Impact of IT-Based Initiatives on Organizational Transformation

1. REORGANIZING THE ENTERPRISE chapter 6 Hirut Gebrekidan FEB 19, 2004

2. Three key questions • Why have company-wide IT based initiatives been increasingly used as the vehicle for organizational transformation? • What effects have major organizational initiative had on work and worker identity? • How well have company-wide initiatives coped with organizational variety and cultural specificity?

3. Three case materials • Corporate lending in UK Bank • Business Process Re-engineering • Enterprise systems or Enterprise resource planning (ERP) systems

4. Corporate lending in UK bank(Scott (1998,2000) and Scott and Walsham (1998) • Decision Support System (DSS) • The system called Lending Advisor(LA) was implemented to formalize the middle market lending processes. • LA project • Formation of a team • Assesing approprate technology

5. Corporate lending in UK bank (cont..) • Implementation of the LA and the change program • Negative aspects on the time of introduction • Using of computers for the first time • Heightened anxiety regarding job security due to extensive reorganization • Concerns with respect to working practices centred on loss autonomy, longer working hours, thier job was disembedded, • Tension of identity related to previous work role

6. Corporate lending in UK bank (cont..) • Positive aspects • Computer-based organizational memory • Central access to organizational data • Analysis capability • Electronic transmission of data

7. Corporate lending in UK (cont..) • Broader organizational and societal effects • Is the system beneficial to the efficiency, effectiveness and profitability of UK Bank as a whole? On the one hand yes: • more informed decisions were taken on loans • Risk were eliminated • Bad loan managers could be identified

8. Corporate lending in UK (cont..) On the other hand • Loan experties was lost

9. Business process re-engineering (BPR) • Analysis and design of workflows and processes within and between organizations • Concerned on job losses, intensification of work, and tighter management control • Is used for a better-integrated organization with a closer customer-oriented focus

10. BPR in Probank(By Knights and McCabe 1998a, 1998b) • Implementation • Negative concerns (Branch staff and management) • Concerned with job losses • Loss of power • Fear of unemployment • Professional pride • Self identity • Resistance to new ways of working in change programmes

11. BPR in Probank (cont..) • Advantages • Widespread job losses • Empowerment (back office staff seemed happier with the new arrangement)

12. Enterprise Systems • Improved communication between different parts of the business and its customers • Direct access to real time management information • A promise of better control for the management

13. Enterprise Systems (cont..)SAP in Norsk Hydro(Hanseth and Braa (1998) • Implementation • Advantages • People (all around Europe) have become acquainted with each other • Learning about each others’ ways of working and doing business • Best practices are identified and tried and then transfered to other locations • Different units get ideas about how to improve their own work

14. Enterprise Systems (cont..)SAP in Norsk Hydro(Hanseth and Braa (1998) • Problems • Local support was problematic while it provided and integrated central processing service • Language barriers for non-english speaking countries • Reduce flexibility of the individual national and regional unit to respond effectively to their own business cultures and markets

15. Analysis and conclusion • Why have company-wide IT based initiatives been increasingly used as the vehicle for organizational transformation? • Pressure for global best practice standards in information systems to enable integrated knowledge sharing • companies need to adapt to a global world • Reinforced by the international consulting companies • The need to communicate across departments and branches for knowledge sharing. • standardization on software is easier than standardizing on IS to support key business processes • Legacy systems grew organically to support business processes. • Management wants tighter control and lower costs. • Need to balance autonomy and control.

16. What effects have major organizational initiative had on work and worker identity? • Individual sense of identity and self-worth linked to identification with work role and practice • Should management worry? Yes, identity will affect the result of company-wide change initiatives (meaning if they resist to change). Therefore resistance and tensions can be a cause of major failure. • Since We are all part of a common society made up of business organizations, we need a wider agenda in this area. • We should be concerned with issues of stress, loss of work identity, work intensification, reduced autonomy and unemployment

17. How well have company-wide initiatives coped with organizational variety and cultural specificity? • Organization have different routines and procedures, context and histories. • Therfore getting rid of the mesy world of organizational variety, including its existing history, systems, people and procedures is important • to create a perfect organization structure, with irreversible infrastructures. • Gradualism may be a better approach to change. • Empirical data will support this • Methaphor of continuous care rather than invasive surgery

18. In general • Company-wide change initiatives have diverse and sometimes unpredictable consequences because of • Individuals varied backgrounds, identities, needs and goals, fears and aspirations, etc • Organizations have different routines and procedures, histories, etc