Chapter 2 IT Drivers and Supporters This chapter provides a perspective of why technology has a unique effect on corporate performance. Specifically, if we look at information technology (IT) from a layperson's point of view, we might better understand how to make technology a more integral part of strategic and competitive advantage. More important is to provide a template for how organizations respond to the generic catalysts for change brought on by technological innovations. Furthermore, how do we objectively view the role of technology in this context, and how should organizations adjust to its short- and long-term impacts? Drivers and Supporters According to Langer, there are essentially two types of generic functions performed by departments in organizations: driver functions and supporter functions.1 These functions relate to the essential behavior and nature of what a department contributes to the goals of the organization. Drivers are defined as those units that engage in direct revenue or frontline generating activities. Supporters are units that do not generate obvious direct revenues but rather are focused on the support of front-line activities. Examples of support functions are operations such as internal accounting, purchasing, or office management. Support departments, due to their very nature, are evaluated on their effectiveness and efficiency or economies of scale. In contrast, driver organizations are expected to generate direct or indirect revenues for the firm. Drivers are also expected to take more risks—since they must inevitably generate returns for the business. As such, drivers engage in what Bradley and Nolan coined “sense and respond” behaviors and activities.2 Let me explain. Marketing departments often generate new business by investing or “sensing” an opportunity, quickly—because of competitive forces in the marketplace. As a result they must sense an opportunity and be allowed to respond to it timely. Furthermore, the process of sensing opportunity and responding with competitive products or services is a cycle undergoing more and more scrutiny—simply put there is less time to respond. Thus, failures in the cycles of sense and respond are expected. Langer's analogy of the launching of new fall television shows is an example. Each of the major stations goes through a process of “sensing” what shows might be interesting to the viewing audience.3 They “respond” after research and review with a number of new shows. Inevitably, only a few of these selected shows are actually successful; some fail almost immediately. While relatively few shows succeed, the process is acceptable and is seen by management as the consequence of an appropriate set of steps for competing effectively—even though the percentage of successful new shows is very low. Therefore, it is required that today's driver organizations are expected to engage in high-risk oriented operations, of which many will fail for the sake of creating ultimately successful products or services. The preceding example raises two questions: (1) how does “sense and respond” relate to the world of information technology, and (2) why is it important? Information technology is unique in that it is both a driver and a supporter, the latter being the generally accepted norm in most firms. Indeed, many IT functions are established to support a myriad of internal functions such as: • • • • • Accounting and finance Data-center infrastructure (e-mail, desktop, etc.) Enterprise level application Customer support Web and e-commerce activities As one would expect, the previous IT functions are typically viewed as overhead, as a commodity, and thus constantly managed on an economyof-scale basis—that is, how can we make this operation more efficient, with a particular focus on cost containment? So what then are IT driver functions? By definition they are those that engage in direct revenues and identifiable return on investment (ROI). How do we define such functions in IT, as most activities are sheltered under the umbrella of marketing organization domains? (Excluding, of course, software application development firms that engage in marketing for their actual application products.) Langer defines IT driver functions as those projects that if delivered would change the relationship between the organization and its customers, that is, those activities that directly affect the classic definition of a market: forces of supply and demand, which are governed by the customer (demand) and the vendor (supplier) relationship.4 Langer repeatedly uses the Santander v. Citibank case as an example. Santander Bank, the major bank of Spain, had enjoyed a dominant market share in its home country. Citibank had attempted for years to penetrate Santander's dominance using traditional approaches (opening more branch offices, marketing, etc.) without success until, that is, they tried online banking. Using technology as a driver, Citibank made significant penetration into Santander's market share because it changed the customer-vendor relationship. Online banking, in general, has had a significant impact on how the banking industry has established new markets by changing this relationship. What is also interesting about this case is the way in which Citibank has accounted for its investment in online banking: It knows very little about its total investment, and essentially does not care about its direct payback. Rather, Citibank sees its ROI in a similar way that depicts driver/marketing behavior: The payback is seen in broader terms to affect not only revenue generation but also customer support and quality recognition. Yet another example is Dana Deasy, when he was chief information officer (CIO) of the Americas for Siemens. At Siemens, Deasy was responsible for more than CIOs across separate and discrete businesses. His role was to promote e-business strategy. Essentially, the CIOs were challenged with the responsibility of rebranding their assets into clusters based on their generic business areas like hospitals, medical, and communications. The essence of this strategic driver was to use e-business strategy to provide multiple offerings to the same Siemens customer base. Deasy engaged in an initiative to communicate with non-IT executives by using a process called storyboarding. Storyboarding is the process of creating prototypes that allow users to actually see an example of how the technology will look and operate. Storyboarding tells a story and can quickly educate executives without being intimidating. Deasy was able to establish a unique life cycle for IT projects by creating excitement through animation—for example, what would Siemens be like if…? He also was able to implement considerations about how IT as a