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impact of Information System on Organisation and Society

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THE BUSINESS VALUE OF GOOD CORPORATE GOVERNANCE Companies that take a strategic approach to the challenge of complying with tough new corporate governance requirements can create opportunities to strengthen their internal processes and enhance their business. This article is one in a series from Microsoft Office System that explores issues and perspectives facing finance executives. Making Sense of the Global Regulatory Patchwork Even For the global economic system to function as it should, investors, employees, consumers and the general public must have confidence that they will benefit from it and from the work of corporations that support it. Recently, that confidence has been severely shaken. As the names of several top corporations have become synony-mous with corporate misconduct and financial scandal, a call for more effective corporate governance has been raised worldwide from finan-cial reporting and internal controls to how a corporation selects, trains and evaluates its board of directors. (This article is not a legal analysis of corporate governance, but rather a look at a range of issues associated with it

and how some companies are responding to those issues and using compliance efforts to build greater business value.) While corporate governance has largely been portrayed as an issue of compliance, analysts and business leaders increasingly are seeing good governance as good business. Finance organizations will see the cost of compliance increase in the coming years as firms move from the investigational phase to implement-ation. Hence, finance executives are looking carefully at the cost-benefit of compliance. In the end, sound corporate governance can reduce market volatility, encourage invest-ment and promote sustainable productivity and growth. The push today is toward putting into place a combination of internal controls, explicit businesses processes and systems for corporate governance that can also build business value.... [continues]

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Information systems audit


The effectiveness of an information systems controls is evaluated through an information systems audit. An audit aims to establish whether information systems are safeguarding corporate assets, maintaining the integrity of stored and communicated data, supporting corporate objectives effectively, and operating efficiently. It is a part of a more general financial audit that verifies an organizations accounting records and financial statements. Information systems are designed so that every financial transaction can be traced. In other words, an audit trail must exist that can establish where each transaction originated and how it was processed. Aside from financial audits, operational audits are used to evaluate the effectiveness and efficiency of information systems operations, and technological audits verify that information technologies are appropriately chosen, configured, and implemented.

Table Of Contents Impacts of information systems


Computerized information systems, particularly since the arrival of the Web and mobile computing, have had a profound effect on organizations, economies, and societies, as well as on individuals whose lives and activities are conducted in these social aggregates.

Organizational impacts of information systems


Several essential organizational capabilities are enhanced by information systems. These systems provide support for business operations; for individual and group decision making; for new product development; for relationships with customers, suppliers, and partners; for pursuit of competitive advantage; and, in some cases, for the business model itself (e.g., Google). Information systems bring new options to the way companies interact and compete, the way organizations are structured, and the way workplaces are designed. In general, use of Web-based information systems can significantly lower the costs of communication among workers and firms and cost-effectively enhance the coordination of supply chains or webs. This has led many organizations to concentrate on their core competencies and to outsource other parts of their value chain to specialized companies. The capability to communicate information efficiently within a firm has led to the deployment of flatter organizational structures with fewer hierarchical layers. Nevertheless, information systems do not uniformly lead to higher profits. Success depends both on the skill with which information systems are deployed and on their use being combined with other resources of the firm, such as relationships with business partners or superior knowledge of the industry. The use of information systems has enabled new organizational structures. In particular, so-called virtual organizations have emerged that do not rely on physical offices and standard organizational charts. Two notable forms of virtual organizations are the network organization and the cluster organization.

In a network organization, long-term corporate partners supply goods and services to and through a central hub firm. Together, a network of small companies can present the appearance of a large corporation. Indeed, at the core of such an organization may be nothing more than a single entrepreneur supported by only a few employees. Thus, network organization forms a flexible ecosystem of companies, whose formation and work is organized around Web-based information systems. In a cluster organization, the principal work units are permanent and temporary teams of individuals with complementary skills. Team members, who are often widely dispersed around the globe, are greatly assisted in their work by the use of Web resources, corporate intranets, and collaboration systems. Global virtual teams are able to work around the clock, moving knowledge work electronically to follow the Sun. Information systems delivered over mobile platforms have enabled employees to work not just outside the corporate offices but virtually anywhere. Work is the thing you do, not the place you go to has become the slogan of the emerging new workplace. Virtual workplaces include home offices, regional work centres, customers premises, and mobile offices of people such as insurance adjusters. Employees who work in virtual workplaces outside their companys premises are known as telecommuters. The role of consumers has changed, empowered by the Web. Instead of being just passive recipients of products, they can actively participate with the producers in the cocreation of value. By coordinating their collective work using information systems, individuals have created such products as open-source software and online encyclopaedias. The value of virtual worlds and massively multiplayer online games has been created largely by the participants. The electronic word-of-mouth in the form of reviews and opinions expressed on the Web can make or break products. In sponsored cocreation, companies attract their customers to generate and evaluate ideas, codevelop new products, and promote the existing goods and services. <Previous Page

