The Role Of Information Technology In Strategies For Organisational Improvement Original Source: Information technology (IT) increases a company's ability to use and communicate information. With this new ability organisations can better cope with uncertainty complexity, and coordination. Use of IT opens up a wider range of choices for organisational design; organisational process; and services; and human resources. To realize these benefits, planning for IT must follow a model of TOP integration, i.e. an integrated design of technological, organisational, and people systems. What is the role of information technology in today's business? Properly used, information technology can help an organisation achieve its fundamental, long-term goals. Proper use means a strategy which fits IT into context comprised of an organisation's business need, organisational structure, human resources and other technology. Why it is such a comprehensive strategy needed? Consider some reasons why achievement of long-term goals is difficult.
Underlying these difficulties are three general concepts: uncertainty, complexity, and coordination. The consequences of our actions are uncertain, our problems are complex, and it is hard to coordinate human, organisational, and technological resources. It is impossible to completely resolve all of these difficulties. Given that organisations are complex open systems which are sensitive both to internal perturbations and to their environment, uncertainty, will remain. Complexity exists because the factors which affect organisations are not only numerous, but also interact with each other in non-linear chaotic ways. Uncertainty and complexity combine to make perfect coordination impossible. Successful organisations differ from their competitors in their ability to approximate solutions to these intractable problems. That ability depends upon many factors, of which the wise use of IT is one. What does information technology contribute to today's business?IT creates an 'information infrastructure' for improved decision making. Although this statement seems obvious, it is worth considering what an information infrastructure is, and why it is so powerful. IT can supply four generic services-access to information, increased ability to manipulate information, increased ability to analyse information, and increased ability to communicate. The choices presented by these services, however, are profound and multitudinous. It is now possible to consider new ranges of decisions with regard to organisational design, organisational process, products and services, and a company's human resource structure. Organisational design: Information technology makes it possible, for the first time, to separate knowledge about an organisational activity from control over that activity. The decoupling of control from knowledge opens up new possibilities for organisational design. As an example, an insurance company I studied wished to provide more underwriting authority to its branches, thus making the company more responsive to its customers. This desire, however, conflicted with a perceived need to have new business carefully monitored at the central office. An automated information system allowed branches to make decisions, while still keep headquarters informed of new underwriting activity. IT gave the insurance company new choices for managing 'part-whole' relationships. IT also enables an organisation to exercise whatever tendencies it has toward centralisation or decentralisation. To extend the example proffered above, the insurance company could have used IT to control its branches even more tightly. Inasmuch as there was now a technology to provide quick communication, there was opportunity for even closer control over the activities of branches. As it turned out, the company already had a strong business interest in decentralisation, and the availability of appropriate IT allowed that change to take place. IT can also support organisational structures whose success depends upon a rich base of information. One example is the matrixed organisation - a form which systematically crosses' professional functions with sets of specific projects. In such settings each individual is responsible to a set of supervisors-one for each technical project, and one representing his technical discipline. Such settings complicate tasks such as allocating work performance appraisal, and professional development. IT also supports organisational designs which require interaction among remote locations, as when corporate headquarters is geographically distanced from business units. In both of the examples given the possibility, desirability, and effectiveness of particular organisational designs may be highly dependent upon an organisation's IT infrastructure. Organsational process As with organisational design, IT provides managers with a host of new choices with regard to organisational process. One set of choices regards efforts to coordinate diverse activities. 'Coordination' is a goal which is often pursued without due scrutiny of its consequences. Duplication of resource expenditure is undesirable. Ill-formed plans are undesirable. Having different parts of an organisaton work at cross purposes is undesirable. Incompatible technologies within an organisation are undesirable. Coordination seems to ameliorate all of these problems. Consider, though, some of the serious problems posed by coordination.