business driver would be consistent with what the business was trying to accomplish. The concept resulted in a process where IT projects were reviewed every 90 days by an advisory board after products had experimental use with customers. We see in this example that the biggest challenge is not necessarily keeping up with new technologies, but rather how technologies can be tested to determine exactly how they might impact the business. In order to address this dilemma, Deasy established the concept of “revalidation.” Specifically, approved technology projects were reviewed every 90 days to determine whether they were indeed providing the planned outcomes, whether new outcomes needed to be established, or whether the technology was no longer useful. The concept of revalidation is an example of a “driver” technology that required a different method of evaluation. Specifically, it required that IT be given the ability to invest and experiment with technology in order to fully maximize the evaluation of the product to the business. This gave Deasy a way to evolve the culture at Siemens, that is, for management to recognize that not all approved technologies succeed. He also dramatically altered the ways in which software applications were to be evaluated by executive management. After the technology is absorbed into operations, executives will seek to maximize the benefit by increased efficiency and effectiveness. Certain product enhancements may be pursued during this cycle; they can create “mini loops” of driver to supporter activities. Ultimately a technology, viewed in terms of its economies of scale and longevity is considered for replacement or outsourcing. Figure 2.1 graphically shows the cycle. Figure 2.1 Driver to Supporter Life Cycle The final stage of maturity of technology driver, therefore, is becoming a supporter, at which time it behaves as a commodity, meaning that it likely can be replaced or outsourced. Subsequent cases in this book explore methods that can be used to address many of the issues and challenges brought forth in this chapter. The concept of a driver becoming a supporter is analogous to the theory of an “S”-curve. According to Wideman, the Scurve is defined as “a display of cumulative costs, labour hours or other quantities plotted against time. The name derives from the S-like shape of the curve, flatter at the beginning and end and steeper in the middle, which is typical of most projects. The beginning represents a slow, deliberate but accelerating start, while the end represents a deceleration as the work runs out.”5 Such is the case with drivers and supporters. All initial IT projects should start as a driver and accelerate slowly up the S-curve. During this cycle, markets are evolving and very uncertain or what Eisenhardt and Bourgeois coined as “high-velocity environments.”6 As a result of market uncertainty, IT requirements will evolve and thus CIOs need to continually react to changes in consumer preferences. This is where the IT “failure rate” needs to be established. However, like all true S curves, eventually the market will mature and products will become generic and sensitive to price. The commoditization of the product is inevitable, the question is when? Thus, CIOs must be students of the S-curve—always thinking about where a product or service exists along the curve and how it affects the measurement of the IT organization. Drivers: A Closer Look from the CIO CIOs must step up to the challenge by putting this reality into perspective with their executive peers in the C-suite. Conversations about technology driver opportunities should never contain any technical jargon—it's communicating IT from a business perspective. While many CIOs admit this, not enough really practice how to articulate why IT is complex—or is it? CIOs need to convey the essence that IT drivers must be more daring and engage in higher-risk oriented operations if they are to bring true value to the business. If you can get the business to understand that many aspects of IT are drivers, then the business can accept that there will be failure rates and changes needed along the way—especially given that the market is immature and changes are the norm. Think about this: If a baseball player gets a hit one out of three bats, he will bat 300 and make the Hall of Fame. What then should be the batting average for driver IT projects? The CIO must define this in context of the business. So if you have an IT project and everyone understands that it is a driver, then the business cannot know what the overall costs might be—budgets likely mean little—yet so many projects fall into a trap in volatile markets. Supporters: Managing with Efficiency Supporter functions, as we defined, are units that do not generate obvious direct revenues, but rather, are designed to support front-line activities. Supporters must live and die on their efficiency and should never fail to provide service. So if you are implementing a supporter project, costs must be low, performance must be high, and failure rate nonexistent. An example of a supporter is e-mail—it better not fail. CIOs need to be careful, though; we do not suggest the supporters are not important. Being on the driver side has lots of glamour, but make no mistake, if the supporter functions are not working, a CIO will have a short life! Another way of saying this is that the lights need to be kept on, and don't underestimate the importance of the supporter side of the business. Unfortunately, many CIOs spend too much of their own individual time on supporter functions. Perhaps this is due to the fact that CIOs feel comfortable with that side of the business. However, allocating too much of their individual time on supporter functions will ultimately detract from time spent with other executives regarding their driver needs. Effective CIOs will surround themselves with capable supporter personnel, so that they can free up for the driver activities. Thus, the message to CIOs is to surround themselves with the talent that can run the day-to-day business. This does not suggest that CIOs should not be active in supporter functions; having regular updates from their management team is certainly necessary. In some instances, a supporter can transform itself into a driver, almost like a reverse life cycle. This would mean that some feature or function of the supporter technology was enhanced in such a way that it could be used competitively. Examples of this kind of transformation relate to help desk activities that can be used to create new business opportunities while working on solving technology-related problems. Another interesting supporter to driver evolution is web sites to social media, where new features could actually