P3 May 2004 Class 2: ISM Rich-Con Needs Help Risks of Technology Adoption

P3 May 2004 Class 2: ISM Process Enabling IT (PET): An example Laudon and Laudon 2003

P3 May 2004 Class 2: ISM Examples of PETs Systems such as ERP, SCM, parts of CRM, many other individual process automation systems: Operations and Logistics –Procurement, shipping, inventory management, production planning Sales and Marketing –Order management, pricing, sales management and planning Financial –Acc Receivables and payables Human Resources –Payroll, time accounting, personnel planning

P3 May 2004 Class 2: ISM A Visual Representation Central database Reporting Application Financial Application Manufacturing Application Inventory Application HR Application Customer Service Application Sales Application CustomersCustomers SuppliersSuppliers Enterprise System

P3 May 2004 Class 2: ISM PET’s Medium/Long Term Impact Hard (measurable) Soft (non-measurable) Reduced Costs, Increased Efficiencies: IT + Cost savings in hardware, software, IT support, and maintenance + Increased IT and information reliability – But very expensive enterprise IT Processes + Increased efficiency, e.g. faster order delivery, faster closing of books, faster invoices, etc Organizational + Cost savings from head count reduction + Other reduced costs (e.g. less maverick procurement, better demand forecasting, etc) IT + Platform for future IT: build up of new IT, connect with suppliers, 24/7 web – Increased “vendor hold up” costs Processes + Automated and redesigned + “Infomated” processes + Integrated, accurate processes’ information for better decisions + Modernized, followed best practices ? Standardized organization-wide –? Process similarity with competitors – Decreased process flexibility/innovation ? Organizational + Increased cross-functional/unit coordination + Centralized shared services ? Decreased BU autonomy Transform

P3 May 2004 Class 2: ISM IT Crisis Issues to Consider Post go-live performance dip is an almost universal phenomenon: Don’t Panic! It is practically very difficult to go fully back to the old system Behavioral effects: The more you get involved, the more you have on stake  you tend to keep it longer than economically rational Political manipulations, ducking responsibility “Technology is not working”, delegate to IT Perceptual bias in favor of evidence that confirms currently held hypotheses and ignoring data that conflicts with currently held hypotheses Wishful thinking and denial  Need a clear crisis management process to control such behavioral effects

P3 May 2004 Class 2: ISM An IT Crisis Management Process 1. Prioritization and Protection: Know what is on stake and what are the priorities (loss of customer order information, loss of revenues, loss of customer trust, loss of employees trust?) and protect as much of the organization as you can: go for parallel use of new system and/or manual processing and/or parts of old system (whichever are possible to still use, e.g. revert to manual processing for customer orders): how many options are there? 2. Stakeholder communication: Communicate the situation to affected stakeholders (e.g. affected BU managers and users, top management, IT department, vendors, partners, customers, suppliers, etc) 3. Diagnosis and Fix: figuring out what exactly is happening and what has caused it in order to fix it

P3 May 2004 Class 2: ISM Mis-specification of IT, e.g. the system parameters were not set up correctly Mis-use of the new IT, e.g. users would not input the right information Non-use of the new IT, e.g. users would bypass the system so the system would be missing information such as customer orders Resistance to IT e.g. some people lose power because of the IT + Lack of anticipation: Could Marty foresee the crisis? Key IT Adoption Risks

P3 May 2004 Class 2: ISM Very low IT sophistication and organizational readiness for IT: many manual processes, legacy IT (since 1969) Many changes in work practices implied by the IT, but very slow moving company, people changing slowly Large organizational scope: virtually everyone affected (all business units, managers, clerical workforce, customers, suppliers, partners) Very large technology scope: virtually all IT systems affected Many software modification made (“requests easily satisfied by the vendor”) by a product focused vendor Technology needs to mandatory to use Foreseeing Rich Con’s Trouble: Factors to Consider

P3 May 2004 Class 2: ISM Yes, the crisis could be foreseen! (to a large extend…) Adoption Risks Sources of risks Foreseen?Foreseeable? Non-Use of the new system Low IT sophistication of the employees NY Major changes needed, but people slow to change NY Mis-Use of the new systems Low IT sophistication of the employees NY Large organizational scope, fast spread of errors NY Mis-specification Many software modifications demanded NY Very large technology scope NY Resistance ? Major changes in work and processes – a lot on stake? NY People slow to change NY

P3 May 2004 Class 2: ISM Learning from Doors: Many Stakeholders, Various Impacts

P3 May 2004 Class 2: ISM The “Socio-tech” Adoption Approach A. Identify ALL stakeholders: (e.g. leaders, users, BU managers, customers, suppliers, potential users, labor unions) How large is the organizational scope and coordination needed? B. Analyze the stakeholders: 1.IT sophistication? 2.Impact: a. Changes needed vs. flexibility ratio? b. How much is on stake for them? c. How autonomous are they? Technology Analysis Stakeholder Analysis Adoption Risks Non-use, Mis-use, Mis-specification, Resistance +

P3 May 2004 Class 2: ISM 1.Size: technology scope (number of processes and systems affected)? 2.Is the use of the technology discretionary? Mandatory? 3.Software changes/customization needed? 4.Is it modular? 5.How complex and/or novel is it? Technology Analysis Stakeholder Analysis Adoption Risks Non-use, Mis-use, Mis-specification, Resistance + The “Socio-tech” Adoption Approach

P3 May 2004 Class 2: ISM Avoiding Rich Con’s Disaster (more next class) Adoption RisksManagerial Actions Non-Use of the new system Mis-Use of the new systems Mis-specification

P3 May 2004 Class 2: ISM Key Lessons The medium/long term impact of PETs on organizations: Hard (measurable) versus Soft (non-measurable) effects First Order versus Transformational (2 nd + Order) Standardization/integration versus flexibility trade off Key IT adoption risks: Misuse, nonuse, mis-specification, resistance (more next class) IT is not a “black” box: The failure of Rich-con was foreseeable (to a large extend) Technology + Stakeholder analysis can help us foresee the key IT adoption risks (more next class) There is still a universal post go-live performance dip: don’t panic but manage the crisis: prioritize, protect, communicate, diagnose, and fix

P3 May 2004 Class 2: ISM Next Class Managing the IT Adoption Risks: Key success factors for making successful IT adoptions