IT provides a means of achieving higher levels of coordination with less cost. As an example, information systems might simultaneously allow more freedom of activity while retaining important coordination. This becomes possible because information systems make it possible to manage by exception. With the right systems, the right algorithms, and good networking, management can make sure it does not 'over coordinate' while still assuring synchronised activities in critical areas. IT also contributes to increased choice in organisational process by providing information to assist the inevitably tedious process of consensus building. Information alone cannot resolve disagreements which are founded on conflicting goals or deep personal beliefs. But information can inform those debates and if properly used, speed the consensus-building process. Properly designed internal information systems can provide ad hoc information about the performance and history of different parts of an organisation. External databases can supply information on new technologies, markets, regulatory issues and a host of other factors which may influence a planning process. Finally, IT provides information for decision making throughout a company. Coupled with an organisation wide consensus on goals, coordination efforts be distributed rather than centralised within a company. As a result, IT opens a new universe of approaches to coordination. Thus, IT can both lower the costs of planning and coordination, and increase the possible range and accuracy of such activity. This increases the capacity of an organisation to plan and coordinate in ways that are useful and productive. In addition to planning and coordination, IT affects the structure of work within an organisation. One good example is cooperative work-a situation wherein multiple, perhaps geographically dispersed groups, work on a single project. IT also helps extend cooperative work to true concurrent engineering, a process which requires high levels of communication and cooperation between product designers, manufacturing engineers, and marketing groups. While concurrent engineering is theoretically possible without a good IT infrastructure, such technology makes contain concurrent engineering easier, more productive, and more feasible over wide areas of an organisation. Finally, IT profoundly impacts how a company interacts with its suppliers. This is particularly true in manufacturing, where a combination of manufacturing resource planning software and electronic communication with suppliers can fuel a change to just-in-time inventory control. Such a change affects not only inventory costs, but also business relations with suppliers and the entire manufacturing process, whose sub-parts will become much more tightly linked than they are when inventory of stock is large. Products and services: Just as IT affects relations with suppliers, it also affects relations with customers. It has now become almost commonplace for a business to 'bind' its customers by giving them access to electronic order capability and to databases which track manufacturing and delivery schedules. IT also affects an organisation's ability to shorten lead time for the delivery of products or services. Time savings accrue from improved internal communication, and from the automation of office, manufacturing, and design processes. The advantages here go beyond pleasing a set of customers who will now receive orders on time. Shortened lead times allow businesses to charge a premium for quick delivery, and to go after business that requires faster delivery than could previously be attained. IT may allow a company to develop new products or services to meet changing consumer demands. As an example of how powerful this capacity can be, recall that neither money management accounts, nor the overnight package delivery business, could exist without a foundation of powerful and reliable IT. Whether the product is a better mileage engine or a new financial instrument, being first to market can often provide a valuable competitive advantage. IT can also allow a company to produce a greater variety of products and services. Proper expert systems can allow a consulting company to provide a greater range of service with a fixed of personnel. Fast, custom designs can emerge from automated design groups. Manufacturers can produce in smaller batch sizes. Insurance companies can tailor policies. These new products and services highlight an important trend. Products and services in the modern economy are steadily becoming more 'information rich' as the amount of information embedded in them increases. This trend is evident in consumer products which contain embedded software; in 'smart houses' whose systems adjust to the needs of residents; in financial instruments which are defined by a database of complex calculations; by overnight delivery services; and by a host of other products and services. The implication of this trend is that the success of any enterprise will increasingly depend upon its ability to understand, manipulate and use information. Human resources: Businesses are facing serious challenges with regard to recruiting, training and deploying personnel. The availability of a trained workforce is threatened. The ethnic, cultural and linguistic diversity of the US workforce is increasing. The skill and knowledge of experienced personnel is becoming more critical as work becomes more complex. The pace of change makes it unrealistic to expect that employees' skills will remain current for long periods of time. These factors will require US companies to make difficult decisions about a set of important issues. Can alternative forms of work be accommodated - part time, flex time, and remote (through 'telecommuting')? To what extent should some parts of the workforce be 'deskilled', while others are 'superskilled'? How can expertise and knowledge be embedded in tools and archives, thus reducing reliance on the personal experience of people who may leave a company? As with other critical issues, IT offers help. Expert systems, hypermedia, and improved access to databases may soften reliance on individuals. Communication networks increase the feasibility of alternate forms of work. Computer assisted training makes it possible to accommodate intense training needs. How can the potential of information technology be realized?It is one thing to praise IT as a way of providing meaningful choices. It is quite something else to press IT into service in pursuit of those choices. I believe that a practical method of doing so requires an understanding of TOP integration, i.e. of the relationships among technology, organisation, and people. This perspective derives from the general framework of socio-technical systems, and from specific work we have been doing at the Industrial Technology Institute. What are the fundamental TOP elements for IT? Technology refers to hardware, software, networking capability, and data bases. For instance, a company with poor networking, inflexible databases, and inadequate database interface capability will have a hard time instituting direct data exchange with suppliers and customers. A company without the applications necessary to perform ad hoc analyses with large databases will find it difficult to use its information systems to improve planning. Technology, however, is not all. Consider two companies with excellent technological infrastructures, but who differ radically with respect to the organisation of their computing systems. Imagine the range of answers which each of our hypothetical companies might give to the following questions.
I contend that despite equivalent technologies, these companies will find very different opportunities to use IT to improve planning and management. Just as the same technology may have differential impact in different organsational settings, so too may its impact depend upon the human resource context in which that technology operates. Again, contrast two organisations with the same IT, but with different answers to the following questions.