initiate revenue opportunities, as opposed to just supporting users. Yet another example of an IT product going from supporter to driver occurred at Grey Healthcare Group. Grey, like many agencies, provides services to assist its clients to help market its product and services. During our conversation with CEO Lynn O'Connor-Vos, we discussed a product that initially was used to determine project costs for clients. A typical project management product that tracked usage for billing and accounting functions—an internal support product, for sure. Well, Lynn saw a driver function—by creating a more robust “Dashboard,” customers could be much more aware of where they were with their budgets, and could make more dynamic decisions of how to better spend their advertising dollars. It was good for Grey and good for their clients. The Dashboard became a driver and interacted socially, if you will, in a way that prior Internet products could not be effectively implemented. IT: A Driver or a Supporter? The sheer fact that drivers become supporters as shown in Figure 2.1 actually provides an interesting way for CIOs to communicate with their peers. Here is the business case: • • • IT is unique in that it is both a driver and a supporter. IT drivers are those activities that can change the relationship with the customer. Stay away from trying to determine how much—the fact that it changes the market balance is most important. All initial IT initiatives should start out as drivers, and then become supporters over time. This is the S-curve of IT, and every CIO should have a sense where their products fall. If your product is nearing Support status, you must be more efficient and perhaps consider outsourcing. The overall message is that IT can drive business strategy and yet support it at the same time. CIOs must know where they are with every project initiative. If you are a driver, be strategic and attend executive meetings. If you have a supporter, hire the best people or companies to run them and manage them effectively, but do not spend too much executive time with these projects. Most important, both drivers and supporters are important—you can't do one without the other. You must be strategic but the lights must stay on at all times. Technological Dynamism Langer introduced technology dynamism as “the unpredictable and accelerated ways in which technology, specifically, can change organizational behavior and culture.”7 Perhaps if we look at IT as a variable, independent of others, we can examine the contribution to the life of a business operation. It is capable of producing an overall, totalizing, yet distinctive effect on organizations: It has the unique capacity to create accelerations of corporate events in an unpredictable way. IT, in its many aspects of unpredictability, is necessarily a variable; and in its capacity as accelerator—its tendency to produce change or advance—it is dynamic. As a dynamic kind of variable, IT, via a responsive handling or management, can be tapped to play a special role in organizational development. It can be pressed into service as the dynamic catalyst that helps bring organizations to maturity in dealing not only with new technological quandaries but with other agents of change as well. Change generates new knowledge, which in turn requires a structure of learning that should, if managed properly, result in transformative behavior, supporting the continued evolution of organizational culture. Specifically, technology speeds up events such as the expectation of getting a response to an e-mail, and requires organizations to respond to them in ever-quickening time frames. Such events are not as predictable as what individuals in organizations have experienced prior to the advent of new technologies—particularly with the meteoric advance of the Internet. In viewing technology then as a dynamic variable, as one that requires of organizations systemic and cultural change, we may regard it as an inherent, internal driving force—a form of technological dynamism. Dynamism is defined as a process or mechanism responsible for the development or motion of a system. Technology dynamism, therefore, is based on the acceleration of events and interactions within organizations and which in turn create the need to better empower individuals and departments. Another way of understanding technological dynamism is to think of it as an internal drive recognized by the symptoms it produces. The new events and interactions brought about by technology are symptoms of the dynamism that technology manifests. The next section discusses how CIOs can begin to make this inherent dynamism work in its favor on different levels. Responsive Organizational Dynamism The technological dynamism at work in organizations has the power to disrupt any antecedent sense of comfortable equilibrium, or an unwelcome sense of stasis. It also upsets the balance among the various factors and relationships that pertain to the question of how we might integrate new technologies into the business—a question of what Langer called strategic integration—and how we assimilate the cultural changes they bring about organizationally—a question of what he called cultural assimilation.8 Managing the dynamism therefore is a way of managing the effects of technology. Langer proposed that these organizational ripples, these precipitous events and interactions can be addressed in specific ways at the organizational management level. The set of integrative responses to the challenges raised by technology is what Langer called responsive organizational dynamism (ROD). There are two distinct categories that present themselves in response to technological dynamism: strategic integration and cultural assimilation.9 Strategic Integration Strategic integration is a process that firms need to use to address the business impact of technology on its organizational processes. That is to say, the business strategic impact of technology requires immediate organizational responses and in some instances zero latency. Strategic integration therefore is the concept of how to recognize the need to scale resources across traditional business geographic boundaries, to redefine the value chain in the life cycle of a product or service line and generally to foster more agile business processes.10 Strategic integration, then, is a way to address the need to change business processes caused by new technology innovations. Evolving technologies are now catalysts for competitive initiatives that create new and different ways to determine successful business investment. As a result, organizations need to see how the technology specifically provides opportunities to compete, and in many cases survive. Historically, organizational