416 Strategic Information Management would make to their job function(s). A simplified course was also developed for shop floor stakeholders. This course not only addressed the educational issues associated with MRPII but also looked at the practical implications of such a system on their job function(s). In doing so, it clearly differentiated education from training. The subject and teaching media used varied, using as much imagination as possible. Teamwork was promoted, with all employees being mixed and grouped together. They were filmed and reviewed playing games, using Legos ® and jigsaw puzzles, all with meaning for throughput production flow, communication, Just in Time (JIT) inventory management, and Total Quality Management (TQM). The workshop exercises appeared to be well received, and helped to win over skeptics. In parallel with the workshop training and education sessions, an information system design and development team was assembled. Table 14.4 Taxonomy of indirect human costs Classification of indirect human costs MRPII cost factors Management/ Staff Resource Integrating computerized production planning and control into work practices. Management Time Devising, approving and amending IT and manufacturing strategies. Cost of ownership: System Support Vendor support/trouble shooting costs. Management Effort and Dedication Exploring the potential of the system. Linking and integrating new systems together, e.g., CAM, DNC, CIM. Employee Time Detailing, approving and amending the computerization of product BOMs. Employee Training Being trained to manipulate vendor software and training others. Employee Motivation Interest in computerized production planning and control reduces as time passes. Changes in Salaries Pay increases based on improved employee flexibility. Software Disposal The removal of all software prior to disposal. Staff Turnover Increases in interview costs, induction costs, training costs based in the need for skilled human resource. Evaluating the Impact of IT on the Organization 417 Where necessary, employees (subject to their acceptance) were sent on external training courses to develop new technical skills. In addition, students on industrial placements were temporarily employed to develop software. Students were placed at Company V for a period of six months or one year. During their placement each student was supervised by a member of staff from a university (implicitly resulting in technical academic support). This recruitment policy helped to keep system development costs down, thus reducing the need for expensive contract engineers. An additional benefit of having students on the project was to maintain a constant stream of innovation, inspiration, and motivation. However, closer supervision was needed to retain project focus than would have been needed if only general company employees performed the work. During the development of their bespoke IS, Company V schematically mapped out their entire business process using flowchart tools. In doing so, a top-level analysis of Company V’s key business processes was performed, identifying processes and their order of occurrence. This enabled processes to be reengineered and facilitated the removal of non-value-adding activities before any systems were computerized. This approach to reengineering was considerably different from earlier attempts in that previous processes appeared to be generic and were based around the functionality of the vendor-supplied software. The reengineering of business processes before bespoke system development allowed for the software being developed to be modeled on best practice jobbing shop activities. It was at this point that the expertise of the consultancy company and academic institutions proved invaluable. Table 14.5 Taxonomy of indirect organizational costs Classification of indirect organizational costs MRPII cost factor Productivity Losses Developing and adapting to new systems, procedures, and guidelines. Strains on Resource Maximizing the potential of the new technology through integrating information flows and increasing information availability. Business Process Reengineering The redesign of organizational functions, processes, and reporting structures. Hardware Disposal The removal of all hardware prior to environmentally friendly disposal. Organizational Restructuring Covert resistance to change. 418 Strategic Information Management Technology management factors: key learning issues As a result of the case study findings, a number of technology management factors have been identified as having an impact on the failure/success of Company V’s adoption of MRPII. These factors are presented in Table 14.6, where their contribution is identified toward the implementation of vendor software and the later development of a bespoke system. The inability of traditional modes of financial analysis to justify IT/IS investments (which have strategic implications) has led a growing number of practitioners in calling for a moratorium on their use. The reason for this is that traditional approaches are considered to offer narrow levels of analysis, through their prescriptive focus on operational implications of the investment. This is further complicated, with many managers becoming preoccupied with financial appraisal insofar as practical strategic considerations have been overlooked and in some cases ignored. This inevitably results in many strategically important projects failing to ‘pass’ the financial justification stage of the evaluation process. Consequently, companies are often forced to adopt a myopic approach to IT/IS project justification. This is further complicated where the information system is modular and the system is purchased in stages, the implications being that the appraisal methods only consider the benefits and costs associated with the module being