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  • 1. Introduction ICT-enabled The 1990s witnessed the failure of many organisations: a model planned change interventions to achieve their original objectives or realise significant ``hard'' for change or ``soft'' business benefits for host management organisations in Australia, the USA, and the UK (Carlopio, 1998; Wilkinson et al., 1998; Zbaracki, 1998; Burnes, 1996; Stace and Scott Gardner and Dunphy, 1995). Colin G. Ash IT focused interventions, such as business process re-engineering (BPR) and enterprise resource planning (ERP), feature prominently in this catalogue of costly change failures, with The authors reported levels of satisfaction with strategic IT investments among surveyed senior executives Scott Gardner is a Lecturer, Graduate Programs, and in US corporations (1989-1997) ranging from Colin G. Ash is Associate Head of School, both at Edith 20-75 per cent (Thorpe, 1998; Sauer, 1997; Cowan University, Churchlands, Perth, Australia. Holland and Kumar, 1995). Ironically many respondents were senior managers who Keywords sanctioned investment in strategic information systems with which they ``wanted to be seen to Strategy, Change management, Information technology, engage'', but neither ``trusted nor understood'' Organizations, United Kingdom, Norway contributing to an estimated US$145 billion in write-offs for US corporate IT investments Abstract in the mid-1990s (King, 1997, cited in Presents a preliminary framework for making sense of and Thorpe, 1998, p. 12). McHugh (2000) cites managing change in organisations that have adopted several more recent examples of ``Faustian'' information systems and e-commerce as a core element of IT contracts signed by big corporate clients their business strategy. Argues that the relatively low buying into ERP, claiming that 37 out of 100 level of organisational benefits realised by typical US executives responsible for ERP adoptions between 1996 and 1999 could not identify any strategic information technology interventions over the positive impact of these systems for their past decade is often a product of poor adoption and businesses. implementation practices on the part of senior managers While IT writers, including Thorpe (1998) and IT practitioners, who have failed to understand the and Koh et al. (2000), suggest that these non-linear and emergent nature of change in complex failure rates will decline with systems organisations. Argues that a clear understanding of the advancements, maturation in project dynamics of change at the people/technology interface, management and improved benefits and the symbiotic relationship between information realisation models, the continuing impact of systems and strategy, is a prerequisite for the successful IT based change failure on corporate business benefits realisation for major IT and e-business profitability and effective organisational projects. Distils lessons learned from reflections on functioning in all sectors continues to warrant theories-in-use and practice into a basic model for senior closer investigation. This requirement is managers and IT practitioners. reinforced by the disappointing level of business benefits realised by client Electronic access organisations from the latest wave of enterprise-wide customer relationship The Emerald Research Register for this journal is management (CRM) technologies, with over available at 55 per cent offering no significant returns, http://www.emeraldinsight.com/researchregister and low levels of executive confidence ± both reported in major US corporate IT surveys The current issue and full text archive of this journal is (Bain, 2001, cited in Rigby et al., 2002). available at http://www.emeraldinsight.com/0957-6053.htm Research objectives and methodology Logistics Information Management Volume 16 . Number 1 . 2003 . pp. 18-24 # MCB UP Limited . ISSN 0957-6053 A comprehensive investigation of the factors DOI 10.1108/09576050310453705 that determine IT-based change failure or 18
  • 2. ICT-enabled organisations: a model for change management Logistics Information Management Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24 success is beyond the scope of this paper individual behaviours, team and which aims to inform future practice in the organisational performance was popularised field of change management, by investigating by Kurt Lewin, Rensis Likert and other US- the dynamic relationship between strategy, based figures in the organisational change management practices, and fifth development movement of the 1950s to the generation information and communication 1970s. During the same era Europe and technologies (ICT), within complex Scandinavia witnessed the emergence and organisational environments. More growth of socio-technical movement, which specifically, the role of information systems made a significant contribution to current within the broader change management systems thinking and the nature of equation will be explored. interactions between people and technology The investigation and subsequent analysis (Waddell et al., 2000). were undertaken with reference to: Although the popularity of OD and socio- . Recent literature on strategic approaches technical schools of thought declined in the to change management and strategic 1980s, many of their fundamental principles information systems to highlight key and methods have been carried forward into concepts and current applications, current change management consulting successes and failures in these fields; practices (Stace and Dunphy, 1994). . Data from interviews with four In the 1980s and 1990s the dominant experienced IT consultants and two approaches to planned change were premised senior IT project managers, to provide on the assumption that structures, processes, insight into the limitations of current IT- technology and human skills, capabilities and based change consulting practices; knowledge can be reconfigured to support or . Two recent case examples: a provincial optimise the achievement of identified bank which combined BPR and strategic goals. These included total quality e-business technologies as part of a management (TQM); BPR and various forms successful strategy to capture a significant of strategic IT interventions including ERP share of the online housing loans market and e-commerce systems (Stace and Dunphy, in the UK market between 1995 and 2001; Wilkinson et al., 1998; Burnes, 1996). 