experiences with IT investments have resulted in two distinct steps of measured returns. The first step often shows determines negative or declining productivity as a result of the investment; in the second step we experience a lagging of, though eventual return to, productivity. The lack of returns in the first step or phase has been attributed to the nature of the early stages of technology exploration and experimentation, which tend to slow down the process of organizational adaptation to technology. The production phase then lags behind the organization's ability to integrate new technologies with its existing processes. Another complication posed by technological dynamism via the process of strategic integration is a phenomenon called “factors of multiplicity”—essentially what happens when several new technology opportunities overlap and create a myriad of projects that are in various phases of their developmental life cycle. Furthermore, the problem is compounded by lagging returns in productivity, which are complicated to track and to represent to management. Thus, it is important that organizations find ways to shorten the period between investment and technology's effective deployment. Murphy identifies five factors that are critical to bridging this delta: 1. Identifying the processes that can provide acceptable business returns. 2. Establishing methodologies that can determine these processes. 3. Finding ways to actually perform and realize expected benefits. 4. Integrating IT projects with other projects. 5. Adjusting project objectives when changes in the business require them.11 Technology complicates these actions, making them more difficult to resolve—hence the need to manage the complications. To address these compounded concerns, strategic integration can shorten life-cycle maturation by focusing on the following integrating factors: • • • • Addressing the weaknesses in management organizations in terms of how to deal with new technologies and how to better realize business benefits. Providing a mechanism that both enables organizations to deal with accelerated change caused by technological innovations and that integrates them into a new cycle of processing and handling change. Providing a strategic framework whereby every new technology variable adds to organizational evolution particularly using strategic advocacy (Chapter 3). Establishing an integrated approach that ties IT accountability to other measurable outcomes integrating acceptable methods of the organization. In order to realize these objectives, executives must be able to: • • • • Create dynamic internal processes that can function on a daily basis to deal with understanding the potential fit of new technologies and its overall value to the local department within the business, that is, to provide for change at the grass roots level of the organization. Provide the discourse to bridge the gaps between IT and non-ITrelated investments and uses into an integrated system Monitor investments and determine modifications to the current life cycle of idea-to-reality. Implement proven techniques that can be used by CIOs that allows them to bring about evolutionary change at the executive level, blending IT with the business. Another important aspect of strategic integration is what Murphy calls “consequential interoperability,” in which “the consequences of a business process” are understood to “dynamically trigger integration.”12 This integration occurs in what he calls the Five Pillars of Benefits Realization: 1. Strategic alignment: The alignment of IT strategically with business goals and objectives. 2. Business process impact: The impact on the need for the organization to redesign business processes and integrate them with new technologies. 3. Architecture: The actual technological integration of applications, databases and networks to facilitate and support implementation. 4. Payback: The basis for computing ROI from both direct and indirect perspectives. 5. Risk: Identifying the exposure for underachievement or failure in the technology investment. Murphy's Pillars are useful in helping us understanding how technology can engender the need for strategic integration. They also help us understand what becomes the strategic integration component of ROD. His theory on strategic alignment and business process impact supports the notion that IT will increasingly serve as an undergirding force, one that will drive enterprise growth by identifying the initiators (such as e-business on the Internet) that best fits business goals. Many of these initiators will be accelerated by the growing use of e-business, which becomes the very driver of many new market realignments. This e-business realignment will require the ongoing involvement of executives, business managers, and IT managers. Indeed, the Gartner Group's original forecast that 70 percent of new software application investments and 50 percent of new infrastructure expenditures by 2005 would be driven by e-business was very accurate. The combination of evolving business drivers with accelerated and changing customer demands has created a business revolution that best defines the imperative of the strategic integration component of ROD. The changing and accelerated way businesses deal with their customers and vendors requires a new strategic integration to become a reality, rather than remain a concept given discussion to but affecting little action. Without action directed toward new strategic integration, organizations would lose competitive advantage, which would ultimately affect profits. Most experts see e-business as the mechanism that will ultimately require the integrated business processes to be realigned, thus providing value to customers and modifying the customer/vendor relationship. The driving force behind this realignment emanates from the Internet, which serves as the principle accelerator of the change in transactions across all businesses. The general need to optimize resources forces organizations to rethink and to realign business processes in order to gain access to new business markets. Murphy's Pillar of Architecture brings out yet another aspect of Responsive Organizational Dynamism. By “architecture” we mean the focus on the effects that technology has on existing computer applications, or legacy systems (old existing systems). Technology requires existing IT systems to be modified or replacement systems to be created that will mirror the new business realignments. These changes respond to the forces of strategic integration and require business process reengineering (BPR) activities, which represent the reevaluation of existing systems based on changing business requirements. It is important to keep in mind the acceleration