TEAM LinG
Cases on Information Technology: Lessons Learned Volume 7
Mehdi Khosrow-Pour, D.B.A. Information Resources Management Association, USA
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Cases on Information Technology Lessons Learned Volume 7
Table of Contents Preface ........................................................................................................................viii Chapter I An Experiential Case Study in IT Project Management Planning: The Petroleum Engineering Economics Evaluation Software Imperative ..............................................1 Charles K. Davis, University of St. Thomas, USA Chapter II The Algos Center: Information Systems in a Small Non-Profit Organization ......... 21 Susan J. Chinn, University of Southern Maine, USA Charlotte A. Pryor, University of Southern Maine, USA John J. Voyer, University of Southern, Maine, USA Chapter III Social Construction of Information Technology Supporting Work ........................... 36 Isabel Ramos, Universidade do Minho, Portugal Daniel M. Berry, University of Waterloo, Canada Chapter IV CRM Systems in German Hospitals: Illustrations of Issues & Trends ..................... 53 Mahesh S. Raisinghani, Texas Woman’s University, USA E-Lin Tan, Purdue University, German International School of Managment & Administration, Germany Jose Antonio Untama, Purdue University, German International School of Managment & Administration, Germany Heidi Weiershaus, Purdue University, German International School of Managment & Administration, Germany Thomas Levermann, Purdue University, German International School of Managment & Administration, Germany Natalie Verdeflor, Purdue University, German International School of Managment & Administration, Germany
Chapter V The Selection of the IT Platform: Enterprise System Implementation in the NZ Health Board ......................................................................................................... 78 Maha Shakir, Zayed University, UAE Dennis Viehland, Massey University, New Zealand Chapter VI Automotive Industry Information Systems: From Mass Production to Build-to-Order ............................................................................................................ 89 Mickey Howard, University of Bath, UK Philip Powell, University of Bath, UK Richard Vidgen, University of Bath, UK Chapter VII Power Conflict, Commitment & the Development of Sales & Marketing IS/IT Infrastructures at Digital Devices, Inc. .................................................................... 103 Tom Butler, University College Cork, Ireland Chapter VIII Development of an Information Kiosk for a Large Transport Company: Lessons Learned ...................................................................................................................... 122 Pieter Blignaut, University of the Free State, South Africa Iann Cruywagen, Interstate Bus Lines (Pty) Ltd., Bloemfontein, South Africa Chapter IX A Case of an IT-Enabled Organizational Change Intervention: The Missing Pieces ........................................................................................................................ 140 Bing Wang, Utah State University, USA David Paper, Utah State University, USA Chapter X Up in Smoke: Rebuilding After an IT Disaster ........................................................ 159 Steven C. Ross, Western Washington University, USA Craig K. Tyran, Western Washington University, USA David J. Auer, Western Washington University, USA Jon M. Junell, Western Washington University, USA Terrell G. Williams, Western Washington University, USA Chapter XI From Principles to Practice: Analyzing a Student Learning Outcomes Assessment System .................................................................................................. 177 Dennis Drinka, University of Alaska Anchorage, USA Kathleen Voge, University of Alaska Anchorage, USA Minnie Yi-Miin Yen, University of Alaska Anchorage, USA
Chapter XII Challenges of Complex Information Technology Projects: The MAC Initiative ...... 196 Teta Stamati, University of Athens, Greece Panagiotis Kanellis, University of Athens, Greece Drakoulis Martakos, University of Athens, Greece Chapter XIII Beyond Knowledge Management: Introducing Learning Management Systems .... 213 Audrey Grace, University College Cork, Ireland Tom Butler, University College Cork, Ireland Chapter XIV A Case of Information Systems Pre-Implementation Failure: Pitfalls of Overlooking the Key Stakeholders’ Interests .......................................................... 231 Christoph Schneider, Washington State University, USA Suprateek Sarker, Washington State University, USA Chapter XV The Columbia Disaster: Culture, Communication, & Change ................................ 251 Ruth Guthrie, California Polytechnic University, Pomona, USA Conrad Shayo, California State University, San Bernardino, USA Chapter XVI New Forms of Collaboration & Information Sharing in Grocery Retailing: The PCSO Pilot at Veropoulos ................................................................................. 272 Katerina Pramatari, Athens University of Economics & Business, Greece Georgios I. Doukidis, Athens University of Economics & Business, Greece Chapter XVII Information Technology in the Practice of Law Enforcement .................................. 287 Susan Rebstock Williams, Georgia Southern Univeristy, USA Cheryl Aasheim, Georgia Southern University, USA Chapter XVIII End-User System Development: Lessons from a Case Study of IT Usage in an Engineering Organization ........................................................................................ 309 Murray E. Jennex, San Diego State University, USA Chapter XIX LIBNET: A Case Study in Information Ownership & Tariff Incentives in a Collaborative Library Database ................................................................................ 324 A.S.C. Hooper, Victoria University of Wellington, New Zealand Chapter XX Information System for a Volunteer Center: System Design for Not-for-Profit Organizations with Limited Resources .................................................................... 345 Suresh Chalasani, Univeristy of Wisconsin, Parkside, USA Dirk Baldwin, University of Wisconsin, Parkside, USA Jayavel Souderpandian, University of Wisconsin, Parkside, USA
Chapter XXI Siemens: Expanding the Knowledge Management System ShareNet to Research & Development .......................................................................................................... 370 Hauke Heier, European Business School, Germany Hans P. Borgman, Universiteit Leiden, The Netherlands Andreas Manuth, Siemens Information & Communication Networks, Germany Chapter XXII Enterprise System Development in Higher Education .............................................. 388 Bongsug Chae, Kansas State University, USA Marshall Scott Poole, Texas A&M University, USA Chapter XXIII ERP Implementation for Production Planning at EA Cakes Ltd. ............................. 407 Victor Portougal, The University of Auckland, New Zealand Chapter XXIV MACROS: Case Study of Knowledge Sharing System Development within New York State Government Agencies ............................................................................ 419 Jing Zhang, Clark University, USA Theresa A. Pardo, University at Albany, SUNY, USA Joseph Sarkis, Clark University , USA Chapter XXV Adoption & Implementation of IT in Developing Nations: Experiences from Two Public Sector Enterprises in India ....................................................................................... 440 Monideepa Tarafdar, University of Toledo, USA Sanjiv D. Vaidya, Indian Institute of Management, Calcutta, India Chapter XXVI IT-Business Strategic Alignment Maturity: A Case Study ..................................... 465 Deb Sledgianowski, Hofstra University, USA Jerry Luftman, Stevens Institute of Technology, USA Chapter XXVII Experiences from Using the CORAS Methodology to Analyze a Web Application ........................................................................................................ 483 Folker den Braber, Norway Arne Bjørn Mildal, NetCom, Norway Jone Nes, NetCom, Norway Ketil Stølen, SINTEF, Norway Fredrik Vraalsen, SINTEF, Norway ChapterXXVIII Infosys Technologies Limited: Unleashing CIMBA ................................................. 502 Debabroto Chatterjee, The University of Georgia, USA Rick Watson, The University of Georgia, USA
Chapter XXIX Development of KABISA: A Computer-Based Training Program for Clinical Diagnosis in Developing Countries .......................................................................... 518 Jef Van den Ende, Institute of Tropical Medicine, Belgium Stefano Laganà, Ospedale Sacro Cuore at Netrar, Italy Koenraad Blot, Pfizer Canada Inc., Canada Zeno Bisoffi, Sacro Cuore Hospital at Negrar, Italy Erwin Van den Enden, Institute of Tropical Medicine, Belgium Louis Kermeulen, Institute of Tropical Medicine, Belgium Luc Kestens, University of Antwerp, Belgium Chapter XXX Cross-Cultural Implementation of Information System ........................................... 527 Wai K. Law, University of Guam, Guam Karri Perez, University of Guam, Guam Chapter XXXI Change Management of People & Technology in an ERP Implementation .............. 537 Helen M. Edwards, University of Sunderland, UK Lynne P. Humphries, University of Sunderland, UK About the Authors ..................................................................................................... 554 Index ........................................................................................................................ 569
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Preface
Insight into successful IT implementation assists researchers and professionals in determining factors of success, as well as causes of failure, in information technology applications and projects. Case studies have proven to be excellent sources of lessons learned for information technology users and designers. Within the 31 real-life case studies included in this book, Cases on Information Technology, Lessons Learned, Volume 7, many IT researchers and professionals from around the world have written of their valuable, real-life IT experiences in IT utilization and management in modern organizations and universities. Each case includes integral information regarding organizations working with IT, including key individuals involved, intelligent steps taken or perhaps overlooked, and the final project outcomes. These cases cover a variety of IT initiatives, including enterprise systems, wireless technologies, rebuilding operating systems after destruction, and implementation within non-profit organizations. IT managers and researchers will find this volume useful as it describes various scenarios of IT implementation and also unfortunate downfalls. Using the real-life situations as facilitators for classroom discussion, professors and students will benefit as well from this collection of cases. Following are summaries of the cases contained in this volume. The first case study, “An Experiential Case Study in IT Project Management Planning: The Petroleum Engineering Economics Evaluation Software Imperative, by Charles K. Davis, describes an organization’s need for a complex software package internal development. This operational and functional situation provides a framework for developing a set of project plans for a software development project to address these needs. The goal of this case is to develop a detailed project plan, including schedules, staffing, and deliverables by task, and cost estimates. The second case study, “The Algos Center: Information Systems in a Small NonProfit Organization”, by Susan J. Chinn, Charlotte A. Pryor, and John J. Voyer, describes an analysis of information systems conducted for a small non-profit organization. The case highlights many of the problems facing small non-profits and allows readers to supply possible courses of action. In addition, it provides an opportunity to evaluate how a consulting experience was handled. “Social Construction of Information Technology Supporting Work” by Isabel Ramos and Daniel M. Berry describes the social dynamics shaping the implementation and deployment of the MIS systems supporting a company’s production processes
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and the procurement of resources for these processes. The case study describes in particular the stakeholders and the organizational relationships between them; the stakeholders’ formal and informal roles; the information needed from and provided to the systems, the stakeholders’ views of the systems’ usefulness, quality, and flexibility; the stakeholders’ career paths; and the stakeholders’ perceptions of their own and others’ worth to the company. German public hospitals face governmental and regulatory pressures to implement efficiency and effectiveness metrics, such as the classification of Diagnosis Related Groups (DRG) system, by the year 2005. “CRM Systems in German Hospitals: Illustrations of Issues & Trends” by Mahesh S. Raisinghani, E-Lin Tan, Jose Antonio Untama, Heidi Weiershaus, Thomas Levermann, and Natalie Verdeflor describes customer relationship management technology and the challenges of data sharing and data security in hospitals. Finally, the benefits accruing to the hospitals are identified, along with strategies to focus on efficiency and customer satisfaction in a very competitive market. Discussing the challenges facing the Health Board enterprise system implementation team in dealing with a necessary IT platform change before the system go-live, “The Selection of the IT Platform: Enterprise System Implementation in the NZ Health Board” by Maha Shakir and Dennis Viehland presents issues pertaining to the initial choice of IT platform, the failure of the platform to meet contractual specifications, and the challenges the project team faced in resolving this problem. Building cars to customer order has been the goal of vehicle manufacturers since the birth of mass production. Despite recent advances in information technology offering total visibility and realtime information flow, transforming a high volume manufacturing industry to adopt customer responsiveness and build-to-order represents a significant step. “Automotive Industry Information Systems: From Mass Production to Build-to-Order” by Mickey Howard, Philip Powell, and Richard Vidgen explores the barriers to change within and between stakeholders at all levels of the supply chain. Exploring the political relationships, power asymmetries, and conflicts surrounding the development, deployment, and governance of IT-enabled sales and marketing information systems (IS) at Digital Devices Inc. allows this case to provide rare insights into the reality of IS development and IT infrastructure deployment. “Power Conflict, Commitment, & the Development of Sales & Marketing IS/IT Infrastructures at Digital Devices, Inc.” by Tom Butler focuses on an in-depth description of the positive and negative influences on these processes and their outcomes. “Development of an Information Kiosk for a Large Transport Company: Lessons Learned” by Pieter Blignaut and Iann Cruywagen dissucusses the devlopment of an information kiosk system for a large public transport company to provide African commuters with limited educational background with up-to-date information on schedules and ticket prices in a graphically attractive way. The challenges regarding liaison with passengers are highlighted and the use of a touchscreen kiosk to supplement current liaison media is justified. “A Case of an IT-Enabled Organizational Change Intervention: The Missing Pieces” by Bing Wang and David Paper documents an organizational change intervention concerning the implementation of a novel information technology (IT) at a universityowned research institute. It describes disparate experiences by key actors toward the intervention, marking a mismatch between a new paradigm and the existing IT culture. In particular, resistance from in-house IT specialists was observed as the strongest force obstructing the novel IT implementation.
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A college of business computer server room was completely destroyed by a fire. “Up in Smoke: Rebuilding After an IT Disaster” by Steven C. Ross, Craig K. Tyran, David J. Auer, Jon M. Junell, and Terrell G. Williams discusses the issues the college faced as they planned for rebuilding their information technology operations. The reader is challenged to learn from this experience and develop an IT architecture that will meet operational requirements and take into account the potential threats to the system. “From Principles to Practice: Analyzing a Student Learning Outcomes Assessment System” by Dennis Drinka, Kathleen Voge, and Minnie Yi-Miin Yen describes the challenges facing a system project manager. The system supports the assessment of student learning and documents and tracks course content documents. In order to move into the design phase, the business objectives must be identified, a system development life cycle approach and development platform selected, project risks identified and assessed, and resources secured. “Challenges of Complex Information Technology Projects: The MAC Initiative” byTeta Stamati, Panagiotis Kanellis, and Drakoulis Martakos provides a detailed account of the ill-fated Management and Administrative Computing (MAC) that aimed by the homogenization of requirements to centrally procure an integrated applications suite for a number of British higher education institutions. In this context the case illustrates the level of complexity that unpredictable change could bring to an information technology project that seeks to realize the impossible dream of the ‘organizationally generic’ and the destabilizing effects it may have on the network of the project’s stakeholders jeopardizing the project’s success in an irreversible manner. Many world-class organizations are now employing a new breed of systems known as Learning Management Systems (LMS) to foster and manage learning within their organizations. “Beyond Knowledge Management: Introducing Learning Management Systems” by Audrey Grace and Tom Butler reports on the deployment of an LMS by a major U.S. multinational and proposes a framework for understanding learning in organizations, which highlights the roles that LMS can play in today’s knowledge-intensive organizations. “A Case of Information Systems Pre-Implementation Failure: Pitfalls of Overlooking the Key Stakeholders’ Interests” by Christoph Schneider and Suprateek Sarker focuses on the software vendor selection process at a large public University which failed even before implementation could get under way, as the managers in charge of the project overlooked procedures as outlined in the RFP and the roles of relevant but “hidden” decision makers during the pre-implementation stage of the project. The National Aeronautics and Space Administration has had unprecedented success with historic space missions, including the development of the Space Shuttle. When the Challenger exploded, investigations called for NASA to examine its culture. Twenty years later, with the Columbia shuttle disaster, some of the same questions are being asked. “The Columbia Disaster: Culture, Communication, & Change” by Ruth Guthrie and Conrad Shayo discusses the problem of relaying complex engineering information to management, in an environment driven by schedule and budget pressure. “New Forms of Collaboration & Information Sharing in Grocery Retailing: The PCSO Pilot at Veropoulos” by Katerina Pramatari and Georgios I. Doukidis describes a pilot implementation utilizing Internet technology in order to enable collaboration and daily sharing of POS data between grocery retail stores and suppliers with the objective
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to streamline the store replenishment process. This effort resulted in significant business results but at the same time several pitfalls and technical challenges, as described in the case. Describing the development and implementation of a knowledge-based policing system, “Information Technology in the Practice of Law Enforcement” by Susan Rebstock Williams and Cheryl Aasheim, discusses how the system enables information regarding incident reports, arrests and investigations to be collected, distributed and managed in a paperless, wireless environment. The challenges faced in merging wireless, wired, database, and application technologies while satisfying the user requirements of the police department are detailed in this report. “End-User System Development: Lessons from a Case Study of IT Usage in an Engineering Organization” by Murray E. Jennex looks at a study of end user computing within the engineering organizations of an electric utility undergoing deregulation. The case was initiated when management perceived that too much engineering time was spent doing IS functions. The case found that there was significant effort being expended on system development, support, and ad hoc use. Several issues were identified affecting system development including use of programming standards, documentation, infrastructure integration, and system support. The value of information depends on the quality of that information, when it is required and the purpose to which it will be put. “LIBNET: A Case Study in Information Ownership & Tariff Incentives in a Collaborative Library Database” by A.S.C. Hooper investigates the principles driving pricing issues and information ownership in a cooperative database. The perspective of selected members provides insights into the strategic outcomes for the organization. “Information System for a Volunteer Center: System Design for Not-For-Profit Organizations with Limited Resources” by Suresh Chalasani, Dirk Baldwin, and Jayavel Souderpandian focuses on the development of information systems for the Volunteer Center of Racine (VCR). This case targets the analysis and design phase of the project using the Unified Modeling Language (UML) methodology. It also discusses project management, team dynamics, projects risks and solution-alternatives in detail. The issues surrounding the pending expansion of Siemens’ community-based knowledge management system ShareNet to the research and development function are described in “Siemens: Expanding the Knowledge Management System ShareNet to Research & Development” by Hauke Heier, Hans P. Borgman, and Andreas Manuth. Information systems implementation issues, as well as change management interventions, are discussed. Particular emphasis is placed on motivation factors for end users, user champions, and top management. “Enterprise System Development in Higher Education” by Bongsug Chae and Marshall Scott Poole study describes a major U.S. university system’s experience in the development of an in-house enterprise system. This case indicates that ES design and implementation in higher education is challenging and complex due to unique factors in the public sector. It offers some unique opportunities to discuss issues, challenges and potential solutions for the deployment of ES in the public arena, particularly in higher education. Changing company’s sales and production strategy from “make-to-order” to “make-to-stock” required a complete redesign of the planning system, which was an integral part of an ERP system based on SAP software. “ERP Implementation for Production Planning at EA Cakes Ltd.” by Victor Portougal describes the organization and
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its management practices and specific problems solved by the consulting team. Finally, it identifies the enhancements management obtained as a result of the implementation of ERP. “MACROS: Case Study of Knowledge Sharing System Development within New York State Government Agencies” by Jing Zhang, Theresa A. Pardo, and Joseph Sarkis reports the development of a knowledge sharing system that fosters knowledge sharing across divisions and levels of government in a New York State agency. It describes in detail the project management tools and models used in various stages to aid the analysis and the development of this project. Finally, ongoing challenges and barriers are outlined. “Adoption & Implementation of IT in Developing Nations: Experiences from Two Public Sector Enterprises in India” by Monideepa Tarafdar and Sanjiv D. Vaidya describes IT adoption issues at two large public sector organizations in India. In addition to illustrating the significance of top management drive and end-user buy in, it particularly highlights the role of middle management in managing the IT adoption process at different levels in these large organizations. “IT-Business Strategic Alignment Maturity: A Case Study” by Deb Sledgianowski and Jerry Luftman describes the use of an assessment tool that can help to promote long-term IT-business strategic alignment. The Strategic Alignment Maturity (SAM) assessment is used as a framework to demonstrate the improvement of an international specialty chemicals manufacturer’s IT-business alignment practices to achieve their corporate goals. Major insights from their experience and SAM best practices are highlighted. “Experiences from Using the CORAS Methodology to Analyze a Web Application” by Folker den Braber, Arne Bjørn Mildal, Jone Nes, Ketil Stølen, and Fredrik Vraalsen. describes the process and results of a model based risk analysis carried out on a web application for customers of a mobile phone company. UML inspired diagrams and models were used for both specification of the input to the analysis as well as to express the results. The main diagrams and models used are explained. Infosys Technologies Ltd. implemented a customer relationship management (CRM) system called CIMBA — Customer Information Management By All. “Infosys Technologies Limited: Unleashing CIMBA” by Debabroto Chatterjee and Rick Watson provides insights into the factors that triggered the need for developing such an integrated CRM solution and how the company went about developing and launching this system. It also brings to light the various challenges associated with the implementation of a CRM system. In the next case, “Development of KABISA: A Computer-Based Training Program for Clinical Diagnosis in Developing Countries” by Jef Van den Ende, Stefano Laganà, ,Koenraad Blot, Zeno Bisoffi, Erwin Van de Enden, Louis Vermeulen, and Luc Kestens, the built-in tutor follows the student’s input with complex logical algorithms and mathematical computations, gives comments and support, and accepts the final diagnosis if sufficient evidence has been built up. Several problems arose with the development. In the first place, the evolution in the teaching of clinical logic is always ahead of the program, so regular updating of the computer logic is necessary. Secondly, the choice of MS Access as computer language has provoked problems of stability, especially the installation of an MS Access runtime. Thirdly, and most importantly, scholars want proof of the added value of computer programs over classical teaching. Moreover, the concept of a pedagogical “game” is often regarded as childish. Finally, the planning
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and financing of an “open-ended” pedagogical project is questioned by deciders, as is the case with all operational research. In “Cross-Cultural Implementation of Information System” by Wai K. Law and Karri Perez an international service conglomerate recently developed a strategic information system to enhance its service delivery and strategic adaptation. A routine implementation of an information subsystem at a newly acquired subsidiary ended with shocking failure. Cultural ignorance doomed the information system project delivered by a seasoned system development team. PowerIT, an engineering company of about 200 staff, adopted an enterprise resource planning (ERP) system. After eighteen months the performance of the system was under scrutiny. The resultant investigation identified problems with the acquisition and implementation process. “Change Management of People & Technology in an ERP Implementation” by Helen M. Edwards and Lynne P. Humphries highlights the difficulties encountered in tailoring the enterprise resource planning system to the existing business practices. Every situation involving information technology varies greatly from the next, providing IT managers and students alike with a wide expanse of successful IT implementation or IT catastrophe examples. It is our hope that the cases included in this volume of the Annals of Cases on Information Technology, Volume VII, will assist IT researchers, professionals, policy makers, teachers, and students in their own IT adoption situations and studies. Your feedback and comments, as always, will be greatly appreciated. Mehdi Khosrow-Pour, D.B.A. Editor-in-Chief Cases on Information Technology, Lessons Learned, Volume 7
An Experiential Case Study in IT Project Management Planning 1
Chapter I
An Experiential Case Study in IT Project Management Planning: The Petroleum Engineering Economics Evaluation Software Imperative Charles K. Davis, University of St. Thomas, USA
EXECUTIVE SUMMARY
The case covers key issues in information technology project management. It deals with developing a full set of project plans, including milestones, tasks, schedules, staffing, deliverables, and projected costs, for a complex software development project (Gido & Clements, 2003; Kerzner, 2003; Schwalbe, 2002). The essence of this case is the analyzing of a specific organizational setting with critical software needs and the developing of the needed plans. As in many similar situations, this organization is relatively complex, and the situation is not entirely clear. By reviewing the facts of the case, collecting outside information, conducting role playing interviews, analyzing requirements, and estimating schedules and costs, one can collect the information needed to develop baseline project plans for the software development envisioned in this case. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
2 Davis
ORGANIZATIONAL BACKGROUND
This case is set in the oil and gas industry, in a family-held engineering consulting firm. This firm is a leader in its markets and wants to develop and extend its competitive advantage, and profitability, by developing sophisticated applications software for its engineers to use to leverage and extend their work product. Petroleum engineers are professional engineers who evaluate the potential yields of oil and gas properties around the world. Petroleum engineering is essentially a branch of chemical engineering in which the principles of chemistry, chemical engineering, and geology are applied to the study and understanding of discovered petroleum deposits in the ground. Because the petroleum products reside in pockets or strata in the underground rock formations called reservoirs, petroleum engineers are also often referred to as reservoir engineers. This analysis of petroleum deposits under the ground, generally referred to as oil and gas reserves, is extremely important to the companies in the oil and gas industry. Obviously, in the petroleum business, companies view their level of reserves as a critical asset. The process of extracting the petroleum from the ground once it has been found is called producing. The value of an oil or gas field is determined by the volume of oil and gas it will produce. It is, therefore, of the utmost importance to be able to estimate with a high degree of accuracy both the rate of production over time and that point in the future when a given producing property will stop producing. The value of an oil or gas field is a function of two factors, how much oil and gas the field will produce and prices, the price per barrel of crude oil and the price per million cubic feet of natural gas, over the life of the field. One way an oil or natural gas company can assess its economic health is by analyzing its producing properties, estimating the amount of producible reserves it has in the ground, and forecasting the selling price of these reserves in the future when they are expected to be produced. By doing this, companies can project the dollar value of their petroleum reserves, a crucial indicator of their ongoing business viability. This process is called a reserves economics evaluation. The value of a firm’s petroleum reserves affects everything from its stock price to its ability to borrow money from banks to fund the unending search for new oil fields. Clearly, the companies have a vested interest in convincing the world outside that they are holding large reserves of high value. So the pronouncements by the oil and gas companies about their levels of reserves are generally viewed skeptically by the banks and financial markets without the opinion of an objective, highly credible, outside agent that can attest to the value of the reserves on hand for a given company. This is a case about a company that provides as a service just these kinds of assessments of the economic value of petroleum reserves and its need to develop a sophisticated software system to support and enhance its work. This case focuses on the project costing, workbreakdown scheduling, and humanpower loading needed for this software system. Hopkins & Associates is a consulting engineering firm. It consists of oil and gas reservoir engineers who provide independent evaluations of the reserves for oil and gas properties. Like a major accounting firm auditing the books of a client on the NY Stock Exchange, Hopkins “audits” the oil and gas reserves for a given company and issues an opinion as to their value. For example, if an oilman who is short on cash wants to borrow money to drill new wells, a bank might come to Hopkins to assess the oilman’s properties to determine if he would be able to pay back the loans if he did not strike oil with the new Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
An Experiential Case Study in IT Project Management Planning 3
wells. Or, if one company wanted to sell an oil field to another, then both would need a firm like Hopkins to determine a fair price for the property. With offices in Houston, Denver, Calgary, and Tulsa, Hopkins & Associates is actually a small firm of less than 1,000 people, about half engineers, but this is the norm for oil and gas consulting firms of this type. In fact, Hopkins is at this time the largest petroleum consulting company in the world and is very highly regarded for its integrity and the quality of its engineering work. The firm was founded by old Mr. Hopkins in the 1930s. As a young man with a newly minted engineering degree from the University of Tulsa, he participated in the founding of “petroleum engineering” as a professional discipline. In fact, some say he invented the idea of using engineering as a tool for understanding petroleum reservoirs. A man of great integrity and honesty, he was for several decades a central figure in the oil industry in Oklahoma, Texas, Venezuela, and the Middle East. In addition to the consulting arm of his company, he also owned several producing oil fields and a small, but highly profitable gas pipeline. He also owned a drilling company that did exploration, wildcatting mostly in Texas.
SETTING THE STAGE
Old Mr. Hopkins died recently. His only son now runs the firm. The younger Mr. Hopkins (“Hoppy” to his golfing buddies and “Hop” to everyone else) is a competent reservoir engineer with tremendous resources at his disposal, but even his closest admirers say privately that “He is not the man his father was”. Born and raised rich, he is the archetypical Texas oil man (think of JR Ewing in the old Dallas TV show, but much nicer). His mansion in the exclusive Preston Oaks area in Houston, a private Lear Jet always standing by, the biggest yacht in the Texas City Yacht Club, a fleet of private cars, a huge Mercedes limo, and all the rest; in many ways, he is bigger than life. But he lives under the shadow of his father’s legacy. At company retreats, Hop can be heard saying things like, “I could never hope to achieve my father’s stature in the oil business”. Kind, generous, and paternalistic to his employees, nevertheless everyone views Hop as a wild playboy type whose wife and kids are often neglected as he pursues his various interests around the world. Of the four Hopkins & Associates offices, the Houston office is headquarters because Hop lives in Houston. It is housed in the Hopkins Building in Greenbrier Plaza. The firm’s largest office is in Tulsa, located in the Hopkins Plaza downtown, an office complex named after “the old man”. The Denver and Calgary offices are tiny by comparison to the others, but they generate a lot of business for the firm. The company consists of four divisions, all of which report to Larry Jordan, a highly respected petroleum engineer who was the older Mr. Hopkins’ most trusted engineer and friend for many years before his death. He is revered within the firm and provides a sense of continuity and stability for both employees and clients now that the younger Mr. Hopkins has taken over the firm. Two of the divisions are actually incorporated as wholly owned subsidiaries of Hopkins & Associates, the pipeline company and the computer services company. Hopkins & Associates is in turn a wholly owned subsidiary of The Hopkins Companies, which is Hop’s holding company for the entire enterprise. Jack Crocket and Em Stinson are key players in this firm. They supervise the reservoir engineering and economics evaluation jobs for Tommy Smith’s area. Each Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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supervisor manages the daily activities of a couple dozen engineers. Jack is one of the “old timers” who sees computers as a necessary evil and longs for the good old days when the slide rule was king. Still, he is adaptable and a very capable manager based out of the Tulsa office. Em was a college roommate of Hop at the University of Oklahoma. Em loves to tell the story, “When me and Hop were sophomores, we got drunk and somehow Hop drove his Cadillac convertible into the middle of the OU football stadium smashing things as he went. It was 3:00 AM on a cool, starry night in October. We lounged in the back seat drinking Wild Turkey out of the bottle until it was gone while talking about living an exciting life prospecting for oil. Then we staggered back to our dorm arm-inarm and went to sleep. Unfortunately, Hop left his car in the middle of the stadium! We were expelled by the end of the next week!” (Upsetting the football establishment at OU is unwise. A former president of OU was once quoted as saying, “We try to maintain a university here that our football team can be proud of!”) That is how Hoppy became a proud graduate of the University of Texas. “Hook’em horns!”
CASE DESCRIPTION
The rapid analysis and use of information is a key innovation (Eppinger, 2001). Therefore, the engineers at Hopkins use a lot of engineering and geology software tools to model and analyze the characteristics of oil and gas reservoirs. They also use financial analysis software tools to forecast the economics for each individual oil or gas well being evaluated using discounted cash flow analysis. Because of the importance of computers in the core work of the firm, the Board of Directors established a separate company, a wholly owned subsidiary of the engineering company called Hopkins Computer Services, Inc. (or HCSI for short), to better provide the computer services needed by the firm. The computer company operates a large distributed network with a modern computer center in Houston and numerous interconnected engineering workstations at the various Hopkins offices. HCSI employs nearly a hundred people (analysts, programmers, computer operators, network specialists, managers, and support staff). The President of HCSI is a brilliant young petroleum engineer from Louisiana named Ken Summers. Ken was an All American golfer at LSU, which is a good skill to have in the golf crazy Hopkins companies. He has Hop’s trust and complete support. Ken is a good manager and an oil man through and through, but he knows little about computers or software development. Nevertheless, he has a vision. He wants to automate the entire process of generating reservoir economics for an oil field. He calls it the Petroleum Reserves Economics System, or PREsys. Let’s look at what this might mean. Essentially, Ken is talking about building several generalized computer models and linking them together into a monster integrated decision support system for petroleum engineers (Arsanjani, 2002). Ken recently met with Hop, Larry, and the rest of the Board and summarized his ideas: “Y’all, I think we need to link together three fancy computer models into one overall model to do this. Some of you know most of these ideas; some of you know some of them; and some of you are less familiar with the economics evaluation process. So, I’ll review the steps involved in doing an evaluation in terms of these three sets of activities.
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Jerry Bye, Director Application Systems Development
Mary Nunn, Manager Technical & User Support
Rocky Ridge, PhD, Manager Geophysical Analysis
Ralph Davison, President Hopkins Gas Pipeline Inc.
Em Stinson, Supervisor Houston & Denver Engineering
Ken Summers, President Hopkins Computer Svcs Inc.
Ron Snyder, Director Computer & Network Operations
Tommy Smith, Vice President Reservoir Engineering
Jack Crocket, Supervisor Tulsa & Calgary Engineering
Eddie Dolan, Vice President Exploration & Drilling
Larry Jordan President Hopkins & Associates Inc.
Hop Hopkins Chairman & CEO The Hopkins Companies Inc.
An Experiential Case Study in IT Project Management Planning 5
Figure 1: An Abbreviated Organization Chart for “The Hopkins Companies, Inc.”
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The FIRST MODEL would be that for an individual reservoir under an oil field. This model would include information about the dimensions of the reservoir (from seismic data and the like). The idea is to develop a three-dimensional map of the reservoir, its geology and its chemistry. The model would include information about the porosity of the rock making up the reservoir and the type of capstone rock that overlays it. We also need to know how many wells have been punched through the capstone into the reservoir. Also, important would be information about the chemical composition of the oil in the reservoir and the viscosity of that oil as well as temperature and pressure readings associated with the wells. Other parameters would include information such as the presence of other fluids in the reservoir (such as salt water) and the amount of pressure exerted by any pumping at the wellheads. By using the Monte Carlo simulation technique for mathematical modeling and some sophisticated reservoir engineering analysis with these kinds of parameters, a model can be constructed to mimic the behavior of the well as oil & gas migrate through the reservoir to the perforations in the well casing and up to the surface. This kind of simulation should be able to predict the flow of petroleum products from the reservoir over time and it should be able to tell us when the well will cease to produce. Production at the wellhead is generally tracked and reported on a monthly basis and the simulation would generate monthly production estimates. This is the first model and it is the only part of this that actually requires complex engineering and geology. The SECOND MODEL deals with forecasting economics for each individual well. By using discounted cash flow analysis, it is possible to estimate how much money a producing well will generate for its owners over the lifetime of that well. This analysis is generally done quarterly. The idea is to construct a spreadsheet to net the negative cash flows from the positive ones quarter by quarter over the life of an oil or gas well until its reserves are fully depleted. [The oil industry gets a special tax break based upon the fact that petroleum reserves are depleted over time. It is called the ‘oil & gas depletion allowance’ and is a minimum of 15% of gross income from production activities. The rationale for this tax break is that it helps the oil industry to drill for more oil, which is critical as existing wells are depleted over time. There has been some discussion of including a tax modeling component in PREsys, as well.] Generally, an oil company will lose money early when the costs of drilling are incurred and begin to make money later as the steady income of a producing well overcomes the earlier high expenses. To begin analyzing cash flows for a specific well, we need two basic sets of numbers: •
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The amount of crude oil and/or natural gas that the well will produce by quarter over its lifetime. Initially, this will be a high number gradually decreasing over time as the pressure in the well is dissipated in the reservoir below by the ongoing production. This is the set of estimates that come from the first model. The price of crude oil and/or natural gas that will be in effect from quarter to quarter as the oil is brought to market. The product of the amount of petroleum produced in a given quarter and the price at that time is the amount of money
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An Experiential Case Study in IT Project Management Planning 7
the well will ‘bring in’ in that quarter. This revenue stream is obviously the most important positive cash flow in the analysis. But it depends upon reasonably predicting the price of oil & gas over the life of the well many years into the future. This is not at all a simple task but, of course, y’all know we do it all the time. It would be good if we could forecast prices better, though. Once we have these numbers, we can populate a spreadsheet with these quarterly cash flows. This simple cash flow analysis is a good start but it is misleading because it does not take into account the ‘time value of money,’ meaning that one dollar received today is worth more to us than one dollar received in the future because a dollar in hand today can be invested at some interest rate. It will have earned interest and be worth more money by that time in the future when the second one dollar is received. We can also turn this idea around. How much is one dollar worth today if it is to be received in the future? For example, if you get $.91 today and invest it at 10% per year, then in one year it will be worth $1. In other words, 91 cents today is the same as $1 a year from now in today’s money. Financial analysts reduce all of these ideas to the concepts of discounted cash flows and net present value. Once we have calculated the cash flows as described above, we determine the cost of money (the best annual interest rate we can get for our firm). That interest rate becomes what is called the discount rate. Then we convert that to an equivalent quarterly discount rate. Each discount rate for each time period in the future has a number associated with it called a discount factor. Tables of discount factors are readily available. You get the discount factors for your company’s discount rate and multiply the cash flows in the spreadsheet quarter by quarter with the discount factors. The result is a figure for each quarter that represents the cash flow for that future quarter in today’s dollars, just like the example above with the 91 cents. These are the discounted cash flows. If we add them all up, quarter by quarter, we get the total value of the reserves for a given well, again, in today’s dollars. This is the net present value of the well and it is the number that the bankers and financial markets want to know. The THIRD MODEL deals with consolidating these numbers across an entire oil field. It is essentially an accounting-style ‘roll-up’ procedure. In order to understand the economic value of an entire field, it is necessary to identify all the reservoirs and wells that make up the field. Of course, there may be only one large reservoir or several smaller ones under a field, and there may be any number of wells tapping into whatever configuration of reservoirs underlies the field, as well. Understanding the reservoir configuration is essential for the engineering work, and understanding the monthly production by individual well is essential for the economic analysis. The roll-up procedure is the process of summing all the discounted cash flows for all the wells on a property by quarter and overall. The total of all the discounted cash flow totals for all the wells in the oil field is the economic value for the entire field in today’s dollars.” Everyone sat quietly, intently waiting while Ken made his case. As the Board looked on, it became obvious that Hop was convinced. “A sophisticated three-dimensional reservoir software package, one that could predict the flow of oil and gas at the wellhead Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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and forecast revenues and profits automatically by well or by oil field for his reservoir engineers! What could be better?!!” Larry offered a word of caution. He had read that big software projects are risky and too often fail (De Meyer, Loch, & Pich, 2002; Keil & Montealegre, 2000; Matta & Ashkenas, 2003). He noted that “the credibility of Hopkins & Associates in the marketplace could be eroded badly if the PREsys computer software was not absolutely accurate and reliable”. Ken agreed, saying that he believed that accurate and reliable software could be created; and, if it could, it would provide a great competitive advantage for the firm. Tommy Smith, who was also at the Board meeting for a presentation, was excited. “You know,” he said, “oil wells change hands all the time. And sometimes, a client will use the same wells as collateral several times. We have folks coming to us to re-evaluate the same wells that we evaluated just a few years ago. We can just dust off the old evaluations, update them and resell them. That is really the most profitable part of our business! If we could electronically file and organize completed evaluations, indexing and cataloging them on the computer, we could make the process of updating and reselling old evaluations a lot easier to manage. It would also help us make sure that our evaluations of wells stayed consistent!” Hop was wide-eyed. He could see how this kind of system could really streamline the task of doing oil and gas reservoir economics analysis and increase his profit margins all across that part of the business. He ended the meeting on his way to give another interview to The Oil Journal by asking, “When can I have it and what will it cost?”
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
Ken was smiling as he left the meeting, but he soon began to “sober up” contemplating the scope of the task ahead. Now he needed a project plan, a humanpower loading plan, and a budget plan for this project fairly soon. He thought about who on his staff might be able to do the necessary planning. There was Ron Snyder. Ron is a Texas A&M Aggie and a super computer technology guy. And he was the principle architect of the Hopkins computing infrastructure. The network consists of a T3 digital backbone between the Houston and Tulsa offices with similar T1 links between Houston and the Denver Office and Houston and the Calgary Office. Various hubs and LANs in the Hopkins offices provide the necessary connectivity so that every engineer has access to the databases and systems in the Houston datacenter from his or her desktop. All network protocols are either ETHERNET or TCP/IP compatible for local and wide area networking, respectively. A longtime user of DEC computers, the Houston datacenter now utilizes HP AlphaServers, a GS320 and two GS80s, all running under the OpenVMSTM operating system. The geophysical and drilling staffs were outfitted with UNIX-based scientific workstations and the engineers all use Windows-based platforms for their engineering workstations. Ron is good with the technology but he does not know enough about petroleum engineering to do this job and, besides, he is too busy running and maintaining the firm’s other systems. Then there was Mary Nunn. Mary ran the user support function at the datacenter in Houston. An ace teacher and trainer, Mary was a former secretary for Jack Crocket, a super “gal Friday” with excellent people skills. Everyone liked Mary. She was Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
An Experiential Case Study in IT Project Management Planning 9
a natural leader and had picked up a lot about reservoir engineering in her 18 years with Hopkins, but not being an engineer herself (or even degreed), she would have a hard time maintaining credibility with the engineering staff during requirements analysis (Howard, 2001). She may not even understand what they are talking about with some of the key down-hole engineering simulation formulas and mathematics that would govern the migration of petroleum through a reservoir. Another of Ken’s trusted lieutenants is Jerry Bye, who runs the applications development and maintenance functions for the computer company. Jerry is a great guy from Indianapolis, a fanatic fan of NASCAR and the Indianapolis 500, which he attended every year growing up as a kid. He is well schooled and experienced in software development (Kezsborn & Edward, 2001; Marchewka, 2003), expert in procedures for project cost estimation (Armour, 2002), but he too is not an engineer. Therefore, Ken is even hesitant about Jerry. He is sure that the PREsys development project will be expensive and will consume a lot of engineering time around the firm. In a company owned and operated by engineers, Ken is hesitant to put a non-engineer in charge of such a high visibility project. Hop will probably let him do it, but if the project turned out badly, it would be a politically difficult decision to justify to the rest of the engineers in the firm. There would be a lot of second-guessing, and Ken finally decides he is just not interested in taking that risk. Ken is also concerned that whoever he chooses to plan the project should be in a position to become Project Manager for the project once it is approved and funded by Hop and the Board. HCSI is a small company and all of his most capable people are critical (even indispensable) to the ongoing operations of the HCSI in their current roles. Ken reluctantly decides that no one on his current staff can take on this mission-critical project for Hopkins & Associates (Hayashi, 2004; Klein, Jiang, & Tesch, 2002). Fortunately, Ken has an “ace in the hole”. He has a friend from his days working for Shell Oil prior to his joining Hopkins. His friend, David M. Gardner, was educated as a petroleum engineer at SMU. He had been a crackerjack programmer at Shell for 10 years, where he learned to develop state-of-the-art software following generally accepted industry standards (Rada & Craparo, 2000). Gardner is now a computer consultant to the petroleum industry with his own firm, David M. Gardner & Associates, Inc., based out of Dallas. Ken calls David, who is on the next plane to Houston. David is shrewd. He agrees to develop the plan and serve as Project Manager for the PREsys project if and when it is approved by Hop and the Board. He agrees to do all of this for minimal pay provided that David M. Gardner & Associates shares equally in the rights to the PREsys system and with the stipulation that The Hopkins Companies and its subsidiaries would be barred from selling the PREsys software itself. Hopkins can utilize PREsys internally to support its reservoir engineering consulting business, but PREsys will be a software product of the tiny, struggling Gardner company. In addition, David requests a royalty of $7 per case from Hopkins for every well evaluation done by Hopkins and Associates that makes use of PREsys. Ken and Hop discuss this arrangement. Ken confides that he has great confidence in David even though his company is small and has few resources outside of David’s programming expertise. Hop, who really wants the PREsys software, agrees to the deal. The Board rubberstamps the contract and provides the initial funding. David rents an
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apartment in the same block as the Hopkins Building in Greenbrier Plaza and moves to Houston for the duration. Ken and David meet at Ken’s office to begin planning the project. “Where do we start?” Ken asks David, smiling coyly but also deadly serious. The current problems facing this organization are clear. Oil and gas consulting is a highly competitive business. If H&A were to become technically obsolete, it would certainly lose its competitive edge. PREsys is a strategic, potentially mission-critical system. Hop, Larry, Ken, and David all understand this reality. Senior management sees a fundamental threat to the business if this technology is not developed soon. For them, there is a competitive imperative driving the demand for this system. So, whether it is realistic or not, Hop and the rest of senior management are pushing hard to get this new system developed and online in record time. However, software development is not really the strong suit of any of The Hopkins Companies. None of the executive management has engaged in such a project before, and the systems staff is inexperienced as well. It is questionable whether they have the collective expertise to oversee the development of PREsys. There is a lot riding on David’s expertise, his judgment and ethics, and his very small company. There is potentially a lot of risk associated with this project configured like this. The challenge is to develop a realistic project plan that will help mitigate the risk and give the developers a reasonable chance of developing a first-rate system that will meet the needs identified while standing up to the time pressures effectively. This is a classic problem, one that is common today, and one that will always be with the information systems management community. And the problem is this: How to balance the demand for rapid delivery of final products by executives with great organizational power against the critical need to make sure that everything is properly analyzed, designed, constructed, tested and implemented. There are two kinds of serious risks here, each diametrically opposed to the other. The first risk is that the system is not developed in time and The Hopkins Companies loses competitive position in the oil & gas consulting business. The second risk is that the company will rush to market with the PREsys software too soon, thinking that it is excellent, only to find out too late that there are serious flaws in the software that lead to inaccurate reserves economics forecasts and, eventually, major law suits. Fundamentally, the project planning for the PREsys software must balance these two risks in the face of real technical complexity and overly optimistic executive time pressures.
REFERENCES
Armour, P. (2002). Ten unmyths of project estimation. Communications of the ACM, 45(11), 15-19. Arsanjani, A. (2002). Developing and integrating enterprise components and services. Communications of the ACM, 45(10), 30-34. De Meyer, A., Loch, C.H., & Pich, M.T. (2002). Managing project uncertainty: From variation to chaos. MIT Sloan Management Review, 43(2), 60-67. Eppinger, S.D. (2001). Innovation at the speed of information. Harvard Business Review, 79(1), 149-158.
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An Experiential Case Study in IT Project Management Planning 11
Gido, J., & Clements, J.P. (2003). Successful Project Management (2nd ed.). Mason, OH: South-Western, Thompson Learning. Hayashi, A.M. (2004). Building better teams. MIT Sloan Management Review, 45(2), 5. Howard, A. (2001). Software engineering project management. Communications of the ACM, 44(5), 23-25. Keil, M., & Montealegre, R. (2000). Cutting your losses: Extricating your organization when a big project goes awry. MIT Sloan Management Review, 41(3), 55-69. Kerzner, H. (2003). Project Management: A Systems Approach to Planning, Scheduling, and Controlling (8th ed.). New York: John Wiley & Sons. Kezsborn, D.S., & Edward, K.A. (2001). The New Dynamic Project Management (2nd ed.). New York: John Wiley & Sons. Klein, G., Jiang, J., & Tesch, D. (2002). Wanted: Project teams with a blend of IS professional orientations. Communications of the ACM, 45(6), 81-86. Marchewka, J.T. (2003). Information Technology Project Management—Providing Measurable Organizational Value. Danvers, MA: John Wiley & Sons. Matta, N.E., & Ashkenas, R.N. (2003). Why good projects fail anyway. Harvard Business Review, 81(9), 109-205. Rada, R., & Craparo, J. (2000). Standardizing software projects. Communications of the ACM, 43(12), 21-24. Schwalbe, K. (2002). Information Technology Project Management (2nd ed.). Boston, MA: Course Technology, Thompson Learning.
APPENDIX Role Playing For Interviews
Divide the class into five teams of interviewers to gather information about requirements. Each person in the class is either a role player or a lead interviewer for a team, and each person is on perhaps two interview teams. The following five individuals will be interviewed by one of the five teams of analysts. This exercise is done in an effort to begin the process of developing a project plan for systems development effort in this case and to officially kick off the project:
1. 2. 3. 4. 5.
Hop Hopkins, President of Hopkins & Associates Rocky Ridge, Manager of Geophysical Analysis Ken Summers, President of HCSI Jerry Bye, Director of Applications Systems Development Mary Nunn, Manager of Technical & User Support
Sample questions for each interview are listed next. Please be sure that you get the information presented next, at least, plus any other information that you feel is relevant as well. •
Sample Interview Questions for Hop Hopkins Tell me a bit about Hopkins & Associates and how you see the company in its marketplace.
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What do you hope to get out of this project short term and long term? What do you think would be a reasonable timeframe for this effort? What do you think are the major risks with this project? Sample Interview Questions for Rocky Ridge What is involved in reservoir engineering modeling? Do you have time to serve to help with the modeling? How long will it take to build a generalized reservoir software model?
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Sample Interview Questions for Ken Summers What is your vision for the system? Why do you want to bring in someone from outside to lead the development work? How do you expect to forecast the price of oil and gas in the future?
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Sample Interview Questions for Jerry Bye How do you see this system returning value to H&A? What kind of staffing for this project can H&A provide? What systems development tools do you support? What platforms do you think that this system should run on?
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Sample Interview Questions for Mary Nunn How is your staff organized and where are they located? How would you assess the computing capabilities of the engineers? What additional requirements would you need to support this new system?
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Now, the following are facts and information about the persons to be interviewed. Each role player is given the fact sheet that pertains to his/her character. The fact sheets help to establish how each player is to play each part and include attitudes and facts that are to come out in the interviews. Only the individual playing each part should be given the fact sheet for that part.
About: Hop Hopkins Assorted Facts H&A generated $382 million in revenues last year. Hop’s mother is descended from an original western Pennsylvania oil family and views H&A as important because it bears the Hopkins name, but really as “small potatoes”. Hop is seldom at the office, which is huge with red silk-covered walls and Louis XIV furniture covered with gold-leaf, reminding one of certain houses of ill repute in New Orleans. •
Primary Work Responsibilities Hop is the President & Chairman of the Board of the holding company that owns all of the Hopkins Companies. “I want the Hopkins Companies to be there for our employees so that they can raise their families and be happy doing it.”
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An Experiential Case Study in IT Project Management Planning 13
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These companies are privately owned by his family, mostly by his mother. “Mom is a hard task-master. I am glad she lives in western Pennsylvania and we are not!” Hop is a curious mixture of figurehead for the firm and final authority for all decision-making in this collection of companies. “I like to let the companies operate for themselves. As long as they get their work done and make profits, I don’t like to get involved too much.” Hop almost always defers to the presidents of the various Hopkins Companies, especially to Larry Jordan. “Let’s see what Larry Jordan has to say about that before we make a final decision.” Public Persona & Attitudes Toward Work First and foremost, Hop is a flamboyant salesman with a big smile and a glad hand. Hop always introduces himself and shakes hands with the individuals that he encounters and projects his importance right away. “Hi! I’m Hop Hopkins. Good to meet you! You know, I bought a Lear Jet the other day and it is really nifty, and super convenient!” Hop is “old money” and very polished socially. “I’ve always loved theater and really enjoy Broadway plays. I studied DANCE in high school and college and danced in a Jazz Dance Troup when I was a kid!” He believes in self-promotion and that, by promoting himself, he is promoting H&A. “I was in the Middle East last week and Venezuela the week before. One of those Saudi princes gave me his new Mercedes limo for only $25,000. He was tired of it. The thing is bullet-proof! It should be here by the end of the week.” He pays a great deal of attention to his appearance, having only the most exquisite personal grooming and elegantly tailored clothing, even for casual wear. “Back when I dressed in business suits all the time, the TV stations never gave me a moments notice. Then I started wearing bright yellow golf slacks and flashy sport shirts and now I’m on Houston TV as an oil industry expert almost every week!” Hop is not concerned with company problems much. He has Jordan to handle those. He is a cheerleader for the firm and works to be optimistic. “We only hire the best people and we give them the best working environment and tools. Hopkins cares about its customers and its employees like family.” Personal Agendas All Hop really wants to do is play golf with a group of oil and entertainment industry tycoons. “Every year we sponsor a tent at the Doug Sanders Pro-Am Golf Tournament in Houston and hang out with Doug, and Willie and Waylon, and the boys!” Hop is insecure and believes he can never really live up to the legacy of his father. “I stood there watching them zip him up the body bag after he died and wondered what am I going to do now?” He is a hedonist who is always looking for a new girlfriend. “Hey fellas, let’s go to the club. Or let’s send the Lear Jet over to Denver to get ‘the girls’ and bring them back here to the ranch.”
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Hop has always had an interest in Rocky Ridge, but she has always wanted to keep work and pleasure separated. “Boy that Rocky is one hell of a woman.”
About: Rocky Ridge Assorted Facts Rocky’s group is independent from the rest of the firm. There are no other geologists or geophysicists in the Hopkins Companies outside of her group. She does independent studies for clients as well as projects for various Hopkins subsidiaries. Last year she engaged in mapping and analyzing the subsurface structures in over 80 oil fields in Texas and Oklahoma. Her most famous (and ultimately the most successful) job was an evaluation of the oil-bearing formations beneath Lake Maracaibo in Venezuela two years ago. People are still talking about that one! • •
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Primary Work Responsibilities Dr. Roxanne (Rocky) Ridge is a PhD in Geophysical Sciences from Oklahoma State with six years of experience in the petroleum industry, most of it at H&A. “Sometimes, I really love this business. It is so exciting when a well comes in!” Rocky runs a team of some 20 geophysicists, plus support personnel, that analyzes client seismic data to determine the most likely spots for successful drilling. “We use tools like a ‘black oil simulator’ that helps us to understand how petroleum will flow to the borehole and up to the wellhead at the surface. That tells us the rate of flow and how long a well is likely to produce.” Rocky is renowned for her ability to find oil or gas deposits that have been previously overlooked in older, supposedly depleted fields. “This three dimensional modeling has made a huge difference in my ability to recognize reserves in old seismic data. Hop & Larry have equipped a state-of-the art geophysics lab for us here in Tulsa, complete with the latest computers and modeling software.” Public Persona & Attitudes Toward Work Rocky is aloof and has a superiority complex about her ability to use new technology to identify reservoirs and find petroleum deposits. “This work involves a highly sophisticated understanding of geology and it is hard to explain in simple terms. We use complicated models to analyze geophysical data in three dimensions. I am afraid that it is too hard for you to understand, really. It takes years of training and experience to appreciate what we are doing here.” Rocky is an attractive woman in a position of power right in the middle of the “old boys” network that runs the oil business in Texas and Oklahoma. Most of the time she is overly serious and too severe, but she is not above flirting occasionally to gain influence. “Come on, Eddie [Dolan], you know we just have to drill in the Austin Chalk one more time. I showed you what we think is over there in the area around the Wayside-One well. Come on, Eddie!”
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An Experiential Case Study in IT Project Management Planning 15
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Personal Agendas Rocky was fired from her previous job and does not want to explain anything about her work to anyone that she does not control personally. She avoids giving out any information unnecessarily under the pretext that it is all too hard to understand without a PhD or years of experience in the geophysical field. “Like I told you before, this is just too complicated to explain without a lot of training in this field. Just let us take care of it. I’ll loan you one of my people to do the analytical work and you can do the programming part of it.” Rocky knows that Hop is interested in her, and she is flattered by his interest. But she is happily married to a veterinarian who was raised in College Station and she keeps Hop at a distance. “Hop is a great guy to work for. He has really supported our department with the latest gear and he has let us hire some really good people; and I really appreciated that.” Rocky is in her early thirties. She would actually like to retire from the oil business, maybe teach college, and begin a family, but she is just making too much money. “Sometimes, I think that if the pressure doesn’t let up, my husband, Bubba, and I will just drop out and go live on a beach somewhere and make babies for a few years!”
About: Ken Summers Assorted Facts HCSI has a budget of $11 million. The computer company as a separate unit makes huge profits, with profit margins regularly 65% or higher. But this is actually a “paper profit” because HCSI charges very high prices to H&A absorbing a lot of H&A’s profits. Larry believes this is a good way to deflect customer complaints that Hopkins charges too much for services. “It’s those ‘gal darned’ computer costs!” •
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Primary Work Responsibilities Ken is a young reservoir engineer, a protégé of Larry Jordan. Ken is a ‘super user’ type. “I really do not know much about computers, or systems development, but Hop wants me to make sure that the HCSI and its products meet the needs of H&A’s engineering staff. And that is my role!” Ken is in charge of the computer company’s daily operations and its systems development activities. In particular, he is intending to personally supervise the development of the new PREsys software development project. “The future of reservoir engineering and economics depends upon having software that can automate projections and make the individual engineer more efficient. Getting this right is VERY important!” Ken is responsible for hiring his friend, David Gardner, as a consultant to make sure that the PREsys project turns out all right. “David is a petroleum engineer AND a programmer! He was in computer systems support for the reservoir engineering group at Shell Oil in Dallas, and he really understands what we need here.”
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Public Persona & Attitudes Toward Work Ken believes that he is the ‘man of the hour,’ a sort of medieval warrior battling to provide a critical software tool for his engineering colleagues to use in their work. “A good manager can manage anything.” Ken is a kind, friendly, hardworking, and capable young man. He is barely thirty and possesses tremendous energy and dedication to work. “I was here late one Saturday afternoon last year. I was the only guy here and a FedEx delivery came. It was an envelope for Hop. I signed for it and left it on the corner of my desk overnight when I went home. Next morning, Hop showed me the contents of the envelope. It was a million dollar royalty check from one of his oil wells!” Ken was an All American golfer in college and he loves to use his golfing skills to build friendships at work. Hop adores him for his golfing. “Some weeks, I cannot get any work done because Hop keeps calling me to go golfing with him and some of our clients, or potential clients, and I have to go do it!” Personal Agendas In his heart, Ken only trusts engineers. He believes that other people, no matter how good, cannot measure up to the standards of the engineering profession. “The Professional Engineer (PE) designation is something that only the very best can aspire to. Engineering professionalism means that engineers are the best people to work with.” Ken wants to get out of the computer company as soon as possible and get back to the engineering work that he loves best. “I know the people in this company and I know what they need from this software. So Hop and Larry trust me to get the computer company working smoothly. But I certainly will be glad when this job is finally done.” More than anything, Ken wants to justify Larry’s trust in him. He gives ‘lip service’ to Hop, but he knows with certainty that Larry is THE man at Hopkins & Associates. “I think that loyalty is the most important trait that an employee can possess. Larry is loyal to Hop and to the memory of Hop’s father. Without Larry, this company would have some serious difficulties.” Ken really does not respect Hop. He thinks Hop is an overgrown adolescent. “When we have the company Christmas & New Years parties, I like to stay close to my wife and kids. Then we go home before Hop starts getting wild.”
About: Jerry Bye Assorted Facts Hopkins Computer Services, Inc., actually historically has done very little software development. Most of the software packages supported at HCSI are purchased from outside vendors or are applications developed and used independently by H&A engineers. HCSI is primarily a Data Center that runs and maintains ‘canned software’ packages to support the Hopkins businesses. Jerry’s group is staffed for the software maintenance function. Every one of them wants to get out of routine maintenance and be on the development team for PREsys. Also, after the PREsys project is over, Jerry sees this new system as undoubtedly Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
An Experiential Case Study in IT Project Management Planning 17
elevating the stature of his group (and of him) in the opinions of senior K&A managers. He is very pleased by this prospect. •
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Primary Work Responsibilities Gerald Bye runs the systems development function in the computer company. He is a rather dull, methodical man in his fifties. “I just want to do my job as well as I can and spend my evenings with my kids. I have two boys in their early teens. You know, little league and all that.” Jerry is experienced in the oil industry and he is well-grounded as a software development manager. He has both a solid technical education and extensive project experience. “I am confident that we can develop this system in-house if Hop wants to, but I also understand that the reasoning behind getting a consultant with the engineering expertise to do the job.” Public Persona & Attitudes Toward Work Jerry is a classic fire-fighter. He is poor at anticipating what might go wrong and planning for contingencies. He is very good at managing emergencies as they happen. He drives his employees crazy more often than not. “Can you guys stay late tonight for a couple of hours? We had an outage on the simulator application today that affected the Tulsa office and we need to run some tests and do some outstanding maintenance. We need to have this problem fixed for Tulsa by tomorrow.” Jerry is convinced that he is underpaid. He has been reading ComputerWorld and has seen the latest salary statistics for the IT industry. His salary is $9,000 below the numbers quoted there and he is unhappy about it. “I wish Hop would do a study of the salaries here in the computer company and determine if we are keeping up with the market. If we fall too far behind, we will start to loose some of our technical people! And the best ones will be the first to go!” Personal Agendas Jerry is frustrated by the arrogance of the engineers, with the engineers subtly intimating that his performance would be better if he were an engineer. “They don’t think anyone can do a good job if he is not an engineer. It is a cultural thing; they just feel it in their bones. I just want to ‘keep my head down’ and ride this job until retirement.” Jerry complains that his staff is not being allowed to tackle the PREsys project on its own, but secretly, he is delighted to have some one else assume the risk of this project. “I am looking forward to working with David and his programming team. We will certainly stand ready to give them any help that we can during this critical project.” Jerry discounts the idea that the profits of HCSI are a bookkeeping gimmick and he believes deeply that the staff at HCSI is not really given sufficient credit (or rewards) for the tremendous profit contribution that the computer company makes toward the Hopkins Companies bottom line. “These engineers just don’t understand how hard it is to keep all of these systems working. We make their lives a lot easier with our technology!”
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18 Davis
About: Mary Nunn Assorted Facts Mary’s group handles about 35 calls per day during a typical workweek, with peaks usually happening on Mondays. The K&A engineers often work on weekends and problems accumulate over the weekends for Monday resolution. On Mondays, there are often fifty or sixty calls to be handled. Most calls deal with routine processing. For example, a request to expedite processing for a particular set of analyses or to find a set of historical cases and load them to the system are common. Some calls are reports of outages or processing errors that need further technical assistance and these must be referred to the proper support staff for resolution. New systems packages tend to cause a lot of commotion. But once the staffs in the engineering offices are trained, those kinds of questions are minimal. •
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Primary Work Responsibilities Mary is in charge of technical and user support for the computer company. Her group of about ten support staff operates a help desk, mostly answering ‘how to’ questions about software packages or logging system problems reported by users for later resolution by the programming staff. “We are the first line of defense, so to speak. The new PREsys software will need to be supported by us and we are very interested in making it user friendly and intuitive for the engineers to use!” As a divorced mother of two grown children, Mary is, in effect, married to Hopkins Computer Systems, Inc. “Some days, I arrive here at the office at 5:00 AM and I go around to the desks of my staff and leave notes for them about ideas that I have had the night before. I think they find it stimulating to come in and find a note from me!” The other function that is Mary’s responsibility is training for users of the applications packages that reside on the Hopkins servers. “I have a lot of expertise as a trainer. We are going to need PREsys training manuals, user guides, and presentation materials to use in rolling out this system for the engineers to use once the development is completed. We will have to work with the project team to assure that these items are available in a timely fashion.” Public Persona & Attitudes Toward Work Mary is defensive about not having a college education. “I worked for Jack Crocket in engineering at Hopkins in Tulsa for 18 years before coming to the computer company here in Houston. I was his number one assistant and I really learned a lot about working with engineers there! Sometimes good work experience is more valuable than a lot of impractical book-learning!” Mary would often rather stay in her office than head home each evening. There is plenty of work to do and she thrives on getting things done. “There are many of us who work late here. The freeways are crowded during the rush hour so it makes no sense really to leave until rush hour is over. We get a lot of work done after hours when the phones stop ringing! Of course, Hop provides an open bar
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An Experiential Case Study in IT Project Management Planning 19
for employees after 5:00 PM every day. So, everyone has a drink before heading home anyway.” •
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Personal Agendas Mary is secretly in love with Jack Crocket and was crushed when Hop brought in Tommy Smith to be VP for Reservoir Engineering instead of promoting Jack to the job. “I think Jack Crocket is the best engineer in the company and the finest man I ever knew. If you need help with the specifications for PREsys, I suggest you talk to Jack. You cannot do any better than working with Jack on this. I can assure you!” Mary hungers for recognition and reward for her dedication and hard work for the firm. “I think we should do something special for the people who work the PREsys project to recognize their contributions as team members on this critical project.”
