REORGANIZING THE ENTERPRISE chapter 6 Hirut Gebrekidan FEB 19, 2004

Three key questions Why have company-wide IT based initiatives been increasingly used as the vehicle for organizational transformation? Why have company-wide IT based initiatives been increasingly used as the vehicle for organizational transformation? What effects have major organizational initiative had on work and worker identity? What effects have major organizational initiative had on work and worker identity? How well have company-wide initiatives coped with organizational variety and cultural specificity? How well have company-wide initiatives coped with organizational variety and cultural specificity?

Three case materials Corporate lending in UK Bank Corporate lending in UK Bank Business Process Re-engineering Business Process Re-engineering Enterprise systems or Enterprise resource planning (ERP) systems Enterprise systems or Enterprise resource planning (ERP) systems

Corporate lending in UK bank (Scott (1998,2000) and Scott and Walsham (1998) Decision Support System (DSS) Decision Support System (DSS) The system called Lending Advisor(LA) was implemented to formalize the middle market lending processes. The system called Lending Advisor(LA) was implemented to formalize the middle market lending processes. LA project LA project Formation of a team Formation of a team Assesing approprate technology Assesing approprate technology

Corporate lending in UK bank (cont..) Implementation of the LA and the change program Implementation of the LA and the change program Negative aspects on the time of introduction Negative aspects on the time of introduction  Using of computers for the first time  Heightened anxiety regarding job security due to extensive reorganization  Concerns with respect to working practices centred on loss autonomy, longer working hours, thier job was disembedded,  Tension of identity related to previous work role

Corporate lending in UK bank (cont..) Positive aspects Positive aspects Computer-based organizational memory Computer-based organizational memory Central access to organizational data Central access to organizational data Analysis capability Analysis capability Electronic transmission of data Electronic transmission of data

Corporate lending in UK (cont..) Broader organizational and societal effects Broader organizational and societal effects Is the system beneficial to the efficiency, effectiveness and profitability of UK Bank as a whole? Is the system beneficial to the efficiency, effectiveness and profitability of UK Bank as a whole? On the one hand yes: more informed decisions were taken on loans more informed decisions were taken on loans Risk were eliminated Risk were eliminated Bad loan managers could be identified Bad loan managers could be identified

Corporate lending in UK (cont..) On the other hand Loan experties was lost Loan experties was lost

Business process re-engineering (BPR) Analysis and design of workflows and processes within and between organizations Analysis and design of workflows and processes within and between organizations Concerned on job losses, intensification of work, and tighter management control Concerned on job losses, intensification of work, and tighter management control Is used for a better-integrated organization with a closer customer- oriented focus Is used for a better-integrated organization with a closer customer- oriented focus

BPR in Probank (By Knights and McCabe 1998a, 1998b) Implementation Implementation Negative concerns (Branch staff and management) Negative concerns (Branch staff and management)  Concerned with job losses  Loss of power  Fear of unemployment  Professional pride  Self identity  Resistance to new ways of working in change programmes

BPR in Probank (cont..) Advantages Advantages Widespread job losses Widespread job losses Empowerment (back office staff seemed happier with the new arrangement) Empowerment (back office staff seemed happier with the new arrangement)

Enterprise Systems Improved communication between different parts of the business and its customers Improved communication between different parts of the business and its customers Direct access to real time management information Direct access to real time management information A promise of better control for the management A promise of better control for the management

Enterprise Systems (cont..) SAP in Norsk Hydro (Hanseth and Braa (1998) Implementation Implementation  Advantages People (all around Europe) have become acquainted with each other Learning about each others’ ways of working and doing business Best practices are identified and tried and then transfered to other locations Different units get ideas about how to improve their own work

Enterprise Systems (cont..) SAP in Norsk Hydro (Hanseth and Braa (1998) Problems Problems Local support was problematic while it provided and integrated central processing service Language barriers for non-english speaking countries Reduce flexibility of the individual national and regional unit to respond effectively to their own business cultures and markets

Analysis and conclusion Why have company-wide IT based initiatives been increasingly used as the vehicle for organizational transformation? Why have company-wide IT based initiatives been increasingly used as the vehicle for organizational transformation? Pressure for global best practice standards in information systems to enable integrated knowledge sharing Pressure for global best practice standards in information systems to enable integrated knowledge sharing companies need to adapt to a global world companies need to adapt to a global world Reinforced by the international consulting companies Reinforced by the international consulting companies The need to communicate across departments and branches for knowledge sharing. The need to communicate across departments and branches for knowledge sharing. standardization on software is easier than standardizing on IS to support key business processes standardization on software is easier than standardizing on IS to support key business processes Legacy systems grew organically to support business processes. Legacy systems grew organically to support business processes. Management wants tighter control and lower costs. Management wants tighter control and lower costs. Need to balance autonomy and control. Need to balance autonomy and control.

What effects have major organizational initiative had on work and worker identity ? Individual sense of identity and self-worth linked to identification with work role and practice Individual sense of identity and self-worth linked to identification with work role and practice Should management worry? Yes, identity will affect the result of company-wide change initiatives (meaning if they resist to change). Therefore resistance and tensions can be a cause of major failure. Should management worry? Yes, identity will affect the result of company-wide change initiatives (meaning if they resist to change). Therefore resistance and tensions can be a cause of major failure. Since We are all part of a common society made up of business organizations, we need a wider agenda in this area. Since We are all part of a common society made up of business organizations, we need a wider agenda in this area. We should be concerned with issues of stress, loss of work identity, work intensification, reduced autonomy and unemployment We should be concerned with issues of stress, loss of work identity, work intensification, reduced autonomy and unemployment

How well have company-wide initiatives coped with organizational variety and cultural specificity? Organization have different routines and procedures, context and histories. Organization have different routines and procedures, context and histories. Therfore getting rid of the mesy world of organizational variety, including its existing history, systems, people and procedures is important Therfore getting rid of the mesy world of organizational variety, including its existing history, systems, people and procedures is important to create a perfect organization structure, with irreversible infrastructures. to create a perfect organization structure, with irreversible infrastructures. Gradualism may be a better approach to change. Gradualism may be a better approach to change. Empirical data will support this Empirical data will support this Methaphor of continuous care rather than invasive surgery Methaphor of continuous care rather than invasive surgery

In general Company-wide change initiatives have diverse and sometimes unpredictable consequences because of Company-wide change initiatives have diverse and sometimes unpredictable consequences because of Individuals varied backgrounds, identities, needs and goals, fears and aspirations, etc Individuals varied backgrounds, identities, needs and goals, fears and aspirations, etc Organizations have different routines and procedures, histories, etc Organizations have different routines and procedures, histories, etc