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Information Technology
and Organizational
Learning
Managing Behavioral Change
in the Digital Age
Third Edition
http://taylorandfrancis.com
Information Technology
and Organizational
Learning
Managing Behavioral Change
in the Digital Age
Third Edition
Arthur M. Langer
CRC Press
Taylor & Francis Group
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Boca Raton, FL 33487-2742
© 2018 by Taylor & Francis Group, LLC
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v
Contents
Foreword xi
Acknowledgments xiii
Author xv
IntroductIon xvii
chApter 1 the “rAvell” corporAtIon 1
Introduction 1
A New Approach 3
The Blueprint for Integration 5
Enlisting Support 6
Assessing Progress 7
Resistance in the Ranks 8
Line Management to the Rescue 8
IT Begins to Reflect 9
Defining an Identity for Information Technology 10
Implementing the Integration: A Move toward Trust and
Reflection 12
Key Lessons 14
Defining Reflection and Learning for an Organization 14
Working toward a Clear Goal 15
Commitment to Quality 15
Teaching Staff “Not to Know” 16
Transformation of Culture 16
Alignment with Administrative Departments 17
Conclusion 19
vi Contents
chApter 2 the It dIlemmA 21
Introduction 21
Recent Background 23
IT in the Organizational Context 24
IT and Organizational Structure 24
The Role of IT in Business Strategy 25
Ways of Evaluating IT 27
Executive Knowledge and Management of IT 28
IT: A View from the Top 29
Section 1: Chief Executive Perception of the Role of IT 32
Section 2: Management and Strategic Issues 34
Section 3: Measuring IT Performance and Activities 35
General Results 36
Defining the IT Dilemma 36
Recent Developments in Operational Excellence 38
chApter 3 technology As A vArIAble And responsIve
orgAnIzAtIonAl dynAmIsm 41
Introduction 41
Technological Dynamism 41
Responsive Organizational Dynamism 42
Strategic Integration 43
Summary 48
Cultural Assimilation 48
IT Organization Communications with “ Others” 49
Movement of Traditional IT Staff 49
Summary 51
Technology Business Cycle 52
Feasibility 53
Measurement 53
Planning 54
Implementation 55
Evolution 57
Drivers and Supporters 58
Santander versus Citibank 60
Information Technology Roles and Responsibilities 60
Replacement or Outsource 61
chApter 4 orgAnIzAtIonAl leArnIng theorIes And
technology 63
Introduction 63
Learning Organizations 72
Communities of Practice 75
Learning Preferences and Experiential Learning 83
Social Discourse and the Use of Language 89
Identity 91
Skills 92
viiContents
Emotion 92
Linear Development in Learning Approaches 96
chApter 5 mAnAgIng orgAnIzAtIonAl leArnIng And
technology 109
The Role of Line Management 109
Line Managers 111
First-Line Managers 111
Supervisor 111
Management Vectors 112
Knowledge Management 116
Ch ange Management 120
Change Management for IT Organizations 123
Social Networks and Information Technology 134
chApter 6 orgAnIzAtIonAl trAnsFormAtIon And the
bAlAnced scorecArd 139
Introduction 139
Methods of Ongoing Evaluation 146
Balanced Scorecards and Discourse 156
Knowledge Creation, Culture, and Strategy 158
chApter 7 vIrtuAl teAms And outsourcIng 163
Introduction 163
Status of Virtual Teams 165
Management Considerations 166
Dealing with Multiple Locations 166
Externalization 169
Internalization 171
Combination 171
Socialization 172
Externalization Dynamism 172
Internalization Dynamism 173
Combination Dynamism 173
Socialization Dynamism 173
Dealing with Multiple Locations and Outsourcing 177
Revisiting Social Discourse 178
Identity 179
Skills 180
Emotion 181
chApter 8 synergIstIc unIon oF It And
orgAnIzAtIonAl leArnIng 187
Introduction 187
Siemens AG 187
Aftermath 202
ICAP 203
viii Contents
Five Years Later 224
HTC 225
IT History at HTC 226
Interactions of the CEO 227
The Process 228
Transformation from the Transition 229
Five Years Later 231
Summary 233
chApter 9 FormIng A cyber securIty culture 239
Introduction 239
History 239
Talking to the Board 241
Establishing a Security Culture 241
Understanding What It Means to be Compromised 242
Cyber Security Dynamism and Responsive Organizational
Dynamism 242
Cyber Strategic Integration 243
Cyber Cultural Assimilation 245
Summary 246
Organizational Learning and Application Development 246
Cyber Security Risk 247
Risk Responsibility 248
Driver /Supporter Implications 250
chApter 10 dIgItAl trAnsFormAtIon And chAnges In
consumer behAvIor 251
Introduction 251
Requirements without Users and without Input 254
Concepts of the S-Curve and Digital Transformation
Analysis and Design 258
Organizational Learning and the S-Curve 260
Communities of Practice 261
The IT Leader in the Digital Transformation Era 262
How Technology Disrupts Firms and Industries 264
Dynamism and Digital Disruption 264
Critical Components of “ Digital” Organization 265
Assimilating Digital Technology Operationally and Culturally 267
Conclusion 268
chApter 11 IntegrAtIng generAtIon y employees to
AccelerAte competItIve AdvAntAge 269
Introduction 269
The Employment Challenge in the Digital Era 270
Gen Y Population Attributes 272
Advantages of Employing Millennials to Support Digital
Transformation 272
Integration of Gen Y with Baby Boomers and Gen X 273
ixContents
Designing the Digital Enterprise 274
Assimilating Gen Y Talent from Underserved and Socially
Excluded Populations 276
Langer Workforce Maturity Arc 277
Theoretical Constructs of the LWMA 278
The LWMA and Action Research 281
Implications for New Pathways for Digital Talent 282
Demographic Shifts in Talent Resources 282
Economic Sustainability 283
Integration and Trust 283
Global Implications for Sources of Talent 284
Conclusion 284
chApter 12 towArd best prActIces 287
Introduction 287
Chief IT Executive 288
Definitions of Maturity Stages and Dimension Variables in
the Chief IT Executive Best Practices Arc 297
Maturity Stages 297
Performance Dimensions 298
Chief Executive Officer 299
CIO Direct Reporting to the CEO 305
Outsourcing 306
Centralization versus Decentralization of IT 306
CIO Needs Advanced Degrees 307
Need for Standards 307
Risk Management 307
The CEO Best Practices Technology Arc 313
Definitions of Maturity Stages and Dimension Variables in
the CEO Technology Best Practices Arc 314
Maturity Stages 314
Performance Dimensions 315
Middle Management 316
The Middle Management Best Practices Technology Arc 323
Definitions of Maturity Stages and Dimension Variables in
the Middle Manager Best Practices Arc 325
Maturity Stages 325
Performance Dimensions 326
Summary 327
Ethics and Maturity 333
chApter 13 conclusIons 339
Introduction 339
glossAry 357
reFerences 363
Index 373
http://taylorandfrancis.com
xi
Foreword
Digital technologies are transforming the global economy. Increasingly,
firms and other organizations are assessing their opportunities, develop-
ing and delivering products and services, and interacting with custom-
ers and other stakeholders digitally. Established companies recognize
that digital technologies can help them operate their businesses with
greater speed and lower costs and, in many cases, offer their custom-
ers opportunities to co-design and co-produce products and services.
Many start-up companies use digital technologies to develop new prod-
ucts and business models that disrupt the present way of doing busi-
ness, taking customers away from firms that cannot change and adapt.
In recent years, digital technology and new business models have dis-
rupted one industry after another, and these developments are rapidly
transforming how people communicate, learn, and work.
Against this backdrop, the third edition of Arthur Langer’ s
Information Technology and Organizational Learning is most welcome.
For decades, Langer has been studying how firms adapt to new or
changing conditions by increasing their ability to incorporate and use
advanced information technologies. Most organizations do not adopt
new technology easily or readily. Organizational inertia and embed-
ded legacy systems are powerful forces working against the adoption
of new technology, even when the advantages of improved technology
are recognized. Investing in new technology is costly, and it requires
xii Foreword
aligning technology with business strategies and transforming cor-
porate cultures so that organization members use the technology to
become more productive.
Information Technology and Organizational Learning addresses these
important issues— and much more. There are four features of the new
edition that I would like to draw attention to that, I believe, make
this a valuable book. First, Langer adopts a behavioral perspective
rather than a technical perspective. Instead of simply offering norma-
tive advice about technology adoption, he shows how sound learn-
ing theory and principles can be used to incorporate technology into
the organization. His discussion ranges across the dynamic learning
organization, knowledge management, change management, com-
munities of practice, and virtual teams. Second, he shows how an
organization can move beyond technology alignment to true technol-
ogy integration. Part of this process involves redefining the traditional
support role of the IT department to a leadership role in which IT
helps to drive business strategy through a technology-based learn-
ing organization. Third, the book contains case studies that make the
material come alive. The book begins with a comprehensive real-life
case that sets the stage for the issues to be resolved, and smaller case
illustrations are sprinkled throughout the chapters, to make concepts
and techniques easily understandable. Lastly, Langer has a wealth of
experience that he brings to his book. He spent more than 25 years
as an IT consultant and is the founder of the Center for Technology
Management at Columbia University, where he directs certificate and
executive programs on various aspects of technology innovation and
management. He has organized a vast professional network of tech-
nology executives whose companies serve as learning laboratories for
his students and research. When you read the book, the knowledge
and insight gained from these experiences is readily apparent.
If you are an IT professional, Information Technology and Organi
zational Learning should be required reading. However, anyone who
is part of a firm or agency that wants to capitalize on the opportunities
provided by digital technology will benefit from reading the book.
Charles C. Snow
Professor Emeritus, Penn State University
CoEditor, Journal of Organization Design
xiii
Acknowledgments
Many colleagues and clients have provided significant support during
the development of the third edition of Information Technology and
Organizational Learning.
I owe much to my colleagues at Teachers College, namely, Professor
Victoria Marsick and Lyle Yorks, who guided me on many of the the-
ories on organizational learning, and Professor Lee Knefelkamp, for
her ongoing mentorship on adult learning and developmental theo-
ries. Professor David Thomas from the Harvard Business School also
provided valuable direction on the complex issues surrounding diver-
sity, and its importance in workforce development.
I appreciate the corporate executives who agreed to participate
in the studies that allowed me to apply learning theories to actual
organizational practices. Stephen McDermott from ICAP provided
invaluable input on how chief executive officers (CEOs) can success-
fully learn to manage emerging technologies. Dana Deasy, now global
chief information officer (CIO) of JP Morgan Chase, contributed
enormous information on how corporate CIOs can integrate tech-
nology into business strategy. Lynn O’ Connor Vos, CEO of Grey
Healthcare, also showed me how technology can produce direct mon-
etary returns, especially when the CEO is actively involved.
And, of course, thank you to my wonderful students at Columbia
University. They continue to be at the core of my inspiration and love
for writing, teaching, and scholarly research.
http://taylorandfrancis.com
xv
Author
Arthur M. Langer, EdD, is professor of professional practice
of management and the director of the Center for Technology
Management at Columbia University. He is the academic direc-
tor of the Executive Masters of Science program in Technology
Management, vice chair of faculty and executive advisor to the dean
at the School of Professional Studies and is on the faculty of the
Department of Organization and Leadership at the Graduate School
of Education (Teachers College). He has also served as a member of
the Columbia University Faculty Senate. Dr. Langer is the author
of Guide to Software Development: Designing & Managing the Life
Cycle. 2nd Edition (2016), Strategic IT: Best Practices for Managers
and Executives (2013 with Lyle Yorks), Information Technology and
Organizational Learning (2011), Analysis and Design of Information
Systems (2007), Applied Ecommerce (2002), and The Art of Analysis
(1997), and has numerous published articles and papers, relating
to digital transformation, service learning for underserved popula-
tions, IT organizational integration, mentoring, and staff develop-
ment. Dr. Langer consults with corporations and universities on
information technology, cyber security, staff development, man-
agement transformation, and curriculum development around the
Globe. Dr. Langer is also the chairman and founder of Workforce
Opportunity Services (www.wforce.org), a non-profit social venture
xvi Author
that provides scholarships and careers to underserved populations
around the world.
Dr. Langer earned a BA in computer science, an MBA in
accounting/finance, and a Doctorate of Education from Columbia
University.
xvii
Introduction
Background
Information technology (IT) has become a more significant part of
workplace operations, and as a result, information systems person-
nel are key to the success of corporate enterprises, especially with
the recent effects of the digital revolution on every aspect of business
and social life (Bradley & Nolan, 1998; Langer, 1997, 2011; Lipman-
Blumen, 1996). This digital revolution is defined as a form of “ dis-
ruption.” Indeed, the big question facing many enterprises today is,
How can executives anticipate the unexpected threats brought on by
technological advances that could devastate their business? This book
focuses on the vital role that information and digital technology orga-
nizations need to play in the course of organizational development
and learning, and on the growing need to integrate technology fully
into the processes of workplace organizational learning. Technology
personnel have long been criticized for their inability to function as
part of the business, and they are often seen as a group outside the
corporate norm (Schein, 1992). This is a problem of cultural assimila-
tion, and it represents one of the two major fronts that organizations
now face in their efforts to gain a grip on the new, growing power of
technology, and to be competitive in a global world. The other major
xviii IntroduCtIon
front concerns the strategic integration of new digital technologies
into business line management.
Because technology continues to change at such a rapid pace, the
ability of organizations to operate within a new paradigm of dynamic
change emphasizes the need to employ action learning as a way to
build competitive learning organizations in the twenty-first century.
Information Technology and Organizational Learning integrates some
of the fundamental issues bearing on IT today with concepts from
organizational learning theory, providing comprehensive guidance,
based on real-life business experiences and concrete research.
This book also focuses on another aspect of what IT can mean to
an organization. IT represents a broadening dimension of business life
that affects everything we do inside an organization. This new reality is
shaped by the increasing and irreversible dissemination of technology.
To maximize the usefulness of its encroaching presence in everyday
business affairs, organizations will require an optimal understanding
of how to integrate technology into everything they do. To this end,
this book seeks to break new ground on how to approach and concep-
tualize this salient issue— that is, that the optimization of information
and digital technologies is best pursued with a synchronous imple-
mentation of organizational learning concepts. Furthermore, these
concepts cannot be implemented without utilizing theories of strategic
learning. Therefore, this book takes the position that technology liter-
acy requires individual and group strategic learning if it is to transform
a business into a technology-based learning organization. Technology
based organizations are defined as those that have implemented a means
of successfully integrating technology into their process of organiza-
tional learning. Such organizations recognize and experience the real-
ity of technology as part of their everyday business function. It is what
many organizations are calling “ being digital.”
This book will also examine some of the many existing organi-
zational learning theories, and the historical problems that have
occurred with companies that have used them, or that have failed
to use them. Thus, the introduction of technology into organizations
actually provides an opportunity to reassess and reapply many of the
past concepts, theories, and practices that have been used to support
the importance of organizational learning. It is important, however,
not to confuse this message with a reason for promoting organizational
xixIntroduCtIon
learning, but rather, to understand the seamless nature of the relation-
ship between IT and organizational learning. Each needs the other to
succeed. Indeed, technology has only served to expose problems that
have existed in organizations for decades, e.g., the inability to drive
down responsibilities to the operational levels of the organization, and
to be more agile with their consumers.
This book is designed to help businesses and individual manag-
ers understand and cope with the many issues involved in developing
organizational learning programs, and in integrating an important
component: their IT and digital organizations. It aims to provide a
combination of research case studies, together with existing theories
on organizational learning in the workplace. The goal is also to pro-
vide researchers and corporate practitioners with a book that allows
them to incorporate a growing IT infrastructure with their exist-
ing workforce culture. Professional organizations need to integrate
IT into their organizational processes to compete effectively in the
technology-driven business climate of today. This book responds to
the complex and various dilemmas faced by many human resource
managers and corporate executives regarding how to actually deal
with many marginalized technology personnel who somehow always
operate outside the normal flow of the core business.
While the history of IT, as a marginalized organization, is rela-
tively short, in comparison to that of other professions, the problems
of IT have been consistent since its insertion into business organiza-
tions in the early 1960s. Indeed, while technology has changed, the
position and valuation of IT have continued to challenge how execu-
tives manage it, account for it, and, most important, ultimately value
its contributions to the organization. Technology personnel continue
to be criticized for their inability to function as part of the business,
and they are often seen as outside the business norm. IT employees
are frequently stereotyped as “ techies,” and are segregated in such a
way that they become isolated from the organization. This book pro-
vides a method for integrating IT, and redefining its role in organiza-
tions, especially as a partner in formulating and implementing key
business strategies that are crucial for the survival of many companies
in the new digital age. Rather than provide a long and extensive list of
common issues, I have decided it best to uncover the challenges of IT
integration and performance through the case study approach.
xx IntroduCtIon
IT continues to be one of the most important yet least understood
departments in an organization. It has also become one of the most
significant components for competing in the global markets of today.
IT is now an integral part of the way companies become successful,
and is now being referred to as the digital arm of the business. This
is true across all industries. The role of IT has grown enormously in
companies throughout the world, and it has a mission to provide stra-
tegic solutions that can make companies more competitive. Indeed,
the success of IT, and its ability to operate as part of the learning
organization, can mean the difference between the success and failure
of entire companies. However, IT must be careful that it is not seen as
just a factory of support personnel, and does not lose its justification
as driving competitive advantage. We see in many organizations that
other digital-based departments are being created, due to frustration
with the traditional IT culture, or because they simply do not see IT
as meeting the current needs for operating in a digital economy.
This book provides answers to other important questions that have
challenged many organizations for decades. First, how can manag-
ers master emerging digital technologies, sustain a relationship with
organizational learning, and link it to strategy and performance?
Second, what is the process by which to determine the value of using
technology, and how does it relate to traditional ways of calculating
return on investment, and establishing risk models? Third, what are
the cyber security implications of technology-based products and
services? Fourth, what are the roles and responsibilities of the IT
executive, and the department in general? To answer these questions,
managers need to focus on the following objectives:
• Address the operational weaknesses in organizations, in
terms of how to deal with new technologies, and how to bet-
ter realize business benefits.
• Provide a mechanism that both enables organizations to deal
with accelerated change caused by technological innovations,
and integrates them into a new cycle of processing, and han-
dling of change.
• Provide a strategic learning framework, by which every new
technology variable adds to organizational knowledge and
can develop a risk and security culture.
xxiIntroduCtIon
• Establish an integrated approach that ties technology account-
ability to other measurable outcomes, using organizational
learning techniques and theories.
To realize these objectives, organizations must be able to
• create dynamic internal processes that can deal, on a daily
basis, with understanding the potential fit of new technologies
and their overall value within the structure of the business;
• provide the discourse to bridge the gaps between IT- and non-
IT-related investments, and uses, into one integrated system;
• monitor investments and determine modifications to the life
cycle;
• implement various organizational learning practices, includ-
ing learning organization, knowledge management, change
management, and communities of practice, all of which help
foster strategic thinking, and learning, and can be linked to
performance (Gephardt & Marsick, 2003).
The strengths of this book are that it integrates theory and practice
and provides answers to the four common questions mentioned. Many
of the answers provided in these pages are founded on theory and
research and are supported by practical experience. Thus, evidence of
the performance of the theories is presented via case studies, which
are designed to assist the readers in determining how such theories
and proven practices can be applied to their specific organization.
A common theme in this book involves three important terms:
dynamic , unpredictable , and acceleration . Dynamic is a term that rep-
resents spontaneous and vibrant things— a motive force. Technology
behaves with such a force and requires organizations to deal with its
capabilities. Glasmeier (1997) postulates that technology evolution,
innovation, and change are dynamic processes. The force then is tech-
nology, and it carries many motives, as we shall see throughout this
book. Unpredictable suggests that we cannot plan what will happen
or will be needed. Many organizational individuals, including execu-
tives, have attempted to predict when, how, or why technology will
affect their organization. Throughout our recent history, especially
during the “ digital disruption” era, we have found that it is difficult,
if not impossible, to predict how technology will ultimately benefit or
xxii IntroduCtIon
hurt organizational growth and competitive advantage. I believe that
technology is volatile and erratic at times. Indeed, harnessing tech-
nology is not at all an exact science; certainly not in the ways in which
it can and should be used in today’ s modern organization. Finally, I
use the term acceleration to convey the way technology is speeding up
our lives. Not only have emerging technologies created this unpre-
dictable environment of change, but they also continue to change it
rapidly— even from the demise of the dot-com era decades ago. Thus,
what becomes important is the need to respond quickly to technology.
The inability to be responsive to change brought about by technologi-
cal innovations can result in significant competitive disadvantages for
organizations.
This new edition shows why this is a fact especially when examining
the shrinking S-Curve. So, we look at these three words— dynamic,
unpredictable, and acceleration— as a way to define how technology
affects organizations; that is, technology is an accelerating motive
force that occurs irregularly. These words name the challenges that
organizations need to address if they are to manage technological
innovations and integrate them with business strategy and competi-
tive advantage. It only makes sense that the challenge of integrating
technology into business requires us first to understand its potential
impact, determine how it occurs, and see what is likely to follow.
There are no quick remedies to dealing with emerging technologies,
just common practices and sustained processes that must be adopted
for organizations to survive in the future.
I had four goals in mind in writing this book. First, I am inter-
ested in writing about the challenges of using digital technologies
strategically. What particularly concerns me is the lack of literature
that truly addresses this issue. What is also troublesome is the lack
of reliable techniques for the evaluation of IT, especially since IT
is used in almost every aspect of business life. So, as we increase
our use and dependency on technology, we seem to understand less
about how to measure and validate its outcomes. I also want to
convey my thoughts about the importance of embracing nonmon-
etary methods for evaluating technology, particularly as they relate
to determining return on investment. Indeed, indirect and non-
monetary benefits need to be part of the process of assessing and
approving IT projects.
xxiiiIntroduCtIon
Second, I want to apply organizational learning theory to the field
of IT and use proven learning models to help transform IT staff into
becoming better members of their organizations. Everyone seems to
know about the inability of IT people to integrate with other depart-
ments, yet no one has really created a solution to the problem. I find
that organizational learning techniques are an effective way of coach-
ing IT staff to operate more consistently with the goals of the busi-
nesses that they support.
Third, I want to present cogent theories about IT and organiza-
tional learning; theories that establish new ways for organizations to
adapt new technologies. I want to share my experiences and those of
other professionals who have found approaches that can provide posi-
tive outcomes from technology investments.
Fourth, I have decided to express my concerns about the valid-
ity and reliability of organizational learning theories and practices as
they apply to the field of IT. I find that most of these models need to
be enhanced to better fit the unique aspects of the digital age. These
modified models enable the original learning techniques to address
IT-specific issues. In this way, the organization can develop a more
holistic approach toward a common goal for using technology.
Certainly, the balance of how technology ties in with strategy is
essential. However, there has been much debate over whether tech-
nology should drive business strategy or vice versa. We will find that
the answer to this is “ yes.” Yes, in the sense that technology can affect
the way organizations determine their missions and business strate-
gies; but “ no” in that technology should not be the only component
for determining mission and strategy. Many managers have realized
that business is still business, meaning that technology is not a “ sil-
ver bullet.” The challenge, then, is to determine how best to fit tech-
nology into the process of creating and supporting business strategy.
Few would doubt today that technology is, indeed, the most signifi-
cant variable affecting business strategy. However, the most viable
approach is to incorporate technology into the process of determin-
ing business strategy. I have found that many businesses still formu-
late their strategies first, and then look at technology, as a means to
efficiently implement objectives and goals. Executives need to better
understand the unique and important role that technology provides
us; it can drive business strategy, and support it, at the same time.
xxiv IntroduCtIon
Managers should not solely focus their attention on generating
breakthrough innovations that will create spectacular results. Most
good uses of technology are much subtler, and longer-lasting. For this
reason, this book discusses and defines new technology life cycles
that blend business strategy and strategic learning. Building on this
theme, I introduce the idea of responsive organizational dynamism as
the core theory of this book. Responsive organizational dynamism
defines an environment that can respond to the three important
terms (dynamic, unpredictable, and acceleration). Indeed, technology
requires organizations that can sustain a system, in which individu-
als can deal with dynamic, unpredictable, and accelerated change, as
part of their regular process of production. The basis of this concept
is that organizations must create and sustain such an environment to
be competitive in a global technologically-driven economy. I further
analyze responsive organizational dynamism in its two subcompo-
nents: strategic integration and cultural assimilation, which address
how technology needs to be measured as it relates to business strategy,
and what related social– structural changes are needed, respectively.
Change is an important principle of this book. I talk about the
importance of how to change, how to manage such change, and why
emerging technologies are a significant agent of change. I support
the need for change, as an opportunity to use many of the learning
theories that have been historically difficult to implement. That is,
implementing change brought on by technological innovation is an
opportunity to make the organization more “ change ready” or, as we
define it today, more “ agile.” However, we also know that little is
known about how organizations should actually go about modifying
existing processes to adapt to new technologies and become digital
entities— and to be accustomed to doing this regularly. Managing
through such periods of change requires that we develop a model that
can deal with dynamic, unpredictable, and accelerated change. This is
what responsive organizational dynamism is designed to do.
We know that over 20% of IT projects still fail to be completed.
Another 54% fail to meet their projected completion date. We now sit
at the forefront of another technological spurt of innovations that will
necessitate major renovations to existing legacy systems, requiring that
they be linked to sophisticated e-business systems. These e-business
systems will continue to utilize the Internet, and emerging mobile
xxvIntroduCtIon
technologies. While we tend to focus primarily on what technology
generically does, organizations need urgently to prepare themselves
for the next generation of advances, by forming structures that can
deal with continued, accelerated change, as the norm of daily opera-
tions. For this edition, I have added new sections and chapters that
address the digital transformation, ways of dealing with changing
consumer behavior, the need to form evolving cyber security cultures,
and the importance of integrating Gen Y employees to accelerate
competitive advantage.
This book provides answers to a number of dilemmas but ultimately
offers an imbricate cure for the problem of latency in performance and
quality afflicting many technologically-based projects. Traditionally,
management has attempted to improve IT performance by increasing
technical skills and project manager expertise through new processes.
While there has been an effort to educate IT managers to become
more interested and participative in business issues, their involvement
continues to be based more on service than on strategy. Yet, at the
heart of the issue is the entirety of the organization. It is my belief that
many of the programmatic efforts conducted in traditional ways and
attempting to mature and integrate IT with the rest of the organiza-
tion will continue to deliver disappointing results.
My personal experience goes well beyond research; it draws from
living and breathing the IT experience for the past 35 years, and
from an understanding of the dynamics of what occurs inside and
outside the IT department in most organizations. With such experi-
ence, I can offer a path that engages the participation of the entire
management team and operations staff of the organization. While
my vision for this kind of digital transformation is different from
other approaches, it is consistent with organizational learning theo-
ries that promote the integration of individuals, communities, and
senior management to participate in more democratic and vision-
ary forms of thinking, reflection, and learning. It is my belief that
many of the dilemmas presented by IT have existed in other parts of
organizations for years, and that the Internet revolution only served
to expose them. If we believe this to be true, then we must begin
the process of integrating technology into strategic thinking and
stop depending on IT to provide magical answers, and inappropriate
expectations of performance.
xxvi IntroduCtIon
Technology is not the responsibility of any one person or depart-
ment; rather, it is part of the responsibility of every employee. Thus,
the challenge is to allow organizations to understand how to modify
their processes, and the roles and responsibilities of their employees,
to incorporate digital technologies as part of normal workplace activi-
ties. Technology then becomes more a subject and a component of
discourse. IT staff members need to emerge as specialists who par-
ticipate in decision making, development, and sustained support of
business evolution. There are also technology-based topics that do
not require the typical expertise that IT personnel provide. This is
a literacy issue that requires different ways of thinking and learning
during the everyday part of operations. For example, using desktop
tools, communicating via e-mail, and saving files and data, are inte-
gral to everyday operations. These activities affect projects, yet they
are not really part of the responsibilities of IT departments. Given
the knowledge that technology is everywhere, we must change the
approach that we take to be successful. Another way of looking at this
phenomenon is to define technology more as a commodity, readily
available to all individuals. This means that the notion of technology
as organizationally segregated into separate cubes of expertise is prob-
lematic, particularly on a global front.
Thus, the overall aim of this book is to promote organizational
learning that disseminates the uses of technology throughout a busi-
ness, so that IT departments are a partner in its use, as opposed to
being its sole owner. The cure to IT project failure, then, is to engage
the business in technology decisions in such a way that individuals
and business units are fundamentally involved in the process. Such
processes need to be designed to dynamically respond to technology
opportunities and thus should not be overly bureaucratic. There is a
balance between establishing organizations that can readily deal with
technology versus those that become too complex and inefficient.
This balance can only be attained using organizational learning
techniques as the method to grow and reach technology maturation.
Overview of the Chapters
Chapter 1 provides an important case study of the Ravell Corporation
(a pseudonym), where I was retained for over five years. During this
xxviiIntroduCtIon
period, I applied numerous organizational learning methods toward
the integration of the IT department with the rest of the organiza-
tion. The chapter allows readers to understand how the theories of
organizational learning can be applied in actual practice, and how
those theories are particularly beneficial to the IT community. The
chapter also shows the practical side of how learning techniques can
be linked to measurable outcomes, and ultimately related to business
strategy. This concept will become the basis of integrating learning
with strategy (i.e., “ strategic learning” ). The Ravell case study also
sets the tone of what I call the IT dilemma, which represents the
core problem faced by organizations today. Furthermore, the Ravell
case study becomes the cornerstone example throughout the book and
is used to relate many of the theories of learning and their practical
applicability in organizations. The Ravell case has also been updated
in this second edition to include recent results that support the impor-
tance of alignment with the human resources department.
Chapter 2 presents the details of the IT dilemma. This chapter
addresses issues such as isolation of IT staff, which results in their
marginalization from the rest of the organization. I explain that while
executives want technology to be an important part of business strat-
egy, few understand how to accomplish it. In general, I show that
individuals have a lack of knowledge about how technology and busi-
ness strategy can, and should, be linked, to form common business
objectives. The chapter provides the results of a three-year study of
how chief executives link the role of technology with business strat-
egy. The study captures information relating to how chief executives
perceive the role of IT, how they manage it, and use it strategically,
and the way they measure IT performance and activities.
Chapter 3 focuses on defining how organizations need to respond
to the challenges posed by technology. I analyze technological dyna-
mism in its core components so that readers understand the different
facets that comprise its many applications. I begin by presenting tech-
nology as a dynamic variable that is capable of affecting organizations
in a unique way. I specifically emphasize the unpredictability of tech-
nology, and its capacity to accelerate change— ultimately concluding
that technology, as an independent variable, has a dynamic effect on
organizational development. This chapter also introduces my theory
of responsive organizational dynamism, defined as a disposition in
xxviii IntroduCtIon
organizational behavior that can respond to the demands of tech-
nology as a dynamic variable. I establish two core components of
responsive organizational dynamism: strategic integration and cultural
assimilation . Each of these components is designed to tackle a specific
problem introduced by technology. Strategic integration addresses the
way in which organizations determine how to use technology as part
of business strategy. Cultural assimilation, on the other hand, seeks
to answer how the organization, both structurally and culturally, will
accommodate the actual human resources of an IT staff and depart-
ment within the process of implementing new technologies. Thus,
strategic integration will require organizational changes in terms of
cultural assimilation. The chapter also provides a perspective of the
technology life cycle so that readers can see how responsive organi-
zational dynamism is applied, on an IT project basis. Finally, I define
the driver and supporter functions of IT and how these contribute to
managing technology life cycles.
Chapter 4 introduces theories on organizational learning, and
applies them specifically to responsive organizational dynamism. I
emphasize that organizational learning must result in individual, and
organizational transformation, that leads to measurable performance
outcomes. The chapter defines a number of organizational learning
theories, such as reflective practices, learning organization, communi-
ties of practice, learning preferences and experiential learning, social
discourse, and the use of language. These techniques and approaches
to promoting organizational learning are then configured into various
models that can be used to assess individual and organizational devel-
opment. Two important models are designed to be used in responsive
organizational dynamism: the applied individual learning wheel and
the technology maturity arc. These models lay the foundation for my
position that learning maturation involves a steady linear progression
from an individual focus toward a system or organizational perspec-
tive. The chapter also addresses implementation issues— political
challenges that can get in the way of successful application of the
learning theories.
Chapter 5 explores the role of management in creating and sustain-
ing responsive organizational dynamism. I define the tiers of middle
management in relation to various theories of management partici-
pation in organizational learning. The complex issues of whether
xxixIntroduCtIon
organizational learning needs to be managed from the top down,
bottom up, or middle-top-down are discussed and applied to a model
that operates in responsive organizational dynamism. This chapter
takes into account the common three-tier structure in which most
organizations operate: executive, middle, and operations. The execu-
tive level includes the chief executive officer (CEO), president, and
senior vice presidents. The middle is the most complex, ranging from
vice president/director to supervisory roles. Operations covers what is
commonly known as “ staff,” including clerical functions. The knowl-
edge that I convey suggests that all of these tiers need to participate in
management, including operations personnel, via a self-development
model. The chapter also presents the notion that knowledge manage-
ment is necessary to optimize competitive advantage, particularly as
it involves transforming tacit knowledge into explicit knowledge. I
view the existing theories on knowledge management, create a hybrid
model that embraces technology issues, and map them to responsive
organizational dynamism. Discussions on change management are
included as a method of addressing the unique ways that technol-
ogy affects product development. Essentially, I tie together respon-
sive organizational dynamism with organizational change theory, by
offering modifications to generally accepted theories. There is also a
specific model created for IT organizations, that maps onto organi-
zational-level concepts. Although I have used technology as the basis
for the need for responsive organizational dynamism, I show that the
needs for its existence can be attributed to any variable that requires
dynamic change. As such, I suggest that readers begin to think about
the next “ technology” or variable that can cause the same needs to
occur inside organizations. The chapter has been extended to address
the impact of social networking and the leadership opportunities it
provides to technology executives.
Chapter 6 examines how organizational transformation occurs.
The primary focus of the chapter is to integrate transformation theory
with responsive organizational dynamism. The position taken is that
organizational learning techniques must inevitably result in orga-
nizational transformation. Discussions on transformation are often
addressed at organizational level, as opposed to focusing on individual
development. As in other sections of the book, I extend a number
of theories so that they can operate under the auspices of responsive
xxx IntroduCtIon
organizational dynamism, specifically, the works of Yorks and Marsick
(2000) and Aldrich (2001). I expand organizational transformation
to include ongoing assessment within technology deliverables. This
is accomplished through the use of a modified Balanced Scorecard
originally developed by Kaplan and Norton (2001). The Balanced
Scorecard becomes the vehicle for establishing a strategy-focused and
technology-based organization.
Chapter 7 deals with the many business transformation projects
that require outsource arrangements and virtual team management.
This chapter provides an understanding of when and how to consider
outsourcing and the intricacies of considerations once operating with
virtual teams. I cover such issues as management considerations and
the challenges of dealing in multiple locations. The chapter extends the
models discussed in previous chapters so that they can be aligned with
operating in a virtual team environment. Specifically, this includes
communities of practice, social discourse, self-development, knowl-
edge management, and, of course, responsive organizational dyna-
mism and its corresponding maturity arcs. Furthermore, I expand the
conversation to include IT and non-IT personnel, and the arguments
for the further support needed to integrate all functions across the
organization.
Chapter 8 presents updated case studies that demonstrate how my
organizational learning techniques are actually applied in practice.
Three case studies are presented: Siemens AG, ICAP, and HTC.
Siemens AG is a diverse international company with 20 discrete
businesses in over 190 countries. The case study offers a perspec-
tive of how a corporate chief information officer (CIO) introduced
e- business strategy. ICAP is a leading international money and secu-
rity broker. This case study follows the activities of the electronic trad-
ing community (ETC) entity, and how the CEO transformed the
organization and used organizational learning methods to improve
competitive advantage. HTC (a pseudonym) provides an example of
why the chief IT executive should report to the CEO, and how a
CEO can champion specific projects to help transform organizational
norms and behaviors. This case study also maps the transformation of
the company to actual examples of strategic advantage.
Chapter 9 focuses on the challenges of forming a “ cyber security”
culture. The growing challenges of protecting companies from outside
xxxiIntroduCtIon
attacks have established the need to create a cyber security culture.
This chapter addresses the ways in which information technology
organizations must further integrate with business operations, so
that their firms are better equipped to protect against outside threats.
Since the general consensus is that no system can be 100% protected,
and that most system compromises occur as a result of internal expo-
sures, information technology leaders must educate employees on
best practices to limit cyberattacks. Furthermore, while prevention is
the objective, organizations must be internally prepared to deal with
attacks and thus have processes in place should a system become pen-
etrated by third-party agents.
Chapter 10 explores the effects of the digital global economy on
the ways in which organizations need to respond to the consumeriza-
tion of products and services. From this perspective, digital transfor-
mation involves a type of social reengineering that affects the ways in
which organizations communicate internally, and how they consider
restructuring departments. Digital transformation also affects the
risks that organizations must take in what has become an accelerated
changing consumer market.
Chapter 11 provides conclusions and focuses on Gen Y employ-
ees who are known as “ digital natives” and represent the new supply
chain of talent. Gen Y employees possess the attributes to assist com-
panies to transform their workforce to meet the accelerated change in
the competitive landscape. Most executives across industries recog-
nize that digital technologies are the most powerful variable to main-
taining and expanding company markets. Gen Y employees provide a
natural fit for dealing with emerging digital technologies. However,
success with integrating Gen Y employees is contingent upon Baby
Boomer and Gen X management adopting new leadership philoso-
phies and procedures suited to meet the expectations and needs of
these new workers. Ignoring the unique needs of Gen Y employees
will likely result in an incongruent organization that suffers high
turnover of young employees who will ultimately seek a more entre-
preneurial environment.
Chapter 12 seeks to define best practices to implement and sus-
tain responsive organizational dynamism. The chapter sets forth a
model that creates separate, yet linked, best practices and maturity
arcs that can be used to assess stages of the learning development
xxxii IntroduCtIon
of the chief IT executive, the CEO, and the middle management. I
discuss the concept of common threads , by which each best practices
arc links through common objectives and outcomes to the responsive
organizational dynamism maturity arc presented in Chapter 4. Thus,
these arcs represent an integrated and hierarchical view of how each
component of the organization contributes to overall best practices. A
new section has been added that links ethics to technology leadership
and maturity.
Chapter 13 summarizes the many aspects of how IT and organi-
zational learning operate together to support the responsive organi-
zational dynamism environment. The chapter emphasizes the specific
key themes developed in the book, such as evolution versus revolu-
tion; control and empowerment; driver and supporter operations; and
responsive organizational dynamism and self-generating organiza-
tions. Finally, I provide an overarching framework for “ organizing”
reflection and integrate it with the best practices arcs.
As a final note, I need to clarify my use of the words information
technology, digital technology, and technology. In many parts of the book,
they are used interchangeably, although there is a defined difference.
Of course, not all technology is related to information or digital; some
is based on machinery or the like. For the purposes of this book, the
reader should assume that IT and digital technology are the primary
variables that I am addressing. However, the theories and processes
that I offer can be scaled to all types of technological innovation.
1
1
The “Ravell” CoRpoRaTion
Introduction
Launching into an explanation of information technology (IT),
organizational learning, and the practical relationship into which I
propose to bring them is a challenging topic to undertake. I choose,
therefore, to begin this discussion by presenting an actual case study
that exemplifies many key issues pertaining to organizational learn-
ing, and how it can be used to improve the performance of an IT
department. Specifically, this chapter summarizes a case study of
the IT department at the Ravell Corporation (a pseudonym) in New
York City. I was retained as a consultant at the company to improve
the performance of the department and to solve a mounting politi-
cal problem involving IT and its relation to other departments. The
case offers an example of how the growth of a company as a “learn-
ing organization”—one in which employees are constantly learning
during the normal workday (Argyris, 1993; Watkins & Marsick,
1993)— utilized reflective practices to help it achieve the practical stra-
tegic goals it sought. Individuals in learning organizations integrate
processes of learning into their work. Therefore, a learning organiza-
tion must advocate a system that allows its employees to interact, ask
questions, and provide insight to the business. The learning organiza-
tion will ultimately promote systematic thinking, and the building
of organizational memory (Watkins & Marsick, 1993). A learning
organization (discussed more fully in Chapter 4) is a component of
the larger topic of organizational learning.
The Ravell Corporation is a firm with over 500 employees who,
over the years, had become dependent on the use of technology to
run its business. Its IT department, like that of many other compa-
nies, was isolated from the rest of the business and was regarded as
a peripheral entity whose purpose was simply to provide technical
support. This was accompanied by actual physical isolation—IT was
2 INFORMATION TECHNOLOGY
placed in a contained and secure location away from mainstream
operations. As a result, IT staff rarely engaged in active discourse
with other staff members unless specific meetings were called relat-
ing to a particular project. The Ravell IT department, therefore, was
not part of the community of organizational learning—it did not
have the opportunity to learn along with the rest of the organiza-
tion, and it was never asked to provide guidance in matters of gen-
eral relevance to the business as a whole. This marginalized status
resulted in an us-versus-them attitude on the part of IT and non-IT
personnel alike.
Much has been written about the negative impact of marginal-
ization on individuals who are part of communities. Schlossberg
(1989) researched adults in various settings and how marginal-
ization affected their work and self-efficacy. Her theory on mar-
ginalization and mattering is applied to this case study because of
its relevance and similarity to her prior research. For example, IT
represents similar characteristics to a separate group on a college
campus or in a workplace environment. Its physical isolation can
also be related to how marginalized groups move away from the
majority population and function without contact. The IT direc-
tor, in particular, had cultivated an adversarial relationship with his
peers. The director had shaped a department that fueled his view of
separation. This had the effect of further marginalizing the posi-
tion of IT within the organization. Hand in hand with this form of
separatism came a sense of actual dislike on the part of IT personnel
for other employees. IT staff members were quick to point fingers
at others and were often noncommunicative with members of other
departments within the organization. As a result of this kind of
behavior, many departments lost confidence in the ability of IT to
provide support; indeed, the quality of support that IT furnished
had begun to deteriorate. Many departments at Ravell began to hire
their own IT support personnel and were determined to create their
own information systems subdepartments. This situation eventually
became unacceptable to management, and the IT director was ter-
minated. An initiative was begun to refocus the department and its
position within the organization. I was retained to bring about this
change and to act as the IT director until a structural transforma-
tion of the department was complete.
3the “rAvell” CorporAtIon
A New Approach
My mandate at Ravell was initially unclear—I was to “fix” the
problem; the specific solution was left up to me to design and imple-
ment. My goal became one of finding a way to integrate IT fully into
the organizational culture at Ravell. Without such integration, IT
would remain isolated, and no amount of “fixing” around this issue
would address the persistence of what was, as well, a cultural prob-
lem. Unless IT became a true part of the organization as a whole,
the entire IT staff could be replaced without any real change having
occurred from the organization’s perspective. That is, just replacing
the entire IT staff was an acceptable solution to senior management.
The fact that this was acceptable suggested to me that the knowledge
and value contained in the IT department did not exist or was mis-
understood by the senior management of the firm. In my opinion,
just eliminating a marginalized group was not a solution because I
expected that such knowledge and value did exist, and that it needed
to be investigated properly. Thus, I rejected management’s option and
began to formulate a plan to better understand the contributions that
could be made by the IT department. The challenge was threefold: to
improve the work quality of the IT department (a matter of perfor-
mance), to help the department begin to feel itself a part of the orga-
nization as a whole and vice versa (a matter of cultural assimilation),
and to persuade the rest of the organization to accept the IT staff as
equals who could contribute to the overall direction and growth of the
organization (a fundamental matter of strategic integration).
My first step was to gather information. On my assignment to the
position of IT director, I quickly arranged a meeting with the IT
department to determine the status and attitudes of its personnel.
The IT staff meeting included the chief financial officer (CFO), to
whom IT reported. At this meeting, I explained the reasons behind
the changes occurring in IT management. Few questions were asked;
as a result, I immediately began scheduling individual meetings with
each of the IT employees. These employees varied in terms of their
position within the corporate hierarchy, in terms of salary, and in
terms of technical expertise. The purpose of the private meetings was
to allow IT staff members to speak openly, and to enable me to hear
their concerns. I drew on the principles of action science, pioneered
4 INFORMATION TECHNOLOGY
by Argyris and Schö n (1996), designed to promote individual self-
reflection regarding behavior patterns, and to encourage a produc-
tive exchange among individuals. Action science encompasses a range
of methods to help individuals learn how to be reflective about their
actions. By reflecting, individuals can better understand the outcomes
of their actions and, especially, how they are seen by others. This was
an important approach because I felt learning had to start at the indi-
vidual level as opposed to attempting group learning activities. It was
my hope that the discussions I orchestrated would lead the IT staff to
a better understanding than they had previously shown, not only of
the learning process itself, but also of the significance of that process.
I pursued these objectives by guiding them to detect problem areas in
their work and to undertake a joint effort to correct them (Argyris,
1993; Arnett, 1992).
Important components of reflective learning are single-loop and
double-loop learning. Single-loop learning requires individuals to
reflect on a prior action or habit that needs to be changed in the future
but does not require individuals to change their operational proce-
dures with regard to values and norms. Double-loop learning, on the
other hand, does require both change in behavior and change in oper-
ational procedures. For example, people who engage in double-loop
learning may need to adjust how they perform their job, as opposed to
just the way they communicate with others, or, as Argyris and Schö n
(1996, p. 22) state, “the correction of error requires inquiry through
which organizational values and norms themselves are modified.”
Despite my efforts and intentions, not all of the exchanges were
destined to be successful. Many of the IT staff members felt that the
IT director had been forced out, and that there was consequently
no support for the IT function in the organization. There was also
clear evidence of internal political division within the IT department;
members openly criticized each other. Still other interviews resulted
in little communication. This initial response from IT staff was disap-
pointing, and I must admit I began to doubt whether these learning
methods would be an antidote for the department. Replacing people
began to seem more attractive, and I now understood why many man-
agers prefer to replace staff, as opposed to investing in their transfor-
mation. However, I also knew that learning is a gradual process and
that it would take time and trust to see results.
5the “rAvell” CorporAtIon
I realized that the task ahead called for nothing short of a total cul-
tural transformation of the IT organization at Ravell. Members of the
IT staff had to become flexible and open if they were to become more
trusting of one another and more reflective as a group (Garvin, 2000;
Schein, 1992). Furthermore, they had to have an awareness of their
history, and they had to be willing to institute a vision of partnering
with the user community. An important part of the process for me
was to accept the fact that the IT staff were not habitually inclined to
be reflective. My goal then was to create an environment that would
foster reflective learning, which would in turn enable a change in
individual and organizational values and norms (Senge, 1990).
The Blueprint for Integration
Based on information drawn from the interviews, I developed a pre-
liminary plan to begin to integrate IT into the day-to-day operations
at Ravell, and to bring IT personnel into regular contact with other
staff members. According to Senge (1990), the most productive learn-
ing occurs when skills are combined in the activities of advocacy and
inquiry. My hope was to encourage both among the staff at Ravell. The
plan for integration and assimilation involved assigning IT resources
to each department; that is, following the logic of the self-dissemina-
tion of technology, each department would have its own dedicated IT
person to support it. However, just assigning a person was not enough,
so I added the commitment to actually relocate an IT person into each
physical area. This way, rather than clustering together in an area of
their own, IT people would be embedded throughout the organiza-
tion, getting first-hand exposure to what other departments did, and
learning how to make an immediate contribution to the productiv-
ity of these departments. The on-site IT person in each department
would have the opportunity to observe problems when they arose—
and hence, to seek ways to prevent them—and, significantly, to share
in the sense of accomplishment when things went well. To reinforce
their commitment to their respective areas, I specified that IT person-
nel were to report not only to me but also to the line manager in their
respective departments. In addition, these line managers were to have
input on the evaluation of IT staff. I saw that making IT staff offi-
cially accountable to the departments they worked with was a tangible
6 INFORMATION TECHNOLOGY
way to raise their level of commitment to the organization. I hoped
that putting line managers in a supervisory position, would help build
a sense of teamwork between IT and non-IT personnel. Ultimately,
the focus of this approach was to foster the creation of a tolerant and
supportive cultural climate for IT within the various departments; an
important corollary goal here was also to allow reflective reviews of
performance to flourish (Garvin, 1993).
Enlisting Support
Support for this plan had to be mustered quickly if I was to create an
environment of trust. I had to reestablish the need for the IT func-
tion within the company, show that it was critical for the company’s
business operations, and show that its integration posed a unique
challenge to the company. However, it was not enough just for me
to claim this. I also had to enlist key managers to claim it. Indeed,
employees will cooperate only if they believe that self-assessment and
critical thinking are valued by management (Garvin, 2000). I decided
to embark on a process of arranging meetings with specific line man-
agers in the organization. I selected individuals who would represent
the day-to-day management of the key departments. If I could get
their commitment to work with IT, I felt it could provide the stimulus
we needed. Some line managers were initially suspicious of the effort
because of their prior experiences with IT. However, they generally
liked the idea of integration and assimilation that was presented to
them, and agreed to support it, at least on a trial basis.
Predictably, the IT staff were less enthusiastic about the idea. Many
of them felt threatened, fearing that they were about to lose their
independence or lose the mutual support that comes from being in a
cohesive group. I had hoped that holding a series of meetings would
help me gain support for the restructuring concept. I had to be care-
ful to ensure that the staff members would feel that they also had an
opportunity to develop a plan, that they were confident would work.
During a number of group sessions, we discussed various scenarios of
how such a plan might work. I emphasized the concepts of integra-
tion and assimilation, and that a program of their implementation
would be experimental. Without realizing it, I had engaged IT staff
members in a process of self-governance. Thus, I empowered them
7the “rAvell” CorporAtIon
to feel comfortable with voicing new ideas, without being concerned
that they might be openly criticized by me if I did not agree. This pro-
cess also encouraged individuals to begin thinking more as a group.
Indeed, by directing the practice of constructive criticism among
the IT staff, I had hoped to elicit a higher degree of reflective action
among the group and to show them that they had the ability to learn
from one another as well as the ability to design their own roles in the
organization (Argyris, 1993). Their acceptance of physical integration
and, hence, cultural assimilation became a necessary condition for
the ability of the IT group, to engage in greater reflective behavior
(Argyris & Schö n, 1996).
Assessing Progress
The next issue concerned individual feedback. How was I to let each
person know how he or she was doing? I decided first, to get feedback
from the larger organizational community. This was accomplished
by meeting with the line managers and obtaining whatever feed-
back was available from them. I was surprised at the large quantity
of information they were willing to offer. The line managers were not
shy about participating, and their input allowed me to complete two
objectives: (1) to understand how the IT staff was being perceived in
its new assignment and (2) to create a social and reflective relation-
ship between IT individuals and the line managers. The latter objec-
tive was significant, for if we were to be successful, the line managers
would have to assist us in the effort to integrate and assimilate IT
functions within their community.
After the discussions with managers were completed, individual
meetings were held with each IT staff member to discuss the feedback.
I chose not to attribute the feedback to specific line managers but rather
to address particular issues by conveying the general consensus about
them. Mixed feelings were also disclosed by the IT staff. After convey-
ing the information, I listened attentively to the responses of IT staff
members. Not surprisingly, many of them responded to the feedback
negatively and defensively. Some, for example, felt that many technology
users were unreasonable in their expectations of IT. It was important for
me as facilitator not to find blame among them, particularly if I was to
be a participant in the learning organization (Argyris & Schö n, 1996).
8 INFORMATION TECHNOLOGY
Resistance in the Ranks
Any major organizational transformation is bound to elicit resistance
from some employees. The initiative at Ravell proved to be no excep-
tion. Employees are not always sincere, and some individuals will
engage in political behavior that can be detrimental to any organiza-
tional learning effort. Simply put, they are not interested in partici-
pating, or, as Marsick (1998) states, “It would be naï ve to expect that
everyone is willing to play on an even field (i.e., fairly).” Early in the
process, the IT department became concerned that its members spent
much of their time trying to figure out how best to position themselves
for the future instead of attending to matters at hand. I heard from
other employees that the IT staff felt that they would live through my
tenure; that is, just survive until a permanent IT director was hired. It
became difficult at times to elicit the truth from some members of the
IT staff. These individuals would skirt around issues and deny making
statements that were reported by other employees rather than con-
front problems head on. Some IT staff members would criticize me in
front of other groups and use the criticism as proof that the plan for
a general integration was bound to fail. I realized in a most tangible
sense that pursuing change through reflective practice does not come
without resistance, and that this resistance needs to be factored into
the planning of any such organizationally transformative initiative.
Line Management to the Rescue
At the time that we were still working through the resistance within
IT, the plan to establish a relationship with line management began
to work. A number of events occurred that allowed me to be directly
involved in helping certain groups solve their IT problems. Word
spread quickly that there was a new direction in IT that could be
trusted. Line management support is critical for success in such trans-
formational situations. First, line management is typically comprised
of people from the ranks of supervisors and middle managers, who are
responsible for the daily operations of their department. Assuming
they do their jobs, senior management will cater to their needs and
listen to their feedback. The line management of any organiza-
tion, necessarily engaged to some degree in the process of learning
9the “rAvell” CorporAtIon
(a “learning organization”), is key to its staff. Specifically, line manag-
ers are responsible for operations personnel; at the same time, they
must answer to senior management. Thus, they understand both exec-
utive and operations perspectives of the business (Garvin, 2000). They
are often former staff members themselves and usually have a high
level of technical knowledge. Upper management, while important
for financial support, has little effect at the day-to-day level, yet this is
the level at which the critical work of integration and the building of
a single learning community must be done.
Interestingly, the line management organization had previously
had no shortage of IT-related problems. Many of these line managers
had been committed to developing their own IT staffs; however, they
quickly realized that the exercise was beyond their expertise, and that
they needed guidance and leadership. Their participation in IT staff
meetings had begun to foster a new trust in the IT department, and
they began to see the possibilities of working closely with IT to solve
their problems. Their support began to turn toward what Watkins and
Marsick (1993, p. 117) call “creating alignment by placing the vision
in the hands of autonomous, cross-functional synergetic teams.” The
combination of IT and non-IT teams began to foster a synergy among
the communities, which established new ideas about how best to use
technology.
IT Begins to Reflect
Although it was initially difficult for some staff members to accept,
they soon realized that providing feedback opened the door to the
process of self-reflection within IT. We undertook a number of exer-
cises, to help IT personnel understand how non-IT personnel per-
ceived them, and how their own behavior may have contributed to
these perceptions. To foster self-reflection, I adopted a technique
developed by Argyris called “the left-hand column.” In this technique,
individuals use the right-hand column of a piece of paper to transcribe
dialogues that they felt had not resulted in effective communication.
In the left-hand column of the same page, participants are to write
what they were really thinking at the time of the dialogue but did not
say. This exercise is designed to reveal underlying assumptions that
speakers may not be aware of during their exchanges and that may be
10 INFORMATION TECHNOLOGY
impeding their communication with others by giving others a wrong
impression. The exercise was extremely useful in helping IT personnel
understand how others in the organization perceived them.
Most important, the development of reflective skills, according to
Schö n (1983), starts with an individual’s ability to recognize “leaps
of abstraction”—the unconscious and often inaccurate generalizations
people make about others based on incomplete information. In the
case of Ravell, such generalizations were deeply entrenched among its
various personnel sectors. Managers tended to assume that IT staffers
were “ just techies,” and that they therefore held fundamentally differ-
ent values and had little interest in the organization as a whole. For
their part, the IT personnel were quick to assume that non-IT people
did not understand or appreciate the work they did. Exposing these
“leaps of abstraction” was key to removing the roadblocks that pre-
vented Ravell from functioning as an integrated learning organization.
Defining an Identity for Information Technology
It was now time to start the process of publicly defining the identity
of IT. Who were we, and what was our purpose? Prior to this time,
IT had no explicit mission. Instead, its members had worked on an
ad hoc basis, putting out fires and never fully feeling that their work
had contributed to the growth or development of the organization as
a whole. This sense of isolation made it difficult for IT members to
begin to reflect on what their mission should or could be. I organized
a series of meetings to begin exploring the question of a mission, and I
offered support by sharing exemplary IT mission statements that were
being implemented in other organizations. The focus of the meetings
was not on convincing them to accept any particular idea but rather to
facilitate a reflective exercise with a group that was undertaking such
a task for the first time (Senge, 1990).
The identity that emerged for the IT department at Ravell was dif-
ferent from the one implicit in their past role. Our new mission would
be to provide technical support and technical direction to the organi-
zation. Of necessity, IT personnel would remain specialists, but they
were to be specialists who could provide guidance to other depart-
ments in addition to helping them solve and prevent problems. As
they became more intimately familiar with what different departments
11the “rAvell” CorporAtIon
did—and how these departments contributed to the organization as a
whole—IT professionals would be able to make better informed rec-
ommendations. The vision was that IT people would grow from being
staff who fixed things into team members who offered their expertise
to help shape the strategic direction of the organization and, in the
process, participate fully in organizational growth and learning.
To begin to bring this vision to life, I invited line managers to
attend our meetings. I had several goals in mind with this invita-
tion. Of course, I wanted to increase contact between IT and non-IT
people; beyond this, I wanted to give IT staff an incentive to change
by making them feel a part of the organization as a whole. I also got
a commitment from IT staff that we would not cover up our prob-
lems during the sessions, but would deal with all issues with trust
and honesty. I also believed that the line managers would reciprocate
and allow us to attend their staff meetings. A number of IT indi-
viduals were concerned that my approach would only further expose
our problems with regard to quality performance, but the group as
a whole felt compelled to stick with the beliefs that honesty would
always prevail over politics. Having gained insight into how the rest of
the organization perceived them, IT staff members had to learn how
to deal with disagreement and how to build consensus to move an
agenda forward. Only then could reflection and action be intimately
intertwined so that after-the-fact reviews could be replaced with peri-
ods of learning and doing (Garvin, 2000).
The meetings were constructive, not only in terms of content issues
handled in the discussions, but also in terms of the number of line
managers who attended them. Their attendance sent a strong message
that the IT function was important to them, and that they under-
stood that they also had to participate in the new direction that IT
was taking. The sessions also served as a vehicle to demonstrate how
IT could become socially assimilated within all the functions of the
community while maintaining its own identity.
The meetings were also designed as a venue for group members to
be critical of themselves. The initial meetings were not successful in
this regard; at first, IT staff members spent more time blaming oth-
ers than reflecting on their own behaviors and attitudes. These ses-
sions were difficult in that I would have to raise unpopular questions
and ask whether the staff had truly “looked in the mirror” concerning
12 INFORMATION TECHNOLOGY
some of the problems at hand. For example, one IT employee found
it difficult to understand why a manager from another department
was angry about the time it took to get a problem resolved with his
computer. The problem had been identified and fixed within an hour,
a time frame that most IT professionals would consider very respon-
sive. As we looked into the reasons why the manager could have been
justified in his anger, it emerged that the manager had a tight deadline
to meet. In this situation, being without his computer for an hour was
a serious problem.
Although under normal circumstances a response time of one hour
is good, the IT employee had failed to ask about the manager’s par-
ticular circumstance. On reflection, the IT employee realized that
putting himself in the position of the people he was trying to support
would enable him to do his job better. In this particular instance, had
the IT employee only understood the position of the manager, there
were alternative ways of resolving the problem that could have been
implemented much more quickly.
Implementing the Integration: A Move toward Trust and Reflection
As communication became more open, a certain synergy began to
develop in the IT organization. Specifically, there was a palpable rise
in the level of cooperation and agreement, with regard to the over-
all goals set during these meetings. This is not to suggest that there
were no disagreements but rather that discussions tended to be more
constructive in helping the group realize its objective of providing
outstanding technology support to the organization. The IT staff
also felt freer to be self-reflective by openly discussing their ideas and
their mistakes. The involvement of the departmental line manag-
ers also gave IT staff members the support they needed to carry out
the change. Slowly, there developed a shift in behavior in which the
objectives of the group sharpened its focus on the transformation of
the department, on its acknowledgment of successes and failures, and
on acquiring new knowledge, to advance the integration of IT into
the core business units.
Around this time, an event presented itself that I felt would allow
the IT department to establish its new credibility and authority to
the other departments: the physical move of the organization to a
13the “rAvell” CorporAtIon
new location. The move was to be a major event, not only because
it represented the relocation of over 500 people and the technologi-
cal infrastructure they used on a day-to-day basis, but also because
the move was to include the transition of the media communications
systems of the company, to digital technology. The move required
tremendous technological work, and the organization decided to
perform a “technology acceleration,” meaning that new technology
would be introduced more quickly because of the opportunity pre-
sented by the move. The entire moving process was to take a year, and
I was immediately summoned to work with the other departments in
determining the best plan to accomplish the transition.
For me, the move became an emblematic event for the IT group at
Ravell. It would provide the means by which to test the creation of,
and the transitioning into, a learning organization. It was also to pro-
vide a catalyst for the complete integration and assimilation of IT into
the organization as a whole. The move represented the introduction
of unfamiliar processes in which “conscious reflection is … necessary
if lessons are to be learned” (Garvin, 2000, p. 100). I temporarily
reorganized IT employees into “SWAT” teams (subgroups formed
to deal with defined problems in high-pressure environments), so
that they could be eminently consumed in the needs of their com-
munity partners. Dealing with many crisis situations helped the IT
department change the existing culture by showing users how to bet-
ter deal with technology issues in their everyday work environment.
Indeed, because of the importance of technology in the new location,
the core business had an opportunity to embrace our knowledge and
to learn from us.
The move presented new challenges every day, and demanded
openness and flexibility from everyone. Some problems required that
IT listen intently to understand and meet the needs of its commu-
nity partners. Other situations put IT in the role of teaching; assess-
ing needs and explaining to other departments what was technically
possible, and then helping them to work out compromises based on
technical limitations. Suggestions for IT improvement began to come
from all parts of the organization. Ideas from others were embraced
by IT, demonstrating that employees throughout the organization
were learning together. IT staff behaved assertively and without fear
of failure, suggesting that, perhaps for the first time, their role had
14 INFORMATION TECHNOLOGY
extended beyond that of fixing what was broken to one of helping
to guide the organization forward into the future. Indeed, the move
established the kind of “special problem” that provided an opportunity
for growth in personal awareness through reflection (Moon, 1999).
The move had proved an ideal laboratory for implementing the
IT integration and assimilation plan. It provided real and important
opportunities for IT to work hand in hand with other departments—
all focusing on shared goals. The move fostered tremendous cama-
raderie within the organization and became an excellent catalyst for
teaching reflective behavior. It was, if you will, an ideal project in
which to show how reflection in action can allow an entire organiza-
tion to share in the successful attainment of a common goal. Because
it was a unique event, everyone—IT and non-IT personnel alike—
made mistakes, but this time, there was virtually no finger-pointing.
People accepted responsibility collectively and cooperated in finding
solutions. When the company recommenced operations from its new
location—on time and according to schedule—no single group could
claim credit for the success; it was universally recognized that success
had been the result of an integrated effort.
Key Lessons
The experience of the reorganization of the IT department at Ravell
can teach us some key lessons with respect to the cultural transforma-
tion and change of marginalized technical departments, generally.
Defining Reflection and Learning for an Organization
IT personnel tend to view learning as a vocational event. They gener-
ally look to increase their own “technical” knowledge by attending
special training sessions and programs. However, as Kegan (1998)
reminds us, there must be more: “Training is really insufficient as a
sole diet of education—it is, in reality a subset of education.” True
education involves transformation, and transformation, according to
Kegan, is the willingness to take risks, to “get out of the bedroom of
our comfortable world.” In my work at Ravell, I tried to augment this
“diet” by embarking on a project that delivered both vocational train-
ing and education through reflection. Each IT staff person was given
15the “rAvell” CorporAtIon
one week of technical training per year to provide vocational develop-
ment. But beyond this, I instituted weekly learning sessions in which
IT personnel would meet without me and produce a weekly memo of
“reflection.” The goal of this practice was to promote dialogue, in the
hope that IT would develop a way to deal with its fears and mistakes
on its own. Without knowing it, I had begun the process of creating
a discursive community in which social interactions could act as insti-
gators of reflective behavior leading to change.
Working toward a Clear Goal
The presence of clearly defined, measurable, short-term objectives
can greatly accelerate the process of developing a “learning organiza-
tion” through reflective practice. At Ravell, the move into new physi-
cal quarters provided a common organizational goal toward which
all participants could work. This goal fostered cooperation among IT
and non-IT employees and provided an incentive for everyone to work
and, consequently, learn together. Like an athletic team before an
important game, or even an army before battle, the IT staff at Ravell
rallied around a cause and were able to use reflective practices to help
meet their goals. The move also represented what has been termed an
“eye-opening event,” one that can trigger a better understanding of a
culture whose differences challenge one’s presuppositions (Mezirow,
1990). It is important to note, though, that while the move accelerated
the development of the learning organization as such, the move itself
would not have been enough to guarantee the successes that followed
it. Simply setting a deadline is no substitute for undergoing the kind
of transformation necessary for a consummately reflective process.
Only as the culmination of a process of analysis, socialization, and
trust building, can an event like this speed the growth of a learning
organization.
Commitment to Quality
Apart from the social challenges it faced in merging into the core
business, the IT group also had problems with the quality of its out-
put. Often, work was not performed in a professional manner. IT
organizations often suffer from an inability to deliver on schedule,
16 INFORMATION TECHNOLOGY
and Ravell was no exception. The first step in addressing the qual-
ity problem, was to develop IT’s awareness of the importance of the
problem, not only in my estimation but in that of the entire company.
The IT staff needed to understand how technology affected the day-
to-day operations of the entire company. One way to start the dia-
logue on quality is to first initiate one about failures. If something was
late, for instance, I asked why. Rather than addressing the problems
from a destructive perspective (Argyris & Schö n, 1996; Schein, 1992;
Senge, 1990), the focus was on encouraging IT personnel to under-
stand the impact of their actions—or lack of action—on the company.
Through self-reflection and recognition of their important role in the
organization, the IT staff became more motivated than before to per-
form higher quality work.
Teaching Staff “Not to Know”
One of the most important factors that developed out of the process
of integrating IT was the willingness of the IT staff “not to know.”
The phenomenology of “not knowing” or “knowing less” became the
facilitator of listening; that is, by listening, we as individuals are better
able to reflect. This sense of not knowing also “allows the individual
to learn an important lesson: the acceptance of what is, without our
attempts to control, manipulate, or judge” (Halifax, 1999, p. 177). The
IT staff improved their learning abilities by suggesting and adopting
new solutions to problems. An example of this was the creation of a
two-shift help desk that provided user support during both day and
evening. The learning process allowed IT to contribute new ideas to
the community. More important, their contributions did not dramat-
ically change the community; instead, they created gradual adjust-
ments that led to the growth of a new hybrid culture. The key to
this new culture was its ability to share ideas, accept error as a reality
(Marsick, 1998), and admit to knowing less (Halifax, 1999).
Transformation of Culture
Cultural changes are often slow to develop, and they occur in small
intervals. Furthermore, small cultural changes may even go unnoticed
or may be attributed to factors other than their actual causes. This
17the “rAvell” CorporAtIon
raises the issue of the importance of cultural awareness and our ability
to measure individual and group performance. The history of the IT
problems at Ravell made it easy for me to make management aware of
what we were newly attempting to accomplish and of our reasons for
creating dialogues about our successes and failures. Measurement and
evaluation of IT performance are challenging because of the intrica-
cies involved in determining what represents success. I feel that one
form of measurement can be found in the behavioral patterns of an
organization. When it came time for employee evaluations, reviews
were held with each IT staff member. Discussions at evaluation
reviews focused on the individuals’ perceptions of their role, and how
they felt about their job as a whole. The feedback from these review
meetings suggested that the IT staff had become more devoted, and
more willing to reflect on their role in the organization, and, gen-
erally, seemed happier at their jobs than ever before. Interestingly,
and significantly, they also appeared to be having fun at their jobs.
This happiness propagated into the community and influenced other
supporting departments to create similar infrastructures that could
reproduce our type of successes. This interest was made evident by
frequent inquiries I received from other departments about how the
transformation of IT was accomplished, and how it might be trans-
lated to create similar changes in staff behavior elsewhere in the com-
pany. I also noticed that there were fewer complaints and a renewed
ability for the staff to work with our consultants.
Alignment with Administrative Departments
Ravell provided an excellent lesson about the penalties of not align-
ing properly with other strategic and operational partners in a firm.
Sometimes, we become insistent on forcing change, especially when
placed in positions that afford a manager power—the power to get
results quickly and through force. The example of Ravell teaches us
that an approach of power will not ultimately accomplish transforma-
tion of the organization. While senior management can authorize and
mandate change, change usually occurs much more slowly than they
wish, if it occurs at all. The management ranks can still push back
and cause problems, if not sooner, then later. While I aligned with
the line units, I failed to align with important operational partners,
18 INFORMATION TECHNOLOGY
particularly human resources (HR). HR in my mind at that time
was impeding my ability to accomplish change. I was frustrated and
determined to get things done by pushing my agenda. This approach
worked early on, but I later discovered that the HR management was
bitter and devoted to stopping my efforts. The problems I encountered
at Ravell are not unusual for IT organizations. The historical issues
that affect the relationship between HR and IT are as follows:
• IT has unusual staff roles and job descriptions that can be
inconsistent with the rest of the organization.
• IT tends to have complex working hours and needs.
• IT has unique career paths that do not “fit” with HR standards.
• IT salary structures shift more dynamically and are very sen-
sitive to market conditions.
• IT tends to operate in silos.
The challenge, then, to overcome these impediments requires IT to
• reduce silos and IT staff marginalization
• achieve better organization-wide alignment
• develop shared leadership
• define and create an HR/IT governance model
The success of IT/HR alignment should follow practices similar
to those I instituted with the line managers at Ravell, specifically the
following:
• Successful HR/IT integration requires organizational learn-
ing techniques.
• Alignment requires an understanding of the relationship
between IT investments and business strategy.
• An integration of IT can create new organizational cultures
and structures.
• HR/IT alignment will likely continue to be dynamic in
nature, and evolve at an accelerated pace.
The oversight of not integrating better with HR cost IT dearly at
Ravell. HR became an undisclosed enemy—that is, a negative force
against the entire integration. I discovered this problem only later, and
was never able to bring the HR department into the fold. Without
HR being part of the learning organization, IT staff continued to
19the “rAvell” CorporAtIon
struggle with aligning their professional positions with those of the
other departments. Fortunately, within two years the HR vice presi-
dent retired, which inevitably opened the doors for a new start.
In large IT organizations, it is not unusual to have an HR member
assigned to focus specifically on IT needs. Typically, it is a joint position
in which the HR individual in essence works for the IT executive. This
is an effective alternative in that the HR person becomes versed in IT
needs and can properly represent IT in the area of head count needs and
specific titles. Furthermore, the unique aspect of IT organizations is in
the hybrid nature of their staff. Typically, a number of IT staff members
are consultants, a situation that presents problems similar to the one I
encountered at Ravell—that is, the resentment of not really being part
of the organization. Another issue is that many IT staff members are
outsourced across the globe, a situation that brings its own set of chal-
lenges. In addition, the role of HR usually involves ensuring compliance
with various regulations. For example, in many organizations, a con-
sultant is permitted to work on site for only one year before U.S. gov-
ernment regulations force the company to hire them as employees. The
HR function must work closely with IT to enforce these regulations.
Yet another important component of IT and HR collaboration is talent
management. That is, HR must work closely with IT to understand new
roles and responsibilities as they develop in the organization. Another
challenge is the integration of technology into the day-to-day business
of a company, and the question of where IT talent should be dispersed
throughout the organization. Given this complex set of challenges, IT
alone cannot facilitate or properly represent itself, unless it aligns with
the HR departments. This becomes further complex with the prolifera-
tion of IT virtual teams across the globe that create complex structures
that often have different HR ramifications, both legally and culturally.
Virtual team management is discussed further in the book.
Conclusion
This case study shows that strategic integration of technical resources
into core business units can be accomplished, by using those aspects of
organizational learning that promote reflection in action. This kind of
integration also requires something of a concomitant form of assimila-
tion, on the cultural level (see Chapter 3). Reflective thinking fosters the
20 INFORMATION TECHNOLOGY
development of a learning organization, which in turn allows for the
integration of the “other” in its various organizational manifestations.
The experience of this case study also shows that the success of organi-
zational learning will depend on the degree of cross fertilization achiev-
able in terms of individual values and on the ability of the community
to combine new concepts and beliefs, to form a hybrid culture. Such a
new culture prospers with the use of organizational learning strategies
to enable it to share ideas, accept mistakes, and learn to know less as a
regular part their discourse and practice in their day-to-day operations.
Another important conclusion from the Ravell experience is that
time is an important factor to the success of organizational learning
approaches. One way of dealing with the problem of time is with
patience—something that many organizations do not have. Another
element of success came in the acceleration of events (such as the relo-
cation at Ravell), which can foster a quicker learning cycle and helps
us see results faster. Unfortunately, impatience with using organiza-
tional learning methods is not an acceptable approach because it will
not render results that change individual and organizational behavior.
Indeed, I almost changed my approach when I did not get the results
I had hoped for early in the Ravell engagement. Nevertheless, my per-
sistence paid off. Finally, the belief that replacing the staff, as opposed
to investing in its knowledge, results from a faulty generalization. I
found that most of the IT staff had much to contribute to the orga-
nization and, ultimately, to help transform the culture. Subsequent
chapters of this book build on the Ravell experience and discuss spe-
cific methods for integrating organizational learning and IT in ways
that can improve competitive advantage.
Another recent perception, which I discuss further in Chapter 4,
is the commitment to “complete” integration. Simply put, IT cannot
select which departments to work with, or choose to participate only
with line managers; as they say, it is “all or nothing at all.” Furthermore,
as Friedman (2007, p. 8) states “The world is flat.” Certainly, part of
the “flattening” of the world has been initiated by technology, but it
has also created overwhelming challenges for seamless integration of
technology within all operations. The flattening of the world has cre-
ated yet another opportunity for IT to better integrate itself into what
is now an everyday challenge for all organizations.
21
2
The iT Dilemma
Introduction
We have seen much discussion in recent writing about how informa-
tion technology has become an increasingly significant component of
corporate business strategy and organizational structure (Bradley &
Nolan, 1998; Levine et al., 2000; Siebel, 1999). But, do we know
about the ways in which this significance takes shape? Specifically,
what are the perceptions and realities regarding the importance of
technology from organization leaders, business managers, and core
operations personnel? Furthermore, what forms of participation
should IT assume within the rest of the organization?
The isolation of IT professionals within their companies often pre-
vents them from becoming active participants in the organization.
Technology personnel have long been criticized for their inability to
function as part of the business and are often seen as a group falling
outside business cultural norms (Schein, 1992). They are frequently
stereotyped as “techies” and segregated into areas of the business
where they become marginalized and isolated from the rest of the
organization. It is my experience, based on case studies such as the
one reviewed in Chapter 1 (the Ravell Corporation), that if an orga-
nization wishes to absorb its IT department into its core culture, and
if it wishes to do so successfully, the company as a whole must be pre-
pared to consider structural changes and to seriously consider using
organizational learning approaches.
The assimilation of technical people into an organization presents
a special challenge in the development of true organizational learning
practices (developed more fully in Chapter 3). This challenge stems
from the historical separation of a special group that is seen as stand-
ing outside the everyday concerns of the business. IT is generally
acknowledged as having a key support function in the organization as
a whole. However, empirical studies have shown that it is a challenging
22 InForMAtIon teChnoloGY
endeavor to successfully integrate IT personnel into the learning fold
and to do so in such a way that they not only are accepted, but also
understood to be an important part of the social and cultural struc-
ture of the business (Allen & Morton, 1994; Cassidy, 1998; Langer,
2007; Schein, 1992; Yourdon, 1998).
In his book In Over Our Heads, Kegan (1994) discusses the chal-
lenges of dealing with individual difference. IT personnel have been
consistently regarded as “different” fixtures; as outsiders who do not
quite fit easily into the mainstream organization. Perhaps, because
of their technical practices, which may at times seem “foreign,” or
because of perceived differences in their values, IT personnel can
become marginalized; imagined as outside the core social structures
of business. As in any social structure, marginalization can result in
the withdrawal of the individual from the community (Schlossberg,
1989). As a result, many organizations are choosing to outsource their
IT services rather than confront and address the issues of cultural
absorption and organizational learning. The outsourcing alternative
tends to further distance the IT function from the core organiza-
tion, thus increasing the effects of marginalization. Not only does the
outsourcing of IT personnel separate them further from their peers,
but it also invariably robs the organization of a potentially important
contributor to the social growth and organizational learning of the
business. For example, technology personnel should be able to offer
insight into how technology can support further growth and learning
within the organization. In addition, IT personnel are usually trained
to take a logical approach to problem solving; as a result, they should
be able to offer a complementary focus on learning. Hence, the inte-
gration of IT staff members into the larger business culture can offer
significant benefits to an organization in terms of learning and orga-
nizational growth.
Some organizations have attempted to improve communications
between IT and non-IT personnel through the use of an intermedi-
ary who can communicate easily with both groups. This intermediary
is known in many organizations as the business analyst. Typically, the
business analyst will take responsibility for the interface between IT
and the larger business community. Although a business analyst may
help facilitate communication between IT and non-IT personnel,
this arrangement cannot help but carry the implication that different
23the It dIleMMA
“languages” are spoken by these two groups and, by extension, that
direct communication is not possible. Therefore, the use of such an
intermediary suffers the danger of failing to promote integration
between IT and the rest of the organization; in fact, it may serve to
keep the two camps separate. True integration, in the form of direct
contact between IT and non-IT personnel, represents a greater chal-
lenge for an organization than this remedy would suggest.
Recent Background
Since the 1990s, IT has been seen as a kind of variable that possesses
the great potential to reinvent business. Aspects of this promise affected
many of the core business rules used by successful chief executives and
business managers. While organizations have used IT for the process-
ing of information, decision-support processing, and order processing,
the impact of the Internet and e-commerce systems has initiated
revolutionary responses in every business sector. This economic phe-
nomenon became especially self-evident with the formation of dot-coms
in the mid- and late 1990s. The advent of this phenomenon stressed
the need to challenge fundamental business concepts. Many financial
wizards surmised that new technologies were indeed changing the very
infrastructure of business, affecting how businesses would operate and
compete in the new millennium. Much of this hoopla seemed justified
by the extraordinary potential that technology offered, particularly with
respect to the revolutionizing of old-line marketing principles, for it
was technology that came to violate what was previously thought to be
protected market conditions and sectors. Technology came to reinvent
these business markets and to allow new competitors to cross market in
sectors they otherwise could not have entered.
With this new excitement also came fear— fear that fostered unnat-
ural and accelerated entry into technology because any delay might
sacrifice important new market opportunities. Violating some of their
traditional principles, many firms invested in creating new organi-
zations that would “incubate” and eventually, capture large market
segments using the Internet as the delivery vehicle. By 2000, many of
these dot-coms were in trouble, and it became clear that their notion
of new business models based on the Internet contained significant
flaws and shortfalls. As a result of this crisis, the role and valuation
24 InForMAtIon teChnoloGY
of IT is again going through a transformation and once more we are
skeptical about the value IT can provide a business and about the way
to measure the contributions of IT.
IT in the Organizational Context
Technology not only plays a significant role in workplace operations,
but also continues to increase its relevance among other traditional
components of any business, such as operations, accounting, and
marketing (Earl, 1996b; Langer, 2001a; Schein, 1992). Given this
increasing relevance, IT gains significance in relation to
1. The impact it bears on organizational structure
2. The role it can assume in business strategy
3. The ways in which it can be evaluated
4. The extent to which chief executives feel the need to manage
operational knowledge and thus to manage IT effectively
IT and Organizational Structure
Sampler’s (1996) research explores the relationship between IT and
organizational structure. His study indicated that there is no clear-cut
relationship that has been established between the two. However, he
concluded that there are five principal positions that IT can take in
this relationship:
1. IT can lead to centralization of organizational control.
2. Conversely, IT can lead to decentralization of organizational
control.
3. IT can bear no impact on organizational control, its signifi-
cance being based on other factors.
4. Organizations and IT can interact in an unpredictable
manner.
5. IT can enable new organizational arrangements, such as net-
worked or virtual organizations.
According to Sampler (1996), the pursuit of explanatory models for
the relationship between IT and organizational structure continues
to be a challenge, especially since IT plays dual roles. On the one
25the It dIleMMA
hand, it enhances and constrains the capabilities of workers within
the organization, and because of this, it also possesses the ability
to create a unique cultural component. While both roles are active,
their impact on the organization cannot be predicted; instead, they
evolve as unique social norms within the organization. Because IT
has changed so dramatically over the past decades, it continues to be
difficult to compare prior research on the relationship between IT and
organizational structure.
Earl (1996a) studied the effects of applying business process reen-
gineering (BPR) to organizations. BPR is a process that organizations
undertake to determine how best to use technology, to improve busi-
ness performance. Earl concludes that BPR is “an unfortunate title: it
does not reflect the complex nature of either the distinctive underpin-
ning concept of BPR [i.e., to reevaluate methods and rules of business
operations] or the essential practical challenges to make it happen
[i.e., the reality of how one goes about doing that]” (p. 54).
In my 2001 study of the Ravell Corporation (“Fixing Bad Habits,”
Langer, 2001b), I found that BPR efforts require buy-in from business
line managers, and that such efforts inevitably require the adaptation
by individuals of different cultural norms and practices.
Schein (1992) recognizes that IT culture represents a subculture in
collision with many others within an organization. He concludes that if
organizations are to be successful in using new technologies in a global
context, they must cope with ceaseless flows of information to ensure
organizational health and effectiveness. His research indicates that chief
executive officers (CEOs) have been reluctant to implement a new sys-
tem of technology unless their organizations felt comfortable with it and
were ready to use it. While many CEOs were aware of cost and effi-
ciency implications in using IT, few were aware of the potential impact
on organizational structure that could result from “adopting an IT view
of their organizations” (p. 293). Such results suggest that CEOs need
to be more active and more cognizant than they have been of potential
shifts in organizational structure when adopting IT opportunities.
The Role of IT in Business Strategy
While many chief executives recognize the importance of IT in
the day-to-day operations of their business, their experience with
26 InForMAtIon teChnoloGY
attempting to utilize IT as a strategic business tool, has been frustrat-
ing. Typical executive complaints about IT, according to Bensaou and
Earl (1998), fall into five problem areas:
1. A lack of correspondence between IT investments and busi-
ness strategy
2. Inadequate payoff from IT investments
3. The perception of too much “technology for technology’s
sake”
4. Poor relations between IT specialists and users
5. The creation of system designs that fail to incorporate users’
preferences and work habits
McFarlan created a strategic grid (as presented in Applegate et al.,
2003) designed to assess the impact of IT on operations and strategy.
The grid shows that IT has maximum value when it affects both oper-
ations and core business objectives. Based on McFarlan’s hypothesis,
Applegate et al. established five key questions about IT that may be
used by executives to guide strategic decision making:
1. Can IT be used to reengineer core value activities, and change
the basis of competition?
2. Can IT change the nature of the relationship, and the balance
of power, between buyers and sellers?
3. Can IT build or reduce barriers to entry?
4. Can IT increase or decrease switching costs?
5. Can IT add value to existing products and services, or create
new ones?
The research and analysis conducted by McFarlan and Applegate,
respectively, suggest that when operational strategy and its results
are maximized, IT is given its highest valuation as a tool that can
transform the organization. It then receives the maximum focus
from senior management and board members. However, Applegate
et al. (2003) also focus on the risks of using technology. These risks
increase when executives have a poor understanding of competitive
dynamics, when they fail to understand the long-term implications
of a strategic system that they have launched, or when they fail to
account for the time, effort, and cost required to ensure user adop-
tion, assimilation, and effective utilization. Applegate’s conclusion
27the It dIleMMA
underscores the need for IT management to educate senior man-
agement, so that the latter will understand the appropriate indi-
cators for what can maximize or minimize their investments in
technology.
Szulanski and Amin (2000) claim that while emerging technologies
shrink the window in which any given strategy can be implemented,
if the strategy is well thought out, it can remain viable. Mintzberg’s
(1987) research suggests that it would be useful to think of strategy as
an art, not a science. This perspective is especially true in situations
of uncertainty. The rapidly changing pace of emerging technologies,
we know, puts a strain on established approaches to strategy— that is
to say, it becomes increasingly difficult to find comfortable implemen-
tation of technological strategies in such times of fast-moving envi-
ronments, requiring sophisticated organizational infrastructure and
capabilities.
Ways of Evaluating IT
Firms have been challenged to find a way to best evaluate IT,
particularly using traditional return on investment (ROI) approaches.
Unfortunately, in this regard, many components of IT do not generate
direct returns. Cost allocations based on overhead formulas (e.g., costs
of IT as a percentage of revenues) are not applicable to most IT spend-
ing needs. Lucas (1999) established nonmonetary methods for evalu-
ating IT. His concept of conversion effectiveness places value on the
ability of IT to complete its projects on time and within its budgets.
This alone is a sufficient factor for providing ROI, assuming that the
project was approved for valid business reasons. He called this overall
process for evaluation the “garbage can” model. It allows organizations
to present IT needs through a funneling pipeline of conversion effec-
tiveness that filters out poor technology plans and that can determine
which projects will render direct and indirect benefits to the organiza-
tion. Indirect returns, according to Lucas, are those that do not pro-
vide directly measurable monetary returns but do provide significant
value that can be measured using his IT investment opportunities
matrix. Utilizing statistical probabilities of returns, the opportunities
matrix provides an effective tool for evaluating the impact of indirect
returns.
28 InForMAtIon teChnoloGY
Executive Knowledge and Management of IT
While much literature and research have been produced on how IT
needs to participate in and bring value to an organization, there has
been relatively little analysis conducted on what non-IT chief execu-
tives need to know about technology. Applegate et al. (2003) suggest
that non-IT executives need to understand how to differentiate new
technologies from older ones, and how to gauge the expected impact
of these technologies on the businesses, in which the firm competes
for market share. This is to say that technology can change the rela-
tionship between customer and vendor, and thus, should be examined
as a potential for providing competitive advantage. The authors state
that non-IT business executives must become more comfortable with
technology by actively participating in technology decisions rather than
delegating them to others. They need to question experts as they would
in the financial areas of their businesses. Lou Gerstner, former CEO
of IBM , is a good example of a non-IT chief executive who acquired
sufficient knowledge and understanding of a technology firm. He was
then able to form a team of executives who better understood how to
develop the products, services, and overall business strategy of the firm.
Allen and Percival (2000) also investigate the importance of non-
IT executive knowledge and participation with IT: “If the firm lacks
the necessary vision, insights, skills, or core competencies, it may be
unwise to invest in the hottest [IT] growth market” (p. 295). The
authors point out that success in using emerging technologies is dif-
ferent from success in other traditional areas of business. They con-
cluded that non-IT managers need to carefully consider expected
synergies to determine whether an IT investment can be realized and,
especially, whether it is efficient to earn cost of capital.
Recent studies have focused on four important components in the
linking of technology and business: its relationship to organizational
structure, its role in business strategy, the means of its evaluation, and
the extent of non-IT executive knowledge in technology. The chal-
lenge in determining the best organizational structure for IT is posed
by the accelerating technological advances since the 1970s and by the
difficulty in comparing organizational models to consistent business
cases. Consequently, there is no single organizational structure that
has been adopted by businesses.
29the It dIleMMA
While most chief executives understand the importance of using
technology as part of their business strategy, they express frustra-
tion in determining how to effectively implement a technology-based
strategic approach. This frustration results from difficulties in under-
standing how IT investments relate to other strategic business issues,
from difficulty in assessing payoff and performance of IT generally
and from perceived poor relations between IT and other departments.
Because most IT projects do not render direct monetary returns, exec-
utives find themselves challenged to understand technology investments.
They have difficulty measuring value since traditional ROI formulas are
not applicable. Thus, executives would do better to focus on valuing tech-
nology investments by using methods that can determine payback based
on a matrix of indirect returns, which do not always include monetary
sources. There is a lack of research on the question of what general knowl-
edge non-IT executives need to have to effectively manage the strategic
use of technology within their firms. Non-IT chief executives are often
not engaged in day-to-day IT activities, and they often delegate dealing
with strategic technology issues to other managers. The remainder of this
chapter examines the issues raised by the IT dilemma in its various guises
especially as they become relevant to, and are confronted from, the top
management or chief executive point of view.
IT: A View from the Top
To investigate further the critical issues facing IT, I conducted a study
in which I personally interviewed over 40 chief executives in vari-
ous industries, including finance/investment, publishing, insurance,
wholesale/retail, and hotel management. Executives interviewed
were either the CEO or president of their respective corporations. I
canvassed a population of New York-based midsize corporations for
this interview study. Midsize firms, in our case, comprise businesses
of between 200 and 500 employees. Face-to-face interviews were
conducted, to allow participants the opportunity to articulate their
responses, in contrast to answering printed survey questions; execu-
tives were therefore allowed to expand, and clarify, their responses to
questions. An interview guide (see questions in Tables 2.1 through
2.3) was designed to raise issues relevant to the challenges of using
technology, as reported in the recent research literature, and to
30 InForMAtIon teChnoloGY
consider significant phenomena, that could affect changes in the uses
of technology, such as the Internet. The interview discussions focused
on three sections: (1) chief executive perception of the role of IT, (2)
management and strategic issues, and (3) measuring IT performance
and activities. The results of the interviews are summarized next.
Table 2.1 Perception and Role of IT
QUESTION ANALYSIS
1. How do you define the role and the
mission of IT in your firm?
Fifty-seven percent responded that their IT
organizations were reactive and did not really have a
mission. Twenty-eight percent had an IT mission that
was market driven; that is, their IT departments were
responsible for actively participating in marketing
and strategic processes.
2. What impact has the Internet had
on your business strategy?
Twenty-eight percent felt the impact was insignificant,
while 24% felt it was critical. The remaining 48% felt
that the impact of the Internet was significant to daily
transactions.
3. Does the firm have its own internal
software development activity? Do
you develop your own in-house
software or use software
packages?
Seventy-six percent had an internal development
organization. Eighty-one percent had internally
developed software.
4. What is your opinion of
outsourcing? Do you have the need
to outsource technology? If so, how
is this accomplished?
Sixty-two percent had outsourced certain aspects of
their technology needs.
5. Do you use consultants to help
formulate the role of IT? If yes,
what specific roles do they play? If
not, why?
Sixty-two percent of the participants used consultants
to assist them in formulating the role of IT.
6. Do you feel that IT will become
more important to the strategy of
the business? If yes, why?
Eighty-five percent felt that IT had recently become
more important to the strategic planning of the
business.
7. How is the IT department viewed
by other departments? Is the IT
department liked, or is it
marginalized?
Twenty-nine percent felt that IT was still marginalized.
Another 29% felt it was not very integrated. Thirty-eight
percent felt IT was sufficiently integrated within the
organization, but only one chief executive felt that IT
was very integrated with the culture of his firm.
8. Do you feel there is too much
“ hype” about the importance and
role of technology?
Fifty-three percent felt that there was no hype. However,
32% felt that there were levels of hype attributed to the
role of technology; 10% felt it was “ all hype.”
9. Have the role and the uses of
technology in the firm significantly
changed over the last 5 years? If
so, what are the salient changes?
Fourteen percent felt little had changed, whereas 43%
stated that there were moderate changes. Thirty-eight
percent stated there was significant change.
31the It dIleMMA
Table 2.2 Management and Strategic Issues
QUESTION ANALYSIS
1. What is the most senior title held
by someone in IT? Where does
this person rank on the
organization hierarchy?
Sixty-six percent called the highest position chief
information officer (CIO). Ten percent used managing
director, while 24% used director as the highest title.
2. Does IT management ultimately
report to you?
Fifty percent of IT leaders reported directly to the chief
executive (CEO). The other half reported to either the
chief financial officer (CFO) or the chief operating
officer (COO).
3. How active are you in working
with IT issues?
Fifty-seven percent stated that they are very active— on
a weekly basis. Thirty-eight percent were less active or
inconsistently involved, usually stepping in when an
issue becomes problematic.
4. Do you discuss IT strategy with
your peers from other firms?
Eighty-one percent did not communicate with peers at
all. Only 10% actively engaged in peer-to-peer
communication about IT strategy.
5. Do IT issues get raised at board,
marketing, and/or strategy
meetings?
Eighty-six percent confirmed that IT issues were
regularly discussed at board meetings. However, only
57% acknowledged IT discussion during marketing
meetings, and only 38% confirmed like discussions at
strategic sessions.
6. How critical is IT to the
day-to-day business?
Eighty-two percent of the chief executives felt it was very
significant or critical to the business.
Table 2.3 Measuring IT Performance and Activities
QUESTION ANALYSIS
1. Do you have any view of how IT
should be measured and
accounted for?
Sixty-two percent stated that they had a view on
measurement; however, there was significant
variation in how executives defined measurement.
2. Are you satisfied with IT
performance in the firm?
There was significant variation in IT satisfaction. Only
19% were very satisfied. Thirty-three percent were
satisfied, another 33% were less satisfied, and 14%
were dissatisfied.
3. How do you budget IT costs? Is it
based on a percentage of gross
revenues?
Fifty-seven percent stated that they did not use gross
revenues in their budgeting methodologies.
4. To what extent do you perceive
technology as a means of
increasing marketing or
productivity or both?
Seventy-one percent felt that technology was a
significant means of increasing both marketing and
productivity in their firms.
5. Are Internet/Web marketing
activities part of the IT function?
Only 24% stated that Internet/Web marketing efforts
reported directly to the IT organization.
32 InForMAtIon teChnoloGY
Section 1: Chief Executive Perception of the Role of IT
This section of the interview focuses on chief executive perceptions of
the role of IT within the firm. For the first question, about the role
and mission of IT, over half of the interviewees responded in ways
that suggested their IT organizations were reactive, without a strate-
gic mission. One executive admitted, “IT is not really defined. I guess
its mission is to meet our strategic goals and increase profitability.”
Another response betrays a narrowly construed understanding of its
potential: “The mission is that things must work— zero tolerance for
failure.” These two responses typify the vague and generalized percep-
tion that IT “has no explicit mission” except to advance the important
overall mission of the business itself. Little over a quarter of respon-
dents could confirm a market-driven role for IT; that is, actively par-
ticipating in marketing and strategic processes. Question 2, regarding
the impact of the Internet on business strategy, drew mixed responses.
Some of these revealed the deeply reflective challenges posed by the
Internet: “I feel the Internet forces us to take a longer-term view and a
sharper focus to our business.” Others emphasized its transformative
potential: “The Internet is key to decentralization of our offices and
business strategy.”
Questions 3 and 4 focused on the extent to which firms have their own
software development staffs, whether they use internally developed or
packaged software, and whether they outsource IT services. Control over
internal development of systems and applications remained important to
the majority of chief executives: “I do not like outsourcing— surrender
control, and it’s hard to bring back.” Almost two-thirds of the partici-
pants employed consultants to assist them in formulating the role of IT
within their firms but not always without reservation: “Whenever we
have a significant design issue we bring in consultants to help us— but
not to do actual development work.” Only a few were downright skepti-
cal: “I try to avoid consultants— what is their motivation?” The percep-
tion of outsourcing is still low in midsize firms, as compared to the recent
increase in IT outsourcing abroad. The lower use could be related to the
initial costs and management overheads that are required to properly
implement outsource operations in foreign countries.
A great majority of chief executives recognized some form of the
strategic importance of IT to business planning: “More of our business
33the It dIleMMA
is related to technology and therefore I believe IT is more important
to strategic planning.” Still, this sense of importance remained some-
what intuitive: “I cannot quantify how IT will become more strategic
to the business planning— but I sense that job functions will be dra-
matically altered.” In terms of how IT is viewed by other departments
within the firm, responses were varied. A little over a third of respon-
dents felt IT was reasonably integrated within the organization: “The
IT department is vitally important— but rarely noticed.” The major-
ity of respondents, however, recognized a need for greater integra-
tion: “IT was marginalized— but it is changing. While IT drives the
system— it needs to drive more of the business.” Some articulated
clearly the perceived problems: “IT needs to be more proactive— they
do not seem to have good interpersonal skills and do not understand
corporate politics.” A few expressed a sense of misgiving (“IT people
are strange— personality is an issue”) and even a sense of hopeless-
ness: “People hate IT— particularly over the sensitivity of the data. IT
sometimes is viewed as misfits and incompetent.”
Question eight asked participants whether they felt there was too
much “hype” attributed to the importance of technology in business.
Over half responded in the negative, although not without reserva-
tion: “I do not think there is too much hype— but I am disappointed.
I had hoped that technology at this point would have reduced paper,
decreased cost— it just has not happened.” Others felt that there is
indeed some degree of sensationalism: “I definitely think there is too
much hype— everyone wants the latest and greatest.” Hype in many
cases can be related to a function of evaluation, as in this exclama-
tion: “The hype with IT relates more to when will we actually see
the value!” The last question in this section asks whether the uses of
technology within the firm had significantly changed over the last
five years. A majority agreed that it had: “The role of IT has changed
significantly in the last five years—we need to stay up-to-date because
we want to carry the image that we are ‘ on the ball’.” Many of these
stressed the importance of informational flows: “I find the ‘ I’ [infor-
mation] part to be more and more important and the ‘ T’ [technol-
ogy] to be diminishing in importance.” Some actively downplayed the
significance: “I believe in minimizing the amount of technology we
use—people get carried away.”
34 InForMAtIon teChnoloGY
Section 2: Management and Strategic Issues
This section focuses on questions pertaining to executive and man-
agement organizational concerns. The first and second questions
asked executives about the most senior title held by an IT officer
and about the reporting structure for IT. Two-thirds of the par-
ticipants ranked their top IT officer as a chief information officer
(CIO). In terms of organizational hierarchy, half of the IT leaders
were at the second tier, reporting directly to the CEO or presi-
dent, while the other half were at the third tier, reporting either
to the chief financial officer (CFO) or to the chief operating offi-
cer (COO). As one CEO stated, “Most of my activity with IT is
through the COO. We have a monthly meeting, and IT is always
on the agenda.”
The third question asked executives to consider their level of
involvement with IT matters. Over half claimed a highly active rela-
tionship, engaging on a weekly basis: “I like to have IT people close
and in one-on-one interactions. It is not good to have artificial barri-
ers.” For some, levels of involvement may be limited: “I am active with
IT issues in the sense of setting goals.” A third of participants claimed
less activity, usually becoming active when difficulties arose. Question
four asked whether executives spoke to their peers at other firms about
technology issues. A high majority managed to skip this potential for
communication with their peers. Only one in 10 actively pursued this
matter of engagement.
Question 5 asked about the extent to which IT issues were
discussed at board meetings, marketing meetings, and business
strategy sessions. Here, a great majority confirmed that there was
regular discussion regarding IT concerns, especially at board meet-
ings. A smaller majority attested to IT discussions during market-
ing meetings. Over a third reported that IT issues maintained a
presence at strategic sessions. The higher incidence at board meet-
ings may still be attributable to the effects of Year 2000 (Y2K)
preparations. The final question in this section concerned the level
of criticality for IT in the day-to-day operations of the business. A
high majority of executives responded affirmatively in this regard:
“IT is critical to our survival, and its impact on economies of scale
is significant.”
35the It dIleMMA
Section 3: Measuring IT Performance and Activities
This section is concerned with how chief executives measured IT per-
formance and activities within their firms. The first question of this
section asked whether executives had a view about how IT performance
should be measured. Almost two-thirds affirmed having some formal
or informal way of measuring performance: “We have no formal pro-
cess of measuring IT other than predefined goals, cost constraints, and
deadlines.” Their responses demonstrated great variation, sometimes
leaning on cynicism: “I measure IT by the number of complaints I
get.” Many were still grappling with this challenge: “Measuring IT is
unqualified at this time. I have learned that hours worked is not the way
to measure IT— it needs to be more goal- oriented.” Most chief execu-
tives expressed some degree of quandary: “We do not feel we know
enough about how IT should be measured.” Question two asked execu-
tives to rate their satisfaction with IT performance. Here, also, there
was significant variation. A little more than half expressed some degree
of satisfaction: “Since 9/11 IT has gained a lot of credibility because of
the support that was needed during a difficult time.” Slightly fewer than
half revealed a degree of dissatisfaction: “We had to overhaul our IT
department to make it more customer-service oriented.”
Question three concerned budgeting; that is, whether or not chief
executives budgeted IT costs as a percentage of gross revenues. Over
half denied using gross revenues in their budgeting method: “When
handling IT projects we look at it on a request-by-request basis.”
The last two questions asked chief executives to assess the impact of
technology on marketing and productivity. Almost three quarters of
the participants felt that technology represented a significant means of
enhancing both marketing and productivity. Some maintained a cer-
tainty of objective: “We try to get IT closer to the customer— having
them understand the business better.” Still, many had a less-defined
sense of direction: “I have a fear of being left behind, so I do think IT
will become more important to the business.” And others remained
caught in uncertainty: “I do not fully understand how to use technol-
ogy in marketing— but I believe it’s there.” Chief executive certainty,
in this matter, also found expression in the opposite direction: “IT
will become less important— it will be assumed as a capability and a
service that companies provide to their customers.” Of the Internet/
36 InForMAtIon teChnoloGY
Web marketing initiatives, only one quarter of these reported directly
to the IT organization: “IT does not drive the Web activities because
they do not understand the business.” Often, these two were seen as
separate or competing entities of technology: “Having Web develop-
ment report to IT would hinder the Internet business’s growth poten-
tial.” Yet, some might be willing to explore a synergistic potential:
“We are still in the early stages of understanding how the Internet
relates to our business strategy and how it will affect our product line.”
General Results
Section 1 revealed that the matter of defining a mission for the IT
organization remains as unresolved as finding a way to reckon with the
potential impact of IT on business strategy. Executives still seemed to
be at a loss on the question of how to integrate IT into the workplace— a
human resource as well as a strategic issue. There was uncertainty regard-
ing the dependability of the technology information received. Most
agreed, however, in their need for software development departments to
support their internally developed software, in their need to outsource
certain parts of technology, and in their use of outside consultants to
help them formulate the future activities of their IT departments.
Section 2 showed that while the amount of time that executives spent
on IT issues varied, there was a positive correlation between a structure in
which IT managers reported directly to the chief executive and the degree
of activity that executives stated they had with IT matters. Section 3
showed that chief executives understood the potential value that technol-
ogy can bring to the marketing and productivity of their firms. They did
not believe, however, that technology can go unmeasured; there needs
to be some rationale for allotting a spending figure in the budget. For
most of the firms in this study, the use of the Internet as a technological
vehicle for future business was not determined by IT. This suggests that
IT does not manage the marketing aspects of technology, and that it has
not achieved significant integration in strategic planning.
Defining the IT Dilemma
The variations found in this study in terms of where IT reports, how
it is measured, and how its mission is defined were consistent with
37the It dIleMMA
existing research. But, the wide-ranging inconsistencies and uncer-
tainties among executives described here left many of them wonder-
ing whether they should be using IT as part of their business strategy
and operations. While this quandary does not in itself suggest an
inadequacy, it does point to an absence of a “best practices” guideline
for using technology strategically. Hence, most businesses lacked a
clear plan on how to evolve IT contributions toward business develop-
ment. Although a majority of respondents felt that IT was critical to
the survival of their businesses, the degree of IT assimilation within
the core culture of organizations still varied. This suggests that the
effects of cultural assimilation lag behind the actual involvement of
IT in the strategic direction of the company.
While Sampler (1996) attributes many operational inconsistencies to
the changing landscape of technology, the findings of this study suggest
that there is also a lack in professional procedures, rules, and established
governance, that could support the creation of best practices for the
profession. Bensaou and Earl (1998), on the one hand, have addressed
this concern by taking a pro-Japanese perspective in extrapolating from
five “Western” problems five “general” principles, presumably not cul-
ture bound, and thence a set of “best principles” for managing IT. But,
Earl et al. (1995), on the other hand, have sidestepped any attempt to
incorporate Earl’s own inductive approach discussed here; instead, they
favor a market management approach, based on a supply-and-demand
model to “balance” IT management. Of course, best practices already
embody the implicit notion of best principles; however, the problems
confronting executives— the need for practical guidelines— remain. For
instance, this study shows that IT performance is measured in many
different ways. It is this type of practical inconsistency that leaves chief
executives with the difficult challenge of understanding how technol-
ogy decisions can be managed.
On a follow-up call related to this study, for example, a CEO
informed me of a practical yet significant difference she had instituted
since our interview. She stated:
The change in reporting has allowed IT to become part of the main-
stream vision of the business. It now is a fundamental component of all
discussions with human resources, sales and marketing, and accounting.
The change in reporting has allowed for the creation of a critical system,
38 InForMAtIon teChnoloGY
which has generated significant direct revenues for the business. I attri-
bute this to my decision to move the reporting of technology directly
to me and to my active participation in the uses of technology in our
business.
This is an example of an executive whom Schein (1994) would
call a “change agent”— someone who employs “cognitive redefinition
through scanning,” in this case to elicit the strategic potential of IT.
We might also call this activity reflective thinking (Langer, 2001b).
Schein’s change agents, however, go on to “acknowledge that future
generations of CEOs will have been educated much more thoroughly
in the possibilities of the computer and IT, thus enabling them to take
a hands-on adopter stance” (p. 343). This insight implies a distanc-
ing (“future”) of present learning responsibilities among current chief
executives. The nearer future of this insight may instead be seen in
the development of organizational learning.* These are two areas of
contemporary research that begin to offer useful models in the pursuit
of a best practices approach to the understanding and managing of IT.
If the focus of this latter study was geared toward the evaluation of
IT based on the view of the chief executive, it was, indeed, because
their views necessarily shape the very direction for the organizations
that they manage. Subsequent chapters of this book examine how
the various dilemmas surrounding IT that I have discussed here are
affecting organizations and how organizational learning practices can
help answer many of the issues of today as raised by executives, man-
agers, and operations personnel.
Recent Developments in Operational Excellence
The decline in financial markets in 2009, and the continued increase
in mergers and acquisitions due to global competition have created an
interesting opportunity for IT that reinforces the need for integration
via organizational learning. During difficult economic periods, IT
has traditionally been viewed as a cost center and had its operations
* My case study “Fixing Bad Habits” (Langer, 2001b) has shown that integrating
the practices of reflective thinking, to support the development of organizational
learning, has greatly enhanced the adaptation of new technologies, their strategic
valuation to the firm, and their assimilation into the social norms of the business.
39the It dIleMMA
reduced (I discuss this further in Chapter 3, in which I introduce
the concept of drivers and supporters). However, with the growth in
the role of technology, IT management has now been asked to help
improve efficiency through the use of technology across departments.
That is, IT is emerging as an agent for business transformation in a
much stronger capacity than ever before. This phenomenon has placed
tremendous pressure on the technology executive to align with his or
her fellow executives in other departments and to get them to partici-
pate in cost reductions by implementing more technology. Naturally,
using technology to facilitate cuts to the workforce is often unpopular,
and there has been much bitter fallout from such cross-department
reductions. Technology executives thus face the challenge of position-
ing themselves as the agents of a necessary change. However, opera-
tional excellence is broader than just cutting costs and changing the
way things operate; it is about doing things efficiently and with qual-
ity measures across corporate operations. Now that technology affects
every aspect of operations, it makes sense to charge technology execu-
tives with a major responsibility to get it accomplished.
The assimilation of technology as a core part of the entire orga-
nization is now paramount for survival, and the technology execu-
tive of today and certainly tomorrow will be one who understands
that operational excellence through efficiency must be accomplished
by educating business units in self-managing the process. The IT
executive, then, supports the activity as a leader, not as a cost cut-
ter who invades the business. The two approaches are very different,
and adopting the former can result in significant long-term results in
strategic alignment.
My interviews with CEOs supported this notion: The CEO does
not want to be the negotiator; change must be evolutionary within the
business units themselves. While taking this kind of role in organiza-
tional change presents a new dilemma for IT, it can also be an oppor-
tunity for IT to position itself successfully within the organization.
http://taylorandfrancis.com
41
3
TeChnology as a
vaRiable anD Responsive
oRganizaTional Dynamism
Introduction
This chapter focuses on defining the components of technology and
how they affect corporate organizations. In other words, if we step
back momentarily from the specific challenges that information tech-
nology (IT) poses, we might ask the following: What are the generic
aspects of technology that have made it an integral part of strategic and
competitive advantage for many organizations? How do organizations
respond to these generic aspects as catalysts of change? Furthermore,
how do we objectively view the role of technology in this context, and
how should organizations adjust to its short- and long-term impacts?
Technological Dynamism
To begin, technology can be regarded as a variable, independent
of others, that contributes to the life of a business operation. It is
capable of producing an overall, totalizing, yet distinctive, effect on
organizations— it has the unique capacity to create accelerations of
corporate events in an unpredictable way. Technology, in its aspect of
unpredictability, is necessarily a variable, and in its capacity as accel-
erator— its tendency to produce change or advance— it is dynamic.
My contention is that, as a dynamic kind of variable, technology, via
responsive handling or management, can be tapped to play a special
role in organizational development. It can be pressed into service as
the dynamic catalyst that helps bring organizations to maturity in
dealing not only with new technological quandaries, but also with
other agents of change. Change generates new knowledge, which in
turn requires a structure of learning that should, if managed properly,
42 INFORMATION TECHNOLOGY
result in transformative behavior, supporting the continued evolution
of organizational culture. Specifically, technology speeds up events,
such as the expectation of getting a response to an e-mail, and requires
organizations to respond to them in ever-quickening time frames.
Such events are not as predictable as those experienced by individuals
in organizations prior to the advent of new technologies— particu-
larly with the meteoric advance of the Internet. In viewing technology
then as a dynamic variable, and one that requires systemic and cul-
tural organizational change, we may regard it as an inherent, internal
driving force— a form of technological dynamism.
Dynamism is defined as a process or mechanism responsible for the
development or motion of a system. Technological dynamism charac-
terizes the unpredictable and accelerated ways in which technology,
specifically, can change strategic planning and organizational behav-
ior/culture. This change is based on the acceleration of events and
interactions within organizations, which in turn create the need to
better empower individuals and departments. Another way of under-
standing technological dynamism is to think of it as an internal drive
recognized by the symptoms it produces. The new events and interac-
tions brought about by technology are symptoms of the dynamism
that technology manifests. The next section discusses how organiza-
tions can begin to make this inherent dynamism work in their favor
on different levels.
Responsive Organizational Dynamism
The technological dynamism at work in organizations has the power
to disrupt any antecedent sense of comfortable equilibrium or an
unwelcome sense of stasis. It also upsets the balance among the vari-
ous factors and relationships that pertain to the question of how we
might integrate new technologies into the business— a question of
what we will call strategic integration— and how we assimilate the cul-
tural changes they bring about organizationally— a question of what
we call cultural assimilation. Managing the dynamism, therefore, is a
way of managing the effects of technology. I propose that these orga-
nizational ripples, these precipitous events and interactions, can be
addressed in specific ways at the organizational management level.
The set of integrative responses to the challenges raised by technology
43teChnoloGY As A vArIAble And responsIve
is what I am calling responsive organizational dynamism, which will
also receive further explication in the next few chapters. For now, we
need to elaborate the two distinct categories that present themselves
in response to technological dynamism: strategic integration and cul-
tural assimilation. Figure 3.1 diagrams the relationships.
Strategic Integration
Strategic integration is a process that addresses the business- strategic
impact of technology on organizational processes. That is, the
business-strategic impact of technology requires immediate orga-
nizational responses and in some instances zero latency. Strategic
integration recognizes the need to scale resources across traditional
business– geographic boundaries, to redefine the value chain in the
life cycle of a product or service line, and generally to foster more
agile business processes (Murphy, 2002). Strategic integration, then,
Technology as an
independent
variable
Creates
Organizational
dynamism
Acceleration of events that
require different
infrastructures and
organizational processes
Requires
Strategic
integration
Cultural
assimilation
Symptoms and
implications
Figure 3.1 Responsive organizational dynamism.
44 INFORMATION TECHNOLOGY
is a way to address the changing requirements of business processes
caused by the sharp increases in uses of technology. Evolving tech-
nologies have become catalysts for competitive initiatives that create
new and different ways to determine successful business investment.
Thus, there is a dynamic business variable that drives the need for
technology infrastructures capable of greater flexibility and of exhib-
iting greater integration with all business operations.
Historically, organizational experiences with IT investment have
resulted in two phases of measured returns. The first phase often
shows negative or declining productivity as a result of the investment;
in the second phase, we often see a lagging of, although eventual
return to, productivity. The lack of returns in the first phase has been
attributed to the nature of the early stages of technology exploration
and experimentation, which tend to slow the process of organizational
adaptation to technology. The production phase then lags behind
the ability of the organization to integrate new technologies with
its existing processes. Another complication posed by technological
dynamism via the process of strategic integration is a phenomenon we
can call factors of multiplicity — essentially, what happens when several
new technology opportunities overlap and create myriad projects that
are in various phases of their developmental life cycle. Furthermore,
the problem is compounded by lagging returns in productivity, which
are complicated to track and to represent to management. Thus, it is
important that organizations find ways to shorten the period between
investment and technology’ s effective deployment. Murphy (2002)
identifies several factors that are critical to bridging this delta:
1. Identifying the processes that can provide acceptable business
returns from new technological investments
2. Establishing methodologies that can determine these processes
3. Finding ways to actually perform and realize expected benefits
4. Integrating IT projects with other projects
5. Adjusting project objectives when changes in the business
require them
Technology complicates these actions, making them more difficult
to resolve; hence the need to manage the complications. To tackle
these compounded concerns, strategic integration can shorten life
cycle maturation by focusing on the following integrating factors:
45teChnoloGY As A vArIAble And responsIve
• Addressing the weaknesses in management organizations in
terms of how to deal with new technologies, and how to bet-
ter realize business benefits
• Providing a mechanism that both enables organizations to
deal with accelerated change caused by technological innova-
tions and integrates them into a new cycle of processing and
handling change
• Providing a strategic learning framework by which every new
technology variable adds to organizational knowledge, par-
ticularly using reflective practices (see Chapter 4)
• Establishing an integrated approach that ties technology
accountability to other measurable outcomes using organiza-
tional learning techniques and theories
To realize these objectives, organizations must be able to
• Create dynamic internal processes that can function on a
daily basis to deal with understanding the potential fit of new
technologies and their overall value to the business
• Provide the discourse to bridge the gaps between IT- and
non-IT-related investments and uses into an integrated system
• Monitor investments and determine modifications to the life
cycle
• Implement various organizational learning practices, includ-
ing learning organization, knowledge management, change
management, and communities of practice, all of which help
foster strategic thinking and learning that can be linked to
performance (Gephardt & Marsick, 2003)
Another important aspect of strategic integration is what Murphy
(2002) calls “ consequential interoperability,” in which “ the conse-
quences of a business process” are understood to “ dynamically trigger
integration” (p. 31). This integration occurs in what he calls the five
pillars of benefits realization:
1. Strategic alignment: The alignment of IT strategically with
business goals and objectives.
2. Business process impact: The impact on the need for the organi-
zation to redesign business processes and integrate them with
new technologies.
46 INFORMATION TECHNOLOGY
3. Architecture: The actual technological integration of appli-
cations, databases, and networks to facilitate and support
implementation.
4. Payback: The basis for computing return on investment (ROI)
from both direct and indirect perspectives.
5. Risk: Identifying the exposure for underachievement or fail-
ure in the technology investment.
Murphy’ s (2002) pillars are useful in helping us understand how
technology can engender the need for responsive organizational dyna-
mism (ROD), especially as it bears on issues of strategic integration.
They also help us understand what becomes the strategic integration
component of ROD. His theory on strategic alignment and business
process impact supports the notion that IT will increasingly serve as an
undergirding force, one that will drive enterprise growth by identify-
ing the initiators (such as e-business on the Internet) that best fit busi-
ness goals. Many of these initiators will be accelerated by the growing
use of e-business, which becomes the very driver of many new market
realignments. This e-business realignment will require the ongoing
involvement of executives, business managers, and IT managers. In
fact, the Gartner Group forecasted that 70% of new software applica-
tion investments and 5% of new infrastructure expenditures by 2005
would be driven by e-business. Indeed, this has occurred and contin-
ues to expand.
The combination of evolving business drivers with accelerated and
changing customer demands has created a business revolution that
best defines the imperative of the strategic integration component of
ROD. The changing and accelerated way businesses deal with their
customers and vendors requires a new strategic integration to become
a reality rather than remain a concept discussed but affecting little
action. Without action directed toward new strategic integration,
organizations would lose competitive advantage, which would affect
profits. Most experts see e-business as the mechanism that will ulti-
mately require the integrated business processes to be realigned, thus
providing value to customers and modifying the customer– vendor
relationship. The driving force behind this realignment emanates from
the Internet, which serves as the principle accelerator of the change
in transactions across all businesses. The general need to optimize
47teChnoloGY As A vArIAble And responsIve
resources forces organizations to rethink and to realign business pro-
cesses to gain access to new business markets.
Murphy’ s (2002) pillar of architecture brings out yet another aspect
of ROD. By architecture we mean the focus on the effects that technol-
ogy has on existing computer applications or legacy systems (old exist-
ing systems). Technology requires existing IT systems to be modified
or replacement systems to be created that will mirror the new busi-
ness realignments. These changes respond to the forces of strategic
integration and require business process reengineering (BPR) activi-
ties, which represent the reevaluation of existing systems based on
changing business requirements. It is important to keep in mind the
acceleration factors of technology and to recognize the amount of
organizational effort and time that such projects take to complete. We
must ask the following question: How might organizations respond to
these continual requirements to modify existing processes? I discuss
in other chapters how ROD represents the answer to this question.
Murphy’ s (2002) pillar of direct return is somewhat limited and nar-
row because not all IT value can be associated with direct returns, but
it is important to discuss. Technology acceleration is forcing organiza-
tions to deal with broader issues surrounding what represents a return
from an investment. The value of strategic integration relies heavily on
the ability of technology to encapsulate itself within other departments
where it ultimately provides the value. We show in Chapter 4 that
this issue also has significance in organizational formation. What this
means is simply that value can be best determined within individual
business units at the microlevel and that these appropriate-level busi-
ness units also need to make the case for why certain investments need
to be pursued. There are also paybacks that are indirect; for example,
Lucas (1999) demonstrates that many technology investments are non-
monetary. The IT department (among others) becomes susceptible to
great scrutiny and subject to budgetary cutbacks during economically
difficult times. This does not suggest that IT “ hide” itself but rather
that its investment be integrated within the unit where it provides the
most benefit. Notwithstanding the challenge to map IT expenditures
to their related unit, there are always expenses that are central to all
departments, such as e-mail and network infrastructure. These types
of expenses can rarely provide direct returns and are typically allocated
across departments as a cost of doing business.
48 INFORMATION TECHNOLOGY
Because of the increased number of technology opportuni-
ties, Murphy’ s (2002) risk pillar must be a key part of strategic
integration. The concept of risk assessment is not new to an organiza-
tion; however, it is somewhat misunderstood as it relates to technology
assessment. Technology assessment, because of the acceleration factor,
must be embedded within the strategic decision-making process. This
can only be accomplished by having an understanding of how to align
technology opportunities for business change and by understanding
the cost of forgoing the opportunity as well as the cost of delays in
delivery. Many organizations use risk assessment in an unstructured
way, which does not provide a consistent framework to dynamically
deal with emerging technologies. Furthermore, such assessment needs
to be managed at all levels in the organization as opposed to being an
event-driven activity controlled only by executives.
Summary
Strategic integration represents the objective of dealing with emerg-
ing technologies on a regular basis. It is an outcome of ROD, and it
requires organizations to deal with a variable, that forces acceleration
of decisions in an unpredictable fashion. Strategic integration would
require businesses to realign the ways in which they include technol-
ogy in strategic decision making.
Cultural Assimilation
Cultural assimilation is a process that focuses on the organizational
aspects of how technology is internally organized, including the role
of the IT department, and how it is assimilated within the organiza-
tion as a whole. The inherent, contemporary reality of technologi-
cal dynamism requires not only strategic but also cultural change.
This reality demands that IT organizations connect to all aspects of
the business. Such affiliation would foster a more interactive culture
rather than one that is regimented and linear, as is too often the case.
An interactive culture is one that can respond to emerging technology
decisions in an optimally informed way, and one that understands the
impact on business performance.
49teChnoloGY As A vArIAble And responsIve
The kind of cultural assimilation elicited by technological dyna-
mism and formalized in ROD is divided into two subcategories: the
study of how the IT organization relates and communicates with
“ others,” and the actual displacement or movement of traditional
IT staff from an isolated “ core” structure to a firm-wide, integrated
framework.
IT Organization Communications with “ Others”
The Ravell case study shows us the limitations and consequences of
an isolated IT department operating within an organization. The case
study shows that the isolation of a group can lead to marginalization,
which results in the kind of organization in which not all individuals
can participate in decision making and implementation, even though
such individuals have important knowledge and value. Technological
dynamism is forcing IT departments to rethink their strategic posi-
tion within the organizational structure of their firm. No longer can
IT be a stand-alone unit designed just to service outside departments
while maintaining its separate identity. The acceleration factors of
technology require more dynamic activity within and among depart-
ments, which cannot be accomplished through discrete communica-
tions between groups. Instead, the need for diverse groups to engage
in more integrated discourse, and to share varying levels of techno-
logical knowledge, as well as business-end perspectives, requires new
organizational structures that will of necessity give birth to a new
and evolving business— social culture. Indeed, the need to assimilate
technology creates a transformative effect on organizational cultures,
the way they are formed and re-formed, and what they will need from
IT personnel.
Movement of Traditional IT Staff
To facilitate cultural assimilation from an IT perspective, IT must
become better integrated with non-IT personnel. This form of inte-
gration can require the actual movement of IT staff into other depart-
ments, which begins the process of a true assimilation of resources
among business units. While this may seem like the elimination of
50 INFORMATION TECHNOLOGY
the integrity or identity of IT, such a loss is far from the case. The
elimination of the IT department is not at all what is called for here;
on the contrary, the IT department is critical to the function of cul-
tural assimilation. However, the IT department may need to be struc-
tured differently from the way it has been so that it can deal primarily
with generic infrastructure and support issues, such as e-mail, net-
work architecture, and security. IT personnel who focus on business-
specific issues need to become closely aligned with the appropriate
units so that ROD can be successfully implemented.
Furthermore, we must acknowledge that, given the wide range of
available knowledge about technology, not all technological knowl-
edge emanates from the IT department. The question becomes
one of finding the best structure to support a broad assimilation of
knowledge about any given technology; then, we should ask how that
knowledge can best be utilized by the organization. There is a pitfall
in attempting to find a “ standard” IT organizational structure that
will address the cultural assimilation of technology. Sampler’ s (1996)
research, and my recent research with chief executives, confirms that
no such standard structure exists. It is my position that organizations
must find their own unique blend, using organizational learning con-
structs. This simply means that the cultural assimilation of IT may
be unique to the organization. What is then more important for the
success of organizational development is the process of assimilation as
opposed to the transplanting of the structure itself.
Today, many departments still operate within “ silos” where they
are unable to meet the requirements of the dynamic and unpredictable
nature of technology in the business environment. Traditional orga-
nizations do not often support the necessary communications needed
to implement cultural assimilation across business units. However,
business managers can no longer make decisions without considering
technology; they will find themselves needing to include IT staff in
their decision-making processes. On the other hand, IT departments
can no longer make technology-based decisions without concerted
efforts toward assimilation (in contrast to occasional partnering or
project-driven participation) with other business units. This assimi-
lation becomes mature when new cultures evolve synergistically as
opposed to just having multiple cultures that attempt to work in con-
junction with each other. The important lesson from Ravell to keep
51teChnoloGY As A vArIAble And responsIve
in mind here is that the process of assimilating IT can create new
cultures that in turn evolve to better support the requirements estab-
lished by the dynamism of technology.