EXPERIENTIAL TEACHING STRATEGIES
This is designed as an ‘experiential case’ (as opposed to an ‘expository’ one). It is for use in a graduate course dealing with Information Technology Project Management. This case fits in the course curriculum after the students have been exposed to project planning and cost estimating procedures as well as the importance of managing the expectations of project stakeholders and the complexities of project staffing. The main deliverable for this assignment is a project plan that fits the circumstances of the case, including the work-breakdown-schedule, work packages, task deliverables, staffing requirements, and cost estimates. This assignment can be done individually or in teams. At the completion of the case, it is often interesting to conduct a “structured walkthrough” of one of the project plans. Have one student (or team) project his or her project plans on a screen and present their ideas point by point, using this one case solution as a springboard and having the rest of the class discuss additions to or variations in the plan as appropriate. This is not a case in petroleum engineering. It is a case that deals with planning information technology projects. The setting is the Oil & Gas Industry and the need to develop a software package to support petroleum engineers in valuing petroleum reserves. Software project developers often face situations in which they are to develop systems for users in areas that are foreign to them when the project begins. They learn the details of the user’s business and needs as the project develops. This case is crafted to provide enough understanding of the work and needs of petroleum engineers so that the resourceful student can develop a reasonable set of plans for this project, just as the resourceful project manager must do in the “real world” of software development. This is an experiential case because it includes role playing as an integral part of the learning process. The concept is to have several students play key figures in the case during a series of interviews conducted by the other students who also role play as interviewers who gather new information and confirm old information gathered elsewhere (e.g., in the case discussions or from websites). At the discretion of the instructor, each student in the class should be on one or more interview teams. Those students playing key roles at the Hopkins Companies (Hop Hopkins, Rocky Ridge, Ken Summers, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
20 Davis
Jerry Bye, and Mary Nunn) have a set of materials (including secret personal goals and agendas) that are not known to the rest of the class (the interviewers). These materials are intended to inform both their content responses and their behaviors during the interviewing. Obviously, the quality of this case experience depends in large part on who among the students in a class might be chosen to play these key roles. The instructor should choose carefully in assigning these roles, generally choosing the more outgoing and academically stronger students who can memorize and deliver the facts necessary and perform the acting roles needed. It is generally a lot of fun. The interviewers are required to meet in teams and develop questions for the interviewees. Those who play one of the key roles for one interview generally join an interviewing team for one of the other roles. Interview teams elect a leader who is responsible for creating the interview agenda. Each member of the class must be sure to document the information that comes out of each interview carefully. The role playing in this case involves five interviews, and therefore, fills a lot of classroom time. With students playing key roles, there is always the chance that an interview will fall flat or a student will miss class, or whatever. This could be a major problem, and the instructor will want to guard against potential problems. There is a way to do this. It should be noted that Larry Jordan is not among those included in the interviewing process, even though he should be. The basic story is that Larry Jordan (who is the real power behind Hop’s throne) is out of town, in the Middle East working on a deal. On the night of Hop’s interview, the instructor comes to class in cowboy (or cowgirl) clothes, at least a big hat, and plays the role of Larry Jordan who has returned unexpectedly from overseas travels and would like to sit in on the meeting. (If the instructor is female, then the full name is “Larry Ann Jordan” and “Daddy wanted a boy!”) This ploy is a surprise to the class, loosens up the role players, and allows the instructor to inject new information into the interview and to control the first interview while the students figure out how it will work. Having established this expectation, the instructor can assume the identity of Larry Jordan at any time throughout the subsequent interviews if there are problems.
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The Algos Center 21
Chapter II
The Algos Center:
Information Systems in a Small Non-Profit Organization Susan J. Chinn, University of Southern Maine, USA Charlotte A. Pryor, University of Southern Maine, USA John J. Voyer, University of Southern Maine, USA
EXECUTIVE SUMMARY
Two systems faculty from a university was contracted to perform an analysis of information systems at the Algos Center, a small non-profit charitable organization which provides support for children and their families facing losses. The Center specifically requested help in integrating its fundraising and accounting software packages or exploring alternative software solutions. It also needed to generate reports required by the Board of Directors and United Way. Finally, the Center requested help in designing a family database to capture and track statistics about the families receiving services. As the team analyzed the Center, they discovered many underlying issues that would form part of their recommendations to the staff. This case makes two contributions. First, it reveals many problems facing small non-profit organizations, which primarily expend their resources on mission-critical activities, and allows readers to supply possible courses of action. Second, it provides an opportunity to evaluate how a consulting experience was handled and to make recommendations to ensure successful project implementation. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
22 Chinn, Pryor, & Voyer
ORGANIZATIONAL BACKGROUND
The Algos Center is a non-profit organization based on the East Coast. (Because we are using a pseudonym to describe the organization, the Web site address cannot be revealed.) It was founded in the 1990s by an individual who helped a young relative deal with her aunt’s death; he saw a need for a Center that would help and support grieving children. The Center’s mission is just that: to aid grieving children, teens, and their families through outreach, education, and peer support. The model for this organization is the Dougy Center, which was the first center in the United States to provide peer-based bereavement support groups for grieving children (Chappell, 2001; http://www.dougy.org/ about.html). In support of the mission, the Center sponsors many program activities, but bereavement peer support is the primary service provided (Rubin & Witztum, 2000; Stroebe, Strobebe, & Hansson, 2002). Approximately 170 children, teens, and adults attend these support groups every week. Trained volunteers conduct the groups. The volunteers seek to provide a safe environment for participants to express their feelings; they do not attempt to be counselors or therapists. A professional consultant or staff member also attends these meetings. All participants are welcome, even if they cannot afford the suggested monthly pledge donation. Groups are divided into age categories: three to five, six to eight, seven to 12, teens, and young adults (up to age 30). Adult family members participate in support groups as well. A related program, the Life Care Program (LCP), offers support groups for children and teens dealing with family members facing terminal or life-threatening illnesses. This program was started in the mid-1990s in collaboration with several hospices, hospitals, and nursing and cancer associations. While the bereavement peer support program is ongoing, LCP is offered in six-week sessions. Two other major programs are offered. The Diversity Peer Support Program provides peer support in association with Kennedy Elementary School, which has a very diverse student body. Many of the students come from war-torn backgrounds and have lost family members. The second program, Community Extensions, is aimed at helping schoolchildren who are faced with a loss, and at assisting adult organizations and businesses dealing with grief issues. Other Center services include presentations to organizations by trained volunteers, and sponsorship of an annual bereavement conference. In addition, the Center offers referrals to mental health professionals, gives telephone support, and sends brochures and other written materials to callers. The Center is governed by a 25-member volunteer board of directors. The executive director, appointed by the board, manages three full-time staff, six part-time staff members, and five unpaid interns who are university students. More than 100 volunteers assist with the events and support groups. Because there are so few full- and part-time staff, the organizational structure is very flat and informal; most of the staff has direct access to the executive director (see Appendix A for the organization chart). The Center is a public, non-profit charity (a 501 (c) (3) organization) that relies on contributions from individuals, grants from foundations, and United Way allocations, as well as corporate sponsorships and special fundraising events, to support its operating budget. The Center sponsors many activities throughout the year including a Pet Walk, Fun Run, golf tournament, and a gala event featuring dinner and an auction. Appendix B shows its Statement of Income, Expenses and Changes in Net Assets for its most recent fiscal year. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
The Algos Center 23
Non-profit organizations such as this Center rely to a large extent on individual donations; successful fundraising necessitates tracking the funds that are received from each donor (Klein, 2004). Information is also needed to evaluate the effectiveness of each fundraising event. Non-profits often use specialized fundraising software for this purpose (Davis, 2002). In addition, the organization’s accounting software must be set up so that donated funds or grants that are restricted in purpose can be carefully monitored to ensure that the funds are used only for their designated intentions (Gross, Larkin, & McCarthy, 2003). The Board of Directors typically wants expense information organized in the same way as the budget is prepared, generally by expense category such as salaries and rent, to ensure that the organization’s expenses do not exceed the board’s authorizations (Trussel, Greenlee, Brady, Colson, Goldband, & Morris, 2002). In addition, funding organizations such as United Way and government agencies, such as the IRS, require that expenses be reported by program type. Many non-profits thus have greater record-keeping requirements than do for-profit enterprises of comparable size (Cutt, Bragg, Balfour, Murray, & Tassey, 1996).
SETTING THE STAGE
Janet Tucker and Caryn Powell, two professors at a local university, both had a strong interest in non-profit organizations. Dr. Tucker was a professor of MIS with an emphasis in systems analysis, while Dr. Powell was an accounting professor with an emphasis in accounting information systems. They put out a general offer to conduct an information system needs assessment for any local non-profit organization in support of the university’s mission of community involvement. The assessment could include problem or opportunity identification, project selection, a feasibility study, identification of project risks, and development of recommended courses of action (Block, 2000; Coates, 1997). The Algos Center responded quickly to the solicitation, and, after a brief phone call with the executive director, a preliminary meeting was scheduled with the key organization members: Elizabeth Medford, Executive Director; Vicki Hume, Development Director; and Dawn Lopez, Operations Manager. Tucker and Powell put together an outline for their first meeting. They wanted to get a sense of what information systems issues the Center was facing, and to set the goals and boundaries for what they were offering to do. They wanted to clarify that they were not proposing to design and implement any new information systems, but rather to evaluate how information was being collected, stored, and reported, and to develop recommendations to improve the systems (Burt & Taylor, 2000). They wanted to set up a schedule to collect data and they also wanted to make sure that the board of directors would approve of their involvement (Cornforth, 2003). At the initial meeting, Elizabeth Medford, Vicki Hume, and Dawn Lopez explained some of the major issues they had been having with their information systems. The first issue concerned the software they were using for fundraising, Paradigm (http:// www.mip.com/software/fundraising/paradigm.htm), and their accounting software, QuickBooks (http://quickbooks.intuit.com/). Vicki said she was having a hard time getting the reports she needed out of Paradigm. Both Vicki and Elizabeth acknowledged that there were inconsistencies in how data (notably expense codes) were being entered Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
24 Chinn, Pryor, & Voyer
in each program. Dawn believed that they were not taking full advantage of Paradigm’s features. They liked QuickBooks, but they wanted to see if there were features in it that they could be using better, or if there was a way for the two packages to work together. This is a concern that many non-profits have when they attempt to use off-the-shelf software (Jones, 2000). Dawn noted that they were currently entering duplicate data in both systems. The second issue concerned reports that the Center was obligated to produce for the board of directors and United Way. As is true of many non-profits, the Center received revenue not only from hundreds of individual and corporate donations, but also from various funding sources, such as United Way. These fund providers need detailed information about how the money is spent (Bradley, Jansen, & Silverman, 2003). Nonprofits also require accurate financial and program data in order to plan for future growth — an especially critical need for organizations like the Center with limited technological expertise (Smith, 2002). The third issue involved a database project that Dawn was starting. She wanted to design a family database that would allow the Center to track bereavement meetings and to generate statistics. The database would be useful to the Center, and it would also facilitate reporting to United Way. For example, United Way required demographic data that the Center staff had had trouble compiling other than manually (Cutt et al., 1996). Elizabeth indicated that the Center was growing, and there was a need to prepare for the growth they were expecting. Tucker and Powell were offering their services pro bono, but they did ask Elizabeth if they should be mindful of any financial constraints when developing recommendations for purchasing software or equipment. Elizabeth said not to worry about it. Elizabeth also asked for confidentiality when viewing any information about their clients. However, she and the rest of the staff agreed to be very open about sharing documents and other agency information with the university team. After their meeting, Tucker and Powell immediately drafted a letter to Elizabeth, which in essence was the consulting contract (Block, 2000). The agreement was to review their software, reports, and database design, and to evaluate alternative approaches to the integration and growth issues that had been discussed. The letter stated that the Center’s current environment would be assessed through interviews, document collection and review, and an analysis of their computer systems. The project, starting in July, was to terminate in the fall with a formal report of recommendations.
CASE DESCRIPTION Gathering Fundraising & Accounting Software Requirements
Tucker and Powell decided to meet first with Dawn Lopez, Operations Manager, to get an overview of how Paradigm (the fundraising software) and QuickBooks (the accounting software) were being used. Dawn was glad to show the team what she did. The team immediately got the impression that Dawn, as an information technology manager, worked hard to keep the Center’s operations running, even though she worked part-time while pursuing a degree at a two-year technical school. Administrative Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
The Algos Center 25
Assistant Alicia Austin recorded donations in Paradigm, and then, Dawn recorded the donated amounts in QuickBooks. Dawn stated that she believed Paradigm could be used to record information about the volunteers that the Center wanted but was not currently collecting. She also showed the team how she produced reports in QuickBooks. Dawn provided the team with a document describing deposit and data entry procedures. The team noticed that the names used for the same donation types entered in Paradigm and in QuickBooks were not consistent. For example, QuickBooks used “publications” and Paradigm used “booklets” to describe the same thing. The team observed Dawn as she demonstrated how deposits were entered into QuickBooks. At month’s end, she manually compared the deposit report generated in QuickBooks with the list of donations entered in a Paradigm report. They usually did not match, and Dawn had to discover where the discrepancies were. In the case of one particular discrepancy, it was not easy for her to show the team how she had resolved it; she had simply attached a sticky note to a printed report saying that the discrepancy had been resolved. It seemed to the team that there was much less duplication of data in the fundraising and accounting programs than had originally appeared to be the case. The total dollar amount of a group of donations deposited at one time was entered as a single transaction in QuickBooks; the individual donations and data relating to each donor were recorded only in Paradigm. In another instance, the team observed Dawn entering a contribution that was designated to cover expenses as a negative expense, instead of as contribution revenue that would offset the relevant expense. Dawn admitted that although she was responsible for entering data into QuickBooks, she had no formal training in accounting. This is a common problem for non-profits with limited staff; they may not have been trained to enter data properly (Barrett & Greene, 2001). The team and Dawn also discovered that Paradigm only supported exporting data to a limited number of programs such as dBase, old versions of Excel, and a comma delimited ASCII format. There were no export options to QuickBooks. Dawn had not been successful trying to export data. After meeting with Dawn, Tucker and Powell believed that meetings with both Vicki Hume and Elizabeth Medford were needed. They wanted to know how Vicki was using Paradigm, what reports she was producing, and what information she needed that she was not able to produce. From Elizabeth, they wanted to learn more about United Way reporting needs. The team met with Vicki Hume and inquired about the donation category and expense code discrepancies between QuickBooks and Paradigm. Vicki replied that the staff had simply not gotten together to standardize the codes, and furthermore, that some codes were “deliberately” entered differently in the two software packages. She said she would prefer a solution where the Center could use QuickBooks for all their work, but she realized that fundraising software would be needed to handle event tracking, a feature usually absent from a general purpose software application. As development director, Vicki was a heavy user of Paradigm. She generated two important reports: one segmented donors into categories to use in generating mailing lists; the other was an analysis of contributions, which she used to track the progress of fundraising campaigns and to analyze donation trends (see Appendix C for a sample report). In order to produce reports, it was necessary to generate queries; some reports also required subqueries. For many reports, Vicki kept getting an error message that the subquery could not return more than one row. The team asked Vicki to keep track of specific querying problems over the next few weeks. Vicki agreed with Dawn that there Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
26 Chinn, Pryor, & Voyer
were many functions in Paradigm that were not being used, and that it was hard to figure out which fields would print out. She also had to resort to calculating many aggregate functions (e.g., counts, averages) manually. When the team asked if she consulted the user’s manual to help solve some of these problems, she remarked that the user’s manual was missing. Concerning vendor support, Vicki said she believed they paid a flat rate for a specific number of calls per year, and to ask Dawn for details. During a subsequent meeting with Dawn, Vicki presented the team with a Paradigm query she had tried to run without success. Vicki also said that she wanted an audit trail of who made each update to the data in Paradigm to see who might be to “blame” for poor data entry. Later, back at the university, the team re-ran the query using test data on their office computer and found that it worked perfectly. During their next visit, they examined some of Paradigm’s features with Dawn and found an error log tool. The error log displayed error codes and SQL statements that appeared to fail because of data entry problems (e.g., attempts to put two values into a single-valued field). Dawn learned that she could contact the vendor to acquire SQL scripts that could be run to “kick out” problem data. Dawn had never previously looked at the error log. Tucker and Powell asked Dawn for more information about Paradigm documentation and user training. First, the team inquired about the missing Paradigm manual; Dawn said it was available, and that Vicki would often say that something was missing when, in fact, it was not. Dawn loaned the manual to the team and the CD-ROM updates. The CD had updated pages that were supposed to be printed out and inserted into the manual, but although the pages had been printed out, Dawn lacked the time to insert the pages. It was later discovered that the CD actually had the complete manual on it, but that several computers (including Vicki’s) lacked CD-ROM drives. The team then asked about the Paradigm training Dawn had received. Training is often a major component in successful technology adoption, but can often be a shortchanged component in a resourceconstrained non-profit organization (Barrett & Greene, 2001; Hecht & Ramsey, 2002; Light, 2002). Staff personnel need to be cross-trained in the event that one staff member should leave. The staff also needs ongoing training to take advantage of upgrades in software, hardware, networking, etc. (Smith, Bucklin & Associates, Inc., 2000). Both Dawn and Alicia had taken a training course. The training emphasized building queries that served as the basis for generating reports. Dawn told the team that she could call the vendor for unlimited support and that all of the updates came bundled with the support contract.
Center Reporting Requirements
Elizabeth discussed reports requested by the board of directors with the team. To produce one of the reports required by the board, the treasurer had to export information from two QuickBooks reports into an Excel spreadsheet; from there, he had to manually prepare the report in the desired format. Elizabeth hoped it would be possible to produce this report more easily, saving the treasurer much effort. Elizabeth also explained that the board needed to have monthly reports that listed expenses by functional classification (e.g., for salaries, rent, depreciation, and utilities) in the same format in which the budget was prepared (see Appendix D for a sample report). This format would improve the directors’ ability to compare expenses with budget authorizations. United Way required not only expenses by functional classification, but also wanted management expenses Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
The Algos Center 27
to be distinguished from program expenses (see Appendix E for a sample United Way report). The Center wanted to set up the accounts in QuickBooks so that the data could be retrieved more easily by both functional classification and program. In addition, Elizabeth explained that increasing reliance on grants meant that in the near future, the Center would need to start tracking the use of restricted purpose funds across fiscal years. There was no one on the staff who knew how to do this in QuickBooks.
The Family Database Project
Elizabeth explained that the Center needed a database because United Way required a lot of demographic information about the Center’s clients, such as age, ethnicity, etc. She provided the team with the Center’s intake form that clients fill out and a copy of the United Way’s information requirements. Elizabeth said there were two important reports that would be “nice to have.” First, she wanted a report that provided the reasons why families sought out the Center; this report would enable the staff to analyze who did or did not use the Center and why. The second was a report that would show the growth in demand for services over the years. Dawn provided the team with a description of the types of information they wanted from the database. Some of the desired information would require data the Center did not currently collect. She also provided a copy of her plan to set up the database in Microsoft Access (http://www.microsoft.com) including a list of tables and attributes (see Appendix F for her data model). Tucker and Powell analyzed the forms and compared them to both Elizabeth’s reporting requests and to the requirements Dawn had provided for future report generation. The Center’s intake form lacked some of the fields (e.g., ethnicity) for information that Elizabeth needed for United Way reporting. In addition, some of the information, such as income that United Way requested was included on the intake form, but was not being filled in. The team spent additional time seeking clarification from Dawn about the data the Center wanted to track, as well as assessing her database design skills and her preliminary data model. Dawn said she had taken an online course in Microsoft Access and had gotten an A in it; however, the concept of foreign keys was new to her. As the team worked with Dawn on redesigning the data model, they discovered that the Center also wanted to use the family database to track attendance at various group sessions; however, facilitators were not taking attendance at group meetings. The Center also wanted to track phone calls using the family database; thus, Dawn had included phone calls in her original data model. The Center wanted every cold call as well as calls from participating (current) clients to be included in the database. There was no policy about how long the Center planned to keep the data. Pamela Russell, Family Coordinator, kept a manual phone log, so the team decided that talking with her would be in order (see Tribunella, Warner, & Smith, 2002, for a rigorous discussion of database design). The team then paid a visit to Pamela to look at the phone log. They discovered that Pamela kept a manual log of all calls, but that she was instructed to check off only one action (outcome) per call (see Appendix G for the phone log form). For example, if she mailed program information to a caller and provided an outside referral, she could only select one of those outcomes. At the end of every month, she manually tallied up the different actions and then summed those totals for the reporting year (Tribunella et al., 2002, discuss more systematic data gathering approaches). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
28 Chinn, Pryor, & Voyer
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
Given the number of technology issues they found, Tucker and Powell were impressed with the way the Center’s staff managed to keep their operations running as smoothly as they did. They were further impressed when they saw the hardware the Center was using. The file server was a donated PC that was rapidly running out of disk space. During the team’s visits, Dawn was able to acquire another PC that she hooked up to the first one as a cluster. Most of the computer equipment in the Center had been donated; in fact, one of the team members wound up donating her five-year-old computer, and it was gratefully accepted. They were particularly impressed with the staff, especially Dawn. Not only was Dawn going to school and working at the Center part-time, she was also heavily involved (as were the rest of the staff) in fundraising activities. She even served as a bereavement support facilitator. As Tucker and Powell studied the Center, they kept thinking about what they would put into their final report of recommendations, and what kinds of reactions they would receive. The Center, as an organization with a small staff and limited resources, was acting as an “adopter” of technology; that is, the type of organization that is simply operating in a survival mode and “making do” with existing technology (Fried, 1995). A major challenge facing many consultants working with non-profits is that they encounter a culture where non-profits shortchange themselves on technological resources, so that they can devote most of their resources to the primary mission (McCarthy, 2003). Tucker and Powell also knew that some of the Center’s staff was aware that technology might be better harnessed to support their mission activities, but the staff did not have a plan in place for realizing this goal. Some of those technology goals would mean that the Center would experience radical changes in its business processes (Amis, Slack, & Hinings, 2004). Was the Center ready for change? The team also reflected on how they might evaluate their own efforts as consultants and as change agents (Bergholz, 1999). They had tried to function in the role of facilitator, which involved empowering clients to “own” changes in technology use and to mobilize and support client initiatives (Winston, 1999); however, they wondered if instead their role had been more of a traditional one or as an advocator. In the traditional role, consultants functioning as change agents focus on the implementation of technology, while advocators create a business vision and pro-actively function as champions for change (Winston, 1999). Was their position as facilitator a good match for a client in the adoptive mode? Had they been effective consultants to the Algos Center to date? How could they be useful to the Center in the future?
REFERENCES
Amis, J., Slack, T., & Hinings, C. R. (2004). The pace, sequence, and linearity of radical change. Academy of Management Journal, 47(1), 15-39. Barrett, K., & Greene, R. (2001). Powering up: How public managers can take control of information technology. Washington, DC: CQ Press. Bergholz, H. (1999). Not-for-profit consulting. Journal of Management Consulting, 10(3), 13-16. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
The Algos Center 29
Block, P. (2000). Flawless consulting. San Francisco: Jossey-Bass. Bradley, B., Jansen, P., & Silverman, L. (2003). The nonprofit sector’s $100 billion opportunity. Harvard Business Review, 81(5), 3-11. Burt, E., & Taylor, J. A. (2000). Information and communication technologies: Reshaping voluntary organizations? Nonprofit Management and Leadership, 11(2), 131-143. Chappell, B. J. (2001). My journey to the Dougy Center. Amityville, NY: US Baywood Publishing. Coates, N. (1997). A model for consulting to help effect change in organizations. Nonprofit Management and Leadership, 8(2), 157-169. Cornforth, C. (ed.). (2003). The governance of public and non-profit organizations: What do boards do? London: Routledge. Cutt, J., Bragg, D., Balfour, K., Murray, V., & Tassie, W. (1996). Nonprofits accommodate the information demands of public and private funders. Nonprofit Management and Leadership, 7(1), 45-68. Davis, C. N. (2002). Look sharp, feel sharp, be sharp and listen — Anecdotal excellence: People, places and things. International Journal of Nonprofit & Voluntary Sector Marketing, 7(4), 393-400. Fried, L. (1995). Managing information technology in turbulent times. New York: John Wiley & Sons. Gross, M. J., Larkin, R. F., & McCarthy, J.H. (2003). Financial and accounting guide for not-for-profit organizations (6th ed.). New York: John Wiley & Sons. Hecht, B., & Ramsey, R. (2002). ManagingNonprofits.org. New York: Wiley. Jones, R. A. (2000). Sizing up NPO software. Journal of Accountancy, 190(5). 28-44. Klein, K. (2004). Fundraising in times of crisis. San Francisco: Jossey-Bass. Light, P. C. (2002). Pathways to nonprofit excellence. Washington, DC: Brookings Institution Press. McCarthy, E. (2003, August 18). A confluence of technology and philanthropy. The Washington Post, p. E5. Rubin, S., & Witztum, E. (eds.). (2000). Traumatic and non-traumatic loss and bereavement: Clinical theory and practice. Madison, CT: Psycho-social Press/International Universities Press. Smith, S. R. (2002). Social services. In L. M. Salamon (Ed.), The state of nonprofit America (pp. 149-186). Washington, DC: Brookings Institution Press. Smith, Bucklin & Associates, Inc. (2000). The complete guide to nonprofit management (2nd ed.). New York: Wiley. Stroebe, M.S., Strobebe, W., & Hansson, R. O. (Eds.). (2002). Handbook of bereavement. Cambridge: Cambridge University Press. Tribunella, T., Warner, P. D., & Smith, L.M. (2002). Designing relational database systems. CPA Journal, 72(7), 69-72. Trussel, J., Greenlee, J. S., Brady, T., Colson, R.H., Goldband, M., & Morris, T. W. (2002). Predicting financial vulnerability in charitable organizations. CPA Journal, 72(6), 66-69. Winston, E. R. (1999). IS consultants and the change agent role. Computer Personnel, 20(4), 55-73.
Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
30 Chinn, Pryor, & Voyer
APPENDIX A Organization Chart for the Algos Center
Elizabeth Medford Executive Director
Other Full and Part Time Staff
Vicki Hume Development Director
Dawn Lopez Operations Manager
Pamela Russell Family Coordinator
Alicia Austin Administrative Assistant
Note: Any of these staff positions may supervise volunteers on an informal basis.
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The Algos Center 31
APPENDIX B Financial Statement for the Year July 1, 2001 through June 30, 2002 Income: Contributions
$152,009
Special Events (less net expenses)
$99,173
United Way/Designated Donations/Allocation
$99,312
Foundations and Grants
$108,929
Investments
($27,214)
Other Donations
$32,770
Donated Services
$10,645
Net Assets released from the restricted fund (scholarship fund payment) Total Support Revenue:
$1,073 $476,697
Expenses: Program Expenses Management and General Fundraising Total Expenses:
$342,153 $91,083 $32,546 $465,782
Increase in unrestricted net assets:
$10,915
Decrease in restricted net assets:
($3,893)
Net assets, beginning of year:
$368,155
Net assets, end of year:
$375,477
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32 Chinn, Pryor, & Voyer
APPENDIX C Sample Paradigm Report Donors who gave amounts (gifts or pledge payments) greater than or equal to $50, between 7/1/00 and 6/30/02 (for the 2001/2002 Annual Appeal, AA01, or Core Support 01 Campaigns Donor Name
Address
John Johnson
678 Long Lane 1040 Taylor Susie Smith Road 123 Main Mr. & Mrs. Thompson Street 124 Main Mr. & Mrs. Thompson Street
Gift/ Pledge Payment
Gift Amount Date
City
State Zip
Smithfield
MD
xxxxx
Chelmstown MA
xxxxx
$75
Union
NY
xxxxx
$150
Union
NY
xxxxx
$50
Pledge $200 3/13/2002 Payment 4/20/01 Gift 11/20/00 Gift Pledge 5/4/01 Payment
Campaign Ann. Appeal 01/02 AA01 Ann. Appeal 01/02 Core Support 01
APPENDIX D Sample Expense Report Jul-03
Aug-03
Sep-03
19,356
20,211
9,863
1,045
1 ,091
1,073
46
54
49
1,143
1,158
1,150
385
412
400
22,926
22,535
Expense 60000 -
Personnel
60100 - Salaries and Wages 60105 - FICA 60115 - SUTA 60125 - Health Insurance 60130 - Simple IRA Contribution 60140 - Other Insurances Total 600000 - Personnel
980 22,955
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The Algos Center 33
APPENDIX D (cont.) 60200 -
Building
60205 - Cleaning
250
250
60210 - Insurance
500
500
250 500
60215 - Real Estate Taxes
2,500
60220 - Rent
495
495
495
60225 - Utilities
618
798
329
60290 - Other Building
100
48
31
1,963
2,091
4,105
325
325
325
75
64
89
60315 - Equipment Maintenance
300
300
300
60320 - Office Supplies
283
196
421
60325 - Postage
334
308
471
60335 - Technical/Sftwr Support
275
275
275
60340 - Telephone
256
289
271
68
123
83
1,916
1,880
5,135
$26,834
$26,897
$31,775
Total 60200 - Building 60300 -
Office & Administration
60305 - Accounting & Payroll 60310 - Audit
2,900
60312 - Credit Card/Bank Fees
60390 - Other Office & Admin Total 60300 - Office & Administration
APPENDIX E United Way Report FISCAL YEAR _______ EXPENSES FOR CURRENT YEAR ALLOCATION
GRAND TOTAL
MANAGEMENT
1.
2.
3.
PROGRAM SERVICES 4. 5. 6.
22. Salaries 23. Employee benefits 24. Payroll Taxes, etc. 25. Professional Fees 26. Supplies 27. Telephone 28. Postage and Shipping 29. Occupancy 30. Rental/Maintenance of Equipment 31. Printing and Publications 32. Travel Conferences 33. Miscellaneous (Include Insurance here) 34. Payments to Affiliated Organizations 35. Depreciation* 36. Major Equipment/Mortgage* 37. SUBTOTAL EXPENSES 38. Less Expenses for activities financed by: Restricted Revenue……………………. Depreciation Expenses*………………. Major Equipment/Mortgage*………….. 39. TOTAL EXPENSES FOR ACTIVITIES FINANCED BY UNRESTRICTED FUNDS (LINE MINUS LINELine 38)39) DEFICIT/SURPLUS 40. (Line 21,37 page 6 minus
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 *United Way does not fund these costs. However, for financial reporting purposes, please include them on this line, then remove them in Line 38.
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34 Chinn, Pryor, & Voyer
APPENDIX F Dawn’s Data Model Tables and Relationships
Caregivers
Volunteers
Children
Telephone Log
Field Breakdown: Caregiver Table Family Id Primary Affiliation - combo box Adult 1 Last Name Adult 1 First Name Adult 1 Telephone Adult 1 Employer & Title Adult 1 Gender Adult 1 Nationality Adult 1 Date of Birth Adult 2 Last Name Adult 2 First Name Adult 2 Telephone Adult 2 Employer & Title Adult 2 Gender Adult 2 Nationality Adult 2 Date of Birth Address City
State Zip Code Email Address Intaker 1 - links to Volunteer Id Intaker 2 - links to Volunteer Id Intake Date Appropriate for Groups - Yes/No If Yes, which group - combo box If No, reason why - combo box Referral Source Currently Attending - Yes/No Start Date 1 End Date 1 Start Date 2 End Date 2 Current Night of Service Current Co-Facilitator 1 - links to Volunteer Id
Current Co-Facilitator 2 - links to Volunteer Id Previous Night of Service Previous Co-Facilitator 1 - links to Volunteer Id Previous Co-Facilitator 2 - links to Volunteer Id Name of Deceased Relationship to Deceased Cause of Death Date of Death Date of FirstCall - could link to telephone log Wait List - Yes/No Policies given - Yes/No Mailings to receive - combo box Relation to children attending combo box
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The Algos Center 35
APPENDIX F (cont.) Field Breakdown continued: Children Table Family Id - links to caregivers Primary Affiliation - combo box Last Name First Name Intaker 1 - links to Volunteer Id Intaker 2 - links to Volunteer Id Intake Date Appropriate for Groups - Yes/No If Yes, which group - combo box If No, reason why - combo box
Currently attending - Yes/No State Date 1 End Date 1 Start Date 2 End Date 2 Current Night of Service Current Co-Facilitator 1 - links to Volunteer Id Current Co-Facilitator 2 - links to Volunteer Id
Previous Night of Service Previous Co-Facilitator 1 - links to Volunteer Id Previous Co-Facilitator 2 - links to Volunteer Id Name of Deceased Relationship to Deceased Cause of Death Date of Death
State Date 1 End Date 1 Previous Night of Service/Volunteering 1 Previous Co-Facilitator 1 - links to Volunteer Id Start Date 2 End Date 2 Previous Night of Service/Volunteering 2
Current Co-Facilitator 2 - links to Volunteer Id Start Date 3 End Date 3 Date of Birth Gender Nationality Employer & Title Referral Source In-Services Attended - text area
City State Zip Code Telephone 1 Telephone 2
Email Address Type of Caller Type of Service Provider Referral Source
Volunteer Table Volunteer Id - links to group members Primary Affiliations - combo box Volunteer Preference Other Interests - combo box Training Date Current Night of Service - combo box Current Co-Facilitator - links to Volunteer Id Current Age Group
Telephone Log Table Last Name First Name Relation to Grieving Chile Business/Organization Name Address
APPENDIX G Center Phone Log PHONE LOG Date______________________ Time______________________ Verbal Program Info.
Info. Sent
Phone Support
Referral to our program
Referral to other center
Referral to other resource
Total
Family Agency/ School Individual Volunteer Other Center Student Other
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36 Ramos & Berry
Chapter III
Social Construction of Information Technology Supporting Work Isabel Ramos, Universidade do Minho, Portugal Daniel M. Berry, University of Waterloo, Canada
EXECUTIVE SUMMARY
In the beginning of 1999, the CIO of a Portuguese company in the automobile industry was debating with himself whether to abandon or to continue supporting the MIS his company had been using for years. This MIS had been supporting the company’s production processes and the procurement of resources for these processes. However, in spite of the fact that the MIS system had been deployed under the CIO’s tight control, the CIO felt strong opposition to the use of this MIS system, opposition that was preventing the MIS system from being used to its full potential. Moreover, the CIO was at lost as to how to ensure greater compliance to his control and fuller use of the MIS system. Therefore, the CIO decided that he needed someone external to the company to help him understand the fundamental reasons, technical, social, or cultural, for the opposition to the MIS system.
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Social Construction of Information Technology Supporting Work 37
THEORETICAL BASIS FOR THE STUDY
Innovative, organization-transforming software systems are introduced with the laudable goals of improving organizational efficiency and effectiveness, reducing costs, improving individual and group performance, and even enabling individuals to work to their potentials. However, it is very difficult to get these software systems to be used successfully and effectively (Lyytinen et al., 1998; Bergman et al., 2002). Some people in some organizations resist the changes. They resist using the systems, misuse them, or reject them. As a result, the goals are not achieved, intended changes are poorly implemented, and development budgets and schedules are not respected. Misguided decisions and evaluations and less than rational behaviour are often offered as the causes of these problems (Norman, 2002; Dhillon, 2004). Bergman, King, and Lyytinen (2002) observe (p. 168), “Indeed, policymakers will tend to see all problems as political, while engineers will tend to see the same problems as technical. Those on the policy side cannot see the technical implications of unresolved political issues, and those on the technical side are unaware that the political ecology is creating serious problems that will show up in the functional ecology.” They go on to say (p. 169), “We believe that one source of opposition to explicit engagement of the political side of RE [Requirements Engineering] is the sense that politics is somehow in opposition to rationality. This is a misconception of the nature and role of politics. Political action embodies a vital form of rationality that is required to reach socially important decisions in conditions of incomplete information about the relationship between actions and outcomes.” The implementation of complex systems, such as enterprise resource planning (ERP) systems, are rarely preceded by considerations about: •
• • •
the system’s degradation of the quality of the employees’ work life, by reducing job security and by increasing stress and uncertainty in pursuing task and career interests (Parker & Wall, 1998, pp. 55-70; Davidson & Martinsons, 2002; Thatcher & Perrewé, 2002); the system’s impact on the informal communication that is responsible for friendship, trust, feeling of belonging, and self-respect (Goguen, 1994; Snizek, 1995; Piccoli & Ives, 2003); the power imbalances the system will cause (Bergman et al., 2002; Dhillon, 2004); and the employees’ loss of work and life meaning, which leads to depression and turnover (Parker & Wall, 1998, pp. 41-49; Bennett et al., 2003; Davison, 2002).
Recent work by Marina Krumbholz, Neil Maiden, et al. (2000) considers some of these issues after implementation of ERP systems. Specifically, this work investigates the impact on user acceptance of ERP-induced organizational transformation that results from a mismatch between the ERP system’s actual and perceived functionalities and the users’ requirements, including those motivated by their values and beliefs (Krumbholz et al., 2000; Krumbholz & Maiden, 2001). This case study describes an on-site examination of one particular ERP-induced organization transformation. The prime champion of the ERP system in one company was surprised by the resistance to the system’s use shown by the employees of the company.
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38 Ramos & Berry
He ended up asking the help of the first author of this case study to understand the sources of this resistance and what to do about it. The present report is a distillation of the first author’s final report to the champion and of her PhD dissertation (Ramos, 2000). The focus of the study is on understanding the technological, social, and cultural reasons of the employees’ resistance against the ERP.
ORGANIZATIONAL BACKGROUND
The reader should consult the organizational charts shown in Figures 1 and 2 in Appendix A as he or she is reading the following narrative. With the exception of the proper name Isabel, that of the first author, none of the proper names in the narrative, including of the company and of software products, is real. However, each proper name does refer to one real person, company, or product that participated in the events narrated. One cold morning in February 1999, Pedro was talking with a friend, Sérgio, about Pedro’s professional path as director of the Information Systems (IS) Department of ENGINECOMP, a Portuguese subsidiary of a Brazilian company in the automobile sector. Pedro was not able to decide what else could be done to ensure that MaPPAR, the information system that was currently supporting the management of production processes and the procurement of the associated resources, was used to its full potential. Pedro had started working for ENGINECOMP at its very beginning in 1992, when the Brazilian company’s administration decided to build a plant in Europe. They chose Portugal for its linguistic and cultural similarity, and for the relatively low salaries that would be paid to a young and educated workforce. See Appendix B for details about the Portuguese automotive sector and about the company. Rafael, the president of the Brazilian company, liked to have close control of the company and of all its branches. He felt especially comfortable with Pedro’s past experience and thus hired Pedro. He also admired Pedro’s creativity and close attention to details. Soon, Pedro earned the power to define the work processes, plant design, management practices, and the information systems that would support the work. The building of the plant was finished in the beginning of 1993, and the plant was already manufacturing seven months later. It produced a small but essential component for the car engines. This component requires a high-quality production line, since even a small variance in the required measures implies that the product would not be accepted by the client. The plant satisfactorily supplied several of the most important automobile builders in Europe. For each car model, the engineers of the plant, assisted by the client, designed the specific dimensions and shape of the product to be delivered each time it was ordered by the client. Simultaneously, the client and the plant administration negotiated the percentage of items that the client could cancel or add to an order already in production. This percentage was very important, since it helped the client to react quickly to a sudden drop or increase in the demand for that specific car model. For the plant, this variability added considerable difficulty to production planning, but the aggressive competitiveness of the automotive sector forced acceptance of these margins. The raw material was shipped from Brazil, where the mines were located. The material was shipped by sea and arrived at ENGINECOMP three months later. This delay forced careful stock management and production planning. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Social Construction of Information Technology Supporting Work 39
Every time a new order arrived, ENGINECOMP’s capability to produce the required product was carefully assessed. Following this assessment, the manufacture of the required product was planned to fit the delivery dates agreed upon with the client, and production orders were drafted and delivered to the plant. The production processes were designed in accordance with international norms and the best practices of the sector. These processes were regularly subjected to quality controls, in both external and internal audits. Management of materials acquisition for the plant machinery was also an important task, since the plant could never stop or reduce its production from what was planned. Three employees of the Logistics Department were assigned to negotiate continually with actual or potential suppliers. These employees were responsible for keeping the materials at adequate stock levels. Whenever ordered products were finished, they were packaged and were stacked in the warehouse for delivery. The finished goods were then delivered to their clients by ENGINECOMP’s own trucks, by train, or by airplane. Pedro decided that the complexity of all these activities required an integrated production management system. He convinced the Brazilian administration to buy a wellknown and highly utilized off-the-shelf system, MaPPAR, to manage all the production processes and associated resources. See Appendix C for details about MaPPAR. MaPPAR was configured and deployed under Pedro’s tight control, with the assistance of the directors of several of ENGINECOMP’s other departments, namely, Engineering, Quality Control, Finance, Logistics, and Warehousing. Pedro told his friend, Sérgio, about all the difficulties and successes of the first two years. Pedro was really proud of his work and of his good decisions. ENGINECOMP was considered one of the best suppliers of its products in all of Europe and was supplying the most successful automobile manufacturers. However, MaPPAR was never used to its full potential. In fact, resistance to MaPPAR’s use seemed to grow steadily since its deployment. In parallel, Pedro’s authority was being continually questioned despite his many past good decisions, his hard work, and his undeniable contributions to ENGINECOMP’s success. During 1998, a large fraction of ENGINECOMP’s shares were sold to a German company. Now, the Brazilian company owned less than 40% of ENGINECOMP’s shares and was thus losing control over what happened at ENGINECOMP. By the end of 1998, the only relics left of the Brazilian company’s administration of ENGINECOMP were framed posters in the Brazilian Portuguese language encouraging employees’ creativity and participation in decision making. The new administrator, Fritz, distributed his control and support evenly over the directors of all departments that reported to him including the IS, Engineering, Quality Control, Finance, Logistics, and Warehousing departments. That is, Fritz treated Pedro for what Pedro really was, the director of the IS Department, one of many departments. Pedro resented this treatment, and he believed there was a close link between his loss of power and the growing opposition to the use of MaPPAR. He wanted to counter this opposition, but was having “difficulty reasoning unemotionally about the current situation and past events.” Then, Sérgio told Pedro about a researcher who might be interested and able to help Pedro analyze the situation. The researcher was Isabel, who entered the scene in early March 1999. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
40 Ramos & Berry
SETTING THE STAGE
When Pedro first talked with Isabel, he told her about an important movement within ENGINECOMP against the use of MaPPAR to support production management. MaPPAR was very versatile and included modules that could support engineering tasks, order processing, production planning, assessment of production capabilities, production management, product shipment, management of stocks, accounts payable to suppliers, accounts receivable by clients, and finances and accounts management. While MaPPAR was a very complete and powerful system, it was very poorly used. Employees ignored or resisted using much of MaPPAR’s functionality, preferring to develop their own small systems and databases to manage only the information relevant to their daily tasks, and used the central MaPPAR database only as the source of data to feed their own small systems and databases. Moreover, the employees of the plant were refusing to input timely data about the tasks they perform. They preferred to defer their inputting until the end of the week or the month, so they would not lose time during the days. Sometimes, one of the employees was freed by his colleagues from his normal duties in order to input his and his colleagues’ data. The problem with this practice was that it became virtually impossible to track down the state of the orders in production. Pedro and Isabel agreed that Isabel would do an on-site study of ENGINECOMP at work, in search of the fundamental reasons, technical, social, or cultural, for the opposition to MaPPAR and for the proliferation of small systems and databases. Isabel would study the work of two departments in ENGINECOMP: the Finance Department and the Logistics Department. They were the most influential departments of the company, since they performed essential activities for the company. The Finance Department did financial management, and the Logistics Department did customer service and production planning. Moreover, the employees of these two departments constituted a majority of MaPPAR’s users.
CASE DESCRIPTION
Isabel spent five months at ENGINECOMP, observing and interviewing all the employees of the Finance and Logistics departments. Almost every day, Isabel spent several hours joining or observing employees performing their tasks with or without support from MaPPAR. She interviewed Carlos and Manuel, the directors of the departments. She also interviewed several middle managers responsible for key activities, including Fernando, Carlos’s closest collaborator in the Finance Department, and Roberto, Eduardo, and António, the managers of the Customer Service, Production Planning, and Purchasing divisions of the Logistics Department. Isabel also observed and interviewed Pedro and his collaborators in the IS Department. She talked also a few times with the German leader, Fritz and she was present at events such as meetings and training programs. To learn more about MaPPAR, Isabel consulted the available manuals and technical documentation. She used a demonstration version of MaPPAR to test some of its functionality on her own. The following is a department-by-department summary of Isabel’s observations.
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Social Construction of Information Technology Supporting Work 41
Finance Department
The Finance Department was responsible for all financial and accounting tasks of the company. Carlos, the director of the Finance Department, had sole directorial responsibility for the department. However, he delegated supervision of the accounting tasks to Fernando, a trusted employee with an accounting degree. Fernando had access to key information and knowledge for performing these accounting tasks. Fernando’s access and knowledge, charisma, and core skills made him a privileged ally of Carlos, the director. As mentioned, the coordination and control of the Finance Department activities were responsibilities of Carlos, the director, who kept and centralized all decision making. Carlos was a Brazilian sent to ENGINECOMP by the Brazilian company’s administration. Fritz, the new German leader, was not very comfortable with Carlos’s complete control of the Finance Department. In the Finance Department, informal communication about work tasks was discouraged. Carlos’s rule was that all communication must be well documented. The work in the department was organized into well-defined tasks connected by clearly defined processes, all of which determined the precise responsibilities of each employee. Employees only occasionally received professional training. The heavy workload left little time for such training. Moreover, Carlos believed that each employee must perform simple and repetitive tasks that can be learned by doing. The tasks were distributed among eight employees, each with limited autonomy. Carlos had his trusted assistant Fernando, with the accounting degree, supervise the daily routine. Fernando was seen as a bright and ambitious young man. He was expected more to comply with rules and procedures than to make autonomous decisions. Fernando worked hard to serve Carlos’s interests, taking advantage of what he had learned in courses leading to his degree to further those interests. Fernando’s actions and information were especially useful to Carlos, who as a Brazilian, was not as familiar with Portuguese accounting regulations as a Finance Department director should be. It is I who signs the accounts, the financial reports, and the balance sheets. It is I who signs the fiscal statements. I am the officer responsible for the company’s accounting. My accounting degree and my understanding of Portuguese law allow me to give invaluable assistance to the director. — Fernando With the help of Fernando, Carlos asserted the strong leadership that Carlos believed was the guarantor of efficiency and motivation. Compliance with Carlos’s leadership was the main criterion by which Carlos recruited employees for the Finance Department. Interviewed Finance Department employees mentioned some competition for career advancement. Finance Department employees were rewarded for accurate completion of assigned tasks. Failure to comply with rules and procedures was punished. There was a predominant belief among the employees that autonomous and creative employees were dangerous in a finance department. This belief was supported by past events during which fraud was perpetrated. This belief was one of the most important sources of the motivation to use MaPPAR, which was seen as reinforcing established practices:
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42 Ramos & Berry
I am responsible for one area. So, I work in a well-defined set of tasks and my colleagues have clearly defined tasks as well. There is no confusion. The system requires that we are specialists in our tasks ... hmm ..., and it assures that our director has access to what we do, so we are not blamed for the mistakes [errors and fraud] of others. — An Employee of the Finance Department There was little variation in the daily routine of the Finance Department. All needed information was in MaPPAR’s database, and that information was provided by the other departments of ENGINECOMP. Moreover, a significant part of the Finance Department’s work was the production of regular reports and other more timely, but irregular information for the other departments. The other departments of ENGINECOMP exerted the most influence on the Finance Department and served as a buffer between the Finance Department and the company’s clients and suppliers. However, the Finance Department did have some interaction with banks and other similar entities outside the company. Thus, as can be expected, the Finance Department’s workload was very stable, with almost no surprises. The Finance Department employees made heavy use of spreadsheets to produce the reports the department was required to produce for the other departments. The reasons offered for use of spreadsheets instead of MaPPAR included: The [MaPPAR] system reports are not adequate for our management needs. They present too much data, in a lot of rows, many of which are not useful. It is better to search for the relevant data using query tools and then to export the data to our spreadsheets where we can treat the data in the way that suits our objectives. — Fernando Despite that the use of spreadsheets was sanctioned for the production of only specific reports, the spreadsheets were being programmed to also perform some functions that the system provided. There is no need to use the options provided in the menus of the [MaPPAR] system because we have other tools that do the same. — Another Employee of the Finance Department Some Finance Department employees regretted the lack of training to use MaPPAR. At the time MaPPAR was installed, MaPPAR’s implementers did train the Finance Department employees that were hired specifically to operate MaPPAR. However, these employees saw the training as too brief and too compressed; they simply could not absorb all the complex information about MaPPAR’s functionality in such a short time. Hence, from the beginning, even the MaPPAR operating employees did not understand MaPPAR’s full capabilities. It was a one-shot training. I would not even call it training; it was more like a conversation with the technicians. — Still Another Employee of the Finance Department After that initial training, employees that had used MaPPAR for a longer time were responsible for in-house MaPPAR training. Often these trainer employees guided the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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trainee employees through only the functionality actually being used. The trainers usually advised trainees to avoid other MaPPAR functionality, saying that it would be too complex, inadequate, or better implemented in the programmed spreadsheet. All that I know about the system is the result of my efforts to use it. But we have too many tasks to perform. There is no time left to explore the system, which has too many complexities. And I say to my colleagues that they should not waste too much time experimenting if they are not sure of the usefulness of a menu’s options. — Fernando The Finance Department employees saw this in-house training as a burden. Moreover, Carlos did not encourage his employees to experiment with MaPPAR themselves. The Finance Department’s history included some catastrophic mistakes, and the department rumor mill still propagated stories about the stupid mistake that Employee A or Employee B had made. To many Finance Department employees, the spreadsheet appeared much easier and less constraining than did MaPPAR. All requests for required new or enhanced features for MaPPAR were sent to the IS Department for implementation. However, many times the IS Department’s response was to deny a request because of the high costs of the new or enhanced feature. The IS Department did not want to have to make the same changes to every new version of MaPPAR that would come out in the future. When a required feature was refused by Pedro, the director of the IS Department, the requesters were able to easily find implementers among their colleagues, who had accepted the informal responsibility of programming the spreadsheets and databases. In general, Finance Department employees acknowledged the importance of MaPPAR for their department, since MaPPAR’s integrated modules automatically fed all the accounts. The institutional authority of the IS Department to define MaPPAR’s IT support was well accepted.
Logistics Department
The work of the Logistics Department was distributed among three divisions: Purchasing, Customer Service, and Production Planning. António, the manager of the Purchasing Division, Roberto, the manager of the Customer Service Division, and Eduardo, the manager of the Production Planning Division, each reported directly to Manuel, the director of the Logistics Department. Each of the three managers coordinated and controlled the tasks for which he was responsible. The three managers and one director participated jointly in defining the Logistics Department’s goals and objectives and in decision making. Professional training was being delivered to Logistics Department employees on a regular basis. However, each of the three managers believed that his skills were not being adequately used and rewarded. In particular, the Customer Service Division manager, Roberto, felt especially frustrated with this situation. Roberto was seen as a very dynamic man who learned his job quickly and tried to exceed what was expected from him. However, Roberto felt that MaPPAR was a significant barrier to his own career advancement. MaPPAR demanded too much specialization in specific tasks and made it Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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difficult for one person to have a broad perspective of the business processes. Roberto believed that this broad perspective was central to providing effective customer service and to making good decisions. Here [at ENGINECOMP], we are evaluated by our ability to solve problems. To be able to solve problems quickly, we need to know what is going on around here. But, the system is so unnecessarily complex, and it limits our ability to access relevant information. — Roberto In fact, it was Roberto who took the initiative of programming the spreadsheets and databases that were being used by his colleagues throughout ENGINECOMP. He and two other employees in the Customer Service Division became the informal IS team of ENGINECOMP, always ready to implement new features adapted to the specific needs of their colleagues. Roberto’s informal, can-do attitude, his enthusiasm in searching for solutions, and his courage to directly face senior managers provided him with the admiration of his colleagues, inside and outside the Logistics Department. Roberto proudly said, “At this stage of my career, I am independent of the director of the department. I report directly to the administration [i.e., Fritz].” There was a widespread belief among all ENGINECOMP’s employees that the Logistics Department created the company’s positive image among its customers and the general public. This belief was a source of negotiating power for the Logistics Department and especially for its emerging leader, Roberto. Especially during the last three months, we ... When I joined the department, we contacted one client directly, and the others were contacted through our office in Hamburg. In fact, it was not a real department but an expedition unit. With the recent closing of the office in Hamburg, all the logistics service is provided by Portugal. Of course, this gave us much more importance inside the company. — Roberto Roberto was the manager of one of the three divisions of the Logistics Department officially directed by Manuel. Manuel and the managers of the three divisions believed that the four of them should cooperate to achieve the department’s goals. However, frequent internal conflicts emerged from the fights over the specific interests of the department’s divisions. These conflicts emerged from the need to fight for scarce resources such as budget, human resources, and technology. The conflicts also arose from the conflicting influences on work practices exerted by António, the Purchasing Division manager, and Roberto. We’re working differently now. We have three autonomous divisions. We [managers of the divisions] are responsible for ensuring that our colleagues have what they need to perform their tasks. Hmmm ... Who coordinates our activities? Well, that is a difficult question. The department’s director, I guess ... [laughter]. Well, I talk directly with the administration [Fritz]. — Roberto Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The Logistics Department office space was designed as an open space into which any ENGINECOMP employee could enter to seek a problem solution or to demand a service. The Purchasing Division and the Production Planning Division managers often complained about deleterious effects and the pressure caused by the constant interruptions that the open space invited: There is always pressure from the exterior of the department. This is a drawback of the client-supplier policy that was adopted internally, this pressure to be continuously available in open space. We are constantly being interrupted! It is not possible to focus our attention on a single subject for long and to follow logical and correct reasoning. — António Adding to this pressure were the variable and often unexpected requests and problems posed by suppliers, clients, and ENGINECOMP’s production plant. For example, as mentioned, the quantities ordered by a costumer could be changed within an agreed upon percentage after the order was placed and production had started. Logistics Department employees saw flexibility of work practices and procedures, autonomy of decision, and informal communication channels and work relations as key factors to reduce the negative impacts of these sudden changes. Moreover, they saw MaPPAR as reducing their flexibility of action and making their work less interesting. Furthermore, MaPPAR was forcing them to comply with rules and procedures that reduced their ability to fulfill the needs of ENGINECOMP’s plant and customers. Some of these Logistics Department employees referred to MaPPAR as a “sacred cow’” that could not be questioned and that made them “slaves,” requiring most of their time to input data without “receiving anything in return.” These employees complained also of the poor quality of the MaPPAR reports. They had become highly suspicious of the data stored in the central database. Because people won’t be wasting their time to explore this and that. Why should they? When I want a report and this [MaPPAR] does not give me what I want ...! If only they [IS Department] made changes to the system! Meanwhile, someone [from the IS Department] decides not to make them. It is frustrating. — Eduardo As in the Finance Department, the reports needed to support Logistics Department decisions were created in spreadsheets, using data obtained by querying the central MaPPAR database. This practice fostered a disconnection between the inputting of data and the production of reports to support decision making. The Logistics Department employees saw MaPPAR as too complex and too general to effectively support the details of the department’s activities. Logistics Department employees agreed with Finance Department employees about the lack of MaPPAR use training and the burden caused by having to train new employees in the use of MaPPAR. I find the system too confusing. It is a tool, since it is a standard in a lot of business areas. I think it does not really help the specific tasks of a specific company in a small country like ours. — António
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Also, the Logistics Department employees decried the IS Department’s lack of support and understanding. In response to this complaint, the Logistics Department developed what Roberto believed was a very effective strategy: I have been doing [developing any needed functionality] by myself. When they [the IS department] do not want to make the [required] changes to the system, I develop the feature using the spreadsheets and databases. Nowadays, I do not even ask; I do by myself and help others with the programming. — Roberto And he added: The lack of support from the IS department is creating disinterest in the system. The removal of MaPPAR was seen as an important step to gain more control over the performed work. Employees wanted to be involved in (1) defining the work practices, (2) decision making, (3) monitoring the system usage, and (iv) defining what were good and bad usages. This plant is six years old now. We have learned a lot. We want to be heard! We need a new system, but this time, we want to be involved! — Roberto
The IS Department
As mentioned, Pedro was the director of the IS department. He kept close at hand the responsibility to define the operational and management best practices and to ensure that the information systems were effectively supporting those practices. Also mentioned, Pedro was very proud of his professional advancement and his contributions to the success of ENGINECOMP. He considered himself responsible for the formulation of creative solutions in both work practices and information systems. He considered that implementing these solutions was a task to be performed in collaboration with the affected departments. Pedro did not consider himself to be an IS technical expert. His closest collaborator was the person that knew the used systems in detail and would do all the programming, parameterization, and users’ support. This collaborator, José, was a timid man with strong technical skills; he was very competent, but was hardly considered a leader of opinion and action. He [José] is very competent. I trust all technical tasks to him — Pedro José works hard. He always treats us right. The only thing is ... Well, he is very silent [smiling]. — Roberto José was well accepted by employees from the other departments. These other employees understood the difficulty José had in providing immediate support to all MaPPAR users. José’s colleagues from the other departments found José easier to approach than Pedro and they preferred to talk with José first when a problem arose or when a change to MaPPAR was needed. However, these employees knew also that José’s
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actions were constrained by IS Department policies and his manager Pedro. At one point, the managers of departments other than the IS Department were informally discussing the role of the IS Department. A clear line was emerging between those that supported Pedro’s interventional attitude and those that supported José’s helpful and cooperative attitude. Pedro was aware of this discussion but showed no resentment towards José. I know that they [the other employees] would like to get rid of me [laughter]. I defend the company interests too much. Of course, some other people around here understand that I have dedicated my life to this company. This happens everywhere and is tough. I do not believe José could handle all this. — Pedro Pedro saw José as a very good programmer that would never be able to carry out the negotiation and political battles inherent in Pedro’s, the IS director’s, job. Moreover, Pedro knew that José was oblivious to the discussion. Pedro understood this discussion as an expression of the growing resistance to his own actions. What Pedro really resented was that the German administration and Fritz, in particular, were listening to these dissenting voices more and more. The Brazilian administration understood. They hired me for my competence, and they saw what I did. The new administrator does not know. — Pedro
CHALLENGES FACING THE ORGANIZATION
By the end of the Isabel’s study, the company was undergoing important changes in its middle management structure. Carlos resigned when a new directorial opportunity was offered to him back home in Brazil. Roberto was becoming a key player in the growing importance of the Logistics Department within ENGINECOMP and in the good image this department projected to the company’s stakeholders. Manuel, the Logistics Department director, was losing control over departmental decisions and strategy definition. The German parent company was using a different ERP system, SAP R/3, and was now weighing the cost-benefits tradeoffs between upgrading ENGINECOMP’s MaPPAR to interface with the parent company’s system and deploying SAP R/3 at ENGINECOMP. Roberto believed that SAP R/3 should be deployed at ENGINECOMP. Roberto believed also that ENGINECOMP’s six-year use of some ERP system, albeit different from SAP R/ 3, gave ENGINECOMP’s middle managers the technological knowledge to actively participate in the parameterization of SAP R/3. The Finance Department did not have any preference, and its director was concerned only with the costs of the new system. Pedro was against the deployment of SAP/R3 because of the high costs of process reengineering and user training. Some were suspicious of the data stored in the central database. The reluctance to use MaPPAR and the lack of time and will to explore MaPPAR’s full functionality resulted in data being entered late or not at all, with the usual deleterious effects. For example, it was not always possible to track a client’s order when the client requested information about his or her order. There were also problems identifying what products and raw material were in stock. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The growing trend to use spreadsheet programming to get around the problems caused by MaPPAR or to implement functionality perceived as not available in MaPPAR was also reducing the data’s quality. Often, results of outside data processing were not fed back into MaPPAR. Important MaPPAR functions, such as requirements planning and capacity planning, were never utilized and were instead programmed outside MaPPAR, resulting in unnecessary maintenance costs, lack of control over planning and its results, and a severe risk of unreliable planning. Pedro’s efforts to document (1) organizational processes and resources, (2) the decision to deploy MaPPAR, (3) the MaPPAR process, (4) MaPPAR’s functionalities and upgrades, and (5) the IT structure of ENGINECOMP supported his conviction that there was no need to incur the high costs of switching to a different system, especially when the European economy, including its automotive sector, was slowing down. Pedro realized that prevailing with this view would require gaining allies within ENGINECOMP and gaining the explicit support of Fritz, a near impossibility. Pedro just did not know what else could be done to get people to see the importance of abandoning the small databases and in-house programming in favour of a fuller understanding and use of MaPPAR.
REFERENCES
Bergman, M.B., King, J.L., & Lyytinen, K. (2002). Large-scale requirements analysis revisited: The need for understanding the political ecology of requirements engineering. Requirements Engineering Journal, 7(3), 152-171. Bennett, J., Stepina, L. P., & Boyle, R. J. (2003). Turnover of Information Technology workers: Examining empirically the influence of attitudes, job characteristics and external markets. Journal of Management Information Systems, 19(3), 231-250. Bergman, M.B., King, J.L., & Lyytinen, K. (2002). Large-scale requirements analysis revisited: The need for understanding the political ecology of requirements engineering. Requirements Engineering Journal, 7(3), 152-171. Davison, R. (2002). Cultural complications of ERP: Valuable lessons learned from implementation experiences in parts of the world with different cultural heritages. Communications of the ACM, 45(7), 107-111. Davison, R., & Martinsons, M.G. (2002). Empowerment or enslavement? A case of process-based organisational change in Hong Kong. Information Technology & People, 15(1), 42-59. Dhillon, G. (2004). Dimensions of power and IS implementation. Information & Management, 41(5), 635-644. Goguen, J.A. (1994). Requirements engineering as the reconciliation of technical and social issues. In J. A. Goguen & M. Jirotka (Eds.), Requirements Engineering: Social and Technical Issues (pp. 165-199). London: Academic Press. Krumbholz, M., Galliers, J., Coulianos, N., & Maiden, N.A.M. (2000). Implementing enterprise resource planning packages in different corporate and national cultures. Journal of Information Technology, 15, 267-279. Krumbholz, M., & Maiden, N.A.M. (n.d.). The implementing of ERP packages in different organisational and national cultures. Information Systems Journal, 26(3), 185-204. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Lyytinen, K., Mathiassen, L., & Ropponen, J. (1998). Attention shaping and software risk: A categorical analysis of four classical risk management approaches. Information Systems Research, 9(3), 233-255 Norman, D.A. (2002). Emotion and design: Attractive things work better. Interactions, 9(4), 36-42. Parker, S., & Wall, T. (1998). Job and Work Design: Organizing Work to Promote WellBeing and Effectiveness. Thousand Oaks, CA: Sage Publications. Piccoli, G.., & Ives, B. (2003). Trust and the unintended effects of behavior control in virtual teams. MIS Quarterly, 27(3), 365-395. Ramos, I.M.P. (2000). Aplicações das Tecnologias de Informação que suportam as dimensões estrutural, social, política e simbólica do trabalho. PhD Dissertation. Departamento de Informática, Universidade do Minho, Guimarães, Portugal. Snizek, W.E. (1995). Virtual offices: Some neglected considerations. Communications of the ACM, 38, 15-17 Thatcher, J. B., & Perrewé, P. L. (2002). An empirical examination of individual traits as antecedents to computer anxiety and computer self-efficacy. MIS Quarterly, 26(4), 381-396.
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APPENDIX A Figure 1: Organizational Chart until 1999
Figure 2: Organizational Chart after 1999
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APPENDIX B The Automotive Sector in Portugal
The automotive industry in Portugal generates, per year, more than 6.6 billion Euros, of which 4.1 billion are in automobile components. It currently employs more than 45,000 workers. Investment in the automotive component industry continues to attract a large number of investors and is strongly supported by both Portuguese Government and European Union funds. The main areas of automotive production in Portugal include electronics, die castings, plastic parts, seats, and climate control systems. Manufacturers, including Volkswagen, Mitsubishi, Opel, Toyota, and Citroen, assemble more than 240,000 cars per year in Portugal. Portugal and Spain together make up the third largest car producing region in Europe. More than 80% of the vehicles produced in Portugal are exported to other European countries. Portugal’s automotive component industry, comprising 160 companies, focuses on engines, engine components, moulds, tools, and other small parts. Number of Companies Directly employed staff Turnover (billion Euro) Exports (billion Euro)
160 37 500 4 112 2 642
Source: AFIA (2002) (http://www.afia-afia.pt/) Components Industry Evolution Years
National Market
Exports
1 986
2 00
2 24
Turnover 4 24
1 990
3 29
7 98
1 .127
1 994
4 34
1 .786
2 .220
1 998
1 .352
2 .319
3 .671
2 003
1 .460
2 .834
4 .294
Source: AFIA (2002) (http://www.afia-afia.pt/)
ENGINECOMP: Organizational Units, Business Vision, & Mission, International Norms Adopted The company’s headquarters are in Brazil. The company has plants in Brazil, Portugal, and Argentina. It has commercial offices in Germany, the United States, Uruguay, and Ireland.
