Challenges of IT Implementation

Challenges of IT Implementation
Ismail Bin Ahmed
August, 2006

1
Contents
Introduction
IT and Challenges
1. IT People Glorify IT and Ignore Human Psychology
2. Information Needed – What Kind and When
3. IT Infrastructure
4. Technological Life-Cycle
Solutions: What Makes for Success?
Solutions: Business and IT Maxims According to Weill & Broadbent
Conclusion
Bibliography & References

2
Challenges of IT Implementation
Introduction
The beginning of the modern information era started when Univac was used as
the first commercial computer in 1951 with its cumbersome mainframe
technology and punch card which necessitated a centralized, hierarchical
approach in management. Later, computer applications broadened from
accountancy to manufacturing support systems, finance, human resource
management and marketing.
Coupled with progressive miniaturization and increasing cheapness and
power of micro circuitry, the cost of processing and distributing information of all
kinds plunged and by time of the ubiquitous era at the end of the 1980s and
beginning of the 1990s, the personal computer market grew with extraordinary
speed (Hoskisson et al, 2004) and companies became more and more
dependent on their computers to handle massive databases.
Dramatic changes in IT occurred when personal computers, cellular phones,
artificial intelligence, virtual reality, e-mail, instant messaging, voice mail, fax,
electronic data-interchange (EDI), teleconferencing and video-conferencing,
intranets, extranets came into being. Companies are electronically linked in
networks with customers, employees, vendors, and suppliers over the internet
and the e-business is big business. (Hoskisson et al, 2004) Technology is
changing the way we live and work and today and the internet provides an
infrastructure that allows the delivery of information via computers in any
location. (Robins et. al, 2005) Wireless smart phones, notebook computers,
and other pocket communication devices have spawned a whole new way for
managers to "keep in touch" and the number of worldwide mobile users keeps
increasing. (Robins et. al, 2005)
Access to significant quantities of relatively inexpensive information yields
strategic opportunities for a range of industries and companies.
The impact of cheap information affects the costs of setting up a new
business. One obvious area where the entry cost has fallen sharply is in mail
order - it has become possible for a new firm, with half a dozen employees and
a PC, to buy sufficiently accurate mailing lists to be able to launch a range of
products aimed at a small niche in the market. (Mc Rae, 1995)
However, introducing new IT, even just to support the existing business
model, emerges as a high-risk, hidden-cost process. Perpetual innovation and
rapid technology diffusion is happening. Competitors can imitate a firm's
successful competitive actions within a few days giving rise to Schumpeterian
innovation. (Hoskisson et al, 2004)
In the 1980s, concern was about the way in which IT could be used by a
firm to gain competitive advantage, but by the end of the decade it had become
clear that IT was not the panacea for all ills, and that its implementation brought
with it a new set of problems. (Fletcher, 2000 as cited by Baker) This is
because while many firms have gained benefits from adopting IT, IT will be a
competitive burden if it is adopted for the wrong reasons or implemented poorly.

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IT and Challenges
The challenges faced by companies in the deployment of IT include:
1. IT People Glorify IT and Ignore Human Psychology
IT managers put too much emphasis on hardware and not enough
emphasis on the soft science of how people actually share information. As in
Harvard Business Review on Knowledge Management, Davenport in 1999
observed that:
(i). Information evolves in many directions, taking on multiple meanings.
While IT specialists are drawn to common definitions of terms like customer or
product, most information doesn't conform to such strict boundaries. Forcing
employees to come to one common definition, as some technologies require,
only truncates the very conversations and sharing of perspectives that the
technology is supposed to ensure.
(2). People don't share information easily. Assuming that different
departments, professionals, or line workers will want to use technology to share
information is one of the biggest mistakes executives make.
(3). The presence of technology, in and of itself, cannot wholly transform a
corporation. Changing a company's information culture requires altering the
basic behaviors, attitudes, values, management expectations, and incentives
that relate to information. Changing the technology only reinforces the
behaviors that already exist.
Often, technically minded individuals lacked communication skills in
speaking and presenting because the marketers have superior presentation
skills and excel in the gentle art of persuasion while the technical experts
believe they could not realistically deliver. (Davis, 2000 as cited in Mastering
Information Management by Marchand et. al)
2. Information Needed – What Kind and When
A major productivity issue facing Intel and other large organizations is the
difficulty employees face when they attempt to access the information they
need, when they need it. While corporations have enormous amounts of
intellectual property, company information, documents and presentations, most
employees are unaware of this information and many are unable to find it even
if they know what they are looking for. (Burns, 2000 as by Marchand et. al)
In Malaysia for example, many SME companies realize that ICT is critical
to the productivity and performance of their companies. Nevertheless, most
SMEs are not able to handle the implementations and maintenance of these
ICT systems due to high staff turnover and lack of ICT project management
expertise. Moreover, many Malaysian SMEs which are still very much family-
based with flat organisation hierarchy are still running business the conventional
way. As a result, many of these SMEs which have invested in ICT systems fail
to implement and maintain these systems successfully. (Lim Tong Ming, 2004)