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The Impact of IT

List of Titles This is an outline of a presentation first delivered in 1988, and which has been adapted and delivered to different senior management audiences over the ensuing years. Learning Organization While some of the details of the early presentations have changed the issues of alinging IT solutions with business, Internet / MIS human and organisational factors are as relevant as ever. See our presentations pages for list of available Virutal Working presentations. Knowledge / KM Also check the Resource Pages and Topic Index for additional articles and resources on these topics. "Many of the impacts of Information Technology are straightforward. But they are not necessarily obvious, nor are they trivial" (Jack Nilles, Centre for Future Research) Survey after survey has shown that many organisations are failing to grasp the opportunities that the continual improvements in information technology brings. This page outlines some of the key impacts of technology, taken from an executive presentation that has been delivered to audiences in a range of industries. It highlights the interactions between information systems and strategy, structure, culture, management processes, work, work environment and people. These interactions need the joint attention of business managers, human resource specialists, workers, and systems designers and implementers.

1. Why is this topic important ?


Many systems implementations do not meet expectations - or, even worse, fail Many companies have missed strategic (competitive advantage) opportunities afforded by IT

The field is littered with cases of failures, or where introduction of new systems unwittingly altered key organizational processes. Awareness and planning of the issues will help to ensure smoother implementations and increase the overall benefits of information systems.

2. It's a Changing World


We are in the midst of a fundamental transition - from the industrial age to the information age.Yet most of our paradigms and behaviours come to us from the old world. Being so close to this means that we sometimes cannot see

the wood from the trees.


Eras of Mankind: From physical processes to information ones Industrial Revolution vs Information Revolution 1760 - today; 1945 - 2000. It's happening 4 times quicker! (Makridakos) Note - the industrial revolution gave a performance improvement of 15. In computers that is happening every 7 or 8 years! Today's changing business environment: Globalization :: Competition :: Consumer choice :: Demographics :: Lifestyles :: Knowledge intensive The Organizational Response: Productivity :: "Customer first" :: Marketing :: Alliances :: Key Needs - responsiveness and adaptability.

3. The Evolution of IT
Not just a response to the environment, but partly a cause of changes e.g. the Chairman of Matsushita says "without doubt the most powerful driver of all is technology".

Changing emphasis: Efficiency -> Effectiveness -> Strategic Eras of Computing o Era 1: Accounting o Era 2: Operations o Era 3: End-User/Office o Era 4: the 'Wired Society' (Rockart) or Computation - Communications - Cognition 7 Key Technological Trends (there are many) - workstations: yesterday's supercomputer on your desk-top - portability - communications: global networks - multimedia - smart cards - object orientation - intelligent software agents Result = Total Connectivity

Implications - rethink dimensions of space, time and information (i.e. virtualization)

"any information, anywhere, anytime, anyway you want it" (Davis) (once we get a few problems e.g. standards, sorted out!)

4. Impact on Business Strategy


These trends open up exciting possibilities for using the resources of space, time and information. In particular information can be made immediately available elsewhere in the organization, it is reproducible at low cost, and is reusable many times. A strategy planning framework: strategic advantage vs. rethinking deployment of resources Some examples:

US airlines - ticket processing in Bermuda (remote back offices) Retail - distribution flows instantly linked to customer demand Teleselling - round the clock! Customer service: 0800 numbers routed overseas for responses Electronic markets - even in second hand car parts! Benneton - speeding up the value chain from New York to Italy Emerging knowledge markets, such as Bright. (Update 2000: The Bright marketplace no longer exists.)

Today, much IT investment and thinking still going into getting on top of old problems. Some proportion needs to go into experimenting with these new opportunities. In the UK, companies like Direct Line have completely changed the shape of home and car insurance through their innovative approaches, while in Internet Commerce, Amazon.com, eBay and others are changing the rules of many traditional markets.

