4BIT7B3Information Management

Organisational change

Dr Magda Hercheui

Information systems

Information systems are more than computers

• In order to understand information systems, we need to understand the organization, its management and the adopted information technology.

Understanding organizations

• Information systems and organizations influence one another. Their interaction is meditated by many factors.

Technical microeconomic definition

• An organization is a stable, formal social structure that takes resources from the environment and processes them to produce outputs. It is a formal legal entity, with a collection of social elements which work as a machine.

Behavioral definition• An organization is a collection of rights, privileges,

obligations, and responsibilities that is balanced over time through conflict and conflict resolution. People make arrangements and have feelings which are not in formal rulebooks.

What is the difference between both perspectives?

• Technical approach: the firm is malleable, the focus should be only on how IS technically impacts inputs and outputs.

• Behavioral approach: IS affects the organizational balance of rights, privileges, obligations, responsibilities, and feelings.– Resistance to change– Support to training and learning– Timing consuming

Features of organisationsAspects to pay attention from the IS perspective

• Routines (rules to cope with expected situations) and business processes (how organizations organize and coordinate related activities to produce specific results).

• Organizational politics: political struggles for resources; which are the interest groups.

• Organizational culture: assumptions which define their goals and products; leadership styles.

• Organizational environment: interaction for receiving resources and delivering services and products.

• Organizational structure: the way communication and decision making is organized.

Leavitt’s Diamond - A model for change

Tasks and processes

PeopleTechnology

Organisational structure

Model draws upon Leavitt (1965)

CONTEXT

Contemporary business environment

• Dynamic changes in:– Markets: from local and national to global

marketplaces.

– The nature of the economic wealth: from the industrial to the knowledge economy.

– The organizational structure: from hierarchical to network organizations.

– The form of working: from offline to online interaction (the virtual firm).

Emergence of the global economy

• Economies depend more on imports and exports.

• Core business functions (design, manufacturing, finance, customer support) are distributed to many countries for cost effectiveness, demanding around the clock management.

• New threats to domestic business firms as customers my shop in a worldwide marketplace.

Transformation of industrial economies

• In industrial economies manufacturing is the largest sector and energy is the most important ingredient for the economy.

• In post-industrial economies: – Knowledge and information are key ingredients for

competitiveness;– Most people work in knowledge/information related

industries: education, health care, computer programming, banks, insurance;

– Even in manufacturing industries most jobs are white collar jobs.

Three states of development

1. Low levels status: growth determined by mobilization of primary production factors.

2. Middle-income status: economic growth achieved by importing global technologies into local production to integrate national economy into international production system.

3. High-income status: innovation-driven global competitiveness; requires high rates of social learning and rapid shift to new technologies.

Transformation of the enterpriseCoping with large amounts of information

• From a hierarchical, centralized, structured arrangement of specialists performing standard operational procedures to deliver mass-produced products and services…

• …To a flattened, decentralized, flexible (network) arrangement of generalists who rely on nearly instant information to deliver products and services uniquely suited to specific markets or customers.

IS and organizational structures

• The organizational structure should be designed to facilitate the communication and work processes in order to permit the accomplishment of goals.

• The structure should reflect the flow of communication and decision making, and the optimisation of processes.

Hierarchical organizations(stable and certain environments)

• The traditional organization has hierarchical structure: the unity of command is clear and when rules do not apply, workers turn to the hierarchy for decision making.

• Top management makes decisions in centralized fashion.

• Decisions are informed to other organizational levels.

• Information systems are important for:– Storing and communicating information– Supporting better information management

Matrix organizations (dynamic and uncertain environments)

• Works are assigned to two or more supervisors in order to integrate more dimensions of the business.

• Decisions are shared among different hierarchical levels and divisions, thus in a less centralized fashion.

• Matrix organizations are supposed to respond more quickly to changes in the environment (flexibility).

• Information systems are important for:– Allowing information sharing among different managerial

functions– Monitoring the environment thus improving decision making

Network organizations(more dynamic and uncertain environments)

• Organizations are organized around formal and informal communication networks that connects all parts of the company.