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To switch to an Internet business, is to switch from managed time to real
time. "Traditional organizations run like buses, with routes to follow and
schedules to meet; real-time organizations are taxis, responding to a waving
arm or a voice crackling on a two-way radio." In the Internet business, too many
similar sites are chasing after too few dollars. And even if a company reaps
benefits from lower supply costs, the Internet also will drive down profit margins
for everyone. For example, at GE, diminished earnings slammed GE's bottom
line. The Internet has been a touchy game and will continue to be so. (Lowe,
Janet 2001)
3. IT Infrastructure
IT infrastructure has become one of the most important investment
decisions made by senior management. Companies' IT infrastructure
investments will be as critical for creating long-term shareholder value as
previous waves of physical infrastructure decisions about location, buildings and
plant. (Weill & Broadbent, 2000 as cited by Marchand et. al)
IT infrastructure investment accounts for about 55 per cent of the
investments that companies make in their IT portfolios. Infrastructure provides
the underlying capability to apply technology to business processes, to link
people and data through communication networks, and to manage increasingly
demanding workplaces. Yet decisions about infrastructure capability and
investments are often a "leap of faith" - or are not made until too late, by which
time the lack of infrastructure has become a barrier to new initiatives. (Weill &
Broadbent, 2000)
Executives find decisions on infrastructure investments difficult because
they often feel that they do not know what they are getting, what business
capability will be provided and how it will lower costs or facilitate new business
development. And taking a cue from other companies' decisions is apt to be
confusing. Weill & Broadbent in 2000 cited that:
 Johnson & Johnson is investing in shared IT services across
previously autonomous businesses.
 Hong Kong-based conglomerates Hutchison Whampoa and Jardine
Matheson make little or no company-wide investments in IT
infrastructure.
 Citibank Asia is centralizing and standardizing all backroom IT
processes into one location for its local Asian operations.
 Ralston Purina has no company-wide IT infrastructure investments.
Has each of these companies made the right decision? How did they
arrive at their decisions? How can business and IT executives together identify
the best choices for their businesses?
Another challenge is the complex task of managing the chain of events
from a customer's order, to manufacture, to distribution and support. Worse,

5
many organizations still see technology as a cost to be constantly managed
down instead of an investment in the future. (Davis, 2000 as cited by
Marchand et. al) In the past, most IT organizations have focused more on
managing technology - by deploying cost-effective servers, systems and
networks - than on managing information. Today, many organizations still view
IT as a service provider and cost center rather than a strategic business
partner.
4. Technological Life-Cycle
Technological changes tend to follow a predictable pattern known as the
technological life-cycle. The pattern is as relevant to machines employed in the
factory as it is to machines used in the office and to new models of car, washing
machine or television set.
At the introduction phase, the introduction of new technology normally
requires capital expenditure of varying magnitude depending on the nature and
extent of the envisaged changes. The office accommodation has to be
restructured, or even new premises found. Personnel will often require
retraining, especially for radical changes of equipment. During system
changeover (assuming the old system continues to function) productivity may
decline because of the need for staff to be involved with both the old and new
system during the implementation phase. This situation will tend to increase the
operating cost per unit of output, but after the changeover it should be
anticipated that unit costs will fall.
At the growth phase, staff become more familiar with the complexities of
the new system and experience is gained, so the level of productivity should
rise and the operating cost per unit fall. This will be a progressive situation until
productivity stabilises at the maturity phase, i.e. when the new system has been
operational for some time, reach its peak performance level as staff become
more confident in and less apprehensive of the system. Productivity and
operating costs stabilise at the optimum performance level.
Finally, at the decline or decay phase, the `new' technology eventually
become outdated and machines will eventually become worn, causing system
performance to decline. This is the point where the technological life-cycle
returns to the introduction phase. Machine maintenance costs, unless of a fixed
nature, will become uneconomical, and the sum of the annual costs of
depreciation and maintenance will increase to an unacceptable level. At this
point productivity will fall as a result of machine down-time due to wear and tear
and prolonged maintenance.
Part of the management of IT is to anticipate this situation and act at the
right moment to minimise system delays, increases in operating costs and low
levels of performance. Management must adopt a 'forward, outward looking'
stance to recognise when change is imperative to sustain or improve
productivity. (Anderson, 1991)