factors of technology, and to recognize the amount of organizational effort and time that such projects take to complete. We must ask: How might organizations respond to these continual requirements to modify existing processes? We shall see in later chapters how ROD represents the answer to this question and an important strategic weapon for the CIO to use to support change. However, Murphy's Pillar of Direct Return is somewhat limited and narrow because not all IT value can be associated with direct returns, but it is important to discuss. Technology acceleration is forcing organizations to deal with broader issues surrounding what represents a return from an investment. The value of strategic integration relies heavily on the ability of technology to encapsulate itself within other departments where it ultimately provides the value. CIOs need to steer their executive colleagues away from IT direct returns, rather the real IT value can be best determined within individual business units at the micro level. That is, let the appropriate level business unit(s) establish the case for why certain IT investments need to be pursued. Most important is to educate executives that most IT paybacks are indirect: For example, Lucas demonstrates that many technology investments are nonmonetary in nature.13 The IT department is one among others that becomes susceptible to great scrutiny and subject to budgetary cutbacks during economically difficult times. This does not suggest that IT “hide” itself, but rather that its investment be integrated within the unit where it provides the most benefit—this would be then the driver side of the front-line IT project. Notwithstanding the challenge to map IT expenditures to its related unit, there are always expenses that are central to all departments, such as e-mail and network infrastructure. These types of expenses can rarely provide direct returns and are typically allocated across departments as a “cost of doing business.” Because of the increased number of technology opportunities, Murphy's Risk pillar must be a key part of CIOs' strategic integration approach. The concept of risk assessment is not new to an organization; however, it is somewhat misunderstood as it relates to technology assessment. Technology assessment must, because of the acceleration factor, be embedded within the strategic decision-making process. This can be accomplished only by having an understanding of how to align technology opportunities for business change and by understanding the cost of forgoing the opportunity, as well as the cost of delays in delivery. Many organizations use risk assessment in a very unstructured way, which does not provide a consistent framework to dynamically deal with emerging technologies. Furthermore, such assessment needs to be managed throughout the organization as opposed to being event-driven activities controlled by executives. Strategic integration represents the objective of dealing with emerging technologies on a regular basis. It is an outcome of ROD, and it requires organizations to deal with a variable that forces acceleration of decisions in an unpredictable fashion. Strategic integration would require businesses to realign the ways in which they include technology in strategic decision making. CIOs need to create appropriate infrastructures to support the ongoing examination of innovations and how they provide customer value at the business unit level. Cultural Assimilation Cultural assimilation is a process that addresses the organizational aspects of how technology is internally organized, including the role of the IT department, and how it is assimilated within the organization as a whole. The inherent, contemporary reality of technological dynamism is not limited only to strategic issues, but cultural change as well. This reality requires that IT organizations connect to all aspects of the business. Such affiliation would foster a more interactive culture rather than one that is regimented and linear, as is too often the case. An interactive culture is one that can respond to emerging technology decisions in an optimally informed way, one that understands the impact on business performance. The kind of cultural assimilation elicited by technological dynamism and formalized in ROD is divided into two subcategories: the study of how the IT organization relates and communicates with “others” and the actual displacement or movement of traditional IT staff from an isolated “core” structure to a firm-wide, integrated framework.14 IT Organization Communications with “Others” Langer's case study called “Ravell” showed the limitations and consequences of an isolated operating IT department within an organization.15 The case study showed that the isolation of a group by a CIO can lead to IT marginalization, which results in the kind of organization where not all individuals can participate in decision making and implementation, even though such individuals have important knowledge and value. Technological dynamism is forcing IT departments to rethink their strategic position within their firm's organizational structure. No longer can IT be a stand-alone unit designed just to service outside departments while maintaining its own separate identity. The acceleration factors of technology require more dynamic activity within and among departments, which cannot be accomplished through discrete communications between groups. Instead, the need for diverse groups to engage in more integrated discourse and to share varying levels of technological knowledge as well as business-end perspectives requires new organizational structures that will of necessity give birth to a new and evolving business social culture. Indeed, the need to assimilate technology creates a transformative effect on organizational cultures, the way they are formed and reformed, and what they will need from IT personnel. Movement of Traditional IT Staff In order to facilitate cultural assimilation from an IT perspective, CIOs must have their IT staffs better integrated with non-IT management than is currently the case. This form of integration can require the actual movement of IT staff personnel into other departments, which begins the process of a true assimilation of resources among business units. While this may seem like the elimination of IT's integrity or identity, such loss is far from being the case. The elimination of the IT department is not at all what is called for here; on the contrary, the IT department is critical to the function of cultural assimilation. However, the IT department may need to be structured differently from the way it has been so that it can deal primarily with generic infrastructure and support issues such as e-mail, network