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Redesigning the Organisation with Information Systems and Managing Change

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Learning Outcomes

4. Explain how an organisation must change in order to successfully capitalise on the use of IS and the consequent impact on organisational structure and employees

– Describe techniques for organisational analysis– Describe types of organisational change– Explain impact of organisational change– Explore failure, success, risk and mitigation in IS

implementation

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Learning Outcomes

6. Produce a plan of how IS may be implemented within an organisation to provide competitive advantage

– Provide a template IS plan used to summarise and present organisational analysis and implementation

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Topics

• Organisational analysis– Enterprise Analysis– Strategic Analysis– Business Process Re-engineering– Soft Systems Methodology– Workflow management– Total Quality Management

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Topics

• Organisational change– Automation– Rationalisation– Business Process Re-engineering– Paradigm Shift

• Information Systems Plan• Implementation

– Failure and avoiding failure– Managing change– Risk and mitigation

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Source Material

• Laudon & Laudon (2002):– Chapter 10, 11

• Laudon & Laudon (2003):– Chapter 12, 13

• Beynon-Davies (2003):– Chapters 16, 33

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Organisational Change

• Successful implementation of Information Systems requires organisational change

• Why?– Change workflow– Reduction in staff– New processes and procedures– New business processes– New business strategy

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IT and Change

• Location– Global operations can be linked by digital networks

• Co-ordination and collaboration– Information can be available simultaneously to more

than one group• Distributed computing

– Distributed information and distributed actions• Portability

– Work at home, customer site, etc.

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Planned Change

• Implementation of IS must be planned to be successful

• Analysts must understand the impact of IS on business processes

• Only target those business processes necessary for improvement

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Organisational Analysis

• The analysis of– The informal systems in organisations (not

written down)– The overall objectives and needs of an

organisation, and within its environment– Identifying where IS can help

• Leads to organisation change

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Organisational Analysis

• Enterprise analysis• Strategic analysis• Business Process Re-engineering

– Workflow management– Total quality management

• Soft Systems Methodology

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Enterprise Analysis(Business Systems Planning)

• Looks at whole organisation• Large sample of managers

– How do they use information?– Where is the information from?– What environment do they work in?– What are their objectives?– How do they make decisions?– What are their data needs?

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Enterprise Analysis(Business Systems Planning)

• Strengths:– Results in an understanding of who uses what data,

which processes and functions– Mapping of existing systems shows new requirements

• Weaknesses:– Too much data– Expensive to collect– Difficult to analyse– Focuses on current practice

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Strategic Analysis(Critical Success Factors)

• Three or four interviews• Top managers:

– What are their organisational goals?• Aggregated into the organisation’s goals

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Strategic Analysis(Critical Success Factors)

• Strengths:– Smaller amount of data– Good for DSS and ESS– Focuses on new practice

• Weaknesses:– Limited data requires ‘creative’ aggregation– Confusion between personal and organisational goals– Focuses on top managers

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Business Process Re-engineering

• IT on its own delivers little value• IT can deliver value by allowing

organisational practices to change– The use of IT should initiate organisational

change– IT and human systems must be designed in

parallel: IS– The greatest benefit can come from the radical

re-design of business processes

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Business Processes

• Recall, a business process is:– A set of activities across the major functional areas of a

business that are used to accomplish the goals of the business

• They therefore:– Have inputs, processing, outputs– Support core activities– May cross over functional and organisational

boundaries– Can be designed

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Business Process Re-engineering

• Effective BPR needs senior management to instigate new business processes:– For example, (re-)defining the strategy

• Focus on a few core business processes• Must understand performance and cost of

existing processes• Use of Information Technology should

influence design

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Business Process Re-engineering

• BPR leads to major change:– Jobs (including redundancy)– Different skills– Workflows– Reporting relationships

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Workflow Management

• Re-engineer and automation of paper-based procedures– Routing– Approvals– Scheduling– Reporting– Simultaneous work on documents– Instant transfer – no more ‘in transit’– Indexing and collation of information

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Re-engineering Steps

• Develop business vision and objectives• Identify processes to be re-designed (core)• Understand performance of existing

processes• Understand Information Technology

opportunities• Prototype the new process

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Total Quality Management

• Making quality control the responsibility of all people in an organisation

• Quality of– Products– Services– Operations

• Catch problems early, they cost less

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Total Quality Management

• TQM is more incremental than BPR• Continuous improvement, rather than ‘big

bang’• May need BPR to improve quality beyond

TQM

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TQM and Information Systems

• Simplify production process– Automate to give less steps– Less steps, less chance of error– Faster production times

