Managing and Using Information Systems:

A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders,

and Dennis Galletta

© Copyright 2016
John Wiley & Sons, Inc.
 Chapter 3
Organizational
Strategy and IT
Comparing Cognizant and
Tata
• What is similar about the two firms?
• Why are they organized differently?

Cognizant Tata
© 2016 John Wiley & Sons, Inc. 3
 Figure 3.3 Organizational design variables.
Variable Description
Organizational variables
Decision rights Authority to initiate, approve, implement, and control decisions
necessary to plan and run the business
Business processes Ordered tasks to complete key business objectives
Formal reporting Structure set up to coordinate organizational units
relationships
Informal networks Mechanism, such as ad hoc groups, to coordinate and
transfer information outside formal reporting relationships.
Control variables
Data Facts collected, stored, and used by the organization
Planning Processes by which future direction is established,
communicated, and implemented
Performance measurement Measures to assess successful execution of plans then using
and evaluation the measures to improve the quality of work
Incentives Monetary and non-monetary devices to motivate behavior

Cultural variables
Values Implicit and explicit beliefs that underlie decisions and actions

Locus The span of culture: local, national, regional, etc.

© 2016 John Wiley & Sons, Inc. 4

© 2016 John Wiley Sons, Inc.

 Organizational Design
• Different designs accomplish different goals
• Decision rights will differ according to the design
• Different reporting relationships and organizational
structure will allocate decision rights in different
ways
• Four major organizational designs are:
• Hierarchical
• Flat
• Matrix
• Networked

© 2016 John Wiley & Sons, Inc. 5

Hierarchical Organizational
Structure
• Orders go down and information goes up
• IT provides communication/memory in both
directions
• Also known as a bureaucracy
• First observed by Max Weber in the Catholic Church
and German army and applied to early factories and
offices
• Features include
• Unity of command (one boss for each person)
• Span of control (measures the number of subordinates for
each boss)
• Clear lines of authority and reporting duties
© 2016 John Wiley & Sons, Inc. 6
 Flat Organizational
Structure
• Also known as horizontal organizational structure
• Features:
• Decentralized decision making
• Less well-defined chain of command
• Less clear decision rights
• Few middle managers
• IT glues together the organization
• IT allows rapid response; supports internal communications

© 2016 John Wiley & Sons, Inc. 7

 Matrix Organization
• Assigns employees to two or more supervisors to
integrate multiple dimensions of a firm
• Features:
• Work is organized into small work teams
• Allows organizations to concentrate on functions and purpose
• IT reduces operating complexity and expense by allowing
information to be easily shared among different managerial
functions
• Shortcomings:
• Sometimes frustrating and confusing
• Require frequent meetings
• Information overload

© 2016 John Wiley & Sons, Inc. 8

 Networked Organizational Structure

• Feel flat yet hierarchical

• Work well in dynamic, unstable environments
• Features:
• Highly decentralized decision rights
• Information systems replace hierarchical controls
• Formal and informal communication networks connect
everyone
• Promote creativity and flexibility while maintaining
operational process control
• Extensive use of communication technologies and
networks:
• Allows coordination across functional boundaries
• Enables quick and more accurate decision making
© 2016 John Wiley & Sons, Inc. 9
The networked
organization.

© 2016 John Wiley & Sons, Inc. 10

Comparison of Organizational Structures
Hierarchical Flat Matrix Networked
Description Bureaucratic w/ Decision-making Workers assigned Formal/informal
defined levels of pushed down to to 2 or more communication
management lowest level supervisors networks that
connect all
Division of labor Informal roles; Dual reporting Known for flexibility
Characteristics
specialization, often small, based on and adaptability
unity of command young function/purpose
organizations

Type of
Stable Dynamic Dynamic
Environment
Certain Dynamic Uncertain Uncertain
Best Supported
Uncertain
Basis of Primary functional Functions and Networks
Structuring Very loose purpose

Power Structure Centralized Distributed Distributed

Decentralized
Key Tech. Mainframe, Networks Intranets and
Supporting this centralized data PCs Internet
and processing

© 2016 John Wiley & Sons, Inc. 11

Emerging Organizational Forms

• Hybrid structure (differs throughout the

organization)
• New forms are beginning to emerge:
• Adaptive Organization
• Zero-Time Organization
• Elastic Enterprise
• What is common among those?
• Flexible, agile, responsive configurations over time
• React to changing needs
• Use of IT and networks to enable these
configurations

© 2016 John Wiley & Sons, Inc. 12

 New Options
• Social networks – used for:
• Finding experts
• Getting to know colleagues
• Seeing who has relevant experience for projects
across functions and geography

