Firm Business and Organizational Design

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Firm Business and Organizational Design

Firm  Business and Organizational Design

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Successful firms have an overriding business strategy that drives both organizational strategy and IS strat- egy. The decisions made regarding the structure, hiring practices, vendor policies, and other components of the organizational design, as well as decisions regarding applications, hardware, and other IS components, are all driven by the firm’s business objectives, strategies, and tactics. Successful firms carefully balance these three strategies—they purposely design their organization and their IS strategies to complement their business strategy.

2. IS strategy can itself affect and is affected by changes in a firm’s business and organizational design. To perpetuate the balance needed for successful operation, changes in the IS strategy must be accompanied by changes in the organizational strategy and must accommodate the overall business strategy. If a firm designs its business strategy to use IS to gain strategic advantage, the leadership position in IS can be sustained only by constant innovation. The business, IS, and organizational strategies must constantly be adjusted.

IS strategy always involves consequences—intended or not—within business and organizational strategies. Avoiding harmful unintended consequences means remembering to consider business and organizational strategies when designing IS implementation. For example, deploying tablets to employees without an accompanying set of changes to job expectations, process design, compensation plans, and business tac- tics will fail to achieve expected productivity improvements. Success can be achieved only by specifically designing all three components of the strategy triangle so they properly complement each other.

Business Strategy

Organizational Strategy Information Strategy

FIGURE 1.1 The Information Systems Strategy Triangle.

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19Brief Overview of Business Strategy Frameworks

Before the changes at Kaiser Permanente, incentives for doctors were misaligned with the goals of better health care. Its IS Strategy Triangle was out of alignment at that time. Its organizational strategy (e.g., a “fix‐me” system) was not supported by the IS strategy (e.g., tracking and reporting billable procedures).

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