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Solutions: What Makes for Success?
To achieve its promise, IT needs to take a human-centered approach.
But implementing such an approach is far more difficult than figuring out which
computers work together and how to construct a new network. It means building
flexibility and disorder into information systems. It means accepting that
different departments frequently can't come up with a shared definition for
things that might seem obvious, such as what constitutes a drug, an airport, or a
sale. And it means changing corporate behaviors that discourage information
sharing. (Davenport, 1999)
In terms of shifting the focus from cost to IT value and competitive
advantage, IT organizations can produce a staggering return on investment by
providing constant computing capabilities. The UK insurance company Direct
Line in the early 1990s achieved five years of competitive advantage by
identifying what customers disliked most and significantly reduce operating
costs. Dell has used the internet as a channel to eliminate all intermediaries
except a courier service where prospective buyers visit the website, choose a
PC configuration and place an order. (Feeny et. al, 2000, as cited by
Marchand et. al)
Amazon.com's success is the result of the cumulative effect of many
sources of competitive advantage including the location of its warehouses, its
focus on continuously enhancing its customer's experience, its rigorous
approach to hiring, its extreme frugality, its approach to corporate development,
and the way it manages executive time. (Cohan, 2000)
The toughest thing about operating in an atmosphere of technical change
is strategic planning, since it becomes impossible to predict the future based on
the past. Often the best planning strategy is to take advantage of those aspects
of change that most suit the company's needs and taxing the imagination in
trying to figure out which aspects those may be. At GE, much of the growth that
Jack Welch orchestrated at GE was through efficiency efforts. Briefly, until the
Internet light went on, it seemed that Welch may have wrung the most he could
out of cost cutting, labor saving, and time saving. The Internet gave him one
more crack at it, but the actual impact of the Internet remains unknown. This is
an area of intense competition. (Lowe, Janet 2001)
Successful IT investment starts from being close to the customer. In
practice, few IT-based business innovations have materialised from formal
planning processes, routine meetings of IT investment committees, or from IT
departments working alone. Sabre in airline reservation systems, Baxter in
medical supplies ordering and Merrill Lynch in account management systems
developed incrementally, through a gradual process of learning and a strong
external focus. (Feeny et. al, 2000, as cited by Marchand et. al)
Total cost of ownership (TCO) is an industry indicator used by IT
consulting and analyst firms to measure IT efficiency. In addition to system
depreciation and support costs, TCO metrics include the lost end-user
productivity due to system downtime. Reducing TCO continues to be a key
objective for IT groups including Intel. (Burns et. al, 2000, as by Marchand et.
al)

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At Intel, a comprehensive approach where business and IT executives
work together as strategic partners to maximize the value of corporate
information involve a transition from viewing IT as a "cost center" that provides
basic services to viewing, and investing in, IT as a "value center" that meets
strategic business objectives. (Burns et. al, 2000, as cited by Marchand et. al)
Solutions: Business and IT Maxims According to Weill
& Broadbent
Weill & Broadbent in 2000 stressed that business and IT executives
need to work on business and IT maxims together to ensure that they are
clearly articulated and to give IT executives insight into future business
directions. This process is necessary because many companies do not have
comprehensive and timely strategic statements, nor is their documentation
sufficiently focused.
From the business maxims, business and IT executives together identify
"IT maxims", which describe how a company needs to deploy IT and connect,
share and structure information.
For example, Honda's business maxim was, in effect, to "expedite global
operations by maximizing synergies of production and operations in many
countries". This leads to a series of IT maxims, including:
• information flow throughout Honda should allow all parts of the company
to spot trends more easily and quickly and use these to Honda's advantage
• Honda R&D staff in different parts of the world must have ready access
to each other to be able to communicate ideas and output to colleagues
• communication systems must facilitate high-quality person-to-person
interaction among R&D staff and between R&D, production, operations and
marketing personnel
• communication systems must support the transfer of sophisticated
design concepts, data and documentation in a high-quality, cost-efficient
manner to cut cycle time.
IT infrastructure is such a critical resource that it requires special
attention during the IT investment process. Companies that treat this part of
their IT portfolio in the same way as other IT investments risk never having the
infrastructure to support their business strategies.

