The Unintended Consequences of Implementing Information Technology.

Michael Sallada

May 15, 2012

Information Technology

Three Observations:1. Information Technology is ubiquitous in the

environment today2. IT is implemented to improve organizational

performance in some dimension3. Expected organizational improvement is

often not realized

Research Purpose

It is my observation that the hoped-for performance improvement is frequently not achieved, or it is accompanied with other unanticipated effects.

The purpose of this research is to search for an answer to the fundamental question; “Why does this happen?”

Literature Review Organizations Organizational Routines System Dynamics Communication/Coordination Goals and Performance Measures Information Technology

Beer Distribution Game

Game Play Research platform Information Sharing Game Modifications

Beer Distribution Game Board

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Big Bass Retail CustomerCa

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Experimental Results Summary

When preparing for this research it was assumed that the implementation of information technology would improve the performance of the teams.

Five hypotheses were designed to test this assumption.

Experimental Design Hypothesis 1 – the performance of the teams will improve

with the implementation of information technology Hypothesis 2 – Implementation of IT will reduce the bullwhip

effect Hypothesis 3 – subjects will no longer under weigh the supply

line with the implementation of information technology Hypothesis 4 – The estimated parameters of my trials without

IT will be comparable to Sterman’s parameter estimations. Hypothesis 5 – The estimated parameters of my trials with IT

will not be comparable to Sterman’s estimation.

Experimental Results Summary

The first hypothesis is that teams with IT would perform better was rejected. Teams that implemented information technology did not perform any better.

The second hypothesis, implementing information technology would reduce the bullwhip effect was accepted.

Experimental Results Summary The third hypothesis that teams with information

technology would not under-weigh the supply line, was rejected.

The fourth hypothesis essentially compared teams today with the trials done in the 1980s. It was accepted that my control group trials were similar to the trials from the 1980s.

I rejected the fifth hypothesis that said that my test group trials would not be similar to the earlier trials

Experimental Results Summary The results of the experiment did little to shed light

on the subject. Although there was some reduction in the bullwhip effect, there was no evidence of the clear performance improvement that had been expected.

Experimental Results Summary Despite the survey results, it appeared that players

continued to use the same ordering heuristics immediately after the implementation of information technology as they had used prior to the implementation.

Ah-ha !

The moment of discovery came when I understood that the change in the structure of the game was not accompanied by any attempt to align the behavior of the players with the new structure.

Back to the Literature

Alignment of behavior and structure Integration of IT• Technically• Organizationally

IT as an Organizational Change Agent Systems Dynamics TechnoChange Project Management

Misalignment is a Critical Factor

The relationship between the inert structure of the organization and the human elements,

The alignment of the organizational structures with mental models, which breathes life into the organization.

When the mental models are not aligned with the organizational structure there is a risk of failure in the implementation of information technology.

Conclusion One of the underlying causes of the unanticipated

effects of implementing information technology is the misalignment between the mental models of the people in the organization and the structure of the organization.

Implementation of new information technology alters the fundamental structure of the organization.

The performance of the organization is the result of the behavior of the people in the system acting within the structure of the system, changing the structure of the system will change the performance of the organization.

SO WHAT?