Chapter 3 - Information Systems and Organizations

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Part I – Information Systems

What is information systems?

Introduction to Organizations and Information Systems
In the early days, organizations use the information systems aimed to promote the operating efficiency of their routines and business processes. The relationship between organizations and information systems is unidirectional.
In recent years, more and more organizations start computer-based information systems to process their data and information due to the pervasive influence of lower cost of information systems and advanced information and communication technologies.
Nowadays, it is popular that organizations establish and use the information systems to enhance the business transactions, to obtain the competitive advantages in marketplaces. The interrelationship between organizations and information systems turns inseparable.

Why do organizations need information systems?
Information is the the lifeblood of any organization. Damaged or lost data can cause breakdowns in normal business activities leading to financial losses, law suits, etc. Information systems, which comprise hardware, software, data, policies, communication, procedures, and people, help an organization to better manage and secure its critical corporate, customer and employee data. Information systems also improve integration and work processes...the benefits go on and on.
Furthermore, information systems also a system but differs from other kinds of systems because its objective is to monitor and record the operations of other systems, which we can call target systems. Information systems owes its existence to the target system. For example, production activities would be the target system for a production scheduling information system, human resources would be the target system of a human resource information system, and so on. We could say that every reactive system may have a subsystem that can be considered as an information system whose objective is to monitor and control such a system. The main functions of information systems may be input, processing, output, storage and control.

Remarks: Information systems interrelated components working together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis and visualization in an organization.

Information Systems (IS) refers to the interaction between people, processes, and technology. This interaction can occur within or across organizational boundaries. An information system is not only the technology an organization uses, but also the way in which the organization’s people interact with the technology and the way in which the technology works with the organization’s business processes. The Information System consists of five parts which include: people, procedures, software, hardware, and data.
Reference :

Information System is not a single component that is combined by different items and people.
People, that need people to input a correct raw data and need people to develop a system to analyse a raw data then output useful information to management. Management will use the information to make business decision.
Items, which need Hardware, Software & Network to hold a system and provide a service and Policies & Procedure to create a standard & keep accuracy of output information.


What is information system?

In a broad sense, the term Information Systems (IS) refers to the interaction between people, processes, and technology. This interaction can occur within or across organizational boundaries. An information system is not only the technology an organization uses, but also the way in which the organization’s people interact with the technology and the way in which the technology works with the organization’s business processes. Information systems are distinct from information technology in that an information system has an information technology component that interacts with the people and processes components.

Organizations and Information systems
Organization is a formal collection of people and various other resources established to accomplish a set of goals. The primary goal of a for-profit organization is to maximize profit by increasing revenues while reducing costs. Nonprofit organizations include social groups, religious groups, universities and organizations that do not have profit as the primary goal.
Organization is a system. Money, manpower, materials, machines and equipment, data, information and decisions are constantly flowing through any organization.

Reference Link :

The Information System consists of six parts which include: people, procedures, software, hardware, information and data. There are various types of information systems, for example: transaction processing systems, office systems, decision support systems, knowledge management systems, database management systems, and office information systems. Critical to most information systems are information technologies, which are typically designed to enable humans to perform tasks for which the human brain is not well suited, such as: handling large amounts of information, performing complex calculations, and controlling many simultaneous processes.

What is a system?

A system is any set of interrelated component which act together to achieve a common objective.

(1) A group of interdependent items that interact regularly to perform a task.
(2) An established or organized procedure; a method.
(3) "Any definable set of components." (Maturana & Varela, 1980, p. 138)
(4) system is a set of elements dynamically interacting and organized in relation to a goal" (J. de ROSNAY, 1990, p. 93).
Reference :

In the software engineering arena, a system is often equated with software, or perhaps with the combination of computer hardware and software. Here, we use the term system in its broader sense. A system is the entire set of components, both computer related, and non-computer related, that provides a service to a user.

What is a system?
A system is a set of interrelated components, such as a program or a webpage, which clearly defined some rules. There are three main basic function of the system, the first one Input, the rules will limited the data format (e.g. Date format dd/mm/yyyy, gender must be M or F), to enforced the information that input by the people must in true format or transform them to the target format. Since system will allow people to work together in the same platform, to input the data, so it is very important for the Information System. After that the system will save it, then to the second function Process the data, the system will transform the data, make some calculation, counting, then to the final function is Output, transferring the data into some meaningful report to the user.

Cybernetic system and other system characteristics

Cybernetic systems are complex structures, with many different interacting components. These components interact in parallel, cooperatively, and in real time, creating multiple simultaneous interactions among subsystems. These simultaneous modes of interaction lead to subsystems which participate in multiple processes and structures, and produce any single dimension of description incomplete, and requiring multiple complementary, irreducible levels of analysis.

Cybernetic systems tend to evolve and grow in an opportunistic manner, rather than be designed and planned in an optimal manner. It is also constructive, in that as they tend to increase in size and complexity, they become historically bound to previous states while simultaneously developing new traits.
Then, Cybernetic systems are rich in internal and external feedback, both positive and negative. Ultimately, they can enter into the "ultimate" feedback of reflexive self-application, in which their components are operated on simultaneously from complementary perspectives, for example as entities and processes. Such situations may result in the reflexive phenomena of self-reference, self-modeling, self-production, and self-reproduction.


