessed by paramedics if you’re ever in an
There are many different configurations for networks, and the accident and need medical attention. The technology has already
text discusses the difference between distributed processing and saved lives.
centralized processing. Which one works best, you ask? It Social Interfaces
depends on the requirements, needs, and wants of the people Bill Gates, Microsoft Corporation, has a vision of the future of
who own and use the network. Managers should analyze their computing. Speaking to a reporter for Business Week magazine,
situation and determine the proper configuration to meet their May 17, 1999, he says: “Desktop PCs have been incredibly
needs. successful. Most businesses have them, and 50% of homes do.
Network Computers and Total Cost of Ownership And for most people, the PC will remain their key computing
The cost issue is becoming more important to businesses and tool, but it will also work alongside a lot of other cool devices.
companies as computer technology and networks grow. That’s why we’ve expanded our vision to giving people the

65
 power to do what they want, where and when they want, on In this paper we analyze the inclusion of the
MANAGEMENT INFORMATION SYSTEM

any device. That means on PCs, handheld PCs, phones, or Interorganizational Information Systems (IOS) concept within
smart TVs such as WebTV.” the network model and discuss the role IT plays in enabling
When asked what he saw on the horizon that will dramatically organizational transformation towards emergent forms of
change people’s lives, he replied: “I’m optimistic about what the organization.
industry can achieve, but the word ÔdramaticÕ will mean In order to attain relatively low costs in the last two decades the
different things to different customers. If you’re a large enterprises followed strategies of backward-forward integration,
enterprise customer, being able to connect your employees with based on the improvement of the effects of the experience
on-demand videoconferencing for collaboration would be curve and the scale economies. We consider that this internal
dramatic. If you are head of IT for a large corporation and can growth may be inadequate to face the new situations appearing
deploy software, do updates, and change users on a in the nineties and, no doubt, those that will appear in the next
companywide network of PCs, and never visit a desktop, ever - century. The individual enterprise has less capability for foresee-
that’s dramatic. If you have a PC at home and use the Web to ing the consequences of the different business decisions;
buy products, such as a car, a TV, or a dishwasher, and if you however, the need for competing in a more and more complex
can use your PC to track the warranties, find the nearest repair context requires the adoption of quick decisions, which facilitate
center, and have your PC store remind you of all that informa- the flexibility of the enterprise. New technologies, fast changing
tion - that would be dramatic.” markets and global competitiveness are revolutionizing
So where are we going with all this technology? Computers that relationships both within and between organizations. Thus, the
are easier to use and incorporated into our everyday lives are in new environment requires from the enterprises a strategy able to
the near future. Improved technologies for business computing agglutinate reduced costs, high quality, flexibility, and a quick
are being introduced each day. Faster and smaller information response to the needs of the customer.
appliances are coming to a store near you. When it comes to the Nowadays, the enterprises have to compete in a more and more
future of computing, your imagination is the only thing turbulent scene, which obliges them to adopt less hierarchical
holding us back. and more flexible structures. During the last years, a major
transformation in the strategy of many enterprises has been
7.3 Role of Information Technologies on
observed with a tendency to disintegration. This is accompanied
the Emergence of New Organizational
by a need for increasing the quality of the products or services
Forms
offered, which requires more interdependency among the
During the last years, a consensus is emerging that to survive in
different corporate units. As a consequence of it, several
the competitive turbulence that is engulfing a growing number
transformations both inside the enterprises and in the relation-
of industries, firms will need to pinpoint innovative practices
ships between them are taking place, which establishes new
rapidly, to communicate them to their suppliers and to
structures through which the relationships among competitors,
stimulate further innovation. In order to be competitive,
customers and suppliers are changing substantially. One of
companies are forced to adopt less hierarchical and more flexible
these changes is the cooperation established among different
structures, and to define strategies able to combine reduced
enterprises, which allows them to develop their competitive
costs, high quality, flexibility and a quick answer to customer
capability. Companies are forming strategic alliances because
requirements. Nowadays, there are very few companies with
there is an increasing acknowledgement that organizations
enough resources to form its value chain on their own.
operate in a relational context of environmental connectedness
Therefore, some changes are taking place within individual and that organizational survival and performance depend upon
companies and in their relations with other organizations, connections with other organizations.
creating new structures in which relationships between
The co-operation among enterprises allows their flexibility and
customers and suppliers are suffering considerable changes. One their innovative capacity to be increased. Current products are
of these changes is concerned with the formation of networks based on so many critical technologies that most of the
in which there is a division of labour that allows each company enterprises cannot keep constantly updated in all of them.
to exploit their distinctive advantages, and be more competitive
globally. The Network Structure
The concept of the network’s form of organization has been
In a network model, a set of juridically independent companies
particularly popular with management writers for its potential
establish cooperative long term links in order to achieve a higher
to build the flexible organization with the ability to meet the
level of competitiveness. The enterprises that belong to a
challenges of a changing and global environment. Despite both
network have not all the elements needed for manufacturing a
the abundant available literature and the existence of a certain
product or providing a service under their absolute control.
consensus on some aspects, there is still too much ambiguity in
Therefore, the success of this kind of structures is conditioned
the concepts used in this area. Taking into account the forma-
by the coordination degree obtained along the realization of
tion of networks, which is an interesting field of recent
inter-organizational activities, which requires an efficient
development with strong repercussions on the inter-organiza-
communication system among the partners. The Information
tional relationships, it is necessary to clear the existing
Technology (IT) represents a supportive element that facilitates
terminological confusions in order to formulate its theory and
the transfer of information across organizational boundaries.
to improve its implementation.

