L04 - IT in Organizations Flashcards
Definition Organization
Definition: Organizations are (1) social entities that are (2) goal-directed, are (3) designed as deliberately structured and coordinated activity system, and (4) are linked to the external environment.
Key Elements of an Organization
Organizational Context: Strategy, Culture, Leadership, Reward structures
Organizational Structure:
• Functional Structure: Divisions, Functions, Roles
• Procedural Structure: Processes, Tasks
• Rules
Resources: Individuals, Technology, Infrastructure
A Structural View of Organization: Silo Perspective
A typical hierarchical structure is organized by function or core competency. Silos are self-contained 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 tole of each silo
Transforming Enterprises (e.g. SAP)
Framework
The key idea of SAP is to integrate all business processes and real-time data processing into one standard enterprise system. SAP´s portfolio covers solutions for all business processes across industries (ERP and Finance, CRM and Customer Experience, Network and Speed Management, Digital Supply Chain, HR and People Engagement, Business Technology Platform).
SAP S4/ HANA is SAP’s latest ERP system. It integrates various features, such as Finance, or HR Management. Artificial intelligence supports automation and decision-making and is adjustable to different IT architectures (on-premise, hybrid, cloud).
Definition Enterprise Systems
“Enterprise Systems (ES) represent a specific category of information systems. They build on pre-packaged industry best practices embedded in standardized product software and target large-scale integration of data and business processes across all company’s functional areas and beyond company borderlines. ES strongly interplay with work practices of individual employees as well as organizational structures shaping and being shaped by individual’s behavior.”
Traditional IS (TIS) vs. Enterprise System (ES)
Strategy:
- TIS Lower organizational scope
- ES Organization-wide resources required
Flexibility:
- TIS High
- ES Low
Scope:
- TIS Integrates selceted functions within or across business processes
- ES Integrates broad spectrum of business processes
Business Logic:
- TIS Developed to suit existing processes
- ES Best practices adopted or customized
Development:
- TIS In-house or specialized vendors
- ES Vendors with industry practices
Complexity/ Risk:
- TIS High
- ES Low
Product Software vs. Tailor – Made Software
PS:
- Standard Software
- Generally purchased from vendor (Service contract)
Characteristics
- Shared Development
- Best-practices established
- Development and maintenance by supplier
- Documentation and education material available
TMS: - Costum software - Made to order or in-house (purchase of things) Characteristics - Tailored solution, focus on required functionalities only - Competitve advantae - Company specific changes possible - Independency of Software supplier
IT in Organization: Forms of In-House IT
Highly Centralized IT Department:
• Advantages: high synergies for development and operation (Standardization, Economies of Scale)
• Challenges: alignment with business (less business process knowledge, conflicting requirements from different business units
Highly Decentralized IT Departments
• Advantages: better business alignment (More business process knowledge, less conflicts in requirement)
• Challenge: Control of costs and redundancy, Standardization
IT in Organization: Outsourced IT
External 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’
Dimensions to Consider When Setting up IT
Assignment of Tasks to Roles
• Assignment of IT-tasks focuses on integration (people are not dedicated to specific IT-tasks) and specialization (people use most of their time on certain IT-tasks)
Service breadth and depth
• Delivery of services distinct by breadth (how many units are served horizontally) and depth (are costumers served directly vs. standard solutions)
Formalization
• Formal (using roles, defined processes, etc.) and informal (centers that freely “contact” amongst each other) coordination of tasks
Centralization
• Centralized vs decentralized: however most companies do not have one or the other most IT-organization are set up in a hybrid way
IT Governance
Governance in the context of business enterprises is all about making decision that define expectation, grant authority or ensure performance. IT governance focuses on how decision rights can be distributed differently to facilitate centralized, decentralized or hybrid modes of decision making.
Centralized Versus Decentralized Organizational Structures
Centralized brings together all staff, hardware, software data and processing into a single location.
Decentralized Structures scatter the components in different locations to address local business need.
Federalism is a combination of centralized and decentralized structures.
Federal IT
The federal IT attempts to capture the benefits of centralized and decentralized organizations while eliminating the drawbacks of each.
+ Framework (!)
Sourcing Decisions
Sourcing involves many decisions. The first step is the “make or buy” (Insource or Outsource) decision. If the “buy” option is selected, the company outsources. The company must decide on “how” (Scope or Contract) and “where”. Is the outsourcing in its own country or offshore? If the company decides to offshore, it must decide whether to offshore nearby or far away.
Insourcing
Insourcing is when a firm provides IS services or develops IS in its own in-house IS organization (“make”)
Drivers that favor this decision: 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 to insourcing: Getting needed IT resources from management, Presence of a competent outsource provider