architecture, and security. IT personnel who focus on businessspecific issues need to become closely aligned with the appropriate units so that ROD can be successfully implemented. Furthermore, we must acknowledge that, given the wide range of available knowledge about technology, not all technological knowledge emanates from the IT department. The question becomes one of finding the best structure to support a broad assimilation of knowledge about any given technology; then we should ask how that knowledge can best be utilized by the organization. There is a pitfall in attempting to find a “standard” IT organizational structure that will address the cultural assimilation of technology. Sampler's research and Langer's studies with chief executives confirm that no such standard structure exists.16 Organizations must find their own unique blend using organizational learning constructs. This simply means that that the cultural assimilation of IT may be unique to the organization. What is then more important for the success of organizational development is the process of assimilation as opposed to the transplanting of the structure itself. Today, many departments still operate within “silos” where they are unable to meet the requirements of the dynamic and unpredictable nature of technology in the business environment. Traditional organizations do not often support the necessary communications needed to implement cultural assimilation across business units. However, business managers can no longer make decisions without considering technology; they will find themselves needing to include IT staff in their decision-making processes. However, CIOs can no longer make technology-based decisions without concerted efforts toward assimilation (in contrast to occasional partnering or project-driven participation) with other business units. This assimilation becomes mature when new cultures evolve synergistically as opposed to just having multiple cultures that attempt to work in conjunction (partner) with one another. Without appropriate cultural assimilation, organizations tend to have staff that “take shortcuts, [then] the loudest voice will win the day, ad hoc decisions will be made, accountabilities lost, and lessons from successes and failures will not become part of…wisdom.”17 It is essential then for the CIO to provide for consistent governance; one that fits the profile of the existing culture, or that can establish the need for a new culture. While many scholars and managers suggest the need to have a specific entity responsible for IT governance, one that is to be placed within the organization's operating structure, such an approach creates a fundamental problem. It does not allow staff and managers the opportunity to assimilate technologically driven change and understand how to design a culture that can operate under ROD. In other words, the issue of governance is misinterpreted as a problem of structural positioning or hierarchy when it is really one of cultural assimilation. As a result, many business solutions to technology issues often lean toward the prescriptive instead of the analytical in addressing the real problem. Murphy's Risk Pillar theory offers us another important component relevant to cultural assimilation. This approach addresses well the concerns that relate to the creation of risk cultures formed to deal with the impact of new systems. New technologies can actually cause changes in cultural assimilation by establishing the need to make certain changes in job descriptions, power structures, career prospects, degree of job security, departmental influence, or ownership of data. Each of these potential risks needs to be factored in as an important part of considering how best to organize and assimilate technology through ROD. Technology Business Cycle To better understand technology dynamism or how technology acts as a dynamic variable, it is necessary to define the specific steps that occur during its evolution in an organization. The evolution or business cycle depicts the sequential steps during the maturation of a new technology from feasibility to implementation and through subsequent evolution. Table 2.1 shows the five components that comprise the cycle. Table 2.1 Technology Business Cycle Cycle Component Component Description Feasibility Understanding how to view and evaluate emerging technologies from business perspectives Measurement Dealing with both the direct monetary returns and indirect nonmonet establishing driver and support life cycles Planning Understanding how to set up projects; establishing participation acro layers of management including operations and departments Implementation Working with the realities of project management; operating with pol constraints, meeting milestones, dealing with setbacks; ability to go li systems. Evolution Understanding how acceptance of new technologies affects cultural ch uses of technology will change as individuals and organizations becom knowledgeable about technology and generate new ideas about how it this objective is established through organizational dynamism, creatin knowledge and an evolving organization Feasibility The stage of feasibility focuses on a number of issues surrounding the practicality of implementing a specific technology. Feasibility addresses the ability to deliver a product when it is needed in comparison to the time it takes to develop it. Risk also plays a role in feasibility assessment; of specific concern is the question: Is it possible or probable that the product will become obsolete before completion? Cost is certainly a huge factor but viewed at a “high level” (i.e., at a general cost range), and it is usually geared toward meeting a firm's expected returns from its investments. The feasibility process must be one that incorporates individuals in a way that allows them to respond to the accelerated and dynamic process brought forth by technological innovations. Measurement Measurement is the process of understanding how an investment in technology is calculated, particularly in relation to an organization's ROI. The complication with technology and measurement is that it is simply not that easy to determine how to calculate such a return. This problem comes up in many of the issues discussed by Lucas in his book Information Technology and the Productivity Paradox.18 His work addresses many comprehensive issues surrounding both monetary and nonmonetary ROI, as well as direct versus indirect allocation of IT costs. Aside from these issues, there is also the fact that many investments in technology for which the attempt to compute ROI may be an inappropriate approach. Lucas offers a “Garbage Can” model that advocates trust in the operational management of