Information Systems and

Organisations

Lecture1:
Organisations and Information Systems

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Scope and Coverage

This topic will cover:

• Data, Information and Knowledge

• Uses and importance of Information Systems (IS) to

organisations

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Learning Outcomes
By the end of this topic students will be able to:

• Explain ways in which data, information and

knowledge are used in organisations

• Appreciate how Information Systems influence the

nature and success of organisations

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Contents

• Organisational forms and functions

• Definitions of data, information and knowledge

• Information Systems and organisations

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Organisations and IS
We develop the approach to information systems in this
module based upon the idea that information systems are
used to support the processes that businesses carry out.
And an important part of this is support to managers making
decisions that enables the business to survive and thrive.
All businesses are organized in a particular way. They have
strategies, structures and systems (processes) that allow
them to do what they do.
Managerial intent and form of organization are supported by
technologies to enable objectives to be achieved.
Thus, the information systems that are used by business
emerge from the influence of management, organization.
and technology.

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How IS becomes important in an organisation?

Management
Management have requirements for information that arise from
problems in the business and its environment. If businesses performed
perfectly and there were no changes in the environment, managers
would be unnecessary. In reality things change continually, both
inside and outside the business.
Change brings business problems that management must deal with. For
example, sales of products or services are declining. Managers ask,
why is this? What can we do about it?
Management can only detect changes and work out how to respond to
them through the use of information. Also, if they want to change
things, for example the way products are sold, they must have
information about the performance of existing sales channels.

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Organization

The design and re-design of organization results

from what managers decide about the future
direction of the business in response to business
problems. Redesigned organizations need new
information to support them. For example, if a
business decides to open a new sales channel
on the Internet this will need changed information
systems to record orders.

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Technology
To the influences of management aspirations and the changes
in organization, the influence of available technologies must
be added. This makes new sorts of information system to
support the business possible. For example, if a company
implements a new Internet based sales channel there will be
a wide variety of options as to what software applications and
methods of deployment to use.
The aim ultimately is to implement a new information system
that addresses the original business problem. And this is how
new and modified information systems come about.

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Summary and Other Thoughts

The types of information systems we have in businesses are the result of a
response to business problems. These drive the need for information to
understand the problems and control the business. Changes in
organization generate requirements for additional information and
systems to provide it. Technological possibilities influence the type of
information system that result.
If we think of the business environment in economic terms it is clear that,
over time, new technologies are what drives change. And, in our digital
age, information technologies lie at the heart of this. The 3 dimensions
of information systems, management, organization and technology
create the environment for all the businesses. One company’s digital
initiative creates competitive pressure on all the other businesses within
a particular market sector and drives change and adaptation in a
relentless manner.

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It is clear that any change in the organization of business

or adoption of new information technologies is
determined by decisions made by managers. But not all
managers make the same kinds of decisions.
We find it useful to think of three levels of decision and
problem in a business. These levels correspond to
different groups of managers.
Operational Managers – concerned with day to day
management
Middle Managers – concerned with the management of
performance of the business
Senior Management – concerned with managing the
businesses future

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Organisational Forms and Functions

• Organisations differ in form and structure, how they
are managed.... and how the people in them work
‘in practice’
• All of these are important when considering the use
of Information Systems in organisations

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Specialisation in Organisations
• Once organisations grow beyond a certain size,
specialisation is essential for them to be effective
• This leads to departments with specialist functions
(finance, human resources, sales...)
• In larger and multi/transnational organisations,
divisions based upon different markets may develop
• All need information systems, and these tend to fall
into certain broad classifications

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Organisational Hierarchies
Strategic
Planning Budgets

Profit
Tactical measures

Credit
Knowledge control

Operational Financial
transactions
HR FINANCE MARKETNG ….. ….. e.t.c.

Functional Activities

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The table below is based upon the hierarchy of

managerial decision making. It shows 4
functional areas within a company that runs a
chain of restaurants. Middle managers each
manage a group of restaurants, operational
managers manage individual restaurants.

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Functions Restaurant Operations Finance Purchasing

Senior Managers Where to open new

restaurants?

Middle Managers What is profitability of each Which supplier to purchase

restaurant? from?

Operational

(restaurant)

Managers

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Ways of Thinking About Data,

Information and Knowledge
PYRAMID

Knowledge FUNNEL

Knowledge Information Data

Information

Data

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Data, Information and Knowledge

• Data Numbers Account balance

• Information Processed Account credit

data history

• Knowledge Meaningful for Choices for

decisions ‘chasing’ payment

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DIKAR Model
This simple model shows the process by which Data is
processed to generate Information which is
interpreted to create Knowledge which leads to Action that
will drive the business Results.
Organizations can also move backwards through this process
when they strategize.

• Data
• Information
• Knowledge
• Actions
• Results

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DIKAR – SIMPLE MODEL

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Management View
Environmental Future Direction
Information
Board Senior
Management

Set Targets Measure Performance

Departmental Managers Middle

Management

Set Targets Measure Performance

Branch/Department Operational
Managers Management

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MIS in Essence (Traditional)

Transaction
Costs
Transaction Recording Performance Monitoring

Customer Margins &

Information Profitability

Enterprise Analysis

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Departmental Information Systems

Monthly
Sales
Weekly/Monthly
Tactical
Credit
Knowledge Control
Daily/Hourly
Financial
Operational transactions

Departments Finance HR Operations Sales ... e.t.c.

Financial Personnel Stock Sales

Accounts Records Control Records Enterprise
System
Sales
Ledger MRP Forecasting

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Broad Classification of Information

Systems - 1
• Operational

• Monitoring

• Decision Support

• Communication

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Broad Classification of Information

Systems - 2
Used by:
• Individuals
• Groups/Departments
• Whole Organisations
• Inter-organisation
• Communities

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A New IS Affects All Users

• Individuals ... Through

• Groups/Departments • Automating information tasks

• Whole Organisations • Eliminating need for

management intervention
• Inter-organisation
• Providing new
• Communities communications paths

• Routine decision-making

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Examples
• Individual – Use e.g. Office’ software

• Group/Department e.g. Workflow Management

• Whole Organisation e.g. Enterprise Systems

• Inter-organisation e.g. Business to Business, eCommerce

• Communities e.g. Websites, Portals and CRM

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Organisational Impacts
• Downsizing
• Outsourcing
• Restructuring
• Removing management layers
• Changing and eliminating work processes
• Changed behaviours (e.g. Information sharing)
• New modes of working (e.g. ‘virtual’ and home-
working, hot-desking, mobile working etc.)

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Interacting Components – P O T

People Organisation

Technology

with acknowledgements
to Laudon and Laudon

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References
• Boddy, D., Boonstra ,A., Kennedy, G. (2008) Managing
Information Systems : strategy and organisation 3rd ed. FT
Pearson. ISBN-13: 978-0273716815

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Lecture 1 – Organisations and Information

Systems

Any Questions?

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