• Benchmarking– Use IS reporting to feedback performance of

processes– Improve processes and IS to meet benchmark

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TQM and Information Systems

• Customer Relationship Management– Used to improve quality of customer service

• Computer Aided Design– Improve quality of product design

• Production control– Automate production to improve precision

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Soft Systems Methodology

• BPR is driven from the top-down– Management defined organisational strategy– Radical form of change

• SSM is driven from the bottom-up– Stakeholders should participate in the re-design

of business processes– More evolutionary form of change

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Soft Systems Methodology

• Technique to analysis and propose change– Performed by stakeholders: involved in the change– Analysis of both culture and systems

• CATWOE:– Customers: the victims or beneficiaries of change– Actors: those making the change– Transformation: conversion from input to output– Weltanschauung: world view– Owners: those that can stop the change– Environmental constraints: elements outside the system

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Introducing Information Systems

• Analysis complete• Chosen IS to implement for business

processes• Recall that successful implementation of IS

requires– Technical changes– Organisational changes

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Types of Change

Risk

Return

Low

Low

High

High

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Types of Change

• Automation– Using computers to speed up existing tasks– Low risk, low return

• Rationalisation– Streamline procedures to improve automation– Remove bottlenecks– Low-medium risk, low-medium return

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Types of Change

• Business Process Re-engineering/Re-design– Radical re-design of business processes– Remove procedural steps– Eliminate paper-based tasks– Improve costs, quality and service– Medium-high risk, medium-high return

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Types of Change

• Paradigm Shifts– Re-thinking the nature of the business /

organisation– Complete re-conception of how the business

should function– High risk, High return

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Information Systems Plan

• Plan indicating the direction of systems development– Rationale– Current situation– Management strategy– Implementation plan– Budget

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Information Systems Plan

• Integral part of business– Strategy– Senior management level

• Defines organisational change• Short- and long-term change• Brings together organisational and technical

factors

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Information Systems Plan

• Plan will depend upon business and management style

• Plan makes the business think about what they wish to achieve and how

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Plan Contents

• Purpose of the Plan– Overview of plan contents– Changes in current situation– Firm’s strategic plan– Current organisation– Key business processes– Management strategy

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Plan Contents

• Strategic Business Plan– Current situation– Current organisation– Changing environments– Major goals of plan

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Plan Contents

• Current Systems– Major systems supporting business functions and

processes– Major current capabilities

• Hardware• Software• Database• Telecommunications

– Difficulties meeting requirements– Anticipated future demands

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Plan Contents

• New Developments– New system projects

• Project descriptions• Business rationale

– New capabilities required• Hardware• Software• Database• Telecommunications

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Plan Contents

• Management Strategy– Acquisition plans– Milestones and timing– Organisational realignment– Internal reorganisation– Management controls– Major training initiatives– Personnel strategy

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Plan Contents

• Implementation plan– Anticipated difficulties (risks)– Progress reports

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Plan Contents

• Budget requirements– Requirements– Potential savings– Financing– Acquisition

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Changes

• Recall that changes include:– Technical solutions– Types of information stored and used– How information is accessed and used– Individual and group responsibilities– New management and reporting structures– New business processes and functions

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Introducing Information Systems

• How can such systems be introduced?• We are going to look at failure in order to

understand how change must be managed

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Failure

• An Information System can be regarded as ‘a failure’ if:– It does not perform as expected– Is not operational at a specified time– Cannot be used in the way it was intended

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Failure

• IS may fail to:– Be delivered– Deliver benefits– Solve intended problems

• May be due to lack of organisational change

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Failure Types

• Design– Failure to capture business requirements– Failure to improve organisational performance– Information may:

• Not be delivered quickly enough• Not be delivered in a useful format• Not be the correct information for the purpose

– System may be difficult to use – user interface

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Failure Types

• Design– Design must take into account all these factors– Traditionally all design was technically-based

• Technically excellent solutions• Solutions that do not meet the organisational needs

– Needs to address these organisational needs

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Failure Types

• Data– Data may be

• Inaccurate• Inconsistent• Incomplete for business function

– Fields may be• Erroneous• Ambiguous• Poorly understood and not broken down

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Failure Types

• Cost– Implementation over budget– Too costly to complete– Running costs over budget– Costs may exceed business value

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Failure Types

• Operations– System runs poorly or is unreliable– Neither timely or efficient– Mostly technical reasons for failure– Can be organisational issues

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Managing Change

• Failure can be avoided by effectively managing the changes

• Recommendations:– User involvement and influence– Management support– Level of complexity and risk– Implementation management

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User Involvement and Influence

• Seen to have positive results– Users involved in design can influence outcome– Based upon their priorities and requirements– Helps them understand complex systems– Impacts positively on uptake and usage of new system

• However– Users will always focus on their current role– May not exploit opportunity to improve processes

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Difficult to Encourage User Involvement

• User concerns– Will the system deliver the information I need?– How quickly can I access the data?– How easily can I receive the data?– How much clerical support will I need for data entry?– How will the system operation fit into my daily

business schedule?