Examples of cybernetic systems
1. Autopilot in an aeroplane
2. GPS
3. Course evaluations


Data Warehouse also a cybernetic system.
"Data warehouse is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis
A Data Warehouse houses a standardized, consistent, clean and integrated form of data sourced from various operational systems in use in the organization, structured in a way to specifically address the reporting and analytic requirements.
This definition of the data warehouse focuses on data storage. However, the means to retrieve and analyze data, to extract, transform and load data, and to manage the data dictionary are also considered essential components of a data warehousing system. Many references to data warehousing use this broader context. Thus, an expanded definition for data warehousing includes business intelligence tools, tools to extract, transform, and load data into the repository, and tools to manage and retrieve metadata.

Function of Cybernetic System
In commercial environment, that can help top management to collect an accurate information in a short period. Then they make a faster and correct decision. Like Data Warehouse, That is a complex system. Management always use that to make a critical decision.


Cybernetic System
We can think about Cybernetic System just like a “Network Traffic Control Monitor”. Network Engineer use this tools to monitor the network traffic to keep the network running smooth.

(Feedback – is data concerning system performance) e.g. The network traffic monitor can tell us the network usage data

(Control – involves monitoring and analyze feedback to determine the system to achieve the goals)
e.g. If the network traffic congestion happening, then we can analyze the data to found out where goes wrong and fix the problem. Limit the bandwidth for some kind of high usage application to achieve the network running smooth (Goals).


Information Systems

Information Systems are a part of Organizations (Laudon & Laudon, 1995). From a business perspective, information systems can be defined as an information technology orientated solution to organizational and management challenges. The interaction between the organization’s IT unit and other units is a key determinant of organizational success (Gordon & Gordon, 2000). Information systems can be centralized or decentralized (Laudon & Laudon, 1995). There has been a strong emphasis on the centralization/decentralization issue in existing IT structure research (Gordon & Gordon, 2000). This has meant that the other IT research issues of a business unit have not been explored in detail. An organization’s IT structure should support its strategy and engage in research beneficial to this. However, current research into strategy supportive structures has stopped at the strategy-structure interface and did not look in detail at the IT-business unit interfaces (Gordon & Gordon, 2000). The key to better research is exploring the interface between business units and IT at a deeper level.
ref link:


Information system resources

Information Resources
The data and information assets of an organization, department. All computer printouts, online display devices, storage media and all computer-related activities. Capable of receiving,storing,managing or transmitting electronic data.

Software Resources
-Program is a set of instruction for computer.
-Procedure is a set of instruction for people.

There are six categories of resources. They are
(1) People Resources
Specialists – system analysts, software developers, system operators
End users – anyone who uses information systems
(2) Hardware Resources
Machines – computers, video monitors, disk drive, printers
Media – floppy disk, CD, paper
(3) Software Resources
Programs – operating system programs, spreadsheet programs, word processing programs
Procedures – data entry procedures, error correction procedure
(4) Data Resources
Product descriptions, customer records, employee files
(5) Network Resources
Communication media, network access and control software
(6) Information Resources
Management reports and business documents using text and graphics displays, audio responses
Source: :O’Brien

People Resources: People are required for the operation of all information system
End users are people who use an information system or the information it produces
IS Specialists are people who develop and operate information system

Hardware Resources: include all physical and materials used in informationprocessing
Machines include all phusical devices
Media comprise all tangible objects on which data recorded

Software Resources: include all sets of information processing instructions
Program is a set of instruction that cause a computer to perform a particular task
Procedures are sets of instructions used by people to complete a task

Data Resources:Data constitutes a valuable organizational resource. Thus, data resources must be managed effectively to benefit all end users in an organization
Databases is a collection of logically related records or files. A database consolidates many records previously stored in separate files so that a common pool of data records serves many applications
Knowledge Bases which hold knowledge in a variety of forms such as facts and rules of inference about various subjects

Network Resources: Telecommunications networks like the Internet, intranets, and extranets have become essential to the successful operations of all types of organizations and their computer-based information systems. Telecommunications networks consist of computers, communications processors, and other devices interconnected by communications media and controlled by communications software. The concept of network resources emphasizes that communications networks are a fundamental resource component of all information systems
Communications media is twisted-pair wire, coaxial cable, fiber-optic cable, microwave systems, and communications satellite systems
Network support is people, hardware, software, and data resources that directly support the operation and use of a communications network


What is data? What is information?

  • Data refers to groups of information that is in its first version,original ones as it is received.
  • Data represents the qualitative or quantitative attributes of a variable or set of variables.
  • It is a result of some meansurement with mainly qualitative or imagery base,it is a collection of facts only.
  • It can be in figures,graphs,iamges or observations of a set of variables.
  • No matter what form of the data type is,it is viewed as the lowest level of abstraction.
  • Data needs further analysis and interpretation to make itself "useful" and "meaningful" for further uses.

  • Information is the next level of data.
  • Information is a concept which bears a diversity of meanings, from everyday usage to technical settings.
  • It is a result of a meaningful summary of a set or several sets of data.
  • Information is got after processing,manimulating and organising data.
  • It is a message received which is meaningful and contains explanation power to humans.
  • It can be in any form with meaningful interpretaion and knowledged view.The biggest difference of data and information is its level of abstraction which causing them the difference of using it.

  • For example,figures showing students' exam result is data,but bar chart graphs showing the distribution of exam marks of all students is information,because it contains the "useful" grouping of data.

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Data are facts, the raw data. They may be a group of information to represent attributes of a variable of set of variable. It is always referred to the lowest level of abstraction from which information and knowledge are derived.
Information is a message received and understood. In terms of data, it can be defined as a collection of facts from which conclusions may be drawn.
I personally think DATA and INFORMATION are very similar, but in technical speaking - The main difference is in the level of abstraction being considered:

Data : the lowest level of abstraction.
Information : the next level of Data.
Knowledge : the highest level among three.

Data is the raw fact , while information is meaning data/text.