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APPENDIX C ENGINECOMP Vision To be acknowledged worldwide as a competitive, high technology manufacturer that respects the environment. Mission To be the principal producer of the XYZ car engine component for the European market, aiming at complete client satisfaction; to achieve a high return on its invested capital. International Norms Adopted: QS 9000/ ISO 9001, VDA 6.1, BS 7750 Number of Employees Turnover (Million Euro per year) Exports (Million Euro per year)
800 30 20
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Chapter IV
CRM Systems in German Hospitals: Illustrations of Issues & Trends Mahesh S. Raisinghani, Texas Woman's University, USA E-Lin Tan, Purdue University, German International School of Management & Administration, Germany Jose Antonio Untama, Purdue University, German International School of Management & Administration, Germany Heidi Weiershaus, Purdue University, German International School of Management & Administration, Germany Thomas Levermann, Purdue University, German International School of Management & Administration, Germany Natalie Verdeflor, Purdue University, German International School of Management & Administration, Germany
EXECUTIVE SUMMARY
German public hospitals face governmental and regulatory pressures to implement efficiency and effectiveness metrics, such as the classification of a Diagnosis Related Groups (DRG) system, by the year 2005. The current average patient stay of nine days in German hospitals is relatively high compared to France with 5.5 days and USA with 6.2 days. CRM will help increase customer satisfaction, loyalty and retention. Multiple
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case studies, including one German hospital compared to two Dutch hospitals, as well as interviews with the management of two additional German hospitals, reveal that no hospital currently has an integrated CRM system. Rather, separate organizational functions collect and store quantitative and qualitative patient data. Furthermore, the challenges of data sharing and data security are significant barriers for technological changes in hospitals. This study focuses on CRM in a modern German hospital as it realigns its processes and strategies in order to focus on efficiency and customer satisfaction in a very competitive market.
ORGANIZATIONAL BACKGROUND
The German healthcare industry is currently undergoing a major change due to the changing demographics of the German population and budget limitations. Due to the aging and/or retired German population, there is less money contributed to taxes. This is resulting in a substantial reduction in the allocation of funds to the healthcare sector. The current cost allocation system, that is, the generation contract, is put in question, and the public healthcare system is forced to charge more of its costs to its clients. The generation contract was the standard structure for the social security systems in many countries including Germany, where the following generation would provide funding for the previous generation. At present, deregulation, increased competition, cost pressures and price reduction from the private hospitals are forcing the public hospital sector to introduce efficient economic processes and systems. The introduction of the Diagnosis Related Group (DRG) calculation system by the German government requires hospitals to review their strategy in order to focus their communication on the patient of today and tomorrow. The DRG calculation system was initially a collaborative effort of insurance companies to establish a control system for payments for healthcare services provided. With the DRG calculation system, illnesses are categorized and acceptable treatments and standards, such as length of hospital stay, are determined. A fixed cost, or payment amount, is then assigned to each treatment or service. Insurance companies will only pay the specified amount for each service. The purpose of DRG is to provide complete patient care for a standardized disease pattern with a fixed budget. This system should also aid hospitals in meeting their budgets by reducing the length of a patient’s stay in the hospital, increasing productivity and using more cost-cutting technologies (Riedel, 2001). In these situations, hospitals need intelligent Customer Relationship Management (CRM) models that interface with the DRG system to help them acquire and “nurse” their customers — both domestic and foreign patients. The key motivator for CRM system implementation is the hospital administration’s realization that they have to be customer-oriented and cost-effective to survive the increased competition in the healthcare sector (MCC Health World, 2002). CRM is an approach that focuses on the acquisition, development and, most importantly, retention of customer relationships through the collection of data and the sharing of this customer information across all areas of an organization. It encompasses both software applications and business strategies that anticipate, interpret, and respond to the needs of current and prospective customers. Access to collected customer information by employees from all areas of an organization provides a complete
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picture of the customer to everyone in the company and helps employees react to customer inquiries more efficiently. Handling customer requests with ease will increase customer satisfaction, resulting in customer loyalty and, ultimately, an increase in customer retention. Customer/patient-centric orientation is being adopted by contemporary businesses/hospitals as a necessary condition for competing effectively in today’s marketplace. Despite the steady growth in number of worldwide installations and sales, not all is perfect in the world of CRM applications. Industry studies suggest that approximately 60% of CRM software installations are failures. CRM applications are prone to problems associated with lack of application flexibility that allows for customized integration and updating, and data management as a function of scale (Crosby & Johnson, 2000; Juki et al., 2002).
Structure & Organization of this Chapter
This exploratory study is fundamentally based on E.M. Rogers’ theory of new product diffusion, also known as Diffusion of Innovation (DoI) (Rogers, 1983). The primary research objective of this study is to explore the diffusion and infusion of CRM systems in the hospital environment. Diffusion is defined as the extent of use of an innovation across people, projects, tasks or organizational units, while infusion is the extent to which an innovation’s features are used in a complete and sophisticated way (Fichman, 2001). In this chapter, we first discuss the trends and governmental/regulatory pressures that confront public hospitals in Germany. As these problems are very real and directly affect the general public, this topic is of keen interest and has been making headlines in Germany in recent years. Next we discuss the organizational structure of an old German hospital that forms the basis of the economic issues it now faces and the steps it should take in order to prevent a possible financial crisis in today’s fast-paced economy. Furthermore, we explain how the implementation of CRM can play a crucial role in bringing the German hospital up to speed with technology and the effective business models of today. Next, the case studies of five hospitals are presented along with a discussion of the objectives, benefits and costs of implementing a CRM system, the technical and strategic composition, the implementation phases and the pitfalls to avoid during the implementation phase. This is followed by the current challenges/problems facing the organization. The conclusion section summarizes the importance of a CRM system to steer the German hospital in the right direction, as well as outlines the potential of information technology in creating new business value for the hospital.
Market Description
The healthcare institutions in Germany are divided into Akut-Kliniken (general hospitals), Reha-Kliniken (rehabilitation facilities) and nursing homes. Most of the German clinics are owned and administered by public authorities. These clinics are financed by the association of local authorities and the federal state. Moreover, some health insurance companies fund and even run hospitals (HPS Research, 2002). According to a study by Kienbaum Management Consultants (Amblank, 2003), German hospital administrators predict a further reduction of clinical beds, as well as nursing, adminis-
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trative and non-medical staff. However, it is necessary to increase the number of doctors and information technology personnel in order to implement efficient and cost-effective business processes in German hospitals, especially in the field of general healthcare services. The survey conducted on more than a hundred Akut-Kliniken (general hospitals), with more than a hundred beds, found the following results (Amblank, 2002): •
• •
Process Optimization: Hospitals need to focus on the optimization of a processoriented organization while taking into account the internal and external information flow. Clinic-specific processes between horizontal levels, particularly between the activity units and functions of a hospital, must also be considered. Hospital Cooperation: Hospitals should increase cooperation with other activity units and participants in the healthcare sector, especially with regard to communication. Managerial Tools for Hospitals: In view of the compulsory introduction of a Diagnosis Related Groups (DRG) cost calculation system, the implementation of process- and profit-oriented cost calculation systems for hospitals must be completed in 2004. At present, 76% of the hospitals are still using budgets as their controlling system. The implementation of DRG systems requires changes in hospital IT systems, training of personnel and data-protection measures — approximately 68% of the hospitals have already started to change their processes.
Key Market Statistics
In 2001, the hospital costs in Germany amounted to about EUR 60 billion, a figure that, according to the German Federal Statistical Office, corresponds to the domestic annual sales of the German automotive industry. The limited budgets of the federal states are forcing hospitals to implement efficient communication and information channels in order to reduce resources and to streamline their operations. The introduction of the DRG system should bring about greater transparency and economic efficiency, which the authorities hope will cause a considerable reduction in the time that patients stay in hospitals. In 2001, the average patient stay was of 9.9 days in German hospitals. In comparison, in Austria, the average patient stay is 5.9 days; in France, 5.5 days; and in the U.S., 6.2 days (Amblank, 2002). Table 1 lists the key statistics on German hospitals in 2000 and 2001. Furthermore, the introduction of the DRG system in Australia in 1992 comprised 667 groups and has continuously improved. As a result, patient stays have been reduced by 20% to 30%, and 20% of the released capacity has been abolished or reallocated to new innovative services (Higbie & Kerres, 2001). In general, a German mid-sized hospital (defined as 100 to 200 beds) settles over 20,000 cases per year, a figure that continues to grow. Consequently, there is a strong need for new, integrated IT systems to streamline all patient-related processes and to integrate, where possible, or even replace the systems currently used in hospitals (Stoffers, 2002). Moreover, IT systems must be flexible enough for improvements as the initial number of DRG classifications has already risen from about 600 to 881 in German hospitals (Riedel, 2001).
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Table 1: Key Statistics on German Hospitals in 2000 & 2001 Type of hospitals Hospitals (total) General hospitals: Public Community hospitals Private Bed capacity General hospitals: Public Community hospitals Private Hospital stay General hospitals: Public Community hospitals Private Total number of cases General hospitals: Public Community hospitals Private Average hospital stay (days) General hospitals: Public Community hospitals Private
Year 2001 2,240 1995 723 804 468 552,680 516,242 276,754 198,205 41,283 162,795,299 150,976,069 82,118,225 56,998,506 11,859,338 16,583,906 16,173,468 8,848,957 6,107,847 1,216,665 9.8
Year 2000 2,242 2003 744 813 446 659,651 523,114 283,537 200,611 38,966 167,012,964 155,187,164 86,213,548 58,653,010 11,320,606 16,486,672 16,096,353 8,899,561 6,077,962 1,118,830 10.1
+/-
-2 -8 -21 -9 2 -6,971 -6,872 -6,783 -2406 -2317 -2.53% 0 0 0 0 0.59% 0 0 0 0 -0.3
9 9 9 9
10 10 10 10
0 0 0 0
Source: Statistisches Bundesamt (2002)
SETTING THE STAGE Hospital Management Strategy: Importance of Patients as Customers
In the past, the principal customer of the hospital was the physician. The patient was secondary, merely the physician’s customer. However, the trend has evolved to where the interaction has broadened, and patients communicate directly with the hospital, as well as with the physicians. The relationship is now triangular, with relations between the hospital and its customers, and between the physician and the patient. The hospital must therefore focus its efforts on satisfying a more demanding patient, who wants to see quality, cost and value in the products and services delivered by the hospital. Patients today are savvier; they do their own research for information, treatment options and sources where they can obtain the relevant services in the most optimal way.
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The onus lies with the discerning hospital to take advantage of this fact and to stay ahead of their competitors by collecting, storing and disseminating this information to their key current or potential patients. It is important for the hospital to build a strong and longterm relationship with the patient and pursue referrals from the satisfied patient, which could attract potential new customers. In terms of information management systems and business models focused on efficient process systems, the healthcare industry is lagging behind other industries. Therefore, it is ever so critical that the healthcare industry review its strategy in order to survive. According to Cap Gemini, Ernst & Young (2002), all industries should adopt a business model that is customer-centric. A customer-centric business model is one in which a company proactively identifies, attracts, engages, serves and covets customers. In their study, the consultancy identifies seven universal elements of this paradigm as follows (Cap Gemini, Ernst & Young, 2002): • • • • • • •
profile, identify and connect with current and prospective customers; give customers a choice about how and when they interact with you; ensure access to the customer’s profile and any information that he or she requests with every interaction; ensure that new information is captured, disseminated and used effectively; develop mechanisms that minimize customer irritation, such as long hold times, multiple handoffs and unavailable or insufficient information; develop the capability to satisfy customers’ requests for insights and information at first contact; and treat customers as valued individuals by learning about their preferences, interests, concerns and wishes.
All of these elements form the building blocks of a CRM system. According to the German Hospital Institute, DKI (Deutsches Krankenhaus Institut), 70% of hospitals decided in favor of replacing of IT systems because this method allows them to precisely quantify costs (Stoffers, 2002). In addition, hospital management strategy should consider a comprehensive, efficient hospital information system, which supports the shift of focus to the patients. Respectively, doctors and hospital staff should be trained to lead patient-oriented discussions in order to provide optimal healthcare service. The reformation of the German healthcare system calls for the participation of the German citizens, health insurance companies and patients. Therefore, all parties involved should have easy access to healthcare information. Independent institutions for healthcare services, call centers of insurance companies, Web-based information services, hospital information services, as well as other networks and institutions, are the main communication channels for distributing this information (Deutsche Krankenhausgesellschaft, 2003).
Work Flows & Cost Drivers in Hospitals
A hospital information communication system should also provide information to the stakeholders and patient care centers, as shown in Figure 1. The information elements flowing across the various entities are the patient’s medical records, insurance informa-
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tion, DRG information, government regulations, hospital policy and procedure, and so forth. The main cost drivers in the hospital are in the areas of accounting, patient administration, procurement and human resource management. For instance, personnel costs account for 70% of overall costs in a general hospital. With the introduction of DRG calculations, the main cost driver for hospitals has changed from bed turnover to treatments per case (Higbie & Kerres, 2001). Research has shown that the average hospital loses between 2% and 4% of its revenues because of poor revenue-cycle management resulting from a lack of system integration (Cap Gemini, Ernst & Young 2002). There are CRM systems available in the market today, which can merge these areas of the hospital into end-to-end processes and integrate them into a seamless network. These CRM systems increase the transparency of cost and resource allocation within the hospital. This increased transparency can be a great aid to hospital management in the reengineering of the fundamental hospital structure, with the objective of minimizing costs, while remaining within the guidelines of DRG. A major cost reduction area that the CRM system has handled effectively is the mapping of documentation during a patient’s treatment, from the moment he enters the hospital until the day he leaves. This information is important in order to have a full picture of the situation, even though DRG is only applied on the day that the patient is Figure 1: Stakeholders & Information Communication Technology Funding Institutions Health Insurance Companies
Government
Top Management
Other Healthcare Organizations
Administrative Department
ICT Department
ICT
Physicians and Researchers
ICT Vendors and Consultants
Nurses
Hospital
Individual Patients
Patient Rights Organizations
Patients
Source: Spanjers et al. (2001) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Decision! Sequence of Diagnostic Measures
Medical History and Preoperative Exam
Source: Higbie and Kerres (2001)
Decision! Choose Admission Ward
Patient Admission
Diagnostic measures Decision!
Operation Intensive Care
Decision!
Discharge
Decision! Diagnostic and Therapeutic Measures
Postopeartive Exam and Care
Transfer from Inter. care to Normal ward Decision!
Intermediate Care
Transfer from Intensive Care to Interm. Care Decision!
Patient Discharge
60 Raisinghani, Tan, Untama, Weiershaus, Levermann, & Verdeflor
Figure 2: Decentralized Decisions Exemplified for the Heart Surgical Ward
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discharged (SAP, 2003). IT systems must support the improvement of information flow between patients and physicians, as well as work and decision processes as illustrated in Figure 2. In the past, some hospitals ignored their relations to their public environment, employees and patients. Today, hospitals are beginning to realize the importance of patients as a source of income. Thus, hospitals are developing marketing instruments in order to compete with other hospitals for the future patient. However, the communication methodology must comply with the German regulations for clinics, which forbid the simple promotion of clinical operations. Moreover, patient data is not allowed to be published, as this would violate the Bundesdatenschutzgesetz — the federal data protection/privacy law. The installation of CRM systems enables the introduction of patient-oriented marketing measures that allow patients to give feedback to hospitals in order to improve treatment (Torex-Deutschland, 2003). Furthermore, hospitals should not forget that healthcare is a field absolutely rife with emotion because a person’s health, and even life, is being addressed. Therefore, an accurate and reliable communication system must be implemented (Barnes, 2003).
Role of Information Technology (IT) in Hospitals
In IT solutions, simulation models that represent organizational processes in hospitals are used to optimize work processes. There are two types of simulation models with different strengths and weaknesses. In the first model, the underlying structure aligns the hospital’s organizational processes with the physical layout of the hospital. Patients are viewed as mobile units with assigned plans who move from one location, such as a ward or treatment room, to another, receiving the respective treatment plan at any given location. The treatment facilities are regarded as functional units where specific services are carried out. The physicians and medical staff are considered passive resources in the model. They are simply there to perform medical services. The doctors and medical staff are guided by the established procedures and local assignments in their administrative decision making. The limitation of this model is that human behavior of patients, as well as medical staff, is not taken into consideration as much as it should be. In this model, the prescribed treatment plans are standardized. There is no room to allow the medical staff to adjust treatment according to individual case, such as a set back or complication. Furthermore, the failure to consider the human element in the hospital’s systems and procedures also makes it difficult to accurately forecast and measure performance. The second simulation model, the agent-based simulation system, is able to support the economic and organizational decision-making process in the hospital domain. Such a system is developed in a two-step process. In the first step, a specific application context is modeled after a real situation in a selected hospital. The basic requirements posed on the simulation model within the hospital domain are analyzed. Based on the information gathered, one attempts to generalize the concepts concluded from this study. In the second step, a general-purpose, component-oriented, agent-based simulation system is developed. It can be used as a general modeling framework in the hospital domain (Sibbel & Urban, 2001).
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Technological Infrastructure
The technology component of a CRM strategy is vital to its success. Areas requiring integration in CRM are cross-channels, back to front office and operations to analysis. Therefore, the IT architecture and infrastructure must be reliable, well-designed and easy-to-maintain to meet the present and future needs of the organization. The Enterprise Solution Architecture Model (Cap Gemini, Ernst & Young, 2002) in Figure 3 illustrates how technology supports CRM. Health CRM applications have operational CRM (that includes analytical CRM) at the center of the model. Operational CRM deals with automation and streamlining workflow. Specific tasks of operational CRM include collecting data, processing transactions and controlling workflow. Some of the elements of operational CRM are described: • • • •
Portal Technology: Enables customers to connect with a company over the Internet. Workflow/Workload Management Rules Engines: Are instructions set forth by managers that enable computer applications to make decisions. Case Management/Accountability Functionality: Accounting system used for tracking patient inquiries, from initiation to resolution. Knowledge Management: Deals with software and applications that include analytical tools and databases, and is generally used to solve business problems.
Analytical CRM is sometimes treated as a subset of operational CRM. However, some healthcare providers prefer to use it as a stand-alone application in order to take
Figure 3: The Enterprise Solution Architecture Model
Source: Cap Gemini, Ernst & Young (2002) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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advantage of its data analysis and management capabilities. Both CRM applications utilize OLAP (online analytical processing) technologies and other tools that aid decision makers in the development and revision of plans. The next component of the Enterprise Solution Architecture Model is the Connected Health Business Model. This component comprises functional tools such as strategy alignment, solution design and change management. Finally, the last component of this model is the Health Integration Architecture. The main purpose of this component is to streamline and link the technologies and processes efficiently and effectively (Cap Gemini, Ernst & Young, 2002).
Rationale for a CRM Solution
Poor revenue-cycle management is one of the major costs of a hospital. CRM can redeem this cost with its enterprise-wide platform of information sharing, customer database, contact management, and system to coordinate and identify payers with external resources. A CRM solution can add business value to the hospital in the following areas (Cap Gemini, Ernst & Young, 2002; L&T Infotech, 2003): • • • • • • •
Reducing transaction costs for processes involving the customer Improving patient/physician satisfaction and loyalty Optimizing revenue potential by reducing “missed appointments” and via improved care-plan compliance Reducing claim refusals by insurance companies Lowering accounts receivable balances Differentiating itself by offering a better service experience to customers (i.e., patients and physicians) Creating a complete 360-degree view of the customer
Implementing a CRM system gives the hospital the capability to integrate its internal processes of marketing, sales, services, analytics, interaction center, field applications, e-commerce and channel management, in order to deliver a people-centric solution leveraged on existing technology and to lower overall costs (SAP, 2003). Since CRM is an approach towards dealing with customers, it is critical for companies to rethink and redesign their basic business processes and organizational structures in order to succeed. Previously, healthcare providers took an episodic approach to their interaction with patients and physicians, where costs and benefits were assessed per episode of care. Today, healthcare is treated as an ongoing mutual value, where relationships between patients and physicians develop over time. Another consideration before CRM implementation is performance measurement. Performance measures around CRM can be qualitative (e.g., customer satisfaction) as well as quantitative (e.g., percentage of inquiries handled per day). The study prepared by Cap Gemini Ernst & Young identifies efficiency (e.g., developing more customer selfservice capabilities, such as scheduling of follow-up appointments, prescription refills, pre-registration, class registrations and concierge service requests), service effectiveness, and market/revenue growth as three objectives on which healthcare providers should focus and are described below (Cap Gemini & Ernst Young, 2002). For instance, a hospital can conduct a patient-focused campaign, with the goal of increasing the
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number of interactions with patients by cross-selling healthcare services or using current patients as referral sources to their friends and family.
Rationale for CRM: Identification of Organizational Change
In the past decade, hospitals generally evolved through the following three types of organizational focus (Lorenzi & Riley, 1995): i. ii.
Functional-oriented organizational focus — organized around the various healthcare and administrative functions in the hospital as illustrated in Figure 4. Specialism-oriented organizational focus — organized around the various specialty areas in the hospital as illustrated in Figure 5.
Figure 4: Functional-Oriented Organizational Focus
Source: Sibbel and Urban (2001)
Figure 5: Specialism-Oriented Organizational Focus
Source: Sibbel and Urban (2001) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
CRM Systems in German Hospitals
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65
Patient-oriented organizational focus — organized around the patient needs as illustrated in Figure 6.
At present, hospital organizations are categorized into too many different functions and specialty areas. There is a lack of inter-connectedness and communication among the general business functions, specialty areas, administration, finance and customer care. Hence the functional and specialism-oriented organization structures may not be optimal from a business process standpoint. In the patient-oriented organization, processes are categorized by flows of patients, with multi-disciplinary teams and management integrated into a seamless network. The ultimate vision of the CRM system is customer service transformation of the hospital-healthcare organization, which inteFigure 6: Patient-Oriented Organization Focus
Source: Sibbel and Urban (2001)
Table 2: Comparison of the Old Model & Future-State Vision of a Hospital The Old Model
“Future State” Vision
1. Communication is fragmented
“Once-and-done”
2. Departments and services are siloed
Integrated information
3. Information systems are stand alone
Front-end and back-end integration of information systems
4. Customer access is fragmented
Customer access points are aligned
5. Web-function is limited
Interactive, personalized Web pages
6. Marketing is not well-targeted
Customer is segmented and marketing strategy is specific to each segment
7. Employee incentives are misaligned with corporate objectives
Rewards are based on measures of customer (patient) satisfaction
Source: Cap Gemini, Ernst & Young (2002) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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grates all patient-related data from the different functions (Cap Gemini, Ernst & Young, 2002). Table 2 illustrates the direction in which the hospital must move in order to effectively and efficiently integrate its processes, while keeping costs at a minimum.
Project Team
In a hospital, there is a strong personnel-related type of performance process between medical staff and patients. The employees are the most important factor for a hospital’s success in improving the quality of its service and the satisfaction of its patients. A successful CRM-implementation team must consider the following: • • • • • •
Start with a pilot project that incorporates all the necessary departments and groups that gets projects rolling quickly but is small enough and flexible enough to allow tinkering along the way Design a scalable CRM architecture Confirm that if the company needs to expand the system, it has the capability and flexibility to know what data is to be collected and stored Recognize the individuality of customers and respond appropriately Ensure that everyone within the organization, especially the IT department, has a comprehensive understanding of the business strategies and customers’ needs Implement the CRM project across all departments and make the implementation easy for the customers, not the company
The main reason why the introduction of a CRM system in a hospital might fail is a lack of communication between everyone in the customer relationship chain, leading to an incomplete picture of the customer. Poor communication can also lead to technology being implemented without proper support or buy-in from users. Any change made must involve and come from the people (SRD Group, 2003).
Rationale for CRM: Identification of Technological Potential
A CRM IT system is a valuable tool in the implementation of this new business strategy. The most relevant advantage of a CRM system is its flexibility to adapt to future requirements such as the addition of more DRGs. Furthermore, most CRM systems are designed with expansion capabilities and to interact with other systems such as the supply chain management, enterprise management, knowledge management, and other technologies. The crucial interaction with the patient is made possible via various technological advances that are popular and ubiquitous today — the Internet (Web page), e-mail, cellphone, personal digital assistant, pager, fax, phone (call center) and electronic kiosk. The patient is able to review his personal information (i.e, billing, scheduling, drug prescription and medication information) and to access relevant information (Web portals, library resources, physician directories, referral requests and community chats for various diseases). A CRM system can also greatly improve the internal process integration through the sharing of patient databases among different departments of the hospital. Doctors and hospital staff can access necessary information about their patients, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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regardless of their location. This would allow them to integrate their results in real-time, thereby saving the critical hours that may mean life or death for their patient.
Processes Involved in the Implementation
When implementing a CRM system, a hospital should focus its activities on following three different process areas: • • •
Patient-oriented information à Patient database Hospital facilities marketing à Quality management Development of preventive actions à Information policy
Hospital management should concentrate on the patient in the following perspectives during the establishment of a CRM system (L&T Infotech, 2003): • • • • •
Design and administer health policies for corporate clients Process medical claims (insurance/hospital claims, domiciliary claims) Liaise with the insurance companies for claims assessment and payment Facilitate the services of the network hospitals Provide information regarding medical facilities and advise on occupational health
Figure 7 illustrates the different objectives of a CRM system in terms of processes and information flow to patients and physicians and the customer “touchpoints” or Figure 7: Integrated CRM for Customer- and Physician-Related Processes
Expanded Functionality
Patient Interaction Physician Reference
Physician Value Feedback Physician Usage
c Se
ure
Int
c era
t
ive
Integrated Clinical
Tools & Resources
PPhysician hysician
Physician Patient
C lClinical inical
Tools & Resources
Advertisingto Web site Advertising Web site
Customer
Integrated Feedback Health Content
Personalized eConsumers Customer Hospital Services
Source: Health Vision (2003) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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channels at the top, where contact with patients begins. Some examples of these customer channels are e-mail, telephone, fax, Internet, mail and walk-ins. Customer Interaction Management, the next component of the model, is basically a desktop platform that allows healthcare providers to manage interaction with patients through all the various “touchpoints.” Enabling technologies are the technical devices that arrange and distribute the information. Some examples of enabling technologies are interactive voice response (IVR), computer-telephone integration (CTI), personal digital assistance (PDA) and Web application protocol (WAP). The establishment of a Web-based, information platform for instance, could facilitate the integration of the different inquiries for patients and physicians. Continuous integration feedback facilitates the development of a more customer-oriented hospital organization.
CASE DESCRIPTION
The current healthcare reform in progress in Germany is looking at the financial viability of German hospitals that have to become more competitive in order to survive in the long run. Thus, many private hospitals decline providing any internal financial data as they do not want to inform their current and future potential customers. Five case studies, including one German hospital compared to two Dutch hospitals, as well as interviews with the management of two additional German hospitals, are used to compare and contrast the separate organizational functions that collect and store quantitative and qualitative patient data. The five case studies were chosen since the intent was to explore the breadth of awareness of CRM systems solutions across enterprises (i.e., diffusion), and the depth of penetration of CRM implementations within organizations (i.e., infusion). The first case study is based on the secondary research available on ICT technology in one German and two Dutch hospitals. The second and third case studies are based on face-to-face interviews with Dr. Schulz, IT Administration Officer of Medizinische Hochschule Hannover (a public hospital); and Dr. Herr Kohnert, managing director of the International Neuroscience Research Institute (a private hospital), Hannover. Furthermore, the challenges of data sharing and data security as significant barriers for technological changes in hospitals are also discussed. The key focus is on CRM in a modern German hospital as it realigns its processes and strategies in order to focus on efficiency and customer satisfaction in a very competitive market.
Leipzig University Hospital (General Hospital)
This former East German hospital has a capacity of 1,500 clinical beds and 4,650 employees, with 15 locations. After the re-unification of Germany, there was a move to restructure and integrate the many systems in the numerous buildings, clinical and ambulant wards, and service facilities using ICT, specifically SAP/R3 modules. Although the Leipzig University Hospital has regional and national collaborations with other general and university hospitals, networking among the centers is uncommon. This lack of integration has caused issues such as unnecessary costs from inefficient and ineffective use of capacity and competence, and poor marketing (i.e., cannot attract the “right” patients). Thus, with ICT, the hospital was looking to solve or at least to reduce Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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these aforesaid problems. The ICT project was controlled by a central team comprising members from IMISE (Institut fuer Medizinische Informatik, Statistik und Epidemiologie), ZMAI (Zentrum fuer Medizinische und Administrative Informationssysteme), and the administrative and ICT departments. The Leipzig University Hospital evolved from a functional-oriented hospital to a specialism-oriented one (see Figures 3 and 4). Even in this early stage, the main goals of the Leipzig University Hospital centered around the patient (customer) database. At the end of the project, the final design of the network organization that resulted was not able to fully integrate all its information system. The system was based on bilateral agreements and uni-directional data flow (low reach and low range). Some of the problems facing the project were very similar to those commonly faced in the implementation of a CRM system, such as lack of a clear hospital strategy and foresight for future development, for example, to reach beyond organizational boundaries in seamless network projects; lack of clear measures for performance and integration; and/or lack of technical support and expertise since implementation and central computing facilities were mostly insourced. On the other hand, the ICT infrastructure implemented in the Leipzig University Hospital was based on current technology that has the scalability to accommodate future networking projects. This scalability is indeed advantageous as the hospital moves on to the patient-oriented organizational focus that may help the hospital administrators and staff to look into more advanced CRM-solutions. As the trend for implementing CRM systems in German hospitals is relatively new, we reviewed the relevant information on Information and Communication Technology (ICT) for the Leipzig University Hospital and two Dutch hospitals to get a sense of the European contextual perspective (Spanjers, Hasselbring, Peterson, & Smits, 2001; Sibbel & Urban, 2001). Table 3 compares and contrasts the ICT characteristics in one German and two Dutch hospitals.
Medizinische Hochschule Hannover (General/Public Hospital)
The Medizinische Hochschule Hannover (MHH) opened in 1965 and has performed clinical operations since 1972. In 2001, the hospital comprised 1,330 beds, 42,000 inpatient customers, 80% bed use and an average bed stay of 9.4 days. There were approximately 7,000 employees working at MHH and the overall budget was about € 370 million. The organization chart of MHH is available at www.mh-hannover.de/ueberblick/ verwaltung/organigramm/mhh_frame.htm. MHH comprises 18 medical centers with 75 divisions, 13 business units and central administration and the university center. It has university institutions within these medical centers such as dermatology in the Linden hospital and orthopedics at the Annastift hospital. At present, the MHH does not have an integrated CRM system. The transformation into a more patient-oriented organization hospital is planned for the near future. The patient-oriented improvements are controlled and conducted by the department of quality management, a separate division of the MHH. The biggest challenge faced by the MHH is the integration of its 36 decentralized systems into a more centralized and standardized IT infrastructure. The main systems in use are a hospital information system (HIS) and an enterprise resource planning (ERP) system provided by proKIM and SAP/R3. Figure 8 illustrates the various services offered Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 3: Information Communication Technology Characteristics in One German and Two Dutch Hospitals Information and Communication Technology Characteristics Level of network organization Organizational focus 1. Strategic drivers and incentives for networking
University Hospital Leipzig Academic Hospital (GERMANY) Intra-departmental towards interdepartmental Functional oriented towards specialism oriented Externally, marketing the hospital and attracting the ‘right’ patients
Internally, efficient and effective use of capacity and competence resulting in costreduction 2. Enabling conditions for networking
A clear hospital strategy is needed to align the strategic information management within.
3. Design of the network organization
There is only one clear seamless network project example in which ICT plays a dominant role. However it is based on bilateral agreements (two nodes) and unidirectional data flow that is not integrated with the other information systems (low reach and range).
4. Functioning of the network organization
Mainly the ICT department and the administrative department are involved in the organization and management of ICT. Technical support, implementation and central computing facilities are mostly insourced. The budget for innovation has been large.
Bosch Medicentrum General Hospital (The NETHERLANDS) Inter-departmental
Roessingh Rheuma Categorical Hospital (The NETHERLANDS) Inter-organizational
Specialism oriented
Patient oriented
Externally, to reduce costs
External, improve efficiency and effectiveness of rheumatology services, meet patients’ demands, through the exploitation of ICT Internally, to formalize effective lines of communication and develop expertise
Internally, to improve efficiency and effectiveness in control resulting in reduced costs without loss of quality in hospital healthcare Efficient and effective control of hospital organizations depends on ability to determine the relation between input and output. These changes demand a higher flexibility of ICT. In seeking improved efficiency and effectiveness, reorganization took place to evolve from an intra-departmental to a inter-departmental organization structure. Units (9 care units, 8 supporting care units and 2 service units) were introduced to give the middle management the flexibility needed (moderate reach and range). Hospital middle management, functional operators and physicians and the automation coordinator are involved in the organization and management of ICT. Technical support, implementation and central computing facilities are outsourced. The budget for innovation is small.
The demand and supply mechanisms regarding rheumatology knowledge and ICT knowledge across the network; sharing of costs (i.e., technical infrastructure) and risks (i.e., privacy) Separate responsibilities for rheumatology services and ICT services; different functional roles and levels: ‘sponsor’, ‘network cocoordinator’, ‘participants/users’; enabling role of multimedia network technology (high reach and range)
Network and stakeholder management; provision of telerheumatology services across the network; leveraging of rheumatology expertise across the network; centralized (concentrated) ICT infrastructure and dispersed ICT applications; differentiated demand and supply of multimedia network technology
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Table 3: Information Communication Technology Characteristics in One German and Two Dutch Hospitals (cont.) 5. ICT infrastructure of the network organization
The implementation of a new hospital information (SAP R3) system, based on new technology, makes future networking possible.
To support the specific hospital processes, mainly HISCOM (market leader) information systems are used.
6. Performance of the network organization
The lack of a clear hospital strategy provides no triggers to reach beyond organizational boundaries in transmural care projects. There is no clear measure for performance.
Reduced costs without loss of quality in hospital healthcare. In this way a contribution is made to the mission statement. The networking is starting to reach beyond organizational boundaries in transmural care projects.
A multi-media database -- ‘the post office’ -based on Internet technology is used to facilitate communication and diagnosis of rheumatology cases. Critical requirements are asynchronous multimedia communication. Improvement of interinstitutional collaboration and communication; efficiency and effectiveness; improvement of rheumatology services; stakeholder satisfaction, redefinition of stakeholder roles and (strategic) positioning in the sector
Source: Sibbel and Urban (2001)
Figure 8: Medizinische Hochschule Hannover’s Services STATION (normal, intensive)
Patient Admin.
CLINIC (surgical, non-surg.)
Universal Communication Basis
Diagnostic Services
Central Computer System Registration, transfers, leave, diagnosis, therapy documentation, invoices (proKIM, Highdent Plus)
Communication server (DATAGate), User-server, Web-, File-, Exchange-, Mail-, Fax-, Archive-, Proxy-, Citrix-, Video-, External server, etc.
Laboratory, pathology, radiology, nuclear-medicine, neuro-physiology, cardiology
Central Archive of Data and Document Documents-, Diagnosis, Pciture archive, Service database, Archive-and-retrieval system (ALIDA)
Data-networks (LWL, Cu) - Distributor - Router - Gateways
Operation, operating theatre, physical therapy, urology, endoscopy
MHH - Administration and Centralized Services Finance, Technical, Human Resource and Administration (SAP)
Students, Apartments
Therap. Services
Warehouses, pharmacies, bloodbank, kitchen
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by MHH and the interface between them. The HIS is linked with a laboratory information system (LIS) enabling MHH to collect and record all patient-oriented data digitally. In 1999, the migration of hardware and software from a mainframe to client-server was completed. At present there are Internet, intranet, mail-servers, directory-list servers and backup servers installed. Data security is achieved by an internal control and tracking system of all user-registration in the hospital matched with personnel data files and a firewall that secures the backbone system. There is an emergency concept for ensuring system operations in the case of an outside attack. The integration of the different functional data is very important for the introduction of DRGs in 2005. Until 2005, MHH plans to introduce a PAC-System that transfers diagnosis pictures and x-rays within the hospital via both internal networks and wireless local area networks. The exchange of data via mobile work places that are equipped with a laptop and linked over a wireless network with a transfer rate of up to 2 MBit/sec will be extended over the entire hospital. In addition, the AIRONET/Cisco APA 4500 and Artem Compoint permit a codified data transfer at a transfer rate of 11 MBit/sec. A new multi-functional identification card is under discussion to improve access control to internal patient data. The establishment of a digital, comprehensive and integrated CRM-system with its focus on patients is on the medium to long-term horizon, as public hospitals such as the MHH optimize their internal information flow processes.
International Neuroscience Research Institute (INRI) (Categorical Private Hospital)
INRI provides a comprehensive range of diagnostic procedures and treatment options for diseases and disorders of the nervous system. At the INI a team of internationally renowned specialists provide the full range of modern neuromedical techniques with notable diagnostic and therapeutic neurosurgery, neuroradiotherapy and neuroradiology. A special emphasis of the INI is the interdisciplinary, surgical and interventional radiological treatment of vascular malformations and tumors of the nervous system. The INI also offers highly specialized surgery, including brainstem implants for the treatment of hearing loss and deep brain stimulation for the treatment of Parkinson’s disease. The INRI private hospital uses a patient-oriented strategy but does not have an integrated CRM system in place yet. At present, INRI’s quality management department is collecting patient-feedback (questionnaires) in order to optimize internal processes and the treatment of patients. INRI uses scientific opinion leaders and physicians to get access to its potential patients. Its information communication technology comprises an HIS and an ERP system provided by ISHMed and SAP. The ERP system collects the quantified data, and HIS registers all qualitative data related to the patient. In the long run, INRI plans to establish an integrated CRM system. Table 4 compares and contrasts the information and communications technology (ICT) between INRI (a private German hospital) and MHH (a general/public German hospital). The INRI has a patient-oriented organization and lower operating costs in terms of personnel than the MHH. The investment in a CRM system is postponed because INRI is still screening the market for a standardized software solution.
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Table 4: Comparison of ICT Between INRI and MHH
ICT Characteristics CRM-systems Patient focus strategy Patient feedback Communication
Hospital information systems (HIS)
Data collection
Outlook
Private Hospital International Neuroscience Research Institute No CRM-system Yes Frequent patient surveys • Scientists • Recommendations • Special press • Online portal • Patient data • Data warehouses • JIT data provision • Data integration via inhouse networks, ISDN, inter- and intranet • Data management software • ISHmed • SAP R3 • Establish an integrated CRM system
General Hospital Medizinische Hochschule Hannover No CRM-system Under survey Quality management • Press center • Research • Online portal • • • • • • • •
Patient data Data warehouses JIT data provision Data integration via inhouse networks, ISDN, inter- and intranet Data management software ProKIM SAP R3 Integration of quality management and HIS
CURRENT CHALLENGES FACING THE ORGANIZATION
Both Gartner Dataquest and Giga Information Group estimate that failure rates of CRM implementation projects remain at approximately 60% due to unclear organizational goals and a lack of success metrics, made worse by the complexity of enterprise CRM initiatives. In light of the above case studies, a CRM application that is appropriate to the organization in terms of its functional breadth and depth is paramount to a successful CRM implementation. Next we discuss the management and technical issues related to CRM.
Management Issues Related to CRM
CRM is not only about the technology. It is more about organizational and cultural change demands from hospitals to conduct transformations to patient-oriented organizations. Many CRM initiatives fail because senior management lacks the involvement, vision or enthusiasm necessary to achieve the anticipated outcomes. Figure 9 illustrates the transformational change cycle that is applicable to the cases we have discussed in this study. Cultural changes require a transformational change cycle that involves four phases: 1.
Initial Phase: It is necessary to have a real focus on the result desired that includes business needs, objectives, strategy and planning; not on the technology. In the hospital, every member of the medical staff needs to understand that the purpose of this change is to increase the number of patients and to maintain the loyalty of the existing ones. Other purpose of this change is to reduce costs and to increase the ROI.
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Figure 9: The Transformational Change Cycle
Pressure to Change
Decision to Change Acceptance of Action
Action Initiated
Source: SRD Group (2003)
2.
3.
4.
Uncertainty Phase: The employees need to know, understand, and have the enough time to discuss and accept the change. It is necessary to have good communication levels amongst them. It is important to know that in the healthcare business, the doctors are dealing with patients every working day, and thus, they have a good knowledge of customer relationship. However, they need to know that there are other ways to improve that relationship and to make it more efficient using CRM strategy. Breakthrough Phase: Training the staff in this new technology is a good approach, but it is also necessary to evaluate the feedback of this training. In the hospital, it is important that personal staff develop their abilities to manage this new system and to apply it in their normal work. Competence Phase: This phase is normally missed and not recognized as important. The impact of this phase deals with the acceptance. In a hospital, it is not easy to measure the acceptance level of the employees and the customers of this new technology, but it is basic guideline to estimate it with the ROI (SRD Group, 2003).
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For healthcare provider services, the customers tend to be much more forgiving, as they will put up with a great deal more than they will in normal commercial situations. Some healthcare professionals may resist the very notion of measuring customer satisfaction. It is not easy to have quick feedback of how a CRM business strategy is doing, but it can be measured using the following parameters: • • • •
Reduced reporting and/or sales cycle Reduced expenses/cost of doing business Improved external/internal customer satisfaction Increased sales and productivity
Technical Issues Related to CRM
The ability to integrate the operational and analytic CRM/ the front- and back-end applications, the length of time required for deployment, scalability, ease of maintenance and the potential to upgrade are important technical issues for CRM products. Based on the above case studies, the key challenge areas with respect to technical CRM are patient access and integrated call centers. Patient Access Since many customers have access to online information of various healthcare providers, the information needs to be interactive. One of the CRM solutions is to give the customers the option to customize the Web site based on their specific needs. The hospital can interact with the customers easily via personalized e-mails and provide prompt feedback. On those Web pages, the end-users such as patients and hospital administrators/staff/physicians can find a wealth of comprehensive information about the hospital staff, appointment schedules, registration for healthcare programs and library resources. Integrated Call Centers Call centers have an important role for patients, their families and physicians, who want a unique point of access to the hospital organization. Normally, the call centers are structured for specific functions and there is little or no interaction with most departments of the hospital. They are also set up to manage call processing, instead of relationship building, and are based on elementary call-routing or automated calldistributor systems, with some basic voice-recognition capability. Now, most healthcare organizations have changed their view of call centers — they are arguably the best way the hospital can improve their customer service and customer relationships and in turn, profits (Cap Gemini Ernst & Young, 2002). Thus these call centers will increasingly be turned into “contact centers” that handle e-mail and Web interaction, as well as inbound and outbound telemarketing. In summary, the German hospital is now facing many governmental and regulatory pressures as it enters the new technology era. It needs to review its fundamental structure in order to increase its hold on its key asset — the customer/patient. It has to realign its processes and strategies to focus on efficiency and customer satisfaction. In the midst
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of a highly competitive market, in order to remain in the business, it should not only seek to compete against its rivals, but it should look into cooperating and collaborating with the other healthcare providers. It is essential to share information within the network of the hospital and if possible, to extend to external partners so that it can provide the customers with an optimal service. The goal must be to build a lifetime relationship with the patients and to gain new, domestic and international customers. In this respect, CRM systems and other existing IT solutions that facilitate information sharing and networking are key to the success of a modern German hospital.
REFERENCES
Amblank, O. (2002). Kienbaum-Krankenhaus-Studie 2002. Kienbaum Management Consultants. Barnes, J. (2003). Bristol Group Inc. Retrieved September 18, 2003: http:// www.bristolgroup.ca Cap Gemini Ernst & Young (2002). Building the customer centric HDO. Customer Relationship Management in Healthcare, (July). Crosby, L.A., & Johnson, S.L. (2000, Winter). What to do before going 1-to-1. Marketing Management, 9(4), 15-21. Fichman, R.G. (2001). The role of aggregation in the measurement of IT-related organizational innovation. Management Information Systems Quaterly, 23(4), 4. Filiuolo, M. L., Mango, P. D., & McCormick, D. H. (2000). Hospital heal thyself. McKinsey Quarterly Report, 1, 91-97. Gutachten, Finanzierung, Nutzerorientierung, & Qualität. (2003). Retrieved September 18, 2003, from Deutsche Krankenhausgesellschaft, Sachverständigenrat für die Konzertierte Aktion im Gesundheitswesen: http://www.dkgev.de/ pol/pol-2003 RS-66 SVR-Gutachten-2003.htm Healthvision (2003). To Enhance Customer Relationships—Leveraging the Internet [electronic version]. Retrieved September 18, 2003: www.heathvision.com Higbie, W., & Kerres, M. (2001). Auf dem weg zum Gesundheits-Unternehmen. Management & Krankenhaus, 7(8), 9. Juki, N., Juki, B., Meamber, L., & Nezlek, G. (2002). Employing a multilevel secure approach in CRM systems. The Journal of Information Technology Theory and Application (JITTA), 4(2), 17-31. L&T Infotech. (2003). Case Study: CRM Implementation for a Health Management Consultant. Lorenzi, N.M., & Riley R.T. (1995). Organizational aspects of health informatics. Managing Technological Change. New York: Springer-Verlag. MCC Health World. (2002). Modernes Krankenhausmanagement im Zeichen v. e-Business u. CRM. Das Krankenhaus von (über-) Morgen, Forum 4, Cologne, October. MHH. (2002). EDV Gesamt Konzeption: 3-Fortschreibung bis zum Jahr 2005. Medizinisches Hochschulrechenzentrum. Rogers, E.M. (1983). Diffusion of Innovations (DoI). New York: The Free Press. Riedel, T. (2001). Das Medicare-DRG-System und seine Anwendung auf das deutsche Fallpauschalsystem. Fachhochschule Giessen-Friedberg Fachbereich KMUB: Krankenhaus-, Medizintschnik, Umwelt und Biotechnologie. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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SAP. (2003). SAP® for Healthcare. Retrieved September 18, 2003: http://www.sap.com/ company/press/factsheets/industry/healthcare.asp Schmidt, H. (2002) Gesundheitsreport. HPS Research, July. Sibbel, R., & Urban, C. (2001). Agent-Based Modeling and Simulation for Hospital Management. Cooperative Agents. Kluwer Academic Publishers (pp. 1-18). Spanjers, R., Hasselbring, W., Peterson, R., & Smits, M. (2001). Exploring ICT-enabled networking in hospital organizations. Proceedings of the 34th Hawaii International Conference on System Sciences, (pp. 1-10). SRD Group Auckland. (2003). CRM and Cultural Change: It’s about People, Process and Technology. Retrieved September 18, 2003: http://www.srd-grp.com/crm.php/ crm-cultural-change Statistisches Bundesamt (2003). Eckdaten der Krankenhausstatistik 2001. Stoffers, C. (2002). A Healthy Economy for Hospitals. Retrieved September 18, 2003: http://www.sapinfo.net/public/en/search.php4/start/t/hospitals/cat Zünkeler, M. (2003). Marketing für Kliniken—Das Krankenhaus als regionale Gesundheitszentrale. Torex Deutschland.
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78 Shakir & Viehland
Chapter V
The Selection of the IT Platform:
Enterprise System Implementation in the NZ Health Board Maha Shakir, Zayed University, UAE Dennis Viehland, Massey University, New Zealand
EXECUTIVE SUMMARY
The Health Board is one of the largest public health care providers in New Zealand (NZ). In early 1999, a supply chain optimization review recommended an enterprise system (ES) implementation to provide better control and reporting of organizational finances. The focus of this case is the IT platform decision made in conjunction with the ES implementation process. This decision was thoroughly considered by all Health Board stakeholders and the final choice was made in alignment with the Board’s strategic IT policy. Nevertheless, initial testing two months prior to go-live revealed major performance problems with the new system. The case documents the events that led up to the selection of the original IT platform and the challenges the project team faced in deciding what to do when the platform did not meet contractual specifications. 1
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The Selection of the IT Platform 79
ORGANIZATIONAL BACKGROUND
The Health Board is a non-profit public organization that is one of New Zealand’s (NZ) largest providers of public hospital and health services. The Board has approximately two million patient contacts annually and provides regional services for 30% of NZ’s population. The organization is structured around seven business units that include four specialist teaching hospitals and other facilities offering community health services, mental health services, and clinical support services. The Health Board vision focuses on patients’ needs. Being a non-profit organization, surplus funds are allocated to supporting patients, research, and education. Table 1 provides the organization’s profile. Health funding in NZ is disseminated through 21 district health boards (DHBs). Each DHB is responsible for improving, promoting, and protecting the health of the population it serves. For their catchment area, each DHB is delegated the responsibility for making decisions on the mix, the level, and the quality of the health services that are publicly funded. They are also responsible for entering into agreements with providers for health service delivery. DHB decisions are made on the basis of local needs, within national guidelines. Funding is based on the size and characteristics of the population of the district each DHB serves; however, a few nationally funded services still exist. The Health Board is one of three DHBs in the same region that share a vision to promote close cooperation for the provision of health services. The Board is made up of 11 members: seven elected and four appointed. All Board members report directly to the Minister of Health.
Table 1: Organization Profile Categories
Health Board Profile
Core business
The provision of public hospital and health services
Type of organization
Non-profit organization
Ownership
Public organization
Business units
Four specialist teaching hospitals and facilities offering community health services, mental health services, and clinical support services
Mission statement (1999-2000)
“The Health Board will provide New Zealand’s finest comprehensive health service through excellence and innovation in patient care, education, research, and technology” (Health Board Annual Report,1999-2000).
Customers
Patients (two million patient contacts annually)
Reach
Regional (within NZ)
Organization size
8,500 employees $600 million budget for the year 2000/2001
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80 Shakir & Viehland
SETTING THE STAGE
In 1999, ConsultCo, a big-five consultancy firm, was engaged to assess the strengths and weaknesses of the supply chain management function at the Health Board, with a view to provide recommendations for the improvement of that function. The product of that engagement was a supply chain optimization (SCO) review report. The SCO review identified problems in business operations and suggested a combination of an organizational restructure, business process reengineering (BPR), and ES (ERP) implementation to accomplish the change program. The core financial modules of Oracle 10.7 ERP system had been implemented in 1997 and were operational at the time the SCO review was conducted. However, that implementation was heavily customized and could not provide for realizing the new strategic vision that aimed to “standardize, consolidate, and integrate services … and control finances” (Strategic Plan for the Health Board 2002-2007). In addition to the recommendation of the SCO review, in early 1999 the Health Board was informed that Oracle 10.7 financials was going to be de-supported by Oracle by the end of 2000, leading to the realization that a major application upgrade was urgently needed. As a result, and in partnership with ConsultCo, an ES business case was developed with a view to rectify these problems. The business case included eight key objectives that were linked to the Health Board’s strategic plan. These are summarized in Table 2.
Table 2: ES Project Objectives Objective
Descriptions
1
To achieve the savings identified in the Health Board strategic business plan
2
To account for savings through an appropriate standard costing mechanism within inventory.
3
To have reporting systems that enable management by exception and the control of rogue expenditure.
4
To implement procurement through a standard requisition process with a catalogue environment.
5
To implement processes for the delegation of authority and risk management of the procurement process.
6
To have a platform in place which: - positions the Health Board to enter into external shared services with other local health care providers - facilitates internal interconnectivity, which allows for the consolidation of accounts payable, inventory management, internal logistics, and enables external supply chain connectivity. To implement the “Health Board Way” throughout the supply chain process, with a particular focus on standardization of processes, integration of systems, and consolidation of service.
7 8
To act as a catalyst for the change in business processes and work practices.
Note: Adapted from the Health Board ERP System Business Case (June 2000, p. 25)
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The Selection of the IT Platform 81
Despite the problems the SCO review had identified with the Oracle 10.7 system, there was an agreement that the new implementation would still be an Oracle ES. The Health Board would have had to write-off the huge investment in the Oracle 10.7 application if it chose to change to a different vendor. Therefore, the business case for the new system was written with a focus on an Oracle upgrade and implementation that was financially justifiable. Organizational restructuring started by the end of 1999, with new job descriptions being written and advertised to fulfill the new organizational design. All new roles had a focus on system implementation experience in preparation for a re-implementation of ERP applications to support the change program. Table 3 presents a chronology of ES implementation events. The final business case the Board considered in July 2000 compared two upgrade alternatives. These were an upgrade from Oracle 10.7 to either Oracle 11 or Oracle 11i ERP applications. While Oracle 11 was in operation since 1999, Oracle 11i was a new release that was launched in NZ in June 2000. The Health Board chose the upgrade to the Webenabled Oracle 11i application to avoid the need to undergo a further upgrade a short time later. A profile of the ES implementation project is included in Table 4.
CASE DESCRIPTION
It is October 2000. James Keen, the chief financial officer (CFO) of the Health Board and the business sponsor of the ES project, is faced with a difficult decision. The Table 3: Main ES Implementation Events (1997-2000) Date
Event(s)
1997
- Implementation of the heavily customized financial modules of Oracle 10.7 ES.
Early 1999
- Oracle users were informed that the Oracle 10.7 ES would be desupported by the end of 2000. An upgrade was suggested to address the loss of future support.
Mid-1999
- The newly appointed CFO recruited a BPR Manager to project manage and review both the supply chain and the finance functions in partnership with ConsultCo, a big-five consultancy firm. The output of that partnership was the supply chain optimization (SCO) review.
End of 1999
- The ES business case was developed to resolve the majority of the SCO review recommendations, including a major system upgrade, with the CFO being the ES project sponsor.
March 2000
- In conjunction with the initiation of the ES project, new organizational roles were established, advertised, and filled by March 2000. All new recruits received training on the Oracle 10.7 applications.
March-May 2000
- A request for proposals for implementation consultancy services was issued. Bids were received and evaluated, with the winning bid going to ConsultCo.
June 2000
- The new version of the Internet-enabled Oracle 11i application was released.
July 2000
- The ES business case was submitted to the Board and approved.
August 2000
- The ES implementation project started, including core financials, fixed assets, and procurement modules.
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Table 4: ES Project Summary Categories
Descriptions
ES product name & version
Oracle 11i
ES core modules
Financials (upgrade), fixed assets (new implementation), and procurement (new implementation)
Number of users
8,500 users, including 120 power users
Cost of implementation in dollars
Approximately NZ$2.3 million that included NZ$1.7 million for hardware, software, consultancy, and internal costs; plus NZ$650,000 for operational costs, including backfill and change management.
Number of locations
One instance implementation on multiple sites (seven business units on two geographically distributed sites).
Implementation management/consultancy
Third-party implementer: ConsultCo, a big-five consultancy firm.
implementation of the Oracle 11i ERP system is scheduled to go live in mid-December. However, initial testing shows that there are some key performance problems with the system. In a meeting with the project team earlier that day, James was told that software testing on PCs that use the Windows NT platform showed substantial delays in data processing. Even worse, the tests were carried out using mockup data and the expectation was that these would be fairly manageable by the system. James remembers that the IT platform issue was one of the issues the ES project team had spent considerable time on during the evaluation phase. The IT platform is the foundation for all business applications; hence it is key to any successful IS implementation. As shown in Figure 1, the base of the IT platform is the hardware (HW) and operating system (OS) layer. Although the components in this base layer are largely commodities and are readily available in the marketplace (Broadbent & Weill, 1997), the
Figure 1: Business Applications & the IT Platform Inter and intra organization applications (i.e., CRM, SCM, electronic commerce)
Business applications
ES applications IT platform Databases HW and OS
Note: Adapted from Broadbent and Weill (1997) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
The Selection of the IT Platform 83
hardware and software architecture form the basis for the IT capability and functionality of the firm (Meyers & Oberndorf, 2001). When purchasing any new, large application the organization must consider a number of criteria for a suitable IT platform. One obvious factor is the vendor’s choice of platforms. For example, if a Linux-based version of the application is unavailable, then Linux is not an option. A second factor is the cost of the operating system and the hardware. For example, initial investment in Windows is generally considered to be a high-cost option, while Unix and Linux cost less (NetNation Communications, 2003). However, organizations must also look beyond acquisition costs to total cost of ownership (TCO), which also includes operations and control costs. TCO can be as much as 100% more than hardware acquisition costs (David, Schuff, & Louis, 2002). A third factor is any hardware/software standard configuration policy in place, usually to solve operational problems (McNurlin & Sprague, 2002). Because of existing staff expertise, the need to integrate applications across a uniform platform, or attempts to reduce TCO, an IT department may prefer or require a standard IT platform for all applications. Other factors such as ease-of-use, portability, processing capability, track record, reliability, and scalability also influence the IT platform choice. See Table 5 for a more detailed comparison of the Windows NT and Unix operating systems platforms. These general factors apply to enterprise systems implementations. TCO is a critically important component in determining the business value of an ERP initiative (Meta Group, 2000). Additionally, a new ES implementation or upgrade requires knowledge and expertise in areas of software functionality, systems configuration and integration and other technical aspects of the IT platform (Ng, 2001). Other factors that are part of an IT platform decision for ES implementation include vendor customer Table 5: Unix vs. Windows NT Platform features
Unix
Windows NT
Administrative support
Unix has advanced server and user management administrative functions. For example, Unix has a disk space allocation utility that can control disk space for any user.
A disk storage facility is not available with the NT platform.
Costs
Most Unix applications are free to use.
Most Microsoft’s applications are proprietary; therefore companies pay for using them. Furthermore, compared with other hosting platforms, Windows often require more staff resources to maintain. Hence, the Windows total cost of ownership is relatively high.
Interface/Ease of use
Unix is text-based and uses a command line structure.
Windows uses a graphical user interface (GUI) and is the operating system of choice for many new users, with a reputation for ease of use and administration.
Portability
Unix is an open source platform; therefore, there is a wide variety of CGI scripts, PHP scripts, and MySQL applications that will work on nearly any Unix system. However, writing an application with a Shell script or Perl in a Unix environment needs a lot of programming experience. Also, not designed for Windows, many of these scripts will not work on a Windows platform. Unix is portable to numerous hardware platforms. However, different vendors of Unix have released different versions. As a result, an application loses its portability if it is not running on all versions.
The Windows platform is compatible with Microsoft applications, such as FrontPage, Access and MS SQL. It also offers the use of programming environments such as Active Server Pages (ASP), Visual Basic Scripts, MS Index Server and ColdFusion. These serverscripting technologies are now becoming more popular because they are easy to use.
Processing capability
Unix is a multi-user, multitasking operating system that is text-based. As a result it can dedicate the full power of the server to applications. Hence, its powerful multiprocessing capabilities are still unparalleled.
The Windows NT platform is a multi-user and multitasking operating system.
Track record, reliability, and scalability
Unix has been in a state of constant refinement since its inception 30 years ago. The platform has a proven track record of performance, stability, and security. Furthermore, Unix can be used over networks that range in size from small servers to supercomputers.
Windows NT was a relatively new platform. Currently, the Windows 2000 Server is the newer hosting platform that completely replaced Windows NT.
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support, lease versus buy options, and the working relationship, good or bad, that the IT vendor has with the organization (Hirt & Swanson, 1999). Many of these criteria for the IT platform decision were considered by the NZ Health Board ES project team. Vendor1 had proposed an IT platform consisting of Sun computers using the Unix operating system. Vendor2’s proposal was to support the ERP application on IBM computers running Windows NT. Michael Field, who has the conjoint role of ERP Project Director and BPR Manager, recalls how the initial IT platform decision was made: We gave the opportunity to a number of hardware suppliers based on our statistics [that] we’d collected through the business case exercise. … ConsultCo was helping us write the business case. Also was Oracle. … We had already collected all of that information informally so we already had a view on what was possible and what wasn’t. Part of our strategy was preferably to go down an NT operating system route. That’s why we went down the hardware route that we did because it was an NT operating system…By the time it got to formally go out for RFP for the hardware, we knew what we wanted and how we would evaluate it. … We wanted to make sure we had the right guarantees. So contract negotiations with those hardware vendors was very much written into warranty — [we had a] strong focus on warranty provisions. … We again ended choosing objectively a hardware solution, which was based on the NT platform… Then it was up to the hardware vendor to guarantee that the Oracle software would work on their hardware. That was a large part of the negotiations because we knew we were going into a risky environment and that was the only way that we could seal it because we didn’t have a relationship with a prime vendor…We had to make very sure each one of the individual contracts we signed had good warranty clauses in them… The Board’s IT department had favored the Windows NT platform because it was the standard IT platform for the organization. Furthermore, two years earlier, a review of information systems at the Health Board had concluded that business operations were disadvantaged because of an inconsistent approach in managing IT. A standard configuration policy was promoted and this had a strong influence in the selection of the IT platform. Finally, there were significant price savings in adopting the Windows NT platform over the Unix alternative due to lower TCO. An issue that complicated the evaluation of the IT platform decision was that Oracle 11i had just been released at the time the IT platform was being considered. The proposed Health Board implementation was to be the first implementation of Oracle 11i in NZ. Additionally, the only planned implementation in Australia was in a for-profit business that was relatively smaller than the Health Board. As a result the Board lacked any concrete evidence of how the application would perform under either platform. Theoretically, the Oracle 11i set of applications could be supported by both platforms, Windows NT or Unix. Andrew Smith, the Accounts Manager for Oracle at the time had explained that “yes, both alternatives were possible,” though he recommended the Unix platform. Experience in implementing ERP applications on the Unix platform showed that system performance was often more stable, especially for an implementation Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
The Selection of the IT Platform 85
the size of the Health Board. Andrew, whose role was focused on sales and managing the client-Oracle relationship, left both options open for the Health Board project team to decide. The other party involved in the IT platform decision was ConsultCo, the big-five consultancy firm that was the ES implementation partner. Like many public organizations in NZ, the Health Board was embarking on a big ERP project, but with a considerably low implementation budget for the size of the organization. To support the fast track project, the Health Board contracted with ConsultCo to manage both the evaluation and implementation processes. In NZ, it is common practice that the client organization determines what the new IT platform should be. Most organizations in NZ are small and medium-sized enterprises (SME), especially when compared to organizations in North America or Europe. As a result, the resources allocated to these implementations are relatively small, even though the systems involved usually have the same amount of sophistication and complexity. As one means of cutting costs, the client organization generally takes more responsibility in implementation decisions. That was the case here — the Health Board was responsible for a large portion of the implementation risk and the IT platform was one of those risks. After considering the advice offered by the Board’s IT department, the Oracle Account Manager, and ConsultCo, the Health Board ES project team selected the Windows NT platform for the implementation of Oracle 11i ERP system. Knowing the risks involved, and to mitigate these risks, they put into the agreement with Vendor2 a condition to ensure that the new system performed according to specification. If performance was not acceptable, the legal agreement allowed for the contract to be terminated. Vendor2 accepted this condition and implementation began. Coming back into the present, James was very disturbed to learn that the performance tests during the past week had shown unacceptable delays in data processing. He realized that a revisit of the earlier evaluation decision was imminent. James knew that this could represent a major setback to the project. If this problem were to delay the golive date, even if only by a few months, then the whole project would collapse. Any delay, he thought, would require a huge boost in the implementation cost. Specialized ERP consultants were scarce and the ConsultCo consultants working on the Health Board project were being flown into NZ from the ConsultCo office in Australia every week. To consider extending the project, even for a few weeks, would mean a large increase in costs and the Health Board did not have a large contingency fund to cover this blowout. Furthermore, as part of new government regulations, the Health Board was to start implementing a new chart of accounts in December. Plans for implementing the new chart of accounts were embedded within the new ERP system, so statutory requirements, as well as cost considerations, were at risk. James, as the business sponsor of this project, knows he needs to move on this issue very quickly. Going over both the earlier considerations of the IT platform decision and the contractual obligations with the hardware vendor, he wondered: Could he recommend that the contract be terminated and go for the alternative path of the Unix platform? Because of the size of the contract, organization policy necessitated that such a decision needed to go to the Board members for approval. Other questions that needed a careful assessment were: What if the hardware vendor decided to go the litigation path? What
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86 Shakir & Viehland
if the problems were not caused by the IT platform? What if the Board did not approve the change? James knows that a decision needs to be made and to be made very quickly. It is one of those times when not making a decision is going to jeopardize the fate of the project anyway. He picks up his phone and schedules an urgent meeting with his project team the next day.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
One of the main problems that affected the choice of both the OS and the hardware platform was the relationship between the release version of the ES application and the IT platform. The Health Board had chosen to implement the new release of Oracle 11i; yet, experience in implementing different combinations of OS and hardware platforms with the new release was very limited. In the following, Michael Field, the ERP Project Director/ BPR Manager), explains the implication this decision had on ES implementation: One of the important areas in terms of a large ERP implementation is around the maturity of the software and its relationship with the operating system. This had quite a large impact on the issues which we had to manage for our project. For us, one of the biggest things in this particular implementation was the relationship of the application to an operating system. That triggered a whole lot of things for us. What we did on the project might have been different to some other ERP applications because this issue looked like it was going to have an impact on us being able to deliver the whole project on time. When a lot of people do an implementation they bundle the whole implementation with no risk. They pass the risk onto the party implementer who supplies everything — the hardware, software, and implementation services. In our case we believed we didn’t want to do that so we structured the project in a certain way and that was to get a third party to help us do the implementation. We’d buy our software from someone else and we would get the hardware from somewhere else. This in terms of managing a project of this size proved too challenging. But for us, that was the only way we could afford to do this project. It [selection of the IT platform] had a major impact on the project. So … [it] went up through to the steering committee, even to the Board. … Even though we had used all the expertise from Oracle, all the expertise from the IT platform vendor in this case, plus ConsultCo’s collective expertise, so-called best around the world, the decision ended up in hindsight not the right one. But at least we made a decision. Although the initial IT platform decision was made at the project manager level, where Michael (ERP Project Director) and ConsultCo were key decision-makers, when performance deteriorated James (the CFO) stepped in in order to rescue the project. He says:
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The Selection of the IT Platform 87
I didn’t get involved in those [IT platform] decisions at all. That was driven out of the IS function working with the consultants. That’s where we had major problems all around — around the hardware and the database. A decision had been taken to go down that path. As we got into the project, there were problems. There are two different explanations to the software performance problems that caused the Board to consider a change in the IT platform decision. The Health Board attributed performance problems to the newly released Oracle 11i. Oracle, the ES vendor, attributed the problems to a combination of unrealistic expectations, limited vendor participation, and an immature implementation experience. A detailed explanation of these two views is provided next. The Health Board based their conclusion that the Oracle 11i had not been thoroughly tested within an NT environment on their own experience, as well as the experience of others who were implementing Oracle 11i at the same time. Heated discussion in the online forum of the Oracle application user group (Hawaii Ebuzz, 2000; Songini, 2000) and a 2001 report from the Gartner Group (“Oracle calls Gartner Group biased,” 2001) affirmed this explanation that Oracle 11i was not ready to go to the market in its initial release. The ES vendor Oracle believed that the IT infrastructure problem was exaggerated for three reasons. First, neither the vendor nor any of its representatives were actively involved in the implementation. Therefore, critical issues did not come to their attention until a problem became significant and needed immediate action. Second, although the implications of implementing a new release had not been clearly explained by Oracle in advance, the Health Board should have had realistic expectations when they chose the new 11i release. One fact most computer professionals are aware of is that new software releases are never bug free until they are validated by users. Therefore, problems inherent in the new software release could have complicated the diagnosis of performance problems. Third, the ConsultCo implementation team did not have prior experience in implementing the Oracle 11i applications on an NT platform and had refused several suggestions to add an Oracle person to complement their team. The Oracle Accounts Manager best summarizes those three issues in the following statement: IT were the people that were saying that you must use an NT system in the first place because “that’s our standard.” … They were more worried about the fact that they were trying to have an NT Microsoft type strategy. … We most assuredly suggested to them and recommended to them many times that they should go down a Unix path and they didn’t listen to us there. … We [Oracle] concluded that [ConsultCo] had little experience with NT — very little experience with NT and with Oracle. Even less, [they] certainly had no experience for putting 11i onto it. They had no experience in putting 11i into a Sun box, which is why I always felt uncomfortable that they weren’t taking Oracle people [as sub contractors on to the project]. In summary, the main challenge facing James Keen is how to resolve the IT platform problem within the two months before go-live. James knows that not resolving IT platform implications in a timely manner is likely to result in a failed project. Hence, a decision Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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needs to be made and actioned quickly. Is it possible to work with Vendor2 to resolve these problems, assuming these were only teething problems? Or need a change of IT platform be actioned as soon as possible with implications of a cost overrun and a legal suit?