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Difficult to Encourage User Involvement

• Designer concerns– How much disk space will the database consume?– How many lines of program code will this function

take?– How can we reduce the CPU time used?– What is the most efficient way of storing this data?– What database management system should we use?

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Management Support

• Commitment from all levels of management will improve chances of success– Recognition and rewards for involvement– Sufficient funding and resources– Management backing of organisational changes

• However– Over commitment can lead to excessive

funding and resources for a failing project

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Level of Complexity and Risk

• Complexity of system relates to risk and hence failure rate– Technology (more technical = higher risk)

• Technology and expertise of staff– Definition (less definition = higher risk)

• Stable definition of requirements– Size (larger = higher risk)

• Staff, costs, time, organisation

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Level of Complexity and RiskTechnology Definition Size

Low Low Small

Low High Small

Low Low Large

Low High Large

High High Small

High High Large

High Low Small

High Low Large

Risk

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Implementation Management• Poor management makes failure more likely

– Cost overruns far exceed budget– Unexpected slippage– Technical shortfalls– Failure to obtain benefit

• Estimated that– Private sector projects are underestimated by 1.5 times budget

and time– Large number are delivered with missing functionality– 30% - 40% are ‘run-away’– 70% of BPR projects fail to deliver benefit

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Implementation Management

• Common causes of management problems:– Ignorance and optimism

• Poor ways of estimating time and budget• Not enough experience of similar projects

– Mythical man-month• More people does not equal less time• Training and expertise

– Bad news travels slowly• Slow communication of lateness to management

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Implementation Manager

• Manages implementation– Plan– Control

• Project team• Suppliers• Risk• Budget

– Problem solving– Follow methodology

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Traditional Technique

• Traditional project management techniques dealt with the size and complexity of the project

• Modularisation of project:– Breakdown to subprojects / tasks

• Schedule, milestones, budget

– Assign team to subprojects / tasks• Focus is on project mechanics, not business

objectives

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“Fourth-generation” Project Management

• Emerging as a way to manage high-risk organisational change projects:– Large implementation– Business process re-engineering– Enterprise systems

• Plan for business goals, not project mechanics• Focus on solving problems• What opinion do you have on this?

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Implementation Management: Controlling Risk

• One of the tasks of an implementation manager is to control risk

• Large projects will have a dedicated risk manager

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Risk Examples

• Organisational– Management / user / customer support– Requirements fully analysed

• Technological– Inadequate, unproven, unreliable– Not available (‘smoke and mirrors’ only)– Project team have insufficient knowledge– Requirements fully analysed

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Risk Examples

• Project and control– Insufficient budget– Insufficient resources

• Hardware / software• Staff• Training

– Insufficient time– Supplier / subcontractor delays

• ‘Acts of God’

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Contingency

• Simple form of risk analysis assigns a likelihood and cost to each risk

• Contingency for a risk is then likelihood times cost

• Total contingency must be factored into project

• Factor in liquidated damages?

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Controlling Risk

• Increasing user involvement– Users can become active project members– Control installation and training– Input into requirements and design– Involved in testing and trials

• May not be enough to overcome resistance to change– Redundancy?

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Controlling Risk

• Manage technical complexity– Managers must understand technical constraints– Build good relationships with team / suppliers– Anticipate problems:

• Supplier delays• Training• Hardware and software requirements

– All team members must have access to technical decisions and supporting information

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Controlling Risk

• Formal planning and control– Gantt and PERT charts– Schedule, resources and milestones– Critical path analysis– Help break down to subprojects / tasks– Assess project status – milestones and budget

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Example Gantt2

2Microsoft Project: http://www.microsoft.com/office/project/default.asp

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Organisational Change

• Remember:– Implementation of Information Systems is both

technical and organisational (sociotechnical)– Implementation must take into account both

technical and organisational change• What impact do Information Systems /

Information Technology have on an organisation?

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Summary

• Organisational analysis– Gathering and analysing information

• Organisational change– Types of change and associated risk

• Information Systems Plan• Implementation

– Failure and avoiding failure– Managing change– Risk and mitigation