66
Starting from the definition, a network is a specific kind of causation between the implementation of IT and the organiza-

MANAGEMENT INFORMATION SYSTEM

relationship joining a particular group of people, objects, or tional changes in the enterprise driving to an increase in the
events. Two factors needed for constituting a network can be competitiveness of the enterprises. On the contrary the
obtained from this definition; first, a network is formed by a technological and organizational implementations are both
group of elements; second, these elements establish specific sides of the same issue, since they depend on and determine
relationships among them. We must show that the establish- each other». We think that, although IT might have the above
ment of a co-operative network is not a purpose itself but «it mentioned positive effects on the organizations, the will and
must be a dynamic structure that allows consolidating the capabilities of the directors of the company are needed in order
competitive position of its members». to make the most of those advantages.
By means of a network structure, the competitive position of In order to make the most of the whole potential of the IOS,
the enterprises can be reinforced as these concentrate on what it will be required that the managing directors get involved with
they do best, and on what maintains their success in the market. the project, since they have a wider and more strategic view of
In this way, other enterprises make the activities left, in which the company. In this way, a system coherent with the objectives
they have distinctive competences too. The enterprises of the company would be implemented. This system would
outsource those activities that are ballast and bureaucratize allow taking even more profit from IT, what would have
them. positive repercussions on the enterprise and would facilitate the
The enterprises that belong to a network have not all the achievement of its objectives. The active participation of the
elements needed for manufacturing a product or providing a Management Board in the planning of the IOS brings a
service under their absolute control. Within the networks, the problem related to the fact that IT is a relatively new resource
involved elements belong to independent enterprises and are that did not exist when most of the current managers were
placed along the value system of a product or service. trained. Therefore, they usually do not feel comfortable with
these new technologies.
All this drives to an organizational structure in which the
enterprises generate more value in those areas where they have As a proof of this, we will consider an example. McKesson was
specific competencies. The success of these emergent organiza- a dealer company of chemical products. This company knew
tional forms seems to be based, on a great extent, on an that its success was linked to that of its customers, which were
effective co-ordination by means of the use of advanced small stores, so it established a close relationship with them. By
information systems, which are based on the Information means of an appropriate use of Information Technologies, it
Technologies (IT). There is an increasing interest in the relation- helped its customers to maximize their profits, since it gave
ship between the emerging organizational ways and the them useful information for competing with the big pharma-
function of the IT/IS insofar as the progresses in each field ceutical chains, which were getting a greater market share. The
have influenced the others. McKesson Corporation directors’ idea was so successful that
many other enterprises of the sector tried to imitate it, but they
Information Technology On the Emergence of made a terrible mistake. They thought that the network created
Networks by McKesson was just a computerized system with terminals
At the moment, the most spectacular and potentially powerful connected in other enterprises.
uses of the information systems technology go beyond the
The secret of the success of this company were not the
individual borders of the enterprises. In fact, the most impor-
computer links; information technology did not create the
tant function of IT in the nineties is the better management of
network. The network’s success was due to the fact that the
the interdependencies among the enterprises. Information
directors of McKesson were aware of both the relationships
Technology has to be the most powerful instrument to reduce
along the added value chain and the need to strengthen as much
the co-ordination costs». While the traditional uses of IT tried
as possible every link within the chain, so cooperative behaviors
to facilitate the internal processes of the enterprises, the
could be established in order to provide the share of informa-
Interorganizational Information Systems (IOS) are addressed
tion and the quick response to the changes of the demand.
towards the efficiency of a group of enterprises.
Another example, widely mentioned in the literature on
Most of the studies about IOS have focused on the incidence
Information Systems, is the one of the American Hospital
of IT on the flows of information among the organizations,
Supply Company whose success has shown up the need to
its capability of reducing the transaction costs, and its potential
consider the network established not only as a mere system of
to achieve competitive advantages. Many authors have verified
electronic data exchange, but also as a better implementation of
that:
the technology found within a context of changes in the
• IT influences the nature, punctuality and detail level of the commercial relationships between the enterprise and its main
information shared by enterprises customers.
• IT reduces the transaction costs, while it provides a better They state that the implementation of this kind of technolo-
management of the risks gies per se does not bring any competitive advantages; on the
• IT reduces the co-ordination costs contrary, they must be accompanied by some particular ele-
In order to benefit from the advantages of IT, the enterprises ments, generally intangible, which facilitate the operation of the
have to keep in mind that IT cannot be isolated from its organization by means of a better distribution of the informa-
organizational context». We do not agree with the existence of