the business and advocates the formation of IT representatives into productive teams that can assess new technologies as a regular part of business operations. The Garbage Can is an abstract concept for allowing individuals a place to suggest innovations brought about by technology. The inventory of technology opportunities needs regular evaluation. Lucas does not really offer an explanation of exactly how this process should work internally. ROD, however, provides the strategic processes and organizational-cultural needs that can provide the infrastructure to better understand and evaluate the potential benefits from technological innovations using the Garbage Can model. The graphic depiction of the model is shown in Figure 2.2. Figure 2.2 Garbage Can Model of IT Value Source: H. C. Lucas, Information Technology and the Productivity Paradox (New York: Oxford University Press, 1999). Planning Planning requires a defined team of user and IT representatives. This appears to be a simple task, but is more challenging to understand how such teams should operate, from whom it needs support, and what resources it requires. Let me be specific. There are a number of varying types of “users” of technology. They typically exist in three tiers: executives, business-line managers, and operations. Each of these individuals offers valuable yet different views of the benefits of technology.19 These user tiers are defined as follows: 1. Executives. These individuals are often referred to as executive sponsors. Their role is twofold. First, they provide input into the system, specifically from the perspective of productivity, ROI, and competitive edge. Second, and perhaps more important, their responsibility is to ensure that users are participating in the requisite manner (i.e., made to be available and in the right place, etc.) This area can be problematic because internal users are typically busy doing their jobs and sometimes neglect to provide input or to attend project meetings. Furthermore, executive sponsors can help control political agendas that can hurt the success of the project. 2. Business-line managers. This interface provides the most information from a business-unit perspective. These individuals are responsible for two aspects of management. First, they are responsible for the day-to-day productivity of their unit, and therefore they understand the importance of productive teams and how software can assist in this endeavor. Second, they are responsible for their staffs. Thus, line managers need to know how software will affect their operational staffs. 3. Functional users. These are the individuals in the trenches who understand exactly how processing needs to get done. While their purview of the benefits of the system is relatively narrower than the executives and managers, they provide the concrete information that is required to create the feature/functions that make the system usable. The planning process becomes challenging when attempting to get the three user communities to integrate their needs and “agree to agree” on how a technology project needs to be designed and managed. Implementation Implementation is the process of actually using a technology. Implementation of technology systems requires wider integration within the various departments than other systems in an organization because they usually affect multiple business units. Implementation must combine traditional methods of IT processes of development yet integrate them within the constraints, assumptions, and cultural (perhaps political) environments of different departments. Cultural assimilation is therefore required at this stage because it delves into the internal organization's structure and requires individual participation in every phase of the development and implementation cycle. The following are nine of the unique challenges facing the implementation of technological projects: 1. Project managers as complex managers. Technology projects require multiple interfaces that often lie outside the traditional user community. They can include interfacing with writers, editors, marketing personnel, customers, and consumers, all of whom are stakeholders in the success of the system. 2. Shorter and dynamic development schedules. Due to the dynamic nature of technology, its process of development is less linear than that of others. Because there is less experience in the general user community and there are more stakeholders, there is a tendency by IT and executives to underestimate the time and cost to complete the project. 3. New untested technologies. There is so much new technology offered to organizations that there is a tendency by IT organizations to implement technologies that have not yet matured—that are not yet the best product they will eventually be. 4. Degree of scope changes. Technology, because of its dynamic nature, tends to be very prone to “scope-creep”—the scope of the original project expanding during development. 5. Project management. Project managers need to work closely with internal users, customers, and consumers to advise them on the impact of changes to the project schedule. Unfortunately, scope changes that are influenced by changes in market trends may not be avoidable. Thus, part of a good strategy is to manage scope changes rather than attempt to stop them, which might not be realistic. 6. Estimating completion time. IT has always had difficulties in knowing how long it will take to implement a technology. Application systems are even more difficult because of the number of variables, unknowns. 7. Lack of standards. The technology industry continues to be a profession that does not have a governing body. Thus, it is impossible to have real enforced standards as other professions enjoy. While there are suggestions for best practices, many of them are unproven and not kept current with changing developments. Because of the lack of successful application projects, there are few success stories to create a new and better set of “best practices.” 