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Unit 1: Management Information Systems

1.3.4 Five Levels of IT-induced Reconfiguration Notes

The figure below is a schematic representation of these five levels along two basic dimensions –
the degree of business transformation and the range of potential benefits from IT. Organizations
thereby proceed to higher levels of transformation as the demands of competition and value
creation for customer increases. The first two levels are evolutionary, requiring relatively
incremental changes in the existing organizational processes. In contrast, the other three levels are
conceptualized as revolutionary, requiring fundamental changes in the nature of business processes.

Figure 1.1: Levels of IT-induced Reconfiguration

These five levels are explained as following:

 Level 1: Localized Exploitation (Automation), which is concerned with the exploitation of
IT within business functions.

 Level 2: Internal Integration, a logical extension of the first in the sense that IT capabilities
are exploited in all the possible activities within the business process. Two types of
integration are critical here: technical integration and the organizational integration by
using common IT platform to integrate the organization’s business processes to enhance
efficiency and effectiveness.

 Level 3: Business Process Redesign, involving the reconfiguration of the business using IT
as a central lever.

 Level 4: Business Network Redesign concerned with the reconfiguration of the scope and
tasks of the business network involved in the creation and delivery of the products and
services.

 Level 5: Business Scope Redefinition concerned with the underlying principle of a
corporation, pertaining to the possibilities of enlarging the business mission and scope
(through related products and services) as well as shifting the business (through substitution
of traditional capabilities with IT-enabled skills).

Self Assessment

Fill in the blanks:

6. ............................................. can be defined as “The orchestrated redesign of the genetic
architecture of the corporation, achieved simultaneously – although at different speed –
along the four dimensions of reframing, restructuring, revitalization and renewal.”

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