Eventually, these new cultural formations will not perceive them-
selves as functioning within an IT or non-IT decision framework
but rather as operating within a more central business operation that
understands how to incorporate varying degrees of IT involvement
as necessary. Thus, organizational cultures will need to fuse together
to respond to new business opportunities and requirements brought
about by the ongoing acceleration of technological innovation. This
was also best evidenced by subsequent events at Ravell. Three years
after the original case study, it became necessary at Ravell to inte-
grate one of its business operations with a particular group of IT staff
members. The IT personnel actually transferred to the business unit
to maximize the benefits of merging both business and technical cul-
tures. Interestingly, this business unit is currently undergoing cultural
assimilation and is developing its own behavioral norms influenced by
the new IT staff. However, technology decisions within such groups
are not limited to the IT transferred personnel. IT and non-IT staff
need to formulate decisions using various organizational learning
techniques. These techniques are discussed in the next chapter.
Summary
Without appropriate cultural assimilation, organizations tend to have
staff that “ take shortcuts, [then] the loudest voice will win the day, ad
hoc decisions will be made, accountabilities lost, and lessons from suc-
cesses and failures will not become part of … wisdom” (Murphy, 2002,
p. 152). As in the case of Ravell Corporation, it is essential, then, to
provide for consistent governance that fits the profile of the existing cul-
ture or can establish the need for a new culture. While many scholars
and managers suggest the need to have a specific entity responsible for
IT governance, one that is to be placed within the operating structure
of the organization, such an approach creates a fundamental problem.
It does not allow staff and managers the opportunity to assimilate tech-
nologically driven change and understand how to design a culture that
can operate under ROD. In other words, the issue of governance is
misinterpreted as a problem of structural positioning or hierarchy when
52 INFORMATION TECHNOLOGY
it is really one of cultural assimilation. As a result, many business solu-
tions to technology issues often lean toward the prescriptive, instead of
the analytical, in addressing the real problem.
Murphy’ s (2002) risk pillar theory offers us another important
component relevant to cultural assimilation. This approach addresses
the concerns that relate to the creation of risk cultures formed to deal
with the impact of new systems. New technologies can actually cause
changes in cultural assimilation by establishing the need to make cer-
tain changes in job descriptions, power structures, career prospects,
degree of job security, departmental influence, or ownership of data.
Each of these potential risks needs to be factored in as an important
part of considering how best to organize and assimilate technology
through ROD.
Technology Business Cycle
To better understand technology dynamism, or how technology acts as
a dynamic variable, it is necessary to define the specific steps that occur
during its evolution in an organization. The evolution or business cycle
depicts the sequential steps during the maturation of a new technology
from feasibility to implementation and through subsequent evolution.
Table 3.1 shows the five components that comprise the cycle: feasibil-
ity, measurement, planning, implementation, and evolution.
Table 3.1 Technology Business Cycle
CYCLE COMPONENT COMPONENT DESCRIPTION
Feasibility Understanding how to view and evaluate emerging technologies, from a
technical and business perspective.
Measurement Dealing with both the direct monetary returns and indirect nonmonetary
returns; establishing driver and support life cycles.
Planning Understanding how to set up projects, establishing participation across
multiple layers of management, including operations and departments.
Implementation Working with the realities of project management; operating with political
factions, constraints; meeting milestones; dealing with setbacks; having
the ability to go live with new systems.
Evolution Understanding how acceptance of new technologies affects cultural
change, and how uses of technology will change as individuals and
organizations become more knowledgeable about technology, and
generate new ideas about how it can be used; objective is established
through organizational dynamism, creating new knowledge and an
evolving organization.
53teChnoloGY As A vArIAble And responsIve
Feasibility
The stage of feasibility focuses on a number of issues surrounding
the practicality of implementing a specific technology. Feasibility
addresses the ability to deliver a product when it is needed in com-
parison to the time it takes to develop it. Risk also plays a role in
feasibility assessment; of specific concern is the question of whether
it is possible or probable that the product will become obsolete before
completion. Cost is certainly a huge factor, but viewed at a “ high
level” (i.e., at a general cost range), and it is usually geared toward
meeting the expected ROI of a firm. The feasibility process must be
one that incorporates individuals in a way that allows them to respond
to the accelerated and dynamic process brought forth by technological
innovations.
Measurement
Measurement is the process of understanding how an investment in
technology is calculated, particularly in relation to the ROI of an
organization. The complication with technology and measurement
is that it is simply not that easy to determine how to calculate such
a return. This problem comes up in many of the issues discussed by
Lucas (1999) in his book Information Technology and the Productivity
Paradox. His work addresses many comprehensive issues, surround-
ing both monetary and nonmonetary ROI, as well as direct ver-
sus indirect allocation of IT costs. Aside from these issues, there
is the fact that for many investments in technology the attempt to
compute ROI may be an inappropriate approach. As stated, Lucas
offered a “ garbage can” model that advocates trust in the operational
management of the business and the formation of IT representatives
into productive teams that can assess new technologies as a regu-
lar part of business operations. The garbage can is an abstract con-
cept for allowing individuals a place to suggest innovations brought
about by technology. The inventory of technology opportunities
needs regular evaluation. Lucas does not really offer an explana-
tion of exactly how this process should work internally. ROD, how-
ever, provides the strategic processes and organizational– cultural
needs that can provide the infrastructure to better understand and
54 INFORMATION TECHNOLOGY
evaluate the potential benefits from technological innovations using
the garbage can model. The graphic depiction of the model is shown
in Figure 3.2.
Planning
Planning requires a defined team of user and IT representatives. This
appears to be a simple task, but it is more challenging to understand
how such teams should operate, from whom they need support, and
what resources they require. Let me be specific. There are a number
of varying types of “ users” of technology. They typically exist in three
tiers: executives, business line managers, and operations users. Each
of these individuals offers valuable yet different views of the benefits
of technology (Langer, 2002). I define these user tiers as follows:
1. Executives: These individuals are often referred to as execu
tive sponsors. Their role is twofold. First, they provide input
into the system, specifically from the perspective of pro-
ductivity, ROI, and competitive edge. Second, and per-
haps more important, their responsibility is to ensure that
users are participating in the requisite manner (i.e., made
Garbage can
model of IT value
Failed systems
Direct
benefits
Indirect
benefits
User
needs, etc.
C
on
ve
rs
io
n
eff
ec
tiv
en
es
s �e IT value pipeline
Figure 3.2 Garbage can model of IT value. (From Lucas, H.C., Information Technology and the
Productivity Paradox. Oxford University Press, New York, 1999.)
55teChnoloGY As A vArIAble And responsIve
to be available, in the right place, etc.). This area can be
problematic because internal users are typically busy doing
their jobs and sometimes neglect to provide input or to
attend project meetings. Furthermore, executive sponsors
can help control political agendas that can hurt the success
of the project.
2. Business line managers: This interface provides the most
information from a business unit perspective. These indi-
viduals are responsible for two aspects of management.
First, they are responsible for the day-to-day productivity
of their unit; therefore, they understand the importance
of productive teams, and how software can assist in this
endeavor. Second, they are responsible for their staff. Thus,
line managers need to know how software will affect their
operational staff.
3. Functional users: These are the individuals in the trenches who
understand exactly how processing needs to get done. While
their purview of the benefits of the system is relatively nar-
rower than that of the executives and managers, they provide
the concrete information that is required to create the feature/
functions that make the system usable.
The planning process becomes challenging when attempting to
get the three user communities to integrate their needs and “ agree to
agree” on how a technology project needs to be designed and managed.
Implementation
Implementation is the process of actually using a technology.
Implementation of technology systems requires wider integration
within the various departments than other systems in an organization
because usually multiple business units are affected. Implementation
must combine traditional methods of IT processes of development
yet integrate them within the constraints, assumptions, and cultural
(perhaps political) environments of different departments. Cultural
assimilation is therefore required at this stage because it delves into
the structure of the internal organization and requires individual
participation in every phase of the development and implementation
56 INFORMATION TECHNOLOGY
cycle. The following are some of the unique challenges facing the
implementation of technological projects:
1. Project managers as complex managers: Technology projects
require multiple interfaces that often lie outside the traditional
user community. They can include interfacing with writers,
editors, marketing personnel, customers, and consumers, all
of whom are stakeholders in the success of the system.
2. Shorter and dynamic development schedules: Due to the dynamic
nature of technology, its process of development is less lin-
ear than that of others. Because there is less experience in
the general user community, and there are more stakeholders,
there is a tendency by those in IT, and executives, to underes-
timate the time and cost to complete the project.
3. New untested technologies: There is so much new technol-
ogy offered to organizations that there is a tendency by IT
organizations to implement technologies that have not yet
matured— that are not yet the best products they will eventu-
ally be.
4. Degree of scope changes: Technology, because of its dynamic
nature, tends to be prone to scope creed — the scope of the orig-
inal project expanding during development.
5. Project management: Project managers need to work closely
with internal users, customers, and consumers to advise
them on the impact of changes to the project schedule.
Unfortunately, scope changes that are influenced by changes
in market trends may not be avoidable. Thus, part of a good
strategy is to manage scope changes rather than attempt to
stop them, which might not be realistic.
6. Estimating completion time: IT has always had difficulties in
knowing how long it will take to implement a technology.
Application systems are even more difficult because of the
number of variables and unknowns.
7. Lack of standards: The technology industry continues to be a
profession that does not have a governing body. Thus, it is
impossible to have real enforced standards that other pro-
fessions enjoy. While there are suggestions for best prac-
tices, many of them are unproven and not kept current with
57teChnoloGY As A vArIAble And responsIve
changing developments. Because of the lack of successful
application projects, there are few success stories to create new
and better sets of best practices.
8. Lessspecialized roles and responsibilities: The IT team tends to
have staff members who have varying responsibilities. Unlike
traditional new technology-driven projects, separation of roles
and responsibilities is more difficult when operating in more
dynamic environments. The reality is that many roles have not
been formalized and integrated using something like ROD.
9. Broad project management responsibilities: Project management
responsibilities need to go beyond those of the traditional IT
manager. Project managers are required to provide manage-
ment services outside the traditional software staff. They need
to interact more with internal and external individuals, as well
as with non-traditional members of the development team,
such as Web text and content staff. Therefore, there are many
more obstacles that can cause implementation problems.
Evolution
The many ways to form a technological organization with a natural
capacity to evolve have been discussed from an IT perspective in this
chapter. However, another important factor is the changing nature
of application systems, particularly those that involve e-businesses.
E-business systems are those that utilize the Internet and engage
in e-commerce activities among vendors, clients, and internal users
in the organization. The ways in which e-business systems are built
and deployed suggest that they are evolving systems. This means
that they have a long life cycle involving ongoing maintenance and
enhancement. They are, if you will, “ living systems” that evolve
in a manner similar to organizational cultures. So, the traditional
beginning-to-end life cycle does not apply to an e-business proj-
ect that must be implemented in inherently ongoing and evolving
phases. The important focus is that technology and organizational
development have parallel evolutionary processes that need to be in
balance with each other. This philosophy is developed further in the
next chapter.
58 INFORMATION TECHNOLOGY
Drivers and Supporters
There are essentially two types of generic functions performed by
departments in organizations: driver functions and supporter func-
tions. These functions relate to the essential behavior and nature of
what a department contributes to the goals of the organization. I
first encountered the concept of drivers and supporters at Coopers
& Lybrand, which was at that time a Big 8* accounting firm. I stud-
ied the formulation of driver versus supporter as it related to the role
of our electronic data processing (EDP) department. The firm was
attempting to categorize the EDP department as either a driver or a
supporter.
Drivers were defined in this instance as those units that engaged
in frontline or direct revenue-generating activities. Supporters were
units that did not generate obvious direct revenues but rather were
designed to support frontline activities. For example, operations such
as internal accounting, purchasing, or office management were all
classified as supporter departments. Supporter departments, due to
their nature, were evaluated on their effectiveness and efficiency or
economies of scale. In contrast, driver organizations were expected to
generate direct revenues and other ROI value for the firm. What was
also interesting to me at the time was that drivers were expected to
be more daring— since they must inevitably generate returns for the
business. As such, drivers engaged in what Bradley and Nolan (1998)
coined “ sense and respond” behaviors and activities. Let me explain.
Marketing departments often generate new business by investing
or “ sensing” an opportunity quickly because of competitive forces
in the marketplace. Thus, they must sense an opportunity and be
allowed to respond to it in a timely fashion. The process of sensing
opportunity, and responding with competitive products or services,
is a stage in the cycle that organizations need to support. Failures in
the cycles of sense and respond are expected. Take, for example, the
* The original “ Big 8” consisted of the eight large accounting and management con-
sulting firms— Coopers & Lybrand, Arthur Anderson, Touche Ross, Deloitte
Haskins & Sells, Arthur Young, Price Waterhouse, Pete Marwick Mitchell, and
Ernst and Whinney— until the late 1980s, when these firms began to merge. Today,
there are four: Price Waterhouse Coopers, Deloitte & Touche, Ernst & Young, and
KPMG (Pete Marwick and others).
59teChnoloGY As A vArIAble And responsIve
launching of new fall television shows. Each of the major stations
goes through a process of sensing which shows might be interesting to
the viewing audience. They respond, after research and review, with a
number of new shows. Inevitably, only a few of these selected shows
are actually successful; some fail almost immediately. While relatively
few shows succeed, the process is acceptable and is seen by manage-
ment as the consequence of an appropriate set of steps for competing
effectively— even though the percentage of successful new shows is
low. Therefore, it is safe to say that driver organizations are expected
to engage in high-risk operations, of which many will fail, for the sake
of creating ultimately successful products or services.
The preceding example raises two questions: (1) How does sense
and respond relate to the world of IT? and (2) Why is it important?
IT is unique in that it is both a driver and a supporter. The latter is the
generally accepted norm in most firms. Indeed, most IT functions are
established to support myriad internal functions, such as
• Accounting and finance
• Data center infrastructure (e-mail, desktop, etc.)
• Enterprise-level application (enterprise resource planning, ERP)
• Customer support (customer relationship management, CRM)
• Web and e-commerce activities
As one would expect, these IT functions are viewed as overhead
related, as somewhat of a commodity, and thus are constantly man-
aged on an economy-of-scale basis— that is, how can we make this
operation more efficient, with a particular focus on cost containment?
So, what then are IT driver functions? By definition, they are those
that engage in direct revenues and identifiable ROI. How do we define
such functions in IT because most activities are sheltered under the
umbrella of marketing organization domains? (Excluding, of course,
software application development firms that engage in marketing for
their actual application products.) I define IT driver functions as those
projects that, if delivered, would change the relationship between the
organization and its customers; that is, those activities that directly
affect the classic definition of a market: forces of supply and demand,
which are governed by the customer (demand) and the vendor (sup-
plier) relationship. This concept can be shown in the case example that
follows.
60 INFORMATION TECHNOLOGY
Santander versus Citibank
Santander Bank, the major bank of Spain, had enjoyed a dominant
market share in its home country. Citibank had attempted for years to
penetrate Santander’ s dominance using traditional approaches (open-
ing more branch offices, marketing, etc.) without success, until, that
is, they tried online banking. Using technology as a driver, Citibank
made significant penetration into the market share of Santander
because it changed the customer– vendor relationship. Online bank-
ing, in general, has had a significant impact on how the banking
industry has established new markets, by changing this relationship.
What is also interesting about this case is the way in which Citibank
accounted for its investment in online banking; it knows little about
its total investment and essentially does not care about its direct pay-
back. Rather, Citibank sees its ROI in a similar way that depicts
driver/marketing behavior; the payback is seen in broader terms to
affect not only revenue generation, but also customer support and
quality recognition.
Information Technology Roles and Responsibilities
The preceding section focuses on how IT can be divided into two dis-
tinct kinds of business operations. As such, the roles and responsibili-
ties within IT need to change accordingly and be designed under the
auspices of driver and supporter theory. Most traditional IT depart-
ments are designed to be supporters, so that they have a close-knit
organization that is secure from outside intervention and geared to
respond to user needs based on requests. While in many instances
this type of formation is acceptable, it is limited in providing the IT
department with the proper understanding of the kind of business
objectives that require driver-type activities. This was certainly the
experience in the Ravell case study. In that instance, I found that
making the effort to get IT support personnel “ out from their com-
fortable shells” made a huge difference in providing better service
to the organization at large. Because more and more technology is
becoming driver essential, this development will require of IT per-
sonnel an increasing ability to communicate to managers and execu-
tives and to assimilate within other departments.
61teChnoloGY As A vArIAble And responsIve
The Ravell case, however, also brought to light the huge vacuum of
IT presence in driver activities. The subsequent chief executive inter-
view study also confirmed that most marketing IT-oriented activities,
such as e-business, do not fall under the purview of IT in most orga-
nizations. The reasons for this separation are correlated with the lack
of IT executive presence within the management team.
Another aspect of driver and supporter functions is the concept of
a life cycle. A life cycle, in this respect, refers to the stages that occur
before a product or service becomes obsolete. Technology products
have a life cycle of value just as any other product or service. It is
important not to confuse this life cycle with processes during devel-
opment as discussed elsewhere in this chapter.
Many technical products are adopted because they are able to deliver
value that is typically determined based on ROI calculations. However,
as products mature within an organization, they tend to become more of
a commodity, and as they are normalized, they tend to become support-
oriented. Once they reach the stage of support, the rules of economies
of scale become more important and relevant to evaluation. As a prod-
uct enters the support stage, replacement based on economies of scale
can be maximized by outsourcing to an outside vendor who can provide
the service cheaper. New technologies then can be expected to follow
this kind of life cycle, by which their initial investment requires some
level of risk to provide returns to the business. This initial investment
is accomplished in ROD using strategic integration. Once the evalua-
tions are completed, driver activities will prevail during the maturation
process of the technology, which will also require cultural assimilation.
Inevitably, technology will change organizational behavior and struc-
ture. However, once the technology is assimilated and organizational
behavior and structures are normalized, individuals will use it as a per-
manent part of their day-to-day operations. Thus, driver activities give
way to those of supporters. Senior managers become less involved, and
line managers then become the more important group that completes
the transition from driver to supporter.
Replacement or Outsource
After the technology is absorbed into operations, executives will seek
to maximize the benefit by increased efficiency and effectiveness.
62 INFORMATION TECHNOLOGY
Certain product enhancements may be pursued during this phase; they
can create “ mini-loops” of driver-to-supporter activities. Ultimately, a
technology, viewed in terms of its economies of scale and longevity,
is considered for replacement or outsourcing. Figure 3.3 graphically
shows the cycle.
The final stage of maturity of an evolving driver therefore includes
becoming a supporter, at which time it becomes a commodity and,
finally, an entity with potential for replacement or outsourcing. The
next chapter explores how organizational learning theories can be
used to address many of the issues and challenges brought forth in
this chapter.
Mini loop technology enhancementsTechnology
driver
Evaluation
cycle
Driver
maturation
Support
status
Replacement or
outsource
Economies
of scale
Figure 3.3 Driver-to-supporter life cycle.
63
4
oRganizaTional leaRning
TheoRies anD TeChnology
Introduction
The purpose of this chapter is to provide readers with an under-
standing of organizational theory. The chapter covers some aspects
of the history and context of organizational learning. It also defines
and explains various learning protocols, and how they can be used to
promote organizational learning. The overall objective of organiza-
tional learning is to support a process that guides individuals, groups,
and entire communities through transformation. Indeed, evidence of
organizational transformation provides the very proof that learning
has occurred, and that changes in behavior are occurring. What is
important in this regard is that transformation remains internal to
the organization so that it can evolve in a progressive manner while
maintaining the valuable knowledge base that is contained within
the personnel of an organization. Thus, the purpose of organiza-
tional learning is to foster evolutionary transformation that will lead
to change in behaviors and that is geared toward improving strategic
performance.
Approaches to organizational learning typically address how indi-
viduals, groups, and organizations “notice and interpret information
and use it to alter their fit with their environments” (Aldrich, 2001,
p. 57). As such, however, organizational learning does not direct itself
toward, and therefore has not been able to show, an inherent link to
success—which is a critical concern for executive management. There
are two perspectives on organizational learning theory. On the one
hand, the adoptive approach, pioneered by Cyert and March (1963),
treats organizations as goal-oriented activity systems. These systems
generate learning when repeating experiences that have either suc-
ceeded or failed, discarding, of course, processes that have failed.
64 INFORMATION TECHNOLOGY
Knowledge development, on the other hand, treats organizations as
sets of interdependent members with shared patterns of cognition and
belief (Argyris & Schö n, 1996). Knowledge development empha-
sizes that learning is not limited to simple trial and error, or direct
experience. Instead, learning is understood also to be inferential and
vicarious; organizations can generate new knowledge through experi-
mentation and creativity. It is the knowledge development perspec-
tive that fits conceptually and empirically with work on technological
evolution and organizational knowledge creation and deployment
(Tushman & Anderson, 1986).
There is a complication in the field of organizational learning over
whether it is a technical or social process. Scholars disagree on this
point. From the technical perspective, organizational learning is
about the effective processing of, interpretation of, and response to
information both inside and outside the organization. “An organiza-
tion is assumed to learn if any of its units acquires knowledge that it
recognizes as potentially useful to the organization” (Huber, 1991,
p. 89). From the social perspective, on the other hand, comes the con-
cept that learning is “something that takes place not with the heads of
individuals, but in the interaction between people” (Easterby-Smith
et al., 1999, p. 6). The social approach draws from the notion that
patterns of behavior are developed, via patterns of socialization, by
evolving tacit knowledge and skills. There is, regrettably, a lack of
ongoing empirical investigation in the area of organizational learning
pertaining, for example, to in-depth case studies, to micropractices
within organizational settings, and to processes that lead to outcomes.
Indeed, measuring learning is a difficult process, which is why there
is a lack of research that focuses on outputs. As Prange (1999, p. 24)
notes: “The multitude of ways in which organizational learning has
been classified and used purports an ‘organizational learning jungle,’
which is becoming progressively dense and impenetrable.” Mackenzie
(1994, p. 251) laments that what the “scientific community devoted
to organizational learning has not produced discernable intellectual
progress.”
Ultimately, organizational learning must provide transformation
that links to performance. Most organizations seeking improved per-
formance expect changes that will support new outcomes. The study of
organizational learning needs an overarching framework under which
65orGAnIzAtIonAl leArnInG theorIes
an inquiry into the pivotal issues surrounding organizational change
can be organized. Frameworks that support organizational learning,
whether their orientation is on individuals, groups, or infrastructure,
need to allow for natural evolution within acceptable time frames for
the organization. This is the problem of organizational learning the-
ory. It lacks a method of producing measurable results that executives
can link to performance. While scholars seek outcomes through stra-
tegic learning, there must be tangible evidence of individual and orga-
nizational performance to ensure future investments in the concepts
of learning. Technology, we should remember, represents the oppor-
tunity to provide outcomes through strategic learning that addresses
transitions and transformations over a specific life cycle.
We saw this opportunity occur in the Ravell case study; the
information technology (IT) department used organizational learn-
ing. Specifically, individual reflective practices were used to provide
measurable outcomes for the organization. In this case, the out-
comes related to a specific event, the physical move of the business
to a different location. Another lesson we can derive (with hindsight)
from the Ravell experience is that learning was converted to strategic
benefit for the organization. The concept of converting learning to
strategic benefit was pioneered by Pietersen (2002). He established a
strategic learning cycle composed of four component processes that he
identified with the action verbs learn, focus, align, and execute. These
are stages in the learning cycle, as follows:
1. Learn: Conduct a situation analysis to generate insights into
the competitive environment and into the realities of the
company.
2. Focus: Translate insights into a winning proposition that out-
lines key priorities for success.
3. Align: Align the organization and energize the people behind
the new strategic focus.
4. Execute: Implement strategy and experiment with new con-
cepts. Interpret results and continue the cycle.
At Ravell, technology assisted in driving the learning cycle because,
by its dynamic nature, it mandated the acceleration of the cycle that
Pietersen (2002) describes in his stage strategy of implementation.
Thus, Ravell required the process Pietersen outlined to occur within
66 INFORMATION TECHNOLOGY
6 months, and therein established the opportunity to provide outcomes.
It also altered the culture of the organization (i.e., the evolution in cul-
ture was tangible because the transformation was concrete).
We see from the Ravell case that technology represents the best
opportunity to apply organizational learning techniques because the
use of it requires forms of evolutionary-related change. Organizations
are continually seeking to improve their operations and competi-
tive advantage through efficiency and effective processes. As I have
discussed in previous chapters, today’s businesses are experiencing
technological dynamism (defined as causing accelerated and dynamic
transformations), and this is due to the advent of technologically driven
processes. That is, organizations are experiencing more pressure to
change and compete as a result of the accelerations that technology
has brought about. Things happen quicker, and more unpredictably,
than before. This situation requires organizations to sense the need for
change and execute that change. The solution I propose is to tie orga-
nizational theory to technological implementation. Another way of
defining this issue is to provide an overarching framework that orga-
nizes an inquiry into the issues surrounding organizational change.
Another dimension of organizational learning is political. Argyris
(1993) and Senge (1990) argue that politics gets “in the way of good
learning.” In my view, however, the political dimension is very much
part of learning. It seems naï ve to assume that politics can be elimi-
nated from the daily commerce of organizational communication.
Instead, it needs to be incorporated as a factor in organizational learn-
ing theory rather than attempting to disavow or eliminate it, which is
not realistic. Ravell also revealed that political factors are simply part
of the learning process. Recall that during my initial efforts to create
a learning organization there were IT staff members who deliberately
refused to cooperate, assuming that they could “outlast” me in my
interim tenure as IT director. But politics, of course, is not limited to
internal department negotiations; it was also a factor at Ravell with,
and among, departments outside IT. These interdepartmental rela-
tionships applied especially to line managers, who became essential
advocates for establishing and sustaining necessary forms of learning
at the organizational level. But, not all line managers responded with
the same enthusiasm, and a number of them did not display a sense of
authentically caring about facilitating synergies across departments.
67orGAnIzAtIonAl leArnInG theorIes
The irrepressible existence of politics in social organizations, however,
must not in itself deter us from implementing organizational learn-
ing practices; it simply means that that we must factor it in as part
of the equation. At Ravell, I had to work within the constraints of
both internal and external politics. Nevertheless, in the end I was able
to accomplish the creation of a learning organization. Another way
one might look at the road bumps of politics is to assume that they
will temporarily delay or slow the implementation of organizational
learning initiatives. But, let us make no mistake about the potentially
disruptive nature of politics because, as we know, in its extreme cases
of inflexibility, it can be damaging.
I have always equated politics with the dilemma of blood cholesterol.
We know that there are two types of cholesterol: “good” cholesterol
and “bad” cholesterol. We all know that bad cholesterol in your blood
can cause heart disease, among other life-threatening conditions.
However, good cholesterol is essential to the body. My point is simple;
the general word politics can have damaging perceptions. When most
people discuss the topic of cholesterol, they focus on the bad type, not
the good. Such is the same with politics—that is, most individuals dis-
cuss the bad type, which often corresponds with their personal expe-
riences. My colleague Professor Lyle Yorks, at Columbia University,
often lectures on the importance of politics and its positive aspects for
establishing strategic advocacy, defined as the ability to establish per-
sonal and functional influence through cultivating alliances through
defining opportunities for the adding value to either the top or bottom
line (Langer & Yorks, 2013). Thus, politics can add value for indi-
viduals by allowing them to initiate and influence relationships and
conversations with other leaders. This, then, is “good” politics!
North American cultural norms account for much of what goes
into organizational learning theory, such as individualism, an empha-
sis on rationality, and the importance of explicit, empirical informa-
tion. IT, on the other hand, has a broadening, globalizing effect on
organizational learning because of the sheer increase in the number of
multicultural organizations created through the expansion of global
firms. Thus, technology also affects the social aspects of organizational
learning, particularly as it relates to the cultural evolution of commu-
nities. Furthermore, technology has shown us that what works in one
culture may not work in another. Dana Deasy, the former CIO of the
68 INFORMATION TECHNOLOGY
Americas region/sector for Siemens AG, experienced the difficulties
and challenges of introducing technology standards on a global scale.
He quickly learned that what worked in North America did not oper-
ate with the same expectations in Asia or South America. I discuss
Siemens AG as a case study in Chapter 8.
It is my contention, however, that technology can be used as an
intervention that can actually increase organizational learning. In
effect, the implementation of organizational learning has lacked and
has needed concrete systemic processes that show results. A solution
to this need can be found, as I have found it, in the incorporation of
IT itself into the process of true organizational learning. The prob-
lem with IT is that we keep trying to simplify it—trying to reduce
its complexity. However, dealing with the what, when, and how of
working with technology is complex. Organizations need a kind of
mechanism that can provide a way to absorb and learn all of the com-
plex pieces of technology.
It is my position that organizational change often follows learn-
ing, which to some extent should be expected. What controls whether
change is radical or evolutionary depends on the basis on which
new processes are created (Argyris & Schö n, 1996; Senge, 1990;
Swieringa & Wierdsma, 1992). Indeed, at Ravell the learning fol-
lowed the Argyris and Schö n approach: that radical change occurs
when there are major events that support the need for accelerated
change. In other words, critical events become catalysts that promote
change, through reflection. On the other hand, there can be non-
event-related learning, that is not so much radical in nature, as it is
evolutionary. Thus, evolutionary learning is characterized as an ongo-
ing process that slowly establishes the need for change over time. This
evolutionary learning process compares to what Senge (1990, p. 15)
describes as “learning in wholes as opposed to pieces.”
This concept of learning is different from an event-driven perspec-
tive, and it supports the natural tendency that groups and organiza-
tions have to protect themselves from open confrontation and critique.
However, technology provides an interesting variable in this regard.
It is generally accepted as an agent of change that must be addressed
by the organization. I believe that this agency can be seized as an
opportunity to promote such change because it establishes a reason
why organizations need to deal with the inevitable transitions brought
69orGAnIzAtIonAl leArnInG theorIes
about by technology. Furthermore, as Huysman (1999) points out, the
history of organizational learning has not often created measurable
improvement, particularly because implementing the theories has not
always been efficient or effective. Much of the impetus for implement-
ing a new technology, however, is based on the premise that its use
will result in such benefits. Therefore, technology provides compelling
reasons for why organizational learning is important: to understand
how to deal with agents of change, and to provide ongoing changes in
the processes that improve competitive advantage.
There is another intrinsic issue here. Uses of technology have not
always resulted in efficient and effective outcomes, particularly as
they relate to a firm’s expected ROI. In fact, IT projects often cost
more than expected and tend to be delivered late. Indeed, research
performed by the Gartner Group and CIO Magazine (Koch, 1999)
reports that 54% of IT projects are late and that 22% are never com-
pleted. In May 2009, McGraw reported similar trends, so industry
performance has not materially improved. This is certainly a disturb-
ing statistic for a dynamic variable of change that promises outcomes
of improved efficiency and effectiveness. The question then is why is
this occurring? Many scholars might consider the answer to this ques-
tion as complex. It is my claim, however, based on my own research,
that the lack of organizational learning, both within IT and within
other departments, poses, perhaps, the most significant barrier to the
success of these projects in terms of timeliness and completion. Langer
(2001b) suggests that the inability of IT organizations to understand
how to deal with larger communities within the organization and to
establish realistic and measurable outcomes are relevant both to many
of the core values of organizational learning and to its importance in
attaining results. What better opportunity is there to combine the
strengths and weaknesses of each of IT and organizational learning?
Perhaps what is most interesting—and, in many ways, lacking
within the literature on organizational learning—is the actual way
individuals learn. To address organizational learning, I believe it is
imperative to address the learning styles of individuals within the
organization. One fundamental consideration to take into account
is that of individual turnover within departments. Thus, methods
to measure or understand organizational learning must incorporate
the individual; how the individual learns, and what occurs when
70 INFORMATION TECHNOLOGY
individuals change positions or leave, as opposed to solely focusing
on the event-driven aspect of evolutionary learning. There are two
sociological positions about how individual learning occurs. The first
suggests that individual action derives from determining influences
in the social system, and the other suggests that it emanates from
individual action. The former proposition supports the concept that
learning occurs at the organizational, or group level, and the lat-
ter supports it at the individual level of action and experience. The
“system” argument focuses on learning within the organization as a
whole and claims that individual action functions within its boundar-
ies. The “individual” argument claims that learning emanates from
the individual first and affects the system as a result of outcomes from
individual actions. Determining a balance between individual and
organizational learning is an issue debated by scholars and an impor-
tant one that this book must address.
Why is this issue relevant to the topic of IT and organizational
learning? Simply put, understanding the nature of evolving technolo-
gies requires that learning—and subsequent learning outcomes—will
be heavily affected by the processes in which it is delivered. Therefore,
without understanding the dynamics of how individuals and organi-
zations learn, new technologies may be difficult to assimilate because
of a lack of process that can determine how they can be best used in
the business. What is most important to recognize is the way in which
responsive organizational dynamism (ROD) needs both the system
and individual approaches. Huysman (1999) suggests (and I agree)
that organizational versus individual belief systems are not mutually
exclusive pairs but dualities. In this way, organizational processes are
not seen as just top-down or bottom-up affairs, but as accumulations
of history, assimilated in organizational memory, which structures
and positions the agency or capacity for learning. In a similar way,
organizational learning can be seen as occurring through the actions
of individuals, even when they are constrained by institutional forces.
The strategic integration component of ROD lends itself to the system
model of learning to the extent that it almost mandates change—
change that, if not addressed, will inevitably affect the competitive
advantage of the organization. On the other hand, the cultural assim-
ilation component of ROD is also involved because of its effect on
individual behavior. Thus, the ROD model needs to be expanded to
71orGAnIzAtIonAl leArnInG theorIes
show the relationship between individual and organizational learning
as shown in Figure 4.1.
An essential challenge to technology comes from the fact that
organizations are not sure about how to handle its overall potential.
Thus, in a paradoxical way, this quandary provides a springboard to
learning by utilizing organizational learning theories and concepts to
create new knowledge, by learning from experience, and ultimately by
linking technology to learning and performance. This perspective can
be promoted from within the organization because chief executives
are generally open to investing in learning as long as core business
principles are not violated. This position is supported by my research
with chief executives that I discussed in Chapter 2.
Organizational
dynamism
Acceleration of events that
require different
infrastructures and
organizational processes
Requires
Strategic
integration
Cultural
assimilation
Organization
structures
(system)
Individual
actions
Renegotiation of
relationship
Organizational learning techniques
Symptoms and
implications
Technology
Figure 4.1 ROD and organizational learning.
72 INFORMATION TECHNOLOGY
Organizational learning can also assist in the adoption of
technologies by providing a mechanism to help individuals manage
change. This notion is consistent with Aldrich (2001), who observes
that many organizations reject technology-driven changes or “pio-
neering ventures,” which he called competence-destroying ventures
because they threaten existing norms and processes. Organizations
would do well to understand the value of technology, particularly for
those who adopt it early (early adopters), and how it can lead to com-
petitive advantages. Thus, organizations that position themselves to
evolve, to learn, and to create new knowledge are better prepared to
foster the handling, absorption, and acceptance of technology-driven
change than those that are not. Another way to view this ethic is to
recognize that organizations need to be “ready” to deal with change—
change that is accelerated by technology innovations. Although
Aldrich (2001) notes that organizational learning has not been tied
to performance and success, I believe it will be the technology revolu-
tion that establishes the catalyst that can tie organizational learning
to performance.
The following sections of this chapter expand on the core concept
that the success of ROD is dependent on the uses of organizational
learning techniques. In each section, I correlate this concept to many
of the organizational learning theories and show how they can be
tailored and used to provide important outcomes that assist the pro-
motion of both technological innovation and organizational learning.
Learning Organizations
Business strategists have realized that the ability of an organization
to learn faster, or “better,” than its competitors may indeed be the key
to long-term business success (Collis, 1994; Dodgson, 1993; Grant,
1996; Jones, 1975). A learning organization is defined as a form of
organization that enables, in an active sense, the learning of its mem-
bers in such a way that it creates positive outcomes, such as innovation,
efficiency, improved alignment with the environment, and competi-
tive advantage. As such, a learning organization is one that acquires
knowledge from within. Its evolution, then, is primarily driven by
itself without the need for interference from outside forces. In this
sense, it is a self-perpetuating and self-evolving system of individual
73orGAnIzAtIonAl leArnInG theorIes
and organizational transformations integrated into the daily processes
of the organization. It should be, in effect, a part of normal organiza-
tional behavior. The focus of organizational learning is not so much
on the process of learning but more on the conditions that allow suc-
cessful outcomes to flourish. Learning organization literature draws
from organizational learning theory, particularly as it relates to inter-
ventions based on outcomes. This provides an alternative to social
approaches.
In reviewing these descriptions of what a learning organization
does, and why it is important, we can begin to see that technology may
be one of the few agents that can actually show what learning organi-
zations purport to do. Indeed, Ravell created an evolving population
that became capable of dealing with environmental changes brought
on by technological innovation. The adaptation of these changes
created those positive outcomes and improved efficiencies. Without
organizational learning, specifically the creation of a learning organi-
zation, many innovations brought about by technology could produce
chaos and instability. Organizations generally tend to suffer from, and
spend too much time reflecting on, their past dilemmas. However,
given the recent phenomenon of rapid changes in technology, orga-
nizations can no longer afford the luxury of claiming that there is
simply too much else to do to be constantly worrying about technol-
ogy. Indeed, Lounamaa and March (1987) state that organizations
can no longer support the claim that too-frequent changes will inhibit
learning. The fact is that such changes must be taken as evolutionary,
and as a part of the daily challenges facing any organization. Because
a learning organization is one that creates structure and strategies, it
is positioned to facilitate the learning of all its members, during the
ongoing infiltration of technology-driven agents of change. Boland
et al. (1994) show that information systems based on multimedia
technologies may enhance the appreciation of diverse interpretations
within organizations and, as such, support learning organizations.
Since learning organizations are deliberately created to facilitate the
learning of their members, understanding the urgency of technologi-
cal changes can provide the stimulus to support planned learning.
Many of the techniques used in the Ravell case study were based
on the use of learning organizational techniques, many of which were
pioneered by Argyris and Schö n (1996). Their work focuses on using
74 INFORMATION TECHNOLOGY
“action science” methods to create and maintain learning organiza-
tions. A key component of action science is the use of reflective prac-
tices—including what is commonly known among researchers and
practitioners as reflection in action and reflection on action. Reflection
with action is the term I use as a rubric for these various methods,
involving reflection in relation to activity. Reflection has received
a number of definitions, from different sources in the literature.
Depending on the emphasis, whether on theory or practice, defini-
tions vary from philosophical articulation (Dewey, 1933; Habermas,
1998), to practice-based formulations, such as Kolb’s (1984b) use of
reflection in the experiential learning cycle. Specifically, reflection
with action carries the resonance of Schö n’s (1983) twin constructs:
reflection on action and reflection in action, which emphasize reflec-
tion in retrospect, and reflection to determine which actions to take
in the present or immediate future, respectively. Dewey (1933) and
Hullfish and Smith (1978) also suggest that the use of reflection sup-
ports an implied purpose: individuals reflect for a purpose that leads
to the processing of a useful outcome. This formulation suggests the
possibility of reflection that is future oriented—what we might call
“reflection to action.” These are methodological orientations covered
by the rubric.
Reflective practices are integral to ROD because so many
technology-based projects are event driven and require individu-
als to reflect before, during, and after actions. Most important to
this process is that these reflections are individually driven and that
technology projects tend to accelerate the need for rapid decisions.
In other words, there are more dynamic decisions to be made in less
time. Without operating in the kind of formation that is a learning
organization, IT departments cannot maintain the requisite infra-
structure to develop products timely on time and support business
units—something that clearly is not happening if we look at the
existing lateness of IT projects. With respect to the role of reflec-
tion in general, the process can be individual or organizational.
While groups can reflect, it is in being reflective that individuals
bring about “an orientation to their everyday lives,” according to
Moon (1999). “For others reflection comes about when conditions
in the learning environment are appropriate” (p. 186). However,
IT departments have long suffered from not having the conditions
75orGAnIzAtIonAl leArnInG theorIes
to support such an individual learning environment. This is why
implementing a learning organization is so appealing as a remedy
for a chronic problem.
Communities of Practice
Communities of practice are based on the assumption that learning
starts with engagement in social practice and that this practice is the
fundamental construct by which individuals learn (Wenger, 1998).
Thus, communities of practice are formed to get things done by using
a shared way of pursuing interest. For individuals, this means that
learning is a way of engaging in, and contributing to, the practices
of their communities. For specific communities, on the other hand,
it means that learning is a way of refining their distinctive practices
and ensuring new generations of members. For entire organizations,
it means that learning is an issue of sustaining interconnected com-
munities of practice, which define what an organization knows and
contributes to the business. The notion of communities of practice
supports the idea that learning is an “inevitable part of participat-
ing in social life and practice” (Elkjaer, 1999, p. 75). Communities of
practice also include assisting members of the community, with the
particular focus on improving their skills. This is also known as situ
ated learning. Thus, communities of practice are very much a social
learning theory, as opposed to one that is based solely on the indi-
vidual. Communities of practice have been called learning in working,
in which learning is an inevitable part of working together in a social
setting. Much of this concept implies that learning, in some form or
other will occur, and that it is accomplished within a framework of
social participation, not solely or simply in the individual mind. In a
world that is changing significantly due to technological innovations,
we should recognize the need for organizations, communities, and
individuals to embrace the complexities of being interconnected at an
accelerated pace.
There is much that is useful in the theory of communities of practice
and that justifies its use in ROD. While so much of learning technol-
ogy is event driven and individually learned, it would be shortsighted
to believe that it is the only way learning can occur in an organization.
Furthermore, the enormity and complexity of technology requires a
76 INFORMATION TECHNOLOGY
community focus. This would be especially useful within the confines of
specific departments that are in need of understanding how to deal with
technological dynamism. That is, preparation for using new technolo-
gies cannot be accomplished by waiting for an event to occur. Instead,
preparation can be accomplished by creating a community that can
assess technologies as a part of the normal activities of an organization.
Specifically, this means that, through the infrastructure of a commu-
nity, individuals can determine how they will organize themselves to
operate with emerging technologies, what education they will need, and
what potential strategic integration they will need to prepare for changes
brought on by technology. Action in this context can be viewed as a
continuous process, much in the same way that I have presented technol-
ogy as an ongoing accelerating variable. However, Elkjaer (1999) argues
that the continuous process cannot exist without individual interaction.
As he states: “Both individual and collective activities are grounded in
the past, the present, and the future. Actions and interactions take place
between and among group members and should not be viewed merely as
the actions and interactions of individuals” (p. 82).
Based on this perspective, technology can be handled by the
actions (community) and interactions (individuals) of the organiza-
tion as shown in Figure 4.2.
Communities of practice:
Social actions of how to
deal with technology
Allows groups to engage in
discourse and examine the
ongoing effects on the
department/unit, including
short/long-term education
requirements, skills transfer
and development,
organizational issues,
relationships with other
departments and customers
�e individual interacts with
others and determines new
methods of utilizing
technology within his/her
specific business objectives.
Individuals use reflection as
the basis of transformative
learning.
Event-driven individual-
based learning
Figure 4.2 Technology relationship between communities and individuals.
77orGAnIzAtIonAl leArnInG theorIes
It seems logical that communities of practice provide the mecha-
nism to assist, particularly, with the cultural assimilation component
of ROD. Indeed, cultural assimilation targets the behavior of the
community, and its need to consider what new organizational struc-
tures can better support emerging technologies. I have, in many ways,
already established and presented the challenge of what should be
called the “community of IT practice” and its need to understand how
to restructure to meet the needs of the organization. This is the kind
of issue that does not lend itself to event-driven, individual learning,
but rather to a more community-based process that can deal with the
realignment of departmental relationships.
Essentially, communities of IT practice must allow for the con-
tinuous evolution of learning based on emergent strategies. Emergent
strategies acknowledge unplanned action. Such strategies are defined
as patterns that develop in the absence of intentions (Mintzberg &
Waters, 1985). Emergent strategies can be used to gather groups that
can focus on issues not based on previous plans. These strategies can
be thought of as creative approaches to proactive actions. Indeed, a
frustrating aspect of technology is its uncertainty. Ideas and concepts
borrowed from communities of practice can help departments deal
with the evolutionary aspects of technological dynamism.
The relationship, then, between communities of practice and tech-
nology is significant. Many of the projects involving IT have been tra-
ditionally based on informal processes of learning. While there have
been a number of attempts to computerize knowledge using various
information databases, they have had mixed results. A “structured”
approach to creating knowledge reporting is typically difficult to estab-
lish and maintain. Many IT departments have utilized International
Organization for Standardization (ISO) 9000 concepts. The ISO is
a worldwide organization that defines quality processes through for-
mal structures. It attempts to take knowledge-based information and
transfer it into specific and documented steps that can be evaluated as
they occur. Unfortunately, the ISO 9000 approach, even if realized,
is challenging when such knowledge and procedures are undergoing
constant and unpredictable change. Technological dynamism cre-
ates too many uncertainties to be handled by the extant discourses on
how organizations have dealt with change variables. Communities of
practice provide an umbrella of discourses that are necessary to deal
78 INFORMATION TECHNOLOGY
with ongoing and unpredictable interactions established by emerging
technologies.
Support for this position is found in the fact that technology requires
accumulative collective learning that needs to be tied to social prac-
tices; this way, project plans can be based on learning as a participatory
act. One of the major advantages of communities of practice is that
they can integrate key competencies into the very fabric of the organi-
zation (Lesser et al., 2000). The typical disadvantage of IT is that its
staff needs to serve multiple organizational structures simultaneously.
This requires that priorities be set by the organization. Unfortunately,
it is difficult, if not impossible, for IT departments to establish such
priorities without engaging in concepts of communities of practice that
allow for a more integrated process of negotiation and determination.
Much of the process of communities of practice would be initiated by
strategic integration and result in many cultural assimilation changes;
that is, the process of implementing communities of practice will
necessitate changes in cultural behavior and organization processes.
As stated, communities-of-practice activities can be initiated via
the strategic integration component of ROD. According to Lesser et
al. (2000), a knowledge strategy based on communities of practice
consists of seven basic steps (Table 4.1).
Lesser and Wenger (2000) suggest that communities of practice
are heavily reliant on innovation: “Some strategies rely more on inno-
vation than others for their success. … Once dependence on innova-
tion needs have been clarified, you can work to create new knowledge
where innovation matters” (p. 8). Indeed, electronic communities of
practice are different from physical communities. IT provides another
dimension to how technology affects organizational learning. It does
so by creating new ways in which communities of practice operate. In
the complexity of ways that it affects us, technology has a dichoto-
mous relationship with communities of practice. That is, there is a
two-sided issue: (1) the need for communities of practice to imple-
ment IT projects and integrate them better into learning organiza-
tions, and (2) the expansion of electronic communities of practice
invoked by technology, which can, in turn, assist in organizational
learning, globally and culturally.
The latter issue establishes the fact that a person can now readily
be a member of many electronic communities, and in many different
79orGAnIzAtIonAl leArnInG theorIes
capacities. Electronic communities are different, in that they can
have memberships that are short-lived and transient, forming and
re-forming according to interest, particular tasks, or commonality of
issue. Communities of practice themselves are utilizing technologies
to form multiple and simultaneous relationships. Furthermore, the
growth of international communities resulting from ever-expanding
global economies has created further complexities and dilemmas.
Thus far, I have presented communities of practice as an infra-
structure that can foster the development of organizational learn-
ing to support the existence of technological dynamism. Most of
what I presented has an impact on the cultural assimilation com-
ponent of ROD—that is, affecting organizational structure and the
Table 4.1 Extended Seven Steps of Community of Practice Strategy
STEP COMMUNITIES-OF-PRACTICE STEP TECHNOLOGY EXTENSION
1 Understanding strategic knowledge
needs: What knowledge is critical
to success.
Understanding how technology affects strategic
knowledge, and what specific technological
knowledge is critical to success.
2 Engaging practice domains: People
form communities of practice to
engage in and identify with.
Technology identifies groups, based on
business-related benefits; requires domains to
work together toward measurable results.
3 Developing communities: How to
help key communities reach their
full potential.
Technologies have life cycles that require
communities to continue; treats the life cycle
as a supporter for attaining maturation and
full potential.
4 Working the boundaries: How to link
communities to form broader
learning systems.
Technology life cycles require new boundaries to
be formed. This will link other communities
that were previously outside discussions and
thus, expand input into technology
innovations.
5 Fostering a sense of belonging: How
to engage people’s identities and
sense of belonging.
The process of integrating communities: IT and
other organizational units will create new
evolving cultures that foster belonging as well
as new social identities.
6 Running the business: How to
integrate communities of practice
into running the business of the
organization.
Cultural assimilation provides new
organizational structures that are necessary to
operate communities of practice and to
support new technological innovations.
7 Applying, assessing, reflecting,
renewing: How to deploy knowledge
strategy through waves of
organizational transformation.
The active process of dealing with multiple new
technologies that accelerates the deployment
of knowledge strategy. Emerging technologies
increase the need for organizational
transformation.
80 INFORMATION TECHNOLOGY
way things need to be done. However, technology, particularly the
strategic integration component of ROD, fosters a more expanded
vision of what can represent a community of practice. What does
this mean? Communities of practice, through the advent of strate-
gic integration, have expanded to include electronic communities.
While technology can provide organizations with vast electronic
libraries that end up as storehouses of information, they are only
valuable if they are allowed to be shared within the community.
Although IT has led many companies to imagine a new world of
leveraged knowledge, communities have discovered that just storing
information does not provide for effective and efficient use of knowl-
edge. As a result, many companies have created these “electronic”
communities so that knowledge can be leveraged, especially across
cultures and geographic boundaries. These electronic communities
are predictably more dynamic as a result of what technology pro-
vides to them. The following are examples of what these communi-
ties provide to organizations:
• Transcending boundaries and exchanging knowledge with
internal and external communities. In this circumstance,
communities are extending not only across business units,
but also into communities among various clients—as we
see developing in advanced e-business strategies. Using the
Internet and intranets, communities can foster dynamic inte-
gration of the client, an important participant in competitive
advantage. However, the expansion of an external commu-
nity, due to emergent electronics, creates yet another need for
the implementation of ROD.
• Creating “Internet” or electronic communities as sources
of knowledge (Teigland, 2000), particularly for technical-
oriented employees. These employees are said to form “com-
munities of techies”: technical participants, composed largely
of the IT staff, who have accelerated means to come into con-
tact with business-related issues. In the case of Ravell, I cre-
ated small communities by moving IT staff to allow them to
experience the user’s need; this move is directly related to the
larger, and expanded, ability of using electronic communities
of practice.
81orGAnIzAtIonAl leArnInG theorIes
• Connecting social and workplace communities through
sophisticated networks. This issue links well to the entire
expansion of issues surrounding organizational learning, in
particular, learning organization formation. It enfolds both
the process and the social dialectic issues so important to cre-
ating well-balanced communities of practice that deal with
organizational-level and individual development.
• Integrating teleworkers and non-teleworkers, including the
study of gender and cultural differences. The growth of dis-
tance workers will most likely increase with the maturation of
technological connectivity. Videoconferencing and improved
media interaction through expanded broadband will support
further developments in virtual workplaces. Gender and cul-
ture will continue to become important issues in the expan-
sion of existing models that are currently limited to specific
types of workplace issues. Thus, technology allows for the
“globalization” of organizational learning needs, especially
due to the effects of technological dynamism.
• Assisting in computer-mediated communities. Such media-
tion allows for the management of interaction among com-
munities, of who mediates their communications criteria, and
of who is ultimately responsible for the mediation of issues.
Mature communities of practice will pursue self-mediation.
• Creating “flame” communities. A flame is defined as a lengthy,
often personally insulting, debate in an electronic commu-
nity that provides both positive and negative consequences.
Difference can be linked to strengthening the identification
of common values within a community but requires organiza-
tional maturation that relies more on computerized commu-
nication to improve interpersonal and social factors to avoid
miscommunications (Franco et al., 2000).
• Storing collective knowledge in large-scale libraries and
databases. As Einstein stated: “Knowledge is experience.
Everything else is just information.” Repositories of informa-
tion are not knowledge, and they often inhibit organizations
from sharing important knowledge building blocks that affect
technical, social, managerial, and personal developments that
are critical for learning organizations (McDermott, 2000).
82 INFORMATION TECHNOLOGY
Ultimately, these communities of practice are forming new social
networks, which have established the cornerstone of “global connectiv-
ity, virtual communities, and computer-supported cooperative work”
(Wellman et al., 2000, p. 179). These social networks are creating
new cultural assimilation issues, changing the very nature of the way
organizations deal with and use technology to change how knowledge
develops and is used via communities of practice. It is not, therefore,
that communities of practice are new infrastructure or social forces;
rather, the difference is in the way they communicate. Strategic inte-
gration forces new networks of communication to occur (the IT effect
on communities of practice), and the cultural assimilation component
requires communities of practice to focus on how emerging technolo-
gies are to be adopted and used within the organization.
In sum, what we are finding is that technology creates the need
for new organizations that establish communities of practice. New
members enter the community and help shape its cognitive schemata.
Aldrich (2001) defines cognitive schemata as the “structure that repre-
sents organized knowledge about persons, roles, and events” (p. 148).
This is a significant construct in that it promotes the importance of a
balanced evolutionary behavior among these three areas. Rapid learn-
ing, or organizational knowledge, brought on by technological inno-
vations can actually lessen progress because it can produce premature
closure (March, 1991). Thus, members emerge out of communities of
practice that develop around organizational tasks. They are driven by
technological innovation and need constructs to avoid premature clo-
sure, as well as ongoing evaluation of perceived versus actual realities.
As Brown and Duguid (1991, p. 40) state:
The complex of contradictory forces that put an organization’s assump-
tions and core beliefs in direct conflict with members’ working, learn-
ing, and innovating arises from a thorough misunderstanding of what
working, learning, and innovating are. As a result of such misunder-
standings, many modern processes and technologies, particularly those
designed to downskill, threaten the robust working, learning, and inno-
vating communities and practice of the workplace.
This perspective can be historically justified. We have seen time
and time again how a technology’s original intention is not realized
83orGAnIzAtIonAl leArnInG theorIes
yet still productive. For instance, many uses of e-mail by individuals
were hard to predict. It may be indeed difficult, if not impossible,
to predict the eventual impact of a technology on an organization
and provide competitive advantages. However, based on evolutionary
theories, it may be beneficial to allow technologies to progress from
driver-to-supporter activity. Specifically, this means that communi-
ties of practice can provide the infrastructure to support growth from
individual-centered learning; that is, to a less event-driven process
that can foster systems thinking, especially at the management levels
of the organization. As organizations evolve into what Aldrich (2001)
call “bounded entities,” interaction behind boundaries heightens the
salience of cultural difference. Aldrich’s analysis of knowledge cre-
ation is consistent with what he called an “adaptive organization”—one
that is goal oriented and learns from trial and error (individual-based
learning)—and a “knowledge development” organization (system-
level learning). The latter consists of a set of interdependent members
who share patterns of belief. Such an organization uses inferential and
vicarious learning and generates new knowledge from both experi-
mentation and creativity. Specifically, learning involves sense mak-
ing and builds on the knowledge development of its members. This
becomes critical to ROD, especially in dealing with change driven
by technological innovations. The advantages and challenges of vir-
tual teams and communities of practice are expanded in Chapter 7, in
which I integrate the discussion with the complexities of outsourcing
teams.
Learning Preferences and Experiential Learning
The previous sections of this chapter focused on organizational learn-
ing, particularly two component theories and methods: learning
organizations and communities of practice. Within these two meth-
ods, I also addressed the approaches to learning; that is, learning that
occurs on the individual and the organizational levels. I advocated
the position that both system and individual learning need to be part
of the equation that allows a firm to attain ROD. Notwithstanding
how and when system and individual learning occurs, the investi-
gation of how individuals learn must be a fundamental part of any
theory-to-practice effort, such as the present one. Indeed, whether
84 INFORMATION TECHNOLOGY
one favors a view of learning as occurring on the organizational or
on the individual level (and it occurs on both), we have to recog-
nize that individuals are, ultimately, those who must continue to
learn. Dewey (1933) first explored the concepts and values of what
he called “experiential learning.” This type of learning comes from
the experiences that adults have accrued over the course of their
individual lives. These experiences provide rich and valuable forms
of “literacy,” which must be recognized as important components
to overall learning development. Kolb (1984a) furthered Dewey’s
research and developed an instrument that measures individual
preferences or styles in which adults learn, and how they respond
to day-to-day scenarios and concepts. Kolb’s (1999) Learning Style
Inventory (LSI) instrument allows adults to better understand how
they learn. It helps them understand how to solve problems, work in
teams, manage conflicts, make better career choices, and negotiate
personal and professional relationships. Kolb’s research provided a
basis for comprehending the different ways in which adults prefer to
learn, and it elaborated the distinct advantages of becoming a bal-
anced learner.
The instrument schematizes learning preferences and styles into
four quadrants: concrete experience , reflective observation , abstract con
ceptualization , and active experimentation . Adults who prefer to learn
through concrete experience are those who need to learn through
actual experience, or compare a situation with reality. In reflective
observation, adults prefer to learn by observing others, the world
around them, and what they read. These individuals excel in group
discussions and can effectively reflect on what they see and read.
Abstract conceptualization refers to learning, based on the assimila-
tion of facts and information presented, and read. Those who prefer
to learn by active experimentation do so through a process of evaluat-
ing consequences; they learn by examining the impact of experimen-
tal situations. For any individual, these learning styles often work in
combinations. After classifying an individual’s responses to questions,
Kolb’s instrument determines the nature of these combinations. For
example, an individual can have a learning style in which he or she
prefers to learn from concrete experiences using reflective observation
as opposed to actually “doing” the activity. Figure 4.3 shows Kolb’s
model in the form of a “learning wheel.” The wheel graphically shows
85orGAnIzAtIonAl leArnInG theorIes
an individual’s learning style inventory, reflecting a person’s strengths
and weaknesses with respect to each learning style.
Kolb’s research suggests that learners who are less constrained by
learning preferences within a distinct style are more balanced and are
better learners because they have available to them more dimensions
in which to learn. This is a significant concept; it suggests that adults
who have strong preferences may not be able to learn when faced with
learning environments that do not fit their specific preference. For
example, an adult who prefers group discussion and enjoys reflective
conversation with others may feel uncomfortable in a less interper-
sonal, traditional teaching environment. The importance of Kolb’s
LSI is that it helps adults become aware that such preferences exist.
McCarthy’s (1999) research furthers Kolb’s work by investigating
the relationship between learning preferences and curriculum devel-
opment. Her Learning Type Measure (4Mat) instrument mirrors
and extends the Kolb style quadrants by expressing preferences from
an individual’s perspective on how to best achieve learning. Another
important contribution in McCarthy’s extension of Kolb’s work is the
inclusion of brain function considerations, particularly in terms of
hemisphericity. McCarthy focuses on the cognitive functions asso-
ciated with the right hemisphere (perception) and left hemisphere
(process) of the brain. Her 4Mat system shows how adults, in each
Concrete experience
Abstract
conceptualization
Learns from
hands-on
experience
Observes
concrete
situation and
reflects on its
meaning
Seeks to find
practical uses
for ideas and
theories
Interested in
abstract ideas
and concepts
Active
experimentation
Reflective
observation
Figure 4.3 Kolb’s Learning Style Inventory.
86 INFORMATION TECHNOLOGY
style quadrant, perceive learning with the left hemisphere of the
brain and how it is related to processing in the right hemisphere.
For example, for Type 1 learners (concrete experience and reflective
observation), adults perceive in a concrete way and process in a reflec-
tive way. In other words, these adults prefer to learn by actually doing
a task and then processing the experience by reflecting on what they
experienced during the task. Type 2 learners (reflective observation
and abstract conceptualization), however, perceive a task by abstract
thinking and process it by developing concepts and theories from
their initial ideas. Figure 4.4 shows McCarthy’s rendition of the
Kolb learning wheel.
The practical claim to make here is that practitioners who acquire
an understanding of the concepts of the experiential learning mod-
els will be better able to assist individuals in understanding how
they learn, how to use their learning preferences during times of
Meaning
Con
ce
pts
W
hat?
Skills
How?
W
hy?
Adaptat
ions
If?
Integrate
QIV
QIII
QI
QII
Try Define
Refine Examine
ImageExtend
Counsel
Figure 4.4 McCarthy rendition of the Kolb Learning Wheel.
87orGAnIzAtIonAl leArnInG theorIes
transition, and the importance of developing other dimensions of
learning. The last is particularly useful in developing expertise in
learning from individual reflective practices, learning as a group
in communities of practice, and participating in both individual
transformative learning, and organizational transformations. How,
then, does experiential learning operate within the framework of
organizational learning and technology? This is shown Figure 4.5
in a combined wheel, called the applied individual learning for tech
nology model, which creates a conceptual framework for linking the
technology life cycle with organizational learning and experiential
learning constructs.
Figure 4.5 expands the wheel into two other dimensions. The
first quadrant (QI) represents the feasibility stage of technology. It
requires communities to work together, to ascertain why a particular
technology might be attractive to the organization. This quadrant is
Engaging in the
technology process
Con
ce
ptuali
ze
driv
er
an
d su
ppor
ter
life
cy
cle
sMeas
urem
en
t a
nd
an
aly
sis
–W
hat?
Exploring technology opportunities
Planning and
design–How?
Feasibility–W
hy?
Im
plem
en
tin
g te
ch
nology
Crea
tio
n–W
hat
If?
Action
learning
QIV
QIII
QI
QII
Knowledge
management
Transformative
learning
Communities
of practice
Figure 4.5 Combined applied learning wheel.
88 INFORMATION TECHNOLOGY
best represented by individuals who engage in group discussions to
make better connections from their own experiences. The process
of determining whether a technology is feasible requires integrated
discourse among affected communities, who then can make better
decisions, as opposed to centralized or individual and predetermined
decisions on whether to use a specific technology. During this phase,
individuals need to operate in communities of practice, as the infra-
structure with which to support a democratic process of consensus
building.
The second quadrant (QII) corresponds to measurement and analy-
sis. This operation requires individuals to engage in specific details
to determine and conceptualize driver and supporter life cycles ana-
lytically. Individuals need to examine the specific details to under-
stand “ what” the technology can do, and to reflect on what it means to
them, and their business unit. This analysis is measured with respect
to what the ROI will be, and which driver and supporter functions
will be used. This process requires transformation theory that allows
individuals to perceive and conceptualize which components of the
technology can transform the organization.
Quadrant 3 (QIII), design and planning, defines the “how”
component of the technology life cycle. This process involves explor-
ing technology opportunities after measurement and analysis have
been completed. The process of determining potential uses for
technology requires knowledge of the organization. Specifically, it
needs the abstract concepts developed in QII to be integrated with
tacit knowledge, to then determine possible applications where the
technology can succeed. Thus, knowledge management becomes the
predominant mechanism for translating what has been conceptual-
ized into something explicit (discussed further in Chapter 5).
Quadrant 4 (QIV) represents the implementation-and-creation
step in the technology life cycle. It addresses the hypothetical ques-
tion of “What if?” This process represents the actual implementation
of the technology. Individuals need to engage in action learning tech-
niques, particularly those of reflective practices. The implementation
step in the technology life cycle is heavily dependent on the indi-
vidual. Although there are levels of project management, the essential
aspects of what goes on inside the project very much relies on the
individual performances of the workers.
89orGAnIzAtIonAl leArnInG theorIes
Social Discourse and the Use of Language
The successful implementation of communities of practice fosters
heavy dependence on social structures. Indeed, without understand-
ing how social discourse and language behave, creating and sustaining
the internal interactions within and among communities of practice
are not possible. In taking individuals as the central component for
continued learning and change in organizations, it becomes impor-
tant to work with development theories that can measure and support
individual growth and can promote maturation with the promotion
of organizational/system thinking (Watkins & Marsick, 1993). Thus,
the basis for establishing a technology-driven world requires the inclu-
sion of linear and circular ways of promoting learning. While there
is much that we will use from reflective action concepts designed by
Argyris and Schö n (1996), it is also crucial to incorporate other theo-
ries, such as marginality, transitions, and individual development.
Senge (1990) also compares learning organizations with engineer-
ing innovation; he calls these engineering innovations “technologies.”
However, he also relates innovation to human behavior and distin-
guishes it as a “discipline.” He defines discipline as “a body of theory
and technique that must be studied and mastered to be put into prac-
tice, as opposed to an enforced order or means of punishment” (p. 10).
A discipline, according to Senge, is a developmental path for acquir-
ing certain skills or competencies. He maintains the concept that cer-
tain individuals have an innate “gift”; however, anyone can develop
proficiency through practice. To practice a discipline is a lifelong
learning process—in contrast to the work of a learning organization.
Practicing a discipline is different from emulating a model. This book
attempts to bring the arenas of discipline and technology into some
form of harmony. What technology offers is a way of addressing the
differences that Senge proclaims in his work. Perhaps this is what is
so interesting and challenging about attempting to apply and under-
stand the complexities of how technology, as an engineering innova-
tion, affects the learning organization discipline—and thereby creates
a new genre of practices. After all, I am not sure that one can master
technology as either an engineering component, or a discipline.
Technology dynamism and ROD expand the context of the glo-
balizing forces that have added to the complexity of analyzing “the
90 INFORMATION TECHNOLOGY
language and symbolic media we employ to describe, represent,
interpret, and theorize what we take to be the facticity of organi-
zational life” (Grant et al., 1998, p. 1). ROD needs to create what
I call the “language of technology.” How do we then incorporate
technology in the process of organizing discourse, or how has tech-
nology affected that process? We know that the concept of dis-
course includes language, talk, stories, and conversations, as well
as the very heart of social life, in general. Organizational discourse
goes beyond what is just spoken; it includes written text and other
informal ways of communication. Unfortunately, the study of dis-
course is seen as being less valuable than action. Indeed, discourse
is seen as a passive activity, while “doing” is seen as supporting
more tangible outcomes. However, technology has increased the
importance of sensemaking media as a means of constructing and
understanding organizational identities. In particular, technology,
specifically the use of e-mail, has added to the instability of lan-
guage, and the ambiguities associated with metaphorical analysis—
that is, meaning making from language as it affects organizational
behavior. Another way of looking at this issue is to study the meta-
phor, as well as the discourse, of technology. Technology is actually
less understood today, a situation that creates even greater reason
than before for understanding its metaphorical status in organiza-
tional discourse—particularly with respect to how technology uses
are interpreted by communities of practice. This is best shown using
the schema of Grant et al. of the relationship between content and
activity and how, through identity, skills, and emotion, it leads to
action (Figure 4.6).
To best understand Figure 4.4 and its application to technology,
it is necessary to understand the links between talk and action. It
is the activity and content of conversations that discursively produce
identities, skills, and emotions, which in turn lead to action. Talk,
in respect to conversation and content, implies both oral and writ-
ten forms of communications, discourse, and language. The written
aspect can obviously include technologically fostered communications
over the Internet. It is then important to examine the unique condi-
tions that technology brings to talk and its corresponding actions.
91orGAnIzAtIonAl leArnInG theorIes
Identity
Individual identities are established in collaborations on a team, or
in being a member of some business committee. Much of the theory
of identity development is related to how individuals see themselves,
particularly within the community in which they operate. Thus, how
active or inactive we are within our communities, shapes how we see
ourselves and how we deal with conversational activity and content.
Empowerment is also an important part of identity. Indeed, being
excluded or unsupported within a community establishes a different
identity from other members of the group and often leads to margin-
ality (Schlossberg, 1989).
Identities are not only individual but also collective, which to
a large extent contributes to cultures of practice within organiza-
tional factions. It is through common membership that a collec-
tive identity can emerge. Identity with the group is critical during
discussions regarding emerging technologies and determining how
they affect the organization. The empowerment of individuals, and
the creation of a collective identity, are therefore important in fos-
tering timely actions that have a consensus among the involved
community.
Skills
Identity
Emotions
Action
Conversational
activity
Conversational
content
Figure 4.6 Grant’s schema— relationship between content and activity.
92 INFORMATION TECHNOLOGY
Skills
According to Hardy et al. (1998, p. 71), conversations are “arenas in
which particular skills are invested with meaning.” Watson (1995)
suggests that conversations not only help individuals acquire “techni-
cal skills” but also help develop other skills, such as being persuasive.
Conversations that are about technology can often be skewed toward
the recognition of those individuals who are most “technologically
talented.” This can be a problem when discourse is limited to who
has the best “credentials” and can often lead to the undervaluing of
social production of valued skills, which can affect decisions that lead
to actions.
Emotion
Given that technology is viewed as a logical and rational field, the
application of emotion is not often considered a factor of action.
Fineman (1996) defines emotion as “personal displays of affected, or
‘moved’ and ‘agitated’ states—such as joy, love, fear, anger, sadness,
shame, embarrassment,”—and points out that these states are socially
constructed phenomena. There is a positive contribution from emo-
tional energy as well as a negative one. The consideration of positive
emotion in the organizational context is important because it drives
action (Hardy et al., 1998). Indeed, action is more emotion than ratio-
nal calculation. Unfortunately, the study of emotions often focuses on
its negative aspects. Emotion, however, is an important part of how
action is established and carried out, and therefore warrants attention
in ROD.
Identity, skills, and emotion are important factors in how talk actu-
ally leads to action. Theories that foster discourse, and its use in orga-
nizations, on the other hand, are built on linear paths of talk and
action. That is, talk can lead to action in a number of predefined paths.
Indeed, talk is typically viewed as “cheap” without action or, as is often
said, “action is valued,” or “action speaks louder than words.” Talk,
from this perspective, constitutes the dynamism of what must occur
with action science, communities of practice, transformative learn-
ing, and, eventually, knowledge creation and management. Action,
by contrast, can be viewed as the measurable outcomes that have been
93orGAnIzAtIonAl leArnInG theorIes
eluding organizational learning scholars. However, not all actions
lead to measurable outcomes. Marshak (1998) established three types
of talk that lead to action: tooltalk , frametalk , and mythopoetictalk :
1. Tooltalk includes “instrumental communities required to:
discuss, conclude, act, and evaluate outcomes” (p. 82). What
is most important in its application is that tool-talk be used to
deal with specific issues for an identified purpose.
2. Frametalk focuses on interpretation to evaluate the mean-
ings of talk. Using frame-talk results in enabling implicit and
explicit assessments, which include symbolic, conscious, pre-
conscious, and contextually subjective dimensions.
3. Mythopoetictalk communicates ideogenic ideas and images
(i.e., myths and cosmologies) that can be used to communicate
the nature of how to apply tool-talk and frame-talk within the
particular culture or society. This type of talk allows for con-
cepts of intuition and ideas for concrete application.
Furthermore, it has been shown that organizational members
experience a difficult and ambiguous relationship, between discourse
that makes sense, and non-sense—what is also known as “the struggle
with sense” (Grant et al., 1998). There are two parts that comprise
non-sense: The first is in the difficulties that individuals experience in
understanding why things occur in organizations, particularly when
their actions “make no sense.” Much of this difficulty can be cor-
related with political issues that create “nonlearning” organizations.
However, the second condition of non-sense is more applicable, and
more important, to the study of ROD than the first—that is, non-
sense associated with acceleration in the organizational change pro-
cess. This area comes from the taken-for-granted assumptions about
the realities of how the organization operates, as opposed to how it can
operate. Studies performed by Wallemacq and Sims (1998) provide
examples of how organizational interventions can decompose stories
about non-sense and replace them with new stories that better address
a new situation and can make sense of why change is needed. This
phenomenon is critical to changes established, or responded to, by the
advent of new technologies. Indeed, technology has many nonsensi-
cal or false generalizations regarding how long it takes to implement
a product, what might be the expected outcomes, and so on. Given
94 INFORMATION TECHNOLOGY
the need for ROD—due to the advent of technology—there is a con-
comitant need to reexamine “old stories” so that the necessary change
agents can be assessed and put into practice. Ultimately, the challenge
set forth by Wallemacq and Sims is especially relevant, and critical,
since the very definition of ROD suggests that communities need
to accelerate the creation of new stories—stories that will occur at
unpredictable intervals. Thus, the link between discourse, organiza-
tional learning, and technology is critical to providing ways in which
to deal with individuals and organizations facing the challenge of
changing and evolving.
Grant’s (1996) research shows that sense making using media and
stories provided effective ways of constructing and understanding
organizational identities. Technology affects discourse in a similar
way that it affects communities of practice; that is, it is a variable that
affects the way discourse is used for organizational evolution. It also
provides new vehicles on how such discourse can occur. However, it is
important not to limit discourse analysis to merely being about “texts,”
emotion, stories, or conversations in organizations. Discourse analysis
examines “the constructing, situating, facilitating, and communicat-
ing of diverse cultural, instrumental, political, and socio-economic
parameters of ‘organizational being’” (Grant, 1996, p. 12). Hence,
discourse is the essential component of every organizational learn-
ing effort. Technology accelerates the need for such discourse, and
language, in becoming a more important part of the learning matura-
tion process, especially in relation to “system” thinking and learning.
I propose then, as part of a move toward ROD, that discourse theories
must be integrated with technological innovation and be part of the
maturation in technology and in organizational learning.
The overarching question is how to apply these theories of dis-
course and language to learning within the ROD framework and par-
adigm. First, let us consider the containers of types of talk discussed
by Marshak (1998) as shown in Figure 4.7.
These types of talk can be mapped onto the technology wheel, so that
the most appropriate oral and written behaviors can be set forth within
each quadrant, and development life cycle, as shown in Figure 4.8.
Mythopoetic-talk is most appropriate in Quadrant 1 (QI), where
the fundamental ideas and issues can be discussed in communities of
practice. These technological ideas and concepts, deemed feasible, are
95orGAnIzAtIonAl leArnInG theorIes
then analyzed through frame-talk, by which the technology can be
evaluated in terms of how it meets the fundamental premises estab-
lished in QI. Frame-talk also reinforces the conceptual legitimacy
of how technology will transform the organization while provid-
ing appropriate ROI. Tool-talk represents the process of identifying
applications and actually implementing them. For this reason, tool-
talk exists in both QIII and QIV. The former quadrant represents
Mythopoetic-talk: Ideogenic
Frame-talk: Interpretive
Tool-talk: Instrumental
Figure 4.7 Marshak’s type of talk containers.
Planning and design–How?
Im
plem
en
tat
ion–W
hat
If?
Tool-talk: Doing
using reflective
practices
QIV
QIII
QI
QII
Tool-talk:
Discuss-decide:
Knowledge
management
Frame-talk:
Transformative
Mythopoetic-
talk: Ground
ideas using
communities of
practice
Feasibility–W
hy?
Meas
urem
en
t a
nd an
aly
sis
–W
hat?
Figure 4.8 Marshak’s model mapped to the technology learning wheel.
96 INFORMATION TECHNOLOGY
the discussion-to-decision portion, and the latter represents the actual
doing and completion of the project itself. In QIII, table-talk requires
knowledge management to transition technology concepts into real
options. QIV transforms these real options into actual projects, in
which, reflecting on actual practices during implementation, provides
an opportunity for individual- and organizational-level learning.
Marshak’s (1998) concept of containers and cycles of talk and
action are adapted and integrated with cyclical and linear matu-
rity models of learning. However, discourse and language must
be linked to performance, which is why it needs to be part of the
discourse and language-learning wheel. By integrating discourse
and language into the wheel, individual and group activities can
use discourse and language as part of ref lective practices to create
an environment that can foster action that leads to measurable
outcomes. This process, as explained throughout this book, is of
paramount importance in understanding how discourse operates
with ROD in the information age.
Linear Development in Learning Approaches
Focusing only on the role of the individual in the company is an incom-
plete approach to formulating an effective learning program. There is
another dimension to consider that is based on learning maturation.
That is, where in the life cycle of learning are the individuals and the
organization? The best explanation of this concept is the learning mat-
uration experience at Ravell. During my initial consultation at Ravell,
the organization was at a very early stage of organizational learning.
This was evidenced by the dependence of the organization on event-
driven and individual reflective practice learning. Technology acted
as an accelerator of learning—it required IT to design a new network
during the relocation of the company. Specifically, the acceleration,
operationalized by a physical move, required IT to establish new rela-
tionships with line management. The initial case study concluded that
there was a cultural change as a result of these new relationships—
cultural assimilation started to occur using organizational learning
techniques, specifically reflective practices.
After I left Ravell, another phase in the evolution of the company
took place. A new IT director was hired in my stead, who attempted
97orGAnIzAtIonAl leArnInG theorIes
to reinstate the old culture: centralized infrastructure, stated opera-
tional boundaries, and separations that mandated anti-learning orga-
nizational behaviors. After six months, the line managers, faced with
having to revert back to a former operating culture, revolted and
demanded the removal of the IT director. This outcome, regrettable
as it may be, is critical in proving the conclusion of the original study
that the culture at Ravell had indeed evolved from its state, at the time
of my arrival. The following are two concrete examples that support
this notion:
1. The attempt of the new IT director to “roll back” the process
to a former cultural state was unsuccessful, showing that a
new evolving culture had indeed occurred.
2. Line managers came together from the established learning
organization to deliver a concerted message to the execu-
tive team. Much of their learning had now shifted to a social
organization level that was based less on events and was
more holistic with respect to the goals and objectives of the
organization.
Thus, we see a shift from an individual-based learning process
to one that is based more on the social and organizational issues to
stimulate transformation. This transformation in learning method
occurred within the same management team, suggesting that changes
in learning do occur over time and from experience. Another way of
viewing the phenomenon is to see Ravell as reaching the next level of
organizational learning or maturation with learning. Consistent with
the conclusion of the original study, technology served to accelerate
the process of change or accelerate the maturation process of organi-
zational learning.
Another phase (Phase II) of Ravell transpired after I returned
to the company. I determined at that time that the IT department
needed to be integrated with another technology-based part of the
business—the unit responsible for media and engineering services
(as opposed to IT). While I had suggested this combination eight
months earlier, the organization had not reached the learning matu-
ration to understand why such a combination was beneficial. Much
of the reason it did not occur earlier, can also be attributed to the
organization’s inability to manage ROD, which, if implemented,
98 INFORMATION TECHNOLOGY
would have made the integration more obvious. The initial Ravell
study served to bring forth the challenges of cultural assimilation,
to the extent that the organization needed to reorganize itself and
change its behavior. In phase II, the learning process matured by
accelerating the need for structural change in the actual reporting
processes of IT.
A year later, yet another learning maturation phase (phase III)
occurred. In Ravell, Phase III, the next stage of learning matura-
tion, allowed the firm to better manage ROD. After completing
the merger of the two technically related business units discussed
(phase II), it became necessary to move a core database depart-
ment completely out of the combined technology department, and
to integrate it with a business unit. The reason for this change was
compelling and brought to light a shortfall in my conclusions from
the initial study. It appears that as organizational learning matures
within ROD, there is an increasing need to educate the executive
management team of the organization. This was not the case during
the early stages of the case study. The limitation of my work, then,
was that I predominantly interfaced with line management and
neglected to include executives in the learning. During that time,
results were encouraging, so there was little reason for me to include
executives in event-driven issues, as discussed. Unfortunately, lack-
ing their participation fostered a disconnection with the strategic
integration component of ROD. Not participating in ROD created
executive ignorance of the importance that IT had on the strategy of
the business. Their lack of knowledge resulted in chronic problems
with understanding the relationship and value of IT on the business
units of the organization. This shortcoming resulted in continued
conflicts over investments in the IT organization. It ultimately left
IT with the inability to defend many of its cost requirements. As
stated, during times of economic downturns, firms tend to reduce
support organizations. In other words, executive management did
not understand the driver component of IT.
After the move of the cohort of database developers to a formal
business line unit, the driver components of the group provided
the dialogue and support necessary to educate executives. However,
this education did not occur based on events, but rather, on using
the social and group dynamics of organizational learning. We see
99orGAnIzAtIonAl leArnInG theorIes
here another aspect of how organizational and individual learning
methods work together, but evolve in a specific way, as summarized
in Table 4.2.
Another way of representing the relationship between individual
and organizational learning over time is to chart a “maturity” arc
to illustrate the evolutionary life cycle of technology and organiza-
tional learning. I call this arc the ROD arc. The arc is designed to
assess individual development in four distinct sectors of ROD, each
in relation to five developmental stages of organizational learning.
Thus, each sector of ROD can be measured in a linear and inte-
grated way. Each stage in the course of the learning development
Table 4.2 Analysis of Ravell’s Maturation with Technology
LEARNING PHASE I PHASE II PHASE III
Type of learning Individual reflective
practices used to
establish
operations and
line management.
Line managers
defend new culture
and participate in
less event-driven
learning.
Movement away from holistic
formation of IT, into
separate driver and
supporter attributes.
Learning approaches are
integrated using both
individual and
organizational methods, and
are based on functionality
as opposed to being
organizationally specific.
Learning
outcomes
Early stage of
learning
organization
development.
Combination of
event-driven and
early-stage social
organizational
learning
formation.
Movement toward social-
based organizational
decision making, relative to
the different uses of
technology.
Responsive
organizational
dynamism:
cultural
assimilation.
Established new
culture; no change
in organizational
structure.
Cultural
assimilation
stability with
existing structures;
early phase of IT
organizational
integration with
similar groups.
Mature use of cultural
assimilation, based on IT
behaviors (drivers and
supporters).
Responsive
organizational
dynamism:
Strategic
integration.
Limited integration
due to lack of
executive
involvement.
Early stages of
value/needs based
on similar
strategic
alignment.
Social structures emphasize
strategic integration based
on business needs.
100 INFORMATION TECHNOLOGY
of an organization reflects an underlying principle that guides the
process of ROD norms and behaviors; specifically, it guides orga-
nizations in how they view and use the ROD components available
to them.
The arc is a classificatory scheme that identifies progressive
stages in the assimilated uses of ROD. It reflects the perspective—
paralleling Knefelkamp’s (1999) research—that individuals in an
organization are able to move through complex levels of thinking,
and to develop independence of thought and judgment, as their
careers progress within the management structures available to
them. Indeed, assimilation to learning at specific levels of opera-
tions and management are not necessarily an achievable end but
one that fits into the psychological perspective of what productive
employees can be taught about ROD adaptability. Figure 4.9 illus-
trates the two axes of the arc.
The profile of an individual who assimilates the norms of ROD
can be characterized in five developmental stages (vertical axis)
along four sectors of literacy (horizontal axis). The arc character-
izes an individual at a specific level in the organization. At each
level, the arc identifies individual maturity with ROD, specifically
strategic integration, cultural assimilation, and the type of learning
process (i.e., individual vs. organizational). The arc shows how each
tier integrates with another, what types of organizational learning
theory best apply, and who needs to be the primary driver within
the organization. Thus, the arc provides an organizational schema
for how each conceptual component of organizational learning
applies to each sector of ROD. It also identifies and constructs a
path for those individuals who want to advance in organizational
rank; that is, it can be used to ascertain an individual’s ability to
cope with ROD requirements as a precursor for advancement in
management. Each position within a sector, or cell, represents a
specific stage of development within ROD. Each cell contains spe-
cific definitions that can be used to identify developmental stages
of ROD and organizational learning maturation. Figure 4.10 rep-
resents the ROD arc with its cell definitions. The five stages of the
arc are outlined as follows:
101orGAnIzAtIonAl leArnInG theorIes
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102 INFORMATION TECHNOLOGY
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103orGAnIzAtIonAl leArnInG theorIes
1. Operational knowledge: Represents the capacity to learn, con-
ceptualize, and articulate key issues relating to how technology
can have an impact on existing processes and organizational
structure. Organizational learning is accomplished through
individual learning actions, particularly reflective practices.
This stage typically is the focus for operations personnel, who
are usually focused on their personal perspectives of how
technology affects their daily activities.
2. Department/unit view as other : Indicates the ability to inte-
grate points of view about using technology from diverse indi-
viduals within the department or business unit. Using these
new perspectives, the individual is in position to augment
his or her understanding of technology and relate it to others
within the unit. Operations personnel participate in small-
group learning activities, using reflective practices. Lower
levels of middle managers participate in organizational learn-
ing that is in transition, from purely individual to group-level
thinking.
3. Integrated disposition : Recognizes that individual and depart-
mental views on using technology need to be integrated to
form effective business unit objectives. Understanding that
organizational and cultural shifts need to include all mem-
ber perspectives, before formulating departmental decisions,
organizational learning is integrated with middle managers,
using communities of practice at the department level.
4. Stable operations : Develops in relation to competence in sec-
tors of ROD appropriate for performing job duties for emerg-
ing technologies, not merely adequately, but competitively,
with peers and higher-ranking employees in the organization.
Organizational learning occurs at the organizational level
and uses forms of social discourse to support organizational
transformation.
5. Organizational leadership : Ability to apply sectors of ROD to
multiple aspects of the organization. Department concepts
can be propagated to organizational levels, including strate-
gic and cultural shifts, relating to technology opportunities.
Organizational learning occurs using methods of knowledge
management with executive support. Individuals use their
104 INFORMATION TECHNOLOGY
technology knowledge for creative purposes. They are will-
ing to take risks using critical discernment and what Heath
(1968) calls “freed” decision making.
The ROD arc addresses both individual and organizational
learning. There are aspects of Senge’s (1990) “organizational”
approach that are important and applicable to this model. I
have mentioned its appropriateness in regard to the level of the
manager— suggesting that the more senior manager is better posi-
tioned to deal with nonevent learning practices. However, there is
yet another dimension within each stage of matured learning. This
dimension pertains to timing. The timing dimension focuses on
a multiple-phase approach to maturing individual and organiza-
tional learning approaches. The multiple phasing of this approach
suggests a maturing or evolutionary learning cycle that occurs
over time, in which individual learning fosters the need and the
acceptance of organizational learning methods. This process can
be applied within multiple tiers of management and across differ-
ent business units.
The ROD arc can also be integrated with the applied individual
learning wheel. The combined models show the individual’s cycle of
learning along a path of maturation. This can be graphically shown
to reflect how the wheel turns and moves along the continuum of the
arc (Figure 4.11).
Figure 4.11 shows that an experienced technology learner can
maximize learning by utilizing all four quadrants in each of the
maturity stages. It should be clear that certain quadrants of indi-
vidual learning are more important to specific stages on the arc.
However, movement through the arc is usually not symmetrical;
that is, individuals do not move equally from stage to stage, within
the dimensions of learning (Langer, 2003). This integrated and
multiphase method uses the applied individual learning wheel
with the arc. At each stage of the arc, an individual will need
to draw on the different types of learning that are available in
the learning wheel. Figure 4.12 provides an example of this con-
cept, which Knefelkamp calls “multiple and simultaneous” (1999),
meaning that learning can take on multiple meanings across dif-
ferent sectors simultaneously.
105orGAnIzAtIonAl leArnInG theorIes
Figure 4.12 shows that the dimension variables are not necessarily
parallel in their linear maturation. This phenomenon is not unusual
with linear models, and in fact, is quite normal. However, it also reflects
the complexity of how variables mature, and the importance of having
the capability and infrastructure to determine how to measure such
levels of maturation within dimensions. There are both qualitative
and quantitative approaches to this analysis. Qualitative approaches
typically include interviewing, ethnographic-type experiences over
Engaging in the
technology process
Con
ce
ptuali
ze
driv
er
an
d su
ppor
ter
life
cy
cle
sMeas
urem
en
t a
nd
an
aly
sis
–W
hat?
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Planning and
design–How?
Feasibility–W
hy?
Im
plem
en
tin
g te
ch
nology
Crea
tio
n–W
hat
If?
Action
learning
QIV
QIII
QI
QII
Operational
knowledge
Department/unit
view as other
Integrated
disposition
Increased levels of maturity with
organizational dynamism
Stable
operations
Organizational
leadership
Knowledge
management
Transformative
learning
Communities
of practice
Figure 4.11 ROD arc with applied individual learning wheel.
106 INFORMATION TECHNOLOGY
D
im
en
si
on
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ar
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bl
e
O
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ra
tio
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te
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at
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107orGAnIzAtIonAl leArnInG theorIes
some predetermined time period, individual journals or diaries, group
meetings, and focus groups. Quantitative measures involve the cre-
ation of survey-type measures; they are based on statistical results
from answering questions that identify the level of maturation of the
individual.
The learning models that I elaborate in this chapter are suggestive
of the rich complexities surrounding the learning process for indi-
viduals, groups, and entire organizations. This chapter establishes a
procedure for applying these learning models to technology-specific
situations. It demonstrates how to use different phases of the learning
process to further mature the ability of an organization to integrate
technology strategically and culturally.
http://taylorandfrancis.com
109
5
managing oRganizaTional
leaRning anD TeChnology
The Role of Line Management
In Chapter 1, the results of the Ravell case study demonstrated the
importance of the role that line managers have, for the success of imple-
menting organizational learning, particularly in the objective of inte-
grating the information technology (IT) department. There has been
much debate related to the use of event-driven learning. In particular,
there is Senge’s (1990) work from his book, The Fifth Discipline. While
overall, I agree with his theories, I believe that there is a need to critique
some of his core concepts and beliefs. That is, Senge tends to make
broad generalizations about the limits of event-driven education and
learning in organizations. He believes that there is a limitation of learn-
ing from experience because it can create limitations to learning based
on actions—as he asks: “What happens when we can no longer observe
the consequences of our actions?” (Senge, 1990, p. 23).
My research has found that event-driven learning is essential to
most workers who have yet to learn through other means. I agree with
Senge that not all learning can be obtained through event-oriented
thinking, but I feel that much of what occurs at this horizon pertains
more to the senior levels than to what many line managers have to deal
with as part of their functions in business. Senge’s concern with learn-
ing methods that focus too much on the individual, perhaps, is more
powerful, if we see the learning organization as starting at the top and
then working its way down. The position, however, particularly with
respect to the integration of technology, is that too much dependence
on executive-driven programs to establish and sustain organizational
learning, is dangerous. Rather, the line management—or middle
managers who fundamentally run the business—is best positioned
to make the difference. My hypothesis here is that both top-down
and bottom-up approaches to organizational learning are riddled with
110 INFORMATION TECHNOLOGY
problems, especially in their ability to sustain outcomes. We cannot
be naï ve—even our senior executives must drive results to maintain
their positions. As such, middle managers, as the key business drivers,
must operate in an event- and results-driven world—let us not under-
estimate the value of producing measurable outcomes, as part of the
ongoing growth of the organizational learning practicum.
To explore the role of middle managers further, I draw on the inter-
esting research done by Nonaka and Takeuchi (1995). These research-
ers examined how Japanese companies manage knowledge creation,
by using an approach that they call “middle-up-down.” Nonaka and
Takeuchi found that middle managers “best communicate the contin-
uous iterative process by which knowledge is created” (p. 127). These
middle managers are often seen as leaders of a team, or task, in which
a “spiral conversion process” operates and that requires both executive
and operations management personnel. Peters and Waterman (1982),
among others, often have attacked middle managers as representing a
layer of management that creates communication problems and inef-
ficiencies in business processes that resulted in leaving U.S. workers
trailing behind their international competitors during the automobile
crisis in the 1970s. They advocate a “flattening” of the never-ending
levels of bureaucracy responsible for inefficient operations. However,
executives often are not aware of details within their operating depart-
ments and may not have the ability or time to acquire those details.
Operating personnel, on the other hand, do not possess the vision
and business aptitudes necessary to establish the kind of knowledge
creation that fosters strategic learning.
Middle managers, or what I prefer to identify as line managers
(Langer, 2001b), possess an effective combination of skills that can pro-
vide positive strategic learning infrastructures. Line managers under-
stand the core issues of productivity in relation to competitive operations
and return on investment, and they are much closer to the day-to-day
activities that bring forth the realities of how, and when, new strategic
processes can be effectively implemented. While many researchers, such
as Peters and Waterman, find them to be synonymous with backward-
ness, stagnation, and resistance to change, middle managers are the
core group that can provide the basis for continuous innovation through
strategic learning. It is my perspective that the difference of opinion
regarding the positive or negative significance middle managers have
111MAnAGInG orGAnIzAtIonAl leArnInG
in relation to organizational learning has to do with the wide-ranging
variety of employees who fall into the category of “middle.” It strikes
me that Peters and Waterman were somewhat on target with respect to
a certain population of middle managers, although I would not char-
acterize them as line managers. To justify this position, it is important
to clearly establish the differences. Line managers should be defined as
pre-executive employees who have reached a position of managing a
business unit that contains some degree of return on investment for the
business. In effect, I am suggesting that focusing on “middle” manag-
ers, as an identifiable group, is too broad. Thus, there is a need to further
delineate the different levels of what comprises middle managers, and
their roles in the organization.
Line Managers
These individuals usually manage an entire business unit and have
“return-on-investment” responsibilities. Line managers should be
categorized as those who have middle managers reporting to them;
they are, in effect, managers of managers, or, as in some organiza-
tions, they serve a “directorial” function. Such individuals are, in
many ways, considered future executives and perform many low-end
executive tasks. They are, if you will, executives in training. What
is significant about this managerial level is the knowledge it carries
about operations. However, line managers are still involved in daily
operations and maintain their own technical capabilities.
FirstLine Managers
First-line individuals manage nonmanagers but can have supervisory
employees who report to them. They do not carry the responsibility
for a budget line unit but for a department within the unit. These
managers have specific goals that can be tied to their performance and
to the department’s productivity.
Supervisor
A supervisor is the lowest-level middle manager. These individu-
als manage operational personnel within the department. Their
112 INFORMATION TECHNOLOGY
management activities are typically seen as “functions,” as opposed
to managing an entire operation. These middle managers do not have
other supervisors or management-level personnel reporting to them.
We should remember that definitions typically used to character-
ize the middle sectors of management, as described by researchers
like Peters, Nonaka, and others, do not come from exact science. The
point must be made that middle managers cannot be categorized by a
single definition. The category requires distinctive definitions within
each level of stratification presented. Therefore, being more specific
about the level of the middle manager can help us determine the man-
ager’s role in the strategic learning process. Given that Nonaka and
Takeuchi (1995) provide the concept of middle-up-down as it related
to knowledge management, I wish to broaden it into a larger sub-
ject of strategic learning, as a method of evolving changes in culture
and organizational thinking. Furthermore, responsive organizational
dynamism (ROD), unlike other organizational studies, represents
both situational learning and ongoing evolutionary learning require-
ments. Evolutionary learning provides a difficult challenge to organi-
zational learning concepts. Evolutionary learning requires significant
contribution from middle managers. To understand the complexity of
the middle manager, all levels of the organization must be taken into
consideration. I call this process management vectors.
Management Vectors
Senge’s (1990) work addresses some aspects of how technology might
affect organizational behavior: “The central message of the Fifth
Discipline is more radical than ‘ radical organization redesign’—
namely that our organizations work the way they work, ultimately
because of how we think and how we interact” (p. xiv). Technology
aspires to be a new variable or catalyst that can change everyday
approaches to things—to be the radical change element that forces
us to reexamine norms no longer applicable to business operations.
On the other hand, technology can be dangerous if perceived unre-
alistically as a power that possesses new answers to organizational
performance and efficiency. In the late 1990s, we experienced the
“bust” of the dot-com explosion, an explosion that challenged conven-
tional norms of how businesses operate. Dot-coms sold the concepts
113MAnAGInG orGAnIzAtIonAl leArnInG
that brick-and-mortar operations could no longer compete with new
technology-driven businesses and that “older” workers could not be
transformed in time to make dot-com organizations competitive.
Dot-coms allowed us to depart from our commitment to knowledge
workers and learning organizations, which is still true today.
For example, in 2003, IBM at its corporate office in Armonk, New
York, laid off 1,000 workers who possessed skills that were no lon-
ger perceived as needed or competitive. Rather than retrain work-
ers, IBM determined that hiring new employees to replace them
was simply more economically feasible and easier in terms of trans-
forming their organization behaviors. However, in my interview
with Stephen McDermott, chief executive officer (CEO) of ICAP
Electronic Trading Community (ETC), it became apparent that
many of the mystiques of managing technology were incorrect. As he
stated, “Managing a technology company is no different from manag-
ing other types of businesses.” While the technical skills of the IBM
workers may no longer be necessary, why did the organization not
provide enough opportunities to migrate important knowledge work-
ers to another paradigm of technical and business needs? Widespread
worker replacements tell us that few organizational learning infra-
structures actually exist. The question is whether technology can pro-
vide the stimulus to prompt more organizations to commit to creating
infrastructures that support growth and sustained operation. Most
important is the question of how we establish infrastructures that can
provide the impetus for initial and ongoing learning organizations.
This question suggests that the road to working successfully with tech-
nology will require the kind of organizational learning that is driven
by both individual and organization-wide initiatives. This approach
can be best explained by referring to the concept of driver and sup-
porter functions and life cycles of technology presented in Chapter 3.
Figure 5.1 graphically shows the relationship between organizational
structure and organizational learning needs. We also see that this
relationship maps onto driver and supporter functionality.
Figure 5.1 provides an operational overview of the relations between
the three general tiers of management in most organizations. These
levels or tiers are mapped onto organizational learning approaches;
that is, organizational/system or individual. This mapping follows a
general view based on what individuals at each of these tiers view or
114 INFORMATION TECHNOLOGY
seek as their job responsibilities and what learning method best sup-
ports their activities within their environment. For example, execu-
tive learning focuses on system-level thinking and learning because
executives need to view their organizations in a longer-term way (e.g.,
return on investment), as opposed to viewing learning on an indi-
vidual, transactional event way. Yet, executives play an integral part in
long-term support for technology, as an accelerator. Their role within
ROD is to provide the stimulus to support the process of cultural
assimilation, and they are also very much a component of strategic
integration. Executives do not require as much event-driven reflective
change, but they need to be part of the overall “social” structure that
paves the way for marrying the benefits of technology with organi-
zational learning. What executives do need to see, are the planned
measurable outcomes linked to performance from the investment of
coupling organizational learning with technology. The lack of execu-
tive involvement and knowledge will be detrimental to the likelihood
of making this relationship successful.
Operations, on the other hand, are based more on individual prac-
tices of learning. Attempting to incorporate organizational vision
and social discourse at this level is problematic until event-driven
learning is experienced individually to prove the benefits that can be
derived from reflective practices. In addition, there is the problem of
the credibility of a learning program. Workers are often wary of new
Management/
operational
layers
Executive tier
Middle
management
tiers
Operations tier Support Event-driven
individual
Reflective practices
Organization/
system on
driver individual
on support
Communities of
practice (driver)
reflective practices
(supporter)
Driver/support
life cycle
Organizational
learning
method
Knowledge
management
Learning
approach
Organization
system
Driver/support
life cycle
involvement
Driver
Figure 5.1 Three-tier organizational structure.
115MAnAGInG orGAnIzAtIonAl leArnInG
programs designed to enhance their development and productivity.
Many question the intentions of the organization and why it is mak-
ing the investment, especially given what has occurred in corporations
over the last 20 years: Layoffs and scandals have riddled organizations
and hurt employee confidence in the credibility of employer programs.
Ravell showed us that using reflective practices during events pro-
duces accelerated change, driven by technological innovation, which
in turn, supports the development of the learning organization. It is
important at this level of operations to understand the narrow and
pragmatic nature of the way workers think and learn. The way opera-
tions personnel are evaluated is also a factor. Indeed, operations per-
sonnel are evaluated based on specific performance criteria.
The most complex, yet combined, learning methods relate to the
middle management layers. Line managers, within these layers, are
engrossed in a double-sided learning infrastructure. On one side, they
need to communicate and share with executives what they perceive to
be the “overall” issues of the organization. Thus, they need to learn
using an organizational learning approach, which is less dependent
on event-driven learning and uses reflective practice. Line managers
must, along with their senior colleagues, be able to see the business
from a more proactive perspective and use social-oriented methods
if they hope to influence executives. Details of events are more of an
assumed responsibility to them than a preferred way of interacting. In
other words, most executives would rather interface with line manag-
ers on how they can improve overall operations efficiently and effec-
tively, as opposed to dealing with them on a micro, event-by-event
basis. The assumption, then, is that line managers are expected to deal
with the details of their operations, unless there are serious problems
that require the attention of executives; such problems are usually cor-
related to failures in the line manager’s operations.
On the other side are the daily relationships and responsibilities
managers face for their business units. They need to incorporate more
individual-based learning techniques that support reflective practices
within their operations to assist in the personal development of their
staff. The middle management tier described in Figure 5.1 is shown
at a summary level and needs to be further described. Figure 5.2 pro-
vides a more detailed analysis based on the three types of middle man-
agers described. The figure shows the ratio of organizational learning
116 INFORMATION TECHNOLOGY
to individual learning based on manager type. The more senior the
manager, the more learning is based on systems and social processes.
Knowledge Management
There is an increasing recognition that the competitive advantage of
organizations depends on their “ability to create, transfer, utilize, and
protect difficult-to-intimate knowledge assets” (Teece, 2001, p. 125).
Indeed, according to Bertels and Savage (1998), the dominant logic
of the industrial era requires an understanding of how to break the
learning barrier to comprehending the information era. While we
have developed powerful solutions to change internal processes and
organizational structures, most organizations have failed to address
the cultural dimensions of the information era. Organizational
knowledge creation is a result of organizational learning through stra-
tegic processes. Nonaka and Takeuchi (1995) define organizational
knowledge as “the capability of a company as a whole to create new
knowledge, disseminate it throughout the organization, and embody
it in products, services, and systems” (p. 3). Nonaka and Takeuchi use
the steps shown in Figure 5.3 to assess the value and chain of events
surrounding the valuation of organization knowledge.
Supervisor
High individual-
based learning
High org/system-
based learning
Individual
System
Manager Director
Figure 5.2 Organizational/system versus individual learning by middle manager level.
Knowledge creation
Continuous innovation
Competitive advantage
Figure 5.3 Nonaka and Takeuchi steps to organizational knowledge.
117MAnAGInG orGAnIzAtIonAl leArnInG
If we view the Figure 5.3 processes as leading to competitive advan-
tage, we may ask how technology affects the chain of actions that
Nonaka and Takeuchi (1995) identify. Without violating the model,
we may insert technology and observe the effects it has on each step,
as shown in Figure 5.4.
According to Nonaka and Takeuchi (1995), to create new knowl-
edge means to re-create the company, and everyone in it, in an ongo-
ing process that requires personal and organizational self-renewal.
That is, knowledge creation is the responsibility of everyone in the
organization. The viability of this definition, however, must be ques-
tioned. Can organizations create personnel that will adhere to such
parameters, and under what conditions will senior management sup-
port such an endeavor?
Again, technology has a remarkable role to play in substantiat-
ing the need for knowledge management. First, executives are still
challenged to understand how they need to deal with emerging tech-
nologies as this relates to whether their organizations are capable
of using them effectively and efficiently. Knowledge management
provides a way for the organization to learn how technology will be
used to support innovation and competitive advantage. Second, IT
departments need to understand how they can best operate within
the larger scope of the organization—they are often searching for a
true mission that contains measurable outcomes, as defined by the
entire organization, including senior management. Third, both execu-
tives and IT staff agree that understanding the uses of technology is a
continuous process that should not be utilized solely in a reactionary
Knowledge creation: Technology provides more dynamic shifts in knowledge,
thus accelerating the number of knowledge-creation events that can occur.
Continuous innovation: Innovations are accelerated because of the dynamic
nature of events and the time required to respond—therefore, continuous
innovation procedures are more significant to have in each department in order
to respond to technological opportunities on an ongoing basis.
Competitive advantage: Technology has generated more global competition.
Competitive advantages that depend on technological innovation
are more common.
Figure 5.4 Nonaka and Takeuchi organizational knowledge with technology extension.
118 INFORMATION TECHNOLOGY
and event-driven way. Finally, most employees accept the fact that
technology is a major component of their lives at work and at home,
that technology signifies change, and that participating in knowledge
creation is an important role for them.
Again, we can see that technology provides the initiator for
understanding how organizational learning is important for com-
petitive advantage. The combination of IT and other organizational
departments, when operating within the processes outlined in ROD,
can significantly enhance learning and competitive advantage. To
expand on this point, I now focus on the literature specifically relat-
ing to tacit knowledge and its important role in knowledge man-
agement. Scholars theorize knowledge management is an ability to
transfer individual tacit knowledge into explicit knowledge. Kulkki
and Kosonen (2001) define tacit knowledge as an experience-based
type of knowledge and skill and as the individual capacity to give
intuitive forms to new things; that is, to anticipate and preconcep-
tualize the future. Technology, by its very definition and form of
being, requires this anticipation and preconceptualization. Indeed,
it provides the perfect educational opportunity in which to practice
the transformation of tacit into explicit knowledge. Tacit knowledge
is an asset, and having individual dynamic abilities to work with
such knowledge commands a “higher premium when rapid organic
growth is enabled by technology” (Teece, 2001, p. 140). Thus,
knowledge management is likely to be greater when technological
opportunity is richer.
Because evaluating emerging technologies requires the ability to
look into the future, it also requires that individuals translate valu-
able tacit knowledge, and creatively see how these opportunities are
to be judged if implemented. Examples of applicable tacit knowledge
in this process are here extracted from Kulkki and Kosonen (2001):
• Cultural and social history
• Problem-solving modes
• Orientation to risks and uncertainties
• Worldview organizing principles
• Horizons of expectations
I approach each of these forms of tacit knowledge from the per-
spective of the components of ROD as shown in Table 5.1.
119MAnAGInG orGAnIzAtIonAl leArnInG
It is not my intention to suggest that all technologies should be, or
can be, used to generate competitive advantage. To this extent, some
technologies may indeed get rejected because they cannot assist the
organization in terms of strategic value and competitive advantage. As
Teece (2001) states, “Information transfer is not knowledge transfer and
information management is not knowledge management, although the
former can assist the latter. Individuals and organizations can suffer
from information overload” (p. 129). While this is a significant issue for
many firms, the ability to have an organization that can select, interpret,
Table 5.1 Mapping Tacit Knowledge to Responsive Organizational Dynamism
TACIT KNOWLEDGE STRATEGIC INTEGRATION CULTURAL ASSIMILATION
Cultural and social
history
How the IT department and other
departments translate emerging
technologies into their existing processes
and organization.
Problem-solving
modes
Individual reflective practices that assist
in determining how specific technologies
can be useful and how they can be
applied.
Technology opportunities
may require organizational
and structural changes to
transfer tacit knowledge to
explicit knowledge.
Utilization of tacit knowledge
to evaluate probabilities for
success.
Orientation to risks
and uncertainties
Technology offers many risks and
uncertainties. All new technologies may
not be valid for the organization.
Tacit knowledge is a
valuable component to fully
understand realities, risks,
and uncertainties.
Worldviews Technology has global effects and changes
market boundaries that cross business
cultures. It requires tacit knowledge to
understand existing dispositions on how
others work together.
Review how technology
affects the dynamics of
operations.
Organizing
principles
How will new technologies actually be
integrated? What are the organizational
challenges to “rolling out” products and
to implementation timelines? What
positions are needed, and who in the
organization might be best qualified to
fill new responsibilities?
Identify limitations of the
organization; that is, tacit
knowledge versus explicit
knowledge realities.
Horizons of
expectations
Individual limitations in the tacit domain
that may hinder or support whether a
technology can be strategically
integrated into the organization.
120 INFORMATION TECHNOLOGY
and integrate information is a valuable part of knowledge management.
Furthermore, advances in IT have propelled much of the excitement
surrounding knowledge management. It is important to recognize that
learning organizations, reflective practices, and communities of prac-
tice all participate in creating new organizational knowledge. This is
why knowledge management is so important. Knowledge must be built
on its own terms, which requires intensive and laborious interactions
among members of the organization.
Change Management
Because technology requires that organizations accelerate their
actions, it is necessary to examine how ROD corresponds to theories
in organizational change. Burke (2002) states that most organiza-
tional change is evolutionary; however, he defines two distinct types
of change: planned versus unplanned and revolutionary versus evolu-
tionary. Burke also suggests that the external environmental changes
are more rapid today and that most organizations “are playing catch
up.” Many rapid changes to the external environment can be attrib-
uted to emerging technologies, which have accelerated the divide
between what an organization does and what it needs to do to remain
competitive. This is the situation that creates the need for ROD.
The catching-up process becomes more difficult because the amount
of change required is only increasing given ever-newer technologies.
Burke (2002) suggests that this catching up will likely require planned
and revolutionary change. Such change can be mapped onto much of
my work at Ravell. Certainly, change was required; I planned it, and
change had to occur. However, the creation of a learning organiza-
tion, using many of the organizational learning theories addressed
in Chapter 4, supports the eventual establishment of an operating
organization that can deal with unplanned and evolutionary change.
When using technology as the reason for change, it is then important
that the components of ROD be integrated with theories of organi-
zational change.
History has shown that most organizational change is not success-
ful in providing its intended outcomes, because of cultural lock-in.
Cultural lockin is defined by Foster and Kaplan (2001) as the inability
of an organization to change its corporate culture even when there
121MAnAGInG orGAnIzAtIonAl leArnInG
are clear market threats. Based on their definition, then, technology
may not be able to change the way an organization behaves, even
when there are obvious competitive advantages to doing so. My con-
cern with Foster and Kaplan’s conclusion is whether individuals truly
understand exactly how their organizations are being affected—or are
we to assume that they do understand? In other words, is there a pro-
cess to ensure that employees understand the impact of not changing?
I believe that ROD provides the infrastructure required to resolve
this dilemma by establishing the processes that can support ongoing
unplanned and evolutionary change.
To best show the relationship of ROD to organizational change
theory, I use Burke’s (2002) six major points in assisting change in
organizations:
1. Understanding the external environment: What are competitors
and customers’ expectations? This is certainly an issue, specif-
ically when tracking whether expected technologies are made
available in the client– vendor relationship. But, more critical
is the process of how emerging technologies, brought about
through external channels, are evaluated and put into produc-
tion; that is, having a process in place. Strategic integration of
ROD is the infrastructure that needs to facilitate the moni-
toring and management of the external environment.
2. Evaluation of the inside of the organization: This directly relates
to technology and how it can be best utilized to improve
internal operations. While evaluation may also relate to a
restructuring of an organization’s mission, technology is often
an important driver for why a mission needs to be changed
(e.g., expanding a market due to e-commerce capabilities).
3. Readiness of the organization: The question here is not whether
to change but how fast the organization can change to address
technological innovations. The ROD arc provides the steps
necessary to create organizations that can sustain change as a
way of operation, blending strategic integration with cultural
assimilation. The maturation of learning: moving toward sys-
tem-based learning also supports the creation of infrastruc-
tures that are vitally prepared for changes from emerging
technologies.
122 INFORMATION TECHNOLOGY
4. Cultural change as inevitable: Cultural assimilation essentially
demands that organizations must dynamically assimilate new
technologies and be prepared to evolve their cultures. Such
evolution must be accelerated and be systemic within business
units, to be able to respond effectively to the rate of change
created by technological innovations.
5. Making the case for change: It is often difficult to explain why
change is inevitable. Much of the need for change can be sup-
ported using the reflective practices implemented at Ravell.
However, such acceptance is directly related to the process of
time. Major events can assist in establishing the many needs
for change, as discussed by Burke (2002).
6. Sustaining change: Perhaps the strongest part of ROD is its
ability to create a process that is evolutionary and systemic. It
focuses on driving change to every aspect of the organization
and provides organizational learning constructs to address
each level of operation. It addresses what Burke (2002) calls
the “prelaunch, launch, postlaunch, and sustaining,” in the
important sequences of organizational change (p. 286).
Another important aspect of change management is leadership.
Leadership takes many forms and has multiple definitions. Technology
plays an interesting role in how leadership can be presented to orga-
nizations, especially in terms of the management style of leadership,
or what Eisenhardt and Bourgeois (1988) have coined as “power cen-
tralization.” Their study examines high-velocity environments in the
microcomputer industry during the late 1980s. By high velocity, they
refer to “those environments in which there is a rapid and discon-
tinuous change in demand, competitors, technology, or regulation, so
that information is often inaccurate, unavailable, or obsolete” (p. 738).
During the period of their study, the microcomputer industry was
undergoing substantial technological change, including the introduc-
tion of many new competitors. As it turns out, the concept of high
velocity is becoming more the norm today given the way organizations
find themselves needing to operate in constant fluxes of velocity. The
term power centralization is defined as the amount of decision-making
control wielded by the CEO. Eisenhardt and Bourgeois’s study finds
that the more the CEO engages in power-centralized leadership,
123MAnAGInG orGAnIzAtIonAl leArnInG
the greater the degree of politics, which has a negative impact on the
strategic performance of the firms examined. This finding suggests
that the less democratic the leadership is in high-velocity environ-
ments, the less productive the organization will be. Indeed, the study
found that when individuals engaged in team learning, political ten-
sion was reduced, and the performance of the firms improved.
The structure of ROD provides the means of avoiding the high-
velocity problems discovered by the Eisenhardt and Bourgeois (1988)
study. This is because ROD allows for the development of more indi-
vidual learning, as well as system thinking, across the executive ranks
of the business. If technology is to continue to establish such high
velocities, firms need to examine the Eisenhardt and Bourgeois study
for its relevance to everyday operations. They also need to use orga-
nizational learning theories as a basis for establishing leadership that
can empower employees to operate in an accelerated and unpredict-
able environment.
Change Management for IT Organizations
While change management theories address a broad population in
organizations, there is a need to create a more IT-specific approach to
address the unique needs of this group. Lientz and Rea (2004) estab-
lish five specific goals for IT change managers:
1. Gain support for change from employees and non-IT
managers.
2. Implement change along measurements for the work so that
the results of the change are clearly determined.
3. Implement a new culture of collaboration in which employees
share more information and work more in teams.
4. Raise the level of awareness of the technology process and
work so that there is less of a tendency for reversion.
5. Implement an ongoing measurement process for the work to
detect any problems.
Lientz and Rea’s (2004) position is that when a new culture is
instilled in IT departments, it is particularly important that it should
not require massive management intervention. IT people need to be
self-motivated to keep up with the myriad accelerated changes in the
124 INFORMATION TECHNOLOGY
world of technology. These changes occur inside IT in two critical
areas. The first relates to the technology itself. For example, how do
IT personnel keep up with new versions of hardware and software?
Many times, these changes come in the form of hardware (often
called system) and software upgrades from vendors who require
them to maintain support contracts. The ongoing self-management
of how such upgrades and changes will ultimately affect the rest
of the organization is a major challenge and one that is difficult to
manage top-down. The second area is the impact of new or emerg-
ing technologies on business strategy. The challenge is to develop IT
personnel who can transform their technical knowledge into busi-
ness knowledge and, as discussed, take their tacit knowledge and
convert it into explicit, strategic knowledge. Further understanding
of the key risks to the components of these accelerated changes is
provided as follows:
System and software version control: IT personnel must continue
to track and upgrade new releases and understand the impact
of product enhancements. Some product-related enhance-
ments have no bearing on strategic use; they essentially fix
problems in the system or software. On the other hand, some
new releases offer new features and functions that need to be
communicated to both IT and business managers.
Existing legacy systems: Many of these systems cannot support
the current needs of the business. This often forces IT staff to
figure out how to create what is called “workarounds” (quick
fixes) to these systems. This can be problematic given that
workarounds might require system changes or modifications
to existing software. The risk of these changes, both short and
long term, needs to be discussed between user and IT staff
communities of practice.
Software packages (offtheshelf software): Since the 1990s, the use
of preprogrammed third-party software packages has become
a preferred mode of software use among users. However,
many of these packages can be inflexible and do not support
the exact processes required by business users. IT personnel
need to address users’ false expectations about what software
packages can and cannot do.
125MAnAGInG orGAnIzAtIonAl leArnInG
System or software changes: Replacement of systems or software
applications is rarely 100% complete. Most often, remnants of
old systems will remain. IT personnel can at times be insensi-
tive to the lack of a complete replacement.
Project completion: IT personnel often misevaluate when their
involvement is finished. Projects are rarely finished when the
software is installed and training completed. IT staff tend to
move on to other projects and tasks and lose focus on the like-
lihood that there will be problems discovered or last-minute
requests made by business users.
Technical knowledge: IT staff members need to keep their techni-
cal skills up to date. If this is not done, emerging technolo-
gies may not be evaluated properly as there may be a lack of
technical ability inside the organization to map new technical
developments onto strategic advantage.
Pleasing users : While pleasing business users appears to be a
good thing, it can also present serious problems with respect
to IT projects. What users want, and what they need, may
not be the same. IT staff members need to judge when they
might need assistance from business and IT management
because users may be unfairly requesting things that are not
feasible within the constraints of a project. Thus, IT staff must
have the ability to articulate what the system can do and what
might be advisable. These issues tend to occur when certain
business users want new systems to behave like old ones.
Documentation: This, traditionally, is prepared by IT staff and
contains jargon that can confuse business users. Furthermore,
written procedures prepared by IT staff members do not con-
sider the entire user experience and process.
Training: This is often carried out by IT staff and is restricted
to covering system issues, as opposed to the business realities
surrounding when, how, and why things are done.
These issues essentially define key risks to the success of imple-
menting technology projects. Much of this book, thus far, has focused
on the process of organizational learning from an infrastructure per-
spective. However, the implementation component of technology
possesses new risks to successfully creating an organization that can
126 INFORMATION TECHNOLOGY
learn within the needs of ROD. These risks, from the issues enumer-
ated, along with those discussed by Lientz and Rea (2004) are sum-
marized as follows:
Business user involvement: Continuous involvement from busi-
ness users is necessary. Unfortunately, during the life of a proj-
ect there are so many human interfaces between IT staff and
business users that it is unrealistic to attempt to control these
communications through tight management procedures.
Requirements, definition, and scope: These relate to the process
by which IT personnel work with business users to deter-
mine exactly what software and systems need to accomplish.
Determining requirements is a process, not a predetermined
list that business users will necessarily have available to
them. The discourse that occurs in conversations is critical to
whether such communities are capable of developing require-
ments that are unambiguous in terms of expected outcomes.
Business rules: These rules have a great effect on how the organi-
zation handles data and transactions. The difference between
requirements and business rules is subtle. Specifically, busi-
ness rules, unlike requirements, are not necessarily related to
processes or events of the business. As such, the determina-
tion of business rules cannot be made by reviewing proce-
dures; for example, all account numbers must be numeric.
Documentation and training materials: IT staff members need to
interact with business users and establish joint processes that
foster the development of documentation and training that
best fit user needs and business processes.
Data conversion: New systems and applications require that data
from legacy systems be converted into the new formats. This
process is called data mapping; IT staff and key business users
review each data field to ensure that the proper data are rep-
resented correctly in the new system. IT staff members should
not be doing this process without user involvement.
Process measurement: Organizations typically perform a post-
completion review after the system or software application
is installed. Unfortunately, this process measurement should
occur during and after project completion.
127MAnAGInG orGAnIzAtIonAl leArnInG
IT change management poses some unique challenges to imple-
menting organizational learning, mostly because managers cannot
conceivably be available for all of the risks identified. Furthermore,
the very nature of new technologies requires that IT staff mem-
bers develop the ability to self-manage more of their daily functions
and interactions, particularly with other staff members outside the
IT department. The need for self-development is even more critical
because of the existence of technological dynamism, which focuses
on dynamic and unpredictable transactions that often must be han-
dled directly by IT staff members and not their managers. Finally,
because so many risks during technology projects require business
user interfaces, non-IT staff members also need to develop better and
more efficient self-management than they are accustomed to doing.
Technological dynamism, then, has established another need for
change management theory. This need relates to the implementation
of self-development methods. Indeed, part of the reason for the lack
of success of IT projects can be attributed to the inability of the core
IT and business staff to perform in a more dynamic way. Historically,
more management cannot provide the necessary learning and reduc-
tion of risk.
The idea of self-development became popular in the early 1980s as
an approach to the training and education of managers, and managers
to be. Thus, the focus of management self-development is to increase
the ability and willingness of managers to take responsibility for
themselves, particularly for their own learning (Pedler et al., 1988).
I believe that management self-development theory can be applied to
nonmanagers, or to staff members, who need to practice self-manage-
ment skills that can assist them in transitioning to operating under
the conditions of technological dynamism.
Management self-development draws on the idea that many peo-
ple emphasize the need for learner centeredness. This is an impor-
tant concept in that it ties self-development theory to organizational
learning, particularly to the work of Chris Argyris and Malcolm
Knowles. The concept of learner centeredness holds that individuals
must take prime responsibility for their own learning: when and how
to learn. The teacher (or manager) is assigned the task of facilitator—a
role that fosters guidance as opposed to direct initiation of learning.
In many ways, a facilitator can be seen as a mentor whose role it is to
128 INFORMATION TECHNOLOGY
guide an individual through various levels of learning and individual
development.
What makes self-development techniques so attractive is that
learners work on actual tasks and then reflect on their own efforts.
The methods of reflective practice theory, therefore, are applicable
and can be integrated with self-development practices. Although self-
development places the focus on the individual’s own efforts, manag-
ers still have responsibilities to mentor, coach, and counsel their staff.
This support network allows staff to receive appropriate feedback and
guidance. In many ways, self-development relates to the professional
process of apprenticeship but differs from it in that the worker may not
aspire to become the manager but may wish simply to develop better
management skills. Workers are expected to make mistakes and to be
guided through a process that helps them reflect and improve. This is
why self-development can be seen as a management issue as opposed
to just a learning theory.
A mentor or coach can be a supervisor, line manager, director, or
an outside consultant. The bottom line is that technological dyna-
mism requires staff members who can provide self- management
to cope with constant project changes and risks. These individu-
als must be able to learn, be self-aware of what they do not know,
and possess enough confidence to initiate the required learning
and assistance that they need to be successful (Pedler et al., 1988).
Self-development methods, like other techniques, have risks.
Most notable, is the initial decrement in performance followed by
a slow increment as workers become more comfortable with the
process and learn from their mistakes. However, staff members
must be given support and time to allow this process to occur;
self-development is a trial-and-error method founded on the basis
of mastery learning (i.e., learning from one’s mistakes). Thus, the
notion of self-development is both continuous and discontinuous
and must be implemented in a series of phases, each having unique
outcomes and maturity. The concept of self-development is also
consistent with the ROD arc, in which early phases of maturation
require more individual learning, particularly reflective practices.
Self-development, in effect, becomes a method of indirect man-
agement to assist in personal transformation. This personal trans-
formation will inevitably better prepare individuals to participate
129MAnAGInG orGAnIzAtIonAl leArnInG
in group- and organizational-level learning at later stages of
maturation.
The first phase of establishing a self-development program is to
create a “learning-to-learn” process. Teaching individuals to learn is a
fundamental need before implementing self-development techniques.
Mumford (1988) defines learning to learn as
1. Helping staff to understand the stages of the learning process
and the pitfalls to not learning
2. Helping staff to find their own preferences to learning
3. Assisting staff in understanding their present learning prefer-
ences and how to deal with, and overcome, learning weaknesses
4. Helping staff to build on their learning experience and apply
it to their current challenges in their job
The first phase of self-development clearly embraces the Kolb
(1999) Learning Style Inventory and the applied individual learn-
ing wheel that were introduced in Chapter 4. Thus, all staff members
should be provided with both of these learning wheels, made aware
of their natural learning strengths and weaknesses, and provided with
exercises to help them overcome their limitations. Most important is
that the Kolb system will make staff aware of their shortfalls with
learning. The applied individual learning wheel will provide a per-
spective on how individuals can link generic learning preferences into
organizational learning needs to support ROD.
The second phase of self-development is to establish a formal learn-
ing program in which staff members
1. Are responsible for their own learning, coordinated with a
mentor or coach
2. Have the right to determine how they will meet their own
learning needs, within available resources, time frames, and
set outcomes
3. Are responsible for evaluating and assessing their progress
with their learning
In parallel, staff coaches or mentors
1. Have the responsibility to frame the learning objectives so
that they are consistent with agreed-on individual weaknesses
130 INFORMATION TECHNOLOGY
2. Are responsible for providing access and support for staff
3. Must determine the extent of their involvement with mentor-
ing and their commitment to assisting staff members achieve
stated outcomes
4. Are ultimately responsible for the evaluation of individual’s
progress and success
This program must also have a formal process and structure.
According to Mossman and Stewart (1988), formal programs, called
self-managed learning (SML), need the following organization and
materials:
1. Staff members should work in groups as opposed to on their
own. This is a good opportunity to intermix IT and non-
IT staff with similar issues and objectives. The size of these
groups is (typically) from four to six members. Groups should
meet every two– three weeks, and should develop what are
known as learning contracts . Learning contracts specifically
state what the individual and management have agreed on.
