8th Module: Information Systems and Organisational Change:

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• 8th Module Information Systems and
  Organisational Change
• Structure
• Information Systems in Organisations past and
  present roles
• The Co-evolution of Organisations and IT
• The Organisational Impact of IT
• Organisational Learning

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Information Systems in Organisations past and
present roles

• It is almost common sense that information
  systems change organisations.
• They do this by automating tasks (which allows to
  perform work more efficiently), carrying out
  workload in new ways, etc.
• Examples are Expert systems, transaction
  processing systems, decision support systems,
  ATMs, electronic sales, etc.

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• It took a long time, however, until the true
  potential for Information Systems to change
  organisations had been understood.
• In the past, responsibilities for making changes
  through information systems was handed over to
  systems analysts and developers. The changes
  analysts were permitted to make, however, were
  quite restricted.
• Senior management was reluctant to let IT experts
  and technology lead their business.
• The work of IT professionals therefore
  concentrated on automating tasks and increasing
  efficiency in organisations.

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• The key question used to be
• How can IT support the business?
• However, this traditional point of view does not
  take into account the full potential of
  Information Systems to help running a business
  successfully.
• As we have seen in Module 2, Information Systems
  can give organisations a sustainable and
  competitive advantage by enhancing/improving what
  the organisation is already good at.

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• Thus, Information Systems can transform the
  organisation in fundamental ways.
• It has been recognised that IT and the
  organisation must evolve together in order to get
  the maximum benefit from IT.
• Nevertheless, the traditional function of IT
  (which was to support organisational goals and
  strategies) still plays a role in organisations
  nowadays.
• The main difference is that the role of
  Information Systems has become wider and more
  important.

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• This does NOT mean that the traditional role of
  Information Systems (support) has to be given
  up.
• Nowadays, it is essential that organisations and
  their information systems co-evolve.
• The next sub-chapter is dedicated to this
  co-evolution.

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• The Co-evolution of Organisations and IT
• To make sure that the co-evolution works
  successfully, the process of designing change in
  organisations needs to reflect both
  organisational practices and the technologies
  employed.

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• There are 2 main approaches to organisational
  change
• Business Process Re-engineering (an approach that
  advocates radical change within organisations)
• 2. Socio-technical Design (an approach which
  advocates a more evolutionary and less radical
  change within organisations).

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• Business Process Re-engineering
• This approach demands a complete re-thinking of
  the ways that tasks are performed in an
  organisation, e.g. Hammer (1990).
• The justification given for this approach is that
  organisations have failed to realise benefits of
  Information Systems in the past (e.g. they have
  just used IT to speed up organisational processes
  rather than to change the processes themselves).

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• These out-of-date organisational processes just
  focused on promoting efficiency within the
  organisation rather than product and service
  quality or speed of delivery/response (which is
  vital for many companies/hospitals etc.).
• Proponents of the Business Process Re-engineering
  approach base their arguments in favour of this
  approach on their estimate that the design of
  business processes from scratch would increase
  productivity by at least 50 percent (Duncan,
  1997).

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• The principle behind the change towards Business
  Process Re-engineering is to ignore existing
  functional boundaries within the organisation and
  to focus on those processes that guarantee
  successful business outputs.
• The re-design of the processes works by creating
  a plan how the work should be performed and by
  identifying the objectives/technological changes
  to be achieved in order to gain maximum benefits
  for the organisation.

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• The study of existing processes is only aimed at
  identifying problems, which the proponents of
  this approach hope to change by introducing new
  processes.
• The role of IT is to support change and to offer
  a technology that allows a transformation of
  these processes (Duncan, 1997).
• The aim to achieve significant improvements in
  performance is based on the expectation that IT
  helps to transform the organisational process.
• Business process re-engineering will certainly
  bring changes to the organisational structure,
  job design, work flows, control mechanisms, etc.

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• It is also considered vital that Business process
  re-engineering projects are driven by senior
  management and not by the Information Systems
  division within an organisation.
• Although Business process re-engineering might
  bring significant changes to an organisation,
  there are a number of things to consider before
  implementing it.
• Actually, it was criticised very harshly.

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• The following were the main concerns of
  criticism
• It neglects human issues in business change.
• It assumes that change is a continuous process,
  but does NOT give any advice on what to do after
  the change has been made.
• It is offered as a solution for every business
  problem, but it is certainly not appropriate for
  any business/organisational environment.
• The costs of implementing this type of radical
  change can be very high and it is NOT clear
  whether the costs exceed the benefits.

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• Davenport (1993) suggests that there must be a
  clear need for Business process re-engineering
  and a clear estimate of the benefits that it
  might yield.
• Though Business process re-engineering might
  bring radical change and might not be a good
  strategy for many organisations, it is one
  example where business and technology co-evolve
  together.

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• The Socio-technical design approach
• The Socio-technical approach focuses on all
  parties that are involved in the organisation
  that is expected to undergo the change (e.g. in a
  hospital, these would be doctors, nurses,
  psychologists, management, administrative and
  other support staff, staff in the personnel
  department, accounting, IT staff, catering,
  mechanics, etc.)

