Course Name: Enterprise Information Systems 2023

Couse Code : IS 211

Lecture One: Introduction to Organization and
Information Systems
Lecture concepts

1. General concepts of Organization

- Organization business processes
- Organization structures
- Organization chart
- Organization production models
 Functional based production model
 Process based production model
2. Information Systems (IS)
- IS in different levels of an organization
- Drawback/ Dis advantages of functional IS for an organization
3. Tutorial Questions

GENERAL CONCEPTS OF ORGANIZATION

What is an Organization?

An organization is an organized group of people known by laws and has particular purpose, such
as a business or governmental department. Organizations create and deliver value in the form of
a product or service, which they offer to consumers or to other organizations.

Example of Organizations which create tangible products

Manufacturing organizations create tangible products such as cars, flashlights, skateboards,

wheat, juice and etc.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Please mention at least 5 real examples of organizations which produce tangible products from

1. Tanzania
2. East Africa
3. Africa
4. Worldwide.

Example of Organizations which create intangible products

The intangible ‘‘products’’ or services are such as education, health, information, and financial
services.

Please mention at least 5 real examples of organizations which produce intangible from

1. Tanzania
2. East Africa
3. Africa
4. Worldwide.

The mentioned organizations can fall under the followings terms companies, firms, corporations,
NGOS or institutes but both must be recognized by laws or certain authority.

Please state which authority is responsible for registration of the following organizations

1. NGOs
2. Legal office
3. Vikundi
4. Companies
5. Firm
6. Institutes

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Regardless of the type of organization, however, the product or service is created via a sequence
of tasks or activities that take a set of inputs and convert them into the desired output. We refer
to this sequence of activities as a business process.

Organization business process

A process consists of multiple sequential steps or activities that produce some outcome or output.

However in an organization there is more than one process or use a number of processes in order
to produce product or deliver a service.

The following are three fundamental/core processes in most organization’s dealing with
production of tangible product:

 Procurement
 Production and
 Fulfilment

In the procurement process,

- The organization acquires the basic materials that it uses to produce goods or services.
In the production process, as its name implies,
- Involves manufacturing or generating the desired goods and services. Finally, in the
In the fulfilment process,
- The company delivers the goods or services to its customers or resellers.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Example; consider a company that manufactures skateboards
In the procurement process,
- First it acquire the necessary components, or raw materials such as a board, wheels,
nuts, and bolts to its warehouse. The steps involved are as shown in figure below.

In the production process,

- Takes the different components (input) from warehouse —such as a board, wheels,
nuts, and bolts—and assembles them into a skateboard. It then inspects the skateboard
for quality and packs it in a box. Assembly, inspection, and packing are the required
steps or activities. The result (output) is skateboards. Because the objective of these
activities is to produce or manufacture the skateboard, this sequence of activities
constitutes the production process.
In the fulfilment process,
- The fulfilment process—generally occurs after the company has completed the
production process. The fulfilment process is concerned with filling a customer order,
and it might include the five steps shown in Figure 1.3. First, the organization
receives a customer’s order over the phone or any method. It then prepares and ships
the order to the customer, along with an invoice. Finally, the customer sends a
payment to the company.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
It is very important, however, to recognize that the activities involved in each particular process
are carried out by individuals (employee) located in different parts of the organization. Most
companies group their employees into different units. The manner in which they group their
people is determined by the organization’s structure and design, and it has significant
implications for how well the various processes are executed.

Organization structures

Organizational structure provides a formal system of tasks, power, and reporting relationships.
Organizational structures influence employee behaviour by:

- enabling or restricting communication

Do love what Secretaries do? Why?
- teamwork, and cooperation
Which department is hated most? Accounting right?
- Intergroup relationships
Do you appreciate your senior’s treatment?

Example

Image the difference between working in an organization comprised of independent work

teams and organization with highly centralised bureaucratic in which decisions are made
solely by the CEO.

The structures depends on what is business is accomplished by an organization. Historically

these structures are continuing evolved therefore there are many types organizational structure
but are categories in five common categories or class of organizational structures are:

1. Vertical or Hierarchical organization structure:

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Consist of more than three level of management. These structures are typical for
medium business. These are traditional organizational structures. Example of models
found in hierarchical organization structures are
- Functional organization structure
- Circular organization structure

2. Horizontal or flat organization structure:

Consist of less than three level of management. The horizontal org chart (or flat org
chart) visualizes an organizational structure with little or no level of middle management
— which means it mostly contains two levels: the top administrators and the workers.
This is common style for start-ups or very small businesses. This is best for companies
that have not yet well defined the roles, but are starting to get more organized. This can
help a company start to see patterns in its reporting and further divide the chart as roles
become clearer.