Essentially, the structure of self-development allows staff
members to experience communities of practice, which by
their very nature, will also introduce them to group learning
and system-level thinking.
2. Mentors or coaches should preside over a group as opposed to
presiding over just one individual. There are two benefits to
doing this: (1) There are simply economies of scale for which
managers cannot cover staff on an individual basis, and (2)
facilitating a group with similar objectives benefits interac-
tion among the members. Coaches obviously need to play an
important role in defining the structure of the sessions, in
offering ideas about how to begin the self-development pro-
cess, and in providing general support.
3. Staff members need to have workbooks, films, courses,
study guides, books, and specialists in the organization,
all of which learners can use to help them accomplish their
goals.
4. Typically, learning contracts will state the assessment meth-
ods. However, assessment should not be limited only to indi-
viduals but also should include group accomplishments.
131MAnAGInG orGAnIzAtIonAl leArnInG
An SML should be designed to ensure that the learning program
for staff members represents a commitment by management to a for-
mal process, that can assist in the improvement of the project teams.
The third phase of self-development is evaluation. This process is a
mixture of individual and group assessments from phase II, coupled
with assessments from actual practice results. These are results from
proven outcomes during normal workday operations. To garner the
appropriate practice evaluation, mentors and coaches must be involved
in monitoring results and noting the progress on specific events that
occur. For example, if a new version of software is implemented, we
will want to know if IT staff and business users worked together to
determine how and when it should be implemented. These results
need to be formally communicated back to the learning groups. This
process needs to be continued on an ongoing basis to sustain the
effects of change management. Figure 5.5 represents the flow of the
three phases of the process.
The process for self-development provides an important approach
in assisting staff to perform better under the conditions of technologi-
cal dynamism. It is one thing to teach reflective practice; it is another
Individual learning contracts
Learning styles inventory
Self-managed learning program
communities of
practice IT and non-IT staff
Phase 1:
Establish
learning to
learn
objectives
Phase 2:
Create formal
learning
program
Make necessary
changes to self-
development
learning
Individual and group assessment
monitor operations for
measurable outcomes
Phase 3:
Implement
evaluation
Figure 5.5 Phases of self-development.
132 INFORMATION TECHNOLOGY
to get staff members to learn how to think in a manner that takes into
consideration the many risks that have plagued systems and software
projects for decades. While the role of management continues to play
a major part in getting things done within strategic objectives, self-
development can provide a strong learning method, that can foster
sustained bottom-up management, which is missing in most learning
organizations.
The Ravell case study provides some concrete evidence on how
self-development techniques can indeed get results. Because of the
time pressures at Ravell, I was not able to invest in the learning-to-
learn component at the start of the process. However, I used informal
methods to determine the learning preferences of the staff. This can
be accomplished through interviews in which staff responses can pro-
vide a qualitative basis for evaluating how specific personnel prefer to
learn. This helped me to formulate a specific training program that
involved group meetings with IT and non-IT-oriented groups.
In effect, phase II at Ravell had two communities. The first com-
munity was the IT staff. We met each week to review progress and
to set short-term objectives of what the community of IT wanted to
accomplish. I acted as a facilitator, and although I was in a power
position as their manager, I did not use my position unless there were
clear signs of resistance in the team (which there were in specific situ-
ations). The second community was formed with various line manager
departments. This is where I formed “dotted-line” reporting struc-
tures, which required IT staff members also to join other commu-
nities of practice. This proved to be an invaluable strategy because
it brought IT and business users together and formed the links that
eventually allowed IT staff members to begin to learn and to form
relationships with the user community, which fostered reflective
thinking and transformation.
As stated, there are setbacks at the start of any self-development
program, and the experience at Ravell was no exception. Initially,
IT staff members had difficulty understanding what was expected
of them; they did not immediately perceive the learning program as
an opportunity for their professional growth. It was through ongo-
ing, motivated discourse in and outside of the IT community that
helped achieve measurable increments of self-developmental growth.
Furthermore, I found it necessary to integrate individual coaching
133MAnAGInG orGAnIzAtIonAl leArnInG
sessions with IT staff. While group sessions were useful, they were
not a substitute for individual discussions, which at times allowed
IT staff members to personally discuss their concerns and learning
requirements. I found the process to be ultimately valuable, and I
maintained the role of coach, as opposed to that of a manager who
tells IT staff members what to do in every instance. I knew that direct
management only would never allow for the development of learning.
Eventually, self-development through discourse will foster identity
development. Such was the case at Ravell, where both user and IT
groups eventually came together to form specific and interactive com-
munities of practice. This helped form a clearer identity for IT staff
members, and they began to develop the ability to address the many
project risk issues that I defined in this chapter. Most important for
the organization was that Ravell phase I built the foundation for later
phases that required more group and system thinking among the IT
ranks.
Evaluation of the performance at Ravell (phase III of the self-
development process) was actually easier than expected, which means
that if the first two phases are successful, evaluation will naturally be
easy to determine. As reflective thinking became more evident in the
group, it was easier to see the growth in transformative behavior; the
IT groups became more proactive and critical by themselves, without
necessarily needing my input. In fact, my participation fell into more
of a supporter role; I was asked to participate more when I felt needed
to provide a specific task for the group. Evaluation based on perfor-
mance was also easier to determine, mainly because we had formed
interdepartmental communities and because of the relationships I
established with line managers.
Another important decision we made and one that nurtured our
evaluation capabilities was the fact that line managers often joined
our IT staff meetings. So, getting feedback on actual results was
always open for discussion.
Viewing self-development in the scope of organizational learning
and management techniques provides an important support method
for later development in system thinking. The Ravel experience did
just that, as the self-development process inevitably laid the foun-
dation for more sophisticated organizational learning, required as a
business matures under ROD.
134 INFORMATION TECHNOLOGY
Social Networks and Information Technology
The expansion of social networks, through the use of technological
innovations, has substantially changed the way information flows in
and out of a business community. Some companies, particularly in the
financial services communities, have attempted to “lock out” social
network capabilities. These attempts are ways for organizations to
control, as opposed to change, behavior. Historically, such controls
to enforce compliance have not worked. This is particularly relevant
because of the emergence of a younger generation of workers who use
social networking tools as a regular way to communicate and carry out
discourse. Indeed, social networking has become the main vehicle for
social discourse both inside and outside organizations. There are those
who feel that the end of confidentiality may be on the horizon. This
is not to suggest that technology executives give up on security—we
all know this would be ludicrous. On the other hand, the increasing
pressure to “open” the Web will inevitably become too significant to
ignore. Thus, the technology executive of the future must be prepared
to provide desired social and professional networks to their employees
while figuring out how to minimize risk—certainly not an easy objec-
tive. Organizations will need to provide the necessary learning tech-
niques to help employees understand the limits of what can be done.
We must remember that organizations, governments, and busi-
nesses have never been successful at controlling the flow of information
to any population to or from any specific interest group—inevitably,
information flows through. As stated by Cross and Thomas (2009),
“The network perspective could trigger new approaches to organiza-
tion design at a time when environmental and competitive conditions
seem to be exhausting conventional wisdom” (p. 186). Most important
is the understanding that multinational organizations need to think
globally and nationally at the same time. To do this, employees must
transform their behavior and how they interact. Controlling access
does not address this concern; it only makes communication more
difficult and therefore does not provide a solution. Controls typically
manifest themselves in the form of new processes and procedures. I
often see technology executives proclaiming the need to change pro-
cesses in the name of security without really understanding that they
are not providing a solution, but rather, fostering new procedures that
135MAnAGInG orGAnIzAtIonAl leArnInG
will allow individuals to evade the new security measures. As Cross and
Thomas (2009) point out, “Formal structures often overlook the fact
that every formal organization has in its shadow an informal or ‘ invis-
ible’ organization” (p. 1). Instead, technology executives concerned
with security, need to focus on new organizational design to assist
businesses to be “social network ready.” ROD must then be extended
to allow for the expansion of social network integration, including,
but not limited to, such products as Linkedln, Facebook, and Twitter.
It may also be necessary to create new internal network infrastruc-
tures that specifically cater to social network communication.
Many software application companies have learned that compat-
ibility in an open systems environment is a key factor for success-
ful deployment of an enterprise-wide application solution. Thus, all
applications developed within or for an organization need to have
compatibility with the common and popular social network products.
This popularity is not static, but rather, a constant process of deter-
mining which products will become important social networks that
the company may want to leverage. We see social networks having
such an impact within the consumer environment—or what we can
consider to be the “market.” I explained in my definition of ROD that
it is the acceleration of market changes—or the changing relationship
between a buyer and seller—that dictates the successes and failures of
businesses. That said, technology executives must focus their attention
on how such networks will require their organizations to embrace
them. Obviously, this change carries risks. Adapting too early could
be overreacting to market hype, while lagging could mean late entry.
The challenge, then, for today’s technology leaders is to create
dynamic, yet functional, social networks that allow businesses to
compete while maintaining the controls they must have to protect
themselves. The IT organization must concentrate on how to provide
the infrastructure that allows these dynamic connections to be made
without overcontrol. The first mission for the technology executive is
to negotiate this challenge by working with the senior management
of the organization to reach consensus on the risk factors. The issues
typically involve the processes, behavior patterns, and risks shown in
Figure 5.6.
Ultimately, the technology executive must provide a new road map
that promotes interagency and cross-customer collaboration in a way
136 INFORMATION TECHNOLOGY
that will assist the organization to attain a ROD culture. Social net-
works are here to stay and will continue to necessitate 24/7 access for
everyone. This inevitably raises salient issues relating to the manage-
ment structure within businesses and how best to manage them.
In Chapter 2, I defined the IT dilemma in a number of contexts.
During an interview, a chief executive raised an interesting issue that
relates to the subject: “My direct reports have been complaining that
because of all this technology that they cannot get away from—that
their days never seem to end.” I responded to this CEO by asking,
Business process
Design a social network
that allows
participants to
respond dynamically
to customer and
business needs
Aspired behavior patterns Risks
Users understand the inherent limits
to what can be communicated
outside the organization, limit
personal transactions, and use
judgment when foreign e-mails are
forwarded.
Users cannot properly
determine the ethics of
behavior and will not take
the necessary precautions
to avoid exposing the
organization to outside
security breaches.
Discern which critical
functions are required
for the social network
to work effectively and
maintain the firm’s
competitive
positioning
Users are active and form strategic
groups (communities of practice)
that define needs on a regular basis
and work closely with IT and senior
management.
Users cannot keep up with
changes in social
networks, and it is
impossible to track
individual needs and
behaviors.
Provide a network
design that can be
scaled as needs
change within the
budget limitations of
the organization
�e organization must understand
that hard budgets for social
networking may not be feasible.
Rather, the network needs are
dynamic, and costs must be
assessed dynamically within the
appropriate operating teams in the
organizations.
Reality tells us that all
organizations operate
within budget limitations.
Large organizations find
it difficult to govern
dynamically, and smaller
organizations cannot
afford the personnel
necessary to manage
dynamically.
Create a social network
that “flattens” the
organization so that
all levels are
accessible
Particularly large organizations need
to have a network that allows its
people better access to its
departments, talent, and
management. In the 1980s, the
book In Search of Excellence (Peters
& Waterman, 1982) was the first
effort to present the value of a
“flatter” organizational structure.
Social networks provide the
infrastructure to make this a reality.
With access come the
challenges of responding
to all that connect to the
system. �e organization
needs to provide the
correct etiquette of how
individuals respond
dynamically without
creating anarchy.
Figure 5.6 Social network management issues.
137MAnAGInG orGAnIzAtIonAl leArnInG
“Why are they e-mailing and calling you? Is it possible that tech-
nology has exposed a problem that has always existed?” The CEO
seemed surprised at my response and said, “What do you mean?”
Again, I responded by suggesting that technology allowed access,
but perhaps, that was not really the problem. In my opinion, the real
problem was a weakness in management or organizational structure.
I argued that good managers build organizations that should handle
the questions that were the subject of these executives’ complaints.
Perhaps the real problem was that the organization or management
was not handling day-to-day issues. This case supports my thesis that
technology dynamism requires reevaluation of how the organization
operates and stresses the need to understand the cultural assimilation
abilities of dealing with change.
Another interesting aspect of social networks is the emergence of
otherwise invisible participants. Technology-driven networks have
allowed individuals to emerge not only because of the access determi-
nant but also because of statistics. Let me be specific. Network traffic
can easily be tracked, as can individual access. Even with limited his-
tory, organizations are discovering the valued members of their com-
panies simply by seeing who is active and why. This should not suggest
that social networks are spy networks. Indeed, organizations need to
provide learning techniques to guide how access is tracked and to
highlight the value that it brings to a business. As with other issues,
the technology executive must align with other units and individuals;
the following are some examples:
• Human resources (HR): This department has specific needs
that can align effectively with the entire social network.
Obviously, there are compliance issues that limit what can
be done over a network. Unfortunately, this is an area that
requires reassessment: In general, governance and controls do
not drive an organization to adopt ROD. There are other fac-
tors related to the HR function. First, is the assimilation of
new employees and the new talents that they might bring to
the network. Second, is the challenge of adapting to ongoing
change within the network. Third, is the knowledge lost of
those who leave the organization yet may still want to partici-
pate socially within the organization (friends of the company).
138 INFORMATION TECHNOLOGY
• Gender: Face-to-face meetings have always shown differences
in participation by gender. Men tend to dominate meetings
and the positions they hold in an organization. However, the
advent of social virtual networks has begun to show a shift
in the ways women participate and hold leadership positions
among their peers. In an article in Business Week (May 19,
2008), Auren Hoffman reports that women dominate social
network traffic. This may result in seeing more women-centric
communication. The question, then, is whether the expan-
sion of social networks will give rise to more women in senior
management positions.
• Marketing: The phenomenon of social networking has allowed
for the creation of more targeted connectivity; that is, the abil-
ity to connect with specific clients in special ways. Marketing
departments are undergoing an extraordinary transformation
in the way they target and connect with prospective custom-
ers. The technology executive is essentially at the center of
designing networks that provide customizable responses and
facilitate complex matrix structures. Having such abilities
could be the differentiator between success and failure for
many organizations.
One can see that the expansion of social networks is likely to have
both good and bad effects. Thus far, in this section I have discussed the
good. The bad relates to the expansion of what seems to be an unlim-
ited network. How does one manage such expansion? The answer lies
within the concept of alignment. Alignment has always been critical
to attain organizational effectiveness. The heart of alignment is deal-
ing with cultural values, goals, and processes that are key to meet
strategic objectives (Cross & Thomas, 2009). While the social net-
work acts to expose these issues, it does not necessarily offer solutions
to these differences. Thus, the challenge for the technology executive
of today is to balance the power of social networks while providing
direction on how to deal with alignment and control—not an easy
task but clearly an opportunity for leadership. The following chapters
offer some methods to address the challenges discussed in this chap-
ter, and the opportunities they provide for technology executives.
139
6
oRganizaTional
TRansfoRmaTion anD The
balanCeD sCoReCaRD
Introduction
The purpose of this chapter is to examine the nature of organiza-
tional transformation, how it occurs, and how it can be measured.
Aldrich (2001) defines organizational transformation along three
possible dimensions: changes in goals, boundaries, and activities.
According to Aldrich, transformations “must involve a qualita-
tive break with routines and a shift to new kinds of competencies
that challenge existing organizational knowledge” (p. 163). He
warns us that many changes in organizations disguise themselves
as transformative but are not. Thus, focusing on the qualifications
of authentic or substantial transformation is key to understanding
whether it has truly occurred in an organization. Technology, as
with any independent variable, may or may not have the capacity to
instigate organizational transformation. Therefore, it is important
to integrate transformation theory with responsive organizational
dynamism (ROD). In this way, the measurable outcomes of orga-
nizational learning and technology can be assessed in organizations
that implement ROD. Most important in this regard, is that organi-
zational transformation, along with knowledge creation, be directly
correlated to the results of implementing organizational learning.
That is, the results of using organizational learning techniques must
result in organizational transformation.
Organizational transformation is significant for three key reasons:
1. Organizations that cannot change will fundamentally be at
risk against competitors, especially in a quickly changing
market.
140 INFORMATION TECHNOLOGY
2. If the organization cannot evolve, it will persist in its norms
and be unwilling to change unless forced to do so.
3. If the community population is forced to change and is con-
strained in its evolutionary path, it is likely that it will not be
able to transform and thus, will need to be replaced.
Aldrich (2001) establishes three dimensions of organizational
transformation. By examining them, we can apply technology-
specific changes and determine within each dimension what consti-
tutes authentic organizational transformation.
1. Goals: There are two types of goal-related transformations: (a)
change in the market or target population of the organiza-
tion; (b) the overall goal of the organization itself changes. I
have already observed that technology can affect the mission
of an organization, often because it establishes new market
niches (or changes them). Changed mission statements also
inevitably modify goals and objectives.
2. Boundaries: Organizational boundaries transform when there
is expansion or contraction. Technology has historically
expanded domains by opening up new markets that could
not otherwise be reached without technological innovation.
E-business is an example of a transformation brought about
by an emerging technology. Of course, business can contract
as a result of not assimilating a technology; technology also
can create organizational transformation.
3. Activity systems: Activity systems define the way things are
done. They include the processing culture, such as behav-
ioral roles. Changes in roles and responsibilities alone do
not necessarily represent organizational transformation
unless it is accompanied by cultural shifts in behavior. The
cultural assimilation component of ROD provides a method
with which to facilitate transformations that are unpredict-
able yet evolutionary. Sometimes, transformations in activ-
ity systems deriving from technological innovations can
be categorized by the depth and breadth of its impact on
other units. For example, a decision could be made to use
technology as part of a total quality management (TQM)
141orGAnIzAtIonAl trAnsForMAtIon
effort. Thus, activity transformations can be indirect and
need to be evaluated based on multiple and simultaneous
events.
Aldrich’ s (2001) concept of organizational transformation bears
on the issue of frequency of change. In general, he concludes that
the changes that follow a regular cycle are part of normal evolution
and “flow of organizational life” (p. 169) and should not be treated as
transformations. Technology, on the other hand, presents an inter-
esting case in that it can be perceived as normal in its persistence
and regularity of change while being unpredictable in its dynamism.
However, Aldrich’ s definition of transformation poses an interesting
issue for determining transformations resulting from technological
innovations. Specifically, under what conditions is a technological
innovation considered to have a transformative effect on the organi-
zation? And, when is it to be considered as part of regular change? I
refer to Figure 6.1, first presented in Chapter 3 on driver and sup-
porter life cycles to respond to this question.
The flows in this cycle can be used as the method to determine
technological events that are normal change agents versus transforma-
tive ones. To understand this point, one should view all driver-related
technologies as transformational agents because they, by definition,
affect strategic innovation and are approved based on return on
investment (ROI). Aldrich’ s (2001) “normal ebb and flows” repre-
sent the “mini-loops” that are new enhancements or subtechnologies,
which are part of normal everyday changes necessary to mature a
Mini loop technology enhancementsTechnology
driver
Evaluation
cycle
Driver
maturation
Support
status
Replacement or
outsource
Economies
of scale
Figure 6.1 Driver-to-supporter life cycle.
142 INFORMATION TECHNOLOGY
technological innovation. Thus, driver variables that result from mini-
loops, would not be considered transformational agents of change.
It is important to recognize that Aldrich’ s (2001) definition of
organizational transformation should not be confused with theories
of transformative learning. As West (1996) proclaims, “The goal of
organizational learning is to transform the organization” (p. 54). The
study of transformative learning has been relevant to adult education,
and has focused on individual, as opposed to organizational, devel-
opment and learning. Thus, transformative learning has been better
integrated in individual learning and reflective practice theories than
in organizational ones. While these modes of learning are related to
the overall learning in organizations, they should not be confused
with organizations that are attempting to realize their performance
objectives.
Yorks and Marsick (2000) offer two strategies that can produce
transformative learning for individuals, groups, or organizations:
action learning and collaborative inquiry. I covered action science in
Chapter 4, particularly reflective practices, as key interventions to fos-
ter both individual and group evolution of learning, specifically in
reference to how to manage ROD. Aspects of collaborative inquiry
are applied to later stages of maturation and to more senior levels of
management based on systems-level learning. As Yorks and Marsick
(2000) state, “For the most part the political dimensions of how the
organization functions is off limits, as are discussions of larger social
consequences” (p. 274).
Technological innovations provide acceleration factors and foster
the need for ROD. Technology also furnishes the potential tangible
and measurable outcomes necessary to normalize York and Marsick’ s
(2000) framework for transformative learning theory into organiza-
tional contexts as follows:
1. Technology, specifically e-business, has created a critical need
for organizations to engage with clients and individuals in a
new interactive context. This kind of discourse has established
accelerated needs, such as understanding the magnitude of
alternative courses of action between customer and vendor.
The building of sophisticated intranets (internal Internets) and
their evolution to assimilate with other Internet operations
143orGAnIzAtIonAl trAnsForMAtIon
has also fueled the need for learning to occur more often than
before and at organizational level.
Because technology can produce measurable outcomes,
individuals are faced with accelerated reflections about the
cultural impact of their own behaviors. This is directly related
to the implementation of the cultural assimilation component
of ROD, by which individuals determine how their behaviors
are affected by emerging technologies.
2. Early in the process of implementing strategic integration,
reflective practices are critical for event-driven technology
projects. These practices force individuals to continually reex-
amine their existing meaning perspectives (specifically, their
views and habits of mind). Individual reflection in, on, and to
practice will evolve to system-level group and organizational
learning contexts, as shown in the ROD arc.
3. The process of moving from individual to system-level learn-
ing during technology maturation is strengthened by the
learners’ abilities to comprehend why historical events have
influenced their existing habits of mind.
4. The combination of strategic integration and cultural assimi-
lation lays the foundation for organizational transformation
to occur. Technology provides an appropriate blend of being
both strategic and organizational in nature, thus allow-
ing learners to confront their prior actions and develop new
practices.
Aldrich (2001) also provides an interesting set of explanations for
why it is necessary to recognize the evolutionary aspect of organiza-
tional transformations. I have extended them to operate within the
context of ROD, as follows:
Variation : Defined as “change from current routines and compe-
tencies and change in organizational forms” (Aldrich, 2001,
p. 22). Technology provides perhaps the greatest amount of
variation in routines and thereby establishes the need for
something to manage it: ROD. The higher the frequency of
variation, the greater the chance that organizational transfor-
mation can occur. Variation is directly correlated to cultural
assimilation.
144 INFORMATION TECHNOLOGY
Selection : This is the process of determining whether to use a
technology variation. Selections can be affected by external
(outside the organization) and internal (inside the organi-
zation) factors, such as changes in market segments or new
business missions, respectively. The process of selection can be
related to the strategic integration component of ROD.
Retention : Selected variations are retained or preserved by the
organization. Retention is a key way of validating whether
organizational transformation has occurred. As Aldrich
states: “Transformations are completed when knowledge
required for reproducing the new form is embodied in a com-
munity of practice” (p. 171).
Because of the importance of knowledge creation as the basis of
transformation, communities of practice are the fundamental struc-
tures of organizational learning to support organizational transforma-
tion. Aldrich (2001) also goes beyond learning; he includes policies,
programs, and networks as parts of the organizational transformative
process. Figure 6.2 shows Aldrich’ s evolutionary process and its rela-
tionship to ROD components.
Thus, we see from Figure 6.2 the relationships between the pro-
cesses of creating organizational transformation, the stages required
to reach it, the ROD components in each stage, and the correspond-
ing organizational learning method that is needed. Notice that the
mapping of organizational learning methods onto Aldrich’ s (2001)
scheme for organizational transformation can be related to the ROD
arc. It shows us that as we get closer to retention, organizational learn-
ing evolves from an individual technique to a system/organizational
learning perspective. Aldrich’ s model is consistent with my driver-
versus-supporter concept. He notes, “When the new form becomes
a taken-for-granted aspect of every day life in the organization, its
legitimacy is assumed” (p. 175).
Hence, the assimilation of new technologies cannot be consid-
ered transformative until it behaves as a supporter. Only then can we
determine that the technology has changed organizational biases and
norms. Representing the driver and supporter life cycle to include this
important relationship is shown in Figure 6.3.
145orGAnIzAtIonAl trAnsForMAtIon
Technology
Variation
Strategic integration–
assess value of
technology
Cultural assimilation–
assess extent of what
to implement and
determine effects on
structure
Strategic integration–
determine which
technologies best fit
corporate needs and
provide highest ROI
Corresponding organizational learning methods
Individual
reflective
practices
Group-based
reflective
practices
Social discourse
using
communities
of practice
Communities of
practice and
knowledge
management
Validation of
organizational
transformation–
technology has provided
strategic outcomes and
modified structures
and processes
Selection
Retention
Figure 6.2 Stages of organizational transformation and ROD.
Individual
reflective practice
Group-based
reflective
practice
Communities
of practice
Knowledge
management
Organizational
transformation
Mini loop technology enhancementsTechnology
driver
Evaluation
cycle
Driver
maturation
Support
status
Replacement or
outsource
Economies
of scale
Figure 6.3 Organizational transformation in the driver-to-supporter life cycle.
146 INFORMATION TECHNOLOGY
Methods of Ongoing Evaluation
If we define organizational transformation as the retention of knowl-
edge within the body of communities of practice, the question to be
answered is how this retention actually is determined in practice.
The possibility often occurs that transformations are partial or in
some phase of completion. This would mean that the transformation
is incomplete or needs to continue along some phase of approach.
Indeed, cultural assimilation does not occur immediately, but rather,
over periods of transition. Much of the literature on organizational
transformation does not address the practical aspects of evaluation
from this perspective. This lack of information is particularly prob-
lematic with respect to technology, since so much of how technology
is implemented relates to phased steps that rarely happen in one major
event. Thus, it is important to have some method of ongoing evalua-
tion to determine the extent of transformation that has occurred and
which organizational learning methods need to be applied to help
continue the process toward complete transformation.
Aldrich’ s (2001) retention can also be misleading. We know that
organizational transformation is an ongoing process, especially as
advocated in ROD. It is probable that transformations continue and
move from one aspect of importance to another, so a completed trans-
formation may never exist. Another way of viewing this concept is to
treat transformations as event milestones. Individuals and communi-
ties of practice are able to track where they are in the learning process.
It also fits into the phased approach of technology implementation.
Furthermore, the notion of phases allows for integration of organiza-
tional transformation concepts with stage and development theories.
With the acceptance of this concept, there needs to be a method or
model that can help organizations define and track such phases of
transformation. Such a model would also allow for mapping outcomes
onto targeted business strategies. Another way of understanding the
importance of validating organizational transformation is to recognize
its uniqueness, since most companies fail to execute their strategies.
The method that can be applied to the validation of organizational
transformation is a management tool called the balanced scorecard.
The balanced scorecard was introduced by Kaplan and Norton (2001)
in the early 1990s as a tool to solve measurement problems. The ability
147orGAnIzAtIonAl trAnsForMAtIon
of an organization to develop and operationalize its intangible assets
has become more and more a critical component for success. As I
have already expressed regarding the work of Lucas (1999), financial
measurement may not be capable of capturing all IT value. This is
particularly true in knowledge-based theories. The balanced score-
card can be used as a solution for measuring outcomes that are not
always financial and tangible. Furthermore, the balanced scorecard
is a “living” document that can be modified as certain objectives or
measurements require change. This is a critical advantage because, as
I have demonstrated, technology projects often change in scope and in
objectives as a result of internal and external factions.
The ultimate value, then, of the balanced scorecard, in this con-
text, is to provide a means for evaluating transformation not only for
measuring completion against set targets but also for defining how
expected transformations map onto the strategic objectives of the
organization. In effect, it is the ability of the organization to execute
its strategy. Before explaining the details of how a balanced scorecard
can be applied specifically to ROD, I offer Figure 6.4, which shows
Mobilize change
through executive
leadership
Balanced
Translate the
strategy to
operational terms
Scorecard
Make strategy a
continual processStrategy
Align
organizational to
the strategy
Make strategy
everyone’s job
Figure 6.4 Balanced scorecard. (From Kaplan, R.S., & Norton, D.P., The Strategy-Focused
Organization , Harvard University Press, Cambridge, MA, 2001.)
148 INFORMATION TECHNOLOGY
exactly where the scorecard fits into the overall picture of transition-
ing emerging technologies into concrete strategic benefit.
The generic objectives of a balanced scorecard are designed to cre-
ate a strategy-focused organization. Thus, all of the objectives and
measurements should be derived from the vision and strategy of the
organization (Kaplan & Norton, 2001). These measurements are
based on the fundamental principles of any strategically focused orga-
nization and on alignment and focus. Kaplan and Norton define these
principles as the core of the balanced scorecard:
1. Translate the strategy to operational terms : This principle
includes two major components that allow an organization to
define its strategy from a cause-and-effect perspective using
a strategy map and scorecard. Thus, the strategy map and its
corresponding balanced scorecard provide the basic measure-
ment system.
2. Align the organization to the strategy: Kaplan and Norton
define this principle as favoring synergies among organiza-
tional departments that allow communities of practice to have
a shared view, and common understanding of their roles.
3. Make strategy everyone’ s everyday job: This principle supports
the notion of a learning organization that requires everyone’ s
participation, from the chief executive officer (CEO) to cleri-
cal levels. To accomplish this mission, the members of the
organization must be aware of business strategy; individuals
may need “personal” scorecards and a matching reward sys-
tem for accomplishing the strategy.
4. Make strategy a continual process: This process requires the
linking of important, yet fundamental, components, includ-
ing organizational learning, budgeting, management reviews,
and a process of adaptation. Much of this principle falls into
the areas of learning organization theories that link learning
and strategy in ongoing perpetual cycles.
5. Mobilize change through executive leadership: This principle
stresses the need for a strategy-focused organization that
incorporates the involvement of senior management and can
mobilize the organization and provide sponsorship to the
overall process.
149orGAnIzAtIonAl trAnsForMAtIon
Using the core balanced scorecard schematic, I have modified it to
operate with technology and ROD, as shown in Figure 6.5.
1. Evaluation of technology: The first step is to have an infrastruc-
ture that can determine how technology fits into a specific
strategy. Once this is targeted, the evaluation team needs to
define it in operational terms. This principle requires the stra-
tegic integration component of ROD.
2. Align technology with business strategy : Once technology is
evaluated, it must be integrated into the business strategy.
This involves ascertaining whether the addition of technology
will change the current business strategy. This principle is also
connected to the strategic integration component of ROD.
3. Make technology projects part of communities of practice : Affected
communities need to be strategically aware of the project.
Organizational structures must determine how they distrib-
ute rewards and objectives across departments. This principle
requires the cultural assimilation component of ROD.
4. Phasedin technology implementation : Short- and long-term
project objectives are based on driver and supporter life cycles.
Executive
interfaces
Balanced
Evaluation of
technology
Scorecard
Phase technology
implementation
Responsive
org
dynamism
strategy
Align
technology
with business
strategy
Make technology
project part of
communities of
practice
Figure 6.5 Balanced scorecard ROD.
150 INFORMATION TECHNOLOGY
This will allow organizational transformation phases to be
linked to implementation milestones. This principle maps
onto the cultural assimilation component of ROD.
5. Executive interface : CEO and senior managers act as executive
sponsors and project champions. Communities of practice
and their common “threads” need to be defined, including
middle management and operations personnel, so that top-
down, middle-up-down, and bottom-up information flows
can occur.
The balanced scorecard ultimately provides a framework to view
strategy from four different measures:
1. Financial : ROI and risk continue to be important components
of strategic evaluation.
2. Customer : This involves the strategic part of how to create
value for the customers of the organization.
3. Internal business processes : This relates to the business pro-
cesses that provide both customer satisfaction and operational
efficiency.
4. Learning and growth : This encompasses the priorities and
infrastructure to support organizational transformation
through ROD.
The generic balanced scorecard framework needs to be extended to
address technology and ROD. I propose the following adjustments:
1. Financial : Requires the inclusion of indirect benefits from
technology, particularly as Lucas (1999) specifies, in nonmon-
etary methods of evaluating ROI. Risk must also be factored
in, based on specific issues for each technology project.
2. Customer : Technology-based products are integrated with
customer needs and provide direct customer package inter-
faces. Further, web systems that use the Internet are depen-
dent on consumer use. As such, technology can modify
organizational strategy because of its direct effect on the cus-
tomer interface.
3. Internal business processes : Technology requires business pro-
cess reengineering (BPR), which is the process of reevaluat-
ing existing internal norms and behaviors before designing a
151orGAnIzAtIonAl trAnsForMAtIon
new system. This new evaluation process addresses customers,
operational efficiencies, and cost.
4. Learning and growth : Organizational learning techniques,
under the umbrella of ROD, need to be applied on an ongo-
ing and evolutionary basis. Progress needs to be linked to the
ROD arc.
The major portion of the balanced scorecard strategy is in its initial
design; that is, in translating the strategy or, as in the ROD scorecard,
the evaluation of technology. During this phase, a strategy map and
actual balanced scorecards are created. This process should begin by
designing a balanced scorecard that articulates the business strategy.
Remember, every organization needs to build a strategy that is unique
and based on its evaluation of the external and internal situation (Olve
et al., 2003). To clarify the definition of this strategy, it is easier to
consider drawing the scorecard initially in the form of a strategy map.
A generic strategy map essentially defines the components of each
perspective, showing specific strategies within each one, as shown in
Figure 6.6.
Perspective:
Financial
Customer
Process
Learning and
growth
Improve
technology
Improve staff
skills
Establish new
markets
Increase
customer
service
Increase
efficiency
More satisfied
customers
Improve
profitability
Stronger
finances
Increase
customer
base
Figure 6.6 Strategy map. (From Olve, N., et al., Making Scorecards Actionable: Balancing
Strategy and Control , Wiley, New York, 2003.)
152 INFORMATION TECHNOLOGY
We can apply the generic strategy map to an actual case study,
Ravell phase I, as shown in Figure 6.7.
Recall that Ravell phase I created a learning organization using
reflective practices and action science. Much of the organization
transformation at Ravell was accelerated by a major event— the relo-
cation of the company. The move was part of a strategic decision for
the organization, specifically the economies of scale for rental expense
and an opportunity to retire old computers and replace them with
a much needed state-of-the-art network. Furthermore, there was a
grave need to replace old legacy applications that were incapable of
operating on the new equipment and were also not providing the
competitive advantage that the company sought. In using the strategy
map, a balanced scorecard can be developed containing the specific
outcomes to achieve the overall mission. The balanced scorecard is
shown in Figure 6.8.
The Ravell balanced scorecard has an additional column that defines
the expected organizational transformation from ROD. This model
addresses the issue of whether a change is truly a transformation. This
method also provides a systematic process to forecast, understand, and
Perspective:
Financial
Users
Process
Learning
and growth
New technology
products
New ways of
staff interaction
Establish
new organization
structure
Improved
systems
Provide accurate
and timely
information
More satisfied
users
Improve return
on project
investments
Reduce
technology
overhead
Increase user
IT support
Figure 6.7 Technology strategy map.
153orGAnIzAtIonAl trAnsForMAtIon
present what technology initiatives will ultimately change in the stra-
tegic integration and cultural assimilation components of ROD.
There are two other important factors embedded in this modified
balanced scorecard technique. First, scorecards can be designed at
varying levels of detail. Thus, two more balanced scorecards could
Strategy map
perspective
Financial
Measureable
outcomes Strategic objectives Organizational
transformation
Combine IT expenses with
relocation and capitalize
entire expense
Combination of expenses
requires formation of new
communities of practice,
which includes finance,
engineering, and IT
Improve
returns on
project
investments
Reduce
technology
overhead
costs
More
satisfied
users
Increase
user IT
support
Users
Process
Learning and
growth
Provide
accurate
and timely
information
Improved
systems
New
technology
products
New ways
of staff
interaction
structure
Establish
new
organization
Integrate new telephone
system with computer
network expenses
Leverage engineering
and communications
expenses with technology
Retire old equipment
from financial statements
Increase access to
central applications
Integrate IT within other
departments to improve
dynamic customer
support requirements
Provide new products to
replace old e-mail
system and make
standard applications
available to all users
Establish help desk
personnel
Process of supporting users
requires IT staff to embrace
reflective practices. User
relationship formed through
new communities of practice
and cultural assimilation
with user community
New culture at Ravell
established
Startegic integration occurs
through increased discourse
and language among
communities of practice
engaged in making
relocation successful. New
knowledge created and
needs knowledge
management
Improve decision support
for improved reporting
and strategic marketing
Upgrade new internal
systems, including
customer relationship
management (CRM),
general ledger, and
rights and royalties
Investigate new
voice-messaging
technology to improve
integration of e-mail and
telephone systems
Physically relocate IT
staff across departments
Modify IT reporting
structure with “dotted
line” to business units
IT becomes more critically
reflective, understands value
of their participation with
learning organization. IT
staff seeks to know less and
understands view of the
“other”
·
·
·
·
·
·
·
·
· ·
·
·
·
·
·
·
·
·
·
·
·
·
Figure 6.8 Ravell phase I balanced scorecard.
154 INFORMATION TECHNOLOGY
be developed that reflect the organizational transformations that
occurred in Ravell phases II and III, or the three phases could
be summarized as one large balanced scorecard or some combina-
tion of summary and detail together. Second, the scorecard can
be modified to reflect unexpected changes during implementa-
tion of a technology. These changes could be related to a shift-
ing mission statement or to external changes in the market that
require a change in business strategy. Most important, though,
are the expected outcomes and transformations that occur during
the course of a project. Essentially, it is difficult to predict how
organizations will actually react to changes during an IT project
and transform.
The balanced scorecard provides a checklist and tracking system
that is structured and sustainable— but not perfect. Indeed, many
of the outcomes from the three phases of Ravell were unexpected or
certainly not exactly what I expected. The salient issue here is that it
allows an organization to understand when such unexpected changes
have occurred. When this does happen, organizations need to have
an infrastructure and a structured system to examine what a change
in their mission, strategy, or expectations means to all of the com-
ponents of the project. This can be described as a “rippling effect,” in
which one change can instigate others, affecting many other parts of
the whole. Thus, the balanced scorecard, particularly using a strat-
egy map, allows practitioners to reconcile how changes will affect the
entire plan.
Another important component of the balanced scorecard, and the
reason why I use it as the measurement model for outcomes, is its
applicability to organizational learning. In particular, the learning
and growth perspective shows how the balanced scorecard ensures
that learning and strategy are linked in organizational development
efforts.
Implementing balanced scorecards is another critical part of the
project— who does the work, what the roles are, and who has the
responsibility for operating the scorecards? While many companies
use consultants to guide them, it is important to recognize that bal-
anced scorecards reflect the unique features and functions of the com-
pany. As such, the rank and file need to be involved with the design
and support of balanced scorecards.
155orGAnIzAtIonAl trAnsForMAtIon
Every business unit that has a scorecard needs to have someone
assigned to it, someone accountable for it. A special task force may
often be required to launch the training for staff and to agree on how
the scorecard should be designed and supported. It is advisable that the
scorecard be implemented using some application software and made
available on an Internet network. This provides a number of benefits:
It reduces paper or local files that might get lost or not be secured, allows
for easy “roll-up” of multiple scorecards, to a summary level, and access
via the Internet (using an external secured hookup) allows the scorecard
to be maintained from multiple locations. This is particularly attractive
for staff members and management individuals who travel.
According to Olve et al. (2003), there are four primary responsi-
bilities that can support balanced scorecards:
1. Business stakeholders : These are typically senior managers
who are responsible for the group that is using the score-
card. These individuals are advocates of using scorecards and
require compliance if deemed necessary. Stakeholders use
scorecards to help them manage the life cycle of a technology
implementation.
2. Scorecard designers : These individuals are responsible for the
“look and feel” of the scorecard as well as its content. To some
extent, the designers set standards for appearance, text, and
terminology. In certain situations, the scorecard designers
have dual roles as project managers. Their use of scorecards
helps them understand how the technology will operate.
3. Information providers : These people collect, measure, and
report on the data in the balanced scorecard. This function
can be implemented with personnel on the business unit level
or from a central services department. Reporting informa-
tion often requires support from IT staff, so it makes sense to
have someone from IT handle this responsibility. Information
providers use the scorecard to perform the measurement of
project performance and the handling of data.
4. Learning pilots : These individuals link the scorecard to organi-
zational learning. This is particularly important when measur-
ing organizational transformation and individual development.
156 INFORMATION TECHNOLOGY
The size and complexity of an organization will ultimately deter-
mine the exact configuration of roles and responsibilities that are
needed to implement balanced scorecards. Perhaps the most appli-
cable variables are:
Competence : Having individuals who are knowledgeable about
the business and its processes, as well as knowledgeable
about IT.
Availability : Individuals must be made available and appropri-
ately accommodated in the budget. Balanced scorecards that
do not have sufficient staffing will fail.
Executive management support: As with most technology proj-
ects, there needs to be a project advocate at the executive level.
Enthusiasm : Implementation of balanced scorecards requires a
certain energy and excitement level from the staff and their
management. This is one of those intangible, yet invaluable,
variables.
Balanced Scorecards and Discourse
In Chapter 4, I discussed the importance of language and discourse
in organizational learning. Balanced scorecards require ongoing dia-
logues that need to occur at various levels and between different com-
munities of practice. Therefore, it is important to integrate language
and discourse and communities of practice theory with balanced
scorecard strategy. The target areas are as follows:
• Developing of strategy maps
• Validating links across balanced scorecard perspectives
• Setting milestones
• Analyzing results
• Evaluating organizational transformation
Figure 6.9 indicates a community of practice relationship that
exists at a company. Each of these three levels was connected by a
concept I called “common threads of communication.” This model can
be extended to include the balanced scorecard.
The first level of discourse occurs at the executive community
of practice. The executive management team needs to agree on the
157orGAnIzAtIonAl trAnsForMAtIon
specific business strategy that will be used as the basis of the mis-
sion statement for the balanced scorecard. This requires conversations
and meetings that engage the CEO, executive board members (when
deemed applicable), and executive managers, like the chief operat-
ing officer (COO), chief financial officer (CFO), chief information
officer (CIO), and so on. Each of these individuals needs to represent
his or her specific area of responsibility and influence from an execu-
tive perspective. The important concept is that the balanced scorecard
mission and strategy should be a shared vision and responsibility for
the executive management team as a whole. To accomplish this task,
the executive team needs to be instructed on how the balanced score-
card operates and on its potential for accomplishing organizational
transformation that leads to strategic performance. Ultimately, the
discourse must lead to a discussion of the four balanced scorecard
perspectives: financial, customer, process, and learning and growth.
From a middle management level, the balanced scorecard allows
for a measurable model to be used as the basis of discourse with
Executive community of practice
CEO
Americas
Executive
board Consultants
CEO
AmericasNew ideas
and
adjustments
Senior
management
Operations
Middle
management
Middle
management
Adjustments as a
result of discourse
with operations
community
Operations management community of practice
Implementation community of practice
Figure 6.9 Community of practice “threads.”
158 INFORMATION TECHNOLOGY
executives. For example, the strategy map can be the vehicle for
conducting meaningful conversations on how to transform execu-
tive-level thinking and meaning into a more operationally focused
strategy. Furthermore, the scorecard outlines the intended outcomes
for strategy and organizational learning and transformation.
The concept of using the balanced scorecard as a method with
which to balance thinking and meaning across communities of prac-
tice extends to the operational level as well. Indeed, the challenge of
making the transition from thinking and meaning at the executive
level of operations is complicated, especially since these communi-
ties rarely speak the same language. The measurable outcomes section
of the scorecard provides the concrete layer of outcomes that opera-
tions staff tend to embrace. At the same time, this section provides
corresponding strategic impact and organizational changes needed to
satisfy business strategies set by management.
An alternative method of fostering the need forms of discourse is to
create multiple-tiered balanced scorecards designed to fit the language
of each community of practice, as shown in Figure 6.10. The diagram
in Figure 6.10 shows that each community can maintain its own lan-
guage and methods while establishing “common threads” to foster a
transition of thinking and meaning between it and other communi-
ties. The common threads from this perspective look at communica-
tion at the organizational/group level, as opposed to the individual
level. This relates to my discussion in Chapter 4, which identified
individual methods of improving personal learning, and development
within the organization. This suggests that each balanced scorecard
must embrace language that is common to any two communities to
establish a working and learning relationship— in fact, this common
language is the relationship.
Knowledge Creation, Culture, and Strategy
Balanced scorecards have been used as a measurement of knowledge
creation. Knowledge creation, especially in technology, has signifi-
cant meaning, specifically in the relationship between data and infor-
mation. Understanding the sequence between these two is interesting.
We know that organizations, through their utilization of software
applications, inevitably store data in file systems called databases.
159orGAnIzAtIonAl trAnsForMAtIon
The information stored in these databases can be accessed by many
different software applications across the organization. Accessing
multiple databases and integrating them across business units creates
further valuable information. Indeed, the definition of information
is “organized data.” These organized data are usually stored in data
infrastructures called data warehouses or data marts, where the infor-
mation can be queried and reported on to assist managers in their
decision-making processes. We see, in the Ravell balanced scorecard,
that decision-support systems were actually one of the strategic objec-
tives for the process perspective.
Organization-level balanced scorecard
Common
discourse threads
Executive-level
balanced scorecard
Management-level
balanced scorecard
Operational-level
balanced scorecard
Common
discourse threads
Common
discourse threads
Figure 6.10 Community of practice “common threads.”
160 INFORMATION TECHNOLOGY
Unfortunately, information does not ensure new knowledge cre-
ation. New knowledge can only be created by individuals who evolve
in their roles and responsibilities. Individuals, by participating in
groups and communities of practice, can foster the creation of new
organizational knowledge. However, to change or evolve one’ s behav-
ior, there must be individual or organizational transformation. This
means that knowledge is linked to organizational transformation. The
process to institutionalize organizational transformation is dependent
on management interventions at various levels. Management needs to
concentrate on knowledge management and change management and
to act as a catalyst and advocate for the successful implementation of
organizational learning techniques. These techniques are necessary to
address the unique needs of ROD.
Ultimately, the process must be linked to business strategy. ROD
changes the culture of an organization, through the process of cul-
tural assimilation. Thus, there is an ongoing need to reestablish align-
ment between culture and strategy, with culture altered to fit new
strategy, or strategy first, then culture (Pietersen, 2002). We see this
as a recurring theme, particularly from the case studies, that busi-
ness strategy must drive organizational behavior, even when technol-
ogy acts as a dynamic variable. Pietersen identifies what he called six
myths of corporate culture:
1. Corporate culture is vague and mysterious.
2. Corporate culture and strategy are separate and distinct
things.
3. The first step in reducing our company should be defining our
values.
4. Culture cannot be measured or rewarded.
5. Our leaders must communicate what our culture is.
6. Our culture is the one constant that never changes.
Resulting from these myths, Pietersen (2002) establishes four basic
rules of success for creating a starting point for the balance between
culture and strategy:
1. Company values should directly support strategic priorities.
2. They should be described as behaviors.
3. They should be simple and specific.
161orGAnIzAtIonAl trAnsForMAtIon
4. They should be arrived at through a process of enrollment
(motivation).
Once business synergy is created, sustaining the relationship
becomes an ongoing challenge. According to Pietersen (2002), this
must be accomplished by continual alignment, measurement, set-
ting examples, and a reward system for desired behaviors. To lead
change, organizations must create compelling statements of the case
for change, communicate constantly and honestly with their employ-
ees, maximize participation, remove ongoing resistance in the ranks,
and generate some wins. The balanced scorecard system provides the
mechanism to address the culture– strategy relationship while main-
taining an important link to organizational learning and ROD. These
linkages are critical because of the behavior of technology. Sustaining
the relationship between culture and strategy is simply more critical
with technology as the variable of change.
Ultimately, the importance of the balanced scorecard is that it
forces an understanding that everything in an organization is con-
nected to some form of business strategy. Strategy calls for change,
which requires organizational transformation.
Mission : To accelerate investment in technology during the reloca-
tion of the company for reasons of economies of scale and competitive
advantage.
http://taylorandfrancis.com
163
7
viRTual Teams anD
ouTsouRCing
Introduction
Much has been written and published about virtual teams. Most
define virtual teams as those that are geographically dispersed,
although others state that virtual teams are those that primarily inter-
act electronically. Technology has been the main driver of the growth
of virtual teams. In fact, technology organizations, due mostly to the
advent of competitive outsourcing abroad, have pushed information
technology (IT) teams to learn how to manage across geographical
locations, in such countries as India, China, Brazil, Ireland, and many
others. These countries are not only physically remote but also present
barriers of culture and language. These barriers often impede commu-
nications about project status, and affect the likelihood of delivering a
project on time, and within forecasted budgets.
Despite these major challenges, outsourcing remains attractive due
to the associated cost savings and talent supply. These two advantages
are closely associated. Consider the migration of IT talent that began
with the growth of India in providing cheap and educated talent. The
promise of cost savings caused many IT development departments to
begin using more India-based firms. The ensuing decline in IT jobs
in the United States resulted in fewer students entering IT curricu-
lums at U.S. universities for fear that they would not be able to find
work. Thus, began a cycle of lost jobs in the United States and further
demand for talent abroad. Now, technology organizations are faced
with the fact that they must learn to manage virtually because the tal-
ent they need is far away.
From an IT perspective, successful outsourcing depends on effec-
tive use of virtual teams. However, the converse is not true; that is,
virtual teams do not necessarily imply outsourcing. Virtual teams can
164 INFORMATION TECHNOLOGY
be made up of workers anywhere, even those in the United States
who are working from a distance rather than reporting to an office
for work. A growing number of employees in the United States want
more personal flexibility; in response, many companies are allow-
ing employees to work from home more often— and have found the
experience most productive. This type of virtual team management
generally follows a hybrid model, with employees working at home
most of the time but reporting to the office for critical meetings; an
arrangement that dramatically helps with communication and allows
management to have quality checkpoints.
This chapter addresses virtual teams working both within the
United States and on an outsource basis and provides readers with
an understanding of when and how to consider outsource partners.
Chapter topics include management considerations, dealing with
multiple locations, contract administration, and in-house alternatives.
Most important, this chapter examines organizational learning as a
critical component of success in using virtual teams. Although the
advent of virtual teams creates another level of complexity for design-
ing and maintaining learning organizations, organizational learning
approaches represent a formidable solution to the growing dilemma of
how teams work, especially those that are 100% virtual.
Most failures in virtual management are caused by poor communi-
cation. From an organizational learning perspective, we would define
this as differences in meaning making— stemming mostly from cul-
tural differences in the meaning of words and differing behavioral
norms. There is also no question that time zone differences play a role
in certain malfunctions of teams, but the core issues remain commu-
nication related.
As stated, concerning the Ravell case study, cultural transformation
is slow to occur and often happens in small intervals. In many virtual
team settings, team members may never do more than communicate
via e-mail. As an example, I had a client who was outsourcing produc-
tion in China. One day, they received an e-mail stating, “ We cannot
do business with you.” Of course, the management team was confused
and worried, seeking to understand why the business arrangement
was ending without any formal discussions of the problem. A trans-
lator in China was hired to help clarify the dilemma. As it turned
out, the statement was meant to suggest that the company needed
165vIrtuAl teAMs And outsourCInG
to provide more business— more work, that is. The way the Chinese
communicated that need was different from the Western interpre-
tation. This is just a small example of what can happen without a
well-thought-out organizational learning scheme. That is, individuals
need to develop more reflective abilities to comprehend the meaning
of words before they take action, especially in virtual environments
across multiple cultures. The development of such abilities— the
continual need for organizations to respond effectively to dynamic
changes, brought about by technology, in this case, e-mail— is consis-
tent with my theory of responsive organizational dynamism (ROD).
The e-mail established a new dynamic of communication. Think how
often specifications and product requirements are changing and need
virtual teams to somehow come together and agree on how to get the
work done— or think they agree.
Prior research and case studies provide tools and procedures as ways
to improve productivity and quality of virtual team operations. While
such processes and methodologies are helpful, they will not necessar-
ily ensure the successful outcomes that IT operations seek unless they
also change. Specifically, new processes alone are not sufficient or a
substitute for learning how to better communicate and make mean-
ing in a virtual context. Individuals must learn how to develop new
behaviors when working virtually. We must also remember that vir-
tual team operations are not limited to IT staffs. Business users often
need to be involved as they would in any project, particularly when
users are needed to validate requirements and test the product.
Status of Virtual Teams
The consensus tells us that virtual teams render results. According to
Bazarova and Walther (2009), “ Virtual groups whose members com-
municate primarily or entirely via email, computer conferencing, chat,
or voice— have become a common feature of twenty-first century
organizations” (p. 252). Lipnack and Stamps (2000) state that virtual
teams will become the accepted way to work and will likely reshape
the work world. While this prediction seems accurate, there has also
been evidence of negative attribution or judgment about problems that
arise in virtual team performance. Thus, it is important to understand
how virtual teams need to be managed and how realistic expectations
166 INFORMATION TECHNOLOGY
of such teams might be formed. So, while organizations understand
the need for virtual teams, they are not necessarily happy with proj-
ect results. Most of the disappointment relates to a lack of individual
development that helps change the mindset of how people need to
communicate, coupled with updated processes.
Management Considerations
Attribution theory “ describes how people typically generate explana-
tions for outcomes and actions— their own and others” (Bazarova &
Walther, 2009, p. 153). This theory explains certain behavior patterns
that have manifested during dysfunctional problems occurring in man-
aging virtual teams. Virtual teams are especially vulnerable to such
problems because their limited interactions can lead to members not
having accurate information about one another. Members of virtual
teams can easily develop perceptions of each other’ s motives that are
inaccurate or distorted by differing cultural norms. Research also shows
us that virtual team members typically attribute failure to the external
factors and successes to internal factors. Problems are blamed on the
virtual or outside members for not being available or accountable to the
physical community. The successes then tend to reinforce that virtual
teams are problematic because of their very nature. This then estab-
lishes the dilemma of the use of virtual teams and organizations— its
use will continue to increase and dominate workplace structures and
yet will present challenges to organizations that do not want to change.
The lack of support to change will be substantiated during failures in
expected outcomes. Some of the failures, however, can and should be
attributable to distance. As Olson and Olson (2000) state: “ Distance
will persist as an important element of human experience” (p. 172). So,
despite the advent of technology, it is important not to ignore the social
needs that teams need to have to be effective.
Dealing with Multiple Locations
Perhaps the greatest difficulty in implementing virtual teams is the
reality that they span multiple locations. More often, these locations
can be in different time zones and within multiple cultures. To prop-
erly understand the complexity of interactions, it makes sense to revisit
167vIrtuAl teAMs And outsourCInG
the organizational learning tools discussed in prior chapters. Perhaps
another way of viewing virtual teams and their effects on organiza-
tion learning is to perceive it as another dimension— a dimension that
is similar to multiple layers in a spreadsheet. This notion means that
virtual teams do not upset the prior relations between technology as
a variable from a two-dimensional perspective, rather in the depth
of how it affects this relationship in a third dimension. Figure 7.1
reflects how this dimension should be perceived.
In other words, the study of virtual teams should be viewed as
a subset of the study of organizations. When we talk about work-
place activities, we need to address issues at the component level. In
this example, the components are the physical organization and the
Technology as an
independent
variable
Creates
Virtual organizational
dynamism dimension
Physical organizational
dynamism dimension
Virtual acceleration
dimension
Strategic
integration
Cultural
assimilation
Total
organizational
dynamism
Acceleration of events that
require different
infrastructures and
organizational processes
Virtual cultural
assimilation dimension
Virtual strategic
integration dimension
Figure 7.1 The three-dimensional ROD.
168 INFORMATION TECHNOLOGY
virtual organization. The two together make up the superset or the
entire organization. To be fruitful, any discussion of virtual organiza-
tions must be grounded in the context of the entire organization and
address the complete topic of workplace learning and transformation.
In Chapter 4, I discussed organizational learning in communities of
practice (COP). In this section, I expand that discussion to include
virtual organizational structures.
The growing use of virtual teams may facilitate the complete inte-
gration of IT and non-IT workers. The ability to connect from various
locations using technology itself has the potential to expand COP.
But, as discussed in Chapter 4, it also presents new challenges, most
of which relate to the transient nature of members, who tend to par-
ticipate on more of a subject or transactional basis, rather than being
permanent members of a group. Table 7.1 reflects some of the key
differences between physical and virtual teams.
There has been much discussion about whether every employee is
suited to perform effectively in a virtual community. The consensus is
that effective virtual team members need to be self-motivated, able to
work independently, and able to communicate clearly and in a posi-
tive way. However, given that many workers lack some or all of these
skills, it seems impractical to declare that workers who do not meet
these criteria should be denied the opportunity to work in virtual
Table 7.1 Operating Differences between Traditional and Virtual Teams
TRADITIONAL OR PHYSICAL TEAMS VIRTUAL TEAMS
Teams tend to have fixed participation and
members.
Membership shifts based on topics and needs.
Members tend to be from the same
organization.
Team members can include people from outside
the organization (clients and collaborators).
Team members are 100% dedicated. Members are assigned to multiple teams.
Team members are collocated geographically
and by organization.
Team members are distributed geographically and
by organization.
Teams tend to have a fixed term of
membership; that is, start and stop dates.
Teams are reconfigured dynamically and may
never terminate.
Teams tend to have one overall manager. Teams have multiple reporting relationships with
different parts of the organization at different
times.
Teamwork is physical and practiced in
face-to-face interactions.
Teamwork is basically social.
Engagement is often during group events
and can often be hierarchical in nature.
Individual engagement is inseparable from
empowerment.
169vIrtuAl teAMs And outsourCInG
teams. A more productive approach might be to encourage workers to
recognize that they must adapt to changing work environments at the
risk of becoming marginal in their organizations.
To better understand this issue, I extended the COP matrix,
presented in Chapter 4, to include virtual team considerations in
Table 7.2.
Item 7 in Table 7.2 links the study of knowledge management with
COP. Managing knowledge in virtual communities within an orga-
nization has become associated directly with the ability of a firm to
sustain competitive advantage. Indeed, Peddibhotla and Subramani
(2008) state that “ virtual communities are not only recognized as
important contributors to both the development of social networks
among individuals but also towards individual performance and firm
performance” (p. 229). However, technology-enabled facilities and
support, while providing a repository for better documentation, also
create challenges in maintaining such knowledge. The process of how
information might become explicit has also dramatically changed
with the advent of virtual team communications. For example, much
technology-related documentation evolves from bottom-up sources,
rather than the traditional top-down process. In effect, virtual com-
munities share knowledge more on a peer-to-peer basis or through
mutual consensus of the members. As a result, virtual communities
have historically failed to meet expectations, particularly those of
management, because managers tend to be uninvolved in communi-
cation. While physical teams can meet with management more often
before making decisions, virtual teams have no such contact available.
To better understand the complexities of knowledge management and
virtual teams, Sabherwal and Becerra-Fernandez (2005) expand on
Nonaka’ s (1994) work on knowledge management, which outlined
four modes of knowledge creation: externalization, internalization,
combination, and socialization. Each of these modes is defined and
discussed next.
Externalization
Externalization is the process of converting or translating tacit knowl-
edge (undocumented knowledge) into explicit forms. The problem with
this concept is whether individuals really understand what they know
170 INFORMATION TECHNOLOGY
Table 7.2 Communities of Practice: Virtual Team Extensions
STEP
COMMUNITIES-OF-
PRACTICE STEP TECHNOLOGY EXTENSION VIRTUAL EXTENSION
1 Understanding strategic
knowledge needs: What
knowledge is critical to
success.
Understanding how
technology affects
strategic knowledge and
what specific
technological knowledge
is critical to success.
Understanding how to
integrate multiple visions
of strategic knowledge and
where it can be found
across the organization.
2 Engaging practice
domains: Where people
form communities of
practice to engage in
and identify with.
Technology identifies
groups based on
business-related
benefits, requiring
domains to work together
toward measurable
results.
Virtual domains are more
dynamic and can be
formed for specific
purposes and then
reconfigured based on
practice needs of subjects
discussed.
3 Developing communities:
How to help key
communities reach their
full potential.
Technologies have life
cycles that require
communities to continue;
treats the life cycle as a
supporter for attaining
maturation and full
potential.
Communities can be
reallocated to participate
in multiple objectives.
Domains of discussion
have no limits to reach
organizational needs.
4 Working the boundaries:
How to link communities
to form broader learning
systems
Technology life cycles
require new boundaries
to be formed. This will
link other communities
that were previously
outside of discussions
and thus expand input
into technology
innovations.
Virtual abilities allow for
customer interfaces,
vendors, and other
interested parties to join
the community.
5 Fostering a sense of
belonging: How to
engage people’ s
identities and sense of
belonging.
The process of integrating
communities: IT and
other organizational
units will create new
evolving cultures that
foster belonging as well
as new social identities.
Communities establish
belonging in a virtual way.
Identities are established
more on content of
discussion than on
physical attributes of
members.
6 Running the business:
How to integrate
communities of practice
into running the
business of the
organization.
Cultural assimilation
provides new
organizational structures
that are necessary to
operate communities of
practice and to support
new technological
innovations.
The organization functions
more as a virtual
community or team, being
more agile to demands of
the business, and
interactions may not
always include all
members.
(Continued)
171vIrtuAl teAMs And outsourCInG
and how it might affect organizational knowledge. Virtual communi-
ties have further challenges in that the repository of tacit information
can be found in myriad storage facilities, namely, audit trails of e-mail
communications. While Sabherwal and Becerra-Fernandez (2005)
suggest that technology may indeed assist in providing the infrastruc-
ture to access such information, the reality is that the challenge is not
one of process but rather of thinking and doing. That is, it is more a
process of unlearning existing processes of thinking and doing, into
new modes of using knowledge that is abundantly available.
Internalization
Internalization is a reversal of externalization: It is the process of
transferring explicit knowledge into tacit knowledge— or individual-
ized learning. The individual thus makes the explicit process into his
or her own stabilized thinking system so that it becomes intuitive
in operation. The value of virtual team interactions is that they can
provide more authentic evidence of why explicit knowledge is valu-
able to the individual. Virtual systems simply can provide more people
who find such knowledge useful, and such individuals, coming from
a more peer relationship, can understand why their procedures can be
internalized and become part of the self.
Combination
Combination allows individuals to integrate their physical processes
with virtual requirements. The association, particularly in a global
Table 7.2 (Continued) Communities of Practice: Virtual Team Extensions
STEP
COMMUNITIES-OF-
PRACTICE STEP TECHNOLOGY EXTENSION VIRTUAL EXTENSION
7 Applying, assessing,
reflecting, renewing: How
to deploy knowledge
strategy through waves
of organizational
transformation.
The active process of
dealing with multiple
new technologies that
accelerates the
deployment of knowledge
strategy. Emerging
technologies increase
the need for
organizational
transformation.
Virtual systems allow for
more knowledge strategy
because of the ability to
deploy information and
procedures. Tacit
knowledge is easier to
transform to explicit forms.
172 INFORMATION TECHNOLOGY
environment, allows virtual team members to integrate new explicit
forms into their own, not by replacing their beliefs, but rather, by
establishing new hybrid knowledge systems. This is particularly
advantageous across multiple cultures and business systems in coun-
tries that hold different and, possibly complementary, knowledge
about how things can get done. Nonaka’ s (1994) concept of combina-
tion requires participants in the community to be at later stages of
multiplicity— suggesting that this form can only be successful among
certain levels or positions of learners.
Socialization
As Nonaka (1994) notes, individuals learn by observation, imitation,
and practice. The very expansion of conversations via technology
can provide a social network in which individuals can learn simply
through discourse. Discourse, as I discussed in Chapter 4, is the basis
of successful implementations of COP. The challenge in virtual social
networks is the difficulty participants have in assessing the authentic-
ity of the information provided by those in the community.
The four modes of knowledge management formulated by Nonaka
(1994) need to be expanded to embrace the complexities of virtual
team COPs. Most of the adjustments are predicated on the team’ s
ability to deal with the three fundamental factors of ROD that I
introduced in this book; that is, acceleration, dynamic, and unpre-
dictability. The application of these three factors of ROD to Nonaka’ s
four modes is discussed next.
Externalization Dynamism
The externalization mode must be dynamic and ongoing with little
ability to forecast the longevity of any tacit-to-explicit formulation.
In other words, tacit-to-explicit change may occur daily but may
only operate effectively for a shorter period due to additional changes
brought on by technology dynamism. This means that members in
a community must continually challenge themselves to revisit pre-
vious tacit processes and acknowledge the need to reformulate their
tacit systems. Thus, transformation from tacit knowledge to explicit
knowledge can be a daily challenge for COP virtual organizations.
173vIrtuAl teAMs And outsourCInG
Internalization Dynamism
Careful reflection on this process of internalizing explicit forms must
be done. Given the differences in cultures and acceleration of busi-
ness change, individualized learning creating new tacit abilities may
not operate the same in different firm settings. It may be necessary
to adopt multiple processes depending on the environment in which
tacit operations are being performed. As stated, what might work in
China may not work in Brazil, for example. Tacit behavior is culture
oriented, so multiple and simultaneous versions must be respected
and practiced. Further expansion of internalization is a virtual team’ s
understanding of how such tacit behaviors change over time due to
the acceleration of new business challenges.
Combination Dynamism
I believe the combination dynamism mode is the most important com-
ponent of virtual team formation. Any combination or hybrid model
requires a mature self— as specified in my maturity arcs discussed in
Chapter 4. This means that individuals in virtual teams may need to
be operating at a later stage of maturity to deal with the complexities
of changing dispositions. Members of COPs must be observed, and a
determination of readiness must be made for such new structures to
develop in a virtual world. Thus, COP members need training; the lack
of such training might explain why so many virtual teams have had
disappointing results. Readiness for virtual team participation depends
on a certain level of relativistic thinking. To be successful, virtual team
members must be able to see themselves outside their own world and
have the ability to understand the importance of what “ others” need.
This position suggests that individuals need to be tested to the extent
that they are ready for such challenges. Organizational learning tech-
niques remain a valid method for developing workers who can cope
with the dynamic changes that occur in virtual team organizations.
Socialization Dynamism
Socialization challenges the virtual team members’ abilities to
understand the meaning of words and requires critical reflection
174 INFORMATION TECHNOLOGY
of its constituents. ROD requires that virtual teams be agile and,
especially, that they be responsive to the emotions of others in the
community. This may require individuals to understand another
member’ s maturity. Thus, virtual team members need to be able
to understand why another member is behaving as he or she is or
reacting in a dualistic manner. Assessment in a virtual collabora-
tion becomes a necessity, especially given the unpredictability of
technology-based projects.
In Table 5.1, I showed how tacit knowledge is mapped to ROD.
Table 7.3 further extends this mapping to include virtual teams.
The requirements support research findings that knowledge man-
agement in a virtual context has significant factors that must be
addressed to improve its success. These factors include management
commitment, resource availability, modification of work practices,
marketing of the initiative, training, and facilitation of cultural dif-
ferences (Peddibhotla & Subramani, 2008).
The following are some action steps that organizations need to take
to address these factors:
1. The executive team needs to advocate the commitment and
support for virtual teams. The chief information officer (CIO)
and his or her counterparts need to provide teams with the
“ sponsorship” that the organization will need to endure set-
backs until the virtual organization becomes fully integrated
into the learning organization. This commitment can be
accomplished via multiple actions, including, but not limited
to, a kickoff meeting with staff, status reports to virtual teams
on successes and setbacks, e-mails and memos on new vir-
tual formations, and a general update on the effort, perhaps
on a quarterly basis. This approach allows the organization to
understand the evolution of the effort and know that virtual
teams are an important direction for the firm.
2. There should be training and practice sessions with collocated
groups that allow teams to voice their concerns and receive
direction on how best to proceed. Practice sessions should
focus on team member responsibilities and advocating their
ownership of responsibility. These sessions should cover les-
sons learned from actual experiences, so that groups can learn
175vIrtuAl teAMs And outsourCInG
Ta
bl
e
7.
3
Ta
ci
t K
no
wl
ed
ge
a
nd
V
irt
ua
l T
ea
m
s
TA
CI
T
KN
OW
LE
DG
E
ST
RA
TE
GI
C
IN
TE
GR
AT
IO
N
ST
RA
TE
GI
C
IN
TE
GR
AT
IO
N
VI
RT
UA
L
CU
LT
UR
AL
A
SS
IM
IL
AT
IO
N
CU
LT
UR
AL
A
SS
IM
IL
AT
IO
N
VI
RT
UA
L
Cu
ltu
ra
l a
nd
s
oc
ia
l
hi
st
or
y
Ho
w
th
e
IT
d
ep
ar
tm
en
t a
nd
o
th
er
de
pa
rtm
en
ts
tr
an
sl
at
e
em
er
gi
ng
te
ch
no
lo
gi
es
in
to
th
ei
r e
xis
tin
g
pr
oc
es
se
s
an
d
or
ga
ni
za
tio
n.
Ho
w
ca
n
vi
rtu
al
a
nd
n
on
vi
rtu
al
de
pa
rtm
en
ts
tr
an
sl
at
e
em
er
gi
ng
te
ch
no
lo
gi
es
in
to
th
ei
r p
ro
je
ct
s
ac
ro
ss
m
ul
tip
le
lo
ca
tio
ns
a
nd
cu
ltu
re
s?
Pr
ob
le
m
-s
ol
vi
ng
m
od
es
In
di
vi
du
al
re
fle
ct
iv
e
pr
ac
tic
es
th
at
a
ss
is
t i
n
de
te
rm
in
in
g
ho
w
sp
ec
ifi
c
te
ch
no
lo
gi
es
c
an
b
e
us
ef
ul
a
nd
h
ow
th
ey
c
an
b
e
ap
pl
ie
d;
u
til
iza
tio
n
of
ta
ci
t
kn
ow
le
dg
e
to
e
va
lu
at
e
pr
ob
ab
ili
tie
s
fo
r s
uc
ce
ss
.
In
di
vi
du
al
re
fle
ct
iv
e
pr
ac
tic
es
an
d
in
te
rc
ul
tu
ra
l
co
m
m
un
ic
at
io
ns
n
ee
de
d
to
de
te
rm
in
e
ho
w
ta
ci
t k
no
wl
ed
ge
sh
ou
ld
b
e
ap
pl
ie
d
to
s
pe
ci
fic
gr
ou
p
an
d
pr
oj
ec
t n
ee
ds
.
Te
ch
no
lo
gy
o
pp
or
tu
ni
tie
s
m
ay
re
qu
ire
o
rg
an
iza
tio
na
l a
nd
st
ru
ct
ur
al
c
ha
ng
es
to
tr
an
sf
er
ta
ci
t k
no
wl
ed
ge
to
e
xp
lic
it
kn
ow
le
dg
e.
Te
ch
no
lo
gi
ca
l o
pp
or
tu
ni
tie
s
m
ay
re
qu
ire
c
on
fig
ur
at
io
n
of
v
irt
ua
l
co
m
m
un
iti
es
o
f p
ra
ct
ic
e
an
d
ex
pl
ic
it
kn
ow
le
dg
e.
Or
ie
nt
at
io
n
to
ri
sk
s
an
d
un
ce
rta
in
tie
s
Te
ch
no
lo
gy
o
ffe
rs
m
an
y r
is
ks
a
nd
un
ce
rta
in
tie
s.
A
ll
ne
w
te
ch
no
lo
gi
es
m
ay
n
ot
b
e
va
lid
fo
r t
he
o
rg
an
iza
tio
n.
Ta
ci
t
kn
ow
le
dg
e
is
a
v
al
ua
bl
e
co
m
po
ne
nt
to
fu
lly
u
nd
er
st
an
d
re
al
iti
es
, r
is
ks
, a
nd
un
ce
rta
in
tie
s.
Te
ch
no
lo
gy
ri
sk
s
an
d
un
ce
rta
in
tie
s
ne
ed
to
b
e
as
se
ss
ed
b
y m
ul
tip
le
v
irt
ua
l
an
d
ph
ys
ic
al
te
am
s
to
de
te
rm
in
e
ho
w
te
ch
no
lo
gi
es
wi
ll
op
er
at
e
ac
ro
ss
m
ul
tip
le
lo
ca
tio
ns
a
nd
c
ul
tu
re
s.
(C
on
tin
ue
d)
176 INFORMATION TECHNOLOGY
Ta
bl
e
7.
3
(C
on
tin
ue
d)
Ta
ci
t K
no
wl
ed
ge
a
nd
V
irt
ua
l T
ea
m
s
TA
CI
T
KN
OW
LE
DG
E
ST
RA
TE
GI
C
IN
TE
GR
AT
IO
N
ST
RA
TE
GI
C
IN
TE
GR
AT
IO
N
VI
RT
UA
L
CU
LT
UR
AL
A
SS
IM
IL
AT
IO
N
CU
LT
UR
AL
A
SS
IM
IL
AT
IO
N
VI
RT
UA
L
W
or
ld
vi
ew
s
Te
ch
no
lo
gy
h
as
g
lo
ba
l e
ffe
ct
s
an
d
ch
an
ge
s
m
ar
ke
t
bo
un
da
rie
s,
th
at
c
ro
ss
bu
si
ne
ss
c
ul
tu
re
s;
it
re
qu
ire
s
ta
ci
t k
no
wl
ed
ge
to
u
nd
er
st
an
d
ex
is
tin
g
di
sp
os
iti
on
s
on
h
ow
ot
he
rs
w
or
k
to
ge
th
er
. R
ev
ie
ws
ho
w
te
ch
no
lo
gy
a
ffe
ct
s
th
e
dy
na
m
ic
s
of
o
pe
ra
tio
ns
.
M
ar
ke
t b
ou
nd
ar
ie
s
ar
e
m
or
e
dy
na
m
ic
a
cr
os
s
vi
rtu
al
te
am
s
th
at
o
pe
ra
te
to
s
ol
ve
c
ro
ss
–
cu
ltu
ra
l a
nd
b
us
in
es
s
pr
ob
le
m
s.
W
or
ld
vi
ew
s
ar
e
m
or
e
th
e
no
rm
th
an
th
e
ex
ce
pt
io
n.
Or
ga
ni
zin
g
pr
in
ci
pl
es
Ho
w
wi
ll
ne
w
te
ch
no
lo
gi
es
ac
tu
al
ly
be
in
te
gr
at
ed
?
W
ha
t
ar
e
th
e
or
ga
ni
za
tio
na
l
ch
al
le
ng
es
to
“
ro
lli
ng
o
ut
”
pr
od
uc
ts
, a
nd
to
im
pl
em
en
ta
tio
n
tim
el
in
es
?
W
ha
t p
os
iti
on
s
ar
e
ne
ed
ed
, a
nd
wh
o
in
th
e
or
ga
ni
za
tio
n
m
ig
ht
be
b
es
t q
ua
lifi
ed
to
fi
ll
ne
w
re
sp
on
si
bi
lit
ie
s?
Id
en
tif
y
lim
ita
tio
ns
o
f t
he
o
rg
an
iza
tio
n;
th
at
is
, t
ac
it
kn
ow
le
dg
e
ve
rs
us
ex
pl
ic
it
kn
ow
le
dg
e
re
al
iti
es
.
W
ha
t a
re
th
e
dy
na
m
ic
n
ee
ds
o
f t
he
vi
rtu
al
te
am
, t
o
ha
nd
le
n
ew
te
ch
no
lo
gi
es
o
n
pr
oj
ec
ts
?
W
ha
t
ar
e
th
e
ne
w
ro
le
s
an
d
re
sp
on
si
bi
lit
ie
s
of
v
irt
ua
l t
ea
m
m
em
be
rs
?
De
te
rm
in
e
wh
at
ta
ci
t
an
d
ex
pl
ic
it
kn
ow
le
dg
e
wi
ll
be
us
ed
to
m
ak
e
de
ci
si
on
s.
Ho
riz
on
s
of
e
xp
ec
ta
tio
n
In
di
vi
du
al
li
m
ita
tio
ns
in
th
e
ta
ci
t
do
m
ai
n
th
at
m
ay
h
in
de
r o
r
su
pp
or
t w
he
th
er
a
te
ch
no
lo
gy
ca
n
be
s
tra
te
gi
ca
lly
in
te
gr
at
ed
in
to
th
e
or
ga
ni
za
tio
n.
In
di
vi
du
al
s
wi
th
in
th
e
vi
rtu
al
co
m
m
un
ity
n
ee
d
to
u
nd
er
st
an
d
th
e
lim
ita
tio
ns
o
n
st
ra
te
gi
c
us
es
o
f t
ec
hn
ol
og
y .
Th
is
m
ay
va
ry
a
cr
os
s
cu
ltu
re
s.
177vIrtuAl teAMs And outsourCInG
from others. Training should set the goals and establish the
criteria for how virtual teams interact in the firm. This should
include the application software and repositories that are in
place and the procedures for keeping information and knowl-
edge current.
3. External reminders should be practiced so that virtual teams
do not become lax and develop bad habits since no one is
monitoring or measuring success. Providing documented
processes, perhaps a balanced scorecard or International
Organization for Standardization (ISO) 9000-type proce-
dures and measurements, is a good practice for monitoring
compliance.
Dealing with Multiple Locations and Outsourcing
Virtual organizations are often a given in outsourcing environments,
especially those that are offshore. Offshore outsourcing also means
that communications originate in multiple locations. The first step in
dealing with multiple locations is finding ways to deal with different
time zones. Project management can become more complicated when
team meetings occur at obscure times for certain members of the
community. Dealing with unanticipated problems can be more chal-
lenging when assembling the entire team may not be feasible because
of time differences. The second challenge in running organizations
in multiple locations is culture. Differing cultural norms can espe-
cially cause problems during off-hour virtual sessions. For example,
European work culture does not often support having meetings out-
side work hours. In some countries, work hours may be regulated by
the government or powerful unions.
A further complication in outsourcing is that the virtual team
members may be employed by different companies. For instance,
part of the community may include a vendor who has assigned staff
resources to the effort. Thus, these outsourced team members belong
to the community of the project yet also work for another organiza-
tion. The relationship between an outside consultant and the internal
team is not straightforward and varies among projects. For example,
some outsourced technical resources may be permanently assigned to
the project, so while they actually work for another firm, they behave
178 INFORMATION TECHNOLOGY
and take daily direction as if they were an employee of the focal busi-
ness. Yet, in other relationships, outsourced resources work closely
under the auspices of the outsourced “ project manager,” who acts
as a buffer between the firm and the vendor. Such COP formations
vary. Still other outsourcing arrangements involve team members the
firm does not actually know unless outsourced staff is called in to
solve a problem. This situation exists when organizations outsource
complete systems, so that the expectation is based more on the results
than on the interaction. Notwithstanding the arrangement or level
of integration, a COP must exist, and its behavior in all three of
these examples varies in participation, but all are driven in a virtual
relationship more by dynamic business events than by preplanned
activities.
If we look closely at COP approaches to operations, it is neces-
sary to create an extension of dynamism in a virtual team commu-
nity. The extension reflects the reliance on dynamic transactions,
which creates temporary team formations based on demographic
similarity needs. This means that virtual teams will often be formed
based on specific interests of people within the same departments.
Table 7.4 shows the expansion of dynamism in a virtual setting
of COPs.
Thus, the advent of modern-day IT outsourcing has complicated
the way COPs function. IT outsourcing has simultaneously brought
attention to the importance of COP and knowledge management
in general. It also further supports the reality of technology dyna-
mism as more of a norm in human communication in the twenty-
first century.
Revisiting Social Discourse
In Chapter 4, I covered the importance of social discourse and the use
of language as a distinct component of how technology changes COP.
That section introduced three components that linked talk and action,
according to the schema of Grant et al. (1998): Identity, skills and
emotion. Figure 7.2 shows this relationship again. The expansion of
virtual team communications further emphasizes the importance of
discourse and the need to rethink how these three components relate
to each other in a virtual context.
179vIrtuAl teAMs And outsourCInG
Identity
I spoke about the “ cultures of practice” due to expansion of contacts
from technology capacities. This certainly holds true with virtual
teams. However, identities can be transactional— in ways such that
an individual may be a member of multiple COP environments and
have different identities in each. This fact emphasizes the multitask-
ing aspect of the linear development modules discussed throughout
this book. Ultimately, social discourse will dynamically change based
on the COP to which an individual belongs, and that individual needs
to be able to “ inventory” these multiple roles and responsibilities.
Such roles and responsibilities themselves will transform, due to the
dynamic nature of technology-driven projects. Individuals will thus
have multiple identities and must be able to manage those identities
across different COPs and in different contexts within those COPs.
Table 7.4 COP Virtual Dynamism
COP PHYSICAL SOCIAL SETTINGS COP VIRTUAL DYNAMISMS
There is shared pursuit of interest
accomplished through group meetings.
Interest in discussion is based more on dynamic
transactions and remote needs to satisfy specific
personal needs.
Creation of the “ community” is typically
established within the same, or similar,
departments.
The notion of permanency is deemphasized.
Specific objectives based on the needs of the
group will establish the community.
Demographic similarity is a strong
contributor to selection of community
members.
Demographic similarity has little to do with
community selection. Selection is based more on
subject-matter expertise.
Situated learning is often accomplished by
assisting members to help develop others.
Learning occurs within a framework of
social participation.
Situated learning to help others has less focus. It
may not be seen as the purpose or responsibility
of virtual team members. Social participation has
more concrete perspective.
Community needs to assess technology
dynamism using ROD in more physical
environments requiring a formal
infrastructure.
Community is less identifiable from a physical
perspective. ROD must be accomplished by
members who have special interests at the
subject level as opposed to the group level.
COP works well with cultural assimilation
of formal work groups where participants
are clearly identified.
Cultural assimilation in virtual settings is more
transaction-based. Assimilation can be a limited
reality during the time of the transaction to
ensure success of outcomes.
COP can be used for realignment of work
departments based on similar needs.
COP in a virtual environment creates temporary
realignments, based on similar needs during the
process.
COP supports continual learning and
dealing with unplanned action.
COPs are continually reconfigured, and do not have
permanency of group size or interest.
180 INFORMATION TECHNOLOGY
This requires individual maturities that must be able to cope with the
“ other” and understand the relativistic nature of multiple cultures and
the way discourse transforms into action.
Skills
I mentioned the importance of persuasion as a skill to transform talk
into action. Having the ability to persuade others across virtual teams
is critical. Often, skills are misrepresented as technical abilities that
give people a right of passage. Across multiple cultures, individuals
in teams must be able to recognize norms and understand how to
communicate with others to get tangible results on their projects. It is
difficult to make such determinations about individuals that one has
never met face to face. Furthermore, virtual meetings may not pro-
vide the necessary background required to properly understand a per-
son’ s skill sets, both “ hard” and “ soft.” The soft skills analysis is more
important as the individual’ s technical credentials become assumed.
We see such assumptions when individuals transition into manage-
ment positions. Ascertaining technical knowledge at the staff level is
easier— almost like an inventory analysis of technical requirements.
Conversational
activity
Skills
Identity
Emotions
Action
Conversational
content
Figure 7.2 Grant’ s schema of the relationship between talk and action.
181vIrtuAl teAMs And outsourCInG
However, assessing an individual’ s soft skills is much more challeng-
ing. Virtual teams will need to create more complex and broadened
inventories of their team’ s skill sets, as well as establish better criteria
on how to measure soft skills. Soft skills will require individuals to
have better “ multicultural” abilities, so that team members can be
better equipped to deal with multinational and cross-cultural issues.
Emotion
Like persuasion, emotion involves an individual’ s ability to motivate
others and to create positive energy. Many of those who successfully
use emotion are more likely to have done so in a physical context than
a virtual one. Transferring positive emotion in a virtual world can
be analogous to what organizations experienced in the e-commerce
world, in which organizations needed to rebrand themselves across
the Web in such a way that their image was reflected virtually to
their customers. Marketing had to be accomplished without exposure
to the buyer during purchase decisions. Virtual COPs are similar:
Representation must be what the individual takes away, without see-
ing the results physically. This certainly offers a new dimension for
managing teams. This means that the development requirements for
virtual members must include advanced abstract thinking so that the
individual can better forecast virtual team reactions to what will be
said, as opposed to reacting while the conversation is being conducted
or thinking about what to do after virtual meetings.
In Chapter 4, I presented Marshak’ s (1998) work on types of
talk that lead to action: tool-talk, frame-talk, and mythopoetic-talk.
Virtual teams require modification to the sequence of talk; that is,
the use of talk is altered. Let us first look at Figure 7.3, represent-
ing Marshak’ s model. To be effective, virtual teams must follow this
sequence from the outside inward. That is, the virtual team must focus
on mythopoetic-talk in the center as opposed to an outer ring. This
means that ideogenic issues must precede interpretation in a virtual
world. Thus, tool-talk, which in the physical world lies at the center of
types of tools, is now moved to the outside rectangle. In other words,
instrumental actions lag those of ideology and interpretation. This is
restructured in Figure 7.4.
182 INFORMATION TECHNOLOGY
Mythopoetic-talk is at the foundation of grounding ideas in a vir-
tual COP. It would only make sense that a COP-driven talk requires
ideogenic behavior before migrating to instrumental outcomes.
Remember that ideogenic talk allows for concepts of intuition and
ideas for concrete application especially relevant among multiple cul-
tures and societies. So, we again see that virtual teams require changes
in the sequence of how learning occurs. This change in sequence
places more emphasis on the need for an individual to be more devel-
opmentally mature— with respect to thinking, handling differences,
and thinking abstractly. This new “ abstract individual” must be able
to reflect before action and reflect in action to be functionally compe-
tent in virtual team participation.
Because ROD is relevant, it is important to determine how virtual
teams affect the ROD maturity arc first presented in Figure 4.10 and
redisplayed in Figure 7.5.
Mythopoetic-talk: Ideogenic
Frame-talk: Interpretive
Tool-talk: Instrumental
Figure 7.3 Marshak’ s types of talk.
Mythopoetic-talk: Ideogenic
Frame-talk: Interpretive
Tool-talk: Instrumental
Figure 7.4 Virtual team depiction of Marshak’ s types of talk.
183vIrtuAl teAMs And outsourCInG
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Fi
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7
.5
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184 INFORMATION TECHNOLOGY
C
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e d
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C
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e a
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185vIrtuAl teAMs And outsourCInG
Figure 7.6 represents the virtual team extension to the ROD arc.
The changes to the cells are shown in italics. Note that there are no
changes to operational knowledge because this stage focuses solely
on self-knowledge learned from authoritative sources. However, as
the individual matures, there is greater need to deal with uncer-
tainty. This includes the uncertainty that conditions in a COP may
be temporary, and thus knowledge may need to vary from meeting to
meeting. Furthermore, while operational realities may be more trans-
actional, it does not necessarily mean that adopted changes are not
permanent. Most important is the reality that permanence in general
may no longer be a characteristic of how the organization operates;
this further emphasizes ROD as a way of life. As a result of this
extreme complexity in operations, there is an accelerated requirement
for executives to become involved earlier in the development process.
Specifically, by stage two (department/unit view of the other), execu-
tives must be engaged in virtual team management considerations.
Ultimately, the virtual team ROD arc demonstrates that vir-
tual teams are more complex and therefore need members who are
more mature to ensure the success of outsourcing and other virtual
constructs. It also explains why virtual teams have struggled, likely
because their members are not ready for the complex participation
necessary for adequate outcomes.
We must also remember that maturity growth is likely not parallel
in its linear progression. This was previously shown in Figure 4.12.
This arc demonstrates the challenge managers face in gauging
the readiness of their staff to cope with virtual team engagement.
On the other hand, the model also provides an effective measure-
ment schema that can be used to determine where members should
be deployed and their required roles and responsibilities. Finally, the
model allows management to prepare staff for the training and devel-
opment they need as part of the organizational learning approach to
dealing with ROD.
http://taylorandfrancis.com
187
8
syneRgisTiC union of
iT anD oRganizaTional
leaRning
Introduction
This chapter presents case studies that demonstrate how information
technology (IT) and organizational learning occur in the real corpo-
rate world. It examines the actual processes of how technological and
organizational learning can be implemented in an organization and
what management perspectives can support its growth so that forms
of responsive organizational dynamism can be formed and developed.
I will demonstrate these important synergies through three case stud-
ies that will show how the components of responsive organizational
dynamism, strategic integration and cultural assimilation, actually
operate in practice.
Siemens AG
The first case study offers a perspective from the chief informa-
tion officer (CIO). The CIO of Siemens of the Americas at the
time of this study was Dana Deasy, and his role was to introduce
and expand the use of e-business across 20 discrete businesses. The
Siemens Corporation worldwide network was composed of over 150
diverse sets of businesses, including transportation, healthcare, and
telecommunications. Deasy’ s mission was to create a common road
map across different businesses and cultures. What makes this case
so distinct from others is that each business is highly decentralized
under the umbrella of the Siemens Corporation. Furthermore, each
company has its own mission; the companies have never been asked
to come together and discuss common issues with regard to technol-
ogy. That is, each business focused on itself as opposed to the entire
188 InForMAtIon teChnoloGY
organization. Deasy had to deal with two sectors of scope and hence,
two levels of learning: the Americas as a region and the global firm
internationally.
The challenge was to introduce a new e-business strategy from the
top-down in each business in the Americas and then to integrate it
with the global firm. Ultimately, the mission was to review what each
business was doing in e-business and to determine whether there was
an opportunity to consolidate efforts into a common direction.
IT was, for the most part, viewed as a back-office operation—
handling services of the company as a support function as opposed to
thinking about ways to drive business strategy. In terms of IT report-
ing, most CIOs reported directly to the chief financial officer (CFO).
While some IT executives view this as a disadvantage because CFOs
are typically too focused on financial issues, Deasy felt that a focus on
cost containment was fine as long as the CIO had access to the chief
executive officer (CEO) and others who ultimately drove business
strategy. So, the real challenge was to ensure that CIOs had access to
the various strategic boards that existed at Siemens.
What are the challenges in transforming an organization the size
of Siemens? The most important issue was the need to educate CIOs
on the importance of their role with respect to the business as opposed
to the technology. As Deasy stated in an interview, “ Business must
come first and we need to remind our CIOs that all technology issues
must refer back to the benefits it brings to the business.” The question
then is how to implement this kind of learning.
Perhaps the best way to understand how Siemens approached this
dilemma is to understand Deasy’ s role as a corporate CIO. The reality
is that there was no alternative but to create his position. What drove
Siemens to this realization was fear that they needed someone to drive
e-business, according to Deasy—fear of losing competitive edge in
this area, fear that they were behind the competition and that smaller
firms would begin to obtain more market share. Indeed, the growth
of e-business occurred during the dot-com era, and there were huge
pressures to respond to new business opportunities brought about by
emerging technologies, specifically the Internet. It was, therefore, a
lack of an internal capacity, such as responsive organizational dyna-
mism, that stimulated the need for senior management to get involved
and provide a catalyst for change.
189sYnerGIstIC unIon oF It
The first aspect of Siemens’ s approach can be correlated to the
strategic integration component of responsive organizational dyna-
mism. We see that Siemens was concerned about whether technology
was properly being integrated in strategic discussions. It established
the Deasy role as a catalyst to begin determining the way technol-
ogy needed to be incorporated within the strategic dimension of the
business. This process cannot occur without executive assistance, so
evolutionary learning must first be initiated by senior management.
Unfortunately, Deasy realized early on that he needed a central pro-
cess to allow over 25 CIOs in the Americas to interact regularly. This
was important to understand the collective needs of the community
and to pave the way for the joining of technology and strategic inte-
gration from a more global perspective. Deasy established an infra-
structure to support open discourse by forming CIO forums, similar
to communities of practice, in which CIOs came together to discuss
common challenges, share strategies, and have workshops on the
ways technology could help the business. Most important at these
forums was the goal of consolidating their ideas and their common
challenges.
There are numerous discussions regarding the common problems
that organizations face regarding IT expenditures, specifically the
approach to its valuation and return on investment (ROI). While
there are a number of paper-related formulas that financial executives
use (e.g., percentage of gross revenues within an industry), Deasy uti-
lized learning theories, specifically, communities of practice, to foster
more thinking and learning about what was valuable to Siemens, as
opposed to using formulas that might not address important indi-
rect benefits from technology. In effect, Deasy promoted learning
among a relatively small but important group of CIOs who needed
to better understand the importance of strategic innovation and the
value it could bring to the overall business mission. Furthermore,
these forums provided a place where CIOs could develop their own
community—a community that allowed its members to openly par-
ticipate in strategic discourse that could help transform the organiza-
tion. It was also a place to understand the tacit knowledge of the CIO
organization and to use the knowledge of the CIOs to summarize
common practices and share them among the other members of the
community.
190 InForMAtIon teChnoloGY
Most of the CIOs at Siemens found it challenging to understand
how their jobs were to be integrated into business strategy. Indeed,
this is not a surprise. In Chapter 1, I discuss the feedback from my
research on CEO evaluation of technology; I found that there were few
IT executives who were actually involved in business strategy. Thus,
the organization sought to create an advocate in terms of a central-
ized corporate headquarter that could provide assistance as opposed
to forcing compliance. That is, it sought a structure with which to
foster organizational learning concepts and develop an approach to
create a more collective effort that would result in global direction for
IT strategic integration.
To establish credibility among the CIO community, Deasy needed
to ensure that the CIOs of each individual company were able to inter-
act with board-level executives. In the case of Siemens, this board is
called the president’ s council. The president’ s council has regularly held
meetings in which each president attends and receives presentations on
ideas about the regional businesses. Furthermore, there are quarterly
CFO meetings as well, where CIOs can participate in understand-
ing the financial implications of their IT investments. At the same
time, these meetings provided the very exposure to the executive team
that CIOs needed. Finally, Deasy established a CIO advisory board
comprised of CIOs who actually vote on the common strategic issues
and thus manage the overall direction of technology at Siemens. Each
of these groups established different types of communities of practice
that focused on a specific aspect of technology. The groups were geared
to create better discourse and working relationships among these com-
munities to, ultimately, improve Siemens’ s competitive advantage.
The three communities of practice at work in the Siemens model—
executive, finance, and technology—suggest that having only one gen-
eral community of practice to address technology issues may be too
limiting. Thus, theories related to communities of practice may need
to be expanded to create discourse among multiple communities. This
might be somewhat unique for IT, not in that there is a need for mul-
tiple communities, but that the same individuals must have an identity
in each community. This shows the complexity of the CIO role today
in the ability to articulate technology to different types and tiers of
management. Figure 8.1 shows the interrelationships among the CIO
communities of practice at Siemens.
191sYnerGIstIC unIon oF It
Another way to represent these communities of practice is to view
them as part of a process composed of three operating levels. Each level
represents a different strategic role of management that is responsible
for a unique component of discourse and on the authorization for uses
of technology. Therefore, if the three different communities of prac-
tice are viewed strategically, each component could be constructed as
a process leading to overall organizational cooperation, learning, and
strategic integration as follows:
Tier 1: CIO Advisory Board : This community discusses issues of
technology standards, operations, communications, and ini-
tiatives that reflect technology-specific areas. Such issues are
seen as CIO specific and only need this community’ s agree-
ment and justification. However, issues or initiatives that
require financial approval, such as those that may not yet be
budgeted or approved, need to be discussed with group CFOs.
Proposals to executive management—that is, the President’ s
Council—also need prior approval from the CFOs.
Communities of practice consist of
presidents from each company.
Regular meetings are designed for
discussion over common issues on
business strategy. Corporate CIOs
can use this forum to present new
proposals on emerging technologies
and seek approval for their plans
and vision.
President’s council
Corporate
CIO of the
Americas
CFO quarterly
meetings
CIO advisory
board
Communities of practice consist of CIOs
from each company. Forum is designed to
openly discuss common challenges, agree
on technology initiatives, foster a more
united community and build on shared
knowledge across businesses.
Communities of practice consist of CFOs
from each company. Discussions
relate to how strategies can be
implemented with respect to ROI.
CIOs need to understand IT costs, both
direct and indirect.
Figure 8.1 Inter-relationships among CIO communities of practice at Siemens.
192 InForMAtIon teChnoloGY
Tier 2: CFO Quarterly : CFOs discuss new emerging technolo-
gies and ascertain their related costs and benefits (ROI).
Those technologies that are already budgeted can be approved
based on agreed ROI scenarios. Proposals for new technology
projects are approved in terms of their financial viability and
are prepared for further discussion at the President’ s Council.
Tier 3: President’ s Council : Proposals for new technology projects
and initiatives are discussed with a focus on their strategic
implications on the business and their expected outcome.
Deasy realized that he needed to create a common connection
among these three communities. While he depended on the initia-
tives of others, he coordinated where these CIO initiatives needed to
be presented, based on their area of responsibility.
Graphically, this can be shown as a linear progression of commu-
nity-based discussions and approvals, as in Figure 8.2.
The common thread to all three tiers is the corporate CIO. Deasy
was active in each community; however, his specific activities within
each community of practice were different. CIOs needed to estab-
lish peer relationships with other CIOs share their tacit knowledge
and contribute ideas that could be useful to other Siemens companies.
Thus, CIOs needed to transform their personal views of technology
and expand them to a group-level perspective. Their challenge was
to learn how to share concepts and how to understand new ones that
emanated at the CIO advisory board level. From this perspective,
they could create the link between the local strategic issues and those
discussed at the regional and global levels, as shown in Figure 8.3.
Using this infrastructure, Siemens’ s organizational learning in
technology, occurred at two levels of knowledge management. The
first is represented by Deasy’ s position, which effectively represents a
top-down structure to initiate the learning process. Second, are the
tiers of communities of practice when viewed hierarchically. This view
reflects a more bottom-up learning strategy, with technological oppor-
tunities initiated by a community of regional, company CIOs, each
representing the specific interests of their companies or specific lines
of business. This view can also be structured as an evolutionary cycle
in which top-down management is used to initiate organizational
learning from the bottom-up, the bottom, in this case, represented by
193sYnerGIstIC unIon oF It
local operating company CIOs. This means that the CIO is seen rela-
tively, in this case, as the lower of the senior management population.
Figure 8.4 depicts the CIO as this “ senior lower level.”
From this frame of reference, the CIO represents the bottom-up
approach to the support of organizational learning by addressing the
technology dilemma created by technological dynamism— specifically,
in this case, e-business strategy.
The role of IT in marketing and e-business was another important
factor in Siemens’ s model of organizational learning. The technology
strategy at Siemens was consistent with the overall objectives of the
organization: to create a shared environment that complements each
Tier 3
Tier 2
Corporate CIO
oversig
ht and management
Tier 1
CFO
quarterly
CIO advisory
board
President’s
council
Outcomes
Budgeted but not approved
implementations. Projects are
approved within budget
constraints
Proposals reviewed based on
strategy and corporate
direction, and approved for
implementation, including
financial commitment
Outcomes
Outcomes
Local or pre-budgeted
technology specific
implementation issues
Requires financial
approval
Requires strategic
approval
Figure 8.2 Siemens’ community-based links.
194 InForMAtIon teChnoloGY
Dana Deasy
Strategic senior
Management level
President and
executive
management
Chief financial
officer
Local CIO
Financial senior
Management level
Senior lower level
Figure 8.4 CIO as the “ senior lower level.”
Company president
CIO advisory board
Company CFO
Technology issues related to
sharing across businesses or
issues for discussion that
require consesus among CIO
population
Company-specific strategic
issues regarding how
technology affects specific
corporate goals and
objectives
Financial implications and
direct reporting at the
company level
Figure 8.3 Siemens’ local to global links.
195sYnerGIstIC unIon oF It
business by creating the opportunity to utilize resources. This shared
environment became an opportunity for IT to lead the process and
become the main catalyst for change. I discuss this kind of support in
Chapter 5, in which I note that workers see technology as an accept-
able agent of change. Essentially, the CIOs were challenged with the
responsibility of rebranding their assets into clusters based on their
generic business areas, such as hospitals, medical interests, and com-
munications. The essence of this strategic driver was to use e-business
strategy to provide multiple offerings to the same customer base.
As with the Ravell case discussed in Chapter 1, the Siemens case
represents an organization that was attempting to identify the driver
component of IT. To create the driver component, it became necessary
for executive management to establish a corporate position (embodied
by Deasy) to lay out a plan for transformation, through learning and
through the use of many of the organizational learning theories pre-
sented in Chapter 4.
The Siemens challenge, then, was to transform its CIOs from being
back-office professionals to proactive technologists focused primarily
on learning to drive business strategy. That is not to say that back-office
issues became less important; they became, instead, responsibilities left
to the internal organizations of the local CIOs. However, back-office
issues can often become strategic problems, such as with the use of
e-mail. This is an example of a driver situation even though it still per-
tains to a support concern. That is, back-office technologies can indeed
be drivers, especially when new or emerging technologies are available.
As with any transition, the transformation of the CIO role was not
accomplished without difficulty. The ultimate message from executive
management to the CIO community was that it should fuse the vital
goals of the business with its technology initiatives. Siemens asked its
CIOs to think of new ways that technology could be used to drive
strategic innovations. It also required CIOs to change their behavior
by asking them to think more about business strategy.
The first decision that Deasy confronted was whether to change
the reporting structure of the CIO. Most CIOs at Siemens reported
directly to the CFO as opposed to the CEO. After careful thought,
Deasy felt that to whom the CIO reported was less important than
giving access and exposure to the President’ s Council meetings. It was
Deasy’ s perspective that only through exposure and experience could
196 InForMAtIon teChnoloGY
CIOs be able to transform from back-office managers to strategic
planners. As such, CIO training was necessary to prepare them for
participation in communities of practice. Eventually, Siemens recog-
nized this need and, as a result, sponsored programs, usually lasting
one week, in which CIOs would be introduced to new thinking and
learning by using individual-based reflective practices. Thus, we see
an evolutionary approach, similar to that of the responsive organiza-
tional dynamism arc, presented in Chapter 4; that is, one that uses
both individual and organizational learning techniques.
Deasy also understood the importance of his relationship and role
with each of the three communities of practice. With respect to the
CEOs of each company, Deasy certainly had the freedom to pick up
the phone and speak with them directly. However, this was rarely a
realistic option as Deasy knew early on that he needed the trust and
cooperation of the local CIO to be successful. The community with
CEOs was then broadened to include CIOs and other senior manag-
ers. This was another way in which Deasy facilitated the interaction
and exposure of his CIOs to the executives at Siemens.
Disagreement among the communities can and does occur. Deasy
believed in the “ pushing-back” approach. This means that, inevitably,
not everyone will agree to agree, and, at times, senior executives may
need to press on important strategic issues even though they are not
mutually in agreement with the community. However, while this type
of decision appears to be contrary to the process of learning embed-
ded in communities of practice learning, it can be a productive and
acceptable part of the process. Therefore, while a democratic process
of learning is supported and preferred, someone in the CIO posi-
tion ultimately may need to make a decision when a community is
deadlocked.
The most important component of executive decision making is
that trust exists within the community. In an organizational learning
infrastructure, it is vital that senior management share in the value
proposition of learning with members of the community. In this way,
members feel that they are involved, and are a part of decision mak-
ing as opposed to feeling that they are a part of a token effort that
allows some level of participation. As Deasy stated, “ I was not try-
ing to create a corporate bureaucracy, but rather always representing
myself as an ambassador for their interest, however, this does not
197sYnerGIstIC unIon oF It
guarantee that I will always agree with them.” Disagreements, when
managed properly, require patience, which can result in iterative dis-
cussions with members of the community before a consensus posi-
tion may be reached, if it is at all. Only after this iterative process is
exhausted does a senior overarching decision need to be made. Deasy
attributed his success to his experience in field operations, similar to
those of his constituents. As a prior business-line CIO, he understood
the dilemma that many members of the community were facing.
Interestingly, because of his background, Deasy was able to “ qual-
ify” as a true member of the CIO community of practice. This truth
establishes an important part of knowledge management and change
management—senior managers who attempt to create communities
of practice will be more effective when they share a similar back-
ground and history with the community that they hope to manage.
Furthermore, leaders of such communities must allow members to
act independently and not confuse that independence with autonomy.
Finally, managers of communities of practice are really champions
of their group and as such must ensure that the trust among mem-
bers remains strong. This suggests that CIO communities must first
undergo their own cultural assimilation to be prepared to integrate
with larger communities within the organization.
Another important part of Deasy’ s role was managing the technol-
ogy itself. This part of his job required strategic integration in that
his focus was more about uses of technology, as opposed to commu-
nity behavior or cultural assimilation. Another way of looking at this
issue is to consider the ways in which communities of practice actually
transform tacit knowledge and present it to senior management as
explicit knowledge. This explicit knowledge about uses of technology
must be presented in a strategic way and show the benefits for the
organization. The ways that technology can benefit a business often
reside within IT as tacit knowledge. Indeed, many senior manag-
ers often criticize IT managers for their inability to articulate what
they know and to describe it so that managers can understand what it
means to the business. Thus, IT managers need to practice transform-
ing their tacit knowledge about technology and presenting it effec-
tively, as it relates to business strategy.
Attempting to keep up with technology can be a daunting, if not
impossible, task. In some cases, Siemens allows outside consultants
198 InForMAtIon teChnoloGY
to provide help on specific applications if there is not enough
expertise within the organization. The biggest challenge, however,
is not necessarily in keeping up with new technologies but rather, in
testing technologies to determine exactly the benefit they have on
the business. To address this dilemma, Deasy established the con-
cept of “ revalidation.” Specifically, approved technology projects
are reviewed every 90 days to determine whether they are indeed
providing the planned outcomes, whether new outcomes need
to be established, or whether the technology is no longer useful.
The concept of revalidation can be associated with my discussion
in Chapter 3, which introduced the concept of “ driver” aspects of
technology. This required that IT be given the ability to invest and
experiment with technology to fully maximize the evaluation of
IT in strategic integration. This was particularly useful to Deasy,
who needed to transform the culture at Siemens to one that rec-
ognized that not all approved technologies succeed. In addition,
he needed to dramatically alter the application development life
cycle and reengineer the process of how technology was evaluated
by IT and senior management. This challenge was significant in
that it had to be accepted by over 25 autonomous presidents, who
were more focused on short and precise outcomes from technology
investments.
Deasy was able to address the challenges that many presidents
had in understanding IT jargon, specifically as it related to ben-
efits of using technology. He engaged in an initiative to communi-
cate with non-IT executives by using a process called storyboarding.
Storyboarding is the process of creating prototypes that allow users to
actually see examples of technology and how it will look and operate.
Storyboarding tells a story and can quickly educate executives without
being intimidating. Deasy’ s process of revaluation had its own unique
life cycle at Siemens:
1. Create excitement through animation. What would Siemens
be like if … ?
2. Evaluate the way the technology would be supported.
3. Recognize implementation considerations about how the
technology as a business driver is consistent with what the
organization is doing and experiencing.
199sYnerGIstIC unIon oF It
4. Technology is reviewed every 90 days by the CIO advisory
board after experimental use with customers and presented to
the president’ s council on an as-needed basis.
5. Establish responsive organizational dynamism with cultural
assimilation; that is, recognize the instability of technol-
ogy and that there are no guarantees to planned outcomes.
Instead, promote business units to understand the concept of
“ forever prototyping.”
Thus, Siemens was faced with the challenge of cultural assimi-
lation, which required dramatic changes in thinking and business
life cycles. This process resembles Bradley and Nolan’ s (1998) Sense
and Respond —the ongoing sensing of technology opportunities and
responding to them dynamically. This process disturbs traditional and
existing organizational value chains and therefore represents the need
for a cultural shift in thinking and doing. Deasy, using technology as
the change variable, began the process of reinventing the operation of
many traditional value chains.
Siemens provides us with an interesting case study for responsive
organizational dynamism because it had so many diverse companies
(in over 190 countries) and over 425,000 employees. As such, Siemens
represents an excellent structure to examine the importance of cul-
tural assimilation. Deasy, as a corporate CIO, had a counterpart in
Asia/Australia. Both corporate CIOs reported to a global CIO in
Germany, the home office of Siemens. There was also a topic-centered
CIO responsible for global security and application-specific planning
software. This position also reported directly to the global CIO. There
were regional and local CIOs who focused on specific geographical
areas and vertical lines of business and operating company CIOs. This
organization is shown in Figure 8.5.
Deasy’ s operation represents one portion (although the most
quickly changing and growing) of Siemens worldwide. Thus, the issue
of globalization is critical for technologies that are scalable beyond
regional operating domains. Standardization and evaluations of tech-
nology often need to be ascertained at the global level and as a result
introduce new complexities relating to cultural differences in business
methods and general thinking processes. Specifically, what works in
one country may not work the same way in another. Some of these
200 InForMAtIon teChnoloGY
matters can be legally based (e.g., licensing of software or assumptions
about whether a technology is legally justified). To a large extent, solv-
ing legal matters relating to technology is easier than cultural ones.
Cultural assimilation matters about technology typically occur
in global organizations with respect to acceptability of operational
norms from one country to another. This becomes a particularly dif-
ficult situation when international firms attempt to justify standards.
At Siemens, Deasy introduced three “ standards” of technology that
defined how it could be used across cultures, and communities of
practice:
1. Corporate services : These are technologies that are required to
be used by the business units. There are central service charges
for their use as well.
2. Mandatory services : Everyone must comply with using a par-
ticular type of application; that is, mandatory software based
on a specific type of application. For example, if you use a
Web browser, it must be Internet Explorer.
3. Optional : These are technologies related to a specific business
and used only within a local domain. There may be a preferred
solution, but IT is not required to use it.
This matrix of standards allows for a culture to utilize technologies
that are specific to its business needs, when justified. Standards at
Siemens are determined by a series of steering committees, starting
Siemens global CIO
(Germany)
Topic centered CIO
Regional CIOs Operating
company CIO
Operating
company CIORegional CIOs
Corporate CIO
Asia/Australia
Corporate CIO
Americas
(deasy)
Figure 8.5 Siemens’ CIO organization.
201sYnerGIstIC unIon oF It
at the regional level, that meet two to three times annually. Without
question, implementing standards across cultures is, as Deasy phrased
it, “ a constant wrestling match which might need to change by the
time a standard is actually reached.” This is why strategic integra-
tion is so important, given the reality that technology cannot always
be controlled or determined at senior levels. Organizations must be
able to dynamically integrate technology changes parallel to business
changes.
Deasy’ s longer-term mission was to provide a community of CIOs
who could combine the business and technology challenges. It was
his initial vision that the CIO of the future would be more involved
than before with marketing and value chain creation. He felt that
“ the CIO community needed to be detached from its technology-
specific issues or they would never be a credible business partner.”
It was his intent to establish organizational learning initiatives that
helped CIOs “ seize and succeed,” to essentially help senior manage-
ment by creating vision and excitement, by establishing best practices,
and by learning better ways to communicate through open discourse
in communities of practice.
Three years after his initial work, I reviewed the progress that
Deasy had made at Siemens. Interestingly, most of his initiatives
had been implemented and were maturing—except for the role of
e-business strategy. I discovered, after this period, that the orga-
nization thought that e-business was an IT responsibility. As such,
they expected that the CIOs had not been able to determine the
best business strategy. This was a mistake; the CIO could not estab-
lish strategy but rather needed to react to the strategies set forth
by senior management. This means that the CIO was not able to
really establish stand-alone strategies as drivers based on technology
alone. CIOs needed, as Deasy stated, “ to be a participant with the
business strategist and to replace this was inappropriate.” This raises
a number of questions:
1. Did this occur because CIOs at Siemens do not have the edu-
cation and skills to drive aspects of business strategy?
2. Did the change in economy and the downfall of the dot-coms
create a negative feeling toward technology as a business
driver?
202 InForMAtIon teChnoloGY
3. Are CEOs not cognizant enough about uses of technology,
and do they need better education and skills to better under-
stand the role of technology?
4. Is the number of communities of practice across the organi-
zation integrated enough so that IT can effectively commu-
nicate and form new cultures that can adapt to the changes
brought about by emerging technologies?
5. Is there too much impatience with the evolution of tech-
nology? Does its assimilation in an organization the size of
Siemens simply take too long to appreciate and realize the
returns from investments in technology?
I believe that all of these questions apply, to some extent, and are
part of the challenges that lie ahead at Siemens. The company has now
initiated a series of educational seminars designed to provide more
business training for CIOs, which further emphasizes the importance
of focusing on business strategy as opposed to just technology. It could
also mean the eventual establishment of a new “ breed” of CIOs who
are better educated in business strategy. However, it is inappropriate
for non-IT managers to expect that the CIOs will be able to handle
strategy by themselves; they must disconnect e-business as solely being
about technology. The results at Siemens only serve to strengthen the
concept that responsive organizational dynamism requires that cul-
tural assimilation occur within all the entities of a company.
Aftermath
Dana Deasy left Siemens a few years after this case study was com-
pleted. During that time, the executive team at Siemens realized that
the CIO alone could not provide business strategy or react quickly
enough to market needs. Rather, such strategy required the integra-
tion of all aspects of the organization, with the CIO only one part of
the team to determine strategic shifts that lead or use components of
technology. Thus, the executives realized that they needed to become
much better versed in technology so that they also could engage in
strategic conversations. This does not suggest that executives needed
technology training per se, but that they do need training that allows
them to comment intelligently on technology issues. What is the best
203sYnerGIstIC unIon oF It
way to accomplish this goal? The answer is through short seminars
that can provide executives with terminology and familiarize them
with the processes their decisions will affect. The case also raised the
question of whether a new wave of executives would inevitably be
required to move the organization forward to compete more effec-
tively. While these initiatives appear to make sense, they still need to
address the fundamental challenges posed by technology dynamism
and the need to develop an organization that is positioned to respond
(i.e., responsive organizational dynamism). We know from the results
of the Ravell case that executives cannot be excluded. However, the
case also showed that all levels of the organization need to be involved.
Therefore, the move to responsive organizational dynamism requires
a reinvention of the way individuals work, think, and operate across
multiple tiers of management and organizational business units. This
challenge will continue to be a difficult but achievable objective of
large multinational companies.
ICAP
This second case study focuses on a financial organization called ICAP,
a leading money and securities broker. When software development
exceeded 40% of IT activities, ICAP knew it was time to recognize
IT as more than just technical support. Stephen McDermott provided
the leadership, leaving his role as CEO of the Americas at ICAP to
become CEO of the Electronic Trading Community (ETC), a new
entity focused solely on software development. This IT community
needed to be integrated with a traditional business model that was
undergoing significant change due to emerging technologies, in this
specific case, the movement from voice to electronic trading systems.
This case study reflects many aspects of the operation of responsive
organizational dynamism. From the strategic integration perspec-
tive, ICAP needed to understand the ways electronic trading could
ultimately affect business strategy. For example, would it replace all
voice-related business interactions, specifically voice trading? Second,
what would be the effect on its culture, particularly with respect to the
way the business needed to be organizationally structured? This study
focuses on the role of the CEO as a pioneer in reexamining his own
biases, which favored an old-line business process, and for developing
204 InForMAtIon teChnoloGY
a realization to manage a major change in business strategy and
organizational philosophy. Indeed, as McDermott stated, “ It was the
challenge of operating at the top, yet learning from the bottom.” This
sentiment essentially reflects the reality of a management dilemma.
Could a CEO who, without question, had substantial knowledge of
securities trading, learn to lead a technology-driven operation, for
which he had little knowledge and experience?
To better understand the impact of technology on the business of
ICAP, it is important to have some background information. Since
1975, the use of technology at ICAP was limited to operations of
the back-office type. Brokers (the front-end or sales force of a trad-
ing business), communicated with customers via telephone. As such,
processing transactions was always limited to the time necessary
to manually disseminate prices and trading activity over the phone
to a securities trader. However, by 1997 a number of technological
advancements, particularly with the proliferation of Internet-based
communication and the increased bandwidth available, enabled bro-
kers and dealers to communicate bidirectionally. The result was that
every aspect of the trade process could now be streamlined, includ-
ing the ability for the trader to enter orders directly into the brokers’
trading systems. The technological advancements and the availability
of capital in the mid-1990s made it difficult to invest in computer
operations. Specifically, the barriers to investing in technology had
been high as developing proprietary trading systems and deploying a
private network were all costly. The market of available products was
scarce, filled with relatively tiny competitors with little more than a
concept, rather than an integrated product that could do what a com-
pany like ICAP needed, in order to maintain its competitive position.
The existing system, called the ICAP Trading Network application
was far from a trading system that would compete against the newer
emerging technologies. The goal was to develop a new trading sys-
tem that would establish an electronic link between the back-office
systems of ICAP and its clients. The system would need to be simple
to use as the traders were not necessarily technology literate. It would
need to be robust, include features that were specific to the markets,
and easily installed and distributed. In addition, as ICAP decided
to fund the entire project, it would have to be cost-effective and not
burden the other areas of the business. As competitive systems were
205sYnerGIstIC unIon oF It
already being introduced, the new system needed to be operational
within three to six months for ICAP to remain competitive.
McDermott recognized that designing a new product would require
that IT developers and business matter experts learn to work together.
As a result of this realization, a representative from the operation was
selected to see if a third-party developer could modify an existing
product. After exploring and evaluating responses, the search team
concluded that off-the-shelf solutions, prohibitive in cost, were not
available that would meet the critical timing needs of the business.
However, during the period when IT and the business users worked
together, these groups came to realize that the core components of
its own trading system could be modified and used to build the new
system. This realization resulted from discussions between IT and the
business users that promoted organizational learning. This process
resembles the situation in the Ravell study, in which I concluded that
specific events could accelerate organizational learning and actually
provide an opportunity to embed the process in the normal discourse
of an organization. I also concluded that such learning starts with
individual reflective practices, and understanding how both factions,
in this case, IT and the business community, can help each other in a
common cause. In the case of Ravell, it was an important relocation
of the business that promoted integration between IT and the busi-
ness community. At ICAP, the common cause was about maintaining
competitive advantage.
The project to develop the new electronic trading application was
approved in August 1999, and the ETC was formed. The new entity
included an IT staff and selected members from the business commu-
nity, who moved over to the new group. Thus, because of technologi-
cal dynamism, it was determined that the creation of a new product
established the need for a new business entity that would form its
own strategic integration and cultural assimilation. An initial test of
the new product took place in November, and it successfully executed
the first electronic trade via the Internet. In addition to their design
responsibility, ETC was responsible for marketing, installing, and
training clients on the use of the product. The product went live in
February 2000. Since its introduction, the ETC product has been
modified to accommodate 59 different fixed-income products, serving
more than 1,000 users worldwide in multiple languages.
206 InForMAtIon teChnoloGY
While the software launch was successful, McDermott’ s role was
a challenge, from coordinating the short- and long-term goals of
ETC with the traditional business models of ICAP to shifting from
management of a global financial enterprise to management of an IT
community. The ICAP case study examines the experiences and per-
ceptions one year after the launch of the new entity.
The first most daunting result, after a year of operations, was
the significant growth of technology uses in the business. Initially,
McDermott noted that electronic trading was about 40% of opera-
tions and that it had grown over 60%. He stated that ETC had
become, without question, the single most important component of
the ICAP international business focus. The growth of electronic trad-
ing created an accelerated need for transformation within ICAP and
its related businesses. This transformation essentially changed the
balance between voice or traditional trading and electronic trading.
McDermott found himself responsible for much of this transforma-
tion and was initially concerned whether he had the technical exper-
tise to manage it.
McDermott admitted that as a chief executive of the traditional
ICAP business, he was conservative and questioned the practicality
and value of many IT investments. He often turned down requests
for more funding and looked at technology as more of a supporter of
the business. As I explain in Chapter 3, IT as a supporter will always
be managed, based on efficiencies and cost controls. McDermott’ s
view was consistent with this position. In many ways, it was ironic
that he became the CEO of the electronic component of the business.
Like many CEOs, McDermott initially had the wrong impression of
the Internet. Originally looking at it as a “ big threat,” he eventually
realized from the experience that the Internet was just another way
of communicating with his clients and that its largest contribution
was that it could be done more cost-effectively, thus leading to higher
profits.
One of the more difficult challenges for McDermott was develop-
ing the mission for ETC. At the time of the launch of the new product,
this mission was unclear. With the assistance of IT and the business
community, the mission of ETC has been developing dynamically;
the business is first trying to protect itself from outside competi-
tion. Companies like IBM, Microsoft, and others, might attempt to
207sYnerGIstIC unIon oF It
invade the business market of ICAP. Thus, it is important that ETC
continues to produce a quality product and keep its competitive edge
over more limited competitors that are software-based organizations
only. The concept of a dynamic mission can be correlated to the fun-
damental principles of responsive organizational dynamism. In fact, it
seems rather obvious that organizations dealing with emerging tech-
nologies might need to modify their missions to parallel the acceler-
ated changes brought about by technological innovation. We certainly
see this case with ICAP, for which the market conditions became
volatile because of emerging electronic trading capacities. Why, then,
is it so difficult for organizations to realize that changing or modify-
ing their missions should not be considered that unusual? Perhaps the
approach of ICAP in starting a completely separate entity was correct.
However, it is interesting that this new organization was operating
without a consistent and concrete mission.
Another important concept that developed at ETC was that
technology was more of a commodity and that content (i.e., the dif-
ferent services offered to clientele) was more important. Indeed, as
McDermott often stated, “ I assume that the technology works, the
real issue is the way you intend to implement it; I want to see a com-
pany’ s business plan first.” Furthermore, ETC began to understand
that technology could be used to leverage ICAP businesses in areas
that they had never been able to consider before the advent of the
technology and the new product. McDermott knew that this was
a time, as Deasy often stated, to “ seize and succeed” the moment.
McDermott also realized that organizational learning practices were
critical for ideas to come from within the staff. He was careful not
to require staff to immediately present a formal new initiative, but
he allowed them to naturally develop a plan as the process became
mature. That is one of the reasons that ETC uses the word community
in its name. As he expressed it to me during a conversation:
Now that is not my mandate to grow into other areas of opportunity, my
initial responsibility is always to protect our businesses. However, I will
not let opportunities go by which can help the business grow, especially
things that we could never do as a voice broker. It has been very exciting
and I can see ICAP becoming a considerably larger company than we
have been historically because of our investment in technology.
208 InForMAtIon teChnoloGY
McDermott also was challenged to learn what his role would be as
a chief executive of a software technology organization. In the early
stages, he was insecure about his job because for the first time he
knew less than his workers about the business. Perhaps this provides
organizational learning practitioners with guidance on the best way
of getting the CEO engaged in the transformative process; that is,
getting the CEO to understand his or her role in an area in which,
typically, he or she does not have expertise. McDermott represented
an executive who reached that position coming up through the ranks.
Therefore, much of his day-to-day management was based on his
knowledge of the business—a business that he felt he knew as well as
anyone. With technology, and its effect as technological dynamism,
CEOs face more challenges, not only because they need to manage
an area they may know little about but also because of the dynamic
aspects of technology and the way it causes unpredictable and acceler-
ated change. McDermott realized this and focused his attention on
discovering what his role needed to be in this new business. There
was no question in McDermott’ s mind that he needed to know more
about technology, although he also recognized that management was
the fundamental responsibility he would have with this new entity:
[Although] I was insecure at the beginning I started to realize that it does
not take a genius to do my job. Management is management, and whether
you manage a securities brokering firm or you manage a deli or manage
a group of supermarkets or an IT or an electronic company, it is really
about management, and that is what I am finding out now. So, whether
I am the right person to bring ETC to the next level is irrelevant at this
time. What is more important is that I have the skills that are necessary to
manage the business issues as opposed to the technological ones.
However, McDermott did have to make some significant changes
to operate in a technology-based environment. ETC was now des-
tined to become a global organization. As a result, McDermott had
to create three senior executive positions to manage each of the three
major geographic areas of operation: North America, Europe, and
Asia. He went from having many indirect reports to having just a
few. He needed four or five key managers. He needed to learn to trust
that they were the right people, people who had the ability to nurture
209sYnerGIstIC unIon oF It
the parts of each of their respective divisions. “ What it leaves now is
being a true CEO,” he stated, “ and that means picking your people,
delegating the responsibility and accepting that they know the busi-
ness.” Thus, we see technological dynamism actually realigning the
reporting structure, and social discourse of the company.