evaluated and are unable to account for benefits that the entire system brings. Conclusions The increased scope of new technology has not only provided organizations with enablers for change but also prompted companies to reassess the way they evaluate, manage, and exploit technology. The empirical results reported in this chapter have identified a case where traditional modes of investment appraisal were inappropriate when accounting for the implications of the investment, and as a result, did not support the efficient and effective deployment of new technology. Therefore, the strategy adopted by the case study when evaluating the MRPII investment was an ‘act of faith,’ and thus ad hoc in nature. This subsequently resulted in the system being considered a ‘failure’ as human and organizational factors were neglected during the evaluation and technology management process. The main reason for Company V’s ad hoc approach to investment decision-making was that many of the benefits resulting from their investment were considered intangible and nonfinancial. Consequently, they could not be accommodated within tradi- tional evaluation and management frameworks, which had been previously used for the justification of capital manufacturing equipment. The relatively new and inexperienced management team further complicated the justification process, as a result of their lack of knowledge on how to identify and manage Table 14.6 Comparative review of technology management processes Technology management factors Vendor software Bespoke software Investment Strategy Act of Faith Educated Decision Without Financial Quantitative Analysis Formal Project Management No Yes Company Culture Closed Open Concept Justification to Workforce No Yes Workforce Educated/Trained No Yes Management Educated/Trained No Yes Appraisal Technique Cost/Benefit Analysis Cost/Benefit Analysis Consultancy Support No Yes Academic Involvement No Industrial Placement of Students Continuous Project Evaluation No Monthly Management Review Meetings Investment Integrated in Business Plan No Yes Classification of Benefits Strategic, Tactical, and Operational Strategic, Tactical, and Operational Nature of Benefits Identified Financial, Nonfinancial, and Intangible Financial, Nonfinancial, and Intangible Classification of Costs Identified Direct Costs Direct and Indirect Costs Nature of Costs Identified Financial Financial and Intangible Risk Considered Competitive Risk Competitive Risk Implementation Process Implementation Team Implementation Team with Contribution from Other Functions Project Leader Managing Director Production Director Development Scope Short/Medium Term Long Term Human Factors Not Considered Addressed Where Possible Organizational Implications Not Considered and Not Considered Far-Reaching Acknowledged as Being Far -Reaching Implementation Documentation Ad hoc Formal Documentation Process Stakeholder Analysis No Yes Perceived Project Outcome Failure Success 420 Strategic Information Management IT/IS-related benefits and costs. There are also serious implications connected with the poor project management, which in part was exacerbated by indecisive and inconsistent leadership, thus questioning the appropriate positioning of project managers within the organizational structure. With management under increasing pressure to produce short-term financial savings through improved productivity, managers need to ensure that those projects with long-term strategic focuses were not excluded on the basis of their intangible and nonfinancial benefits. The case study points to the significance of human and organizational factors, and exemplifies the need to take account of such issues within any robust evaluation criteria, thus heightening the significance of the proposed technology management taxonomies. Acknowledgements The authors thank the case study company for its participation in this study. Without the cooperation and support of management and employees the research could not have been undertaken. The authors are also grateful to the five anonymous referees for their helpful and constructive comments, which helped improve this manuscript. Note The previously formed software selection and implementation team took the initiative to implement bespoke MRPII development. They perceived that the company would be more satisfied with the results of their ‘own’ system, rather than the implementation of ‘rigid’ vendor software. References 1 Bonoma, T. V. Case research in marketing: opportunities, problems, and a process. Journal of Marketing Research, 12 (1985), 199–208. 2 British CIMA/IProdE. Justifying Investments in Advanced Manufactur- ing Projects. London: Kogan Page, 1987. 3 Cox, J. F., and Clark, S. L. Problems in implementing and operating a manufacturing resource planning information system. Journal of Man- agement Information Systems, 1, 1 (1984), 81–101. 4 Dane, F. C. Research Methods. Pacific Grove, CA: Brooks-Cole, 1990. 5 Ezingeard J N., Irani, Z. and Race, P. Assessing the value and cost implications of manufacturing information and data systems: an empirical study. European Journal of Information Systems, 7, 4 (1999), 252–260. Evaluating the Impact of IT on the Organization 421 6 Farbey, B., Land, F. and Targett, D. IT Investment: A Study of Methods and Practices. Kent, UK: Management Today/Butterworth-Heinemann Ltd., 1993. 7 Fieldler, J. Field Research: A Manual for Logistics and Management of Scientific Studies in Natural Settings. San Francisco: Jossey-Bass, 1978. 8 Galliers, R. D. Choosing information systems research approaches. In R. D. Galliers (ed.), Information Systems Research – Issues, Methods and Practice Guidelines. Oxford, UK: Blackwell Scientific, 1992, pp. 144– 162. 9 Hakim, C. Research Design: Strategies and Choice in the Design of Social Research. London: Allen and Unwin, 1987. 