67
 tion and the experience. They also reflect a collaborative attitude independent organizations will have to establish close interrela-
MANAGEMENT INFORMATION SYSTEM

among the enterprises. tionships, in which Information Technologies have a vital role
A positive consequence of the revolution of communication to play. In this way, the aim of optimizing the flow of profits
and Information Technologies is that there are more available along the supply chain could be achieved too. IOSs are, basically,
options for designing the labour now, because the technology new means to facilitate the relationships among organizations;
can be used to increase the capacities of the workforce, and the they are, therefore, a strategic instrument. However, an IOS
information can be transferred to those places were the labour is allows to obtain operative advantages too, such as
carried out. Workers do not need to be located according to • Reducing paper-work and manual operations;
parameters of time and space to co-ordinate any more. • Reducing the stock levels;
We consider that technology, although it is not the ground for • Accelerating the product and material flow;
the emergence of a new and innovative way of organizing the
• Standardizing of procedures;
enterprises, plays an important role in its operation. Technology
allows doing things in a different way, which provides the • Accelerating the flow of information about changes on the
directors some organizational possibilities that would be demand;
unthinkable without its implementation. Thus, using a • Reducing telecommunication costs.
mathematical expression, we can state that Information The IT is a basic support that facilitates the co-ordination of
Technologies are necessary but they are not enough to achieve different enterprises through EDI systems, shared databases, e-
greater business competitiveness. mail, videoconferences, which will allow them to work together.
The Role of IOS within the Network Structure They will be able to share information on the markets, on the
The enterprises involved in an alliance must decide whether to needs for materials, on stock levels, production schedules, and
use the manual management of all the exchanged data, or to delivery programs. A key factor in an efficient exchange of
complement that management with the interconnection of information within a network is the computer connection of its
their respective computer applications. This interconnection may members. The computer links accelerate the transference of
bring, however, compatibility problems in the integration of information, since it provides the automatic transmission of
the data from the different enterprises, since those applications data between physically distant computers. These links can be
would have possibly been designed without taking into account used as a strategic instrument to increase the competitiveness of
any requirement of integration among enterprises. The the enterprise, binding it electronically with its customers and
establishment of co-operation networks implies the need for suppliers through inter-organizational systems. The electronic
wider communication in the organizational field, as well as the connection facilitates the approaching of the linked enterprises,
requirement of capability to integrate the information systems which means that the companies may provide the customers
from different enterprises. direct access to the internal databases, as well as just-in-time
stock control.
The enterprises inside a network cannot operate properly if they
have not the possibility to communicate quickly, accurately, and Changes in the Business Environment and their
over long distances. Within a network, it does not make any Effect on Organizational Design
sense to restrict the application of modern computer technolo- The powerful worldwide changes have altered the environment
gies to the individual borders of each enterprise. The of business. These changes in the business environment and
Management Board of the enterprises in the network must, on climate are classified into political, social, economical and
the contrary, consider the possibilities of co-ordinating the technological categories.
processing of data outside the limits of their own organiza- Environmental, organizational, and technological factors are
tions by means of an IOS. creating a highly competitive business environment where
The application of the IT which provides the electronic customers are the focal point. Further, environmental, organiza-
integration among the shareholders of an industry may make tional, and technological factors can change quickly, sometimes
easier the outsourcing of activities, as well as be a basic part of in an unpredictable manner.
the proper operation of the reticular structures. An IOS may Therefore, companies need to react often and quickly to both
play an important role in the coordination of interdependent the problems and the opportunities resulting from this new
activities, which would be carried out by distant organizational business environment. This dramatic change is due to a set of
units. Thus, the enterprises can reduce their dependency on business pressures or drivers. They maintain that in order to
strategies of backward-forward integration in order to ensure succeed (or even to survive) in this dynamic world, companies
the control over the production process. must not rely only on traditional actions such as lowering cost,
The concept of network emphasizes the interdependency but also encourage innovative activities by empowering
among enterprises, which is provoked by the presence and the employees.
sharing of the following key attributes: objectives, experience, Organizations are composed of five major components: IT,
labour, taking of decisions, responsibility, trust, and organizational structure and corporate culture, management and
acknowledgement or reward. The enterprises within a network business processes, organization’s strategy, and individuals and
will adopt a common objective, namely to provide a quicker and roles. These components are in stable condition, called equilib-
better service to the final customer. With this aim in view, rium, as long as no significant changes occur in the environment

