Technical Definition: "A stable, formal, social structure that takes resources from the environment and proceses them to produce outputs." (Laudon & Laudon)
- Information Technology is introduced into this structure to make the production of outputs more efficient.
Structural, Behavioural and Other Definitions:
Ideal-Typical Characteristics (Weber, 1907; from: Verstehen: Max Weber's Home Page - http://www.faculty.rsu.edu/~felwell/Theorists/Weber/Whome.htm)
- Hierarchy of authority
- Impersonality
- Written rules of conduct (operating procedures)
- Promotion based on achievement (technical qualifications for positions; meritocracy)
- Specialized division of labor
- Efficiency (maximal organizational efficiency)
Information Technology: the introduction of new technologies can result in conflict between these characteristics. For example, it may change a job description, resulting in greater efficiency, but producing problems for promotion based on achievement or for established of rules of conduct.
Organizational Culture:
Organizational Culture refers to the values, beliefs and customs of an organization. Whereas organizational structure is relatively easy to draw and describe, organizational culture is less tangible (Wikipedia: Organizational Culture). These values, beliefs & customs are generally not spoken about explicitly in the organization.
Communities of Practice:
In some cases, "real work" takes place in organizations not along hierarchies of authority or in strict conformance with rules of conduct. Instead they occur within loosely- and informally-constituted communities of practice. With the Internet and the Web, these self-organizing communities have risen to greater prominence. They can often be of great importance in creating Internet or Web infrastructures and projects.
Community of Practice is a phrase coined by researchers who studied the ways in which people naturally work and play together. In essence, communities of practice are groups of people who share similar goals and interests. In pursuit of these goals and interests, they employ common practices, work with the same tools and express themselves in a common language. Through such common activity, they come to hold similar beliefs and value systems. (from: What is a Community of Practice - http://www.co-i-l.com/coil/knowledge-garden/cop/definitions.shtml)
Economic Theories - three predicted effects:
- Information technology costs generally fall, labour costs generally rise. IT can be substituted for labour, and result in fewer middle managers and clerical workers.
- Information technology lowers transaction costs. Firms should therefore become smaller, and have more external transactions (e.g. through outsourcing).
- Information technology lowers internal management (supervision and coordination) costs. Firms can therefore become larger.
Food for Thought : Economic effects of ICTs.
The predicted effects of IT in organizations contradict each other, and are associated with some contentious issues. They also seem to rely most on a technical definition of the organization --rather than behavioural and other definitions. Consider whether these three predicted effects are observable as predicted, why or why not, and how various understandings of the organization may be relevant to these considerations. |
Network Effects & Economics:
The network effect causes a good or service to have a value to a potential customer dependent on the number of customers already owning that good or using that service. Metcalfe's law states that the total value of a good or service that possesses a network effect is roughly proportional to the square of the number of customers already owning that good or using that service. (From: Wikipedia: Network Effect). In other words, the more people using a network (e.g. telephone, Internet) the more valuable that network is. This runs counter to the law of diminishing returns, in which investing more and more in a production process eventually results in less and less improvement.
This is perhaps the only economic law that came out of the dot-com boom, and survived the dot-com bust.
Food for Thought : Amazon.com and network effects.
Watch this 3-minute interview with Jeff Bezos (Amazon.com CEO: http://news.com.com/1606-2-5399689.html). What are some examples of "network effects" exploited on Amazon.com? How might these develop communities of practice? |
Table: Organizational Level, Functional Area & corresponding Information Systems
Function
Org. level |
Sales & Marketing |
Manufacturing & Production |
Finance & Accounting |
Human Resources |
"Epistemological Level" |
Strategic
(Executive Support System) |
Sales trend forcasting |
Facilities location |
Profit Planning |
Labour force needs |
Strategy
"Wisdom?" |
Management (Decision Support System; Management Information Systems) |
Pricing analysis |
Production Planning |
Budgeting |
Range & Distribution of wages, benefits |
Knowledge |
Knowledge (Knowledge Work Systems; Office Systems) |
Market analysis |
Computer Aided Design |
Investment Portfolio Analysis |
Design possible career paths |
Knowledge and Information |
Operations (Transaction Processing Systems) |
Enter, process, track |
Machine control |
Accounts Receivable |
Track employee training, skills & evaluations |
Data |
Example: WebTrends (http://www.webtrends.com/) is a powerful Website analysis tool. It can take the data that is automatically generated by the software that powers Websites, and produce analysis and reports suitable for each organizational level listed in the table above.
Read Managing the Digital Enterprise: Web Analytics (http://digitalenterprise.org/metrics/metrics.html).
Click on the links listed to view visual examples of the level of analysis provided:
- Operations - raw data generated by Web server software; used as the basis for Web analytics
- Knowledge work - information on downloads of invidivual pages during the day
- Management - trend summaries for the week; providing knowledge on use
- Strategic - cost/benefit analysis for Web sales for one quarter or one year (no example provided)
Impact of Enterprise Systems on Organization
Enterprise systems: create an integrated, organization-wide information system to coordinate its key internal processes. These integrate data, information and (strategic) knowledge from sales and marketing, manufacturing and production, finance and accounting, and human resources.
With enterprise systems, information technology is integrated in a new way in the organization. Instead of individual information systems being integrated separately and vertically within each of the functional areas or vertical "silos" of the organization (first chart, below), a single integrated system runs across and connects areas (second chart). This results in an emphasis on cross-functional connections and capabilities, and erodes the boundaries between functions --with the promise of reducing specialized divisions of labour, and increasing organizational efficiency.
Sales & Marketing |
Manufacturing & Production |
Finance & Accounting |
|
Business Process
|
Business Process
|
Business Process
|
Business Process
|
Sales & Marketing Systems |
Manufacturing & Production Systems |
Finance & Accounting Systems |
Human Resources Systems |
VERSUS
