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Using IT For Coordination and Control

Overview of the Chapter 8 of Organizational Theory and Design

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Sahrish Tariq
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25 views5 pages

Using IT For Coordination and Control

Overview of the Chapter 8 of Organizational Theory and Design

Uploaded by

Sahrish Tariq
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter: 8

Using IT for Coordination and Control

Introduction: IT Evolution:
IT systems have evolved to various applications to meet organizational information
needs. These sophisticated applications help in effective management coordination,
control and decision making about complex and uncertain problems. Operations
applications are applied to well-defined tasks at lower organization levels and help to
improve efficiency. These initial applications were based on the machine-room
efficiency because the goal was to reduce labor costs by having computers to take over
some tasks.

Transaction processing systems (TPS), which automate the organization’s routine,


day-to-day business transactions. A TPS collects data from transactions such as sales,
purchases from suppliers and inventory changes, and stores them in a database.

Data warehousing is the use of huge databases that combine all of a company’s data
and allow users to access the data directly and create reports and provide responses
about queries.

Business intelligence deals with the high-tech analysis of a company’s data in order to
make better strategic decisions. Sometimes also called as data mining, business
intelligence means searching out and analyzing data from multiple sources across the
enterprise and sometimes from outside sources as well, to identify patterns and
relationships that might be significant.

Organizational decision-making system:

Management information system (MIS) is a computer-based system that provides


information and support for managerial decision making. The MIS is supported by TPS
and external databases. The information reporting system, the most common form of
MIS, provides mid-level managers with reports that summarize data and support in day-
to-day decision making. An executive information system (EIS) is a higher-level
application that helps in decision making at the highest levels of management. These
systems include software that can convert large amounts of complex data into related
information.

Decision support system (DSS) provides specific benefits to managers at all levels of
the organization. They are computer-based systems rely on decision models and
integrated databases, employees and managers can explore various alternatives and
receive information that would likely have the best outcome.

Feedback control System:

Effective control systems involve the use of feedback to determine whether


organizational performance meets established standards and goals. Managers set up
systems for organizational control that consist of the four key steps,

 Set strategic goals


 Develop metrics and performance standards
 Compare metrics of actual performance to standards
 Take corrective measures as needed

Management control system:

Management control systems are broadly including the formal routines, reports and
procedures that use information to maintain or alter patterns in organizational activities.
It includes planning, budgeting, performance evaluation, resource allocation and
employee rewards. Targets are set in advance, outcomes compared to targets and
variances reported to managers for corrective action.

Executive dashboard, also called as business performance dashboard, is a software


program that presents key business information in graphical, easy-to-interpret form.
Dashboards pull data from a variety of organizational systems and databases and
measure the data against key performance metrics and deliver to managers for analysis
and action.

Benchmarking means the process of persistently measuring products, services and


practices against tough competitors or other organizations recognized as industry
leaders.

Six Sigma specifically means a highly ambitious quality standard that specifies a goal
of no more than 3.4 defects per million parts.
The Levels of Control System:
Organizational level: The Balanced Scorecard:

The balanced scorecard (BSC) is a comprehensive management control system that


balances traditional financial measures with operational measures. A balanced scorecard
contains four major perspectives, financial performance, customer service, internal
business processes and the organization’s capacity for learning and growth. Use a
balanced scorecard to integrate various control dimensions and get a more complete
picture of organizational performance. Select indicators in the areas of financial
performance, customer service, internal processes, and learning and growth, and
consider a strategy map to visualize how outcomes are linked.

Departmental level: Behavior versus outcome control:

Behavior control is based on manager observation of employee actions to see whether


the individual follows desired procedures and performs tasks as instructed. The
balanced scorecard and strategy map are techniques used primarily by top and upper-
level managers. Lower-level managers focus on the performance of people at the
department level, who must meet goals and standards in order to meet overall
organizational goals.

Adding Strategic Values: Strengthening Internal Coordination:

Intranets:

Intranet, a private, companywide information system that uses the communications


protocols and standards of the Internet and the World Wide Web but is accessible only
to people within the company. To view files and information, users simply navigate the
site with a standard Web browser by clicking on links.

Web 2.0 Tools:

These second-generation Internet technologies are often collectively called as Web 2.0.
These web services refer to a variety of software that makes it easier for people to
exchange information and conduct business transactions via Internet. Blog and Wiki or
social networking are few examples of these tools.

Knowledge Management:
It is a systematically way to organize, and make available a company’s intellectual
capital and to enhance a culture of continuous learning and knowledge sharing so that
organizational activities build on what is already known. It is mainly based on explicit
and tacit knowledge. Explicit knowledge can easily be captured and shared in
documents and through IT systems, but as much as 80 percent of an organization’s
valuable knowledge may be tacit knowledge that is not easily captured and transferred.
The organization uses IT systems primarily for facilitating conversation and person-to-
person sharing of experience, insight, and ideas for the communication of tacit
knowledge.

Enterprise resource planning (ERP)

It provides information about a company’s entire enterprise, including order processing,


product design, purchasing, inventory, manufacturing, distribution, human resources
(HR), receipt of payments and forecasting of future demand.

Adding Strategic Values: Strengthening External Coordination:

The Integrated Enterprise:

The integrated enterprise is an organization that uses advanced IT to enable close


coordination within the company as well as with suppliers, customers and partners. An
important aspect of the integrated enterprise is using supply chain management systems,
which manage the sequence of suppliers and purchasers covering all stages of
processing from obtaining raw materials to distributing finished goods to consumers.

Customer Relationship Approach:

These systems help companies track customers’ interactions with the firm and allow
employees to call up a customer’s past sales and service records, outstanding orders, or
unresolved problems.

E-Business organizational Design:

E-business can be defined as any business that takes place by digital processes over a
computer network rather than in physical space.
In-House Division offers tight integration between the Internet operation and the
organization’s traditional operation. The organization creates a separate internet unit
within the company that functions within the structure and guidance of the traditional
organization.

Spin-Off give the Internet operation greater autonomy, flexibility and focus, some
organization choose to create a separate spin-off company. Advantages of a spin-off
include faster decision making, increased flexibility and responsiveness to changing
market conditions, an entrepreneurial culture, and management that is totally focused on
the success of the online operation.

Strategic Partnership offer a middle ground, enabling organizations to attain some of


the advantages and overcome some of the disadvantages of the purely in-house or
spinoff options.

IT Impact on Organizational Design:

Advanced IT is having a significant impact on organization design, and some experts


suggest that it will eventually replace traditional hierarchy as a primary means of
coordination and control. Technology has enabled creation of the network organization
structure, in which a company subcontracts most of its major functions to separate
companies. In addition, most other organizations are also rapidly evolving toward
greater interorganizational collaboration. Other specific implications of advanced IT for
organization design include smaller organization, decentralized organization structures,
and improved internal and external coordination.

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