3. Matrix organization structure:

Consist of more than three level of management. For large organization, it’s a
combination of horizontal and vertical structure. It integrates the top-down vertical
organizational structure that highlights reporting relationships, with the flexibility of a flat
organizational structure where cross-department teams report to project managers.
The matrix style divides employees by department, but also by project, to visually display
what everyone is working on at a given time. This chart will likely need to be updated
more often than the others as projects reach completion and tasks change. Real examples
are the Dutch multinational electronics enterprise.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
4. Network organization structure:
It has complex levels of management. For large organization, it’s a combination of
more than one organization to produce goods or provide services. For example, if a
company hire another company or outsource one of its functions

5. Divisional organization structure:

Consist of complex levels of management. Example of models found in organization
divisional structures are
- Market-based organization structure
- Product-based organization structure
- Geographic organizational structure

Market-based organization structure is an approach to business that prioritizes

identifying the needs and desires of consumers and creating products and services that
satisfy them. The departments in market based structure include Marketing research,
Adverting and sales. Examples of companies are Nike and Coca-Cola.

In product based business approach companies envision of product before consumers

release if they need them. Example, Apple deals with I pad and IPhone this includes also
Telsa and Netflix. Product structures department can be research and development,
production, and quality controls.

In geographical structures division are separated by regionals, territories or districts in

order to offer more localization and products. Geographic structuring may be
necessary because of cost and availability of resources, distribution strategies, and
laws in foreign countries. Coca Cola structures geographically because of the cost of
transporting water. Net Jets, a private aviation company, had to create a separate
company in Portugal to operate Net Jets Europe, because the entity had to be owned by a

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
European Union carrier. McDonald’s is well-known for its geographic structure and
localization strategy for food preferences. The McDonald’s in Malaysia is certified
halal (no pork products) and you can order the McD Chicken Porridge: chicken and
onions in porridge. Other examples are Brie Nuggets (fried brie) in Russia; the Ebi Filet-
O (shrimp patty) in Japan; and in Canada, you can get poutine (fries and cheese curds
smothered in gravy).

For IT practitioner’s easy way to understand organizational structures is through organizational

charts.

Organization chart

Organizational chart is a diagram which shows different levels for chain of command and
reporting relationships in a company. It is a visual display of organizational structure. It also
show implicitly the organization structure; the division of labour, which reflects the degree to
which employees specialize or perform tasks.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems

University Boards Executives

College College Senior Managers

Principal Principal

HOD HOD HOD HOD Managers

Academic Academic Academic Academic Staffs Employees

Staffs Staffs Staffs
Chain of Commands

Chain of Reports

Figure 1.4
Qn: Which organizational structure is implicitly show by figure 1.5

Figure 1.5

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Qn: Which organizational structure is implicitly show by Figure 1.6

Figure 1.6
Qn: Which organizational structure is implicitly show by Figure 1.7

Figure 1.7

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Qn: Which organizational structure is implicitly show by Figure 1.8

Figure 1.8

Qn: Which organizational structure is implicitly show by Figure 1.9

Figure 1.9

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Qn: Which organizational structure is implicitly show by Figure 1.10

Figure 1.10

Qn: Can you state which type of organizational structure in the organization you have done
a field work

Qn: Jim and Natasha started an interior design business five years ago. At first, it was just
Jim taking care of the business side of things while Natasha focused on design, but as the
business grew, they hired people to help. Now they have a team of 20 organized into the
following areas: designers, operations and finance, sales and marketing, and purchasing.
What kind of structure have they implemented in their business?

Qn: Jackson is an engineer at a computer manufacturer with offices in the US, Europe, and
South America. His New York-based team reports to their office’s head product manager.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
The team also reports to the CTO, who is based in Germany. What type of structure is
Jackson’s company using?

NB:

- It is a common mistake to believe that a person’s location in the organizational chart

reflects their importance to the company and its performance.
- If an organization grows multiple charts may be developed for each major division or
functional area.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Organization production models

There are two types of organization production models

 Functional production model

 Process production model

Functional based production model

Most Organizations utilize a functional view whereby there are departments, each of which is
responsible for a set of closely related activities to delivery business service or product. For
example, the accounting department sends and receives payments, and the warehouse receives
and ships goods and materials. Typical departments found in a modern organization include
purchasing, operations, warehouse (inventory management), sales and marketing, research and
development, finance and accounting, human resources, and information technology.

From Figure 1. 11 the procurement business process can be operated as follows; the warehouse
determines what it needs, and it creates the purchase requisition. The purchasing department
then selects the supplier and creates and sends the purchase order to the supplier. The warehouse
receives the goods from the supplier and places them into inventory. Finally, the accounting
department receives the invoice from the supplier and makes the payment.

The fulfilment business process can be as follows; the sales department takes the order, the
warehouse packs and ships the order, and the accounting department sends the invoice and
receives payment.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems

Figure 1.11
Drawback of functional based production model
- Silo Effect

For the business processes (procurement, production and fulfilment) to be successfully

completed, then, the company must rely on each department to execute its individual
steps in the process. But in reality, people in the different functional areas (department)
came to perform their steps in the process in isolation, without fully understanding
what steps happen before and what steps happen next. They essentially complete their
part of the process, hand it off to the next person, and then proceed to the next task. By
focusing so narrowly on their specific tasks, they lose sight of the ‘‘big picture’’ of the
larger process, be it procurement, fulfilment, or production. This tendency is commonly
referred to as the silo effect.

