Information and Control

Processes
Chapter

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 Managing By Design
• Information technology (IT) helps companies
maintain a competitive edge in the face of
growing global competition and rising
customer demands for speed, convenience,
quality, and value.
• The benefits of IT include improved decision
making, enhanced coordination and control
internally and with external partners and
customers.
 Evolution of Organizational
Applications of Technology

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 Information for Decision Making
and Control
• Technology can help managers make important decisions
• Management information systems include:
– Information reporting systems- provides mid-level managers with reports
that summarize data for day-to-day decision making on issues such as
production scheduling.
– Executive information systems (EIS)-Converts complex data into pertinent
information for top management to have rapid access to key decision making
– Decision support systems (DSS)-relies on decision models and integrated
databases so users can pose a series of what if questions to test alternatives
• Organizations are using technology to add strategic value

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 Managerial Control and
Decision Making

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Deutsche Lufthansa AG and Fraport AG
• German carrier Deutsche Lufthansa AG handles
100,000 bags a day at Frankfurt Airport, but the
company faced the problem of lost bags. Baggage
handlers use bar codes on check-in tags, but most
airlines have computer systems that don’t
communicate with one another. Lufthansa and
Fraport linked their computers. Employees use
scanners to register every bag. The system really
pays off for bags making tight flight connections.
 Feedback Control Model
The feedback control model consists of
setting standards of performance,
measuring actual performance and
comparing it to the standards, and
correcting or changing activities as
needed.
HOW DO YOU FIT THE DESIGN?
Is Goal-Setting Your Style?
 A Simplified Feedback
Control Model

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 Management Control Systems
• Formal routines, reports, and procedures
• Formalized information based activities
• Controls include:
– Budgets, financial reports
– Reward systems
– Quality control systems
• Managers must define standards and measure
performance

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Control Systems/Content Frequency

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 An Executive Dashboard/Business
Performance Dashboard

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 The Level and Focus of
Control Systems
• Organizational Level: The Balanced Scorecard
– Measures financial, customer, employee, and
market concerns
– Comprehensive management control system
– Strategy map – visualization of organization
success drivers and shows how specific outcomes
in each area are linked
• Departmental Level: Behavior versus Outcome
Control
– How people do their jobs
– Outcomes people produce
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 Best Buy
Best Buy’s culture that emphasized long
hours, mandatory procedures, and
managers “acting like hall monitors” was
no longer working. So, what was the best
approach to keep talented people from
reaching burnout? The answer turned out
to be an innovative initiative known as
ROWE (Results-Only Work Environment),
which lets people work when and where
they want as long as they get the job
done.
 Major Perspectives of the
Balanced Scorecard

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Strategy Map for Performance Management

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Knowledge management is the process that
companies use to measure the value of
intellectual worth of each employee in the
company. Knowledge is managed to make sure
everyone is working from the same, accurate set of
parameters, sharing information, learning and
documenting their experience.
Goodlass Nerolac has embraced the use of
knowledge management in March, 2003. Other
famous names, including Wipro, Infosys, Unisys,
and many more to count, all have a knowledge
management platform, for one reason or the
other.
 Strategic Approach I: Strengthening
Employee Coordination and Efficiency
Increasing internal coordination with
customers and external partners

Knowledge
Intranets
Management(NS)
Enterprise
Social
Resource
Networking
Planning
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 Two Approaches to
Knowledge Management

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 Amazon uses KM principles and practices to add
significant value for their customers in many ways:
• How does Amazon.com so effortlessly connect
“zillions” of people with “zigabytes” of product
information? The answer, in part, is through use of
advanced knowledge-management (KM) techniques.
We can learn a lot from how Amazon approaches the
relationship between customers and information.
• From the beginning, Amazon determined that the
user experience—the ability of its customers to find
what they want, when they want it, quickly and
easily—was a key to success. But that wasn’t enough.
If the system could help customers accomplish their
goals in an intuitive and personalized way, it would
add even more value to the experience.
• One Portal, one Interface: A single portal and interface provides
the employees with a common, familiar, and easy-to-use gateway
to workplace knowledge in all forms.
• Consistent Presentation: This comes from outstanding content
management, where they compose information and then publish it
to users in a consistent manner. 
• Modular content. They organize every page on Amazon in easy-to-
read sections.
• Distributed upstream content creation
• Almost magical personalization. 
• Instantly easy and consistent transactions
• Subscriptions, Alerts and Reminders,
• Feedback
• Reduced Servicing
• Great online help
• Mobility
Amazon.com-It’s GENIUS.
 Cognizant
Cognizant provides information
technology, consulting, and business
process outsourcing services. Many
employees use social media to build their
personal and professional networks.
Projects and project managers are rated
on how well they use social media.
Cognizant analyzes its employee networks
and identifies those who can spread new
ideas or get feedback. The CEO
contributes to blogging forums and uses
blogs to communicate new initiatives
 3 Major Reasons:
1.To integrate financial data.
2.To standardize manufacturing
processes.
3.To standardize HR information.