• Network structures foster creativity and flexibility, although keeping operational process control.

• Employees throughout the organization share knowledge and experiences and participate in decision making.

• Information systems are important for:– Processing timely and accurately data– Communicating– Coordinating across functional boundaries

Discernible trendsin organizational level

• There is not a prevalent organizational structure, and in practice these models may be present in different levels in the very same organization.

– Reducing the middle layers of the organizational pyramid (flattening hierarchies), as IT enables faster decision making and increase span of control

– The emergence of virtual corporations (alignment of different businesses under the same coordination); virtual organizations (work does not depend on the workplace); and virtual teams (geographically dispersed co-workers who aims to accomplish tasks)

Flattening OrganizationsFlattening Organizations

Discernible trends in the nature of work

• Workers are more productive, with broader capabilities

• New types of work emerge: programmers, analysts, IT managers and consultants

• Traditional jobs are substituted (automation) or changed (more information is available; more collaborative environments)

• Work processes are re-designed (new tools such as groupware and embedded ERP best practices)

• Work demands more abstract thought (cognitive change), more IT skills, more managerial skills (decision making)

• New forms of working: telecommuting, mobile work

The emerging digital firmFacing the dynamic environment

• Organizations adopt intensive use of IT and telecommunications for:– Improving communication and coordination of

global teams and processes.– Managing large amount of information and

knowledge.– Creating information and knowledge

(innovation).– Reducing transaction and coordination costs.

Becoming digital firmsInteresting examples

• Cisco Systems and Dell Computers: relevant proportion of their business relationship with customers, suppliers and employees is mediated by digital means.

• Accenture: information systems and businesses processes permit consultants to work from any location.

Cisco: changing organisational structures

• Cisco: network enterprise– A new business model integrating suppliers and customers in innovative

ways: 90% of sales are done through the system and outsourced;– Real time feedback between customers and production– Suppliers provide products directly to customers;– Customer and technical services are largely automate and online.

• Role of Cisco:– Intermediary of integrative process– R&D, quality control, brand name– Active acquisition polity– Integrating partners in the logic of the network organisation

• Market change:– The quick change in markets (demands) and in technological innovation

require flexibility to adapt to global markets. – The capacity to interact and deliver customised products globally

generates cost reduction, more quality and efficiency and more customer satisfaction.

(Castells, 2001)

Change management

• Change management is the process of developing a planned approach to change in an organisation.

• Typically the objective is to:• Maximise the collective efforts of all people

involved in the change;• Minimise the risk of failure in implementing

the change.

Changes imply gainers and losers

• Any organisation has many political structures of power, and change management affect these structures.

– Positive views: opportunity, progress, innovation, growth

– Negative views: instability, disturbance, unpredictability, threat, disorientation

Change management approaches• CI – Continuous Improvement, an

evolutionary approach– Improvement of that part of a process that falls within a particular

function. Focus on tasks rather than delays between steps. Little critical appraisal.

• BPR – business process re-engineering, a revolutionary approach– Rethinking and radical redesign of end to end processes,

considering time, cost, and perceived quality;– Ignores departmental boundaries and existing routines and

structures; may require involvement of business partners;– Often supported by implementation of IS and IT.

Schematic BPR

Vakola and Rezgui (2000)

Organizational Change Carries Organizational Change Carries Risks and RewardsRisks and Rewards

BPR: An example from the mortgage industry

• Home mortgage industry used IT to redesign mortgage application process

– BEFORE: 6- to 8-week process costing $3000– AFTER: 1-week process costing $1000– Replaced sequential tasks with “work cell” or

team approach• Work flow management: Process of

streamlining business procedures so documents can be moved easily and efficiently

• Large payoffs can result from redesigning business processes

Laudon and Laudon, 2010

Redesigning Mortgage Processing in Redesigning Mortgage Processing in the United States: before BPRthe United States: before BPR

Redesigning Mortgage Processing in Redesigning Mortgage Processing in the United States: after BPRthe United States: after BPR