1998, and an offshore petroleum As discussed in section one of this paper, engineering company which used Web planned change in its various forms had a front-end technology with ERP to make fairly poor track record throughout the 1990s, significant efficiency gains for minimising with TQM, BPR and IT failures incurring offshore personnel costs and optimise use massive financial and human resource of the available labour pool. deployment costs, with limited returns to the These case examples of ICT as a platform for client organisation. While the reasons for change will be discussed in the fifth section these failures are manifold, it is proposed that following a consideration of some of the senior management's view of strategy as a typical problems and issues associated with linear process, implemented through information technology projects in the fourth conventional project management models, section. The next section briefly examines the over predictable time frames, was a major defining characteristics of strategic change contributing factor. This mechanistic view of management and the enabling role of IT. strategic change, which ignores the emergent, processual, and relationship-based models advanced by prominent theorists in the field of strategy and change management Strategic approaches to change management including: Quinn (1980), Pettigrew and Whipp (1991), Mintzberg and Quinn (1991), The notion of implementing planned reforms and Stacey (2000), is particularly evident in to reorder the human and technological major IT project implementations. These dimensions of the organisation has been in were characterised by a deterministic, existence since the conception of the earliest strategy-in-a-box approach, where people are armies and bureaucracies pre-dating configured around systems to ensure optimal Christian times (Postman, 1992). organisational performance. Taken to its In recent times the idea of planned logical extreme technology becomes strategy interventions to bring about changes in or an end in itself. 19
  • 3. ICT-enabled organisations: a model for change management Logistics Information Management Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24 This tendency is illustrated by Markus and Y2K and other legacy system problems. Benjamin's (1997) ``magic bullet'' analogy Clients were criticised for their lack of where IT practitioners naõvely assume that, by È up-front consultation with their own senior IS building or designing a powerful technology to specialists, acceptance of unrealistic budgets be shot into the problem area, desirable and deadlines from consultants and failure to changes will result when the technology establish a clear business case for systems penetrates the human and technological fabric adoption. According to Thorpe (1998) these of the organisation (Markus and Benjamin, types of adoption practices reflect linear 1997, p. 57). This deterministic and flawed industrial age thinking, based on the conception of the role of ICT within the assumption that plugging in extra change management equation is identified by technological capacity will necessarily the authors and the interviewed respondents generate business efficiencies and more profit. as a major contributor to project failures in a range of organisational environments. Vendor issues To advance our understanding of Vendor indifference to the specific human, IT-focused change within complex ICT- operational, and business requirements of enabled environments, the paper will explore client organisations was identified as a major some of the factors that precipitate the contributor to project failure or low levels of success or failure of technology-focused benefits realisation. Vendors were seen to be interventions. In the final section a model is primarily concerned with selling template presented which attempts to explain the solutions on set margins that could be rolled complex interaction between strategy, out across a clearly defined time frame. This technology and people within this type of problem was compounded by the high costs networked organisation and the symbiotic associated with product customisation, relationship between strategy and information switching to an alternative vendor if systems. dissatisfied, and the general disruption to workflow and productivity caused by system installation disruptions. Each of these factors Interview findings: IT project failures contributed to low returns for the organisation on the original IT investment. Interviews were conducted by the researchers, with four experienced IT consultants and two senior IT project directors between October Consultant issues 2000 and February 2001, to provide an Not surprisingly, many of the consultant and insight into current IT-focused change vendor issues were similar, given that some management contexts, approaches and consultants worked for the vendor, whilst practices. The principal concern was to others worked closely with the