Organisational Themes in ISD: Strategic Information Systems and Business Process Re-engineering

1. IMS5006 - Information Systems Development Practices Organisational Themes; Organisational Culture and Organisational Change

2. Organisational themes in ISD • Strategic information systems • Business process re-engineering (BPR) • Information systems planning • Organisational culture • Organisational change

3. Organisational themes in ISD • strategic information systems: top management’s needs • BPR (Business Process Re-engineering): re-examination of the organisation’s information systems • Strategic planning approaches

4. Organisational themes in ISD strategic information systems: early computerisation focused on basic transaction processing: cost savings quantifiable, perform same processing more efficiently limitations of further efficiency gains: opportunities limited as more projects completed some opportunities unlikely to demonstrate these types of savings emergence of an additional role for information systems and IT: a direct tool for gaining competitive advantage

5. strategic information systems use information systems to improve the business in the market place: competitive advantage: - redefine the boundaries of specific industries - develop new products and services - change the relationships between customers and suppliers - establish barriers to deter new entrants to the market place cost justifications more difficult: - benefits are not reduced costs - need to show that benefits (e.g. improved service) will be recognised - implications for methodologies

6. strategic information systems “classic” examples of use of IS for competitive advantage: American Hospital Supply Corporation, Merrill Lynch and Co (see pp 51-52 Avison and Fitzgerald 2003) the role of IS/IT: success due to a good product, and can success be sustained when competitors copy and improve on the product? Michael Porter’s (1980) framework of competitive strategy: bargaining power of customers, of suppliers, threat of new entrants, threat of substitute products/services, rivalry amongst existing firms (pp 51-52 Avison and Fitzgerald 2003)

7. strategic information systems approaches to addressing competitive effectiveness using IS/IT: 1. technology/ist-driven model: assume IT investment always provides business benefits - can result in IT not meeting business needs, lack of budget control over IT, lack of accountability 2. competitor-driven model: react to competitors by copying them e.g. data warehousing - organisations will not develop their own strengths/innovations - miss opportunities for being a leader - may still be disadvantaged by not being the first

8. strategic information systems approaches to addressing competitive effectiveness using IS/IT: 3. Earl’s (1989) model: a combination of approaches/techniques is necessary - top down analysis of business goals, objectives and the role of IT e.g. CSFs, SWOT analysis, business-led - bottom up analysis of the current systems evaluate strengths/weaknesses of existing IS/IT and take action: business contribution/value and technical quality: enhance or exit - identify IT opportunities assess the enabling effects of IT for its potential application implications for methodologies

9. Business process re-engineering (BPR) business process re-engineering (BPR): opportunity to re-engineer business processes which is enabled by technology: “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed” Hammer and Champy (1993) what an organisation should do, how it should do it, what its concerns should be, not what they currently are

10. Business process re-engineering (BPR) motivations for re-engineering - no choice commercially - competitive forces require re-aligning business processes with strategic positioning - organisation management see re-engineering as an opportunity to streamline and to overtake their competitors - the “band wagon” effect: copy the competitors

11. Business process re-engineering (BPR) Hammer and Champy’s model - combine several jobs which are performed by a “case worker” responsible for an entire process - “case team” members are empowered to find ways to: improve service and quality, reduce costs and cycle times - process integration means less checks and controls - less defects as the entire process is completed by those responsible for the final product - process steps determined by those completing the task - parallel processing of entire operations is possible

12. Business process re-engineering (BPR) issues for a BPR programme - IT is an enabler, not a driver, of change - IS personnel should be involved in early planning but not as leaders of the change process - consider the organisation of the company, the way work is carried out, the existing operational systems - organisational culture change is inevitable: e.g. flatter structure, customer focus, more teamwork, coaching rather than directing, facilitative team management style, balance between management authority and worker empowerment - may need to recruit a BPR team

13. Business process re-engineering (BPR) BPR: experiences of project failures (and failure rates) - senior managers lack motivation for organisational change: BPR must be driven from the top - extent of necessary change not fully recognised - piecemeal approaches mean individual process gains not translated into organisational level improvement - failure by top management to adequately define future operations - non-critical business operations addressed - motivation is publicity/bandwagon or management’s reputation - short-term financial pressures result in lack of resources - BPR is radical change, not TQM etc.

14. Business process re-engineering (BPR) BPR crosses functional boundaries - increasingly complex environment means new threats and challenges - BPR and IS/IT provide opportunity for radical change - need to maximise performance of interrelated activities rather than individual functions: co-ordination of activities - alignment of IS with business strategy through strategic IS - role of IS personnel is support BPR is itself now undergoing re-engineering - see pp 58-59 Avison & Fitzgerald 2003 implications for methodolgies

15. Information systems planning planning approaches: stress the planning required to develop an organisation’s information systems top management involved in analysing the organisation’s objectives plan for the use of IS/IT to achieve the business objectives avoid a piecemeal approach to IS development align IS/IT with the business planning at three levels: long term, medium term, short term

16. Information systems planning approaches - organisation-wide perspective promotes integration - involvement of top management - IBM's BSP (Business Systems Planning 1975) • strategic management view of entire organisation • top management defines organisational needs and priorities • establish a stable information architecture • implementation from bottom up