10 Harris, S. Human Communication and Information Systems. Oxford, UK: NCC Blackwell, 1996. 11 Heald, K., and Kelly, K. ARM research predicts EPR market will reach $72.63 billion by 2002, ARM Research, November 2d, 1998. 12 Hyde, A. Failure? – who says? The Computer Bulletin, 26–29 July, 2000. 13 Irani, Z., Ezingeard, J N. and Grieve, R. J. Integrating the costs of an IT/ IS infrastructure into the investment decision making process. The International Journal of Technological Innovation. Entrepreneurship and Technology Management (Technovation), 17, 11–12 (1997), 695–706. 14 Irani, Z., Love, P. E .D. and Hides, M. T. Investment Evaluation of New Technology: Integrating IT/IS Cost Management into a Model, Associa- tion for Information System, 2000 Americas Conference on Information Systems (AMCIS 2000), CD Proceedings, 10–13 August 2000, Long Beach, CA. 15 Jick, T. D. Mixing qualitative and quantitative methods: triangulation in accumulation. Administrative Science Quarterly, 24, 602–611, 1979. 16 Kaplan, R. S. Financial justification for the factory of the future. Working Paper, Harvard Business School, 1985. 17 Khalifa, G., Irani, Z. and Baldwin, L. P. IT Evaluation Methods: Drivers and Consequences, Association for Information System, 2000 Americas Conference on Information Systems (AMCIS2000), CD Proceedings, 10–13 August 2000, Long Beach, CA. 18 Remenyi, D., Money, A., Sherwood-Smith, M. and Irani, Z. The Effective Measurement and Management of IT Costs and Benefits, Professional Information Systems Text Books series, 2d ed., Kent, UK: Butterworth- Heinemann/Computer Weekly, 2000. 19 Ryan, S. D., and Harrison, D. A. Considering social subsystem costs and benefits in IT investment decisions: A view from the field of anticipated payoffs, Journal of Management Information Systems, 16, 4 (2000), 11–40. 422 Strategic Information Management 20 Serafeimidis, V. and Smithson, S. Information Systems Evaluation in Practice: a case study of organisational change. Journal of Information Technology, 15, 2 (2000), 93–105. 21 Shaughnessy, J. J. and Zechmeister, E. B. Research Methods in Psychology, 3d edn, Boston: McGraw-Hill, 1994. 22 Voss, C. A. Managing advanced manufacturing technology, International Journal of Operations and Production Management, 6, 5 (1986), 4–7. 23 Yin, R. K. Case Study Research: Design and Methods. Applied Social Research Methods Series, vol. 5. London: Sage Publications, 1994. Copyright © 2000 by M. E. Sharpe, Inc. Irani, Z. and Love, P. E. D. (2000) The propagation of technology management taxonomies for evaluating investments in information systems. Journal of Management Information Systems, 17(3), Winter, 161–177. Questions for discussion 1 We often talk of tangible and intangible benefits when evaluating IS/IT investments. How useful is this distinction? Consider the case study discussed in this chapter and the benefits identified when answering this question. Can you think of other benefits – tangible or intangible – that might also have been identified by the authors? 2 In Chapter 20, Willcocks and Lester talk of the IT productivity paradox. Relate the conclusions to be drawn from this chapter and theirs. 3 Why do many organizations ‘approach the whole management of [information] technology in an unstructured or ad hoc manner throughout the systems’ lifecycle’? Why don’t they view it ‘as a structured iterative business process’ as the authors of this chapter recommend? 4 How might a company use the findings from the case study research reported in this chapter in parallel with the kind of ‘stages of growth’ framework introduced in Chapter 2? 5 Compare and contrast the findings and recommendations reported in this chapter with those of Willcocks in Chapter 9. Part Four Information Systems Strategy and the Organizational Environment The focus of this final part of the book is the outer shaded portion of our conceptualization of strategic information management, reproduced below as Figure IV.1. It is concerned with the wider context within which information systems strategy takes place: the organizational environment. As such, it reflects on such issues as information technology and the globalization Figure IV.1 The focus of Part Four: information systems strategy and the organizational environment 424 Strategic Information Management of business;* alternative organizational arrangements; decision making in organizations, and organizational culture and knowledge management. New to this edition are chapters on the impact of IT on customer relationship management and the impact of IT on organizational learning. Part Four commences, in Chapter 15, with an article by Lambert and Peppard that looks at IT and new organizational forms. By the latter they mean structure, systems, management style, cultures, roles, responsibilities, skills and the like. The authors remind us that ‘Organizations must adopt a form that is appropriate to their strategy and the competitive position within which they find themselves’, bearing in mind the opportunities afforded by IT. A range of alternative organizational forms are presented, as is a framework which should prove useful when dealing with the myriad complex issues associated with migrating towards an appropriate new form. Their framework pays considerable attention to change management issues (cf. once again, the innermost circle of our conceptualization of strategic information management, and Chapters 5 and 6). For further reading on the general topic of organizational transformation, see Kochan and Useem (1992), from which Chapter 5 is extracted. For more on IT and organizational transformation, see, for example, Scott Morton (1991) and Galliers and Baets (1997). We turn our attention, in Chapter 16, to the effects of information technology on organizational decision making. Written by Huber, this chapter is not alone in this collection in