Data are plain facts. When data are processed, organized, structured or presented in a given context so as to make them useful, they are called Information.
Data themselves are fairly useless. But when these data are interpreted and processed to determine its true meaning, they becomes useful and can be called Information.
Reference :

Data are facts gained by reading, observation, counting, measuring, weighing, surveys, etc., which are then recorded. They are called raw or basic data and are records of the day-to-day transactions of the organizations, such as the date, amount and other details of an invoice or cheque, payroll details of pay.
Information is data that have been analyzed, summarized, processed, interpreted and understood by the user of the message. Information is knowledge and understanding that is usable by the user. It reduces uncertainty and has useful value. It must tell the user something not already known and which could not be predicted.

Part II – Role of IS in Organizations

Five IS Activities

The five IS activities are Input, processing, output, storage, and control.
Input: activities of inputing data resources
Processing: Turning the raw data into something that is meaningful information. e.g. sorting, comparision
Output: The product of after processing data, e.g. reports, graphs, pie chat
Storage: The instrument used to store the data. e.g. database
Control: The ways used to maintain the quality of service, system performance. e.g. Monitoring Report, feedback, suvery


Three roles IS plays in organization

1) IS enables the collection of information that may not be collectable others ways
2) IS speeds the flow of information from where it is generated to where it is needed
3) IS facilitates the analysis of information in ways that may not be possible otherwise.

IT changes the way in organization
-Monitor : IS makes possible new ways to track performance and behavior
-Evaluate : models are easily built, making it easier to understand progress and performance
-Provide feedback : IS makes rapid feedback possible (e.g. through electronic forms)
-Compensate & reward : team-based efforts can be evaluated and complex formulas used
-Control processes : IS also used extensively in industrial processes, and makes it easier to collect, analyze and move information

Reference Link :


Information system trends
Data Processing 1950-1960
Electronic Data Processing system
System that perform simple,repetitive activities to process large volumns of similar information.
High hardware costs and slow processing speed. Data storage formats were heavily.

Management Reporting 1960-1970
Management information system
Before this status, organization reporting was made manually.
This kind of system provide information report to user for support decision making. They are use to analyze operational activities in the organization.

Decision Support 1970-1980
Decision Support System
Support decision making activities by provide useful information that conbine of documents, business models. Identified the characteristic of problem or compare the information to user.

Strategic and End User Support 1980-1990.
End-User computing systems
collaborate user to perform problem solving.
Executive information system
Support decision-making for to level management By graphical display and easy-to-user interface.
User can drill-down information to retrieve details.
It mostly use by financial officers, directors or CEO.
Expert System
Is a Knowledge-based system that provide question and answer.Use human knowledge to solve problems that normally would require human intelligence.
Strategic Information System
System for competitive that can change competes way and manage information and provide decision making to user.

Electronic Business and Commerce 1990-2000
Internet-based e-business and e-commerce systems
commonly known as buying and selling of products or services over internet or computer networks.
Online shopping - is an important component of electronic commerce.

Enterprise resource Planning and Business Intelligence 2000-2010
Manage and coordinate all the organization resources,information.
It allow business to add or modified modules.
It must provide the function of at least two systems.
It contains all data in the business
like Manufacting, financials, Human resources.
System are often complex.


Information systems can divided in to two parts, the first part is “Operations Support System” which is a system that will let the people to follow the procedure of the business and the system to input, process the data together. The second part is “Management Support System”, which is process the input data to generate some meaningful report to the manager. This kind of report is just an advice for the decision maker, it still needs the people to analysis the report and make the decision.

Information system trends
(Reference Link :


Types of Information Systems and the purpose of these system
Transaction Processing System
A Transaction Processing System or Transaction Processing Monitor is a set of information which process the data transaction in database system that monitors transaction programs.

It can be classified into the following three categories:
(1) Contrasted with batch processing
It is not transaction processing, it involves processing several transactions at the same time, the results of each transaction will not be available immediately when the transaction is being entered, so there is a time delay.

(2) Real-time and batch processing
Real-time processing requires the master file to be available more often for updating and reference than batch processing. The database is not accessible all of the time for batch processing. And then, it has fewer errors than batch processing, as transaction data is validated and entered immediately. With batch processing, the data is organised and stored before the master file is updated. Errors can occur during these steps.

Process Control System

Process Control System can be classified into the following three categories:
1)Discrete - This system can be used in many manufacturing production, to produce discrete piece of product.
2)Batch - Quantities of raw materials be combined in specific ways for particular durations to produce an intermediate or end result. E.g. production of food/drinks.
3)Continuous - Production requires continous processes. E.g. production of fuels.

(Reference Link : )


There are several types of Information systems, some are support of business operations, some are support of managerial decision making and others are support for both.
Support for Business Operations have 3 types:
(1) Transaction Processing Systems
– processing business transactions
e.g. Sales and inventory processing and accounting systems
(2) Process Control Systems
– control of industrial processes
e.g. Petroleum refining systems
(3) Enterprise Collaboration Systems
– team and workgroup collaboration
e.g. e-mail, chat systems

Support for Managerial Decision Making have 3 types:
(1) Management Information systems
– prespecified reporting for managers
e.g. Sales analysis, production performance system
(2) Decision Support Systems
– interactive decision support
e.g. Product pricing, Risk analysis systems
(3) Executive Information Systems
– information tailored for executives
e.g. Actions of competitors
Support for Both have 4 types:
(1) Expert Systems
– expert advice to decision makers
e.g. Credit application advisor system
(2) Knowledge Management Systems
– manage organizational knowledge
e.g. Customer problem resolution system
(3) Strategic Information Systems
– support competitive advantage
e.g. Online stock trading, shipment tracking system
(4) Functional Business Systems
– support basic business functions