My presentation in previous chapters focused on helping orga-
nizations transform and change. Most important in organizational
learning theories is the resistance to change that most workers have,
particularly when existing cultural norms are threatened. ICAP was
no exception to the challenges of change management. The most sig-
nificant threat at ICAP was the fear that the traditional voice bro-
ker was endangered. McDermott understood this fear factor and
presented electronic trading not as a replacement but rather, a sup-
plement to the voice broker. There was no question that there were
certain areas of the business that lent themselves more to electronic
trading; however, there are others that will never go electronic or at
least predominantly electronic. Principles of responsive organizational
dynamism suggest that accelerated change becomes part of the stra-
tegic and cultural structure of an organization. We see both of these
components at work in this case.
Strategically, ICAP was faced with a surge in business opportuni-
ties that were happening at an accelerated pace and were, for the most
part, unplanned, so there was little planned activity. The business was
feeling its way through its own development, and its CEO was pro-
viding management guidance, as opposed to specific solutions. ICAP
represents a high-velocity organization similar to those researched by
Eisenhardt and Bourgeois (1988), and supports their findings that a
democratic, less power-centralized management structure enhances
the performance of such a firm. From a cultural assimilation perspec-
tive, the strategic decisions are changing the culture and requiring new
structures and alignments. Such changes are bound to cause fears.
As a result of recognizing the inevitable changes that were becom-
ing realities, McDermott reviewed the roles and responsibilities of
his employees on the brokering side of the business. After careful
analysis, he realized that he could divide the brokers into three dif-
ferent divisions, which he branded as A, B, and C brokers. The A
brokers were those who were fixed on the relational aspect of their
jobs, so voice interaction was the only part of their work world. Such
210 InForMAtIon teChnoloGY
individuals could do things in the voice world that electronic means
could not reach. They were personal experts, if you will, who could
deal with clients requiring a human voice. Thus, the A broker would
exist as long as the broker wanted to work—and would always be
needed because a population of clients wants personal support over
the phone. This is similar to the opposition to the Internet in which
we find that some portion of the population will never use e-com-
merce because they prefer a live person. The B broker was called the
hybrid broker—an individual who could use both voice and electronic
means. Most important, these brokers were used to “ convert” voice-
based clients into electronic ones. As McDermott explained:
Every day I see a different electronic system that someone is trying to
sell in the marketplace. Some of these new technologies are attempting
to solve problems that do not exist. I have found that successful systems
address the content more than the technology. Having a relationship for
many of our customers is more important. And we can migrate those
relationships from voice to electronic or some sort of a hybrid combi-
nation. The B brokers will end up with servicing some combination of
these relationships or migrate themselves to the electronic system. So, I
believe they have nothing to fear.
The C brokers, on the other hand, represented the more average
voice brokers who would probably not have a future within the busi-
ness. They would be replaced by electronic trading because they did
not bring the personal specialization of the A broker. The plight of
the C broker did raise an important issue about change management
and technological dynamism: Change will cause disruption, which
can lead to the elimination of jobs. This only further supported the
fears that workers had when faced with dynamic environments. For
McDermott, this change would need to be openly discussed with the
community, especially for the A and B brokers, who in essence would
continue to play an important role in the future of the business. C
brokers needed to be counseled so that they could appropriately seek
alternate career plans. Thus, honesty brings forth trust, which inevi-
tably fosters the growth of organizational learning. Another perspec-
tive was that the A and B brokers understood the need for change
and recognized that not everyone could adapt to new cultures driven
211sYnerGIstIC unIon oF It
by strategic integration, so they understood why the C broker was
eliminated.
In Chapter 2, I discussed the dilemma of IT as a “ marginalized”
component of an organization. This case study provides an opportunity
to understand how the traditional IT staff at ICAP made the transi-
tion into the new company—a company in which they represented a
direct part of its success. As noted, ICAP considered the IT depart-
ment as a back-office support function. In the new organization, it
represented the nucleus or the base of all products and careers. Hence,
McDermott expected ETC employees to be technology proficient. No
longer were IT people just coders or hardware specialists—he saw tech-
nology people as lawyers, traders, and other businesspeople. He related
technology proficiency in a similar way to how his business used to
view a master’ s degree in business (MBA) in the late 1980s. This issue
provides further support for the cultural assimilation component of
responsive organizational dynamism. We see a situation in which the
discrepancy between who is and is not a technology person beginning
to dwindle in importance. While there is still clear need for expertise
and specialization, the organization as a whole has started the process
of educating itself on the ways in which technology affects every aspect
of its corporate mission, operations, and career development.
ICAP has not been immune to the challenges that have faced most
technology-driven organizations. As discussed in Chapter 2, IT proj-
ects typically face many problems in terms of their ability to complete
projects on time and within budget. ICAP was also challenged with
this dilemma. Indeed, ICAP had no formal process but focused on
the criterion of meeting the delivery date as the single most important
issue. As a result, McDermott was attempting to instill a new culture
committed to the importance of what he called the “ real date of deliv-
ery.” It was a challenge to change an existing culture that had difficulty
with providing accurate dates for delivery. As McDermott suggested:
I am learning that technology people know that there is no way that they
can deliver an order in the time requested, but they do not want to disap-
point us. I find that technology people are a different breed from the peo-
ple that I normally work with. Brokers are people looking for immediate
gratification and satisfaction. Technology people, on the other hand, are
always dedicated to the project regardless of its time commitment.
212 InForMAtIon teChnoloGY
McDermott was striving to attain a mix or blend of the traditional
culture with the technology culture and create a new hybrid organiza-
tion capable of developing realistic goals and target dates. This process
of attainment mirrors the results from the Ravell case, which resulted
in the formation of a new hybrid culture after IT and business staff
members were able to assimilate one another and find common needs
and uses for technology and the business.
McDermott also understood his role as a leader in the new orga-
nization. He realized early on that technology people are what he
called more “ individualistic” ; that is, they seemingly were reluctant to
take on responsibility of other people. They seemed, as McDermott
observed, “ to have greater pleasure in designing and creating some-
thing and they love solving problems.” This was different from what
CEOs experienced with MBAs, who were taught more to lead a group
as opposed to being taught to solve specific problems. Yet, the integra-
tion of both approaches can lead to important accomplishments that
may not be reachable while IT and non-IT are separated by depart-
mental barriers.
Ultimately, the cultural differences and the way they are managed
lead to issues surrounding the basis of judging new technologies for
future marketing consideration. McDermott understood that this was
a work in progress. He felt strongly that the issue was not technology,
but that it was the plan for using technology competitively. In other
words, McDermott was interested in the business model for the tech-
nology that defined its benefits to the business strategically. As he put
it, “ Tell me how you are going to make money, tell me what you can
do for me to make my life easier. That is what I am looking at!” While
McDermott felt that many people were surprised by his response, he
believed its reality was taken too much for granted. During the dot-
com era, too many investors and businesses assumed that technologi-
cal innovation would somehow lead to multiples of earnings—that
simply did not happen. Essentially, McDermott realized that good
technology was available in many places and that the best technology
is not necessarily the one that will provide businesses with the highest
levels of success.
Judging new technologies based on the quality of the business plan
is an effective method of emphasizing the importance of why the
entire organization needs to participate and understand technology.
213sYnerGIstIC unIon oF It
This inevitably leads to questions about the method in which ROI is,
or should be, measured. The actual measurement of ROI for ICAP
was remarkably simple yet effective. There were four methods of
determining ROI. The first and most significant was whether the
technology would increase volume of trades along the different prod-
uct lines. The second was the amount in dollars of the securities being
traded. That is, did technology provide a means for clients to do larger
dollar trades? The third factor could be an increase in the actual num-
ber of clients using the electronic system. The fourth might be allevi-
ating existing bottlenecks in the voice trading process, whether it was
a legal issue or the advantage provided by having electronic means.
We see here that some of the ROI factors are direct and monetary. As
expected methods, the first and second were very much direct mone-
tary ways to see the return for investing in electronic trading systems.
However, as Lucas (1999) reminds us, many benefits derived from IT
investments are indirect, and some are impossible to measure. We see
this with the third and fourth methods. Increasing the number of cli-
ents indirectly suggested more revenue, but did not guarantee it. An
even more abstract benefit was the improvement of throughput, what
is typically known as improved efficiency in operations.
While all of the accomplishments of ICAP and McDermott seem
straightforward, they were not accomplished without challenges;
perhaps the most significant was the approach, determination, and
commitment that were needed by the executive team. This chal-
lenge is often neglected in the literature on organizational learning.
Specifically, the executive board of ETC needed to understand what
was necessary in terms of funding to appropriately invest in the future
of technology. To do that, they needed to comprehend what e- business
was about and why it was important for a global business to make seri-
ous investments in it to survive. In this context, then, the executive
board needed to learn about technology as well and found themselves
in a rather difficult position. During this period, McDermott called
in an outside consultant who could provide a neutral and objective
opinion. Most important was to define the issue in lay terms so that
board members could correlate it with their traditional business mod-
els. Ultimately, the learning consisted of understanding that technol-
ogy and e-commerce were about expanding into more markets, ones
that ICAP could not reach using traditional approaches. There was a
214 InForMAtIon teChnoloGY
realization that ICAP was too focused on its existing client base, as
opposed to reaching out for new ones—and there was also the reverse
reality that a competitor would figure out a strategy to reach out to the
client base of ICAP. What is also implied in expanding one’ s client
base is that it means going outside one’ s existing product offerings.
This had to be carefully planned as ICAP did not want to venture
outside what it was—an intermediary brokering service. So, expan-
sion needed to be carefully planned and discussed first among the
executive members, then presented as a challenge to the senior man-
agement, and so on.
This process required some modifications to the organizational
learning process proposed by such scholars as Nonaka and Takeuchi
(1995). Specifically, their models of knowledge management do not
typically include the executive boards; thus, they are not considered a
part of the learning organization. The ICAP case study exposes the fact
that their exclusion can be a serious limitation, especially with respect
to the creation of responsive organizational dynamism. In previous
chapters, I presented a number of management models that could be
used to assist in developing and sustaining organizational learning.
They focused fundamentally on the concept of whether such manage-
ment should be top-down, bottom-up, or, as Nonaka and Takeuchi
suggest, “ middle-up-down.” I laid out my case for a combination of
all of them in a specific order and process that could maximize each
approach. However, none of these models really incorporates the out-
side executive boards that have been challenged to truly understand
what technology is about, their approach to management, and what
their overall participation should be in organizational learning.
Perhaps the most significant historical involvement of executive
boards was with the Year 2000 (Y2K) event. With this event, executive
boards mandated that their organizations address the potential tech-
nology crisis at the turn of the century. My CEO interviews verified
that, if anything, the Y2K crisis served to educate executive boards by
forcing them to focus on the issue. Boards became unusually involved
with the rest of the organization because independent accounting firms,
as outside objective consultants, were able to expose the risks for not
addressing the problem. The handling of e-commerce by ICAP was
in many ways similar but also suggests that executive boards should
not always wait for a crisis to occur before they get involved. They also
215sYnerGIstIC unIon oF It
must be an important component of organizational learning, particu-
larly in responsive organizational dynamism. While organizational
learning fosters the involvement of the entire community or workers,
it also needs advocates and supporters who control funding. In the case
of ICAP, organizational learning processes without the participation
of the executive board, ultimately would not have been successful. The
experience of ICAP also suggests that this educational and learning
process may need to come from independent and objective sources,
which integrates another component of organizational learning that
has not been effectively addressed: the role of outside consultants as a
part of a community of practice. Figure 8.6 depicts the addition of the
ICAP ETC executive board and outside consultants in the organiza-
tional learning management process.
The sequential activities that occurred among the different communi-
ties are shown in Table 8.1. While Table 8.1 shows the sequential steps
necessary to complete a transformation toward strategic integration and
cultural assimilation, the process is also very iterative. Specifically, this
means that organizations do not seamlessly move from one stage to
another without setbacks. Thus, transformation depends heavily on dis-
course as the main driver for ultimate organizational evolution.
Figure 8.7 shows a somewhat messier depiction of organizational
learning under the auspices of ROD. The changes brought on by
dynamic interactions foster top-down, middle-up-down, and bottom-
up knowledge management techniques—all occurring simultane-
ously. This level of complex discourse creates a number of overlapping
communities of practice that have similar, yet unique, objectives in
learning. These communities of practice overlap at certain levels as
shown in Figure 8.8.
As stated, organizational learning at the executive levels tends to
be ignored in the literature. At ICAP, an important community of
practice emerged that created a language discourse essential to its
overall success in dealing with technological dynamism, brought on
by technological innovation in electronic communications. Language
was critical at this level; ICAP is a U.K.-based organization and as
such has an international board. As McDermott explained:
As you know, from travelling anywhere around the world, cultures are
different. And even the main office for our company, ICAP in England,
216 InForMAtIon teChnoloGY
and even with the English, we are separated by a common language, as
we often say. There is a very, very different culture everywhere in the
world. I will tell you that information technology in our company is
separated from electronic trading—there is a difference.
Thus, McDermott’ s challenge was to establish a community
that could reach consensus not only on strategic issues but also
Advisement on e-commerce
business opportunities
Overall changes to
corporate mission
financial
commitments
approve major
organizational
changes—form ETC
Discourse and
learning at the
organizational
level, non-event
specific. ICAP
board focused on
impact of
technology on
trading operations.
Senior
management
team meets and
determines
strategy and
organization for
creating new
corporate entity.
Middle managers
determine how and
when operations
will be changed.
�is includes
personnel
changes and
development of
specific
implementation
schedules through
group discourse.
Operations
personnel work
with middle
management to
determine change
in organization
structure and duties
and responsibilies of
new and old positions.
Individual reflective
practice, tacit knowledge
of how to actually
implement changes at
the individual and
group levels
Buy in
modify
implementation plans
based on discourse and
knowledge of how the
business operates
Buy in
modify strategic plans
based on discourse and
knowledge of specific
areas of the business
Specific skills in
technology strategy
objective analysis
of business
realignment
education of
executive board
Initiator of change
knowledge and
strategic management
organizational change
agent
ICAP ETC
executive board
Independent
consultants
CEO
Senior
management
Middle
management
Operations
Figure 8.6 ICAP ETC management tiers.
217sYnerGIstIC unIon oF It
Table 8.1 ICAP—Steps to Transformation
STEP LEARNING ENTITY(S) LEARNING ACTIVITY
1 CEO Americas Initiates discourse at board level on
approaches to expanding electronic trading
business
2 Executive board Decides to create separate corporate entity
ETC to allow for the establishment of a new
culture
3 Outside consultant E-commerce discourse, ways in which to
expand the domain of the business
4 Executive board Discussion of corporate realignment of
mission, goals, and objectives
5 CEO/senior management Establishes strategic direction with senior
management
6 Senior management/middle
management
Meet to discuss and negotiate details of the
procedures to implement
7 Middle management/operations
communities
Meet with operations communities to discuss
impact on day-to-day processes and
procedures
Discourse initiated
Discourse on
“how” to
implement
Rollout of new
organization and
strategies
Interactive discussions
Questions and responsesExecutive
board
CEO
Americas
Senior
management
Middle
management
Operations
Operations adjustments
based on reflective practices
Adjustments as a result of
discourse with operations
community
New ideas and
adjustments
Objective advice
and education
Objective advice
and education
Meetings and
discussions on
day-to-day
operations
Consultants
Figure 8.7 ICAP—responsive organizational dynamism.
218 InForMAtIon teChnoloGY
on the very nomenclature applied to how technology was defined
and procedures adopted among the international organizations
within ICAP. That is why outside consultation could be effective
as it provided independent and objective input that could foster
the integration of culture-based concepts of technology, strategy,
and ROI. Key to understanding the role of executive communi-
ties of practice is their overall importance to organizational learn-
ing growth. Very often we have heard, “ Can we create productive
discourse if the executive team cannot discuss and agree on issues
themselves?” Effectively, ICAP created this community to ensure
consistency among all the levels within the business. Consistent
with the responsive organizational dynamism arc, learning in this
community was at the “ system” or organizational level, as opposed
to being based on specific events like Y2K. These concerns had
a broader context, and they affected both short- and long-term
issues of business strategy and culture.
Another community of practice was the operations manage-
ment team, which was the community responsible for transform-
ing strategy into a realistic plan of strategic implementation. This
team consisted of three levels (Figure 8.9). We see in this commu-
nity of practice that the CEO was common to both this commu-
nity and the executive community of practice. His participation in
both provided the consistency and discourse that pointed to three
valuable components:
1. The CEO could accurately communicate decisions reached at
the board level to the operations management team.
CEO
Americas
Executive
board
Consultants
Questions and responses
Objective advice
and education
Objective advice
and education
Interactive discussions
Discourse initiated
Figure 8.8 ICAP—community of practice.
219sYnerGIstIC unIon oF It
2. The operations team could provide important input and sug-
gestions to the CEO, who could then provide this informa-
tion to the executive community.
3. The CEO interacted in different ways between the two com-
munities of practice. This was critical because the way things
were discussed, the language used, and the processes of con-
sensus were different in each community.
The operations management community was not at the detailed
level of implementation; rather, it was at the conceptual one. It needed
to embrace the strategic and cultural outcomes discussed at the execu-
tive community, suggest modifications if applicable, and eventually
reach consensus within the community and with the executive team.
The operations management community, because of its conceptual
perspectives, used more organizational learning methods as opposed
to individual techniques. However, because of their relationship
with operations personnel, they did participate in individual reflec-
tive practices. Notwithstanding their conceptual nature, event-driven
issues were important for discussion. That is why middle management
needed to be part of this community, for without their input, concep-
tual foundations for implementing change may very well have flaws.
CEO
Americas
Senior
managementNew ideas and
adjustments
Middle
management
Rollout of new
organization and
strategies
Discourse on
“how” to
implement
Adjustments as a result of
discourse with operations
community
Figure 8.9 ICAP—community of practice interfaces.
220 InForMAtIon teChnoloGY
Middle management participated to represent the concrete pieces
and the realities for modifications to conceptual arguments. As such,
middle managers could indirectly affect the executive board commu-
nity since their input could require change in the operations man-
agement community, which in turn could foster the need for change
requests back to the board. This process provides the very essence of
why communities of practice need to work together, especially with
the dynamic changes that can occur from technological innovations.
The third community of practice at ICAP was at the operations
or implementation tier. It consisted of the community of staff that
needed to transition conceptual plans into concrete realities. To ensure
that conceptual ideas of implementation balanced with the concrete
events that needed to occur operationally, middle managers needed
to be part of both the operations management, and implementation
communities, as shown in Figure 8.10.
Because of the transitory nature of this community, it was important
that both organizational learning and individual learning occurred
simultaneously. Thus, it was the responsibility of middle managers
to provide the transition of organizational-based ideas to the event
and concrete level so that individuals understood what it ultimately
meant to the operations team. As one would expect, this level oper-
ated on individual attainment, yet through the creation of a commu-
nity of practice, ICAP could get its operations members to begin to
think more at the conceptual level. This provided management with
the opportunity to discuss conceptual and system-level ideas with
Middle
management
Operations
Meetings and
discussions on
day-to-day
operations
Operations adjustments
based on reflective practices
Figure 8.10 Middle-management community of practice at ICAP.
221sYnerGIstIC unIon oF It
operations personnel. Operations personnel could review them and,
under a managed and controlled process, could reach consensus. That
is, changes required by the implementation community could be rep-
resented to the operations management community through middle
management. If middle management could, through discourse and
language, reach consensus with the operations management commu-
nity, then the CEO could bring them forth to the executive commu-
nity for further discussion. We can see this common thread concept
among communities of practice as a logical process among tiers of
operations and management and one that can foster learning matura-
tion, as identified in the responsive organizational dynamism arc. This
is graphically shown in Figure 8.11.
Figure 8.11 shows the relationships among the three communi-
ties of practice at ICAP and how they interacted, especially through
upward feedback using common threads of communication. Thus,
multiple communities needed to be linked via common individu-
als to maintain threads of communication necessary to support
Executive community of practice
Operations management community of practice
CEO
Americas
CEO
AmericasNew ideas
and
adjustments
Implementation community of practice
Senior
management
Operations
Adjustments as
a result of
discourse
with operations
community
Middle
management
Middle
management
Executive
board Consultants
Figure 8.11 ICAP—COP common threads.
222 InForMAtIon teChnoloGY
responsive organizational dynamism and learning across organiza-
tional boundaries.
Another important observation is the absence of independent con-
sultants from the operations management and implementation com-
munities of practice. This does not suggest that consultants were not
needed or used by these communities. The independent consultant
in the executive community provides organizational-level learning, as
opposed to the consultant who is, for example, a specialist in database
design or training.
This case study provides an example of how an international firm
dealt with the effects of technology on its business. The CEO, Stephen
McDermott in this case, played an important role, using many forms
of responsive organizational dynamism, in managing the organiza-
tion through a transformation. His experience fostered the realiza-
tion that CEOs and their boards need to reinvent themselves on an
ongoing basis. Most important, this case study identified the number
of communities of practice that needed to participate in organiza-
tional transformation. The CEO continued to have an important role;
in many ways, McDermott offered some interesting advice for other
chief executives to consider:
1. The perfect time may or may not exist to deal with changes
brought on by technology. The CEO may need to just “ dive
in” and serve as a catalyst for change.
2. Stay on course with the fundamentals of business and do not
believe everything everyone tells you; make sure your busi-
ness model is solid.
3. Trust that your abilities to deal with technology issues are no
different from managing any other business issue.
As a result of the commitment and the process for adapting tech-
nology at ICAP, it has realized many benefits, such as the following:
• Protection of tacit knowledge : By incorporating the existing
trading system, ICAP was able to retain the years of expe-
rience and expertise of its people. As a result, ICAP devel-
oped an electronic system that better served the needs of
broker users; this ability gave it an advantage over competitor
systems.
223sYnerGIstIC unIon oF It
• Integrated use : The combination of the new system and its
compatibility with other ICAP legacy systems enabled the
organization to continue to service the core business while
increasing access for new clients. This resulted in a reduction
of costs and an increase in its user base.
• Transformation of tacit knowledge to explicit product knowledge :
By providing an infrastructure of learning and strategic inte-
gration, ICAP was able to bridge a wide range of its employ-
ees’ product knowledge, particularly of those outside IT with
a specific understanding of trading system design, and to
transform their tacit knowledge into explicit value that was
used to build on to the existing trading systems.
• Flexibility : Because multiple communities of practice were
formed, IT and non-IT cultures were able to assimilate. As a
result, ICAP was able to reduce its overall development time
and retain the functionality necessary for a hybrid voice and
electronic trading system.
• Expansion : Because of the assimilation of cultures, ICAP
was able to leverage its expertise so that the design of the
electronic system allowed it to be used with other third-party
trading systems. For example, it brought together another
trading system from ICAP in Europe and enabled concurrent
development in the United States and the United Kingdom.
• Evolution : By incorporating existing technology, ICAP con-
tinued to support the core business and gradually introduced
new enhancements and features to serve all of its entities.
• Knowledge creation : By developing the system internally,
ICAP was able to increase its tacit knowledge base and stay
current with new trends in the industry.
ICAP went on to evolve its organization as a result of its adop-
tion of technology and its implementation of responsive organiza-
tional dynamism. The company reinvented itself again. McDermott
became the chief operating officer (COO) for three business units
in the Americas; all specific business lines, yet linked by their inte-
grated technologies and assimilated cultures. In addition, ICAP
purchased a competitor electronic trading product and assimilated
these combined technologies into a new organization. Business
224 InForMAtIon teChnoloGY
revenues rose at that time from $350 million to over $1 billion four
years later. The company also had more than 2,800 staff members
and operated from 21 offices worldwide. Much has been attrib-
uted to ICAP’ s investment in electronic trading systems and other
emerging technologies.
Five Years Later
I returned to meet with Stephen McDermott almost five years after
our original case study. Many of the predictions about how technol-
ogy would affect the business had indeed become reality. In 2010,
technology at ICAP had become the dominant component of the
business. The C brokers had all but disappeared, with the organiza-
tion now consisting of two distinct divisions: voice brokers and elec-
tronic brokers. The company continued to expand by acquiring other
smaller competitors in the technology space. The electronic division
now consisted of three distinct divisions from these acquisitions, with
ETC just one of those divisions. In effect, the expansion led to more
specialization and leveraging of technology to capture larger parts of
various markets.
Perhaps the unseen reality was how quickly technology became a
commodity. As McDermott said to me, “ Everybody (our competi-
tors) can do it; it’ s now all about your business strategy.” While the
importance of strategy was always part of McDermott’ s position,
the transition from product value to market strategy was much more
transformative on the organization’ s design and how it approached
the market. For example, the additional regulatory controls on voice
brokering actually forced many brokers to move to an electronic
interface, which reduced liability between the buyer and the broker.
McDermott also emphasized how “ technology has created overnight
businesses,” forcing the organization to understand how technology
could provide new competitive advantages that otherwise did not
exist. Today, 50% of the trading dollars, some $2 trillion, occurs over
electronic technology-driven platforms. Undoubtedly, these dynamic
changes, brought on by technological dynamism, continue to chal-
lenge ICAP on how they strategically integrate new opportunities
and how the organization must adapt culturally with changes in indi-
vidual roles and responsibilities.
225sYnerGIstIC unIon oF It
HTC
HTC (a pseudoacronym) is a company that provides creative business
services and solutions. The case study involving HTC demonstrates
that changes can occur when technology reports to the appropriate
level in an organization. This case study offers the example of a com-
pany with a CEO who became an important catalyst in the successful
vitalization of IT. HTC is a company of approximately 700 employees
across 16 offices. The case involves studying the use of a new applica-
tion that directly affected some 200 staff people.
The company was faced with the challenge of providing accurate
billable time records to its clients. Initial client billings were based on
project estimates, which then needed to be reconciled with actual work
performed. This case turned out to be more complex than expected.
Estimates typically represented the amount of work to which a client
agreed. Underspending the budget agreed to by the client, however,
could lead to lost revenue opportunities for the firm. For example, if
a project was estimated at 20 hours, but the actual work took only
15, then most clients would seek an additional five hours of service
because they had already budgeted the total 20 hours. If the recon-
ciliation between hours budgeted and hours worked was significantly
delayed, clients might lose their window of opportunity to spend the
remaining five hours (in the example situation). Thus, the incapacity
to provide timely reporting of this information resulted in the actual
loss of revenue, as well as upset clients. If clients did not spend their
allocated budget, they stood to lose the amount of the unused portion
in their future budget allocations. Furthermore, clients had expecta-
tions that vendors were capable of providing accurate reporting, espe-
cially given that present-day technology could automate the recording
and reporting of this information. Finally, in times of a tight econ-
omy, businesses tend to manage expenditures more closely and insist
on more accurate record keeping than at other times.
The objective at HTC was to transform its services to better meet
the evolving changes of its clients’ business requirements. While the
requirement for a more timely and accurate billing system seems
straightforward, it became a greater challenge to actually implement
than it otherwise seemed.
The first obstacle for HTC to overcome was the clash between this
new requirement and the existing ethos, or culture of the business.
226 InForMAtIon teChnoloGY
HTC provided creative services; 200 of its staff members were artisti-
cally oriented and were uncomfortable with focusing on time-based
service tracking; they were typically engrossed in the creative per-
formance required by their clients. Although it would seem a simple
request to track time and enter it each day, this projected change in
business norms became a significant barrier to its actual implemen-
tation. Project managers became concerned that reporting require-
ments would adversely affect performance, and thus, inevitably hurt
the business. Efforts to use blunt force—do it or find another job —
were not considered a good long-term solution. Instead, the company
needed to seek a way to require the change while demonstrating the
value of focusing on time management.
Many senior managers had thought of meeting with key users to
help determine a workable solution, but they were cognizant of the
fact that such interactive processes with the staff do not always lead to
agreement on a dependable method of handling the problem. This is a
common concern among managers and researchers working in orga-
nizational behavior. While organizational learning theorists advocate
this mediating, interactive approach, it may not render the desired
results in time and can even backfire if staff members are not genu-
inely willing to solve the problem or if they attempt to make it seem
too difficult or a bad idea. The intervention of the CEO of HTC,
together with the change in time reporting methods, directly involv-
ing IT, made a significant difference in overcoming the obstacle.
IT History at HTC
When I first interviewed the CEO, I found that she had little direct
interaction with the activities of the IT department. IT reported to
the CFO, as in many companies, because it was seen as an opera-
tional support department. However, the CEO subsequently became
aware of certain shortfalls associated with IT and with its report-
ing structure. First, the IT department was not particularly liked
by other departments. Second, the department seemed incapable of
implementing software solutions that could directly help the busi-
ness. Third, the CFO did not possess the creativity beyond account-
ing functions to provide the necessary leadership needed to steer the
activities of IT in a more fruitful direction. As a result, the CEO
227sYnerGIstIC unIon oF It
decided that the IT department should report directly to her. She was
also concerned that IT needed a more senior manager and hired a new
chief technology officer (CTO).
Interactions of the CEO
My research involving 40 chief executives showed that many execu-
tives are unsure about what role they need to take with their chief IT
managers. However, the CEO of HTC took on the responsibility to
provide the financial support to get the project under way. First, the
CEO made it clear that a solution was necessary and that appropri-
ate funds would be furnished to get the project done. Second, the
new CTO was empowered to assess the needs of the business and the
staff, and to present a feasible solution for both business and cultural
adaptation needs.
The CEO was determined to help transform the creative-artistic
service business into one that would embrace the kinds of controls that
were becoming increasingly necessary to support clients. Addressing
the existing lag in collecting time records from employees, which
directly affected billing revenue, seemed like the logical first step for
engaging the IT department in the design and implementation of new
operating procedures and cultural behavior.
Because middle managers were focused on providing services to
their clients, they were less concerned with the collection of time
sheets. This need was a low priority of the creative workers of the firm.
Human resources (HR) had been involved in attempting to address
the problem, but their efforts had failed. Much of this difficulty was
attributed to an avoidance by middle managers of giving ultimatums
as a solution; that is, simply demanding that workers comply. Instead,
management subsequently became interested in a middle-ground
approach that could possibly help departments realize the need to
change and to help determine what the solution might be. The ini-
tial thinking of the CEO was to see if specialized technology could
be built that would (1) provide efficiency to the process of recording
time, and (2) create a form of controls that would require some level
of compliance.
With the involvement of the CEO, the embattled IT depart-
ment was given the authority to determine what technology could
228 InForMAtIon teChnoloGY
be employed to help the situation. The existing application that had
been developed by the IT department did not provide the kind of ease
of use and access that was needed by operations. Previous attempts
to develop a new system, without the intervention of the CEO, had
failed for a number of reasons. Management did not envision the
potential solution that software was capable of delivering. It was not
motivated in getting the requisite budget support; no one was in a
position to champion it, to allocate the needed budget. Ultimately,
management individuals were not convinced of the importance of
providing a better solution.
The Process
The new CTO determined that there was a technological solution
that could provide greater application flexibility, while maintaining its
necessary integrity, through the use of the existing e-mail system. The
application would require staff to enter their project time spent before
signing on to the e-mail system. While this procedure might be seen
as a punishment, it became the middle-ground solution for securing
compliance without dramatically dictating policy. There was initial
rejection of the procedure by some of the line managers, but it was
with the assistance of the CEO, who provided the necessary support
and enforcement, that the new procedure took hold. This enforcement
became crucial when certain groups asked to be excluded from the
process. The CEO made it clear that all departments were expected
to comply.
The application was developed in three months and went into pilot
implementation. The timely delivery of the application by the IT
department gave IT its first successful program implementation and
helped change the general view of IT among its company colleagues.
It was the first occasion in which IT had a leadership role in guiding
the company to a major behavioral transformation. Another positive
outcome that resulted from the transition occurred in the way that
resistance to change was managed by the CTO. Simply put, the cre-
ative staff was not open to a structured solution. The CTO’ s response
was to implement a warning system instead of immediately disallow-
ing e-mail access. This procedure was an important concession as it
229sYnerGIstIC unIon oF It
allowed staff and management to deal with the transition, to meet
them halfway.
Transformation from the Transition
After the pilot period, the application was implemented firm-wide.
The results of this new practice have created an interesting internal
transformation: IT is now intimately engaged in working on new
enhancements to the time-recording system. For instance, a “ digital
dashboard” is now used to measure performance against estimates.
More important, however, are the results of the new application. The
firm has shown substantial increases in revenue because its new time-
recording system enabled it to discover numerous areas in which it
was underbilling its clients. Its clients, on the other hand, are happier
to receive billing statements that can demonstrate more accurately
than before just how time was spent on their projects. Hence, the
IT-implemented solution proved beneficial not only to the client but
also to the firm.
Notwithstanding the ultimate value of utilizing appropriate tech-
nology and producing measurable outcomes, IT has also been able
to assist in developing and establishing a new culture in the firm.
Staff members are now more mindful and have a greater sense of cor-
porate-norm responsibility than they did before. They have a clearer
understanding of the impact that recording their time will have and of
how this step ultimately contributes to the well-being of the business.
Furthermore, the positive results of the new system have increased
attention on IT spending. The CEO and other managers seek new
ways in which technology can be made to help them; this mindset has
been stressed further down to operating departments. The methods
of IT evaluation have also evolved. There is now a greater clarification
of technology benefits, a better articulation of technology problems,
less trial and error, and more time spent on understanding how to use
the technology better.
Another important result from this project has been the cascad-
ing effect of the financial impact. The increased profits have required
greater infrastructure capacity. A new department was created with
five new business managers whose responsibility it is to analyze and
interpret the time reports so that line managers, in turn, can think of
230 InForMAtIon teChnoloGY
ways to generate greater profit through increased services. The project,
in essence, has merged the creative performance of the firm with new
business initiatives, resulting in a higher ROI.
In analyzing the HTC case study, we see many organizational
learning techniques that were required to form a new community
that could assimilate multiple cultures. However, while the organiza-
tion saw the need, it could not create a process without an advocate.
This champion was the CEO, who had the ability to make the salient
organizational changes and act as a catalyst for the natural processes
that HTC hoped to achieve. This case also provides direction on the
importance of having the right resource to lead IT. At HTC, this
person was the CTO; in actuality, this has little bearing on the over-
all role and responsibilities that were needed at HTC. At HTC, it
became more apparent to the CEO that she had the wrong individual
running the technology management of her firm. Only the CEO in
this situation was able to foster the initial steps necessary to start what
turned out to be a more democratic evolution of using technology in
the business.
Companies that adapt to technological dynamism find that the
existing leadership and infrastructure may need to be enhanced or
replaced as well as reorganized, particularly in terms of reporting
structure. This case supports the notion that strategic integration may
indeed create the need for more cultural assimilation. One question
to ask, is why the CEO waited so long to make the changes. This was
not a situation of a new CTO who inherited resources. Indeed, the
former CTO was part of her regime. We must remember that CEOs
typically concentrate on driving revenue. They hope that what are
considered “ back-end” support issues will be handled by other senior
managers. Furthermore, support structures are measured differently
and from a specific frame of reference. I have found that CEOs inter-
vene in supporter departments only when there are major complaints
that threaten productivity, customer support, sales, and so on. The
other threat is cost, so CEOs will seek to make supporter departments
more efficient. These activities are consistent with my earlier findings
regarding the measurement and role of supporter departments.
In the case of HTC, the CEO became more involved because of
the customer service problems, which inevitably threatened revenues.
231sYnerGIstIC unIon oF It
On her review of the situation, she recognized three major flaws in
the operation:
• The CFO was not in a position to lead the organizational
changes necessary to assimilate a creative-based department.
• Technology established a new strategy (strategic integration),
which necessitated certain behavioral changes within the
organization (cultural assimilation). The creative department
was also key to make the organizational transition possible.
• The current CTO did not have the management and business
skills that were necessary to facilitate the integration of IT
with the rest of the organization.
HTC provides us with an interesting case of what we have defined
as responsive organizational dynamism, and it bears some parallels to
the Ravell study. First, like Ravell, the learning process was triggered
by a major event. Second, the CTO did not dictate assimilation but
rather provided facilitation and support. Unlike Ravell, the CEO of
the organization was the critical driver to initiate the project. Because
of the CEO’ s particular involvement, organizational learning started
at the top and was thus system oriented. At the same time, the CTO
understood that individual event-driven learning using reflective
practices was critical to accomplish organizational transformation. In
essence, the CTO was the intermediary between organizational-level
and individual-level learning. Figure 8.12 depicts this relationship.
Five Years Later
HTC has been challenged because of the massive changes that adver-
tising companies have faced over this timeframe, particularly with
the difficulty of finding new advertising revenue sources for their
clients. The CEO has remained active in technology matters, and
there has also been turnover in the CTO role at the company. The
CEO has been challenged to find the right fit—a person who can
understand not only the technology but also the advertising business.
With media companies taking over much of the advertising space, the
CEO clearly recognizes the need to have a technology-driven market
strategy. Most important is the dilemma of how to transform what
232 InForMAtIon teChnoloGY
was once a “ paper” advertising business to what has become a lower-
cost media market. “ Advertising companies need to do more business
just to keep the same revenue stream and that is a big challenge in
today’ s volatile market,” the CEO stated. The time-recording system
has gone through other changes to provide what are known as value
added services , not necessarily tied to time effort, but rather, the value
of the output itself.
The experience at HTC shows the importance of executive partici-
pation, not just sponsorship. Many technology projects have assumed
the need for executive sponsorship. It is clear to me that this position
is obsolete. If the CEO at HTC had not become involved in the prob-
lem five years ago, then the organization would not be in the position
to embrace the newest technology dynamism affecting the industry.
So, the lessons learned from this case, as well as from the Ravell case,
are that all levels of the organization must be involved, and that exec-
utives must not be sacred. Responsive organizational dynamism, and
the use of organizational learning methods to develop staff, remains
key concepts for adapting to market changes and ensuring economic
survival.
Organizational and system
level learning
Organizational and
individual-level learning
Individual learning
Learning
facilitator
CTO
CEO
Middle
management
Creative
operations
Figure 8.12 HTC—Role of the CTO as an intermediary.
233sYnerGIstIC unIon oF It
Summary
This chapter has provided three case studies that show the ways
technology and organizational learning operate and lead to results
through performance. The Siemens example provided us with an
opportunity to see a technology executive formulate relationships,
form multiple communities of practice, and create an infrastructure
to support responsive organizational dynamism. This case provides a
method in which IT can offer a means of handling technology as new
information and, through the formation of communities of practice, it
can generate new knowledge that leads to organizational transforma-
tion and performance.
The case study regarding ICAP again shows why technology, as an
independent variable, provides an opportunity, if taken, for an inter-
national firm to move into a new competitive space and improve its
competitive advantage. ICAP was only successful because it under-
stood the need for organizational learning, communities of practice,
and the important role of the CEO in facilitating change. We also
saw why independent consultants and executive boards need to par-
ticipate. ICAP symbolizes the ways in which technology can change
organizational structures and cultural formations. Such changes are
at the very heart of why we need to understand responsive organi-
zational dynamism. The creation of a new firm, ETC, shows us the
importance of these changes. Finally, it provides us with an example
of how technology can come to the forefront of an organization and
became the major driver of performance.
HTC, on the other hand, described two additional features of how
responsive organizational dynamism can change internal processes
that lead to direct returns. The CEO, as in the ICAP case, played an
important, yet different, role. This case showed that the CTO could
also be used to facilitate organizational learning, becoming the nego-
tiator and coordinator between the CEO, IT department, and cre-
ative user departments.
All three of these cases reflect the importance of recognizing that
most technology information exists outside the organization and needs
to be integrated into existing cultures. This result is consistent with the
findings of Probst et al. (1998), which show that long-term sustained
competitive advantage must include the “ incorporation and integration
234 InForMAtIon teChnoloGY
of information available outside the borders of the company” (p. 247).
The reality is that technology, as an independent and outside variable,
challenges organizations in their abilities to absorb external informa-
tion, assimilate it into their cultures, and inevitably apply it to their
commercial activities as a function of their existing knowledge base.
These case studies show that knowledge creation most often does
not get created solely by individuals. It is by using communities of
practice that knowledge makes its way into the very routines of the
organization. Indeed, organizational learning must focus on the
transformation of individual skills into organizational processes that
generate measurable outcomes. Probst et al. (1998) also shows that the
development of organizational knowledge is mediated via multiple
levels. Walsh (1995) further supports Probst et al.’ s findings that there
are three structures of knowledge development in an organization.
The first is at the individual level; interpretation is fostered through
reflective practices that eventually lead to personal transformation and
increased individual knowledge. The second structure is at the group
level; individual knowledge of the group is combined into a consen-
sus, leading to a shared belief system. The third structure resides at the
organizational level; knowledge emanates from the shared beliefs and
the consensus of the groups, which creates organizational knowledge.
It is important to recognize, however, that organizational knowledge
is not established or created by combining individual knowledge. This
is a common error, particularly among organizational learning prac-
titioners. Organizational knowledge must be accomplished through
social discourse and common language interactions so that knowl-
edge can be a consensus among the communities of practice.
Each of the case studies supported the formation of tiers of learning
and knowledge. The individuals in these cases all created multiple lay-
ers that led to structures similar to those suggested by scholars. What
makes these cases so valuable is that technology represented the exter-
nal knowledge. Technological dynamism forced the multiple struc-
tures from individual-based learning to organizational-level learning,
and the unique interactions among the communities in each example
generated knowledge leading to measurable performance outcomes.
Thus, as Probst and Bü chel (1996, p. 245) conclude, “ Organizational
learning is an increase in organizational knowledge base, which leads
to the enhancement of problem-solving potential of a company.”
235sYnerGIstIC unIon oF It
However, these case studies also provide important information
about the process of the interactions. Many tiered structures tend
to be viewed as a sequential process. I have presented theories sug-
gesting that knowledge management is conditioned either from the
top-down, middle-up-down, or bottom-up. It has been my posi-
tion that none of these processes should be seen as set procedures
or methodologies. In each of these cases, as well as in the Ravell
case, the flow of knowledge occurs differently and, in some ways,
uniquely to the culture and setting of the organization. This suggests
that each organization must derive its own process, adhering more to
the concept of learning, management, and outcomes, as opposed to a
standard system of how and when they need to be applied. Table 8.2
summarizes the different approaches of organizational learning of
the three case studies.
Such is the challenge of leaders who aspire to create the learning
organization. Technology plays an important role because, in reality,
it tests the very notions of organizational learning theories. It also
creates many opportunities to measure organizational learning, and
its impact on performance. Indeed, technology is the variable that
provides the most opportunity to instill organizational learning, and
knowledge management in a global community.
Table 8.2 Summary of Organizational Learning Approaches
SUBJECT SIEMENS ICAP/ETC HTC
Knowledge
management
participation
CIO as
middle-up-down
Top-down from CEO
and bottom-up
from operations
Top-down from CEO
and middle-up-down
from CTO
Community of
practices
President’ s Council
CFO
CIO advisory board
Executive Board
Operations
Management
Implementation
CEO/CTO
CTO operations
Participating entities Presidents
CFOs
Global CIO
Corporate CIOs
Regional CIOs
Operating CIOs
Central CIOs
Executive board
Outside
consultants
CEO
Senior management
Middle management
Operations
CEO
CTO
Middle management
Creative operations
Common thread Corporate CIO CEO
Senior management
Middle management
CTO
236 InForMAtIon teChnoloGY
The case studies also provided an understanding of the
transformational process and the complexities of the relationships
between the different learning levels. It is not a single entity that
allows a company to be competitive but the combination of knowl-
edge at each of the different tiers. The knowledge that exists through-
out a company is typically composed of three components: processes,
technology, and organization (Kanevsky & Housel, 1998). I find that,
of these three components, technology is more variable than the oth-
ers and, as stated many times in this book, at a dynamic and unpre-
dictable fashion (that condition, called technological dynamism).
Furthermore, the technology component has direct effects on the
other two. What does this mean? Essentially, technology is at the
core of organizational learning and knowledge creation.
This chapter has shown the different ways in which technology has
been valued and how, through organizational learning, tacit knowl-
edge is transformed into explicit knowledge, and used for competitive
advantage. We have seen that not all of this value creation can be
directly attributed to technology; in fact, this is rarely the case. Most
value derived from technology is indirect, and it must be recognized
by management as maximizing outcomes. Two of the case studies
looked at the varying roles and responsibilities of the CEO. I believe
their involvement was critical. Indeed, the conclusions reached from
the Ravell case showed further support that the absence of the CEO
will limit results. Furthermore, the CEO was crucial to sustaining
organizational learning and the responsive organizational dynamism
infrastructure.
Much has been written about the need to link learning to knowl-
edge and knowledge to performance. This process can sometimes be
referred to as a value chain. Kanevsky and Housel (1998) created what
they call a “ learning-knowledge-value spiral,” comprised of six spe-
cific steps to creating value from learning and ultimately, changing
product or process descriptions, as shown in Figure 8.13.
I have modified Figure 8.13 to include “ technology” ; that is, how
technology affects learning, learning affects knowledge, and so on.
Table 8.3 is a matrix that reflects the specific results, in each phase,
for the three case studies.
Table 8.3 reflects the ultimate contribution that technology made
to the learning-knowledge-value chain. I have also notated the ROI
237sYnerGIstIC unIon oF It
Ta
bl
e
8
.3
IT
C
on
tri
bu
tio
n
to
th
e
Le
ar
ni
ng
-K
no
wl
ed
ge
-V
al
ue
C
ha
in
CO
M
PA
NY
TE
CH
NO
LO
GY
LE
AR
NI
NG
GE
NE
RA
TE
D
KN
OW
LE
DG
E
PR
OC
ES
S
PR
OD
UC
T
VA
LU
E
Si
em
en
s
E-
bu
si
ne
ss
Co
m
m
un
iti
es
o
f
pr
ac
tic
e
Co
ns
en
su
s a
cr
os
s m
ul
tip
le
co
m
m
un
iti
es
on
h
ow
to
re
la
te
ta
cit
kn
ow
led
ge
a
bo
ut
te
ch
no
log
y t
o s
tra
te
gi
c
bu
sin
es
s p
ro
ce
ss
es
.
90
-D
ay
“
re
in
ve
nt
io
n”
lif
e-
cy
cl
e
m
et
ho
d.
Co
ns
ol
id
at
ed
e-
co
m
m
er
ce
W
eb
si
te
s
pr
ov
id
in
g
co
ns
is
te
nc
y
of
p
ro
du
ct
a
nd
s
er
vi
ce
of
fe
rin
gs
.
Le
ve
ra
gi
ng
o
f s
am
e
cl
ie
nt
s;
p
ro
vi
di
ng
m
ul
tip
le
p
ro
du
ct
of
fe
rin
gs
to
s
am
e
cl
ie
nt
b
as
e.
RO
I:
In
di
re
ct
IC
AP
El
ec
tro
ni
c
tra
di
ng
CE
O/
ex
ec
ut
iv
e
co
m
m
itt
ee
Ab
ili
ty
to
p
ro
vi
de
a
nd
in
te
gr
at
e
bu
si
ne
ss
a
nd
te
ch
no
lo
gy
k
no
wl
ed
ge
to
cr
ea
te
n
ew
p
ro
du
ct
.
Es
ta
bl
is
h
ne
w
co
m
pa
ny
, E
TC
, t
o
su
pp
or
t c
ul
tu
ra
l
as
si
m
ila
tio
n
an
d
ev
ol
ut
io
n.
El
ec
tro
ni
c
tra
di
ng
.
Cr
ea
te
d
m
os
t
co
m
pe
tit
iv
e
pr
od
uc
t i
n
th
e
fin
an
ci
al
in
du
st
ry.
Le
ve
ra
gi
ng
in
de
pe
nd
en
t
co
ns
ul
ta
nt
s.
In
fil
tra
tio
n
in
to
n
ew
m
ar
ke
ts
.
Gr
ou
p
le
ar
ni
ng
.
RO
I:
Di
re
ct
.
M
ul
tip
le
c
om
m
un
iti
es
of
p
ra
ct
ic
e.
HT
C
E-
m
ai
l
CE
O
at
or
ga
ni
za
tio
na
l-l
ev
el
;
in
di
vi
du
al
le
ar
ni
ng
us
in
g
re
fle
ct
iv
e
pr
ac
tic
es
.
Un
de
rs
ta
nd
in
g
ho
w
to
in
te
gr
at
e
IT
d
ep
ar
tm
en
t
wi
th
c
re
at
iv
e
m
an
ag
em
en
t
gr
ou
p.
Es
ta
bl
is
h
ne
w
pr
oc
ed
ur
es
fo
r u
si
ng
e-
m
ai
l t
o
re
co
rd
c
lie
nt
bi
lla
bl
e
ho
ur
s.
Ne
w
cl
ie
nt
b
ill
in
g
sy
st
em
.
Cl
ie
nt
s
ha
pp
y.
M
or
e
co
m
pe
tit
iv
e.
Ad
di
tio
na
l r
ev
en
ue
s.
RO
I:
Di
re
ct
.
238 InForMAtIon teChnoloGY
generated from each investment. It is interesting that two of the three
cases generated identifiable direct revenue streams from their invest-
ment in technology.
This chapter has laid the foundation for Chapter 9, which focuses
on the ways IT can maximize its relationship with the community
and contribute to organizational learning. To accomplish this objec-
tive, IT must begin to establish best practices.
Change in
product/process
description
Learning
Value
MarketCompetition
Product
Knowledge
Process
Figure 8.13 The learning-knowledge-value cycle. (From Kanevsky, V., et al. (Eds.), Knowing in
Firms: Understanding, Managing and Measuring Knowledge , Sage, London, 1998, pp. 240– 252.)
239
9
foRming a CybeR
seCuRiTy CulTuRe
Introduction
Much has been written regarding the importance of how companies
deal with cyber threats. While most organizations have focused on
the technical ramifications of how to avoid being compromised, few
have invested in how senior management needs to make security a
priority. This chapter discusses the salient issues that executives must
address and how to develop a strategy to deal with the various types
of cyber attack that could devastate the reputation and revenues of any
business or organization. The response to the cyber dilemma requires
evolving institutional behavior patterns using organizational learning
concepts.
History
From a historical perspective we have seen an interesting evolution
of the types and acceleration of attacks on business entities. Prior to
1990, few organizations were concerned with information security
except for the government, military, banks and credit card companies.
In 1994, with the birth of the commercial Internet, a higher volume of
attacks occurred and in 2001 the first nation-state sponsored attacks
emerged. These attacks resulted, in 1997, in the development of com-
mercial firewalls and malware. By 2013, however, the increase in
attacks reached greater complexity with the Target credit card breach,
Home Depot’ s compromise of its payment system, and JP Morgan’ s
exposure that affected 76 million customers and seven million busi-
nesses. These events resulted in an escalation of fear, particularly in
the areas of sabotage, theft of intellectual property, and stealing of
money. Figure 9.1 shows the changing pace of cyber security
240 InForMAtIon teChnoloGY
Pr
e-
19
90
19
94
19
97
20
00
20
01
20
14
Bi
rt
h
of
co
m
m
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te
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re
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cr
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se
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m
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it
h
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r c
om
pl
ex
it
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ar
fa
ct
or
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la
te
s.
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ab
ot
ag
e,
th
ef
t o
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nt
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l
pr
op
er
ty
a
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on
ey
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re
at
. D
ai
ly
h
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dl
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sk
is
a
n
ew
re
al
it
y.
C
om
m
er
ci
al
iz
ed
c
yb
er
se
cu
rit
y:
19
94
: N
et
sc
ap
e
D
ev
el
op
s s
ec
ur
e
so
ck
et
s
la
ye
r e
nc
ry
pt
io
n,
co
m
m
er
ci
al
ly
a
va
ila
bl
e
se
cu
ri
ty
so
ftw
ar
e,
to
se
cu
re
o
nl
in
e
tr
an
sa
ct
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ns
.
Fe
w
g
ro
up
s c
on
ce
rn
ed
w
ith
in
fo
rm
at
io
n
se
cu
rit
y
ex
ce
pt
go
ve
rn
m
en
t,
m
ili
ta
ry
,
ba
nk
s a
nd
c
re
di
t c
ar
d
co
m
pa
ni
es
.
9/
11
Ev
ol
ut
io
n
of
c
yb
er
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tt
ac
ks
:
H
ig
he
r v
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um
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of
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ta
ck
s:
20
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:
N
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n
st
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sp
on
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ck
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em
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in
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l w
ay
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20
13
–2
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4:
T
ar
ge
t h
as
7
0
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ill
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er
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cr
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s b
re
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he
d.
20
13
: B
oo
z
A
lle
n
em
pl
oy
ee
a
nd
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on
tr
ac
to
r
fo
r t
he
N
SA
, E
dw
ar
d
Sn
ow
de
n
st
ea
ls
an
d
le
ak
s
de
ta
ils
o
f s
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al
to
p-
se
cr
et
U
.S
. a
nd
B
rit
ish
g
ov
er
nm
en
t
m
as
s s
ur
ve
ill
an
ce
p
ro
gr
am
s
to
th
e
pr
es
s.
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m
el
in
e
of
e
ve
nt
s
20
14
: H
om
e
D
ep
ot
su
ffe
rs
a
6
-m
on
th
b
re
ac
h
of
it
s
pa
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en
t s
ys
te
m
a
ffe
ct
in
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m
or
e
th
an
5
3
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ill
io
n
cr
ed
it
an
d
de
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t c
ar
ds
.
20
14
:
JP
M
or
ga
n
C
ha
se
su
ffe
rs
a
b
re
ac
h
aff
ec
tin
g
76
m
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io
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st
om
er
s a
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ve
n
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ill
io
n
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sin
es
se
s.
Fi
gu
re
9
.1
T
he
c
ha
ng
in
g
pa
ce
o
f c
yb
er
s
ec
ur
ity
. (
Fr
om
R
us
se
ll
Re
yn
ol
ds
A
ss
oc
ia
te
s
20
14
p
re
se
nt
at
io
n.
)
241ForMInG A CYber seCurItY Culture
The conventional wisdom among cyber experts is that no business
can be compromise proof from attacks. Thus, leaders need to realize
that there must be (1) other ways beyond just developing new anti-
software to ward off attacks, and (2) internal and external strategies to
deal with an attack when it occurs. These challenges in cyber security
management can be categorized into three fundamental components:
• Learning how to educate and present to the board of directors
• Creating new and evolving security cultures
• Understanding what it means organizationally to be
compromised
Each of these components is summarized below
Talking to the Board
Board members need to understand the possible cyber attack expo-
sures of the business. They certainly need regular communication
from those executives responsible for protecting the organization.
Seasoned security executives can articulate the positive processes that
are in place, but without overstating too much confidence since there
is always risk of being compromised. That is, while there may be expo-
sures, C-level managers should not hit the panic button and scare the
board. Typically, fear only instills a lack of confidence by the board in
the organization’ s leadership. Most important is to always relate secu-
rity to business objectives and, above all, avoid “ tech” terms during
meetings. Another important topic of discussion is how third-party
vendors are being managed. Indeed, so many breaches have been
caused by a lack of oversight of legacy applications that are controlled
by third-party vendors. Finally, managers should always compare the
state of security with that of the company’ s competitors.
Establishing a Security Culture
The predominant exposure to a cyber attack often comes from care-
less behaviors of the organization’ s employees. The first step to avoid
poor employee cyber behaviors is to have regular communication with
staff and establish a set of best practices that will clearly protect the
business. However, mandating conformance is difficult and research
242 InForMAtIon teChnoloGY
has consistently supported that evolutionary culture change is best
accomplished through relationship building, leadership by influence
(as opposed to power-centralized management), and ultimately, a
presence at most staff meetings. Individual leadership remains the
most important variable when transforming the behaviors and prac-
tices of any organization.
Understanding What It Means to Be Compromised
Every organization should have a plan of what to do when security
is breached. The first step in the plan is to develop a “ risk” culture.
What this simply means is that an organization cannot maximize
protection of all parts of its systems equally. Therefore, some parts of a
company’ s system might be more protected against cyber attacks than
others. For example, organizations should maximize the protection
of key company scientific and technical data first. Control of network
access will likely vary depending on the type of exposure that might
result from a breach. Another approach is to develop consistent best
practices among all contractors and suppliers and to track the move-
ment of these third parties (e.g., if they are merged/sold, disrupted
in service, or even breached indirectly). Finally, technology execu-
tives should pay close attention to Cloud computing alternatives and
develop ongoing reviews of possible threat exposures in these third-
party service architectures.
Cyber Security Dynamism and Responsive Organizational Dynamism
The new events and interactions brought about by cyber security
threats can be related to the symptoms of the dynamism that has
been the basis of ROD discussed earlier in this book. Here, however,
the digital world manifests itself in a similar dynamism that I will
call cyber dynamism .
Managing cyber dynamism, therefore, is a way of managing the
negative effects of a particular technology threat. As in ROD, cyber
strategic integration and cyber cultural assimilation remain as distinct
categories, that present themselves in response to cyber dynamism.
Figure 9.2 shows the components of cyber ROD.
243ForMInG A CYber seCurItY Culture
Cyber Strategic Integration
Cyber strategic integration is a process that firms need to use to address
the business impact of cyber attacks on its organizational processes.
Complications posed by cyber dynamism, via the process of strategic
integration, occurs when several new cyber attacks overlap and create a
myriad of problems in various phases of an organization’ s ability to oper-
ate. Cyber attacks can also affect consumer confidence, which in turn
hurts a business’s ability to attract new orders. Furthermore, the problem
can be compounded by reductions in productivity, which are complicated
to track and to represent to management. Thus, it is important that orga-
nizations find ways to develop strategies to deal with cyber threats such as:
1. How to reduce occurrences by instituting aggressive organi-
zation structures that review existing exposures in systems.
Cyber attacks as
an independent
variable
Organizational
dynamism
Requires
How to formulate risk-
related strategies to deal
with cyber attacks
Symptoms and
implications
Cyber
cultural
assimilation
Requires
Cyber
strategic
integration
Figure 9.2 Cyber responsive organizational dynamism. (From Langer, A., Information Technology
and Organizational Learning: Managing Behavioral Change through Technology and Education , CRC
Press, Boca Raton, FL, 2011.)
244 InForMAtIon teChnoloGY
2. What new threats exist, which may require ongoing research
and collaborations with third-party strategic alliances?
3. What new processes might be needed to combat new cyber
dynamisms based on new threat capabilities?
4. Creating systems architectures that can recover when a cyber
breach occurs.
In order to realize these objectives, executives must be able to
• Create dynamic internal processes that can function on a
daily basis, to deal with understanding the potential fit of new
cyber attacks and their overall impact to the local department
within the business, that is, to provide for change at the grass-
roots level of the organization.
• Monitor cyber risk investments and determine modifications
to the current life cycle of idea-to-reality.
• Address the weaknesses in the organization in terms of how
to deal with new threats, should they occur, and how to better
protect the key business operations.
• Provide a mechanism that both enables the organization to
deal with accelerated change caused by cyber threats and that
integrates them into a new cycle of processing and handling
change.
• Establish an integrated approach that ties cyber risk account-
ability to other measurable outcomes integrating acceptable
methods of the organization.
The combination of evolving cyber threats with accelerated and
changing consumer demands has also created a business revolution that
best defines the imperative of the strategic integration component of
cyber ROD. Without action directed toward new strategic integration
focused on cyber security, organizations will lose competitive advan-
tage, which will ultimately affect profits. Most experts see the danger
of breaches from cyber attacks as the mechanism that will ultimately
require the integrated business processes to be realigned, thus provid-
ing value to consumers and modifying the customer- vendor relation-
ship. The driving force behind this realignment emanates from cyber
dynamisms, which serve as the principle accelerator of the change in
transactions across all businesses.
245ForMInG A CYber seCurItY Culture
Cyber Cultural Assimilation
Cyber cultural assimilation is a process that addresses the organiza-
tional aspects of how the security department is internally organized,
its relationship with IT, and how it is integrated within the organiza-
tion as a whole. As with technology dynamism, cyber dynamism is
not limited only to cyber strategic issues, but cultural ones as well. A
cyber culture is one that can respond to emerging cyber attacks, in
an optimally informed way, and one that understands the impact on
business performance and reputation.
The acceleration factors of cyber attacks require more dynamic
activity within and among departments, which cannot be accom-
plished through discrete communications between groups. Instead,
the need for diverse groups to engage in more integrated discourse
and to share varying levels of cyber security knowledge, as well as
business-end perspectives, requires new organizational structures that
will give birth to a new and evolving business social culture.
In order to facilitate cyber cultural assimilation, organizations must
have their staffs be more comfortable with a digital world that contin-
ues to be compromised by outside threats. The first question becomes
one of finding the best structure to support a broad assimilation of
knowledge about any given cyber threat. The second is about how that
knowledge can best be utilized by the organization to develop both
risk efforts and attack resilience. Business managers therefore need
to consider cyber security and include the cyber staff in all decision-
making processes. Specifically, cyber assimilation must become fun-
damental to the cultural evolution.
While many scholars and managers suggest the need to have a
specific entity responsible for cyber security governance; one that is
to be placed within the organization’ s operating structure, such an
approach creates a fundamental problem. It does not allow staff and
managers the opportunity to assimilate cyber security-driven change
and understand how to design a culture that can operate under ROD.
In other words, the issue of governance is misinterpreted as a problem
of structural positioning or hierarchy when it is really one of cultural
assimilation. As a result, many business solutions to cyber security
issues often lean toward the prescriptive instead of the analytical in
addressing the real problem.
246 InForMAtIon teChnoloGY
Summary
This section has made the argument that organizations need to excel
in providing both strategic and cultural initiatives to reduce exposure
to cyber threats and ultimate security breaches. Executives must design
their workforce to meet the accelerated threats brought on by cyber
dynamisms. Organizations today need to adapt their staff to operate
under the auspices of ROD by creating processes that can determine
the strategic exposure of new emerging cyber threats and by establish-
ing a culture that is more “ defense ready.” Most executives across indus-
tries recognize that cyber security has become one of the most powerful
variables to maintaining and expanding company markets.
Organizational Learning and Application Development
Behavioral change, leading to a more resilient cyber culture, is just
one of the challenges in maximizing protection in organizations.
Another important factor is how to design more resilient applications
that are better equipped to protect against threats; that is, a decision
that needs to address exposure coupled with risk. The general con-
sensus is that no system can be 100% protected and that this requires
important decisions when analysts are designing applications and sys-
tems. Indeed, security access is not just limited to getting into the sys-
tem, but applies to the individual application level as well. How then
do analysts participate in the process of designing secure applications
through good design? We know that many cyber security architec-
tures are designed from the office of the chief information security
officer (CISO), a new and emerging role in organizations. The CISO
role, often independent of the chief information officer (CIO), became
significant as a result of the early threats from the Internet, the 9/11
attacks and most recently the abundant number of system compro-
mises experienced by companies such as JP Morgan Chase, SONY,
Home Depot, and Target, to name just a few.
The challenge of cyber security reaches well beyond just archi-
tecture. It must address third-party vendor products that are part of
the supply chain of automation used by firms, not to mention access
to legacy applications that likely do not have the necessary securities
built into the architecture of these older, less resilient technologies. This
247ForMInG A CYber seCurItY Culture
challenge has established the need for an enterprise cyber security solu-
tion that addresses the need of the entire organization. This approach
would then target third- party vendor design and compliance. Thus,
cyber security architecture requires integration with a firm’ s Software
Development Life Cycle (SDLC), particularly within steps that include
strategic design, engineering, and operations. The objective is to use a
framework that works with all of these components.
Cyber Security Risk
When designing against cyber security attacks, as stated above, there
is no 100% protection assurance. Thus, risks must be factored into
the decision-making process. A number of security experts often ask
business executives the question, “ How much security do you want,
and what are you willing to spend to achieve that security?”
Certainly, we see a much higher tolerance for increased cost given the
recent significance of companies that have been compromised. This sec-
tion provides guidance on how to determine appropriate security risks.
Security risk is typically discussed in the form of threats. Threats
can be categorized as presented by Schoenfield (2015):
1. Threat agent: Where is the threat coming from, and who is
making the attack?
2. Threat goals: What does the agent hope to gain?
3. Threat capability: What threat methodology, or type of
approach is the agent possibly going to use?
4. Threat work factor: How much effort is the agent willing to
put in to get into the system?
5. Threat risk tolerance: What legal chances is the agent willing
to take to achieve his or her goals?
Table 9.1 is shown as a guideline.
Depending on the threat and its associated risks and work factors,
it will provide important input to the security design, especially at the
application design level. Such application securities in design typically
include:
1. The user interface (sign in screen, access to specific parts of
the application).
248 InForMAtIon teChnoloGY
2. Command-line interface (interactivity) in online systems.
3. Inter-application communications. How data and password
information are passed, and stored, among applications across
systems.
Risk Responsibility
Schoenfield (2015) suggests that someone in the organization is
assigned the role of the “ risk owner.” There may be many risk owners
and, as a result, this role could have complex effects on the way sys-
tems are designed. For example, the top risk owner in most organiza-
tions today is associated with the CISO. However, many firms also
employ a chief risk officer (CRO). This role’ s responsibilities vary.
But risk analysis at the application design level requires different
governance. Application security risk needs involvement from the
business and the consumer and needs to be integrated within the risk
standards of the firm. Specifically, multiple levels of security often
require users to reenter secure information. While this may maximize
safety, it can negatively impact the user experience and the robust-
ness of the system interface in general. Performance can obviously
also be sacrificed, given the multiple layers of validation. There is no
quick answer to this dilemma other than the reality that more secu-
rity checkpoints will reduce user and consumer satisfaction unless
cyber security algorithms become more invisible and sophisticated.
However, even this approach would likely reduce protection. As with
all analyst design challenges, the IT team, business users, and now
the consumer must all be part of the decisions on how much security
is required.
As my colleague at Columbia University, Steven Bellovin, states
in his new book, Thinking Security , security is about a mindset. This
mindset to me relates to how we establish security cultures that can
Table 9.1: Threat Analysis
THREAT AGENT GOALS RISK TOLERANCE WORK FACTOR METHODS
Cyber criminals Financial Low Low to medium Known and proven
Source : Schoenfield, B.S.E., Securing Systems: Applied Security Architecture and Threat Models ,
CRC Press, Boca Raton, FL, 2015.
249ForMInG A CYber seCurItY Culture
enable the analyst to define organizational security as it relates to new
and existing systems. If we get the analyst position to participate in
setting security goals in our applications, some key questions accord-
ing to Bellovin (2015) are:
1. What are the economics to protect systems?
2. What is the best protection you can get for the amount of
money you want to spend?
3. Can you save more lives by spending that money?
4. What should you protect?
5. Can you estimate what it will take to protect your assets?
6. Should you protect the network or the host?
7. Is your Cloud secure enough?
8. Do you guess at the likelihood and cost of a penetration?
9. How do you evaluate your assets?
10. Are you thinking like the enemy?
The key to analysis and design in cyber security is recognizing that
it is dynamic; the attackers are adaptive and somewhat unpredictable.
This dynamism requires constant architectural change, accompanied
with increased complexity of how systems become compromised.
Thus, analysts must be involved at the conceptual model, which
includes business definitions, business processes and enterprise stan-
dards. However, the analysts must also be engaged with the logical
design, which comprises two sub-models:
1. Logical architecture : Depicts the relationships of different data
domains and functionalities required to manage each type of
information in the system.
2. Component model : Reflects each of the sub-models and appli-
cations that provide various functions in the system. The
component model may also include third-part vendor prod-
ucts that interface with the system. The component model
coincides, in many ways, with the process of decomposition.
In summary, the ROD interface with cyber security is more com-
plex than many managers believe. Security is relative, not absolute,
and thus leaders must be closely aligned with how internal cultures
must evolve with changes environments.
250 InForMAtIon teChnoloGY
Driver /Supporter Implications
Security has traditionally been viewed as a support function in most
organizations, particularly when it is managed by IT staff. However,
the recent developments in cyber threats suggest, as with other aspects
of technology, that security too has a driver side.
To excel in the role of security driver, leaders must:
• Have capabilities, budgets and staffing levels, using
benchmarks.
• Align even closer with users and business partners.
• Have close relationships with third parties.
• Extend responsibilities to include the growing challenges in
the mobile workforce.
• Manage virtualized environments and third-party ecosystems.
• Find and/or develop cyber security talent and human capital.
• Have a strategy to integrate millennials with baby boomer
and Gen X managers.
251
10
DigiTal TRansfoRmaTion
anD Changes in
ConsumeR behavioR
Introduction
Digital transformation is one of the most significant activities of the
early twenty-first century. Digital transformation is defined as “ the
changes associated with the applications of digital technology in all
aspects of human society” (Stolterman & Fors, 2004, p. 689). From a
business perspective, digital transformation enables organizations to
implement new types of innovations and to rethink business processes
that can take advantage of technology. From this perspective, digital
transformation involves a type of reengineering, but one that is not
limited to rethinking just how systems work together, but rather, that
extends to the entire business itself. Some see digital transformation
as the elimination of paper in organizations. Others see it as revamp-
ing a business to meet the demands of a digital economy. This chapter
provides a link between digital transformation and what I call “ digital
reengineering.” To explain this better, think of process reengineering
as the generation that brought together systems in the way that they
talked to one another— that is, the integration of legacy systems with
new application that used more robust software applications.
The advent of digital transformation requires the entire organization
to meet the digital demands of their consumers. For some companies, the
consumer is another company (B2B, or business-to-business), that is, the
consumer is a provider to another company that inevitably supports a con-
sumer. For other businesses, their consumer is indeed the ultimate buyer.
I will discuss the differences in these two types of consumer concepts later
in this chapter. What is important from an IT perspective is that reengi-
neering is no longer limited to just the needs of the internal user, but rather
the needs of the businesses consumer as well. So, systems must change,
252 InForMAtIon teChnoloGY
as necessary, with the changes in consumer behavior. The challenge with
doing this, of course, is that consumer needs are harder to obtain and
understand, and can differ significantly among groups, depending on
variables, such as ethnicity, age, and gender, to name just a few.
As a result, IT managers need to interact with the consumer more
directly and in partnership with their business colleagues. The con-
sumer represents a new type of user for IT staff. The consumer, in
effect, is the buyer of the organization’ s products and services. The
challenge becomes how to get IT more engaged with the buyer com-
munity, which could require IT to be engaged in multiple parts of
the business that deals with the consumer. Below are six approaches,
which are not mutually exclusive of each other:
1. Sales/Marketing : These individuals sell to the company’ s buy-
ers. Thus, they have a good sense of what customers are look-
ing for, what things they like about the business, and what
they dislike. The power of the sales and marketing team is
their ability to drive realistic requirements that directly impact
revenue opportunities. The limitation of this resource is that
it still relies on an internal perspective of the consumer; that
is, how the sales and marketing staff perceive the consumer’ s
needs.
2. Thirdparty market analysis/reporting : There are outside
resources available that examine and report on market trends
within various industry sectors. Such organizations typically
have massive databases of information and, using various
search and analysis tools, can provide a better understand-
ing of the behavior patterns of an organization’ s consumers.
These third parties can also provide reports that show how the
organization stacks up against its competition and why con-
sumers may be choosing alternative products. Unfortunately,
if the data is inaccurate it likely will result in false generaliza-
tions about consumer behavior, so it is critical that IT digital
leaders ensure proper review of the data integrity.
3. Predictive analytics : This is a hot topic in today’ s competitive
landscape for businesses. Predictive analytics is the process
of feeding off large data sets (big data) and predicting future
253dIGItAl trAnsForMAtIon
behavior patterns. Predictive analytics approaches are usually
handled internally with assistance from third-party products
or consulting services. The limitation is one of risk— the risk
that the prediction does not occur as planned.
4. Consumer support departments: Internal teams and external
vendors (outsourced managed service) have a good pulse
on consumer preferences because they interact with them.
More specifically, these department respond to questions,
hande problems and get feedback from consumers on a reg-
ular basis. These support departments typically depend on
applications to help the buyer. As a result, they are an excel-
lent resource for providing up-to-date things that the sys-
tem does not provide consumers. Unfortunately, consumer
support organizations limit their needs to what they expe-
rience as opposed to what might be future trends of their
consumers.
5. Surveys: IT and the business can design surveys (question-
naires) and send them to consumers for feedback. Using
surveys can be of significant value in that the questions can
target specific issues that the organization wants to address.
Survey design and administration can be handled by third-
party firms, which may have an advantage in that the ques-
tions are being forwarded from an independent source and
one that does not identify the interested company. On the
other hand, this might be considered a negative— it all
depends on what the organization is seeking to obtain from
the buyer.
6. Focus groups: This approach is similar to the use of a survey.
Focus groups are commonly used to understand consumer
behavior patterns and preferences. They are often conducted
by outside firms. The differences between the focus group
and a survey are (1) surveys are very quantitative based and
use scoring mechanisms (Likert scales) to evaluate outcomes.
Consumers sometimes may misinterpret the question thus
resulting in distorted feedback, and (2) focus groups are more
qualitative and allow IT digital leaders to engage with the
consumer in two-way dialogues.
254 InForMAtIon teChnoloGY
Figure 10.1 reflects a graphic depiction of the sources for under-
standing consumer behaviors and needs.
Table 10.1 further articulates the methods and deliverables that IT
digital leaders should consider when developing system strategies.
Requirements without Users and without Input
Could it be possible to develop digital strategies and requirements for
a system without user input or even consumer opinions? Could this be
a reality for future design of strategic systems?
Perhaps we need to take a step back historically and think about
trends that have changed the competitive landscape. Digital trans-
formation may indeed be the most powerful agent of change in the
history of business.
Product
requirements
Sales/marketing
Staff
competitive analysis
Surveys
Internal/external
targeted consumers
Consumer support
departments
Internal support
groups, third-party
call centers,
shared services
organization
�ird-party studies
and databases
Trends
Data analysts
Predictive analytics
Focus groups
Internal/external
consumer sessions
Figure 10.1 Sources for understanding consumer behavior.
255dIGItAl trAnsForMAtIon
We have seen large companies lose their edge. IBM’ s fall as the
leading technology firm in the 1990s is an excellent example, when
Microsoft overtook them. Yet Google was able to take the lead away
from Microsoft, particularly in relation to analytical consumer com-
puting. And what about the comeback Apple made with its new array
Table 10.1 Langer’ s Methods and Deliverables for Assessing Consumer Needs
ANALYST’ S
SOURCES METHODS DELIVERABLES
Sales/
Marketing
Interviews Should be conducted in a similar way to typical end user
interviews. Work closely with senior sales staff. Set up
interviews with key business stakeholders.
Win/loss sales
reviews
Review the results of sales efforts. Many firms hold formal
win/loss review meetings that may convey important
limitations of current applications and system
capabilities.
Third-Party
Databases
Document
reports
reviews
Obtain summaries of the trends in consumer behavior and
pinpoint shortfalls that might exist in current applications
and systems.
Data analysis Perform targeted analytics on databases to uncover trends
not readily conveyed in available reports.
Predictive
analytics
Interrogate data by using analytic formulas that may
enable predictive trends in consumer behavior.
Support
Department
Interviews Interview key support department personnel (internal and
third party) to identify possible application deficiencies.
Data/reports Review call logs and recorded calls between consumers
and support personnel to expose possible system
deficiencies.
Surveys Internal and
external
questionnaires
Work with internal departments to determine application
issues when they support consumers. Use similar surveys
with select populations of customers to validate and
fine-tune internal survey results.
Use similar surveys targeted to consumers who are not
customers and compare results. Differences between
existing customer base and non-customers may expose
new trends in consumer needs.
Focus Groups Hold internal
and external
sessions
Internal focus groups can be facilitated by marketing
personnel. Select survey results, that had unexpected
results or mixed feedback can be reviewed. Internal
attendees should come from operations management and
sales. External focus groups should be facilitated by a
third-party vendor and held at independent sites.
Discussions with customers should be compared with
internal focus group results. Consumer focus groups
should be facilitated by professional third-party firms.
256 InForMAtIon teChnoloGY
of smart phone-related products? The question is, Why and how do
these shifts in competitive advantage occur so quickly?
Technology continues to generate change and that change is
typically referred to today as a “ digital disruption.” The challenge
in disruption is the inability to predict what consumers want and
need; furthermore, the consumer may not know! The challenge,
then, is for IT digital leaders to forecast the changes that are
brought about by technology disruptions. So, digital transforma-
tion is more about predicting consumer behavior and providing
new products and services, which we hope consumers will want.
This is a significant challenge for IT leaders, of course, given that
the profession was built on the notion that good specifications
accurately depicted what users want. Langer (1997) originally
defined this as the “ Concept of the Logical Equivalent.” So, we
may have created an oxymoron— how do we develop systems that
the user cannot specify? Furthermore, requirements that depict
consumer behavior are now further complicated by the globaliza-
tion of business. Which consumer behavior are we attempting to
satisfy and across what societal cultural norms? The reality is that
new software applications will need to be built with some uncer-
tainty. That is, some business rules may be vague and risks will
need to be part of the process of system functionality. To see an
example of designing systems based on uncertainty, we need only
to analyze the evolution of the electronic spreadsheet. The first
electronic spreadsheet, called VisiCalc, was introduced by a com-
pany called VisiCorp. It was designed for the Apple II and eventu-
ally the IBM personal computer. The electronic spreadsheet was
not designed based on consumer input per se, rather on perceived
needs by visionary designers who saw a need for a generic calcula-
tor and mathematical worksheet. VisiCorp took a risk by offer-
ing a product to the market that consumers would find useful. Of
course, history shows that it was a very good risk. The electronic
spreadsheet, which is now dominated by Microsoft’ s Excel product
has gone through multiple product generations. The inventors of
the electronic spreadsheet had a vision and the market responded
favorably. Although VisiCorp’ s vision of the market need was cor-
rect, the first version was hardly 100% accurate of what consumers
would want in a spreadsheet. For example, additional features, such
257dIGItAl trAnsForMAtIon
as a database interface, three-dimensional spreadsheets to support
budgeting and forward referencing, are all examples of responses
from consumers that resulted in new product enhancements.
Allen and Morton (1994) established an excellent graphic depic-
tion of the relationship between technology advancements and mar-
ket needs (Figure 10.2)
Figure 10.2 shows an interesting life cycle of how product innovations
relate to the creation of new products and services. The diagram reflects
that innovations can occur as a result of new technology capabilities or
inventions that establish new markets— like the electronic spreadsheet.
On the other hand, the market can demand more features and functions
the technology organizations or developers need to respond to that— like
the upgrades made over the years to spreadsheet applications. Responding
to market needs are what most organizations have practiced over the past
60 years, usually working with their end user populations (those internal
users that supported the actual consumer). The digital revolution; how-
ever, is placing more emphasis on “ generic” applications that resemble the
object paradigm (one that requires applications to be able to fit into any
business application). This trend will drive new and more advanced object-
driven applications. These applications will reside in a more robust object
functioning library that can dynamically link these modules together to
form specific applications that can support mul consumer devices (what is
now being called the “ Internet of Things” ).
Another useful approach to dealing with consumer preferences is
Porter’ s Five Forces Framework. Porter’s framework consists of the
following five components:
1. Competitors : What is the number of competitors in the market
and what is the organization’ s position within the market?
Technology
Market
Innovation
Figure 10.2 Technology, innovation, and market needs.
258 InForMAtIon teChnoloGY
2. New entrants : What companies can come into the organiza-
tion’ s space and provide competition?
3. Substitutes : What products or services can replace what you do?
4. Buyers : What alternatives do buyers have? How close and
tight is the relationship between the buyer and seller?
5. Suppliers : What is the number of suppliers that are available,
which can affect the relationship with the buyer and also
determine price levels?
Porter’ s framework is graphically depicted in Figure 10.3.
Cadle et al. (2014) provide an approach to using Porter’ s model as
part of the analysis and design process. Their approach is integrated
with Langer’ s Analysis Consumer Methods in Table 10.2.
Concepts of the S-Curve and Digital
Transformation Analysis and Design
Digital transformation will also be associated with the behavior of the
S-curve. The S-curve has been a long-standing economic graph that
depicts the life cycle of a product or service. The S-curve is shown in
Figure 10.4
New
entrants
Suppliers
Consumer
support dept.
Buyers
Industry
competitors
(sales and
marketing)
Substitutes
New products
or services
Sales and
marketing
Figure 10.3 Porter’ s Five Forces Framework.
259dIGItAl trAnsForMAtIon
The left and lower portion of the S-curve represents a growing
market opportunity that is likely volatile and exists where demand
exceeds supply. As a result, the market opportunity is large and prices
for the product are high. Thus, businesses should seek to capture as
much of the market share at this time before competitors catch up.
This requires the business to take more risk and assumes that the mar-
ket will continue to demand the product. The shape of the S-curve
suggests the life of this opportunity (the length of the x-axis repre-
sents the lifespan of the product).
As the market approaches the middle of the center of the S-curve,
demand begins to equal supply. Prices start to drop and the market, in
general, becomes less volatile and more predictable. The drop in price
reflects the presence of more competitors. As a product or service
approaches the top of the S, supply begins to exceed demand. Prices
begin to fall and the market is said to have reached maturity. The
uniqueness of the product or service is now approaching commodity.
Table 10.2 Langer’ s Analysis Consumer Methods
PORTER’ S FIVE FORCES CADEL ET AL’ S APPROACH LANGER’ S SOURCES OF INPUT
Industry competitors How strong is your market
share?
Third-party market studies
New entrants New threats Third-party market studies
Surveys and focus groups
Suppliers Price sensitivity and closeness
of relationship.
Consumer support and end user
departments
Buyers Alternative choices and brand
equity.
Sales/marketing team
Substitutes Consumer alternatives Surveys and focus groups
Sales and marketing team
Third-party studies
Figure 10.4 The S-curve.
260 InForMAtIon teChnoloGY
Typically, suppliers will attempt to produce new features and func-
tions to extend the life of the curve as shown in Figure 10.5
Establishing a new S-curve, then, extends the competitive life of
the product or service. Once the top of the S-curve is reached, the
product or service has reached the commodity level, where supply is
much greater than demand. Here, the product or service has likely
reached the end of its useful competitive life and should either be
replaced with a new solution or considered for outsourcing to a third-
party who can deliver the product at a very low price.
Langer’ s Driver/Supporter depicts the life cycle of any application
or product as shown in Figure 10.6
Organizational Learning and the S-Curve
When designing a new application or system, the status of that
product’ s S-curve should be carefully correlated to the source of the
Figure 10.5 Extended S-curve.
Mini loop technology enhancementsTechnology
driver
Evaluation
cycle
Driver
maturation
Support
status
Replacement or
outsource
Economies
of scale
Figure 10.6 Langer’ s drive/supporter life cycle.
261dIGItAl trAnsForMAtIon
requirements. Table 10.3 reflects the corresponding market sources
and associated risk factors relating to the dependability of require-
ments based on the state of the consumer’ s market. Leaders engaged
in this process obviously need to have an abstract perspective to sup-
port a visionary and risk-oriented strategy. Table 10.3 includes the
associated complexity of staff needed to deal with each period in the
S-curve.
Communities of Practice
As stated in Chapter 4, Communities of Practice (COP) have been
traditionally used as a method of bringing together people in orga-
nizations with similar talents, responsibilities and/or interests. Such
communities can be effectively used to obtain valuable information
about the way things work and what is required to run business opera-
tions. Getting such information strongly correlates to the challenges of
obtaining dependable information from the consumer market. I dis-
cussed the use of surveys and focus groups earlier in this chapter, but
COP is an alternative approach to bringing together similar types of
consumers grouped by their interests and needs. In digital transforma-
tion we find yet another means of obtaining requirements by engaging
in, and contributing to, the practices of specific consumer communities.
This means that working with COP offers another way of developing
relations with consumers to better understand their needs. Using this
Table 10.3 S-Curve, Application Requirement Sources, and Risk
S-CURVE STATUS
ANALYSIS INPUT
SOURCE RISK FACTOR
Early S-curve Consumer High; market volatility and uncertainty.
High S-curve Consumer Lower; market is less uncertain as product becomes
more mature.
End users Medium; business users have experience with
consumers and can provide reasonable requirements.
Crest of the
S-curve
End users Low; business users have more experience as product
becomes mature.
Consumer High; might consider new features and functions to
keep product more competitive. Attempt to establish
new S-curve.
End of S-curve End user None; seek to replace product or consider third-party
product to replace what is now a legacy application.
Also think of outsourcing application.
262 InForMAtIon teChnoloGY
approach inside an organization, as we saw in Chapter 4, provides a
means of better learning about issues by using a sustained method of
remaining interconnected with specific business user groups, which can
define what the organization really knows and contributes to the busi-
ness that is typically not documented. IT digital leaders need to become
engaged in learning if they are to truly understand what is needed to
develop more effective and accurate software applications.
It seems logical that COP can provide the mechanism to assist IT
digital leaders with an understanding of how business users and con-
sumers behave and interact. Indeed, the analyst can target the behavior
of the community and its need to consider what new organizational
structures can better support emerging technologies. I have, in many
ways, already established and presented what should be called the
“ community of IT digital leaders” and its need to understand how to
restructure, in order to meet the needs of the digital economy. This new
era does not lend itself to the traditional approaches to IT strategy, but
rather to a more risk-based process that can deal with the realignment
of business operations integrated with different consumer relationships.
The relationship, then, between COP and digital transformation is
significant, given that future IT applications will heavily rely on infor-
mal inputs. While there may be attempts to computerize knowledge
using predictive analytics software and big data, it will not be able
to provide all of the risk-associated behaviors of users and consum-
ers. That is, a “ structured” approach to creating predictive behavior
reporting, is typically difficult to establish and maintain. Ultimately,
the dynamism from digital transformations creates too many uncer-
tainties to be handled by sophisticated automated applications on how
organizations will react to digital change variables. So, COP, along
with these predictive analytics applications, provides a more thorough
umbrella of how to deal with the ongoing and unpredictable interac-
tions established by emerging digital technologies.
The IT Leader in the Digital Transformation Era
When we discuss the digital world and its multitude of effects on how
business is conducted, one must ask how this impacts the profession
of IT Leader. This section attempts to address the perceived evolution
of the role.
263dIGItAl trAnsForMAtIon
1. The IT leader must become more innovative. While the
business has the problem of keeping up with changes in
their markets, IT needs to provide more solutions. Many
of these solutions will not be absolute and likely will have
short shelf lives. Risk is fundamental. As a result, IT lead-
ers must truly become “ business” leaders by exploring new
ideas from the outside and continually considering how
to implement the needs of the company’ s consumers. As
a result, the business analyst will emerge as an idea bro-
ker (Robertson & Robertson, 2012) by constantly pursuing
external ideas and transforming them into automated and
competitive solutions. These ideas will have a failure rate,
which means that companies will need to produce more
applications than they will inevitably implement. This will
certainly require organizations to spend more on software
development.
2. Quality requirements will be even more complex. In order to
keep in equilibrium with the S-curve the balance between
quality and production will be a constant negotiation.
Because applications will have shorter life cycles and there
is pressure to provide competitive solutions, products will
need to sense market needs and respond to them quicker. As
a result, fixes and enhancements to applications will become
more inherent in the development cycle after products go
live in the market. Thus, the object paradigm will become
even more fundamental to better software development
because it provides more readily tested reusable applications
and routines.
3. Dynamic interaction among users and business teams will
require the creation of multiple layers of communities of prac-
tice. Organizations involved in this dynamic process must
have autonomy and purpose (Narayan, 2015).
4. Application analysis, design, and development must be treated
and managed as a living process; that is, it never ends until the
product is obsolete (supporter end). So, products must con-
tinually develop to maturity.
5. Organizations should never outsource a driver technology
until it reaches supporter status.
264 InForMAtIon teChnoloGY
How Technology Disrupts Firms and Industries
The world economy is transforming rapidly from an analogue to a
digital-based technology-driven society. This transformation requires
businesses to move from a transactional relationship to one that that
is “ interactional” (Ernst & Young, 2012). However, this analogue to
digital transformation, while essential for a business to survive in the
twenty-first century, is difficult to accomplish. Langer’ s (2011) theory
of responsive organizational dynamism (ROD), as discussed earlier in
this book, is modified to show that successful adaptation of new digi-
tal technologies called Digital Dynamisms requires cultural assimila-
tion of the people that comprise the organization.
Dynamism and Digital Disruption
The effects of digital dynamism can also be defined as a form of
disruption or what is now being referred to as digital disruption .
Specifically, the big question facing many enterprises is around how
they can anticipate the unexpected threats brought on by technologi-
cal advances that can devastate their business. There are typically two
disruption factors:
1. A new approach to providing products and services to the
consumer.
2. A strategy not previously feasible, now made possible using
new technological capabilities.
Indeed, disruption occurs when a new approach meets the right
conditions. Because technology shortens the time it takes to reach
consumers, the changes are occurring at an accelerated and exponen-
tial pace. As an example, the table below shows the significant accel-
eration of the time it takes to reach 50 million consumers:
Radio 38 years
Television 13 years
Internet 4 years
Facebook 3.5 years
Twitter 9 months
Instagram 6 months
Poké mon GO 19 days
265dIGItAl trAnsForMAtIon
The speed of which we can accelerate change has an inverse effect
on the length of time the effect lasts. We use the S-curve to show how
digital disruption shortens the competitive life of new products and
services. Figure 10.7 represents how the S-curve is shrinking along
the x-axis, which measures the length or time period of the product/
service life.
Figure 10.7 essentially reflects that the life of a product or service is
shrinking, thus enterprises have less time to capture a market oppor-
tunity and far less time to enjoy the length of its competitive suc-
cess. As a result, business leaders are facing a world that is changing
at an accelerating rate and trying to cope with understanding how
new waves of “ disruptive” technologies will affect their business.
Ultimately, digital disruption shifts the way competitive forces deliver
services, requires change in the way operations are managed and mea-
sured, and shortens the life of any given product or service success.
Critical Components of “ Digital” Organization
A study conducted by Westerman et al. (2014), who interviewed 157
executives in fifty large companies, found four capabilities that were
key to successful digital transformation:
1. A unified digital platform : Integration of the organization’ s
data and processes across its department silos is critical. One
reason why web-based companies gain advantage over tradi-
tional competitors is their ability to use analytics and customer
personalization from central and integrated sources. Thus,
the first step toward a successful digital transformation is for
companies to invest in establishing central repositories of data
and common applications that can access the information.
Figure 10.7 The shrinking S-curve.
266 InForMAtIon teChnoloGY
This centralization of digital data is key to competing globally
since firms must be able to move data to multiple locations
and use that data in different contexts.
2. Solution delivery : Many traditional IT departments are not
geared to integrating new processes into their legacy opera-
tions. A number of firms have addressed this problem by
establishing independent “ innovation centers” designed to
initiate new digital ideas that are more customer solution ori-
ented. These centers typically focus on how new mobile and
social media technologies can be launched without disturb-
ing the core technology systems that support the enterprise.
Some of these initiatives include partnerships with high-tech
vendors; however, a number of executives have shown concern
that such alliances might result in dependencies because of
the lack of knowledge inside the organization.
3. Analytics capabilities : Companies need to ensure that their
data can be used for predictive analytics purposes. Predictive
analytics provide actors with a better understanding of their
consumer’ s behaviors and allow them to formulate competi-
tive strategies over their competitors. Companies that inte-
grate data better from their transactional systems can make
more “ informed and better decisions” and formulate strate-
gies to take advantage of customer preferences and thus, turn
them into business opportunities. An example is an insurance
company initiative that concentrates on products that meet
customer trends determined by examining their historical
transactions across various divisions of the business. Analytics
also helps organizations to develop risk models that can assist
them to formulate accurate portfolios.
4. Business and IT integration : While the integration of the IT
department with the business has been discussed for decades,
few companies have achieved a desired outcome (Langer,
2016). The need for digital transformation has now made this
integration essential for success and to avoid becoming a vic-
tim of disruption. True IT and business integration means
more than just combining processes and decision making; but
rather, the actual movement of personnel into business units
so they can be culturally assimilated (Langer & Yorks, 2013).
267dIGItAl trAnsForMAtIon
Assimilating Digital Technology Operationally and Culturally
When considering how to design an organization structure that
can implement digital technologies, firms must concentrate on how
to culturally assimilate a new architecture. The importance of the
architecture first affects the strategic integration component of
ROD. Indeed, the actor-oriented architecture must be designed to
be agile enough to react to increased changes in market demands.
The consumerization of technology, defined as changes in technol-
ogy brought on by increased consumer knowledge of how digital
assets can reduce costs and increase competitive advantage, have
created a continual reduction in the length of any new competitive
products or services life. Thus, consumerization has increased what
Eisenhardt and Bourgeouse (1988) define as “ high-velocity” market
conditions.
This dilemma drives the challenge of how organizations will cope
to avoid the negative effects of digital disruption. There are four over-
all components that appear to be critical factors of autonomy from
disruption:
1. Companies must recognize that speed and comfort of service
can be more important than just the cost: our experience is
that enterprises who offer multiple choices that allow con-
sumers to choose from varying levels of service options are
more competitive. The more personal the service option, the
higher the cost. Examples can be seen in the airline indus-
try where passengers have options for better seats at a higher
price, or a new option being offered by entertainment parks
that now provide less wait time on shorter lines, for higher
paying customers. These two examples match the price with
a desired service and firms that do not offer creative pricing
options are prime for disruption.
2. Empower your workforce to try new ideas without over con-
trols. Companies are finding that many young employees have
new service ideas but are blocked from trying them because
of the “ old guard” in their management reporting lines. Line
managers need to be educated on how to allow their staffs to
quickly enact new processes, even though some of them may
not be effective.
268 InForMAtIon teChnoloGY
3. Allow employees and customer to have choice of devices.
Traditionally IT departments desire to create environments
where employees adhere to standard hardware and software
structures. Indeed, standard structures make it easier for IT
to support internal users and provide better security across
systems. However, as technology has evolved, the relation
between hardware and software, especially in mobile devices,
has become more specialized. For example, Apple smart-
phones have proprietary hardware architectures that in many
cases require different versions of application software as well
as different security considerations than its major competi-
tor, Samsung. With the consumerization of technology, these
IT departments must now support multiple devices because
both their customers and employees are free to select them.
Therefore, it is important to allow staff to freely integrate
company applications with their personal device choices.
4. Similar to (3), organizations who force staff to adhere to strict
processes and support structures are exposed to digital dis-
ruption. Organizational structures that rely on technological
innovation must be able to integrate new digital opportuni-
ties seamlessly into their current production and support pro-
cesses. Specifically, this means having the ability to be agile
enough to provide services using different digital capabilities
and from different geographical locations.
Conclusion
This chapter has provided a number of different and complex aspects
of digital transformation, its effects on how organizations are struc-
tured and how they need to compete to survive in the future. The
technology executive is, by default, the key person to lead these digi-
tal transformation initiatives because of the technical requirements
that are at the center of successfully completing these projects. As
such, these executives must also focus on their own transformation as
leaders that allows them to help form the strategic goals to meet the
dynamic changes in consumer behavior.
269
11
inTegRaTing geneRaTion y
employees To aCCeleRaTe
CompeTiTive aDvanTage
Introduction
This chapter focuses on Gen Y employees who are also known as
“ digital natives” and “ millennials.” Gen Y employees possess the
attributes to assist companies in transforming their workforce to
meet the accelerated change in the competitive landscape. Most
executives across industries recognize that digital technologies are
the most powerful variable to maintaining and expanding company
markets. Gen Y employees provide a natural fit for dealing with
emerging digital technologies. However, success with integrating
Gen Y employees is contingent upon baby boomer and Gen X man-
agement to adapt new leadership philosophies and procedures suited
to meet the expectations and needs of these new workers. Ignoring
the unique needs of Gen Y employees will likely result in an incon-
gruent organization that suffers high turnover of young employees
who will seek more entrepreneurial environments.
I established in Chapter 10 that digital transformation is at the
core of change and competitive survival in the twenty-first cen-
tury. Chapter 10 did not address the changes in personnel that
are quickly becoming major issues at today’ s global firms. While I
offered changes to organizational structures, I did not address the
mixture of different generations that are at the fabric of any typical
organization. This chapter is designed to discuss how these multiple
generations need to “ learn” how to work together to form productive
and effective organizations that can compete in the digital economy.
Furthermore, this chapter will address how access to human capital
will change in the future and the different types of relationships
that individuals will have with employers. For example, the “ gig”
270 InForMAtIon teChnoloGY
economy will use non-traditional outside workers who will provide
sources of talent for shorter-term employment needs. Indeed, the
gig economy will require HR and IT leaders to form new and intri-
cate employee relationships.
As discussed in Chapter 10, companies need to transform their
business from analogue to one that uses digital technologies. Such
transformation requires moving from a transactional relation-
ship with customers to one that is more “ interactional” (Ernst &
Young, 2012). Completing an analogue to digital transformation,
while essential for a business to survive in the twenty-first century,
is difficult to accomplish. Responsive organizational dynamism
(ROD) showed us that successful adaptation of new digital tech-
nologies requires strategic integration and cultural assimilation of
the people that comprise the organization. As stated earlier, these
components of ROD can be categorized as the essential roles and
responsibilities of the organization that are necessary to utilize
new technological inventions that can strategically be integrated
within a business entity. The purpose here is to explore why Gen
Y employees need to be integrated with baby boomers and Gen X
staff to effectively enhance the success of digital transformation
initiatives.
The Employment Challenge in the Digital Era
Capgemini and MIT (2013) research shows that organizations need
new operating models to meet the demands of a digital-driven era.
Digital tools have provided leaders with ways to connect at an unprec-
edented scale. Digital technology has allowed companies to invade
other spaces previously protected by a business’ s “ asset specificities”
(Tushman & Anderson, 1997), which are defined as advantages
enjoyed by companies because of their location, product access, and
delivery capabilities. Digital technologies allow those specificities to
be neutralized and thus, change the previous competitive balances
among market players. Furthermore, digital technology acceler-
ates this process, meaning that changes in market share occur very
quickly. The research offers five key indicators that support successful
digital transformation in a firm:
271InteGrAtInG GenerAtIon Y
1. A company’ s strategic vision is only as effective as the people
behind it. Thus, winning the minds of all levels of the organi-
zation is required.
2. To become digital is to be digital. Companies must have a
“ one-team culture” and raise their employees’ digital IQ.
3. A company must address the scarcity of talented resources
and look more to using Gen Y individuals because they have
a more natural adaptation to take on the challenges of digital
transformation.
4. Resistant managers are impediments to progress and can
actually stop digital transformation.
5. Digital leadership starts at the top.
As stated in Chapter 10, Eisenhardt and Bourgeouis (1988) first
defined dynamic changing markets as being “ high-velocity.” Their
research shows that high-velocity conditions existed in the technol-
ogy industry during the early 1980s in Silicon Valley, in the United
States. They found that competitive advantage was highly dependent
on the quality of people that worked at those firms. Specifically, they
concluded that workers who were capable of dealing with change and
less subjected to a centralized totalitarian management structure out-
performed those that had more traditional hierarchical organizational
structures. While “ high-velocity” during the 1980s was unusual, dig-
ital disruption in the twenty-first century has made it a market norm.
The combination of evolving digital business drivers with acceler-
ated and changing customer demands has created a business revolution
that best defines the imperative of the strategic integration component
of ROD. The changing and accelerated way businesses deal with their
customers and vendors requires a new strategic integration to become
a reality, rather than remain a concept without action. Most experts
see digital technology as the mechanism that will require business
realignment to create new customer experiences. The driving force
behind this realignment emanates from digital technologies, which
serve as the principle accelerator of the change in transactions across
all business units. The general need to optimize human resources
forces organizations to rethink and to realign business processes, in
order to gain access to new business markets, which are weakening
the existing “ asset specificities” of the once dominant market leaders.
272 InForMAtIon teChnoloGY
Gen Y Population Attributes
Gen Y or digital natives are those people who are accustomed to the
attributes of living in a digital world and are 18– 35 years old. Gen Y
employees are more comfortable with accelerated life changes, par-
ticularly change brought on by new technologies. Such individuals,
according to a number of commercial and academic research studies
(Johnson Controls, 2010; Capgemini, 2013; Cisco, 2012; Saxena &
Jain, 2012), have attributes and expectations in the workplace that
support environments that are flexible, offer mobility, and provide
collaborative and unconventional relationships. Specifically, millen-
nial workers
• want access to dedicated team spaces where they can have
emotional engagements in a socialized atmosphere;
• require their own space; that is, are not supportive of a “ hotel-
ing” existence where they do not have a permanent office or
workspace;
• need a flexible life/work balance;
• prefer a workplace that supports formal and informal collab-
orative engagement.
Research has further confirmed that 79% of Gen Y workers pre-
fer mobile jobs, 40% want to drive to work, and female millennials
need more flexibility at work than their male counterparts. As a result
of this data, businesses will need to compete to recruit and develop
skilled Gen Y workers who now represent 25% of the workforce. In
India, while Gen Y represents more than 50% of the working popula-
tion, the required talent needed by businesses is extremely scarce.
Advantages of Employing Millennials to Support Digital Transformation
As stated, Gen Y adults appear to have many identities and capabilities
that fit well in a digital-driven business world. Indeed, Gen Y peo-
ple are consumers, colleagues, employees, managers, and innovators
(Johnson Controls, 2010). They possess attributes that align with the
requirements to be an entrepreneur, a person with technology savvy
and creativity, someone who works well in a mobile environment, and
is non-conformant enough to drive change in an organization. Thus,
273InteGrAtInG GenerAtIon Y
the presence of Gen Y personnel can help organizations to restrat-
egize their competitive position and to retain key talent (Saxena &
Jain, 2012). Furthermore, Gen Y brings a more impressive array of
academic credentials than their predecessors.
Most important is Gen Y’ s ability to deal better with market
change— which inevitably affects organizational change. That is, the
digital world market will constantly require changes in organizational
structure to accommodate its consumer needs. A major reason for Gen
Y’ s willingness to change is its natural alignment with a company’ s
customers. Swadzba (2010) posits that we are approaching the end of
what he called the “ work era” and moving into a new age based on
consumption. Millennials are more apt to see the value of their jobs
from their own consumption needs. Thus, they see employment as
an act of consumption (Jonas & Kortenius, 2014). Gen Y employees
therefore allow employers to acquire the necessary talent that can lead
to better consumer reputation, reduced turnover of resources and, ulti-
mately, increased customer satisfaction (Bakanauskiené et al., 2011).
Yet another advantage of Gen Y employees is their ability to transform
organizations that operate on a departmental basis into one that is
based more on function; an essential requirement in a digital economy.
Integration of Gen Y with Baby Boomers and Gen X
The prediction is that 76 million baby boomers (born 1946– 1964)
and Gen X workers (born 1965– 1984) will be retiring over the next
15 years. The question for many corporate talent executives is how to
manage the transition in a major multigenerational workforce. Baby
boomers alone still inhabit the most powerful leadership positions in
the world. Currently, the average age of CEOs is 56, and 65% of all
corporate leaders are baby boomers. Essentially, corporations need to
produce career paths that will be attractive to millennials. Thus, the
older generation needs to
• Acknowledge some of their preconceived perceptions of cur-
rent work ethics that are simply not relevant in today’ s com-
plex environments.
• Allow Gen Y to escalate in ranks to satisfy their ambitions
and sense of entitlement.
274 InForMAtIon teChnoloGY
• Implement more flexible work schedules, offer telecommut-
ing, and develop a stronger focus on social responsibility.
• Support more advanced uses of technology, especially those
used by Gen Yers in their personal lives.
• Employ more mentors to help Gen Y employees to better
understand the reasons for existing constraints in the organi-
zations where they work.
• Provide more complex employee orientations, more timely
personnel reviews, and in general more frequent feedback
needed by Gen Y individuals.
• Establish programs that improve the verbal communications
skills of Gen Y workers that are typically more comfortable
with nonverbal text-based methods of communication.
• Implement more continual learning and rotational programs
that support a vertical growth path for younger employees.
In summary, it is up to the baby boomer and Gen X leaders to
modify their styles of management to fit the needs of their younger
Gen Y employees. The challenge to accomplish this objective is com-
plicated, given the wide variances on how these three generations
think, plan, take risks, and most important, learn.
Designing the Digital Enterprise
Zogby completed an interactive poll of 4,811 people on perceptions
of different generations. 42% of the respondents stated that baby
boomers would be remembered for their focus on consumerism and
self-indulgence. Gen Y, on the other hand, are considered more self-
interested, entitled narcissists who want to spend all their time post-
ing “ selfies” to Facebook. However, other facts offer an expanded
perception of these two generations, as shown in Table 11.1
Research completed by Ernst and Young (2013) offers additional
comparisons among the three generations as follows:
1. Gen Y individuals are moving into management positions
faster due to retirements, lack of corporate succession plan-
ning, and their natural ability to use technology at work.
Table 11.2 shows percentage comparisons between 2008
and 2013.
275InteGrAtInG GenerAtIon Y
The acceleration of growth to management positions among
Gen Y individuals can be further illuminated in Table 11.3 by
comparing the prior five-year period from 2003 to 2007.
2. While responders of the survey felt Gen X were better
equipped to manage than Gen Y, the number of Gen Y man-
agers is expected to double by 2020 due to continued retire-
ments. Another interesting result of the research relates to
Gen Y expectations from their employers when they become
managers. Specifically Gen Y managers expect (1) an oppor-
tunity to have a mentor, (2) to receive sponsorship, (3) to have
more career-related experiences, and (4) to receive training to
build their professional skills.
3. Seventy-five percent of respondents that identified themselves
as managers agree that managing the multiple generations is
a significant challenge. This was attributed to different work
expectations and the lack of comfort with younger employees
managing older employees.
Table 11.4 provides additional differences among the three
generations:
Table 11.1 Baby Boomers versus Gen Y
BABY BOOMERS GEN Y
Married later and less children Not as aligned to political parties
Spend lavishly More civically engaged
More active and selfless Socially active
Fought against social injustice, supported civil
rights, and defied the Vietnam War
Cheerfully optimistic
Had more higher education access More concerned with quality of life than
material gain
Table 11.2 Management Roles 2008– 2013
Baby boomer (ages 49– 67) 19%
Gen X (ages 33– 48) 38%
Gen Y (18– 32) 87%
Table 11.3 Management Roles 2003– 2007
Baby boomer (ages 49– 67) 23%
Gen X (ages 33– 48) 30%
Gen Y (18– 32) 12%
276 InForMAtIon teChnoloGY
Assimilating Gen Y Talent from Underserved
and Socially Excluded Populations
The outsourcing of jobs outside of local communities to countries with
lower employment costs has continued to grow during the early part
of the twenty-first century. This phenomenon has led to significant
social and economic problems, especially in the United States and
in Western Europe as jobs continue to migrate to foreign countries
where there are lower labor costs and education systems that provide
Table 11.4 Baby Boomer, Gen X and Gen Y Compared
BABY BOOMERS GEN X GEN Y
Seek employment in large
established companies that
provide dependable
employment.
Established companies no
longer a guarantee for
lifetime employment. Many
jobs begin to go offshore.
Seek multiple experiences with
heavy emphasis on social
good and global experiences.
Re-evaluation of offshoring
strategies.
Process of promotion is well
defined, hierarchical and
structured, eventually leading
to promotion and higher
earnings—concept of
waiting your turn.
Process of promotion still
hierarchical, but based more
on skills and individual
accomplishments. Master’s
degree now preferred for
many promotions.
Less patience with hierarchical
promotion policies. More
reliance on predictive
analytics as the basis for
decision making.
Undergraduate degree
preferred but not mandatory.
Undergraduate degree required
for most professional job
opportunities.
More focus on specific skills.
Multiple strategies developed
on how to meet shortages of
talent. Higher education is
expensive and concerns
increase about the value of
graduate knowledge and
abilities.
Plan career preferably with one
company and retire.
Acceptance of a gradual
process of growth that was
slow to change. Successful
employees assimilated into
existing organizational
structures by following the
rules.
Employees begin to change
jobs more often, given growth
in the technology industry,
and opportunities to increase
compensation and accelerate
promotion by switching jobs.
Emergence of a “gig” economy,
and the rise of multiple
employment relationships
Entrepreneurism was seen as
an external option for those
individuals desiring wealth
and independence and
willing to take risks.
Corporate executives’
compensation dramatically
increases, no longer requiring
starting businesses as the
basis for wealth.
Entrepreneurism promoted
in Higher Education as the
basis for economic growth,
given the loss of jobs in
the U.S.
277InteGrAtInG GenerAtIon Y
more of the skills needed by corporations. Most impacted by the loss
of jobs have been the underserved or socially excluded Gen Y youth
populations. Indeed, the European average for young adult unem-
ployment (aged 15– 25) in 2013 was nearly 25%, almost twice the
rate for their adult counterparts (Dolado, 2015). Much of the loss of
local jobs can be attributed to expansion of the globalized economy,
which has been accelerated by continued technological advancements
(Wabike, 2014). Thus, the effects of technology gains have negatively
impacted efforts toward social inclusion and social equality.
Langer, in 2003, established an organization called Workforce
Opportunity Services (WOS), as a means of utilizing a form of action
research using adult development theory to solve employment problems
caused by outsourcing. Langer’ s approach is based on the belief that
socially excluded youth can be trained and prepared for jobs in areas such
as information technology that would typically be outsourced to lower
labor markets. WOS has developed a talent-finding model that has suc-
cessfully placed over 1400 young individuals in such jobs. Results of over
12 years of operation and research have shown that talented youth in
disadvantaged communities do exist and that such talent can economi-
cally and socially contribute to companies (Langer, 2013). The following
section describes the Langer Workforce Maturity Arc (LWMA), pres-
ents data on its effectiveness as a transformative learning instrument,
and discusses how the model can be used as an effective way of recruit-
ing Gen Y talent from underserved and socially excluded populations.
Langer Workforce Maturity Arc
The Langer Workforce Maturity Arc (LWMA) was developed to help
evaluate socially excluded youth preparation to succeed in the workplace.
The LWMA, initially known as the Inner-City Workplace Literacy Arc:
charts the progression of underserved or ‘ excluded’ individuals along
defined stages of development in workplace culture and skills in relation
to multiple dimensions of workplace literacy such as cognitive growth
and self-reflection. When one is mapped in relation to the other (work-
place culture in relation to stages of literacy assimilation), an Arc is
created. LWMA traces the assimilation of workplace norms, a form of
individual development. (Langer, 2003: 18)
278 InForMAtIon teChnoloGY
The LWMA addresses one of the major challenges confronting an
organization’ s HR group: to find talent from diverse local populations
that can successfully respond to evolving business norms, especially those
related to electronic and digital technologies. The LWMA provides a
method for measuring the assimilation of workplace cultural norms and
thus, can be used to meet the mounting demands of an increasingly
global, dynamic, and multicultural workplace. Furthermore, if organi-
zations are to attain acceptable quality of work from diverse employees,
assimilation of socially or economically excluded populations must be
evaluated based on (1) if and how individuals adopt workplace cultural
norms, and (2) how they become integrated into the business (Langer,
2003). Understanding the relationship between workplace assimila-
tion and its development can provide important information on how
to secure the work ethic, dignity, solidarity, culture, cognition, and
self-esteem of individuals from disadvantaged communities, and their
salient contributions to the digital age.
Theoretical Constructs of the LWMA
The LWMA encompasses sectors of workplace literacy and stages of lit
eracy development , and the arc charts business acculturation require-
ments as they pertain to disadvantaged young adult learners. The
relationship between workplace assimilation and literacy is a chal-
lenging subject. A specific form of literacy can be defined as a social
practice that requires specific skills and knowledge (Rassool, 1999).
In this instance, workplace literacy addresses the effects of workplace
practices and culture on the social experiences of people in their work-
day, as well as their everyday lives. We need to better understand how
individual literacy in the workplace, which subordinates individuality
to the demands of an organization, is formulated for diverse groups
(Newman, 1999). Most important, are the ways in which one learns
how to behave effectively in the workplace— the knowledge, skill, and
attitude sets required by business generally, as well as by a specific
organization. This is particularly important in disadvantaged commu-
nities, which are marginalized from the experiences of more affluent
communities in terms of access to high-quality education, informa-
tion technologies, job opportunities, and workplace socialization. For
example, Friedman et al. (2014) postulate that the active involvement
279InteGrAtInG GenerAtIon Y
of parents in the lives of their children greatly impacts a student’ s
chances of success. It is the absence of this activism that contributes
to a system of social exclusion of youth. Prior to determining what
directions to pursue in educational pedagogies and infrastructures, it
is necessary to understand what workplace literacy requirements are
present and how they can be developed for disadvantaged youth in the
absence of the active support from families and friends.
The LWMA assesses individual development in six distinct sectors
of workplace literacy:
1. Cognition : Knowledge and skills required to learn and com-
plete job duties in the business world, including computational
skills; ability to read, comprehend, and retain written infor-
mation quickly; remembering and executing oral instructions;
and critically examining data.
2. Technology : An aptitude for operating various electronic and
digital technologies.
3. Business culture : Knowledge and practice of proper etiquette
in the workplace including dress codes, telephone and in-per-
son interactions, punctuality, completing work and meeting
deadlines, conflict resolution, deference and other protocols
associated with supervisors and hierarchies.
4. Socioeconomic values : Ability to articulate and act upon main-
stream business values, which shape the work ethic. Such val-
ues include independent initiative, dedication, integrity, and
personal identification with career goals. Values are associated
with a person’ s appreciation for intellectual life, cultural sen-
sitivity to others, and sensitivity for how others view their role
in the workplace. Individuals understand that they should
make decisions based on principles and evidence rather than
personal interests.
5. Community and ethnic solidarity : Commitment to the educa-
tion and professional advancement of persons in ethnic minor-
ity groups and underserved communities. Individuals can use
their ethnicity to explore the liberating capacities offered in
the workplace without sacrificing their identity (i.e., they can
assimilate workplace norms without abandoning cultural,
ethnic, or self-defining principles and beliefs).
280 InForMAtIon teChnoloGY
6. Selfesteem : The view that personal and professional success
work in tandem, and the belief in one’ s capacity to succeed
in both arenas. This includes a devotion to learning and self-
improvement. Individuals with high self-esteem are reflective
about themselves and their potential in business. They accept
the realities of the business world in which they work and
can comfortably confirm their business disposition, indepen-
dently of others’ valuations.
Each stage in the course of an individual’ s workplace development
reflects an underlying principle that guides the process of adopting
workplace norms and behavior. The LWMA is a classificatory scheme
that identifies progressive stages in the assimilated uses of workplace
literacy. It reflects the perspective that an effective workplace partici-
pant is able to move through increasingly complex levels of thinking
and to develop independence of thought and judgment (Knefelkamp,
1999). The profile of an individual who assimilates workplace norms
can be characterized in five developmental stages:
1. Concept recognition : The first stage represents the capacity to
learn, conceptualize, and articulate key issues related to the
six sectors of workplace literacy. Concept recognition provides
the basis for becoming adaptive to all workplace requirements.
2. Multiple workplace perspectives : This refers to the ability to
integrate points of view from different colleagues at various
levels of the workplace hierarchy. By using multiple perspec-
tives, the individual is in a position to augment his or her
workplace literacy.
3. Comprehension of business processes : Individuals increase their
understanding of workplace cooperation, competition, and
advancement as they build on their recognition of busi-
ness concepts and workplace perspectives. They increasingly
understand the organization as a system of interconnected
parts.
4. Workplace competence : As assimilation and competence increase,
the individual learns not only on how to perform a particu-
lar job adequately but how to conduct oneself professionally
within the workplace and larger business environment.
281InteGrAtInG GenerAtIon Y
5. Professional independence : Individuals demonstrate the ability
to employ all sectors of workplace literacy to compete effec-
tively in corporate labor markets. They obtain more respon-
sible jobs through successful interviewing and workplace
performance and demonstrate leadership abilities, leading to
greater independence in career pursuits. Professionally inde-
pendent individuals are motivated and can use their skills for
creative purposes (Langer, 2009).
The LWMA is a rubric that charts an individual’ s development
across the six sectors of workplace literacy. Each cell within the matrix
represents a particular stage of development relative to that sector of
workplace literacy, and each cell contains definitions that can be used
to identify where a particular individual stands in his or her develop-
ment of workplace literacy.
The LWMA and Action Research
While the LWMA serves as a framework for measuring growth,
the model also uses reflection-with-action methods, a component
of action research theory, as the primary vehicle for assisting young
adults to develop the necessary labor market skills to compete for a
job and inevitably achieve some level of professional independence
(that is, the ability to work for many employers because of achiev-
ing required market skills). Reflection-with-action is used as a rubric
STAGES OF WORKPLACE LITERACY
SECTORS OF
WORKPLACE
LITERACY
CONCEPT
RECOGNITION
MULTIPLE
WORKPLACE
PERSPECTIVES
COMPREHENSION
OF BUSINESS
PROCESSES
WORKPLACE
COMPETENCE
PROFESSIONAL
INDEPENDENCE
Cognition
Technology
Business
Culture
Socio-
Economic
Values
Community
and Ethnic
Solidarity
Self-Esteem
282 InForMAtIon teChnoloGY
for a variety of methods, involving reflection in relation to learning
activities. Reflection has received a number of definitions from differ-
ent sources in the literature. Here, “ reflection-with-action” carries the
resonance of Schö n’ s (1983) twin constructs: “ reflection-on-action”
and “ reflection-in-action,” which emphasize (respectively) reflec-
tion in retrospect and reflection to determine what actions to take in
the present or immediate future (Langer, 2003). Dewey (1933) and
Hullfish and Smith (1978) also suggest that the use of reflection sup-
ports an implied purpose. Their formulation suggests the possibility
of reflection that is future oriented; what we might call “ reflection-to-
action.” These are methodological orientations covered by the rubric.
Reflection-with-action is critical to the educational and workplace
assimilation process of Gen Y. While many people reflect, it is in
being reflective that people bring about “ an orientation to their every-
day lives” (Moon, 2000). The LWMA incorporates reflection-with-
action methods as fundamental strategies for facilitating development
and assimilation. These methods are also implemented interactively,
for example in mentoring, reflective learning journals, and group dis-
cussions. Indeed, as stated by De Jong (2014), “ Social exclusion is
multi-dimensional, ranging from unemployment, barriers to educa-
tion and health care, and marginalized living circumstances” (p. 94).
Ultimately, teaching socially excluded youth to reflect-with-action is
the practice that will help them mature across the LWMA stages
and inevitably, achieve levels of inclusion in the labor market and in
citizenship.
Implications for New Pathways for Digital Talent
The salient implications of the LWMA, as a method of discover-
ing and managing disadvantaged Gen Y youth in communities,
can be categorized across three frames: demographic shifts in talent
resources, economic sustainability and integration and trust among
vested local interest groups.
Demographic Shifts in Talent Resources
The LWMA can be used as a predictive analytic tool for capturing
and cultivating the abilities in the new generation of digital natives
283InteGrAtInG GenerAtIon Y
from disadvantaged local communities. This young talent has the
advantage of more exposure to technologies, which senior workers
had to learn later in their careers. This puts them ahead of the curve
with respect to basic digital skills. Having the capacity to employ tal-
ent locally and provide incentives for these individuals to advance can
alleviate the significant strain placed on firms who suffer from high
turnover in outsourced positions. Investing in viable Gen Y under-
served youth can help firms close the skills gap that is prevalent in the
emerging labor force.
Economic Sustainability
As globalization ebbs and flows, cities need to establish themselves
as global centers, careful not to slip into market obsolescence, espe-
cially when facing difficulties in labor force supply chains. In order to
alleviate the difficulty in supplying industry-ready professionals to a
city only recently maturing into the IT-centric business world, firms
need to adapt to an “ on-demand” gig approach. The value drawn from
this paradigm lies in its cyclical nature. By obtaining localized human
capital at a lower cost, firms can generate a fundable supply chain of
talent and diversity as markets change over time.
Integration and Trust
Porter and Kramer (2011) postulate that companies need to formulate
a new method of integrating business profits and societal responsi-
bilities. They state, “ the solution lies in the principle of shared value,
which involves creating economic value in a way that also creates value
for society by addressing its needs and challenges” (p. 64). Porter and
Kramer suggest that companies need to alter corporate performance
to include social progress. The LWMA provides the mechanism, the-
ory, and measurement that is consistent with this direction and pro-
vides the vehicle that establishes a shared partnership of trust among
business, education, and community needs. Each of the interested
parties experiences progress toward its financial and social objectives.
Specifically, companies are able to attract diverse and socially excluded
local talent, and have the constituents trained specifically for its needs
and for an economic return that fits its corporate models. As a result,
284 InForMAtIon teChnoloGY
the community adds jobs, which reduces crime rates and increases tax
revenue. The funding corporation then establishes an ecosystem that
provides a shared value of performance that underserved and excluded
youth bring to the business.
Global Implications for Sources of Talent
The increasing social exclusion of Gen Y youth is a growing prob-
lem in almost every country. Questions remain about how to establish
systemic solutions that can create sustainable and scalable programs
that provide equity in access to education for this population. This
access to education is undoubtedly increasing employability, which
indirectly contributes to better citizenship for underserved youth.
Indeed, there is a widening gap between the “ haves” and the “ have-
nots” throughout the world. Firms can use tools like the LWMA to
provide a model that can improve educational attainment of under-
served youth by establishing skill-based certificates with universities,
coupled with a different employment-to-hire model. The results have
shown that students accelerate in these types of programs and ulti-
mately, find more success in labor market assimilation. The data sug-
gests that traditional degree programs that require full-time study at
university as the primary preparation for labor market employment
may not be the most appropriate approach to solving the growing
social inequality issue among youth.
Conclusion
This chapter has made the argument that Gen Y employees are “ digi-
tal natives” who have the attributes to assist companies to transform
their workforce and meet the accelerated change in the competitive
landscape. Organizations today need to adapt their staff to operate
under the auspices of ROD by creating processes that can determine
the strategic value of new emerging technologies and establish a cul-
ture that is more “ change ready.” Most executives across industries
recognize that digital technologies are the most powerful variable to
maintaining and expanding company markets.
Gen Y employees provide a natural fit for dealing with emerg-
ing digital technologies. However, success with integrating Gen Y
285InteGrAtInG GenerAtIon Y
employees is contingent upon baby boomer and Gen X manage-
ment adapting new leadership philosophies and procedures that are
suited to meet the expectations and needs of millennials. Ignoring the
unique needs of Gen Y employees will likely result in an incongruent
organization that suffers high turnover of young employees who will
ultimately seek a more entrepreneurial environment. Firms should
consider investing in non-traditional Gen Y youth from underserved
and socially excluded populations as alternate sources of talent.
http://taylorandfrancis.com
287
12
TowaRD besT pRaCTiCes
Introduction
The previous chapters provided the foundation for the formation of
“ best practices” to implement and sustain responsive organizational
dynamism (ROD). First, it is important to define what we mean by
best practices and specify which components comprise that definition.
Best practices are defined as generally accepted ways of doing spe-
cific functions or processes by a particular profession or industry. Best
practices, in the context of ROD, are a set of processes, behaviors, and
organizational structures that tend to provide successful foundations
to implement and sustain organizational learning. I defined respon-
sive organizational dynamism as the disposition of a company to
respond at the organizational level to the volatility of advancing tech-
nologies— ones that challenge the organization to manage a constant
state of dynamic and unpredictable change. Second, best practices are
those that need to be attributed to multiple communities of practice
as well as to the different professions or disciplines within a learning
organization.
However, these multiple tiers of best practices need to be integrated
and to operate with one another to be considered under the rubric.
Indeed, best practices contained solely within a discipline or com-
munity are limited in their ability to operate on an organization-wide
level. It is the objective of this chapter, therefore, to formulate a set of
distinctive yet integrated best practices that can establish and support
ROD through organizational learning. Each component of the set of
best practices needs to be accompanied by its own maturity arc, which
defines and describes the stages of development and the dimensions
that comprise best practices. Each stage defines a linear path of con-
tinued progress until a set of best practices is reached. In this way,
organizations can assess where they are in terms of best practices and
determine what they need to do to progress. Ultimately, each maturity
288 InForMAtIon teChnoloGY
arc will represent a subset of the overall set of best practices for the
organization.
The discipline that lays the foundation for ROD is information
technology (IT). Therefore, the role of the chief IT executive needs to
be at the base of organizational best practices. As such, I start build-
ing the organizational best practices model with the chief IT execu-
tive at the core.
Chief IT Executive
I use the title “ chief IT executive” to name the most senior IT indi-
vidual in an organization. Because of the lack of best practices in this
profession, a number of different titles are used to describe this job.
