System-Development-and-Organizational-Change.pptx

System Development and Organizational Change

In today’s competitive and technology-driven business environment, organizations constantly adapt their systems and processes to remain efficient, productive, and customer-centric. Every time an organization introduces a new information system—whether it is a new software platform, an automated workflow, or an analytics tool—it is not merely installing a technology; it is undergoing a process of planned organizational change. The concept of System Development and Organizational Change represents the interrelationship between technological advancement and organizational transformation. Building an information system is never limited to hardware and software implementation; it fundamentally affects people, processes, and organizational culture. Hence, understanding how systems are developed and how they influence change becomes essential for managers and decision-makers in all sectors.

System development is a structured process through which organizations plan, design, build, test, and deploy information systems that support business operations and strategic goals. It involves several stages, including problem identification, analysis, design, implementation, and maintenance. However, beyond the technical aspect, system development also induces change in job roles, workflows, and management practices. When a new information system is introduced, employees must learn new ways of working, departments must coordinate differently, and management must redefine responsibilities and decision-making structures. Thus, every system development project has a social, behavioral, and organizational dimension that must be managed carefully to ensure successful adoption.

Building a new information system can bring about different degrees of organizational change—ranging from minor process improvements to complete restructuring of business models. Information technology (IT) acts as a catalyst for such transformation by introducing automation, improving efficiency, and enabling new forms of communication and control. According to management scholars, there are four types of structural changes that IT can enable within an organization: Automation, Rationalization, Business Process Redesign, and Paradigm Shifts. These represent increasing levels of change, from incremental to transformational.

The first and most basic level of IT-enabled change is Automation. Automation involves using technology to perform tasks that were previously carried out manually. Its primary goal is to increase efficiency, speed, and accuracy in routine operations. Early examples of automation include computerized payroll systems, inventory management systems, and airline reservation systems. For instance, banks automated their deposit and withdrawal records to give tellers instant access to customer information, which reduced errors and waiting time.

1. System Development and Organizational Change Building new information systems produces fundamental organizational change. It's more than hardware and software—it's a transformation of jobs, skills, management structures, and organizational culture. Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS

2. Building a new information system in an organization primarily results in: Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS A. Only a change in technology B. Only an increase in costs C. Planned organizational change involving people, processes, and technology D. A temporary improvement with no structural impact Building an IS involves not just hardware/software but also changes in jobs, skills, and management processes.

3. The Redesign Reality When We Build New Systems, We Redesign Organizations Information technology enables varying degrees of organizational change, from incremental improvements to complete transformation. The introduction of a new system touches every aspect of operations. Understanding these change patterns helps managers anticipate challenges and plan effective implementations.

4. Four Levels of IT-Enabled Change Information technology can drive organizational change at different scales and intensities. Each level requires different strategies, resources, and management approaches. Automation Making existing processes faster and more efficient through technology—the foundation of IT change. Rationalization Streamlining procedures by eliminating bottlenecks and simplifying workflows revealed by automation. Business Process Redesign Fundamentally rethinking and restructuring core business processes for dramatic improvements. Paradigm Shifts Completely transforming the nature of the business and organization—the most radical change.

5. Level 1: Automation The Foundation Automation is the most common form of IT-enabled change. It helps employees perform tasks more efficiently and effectively without fundamentally changing processes. Classic Examples Automated payroll calculation and paycheck generation Instant access to customer deposit records for bank tellers Nationwide airline reservation networks for ticket agents Inventory tracking systems replacing manual counts While powerful, automation often reveals inefficiencies in existing processes, setting the stage for deeper change.

6. Which of the following best represents an example of automation in an organization? Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS A. Redesigning the organizational structure B. Using a computer to generate employee payroll slips C. Merging two departments for efficiency D. Adopting a new company mission statement Automation means performing existing tasks faster and more accurately through technology.

