4. IT IN Organizations Flashcards
Organisations (Characteristics (4))
Organizations are:
- social entities
- goal-directed
- designed as deliberately structured and coordinated activity systems
- linked to the external environment
Key Elements of an Organization (3)
- Organizational context (strategy, culture, leadership, reward structures)
- Organizational structure
- functional structure (division, functions, roles)
- procedural structure (processes, tasks)
- rules
- Resources (individuals, technology, infrastructure)
Structural View of Organization: Silo Perspective (Purpose/Definition, Characteristics (5)
A typical hierarchical structure is organized by function or core competency -> Divisions work independently and avoid sharing information (in “Silos”)
Silos are self-contained functional units that:
- optimize expertise and training
- avoid redundancy in expertise
- are easier to benchmark with outside organizations
- utilize bodies of knowledge created for each function
- make it easier to understand the role of each silo
Enterprise Systems
= represents a specific category of IS
- Build on pre-packaged industry best practices embedded in standardized product software
- target large-scale integration of data and business processes across all company’s functional areas and beyond company borderlines
- interplays with work practices of individuals and is shaped by individual’s behavior
Traditional IS (6 Characteristics)
- lower organizational scope
- high flexibility
- integrates selected functions within/across business processes
- developed to suit existing processes
- in-house or specialized vendors
- low complexity and risk
Enterprise Systems (6 Characteristics oppose to Traditional IS)
- organization wide resources required (scope)
- low flexibility
- integrates broad spectrum of business processes
- best practices adopted or customized
- vendors with industry best practices
- high complexity & risk
Product Software (vs. Tailor Made Software) (Definition, Source, Characteristics (4))
= standard software
-> generally purchased from vendor via service contract
- shared development costs
- best-practices established
- development and maintenance by supplier
- documentation and education material available
Tailor Made Software (vs. Product Software) (Definition, Source, Characteristics (4))
= custom software
-> made to order or in-house (Purchase)
- tailored solutions, focus on required functionalities only
- competitive advantage
- company-specific changes possible
- independency of software supplier
Process-Centric Software Products (5)
- Enterprise Resource Planning (ERP)
- Customer Relationship Management (CRM)
- Supply Chain Management (SCM)
- Product Lifecycle Management (PLM)
- Business Process Management (BPM)
Information-Centric Software Products (4)
- Master Data Management (MDM)
- Business Intelligence (BI)
- Enterprise Content Management (ECM)
- Information Access (IA)
People-Centric Software
- Enterprise Portals (EP)
- Collaboration Technology (CSCW)
- Social Websites (SWS)
Forms of In-House IT (3)
- Highly Centralized IT department
- Highly Decentralized IT department
- Autonomous Centralized IT
Forms of In-House IT 1/3: Highly Centralized IT (Pros and Challenges)
Highly Centralized IT department
+ high synergies for development and operation (standardization, economies of scale)
Challenge: alignment with business (conflicting requirements from different business units)
Forms of In-House IT 2/3: Highly Decentralized IT (Pros and Challenges)
Highly Decentralized IT department
+ better business alignment (more business process knowledge, less conflicts in requirements)
Challenge: Control of costs and redundancy, standardization
Forms of In-House IT 3/3: Autonomous Centralized IT (Pros and Challenges)
Autonomous Centralized IT
+ flexible adjustment of alignment efforts (“Internal” Outsourcing, innovations and standardization can be triggered by IT)
Challenge: Less business process knowledge, conflicting requirements from different business units)
Advantages of In-House IT (5)
+ IT knowledge stays in-house
+ more stable long-term control over IT knowledge
+ easier introduction of new IT service processes by using hierarchical power
+ “Quick fixies” can be achieved with hierarchical power
+ locus of control for technology management stays within the firm
Disadvantages of In-House IT (2)
- Knowledge retention and acquisition required for IT innovation becomes a concern for the firm
- high overhead costs (administration, resources, global coordination)
Outsourced IT (2 Forms)