being of particular relevance to MBA audiences, drawing, as it does, from a range of disciplines, in this instance from the worlds of organization science and communications, as well as information systems. As Gibbons (1995) has argued, it is through trans-disciplinary research of this kind that new knowledge is more likely to be obtained. Huber’s intent is to reinvestigate components of organization theory, given that much of this had been formulated ‘when the nature and mix of communication technologies were relatively constant, both across time and across organizations of the same general type’. Citing the advent of electronic mail, image transmission, computer conferencing, expert systems, external information retrieval systems, and the like, Huber sets out to explore how such new technologies as these might impact organizational forms, intelligence and decision making. A series of propositions are set forth, connected with constructs and concepts, from which a conceptual theory is developed. He concludes, inter alia, that researchers in organization science ‘should study advanced information technology as . . . an intervention or jolt in the life of an organization that may have unanticipated consequences with respect to evolved organizational design’. The collective experiences of our readers are likely to conclude that he is right on this score! More positively, he also concludes that IT is likely to improve decision making and enable new organizational forms. Reasons for possible impediments to the former, however, are uncovered in Chapter 19 that then follows. For further reading on IT and organizational structure and decision making, see, for example, Fiedler et al. (1996), Leidner and Elam (1993, 1995), Molloy and Schwenk (1995), Orlikowski and Robey (1991) and Tavakolian (1989). In Chapter 17, Leidner reflects on the issues associated with current attempts to implement knowledge management systems (KMS) in organizations and their, at times, limited impact, due to clashes with corporate culture. The author introduces the chapter with an insightful account of developments over the years in information systems designed to support managerial and operational activity in organizations, preceding the more recent developments in KMS. Providing a complementary account to that presented in Chapter 1, Leidner focuses attention on the implementation effects and requirements of various types of information system, from management information systems (MIS), to decision support systems (DSS), to executive information systems (EIS), to KMS. She notes a trend from a ‘one system for all users’, to a ‘one system for one user’, to an ‘anyone, anywhere, anytime’ information provision strategy in line with these developments. Reflecting on organizational culture issues, Leidner illustrates how the * See also, for example, Walsham (2001) and Castells (2001). Information Systems Strategy and the Organizational Environment 425 necessity for user participation in the information systems development and design process has progressed, in the light of these developments, from involvement during earlier stages of analysis and design to active contribution of user knowledge with KMS. This is where her concept of information culture comes in, with a series of propositions that help illustrate, inter alia, the circumstances in which knowledge is more or less likely to be shared by actors in organizations, dependent on their view as to whether this information is an individual or corporate asset. While knowledge management may be considered a relatively new topic, it is in essence an extension of the broader issue of organizational learning. Chapter 18 offers an interesting analysis of the introduction of IT in an organization and subsequent learning. Pentland views organizations as knowledge systems composed of a collection of knowledge processes, including constructing, organizing, storing, distributing, and applying. Pentland analyses the case of a small engineering consulting company that implemented a new information system to automate one of its core business activities. He shows how information systems influence not only the objects of knowledge but also the criteria for knowledge construction. Chapter 19 introduces a topic new to this edition, that of improving customer support with information systems. El Sawy and Bowles provide insights for designing IT-enabled customer support processes that enable a company to meet the requirements of operating in a fast response, internetworked world. The system they describe provides an infrastructure for problem resolution that includes a customer support knowledge base whose structure is dynamically updated based on adaptive learning through customer interactions. Whereas the previous chapter focuses on individuals learning through information systems, this chapter poses the opportunity of systems learning through the information input by people. El Sawy and Bowles provide observations that can be useful starting points for any firm wanting to think of ways to utilize information technology to improve customer relationships. We conclude, in Chapter 20, with a look at what has been termed the IT productivity paradox – the problem that many organizations face in obtaining business advantage from their IT, despite the dramatic developments in the technology that we have witnessed over recent years, and despite the considerable investment made in this technology by many companies. Written by Willcocks and Lester, it proposes a means of linking business and information systems strategy by prioritizing IT investments, setting interlinking performance measures and considering external IT services as well as internally developed solutions. In many ways, then, the holistic stance taken by the authors makes Chapter 20 an appropriate place to bring our consideration