REFERENCES
Alexander, B. (2004). Unix vs. Windows NT. India Web Developers. Retrieved January 30, 2004: http://www.indiawebdevelopers.com/technology/scripts/chapter1.asp Broadbent, M., & Weill, P. (1997). Management by maxim: How business and IT managers can create IT infrastructures. Sloan Management Review, 77-92. BroadSpire. (2003). Windows vs. Linux: Choosing the right hosting platform. Retrieved January 30, 2004: http://www.broadspire.com/solutions/express/shared/ linuxvswindows.html David, J.S., Schuff, D., & Louis, S. (2002). Managing your IT total cost of ownership. Communications of the ACM, 45(1), 101-106. Hawaii Ebuzz. (2000, October 27). OAUG conference offers users chance to ask Oracle. Hawaii Ventures Corporation. Retrieved July 2003: http://www.hawaii ventures.com/news10023.html Hirt, S.G., & Swanson, E.B. (1999). Adopting SAP at Siemens Power Corporation. Journal of Information Technology, 14, 243-251. McNurlin, B.C., & Sprague, R.H. (2002). Information Systems Management in Practice (5th ed.). Upper Saddle River, NJ: Prentice Hall. Meta Group. (2000). ERP platform-related analysis total cost of ownership study: A platform-related cost analysis of ERP applications on-going support costs in the mid-tier. Retrieved April 21, 2004: http://www.verio.co.uk/powerplatform/library/ erp_tco.pdf Meyers, B.C., & Oberndorf, P. (2001). Managing Software Acquisition: Open Systems and COTS Products. Boston: Addison-Wesley. NetNation Communications. (2003, October 6). Unix versus Windows. Retrieved January 30, 2004: http://www.netnation.com/products/unix_or_nt.cfm Ng, C.S.P. (2001). A decision framework for enterprise resource planning maintenance and upgrade: A client perspective. Journal of Software Maintenance and Evolution: Research and Practice, 13, 431-468. Oracle calls Gartner Group biased after consultant knocks operations. (2001, August 28). CFO. Retrieved July 31, 2003: http://www.cfo.com/article/1,5309, 4748%7C%7CA%7C134%7C6,00.html Songini, M.L. (2000, October 20). Oracle applications users look for more help on upgrades. Computerworld. Retrieved July 2003: http://archive.infoworld.com/articles/hn/xml/00/10/20/001020hnorapps.xml
ENDNOTE 1
All organization and personal names have been disguised.
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Automotive Industry Information Systems 89
Chapter VI
Automotive Industry Information Systems: From Mass Production to Build-to-Order Mickey Howard, University of Bath, UK Philip Powell, University of Bath, UK Richard Vidgen, University of Bath, UK
EXECUTIVE SUMMARY
Building cars to customer order has been the goal of volume vehicle manufacturers since the birth of mass production. Eliminating the vast stocks of unsold vehicles held in distribution parks around the world represents potential savings worth billions, yet the current supply chain resembles islands of control, driven by production push. Despite recent advances in information technology offering total visibility and realtime information flow, transforming an “old world” industry to adopt customer responsiveness and build-to-order represents a significant step change. This requires overcoming barriers both within and between supply partners and at all levels of the supply chain. Yet, what are these barriers really like and how can the industry overcome them?
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90 Howard, Powell, & Vidgen
ORGANISATIONAL BACKGROUND
Automotive manufacturing is a global industry producing 56 million new cars per year, and represents a significant proportion of gross domestic product in developed countries, for instance, 5% in the United Kingdom (Crain, 2002). Yet despite steady sales, the industry in Europe is facing a period of significant change, driven by poor profitability, excess finished stock and over-capacity. Current vehicle manufacturing and distribution represents an old-world industry struggling to come to terms with a digital economy, driven by increasingly price conscious, demanding customers who require vehicles built to individual specifications and delivered in short lead-times. Vehicle manufacturers can no longer rely on selling cars from existing stocks and are shifting their business models away from mass production toward mass customisation and build-toorder (BTO). The ‘double prize’ for manufacturers in achieving BTO is eliminating the vast car parks of unsold inventory, and reducing vehicle discounting by dealerships that can demand a premium price for vehicles tailored and delivered according to customer choice. However, this increases the importance of existing systems for efficient order execution and integrated information flow, where manufacturers’ IT infrastructure still reflects the hierarchical, function-orientated nature of communication in many corporations. The rise of BTO reflects the increasing dissatisfaction in the marketplace with the traditional vehicle production philosophy that typically builds the vehicle first before finding a customer. In Europe, manufacturers expect dealers to hold between 60 to 100 days of inventory that amounts to billions of dollars (ATKearney, 2003). Even in the USA where vehicles are usually sold from dealer stock, 74% of customers would rather wait and order the vehicle instead of buying one from the dealer lot that is incorrectly equipped (Business Wire, 2001). Customers are beginning to realise that they are paying for the waste in the automotive distribution system. Hence, many manufacturers are now exploring the possibilities of reducing order-to-delivery lead-time to the customer through their own initiatives: that is, BMW — ‘Customer Orientated Sales and Production Process’; Ford — ‘Order Fulfilment’; Renault — ‘Project Nouvelle Distribution’; and Volvo — ‘Distribution 90’.
SETTING THE STAGE
The ability to communicate effectively both locally and globally increases the reliance on information systems (IS) and information technology (IT). The auto industry operates complex IS, where current systems act as a major inhibitor both to time compression in the order fulfilment process and to organisational change. These inhibitors or information barriers, are the subject of a research programme called ‘3DayCar’. A key finding from this research shows an average delivery lead-time of a new car in the UK is around 40 days. Moreover, only 5% of the delay is taken up by manufacturing, and 85% of the process is related to customer order, supplier schedule, and vehicle sequence information systems (Figure 1). A transformation is required in order to satisfy customers and remove the functional chimneys, silo mentality and waste, towards the integration of IS across the whole supply chain. 3DayCar (3DC) is a complex project that aims to understand the current practice, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Automotive Industry Information Systems 91
Figure 1: Delay in the UK Customer Order Fulfilment Process (Holweg & Pil, 2001) Order scheduling 14 days Production sequence 6 days Vehicle production 1 day Order bank 10 days
Order entry 4 days
Distribution 4 days
Vehicle loading 1 day
relationships and technology. It involves universities and independent research institutions to examine the role of BTO and the barriers to change across the automotive supply chain in the UK. The programme is unique as it encourages the participation of sponsors from all parts of the supply chain and some beyond, including vehicle manufacturers (VMs), dealers, component suppliers, logistics, consumer groups, trade associations, and financial corporations. The key objective of 3DC is to develop a framework in which a vehicle can be built and delivered to customer specification in minimal lead-times, with a three-day order-to-delivery as the ultimate goal. The generic map of the current order fulfilment process presents the extent of the problem to order, build and deliver a new vehicle within a short lead-time (Figure 2). It uses process mapping to record information and physical flows during the order to delivery process. In response to the productivity gap between Japan and the West — highlighted by the best-seller, The Machine that Changed the World (Womack, Jones, & Rods, 1990) — the past two decades have seen vehicle manufacturers optimising their own production operations while transferring more responsibility to upstream and downstream partners. Figure 2 highlights the challenge for the industry today, where competitiveness no longer depends solely on assembly plant performance and ‘metal bashing’, but on the collaboration of all stakeholders across the entire vehicle delivery process — from extraction of raw material to final inspection at the dealership. Identification of the barriers to change is essential if they are to be incorporated into planning for the redesign of the industry (Figure 3). This will promote a successful transition from the current mindset of ‘production push’ and the erosion of profits through discounted sales, towards responsive production and ‘customer pull’. The following accounts explore the experiences of key industry stakeholders, and highlight the major difficulties both in identification and amelioration of information barriers.
CASE DESCRIPTION Customer & Dealer
“We don’t confirm the delivery date to the customer until the vehicle actually arrives at the showroom, so much can go wrong.” (Sales Director) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
92 Howard, Powell, & Vidgen
Figure 2: Generic Map Showing UK Leadtime and Order Fulfilment Process (3Daycar) Order bank: 10
Order input: 4 (days)
Central planning
Central sales
Scheduling: 14
Material constraints Shift patterns
Monthly forecast
Sales request
Production Programme
Capacity
National sales
Sales meeting
Dealer
Forecast
Feedback Month 2+3
Yearly forecast
1st Tier Suppliers
3- 4 week schedules
Order Entry
Order Bank
Daily call-offs
Parts delivery
Sequencing: 6
Small
Bulk
Supply 3 hrs
Order scheduling tool
Kanban
Sequencing tool
Vehicle manufacture
Traffic control system Logistics
Assembly
Dealer
Load lane Weld
Primer
Rework
Topcoat Internal supplier
Production: 1
Loading: 1
Distribution: 4
Figure 3: Current IT Barriers (Howard, 2000)
VEHICLE MANUFACTURERS
CUSTOMERS AND DEALERS
• Batch processing
•
• Legacy systems
•
Order entry duplication & system duality
• Vertical stovepipes / chimneys
•
Order visibility
• Central management systems
•
Lack of ‘common car description’
Purchasing
Sequencing
Scheduling
System not integrated: DMS / DCS
Planning
NSC
Dealer
Current IT Barriers Distribution centre Suppliers
Customer
Dealer
Production LOGISTICS
SUPPLIERS
•
Lack of out-bound open access data system
Multiple EDI standards in dialect & label format
•
Lack of real time forward data
• ‘The Future’: Odette, Edifact , Web enabled PC’s?
•
Vehicle labeling: wasteful and time intensive
• •
Internet reliability & security
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Automotive Industry Information Systems 93
The lack of integration between Dealer Management Systems (DMS) and Dealer Communication Systems (DCS) is causing high levels of hand-keying and information duplication. Dealers operate two distinctly separate systems: DCS is linked with the VM and provides information on vehicle availability, price, incentive and orders. DMS provides the dealer with their own independent database of customer details, costs, and sales. When an order for a new vehicle is placed, significant levels of duplication occurs, where identical data such as vehicle description and owner details are hand-keyed into both systems. Ideally, dealers can do without the complexity and delay caused by maintaining two systems. Other stand-alone PCs are also used to support activities such as finance schedules. Hence, in terms of changing the entire vehicle delivery process from a manual to an electronic system, much development is required, as there are still up to 20 ‘hard copy’ documents per vehicle. For example, this research found the process to require an Order Form, Cash Back Claim Form, Vehicle Invoice, Supplementary Invoice, Vehicle Registration Certificate, Vehicle Swap Sheet, Vehicle Delivery Note, Purchase Invoice, Product Delivery Inspection Note, and Requisition Note. Dealerships in the UK still operate within a territory, and their customer data is considered confidential both from the VM and other dealers. It is suggested that integration is possible if DMS system architects can be persuaded to use a common middleware implementation with DCS capable of masking specific data streams. This means that each system must retain the facility for hiding certain information fields from other organisations. Extensible mark-up language (XML) will be a key enabling technology in this situation. XML is a universal standard for representing any kind of structured data. ‘Markup’ means the insertion of information into a document to convey information about its contents. The power of the language is that users can access documents in an intelligent manner based on the grammar they use. Thus, specific files can only be accessed according to a standard, predetermined syntax.
System Support
The system support provided for dealers is often inadequate and not aligned with the needs of the business. Hardware choices promoted by the VM may be inappropriate. For example, current DCS satellite bandwidth is often too narrow to transmit all necessary information to the VM. Consequently, some dealers are reverting to traditional terrestrial systems. Due to the complexity of the process and the duplicative systems, training system administrators for the role can take between one and two years. Despite Sunday being a busy day for order enquiries (confirmed by 3DayCar market research), no IT system back-up is provided by VMs because the weekend is traditionally reserved for system maintenance. Liaison over systems designed for the dealer network does not appear to adequately involve ‘Dealer Councils’. The manager of one dealership stated that he had heard of 13 new DCS software ‘improvements’ currently being prepared by the VM, but had not been consulted about any of them during their development process. There is a distinct feeling of ‘IT Specialists’ at the VM creating new software without working with the end user first. This extends to the use of the Internet by dealers for new car sales: the lack of their involvement in the VM’s going online is making dealers uncertain of the future and provides the gap for new entrants, particularly Internet brokers, to enter the market. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
94 Howard, Powell, & Vidgen
Order Visibility & Customer Information Needs
Order visibility beyond stocks held in VM compounds and distribution is highly variable, but all dealers can see UK market stock for their franchises. If the vehicle required by the customer is visible in the stock locator, such as held in a compound or at another dealer, then response is either instantaneous or reasonably quick. Once a factory order has been placed, some versions of DCS can provide data further upstream in production, but feedback can be slow. If the vehicle is in the VM pipeline, then it can take 24 to 48 hours for this information to be given to the dealer. Some dealer franchises can see into production, others cannot. Some dealers can see all orders in the pipeline; some can only see their own orders. Some VMs raise all stock orders; some systems operate totally from dealer orders, requiring the dealer to phone another dealer who has an unsold model and ‘agree to a swap’ before they can acquire it and specify it for their customer. All systems allow different levels of order specification amendments. Many DCS either do not give a delivery date, or have significant time delays in confirming them, which is a particular problem for customer-built orders. When dealers are given delivery dates on the system, these can and often do change and are not guaranteed. Dealers will add on days for quotation to the customer to compensate. Dealers and customers need a search facility for stock and pipeline that supplies the information they need when they want it. If they request a certain specification, product mix, and delivery date, they want to know whether these service needs can be met, and what near matches are also available.
Uncertainty Over the Internet for New Car Sales
Dealers are in an uncertain position on how to embrace the Internet for new car sales. The introduction of vehicle selling over the Internet is seen as a threat by some dealers, concerned that they will lose significant market share of price driven, online purchasers either buying direct from the manufacturer or from importers such as Jamjar or Virgin Cars.com. Others feel that brokers such as Autobytel are building an Internet presence for dealers and customers in the gap left open by VMs. These brokers are able to advertise over any geographical area and allow customers to search for value offers by contacting many dealers quickly and efficiently. Some dealers feel that the customer prefers a faceto-face purchasing experience, built on the more traditional concept of ‘service and trust’ and that the Internet cannot replace these elements of new car buying. ‘Clicks and mortar’ summarises the use of the Internet in the USA where it is generally perceived as an extension to existing customer services and where vehicle enquiries are directed to the nearest available showroom. In the UK, leads to customers are being generated for dealers via manufacturer sites and brokers, but very little through their own sites. However, it must also be remembered that the UK is behind the US in most respects in e-commerce, although it is catching up fast. The 3DayCar National Franchised Dealer Association (NFDA) survey highlighted that dealers feel slightly threatened by the Internet, but would have faith in a ‘clicks and mortar’ approach if the manufacturers gave them more of a lead in implementing an integrated online new car sales presence.
Dealers & Change
Dealer IT Systems currently suffer from excessive hand-keying, duplication of processes and poor integration. They have largely failed to capitalise from the technoCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Automotive Industry Information Systems 95
logical advances of the last decade, shown by their reliance on manual controls and hard copy documentation. However, to what extent have barriers emerged through a lack of technological integration as opposed to process re-engineering? Significant conflict exists in vehicle retailing at present between the traditional ‘territorial sales’ approach encouraged by the VMs, and the ‘empowered customer’ approach currently being adopted by new entrant IT specialist companies. New entrants who offer customers the facility to trawl for a quote from any number of dealers, are undermining the current system based on local sales territories. Despite the imminent threat of losing market share to importers, the traditional boundaries between VM/dealer and dealer/dealer remain, where system ownership and resistance to sharing is obscuring the potential benefits of a collaborative solutions. One dealer is quoted as saying: “Technology is the easy bit, 90% of our problems are process related”.
Vehicle Manufacturer
“The Internet is the 21st century equivalent of the moving assembly line.” (Jac Nasser, Ford Motor Company CEO, 1999-2001) ‘Batch Processing’ represents a major IT systems barrier to 3DayCar where large numbers of customer orders are processed prior to production at a set time every 24 hours. The current configuration of VMs’ systems typically results in individual mainframe systems updating overnight, processing batches or ‘buckets’ of orders in time intensive cycles that adds four to five days to the order lead time (Figure 4). Due to the fact that the information flow through the batch processing systems is largely un-sequenced, it
Figure 4: Generic IT Map of the Automotive Supply Chain (Howard, 2000)
Long term Forecasting
O/n
EDI / FAX
MRP
EDI
Monthly Weekly Daily Sub daily MRP Parts req’s
Despatch Note/ Barcode
Monthly Weekly Daily Sub daily
Supplier Scheduling MRP
Order Bank O/n
Sequenced supply message forwarder
Dealer
Scheduled Orders O/n
Inventory Control System
O/n Road Transport
Build Sequences
Hand held computer
MACHINING
1st Tier Supplier
Dealer Mgt System
Order Sequencing
Inventory Files
2nd Tier Supplier
Dealer Comm’s System
Order Extraction O/n
Electronic calloff to Warehouses & Suppliers
Customer Interface, Website…
Order Administration -Planning -Parts req’s
Logistics Resource Planning
Operational scheduling
MANUFACTURING
Vehicle Manufacturer
EDI VM Traffic Control
Mail Sea Transport
Logistics
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96 Howard, Powell, & Vidgen
is possible for the output of one process to miss the start of the next window, adding further time into the process. IT managers confirmed that there was an increasing emphasis on developing the capability for building-to-order. Proposals had been made to ‘speed up’ the system by shortening batch processing periods to around 10 minutes (currently around four hours, overnight). This represents a logical progression for VMs that can avoid scrapping existing databases, and only needing to replace IT software in order for it to handle such a change.
IT System Legacy
Legacy systems were originally built for a ‘different world’ of IT capability, specific tasks, and where technology was associated with ‘control’. Systems today are still driven by in-bound logistics and pushed by production, rather than by order demand. It was found during the research that the total lead-time required to develop, pilot and ‘roll-out’ systems across several continents could be as much as 10 years. Once committed to an operational IT strategy, VMs have little choice but to complete them almost regardless of any changes to the external business environment that may occur during the period. Changes to the IT infrastructure have been achieved in the past by simply ‘bolting on’ additional systems alongside existing mainframe architecture. For example, in the 1990s, PC-based, client-server architecture offered a powerful industry standard on which to base new systems. However, very few of the old systems were ever fully engineered out of the business and switched off, resulting in a mess of complex, overlapping networks. Today a typical production plant runs over 200 separate IT systems; hence, many VMs are faced with an expensive and ongoing burden of replacement and repair of an aging ‘spaghetti’ infrastructure. Often, the fault lies not with the legacy databases themselves (the ‘IBM AS 400’ remains one of the most popular and reliable models from the 1980s), but the network of cabling, applications/software and user terminals, that require replacing without disrupting the order flow. The introduction of ‘middleware’ technology such as Tuxedo (BEA Systems) has significantly increased the flexibility of writing IT applications as business services and linking this information with local area network and Internet-based environments. However, the success of this approach depends on the reliability of the legacy system. Some VMs have begun to recognise the weakness of simply building onto existing infrastructure and are now systematically replacing sections with ‘modular solutions’ that offer a universal platform and the flexibility to accommodate future change. There are products available now that allow core systems to be retained without having to renew the entire network.
Stovepipe/Chimney
IT systems tend to be designed to meet the specific objectives of the different players in the supply chain within an organisation. They are not, therefore, driven by true customer order fulfilment philosophy and inhibit smooth order flow. ‘Stovepipe/chimney’ refers to the mentality that focuses on the requirements of specific parts of the process without considering what effects may result in other areas. This multiplies the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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series of batch systems operating, such that once an order has entered the system, it is often invisible to the rest of the organisation and other supply chain partners until it reaches the order sequencing or operational scheduling stage. The stovepipe/chimney mentality also extends inside the functions. Manufacturing is a particular example where, once an order enters the order bank, it often cannot be amended, before emerging from production in, at best, eight days time. The extent of IT legacy means that the ability of VMs to move toward a BTO environment is severely limited. VMs are largely governed by a centralised ‘package’ mentality, built around an in-bound logistics optimisation view rather than out-bound customer delivery. There is some evidence of a growing emphasis being placed on removing internal stovepipes and increasing system visibility. However, where this is the case, change is quoted by automakers on a timescale of five to 10 years.
Central Management Systems
Central management systems are popular amongst VMs because of the ease of maintenance and the purchasing advantage gained through economies of scale. However, the time lag introduced at regional plant level, where central batch processing cannot allow for local time differences, can result in higher levels of inventory. The research also found examples of managers flying around Europe looking for the original IT system architect. In some cases, it took weeks to locate and resolve the system query because the problem originated from central VM headquarters, located on the opposite side of Europe. Driven by material optimisation, IT systems are designed for the purchasing and inbound logistics (pull to production) aspects of supply rather than for the flexibility to respond to individual markets (pull to customer demand). Is there a case for examining the balance between central versus regional systems?
Supplier
“Once you get past Tier one, there aren’t any system standards.” (IT Manager)
EDI Standards
Electronic Data Interchange (EDI) emerged in the early 1980s as a bespoke, dedicated communication link between two organisations for logistical and technical messaging. Suppliers perceive the major IT system barrier as a lack of adherence to EDI standards by VM’s in terms of protocol and data format (label layout). Protocol means the language used during transmission: for example, OFTP (Odette File Transport Protocol) and TCPIP (Transport Control Protocol — Internet Protocol). Data format refers to the visual interface containing predetermined fields or subsets into which information is entered: for example, supplier name, address, date, material, and quantity. Odette was set up as the original EDI system with the support of Ford Europe in the early 1980s, but they felt the system was not developing fast enough and went on to develop VDA and Fordnet. While many European Suppliers still use a version of Odette, France has developed its own system called Galia. No VM uses EDI in exactly the same way. The differences usually manifest themselves in the layout and content of the data. In an attempt to make systems more compatible, all VMs have pledged to adopt a new standard called Edifact where everyone will use universal ‘fields’ (i.e., NAD — Name and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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address, QTY — Quantity, DTM — Date and time) with free-text fields left for specific comments. Currently, EDI format changes are made by VMs up to three times a year. Suppliers are already receiving messages in about a dozen different formats, all of which must be converted to a common standard before they can be processed internally. This all causes delay and disruption to the system, particularly in the event of a system malfunction. During the research it was calculated that each format change costs a supplier around two ‘IT manager weeks’ of labour. Considerable time is also spent with IT software consultants, where suppliers are understandably reluctant to build and maintain a customised system with diverse inputs from around a dozen demanding customers who seem to change their minds on a whim. Suppliers are currently concerned about the significant costs of IT system administration caused by the undisciplined approach by VMs and the implications of adopting new technology on an unregulated, firm-to-firm basis. With traditional EDI, there is usually no acknowledgment, where messages are sent at a pre-agreed time to ensure the equipment is switched on and operating correctly. Internet communication offers many business-to-business benefits, particularly in areas such as automatic electronic invoicing that may soon become widespread across the industry. However, like many aspects of electronic communication discussed so far, homogenous procedures need to be established by all players.
Internet Security
There is some concern by suppliers who have adopted Web-enabled systems that do not offer sufficient reliability or security to conduct transactions between businesses. A total system failure, whether caused by the Internet or otherwise, cannot be buffered by the low stock levels typically held at most assembly plants. However, Internet security is being improved with the use of a virtual ‘firewalls’ which are inserted between the host organisation’s core communication platform and the external electronic environment. Supply partners wishing to share information must first verify their identity via a password. Some suppliers question whether the Internet is ready to support mission-critical operations, despite its success in other areas of commerce (e.g., Internet banking) where delay in delivering a message could ultimately mean the stopping of a vehicle assembly line. Accountability would ultimately rest with the supplier. The delays and occasional inconsistencies currently experienced in e-mail delivery, not to mention the new dimensions of Internet crime such as hackers and viruses, are regenerating some support for traditional, dedicated ‘machine-to-machine’ links such as bespoke EDI.
Visibility
Internet technology potentially offers total connectivity and visibility to the auto industry. At present, the component supplier does not know the true demand for his product. The end customer is seen as the VM, not the new car buyer. Current IT systems reflect this: There is no customer delivery date attached to any parts ordering. A component may be used within days of its despatch or may remain in inventory for a considerable period.
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In the transition from traditional EDI to Web-enabled systems, the full potential of total visibility across the entire supply chain must be exploited: The system must not simply emulate the original functional, stovepipe/chimney mentality. A recent development is ‘WebEDI’ which emerged in the late 1990s using XML code and standard computers to offer a flexible, low-cost solution for suppliers seeking a connection to other business partners via the Web. It is increasingly used by tier 1 suppliers to overcome the high costs of installing bespoke EDI to connect smaller upstream partners, where improvements in efficiency and responsiveness can reduce the need for safety and buffer stock. Questions remain about how suppliers will fit into the consortium automaker portals like the ‘Covisint’ Internet trade exchange founded in 2000 by Ford, General Motors, and DaimlerChrysler (also known as a portal or ‘e-hub’). Some industry observers think a single automotive e-hub will evolve linking everything from the lowest-tier suppliers to dealers. Others believe a variety of exchanges will emerge, not a single online marketplace that dominates the industry. To date, the fortunes of the e-hub in the auto industry have been mixed, with Covisint suffering from a Federal antitrust case, delays in the introduction of new technology, and departures of a succession of CEOs. Current total investment in the hub stands at $500 million with still no sign of the business reducing its losses (ANE, 2004). Yet ‘SupplyOn’ is a successful third party managed hub originally founded by Bosch, which currently serves 2,700 suppliers. It receives a monthly subscription from each firm in return for the provision of electronic training, a connection service, and online collaborative product engineering software.
Logistics
“E-commerce and IT will wring out cost from our massive supply chain management systems.” (Ford press release on their alliance with UPS Logistics, USA, 2000)
System Integration & Data Quality
In-bound logistics IT systems for materials and components to be delivered to the assembly line are more developed than out-bound vehicle distribution, but this contradicts the value of the goods carried. Despite having their own systems, the lack of contractual commitment given to logistics providers by VMs on out-bound delivery promotes a short-termism that hinders long-term investment and the development of new IT. Vehicle manufacturer annual capacity is based upon a production plan and sales forecast, which will differ over the year. Capacity judgments by the logistics provider are based more on risk management than firm data. More information is required by logistics providers prior to vehicle release from production. The key issue is poor data on projected volumes and resource planning, as part of the general quality of advance information from VM’s central control.
Labelling
In supplier-to-supplier logistics, or in-bound logistics, to the VM assembly plant, there are no universal standards in terms of Odette label formats. Upon receiving an EDI transmission, labels are individually printed off, attached to a crate or ‘stillage’, and the
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bar-code portion scanned before departure and upon arrival. However, subtle label format differences require significant levels of VM-specific knowledge by all individuals who come into contact with the system, creating confusion and inevitably resulting in time lost during the process. Converting electronic data to ‘hard-copy’ documentation is becoming a very lengthy process for suppliers faced with delivering vehicle parts to depots in transit to other destinations. Typically seven duplicate copies of documentation per part are required, specifying carrier, warehouse, depots, and final destination. Some areas of inbound delivery work well, assuming constant demand, such as sequenced in-line supply. However, it will be some time before logistics providers, suppliers and VMs achieve a truly ‘paperless revolution’ where electronic tagged containers automatically trigger a goods-received message as a truck completes its delivery, which in turn sets off a sequence of electronic billing.
Connectivity: Wide Area Networks & Extranets
Lack of connectivity is the main technical obstacle, particularly in current outbound logistics. Wide Area Networks (WANs) will replace Local Networks (LANs) and these WANs can be combined with company intranets to provide a shared space, an extranet, portal, or electronic hub. The combined power of e-hubs can be harnessed to provide a high portability of information, ease of transfer and access, eliminate re-keying of data and time lost on updates. The replacement of traditional LAN-based access within companies by e-hubs will allow increased portability of information, reports and real-time data exchange between departments increasing their ‘single world view’. This should improve the chance of noncontradictory messages from VMs being exchanged with supply chain partners, a common issue for logistics providers for out-bound transport. A common platform is needed to facilitate sharing spare capacity, particularly on return runs (called ‘back loading’) between rival haulage firms, although this requires significantly higher levels of trust between VM/logistics and logistics/logistics partners.
Planning & Routing
Load consolidation and planning is executed as vehicles come in from the manufacturer. There is no direct consideration of load consolidation and planning by the manufacturer in passing advance information to the out-bound logistics company. In a 3DayCar scenario, this would be unacceptable. Currently, around three days is given to move product, including time taken for consolidation. Transport providers use off-the-shelf routing and load-planning software, but the development of more sophisticated network planning systems is under development and can learn from route planning. This software uses “genetic algorithms” that claim to cut journeys through experience and recalculation: A route is reworked over result generations to improve overall journey minimisation. Proactive decision making systems are required, such as suppliers taking control of replenishment, based upon a signal to build for delivery date from order placement at the factory. Mid-journey re-routing could also be harnessed by logistics companies using global positioning system (GPS) and Internet technology in order to provide a ‘24/ 7’ operating environment, which is totally responsive to changing requirements and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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takes into account fleet capacity. However, this represents a significant speculative investment for logistic providers.
CURRENT CHALLENGES FACING THE ORGANISATIONS
Organisations wishing to begin the transition from mass production to build-toorder face a number of significant challenges. This is because the problem lies less with ‘technology’, and more within the people who use it. A mindset change is needed away from vertical, hierarchical reporting and the optimisation of only part of the system (i.e., production) and toward embracing the concepts of information transparency and responsiveness from the perspective of the end customer. Four core challenges for the automotive industry as a whole are raised here: 1.
2.
3.
4.
There is considerable work to do in Europe (and the US) in building an electronic infrastructure that overcomes the proliferation of standards and protocols that creates so much additional work for supply partners. A situation where information systems expand through poor regulation, such as the case with bespoke EDI, must not be repeated with Web-enabled e-commerce. Better measures are needed to encourage supply chain collaboration and the adoption of inter-organisational systems over the nature of the realised benefits from building-to-order, and a clearer vision over who — other than VMs — are likely to share in them. A coordinated adoption of information systems across multiple stakeholders is needed, driven by ‘electronic leadership’ skills that are currently lacking at boardroom level. The premature departure of Jac Nasser as CEO of Ford shows that even top executives are not immune from the outcome of business decisions involving the Internet. In order to meet the requirements of 3DayCar and build-to-order, there must be a reduction in the number of processes that an order goes through prior to production. Eventually, customer orders should be treated as ‘batch sizes of one’ capable of being handled in real time. Hence, a major challenge facing the automotive industry today is how to adopt an Internet-enabled inter-organisational system that supports total supply chain transparency and connects all stakeholders with the customer (Figure 5).
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Figure 5: Core Information Systems for 3DayCar Shared information:
- Demand management - Direct customer order booking - Planning & scheduling Tier 3 Supplier
Tier 2 Supplier
- Logistics
WWW / Web-EDI Tier 2 & 3 supplier service levels
Order fulfilment platform / e-hub Tier 1 Supplier
Dealer Vehicle Manufacturer
Customer
Logistics
REFERENCES
ANE — Automotive News Europe. (2004). A decimated Covisint is put up for sale. p.17. ATKearney. (2003). Lean distribution in the United Kingdom. www.prnews.com/cnoc/ ATKlean Business Wire (2001, Feb). Gartner survey shows US consumers prefer concept of buildto-order when buying an automobile. Crain, K. (2002, Oct 15). Global market data book. Automotive News Europe. Holweg, M., & Pil, F. (2001). Successful build-to-order strategies start with the customer. Sloan Management Review, (Fall), 74-83. Howard, M. (2000). Current information technology systems: The barriers to 3DayCar. 3DayCar sponsor report. Ref: T3 – 7/100. Online: www.3daycar.com Womack, J., Jones, D.T. & Roos, D. (1990). The machine that changed the world. Rawson Associates. 3DayCar — www.3daycar.com
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Chapter VII
Power Conflict, Commitment, & the Development of Sales & Marketing IS/IT Infrastructures at Digital Devices, Inc. Tom Butler, University College Cork, Ireland
EXECUTIVE SUMMARY
This article explores the political relationships, power asymmetries, and conflicts surrounding the development, deployment, and governance of IT-enabled sales and marketing information systems (IS) at Digital Devices, Inc. The study reports on the web of individual, group and institutional commitments and influences on the IS development and implementation processes in an organizational culture that promoted and supported user-led development. In particular, the article highlights the problems the company’s IS function encountered in implementing its ad-hoc strategies and governance policies. It will be seen that the majority of these problems occurred because of the high levels of autonomy and budgetary independence of the IT-literate, engineering-oriented business ‘communities-of-practice’ that constituted Digital Devices. The case therefore provides rare insights into the reality of IS development and IT infrastructure deployment in organizations through its in-depth description of the positive and negative influences on these processes and their outcomes. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
Digital Devices, Inc. was founded in 1965 in Cambridge, Massachusetts, by Ray Stata and Matt Lorber. In 2003, the company was acknowledged as one of the leading designers and manufacturers of high-performance linear, mixed-signal and digital integrated circuits (ICs), which addressed a wide range of signal-processing applications in the electronics and related industries. Digital Devices is headquartered in Norwood, Massachusetts, and has a significant global presence in all major markets in the electronics industry. The company has numerous design, manufacturing and direct sales offices in over 18 countries and employs more than 7,200 people worldwide (Figure 1). The company’s stock is traded on the New York Stock Exchange and is included in the Standard & Poor’s 500 Index. Many of Digital’s largest customers buy directly from the company, placing orders with its sales force worldwide; the remainder obtain their products through distributors or over the Internet. Just fewer than 50% of Digital’s revenues come from customers in North America, while the balance came from customers in Western Europe and the Far East. Ray Stata, Digital’s co-founder and longtime CEO, recognized the importance of fostering a culture of openness, where employees were empowered and encouraged to be innovative. This was reflected in the company’s structure, which exhibited a high degree of process decentralization, especially in the allocation of capital and operational budgets, and, in particular, the locus of decision making. Figure 2 illustrates the company’s structure: the core business functions are the ‘product line’ Computer Products Division, Communications Division, Standard Linear Products Division, Transportation and Industrial Products Division, and the Micromachined Products Division, which was taken over by Ray Stata when he stepped down as CEO. Shown directly beneath these are corporate business divisions that provided support for product line divisions. It is of significance that Human Resources and Finance Divisions aside, all support divisions were engineering oriented, even the World Wide Sales and Corporate Marketing and Planning Divisions. This engineering-oriented culture was to have Figure 1: Digital Devices Inc. Worldwide Design, Manufacturing and Sales Functions
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Sales & Marketing IS/IT Infrastructures 105
Figure 2: Digital Devices Inc. Organizational Structure (as of 2000)
profound implications for IS development and governance in several areas of the company’s operations, as will be seen. Since its inception, Digital Devices gained a reputation as an excellent employer, where employees were respected, well remunerated and benefited from lucrative stock options. Individual commitment to the organization was manifested in the low level of staff turnover and the lifelong employment of many senior employees and engineers. The vast majority of employees remained loyal to the company despite the large salaries and attractive bonuses on offer from competitors. Significant too was the low level of turnover in employees from areas like sales and marketing, which was comparatively high in other companies in the sector. In December of 1997, Fortune magazine selected Digital Devices as one of the top 100 companies to work for in America and, later, in 2000, Fortune named the company as one of America’s most admired companies.
SETTING THE STAGE
The process of information systems development is akin to Shakespearean drama, with its various acts, scenes, plots, counterplots, characters, tragedies and uncertain outcomes. This section of the article sets the stage for the drama described by introducing the major players: (a) design engineers in the marketing sub-functions of the Standard Linear Product Division; (b) marketing managers/engineers and communication professionals from the Corporate Marketing Division; (c) Central Applications support engineers, and sales and field engineers from the Sales Division; (d) IS professionals from the IS function, which is a sub-unit within the Finance Division; and (e) IT professionals from external consultancy firms. Customer design engineers from Digital’s customer base constituted the ultimate end-user/stakeholder group. In order to better understand the issues discussed herein, a short overview of the major actors in the drama of the development of sales and marketing and governance of IT infrastructures at Digital Devices, Inc. is first offered. Following the major sections on theory and research method, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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the main section of this article then describes the origins of the political tensions surrounding IS development and associated issues of governance. These subsections are followed by three that describe how the various ‘actors’ and their ‘communities-ofpractice’ participated in the development and implementation of: (1) the sales and marketing component of the company’s Intranet and (2) the Corporate Web-presence. The evidence adduced in describing these complex IS development ‘dramas’ facilitates an understanding of the roles that power, political conflict and commitment play in shaping both the development process and its product — these are discussed in the penultimate section. The case therefore provides a real-world example of the ‘reality’ of systems development in innovative organizations.
The IS Function
The company’s IS function was located at corporate HQ in Norwood. Unlike senior executives in the sales or marketing divisions, the senior IS executive, the CIO, reported to the VP of Finance, the CFO (Figure 2). This is important, as most large organizations in the US had established relatively autonomous IS functions by the mid-1990s. Product line and support divisions at Digital Devices had IS managers and IT professionals dedicated to take care of their particular IS needs and IT infrastructure support. For example, the Sales and Corporate Marketing divisions had one IS team to take care of their Sales and Marketing IS requirements: however, in all cases report relationships of IS staff were to the CIO and thence to the CFO. The following overview of IS operations at Digital indicates the outcome of this structural arrangement. In the early 1990s, Digital’s IS were centralized and based around an IBM mainframe. In this scheme of things, the role of IS was to gather corporate data. Subsequently, Digital’s major business systems were based around SAP-packages. The first SAP module was implemented in 1994. In that year, the IS function also decided to standardize the desktop platforms in use across the organization, in order to provide all users with a common suite of applications and lower the total cost of ownership. Although many end-users preferred the Apple Macintosh platform, the decision to go with the PC hinged on the paucity of business applications for the MAC. So, while there was some opposition to this strategy within the organization, Digital opted for Microsoft Windows-based PC platforms worldwide and rolled out Banyan-Vines Network Operating System on the local area network. The one exception to this strategy of standardization was the engineering community in the product line and R&D divisions, who used Sun UNIX workstations. At the end of 1998, there were about 4,000 Windows-based desktop PCs and approximately 2,000 Sun Unix workstations in Digital’s IT infrastructure. It was considered by many that Digital had a state-of-art IT infrastructure, although others were of the opinion that the same could not be said of IS support for areas like sales and marketing.
Central Applications: The Nexus of Sales & Marketing Product Knowledge at Digital Devices, Inc.
Digital’s Sales and Corporate Marketing Divisions together served a wide range of customers in the US electronics industry and played a pivotal role in servicing customer needs worldwide. It must be noted that while Corporate Marketing was concerned with the formulation of Digital’s worldwide marketing strategies, each of the product line Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Sales & Marketing IS/IT Infrastructures 107
divisions had their own marketing sub-functions. The company’s IT infrastructure and related IS — that is, its Internet e-commerce and e-Business application, corporate intranet systems, and emerging sales and marketing information systems — played a major role in helping the sales and marketing operations deal with the large number, and wide geographical dispersion, of Digital’s products and customers. Based in Wilmington, a suburb of Boston, the Sales Division’s Central Applications function was the corporate nexus for all product-related knowledge at Digital Devices. It was through this function that sales and field engineers, in addition to product distributors, were trained and supported. It also had close functional relationships with the marketing engineers from the various product line divisions. This function also provided technical support via 1-800 toll-free lines direct to Digital’s customers. Each day it accepted and processed about 200 technical support questions from customers, and recorded each and every call. Central Applications also advertised new products, mainly at technical seminars, and through this forum it reached about 10,000 design engineers every year. The function also provided a fax-back service to customers — here, customers faxed in a request for data sheets1 and these were automatically dispatched by fax in a matter of hours. Application engineers also used the information contained in the data sheets of over 2,000 new and established products to compile the company’s short-form product catalogue and the related CD-ROM. This product data was also published on the company’s Internet Web site, and later became the preferred method of access, thus replacing Fax-Back. One of Central Applications’ key roles was in providing product support and technical information over the corporate intranet with its own Lotus Notes-based product and technical support application. Because of the need to better manage customer-related call tracking, customer contact, and product application problem-solving, this system evolved from a client/server platform into a web-based solution. Since its inception as a client/server system, this application, which consists of several separate but related databases, has been extended and ported to the corporate intranet via Lotus Notes Domino Server.
Why Engineering-Oriented Business ‘Communities-ofPractice’ Generally Held the Balance of Power in Shaping IS/IT Infrastructures
The majority of senior, middle and line managers at Digital Devices came from engineering backgrounds; as such, they shared common educational and professional interests. This shaped the various ‘communities-of-practice’ that existed within and between ‘business’ divisions and their functional sub-units. This is in contrast to staff from the company’s administrative and IS functions, the vast majority of whom were not engineers. This had a significant impact on the formation of Digital’s social matrix and the manner in which IT architectures were deployed and in how IS development was conducted. Two comments highlight this point graphically. The first comes from Standard Linear Products Division’s (SLPD) Marketing Manager, who was an engineer and who was with the company for 26 years: Part of it is the corporate culture within Digital, it has always been an engineeringrun and an engineering-driven company, seldom in a time of contraction has the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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research and development budget been cut…all the guys come from the same universities, from the same professors and they all have been taught the same things. The common background in electrical and electronic engineering provided social actors with a shared language that facilitated communication and learning across functional areas within the organization — however, there were obvious differences in objectives between engineering and non-engineering ‘communities-of-practice’ that led to a degree of institutional tension around IS development and the deployment and operation of IT infrastructures. Such differences were reflected in the way IT resources were employed. For example, while engineers in the product line divisions used the corporate LAN and WAN infrastructure, they were relatively independent in terms of the computer platforms and applications they used. The IS manager described it thus: This federated decentralized approach to building Digital’s IT infrastructure resulted from the way in which the company operated since its foundation, where the product divisions and the product lines at the various sites maintained their own IT budgets and tended to provide for their own IT needs. The important point here is that of ownership and control of non-corporate applications rested exclusively with the end-user community, with the IS function acting in support roles only. On one hand, this engendered a local sense of community that helped reinforce each engineering ‘community-of-practice.’ On the other, this independence of corporate IS extended beyond engineers in the product divisions, as is evidenced in the Sales Division’s Central Applications function, which was staffed by applications engineers who developed and operated a key element of the corporate intranet, with the blessing, but not with the support of the corporate IS function.
THEORY & PREVIOUS EMPIRICAL RESEARCH: COMMITMENT, POWER & POLITICS
Three separate but related theoretical perspectives are now briefly explored to help understand the case and associated analysis.
Institutionalized Commitment & Organizational Purpose
The role of ‘commitment’ in the design, development and implementation of IS has been elaborated on in several studies. In computer science, Winograd and Flores (1986) highlight the role of commitment in shaping the design of computer-based information systems, while Abrahamsson (2001) illustrates the role of commitment in the success of software process improvement initiatives. Sabherwal et al. (2003) highlight the role of commitment in successful information system development; however, theirs was one of several that focused on the dysfunctional escalation of commitment and its consequences. All this is indicative of the vital role of individual and organizational commitments in shaping the trajectory of the development process and its outcomes. This study Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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draws on Selznick (1949, 1957), who illustrates that the process of institutionalism gives rise to, and shapes, the commitments of organizational actors and groupings. Selznick (1957) argues it is through commitment, enforced as it is by a complex web of factors and circumstances, and operating at all levels within an organization, that social actors influence organizational strategies and outcomes. Here, ‘commitment’ refers to the binding of individuals to particular behavioral acts in the pursuit of organizational objectives. Selznick identified the sources of organizational commitment viz. (a) commitments enforced by uniquely organizational imperatives; (b) commitments enforced by the social character of the personnel; (c) commitments enforced by institutionalization; (d) commitments enforced by the social and cultural environment; (e) commitments enforced by the centers of interest generated in the course of action. However, these commitments do not evolve spontaneously through the process of institutionalization, they are shaped by ‘critical decisions’ that reflect or constitute management policy: as Selznick illustrates, the visible hand of leadership influences the social and technological character of organizations. Thus, Selznick (1957) maintains that organizational, group, and individual commitments determine whether organizational resources, such as IT, are employed with maximum efficiency and whether organizational capabilities are developed to leverage such resources to attain competitive advantage.
Power & Politics
Power is another concept that has been used to help explain different preferences among stakeholders in IS development; as such, it provides a useful complement to commitment theory. Jasperson, Saunders, Butler, Croes and Zheng (2002) provide a comprehensive review of previous research on the subject which includes perspectives from the user participation literature (itself comprehensively reviewed by Cavaye, 1995). This short review therefore draws on this body of work as a convenient point of access to what is a comprehensive literature. The dominant view in the literature holds that participants in the development of IT infrastructures shape the socio-technical features of an IS through the exercise of power. User participation, for example, in systems development leads to the exercise of power by users to change development outcomes. So does the exercise of power by competing groups of managers. Thus, in line with the pluralist perspective, power may be defined in terms of users’ abilities to influence the behavior of others to achieve specific objectives (Jasperson et al., 2002). Keen (1981) therefore argues that the development of an IS is a political process. In light of this, IS managers require organizational mechanisms to provide them with the necessary influence and resources to successfully develop an IS within the context of competition among political actors and groupings in an organization, who will possess divergent aims and commitments. While Markus (1983, p. 442) illustrates that “[w]hen the introduction of a computerized information system specifies a distribution of power which represents a loss to certain participants, these participants are likely to resist the system”; she also showed how the reverse also holds. Echoing Markus (1983), Kling and Iacono (1984) contend that in order to gain control over the development trajectory of an IS, key actors will engage in conflict-related activities such as domination, sabotage or compromise. The concepts of commitment and power therefore inform the readers’ interpretations of the case in that they promote an understanding of the purposeful actions of actors in achieving IS development outcomes in terms of shaping process and influencing product. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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RESEARCH METHOD
A qualitative, interpretive, case-based research strategy was adopted to conduct this study. This involved a single instrumental case study (Stake, 1995) that was undertaken to obtain an understanding of the circumstances surrounding the design, development and deployment IT-enabled information systems at Digital Devices Inc. Purposeful sampling was employed throughout (Patton, 1990). Research of Digital Devices, Inc. was conduced at three sites located in Limerick (Ireland), Wilmington (Boston, MA) and at the company’s corporate headquarters in Norwood (MA) in midto-late 1998. Fourteen taped interviews were made with a cross-section of ‘key informants’ from business and IS ‘communities-of-practice’ — each interview was up to two hours in length. Additional data sources included documentary evidence and informal participant observation and discussion at the three sites. Elements of Selznick’s (1949) theory of commitment and insights from the literature on ‘power’ were employed as ‘seed categories’ to interpret the interview transcripts and other documentary sources. Finally, the case report approach was used to write up the research findings.
CASE DESCRIPTION: DEVELOPMENT & GOVERNANCE OF IS & IT INFRASTRUCTURES AT DIGITAL DEVICES, INC.
The following case report is structured into four sections, each of which provides a different, but complementary, perspective on the issues surrounding the development of IS and governance of IT at Digital Devices, Inc. The first provides the context for the other three by describing the origins of the political tension between the IS function and some of the ‘communities-of-practice’ responsible for sales and marketing operations in the company. The second delineates the problems with IS governance, while the third and fourth sections then describe the factors that influenced the development, implementation and governance of two IS/IT architectures: the company intranet and the corporate Internet system. The events described in the case occurred between 1996 and 1999.
Political Tension Surrounding the Development of IT-Enabled IS
Previous sections have made reference to Digital’s unique character and idiosyncratic business practices, which had a significant impact on the manner in which IS had been developed, operated and used in the company. The following comments provide insights into the kernel of the issues described in the case: the first comes from the IS manager for Sales and Marketing. Traditionally the company has been based on a culture where autonomy has been promoted and creativeness of engineers encouraged in designing new products, getting into spaces where they need to be visionaries, an area that’s where the real disconnection is, in the culture that’s been built here. And also, if you think about the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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product line guys, they are all engineers — you know they are not known for their discipline. And most of the sales people are engineers, so you got a lot of these people running around and we have to instill some discipline, put some standards in here, so we say ‘We need to slow you down because it’s good for everyone.’ I’m not sure that that’s something that they would agree with it. He was more specific when it came to describing the activities of one product support unit: Take [the manager of Central Applications, he] has been very successful at developing systems to support what he needs to do. He and I joke about it all the time because we made a decision a couple of years ago not to use Lotus Notes, it just did not fit into our architecture, we went the Microsoft way, he’s been very successful deploying small Lotus Notes applications for his group. I’m not going to come in with a hammer and say “You have got to get rid of that because it’s against standards,” it fits a niche. Fortunately, with the advent of the Internet, Lotus Notes and its Domino server is just another Internet server, as opposed to the whole infrastructure change, where we would have to deploy servers everywhere—it just plugs into the intranet. So we do have situations now where groups will go and implement their own technology for their own niche requirements as opposed to something for everybody. Hence, business managers developed information systems out of their own budgets, and without IS input, through in-house development or by importing the required competencies from external consultants to aid in the development endeavor. This independence and autonomy, which enhanced creativity in product development, caused problems elsewhere in the organization, especially for the IS function, and it resulted in a certain degree of friction between IS and the business community. While there was ample evidence of amicable social interpersonal relationships between the respective ‘communities-of-practice’, that is, between those populated by engineers and IT professionals, professional relationships, on the other hand, appeared to be less than amicable. Take for example a comment made by the manager of the Central Applications function in the Sales Division: In terms of IS…they introduced a SAP system for accounting and order processing, they maintain the system, but did not develop it; they are essentially system integrators and IT architects. One of the major issues with them is that our technical support needs are not being met. They have elaborate solutions for simple needs, and they impose restrictions on applications support. But because I have my own budget, I have instituted in own solution based around Lotus Notes: this is not a Corporate standard, so I am a mini-IS owner. An uneasy truce exists between myself, my department and the IS people in Norwood; essentially, what I have found is that their grand solutions are impractical. That said, IS managers did not just ignore end-user development, as a formal protocol existed whereby independent units and sub-units could develop their own applications. If those applications complied with the corporate standards, and were of use to other organizational units, the IS function rolled them out across the organization, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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and subsequently supported them. This happened with an application developed by engineers in the Santa Clara facility — later, that system was rolled out by the IS function, as it had found favor with engineers in other divisions. The Central Applications Lotus Notes/Domino application, which could be accessed through an Internet browser over the intranet, gained acceptance at IS, as it did not interfere with corporate standards due to its use of a Web browser on the desktop: in any event, IS staff refused to support the underlying Lotus Notes Domino system.
Problems with IS Governance
In terms of IS governance and independence, engineering-oriented business managers across divisions at Digital were universally unhappy with the IS function being under the control of the Finance Division. For example, a senior marketing manager in the Standard Linear Products Division in Wilmington argued that: There are no good reasons for having the IS function under finance, there are very good reasons for having it as a shared resource: because we are a decentralized company and because we have five different business units, and we can’t have an IT function in every single business unit, and we do not want business units making decisions on expenditures that result in overlapping systems that don’t talk to each other. It’s the kind of [mess] that [the manager of Central Applications] is in right now, he is married to Lotus Notes — and Lotus Notes is a loser, I’m sorry. And is not supported in Digital at all, and any time something breaks and any time something hiccups in Lotus Notes, he has got to pay a contractor to fix it — and Lotus Notes doesn’t talk to anything, and you cannot link it to the Internet, so you’re screwed. It is ironic that the marketing manager was in agreement with IS people in relation to Lotus Notes, while sharing the same opinion, more or less, as sales managers with regard to the IS function. IS managers were sensitive to such opinions, and in defense of the status quo one stated: I know that reporting through to finance has always been an issue out there, but I think our CFO has a very good perspective and good vision on where IT fits in the whole organization, so I would say he’s been a most positive force in driving us where we are today to the point where everyone has access to the same capabilities and functionality. Notwithstanding this positive opinion, no formal IT strategy was ever articulated for the organization. Instead, this manager said: I think we all walk around generally understanding what needs to be done. [The CFO] overcomes the problem of not having [a strategy] by communicating with a lot of people, he’s very much in touch with all of the VPs, he communicates his plans and so forth. Even so, the IS manager underlined the fact that Microsoft was the corporate desktop standard, although it was not written down anywhere, nor indeed was it codified that SAP was the first choice when it came to developing corporate applications. In Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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addition, the IS managers interviewed considered the CFO to be really unique due to his passion for IT and his understanding of its benefits to the company. They also thought that few senior executives within Digital were as enthusiastic proponents or sponsors of IT as he. Nevertheless, the following statement from the IS Manager for Sales and Marketing is revealing, in that it may indicate where the fundamental cause of the frustration with the IS function existed: I think there would be good agreement that there are areas, especially in Sales and Marketing, that he just does not understand — the soft stuff, customer relationship management [etc.]…There is agreement that he is probably too removed from that side of the business, that he might say: “Well, wait a second, why are we spending money on that?” And well sometimes you know at the high level that many of the vicepresidents communicate when these initiatives are being discussed, but I think what he tends to fall back on is that if the vice president responsible is willing to fund it out of his own budget, and put his best people on it, then he would be willing to support [it]. While the IS function was not held in the highest regard by Sales and Marketing engineers, the reverse was also the case, as both Sales and Marketing (including the marketing sub-units in the product line divisions) tended to go it alone more often than other organizational units when it came to providing their own IT solutions. Nevertheless, IS was always the first port of call whenever new systems were planned in order to determine whether or not the IS function could deliver the desired solution. However, because of human resource limitations and skills shortages, the demand for corporatewide systems, and attendant need to prioritize the systems to be developed, IS was not always in a position to deliver a particular solution.
The Other Side of the Governance Coin
The IS function ran into problems that were not of its own making in undertaking certain projects for business ‘communities-of-practice’. For example, it had been badly burned in the past, with, for example, the original Opportunities, Strategies and Tactics (OST) System for Digital’s sales team and, also, the organization’s sales forecasting system — both of which were failures. Accordingly, the IS function tended to tread carefully so as not to get embroiled in change management problems and resultant system failures. Hence, they adopted a policy that required business areas to appoint a project leader who was highly competent in his field, and who would have top management support, as they did with the successful SAP Logistics and Order Fulfillment System. In this project, a senior manager from manufacturing acted as user project manager, and an IS project manager handled development. The problems that arose in the implementation of this system revolved around the significant change in the logistics process that would effectively eliminate all product distribution warehouses worldwide, save for those at the manufacturing site of origin. The new system allowed for a form of just-in-time manufacturing whereby products were to be shipped directly from the manufacturing site of origin direct to a customer once ordered. As the IS manager responsible outlined:
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An IT guy could not make that type of business decision, and an IT guy could not get through political issues in Europe: like saying that we are going to close down that warehouse and make 30 people redundant. The business manager who did that had the support of the vice president of worldwide sales. And that is the struggle I alluded to before, but now we’re in the space of systems where someone comes up with [a] great idea and says well I think we should do this, and I say fine, but who are you going to put into this to run it? And the response might be: “Well I don’t really have any one that I am willing to give up at present.” That is signal to me that the system is not that important. Whereas change management problems were resolved when the SAP system was implemented, the new sales forecasting system was more problematic however, as problems of a cross-functional nature between the manufacturing and marketing functions, and a lack of buy-in on the marketing side, caused the system’s implementation to fail. One of the major problems here was that Manufacturing and Corporate Marketing had separate sales forecasting needs. Furthermore, their existing approaches to forecasting, although separate, were pretty much dependent on each other. In any event, managers from manufacturing locations and the marketing groups participating in the development redesigned the forecasting processes and developed the system around the new processes. However, the system was never used to its full potential because business managers not involved in the design and development were reluctant to change fundamental forecasting processes. Thus, while the new system was implemented, the basic business processes involved in forecasting were never changed. The IS manager responsible for this development project stated that it became “a pass the buck issue” with both marketing and manufacturing. As a result of these implementation problems, responsibility for forecasting was removed from the marketing function, and the relevant planning activities were transferred and integrated into manufacturing processes and then ported back into marketing. Hence, the new planners effectively spanned both functions. The IS manager for Sales and Marketing summed up the situation thus: It seems to me that everyone is always fascinated with new systems, and they believe that a particular solution is going to solve all their problems; and [whether the systems work or not] it all comes down to whether or not the organization is lined up — that the right people, with the right incentives, are in place, and that business managers have thought through what this is going to mean, and so on. In response to the problems they were experiencing with the Sales and Marketing divisions, IS managers wanted to see a single vice president of Sales and Marketing so that there would be coherence, vision and leadership in the planning, development and implementation of Sales and Marketing Systems. The other side of this coin, however, was that such a move had the potential to reduce political infighting and, perhaps, act as a mechanism to impose corporate standards on highly innovative operations like Central Applications.
Building the Intranet the Digital Way
In 1996, the IS function put in place a strategy for the corporate intranet. Prior to this, islands of Web-based sites had appeared across the wide area network (WAN), and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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business and IS managers wished to tap into the potential for intra-organizational communication and learning that such systems offered. Essentially, business users were employing Web-based technologies to share their knowledge of products and customers with each other. In order to develop a strategy that would bring order to the chaos that then existed, the IS function benchmarked its proposed strategy with companies such as DEC, Hewlett Packard, Sun Microsystems and Silicon Graphics. The IS team observed two dominant approaches to implementing intranet technologies in these companies. First, they noted that Sun Microsystems and Silicon Graphics had adopted a laissez faire strategy and basically let staff do their own thing, whereby every workstation had the potential to become an intranet Web site. DEC and Hewlett Packard took a much more disciplined and rigorous approach by instituting a formal strategy that included the adoption of exacting standards, in conjunction with a corporate template that mandated a certain look and feel for each site. The IS function at Digital adopted a strategy that lay somewhere between the two reported. In implementing this strategy, an umbrella intranet site was first established and the representatives of all the other sites were informed of the new policy. Essentially, this involved the observance of some basic guidelines that end-user developers had to follow — these guidelines merely set certain standards for the Web sites. No effort was made to tell users as to what they could or could not place on their sites, but nevertheless, certain policies had to be observed. The IS project manager responsible commented on this endeavor and maintained that it had “worked out pretty well, but there was some duplication of effort. For example, if I need a phone list of people, there are probably 10 of them out there now, and each one, apart from the corporate one, is maintained for people in a particular Web group.” Nonetheless, in response to such issues, and to introduce more functionality and cross-site accessibility, a cross-functional intranet development steering group was established. This group was charged with two tasks— to develop standards and to develop generic tools like a search engine. The group had responsibility also for the formulation of a strategy to guide the direction of the Intranet and to determine what, if any, additional standards needed to be put in place. However, in keeping with the organizational culture, rigid structures were not put in place, nor were Web authors questioned in regards to what they were doing with their sites. Even so, some control was levied over the use of resources to prevent particular groups from monopolizing them and thereby preventing other voices from being heard.
Central Applications Leads the Way in Providing Intranet Support for Sales & Marketing
As indicated previously, Lotus Notes was not supported by the IS function, and because the Digital’s CIO did not want Lotus Notes client software on corporate desktops, it seemed unlikely that the applications developed using Lotus Notes would be of general use to the people that needed them — the sales and field engineers. However, with the advent of the corporate intranet, and with the capability of Notes’ Domino Web-server, the Central Applications product support system came into its own, and such was its success that the product divisions and the product lines looked to Central Applications to host new product information. The IT consultant at Central Applications described it thus:
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When Internet technology and Web servers first became available and popular, a lot of people went out and set up their own intranet servers, and it was fun and games for a while. But they soon realized how much work it was to maintain their own sites and keep their information fresh…So what we have done is make it easy for people [by hosting their intranet sites], and the [Central Applications manager] feels that if we keep it easy for people, they will come. In addition to hosting new product data for the product divisions, something that was pivotal in helping sales and field engineers to promote Digital’s diverse product range, Central Applications also hosted intranet Web sites for the product lines, as many of them had neither the time nor the inclination to maintain their own sites. Application engineers supported and input most of the data into the Lotus Notes databases; for example, the sales bulletins, the product problem data, and so on. With the general accessibility of the Marketing Information Central Web site, it was hoped that much of the work of inputting new product status data would be taken over by the entities responsible for the original data such as the product lines and so on.