vendor (on establish the factors that led to the relative behalf of the client). From the perspective of success or failure of strategic IT-based change the two project managers interviewed the projects, with respect to their original goals. biggest problem for them was the increasing In addressing the broad themes identified in tendency for consultancies to hire the semi-structured interview format, the ``technicians'' trained to follow standardised respondents emphasised issues and barriers methodologies, rather than strategists who that they saw as contributing to IT change understood the organisation's business model failure in various contexts. These are and were capable of implementing change described below as Client, Vendor and across the people/technology interface. Consultant issues: Client issues Case study insights Senior management (client) ignorance of IT applications and their potential ramifications Case 1: Bank.com throughout the adoptive organisation was The case of a highly conservative, provincial identified as a prime contributor to project UK bank that used BPR and Web-based failure. Two respondents noted that several technologies to become a major player in the clients with whom they had dealt had adopted UK Internet home loans market is a high cost (typically US$5m, plus) ERP remarkable illustration of both effective technologies as a silver bullet solution to fix management and subsequent 20
  • 4. ICT-enabled organisations: a model for change management Logistics Information Management Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24 mismanagement of the technology/strategy As an IT-based change initiative, the relationship. re-engineering of the original bank structure, In the early 1990s the conservative lending processes, and information technology base to policies and traditional branch banking create Bank.com and two other streamlined structure that had served the bank well in business units proved to be a great success. their traditional provincial markets during the The BPR intervention saved the business an 1980s looked like becoming an increasing estimated £30.1 million per annum and, liability with the entry of major UK and combined with the value analysis European players. The prospect of steady methodology, reduced the cost of processing erosion of their core customer base by a housing loan by over 50 per cent. The institutions with immense capital bases, bank's Internet-based business grew at 25 per superior technology and international cent per annum between 1996 and 1999. In networks and the increasing danger of a 1999 the bank estimated that the return from forced merger or take-overs, moved the their investment in consulting and bank's conservative board to initiate a survival information technology adoption since 1995 strategy. This required a massive departure was in the order of ten to one. from their existing approach to lending Since that time the bank has continued to through detailed personal vetting of record a steady increase in profitability due customers and an extended approvals more to the rapid growth in the UK housing process, which passed through seven layers of loans and financial markets during 2000 than effective strategic and business management. hierarchy for loans over £100,000. In 1995 the board was persuaded that early However, major changes in the bank's top team in 1999 and 2000, combined with entry into the new technophile, 18-35 year increased exposure to high risk commercial old, Internet-based banking market loans, led to increasing concerns being voiced represented their only significant opportunity by shareholders and analysts in the UK for expansion into the broader UK market. At business media. These concerns were the same time they sought to recoup compounded in 1999 by the departure from significant business benefits from the new the 1995-1998 business model through the Internet technologies within a two-year period use of CRM technologies, in an attempt to from 1996-1998, whilst maintaining their no integrate three successful, stand-alone forced redundancy policy. business units. Paradoxically, the board's Despite the considerable challenge involved decision to roll back the implementation of in achieving these apparently conflicting their CRM project with £80 million spent in objectives, both outcomes were achieved. The 2001 reversed many of the gains from the first through an innovative staff redeployment investment in BPR and Internet technologies, strategy, which transferred branch employees as tools with a clearly defined enabling role into a massive centralised call centre servicing within a well conceived business model. As a the entire UK market for Internet-sourced consequence the executive team were forced housing loans. The second through a change within a few months of the decision to strategy combining BPR, value chain analysis, reluctantly accept a merger deal with a major cost cutting, and an aggressive Web-based competitor, effectively changing the bank's business-to-customer (B2C) marketing identity forever. strategy. Under the new business model three Case 2: Engineer.com distinct businesses were identified under a Engineer.com is the Norwegian-based holding company structure: the traditional operation of a large US multinational and a ``Retail'' branch banking network; global leader in energy services, equipment, ``Commercial'' banking; and ``Bank.com''. engineering and construction. Until recently The bank was able to offer a combination of one of the major challenges facing the traditional and electronic banking services. company was the high cost of employee These covered UK-based, Offshore, and resourcing for its offshore oil and gas International customers, with low cost, credit operations, particularly with regard to scored housing loans supplied online through scheduling, shift arrangements, and the the call centre and broker network, which associated logistics for skilled recorded a turnover of over £250m in 1999. offshore workers. 21