Source: :O’Brien

Five Types of Information Systems
Information systems are constantly changing and evolving as technology continues to grow. Very importantly the information systems described below are not mutually exclusive and some (especially Expert Systems, Management Information Systems and Executive Information Systems are can be seen as a subset of Decision Support Systems). However these examples are not the only overlaps and the divions of these information systems will change over time.
At present there are five main types:

1) Transaction Processing Systems (TPS)
2) Decision Support Systems (DSS)
3) Expert Information Systems (EIS)
4) Management Information Systems (MIS)
5) Office Automation Systems (OAS)

The Different Types and purposes (Functions) of an Information System are:

Processing Transactions:

A transaction processing system (tps) collects, stores, modifies and retrieves the transactions of an organization. Examples of such systems are automatic telling machines (ATMs), electronic funds transfer at point of sale (EFTPOS – also referred to as POS). There are two types of transaction of processing:

  • Batch processing: where all of the transactions are collected and processed as one group or batch at a later stage.
  • Real-time processing:where the transaction is processed immediately.

Provide Users with Information About an Organisation:

This information system provides information to managers about the performance of their organisation. It may involve information about payroll, an inventory, stock list or budgets and would require the printing of information in the form of reports normally based on queries. Examples of this kind of system are management information systems (MIS) and executive information systems (EIS).

Help Decision-making:

This type of system is also referred to as a decision support system (DSS). A decision support system will assist people to make decisions by providing tools to analyse the information stored in a system. A DSS will provide a mathematical model of the variables affecting the decision and then point directions for actions that should be taken. One such example is the system that used by stockbrokers, which chart fluctuations in price and then make buy or sell recommendations dependant upon the parameters predefined by the stockbroker. Many DSS will allow managers to ask “what if” style questions and then see what would happen. This is particularly useful when the variables are limited and predictions can be safely based on what is known. A DSS is only as accurate as the mathematical model used.
Another kind of DSS is an expert system. Expert systems are designed to help make decisions that would involve someone highly qualified an experienced in that field. An example of an expert system is one used by doctors to help diagnose patients or prescribe drugs.

Manage Information used Within an Organisation:

This system is designed to provide an efficient way of dealing with information within an office environment. Another name for this an office automation system. This will include word processors, spreadsheets, databases and email. An example of an office automation system is Microsoft Office.
Reference Link :

There are three famous types of Management Support Systems:
1. Executive Information System (EIS) is one type of management supoort systems to support
the information and decision-making of executives and managers.
Benefits of EIS:
  • executives can easily to use due to extensive computer experience is not required in operations.
  • essential company information can be delivered on time.
  • filter data for management and improve to tracjing information.
  • efficiently decision making.
Drawbacks of EIS:
  • overloaded nformation for some managers.
  • hard to quantify.
  • high costs to implement.
  • system dependent and it may trend to slow, large and difficult to manage.
  • less secure data.

2. Decision Support Systems (DSS) is one type of management support systems to support business and organizational decision-making activities.
Benefits of DSS:
  • improve personal efficiency.
  • speed up the problem solving, reduce the length of the decision cycle and reduce the cost of the decision.
  • speed up interpersonal communication.
  • enchance training and learning abilites.
  • automate the managerial processes.
  • increase organizational control.
Drawbacks of DSS:
  • overemphasize on decision-making -- versus social, intuitive and personalized approaches to reaching resolution.
  • unintended transfer of power from decision-maker to DSS.
  • obscuring responsibility, tendency to trust DSS and its designers.

3. Management Information System (MIS) is one type of management support systems. MIS which means that the information system is viewed as a means of processing data. MIS is qualitatively different from data processing systems and that interaction between information specialists and management are the key features of successful MIS design.
Benefits of MIS:
  • procide information needed for effective decision-making by mangers.
  • provide management with accurate and timely information necessary for decision making.
  • as a systems framework for ogranizing business computer applications.
  • concerned with planning and control.
Drawbacks of MIS:
  • lack of management involvement with the design of MIS.
  • narrow emphasis of the computer system.
  • improper concerntration on low level data processing applications.
  • lack of management knowledge of computers.

Part III – What is an Organization

Relationship between Organizations and Information systems
Information systems have contributed to organizational efficiency and effectiveness.
Both of them have mutual influence on each other.

Information systems provide information needed by important groups within the organization.
Organization must be influenced by Information Sysyem to benefit from new technology.


Two-Way Relationship between Organization and Information Systems
Interdependence of business environment, orgnaizational structure, management, and the development of information systems.
There are many different types of organzations;
different organizations in dfferent circumstances expriencedifferent effects from the same IT


"Informational variables are key to the structure of organizations because the quality of decisions is determined by the quality of information available to the decision maker. The co-location of information and decision rights enables the decision maker to make optimal decisions. The implementation of this co-location depends on the nature of the pertinent information."

Information which can be easily summarized, communicated and shared by decision makers are called "general knowledge" and can best be transferred to the decision maker by using the organization's information system.

Erik Brunjolfsson and Haim Mendelson ‧ June, 1993


What is an Organization
When there are two or more guys work together and agreed to control the activities to reach their same achievement (the goal), then we called it "organization". The purpose of creating such an organization, is to have a good structure and to arrange the position and let each of the position has their own responsibilities. Organization may included managerial position, supervisory position and specialist position, they may be employed it its services.
Reference :

An organization is a social arrangement which follow collective goals, which controls its own performance, and which has a boundary separating it from its environment.