8. Less specialized roles and responsibilities. The IT team tends to have staff members that have varying responsibilities. Unlike traditional new technology driven projects, separation of roles and responsibilities are more difficult when operating in more dynamic environments. The reality is that many roles have not been formalized and integrated using something like ROD. 9. Broad project management responsibilities. Project management responsibilities need to go beyond those of the traditional IT manager. Project managers are required to provide management services outside the traditional software staff. They need to interact more with internal and external individuals as well as with nontraditional members of the development team, such as Web text and content staff. Therefore, there are many more obstacles that can cause implementation problems. Evolution Many of the needs to form a technological organization with the natural capacity to evolve have been discussed from an IT perspective in this chapter. However, another important factor is the changing nature of application systems, particularly those that involve e-businesses. Ebusiness systems are those that utilize the Internet and engage in ecommerce activities among vendors, clients, and internal users in the organization. The ways in which e-business systems are built and deployed suggest that they are evolving systems. This means that they have a long life cycle involving ongoing maintenance and enhancement. They are, if you will, “living systems” that evolve in a similar manner in which organizational cultures have developed. So the traditional beginning-to-end life cycle does not apply to an e-business project that must be implemented in inherently ongoing and evolving phases. The important focus is that technology and organizational development have parallel evolutionary processes that need to be in balance with each other. This philosophy will be developed further in Chapter 3. Information Technology Roles and Responsibilities The preceding sections focused on how IT can be divided into two distinct kinds of business operations. As such, the roles and responsibilities within IT need to change accordingly and be designed under the auspices of driver and support theory. Most traditional IT departments are designed to be supporters, so that they have a close-knit organization that is secure from outside intervention and geared to respond to user needs based on their requests. While in many instances this type of formation is acceptable, it is very limited in providing the IT department with the proper understanding of the kind of business objectives that require driver-type activities. This was certainly the experience in the Ravell case study. In that instance, making the effort to get IT support personnel “out from their comfortable shells” made a huge difference in providing better service to the organization at large. Because more and more technology is becoming driver essential, this development will require of CIOs an increasing ability to communicate to managers and executives and to assimilate within other departments. Another aspect of driver-and-support functions is the concept of a “life cycle.” A life cycle in this respect refers to the stages that occur before a product or service becomes obsolete. Technology products have a life cycle of value just as any other product or service. It is important not to confuse this life cycle with processes during development as discussed earlier in this chapter. Many technical products are adopted because they are able to deliver value—value that is typically determined based on ROI calculations. However, as products mature within an organization, they tend to become more of a commodity; and as they are normalized, they tend to become support oriented. Once they reach the stage of support, the rules of economies of scale become more important and relevant to evaluation. As a product enters the support stage, replacement based on economies of scale can be maximized by outsourcing to an outside vendor who can provide the service cheaper. New technological innovations then can be expected to follow this life cycle, where their initial investment requires some level of risk in order to provide returns to the business. This initial investment is accomplished in ROD using strategic integration. Once the evaluations are completed, driver activities will prevail during the technology's maturation process, which will also require cultural assimilation, and inevitably technology will change organizational behavior and structure. However, once the technology is “assimilated” and organizational behavior and structures are normalized, individuals will use it as a permanent part of their day-to-day operations. Thus, driver activities give way to those of support. Senior managers become less involved, and line managers then become the more important group that completes the transition from driver to supporter. Conclusion Throughout this chapter we have emphasized a perspective that IT has multitudes of uses within an organization. We divided these multiple value points into two major categories, drivers and supporters. CIOs must be able to provide a mechanism that both enables the organization to deal with accelerated change caused by technological innovations for driver applications and that integrates them into a new cycle of processing and handling consistent with the theories of S-curve life cycle. CIOs must also recognize that the supporter side of their responsibility is equally important but measured for success very differently than its corresponding driver approaches. Notes A. M. Langer, Information Technology and Organizational Learning: Managing Behavioral Change through Technology and Education, 1st. ed. (Boca Raton, FL: Taylor & Francis, 2005). 2 S. P. Bradley, and R. L. Nolan, Sense and Respond: Capturing Value in the Network Era (Boston: Harvard Business School Press, 1998). 3 A. M. Langer, Information Technology and Organizational Learning: Managing Behavioral Change through Technology and Education, 2nd ed. (Boca Raton, FL: Taylor & Francis, 2011). 4 Ibid. 5 Wideman Comparative Glossary of Common Project Management Terms, v2.1. Copyright © R. Max Wideman, May 2001. 6 K. M. Eisenhardt, and L. J. Bourgeois, “Politics of Strategic Decision Making in HighVelocity Environments: Toward a Midrange Theory,” Academy of Management Journal 31 (1988): 737–770. 7 Langer, Information Technology and Organizational Learning, 1st. ed., p. 44. 8 Ibid. 9 Ibid. 10 T. Murphy, Achieving Business Practice from Technology: A Practical Guide for Today's Executive (Hoboken, NJ: John Wiley & Sons, 2002). 1 Ibid. 12 Murphy, Achieving Business Practice from Technology, p. 31. 13 H. C. Lucas, Information Technology and the Productivity Paradox (New York: Oxford University Press, 1999). 14 Langer, Information Technology and Organizational Learning, 1st. ed. 15 Ibid. 16 J. L. Sampler, “Exploring the Relationship between Information Technology and Organizational Structure.” In M. J. Earl (Ed.), Information Management: The Organizational Dimension (New York: Oxford University Press, 1996), 5–22. 17 Murphy, Achieving Business Practice from Technology, p. 152. 18 Lucas, Information Technology and the Productivity Paradox. 19 A. M. Langer, “Reflecting on Practice: Using Learning Journals in Higher and Continuing Education,” Teaching in Higher Education 7 (2002): 337–351. 11
Purchase answer to see full attachment