Creative Tension & Development of Digital’s Corporate Web Presence
The success of user-led development of Digital’s intranet systems had unintended consequences for the development of the company’s Internet IS. Digital wished to implement a corporate Web site in order to execute its e-Business strategy, such as it was. External users consisted primarily of design engineers who were now provided with enhanced product search and select features in order to better meet their needs. The system would also provide a mechanism by which design engineers could order products or have samples sent to them. Internal users provided product descriptions and technical data for publication, on one hand, while customer preferences and future product needs (in terms of design and manufacture) could be obtained from customer interaction and used by sales and corporate/product line marketing functions. The IS function, which provided technical support for the initiative, did not see itself as leading the project, that responsibility rested firmly with the VP of Corporate Marketing. The appointment of a Webmaster was a pivotal factor in the success of the Web project. The Webmaster acted as a user project manager whose role was to provide leadership and guidance for the ongoing development, operation and use of Digital’s Internet presence. Previously she was involved with the Computer Products Division (CPD) application support center at Norwood. Enthusiastic as many of the management team were by the exciting new possibilities for customer contact and marketing new and existing products using the Internet, others were less enthused as they perceived that tried and tested methods of communicating with customers were to be discarded and replaced by indirect, impersonal technological mechanisms. Predictably, this led to friction between the various groups involved, particularly the sales and marketing functions. Take, for example, this admission by the Webmaster: “I know that the Web site will continue to be an emotional thing and not everyone will be happy.” Nevertheless, elsewhere she admitted that the Web site was jointly developed with cross-functional teams from these constituencies, indicating that the difficulties mentioned were overcome — at least on a formality. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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One of the major difficulties that arose in relation to the implementation of this Webbased IS centred on the manner in which product details were prepared for publication on the Web. In a move that paralleled the intranet policy at Central Applications, the Webmaster shifted the emphasis from authorship and ownership of all new product data to the product lines. The early successes in deploying what was a new technology led some senior managers to believe: (a) that traditional mechanisms of customer contact were now obsolete; (b) that existing business processes were under threat; (c) and that catalogs, CD-ROMs, and sales engineers were now of little value. The perspectives of IS function managers on the issue of IT support for promoting product data to customers are summed up by a comment from the IS manager for the Internet project: The [Central Applications Manager] does this on the intranet internally, [the Webmaster] is on the Internet site: I think maybe that there is some competition there, I don’t think that is organizationally clear who is responsible for this—it just hasn’t been defined. I don’t think Digital works like that, [Central Applications] have done this for a long time and now [the Webmaster] needs to do this externally. The choices are “I can use his stuff or I can do my own thing”; [The Central Applications Manager], I think, gets and maintains it himself, while [the Webmaster] has the product line people do it for her. [Central Applications are] facing field service engineers while [the Webmaster] is facing the customer. Thus, the absence of an overarching policy on the management of the customer interface at Digital (one direct, the other via sales and field service engineers) led to competition and tension between two important organizational functions. However, this proved beneficial and led to optimal outcomes for customers and field service and sales engineers, as the Web team and Central Applications unit both wished to be perceived as the nexus of corporate knowledge. It must be said, however, that unequivocal top management support helped mitigate many of the problems mentioned and others that arose elsewhere in the organization regarding the new Internet IS, and thereby led to a successful development outcome.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
This section describes the problems and challenges facing the organization in relation to IS development and governance of IT infrastructures, and, in particular, the issues confronting its IS function and engineering-oriented business ‘communities-ofpractice’ in the Sales, Corporate Marketing, and Standard Linear Products divisions. The following challenges/problems are discussed with reference to the preceding case report. Business users in engineering ‘communities-of-practice’ were committed to leveraging IT to transform core business processes and to be innovative in delivering products and services using IS. It is evident that they will continue to do this with or without the help of the IS function. Hence, in order achieve their objectives, they will exercise as much control over the development of IS and the governance of IT infrastrucCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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tures as is possible. On the other hand, the IS function is committed to bringing order and professionalism to the mayhem caused by the organic and uncoordinated approach to IS development and IT infrastructure deployment by engineers from the business divisions. Factional interests will continue to exist as engineers in business ‘communities-of-practice’ form alliances with others to achieve their ends. However, if the IS function continues to operate from a relatively weaker power base, it will need to form potent alliances to obtain its goals. The challenges for the organization’s leadership would be to maintain what is good in Digital Devices’ culture, structure and processes, while transforming how the company deploys and governs IT infrastructures and develops and implements IS. These challenges are now detailed. At the time this study ended, the company faced several major options in addressing what were its main problems: the marginalization of the company’s IS function and the power asymmetries this created with the business community in terms of IS development and governance issues. The first option concerns the challenge of changing the company’s structure for the purpose of establishing a new division based on the IS function. From IS managers’ perspectives, the key challenge is to have the IS function emerge from beneath the wing of the Finance Division and become an autonomous organizational unit with a CIO of equal standing to the VPs of business divisions, as is the case with almost all large multinational organizations. The challenge for the ITliterate, engineering-oriented, business ‘communities-of-practice’ would be to gracefully cede control over the design, development, implementation and operation of IT infrastructures so that a uniform and aligned approach could be adopted in the provision and deployment of IS. This would involve a change in power relationships and commitments. Hence, the challenge for business and IS managers here would be to address the fallout in terms of the perceived loss of control by business managers over the design, development and evolution of the IS they depend on to conduct business. An alternative to this option would be the challenge of creating a business-specific IS function within each division with direct reporting relationships to a senior business executive: for example, the IS Manger for the Standard Linear Product Division would report to, and receive budgetary resources from, a senior executive or the VP of that division. Overall strategy could then be formulated by a corporate IS function. Thus IS personnel could participate with business users as members of the same ‘community-ofpractice’ and the culture of user-led development in the organization would not need radical change. The problem here is that if corporate IS remained under the umbrella of the Finance Division, then the CIO could not be said to be unbiased in terms of strategy formulation, the allocation of IS budgets and the prioritization of IS projects. Hence, the corporate IS, whatever its size, would need to be focused exclusively on strategy, but with a CIO that had VP status reporting directly to the CEO. This would enable the CIO and his IS executives to address, for the first time, the challenge of formulating an IS strategy that was aligned with business strategies and needs across the organization, thus IT-enabled support for business processes could be delivered more effectively and efficiently. Indeed, the absence of a coherent IS strategy throughout the 1990s was a significant problem for the company and its IS function. Another problem highlighted by IS managers, and evident from the case, was the limitations on IS performance in its inability to deliver timely solutions to business due to a shortage of IS staff, especially those with competencies in particular areas such as Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Internet and intranet technologies. If recruiting new staff was going to be problematic, due to the high demand of IT professionals at the time, the challenge for IS managers would be to choose between outsourcing, consultancy or customizable-off-the-shelf software approaches, or implement hybrid solutions involving a mixture of all three. These could be integrated with the above options. However, there will remain the significant challenge in convincing an IT-literate business ‘community-of-practice’ that IS is best placed to do this, as many business managers, such as the Manager of Central Applications, are already contracting consultants, and so on. Whatever strategy is selected, there remains the challenge of confidence building in the business community in regard to the IS function, as IT-literate business managers already had a long-standing role in providing for their own IS needs. If management at Digital Devices address the aforementioned challenges and solve related problems, there remain several issues to be addressed in the short term. As an IS manager pointed out, having a single IS unit serve the IS needs of both the Sales and Corporate Marketing divisions was causing problems. The challenge of senior management would be to merge the two divisions, as the existing structure lay at the root of many of the IS development-related problems being experienced by the IS function in providing joint solutions. Sales and marketing strategies could be then be aligned more effectively so that agreement could be reached on integrated IS applications. This was important given that a number of sales and marketing engineers were fearful of the company’s radical change of strategy in planning to use Internet-based systems to replace established means of meeting customer needs. The challenge was to use the Internet as an additional sales and marketing tool, while not abandoning tried and tested business processes — only then could the ‘doubters’ be won over. Then there was the problem of business managers in the Sales and Marketing divisions thinking that they knew better than IS managers as to which IT platform was the best IT-based solution for their IS needs, as indicated in the case. Even if agreement was reached on a particular IS solution, change management problems tended to arise that could only be solved by business managers. For IS managers, the solution to these and other problems was to draft Project Charters that delineated the roles and responsibilities of all stakeholders and which would provide agreement to implement the agreed project outcomes. The challenge for the IS function is to have this introduced on a corporate-wide basis. Several of the major issues facing Digital Devices related to matters of IT governance and adherence to standards. One such problem facing the organization will be resolving issues relating to the IS function’s support for the Microsoft Windows platform and the engineering ‘communities-of-practice’ allegiance to UNIX-based systems. Take, for example, that Linux, the free Open Source Software operating system, now comes with a client suite of personal productivity tools (Open Office) and enterprise-wide system software utilities that rival Microsoft’s offerings (Apache, MySQL, etc.). Then, there is the competition between Microsoft’s .Net and Sun’s Java 2 Enterprise Edition (J2EE) in the application development space. Interestingly, engineers in product line divisions were early adaptors of Java technologies and are committed to their use, as J2EE applications run on Windows, Mac and all UNIX variants, while .Net applications run on Windows only. Also, it will be interesting to see whether the company will continue with its insistence on Windows client and server operating systems in the face of the lower total cost of ownership (TCO) of Linux-based Open Office and server side utilities, especially given the range of UNIX-based competencies in the organizations. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Finally, while Digital’s intranet strategy was an undoubted success, it had two obvious weaknesses. First, the heterogeneous nature of the Web and data servers meant that it would be more difficult for the IS function to quickly roll-out anti-virus and worm upgrades across different platforms (e.g., Microsoft’s Internet Information Server (IIS), Lotus Domino, Apache, etc.). Thus, weak links could exist that would compromise the company’s local and wide area networks (LANs and WANs) and cause data loss. The challenge here for the IS function would be to implement a strategy that migrated nonstandard servers to the corporate standard(s), and introduce automated anti-virus upgrades and other means to protect valuable corporate data repositories. Second, the case description of Digital Devices’ intranet and Internet infrastructures indicates that the company’s knowledge resources were not well integrated, in that there existed islands of knowledge stored in diverse data repositories — something that is in contravention of knowledge management practice. Problems of duplication of effort and data inconsistency aside, a major challenge for Digital’s IS function is to protect this learning organization’s most valuable resource, knowledge of its core business processes and products.
REFERENCES
Abrahamsson, P. (2001). Rethinking the concept of commitment in software process improvement. Scandinavian Journal of Information Systems, 13, 69-98. Butler T., & Fitzgerald, B. (2001). The relationship between user participation and the management of change surrounding the development of information systems: A European perspective. Journal of End User Computing, (Jan-March), 12-25. Butler, T. (2003). An institutional perspective on developing and implementing intranetand Internet-based IS. Information Systems Journal, 13(3), 209-232. Cavaye, A.L.M. (1995). User participation in system development revisited. Information and Management, 28, 311-323. Jasperson, J., Carte, T.A., Saunders, C.S., Butler, B.S., Croes, H.J., & Zheng, W. (2002). Review: Power and information technology research: A metatriangulation review. MIS Quarterly, 26(4), 397-459. Keen, P.G.W. (1981). Information systems and organizational change. Communications of the ACM, 24(1), 24-33. Kling, R., & Iacono, S. (1984). The control of information systems after implementation. Communications of the ACM, 27(12), 1218-1226. Markus, M.L. (1983). Power, politics, and MIS implementation, Communications of the ACM, 26(6), 430-444. Patton, M.Q. (1990), Qualitative Evaluation and Research Methods. London: Sage. Sabherwal, R., Sein, M.K., & Marakas, G. M. (2003). Escalating commitment to information system projects: Findings from two simulated experiments. Information and Management, 40(8), 781-798. Selznick, P. (1949). TVA and the Grass Roots. Los Angeles: University of California Press. Selznick, P. (1957). Leadership in Administration. New York: Harper and Row. Stake, R.E. (1995). The Art of Case Study Research. Thousand Oaks, CA: Sage.
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Winograd, T., & Flores, F. (1986). Understanding Computers and Cognition: A New Foundation for Design. Norwood, NJ: Ablex Publishing Corporation.
ENDNOTE
1
The product data sheets contained detailed descriptions and specifications of products; it is therefore a vital component in making sales, as customers require this information to match products to their specific design needs.
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Chapter VIII
Development of an Information Kiosk for a Large Transport Company: Lessons Learned Pieter Blignaut, University of the Free State, South Africa Iann Cruywagen, Interstate Bus Lines (Pty) Ltd., Bloemfontein, South Africa
EXECUTIVE SUMMARY
An information kiosk system is a computer-based information system in a publicly accessible place. Such a system was developed for a large public transport company to provide African commuters with limited educational background with up-to-date information on schedules and ticket prices while also presenting general company information in a graphically attractive way. The challenges regarding liaison with passengers are highlighted and the use of a touchscreen kiosk to supplement current liaison media is justified. System architecture is motivated and special services offered by the system are discussed. Several lessons were learned regarding the implementation of such a system in general, as well as in this environment specifically. An online survey indicated that the system fulfils its role of providing useful information in an accessible medium to commuters in a reasonable time.
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Development of an Information Kiosk for a Large Transport Company
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ORGANIZATIONAL BACKGROUND
The transport of workers between their place of residence and workplace is a worldwide phenomenon, which has been given a unique twist in the Republic of South Africa due to the policy of Apartheid imposed by the previous government. This policy has given rise to cities such as Botshabelo in the central Free State, 47 kilometers from Bloemfontein, the industrial center of the region. Even though Apartheid has been abolished and citizens are free to stay where they choose, practical necessity dictates that Botshabelo, as a legacy of the Apartheid policy, will remain viable and populated for a long time to come. The workers of the central Free State, settled far from their workplace and unable to afford private means of motorized transport, use public passenger transport. In the absence of commuter trains in this region, this need is addressed by 16-seater minibus taxis and buses.
Interstate Bus Lines (Pty) Ltd. as a Major Transporting Company
The public transport service provider in the central Free State, Interstate Bus Lines (Pty) Ltd. (IBL), was founded in 1975 as Thaba ‘Nchu Transport, and has since grown to a major company with 508 full-time employees. IBL operates a fleet of 62 train and 134 standard buses from the cities of Botshabelo, Thaba ‘Nchu, and Mangaung to the terminal building at Central Park in Bloemfontein. A train bus pivots around a center point and may carry 110 seated passengers, whereas a standard bus is rigid and is designed to transport 65 seated passengers. IBL operates 702 trips daily in this area and transports 70,500 to 80,000 passengers weekly between their homes and workplaces (see the map of the operational area in Figure 1). Depending on the exact area where a person lives or works, it may happen that he or she will have to take more than one bus for a one-way trip. At Central Park, commuters Figure 1: Operational Area of IBL
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may transfer to other buses heading for various businesses and factories, as well as the traditionally white suburbs. Central Park also serves as the main ticket selling point. IBL also provides other services to its community, for example, unsubsidized feeder services in Botshabelo, as well as between Botshabelo and Thaba ‘Nchu, and the transport of students to and from schools. Passengers living to the north and south of Thaba ‘Nchu are also provided with transport services (Figure 1). Interstate Bus Lines has a fleet of buses fully committed to peak demand, with allowances made for workshop allocation. IBL is equipped to render a service, along with the minibus taxi industry, to satisfy the public demand. IBL itself services and maintains its fleet of buses. The bus fleet is of the most modern in the Republic of South Africa, with an average age of 4.8 years per bus. IBL trains its own drivers during an intensive six-week course. Drivers receive annual retraining and evaluation, lasting a further two weeks. IBL’s income is based on ticket sales along with a government subsidy and a small special trip market, and averages around USD 2 million per month, which amounts to an annual turnover of around USD 24.2 million. IBL’s fleet of buses travels approximately 14.5 million kilometers per year while consuming 5.6 million liters of fuel. Services run from 04:15 to 22:30 daily. The peak requirement is from 06:00 to 07:45 in the mornings and from 15:30 to 18:00 in the afternoons — peak being defined as the time when the total bus fleet is fully committed to the transport of commuters. Figure 2 indicates the times when the largest concentration of commuters passes through Central Park. All commuters must be in possession of a valid ticket, purchased from the Central Park ticket kiosk. These tickets are daily, one-way, weekly or monthly tickets.
Figure 2: Average Number of Passengers Passing Through Central Park per Half Hour Interval During Week Days
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Passenger Profile
Interstate Bus Lines conducts frequent surveys in order to determine the profile of its passengers. According to the most recent survey (Breytenbach, 2003), passengers are mostly African (89.1%), Sotho-speaking (51.0%), female (52.3%), and are predominantly domestic workers (20.8%). According to the living standards index, 95.8% have electricity in their homes, and 63.2% earn between $135.00 and $275.00 per month. The average educational level of commuters is grade six, although 27.3% of passengers are enrolled for a post-school qualification. Less than 10% of IBL’s passengers have access to computers and less than 5% have access to the Internet, either at home or at work. IBL transports predominantly domestic workers, although students, part-time workers and shoppers constitute almost half of the company's clientele base (Figure 3). Many passengers are younger than 30 years of age and are studying or have just completed some form of education.
IT Infrastructure
Business processes are fully supported by information technology. IBL uses a system of electronic ticket machines (ETMs) and all ticket sales are recorded in a database. Tickets bear a magnetic strip and when a passenger boards a bus, the ticket is swiped and the passenger recorded for the specific route and trip. Special electronic equipment is installed in the gearbox of every bus that records movement times and speed. The raw data from these devices is processed and used to prepare statistics on passenger numbers and kilometers traveled on a monthly basis. These statistics are then used as proof for the monthly government subsidy claim. On the passenger liaison side, however, IT applications are non-existent. One would think that potential for a web page exists but the lack of access to computer technology and the limited computer literacy of commuters would make this a futile exercise.
SETTING THE STAGE Need for Communication
Dora Ramakoatse works as housekeeper in the home of a wealthy Bloemfontein business man. She is 46 years of age and her native tongue is Sesotho. She also speaks
Figure 3: Graphical Representation of IBL’s Clientele Base
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some Afrikaans and English. She has formal school education up to grade 5 and has a limited reading capability. Dora lives in Botshabelo and every morning at 5:00, she boards a bus for a trip of some 50 kilometers to Central Park. There she transfers to another bus for the suburb of Hospital Park where her employer and his family live. At about 6:30 she is just in time to wake the kids, prepare breakfast and start her daily duties of washing, cleaning and ironing. At 15:30, she once again takes a bus to Central Park and from there to Botshabelo. At around 17:00, she arrives at her own home, exhausted but still with the responsibility of seeing to the basic needs of her own family, such as preparing meals for the evening and the day to come. Dora is entirely dependent on the commuter service to get to and from her workplace. She used to complain about buses being late or not even turning up for scheduled trips. In the winter, she has a problem with buses being extremely cold in the early mornings. Sometimes she complains of buses being overloaded or having reckless or impatient drivers. Being dependent on a basic minimum wage, annual tariff increases hit hard and she does not always understand why these increases are necessary. What Dora needs is to be able to express her complaints in a medium that will allow her to comment immediately when the problem occurs. Also, Dora needs the assurance that her complaints will reach those who can do something about it. This medium should not only allow commuters to give feedback on IBL’s services, but should also present commuters with information on schedules and ticket prices.
Communicating with Commuters: The Traditional Approach
Upon taking up this matter with IBL’s management, Dora’s employer was told, as part of their customer care drive, IBL has implemented a toll-free hotline, where complaints, questions, and suggestions are handled and processed. Also, George Mokgothu, public relations officer of IBL, holds regular focus group discussions where community leaders can raise their concerns and express their needs on a monthly basis. George takes note of specific complaints, and provides information on relevant items such as route changes, tariff increases, and feedback on previous enquiries. George also hosts a weekly, hour-long radio talk show on Lesedi FM, the radio station patronized by 86.3% of IBL’s passengers. As a part of this show, listeners are invited to phone in and question him, live on air, about IBL’s service. Infrequently, IBL also runs advertisements in local newspapers, advertising mostly for the special trip market. Annual tariff increases are communicated via major advertisements in the local media. Need-to-know passenger information, for example, tariffs for specific routes are available for perusal in each bus. Brochures with timetables, routes and stops are available on request at Central Park. These may also be faxed or e-mailed to passengers on request. But Dora was still not happy. She does not have the confidence to phone in to the radio talk show and raise her concerns in public. She also does not have personal contact with the community leaders who represent her in the focus groups. She wants a medium of communication through which she can complain about IBL’s services, knowing that her complaints will reach the right ears and will be attended to. She wants access to schedules and tariffs without having to wait for an initiative from IBL. She also complains Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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that the brochures are often outdated before they hit the streets. People also remove the brochures from the buses and notice boards. George confirms that it is difficult to replace brochures on just about 200 buses with updated ones at short notice. He also confirms that he cannot keep up with answering all the queries to the satisfaction of both IBL and its clientele on a regular basis. He needs a way to disseminate information regarding route and schedule changes, tariff increases, and so forth at short notice.
Communicating with Commuters: Alternative Approach
After consulting with George, passenger representatives and local authorities, Interstate Bus Lines approached the Department of Computer Science and Informatics (DCSI) at the University of the Free State (UFS) early in 2003 to assist in a search for a solution. A touchscreen information kiosk (Figure 4) was identified as a way of supplementing the communication techniques mentioned previously while at the same time overcoming some of the disadvantages of these techniques. Additionally, it could also serve the purpose of improving the company's corporate image among commuters and could expose previously deprived people to technology. The idea was that the system should present commuters with the opportunity to query a database regarding routes, schedules and ticket prices. During periods of inactivity, the system should present general company information on a continuous basis. As an added bonus, advertisements from shops in the center could be displayed. Passers-by or people queuing in front of a ticket box should then be able to follow the presentations which are accompanied by attractive graphic animations and sound or video clips. It was imperative that the system be updatable on a regular basis as ticket prices increase, timetables change, shops change their special promotions, and so forth. Furthermore, it should be possible for George and other staff members of IBL to do these updates themselves after the developers of the system have handed over the completed system. In an attempt to conform to these requirements, a user-friendly switchboard application was integrated with a set of presentations and a single-user database Figure 4: Touchscreen Information Kiosk at IBL Ticket Office in Central Park
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package to set up a comprehensive information kiosk while allowing maintenance by people with end-user skills only. Because of the centralized location of the ticket office, it was not necessary to connect the system to other information kiosks. Also, because of the non-existence of a web page, no need existed to connect the system to the Internet. Since the complete timetable is in any case maintained in an Access database for scheduling purposes and driver instructions as part of the business process, it was worthwhile exploring the possibility of connecting the kiosk system to this database by means of a local area network. This case study outlines the impediments, design issues and pitfalls that were encountered during the implementation of the system.
CASE DESCRIPTION
Information kiosk systems are computer-based information systems in publicly accessible places, offering access to information or transactions for an anonymous, constantly varying group of users with typically short dialogue times and a simple user interface (Holfelder & Hehmann, 1994). Depending on the nature of the business, the presence of an information kiosk could be a necessity, but most probably is a supplement to existing means of communication. The success of such systems depends largely on the attractiveness of their user interfaces, how easily they allow access to information and how clearly the information is presented (Borchers, Deussen, & Knörzer, 1995). It is no use having the technology with all the latest information if Dora and others like her cannot access it or do not understand how to use it.
Classification of Information Kiosks
Borchers, Deussen, and Knörzer (1995) propose a classification of kiosk systems according to their major tasks: •
•
• •
Information kiosks have the primary goal of providing information in a limited subject field, for example, at a railway station where users can find information on a connection to a chosen destination. Users of such systems use the system because they need the information — they do not have to be extrinsically motivated to use the system. Advertising kiosks are installed by companies to present themselves or their products to the public in an attractive and innovative way. The missing initial motivation of potential users has to be compensated for by a visually attractive design. The contents should be interesting and entertaining and should motivate the user to explore the system further. Service kiosks are similar to information kiosks with the added functionality of information entry by the user, for example, hotel reservation systems where data such as names and addresses have to be entered to make a booking. Entertainment kiosks usually do not have a specific task apart from entertaining the user.
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Borchers, Deussen and Knörzer (1995) acknowledge that most information kiosk systems will belong to two or more of the previously mentioned classes. The system that was developed for the IBL ticket office can typically be regarded as both an information kiosk and an advertising kiosk with the potential to include the functionality of a service kiosk at a later stage.
System Architecture Development Tools
Several possibilities regarding the development tools were considered in order to develop a system that would fulfill in the needs as expressed previously. A presentation package such as Microsoft PowerPoint® provides for easy end-user updates while allowing attractive graphical animations and multimedia effects. The preparation of an individual slide for every trip makes this, however, an impractical solution. A user-friendly front-end system to query the database for the relevant information or a fully-fledged object-oriented database environment to store graphic images, video clips, and so forth as well as the route and timetable information, could have been developed by professional programmers. Another possibility that was considered was a series of HTML and ASP files to be viewed in a browser. Such an environment would have allowed the combination of graphic attractiveness, the use of multimedia and database querying. Although these tools might have done the job, they would have been difficult to maintain for people with end-user skills only. Finally, it was decided to develop the IBL system by integrating a dedicated enduser application (developed in Delphi®) with a presentation package (Microsoft PowerPoint®) and a single-user database package (Microsoft Access®) inside Microsoft Windows® as operating system. Together with the fact that the complete timetable was already available in Microsoft Access, both PowerPoint and Access were reasonably well known by the staff members of IBL who would be responsible for system maintenance. The integration was done in such a way that commuters would not be aware of transitions between the environments. A diagrammatic representation of the system is shown in Figure 5. A form at the bottom of the screen acts as a switchboard (Figure 6). Buttons on the switchboard allow users to navigate through the system. Some of the options activate MS PowerPoint® presentations in the upper part of the display. These presentations convey general company information, ticket office hours, contact telephone numbers, advertisements from shops in the center, and so on. Other options enable users to query the MS Access® database for route information, ticket prices, schedules, and so forth. The use of a dedicated end-user application as switchboard also allows the programmatic capturing of research data such as frequencies of usage, commuters’ preferences regarding language, typing speed, as well as a limited user profile. These values are saved into the underlying database and are analyzed periodically by the researchers.
Services Offered
One of the most important needs that Dora expressed was to be able to lodge complaints as they arose. Also, in order for George to be able to communicate passenger Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 5: Diagrammatic Representation of the IBL System Commuters
Information requests or feedback Switchboard
Render information
Render information
Programmatic requests for information or entering of feedback into the database Presentations
Database
Maintenance
Maintenance IBL Staff
Figure 6: Switchboard and MS PowerPoint Presentation
Presentation
Switchboard
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needs to management, he has to know what they think and how they experience the services that IBL renders. The information kiosk allows commuters to register comments, complaints, requests, and so forth by means of an on-screen keyboard (Figure 7). The idea for this technique is accredited to researchers at the Human Computer Interface Laboratory at the University of Maryland (Plaisant & Sears, 1992; Sears, 1991; Sears, Kochavy, & Shneiderman, 1990; Sears, Revis, Swatski, Crittendon, & Shneiderman, 1993). Valuable feedback for IBL has been generated in this way. Although many passerbys use this facility just for the sake of playing around and to get the feel of using a touchscreen, some 800 valid and useful comments were registered in the period May to December 2003. Since the information kiosk is available night and day, Dora is now happy that she has a way to express her concerns the moment that she gets off a bus. Also, George has expressed his satisfaction for getting honest and unbiased feedback on a daily basis. Route and timetable information is kept in an MS Access® database. Commuters are able to query the database by means of a form that is displayed full-screen, covering the running presentation windows. Figure 8 shows a screen print of this form.
Lessons Learned During Development
Several sources are available that provides guidelines for the design of touchscreenbased information kiosks (Borchers, Deussen, & Knörzer, 1995; ELO Touch Systems, 2002; ELO Touch Systems, 2003; MicroTouch Systems, Inc., 2000). These guidelines are mostly generic of nature and not specific to a particular package or an integrated approach as is proposed here. During the development of this system, several lessons were learned that proved to be critical in an integrated development approach. Figure 7: On-Screen Keyboard to Allow Free Text Input with Touch Typing
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Figure 8: Form to Query Database for Trip Details
Physical Mounting of the Screen
According to ELO Touch Systems (2002), the cabinet in which the touchscreen is installed should be in the company colors, have proper ventilation and should be mounted at a viewing angle that minimizes differences in user height. The design of the cabinet should be attractive and sturdy. In the current study, the system was installed in a metal casing just below average eye-level and mounted against the wall between two cubicles of the ticket office at a slight angle (Figure 4). The screen was placed inside the metal casing in such a way that only the glass part was accessible in order to avoid users tampering with the screen’s adjustment controls. The screen could be closed by a lockable lid after hours. This has worked well and to date no incidences of tampering or vandalism have occurred. The continuous presentations attract the attention of passerbys and are visible to people queuing at the ticket offices. This near-vertical mounting also prevents people from putting objects, for example, food, parcels, and so forth, on the screen.
Touch Modes
Potter, Weldon and Shneiderman (1988) describe a lift-off strategy for touchscreens that implies that the selection is not made when the user touches the screen but when he lifts his finger from the screen. This allows the user to put his finger on the screen and then make a correction to adjust the position of the pointer. 3M Touch Systems (2002) indicates that the so-called desktop mode is most useful for general-purpose desktop applications. In this mode, a touch positions the cursor in much the same way as a mouse does. Holding the touch steady is equivalent to pressing and holding the mouse button. Lifting off is equivalent to releasing the mouse button. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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In the current study, it was found that both these strategies seem to be unnatural to the average user from the IBL commuter community. These users expect a reaction from the system as soon as they press a button. If nothing happens, they tend to press harder without lifting the finger. It was found that the button-mode was the most appropriate strategy for this user group. In this mode, touching the screen is equivalent to pressing and releasing the mouse button. The action occurs as soon as you touch the screen.
System Cursor
The lift-off strategy proposed by Shneiderman (1991) implies that a cursor should be visible on the screen that is not obscured by the finger. The concept of a visible cursor is contradictory, however to the idea of ELO Touch Systems (2003) that there should be no cursor because the user should focus on the entire screen instead of the arrow. The normal pointing cursor for button-aware applications is the northwest pointer, but for PowerPoint presentations, the default cursor for links is the pointing finger. In order not to confuse commuters, it was essential to change the cursor to a consistent graphic throughout the system. A top-down arrow has its hot spot on the bottom tip of the arrow and presents good feedback with regard to the exact item selected since the cursor is not entirely obscured by the finger. To replace the top-down arrow with a hand with finger pointing downward would, however, suggest an awkward physical position. In the end it was decided that the visual clue of a hand with a pointing finger outweighs the disadvantage of occasional obscuring.
Use of Sound
The effect of sound to attract attention and for purposes of feedback is well known (Preece, Rogers, Sharp, Benyon, Holland, & Carey, 1994). The value added with regard to information conveyed is somewhat less, however. Speech has a transient nature. If you did not catch the message then you did not catch it, while written text has the advantage that it can be read over and over again at the reader’s own tempo until he/she understands what is said. At the IBL kiosk, each one of the running presentations had accompanying sound effects and narration. The facilities that expected user input had short written as well as spoken instructions. Users could at any time press a button to listen to the instructions again. Touchscreens have no tactile feedback like a button on a soft microwave oven keypad that gives when pressed or a button on an elevator’s keypad that can physically be depressed. Sound effects (e.g., an audible click with every valid press) and display changes (e.g., a button that is displayed differently when selected) are important to inform the user that the input was accepted. The placement of the loudspeakers presented a problem. The speakers were placed inside the metal casing, facing the ventilation holes at the sides of the unit. The kiosk was placed in a public foyer with very bad acoustics, noise from nearby stores, and even a night club. Users complained that they could not hear properly, even with the volume setting at its highest. It would have been better had the casing been made a little wider so that the speakers could fit in next to the screen, facing towards the users behind a grid similar to the ventilation holes. A sound amplifier would also have been an improvement.
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One Window with Many Inputs or Many Windows with One Input Each?
Due to users’ limited previous exposure to technology and limited educational background, the need to keep the user interface simple and easy to use was identified from the start. For example, it was thought that, whenever a series of user inputs was required, a single screen capturing all the inputs would provide the simplest user interface. It was found, however, that such a screen confused and frustrated the users. The error messages they got due to incomplete inputs caused them to walk away. This approach was then replaced with one where the user inputs were obtained through a series of modal dialog boxes, appearing one after the other (Figure 9). Each dialog box had only one set of mutually exclusive buttons. This was accepted much more easily as users were guided to answer one question after the other.
Navigating Through a Series of Dialog Boxes
Initially, the series of dialog boxes was provided with a set of Previous/Next buttons similar to the typical setup wizards for many software applications. It was found, however, that users at the IBL ticket office did not understand the concept of going back to edit a previous input, became frustrated, and walked away leaving the system halfway through a sequence. The Previous buttons were then replaced with Restart to allow users to start with the query all over again. The Next buttons were taken away — when the user made a selection the next box in the sequence was automatically displayed. This approach was much better accepted. This might be another confirmation of the findings of Blake, Stevenson, Edge, and Foster (2001), as well as Walton and Vukovic (2003), that African people have a different view of hierarchies and sequences than Western people have.
Control Types: Buttons, Scroll Bars, Sliders, Radio Buttons, etc.
According to Shneiderman (1991), it is possible to use actions other than clicking a button on a touchscreen, for instance, sliding, dragging, rubbing, etc. He asserts that many actions that are unnatural with a mouse are more intuitive with a touchscreen, for example, dragging the arms of an alarm clock to set the time. Shneiderman (1991) discusses evidence that most users succeed immediately in using a touchscreen information kiosk that utilizes these kinds of interactions. Figure 9: Series of Dialog Boxes to Determine User Profile
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Our experience with the current study, however, was that users find the single tap on the screen easier than a slide. It was easier for them to adjust the sound volume if the control consisted of a set of discrete values implemented with radio buttons (Figure 6) than when they had to drag a slider along a continuous scale. It must always be kept in mind that users of the IBL system are casual users who are unlikely to use the system time and time again and will, therefore, never have the opportunity to practice the action of dragging.
Do Away with the Windows Task Bar
ELO Touch Systems (2002) recommends that the system should not have a “Windows look”. There should be no indication of the operating system and users should not even think of the system as a computer system. In the current system, this lesson was learned the hard way. Initially, the Windows task bar was always available at the bottom of the screen, even though it was set to “auto-hide”. Some of the users would press on a specific button and then read the information presented on the screen while dropping their hands off the screen at the bottom edge; this sometimes caused accidental touching of the screen again, which caused the task bar to jump up. For computer literate users, especially teenagers, this presented a challenge to fiddle around with the system, edit the PowerPoint presentations, search for evidence of Internet availability, and even close down the system. For computer illiterate users, the sudden appearance of a bar at the bottom of the screen distracted their attention and even made them uncertain about whether some reaction on their part was expected. When the task bar was removed altogether, these problems were largely solved.
Cater for User Ignorance
One of the general design guidelines for information kiosks states that system reaction must be immediate to prevent users from walking away (ELO Touch Systems, 2003). Any presentation must at any time be immediately available on request of a commuter. In this case study, all presentations were activated to run in the memory simultaneously, one behind the other. On request, the appropriate presentation can only be brought forward on the screen with no time delay due to loading. It was also observed that some of the commuters, especially teenagers, just played around with the system, pressing one button after the other in quick succession. Commuters can press the buttons on the screen much faster than they can click a mouse, thereby expecting the system to switch between the various presentations or query the database and display results in a matter of milliseconds. To cater for these scenarios, it was important to ensure ample resources for the computer system. In this case study a PIII 866MHz CPU with 256 MB memory proved to be stable and efficient enough. In a typical information kiosk environment, it is always possible that a specific user may leave the system halfway through a process or query. The next user might then be confused and even unable to get to the information he or she requires. It was, therefore, essential to add functionality for the system to reset itself and to return to the main screen after a period of inactivity.
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Commuters’ Comments
An online questionnaire allows commuters to select their answers from a set of possibilities (Figure 10). Norman, Friedman, Norman, and Stevenson (2001) provides guidelines regarding the layout of such online questionnaires. Results obtained from this survey revealed that 71.1% of first-time users and 83.8% of follow-up users found the system easy or moderately easy to use. Also, 68.6% of firsttime users and 70.6% of follow-up users indicated that they experienced a positive emotion, e.g., satisfaction or enjoyment, while using the system. A rather low percentage of 40.2% first-time users indicated that they had found what they had been looking for. This was probably because the commuters expected the system to allow them to buy tickets from the machine rather than having to queue for them; something that had not, from the outset, been the intention of the system. The fact that 71.8% of follow-up users indicated that they had found what they had been looking for, confirms that the commuters realize the intention of the system after some exposure. The fact that 70% of first-time users and 88% of follow-up users indicated that they found the information useful was regarded as an indication of commuters’ rating of the value of the system. In a usability study, selected users were asked to search for information on six specific items that were representative of the available information. On average, firsttime users found 90.1% of the requested items correctly while follow-up users found 97% of the items correctly. The fact that follow-up users could obtain these items in about 4½ minutes can qualitatively be considered as acceptable to good in comparison with the two minutes that an expert user took to complete the tasks.
Figure 10: On-Screen Survey Form (extract only)
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CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
When a new IT installation is on the cards, one can always ask the question: Is this a “nice-to-have” or a critical necessity for business survival? How often does one see potential for implementation of an IT solution that promises to work better than the existing manual system with a concomitant saving in time, money and manpower and a positive impact on annual turnaround, but due to the skepticism of management and reluctance of employees to use it, the system is either not implemented or not utilized to the full? This was and still is one of the biggest stumbling blocks that needed to be overcome with this kiosk system. Despite the fact that management and the PR, George, are convinced that the system adds value to the company, despite the fact that the usability results reported favorably to a large extent, and despite positive feedback from individuals such as Dora Ramakoatse, there are still those who are skeptical about the system. This was especially evident from employees at the ticket office who were assigned the task of ensuring that the system runs smoothly on a day-to-day basis. They were trained to restart the system in cases of power failures or system crashes. Those employees are, however, not enthusiastic about the system. It was found that, if one of the researchers or George or another member of management does not visit the installation at least once per week to prove interest in and the importance of the system, the employees do not consider the effort to keep the system up and running worthwhile. They view the system as an extra (unnecessary) burden that is nice to have but not essential. Because of this lack of interest on the part of IBL employees, it was extremely difficult to find an individual who was willing to take responsibility for the system on a continuous basis. This meant that the researchers could not easily withdraw from the system once their job was done. Because of the fact that ticket salespeople work with huge amounts of cash, and because of the high crime rate in the area where the ticket office complex is located, intensive security measures are in place. Among other things the whole environment, inside and out, is under constant surveillance of closed circuit television (CCTV). Because of the risk of insiders working together with criminals to deactivate the CCTV prior to a robbery attempt, the computer for the CCTV system is behind a security door where not even the sales people can enter. For reasons of limited space and power outlets, as well as the existence of a heat extracting fan, the computer for the information kiosk is also behind this security door. This isolation of the information kiosk computer causes a certain amount of inconvenience. It happens quite often that a power failure or, especially in the early days, a malfunctioning system causes the system to shut down. The salespeople cannot solve the problem or restart the computer and the researcher has to be called out time and again. The public environment in which the system is functioning implies a high risk for potential vandalism and even theft of equipment. Currently the touchscreen is installed in a metal cabinet in such a way that only the glass part is accessible. Furthermore, the touchscreen is also undercover by CCTV. The risk still exists, however, that a person with a vandalistic inclination could hit the screen with a hammer during quiet hours and then
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disappear. Due to the high crime rate in South Africa, the police would probably not have the time nor the manpower to follow up the TV recording. Much research has previously been done on user interfaces for touchscreen kiosks (Borchers, Deussen, & Knörzer, 1995; ELO Touch Systems, 2002; ELO Touch Systems, 2003; MicroTouch Systems, Inc., 2000; Sears & Shneiderman, 1991; Shneiderman, 1991). This research was, however, always focused on users with average computer literacy skills and exposure to technology according to Western standards. For an interface to be developed for users from the IBL passenger community, special considerations should be taken into account. As previously indicated, these people are mostly from an African community with very limited educational background. One of the initial research aims for this project was to investigate the ways in which a computer interface must be adapted to accommodate users of this profile. To date, no clear-cut set of guidelines could be formulated and it remains an open question as to how much users of this user community gain from a Westernized interface in a non-native tongue that is not always well understood. Commuters who travel the same route every day do not have to consult the system time and again to determine departure times or ticket prices. This means that they would not have any motivation to consult the system on a regular basis, thereby probably missing out on important notices that IBL communicates from time to time. It is, therefore, essential to determine effective ways to motivate commuters to use the system on a regular basis. With reference to the techniques of liaison and obtaining feedback that were in place prior to the implementation of the information kiosk, the ultimate question is whether or not the information kiosk adds value. It is accepted that the existing techniques should not be replaced by the information kiosk and that the kiosk should act as a supplementary source of information, but would the old ways not suffice without the information kiosk? In other words, does the information kiosk system really fulfill the needs of Dora Ramakoatse and others like her?
REFERENCES
3M Touch Systems. (2002). Online help of the TouchWare software driver for TouchScreen monitors. Version 5.63 SR3. Blake, E., Steventon, L., Edge, J., & Foster, A. (2001). A Field Computer with Animal Trackers. Presented at the Second South African Conference on Human-Computer Interaction [CHI-SA 2001]. Pretoria, South Africa. Online: www.chisa.org.za/chi-sa2001/ chisa2001new.htm Borchers, J., Deussen, O., & Knörzer, C. (1995). Getting it across: Layout issues for Kiosk Systems. SIGCHI Bulletin, 27(4), 68-74. Breytenbach, H.J. (2003). Interstate Bus Lines Passenger Survey: Executive Summary. Passenger survey conducted by independent consultant. ELO Touch Systems. (2002). Keys to a successful Kiosk application. Accessed January 5, 2003: http://www.elotouch.com ELO Touch Systems. (2003). Touchscreen application tips. Accessed January 5, 2003: http://www.elotouch.com/support/10tips.asp
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Holfelder, W., & Hehmann, D. (1994). A networked multimedia retrieval management system for distributed kiosk applications. Proceedings of the 1994 IEEE International Conference on Multimedia Computing and Systems. MicroTouch Systems, Inc. (2000). Kiosk Planning & Design Guide. Document number 19-251, Version 2.0. Norman, K.L., Friedman, Z., Norman, K., & Stevenson, R. (2001). Navigational issues in the design of online self-administered questionnaires. Behaviour & Information Technology, 20(1), 37-45. Plaisant, C., & Sears, A. (1992). Touchscreen interfaces for alphanumeric data entry. Proceedings of the Human Factors Society: The 36th Annual Meeting, Atlanta, Georgia (vol. 1, pp. 293-297). Potter, R.L., Weldon, L.J., & Shneiderman, B. (1988). Improving the accuracy of touchscreens: An experimental evaluation of three strategies. Proceedings of the Conference on Human Factors in Computing Systems, Washington DC (pp. 2732). Preece, J., Rogers, Y., Sharp, H., Benyon, D., Holland, S., & Carey, T. (1994). HumanComputer Interaction. Addison-Wesley. Sears, A. (1991). Improving touchscreen keyboards: Design issues and a comparison with other devices. Interacting with Computers, 3(3), 253-269. Sears, A., Kochavy, Y., & Shneiderman, B. (1990). Touchscreen field specification for public access database queries: Let your fingers do the walking. Proceedings of the ACM Computer Science Conference '90, (pp. 1-7). Sears, A., & Shneiderman, B. (1991). High precision touchscreens: Design strategies and comparisons with a mouse. International Journal of Man-Machine Studies, 34(4), 593-613. Sears, A., Revis, D., Swatski, J., Crittendon, R., & Shneiderman, B. (1993). Investigating touchscreen typing: The effect of keyboard size on typing speed. Behaviour & Information Technology, 12(1), 17-22. Shneiderman, B. (1991). Touchscreens now offer compelling uses. IEEE Software, 8(2), 93-94, 107. Walton, M., & Vukovic, W. (2003). Cultures, literacy, and the Web: Dimensions of information ‘scent’. Interactions, 2, 64-71.
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Chapter IX
A Case of an IT-Enabled Organizational Change Intervention: The Missing Pieces Bing Wang, Utah State University, USA David Paper, Utah State University, USA
EXECUTIVE SUMMARY
This case study documents an organizational change intervention concerning the implementation of a novel information technology at a university-owned research foundation (URF). It evidences the disparate expectations and reactions by key actors toward the change event, marking a mismatch between a new paradigm required by the new technology and existing information technology practices. Drawing upon change management and management information systems (MIS) literature, we discuss the perceived change management issues hindering the change process at URF. Our discussion is tempered by a theoretical lens that attempts to integrate the literature bases drawn upon in this research. In particular, resistance from in-house IT specialists was observed as the strongest force obstructing the novel IT implementation. This study offers a forum to stimulate both researchers and practitioners to rethink the necessary elements required to enact change, especially with respect to novel IT implementations. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
The information technology (IT) enabled change process reported in this case is being implemented in a university-owned research organization (hereafter, the parent organization will be referred to as the university and the research organization will be referred to as URF). URF was formally incorporated in 1967 as a not-for-profit corporation with its origin as a space science and technology research laboratory that was created in 1959. URF was established primarily to provide an organizational structure for the management and physical support of applied research, the discovery of new ideas, and the advancement of new technologies. Since its establishment 40 years ago, URF has expanded from supporting a single-disciplinary research base to a multidisciplinary research base in space science and technology, small molecular systems, water science and technology, and associated information technologies; from owning one research laboratory to over 15 research facilities and laboratories; from having two university professors who started the first research laboratory to employing more than 400 scientists, engineers and administrative staff. Over the years, URF has evolved into a distinct research institute with international recognition as an associated reputation as a world-class research facility. URF not only provides research administration, management, and stewardship of funds for university-wide research projects, but also undertakes much of its renowned research activities in space, water and bio-molecular science and technologies via its various research units. URF currently has three research units and one technology commercialization office: the Space Unit (SU), the Molecular Unit (MU), the Water Unit (WU), and the Commercialization Office (CO). Each unit is characterized by its own identity in terms of management style, culture, finance, and research capacity. SU, as one of 10 university affiliated research centers (UARCs) in the nation, is the largest unit within URF and generates 94% of total URF research funding. The sources of funding by agency include: Ballistic Missile Defense Organization (BMDO) 39.7%, Air Force 20.6%, Navy 18.6%, NASA 15.5%, Private 2.0%, other Department of Defense (DoD) 1.5%, other Federal 1.4%, National Science Foundation (NSF) 0.4%, and state funding 0.4%. A board of trustees provides oversight and direction for the policies, procedures and development of the organization. There are currently 16 members on the board with backgrounds in academia, industry and government. The president of the university (the parent organization) appoints URF’s directors with approval from the existing board. Until about five years ago, URF was managed and administrated under the auspices of a university model in all operational aspects such as finance, human resources, and research/business development. The vice president of research for the university had played a key role in the management and administration of URF. A major portion of URF research funding was contract and grant-based and its financial structure followed A21 — a university accounting scheme. However, during the past five years, URF has experienced tremendous growth that demanded transformation from a university-oriented organization to a business-oriented corporation. Moreover, the increased scrutiny by federal government audits required URF to move to a more independent business environment. As a result, the accounting scheme has recently moved from A21 to A122, a not-for-profit protocol, to reflect the standard adopted by many other major federal and industrial scientific laboratory operations. Also, the role of the vice president for research changed from active to Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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inactive in terms of URF management responsibility. Instead, URF appointed a CEO to lead the organization. An orchestration of changes has thereby been enacted — namely changes in leadership, financial structure, organizational structure, business process management, and IT. Due to the rapid expansion of the organization, the contracts and grants URF procures with federal and private entities demands an even higher level of research, ideas, and competence to compete with other major scientific and private laboratories. In fact, 94% to 96% of the research dollars generated by URF are contract dollars, unlike in the past where grant-based dollars were more significant. The difference between contracts and grants is important. Contract procurement must be competed with private industry and a good or service must be delivered. Grant procurement is only competitive on the front-end. That is, once a grant is procured there are no deliverables, and thus no competition exists on the back end.
SETTING THE STAGE
The slowdown of the global economy, shrinkage of federal funding available for basic and applied research programs, and increasingly more stringent regulations in federal defense research contracts during the past several years have greatly impacted the ability of URF to compete. Such environmental change has seriously challenged the viability of the URF research and management practices that had been exercised successfully in the past. Taking on that challenge, URF top management launched a large-scale organizational transformation designed to revitalize URF and enable it to continue to grow. It was hoped that URF would be able to reposition itself as a cuttingedge player in the increasingly competitive environment by transforming into a true business-oriented corporation. One overriding strategic goal of the transformation was to ensure better management of intellectual properties (discoveries/technologies) to further secure and expand its business base and continuously increase its capability to compete with other scientific and industrial laboratories. To facilitate this goal, a novel IT (BATON technology) was introduced into the organization with the purpose of streamlining/automating core management processes related to intellectual property and discovery protection. An outside consulting team was secured to lead the IT implementation. Utilization of BATON literally enforces change in the manner in which managers use IT to create (and utilize) contract management processes, identify/secure new ideas and discoveries, and monitor contract/project progress. Consequently, effective utilization of BATON requires a significant change in current practices of the IT department. That is, the IT department must adapt to administer IT in the way that effectively supports newly created management processes. Four key groups were involved in the initial planning and implementation of BATON — top management (essentially the CEO), external IT consultants, business managers, and in-house IT specialists. Each group (excluding the CEO) was assigned roles and responsibilities within each phase of the BATON implementation process. As the case unfolds, it will be made clear how each group reacted to the changes accompanying the novel IT implementation.
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CASE DESCRIPTION
Managing change is frequently cited in the organizational development (OD) literature. Traditionally, three phased elements — envisioning change, implementing change, and managing reactions to change — have been reported in the OD literature as enabling change (Jick, 1993). We use these phased elements as a theoretical lens to frame the IT intervention described in this case. As such, we explore the change management issues occurring in each of the three phases based on the perceptions of change actors. To provide a theoretical foundation that will help readers better understand our case (within an integrated context of OD and MIS), we first introduce the theoretical phases we followed. •
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Vision Issues: The foundation of any successful change process rests on a clear vision of how change can be desirable to the future of the organization and how it can be directed and shaped to reach anticipated outcomes (Tichy & Devanna, 1986). However, as suggested by many researchers, not enough effort has been afforded to properly communicating said vision and educating people to share in this vision given that it is intended to stimulate and guide organizational change (Jick, 1993). Without a systematic structure to communicate and translate vision into reality (Graves & Rosenblum, 1987), visionaries will likely encounter skepticism and other negative reactions to change. Moreover, the seeming inconsistency between vision articulation and action by visionaries in leading the change effort merely increases confusion and cynicism among organization members (Richards & Engle, 1986). Implementing Change: Issues involved in implementing change often encompass three elements — supporting structure, change consistency, and the power to bridge the gap between the change strategist’s vision and organization reality (Oden, 1999). To enable change, there must be a supporting structure in place that facilitates the creation of an environment in support of useful and innovative action leading toward realizing the vision (Richards & Engle, 1986). At the same time, consistency in change techniques employed during the process, as perception becomes reality, is crucial to enhance the enthusiasm and morale of the change actors. That is, if what is perceived as strength from one constituency is greeted with more ambiguity from another, the overall perceptions of the change intervention will be negatively influenced (Jick, 1993). Finally, change implementers often bemoan their frustration due to insufficient power to overcome the resistance they encounter to transform the organization into a new paradigm as called for by the change vision (Beckhard & Harries, 1987). Without considering such issues during the implementation process, there exists the potential to derail the course of change (as demonstrated by the consultants’ experience described later). Managing Reactions: Managing reactions to change is probably the most challenging and unpredictable element in a change process. Receptivity, resistance, commitment, cynicism, stress, and related personal reactions must be considered within the framework of planning and implementing an organizational change, as researchers come to realize that organizations, as open systems, depend on hu-
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man direction to succeed (Armenakis & Bedeian, 1999). Cases about unsuccessful change programs reported in many studies have exemplified that change without considering the psychological effect on others in the organization, particularly those who have not been part of the decision to make the change, is a major concern (Jick, 1993). OD researchers further point out that if the reactions to change are not anticipated and managed, the change process will be painful and perhaps unsuccessful (Beer et al., 1990). In the MIS literature, managing reactions to change is also cited as a challenging and unpredictable element. Traditionally, IT managers often take a technological imperative perspective (Markus & Benjamin, 1996). As such, “technology is seen as a primary and relatively autonomous driver of organizational change, so that the adoption of new technology creates predictable changes in organizations’ structure, work routines, information flows, and performance” (Orlikowski, 1996, p. 64). Change strategists trapped within this perspective largely neglect the social issues involved in technologybased organizational change. The techno-centric lens offered by this perspective often limits their focus on technological issues and away from human issues such as affective impact of technology on change recipients, behavioral reactions to change, and attitudinal shifts that may occur during a change process (Berney, 2003). However, as the studies on IT-enabled change continue to reveal the importance of the human element in this process, MIS researchers have come to realize that the technological imperative model is not sufficient to effectuate change (Orlikowski, 1996). The most current paradigm of IT-based organizational change intervention, in which organizations employ technology as a mechanism to enact and institutionalize intended change, requires change strategists to heed human issues and respond effectively to the various reactions triggered by the intervention (Jick, 1990). Furthermore, IT specialists are frequently referred to as change agents because they identify psychologically with the technology they create or support (Markus & Benjamin, 1996). Ironically, IT specialists that are stereotyped as being in love with technical change and seem to benefit the most from an IT-enabled change resist such desirable change implementation (Orlikowski, 1994). This paradox has inspired a new stream of research that attempts to monitor/analyze behavioral reactions of IT specialists and explores forces/barriers precipitating resistance to change. Among this research are Markus and Benjamin’s (1996) study classifying organizational beliefs and behaviors of stereotyped groups of IT specialists. Their interpretation suggests that many IT specialists fear that new technologies in the hands of users may threaten their professional credibility and self-esteem. As they explain, “new technology makes these IT specialists vulnerable: unless they know everything about it, they will look technically incompetent when users inevitably experience problems. Further, even when a new technology’s problems are known and tractable, the shakedown period increases their workload and working hours” (Markus & Benjamin, 1996, p. 391). Framed within the foregoing theories, the reminder of this case description articulates the research methodology and our story. The story includes the CEO’s vision that initiated the IT-enabled change intervention, the external IT consultants’ implementation issues, and the resistance from in-house IT specialists toward change. We organize
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our story chronologically to explain what happened during the intervention process and discuss the change management issues critical to the IT-enabled change intervention.
Research Methodology
This case study explores an organizational phenomenon — namely a change intervention enabled by IT and the reactions by various constituencies towards the changes during the intervention process. As such, we adopt an in-depth qualitative case study approach to explore the context within which the phenomenon occurred. The procedures for the data collection and analysis process are interwoven within an iterative cycle consisting of interview-analyze-refine-interview. •
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Data Collection: The data were collected mainly through unstructured and semistructured interviews. Interview participants spanned across different levels and different functionalities of the organization, including the CEO, deputy directors, external IT consultants, business managers, in-house IT specialists, and research engineers. A contact summary sheet was designed and used for every interview session to keep track of respondent information. Each interview lasted approximately 60 to 90 minutes and was recorded and carefully transcribed. Necessary clarifications with interview participants were made to ensure the reliability and validity of the data collected. Also, we supplemented interview data with on-site observations as well as various written documents (i.e., annual reports, mission statements, and meeting notes). Our data collection goal was to capture actors’ perceptions of the intervention and the associated consequences of their actions as the change unfolds. This process of data collection proved to be efficient as it emphasized problems and issues that emerged during different phases of the change process. Data Analysis: To ensure rigorous data analysis, the case study approach as advocated by Creswell (1998) and Yin (1994) was utilized. Data analysis was integrated with data collection throughout the entire research process. Analysis centered on classifying data into coherent constructs (by identifying both surface and latent change issues), relating findings to existing OD and MIS literature, and generating/refining interview questions based upon the data obtained through prior interviews. Such an iterative cycle of data collection and analysis allowed us to organize new insights, accommodate emergent constructs, refine interview questions, and adjust the research focus accordingly.
We began data collection and analysis for this case study in the summer of 2003. The process during which we iteratively interviewed, transcribed, resolved data discrepancies, and synthesized such information had a duration of over seven months. Such a longitudinal approach is critical to investigating change intervention as it helps researchers capture multiple perceptions/perspectives of change as it unfolds and enables them to develop a cogent lens for better understanding organizations and people (Garvin, 1998).
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CEO’s Vision
Five years ago, the former executive director of URF retired and a new CEO (the current CEO) was appointed to lead the organization into the future. His mission was to develop and implement a strategy of growth to better compete in a changing business environment. The current CEO can be characterized as an entrepreneurial-type of leader because his history is one of founding and launching new organizations. His leadership by vision style is new to many people at URF. An excerpt from the CEO’s vision states: “URF has reached a fundamental turning point in the way it does business and performs research, paving the way for future cooperative success.” It later continues with, “URF will further its efforts to a successful future via the management and commercialization of intellectual properties.” To facilitate this fundamentally new way (process) of doing business, the CEO announced at the project introduction meeting with his business managers that “a new information technology has been evaluated and chosen to assist managing the transfer of intellectual properties into the commercial arena. This technology, known as BATON technology, will be implemented to the benefit of URF, the University, and the community.” Consistent with his vision and our interviews, the CEO believes that the successful implementation of the BATON technology will not only streamline, automate, and document the intellectual properties management process, but more importantly, it will change the culture of people by promoting a new way to manage the process of discovery. In an interview, the CEO explained: In the grant area, it’s very much the case that your white paper constitutes your discovery. While you’re delivering goods ([which is the case within URF]), not a white paper, you’re not revealing your discoveries. [As such] we have developed a very poor habit across the University and in URF, simply to ignore discovery. Now for every contract we have, we are to identify the intellectual property [the discoveries] in order to report those discoveries and inform the federal government what they have earned through their investment, not only in the goods or services received, but also in the discoveries identified. By doing so, it is to change the culture of our people, to realize that they are having discoveries that have value internally, and identifying our critical areas of contribution is important. The discovery is our future. I contend that in the future, if we don’t do an effective job of that, we will lose the ability to compete with the big guys who can just redo our ideas and cut us out of opportunity. However, such vision had not been widely advertised and championed to other members of the organization because the CEO believes that change takes time and therefore should be communicated in a subtle manner. As a result, the vision was not universally shared among organization members, as evidenced in interviews with business managers at URF. “I know [that] many other managers do not see that vision,” said a deputy director of a unit at URF, “I know where he [the CEO] wants us to go, but without a roadmap of how to get there is a question [shared] by many people.” It is also important to note that the vision’s promise to value people’s ideas and discoveries and bring new opportunities to the organization did not seem to stimulate them (with the exception of the external consultants). Rather, it was seen as another wave of new leadership manifesting as, “I guess this is a different management style,” “we just Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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do what we are supposed to do,” “as long as we get things done, it is all right, I think.” Such are the perceptions of senior engineers that we interviewed. Even the consultants who worked closely with the CEO on the intervention project and understood the vision well enough to implement it had frustration. “I thought this was a pet-project of his, but it didn’t really turn out to be the case because I didn’t see [the CEO] put it as his top priority.” Without consistent support from top management, the consultants felt powerless and concerned: “in spite of the fact that we are leading this project, there is no structure, and we have no power to push what we know needs to change.”
Intervention Begins with BATON Technology
The existing IT system, as explained by the CEO, did not include standard procedures to assist principle investigators (PIs) in documenting and reporting research activities, new ideas, and by-product discoveries. In fact, each PI used their own spreadsheet and other non-centrally-controlled software to manage research projects and/or contracts. Even data pertaining to a single project/contract were scattered across the enterprise without a central repository to consolidate financial, human resource, and project progress for said project/contract. The management and reporting of such scattered information for all projects/contracts at the organizational level was recalcitrant. The same was true with intellectual protection of discoveries. Moreover, the legacy system was not built to accommodate ever-changing regulations imposed by government agencies for regulating research and development of sensitive defense technologies. Without a mandated contract management process and a centralized system that supports said process, absolute compliance with regulations and procedures for each contract was difficult and challenging to say the least, especially as URF strives to grow and compete with other major industry laboratories. Building a centralized process and the associated IT system that optimally rectifies such problems, however, is not an easy endeavor. Given the weaknesses of the traditional IT paradigm in dealing with rapid system development and expansion (i.e., tremendous time and resources required), BATON was considered because it was designed to support dynamic modeling and deployment of management processes in accordance with IT. One of its important merits is that it allows non-technical people such as business managers to map and manage business process logic, and build their own management processes for each contract or research project directly into the IT architecture. Such mapped processes are automatically translated into the system with database interactions and programming tasks that are completed by system designers (see appendix A for an example). BATON-facilitated designs thereby drastically shorten system development cycle times and reduce interference from IT specialists in the process mapping arena. That is, it limits the time (and workload) required of managers and system designers as they attempt to understand each other’s domain knowledge. It allows them to more easily transform such knowledge into effective IT support for each individual contract. With BATON, management processes pertaining to project/contract operations can be centrally streamlined and thereby effectively reflect specific contract regulations because the responsible manager, who understands said regulations and processes, actually maps such processes into the system through a graphical user interface (GUI). Once a process is established, all those involved in a particular contract or research project have no choice but to follow the basic structure of the mapped process. For Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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example, a business manager can create a set of memos of a process as he/she sees it, and these memos, in turn, are negotiated until a consensus is reached by all responsible parties. The memos are then recorded into BATON with help from IT specialists. Each memo contains process steps that describe workflow. Each step is associated with a process-key and each process-key has a unique operational definition (see Appendix B for an example). All process keys are stored in BATON as libraries of process logic trees that allow valid users to navigate said trees. Process keys are really just sophisticated indexes that point to different locations in an overall process that is stored in the BATON system. The logic of a process is defined with a hierarchical tree structure. This tree (as conceptually realized by a manager) is finally translated by system designers into BATON. An integrated system is thus created because the tree represents a process that, once recorded into the system, must be followed by all users of the system. In mid 2002, the CEO decided to hire two IT consultants to facilitate the realization of his vision. He charged the consultants with leading implementation of the BATON technology at URF. BATON was chosen because of its innovative nature and process capability. Such features convinced the CEO that BATON was a good choice because it offered potential to alleviate many of the difficulties inherent in existing process management at URF, and in particular, the intellectual protection process. Charged with the responsibility of BATON, the consultants began the implementation process as well as other required changes. Their initial plan was to present the project to business managers to get them excited about how BATON can help their business. The hope was that the managers would become enthused so that they would rally further support within the organization. The managers quickly came on board because BATON obviously offered them a way to better manage their processes and obtain data when and where needed. The next target group was the in-house IT specialist, because the consultants needed access to systems and data controlled by these people. In addition, the IT specialists would have to be the long-term custodians of BATON after the consultants leave. With assistance from the in-house IT specialists, the consultants expected to complete the implementation within months.
Consultants’ Expectations
During August and September of 2002, the consultants carried out their plan with business managers as expected. They frequently met with business managers to familiarize them with the technology and convince them of the advantages offered by BATON, such as the ability to quickly and easily build their own processes. For this constituency, the consultants knew that managers do not want to be presented technical complexities, only how an IT can help them. They therefore attempted to sell managers on the ease of use and usefulness of BATON. To get managers to buy-into the BATON system and assure successful implementation of said system, the consultants carefully prepared their presentation and material in such a way as to demonstrate the business impact and how BATON works. Following are some of the most salient presentation points: “BATON is a tree-based system development tool, and it is the most feasibly efficient solution for URF in its current situation.” Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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“Using trees, it enables managers and research scientists to conceptually design logical structures that automatically generate the necessary Java code, coordinate with relational databases, and work with directory services with the goal of building a complete application.” “No IT background is needed for managers and research scientists. With only limited assistance from IT specialists, managers and research scientists will be able to layout basic structure of an application within a few days, and by a week, they can incorporate a complete set of complex logical elements.” “Such elements will then constitute the architecture of a new application in BATON, within weeks; a resulting application can be built and tested.” During the presentation, there was some skepticism, but once BATON was demonstrated the business managers were generally encouraged by the notion of what the technology can do and how it can do it. The consultants also had a few managers actually design a simple process structure after the presentation. This exercise helped to greatly reduce any remaining skepticism. Within a few days of preliminary training, managers were prepared to readily accept the technology and facilitate their part in implementing it. The consultants felt very positive at this point in time and believed they had an important first victory toward disseminating a positive attitude toward the intervention. As a result, the consultants anticipated a smooth transition to the next step of the process — gaining cooperation with the in-house IT specialists to set up a pilot infrastructure for the new system. This anticipation seemed reasonable because, after all, the in-house IT specialist would be managing the new technology and should readily appreciate its advantages.