Success factors for BPR

• Strategic alignment with company’s strategy– How the company may achieve its strategic goals through redesigning its

processes

• Project definition and drivers– All process aspects should be rethought under the new, appropriate scope– Use of modelling techniques

• Project Support– Understanding human and organisational aspects– Top management support (strong and consistent involvement throughout)– Full involvement of stakeholders, for building a coalition for change– Rollout by business benefit not engineering sequence (make change according

business benefits considering the new business design rather than just automating)

– Effective change management (address cultural transformation)– Choosing an appropriate team– Communicating clearly– Training staff (developing new skills)

Reacting to changeWho does benefit from changes?

• Change is a challenge to existing skills, technology, ways of working, relationships, and organisational culture.

• These challenges trigger resistance to changes. Some reasons behind resistance:– limited perspective or divergent perspective– lack of understanding and conflict with previous

schemas and skills– changes and threats to power structures– perception that costs outweighs benefits– fear of failure; inadequacy; losses of jobs

Systems from the enterprise perspective (more in lecture 8)

Alternative views on organisational change• Organisational change is not planned or punctual,

but emergent and continuous, as people interact with technology and processes in specific situations.

• Plans are models, route maps, but not something that can be enact as thought initially.

• Organisational change is not determined by technology implementation (technology per se does not bring change).

• Organisational change requires continuous management, often in the form of improvisations.

• Organisations adopt business models and structures that are legitimate in a given context and time (institutional approach).

Avgerou (2000), Ciborra and Associates (2000), DiMaggio and Powell (1991), andOrlikowski (1996)

System changeover approaches

• Direct cut-over: old system is cut and over written by new system. This is a least expensive method among all four but involves high risk of data loss and system failure.

• Parallel running: requires both old and new IS operate fully for a specified period-most costly changeover method. Data have to be input in both systems-increased workload and processing delays.

System changeover approaches• Phased introduction: implementation of new system in

modules or stages. It is a combination of direct cutover and parallel similar to pilot operation. But in this approach the entire system is provided to some users instead a part of system to all users. The risk of errors or failures is limited to the implemented module only and also phased operation is less expensive than the full parallel operation.

• Pilot introduction: involves implementing the complete new system at a selected location of the company. Pilot site assure the working of new system and reduces the risk of system failure. This is also less expensive than the parallel operation as only at one section both system works for limited period.

Questions on the first assignment?

References• Avgerou, C. and T. Cornford (1998). Developing Information Systems: Concepts, Issues and

Practice. Basingstoke, Macmillan.

• Avgerou, C. (2000). IT and Organizational Change: An Institutionalist Perpsective. Information Technology and People, 13 (4), pp. 234-262.

• Castells, M. (2001). The Internet Galaxy, Oxford, Oxford University Press.

• Ciborra, C. and Associates (2000) From Control to Drift. Oxford, Oxford University Press.

• Davenport, T. (1993). Process Innovation: Reengineering work through information technology. Harvard Business School Press, Boston.

• DiMaggio, P.J.; and Powell, W.W. (1991). The New Institutionalism in Organizational Analysis. Chicago; London: The University of Chicago Press.

• Hammer, M. (1990). Reengineering work: Don't automate, obliterate. Harvard Business Review July-August: 104-112.

• Hammer, M. and Champy, J. (1993). Reengineering the Corporation: A Manifesto for Business Revolution, Harper Business.

• Leavitt, H.J. (1965). Applying organisational change in industry; structural, technological and

• Humanistic approaches, in Handbook of Organisations, ed. L.G. March, Chicago, Rand McNally.

• Orlikowski, W.J. (1996). "Improvising organizational transformation over time: A situated change perspective," Information Systems Research 7(1): 63-92.

• Vakola, M. and Rezgui, Y. (2000). Critique of existing business process re-engineering methodologies: The development and implementation of a new methodology, Business Process Management Journal, Vol. 6(3): pp.238 – 250.

• Willcocks, L., Petherbridge, P., and Olson, N. (2002). Making IT count: strategy, delivery, infrastructure, Elsevier.