  • 5. ICT-enabled organisations: a model for change management Logistics Information Management Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24 In order to minimise these costs through operation for staff, through flexible access and optimal work scheduling and shift patterns better presentation of R/3 HR data offshore the management realised that they needed projects (Ash and Burn, 2001; Ash, 2000). remote access to relevant HR data such as As a further measure of its success and shift details and updates on local employment strategic application for the organisation, the regulations. There are significant penalties in e-business solution was expanded to include Norway for companies that employ foreign the IT department's computer hardware workers beyond an agreed time quota. tracking system and was incorporated as a key Although the need to drastically reduce component of the company's global ICT personnel deployment costs was apparent to network. the offshore project managers, the bureaucratic and autocratic culture of the organisation had previously prevented a Managing emergent change? creative solution emerging from management or other key players in the organisation. Early The bank and the engineering company cases in 1999 the situation changed when the HR both demonstrated the benefits of judicious manager and project team championed the use of IT and Internet technologies as tools to idea of a personnel management intranet to support a business model with objectives leverage the power of graphics and Internet shared and understood by all major project or technology and extend the reach of the program stakeholders including: senior existing ERP system to remote users seeking managers; IT specialists; business unit real time access to crucial deployment and managers, HR managers, and other change scheduling data. Following an intensive six- agents responsible for the implementation, month period spent educating peers, project communication or facilitation of the broader managers, and other potential system users on change process. The need for shared the benefits and applications of the understanding of the role of technology technology and building a sound business within the change management and strategy case for senior management, the HR team process has also been identified as a unifying were successful. The intranet project was theme (Remenyi, 1999; Beckford, 1998). adopted and fully operational within a year, However, future change management with the significant addition of wireless practitioners face a significant challenge in application protocol (mobile) technology to trying to deliver ambitious business outcomes enhance network accessibility. for organisations operating in increasingly Within six months of the new system being complex and dynamic ICT-enabled network established and being accepted and environments. New theories and models of understood by the project managers and other change management are required to help key stakeholders, significant cost savings of practitioners understand the complex over US$100k were recorded. The major dynamics of change within organisational benefits realised from the application of the networks seeking to harness the power of the new technology resulted from optimised shift fifth generation information and patterns and increased flexibility in the communication technologies (Savage, 1996). deployment of staff and contract personnel, in Figure 1 represents a first step towards response to delays, downtime and other building this understanding by serving as a offshore operational contingencies. Other common reference point for senior managers, related benefits identified by the researcher IT practitioners, other change agents and key included: cost savings in sourcing and inter-organisational stakeholders, such as managing of contract staff; improved major customers and suppliers. It illustrates relationships between the company's onshore how an emergent strategy process, focusing and offshore management staff and the local on broad corporate intent rather than fixed government agencies responsible for goals, informs, and is informed by, the supplying and regulating the deployment of application of well defined and widely staff; improvements in IT end user skills; understood business models. These are better decision making by project managers designed to support achievement business resulting in reduced uncertainty surrounding unit goals and broader organisational work patterns and continuity amongst staff outcomes, by supporting and shaping and contractors; and increased ease of electronic transactions with consumers and 22
