Stages of Growth

1
Stages of Growth

• Two Models

2
The Changing Place of IT

• Small new users of IT tend to give it little
  importance.
• More mature users see it as a strategic weapon.

3
Background

• Commercial activities
• New businesses
• Business structures
• Competitive strategies

4
Background

• Developing major systems is risky, and high cost.
  
• In the 1980s a years delay before getting new
  system benefits was normal
• Hardware and software may be replaced or
  modified, annually.

5
Background

• Many companies could not now survive without IT
  systems-
• Banking
• Health
• Social Security
• Defence
• Insurance
• Call centres

6
Models

• Two approaches to representing the current stage
  of a companys use of IT, and its future use, are
  available.
• They take quite different forms.

7
Stages of Growth Models

• The Nolan Stage Model
• McFarlan and McKenney Strategic Grid

8
The Nolan Growth Model

• Suggests four stages of growth-
• Initiation
• Contagion
• Control
• Maturity

9
The Nolan Four-Stage Model
Maturity
Obvious application are computerised, payroll,
ledgers
IT just another resource IT projects pursue
benefits
Control
Cost overruns, late delivery, top management
anxiety
Contagion
Initiation
Follow trend
Time
10
Managerial Impact of IT

• Nolan suggests that IT capabilities and ubiquity
  alter the way management carry out their role.
• He goes further, and maps the changing attitudes,
  and responses, of management onto his Stages of
  Growth model.

11
Nolans Stages of Management
12
Management Styles by Stage
Development Stage people and task orientation
required.
Maturity
Data
People-oriented style increases success and user
participation.
Integration
Shared data. Common systems. Users accountable
Innovation supported. IS and user teams.
Increasing intelligent use of IS
Control
Contagion
Initiation
Steep rise in spend
Steady spend from zero base
Steep rise in spend
Steady spend
Time
Lu and Wang 1997, Information Management
Journal 32, pp203-213
13
The McFarlan McKenney Grid

• Positions organisations, business units, or
  departments into one of four categories,
  depending on the significance of IT to them.
• Can also be used to plan and manage information
  systems.

14
The Strategic Grid
LOW
HIGH
Strategic impact of future systems
LOW
Strategic impact of existing systems
HIGH
15
Managing Grid Systems

• Support Applications.
• Can be managed ad hoc.
• Low technical input.

16
Managing Grid Systems

• Factory Applications.
• Provide the mechanisms by which current business
  is done. Hence factory analogy.

17
Managing Grid Systems

• Turnaround Applications.
• Need planning.
• Systems may be in embryonic form at present.

18
Managing Grid Systems

• Strategic Applications.
• Should be owned by business units and managers.
• Must be tightly controlled, well funded.
• Must fully integrate into business/strategic plan.

19
The Strategic Grid Organisations
LOW
HIGH
Strategic impact of future systems
LOW
Strategic impact of existing systems
HIGH
20
Development Over Time
Stage 1
Stage 4
Stage 3
Stage 5
Stage 2
Ward, Griffiths Whitmore, 1990 Strategic
Planning for Information Systems. Wiley
21
Stage One Organisation

• Support. Early Data Processing Department
• Development is piecemeal.
• Separate systems need to be interfaced, one by
  one.

22
Stage One Organisation

• Dependence on IT grows.
• Senior management begins to see IT potential.

23
Stage Two Organisation

• Factory. Knowledgeable management.
• Top down review of IS applications takes place.
• Priorities assigned to systems based on business
  needs, and using formal appraisal methodologies.

24
Stage Three Organisation

• Integration/Re-integration. New stage.
• Detailed planning of introduction of new systems.
• Factory systems now seen as critical.
• Database idea emerges.
• Information centre, bought-in application
  packages applied.

25
Stage Four Organisation

• Turnaround. Innovation stage.
• User entrepreneurial flair encouraged.
• Generates the few good turnaround ideas that the
  IS function can build on.
• Is the Inside-Out function, in practice.

26
Stage Five Organisation

• Strategic. Delivers truly strategic uses of IS.
• Difficult. Ideas from stages three and four
  need to be sifted, developed in the business
  context.
• Linking IS potential to the business strategy is
  the main task.
• Calls for coalition of senior management, line
  management, IS specialists.

27
Comment

• In real life, parts of an organisation may be at
  a different stage (or straddle stages) compared
  with others.
• Traditionally, the manufacturing area, and
  finance enjoy high automation.
• What about order processing, the supply chain,
  distribution?