While these titles are distinct among themselves, I have found that
they are not consistently followed in organizations. However, it is
important to understand these titles and their distinctions, particu-
larly because an organizational learning practitioner will encounter
them in practice. These titles and roles are listed and discussed next:
Chief information officer (CIO) : This individual is usually the most
senior IT executive in an organization, although not every
organization has such a person. The CIO is not necessarily
the most technical of people or even someone who has come
through the “ ranks” of IT. Instead, this individual is consid-
ered an executive who understands how technology needs to
be integrated within the organization. CIOs typically have
other general IT executives and managers who report directly
to them. As shown in the Siemens case study, there can be a
number of alternate levels of CIOs, from corporate CIOs to
local CIOs of a company division. For the purposes of this
discussion, I look at the corporate CIO, who is considered part
of the senior executive management team. My research on
chief executive officer (CEO) perceptions of technology and
business strategy showed that only a small percentage of CIOs
report directly to the CEO of their organization, so it would
be incorrect to generalize that they report to the most senior
executive. In most cases, the CIO reports to the chief oper-
ating officer (COO) or the chief financial officer (CFO). As
289towArd best prACtICes
stated, the role of the CIO is to manage information so that it
can be used for business needs and strategy. Technology, then,
is considered a valuable part of knowledge management from a
strategic perspective as opposed to just a technical one.
Chief technology officer (CTO) : This individual, unlike the CIO, is
very much a senior technical person. The role of the CTO is to
ensure that the organization is using the best and most cost-
effective technology to achieve its goals. One could argue that
the CTO holds more of a research-and-development type of
position. In many organizations, the CTO reports directly to the
CIO and is seen as a component of the overall IT infrastructure.
However, some companies, like Ravell and HTC, only have a
CTO and view technology more from the technical perspective.
Chief knowledge officer (CKO) and chief digital officer (CDO) : This
role derives from library management organizations because of
the relevance of the word knowledge and/or data. It also com-
petes somewhat with the CIO’ s role when organizations view
technology from a perspective that relates more to knowledge.
In larger organizations, the CKO/CDO may report directly
to the CIO. In its purest role, the CKO/CDO is responsible
for developing an overall infrastructure for managing knowl-
edge, including intellectual capital, sharing of information,
and worker communication. Based on this description, the
CKO/CDO is not necessarily associated with technology but
is more often considered part of the technology infrastructure
due to the relevance of knowledge and data to technology.
To define best practices for this function, it is necessary to under-
stand the current information and statistics about what these people
do and how they do it. Most of the statistical data about the roles and
responsibilities of chief IT executives are reported under the auspices of
the CIO. According to an article by Jerry Gregoire in CIO magazine in
March 2002, 63% of IT executives held the title CIO, while 13% were
CTOs; there were few to no specific statistics available on the title of
CKO and CDO, however, the CDO role has become more relevant
over the past five years given the importance of social media and digital
transformations. This report further supported the claim that there is
limited use of the CKO title and function in organizations at this time.
290 InForMAtIon teChnoloGY
From a structural point of view, 63% of IT organizations are cen-
trally structured, while 23% are decentralized with a central reporting
structure. However, 14% are decentralized without any central head-
quarters or reporting structure. From a spending perspective, orga-
nizations spend most of their budgets on integrating technology into
existing applications and daily processing (36% of budget). Twenty-
six percent is related to investments in emerging or new technologies,
24% is based on investing in e-commerce activities, and 24% is spent
on customer relationship management (CRM), which is defined as
applications that engage in assisting organizations to better under-
stand and support their customer base. Twenty-five percent is spent
on staff development and retention.
Compensation of IT chief executives still comes predominantly
from base salary, as opposed to bonus or equity positions with the
company. This suggests that their role is not generally viewed as top
management or partner-level in the business. This opinion was sup-
ported by the results of my CEO study, discussed in Chapter 2. The
issue of executive seniority can be determined by whether the chief
IT executive is corporate driven or business unit driven. This means
that some executives have corporate-wide responsibilities as opposed
to a specific area or business unit. The issue of where IT depart-
ments provide value to the organization was discussed in Chapter 3,
which showed that there are indeed different ways to manage and
structure the role of IT. However, in general, corporate IT execu-
tives are responsible for IT infrastructure, shared technology services,
and global technology architecture, while business unit CIOs con-
centrate on strategically understanding how to use applications and
processes to support their business units. This is graphically depicted
in Figure 12.1.
From a best practices perspective, the following list has historically
suggested what chief IT executives should be doing. The list empha-
sizes team building, coaching, motivating, and mentoring as tech-
niques for implementing these best practices.
Strategic thinking : Must understand the business strategy and
competitive landscape of the company to apply technology in
the most valuable way to the organization.
291towArd best prACtICes
Industry expertise : Must have the ability to understand the prod-
uct and services that the company produces.
Create and manage change : Must have the ability to create
change, through technology, in the operating and business
processes of the organization to gain efficiency and competi-
tive advantage.
Communications : Must have the ability to communicate ideas,
to give direction, to listen, to negotiate, to persuade, and to
resolve conflicts. Executives must also be able to translate
technical information to those who are not technologically
literate or are outside IT and need to be comfortable speaking
in public forums and in front of other executives.
Relationship building : Must have the ability to interface with
peers, superiors, and customers, by establishing and main-
taining strong rapport, bond, and trust between individuals.
Business knowledge : Must have the ability to develop strong busi-
ness acumen and having peripheral vision across all functional
areas of the business.
Technology proficiency : Must have the knowledge to identify
appropriate technologies that are the most pragmatic for the
business, can be delivered quickly at the lowest cost, produce
an impact on the bottom line (ROI), and have longevity.
Local applications
Standard IT applications
Shared IT technology
services
Public available infrastructure
(Internet, portals, etc.)
IT infrastructure
Business level CIOs
Corporate CIOs
Figure 12.1 Business-level versus corporate-level CIOs.
292 InForMAtIon teChnoloGY
Leadership : Must be a visionary person, inspirational, influential,
creative, fair, and open minded with individuals within and
outside the organization.
Management skills : Must have the ability to direct and supervise
people, projects, resources, budget, and vendors.
Hiring and retention : Must have the ability to recognize, culti-
vate, and retain IT talent.
While this list is not exhaustive, it provides a general perspec-
tive, one that appears generic; that is, many management positions
in an organization might contain similar requirements. A survey of
500 CIOs conducted by CIO magazine (March 2002) rated the top
three most important concerns among this community in terms of
importance:
1. Communications: 70%
2. Business understanding: 58%
3. Strategic thinking: 46%
What is interesting about this statistic is that only 10% of CIOs
identified technical proficiency as critical for their jobs. This find-
ing supports the notion that CIOs need to familiarize themselves
with business issues, as opposed to just technical ones. Furthermore,
the majority of a CIO’ s time today has been recorded as spent com-
municating with other business executives (33%) and managing IT
staffs (28%). Other common activities reported in the survey were as
follows:
• Operating the baseline infrastructure and applications
• Acting as technology visionary
• Implementing IT portions of new business initiatives
• Designing infrastructure and manage infrastructure projects
• Allocating technology resources
• Measuring and communicate results
• Serving as the company spokesperson on IT-related matters
• Selecting and managing product and service providers
• Recruiting, retaining, and developing IT staff
• Participating in company and business unit strategy
development
293towArd best prACtICes
These results further confirm that chief IT executives define best
practices, based on understanding and supporting business strategy.
This survey also reported common barriers that chief IT executives
have to being successful. The overarching barrier that most IT execu-
tives face is the constant struggle between the business expectation to
drive change and improve processes, and the need to reduce costs and
complete projects faster. The detailed list of reported problems by rank
was as follows:
1. Lack of key staff, skill sets, and retention: 40%
2. Inadequate budgets and prioritizing: 37%
3. Shortage of time for strategic thinking: 31%
4. Volatile market conditions: 22%
5. Ineffective communications with users: 18%
6. Poor vendor support and service levels, and quality: 16%
7. Overwhelming pace of technological change: 14%
8. Disconnection with executive peers: 12%
9. Difficulty proving the value of IT: 10%
10. Counterproductive office politics: 6%
Chief IT executives also felt that their roles were ultimately influ-
enced by two leading factors: (1) changes in the nature and capabilities
of technology, and (2) changes in the business environment, includ-
ing marketplace, competitive, and regulatory pressures. This can be
graphically viewed in Figure 12.2.
Figure 12.2 has a striking similarity to Figure 3.1 outlining ROD.
That diagram represented technology as an independent variable cre-
ating the need for ROD, which is composed of strategic integration
and cultural assimilation, as shown in Figure 12.3.
Figure 12.3 shows many similarities to Figure 12.2. The difference
between these two diagrams defines what is missing from many best
practices: the inclusion of organizational learning practices that would
enable chief IT executives to better manage business and technology
issues. In effect, if organizational learning techniques were included,
they could reduce many barriers between business and IT. Thus, the
solution to providing best practices for the IT community rests with
the inclusion of organizational learning along the constructs of ROD.
The inclusion of organizational learning is crucial because the best
practices, as reported among the community of chief IT executives, has
294 InForMAtIon teChnoloGY
Technology
drivers
Business
environment
Strategic
options
Im
posesInspires
Figure 12.2 Chief IT executives— factors influencing strategic options.
Technology
creates
Symptoms and
implications
Responsive
organizational
dynamism
Acceleration of events that
require different
infrastructures and
organizational processes
Requires
Strategic
integration
Cultural
assimilation
Organization
structures
(system)
Individual
actions
Renegotiation of
relationship
Organizational learning techniques
Figure 12.3 ROD and organizational learning techniques.
295towArd best prACtICes
not produced the performance outcomes sought by chief executives.
I refer to Chapter 2, in which I first defined the IT dilemma. While
many IT initiatives are credible, they often fall short of including
critical business issues. As a result, IT project goals are not completely
attained. This suggests that the problem is more related to the process
and details of how to better implement good ideas. As further sup-
port for this position, the Concours Group (an international executive
managing consulting organization) published a list of emerging roles
and responsibilities that chief IT executives will need to undertake as
part of their jobs in the near future (Cash & Pearlson, 2004):
Shared services leader : More companies are moving to the shared
services model for corporate staff functions. CIOs’ experi-
ences may be invaluable in developing and managing these
organizations.
Executive account manager : More companies today are involv-
ing the CIO in the management of relationships between the
company and its customers.
Process leader : As companies move toward organizing around
major business processes, a CIO is in a good role to temporar-
ily lead this effort since applications and databases are among
the business resources that must be revamped to implement
process management.
Innovation leader : A CIO is starting to act as the innovation
leader of the corporation when a company is seeking to
achieve substantial improvements in process performance or
operational efficiencies, or to implement IT, since innovation
may center on the application of IT.
Supply chain executive: Purchasing, warehousing, and transpor-
tation are among the most information-intensive activities
undertaken by a business. As companies look to improve these
overall processes, the CIO may become the most knowledge-
able executive about the supply chain.
Information architect : Companies are recognizing the benefit of
a consolidated view of customers, vendors, employees, and so
on. CIOs are finding themselves taking on the leadership role
of information architect by cultivating commitment and con-
sensus around this challenging task.
296 InForMAtIon teChnoloGY
Change leader : CIOs are playing an increasingly important role
in business change management. Their role is in either direct
change leadership (developing new business models) or, more
often, indirect; that is, change process is behind the scenes
(get other leaders to think about new possibilities).
Business process outsourcing leader : CIOs tend to have some of
the most extensive experience in company outsourcing. This
makes them a logical internal consultant and management
practice leader in business process outsourcing.
These issues all suggest that the role of the chief IT executive is
growing and that the need for these executives to become better inte-
grated with the rest of their organizations is crucial for their success.
Much more relevant, though, is the need for ROD and the role that
the chief IT executive has as a member of the overall community. To
create best practices that embrace organizational learning and foster
ROD, a chief IT executive maturity arc needs to be developed that
includes the industry best practices presented here integrated with
organizational learning components.
The chief IT executive best practices arc is an instrument for assess-
ing the business maturity of chief IT executives. The arc may evaluate
a chief IT executive’ s business leadership using a grid that measures
competencies ranging from essential knowledge in technology to
more complex uses of technology in critical business thinking. Thus,
the chief IT executive best practices arc provides executives with a
method of integrating technology knowledge and business by present-
ing a structured approach of self-assessment and defined milestones.
The model measures five principal facets of a technology executive:
cognitive, organization culture, management values, business ethics,
and executive presence. Each dimension or sector is measured in five
stages of maturation that guide the chief IT executive’ s growth. The
first facet calls for becoming reflectively aware about one’ s existing knowl-
edge of technology and what it can do for the organization. The second
calls for other centeredness , in which chief IT executives become aware
of the multiplicity of technology perspectives available (e.g., other busi-
ness views of how technology can benefit the organization). The third is
comprehension of the technology process , in which a chief IT executive can
begin to merge technology issues with business concepts and functions.
297towArd best prACtICes
The fourth is stable technology integration , meaning that the chief
IT executive understands how technology can be used and is resilient
to nonauthentic sources of business knowledge. Stage 4 represents an
ongoing implementation of both technology and business concepts.
The fifth stage is technology leadership , in which chief IT executives
have reached a stage at which their judgment on using technology and
business is independent and can be used to self-educate from within.
Thus, as chief IT executives grow in knowledge of technology and
business, they can become increasingly more other centered, inte-
grated, stable, and autonomous with the way they use their business
minds and express their executive leadership and character.
Definitions of Maturity Stages and Dimension Variables
in the Chief IT Executive Best Practices Arc
Maturity Stages
1. Technology competence and recognition : This first stage repre-
sents the chief IT executive’ s capacity to learn, conceptualize,
and articulate key issues relating to cognitive technological
skills, organization culture/etiquette, management value sys-
tems, business ethics, and executive presence needed to be a
successful chief IT executive in business.
2. Multiplicity of technology perspectives : This stage indicates the
chief IT executive’ s ability to integrate multiple points of view
about technology from others in various levels of workplace
hierarchies. Using these new perspectives, the chief IT execu-
tive augments his or her skills with the technology necessary
for career success, expands his or her management value sys-
tem, is increasingly motivated to act ethically, and enhances
his or her executive presence.
3. Comprehension of technology process : Maturing chief IT executives
accumulate increased understanding of workplace cooperation,
competition, and advancement as they gain new cognitive skills
about technology and a facility with business culture/etiquette,
expand their management value system, perform business/
workplace actions to improve ethics about business and technol-
ogy, and develop effective levels of executive presence.
298 InForMAtIon teChnoloGY
4. Stable technology integration : Chief IT executives achieve inte-
gration with the business community when they have levels
of cognitive and technological ability, organization etiquette/
culture, management values, business ethics, and execu-
tive presence appropriate for performing job duties not only
adequately but also competitively with peers and even higher-
ranking executives in the workplace hierarchy.
5. Technology leadership : Leadership is attained by the chief IT
executive when he or she can employ cognitive and tech-
nological skills, organization etiquette, management, a
sense of business ethics, and a sense of executive presence
to compete effectively for executive positions. This chief IT
executive is capable of obtaining increasingly executive-level
positions through successful communication and workplace
performance.
Performance Dimensions
1. Technology cognition : Concerns skills specifically related
to learning, applying, and creating resources in IT, which
include the necessary knowledge of complex operations. This
dimension essentially establishes the CIO as technically pro-
ficient and forms a basis for movement to more complex and
mature stages of development.
2. Organizational culture : The knowledge and practice of proper
etiquette in organizational settings with regard to dress, tele-
phone and in-person interactions, punctuality, work comple-
tion, conflict resolution, deference, and other protocols in
workplace hierarchies.
3. Management values : Measures the individual’ s ability to articu-
late and act on mainstream organizational values credited with
shaping the work ethic— independent initiative, dedication,
honesty, and personal identification with career goals, based
on the organization’ s philosophy of management protocol.
4. Business ethics : Reflects the individual’ s commitment to the
education and professional advancement of other employees
in technology.
299towArd best prACtICes
5. Executive presence : Involves the chief IT executive’ s view of
the role of an executive in business and the capacity to succeed
in tandem with other executives. Aspects include a devotion
to learning and self-improvement, self-evaluation, the ability
to acknowledge and resolve business conflicts, and resilience
when faced with personal and professional challenges.
Figure 12.4 shows a graphical view of the chief IT executive best
practices arc. Each cell in the arc provides the condition for assess-
ment. The complete arc is provided in Table 12.1.
Chief Executive Officer
When attempting to define CEO best practices, one is challenged with
the myriad material that attempts to determine the broad, yet impor-
tant, role of the CEO. As with most best practices, they are typically
based on trends and percentages of what most CEOs do— assuming,
of course, that the companies they work for are successful. That is, if
their organization is successful, then their practices must be as well.
This type of associative thinking leads to what scholars often term
false generalizations. Indeed, these types of inadequate methods lead
to false judgments that foster business trends, which are misinter-
preted as best practices. Reputation is what would better define these
trends, which usually after a period of time can become ineffective
Developmental dimensions of maturing
Dimension skill
Technology
competence
and recognition
Multiplicity
of technology
perspectives
Comprehension
of technology
process
Stable
technology
integration
Technology
leadership
Technology
cognition
Organization
culture
Management
values
Business
ethics
Executive
presence
Figure 12. 4 Chief IT executive best practices arc – conditions for assessment.
300 InForMAtIon teChnoloGY
Table 12.1 The Chief IT Executive Best Practices Arc
DIMENSION VARIABLE
TECHNOLOGY COMPETENCE AND
RECOGNITION
MULTIPLICITY OF TECHNOLOGY
PERSPECTIVES
Technology Cognition Understands how technology
operates in business. Has mastered
how systems are developed,
hardware interfaces, and the
software development life cycle.
Has mastery of hardware,
compilers, run-time systems. Has
core competencies in distributed
processing, database development,
object-oriented component
architecture, and project
management. Is competent with
main platform operating systems
such as UNIX, WINDOWS, and MAC.
Has the core ability to relate
technology concepts to other
business experiences. Can also
make decisions about what
technology is best suited for a
particular project and organization.
Can be taught how to expand the
use of technology and can apply it
to other business situations.
Understands that technology
can have multiple
perspectives. Able to analyze
what are valid vs. invalid
opinions about business uses
of technology. Can create
objective ideas from multiple
technology views without
getting stuck on individual
biases. An ability to identify
and draw upon multiple
perspectives available from
business sources about
technology. Developing a
discriminating ability with
respect to choices available.
Realistic and objective
judgment, as demonstrated by
the applicability of the
technology material drawn for
a particular project or task
and tied to functional/
pragmatic results.
Organization Culture Understands that technology can be
viewed by other organizations in
different ways. Uses technology as
a medium of communication.
Understands that certain
technological solutions, Web pages,
and training methods may not fit
all business needs and preferences
of the business. Has the ability to
recommend/suggest technological
solutions to suite other business
needs and preferences
Seeks to use technology as a
vehicle to learn more about
organization cultures and
mindsets. Strives to care
about what others are
communicating and embraces
these opinions. Tries to
understand and respect
technologies that differ from
own. Understands basic
technological needs of others.
(Continued)
301towArd best prACtICes
Table 12.1 (Continued) The Chief IT Executive Best Practices Arc
COMPREHENSION OF
TECHNOLOGY PROCESS
STABLE TECHNOLOGY
INTEGRATION TECHNOLOGY LEADERSHIP
Has the ability to relate
various technical concepts
and organize them with
non-technical business
issues. Can operate with
both automated and manual
business solutions. Can use
technology to expand
reasoning, logic, and what-if
scenarios. Ability to use the
logic of computer programs
to integrate the elements of
non-technological tasks and
business problems. Ability to
discern the templates that
technology has to offer in
order to approach everyday
business problems. This
involves the hypothetical
(inductive/deductive) logical
business skill.
Knowledge of technology is
concrete, accurate, and precise,
broad and resistant to interference
from non-authentic business
sources. Ability to resist or recover
from proposed technology that is
not realistic— and can recover
resiliently.
Methods and judgment in a
multidimensional business
world is independent, critical
discernment. Knowledge of
technology and skills in
technology can be transferred
and can be used to
self-educate within and
outside of technology. Can
use technology for creative
purposes to solve business
challenges and integrate with
executive management views.
Can deal with multiple
dimensions of criticism
about technology. Can
develop relationships
(cooperative) that are
dynamic and based on
written communication and
oral discourse. Ability to
create business relations
outside of technology
departments. Has an
appreciation of cyberspace
as a communication
space— a place wide open to
dialogue (spontaneous), to
give and take, or other than
voyeuristic, one-sidedness.
Ability to produce in
teamwork situations, rather
than solely in isolation.
Loyalty and fidelity to relations in
multiple organizations.
Commitment to criticism and
acceptance of multiple levels of
distance and local business
relationships. Ability to sustain
non-traditional types of inputs
from multiple sources.
Can utilize and integrate
multidimensions of business
solutions in a self-reliant way.
Developing alone if necessary
using other technical
resources. Can dynamically
select types of interdependent
and dependent organizational
relationships. Ability to
operate within multiple
dimensions of business
cultures, which may demand
self-reliance, independence of
initiative, and interactive
communications.
(Continued)
302 InForMAtIon teChnoloGY
Table 12.1 (Continued) The Chief IT Executive Best Practices Arc
DIMENSION VARIABLE
TECHNOLOGY COMPETENCE AND
RECOGNITION
MULTIPLICITY OF
TECHNOLOGY PERSPECTIVES
Management Values Technology and cultural sensitivity.
Global communication, education,
and workplace use of technology
can be problematic— subject to
false generalizations and
preconceived notions. Awareness
of assumptions about how
technology will be viewed by other
organizations and about biases
about types of technology (MAC vs.
PC).
Can appreciate need to obtain
multiple sources of
information and opinion. The
acceptance of multi-
dimensional values in human
character.
Business Ethics Using technology with honesty re:
privacy of access and information.
Development of ethical policies
governing business uses of the
Internet, research, intellectual
property rights and plagiarism.
The use of information in a fair
way— comparison of facts
against equal sources of
business information.
Compassion for business
information for which sources
are limited because of
inequality of technology
access. Compassion for
sharing information with
other business units from a
sense of inequality.
Executive Presence Has accurate perception of one’ s
own potential and capabilities in
relation to technology in the
business— the technologically
realizable executive self.
Understands how other
executives can view self from
virtual and multiple
perspectives. Understands or
has awareness of the
construction of self that occurs
in business. Focuses on views
of other executives in multiple
settings. Understands that the
self (through technology) is
open for more fluid
constructions, able to
incorporate diverse views in
multiple settings.
(Continued)
303towArd best prACtICes
and unpopular. We must also remember the human element of suc-
cess; certain individuals succeed based on natural instincts and talent,
hard work and drive, and so on. These components of success should
not be confused with theories that are scalable and replicable to prac-
tice; that is, what best practices need to accomplish.
This section focuses on technology best practices of the CEO. These
best practices are based on my research as well as other positions and
Table 12.1 (Continued) The Chief IT Executive Best Practices Arc
COMPREHENSION OF
TECHNOLOGY PROCESS
STAB LE TECHNOLOGY
INTEGRATION TECHNOLOGY LEADERSHIP
Can operate within multiple
dimensions of value systems
and can prioritize multi-
tasking events that are
consistent with value priorities.
Ability to assign value to new
and diverse technology
alternatives—integrating
them within a system of
pre-existing business and
technology values.
Testing value systems in new ways
due to technology is integrated
with long-term values and goals
for business achievement. Some
concepts are naturally persistent
and endure despite new arenas in
the technological era.
Use of technology and business
are based on formed
principles as opposed to
dynamic influences or
impulses. Formed principles
establish the basis for
navigating through, or
negotiating the diversity of
business influences and
impulses.
Consistent values displayed on
multiple business
communications,
deliverables of content, and
dedication to authenticity.
Maintains consistency in
integrating values within
technology business issues.
Technology is a commitment in all
aspects of value systems,
including agility in managing
multiple business commitments.
Commitment to greater openness
of mind to altering traditional and
non-technological methods.
Technological creativity with
self-defined principles and
beliefs. Risk-taking in
technology-based ventures.
Utilizing technology to expand
one’ s arenas of business
freedom. Exploring the
business-liberating
capacities of technology.
Operationalizes technology to
unify multiple components of
the self and understands its
appropriate behaviors in
varying executive situations.
Has regulated an identity of self
from a multiplicity of executive
venues. Methods of business
interaction creates positive value
systems that generate confidence
about operating in multiple
business communities.
Acceptance and belief in a
multidimensional business
world of the self. Can determine
comfortably the authenticity of
other executives and their view
of the self. Can confirm
disposition independently from
others’ valuations, both
internally and from other
organization cultures. Beliefs
direct and control
multidimensional executive
growth.
304 InForMAtIon teChnoloGY
facts that provide a defendable context of how and why they appear to be
effective. However, as with the chief IT executive model, best practices
cannot be attained without an arc that integrates mature organizational
learning and developmental theories. Many of the CEO best practices
reconcile with my interviews with CEOs and, in particular, with the two
CEO case studies (of ICAP and HTC) discussed in Chapter 8. Other
published definitions and support are referenced in my presentation.
In February 2002, Hackett Benchmarking, a part of Answerthink
Corporation, issued its best practices for IT. Its documentation stated:
In compiling its 2002 best practices trend data, Hackett evaluated the
effectiveness (quality and value) and efficiency (cost and productivity)
of the information technology function across five performance dimen-
sions: strategic alignment with the business; ability to partner with
internal and external customers; use of technology; organization; and
processes.*
The findings, as they apply to the CEO function, provide the fol-
lowing generalizations:
• There was an 85% increase in the number of CIOs who
reported directly to the CEO. This increase would suggest
that CEOs need to directly manage the CIO function because
of its importance to business strategy.
• CEOs supporting outsourcing did not receive the cost-cut-
ting results they had hoped for. In fact, most broke even. This
suggests that CEOs should not view outsourcing as a cost-
cutting measure, but rather foster its use if there are identifi-
able business benefits.
* Hackett Benchmarking has tracked the performance of nearly 2,000 complex,
global organizations and identified key differentiators between world-class and aver-
age companies, across a diverse set of industries. In addition to information tech-
nology, staff functions studied include finance, human resources, procurement, and
strategic decision making, among others. Study participants comprised 80% of the
Dow Jones Industrials, two-thirds of the Fortune 100, and 60% of the Dow Jones
Global Titans Index. Among the IT study participants are Agilent Technologies,
Alcoa, Capital One Financial Corporation, Honeywell International, Metropolitan
Life Insurance, SAP America, and TRW. (From PR Newswire, February 2002.)
305towArd best prACtICes
• CEOs have found that IT organizations that have centralized
operations save more money, have fewer help-line calls than
decentralized organizations, and do not sacrifice service qual-
ity. This suggests that the CEOs should consider less busi-
ness-specific support structures, especially when they conduct
their business at multiple locations.
• CEOs are increasingly depending on the CIO for advice
on business improvements using technology. As a result,
their view is that IT professionals need advanced business
degrees.
• CEOs should know that consistent use of IT standards has
enabled firms to trim IT development costs by 41%, which
has reduced costs for end-user support and training opera-
tions by 17%.
• CEOs need to increase support for risk management. Only
77% of average companies maintained disaster recovery plans.
As we can see from these generalizations, they are essentially
based on what CEOs are doing, and what they have experienced.
Unfortunately, this survey addressed little about what CEOs know
and exactly what their role should be with respect to overall man-
agement, participation, and learning of technology. These “ best
practices” are particularly lacking in the area of organizational
learning and the abilities of the firm to respond to changing condi-
tions as opposed to searching for general solutions. Let us look at
each of these generalizations and discuss what they lack in terms of
organizational learning.
CIO Direct Reporting to the CEO
The fact that more CIOs are reporting directly to the CEO shows an
escalation of their importance. But, what is more relevant as a best
practice is what that relationship is about. Some report about how
often they meet. What is more important is the content of the inter-
actions. What should the CEOs know, how should the CEOs con-
duct themselves? What management and learning techniques do they
apply? How do they measure results? My CEO interview research
exposed the fact that many CEOs simply did not know what they
306 InForMAtIon teChnoloGY
needed to do to better manage the CIO and what they needed to
know in general about technology.
Outsourcing
Outsourcing can be a tricky endeavor. In Chapter 3, I introduced
the concept of technology as a driver and a supporter. I presented a
model that shows how emerging technologies are initially drivers and
need to be evaluated and measured using similar models embraced by
marketing-oriented communities. I then showed how, through matu-
ration, emerging technologies become supporters, behaving more as a
commodity within the organization. I explained that only then can a
technology be considered for outsourcing because supporter operations
are measured by their economies of scale, reduced costs, increased
productivity, or both (efficiency). Figure 12.5 shows that cycle.
Thus, what is missing from the survey information is the knowl-
edge of where such technologies were with respect to this technology
life cycle. Knowing this dramatically affects what the CEO should be
expecting and what organizational learning concepts and factors are
needed to maximize benefit to the organization.
Centralization versus Decentralization of IT
The entire question of how IT should or should not be organized
must be based on a business that implements ROD. ROD includes
the component called cultural assimilation, which provides a process,
Mini loop technology enhancementsTechnology
driver
Evaluation
cycle
Driver
maturation
Support
status
Replacement or
outsource
Economies
of scale
Figure 12.5 Driver-to-supporter life cycle.
307towArd best prACtICes
using organizational learning, to help businesses determine the best
IT structure. To simply assume that centralizing operations saves
money is far too narrow; the organization may need to spend more
money on a specific technology in the short term to get long-term
benefits. Where is this included in the best practices formula? My
research has shown that more mature uses of technology in organiza-
tions require more decentralization of IT personnel within the busi-
ness units. The later stages of IT organizational structure at Ravell
supported this position.
CIO Needs Advanced Degrees
I am not sure that anyone could ever disagree with the value of
advanced degrees. Nevertheless, the survey failed to provide content
on what type of degree would be most appropriate. It also neglected to
address the issue of what may need to be learned at the undergradu-
ate level. Finally, what forms of education should be provided on the
job? What exactly are the shortfalls that CIOs need to know about
business? And, equally important is the consideration of what educa-
tion and learning is needed by CEOs and whether they should be so
dependent on advice from their CIOs.
Need for Standards
The need for standards is something that most organizations would
support. Yet, the Siemens case study showed us that too much con-
trol and standardization can prove ineffective. The Siemens model
allowed local organizations to use technology that was specific to
their business as long as it could be supported locally. The real chal-
lenge is to have CEOs who understand the complexity of IT stan-
dards. They also need to be cognizant that standards might be limited
to the structure of their specific organization structure, its business,
and its geographical locations.
Risk Management
The survey suggested that CEOs need to support risk management
because their backup recovery procedures may be inadequate. The
308 InForMAtIon teChnoloGY
question is whether the problem stems from a lack of support or from
a lack of knowledge about the topic. Is this something that the chief
IT executive needs to know, or is it just about the CEO’ s unwilling-
ness to spend enough funds? The best practices component of risk
management must be broader and answer these questions.
By contrast to the survey, we may consider a report issued by
Darwin Research (“ A CRM Success Story,” November 1, 2002),
which cited the recommended best practices of Christopher Milliken,
CEO of Boise Cascade Office Products. He offered the kind of in-
depth view of best practices that I feel is needed to be consistent with
my research on ROD. Milliken participated in the implementation of
a large-scale CRM system needed to give his customers a good reason
to choose Boise. The project required an investment of more than $20
million. Its objective was to provide customers with better service. At
the time of the investment, Milliken had no idea what his ROI would
be, only that the project was necessary to distinguish Boise Cascade
from myriad competitors in the same industry.
After the successful implementation of the project, Milliken was
now in a position to offer his own thoughts about technology-related
best practices that a CEO might want to consider. He came up with
these six:
1. The CEO must commit to a technology project : Milliken was keen
to express the reasons why the CRM project was important;
he was intimately involved with its design, and made it clear
that he had to be consulted, should there be any delays in the
project schedule. KPMG (a major consulting firm) was also
hired as a consultant to help implement the schedule and was
held to the same level of excellence. What Milliken accom-
plished, significantly, was to show his interest in the project
and his willingness to stay involved at the executive level.
Milliken’ s best practice here lies in his commitment, which
is consistent with that of McDermott from ICAP and the
CEO from HTC. They both realized, as Milliken did, that
the CEO must have an active role in the project and not just
allow the management team to get it done. Milliken, as did
McDermott and the CEO of HTC, issued specific perfor-
mance-related requirements to his employees and consultants.
309towArd best prACtICes
His participation sent a valuable message: The CEO is part
of the supporting effort for the project and is also part of
the learning process of the organization. Indeed, the situa-
tion that Milliken faced and resolved (i.e., to jump in without
knowing the expected returns of the project) is exemplary of
the core tenets of ROD, which require the ability for an orga-
nization to operate with dynamic and unpredictable change
brought about by technology. In this case, the technology was
crucial to distinguishing Boise Cascade, in the same way that
electronic trading was for ICAP, and the billing system was
for HTC. Yet, all three of these situations required a cer-
tain behavior and practice from the company CEO. Thus,
the most important best practice lies in the commitment and
learning to the learning organization format.
2. Think business first, then technology : To understand why a tech-
nology is needed, there must first be a supporting business
plan; that is, the business plan must drive the technology or
support its use. This best practice concept is consistent with
my research. Indeed, Dana Deasy from Siemens realized it
after a three-year investment in e-business, and McDermott
clearly advocated the importance of a business plan over
embellished technology. Another interesting and important
result of the business plan was that it called for the creation
of a centralized CRM system. Therefore, it became necessary
to consolidate the separate business units at Boise into one
corporate entity— providing central support and focus. This
is another example of how ROD operates. The CRM project,
through a validation process in a business plan, provided the
strategic integration component of ROD. The strategy then
influenced cultural assimilation and required a reorganization
to implement the strategy or the new CRM system.
Furthermore, Boise Cascade allowed its staff to experiment in
the project, to make mistakes, without criticizing them. They
were, in effect, implementing the driver-related concepts of
technology. These driver concepts must be similar to the way
organizations support their marketing activities, by which
they accept a higher error ratio than when implementing a
supporter activity. The CEO wanted everyone to give it their
310 InForMAtIon teChnoloGY
best and to learn from the experience. This position is a key
best practice for the CEO; it promotes organizational learn-
ing throughout the business.
3. Handcuff business and technology leaders to each other : Milliken
understood that technology projects often fail because of a
lack of communication between IT and other business enti-
ties. The project represented many of the IT dilemmas that I
discussed in Chapter 2, particularly relating to the new CRM
system and its integration with existing legacy applications
and, at the same time, creating a culture that could imple-
ment the business strategy. To address this, Milliken first
appointed a new CIO to foster better communication. He
also selected a joint project leader from the business side, thus
creating a joint project leadership team. What Milliken did
was to form a new community of practice that did not exist
before the project. The project, as with Ravell, represented
an event that fostered the creation of organizational learning
opportunities. As with ICAP, Milliken’ s company enlisted
the support of executive-level consultants to help finalize the
business plan and marketing strategy, as well as assist with
change management. What exactly did Milliken do that rep-
resents a best practice? From an organizational learning per-
spective, he created communities of practice between IT and
the business. That then is a true best practice for a CEO.
4. Get the show on the road : There was a not-to-be-questioned
deadline that was instituted by Milliken. As I noted in
Chapter 4, this type of management seems undemocratic,
but it should not be confused with being nonparticipatory.
Someone had to get this going and set expectations. In this
case, both IT and business users were set to make things
happen. Senior management endorsed the project and openly
stated that it represented what could be a one-time opportu-
nity to “ do something of great magnitude” (Dragoon, 2002).
From a best practices perspective, this means that the CEO
can and should provide the leadership to get projects done
and that part of that leadership could be setting strategic
dates. However, CEOs should not confuse this leadership
with power-centralized management over IT-related projects.
311towArd best prACtICes
Communities of practice still need to be the driving force for
inevitable success in ROD. Another important factor was
Milliken’ s decision to create dual management over the proj-
ect. Thus, Milliken was able to create an environment that
required discourse between IT and the business.
5. Win over the masses for massive changes : As stated, the business
plan called for a reorganization of other business units. This
also required executives to rethink job descriptions and titles
in relation to new processes. It also eliminated six redundant
management-level jobs. Milliken engaged employees in a
massive “ external-internal” marketing campaign. Employees
participated in ad campaigns, and brochures were created for
all staff. A video was also produced that defined the benefits
to Boise Cascade customers. In essence, Milliken was com-
mitted to communication and training. Similar to my experi-
ence at Ravell, not everyone is comfortable with change, and
resistance in the ranks is inevitable. As a result, the educa-
tion and training programs at Boise were not enough. What
was lacking was true organizational learning and knowledge
management. There are two best practices that were defined
from this experience. First, the CEO needs to engage in
actively showing the importance that technology has to the
organization, not only from an economic perspective, but also
from a staff development point of view. The second best prac-
tice comes from the example of what Boise Cascade did not
do enough of: provide organizational transformation through
knowledge management, reflective practices, and commu-
nities of practice. This suggests that CEOs need to better
understand and incorporate organizational learning concepts,
so that they can be the catalyst for change as they are in other
areas of the business. We saw support for this concept from
both ICAP and HTC, where the actions of the CEO came
from an organizational learning perspective.
6. Know that technology projects never end : ROD assumes, by def-
inition, that technology is a variable, albeit an insistent one.
Milliken’ s experience further supported this notion, in that
he realized that Boise Cascade must continue to assess the
impact of the CRM application. Another way of saying this
312 InForMAtIon teChnoloGY
is that the technology will continue to be viewed as a means to
transform the business on an ongoing basis. Indeed, Milliken
was planning to spend another $10 million on the next phase.
So, from a best practices perspective, CEOs must recognize
that technology investment never ends, but it moves to other
phases of maturation, similar to the driver/supporter life
cycle. Finally, the buy-in to this reality ensures the recogni-
tion of organizational dynamism.
Based on the case studies and research presented thus far in this
book, I can now formulate a list of 11 key planks that represent the
core of what constitutes a technology CEO’ s set of best practices:
1. The chief IT executive should report directly to the CEO.
2. CEOs should be actively committed to technology on an
ongoing basis, as opposed to project-by-project involvement.
3. CEOs should be willing to be management catalysts to sup-
port new technology-driven projects. They, in effect, need to
sometimes play the role of technology champion.
4. CEOs should focus on business concepts and plans to drive
technology. In other words, technology should not drive the
business.
5. CEOs should use consultants to provide objective input to
emerging technology projects.
6. CEOs should establish organizational infrastructures that
foster the creation of communities of practice. They need
to create joint ownership of IT issues by fostering discourse
between IT, business managers, and staff.
7. CEOs may need to take control of certain aspects of tech-
nology investments, such as setting milestones and holding
management and staff to making critical project dates.
8. CEOs need to foster cultural assimilation, which may lead to
reorganization, since technology changes processes.
9. CEOs need to understand organizational learning and knowl-
edge management theories and participate in organizational
transformation.
10. CEOs need to understand how the technology life cycle
behaves, with specific attention to the transition from driver
activities to supporter functions. To that end, CEOs need to
313towArd best prACtICes
understand the short- and long-term investments that need to
be made in technology.
11. CEOs should create organizations that can effectively oper-
ate within technological dynamism. This process will educate
management and staff to handle the dynamic and unpredict-
able effects of emerging technologies. It will also foster the
development of both middle-up-down and bottom-up man-
agement of technology.
The issue is now to provide a linear development model for CEOs
that enables them to measure where they are in relation to ROD and
the best practices outlined.
The CEO Best Practices Technology Arc
Similar to the chief IT executive arc, the CEO best practices arc is
an instrument for assessing the technology best practices of CEOs.
The arc evaluates a CEO’ s strategic uses of technology and leader-
ship by using a grid that charts competencies ranging from conceptual
knowledge about technology to more complex uses of technology and
business and how they are integrated in strategic business planning.
As with all arc models, the CEO version measures five principal
stages of a CEO’ s maturity with respect to business applications of
technology: conceptual, structural, executive values, executive eth-
ics, and executive leadership. Each dimension or sector is measured
in five stages of maturation that guide the CEO’ s executive growth
managing technological dynamism. The first stage is being reflec-
tively aware about their conceptual knowledge of technology and
what it can do for the organization. The second is other centered-
ness, by which CEOs become aware of the multiplicity of business
uses of technology and the different views that can exist inside and
outside the organization. The third is integration of business use of
technology; a CEO can begin to combine how business plans foster
the need for technology. The fourth is implementation of business/
technology process, meaning that the CEO understands how busi-
ness applications and technology are used together and is resilient
to nonauthentic sources of emerging technologies. Stage four rep-
resents an ongoing commitment to implementing both technology
314 InForMAtIon teChnoloGY
and business applications. The fifth refers to strategic uses of tech-
nology; CEOs have reached a stage at which their judgment on
using technology and business is independent and can be used to
self-educate. Thus, as CEOs grow in knowledge of business uses
of technology, they can become increasingly more understanding of
the multiplicity of uses, can become more integrated in how they
conceptualize technology, can manage its implementation from an
executive position, and can apply strategies to support new applica-
tions of technology in the organization.
Definitions of Maturity Stages and Dimension Variables
in the CEO Technology Best Practices Arc
Maturity Stages
1. Conceptual knowledge of technology : This first stage represents
the CEO’ s capacity to learn, conceptualize, and articulate key
issues relating to business uses of technology, organizational
structures available, executive value methods, executive ethi-
cal issues surrounding technology, and leadership alternatives
that are needed to be successful with technology applications.
2. Multiplicity of business perspectives of technology : This stage
indicates the CEO’ s ability to integrate multiple points of
view from management, staff, and consultants about technol-
ogy applications in business. Using these new perspectives,
the CEO augments his or her conceptual skills with technol-
ogy, has an expanded view of what organizational structures
might work best, expands his or her executive values about
technology uses, is increasingly aware of the ethical dilemmas
with technology, and enhances his or her leadership abilities.
3. Integration of business uses of technology : Maturing CEOs accu-
mulate increased understanding of how technology can sup-
port the business, provide more competitive advantage, and
have a more integrated understanding of how to use their
conceptual skills about technology, of the alternative organi-
zational structures available, of how to combine their business
executive value and ethical systems, and how to develop effec-
tive levels of executive leadership.
315towArd best prACtICes
4. Implementation of business/technology process : CEOs achieve
integration when they can regularly apply their conceptual
knowledge of technology, organization structures, executive
values and ethics about technology, and executive leadership,
appropriate for performing their job duties, not only ade-
quately, but at a level that provides a competitive advantage
for the organization.
5. Strategic uses of technology : Leadership is attained by the
CEO when he or she can employ conceptual skills, develop
new organizational structures as necessary, establish new
values and ethics that are appropriate for the organization,
and create a sense of executive presence to lead the organiza-
tion strategically. This CEO is capable of having new vision
about how business and technology can be expanded into
new endeavors.
Performance Dimensions
1. Technology concepts : Concerns conceptual skills, specifically
related to understanding how technology can be used in the
business. This dimension essentially establishes the CEO
as technically proficient, conceptually, and forms a basis for
movement to more complex and mature stages of business/
technology development.
2. Organizational structures : The knowledge of the alternative
organizational structures that can support the application
of emerging technology in corporate settings with regard to
roles, responsibilities, career paths, and organizational report-
ing alternatives.
3. Executive values : Measures the CEO’ s ability to articulate and
act on mainstream technological values credited with shaping
the work ethic: independent initiative, dedication, honesty,
and personal identification with career goals, based on the
philosophy of the management protocol of the organization.
4. Executive ethics : Reflects the CEO’ s commitment to the edu-
cation and professional advancement of the behavior of the
organization as it relates to business uses of technology.
316 InForMAtIon teChnoloGY
5. Executive leadership : Involves the CEO’ s view of the role of
an executive in business, and the capacity to succeed in tan-
dem with his or her organizational resources. Aspects include
a devotion to organizational learning and self-improvement,
self-evaluation, the ability to acknowledge and resolve busi-
ness/technology conflicts, and resilience when faced with per-
sonal and professional challenges.
Figure 12.6 shows a graphic view of the CEO technology best
practices arc. Each cell in the arc provides the condition for assess-
ment. The complete arc is provided in Table 12.2.
Middle Management
Middle management, which comprises a number of tiers, is perhaps
the most challenging of best practices to define. In Chapter 3, I strati-
fied the different types of positions that make up middle managers
into three tiers: directors, line managers, and supervisors. What is
most important at this point is to determine the set of technology
best practices for managers so that they can effectively operate under
ROD. That is, technology best practices must be designed to contain
the insights and skills for effective management of technology. This
must include
1. Working with IT personnel
2. Providing valuable input to the executive management team,
including the CEO
3. Participating and developing a technology strategy within
their business units
4. Effectively managing project resources, including technical
staff
5. Leading innovative groups in their departments
6. Incorporating technology into new products and services
7. Developing proactive methods of dealing with changes in
technology
8. Investigating how technology can improve competitive
advantage.
317towArd best prACtICes
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318 InForMAtIon teChnoloGY
Table 12.2 CEO Technology Best Practices Arc—Detail
DIMENSION VARIABLE
CONCEPTUAL KNOWLEDGE OF
TECHNOLOGY
MULTIPLICITY OF BUSINESS
PERSPECTIVES OF
TECHNOLOGY
Technology Concept Understands concepts and
definitions about technology
and how it relates to
business. Has conceptual
knowledge of the software
development life cycle.
Understands high-level
concepts about distributed
processing, database
development, and project
management. Understands
the definition and role of
operating systems such as
UNIX, WINDOWS, and MAC.
Has the ability to relate
technology concepts to other
business experiences.
Understands that different
technology may be required
for a particular project and
organization. Can
conceptualize how to expand
the use of technology and
apply it to business
situations.
Seeks to manage by appreciating
that technology can have
multiple perspectives. Able to
manage a process that requires
validation about different
opinions about business uses of
technology. Can manage the
different objective ideas from
multiple technology views
without getting stuck on
personal biases. Has an ability
to identify and draw upon
multiple perspectives available
from business sources about
technology, particularly from
independent sources. Developing
a discriminating ability to create
an infrastructure that can
operate with multiple views.
Committed to creating an
organization that can learn
through realistic and objective
judgment, as demonstrated by
the applicability of the
technology material drawn for a
particular project or task and
tied to business outcomes.
Organizational Structures Understands that technology
can be viewed by other
organizations in different
ways and may need different
organizational structures.
Can use technology as a
medium of communication.
Understands that certain
technologies may need to be
managed differently and
need specific types of
structures and expertise. Has
the ability to comprehend
recommend/suggested
technological solutions to
suite business needs and
preferences.
Seeks to manage technology as a
vehicle to learn more about what
alternative organization
structures are available from
others. Strives to create a
learning organization that cares
about what other staff perceive
as solutions. Committed to
cultural assimilation that can
change the need to restructure
the organization. Tries to
understand and respect
technologies that differ from
what the organization is currently
using. Understands that the
organization has multiple and
different technological needs.
(Continued)
319towArd best prACtICes
Table 12.2 (Continued) CEO Technology Best Practices Arc—Detail
INTEGRATION OF BUSINESS
USES OF TECHNOLOGY
IMPLEMENTATION OF
BUSINESS/TECHNOLOGY
PROCESS
STRATEGIC USES OF
TECHNOLOGY
Creates an organization
that has the ability to
relate various technical
concepts and organize
them with non-technical
business issues. Can
manage by operating with
both automated and
manual business
solutions. Can use
technology to expand
business reasoning, logic,
and what-if scenarios.
Establishes business
templates that allow
technology to offer
everyday business
solutions. This involves
the hypothetical
(inductive/deductive)
logical business issues.
Organization’ s use of
technology is concrete,
accurate, and precise, broad
and resistant to interference
from non-authentic
technology business sources.
Ability to resist or recover
from faulty uses of
technology that is not
realistic without a supporting
business plan.
Methods and judgment as a
multidimensional CEO is
independent, has critical
discernment. Conceptual
knowledge of technology can be
transferred and can be used to
self-educate within and outside
of technology. Can use
technology for creative
purposes to create new
business initiatives and
integrate them with short- and
long-term business goals.
Can deal with multiple
dimensions of criticism
about how technology can
be used in the
organization. Can develop
relationships (cooperative)
that are dynamic and
based on written
communication and oral
discourse about how
business can drive
technological investments.
Ability to create new
business relations using
technology with new and
existing customers. Has an
appreciation of cyberspace
as a new market— a place
wide open to dialogue
(spontaneous), to provide
new opportunities for
business growth.
Commitment to open
discussion of alternating
opinions on technology and
acceptance of varying types
of structures to accommodate
technology opportunities.
Ability to sustain dynamic
organizational structures.
Can design new structures to
integrate multidimensions of
business and technology
solutions. Can dynamically
manage different types of
interdependent and dependent
organizational relationships.
Ability to manage within
multiple dimensions of
business cultures, which may
demand self-reliance and
confidence in independence of
initiatives.
(Continued)
320 InForMAtIon teChnoloGY
Table 12.2 (Continued) CEO Technology Best Practices Arc—Detail
DIMENSION VARIABLE
CONCEPTUAL KNOWLEDGE OF
TECHNOLOGY
MULTIPLICITY OF BUSINESS
PERSPECTIVES OF
TECHNOLOGY
Executive Values Understanding of technology
and cultural differences.
Conceptually understands
that global communication,
education, and workplace use
of technology can be
problematic— subject to
false generalizations and
preconceived notions.
Management awareness of
responsibilities to address
assumptions about how
technology will be viewed by
other departments and
customers.
Sets conditions that foster the
need to obtain multiple sources
of information and opinion
about how technology values.
The propagation
organizationally of acceptance
that there can be
multidimensional values in
human character.
Executive Ethics Understands that there is a
need to use technology with
honesty re: privacy of access
and information. Supports
the development of ethical
policies governing business
uses of the Internet, research,
intellectual property rights,
and plagiarism.
Committed to creating an
organization that uses
information in a fair
way— comparison of facts
against equal sources of
business information.
Understands and is
compassionate that business
and technology information may
have different levels of
knowledge access. Recognizes
the need for sharing information
with other business units from a
sense of inequality.
Executive Leadership Conceptualizes the need to
have a leadership role with
respect to technology in the
business— the business and
technologically realizable
executive self.
Understands how other
executives can view technology
leadership differently.
Understands or has awareness
of the construction of self that
occurs when taking on the
integration of technology in
business operations. Focuses
on views of other CEOs in
multiple settings. Understands
that the self (through
technology) is open for more
fluid constructions, able to
incorporate diverse views in
multiple technology settings.
(Continued)
321towArd best prACtICes
As with CEO research, there are myriad best practices that have
been offered as a method of dealing with the subject of technology
management. Unfortunately, these practices usually are vague and
intermingle management levels and departments; that is, it is diffi-
cult to know whether the best practice is for the chief IT executive,
Table 12.2 (Continued) CEO Technology Best Practices Arc—Detail
INTEGRATION OF BUSINESS
USES OF TECHNOLOGY
IMPLEMENTATI ON OF
BUSINESS/TECHNOLOGY
PROCESS
STRAT EGIC USES OF
TECHNOLOGY
Can manage multiple
dimensions of value
systems and can prioritize
multi-tasking events that
are consistent with value
priorities. Ability to assign
value to new and diverse
technology business
alternatives— linking
them to legacy systems
and processes.
Managing value systems in
new ways because technology
changes long-term values
and goals for business
objectives. Recognition that
some concepts remain
unchanged despite emerging
technologies.
Management of technology and
business are based on formed
principles as opposed to
dynamic influences or
impulses. Formed executive
principles establish the basis
for navigating through or
negotiating the diversity of
business opportunities and
impulses for investment in
technologies.
Consistent management
values displayed on
multiple business goals,
mission, and dedication
to authenticity. Maintains
management consistency
in combining values
regarding technology
issues.
Business and technology are a
commitment in all aspects of
management value systems,
including agility in managing
multiple business
commitments. Commitment
to greater openness of mind
to altering traditional and
non-technological
management methods.
Technology management
creativity with self-defined
principles and beliefs.
Risk-taking in technology-
based ventures. Utilizing
technology to expand one’ s
arenas of business
development. Manages the
business liberating capacities
of technology.
Manages technology to
unify multiple parts of
the organization and
understands how the
process behaves in
different business
situations.
Has developed an executive
identity of self from a
multiplicity of management
venues. Method of
management creates positive
value systems that generate
confidence about how
multiple business
communities need to operate.
Acceptance and belief in a
multidimensional business
world of how to lead with
technology. Can determine
comfortably, authenticity of
organization’ s executives and
their view of the self. Can
confirm disposition on
technology independently from
others’ valuations, both
internally and from other
organizations. Beliefs direct
and control multi-dimensional
leadership growth.
322 InForMAtIon teChnoloGY
the CEO, or some other level of management. We know from the
research from Bolman and Deal (1997) that middle managers feel
torn by conflicting signals and pressures they get from both senior
management and the operations that report to them: “ They need to
understand the difference in taking risks and getting punished for
mistakes” (p. 27). According to Bolman and Deal (1997), best prac-
tices for middle managers need to cover the following areas:
1. Knowledge management
2. Alignment
3. Leadership and commitment
4. Organization
5. Human resources
6. Opportunity management
7. Leveraging
8. Performance assessment
Their study covered more than 400 companies in the eight areas
of concern. I extracted 10 middle management-related best practices
from their study results and concluded that middle managers need to
1. Understand how to take a strategy and implement it with
technology; that is, they need to create tactics for completing
the project.
2. Establish team-building measures for linking technology
with daily operations of the staff.
3. Foster the aggregation and collaboration of business unit
assets to form peer groups that can determine joint efforts for
implementing new technologies.
4. Stimulate their staffs using innovative strategies of value
propositions and reward systems.
5. Create multifunctional teams that can focus on particu-
lar aspects of how technology affects their specific area of
expertise.
6. Follow common project management practices so that mul-
titier and department projects can be globally reviewed by
senior management.
7. Form project teams that can respect and perform on an action
basis; that is, teams that are action oriented.
323towArd best prACtICes
8. Understand how to communicate with, and use, IT staff on
projects.
9. Have a systematic process for gathering intelligence relating
to pertinent technology developments.
10. Understand that customers are the drivers for technology
tools provided by the organization.
On reviewing the different aspects of middle manager best practices
with technology research, it appears that there are two focal points:
(1) those best practices that address the needs of senior management,
the CIO, and the CEO; and (2) those that are geared toward the
management of the staffs who need to implement emerging technol-
ogy projects.
This makes sense, given that the middle manager, notwith-
standing whether a director, line manager, or supervisor, needs
to deal with executive productivity-related issues as well as staff
implementation ones. They are, as Bolman and Deal (1997) state,
“ torn” by these two competing organizational requirements.
Table 12.3 represents the combined list of technology-based best
practices organized by executive best practices and implementation
best practices.
Table 12.3 exemplifies the challenge that middle managers
have in balancing their priorities. In accordance with the research,
the best practices mentioned are implemented using methods of
knowledge management, alignment, leadership and commitment,
human resources, opportunity management, leveraging, and per-
formance assessment. As with the other best practices, the middle
manager technology best practices are limited because they do not
address the specific needs of ROD, particularly organizational
learning theories (with the exception of knowledge management).
This shortfall is integrated into another developmental arc model
that combines these theories with the preceding definitions of best
practices.
The Middle Management Best Practices Technology Arc
The middle management best practices technology arc, as with others,
can be used to evaluate a middle manager’ s strategic and operational
324 InForMAtIon teChnoloGY
uses of technology by using a grid that measures competencies rang-
ing from conceptual knowledge about technology to more complex
uses of technology and business operations.
The five principal stages defined by the arc determine the middle
manager’ s maturity with business implementations of technology:
cognitive, organization interactions, management values, project eth-
ics, and management presence. There are five stages of maturation
that guide the middle manager’ s growth. The first is becoming reflec-
tively aware about one’ s existing knowledge with business technology
and how it can be implemented. The second is the recognition of the
Table 12.3 Middle Manager Executive and Implementation Best Practices
EXECUTIVE-BASED MIDDLE MANAGER BEST
PRACTICES
IMPLEMENTATION-BASED MIDDLE MANAGER BEST
PRACTICES
1. Provide valuable input to the executive
management team, including the CEO.
1. Understand how to communicate with and use
IT staff on projects.
2. Incorporate technology into new
products and services.
2. Effectively manage project resources,
including technical staff.
3. Participate in developing a technology
strategy within their business units.
3. Lead innovative groups in their departments.
4. Have proactive methods of dealing
with changes in technology.
4. Understand how to take a strategy and
implement it with technology; that is, create
tactics for completing the project.
5. Focus on how technology can improve
competitive advantage.
5. Establish team-building measures for linking
technology with staff’ s daily operations.
6. Have a systematic process for
gathering intelligence, relating to
pertinent technology developments.
6. Foster the aggregation and collaboration of
business unit assets to form peer groups that
can determine joint efforts for implementing
new technologies.
7. Understand that customers are the
drivers for technology tools provided by
the organization reward.
7. Stimulate their staffs using innovative
strategies of value propositions and systems.
8. Create multifunctional teams that can focus
on particular aspects of how technology
affects their specific area of expertise.
9. Follow common project management practices
so that multitier and department projects can
be globally reviewed by senior management.
10. Form project teams that can respect and
perform on an action basis; that is, teams
that are action oriented.
325towArd best prACtICes
multiplicity of ways that technology can be implemented on projects
(e.g., other business views of how technology can benefit the organiza-
tion). The third is integration of business implementation with tech-
nology, in which a middle manager can begin to combine technology
issues with business concepts and functions on a project basis. The
fourth is stability of business/technology implementation, in which
the middle manager has integrated business/technology as a regu-
lar part of project implementations. The fifth is technology project
leadership, in which the middle manager can use their independent
judgment on how best to use technology and business on a project-by-
project basis. Thus, as middle managers grow in knowledge of tech-
nology and business projects, they can become increasingly more open
to new methods of implementation and eventually, autonomous with
the way they implement projects and provide leadership.
Definitions of Maturity Stages and Dimension Variables
in the Middle Manager Best Practices Arc
Maturity Stages
1. Technology implementation competence and recognition: This
first stage represents the middle manager’ s capacity to learn,
conceptualize, and articulate key issues relating to cogni-
tive business technological skills, organizational interactions,
management value systems, project management ethics, and
management presence.
2. Multiplicity of business implementation of technology: Indicates
the middle manager’ s ability to integrate multiple points of
view during technical project implementations. Using these
new perspectives, the middle manager augments his or her
skills with business implementation with technology career
advancement, expands his or her management value system,
is increasingly motivated to act ethically during projects, and
enhances his or her management presence.
3. Integration of business implementation of technology: Maturing
middle managers accumulate increased understand-
ing of how business and technology operate together and
affect one another. They gain new cognitive skills about
326 InForMAtIon teChnoloGY
technology and a facility with how the organization needs
to interact, expand their management value system, perform
business/technology actions to improve ethics about busi-
ness and technology, and develop effective levels of manage-
ment presence.
4. Stability of business/technology implementation: Middle manag-
ers achieve stable integration when they implement projects
using their cognitive and technological ability; have organi-
zation interactions with operations; have management values
with their superiors, peers, and subordinates; possess project
ethics; and have the management presence appropriate for
performing job duties, not only adequately, but also competi-
tively (with peers and higher-ranking executives in the orga-
nization hierarchy).
5. Technology project leadership: Leadership is attained by the
middle manager when he or she can employ cognitive and
technological skills, organization interactions, management, a
sense of business ethics, and a sense of management presence
to compete effectively for executive positions. This middle
manager is capable of obtaining increasingly executive-level
positions through successful interviewing and organization
performance.
Performance Dimensions
1. Business technology cognition : Pertains to skills specifically
related to learning, applying, and creating resources in busi-
ness and technology, which include the necessary knowledge
of complex operations. This dimension essentially establishes
the middle manager as “ operationally” proficient with tech-
nology and forms a basis for movement to more complex and
mature stages of development when managing technology
projects.
2. Organizational interactions : This focuses on the middle man-
ager’ s knowledge and practice of proper relationships and
management interactions during technology projects. This
pertains to in-person interactions, punctuality of staff, work
327towArd best prACtICes
completion, conflict resolution, deference, and other protocols
in technology projects.
3. Management values : Measures the middle manager’ s ability
to articulate and act on mainstream corporate values credited
with shaping technology project work ethic: independent ini-
tiative, dedication, honesty, and personal identification with
technology project goals, based on the philosophy of manage-
ment protocol of the organization.
4. Project ethics: Reflects the middle manager’ s commitment to
the education and professional advancement of other persons
in technology and in other departments.
5. Management presence: Involves the middle manager’ s view
of the role of a project-based manager during a technology
project implementation and the capacity to succeed in tandem
with other projects. Aspects include a devotion to learning
and self-improvement, self-evaluation, the ability to acknowl-
edge and resolve business conflicts, and resilience when faced
with personal and professional challenges during technology
implementations.
Figure 12.7 shows a graphic view of the middle management tech-
nology best practices arc. Each cell in the arc provides the condi-
tion for assessment. The complete arc is provided in Table 12.4. The
challenge of the middle management best practices arc is whether
to emphasize executive management concepts (more organizationally
intended) or event-driven concepts (project oriented). This arc focuses
on project implementation factors and deals with best practices that
can balance executive pressures with implementation realities. I sug-
gest that senior middle managers, at the director level, who do not
participate in implementation, set their best practices, based on the
CEO maturity arc. Indeed, creating a separate arc for upper manage-
ment would contain too many overlapping cells.
Summary
The formation of best practices to implement and sustain ROD is a
complex task. It involves combining traditional best practice methods
(i.e., what seems to work for proven organizations and individuals)
328 InForMAtIon teChnoloGY
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329towArd best prACtICes
Table 12.4 Middle Management Technology Best Practices Arc—Detail
DIMENSION VARIABLE
TECHNOLOGY
IMPLEMENTATION
COMPETENCE AND
RECOGNITION
MULTIPLICITY OF BUSINESS
IMPLEMENTATION OF
TECHNOLOGY
Business Technology
Cognition
Understands how technology
operates during projects. Has
conceptual knowledge about
hardware interfaces, and the
software development life
cycle. Has the core ability to
relate technology concepts to
other business experiences.
Can also participate in the
decisions about what
technology is best suited for
a particular project. Can be
taught how to expand the use
of technology and can apply
it to other business
situations.
Understands that technology
projects can have multiple
perspectives on how to
implement them. Able to
analyze what is valid vs.
invalid opinions about
business uses of technology.
Can create objective ideas from
multiple technology views
without getting stuck on
individual biases. An ability to
identify and draw upon
multiple perspectives available
from project sources about
technology. Developing a
discriminating ability with
respect to choices available.
Realistic and objective
judgment, as demonstrated by
the applicability of the
technology material drawn for
a particular project or task and
tied to functional/pragmatic
outcomes.
Organizational Interactions Understands that technology
projects require the opinions
of other departments and
staff in multiple ways.
Understands that certain
technological solutions and
training methods may not fit
all project needs and
preferences of the business.
Has the ability to
recommend/suggest
alternative technological
solutions to suite other
business and project needs
and preferences.
Seeks to use technology projects
as a vehicle to learn more
about organization interactions
and mindsets. Strives to care
about what others are
communicating and embraces
these opinions on a project
basis. Tries to understand and
respect technologies that differ
from own. Understands basic
technological project needs of
others.
(Continued)
330 InForMAtIon teChnoloGY
Table 12.4 (Continued) Middle Management Technology Best Practices Arc—Detail
INTEGRATION OF BUSINESS
IMPLEMENTATION OF
TECHNOLOGY
STABILITY OF BUSINESS/
TECHNOLOGY
IMPLEMENTATION
TECHNOLOGY PROJECT
LEADERSHIP
Has the ability to relate
various technical project
concepts and organize
them with non-technical
business issues. Can
operate with both
business and technical
solutions. Can use
technology to expand
reasoning, logic, and
what-if scenarios. Ability
to discern the templates
that technology has to
offer in order to approach
everyday technology
project problems. This
involves the hypothetical
(inductive/deductive)
logical business and
technology skills.
Knowledge of technology
projects are concrete,
accurate, and precise, broad
and resistant to interference
from non-authentic business
and technical project
sources. Ability to resist or
recover from proposed
technology that is not
realistic— and can recover
resiliently.
Methods and judgment in
multidimensional technology
projects are independent and
use critical discernment.
Operational knowledge of
technology and project
management skills can be
transferred and can be used to
self-educate within and
outside of technology. Can use
technology for creative
purposes to solve business and
project challenges and
integrate with executive
management views.
Can deal with multiple
dimensions of criticism
about technology-based
projects. Can develop
relationships
(cooperative) that are
dynamic and based on
discourse. Ability to create
project relations with IT,
other departments, and
customers. Has an
appreciation of project
communication— to
foster open dialogue
(spontaneous), to give
and take, or other than
voyeuristic, one-sidedness
about the project. Ability
to produce in teamwork
situations, rather than
solely in isolation.
Loyalty and fidelity to relations
in multiple organizations.
Commitment to criticism and
acceptance of multiple levels
of IT and business
relationships. Ability to
sustain non-traditional types
of inputs from multiple
sources during projects.
Can utilize and integrate
multidimensions of project
solutions in a self-reliant way.
Developing alone if necessary
using other technical and
non-technical resources. Can
dynamically select types of
interdependent and dependent
organizational relationships.
Ability to operate within
multiple dimensions of
business cultures, which may
demand self-reliance,
independence of initiative, and
interactive communications
during project
implementations.
(Continued)
331towArd best prACtICes
Table 12.4 (Continued) Middle Management Technology Best Practices Arc—Detail
DIMENSION VARIABLE
TECHNOLOGY
IMPLEMENTATION
COMPETENCE AND
RECOGNITION
MULTIPLICITY OF BUSINESS
IMPLEMENTATION OF
TECHNOLOGY
Management Values Technology and cultural
sensitivity during project
implementations. Global
communication, education,
and project use of technology
can be problematic— subject
to false generalizations and
preconceived notions.
Awareness of assumptions
about how technology will be
viewed by other departments
and staff and about biases
about types of technology
used (MAC vs. PC).
Can appreciate need to obtain
multiple sources of information
and opinions during project
implementations. The
acceptance of
multidimensional values in
human character as value
during project design and
completion.
Project Ethics Using technology on the
project with honesty re:
privacy of access and
information. Development of
ethical policies governing
project uses of the Internet,
research, intellectual
property rights, and
plagiarism.
The use of information in a fair
way— comparison of facts
against equal sources of
project information.
Compassion for differences in
project information for which
sources are limited because of
inequality of technology
access. Compassion for
sharing information with other
business units from a sense of
inequality.
Management Presence Has accurate perception of
one’ s own potential and
capabilities in relation to
technology projects— the
technologically realizable
manager.
Understands how other
managers can view self from a
virtual and multiple
perspectives. Understands or
has awareness of the
construction of self that occurs
in projects. Understands views
of other executives and
managers in multiple project
settings. Understands that the
self (thru technology projects)
are open for more fluid
constructions, able to
incorporate diverse views in
multiple settings.
(Continued)
332 InForMAtIon teChnoloGY
with developmental theory on individual maturation. The combina-
tion of these two components provides the missing organizational
learning piece that supports the attainment of ROD. Another way
of comprehending this concept is to view the ROD arc as the over-
arching or top-level model. The other maturity arcs and best practices
Table 12.4 (Continued) Middle Management Technology Best Practices Arc—Detail
INTEGRATION OF BUSINESS
IMPLEMENTATION OF
TECHNOLOGY
STABILITY OF BUSINESS/
TECHNOLOGY
IMPLEMENTATION
TECHNOLOGY PROJECT
LEADERSHIP
Can operate project within
multiple dimensions of
value systems and can
prioritize multitasking
events that are consistent
with value priorities.
Ability to assign value to
new and diverse
technology project
alternatives— integrating
them within a system of
pre-existing business and
technology project
implementation values.
Testing technology value
systems in new ways during
the project implementation is
integrated with long-term
values and goals for
business achievement. Some
project concepts are naturally
persistent and endure
despite new arenas in the
technological era
Use of technology and business
during project implementation
are based on formed principles
as opposed to dynamic
influences or impulses. Formed
principles establish the basis
for navigating through, or
negotiating the diversity of
business influences and
impulses during the project.
Consistent values
displayed on multiple
project communications,
deliverables of content,
and dedication to
authenticity. Maintains
consistency in integrating
values within technology
business issues during
project implementation.
Technology is a commitment in
all aspects of value systems,
including agility in managing
multiple project
commitments. Commitment
to greater openness of mind
to altering traditional and
non-technological methods
on project implementations.
Technological project creativity
with self-defined principles
and beliefs. Risk-taking in
technology-based projects.
Utilizing technology to expand
one’ s arenas of project
freedom. Exploring the project
management liberating
capacities of technology.
Operationalizes technology
projects to unify multiple
components of the self
and understands its
appropriate behaviors in
varying management
situations.
Has regulated an identity of
self from a multiplicity of
management venues. Method
of project interaction creates
positive value systems that
generate confidence about
operating in multiple
organizational communities.
Can determine comfortably,
authenticity of other managers
and their view of the self. Can
confirm project-related
disposition independently from
others’ valuations, both
internally and from other
department cultures. Has
direct beliefs and controls
multidimensional management
growth.
333towArd best prACtICes
represent the major communities of practice that are the subsets of
that model. This is graphically depicted in Table 12.5.
Thus, the challenge is to create and sustain each community and, at
the same time, establish synergies that allow them to operate together.
This is the organizational climate created at ICAP, where the execu-
tive board, senior and middle managers, and operations personnel all
formed their own subcommunities; at the same time, all had the abil-
ity for both downward and upward communication. In summary, this
particular model relies on key management interfaces that are needed
to support ROD.
Ethics and Maturity
The word ethics is defined in many different ways. Reynolds (2007)
defines ethics as “ a set of rules that establishes the boundaries of gen-
erally accepted behaviour” (p. 3). Ethics can also mean conforming to
social norms and rules, which can be challenged by deviant behaviors
of “ others.” Still other groups construct ethics as a moral code that a
community agrees to uphold. Ethics often map to our values— like
integrity and loyalty to others. What is ethical for one person may not
be ethical for another. This issue frames yet another question: How
does ethics relate to leadership, specifically leadership in technology?
Ethics became a heightened issue after the Enron scandal in the
United States. The scandal had a huge effect on the IT industry
because it resulted in Congress enacting the Sarbanes-Oxley (SOX)
Act, which placed significant audit trail requirements on document-
ing processes. Most of these processes existed in automated applica-
tions; thus, IT was required to comply with the rules and regulations
that the SOX Act mandated. Implementing the SOX Act became an
immense challenge for IT organizations mostly because the rules of
compliance were vague.
Most would agree that ethics are a critical attribute for any leader.
The challenge is how to teach it. The SOX Act “ teaches” ethics by
establishing governance by control— control of unethical behavior
through catching deviants. However, history has shown us that devi-
ants are not cured by laws and punishment; rather, they are simply
contained. Unfortunately, containment does not eliminate or cure
unethical behavior. Furthermore, deviants tend to find new ways to
334 InForMAtIon teChnoloGY
Ta
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335towArd best prACtICes
bypass controls and get around the system in time. On the other hand,
educators more often see the solution as transforming behavior of the
individual; that is, ethics can only be taught if the individual realizes
its value. Value in ethical behavior becomes a systemic transforma-
tion when the individual believes in its self-realization. Being ethical
is then aligned with self-actualization and adult maturity. So, ethics
can be aligned with maturity in the same ways that the maturity arcs
presented were mapped to leadership. Why is this so important for
IT leaders? The SOX Act answered this question because it clearly
identified the IT function as the most critical component of com-
pliance. Unethical behavior in technology-based systems can damage
the greater good, which places a big responsibility on the IT function.
I would suggest that IT ethics and leadership are very much linked.
It is a very important responsibility for technology executives to pro-
vide direction to their firms on how technology and ethics are inte-
grated and how they can transform individuals to value conformance
without the overuse of governing controls. Firms must use organi-
zational learning tools as the vehicle to promote such conformance
through changes in behavior. Unfortunately, many executives, includ-
ing those in IT, practice governance much more than influence. I am
not suggesting the elimination of controls, but rather, that leadership
should depend less on governance and more on effecting behavioral
change. In other words, the key to developing strong ethics within an
IT organization is leadership, not governance. An important compo-
nent of leadership is the ability to influence the behaviors of others
(without exerting control or power). The real power of leadership is to
use influence to effect ethical behavior as opposed to demanding it.
How do we create ethical IT organizations? Further, how can a
technology executive provide the necessary strategy and influence to
accomplish firm-wide ethical transformation? The first strategy, for a
number of reasons, should be to create an ethical IT organization as
the model:
1. The technology executive has control over that organization.
2. Most IT ethical problems today emanate from technology per-
sonnel because of their unusual access to data and information.
3. IT is positioned to lead the direction, since it is its area of
expertise.
336 InForMAtIon teChnoloGY
So, IT can set the example for technology-related ethics for the
entire organization by establishing its own level of compliance by a
“ way of being,” as opposed to a way of being managed. Often, this
way of being can evolve into a code of behavior that can become the
cultural “ code” of the organization itself. This code of ethics should
address and be limited to such IT-related issues as:
• Privacy : Because of their access to transactions over the
Internet, IT professionals must respect the privacy of infor-
mation of others. Their code of ethics should go beyond just
e-mail transactions to include access to personal data that
may be stored on desktops or data files.
• Confidentiality : This differs from privacy because the data are
available to IT in the normal transactions of business. That
is, the data are captured or used in the development of an
application. IT personnel need to keep such information con-
fidential at all times— not only for the employees of the firm
but also for clients and vendors.
• Moral responsibility : IT needs to protect the organization from
outside abuses or questionable transactions coming into and
leaving the company. Protection can also include blocking
access to certain websites that are dangerous or inappropriate.
This practice should not be regarded as a control, but rather,
as a moral responsibility of any employee. Of course, there
needs to be careful objectivity in how the moral code is actu-
ally executed when a problem is identified.
• Theft : Removing information that belongs to someone else
can be construed as a form of theft. Theft should always be
regarded as an offense punishable by law— that is, above and
beyond rules and regulations of the company.
These are only examples of areas in which an ethical code might
be applied. Such a code must be implemented in IT as a framework
for how people are employed and as a basis for promotion. Again,
governance plays an important part because unfortunately there will
always be individuals who violate ethics. What we need are organiza-
tions that promote and defend ethics to the greatest possible extent.
This way of being is consistent with the core definition of a learn-
ing organization in that ethics must inevitably be part of the fabric
337towArd best prACtICes
of the culture and evolved within it. With IT serving as a model,
the technology executive can act as the champion for implementation
company-wide. This chapter has shown that ethics are intrinsically
linked to maturity. Indeed, every arc contained a dimension that con-
tained an ethical dimension. Perhaps if such ethical practices existed
at Enron, the “ learning organization” there could have stopped the
abuses.
http://taylorandfrancis.com
339
13
ConClusion
Introduction
This book has explored many conceptual aspects of information tech-
nology (IT) and organizational learning and how they can be utilized
together to help firms compete in a rapidly changing world. Case stud-
ies were presented to show how these concepts, and the theories they
derive from, could be implemented into practice. It is most important,
however, to remember that each organization is unique and that the
implementation of organizational learning methods must therefore
be tailored to the particular dynamics at play in a given organiza-
tion. Hence, there can be no boilerplate methodology for the strategic
employment of technology; such an approach could never guarantee
maximum benefit to the organization. My position involves employ-
ing various organizational learning methods that must be carefully
chosen and implemented, based on the projected target audience and
on the particular stage of growth of the organization and its mature
use of technology.
In my study of chief executive officer (CEO) perceptions of IT,
I found that the role of IT was not generally understood in most of the
organizations I surveyed, especially at the CEO level. There appear
to be inconsistent reporting structures within the IT organization,
and there is a lack of IT-related discussion at the strategic and senior
executive levels. Furthermore, most executives are not satisfied with
IT performance, and while most agree that technology should play a
larger role in marketing, few have been able to accomplish this. The
general dilemma has involved an inability to integrate technology
effectively into the workplace.
Certainly, a principle target of this book is to answer the question
of what chief IT executives need to do and in what directions their
340 InForMAtIon teChnoloGY
roles need to evolve regarding IT. Other concerns center on general
organizational issues surrounding who IT people are, where they
report, and how they should be evaluated. IT must also provide better
leadership with respect to guiding a company through the challenges
of unproven technologies. While technology behaves dynamically, we
still need processes that can validate its applicability to the organiza-
tion. Another way of viewing this is to accept the idea that certain
technologies need to be rejected because of their inappropriateness to
drive strategy.
IT is unique in that it is often viewed from a project perspective; for
instance, that which is required to deliver technology and the cultural
impact it has on the organization, and tends to be measured by project
deliverables due to the pressure to see measurable outcomes. From a
project perspective, IT staff members typically take on the role of
project managers, which requires them to communicate with multiple
business units and management layers. They need to establish shorter
project life cycles and respond to sudden changes to the requirements.
No longer does a traditional project life cycle with static dates and
deliverables work with the fast-paced businesses of today. Rather,
these projects are living and breathing entities that must be in balance
with what is occurring in the business at all times. Most important is
that project measurable outcomes must be defined and seen in balance
with expected organizational transformations.
I began my explanation of the role of technology by establishing
it as a dynamic variable, which I termed technological dynamism.
Responsive organizational dynamism (ROD) represents my attempt
to think through a range of responses to the problems posed by tech-
nological dynamism, which is an environment of dynamic and unpre-
dictable change resulting from the advent of innovative technologies.
This change can no longer be managed by a group of executives or
managers; it is simply too complex, affecting every component of a
business. A unilateral approach does not work; the problem requires
an environmental approach. The question is how to create an orga-
nization that can respond to the variability of technologies in such
a way that its responses become part of its everyday language and
discourse. This technological state of affairs is urgent for two major
reasons. First, technology not only is an accelerator of change but also
requires accelerated business responses. Organizations cannot wait
341ConClusIon
for a committee to be formed or long bureaucratic processes to act.
Second, the market is unforgiving when it comes to missing business
opportunities. Every opportunity missed, due to lack of responding in
a timely fashion, can cost an organization its livelihood and future. As
stated by Johansen et al. (1995):
The global marketplace requires constant product innovation, quick
delivery to market, and a large number of choices for the consumer, all
of which are forcing us to rethink the way we structure our business
organizations to compete. Indeed, many businesses are finding their
traditional structure cumbersome— the way they work is more of an
obstacle than help in taking advantage of global opportunities. (p. 1)
While ROD is the overarching approach for a firm that can perform
in a dynamic and unpredictable environment, there are two major
components to that approach that I raised for further consideration. I
discussed how technology, as a variable, is unique in that it affects two
areas of any organization. The first is the technology itself and how it
operates with business strategy. I called this the strategic integration
component of responsive organizational dynamism. The challenge
here is to have organizations create processes that can formally and
informally determine the benefit of new and emerging technologies
on an ongoing basis. The second component is cultural assimilation,
which is about managing the cultural and structural changes that are
required when new strategies are adopted by the organization.
Creating an environment of ROD requires processes that can fos-
ter individual and organizational-level thinking, learning, and trans-
formation. Organizational learning techniques best fit the need as
they contain the core capabilities to assist organizations in reinvent-
ing themselves as necessary, and to build an organization that can
evolve with technology, as opposed to one that needs to be reorga-
nized. I have presented many organizational learning concepts and
modified them to provide specific remedies to the challenges required
to create responsive organizational dynamism. I have also presented
the complex vectors that determine which learning theory should be
applied and integrated with others, so that every aspect of individual
and organizational evolution can be supported. I chose to use the term
vector to describe this force or influence because of the different ways
342 InForMAtIon teChnoloGY
in which these learning methods can help in creating and sustaining
firm-wide responses to technological dynamism.
Perhaps the most important learning process among these is that
of linear development leading to maturation. My use of maturity arcs
permits me a framework for the development and integration of mod-
els that can measure where individuals and organizations are in their
trajectory toward the integration of emerging technologies in their
business strategies. These maturity arcs provide a basis for how to mea-
sure where the organization is, what types of organizational learning
methods to consider, and what outcomes to expect. Indeed, providing
measurable outcomes in the form of strategic performance is the very
reason why executives should consider embracing this model.
I also discussed a number of methods to manage organizational
learning, modifying theories of knowledge management and change
management, so that they specifically addressed the unique aspects
of change brought about by new technologies. I looked at how the
CEO needs to become more knowledgeable about technology, and,
based on case studies and research, I provided sets of best practices to
suggest that staff members cannot become part of a learning organi-
zation without the participation of the CEO and his or her executive
committees. On the other hand, I investigated the interesting work
of Nonaka and Takeuchi (1995) and their middle-up-down theory
of middle management. I modified Nonaka and Takeuchi’ s idea by
complicating the strata that can be used to define the middle, and I
established three tiers of middle management and integrated them
into organizational learning theories. Finally, I used the Ravell case
study to show how operations personnel continue to play an impor-
tant role in organizational learning, and how the maturity arc can be
used to transform individual learning practices into less event-driven
learning at the organizational level. I formulated best practices for
each of these three major organizational structures, along with corre-
sponding maturity arcs to lay the foundation of what each community
needs to do to properly participate in the transformations indicated
for responsive organizational dynamism. To this end, I proposed cer-
tain road maps that, if followed, could provide the mechanisms that
lead to the kind of organizational transformation that is empowered
to handle the challenges of new technologies. This process is sum-
marized in Figure 13.1.
343ConClusIon
I have taken a strong position regarding the debate over whether
learning occurs best on the individual level or at the system-orga-
nizational one, particularly as learning affects the establishing and
sustaining of responsive organizational dynamism. My response to
this debate is “ yes” — yes, in the sense that both are very much needed
and part of a process that leads to a structured way of maturing the
use of organizational learning by an organization to improve strategic
performance. I believe the Ravell case study provides an example of
how learning maturation operates in a dynamic environment. We see
that operations personnel tend to rely on event-driven and individual-
based reflective practices before being able to think at an organiza-
tional level. My prior research (Langer, 2002) on reflective practices
clearly shows that many adults do not necessarily know how to reflect.
Technology
dynamism
�e
“technology”
variable
Requirements for
organizational
change
Responsive organizational
dynamism
Strategic
integration
Cultural
assimilation
Strategic
performance
Organizational
learning
Figure 13.1 Technology “ road map.”
344 InForMAtIon teChnoloGY
The important work of Argyris and Schö n (1996) on introducing and
sustaining individual learning, specifically using double-loop learn-
ing, should be used when implementing an organizational learning
program. Ravell also showed us that time is an important factor for
individual development and that political factions are part of that pro-
cess. With patience and an ongoing program, group learning activi-
ties can be introduced to operations personnel, thereby supporting the
kind of system-level thinking proposed by Senge (1990).
A critical part of organizational learning, in particular the nec-
essary steps to establish a learning organization, is the formation of
communities of practice. Communities of practice, in all of the case
studies, were the cornerstones in the transition from individual-based
learning to group learning. Communities of practice begin the matu-
ration process of getting organizations to change to learning based
on organizational goals. This is critical for ROD because technology
requires planning and vision that are consistent with business strat-
egy. While much of the literature integrates the notion of communi-
ties of practice with knowledge management, I expanded its use and
defined the community as the single most important organizational
structure for dealing with emerging technologies. The reason for this
is the very challenge facing IT organizations today: to be able to inte-
grate their efforts across business units. This has been proven to be the
most difficult challenge for the chief information officers (CIOs) of
today. This was further supported by the Siemens AG case study, in
which Dana Deasy, the corporate CIO of the Americas, provided a
detailed picture of the complex world of a CIO in a global firm, with
over 400,000 employees. Yet, it is the creation of multiple layers of
communities of practice that enables firms to create what I call “ com-
mon threads” of communication. Thus, the linkage across communi-
ties of practice is a central theme of this book, providing guidance and
education to organizations to establish processes that support their
evolution in a responsive way.
The key word that I have used here is evolution. In the past, infor-
mation traveled much slower, and there was more time to interpret
its impact on the organization. Today, the travel time is shrinking;
therefore, evolution can and should occur at a quicker pace. Indeed,
organizational evolution is intertwined with the dynamics of com-
munity legitimization (Aldrich, 2001). Technological development
345ConClusIon
for a particular population has widespread consequences for the rest
of the organization. In these cases, technological innovations repre-
sent a form of collective learning that is different from direct learning
from experience alone (Miner & Haunschild, 1995). There are many
scholars who believe that change management must be implemented
through top-down management approaches. However, I hope this
book demonstrates that leadership through top-down management
will never be solely sufficient to establish the organizational struc-
ture needed to handle technological innovations properly. Many
such efforts to reorganize or reengineer organizations have had dis-
appointing results. Many of these failures, I believe, are attributable
to a dependence on management intervention as opposed to strate-
gic integration and cultural assimilation. Technology only serves to
expose problems that have existed in organizations for decades: the
inability to drive down responsibilities to the operational levels of the
organization.
My case studies provide, I trust, a realistic and pragmatic view
toward the attainment of responsive organizational dynamism,
assuming the appropriate roles and responsibilities are available.
Furthermore, the case studies also reflect that progress toward orga-
nizational learning and maturity is a gradual one. As such, I deter-
mined that organizational transformation must be addressed along
the same basis; that is, transformation is a gradual process as opposed
to a planned specific outcome. I showed that organizations could and
should look at transformation in much shorter “ chunks,” as opposed
to long-term “ big-bang” approaches that rarely work and are difficult
to measure. Measurement was applied to organizational transforma-
tion via the implementation of the balanced scorecard. The scorecard
model I modified is tied to the chunk approach.
Another important concept in this book is the reconciliation
between control and empowerment. As organizations find that their
traditional structures are cumbersome when dealing with emerging
technologies, they realize the need to empower employees to do more
dynamically. With this empowerment, employees may make more
mistakes or seem less genuine at times. When this occurs, there may
be a need for management controls to be instituted and power-central-
ized management styles to be incorporated. Unfortunately, too many
controls end any hope of creating a learning organization that can
346 InForMAtIon teChnoloGY
foster the dynamic planning and needs of responsive organizational
dynamism. They also block the molding of communities of practice
that require common threads of discourse and language. Indeed, it
is communities of practice and discourse that lay the foundations for
addressing the dilemma of employee control versus empowerment.
We are really beginning to experience the results of emerging tech-
nologies, particularly for products traded internationally. We have
seen an unusual trend occur in which off shore product development
and maintenance is at an all-time high, local employment is down,
and corporate earnings are growing. The advent of this cycle lays a
foundation for the new trends of global worker operations, many of
which are shifting from a labor-intensive process to needs for think-
ing, planning, and management.
Unskilled or less-skilled workers, partly because of new technolog-
ical automation, are allowing organizations to displace higher-costing
local labor to international outsourced operations. This means an
increase in management learning related to supervision and coordina-
tion in a technology-driven world. We must be aware of the concern
expressed by O’ Sullivan (2001) that “ new technologies have created
unemployed workers with no rights” (p. 159). The way individuals
communicate, or the rules of their engagement, are quickly chang-
ing, particularly in the need to create more research and develop-
ment (R&D) infrastructures that can respond quicker to innovation
opportunities brought about by emerging technologies. We saw this
dilemma occur at Siemens, where business strategy and technology
became a major investment, and the realization that e-business was
more about business than just technology.
To address the lack of understanding of the technology life cycle, I
presented my concept of driver and supporter functions and mapped
them onto evolutionary transformation. This life cycle is one that
ties business strategy into technology and should be used to convey
ROD to executives. Driver functions explain why strategic integra-
tion is so important and present a case that requires more market-
ing-based philosophies when investing in technologies. This means
that early adaptation of technology requires, as Bradley and Nolan
(1998) call it, “ sense-and-respond” approaches, by which IT organi-
zations can experiment with business units on how a technology may
347ConClusIon
benefit the business. Siemens and ICAP provided good examples of
different ways of creating infrastructures that can support technology
exploration, including Deasy’ s 90-day program, by which technol-
ogy investments were reviewed periodically to see what adjustments
are required to maximize the investment. It also provided a way to
cancel those investments that were not paying off as originally fore-
cast. Understanding that changes along the way are needed, or that
there are technologies that do not provide the intended benefits, must
become a formal part of the process, one that CEOs must recognize
and fund.
On the other hand, the supporter role is one that addresses the
operational side of IT, such that executives and managers under-
stand the difference. I treated the concept of supporter as an eventual
reality, the reality that all technologies, once adopted by operations,
must inevitably become a commodity. This realization paves the way
to understanding when and how technologies can be considered for
outsourcing, based on economies of scale. The adoption of this phi-
losophy creates a structured way of understanding the cost side of the
IT dilemma and requires business units to integrate their own plans
with those offered by emerging technologies. The supporter aspect
of technology became the base of cultural assimilation because once
a technology is adapted by operations, there must be a correspond-
ing process that fosters its impact on organizational structures and
cultural behaviors. It also provides the short- and long-term expected
transformations, which ultimately link technology and strategic
performance.
The driver/supporter philosophy also shows the complexity of the
many definitions of technology, and that executives should not attempt
to oversimplify it. Simply put, technology must be discussed in differ-
ent ways, and chief IT executives need to rise to the occasion to take a
leadership role in conveying this to executives, managers, and opera-
tions, through organizational learning techniques. Organizations
that can implement driver/supporter methods will inevitably be better
positioned to understand why they need to invest in certain technolo-
gies and technology projects. My initial case study at Ravell exposed
the potential limit of only operating on the unit levels and not getting
executives involved in the system thinking and learning phases.
348 InForMAtIon teChnoloGY
These general themes can be formulated as a marriage between
business strategy and technological innovation and can be represented
as follows:
1. Organizations must change the business cycles of technology
investment; technology investment must become part of the
everyday or normative processes, as opposed to specific cycles
based on economic opportunities or shortfalls. Emerging
technologies tend to be implemented on a “ stop-and-go”
basis, or based on breakthroughs, followed by discontinuities
(Tushman & Anderson, 1997).
2. The previous experiences that organizations have had
with technology are not a good indicator for its future use.
Technology innovations must evolve through infrastructure,
learning, and process evaluation.
3. Technology is central to competitive strategy. Executives
need to ensure that technology opportunities are integrated
with all discussions on business strategy.
4. Research and development ( R&D) is at the center of sys-
tems/organizational-level thinking and learning. Companies
need to create R&D operations, not as separate entities, but
as part of the evaluation processes within the organizational
structure.
5. Managing technology innovations must be accomplished
through linkages. Thus, interfaces across communities of
practice via common threads are essential to have learning
improve the ability of the organization to operate within
responsive organizational dynamism.
6. Managing intellectual capital is an exercise of linking the var-
ious networks of knowledge in the organization. Managing
this knowledge requires organizational learning, to transfer
tacit knowledge to explicit knowledge. The cultural assimi-
lation component of ROD creates complex tacit knowledge
between IT and non-IT business units.
7. There are multiple and complex levels of management that
need to be involved in responsive organizational dynamism.
Successful management utilizes organizational learning prac-
tices to develop architectures, manage change, and deal with
349ConClusIon
short- and long-term projects simultaneously. Strong leader-
ship will understand that the communities of practice among
the three primary levels (executive, middle management,
and operations) constitute the infrastructure that best sus-
tains the natural migration toward responsive organizational
dynamism.
This book looked at business strategy from yet another perspective,
beyond its relationship with emerging technologies. Because organi-
zational learning is required to foster responsive organizational dyna-
mism, strategy must also be linked to learning. This linkage is known
as strategic learning, which, if implemented, helps organizations to
continually adapt to the changing business environment, including
changes brought about by technology.
However, due to the radical speed, complexity, and uncertainty,
traditional ways of doing strategy and learning can no longer ignore
the importance of technology. The old methods of determining busi-
ness strategy were based on standard models that were linear and
“ plug-in.” As stated, they were also very much based on projects that
attempted to design one-time efforts with a corresponding result. As
Pietersen (2002) explains, “ These processes usually produce operating
plans and budgets, rather than insights and strategic breakthroughs”
(p. 250). Technological dynamism has accelerated the need to replace
these old traditions, and I emphasized that organizations that practice
ROD must
• Evaluate and implement technology in an ongoing process
and embed it as part of normal practices. This requires a
change in integration and culture.
• Comprehend that the process of ROD is not about planning;
it is about adaptation and strategic innovation.
• Have a process that feeds on the creation of new knowledge
through organizational learning toward strategic organiza-
tional transformation.
Many scholars might correlate strategic success with leadership.
While leadership, in itself, is an invaluable variable, it is just that. To
attain ongoing evolution, I believe we need to move away from relying
on individual leadership efforts and move toward an infrastructure
350 InForMAtIon teChnoloGY
that has fewer leaders and more normative behavior that can support
and sustain responsive organizational dynamism. Certainly, this fos-
ters the important roles and responsibilities of CEOs, managers, and
boards, but to have an ongoing process that changes the thinking and
the operational fundamentals of the way the organization functions
is more important and more valuable than individual leadership. That
is why I raised the issues of discourse and language as well as self-
development. Therefore, it is the ability of an organization to trans-
form its entire community that will bring forth long-term strategic
performance.
What this book really commits to is the importance of lifelong
learning. The simple concept is that adults need to continually chal-
lenge their cultural norms if they are to develop what Mezirow (1990)
calls “ new meaning perspectives.” It is these new meaning perspec-
tives that lay the foundation for ROD so that managers and staff can
continually challenge themselves to determine if they are making the
best strategic decisions. Furthermore, it prepares individuals to deal
with uncertainty as well as the ongoing transitions in the way they
do their jobs. It is this very process that ultimately fosters learning in
organizations.
While on-the-job training is valuable, Ravell shows us that move-
ment, or rotation of personnel, often supports individual learning.
Specifically, the relocation of IT personnel to a business unit environ-
ment during Ravell phase I served to get IT staff more acclimated to
business issues. This relocation helped IT staff members to begin to
reflect about their own functions and their relationship to the over-
all mission of the organization. Ravell phase III showed yet another
transition; taking a group of IT staff members and permanently inte-
grating them in a non-IT business-specific department. Ravell also
teaches us that reflection must be practiced; time must be devoted to
its instruction, and it will not occur automatically without interven-
tions from the executive rank. The executive must be a “ champion”
who demonstrates to staff that the process is important and valued.
Special sessions also need to be scheduled that make the process of
learning and reflection more formal. If this is done and nurtured
properly, it will allow communities to become serious about best prac-
tices and new knowledge creation.
351ConClusIon
Although I used technology as the basis for the need for responsive
organizational dynamism, the needs for its existence can be attributed
to any variable that requires dynamic change. As such, I suggest that
readers begin to think about the next “ technology” or variable that
can cause the same needs to occur inside organizations. Such accel-
erations are not necessarily limited to technology. For example, we
are experiencing the continuation of organizational downsizing from
acquisitions. These acquisitions present similar challenges in that
organizations must be able to integrate new cultures and “ other” busi-
ness strategies and attempt to form new holistic directions— direc-
tions that need to be formed quickly to survive.
The market per se also behaves in a similar way to technology. The
ability to adjust to consumer needs and shifting market segments is
certainly not always related to technological change. My point is that
ROD is a concept that should be embraced notwithstanding whether
technology seems to have slowed or to have no effect on a specific
industry at a particular moment. Thus, I challenge the organizations
of today to develop new strategies that embrace the need to become
dynamic throughout all of their operations and to create communi-
ties of practice that plan for ongoing strategic integration and cultural
assimilation.
This book looked at the advent of technology to uncover a dilemma
that has existed for some time. Perhaps a more general way of defining
what ROD offers is to compare it to another historical concept: “ self-
generating organizations.” Self-generating organizations are known
for their promotion of autonomy with an “ underlying organic sense
of interdependence” (Johansen et al., 1995). Based on this definition,
a self-generating organization is like an organism that evolves over
time. This notion is consistent with organizational learning because
they both inherently support inner growth stemming from the orga-
nization as opposed to its executives. The self-generating organization
works well with ROD in the following ways:
• Traditional management control systems do not apply.
• Risks are higher, given that these organizational workers
are granted a high degree of autonomy and empowerment
that will lead to processes that break with the norms of the
business.
352 InForMAtIon teChnoloGY
• Adjustments and new processes should be expected.
• These organizations tend to transform political activity into
strong supporting networks.
• Leadership definitions do not work. You cannot lead what
you cannot control.
Self-generating organizations have scared traditional managers in
the past, due to the fear they have of losing control. ROD provides
a hybrid model that allows for self-generating infrastructures while
providing certain levels of control fostered by organizational learn-
ing. Specifically, this means that the control is not traditional con-
trol. Responsive organizational dynamism, for example, embraces the
breaking of rules for good reasons; it allows individuals to fail yet to
reflect on the shortfall so that they do not repeat the same errors. It
also allows employees to take risks that show promise and lead to
increased critical thinking and to strategic action. Indeed, manage-
ment and leadership become more about framing conditions for oper-
ations, observing the results, and making adjustments that maintain
stability. Thus, seeing ROD as a form of self-generation is the basis
for sustaining innovative infrastructures that can respond to dynamic
variables, like technology.
I have emphasized the need for organizational learning as the key
variable to make ROD a reality. While I have modified many of the
organizational learning theories to fit this need, I must acknowledge
that a portion of the “ learning” should be considered “ organizing.”
Vince (2002) provides an analysis of how organizational learning
could be used to sustain an “ organized” reflection. He provides an
interesting matrix of how the two theories can be integrated. After
reviewing many of the ways in which organizational learning affects
responsive organizational dynamism, I have developed a modified
chart of Vince’ s original framework, as shown in Table 13.1.
Table 13.1 shows the three kinds of reflective practices that can
operate in an organization: individual, group, and organizational.
I emphasized in Chapter 9 that the extent of organizational learn-
ing maturation is directly related to the sophistication of reflections
among the communities of practice. The more learning that occurs,
based on individual reflection, the earlier the stage at which organi-
zational learning maturity occurs. Thus, more mature organizations
353ConClusIon
Ta
bl
e
13
.1
In
di
vi
du
al
, G
ro
up
, a
nd
O
rg
an
iza
tio
na
l a
nd
R
efl
ec
tiv
e
Pr
ac
tic
es
IN
DI
VI
DU
AL
R
EL
AT
IO
NS
B
ET
W
EE
N
TH
E
PE
RS
ON
, R
OL
E,
A
ND
T
HE
OR
GA
NI
ZA
TI
ON
-IN
-T
HE
-M
IN
D
GR
OU
P
RE
LA
TI
ON
S
AC
RO
SS
T
HE
IT
BO
UN
DA
RI
ES
O
F
SE
LF
O
R
OT
HE
R
AN
D
OF
S
UB
DE
PA
RT
M
EN
TS
W
IT
HI
N
IT
OR
GA
NI
ZA
TI
ON
AL
T
HE
R
EL
AT
IO
NS
BE
TW
EE
N
IT
A
ND
O
TH
ER
B
US
IN
ES
S
UN
IT
S
Pe
er
co
ns
ul
tin
g
gr
ou
ps
(n
on
m
an
ag
er
ia
l
se
lf-
go
ve
rn
in
g
IT
g
ro
up
s
of
a
t l
ea
st
th
re
e
in
di
vi
du
al
s)
M
ak
in
g
co
nn
ec
tio
ns
fo
r t
he
s
el
f:
Re
vi
ew
a
nd
re
fle
ct
io
n
wi
th
in
IT
co
m
m
un
ity
, b
y f
rie
nd
sh
ip
, a
nd
m
ut
ua
lit
y o
f i
nt
er
es
ts
a
nd
n
ee
ds
.
M
ak
in
g
co
nn
ec
tio
ns
in
s
m
al
l g
ro
up
s
wi
th
“
ot
he
rs
”
ac
ro
ss
IT
o
rg
an
iza
tio
n:
De
ve
lo
p
in
te
rp
er
so
na
l c
om
m
un
ic
at
io
n
an
d
di
al
og
ue
w
ith
in
IT
c
om
m
un
iti
es
.
M
ak
in
g
co
nn
ec
tio
ns
w
ith
th
e
en
tir
e
or
ga
ni
za
tio
n:
R
efl
ec
tio
n
on
w
ay
s
th
at
te
ch
no
lo
gy
a
ffe
ct
s
ot
he
r g
ro
up
s
in
th
e
or
ga
ni
za
tio
n.
Or
ga
ni
za
tio
na
l r
ole
a
na
lys
is
(l
in
ki
ng
in
di
vi
du
al
s
wi
th
“
ot
he
rs
”
in
si
de
th
e
IT
or
ga
ni
za
tio
n)
Or
ga
ni
za
tio
na
l r
ol
e
an
al
ys
is
:
Un
de
rs
ta
nd
in
g
th
e
co
nn
ec
tio
ns
be
tw
ee
n
th
e
pe
rs
on
, t
he
p
er
so
n
in
IT
,
an
d
hi
s
or
h
er
ro
le
in
o
rg
an
iza
tio
n.
Ro
le
a
na
lys
is
g
ro
up
s:
T
he
w
ay
s
in
wh
ic
h
te
ch
no
lo
gy
ro
le
s
an
d
th
e
un
de
rs
ta
nd
in
g
of
th
os
e
ro
le
s
in
te
rw
ea
ve
w
ith
in
a
n
IT
c
om
m
un
ity
o
r
de
pa
rtm
en
t.
Te
ch
no
lo
gy
ro
le
p
ro
vi
de
s
th
e
fra
m
ew
or
k
wi
th
in
w
hi
ch
th
e
pe
rs
on
a
nd
or
ga
ni
za
tio
n
ar
e
in
te
gr
at
ed
.
Co
m
m
un
iti
es
of
p
ra
ct
ice
(g
ro
up
s
of
in
di
vi
du
al
s
un
ite
d
in
a
ct
io
ns
th
at
co
nt
rib
ut
e
to
th
e
pr
od
uc
tio
n
of
IT
id
ea
s
in
p
ra
ct
ic
e)
In
vo
lv
em
en
t:
Pr
ov
id
in
g
pe
rs
on
al
ex
pe
rie
nc
e
as
th
e
ve
hi
cl
e
to
o
rg
an
ize
th
e
us
e
of
te
ch
no
lo
gy
.
En
ga
ge
m
en
t:
Ex
pe
rie
nc
e
us
ed
to
a
pp
ly
te
ch
no
lo
gy
a
cr
os
s
IT
o
rg
an
iza
tio
n;
un
de
rs
ta
nd
in
g
of
im
po
rta
nc
e
of
IT
in
te
rd
ep
ar
tm
en
t c
om
m
un
ic
at
io
n.
Es
ta
bl
is
hm
en
t:
Ex
pe
rie
nc
e
of
p
ow
er
re
la
tio
ns
a
s
th
ey
re
ac
t a
nd
re
sp
on
d
to
te
ch
no
lo
gy
u
se
s
am
on
g
co
m
m
un
iti
es
o
f
pr
ac
tic
e
Gr
ou
p
re
la
tio
ns
co
nf
er
en
ce
s
(re
ve
al
th
e
co
m
pl
ex
iti
es
o
f f
ee
lin
gs
, i
nt
er
ac
tio
ns
,
an
d
po
we
r r
el
at
io
ns
th
at
a
re
in
te
gr
al
to
th
e
pr
oc
es
s
of
o
rg
an
izi
ng
te
ch
no
lo
gy
im
pl
em
en
ta
tio
ns
)
Ex
pe
rie
nc
in
g
an
d
re
th
in
ki
ng
te
ch
no
lo
gy
au
th
or
ity
a
nd
th
e
m
ea
ni
ng
a
nd
co
ns
eq
ue
nc
es
o
f l
ea
de
rs
hi
p
an
d
fo
llo
we
rs
hi
p.
Ex
pe
rie
nc
in
g
de
fe
ns
iv
e
m
ec
ha
ni
sm
s
an
d
av
oi
da
nc
e
st
ra
te
gi
es
a
cr
os
s
IT
de
pa
rtm
en
ts
. E
xp
er
ie
nc
e
of
or
ga
ni
zin
g,
b
el
on
gi
ng
, a
nd
re
pr
es
en
tin
g
ac
ro
ss
IT
o
rg
an
iza
tio
ns
.
Ex
pe
rie
nc
in
g
th
e
wa
ys
in
w
hi
ch
IT
a
nd
th
e
or
ga
ni
za
tio
n
be
co
m
e
in
te
gr
at
ed
us
in
g
co
lle
ct
iv
e
em
ot
io
na
l e
xp
er
ie
nc
e,
po
lit
ic
s,
le
ad
er
sh
ip
, a
ut
ho
rit
y ,
an
d
or
ga
ni
za
tio
na
l t
ra
ns
fo
rm
at
io
n.
354 InForMAtIon teChnoloGY
reflect at the group and organizational level. Becoming more mature
requires a structured process that creates and maintains links between
reflection and democratic thinking. These can be mapped onto the
ROD arc, showing how, from an “ organizing” perspective, reflective
practice serves as a process to “ outline what is involved in the pro-
cess of reflection for learning and change” (Vince, 2002, p. 74). Vince
does not, however, establish a structure for implementation, for which
ROD serves that very purpose, as shown in Figure 13.2.
Figure 13.2 graphically shows how organized reflection maps to
the linear stages of the ROD arc (the organizational-level maturity
arc), which in turn maps onto the three best practices arcs, discussed
in Chapter 9. Each of the management arcs represents a level of man-
agement maturity at the organizational level, with Vince’ s (2002)
matrix providing the overarching concepts on how to actually orga-
nize the progression from individual-based thinking and reflection to
a more comprehensive and systems-level thinking and learning base.
Organizational-level
maturity arc
Chief IT executive
best practices
maturity arc
CEO technology
best practices
maturity arc
Middle
management
technology best
practices
maturity arc
Vince’s “organizing” reflection matrix
Strategic integration
Cultural assimilation
Organizational learning constructs
Varying levels of management
participation
Individual
reflection
Organizational
reflectionLinear stages learning maturation
Individual
reflection
Group
reflection
Organizational
reflection
Figure 13.2 ROD and Vince’ s reflection matrix.
355ConClusIon
The emphasis, overall, is that individual learning alone will under-
mine collective governance. Therefore, the movement from individual
to organizational self-management remains a critical part of under-
standing how technology and other dynamic variables can foster new
strategies for competitive advantage.
Perhaps the most important conclusion of this third edition is the
impact that digital technologies are having on the acceleration of
change being experienced throughout the world. Indeed, digital tech-
nology has begun to change not only the business world but the very
fabric of our lives. Particular to this change is the continual emer-
gence of social media as a driver of new and competitive products and
services. I also discussed the changing work philosophy and expecta-
tions of our new generation of employees, and how they think differ-
ently and want a more complex experience in the places in which they
work. The Gen Y population is clearly a new breed of employees and
the Gen Z behind them will be even more accustomed to using digi-
tal technologies in every fabric of the ways they want to learn, their
preferences in communicating with others, and their role in society.
Most important are the ways that technology has changed consumer
behavior. I truly believe that future generations will look back on this
period and indeed say, this was truly a consumer revolution!
http://taylorandfrancis.com
357
Glossary
baby boomers: The generation of individuals who were born between
the years of 1946 and 1964.
business process reengineering: a process that organizations under-
take to determine how best to use technology to improve
business performance
customer relationship management (CRM): the development and
maintenance of integrated relationships with the customer
base of an organization. CRM applications provide organiza-
tions with integrated tools that allow individuals to store and
sustain valuable information about their customers.
data mapping: the process of comparing the data fields in one data-
base to another, or toward a new application database
decision‑support systems (DSS): systems that assist managers to
make better decisions by providing analytical results from
stored data
digital disruption: When new digital technology advancements
impact the value of goods and services.
digital transformation: The repositioning of or a new investment
in technology and business models in efforts to compete in
a rapidly changing digital economy and create a newfound
sense of value for customers.
358 GlossArY
enterprise resource planning (ERP): a set of multimodule applica-
tions that support an entire manufacturing and business oper-
ation, including product planning, purchasing, maintaining
inventories, interacting with suppliers, providing customer
service, accounting interfaces, and tracking order shipments.
These systems are also known as enterprise-level applications.
garbage can: an abstract concept for allowing individuals a place to
suggest innovations, brought about by technology. The inven-
tory of technology opportunities needs regular evaluation
Gen X: The generation of individuals who were born between the
years of 1965 and 1980.
Gen Y/Millennials: The generation of individuals who were born
between the years of 1981 and 1992. There is disagreement
on the exact end dates of Gen Y individuals.
internet: a cooperative message-forwarding system that links com-
puter networks all over the world.
intranet: a network confined to a single organization or unit.
ISO 9000: a set of quality assurance standards published by the
91-nation International Organization for Standardization
(ISO). ISO 9000 requires firms to define and implement
quality processes in their organization.
legacy: an existing software application or system that is assumed to
operate. By definition, all applications in production become
legacies.
operational excellence: a philosophy of continuous improvement
throughout an organization by enhancing efficiency and qual-
ity across operations
outsourcing: A practice utilized by corporations which involves hav-
ing external suppliers complete internal work in efforts to
reduce costs.
storyboarding: the process of creating prototypes that allow users to
actually see examples of technology, and how it will look and
operate. Storyboarding tells a story and can quickly educate
executives, without being intimidating.
technology definitions branding: the process of determining how an
organization wants to be viewed by its customers. Branding
includes not only the visual view, but also the emotional,
359GlossArY
rational, and cultural image that consumers associate with an
organization, its products, and services.
user interface: the relationship with end users that facilitates the pro-
cess of gathering and defining logical requirements
user level: the tier of computer project experience of the user. There
are three levels: (1) knowledgeable, (2) amateur, and (3) novice
virtual teams: groups of people, geographically disbursed, and linked
together using communication technologies
World Wide Web (web): loosely organized set of computer sites that
publish information that anyone can read via the Internet
using mainly HTTP (Hypertext Transfer Protocol)
Year 2000 (Y2K): a monumental challenge to many organizations
due to a fear that software applications could not handle the
turn of the century. Specifically, calculations that used the
year portion of a date would not calculate properly. As such,
there was a huge investment in reviewing legacy systems to
uncover where these flaws existed.
Organizational Learning Definitions
action science: pioneered by Argyris and Schö n (1996), action science
was designed to promote individual self-reflection, regarding
behavior patterns and to encourage a productive exchange
among individuals. Action science encompasses a range of
methods to help individuals learn how to be reflective about
their actions. A key component of action science is the use
of reflective practices— including what is commonly known
among researchers and practitioners as reflection in action,
and reflection on action.
balanced scorecard: a means for evaluating transformation, not only
for measuring completion against set targets, but also, for
defining how expected transformations map onto the strate-
gic objectives of the organization. In effect, it is the ability of
the organization to execute its strategy.
communities of practice: are based on the assumption that learning
starts with engagement in social practice and that this prac-
tice is the fundamental construct by which individuals learn.
360 GlossArY
Thus, communities of practice are formed to get things done
using a shared way of pursuing interest.
cultural assimilation: a process that focuses on the organizational
aspects of how technology is internally organized, including
the role of the IT department, and how it is assimilated within
the organization as a whole. It is an outcome of responsive
organizational dynamism.
cultural lock‑in: the inability of an organization to change its corpo-
rate culture, even when there are clear market threats (Foster
& Kaplan, 2001)
double‑loop learning: requires individuals to reflect on a prior action
or habit that needs to change in behavior and change to oper-
ational procedures. For example, people who engage in dou-
ble-loop learning, may need to adjust how they perform their
job as opposed to just the way they communicate with others.
drivers: those units that engage in frontline or direct revenue-
generating activities
experiential learning: a type of learning that comes from the experi-
ences that adults have accrued over the course of their individ-
ual lives. These experiences provide rich and valuable forms of
“ literacy” that must be recognized as important components
to overall learning development.
explicit knowledge: documented knowledge found in manuals, doc-
umentation, files, and other accessible places and sources
flame: a lengthy, often personally insulting, debate in an elec-
tronic community that provides both positive and negative
consequences
frame‑talk: focuses on interpretation to evaluate the meanings of talk
knowledge management: the ability to transfer individual tacit
knowledge into explicit knowledge
left‑hand column: a technique by which individuals use the right-hand
column of a piece of paper to transcribe dialogues that they feel
have not resulted in effective communication. In the left-hand
column of the same page, participants write what they were
really thinking at the time of the dialogue but did not say.
management self‑development: increases the ability and willingness
of managers to take responsibility for themselves, particularly
for their own learning (Pedler et al., 1988)
361GlossArY
mythopoetic‑talk: communicates ideogenic ideas and images that
can be used to communicate the nature of how to apply tool-
talk and frame-talk, within the particular culture or society.