Understanding the importance of TOP integration is one step toward realising the potential of IT. The next step is an appreciation of the benefits which can be derived. Many specific examples of those benefits have been woven into the discussion so far. It is now time to impose a structure on those varied benefits. Three dimensions seem useful - time horizon, quantifiability, and continuity. Time horizon refers to how long it takes for benefits to become manifest. For reasons of cost justification, employee motivation, and the tracking of progress, any change in the TOP- integrative use of IT must deliberately include short and intermediate term changes. Quantfiability refers to the ease of measuring benefits. In this regard it is important to realise that the most important changes might be the most difficult to assess. A change in clerical costs as a function of IT may be easy to measure, but unimportant in the greater scheme of things. Contrast those clerical savings with the value of giving all of a company's middle managers the opportunity to track budgets with spreadsheets. What is the aggregate value to an organisation of better budget management throughout its middle management corps? Intuitively, the value seems considerable. Documenting that value, however, would be extremely difficult. Therefore, justification of IT cannot not be made solely in terms of easily measured impact. Either some leap of faith, or a serious evaluation effort, or a change in cost accounting procedures, is required. When this reality is not firmly rooted in the beliefs of top-level managers, efforts to effect fundamental changes in IT use are likely to be derailed in mid-stream. Questions of pay back will (and should) arise. Absent agreement on acceptable definitions of benefit, and without agreed upon metrics for change, long term planned change cannot be effected. Continuity refers to the fact that some impact of IT is gradual, while some is rapid and unanticipated. To build on the spreadsheet example given earlier, consider what changes may result. One possibility is that as people will learn to manage budgets more closely, there is a continual decrease in cost over-runs and a continual improvement in finishing projects on time. While these events are occurring, one manager may take it upon herself to perform an analysis that will save the company millions. These events are binary -- either they occur or they do not. At best one can track the probability of such events, but one cannot plan for them as one would plan for a gradual improvement in cost control. A major problem for advocates of IT is that much of the payoff may come precisely from these discrete events. As with the problem of quantifiability, planners must appreciate the unpredictable nature of benefits, and agree on the value of increasing the likelihood of those benefits. Given an appreciation of the importance of TOP integration and the value of changes which IT can effect, the next step is to develop a migration path. As with any deep organisational change, that migration must be characterised by wide consensus on a vision for the future; support from upper management; commitment from skilled and energetic 'innovation champions'; input from all relevant parties; and a coordinating function that recognises the importance of striking a balance between company-wide standards, and the need for local variation. At this point my argument comes full circle. At the beginmng of this report I claimed that IT cannot by itself solve problems. The TOP integration view now reverses that logic. Deep IT change cannot take place without associated changes in the organisation. There is a promise implied in an integrated TOP change, and that promise involves far more than the efficient implementation of new machines. One cannot, for example, give people the data and technology to make decisions, and then expect them not to decide. Thus TOP oriented change implies a willingness to embrace the organisational and people related consequences which underlie the effective use of technology. There is an implied unitary nature in the above argument that I do not intend. It is true that critical elements are inter-connected, and that a long-range coordinated view is needed. It is also true, however, that incremental change is possible and desirable. The challenge is to plan a process in which each stage builds on what has gone before, and which at each stage, accomplishes useful and rewarding objectives. The key to accomplishing useful and rewarding objectives is to extend the TOP integration perspective to the actual design of planned organisational change. Just as an overall change works best with TOP integration, so too will the accomplishment of intermediate objectives. This point is best illustrated by example. Imagine an organisation confronted with the question of how to deploy a new IT infrastructure which is characterised by high power personal computers, rich networking powerful end-user applications, and access to centralised databases. Assuming that all cannot be done at once, which of the following choices is preferable?
TOP considerations can help discern the proper choice. In terms of the organisation are there business reasons to quickly give a small number of people access to more data and better intercommunication? Is there an imperative to move discrete groups within the organisation into a 'cooperative work' mode? An affirmative answer to these questions argues in favour of developing network and access capabilities first, and then carefully choosing which end-users receive priority for obtaining new computers. This logic can be extended to issues of training. Giving new computers to many users at once is useful only if those users already know how to exploit the new technology, or large numbers of users can be quickly trained. Training considerations alone may dictate an implementation strategy. They may also interact with organisational considerations. If much training is needed and the quick realisation of cooperative work is desired, there is powerful motivation to network first. So doing will provide time to train particular individuals, and insure that cooperative work could begin as soon as the technology becomes operational. Despite the changing specifics of each situation, the principle remains the same. Satisfying and practical migration strategies can be developed by using a TOP integration perspective not only overall goals, but on intermediate objectives as well. ReferencesBurk, C. and Horton, F. (1988) InfoMap. Prentice Hall, Englewood Cliffs NJ An overview of recent trend towards formation resource management. Fleischer, M and Morell, JA. (1991) 'The impact of computer systems: Revolution incremental change'? in J. Morell, and M. Fleischer, (eds), Advances in the implementation and Impact of Computer Systems, vol. 1, Greenwich, CT JAI Press. Katz, D. and Kahn, R. (1978) The Social Psychology of Organizations, 7th ed John Wiley and Sons, NY. Mason, R.0 and Mitroff, 11. (1981) Challenging strategic Planning Assumptions: Cases and Techniques, John Wiley and Sons NY. Mohrman, A. et al (1989) Large-scale Organizational Change, Jossey Bass, San Francisco. Morell, J.A. and Sutherland, D. (1990) Managerial Employment and Information Technology: An Exploration of Organisational Dynamics Office Systems Research Association Journal, Spring, pp. IS-25. Pasmore, W.A. and Sherwood, JJ (1978) Soeiotechnical Systems: A Sourcebook, San Diego CA, University Associates. Many people contributed valuable comments to this article. I would like to thank Prisalla Fowler, Jeff Liker, Bill McUmber, Richard Niemec, Marge Pacer and Mel Pirtle. |