Current Infrastructure & Practices in the IT Department
By October, after examining the existing IT infrastructure, the consultants noted that the legacy system built and maintained by the IT department for the past 15 years had many inherent problems such as lack of integration, redundant processes, redundant code, redundant data, and no apparent coordination. In retrospect, one of the consultants noted: Data is not stored in one place, that is, there is no centralized repository. This means that it is difficult to retrieve information on a project or contract on an ad hoc basis (via SQL). Data on a project or contract may be stored in several locations owned by more than one IT person (the DBA may have user information, the network person the same and so on). Data is not stored logically and/or consistently. There was no database structure or strategy (e.g., overall ERD) that could be found. We were never shown an ERD for human resources, IT or any other part of the business. As for system security which is a big thing for IT, the IT department does a lot of firefighting, that is, they fix a problem without thought of an overall schema to help Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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identify the root cause rather than a symptom. For example, if security needs to be heightened, IT builds a new firewall (or firewalls) to deny malicious access. The problem again is that there is no overall security strategy, just band-aids. At least we never noticed anything that explicitly verbalized or documented. Servers are everywhere with no seeming strategy for coordinating IT resources. “There is a method to the madness, I suppose,” said one of the consultants in an interview with us, “but it was not possible for us to determine their IT security, network, database or other management strategy because they are either not documented as such or they do not exist at all.” Moreover, the culture of the IT department was such that “you do what you have to do to make it work.” There was no standard in terms of system development and data access. Each IT specialist developed and controlled a piece of a stand-alone application as his or her own property. Decisions about which additional applications needed to be built and how they should be built were usually made separately by individual owners. One of the consultants told us that “[the CEO’s] goal with BATON is to reduce these ad hoc applications. Some of these applications may do the same thing, but are never shared because nothing is integrated.” Also, the ability of business managers to obtain access to project data depended mostly on their relationship with individual owners. That is, personal connections with system administrators and developers determined who got what data, rather than access to data being determined by a general data access policy. Since the organizational culture from the past few decades was family-oriented, administration of the IT department from top management was relaxed. As a result, IT specialists had great power over how they operated their supporting functionalities. Furthermore, IT specialists, guarded by techno-babble (technical jargon), were able to easily shield themselves from any attempts to question their practices or motives in order to defend their turf. According to one consultant, “since most managers do not know IT in any detail, it is not difficult to SCARE people away from potentially poor practices!” The consultants’ perception was that technology intimidation was used as a defense mechanism because business managers are not normally IT literate and are thereby easily intimidated. One of the consultants reflected that “when the company was small, this [lack of macro management] was probably not a problem, but the tremendous growth of URF in the past five years has made it almost impossible to operate IT support in this way.” In spite of the discovered poor IT practices, however, the consultants were still confident that implementation was possible: “By implementing this new IT-project, we hope to change the existing IT infrastructure and make it into an integrated one. Also we anticipate that there will be a good chance for us to bring in a new paradigm of integrated and coordinated business practices.”
Consultants’ Frustration
With some effort, in November, the consultants moved the BATON project into the IT department and got it started. They talked with each IT specialist in the department in an effort to understand their corresponding responsibilities and the overall structure of the existing system architecture. At first the project seemed to be going well, but as events unfolded the consultants began to feel frustrated. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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It seemed to the consultants that the in-house IT people simply did not care about the project. It also seemed that the IT people were not willing to carry out their given responsibilities to make the project a success. In fact, the assistance that the consultants expected from the IT department turned out to be resistance: IT controlled all the databases and systems. As a result, we had to go through the DBA to get access to the database and subsequent access to the data inside the database. However, access was not easily forthcoming. It literally took a month for us just to get an account on the real system. Actually, we were never really sure that the account that we were given was really on the real system. We suspected that it was a dummy account with non-production data. Of course, this set us back months because we had to figure out what was going on. It seemed that at almost every step the consultants took to move the project forward, the IT department induced obstructions of some kind. “We had the same problem with network security. To connect to a database server, we asked the network administrator to open a port for us. Again it took weeks for us to really get one.” When the consultants needed to prototype the new system somewhere, they again became frustrated: “we needed a machine to host our system, but we were turned away because our project was not included in their routine operation.” In spite of enormous efforts expended by the consultants, the project was not making progress with IT. Unable to push IT forward, the consultants turned to the CEO for support and hoped that he would help the effort. According to one of the consultants, however, the CEO was ambiguous in answering their request. “I think, although we were delegated by the CEO to lead the project, we didn’t really have the power to push IT in any real direction. Hence we could not make change which was crucial to implement the project.” One of the consultants also noted: “The CEO shared the vision but didn’t actively help us.” Although business managers had sponsored the project, they did not feel that it was their responsibility to push IT to change. Without a supporting structure to facilitate the change, the consultants felt alone and powerless to overcome resistance from IT. “We really wished that people from all levels had joined us and to create an environment that would pressure IT [for change]. To date, this hasn’t happened.” By early 2003, what really concerned the consultants was that they were losing sponsorship from business managers. It was obvious that the new system could not be built and tested for production without costing another year in implementation time. The consultants revealed to us that what they promised in terms of project timelines was not being met. Having perceived the problems in implementation in IT, business managers began pulling back, doubting that the technology would really work. As obstacles to the IT implementation continued to mount, the consultants started to realize that the project was facing serious challenges and that they were trapped between the vision and the reality. Powerless and helpless, the consultants noticed that their enthusiasm was fading.
IT Reactions to Change
Finally, in March of 2003, one of the consultants resigned and the database administrator (DBA) from the IT department was appointed to lead the BATON project. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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By the time we finished our first round of interviews at URF, one and half years had passed since the project began and the system still had not been moved into production. Business managers had gone back to using their original IS applications to manage their processes the way they had prior to BATON. What had really gone wrong? Wondering about this question, we interviewed (for the second time) the consultants. “Basically, IT had strongly resisted the implementation because they feared that they would lose power over controlling the data and systems.” “This is the power that IT doesn’t want to lose,” according to one of the consultants. As further pondered by the consultants: IT traditionally controls everything that is technology related. With that power, IT is able to operate as they see fit. Since most of the IT specialists have worked at URF for many years (and were responsible for creating the culture over time), they are content with the loose culture that exists at both IT and URF. At the same time, non-IT people have become accustomed to the IT practices. That is, no one has ever challenged how IT should provide expertise to support the organization. The consultants also pointed out that “… being unfamiliar with BATON may cause IT to resist the implementation of this technology.” One of the consultants confided that the level of resistance from IT was somewhat of a surprise. “I thought that IT people would love this technology since it is novel and eventually it should free them from tedious application development. But this turned out to be just a misconception on our part.” From the consultants’ story, it may seem that IT is resisting good change with no regard for progress or the business. However, there is another side to the story. The major BATON programmer (who has been on the project from the beginning) did not really resist implementation and actually has become a champion of the project. We now relate some of his perceptions: I don’t really think people [within the IT department] really envisioned a purpose as much as [the consultants] did. I think they [other IT specialists] were there just because they had to be there. As far as purpose goes, I don’t even know what it did at the beginning [how BATON worked when he first began the project]. Nobody really knew what the technology was for [at the beginning]. I think they [other IT specialists] were just busy with other projects. I guess they just figured it wasn’t their problem either. I think it’s hard for them [other IT specialists] to take [consultants] seriously, because [one of the consultants] often said the tool [will] basically replace all [other] IT tools. And their experience was that they had never seen anything [that] would do this in the first place. So it’s hard to take [the consultant] seriously. I think they [other IT specialists] just figure more like it’s impossible. Also, the programmer revealed that the CEO was just so busy that he could not become actively involved in the implementation. Although the DBA was assigned to lead the project, she was also busy with her routine work, and did not really care about the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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project anyway. The programmer concluded, “… basically there is no lead on this project now.” Admittedly, the consultants, reflecting upon their experience with the IT department, commented that they had not been consistent in educating across all groups concerning the new technology and the potential benefits to the organization in the long term. Neither had they made as much effort as they should have to rally sponsorship from IT people and prepare them for the intervention. “I guess we did not spend as much time and energy with the IT department as we did preparing business managers for the new technology. We could have spent more time with IT prior to pushing for implementation.” The consultant went on to say that “… without laying the groundwork for a change at the IT level, we underestimated the difficulties in implementing the project, [and] were unable to make the intended change to a new paradigm within IT.” The reason given by the consultants was that the tool is really for business managers, not IT. However, “IT is central to the plan. We should have anticipated this. We didn’t mean to underestimate IT. We just thought that they would do as directed by the CEO.”
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
The major challenge facing successful implementation of BATON is the mismatch between the legacy IT culture within URF and the paradigm shift inherent in the novel technology. Adding to this challenge is the imperative of effectively managing the change process, particularly resistance to change. Unfortunately, URF management never recognized the urgency to systematically re-examine the change intervention. The next subsection provides additional analysis of the case to help readers understand the critical problems facing the organization so as to develop a more informed plan of rectification.
Mismatch
Historically, the culture at URF was rooted in that of a small, family-owned business. With fewer contracts and grant projects, the level of managing IT support in business process management was relatively low. Such low levels of control on the IT department and a lack of an overall IT strategy from top management made the IT department a selfindulgent (and relatively independent) entity that possessed undue power in controlling processes. This translated into an inability to share data across independent systems, and created practices based upon personal connections rather than standard IT procedures and policies. As the organization expanded in size and number of contracts over the past decade, the existing IT culture did not fit. Instead, the expansion of the organization as well as the changing business environment demanded increased strategic planning of overall process management, efficient utilization of IT resources, and standardized IT operations. That is, top management believed that a high level of strategic control on IT would be necessary to match the continued expansion of URF. To illustrate, the new technology (BATON) allows business managers to implement their own processes without direct interference from IT. Implementation of BATON
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induces a radical departure from the existing culture within IT. That is, IT was used to dictate how information is to be supplied to processes rather than managers dictating how and when they need information to support their businesses. With BATON, IT actually has to do less work because they only have to translate the managementestablished process into the system infrastructure. However, this also implies that IT will no longer be able to control the processes to the extent that they had in the past. Furthermore, a process management system built with BATON technology is, by default, centralized and shared so that it can be used across all levels of the organization to meet disparate needs. The artifactual boundaries set by individual IT owners are thereby broken. “Do me a favor” requests are replaced by standard IT procedures and policies if BATON is successful. This new paradigm contrasts significantly with the existing nonstandardized culture and practices within IT and thereby demands drastic changes in policies, procedures, and attitudes. The mismatch (between nonstandard IT practices and BATON requirements), however, had not been fully recognized by top management during planning of the change intervention. Moreover, top management (and the consultants) underestimated the challenges (change management issues) of implementing the new technology in a provincial IT culture. Hence, top management faces a dilemma. They must reconcile the mismatch to save the project from failure by creating a better estimate of crucial change management issues as they relate to the IT culture. Therefore, the reader should begin thinking about ways that URF can reconcile this mismatch. In addition, the reconciliation should take into account the following change management issues that are still hindering progress. •
•
Communicating/sharing the vision of change: As the case revealed, there was insufficient energy from top management to communicate and promote the vision to lower levels of the organization (i.e., programmers and other IT specialists). Further, the CEO’s vision was well established, but it did not include specific objectives and plans to guide realization of the vision. Only informed by an abstract vision, organization members had limited understanding of how the change initiative would really affect them. This was clearly demonstrated by the fact that IT specialists were unaware of the purpose of BATON when it was first implemented in their department. As a result, they did not buy into the project (from the beginning), and as change unfolded, their resistance to the change escalated. The absence of a concrete and consistent articulation of the change vision, that should be communicated and shared by organizational members, created an early obstacle to a successful change intervention. Managing the change process: In spite of the fact that the external consultants were hired to lead the implementation of BATON, they were seen by organization members as outsiders with no influence or power. Further, responsibilities for enacting change were not clearly assigned to those involved in the change (i.e., business managers, PIs, in-house IT specialists). Without such clear responsibilities, the normal management structure was not sufficient to support the change effort given that managers are already busy. As indicated from analysis of the case, consultants lost political sponsorship from other actors (i.e., managers and
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A Case of an IT-Enabled Organizational Change Intervention 155
•
PIs) to a great extent in that they were unable to overcome the resistance they encountered when attempting to bring IT into the change effort. This insufficient management of the change process has contributed greatly to the problems encountered with BATON implementation within the IT department. Indeed, researchers have purported that “it is not the results management is managing, but the processes that achieve results” (Jick, 1993, p. 171). Resistance to change: It seems apparent that the CEO took a technological imperative perspective in attempting to realize his vision with respect to intellectual property protection and process management. That is, he and other top management implicitly assumed that implementing BATON would automatically enable expected changes in work routines, information flows, and performance. While such assumptions appear to be reasonable for business managers because the benefits are apparent, they fail when dealing with IT department resistance because it is more difficult for IT people to understand how such change benefits them. The IT department was used to controlling business processes, data, systems, and was seldom challenged by management to change such practices. As a result, it was difficult to convince them that BATON offered any real benefits because management neglected the existing IT culture developed over the years. As the change process unfolded, IT was pressed to rethink almost every aspect of their culture, and a sense of being questioned about their current practices emerged among IT specialists. As such, IT was immediately defensive about BATON and resisted because they wanted to maintain their comfortable way of life. In contrast, business managers were not as deeply affected (in a perceived negative sense) as their IT counterparts. Thus business managers were less resistant to changes brought about by BATON. The challenge facing top management concerns what can be done to be more proactive in diffusing IT resistance. 1
REFERENCES
Armenakis, A.A., & Bedeian, A.G. (1999). Organizational change: A review of theory and research in the 1990s. Journal of Management, 25(3), 293-315. Beckhard, R., & Harries, H.R. (1987). Organizational transactions (2nd ed.). MA: AddisonWesley. Beer, M., Eisenstat, R.A., & Spector, B. (1990). Why change programs don’t produce change. Harvard Business Review, 68(6). Berney, M. (2003). Transition Guide: How to Manage the Human Side of Major Change. Washington, DC: Federal Judicial Center. Creswell, J.W. (1998). Qualitative Inquiry and Research Design: Choosing Among Five Traditions. London: Sage Publications. Garvin, D.A. (1998). The process of organization and management. Sloan Management Review, 39(4), 33-50. Graves, P., & Rosenblum, J. (1987, December). Rolling out the vision. OD Practitioner. Jick, T.D. (1990). The recipients of change. Harvard Business School Case N9-491039.
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Jick, T.D. (1993). Managing Change: Case and Concept. Columbus, OH: The McGrawHill Companies. Markus, M.L., & Benjamin, R.I. (1996). Change agentry — The next IS frontier. MIS Quarterly, 20(4). Oden, H.W. (1999). Transforming the Organization: A Social-Technical Approach. Westport, CT: Greenwood Publishing Group. Orlikowski, W.J. (1994). The contradictory structure of systems development methodologies: Deconstructing the IS-user relationship in information engineering. Information Systems Research, 5(4). Orlikowski, W.J. (1996). Improvising organizational transformation over time: A situated change perspective. Information Systems Research, 7(1). Richards, D., & Engle, S. (1986). After the vision: Suggestions to corporate visionaries and vision champions. Transforming leadership: From vision to results. Alexandria, VA: Miles River Press. Tichy, N.M., & Devanna, M.A. (1986). The Transformational Leader. West Sussex, UK: John Wiley & Sons. Yin, R.K. (1994). Case Study Research: Design and Methods. Thousand Oaks, CA: Sage Publications.
ENDNOTE
1
Names of the organization, its parent organization, units, and members have all been disguised.
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APPENDIX A Illustration for Mapping Business Processes
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APPENDIX B Example for Process Keys & Definitions
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Chapter X
Up in Smoke: Rebuilding After an IT Disaster Steven C. Ross, Western Washington University, USA Craig K. Tyran, Western Washington University, USA David J. Auer, Western Washington University, USA Jon M. Junell, Western Washington University, USA Terrell G. Williams, Western Washington University, USA
EXECUTIVE SUMMARY
On July 3, 2002, fire destroyed a facility that served as both office and computer server room for a College of Business located in the United States. The fire also caused significant smoke damage to the office building where the computer facility was located. The monetary costs of the disaster were over $4 million. This case, written from the point of view of the chairperson of the College Technology Committee, discusses the issues faced by the college as they resumed operations and planned for rebuilding their information technology operations. The almost-total destruction of the college’s server assets offered a unique opportunity to rethink the IT architecture for the college. The reader is challenged to learn from the experiences discussed in the case to develop an IT architecture for the college that will meet operational requirements and take into account the potential threats to the system.
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ORGANIZATIONAL BACKGROUND Western University1
Western University (WU) is a public, liberal arts university located on the west coast of the United States. The university’s student enrollment is approximately 12,000. WU focuses on undergraduate and master’s level programs and is comprised of seven colleges, plus a graduate school. WU receives much of its funding from the state government. The university has earned a strong reputation for educational quality, particularly among public universities. In its 2003 ranking of “America’s Best Colleges,” US News & World Report ranked Western University among the top 10 public master’sgranting universities in the United States. The university community takes pride in WU’s status. According to Dr. Mary Haskell, President of WU, “Continued ranking as one of the nation’s best public comprehensive universities is a tribute to our excellent faculty and staff. We are committed to maintaining and enhancing the academic excellence, personal attention to students and positive environment for teaching and learning that has repeatedly garnered Western this kind of recognition.”
College of Business Administration
The College of Business Administration (CBA) is one of the colleges at WU. CBA’s programs focus on junior and senior level classes leading to degrees in either Business Administration or Accounting. In addition, CBA has an MBA program. About 10% of the students at WU (1,200 FTE) are registered as majors in the CBA. Each year, CBA graduates roughly 600 persons with bachelor’s degrees and about 50 with MBA degrees. CBA has four academic departments — accounting, decision sciences, finance and marketing, and management — each of which has about 20 full-time or adjunct faculty members and an administrative assistant. Other academic and administrative units for the college are the college office, three research centers, and the CBA Office of Information Systems (OIS) — about 20 persons total.
Organizational Structure of Information Systems at Western University & CBA
The organizational structure of information technology (IT) support services at WU includes both centralized and decentralized units. Figure 1 shows a partial organizational chart for WU that depicts the different groups and personnel relevant to the case.
WU Information Systems
WU’s Office of Information and Technology Services (OITS) group is a large centralized organization that provides university-level services to the WU administration, the seven colleges, and students. OITS is headed by the Vice-President for Information Systems Services Ken Burrows and is organized into three areas: User Support (US), Administrative Services (AS), and Information Technology Services (ITS). OITS has offices in Thompson Hall, which houses the WU administration offices, and the Administrative Center located approximately one mile off campus on 23rd Street (and more often called “23rd Street” than by its proper name of “Administrative Center”). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Rebuilding After an IT Disaster 161
Figure 1: Partial Organization Chart for Western University M a ry H a s ke ll Pre sid e n t, W U
W illia m F ro st Pro vo st
Bo b O ’N e il VP, Bu sin e ss & F in a n cia l Affa irs
Ke n Bu rro w s VP, O ffice o f In fo rm a tio n a n d T e c h n o lo g y Se r vice s
Pe te r Ja m e s D e a n , C o lle g e o f Bu s in e ss Ad m in istra tio n
Bill W o rth in g to n D ire cto r o f In fo rm a tio n Sys te m s
Sa m M o s s C h a ir C BA T e c h C o m m itte e
D o n C la rk M anager of In fo rm a tio n T e c h n o lo g y
The 23rd Street facility contains a secure, fire-protected, emergency power equipped server room. The OITS main offices and US are located in Thompson Hall, while ITS and AS are located at 23rd Street. The key server computers that are operated by OITS are summarized in Table 1.
CBA Information Systems
While some of WU’s colleges rely almost completely on the OITS group for all of their IT service needs (e.g., management of data servers, end user support, etc.), other colleges — including CBA — have created their own decentralized IT unit to address specific information service needs. CBA’s Office of Information Systems (OIS) was created in 1985 to provide systems support to CBA’s microcomputer lab and faculty workstations, which were the first on campus. Although OITS now provides support for these types of systems, CBA has elected to continue its OIS function. CBA’s OIS staff provides most of the information systems and technology services used by CBA, including its 55-workstation computer lab. CBA’s OIS group is located in Mitchell Hall, which is CBA’s office building. Mitchell Hall is an older building that lacks a number of features that are common in newer buildings. For example, at the time of this case, Mitchell Hall had fire alarms that could be triggered manually, but it did not have automatic fire alarms that would detect a fire and then contact the fire department and shut off the ventilation system (shutting down Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 1: Server Computers at Western University and CBA Category Comments Operating (see note) System WU OITS Academic Support servers. (List does not include rd Administrative Support servers.) All at 23 St. Location. Kermit Netware Production Faculty accounts 5.1 Bert & Ernie Netware Production Student accounts (two machines) 5.1 Oscar Win NT 4.0 Production Course support Grover UNIX Production Web pages CBA servers at the time of the fire. All but Iowa were located in MH 310 and destroyed in the fire. Wisconsin Netware Production Faculty and staff file 5.1 and print services Missouri Netware Production Student file and print 5.1 services California Linux Production Restricted file services Jersey Win NT 4.0 Production Web server Maryland Win 2000 Production CBA web site and SQL DBMS server Alabama Win 2000 Production Tape backup – Windows servers Massachusetts Netware Production Tape backup – 5.1 Netware servers Indiana Linux Production Help desk Dakota Win 2000 Academic Web server Washington Win 2000 Academic SQL DBMS server Carolina Netware Academic File and print 5.1 services Virginia Win 2000 Academic Web server, SQL DBMS server Colorado Linux Academic E-mail services Iowa Win 2000 Research & Web server, SQL Development DBMS server Server Name
Note: Server categories: “Production” servers support normal operations; “Academic” servers support specialized teaching uses; “Research & Development” server is used by faculty members for course and research applications. the ventilation system is critical to reduce smoke damage). Office and work space in Mitchell Hall was at a premium. The OIS group’s computers and operations were limited to a cramped office that was about 30 feet long and 15 feet wide. This space was home to 13 computer servers, a variety of technical equipment, numerous file cabinets and bookshelves, and the OIS staff. Table 1 lists CBA servers that existed at the time of the fire. CBA servers were named after states. While some of the servers were new and powerful machines, others were upgraded workstations that were used for low demand special purpose applications. The age of the CBA servers ranged from one year old to six years old. Due to a tight operating budget, the staffing resources for CBA’s OIS group were very limited. The OIS group had two full-time employees who were supplemented by numerous part-time student employees. The Director of Information Systems for OIS was Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Bill Worthington, who had been in the position for over five years. Worthington had extensive operating experience with a number of technologies and operating system environments. In early 2001 CBA hired Don Clark to serve as the OIS group’s second full-time employee. Clark’s title was manager of Information Technology, and his job was to manage operations for the OIS group. Clark knew the people and information systems of CBA very well, since he had worked under Worthington the previous two years before he graduated from CBA with an MIS degree.
CBA’s Technology Committee
CBA has a Technology Committee that provides advice to the dean and OIS concerning a variety of matters involving the planning, management, and application of technology in CBA. At the time of the case, the committee was chaired by an MIS professor named Sam Moss. Other members of the committee included other MIS faculty and representatives from each of the CBA departments — usually the most technologyliterate persons in those departments.
SETTING THE STAGE
On the evening of July 3, 2002, a fire destroyed many components of the information systems infrastructure for CBA, including virtually all of the server machines for CBA’s computer network. To help provide a context for understanding the issues associated with IT disasters, this section provides an overview of the topic of disaster recovery, followed by a description of the fire disaster incident at CBA and a summary of the key people and places involved with the disaster and subsequent recovery process.
Information Technology Disasters & Disaster Recovery
An information technology (IT) disaster can be considered any type of event that may significantly disrupt IT operations (Lewis, Watson, & Pickren, 2003). Examples of disasters range from events that are more ordinary (e.g., an IT move or upgrade) to those that are more dramatic (e.g., a hurricane). A recent study analyzed all disaster recovery events (a total of 429) handled by a large international provider of disaster recovery services during the period from 1981 to 2000 (Lewis et al., 2003). This study identified the most common types of disaster events, as well as the degree of disruption caused by the events. Seven types of disasters were found to be most common, with the disaster categories of “natural event” and “IT failure” being the most frequent types of disasters encountered. While disasters associated with fires and IT moves/upgrades were not as common, the study found that the potential for extended periods of disruption for these types of disasters were particularly high (Table 2). While IT disaster recovery has long been an important issue for organizations (e.g., Rhode & Haskett, 1990), the issue of IT disaster recovery gained a higher profile and sense of urgency following the terrorist attacks on September 11, 2001 (e.g., Eklund, 2001). Although many organizations may not feel threatened by terrorism, most organizations are vulnerable to some form of disruption to their IT operations. For example, the electrical blackout that hit the northeastern section of the United States in August 2003 Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 2: Most Frequent Types of IT Disasters (Adapted from Lewis et al., 2003) Disaster Category Natural Event - e.g., Earthquake, severe weather IT Failure - e.g., Hardware, Software Power Outage - e.g., Loss of power Disruptive Act - e.g., Intentional human acts (e.g., bomb) Water Leakage - e.g., Pipe leaks
% of Disaster Events (out of 429 events)
Days of Disruption (minimum – maximum)
28 %
0 – 85
23 %
1 – 61
16 %
1 – 20
7%
1 – 97
7%
0 – 17
5%
1 – 124
3%
1 – 204
Fire - e.g., Electrical or natural fires IT Move/Upgrade - e.g., Data center moves, CPU upgrades
exposed many businesses to vulnerabilities in their ability to handle a disaster (Mearian, 2003). Given the importance of IT operations to contemporary organizations, it is critical for organizations to be prepared. Unfortunately, industry surveys indicate that many organizations are not as prepared as they should be (Hoffman, 2003). In particular, small and medium-sized organizations tend to be less prepared, often due to limited IT budgets (Verton, 2003). Disaster planning can require significant time and effort since it involves a number of steps. As described by Erbschloe (2003), key steps in disaster planning include the following: organizing a disaster recovery planning team; assessing the key threats to the organization; developing disaster-related policies and procedures; providing education and training to employees; and ongoing planning management.
The Night of July 3, 2002
The fire disaster event at CBA occurred on the night of Wednesday, July 3, 2002. During this evening, the WU campus was quiet and deserted. The following day was Independence Day, which is a national holiday in the United States. The July 4th holiday is traditionally a time when many people go on vacation, so a large number of WU faculty and staff who did not have teaching commitments had already left town. The library and computer labs on campus were closed at 5 p.m. in anticipation of the holiday, and custodial staff took the evening off. The quiet mood at the WU campus on the evening of July 3rd changed considerably at 10:15 p.m. when a campus security officer spotted large amounts of smoke emerging
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from Mitchell Hall. The officer immediately reported the incident to the fire department. Within minutes, Mitchell Hall was surrounded by fire trucks. The fire crew discovered that a fire had started on the third floor of Mitchell Hall. Fortunately, the fire fighters were able to contain the fire to an area surrounding its place of origin. Considering that Mitchell Hall did not have an automated smoke alarm system, the structural damage to the building could have been much worse. As noted by Conrad Minsky, a spokesman for the local fire department, “If it hadn’t been for [the security officer’s report of the smoke], the whole building probably would have burned down.” Unfortunately, the room where the fire started was Mitchell Hall 310 (MH 310), the central technical office and server room for CBA — where virtually all server hardware, software, and data for CBA were located. The dean of CBA, Peter James, and the Director of CBA’s OIS, Bill Worthington, were called to the scene of the fire late on the night of July 3rd. Their hearts sank when they learned that the fire had started in MH 310 and that it had completely devastated the contents of that room. Due to the fire department’s protocols involving forensic procedures at a disaster site, neither James nor Worthington was initially allowed into the area near MH 310. However, based on what they could see — numerous fire fighters in full gear coming in and out of the Mitchell Hall building — they could imagine a grim situation inside the building. There wasn’t much that James or Worthington could do that evening, other than wonder if anything could be saved from the room and what it would take to recover. James found a computer on campus from which he could send an e-mail message to the CBA staff and faculty, most of whom were blissfully unaware of the disruption that was about to happen in their lives. The e-mail sent by Dean James is shown in Figure 2.
Figure 2: E-Mail Message from Dean James From: Peter James Sent: Thursday, July 04, 2002 1:03 AM To: Faculty and Staff of CBA Cc: Mary Haskell (President); William Frost (Provost) Subject: FIRE IN MITCHELL HALL Importance: High You may have heard that there was a fire in Mitchell Hall that started sometime prior to 10 PM Wednesday evening. It is now 12:55 Wednesday evening, and Bill Worthington and I have been there to review the situation. The fire appears to have started in MH 310, which is the server/ technology room. The room and all of the contents have been destroyed according to the fire personnel, and we were prohibited from entering that part of the building pending an investigation by the fire inspector. There is substantial smoke damage to all of the third floor, and to a considerably lesser extent the fourth floor as well. Vice President O’Neil, who was also present along with his crew and Western's Police Chief, indicated that clean-up will start at the latest Friday morning. There was little to no damage on the lower floors, although considerable water had been pumped into MH 310 as well as the seminar rooms, and possible water damage had not yet become evident. I am requesting that you do not come to the office on Friday unless absolutely necessary. Third floor offices will be in the process of being cleaned, and some of them may not be habitable because of the smoke damage. An assessment will be completed over the next few days. We do not yet know what we will do regarding the loss of the servers and associated data and software. Peter
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After the Smoke Had Cleared
After the fire fighters managed to put out the fire and clear the area of smoke, the fire department’s forensic team closely examined the burn site. The extent of the damage to MH 310 and its contents was complete. According to the fire department spokesman Conrad Minsky, “It was cooked beyond belief. It was so hot in there that a lot of the [forensic] evidence burned … All we saw was just huge clumps of melted computers.” The extent of the damage is illustrated in Figure 3, which shows a picture of a MH 310 server rack shortly after the fire was extinguished. Based on the evidence available at the scene, the forensic team concluded that an electrical fire in one of CBA’s oldest server computers had started the blaze. Once the fire started in the server, it slowly spread to other servers in a slow chain reaction. Since the servers were not in contained fire-proof server racks, there was nothing to stop the initial server fire from spreading. Ultimately, the entire server room and all of its contents (including technical equipment, furniture, back-up tapes, and papers) were destroyed.
CASE DESCRIPTION
This section discusses the key activities and issues that confronted the members of the CBA IT staff and administration following the fire. As is the case with many disaster events, it took some time for the people involved to get a complete understanding of the extent of the disaster and its implications. Once the situation was assessed, a number of issues needed to be addressed to deal with the disaster. These issues included data recovery, the search for temporary office space and computing resources, rebuilding Mitchell Hall, and disaster funding. Figure 3: Computer Server Rack in Mitchell Hall 310 Following the Fire
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The Morning After
Sam Moss, MIS Professor and Chair of the CBA Technology Committee, awoke on the morning of July 4th looking forward to a day of relaxation — a bit of work around the house capped off by a burger and a brew while he and his friends watched the civic fireworks show that evening. Little did he realize that the real fireworks had happened the evening before. Moss always checks his e-mail, even on a holiday. He was, of course, rather disturbed to see the message from Dean James about the fire in Mitchell Hall. Moss’s first reaction was to try to visit a Web site that he maintained on his experimental server, Iowa, which was located in his office. Much to his relief, the Web site responded and appeared to be working as usual. Moss also tried to access the CBA Web site, which he had developed with another colleague (Chanute Olsen), as well as files maintained on the CBA faculty data server. Neither of these last two attempts was successful. Upon first reading, the Dean’s message did not convey the full impact of the loss of systems to Moss, who hoped that the servers might be recoverable. Moss knew that the CBA office maintained tape backups of the directories containing the Web site, faculty, and student data. While he expected a few weeks of disruption, he anticipated that CBA’s IT operations would be in pretty good shape shortly. Moss was very familiar with the techniques for remote access to Iowa and other college and university systems (see Microsoft Corporation, 2004a, and Novell Corporation, 2004, for examples of remote access software). Concerned that access to his office, where Iowa was located, might be limited for a few days, Moss immediately copied the backup files of his database projects and those of his students to his home machine. He also copied .ASP (active server page) files and any other documents that would be difficult to replace. Moss contacted Dean James later in the day via e-mail. Moss made his remarks brief: “Iowa appears to be OK, we can use it as needed as a temporary server.” … and … “Would you like me to convene the College Technology Committee to provide advice for the rebuilding of our technology support?” James’s response was that he appreciated the offer of Iowa, and yes, he wanted advice on “How should we rebuild?” The following sections summarize what was learned and what was done by key players during the month after the fire. These items are not in chronological order; they are a summary of what Moss learned as he prepared to address the issue of rebuilding the college’s IT architecture.
Determining the Extent of Data Loss
The first question, of course, concerned the state of the data back-up tapes of the CBA servers. Unfortunately, the situation regarding the back-ups was discouraging. While nightly data back-ups had been made, the tapes were stored in MH 310. Copies were taken off-site every two weeks. At the off-site location, the most recent copies of data and documents from Wisconsin and Missouri were dated June 16 — the last day of Spring Quarter. All of the more recent backup tapes were located on a shelf near the server machines and had been destroyed in the fire. On Maryland, the static pages and scripts to create dynamic pages (e.g., a list of faculty drawn from the database) of the CBA
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Web site had been backed up, but the SQL Server database (which included data as well as stored procedures and functions) on that machine had not been backed-up. According to Worthington, the college was waiting for special software needed to back- up SQL Server databases. In addition to the back-up tapes, there were several other sources of backed-up data; however, these sources were rather fragmented. For example, many professors worked on the files for their university Web sites from home and used FTP (file transfer protocol) to copy the updated files to the Web server. Their home copies were, in effect, back-ups. Moss had made some changes to the CBA Web site pages the evening of July 2nd and had copies of those pages on his home system. The Iowa server in Moss’s office had been used as the test bed for the database portion of the Web site; therefore it contained the structure of the database, but neither the most recent data nor the stored procedures and functions. Although no desktop machines, other than those in MH 310, were burned in the fire, they were not readily available immediately after the event. Smoke and soot permeated the building. There was a concern that starting these machines, which were turned off at the time of the fire, might lead to electrical short circuits and potentially toxic odors and fumes. The decision was made to clean these machines before restarting them.
Recovery & Repair of Smoke-Damaged Systems
Within 48 hours of the fire, the university contracted with BELFOR International to help with clean-up. BELFOR specializes in disaster recovery and restoration. Examples of high profile disasters that BELFOR responded to in 2003 included the major wildfires in California and hurricane Isabel in the eastern United States (BELFOR, 2004). With extensive experience with disaster recovery and regional offices in Seattle, Portland, and Spokane, BELFOR was well-positioned to respond to the Mitchell Hall fire incident. BELFOR’s areas of expertise included restoration of building structures, office equipment, and paper documents. Based upon BELFOR’s initial analysis, none of the computer systems, nor any of their components, from MH 310 was deemed recoverable. On the other hand, all other computers in the building escaped heat and water damage and could be “cleaned” and continued in service. These machines contained valuable data and were set up with individual users’ preferences. Recovering them would be a major benefit. The cleaning procedure for computers was a labor intensive process that involved immersion in a special water solution followed by drying and dehumidification. Systems units, monitors, and most printers could be cleaned. Keyboards, mice, and speakers were cheaper to replace than to clean. Most of these systems were cleaned in the 30 days following the fire and then stored until the reopening of the building in mid September. The college identified a few critical systems, based on the data they contained, for expedited cleaning and return to service.
Sources of Funding for Disaster Recovery
The cost of cleaning Mitchell Hall and rebuilding the computer system was significant. Estimates rose dramatically during the period that followed the fire. The initial estimate was $750,000. However, ongoing investigation of the damages and building
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contamination indicated that the total cost would be much higher. By the end of July, the university issued a press release indicating that the costs required to replace equipment and make Mitchell Hall ready for classes would be approximately $4 million. In fact, the final cost was about $4.25 million. The repair costs were high because of smoke and water damage. The ventilation system in Mitchell Hall had used fiberboard ducts instead of metal ducts, and these had absorbed smoke and particles during the fire. The ducts could not be cleaned and had to be completely replaced on the top three floors. This required new ceiling tile installations to accommodate the new locations of the ventilation ducts. Carpets on these three floors also had to be replaced. MH 310 was completely gutted and rebuilt starting with the metal studding in the walls. The remainder of the third floor had the drywall walls torn out and replaced. In addition, the electrical and network infrastructure was rebuilt, which required completely rerunning the associated wires back to an electrical closet on the third floor. BELFOR handled the cleaning for all computers and other electronic equipment that was of sufficient economic value to justify the work. These cleaning costs totaled more than $100,000. The replacement costs for computer equipment and software that had been lost in the fire was approximately $150,000 — an amount that did not include the labor required to install and test the hardware and software. The cost of the recovery was paid from two sources. WU had a specialized Electronic Data Processing (EDP) insurance policy to cover hardware losses. This policy provided up to $250,000 (on a “replacement cost” basis) less a $25,000 deductible. The other source of funds was a self-funded reserve set up by the state. The amount of money provided from this fund was determined by the State Legislature. President Haskell invited several legislators to campus and conducted first-hand tours of Mitchell Hall so that they could view the damage. Based on their review of the situation, the State Legislature provided a sufficient amount of funding to WU to rebuild Mitchell Hall and to replace all the hardware and software that had been destroyed. In a press release, President Haskell stated “We are very pleased with the timely and supportive action from legislative leaders and the Governor’s office.”
Temporary Quarters
Office space on the WU campus is at a premium. Fortunately, there was a small area in WU’s administration building, Thompson Hall, which had been recently vacated. This office, with perimeter cubicles surrounding a large open area, became the temporary location of CBA’s department offices. Each department chair and each department secretary had a workspace with a desk, phone, and limited storage for files and books. The offices had connectivity to the campus network. An open area was converted to a “bull pen” for faculty use and small group meetings. Because the incident happened in the summer, it was relatively easy to relocate the classes. During the school year, university classrooms are at 100% utilization during midday class hours but in the Summer Quarter, less than 50% utilization is common. The only class sessions lost were for the few classes scheduled to meet on Friday, July 5th. Classes resumed as usual on July 8 th, although in different rooms. Those that had been assigned to meet in the Mitchell Hall computer lab were relocated to another lab on campus.
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Computer Hardware Resources Available for Immediate Use
For the immediate term, CBA was able to make use of 15 computers that had been received but not yet deployed in Mitchell Hall. These machines had been ear-marked as replacements for older systems and for recently hired faculty due to arrive in the fall. Fortunately, these systems were being held in the 23rd Street facility. They were quickly configured and delivered to the offices in Thompson Hall. The MIS program at Western had a set of 20 notebook computers that were used for classroom instruction as part of a “mobile computer lab.” At the time of the fire, they were stored in a locked cabinet in a second floor room in Mitchell Hall. These computers were examined by the health inspectors and deemed safe to use (i.e., cleaning was not needed). These machines contained wireless network cards and were configured with the Microsoft Office suite. No MIS classes were scheduled to use this lab during the summer, so these computers were signed out to faculty who did not have sufficient capacity in their home systems. The combination of new systems, the notebook computers, and individuals’ home systems was sufficient to equip all staff and faculty with adequate workstations. The loss of servers was much more problematic. The college lost every server it had with the exception of Iowa — the research and development server running Windows 2000 Server and MS SQL Server 2000. Iowa was located in Moss’s office on the third floor. Although this location was less than 100 feet from the scene of the fire, Iowa had been relatively protected in Moss’s office. Because Iowa had been operational continuously since the start of the fire and had not shown evidence of any problems, Moss and Worthington decided to keep it in operation (not clean it). Iowa was relocated to a wellventilated area in the Thompson Hall offices.2 The university maintains many servers: a series of Novell systems used for student and faculty data, a server running Windows NT devoted to academic use, and a UNIX server used for most university, faculty, and student Web pages. Worthington was able to negotiate for space on one of the Novell servers to hold the data that had been stored on Wisconsin and Missouri.
Recovering Files from Novell OS Servers
Immediately following the fire, Worthington obtained temporary workspace in the 23 rd Street building and set out to recover the data from the June 16th tapes. He quickly ran into a severe stumbling block. CBA used digital tape equipment that was newer than the drives attached to Kermit, WU’s Novell server. Fortunately, a tape drive in the correct format was attached to Grover, WU’s UNIX server. To recover data from Wisconsin and Missouri, it was necessary to copy the tape contents to a disk on Grover; then write the data to tapes in the format of the drives attached to Kermit, and finally restore from those tapes. Most of the data was available within a week, thanks to Worthington’s diligent efforts.
Back on the Web
The Windows servers that were used to support CBA’s WWW sites and database applications were also lost. As it turned out, the process of recovering and recreating Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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this data took much longer than the Novell files and was not completed until July 31st. Worthington was able to recover portions of the CBA Web site which had been backed up on June 16th. The recovered data consisted of those folders that professors and department chairs had prepared for their Web sites. As the files were recovered, they were copied onto the Iowa server. Unfortunately, the database data for the CBA WWW site, including the views and stored procedures used to execute queries, had not been backedup to tape and were lost. Sam Moss and Chanute Olsen set about to reestablish the site as quickly as possible. Once Iowa was operating in its new location in Thompson Hall, they arranged for the DNS entry for the Web site to point to Iowa’s IP address. They quickly rebuilt portions of the database and copied as much data as they could from other sources. On his home computer, Moss had current copies of many of the Active Server Page (ASP) files that were used to extract data and format the data for the page displays on CBA’s WWW site. Moss immediately loaded these files onto Iowa. Unfortunately, Moss did not have copies of ASP files on the Windows server that had been maintained by others. These files ultimately had to be recreated from scratch. Much of the information displayed on the college Web site was drawn from a database. Maintenance of the database data was done by the department chairs and secretaries. Once Iowa was fully operational, these persons had to re-enter data about their departments. Moss and Olsen contacted the professors who had sites on the college Web site. For those who had home back-ups of their data, it was easy to recreate their sites on Iowa. Those who did not have a back-up were forced to wait until files were copied from the back-up tapes. By the first of August, all Web sites had been restored and most of the database entries had been recreated.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
During the period following the fire, Moss thought about the challenges that the college would face once the immediate tasks of restoring data and temporary operations were accomplished. He knew that a major task would be rebuilding the College’s IT operations. Moss would need to work with his College Technology Committee through the months of July and August to come up with recommendations. As Moss pondered the situation, he realized that there were many unanswered questions, which he organized into two categories: •
•
Planning for IT Architecture: What system applications and services were needed at CBA? What were the hardware/operating system requirements for these applications? How should the applications and services for CBA be allocated across servers? How many servers should CBA acquire? Where should the servers be physically located, and under whose control? Assessment of Threats: What were the disaster-related threats to the CBA information systems? Would it be possible to design a CBA IT architecture that would minimize the impact of disaster and facilitate disaster recovery?
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Planning for the Information Technology Architecture
Issues concerning IT architecture were at the top of Moss’s list. As discussed by Seger and Stoddard (1993), “IT architecture” describes an organization’s IT infrastructure and includes administrative policies and guidelines for hardware, software, communications, and data. While one option for CBA would be to replicate the architecture that had been destroyed, Moss did not believe that this would be the best way to go. The array of servers and systems before the fire had grown on an “as needed” basis over time, rather than guided by any master plan. While the previous system had worked, Moss wondered if there might be a different, more effective IT architecture for CBA. Since CBA would need to rebuild much of its IT operations from the ground up in any event, Moss thought that it would be worthwhile to take this opportunity to re-examine the IT service requirements and the way that the requirements would be implemented. By doing so, it was possible that the college might adopt a new IT architecture. Moss was aware that an important first step in IT architecture planning is to determine the applications and services that will needed (Applegate, 1995). To kick off the IT architecture planning process, Moss sent an e-mail message to all faculty and staff on the morning of July 8th. The purpose of the message was to solicit input from the CBA user community regarding IT service requirements. The e-mail message is shown in Figure 4. By learning more about the desired IT applications and services, Moss and his committee would be able to determine the types of application software that could be used to provide the specified services. This information would be useful, as it would have implications for the types of operating systems that would be needed. Due to operational considerations, Moss anticipated that no more than one type of operating system would reside on any given server. After the services were identified and the operating systems requirements were determined, the next step would be to decide on the number and type of server machines. Based on input from Worthington and others, Moss knew that an “N-tier” type of IT architecture would offer useful advantages for CBA. An N-tier design (also called multi-tiered or multi-layered) would involve separating data storage, data Figure 4: E-Mail Message from Sam Moss From: Sam Moss Sent: Monday, July 08, 2002 9:43 AM To: CBA Faculty and Staff Subject: Thinking about CBA Server needs Importance: High Colleagues, As we rebuild from the fire, we have an opportunity to rethink our server configurations. The first step in such a process is a requirements analysis (we all teach it this way, don't we?). To that end, I would appreciate your input on the following questions: What are the data and application program storage needs for CBA? What service requirements do we have? Don't answer this question in terms of a proposed solution (i.e., "We need two Netware servers and one NT server under CBA control.") but rather in terms of what must be delivered, as independent of technology as possible, to our faculty, students, and external publics. --Sam Moss Chair, CBA Technology Committee
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retrieval, business logic, presentation (e.g., formatting), and client display functions. One benefit of an N-tier design is that the development staff can focus on discrete portions of the application (Sun Microsystems, 2000). Also, it makes it easy to scale (increase the number of persons served) the application and facilitates future change because the layers communicate via carefully specified interfaces (Petersen, 2004). Although multiple tiers may reside on the same server, it is often more efficient to design each server to host specific parts of the application. For example, database servers perform better with multiple physical disks (see McCown, 2004). The use of more than one server can also complement security offered by network operating systems. For example, CBA provided file storage services for both faculty and students. Although these services could be hosted on a single machine, allocating the services on separate machines, and not allowing any student access to the “faculty” machine, would provide additional security for faculty files (e.g., student records, exams, faculty research). As Moss received responses to his e-mail message, he organized the responses in a table to help him and his committee analyze the requirements. As indicated in Table 3, Moss had organized his list of application and service requirements for CBA into different categories based on the type of server that might be used to host the services. A variety of different types of servers may be used in an N-tier architecture. Examples of some of the different types of servers and their functions include the following (TechEncyclopedia, 2004): •
• • • • •
• •
Application Server: The computer in a client/server environment that performs the business logic (the data processing). For WWW-based systems, the application server may be used to program database queries (e.g., Active Server Pages, Java Server Pages). Database Server: A computer that stores data and the associated database management system (DBMS). This type of server is not a repository for other types of files or programs. Directory Services: A directory of names, profile information and machine addresses of every user and resource on the network. It is used to manage user accounts and permissions. File Server: A computer that serves as a remote storage drive for files of data and/or application programs. Unlike an application server, a file server does not execute the programs. Print Server: A computer that controls one or more printers. May be used to store print output from network machines before the outputs are sent to a printer for printing. Research and Development Server: A local name used at CBA to describe a computer that is used for developing and testing software and programs. A single R&D server often hosts multiple tiers because demand (i.e., number of clients served) is light. Tape Back-Up Server: A computer that contains one or more tape drives. This computer reads data from the other servers and writes it onto the tapes for purposes of backup and archive. Teaching Server: Another local name used at CBA to describe a computer that is used for educational purposes to support classroom instruction in information
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•
systems courses (e.g., WWW development, database management, network administration). Web Server: A computer that delivers Web pages to browsers and other files to applications via the HTTP protocol. It includes the hardware, operating system, Web server software, TCP/IP protocols, and site content (e.g., Web pages and other files).
Assessment of Threats
It was clear to Moss that the College had not been well positioned to handle an IT disaster. Although many books on IT management include references to disaster planning (e.g., Frenzel & Frenzel, 2004), the college had been too busy handling day-today IT operations to devote resources to disaster planning. Moss resolved to ensure that the next disaster, if there was one, would not be as traumatic. As part of this process, Moss wanted to identify the threats to CBA’s IT system (Microsoft Corporation, 2004b). As suggested by Table 2, Moss knew that IT disaster threats can come from the physical environment (e.g., WU’s location makes it susceptible to both earthquake and volcanic activity), from machine failure, and from human causes. With the help of the technology committee, Moss set out to identify the primary threats.
Table 3: CBA IT Requirements Type of Server Requirements for Services/Applications
Suitable Software or Operating Systems
File Server 1. Individual directories and files (faculty and student documents) 2. Class directories and files 3. Homework and exercise drop-off 4. College documents and records Print Server 5. Printer queues for faculty and staff 6. Printer queue for student lab Database Server 7. Data to support CBA web site 8. Student Information System Data 9. Faculty Information System Data Application Server 10. Web site active server pages 11. Student and faculty info. systems Web Site Server 12. Static and dynamic pages for the college and departments 13. Individual faculty pages 14. Student club pages
Novell NetWare MS Windows Server UNIX and derivatives (e.g., LINUX)
Teaching Server 15. Web development class 16. Database management class 17. Enterprise resource mgmt. class 18. Network administration class Research and Development 19. Database management 20. Web site development Tape Back-up Server Tape backup of all servers Directory Services File and Print Services login (for Items 1-6 listed above) College Web server and database server login (Items 7-14, 19 & 20) Academic Course logins (Items 15-18)
Novell NetWare MS Windows Server MS SQL Server Oracle MySQL or another RDBMS MS IIS was previously used for item 10. Item 11 is a future project Static pages could be on any of several systems, currently on MS Windows and UNIX servers Dynamic pages work in conjunction with item 10 Classes 15-17 currently use Windows 2000 Server Class 18 uses Linux, Novell NetWare and Windows 2000 Server Current research all conducted on software that requires Windows Veritas Backup Exec IBM Tivoli Novell eDirectory (formerly Novell Directory Services – NDS) Microsoft Active Directory (AD)
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Once Moss and his committee had generated the list of threats to CBA’s IT operations, he hoped to design the IT architecture in a way to minimize the impact of any future disasters and facilitate future disaster recovery. Toigo (2000) has pointed out that decentralized IT architectures, such as a N-tier design, involve special considerations for disaster planning. To help minimize the impact of disaster, Tiogo recommends that a decentralized system include high-availability hardware components, partitioned design, and technology resource replication. For example, having similar machines in multiple locations may provide an immediate source of back-up computing resources (as illustrated by the use of Iowa and Kermit after the CBA fire). Moss planned to arrange meetings with both OIS and OITS personnel to determine how CBA and WU could shape its IT architecture plan to minimize the impact of any future disaster.
REFERENCES
Applegate, L. M. (1995). Teaching note: Designing and managing the information age IT architecture. Boston, MA: Harvard Business School Press. BELFOR (2004). BELFOR USA News. Retrieved May 30, 2004: http://www.belfor.com/ flash/ index.cfm?interests_id=41&modul=news&website_log_id=27802 Burd, S.D. (2003). Systems Architecture (4th edition). Boston, MA: Course Technology. Eklund, B. (2001). Business Unusual. netWorker, December, 20-25. Erbschloe, M. (2003). Guide to Disaster Recovery. Boston, MA: Course Technology. Frenzel, C.W., & Frenzel, J.C. (2004). Management of information technology. Boston, MA: Course Technology. Hoffman, M. (2003). Dancing in the Dark. Darwin, September 1. Lewis, W., Watson, R.T., & Pikren, A. (2003). An Empirical Assessment of IT Disaster Risk. Communications of the ACM, 46(9ve), 201-206. McCown, S. (2004). Database Basics: A few procedural changes can help maintain high performance. InfoWorld, February 20. Mearian, L. (2003). Blackout tests contingencies. ComputerWorld, August 25. Microsoft Corporation (2004a). Windows 2000 Terminal Services. Retrieved May 27, 2004: http://www.microsoft.com/windows2000/technologies/terminal/default.asp Microsoft Corporation (2004b). Microsoft Operations Framework: Risk Management Discipline for Operations. Retrieved June 1, 2004: http://www.microsoft. com/technet/ itsolutions/techguide/mof/mofrisk.mspx Novell Corporation (2004). Novell iManager. Retrieved May 27, 2004: http://www.novell.com/ products/consoles/imanager/ Petersen, J. (2004). Benefits of Using the N-Tiered Approach for Web Applications. Retrieved June 1, 2004: http://www.macromedia.com/devnet/mx/coldfusion/articles/ ntier.html Rhode, R., & Haskett, J. (1990). Disaster Recovery Planning for Academic Computing Centers. Communications of the ACM, 33(6), 652-657. Seger, K. & Stoddard, D.P. (1993). Teaching Note: Managing Information: The IT Architecture. Boston, MA: Harvard Business School Press. Sun Microsystems (2000). Scaling the N-Tier Architecture. Retrieved June 4, 2004: http:// wwws.sun.com/software/whitepapers/wp-ntier/wp-ntier.pdf
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TechEncyclopedia (2004). Retrieved June 2, 2004: http://www.techweb.com/encyclopedia Toigo, J.W. (2000). Disaster Recovery Planning (2nd edition). Upper Saddle River, NJ: PrenticeHall. Verton, D. (2003). Tight IT budgets impair planning as war looms. ComputerWorld, March 10.
ENDNOTES
1
2
The facts described in this case accurately reflect an actual disaster incident that occurred at a university located in the United States. For purposes of anonymity, the name of the organization and the names of individuals involved have been disguised. In the two years since the incident, Iowa has operated continuously with no hardware problems. The monitor was cleaned and the mouse and keyboard were replaced, but the only cleaning the system unit received was a wipe of the outer surface. Iowa initially emitted a pungent smell, but that odor disappeared after two to three weeks.
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Chapter XI
From Principles to Practice:
Analyzing a Student Learning Outcomes Assessment System Dennis Drinka, University of Alaska Anchorage, USA Kathleen Voge, University of Alaska Anchorage, USA Minnie Yi-Miin Yen, University of Alaska Anchorage, USA
EXECUTIVE SUMMARY
The College of Business Administration (CBA) is part of a mid-sized urban university with a primary focus on teaching. It had recently decided to develop a process for defining student learning objectives and outcomes, measuring success in achieving these, and using the results of those measures for continuously improving the quality of student learning. Its aim was to design and develop a system which could automate data collection and streamline the processes of course effectiveness evaluation and course/curriculum enhancement. Even though many challenges still existed for the college, it nevertheless launched into a logical design of the Student Learning Outcome Assessment System (SLOAS). Alexis, the college’s IT Manager, was assigned the responsibility for managing this project. She determined this system would be used for data collection and reporting in order to provide evidence that student learning outcomes were being achieved at the course, college, and potentially university levels. Amid the lack of internal development resources, insufficient IT support, constantly changing standards and policies, budget issues, and so forth. Alexis knew that she was faced with a challenging project. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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BACKGROUND
The College of Business Administration (CBA) was housed within a public, midsized, urban university located in its state’s largest city. The mission of the university was to promote scholarship, and excellence in teaching, research, creativity, and service. Working towards this mission, the college’s faculty, administration, alumni, and community partners were dedicated to advancing the quality of learning and academic distinction of the university, while being actively engaged in using their talents and knowledge in service to their local and statewide communities. In recognition of their dedication and commitment to quality by AACSB International (Association to Advance Collegiate Schools of Business), the CBA was awarded its accreditation in 1995. The CBA was composed of six academic departments: accounting, business administration, computer information systems (CIS), economics, logistics, and public administration. It offered associate and bachelor’s degrees in each department, a certificate in logistics, a master’s degree in business administration (MBA), a master’s degree in public administration (MPA), and a Master’s of Science (MS) in logistics and global supply chain management. The college was also the home of several research, outreach, and economic development centers. These centers focused on social and economic research, international business, small business administration, regional economic policy and development, and international business education. The CBA served the local, state, and global communities by training and educating the workforce, by promoting and inspiring excellence in public, private, and non-profit management and related business disciplines, by providing professional assistance and advice to these organizations, and by conducting basic, applied, and pedagogical research. The CBA had more than 1,300 students of which approximately 15% were pursuing one of the two-year associate degrees or a certificate, 75% were pursuing four-year baccalaureate degrees, and 10% were in one of the three graduate degree programs. Nearly 50% of the student body was considered non-traditional, either working towards their degrees on a part-time basis, or attending classes solely for personal or professional development. Part-time students typically required six to seven years to complete a baccalaureate degree program. In 1987, the university was included in a state government-mandated consolidation that resulted in the merger of the regional community colleges with the university. One result of this merger was the partitioning of faculty into two distinct categories: faculty members from the community colleges were categorized as bi-partite faculty whose job responsibilities would include teaching and service, while faculty members from the original university were classified as tri-partite faculty whose responsibilities, in addition to teaching and service, would also include research. Faculty members have since unionized, with bi-partite and tri-partite faculty members represented by separate unions. The CBA had 46 full-time faculty members of which 12 were bi-partite and 34 were tripartite.
SETTING THE STAGE
The stated objectives of the college for its CBA baccalaureate program were as follows: Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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to provide a broad-based business education; to prepare students for professional and managerial careers in regional, national and international job markets; and to foster lifelong learning.
The objectives of the CBA master’s degree programs were similar, but also include a primary emphasis on preparing students for leadership roles in organizations. The college would be undergoing review for reaffirmation of accreditation by the AASCB in January 2005. Beginning in September 2002, the college initiated its required self-study process phase for that review. It was recognized by the administration and faculty within the CBA that regular, continuous assessment of the quality of the education that it provided, and the quality of the learning of the students, was imperative to achieving the college’s objectives and to it maintaining its accreditation status. Three distinct and independent review processes were being used to evaluate and manage educational quality and assurance of learning. The focuses of these separate processes were on teaching effectiveness, course effectiveness, and course and curriculum design. Teaching effectiveness was evaluated through standardized student evaluation surveys that were designed by the University and administered at the University level. These surveys were used to determine students’ perceptions of instructors, textbooks, and overall course value. The surveys were conducted in two parts. In one part, students rated predetermined factors concerning the course using a standard scale. For example, “I would recommend this instructor to other students” would be rated on a five-point scale from strongly disagree to strongly agree. In the second part of the survey, students were asked to supply written, open-ended responses to predetermined questions such as, “What did you like best about this course?” The two parts of the survey and a summary of the results were reviewed by the CBA Dean. His comments and suggestions, if any, were appended to the surveys and summary results for each course. The appended surveys were then forwarded to the appropriate department chair for review and more comments. Finally, all comments, summary results, and surveys were given to the individual faculty member. These surveys were significant — although not exclusive — documentation used for assessment of faculty teaching for purposes of annual reviews, promotion, and tenure. These surveys, while an indicator of teaching effectiveness, did not in any way attempt to address course objectives or student outcomes. Course effectiveness, as measured by achievement of course objectives and student outcomes, was evaluated through a separate survey. Each course is required to have a Course Content Guide (CCG) that served as a general resource guiding the development of course syllabi. One of the requirements of each CCG was a statement of course objectives and student outcomes. The objectives were statements that reflected what the instructor of the course needed to accomplish if the course was to be considered successful. The outcomes defined, in a general sense, the knowledge, skills, and abilities the students should attain through participation in the course (Gardiner, Anderson & Cambridge, 1997). These objectives and outcomes became part of the course syllabi. At the end of each semester, the course effectiveness surveys were completed by students to evaluate how well the course objectives were achieved and how well students felt they achieved the defined student outcomes. This form of assessment was relatively new to the CBA, and its format varied from instructor to instructor and course to course, so its Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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design and its usefulness as feedback were still evolving. A summary of results was prepared at the college and department levels. The results of these surveys were not used for purposes of faculty evaluation in annual review, promotion, or tenure decisions, and there was no formal process in place by which this information was being used to guide changes in course design. Course and curriculum design review was conducted through the review of the Course Content Guides. Every course in the university was required to have a CCG, all were publicly available on the University’s Web site and were often used for advising, for course shopping by students, for content evaluation by community organizations, or for evaluation of transfer credits by other universities. In addition to the objectives and outcomes included in the CCG documents, instructors also incorporated an outline of topics to be covered in the course and a bibliography of relevant books. These additional items were included to ensure that guidance for the development of course syllabi was provided. They were used to maintain consistency across multiple sections of a course, to control the quality of items that might be used to publicly represent the curriculum of the university, to ensure that adequate library and instructor resources were available for supporting the course, to minimize duplication and maximize consistency throughout the university system, and to ensure that curriculum changes were consistent with the University’s overall objectives. All curriculum change requests had to be initiated by a faculty member. The process began with the development of a CCG document using word-processing software. The document, in paper form, would then be approved in sequence by the appropriate department chair, a college-wide curriculum committee, the Dean, the University Curriculum Committee, the Faculty Senate, the Provost, and, in the case of program additions, the Board of Regents. All proposed changes to a CCG were distributed through a university-wide e-mail listserv in order to allow all university faculty an opportunity to comment on any proposed curriculum changes. Changes could be suggested at any stage during the review process, however the tracking of changes was not a formal process, and monitoring of the progress of a given curriculum action through the process was difficult. The University Curriculum Committee (UCC) historically presented the most rigorous level of review. This committee provided guidelines on what content should be included in the document, and they provided examples of “good” formats, but there were no standard formats or templates. Included in the reviews by this committee were an examination of the consistency between — and completeness of — course objectives, student outcomes, and course topics, and the consistency between stated course expectations and the course level. One exception to the review process by the UCC were experimental courses which only required approval at the Dean’s level, but which could only be taught for four semesters. Another exception were special topic courses that needed to be reviewed by the UCC in a generic format, but could be changed by an instructor as desired to accommodate a unique topic without undergoing additional UCC review. There was no review of curriculum at the college or department level that was comparable to the level of review at the UCC. In addition, at no level was there a systematic review of learning objectives, peer observation, expert observation, or formal periodic assessment of the impact of instruction on student performance. Moreover, at no level Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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of review was there an evaluation of courses with the purpose of evaluating and guiding instructional improvement, to reward the development of new courses, or to reward innovation in teaching and learning, nor was there any formal review of the consistency between the thoroughly reviewed CCGs’ objectives and outcomes, and those included in the course syllabi.
CASE DESCRIPTION Project Background & Initial System Analysis
Alexis was recently hired as an IT Manager for the CBA. She had been assigned the project of developing the Student Learning Outcomes Assessment System in May 2003. This was to be a highly visible project and, if developed and implemented successfully, it could help the college and possibly the university in a variety of ways including standardizing formats and providing version control of CCGs. The primary goals of the new system included: 1. 2. 3. 4.
Assure consistency between the college mission, the college-level program outcomes, and the individual course CCG learning objectives. Allow comparison of actual student outcomes to desired student outcomes. Provide continuous improvement in student learning through curriculum revision by providing reports on the outcomes assessment results. Increase operating efficiency and maintenance of AACSB accreditation by assisting in the documenting and tracking of curriculum changes throughout the curriculum review process.
