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.
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