17. IBM's BSP (Business Systems Planning 1975) 1. define business processes 2. define business data 3. define an information architecture 4. analyse current systems support 5. interview executives at top three organisational levels 6. define findings and conclusions 7. determine architecture priorities 8. review information resource management 9. develop recommendations and action plan 10. overview of follow-up activities (Sprague and McNurlin 1993)

18. Organisational culture Organisational culture (corporate culture): • “the system of shared beliefs and values that develops within an organisation and guides the behaviour of its members” Schermerhorn et al (2000,1994) Influence on: • the performance of an organisation • the quality of working life of its members

19. Organisational culture Three levels of cultural analysis in organisations: • observable culture, shared values, common assumptions observable culture: - “the way we do things here” - methods the group has developed and imparts to new members - stories, ceremonies, corporate rituals: define meanings and roles e.g. founding stories, heroic sagas, success stories: convey “hidden” information, define group identity

20. Organisational culture Shared values: a dominant and coherent set of values shared by a group as a whole: links people together, a motivational mechanism for members of the organisation e.g. quality, customer service Common assumptions: taken-for-granted truths that members share as a basis of their collective experience e.g. background influence of national cultures

21. Organisational culture Subcultures “groups of individuals with a unique pattern of values and philosophy which are not inconsistent with the organisation's dominant values and philosophy” e.g. high performance task teams, special project teams Counter cultures “a pattern of values and a philosophy that rejects the surrounding culture” e.g. mergers and acquisitions may produce counter cultures

22. Role of organisational culture develops the consensus necessary to cope with changing environments and change • external adaptation: core mission and strategy goals, objectives, means standards, corrective actions • internal integration: common language / jargon membership criteria power and status differentials standards for rewards and punishments

23. Role of organisational culture Cultural rules and roles: • when various types of actions are appropriate • where individual members stand in the social system e.g. meetings: a forum for dialogue and discussion, encouragement of new ideas, full participation OR forum for passing out directives and information about what is being done, new ideas etc. determined beforehand

24. Organisational culture Elements of “strong” corporate cultures: • widely-shared philosophy • concern for individuals • recognition of "heroes" • belief in ritual and ceremony • sense of informal rules and expectations • networking amongst members a competitive advantage

25. Organisational culture A strong corporate culture: positive: • strong corporate identity • enhanced collective commitment • stable social system • reduced need for bureaucratic controls negative: • a particular view is reinforced • difficult to change

26. Organisational change • introducing and managing organisational change: - new information systems - new information technology • for systems development: - new system development methodologies - new system development technologies - new system development techniques • user perspectives • systems developers as users: changing roles and technology

27. Organisational change • organisational performance: efficiency etc. • quality of work life • a change agent: “a person or group taking responsibility for changing the existing pattern of behaviour of another person or social system” Schermerhorn et al (1994) • unplanned change • planned change

28. Organisational change organisational targets for change (Kolb et al 1991) • the people subsystem: personnel flow, education • the authority subsystem: formal authority relationships, informal leadership patterns • the information subsystem: formal, informal • the task subsystem: job satisfaction, technology • the policy/culture subsystem: formal explicit, informal implicit • the environmental subsystem: internal physical environment, external environment

29. Organisational change resistance to change: • feedback that can be used constructively by the change agent • why do people resist change? - fear of the unknown - doubts about future competence - comfort with the status quo - vested interests threatened - “surprise” factor - poor timing - lack of resources - job security

30. Organisational change three phases of planned change: 1. unfreezing 2. changing 3. refreezing

31. Organisational change the scope and nature of change: • paradigm shift or incremental change • level of task and organisational integration • level of functionality

32. Organisational change acceptance criteria for changes: • changes must have clear, appropriate benefits • changes must be compatible with existing values and experiences • changes must not be too complex • changes should be able to be tried on an incremental or experimental basis

33. Organisational change strategies for gaining support for change: • force - coercion: legitimacy, rewards, punishment • rational persuasion: expert power, rational argument • shared power: trust-based, common vision

34. Organisational change dealing with resistance to change: (Schermerhorn et al 1994) • education and communication • participation and involvement • facilitation and support • negotiation and agreement • manipulation and co-optation • explicit and implicit coercion

35. Initiating and managing change SCOUTING The Process of Planned Change ENTRY DIAGNOSIS PLANNING ACTION Kolb et al (1991) p. 593 EVALUATION INSTITUTIONALISATION

36. Initiating and managing change scouting determine readiness for change, obvious obstacles entry negotiate a "contract" with entry point representatives diagnosis the perceived problem, goals, resources available planning define change objectives, alternative solutions, strategies action implement change: activities, resistance, monitor evaluation relate to objectives institutionalisation complete vs continuous

37. References • Avison, D.E. & Fitzgerald, G. (2003). Information Systems Development: Methodologies, Techniques and Tools. (3rd ed), McGraw-Hill, London. Chapters 4.2-4.6, 6.6, 15 • Kolb, D.A., Rubin, I.M. and Osland, J. (1995). Organisational Behaviour: An Experiential Approach. (6th ed) Prentice-Hall, Englewood Cliffs. • Schermerhorn, J.R., Hunt, J.G. and Osborn, R.N. (2000). Managing Organizational Behavior. (7th ed). Wiley, New York.