An organization is an entity where some persons work together to achieve a goal or a common purpose. There are some organization around us, one of the example is hospitals, colleges, factories, farms and government offices.
If there is an organization, then there must be some people who work as a whole for a common purpose, so there must be a defined purpose. If an organization does not have any purpose, it will not survive in the long run. To achieve the purposes by using people, the processes are needed. Without any process, you cannot achieve any type of purpose or goal. If we see in our daily life, we have some goals. For achieving these goals, we use some processes. So that process is also obvious and important for an organization.


An organization is a deliberate arrangement of people to accomplish some specific purpose. It have three common characteristics are distinct purpose, deliberate structure and people.

First, each organization has a distinct purpose. This purpose is typically expressed in terms of a goal or a set of goals that the organization hopes to accomplish.

Second, each organization is composed of people. One person working alone is not an organization, and it takes people to perform the work that’s necessary for the organization to achieve its goals.

Third, all organizations develop some deliberate structure so that their members can do their work. That structure may be open and flexible, with no clear and precise delineations of job duties or strict adherence to an explicit job arrangement.

In summary, the term organization refers to an entity that has a distinct purpose, includes people or members, and has some type of deliberate structure.
References: Management, 8th edition, Stephen P. Robbins & Mary Coulter

Organizations are social inventions for reaching goals through group effort. In a common definition it can take as a group of people working to obtain a certain goal or group of people working interdependently toward some objectives. There are several accepted definitions of an organization are suggested from well-known management writers:

  • An organization is a system of cooperative human activities. (C.I. Barnard, Functions of the Executive, 1972)
  • Organizations are systems of interdependent human beings. (D.S. Pugh, Organization Theory: Selected Readings, 1997)
  • Organizations are intricate human strategies designed to achieve certain objectives. (C. Argris, On Organizational Learning, 1999)

According to the above definitions of an organization, we can notice that an organization is goal-oriented, social systems, technical systems and the integration of structure activities. But, what's the difference between a group and an organization? I deem that an organization consists of a group of people, they coordinate with each other, has a structure and common purpose. Whereas, a group hasn't.

Organizations exist in anywhere, they can be from a schools, colleges, universities, military, government and business, etc.
Business organization is a gathering of people in order to achieve profits as the common goal. Business organization can be seen in different types and sizes. A business organization can be from a home base small private company with few employees to multi million dollar organizations with thousands of employees.

The important for any organization is that it requires main points of management shown as below:
1. Planning
2. Organizing
3. Leading
4. Controlling


Part IV – Features of Organizations

The basic elements of bureaucratic are Division of labor, Hierarchy of Authority, Policy and Procedures, Appointment and Promotion.
Division of labor: Each employee should clearly understand their role in the organization. Different role have difference right and responsibility.
Hierarchy of Authority: The organization has an order of hierarchy and the division of power involves the ranking of offices to provide a clear chain of command. In bureaucracies, the hierarchy is also typically complex leading to many levels providing a highly differentiated structure of authority.
Policy and Procedure: Organization should provide a set of instruction for employee.
Appointment and Promotion: Salaries are pay by grade system appointments and promotion formal, with specific titles and power which come from the office assigned to them.


Many people deem that 'bureaucracy' is infefficiency, officialdom and unprogressive, but it is not totally true, since there are many large-scale enterprises adopt bureaucracy and work well. The good bureaucratic type of organization consists of the following key elements:
  • well defined hierarchy of lawful authority
  • division of labour based on functional specialization
  • clear statement of the rights and duties of personnel
  • rules and procedures in writing should exits to deal with all decisions and conditions
  • promotion and selection based on technical skills

Actually, the ultimate purposes of bureaucratic organization are to improve efficiency, intend to the needs and unify.

Routines and business processes
A business process is included the related, structured activities or tasks that produce a specific service or product for a particular customer or customers.

Information technology (IT) can manage routine business processes. Many business owners introduce and use computers to help them 'stay in control' of the business as it grows. Computers can formalise many of the routine business processes of the business, making them simple and consequently more reliable and efficient.Computers can also capture the state of the business and of its customers and suppliers, providing information where and when it is needed.

Simplifying routine business processes through IT is well within the reach of even the smallest organisation. For example, a database on a PC can be used to create a simple record system such as customer purchases. The greatest challenge is not setting up the system, but deciding what information most needs to be captured, processed and stored, and then designing and formalising the processes that will be used to do so. IT systems can then make the system run easily and efficiently.


Organizational politics
Organizational Politics always affect the organization change. It was because each group/department has own point of view, they also focus on the point that is advantage on themselves. They will use the politics to protect themselves and attack other people. When they are not willing to think more and do more for company, they will show the politics. If people cannot drop down the politics and think about the company, that organization cannot improve and Information system cannot function in there.

Like below example:
In ERP system, if one department is not cooperate when input a data (missing seem not important data), Data Warehouse cannot output a correct and accuracy information to top management. That may cause the top management make a wrong decision.


Organizational culture
Culture is a set of major understandings and assumptions shared by a group.
Organizational culture consists of the major understanding and assumptions for a business, a corporate, or an organization.
The understandings, which can include common beliefs, values and approaches to decision making are often not stated or document in goal statement or formal policies.

There are four main types of culture in organizations: power culture, role culture, task culture and person culture.
  • Power culture is usually found in owner managed and entrepreneurial organizations. We can call the power is central power since it is concentrated in the hands of a single person or small group and used to control a whole firm.
  • Role culture can be found in large organizations with stable environment. A set of clearly defined rules, duties and hierarchies, titles, procedures and decision-making rules are highly formalized. For example, the Civil Service Organization.
  • Task culture focuses on job expertise and task orientation. These organizations tend to get advice from appropriate expertise to overcome fast changing products, processes and markets.
  • Person culture fits the organizations which have a large number of professional employees and tend to have flat structures with condiserable power sharing.


