Information systems and organizations have a mutual influence on each other.  On the other hand, information systems  must be aligned with the organization to provide information needed by important groups within the organization.  At the same time, the organization must be aware of and must open itself to the influences of information systems to benefit from new technologies.  Information systems affect organizations necessarily affect the design of systems.  Figure 3.1 shows a great many mediating factors that influence the interaction between information technology and organizations.   These include the organization's structure, standard operating procedures, politics, culture, surrounding environment, and management decisions.  Managers, after all, decide what systems will be built, what the systems will do, how they will be implemented, and so forth. To a large extent, managers and organizations choose the "computer impacts"  

2. What is an Organization?

An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. This technical definition focuses on three elements of an organization.  Capital and labor are primary production factors provided by the environment.  The organization transforms these inputs into products and services in a production functions - a process that transforms capital and labor into a product.  The products and services are consumed by environments in return for supply inputs.

The  behavioral definition of an organization is that it is a collection of rights, privileges, obligations, and responsibilities that are dedicatedly balanced over time through conflict and conflict resolution. The technical and behavioral definitions of organizations are not contradictory.  Indeed, they complement one another:  The microeconomic definition tells us how thousands of firms in.

Competitive markets combine capital and labor and information technology, whereas the behavioral model takes us inside the individual firm to describes how theories based on each of these definitions of organizations can help explain the relationship between information systems and organizations. 

In this section, we introduce and discuss the major features of organizations of which managers should be aware when building information systems.  These organizational features are mediating factors that influence the relationship between organizations and information technology.  Some features of organizations are common to all organizations; others distinguish one organization from another. 

Bureaucracy -  A German sociologist, Max Weber, was the first to describe these "ideal-typical" characteristics of organization in 1911.  He called bureaucracies that have certain "structural" features.  According to Weber, all modern bureaucracies have a clear-cut division of labor and specialization.  Organizations employ or train individuals who posses specific talents or skills.  Organizations arrange specialists in a hierarchy of authority in which everyone is accountable to someone and authority is limited to specific actions. 

Bureaucracies are so prevalent, according to Weber, because they are the most efficient form of organization.  They are much more stable and powerful than mercurial charismatic groups or formal aristocracies held together by the right of birth.  Other scholars supplemented Weber, identifying additional features of organizations.  All organizations develop standard operating procedures, politics, and a culture.

Over long periods of time, the organizations that survive become very efficient, producing a limited number of products and services by following standard routines.  In this period of time, employees develop reasonably precise rules, procedures, and practices called Standard Operating Procedures (SOPs) to cope with virtually all expected situations.  

Organizations are arranged so that people occupy different positions. Because these individuals have different concerns and specialists, they naturally have differences in viewpoint, perspective, and options about how resources, rewards, and punishments viewpoint, perspective, and opinion about  how resources, rewards, and punishments should be distributed.  Because of these differences, Political struggle, competition, and conflict occur in every organization.  Sometimes political struggles occur when individuals or interest groups seek to exercise leadership and to gain advantages.  Other times, entire groups compete, leading to clashes on a large scale.  In either case, politics is a

normal part of organizational life.

All organizations have bedrock, unassailable, unquestioned (by the members) assumptions that define the goals  and products of the organization.  Organizational culture is the set of fundamental assumptions about what the organization should produce, what business process should be used and how they should be defined, how it should produce its products, where and for whom.  Generally, these cultural assumptions are taken totally for granted and rarely are publicly announced or discussed.  They are simply assumptions that few people, if anyone (in their right mind), would question.

  Organizational culture is a powerful unifying force, which restrains political conflict and promotes common understanding, agreement on procedures, and common practices.  If we all share the same basic cultural assumptions, then agreement on other matters is more likely.  At the same time, organizational culture is a powerful restraint on change, especially technological change.  Any technological change that threatens commonly held  cultural assumptions will meet with a great deal of resistance.  One reasons why U.S. auto makers were slow to switch to "lean production" methods is because of long standing assumptions that management should be authoritarian and does not need to listen to the opinions of workers. 

 Why Organizations Are So Different:  Unique Features

Some features vary from one organization to another.  Although all organizations

have some common characteristics, no two organizations are identical. 

Organizations have different structures, goals, constituencies, leadership styles,

tasks, and surrounding environments.

Mintzberg's classification is especially useful and simple, for it identifies the

Following five basic kinds of organizations:

Entrepreneurial structure:  Organizations with simple structures tend to be young, small, entrepreneurial firms in fast-changing environments, dominated by a single entrepreneur and managed by a single chief executive officer.  Information systems typically are poorly planned and significantly behind fast-breaking productions developments.

Machine bureaucracy:  The large, classic bureaucracy exists in slow-changing

environments, producing standardized products.  It is dominated by a strategic

senior management that centralizes information flow and decision authority.  It is

likely to be organized into functional divisions, for example, manufacturing, finance, marketing, and human resources.  Information systems tend to be mainframe-based.  They are well planned, but are generally limited to accounting, finance, simple planning, and administrative applications.

Professional bureaucracy:  This structure is typical of law firms, school systems, accounting firms, hospitals, and other knowledge-based organizations that depend on the knowledge and expertise of professionals.  Professional bureaucracies are suitable for slow-changing environments and skill sets.  They are dominated by department heads and have weak centralized authority. 

Divisional bureaucracy:  This type of organization is the most common Fortune 500 form, a combination of machine bureaucracies, each producing a different product or service, topped by a central headquarters.   This type of organization is suited to slow-changing environments and standardized products, but because these kinds of organizations are divisionalized, they tend to operate is several different environments.