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• The tasks in the socio-technical approach are
  designed in a way that allows to reduce factors
  which can negatively influence the quality,
  throughput, job satisfaction, work environment
  and costs.
• It focuses on the inputs and outputs of the work
  process.
• Although many of the design changes, e.g. towards
  multi-skilling jobs, are similar to Business
  process re-engineering, Socio-technical change is
  rather aimed at continuous organisational renewal
  and evolutionary change.

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• IT is not even essential, because this approach
  can be used for any work environment where
  technologies are applied.
• More detailed explanations about socio-technical
  design are provided by Mumford (1983a, 1983b).
• Like Business process re-engineering,
  Socio-technical design is also seen as a
  partnership, but not as a partnership between
  business processes and technology. Rather,
  Socio-technical design emphasises a partnership
  between people and technology.

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• Integrating Business process re-engineering and
  Socio-technical design
• Business process re-engineering as well as
  Socio-technical design recognise the importance
  of changing/evolving technology and the
  organisation together, but the philosophies
  behind both approaches are quite different.
• The majority of system development in Information
  Systems is no longer seen as an intervention in
  the organisation (as it used to be the case), but
  as a change within the organisation.

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The Organisational Impact of IT

• IT will continue to create opportunities for
  major changes in the way that organisations are
  structured and in the nature of work itself
  (Duncan, 1997).
• According to Drucker (1988), future organisations
  will be information-based, composed of knowledge
  specialists who co-ordinate their efforts by
  communication rather than direction, with flat
  rather than hierarchical management structures.

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• If you consider that Druckers influential
  article dates back to 1988 and if you compare his
  predictions with organisational structures
  nowadays, you realise that many of these
  predictions have become reality.
• Many organisations have flat management
  structures (lean management), classical
  hierarchies no longer exist in the traditional
  way, a lot of communication takes place via
  email, internal memos, intranet, and senior
  management becomes more and more knowledgeable in
  IT issues.

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• Furthermore, the internet has enabled many
  companies to offer products in a non-traditional
  way (Amazon, Easyjet, etc.).
• Due to advances in IT, it is now common that many
  employees are less dependent on location, and can
  for instance work from their homes.
• Even though many of these predictions have become
  reality nowadays, the range of possibilities for
  the application of IT appears without limit, and
  there will always remain some uncertainty about
  future developments.

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Organisational Learning

• In an environment of rapid progress, the only
  constant is change itself, and it will be
  important for organisations to adapt to this
  change.
• The term that describes the way to tackle the
  challenge of continuous change is Organisational
  Learning.
• Organisational learning recognises that in order
  to change itself, it must first understand the
  way it works.

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• It must also be able to question the implicit and
  explicit norms that guide its organisational
  behaviour as well as its employees.
• This process of understanding and questioning is
  described as double-loop learning (Argyris,
  1977).
• Argyris recognised that there were frequent
  contradictions in terms of organisational demands
  on managers. This was due to the fact that the
  organisations wanted to maintain stability, but
  promote change at the same time.

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• Managers were often told to be innovative but not
  to violate any organisational rules. They were
  also encouraged to plan for the future, but their
  reward scheme was pretty much based on their
  present short-term performance.
• The result was often that managers became
  defensive and minimised their co-operation with
  other employees.
• The only learning that resulted from this process
  was learning on how to conform, which Argyris
  calls single loop learning.

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• Argyris suggested that the solution of these
  conflicts lies in group/organisational learning.
  Therefore, he demands that openness be encouraged
  and not seen as a sign of weakness.
• Moreover, he suggests that managers should look
  for contributions from other employees and not be
  shy about testing their own assumptions in
  public. This switch of behaviour would lead to
  double loup learning, enabling both managers and
  the group to change.

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• Organisational learning is particularly important
  for the introduction of Information Systems,
  because they challenge many basic practices in
  organisations.
• Various experts believe that in an increasingly
  complex world of business, the successful
  organisations will be the ones that learn quickly
  and adapt fastest to changes in the environment.
• Business scientists McKenney and McFarlan (1982)
  have examined the process by which organisations
  adapt to new technologies.

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• The result of their studies was that irrespective
  of the new technology employed (be it databases,
  LANs or expert systems), the process of
  assimilation undergoes the same phases.
• Organisational and technological change is
  expected to increase even more in the future, so
  a key area of competence for every IT manager
  will be to manage the introduction of new
  technologies and the adaptation to new skills by
  an organisations employees.

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• References
• Argyris, C. (1977). Double-loop Learning in
  Organisations. Harvard Business Review, 5,
  115-125.
• Davenport, T.H. (1993). Process Innovation
  Re-engineering Work through Information
  Technology. Boston, MA Harvard Business School
  Press.
• Duncan, W.M. (1997). Information Systems
  Management. London University of London Press.

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• Drucker, P. (1988). The Coming of the New
  Organisation. Harvard Business Review, 66 (1),
  45-53.
• Hammer, M. (1990). Re-engineering Work Dont
  Automate, Obliterate. Harvard Business Review, 68
  (4), 104-112.
• McKenney, J.L. McFarlan, F.W. (1982). The
  Information Archipelago Maps and Bridges.
  Harvard Business Review, 60 (5), 109-119.
• Mumford, E. (1983a). Designing Human Systems.
  Manchester Business School ISBN 0-903-808-285.

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• Mumford, E. (1983b). Designing Participatively.
  Manchester Business School ISBN 0-85227-221-9.
• The references for students who are interested in
  further reading can be found on page 25 of the
  study guide.