Why ERP
Enterprise Resource Planning
 Example of ERP Network

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 LG –A case study of successful
implementation of ERP

• When the global giant LG Electronics (LG) – with 114 

subsidiaries, and more than 82,000 employees across 40
countries – tried to harmonize its Human Resources (HR) 
functions, the challenges were of a similarly giant scale.
High maintenance costs, local controls lacking 
transparency, inefficient decision-making, under-
utilization of resources, manual processes, etc. made it
difficult for LG to operate as a global company. So it
decided to take the ERP route.
• Why ERP
The Challenges for LG included
•Location-specific multiple systems leading to
unclear top-level reporting, lack of optimum
resource utilization
•Location-specific processes lacking transparency
and automation needs for a global reporting
•Disengaged employees, limited outlook, no room
for information or best-practices sharing
•Limited localized resources for employee learning
and training
•Difficulties with decision making, with significant
business impact
 Achieved Benefits
• The ERP solution, which included a data mart, 
performance management system, staff portal and e-learning
application, enabled the following benefits for LG:
• Centrally managed single system with minimal maintenance
costs
• Transparency in the recruitment and employee appraisal
processes, which hiring, engaging and rewarding
performance based on the right competencies and proven
performance
• Real-time reporting for higher management and tracking of
set goals and objectives
• Informed decision making due to readily available real time
reports
• Centralized control over HR Processes, with flexibility for
regions to implement localized changes
 Benefits……

• Efficiency improvement for HR Functions

• Cost savings
• Easy sharing of best practices across the various
centers
• Easy access –self service function for employees
• Facilitated learning for common tasks through
document sharing and online tutorials, resulting in
time and cost savings
• Increased employee morale, productivity and
engagement
 Strategic Approach II: Strengthening Coordination
with External Partners
• Strengthening External Coordination with
information technology
– Supply Chain Management
– Integrated enterprise
– Enhancing customer relationships
– eBusiness organizational design
• The Integrated Enterprise
– Information linkages are key for coordination
– Horizontal relationships coordinate the supply chain
to meet customer needs 30
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 The Integrated Enterprise

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Corrugated Supplies System in Action

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 Customer Relationships
• Many companies are applying technology to build
customer relationships
• Social Media Directors are blending marketing,
promotions, customer service, and support through
Facebook, Twitter, and company websites
• 65% of companies use company blogs to
communicate with customers
• For CEOs, blogs and Twitter have become
requirements
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 E-Business Organization Design
• E-business is any business that takes place
over a computer network
• E-commerce is transforming to m-commerce
as more transactions take place on mobile
devices
• Managers must figure out bricks and clicks
strategies
– Separate business
– Spin-off companies
– Joint ventures
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 Strategies for Integrating
Bricks and Clicks

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IT Impact on Organization Design
 Smaller Organizations-IT enables organizations to
outsource, using fewer in-house resources.
 Decentralized Organizational Structures-Information
can easily be shared throughout an organization
 Improved Horizontal Coordination-Via intranet &
Knowledge Management systems
 Improved Interorganizational Relationships-
Interorganizational information networks tend to
heighten integration, blur organizational boundaries
 Enhanced Network Structures-most activities are
outsourced. 36
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Key Characteristics of Traditional vs. Emerging
Interorganizational Relationships

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 Design Essentials
 Successful organizations leverage technology
 Technology aids in better decision-making
 Organizations must employ controls to measure
performance(Balanced Scorecard).
 Technology is adding strategic value internally and
externally
 Technology is impacting the design of organizations(it
will eventually replace traditional hierarchy as a
primary means of coordination and control).
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