5. The Organisational Impacts


A similar evolution to strategy: efficiency, effectiveness, transformation. However, our understanding is not as advanced. We are into a complex world of individual and

organisational behaviours - people are not as logical as computer systems! We need a better understanding of:

Work - what it is, how it is changing People - what they expect, how they behave Work environments - do they get the best out of people? Teams and Groups - how can they be made more effective? Organization structures - hierarchies and networks, the formal and the informal Organization cultures - the values and beliefs that drive behaviours

We shall look at some of these in more detail.

6. Work - more knowledge based, more varied and less structured


Simple cybernetics - as variety in the environment increases so does the variety in the response mechanisms need to increase to build an effective response. We can automate the routine and standard, but can only hope to offer decision support and similar tools for less structured work. Why do many IT systems and BPR initiatives fail? Because the IS tradition is one of formalisation and standardisation vs. providing flexibility to changing needs.

Types of work - clerical, professional, technical, managerial, and (hopefully) strategic thinking Differences in variety and routine, differences in IT support From automate to informate to ? How IT enhances information value activities:creation; access; processing; storage; communication Moving up the knowledge hierarchy - data to wisdom Storage and access: plenty of data, little information! Communications: also complex but some evidence of what is more effective. The communications

hierarchy - from simple electronic mail to worldwide computer conferencing. [Note - there is a whole separate set of slides on the role of IT on business communications] The main organisational challenge is to understand the nature of the work that is happening in various groups, and therefore what style of IT support is needed. Too often we automate what we think is routine, but our inflexible systems cannot adapt as the 'routine' changes.

7. Changing Organisational Structures


The hierarchy served us well in stable times. We still need the hierarchy for some aspects of management, but not for information flows.

More automation of routine + more knowledge work = downsizing + diamond shaped + flatter hierarchies = the networked organisation Structure is about differentiation - integration Differentiation = specializing in skills Integration = pulling them together Need both - but segmentalism builds barriers Best structure for non routine work is team work Therefore structures to meld teams and to coordinate different teams IT networks are a powerful mechanism Many examples within large corporations - multidisciplinary teams, multi-location teams, ad-hoc and changing teams (boundary busting) Todays networks are but stepping stones to neural nets.

IT enables adaptive structures. Think of organisations as neural systems, with sensing mechanisms, information and knowledge flows and responses to stimuli (e.g. customer demands). Our research has shown that too often the organisational aspects of new systems are ignored - job design, team composition, skill requirements all change.

8. People at Work
"People are our most important asset" - If so, then treat

them as such! Sociologists and psychologists can tell us a lot about people. Systems designers often ignore them .. which perhaps is not surprising if a systems design team has no psychologists or human needs awareness!

People are not standardized - they are different! People want to be involved Individuals and Information Technology: A good system addresses - working conditions - ease of learning - skill enhancing - a sense of control - feed-back - variety [items from a check list on system usability] Involve users early Accommodate individual differences: - in work-style - in personalities - in learning strategies

The basic principles of socio-technical design were established in the 1950s. Today they are too often ignored! We need to move from systems engineer designed systems to user centred design approach. This is not designing systems for the user, nor letting the user design their own, but designing systems together in co-operation. There is a wealth of information from the HCI community on this aspect of systems design.

9. Flexible Work Practices


Demographic and lifestyle changes are changing the shape of the firm - more contracting out, more temporary staff. IT can help with flexible work practices in several areas:

Remote working ('front office and back office in different locations) Teleworking - from home, from other locations, from hotel rooms etc.location independence Flexible offices - optimising space and facilities to meet tomorrow's needs, not yesterdays!

Note that technologies such as CTI (Computer Telephony Integration) create opportunities for location independence within a building.

10. Working Environment


Traditional offices were designed for people and paper. More recent offices were built for information systems, computer rooms, cabling etc. But now we must rethink the office again - and shift from homogenised work spaces to heteregenous 'environments' for different types of tasks and socialisation e.g. for creative work, customer liaison and co-operative work. This means more 'environments' (e.g. fully equipped meeting rooms and less personal space. Architects, designers, furniture specialists and ergonomics specialists are all part of the systems team!

11. Integration - Across IT, HOF and Strategy


Integration is the nub of the issue. If it were so simple we would have done it long ago! We have developed a useful integration model that can be used in multi-skilled team development:

Integration of Business needs, information systems and HOF (human and organisational factors) i.e. strategy/operations - technical - social. The integration wheel - from generic to specific Many types of integration and integration processes Depends on purpose and perspective Don't get locked into one part of the model - move around the sectors, and outwards, as well as inwards.

The best way forward for any organization is to go through a process of developing their own integration model or business architecture.

Summary

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