Organizational culture and change
Culture : is a set of major understandings and assumptions shared by a group. Organizational culture consists of the major understanding and assumptions for a business, a corporate , or an organization. The understandings, which can include common beliefs ,values and approaches to decision making are often not stated or document in goal statement or formal policies.

Organizational Change :
Organizational change deals with how for profit and nonprofit organizations plan for implement and handle change. Change can be caused by internal or external factors. Internal factors include activities initiated by all levels of employees.
External factors include activities wrought competitors, stockholders, federal and state laws, community regulations, natural occurrences ( hurricanes) and general economic conditions.
Change Model : is a representation of change theories that identifies the phases of change and the best way to implement them.

Reference Link :


Organization culture is a system of shared meaning and beliefs held by organizational members that determines, in large degree, how employees act.
References: Management, 8th edition, Stephen P. Robbins & Mary Coulter

Organizational environments

Organizational environment refers to the forces that can make an impact. Forces made up opportunities and threats.
Organizations dose not exist in isolation. It works with the overall environment.

In common, Environments can show that what action or decision the organizations can do, but in the same way, the organizations can influence their environments and decide to change environments altogether.

So, Information System plays a critical role in helping organizations perceive environmental change and in helping organizations act on their environment., because the information can help the organization to know more about the marketing.

Organizations need resources from the environment, their products or services have to be desired by the environment, and they need information from the environment to monitor these other two needs. As long as an organization can foresee its needs being fulfilled by the environment, and predict the demands from the environment for its goods or services, it can continue to function in the way that it always has.

However, as any part of the environment becomes more uncertain, the organization will have to adapt to the new demands or contingencies.


Organizational environments are those forces (opportunties and threats) outside organizations' boundaries that can impact organizations to achieve their goals . In general, organizational environmental factors can be divided into external and internal parts.
Competitive marketplaces, technological, political and legal are the major external environments which affect the organizations' plans, operations and the ways to achieve their goals.
  • Competitive marketplace: more and more competitors enter the global marketplace and micro-markets, they share the same customer gorup of the organizations, and their price, quality, distribution, products, services and other factors affect the overall organization goals. It can push the organizations to improve their quality and marketing strategies; in other hand, it may threat the existence of an organization in a markeplace.
  • Technological: in modern technology is used also for management to bring the better organizational environment. The development of computer technology and communications, have speed up the production of organization. Moreover, advanced techologies help the organizations to develop new markets, such as internet has created new markets for new kinds of goods and services: digital micro-products and online sales (Apple's I-tunes songs, Disney's short video and's online bookstores, etc.)
  • Political: can make the bad or the good effect to an organization. The political situations or the system of a country can make the organizations future. Better policies make good business envirnoment for any organization.
  • Legal: every organization and resources, including employees have act under the legal factor. No one can go beyond the law of a country. Witch ever an organization does they have to scope with the legal factors.

Emplolyees, management, trade unions and share holders are the major internal environments of an organization.
  • Employees: working people are the main resources of an organization. In other hand, these employees can make a big difference for an organization. If an organization has unskilled labors they may find a difficulty of getting things done. Organization benefited with skilled labor. It needs motivation and skills development to obtain the max. performance of the labor.
  • Management: a manager is someone skilled in knowing how to analyze and improve the ability of an organization to survive and grow in a complex and changing world. This means that managers have a set of tools that enable them to pierce the complexity of the organization's environment. A management system describes the organization and the set of significant interacting institutions and forces in the organization's complex and rapidly changing environment that affect its ability to serve its customers. The company must continuously monitor and adapt to the environment if it is to survive and prosper.
  • Trade unions: is a continuous association of wage-earners for the purpose of maintaining and improving the conditions of their employment. They are demand for there rights, but some organizations face huge problems due to the white color trade unions.
  • Share holder: they are the owners of an organization. a shareholder is an individual or company that legally owns one or more shares of stock in a joint stock company. A company;s shareholders collectively own that company they invests there recources to an organization in order to obtain a profit.

Due to there are many external and internal organziational environments, managers require an information systems help an organization to detect the rapidly environmental change and support the organization make correct decisions to against or adapt to these challenges throught the interaction between of people, process and techology.

There are several external environmental factors surrond an organization, such as competitors, customers, suppliers, regulatory agencies, stockholder, etc. How to handle these external organizational environments? An organization can handle these external organizational environments by using information systems(IS), due to IS contains information about an organization, including input, processing and output and its surrounding environment. So, the organization is possible to evaluate and improve its input based on the certainly feedback and information.
(Reference Link : )


Organizational structure
The main successful organizational structures that he identifies are as follows:

Entrepreneurial organization

This is a simple flat structure, managed by one or few people. The organization is relatively unstructured and informal.
Machine bureaucracy
Machine organization is defined by its standardization. Jobs are clearly defined. Work is formalized, there are many routines and procedures, decision making is centralized and tasks are grouped by functional departments.
Divisionalized Organization
The organization has many different product lines and business units. A central headquarters supports a number of divisions. The divisions make their own decisions and have their own unique structures. This type of structure can be seen as multiple Machine bureaucracy structure.
E.g. Toyota, Sony

Professional organization
Professional organization is complex and contains a lot of rules and procedures. This structure depends on highly trained professionals who demand control of their own work. So, while there's a high degree of specialization, decision making is decentralized.
E.g. The Hong Kong Polytechnic University

Adhocracy organization
In new industries, companies are function on an “adhoc” basis to survive. There are a lot of conflicts when authority and power are ambiguous. And dealing with rapid change is stressful for workers, making it difficult to find and keep talent. However, given the complex and dynamic state of most operating environments, adhocracy is a common structural choice. It’s popular for small start-up company who need the more flexibility.
E.g. Project base company such as filmmaking and consulting

Source Minitzberg


The organizational structure is the formal arrangement of jobs within an organization.
References: Management, 8th edition, Stephen P. Robbins & Mary Coulter

Other Organizational features

Social roles or functions:
In our region, society, we all have our roles, obliglations to perform. e.g. The ballot of the Legislative Council members, the taxpayers need to pay tax to contribute the societies, open the task force to investigate the social issue.



