Organization of the Information Systems Function

Chapter 14

Chapter Objectives

• Describe the history, evolution, and role of the IS function within firms

• Explain the alternative structures and locations of the IS function within modern organizations

• Understand the critical issues currently facing business managers with respect to the organization of the IS function

• Discuss the future of the IS function

The History and Roleof the IS Function

• Before 1950 “computer” was a job classification title

• In 1940s and early 1950s computers were giant counting machines

• Changed in 1952 when IBM offered relatively affordable business computers

• As computer use grew, the need to manage IS grew

Management by Structure

• Organizational structure– Represented in an organizational chart– Describes the allocation of tasks and

responsibilities– Designates formal reporting relationships,– Identifies grouping of individuals into

departments – Includes the design of systems for effective

communication, coordination, and integration

An Outgrowth of the Accounting Department

• Computers adopted in 1950s as electronic accounting systems

Evolution of the IS Function

• The 1960s – Computers used in each functional areas – Electronic data processing department

• The 1970s– From support data processing to complex IS– Information systems department

Evolution of the IS Function to Data Processing Departments

IS Structure During the 1970s

Evolution of the IS Function

• The 1980s– Began using personal computers– Telecommunications made computing difficult to

centrally manage– Location of computing resources spread throughout

the firm

• Late 1980s and 1990s,– Organizations needed systems integration and

enterprise-wide information system architecture

Alternatives Structuresfor the IS Function

• Technology use now spread throughout the structure of most organizations

• Centralized management – Traditional IS organizational structure– Strong IS function with CIO

• Decentralized management– Structure of the organization determines

whether IS is centralized or decentralized

A Centralized IS Structure

• CIO– Highest-ranking administrator– Strategic and long-term duties

• IS Director – Head of department and mid-level manager– Builds and maintains IS for functional areas– Performs day-to-day management of IS

Centralized Structure

A Decentralized IS Structure

• Provides services to functional areas that develop their own technologies

Decentralized Structure

InformationCenter SecurityConsulting

SystemsPlanning Standards

Research andDevelopment

SystemsIntegration

IS Director

Administration

CIO

Services

Networking

Operationsand Networking

Planning

CorporateSystems

Financial andAccountingSystems

Production andOperational

Systems

HumanResources

ManagementSystems

MarketingSystems

IS Personnel

• CIO• IS Director• Account Executive• Information Center

Manager • Development

Manager• Project Manager

• Maintenance Manager

• Systems Manager• IS Planning Manager• Operations Manager• Programming

Manager• WebMaster

Competencies

• Technical– Knowledge and skills in hardware,

software, and networking

• Business– Knowledge of business functional areas

• Systems– Knowledge of and skills in building systems

and solving problems

Critical Issues for the Locations and Structures of

the IS Function

• From Centralization to Decentralization and Hybrid Models

• Downsizing of Organizations and IS Departments

• From Ownership and Control to a Consulting Organization and a Service Mentality

From Centralization to Decentralization and Hybrid Models

• Centralized or Decentralized – The extent of which decision-making authority

is toward the middle and higher ranks

• Centralized– Strong IS unit that builds all internal systems

• Decentralized– Development and control of computing

recourses located in functional area units

When a Decentralized IS Structure Fits

• Corporate strategy of unrelated diversification

• Focused differentiation business strategy for each operating company

• Culture and reward system that emphasizes business unit autonomy

When a Centralized IS Structure Fits

• Corporate strategy of related diversification

• Related core businesses that compete in mature industries

• History of strong central direction and monitoring

When to Move Away From a Centralized IS Structure

• Corporate restructuring and new corporate strategy

• Organic (i.e., informal, adaptive) decision processes

• Autonomous business units

• Decentralized locus of responsibility for many corporate functions

When to Move Toward a More Centralized IS Structure

• Shared belief in the strategic role of IS

• Dissatisfaction with progress in new system development projects

• Deficiencies in IS performance capabilities

Downsizing of Organizations and IS Departments

• Technology used to streamline business functions

• Shrinks the IS department, along with other parts of the firm

• End users take on many of the traditional IS tasks

From Ownership and Control to a Consulting Organization

• Early IS departments provided little customer service

• Users forced to put up with poor service

• Users began to develop own applications

• IS personnel realized that they needed an attitude adjustment

• Modern IS units are more responsive than they used to be

The Future for the IS Function

• Continued Growth and Development

• Pervasiveness and Spread of IS throughout the Organization

• Changing Skill Set and Human Resource Planning

• Career Prospects and Opportunities

Continued Growth and Development

• Increased importance of technology to the success of organizations

• Demand for IS personnel will continue to grow

• Easy to predict growth and change

• Hard to predict what and how things will change

Pervasiveness and Spread of IS Throughout the Organization

• Organizations are pushing their IS personnel out into the business units

• Firms continue to need centralized IS planning, deployment, and management

Changing Skill Set and Human Resource Planning

• Need functional area staff to have technology skills

• Need IS staff to know functional business areas

Career Prospects and Opportunities

• There are now and will continue to be lots of jobs

• Jobs will be found in all industries and all market segments

• IS departments will continue to exist and play important role in the future