The stakeholders of the Student Learning Outcomes Assessment System (SLOAS) included many college and university-level personnel, CBA faculty, and any current or future students enrolled in CBA courses. A new college-level Curriculum and Assessment Committee was established by the Dean in September of 2003. Members of this committee would be appointed annually, with representation from each of the CBA academic departments. This committee was responsible for oversight of the system and would be the primary and most direct system stakeholder. Alexis was designated as the Project Manager for the project, and she was responsible for ensuring that resources were identified and made available once the analysis and design phases were completed and development was ready to begin. Since the Curriculum and Assessment Committee membership could change from year to year, it was important to have someone like Alexis involved to ensure continuity on the project. During the previous academic year (2002-2003), student course effectiveness surveys had been administered in most classes for the first time to begin capturing assessment data and as a test of potential survey designs and survey methods. At that time, no agreement had been reached concerning a college-level design, so departments and even individual instructors were allowed to design their own surveys. In April 2003, two faculty members from the CIS department, Mike and Kevin, were invited to consult on the design of the assessment process by Ferdinand, the Associate Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Dean of Academic Affairs. Mike and Kevin accepted the responsibility of being the system analysts as well as the project designers for this process, and had already begun analysis work before the Curriculum and Assessment Committee (CAC) was formed. They had been asked to begin an analysis of the needed system and to build a prototype that would help in the capture, analysis, and reporting of the Course Effectiveness data that had, by then, already been gathered. As a result of his experience with the analysis and prototype, Kevin was eventually appointed as one of the CIS department representatives to the CAC when it was formed. When Alexis was given responsibility for the project development the next month, her first step was to evaluate her resources. She learned that the University had an Information Technology Department that was responsible for communications, the information technology infrastructure, university-wide software licensing, security, and public use labs. However, the Information Technology staff within the CBA, Alexis learned, was relatively small, consisting of four full-time employees (Appendix A) and many part-time student lab aides. It was responsible for all the needs of CBA students, faculty, and staff. The IT Department within the CBA operated independently of the University’s IT staff, and there was minimal interaction between them. The college had its own network, over 275 workstations, three student computer labs, and six lab classrooms in addition to four network and database servers. The college IT staff was responsible for managing all aspects of IT in the college, from purchasing new equipment to maintaining records on software licenses. The part-time lab aides were available only to assist students in the labs and computer classrooms. There was no one on the staff that performed any development function with the exception of the Webmaster, who was responsible for maintaining the CBA Web site. Alexis realized that she would not be able to use any existing CBA staff for her project because of their lack of development expertise and because they were already overextended in their operational support. She also learned that the University IT staff, and potentially the system-wide IT staff, had the development capabilities she would require. However, the project could not be completed in time for the January 2005 AACSB review if she had to rely on these resources. By the time Alexis got involved, Mike and Kevin had already drafted the original process of the Student Learning Outcomes Assessment System, with input and confirmation provided from the Curriculum and Assessment Committee and from the Associate Dean. The need to analyze the process had originally been identified early in the 20022003 academic year, just shortly after some Course Effectiveness Surveys had been administered by faculty and results were collected. At the time, Ferdinand already decided that student-reported self-efficacy data would be the most appropriate for these Course Effectiveness surveys, so Mike and Kevin developed a Microsoft® Access database to assist in the tracking of course-level learning objectives, faculty information, and the student self-efficacy Course Effectiveness survey responses. The data for the Spring 2003 semester surveys was captured and entered into the new database, and reports were generated for faculty and administration by the time they returned in August 2003. Upon completion of this database, Mike and Kevin both realized it had the potential for tracking all of the college’s information needed for teaching effectiveness, course effectiveness, and course and curriculum design. It could store course-level curriculum Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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information, the student learning objectives, and the assessment results. They decided to modify the original database design and complete the logical design of the larger system which could ultimately include a Web-based user interface. It was at this point that they decided Alexis would need to be brought in to oversee the project.
Project Risks
Shortly after Alexis became involved, she received notice that the AACSB had announced and published new standards (AACSB International). These standards resulted in many significant reporting changes for the college, one of which had a direct impact on the measures of course effectiveness that Mike and Kevin had been working with. Upon their return at the beginning of the 2003-2004 academic year, there was still considerable uncertainty among the CBA faculty, and faculty throughout the country, about how to interpret the new standards and exactly what assessment data should now be collected. This uncertainty led directly to the formation of the Curriculum and Assessment Committee. The CAC eventually reached the consensus that the new standards indicated that while student self-efficacy data was nice to have, that type of data was not a direct measure of the amount of learning that actually occurred in a course and so should not be the primary measure of course effectiveness. Therefore, the focus for Mike and Kevin and the CAC shifted to the collection of direct measurement of student outcomes that did measure effectiveness. Their challenge was now to determine the best methods for collecting the new student outcomes data. Given the new AACSB standards, almost everyone in the college agreed that it would be important to have faculty ownership over both the curriculum process and the development of any assessment tools that would be used in their courses. While Kevin and Mike were reworking their analysis and their prototype, Alexis was identifying potential risks and issues that needed to be addressed. One of Alexis’ concerns with the design and development of the system was integration of the data with the larger, university-wide system already in existence. Kevin and Mike had a good start on the design of a college-based system, but had not fully considered the broader uses of the data. Alexis also wondered how the system administration and on-going maintenance of the new system would be supported once the system was built, but felt that addressing that issue could be postponed because of larger overriding issues. At that time, her primary concern was with the use — or more specifically the nonuse — of the system once it was developed. The faculty members were already starting to show their discontent resulting from the original effort required for administering the original Course Effectiveness surveys that had now been discarded. She knew she needed to ensure that any new system processes that would be developed must be streamlined and have little workload impact on faculty. However, the faculty members’ desires of wanting to own the process themselves, rather than allowing the administration to own it, was a barrier to being able to quickly finalize a design for a system that would be optimized for ease of use. She knew that design changes might never stop being requested if their decision making was done by a faculty committee and no one individual had the authority to freeze and approve the design. To address these problems, Alexis decided she needed to review the basic principles of system development using a conventional System Development Life Cycle Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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(SDLC) versus those of several other alternatives, such as Rapid Application Development (RAD), Joint Application Design (JAD), Object-Oriented Development (OOD), and so forth. She pulled out her collection of System Analysis and Design books and articles for help in determining the advantages and drawbacks of each approach and to review different project lifecycle approaches, such as waterfall, iterative, spiral, prototype, and design-to-tools (Berardi & Stucki, 2003; Cleland & Ireland, 2002; Hoffer, George, & Valacich, 2001; Kendall & Kendall, 2004; Kloppenborg & Petrick, 1999; McConnell, 1996; Valacich, George, & Hoffer, 2003; Whitten, Bentley & Dittman, 2004). She did not want to restrict the project to one specific approach without having a thorough knowledge of all the available resources she might have access to once the analysis and design phases were complete. Theoretically, Alexis knew that she could use a combination of the above proven methodologies depending on the needs and the available resources and skills faced by the CBA (Johnson, 2000; Mylopoulos, 1999; Wang, 1996). After reviewing her texts, Alexis realized she had other problems. She decided to arrange a meeting with Kevin and Mike so they could brainstorm design ideas and risks. She started by expressing her concern to them that since no dedicated IT development function currently existed within the college, no standard development tools could be identified. The prototype that Mike and Kevin had developed utilized Microsoft® Access, but they all agreed that the new system should be designed using a client/server model for the database with a Web-enabled user interface. Kevin and Mike agreed with Alexis’ assumption that the database design would have to be scalable to allow for both database growth and the expected continuous design changes — including possible university-wide data requirements. Since it appeared that the learning outcomes assessments and curriculum reviews would continue to be in an iterative and on-going process of revision, the actual assessments used and the data collected would need to be able to take on a variety of forms over the years. For some stakeholders, the system would primarily be used as a data warehouse for both curriculum information and assessment results. However, Kevin pointed out that other members on the CAC had indicated that it would be desirable to keep historical data in the system so that at some point in the future, past students’ learning assessment results could be compared with current results using data mining techniques. Mike and Alexis agreed that historical data would most likely need to be preserved. Kevin then pointed out that one primary responsibility of the CAC was to provide oversight for a five-year curriculum review cycle. That is, each course would need to be reviewed, updated, and revised, if necessary, at least once every five years. The purpose for this review went beyond accreditation and assessment needs; these reviews would be conducted to ensure that the curriculum being delivered in the classroom was meeting current needs of both students and industry, and to ensure that all CCG document items, especially outcomes, objectives, and bibliographies, were up to date. While discussing this issue, Mike realized that even if the college implemented its own new curriculum review requirements, it would still need to satisfy the comprehensive review requirement of the UCC in order to obtain approval for changes. Therefore, it would be critical for the new system to aid in the university-level approval process, not hinder it.
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Balancing Stakeholder Expectations
As Alexis began to understand all of the related curriculum process needs, she knew this project would be difficult, though not impossible, to manage. She continued to identify, document, and prioritize the risks. One primary element that was out of her control was getting the faculty to agree on the interpretation of the new accreditation standards and what assessment techniques would best provide evidence of student learning. She knew her experience was in IT, not curriculum development, so maintaining clear and open communication with her primary faculty stakeholders would be critical to the project’s success. She determined that she would have to rely on the CAC to handle the interpretation of the new accreditation standards and resolve any faculty disagreements on assessment techniques, but would also have to press them to commit to some technique as soon as possible. In the meantime, she would focus her efforts on identifying resources to actually build and maintain the system. Alexis recognized that different stakeholder perspectives, views, and values would also be considered a main challenge in this project. Given that this was an academic environment where freedom of ideas was cultivated and encouraged, differing perspectives were to be expected. She would need to balance individual perspectives with department and college goals, along with any imposed university-wide requirements. But she alone did not have the authority to approve the final design, nor was there anyone who did have that authority. This “freedom of ideas” dilemma was further complicated by the fact that she knew that if the system was to truly integrate with other campus-wide systems, she would need to be in communication with the University’s IT group, perhaps the system-wide IT group, the UCC, and maybe even the Provost, the Faculty Senate, and the faculty unions. As Alexis began to plan how to effectively manage the project, she documented the implementation issues she would eventually need to address. In a worst-case scenario, she would manage the development of a system that no one would end up using. This would be viewed as a huge waste of effort and resources; therefore, she knew that faculty would need to quickly see the benefits of the system in order to accept and utilize it. Additionally, with workloads already a potential point of contention for many faculty, any process developed and any assessment tools designed, would have to be simple to use, with an automated data collection process to minimize impact on faculty time. Finally, results would need to be made available in a timely and accessible manner. Alexis knew that there were many individuals who had differing views concerning the potential appearance and operation of the resulting system; nevertheless, she felt confident that no one would disagree with the eventual benefits of the system. The ultimate business purposes of the system would have to be: (1) to effectively and efficiently track and maintain all course-level learning objectives for the college in a centralized data store to support the needed five-year curriculum review process, (2) to track either individual assessment data or summarized assessment data results, and (3) to provide a base of data that would assist in meeting the majority of on-going curriculum and/or assessment reporting needs. While everyone would likely agree on the primary benefit of the system, the “how” to accomplish these, and the “what” to actually capture and store, would be more difficult to obtain agreement on. The usefulness of data, the validity of data, the question of whether private information (like student IDs) would be stored in the database, and so Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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forth, were all issues that would eventually need to be addressed. She knew that she would be relying heavily on Mike and Kevin to complete a very thorough and comprehensive analysis of the information requirements, and she anxiously awaited their report.
Project Documentation
By the end of the fall semester of 2003, Mike and Kevin had made progress in their new analysis of the system and expanded it based on Alexis’ concerns. They had documented the main processes and developed a preliminary design of the database that would collect and maintain the necessary data. They also had developed a Context-Level DFD (Data Flow Diagram) in order to help define the project scope, to manage faculty expectations, and to communicate requirements to both Alexis and the CAC (Appendix B). The Context-Level DFD dramatically illustrated the large number of entities that would either provide input to or receive data from the system. The complexity of the system was apparent even at this beginning level. Even Alexis was surprised to see just how large the environment of the system was. The large number of interactions and approval stages required by the CCG approval and maintenance process was finally documented (with the exception of the Faculty Senate, Provost, and/or Regents approvals) (Appendix C). This further confirmed Alexis’ understanding of the complexity of the system. While she was overwhelmed by the large number of approvals required, she understood that these were justified by the importance of maintaining and continuously reviewing the curriculum. But even this documentation of the process was insufficient in identifying all of the inherent issues. First, after a CCG had been approved by the UCC, its status was never well-tracked. If a CCG moved to the UCC, then was returned to the CBA for editing, it was not easy to determine where in the process the CCG was, and whether suggested changes had actually been made. In some cases where there had been several editing cycles between the UCC and CBA, there had been instances where the final version of the document was not what was eventually published in the University Catalog. Tracking versions had always been a totally manual process, which invited errors. Mike and Kevin hoped that, eventually, a CCG version tracking module could be designed and implemented as a part of the new system. However, until the UCC established a standard format for all CCGs and moved toward an automated, rather than paper-based, submission process, such a tracking module seemed to be an unlikely enhancement in the near future. At a minimum, Mike and Kevin felt it might be postponed until a second version of the system. Finally, with a preliminary design of the database completed (Appendix D), the project designers had to establish new business processes for the entry and maintenance of system data. While they could identify processes, they were unsure as to whether the individual faculty members would actually complete them. How would faculty feel about having another job responsibility? While Mike and Kevin knew there were some who would readily accept and utilize the system as it was intended, if even one course was not kept up to date or assessment results not entered, the data validity and reliability would be at risk. Mike and Kevin considered suggesting to Alexis that once the system was developed, some individual in the College should be assigned the responsibility of all data entry and maintenance, so that faculty would not have to be involved in the initial user acceptance testing and so that the system could be implemented more quickly. Then, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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once the system was stable, data entry and maintenance functions could be decentralized on a department-by-department basis, gaining support and momentum along the way. To help Alexis understand the type of entry that might be required in the new system, they provided a sample of data that the primary database tables might contain (Appendix E). When the beginning of the Spring 2004 semester approached, Mike and Kevin provided Alexis with a status report. They told her that they felt confident they would have all of the remaining system designs completed and documented, including all input screens and the base set of reports, before the end of January. They would also make recommendations, based on input from the CAC and the Associate Dean, about the implementation approach that should be pursued. In addition, they would complete a brief analysis of what different development tools might be utilized. They both believed that the final database would be developed in Oracle®, but this might require housing the data on a university server rather than relying on a college server; the advantages and disadvantages of this option would have to be evaluated. In any case, at the end of January, the system had to be ready to move into the development phase.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
Alexis reviewed the status report Mike and Kevin had prepared and realized she had only two months remaining to identify the development resources that would be necessary. She had a number of options to consider. However, at the moment, she wasn’t sure which would be the most cost effective, efficient, or attainable. She knew she would need to carefully consider all practical design and development strategies currently available given the unique issues and current business environment of the CBA. As she began to carefully identify and categorize the most significant challenges currently facing the project, she identified two main groups of issues; organizational/environmental issues and IT management issues.
Organizational/Environmental Issues
The CBA, like other higher education institutions, was experiencing a paradigm shift from a teacher-centered “instruction paradigm” to a student-centered “learning paradigm” (Barr & Tagg, 1995). This new paradigm created opportunities that could contribute to continuous improvement in educational quality, and could help students develop learning skills and facilitate them in becoming “self-growers” (i.e., people who take ownership of and responsibility for their own educational growth) (Apple & Duncan-Hewitt, 1995). It would also entail the need for changes in the management and control of the curriculum and course design for the CBA. This shift was the reason for increased interest in the assessment of learning outcomes as part of the Assurance of Learning process. Alexis and the CAC realized that this process was a dynamic process that would need continuous refinement and enhancement in both the curriculum and the assessment portions of the process. One of the challenges in adapting to the shift was the need to have faculty develop a consensus on the learning goals for each CBA degree. Faculty members in each of the different Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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disciplines would then have to develop a consensus on learning goals for their programs, consistent with their degree goals. These revisions would have to be done before the course-level outcomes and the assessment measures could be developed. Designing and implementing the SLOAS would also be a dynamic process that would need continuous refinement and enhancement. However, if this system was well designed, it was likely to help formalize and simplify the entire process.
IT Management Issues
Because she was still relatively new in the CBA, Alexis was very nervous about the IT management challenges she was facing. As she was reviewing her notes, she noticed three main groupings of issues: Project Management, IT Resources, and IT Implementation. Project Management The Context-Level DFD clearly emphasized the large number of entities that would either provide input to or receive data from the system. Alexis quickly recognized how large the environment of the system was and how complicated the system would be. There were several management problems she had to face. Being able to plan and manage the progress of the project would be the key to its success. If the project was completed late, the college might not obtain reaccreditation. However, given the faculty members’ desires of owning this process themselves, and with no one individual having the authority to freeze the design or approve the move into the development phase, any project schedule Alexis developed would be meaningless. She realized that the project would have to either be divided into several subprojects, or different versions would have to be developed in phases, with major functionality required for reaccreditation being in the first release. Another concern Alexis faced was that since no dedicated IT development function currently existed in the college, there were no standard development tools that could be identified. Based on the requirements of the analysis, the SLOAS needed to have a client/ server model for the database which would be scalable to allow for the growth and continuous design changes; have a user-friendly, Web-enabled user interface; and have the capability of being able to keep the historical data for future long-term evaluation and comparison. Regardless of whether the development would be carried on in-house or use outside resources, the CBA had to be able to identify its preferred standard for development tools. Additionally, she knew a thorough investigation of available packaged software would need to be initiated as soon as the requirements from Mike and Kevin’s prototype had been documented. Though the CBA might incur higher initial costs if an off-the-shelf software package was identified, the longer-term savings and perhaps a reduction of development time were potential benefits that could not be overlooked. IT Resources Resources at both the state and university level were tightly constrained, and budgets were being cut. Like IT project managers in many other non-profit organizations, Alexis faced the difficulty of finding the financial and human resources needed for developing, implementing, and maintaining this system. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Alexis also began to realize that she would not be able to use any existing IT staff for her project because of their lack of development expertise and because they were already overextended in their operational support. She also learned that the university IT staff, and potentially the system-wide IT staff, had the capabilities she would require; however, the project could not be completed in time for the AACSB review if she relied on these resources, since system development for academic units was not a priority in their jobs. CIS faculty, primarily Mike and Kevin, could be involved in the development and maintenance of the system, but their use would not be cost free. Their inclusion might require obtaining course releases for them since their job descriptions focus on teaching, research, and service. They were each on nine-month contracts; therefore extending their contracts over the summer would require additional funding. Their only commitment would be as a service activity through committee assignments. As a result, their participation on this project would be sporadic, especially throughout the summer months, so maintaining momentum on the project would be difficult. However, Alexis did not want to forget about the prototype that Mike and Kevin had already developed. The prototype was being used to collect and summarize survey data. Though the original intentions had been for the prototype to be a “throwaway,” she was beginning to wonder if could become more of an “evolutionary” prototype. IT Implementation One of Alexis’ major concerns with the design and development of this system was the integration of the data with the larger, university-wide curriculum and enrollment systems already in existence. It was possible for SLOAS to source or download course and enrollment data from the campus-wide system; therefore, the data collected from and processed by the SLOAS would also need to be integrated into the campus-wide system for university-level learning outcome assessment purposes. However, integration raised other issues such as the inconsistencies between definitions of objectives and outcomes at the different levels. Alexis discovered that the university was accredited by one board while the college was accredited by another, and the data needed by each did not easily map from one onto the other. No student outcome system similar to SLOAS existed elsewhere in the university. Another integration issue was that UCC had no standard CCG document format. This and other similar issues needed to be coordinated between the CBA, Alexis and outside parties such as other colleges, the system-wide IT group, and the UCC. An articulated policy that established the required standards for both business processes and data formats was essential for development of this system. Being the leaders in the development of this system would provide the CBA and Alexis the opportunity to play the leading role in implementing a larger, highly visible, university-wide system, though it would also provide them with many other significant challenges. As Alexis reviewed and contemplated these issues, she wondered what the best development strategy would be. She knew she would need to be creative and resourceful if this project was to be a success.
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REFERENCES
AACSB International. (n.d.). Accreditation Standards: Assurance of Learning Standards. Available from: http://www.aacsb.edu/resource_centers/assessment/ standards.asp Apple, D. K., & Duncan-Hewitt, W. (1995). A Primer for Process Education. Corvallis, OR: Pacific Crest Software. Apple, D.K. et al. (1995). Foundations of Learning. Corvallis, OR: Pacific Crest Software. Berardi, M., & Stucki, C. (2003). Audit and control, SAC: System development overview. ITAudit, 6, (February 1). Barr, R.B., & Tagg, J. (1995). From teaching to learning: A new paradigm shift for undergraduate education, Change, (Nov/Dec), 12-25. Cleland, D. I., & Ireland, L. R. (2002). Project Management: Strategic Design and Implementation (4th edition). New York: McGraw-Hill. Gardiner, L. F., Anderson, C., & Cambridge, B. L. (1997). Editors, Learning through Assessment: A Resource Guide for Higher Education. Washington, DC: American Association for Higher Education (AAHE). Hoffer, J. A., George, J., & Valacich, J. (2001). Modern Systems Analysis and Design (third edition). Prentice-Hall. Johnson, R. A. (2000). The ups and downs of object-oriented systems development. Communications of the ACM, 43(10). Kendall, K. E., & Kendall, J. E. (2004). System Analysis and Design (sixth edition). Prentice Hall. Kloppenborg, T. J., & Petrick, J. A. (1999, June). Leadership in project life cycle and team character development. Project Management Journal, 30(2), 8-14. McConnell, S. (1996). Rapid Development: Taming Wild Software Schedules. Microsoft Press. Mylopoulos, J. (1999). From object-oriented to goal-oriented requirements analysis. Communications of the ACM, 42(1). Valacich, J. S., George, J. F., & Hoffer, J. (2003). Essentials of System Analysis and Design (second edition). Prentice-Hall. Wang, S. (1996). Two MIS analysis methods: An experimental comparison. Journal of Education for Business, 71(17). Whitten, J. L., Bentley, L., & Dittman, K. C. (2004). System Analysis and Design Methods (6th edition). New York: McGraw-Hill.
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APPENDIX A. CBA ORGANIZATION CHART
D ean
R es earc h a nd E c ono m ic D e v C enters
A s s oc iate D e an of A c adem ic A ffairs
A s s is tant D e an O f A d vanc em ent
A c ade m ic D epartm en ts
A d m inis tration
A c c ounting
B u sines s A d m inis tration
C om puter Inform ation S ys tem s
E c ono m ic s
Logis tic s
B u d get M ana ge r
IT M anag er
A d m inis trative S u p port S ta ff
Labs C oordinator
S y s tem A dm inistrator S y s tem A dm inistrator
P u blic A d m inis tration W ebm aster
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192 Drinka, Voge, & Yen
APPENDIX B. CONTEXT-LEVEL DATA FLOW DIAGRAM
University Administration
Student
Learning Measurement Results
CCG
College Academic Department
Department Assessment Summary Report
Program Level Assessment Data
AACSB
Course Assessment Tool Design
Goal Assessment Summary Report
Course Assessment Summary Report
College Administration
College Goals
Completed Assesment Tool Assessment Tool
Student Student Learning Outcomes Outcomes Assessment Assessment System System
Faculty
Curriculum and Assessment Committee (CAC)
Program Assessment Summary Report Reviewed / Proposed CCG Approved / Denied CCG
College Approved CCG UCC Approved / Denied CCG
University Curriculum Committee (UCC)
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No
A p p ro v e d C A R & CCG?
Yes
(3 ) R e v ie w / A p p ro v e C AR & C C G
(1 ) P ro p o s e / M o d if y C o u rs e in c lu d in g I d e n t if ie d L e a rn in g O utc om es
(2 ) P re p a re s C A R a n d CCG
C AR & C C G w it h C o u rs e L e a rn in g O utc om es
D e p a rtm e n t / P ro g ra m
C o u rs e In tr u c to r / L e a d C o o rd in a to r
No
A p p ro v e d C A R Y e s & CCG?
(4 ) R e v ie w / A p p ro v e C AR & C C G
A p p ro v e d C A R & CCG
C B A C u r ric u lu m a n d Asse ssme n t C o m m itte e
C B A C u rric u lu m a n d A s s e s s m e n t C C G P ro c e s s
(5 ) T e c h n ic a l E d it in g (p ro p o s e d s t e p in p ro c e s s t o e n s u re f o rm a t t in g c o n s is t e n c y )
A d m in is tra tiv e S u p p o rt
No
Y e s A p p ro v e d C A R & CCG?
(6 ) R e v ie w / A p p ro v e C AR & C C G
U n iv e r s ity C u rric u lu m C o m m itte e
C o m p le t e d C o u rs e Lev el As s es s m ent T ool
C o m p le t e s L e a rn in g O b je c t iv e s As s es s m ent T ool
E n ro lls / P a rt ic ip a t e s in C o u rs e
S tu d e n t
I n s t ru c t o r, C o u rs e , D e p a rt m e n t , a n d P ro g ra m L e v e l As s es s m ent R e p o rt s
P ro d u c e s As s es s m ent R e s u lt s R e p o rt s
S u m m a riz e s C o u rs e L e v e l As s es s m ent R e s u lt s
C a p t u re / E n t ry o f C o m p le t e d As s es s m ent T ool D ata
P ro d u c e s C o u rs e Lev el As s es s m ent T o o ls
C o lle c t s / M a in t a in s C o u rs e L e v e l L e a rn in g O b je c t iv e s
SLO AS
Analyzing Student Learning Outcomes Assessment System 193
APPENDIX C. DIAGRAM FOR CCG PROCESS
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194 Drinka, Voge, & Yen
APPENDIX D. PRELIMINARY ERD
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APPENDIX E. SAMPLE DATA TABLE: Program_Goals Program
Program_Goal_Num
Acad_Yr
Program_Goal_Statement
BBA
BBA1
0304
Students will be able to communicate effectively using technical writing skills, managerial presentation skills, and group communication skills.
BBA
BBA2
0304
Students will be able to analyze and solve business problems using appropriate methodologies or tools.
TABLE: C o urse _Le arning _O b je c tive s C o urse _P re fix
C o urse _N um
C o urse _Le arn_O bj_N um
C o urse _Le arn_O bj_State m e nt
Prog ram _G o al_Num
C C G _Revie w _D ate
C IS
A31 5
2
Stude nts w ill p re p are a p e rsuasive p re sen tatio n using app ro p riate te c hnolo g y.
BBA 1
1-O c t-2000
C IS
A31 5
3
Stude nts w ill p re p are an info rm atio nal p re sentatio n using ap prop riate te c hno lo g y.
BBA 1
1-O c t-2000
TABLE: Learning_Obj_Assessment_Setup Course_Prefix
Course_Num
Course_Learn_Obj_Num
Assessment_Num
Assessment_Type
Required_Score
CIS
A315
2
1
In-Class Presentation
70
CIS
A315
3
2
In-Class Presentation
70
TABLE: Student_Assessment_Detail Student_ID
Course_ID
Assessment_Num
Assessment_Score
4136803
30513
1
82
5215911
30513
1
90
4136803
30513
2
85
5215911
30513
2
92
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196 Stamati, Kanellis, & Martakos
Chapter XII
Challenges of Complex Information Technology Projects: The MAC Initiative Teta Stamati, University of Athens, Greece Panagiotis Kanellis, University of Athens, Greece Drakoulis Martakos, University of Athens, Greece
EXECUTIVE SUMMARY
Although painstaking planning usually precedes all large IT development efforts, 80% of new systems are delivered late (if ever) and over budget, frequently with functionality falling short of contract. This case study provides a detailed account of an ill-fated initiative to centrally plan and procure, with the aim to homogenize requirements, an integrated applications suite for a number of British higher education institutions. It is argued that because systems are so deeply embedded in operations and organization and, as you cannot possibly foresee and therefore plan for environmental discontinuities, high-risk, ‘big-bang’ approaches to information systems planning and development must be avoided. In this context the case illustrates the level of complexity that unpredictable change can bring to an information technology project that aims to establish the ‘organizationally generic’ and the destabilizing effects it has on the network of the project’s stakeholders. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
Located on the western edge of London, Isambard University received its Royal Charter1 in 1966 and since then enjoys a considerable reputation for research and teaching in the science and technology fields in which it specializes. Close connections with the public sector, industry and commerce characterize Isambard University. These links were built through a commitment to the thin sandwich2 undergraduate degrees which made the University’s graduates among the most employable in the country and, by its distinctive competence in applied and strategic research. As a direct result, Isambard University is popular with undergraduates, while its earnings from contract research per member of academic staff are significantly above the national average in most of the cost centers in which it is active. In the beginning of the 1990s the Higher Education (HE) sector in the UK started to experience dramatic changes. The Secretary of State invited comment on the scale, purpose and structure of HE, and the Government made its views clear through the introduction of numerous policy changes affecting universities’ funding, teaching and research. Those were followed by the merger of the Ministries of Education and Employment, and the move of the Office of Science and Technology to the Ministry of Trade and Industry, signifying an increased requirement for public spending on HE to have a demonstrable effect on employment and national economic growth. For example, in November 1995, a 7% overall reduction in universities funding for 1996 was announced, including a 31% fall in capital funding, meaning that over a six-year period the unit of funding for teaching each student would have had to be reduced by 28%. Direct financial support for students was also reduced. The previous students’ allowance scheme was terminated, with the balance between student grants and loans moving even more deterministically towards the latter, with the Government signaling its adamant intention to fundamentally review the funding mechanisms. It was against this background of environmental turbulence that Isambard University, as indeed every other academic institution of HE, operated. Another one of the key environmental changes was the Government’s plan to double the number of undergraduate students, from one million to two million, over a 25-year period beginning from 1989. In the medium term this was to be achieved through a strategy of ‘expansion with greater efficiency’. Hence, a major challenge for Isambard University was to determine a plan and assure that the necessary infrastructure was in place for participating in this program of expansion in a way that would build upon and strengthen its distinctive characteristics. Associated with this change was the Government’s decision to abolish the Council for National Academic Awards (CNAA3). Institutions with degrees validated by this body were now required to seek alternative means of validation, either through the acquisition of chartered status, or through association with an existing chartered institution. Opportunities to validate the awards of other institutions were therefore available for Isambard University. Isambard University’s strategy of actively seeking growth and diversity, by merging and fostering links with other institutions, came into fruition in February 1995, when the West London Institute of Higher Education was incorporated into the University as Isambard University College. This amalgamation marked the beginning of significant restructuring as the College departments had to be molded into a unified faculty structure. By the end of 1995, the Departments of Education from the two Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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institutions were brought together into a single School of Education, and the Department of Design joined the Faculty of Technology. Furthermore, there were plans involving the splitting of the College Department of Human and Environmental Sciences into a Department of Sports Sciences and a separate Department of Geography and Earth Sciences. In addition, Isambard was for the first time planning to establish an Arts Faculty. This re-organization was the cause of considerable instability. Adding to these was the intensification of the competition for research funding. Changes in the Funding Council’s allocation model were directed towards greater selectivity in the use of research funding and an increased emphasis on research quality and proven research success. For these reasons, Isambard was experiencing a shift in its funding arrangements and had to obtain external funding to compensate for a reduction in central funds through the Higher Education Funding Council for England (HEFCE). Whereas in the past there were one or two revenue streams to be maximized, now there were at least five. These included: • • • • •
Central funding from the HEFCE based on a series of assessments (for example Research Assessment Exercise) Project-driven funding from UK research councils and from the European Community Collaborative and contract research for industry and commerce Overseas student fee income Conference accommodation and catering income
Hence it was towards the end of the ’80s and the beginning of the ’90s that Isambard University found itself exposed to an operating environment that in many respects was borrowing the business — like characteristics of the commercial sector. In the Vice Chancellor’s own words: “The only cloud on our horizon as we start the new year is the uncertainty of the environment in which we will be seeking to put those values [to continue to be a mixed teaching and research university which is financially sound; and to be characterized by teaching and research which is of relevance to its user community] into practice. 1995 entered with less clarity about the future of the UK Higher Education system than most of us working in it have ever known.” (Sterling, 1995, p. 16)
SETTING THE STAGE
Information systems played a critical role at Isambard University. Its orientation towards engineering and sciences dictated a high level of interest in, and use of such systems, among other high technology facilities. Since the mid-eighties its systems infrastructure developed from a central multi-user mainframe with islands of computation in the various departments, to a distributed computing system linking central and departmental resources and providing user access at required locations, via terminals, PCs, and workstations. Teaching and research staff, partnering with their close links to industry and commerce, demanded ‘state-of-the-art’ computing at industry standards. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The following elements constituted the framework for the university’s computing infrastructure: • • • • • •
UNIX for main service operating systems Networks based on X.25 and Ethernet IBM compatibility for PCs Adoption of UNIX- based workstations Application software of industry standards Centralized file service
It was also recognized that all administrative work ought to be underpinned with effective information and management systems. Historically, the administrative computing capability had been developed to service the central administrative functions. As management and administrative tasks and activities by departments and faculties increased, so did the need for support in those areas. This change in responsibility brought about the development, within some departments and faculties, of local systems to support their management and administrative activities and needs. In parallel with this, there was an increasing demand from departments and faculties for management information from central administration and support, in terms of access to system facilities. In 1988, it was observed that in terms of hardware, the host machine supported about the maximum number of peripherals it could, and was utilized beyond the normal expected level. This meant that any further expansion of support was not feasible without increasing computing power and capacity. In addition, the terminal access of administrative systems for individual departments provided via the university’s network did not provide an adequate response to those remote users, and the service level did not always fulfill their needs. It was not necessarily the case that the information held within the systems was inadequate, but barriers existed which prevented or hindered its use by the departmentally base staff that needed it. There were also issues associated with the data itself, and it was felt that they could probably be resolved by developing new hardware and software architectures to support the differing needs of the users. In summary, the main issues were: • • • •
Format and Structuring: Data was not formatted and structured so that it could be presented to the user in a useful and meaningful way. Access: There was limited access to the data caused primarily by technical constraints. Currency: Data was found to be current for one set of users but out of date for others, due to differences in need and timescale. Ownership: There were areas where lack of ownership definition and responsibility had resulted in a lapse in maintenance of the data. Where ownership was at the center, but data was derived from other sources, there were problems in maintaining it. An example was customer records where ongoing information was provided from many sources, but there was no area responsible for collecting the data and no means of distributed input. Any breakdown of communication resulted in central and departmental information being different.
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•
Completeness: There was a wealth of information in all subject areas held by individual departments and within the faculties, which was not captured effectively. The necessary mechanisms (i.e., coordinated and integrated systems) did not exist to enable this to happen.
The software applications processing this data had been developed over the last 12 years. Their development had been tailored to the specific needs of the users that applied at the time of development or subsequent amendment. As management and administrative roles and responsibilities were undergoing change, new users were bringing in a new set of needs to be satisfied. Similarly, changing circumstances — unpredictable demands from the Universities Funding Council (UFC)4 and changing rules for allocating funds — and pressures were bringing about different needs. During the period of 1988-1990 it became clear that while the existing systems satisfied many of the central administrative requirements, new needs in both the management and administration of the university arose.
CASE DESCRIPTION: MANAGEMENT & ADMINISTRATIVE COMPUTING INITIATIVE
The UFC’s Management and Administrative Computing (MAC) initiative was announced in September 1988. The aim of the initiative was to promote the introduction of more effective and sophisticated systems to support the increasingly complex decisions that faced universities and colleges (Kyle, 1992). In addition, the systems were to provide the UFC with the information needed for allocating funds more effectively across the pool of universities. The cost of institutions ‘doing it alone’ was estimated at £ 0.5 million or more for each. To avoid this, the Universities Grants Committee (UGC5 — precursor to the UFC) commissioned a study to develop an information/data specification or ‘Blueprint’, which aimed to cover 80-90% of the needs of any single institution. A Managing Team was formed, and an initial study based on direct input from five universities and contributions from 20 more was completed. The team, comprising senior computing staff and university administrators, was chaired by the Vice Chancellor of the University of Nottingham. The UFC decided that they would only fund information technology developments for MAC that were organized to suit ‘families’ of universities. The objective was to group institutions into five or six families with similar computing requirements. Whilst geographic proximity was helpful in promoting frequent contact between the family members, it was not to be the only consideration. Others included similarity in size, structure, type of institution, existing collaboration (for example on purchasing), and computing development needs.
The Initial Phases
The Blueprint undertaken by Price Waterhouse (now PriceWaterhouseCoopers) delivered at the end of 1988. The five main participants were Manchester University, Strathclyde University, Newcastle University, University College London and Isambard University. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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In March 1989 the blueprint was sent to all universities, together with a request that each university prepare a ‘migration strategy’ report. This would have to include each university’s present administrative computing situation, both in terms of its computing hardware and its existing applications, and of its development priorities and requirements for the future and additionally: • • •
A comparison of the information needs of the university with the generalized blueprint and an identification of gaps between the two The identification of the characteristics of the institution in order for the Managing Team to classify it The development of an outline strategy for migration from the university’s existing systems to the outline architecture in the blueprint
Isambard’s migration strategy was prepared with the assistance of two consultants from Ernst and Young and emphasized the importance placed by the university on the provision of management as well as operational information. There were also two additional features that were highlighted: one was the need to conform to the university’s own Information Technology strategy6; the other was the fact that a new development platform had to be selected for any future systems, as the existing systems were coming to the end of their useful life. The preparation of Isambard’s migration strategy for MAC took place at about the same time and led to a decision to integrate management and administrative computing systems. This decision for integration was one of the principal factors that led to a commitment to the Oracle database platform as it was the one supported by the university’s computing services. This migration strategy was sent to the UFC in July 1989.
The Formation of Families
The MAC Managing Team used the migration strategies submitted by all universities as the basis for the formation of different ‘families’. A consultant from the National Computing Center (NCC) assisted in analyzing the strategies. As a result of his analysis and at a meeting held in September 1989, it was proposed that the families should be formed around the four main relational database products available at that time and in use in universities, as the universities believed it to be the most important factor regarding their future systems development. In addition it was thought that this would enable them to achieve the objective of developing a common code to run on their hardware. The products were Oracle, Ingres, Powerhouse and Secqus. Each university was then asked to choose which family it wished to join, with the UGC hoping “that, in time, all members of any one family will be using the same administrative computing software which they will develop and maintain jointly.” The process of forming the families took place during October 1989 and Isambard joined the largest one — the Oracle Family — which represented a wide variety of universities. Other reasons for this were the size of the family itself — the bigger the family, the smaller the contribution Isambard believed it would have to make — and the viability of the supplier; in terms of sales, Oracle was by far the largest of the four as well as the most ‘open’. In October 1989, the Family was simply a collection of universities that agreed to cooperate on systems development using a particular product. A constitution and modus Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
202 Stamati, Kanellis, & Martakos
operandi had to be drawn up for the Family in addition to a plan of its activities. This was necessary in order to obtain funding from the UFC. The constitution established a Management Board in which each university had one representative and one vote. A Chairman was elected from among those representatives, and the Family incorporated as a limited company known as Delphic Ltd. The Board also decided to form a number of what they called Application Groups, one for each area of the management and administrative systems identified in the Price Waterhouse’s Blueprint. This did not mean that the groups had to undertake the development of the systems themselves, but that they were to be responsible for working directly with the commercial contractors employed by the Family. Each member of the Family had to be a member of at least one group, and Isambard took the decision to join the Management Information Application Group.
The Analysis, Design, & Delivery Phases
In February 1990, it was decided to contract Mantis UK to undertake the analysis stage of the Family’s systems development program. This involved the production of the functional analysis and data dictionary of the members’ requirements, under the sections covered by the six Applications Groups set up by the Management Board: Students, Staff, Finance, Research and Consultancy, Physical Resources, and Management Information. The work on this contract commenced in February and ended in June 1990. It involved several consultants from Mantis UK plus many staff from all the member universities of the Family and was supervised by a Project Manager employed on a consultancy basis, together with a small group7 chaired by the administrative computing manager of Bristol University. The result of all the work — a huge coordinated effort between Mantis UK and the Family members — culminated in an enormous document running into several hundreds of pages which contained everything one ever wanted to know about management and administrative computing requirements in UK universities. It was made up of two main parts. The first was the analysis of all the management and administrative functions that universities needed the systems to help them carry out (the Function Hierarchy). The second identified all the data items required by these functions and the relationships between them (the Entity Relationship Model). These were followed by proposals concerning the development of the required systems. The document therefore comprised the deliverables from the analysis stage on the basis of which the system was to be designed and built. The next stage was to commission someone to design and build the systems software on the basis of this analysis and data dictionary. An initial description of the work to be tendered was issued by the NCC on behalf of the Family at the end of April 1990, and expressions of interest in receiving a full tender document were invited. The formal invitation to tender was issued in June to three companies expressing interest. These were Mantis UK, Hoskyns and Price Waterhouse. The Family received the three tenders on August 7, 1990, and spent the rest of the month assessing them. A detailed scoring system was used to evaluate the three tenders against a whole range of factors. This evaluation process was followed by a period of intense negotiation over the costs with each of the suppliers and significant reductions over the original tender price were eventually achieved. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The outcome was that Mantis UK was offered the contract to develop the full set of management and administrative systems. The recommendation was formally accepted by a meeting of the Management Board in September 1990, and a contract was subsequently drawn up with Mantis UK with the assistance of specialist legal advice. The complexities of the negotiations over the contract were such that it was not formally signed until May 1991, although the work itself started and continued during the negotiation period. Although the MAC system was designed as one closely integrated system, its software was to be made available in phases (see Appendix). All applications, with the exception of payroll, would use SQL Forms V.3 with pop-up windows etc. as part of the user interface. The Finance application was based on Mantis’s own accounting package that was to be enhanced to cater for the additional functionality requested by the Family. Whenever the Mantis development team finished writing and testing a release of software, this was to be passed over to the appropriate Application Group for them to run their own acceptance tests on it. It is important to note that the ‘80/20’ rule applied here. A small part of the system was left to the discretion of the programmers working at each of the universities, who after an Mantis software release and in close cooperation with Mantis developers, would attempt to ‘tailor’ the system to the specifics of the sites (Pollock, 2001). If an institution was encountering problems in running the software, the ‘Delphic Support Desk’ had to be contacted. This would assess the problem and then pass the solution back to the institution responsible for the particular application. If the problem could not be resolved, it was forwarded back to Mantis which had to redesign and rebuild the application.
Management & Administrative Computing Initiative Outcome for the Delphic Family
Towards the end of 1994 and with the funding for the MAC Initiative nearing its termination date of March 31, 1995, the Delphic members were experiencing severe delays concerning the delivery of the main application packages. The Anticipated Availability Schedule (see Appendix) shows the time slippages. Kyle (1994) summarized some of the main causes for the delays as follows: 1. 2. 3. 4. 5.
The design of the Student Structure was found to be flawed, and had to be redone. Mantis’s decision to merge its development team responsible for its own Finance package with the one responsible for the MAC’s Finance module. The loss of senior Mantis development staff, particularly during critical design stages. The introduction of a new stage: implementation by a test (lead) institute between the end of acceptance testing and the release of an application in its supported state. The decision of Delphic to make modules available in ‘baskets’. This meant that the first module accepted had to wait until the acceptance of the last module in the basket before it could be implemented.
Complementary to the above a number of observations can be made regarding this state of affairs concerning the initiative. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Price Waterhouse’s approach for conducting the initial feasibility study (i.e., the Blueprint) was considered hardly appropriate for as complex a system as MAC was. On the basis of the knowledge they had acquired about university administration from developing information systems for Durham and Leeds Universities, and because time was of essence, they adopted a ‘drive the user base instead of letting the user base drive you’ approach. This meant that Price Waterhouse as in effect designing the Blueprint based on its assumptions of what was needed, and then presenting it to the representatives from a cross-sample of universities, inviting them to comment. However, the representatives did not have the blueprints in advance to study and to comment interactively with the consultants — they were given to them at the meetings, where at the end a decision had to be made. This, coupled with the large size of the project and its ‘open’ structure, resulted in some areas being overlooked and others not being looked at in sufficient detail. The final Blueprint was a huge and complicated technical document, and by large the universities did not check it out as they ought to have done. It was of a hierarchical structure cut down to functions described in little detail, which made it difficult for systems personnel to understand, let alone explain it to their line managers and get the much-needed feedback. The fact that this approach was problematic became evident when the families started their own individual developments. They found out that the result was not as much of the Blueprint as they had thought it to be. The application of the ‘80/20’ rule mentioned in the preceding section meant that the finalization and successful implementation of the various modules was heavily reliant on the skills and efforts of the programmers who were working the code so as to make it compatible to the specifics of each site. But they were tasked to work with the system only in certain ways, as Mantis wanted to ensure that the code would only be modified in the ways they deemed appropriate. In a sense they were “…attempting to configure the local programmers as their users…” (Pollock, 2001, p. 7) and this gave rise to a lot of friction. The following excerpt from a final report to the Delphic Support Desk regarding an issue illustrates this: “…As you may know, [the university] migrated from [MAC] 1.3 to 1.4 last week and encountered some problems which we helped with. We also advised them to migrate to 1.5, as 1.4 was no longer supported. This they did over the weekend and again had some problems, which I have mentioned in the log. They contacted me on Monday morning and I have been looking at the problem(s) over the last day and a half. We have carried out a few checks and offered some advice on overcoming some of the problems, but it would appear that the problem lies in the data that they are working with and not a problem in any of our code…Quite simply, I cannot justify any more time on this problem as it does not appear to be a problem with our software, rather a problem on site which may well require a great deal of time to identify…Their current work-around is to use the basket 4 forms against the basket 5 database. I have expressed my concern over this and warned them that this is unsupported but they appear to be confident that they have an adequate work-around.” (Pollock, 2001, p. 14) Arguably, the causes for the delays mentioned above can be experienced in any project of MAC’s scope, scale and complexity. However, the first one on Kyle’s list draws one’s attention, as it was the result of an environmental discontinuity that could have Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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not been anticipated — that of semesterization8. It was felt as something that was clearly overdue, a departure from a rigid and inflexible academic structure that originated in the beginning of the last century to a more open and clearly cost-effective scheme. As a result of semesterization, Isambard, for example, was able to increase considerably its student numbers by offering a wider range of choice regarding the structure of its courses, rather than only the four-year thin sandwich course option. This change affected mainly the Student Module. The fact that in 1994 parts of it had not been contracted (see Appendix), although the initial delivery date for the completed module was July 1992, shows clearly the magnitude of the effect that this change had. The Student Module was driven by what was called “Program Structures” — schemes of study. “Program Structures” was designed in such a way that in an attempt to provide for integration, every single module was required to know what the structure was when dealing with student administration. For example, the Student Registration, Student Finance, and the Assessment and Degree Conferment modules related first of all to the Program Structure and its maintenance, and in effect were totally dependent on it. This module’s development had to start virtually from scratch again because of semesterization, and it was estimated that its delivery had to be put back by a year to 18 months. Twenty-six months later and there was still no definite delivery date, although an estimation was that a ‘formal’ deliverable had to wait for another two years. Needless to say, no member of the Family could afford to bear the cost of a product that had not been proven to work, and in which acceptance tests had to take place throughout a whole academic year and be evaluated against the annual cycle of activities. The metaphor of the old lady who is trying to cross the road and waits for someone else to do it first, in order to see if he gets run over, illustrates the case. Angela Crum Ewing, deputy registrar at Reading University (a member of the Delphic Family), said after they decided to hold onto their in-house applications, rather than implement a MAC solution: “MAC is in a position of transition. We did not want to commit to a new, untried system, when we had our own in-house systems which worked well” (Haney, 1994). A ‘sneak preview’ of the modules by Family members resulted in a lot of skepticism about the future, stemming from the fact that continuous disappointment would mean dissatisfied stakeholders who will not stop placing pressure in favor of project abandonment. The effect of semesterization had major repercussions not only on Mantis UK as the system developer, but on all members in the Family who were counting on the deliverables and had already made their migration plans. For Isambard University, only the quantifiable costs amounted to the region of more than £50,000 — two extra man-years of further systems development work that no one had anticipated.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
In September 1994, after almost six years of systems development and six months before the termination of the funding, only one of the Delphic modules that were to be made available was finally adopted by Isambard University (Figure 1). The state of affairs regarding the seven main areas was as follows: Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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•
•
Students: Although at the time Isambard’s existing system infrastructure could hardly accommodate semesterization, the administration of the university, tired of waiting for Delphic to come up with a deliverable, was pushing persistently for a new system. In November 1993, after ‘shopping around’ for any Mantis-based student system in use that could be able to satisfy Isambard’s own requirements, a decision was made to consider the system of the University of Liverpool. After some time it was found out that for a number of reasons, this was not the solution either. Firstly the system was designed to meet Liverpool’s own requirements in a very specific way and it was never developed as a package for other universities to use. Isambard’s own requirements were completely different to theirs. Secondly, it was developed on an older version of Mantis. This meant that its blind adoption would pose problems in the future concerning its integration with any Delphic deliverables. On the other hand, an attempt to modify it would mean major overhead. Finally, from a technical point of view, the system was not documented — a ‘black box’ in the systems team’s own words. Isambard had no alternative but to develop and design its own in-house student system whose first phase went live in the first week of October 1994 to coincide with the beginning of the new academic year. The system covered the Registration process, but no project was under way regarding the two other main areas — Student Finance and Student Accommodation. Finance: The development of the Finance module which was a base offering from Mantis UK and which had been enhanced to meet the extra requirements, was also off schedule. As a result, an Mantis quasi-commercial accounting package was adopted and implemented. The package had nothing specific to offer to universities, and if there were a choice, it would have not been taken on board by Isambard. It was developed by Mantis UK (in much the same way as Price Waterhouse delivered its MAC Blueprint) in an attempt to quickly capture a slice of the off-theshelf software market when it had decided to enter it a couple of years ago. This meant that several enhancements were necessary and it took more that 200 person hours alone to determine whether or not it could replace the existing system. Subsystems to deal with the maintenance of research contracts, and to allow for the issuing of monthly statements of accounts to heads of departments and senior researchers, were designed, and eventually the system went ‘live’ in August 1994 — the beginning of the new financial year.
Figure 1: MAC Modules Adopted by Isambard University after Almost Six Years of Systems Development
Finance
Non- Delphic solution
Students
Non- Delphic solution
Staff
Delphic offering adopted
Non- Delphic solution
Research and Consultancy
Non- Delphic solution
Payroll
Non- Delphic solution
Non- Delphic solution
Physical Res ources
Management Information
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•
•
•
•
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Staff: Following the installation and assessment of the pre-release version of the first module from Delphic (Posts, People, Appointments and Organization), the implementation team agreed and the old system was subsequently discontinued in September 1993. It was replaced by this and the second module (Skills, Recruitment and USR Return). However, at that time (September 1993) Delphic still had not provided any documentation for the system. Physical Resources: The initial Delphic offering proved to be an ‘overkill’ for Isambard’s requirements. It provided more than was actually needed, and two key areas had already been covered by in-house-developed Mantis systems. One area was the administration of the university’s own housing facilities and the people who occupied them, and the other was an inventory system for mobile equipment. The Delphic offering still held some level of attraction to Isambard’s Management Services team, but only when used in conjunction with the Delphic Finance Module, as it offered the facility the option to debit directly a departmental account at a store as soon as an item was issued out. The Stock Control Module was at the time running at test mode, but as these two packages were designed to be highly integrated, there was a deadlock situation as the Finance module had not been delivered. Moreover, as mentioned above, a commitment had been made to the inhouse-developed finance system, which was unlikely to be replaced for at least two years. Research and Consultancy: No view had been formed about this module as there had not been a delivery. Supposedly it provided the ability to maintain profiles of staff and possible customers who could require applied research to be undertaken by the university on their behalf. An in-house-developed Mantis system was then in operation centered around publications of Isambard staff and information on customers. The accounting side (e.g., the recording of costs against research projects) was partly accommodated by the core finance system. Again, it was rather like Physical Resources — nothing particularly attractive given the overhead in implementing either of the Delphic modules that tended to be reasonably sophisticated for Isambard requirements. Payroll: A bureau service from a leading UK bank catered for the payroll function at Isambard. The consensus of the Director of Financial Services was that it was adequate, and therefore he was cautious and opposed any change. What were however lost by this decision were the integration and the economies, such as saving in paperwork and clerical time that came with the Delphic module, and that were associated with raising the cost of various processes between the two interconnected functions — payroll and personnel. However, the high level of integration offered between Delphic’s Payroll (not delivered at that time) and Staff modules were attractive to Isambard, as it had implemented the latter. After some careful consideration it became clear that its adoption was very unlikely to happen, as at the outset it seemed a very general package; again, many enhancements would have been necessary. This was a significant requirement considering the size of Isambard’s Management Systems Team and its constrained time scales. Management Information: Similarly, no ‘final’ view was formed. There had been a development where Management Information was considered to be the ‘Cinderella’
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module — the sort of one where by residing within the other modules, management information requirements at a strategic level could be easily accommodated. In September 1994, only statistics of various sorts could be generated for Government use, and those with considerable difficulty. In order to cure the problem, Delphic bought the rights for individual universities to acquire Holis — a powerful expert system, as there was general consent that Mantis UK was delivering ‘textbook’ systems. This meant that they had gone too far in terms of splitting down to tables for the database, without considering that most legacy systems already in place at universities were hierarchical, thus operating with one table. This transition posed a considerable challenge. It required a lot of effort and man-hours for the Management Services team that had to undergo the process, as Holis was not available when the initial design decisions were made. Holis was generally looked upon as the solution in gluing and running the whole of the independent databases together as it could accommodate any set of computerized data-like spreadsheets and flat files which did not necessarily have to follow Delphic’s database format. The MAC Initiative was funded from 1988 to 1995 and a total of 11 million were invested in those seven years. “Universities snub software policy,” read a headline in Computing (September 22, 1994) — a professional trade magazine. “UK universities are going their own way to buy core administrative software after finding a governmentsponsored scheme out of touch with their business needs,” the article continued. Birmingham and Reading Universities both confirmed in September of that year that they were moving outside the MAC initiative for their latest developments, and the University of Sussex being dissatisfied with the delivered software for Undergraduate student admissions eventually chose a separate system. With the funding for MAC running out in July 1995, similar moves from other institutions were being planned, as there was no other viable alternative. The outcome was that although Families continued to exist in a rather informal way, MAC-related activity slowly came to an end after the central funding terminated. The Delphic and Mantis UK Management Boards agreed and concluded their contract at the end of April 1996. The agreement was to deliver all remaining software in an ‘as-is’ state at the end of January in order to be tested at the University of Liverpool. The software was to be accepted at the end of February, with any ‘bugs’ to be remedied under the warranty agreement. Delphic was to make no further development demands on Mantis (Philips, 1996). It is without doubt that many interpretations can be given regarding the final outcome, and in retrospect each Family managed to achieve the objective of producing software to cover a number of the Data Blueprint areas. Some of these systems did run quite successfully in a number of institutions (Hillicks, 2002). What must be noted, however, is the fact that no university managed to achieve the initial objective of using only the MAC modules exclusively. The ending of the contract meant that Delphic was in total control of the situation rather than having to work through Mantis, and in 1996 MAC was a far cry from the initial objective for an integrated information system where all the functional subsystems could be seamlessly linked so that one would not end up with a collection of disjointed and ineffective systems (Kanellis & Paul, 1995; Kanellis, 1996). For Isambard University in particular, the main attraction in joining the Delphic Family was the integrated solution Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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that they were offering. Graham Kyle, manager of the Management Services team, summarized eloquently the situation: “…as you can observe, the way we are staggering here at Isambard, there is no sign of integration as far as we are concerned.” One feature of Delphic that did not apply to any of the other families was that from day one the deliverable was designed as one system. It caused Mantis UK problems because, when the first major slippage occurred (the Students Module), Mantis had to respond to pressure from the Delphic representatives who demanded some deliverables.” This meant that Mantis had to unbundle the system by separating and redesigning the links, a major cause for MAC’s failure to meet deadlines. Almost all deliverables were at least two years late, according to the dates quoted by Mantis UK in the original specification, and this caused considerable stress and frustration to Isambard, which had to decide which route to follow regarding its infrastructure: to wait and see how Delphic would handle the situation after the termination of the contract with Mantis, to see how to integrate the various probable solutions described in the beginning of this section or to make a fresh beginning abandoning all previous investments? Difficult choices indeed and hardly the type one expects to be faced with at the end of an information technology development project that started with the best of expectations.
REFERENCES
Haney, C. (1994). Universities snub software policy. Computing, (September 22), 14. Hillicks, J. (2002). Development Partnerships between HE and Vendors: Marriage made in Heaven or Recipe for Disaster? Online: www.jiscinfonet.ac.uk/Resources/ external-resources/development-partnerships/view Kanellis, P., & Paul, R.J. (1995, August 2-5). Unpredictable change and the effects on information systems development: A case study. In W.A. Hamel (Ed.), Proceedings of the 13th Annual International Conference of the Association of Management (pp. 90-98). Vancouver, BC: Maximilian Press Publishers. Kanellis, P. (1996). Information Systems and Business Fit in Dynamic Environments. Unpublished PhD Dissertation, Brunel University, UK. Kyle, G. W. (1992). Report on the UFC MAC Initiative. London: Brunel University. Kyle, G. W. (1994). MAC Situation Report. Brunel University, UK. Philips, T. (1996). MAC Progress Report. Online: www.bris.ac.uk/WorkingGroups/ ISAC/13-2-96/i-95-10.htm Pollock, N. (2001). The tension of work-arounds: How computer programmers. Paper submitted to Science, Technology & Human Values. Sterling, M. (1995). Vice-Chancellor’s Report to Court. Brunel University, UK.
ENDNOTES
1
Royal Charters have a history dating back to the 13th century. The original purpose was to create public or private corporations and to define their privileges and purpose. Nowadays, Charters are normally reserved for bodies that work in the public interest and can demonstrate pre-eminence, stability and permanence in
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210 Stamati, Kanellis, & Martakos
2
3
4
5
6
7
8
their particular field. Many older universities in England, Wales and Northern Ireland are also chartered bodies. Sandwich courses involve a period of work in industry or a commercial organization. On a ‘thick’ sandwich course, the student spends the third year working away from university. The ‘thin’ sandwich course has placements lasting six months each calendar year. The CNAA was founded by Royal Charter in 1964, with the object of advancing education, learning, knowledge, and the arts by means of the grant of academic awards and distinctions. UFC became the Higher Education Funding Council for England (HEFCE) which was established following the Further and Higher Education Act 1992. A principal feature of the legislation was to create one unified higher education sector by abolishing the division between universities and polytechnics. Under the education Reform Act of 1988, the University Grants Committee (UGC) was replaced with the Universities Funding Council (UFC) which in turn was replaced by the Higher Education Funding Council for England (HEFCE) to conform to the Further and Higher Education Act 1992 which made provision for a single system of higher education, with a unified funding structure and separate funding councils for England, Scotland and Wales. It was during 1989 that Isambard University was required to prepare a renewed internal information technology strategy to support its bid to the UFC’s Computer Board for funds related to academic computing from 1990 onwards. The principal objective of the strategy was to make available a range of integrated computing facilities to staff and students throughout the University using an infrastructure of distributed computing based on campus networking. Members comprised of the chairmen of the six Applications Groups, plus a couple of other members nominated by the Management. A standard of measurement in higher education used to group weeks of instructional time in the academic calendar. An academic year contains a minimum of 30 weeks of instructional time. An individual semester provides about 15 weeks of instruction, and full-time enrollment is defined as at least 12 semester hours per term. The academic calendar includes a fall and spring term, and often a summer term.
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APPENDIX Delphic Family Schedule of Deliverables (a) DELPHIC Family Initial Schedule of Deliverables 1990/1991
1991/1992
STUDENT REGISTRATION, FEES, EXAMINATIONS
FULL STUDENT SYSTEM
FINANCE PHASE 1
FINANCE PHASE 2
PAYROLL PACKAGE
PERSONNEL PHASE 2
INTERIM PERSONNEL PACKAGE
RESEARCH AND CONSULTANCY 1
MARCH 1993 MANAGEMENT INFORMATION & ALL SYSTEMS
PHYSICAL RESOURCES PHASES 1,2,3
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212 Stamati, Kanellis, & Martakos
(b) DELPHIC Family Schedule of Deliverables (as at 30.09.1994)
STUDENTS
FINANCE
Module
Applications
Design
System Test
Acceptance Test Signed- Off
Sales Document Input
11/91
2/92
10/92
Purchase Document Input, Budgets & Commitments
11/91
2/92
10/92
Sales & Purchase Ledgers
4/92
3/93 (1)
4/93
Nominal Ledger
2/93
5/93 (1)
(3)
Payroll Integration
1/93
3/93
(2)
Program Structures
5/92
8/92
1/93 (3)
Registrations
11/92
12/92
(3)
Student Finance
10/92
3/93
(3)
Admissions
10/92
3/93
7/94
Assessments
10/92
8/93
(3)
Module
PERSONNEL
PAYROLL RESEARCH PHYSICAL RESOURCES
Applications
Design
System Test
Acceptance Test SignedOff
Degree Conferment
3/93
8/93
(3)
Timetabling
(4)
(4)
(4)
Accommodation
(4)
(4)
(4)
Alumni
(4)
(4)
(4)
Posts, People, Appointments & Organisations
11/91
3/92
6/92
Skills & Recruitment
12/91
7/92
1/93
Absences & Occupational Health, Committees, Reviews
15/1/93
12/3/93
7/93
Superannuation
11/92
3/93
6/94
Integration Stand Alone
-
10/92
(3)
Integrated
6/92
3/93
(3)
Project Application
2/93
3/93 (1)
(3)
Research Projects
2/93
3/93 (1)
(3)
Asset Register & Allocation
10/91
4/92
6/92
Stores Control & Management
10/91
10/92
2/93
Job Progress & Costing
6/92
1/93
3/94
(1) Denotes specific dates agreed by Mantis; (2) Denotes acceptance test failed; (3) Denotes awaited; (4) Denotes not yet contracted
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Chapter XIII
Beyond Knowledge Management: Introducing Learning Management Systems
Audrey Grace, University College Cork, Ireland Tom Butler, University College Cork, Ireland
EXECUTIVE SUMMARY
In the knowledge economy, a firm’s intellectual capital represents the only sustainable source of competitive advantage; accordingly, the ability to learn, and to manage the learning process are key success factors for firms. The knowledge management approach to learning in organizations has achieved limited success, primarily because it has focused on knowledge as a resource rather than on learning as a people process. Many world-class organizations, such as Procter & Gamble, Cisco Systems and Deloitte Consulting, are now employing a new breed of systems known as Learning Management Systems (LMS) to foster and manage learning within their organizations1. This article reports on the deployment of an LMS by a major US multinational, CEM Corporation, and proposes a framework for understanding learning in organizations, which highlights the roles that LMS can play in today’s knowledge-intensive organizations. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
CEM Corporation2 is a world leader in the design, development and manufacture of Internetworking storage IT infrastructures. The company’s core competencies are in networked storage technologies, storage platforms, software, and, also, in services that enable organizations to better and more cost-effectively manage, protect and share information. CEM was founded in 1979 and launched its first product in 1981 — a 64kilobyte integrated circuit memory board developed for the then popular Prime minicomputer platform. CEM’s sales passed the $3 million mark in 1982 and reached $18.8 million two years later. In the mid-1980s, CEM launched a series of memory and storage products that improved performance and capacity for minicomputers made by IBM, HewlettPackard, Wang, and Digital Equipment Corporation. The company went public in April 1986; a year in which sales hit $66.6 million and a net income of $18.6 million was achieved. In the late 1980s, CEM expanded strongly into the auxiliary storage arena, where it remarketed other suppliers’ magnetic disk drive storage subsystems, often coupled with its own controller units. In 1987, the company introduced solid state disk (SSD) storage systems for the mini-computer market and its headquarters moved to Hopkinton, Massachusetts. In 1988, its stock was listed on the New York Stock Exchange and in 1989 CEM accelerated the transition from a supplier of memory enhancement products to a provider of mass storage solutions. In 1997, more than 70% of the company’s engineers were dedicated to software development for mass storage technologies. Software sales rose from $20 million in 1995 to $445 million in 1998, making CEM the fastest growing major software company in the industry sector. In 2001, CEM was named as one of Fortune’s 100 best companies to work for in America. In the same year, the company launched a major new global branding initiative. CEM Corporation’s total consolidated revenue for 2002 was $5.44 billion.
SETTING THE STAGE
From its inception, CEM recognized the importance of learning within the organization: accordingly, it facilitated learning development and support for its employees, including: technical skills; business skills; IT skills; management skills; and individual personal development. Prior to 2000, learning development and support was facilitated through a number of training services, which included: • • • • •
A Corporate University, which provides training throughout CEM, including induction training for new staff, corporate guidelines, professional and project management guidelines, and computer skills. A Professional Global Services Training department, which supports field and sales staff at CEM. A Global Technical Training Department, whose main aim is to address the advancing technologies in the ever-evolving hardware, software products, and support applications and processes. Human Resources Training Centers, which support the soft skill training of managers, supervisors and individual employees. Technical Libraries and Personal Development Libraries.