- External IT service provider with centralized internal IT
- biggest part of IT is outsourced
- small internal IT remains for coordination purposes - External IT service provider with decentralized internal IT
- IT is completely outsourced
- small internal decentralized IT remains for every department
- good “IT business alignment”
Advantages of Outsourced IT (4)
+ lower overhead costs
+ knowledge required for IT innovation can be sourced
+ knowledge retention and acquisition is a concern for the service partner
+ more flexibility in case of unsatisfying performance
Disadvantages of Outsourced IT (4)
- tool choices and technology choices depend on services partner’s capabilities
- lock-in situations: in case of complex IT landscapes, knowledge transition to a new vendor has high cost
- missing trust in service provider causes extra cost
- lower transparency and control on real operation costs
Dimensions to consider when setting up IT (4)
- Assignment of Task to Roles = assignment of IT tasks either focusses on:
- integration: people are not dedicated to specific IT tasks
- specialization: people use most of their time on certain IT tasks
- Service breadth and depth = delivery of service distinct by:
- breadth: how many units are served horizontally
- depth: are customers served directly vs. standard solutions
- Formalization = coordination of tasks
- formal: using roles, defined processes, etc.
- informal: centers that freely “contract” among each other
- Centralization = central vs. decentralized, however, most companies do not have one way or another => are set up in a hybrid way
IT Governance (Definition)
= it’s about making decisions that define expectations, grant authority, or ensure performance
-> focusses on how decision rights can be distributed differently to facilitate centralized, decentralized or hybrid modes of decision making
Centralized vs. Decentralized Organizational Structures (3)
- Centralized = brings together all staff, hardware, software, data, and processing into a single location.
- Decentralized = the components are scattered in different locations to address local business needs.
- Federalism = a combination of centralized and decentralized structures.
Sourcing decisions (Possible Decisions (2), subsequent decisions)
Step 1: “Make-“ (Insource) or “Buy-“ (Outsource) decision.
Step 2: The company must decide “how”.
-> Outsourcing: How (scope or contract)? Where
(Onshore or Offshore -> close or far away)?
-> Insourcing: How?
Insourcing (Definition, Drivers (4) and Challenges (2))
= when a firm provides IS services or develops in its own in-house organization -> “make” decision
Drivers:
- keeping core competencies in-house
- IS service or product requires considerable security
or confidentiality
- time available in-house to complete IS-projects
- in-house IT personnel
Challenges:
- getting needed IT resources from management
- presence of a competent outsource provider
Outsourcing (Definition, Drivers (4) and Challenges (6))
= the purchase of a good or service that previously was (or could be) provided internally but is now provided by outside vendors
Drivers:
- cost reduction achieved through economies of
scale
- need for help transitioning to new technologies
though access to larger IT talent pools
- ability to handle peaks in processing
- focusing management’s attention on core activities
Challenge:
- control of the project
- scope creep
- technologies
- costs
- contract terms may leave clients highly dependent
on their providers
- competitive secrets may be harder to keep
Decision About How to Outsource Successfully (3 Steps)
- Selection = finding contractors whose capabilities, managers, internal operations, and culture complement those of the client
- Contracting = many “how” decisions center around the outsourcing contract
-> ensure that contract terms allow flexibility to
manage
-> Service Level Agreements (SLAs) = delivery time
and expected performance of the service - Scope = client must decide whether to pursue outsourcing fully or selectively
Fully vs. Selective Outsourcing (3 Approaches)
- Full Outsourcing = implies that an enterprise outsources all its IS functions from desktop services to software development
- Selective Outsourcing (strategic outsourcing) = an enterprise chooses which IT capabilities to retain in-house and which to give to an outsider
- “Best-of-breed” Approach: supplies are chosen for their expertise in specific technology areas (e.g. Website Hosting, business process application development, networking and communications, etc.)