Adhocracy:  This "task force" organization is typically found in research

organizations (such as Rand Rand Corporation), aerospace companies, medical,

biomedical, electronic, and other high-tech firms that must respond to rapidly

changing environments and markets or that derive revenue from government

contracts. 

Information technology, especially business systems, plays a significant role in

helping organizations perceive changes in their environments, and also in helping organizations at on their environments.  Information systems are key tools for environmental scanning, helping managers identify external changes that might require an organizational response.

Other Difference Among Organizations. Organizations differ in their ultimate goals and the type of power used to achieve them. Some organizations have coercive goals; other have utilitarian goals. Still others have normative goals. Business Processes refer to the manner in which work is organized, coordinated, and focused to produce a valuable product or service.  On the other hand, business processes are concrete work flows of material, information, and knowledge - sets of activities.  This definition falls into the technical-rational view of organizations, and the focus is on value-creating activities and their improvement. 

Levels of Analysis:  Within organizations, there are different levels, occupations, divisions, and groups.  All organizations have levels are who occupies them, and what tasks are assigned to different levels.  The impact of information systems will probably be different for different levels and groups within an organization.

We now can look more closely at the two-way relationship between information systems and organizations. We first need to explain how organizations affect technology and systems. Organizations have an impact on information systems through the decisions made by managers and employees. Managers make decisions about the design of systems: they also use information technology. Managers decide who will build and operate systems, and ultimately managers provide the rationale for building systems.

There are four important questions to consider in studying this issue.

O  How have organizations actually used information systems?

O  How has the organizational role of information systems changed?

O  Who operates information systems?

O  Why do organizations adopt information systems in the first place?

Organizations have a direct impact on information technology by making decisions about how the technology will be used and what role it will play in the organizations.  Chapter 1 and 2 described the ever widening role of information systems in organizations.  Supporting this changing role have been changes in the technical and organizational configuration of system that have brought computing power and data much closer to the ultimate end users.

A second way in which organizations affect information technology is through decisions about who will design, build, and operate the technology within the organization. Information systems require a package of services, organizations, and people specialized organizational subunits, information specialists, and a host of other supportive groups.  Managers make the key decisions about the computer package:  These decisions determine how technology serves will be delivered, and by whom, how, and when.

Managers provide the public and private rationales for building information systems.  Managers can choose to use systems primarily to achieve economies, or to provide better service, or to provide a better workplace.  The impact of computers in any organization depends in part on how managers make decisions. Environmental factors:  Factors external to the organization that influence the adoption and design of information systems.

Institutional factors:  Factors internal to the organization that influence the adoption and design of information systems.  They include values, norms, and vital interests that govern matters of strategic importance to the organization.  For instance, the top management of corporation can decide that it needs to exercise much stronger control over the inventory process and therefore decides to develop an inventory information system. 

How do information systems affect organization? To answer this question, we need to examine and quickly summarize a large body of research and theory. Economic Theories Economics is the study of allocating scarce resources in markets populated by thousands of competing firms.  It is also the study of national global economics. Microecomics focuses on individual firm provides several models to describe the impact of information technology on organizations.

Behavioral Theories:

Decision and Control Theory:  Behavioral theory stating that the function of the organization is to make decision under conditions of uncertainty and risk and that Organizations centralize decision making and create a hierarchy of decision making to reduce uncertainty and to ensure survival.

With more than 50 million Web pages developed by over 50,000 organizations around the globe, the World Wide Web is beginning to have an important impact on the relationships between firms and external entities, and even on the organizations of business process inside the firm. The World Wide Web alters the accessibility, storage, and distribution of information and knowledge for organization. The Web has the following capabilities.

o It enlarges the potential to access information for all market and organizational participants. Nearly any information can be available anywhere at anytime.

o It enlarges the scope, depth, and range of information and knowledge storage, with so many contributors to what constitutes a global encyclopedia, just about any extant knowledge or information is available.

o It knows the cost and raises the quality of information and knowledge distribution; business interactive multimedia applications on the Web enhance the attention span of vendors, customers, and employees.

Because information systems potentially change an organization's structure, culture, politics, and work, there is often considerable resistance to them when they are introduced.  Microeconomic theories have no explanation for organizational resistance to change.  In general, behavioral theories are superior for describing this phenomenon.

Because of the difficulties of introducing new information systems, experienced systems observers approach social change through systems very cautiously.

o Organizations do not innovate unless there is a substantial environmental change. Organizations adopt innovations only when necessary.

o Substantial forces resisting change are rooted in the organization�s structures, values, and interest groups.

o Organizational innovation is difficult and complex to achieve.  It involves more than simply purchasing technology. To reap the benefits of technology, innovations must be utilized and managed properly. This, in turn, requires changes in the values, norms, and interest-group alignments of the organization.

o The function of leaders is to take advantage of external circumstances to solidify their power. Leaders must use external opportunities to tilt the internal conflict in an organization in their favor and toward the successful development of their own agendas.

You can develop a checklist of factors to consider in your plans when envisioning, designing, building, or managing information systems. In our experience, the following are the central organizational factors in rough rank order of importance:

o The environment in which the organizations must function.

o The structure of the organization:  hierarchy, specialization, standard operating procedures.

o The culture and politics of the organization.

o The type of organization.

o The extent of support and understanding of top management

o The level of organization at which the system resides.

o The principal interest groups affected by the system

o The kinds of tasks, decisions, and business process that the information system is designed to assist.

o The sentiments and attitudes of workers in the organization who will be using the information systems.

o The history of the organization:  past investments in information technology, existing skills, important programs, and human resources.