Technical Definition:
- Stable, formal structure
- Takes resources from environment and processes them To produce outputs

Behavioral definition:
Collection of:
- Rights, privileges, boligations, responsibilities
- Delicately balanced
- Conflict Resolution


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Part V – How IS Impact Organizations

There are two main impacts:
1. Economic impacts
Economic Impacts
-Transaction cost theory ( Same number of employees ---> transaction costs decrease)
-Agency theory ( Same number of employees ---> agency costs decrease)


Economic ImpactsInformation system can replace capital and labour. Due to some human process can be replace by IS automate production process.
e.g. A company implemented EDI (Electronic Data Interchange) so that it will replace some account staff.

2. Organizational and behavioral impacts
IT flattens organizations

It is a technological and business perception, globally recognized, that successful enterprises usually possesses strong network to share their skills, information, competencies of internal resources include not only tangible (physical, financial and human resources) but also intangible resources (capabilities, competencies and organizational culture) in order to get the better and viable respond to the business opportunities.

Today in modern business environment, SMEs are usually flexible in their nature to adopt the information systems to operate in the business environment. The use of Information Technologies means Implementation of all hard ware and software packages to enhance the business with the help of Information Systems. With the advancement of technologies, It has brought revolutionary changes in the life of managers to alter their tasks in order meet the organizational objectives to compete the global trends.

Information technology (IT) is dramatically changing the business landscape. Although organization cultures and business strategies shape the use of IT in organizations, more often the influence is stronger the other way round. IT significantly affects strategic options and creates opportunities and issues that managers need to address in many aspects of their business. This page outlines some of the key impacts of technology and the implications for management on:
  • Business strategy - collapsing time and distance, enabling electronic commerce
  • Organization Culture - encouraging the free flow of information
  • Organization Structures - making networking and virtual corporations a reality
  • Management Processes - providing support for complex decision making processes
  • Work - dramatically changing the nature of professional, and now managerial work
  • The workplace - allowing work from home and on the move, as in telework

Postindustrial organizations

It is a society in which an economic transition has occurred from a manufacturing based economy to a service based economy, a diffusion of national and global capital, and mass privatization. The prerequisites to this economic shift are the processes of industrialization and liberalization. This economic transition spurs a restructuring in society as a whole.

Organizational resistance to change
In order to survive, organizations must adapt to fit their changing circumstances. Organizational change may be necessary to maintain a competitive edge or adapt to changing economic factors. Unfortunately, change within an organization is not always a smooth process. Impediments to change exist at all levels, from the individual all the way up to the organization as a whole. It is the responsibility of top managers to recognize the source of this resistance and work to remedy it before it hampers the growth of the organization (George & Jones, 2008).

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How Information Systems Affect Organizations

Economic Theories

Microeconomic model of the firm. It that views information technology as a factor of production that can be freely substantiated for capital and laber.

Information technology also helps firms contract in size, becaue it can reduce transaction costs—the costs incurred when a firm buys on the marketplace what it cannot make itself. According to transaction cost theory, firms and individuals seek to economize on transaction costs, much as they do on production cost. Using markets is expensive because of costs such as locating and communicating with distant suppliers monitoring contract compliance, buying insurance, obtaining information on products and so fort.

Information technology also can reduce internal management costs. According to agency theory, the firm is viewed as a “nexus of contracts” among self-interested individuals rather than as a unified, profit-maximizing entity. A principle (owner) employs “agents” (employees) to perform work on his or her behalf. However agents need constant supervision and management, because they otherwise will tend to pursue their own interests rather than those of the owners. As firms grow in size and scope, agency costs or coordination cost rise, because owners must expend more and more effort supervising and managing employee.

Behavioral Theories

Behavioral researchers have theorized that information technology could change the hierarchy of decision making in organizations by lowering the costs of information acquisition and broadening the distribution of information. Information technology could bring information directly from operating units to senior managers, thereby eliminating middle managers and their clerical support workers. Alternatively, information technology could distribute information directly to lower- level workers, who could then make their own decisions based on their own knowledge and information without any management intervention.

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The figure above show that the agency cost theory of the impact of information technology on the organization. As firms grow in size and complexity, traditionally they experience rising agency costs. IT shifts the agency cost curve down and to the right, allowing firms to increase size while lowering agency costs.

Implementing information systems has consequences for task arrangements, structures, and people. According to this model, in order to implement change, all four components must be change simultaneously.

ref link:


Part VI – Review questions

Question 1
Explain the two-way relationship of IS and organizations.

Information systems can be defined as the software part of an organization, which we can think of them as the hardware part of the entire system.

Just like all information systems, they need comparable hardware configuration in order to run smoothly. Also, like all information systems, their power is shaped by the tasks, goals, culture, politics, and management of the organization.

The reality is that information systems will gradually change all three layers: surface activities, standard operating procedures, and finally the culture, assumptions, and beliefs.


