OVERVIEW

IT has become a significant part of every person’s working life. According to US economic analysis figures, companies are now spending an average of 30 per cent of their capital expenditures on information technology compared with 5 per cent in the 1960s. It is viewed as a critical resource.

However, despite the sophistication of the IT equipment available and the range of IT tools and techniques that have been devised and in many cases heavily promoted, organizations are still failing to gain the business value they hope for when they embark on IT-based change. It seems that while the promise of IT is high, the reality of what we actually experience is disappointing. It is as if the capacity of IT to deliver great things has overtaken our ability to use it effectively within our organizations.

Data gathered by Wharton Management School in 1996 reinforces this gap between expectation and reality. The research indicates that although 72 per cent of company executives asked say that it is critical for their organization to use high-tech tools such as IT to be competitive, only 17 per cent of respondents say that the benefits of these tools are being realized.

So what goes wrong in the process of realizing the benefits? Why do organizations have trouble with IT-based change? This chapter looks at the particular difficulties of achieving successful IT-based change and offers advice on how to overcome particular obstacles associated with this type of endeavour. The topics addressed are:

strategy and IT;
the role of IT management;
the need for IT change managers;
achieving process change;
changing the information culture;
new rules for a new age.

The potential gains of successfully implementing IT-based change are many and varied. Organizations are attracted by the idea that they will gain the capability to do a range of highly desirable things. Some of the potential gains concern innovation and development:

to achieve flexible responsive production of customized goods;
to segment the market place in new ways through analysing information, and then create new products for those segments;
to serve customers in new ways by creating access via the Internet;
to create new forms of partnership and new types of organization.

But many of the potential gains concern achieving efficiencies to:

reduce the need for agents and intermediaries by providing employee or customer self-service facilities over the Internet or intranet;

achieve sophisticated functionality at reasonable cost (for instance by introducing standard packages such as ERP);

allow globalization of operations;

enable choices to be made about how the company is structured while retaining the necessary level of central control;

produce better information, with a greater level of detail than was possible before, and make it available faster to allow better decisions to be made;

enable 24-hour working to maximize the ability to serve the globe and make best use of resources;

encourage greater staff involvement by making information available to more people in the company;

increase the opportunity for flexible working on the road or at home;

reduce staff costs;

increase the value of skills and knowledge by sharing information well.

Consider the growth in the use of SAP systems as an example of how companies are responding to the need to realize some of the potential gains listed above. SAP is a company that provides enterprise-wide applications that can satisfy most of a business’s activities. SAP global sales have seen phenomenal growth from US$500 million in 1991 to US$2,400 million in 1996. Companies are obviously impressed by the powerful system, but there are many stories of the painful struggles that people have to go through before they achieve optimum usage of the software. It is certainly not an easy ride to move from strategy to implementation.

IT-based process change

OVERVIEW