7. Level 2: Rationalization of Procedures Streamlining Operations Rationalization follows automation by simplifying and standardizing procedures that technology has revealed as cumbersome or inefficient. Continuous Improvement Often implemented through Total Quality Management (TQM) and Six Sigma programs focused on systematic quality enhancement. Real-World Impact: CIMB Bank CIMB Bank's retail banking system succeeded not just through technology, but by simultaneously simplifying the business process for opening customer accounts. The combination of automation and rationalization created exponential improvements in speed and accuracy.

8. Quality Management Approaches Total Quality Management (TQM) TQM makes quality achievement the responsibility of all people and functions within an organization. Developed by American experts like W. Edwards Deming and Joseph Juran, it was popularized by Japanese manufacturing. Quality as an organizational goal Continuous process improvement Cross-functional responsibility Six Sigma Six Sigma represents a specific quality measure: 3.4 defects per million opportunities. While few companies achieve this level, it serves as a benchmark for driving quality improvement programs. Data-driven decision making Measurable quality standards Systematic defect reduction

9. Level 3: Business Process Redesign Business processes are analyzed, simplified, and redesigned—reorganizing workflows, combining steps to cut waste, and eliminating repetitive, paper-intensive tasks. The Transformation Unlike rationalization, redesign requires a completely new vision of process organization. It's ambitious, sometimes eliminating jobs while creating dramatic efficiency gains. Key Characteristics Fundamental rethinking of workflows Combining multiple steps into streamlined processes Eliminating waste and redundancy May involve workforce restructuring Focuses on specific business areas

10. Level 4: Paradigm Shifts—The Ultimate Transformation Rethinking Everything Paradigm shifts involve fundamentally rethinking the nature of the business and the organization itself. New information systems transform how organizations conduct business or even redefine what business they're in. The Challenge Paradigm shifts and reengineering often fail because orchestrating extensive organizational change is exceptionally difficult. Success requires leadership commitment, cultural transformation, and sustained effort across all organizational levels. Critical Insight: While automation and rationalization affect specific processes, paradigm shifts transform the entire organizational design and business model—making them the most powerful but riskiest change initiatives.

11. SmartShop Retailers: The Road to Digital Transformation Background and Context SmartShop Retailers is a growing chain of departmental stores headquartered in Hyderabad, Telangana, employing around 150 staff across five outlets. The business had earned customer trust through competitive pricing and friendly service, yet it was struggling to maintain consistency across stores.   Operations were largely manual — cashiers issued hand-written bills, daily sales reports were compiled in ledgers, and stock counts were done physically every evening. With rising competition from Reliance Smart and Big Bazaar, SmartShop’s management realized that their information flow lagged behind market speed.   The Managing Director, Mr. Rahul Mehta, a commerce graduate with 20 years of retail experience, decided to modernize operations. He believed that building a new Information System would not only improve efficiency but also transform how the company worked.   The project, named Project SMART, was planned in four stages, reflecting the degrees of organizational change brought by information systems. Case Study – 1: System Development and Organizational Change

12. SmartShop Retailers: The Road to Digital Transformation Stages of Building Information Systems in a Business Case Study – 1: System Development and Organizational Change

13. SmartShop Retailers: The Road to Digital Transformation Stage 1: Automation — Making Work Faster 1. The first step was to computerize billing and cash management. Each store installed a Point-of-Sale (POS) terminal with barcode scanners and receipt printers. 2. Cashiers, who earlier wrote paper bills, now entered item codes, and the system automatically calculated totals, taxes, and discounts. 3. “At first, I was nervous,” said Kavitha , a cashier. “But once I learned the system, billing became easier and I made fewer mistakes.” 4. The new system reduced checkout times by 40 percent and eliminated pricing errors. Customers appreciated the quick service. Type of Change: Automation — existing tasks were performed faster and more accurately using technology. Case Study – 1: System Development and Organizational Change

