It Impact on Organization

IT Impact on Organization

IT is a fundamental organizational component that affects the way managers design their organizations with a purpose to optimize performance on human resources, capital, physical assets and knowledge.

As far back as 1988, following up on the predictions by Peter Drucker, three Harvard professors researched information-strong companies and predicted what they believed companies in "the information age" would be like.

The original article:  Information Technology and Tomorrow's Managers,

http://hbr.org/1988/11/information-technology-and-tomorrows-manager/ar/1

They said:

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And, of course, they were RIGHT!

If IT is just added on, it won't be as effective as if it is included at the start as part of the physical design, coordination and control of the organization and all its interrelated processes, just like Accounting, Marketing and Production.

 Example:  An organization's structure usually reflects reporting relationships, the flow of information and decision making throughout the organization.  Structure affects Information Systems and Information Systems affect structure.

Common Structures: Hierarchical, Flat, Matrix, or Networked.

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Traditional hierarchical organizations require managers to tightly control operating processes.  In Hierarchies, information flows more down and up than across.  If IS was not included in the structure decisions, it is now required to find a way to get information from the top level management to the employees and from the employees, through several layers to the management.

In Flat structures, information flows more across, between the various units.

In Matrix structures information must flow in both directions at the same time.

Networked structures need information to flow between units.  Sometimes these units can become what is called "silos", each operating more or less as a fiefdom and actually preventing information (information is power) from escaping.  Information Systems can have a huge effect on Networked Organizations by helping the right information to flow in a timely fashion between the right people in the right units.

An article published in the Harvard Business Review describes this type of organization: “Rigid hierarchies are replaced by formal and informal communication networks that connect all parts of the company. . . .This type of organizational structure] is well known for its flexibility and adaptiveness and is particularly suited to dynamic, unstable environments."