© 2016 John Wiley & Sons, Inc. 13

 INFORMATION
TECHNOLOGY AND
MANAGEMENT
CONTROL SYSTEMS

© 2016 John Wiley & Sons, Inc. 14

 IT Changes Management
Functions
• IT changes the way managers:
• Monitor: new ways to track performance and
behavior
• Evaluate: easier to understand progress and
performance
• Provide Feedback: rapid feedback possible
• Compensate & Reward: team-based efforts can be
evaluated and complex formulas used
• Control Processes: easier to
• Collect data
• Analyze
• Communicate results
© 2016 John Wiley & Sons, Inc. 15
 Management Control
• IS profoundly affect control
• People & processes are monitored in ways that were
not possible only a decade ago.
• IS play important roles in management control
processes
• Data collection
• Evaluation
• Communication
• IS play important roles in planning
• Can provide the necessary data
• Can evaluate scenarios
• Can provide analysis and simulation tools
© 2016 John Wiley & Sons, Inc. 16
 IS and Culture
• Culture is a shared set of values and beliefs”
• It may be held by a group, organization, profession,
industry, and/or nation.
• AKA “collective programming of the mind”
• Culture has:
• Observable artifacts
• Espoused values
• Assumptions

© 2016 John Wiley & Sons, Inc. 17

 Data and Information Systems
• IS can streamline data collection through monitoring
• IS can provide analysis tools for that data
• Types of data include
• Keystrokes
• How long each task takes
• Who is contacted during the task
• Specific data passing through the process
• Large data stores can be created
• Behavioral issues can result
• Stress from monitoring, especially if it seems not to fit the task
• Deliberate delaying, distorting or falsifying collected data
• Employees should know what is collected and how it is used
© 2016 John Wiley & Sons, Inc. 18
 Performance Measurement,
Evaluation, and IS
• Analytics tools have proliferated, perhaps leading to information
overload
• Often it is less threatening/more welcomed to provide feedback
for performance improvement than for rewards/compensation
• Incentives and goals need to be carefully administered
• Reward for short call duration? You’ll get short calls and perhaps unhappy
customers
• Reward for customer satisfaction? You’ll get happier customers but
perhaps calls that are significantly longer than necessary
• Be careful with incentives; you will get what you reward
• IS can easily apply complex formulas and track performance
• Multi-dimensional goals (e.g., 50% on efficiency + 50% on satisfaction)
• If most work is done on teams, team performance needs to be added

© 2016 John Wiley & Sons, Inc. 19

 Impacts of Culture on IT
• Culture is a “collective programming of the
mind” involving “shared values and beliefs”
• Culture can:
• Color the development of IS
• Affect technology adoption/diffusion
• Influence system use and outcomes
• Impact management practices

© 2016 John Wiley & Sons, Inc. 20

 Layers of Culture
1. Observable artifacts – most visible layer
• For example, dress, acronyms, awards, stories, rituals
2. Espoused values: explicitly stated preferred values
• For example: “we have a good work-life balance”
3. Enacted values: reflected in actual behavior,
sometimes inconsistent with espoused values
• For example “we have a good work-life balance” but
require 12-hour work days plus weekends
4. Assumptions – deepest layer – unobservable;
taken for granted
• For example, “respect the customer”
© 2016 John Wiley & Sons, Inc. 21
 Levels of Culture and IT
• In business, culture is often applied at the following
levels:
• Nations
• Organizations
• Work groups
• Sometimes IS developers and clients can have a
clash in culture
• Clients might want fast turnaround and convenience
• Developers might want slower, more deliberate approach,
for stability and control

© 2016 John Wiley & Sons, Inc. 22

Levels of Culture

From Leidner and Kayworth, 2006

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 NATIONAL CULTURE:
GLOBE Cultural Dimensions

• Uncertainty avoidance
• Power distance
• Societal collectivism
• In-group collectivism
• General egalitarianism
• Assertiveness
• Future orientation
• Performance orientation
• Humane orientation
© 2016 John Wiley & Sons, Inc. 24
 How are IT and Culture
Linked?
• IT supports cross-cultural communication
• People need to be aware of cultural differences
when communicating
• This awareness will lead to:
• Better listening and understanding (correctly framed
messages)
• Searching for a solution that will be accepted widely
• Reduced conflict

© 2016 John Wiley & Sons, Inc. 25

 Application to IS Training
Investments
• Peretz & Rosenblatt found that cultural dimensions impact
training.
• Higher training investments were found by firms in countries with:
• Low power distance (Germanic countries, Anglo-American countries,
Netherlands, Israel)
• Future orientation (some Asian countries)
• High uncertainty avoidance (some Hispanic countries, Japan, South Korea,
Israel, Russia)
• Lower investments were found in firms from countries with
• High power distance (some Asian, Latin American, and Middle Eastern
countries)
• Why? Perhaps to maintain power differences
• Short-term orientation (some Anglo-American countries)
• Low uncertainty avoidance (the UK, Ireland, Hong Kong, and Singapore)

© 2016 John Wiley & Sons, Inc. 26

Managing and Using Information Systems:
A Strategic Approach – Sixth Edition

Keri Pearlson, Carol Saunders,

and Dennis Galletta

© Copyright 2016
John Wiley & Sons, Inc.