This type of talk allows for concepts of intuition and ideas for
concrete application.
organizational knowledge: is defined as “ the capability of a company
as a whole to create new knowledge, disseminate it through-
out the organization, and embody it in products, services, and
systems” (Nonaka & Takeuchi, 1995, p. 3)
organizational transformation: changes in goals, boundaries, and
activities. According to Aldrich (2001), organizational trans-
formations “ must involve a qualitative break with routines
and a shift to new kinds of competencies that challenge exist-
ing organizational knowledge” (p. 163).
reflection with action: term used as a rubric for the various methods
involving reflection in relation to activity
responsive organizational dynamism: the set of integrative
responses, by an organization, to the challenges raised by
technology dynamism. It has two component outcomes: stra-
tegic integration and cultural assimilation.
single‑loop learning: requires individuals to reflect on a prior action
or habit that needs to be changed in the future but that does
not require individuals to change their operational procedures
with regard to values and norms
strategic integration: a process that addresses the business-strategic
impact of technology on organizational processes. That is,
the business-strategic impact of technology requires imme-
diate organizational responses and, in some instances, zero
latency. It is an outcome of responsive organizational dyna-
mism, and it requires organizations to deal with a variable
that forces acceleration of decisions in an unpredictable
fashion.
supporters: units that do not generate obvious direct revenues but
rather are designed to support frontline activities
tacit knowledge: an experience-based type of knowledge and skill,
with the individual capacity to give intuitive forms to new
things; that is, to anticipate and preconceptualize the future
(Kulkki & Kosonen, 2001)
362 GlossArY
technological dynamism: characterizes the unpredictable and accel-
erated ways in which technology, specifically, can change
strategic planning and organizational behavior/culture. This
change is based on the acceleration of events and interactions
within organizations, which in turn create the need to better
empower individuals and departments.
tool‑talk: includes instrumental communities required to discuss,
conclude, act, and evaluate outcomes
363
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373
Index
A
Abstract conceptualization, as
learning preference, 84
Abstraction, leaps of, 10
Acceleration, xxi
Access control, social networking
issues, 134
Access tracking, 137
Accountability, of IT staff, 5
Accounting, IT relevance to, 24
Action, emotional components
of, 92
Action science, 3, 4, 74, 142,
152, 359
Active experimentation, as learning
preference, 84
Activity, relationship to content, 90
Activity systems, organizational
transformation of, 139–141
Adaptive organizations, 83
Administrative departments,
alignment with, 17–19
Adoptive approach, 63
Adversarial relationships, 2
Advertising business,
transformation to media
market, 231
Alignment
with administrative
departments, 17–19
to business strategy, 148
with human resources, 18
with social networks, 138
of technology with business
strategy, 149
Answerthink Corporation, 304
Applied individual learning for
technology model, 87
Architecture, 46
Assimilation, 6
cultural, 7
Assumptions, unearthing
unspoken, 9–10
Attribution theory, 166
Autonomy, 351
374 Index
B
Back office issues
at ICAP, 204
as strategic business problems, 195
Balanced scorecard, 359
availability variable, 156
business stakeholder support
for, 155
as checklist and tracking
system, 154
competence variable, 156
discourse and, 156–158
enthusiasm requirements, 156
executive management support
for, 156
implementing using application
software, 155
information provider
responsibilities, 155
learning pilots
responsibilities, 155
as living document, 147
as measurement of knowledge
creation, 158
modifications for ROD, 149
organizational transformation
and, 139–161
for Ravell phase I, 153
roles and responsibilities, 156
rules of success, 160
schematic diagram, 149
scorecard designer, 155
responsibilities, 155
Behavioral shifts, 12, 140
in CIOs, 195
Benefits realization, five pillars of,
45–46
Best practices, 37
CEO best practices technology
arc, 313–314
for chief executive officers,
299–313
chief IT executive best practices
arc, 297–299
for chief IT executives, 288–297
ethics and maturity issues,
333–337
middle management, 316–325
quest for, 287–288
unproven nature of, 56–57
Billable time records
financial returns from technology
solution, 229
limitations at HTC, 225–226
value-added services solutions, 232
Board meetings, IT issues discussed
at, 34
Boise Cascade Office Products, 308,
309, 311
Bottom-up learning, xxix, 132,
214, 235
at Siemens AG, 192, 193
Boundaries, organizational
transformation of, 139, 140
Brain hemispheres, and learning
preferences, 85
Budgetary cutbacks, 47, 293
Budgeting, IT strategies, 35
Business analysts, as
intermediaries, 22
Business ethics, 296–298, 302, 326
Business knowledge, by chief IT
executives, 291
Business plan, judging technologies
based on, 212–213
Business process, implementation
of, 314
Business process impact, 45
Business process outsourcing
leaders, 296
Business process reengineering
(BPR), 25, 47, 357
Business rules, 126
Business strategy, 31, 34–35
aligning technology with, xii, 149
375Index
articulating through balanced
scorecard, 151
balanced scorecards and, 159–160
CIO assimilation to, 195
as continual process, 148
and importance of balanced
scorecards, 161
IT role in, 21, 23–24, 26
translating to operational
terms, 148
Business technology cognition,
326, 329
Business user involvement, risks, 126
C
Case studies, xxx, 187, 233–238;
see also Ravell
Corporation case study
HTC, 225–232
ICAP, 203–224
learning-knowledge-value
cycle, 238
organizational learning
approaches summary, 235
Siemens AG, 187–203
Catch-up, playing, 120
Centralization issues, 290, 305–306
CEO best practices technology arc,
313–314
CEO roles, in HTC case study,
227–228
CEO technology best practices arc,
313–314, 317, 334
detail, 318–321
maturity stages, 314–315
performance dimensions,
315–316
CFO quarterly meetings, 193
at Siemens AG, 191, 192
Change, xxiv
evolutionary vs. revolutionary, 120
frequency of, 141
mobilizing through executive
leadership, 148
need for accelerated, 68
overwhelming pace of, 293
pace of, 18
planned vs. unplanned, 120
rejection of technology-driven, 72
unpredictability of, 77
vs. transformation, 141, 152
Change agents, 38
CEOs as, 311
IT executives as, 39
technology, 68, 195
Change leaders, 296
Change management, xxiv, 45,
120–123, 345
by chief IT executives, 291
goals for IT, 123
at ICAP, 209
for IT organizations, 123–133
Chief executive officers (CEOs),
xxix; see also Executive
perspective
advice for participation
in organizational
transformation, 222
best practices, 299–305, 312–313
business-first perspectives, 309
business uses of technology
and, 314
as change agents, 311
CIO direct reporting to,
305–306
commitment to technology
projects, 308–309
conceptual knowledge of
technology, 314
dependence on CIOs for business
advice, 305
engaging in transformation, 208
executive decision making, 311
five stages of maturity, 313
ICAP case study, 206
376 Index
intervention in supporter
departments, 230
and IT centralization/
decentralization issues,
306–307
lack of cognizance about
technology uses, 202
linear development model, 313
multiple business perspectives, 314
need for linking business and
technology leaders, 310
need for standards, 307
outsourcing responsibilities, 306
perceptions of IT, xxix, 339
recognition of never-ending
technology projects,
311–312
reluctance to implement new
technology, 25
risk management and, 307–313
role in examining own biases, 203
role in HTC transformation, 230
strategic technology uses by, 315
willingness to learn from
staff, 208
Chief financial officer (CFO) CIOs
reporting to, 188, 226, 288
lack of creativity, 226
Chief information officers (CIOs),
288–289
business-level vs.
corporate-level, 291
inability to establish corporate
strategy, 211
integrating job functions into
business strategy, 190
integration challenges, 344
interactions with board-level
executives, 190
lack of involvement in business
strategy, 190
need for advanced degrees, 307
need to educate, 188
reporting to CFOs, 188
as senior lower level, 193
training in business strategy, 202
transformation to proactive
technologists, 195
Chief IT executives
best practices, 288
best practices arc, 299, 334
business environment
influences, 293
business ethics, 298
business knowledge
competence, 291
as business process outsourcing
leaders, 296
change creation and management
roles, 291
as change leaders, 296
common barriers to success, 293
communications roles, 291
compensation methods, 290
comprehension of technology
processes, 297
detail, best practices arc, 300–303
emerging roles and
responsibilities, 295–296
as executive account managers, 295
executive presence, 299
factors influencing strategic
options, 294
hiring and retention roles, 292
implementation of business/
technology processes by, 315
industry expertise, 291
as information architects, 295
as innovation leaders, 295
lack of uniform titles, 288
leadership roles, 292
management skills, 292
management values, 298
multiplicity of technology
perspectives, 297
377Index
organizational culture
competency, 298
as process leaders, 295
relationship building role, 291
roles and responsibilities,
290–292
as shared services leaders, 295
stable technology integration, 298
strategic thinking role, 290
as supply chain executives, 295
technology cognition, 298
technology competence and
recognition, 297
technology driver influences, 294
technology leadership, 298
technology proficiency, 291
Chief knowledge officer (CKO), 289
Chief technology officer (CTO), 289
intermediary role at HTC, 232
CIO advisory board, 191, 193
need for peer relationships, 192
at Siemens, 190
Citibank, use of technology as
driver, 60
Code of ethics, 336
Cognitive schemata, 82
Collaborative inquiry, 142
Collective identity, 91
Collective knowledge, storage of, 81
Collective learning, 78, 345
Combination, and virtual teams,
171–172
Combination dynamism, 173
Commitment, raising IT levels of, 6
Commoditization, 59, 61, 62, 207,
224, 259, 260, 306, 347
Common threads of communication,
156, 158, 159, 221, 344
at Siemens, ICAP/ETC,
HTC, 233
Communications
by chief IT executives, 291
failures in virtual team efforts, 164
importance to chief IT executive
role, 291
between IT organization and
others, 49
tacit knowledge buried in, 172
in virtual teams, 168
Communities of practice, xii, xxi,
45, 75–83, 87–90, 94, 103,
130, 189, 344, 346, 351,
359–360
application to virtual teams,
168–172
blockage by organizational
controls, 346
CIO-based, 191
and consensus building, 88
disagreements within, 196
discourse as basis of successful, 172
electronic, 78
extended seven steps, 79
formation of multiple, 233
at ICAP, 218–219
incorporating technology projects
into, 149
knowledge creation through, 234
knowledge management in, 197
Milliken’s formation of, 310
and organizational learning, 144
overlapping, 215
participation at Siemens, ICAP/
ETC, HTC, 235
preparing CIOs for, 196
reliance on innovation, 78
technology as change agent
for, 178
use in ROD, 75
virtual dynamism, 179
Communities of practice common
threads, 159
Communities of practice
threads, 157
Competitive advantage, 117, 233,
236, 355
378 Index
centrality of technology to, 348
dependence on knowledge
management, 116
importance of strategic
integration to, 46
improvement at Siemens AG, 190
issues at ICAP, 205, 207
IT potential to provide, 28
loss without transformation, 139
technology as source of, 41, 72
Completion time, estimating, 56
Compliance monitoring, in virtual
teams, 177
Concrete experience, as learning
preference, 84
Confidentiality, 336
end of, 134
Consequential interoperability, 45
Consultants, use of outside, 32
Containers, 96
Content, vs. technology, 207
Content-activity relationship, 90, 91
Continual learning, in virtual
teams, 179
Continuous innovation, 117
Control
organizational fear of losing, 352
vs. empowerment, 345–346
Conversion effectiveness, 21
Coopers & Lybrand, 58
Corporate culture, six myths of, 160
Corporate services standards, at
Siemens AG, 200
Creative professionals, cultural
assimilation challenges, 225
Cross-functional synergetic teams, 9
Cultural assimilation, xvii, xxiv, 42,
48–49, 140, 187, 245, 293,
306, 341, 343, 360
between brokers and
technologists at ICAP, 212
changes caused by new
technologies, 245
and communities of practice, 77
and creation of new cultures,
50, 51
as foundation for organizational
transformation, 143
in global organizations, 200
at implementation stage, 55–57
issues at HTC, 227
and IT organization
communications with
others, 49
and movement of traditional IT
staff, 49–51
at product maturity phase, 61
in ROD, 43
at Siemens AG, 199, 202
in transition, 146
uniqueness to each
organization, 50
in virtual teams, 179
Cultural awareness, 17
Cultural change, inevitability
of, 122
Cultural differences, 181, 199
ICAP experiences, 215
regarding operational norms, 200
in virtual teams, 174, 177
Cultural history, and virtual
teams, 175
Cultural lock-in, 120, 360
Cultural transformation, 8, 16–17
limitations of power approach, 17
Customer perspective
in balanced scorecard, 150
in Ravell Phase I balanced
scorecard, 153
ROD adjustments, 150–151
Customer relationship
management (CRM), 290,
308–311, 357
Customer-vendor relationships,
technology as change agent
for, 46
379Index
D
Data mapping, 126, 357
Deasy, Dana, 67, 187–190, 192, 195–
202, 207, 309, 344, 347
Decentralization, 24, 32, 306–307
with mature uses of
technology, 307
Decision support systems (DSS),
159, 357
Democratic leadership, importance
to high-velocity
environments, 123
Department/unit view as other, in
ROD arc, 102, 103
Design/planning phase, 88
Development schedules
failures in, xxiv
shortening dynamic, 56
Direct return, 47
through technology investments,
236, 238
Disagreements, in communities of
practice, 196–197
Disciplines, 89
Discourse, xxi, 350; see also Social
discourse
balanced scorecards and,
156–158
as basis of successful COP
implementation, 172
links to organizational learning
and technology, 93
Distance workers, 81, 164; see also
Virtual teams
Documentation, 125
and training materials, 126
Dot.com phenomenon, 23, 24
fallacies of, 212
and growth of e-business, 188
loss of commitment to learning
organizations in, 112, 113
and negative perceptions of
technology as business
driver, 201
Double-loop learning, 4, 344, 360
Driver functions, 58, 113, 360
conversion to supporter
functions, 62
and high-risk operations, 59
IT-related, 59
vacuum of IT presence in, 60
Driver to supporter life cycle, 141,
306, 346–347
organizational transformation
in, 145
Dynamic, xxi
E
E-business, 140
business vs. technology
components, 346
expanding use at Siemens
AG, 187
IT role at Siemens AG, 193
perception as IT
responsibility, 201
top-down strategy
introduction, 188
transferring emotion in, 181
E-business realignment, 46, 57
Economies of scale, 34, 58, 61, 62,
130, 152, 347
in driver to supporter life cycle,
141, 145
Education
through reflection, 14
and transformation, 14
Electronic communities, 78, 79
Electronic trading, 207, 223
growth at ICAP, 206
at ICAP, 205
and need for organizational
transformation, 206
380 Index
as proportion of total trading
dollars, 224
replacement of mediocre brokers
by, 210
role in business strategy, 203
as supplement to voice broker, 209
Emerging technologies, xiii
challenges to business strategy, 28
as change agents, xxiv
communities of practice and, 344
impact on business strategy, 124
and mission modification, 207
Emotion
requirements for virtual team
members, 174
and social discourse, 92–96
in virtual teams, 181–185
Employee evaluations, 17
Employee replacement, see Staff
replacement
Empowerment, 91, 345–346
vs. control, 345–346
Enron Corporation, 333, 337
Enterprise resource planning
(ERP), 358
Ethics
and best practices, 333–337
executive, 315, 320
Event-driven education
limits of, 109
at operations tier, 114
Evolution phase, 52
in technology business cycle, 57
Evolutionary change, 120–121
at Siemens, 196
Evolutionary learning, 77, 99
initiation by senior
management, 189
in ROD, 112
Executive account managers, 295
Executive decision making, 196, 310
by Milliken, 310
Executive-driven programs, limits
of, 109
Executive ethics, 315, 320
Executive interface, 150
earlier needs in virtual COPs,
185
Executive leadership, 148, 313–316,
320
Executive learning, systems
perspective, 114
Executive participation, importance
of direct, 232
Executive perspective, 9
consequences of exclusion, 214
importance of including in
learning, 98
on IT, 29–31
lack of detail knowledge, 110
level of involvement with IT, 34
poor understanding of
competitive dynamics,
25–27
on role of IT, 32–33
and stimulus for cultural
assimilation, 114
support for virtual teams, 174
Executive presence, 61, 296–299,
302, 315
Executive sponsors, 54, 55, 150, 232
Executive tier, 114
Executive values, 313, 314
Expectations, and virtual
teams, 176
Experiential learning, xxviii, 83–88,
360
Explicit knowledge, 118, 171, 360
challenges for virtual COPs, 172
transformation to, 223
Externalization, and virtual teams,
169–171
Externalization dynamism, 172
Eye-opening events, 15
381Index
F
Facebook, 135
Facilitator role, 127
Factors of multiplicity, 44
False generalizations, 299
Feasibility phase, 52, 53, 87
Feedback, 7
negative IT responses to, 7
Financial measurements
in balanced scorecard, 150
inability to capture IT value, 147
in Ravell Phase I balanced
scorecard, 153
ROD adjustments, 150
First-line managers, 111
Flame communities, 81, 360
Frame-talk, 93, 95, 181, 361
G
Garbage can model, 27, 53, 358
of IT value, 54
Gender participation, in social
networks, 138
Generalizations, entrenched, 10
Globalization, 81, 256, 283
for scalable technologies, 199
Goals
organizational transformation of,
139, 140
working towards, 15
Governance by control, 333
Governance issues, 245
Group discussions, 84, 85, 88, 282
Group relations conferences, 353
H
Hackett Benchworking, 304
Hardware upgrades, 124
High-risk operations, 59
High-velocity environments, 122
ICAP, 209
need for democratic leadership
in, 123
HT/IT governance model, 18
HTC case study, xxx, 225–226, 308
billable time records problems, 225
cascading effect of increased
profits, 229
CEO interactions, 227–228
CTO intermediary role, 232
follow-up developments, 231–232
IT contribution to learning-
knowledge-value chain, 237
IT history, 226–227
middle-ground solution, 228
organizational transformation,
229–231
process, 228–229
similarities to Ravell, 231
Human resources (HR)
dedicated staff allocation to
IT, 19
failure to align with, 18
social networking issues, 137–138
as undisclosed enemy, 18
Hype, about IT importance, 33
I
ICAP case study, xxx, 203–224,
308, 347
B brokers, 210
broker classes, 209–210
A brokers, 209–210
C brokers, 209–210
communities of practice, 218–222
COP common threads, 221
expanding markets through
technology, 213
five-year follow-up, 224
hybrid brokers, 210
382 Index
IT contribution to
learning-knowledge-value
chain, 237
language discourse at, 215, 218
limitations of off-the-shelf
solutions, 205
middle-management COP, 220
recognition of IT as business
driver, 203
role of electronic trading in
business strategy, 203
steps to transformation, 217
Y2K event and executive
involvement, 214–215
Identity definition, 133
for IT, 10–12
Identity development, 91
in virtual teams, 179–180
Ideogenic issues, 181
in virtual teams, 182
Implementation phase, 52, 88
of technology business cycle,
55–57
Indirect returns, 27, 29, 47, 213
need for management to
recognize, 236
Individual learning, xxviii, 70, 83,
171, 344
event driven, 76
at ICAP, 205
by middle managers, 115, 116
moving to system-level learning
from, 143
personnel rotation and, 350
progression to systems thinking,
354–355
in ROD arc, 183–184
with ROD arc, 104
shift to social, 97
simultaneously with
organizational learning, 220
styles of, 69
vs. system-level, 344
Industry expertise, by chief IT
executives, 291
Inferential learning, 64
Information architects, 295
Information overload, 119
Information Technology (IT),
xxxii, 1
as agent for business
transformation, 39
best organizational structure
for, 28
and centralization/
decentralization, 24
centralization/decentralization
issues, 306–307
CEO perceptions of, 339
combining with organizational
learning, 339
contribution to
learningknowledge-value
chain, 237
defining role and mission, 30
difficulty proving value of, 293
executive knowledge and
management of, 28–29
executive views of, 29–31
extent of non-IT executive
knowledge in, 28
hype about, 33
identifying driver component at
Siemens AG, 195
identity definition at Ravell,
10–12
impacts on marketing and
productivity, 35
importance to business strategy
and organizational
structure, 21, 30
improving performance through
organizational learning, 1
integrating into organizational
processes, xix
as key to success, xx
383Index
lack of representation at strategic/
executive levels, 339
management and strategic issues,
31, 34
means of evaluation, 28
need to provide greater
leadership, 340
operation reductions, 38
perception and role, 30
potential to provide competitive
advantage, 28
potential to reinvent business, 23
project perspective, 340
relationship to organizational
structure, 28
relevance to operations,
accounting, marketing, 24
role and mission, 30
role in behavioral
transformation, 228
role in business strategy, 26–27
seamless relationship with
organizational learning, xix
social networks and, 134–138
as strategic business tool, 26
strategic importance, 32
synergistic union with
organizational learning, 187
view as cost center, 38
ways to evaluate, 27–28
Informational flows, importance
of, 33
Innovation leaders, 295
Intangible assets, 147
Integrated disposition phase, in
ROD arc, 103
Integration, see IT integration
Intellectual capital
management
Interactive culture, 48
Internal business processes
in balanced scorecard, 150
ROD adjustments, 150
Internal capacity, lack of, 188
Internal development, 32
Internalization, and virtual teams, 171
Internalization dynamism, 173
Internet, 358
as driving force for e-business
realignment, 46
impact on business strategy, 32
increasing pressure to open, 134
Internet delivery, 23
impact on business strategy, 30
Intranets, 358
and accelerated learning pace, 142
Invisible organizations, 135, 137
ISO 9000, 77, 358
use for virtual team
processes, 177
Isolation, xxvii, 10
of IT departments, 1–2, 21
physical, 2
IT departments
assimilation challenges, 21
change management for, 123–133
complex working hours, 18
concerns about elimination of
integrity, 49–50
dichotomous relationship with
communities of practice, 78
incorporating into true
organizational learning, 68
integrating into organizational
culture, 3
isolation of, 1
lack of executive presence in
management teams, 61
marginalization, xv
as nucleus of all products and
careers, 211
overhead-related functions, 59
perception as back office
operations, 188, 211
perception as support function, 188
reporting to CFOs, 226
384 Index
restructuring of, 50
shifting salary structures, 18
silo operations, 18
subjection to budgetary
cutbacks, 47
support functions, 59
view by other departments, 30
IT dilemma, xxiv, 21–39
day-to-day issues, 137
defining, 36–38
and developments in operational
excellence, 38–39
executive knowledge and
management, 28–29
executive perspective, 32–33
general results, 36
IT role in business strategy,
25–27
management and strategic
issues, 34
organizational context, 24
and organizational structure,
24–25
recent background, 23–24
IT evaluation, 27
IT integration, 3–5, 14, 23, 109
blueprint for, 5–6
enlisting support for, 6–7
executive confusion about, 36
failures in strategic
planning, 36
implementing, 12–14
progress assessment, 7
vs. outsourcing, 22
IT investment
historical phases, 44
risk identification for, 46
IT jobs, decline in U.S., 163
IT performance, measuring, 31
IT professionals
as individualists, 212
integrating with non-IT
personnel, 49
movement into other
departments, 49–51
outsider image, 22
poor interpersonal skills, 33
project management roles, 340
reluctance to take on responsibility
for others, 212
as techies, 21
IT projects, failure of completion, xxiv
IT roles and responsibilities, 60–61
IT spending needs, failure of ROI to
accommodate, 27
IT value, garbage can model, 53–54
IT virtual teams, 19
K
Knowledge creation, 53, 117,
118, 234
balanced scorecards and, 158–161
as basis of transformation, 144
and communities of practice, 169
by electronic communities, 80
structured approach
difficulties, 77
by technology, 222
Knowledge development, 64,
83, 234
Knowledge management, xii, xxi,
xxix, 45, 116–120, 360
in COPs, 197
four modes of, 172
instilling through
technology, 234
participation at Siemens, ICAP/
ETC, HTC, 236
in virtual context, 174
KPMG, 308
L
Language use, xxviii, 89–91, 350
at ICAP, 215
385Index
Latency problems, xxv
Leadership, xii
executive, 315, 320
movement away from individual,
349–350
need for greater IT, 340
vs. governance, 335
Leaps of abstraction, 10
Learner centeredness, 127
Learning
converting to strategic
benefit, 65
defining at organizational level,
14–15
double-loop, 4
single-loop, 4
situated, 75
Learning and growth perspective
in balanced scorecard, 150
in Ravell Phase I balanced
scorecard, 152, 153
ROD adjustments, 150–151
Learning and working, 75
Learning approaches, linear
development in, 96–107
Learning contracts, 130
Learning-knowledge-value
chain, 238
IT contributions to, 237
Learning maturation, 94, 96,
104, 343
phases of, 98
Ravell case study example, 100
Learning organizations, xii, xviii, 9,
45, 72–75
developing through reflective
practice, 15, 20
and fallacy of staff
replacement, 113
transitioning to through
technology acceleration, 13
Learning preferences, xxviii, 83–88
and curriculum development, 85
Learning Style Inventory (LSI),
84, 85
combined applied learning
wheel, 87
McCarthy rendition, 86
Learning Type Measure
instrument, 85
Learning wheel, 84, 86, 87, 95
Left-hand column, 9, 360
Legacy systems, xi, 124, 358
Lessons learned, Ravell Corporation
case study, 14–17
Life-cycle maturation, shortening
through strategic
integration, 44
Lifelong learning, 350
Line management, 111
BPR buy-in by, 25
defined, 111
executive and operations
perspectives, 9
as executives in training, 111
feedback from, 7
importance of support from, 6, 219
learning maturation among, 96–97
meeting attendance, 11
proximity to day-to-day activities,
110
in Ravell case study, 109, 132
role in managing organizational
learning, 109–111
role in product maturity phase, 62
strategic importance to IT
integration, 8–9
technical knowledge, 9
as technology users, 54, 55
vs. first-line managers, 111
vs. supervisors, 112
Linear development, 342
in learning approaches, 96–107
Linkages, 348
Linkedln, 135
Lost jobs cycle, 163
386 Index
M
Management presence, 324–328, 331
Management pushback, 17
Management self-development,
127, 360
Management skills, by chief IT
executives, 292
Management support, importance
of, 6
Management tiers, 113–114
Management values, 296–299, 302,
324–327, 331
Management vectors, 112–116, 341
and three-tier organizational
structure, 114
Mandatory services, at Siemens
AG, 200
Marginality, 89
Marginalization, xxvii, 2, 22, 49
of nonadaptive virtual team
members, 168
reducing, 18
Marketing
IT relevance to, 24
social networking issues, 138
Mastery learning, 128
Mature self, 182
role in virtual team success, 173
and virtual team
complexities, 185
Maturity
ethics and, 327, 334
as gradual process, 345
Maturity arcs, xxviii, 173, 332,
335, 342
Maturity stages
CEO best practices technology
arc, 314–315
in chief IT executive best
practices arc, 297–299
middle manager best practices
arc, 325–326
McDermott, Stephen, 113, 203–
216, 222–224
learning philosophy, 204
Measurable outcomes, 45, 92, 110,
142, 342
Measurement phase, 52, 88
in technology business cycle, 53
Mentorship, 127–130
in self-development process,
129, 131
Middle manager best practices arc,
323, 324
maturity stages, 325–326
performance dimensions,
326–327
Middle managers, 110–112
avoidance of worker compliance
demands, 227
balanced scorecard discourse,
157–158
best practices, 316–325
challenges of defining best
practices for, 316
community of practice at
ICAP, 221
executive-based best
practices, 324
first-line managers, 111
five stages of maturity, 323
implementation-based best
practices, 322
importance to organizational
learning, 109
issues at ICAP, 219
as key business drivers, 110
line managers, 111
multiple tiers of, 111, 113–114
organizational vs. individual
learning by, 115, 116
representing required changes
through, 220
stagnation and resistance to
change among, 110–111
387Index
supervisors, 112
three tiers of, 342
Middle-up-down approach, 110,
112, 150, 214, 215, 235,
313, 342
Milliken, Christopher, 308–312
Missed opportunities, consequences
of, 341
Mission, 36
executive perspectives, 22
identifying IT, 10
modifying based on emerging
technologies, 207
Moral responsibility, 336
Multiple locations, 166–169
for virtual teams, 178
Mythopoetic-talk, 93, 94, 181,
182, 361
N
Networked organizations, 24
New meaning perspectives, 350
Non-IT executives, extent of
technology knowledge,
28, 31
Non-sense, 93
Normative behavior, vs.
leadership, 350
Not knowing, 16
O
Off-the-shelf software, 124
limitations at ICAP, 205
Older workers, fallacy of
replacing, 113
Online banking, 60
Operational efficiencies, 150, 213
Operational excellence, 358
developments in, 39
Operational knowledge, in ROD
arc, 103, 106
Operational norms, cultural
differences regarding, 200
Operations management, at
ICAP, 219
Operations perspective, 9
IT relevance to, 24
Operations tier, 114
Operations users, 54
Opportunities matrix, 27, 29
Organizational change, 66
business case for, 122
cultural lock-in as barrier to, 120
external environment and, 121
and inevitability of cultural
change, 122
internal organization and, 121
and organizational readiness, 121
requirements for, 343
sustaining, 122
Organizational culture, 298,
300–301, 303
altering, 65–66
balanced scorecards and,
158–161
integrating IT into, 3
technology support for evolution
of, 42
transformation of, 16–17
Organizational discourse, 90
Organizational dynamism, 42–48
Organizational evolution, 94,
341, 344
Organizational interactions,
325–327, 329
Organizational knowledge creation,
64, 116, 361
steps to, 117
with technology extension, 117
Organizational leadership phase, in
ROD arc, 102104
Organizational learning, xi, xii, 1,
20, 22, 38, 293, 295, 339,
343, 348
388 Index
balanced scorecard applicability
to, 154
balancing with individual
learning, 70
CEO need to understand, 312
and communities of practice,
75–83
and dealing with change
agents, 69
defining, 14–15
evolution of, 144
at executive levels, 215
experiential learning and, 83–88
and explicit knowledge
creation, 236
fostering through trust, 210
gradual process of, 345
HR/IT integration through, 18
instilling through
technology, 234
IT department isolation from, 2
and IT role at Siemens, 193
and language use, 89–96
learning preferences and, 83–88
limitations of top-down and
bottom-up approaches,
109–110
linear development in learning
approaches, 96–107
links to transformation and
performance, 64
by middle managers, 115
need for executive involvement
in, 215
and organizational knowledge
creation, 116
ratio to individual learning by
manager type, 116
reflective organizational
dynamism arc model, 101
relationship to self-generating
organizations, 351–352
and ROD, 71, 215
ROD and, 293
in ROD arc, 183
self-development and, 133
at Siemens AG, 192
simultaneously with individual
learning, 220
and social discourse, 89–96
synergistic union with IT, 187
transformational results, 139
in virtual teams, 185
Organizational learning
management, 109
change management, 120–133
knowledge management,
116–120
management vectors and,
112–116
mapping tacit knowledge to
ROD, 119
role of line management, 109–111
social networks and IT issues,
134–138
Organizational learning theory, 73
North American vs. global
cultural norms in, 67
and technology, 64–72
Organizational memory, building, 1
Organizational readiness, 121
Organizational role analysis, 353
Organizational structure, 313–314
CEO performance dimensions, 315
IT and, 24–25
IT importance to, 21
Organizational theory, 63
Organizational transformation,
xxviii, 63, 361
balanced scorecard and, 139–144,
146–147
defined, 146
in driver to supporter life cycle,
146
as event milestones, 146
evolutionary aspect of, 143
389Index
HTC case study, 229–230
at ICAP, 217
and knowledge creation, 158–161
knowledge links to, 160
ongoing evaluation methods,
146–156
as ongoing process, 146
stages, with ROD, 145
strategic integration and cultural
assimilation as foundation
for, 143
technology as driver of, 206
three dimension of, 139–141
validation of, 147
vs. change, 152
Organizations
as goal-oriented activity
systems, 63
as interdependent members, 63–64
Organizing principles, and virtual
teams, 176
Other centeredness, 296
in chief IT executives, 296
Outsourcing, xxx, 163–165
all-time highs, 346
by CEOs, 306
cost savings benefits, 163
executive opinions, 29
failure to achieve cost-cutting
results with, 304
of IT, 178
of mature technologies, 62
perception by midsize firms, 32
talent supply benefits, 163
time zone challenges, 164
in virtual teams, 178
vs. internal development, 32
vs. IT integration, 22
P
Payback, 46
Peer consulting groups, 353
Performance
linking organizational learning
to, 64, 65
reflective reviews, 6
Performance dimensions
CEO best practices technology
arc, 315
middle manager best practices
arc, 326, 327
Performance improvement, 3
Performance measurement, 31,
35–37
Permanence, disappearance in
organizations, 185
Personal transformation, through
self-development, 128
Personnel rotation, and individual
learning, 350
Persuasion, as skill to transform talk
into action, 180–181
Pillars model, 45–48
Planning phase, 52
in technology business cycle,
54–55
Politics, xxvi
blood cholesterol analogy, 67
negative impact of power
centralization, 123
and organizational learning,
66–67
Power approach, limitations for
transformation, 13
Power centralization, 122
President’s Council, 193
CIO exposure to, 195
at Siemens AG, 191, 192
Privacy issues, 336
Problem-solving modes, in virtual
teams, 175
Process comprehension, by chief IT
executives, 297
Process leaders, 295
Process measurement, 126
390 Index
in Ravell Phase I balanced
scorecard, 153
Product maturity, 61
Productivity, lagging returns in, 44
Project completion, 125
barriers to, 69
Project ethics, 324, 326–327, 331
Project managers
broad IT responsibilities, 57
as complex managers, 56
IT staff as, 340
Q
Quality, commitment to, 15–16
R
Ravell Corporation case study, xxvi,
1–2, 51, 60, 120, 342, 347
alignment with administrative
department, 17–19
balanced scorecard, 152–153
blueprint for integration, 5–6
BPR buy-in, 25
commitment to quality, 15–16
cultural evolution, 97
culture transformation, 16–17
decision-support systems, 159
defining reflection and learning,
14–15
employee resistance, 8
enlisting support, 6–7
goal orientation, 15
implementing integration,
12–14
IT identity definition, 10–12
IT self-reflection, 9–10
key lessons, 14–17
learning maturation analysis, 96,
99, 343
line management importance,
8–9, 109
new approach to IT integration,
3–7
not knowing mindset, 16
performance evaluation, 133
phase I balanced scorecard, 153
reflective practices and
measurable outcomes, 65
and self-development results, 132
technological acceleration at, 151
virtual team aspect, 164
Real date of delivery, 211
Reflection, 10
with action, 74, 76, 361
defining on organizational level,
14–15
education through, 15
organization movement toward,
12–14
Reflection matrix, 354
Reflective observation, as learning
preference, 84
Reflective organizational dynamism
arc model, 101
Reflective practices, xxviii, 4, 19, 38,
96, 142, 143, 152, 219, 313,
343
by chief IT executives, 296
fostering organizationally, 5
at ICAP, 205
importance to ROD, 74
individual, group, and
organizational, 352, 353
by middle managers, 115
need to develop in virtual teams,
165
in Ravell case study, 65
Reflective skills development, 9–10
Relationship building, by chief IT
executives, 291
Replacement phase, in technology
business cycle, 61–62
Reporting structures, 34, 37, 312
changes in, 38
391Index
for CIOs, 288
of CIOs, 195
CIOs to CEOs, 305
CIOs to CFOs, 188
inconsistent, 339
increased reporting to
CEOs, 304
and organizational change, 225
technological dynamism effects
on, 209
Requirements definition, risks, 126
Research and development, 348
Resistance to change, 209
to integration, 8
Responsive organizational
dynamism (ROD), 42–48,
53, 70, 89, 165, 187, 340
and adaptation, 349
arc model, 102
attainment of, 345
balanced scorecard
modifications, 149
and best practices arcs, 334
best practices to implement, 287
cultural assimilation in, 48–52
dependence on organizational
learning, 72
developmental stages, 100
drivers and supporters concept,
58–59
at HTC, 230–231, 233
at ICAP, 211, 217
importance of reflective practices
to, 74
and individual learning, 123
integrating transformation theory
with, 139
and IT roles and responsibilities,
60–61
mapping tacit knowledge to, 117
in multinational companies, 203
organizational inability to
manage, 97
and organizational learning,
71, 294
relationship to self-generating
organizations, 352
replacement/outsourcing decision,
61–62
requirements, 349
role in economic survival, 232
role of social networks in, 136
at Siemens AG, 189, 199
situational and evolutionary
learning in, 112
stages of organizational
transformation with, 145
and strategic innovation, 349
and strategic integration, 43–48
and systems thinking, 123
technology as, 41
technology business cycle and,
52–57
three-dimensional, 167
and Vince’s reflection matrix, 354
as way of life, 186
Retention
evaluation methods, 145
of IT talent by chief IT
executives, 292
and organizational
transformation, 144
Return-on-investment (ROI), 114
example of direct IT
contributions to, 230
failure of traditional strategies,
27, 29
for ICAP, 213
IT expenditure issues, 189
line management responsibilities,
111
and measurement phase, 53
monetary and nonmonetary, 53
payback as basis for, 46
technology failures, 69
Revalidation, at Siemens AG, 198
392 Index
Revolutionary change, 120
Rippling effect, 154
Risk assessment, 46
in feasibility phase, 53
misunderstandings about, 48
Risk management, as CEO role,
307–313
Risk minimization, with social
networks, 134
Risk orientation, in virtual
teams, 175
ROD arc, 99, 102, 144, 334
with applied individual learning
wheel, 104
department/unit view as other
stage, 100
example, 104
integrated disposition phase, 100,
102, 103
operational knowledge stage, 100
organizational leadership
phase, 103
stable operations phase, 102, 103
stages of individual and
organizational learning,
183–184
Roles and responsibilities
varying IT, 57
of virtual team members, 179
S
Santander Bank, 60
Sarbanes-Oxley (SOX) Act, 333
Scope changes, 56
risks, 126
Selection, and organizational
transformation, 144
Self-development
evaluation phase, 131, 133
formal learning program phase,
129–132
fostering of bottom-up
management through, 132
implementation phase, 131
learning-to-learn phase, 129, 132
as management issue, 128
in organizational learning, 133
in Ravell case study, 132
setbacks to, 132
through discourse, 132
as trial-and-error method, 128
Self-generating organizations, 351,
352
Self-governance, 6
Self-managed learning, 130
Self-management, 124
developing among IT staff, 127
by non-IT staff members, 127
and reflective practice theory, 128
Self-motivation, 123–124
Self-reflection, 9, 12, 16
promotion of, 4
Senior lower level, at Siemens AG,
194
Senior management
initiation of evolutionary learning
by, 189
sharing in learning, 196
Sense and respond, 58, 59, 199, 346
and IT, 59
Sense making, 63, 94
Shared leadership, 18
Shared services leaders, 295
Siemens AG, xxviii, 68, 344, 347
case study, 187–203
CEO quarterly meetings, 191
CFO quarterly meetings, 192
CIO advisory board, 190, 191
CIOs as senior lower level, 194
competitive advantage
improvement, 190
corporate services standards, 20
five-year follow-up, 202–203
393Index
interrelationships among
CIO communities of
practice, 191
IT contribution to
learning-knowledge-value
chain, 237
local-to-global links, 194
mandatory services standards, 200
multiple levels of CIO s, 242
optional technologies
standards, 200
President’s Council, 191, 192
quarterly CFO meetings, 190
revalidation concept at, 198
storyboarding process, 198
technology standards at, 200
Silo operations, 18, 50
Single-loop learning, 4, 361
Situated learning, 75
in ROD, 112
Skills, 92
in virtual teams, 180–181
Social discourse, 89–96, 234
application to virtual teams, 178
and content-activity
relationships, 90
and emotion, 92–96, 180–182
and identity development, 91,
179–180
Marshak’s model mapped to
technology learning
wheel, 93
as “passive” activity, 90
skills and, 92, 180
technology as driver of, 209
type of talk containers, 96
Social networks, xxix
ambiguous effects, 138
attempts to lock out
capabilities, 134
gender participation issues, 138
invisible participants, 137
and IT, 134–138
management issues, 136
Socialization, in virtual teams, 172
Socialization dynamism, 173–177
Soft skills analysis, 180–181
Software packages, 124
Software upgrades, 124
Spiral conversion process, 110
Spy networks, 137
Stable operations phase, in ROD
arc, 102, 103
Stable technology integration, 297,
298, 326
Staff replacement
fallacy of, 113
vs. staff transformation, 4, 20
Standards, 307
CEO needs for, 307
lack of, 56–57
and reduced development
costs, 305
at Siemens AG, 200
Storyboarding process, 358
at Siemens, 198
Strategic advocacy, 67
Strategic alignment, 45
Strategic innovation, 349
Strategic integration, xxviii, 42–48,
82, 187, 197, 201, 293, 341,
343, 361
and communities of practice, 78
consequential interoperability
and, 45
as foundation for organizational
transformation, 143
and need for increased cultural
assimilation, 230
as outcome of ROD, 48
shortening life-cycle maturation
through, 44
Strategic learning, 65, 110, 349
Strategic performance, 342, 343
improving through organizational
learning, 63
394 Index
Strategic thinking
by chief IT executives, 290
importance to chief IT executive
role, 292
shortage of time for, 293
Strategy, see Business strategy
Strategy map, 148, 151–158
Supervisors, 112
Supply chain executives, 295
Support, enlisting, 6–7
Supporter functions, 58, 113,
312, 346
and organizational
transformation, 144
and perception of IT, 188
at product maturity, 61
SWAT teams, 13
System upgrades, 124, 125
Systems thinking, 1, 83, 89, 94,
123, 347
by executives, 114
progression to, 354–355
T
Tacit knowledge, 361
challenges for COP virtual
organizations, 172
in e-mail communications, 171
IT manager practice at
transforming, 197
mapping to ROD, 119, 174–176
protection by technology, 222
role in knowledge
management, 118
transformation to explicit product
knowledge, 223, 236
translating to explicit forms, 169
and virtual teams, 175–176
Talk, and discourse, 90
Talk-action cycles, 96
application to virtual teams, 178
role of persuasion in, 180
Teachers, as facilitators, 127
Techies, stereotyping as, 21
Technical knowledge, need for
up-to-date, 125
Technical resources, strategic
integration into core
business units, 19
Technological acceleration, xxiv, 41,
43, 66, 72, 208, 296, 307
enabling organizations to cope
with, 45
in Ravell case study, 152
Technological dynamism, xxiv,
41–42, 66, 209, 210, 340,
343, 362
as 21st-century norm, 178
self-management
requirements, 128
at Siemens AG, 193
Technological proficiency, as staff
job requirement, 211
Technology, xxxii
aligning with business
strategy, 149
basing on quality of business
plan, 212
benefits at ICAP, 222–223
centrality to competitive
strategy, 348
CEO conceptual knowledge
of, 103
challenges of strategic use, xxii
as change agent, 70, 195
commoditization of, 224
as commodity, 207
and communities-individuals
relationships, 76
and competitive advantage, 72
as component of discourse,
xxvicontribution to
learning-knowledge-value
chain, 236
as driver of business strategy, xxiii
395Index
as driver of organizational
transformation, 206
as driver of virtual team
growth, 163
effects on discourse, 94
effects on legacy systems, 47
evolution of, 223
executive need to recognize
instability of, 199
expansion benefits, 223
failure to result in improved
ROI, 69
feasibility stage, 87
flexibility benefits, 223
impact on ICAP business, 204
impatience with evolution of, 202
implementation risks, 126
impossibility of predicting impact
of, 83
increasing organizational
learning through, 68
as independent variable, 43
integration of business
implementation, 314,
325–326
as internal driver, 42
knowledge creation by, 223
learning maturation with, 100
linking to learning and
performance, 71
multiplicity of business
implementations, 325
multiplicity of business
perspectives, 314
and need for interaction, 142
need to integrate into
organizational
learning, xviiiongoing
implementation of, 349
perception as support function,
206
phased-in implementation,
149–150
role in knowledge
management, 117
strategic uses, 315–316
in TQM, 140
unpredictability of, 41
untested, 56
variability of, 236
as variable, xxvii, 41, 112, 235,
311, 340
Technology acceleration, 13, 20, 47
Technology-based organizations, xviii
Technology business cycle, 52, 63
evolution phase, 52, 57
feasibility phase, 52, 53
garbage can model of IT value, 54
implementation phase, 52, 55–57
measurement phase, 52–54
planning phase, 52, 54–55
stages of, 52
Technology business
implementations,
multiplicity of, 325
Technology cognition, 298–300
Technology competence, 300
by chief IT executives, 297
Technology concepts, 318
for CEOs, 316
Technology definitions branding,
358–359
Technology evaluation, 149
Technology for technology’s sake, 26
Technology implementation
competence for middle
managers, 325
stability of, 326
Technology implementation
competence/recognition, by
middle managers, 325
Technology investment, as
normative process, 348
Technology leadership, 298
by chief IT executives, 298
Technology life cycle, xxiv, xxvii, 346
396 Index
Technology perspectives,
multiplicity of, 297
Technology proficiency, by chief IT
executives, 291
Technology project leadership, 326
Technology projects
reasons for failure, 310
risks to success, 125
Technology road map, 342, 343
Technology strategy map, 151
Technology users, three types of,
54–55
Telephone brokers, 224
electronic trading as supplement
to, 209
at ICAP, 204
Teleworkers, 81
Theft, 336
Three-tier organizational
structure, 113
Throughput improvements, at
ICAP, 213
Time zones, virtual team
challenges, 177
Timeliness
barriers to, 69
issues with IT projects, 74
Timing, and learning
maturation, 104
Tool-talk, 93, 95, 181, 361
Top-down strategy introduction,
xxix, 214, 235, 345
at Siemens, 188, 192
Total quality management (TQM),
technology in, 140
Training
for CIOs, 202
and documentation, 126
inadequacy of, 14
limitations of IT-based, 125
for Siemens CIOs, 196
for virtual team COPs, 173, 177
Transformation, vs. change, 141
Transformative learning, 142
Trust
based on corporate honesty, 210
in communities of practice, 197
organizational movement toward,
12–14
Twitter, 135
Type of talk containers, 95, 181
virtual team applicability, 182
U
Uncertainty, in technology, 77
Unemployed workers, without
rights, 346
Unpredictability, xxi
User interface, 359
User level, 359
V
Value-added services, 232
Variation, and organizational
transformation, 143
Velocity fluxes, 122
Version control, 124
Videoconferencing, 81
Vince’s reflection matrix, 354
Virtual teams, xxx, 163, 359
combination and, 171–172
combination dynamism in, 173
communication failures in, 164
communities of practice with,
170–171
contract administration, 164
cultural and language
barriers, 163
distorted perceptions in, 166
executive support for, 174
externalization and, 169, 171
externalization dynamism in, 172
internalization and, 171
internalization dynamism in, 173
397Index
lack of individual development in,
165–166
management of, 19, 24, 164, 166
marginalization of nonadaptive
members, 169
multi-company challenges, 177
multiple identities in, 179
multiple location challenges, 164,
166–178
need for documented
processes, 177
need for individual
development, 344
need for mature individuals
in, 185
operating differences from
traditional teams, 168
outsourcing in, 177–178
quality checkpoints for, 164
readiness for participation, 173
socialization and, 172
socialization dynamism in,
173–174, 177
soft skills assessment challenges,
180–181
status, 165–166
as subset of organizations, 167
tacit knowledge and, 175–176
and three-dimensional
ROD, 167
transient nature of members, 168
W
Web, 359
Women-centric
communication, 138
Worldviews, and virtual teams, 176
Y
Y2K event, 214, 218, 359
Z
Zero latency, 43
http://taylorandfrancis.com
Cover
Half Title
Title Page
Copyright Page
Contents
Foreword
Acknowledgments
Author
Introduction
1: The “Ravell” Corporation
Introduction
A New Approach
The Blueprint for Integration
Enlisting Support
Assessing Progress
Resistance in the Ranks
Line Management to the Rescue
IT Begins to Reflect
Defining an Identity for Information Technology
Implementing the Integration: A Move toward Trust and Reflection
Key Lessons
Defining Reflection and Learning for an Organization
Working toward a Clear Goal
Commitment to Quality
Teaching Staff “Not to Know”
Transformation of Culture
Alignment with Administrative Departments
Conclusion
2: The IT Dilemma
Introduction
Recent Background
IT in the Organizational Context
IT and Organizational Structure
The Role of IT in Business Strategy
Ways of Evaluating IT
Executive Knowledge and Management of IT
IT: A View from the Top
Section 1: Chief Executive Perception of the Role of IT
Section 2: Management and Strategic Issues
Section 3: Measuring IT Performance and Activities
General Results
Defining the IT Dilemma
Recent Developments in Operational Excellence
3: Technology as a Variable and Responsive Organizational Dynamism
Introduction
Technological Dynamism
Responsive Organizational Dynamism
Strategic Integration
Summary
Cultural Assimilation
IT Organization Communications with “ Others”
Movement of Traditional IT Staff
Summary
Technology Business Cycle
Feasibility
Measurement
Planning
Implementation
Evolution
Drivers and Supporters
Santander versus Citibank
Information Technology Roles and Responsibilities
Replacement or Outsource
4: Organizational Learning Theories and Technology
Introduction
Learning Organizations
Communities of Practice
Learning Preferences and Experiential Learning
Social Discourse and the Use of Language
Identity
Skills
Emotion
Linear Development in Learning Approaches
5: Managing Organizational Learning and Technology
The Role of Line Management
Line Managers
First-Line Managers
Supervisor
Management Vectors
Knowledge Management
Change Management
Change Management for IT Organizations
Social Networks and Information Technology
6: Organizational Transformation and the Balanced Scorecard
Introduction
Methods of Ongoing Evaluation
Balanced Scorecards and Discourse
Knowledge Creation, Culture, and Strategy
7: Virtual Teams and Outsourcing
Introduction
Status of Virtual Teams
Management Considerations
Dealing with Multiple Locations
Externalization
Internalization
Combination
Socialization
Externalization Dynamism
Internalization Dynamism
Combination Dynamism
Socialization Dynamism
Dealing with Multiple Locations and Outsourcing
Revisiting Social Discourse
Identity
Skills
Emotion
8: Synergistic Union of IT and Organizational Learning
Introduction
Siemens AG
Aftermath
ICAP
Five Years Later
HTC
IT History at HTC
Interactions of the CEO
The Process
Transformation from the Transition
Five Years Later
Summary
9: Forming a Cyber Security Culture
Introduction
History
Talking to the Board
Establishing a Security Culture
Understanding What It Means to Be Compromised
Cyber Security Dynamism and Responsive Organizational Dynamism
Cyber Strategic Integration
Cyber Cultural Assimilation
Summary
Organizational Learning and Application Development
Cyber Security Risk
Risk Responsibility
Driver /Supporter Implications
10: Digital Transformation and Changes in Consumer Behavior
Introduction
Requirements without Users and without Input
Concepts of the S-Curve and Digital Transformation Analysis and Design
Organizational Learning and the S-Curve
Communities of Practice
The IT Leader in the Digital Transformation Era
How Technology Disrupts Firms and Industries
Dynamism and Digital Disruption
Critical Components of “ Digital” Organization
Assimilating Digital Technology Operationally and Culturally
Conclusion
11: Integrating Generation Y Employees to Accelerate Competitive Advantage
Introduction
The Employment Challenge in the Digital Era
Gen Y Population Attributes
Advantages of Employing Millennials to Support Digital Transformation
Integration of Gen Y with Baby Boomers and Gen X
Designing the Digital Enterprise
Assimilating Gen Y Talent from Underserved and Socially Excluded Populations
Langer Workforce Maturity Arc
Theoretical Constructs of the LWMA
The LWMA and Action Research
Implications for New Pathways for Digital Talent
Demographic Shifts in Talent Resources
Economic Sustainability
Integration and Trust
Global Implications for Sources of Talent
Conclusion
12: Toward Best Practices
Introduction
Chief IT Executive
Definitions of Maturity Stages and Dimension Variables in the Chief IT Executive Best Practices Arc
Maturity Stages
Performance Dimensions
Chief Executive Officer
CIO Direct Reporting to the CEO
Outsourcing
Centralization versus Decentralization of IT
CIO Needs Advanced Degrees
Need for Standards
Risk Management
The CEO Best Practices Technology Arc
Definitions of Maturity Stages and Dimension Variables in the CEO Technology Best Practices Arc
Maturity Stages
Performance Dimensions
Middle Management
The Middle Management Best Practices Technology Arc
Definitions of Maturity Stages and Dimension Variables in the Middle Manager Best Practices Arc
Maturity Stages
Performance Dimensions
Summary
Ethics and Maturity
13: Conclusion
Introduction
Glossary
Organizational Learning Definitions
References
Index
Information Systems for Business and Beyond (2019)
Information Systems for
Business and Beyond (2019)
Information systems, their use in business, and the
larger impact they are having on our world.
DAVID BOURGEOIS
JOSEPH MORTATI, SHOUHONG WANG,
AND JAMES SMITH
Information Systems for Business and Beyond (2019) by David Bourgeois is licensed
under a Creative Commons Attribution-NonCommercial 4.0 International License,
except where otherwise noted.
This book was initially developed in 2014 by Dr. David Bourgeois as part of
the Open Textbook Challenge funded by the Saylor Foundation. This 2019
edition is an update to that textbook.
This book was produced with Pressbooks (https://pressbooks.com) and
rendered with Prince.
https://creativecommons.org/licenses/by-nc/4.0/
Open Textbook Challenge: Making Textbooks Available (For Free!)
Information Systems for
Business and Beyond
Updated edition: August 1, 2019
DAVID T. BOURGEOIS, PH.D.
JAMES L. SMITH, PH.D.
SHOUHONG WANG, PH.D.
JOSEPH MORTATI, MBA
Title Page | v
Copyright
Information Systems for Business and Beyond (2019) by David Bourgeois is licensed
under a Creative Commons Attribution-NonCommercial 4.0 International License,
except where otherwise noted.
vi | Copyright
https://creativecommons.org/licenses/by-nc/4.0/
http://creativecommons.org/licenses/by/3.0/legalcode
Book Contributors
Information Systems for Business and Beyond was originally
developed in 2014 by David T. Bourgeois Ph.D.
Updates for the 2019 edition were graciously contributed by:
• James L. Smith Ph.D. (all chapters)
• Shouhong Wong, Ph.D. (chapters 4 and 8)
• Joseph Mortati, MBA (chapter 10)
Book Contributors | vii
Changes from Previous
Edition
Information Systems for Business and Beyond was written by Dr.
David Bourgeois and originally published in 2014 as part of the
Open Textbook Challenge at the Saylor Foundation. Since then, it
has been accessed thousands of time and used in many courses
worldwide. This 2019 update to the textbook brings it up to date
and adds many new topics. True to its open textbook roots, many
of the updates have come from the community of instructors and
practitioners who are passionate about information systems. See
the page Book Contributors to see the primary contributors to this
edition. A majority of the changes listed below were made by Dr.
James Smith, who did a revision to this text in 2018.
Here is a summary of the changes made:
Overall
• New and updated images, especially those related to statistics,
in order to bring them up to date.
• References brought up to date.
• Added labs for every chapter.
• Added an index.
• Editing for consistency.
Chapter 1: What is an information system?
• Added video: Blum’s fibre optic TED Talk
viii | Changes from Previous Edition
Chapter 2: Hardware
• Removed text which discussed increasing dependency on
tablets and decreasing use of desktops
• Clarification of bit vs. byte, binary vs. digital. Added tables to
Understanding Binary sidebar
• Added Huang’s Law on graphics processor units
• Modified text regarding Moore’s Law to state that his law is no
longer able to be maintained
Chapter 3: Software
• Added information about Ubuntu Linux
• Added Eclipse IDE
• Added information about Tableau
• Supply Chain Management: added an emphasis on use of
Information Systems up and down supply chain by Walmart to
gain competitive advantage
Chapter 4: Data and Databases
• Database schemas redesigned
• Data types added
• SQL examples include output
• NoSQL described
• Data Dictionary re-ordered to column name
• New section on “Why database technology?”
• Differentiation of data, information, and knowledge
• Section on Data models
• Changed illustrative example of database tables and
relationships.
Changes from Previous Edition | ix
• Updated section on Business Intelligence to focus on the rise
of analytics and data science. Includes a new “What is Data
Science?” sidebar.
Chapter 5: Networking and Communication
• History of ARPANET initial four nodes, etc.
• Metcalfe’s Law
Chapter 6: Information Systems Security
• Added information on blockchain and Bitcoin.
Chapter 8: Business Processes
• Introduce tools (DFD, BPMN, UML) of business process
modeling
• Introduce examples of DFD.
Chapter 10: Information Systems Development
• Java sample code
• Mismanaging Change side bar
• Added section on mobile development.
• Added sidebar on risks of end-user computing
x | Information Systems for Business and Beyond (2019)
Chapter 11: Globalization and the Digital Divide
• World 3.0 written by economist Pankaj Ghemawat; also his
TED talk video
Chapter 12: The Ethical and Legal Implications of
Information Systems
• Facebook and Cambridge Analytics data privacy
• General Data Protection Regulation section
Chapter 13: Trends in Information Systems
• Waze mapping app
• Drone video
• Drone blood delivery in Kenya video
• Added sidebar on Mary Meeker and her Internet Trends report
Changes from Previous Edition | xi
How you can help
This is an open textbook and relies on the support of its users to
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Introduction
Welcome to Information Systems for Business and
Beyond. In this book, you will be introduced to the
concept of information systems, their use in
business, and how information systems can be
used to gain competitive advantage.
Audience
This book is written as an introductory text, meant for those with
little or no experience with computers or information systems.
While sometimes the descriptions can get a bit technical, every
effort has been made to convey the information essential to
understanding a topic while not getting overly focused in detailed
terminology.
Chapter Outline
The text is organized around thirteen chapters divided into three
major parts, as follows:
• Part 1: What Is an Information System?
◦ Chapter 1: What Is an Information System? – This chapter
provides an overview of information systems, including
the history of how information systems got to where it is
today.
◦ Chapter 2: Hardware – This is a discussion of information
Introduction | 1
systems hardware and how it works. You will look at
different computer parts and learn how they interact.
◦ Chapter 3: Software – Without software, hardware is
useless. This chapter covers software and the role it plays
in an organization.
◦ Chapter 4: Data and Databases – This chapter explores
how organizations use information systems to turn data
into information that can then be used for competitive
advantage. Special attention is paid to the role of
databases.
◦ Chapter 5: Networking and Communication – Today’s
computers are expected to also be communication
devices. This chapter reviews the history of networking,
how the Internet works, and the use of networks in
organizations today.
◦ Chapter 6: Information Systems Security – This chapter
discusses the information security triad of confidentiality,
integrity, and availability. Different security technologies
are reviewed, and the chapter concludes with a primer on
personal information security.
• Part 2: Information Systems for Strategic Advantage
◦ Chapter 7: Does IT Matter? – This chapter examines the
impact that information systems have on an organization.
Can IT give a company a competitive advantage? This
chapter discusses the seminal works by Brynjolfsson, Carr,
and Porter as they relate to IT and competitive advantage.
◦ Chapter 8: Business Processes – Business processes are the
essence of what a business does, and information systems
play an important role in making them work. This chapter
will discuss business process management, business
process reengineering, and ERP systems.
◦ Chapter 9: The People in Information Systems – This
chapter will provide an overview of the different types of
people involved in information systems. This includes
2 | Information Systems for Business and Beyond (2019)
people who create information systems, those who
operate and administer information systems, those who
manage information systems, and those who use
information systems.
◦ Chapter 10: Information Systems Development – How are
information systems created? This chapter will review the
concept of programming, look at different methods of
software development, review website and mobile
application development, discuss end-user computing,
and look at the “build vs. buy” decision that many
companies face.
• Part 3: Information Systems beyond the Organization
◦ Chapter 11: Globalization and the Digital Divide – The rapid
rise of the Internet has made it easier than ever to do
business worldwide. This chapter will look at the impact
that the Internet is having on the globalization of business
and the issues that firms must face because of it. It will
also cover the concept of the digital divide and some of
the steps being taken to alleviate it.
◦ Chapter 12: The Ethical and Legal Implications of
Information Systems – The rapid changes in information
and communication technology in the past few decades
have brought a broad array of new capabilities and powers
to governments, organizations, and individuals alike. This
chapter will discuss the effects that these new capabilities
have had and the legal and regulatory changes that have
been put in place in response.
◦ Chapter 13: Future Trends in Information Systems – This
final chapter will present an overview of some of the new
technologies that are on the horizon. From wearable
technology to 3-D printing, this chapter will provide a look
forward to what the next few years will bring.
Introduction | 3
For the Student
Each chapter in this text begins with a list of the relevant learning
objectives and ends with a chapter summary. Following the
summary is a list of study questions that highlight key topics in the
chapter. In order to get the best learning experience, you would
be wise to begin by reading both the learning objectives and the
summary and then reviewing the questions at the end of the
chapter.
For the Instructor
Instructors: if you have adopted this book for your course, would
you be so kind as to let us know in the instructor survey?
Learning objectives can be found at the beginning of each
chapter. Of course, all chapters are recommended for use in an
introductory information systems course. However, for courses on
a shorter calendar or courses using additional textbooks, a review
of the learning objectives will help determine which chapters can be
omitted.
At the end of each chapter, there is a set of study questions and
exercises (except for chapter 1, which only offers study questions).
The study questions can be assigned to help focus students’ reading
on the learning objectives. The exercises are meant to be a more
in-depth, experiential way for students to learn chapter topics. It
is recommended that you review any exercise before assigning it,
adding any detail needed (such as length, due date) to complete the
assignment. Some chapters also includes lab assignments.
As an open textbook, support for supplemental materials relies
on the generosity of those who have created them and wish to
share them. Supplemental materials, including slides and quizzes,
are located on the home page for this book. If you wish to contribute
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materials that you have created, please fill out the instructor survey
and communicate that fact.
Introduction | 5
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PART I: WHAT IS AN
INFORMATION SYSTEM?
Part I: What is an information
system? | 7
Chapter 1: What Is an
Information System?
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• define what an information system is by identifying
its major components;
• describe the basic history of information systems;
and
• describe the basic argument behind the article
“Does IT Matter?” by Nicholas Carr.
Introduction
Welcome to the world of information systems, a world that seems to
change almost daily. Over the past few decades information systems
have progressed to being virtually everywhere, even to the point
where you may not realize its existence in many of your daily
activities. Stop and consider how you interface with various
components in information systems every day through different
Chapter 1: What Is an Information
System? | 9
electronic devices. Smartphones, laptop, and personal computers
connect us constantly to a variety of systems including messaging,
banking, online retailing, and academic resources, just to name a
few examples. Information systems are at the center of virtually
every organization, providing users with almost unlimited
resources.
Have you ever considered why businesses invest in technology?
Some purchase computer hardware and software because everyone
else has computers. Some even invest in the same hardware and
software as their business friends even though different technology
might be more appropriate for them. Finally, some businesses do
sufficient research before deciding what best fits their needs. As
you read through this book be sure to evaluate the contents of each
chapter based on how you might someday apply what you have
learned to strengthen the position of the business you work for, or
maybe even your own business. Wise decisions can result in stability
and growth for your future enterprise.
Information systems surround you almost every day. Wi-fi
networks on your university campus, database search services in
the learning resource center, and printers in computer labs are
good examples. Every time you go shopping you are interacting
with an information system that manages inventory and sales. Even
driving to school or work results in an interaction with the
transportation information system, impacting traffic lights,
cameras, etc. Vending machines connect and communicate using
the Internet of Things (IoT). Your car’s computer system does more
than just control the engine – acceleration, shifting, and braking
data is always recorded. And, of course, everyone’s smartphone is
constantly connecting to available networks via Wi-fi, recording
your location and other data.
Can you think of some words to describe an information system?
Words such as “computers,” “networks,” or “databases” might pop
into your mind. The study of information systems encompasses a
broad array of devices, software, and data systems. Defining an
10 | Information Systems for Business and Beyond (2019)
information system provides you with a solid start to this course
and the content you are about to encounter.
Defining Information Systems
Many programs in business require students to take a course in
information systems. Various authors have attempted to define the
term in different ways. Read the following definitions, then see if
you can detect some variances.
• “An information system (IS) can be defined technically as a set
of interrelated components that collect, process, store, and
distribute information to support decision making and control
in an organization.” 1
• “Information systems are combinations of hardware, software,
and telecommunications networks that people build and use to
collect, create, and distribute useful data, typically in
organizational settings.”2
• “Information systems are interrelated components working
together to collect, process, store, and disseminate
information to support decision making, coordination, control,
analysis, and visualization in an organization.”3
As you can see these definitions focus on two different ways of
describing information systems: the components that make up an
information system and the role those components play in an
organization. Each of these need to be examined.
1. [1]
2. [2]
3. [3]
Chapter 1: What Is an Information System? | 11
The Components of Information Systems
Information systems can be viewed as having five major
components: hardware, software, data, people, and processes. The
first three are technology. These are probably what you thought
of when defining information systems. The last two components,
people and processes, separate the idea of information systems
from more technical fields, such as computer science. In order to
fully understand information systems, you will need to understand
how all of these components work together to bring value to an
organization.
Technology
Technology can be thought of as the application of scientific
knowledge for practical purposes. From the invention of the wheel
to the harnessing of electricity for artificial lighting, technology has
become ubiquitous in daily life, to the degree that it is assumed
to always be available for use regardless of location. As discussed
before, the first three components of information systems –
hardware, software, and data – all fall under the category of
technology. Each of these will be addressed in an individual chapter.
At this point a simple introduction should help you in your
understanding.
Hardware
Hardware is the tangible, physical portion of an information system
– the part you can touch. Computers, keyboards, disk drives, and
flash drives are all examples of information systems hardware. How
12 | Information Systems for Business and Beyond (2019)
these hardware components function and work together will be
covered in Chapter 2.
Software
Software comprises the set of instructions that tell the hardware
what to do. Software is not tangible – it cannot be touched.
Programmers create software by typing a series of instructions
telling the hardware what to do. Two main categories of software
are: Operating Systems and Application software. Operating
Systems software provides the interface between the hardware and
the Application software. Examples of operating systems for a
personal computer include Microsoft Windows and Ubuntu Linux.
The mobile phone operating system market is dominated by Google
Android and Apple iOS. Application software allows the user to
perform tasks such as creating documents, recording data in a
spreadsheet, or messaging a friend. Software will be explored more
thoroughly in Chapter 3.
Data
The third technology component is data. You can think of data as
a collection of facts. For example, your address (street, city state,
postal code), your phone number, and your social networking
Chapter 1: What Is an Information System? | 13
account are all pieces of data. Like software, data is also intangible,
unable to be seen in its native state. Pieces of unrelated data are
not very useful. But aggregated, indexed, and organized together
into a database, data can become a powerful tool for businesses.
Organizations collect all kinds of data and use it to make decisions
which can then be analyzed as to their effectiveness. The analysis
of data is then used to improve the organization’s performance.
Chapter 4 will focus on data and databases, and how it is used in
organizations.
Networking Communication
Besides the technology components (hardware, software, and data)
which have long been considered the core technology of
information systems, it has been suggested that one other
component should be added: communication. An information
system can exist without the ability to communicate – the first
personal computers were stand-alone machines that did not access
the Internet. However, in today’s hyper-connected world, it is an
extremely rare computer that does not connect to another device
or to a enetwork. Technically, the networking communication
component is made up of hardware and software, but it is such a
core feature of today’s information systems that it has become its
own category. Networking will be covered in Chapter 5.
People
14 | Information Systems for Business and Beyond (2019)
Jeff Bezos, Amazon CEO
When thinking about information
systems, it is easy to focus on the
technology components and forget to
look beyond these tools to fully
understand their integration into an
organization. A focus on the people
involved in information systems is the
next step. From the front-line user
support staff, to systems analysts, to
developers, all the way up to the chief
information officer (CIO), the people
involved with information systems are
an essential element. The people
component will be covered in Chapter 9.
Process
The last component of information systems is process. A process
is a series of steps undertaken to achieve a desired outcome or
goal. Information systems are becoming more integrated with
organizational processes, bringing greater productivity and better
control to those processes. But simply automating activities using
technology is not enough – businesses looking to utilize
information systems must do more. The ultimate goal is to improve
processes both internally and externally, enhancing interfaces with
suppliers and customers. Technology buzzwords such as “business
process re-engineering,” “business process management,” and
“enterprise resource planning” all have to do with the continued
improvement of these business procedures and the integration of
technology with them. Businesses hoping to gain a competitive
advantage over their competitors are highly focused on this
Chapter 1: What Is an Information System? | 15
IBM 704 Mainframe (Copyright:
Lawrence Livermore National
Laboratory)
component of information systems. The process element in
information systems will be discussed in Chapter 8.
The Role of Information Systems
You should now understand that information systems have a
number of vital components, some tangible, others intangible, and
still others of a personnel nature. These components collect, store,
organize, and distribute data throughout the organization. You may
have even realized that one of the roles of information systems
is to take data and turn it into information, and then transform
that information into organizational knowledge. As technology has
developed, this role has evolved into the backbone of the
organization, making information systems integral to virtually every
business. The integration of information systems into organizations
has progressed over the decades.
The Mainframe Era
From the late 1950s through the
1960s, computers were seen as
a way to more efficiently do
calculations. These first
business computers were
room-sized monsters, with
several machines linked
16 | Information Systems for Business and Beyond (2019)
http://commons.wikimedia.org/wiki/File%3AIbm704.gif
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Registered trademark of International
Business Machines
together. The primary work was to organize and store large volumes
of information that were tedious to manage by hand. Only large
businesses, universities, and government agencies could afford
them, and they took a crew of specialized personnel and dedicated
facilities to provide information to organizations.
Time-sharing allowed dozens or even hundreds of users to
simultaneously access mainframe computers from locations in the
same building or miles away. Typical functions included scientific
calculations and accounting, all under the broader umbrella of “data
processing.”
In the late 1960s,
Manufacturing Resources
Planning (MRP) systems were
introduced. This software,
running on a mainframe
computer, gave companies the
ability to manage the
manufacturing process, making it more efficient. From tracking
inventory to creating bills of materials to scheduling production, the
MRP systems gave more businesses a reason to integrate computing
into their processes. IBM became the dominant mainframe
company. Continued improvement in software and the availability
of cheaper hardware eventually brought mainframe computers (and
their little sibling, the minicomputer) into most large businesses.
Today you probably think of Silicon Valley in northern California
as the center of computing and technology. But in the days of the
mainframe’s dominance corporations in the cities of Minneapolis
and St. Paul produced most computers. The advent of the personal
computer resulted in the “center of technology” eventually moving
to Silicon Valley.
Chapter 1: What Is an Information System? | 17
IBM PC
The PC Revolution
In 1975, the first microcomputer was announced on the cover of
Popular Mechanics: the Altair 8800. Its immediate popularity
sparked the imagination of entrepreneurs everywhere, and there
were soon dozens of companies manufacturing these “personal
computers.” Though at first just a niche product for computer
hobbyists, improvements in usability and the availability of practical
software led to growing sales. The most prominent of these early
personal computer makers was a little company known as Apple
Computer, headed by Steve Jobs and Steve Wozniak, with the hugely
successful “Apple II.” Not wanting to be left out of the revolution,
in 1981 IBM teamed with Microsoft, then just a startup company,
for their operating system software and hurriedly released their
own version of the personal computer simply called the “PC.” Small
businesses finally had affordable computing that could provide
them with needed information systems. Popularity of the IBM PC
gave legitimacy to the microcomputer and it was named
Time magazine’s “Man of the Year” for 1982.
Because of the IBM PC’s open
architecture, it was easy for
other companies to copy, or
“clone” it. During the 1980s,
many new computer
companies sprang up, offering
less expensive versions of the
PC. This drove prices down and
spurred innovation. Microsoft
developed the Windows
operating system, with version
3.1 in 1992 becoming the first
commercially successful release. Typical uses for the PC during this
period included word processing, spreadsheets, and databases.
18 | Information Systems for Business and Beyond (2019)
Registered Trademark of SAP
These early PCs were standalone machines, not connected to a
network.
Client-Server
In the mid-1980s, businesses began to see the need to connect their
computers as a way to collaborate and share resources. Known as
“client-server,” this networking architecture allowed users to log
in to the Local Area Network (LAN) from their PC (the “client”) by
connecting to a central computer called a “server.” The server would
lookup permissions for each user to determine who had access to
various resources such as printers and files. Software companies
began developing applications that allowed multiple users to access
the same data at the same time. This evolved into software
applications for communicating, with the first popular use of
electronic mail appearing at this time.
This networking and data
sharing all stayed mainly within
the confines of each business.
Sharing of electronic data
between companies was a very
specialized function.
Computers were now seen as tools to collaborate internally within
an organization. These networks of computers were becoming so
powerful that they were replacing many of the functions previously
performed by the larger mainframe computers at a fraction of the
cost. It was during this era that the first Enterprise Resource
Planning (ERP) systems were developed and run on the client-server
architecture. An ERP system is an application with a centralized
database that can be used to run a company’s entire business. With
separate modules for accounting, finance, inventory, human
resources, and many more, ERP systems, with Germany’s SAP
Chapter 1: What Is an Information System? | 19
ARPANet, 1969
leading the way, represented the state of the art in information
systems integration. ERP systems will be discussed in Chapter 9.
The Internet, World Wide Web and E-Commerce
The first long distance
transmission between two
computers occurred on
October 29, 1969 when
developers under the direction
of Dr. Leonard Kleinrock sent
the word “login” from the
campus of UCLA to Stanford
Research Institute in Menlo
Park, California, a distance of
over 350 miles. The United
States Department of Defense
created and funded ARPA Net
(Advanced Research Projects
Administration), an
experimental network which
eventually became known as
the Internet. ARPA Net began with just four nodes or sites, a very
humble start for today’s Internet. Initially, the Internet was confined
to use by universities, government agencies, and researchers. Users
were required to type commands (today we refer to this as
“command line”) in order to communicate and transfer files. The
first e-mail messages on the Internet were sent in the early 1970s as
a few very large companies expanded from local networks to the
Internet. The computer was now evolving from a purely
computational device into the world of digital communications.
In 1989, Tim Berners-Lee developed a simpler way for researchers
to share information over the Internet, a concept he called the
20 | Information Systems for Business and Beyond (2019)
Registered trademark of Amazon.com,
Inc.
World Wide Web.4 This invention became the catalyst for the growth
of the Internet as a way for businesses to share information about
themselves. As web browsers and Internet connections became the
norm, companies rushed to grab domain names and create
websites.
In 1991 the National Science
Foundation, which governed
how the Internet was used,
lifted restrictions on its
commercial use. Corporations
soon realized the huge potential of a digital marketplace on the
Internet and in 1994 both eBay and Amazon were founded. A mad
rush of investment in Internet-based businesses led to the dot-com
boom through the late 1990s, and then the dot-com bust in 2000.
The bust occurred as investors, tired of seeing hundreds of
companies reporting losses, abandoned their investments. An
important outcome for businesses was that thousands of miles of
Internet connections, in the form of fiber optic cable, were laid
around the world during that time. The world became truly “wired”
heading into the new millenium, ushering in the era of globalization,
which will be discussed in Chapter 11. This TED Talk video focuses
on connecting Africa to the Internet through undersea fibre optic
cable.
The digital world also became a more dangerous place as virtually
all companies connected to the Internet. Computer viruses and
worms, once slowly propagated through the sharing of computer
disks, could now grow with tremendous speed via the Internet.
Software and operating systems written for a standalone world
found it very difficult to defend against these sorts of threats. A
whole new industry of computer and Internet security arose.
Information security will be discussed in Chapter 6.
4. [4]
Chapter 1: What Is an Information System? | 21
Web 2.0
As the world recovered from the dot-com bust, the use of
technology in business continued to evolve at a frantic pace.
Websites became interactive. Instead of just visiting a site to find
out about a business and then purchase its products, customers
wanted to be able to customize their experience and interact online
with the business. This new type of interactive website, where you
did not have to know how to create a web page or do any
programming in order to put information online, became known as
Web 2.0. This new stage of the Web was exemplified by blogging,
social networking, and interactive comments being available on
many websites. The new Web 2.0 world, in which online interaction
became expected, had a major impact on many businesses and even
whole industries. Many bookstores found themselves relegated to a
niche status. Video rental chains and travel agencies simply began
going out of business as they were replaced by online technologies.
The newspaper industry saw a huge drop in circulation with some
cities such as New Orleans no longer able to support a daily
newspaper.
Disintermediation is the process of technology replacing a
middleman in a transaction. Web 2.0 allowed users to get
information and news online, reducing dependence of physical
books and newspapers.
As the world became more connected, new questions arose.
Should access to the Internet be considered a right? Is it legal
to copy a song that had been downloaded from the Internet? Can
information entered into a website be kept private? What
information is acceptable to collect from children? Technology
moved so fast that policymakers did not have enough time to enact
appropriate laws. Ethical issues surrounding information systems
will be covered in Chapter 12.
22 | Information Systems for Business and Beyond (2019)
The Post-PC World, Sort of
Ray Ozzie, a technology visionary at Microsoft, stated in 2012 that
computing was moving into a phase he called the post-PC world.5
Now six years later that prediction has not stood up very well to
reality. As you will read in Chapter 13, PC sales have dropped slightly
in recent years while there has been a precipitous decline in tablet
sales. Smartphone sales have accelerated, due largely to their
mobility and ease of operation. Just as the mainframe before it, the
PC will continue to play a key role in business, but its role will
be somewhat diminished as people emphasize mobility as a central
feature of technology. Cloud computing provides users with mobile
access to data and applications, making the PC more of a part of
the communications channel rather than a repository of programs
and information. Innovation in the development of technology and
communications will continue to move businesses forward.
5. [5]
Chapter 1: What Is an Information System? | 23
Eras of Business Computing
Era Hardware Operating
System Applications
Mainframe
(1970s)
Terminals connected
to mainframe
computer
Time-sharing
(TSO) on
Multiple
Virtual
Storage
(MVS)
Custom-written
MRP software
PC
(mid-1980s)
IBM PC or compatible.
Sometimes connected
to mainframe
computer via
network interface
card.
MS-DOS WordPerfect,
Lotus 1-2-3
Client-Server
(late 80s to
early 90s)
IBM PC “clone” on a
Novell Network.
Windows for
Workgroups
Microsoft
Word,
Microsoft Excel
World
Wide Web
(mid-90s to
early 2000s)
IBM PC “clone”
connected to company
intranet.
Windows XP
Microsoft
Office, Internet
Explorer
Web 2.0
(mid-2000s –
present)
Laptop connected to
company Wi-Fi. Windows 10 Microsoft
Office
Post-PC
(today and
beyond)
Smartphones Android, iOS
Mobile-friendly
websites,
mobile apps
Can Information Systems Bring
Competitive Advantage?
It has always been the assumption that the implementation of
information systems will bring a business competitive advantage. If
installing one computer to manage inventory can make a company
more efficient, then it can be expected that installing several
computers can improve business processes and efficiency.
In 2003, Nicholas Carr wrote an article in the Harvard Business
24 | Information Systems for Business and Beyond (2019)
Registered Trademark of Walmart, Inc.
Review that questioned this assumption. Entitled “I.T. Doesn’t
Matter.” Carr was concerned that information technology had
become just a commodity. Instead of viewing technology as an
investment that will make a company stand out, Carr said
technology would become as common as electricity – something to
be managed to reduce costs, ensure that it is always running, and be
as risk-free as possible.
The article was both hailed and scorned. Can I.T. bring a
competitive advantage to an organization? It sure did for Walmart
(see sidebar). Technology and competitive advantage will be
discussed in Chapter 7.
Sidebar: Walmart Uses Information Systems
to Become the World’s Leading Retailer
Walmart is the world’s largest
retailer, earn 8.1 billion for the
fiscal year that ended on
January 31, 2018. Walmart
currently serves over 260
million customers every week worldwide through its 11,700 stores in
28 countries.6In 2018 Fortune magazine for the sixth straight year
ranked Walmart the number one company for annual revenue as
they again exceeded $500 billion in annual sales. The next closest
company, Exxon, had less than half of Walmart’s total revenue.7
Walmart’s rise to prominence is due in large part to making
6. [6]
7. [7]
Chapter 1: What Is an Information System? | 25
information systems a high priority, especially in their Supply Chain
Management (SCM) system known as Retail Link.ing $14.3 billion on
sales of $30
This system, unique when initially implemented in the mid-1980s,
allowed Walmart’s suppliers to directly access the inventory levels
and sales information of their products at any of Walmart’s more
than eleven thousand stores. Using Retail Link, suppliers can
analyze how well their products are selling at one or more Walmart
stores with a range of reporting options. Further, Walmart requires
the suppliers to use Retail Link to manage their own inventory
levels. If a supplier feels that their products are selling out too
quickly, they can use Retail Link to petition Walmart to raise the
inventory levels for their products. This has essentially allowed
Walmart to “hire” thousands of product managers, all of whom have
a vested interest in the products they are managing. This
revolutionary approach to managing inventory has allowed Walmart
to continue to drive prices down and respond to market forces
quickly.
Today Walmart continues to innovate with information
technology. Using its tremendous market presence, any technology
that Walmart requires its suppliers to implement immediately
becomes a business standard. For example, in 1983 Walmart became
the first large retailer to require suppliers to the use Uniform
Product Code (UPC) labels on all products. Clearly, Walmart has
learned how to use I.T. to gain a competitive advantage.
Summary
In this chapter you have been introduced to the concept of
information systems. Several definitions focused on the main
components: technology, people, and process. You saw how the
26 | Information Systems for Business and Beyond (2019)
business use of information systems has evolved over the years,
from the use of large mainframe computers for number crunching,
through the introduction of the PC and networks, all the way to
the era of mobile computing. During each of these phases, new
innovations in software and technology allowed businesses to
integrate technology more deeply into their organizations.
Virtually every company uses information systems which leads
to the question: Does information systems bring a competitive
advantage? In the final analysis the goal of this book is to help you
understand the importance of information systems in making an
organization more competitive. Your challenge is to understand the
key components of an information system and how it can be used to
bring a competitive advantage to every organization you will serve
in your career.
Study Questions
1. What are the five major components that make up an
information system?
2. List the three examples of information system hardware?
3. Microsoft Windows is an example of which component of
information systems?
4. What is application software?
5. What roles do people play in information systems?
6. What is the definition of a process?
7. What was invented first, the personal computer or the
Internet?
8. In what year were restrictions on commercial use of the
Internet first lifted?
9. What is Carr’s main argument about information technology?
Chapter 1: What Is an Information System? | 27
Exercises
1. Suppose that you had to explain to a friend the concept of an
information system. How would you define it? Write a one-
paragraph description in your own words that you feel would
best describe an information system to your friends or family.
2. Of the five primary components of an information system
(hardware, software, data, people, process), which do you think
is the most important to the success of a business
organization? Write a one-paragraph answer to this question
that includes an example from your personal experience to
support your answer.
3. Everyone interacts with various information systems every
day: at the grocery store, at work, at school, even in our cars.
Make a list of the different information systems you interact
with daily. Can you identify the technologies, people, and
processes involved in making these systems work.
4. Do you agree that we are in a post-PC stage in the evolution of
information systems? Do some original research and cite it as
you make your prediction about what business computing will
look like in the next generation.
5. The Walmart sidebar introduced you to how information
systems was used to make them the world’s leading retailer.
Walmart has continued to innovate and is still looked to as a
leader in the use of technology. Do some original research and
write a one-page report detailing a new technology that
Walmart has recently implemented or is pioneering.
Labs
1. Examine your PC. Using a four column table format identify
and record the following information: 1st column: Program
28 | Information Systems for Business and Beyond (2019)
name, 2nd column: software manufacturer, 3rd column:
software version, 4th column: software type (editor/word
processor, spreadsheet, database, etc.).
2. Examine your mobile phone. Create another four column table
similar to the one in Lab #1. This time identify the apps, then
record the requested information.
3. In this chapter you read about the evolution of computing
from mainframe computers to PCs and on to smartphones.
Create a four column table and record the following
information about your own electronic devices: 1st column –
Type: PC or smartphone, 2nd column – Operating system
including version, 3rd column – Storage capacity, 4th column –
Storage available.
1. Laudon, K.C. and Laudon, J. P. (2014) Management Information
Systems, thirteenth edition. Upper Saddle River, New Jersey:
Pearson.
2. Valacich, J. and Schneider, C. (2010). Information Systems Today
– Managing in the Digital World, fourth edition. Upper Saddle
River, New Jersey: Prentice-Hall.
3. Laudon, K.C. and Laudon, J. P. (2012). Management Information
Systems, twelfth edition. Upper Saddle River, New Jersey:
Prentice-Hall.
4. CERN. (n.d.) The Birth of the Web. Retrieved
from http://public.web.cern.ch/public/en/about/web-
en.html
5. Marquis, J. (2012, July 16) What is the Post-PC World? Online
Universities.com. Retrieved from
https://www.onlineuniversities.com/blog/2012/07/what-
post-pc-world/
6. Walmart. (n.d.) 2017 Annual Report. Retrieved from
http://s2.q4cdn.com/056532643/files/doc_financials/2017/
Annual/WMT_2017_AR-(1)
Chapter 1: What Is an Information System? | 29
7. McCoy, K. (2018, May 21). Big Winners in Fortune 500 List. USA
Today. Retrieved from http://https://www.usatoday.com/
story/money/2018/05/21/big-winners-fortune-500-list-
walmart-exxon-mobil-amazon/628003002/
30 | Information Systems for Business and Beyond (2019)
Chapter 2: Hardware
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• describe information systems hardware;
• identify the primary components of a computer
and the functions they perform; and
• explain the effect of the commoditization of the
personal computer.
Introduction
As you learned in the first chapter, an information system is made
up of five components: hardware, software, data, people, and
process. The physical parts of computing devices – those that you
can actually touch – are referred to as hardware. In this chapter, you
will take a look at this component of information systems, learn a
little bit about how it works, and discuss some of the current trends
surrounding it.
As stated above, computer hardware encompasses digital devices
that you can physically touch. This includes devices such as the
following:
Chapter 2: Hardware | 31
• desktop computers
• laptop computers
• mobile phones
• tablet computers
• e-readers
• storage devices, such as flash drives
• input devices, such as keyboards, mice, and scanners
• output devices such as printers and speakers.
Besides these more traditional computer hardware devices, many
items that were once not considered digital devices are now
becoming computerized themselves. Digital technologies are being
integrated into many everyday objects so the days of a device being
labeled categorically as computer hardware may be ending.
Examples of these types of digital devices include
automobiles, refrigerators, and even beverage dispensers. In this
chapter, you will also explore digital devices, beginning with
defining what is meant by the term itself.
Digital Devices
A digital device processes electronic signals into discrete values, of
which there can be two or more. In comparison analog signals are
continuous and can be represented by a smooth wave pattern. You
might think of digital (discrete) as being the opposite of analog.
Many electronic devices process signals into two discrete values,
typically known as binary. These values are represented as either
a one (“on”) or a zero (“off”). It is commonly accepted to refer to
the on state as representing the presence of an electronic signal.
It then follows that the off state is represented by the absence of
an electronic signal. Note: Technically, the voltages in a system are
evaluated with high voltages converted into a one or on state and
low voltages converted into a zero or off state.
32 | Information Systems for Business and Beyond (2019)
http://www.ford.com/technology/sync
http://www.npr.org/blogs/thesalt/2012/05/03/151968878/the-smart-fridge-finds-the-lost-lettuce-for-a-price
http://www.coca-colafreestyle.com/
Each one or zero is referred to as a bit (a blending of the two
words “binary” and “digit”). A group of eight bits is known as a byte.
The first personal computers could process 8 bits of data at once.
The number of bits that can be processed by a computer’s processor
at one time is known as word size. Today’s PCs can process 64 bits of
data at a time which is where the term 64-bit processor comes from.
You are most likely using a computer with a 64-bit processor.
Sidebar: Understanding Binary
The numbering system you first learned was Base 10 also known as
Decimal. In Base 10 each column in the number represents a power
of 10 with the exponent increasing in each column as you move to
the left, as shown in the table:
Thousands Hundreds Tens Units
103 102 101 100
The rightmost column represents units or the values zero through
nine. The next column from the left represents tens or the values
teens, twenties, thirties, etc, followed by the hundreds column (one
hundred, two hundred, etc.), then the thousands column (one
thousand, two thousand) etc. Expanding the table above, you can
write the number 3456 as follows:
Thousands Hundreds Tens Units
103 102 101 100
3 4 5 6
3000 400 50 6
Chapter 2: Hardware | 33
Computers use the Base 2 numbering system. Similar to Base 10,
each column has a Base of 2 and has an increasing exponent value
moving to the left as shown in the table below:
Two
cubed
Two
squared Two Units
23 22 21 20
The rightmost column represents 20 or units ( 1 ). The next
column from the left represents 21 twos or ( 2 ). The third column
represents 22 or ( 4 ) and the fourth column represents 23 or ( 8 ).
Expanding the table above, you can see how the decimal number 15
is converted to 1111 in binary as follows:
Two
cubed
Two
squared Two Units
23 22 21 20
1 1 1 1
8 4 2 1
8 + 4 + 2 + 1 = 15
Understanding binary is important because it helps us understand
how computers store and transmit data. A “bit” is the lowest level
of data storage, stored as either a one or a zero. If a computer
wants to communicate the number 15, it would need to send 1111 in
binary (as shown above). This is four bits of data since four digits
are needed. A “byte” is 8 bits. If a computer wanted to transmit the
number 15 in a byte, it would send 00001111. The highest number
that can be sent in a byte is 255, which is 11111111, which is equal
to 27+26+25+24+23+22+21+20.
34 | Information Systems for Business and Beyond (2019)
As the capacities of digital devices grew, new terms were developed
to identify the capacities of processors, memory, and disk storage
space. Prefixes were applied to the word byte to represent different
orders of magnitude. Since these are digital specifications, the
prefixes were originally meant to represent multiples of 1024 (which
is 210), but have more recently been rounded for the sake of
simplicity to mean multiples of 1000, as shown in the table below:
Prefix Represents Example
kilo one
thousand
kilobyte=one
thousand bytes
mega one million megabyte = one
million bytes
giga one billion gigabyte = one
billion bytes
tera one trillion terabyte = one
trillion bytes
peta one
quadrillion
petabyte = one
quadrillion bytes
exa one
quintillion
exabyte = one
quintillion bytes
zetta one
sextillion
zettabyte = one
sextillion bytes
yotta one
septillion
yottabyte = one
septillion bytes
Tour of a PC
All personal computers consist of the same basic components: a
Central Processing Unit (CPU), memory, circuit board, storage, and
input/output devices. Almost every digital device uses the same set
of components, so examining the personal computer will give you
Chapter 2: Hardware | 35
Intel Core i7 CPU
insight into the structure of a variety of digital devices. Here’s a
“tour” of a personal computer.
Processing Data: The CPU
The core of a computer is the Central Processing Unit, or CPU. It
can be thought of as the “brains” of the device. The CPU carries out
the commands sent to it by the software and returns results to be
acted upon.
The earliest CPUs were large circuit
boards with limited functionality.
Today, a CPU can perform a large
variety of functions. There are two
primary manufacturers of CPUs for
personal computers: Intel and
Advanced Micro Devices (AMD).
The speed (“clock time”) of a CPU is
measured in hertz. A hertz is defined
as one cycle per second. A kilohertz (abbreviated kHz) is one
thousand cycles per second, a megahertz (mHz) is one million cycles
per second, and a gigahertz (gHz) is one billion cycles per second.
The CPU’s processing power is increasing at an amazing rate (see
the sidebar about Moore’s Law).
Besides a faster clock time, today’s CPU chips contain multiple
processors. These chips, known as dual-core (two processors) or
quad-core (four processors), increase the processing power of a
computer by providing the capability of multiple CPUs all sharing
the processing load. Intel’s Core i7 processors contain 6 cores and
their Core i9 processors contain 16 cores. This video shows how a
CPU works.
36 | Information Systems for Business and Beyond (2019)
Sidebar: Moore’s Law and Huang’s Law
As you know computers get faster every year. Many times we are
not sure if we want to buy today’s model because next week it
won’t be the most advanced any more. Gordon Moore, one of the
founders of Intel, recognized this phenomenon in 1965, noting that
microprocessor transistor counts had been doubling every year.1
His insight eventually evolved into Moore’s Law:
The number of integrated circuits on a chip doubles every two
years.
Moore’s Law has been generalized into the concept that
computing power will double every two years for the same price
point. Another way of looking at this is to think that the price for the
same computing power will be cut in half every two years. Moore’s
Law has held true for over forty years (see figure below).
The limits of Moore’s Law are now being reached and circuits
cannot be reduced further. However, Huang’s Law regarding
Graphics Processors Units (GPUs) may extend well into the future.
Nvidia’s CEO Jensen Huang spoke at the GPU Technology
Conference in March 2018 announcing that the speed of GPUs are
increasing faster than Moore’s Law. Nvidia’s GPUs are 25 times
faster than five years ago. He admitted that the advancement is
because of advances in architecture, memory technology,
algorithms, and interconnects.2
1. [1]
2. [2]
Chapter 2: Hardware | 37
https://commons.wikimedia.org/wiki/User:Wgsimon
https://spectrum.ieee.org/view-from-the-valley/computing/hardware/move-over-moores-law-make-way-for-huangs-law
Motherboard
Motherboard bus traces
Motherboard
The motherboard is the main
circuit board on the computer.
The CPU, memory, and storage
components, among other
things, all connect into the
motherboard. Motherboards
come in different shapes and
sizes, depending upon how
compact or expandable the
computer is designed to be. Most modern motherboards have many
integrated components, such as network interface card, video, and
sound processing, which previously required separate components.
The motherboard provides
much of the bus of the
computer (the term bus refers
to the electrical connections
between different computer
components). The bus is an
important factor in
determining the computer’s
speed – the combination of how
fast the bus can transfer data
and the number of data bits that can be moved at one time
determine the speed. The traces shown in the image are on the
underside of the motherboard and provide connections between
motherboard components.
Random-Access Memory
When a computer boots, it begins to load information from storage
38 | Information Systems for Business and Beyond (2019)
DDR4 Memory
Hard disk interior
into its working memory. This working memory, called Random-
Access Memory (RAM), can transfer data much faster than the hard
disk. Any program that you are running on the computer is loaded
into RAM for processing. In order for a computer to work effectively,
some minimal amount of RAM must be installed. In most cases,
adding more RAM will allow the computer to run faster. Another
characteristic of RAM is that it is “volatile.” This means that it can
store data as long as it is receiving power. When the computer is
turned off, any data stored in RAM is lost.
RAM is generally installed in a
personal computer through the
use of a Double Data Rate (DDR)
memory module. The type of
DDR accepted into a computer
is dependent upon the motherboard. There have been basically four
generations of DDR: DDR1, DDR2, DDR3, and DDR4. Each generation
runs faster than the previous with DDR4 capable of speeds twice as
fast as DDR3 while consuming less voltage.
Hard Disk
While the RAM is used as
working memory, the computer
also needs a place to store data
for the longer term. Most of
today’s personal computers use
a hard disk for long-term data
storage. A hard disk is
considered non-volatile
storage because when the
computer is turned off the data
remains in storage on the disk, ready for when the computer is
turned on. Drives with a capacity less than 1 Terabyte usually have
Chapter 2: Hardware | 39
https://www.kingston.com/us/memory/ddr4
Solid State Drive interior
just one platter. Notice the single platter in the image. The read/
write arm must be positioned over the appropriate track before
accessing or writing data.”
Solid State Drives
Solid State Drives (SSD) are becoming more popular in personal
computers. The SSD performs the same function as a hard disk,
namely long-term storage. Instead of spinning disks, the SSD uses
flash memory that incorporates EEPROM (Electrically Erasable
Programmable Read Only Memory) chips, which is much faster.
Solid-state drives are
currently a bit more expensive
than hard disks. However, the
use of flash memory instead of
disks makes them much lighter
and faster than hard disks. SSDs
are primarily utilized in
portable computers, making
them lighter, more durable, and
more efficient. Some computers combine the two storage
technologies, using the SSD for the most accessed data (such as the
operating system) while using the hard disk for data that is accessed
less frequently. SSDs are considered more reliable since there are
no moving parts.
40 | Information Systems for Business and Beyond (2019)
USB Drive
Removable Media
Removable storage has changed
greatly over the four decades of
PCs. Floppy disks have been
replaced by CD-ROM drives,
then they were replaced by USB
(Universal Serial Bus) drives.
USB drives are now standard on
all PCs with capacities
approaching 512 gigabytes. Speeds have also increased from 480
Megabits in USB 2.0 to 10 Gigabits in USB 3.1. USB devices also use
EEPROM technology.
3
Network Connection
When personal computers were first stand-alone units when first
developed, which meant that data was brought into the computer
or removed from the computer via removable media. Beginning in
the mid-1980s, however, organizations began to see the value in
connecting computers together via a digital network. Because of
this personal computers needed the ability to connect to these
networks. Initially, this was done by adding an expansion card to
the computer that enabled the network connection. These cards
were known as Network Interface Cards (NIC). By the mid-1990s
an Ethernet network port was built into the motherboard on most
personal computers. As wireless technologies began to dominate
3. [3]
Chapter 2: Hardware | 41
USB port on a computer
in the early 2000s, many personal computers also began including
wireless networking capabilities. Digital communication
technologies will be discussed further in Chapter 5.
Input and Output
In order for a personal
computer to be useful, it must
have channels for receiving
input from the user and
channels for delivering output
to the user. These input and
output devices connect to the
computer via various
connection ports, which
generally are part of the
motherboard and are accessible outside the computer case. In early
personal computers, specific ports were designed for each type of
output device. The configuration of these ports has evolved over the
years, becoming more and more standardized over time. Today,
almost all devices plug into a computer through the use of a USB
port. This port type, first introduced in 1996, has increased in its
capabilities, both in its data transfer rate and power supplied.
Bluetooth
Besides USB, some input and output devices connect to the
computer via a wireless-technology standard called Bluetooth
which was invented in 1994. Bluetooth exchanges data over short
distances of 10 meters up to 100 meters using radio waves. Two
devices communicating with Bluetooth must both have a Bluetooth
42 | Information Systems for Business and Beyond (2019)
communication chip installed. Bluetooth devices include pairing
your phone to your car, computer keyboards, speakers, headsets,
and home security, to name just a few.
Input Devices
All personal computers need components that allow the user to
input data. Early computers simply used a keyboard for entering
data or select an item from a menu to run a program. With the
advent operating systems offering the graphical user interface, the
mouse became a standard component of a computer. These two
components are still the primary input devices to a personal
computer, though variations of each have been introduced with
varying levels of success over the years. For example, many new
devices now use a touch screen as the primary way of data entry.
Other input devices include scanners which allow users to input
documents into a computer either as images or as text.
Microphones can be used to record audio or give voice commands.
Webcams and other types of video cameras can be used to record
video or participate in a video chat session.
Output Devices
Output devices are essential as well. The most obvious output
device is a display or monitor, visually representing the state of
the computer. In some cases, a personal computer can support
multiple displays or be connected to larger-format displays such as
a projector or large-screen television. Other output devices include
speakers for audio output and printers for hardcopy output.
Chapter 2: Hardware | 43
Sidebar: Which Hardware Components
Contribute to the Speed of Your Computer
The speed of a computer is determined by many elements, some
related to hardware and some related to software. In hardware,
speed is improved by giving the electrons shorter distances to
travel in completing a circuit. Since the first CPU was created in
the early 1970s, engineers have constantly worked to figure out
how to shrink these circuits and put more and more circuits onto
the same chip – these are known as integrated circuits. And this
work has paid off – the speed of computing devices has been
continuously improving.
Multi-core processors, or CPUs, have contributed to faster
speeds. Intel engineers have also improved CPU speeds by using
QuickPath Interconnect, a technique which minimizes the
processor’s need to communicate directly with RAM or the hard
drive. Instead, the CPU contains a cache of frequently used data
for a particular program. An algorithm evaluates a program’s data
usage and determines which data should be temporarily stored in
the cache.
The hardware components that contribute to the speed of a
personal computer are the CPU, the motherboard, RAM, and the
hard disk. In most cases, these items can be replaced with newer,
faster components. The table below shows how each of these
contributes to the speed of a computer. Besides upgrading
hardware, there are many changes that can be made to the software
of a computer to make it faster.
44 | Information Systems for Business and Beyond (2019)
http://www.microsoft.com/atwork/maintenance/speed.aspx#fbid=BJ54lqHa0zy
Component
Speed
measured
by
Units Description
CPU Clock
speed
GHz
(billions of
cycles)
Hertz indicates the time it
takes to complete a cycle.
Motherboard Bus
speed MHz The speed at which data can
move across the bus.
RAM
Data
transfer
rate
Mb/s
(millions of
bytes per
second)
The time it takes for data to
be transferred from memory
to system measured in
Megabytes.
Hard Disk
Access
time
ms
(millisecond)
The time it takes for the drive
to locate the data to be
accessed.
Data
transfer
rate
MBit/s
The time it takes for data to
be transferred from disk to
system.
Other Computing Devices
A personal computer is designed to be a general-purpose device,
able to solve many different types of problems. As the technologies
of the personal computer have become more commonplace, many
of the components have been integrated into other devices that
previously were purely mechanical. The definition or description
of what defines a computer has changed. Portability has been an
important feature for most users. Here is an overview of some
trends in personal computing.
Chapter 2: Hardware | 45
MacBook Air
Portable Computers
Portable computing today
includes laptops, notebooks
and netbooks, many weighing
less than 4 pounds and
providing longer battery life.
The MacBook Air is a good
example of this: it weighs less
than three pounds and is only
0.68 inches thick!
Netbooks (short for Network
Books) are extremely light because they do not have a hard drive,
depending instead on the Internet “cloud” for data and application
storage. Netbooks depend on a Wi-Fi connection and can run Web
browsers as well as a word processor.
Smartphones
While cell phones were introduced in the 1970s, smartphones have
only been around for the past 20 years. As cell phones evolved
they gained a broader array of features and programs. Today’s
smartphones provide the user with telephone, email, location, and
calendar services, to name a few. They function as a highly mobile
computer, able to connect to the Internet through either cell
technology or Wi-Fi. Smartphones have revolutionized computing,
bringing the one feature PCs and laptops could not deliver, namely
mobility. Consider the following data regarding mobile computing 4:
4. [4]
46 | Information Systems for Business and Beyond (2019)
1. There are 3.7 billion global mobile Internet users as at January
2018.
2. Mobile devices influenced sales to the tune of over $1.4 trillion
in 2016.
3. Mobile commerce revenue in the U.S. is projected to be
$459.38 billion in 2018, and it is estimated to be $693.36 billion
by 2019.
4. By the end of 2018, over $1 trillion — or 75 percent — of
ecommerce sales in China will be done via mobile devices.
5. The average order value for online orders placed on
Smartphones in the first quarter of 2018 is $84.55 while the
average order value for orders placed on Tablets is $94.91.
6. Of the 2.79 billion active social media users in the world, 2.55
billion actively use their mobile devices for social media-
related activities.
7. 90 percent of the time spent on mobile devices is spent in
apps.
8. Mobile traffic is responsible for 52.2 percent of Internet traffic
in 2018 — compared to 50.3 percent from 2017.
9. While the total percentage of mobile traffic is more than
desktop, engagement is higher on desktop. 55.9 percent of
time spent on sites is by desktop users and 40.1 percent of time
spent on sites is by mobile users.
10. By 2020, mobile commerce will account for 45 percent of all e-
commerce activities — compared to 20.6 percent in 2016.
The Apple iPhone was introduced in January 2007 and went on
the market in June of that same year. Its ease of use and intuitive
interface made it an immediate success and solidified the future of
smartphones. The first Android phone was released in 2008 with
functionality similar to the iPhone.
Chapter 2: Hardware | 47
iPad Air
Tablet Computers
A tablet computer uses a
touch screen as its primary
input and is small enough and
light enough to be easily
transported. They generally
have no keyboard and are self-
contained inside a rectangular
case. Apple set the standard for
tablet computing with the
introduction of the iPad in 2010
using iOS, the operating system
of the iPhone. After the success
of the iPad, computer
manufacturers began to
develop new tablets that
utilized operating systems that
were designed for mobile devices, such as Android.
Global market share for tablets has changed since the early days
of Apple’s dominance. Today the iPad has about 25% of the global
market while Amazon Fire has 15% and Samsung Galaxy has 14%.
5 However, the popularity of tablets has declined sharply in recent
years.
Integrated Computing and Internet of Things
(IoT)
Along with advances in computers themselves, computing
5. [5]
48 | Information Systems for Business and Beyond (2019)
technology is being integrated into many everyday products. From
automobiles to refrigerators to airplanes, computing technology is
enhancing what these devices can do and is adding capabilities into
our every day lives thanks in part to IoT.
Internet of Things and the Cloud
The Internet of Things (IoT) is a network of billions of devices,
each with their own unique network address, around the world with
embedded electronics allowing them to connect to the Internet
for the purpose of collecting and sharing data, all without the
involvement of human beings.6
Objects ranging from a simple light bulb to a fitness band such
as FitBit to a driverless truck are all part of IoT thanks to the
processors inside them. A smartphone app can control and/or
communicate with each of these devices as well as others such as
electric garage door openers (for those who can’t recall if the door
has been closed), kitchen appliances (“Buy milk after work today.”),
thermostats such as Nest, home security, audio speakers, and the
feeding of pets.
Here are three of the latest ways that computing technologies are
being integrated into everyday products through IoT:
6. [6]
Chapter 2: Hardware | 49
https://pixabay.com/en/network-iot-internet-of-things-782707/
• How IoT Works
• The Smart House
• The Self-Driving Car
The Commoditization of the Personal
Computer
Over the past forty years, as the personal computer has gone from
technical marvel to part of everyday life, it has also become a
commodity. There is very little differentiation between computer
models and manufacturers, and the primary factor that controls
their sale is their price. Hundreds of manufacturers all over the
world now create parts for personal computers which are
purchased and assembled. As commodities, there are essentially
little or no differences between computers made by these different
companies. Profit margins for personal computers are minimal,
leading hardware developers to find the lowest-cost manufacturing
methods.
There is one brand of computer for which this is not the case
– Apple. Because Apple does not make computers that run on the
same open standards as other manufacturers, they can design and
manufacture a unique product that no one can easily copy. By
creating what many consider to be a superior product, Apple can
charge more for their computers than other manufacturers. Just
as with the iPad and iPhone, Apple has chosen a strategy of
differentiation, an attempt to avoid commoditization.
Summary
Information systems hardware consists of the components of digital
50 | Information Systems for Business and Beyond (2019)
https://www.youtube.com/watch?v=QSIPNhOiMoE
technology that you can touch. This chapter covered the
components that make up a personal computer, with the
understanding that the configuration of a personal computer is very
similar to that of any type of digital computing device. A personal
computer is made up of many components, most importantly the
CPU, motherboard, RAM, hard disk, removable media, and input/
output devices. Variations on the personal computer, such as the
smartphone, were also examined. Finally, commoditization of the
personal computer was addressed.
Study Questions
1. Write your own description of what the term information
systems hardware means.
2. What has lead to the shift toward mobility in computing?
3. What is the impact of Moore’s Law on the various hardware
components described in this chapter?
4. Write a one page summary of one of the items linked to in the
“Integrated Computing” section.
5. Explain why the personal computer is now considered a
commodity.
6. The CPU can also be thought of as the _____________ of
the computer.
7. List the units of measure for data storage in increasing order
from smallest to largest, kilobyte to yottabyte.
8. What is the bus of a computer?
9. Name two differences between RAM and a hard disk.
10. What are the advantages of solid-state drives over hard disks?
Chapter 2: Hardware | 51
Exercises
1. If you could build your own personal computer, what
components would you purchase? Put together a list of the
components you would use to create it, including a computer
case, motherboard, CPU, hard disk, RAM, and DVD drive. How
can you be sure they are all compatible with each other? How
much would it cost? How does this compare to a similar
computer purchased from a vendor such as Dell or HP?
2. Re-read the section on IoT, then find at least two scholarly
articles about IoT. Prepare a minimum of three slides that
address issues related to IoT. Be sure to give attribution to
your sources.
3. What is the current status of solid-state drives vs. hard disks?
Research online and compare prices, capacities, speed, and
durability. Again, be sure to give attribution to your sources.
Labs
1. Review the sidebar on the binary number system. Represent
the following decimal numbers in binary: 16, 100. Represent the
following binary numbers in decimal: 1011, 100100. Write the
decimal number 254 in an 8-bit byte.
2. Re-read the section on IoT, then look around your building
(dorm, apartment, or house) and make a list of possible
instances of IoTs. Be sure to list their location and likely
function.
1. Moore, G. E. (1965). Cramming more components onto
integrated circuits. Electronics Magazine, 4.
2. Huang, J. (2018, April 2). Move Over Moore’s Law: Make Room
52 | Information Systems for Business and Beyond (2019)
for Huang’s Law. IEEE Spectrum. Retrieved from
https://spectrum.ieee.org/view-from-the-valley/computing/
hardware/move-over-moores-law-make-way-for-huangs-
law↵
3. Wikipedia. (n.d.) Universal Serial Bus. Retrieved from
https://en.wikipedia.org/wiki/USB.
4. Stevens, J. (2017). Mobile Internet Statistics and Facts 2017.
Hosting Facts, August 17, 2017. Retrieved from
https://hostingfacts.com/internet-facts-stats-2016/
5. Statista. (2018). Global market share held by tablet vendors 4th
quarter 2017. Retrieved from https://www.statista.com/
statistics/276635/market-share-held-by-tablet-vendors/
6. Ranger, S. (2018, January 19). What is the IoT? ZDNet. Retrieved
from http://www.zdnet.com/article/what-is-the-internet-of-
things-everything-you-need-to-know-about-the-iot-right-
now/.
Chapter 2: Hardware | 53
Chapter 3: Software
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• define the term software;
• identify and describe the two primary categories of
software;
• describe the role ERP software plays in an
organization;
• describe cloud computing and its advantages and
disadvantages for use in an organization; and
• define the term open-source and identify its
primary characteristics.
Introduction
The second component of an information system is software, the
set of instructions that tells the hardware what to do. Software
is created by developers through the process of programming
(covered in more detail in Chapter 10). Without software, the
hardware would not be functional.
54 | Chapter 3: Software
Types of Software
Software can be broadly divided into two categories: operating
systems and application software. Operating systems manage the
hardware and create the interface between the hardware and the
user. Application software performs specific tasks such as word
processing, accounting, database management, video games, or
browsing the web.
Operating Systems
An operating system is first loaded into the computer by the
boot program, then it manages all of the programs in the computer,
including both programs native to the operating system such as
file and memory management and application software. Operating
systems provide you with these key functions:
1. managing the hardware resources of the computer;
2. providing the user-interface components;
Chapter 3: Software | 55
Linux Ubuntu desktop
3. providing a platform for software developers to write
applications.
All computing devices require an operating system. The most
popular operating systems for personal computers are: Microsoft
Windows, Apple’s Mac OS, and various versions of Linux.
Smartphones and tablets run operating systems as well, such as
iOS (Apple), Android (Google), Windows Mobile (Microsoft), and
Blackberry.
Microsoft provided the first operating system for the IBM-PC,
released in 1981. Their initial venture into a Graphical User Interface
(GUI) operating system, known as Windows, occurred in 1985.
Today’s Windows 10 supports the 64-bit Intel CPU. Recall that
“64-bit” indicates the size of data that can be moved within the
computer.
Apple introduced the Macintosh computer 1984 with the first
commercially successful GUI. Apple’s operating system for the
Macintosh is known as “Mac OS ” and also uses an Intel CPU
supporting 64-bit processing. Mac OS versions have been named
after mountains such as El Capitan, Sierra, and High Sierra.
Multitasking, virtual memory, and voice input have become
standard features of both operating systems.
The Linux operating system
is open source, meaning
individual developers are
allowed to make modifications
to the programming code.
Linux is a version of the Unix
operating. Unix runs on large
and expensive minicomputers.
Linux developer Linus Torvalds,
a professor in Finland and the creator of Linux, wanted to find a way
to make Unix run on less expensive personal computers. Linux has
many variations and now powers a large percentage of web servers
in the world.
56 | Information Systems for Business and Beyond (2019)
Sidebar: Why Is Microsoft Software So
Dominant in the Business World?
If you’ve worked in business, you may have noticed that almost
all computers in business run a version of Microsoft Windows.
However, in classrooms from elementary to college, there is almost
a balance between Macs and PCs. Why has this not extended into
the business world?
As discussed in Chapter 1, many businesses used IBM mainframe
computers back in the 1960s and 1970s. When businesses migrated
to the microcomputer (personal computer) market, they elected to
stay with IBM and chose the PC. Companies took the safe route,
invested in the Microsoft operating system and in Microsoft
software/applications.
Microsoft soon found itself with the dominant personal computer
operating system for businesses. As the networked PC began to
replace the mainframe computer, Microsoft developed a network
operating system along with a complete suite of programs focused
on business users. Today Microsoft Office in its various forms
controls 85% of the market. 1
Application Software
The second major category of software is application software.
1. [1]
Chapter 3: Software | 57
Image of Microsoft Excel
Application software is utilized directly today to accomplish a
specific goal such as word processing, calculations on a
spreadsheet, or surfing the Internet using your favorite browser.
The “Killer” App
When a new type of digital
device is invented, there are
generally a small group of
technology enthusiasts who
will purchase it just for the joy
of figuring out how it works. A
“killer” application is one that
becomes so essential that large
numbers of people will buy a
device just to run that application. For the personal computer, the
killer application was the spreadsheet.
The first spreadsheet was created by an MBA student at Harvard
University who tired of making repeated calculations to determine
the optimal result on a problem and decided to create a tool that
allowed the user to easily change values and recalculate formulas.
The result was the spreadsheet. Today’s dominant spreadsheet is
Microsoft Excel which still retains the basic functionality of the first
spreadsheet.
Productivity Software
Along with the spreadsheet, several other software applications
have become standard tools for the workplace. Known as
productivity software, these programs allow office employees to
complete their daily work efficiently. Many times these applications
58 | Information Systems for Business and Beyond (2019)
come packaged together, such as in Microsoft’s Office suite. Here is
a list of some of these applications and their basic functions:
• Word processing Users can create and edit documents using
this class of software. Functions include the ability to type and
edit text, format fonts and paragraphs, as well as add, move,
and delete text throughout the document. Tables and images
can be inserted. Documents can be saved in a variety of
electronic file formats with Microsoft Word’s DOCX being the
most popular. Documents can also be converted to other
formats such as Adobe’s PDF (Portable Document Format) or a
.TXT file.
• Spreadsheet This class of software provides a way to do
numeric calculations and analysis, displaying the result in
charts and graphs. The working area is divided into rows and
columns, where users can enter numbers, text, or formulas. It
is the formulas that make a spreadsheet powerful, allowing the
user to develop complex calculations that can change based on
the numbers entered. The most popular spreadsheet package
is Microsoft Excel, which saves its files in the XLSX format.
• Presentation Users can create slideshow presentations using
this class of software. The slides can be projected, printed, or
distributed to interested parties. Text, images, audio, and
visual can all be added to the slides. Microsoft’s PowerPoint is
the most popular software right now, saving its files in PPTX
format.
• Some office suites include other types of software. For
example, Microsoft Office includes Outlook, its e-mail
package, and OneNote, an information-gathering collaboration
tool. The professional version of Office also includes Microsoft
Access, a database package. (Databases are covered more in
Chapter 4.)
Microsoft popularized the idea of the office-software productivity
Chapter 3: Software | 59
bundle with their release of the Microsoft Office Suite. This package
continues to dominate the market and most businesses expect
employees to know how to use this software. However, many
competitors to Microsoft Office do exist and are compatible with
the file formats used by Microsoft (see table below). Microsoft also
offers a cloud-based version of their office suite named Microsoft
Office 365. Similar to Google Drive, this suite allows users to edit
and share documents online utilizing cloud-computing technology.
Utility Software and Programming Software
Utility software includes programs that allow you to fix or modify
your computer in some way. Examples include anti-malware
software and programs that totally remove software you no longer
want installed. These types of software packages were created to
fill shortcomings in operating systems. Many times a subsequent
release of an operating system will include these utility functions as
part of the operating system itself.
Programming software’s purpose is to produce software. Most of
60 | Information Systems for Business and Beyond (2019)
https://commons.wikimedia.org/wiki/User:Wgsimon
Screen shot of Tableau (click to
enlarge)
these programs provide developers with an environment in which
they can write the code, test it, and convert/compile it into the
format that can then be run on a computer. This software is typically
identified as the Integrated Development Environment (IDE) and is
provided free from the corporation that developed the
programming language that will be used to write the code.
Sidebar: “PowerPointed” to Death
As presentation software has
gained acceptance as the
primary method to formally
present information to a group
or class, the art of giving an
engaging presentation is
becoming rare. Many
presenters now just read the
bullet points in the
presentation and immediately bore those in attendance, who can
already read it for themselves. The real problem is not with
PowerPoint as much as it is with the person creating and presenting.
Author and chief evangelist Guy Kawasaki has developed the 10/20/
30 rule for Powerpoint users. Just remember: 10 slides, 20 minutes,
30 point font.”2 If you are determined to improve your PowerPoint
skills, read Presentation Zen by Garr Reynolds.
New digital presentation technologies are being developed that
go beyond Powerpoint. For example, Prezi uses a single canvas for
the presentation, allowing presenters to place text, images, and
2. [2]
Chapter 3: Software | 61
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/TABLUE
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/TABLUE
other media on the canvas, and then navigate between these objects
as they present. Tools such as Tableau allow users to analyze data in
depth and create engaging interactive visualizations.
Sidebar: I Own This Software, Right?
Well…
When you purchase software and install it on your computer, are
you the owner of that software? Technically, you are not! When you
install software, you are actually just being given a license to use it.
When you first install a package, you are asked to agree to the terms
of service or the license agreement. In that agreement, you will find
that your rights to use the software are limited. For example, in
the terms of the Microsoft Office software license, you will find
the following statement: “This software is licensed, not sold. This
agreement only gives you some rights to use the features included
in the software edition you licensed.”
For the most part, these restrictions are what you would expect.
You cannot make illegal copies of the software and you may not use
it to do anything illegal. However, there are other, more unexpected
terms in these software agreements. For example, many software
agreements ask you to agree to a limit on liability. Again, from
Microsoft: “Limitation on and exclusion of damages. You can
recover from Microsoft and its suppliers only direct damages up to
the amount you paid for the software. You cannot recover any other
damages, including consequential, lost profits, special, indirect or
incidental damages.” This means if a problem with the software
causes harm to your business, you cannot hold Microsoft or the
supplier responsible for damages.
62 | Information Systems for Business and Beyond (2019)
Applications for the Enterprise
As the personal computer proliferated inside organizations, control
over the information generated by the organization began
splintering. For instance, the customer service department creates
a customer database to keep track of calls and problem reports,
and the sales department also creates a database to keep track of
customer information. Which one should be used as the master
list of customers? Or perhaps someone in sales might create a
spreadsheet to calculate sales revenue, while someone in finance
creates a different revenue document that meets the needs of their
department, but calculates revenue differently. The two
spreadsheets will report different revenue totals. Which one is
correct? And who is managing all of this information?
Enterprise Resource Planning
In the 1990s
the need to bring an organization’s information back under
centralized control became more apparent. The Enterprise
Resource Planning (ERP) system (sometimes just called enterprise
software) was developed to bring together an entire organization
within one program. ERP software utilizes a central database that
is implemented throughout the entire organization. Here are some
key points about ERP.
• A software application. ERP is an application that is used by
Chapter 3: Software | 63
many of an organization’s employees.
• Utilizes a central database. All users of the ERP edit and save
their information from the same data source. For example, this
means there is only one customer table in the database, there
is only one sales (revenue) table in the database, etc.
• Implemented organization-wide. ERP systems include
functionality that covers all of the essential components of a
business. An organization can purchase modules for its ERP
system that match specific needs such as order entry,
manufacturing, or planning.
ERP systems were originally marketed to large corporations.
However, as more and more large companies began installing them,
ERP vendors began targeting mid-sized and even smaller
businesses. Some of the more well-known ERP systems include
those from SAP, Oracle, and Microsoft.
In order to effectively implement an ERP system in an
organization, the organization must be ready to make a full
commitment. All aspects of the organization are affected as old
systems are replaced by the ERP system. In general, implementing
an ERP system can take two to three years and cost several million
dollars.
So why implement an ERP system? If done properly, an ERP
system can bring an organization a good return on their investment.
By consolidating information systems across the enterprise and
using the software to enforce best practices, most organizations
see an overall improvement after implementing an ERP. Business
processes as a form of competitive advantage will be covered in
Chapter 9.
64 | Information Systems for Business and Beyond (2019)
Customer Relationship Management
A Customer Relationship Management (CRM) system manages an
organization’s customers. In today’s environment, it is important to
develop relationships with your customers, and the use of a well-
designed CRM can allow a business to personalize its relationship
with each of its customers. Some ERP software systems include
CRM modules. An example of a well-known CRM package is
Salesforce.
Supply Chain Management
Supply Chain
Many organizations must deal with the complex task of managing
their supply chains. At its simplest, a supply chain is the linkage
between an organization’s suppliers, its manufacturing facilities,
and the distributors of its products. Each link in the chain has a
multiplying effect on the complexity of the process. For example,
if there are two suppliers, one manufacturing facility, and two
distributors, then the number of links to manage = 4 ( 2 x 1 x
2 ). However, if two more suppliers are added, plus another
manufacturing facility, and two more distributors, then the number
of links to manage = 32 ( 4 x 2 x 4 ). Also, notice in the above
illustration that all arrows have two heads, indicating that
information flows in both directions. Suppliers are part of a
business’s supply chain. They provide information such as price,
size, quantity, etc. to the business. In turn, the business provides
information such as quantity on hand at every store to the supplier.
The key to successful supply chain management is the information
system.
Chapter 3: Software | 65
https://commons.wikimedia.org/wiki/Category:Supply_chain#/media/File:A_company%27s_supply_chain_(en)
A Supply Chain Management (SCM) system handles the
interconnection between these links as well as the inventory of
the products in their various stages of development. As discussed
previously much of Walmart’s success has come from its ability
to identify and control the supply chain for its products. Walmart
invested heavily in their information system so they could
communicate with their suppliers and manage the thousands of
products they sell.
Walmart realized in the 1980s that the key to their success was
information systems. Specifically, they needed to manage their
complex supply chain with its thousands of suppliers, thousands
of retail outlets, and millions of customers. Their success came
from being able to integrate information systems to every entity
(suppliers, warehouses, retail stores) through the sharing of sales
and inventory data. Take a moment to study the diagram
above…look for the double-headed arrow. Notice that data flows
down the supply chain from suppliers to retail stores. But it also
flows up the supply chain, back to the suppliers so they can be up to
date regarding production and shipping.
Mobile Applications
Just as with the personal computer, mobile devices such as
66 | Information Systems for Business and Beyond (2019)
smartphones and electronic tablets also have operating systems and
application software. These mobile devices are in many ways just
smaller versions of personal computers. A mobile app is a software
application designed to run specifically on a mobile device.
As shown in Chapter 2, smartphones are becoming a dominant
form of computing, with more smartphones being sold than
personal computers. A greater discussion of PC and smartphone
sales appears in Chapter 13, along with statistics regarding the
decline in tablet sales. Businesses have adjusted to this trend by
increasing their investment in the development of apps for mobile
devices. The number of mobile apps in the Apple App Store has
increased from zero in 2008 to over 2 million in 2017.3
Building a mobile app will will be covered in Chapter 10.
Cloud Computing
Historically, for software to run on a computer an individual copy
of the software had to be installed on the computer. The concept of
“cloud” computing changes this.
Cloud Computing
The “cloud” refers to applications, services, and data storage
located on the Internet. Cloud service providers rely on giant server
farms and massive storage devices that are connected via the
Internet. Cloud computing allows users to access software and data
storage services on the Internet.
You probably already use cloud computing in some form. For
example, if you access your e-mail via your web browser, you are
3. [3]
Chapter 3: Software | 67
using a form of cloud computing if you are using Google Drive’s
applications. While these are free versions of cloud computing,
there is big business in providing applications and data storage over
the web. Cloud computing is not limited to web applications. It can
also be used for services such as audio or video streaming.
Advantages of Cloud Computing
• No software to install or upgrades to maintain.
• Available from any computer that has access to the Internet.
• Can scale to a large number of users easily.
• New applications can be up and running very quickly.
• Services can be leased for a limited time on an as-needed
basis.
• Your information is not lost if your hard disk crashes or your
laptop is lost or stolen.
• You are not limited by the available memory or disk space on
your computer.
Disadvantages of Cloud Computing
• Your information is stored on someone else’s computer.
• You must have Internet access to use it.
• You are relying on a third-party to provide these services.
Cloud computing has the ability to really impact how
organizations manage technology. For example, why is an IT
department needed to purchase, configure, and manage personal
computers and software when all that is really needed is an Internet
connection?
68 | Information Systems for Business and Beyond (2019)
Using a Private Cloud
Many organizations are understandably nervous about giving up
control of their data and some of their applications by using cloud
computing. But they also see the value in reducing the need for
installing software and adding disk storage to local computers. A
solution to this problem lies in the concept of a private cloud. While
there are various models of a private cloud, the basic idea is for
the cloud service provider to section off web server space for a
specific organization. The organization has full control over that
server space while still gaining some of the benefits of cloud
computing.
Virtualization
Virtualization is the process of using software to simulate a
computer or some other device. For example, using virtualization
a single physical computer can perform the functions of several
virtual computers, usually referred to as Virtual Machines (VMs).
Organizations implement virtual machines in an effort to reduce
the number of physical servers needed to provide the necessary
services to users. This reduction in the number of physical servers
also reduces the demand for electricity to run and cool the physical
servers. For more detail on how virtualization works, see this
informational page from VMWare.
Chapter 3: Software | 69
http://www.vmware.com/virtualization/virtualization-basics/how-virtualization-works.html
http://www.vmware.com/virtualization/virtualization-basics/how-virtualization-works.html
Example program “Hello World”
written in Java
Software Creation
Modern software applications
are written using a
programming language such as
Java, Visual C, C++, Python, etc.
A programming language
consists of a set of commands
and syntax that can be
organized logically to execute
specific functions. Using this language a programmer writes a
program (known as source code) that can then be compiled into
machine-readable form, the ones and zeroes necessary to be
executed by the CPU. Languages such as HTML and Javascript are
used to develop web pages.
Open-Source Software
When the personal computer was first released, computer
enthusiasts banded together to build applications and solve
problems. These computer enthusiasts were motivated to share any
programs they built and solutions to problems they found. This
collaboration enabled them to more quickly innovate and fix
problems.
As software began to become a business, however, this idea of
sharing everything fell out of favor with many developers. When a
program takes hundreds of hours to develop, it is understandable
that the programmers do not want to just give it away. This led to a
new business model of restrictive software licensing which required
payment for software, a model that is still dominant today. This
model is sometimes referred to as closed source, as the source code
is not made available to others.
70 | Information Systems for Business and Beyond (2019)
There are many, however, who feel that software should not be
restricted. Just as with those early hobbyists in the 1970s, they feel
that innovation and progress can be made much more rapidly if
they share what has been learned. In the 1990s, with Internet access
connecting more people together, the open-source movement
gained steam.
Open Office Suite
Open-source software makes the source code available for
anyone to copy and use. For most people having access to the
source code of a program does little good since it is challenging to
modify existing programming code. However, open-source software
is also available in a compiled format that can be downloaded and
installed. The open-source movement has led to the development
of some of the most used software in the world such as the Firefox
browser, the Linux operating system, and the Apache web server.
Many businesses are wary of open-source software precisely
because the code is available for anyone to see. They feel that this
increases the risk of an attack. Others counter that this openness
actually decreases the risk because the code is exposed to
thousands of programmers who can incorporate code changes to
quickly patch vulnerabilities.
There are thousands of open-source applications available for
download. For example, you can get the productivity suite from
Chapter 3: Software | 71
Open Office. One good place to search for open-source software is
sourceforge.net, where thousands of programs are available for free
download.
Summary
Software gives the instructions that tell the hardware what to do.
There are two basic categories of software: operating systems and
applications. Operating systems interface with the computer
hardware and make system resources available. Application
software allows users to accomplish specific tasks such as word
processing, presentations, or databases. This group is also referred
to as productivity software. An ERP system stores all data in a
centralized database that is made accessible to all programs and
departments across the organization. Cloud computing provides
access to software and databases from the Internet via a web
browser. Developers use various programming languages to develop
software.
Study Questions
1. Develop your own definition of software being certain to
explain the key terms.
2. What are the primary functions of an operating system?
3. Which of the following are operating systems and which are
applications: Microsoft Excel, Google Chrome, iTunes,
Windows, Android, Angry Birds.
4. What is your favorite software application? What tasks does it
help you accomplish?
72 | Information Systems for Business and Beyond (2019)
http://sourceforge.net/
5. How would you categorize the software that runs on mobile
devices? Break down these apps into at least three basic
categories and give an example of each.
6. What does an ERP system do?
7. What is open-source software? How does it differ from closed-
source software? Give an example of each.
8. What does a software license grant to the purchaser of the
software?
Exercises
1. Find a case study online about the implementation of an ERP
system. Was it successful? How long did it take? Does the case
study tell you how much money the organization spent?
2. If you were running a small business with limited funds for
information technology, would you consider using cloud
computing? Find some web-based resources that support your
decision.
3. Go to sourceforge.net and review their most downloaded
software applications. Report on the variety of applications you
find. Then pick one that interests you and report back on what
it does, the kind of technical support offered, and the user
reviews.
4. Review this article on the security risks of open-source
software. Write a short analysis giving your opinion on the
different risks discussed.
5. List three examples of programming languages? What features
in each language makes it useful to developers?
Chapter 3: Software | 73
http://sourceforge.net/
http://www.zdnet.com/six-open-source-security-myths-debunked-and-eight-real-challenges-to-consider-7000014225
Lab
1. Download Apache Open Office and create a document. Note: If
your computer does not have Java Runtime Environment (JRE)
32-bit (x86) installed, you will need to download it first from
this site.Open Office runs only in 32-bit (x86) mode. Here is a
link to the Getting Started documentation for Open Office.
How does it compare to Microsoft Office? Does the fact that
you got it for free make it feel less valuable?
1. Statista. (2017). Microsoft – Statistics & Facts. Retrieved from
https://www.statista.com/topics/823/microsoft/
2. Kawasaki, G. (n.d.). The 10/20/30 Rules for PowerPoint.
Retrieved from https://guykawasaki.com/the_102030_rule/.↵
3. Statista. (2018). Number of apps in Apple App Store July 2008 to
January 2017. Retrieved from https:https://www.statista.com/
statistics/263795/number-of-available-apps-in-the-apple-
app-store/.↵
74 | Information Systems for Business and Beyond (2019)
http://www.openoffice.org/download
http://www.oracle.com/technetwork/java/javase/downloads/jre8-downloads-2133155.html
http://wiki.openoffice.org/w/images/3/3c/0108GS33-GettingStartedWithBase
Chapter 4: Data and
Databases
Learning Objectives
Upon successful completion of this chapter, you
will be able to:
• Describe the differences between data,
information, and knowledge;
• Describe why database technology must be
used for data resource management;
• Define the term database and identify the
steps to creating one;
• Describe the role of a database
management system;
• Describe the characteristics of a data
warehouse; and
• Define data mining and describe its role in
an organization.
Chapter 4: Data and Databases | 75
Introduction
You have already been introduced to the first two components of
information systems: hardware and software. However, those two
components by themselves do not make a computer useful. Imagine
if you turned on a computer, started the word processor, but could
not save a document. Imagine if you opened a music player but
there was no music to play. Imagine opening a web browser but
there were no web pages. Without data, hardware and software
are not very useful! Data is the third component of an information
system.
Data, Information, and Knowledge
There have been many definitions and theories about data,
information, and knowledge. The three terms are often used
interchangeably, although they are distinct in nature. We define
and illustrate the three terms from the perspective of information
systems.
76 | Information Systems for Business and Beyond (2019)
Data are the raw facts, and may
be devoid of context or intent. For example, a sales order of
computers is a piece of data. Data can be quantitative or qualitative.
Quantitative data is numeric, the result of a measurement, count,
or some other mathematical calculation. Qualitative data is
descriptive. “Ruby Red,” the color of a 2013 Ford Focus, is an example
of qualitative data. A number can be qualitative too: if I tell you my
favorite number is 5, that is qualitative data because it is descriptive,
not the result of a measurement or mathematical calculation.
Information is processed data that possess context, relevance, and
purpose. For example, monthly sales calculated from the collected
daily sales data for the past year are information. Information
typically involves the manipulation of raw data to obtain an
indication of magnitude, trends, in patterns in the data for a
purpose.
Knowledge in a certain area is human beliefs or perceptions about
relationships among facts or concepts relevant to that area. For
example, the conceived relationship between the quality of goods
Chapter 4: Data and Databases | 77
and the sales is knowledge. Knowledge can be viewed as
information that facilitates action.
Once we have put our data into context, aggregated and analyzed
it, we can use it to make decisions for our organization. We can
say that this consumption of information produces knowledge. This
knowledge can be used to make decisions, set policies, and even
spark innovation.
Explicit knowledge typically refers to knowledge that can be
expressed into words or numbers. In contrast, tacit knowledge
includes insights and intuitions, and is difficult to transfer to
another person by means of simple communications.
Evidently, when information or explicit knowledge is captured
and stored in computer, it would become data if the context or
intent is devoid.
The final step up the information ladder is the step from
knowledge (knowing a lot about a topic) to wisdom. We can say
that someone has wisdom when they can combine their knowledge
and experience to produce a deeper understanding of a topic. It
often takes many years to develop wisdom on a particular topic, and
requires patience.
Big Data
Almost all software programs require data to do anything useful.
For example, if you are editing a document in a word processor
such as Microsoft Word, the document you are working on is the
data. The word-processing software can manipulate the data: create
a new document, duplicate a document, or modify a document.
Some other examples of data are: an MP3 music file, a video file, a
spreadsheet, a web page, a social media post, and an e-book.
Recently, big data has been capturing the attention of all types of
organizations. The term refers to such massively large data sets that
conventional data processing technologies do not have sufficient
78 | Information Systems for Business and Beyond (2019)
power to analyze them. For example, Walmart must process millions
customer transactions every hour across the world. Storing and
analyzing that much data is beyond the power of traditional data
management tools. Understanding and developing the best tools
and techniques to manage and analyze these large data sets are a
problem that governments and businesses alike are trying to solve.
Databases
The goal of many information systems is to transform data into
information in order to generate knowledge that can be used for
decision making. In order to do this, the system must be able to take
data, allow the user to put the data into context, and provide tools
for aggregation and analysis. A database is designed for just such a
purpose.
Why Databases?
Data is a valuable resource in the organization. However, many
people do not know much about database technology, but use non-
database tools, such as Excel spreadsheet or Word document, to
store and manipulate business data, or use poorly designed
databases for business processes. As a result, the data are
redundant, inconsistent, inaccurate, and corrupted. For a small
data set, the use of non-database tools such as spreadsheet may
not cause serious problem. However, for a large organization,
corrupted data could lead to serious errors and destructive
consequences. The common defects in data resources management
are explained as follows.
(1) No control of redundant data
People often keep redundant data for convenience. Redundant
Chapter 4: Data and Databases | 79
data could make the data set inconsistent. We use an illustrative
example to explain why redundant data are harmful. Suppose the
registrar’s office has two separate files that store student data: one
is the registered student roster which records all students who have
registered and paid the tuition, and the other is student grade roster
which records all students who have received grades.