14. SmartShop Retailers: The Road to Digital Transformation Stage 2: Rationalization — Streamlining the Routine 1. Automation revealed inefficiencies in inventory updating. Store staff still noted stock levels on paper and phoned head office for replenishment. 2. To fix this, SmartShop integrated billing data with inventory records, ensuring that every sale automatically reduced item quantities in the database. Managers could instantly see which products were running low. 3. The management also introduced Total Quality Management (TQM) principles to encourage employees to suggest further improvements. 4. “Before, we guessed what to order,” said Store Manager Suresh. “Now we have numbers. No more over-stock or shortages.” Type of Change: Rationalization — standard operating procedures were simplified and improved for better control and quality. Case Study – 1: System Development and Organizational Change

15. SmartShop Retailers: The Road to Digital Transformation Stage 3: Business Process Redesign — Rethinking Workflows 1. Encouraged by results, Mr. Mehta expanded Project SMART. The procurement process, previously handled manually by branch managers, was re-engineered. 2. Now, the system automatically generated purchase orders whenever stock dropped below reorder levels, routing them to approved suppliers. The accounts team could track supplier performance, delivery times, and payment schedules through system dashboards. 3. The workflow was reorganized, combining several approval steps into one electronic process. Some redundant clerical positions were re-assigned to customer-service roles. Type of Change: Business Process Redesign — workflows were analyzed, simplified, and reorganized to eliminate waste and speed up decision-making. Case Study – 1: System Development and Organizational Change

16. SmartShop Retailers: The Road to Digital Transformation Stage 4: Paradigm Shift — Reinventing the Business 1. Two years later, SmartShop took a bold step — launching SmartShop Online, an e-commerce portal integrated with its in-store database. Customers could browse products, place orders, and select home delivery or store pickup. 2. The organization redefined its business identity from a local retail chain to a phygital (physical + digital) retailer. Departments were restructured, new digital marketing roles were created, and logistics partnerships were formed. 3. “We are no longer just a store,” said Mr. Mehta proudly. “We are a service platform connecting customers anytime, anywhere.” Type of Change: Paradigm Shift — a radical rethinking of the business model and organizational structure. Case Study – 1: System Development and Organizational Change

17. SmartShop Retailers: The Road to Digital Transformation Outcome Within three years, SmartShop saw: • 25 % increase in sales • 40 % faster stock turnaround • Improved customer retention • Employees more skilled in data-based decision-making However, the journey wasn’t smooth. Some staff resisted change, fearing job loss or skill mismatch. Training programs and open communication helped ease the transition. Ultimately, SmartShop proved that building a new information system is not merely technical—it is a process of planned organizational change. Case Study – 1: System Development and Organizational Change

18. In the SmartShop Retailers case, when the billing data was automatically linked to inventory updates, this change represents: Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS A. Automation B. Rationalization of procedures C. Paradigm shift D. Business process redesign Linking billing with inventory is a process streamlining activity — a rationalization step for efficiency. Case Study – 1: System Development and Organizational Change

19. Business Process Redesign (BPR) focuses on: Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS A. Eliminating entire departments C. Fundamentally rethinking and restructuring workflows B. Making minor adjustments to existing procedures D. Creating new job titles BPR involves analyzing and reorganizing processes to eliminate inefficiencies and duplication. Case Study – 1: System Development and Organizational Change

20. A paradigm shift in an organization means: Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS A. Using IT to make routine work faster C. A complete rethinking of how the business operates B. Small improvements to ongoing tasks D. Adding more employees to handle workload A paradigm shift is a radical, transformative change in the business model and organizational vision. Case Study – 1: System Development and Organizational Change

21. Which of the following sequences correctly represents the progression of IT-enabled organizational change? Management Information Systems UNIT – IV. BUILDING OF INFORMATION SYSTEMS A. Redesign → Rationalization → Automation → Paradigm Shift B. Rationalization → Paradigm Shift → Automation → Redesign D . Automation → Rationalization → Business Process Redesign → Paradigm Shift C . Automation → Redesign → Rationalization → Paradigm Shift This sequence shows increasing depth of organizational transformation as IT matures. Case Study – 1: System Development and Organizational Change