p3 may 2004 class 2: ism rich-con needs help risks of technology adoption

P3 May 2004Class 2: ISM

Rich-Con Needs Help

Risks of Technology Adoption


Process Enabling IT (PET): An example

Laudon and Laudon 2003


Examples of PETs Systems such as ERP, SCM, parts of CRM, many other

individual process automation systems:

• Operations and Logistics– Procurement, shipping, inventory management,

production planning • Sales and Marketing

– Order management, pricing, sales management and planning

• Financial– Acc Receivables and payables

• Human Resources– Payroll, time accounting, personnel planning


A Visual Representation

Central database

Reporting Application

Financial Application

ManufacturingApplication

InventoryApplication

HRApplication

CustomerService

Application

Sales Application

Cu s t ome r s

S u p p l i e r s

Enterprise System


PET’s Medium/Long Term ImpactHardHard (measurable) (measurable) SoftSoft (non-measurable) (non-measurable)

Reduced Costs, Increased Efficiencies:

IT + Cost savings in hardware, software, IT support, and maintenance + Increased IT and information reliability – But very expensive enterprise IT

Processes + Increased efficiency, e.g. faster order delivery, faster closing of books, faster invoices, etc

Organizational + Cost savings from head count reduction + Other reduced costs (e.g. less maverick procurement, better demand forecasting, etc)

IT + Platform for future IT: build up of new IT, connect with suppliers, 24/7 web – Increased “vendor hold up” costs

Processes + Automated and redesigned + “Infomated” processes + Integrated, accurate processes’ information for better decisions + Modernized, followed best practices ? Standardized organization-wide –? Process similarity with competitors – Decreased process flexibility/innovation?

Organizational + Increased cross-functional/unit coordination + Centralized shared services ? Decreased BU autonomy

Transfor

m


IT Crisis Issues to Consider Post go-live performance dip is an almost universal phenomenon:

Don’t Panic!

It is practically very difficult to go fully back to the old system

Behavioral effects: The more you get involved, the more you have on stake

you tend to keep it longer than economically rational Political manipulations, ducking responsibility “Technology is not working”, delegate to IT Perceptual bias in favor of evidence that confirms currently

held hypotheses and ignoring data that conflicts with currently held hypotheses

Wishful thinking and denial

Need a clear crisis management process to control

such behavioral effects


An IT Crisis Management Process

1. Prioritization and Protection: Know what is on stake and what are the priorities (loss of customer order information, loss of revenues, loss of customer trust, loss of employees trust?) and protect as much of the organization as you can: go for parallel use of new system and/or manual processing and/or parts of old system (whichever are possible to still use, e.g. revert to manual processing for customer orders): how many options are there?

2. Stakeholder communication: Communicate the situation to affected stakeholders (e.g. affected BU managers and users, top management, IT department, vendors, partners, customers, suppliers, etc)

3. Diagnosis and Fix: figuring out what exactly is happening and what has caused it in order to fix it


Mis-specification of IT, e.g. the system parameters were not set up correctly

Mis-use of the new IT, e.g. users would not input the right information

Non-use of the new IT, e.g. users would bypass the system so the system would be missing information such as customer orders

Resistance to IT e.g. some people lose power because of the IT

+ Lack of anticipation:

Could Marty foresee the crisis?

Key IT Adoption Risks


Very low IT sophistication and organizational readiness for IT: many manual processes, legacy IT (since 1969)

Many changes in work practices implied by the IT, but very slow moving company, people changing slowly

Large organizational scope: virtually everyone affected (all business units, managers, clerical workforce, customers, suppliers, partners)

Very large technology scope: virtually all IT systems affected

Many software modification made (“requests easily satisfied by the vendor”) by a product focused vendor

Technology needs to mandatory to use

Foreseeing Rich Con’s Trouble:Factors to Consider


Yes, the crisis could be foreseen! (to a large extend…)

Adoption RisksAdoption Risks Sources of risksSources of risks Foreseen?Foreseen? ForeseeableForeseeable??

Non-Use of the new system

Low IT sophistication of the employees N Y

Major changes needed, but people slow to change N Y

Mis-Use of the new systems

Low IT sophistication of the employees N Y

Large organizational scope, fast spread of errors N Y

Mis-specification Many software modifications

demanded N Y

Very large technology scope N Y

Resistance ? Major changes in work and processes – a lot on stake? N Y

People slow to change N Y


Learning from Doors: Many Stakeholders, Various Impacts


The “Socio-tech” Adoption ApproachA. Identify ALL stakeholders: (e.g.

leaders, users, BU managers, customers, suppliers, potential users, labor unions)

How large is the organizational scope and coordination needed?

B. Analyze the stakeholders: 1. IT sophistication?2. Impact:

a. Changes needed vs. flexibility ratio? b. How much is on stake for them?c. How autonomous are they?

Technology Analysis

Stakeholder Analysis

Adoption Risks Non-use, Mis-use, Mis-specification, Resistance

+


1. Size: technology scope (number of processes and systems affected)?

2. Is the use of the technology discretionary? Mandatory?

3. Software changes/customization needed?

4. Is it modular?5. How complex and/or novel is it?

Technology Analysis

Stakeholder Analysis

Adoption Risks Non-use, Mis-use, Mis-specification, Resistance

+

The “Socio-tech” Adoption Approach


Avoiding Rich Con’s Disaster (more next class)

Adoption Risks Managerial Actions

Non-Use of the new system

Mis-Use of the new systems

Mis-specification


Key Lessons The medium/long term impact of PETs on organizations:

Hard (measurable) versus Soft (non-measurable) effects First Order versus Transformational (2nd+ Order) Standardization/integration versus flexibility trade off

Key IT adoption risks: Misuse, nonuse, mis-specification, resistance (more next class)

IT is not a “black” box: The failure of Rich-con was foreseeable (to a large extend)

Technology + Stakeholder analysis can help us foresee the key IT adoption risks (more next class)

There is still a universal post go-live performance dip: don’t panic but manage the crisis: prioritize, protect, communicate, diagnose, and fix


Next Class

Managing the IT Adoption Risks: Key success factors for making successful

IT adoptions

p3 may 2004 class 2: ism rich-con needs help risks of technology adoption

Documents

ism process

sales management

ism rich

personnel planning slide

behavioral effects slide

inventory management

costs processes

process similarity