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Conclusion
Where are we going?
Prediction is always difficult but where IT is concerned, it seems almost
impossible. Knowledge (information, intelligence, and expertise) is the basis of
technology and its application. In the 21st-century competitive landscape,
knowledge is a critical organizational resource and is increasingly a valuable
source of competitive advantage.
As a result, many companies now strive to transmute the accumulated
knowledge of individual employees into a corporate asset. Some argue that the
value of intangible assets, including knowledge, is growing as a proportion of
total shareholder value. The probability of achieving value creation in today's
business environment is enhanced for the firm aware that its survival depends
on the ability to capture intelligence, transform it into usable knowledge, and
diffuse it rapidly throughout the company. Firms accepting this challenge shift
their focus from merely obtaining information to exploiting that information to
gain a competitive advantage over rival firms.
Risk taking is natural in an emerging industry. The computer industry is
about as far into its development as cars were in the 1910s and planes were in
the 1930s. Those industries underwent radical and often chaotic technical and
business change before they matured, and the same phenomenon is happening
in the computer industry. The phrase mature industry implies less risk taking,
but in well developed industries, where vendors approach parity in most areas,
taking a risk that information technology can change the rules is the best way to
create product and market breakthroughs. (Gates, 1999, Business @ The
Speed of Thought: Big Wins Require Big Risks, pg 263)
The global networks of economic wealth, political power and media will
depend more and more on knowledge generation. Society will become more
and more symbolic - that is, the capacity to produce and distribute goods and
services will become increasingly dependent on the ability to create and
manipulate electronic symbols. Companies will have to adapt to this new
environment, although the process will not be easy. Companies will have to
conceive of themselves as located within a shifting network of suppliers,
competitors and consumers; their boundaries will accordingly be highly fluid.
Permanent flexibility will be the key to survival in the new economy.

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Bibliography & References
Books
Anderson, R.G (1991) Data Processing Volume 2: Information Systems &
Technology (7th
edition). London: M&E Handbooks, Pitman Publishing.
Baker, Michael, J (2000) The Marketing Book. Oxford: Butterworth-Heinemann.
Brown, David (1997) Cybertrends. England: Viking
Cohan, Peter S (2000) E- Profit. New York: Amacom.
Gates, Bill (1999) Business @ The Speed of Thought – Using A Digital Nervous
System, Warner Books, New York.
Gilmore, Fiona (2001) Warriors On The High Wire. London: Profile Books Ltd.
Lowe, Janet (2001) Welch: An American Icon. John Wiley & Sons, Inc.
Marchand, Donald A., Davenport, Thomas H. & Dickson, Tim (2000) Mastering
Information Management. Great Britain: Prentice Hall.
Mc Rae, Hamish, (1995) The World In 2020. London: Harper Collins.
Paliwoda Stanley J. & Thomas, Michael J. (1999) International Marketing. Oxford:
Butterworth- Heinemann.
Robbins, Stephen P. & Coulter, Mary (2005) Management. New Jersey, Pearson
Education – Prentice Hall.
Hoskisson, Hitt & Ireland (2004) Competing for Advantage. Ohio: Thompson-South
Western
Journal
Thomas H. Davenport (1999) Saving IT's Soul: Human-Centered Information
Management, Harvard Business Review on Knowledge Management, HBS Press.
Internet References
http://www.infotech.monash.edu.my/workshop/ Dr. Lim Tong Ming, Outsourcing to
Ensure Successful ICT Systems: Implementation and Maintenance (Accessed August
24, 2006)

Challenges of IT Implementation

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