of strategic information management to a close, since it tries to integrate many – although by no means all – of the issues raised in the book. The overall intention of the chapter, as well as Strategic Information Management as a whole, has been to enable organizations to obtain greater business value from their investments in IT. This can only be achieved by executives understanding the issues, getting involved and taking responsibility in this key area. We hope we have gone some way in assisting in this process. References Castells, M. (2001). The Internet Galaxy, Oxford University Press, Oxford. Fiedler, K. D. Grover, V. and Teng, J. T. C. (1996) An empirically derived taxonomy of Information Technology structure and its relationship to organizational structure. Journal of Management Information Systems, 13(1), Summer, 9–34. Galliers, R. D. and Baets, W. R. J. (1998) Information Technology and Organizational Transformation: Innovation for the 21st Century Organization, Wiley, Chichester. Gibbons, M. (1995) The New Production of Knowledge: The Dynamics of Science and Research in Contemporary Societies, Sage, London. Kochan, T. A. and Useem, M. (eds) (1992) Transforming Organizations, Oxford University Press, New York. [...]...426 Strategic Information Management Leidner, D E and Elam, J J (1993) Executive information systems; their impact on executive decision making Journal of Management Information Systems, 10(3), 139–156 Leidner, D E and Elam, J J (1995) The impact of executive information systems on organizational design, intelligence and decision making... The effects of Information Technology on strategic decision making Journal of Management Studies, 32(5), 283–311 Orlikowski, W and Robey, D (1991) Information Technology and the structuring of organizations Information Systems Research, 2(2), 143–169 Porter, M E (1990) The Competitive Advantage of Nations, Macmillan, Basingstoke Scott Morton, M S (ed.) (1991) The Corporation of the 1990s: Information. .. distortion and manipulation In a network, especially a global network that extends across borders, information must be visible and simultaneous Members of the network receive the same information at the same time Not only must hard information be presented, but also more qualitative information, not just external information but members’ experiences, successes, views and problems The single most important... transformation 446 • Strategic Information Management Managing the migration How do we manage the migration from the existing organization form to a new form? The concern here is with the change management process which seeks to ensure the successful transition from the old form to the new form A particularly difficult area to tackle here is an organization’s ability to incorporate information systems /information. .. responsiveness, flexibility and innovation will be key corporate attributes for successful organizations Information plays a critical role in improving these within today’s organization However, traditional organizational forms have significant limitations in supporting the information- based organization Information technology must share responsibility for much of the rigidity and inflexibility in organizations... (1989) see self-governing units as being one of the impacts of IT The Information Technology–Organizational Design Relationship 437 Table 15.1 Mechanistic versus organic organizations Element Mechanistic organization Organic organization Channel of communication Highly structured Controlled information flow Open; free flow of information Operating style Must be uniform and restricted Allowed to vary... • Strategic Information Management networks differ from teams, cross-functional task forces or other assemblages designed to break hierarchy networks are not temporary; teams generally disband when the reason they were assembled is accomplished networks are dynamic; they do not merely solve problems that have been defined for them networks make demands on senior management In most organizations, information. .. University Press, New York Tavakolian, H (1989) Linking the Information Technology structure with organizational competitive strategy: a survey MIS Quarterly, 13(3), September, 309–319 Walsham, G (2001) Making a World of Difference: IT in a Global Context Wiley, Chichester 15 The Information Technology–Organizational Design Relationship Information technology and new organizational forms R Lambert... integrating information flows With BPR the emphasis is on processes which transcend functional units It seeks to challenge existing assumptions relating to how the organization operates It * For a discussion on the ‘process’ notion see Chris Edwards and Joe Peppard, Business Process Redesign: Hype, Hope or Hypocrisy? Cranfield School of Management, Cranfield, Bedford, 1993 442 Strategic Information. .. myth or theory of what is happening in the world With this in mind, they create a strategy to react to this myth so that they can form defence networks against information overflows from other myths and map information into definitions The Information Technology–Organizational Design Relationship 443 of their situations They then test the strategy out on the world and evaluate its success Mason and . 19 that then follows. For further reading on IT and organizational structure and decision making, see, for example, Fiedler et al. ( 199 6), Leidner and Elam ( 199 3, 199 5), Molloy and Schwenk ( 199 5),. and Useem, M. (eds) ( 199 2) Transforming Organizations, Oxford University Press, New York. 426 Strategic Information Management Leidner, D. E. and Elam, J. J. ( 199 3) Executive information systems;. Schwenk, C. R. ( 199 5) The effects of Information Technology on strategic decision making. Journal of Management Studies, 32(5), 283–311. Orlikowski, W. and Robey, D. ( 199 1) Information Technology