How to solve silo effect

The key is to exchange information efficiently and effectively. People in each step in a
process must be informed when it is time for them to complete their step.

- Delays in Executing the Process

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Before information systems this exchange of information was done manually through
exchange of papers. For example, in the fulfilment process: delays can be due to the need
to maintain paperwork and delays in sending the paperwork to other functions. Delays
occur in the form of increased lead times (e.g., how far in advance a company must plan
to obtain raw materials from its suppliers) and cycle times (i.e., the amount of time
needed to produce a product or process a customer order). Increased lead times can cause
a company to have an insufficient inventory of material when it is needed. Increased
cycle times can prevent the company from producing goods and filling customer orders in
a timely manner.

- Excess Inventory

Companies that are plagued by delays and poor communication frequently tend to ‘‘cover
themselves’’ by creating a buffer of inventory. Thus, the factory manager will keep a
little extra raw material on hand, just in case the purchasing process is delayed (which
history has shown is often the case), the warehouse manager will stockpile a little extra
inventory of raw material and finished goods, just in case the purchasing process and the
production process are delayed, and so on. If all the groups involved in the process pile
up extra inventory, the result will be an excessive—and costly—amount of extra ‘‘just in
case’’ inventory for the organization.

- Lack of Visibility across Processes

That is, the people involved in the process do not have information about (1) the status of
the process in other parts of the organization and/or (2) how well the process is
performing over time. Typically, the paperwork and information about process steps are
not readily available to people in other departments.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Process based production model

This allows not viewing a work in terms of functional silos rather than in terms of cross-
functional processes. Dell Corporation is a great example of an organization that is designed
around a process rather than functional silos. Dell is organized around a process view of
computer sales and manufacturing. Dell largely operates on a business model that builds
computers after the company receives an order from a customer, an approach known as make-to-
order. The process of building the computer begins as soon as Dell receives the customer order
(and usually the payment). This order triggers different steps, including procuring the
components, building the computer to exact specifications, shipping the computer, and so on.
This process-based production model enabled Dell to become the leader in the personal computer
industry and remain much more profitable than their competitors

A process view is a philosophy that emerged in the early 1990s as a result of the increasing
complexity and distributed operations that globalization created. It gave companies a powerful
way to standardize the way they did their work across many countries and gain significant cost
savings as a result. Because processes span multiple departments across companies—and in
many cases across multiple countries—it is not possible to manage these processes manually;
that is, using paperwork. For this reason, ICT is an essential part of the process based
production model of organizations. In today’s business reality ICT cannot be avoided. In the
next section, we will discuss about information systems in supporting business processes.

Information Systems (IS)

Is a formal organizational system designed to collect, process, store, and distribute business
processes information’s. Information systems are computer-based systems that capture, store,
and retrieve data associated with process activities. In addition, they organize these data into
meaningful information that organizations use to support and assess these activities.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
Data Information
Every activity in an organization generates However, a report that uses these data to
data, which are raw facts that, by themselves, summarize product sales over time has
have limited value or meaning. Examples of tremendous value. Data that are organized in
data are customer names, product numbers, a way that is useful to an organization are
and quantities of products sold. By referred to as information. In this case, the
themselves, these facts might not have much organization can utilize this sales information
value. to determine which products are doing well and
which are not.

NB: By default Information Systems inherits functional based production model.

Functional Information Systems

Although organizations utilize a variety of information systems, most systems—like most

organizations— tend to focus on functions based information systems rather than processes
based information system. That is, each functional area or department developed a system that
suited its purposes well. Thus, sales developed order management systems, warehouses
developed systems to track inventory of materials, accounting developed systems to track
invoices and payments, and so on. These functional information systems evolved independently
of one another. Because the work was performed in functional silos, organizations gave little
thought to sharing the data among functions or departments. Figure1. 13 show different kind
information systems in different levels of organization.

Three Kind or Categories of Information Systems based on Organizational Levels

1. Operational level IS
2. Management level IS

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems
3. Strategic level IS

Figure 1. 13

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems

Drawback/ Dis advantage of functional IS in an organization

The use of functional information systems has reduced delays associated with maintaining data
within the department. However, the delays associated with communicating with other
departments persist because much of this communication still involves paper documents.
As shown in Figure 1. 14. Between cross departmental there is delay of exchange of information
and to make matters worse, information is often exchanged manually. To solve this issues
process based production model should be adopted and their corresponding ICT systems which
are called Enterprises Systems.

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 Course Name: Enterprise Information Systems 2023
Couse Code : IS 211
Lecture One: Introduction to Organization and
Information Systems

Figure 1.14 Fulfilment process supported by functional IS

Given the complexity of managing the data across entire processes, it is not feasible to rely on
manually connecting functional information systems by printing information from one system
and rekeying it into the next system. Therefore, in addition to moving from silos to processes,
organizations must also move from functionally focused information systems to integrated
enterprise systems (ES).

References

Internet Sources

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