The relationship between organization and information system is interrelated.
(Reference Link : )

Question 2
What are the differences between the technical and behavioral definitions of an organization?
The technical definition for an organization defines an organization as a stable, formal social structure that takes resources from the environment and processes them to produce outputs. The technical definition of an organization focuses on three elements: capital and labor, production, and products for consumption. The technical definition also implies that organizations are more stable than an informal group, are formal legal entities, and are social structures.
The behavioral definition states that an organization is a collection of rights, privileges, obligations, and responsibilities that are delicately balanced over a period of time through conflict and conflict resolution. This definition highlights the people within the organization, their ways of working, and their relationships.
The technical definition shows us how a firm combines capital, labor, and information technology. The behavioral definition examines how information technology impacts the inner workings of the organization. The behavioral definition is the more realistic of the two.



Question 3
What are the main characteristics that describe an bureaucratic organization?

We can classified bureaucratic organization as eight main characteristics:
1.Most employees blame their organization’s "bureaucracy" on senior management. They assume that management must want it, or it wouldn’t be tolerated.

2.Executives have tried many things to eliminate "bureaucracy," but the "program-of-the-year" approach generally hasn’t worked, because they have been fighting symptoms, not the root cause.

3.The root cause of "bureaucracy" is the organizing model, the "bureaucratic form." Yet, the bureaucratic form is so pervasive that its destructive nature is seldom questioned.

If you were starting a new enterprise today, you could avoid "bureaucracy" by using a new organizing model called the "mission-driven" model.

5.Existing bureaucratic organizations can reduce the amount of "bureaucracy" by changing one or more of the basic organizing principles, either temporarily or permanently.

6.Management people in the existing organization will need to learn and use new ways of managing. They will need to learn what they have been doing that adds to the "bureaucracy" in the organization. They will need to learn new ways of doing their jobs that diminish the amount of bureaucracy within the organization. Most importantly, they will need to provide empowerment for those who work for them, and protection and coaching to those who accept and act upon the offered empowerment.

People in the organization who currently aren’t managing will play a vital new role in the de-bureaucratized organization. The labor/management war, if it exists in your organization, must end. Everyone in the organization will need to act as one unified team, driven by a common mission, and aligned by a common vision of the new organization. People who today are not formally managing will be grouped into teams in which the brainpower, skills, talents, and experience of the individuals will be harnessed to continuously improve the organization’s quality, service, or both.

8. Finally, the vision of what your organization might look like, and be like, when you have achieved your desired goal state is outlined in detail in "Busting Bureaucracy." You will discover the rewards that come from working in an organization of empowered people who are satisfying or even dazzling their customers, and are doing so with few, if any, of the immobilizing and suffocating effects of bureaucracy.


The main characteristics of the bureaucratic organization are having more complex or larger scale organizations. They usually adopt a tall structure.

Question 4
Identify and describe important features of organizations that managers need to know about in order to build and use IS successfully.

When the managers need to build and use IS successfully, the managers need to know better the relationships between IT and organizations. Different organization has different politics, culture, environment, they can only use the models as reference. They need to customize the models to fit their actual situation. They need to sense-and-respond, change their policies from time to time, conduct short experiments and test whether it is success or not.


"The organizational culture and structure are instrumental in influencing its ability to derive strategic benefits from Information System. The absence of organizational culture and structure supporting the smooth implementation and use of Information System has been documented as a major cause of many system failures in the Information System implementation and adoption literature. Several empirical studies, for instance, have found relatively low system use among firms lacking a culture and reward systems that support Information System adoption (Zuboff, 1988; Constant et al., 1996; Goodman & Darr, 1998). The business process reengineering research also demonstrates that firms whose structures and processes are not aligned with their new Information System have experienced difficulty in reaping the benefits of the Information System (Hammer & Champy, 1993; Keen, 1993; Boar, 1994). Moreover, recent research on organizational barriers to knowledge management suggests that firms may not be able to turn data and information into useful knowledge and organizational results from their Information System without a supportive organizational culture and structure (Davenport et al., 2001). Even if new knowledge is created from employing Information System, sharing the new knowledge may be limited by cultural and structural constrictions (Zuboff, 1988; Ciborrra & Patriota, 1998)."

Assessing the performance impacts of information systems from the resource-based perspective: an empirical test of the indirect effect of IS.
by Zhang, Michael J.
Journal of Business Strategies ‧ Fall, 2007


Question 5
Describe the major economic and behavioral theories that help explain how IS affect organizations.

Behavioral theories, from sociology, psychology, and political science, are useful for describing the behavior of individual firms. Behavioral researchers theorize that information technology could change the decision-making hierarchy by lowering the costs of information acquisition and distribution. IT could eliminate middle managers and their clerical support by sending information from operating units directly to senior management and by enabling information to be sent directly to lower-level operating units. It even enables some organizations to act as virtual organizations because they are no longer limited by geographic locations.
One behavioral approach views information systems as the outcome of political competition between organizational subgroups. IT becomes very involved with this competition because it controls who has access to what information, and information systems can control who does what, when, where, and how.



Question 6
Why is there considerable organizational resistance to the introduction of IS?

There is considerable organizational resistance to new information systems because they change many important organizational dimensions, such as culture, structure, politics, and work. Leavitt puts forth a model that says that changes in technology are absorbed, deflected, and defeated by organizational task arrangements, structures, and people. In this model the only way to bring about change is to change the technology, tasks, structure, and people simultaneously. In a second model, the authors speak of the need to "unfreeze" organizations before introducing an innovation, quickly implementing the new system, and then "refreezing" or institutionalizing the change.