  • 6. ICT-enabled organisations: a model for change management Logistics Information Management Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24 Figure 1 Dynamic model of change in ICT-enabled networks It is proposed that emergent change, although difficult to manage in a conventional sense, can be shaped, harnessed or purposefully oriented under certain conditions. These include: shared stakeholder goals, a clear understanding of the business model, its objectives, and the role of technology within the process; creation of common ``IT change management'' protocols and conventions; and ongoing use of facilitated forums required to support knowledge integration, through in-context interpretation of emergent change. Change in ICT contexts should be managed and shaped through mutual adjustment of the change implementation other businesses, and day-to-day interactions approaches employed by IT practitioners, line with staff through the intranet and allied managers, and other active stakeholders. This networks. suggests the need for change agent attributes Significantly, the success of these business suited to non-linear, and at times chaotic, models within a complex ICT-enabled environments, notably: flexibility of thought context, is determined not by a single variable and action; skilful interpretation of change like technology or people but the contexts and contingencies; and crucially the management of both planned change and the ability to create and facilitate purposeful emergent changes generated at the people/ electronic and face-to-face dialogue, amongst technology interface. In this context the role key stakeholders throughout the of the IT project director or other designated organisational network. Broader adoption of change agents becomes that of moderator, these ideas may go some way towards interpreter, and manager of change. This reconciling the tension between second represents a considerable shift from generation management practices and fifth conventional linear IT project management generation technologies, which continues to models of organisational change, which pre-determine change failure in complex assume that effective planning, budgeting, organisations. controls and communication will deliver desired business results within a realistic timeframe. The recent history of IT failure References suggests that a new theory-in-use may be Ash, C.G. (2000), ``E-business change and personnel called for to help managers make sense of the performance: a case study of an ERP-enabled complex change dynamics of ICT-enabled organisation'', Proceedings of the BIT'2000 environments. Conference ± Generative Futures, MMU, Manchester, 1-2 November. Ash, C.G. and Burn, J.M. (2001), ``Evaluating successful e-business change through ERP'', Proceedings Conclusion Americas Conference of Information Systems AMCIS'2001, Bentley College, Boston, MA, Change in complex information and 3-5 August. communication technology-enabled Beckford, J. (1998), Quality: A Critical Introduction, organisations is generated at the interface Routledge, London. Burnes, B. (1996), Managing Change: A Strategic between people, technology, and change Approach to Organisational Dynamics, 2nd ed., agents. While conventional change theories Pitman, London. and methodologies assume that change can be Carlopio, J. (1998), Implementation: Making Workplace planned and systematically managed through Innovation and Technical Change Happen, a series of programs or interventions, the McGraw-Hill, Sydney. Holland, D. and Kumar, S. (1995), Getting Past the model indicates that this process is Obstacles to Successful Reengineering, cited in constrained in complex networked Fitzpatrick, P. and Terziovski, M. (1999), ``Critical environments. predictors of business process reengineering success 23
  • 7. ICT-enabled organisations: a model for change management Logistics Information Management Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24 in the Australian financial sector'', Proceedings: 3rd Teaming and Knowledge Networking, Butterworth- International and 6th National Conference on Heinemann, New York, NY. Quality Management, Singapore, May. Stace, D. and Dunphy, D. (1994), (2001), Beyond the Koh, C., Soh, C. and Markus, M.L. (2000), ``ERP Boundaries: Leading and Recreating the Successful implementation and impacts: the case of Revel Enterprise, 2nd ed., McGraw-Hill, Sydney. Asia'', Journal of Information Technology: Cases and Stacey, R.D. (2000), Strategic Management and Applications, Vol. 2 No. 1. Organisational Dynamics, 3rd ed., Financial Times/ McHugh, J. (2000), ``Now we know how ERP software's Prentice-Hall, London. promise died ± and who killed it'', eCompany Now, Thorpe, J. (1998), The Information Paradox: Realising the June. Benefits of Information Technology, McGraw-Hill, Markus, L. and Benjamin R.I. (1997), ``The magic bullet Toronto. theory in IT-enabled transformation'', Sloan Waddell, D., Cummings, G. and Worley, G. (2000), Management Review, Winter. Organisational Development and Change, Nelson Mintzberg, H. and Quinn, J.B. (Eds) (1991), The Strategy Process: Concepts, Contexts, Cases, Prentice-Hall, Thomson Learning, Southbank. Englewood Cliffs NJ. Wilkinson, A., Redman. T. and Marchington, M. (1998), Pettigrew, A. and Whipp, R. (1991), Managing Change for Managing with Total Quality Management, Competitive Success, Blackwell, Oxford. Macmillan, Basingstoke. Postman, N. (1992), Technopoly, Knopf Publishers, Zbaracki, M.J. (1998), ``The rhetoric and reality of quality New York, NY. management'', Administrative Science Quarterly, Quinn, J.B. (1980), Strategies for Change: Logical Vol. 43 No. 3, pp. 602-36. Incrementalism, Richard Irwin, Chicago, IL. Remenyi, D. (1999), IT Investment: Making a Business Case, Butterworth-Heinemann, Oxford. Rigby, D., Reicheld, F.F. and Schefter, P. (2002), ``Avoid Further reading the four perils of CRM'', Harvard Business Review, February. Lewis, W.L. (2000), ``Exploring paradox: toward a more Sauer, R. (1997), ``Deciding on the future of IT failures'', comprehensive guide'', Academy of Management cited in Currie, W. and Galliers, R. (Eds), Rethinking Review, Vol. 25 No. 4, pp. 760-76. MIS, Oxford University Press, Oxford. Willocks, L.P. and Sykes, R. (2000), ``The role of the CIO Savage, C.M. (1996), 5th Generation Management: and the IT function in ERP'', Communications of the Co-creating through Virtual Enterprising Dynamics, ACM, Vol. 43 No. 4, April, pp. 34-8. 24