68
or in any of the components. However, as soon as a significant Five Levels of IT-induced Reconfiguration

MANAGEMENT INFORMATION SYSTEM

change occurs, the system becomes unstable and it is necessary The above figure is a schematic representation of these five
to adjust some or all of the internal components since all are levels along two basic dimensions – the degree of business
interrelated. transformation and the range of potential benefits from IT.
Organizations thereby proceed to higher levels of transforma-
IT and Organizational Design
tion as the demands of competition and value creation for
An important and fast growing technological innovation during
customer increases. The first two levels are evolutionary,
this century is computer-based information systems. Com-
requiring relatively incremental changes in the existing organiza-
puter-based information systems (CBIS or only IS) provide an
tional processes. In contrast, the other three levels are
opportunity for businesses to improve their efficiency and
conceptualized as revolutionary, requiring fundamental changes
effectiveness, and even to gain a competitive advantage. IT is
in the nature of business processes. These five levels are
also a catalyst of fundamental changes in the structure, opera-
explained as following
tions and management of organizations. Most businesses in
the industrial world could not compete, and many could not • Level 1: Localized Exploitation (Automation), which is
even survive without computers and software. Now IT is an concerned with the exploitation of IT within business
integral part of the products and services delivered to custom- functions.
ers. • Level 2: Internal Integration, a logical extension of the first
Competition leads to environmental uncertainty and increases in the sense that IT capabilities are exploited in all the
both the need for and the rate of innovation adoption. By possible activities within the business process. Two types of
adopting IS, businesses will be able to compete in three ways: integration are critical here: technical integration and the
organizational integration by using common IT platform to
(1) IS can change the industry structure and, in doing so, alter
integrate the organization’s business processes to enhance
the rules of competition;
efficiency and effectiveness.
(2) IS can also create competitive advantage by offering business
new ways to outperform their rivals; and
High
(3) IS spawns new businesses, often from within existing Five: Business
Revolutionary Levels
operations of the business. Scope Redefinition

IT-enabled Organizational Transformation Four: Business

Network Redesign
There is a growing body of conceptual papers and case studies Degree of Business
Transformation
on IT-enabled organizational transformation in the informa- Three: Business
Process Redesign
tion systems literature. Most of the studies suggest that the use
of IT without concomitant organizational changes is unlikely to Two: Internal
yield significant gains in terms of organizational performance. Integration

