From an economic point of view, information systems technology can be seen as a factor of production that can be freely substituted for capital and labor. As information systems technology automates the production process, less capital and labor are required to produce a specified output.
Transaction cost theory states that organizations grow in size because they can obtain certain products or services internally at lower cost than by using external firms in the marketplace. By lowering the cost of market participation (transaction costs) information technology allows firms to obtain goods and services more cheaply from outside sources than through internal means. Information systems can thus help firms increase revenue while shrinking in size.
Figure 3-6
FIGURE 3-6 THE TRANSACTION COST THEORY OF THE IMPACT OF INFORMATION TECHNOLOGY ON THE ORGANIZATION
Firms traditionally grew in size to reduce transaction costs. IT potentially reduces the costs for a given size, shifting the transaction cost curve inward, opening up the possibility of revenue growth without increasing size, or even revenue growth accompanied by shrinking size.
Agency theory views the firm as a nexus of contracts among self- interested individuals, who must be carefully supervised to ensure they pursue the interests of the organization. Information technology can help reduce agency costs, the costs of coordinating many different people and activities, so that each manager can oversee a larger number of employees.
Figure 3-7
FIGURE 3-7 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, enabling firms to increase size while lowering agency costs.
Behavioral researchers have theorized that information technology facilitates flattening of hierarchies by broadening the distribution of information to empower lower-level employees and increase management efficiency.
Figure 3-8
FIGURE 3-8 FLATTENING ORGANIZATIONS
Information systems can reduce the number of levels in an organization by providing managers with information to supervise larger numbers of workers and by giving lower-level employees more decision-making authority.
Postindustrial theories also support the idea that IT should flatten hierarchies by allowing professionals to be self-managing, by decentralizing decision making, and by encouraging formation of ad-hoc, temporary "task forces" that address specific tasks.
Because information systems potentially change an organization's structure, culture, business processes, and strategy, there is often considerable resistance to them when they are introduced. In one model describing organizational resistance, the only way to bring about change is to change the technology, tasks, structure, and people simultaneously.
Figure 3-9.
FIGURE 3-9 ORGANIZATIONAL RESISTANCE AND THE MUTUALLY ADJUSTING RELATIONSHIP BETWEEN TECHNOLOGY AND THE ORGANIZATION
Implementing information systems has consequences for task arrangements, structures, and people. According to this model, to implement change, all four components must be changed simultaneously.
Source: Leavitt (1965).
The internet and World Wide Web are increasing the accessibility, storage, and distribution of information and knowledge for organizations, dramatically lowering transaction and agency costs. Businesses are rapidly rebuilding some key business processes based on Internet technology.
To deliver genuine benefits, information systems must be built with a clear understanding of the organization in which they will be used, and consideration of the firm's environment, structure, culture, politics, organization and leadership, business processes, as well as the principle interest groups affected by the system.
External users demand information from the organisation inorder to make investment decisions.If the organisation is doing well it attracts more investors thus increasing the wealth of an organisation.
What is fundamental information system What is fundamental information system What is fundamental information system What is fundamental information system
It is called an accounting system.
There are following roles of Information system in Business environment: 1.) In the today's competitive world Information System in Business Environment Environment acts as goal oriented process. 2.) Information system acts as a big revolutionary change in Business Environment. 3.) Information system also play a very important role in decision making process.
Transaction processing systems help businesses charge customers. If a business doesn't have a proper system money can get missing from the organization.
The impact of management and information system on organizational performance
it tells the organisation and system statues, how they improve a organisation through MIS? and how much they earn it from the customer.
management information systems are systems that record transactions in an organisation and provide management with information to make decisions that affect the whole organisation whereas operation information system is the systems that help with daily running of an organisation.
Enumerate the impact of information system?
Management information system (MIS) is completely integrated with business today. Various business functions such as customer satisfaction, sales and marketing, IT operations, HR, operations management all benefit from MIS.
There are several computer application in management information system. These are application systems that aids the management in decision making. Example of which are: business intelligence system,...
An organisation operating in an open environment is constantly influenced by changes that affect the information produced by the information system. Therefore the information system needs to be replaced, because if it is not replaced that information contained will not be accurate. For example the typical changes that would influence the information produced by the information system in an environment are: * Technological changes * Business environment changes * Competition * Organisational growth * Changes in the activities of the business
These are both in charge of keeping information secure for a business. You need to have a reliable way to protect information from hackers and these systems of personnel can do that.
its where a certain information is been used by all department in the organisation
Management Information System is a type of Information System. It is used by middle management to keep taps on the activities of the organisation. It helps them in making informed decisions.
The CPA rules, the tax laws, and the rules set by company management and Board of Directors.
External users demand information from the organisation inorder to make investment decisions.If the organisation is doing well it attracts more investors thus increasing the wealth of an organisation.