As you can see from the two spreadsheets, this data management
system has problems. The fact that “Student 4567 is Mary Brown,
and her major is Finance” is stored more than once. Such
occurrences are called data redundancy. Redundant data often
make data access convenient, but can be harmful. For example, if
Mary Brown changes her name or her major, then all her names and
major stored in the system must be changed altogether. For small
data systems, such a problem looks trivial. However, when the data
system is huge, making changes to all redundant data is difficult if
not impossible. As a result of data redundancy, the entire data set
can be corrupted.
(2) Violation of data integrity
Data integrity means consistency among the stored data. We
use the above illustrative example to explain the concept of data
integrity and how data integrity can be violated if the data system is
flawed. You can find that Alex Wilson received a grade in MKT211;
however, you can’t find Alex Wilson in the student roster. That is,
the two rosters are not consistent. Suppose we have a data integrity
control to enforce the rules, say, “no student can receive a grade
unless she/he has registered and paid tuition”, then such a violation
of data integrity can never happen.
(3) Relying on human memory to store and to search needed data
The third common mistake in data resource management is the
80 | Information Systems for Business and Beyond (2019)
over use of human memory for data search. A human can remember
what data are stored and where the data are stored, but can also
make mistakes. If a piece of data is stored in an un-remembered
place, it has actually been lost. As a result of relying on human
memory to store and to search needed data, the entire data set
eventually becomes disorganized.
To avoid the above common flaws in data resource management,
database technology must be applied. A database is an organized
collection of related data. It is an organized collection, because in
a database, all data is described and associated with other data.
For the purposes of this text, we will only consider computerized
databases.
Though not good for replacing databases, spreadsheets can be
ideal tools for analyzing the data stored in a database. A spreadsheet
package can be connected to a specific table or query in a database
and used to create charts or perform analysis on that data.
Data Models and Relational Databases
Databases can be organized in many different ways by using
different models. The data model of a database is the logical
structure of data items and their relationships. There have been
several data models. Since the 1980s, the relational data model
has been popularized. Currently, relational database systems are
commonly used in business organizations with few exceptions. A
relational data model is easy to understand and use.
In a relational database, data is organized into tables (or relations).
Each table has a set of fields which define the structure of the data
stored in the table. A record is one instance of a set of fields in a
table. To visualize this, think of the records as the rows (or tuple) of
the table and the fields as the columns of the table.
In the example below, we have a table of student data, with each
row representing a student record , and each column representing
Chapter 4: Data and Databases | 81
one filed of the student record. A special filed or a combination
of fields that determines the unique record is called primary key
(or key). A key is usually the unique identification number of the
records.
Rows and columns in a table
Designing a Database
Suppose a university wants to create a School Database to track
data. After interviewing several people, the design team learns that
the goal of implementing the system is to give better insight into
students’ performance and academic resources. From this, the
team decides that the system must keep track of the students, their
grades, courses, and classrooms. Using this information, the design
team determines that the following tables need to be created:
• STUDENT: student name, major, and e-mail.
• COURSE: course title, enrollment capacity.
• GRADE: this table will correlate STUDENT with COURSE,
allowing us to have any given student to enroll multiple
courses and to receive a grade for each course.
• CLASSROOM: classroom location, classroom type, and
classroom capacity
82 | Information Systems for Business and Beyond (2019)
Now that the design team has determined which tables to create,
they need to define the specific data items that each table will hold.
This requires identifying the fields that will be in each table. For
example, course title would be one of the fields in the COURSE
table. Finally, since this will be a relational database, every table
should have a field in common with at least one other table (in other
words, they should have relationships with each other).
A primary key must be selected for each table in a relational
database. This key is a unique identifier for each record in the table.
For example, in the STUDENT table, it might be possible to use the
student name as a way to identify a student. However, it is more
than likely that some students share the same name. A student’s
e-mail address might be a good choice for a primary key, since e-
mail addresses are unique. However, a primary key cannot change,
so this would mean that if students changed their e-mail address we
would have to remove them from the database and then re-insert
them – not an attractive proposition. Our solution is to use student
ID as the primary key of the STUDENT table. We will also do this
for the COURSE table and the CLASSROOM table. This solution is
quite common and is the reason you have so many IDs! The primary
key of table can be just one field, but can also be a combination of
two or more fields. For example, the combination of StudentID and
CourseID the GRADE table can be the primary key of the GRADE
table, which means that a grade is received by a particular student
for a specific course.
The next step of design of database is to identify and make the
relationships between the tables so that you can pull the data
together in meaningful ways. A relationship between two tables is
implemented by using a foreign key. A foreign key is a field in one
table that connects to the primary key data in the original table. For
example, ClassroomID in the COURSE table is the foreign key that
connects to the primary key ClassroomID in the CLASSROOM table.
With this design, not only do we have a way to organize all of the
data we need and have successfully related all the table together to
Chapter 4: Data and Databases | 83
Tables of the
student
database
meet the requirements, but have also prevented invalid data from
being entered into the database. You can see the final database
design in the figure below:
Normalization
When designing a database, one important concept to understand
is normalization. In simple terms, to normalize a database means to
design it in a way that: 1) reduces data redundancy; and 2) ensure
data integrity.
In the School Database design, the design team worked to achieve
these objectives. For example, to track grades, a simple (and wrong)
solution might have been to create a Student field in the COURSE
table and then just list the names of all of the students there.
However, this design would mean that if a student takes two or
more courses, then his or her data would have to be entered twice
or more times. This means the data are redundant. Instead, the
designers solved this problem by introducing the GRADE table.
In this design, when a student registers into the school system
before taking a course, we first must add the student to the
STUDENT table, where their ID, name, major, and e-mail address
are entered. Now we will add a new entry to denote that the
student takes a specific course. This is accomplished by adding a
record with the StudentD and the CourseID in the GRADE table.
If this student takes a second course, we do not have to duplicate
the entry of the student’s name, major, and e-mail; instead, we
84 | Information Systems for Business and Beyond (2019)
only need to make another entry in the GRADE table of the second
course’s ID and the student’s ID.
The design of the School database also makes it simple to change
the design without major modifications to the existing structure.
For example, if the design team were asked to add functionality
to the system to track instructors who teach the courses, we could
easily accomplish this by adding a PROFESSOR table (similar to the
STUDENT table) and then adding a new field to the COURSE table
to hold the professors’ ID.
Data Types
When defining the fields in a database table, we must give each field
a data type. For example, the field StudentName is text string, while
EnrollmentCapacity is number. Most modern databases allow for
several different data types to be stored. Some of the more common
data types are listed here:
• Text: for storing non-numeric data that is brief, generally
under 256 characters. The database designer can identify the
maximum length of the text.
• Number: for storing numbers. There are usually a few different
number types that can be selected, depending on how large
the largest number will be.
• Boolean: a data type with only two possible values, such as 0 or
1, “true” or “false”, “yes” or “no”.
• Date/Time: a special form of the number data type that can be
interpreted as a number or a time.
• Currency: a special form of the number data type that formats
all values with a currency indicator and two decimal places.
• Paragraph Text: this data type allows for text longer than 256
characters.
• Object: this data type allows for the storage of data that cannot
Chapter 4: Data and Databases | 85
Open Office Database Management
System
be entered via keyboard, such as an image or a music file.
There are two important reasons that we must properly define
the data type of a field. First, a data type tells the database what
functions can be performed with the data. For example, if we wish
to perform mathematical functions with one of the fields, we must
be sure to tell the database that the field is a number data type. For
example, we can subtract the course capacity from the classroom
capacity to find out the number of extra seats available.
The second important reason to define data type is so that the
proper amount of storage space is allocated for our data. For
example, if the StudentName field is defined as a Text(50) data type,
this means 50 characters are allocated for each name we want to
store. If a student’s name is longer than 50 characters, the database
will truncate it.
Database Management Systems
To the computer, a database
looks like one or more files. In
order for the data in the
database to be stored, read,
changed, added, or removed, a
software program must access
it. Many software applications
have this ability: iTunes can
read its database to give you a listing of its songs (and play the
songs); your mobile-phone software can interact with your list of
contacts. But what about applications to create or manage a
database? What software can you use to create a database, change
a database’s structure, or simply do analysis? That is the purpose of
a category of software applications called database management
systems (DBMS).
86 | Information Systems for Business and Beyond (2019)
DBMS packages generally provide an interface to view and change
the design of the database, create queries, and develop reports.
Most of these packages are designed to work with a specific type
of database, but generally are compatible with a wide range of
databases.
A database that can only be used by a single user at a time is not
going to meet the needs of most organizations. As computers have
become networked and are now joined worldwide via the Internet,
a class of database has emerged that can be accessed by two, ten,
or even a million people. These databases are sometimes installed
on a single computer to be accessed by a group of people at a
single location. Other times, they are installed over several servers
worldwide, meant to be accessed by millions. In enterprises the
relational DBMS are built and supported by companies such as
Oracle, Microsoft SQL Server, and IBM Db2. The open-source
MySQL is also an enterprise database.
Microsoft Access and Open Office Base are examples of personal
database-management systems. These systems are primarily used
to develop and analyze single-user databases. These databases are
not meant to be shared across a network or the Internet, but are
instead installed on a particular device and work with a single user
at a time. Apache OpenOffice.org Base (see screen shot) can be
used to create, modify, and analyze databases in open-database
(ODB) format. Microsoft’s Access DBMS is used to work with
databases in its own Microsoft Access Database format. Both Access
and Base have the ability to read and write to other database
formats as well.
Structured Query Language
Once you have a database designed and loaded with data, how
will you do something useful with it? The primary way to work
Chapter 4: Data and Databases | 87
with a relational database is to use Structured Query Language,
SQL (pronounced “sequel,” or simply stated as S-Q-L). Almost all
applications that work with databases (such as database
management systems, discussed below) make use of SQL as a way to
analyze and manipulate relational data. As its name implies, SQL is a
language that can be used to work with a relational database. From
a
simple request for data to a complex update operation, SQL is a
mainstay of programmers and database administrators. To give you
a taste of what SQL might look like, here are a couple of examples
using our School database:
The following query will retrieve the major of student John
Smith from the STUDENT table:
SELECT StudentMajor
FROM STUDENT
WHERE StudentName = ‘John Smith’;
The following query will list the total number of students in
the STUDENT table:
SELECT COUNT(*)
FROM STUDENT;
SQL can be embedded in many computer languages that are used
to develop platform-independent web-based applications. An in-
depth description of how SQL works is beyond the scope of this
introductory text, but these examples should give you an idea of
the power of using SQL to manipulate relational databases. Many
DBMS, such as Microsoft Access, allow you to use QBE (Query-by-
Example), a graphical query tool, to retrieve data though visualized
commands. QBE generates SQL for you, and is easy to use. In
comparison with SQL, QBE has limited functionalities and is unable
to work without the DBMS environment.
88 | Information Systems for Business and Beyond (2019)
Other Types of Databases
The relational database model is the most used database model
today. However, many other database models exist that provide
different strengths than the relational model. The hierarchical
database model, popular in the 1960s and 1970s, connected data
together in a hierarchy, allowing for a parent/child relationship
between data. The document-centric model allowed for a more
unstructured data storage by placing data into “documents” that
could then be manipulated.
Perhaps the most interesting new development is the concept
of NoSQL (from the phrase “not only SQL”). NoSQL arose from the
need to solve the problem of large-scale databases spread over
several servers or even across the world. For a relational database
to work properly, it is important that only one person be able to
manipulate a piece of data at a time, a concept known as record-
locking. But with today’s large-scale databases (think Google and
Amazon), this is just not possible. A NoSQL database can work with
data in a looser way, allowing for a more unstructured environment,
communicating changes to the data over time to all the servers that
are part of the database.
As stated earlier, the relational database model does not scale
well. The term scale here refers to a database getting larger
and larger, being distributed on a larger number of computers
connected via a network. Some companies are looking to provide
large-scale database solutions by moving away from the relational
model to other, more flexible models. For example, Google now
offers the App Engine Datastore, which is based on NoSQL.
Developers can use the App Engine Datastore to develop
applications that access data from anywhere in the world.
Amazon.com offers several database services for enterprise use,
including Amazon RDS, which is a relational database service, and
Amazon DynamoDB, a NoSQL enterprise solution.
Chapter 4: Data and Databases | 89
Sidebar: What Is Metadata?
The term metadata can be understood as “data about data.”
Examples of metadata of database are:
• number of records
• data type of field
• size of field
• description of field
• default value of field
• rules of use.
When a database is being designed, a “data dictionary” is created to
hold the metadata, defining the fields and structure of the database.
Finding Value in Data: Business Intelligence
With the rise of Big Data and a myriad of new tools and techniques
at their disposal, businesses are learning how to use information to
their advantage. The term business intelligence is used to describe
the process that organizations use to take data they are collecting
and analyze it in the hopes of obtaining a competitive advantage.
Besides using their own data, stored in data warehouses (see below),
firms often purchase information from data brokers to get a big-
picture understanding of their industries and the economy. The
results of these analyses can drive organizational strategies and
provide competitive advantage.
90 | Information Systems for Business and Beyond (2019)
Data Visualization
Data visualization is the graphical representation of information and
data. These graphical representations (such as charts, graphs, and
maps) can quickly summarize data in a way that is more intuitive
and can lead to new insights and understandings. Just as a picture
of a landscape can convey much more than a paragraph of text
attempting to describe it, graphical representation of data can
quickly make meaning of large amounts of data. Many times,
visualizing data is the first step towards a deeper analysis and
understanding of the data collected by an organization. Examples of
data visualization software include Tableau and Google Data Studio.
Data Warehouses
As organizations have begun to utilize databases as the centerpiece
of their operations, the need to fully understand and leverage the
data they are collecting has become more and more apparent.
However, directly analyzing the data that is needed for day-to-day
operations is not a good idea; we do not want to tax the operations
of the company more than we need to. Further, organizations also
want to analyze data in a historical sense: How does the data we
have today compare with the same set of data this time last month,
or last year? From these needs arose the concept of the data
warehouse.
The concept of the data warehouse is simple: extract data from
one or more of the organization’s databases and load it into the
data warehouse (which is itself another database) for storage and
analysis. However, the execution of this concept is not that simple.
A data warehouse should be designed so that it meets the following
criteria:
• It uses non-operational data. This means that the data
Chapter 4: Data and Databases | 91
Data Warehouse Process (top-down)
warehouse is using a copy of data from the active databases
that the company uses in its day-to-day operations, so the
data warehouse must pull data from the existing databases on
a regular, scheduled basis.
• The data is time-variant. This means that whenever data is
loaded into the data warehouse, it receives a time stamp,
which allows for comparisons between different time periods.
• The data is standardized. Because the data in a data warehouse
usually comes from several different sources, it is possible that
the data does not use the same definitions or units. For
example, each database uses its own format for dates (e.g.,
mm/dd/yy, or dd/mm/yy, or yy/mm/dd, etc.). In order for
the data warehouse to match up dates, a standard date format
would have to be agreed upon and all data loaded into the data
warehouse would have to be converted to use this standard
format. This process is called extraction-transformation-load
(ETL).
There are two primary schools of thought when designing a data
warehouse: bottom-up and top-down. The bottom-up approach
starts by creating small data warehouses, called data marts, to solve
specific business problems. As these data marts are created, they
can be combined into a larger data warehouse. The top- down
approach suggests that we should start by creating an enterprise-
wide data warehouse and then, as specific business needs are
identified, create smaller data marts from the data warehouse.
Benefits of Data
Warehouses
Organizations find data
warehouses quite beneficial for a number of reasons:
92 | Information Systems for Business and Beyond (2019)
• The process of developing a data warehouse forces an
organization to better understand the data that it is currently
collecting and, equally important, what data is not being
collected.
• A data warehouse provides a centralized view of all data being
collected across the enterprise and provides a means for
determining data that is inconsistent.
• Once all data is identified as consistent, an organization can
generate “one version of the truth”. This is important when the
company wants to report consistent statistics about itself,
such as revenue or number of employees.
• By having a data warehouse, snapshots of data can be taken
over time. This creates a historical record of data, which allows
for an analysis of trends.
• A data warehouse provides tools to combine data, which can
provide new information and analysis.
Data Mining and Machine Learning
Data mining is the process of analyzing data to find previously
unknown and interesting trends, patterns, and associations in order
to make decisions. Generally, data mining is accomplished through
automated means against extremely large data sets, such as a data
warehouse. Some examples of data mining include:
• An analysis of sales from a large grocery chain might
determine that milk is purchased more frequently the day after
it rains in cities with a population of less than 50,000.
• A bank may find that loan applicants whose bank accounts
show particular deposit and withdrawal patterns are not good
credit risks.
• A baseball team may find that collegiate baseball players with
specific statistics in hitting, pitching, and fielding make for
Chapter 4: Data and Databases | 93
more successful major league players.
One data mining method that an organization can use to do these
analyses is called machine learning. Machine learning is used to
analyze data and build models without being explicitly programmed
to do so. Two primary branches of machine learning exist:
supervised learning and unsupervised learning.
Supervised learning occurs when an organization has data about
past activity that has occurred and wants to replicate it. For
example, if they want to create a new marketing campaign for a
particular product line, they may look at data from past marketing
campaigns to see which of their consumers responded most
favorably. Once the analysis is done, a machine learning model is
created that can be used to identify these new customers. It is called
“supervised” learning because we are directing (supervising) the
analysis towards a result (in our example: consumers who respond
favorably). Supervised learning techniques include analyses such as
decision trees, neural networks, classifiers, and logistic regression.
Unsupervised learning occurs when an organization has data and
wants to understand the relationship(s) between different data
points. For example, if a retailer wants to understand purchasing
patterns of its customers, an unsupervised learning model can be
developed to find out which products are most often purchased
together or how to group their customers by purchase history. Is
it called “unsupervised” learning because no specific outcome is
expected. Unsupervised learning techniques include clustering and
association rules.
Privacy Concerns
The increasing power of data mining has caused concerns for many,
especially in the area of privacy. In today’s digital world, it is
becoming easier than ever to take data from disparate sources and
94 | Information Systems for Business and Beyond (2019)
combine them to do new forms of analysis. In fact, a whole industry
has sprung up around this technology: data brokers. These firms
combine publicly accessible data with information obtained from
the government and other sources to create vast warehouses of
data about people and companies that they can then sell. This
subject will be covered in much more detail in chapter 12 – the
chapter on the ethical concerns of information systems.
Sidebar: What is data science? What is data
analytics?
The term “data science” is a popular term meant to describe the
analysis of large data sets to find new knowledge. For the past
several years, it has been considered one of the best career fields
to get into due to its explosive growth and high salaries. While a
data scientist does many different things, their focus is generally
on analyzing large data sets using various programming methods
and software tools to create new knowledge for their organization.
Data scientists are skilled in machine learning and data visualization
techniques. The field of data science is constantly changing, and
data scientists are on the cutting edge of work in areas such as
artificial intelligence and neural networks.
Knowledge Management
We end the chapter with a discussion on the concept of knowledge
management (KM). All companies accumulate knowledge over the
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https://www.forbes.com/sites/louiscolumbus/2019/01/23/data-scientist-leads-50-best-jobs-in-america-for-2019-according-to-glassdoor/#2cb23c4b7474
course of their existence. Some of this knowledge is written down
or saved, but not in an organized fashion. Much of this knowledge
is not written down; instead, it is stored inside the heads of its
employees. Knowledge management is the process of creating,
formalizing the capture, indexing, storing, and sharing of the
company’s knowledge in order to benefit from the experiences and
insights that the company has captured during its existence.
Summary
In this chapter, we learned about the role that data and databases
play in the context of information systems. Data is made up of
facts of the world. If you process data in a particular context, then
you have information. Knowledge is gained when information is
consumed and used for decision making. A database is an organized
collection of related data. Relational databases are the most widely
used type of database, where data is structured into tables and all
tables must be related to each other through unique identifiers. A
database management system (DBMS) is a software application that
is used to create and manage databases, and can take the form of
a personal DBMS, used by one person, or an enterprise DBMS that
can be used by multiple users. A data warehouse is a special form of
database that takes data from other databases in an enterprise and
organizes it for analysis. Data mining is the process of looking for
patterns and relationships in large data sets. Many businesses use
databases, data warehouses, and data-mining techniques in order to
produce business intelligence and gain a competitive advantage.
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Study Questions
1. What is the difference between data, information, and
knowledge?
2. Explain in your own words how the data component relates to
the hardware and software components of information
systems.
3. What is the difference between quantitative data and
qualitative data? In what situations could the number 42 be
considered qualitative data?
4. What are the characteristics of a relational database?
5. When would using a personal DBMS make sense?
6. What is the difference between a spreadsheet and a database?
List three differences between them.
7. Describe what the term normalization means.
8. Why is it important to define the data type of a field when
designing a relational database?
9. Name a database you interact with frequently. What would
some of the field names be?
10. What is metadata?
11. Name three advantages of using a data warehouse.
12. What is data mining?
13. In your own words, explain the difference between supervised
learning and unsupervised learning. Give an example of each
(not from the book).
Exercises
1. Review the design of the School database earlier in this
chapter. Reviewing the lists of data types given, what data
types would you assign to each of the fields in each of the
tables. What lengths would you assign to the text fields?
Chapter 4: Data and Databases | 97
2. Download Apache OpenOffice.org and use the database tool to
open the “Student Clubs.odb” file available here. Take some
time to learn how to modify the database structure and then
see if you can add the required items to support the tracking of
faculty advisors, as described at the end of the Normalization
section in the chapter. Here is a link to the Getting Started
documentation.
3. Using Microsoft Access, download the database file of
comprehensive baseball statistics from the website
SeanLahman.com. (If you don’t have Microsoft Access, you can
download an abridged version of the file here that is
compatible with Apache Open Office). Review the structure of
the tables included in the database. Come up with three
different data-mining experiments you would like to try, and
explain which fields in which tables would have to be analyzed.
4. Do some original research and find two examples of data
mining. Summarize each example and then write about what
the two examples have in common.
5. Conduct some independent research on the process of
business intelligence. Using at least two scholarly or
practitioner sources, write a two-page paper giving examples
of how business intelligence is being used.
6. Conduct some independent research on the latest
technologies being used for knowledge management. Using at
least two scholarly or practitioner sources, write a two-page
paper giving examples of software applications or new
technologies being used in this field.
98 | Information Systems for Business and Beyond (2019)
http://www.openoffice.org/download/
http://www.saylor.org/site/wp-content/uploads/2014/02/Student-Clubs.odb
http://wiki.openoffice.org/w/images/3/3c/0108GS33-GettingStartedWithBase
http://wiki.openoffice.org/w/images/3/3c/0108GS33-GettingStartedWithBase
http://www.seanlahman.com/baseball-archive/statistics/
http://www.saylor.org/site/wp-content/uploads/2014/02/lahman.odb
Chapter 5: Networking and
Communication
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• understand the history and development of
networking technologies;
• define the key terms associated with networking
technologies;
• understand the importance of broadband
technologies; and
• describe organizational networking.
Introduction
In the early days of computing, computers were seen as devices
for making calculations, storing data, and automating business
processes. However, as the devices evolved, it became apparent that
many of the functions of telecommunications could be integrated
into the computer. During the 1980s, many organizations began
Chapter 5: Networking and
Communication | 99
combining their once-separate telecommunications and
information systems departments into an Information Technology
(IT) department. This ability for computers to communicate with
one another and to facilitate communication between individuals
and groups has had a major impact on the growth of computing over
the past several decades.
Computer networking began in the 1960s with the birth of the
Internet. However, while the Internet and web were evolving,
corporate networking was also taking shape in the form of local
area networks and client-server computing. The Internet went
commercial in 1994 as technologies began to pervade all areas of the
organization. Today it would be unthinkable to have a computer that
did not include communications capabilities. This chapter reviews
the different technologies that have been put in place to enable this
communications revolution.
A Brief History of the Internet
In the Beginning: ARPANET
The story of the Internet, and networking in general, can be traced
back to the late 1950s. The United States was in the depths of the
Cold War with the USSR as each nation closely watched the other
to determine which would gain a military or intelligence advantage.
In 1957, the Soviets surprised the U.S. with the launch of Sputnik,
propelling us into the space age. In response to Sputnik, the U.S.
Government created the Advanced Research Projects Agency
(ARPA), whose initial role was to ensure that the U.S. was not
surprised again. It was from ARPA, now called DARPA
((Defense Advanced Research Projects Agency), that the Internet
first sprang.
100 | Information Systems for Business and Beyond (2019)
http://history.nasa.gov/sputnik
ARPA was the center of computing research in the 1960s, but
there was just one problem. Many of the computers could not
communicate with each other. In 1968 ARPA sent out a request
for proposals for a communication technology that would allow
different computers located around the country to be integrated
together into one network. Twelve companies responded to the
request, and a company named Bolt, Beranek, and Newman (BBN)
won the contract. They immediately began work and were able to
complete the job just one year later.
ARPA Net 1969
Professor Len Kleinrock of UCLA along with a group of graduate
students were the first to successfully send a transmission over
the ARPANET. The event occurred on October 29, 1969 when they
attempted to send the word “login” from their computer at UCLA to
the Stanford Research Institute. You can read their actual notes. The
first four nodes were at UCLA, University of California, Stanford,
and the University of Utah.
Chapter 5: Networking and Communication | 101
https://www.lk.cs.ucla.edu/internet_first_words.html
The Internet and the World Wide Web
Over the next decade, the ARPANET grew and gained popularity.
During this time, other networks also came into existence. Different
organizations were connected to different networks. This led to a
problem. The networks could not communicate with each other.
Each network used its own proprietary language, or protocol (see
sidebar for the definition of protocol) to send information back and
forth. This problem was solved by the invention of Transmission
Control Protocol/Internet Protocol (TCP/IP). TCP/IP was designed
to allow networks running on different protocols to have an
intermediary protocol that would allow them to communicate. So
as long as your network supported TCP/IP, you could communicate
with all of the other networks running TCP/IP. TCP/IP quickly
became the standard protocol and allowed networks to
communicate with each other. It is from this breakthrough that we
first got the term Internet, which simply means “an interconnected
network of networks.”
Sidebar: An Internet Vocabulary Lesson
Network communication is full of some very technical concepts
based on simple principles. Learn the following terms and you’ll be
able to hold your own in a conversation about the Internet.
• Packet The fundamental unit of data transmitted over the
Internet. When a host (PC, workstation, server, printer, etc.)
intends to send a message to another host (for example, your
PC sends a request to YouTube to open a video), it breaks the
message down into smaller pieces, called packets. Each packet
has the sender’s address, the destination address, a sequence
102 | Information Systems for Business and Beyond (2019)
number, and a piece of the overall message to be sent.
Different packets in a single message can take a variety of
routes to the destination and they can arrive at different times.
For this reason the sequence number is used to reassemble the
packets in the proper order at the destination.
• Switch A network device that connects multiple hosts together
and forwards packets based on their destination within the
local network which is commonly known as a Local Area
Network (LAN).
• Router A device that receives and analyzes packets and then
routes them towards their destination. In some cases a router
will send a packet to another router. In other cases it will send
it directly to its destination. Routers are used to connect one
network to another network.
• IP Address Every device on the Internet (personal computer, a
tablet, a smartphone, etc.) is assigned a unique identifying
number called an IP (Internet Protocol) address. Originally, the
IPv4 (version 4) standard was used. It had a format of four
numbers with values ranging from 0 and 255 separated by a
period. For example, the domain Dell.com has the IPv4 address
107.23.196.166. The IPv4 standard has a limit of 4,294,967,296
possible addresses. As the use of the Internet has grown, the
number of IP addresses needed has increased to the point
where the use of IPv4 addresses will be exhausted. This has led
to the new IPv6 standard.The IPv6 standard is formatted as
eight groups of four hexadecimal digits, such as
2001:0db8:85a3:0042:1000:8a2e:0370:7334. The IPv6 standard
has a limit of 3.4×1038 possible addresses. For example, the
domain LinkedIn.com has an IPv6 address of:
[2620:109:c002::6cae:a0a]. You probably noticed that the
address has only five groups of numbers. That’s because IPv6
allows the use of two semi-colons ( :: ) to indicate groups that
are all zeroes and do not need to be displayed. For more detail
about the IPv6 standard, see this Wikipedia article.
• Domain name If you had to try to remember the IP address of
Chapter 5: Networking and Communication | 103
https://en.wikipedia.org/wiki/IPv6
every web site you wanted to access, the Internet would not be
nearly as easy to use. A domain name is a human-friendly
name, convenient for remembering a website. These names
generally consist of a descriptive word followed by a dot
(period) and the Top-Level Domain (TLD). For example,
Wikipedia’s domain name is wikipedia.org. Wikipedia describes
the organization and .org is the TLD. Other well-known TLDs
include .com, .net, and .gov. For a list and description of top
level domain names, see this Wikipedia article.
• DNS DNS stands for “domain name server or system.” DNS acts
as the directory of websites on the Internet. When a request to
access a host with a domain name is given, a DNS server is
queried. It returns the IP address of the host requested,
allowing for proper routing.
• Packet-switching When a message’s packets are sent on the
Internet, routers try to find the optimal route for each packet.
This can result in packets being sent on different routes to
their destination. After the packets arrive they are re-
assembled into the original message for the recipient. For
more details on packet-switching, see this interactive web
page.
• Protocol A protocol is the set of rules that govern how
communications take place on a network. For example, File
Transfer Protocol (FTP) are the communication rules for
transferring files from one host to another. TCP/IP, discussed
earlier, is known as a protocol suite since it contains numerous
protocols.
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https://en.wikipedia.org/wiki/List_of_Internet_top-level_domains
http://www.pbs.org/opb/nerds2.0.1/geek_glossary/packet_switching_flash.html
http://www.pbs.org/opb/nerds2.0.1/geek_glossary/packet_switching_flash.html
Internet Users Worldwide, December 2017.
(Public Domain. Courtesy of the Miniwatts Marketing Group)
The 1980s witnessed a significant growth in Internet
usage. Internet access came primarily from government, academic,
and research organizations. Much to the surprise of the engineers,
the early popularity of the Internet was driven by the use of
electronic mail (see the next sidebar ).
Initially, Internet use meant having to type commands, even
including IP addresses, in order to access a web server. That all
changed in 1990 when Tim Berners-Lee introduced his World Wide
Web project which provided an easy way to navigate the Internet
through the use of hypertext. The World Wide Web gained even
more steam in 1993 with the release of the Mosaic browser which
allowed graphics and text to be combined as a way to present
information and navigate the Internet.
The Dot-Com Bubble
In the 1980s and early 1990s, the Internet was being managed by
the National Science Foundation (NSF). The NSF had restricted
commercial ventures on the Internet, which meant that no one
could buy or sell anything online. In 1991, the NSF transferred its
role to three other organizations, thus getting the US government
out of direct control over the Internet and essentially opening up
commerce online.
This new commercialization of the Internet led to what is now
known as the dot-com bubble. A frenzy of investment in new dot-
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https://www.internetworldstats.com/stats.htm
https://www.internetworldstats.com/stats.htm
com companies took place in the late 1990s with new tech
companies issuing Initial Public Offerings (IPO) and heating up the
stock market. This investment bubble was driven by the fact that
investors knew that online commerce would change everything.
Unfortunately, many of these new companies had poor business
models and anemic financial statements showing little or no profit.
In 2000 and 2001, the bubble burst and many of these new
companies went out of business. Some companies survived,
including Amazon (started in 1994) and eBay (1995). After the dot-
com bubble burst, a new reality became clear. In order to succeed
online, e-business companies would need to develop business
models appropriate for the online environment.
Web 2.0
In the first few years of the World Wide Web, creating and hosting a
website required a specific set of knowledge. A person had to know
how to set up a web server, get a domain name, create web pages in
HTML, and troubleshoot various technical issues.
Starting in the early 2000s, major changes came about in how the
Internet was being used. These changes have come to be known as
Web 2.0. Here are some key characteristics in Web 2.0.
• Universal access to Apps
• Value is found in content, not display software
• Data can be easily shared
• Distribution is bottom up, not top down
• Employees and customers can use access and use tools on
their own
• Informal networking is encouraged since more contributors
results in better content
• Social tools encourage people to share information
1
106 | Information Systems for Business and Beyond (2019)
Social networking, the last item in the list, has led to major
changes in society. Prior to Web 2.0 major news outlets investigated
and reported important news stories of the day. But in today’s world
individuals are able to easily share their own views on various
events. Apps such as Facebook, Twitter, Youtube, and personal blogs
allow people to express their own viewpoint.
Sidebar: E-mail Is the “Killer” App for the
Internet
As discussed in chapter 3, a “killer app” is a use of a device that
becomes so essential that large numbers of people will buy the
device just to run that application. The killer app for the personal
computer was the spreadsheet, enabling users to enter data, write
formulas, and easily make “what if” decisions. With the introduction
of the Internet came another killer app – E-mail.
The Internet was originally designed as a way for the Department
of Defense to manage projects. However, the invention of electronic
mail drove demand for the Internet. While this wasn’t what
developers had in mind, it turned out that people connecting with
people was the killer app for the Internet. As we look back today, we
can see this being repeated again and again with new technologies
that enable people to connect with each other.
Sidebar: The Internet and the World Wide Web
1. [1]
Chapter 5: Networking and Communication | 107
Are Not the Same Thing
Many times the terms “Internet” and “World Wide Web,” or even
just “the web,” are used interchangeably. But really, they are not the
same thing.
The Internet is an interconnected network of networks. Services
such as email, voice and video, file transfer, and the World Wide
Web all run across the Internet.The World Wide Web is simply one
part of the Internet. It is made up of web servers that have HTML
pages that are being viewed on devices with web browsers.
The Growth of High Speed Internet
In the early days of the Internet, most access was accomplished via
a modem over an analog telephone line. A modem was connected
to the incoming phone line when then connected to a computer.
Speeds were measured in bits-per-second (bps), with speeds
growing from 1200 bps to 56,000 bps over the years. Connection to
the Internet via modems is called dial-up access. As the web became
more interactive, dial-up hindered usage when users wanted to
transfer more and more data. As a point of reference, downloading
a typical 3.5 MB song would take 24 minutes at 1200 bps and 2
minutes at 28,800 bps.
High speed Internet speeds, by definition, are a minimum of
256,000 bps, though most connections today are much faster,
measured in millions of bits per second (megabits or Mbps) or even
billions (gigabits). For the home user, a high speed connection is
usually accomplished via the cable television lines or phone lines
using a Digital Subscriber Line (DSL). Both cable and DSL have
similar prices and speeds, though price and speed can vary in local
communities. According to the website Recode, the average home
108 | Information Systems for Business and Beyond (2019)
broadband speed ranges from 12 Mbps and 125 Mbps.2
Telecommunications companies provide T1 and T3 lines for greater
bandwidth and reliability.
High speed access, also known as broadband, is important
because it impacts how the Internet is used. Communities with
high speed Internet have found residences and businesses increase
usage of digital resources. Access to high speed Internet is now
considered a basic human right by the United Nations, as declared
in their 2011 statement:
“Broadband technologies are fundamentally transforming the way
we live,” the Broadband Commission for Digital Development, set up
in 2017 by the UN Educational Scientific and Cultural Organization
(UNESCO) and the UN International Telecommunications Union
(ITU), said in issuing “The Broadband Challenge” at a leadership
summit in Geneva.
“It is vital that no one be excluded from the new global knowledge
societies we are building. We believe that communication is not just
a human need – it is a right.”3
Wireless Networking
Thanks to wireless technology, access to the Internet is virtually
everywhere, especially through a smartphone.
Wi-Fi
Wi-Fi takes an Internet signal and converts it into radio waves.
2. [2]
3. [3]
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http://www.un.org/apps/news/story.asp?Cr=broadband&NewsID=40191#.UZlTSyvSOPU
http://www.un.org/apps/news/story.asp?Cr=broadband&NewsID=40191#.UZlTSyvSOPU
http://www.unesco.org/new/en/unesco
http://www.itu.int/
http://www.broadbandcommission.org/Documents/Broadband_Challenge
These radio waves can be picked up within a radius of
approximately 65 feet by devices with a wireless adapter. Several
Wi-Fi specifications have been developed over the years, starting
with 802.11b in 1999, followed by the 802.11g specification in 2003
and 802.11n in 2009. Each new specification improved the speed and
range of Wi-Fi, allowing for more uses. One of the primary places
where Wi-Fi is being used is in the home. Home users access Wi-Fi
via in-home routers provided by the telecommunications firm that
services the residence.
Mobile Network
As the cellphone has evolved into the smartphone, the desire for
Internet access on these devices has led to data networks being
included as part of the mobile phone network. While Internet
connections were technically available earlier, it was really with
the release of the 3G networks in 2001 (2002 in the US) that
smartphones and other cellular devices could access data from the
Internet. This new capability drove the market for new and more
powerful smartphones, such as the iPhone, introduced in 2007. In
2011, wireless carriers began offering 4G data speeds, giving the
cellular networks the same speeds that customers were accustomed
to getting via their home connection.
Beginning in 2019, some part of the world began seeing the
implementation of 5G communication networks. Speeds associated
with 5G will be greater than 1 GB/second, providing connection
speeds to handle just about any type of application. Some have
speculated that the 5G implementation will lead households to
eliminate the purchase of wired Internet connections for their
homes, just using 5G wireless connections instead.
110 | Information Systems for Business and Beyond (2019)
3G, 4G, and 5G Comparison
3G 4G 5G
Deployed 2004-2005 2006-2010 By 2020
Bandwidth 2 mbps 200 mbps > 1 gbps,
Service
Integrated
high-quality
audio, video
and data
Dynamic
information
access, variable
devices
Dynamic information
access, variable devices
with all capabilities
(James Dean, Raconteur, December 7, 2014)
4
Sidebar: Why Doesn’t My Cellphone Work When
I Travel Abroad?
As mobile phone technologies have evolved, providers in different
countries have chosen different communication standards for their
mobile phone networks. There are two competing standards in the
US: GSM (used by AT&T and T-Mobile) and CDMA (used by the
other major carriers). Each standard has its pros and cons, but
the bottom line is that phones using one standard cannot easily
switch to the other. This is not a big deal in the US because mobile
networks exist to support both standards. But when traveling to
other countries, you will find that most of them use GSM networks.
The one exception is Japan which has standardized on CDMA. It is
possible for a mobile phone using one type of network to switch
to the other type of network by changing out the SIM card, which
controls your access to the mobile network. However, this will not
4. [4]
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work in all cases. If you are traveling abroad, it is always best to
consult with your mobile provider to determine the best way to
access a mobile network.
Bluetooth
While Bluetooth is not generally used to connect a device to the
Internet, it is an important wireless technology that has enabled
many functionalities that are used every day. When created in 1994
by Ericsson, it was intended to replace wired connections between
devices. Today, it is the standard method for wirelessly connecting
nearby devices. Bluetooth has a range of approximately 300 feet
and consumes very little power, making it an excellent choice for
a variety of purposes. Some applications of Bluetooth include:
connecting a printer to a personal computer, connecting a mobile
phone and headset, connecting a wireless keyboard and mouse to a
computer, or connecting your mobile phone to your car, resulting in
hands free operation of your phone.
112 | Information Systems for Business and Beyond (2019)
Typical VoIP
communicati
on
VoIP
Voice over IP (VoIP) allows analog signals to be converted to digital
signals, then transmitted on a network. By using existing
technologies and software, voice communication over the Internet
is now available to anyone with a browser (think Skype, WebEx,
Google Hangouts). Beyond this, many companies are now offering
VoIP-based telephone service for business and home use.
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Organizational Networking
LAN and WAN
Scope of business networks
While the Internet was evolving and creating a way for
organizations to connect to each other and the world, another
revolution was taking place inside organizations. The proliferation
of personal computers led to the need to share resources such
as printers, scanners, and data. Organizations solved this problem
through the creation of local area networks (LANs), which allowed
computers to connect to each other and to peripherals.
A LAN is a local network, usually operating in the same building
or on the same campus. A Wide Area Network (WAN) provides
connectivity over a wider area such as an organization’s locations in
different cities or states.
114 | Information Systems for Business and Beyond (2019)
Client-Server
Client-server computing provides stand-alone devices such as
personal computers, printers, and file servers to work together. The
personal computer originally was used as a stand-alone computing
device. A program was installed on the computer and then used to
do word processing or calculations. With the advent of networking
and local area networks, computers could work together to solve
problems. Higher-end computers were installed as servers, and
users on the local network could run applications and share
information among departments and organizations.
Intranet
An intranet, as the name implies, provides web-based resources
for the users within an organization. These web pages are not
accessible to those outside the company. The pages typically
contain information useful to employees such as policies and
procedures. In an academic setting the intranet provides an
interface to learning resources for students.
Extranet
Sometimes an organization wants to be able to collaborate with
its customers or suppliers while at the same time maintaining the
security of being inside its own network. In cases like this a
company may want to create an extranet, which is a part of a
company’s network that can be made available securely to those
outside of the company. Extranets can be used to allow customers
to log in and place orders, or for suppliers to check their customers’
inventory levels.
Chapter 5: Networking and Communication | 115
Sometimes an organization will need to allow someone who is not
located physically within its internal network to gain secure access
to the intranet. This access can be provided by a virtual private
network (VPN). VPNs will be discussed further in Chapter 6 which
focuses on Information Security).
Sidebar: Microsoft’s SharePoint Powers the
Intranet
As organizations begin to see the power of collaboration between
their employees, they often look for solutions that will allow them
to leverage their intranet to enable more collaboration. Since most
companies use Microsoft products for much of their computing,
some are using Microsoft’s SharePoint to support employee
collaboration.
SharePoint provides a communication and collaboration platform
that integrates seamlessly with Microsoft’s Office suite of
applications. Using SharePoint, employees can share a document
and edit it together, avoiding the need to email the document for
others to review. Projects and documents can be managed
collaboratively across the organization. Corporate documents are
indexed and made available for search.
Cloud Computing
Cloud computing was covered in Chapter 3. The universal
availability of the Internet combined with increases in processing
116 | Information Systems for Business and Beyond (2019)
power and data-storage capacity have made cloud computing a
viable option for many companies. Using cloud computing,
companies or individuals can contract to store data on storage
devices somewhere on the Internet. Applications can be “rented”
as needed, giving a company the ability to quickly deploy new
applications. The I.T. department benefits from not having to
maintain software that is provided on the cloud.
Sidebar: Metcalfe’s Law
Just as Moore’s Law describes how computing power is increasing
over time, Metcalfe’s Law describes the power of networking.
Metcalfe’s Law states that the value of a telecommunications
network is proportional to the square of the number of connected
users of the system, or N2. If a network has 10 nodes, the inherent
value is 100, or 102.
Metcalfe’s Law is attributed to Robert Metcalfe, the co-inventor of
Ethernet. It attempts to address the added value provided by each
node on the network. Think about it this way: If none of your friends
were on Instagram, would you spend much time there? If no one
else at your school or place of work had e-mail, would it be very
useful to you? Metcalfe’s Law tries to quantify this value.
Summary
The networking revolution has completely changed how personal
computers are used. Today, no one would imagine using a computer
that was not connected to one or more networks. The development
Chapter 5: Networking and Communication | 117
of the Internet and World Wide Web, combined with wireless
access, has made information available at our fingertips. The Web
2.0 revolution has made everyone potential authors of web content.
As networking technology has matured, the use of Internet
technologies has become a standard for every type of organization.
The use of intranets and extranets has allowed organizations to
deploy functionality to employees and business partners alike,
increasing efficiencies and improving communications. Cloud
computing has truly made information available everywhere.
Study Questions
1. What were the first four locations hooked up to the Internet
(ARPANET)?
2. What does the term packet mean?
3. Which came first, the Internet or the World Wide Web?
4. What was revolutionary about Web 2.0?
5. What was the so-called killer app for the Internet?
6. What does the term VoIP mean?
7. What is a LAN?
8. What is the difference between an intranet and an extranet?
9. What is Metcalfe’s Law?
Exercises
1. What is the difference between the Internet and the World
Wide Web? Create at least three statements that identify the
differences between the two.
2. Who are the broadband providers in your area? What are the
118 | Information Systems for Business and Beyond (2019)
prices and speeds offered?
3. Pretend you are planning a trip to three foreign countries in
the next month. Consult your wireless carrier to determine if
your mobile phone would work properly in those countries.
What would the costs be? What alternatives do you have if it
would not work?
Labs
1. Check the speed of your Internet connection by going to the
following web site: speedtest.net
What is your download and upload speed?
2. What is the IP address of your computer? How did you find it?
Hint for Windows: Go to the start icon and click Run. Then
open the Command Line Interface by typing: cmd Then type:
ipconfigWhat is your IPv4 address?What is your IPv6 address?
3. When you enter an address in your web browser, a Domain
Name Server (DNS) is used to lookup the IP address of the site
you are seeking. To locate the DNS server your computer is
using, type: nslookupWrite down the name and address of
your DNS server.Use the nslookup command to find the
address for a favorite web site. For example, to find the IP
address of espn type: nslookup espnWrite down your website’s
name and address. Note: it is on the line following the name of
the web site you entered.
4. You can use the tracert (trace route) command to display the
path from your computer to the web site’s IP address you used
in the previous lab. For example, tracert 199.181.132.250Be
patient as tracert contacts each router in the path to your
website’s server. A “Request timed out” message indicates the
tracing is taking too long, probably due to a lack of bandwidth.
You can stop the trace by pressing Ctrl + C
Chapter 5: Networking and Communication | 119
5. The ping command allows you check connectivity between the
local host (your computer) and another host. If you are unable
to connect to another host, the ping command can be used to
incrementally test your connectivity. The IP address 127.0.0.1 is
known as your home address (local host).Begin your test by
going to your command line interface (command promkpt) and
pinging your local host: ping 127.0.0.1You should get a series of
“Reply from 127.0.0.1” messagesNext, ping the IP address you
used in lab #3.Sometimes a failed ping is not the result of a
lack of connectivity. Network administrators of some IP
addresses/hosts do not want their site pinged so they block all
ICMP packets. That’s the protocol used for pinging.
• The whois.domaintools.com site provides you with information
about a web site. For example, to find information about
google.com open your web browser and type:
whoisdomaintools.com Then in the Lookup window, type:
google.comFind information about a favorite site of yours.
Record the following: administrator name, phone number,
when the site was created, and the site’s name servers (the
names begin with “ns”).
• Network statistics can be displayed using the netstat
command. In the command line window (see lab #2 for
instructions on how to get to the command line), type: netstat
-eHow many bytes were sent and how many were
received?Execute the command again and record your results.
You should see an increase in both received and sent bytes.To
see a complete list of options/switches for the netstat
command, type: netstat ?
1. Wolcott, M. (2017). What is Web 2.0? MoneyWatch. Retrieved
from https://www.cbsnews.com/news/what-is-web-20/↵
2. Molla, R. (2017). These are the fastest and slowest Internet
120 | Information Systems for Business and Beyond (2019)
speeds”. Recode. Retrieved from https://www.recode.net/2017/
6/9/15768598/states-fastest-slowest-internet-speeds↵
3. International Telecommunications Union. (2018, January 23).
UN Broadband Commission sets goal broadband targets to
bring online the world’s 3.8 billion not connected to the
Internet. Retrieved from https://www.itu.int/en/
mediacentre/Pages/2018-PR01.aspx↵
4. “Dean, J. (2014). 4G vs 5G Mobile Technology. Raconteur
Retrieved from https://www.raconteur.net/technology/4g-
vs-5g-mobile-technology.
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Chapter 6: Information
Systems Security
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• identify the information security triad;
• identify and understand the high-level concepts
surrounding information security tools; and
• secure yourself digitally.
Introduction
As computers and other digital devices have become essential to
business and commerce, they have also increasingly become a
target for attacks. In order for a company or an individual to use
a computing device with confidence, they must first be assured
that the device is not compromised in any way and that all
communications will be secure. This chapter reviews the
fundamental concepts of information systems security and
discusses some of the measures that can be taken to mitigate
122 | Chapter 6: Information Systems
Security
The security triad
security threats. The chapter begins with an overview focusing on
how organizations can stay secure. Several different measures that a
company can take to improve security will be discussed. Finally, you
will review a list of security precautions that individuals can take in
order to secure their personal computing environment.
The Information Security Triad:
Confidentiality, Integrity, Availability
(CIA)
Confidentiality
Protecting information
means you want to want to be
able to restrict access to those
who are allowed to see it. This
is sometimes referred to as
NTK, Need to Know. Everyone
else should be disallowed from
learning anything about its
contents. This is the essence of
confidentiality. For example,
federal law requires that
universities restrict access to private student information. Access to
grade records should be limited to those who have authorized
access.
Chapter 6: Information Systems Security | 123
Integrity
Integrity is the assurance that the information being accessed has
not been altered and truly represents what is intended. Just as a
person with integrity means what he or she says and can be trusted
to consistently represent the truth, information integrity means
information truly represents its intended meaning. Information can
lose its integrity through malicious intent, such as when someone
who is not authorized makes a change to intentionally misrepresent
something. An example of this would be when a hacker is hired to
go into the university’s system and change a student’s grade.
Integrity can also be lost unintentionally, such as when a
computer power surge corrupts a file or someone authorized to
make a change accidentally deletes a file or enters incorrect
information.
Availability
Information availability is the third part of the CIA triad. Availability
means information can be accessed and modified by anyone
authorized to do so in an appropriate timeframe. Depending on
the type of information, appropriate timeframe can mean different
things. For example, a stock trader needs information to be available
immediately, while a sales person may be happy to get sales
numbers for the day in a report the next morning. Online retailers
require their servers to be available twenty-four hours a day, seven
days a week. Other companies may not suffer if their web servers
are down for a few minutes once in a while.
124 | Information Systems for Business and Beyond (2019)
Tools for Information Security
In order to ensure the confidentiality, integrity, and availability of
information, organizations can choose from a variety of tools. Each
of these tools can be utilized as part of an overall information-
security policy.
Authentication
The most common way to identify someone is through their
physical appearance, but how do we identify someone sitting behind
a computer screen or at the ATM? Tools for authentication are used
to ensure that the person accessing the information is, indeed, who
they present themselves to be.
Authentication can be accomplished by identifying someone
through one or more of three factors:
1. Something they know,
2. Something they have, or
3. Something they are.
For example, the most common form of authentication today is the
user ID and password. In this case, the authentication is done by
confirming something that the user knows (their ID and password).
But this form of authentication is easy to compromise (see sidebar)
and stronger forms of authentication are sometimes needed.
Identifying someone only by something they have, such as a key or a
card, can also be problematic. When that identifying token is lost or
stolen, the identity can be easily stolen. The final factor, something
you are, is much harder to compromise. This factor identifies a user
through the use of a physical characteristic, such as a retinal scan,
Chapter 6: Information Systems Security | 125
RSA
SecureID
token
fingerprint, or facial geometry. Identifying someone through their
physical characteristics is called biometrics.
A more secure way to authenticate a user is through multi-factor
authentication. By combining two or more of the factors listed
above, it becomes much more difficult for someone to misrepresent
themselves. An example of this would be the use of an RSA SecurID
token. The RSA device is something you have, and it generates a
new access code every sixty seconds. To log in to an information
resource using the RSA device, you combine something you know,
such as a four-digit PIN, with the code generated by the device. The
only way to properly authenticate is by both knowing the code and
having the RSA device.
Access Control
Once a user has been authenticated, the next step is to ensure that
they can only access the information resources that are appropriate.
This is done through the use of access control. Access control
determines which users are authorized to read, modify, add, and/
or delete information. Several different access control models exist.
Two of the more common are: the Access Control List (ACL) and
Role-Based Access Control (RBAC).
An information security employee can produce an ACL which
identifies a list of users who have the capability to take specific
actions with an information resource such as data files. Specific
126 | Information Systems for Business and Beyond (2019)
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http://www.rsa.com/node.aspx?id=1159
Comparison
of ACL and
RBAC
permissions are assigned to each user such as read, write, delete,
or add. Only users with those permissions are allowed to perform
those functions.
ACLs are simple to understand and maintain, but there are several
drawbacks. The primary drawback is that each information resource
is managed separately, so if a security administrator wanted to add
or remove a user to a large set of information resources, it would be
quite difficult. And as the number of users and resources increase,
ACLs become harder to maintain. This has led to an improved
method of access control, called role-based access control, or RBAC.
With RBAC, instead of giving specific users access rights to an
information resource, users are assigned to roles and then those
roles are assigned the access. This allows the administrators to
manage users and roles separately, simplifying administration and,
by extension, improving security.
The following image shows an ACL with permissions granted to
individual users. RBAC allows permissions to be assigned to roles,
as shown in the middle grid, and then in the third grid each user is
assigned a role. Although not modeled in the image, each user can
have multiple roles such as Reader and Editor.
Sidebar: Password Security
So why is using just a simple user ID and password not considered a
secure method of authentication? It turns out that this single-factor
Chapter 6: Information Systems Security | 127
authentication is extremely easy to compromise. Good password
policies must be put in place in order to ensure that passwords
cannot be compromised. Below are some of the more common
policies that organizations should use.
• Require complex passwords. One reason passwords are
compromised is that they can be easily guessed. A recent study
found that the top three passwords people used were
password, 123456 and 12345678.[1] A password should not be
simple, or a word that can be found in a dictionary. Hackers
first attempt to crack a password by testing every term in the
dictionary. Instead, a good password policy should require the
use of a minimum of eight characters, at least one upper-case
letter, one special character, and one digit.
• Change passwords regularly. It is essential that users change
their passwords on a regular basis. Also, passwords may not be
reused. Users should change their passwords every sixty to
ninety days, ensuring that any passwords that might have been
stolen or guessed will not be able to be used against the
company.
• Train employees not to give away passwords. One of the
primary methods used to steal passwords is to simply figure
them out by asking the users for their password. Pretexting
occurs when an attacker calls a helpdesk or security
administrator and pretends to be a particular authorized user
having trouble logging in. Then, by providing some personal
information about the authorized user, the attacker convinces
the security person to reset the password and tell him what it
is. Another way that employees may be tricked into giving away
passwords is through e-mail phishing. Phishing occurs when a
user receives an e-mail that looks as if it is from a trusted
source, such as their bank or employer. In the e-mail the user
is asked to click a link and log in to a website that mimics the
genuine website, then enter their ID and password. The userID
and password are then captured by the attacker.
128 | Information Systems for Business and Beyond (2019)
Encryption
Many times an organization needs to transmit information over the
Internet or transfer it on external media such as a flash drive. In
these cases, even with proper authentication and access control, it
is possible for an unauthorized person to gain access to the data.
Encryption is a process of encoding data upon its transmission
or storage so that only authorized individuals can read it. This
encoding is accomplished by software which encodes the plain text
that needs to be transmitted (encryption). Then the recipient
receives the cipher text and decodes it (decryption). In order for
this to work, the sender and receiver need to agree on the method
of encoding so that both parties have the same message. Known
as symmetric key encryption, both parties share the encryption key,
enabling them to encode and decode each other’s messages.
An alternative to symmetric key encryption is public key
encryption. In public key encryption, two keys are used: a public key
and a private key. To send an encrypted message, you obtain the
public key, encode the message, and send it. The recipient then uses
their private key to decode it. The public key can be given to anyone
who wishes to send the recipient a message. Each user simply needs
one private key and one public key in order to secure messages. The
private key is necessary in order to decrypt a message sent with the
public key.
Notice in the image how the sender on the left creates a plaintext
message which is then encrypted with a public key. The ciphered
text is transmitted through the communication channel and the
recipient uses their private key to decrypt the message and then
read the plain text.
Chapter 6: Information Systems Security | 129
Public Key
Encryption
Sidebar: Blockchain and Bitcoin
Blockchain
Introduced in 2008 as part of a proposal for Bitcoin, Blockchain is
a peer-to-peer network which provides an open, distributed record
of transactions between two parties. A “peer-to-peer” network is
one where there is no server between the two nodes trying to
communicate. Essentially, this means that each node acts as a server
and a client.
130 | Information Systems for Business and Beyond (2019)
Supporters see blockchain as a tool to simplify all types of
transactions: payments, contracts, etc. Motivation comes from the
desire to remove the middleman (lawyer, banker, broker) from
transactions, making them more efficient and readily available
across the Internet. Blockchain is already being used to track
products through supply chains.
Blockchain is considered a foundational technology, potentially
creating new foundations in economics and social systems. There
are numerous concerns about Blockchain and its adoption.
Consider the following:
• Speed of adoption. Initially there is a great deal of enthusiasm
by a small group. However, adoption on a larger scale can take
a great number of years even decades for a worldwide
acceptance of a new method of doing business.
• Governance. The banking sector, both in individual countries
(U. S. Federal Reserve System) and the world at large (the
International Monetary Fund), controls financial transactions.
One purpose of these organizations is an attempt to avoid
banking and financial systems collapse. Blockchain will result
in the governance of financial transactions shifting away from
these government-controlled institutions.
• Smart contracts. The smart contract will re-shape how
businesses interact. It is possible for blockchain to
automatically send payment to a vendor the instant the
product is delivered to the customer. Such “self-executing”
contracts are already taking place in banking and venture
capital funding. 1
Many are forecasting some universal form of payment or value
transfer for business transactions. Blockchain and Bitcoin are being
used to transform banking in various locations around the world.
1. [9]
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The following Bitcoin section includes a look at a new banking
venture in Tanzania, East Africa.
Bitcoin
Bitcoin logo
Bitcoin is a world wide payment system using cryptocurrency. It
functions without a central bank, operating as a peer-to-peer
network with transactions happening directly between vendors and
buyers. Records for transactions are recorded in the blockchain.
Bitcoin technology was released in 2009. The University of
Cambridge estimated there were 2.9 and 5.8 million unique users
of bitcoin in 2017.2 This web site provides more information about
bitcoin.
A major bitcoin project is underway in Tanzania. Business
transactions in this East African country are fraught with many
challenges such as counterfeit currency and a 28% transaction fee
on individuals who do not have a bank account. Seventy percent of
the country’s population fall into this category. Benjamin Fernandes,
2. [10]
132 | Information Systems for Business and Beyond (2019)
https://www.blockchain.com/
https://www.blockchain.com/
a Tanzanian and 2017 graduate of Stanford Graduate School of
Business, is co-founder of NALA, a Tanzanian firm working to bring
cryptocurrency to a country where 96% of the population have
access to mobile devices. NALA’s goal is to provide low cost
transactions to all of the country’s citizens through
cryptocurrency.3 You can read more of this cryptocurrency venture
here.
Backups
Another essential tool for information security is a comprehensive
backup plan for the entire organization. Not only should the data
on the corporate servers be backed up, but individual computers
used throughout the organization should also be backed up. A good
backup plan should consist of several components.
• Full understanding of the organization’s information
resources. What information does the organization actually
have? Where is it stored? Some data may be stored on the
organization’s servers, other data on users’ hard drives, some
in the cloud, and some on third-party sites. An organization
should make a full inventory of all of the information that
needs to be backed up and determine the best way to back it
up.
• Regular backups of all data. The frequency of backups should
be based on how important the data is to the company,
combined with the ability of the company to replace any data
that is lost. Critical data should be backed up daily, while less
3. [11]
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critical data could be backed up weekly. Most large
organizations today use data redundancy so their records are
always backed up.
• Offsite storage of backup data sets. If all backup data is being
stored in the same facility as the original copies of the data,
then a single event such as an earthquake, fire, or tornado
would destroy both the original data and the backup. It is
essential the backup plan includes storing the data in an offsite
location.
• Test of data restoration. Backups should be tested on a regular
basis by having test data deleted then restored from backup.
This will ensure that the process is working and will give the
organization confidence in the backup plan.
Besides these considerations, organizations should also examine
their operations to determine what effect downtime would have
on their business. If their information technology were to be
unavailable for any sustained period of time, how would it impact
the business?
Additional concepts related to backup include the following:
• Uninterruptible Power Supply (UPS). A UPS provides battery
backup to critical components of the system, allowing them to
stay online longer and/or allowing the IT staff to shut them
down using proper procedures in order to prevent data loss
that might occur from a power failure.
• Alternate, or “hot” sites. Some organizations choose to have
an alternate site where an exact replica of their critical data is
always kept up to date. When the primary site goes down, the
alternate site is immediately brought online so that little or no
downtime is experienced.
As information has become a strategic asset, a whole industry
has sprung up around the technologies necessary for implementing
a proper backup strategy. A company can contract with a service
134 | Information Systems for Business and Beyond (2019)
Diagram of a network configuration
with firewalls, a router, and a DMZ.
provider to back up all of their data or they can purchase large
amounts of online storage space and do it themselves. Technologies
such as Storage Area Networks (SAN) and archival systems are now
used by most large businesses for data backup.
Firewalls
Firewalls are another method
that an organization can use for
increasing security on its
network. A firewall can exist as
hardware or software, or both.
A hardware firewall is a device
that is connected to the
network and filters the packets
based on a set of rules. One
example of these rules would
be preventing packets entering
the local network that come
from unauthorized users. A software firewall runs on the operating
system and intercepts packets as they arrive to a computer.
A firewall protects all company servers and computers by
stopping packets from outside the organization’s network that do
not meet a strict set of criteria. A firewall may also be configured
to restrict the flow of packets leaving the organization. This may
be done to eliminate the possibility of employees watching YouTube
videos or using Facebook from a company computer.
A demilitarized zone (DMZ) implements multiple firewalls as part
of network security configuration, creating one or more sections of
their network that are partially secured. The DMZ typically contains
resources that need broader access but still need to be secured.
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Intrusion Detection Systems
Intrusion Detection Systems (IDS) can be placed on the network
for security purposes. An IDS does not add any additional security.
Instead, it provides the capability to identify if the network is being
attacked. An IDS can be configured to watch for specific types of
activities and then alert security personnel if that activity occurs. An
IDS also can log various types of traffic on the network for analysis
later. It is an essential part of any good security system.
Sidebar: Virtual Private Networks
Using firewalls and other security technologies, organizations can
effectively protect many of their information resources by making
them invisible to the outside world. But what if an employee
working from home requires access to some of these resources?
What if a consultant is hired who needs to do work on the internal
corporate network from a remote location? In these cases, a Virtual
Private Network (VPN) is needed.
136 | Information Systems for Business and Beyond (2019)
Diagram of VPN (click to enlarge). Attribution to
Ludovic.ferre.
A VPN allows a user who is outside of a corporate network to
take a detour around the firewall and access the internal network
from the outside. Through a combination of software and security
measures, a VPN provides off-site access to the organization’s
network while ensuring overall security.
The Internet cloud is essentially an insecure channel through
which people communicate to various web sites/servers.
Implementing a VPN results in a secure pathway, usually referred
to as a tunnel, through the insecure cloud, virtually guaranteeing
secure access to the organization’s resources. The diagram
represents security by way of the functionality of a VPN as it
“tunnels” through the insecure Internet Cloud. Notice that the
remote user is given access to the organization’s intranet, as if the
user was physically located within the intranet.
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Physical Security
An organization can implement the best authentication scheme in
the world, develop superior access control, and install firewalls and
intrusion detection, but its security cannot be complete without
implementation of physical security. Physical security is the
protection of the actual hardware and networking components that
store and transmit information resources. To implement physical
security, an organization must identify all of the vulnerable
resources and take measures to ensure that these resources cannot
be physically tampered with or stolen. These measures include the
following.
• Locked doors. It may seem obvious, but all the security in the
world is useless if an intruder can simply walk in and physically
remove a computing device. High value information assets
should be secured in a location with limited access.
• Physical intrusion detection. High value information assets
should be monitored through the use of security cameras and
other means to detect unauthorized access to the physical
locations where they exist.
• Secured equipment. Devices should be locked down to
prevent them from being stolen. One employee’s hard drive
could contain all of your customer information, so it is
essential that it be secured.
• Environmental monitoring. An organization’s servers and
other high value equipment should always be kept in a room
that is monitored for temperature, humidity, and airflow. The
risk of a server failure rises when these factors exceed
acceptable ranges.
• Employee training. One of the most common ways thieves
steal corporate information is the theft of employee laptops
while employees are traveling. Employees should be trained to
secure their equipment whenever they are away from the
138 | Information Systems for Business and Beyond (2019)
office.
Security Policies
Besides the technical controls listed above, organizations also need
to implement security policies as a form of administrative control.
In fact, these policies should really be a starting point in developing
an overall security plan. A good information security policy lays out
the guidelines for employee use of the information resources of the
company and provides the company recourse in the event that an
employee violates a policy.
According to the SANS Institute, a good policy is “a formal, brief,
and high-level statement or plan that embraces an
organization’s general beliefs, goals, objectives, and acceptable
procedures for a specified subject area.” Policies require
compliance. Failure to comply with a policy will result in disciplinary
action. A policy does not list the specific technical details, instead it
focuses on the desired results. A security policy should be based on
the guiding principles of confidentiality, integrity, and availability.4
Web use is a familiar example of a security policy. A web use
policy lays out the responsibilities of company employees as they
use company resources to access the Internet. A good example of a
web use policy is included in Harvard University’s “Computer Rules
and Responsibilities” policy, which can be found here.
A security policy should also address any governmental or
industry regulations that apply to the organization. For example,
if the organization is a university, it must be aware of the Family
Educational Rights and Privacy Act (FERPA), which restricts access
to student information. Health care organizations are obligated to
4. [2]
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http://www.fas-it.fas.harvard.edu/services/student/policies/rules_and_responsibilities
follow several regulations, such as the Health Insurance Portability
and Accountability Act (HIPAA).
A good resource for learning more about security policies is the
SANS Institute’s Information Security Policy Page.
Sidebar: Mobile Security
As the use of mobile devices such as laptops and smartphones
proliferates, organizations must be ready to address the unique
security concerns that the use of these devices bring. One of the
first questions an organization must consider is whether to allow
mobile devices in the workplace at all. Many employees already have
these devices, so the question becomes: Should we allow employees
to bring their own devices and use them as part of their employment
activities? Or should we provide the devices to our employees?
Creating a BYOD (“Bring Your Own Device”) policy allows employees
to integrate themselves more fully into their job and can bring
higher employee satisfaction and productivity. In many cases, it
may be virtually impossible to prevent employees from having their
own smartphones or laptops in the workplace. If the organization
provides the devices to its employees, it gains more control over
use of the devices, but it also increases the burden of having to
administrate distribution and use.
Mobile devices can pose many unique security challenges to an
organization. Probably one of the biggest concerns is theft of
intellectual property. For an employee with malicious intent, it
would be a very simple process to connect a mobile device either to
a computer via the USB port, or wirelessly to the corporate network,
and download confidential data. It would also be easy to secretly
take a high-quality picture using a built-in camera.
When an employee does have permission to access and save
140 | Information Systems for Business and Beyond (2019)
http://www.sans.org/security-resources/policies
company data on his or her device, a different security threat
emerges. Namely, that device now becomes a target for thieves.
Theft of mobile devices (in this case, including laptops) is one of the
primary methods that data thieves use.
So what can be done to secure mobile devices? Begin with a
good policy regarding their use. According to a 2013 SANS study,
organizations should consider developing a mobile device policy
that addresses the following issues: use of the camera, use of voice
recording, application purchases, encryption at rest, Wi-Fi
autoconnect settings, Bluetooth settings, VPN use, password
settings, lost or stolen device reporting, and backup. 5
Besides policies, there are several different tools that an
organization can use to mitigate some of these risks. For example,
if a device is stolen or lost, geolocation software can help the
organization find it. In some cases, it may even make sense to install
remote data removal software, which will remove data from a device
if it becomes a security risk.
Usability
When looking to secure information resources, organizations must
balance the need for security with users’ needs to effectively access
and use these resources. If a system’s security measures make it
difficult to use, then users will find ways around the security, which
may make the system more vulnerable than it would have been
without the security measures. Consider password policies. If the
organization requires an extremely long password with several
5. [3]
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Stop.Think.Connect. poster (click to
enlarge)
special characters, an employee may resort to writing it down and
putting it in a drawer since it will be impossible to memorize.
Personal Information Security
As a final topic for this
chapter, consider what
measures each of us, as
individual users, can take to
secure our computing
technologies. There is no way
to have 100% security, but
there are several simple steps
each individual can take to be
more secure.
• Keep your software up to
date. Whenever a software
vendor determines that a
security flaw has been
found in their software, an
update will be released so you can download the patch to fix
the problem. You should turn on automatic updating on your
computer to automate this process.
• Install antivirus software and keep it up to date. There are
many good antivirus software packages on the market today,
including some that are free.
• Be smart about your connections. You should be aware of
your surroundings. When connecting to a Wi-Fi network in a
public place, be aware that you could be at risk of being spied
on by others sharing that network. It is advisable not to access
your financial or personal data while attached to a Wi-Fi
hotspot. You should also be aware that connecting USB flash
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https://www.pcmag.com/article2/0,2817,2388652,00.asp
drives to your device could also put you at risk. Do not attach
an unfamiliar flash drive to your device unless you can scan it
first with your security software.
• Backup your data. Just as organizations need to backup their
data, individuals need to so as well. The same rules apply.
Namely, do it regularly and keep a copy of it in another
location. One simple solution for this is to set up an account
with an online backup service to automate your backups.
• Secure your accounts with two-factor authentication. Most
e-mail and social media providers now have a two-factor
authentication option. When you log in to your account from
an unfamiliar computer for the first time, it sends you a text
message with a code that you must enter to confirm that you
are really you. This means that no one else can log in to your
accounts without knowing your password and having your
mobile phone with them.
• Make your passwords long, strong, and unique. Your personal
passwords should follow the same rules that are recommended
for organizations. Your passwords should be long (at least 12
random characters) and contain at least two of the following:
uppercase and lowercase letters, digits, and special characters.
Passwords should not include words that could be tied to your
personal information, such as the name of your pet. You also
should use different passwords for different accounts, so that
if someone steals your password for one account, they still are
locked out of your other accounts.
• Be suspicious of strange links and attachments. When you
receive an e-mail, tweet, or Facebook post, be suspicious of
any links or attachments included there. Do not click on the
link directly if you are at all suspicious. Instead, if you want to
access the website, find it yourself with your browser and
navigate to it directly. The I Love You virus was distributed via
email in May 2000 and contained an attachment which when
opened copied itself into numerous folders on the user’s
computer and modified the operating system settings. An
Chapter 6: Information Systems Security | 143
estimated 50,000 computers were affected, all of which could
have been avoided if users had followed the warning to not
open the attachment.
You can find more about these steps and many other ways to be
secure with your computing by going to Stop. Think. Connect. This
website is part of a campaign by the STOP. THINK. CONNECT.
Messaging Convention in partnership with the U.S. government,
including the White House.
Summary
As computing and networking resources have become more an
integral part of business, they have also become a target of
criminals. Organizations must be vigilant with the way they protect
their resources. The same holds true for individuals. As digital
devices become more intertwined in everyone’s life, it becomes
crucial for each person to understand how to protect themselves.
Study Questions
1. Briefly define each of the three members of the information
security triad.
2. What does the term authentication mean?
3. What is multi-factor authentication?
4. What is role-based access control?
5. What is the purpose of encryption?
144 | Information Systems for Business and Beyond (2019)
http://stopthinkconnect.org/
6. What are two good examples of a complex password?
7. What is pretexting?
8. What are the components of a good backup plan?
9. What is a firewall?
10. What does the term physical security mean?
Exercises
1. Describe one method of multi-factor authentication that you
have experienced and discuss the pros and cons of using
multi-factor authentication.
2. What are some of the latest advances in encryption
technologies? Conduct some independent research on
encryption using scholarly or practitioner resources, then
write a two- to three-page paper that describes at least two
new advances in encryption technology.
3. Find favorable and unfavorable articles about both blockchain
and bitcoin. Report your findings, then state your own opinion
about these technologies
4. What is the password policy at your place of employment or
study? Do you have to change passwords every so often? What
are the minimum requirements for a password?
5. When was the last time you backed up your data? What
method did you use? In one to two pages, describe a method
for backing up your data. Ask your instructor if you can get
extra credit for backing up your data.
6. Find the information security policy at your place of
employment or study. Is it a good policy? Does it meet the
standards outlined in the chapter?
7. How diligent are you in keeping your own information secure?
Review the steps listed in the chapter and comment on your
security status.
Chapter 6: Information Systems Security | 145
Labs
1. The Caesar Cipher. One of the oldest methods of encryption
was used by Julius Caesar and involved simply shifting text a
specified number of positions in the alphabet. The number of
shifted positions is known as the key. So a key = 3 would
encrypt ZOO to CRR. Decrypt the following message which has
a key = 3: FRPSXWHU
2. The Vigenere Cipher. This cipher was used as recently as the
Civil War by the Confederate forces. The key is slightly more
complex than the Caesar Cipher. Vigenere used the number of
letters after ‘A’ for his key. For example, if the key = COD, the
first letter in the cypher is shifted 2 characters (because “C” is
2 letters after the letter ‘A’), the second letter is shifted 14
letters (O being 14 letters after ‘A’), and the third letter is
shifted 3 letters (D being 3 letters after ‘A’). Then the pattern is
repeated for subsequent letters. Decrypt the following
message which has a key = COD: YSPGSWCHGCKQ
3. Frequency and Pattern Analysis. If you’ve ever watched Wheel
of Fortune you know that contestants look for patterns and
frequencies in trying to solve a puzzle. Your job in this lab is to
analyze letter frequency and letter patterns to determine the
plaintext message which in this case is a single word. The key
is a simple substitution where the same letter in plaintext
always results in the same letter in the cyphertext. The most
frequently used letters in the English language are: E, A, O , I, T,
S, N. Pattern analysis includes knowing words that have double
letters such as “school.” Other patterns include “ing” at the end
of a word, “qu” and “th” as a pairs of letters.Cyphertext =
CAGGJWhat is the key and the plaintext?
1. Gallagher, S. (2012, November 3). Born to be
146 | Information Systems for Business and Beyond (2019)
breached. Arstechnica. Retrieved from
http://arstechnica.com/information-technology/2012/11/
born-to-be-breached-the-worst-passwords-are-still-the-
most-common/
2. SANS Institute. (n.d.). Information Security Policy Templates.
Retrieved from http://www.sans.org/security-resources/
policies/Policy_Primer on May 31, 2013.
3. SANS. (n.d.). SCORE: Checklists and Step by Step Guides.
Retrieved from http://www.sans.org/score/checklists/
mobile-device-checklist.xls
4. Iansiti, M. and Lakhani, K. R. (2017, January). The truth about
blockchain. Harvard Business Review. Retrieved from
https://hbr.org/2017/01/the-truth-about-blockchain↵
5. Wikipedia. (n.d.). Bitcoin. Harvard Business Review. Retrieved
from https://en.wikipedia.org/wiki/Bitcoin↵
6. Fernandes, B. (2017, October 20). Personal telephone
interview↵
Chapter 6: Information Systems Security | 147
PART II: INFORMATION
SYSTEMS FOR STRATEGIC
ADVANTAGE
Part II: Information Systems for
Strategic Advantage | 149
Chapter 7: Does IT Matter?
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• define the productivity paradox and explain the
current thinking on this topic;
• evaluate Carr’s argument in “Does IT Matter?”;
• describe the components of competitive advantage;
and
• describe information systems that can provide
businesses with competitive advantage.
Introduction
For over fifty years, computing technology has been a part of
business. Organizations have spent trillions of dollars on
information technologies. But has all this investment in IT made
a difference? Have there been increases in productivity? Are
companies that invest in IT more competitive? This chapter looks
at the value IT can bring to an organization and attempts to answer
Chapter 7: Does IT Matter? | 151
these questions. Two important works in the past two decades have
attempted to address this issue.
The Productivity Paradox
In 1991, Erik Brynjolfsson wrote an article, published in
the Communications of the ACM, entitled “The Productivity Paradox
of Information Technology: Review and Assessment.” After
reviewing studies about the impact of IT investment on productivity,
Brynjolfsson concluded that the addition of information technology
to business had not improved productivity at all. He called this
the “productivity paradox.” While he did not draw any specific
conclusions from his work, 1 he did provide the following analysis.
Although it is too early to conclude that IT’s
productivity contribution has been subpar, a paradox
remains in our inability to unequivocally document
any contribution after so much effort. The various
explanations that have been proposed can be
grouped into four categories:
1) Mismeasurement of outputs and inputs
2) Lags due to learning and adjustment
3) Redistribution and dissipation of profits
4) Mismanagement of information and technology
In 1998, Brynjolfsson and Lorin Hitt published a follow-up paper
entitled “Beyond the Productivity Paradox [2] In this paper, the
authors utilized new data that had been collected and found that
IT did, indeed, provide a positive result for businesses. Further,
they found that sometimes the true advantages in using technology
1. [1]
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http://ccs.mit.edu/papers/CCSWP130/ccswp130.html
http://ccs.mit.edu/papers/CCSWP130/ccswp130.html
http://ebusiness.mit.edu/erik/bpp
were not directly relatable to higher productivity, but to “softer”
measures, such as the impact on organizational structure. They also
found that the impact of information technology can vary widely
between companies.
IT Doesn’t Matter
Just as a consensus was forming about the value of IT, the Internet
stock market bubble burst. Two years later in 2003, Harvard
professor Nicholas Carr wrote his article “IT Doesn’t Matter” in
the Harvard Business Review. In this article Carr asserted that as
information technology had become ubiquitous, it has also become
less of a differentiator, much like a commodity. Products that have
the same features and are virtually indistinguishable are considered
to be commodities. Price and availability typically become the only
discriminators when selecting a source for a commodity. In Carr’s
view all information technology was the same, delivering the same
value regardless of price or supplier. Carr suggested that since IT
is essentially a commodity, it should be managed like one. Just
select the one with the lowest cost this is most easily accessible. He
went on to say IT management should see themselves as a utility
within the company and work to keep costs down. For Carr IT’s
goal is to provide the best service with minimal downtime. Carr
saw no competitive advantage to be gained through information
technology.
As you can imagine, this article caused quite an uproar, especially
from IT companies. Many articles were written in defense of IT
while others supported Carr. In 2004 Carr released a book based on
the article entitled Does IT Matter? A year later he was interviewed
by CNET on the topic “IT still doesn’t matter.” Click here to watch
the video of Carr being interviewed about his book on CNET.
Probably the best thing to come out of the article and subsequent
book were discussions on the place of IT in a business strategy, and
Chapter 7: Does IT Matter? | 153
exactly what role IT could play in competitive advantage. That is the
question to be addressed in this chapter.
Competitive Advantage
What does it mean when a company has a competitive advantage?
What are the factors that play into it? Michael Porter in his
book Competitive Advantage: Creating and Sustaining Superior
Performance. writes that a company is said to have a competitive
advantage over its rivals when it is able to sustain profits that exceed
the average for the industry. According to Porter, there are two
primary methods for obtaining competitive advantage: cost
advantage and differentiation advantage. 2 So the question for I.T.
becomes: How can information technology be a factor in one or both
of these methods?
The following sections address this question by using two of
Porter’s analysis tools: the value chain and the five forces model.
Porter’s analysis in his 2001 article “Strategy and the Internet,”
which examines the impact of the Internet on business strategy and
competitive advantage, will be used to shed further light on the role
of information technology in gaining competitive advantage.3
2. [3]
3. [4]
154 | Information Systems for Business and Beyond (2019)
Diagram of
Porter’s
Value Chain
(click to
enlarge)
The Value Chain
In his book Competitive Advantage: Creating and Sustaining
Performance Porter describes exactly how a company can create
value and therefore profit. Value is built through the value chain: a
series of activities undertaken by the company to produce a product
or service. Each step in the value chain contributes to the overall
value of a product or service. While the value chain may not be a
perfect model for every type of company, it does provide a way to
analyze just how a company is producing value. The value chain is
made up of two sets of activities: primary activities and support
activities. An explanation of these activities and a discussion of
how information technology can play a role in creating value by
contributing to cost advantage or differentiation advantage appears
next.
Primary activities are the functions that directly impact the
creation of a product or service. The goal of a primary activity is to
add value that is greater than the cost of that activity. The primary
activities are:
• Inbound logistics. These are the processes that bring in raw
materials and other needed inputs. Information technology
can be used to make these processes more efficient, such as
with supply-chain management systems which allow the
suppliers to manage their own inventory.
• Operations. Any part of a business that converts the raw
materials into a final product or service is a part of operations.
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From manufacturing to business process management
(covered in Chapter 8), information technology can be used to
provide more efficient processes and increase innovation
through flows of information.
• Outbound logistics. These are the functions required to get
the product out to the customer. As with inbound logistics, IT
can be used here to improve processes, such as allowing for
real-time inventory checks. IT can also be a delivery
mechanism itself.
• Sales/Marketing. The functions that will entice buyers to
purchase the products are part of sales and marketing.
Information technology is used in almost all aspects of this
activity. From online advertising to online surveys, IT can be
used to innovate product design and reach customers as never
before. The company website can be a sales channel itself.
• Service. Service activity involves the functions a business
performs after the product has been purchased to maintain
and enhance the product’s value. Service can be enhanced via
technology as well, including support services through
websites and knowledge bases.
The support activities are the functions in an organization that
support all of the primary activities. Support activities can be
considered indirect costs to the organization. The support activities
are:
• Firm infrastructure. An organization’s infrastructure includes
finance, accounting, ERP systems (covered in Chapter 9) and
quality control. All of these depend on information technology
and represent functions where I.T. can have a positive impact.
• Human Resource Management Human Resource Management
(HRM) consists of recruiting, hiring, and other services needed
to attract and retain employees. Using the Internet, HR
departments can increase their reach when looking for
candidates. I.T. also allows employees to use technology for a
156 | Information Systems for Business and Beyond (2019)
Porter’s Five Forces (click to enlarge)
more flexible work environment.
• Technology development. Technology development provides
innovation that supports primary activities. These advances
are integrated across the firm to add value in a variety of
departments. Information technology is the primary generator
of value in this support activity.
• Procurement. Procurement focuses on the acquisition of raw
materials used in the creation of products. Business-to-
business e-commerce can be used to improve the acquisition
of materials.
This analysis of the value chain provides some insight into how
information technology can lead to competitive advantage. Another
important concept from Porter is the “Five Forces Model.”
Porter’s Five Forces
Porter developed the Five
Forces model as a framework
for industry analysis. This
model can be used to help
understand the degree of
competition in an industry and
analyze its strengths and
weaknesses. The model
consists of five elements, each of which plays a role in determining
the average profitability of an industry. In 2001 Porter wrote an
article entitled ”Strategy and the Internet,” in which he takes this
model and looks at how the Internet impacts the profitability of an
industry. Below is a quick summary of each of the Five Forces and
the impact of the Internet.
• Threat of substitute products or services. The first force
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challenges the user to consider the likelihood of another
produce or service replacing the product or service you offer.
The more types of products or services there are that can meet
a particular need, the less profitability there will be in an
industry. In the communications industry, the smartphone has
largely replaced the pager. In some construction projects,
metal studs have replaced wooden studs for framing. The
Internet has made people more aware of substitute products,
driving down industry profits in those industries in which
substitution occurs. Please notice that substitution refers to a
product being replaced by a similar product for the purpose of
accomplishing the same task. It does not mean dissimilar
products or services such as flying to a destination rather than
traveling by rail.
• Bargaining power of suppliers. A supplier’s bargaining power
is strong when there are few suppliers from which your
company can obtain a needed product or service. Conversely,
when they are many suppliers their bargaining power is lower
since your company would have many sources from which to
source a product. When your company has several suppliers to
choose from, you can negotiate a lower price. When a sole
supplier exists, then your company is at the mercy of the
supplier. For example, if only one company makes the
controller chip for a car engine, that company can control the
price, at least to some extent. The Internet has given
companies access to more suppliers, driving down prices.
• Bargaining power of customers. A customer’s bargaining
power is strong when your company along with your
competitors is attempting to provide the same product to this
customer. In this instance the customer has many sources
from which to source a product so they can approach your
company and seek a price reduction. If there are few suppliers
in your industry, then the customer’s bargaining power is
considered low.
• Barriers to entry. The easier it is to enter an industry, the
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more challenging it will be to make a profit in that industry.
Imagine you are considering starting a lawn mowing business.
The entry barrier is very low since all you need is a law mower.
No special skills or licenses are required. However, this means
your neighbor next door may decide to start mowing lawns
also, resulting in increased competition. In contrast a highly
technical industry such as manufacturing of medical devices
has numerous barriers to entry. You would need to find
numerous suppliers for various components, hire a variety of
highly skilled engineers, and work closely with the Food and
Drug Administration to secure approval for the sale of your
products. In this example the barriers to entry are very high so
you should expect few competitors.
• Rivalry among existing competitors: Rivalry among existing
competitors helps you evaluate your entry into the market.
When rivalry is fierce, each competitor is attempting to gain
additional market share from the others. This can result in
aggressive pricing, increasing customer support, or other
factors which might lure a customer away from a competitor.
Markets in which rivalry is low may be easier to enter and
become profitable sooner because all of the competitors are
accepting of each other’s presence.
Porter’s five forces are used to analyze an industry to determine
the average profitability of a company within that industry. Adding
in Porter’s analysis of the Internet to his Five Forces results in the
realization that technology has lowered overall profitability. 4
4. [5]
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Using Information Systems for Competitive
Advantage
Having learned about Porter’s Five Forces and their impact on a
firm’s ability to generate a competitive advantage, it is time to look
at some examples of competitive advantage. A strategic information
system is designed specifically to implement an organizational
strategy meant to provide a competitive advantage. These types of
information systems began popping up in the 1980s, as noted in a
paper by Charles Wiseman entitled “Creating Competitive Weapons
From Information Systems.”5
A strategic information system attempts to do one or more of the
following:
• Deliver a product or a service at a lower cost;
• Deliver a product or service that is differentiated;
• Help an organization focus on a specific market segment;
• Enable innovation.
Here are some examples of information systems that fall into this
category.
Business Process Management Systems
In their book, IT Doesn’t Matter – Business Processes Do, Howard
Smith and Peter Fingar argue that it is the integration of information
systems with business processes that leads to competitive
advantage. The authors state that Carr’s article is dangerous
because it gave CEOs and IT managers approval to start cutting
5. [6]
160 | Information Systems for Business and Beyond (2019)
Comparison
of process
with and
without EDI
(click to
enlarge)
their technology budgets, putting their companies in peril. True
competitive advantage can be found with information systems that
support business processes. Chapter 8 focuses on the use of
business processes for competitive advantage.
Electronic Data Interchange
Electronic Data Interchange (EDI) provides a competitive advantage
through integrating the supply chain electronically. EDI can be
thought of as the computer-to-computer exchange of business
documents in a standard electronic format between business
partners. By integrating suppliers and distributors via EDI, a
company can vastly reduce the resources required to manage the
relevant information. Instead of manually ordering supplies, the
company can simply place an order via the computer and the
products are ordered.
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Collaborative Systems
As organizations began to implement networking technologies,
information systems emerged that allowed employees to begin
collaborating in different ways. These systems allowed users to
brainstorm ideas together without the necessity of physical, face-
to-face meetings. Tools such as video conferencing with Skype or
WebEx, collaboration and document sharing with Microsoft
SharePoint, and project management with SAP’s Project System
make collaboration possible in a variety of endeavors.
Broadly speaking, any software that allows multiple users to
interact on a document or topic could be considered collaborative.
Electronic mail, a shared Word document, and social networks fall
into this broad definition. However, many software tools have been
created that are designed specifically for collaborative purposes.
These tools offer a broad spectrum of collaborative functions. Here
is just a short list of some collaborative tools available for businesses
today:
• Google Drive. Google Drive offers a suite of office applications
(such as a word processor, spreadsheet, drawing, presentation)
that can be shared between individuals. Multiple users can edit
the documents at the same time and the threaded comments
option is available.
• Microsoft SharePoint. SharePoint integrates with Microsoft
Office and allows for collaboration using tools most office
workers are familiar with. SharePoint was covered in greater
detail in chapter 5.
• Cisco WebEx. WebEx combines video and audio
communications and allows participants to interact with each
other’s computer desktops. WebEx also provides a shared
whiteboard and the capability for text-based chat to be going
on during the sessions, along with many other features. Mobile
editions of WebEx allow for full participation using
162 | Information Systems for Business and Beyond (2019)
http://drive.google.com/
http://office.microsoft.com/en-us/microsoft-sharepoint-collaboration-software-FX103479517.aspx
http://webex.com/
smartphones and tablets.
• GitHub. Programmers/developers use GitHub for web-based
team development of computer software.
Decision Support Systems
A decision support system (DSS) helps an organization make a
specific decision or set of decisions. DSSs can exist at different
levels of decision-making within the organization, from the CEO
to first level managers. These systems are designed to take inputs
regarding a known (or partially-known) decision making process
and provide the information necessary to make a decision. DSSs
generally assist a management level person in the decision-making
process, though some can be designed to automate decision-
making.
An organization has a wide variety of decisions to make, ranging
from highly structured decisions to unstructured decisions. A
structured decision is usually one that is made quite often, and one
in which the decision is based directly on the inputs. With
structured decisions, once you know the necessary information you
also know the decision that needs to be made. For example,
inventory reorder levels can be structured decisions. Once your
inventory of widgets gets below a specific threshold, automatically
reorder ten more. Structured decisions are good candidates for
automation, but decision-support systems are generally not built
for them.
An unstructured decision involves a lot of unknowns. Many times
unstructured decisions are made for the first time. An information
system can support these types of decisions by providing the
decision makers with information gathering tools and collaborative
capabilities. An example of an unstructured decision might be
Chapter 7: Does IT Matter? | 163
https://github.com/
dealing with a labor issue or setting policy for the implementation
of a new technology.
Decision support systems work best when the decision makers
are having to make semi-structured decisions. A semi-structured
decision is one in which most of the factors needed for making the
decision are known but human experience and other outside factors
may still impact the decision. A good example of an semi-structured
decision would be diagnosing a medical condition (see sidebar).
As with collaborative systems, DSSs can come in many different
formats. A nicely designed spreadsheet that allows for input of
specific variables and then calculates required outputs could be
considered a DSS. Another DSS might be one that assists in
determining which products a company should develop. Input into
the system could include market research on the product,
competitor information, and product development costs. The
system would then analyze these inputs based on the specific rules
and concepts programmed into it. The system would report its
results with recommendations and/or key indicators to be used in
making a decision. A DSS can be looked at as a tool for competitive
advantage because it can give an organization a mechanism to make
wise decisions about products and innovations.
164 | Information Systems for Business and Beyond (2019)
Isabel screen shot
Sidebar: Isabel – A Health Care DSS
A discussed in the text, DSSs
are best applied to semi-
structured decisions, in which
most of the needed inputs are
known but human experience
and environmental factors also
play a role. A good example for
today is Isabel, a health care
DSS. The creators of Isabel
explain how it works:
Isabel uses the information routinely captured
during your workup, whether free text or structured
data, and instantaneously provides a diagnosis
checklist for review. The checklist contains a list of
possible diagnoses with critical “Don’t Miss
Diagnoses” flagged. When integrated into your
Electronic Medical Records (EMR) system, Isabel can
provide “one click” seamless diagnosis support with
no additional data entry. 6
Investing in IT for Competitive Advantage
In 2008, Brynjolfsson and McAfee published a study in the Harvard
Business Review on the role of IT in competitive advantage, entitled
6. [7]
Chapter 7: Does IT Matter? | 165
http://www.isabelhealthcare.com/
http://hbr.org/2008/07/investing-in-the-it-that-makes-a-competitive-difference/ar/1
“Investing in the IT That Makes a Competitive Difference.” Their
study confirmed that IT can play a role in competitive advantage if
deployed wisely. In their study, they drew three conclusions7:
• First, the data show that IT has sharpened differences
among companies instead of reducing them. This
reflects the fact that while companies have always
varied widely in their ability to select, adopt, and exploit
innovations, technology has accelerated and amplified
these differences.
• Second, good management matters. Highly qualified
vendors, consultants, and IT departments might be
necessary for the successful implementation of
enterprise technologies themselves, but the real value
comes from the process innovations that can now be
delivered on those platforms. Fostering the right
innovations and propagating them widely are both
executive responsibilities – ones that can’t be delegated.
• Finally, the competitive shakeup brought on by IT is not
nearly complete, even in the IT-intensive US economy.
You can expect to see these altered competitive
dynamics in other countries, as well, as their IT
investments grow.
Information systems can be used for competitive advantage, but
they must be used strategically. Organizations must understand
how they want to differentiate themselves and then use all the
elements of information systems (hardware, software, data, people,
and process) to accomplish that differentiation.
7. [8]
166 | Information Systems for Business and Beyond (2019)
Summary
Information systems are integrated into all components of business
today, but can they bring competitive advantage? Over the years,
there have been many answers to this question. Early research
could not draw any connections between IT and profitability, but
later studies have shown that the impact can be positive. IT is
not a panacea. Just purchasing and installing the latest technology
will not by itself make a company more successful. Instead, the
combination of the right technologies and good management will
give a company the best chance for a positive result.
Study Questions
1. What is the productivity paradox?
2. Summarize Carr’s argument in “Does IT Matter.”
3. How is the 2008 study by Brynjolfsson and McAfee different
from previous studies? How is it the same?
4. What does it mean for a business to have a competitive
advantage?
5. What are the primary activities and support activities of the
value chain?
6. What has been the overall impact of the Internet on industry
profitability? Who has been the true winner?
7. How does EDI work?
8. Give an example of a semi-structured decision and explain
what inputs would be necessary to provide assistance in
making the decision.
9. What does a collaborative information system do?
10. How can IT play a role in competitive advantage, according to
Chapter 7: Does IT Matter? | 167
the 2008 article by Brynjolfsson and McAfee?
Exercises
1. Analyze Carr’s position in regards to PC vs. Mac, Open Office
vs. Microsoft Office, and Microsoft Powerpoint vs. Tableau.
2. Do some independent research on Nicholas Carr (the author of
“IT Doesn’t Matter”) and explain his current position on the
ability of IT to provide competitive advantage.
3. Review the WebEx website. What features of WebEx would
contribute to good collaboration? Compare WebEx with other
collaboration tools such as Skype or Google Hangouts?
Lab
1. Think of a semi-structured decision that you make in your
daily life and build your own DSS using a spreadsheet that
would help you make that decision.
1. Brynjolfsson, E. (1994). The Productivity Paradox of Information
Technology: Review and Assessment. Center for Coordination
Science MIT Sloan School of Management: Cambridge,
Massachusetts.↵
2. Brynjolfsson, E. and Hitt, L. (1998). Beyond the Productivity
Paradox. Communications of the ACM, 41, 49–55. ↵
3. Porter, M. (1985). Competitive Advantage: Creating and
Sustaining Superior Performance. New York: The Free Press. ↵
4. Porter, M. (2001, March). Strategy and the Internet. Harvard
168 | Information Systems for Business and Beyond (2019)
http://webex.com/
Business Review, 79 ,3. Retrieved from http://hbswk.hbs.edu/
item/2165.html ↵
5. Porter, M. (2001, March). Strategy and the Internet. Harvard
Business Review, 79, 3. Retrieved from http://hbswk.hbs.edu/
item/2165.html↵
6. Wiseman, C. and MacMillan, I. C. (1984). Creating Competitive
Weapons From Information Systems. Journal Of Business
Strategy, 5(2)., 42.↵
7. Isabel. (n.d.). Broaden Your Differential Diagnosis. Retrieved
from http://www.isabelhealthcare.com/home/ourmission. ↵
8. McAfee, A. and Brynjolfsson, E. (2008, July-August). Investing in
the IT That Makes a Competitive Difference. Harvard Business
Review.↵
Chapter 7: Does IT Matter? | 169
Chapter 8: Business Processes
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• define the term business process;
• understand the tools of documentation of business
processes;
• identify the different systems needed to support
business processes in an organization;
• explain the value of an enterprise resource
planning (ERP) system;
• explain how business process management and
business process reengineering work; and
• understand how information technology combined
with business processes can bring an organization
competitive advantage.
Introduction
The fourth component of information systems is process. But what is
a process and how does it tie into information systems? And in what
170 | Chapter 8: Business Processes
ways do processes have a role in business? This chapter looks to
answer those questions and also describe how business processes
can be used for strategic advantage.
What Is a Business Process?
We have all heard the term process before, but what exactly does
it mean? A process is a series of tasks that are completed in order to
accomplish a goal. A business process, therefore, is a process that is
focused on achieving a goal for a business. Processes are something
that businesses go through every day in order to accomplish their
mission. The better their processes, the more effective the business.
Some businesses see their processes as a strategy for achieving
competitive advantage. A process that achieves its goal in a unique
way can set a company apart. A process that eliminates costs can
allow a company to lower its prices (or retain more profit). If you
have worked in a business setting, you have participated in a
business process. Anything from a simple process for making a
sandwich at Subway to building a space shuttle utilizes one or more
business processes. In the context of information systems, a
business process is a set of business activities performed by human
actors and/or the information system to accomplish a specific
outcome.
Documenting a Process
Every day each of us will perform many processes without even
thinking about them such as getting ready for work, using an ATM,
texting a friend, etc. As processes grow more complex, documenting
becomes necessary. It is essential for businesses to do this because
it allows them to ensure control over how activities are undertaken
Chapter 8: Business Processes | 171
in their organization. It also allows for standardization. For example,
McDonald’s has the same process for building a Big Mac in all of its
restaurants.
The simplest way to document a process is to just create a list.
The list shows each step in the process. Each step can be checked
off upon completion. A simple process such as how to create an
account on gmail might look like this:
1. Go to gmail.com.
2. Click “Create account.”
3. Enter your contact information in the “Create your Google
Account” form.
4. Choose your username and password.
5. Agree to User Agreement and Privacy Policy by clicking on
“Submit.”
For processes that are not so straightforward, documenting all of
the steps as a checklist may not be sufficient. For example, here
is the process for determining if an article for a term needs to be
added to Wikipedia:
1. Search Wikipedia to determine if the term already exists.
2. If the term is found, then an article is already written, so you
must think of another term. Go to step 1.
3. If the term is not found, then look to see if there is a related
term.
4. If there is a related term, then create a redirect.
5. If there is not a related term, then create a new article.
This procedure is relatively simple. In fact it has the same number
of steps as the previous example, but because it has some decision
points, it is more difficult to track as a simple list. In these cases it
may make more sense to use a diagram to document the process.
172 | Information Systems for Business and Beyond (2019)
Diagram of an example business
process (click to enlarge)
Business Process
Modeling Notation
A diagramming tool for
documentation of business
process is a formalized visual
language that provides systems
analysts with the ability to describe the business processes
unambiguously, to visualize the business processes for systematic
understanding, and to communicate the business process for
business process management. Natural languages (e.g., English) are
incapable to explain complex business processes. Diagrams have
been used as tools for business process modeling in the information
systems field. There have been many types of business process
diagramming tools, and each of them has its own style and syntax to
serve its particular purpose. The most commonly used business
process diagramming tools are Business Process Modeling Notation
(BPMN), Data Flow Diagram (DFD), and the Unified Modeling
Language (UML).
BPMN is an extension of the traditional flowchart method by
adding more diagramming elements for descriptions of business
process. The objective of BPMN is to support business process
documentation by providing intuitive notations for business rules.
The flowchart style diagrams in BPMN can provide detailed
specifications business processes from start to end. However,
BPMN is short of the ability of system decomposition for large
information systems.
DFD has served as a foundation of many other tools of
documentation of business process. The central concept of DFD is
a top-down approach to understanding a system. The top-down
approach is consistent with the system concept that views a system
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in a holistic manner and concerns an understanding of a system
by examining the components and their interactions within the
system. More importantly, while describing a business process by
using DFD, the data stores used in the process and generated data
flows in the process are also defined. We will provide an example
of DFD in the Sidebar section of this chapter to illustrate the
integration of data and business tasks in documenting a business
process.
The Unified Modeling Language (UML) is a general-purpose
modeling tool in the field of software engineering for constructing
all types of computerized systems. UML includes a set of various
types of diagrams with different subjects of modeling and
diversified graphics styles. The diversified diagrams in UML can
provide detailed specifications for software engineering in many
perspectives for construction of information systems, but could
be too complicated for documenting business processes from the
perspective of business process management.
Managing Business Process Documentation
As organizations begin to document their processes, it becomes an
administrative responsibility to keep track of them. As processes
change and improve, it is important to know which processes are
the most recent. It is also important to manage the process so
that it can be easily updated. The requirement to manage process
documentation has been one of the driving forces behind the
creation of the document management system. A document
management system stores and tracks documents and supports the
following functions.
• Versions and timestamps. The document management system
will keep multiple versions of documents. The most recent
version of a document is easy to identify and will be
174 | Information Systems for Business and Beyond (2019)
An ERP System (click to enlarge)
considered the default.
• Approvals and workflows. When a process needs to be
changed, the system will manage both access to the
documents for editing and the routing of the document for
approval.
• Communication. When a process changes, those who
implement the process need to be made aware of the changes.
The document management system will notify the appropriate
people when a change to a document has been approved.
Of course, document management systems are not only used for
managing business process documentation. Many other types of
documents are managed in these systems, such as legal documents
or design documents.
ERP Systems
An Enterprise Resource Planning (ERP) system is software with a
centralized database that can be used to run an entire company.
Here are some of the main components of an ERP system.
Computer program. The
system is a computer program,
which means that it has been
developed with specific logic
and rules behind it. It is
customized and installed to
work specifically for an
individual organization.
• Centralized database. All data
in an ERP system is stored in a
single, central database.
Centralization is key to the success of an ERP. Data entered in
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one part of the company can be immediately available to other
parts of the company.
• Used to run an entire company. An ERP can be used to
manage an entire organization’s operations. Companies can
purchase modules for an ERP that represent different
functions within the organization such as finance,
manufacturing, and sales. Some companies choose to purchase
many modules, others choose a subset of the modules.
An ERP system not only centralizes an organization’s data, but
the processes it enforces are the processes the organization has
adopted. When an ERP vendor designs a module, it has to
implement the rules for the associated business processes. Best
practices can be built into the ERP – a major selling point for ERP. In
other words, when an organization implements an ERP, it also gets
improved best practices as part of the deal.
For many organizations the implementation of an ERP system is
an excellent opportunity to improve their business practices and
upgrade their software at the same time. But for others an ERP
brings a challenge. Is the process embedded in the ERP really better
than the process they are currently utilizing? And if they implement
this ERP and it happens to be the same one that all of their
competitors have, will they simply become more like them, making
it much more difficult to differentiate themselves? A large
organization may have one version of the ERP, then acquire a
subsidiary which has a more recent version. Imagine the challenge
of requiring the subsidiary to change back to the earlier version.
One of the criticisms of ERP systems has been that they
commoditize business processes, driving all businesses to use the
same processes and thereby lose their uniqueness. The good news
is that ERP systems also have the capability to be configured with
custom processes. For organizations that want to continue using
their own processes or even design new ones, ERP systems offer
customization so the ERP is unique to the organization.
176 | Information Systems for Business and Beyond (2019)
Registered
Trademark
of SAP
There is a drawback to customizing an ERP system. Namely,
organizations have to maintain the changes themselves. Whenever
an update to the ERP system comes out, any organization that
has created a custom process will be required to add that change
to their new ERP version. This requires someone to maintain a
listing of these changes as well as re-testing the system every time
an upgrade is made. Organizations will have to wrestle with this
decision. When should they go ahead and accept the best-practice
processes built into the ERP system and when should they spend
the resources to develop their own processes?
Some of the best-known ERP vendors are SAP, Microsoft, and
Oracle.
Business Process Management
Organizations that are serious about improving their business
processes will also create structures to manage those
processes. Business process management (BPM) can be thought of
as an intentional effort to plan, document, implement, and
distribute an organization’s business processes with the support of
information technology.
BPM is more than just automating some simple steps. While
automation can make a business more efficient, it cannot be used to
Chapter 8: Business Processes | 177
provide a competitive advantage. BPM, on the other hand, can be an
integral part of creating that advantage.
Not all of an organization’s processes should be managed this way.
An organization should look for processes that are essential to the
functioning of the business and those that may be used to bring a
competitive advantage. The best processes to look at are those that
include employees from multiple departments, those that require
decision-making that cannot be easily automated, and processes
that change based on circumstances. Here is an example.
Suppose a large clothing retailer is looking to gain a competitive
advantage through superior customer service. A task force is
created to develop a state-of-the-art returns policy that allows
customers to return any article of clothing, no questions asked. The
organization also decides that, in order to protect the competitive
advantage that this returns policy will bring, they will develop their
own customization to their ERP system to implement this returns
policy. In preparation for the rollout of the system, all customer
service employees are trained, showing how to use the new system
and specifically how to process returns. Once the updated returns
process is implemented, the organization will be able to measure
several key indicators about returns that will allow them to adjust
the policy as needed. For example, if it is determined that many
women are returning their high-end dresses after wearing them
once, they could implement a change to the process that limits
the return period to 14 days from the original purchase date. As
changes to the returns policy are made, the changes are rolled out
via internal communications and updates to the returns processing
on the system are made.
If done properly, business process management will provide
several key benefits to an organization, which can be used to
contribute to competitive advantage. These benefits include:
• Empowering employees. When a business process is designed
correctly and supported with information technology,
employees will be able to implement it on their own authority.
178 | Information Systems for Business and Beyond (2019)
In the returns policy example, an employee would be able to
accept returns made before fourteen days or use the system to
make determinations on what returns would be allowed after
fourteen days.
• Built-in reporting. By building measurement into the
programming, the organization can stay current on key
metrics regarding their processes. In this example, these can
be used to improve the returns process and also, ideally, to
reduce returns.
• Enforcing best practices. As an organization implements
processes supported by information systems, it can work to
implement the best practices for that class of business process.
In this example, the organization may want to require that all
customers returning a product without a receipt show a legal
ID. This requirement can be built into the system so that the
return will not be processed unless a valid ID number is
entered.
• Enforcing consistency. By creating a process and enforcing it
with information technology, it is possible to create
consistency across the entire organization. In this example, all
stores in the retail chain can enforce the same returns policy. If
the returns policy changes, the change can be instantly
enforced across the entire chain.
Business Process Re-engineering
As organizations look to manage their processes to gain a
competitive advantage, it is also important to understand that
existing ways of doing things may not be the most effective or
efficient. A process developed in the 1950s is not going to be better
just because it is now supported by technology.
In 1990 Michael Hammer published an article in the Harvard
Business Review entitled “Reengineering Work: Don’t Automate,
Obliterate.” This article suggested that simply automating a bad
Chapter 8: Business Processes | 179
process does not make it better. Instead, companies should “blow
up” their existing processes and develop new processes that take
advantage of the new technologies and concepts. He states in the
introduction to the article:
Many of our job designs, work flows, control mechanisms,
and organizational structures came of age in a different
competitive environment and before the advent of the
computer. They are geared towards greater efficiency and
control. Yet the watchwords of the new decade are
innovation and speed, service, and quality.
It is time to stop paving the cow paths. Instead of
embedding outdated processes in silicon and software, we
should obliterate them and start over. We should “re-
engineer” our businesses: use the power of modern
information technology to radically redesign our business
processes in order to achieve dramatic improvements in
their performance.1
Business Process Re-engineering (BPR) is not just taking an existing
process and automating it. BPR is fully understanding the goals of a
process and then dramatically redesigning it from the ground up to
achieve dramatic improvements in productivity and quality. But this
is easier said than done. Most people think in terms of how to do
small, local improvements to a process. Complete redesign requires
thinking on a larger scale. Hammer provides some guidelines for
how to go about doing business process re-engineering:
• Organize around outcomes, not tasks. This simply means
design the process so that, if possible, one person performs all
the steps. Instead of passing the task on to numerous people,
one person does the entire process, resulting in greater speed
1. [1]
180 | Information Systems for Business and Beyond (2019)
and customer responsiveness.
• Have those who use the outcomes of the process perform the
process. With the use of information technology many simple
tasks are now automated so the person who needs the
outcome should be empowered to perform it. Hammer
provides the following example. Instead of having every
department in the company use a purchasing department to
order supplies, have the supplies ordered directly by those
who need the supplies using an information system.
• Merge information processing work into the real work that
produces the information. When one part of the company
creates information, such as sales information or payment
information, it should be processed by that same department.
There is no need for one part of the company to process
information created in another part of the company.
• Treat geographically dispersed resources as though they
were centralized. With the communications technologies
available today, it becomes easier than ever to focus on
physical location. A multinational organization does not need
separate support departments (such as IT, purchasing, etc.) for
each location anymore.
• Link parallel activities instead of integrating their results.
Departments that work in parallel should be sharing data and
communicating with each other during a process instead of
waiting until each group is done and then comparing notes.
The outdated concept of only linking outcomes results in re-
work, increased costs, and delays.
• Put the decision points where the work is performed, and
build controls into the process. The people who do the work
should have decision making authority and the process itself
should have built-in controls using information
technology. Today’s workforce is more educated and
knowledgeable than in the past so providing workers with
information technology can result in the employees controlling
their processes.
Chapter 8: Business Processes | 181
• Capture information at the source. Requiring information to
be entered more than once causes delays and errors. With
information technology, an organization can capture it once
and then make it available whenever needed.
These principles may seem like common sense today, but in 1990
they took the business world by storm. Hammer gives example after
example of how organizations improved their business processes
by many orders of magnitude without adding any new employees,
simply by changing how they did things (see sidebar).
Unfortunately, business process re-engineering got a bad name in
many organizations. This was because it was used as an excuse for
cost cutting that really had nothing to do with BPR. For example,
many companies simply used it as a reason for laying off part of
their workforce. However, today many of the principles of BPR have
been integrated into businesses and are considered part of good
business-process management.
Sidebar: Reengineering the College
Bookstore
The process of purchasing the correct textbooks in a timely manner
for college classes has always been problematic. Now with online
bookstores competing directly with the college bookstore for
students’ purchases, the college bookstore is under pressure to
justify its existence.
But college bookstores have one big advantage over their
competitors, namely they have access to students’ data. Once a
student has registered for classes, the bookstore knows exactly
what books that student will need for the upcoming term. To
leverage this advantage and take advantage of new technologies,
182 | Information Systems for Business and Beyond (2019)
College
Bookstore
Redesign
the bookstore wants to implement a new process that will make
purchasing books through the bookstore advantageous to students.
Though they may not be able to compete on price, they can provide
other advantages such as reducing the time it takes to find the
books and the ability to guarantee that the book is the correct
one for the class. In order to do this, the bookstore will need to
undertake a process redesign.
The goal of the process redesign is simple. Capture a higher
percentage of students as customers of the bookstore. After
diagramming the existing process and meeting with student focus
groups, the bookstore comes up with a new process. In the new
process the bookstore utilizes information technology to reduce the
amount of work the students need to do in order to get their books.
In this new process the bookstore sends the students an e-mail
with a list of all the books required for their upcoming classes. By
clicking a link in this e-mail the students can log into the bookstore,
confirm their books, and complete the purchase. The bookstore will
then deliver the books to the students. And there is an additional
benefit to the faculty: Professors are no longer asked to delay start
of semester assignments while students wait for books to arrive in
the mail. Instead, students can be expected to promptly complete
their assignments and the course proceeds on schedule.
Chapter 8: Business Processes | 183
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College bookstore data flow diagram
(original) (Click to enlarge)
College bookstore data flow diagram
(redesigned) (Click to enlarge)
Here are the changes to this process shown as data flow diagrams:
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https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/DFD1B
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/DFD2A
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Sidebar: ISO Certification
Many organizations now claim that they are using best practices
when it comes to business processes. In order to set themselves
apart and prove to their customers, and potential customers, that
they are indeed doing this, these organizations are seeking out
an ISO 9000 certification. ISO is an acronym for International
Standards Organization (website here). This body defines quality
standards that organizations can implement to show that they are,
indeed, managing business processes in an effective way. The ISO
9000 certification is focused on quality management.
In order to receive ISO certification, an organization must be
audited and found to meet specific criteria. In its most simple form,
the auditors perform the following review.
• Tell me what you do (describe the business process).
• Show me where it says that (reference the process
documentation).
• Prove that this is what happened (exhibit evidence in
documented records).
Chapter 8: Business Processes | 185
http://www.iso.org/iso/home.html
Over the years, this certification has evolved and many branches
of the certification now exist. ISO certification is one way to
separate an organization from others. You can find out more about
the ISO 9000 standard here.
Summary
The advent of information technologies has had a huge impact on
how organizations design, implement, and support business
processes. From document management systems to ERP systems,
information systems are tied into organizational processes. Using
business process management, organizations can empower
employees and leverage their processes for competitive advantage.
Using business process reengineering, organizations can vastly
improve their effectiveness and the quality of their products and
services. Integrating information technology with business
processes is one way that information systems can bring an
organization lasting competitive advantage.
Study Questions
1. What does the term business process mean?
2. What are three examples of business process from a job you
have had or an organization you have observed?
3. What is the value in documenting a business process?
4. What is an ERP system? How does an ERP system enforce best
practices for an organization?
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http://www.iso.org/iso/home/standards/management-standards/iso_9000.htm
5. What is one of the criticisms of ERP systems?
6. What is business process re-engineering? How is it different
from incrementally improving a process?
7. Why did BPR get a bad name?
8. List the guidelines for redesigning a business process.
9. What is business process management? What role does it play
in allowing a company to differentiate itself?
10. What does ISO certification signify?
Exercises
1. Think of a business process that you have had to perform in
the past. How would you document this process? Would a
diagram make more sense than a checklist? Document the
process both as a checklist and as a diagram.
2. Review the return policies at your favorite retailer, then answer
this question. What information systems do you think would
need to be in place to support their return policy?
3. If you were implementing an ERP system, in which cases would
you be more inclined to modify the ERP to match your
business processes? What are the drawbacks of doing this?
4. Which ERP is the best? Do some original research and
compare three leading ERP systems to each other. Write a
two- to three-page paper that compares their features.
Labs
1. Visit a fast food restaurant of your choice. Observe the
Chapter 8: Business Processes | 187
processes used in taking an order, filling the order, and
receiving payment. Create a flowchart showing the steps used.
Then create a second flowchart indicating where you would
recommend improvements to the processes.
2. Virginia Mason Medical Center, located in Seattle, Washington,
needed to radically change some of their business processes.
Download the case study. Then read the case study and
respond to the following items.
1. Number of campuses
2. Number of employees
3. Number of physicians
4. Nature of the issue at Virginia Mason
5. “You cannot improve a process until…”
6. Discuss staff walking distance and inventory levels
7. How were patient spaces redesigned?
8. What happened to walking distance after this redesign?
9. Inventory was reduced by what percent?
10. Total cost savings =
1. Hammer, M. (1990). Reengineering work: don’t automate,
obliterate. Harvard Business Review 68.4, 104–112.↵
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https://drive.google.com/file/d/19LMjui3a6X6Ea-YOCA5W-1ofhcieROFj/view?usp=sharing
Chapter 9: The People in
Information Systems
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• describe each of the different roles that people play
in the design, development, and use of information
systems;
• understand the different career paths available to
those who work with information systems;
• explain the importance of where the information-
systems function is placed in an organization; and
• describe the different types of users of information
systems.
Introduction
The opening chapters of this text focused on the technology behind
information systems, namely hardware, software, data, and
networking. The last chapter covered business processes and the
Chapter 9: The People in Information
Systems | 189
U. S. Bureau
of Labor
Statistics –
2020
Projections
key role they can play in the success of a business. This chapter
discusses people, the last component of an information system.
People are involved in information systems in just about every
way. People imagine information systems, people develop
information systems, people support information systems, and,
perhaps most importantly, people use information systems.
The Creators of Information Systems
The first group of people to be considered play a role in designing,
developing, and building information systems. These people are
generally technical and have a background in programming,
analysis, information security, or database design. Just about
everyone who works in the creation of information systems has a
minimum of a bachelor’s degree in computer science or information
systems, though that is not necessarily a requirement. The process
of creating information systems will be covered in more detail in
Chapter 10.
The following chart shows the U. S. Bureau of Labor Statistics
projections for computing career employment in 2020.
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Systems Analyst
The systems analyst straddles the divide between identifying
business needs and imagining a new or redesigned system to fulfill
those needs. This individual works with a team or department
seeking to identify business requirements and analyze the specific
details of an existing system or a system that needs to be built.
Generally, the analyst is required to have a good understanding
of the business itself, the purpose of the business, the business
processes involved, and the ability to document them well. The
analyst identifies the different stakeholders in the system and works
to involve the appropriate individuals in the analysis process.
Prior to analyzing the problem or the system of concern, the
analyst needs to a) clearly identify the problem, b) gain approval for
the project, c) identify the stakeholders, and d) develop a plan to
monitor the project. The analysis phase of the project can be broken
down into five steps.
1. Seek out and identify the details
2. Specify requirements
3. Decide which requirements are most important
4. Create a dialog showing how the user interacts with the
existing system
5. Ask users to critique the list of requirements that have been
developed
The analysis phase involves both the systems analyst and the
users. It is important to realize the role the users take in the analysis
of the system. Users can have significant insights into how well the
current system functions as well as suggest improvements.
Once the requirements are determined, the analyst begins the
process of translating these requirements into an information
systems design. It is important to understand which different
technological solutions will work and provide several alternatives
to the client, based on the company’s budgetary constraints,
Chapter 9: The People in Information Systems | 191
technology constraints, and culture. Once the solution is selected,
the analyst will create a detailed document describing the new
system. This new document will require that the analyst understand
how to speak in the technical language of systems developers.
The design phase results in the components of the new system
being identified, including how they relate to one another. The
designer needs to communicate clearly with software developers as
well database administrators by using terminology that is consistent
with both of these specialties. The design phase of the project can
be broken down into six steps.
1. Design the hardware environment
2. Design the software
3. Design how the new system will interface with the users
4. Design hardware interfaces
5. Design database tables
6. Design system security
A systems analyst generally is not the one who does the actual
development of the information system. The design document
created by the systems analyst provides the detail needed to create
the system and is handed off to a developer to actually write the
software and to the database administrator to build the database
and tables that will be in the database.
Sometimes the system may be assembled from off-the-shelf
components by a person called a systems integrator. This is a
specific type of systems analyst that understands how to get
different software packages to work with each other.
To become a systems analyst, you should have a background both
in the business analysis and in systems design. Many analysts first
work as developers and have business experience before becoming
system analysts. It is vital for analysts to clearly understand the
purpose of the business of interest, realizing that all businesses are
unique.
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Programmer/Developer
Programmers spend their time writing computer code in a
programming language. In the case of systems development,
programmers generally attempt to fulfill the design specifications
given to them by a systems analyst/designer. Many different styles
of software development exist A programmer may work alone for
long stretches of time or work as part of a team with other
developers. A programmer needs to be able to understand complex
processes and also the intricacies of one or more programming
languages.
Computer Engineer
Computer engineers design the computing devices that are used
every day. There are many types of computer engineers who work
on a variety of different types of devices and systems. Some of the
more prominent computer engineering jobs are as follows:
• Hardware engineer. A hardware engineer designs hardware
and test components such as microprocessors, memory
devices, routers, and networks. Many times, a hardware
engineer is at the cutting edge of computing technology,
creating something brand new. Other times, the hardware
engineer’s job is to re-engineer an existing component to work
faster or use less power. Many times a hardware engineer’s job
is to write code to create a program that will be implemented
directly on a computer chip.
• Software engineer. Software engineers tend to focus on a
specific area of software such as operating systems, networks,
applications, or databases. Software engineers use three
primary skill areas: computer science, engineering, and
mathematics.
Chapter 9: The People in Information Systems | 193
• Systems engineer. A systems engineer takes the components
designed by other engineers and makes them all work
together, focusing on the integration of hardware and
software. For example, to build a computer the mother board,
processor, memory, and hard disk all have to work together. A
systems engineer has experience with many different types of
hardware and software and knows how to integrate them to
create new functionality.
• Network engineer. A network engineer understands the
networking requirements of an organization and then designs
a communications system to meet those needs, using the
networking hardware and software, sometimes referred to as a
network operating system. Network engineers design both
local area networks as well as wide area networks.
There are many different types of computer engineers, and often
the job descriptions overlap. While many may call themselves
engineers based on a company job title, there is also a professional
designation of “professional engineer” which has specific
requirements. In the United States each state has its own set of
requirements for the use of this title, as do different countries
around the world. Most often, it involves a professional licensing
exam.
Information Systems Operations and
Administration
Another group of information systems professionals are involved in
the day-to-day operations and administration of IT. These people
must keep the systems running and up-to-date so that the rest
of the organization can make the most effective use of these
resources.
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Computer Operator
A computer operator is the person who oversees the mainframe
computers and data centers in organizations. Some of their duties
include keeping the operating systems up to date, ensuring available
memory and disk storage, providing for redundancy (think
electricity, connectivity to the Internet, and database backups), and
overseeing the physical environment of the computer. Since
mainframe computers increasingly have been replaced with servers,
storage management systems, and other platforms, computer
operators’ jobs have grown broader and include working with these
specialized systems.
Database Administrator
A Database Administrator (DBA) is the person who designs and
manages the databases for an organization. This person creates and
maintains databases that are used as part of applications or the
data warehouse. The DBA also consults with systems analysts and
programmers on projects that require access to or the creation of
databases.
Help Desk/Support Analyst
Most mid-size to large organizations have their own information
technology help desk. The help desk is the first line of support for
computer users in the company. Computer users who are having
problems or need information can contact the help desk for
assistance. Many times a help desk worker is a junior level employee
who is able to answer basic issues that users need assistance with.
Help desk analysts work with senior level support analysts or have a
Chapter 9: The People in Information Systems | 195
computer knowledgebase at their disposal to help them investigate
the problem at hand. The help desk is a great place to break into
working in IT because it exposes you to all of the different
technologies within the company. A successful help desk analyst
should have good communications skills and a sincere interest in
helping users.
Trainer
A computer trainer conducts classes to teach people specific
computer skills. For example, if a new ERP system is being installed
in an organization, one part of the implementation process is to
teach all of the users how to use the new system. A trainer may work
for a software company and be contracted to come in to conduct
classes when needed; a trainer may work for a company that offers
regular training sessions. Or a trainer may be employed full time for
an organization to handle all of their computer instruction needs.
To be successful as a trainer you need to be able to communicate
technical concepts clearly and demonstrate patience with learners.
Managing Information Systems
The management of information-systems functions is critical to
the success of information systems within the organization. Here
are some of the jobs associated with the management of
information systems.
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CIO
The Chief Information Officer (CIO) is the head of the information-
systems function. This person aligns the plans and operations of the
information systems with the strategic goals of the organization.
Tasks include budgeting, strategic planning, and personnel
decisions for the information systems function. The CIO must also
be the face of the IT department within the organization. This
involves working with senior leaders in all parts of the organization
to ensure good communication, planning, and budgeting.
Interestingly, the CIO position does not necessarily require a lot
of technical expertise. While helpful, it is more important for this
person to have good management skills and understand the
business. Many organizations do not have someone with the title
of CIO. Instead, the head of the information systems function is
called the Vice President of Information Systems or Director of
Information Systems.
Functional Manager
As an information systems organization becomes larger, many of
the different functions are grouped together and led by a manager.
These functional managers report to the CIO and manage the
employees specific to their function. For example, in a large
organization there are a group of systems analysts who report to
a manager of the systems analysis function. For more insight into
how this might look, see the discussion later in the chapter of how
information systems are organized.
Chapter 9: The People in Information Systems | 197
Gantt Chart
for
managing
projects
ERP Management
Organizations using an ERP require one or more individuals to
manage these systems. EPR managers make sure that the ERP
system is completely up to date, work to implement any changes to
the ERP that are needed, and consult with various user departments
on needed reports or data extracts.
Project Managers
Information systems projects are notorious for going over budget
and being delivered late. In many cases a failed IT project can spell
doom for a company. A project manager is responsible for keeping
projects on time and on budget. This person works with the
stakeholders of the project to keep the team organized and
communicates the status of the project to management. Gantt
charts, shown above, are used to graphically illustrate a project’s
schedule, tasks, and resources.
A project manager does not have authority over the project team.
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Instead, the project manager coordinates schedules and resources
in order to maximize the project outcomes. This leader must be a
good communicator and an extremely organized person. A project
manager should also have good people skills. Many organizations
require each of their project managers to become certified as a
Project Management Professional (PMP).
Information Security Officer
An information security officer is in charge of setting information
security policies for an organization and then overseeing the
implementation of those policies. This person may have one or more
people reporting to them as part of the information security team.