Four R’s of Business Transformation One: Localised Evolutionary Levels

Low Exploitation
Business Transformation can be defined as “The orchestrated
redesign of the genetic architecture of the corporation, achieved
Low Range of Potential Benefits High
simultaneously – although at different speed – along the four
dimensions of reframing, restructuring, revitalization and
renewal.” By this definition a biological model has been • Level3: Business Process Redesign, involving the
developed that we call the Four reconfiguration of the business using IT as a central lever
R’s of transformation: Reframing, Restructuring, Revitalization, • Level 4: Business Network Redesign concerned with the
and Renewal. reconfiguration of the scope and tasks of the business
The meaning of Four R’s: network involved in the creation and delivery of the
products and services and
Reframing is the shifting of a company’s conception of what it
is and what it can achieve with new visions and a new resolve • Level 5: Business Scope Redefinition concerned with the
underlying principle of a corporation, pertaining to the
Restructuring is a girding of corporate loins, getting it to
possibilities of enlarging the business mission and scope
achieve a competitive level of performance by dealing with the
(through related products and services) as well as shifting the
body of corporation and competitiveness. The need to be lean
business (through substitution of traditional capabilities
and fit is the primary consideration.
with IT-enabled skills).
Revitalization is about igniting growth by linking the corpo-
rate body to the environment. Renewal deals with the people Summary
side of transformation, and with the spirit of the company. It We note that the future organizations would be facing a
is about investing individuals with new skills and new pur- shortage and a redundancy of information. To solve the
poses, thus allowing the company to regenerate itself. problems of “information-glut” arising from the evermore
affordable information and communication technologies that
provide for evermore high-capacity, fast, long-distance transmis-
sion, organizations would need to introduce methods for

69
 “selective dispersion of information” to their various parts. 5. If you could change anything about computer hardware,
MANAGEMENT INFORMATION SYSTEM

Work tasks would be grouped in organizational units created what would it be? Be as specific as you can and use your
around a common program for information processing. imagination.
Improvements in telecommunications will make it easier to
Discussion Questions
control [which will be primarily a matter of information
exchange] organizational units dispersed over different parts of 1. How could a financial services company specializing its
the world. Advances in telecommunications [such as mortgage loans use information about its customers to gain
videophone], coupled with diminishing costs, would result in power over its customers?
increased distance-communication. Indirect communication 2. What applications of Information Technology can have a
would be preferred for well-structured information for routin- significant impact on improving customer service?
ized, “preprogrammed” decision processes. 3. Give three examples of Internet Applications that have the
The design of the organizational structure should take into business uses.
account and take advantage of the information and informa- Application Exercise
tion- processing supports which could be designed, and in the
1. Locate at least five sources for additional information about
not- distant future will be inexpensive. The technology itself is
bicycles and bicycle components on the Internet. List and
neutral, but it can greatly increase humanity’s woe or welfare,
briefly describe the sites
depending on how well it is used. What is missing is the full
recognition of the strong interactions between this technology 2. Using Internet, financial, and government sources, estimate
and organization design, and the consequent need to take a the size of the market of any product (total sales and
systems approach to the joint design of organizations and their number of units) for the last three years.
information support systems. 3. Find out atleast five different Web Sites which are facilitating
This decade has brought companies around the world a business and trade. Also analyse the facilities offered by them
tremendous increase in competitive pressures. In order to
survive, organizations need to be highly flexible and responsive
to the rapid twists and turns of markets and technologies.
Management theorists rushed to offer alternative organizational
models. The transformation in organizational structure may be
facilitated by advances in Information Technology. But, IT is
not effective if it is not accompanied by an innovation in the
human and organizational parts simultaneously. The connec-
tion of information systems of distant organizations requires
organizational changes in order to improve a wider share of
data among them. In our opinion, a co-operative network is the
perfect frame in which a major improvement of the potential
advantages of an IOS can be obtained.
The network pursues to integrate the distinctive capabilities of
different enterprises in it, by means of collaborative agreements
which involve closer relationships among them. The network
structure allows an enterprise to specialize and to reduce costs in
those activities from the value chain that are basic for its
competitive advantage, leaving its partners to realize the
activities particular to their respective speciality areas.
Review Questions
1. Determine the TOC (total cost of ownership) associated
with the technology in your workplace or classroom, even if
it is your own home. Use your hourly wage or salary as a
basis to figure the persware cost.
2. Describe a client/server network with which you are
associated. Remember, Internet Service Providers such as
AOL or your local service provider can be part of your
personal client/server network.
3. Explain the concepts of Inter-organisational Systems with
Examples
4. Explain the benefits companies enjoying out of the
Network Models

70