As information has become a critical asset, this position has become
highly valued. The information security officer must ensure that the
organization’s information remains secure from both internal and
external threats.
Emerging Roles
As technology evolves many new roles are becoming more common
as other roles diminish. For example, as we enter the age of “big
data,” we are seeing the need for more data analysts and business
intelligence specialists. Many companies are now hiring social
media experts and mobile technology specialists. The increased use
of cloud computing and Virtual Machine (VM) technologies also is
increasing demand for expertise in those areas.
Chapter 9: The People in Information Systems | 199
http://www.pmi.org/Certification/Project-Management-Professional-PMP.aspx
Career Paths in Information Systems
(click to enlarge)
Career Paths in Information Systems
These job descriptions do not
represent all possible jobs
within an information systems
organization. Larger
organizations will have more
specialized roles, while smaller
organizations may combine
some of these roles. Many of
these roles may exist outside of
a traditional information-
systems organization, as we will
discuss below.
Working with information
systems can be a rewarding
career choice. Whether you
want to be involved in very
technical jobs (programmer,
database administrator), or you
want to be involved in working
with people (systems analyst, trainer, project manager), there are
many different career paths available.
Many times those in technical jobs who want career advancement
find themselves in a dilemma. A person can continue doing
technical work, where sometimes their advancement options are
limited, or become a manager of other employees and put
themselves on a management career track. In many cases those
proficient in technical skills are not gifted with managerial skills.
Some organizations, especially those that highly value their
technically skilled employees, create a technical track that exists in
parallel to the management track so that they can retain employees
who are contributing to the organization with their technical skills.
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CISCO certification badge
Sidebar: Are Certifications Worth Pursuing?
As technology becomes more important to businesses, hiring
employees with technical skills is becoming critical. But how can
an organization ensure that the person they are hiring has the
necessary skills? Many organizations are including technical
certifications as a prerequisite for getting hired.
Cisco Certified Internetwork Expert.
Certifications are
designations given by a
certifying body that someone
has a specific level of
knowledge in a specific
technology. This certifying
body is often the vendor of the
product itself, though
independent certifying
organizations, such as
CompTIA, also exist. Many of these organizations offer certification
tracks, allowing a beginning certificate as a prerequisite to getting
more advanced certificates. To get a certificate, you generally
attend one or more training classes and then take one or more
certification exams. Passing the exams with a certain score will
qualify you for a certificate. In most cases, these classes and
certificates are not free. In fact a highly technical certification can
cost thousands dollars. Some examples of the certifications in
highest demand include Microsoft (software certifications), Cisco
(networking), and SANS (security).
For many working in IT, determining whether to pursue one or
more of these certifications is an important question. For many jobs,
Chapter 9: The People in Information Systems | 201
http://certification.comptia.org/home.aspx
http://www.microsoft.com/learning/en/us/certification-overview.aspx
http://www.cisco.com/web/learning/certifications/index.html
http://www.sans.org/
such as those involving networking or security, a certificate will be
required by the employer as a way to determine which potential
employees have a basic level of skill. For those who are already in
an IT career, a more advanced certificate may lead to a promotion.
For those wondering about the importance of certification, the best
solution is to talk to potential employers and those already working
in the field to determine the best choice.
Organizing the Information Systems
Function
In the early years of computing, the information-systems function
(generally called “data processing”) was placed in the finance or
accounting department of the organization. As computing became
more important, a separate information-systems function was
formed, but it still was generally placed under the Chief Financial
Officer and considered to be an administrative function of the
company. By the 1980s and 1990s, when companies began
networking internally and then connecting to the Internet, the
information systems function was combined with the
telecommunications functions and designated as the Information
Technology (IT) department. As the role of information technology
continued to increase, its place in the organization became more
important. In many organizations today, the head of IT (the CIO)
reports directly to the CEO.
Where in the Organization Should IS Be?
Before the advent of the personal computer, the information
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systems function was centralized within organizations in order to
maximize control over computing resources. When the PC began
proliferating, many departments within organizations saw it as a
chance to gain some computing resources for themselves. Some
departments created an internal information systems group,
complete with systems analysts, programmers, and even database
administrators. These departmental IS groups were dedicated to
the information needs of their own departments, providing quicker
turnaround and higher levels of service than a centralized IT
department. However, having several IS groups within an
organization led to a lot of inefficiencies. There were now several
people performing the same jobs in different departments. This
decentralization also led to company data being stored in several
places all over the company.
In some organizations a matrix reporting structure developed in
which IT personnel were placed within a department and reported
to both the department management and the functional
management within IS. The advantages of dedicated IS personnel
for each department must be weighed against the need for more
control over the strategic information resources of the company.
For many companies, these questions are resolved by the
implementation of the ERP system (see discussion of ERP in Chapter
8). Because an ERP system consolidates most corporate data back
into a single database, the implementation of an ERP system
requires organizations to find “silos” of data so that they can
integrate them back into the corporate system. The ERP allows
organizations to regain control of their information and influences
organizational decisions throughout the company.
Outsourcing
Frequently an organization needs a specific skill for a limited period
of time. Instead of training existing employees or hiring new staff,
Chapter 9: The People in Information Systems | 203
it may make more sense to outsource the job. Outsourcing can be
used in many different situations within the information systems
function, such as the design and creation of a new website or the
upgrade of an ERP system. Some organizations see outsourcing as a
cost-cutting move, contracting out a whole group or department.
New Models of Organizations
The integration of information technology has influenced the
structure of organizations. The increased ability to communicate
and share information has led to a “flattening” of the organizational
structure due to the removal of one or more layers of management.
The network-based organizational structure is another changed
enabled by information systems. In a network-based organizational
structure, groups of employees can work somewhat independently
to accomplish a project. People with the right skills are brought
together for a project and then released to work on other projects
when that project is over. These groups are somewhat informal and
allow for all members of the group to maximize their effectiveness.
Information Systems Users – Types of Users
Besides the people who work to create, administer, and manage
information systems, there is one more extremely important group
of people, namely, the users of information systems. This group
represents a very large percentage of an organization’s employees.
If the user is not able to successfully learn and use an information
system, the system is doomed to failure.
Technology adoption user types
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Diffusion of Innovation (click to
enlarge)
One tool that can be used to
understand how users will
adopt a new technology comes
from a 1962 study by Everett
Rogers. In his book, Diffusion of
Innovation,[1]Rogers studied
how farmers adopted new
technologies and noticed that
the adoption rate started slowly
and then dramatically
increased once adoption hit a
certain point. He identified five specific types of technology
adopters:
• Innovators. Innovators are the first individuals to adopt a new
technology. Innovators are willing to take risks, are the
youngest in age, have the highest social class, have great
financial liquidity, are very social, and have the closest contact
with scientific sources and interaction with other innovators.
Risk tolerance is high so there is a willingness to adopt
technologies thast may ultimately fail. Financial resources help
absorb these failures (Rogers, 1962, p. 282).
• Early adopters. The early adopters are those who adopt
innovation soon after a technology has been introduced and
proven. These individuals have the highest degree of opinion
leadership among the other adopter categories, which means
that these adopters can influence the opinions of the largest
majority. Characteristics include being younger in age, having a
higher social status, possessing more financial liquidity, having
advanced education, and being more socially aware than later
adopters. These adopters are more discrete in adoption
choices than innovators, and realize judicious choice of
adoption will help them maintain a central communication
position (Rogers, 1962, p. 283).
• Early majority. Individuals in this category adopt an innovation
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after a varying degree of time. This time of adoption is
significantly longer than the innovators and early adopters.
This group tends to be slower in the adoption process, has
above average social status, has contact with early adopters,
and seldom holds positions of opinion leadership in a system
(Rogers, 1962, p. 283).
• Late majority. The late majority will adopt an innovation after
the average member of the society. These individuals approach
an innovation with a high degree of skepticism, have below
average social status, very little financial liquidity, are in
contact with others in the late majority and the early majority,
and show very little opinion leadership.
• Laggards. Individuals in this category are the last to adopt an
innovation. Unlike those in the previous categories, individuals
in this category show no opinion leadership. These individuals
typically have an aversion to change agents and tend to be
advanced in age. Laggards typically tend to be focused on
“traditions,” are likely to have the lowest social status and the
lowest financial liquidity, be oldest of all other adopters, and be
in contact with only family and close friends.[2]
These five types of users can be translated into information
technology adopters as well, and provide additional insight into how
to implement new information systems within the organization. For
example, when rolling out a new system, IT may want to identify
the innovators and early adopters within the organization and work
with them first, then leverage their adoption to drive the rest of the
implementation to the other users.
Summary
In this chapter we have reviewed the many different categories
of individuals who make up the people component of information
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systems. The world of information technology is changing so fast
that new roles are being created all the time and roles that existed
for decades are being phased out. This chapter this chapter should
have given you a good idea and appreciation for the importance of
the people component of information systems.
Study Questions
1. Describe the role of a systems analyst.
2. What are some of the different roles for a computer engineer?
3. What are the duties of a computer operator?
4. What does the CIO do?
5. Describe the job of a project manager.
6. Explain the point of having two different career paths in
information systems.
7. What are the advantages and disadvantages of centralizing the
IT function?
8. What impact has information technology had on the way
companies are organized?
9. What are the five types of information-systems users?
10. Why would an organization outsource?
Exercises
1. Which IT job would you like to have? Do some original
research and write a two-page paper describing the duties of
the job you are interested in.
2. Spend a few minutes on Dice or Monster to find IT jobs in your
area. What IT jobs are currently available? Write up a two-page
Chapter 9: The People in Information Systems | 207
http://dice.com/
http://monster.com/
paper describing three jobs, their starting salary (if listed), and
the skills and education needed for the job.
3. How is the IT function organized in your school or place of
employment? Create an organization chart showing how the IT
organization fits into your overall organization. Comment on
how centralized or decentralized the IT function is.
4. What type of IT user are you? Take a look at the five types of
technology adopters and then write a one-page summary of
where you think you fit in this model.
Lab
1. Define each job in the list, then ask 10 friends to identify which
jobs they have heard about or know something about. Tabulate
your results.
2. Chief marketing technologist
3. Developer evangelist
4. Ethical hacker
5. Business intelligence analyst
6. Digital marketing manager
7. Growth hacker
8. UX designer
9. Cloud architect
10. Data detective
11. Master of edge computing
12. Digital prophet
13. NOC specialist
14. SEO/SEM specialist
1. Rogers, E. M. (1962). Diffusion of innovations. New York: Free
Press↵
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2. Rogers, E. M. (1962). Diffusion of innovations. New York: Free
Press↵
Chapter 9: The People in Information Systems | 209
Chapter 10: Information
Systems Development
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• Explain the overall process of developing new
software;
• Explain the differences between software
development methodologies;
• Understand the different types of programming
languages used to develop software;
• Understand some of the issues surrounding the
development of websites and mobile applications; and
• Identify the four primary implementation policies.
Introduction
When someone has an idea for a new function to be performed by
a computer, how does that idea become reality? If a company wants
to implement a new business process and needs new hardware or
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Systems Development
Software
development
methodologie
s
software to support it, how do they go about making it happen?
This chapter covers the different methods of taking those ideas and
bringing them to reality, a process known as information systems
development.
Programming
Software is created via programming, as discussed in Chapter 2.
Programming is the process of creating a set of logical instructions
for a digital device to follow using a programming language. The
process of programming is sometimes called “coding” because the
developer takes the design and encodes it into a programming
language which then runs on the computer.
The process of developing good software is usually not as simple
as sitting down and writing some code. Sometimes a programmer
can quickly write a short program to solve a need, but in most
instances the creation of software is a resource-intensive process
that involves several different groups of people in an organization.
In order to do this effectively, the groups agree to follow a specific
software development methodology. The following sections review
several different methodologies for software development, as
summarized in the table below and more fully described in the
following sections.
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Systems Development Life Cycle
The Systems Development Life Cycle (SDLC) was first developed in
the 1960s to manage the large software projects associated with
corporate systems running on mainframes. This approach to
software development is very structured and risk averse, designed
to manage large projects that include multiple programmers and
systems that have a large impact on the organization. It requires
a clear, upfront understanding of what the software is supposed
to do and is not amenable to design changes. This approach is
roughly similar to an assembly line process, where it is clear to
all stakeholders what the end product should do and that major
changes are difficult and costly to implement.
Various definitions of the SDLC methodology exist, but most
contain the following phases.
1. Preliminary Analysis. A request for a replacement or new
system is first reviewed. The review includes questions such
as: What is the problem-to-be-solved? Is creating a solution
possible? What alternatives exist? What is currently being
done about it? Is this project a good fit for our organization?
After addressing these question, a feasibility study is launched.
The feasibility study includes an analysis of the technical
feasibility, the economic feasibility or affordability, and the
legal feasibility. This step is important in determining if the
project should be initiated and may be done by someone with a
title of Requirements Analyst or Business Analyst
2. System Analysis. In this phase one or more system analysts
work with different stakeholder groups to determine the
specific requirements for the new system. No programming is
done in this step. Instead, procedures are documented, key
players/users are interviewed, and data requirements are
developed in order to get an overall impression of exactly what
the system is supposed to do. The result of this phase is a
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system requirements document and may be done by someone
with a title of Systems Analyst
3. System Design. In this phase, a designer takes the system
requirements document created in the previous phase and
develops the specific technical details required for the system.
It is in this phase that the business requirements are translated
into specific technical requirements. The design for the user
interface, database, data inputs and outputs, and reporting are
developed here. The result of this phase is a system design
document. This document will have everything a programmer
needs to actually create the system and may be done by
someone with a title of Systems Analyst, Developer, or Systems
Architect, based on the scale of the project.
4. Programming. The code finally gets written in the
programming phase. Using the system design document as a
guide, programmers develop the software. The result of this
phase is an initial working program that meets the
requirements specified in the system analysis phase and the
design developed in the system design phase. These tasks are
done by persons with titles such as Developer, Software
Engineer, Programmer, or Coder.
5. Testing. In the testing phase the software program developed
in the programming phase is put through a series of structured
tests. The first is a unit test, which evaluates individual parts of
the code for errors or bugs. This is followed by a system test in
which the different components of the system are tested to
ensure that they work together properly. Finally, the user
acceptance test allows those that will be using the software to
test the system to ensure that it meets their standards. Any
bugs, errors, or problems found during testing are resolved
and then the software is tested again. These tasks are done by
persons with titles such as Tester, Testing Analyst, or Quality
Assurance.
6. Implementation. Once the new system is developed and tested,
it has to be implemented in the organization. This phase
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The SDLC method (click to enlarge)
includes training the users, providing documentation, and data
conversion from the previous system to the new system.
Implementation can take many forms, depending on the type
of system, the number and type of users, and how urgent it is
that the system become operational. These different forms of
implementation are covered later in the chapter.
7. Maintenance. This final phase takes place once the
implementation phase is complete. In the maintenance phase
the system has a structured support process in place. Reported
bugs are fixed and requests for new features are evaluated and
implemented. Also, system updates and backups of the
software are made for each new version of the program. Since
maintenance is normally an Operating Expense (OPEX) while
much of development is a Capital Expense (CAPEX), funds
normally come out of different budgets or cost centers.
The SDLC methodology is
sometimes referred to as the
waterfall methodology to
represent how each step is a
separate part of the process.
Only when one step is
completed can another step
begin. After each step an
organization must decide when
to move to the next step. This methodology has been criticized for
being quite rigid, allowing movement in only one direction, namely,
forward in the cycle. For example, changes to the requirements are
not allowed once the process has begun. No software is available
until after the programming phase.
Again, SDLC was developed for large, structured projects. Projects
using SDLC can sometimes take months or years to complete.
Because of its inflexibility and the availability of new programming
techniques and tools, many other software development
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methodologies have been developed. Many of these retain some of
the underlying concepts of SDLC, but are not as rigid.
Rapid Application Development
RAD Methodology (click to enlarge)
Rapid Application Development (RAD) focuses on quickly building
a working model of the software, getting feedback from users, and
then using that feedback to update the working model. After several
iterations of development, a final version is developed and
implemented.
The RAD methodology consists of four phases.
1. Requirements Planning. This phase is similar to the preliminary
analysis, system analysis, and design phases of the SDLC. In
this phase the overall requirements for the system are defined,
a team is identified, and feasibility is determined.
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2. User Design. In the user design phase representatives of the
users work with the system analysts, designers, and
programmers to interactively create the design of the system.
Sometimes a Joint Application Development (JAD) session is
used to facilitate working with all of these various
stakeholders. A JAD session brings all of the stakeholders for a
structured discussion about the design of the system.
Application developers also participate and observe, trying to
understand the essence of the requirements.
3. Construction. In the construction phase the application
developers, working with the users, build the next version of
the system through an interactive process. Changes can be
made as developers work on the program. This step is
executed in parallel with the User Design step in an iterative
fashion, making modifications until an acceptable version of
the product is developed.
4. Cutover. Cutover involves switching from the old system to the
new software. Timing of the cutover phase is crucial and is
usually done when there is low activity. For example, IT
systems in higher education undergo many changes and
upgrades during the summer or between fall semester and
spring semester. Approaches to the migration from the old to
the new system vary between organizations. Some prefer to
simply start the new software and terminate use of the old
software. Others choose to use an incremental cutover,
bringing one part online at a time. A cutover to a new
accounting system may be done one module at a time such as
general ledger first, then payroll, followed by accounts
receivable, etc. until all modules have been implemented. A
third approach is to run both the old and new systems in
parallel, comparing results daily to confirm the new system is
accurate and dependable. A more thorough discussion of
implementation strategies appears near the end of this
chapter.
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As you can see, the RAD methodology is much more compressed
than SDLC. Many of the SDLC steps are combined and the focus
is on user participation and iteration. This methodology is much
better suited for smaller projects than SDLC and has the added
advantage of giving users the ability to provide feedback throughout
the process. SDLC requires more documentation and attention to
detail and is well suited to large, resource-intensive projects. RAD
makes more sense for smaller projects that are less resource
intensive and need to be developed quickly.
Agile Methodologies
Agile methodologies are a group of methodologies that utilize
incremental changes with a focus on quality and attention to detail.
Each increment is released in a specified period of time (called a
time box), creating a regular release schedule with very specific
objectives. While considered a separate methodology from RAD,
the two methodologies share some of the same principles such as
iterative development, user interaction, and flexibility to change.
The agile methodologies are based on the “Agile Manifesto,” first
released in 2001.
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Agile Methodology
Agile and Iterative Development
The diagram above emphasizes iterations in the center of agile
development. You should notice how the building blocks of the
developing system move from left to right, a block at a time, not the
entire project. Blocks that are not acceptable are returned through
feedback and the developers make the needed modifications.
Finally, notice the Daily Review at the top of the diagram. Agile
Development means constant evaluation by both developers and
customers (notice the term “Collaboration”) of each day’s work.
The characteristics of agile methodology include:
• Small cross-functional teams that include development team
members and users;
• Daily status meetings to discuss the current state of the
project;
• Short time-frame increments (from days to one or two weeks)
for each change to be completed; and
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Lean Methodology (click to enlarge)
• Working project at the end of each iteration which
demonstrates progress to the stakeholders.
The goal of agile methodologies is to provide the flexibility of an
iterative approach while ensuring a quality product.
Lean Methodology
One last methodology to
discuss is a relatively new
concept taken from the
business bestseller The Lean
Startup by Eric Reis. Lean
focuses on taking an initial idea
and developing a Minimum
Viable Product (MVP). The MVP
is a working software
application with just enough
functionality to demonstrate
the idea behind the project.
Once the MVP is developed, the development team gives it to
potential users for review. Feedback on the MVP is generated in two
forms. First, direct observation and discussion with the users and
second, usage statistics gathered from the software itself. Using
these two forms of feedback, the team determines whether they
should continue in the same direction or rethink the core idea
behind the project, change the functions, and create a new MVP.
This change in strategy is called a pivot. Several iterations of the
MVP are developed, with new functions added each time based on
the feedback, until a final product is completed.
The biggest difference between the iterative and non-iterative
methodologies is that the full set of requirements for the system are
not known when the project is launched. As each iteration of the
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The quality triangle (click to enlarge)
project is released, the statistics and feedback gathered are used to
determine the requirements. The lean methodology works best in
an entrepreneurial environment where a company is interested in
determining if their idea for a program is worth developing.
Sidebar: The Quality Triangle
When developing software or
any sort of product or service,
there exists a tension between
the developers and the
different stakeholder groups
such as management, users,
and investors. This tension
relates to how quickly the
software can be developed
(time), how much money will be spent (cost), and how well it will be
built (quality). The quality triangle is a simple concept. It states that
for any product or service being developed, you can only address
two of the following: time, cost, and quality.
So why can only two of the three factors in the triangle be
considered? Because each of these three components are in
competition with each other! If you are willing and able to spend
a lot of money, then a project can be completed quickly with high
quality results because you can provide more resources towards
its development. If a project’s completion date is not a priority,
then it can be completed at a lower cost with higher quality results
using a smaller team with fewer resources. Of course, these are
just generalizations, and different projects may not fit this model
perfectly. But overall, this model is designed to help you understand
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the trade-offs that must be made when you are developing new
products and services.
There are other, fundamental reasons why low-cost, high-quality
projects done quickly are so difficult to achieve.
1. The human mind is analog and the machines the software run
on are digital. These are completely different natures that
depend upon context and nuance versus being a 1 or a 0.
Things that seem obvious to the human mind are not so
obvious when forced into a 1 or 0 binary choice.
2. Human beings leave their imprints on the applications or
systems they design. This is best summed up by Conway’s Law
(1968) – “Organizations that design information systems are
constrained to do so in a way that mirrors their internal
communication processes.” Organizations with poor
communication processes will find it very difficult to
communicate requirements and priorities, especially for
projects at the enterprise level (i.e., that affect the whole
organization.
Programming Languages
As noted earlier, developers create programs using one of several
programming languages. A programming language is an artificial
language that provides a way for a developer to create programming
code to communicate logic in a format that can be executed by
the computer hardware. Over the past few decades, many different
types of programming languages have evolved to meet a variety of
needs. One way to characterize programming languages is by their
“generation.”
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Generations of Programming Languages
Early languages were specific to the type of hardware that had to be
programmed. Each type of computer hardware had a different low
level programming language. In those early languages very specific
instructions had to be entered line by line – a tedious process.
First generation languages were called machine code because
programming was done in the format the machine/computer could
read. So programming was done by directly setting actual ones
and zeroes (the bits) in the program using binary code. Here is an
example program that adds 1234 and 4321 using machine language:
10111001 00000000
11010010 10100001
00000100 00000000
10001001 00000000
00001110 10001011
00000000 00011110
00000000 00011110
00000000 00000010
10111001 00000000
11100001 00000011
00010000 11000011
10001001 10100011
00001110 00000100
00000010 00000000
Assembly language is the second generation language and uses
English-like phrases rather than machine-code instructions,
making it easier to program. An assembly language program must
be run through an assembler, which converts it into machine code.
Here is a sample program that adds 1234 and 4321 using assembly
language.
MOV CX,1234
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MOV DS:[0],CX
MOV CX,4321
MOV AX,DS:[0]
MOV BX,DS:[2]
ADD AX,BX
MOV DS:[4],AX
Third-generation languages are not specific to the type of
hardware on which they run and are similar to spoken languages.
Most third generation languages must be compiled. The developer
writes the program in a form known generically as source code,
then the compiler converts the source code into machine code,
producing an executable file. Well-known third generation
languages include BASIC, C, Python, and Java. Here is an example
using BASIC:
A=1234
B=4321
C=A+B
END
Fourth generation languages are a class of programming tools that
enable fast application development using intuitive interfaces and
environments. Many times a fourth generation language has a very
specific purpose, such as database interaction or report-writing.
These tools can be used by those with very little formal training in
programming and allow for the quick development of applications
and/or functionality. Examples of fourth-generation languages
include: Clipper, FOCUS, SQL, and SPSS.
Why would anyone want to program in a lower level language
when they require so much more work? The answer is similar to
why some prefer to drive manual transmission vehicles instead of
automatic transmission, namely, control and efficiency. Lower level
languages, such as assembly language, are much more efficient and
execute much more quickly. The developer has finer control over
the hardware as well. Sometimes a combination of higher and lower
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level languages is mixed together to get the best of both worlds. The
programmer can create the overall structure and interface using a
higher level language but use lower level languages for the parts of
the program that are used many times, require more precision, or
need greater speed.
The programming language spectrum (click to enlarge).
Compiled vs. Interpreted
Besides identifying a programming language based on its
generation, we can also classify it through the distinction of
whether it is compiled or interpreted. A computer language is
written in a human-readable form. In a compiled language the
program code is translated into a machine-readable form called
an executable that can be run on the hardware. Some well-known
compiled languages include C, C++, and COBOL.
Interpreted languages require a runtime program to be installed
in order to execute. Each time the user wants to run the software
the runtime program must interpret the program code line by line,
then run it. Interpreted languages are generally easier to work with
but also are slower and require more system resources. Examples
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of popular interpreted languages include BASIC, PHP, PERL, and
Python. The web languages of HTML and JavaScript are also
considered interpreted because they require a browser in order to
run.
The Java programming language is an interesting exception to
this classification, as it is actually a hybrid of the two. A program
written in Java is partially compiled to create a program that can
be understood by the Java Virtual Machine (JVM). Each type of
operating system has its own JVM which must be installed before
any program can be executed. The JVM approach allows a single
Java program to run on many different types of operating systems.
Procedural vs. Object-Oriented
A procedural programming language is designed to allow a
programmer to define a specific starting point for the program and
then execute sequentially. All early programming languages worked
this way. As user interfaces became more interactive and graphical,
it made sense for programming languages to evolve to allow the
user to have greater control over the flow of the program. An object-
oriented programming language is designed so that the programmer
defines “objects” that can take certain actions based on input from
the user. In other words, a procedural program focuses on the
sequence of activities to be performed while an object oriented
program focuses on the different items being manipulated.
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Employee object
Consider a human resources
system where an “EMPLOYEE”
object would be needed. If the
program needed to retrieve or
set data regarding an employee,
it would first create an
employee object in the program
and then set or retrieve the
values needed. Every object has
properties, which are
descriptive fields associated with the object. Also known as a
Schema, it is the logical view of the object (i.e., each row of
properties represents a column in the actual table, which is known
as the physical view). The employee object has the properties
“EMPLOYEEID”, “FIRSTNAME”, “LASTNAME”, “BIRTHDATE” and
“HIREDATE”. An object also has methods which can take actions
related to the object. There are two methods in the example. The
first is “ADDEMPLOYEE()”, which will create another employee
record. The second is “EDITEMPLOYEE()” which will modify an
employee’s data.
Programming Tools
To write a program, you need little more than a text editor and a
good idea. However, to be productive you must be able to check
the syntax of the code, and, in some cases, compile the code. To
be more efficient at programming, additional tools, such as an
Integrated Development Environment (IDE) or computer-aided
software-engineering (CASE) tools can be used.
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Screen shot
of Oracle
Eclipse
Integrated Development Environment
For most programming languages an Integrated Development
Environment (IDE) can be used to develop the program. An IDE
provides a variety of tools for the programmer, and usually includes:
• Editor. An editor is used for writing the program. Commands
are automatically color coded by the IDE to identify command
types. For example, a programming comment might appear in
green and a programming statement might appear in black.
• Help system. A help system gives detailed documentation
regarding the programming language.
• Compiler/Interpreter. The compiler/interpreter converts the
programmer’s source code into machine language so it can be
executed/run on the computer.
• Debugging tool. Debugging assists the developer in locating
errors and finding solutions.
• Check-in/check-out mechanism. This tool allows teams of
programmers to work simultaneously on a program without
overwriting another programmer’s code.
Examples of IDEs include Microsoft’s Visual Studio and Oracle’s
Eclipse. Visual Studio is the IDE for all of Microsoft’s programming
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http://www.eclipse.org/downloads/index-developer.php
languages, including Visual Basic, Visual C++, and Visual C#. Eclipse
can be used for Java, C, C++, Perl, Python, R, and many other
languages.
CASE Tools
While an IDE provides several tools to assist the programmer in
writing the program, the code still must be written. Computer-
Aided Software Engineering (CASE) tools allow a designer to develop
software with little or no programming. Instead, the CASE tool
writes the code for the designer. CASE tools come in many varieties.
Their goal is to generate quality code based on input created by the
designer.
Sidebar: Building a Website
In the early days of the World Wide Web, the creation of a website
required knowing how to use HyperText Markup Language (HTML).
Today most websites are built with a variety of tools, but the final
product that is transmitted to a browser is still HTML. At its simplest
HTML is a text language that allows you to define the different
components of a web page. These definitions are handled through
the use of HTML tags with text between the tags or brackets. For
example, an HTML tag can tell the browser to show a word in italics,
to link to another web page, or to insert an image. The HTML code
below selects two different types of headings (h1 and h2) with text
below each heading. Some of the text has been italicized. The output
as it would appear in a browser is shown after the HTML code.
This is a first-level heading
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HTML
output
Here is some text. Here is some emphasized text.
Here is a second-level heading</h2)
Here is some more text.
HTML code
While HTML is used to define the components of a web page,
Cascading Style Sheets (CSS) are used to define the styles of the
components on a page. The use of CSS allows the style of a website
to be set and stay consistent throughout. For example, a designer
who wanted all first-level headings (h1) to be blue and centered
could set the “h1″ style to match. The following example shows how
this might look.
h1
{
color:blue;
text-align:center;
}
This is a first-level heading
Here is some text. Here is some emphasized text.
Here is a second-level heading</h2)
Here is some more text.
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HTML with
CSS output
HTML code with CSS added
The combination of HTML and CSS can be used to create a wide
variety of formats and designs and has been widely adopted by
the web design community. The standards for HTML are set by
a governing body called the World Wide Web Consortium. The
current version of HTML 5 includes new standards for video, audio,
and drawing.
When developers create a website, they do not write it out
manually in a text editor. Instead, they use web design tools that
generate the HTML and CSS for them. Tools such as Adobe
Dreamweaver allow the designer to create a web page that includes
images and interactive elements without writing a single line of
code. However, professional web designers still need to learn HTML
and CSS in order to have full control over the web pages they are
developing.
Sidebar: Building a Mobile App
In many ways building an application for a mobile device is exactly
the same as building an application for a traditional computer.
Understanding the requirements for the application, designing the
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http://www.w3.org/
http://www.adobe.com/products/dreamweaver.html
http://www.adobe.com/products/dreamweaver.html
interface, and working with users are all steps that still need to be
carried out.
Mobile Apps
So what’s different about building an application for a mobile
device? There are five primary differences:
1. Breakthroughs in component technologies. Mobile devices
require multiple components that are not only smaller but
more energy-efficient than those in full-size computers
(laptops or desktops). For example, low-power CPUs combined
with longer-life batteries, touchscreens, and Wi-Fi enable very
efficient computing on a phone, which needs to do much less
actual processing than their full-size counterparts.
2. Sensors have unlocked the notion of context. The
combination of sensors like GPS, gyroscopes, and cameras
enables devices to be aware of things like time, location,
velocity, direction, altitude, attitude, and temperature.
Location in particular provides a host of benefits.
3. Simple, purpose-built, task-oriented apps are easy to
use. Mobile apps are much narrower in scope than enterprise
software and therefore easier to use. Likewise, they need to be
intuitive and not require any training.
4. Immediate access to data extends the value proposition. In
addition to the app providing a simpler interface on the front
end, cloud-based data services provide access to data in near
real-time, from virtually anywhere (e.g., banking, travel, driving
directions, and investing). Having access to the cloud is needed
to keep mobile device size and power use down.
5. App stores have simplified acquisition. Developing, acquiring,
and managing apps has been revolutionized by app stores such
as Apple’s App Store and Google Play. Standardized
Chapter 10: Information Systems Development | 231
development processes and app requirements allow
developers outside Apple and Google to create new apps with
a built-in distribution channel. Average low app prices
(including many of which that are free) has fueled demand.
In sum, the differences between building a mobile app and other
types of software development look like this:
Mobile app differences
Building a mobile app for both iOS and Android operating systems is
known as cross platform development. There are a number of third-
party toolkits available for creating your app. Many will convert
existing code such as HTML5, JavaScript, Ruby, C++, etc. However,
if your app requires sophisticated programming, a cross platform
developer kit may not meet your needs.
Responsive Web Design (RWD) focuses on making web pages
render well on every device: desktop, laptop, tablet, smartphone.
Through the concept of fluid layout RWD automatically adjusts the
content to the device on which it is being viewed. You can find out
more about responsive design here.
232 | Information Systems for Business and Beyond (2019)
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2019/07/Mobile-app-differentiators
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2019/07/Mobile-app-differentiators
https://responsivedesign.is/
Build vs. Buy
When an organization decides that a new program needs to be
developed, they must determine if it makes more sense to build it
themselves or to purchase it from an outside company. This is the
“build vs. buy” decision.
There are many advantages to purchasing software from an
outside company. First, it is generally less expensive to purchase
software than to build it. Second, when software is purchased, it is
available much more quickly than if the package is built in-house.
Software can take months or years to build. A purchased package
can be up and running within a few days. Third, a purchased
package has already been tested and many of the bugs have already
been worked out. It is the role of a systems integrator to make
various purchased systems and the existing systems at the
organization work together.
There are also disadvantages to purchasing software. First, the
same software you are using can be used by your competitors. If a
company is trying to differentiate itself based on a business process
incorporated into purchased software, it will have a hard time doing
so if its competitors use the same software. Another disadvantage
to purchasing software is the process of customization. If you
purchase software from a vendor and then customize it, you will
have to manage those customizations every time the vendor
provides an upgrade. This can become an administrative headache,
to say the least.
Even if an organization determines to buy software, it still makes
sense to go through the same analysis as if it was going to be
developed. This is an important decision that could have a long-
term strategic impact on the organization.
Chapter 10: Information Systems Development | 233
Web Services
Chapter 3 discussed how the move to cloud computing has allowed
software to be viewed as a service. One option, known as web
services, allows companies to license functions provided by other
companies instead of writing the code themselves. Web services can
greatly simplify the addition of functionality to a website.
Suppose a company wishes to provide a map showing the location
of someone who has called their support line. By utilizing Google
Maps API web services, the company can build a Google Map
directly into their application. Or a shoe company could make it
easier for its retailers to sell shoes online by providing a shoe sizing
web service that the retailers could embed right into their website.
Web services can blur the lines between “build vs. buy.”
Companies can choose to build an application themselves but then
purchase functionality from vendors to supplement their system.
End-User Computing (EUC)
In many organizations application development is not limited to
the programmers and analysts in the information technology
department. Especially in larger organizations, other departments
develop their own department-specific applications. The people
who build these applications are not necessarily trained in
programming or application development, but they tend to be adept
with computers. A person who is skilled in a particular program,
such as a spreadsheet or database package, may be called upon to
build smaller applications for use by their own department. This
phenomenon is referred to as end-user development, or end-user
computing.
End-user computing can have many advantages for an
organization. First, it brings the development of applications closer
234 | Information Systems for Business and Beyond (2019)
https://developers.google.com/maps/documentation/webservices
https://developers.google.com/maps/documentation/webservices
to those who will use them. Because IT departments are sometimes
backlogged, it also provides a means to have software created more
quickly. Many organizations encourage end-user computing to
reduce the strain on the IT department.
End-user computing does have its disadvantages as well. If
departments within an organization are developing their own
applications, the organization may end up with several applications
that perform similar functions, which is inefficient, since it is a
duplication of effort. Sometimes these different versions of the
same application end up providing different results, bringing
confusion when departments interact. End-user applications are
often developed by someone with little or no formal training in
programming. In these cases, the software developed can have
problems that then have to be resolved by the IT department.
End-user computing can be beneficial to an organization
provided it is managed. The IT department should set guidelines
and provide tools for the departments who want to create their own
solutions. Communication between departments can go a long way
towards successful use of end-user computing.
Sidebar: Risks of EUC’s as “Shadow IT”
The Federal Home Loan Mortgage Company, better known as
Freddie Mac, was fined over $100 million in 2003 in part for
understating its earnings. This triggered a large-scale project to
restate its financials, which involved automating financial reporting
to comply with the Sarbanes-Oxley Act of 2002. Part of the
restatement project found that EUCs (such as spreadsheets and
databases on individual laptops) were feeding into the General
Ledger. While EUCs were not the cause of Freddie Mac’s problems
(they were a symptom of insufficient oversight) to have such poor
Chapter 10: Information Systems Development | 235
IT governance in such a large company was a serious issue. It turns
these EUCs were done in part to streamline the time it took to
make changes to their business processes (a common complaint of
IT departments in large corporations is that it takes too long to get
things done). As such, these EUCs served as a form of “shadow IT”
that had not been through a normal rigorous testing process.
Implementation Methodologies
Once a new system is developed or purchased, the organization
must determine the best method for implementation. Convincing
a group of people to learn and use a new system can be a very
difficult process. Asking employees to use new software as well as
follow a new business process can have far reaching effects within
the organization.
There are several different methodologies an organization can
adopt to implement a new system. Four of the most popular are
listed below.
• Direct cutover. In the direct cutover implementation
methodology, the organization selects a particular date to
terminate the use of the old system. On that date users begin
using the new system and the old system is unavailable. Direct
cutover has the advantage of being very fast and the least
expensive implementation method. However, this method has
the most risk. If the new system has an operational problem or
if the users are not properly prepared, it could prove
disastrous for the organization.
• Pilot implementation. In this methodology a subset of the
organization known as a pilot group starts using the new
system before the rest of the organization. This has a smaller
236 | Information Systems for Business and Beyond (2019)
impact on the company and allows the support team to focus
on a smaller group of individuals. Also, problems with the new
software can be contained within the group and then resolved.
• Parallel operation. Parallel operations allow both the old and
new systems to be used simultaneously for a limited period of
time. This method is the least risky because the old system is
still being used while the new system is essentially being
tested. However, this is by far the most expensive methodology
since work is duplicated and support is needed for both
systems in full.
• Phased implementation. Phased implementation provides for
different functions of the new application to be gradually
implemented with the corresponding functions being turned
off in the old system. This approach is more conservative as it
allows an organization to slowly move from one system to
another.
Your choice of an implementation methodology depends on the
complexity of both the old and new systems. It also depends on the
degree of risk you are willing to take.
Change Management
As new systems are brought online and old systems are phased out,
it becomes important to manage the way change is implemented in
the organization. Change should never be introduced in a vacuum.
The organization should be sure to communicate proposed changes
before they happen and plan to minimize the impact of the change
that will occur after implementation. Change management is a
critical component of IT oversight.
Chapter 10: Information Systems Development | 237
Sidebar: Mismanaging Change
Target Corporation, which operates more than 1,500 discount
stores throughout the United States, opened 133 similar stores in
Canada between 2013 and 2015. The company decided to implement
a new Enterprise Resources Planning (ERP) system that would
integrate data from vendors, customers, and do currency
calculations (US Dollars and Canadian Dollars). This implementation
was coincident with Target Canada’s aggressive expansion plan and
stiff competition from Wal-Mart. A two-year timeline – aggressive
by any standard for an implementation of this size – did not account
for data errors from multiple sources that resulted in erroneous
inventory counts and financial calculations. Their supply chain
became chaotic and stores were plagued by not having sufficient
stock of common items, which prevented the key advantage of
“one-stop shopping” for customers. In early 2015, Target Canada
announced it was closing all 133 stores. In sum, “This
implementation broke nearly all of the cardinal sins of ERP projects.
Target set unrealistic goals, didn’t leave time for testing, and
neglected to train employees properly.”1
1. Taken from ACC Software Solutions. "THE MANY FACES
OF FAILED ERP IMPLEMENTATIONS (AND HOW TO
AVOID THEM)" https://4acc.com/article/failed-erp-
implementations/
238 | Information Systems for Business and Beyond (2019)
Maintenance
After a new system has been introduced, it enters the maintenance
phase. The system is in production and is being used by the
organization. While the system is no longer actively being
developed, changes need to be made when bugs are found or new
features are requested. During the maintenance phase, IT
management must ensure that the system continues to stay aligned
with business priorities and continues to run well.
Summary
Software development is about so much more than programming. It
is fundamentally about solving business problems. Developing new
software applications requires several steps, from the formal SDLC
process to more informal processes such as agile programming
or lean methodologies. Programming languages have evolved from
very low-level machine-specific languages to higher-level
languages that allow a programmer to write software for a wide
variety of machines. Most programmers work with software
development tools that provide them with integrated components
to make the software development process more efficient. For some
organizations, building their own software does not make the most
sense. Instead, they choose to purchase software built by a third
party to save development costs and speed implementation. In end-
user computing, software development happens outside the
information technology department. When implementing new
software applications, there are several different types of
implementation methodologies that must be considered.
Chapter 10: Information Systems Development | 239
Study Questions
1. What are the steps in the SDLC methodology?
2. What is RAD software development?
3. What makes the lean methodology unique?
4. What are three differences between second-generation and
third-generation languages?
5. Why would an organization consider building its own software
application if it is cheaper to buy one?
6. What is responsive design?
7. What is the relationship between HTML and CSS in website
design?
8. What is the difference between the pilot implementation
methodology and the parallel implementation methodology?
9. What is change management?
10. What are the four different implementation methodologies?
Exercises
1. Which software-development methodology would be best if an
organization needed to develop a software tool for a small
group of users in the marketing department? Why? Which
implementation methodology should they use? Why?
2. Doing your own research, find three programming languages
and categorize them in these areas: generation, compiled vs.
interpreted, procedural vs. object-oriented.
3. Some argue that HTML is not a programming language. Doing
your own research, find three arguments for why it is not a
programming language and three arguments for why it is.
4. Read more about responsive design using the link given in the
text. Provide the links to three websites that use responsive
design and explain how they demonstrate responsive-design
240 | Information Systems for Business and Beyond (2019)
behavior.
Labs
1. Here’s a Python program for you to analyze. The code below
deals with a person’s weight and height. See if you can guess what
will be printed and then try running the code in a Python interpreter
such as https://www.onlinegdb.com/online_python_interpreter.
measurements = (8, 20)
print("Original measurements:")
for measurement in measurements:
print(measurement)
measurements = (170, 72)
print("\nModified measurements:")
for measurement in measurements:
print(measurement)
2. Here’s a broken Java program for you to analyze. The code
below deals with calculating tuition, multiplying the tuition rate and
the number of credits taken. The number of credits is entered by
the user of the program. The code below is broken and gives the
incorrect answer. Review the problem below and determine what it
would output if the user entered “6” for the number of credits. How
would you fix the program so that it would give the correct output?
package calcTuition;
//import Scanner
import java.util.Scanner;
Chapter 10: Information Systems Development | 241
https://www.onlinegdb.com/online_python_interpreter
public class CalcTuition
{
public static void main(String[] args)
{
//Declare variables
int credits;
final double TUITION_RATE = 100;
double tuitionTotal;
//Get user input
Scanner inputDevice = new Scanner(System.in);
System.out.println("Enter the number of credits: ");
credits = inputDevice.nextInt();
//Calculate tuition
tuitionTotal = credits + TUITION_RATE;
//Display tuition total
System.out.println("You total tuition is: " + tuitionTotal);
}
}
242 | Information Systems for Business and Beyond (2019)
PART III: INFORMATION
SYSTEMS BEYOND THE
ORGANIZATION
Part III: Information Systems Beyond
the Organization | 243
Chapter 11: Globalization and
the Digital Divide
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• explain the concept of globalization;
• describe the role of information technology in
globalization;
• identify the issues experienced by firms as they
face a global economy; and
• define the digital divide and explain Nielsen’s three
stages of the digital divide.
Introduction
The Internet has wired the world. Today it is just as simple to
communicate with someone on the other side of the world as it
is to talk to someone next door. But keep in mind that many
businesses attempted to outsource different needs in technology,
only to discover that near-sourcing (outsourcing to countries to
Chapter 11: Globalization and the
Digital Divide | 245
Internet
Statistics by
Continent.
Source:
https://www
.internetworl
dstats.com/
stats.htm.
(Click to
enlarge)
which your country is physically connected) had greater advantage.
This chapter looks at the implications of globalization and the
impact it is having on the world.
What Is Globalization?
Globalization refers to the integration of goods, services, and
culture among the nations of the world. Globalization is not
necessarily a new phenomenon. In many ways globalization has
existed since the days of European colonization. Further advances
in telecommunication and transportation technologies accelerated
globalization. The advent of the the worldwide Internet has made all
nations virtual next door neighbors.
The Internet is truly a worldwide phenomenon. As of December
2017 the Internet was being used by over 4.1 billion people world
wide.1 From its initial beginnings in the United States in the 1970s to
the development of the World Wide Web in the 1990s to the social
networks and e-commerce of today, the Internet has continued to
increase the integration between countries, making globalization a
fact of life for citizens all over the world.
1. [1]
246 | Information Systems for Business and Beyond (2019)
https://www.internetworldstats.com/stats.htm
https://www.internetworldstats.com/stats.htm
The Network Society
In 1996 social-sciences researcher Manuel Castells published The
Rise of the Network Society, in which he identified new ways
economic activity was being organized around the networks that
the new telecommunication technologies had provided. This new,
global economic activity was different from the past, because “it
is an economy with the capacity to work as a unit in real time on
a planetary scale.”2 Having a world connected via the Internet has
some massive implications.
The World Is Flat
Thomas Friedman’s 2005 book The World Is Flat uses anecdotal
evidence to present the impact the personal computer, the Internet,
and communication software have had on business, specifically the
impact on globalization. Three eras of globalization are defined at
the beginning of the book.3:
• “Globalization 1.0″ occurred from 1492 until about 1800. In this
era globalization was centered around countries. It was about
how much horsepower, wind power, and steam power a
country had and how creatively it was deployed. The world
shrank from size “large” to size “medium.”
• “Globalization 2.0″ occurred from about 1800 until 2000,
interrupted only by the two World Wars. In this era, the
dynamic force driving change was multinational companies.
The world shrank from size “medium” to size “small.”
2. [2]
3. [3]
Chapter 11: Globalization and the Digital Divide | 247
• “Globalization 3.0″ is our current era, beginning in the year
2000. The convergence of the personal computer, fiber-optic
Internet connections, and software has created a “flat-world
platform” that allows small groups and even individuals to go
global. The world has shrunk from size “small” to size “tiny.”
According to Friedman, this third era of globalization was brought
about, in many respects, by information technology. Some of the
specific technologies include:
• Graphical user interface for the personal computer
popularized in the late 1980s. Before the graphical user
interface, using a computer was relatively difficult, requiring
users to type commands rather than click a mouse. By making
the personal computer something that anyone could use, the
computer became a tool of virtually every person, not just
those intrigued by technology. Friedman says the personal
computer made people more productive and, as the Internet
evolved, made it simpler to communicate information
worldwide.
• Build-out of the Internet infrastructure during the dot-com
boom during the late-1990s. During the late 1990s,
telecommunications companies laid thousands of miles of fiber
optic cable all over the world, turning network
communications into a commodity. At the same time, the
Internet protocols, such as SMTP (e-mail), HTML (web pages),
and TCP/IP (network communications) became standards that
were available for free and used by everyone through their
email programs and web browsers.
• Introduction of software to automate and integrate business
processes. As the Internet continued to grow and become the
dominant form of communication, it became essential to build
on the standards developed earlier so that the websites and
applications running on the Internet would work well together.
Friedman calls this “workflow software,” by which he means
248 | Information Systems for Business and Beyond (2019)
software that allows people to work together more easily, and
allows different software and databases to integrate with each
other more easily. Examples include payment processing
systems and shipping calculators.
These three technologies came together in the late 1990s to
create a “platform for global collaboration.” Once these technologies
were in place, they continued to evolve. Friedman also points out
a couple more technologies that have contributed to the flat-world
platform, namely the open source movement discussed in Chapter
10 and the advent of mobile technologies.
Economist Pankaj Ghemawat authored the book World 3.0 in 2011
in an attempt to provide a more moderate and research-based
analysis of globalization. While Friedman talked with individuals and
produced an anecdotally-based book, Ghemawat’s approach was to
research economic data, then draw conclusions about globalization.
His research found the following:
• Mailed letters that cross international borders = 1%
• Telephone calling minutes that are international = 2%
• Internet traffic that is routed across international borders =
18%
• National, as opposed to international, TV news sources = 95%
• First generation immigrants as portion of world’s population =
3%
• People who at sometime in their lives will cross an
international border = 10%
• Global exports as portion of the value of all goods produced in
the world = 20%
4
According to Ghemawat, while the Internet has had an impact on
4. [4]
Chapter 11: Globalization and the Digital Divide | 249
the world’s economy, it may well be that domestic economies can be
expected to continue to be the main focus in most countries. You
can watch Ghemawat’s Ted Talk here. Current and future trends will
be discussed in Chapter 13.
The Global Firm
The new era of globalization allows virtually any business to become
international. By accessing this new platform of technologies,
Castells’s vision of working as a unit in real time on a planetary scale
can be a reality. Some of the advantages include:
• Ability to locate expertise and labor around the world.
Instead of drawing employees from their local area,
organizations can now hire people from the global labor pool.
This also allows organizations to pay a lower labor cost for the
same work based on the prevailing wage in different countries.
• Ability to operate 24 hours a day. With employees in different
time zones all around the world, an organization can literally
operate around the clock, handing off work on projects from
one part of the world to another as the normal business day
ends in one region and begins in another. A few years ago
three people decided to open a web hosting company. They
strategically relocated to three places in the world which were
eight hours apart, giving their business 24 hour coverage while
allowing each to work during the normal business day.
Operating expenses were minimized and the business provided
24/7 support to customers world wide.
• Larger market for their products. Once a product is being
sold online, it is available for purchase from a worldwide
customer base. Even if a company’s products do not appeal
beyond its own country’s borders, being online has made the
product more visible to consumers within that country.
250 | Information Systems for Business and Beyond (2019)
In order to fully take advantage of these new capabilities,
companies need to understand that there are also challenges in
dealing with employees and customers from different cultures.
Some of these challenges include:
• Infrastructure differences. Each country has its own
infrastructure with varying levels of quality and bandwidth. A
business cannot expect every country it deals with to have the
same Internet speeds. See the sidebar titled “How Does My
Internet Speed Compare?”
• Labor laws and regulations. Different countries (even different
states in the United States) have different laws and regulations.
A company that wants to hire employees from other countries
must understand the different regulations and concerns.
• Legal restrictions. Many countries have restrictions on what
can be sold or how a product can be advertised. It is important
for a business to understand what is allowed. For example, in
Germany, it is illegal to sell anything Nazi related.
• Language, customs, and preferences. Every country has its
own unique culture which a business must consider when
trying to market a product there. Additionally, different
countries have different preferences. For example, in many
parts of Europe people prefer to eat their french fries with
mayonnaise instead of ketchup. In South Africa a hamburger
comes delivered to your table with gravy on top.
• International shipping. Shipping products between countries
in a timely manner can be challenging. Inconsistent address
formats, dishonest customs agents, and prohibitive shipping
costs are all factors that must be considered when trying to
deliver products internationally.
Because of these challenges, many businesses choose not to
expand globally, either for labor or for customers. Whether a
business has its own website or relies on a third-party, such as
Chapter 11: Globalization and the Digital Divide | 251
Comparison
of top world
Internet
speeds in
2019. Source:
https://www
.statista.com
/chart/
7246/
the-countrie
s-with-the-f
astest-intern
et/ (Click to
enlarge)
Amazon or eBay, the question of whether or not to globalize must
be carefully considered.
Sidebar: How Does My Internet Speed
Compare?
How does your Internet speed compare with others in the world?
The following chart shows how Internet speeds compare
in different countries. You can find the full list of countries by going
to this article . You can also compare the evolution of Internet
speeds among countries by using this tool .
So how does your own Internet speed compare? There are many
online tools you can use to determine the speed at which you are
connected. One of the most trusted sites is speedtest.net, where
you can test both your download and upload speeds.
252 | Information Systems for Business and Beyond (2019)
https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/
https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/
http://www.akamai.com/stateoftheinternet
https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/
https://www.statista.com/chart/7246/the-countries-with-the-fastest-internet/
http://www.speedtest.net/
The Digital Divide
As the Internet continues to make inroads across the world, it is also
creating a separation between those who have access to this global
network and those who do not. This separation is called the “digital
divide” and is of great concern. An article in Crossroads puts it this
way:
Adopted by the ACM Council in 1992, the ACM Code of
Ethics and Professional Conduct focuses on issues involving
the Digital Divide that could prevent certain categories of
people — those from low-income households, senior
citizens, single-parent children, the undereducated,
minorities, and residents of rural areas — from receiving
adequate access to the wide variety of resources offered
by computer technology. This Code of Ethics positions the
use of computers as a fundamental ethical consideration: “In
a fair society, all individuals would have equal opportunity
to participate in, or benefit from, the use of computer
resources regardless of race, sex, religion, age, disability,
national origin, or other similar factors.” This article
summarizes the digital divide in its various forms, and
analyzes reasons for the growing inequality in people’s
access to Internet services. It also describes how society
can bridge the digital divide: the serious social gap between
information “haves” and “have-nots.”5
The digital divide can occur between countries, regions, or even
neighborhoods. In many US cities, there are pockets with little or no
5. [5]
Chapter 11: Globalization and the Digital Divide | 253
Internet access, while just a few miles away high-speed broadband
is common.
Solutions to the digital divide have had mixed success over the
years. Many times just providing Internet access and/or computing
devices is not enough to bring true Internet access to a country,
region, or neighborhood.
A New Understanding of the Digital Divide
In 2006, web-usability consultant Jakob Nielsen wrote an article
that got to the heart of our understanding of this problem. In his
article he breaks the digital divide up into three stages: the
economic divide, the usability divide, and the empowerment
divide6.
• Economic divide. This is what many call the digital divide. The
economic divide is the idea that some people can afford to
have a computer and Internet access while others cannot.
Because of Moore’s Law (see Chapter 2), the price of hardware
has continued to drop and, at this point, we can now access
digital technologies, such as smartphones, for very little.
Nielsen asserts that for all intents and purposes, the economic
divide is a moot point and we should not focus our resources
on solving it.
• Usability divide. Usability is concerned with the fact that
“technology remains so complicated that many people couldn’t
use a computer even if they got one for free.” And even for
those who can use a computer, accessing all the benefits of
having one is beyond their understanding. Included in this
group are those with low literacy and seniors. According to
6. [6]
254 | Information Systems for Business and Beyond (2019)
Nielsen, we know how to help these users, but we are not
doing it because there is little profit in doing so.
• Empowerment divide. Empowerment is the most difficult to
solve. It is concerned with how we use technology to empower
ourselves. Very few users truly understand the power that
digital technologies can give them. In his article, Nielsen
explains that his and others’ research has shown that very few
users contribute content to the Internet, use advanced search,
or can even distinguish paid search ads from organic search
results. Many people will limit what they can do online by
accepting the basic, default settings of their computer and not
work to understand how they can truly be empowered.
Understanding the digital divide using these three stages provides
a more nuanced view of how we can work to alleviate it. More work
needs to be done to address the second and third stages of the
digital divide for a more holistic solution.
Refining the Digital Divide
The Miniwatts Marketing Group, host of Internet World Stats, has
sought in 2018 to further clarify the meaning of digital divide by
acknowledging that the divide is more than just who does or does
not have access to the Internet. In addition to Nielsen’s economic,
usability, and empowerment divides, this group sees the following
concerns.
• Social mobility. Lack of computer education works to the
disadvantage of children with lower socioeconomic status.
• Democracy. Greater use of the Internet can lead to healthier
democracies especially in participation in elections.
• Economic growth. Greater use of the Internet in developing
countries could provide a shortcut to economic advancement.
Chapter 11: Globalization and the Digital Divide | 255
Using the latest technology could give companies in these
countries a competitive advantage.
The focus on the continuing digital divide has led the European
Union to create an initiative known as The European 2020 Strategy.
Five major areas are being targeted: a) research and development,
b) climate/energy, c) education, d) social inclusion, and e) poverty
reduction.7
Sidebar: Using Gaming to Bridge the
Digital Divide
Paul Kim, the Assistant Dean and Chief Technology Officer of the
Stanford Graduate School of Education, designed a project to
address the digital divide for children in developing countries. 8
In their project the researchers wanted to learn if children can
adopt and teach themselves mobile learning technology, without
help from teachers or other adults, and the processes and factors
involved in this phenomenon. The researchers developed a mobile
device called TeacherMate, which contained a game designed to
help children learn math. The unique part of this research was
that the researchers interacted directly with the children. They
did not channel the mobile devices through the teachers or the
schools. There was another important factor to consider. In order
to understand the context of the children’s educational
environment, the researchers began the project by working with
7. [7]
8. [8]
256 | Information Systems for Business and Beyond (2019)
parents and local nonprofits six months before their visit. While the
results of this research are too detailed to go into here, it can be
said that the researchers found that children can, indeed, adopt and
teach themselves mobile learning technologies.
What makes this research so interesting when thinking about
the digital divide is that the researchers found that, in order to be
effective, they had to customize their technology and tailor their
implementation to the specific group they were trying to reach. One
of their conclusions stated the following:
Considering the rapid advancement of technology today,
mobile learning options for future projects will only
increase. Consequently, researchers must continue to
investigate their impact. We believe there is a specific need
for more in-depth studies on ICT [Information and
Communication Technology] design variations to meet
different challenges of different localities.
To read more about Dr. Kim’s project, locate the paper referenced
here.
Summary
Information technology has driven change on a global scale.
Technology has given us the ability to integrate with people all over
the world using digital tools. These tools have allowed businesses to
broaden their labor pools, their markets, and even their operating
hours. But they have also brought many new complications for
businesses, which now must understand regulations, preferences,
and cultures from many different nations. This new globalization
has also exacerbated the digital divide. Nielsen has suggested that
the digital divide consists of three stages (economic, usability, and
empowerment), of which the economic stage is virtually solved.
Chapter 11: Globalization and the Digital Divide | 257
http://ldtprojects.stanford.edu/~educ39107/hyunkyung/IJED%20-%20India%20-%20comparative /
http://ldtprojects.stanford.edu/~educ39107/hyunkyung/IJED%20-%20India%20-%20comparative /
Study Questions
1. What does the term globalization mean?
2. How does Friedman define the three eras of globalization?
3. Which technologies have had the biggest effect on
globalization?
4. What are some of the advantages brought about by
globalization?
5. What are the challenges of globalization?
6. What perspective does Ghemawat provide regarding
globalization in his book World 3.0?
7. What does the term digital divide mean?
8. What are Jakob Nielsen’s three stages of the digital divide?
9. What was one of the key points of The Rise of the Network
Society?
10. Which country has the highest average Internet speed? How
does your country compare?
Exercises
1. Compare the concept of Friedman’s “Globalization 3.0″ with
Nielsen empowerment stage of the digital divide.
2. Do some original research to determine some of the
regulations that a US company may have to consider before
doing business in one of the following countries: China,
Germany, Saudi Arabia, Turkey.
3. Give one example of the digital divide and describe what you
would do to address it.
4. How did the research conducted by Paul Kim address the three
258 | Information Systems for Business and Beyond (2019)
levels of the digital divide?
Lab
1. Go to speedtest.net to determine your Internet speed.
Compare your speed at home to the Internet speed at two
other locations, such as your school, place of employment, or
local coffee shop. Write a one-page summary that compares
these locations.
1. Internet World Stats. (n.d.). World Internet Users and 2018
Population Stats. Retrieved from
http://internetworldstats.com/↵
2. Castells, M. (2000). The Rise of the Network Society (2nd ed.).
Cambridge, MA: Blackwell Publishers, Inc.↵
3. Friedman, T. L. (2005). The world is flat: A brief history of the
twenty-first century. New York: Farrar, Straus and Giroux.↵
4. Ghemawat, P. (2011). World 3.0: Global Prosperity and How to
Achieve It. Boston: Harvard Business School Publishing.↵
5. Kim, K. (2005, December). Challenges in HCI: digital divide.
Crossroads 12, 2. DOI=10.1145/1144375.1144377. Retrieved from
http://doi.acm.org/10.1145/1144375.1144377↵
6. Nielsen, J. (2006).Digital Divide: The 3 Stages. Nielsen Norman
Group. Retrieved from http://www.nngroup.com/articles/
digital-divide-the-three-stages/↵
7. Miniwatts Marketing Group. (2018, May 23). The Digital Divide,
ICT, and Broadband Internet. Retrieved from
https://www.internetworldstats.com/links10.htm↵
8. Kim, P., Buckner, E., Makany, T., and Kim, H. (2011). A
comparative analysis of a game-based mobile learning model in
Chapter 11: Globalization and the Digital Divide | 259
low-socioeconomic communities of India. International Journal
of Educational Development. Retrieved from https//doi:10.1016/
j.ijedudev.2011.05.008.↵
260 | Information Systems for Business and Beyond (2019)
Chapter 12: The Ethical and
Legal Implications of
Information Systems
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• describe what the term information systems ethics
means;
• explain what a code of ethics is and describe the
advantages and disadvantages;
• define the term intellectual property and explain
the protections provided by copyright, patent, and
trademark; and
• describe the challenges that information
technology brings to individual privacy.
Introduction
Information systems have had an impact far beyond the world of
Chapter 12: The Ethical and Legal
Implications of Information
business. New technologies create new situations that have never
had to be confronted before. One issue is how to handle the new
capabilities that these devices provide to users. What new laws are
going to be needed for protection from misuse of new technologies.
This chapter begins with a discussion of the impact of information
systems has on user behavior or ethics. This will be followed with
the new legal structures being put in place with a focus on
intellectual property and privacy.
Information Systems Ethics
The term ethics means “a set of moral principles” or “the principles
of conduct governing an individual or a group.”1 Since the dawn
of civilization, the study of ethics and their impact has fascinated
mankind. But what do ethics have to do with information systems?
The introduction of new technology can have a profound effect
on human behavior. New technologies give us capabilities that we
did not have before, which in turn create environments and
situations that have not been specifically addressed in an ethical
context. Those who master new technologies gain new power while
those who cannot or do not master them may lose power. In 1913
Henry Ford implemented the first moving assembly line to create
his Model T cars. While this was a great step forward technologically
and economically, the assembly line reduced the value of human
beings in the production process. The development of the atomic
bomb concentrated unimaginable power in the hands of one
government, who then had to wrestle with the decision to use
it. Today’s digital technologies have created new categories of
ethical dilemmas.
1. [1]
262 | Information Systems for Business and Beyond (2019)
Facebook logo
For example, the ability to anonymously make perfect copies of
digital music has tempted many music fans to download
copyrighted music for their own use without making payment to the
music’s owner. Many of those who would never have walked into a
music store and stolen a CD find themselves with dozens of illegally
downloaded albums.
Digital technologies have given us the ability to aggregate
information from multiple sources to create profiles of people.
What would have taken weeks of work in the past can now be
done in seconds, allowing private organizations and governments
to know more about individuals than at any time in history. This
information has value, but also chips away at the privacy of
consumers and citizens.
Sidebar: Data Privacy, Facebook, and
Cambridge Analytica
In early 2018 Facebook acknowledged a
data breach affecting 87 million users. The
app “thisisyourdigitallife”, created by Global
Science Research, informed users that they
could participate in a psychological research
study. About 270,000 people decided to
participate in the research, but the app failed
to tell users that the data of all of their
friends on Facebook would be automatically
captured as well. All of this data theft took place prior to 2014, but it
did not become public until four years later.
In 2015 Facebook learned about Global Science Research’s
collection of data on millions of friends of the users in the research.
Global Science Research agreed to delete the data, but it had already
Chapter 12: The Ethical and Legal Implications of Information
Systems | 263
been sold to Cambridge Analytica who used it in the 2016
presidential primary campaign. The ensuing firestorm resulted in
Mark Zuckerberg, CEO of Facebook, testifying before the U.S.
Congress in 2018 on what happened and what Facebook would
do in the future to protect users’ data. Congress is working on
legislation to protect user data in the future, a prime example of
technology advancing faster than the laws needed to protect users.
More information about this case of data privacy can be found at
Facebook and Cambridge Analytica. 2
Code of Ethics
A code of ethics is one method for navigating new ethical waters.
A code of ethics outlines a set of acceptable behaviors for a
professional or social group. Generally, it is agreed to by all
members of the group. The document details different actions that
are considered appropriate and inappropriate.
A good example of a code of ethics is the Code of Ethics and
Professional Conduct of the Association for Computing Machinery,3
an organization of computing professionals that includes
academics, researchers, and practitioners. Here is a quote from the
preamble:
Commitment to ethical professional conduct is expected of
every member (voting members, associate members, and
student members) of the Association for Computing
Machinery (ACM).
2. [2]
3. [3]
264 | Information Systems for Business and Beyond (2019)
http://www.https//www.digitaltrends.com/social-media/what-facebook-users-should-know-about-cambridge-analytica-and-privacy/
http://www.acm.org/about/code-of-ethics
http://www.acm.org/about/code-of-ethics
This Code, consisting of 24 imperatives formulated as
statements of personal responsibility, identifies the
elements of such a commitment. It contains many, but not
all, issues professionals are likely to face. Section 1 outlines
fundamental ethical considerations, while Section
2 addresses additional, more specific considerations of
professional conduct. Statements in Section 3 pertain more
specifically to individuals who have a leadership role,
whether in the workplace or in a volunteer capacity such
as with organizations like ACM. Principles involving
compliance with this Code are given in Section 4.
In the ACM’s code you will find many straightforward ethical
instructions such as the admonition to be honest and trustworthy.
But because this is also an organization of professionals that focuses
on computing, there are more specific admonitions that relate
directly to information technology:
• No one should enter or use another’s computer system,
software, or data files without permission. One must always
have appropriate approval before using system resources,
including communication ports, file space, other system
peripherals, and computer time.
• Designing or implementing systems that deliberately or
inadvertently demean individuals or groups is ethically
unacceptable.
• Organizational leaders are responsible for ensuring that
computer systems enhance, not degrade, the quality of
working life. When implementing a computer system,
organizations must consider the personal and professional
development, physical safety, and human dignity of all workers.
Appropriate human-computer ergonomic standards should be
considered in system design and in the workplace.
One of the major advantages of creating a code of ethics is that
it clarifies the acceptable standards of behavior for a professional
Chapter 12: The Ethical and Legal Implications of Information
Systems | 265
http://www.acm.org/about/code-of-ethics/#sect1
http://www.acm.org/about/code-of-ethics/#sect2
http://www.acm.org/about/code-of-ethics/#sect2
http://www.acm.org/about/code-of-ethics/#sect3
http://www.acm.org/about/code-of-ethics/#sect4
group. The varied backgrounds and experiences of the members
of a group lead to a variety of ideas regarding what is acceptable
behavior. While the guidelines may seem obvious, having these
items detailed provides clarity and consistency. Explicitly stating
standards communicates the common guidelines to everyone in a
clear manner.
A code of ethics can also have some drawbacks. First, a code of
ethics does not have legal authority. Breaking a code of ethics is
not a crime in itself. What happens if someone violates one of the
guidelines? Many codes of ethics include a section that describes
how such situations will be handled. In many cases repeated
violations of the code result in expulsion from the group.
In the case of ACM: “Adherence of professionals to a code of
ethics is largely a voluntary matter. However, if a member does
not follow this code by engaging in gross misconduct, membership
in ACM may be terminated.” Expulsion from ACM may not have
much of an impact on many individuals since membership in ACM is
usually not a requirement for employment. However, expulsion from
other organizations, such as a state bar organization or medical
board, could carry a huge impact.
Another possible disadvantage of a code of ethics is that there
is always a chance that important issues will arise that are not
specifically addressed in the code. Technology is quickly changing
and a code of ethics might not be updated often enough to keep up
with all of the changes. A good code of ethics, however, is written
in a broad enough fashion that it can address the ethical issues of
potential changes to technology while the organization behind the
code makes revisions.
Finally, a code of ethics could also be a disadvantage in that it
may not entirely reflect the ethics or morals of every member of the
group. Organizations with a diverse membership may have internal
conflicts as to what is acceptable behavior. For example, there may
be a difference of opinion on the consumption of alcoholic
beverages at company events. In such cases the organization must
266 | Information Systems for Business and Beyond (2019)
make a choice about the importance of addressing a specific
behavior in the code.
Sidebar: Acceptable Use Policies
Many organizations that provide technology services to a group
of constituents or the public require agreement to an Acceptable
Use Policy (AUP) before those services can be accessed. Similar to
a code of ethics, this policy outlines what is allowed and what is
not allowed while someone is using the organization’s services. An
everyday example of this is the terms of service that must be agreed
to before using the public Wi-Fi at Starbucks, McDonald’s, or even
a university. Here is an example of an acceptable use policy from
Virginia Tech.
Just as with a code of ethics, these acceptable use policies specify
what is allowed and what is not allowed. Again, while some of the
items listed are obvious to most, others are not so obvious:
• “Borrowing” someone else’s login ID and password is
prohibited.
• Using the provided access for commercial purposes, such as
hosting your own business website, is not allowed.
• Sending out unsolicited email to a large group of people is
prohibited.
As with codes of ethics, violations of these policies have various
consequences. In most cases, such as with Wi-Fi, violating the
acceptable use policy will mean that you will lose your access to
the resource. While losing access to Wi-Fi at Starbucks may not
have a lasting impact, a university student getting banned from the
Chapter 12: The Ethical and Legal Implications of Information
Systems | 267
http://www.vt.edu/about/acceptable-use.html
http://www.vt.edu/about/acceptable-use.html
university’s Wi-Fi (or possibly all network resources) could have a
large impact.
Intellectual Property
One of the domains that has been deeply impacted by digital
technologies is intellectual property. Digital technologies have
driven a rise in new intellectual property claims and made it much
more difficult to defend intellectual property.
Intellectual property is defined as “property (as an idea, invention,
or process) that derives from the work of the mind or intellect.”4
This could include creations such as song lyrics, a computer
program, a new type of toaster, or even a sculpture.
Practically speaking, it is very difficult to protect an idea. Instead,
intellectual property laws are written to protect the tangible results
of an idea. In other words, just coming up with a song in your head
is not protected, but if you write it down it can be protected.
Protection of intellectual property is important because it gives
people an incentive to be creative. Innovators with great ideas will
be more likely to pursue those ideas if they have a clear
understanding of how they will benefit. In the US Constitution,
Article 8, Section 8, the authors saw fit to recognize the importance
of protecting creative works:
Congress shall have the power . . . To promote the Progress
of Science and useful Arts, by securing for limited Times to
Authors and Inventors the exclusive Right to their respective
Writings and Discoveries.
4. [4]
268 | Information Systems for Business and Beyond (2019)
An important point to note here is the “limited time” qualification.
While protecting intellectual property is important because of the
incentives it provides, it is also necessary to limit the amount of
benefit that can be received and allow the results of ideas to become
part of the public domain.
Outside of the US, intellectual property protections vary. You can
find out more about a specific country’s intellectual property laws
by visiting the World Intellectual Property Organization.
The following sections address three of the best known
intellectual property protections: copyright, patent, and trademark.
Copyright
Copyright is the protection given to songs, computer programs,
books, and other creative works. Any work that has an “author” can
be copyrighted. Under the terms of copyright, the author of a work
controls what can be done with the work, including:
• Who can make copies of the work.
• Who can make derivative works from the original work.
• Who can perform the work publicly.
• Who can display the work publicly.
• Who can distribute the work.
Many times a work is not owned by an individual but is instead
owned by a publisher with whom the original author has an
agreement. In return for the rights to the work, the publisher will
market and distribute the work and then pay the original author a
portion of the proceeds.
Copyright protection lasts for the life of the original author plus
seventy years. In the case of a copyrighted work owned by a
publisher or another third party, the protection lasts for ninety-
five years from the original creation date. For works created before
Chapter 12: The Ethical and Legal Implications of Information
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http://www.wipo.int/
1978, the protections vary slightly. You can see the full details on
copyright protections by reviewing the Copyright Basics document
available at the US Copyright Office’s website.
Obtaining Copyright Protection
In the United States a copyright is obtained by the simple act of
creating the original work. In other words, when an author writes
down a song, makes a film, or develops a computer program, the
author has the copyright. However, for a work that will be used
commercially, it is advisable to register for a copyright with the
US Copyright Office. A registered copyright is needed in order to
bring legal action against someone who has used a work without
permission.
First Sale Doctrine
If an artist creates a painting and sells it to a collector who then,
for whatever reason, proceeds to destroy it, does the original artist
have any recourse? What if the collector, instead of destroying it,
begins making copies of it and sells them? Is this allowed? The first
sale doctrine is a part of copyright law that addresses this, as shown
below5:
The first sale doctrine, codified at 17 U.S.C. § 109, provides
that an individual who knowingly purchases a copy of a
copyrighted work from the copyright holder receives the
5. [5]
270 | Information Systems for Business and Beyond (2019)
http://www.copyright.gov/circs/circ01
http://www.copyright.gov/circs/circ01
right to sell, display or otherwise dispose of that particular
copy, notwithstanding the interests of the copyright owner.
Therefor, in our examples the copyright owner has no recourse if
the collector destroys the artwork. But the collector does not have
the right to make copies of the artwork.
Fair Use
Another important provision within copyright law is that of fair use.
Fair use is a limitation on copyright law that allows for the use
of protected works without prior authorization in specific cases.
For example, if a teacher wanted to discuss a current event in
class, copies of the copyrighted new story could be handed out in
class without first getting permission. Fair use is also what allows a
student to quote a small portion of a copyrighted work in a research
paper.
Unfortunately, the specific guidelines for what is considered fair
use and what constitutes copyright violation are not well defined.
Fair use is a well-known and respected concept and will only be
challenged when copyright holders feel that the integrity or market
value of their work is being threatened. The following four factors
are considered when determining if something constitutes fair
use: 6
1. The purpose and character of the use, including whether such
use is of commercial nature or is for nonprofit educational
purposes;
2. The nature of the copyrighted work;
3. The amount and substantiality of the portion used in relation
6. [6]
Chapter 12: The Ethical and Legal Implications of Information Systems | 271
to the copyrighted work as a whole;
4. The effect of the use upon the potential market for, or value of,
the copyrighted work.
If you are ever considering using a copyrighted work as part of
something you are creating, you may be able to do so under fair
use. However, it is always best to check with the copyright owner to
be sure you are staying within your rights and not infringing upon
theirs.
Sidebar: The History of Copyright Law
As noted above, current copyright law grants copyright protection
for seventy years after the author’s death, or ninety-five years from
the date of creation for a work created for hire. But it was not always
this way.
The first US copyright law, which only protected books, maps, and
charts, provided protection for only 14 years with a renewable term
of 14 years. Over time copyright law was revised to grant protections
to other forms of creative expression, such as photography and
motion pictures. Congress also saw fit to extend the length of the
protections, as shown in the following chart. Today, copyright has
become big business with many businesses relying on the income
from copyright protected works for their income.
Many now think that the protections last too long. The Sonny
Bono Copyright Term Extension Act has been nicknamed the
“Mickey Mouse Protection Act,” as it was enacted just in time to
protect the copyright on the Walt Disney Company’s Mickey Mouse
character. Because of this term extension, many works from the
1920s and 1930s that would have been available now in the public
domain are still restricted.
272 | Information Systems for Business and Beyond (2019)
Evolution of
copyright
The Digital Millennium Copyright Act
As digital technologies have changed what it means to create, copy,
and distribute media, a policy vacuum has been created. In 1998, the
US Congress passed the Digital Millennium Copyright Act (DMCA),
which extended copyright law to take into consideration digital
technologies. Two of the best-known provisions from the DMCA are
the anti-circumvention provision and the “safe harbor” provision.
• The anti-circumvention provision makes it illegal to create
technology to circumvent technology that has been put in
place to protect a copyrighted work. This provision includes
not just the creation of the technology but also the publishing
of information that describes how to do it. While this provision
does allow for some exceptions, it has become quite
controversial and has led to a movement to have it modified.
• The “safe harbor” provision limits the liability of online service
providers when someone using their services commits
copyright infringement. This is the provision that allows
YouTube, for example, not to be held liable when someone
posts a clip from a copyrighted movie. The provision does
Chapter 12: The Ethical and Legal Implications of Information
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http://fixthedmca.org/
require the online service provider to take action when they
are notified of the violation (a “takedown” notice). For an
example of how takedown works, here’s how YouTube handles
these requests: YouTube Copyright Infringement Notification.
Many think that the DMCA goes too far and ends up limiting our
freedom of speech. The Electronic Frontier Foundation (EFF) is at
the forefront of this battle. In discussing the anti-circumvention
provision, the EFF states:
Yet the DMCA has become a serious threat that jeopardizes
fair use, impedes competition and innovation, chills free
expression and scientific research, and interferes with
computer intrusion laws. If you circumvent DRM [digital
rights management] locks for non-infringing fair uses or
create the tools to do so you might be on the receiving end
of a lawsuit.
Sidebar: Creative Commons
Chapter 2 introduced the topic of open-source software. Open-
source software has few or no copyright restrictions. The creators
of the software publish their code and make their software available
for others to use and distribute for free. This is great for software,
but what about other forms of copyrighted works? If an artist or
writer wants to make their works available, how can they go about
doing so while still protecting the integrity of their work? Creative
Commons is the solution to this problem.
Creative Commons is a nonprofit organization that provides legal
tools for artists and authors. The tools offered make it simple to
license artistic or literary work for others to use or distribute in a
274 | Information Systems for Business and Beyond (2019)
http://www.youtube.com/yt/copyright/copyright-complaint.html
manner consistent with the author’s intentions. Creative Commons
licenses are indicated with the symbol . It is important to note
that Creative Commons and public domain are not the same. When
something is in the public domain, it has absolutely no restrictions
on its use or distribution. Works whose copyrights have expired are
in the public domain.
By using a Creative Commons license, authors can control the use
of their work while still making it widely accessible. By attaching a
Creative Commons license to their work, a legally binding license is
created. Here are some examples of these licenses:
• CC-BY. This is the least restrictive license. It lets others
distribute and build upon the work, even commercially, as long
as they give the author credit for the original work.
• CC-BY-SA. This license restricts the distribution of the work
via the “share-alike” clause. This means that others can freely
distribute and build upon the work, but they must give credit
to the original author and they must share using the same
Creative Commons license.
• CC-BY-NC. This license is the same as CC-BY but adds the
restriction that no one can make money with this work. NC
stands for “non-commercial.”
• CC-BY-NC-ND. This license is the same as CC-BY-NC but also
adds the ND restriction, which means that no derivative works
may be made from the original.
These are a few of the more common licenses that can be created
using the tools that Creative Commons makes available. For a full
listing of the licenses and to learn much more about Creative
Commons, visit their web site.
Chapter 12: The Ethical and Legal Implications of Information
Systems | 275
Patent
Patents are another important form of intellectual property
protection. A patent creates protection for someone who invents a
new product or process. The definition of invention is quite broad
and covers many different fields. Here are some examples of items
receiving patents:
• circuit designs in semiconductors;
• prescription drug formulas;
• firearms;
• locks;
• plumbing;
• engines;
• coating processes; and
• business processes.
Once a patent is granted it provides the inventor with protection
from others infringing on his or her patent. A patent holder has the
right to “exclude others from making, using, offering for sale, or
selling the invention throughout the United States or importing the
invention into the United States for a limited time in exchange for
public disclosure of the invention when the patent is granted.”7
As with copyright, patent protection lasts for a limited period of
time before the invention or process enters the public domain. In
the US, a patent lasts twenty years. This is why generic drugs are
available to replace brand-name drugs after twenty years.
7. [7]
276 | Information Systems for Business and Beyond (2019)
Obtaining Patent Protection
Unlike copyright, a patent is not automatically granted when
someone has an interesting idea and writes it down. In most
countries a patent application must be submitted to a government
patent office. A patent will only be granted if the invention or
process being submitted meets certain conditions.
• Must be original. The invention being submitted must not
have been submitted before.
• Must be non-obvious. You cannot patent something that
anyone could think of. For example, you could not put a pencil
on a chair and try to get a patent for a pencil-holding chair.
• Must be useful. The invention being submitted must serve
some purpose or have some use that would be desired.
The job of the patent office is to review patent applications to
ensure that the item being submitted meets these requirements.
This is not an easy job. In 2017 the US Patent Office granted 318,849
patents, an increase of 5.2% over 2016.8 The current backlog for a
patent approval is 15.6 months. Information Technology firms have
apply for a significant number of patents each year. Here are the
top five I.T. firms in terms of patent applications filed since 2009.
The percents indicate the percent of total I.T. patents filed since
2009. Notice that over half of patent filings come from just these
five corporations.
• International Business Machines (IBM) 21.6%
• Microsoft Corporation 14.2%
• AT & T, Inc. 7.1%
• Alphabet (Google), Inc. 5.0%
8. [8]
Chapter 12: The Ethical and Legal Implications of Information Systems | 277
• Sony Corporation 4.7%
You might have noticed that Apple is not in the top five listing.
Microsoft holds the lead in Artificial Intelligence (AI) patents.
9
Sidebar: What Is a Patent Troll?
The advent of digital technologies has led to a large increase in
patent filings and therefore a large number of patents being
granted. Once a patent is granted, it is up to the owner of the patent
to enforce it. If someone is found to be using the invention without
permission, the patent holder has the right to sue to force that
person to stop and to collect damages.
The rise in patents has led to a new form of profiteering called
patent trolling. A patent troll is a person or organization who gains
the rights to a patent but does not actually make the invention that
the patent protects. Instead, the patent troll searches for those who
are illegally using the invention in some way and sues them. In many
cases the infringement being alleged is questionable at best. For
example, companies have been sued for using Wi-Fi or for scanning
documents, technologies that have been on the market for many
years.
Recently, the U.S. government has begun taking action against
patent trolls. Several pieces of legislation are working their way
through the U.S. Congress that will, if enacted, limit the ability of
patent trolls to threaten innovation. You can learn a lot more about
9. [9]
278 | Information Systems for Business and Beyond (2019)
https://www.eff.org/deeplinks/2013/01/scanning-documents-patent-trolls-want-you-pay
https://www.eff.org/deeplinks/2013/01/scanning-documents-patent-trolls-want-you-pay
Apple logo
patent trolls by listening to a detailed investigation conducted by
the radio program This American Life, by clicking this link.
Trademark
A trademark is a word, phrase, logo,
shape or sound that identifies a
source of goods or services. For
example, the Nike “Swoosh,” the
Facebook “f”, and Apple’s apple (with a
bite taken out of it) are all
trademarked. The concept behind
trademarks is to protect the
consumer. Imagine going to the local
shopping center to purchase a
specific item from a specific store and
finding that there are several stores all with the same name!
Two types of trademarks exist – a common law trademark and
a registered trademark. As with copyright, an organization will
automatically receive a trademark if a word, phrase, or logo is being
used in the normal course of business (subject to some restrictions,
discussed below). A common law trademark is designated by placing
“TM” next to the trademark. A registered trademark is one that has
been examined, approved, and registered with the trademark office,
such as the Patent and Trademark Office in the US. A registered
trademark has the circle-R (®) placed next to the trademark.
While most any word, phrase, logo, shape, or sound can be
trademarked, there are a few limitations. A trademark will not hold
up legally if it meets one or more of the following conditions:
• The trademark is likely to cause confusion with a mark in a
registration or prior application.
Chapter 12: The Ethical and Legal Implications of Information
Systems | 279
http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack
• The trademark is merely descriptive for the goods/services.
For example, trying to register the trademark “blue” for a blue
product you are selling will not pass muster.
• The trademark is a geographic term.
• The trademark is a surname. You will not be allowed to
trademark “Smith’s Bookstore.”
• The trademark is ornamental as applied to the goods. For
example, a repeating flower pattern that is a design on a plate
cannot be trademarked.
As long as an organization uses its trademark and defends it
against infringement, the protection afforded by it does not expire.
Because of this, many organizations defend their trademark against
other companies whose branding even only slightly copies their
trademark. For example, Chick-fil-A has trademarked the phrase
“Eat Mor Chikin” and has vigorously defended it against a small
business using the slogan “Eat More Kale.” Coca-Cola has
trademarked the contour shape of its bottle and will bring legal
action against any company using a bottle design similar to
theirs. Examples of trademarks that have been diluted and have
now lost their protection in the US include: “aspirin” (originally
trademarked by Bayer), “escalator” (originally trademarked by Otis),
and “yo-yo” (originally trademarked by Duncan).
Information Systems and Intellectual Property
The rise of information systems has resulted in rethinking how
to deal with intellectual property. From the increase in patent
applications swamping the government’s patent office to the new
laws that must be put in place to enforce copyright protection,
digital technologies have impacted our behavior.
280 | Information Systems for Business and Beyond (2019)
http://finance.yahoo.com/blogs/the-exchange/eat-more-kale-company-losing-against-chick-fil-212157027.html
http://finance.yahoo.com/blogs/the-exchange/eat-more-kale-company-losing-against-chick-fil-212157027.html
Privacy
The term privacy has many definitions, but for purposes here,
privacy will mean the ability to control information about oneself.
The ability to maintain our privacy has eroded substantially in the
past decades, due to information systems.
Personally Identifiable Information
Information about a person that can be used to uniquely establish
that person’s identify is called personally identifiable information, or
PII. This is a broad category that includes information such as:
• Name;
• Social Security Number;
• Date of birth;
• Place of birth;
• Mother‘s maiden name;
• Biometric records (fingerprint, face, etc.);
• Medical records;
• Educational records;
• Financial information; and
• Employment information.
Organizations that collect PII are responsible to protect it. The
Department of Commerce recommends that “organizations
minimize the use, collection, and retention of PII to what is strictly
necessary to accomplish their business purpose and mission.” They
go on to state that “the likelihood of harm caused by a breach
involving PII is greatly reduced if an organization minimizes the
Chapter 12: The Ethical and Legal Implications of Information Systems | 281
amount of PII it uses, collects, and stores.”10 Organizations that do
not protect PII can face penalties, lawsuits, and loss of business. In
the US, most states now have laws in place requiring organizations
that have had security breaches related to PII to notify potential
victims, as does the European Union.
Just because companies are required to protect your information
does not mean they are restricted from sharing it. In the US,
companies can share your information without your explicit
consent (see the following sidebar), though not all do so. Companies
that collect PII are urged by the FTC to create a privacy policy and
post it on their website. The State of California requires a privacy
policy for any website that does business with a resident of the state
(see http://www.privacy.ca.gov/lawenforcement/laws.htm).
While the privacy laws in the US seek to balance consumer
protection with promoting commerce, privacy in the European
Union is considered a fundamental right that outweighs the
interests of commerce. This has led to much stricter privacy
protection in the EU, but also makes commerce more difficult
between the US and the EU.
Non-Obvious Relationship Awareness
Digital technologies have given people many new capabilities that
simplify and expedite the collection of personal information. Every
time a person comes into contact with digital technologies,
information about that person is being made available. From
location to web-surfing habits, your criminal record to your credit
report, you are constantly being monitored. This information can
then be aggregated to create profiles of each person. While much
of the information collected was available in the past, collecting it
10. [10]
282 | Information Systems for Business and Beyond (2019)
http://www.privacy.ca.gov/lawenforcement/laws.htm
Non-obvious
relationship
awareness
(NORA)
and combining it took time and effort. Today, detailed information
about a person is available for purchase from different companies.
Even information not categorized as PII can be aggregated in such a
way that an individual can be identified.
This process of collecting large quantities of a variety of
information and then combining it to create profiles of individuals
is known as Non-Obvious Relationship Awareness, or NORA. First
commercialized by big casinos looking to find cheaters, NORA is
used by both government agencies and private organizations, and it
is big business.
In some settings NORA can bring many benefits such as in law
enforcement. By being able to identify potential criminals more
quickly, crimes can be solved sooner or even prevented before they
happen. But these advantages come at a price, namely, our privacy.
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https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/NORA-1
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/NORA-1
Restrictions on Data Collecting
In the United State the government has strict guidelines on how
much information can be collected about its citizens. Certain
classes of information have been restricted by laws over time and
the advent of digital tools has made these restrictions more
important than ever.
Children’s Online Privacy Protection Act
Websites that collect information from children under the age of
thirteen are required to comply with the Children’s Online Privacy
Protection Act (COPPA), which is enforced by the Federal Trade
Commission (FTC). To comply with COPPA, organizations must
make a good-faith effort to determine the age of those accessing
their websites and, if users are under thirteen years old, must obtain
parental consent before collecting any information.
Family Educational Rights and Privacy Act
The Family Educational Rights and Privacy Act (FERPA) is a US law
that protects the privacy of student education records. In brief, this
law specifies that parents have a right to their child’s educational
information until the child reaches either the age of eighteen or
begins attending school beyond the high school level. At that point
control of the information is given to the child. While this law is
not specifically about the digital collection of information on the
Internet, the educational institutions that are collecting student
information are at a higher risk for disclosing it improperly because
of digital technologies.
284 | Information Systems for Business and Beyond (2019)
http://www.coppa.org/
http://www.coppa.org/
GDPR Logo
Health Insurance Portability and Accountability Act
The Health Insurance Portability and Accountability Act of 1996
(HIPAA) singles out records related to health care as a special class
of personally identifiable information. This law gives patients
specific rights to control their medical records, requires health care
providers and others who maintain this information to get specific
permission in order to share it, and imposes penalties on the
institutions that breach this trust. Since much of this information is
now shared via electronic medical records, the protection of those
systems becomes paramount.
General Data Protection Regulation
The European Union, in an effort to
help people take control over their
personal data, passed the General Data
Protection Regulation (GDPR) in May
2016. While this protection applies to
the countries in the EU, it is having an
impact of U.S. companies using the
Internet as well. The regulation went
into effect May 25, 2018.
EU and non-EU countries have
different approaches to protecting the data of individuals. The focus
in the U.S. has been on protecting data privacy so that it does not
impact commercial interests.
In the EU the individual’s data privacy rights supercede those
of business. Under GDPR data cannot be transferred to countries
that do not have adequate data protection for individuals. Currently,
those countries include, but are not limited to, the United States,
Korea, and Japan. While the GDPR applies to countries in the EU,
it is having an impact around the world as businesses in other
Chapter 12: The Ethical and Legal Implications of Information
Systems | 285
countries seek to comply with this regulation.IEEE Spectrum.
Retrieved from https://spectrum.ieee.org/telecom/internet/your-
guide-to-the-gdpr.”11
One week prior to the effective date of May 25, 2018, only 60%
of companies surveyed reported they would be ready by the
deadline.Information Management. Retrieved from
https://www.information-management.com/opinion/playing-
catch-up-with-the-general-data-protection-regulation.”12
Clearly, the message of GDPR has gone out around the world. It is
likely that greater data protection regulations will forthcoming from
the U.S. Congress as well.
Sidebar: Do Not Track
When it comes to getting permission to share personal information,
the US and the EU have different approaches. In the US, the “opt-
out” model is prevalent. In this model the default agreement states
that you have agreed to share your information with the
organization and must explicitly tell them that you do not want your
information shared. There are no laws prohibiting the sharing of
your data, beyond some specific categories of data such as medical
records. In the European Union the “opt-in” model is required to
be the default. In this case you must give your explicit permission
before an organization can share your information.
11. [11]
12. [12]
286 | Information Systems for Business and Beyond (2019)
To combat this sharing of information, the Do Not Track initiative
was created. As its creators explain13:
Do Not Track is a technology and policy proposal that
enables users to opt out of tracking by websites they do
not visit, including analytics services, advertising networks,
and social platforms. At present few of these third parties
offer a reliable tracking opt out and tools for blocking them
are neither user-friendly nor comprehensive. Much like the
popular Do Not Call registry, Do Not Track provides users
with a single, simple, persistent choice to opt out of third-
party web tracking.
Summary
The rapid changes in information technology in the past few
decades have brought a broad array of new capabilities and powers
to governments, organizations, and individuals alike. These new
capabilities have required thoughtful analysis and the creation of
new norms, regulations, and laws. This chapter has covered the
areas of intellectual property and privacy regarding how these
domains have been affected by new information systems
capabilities and how the regulatory environment has been changed
to address them.
13. [13]
Chapter 12: The Ethical and Legal Implications of Information
Systems | 287
Study Questions
1. What does the term information systems ethics mean?
2. What is a code of ethics? What is one advantage and one
disadvantage of a code of ethics?
3. What does the term intellectual property mean? Give an
example.
4. What protections are provided by a copyright? How do you
obtain one?
5. What is fair use?
6. What protections are provided by a patent? How do you obtain
one?
7. What does a trademark protect? How do you obtain one?
8. What does the term personally identifiable information mean?
9. What protections are provided by HIPAA, COPPA, and FERPA?
10. How would you explain the concept of NORA?
11. What is GDPR and what was the motivation behind this
regulation?
Exercises
1. Provide one example of how information technology has
created an ethical dilemma that would not have existed before
the advent of I.T.
2. Find an example of a code of ethics or acceptable use policy
related to information technology and highlight five points
that you think are important.
3. Do some original research on the effort to combat patent
trolls. Write a two-page paper that discusses this legislation.
4. Give an example of how NORA could be used to identify an
individual.
5. How are intellectual property protections different across the
288 | Information Systems for Business and Beyond (2019)
world? Pick two countries and do some original research, then
compare the patent and copyright protections offered in those
countries to those in the US. Write a two- to three-page paper
describing the differences.
6. Knowing that GDPR had a deadline of May 25, 2018, provide an
update on the status of compliance by firms in non-European
countries.
Labs
1. Contact someone who has created a mobile device app,
composed music, written a book, or created some other type
of intellectual property. Ask them about the amount of effort
required to produce their work and how they feel about being
able to protect that work. Write a one or two page paper on
your findings.
2. Research the intellectual property portion of the End User
License Agreement (EULA) on a favorite computer program of
yours. Explain what the EULA is saying about protection of this
work.
1. Merriam-Webster Dictionary. (n.d.). Ethics. Retrieved from
http://www.merriam-webster.com/dictionary/ethics↵
2. Grigonis, H. (2018, April 5). Nine Things to Know About
Facebook and Cambridge Analytica. Digital Trends. Retrieved
from https://www.digitaltrends.com/social-media/what-
facebook-users-should-know-about-cambridge-analytica-
and-privacy/
3. Association for Computing Machinery (1992, October 16) ACM
Code of Ethics and Professional Conduct.↵
Chapter 12: The Ethical and Legal Implications of Information
Systems | 289
4. Merriam-Webster Dictionary. (n.d.). Intellectual Property.
Retrieved from http://www.merriam-webster.com/
dictionary/intellectual%20property↵
5. United States Department of Justice. (n.d.). Copyright
Infringement – First Sale Doctrine. Retrieved from
http://www.justice.gov/usao/eousa/foia_reading_room/
usam/title9/crm01854.htm↵
6. United States Copyright Office. (n.d.). Fair Use Index. Retrieved
from http://www.copyright.gov/fls/fl102.html↵
7. United States Patent and Trademark Office (n.d.). What Is A
Patent? Retrieved from http://www.uspto.gov/patents/↵
8. United States Patent and Trademark Office (n.d.). Visualization
Center. Retrieved from http://www.uspto.gov/patents/↵
9. Bachmann, S. (2016, December 22). America’s Big 5 Tech
companies increase patent filings, Microsoft holds lead in AI
technologies. IP Watchdog. Retrieved from
http://www.ipwatchdog.com/2016/12/22/big-tech-
companies-increase-patent/id=76019/↵
10. McAllister, E., Grance, T., and Scarfone, K. (2010, April). Guide
to Protecting the Confidentiality of Personally Identifiable
Information (PII). National Institute of Standards and
Technology. Retrieved from http://csrc.nist.gov/publications/
nistpubs/800-122/sp800-122 ↵
11. Sanz, R. M. G. (2018, April 30). Your Guide to the GDPR. IEEE
Spectrum. Retrieved from
https://spectrum.ieee.org/telecom/internet/your-guide-to-
the-gdpr↵
12. Zafrin, W. (2018, May 25). Playing Catch-up with the General
Data Protection Regulation. Information Management.
Retrieved from
https://www.information-management.com/opinion/playing-
catch-up-with-the-general-data-protection-regulation↵
13. Electronic Frontier Foundation. (n.d.). Do Not Track. Retrieved
from http://donottrack.us/↵
290 | Information Systems for Business and Beyond (2019)
Chapter 13: Trends in
Information Systems
Learning Objectives
Upon successful completion of this chapter, you will be
able to:
• describe current trends in information systems.
• know how to think about the impacts of changes in
technology on society and culture.
Introduction
Information systems have evolved at a rapid pace ever since their
introduction in the 1950s. Today devices you can hold in one hand
are more powerful than the computers used to land a man on the
moon in 1969. The Internet has made the entire world accessible to
you, allowing you to communicate and collaborate like never before.
This chapter examines current trends and looks ahead to what is
coming next. As you read about technology trends in this chapter,
think how you might gain competitive advantage in a future career
through implementation of some of these devices.
Chapter 13: Trends in Information
Systems | 291
Global
The first trend to note is the continuing expansion of globalization.
The use of the Internet is growing all over the world, and with
it the use of digital devices. Penetration rates, the percent of the
population using the Internet, remains high in the developed world,
but other continents are gaining.1
Internet Users by Continent (Source: Internet World Stats)
In addition to worldwide growth in Internet penetration, the
number of mobile phones in use continues to increase. At the end
of 2017 the world population of people over the age 10 years (those
old enough to possibly have their own mobile phone) was about
5.7 billion with an estimated 4.77 billion mobile phone users. This
1. Internet World Stats
292 | Information Systems for Business and Beyond (2019)
https://www.internetworldstats.com/stats.htm
equates to over 80% of people in the world having a mobile phone.
2
World wide mobile phone users (Source: Statista)
Social
Social media growth is another trend that continues at a firm
growth rate. As of April 2018 there were about 2.18 billion Facebook
users, a 14% increase from April 2017.3
2. Statistica Forecast of Mobile Phone Users Worldwide
3. Zephoria Top 15 Valuable Facebook Statistics
Chapter 13: Trends in Information Systems | 293
https://www.statista.com/statistics/274774/forecast-of-mobile-phone-users-worldwide/
https://zephoria.com/top-15-valuable-facebook-statistics/
Facebook users world wide in June 2017 (Source: Internet World
Stats)
In 2018, of the 2.2 billion users who regularly use Facebook, only half
them spoke English and only 10% were from the US.4
Besides Facebook, other social media sites are also seeing
tremendous growth. Over 83% of YouTube’s users are outside the
US, with the UK, India, Germany, Canada, France, South Korea, and
Russia leading the way.5 Pinterest gets over 57% of its users from
outside the US, with over 9% residing in India. 6 Twitter now has
over 330 million active users. 7 Social media sites not based in the
US are also growing. China’s WeChat multipurpose messaging and
social media app is the fifth most-visited site in the world.8
4. https://blog.hootsuite.com/facebook-statistics
5. Omnicore Agency Facebook Statistics
6. Omnicore Agency Pinterest Statistics
7. Omnicore Agency Twitter Statistics
8. Statista
294 | Information Systems for Business and Beyond (2019)
https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/
Mary Meeker making her Internet
Trends presentation
Personal
Ever since the advent of Web 2.0 and e-commerce, users of
information systems have expected to be able to modify their
experiences to meet their personal tastes. From custom
backgrounds on computer desktops to unique ringtones on mobile
phones, makers of digital devices provide the ability to personalize
how we use them. More recently, companies such as Netflix have
begun assisting their users with personalizations by viewing
suggestions. In the future, we will begin seeing devices perfectly
matched to our personal preferences, based upon information
collected about us.
Sidebar: Mary Meeker and Internet Trends
Chapters such as this are
difficult to maintain because
the future is a moving target.
The same goes for businesses
looking to figure out where to
develop new products and
make investments. Enter Mary
Meeker, up until 2018 a partner
at the notable venture capital
firm Kleiner Perkins Caufield &
Byers and now forming her own investment group, Bond Capital. For
the past several years, Ms. Meeker has presented the “Internet
Trends” report at the Code Conference every May. The
presentation consists of rapid-fire summaries of data that provides
insights into all of the latest trends in digital technologies and their
Chapter 13: Trends in Information Systems | 295
https://www.linkedin.com/in/mary-meeker-5823ba48/
https://www.linkedin.com/in/mary-meeker-5823ba48/
impact on economies, culture, and investing. For those wanting to
keep up with technology, there is no better way than to unpack her
annual presentation by watching a video of the presentation and
reviewing the associated slide deck.
Here are the last few years of videos of her presentation: 2019
2018 2017
You can view her slide decks from previous years by going to the
Bond Capital archive.
Mobile
Perhaps the most impactful trend in digital technologies in the last
decade has been the advent of mobile technologies. Beginning with
the simple cellphone in the 1990s and evolving into the smartphones
of today, the growth of mobile has been overwhelming. Here are
some key indicators of this trend:
• Mobile vs. Desktop. Minutes spent each day on a mobile
device are 2.5 times the number of minutes spent on a desktop
computer.
• Daytime vs. Evening. Desktop use dominates in the daytime
hours, but mobile devices are dominant in the evening, with
peak usage around 8:00 pm.
• Device usage. Smartphones are used more than any other
technology. Laptops are in second place, followed by tablets
holding a slight edge over desktops. 9
• Smartphone sales decline. According to Gartner Group, world
9. Smart Insights
296 | Information Systems for Business and Beyond (2019)
https://www.bondcap.com/#archive
wide smartphone sales declined in the fourth quarter of 2017
by 4.7% compared with the fourth quarter of 2016. This is the
first decline in global smartphone sales since Gartner began
tracking mobile phone sales in 2004. 10
• The rise and fall of tablets. In 2012 the iPad sold more than
three times as many units in its first twelve months as the
iPhone did in its first twelve months. However, tablet sales
dropped 20% from the fourth quarter 2015 to fourth quarter
2016. 11
The decline in tablet sales continued into 2017 when first
quarter sales dropped 8.5% to their lowest total since the third
quarter of 2012, the year they were introduced. 12 In
comparison, PC sales dropped only 1.7% in 2017 compared with
tablet sales being down 10%. 13
As discussed in chapter 5, the advent of 5G connection technologies
will accelerate an “always-connected” state for a majority of people
around the world.
Wearable
The average smartphone user looks at his or her smartphone 150
times a day for functions such as messaging (23 times), phone calls
(22), listening to music (13), and social media (9).Many of these
functions would be much better served if the technology was worn
10. Gartner.com
11. Techcrunch
12. Business Insider
13. Telegraph
Chapter 13: Trends in Information Systems | 297
https://www.gartner.com/newsroom/id/3859963
http://www.businessinsider.com/tablet-sales-decline-ipad-chart-2017-5
https://www.telegraph.co.uk/technology/2017/01/11/tablet-sales-fall-third-successive-year-pc-market-stabilises/
Wearable
Devices
Actual and
Forecast
(Source:
Gartner
Group,
August 2017)
on, or even physically integrated into, our bodies. This technology is
known as a “wearable.”
Wearables have been around for a long time, with technologies
such as hearing aids and, later, bluetooth earpieces. Now the
product lines have expanded to include the Smartwatch, body
cameras, sports watch, and various fitness monitors. The following
table from the Gartner Group reports both historical and predicted
sales.
Wearable Devices Worldwide (millions of units)
Notice the strong growth predicted by 2021. Total wearable
devices are projected to increase by about 45% from 2018 to 2021.
298 | Information Systems for Business and Beyond (2019)
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/170824_gartner_wearables
https://opentextbook.site/informationsystems2019/wp-content/uploads/sites/3/2018/07/170824_gartner_wearables
Waze Screen Shot (Click to enlarge)
Collaborative
As more people use
smartphones and wearables, it
will be simpler than ever to
share data with each other for
mutual benefit. Some of this
sharing can be done passively,
such as reporting your location
in order to update traffic
statistics. Other data can be
reported actively, such as
adding your rating of a
restaurant to a review site.
The smartphone app Waze is
a community-based tool that
keeps track of the route you are
traveling and how fast you are
making your way to your
destination. In return for
providing your data, you can benefit from the data being sent from
all of the other users of the app. Waze directs you around traffic and
accidents based upon real-time reports from other users.
Yelp! allows consumers to post ratings and reviews of local
businesses into a database, and then it provides that data back to
consumers via its website or mobile phone app. By compiling ratings
of restaurants, shopping centers, and services, and then allowing
consumers to search through its directory, Yelp! has become a huge
source of business for many companies. Unlike data collected
passively however, Yelp! relies on its users to take the time to
provide honest ratings and reviews.
Chapter 13: Trends in Information Systems | 299
http://www.waze.com/
http://www.yelp.com/
Printable
One of the most amazing innovations to be developed recently is
the 3-D printer. A 3-D printer allows you to print virtually any 3-D
object based on a model of that object designed on a computer.
3-D printers work by creating layer upon layer of the model using
malleable materials, such as different types of glass, metals, or even
wax.
3-D printing is quite useful for prototyping the designs of
products to determine their feasibility and marketability. 3-D
printing has also been used to create working prosthetic legs and
an ear that can hear beyond the range of normal hearing. The US
military now uses 3-D printed parts on aircraft such as the F-18.14
Here are more amazing productions from 3D printers.
• Buildings. Researchers at MIT in 2017 unveiled a 3D printing
robot that can construct a building. It has a large arm and small
arm. The large arm moves around the perimeter of the building
while the small arm sprays a variety of materials including
concrete and insulation. Total time to construct a dome-
shaped building is just 14 hours.
• Musical Instruments. Flutes, fiddles, and acoustic guitars are
being produced with 3D printing using both metal and plastic.
You can click here for an example of making a violin.
• Medical Models. Medical models are being used to help
doctors train in the areas of orthopedics, transplant surgery,
and oncology. Using a 3D printed brain model similar to the
one shown here, surgeons were able to save a patient from a
cerebral aneurysm.
• Clothing. How would you like clothes that fit perfectly? Special
14. The Economist. (2013, September 13). 3-D Printing Scales
Up.
300 | Information Systems for Business and Beyond (2019)
http://inhabitat.com/these-beautiful-customized-3d-printed-prosthetic-legs-are-made-to-be-seen
http://news.yahoo.com/7-weirdest-things-made-3d-printing-122023635.html
https://violinodigitale.com/
http://www.3ders.org/articles/20170713-3d-printed-brain-model-helps-surgeons-save-60-year-old-woman-with-cerebral-aneurysm.html
http://www.economist.com/news/technology-quarterly/21584447-digital-manufacturing-there-lot-hype-around-3d-printing-it-fast
http://www.economist.com/news/technology-quarterly/21584447-digital-manufacturing-there-lot-hype-around-3d-printing-it-fast
software is used to measure a person, then 3D printing
produces the clothing to the exact measurements. The result is
well-fitting clothes that consume less raw materials. Initially
the challenge was to find materials that would not break. You
can read more about 3D printing of clothes and shoes.
15
3-D printing is one of many technologies embraced by the
“maker” movement. Chris Anderson, editor of Wired magazine, puts
it this way16:
In a nutshell, the term “Maker” refers to a new category of
builders who are using open-source methods and the latest
technology to bring manufacturing out of its traditional
factory context, and into the realm of the personal desktop
computer. Until recently, the ability to manufacture was
reserved for those who owned factories. What’s happened
over the last five years is that we’ve brought the Web’s
democratizing power to manufacturing. Today, you can
manufacture with the push of a button.
15. Bosavage, J. (2017, September 5). Unbelievable Creations
from 3-D Printers.
16. Anderson, C. (2012). Makers: The New Industrial
Revolution.. Crown Business.
Chapter 13: Trends in Information Systems | 301
https://www.wired.com/2017/05/the-shattering-truth-of-3d-printed-clothing/
http://theinstitute.ieee.org/technology-topics/consumer-electronics/unbelievable-creations-from-3d-printers
http://theinstitute.ieee.org/technology-topics/consumer-electronics/unbelievable-creations-from-3d-printers
Findable
The “Internet of Things” (IoT) refers to devices that have been
embedded into a variety of objects including appliances, lamps,
vehicles, lightbulbs, toys, thermostats, jet engines, etc. and then
connecting them via Wi-Fi, BlueTooth, or LTE to the Internet.
Principally three factors have come together to give us IoT:
inexpensive processors, wireless connectivity, and a new standard
for addresses on the Internet known as IPv6. The result is these
small, embedded objects (things) are capable of sending and
receiving data. Lights can be turned on or off remotely. Thermostats
can be reset with anyone being present. And, perhaps on the
downside, how you drive your car can be monitored and evaluated
by your insurance company.
Processors have become both smaller and cheaper in recent
years, leading to their being embedded in more devices. Consider
technological advancements in your vehicles. Your car can now
collect data about how fast you drive, where you go, radio stations
you listen to, and your driving performance such as acceleration
and braking. Insurance companies are offering discounts for the
right to monitor your driving behavior. On the positive side, imagine
302 | Information Systems for Business and Beyond (2019)
the benefit of being informed instantly of anticipated traffic delays
each time you adjust your route to work in the morning.
Think of IoT as devices that you wouldn’t normally consider being
connected to the Internet. And, the connection is independent of
human intervention. So a PC is not an IoT, but a fitness band could
be. One keyword for IoT would be “independent”, not relying
directly or constantly on human action.
Another keyword would be “interconnected”, in the sense that
IoTs are connected to other IoTs and data collection points or data
servers. This interconnectedness or uploading of data is virtually
automatic.
“Ubiqutous” is also a good descriptor of IoTs. And so is
“embeddedness.” It is reasonable to expect that devices through
IoTs are reporting data about conditions and events that are not
foremost in our thinking, at least not on a continuous basis. Today
there are IoTs for monitoring traffic, air quality, soil moisture, bridge
conditions, consumer electronics, autonomous vehicles, and the list
seemingly never stops. The question that might come to mind is
“How many IoTs are there today?”
The Gartner Group released a study in January 2017 which
attempted to identify where IoTs exist. They reported that over half
of all IoTs are installed in devices used by consumers. They also
noted that growth in IoTs increased by over 30% from 2016 to the
projected levels for 2017.17
Benefits from IoTs are virtually everywhere. Here is a quick list.
• Optimization of Processes. IoTs in manufacturing monitor a
variety of conditions that impact production including
temperature, humidity, barometric pressure – all factors which
17. Ranger, S. (2018, January 19). What is the IoT? Everything
You Wanted to Know about The Internet of Things Right
Now. ZDNet.
Chapter 13: Trends in Information Systems | 303
https://www.zdnet.com/article/what-is-the-internet-of-things-everything-you-need-to-know-about-the-iot-right-now/
https://www.zdnet.com/article/what-is-the-internet-of-things-everything-you-need-to-know-about-the-iot-right-now/
https://www.zdnet.com/article/what-is-the-internet-of-things-everything-you-need-to-know-about-the-iot-right-now/
require adjustment in application of manufacturing formulas.
• Component Monitoring. IoTs are added to components in the
manufacturing process, then monitored to see how each
component is performing.
• Home Security Systems. IoTs make the challenge of
monitoring activity inside and outside your home are now
easier.
• Smart Thermostats. Remote control of home thermostats
through the use of IoTs allows the homeowner to be more
efficient in consumption of utilities.
• Residential Lighting. IoTs provide remote control of lighting,
both interior and exterior, and at any time of day.18
Security issues need to be acknowledged and resolved, preferably
before IoTs in the form of remote lighting, thermostats, and security
systems are installed in a residence. Here are some security
concerns that need monitoring.
• Eavesdropping. Smart speaker systems in residences have
been hacked, allowing others to eavesdrop on conversations
within the home.
• Internet-connected Smart Watches. These devices are
sometimes used to monitor the location of children in the
family. Unfortunately, hackers have been able to breakin and
again, eavesdrop as well as learn where children are located.
• Lax Use by Owners. Devices such as smart thermometers,
security systems, etc. come with a default password. Many
owners fail to change the password, thereby allowing easy
access by a hacker.
18. Ranger, S. (2018, January 19). What is the IoT? Everything
You Wanted to Know about The Internet of Things Right
Now. ZDNet.
304 | Information Systems for Business and Beyond (2019)
https://www.zdnet.com/article/what-is-the-internet-of-things-everything-you-need-to-know-about-the-iot-right-now/
https://www.zdnet.com/article/what-is-the-internet-of-things-everything-you-need-to-know-about-the-iot-right-now/
https://www.zdnet.com/article/what-is-the-internet-of-things-everything-you-need-to-know-about-the-iot-right-now/
Autonomous
Another trend that is emerging is an extension of the Internet of
Things: autonomous robots and vehicles. By combining software,
sensors, and location technologies, devices that can operate
themselves to perform specific functions are being developed.
These take the form of creations such as medical nanotechnology
robots (nanobots), self-driving cars, or unmanned aerial vehicles
(UAVs).
A nanobot is a robot whose components are on the scale of about
a nanometer, which is one-billionth of a meter. While still an
emerging field, it is showing promise for applications in the medical
field. For example, a set of nanobots could be introduced into the
human body to combat cancer or a specific disease.
In March of 2012, Google introduced the world to their driverless
car by releasing a video on YouTube showing a blind man driving
the car around the San Francisco area. The car combines several
technologies, including a laser radar system, worth about $150,000.
While the car is not available commercially yet, three US states
(Nevada, Florida, and California) have already passed legislation
making driverless cars legal.
A UAV, often referred to as a “drone,” is a small airplane or
helicopter that can fly without a pilot. Instead of a pilot, they are
either run autonomously by computers in the vehicle or operated
by a person using a remote control. While most drones today are
used for military or civil applications, there is a growing market
for personal drones. For around $300, a consumer can purchase a
drone for personal use.
Secure
As digital technologies drive relentlessly forward, so does the
Chapter 13: Trends in Information Systems | 305
demand for increased security. One of the most important
innovations in security is the use of encryption, which we covered
in chapter 6.
Summary
As the world of information technology moves forward, we will
be constantly challenged by new capabilities and innovations that
will both amaze and disgust us. As we learned in chapter 12, many
times the new capabilities and powers that come with these new
technologies will test us and require a new way of thinking about
the world. Businesses and individuals alike need to be aware of these
coming changes and prepare for them.
Study Questions
1. Which countries are the biggest users of the Internet? Social
media? Mobile?
2. Which country had the largest Internet growth (in %) in the
last five years?
3. How will most people connect to the Internet in the future?
4. What are two different applications of wearable technologies?
5. What are two different applications of collaborative
technologies?
6. What capabilities do printable technologies have?
7. How will advances in wireless technologies and sensors make
objects “findable”?
8. What is enhanced situational awareness?
9. What is a nanobot?
10. What is a UAV?
306 | Information Systems for Business and Beyond (2019)
Exercises
1. If you were going to start a new technology business, which of
the emerging trends do you think would be the biggest
opportunity? Do some original research to estimate the market
size.
2. What privacy concerns could be raised by collaborative
technologies such as Waze?
3. Do some research about the first handgun printed using a 3-D
printer and report on some of the concerns raised.
4. Write up an example of how IoT might provide a business with
a competitive advantage.
5. How do you think wearable technologies could improve overall
healthcare?
6. What potential problems do you see with a rise in the number
of autonomous cars? Do some independent research and write
a two-page paper that describes where autonomous cars are
legal and what problems may occur.
7. Seek out the latest presentation by Mary Meeker on “Internet
Trends” (if you cannot find it, the video from 2018 is available
at Mary Meeker). Write a one-page paper describing what the
top three trends are, in your opinion.
8. Select a business enterprise of interest to you, one that you
may pursue following graduation. Select one or more of the
technologies listed in this chapter, then write a one or two
page paper about how you might use that technology to gain a
competitive advantage.
Chapter 13: Trends in Information Systems | 307
https://www.youtube.com/results?search_query=mary+meeker+internet+trends+2018
Index
Below are listed terms that can be found in this text. The terms are
indexed by chapter and page. For example, “12-254” indicates that
the term can be found in chapter 12 on page 254. Please also note
that page numbers may vary based upon how you are reading this
text!
Acceptable User Policy, 12-254
Access control, 6-127
Agile methodologies, 10-205
Altair 8800, 1-20
Apple II, 1-20
Application software, 1-16, 3-57
ARPA Net, 1-225-104
Assembly language, 10-210
Authentication, 6-125
Autonomous devices, 13-289
Availability, 6-125
Backups, 6-131
Berners-Lee, Tim, 1-22
Big Data, 4-91, 4-93
Binary, 2-33, -34
Binary prefixes, 2-36
Biometrics, 6-126
Bit, 2-33
Bitcoin, 11-245
Blockchain, 11-244
Bluetooth, 2-43, 5-114
Brynjolfson, Eric, 7-146
Build v. buy, 10-218
Bus, 2-39
Business Analytics, 4-98
Business Intelligence, 4-98
Index | 309
Business process, 8-163
Business Process Management (BPM), 7-153, 8-168
Business process re-engineering, 8-170
Byte, 2-33
Cambridge Analytica, 12-251
Career paths, 9-189
Carr, Nicholas, 1-12, 2-26, 7-147
CASE tools, 10-215
Castells, Manuel, 11-233
Cellphone abroad, 5-114
Central Processing Unit (CPU), 2-36, video 2-37, multi-core 2-45
Certifications, 9-190
Change management, 10-223
Chief Information Officer (CIO), 9-186
Client-server, 1-21, 5-116
Cloud computing, 1-25, 3-68, 5-118
Collaborative systems, 7-155, 13-283
Code of ethics, 12-252
Commoditization, 2-50
Competitive advantage, 1-13, 2-26, 7-147, 7-153, 7-158
Compiled v. interpreted, 10-213
Components, 1-14
Computer engineer, 9-183
Computer operator, 9-185
Confidentiality, 6-124
Copyright, 12-256
Creative Commons, 12-261
Cross platform development, 10-221
Customer Relationship Management (CRM), 3-65
Data dictionary, 4-93
Data-Information-Knowledge-Wisdom, 4-77
Data integrity, 4-86
Data mining, 4-96, sidebar, 4-97
Data privacy, 12-251
Data types, 4-83
310 | Information Systems for Business and Beyond (2019)
Data warehouse, 4-93, benefits, 4-95
Database, 4-78
Database administrator, 9-185
Database, enterprise, 4-91
Database spreadsheet sidebar, 4-85
Database Management System (DBMS), 4-90
Database, Relational, 4-78
Decimal numbering system, 2-34
Decision Support Systems (DSS), 7-156
Developer, 9-183
Digital devices, 2-33
Digital divide, 11-240
Digital Millennium Copyright Act, 12-260
Disintermediation, 1-23
Domain name, 5-107
DNS, 5-107
Do Not Track, 12-273
Dot-comm bubble, 1-235, 5-109
Double Data Rate (DDR), 2-40
Eclipse IDE, 3-61
Electronic Data Interchange (EDI), 7-154
Email, 5-110
Encryption, 6-128
End-user computing, 10-220
Enterprise Resource Planning (ERP), 1-21, 3-64, 8-166
Eras, business computing, 1-25
Ethics, 12-250
Extranet, 5-117
Facebook, 11-251, 13-280
Fair use, 12-258
Family Educational Rights and Privacy Act, 12-271
Fernandes, Benjamin, 11-245
Findable, 13-286
Firewalls, 6-132
First sale doctrine, 12-257
Index | 311
Ford, Henry, 12-250
Friedman, Thomas, 11-234
Gantt chart, 9-188
General Data Protection Regulation, 12-272
Global firm, 11-236
Globalization, 11-232
Ghemawat, Pankaj, 11-236
Hammer, Michael, 8-170
Hard disk, 2-41
Hardware, 1-15, 2-32
Health Insurance Portability and Accountability Act, 12-271
Huang’s Law, 2-38
Implementation Methodologies, 10-222
Information security triad, 6-124
Information systems, 1-14
Information systems employment, 9-180
Integrity, 6-124
Intellectual property, 12-255
Internet speed, 11-239
Internet usage statistics, 11-233
Intrusion Detection System (IDS), 6-133
IBM-PC, 1-20
Integrated circuits, 2-45
Internet, 1-22, internet and www, 5-111, high speed, 5-111
Internet of Things (IoT), 2-49, 13-286, install, 13-287
IP address, 5-106
Integrated Development Environment (IDE), 10-214
Internet user worldwide, 5-108
Intranet, 5-116
Isabel, 7-157
ISO certification, 8-174
IT doesn’t matter, 7-147
Key-Value database, 4-89
Kim, Paul, 11-243
Knowledge Management (KM), 4-98
312 | Information Systems for Business and Beyond (2019)
Laptop, 1-12
Lean methodologies, 10-207
Linux, 3-56
Local Area Network (LAN), 1-21
Machine code, 10-209
Mainframe, 1-18
Manufacturing Resource Planning (MRP), 1-19
Metadata, 4-92
Metcaffe’s Law, 5-119
Microsoft Excel, 3-57
Mobile applications, 3-67, building, 10-221, cross platform, 10-221
Mobile phone users worldwide, 13-280
Mobile networking, 5-113
Mobile security, 6-136
Mobile technology trends, 13-282
Motherboard, 2-39
Moore’s Law, 2-37
Nanobot, 13-289
Network Interface Card (NIC), 2-44
Nielsen, Jakob, 11-241
Non-obvious relationship awareness, 12-269
Normalization, 4-82
NoSQL, 4-89
Office application suites, 3-60
Open source software, 3-71
Openoffice, 3-72
Operating systems, 1-15, 3-55
Outsourcing, 9-193
Ownership of software, 3-63
Packet, 5-106
Password security, 6-130
Patent, 12-263
Patent troll, 12-265
PC, 1-12
Personal information security, 6-138
Index | 313
Personally identifiable information, 12-268
Physical security, 6-134
Powerpoint, 3-62
Portable computer, 2-47
Porter’s five forces, 7-150
Post PC world, 1-24
Primary key, 4-80
Printable, 13-284
Privacy, data, 4-97, 12-267
Procedural v. object-oriented, 10-213
Productivity paradox, 7-146
Productivity software, 3-58
Project manager, 9-188
Programming language spectrum, 10-212
Protocol, 5-108
Public key encryption, 6-129
Quality triangle, 10-208
Random Access Memory (RAM), 2-40
Rapid Application Development (RAD), 10-203
Retail Link, Walmart, 1-27
Router, 5-106
RSA SecurID token, 6-126
Security policies, 6-135
Sharepoint, 5-118
Smartphone, 1-12, 2-47
Software, 1-15
Solid State Drive (SSD), 2-41
Stop Think Connect, 6-139
Structured Query Language (SQL) 4-86
Student Clubs database, 4-81
Supply Chain Management, 1-27, 3-66
Support analyst, 9-185
Switch, 5-106
Systems analyst, 9-181
Systems Development Life Cycle (SDLC), 10-200
314 | Information Systems for Business and Beyond (2019)
Tableau, 3-62
Tablet, 2-48, decline, 13-282
TCP/IP, 5-105
Ted talk fibre optic, 1-23
Time-sharing, 1-19
Trademark, 12-265
Universal Serial Bus (USB), 2-42
Unmanned Aerial Vehicle, 13-290
Usability, 6-138
Users, adoption types, 9-194
Value chain, 7-148
Virtual Machine (VM), 3-70
Virtual Private Network (VPN), 6-133
Virtualization, 3-70
Voice Over IP (VOIP), 5-115
Walmart, 1-26, 4-91
Wearable, 13-282
Web 2.0, 1-23, 5-109
Web services, 10-219
Website, build, 10-216
Wi-fi, 5-112
Windows operating system, 1-20
Word size, 2-34
World 3.0, 11-236
World is flat, 11-234
World Wide Web (WWW), 1-22
Index | 315
Information Systems for Business and Beyond (2019)
Information Systems for Business and Beyond (2019)
Title Page
Copyright
Book Contributors
Changes from Previous Edition
How you can help
Introduction
Part I: What is an information system?
Chapter 1: What Is an Information System?
Chapter 2: Hardware
Chapter 3: Software
Chapter 4: Data and Databases
Chapter 5: Networking and Communication
Chapter 6: Information Systems Security
Part II: Information Systems for Strategic Advantage
Chapter 7: Does IT Matter?
Chapter 8: Business Processes
Chapter 9: The People in Information Systems
Chapter 10: Information Systems Development
Part III: Information Systems Beyond the Organization
Chapter 11: Globalization and the Digital Divide
Chapter 12: The Ethical and Legal Implications of Information Systems
Chapter 13: Trends in Information Systems
Index
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