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A Continuing Education Program, which provides financial support and study leave.
These diverse training services within CEM had, for some time, been successfully delivering training and learning support to a number of distinct areas within the corporation. However, by the year 2000, CEM recognized that it was facing a number of key challenges in relation to its organizational learning processes. These included the following: •
•
•
•
As a large multinational organization with a constantly growing global workforce of 20,000-plus employees, the overall management of the learning of all employees using multiple training organizations was becoming increasingly difficult. In particular, the management of course enrollments, training paths and individual competency levels posed a significant challenge. There was some duplication of effort across many of the training services and a distinct lack of consistency in how training was being developed and delivered. Specifically, there was a lack of coherence in relation to how content was being created and administered. From the point of view of an employee, there was no overall catalogue of courses available that outlined the training or learning programs available from each of the training services. By 2000, the business environment in which CEM Corporation operated was rapidly evolving and becoming more intensely competitive: hence, learning and the management of learning began to play an increasingly critical role in the ongoing success of the organization. Within this context, CEM needed to replace the isolated and fragmented learning programs with a systematic means of assessing and raising competency and performance levels of all employees throughout the organization. In addition, CEM wished to establish itself as an employer of choice by offering its people extensive career planning and development opportunities.
In response to these challenges, CEM decided to implement an enterprise learning solution. The stated business drivers for deploying this enterprise learning solution were to: • • • • • •
Decrease time-to-competency. Develop and manage skill sets for all employees. Leverage global, repeatable and predictable curriculum. Integrate competency assessments with development plans. Accelerate the transfer of knowledge to employees, partners, and customers. Provide a single learning interface for all internal and external users.
CEM went to the market looking for an off-the-shelf corporate-based learning management system (LMS) that could be used to formulate and manage learning across multiple functions within the organization, including: technical functions; business functions; IT professional functions; and management functions. The system would also need to facilitate the delivery and tracking of disparate training programs, including the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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tracking of individual personal development training. Having considered several LMS then available from different vendors, CEM Corporation chose Saba Learning Enterprise™ (see Appendix A for a brief overview of Saba Software Inc.). In February 2001, CEM deployed its enterprise learning solution, incorporating this new LMS to employees across the entire organization as well as to CEM customers and business partners. Based on an exhaustive analysis of previous research in the area and an extensive case study of the deployment and use of Saba Learning Enterprise™ at CEM Corporation, this article proposes a framework that places LMS in context with other categories of IS said to underpin learning in organizations. The framework also highlights the roles that LMS can play in the support and management of learning within knowledge-intensive business enterprises. Thus, it is hoped that this framework will deepen the IS field’s understanding of the contribution of LMS to learning within organizations.
Motivation for the Study Significance of Learning in Organizations The importance of facilitating and managing learning within organizations is well accepted. Zuboff (1988), for example, argues that learning, integration and communication are critical to leveraging employee knowledge; accordingly, she maintains that managers must switch from being drivers of people to being drivers of learning. Harvey and Denton (1999) identify several antecedents that help to explain the rise to prominence of organizational learning, viz. • • • • • •
The shift in the relative importance of factors of production away from capital towards labor, particularly in the case of knowledge workers. The increasing pace of change in the business environment. Wide acceptance of knowledge as a prime source of competitive advantage. The greater demands being placed on all businesses by customers. Increasing dissatisfaction among managers and employees with the traditional “command control” management paradigm. The intensely competitive nature of global business.
Deficiencies in the Knowledge Management Approach During the 1990s, there was a major shift in focus from organizational learning to knowledge management in both applied and theoretical contexts (Alvesson & Kärreman, 2001; Easterby-Smith, Crossan, & Nicolini, 2000; Scarbrough & Swan, 2001). Knowledge management systems (KMS) sought to facilitate the sharing and integration of knowledge (Alavi & Leidner, 1999; Chait, 1999; Garavelli, Gorgoglione, & Scozzi, 2002). However, these systems had limited success (Shultz & Boland, 2000), with reported failure rates of over 80% (Storey & Barnett, 2000). This was because many of them were, for the most part, used to support data and information processing, rather than knowledge management (Borghoff & Pareschi, 1999; Butler, 2003; Garavelli et al., 2002; Hendricks, 2001; Sutton, 2001) and also because many implementations neglected the social, cultural and motivational issues that were critical to their success (Huber, 2001; McDermott, 1999; Schultze & Boland, 2000). Indeed, some argue the knowledge management paradigm may be little more than the latest “fad” to be embraced by the IS field Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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(Butler, 2000; Galliers & Newell, 2001; Swan, Scarborough & Preston, 1999), and its popularity may have been heightened by glossing over complex and intangible aspects of human behavior (Scarborough & Swan, 2001). New Potential Offered by Learning Management Systems It is perhaps time to admit that neither the learning organization concept, which is people oriented and focuses on learning as a process, nor the knowledge management concept, which focuses on knowledge as a resource, can stand alone. These concepts compliment each other, in that the learning process is of no value without an outcome, while knowledge is too intangible, dynamic and contextual to allow it to be managed as a tangible resource (Rowley, 2001). She emphasizes that successful knowledge management needs to couple a concern for systems with an awareness of how organizations learn. Researchers believe that what is needed is to better manage the flow of information through and around the “bottlenecks” of personal attention and learning capacity (Brennan, Funke, & Andersen, 2001; Wagner, 2000) and to design systems where technology services and supports diverse learners and dissimilar learning contexts (McCombs, 2000). In response to these needs, learning management systems (LMS) evolved; accordingly, an increasing number of firms are using such technologies in order to adopt new approaches to learning within their organizations. This new learning management approach has been led primarily by practitioners and IT vendors; as it is a relatively new phenomenon, there is a dearth of empirical research in the area. Therefore, an important challenge for the IS field is to better understand LMS and to examine the role that these new systems play in organizations.
CASE DESCRIPTION Conduct of the Study This case study was conducted over a period of 11 months from October 2002 to August 2003. The LMS in use at CEM is a complex and multifaceted system; hence, it was necessary to first conduct several exploratory interviews with the subject matter expert. Five such site visits occurred over a six-month period and each meeting lasted between one and one and a half hours. This type of elite interviewing (Marshall & Rossman, 1989) is sometimes necessary to investigate little understood phenomena. In one of these sessions, a detailed demonstration of how the system operates was provided by this expert. A second demonstration of the system was subsequently obtained from a training manager within CEM Corporation. This provided the researchers with an understanding of the system’s capabilities and an insight into how the system is used on a day-to-day basis. The human resources manager was also interviewed at this stage. Subsequently, the researcher carried out eight semi-structured interviews with key personnel, including an administrator of the system, a number of employees and managers who use the system, and several training specialists, one of whom had responsibility for knowledge management initiatives at CEM. Appendix B provides an outline of the interview guide used in the semi-structured interviews. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The Enterprise Learning Solution
The Enterprise Learning Solution implemented by CEM Corporation consists of several components, one of which is an LMS called Saba Learning Enterprise™ (Figure 1). Much of the learning material is created and maintained by CEM employees using a range of off-the-shelf products that includes Microsoft Office, Adobe Acrobat and Saba Publisher, while the systems learning content is stored in CEM’s own on-site storage repository. In addition, courseware is created and maintained directly by third parties including KnowledgeNet and Netg, and is stored offsite in the storage repository of both third-party organizations. Employees at CEM manage their own learning processes by accessing the LMS through the Internet. Using the Web, they can enrol in classroom courses; search for learning material; engage in online learning activities; and look at what development options are suitable for their role within the organization. Managers also use the system to administer the employee learning processes; for example, managers can examine the status of the learning activities of their employees; assign learning initiatives to their employees; and generate reports on learning activities. Administrators and training personnel use the system to supervise employee training; for example, they publish and manage learning content; manage a catalogue of courses; and create reports on learning activities. While much of the required reporting is provided by the LMS, administrators also use a third-party software application called Brio to generate more sophisticated reports. The Saba Learning Enterprise™ LMS has the capability of managing and tracking offline activities (e.g., books, “on the job” training, mentoring, classroom training) and online activities (e.g., video and audio, Webcasts, Web-based training, virtual classroom Figure 1: CEM Corporation — Enterprise Learning Solution Components Em ployees
Customers
W eb Application Interface A
Author and M aintain Learning Content (S a b a P u b lis he r, M ic ro so ft O ffice , A d ob e A cro b a t, e tc .)
Partners
W eb Application Interface B
Learning Activities
Video & Audio
Learning Content
Learning M anagement System (S a b a Le a rn ing E n te rpris e™ )
Books Rich Media on Demand (g fo rc e )
Users Functionality - E n ro lm e nts , Tra n sc rip ts , C o m p e te nc ies , D e velo p m e nt P la n s, C u rricu lu m P ath s, Le a rn ing C a ta lo gu e
'on the job' Training W ebcasts (P la c eW a re )
CEM Corporation Learning Content Repository
Third Party Courseware Repository (K n o w le d g e N e t, N e tg )
M anagers Additional Functionality - T e a m S um m a ry, P rofile s, Initia tive s, R e p o rts
Administrators Additional Functionality - C o n te n t M a n a ge m e n t, C a ta lo g ue M a na g e m e nt, R e p o rts
W eb Based Training (K n o w le d g e N e t, H a rvard B u s in e ss O nlin e , T ho m s on )
Virtual Classroom (C e ntra )
Third Party updates to Courseware
Report Generation (B rio )
M entoring
Classroom
Online Testing (Q ue s tio n M a rk)
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training, and rich media). Learning content for online activities may be accessed and delivered through the Web application interface either from CEM’s own learning content repository or from a third party’s storage repository. Certain post-training testing is built into the learning content itself, but additional pre-training testing and post-training testing may be invoked, and this is provided by another third-party product called QuestionMark.
LMS: Toward a Better Understanding
Figure 2 summarizes the case study findings. In this diagram, an empirically tested framework is presented that places LMS in context within a wider topology of the key categories of IS that underpin learning in organizations. Furthermore, the framework describes the principal attributes of each category of IS and highlights the roles that LMS can play in the support and management of learning within an organization. The categories of IS have been segregated into two groups: those that support formal managed learning within the organization, and those that support informal or unmanaged learning. The IS category of LMS is highlighted within the framework to emphasize that this new breed of system is central to the strategic “people oriented” approach to managing learning that is now emerging in many organizations.
LMS: In Context
On one hand, the findings illustrate that CEM found that their new LMS, learning content management systems (LCMS), and learning/training environments all contributed to the process of formal managed learning in the organization. On the other hand, it was clear that informal unmanaged learning within the organization was facilitated through IS that supported ad hoc learning in concert with the extant knowledge management system (KMS). The reason for this situation is that KMS, while supporting knowledge management in a formal way, only support informal learning, as learning is not facilitated in a structured way, nor is it measured or validated by the KMS. In Figure 2, the arrows describe the links that exist from one IS category to another (i.e., LMS, LCMS, KMS, etc.), signifying the interrelationships between them. For example, the case study findings indicate that LMS are fed content directly by LCMS (as illustrated by the solid arrows lines). The LMS Manager elaborated on this: “a link is created in the LMS that contains the address where content is located, either on CEM’s own storage repository or on the third party courseware repository.” The findings also highlighted that LMS have a strong two-way relationship with learning/training environments, as training programs are often initiated from within the LMS and information on the outcome of this training is often captured directly by the LMS. It was clear that LMS had only a tenuous link to other information systems that support ad hoc or informal learning (as illustrated by the broken arrowed lines). In describing this type of linkage, the LMS Manager pointed out that “the link from these systems consists primarily of a need which they generate for formal learning and training programs to be carried out.” He added that “the content for this training will often stem from the IS itself and the type of environment used will, more than likely, be decided by the nature of the system in question.” He indicated that KMS often store information on problems and solutions relating to other systems that support informal learning; hence, there is a tenuous link between these two categories of IS. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 2: Learning in Organizations — Framework Incorporating LMS
Information Systems that Support Learning in Organizations
Formal Managed Learning
Informal Unmanaged Learning
Learning Content Management Systems Roles - Provide learning content repository - Facilitate content authoring - Enable delivery of content - Provide content administration
Learning Management Systems Roles - Support training administration (registration, scheduling, delivery, testing/tracking) - Support diverse learners within diverse learning contexts - Facilitate competence development to meet particular business objectives (top down, bottom up) - Enable cohesive learning throughout the enterprise - Encourage accountability for learning among employees - Enable monitoring and analysis of the 'learning condition' of the organization - Support training planning - Increase learning in the organization - Increase productivity of training - Evaluate individual learning performance - Provide post learning support - Signalling system for changes in the organization
Information Systems Practices that Facilitate Ad Hoc and Informal Learning Roles - Speed up knowledge acquisition - Facilitate information interpretation - Expand information distribution - Facilitate organizational memory Examples - Email / Video Conferencing / Groupware - Decision Support Systems - Management Information Systems - Executive Information Systems - Intranet/Internet Systems - Datawarehouse Systems - Enterprise Resource Planning - Customer Relationship Management
Knowledge Management Systems Roles - Code and share best practices - Create corporate knowledge directories & repositories - Create knowledge networks
Learning / Training Environments Roles - Facilitate training and learning Examples - 'On the job' Training - Mentoring - Classroom based instruction - Synchronous computer assisted instruction (video & audio, rich media on demand, webcasts) - Interactive computer based training (online training, multiple media, hypermedia) - Virtual Learning Environments
Examples - Data mining - Electronic bulliten boards - Discussion forums - Knowledge databases - Expert systems - Workflow Systems
LMS: Key Roles
The framework shown in Figure 2 lists a number of key roles that LMS can play in supporting and managing learning. These roles indicate the dimensions, factors, or variables that future researchers should try to capture when evaluating the roles of LMS. One of the more significant roles listed is that LMS can support the administration of training3 across large organizations with a variety of training needs (Barron, 2000; Brennan et al., 2001; Zeiberg, 2001). A training manager within CEM Corporation Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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commented that “the main role of the LMS is to automate training administration and then to add value.” He also maintained that “with the LMS, the amount of work that you can get through is greater…it improves the efficiency of delivering and managing training.” Thus, the LMS facilitates an increase in the productivity of training. From a learner’s perspective, the principal role of the LMS is that it can provide a central repository for a range of learning material in a structured way that enables the system to support a diverse body of learners within diverse learning contexts (Brennan et al., 2001; McCombs, 2000; Wagner, 2000). As one user of the LMS within CEM Corporation put it, “employees who work in areas of the business can identify their role and cross reference the LMS for recommendations on what training is appropriate for that role…the system also provides guidance with recommended paths through several training courses.” Another user of the LMS emphasized that “before, it was known that the Training Organization facilitated training, but you couldn’t put your finger on something you wanted…now there is a central repository and you can see all the training that is being delivered.” This leads to the most critical role of all, which is that it can increase the degree to which training is utilized and hence, increase learning in the organization. Also, from the perspective of the learner, the research findings identified two other significant and emerging roles of the LMS, which are listed within the framework. The first of these is the provision of post learning support, whereby, as the LMS manager explained, “the LMS enables employees to return to material from a course or download documents associated with a course that they have already completed.” The second emerging role of the LMS is that it acts as a signaling system for changes in the organization. This was highlighted by one user of the system, who holds a software development role within the organization. He argued that “when new training becomes available on the LMS within our area, this normally signals that either new software product features have been released or that software product changes have taken place.” CEM’s LMS also allows for competency mapping and facilitates career development paths. Using the LMS, an employee’s competencies may be assessed using a predefined competency model for their particular job role. Subsequently, a number of development options or learning activities are suggested by the system, which may be carried out by the individual in order to fill any skill gap or competency deficiency for their role type. Thus, the LMS facilitates competence development to meet particular business objectives (see also: Brennan et al., 2001; Hall, 2001). The competency assessment process enables a dual approach to learning management (i.e., top-down and bottom-up). From a top-down perspective, training managers can use the LMS skillassessment process to automate the training needs analysis process, which will assist them in the identification of training needs and will support training planning. Furthermore, from a management perspective, it is possible for a manager to get an overall picture of the competency levels within their department. One technical manager maintained that “although it started as just automation of training needs analysis, managers then saw that they can get a picture of training gaps and competency levels …they can also see overlaps in competencies.” The LMS manager also commented on the bottom-up approach facilitated by the system viz. “self assessment and self directed learning is offered, which has passive approval.” In this context, passive approval means that if an employee registers for a particular course or learning activity, they are automatically approved for that training unless the training is specifically disapproved by their Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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manager within a certain limited time period. In this way, employees are encouraged to self-manage their own learning using the LMS: this has the added benefit of encouraging accountability for learning among employees (see also Hall, 2000). The use of competency models for assessing and developing employee capabilities forms the basis of a number of other evolving roles of the LMS. Through standardizing role-based competency requirements and development options, the LMS can enable more consistent and cohesive learning throughout the enterprise (see also Greenberg, 2002). The LMS manager pointed out that “the status of competencies within the organization may be reported on at a number of different levels, using the LMS.” This enables the monitoring and analysis of the “learning condition” of an organization (see also Nichani, 2001). Furthermore, a department manager described how “the LMS can support a manager in assessing an employee’s role-based competencies and having agreed development plans with that employee, a subsequent competency assessment can help that manager to determine the employee’s ‘learning performance’ in acquiring the new competencies, as per the development plan.” Thus, by reviewing progress between one competency assessment and the next, the evaluation of individual learning performance for an employee is facilitated. This may then form part of the individual’s overall performance evaluation.
CEM Corporation: Overall Benefits of the Enterprise Learning Solution
The deployment of the enterprise learning solution has enabled CEM Corporation to address many of the challenges that it faced in 2000, prior to the system’s implementation. In particular, CEM has achieved the following: •
•
•
•
CEM now has a single enterprise system that supports the administration of all training across the entire organization. From the point of view of the employees, the system provides a centralized mechanism that enables them to search for and to enrol in selected courses or training programs; it also offers guidance on recommended training paths and curriculums. Furthermore, the competency assessment facility enables employees to determine and rectify competency gaps as well as providing management at CEM with a means of monitoring and managing overall employee competency levels within the organization. The enterprise learning solution supports all training content whatever its subject matter or form and enables the management and control of access to this content using one system. This has the added advantage of highlighting duplication of training material in different parts of the organization and paves the way for streamlining the efforts of different training services within the company. The flexibility and dynamic nature of the system allows CEM Corporation to unilaterally introduce and to quickly implement new training requirements across the organization in response to changing business needs or new technical advances. The Saba Learning Enterprise™ LMS may help to attract or retain key personnel by offering them a unique opportunity to monitor and develop their competencies and to manage their careers within the organization.
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CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
As outlined earlier, CEM Corporation is a hi-tech organization that operates in a very competitive and dynamic business environment. Managing learning and measuring learning outcomes are in themselves difficult tasks, but they are made even more problematic within complex learning domains, such as those that exist at CEM. It is unlikely that the LMS will enable the full management of all of the learning in the organization in a truly scientific way, though it will assist greatly in managing the diverse and extensive array of learning contexts and learning processes that must be supported. The system’s strengths lie in the new approach and attitude that it will encourage and inspire in the hearts and minds of individuals within the organization, as it enables learning that is highly visible, structured, and more accessible within the organization. This stimulation of the hearts and minds is a major contributing factor to learning and is known as “emotional quotient” (Goleman, 1996). Having deployed the enterprise learning solution, CEM Corporation now faces a number of key challenges. These are outlined next:
Control vs. Creativity: Managing the Delicate Balance
The findings of this case study demonstrate that CEM’s new LMS can play a vital role in increasing learning within across the organization. This will be achieved by improving the control and management of employee competency levels, and also by empowering employees to be creative in managing their own learning and competency development. Thus, the key challenge for management at CEM is to increase their influence and control over training and learning within the organization, while at the same time increasing employee commitment to managing their ongoing self-development by taking responsibility for improving their knowledge of the business and building related competencies. These objectives are delicately balanced and must therefore be handled carefully. Too much control may de-motivate employees and discourage them from engaging with the system, but at the same time, enough control must be exerted to ensure that employees are developing competencies that support the day-to-day operational requirements of the organization, as well as being in sync with the overall goals and objectives of the company.
Exploiting the Benefits of the LMS: Incorporating all Training & Learning
Another key challenge presently facing CEM Corporation is that they have a long way to go before all of the benefits offered by their new LMS can be fully exploited. Not all formal training is currently being tracked and managed through the LMS and some departments independently organize their own training outside of the system. One engineer argued that “there doesn’t appear to be a large amount of suitable training available for our department.” The benefits offered by this enterprise learning solution will not be fully realized until sufficient training or learning programs are offered to all employees in all departments within the organization. Furthermore, while it is possible to take certain online training directly through the Internet, it is not possible to track or Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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manage associated learning outcomes, as this training is initiated and completed outside of the LMS, and is not currently recorded by it. It is understandable that it will take some time to incorporate every training program for all employees onto the system, but it is critical that this is achieved as quickly and efficiently as possible, to ensure support for the system and ongoing use of the system across the entire organization.
Drawing Up Competency Models for All Employees
Role-based competency models have not yet been drawn up for all roles within the organization. As the LMS Manager pointed out, “there is difficulty in having accurate competency models for all roles when there is such a vast array of diverse technical positions.” He added that “as you drill down, you find that there are a lot of specialist functional competencies and you get into the ROI question…because there is such a large investment in time and effort involved in devising competency models for all technical roles, it has to be driven by the local business needs”. Competency assessments are instrumental to determining if positive learning outcomes have been achieved and they will also demonstrate if the organization is obtaining a return on its investment in implementing and deploying the LMS. Furthermore, competency assessments offer management at CEM an opportunity to identify and rectify gaps or overlaps in competency levels as well as providing a means of assessing and managing overall competency levels within the organization. CEM Corporation is now faced with the daunting task of drawing up and maintaining competency models for the vast array of role types of its 20,000-plus employees, many of whom work in dynamic and highly technical areas.
Managing the Competency Assessment Process
Even where competency models are available, the study revealed that the process of self-management of career development has, for the most part, not yet been taken up within the organization. Moreover, many employees, and indeed managers, have not yet engaged with the competency assessment process. A structured plan or roadmap needs to be formulated in conjunction with local business needs for the formal migration of all employees onto the system for competency assessment and competency development planning to take place.
Fully Mobilizing the LMS within the Organization
One manager observed that “many employees still feel that the system is primarily designed for course registration and the other elements of the system may need to be emphasized more internally.” Another user of the LMS argued that “although the initial rollout of the LMS seems to have been good and although there is a growing awareness of the system, people still have not got to grips with using it.” The challenge facing CEM Corporation is to raise internal awareness of the functions and capabilities that are now provided by the LMS, and to educate the employees on how these functions and features operate. This education program needs to address cultural issues, as well as dealing with the fears and anxieties that employees may have in relation to the use of the system. This finding was supported by one manager who noted that “some employees may fear that if they use the system to log their competencies, their career may be negatively affected.”
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CEM Corporation needs to encourage the active participation of senior management in the mobilization of the LMS and perhaps consider the appointment of an overall champion for the initiative at senior management level. This chief learning officer4 could promote the utilization of the system at a senior level within the business units and ensure that any synergies that exist between them are exploited. Finally, a number of managers felt that CEM needs to publicize and promote the benefits of engaging with the LMS and find ways of formalizing and integrating this novel strategic learning management system with extant business processes and work practices.
REFERENCES
Alavi, M., & Leidner, D. (1999). Knowledge management systems: Issues, challenges and benefits. Communications of the Association of Information Systems, 1(2). Alvesson, M., & Kärreman, D. (2001). Odd couple: Making sense of the curious concept of knowledge management. Journal of Management Studies, 38(7), 995-1018. Barron, T. (2000). The LMS guess. Learning Circuits, American Society for Training and Development. Online: http://www.learningcircuits.org/2000/apr2000/ barron.html Borghoff, U.M., & Pareschi, R. (1999). Information Technology for Knowledge Management. Heidelberg: Springer-Verlag. Brennan, M., Funke, S., & Andersen, C. (2001). The learning content management system: A new elearning market segment emerges. IDC White Paper. Online: http:/ /www.lcmscouncil.org/resources.html Butler, T. (2000, August 10-13). Making sense of knowledge: A constructivist viewpoint. Proceedings of the Americas Conference on Information Systems, Long Beach, CA (vol. II, pp. 1462-1467). Butler, T. (2003). From data to knowledge and back again: Understanding the limitations of KMS. Knowledge and Process Management: The Journal of Corporate Transformation, 10(4), 144-155. Chait, L.P. (1999). Creating a successful knowledge management system. Journal of Business Strategy, 20(2), 23-26. Easterby-Smith, M., Crossan, M., & Nicolini, D. (2000). Organizational learning: Debates past, present and future. Journal of Management Studies, 37(6), 783-796. Galliers, R., & Newell, S. (2001, June 27-29). Back to the future: From knowledge management to data management. Global Co-Operation in the New Millennium, 9th European Conference on Information Systems, Bled, Slovenia (pp. 609-615). Garavelli, A.C., Gorgoglione, M., & Scozzi, B. (2002). Managing knowledge transfer by knowledge technologies. Technovation, 22, 269-279. Goleman, D. (1996). Emotional Intelligence. London: Bloomsbury Publishing. Greenberg, L. (2002). LMS and LCMS: What’s the difference? Learning Circuits, American Society for Training and Development. Online: http:// www.learningcircuits.org/2002/dec2002/greenberg.htm Hall, B. (n.d.). Learning Management Systems 2001. CA: brandon-hall.com. Harvey, C., & Denton, J. (1999). To come of age: Antecedents of organizational learning. Journal of Management Studies, 37(7), 897-918.
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Hendriks, P.H. (2001). Many rivers to cross: From ICT to knowledge management systems. Journal of Information Technology, 16(2), 57-72. Huber, G.P. (2001). Transfer of knowledge in knowledge management systems: Unexplored issues and suggestions. European Journal of Information Systems, 10(2), 72-79. Marshall, C., & Rossman, B.G. (1989). Designing Qualitative Research. CA: Sage. McCombs, B.L. (2000). Assessing the role of educational technology in the teaching and learning process: A learner centered perspective. The Secretary’s Conference on Educational Technology, US Department of Education. Online: http://www.ed.gov/ rschstat/eval/tech/techconf00/mccombs_paper.html McDermott, R. (1999). Why information technology inspired, but cannot deliver knowledge management. California Management Review, 41(4), 103-117. Nichani, M. (2001). LCM S = LMS + CMS [RLOs]. Online: http://www.elearningpost.com/ features/archives/001022.asp Rowley, J. (2001). Knowledge management in pursuit of learning: The learning with knowledge cycle. Journal of Information Science, 27(4), 227-237. Scarbrough, H., & Swan, J. (2001). Explaining the diffusion of knowledge management: The role of fashion. British Journal of Management, 12, 3-12. Schultze, U., & Boland, R.J. (2000). Knowledge management technology and the reproduction of knowledge work practices. Journal of Strategic Information Systems, 9(2-3), 193-212. Storey, J., & Barnett, E. (2000). Knowledge management initiatives: Learning from failure. Journal of Knowledge Management, 4, 145-156. Sutton, D.C. (2001). What is knowledge and can it be managed? European Journal of Information Systems, 10(2), 80-88. Swan, J., Scarbrough, J., & Preston, J. (1999, June 23-25). Knowledge management — The next fad to forget people. In J. Pries-Heje et al. (Eds.), Edition Proceedings of the 7th European Conference on Information Systems, Copenhagen, Denmark (vol. III, pp. 668-678). Wagner, E.D. (2000). E-learning: Where cognitive strategies, knowledge management, and information technology converge. Learning without limits (vol. 3). CA: Informania Inc. Online: http://www.learnativity.com/download/LwoL3.pdf Zeiberg, C. (2001). Ten steps to successfully selecting a learning management system. In L. Kent, M. Flanagan, & C. Hedrick (Eds.). Online: http://www.lguide.com/ reports Zuboff, S. (1988). In the Age of the Smart Machine: The Future of Work and Power. New York: Basic Books.
ADDITIONAL RESOURCES
The following is a list of other resources that may be relevant for obtaining additional information related to the case: Alavi, M., & Leidner D. (2001). Research commentary: Technology mediated learning — A call for greater depth and breadth of research. Information Systems Research, 12(1), 1-10. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Aldrich, C. (2001). Can LMSs survive the sophisticated buyer? Learning Circuits, American Society for Training and Development. Online: http:// www.learningcircuits.org/2001/nov2001/ttools.html Broadbent, B. (2002). Selecting a Learning Management System. Brown, J., & Duguid, P. (1998). Organizing knowledge. California Management Review, 40(3), 90-111. Evangelisti, D. (2002). The must-have features of an LMS. Learning Circuits, American Society for Training and Development. Online: http://www.learningcircuits.org/ 2002/mar2002/evangelisti.html Hall, B. (2003). LMS 2003: Comparison of Enterprise Learning Management Systems. CA: bandon-hall.com. Hodgins, W., & Conner, M. (2002). Learning objects and learning standards. IEEE Learning Objects Groups Overview. Online: http://www.learnativity.com/ standards.html Lennox, D. (2001). Managing knowledge with learning objects. A WBT Systems White Paper. Online: http://www.wbtsystems.com/news/whitepapers
ENDNOTES
1 2
3
4
http://www.saba.com/english/customers/index.htm For reasons of confidentiality, the organization on which this case study is based cannot be identified; it will be referred to as CEM Corporation throughout the document. Bold text within this section indicates that this is a role fulfilled by the learning management system. Akin to a chief information officer (CIO) or chief knowledge officer (CKO).
APPENDIX A Saba Software Inc. Overview
Founded in 1997, Saba Software Inc. (quoted on the NASDAQ stock exchange as SABAD) is a global company headquartered in Redwood Shores, California, and is a leading provider of Human Capital Development and Management (HCDM) solutions. The Saba vision is to make it possible for every enterprise to manage its human capital by bringing together learning, performance, content and resource management in a holistic, seamless way. To satisfy this vision, Saba offers two key products sets, namely, its “Enterprise Learning Suite” and “Saba Performance”. “Saba Learning” is an Internetbased learning management system within the Enterprise Learning Suite that automates many of the learning processes for both learners and learning providers. Table A(1) lists some of Saba Software’s major customers.
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Table A(1): Saba Software Incorporated — Major Customers Business Area High Tech Telecommunications Professional Services Financial and Insurance Services Government Life Science Automotive Transportation Energy Manufacturing and Distribution Consumer Goods and Retail Distribution
Customers Cisco Systems, Cypress, EMC2, Xilinx, i2 Technologies, VERITAS Software ALCTEL, Telecom Italia, CENTEC, Lucent Technologies Kendle International, Deloitte & Touche, EDS, Bearing Point (Formerly KPMG) ABN Amro, Royal & Sun Alliance, Scotiabank, Principal Financial Group, BPM, Standard Chartered, Wells Fargo United States of America Department of the Army, Distributed Learning Services, LearnDirect Scotland Aventis, Novartis, Procter & Gamble, Medtronic Ford Motor Company, General Motors, Daimler Chrysler Continental Airlines, BAA Duke Energy, Energy Australia Caterpillar, Cemex, Grainger. Best Buy, Kinkos
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APPENDIX B What are the roles of the LMS in managing learning within the organization? 1.1
Does LMS support training administration? - registration - scheduling - delivery - testing - tracking/reporting of individual learning
1.2
Does LMS support diverse learners within diverse learning contexts? - large number of learners - diverse learning contexts - online and offline learning
1.3
Does LMS facilitate competence development to meet particular business objectives? - skills specification needed to fulfil particular objective - skills assessment to establish gap in learning - recommended learning to fill identified gap in learning
1.4
Does LMS enable cohesive learning throughout the enterprise? - learning development plan for organization - learning plan for individuals in sync with overall learning plan
1.5
Does LMS encourage accountability for learning among employees? - self-service learning - self-planning and self-assessment of career development
1.6
Does LMS enable monitoring and analysis of “learning condition” within the organization? - overall picture of competencies within the organization - overall picture of learning achieved in organization - overall picture of learning required within the organization
1.7
What are the other key roles/attributes of the LMS? - provision of any content authoring - provision of any content management - provision of any knowledge management - synchronization with HR system - provision of post-learning support - adherence to learning content standards - integration of incompatible systems for learning management - support for large range of third-party courseware - other
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What is the relationship between the LMS and other IS that support learning? 2.1
What types of learning/training environments are used in EMC and how does LMS incorporate them? - classroom - onsite - offsite - computer-based instruction (video and synchronous training programs) - computer-based training (interactive online training) - multiple media - hyper media - virtual learning environments (instructor led) - other
2.2
What knowledge management systems are used in EMC and how does the LMS Incorporate them? - coding and sharing of best practices (e.g., knowledge databases) - corporate knowledge directories and repositories (e.g., data mining, expert systems) - creation of knowledge networks (e.g., electronic bulletin boards, discussion forums) - other
2.3
What content management systems are used in EMC and what functionality do they provide to LMS? - provide learning object repository - facilitate content authoring - enable delivery of content - provide content administration - other
2.4
Is there any relationship between LMS and other IS that facilitate ad hoc or informal learning? - e-mail - video conferencing - groupware - decision support systems - management information systems - executive information systems - Internet/intranet systems - data warehousing systems - enterprise resource planning systems - customer relationship management systems - other
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Chapter XIV
A Case of Information Systems Pre-Implementation Failure:
Pitfalls of Overlooking the Key Stakeholders’ Interests Christoph Schneider, Washington State University, USA Suprateek Sarker, Washington State University, USA
EXECUTIVE SUMMARY
This case study examines an often overlooked context of information system failures, that of pre-implementation failure. It focuses on an Information Systems Development (ISD) project at a large public university that failed even before implementation could get under way. Specifically, it describes the vendor selection process of a proposed computerized maintenance management system. While the managers in charge of the project took great care to avoid commonly discussed types of information systems failures by emphasizing user involvement and trying to select the best possible system they could afford, non-functional requirements, procedures as outlined in the RFP, and the roles of relevant but relatively “hidden” decision makers during the preimplementation stage of the project were overlooked. This led to the termination of the project after an appeal was lodged by a software vendor whose product had not been selected for implementation. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
UMaint is the maintenance department of a large public university (BigU1) in the northwest of the United States. Currently, about 18,000 students are enrolled at BigU, a large proportion of whom reside on-campus. This makes BigU’s main campus one of the largest residential campuses in the Pacific Northwest. In addition to the student body, about 7,000 faculty and staff work on campus. UMaint’s employees are responsible for the maintenance of BigU, the campus area of which encompasses more than 400 buildings and over 1,930 acres of land. In a typical year, UMaint handles approximately 60,000 service calls, and schedules and completes 70,000 preventive maintenance projects for 69,000 pieces of equipment. The primary departments of UMaint are Architectural, Engineering, and Construction Services, Utility Services, Custodial Services, and Maintenance Services. These departments are supported by UMaint’s Administrative Services. Architectural, Engineering, and Construction Services are involved in all new construction projects as well as all modifications to existing facilities. The Utility Services department operates the university’s power plant and is responsible for providing utilities such as steam, electricity, and water. Custodial Services, UMaint’s largest department, handles the custodial work for all buildings and public areas on campus. Maintenance Services is divided into environmental operations, life safety and electronics, plant maintenance and repair, and operations, and is responsible for the upkeep of the university’s buildings and facilities. The Administrative Services department encompasses units such as operational accounting, personnel and payroll, storeroom, plant services (including motor pool, heavy equipment, trucking and waste, and incinerator operations), and management information systems. This department handles all supporting activities needed to coordinate and facilitate UMaint’s primary activities. Overall, more than 450 employees work for UMaint in order to support the university’s operations. Please refer to Appendix A for the organizational chart of UMaint.
SETTING THE STAGE
The major challenges faced by UMaint arose from the state’s tight budget situation and increased competition from outside service suppliers. In order to deal with these challenges, UMaint had to constantly strive to reduce costs and streamline operations. One major obstacle to providing services efficiently and effectively, as is the case in many universities and even business organizations, was UMaint’s outdated information systems infrastructure. This infrastructure consisted primarily of an outdated mainframe, in which the applications were written in Natural and the databases were hosted in ADABAS. Administrative functions were conducted using form-based systems that had been developed in-house. Over the years, the systems had grown with the needs of UMaint. In the absence of an information systems (IS) department that was internal (or dedicated) to the needs of UMaint, the growth of the systems in this area has been rather uncontrolled, leading to a variety of different applications, the majority of which were incompatible with one another. In order to perform accounting, inventory management, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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maintenance, and project development functions, the employees had to work with over 100 different databases. This situation led to a huge paper trail, the need for multiple paper copies of documents and considerable redundancy of work, which in turn resulted in the lack of data integrity, a major hindrance to efficient operations. As one manager explained “… [UMaint has] someone three cubicles down from another person replicating the same work, unnecessarily.”2 In the mid-1990’s, UMaint’s director and departmental managers (hereafter referred to as top management) decided to implement a computerized maintenance management system (CMMS) in order to consolidate the legacy applications into one integrative system. With this, UMaint hoped to be able to provide more efficient and higher quality service, obtain more timely and accurate information for top management, and reduce costs for the customers by eliminating the need for multiple data entry and simultaneously reducing the potential for errors associated with the maintenance business processes. Additional goals were to increase the accountability of the organization as well as to better maintain the university’s facilities. Appendix B displays typical features of a CMMS. In order to achieve these goals, UMaint formed an implementation team consisting of employees representing different levels of the organization. These were charged with initiating the CMMS project. In the first stage, the primary task was to gather information about different CMMS vendors. As the members of the implementation team conducted all project-related activities in addition to their regular tasks, many of them spent additional hours in the evenings to work on the CMMS project, often leading to dissatisfaction among the project team-members. Unfortunately, the personal sacrifices of the team-members proved to be in vain, since shortly thereafter, work on the project was halted due to lack of adequate funds. A timeline of the events is shown in Appendix C. The idea of introducing a CMMS however was never completely abandoned. In the year 2000 (after the Y2K crisis never materialized), top management again decided to make a renewed commitment to implementing a CMMS. After a new president had been hired to take on leadership of BigU, a new strategic plan was set up for the entire university; one of the goals was to “create a shared commitment to quality in all … activities”, which included to “develop strategies that foster a university culture dedicated to adopting and extending best practices that promote an ongoing commitment to continuous improvement”. As this goal was closely linked to the services of UMaint, Jack, the director of UMaint, was invited to be a member of the implementation team for this goal. Since Jack had been with BigU for a long time, he therefore enjoys high credibility and good relationships with higher management, but as in most large institutions, he is constrained by his budget and the strategic goals of BigU. With the introduction of a CMMS, UMaint would clearly help BigU in achieving this goal, thus, funding seemed much more likely, and consequently, an internal IS department responsible for providing information services and technical support for UMaint’s information systems was created. The IS department was also charged with the project of implementing the computerized maintenance management system. Currently, the information systems department consists of an Information Systems Manager (“Frank”) and two Computer Systems Administrators, in addition to several computer-savvy college students serving as Support Staff. Top management was very excited about the project and had a good grasp on the project’s potential implications for the organization, a factor that would help in the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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selection process (West & Shields, 1998). Specifically, Jack (the director of UMaint) strongly believed that “the selection of a CMMS will affect the way [UMaint does] business for the next 10 years.” In addition to serving UMaint, the CMMS was supposed to serve BigU’s housing department and Central Stores. University Housing would use the system to support all maintenance related aspects of their operations, as well as to manage its warehouse, and Central Stores would use the system for all procurement-related activities. Several other departments played a role in the process as well; for example, the university’s Budget Office allocated the funds for the project and was hence involved in the purchasing process. As the total amount budgeted for the purchase of the CMMS exceeded $2,500, the acquisition had to be made through the university’s Purchasing Department in the form of a bidding process; furthermore, due to the administrative, rather than academic or research related nature of the project and the fact that BigU is a state university, unsuccessful bidders had the option of filing a protest with the state’s Department of Information Services (DIS) after the announcement of the final decision. The DIS had the authority to review and override any decisions made by UMaint. Furthermore, acting as an outside consultant (Piturro, 1999), the university’s IS department provided guidance to UMaint’s IS department during the selection process. Please refer to Appendix D for a diagram displaying how UMaint fits into the university’s structure; Appendix E shows the major stakeholders of the proposed system. Given that upper administration was well aware of the large impact the system would have, everyone agreed to implement and routinize the “best possible alternative” for the proposed system. Due to the limited resources, developing an integrated system inhouse was not seen to be feasible. Therefore, it was decided to purchase a system from an outside vendor. Even though highly customized solutions can be problematic in the long run (Ragowsky & Stern, 1995), both off-the-shelf packages and solutions specifically designed for UMaint by interested vendors were considered.
CASE DESCRIPTION
In the practitioner literature, there has been a limited number of articles on software vendor selection processes; most of these articles have offered somewhat simplistic implementation guidelines such as having sufficient human resources, securing commitment by top management, conducting site visits, or being aware of possible problems associated with customized software (e.g., Ciotti, 1988; Piturro, 1999; Ragowsky & Stern, 1995; West & Shields, 1998). In addition, few academic IS researchers have directed attention to critically examining the process of software vendor selection; consequently, normative rational processes (Howcroft & Light, 2002) are seen to guide systems acquisition initiatives (Please refer to Appendix F for a model of the software vendor selection process). Even fewer have empirically studied the vendor selection process (e.g., Gustin, Daugherty, & Ellinger, 1997; Howcroft & Light, 2002; Lucas, Jr. & Spitler, 2000; Weber, Current, & Benton, 1991). A recent meta-analysis found that in information systems development process, user participation can influence IS success (e.g., Hwang & Thorn, 1999). Consistent with these findings, noted researchers such as Land (1982) have explained that in the software vendor selection process, user input is seen as an important step in determining business needs, which is fundamental to implementing a Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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successful system. According to Land (1982), user participation can be consultative, democratic, or responsible, where responsible participation implies the greatest influence on the part of the users. At UMaint, one of the first steps in the vendor selection process was to inquire about experiences with a CMMS implementation at similar institutions. Frank briefly described the experiences other universities had: I talked to a lot of schools [that had] been through [this process], read a lot of implementations, and saw where the weaknesses were; the weaknesses were people not getting involved, I spent some time over at [WesternU], looking at them and their implementation, and one of the biggest regrets and problems was they didn’t get people involved. Just a few years ago, WesternU, another large university in the Northwest region of the US went through a similar process and faced severe implementation problems, partly due to lack of stakeholder involvement with the project from the very beginning. On talking to WesternU, Frank found out that: …they went through this a couple of years ago, and have a vendor and have implemented it and are still in partial implementation, and they said the biggest problem that they had is when they went to train people and so many people down at the very lowest level claiming not to know what is going on, or not to be happy with the system. Knowing about the beneficial effects of user involvement (Hwang & Thorn, 1999; Land, 1982; Schwab & Kallman, 1991), top management tried to involve their employees from the initiation stages of the project. Joan (the Assistant Director for Administrative Services) recognized the fact that it would be impossible to involve all employees directly; therefore, she strived to inform as many people as possible, rather than ensure direct participation from every employee: We obviously selected a core group to work on it because every one of 400 people can’t be involved…I’m not sure if they have the need to say vendor A is better than C or D or E, it’s more the idea that, okay, it’s going to change what I do, am I comfortable with that idea and then as far as which vendor we choose, they’re going to have to learn something new, no matter what. So it’s more trying to get them the information… them knowing about it, knowing that it’s coming, and giving input where they can. But it’s…it’s very specific what they’re going to be doing, and I think it’s really important for them to know that it’s happening and feel comfortable with the idea. Therefore, committees were formed in order to involve people from all departments. The Executive Committee was responsible for making the formal decisions while the CMMS Evaluation Team was heavily involved in ranking and scoring the different vendors. In addition to these committees, process teams were created; these were charged with analyzing the workflows in different areas such as accounting, human resources, scheduling, preventive maintenance, or engineering and design. The Executive Committee consisted of UMaint’s Director, his two assistants, and the IS manager. Members of Central Stores and University Housing were only represented in the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Evaluation Team. In fact, the CMMS Evaluation Team included members of every department of UMaint, with members being nominated by their respective department heads. Of the 51 members, 16 were managers/directors, 18 were supervisors/leads, and 17 were line employees. The process teams consisted of line employees as well as managers. To ensure adequate say of individuals who actually get the work done, several teams were led by line employees. A requirement from the beginning was that “every supervisor, every manager has to be involved.” The committee members were expected to “involve all of their people in some way.” In this way, the project leadership hoped to have as many people as possible participating in the selection process. The implementation of the CMMS was planned in three stages. The first stage involved the request for proposal (RFP) process; the second stage consisted of the decision-making process, and the third stage, the actual implementation. During the RFP process, the different process teams had to analyze the various business functions. This phase was not completed as smoothly as expected, since some of the groups did not put in the necessary effort. This was seen as a big concern during the RFP process when: …every area that was going to be involved was requested to go out and say what’s important to them. And that’s where they didn’t participate as fully as maybe another group. Some groups did an excellent job of saying I need this, this, this, this, this. And this is the ranking, this is what we need, this is what we’ve got to have, this is what would be nice. And we may have had…I think it is mainly one area that just kind of didn’t do that very well. And I guess how that will be affected as if they, after we’ve chosen, come and say, oh, I’ve got to have this…well, you didn’t have it in the RFP, we, I, can’t know what’s important for you. So that would probably… and laziness maybe is a bad word, but I think that’s…they’re just not choosing their priorities. Some people realize just how important the process was and some don’t realize it... and may be impacted. As the IS group was concerned with choosing the best possible system for the organization, its members decided to start analyzing the business functions themselves. This helped the groups to get started in the RFP process. Frank described his experience with the process as follows: [We] charged all the groups to come up with [the business functions]; that didn’t work out too well, the groups really didn’t do a good job putting it together, so what happened was, we put them together. Our group did all of them and then what we did, we took ‘em back to the groups and said okay, here’s the storeroom piece, here is what we think is your function, but we’re the wireheads, we’re not the workers, we don’t know their business, but from working with them, and doing what we have been doing up to this point, we felt we could at least get the ball rolling. Having started the process, the IS group saw some improvement in participation, and most of the groups seemed more actively engaged in the RFP process: …so we gave them basically something to react to. And that helped a lot. Then people started coming up with a lot of ideas, a lot of changes, and we started getting more Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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participation that way…. These folks really struggled with coming up with something on their own. Participation was not seen as mandatory by top management, therefore, the CMMS Decision Team tried to motivate the employees to participate as much as possible. However, they also had the option to exercise power in order to get things done. Since UMaint’s executive director was a big supporter of the CMMS project, Frank (the IS manager) mentioned that: I also have an ace in the hole with the director, who’s willing to come at any point and lay the hammer down if somebody don’t do what we need them to. We don’t do that unless we have to, but if we get into that situation where there’s a work group or a person who’s simply just not going to pull their share. We’re trying to work with them and we’re trying to motivate them, and get ‘em excited and get their involvement, but otherwise, we just have to take it to another level if it is too critical. It’s a big project. Finally, the mandatory and desirable requirements were put together and the RFP was deemed acceptable by the state’s Department of Information Services after a few minor revisions. According to the RFP (please refer to Appendix G for the required structure of the proposals), three vendors were supposed to be invited to conduct onsite product demonstrations. In regards to the requirements, the RFP stated that the proposed CMMS system had to be able to integrate the large number of databases currently used to manage accounting, maintenance, inventory, and project development needs. Furthermore, Microsoft Project Server 2002, Sharepoint Portal and Team Services, as well as several Access Data Projects needed to be integrated into the proposed system. As UMaint already had an existing information systems infrastructure consisting of more than 130 workstations running a combination of Windows NT 4.0, Windows 2000 professional and Windows XP operating systems, no substantial changes in client hardware were desired; however, if additional hardware such as servers would be needed for the implementation, this would have to be covered by the budget initially allocated to the project. Furthermore, it was expected that the vendors’ systems would be compatible with the operating systems of the existing workstations. Finally, it was not anticipated to allocate human resources in addition to the IS department’s current staff to the support of the CMMS system. While certain non-functional requirements,3 such as security of the transactions or scalability of the database, were considered to be important factors, a proven track record of successful implementations was considered more important than a system using the newest technologies. Using the mandatory functional requirements, such as the ability to track the status of each shop assignment, request materials for a work order from a “Materials Management” module, trigger notices to responsible persons for potential problems with contract processes, or track equipment maintenance labor history, the executive committee was able to screen out a large number of vendors that initially had responded to the RFP, bringing down the number of potential vendors to six. Following recommendations provided in the practitioner literature (e.g., Raouf, Ali, & Duffuaa, 1993; Weber et al., 1991), these vendors were scored by the CMMS Evaluation Team according to the CMMS Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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requirements, technical requirements and capabilities, and vendor qualifications. Initially, only one bidder provided the required cost proposal (which did not comply with the RFP), hence it was decided to eliminate this criterion in this stage of the process and to reassign the weights of the remaining criteria. Based on a comparison of the summary scores, four vendors were invited to present their products to the CMMS Evaluation Team according to a scripted scenario. The attendees at the demonstrations had the opportunity to score each vendor’s product using a standardized scoring package. The scores given were to be used during the final decision-making; at this point, the vendors that were invited to present their products were asked to re-submit their cost proposals. In addition to helping with the selection, giving the attendants of the vendor demonstrations the opportunity to score the products was seen as a good way to involve people and to get their “buy in”. Most members of the executive committee believed that many employees “just want to be involved, just want to be important,” no matter “if things go their way or not.” According to Joan, the scoring could be compared to voting, where everyone’s vote counts. However, in contrast to management’s beliefs, many members of the process teams felt that their input did not count at all, which led to dissatisfaction with the process. Furthermore, some areas felt “shortchanged” during the vendor demonstrations, having felt that their area has not been considered enough during the demonstrations. Another factor adding to the dissatisfaction with the decision process was a lack of feedback from top management. One administrative employee complained: …they had us do all kinds of stuff. You know, questions we needed to ask, how everything flows, how it needs to be done…. I’m just a little nervous because … we put a lot of input in, but we didn’t get much information back, or how it would affect us. Even though the process team members were intended to funnel down the information, the information flow did not take place as expected; indeed, many employees did not receive much information about the proposed system. This problem was of great concern to upper management, as information sharing was seen as critical to the success of the process. Frank stated: And one of the biggest challenges this place has is the information distribution. The information does not go from the top to the bottom. The manager hears it at a Tuesday manager meeting; it may be six months until the employee hears it. It’s really embarrassing, but it happens a lot around here. With a project of this magnitude and complexity, you can’t do that. The information has to reach everybody at every time. So one of the tasks for us was, how do we get information out. So we developed the project information site…. The project Web site was developed to provide access to announcements about the status of the vendor selection, vendor scores and rankings, background information about the vendors, and the like. Even though the Web site was seen as pretty effective by the IS group, it did not help to effectively spread the information throughout the entire organization, as the Web site was only accessible to CMMS Evaluation Team members and Executive Committee members. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Since the IS team was in charge of the CMMS project, meetings with line employees were set up in order to provide them with information and solicit feedback. Nevertheless, many employees were unaware of the proposed system’s impact on their work. Generally, they saw “other” departments as being impacted to a greater extent, and did not anticipate their own day-to-day responsibilities to change much. Many employees regarded the CMMS as a tool for the higher echelons of administration. This led to a lack of interest in participating in the decision process, which thereafter translated to the perception that their departments had been left out of the process. For example, an employee mentioned: …I don’t know how it will really affect me, unless they would get a couple of modules that would really help out back here. It’s my understanding that they’re just doing administration modules…. I do know that administration, at the other end of this building, had a lot of input…. I don’t know that it will probably help us at this point. (emphasis added) Antagonism between departments added to such perceptions. As the criteria established for the vendor selection process were viewed as relatively inflexible and determined a priori , many employees saw their area as “covered,” and did not see the point of providing additional input into the decision process, many hoping that the IS department, consisting of acknowledged experts, would select the right system for them. One employee, for example, stated that “our info tech group… they do have the knowledge to make something run right and I don’t.” The information systems department was well aware of its power arising from the myths of their expertise and magic representing systems professionals as “high priests” (Hirschheim & Klein, 1989; Hirschheim & Newman, 1991) to influence decisions of nonIT employees in UMaint. However, it consciously tried to limit the extent of influence IS professionals would have on the decision process: …we didn’t want to influence anyone’s decision. … this isn’t supposed to be about us … this is about their achievement, this is their product in the end, we’re just charged with implementing it. They’re the ones who gonna have to use it every day and live with it. We wanted it to be about them, and that’s why we’ve been so big about having their involvement…. Nevertheless, being in such an influential position, the IS manager noticed the benefits of being able to influence people’s decision, as he was trying to choose the most adequate system for the organization: …in many ways, we put our hands on the wheel. Because we basically had to come to a decision that works. Everybody, they’re just gonna do whatever we say. So we better make sure that what we’re saying is really what is the greatest good for everyone … and that’s one thing that has been very confident for us that we have always been striving for the absolute biggest bang for the buck…. Whatever we could get. The most we could do.
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Finally, a decision was made by the Executive Committee based on a number of criteria, which included the weighted scores, reference calls conducted by evaluation team members, and finally, consideration of the budget. Before the final decision was made, an informal vote (that would not influence the final decision) was held. Interestingly, the selection made was not consistent with the results of the vote. The vendor that ranked first in the informal vote was not considered for selection, since its product did not meet the budget criteria. The vendor that ranked second had the newest technology and offered a highly customizable product; however, it was regarded as being too risky, as universities were considered an entirely new market for the vendor and was thus dropped from the selection. The vendor that was finally selected ranked third in the last informal vote. Even though the vendor selected scored very high in terms of meeting the requirements, functions, and features, the decision found only partial support by many organizational members, including the IS department members. The IS group was not at all convinced that the product had necessary technological and functional capabilities. In a vendor review demonstration, an IS department member mentioned that the vendor’s “technology is severely outdated and does not offer any customization for the user.” Other departments also were not satisfied with the selection, with a member of the accounting team stating, “…just the one that got chosen… we wished that it hadn’t.” The storeroom, a very powerful unit of UMaint’s administrative services department, shared the same thoughts: “we were looking at [Vendor A] and [Vendor B]. These were what we thought were the two best, but other factors came into play in the decision making….”
CURRENT CHALLENGES FACING THE ORGANIZATION
When the final decision was announced to the vendors, it was also not received too well by the vendors whose products had not been selected for implementation. One of the unsuccessful bidders decided to lodge an appeal with the state’s department of information services. The members of the department of information services, who had not been at all involved during the selection process, took only a very short time to review the decision and mandate the termination of the project based on procedural errors. As contended by the unsuccessful bidder, the change in scoring criteria for the first stage could not be considered a harmless error, as vendors might have otherwise submitted different proposals. Furthermore, asking the vendors to re-submit cost proposals could be considered a “best-and-final offer” procedure, which was explicitly ruled out in the initial RFP. On the other hand, not asking the vendors for a renewed cost proposal would have led to the elimination of all vendors but one during the first evaluation stage, rendering the RFP process “just a paper chase” (Ciotti, 1988, p. 48). Making a new selection, as recommended by the State’s IS department, would not only mean reviewing the original decision, but also reverting to the beginning stages of the project. In order to select a different vendor, the entire selection process would have to be started anew, including sending out a request for proposals, inviting candidates for product demonstrations, scoring the different products, and making reference calls. As this process Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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would most likely continue well into the following year, funding for the project was not automatically valid any more. UMaint would have to reapply for funding, and in light of the state’s tight budget situation, getting funds for such a project a second time seemed highly unlikely. As of 2003, no computerized maintenance management system was implemented at UMaint. Frank (the IS manager), reflecting on the sequence of events in the project, still remains perplexed about why the initiative turned out to be a disaster, despite all his and his colleagues’ efforts to consciously manage stakeholder input and thus avoid failure, so he approached an IS academic to find out the reasons for the failure of the current project, how UMaint’s current project could be “salvaged”, and how similar problems could be avoided in future projects.
REFERENCES
Ciotti, V. (1988). The request for proposal: Is it just a paper chase? Healthcare Financial Management, 42(6), 48-50. Gustin, C. M., Daugherty, P. J., & Ellinger, A. E. (1997). Supplier selection decisions in systems/software purchases. International Journal of Purchasing and Materials, 33(4), 41-46. Hirschheim, R., & Klein, H. K. (1989). Four paradigms of information systems development. Communications of the ACM, 32(10), 1199-1216. Hirschheim, R., & Newman, M. (1991). Symbolism and information systems development: Myth, metaphor, and magic. Information Systems Research, 2(1), 29-62. Howcroft, D., & Light, B. (2002). A study of user involvement in packaged software selection. In L. Applegate, R. Galliers, & J. I. DeGross (Eds.), Proc. of the 23rd Int. Conf. on Information Systems, Barcelona, Spain, December 15-18 (pp. 69-77). Hwang, M. I., & Thorn, R. G. (1999). The effect of user engagement on system success: A meta-analytical integration of research findings. Information & Management, 35(4), 229-239. Land, F. F. (1982). Tutorial. The Computer Journal, 25(2), 283-285. Lucas Jr., H. C., & Spitler, V. (2000). Implementation in a world of workstations and networks. Information & Management, 38(2), 119-128. Managestar. (n.d.). manageStar — Products. Retrieved May 3, 2004: http:// www.managestar.com/facility_mgmt.html Piturro, M. (1999). How midsize companies are buying ERP. Journal of Accountancy, 188(3), 41-48. Ragowsky, A., & Stern, M. (1995). How to select application software. Journal of Systems Management, 46(5), 50-54. Raouf, A., Ali, Z., & Duffuaa, S. O. (1993). Evaluating a computerized maintenance management system. International Journal of Operations & Production Management, 13(3), 38-48. Schwab, S. F., & Kallman, E. A. (1991). The software selection process can’t always go by the book. Journal of Systems Management, 42(5), 9-17. Weber, C. A., Current, J. R., & Benton, W. C. (1991). Vendor selection criteria and methods. European Journal of Operational Research, 50, 2-18.
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West, R., & Shields, M. (1998). Strategic software selection. Management Accounting, August, 3-7.
ENDNOTES
1
2 3
Names of the university and its divisions have been replaced by pseudonyms. Further, the identities of the employees of the university and other stakeholders of the system have been disguised to ensure confidentiality. For the sake of authenticity, the quotations have not been edited. i.e., technical or infrastructure related requirements such as scalability or technical potential for the future
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APPENDIX A Organizational Chart of UMaint Jack Director
Carl Asst. Director Arch., Eng., & Constr. Services
Mark Manager Construction Services
Joan Asst. Director Administrative Services
Joe Manager Architectural Services
Rob Manager Construction Services
Valeria Administrative Assistant
John Manager Utility Services
Lorie Fin./Budg. Manager Minor Capital Acctg.
Marcia Fin./Budg. Manager Operat l Acctg.
Sharon Personnel & Payroll
Andrew Manager Storeroom
Frank Mgr. Information Systems
Dave Mgr. Plant Services
Tim Energy Manager
Craig Manager Custodial Services
Tom Manager Maintenance Services
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APPENDIX B Typical Features of a CMMS Work Order Management • Receive and route web-based work requests. • Obtain approvals as part of the workflow if necessary. • Receive alerts on critical issues in your workflow. • View a comprehensive list of work in process work plans, schedules, costs, labor, • •
materials, assets and attached documents. View overdue work, or sort work orders on a place, space, asset or engineer basis. Set-up predetermined workflow processes or create them on the fly, assigning work orders to available personnel. Link related work orders. Send clarifications that are tracked in the message history. Attach documents, including drawings, specs, and more.
• • • Asset Management • Click on an asset to launch a work order. • Maintain all critical asset information. • Do preventive maintenance. • Track and get alerts on asset contracts or leases. • Track assets, costs, histories and failures. • Link assets to a work order, place, space, project or contract. • Drill down in your organization to locate assets. • Get reminders and alerts on any element of the asset. • Attach documents, such as diagrams, to the asset. Inventory Management • Receive minimum/maximum alerts on inventory levels. • Allow employees to request or order products. • Add any products to a service delivery, e.g., a new computer for a new employee set-up. • Kick-off automatic purchase orders to pre-approved vendors. • Track Bill of Materials, SKU, price, stock, description, vendor and transaction information. • Connect inventory with specific budgets to track exact costs. Project Management • Kick-off new projects with a few clicks. • Monitor project schedules and milestones on real-time interactive Gantt charts. • Track budgeted vs. actual spending on a project-by-project basis. • Manage resources by viewing project analyses. • Issue service requests within projects and build into Gantt charts. • Draw relationships between projects, people, places, things, contracts, POs, inventory, vendors and more.
• Attach and share documents. Procurement Management • Route POs and invoices automatically. • Receive approvals and responses automatically. • Set amounts that require approval and workflow automatically obtains it. • Integrate with financials. • Automate all procurement of services, independent contractors, vendors, etc. • Create and broadcast requests for proposals. • Track and compare all out-bound and in-bound proposal and bids. • Negotiate online with vendors. • Attach proposals to people, places or things as well as projects and contracts. • Send proposals out in workflow for review and approval.
Adapted from: ManageStar (n.d.) Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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APPENDIX C Timeline of the CMMS Project
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APPENDIX D Organizational Chart of BigU
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APPENDIX E Stakeholders of the Proposed System
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APPENDIX F Vendor Selection Process
Adapted from West & Shields (1998) and Land (1982)
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APPENDIX G Contents of the Proposal 1. Proposal Contents The sections of the vendor proposal should be as follows: Section 1 Section 2 Section 3 Section 4 Section 5 Section 6
Transmittal Letter (signed paper copy must also be included) Administrative Requirements (see 3) CMMS Requirements, Functions and Features (responses in Attachment x) Technical Requirements and Capabilities (responses in Attachment xx) Vendor Qualifications (responses in Attachment xxx) Cost Proposals (responses in Attachment xxxx)
All vendors must use the RFP templates and format provided on the CMMS website.
2. Section 1 - Transmittal Letter The transmittal letter must be on the vendor's letterhead and signed by a person authorized to make obligations committing the vendor to the proposal. Contact information for the primary contact for this proposal must also be included. 3. Section 2 - Administrative Requirements This section of the proposal must include the following information:
a) A brief (no more than three pages) executive summary of the vendor's proposal including: 1. A high-level overview of your product and the distinguishing characteristics of your proposal. 2. Indicate the number of universities using the system as proposed. "System" is defined as the vendor's current version of the software with all the functionality proposed in the response to this RFP. 3. Describe how closely the proposed system matches UMaint’s needs. 4. Discuss what attributes of your proposal offer BigU a distinguishing long-term vendor relationship. b) A specific statement of commitment to provide local installation for the system. c) A specific statement warranting that for a period of five years after acceptance of the first application software, that all application software will continue to be compatible with the selected hardware and system software, and will be supported by the vendor. This does not include the database software and hardware to be selected by BigU. d) For proposal certification, the vendor must certify in writing: 1. That all vendor proposal terms, including prices, will remain in effect for a minimum of 180 days after the Proposal Due Date. 2. That the proposed software is currently marketed and sold under the vendor’s most current release only (or be added within six months) 3. That all proposed capabilities can be demonstrated by the vendor in their most current release of the system. 4. That all proposed operational software has been in a production environment at three non-vendor owned customer sites for a period of 180 days prior to the Proposal Due Date (except in cases where custom or new functionality is designed for BigU) 5. Acceptance of the State’s Department of Information Services (DIS) Terms and Conditions.
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4. Section 3 - CMMS Requirements, Functions, and Features Section 3 responses of this RFP contain mandatory and desired features for specific CMMS application modules. This requires coded responses only. 5. Section 4 - Technical Requirements and Capabilities Section 4 responses of this RFP ask the vendor to identify the computer system software environment for the CMMS, and to provide additional technical information regarding system interfaces, hardware requirements, and application flexibility/enhancements. Answers to these questions should be provided with both narrative and coded responses. 6. Section 5 - Vendor Qualifications Section 5 responses of the RFP requires the vendor to provide information about the vendor organization and customer base; and to propose support capabilities in terms of design, installation, data conversion, training, and maintenance of the proposed system. This information is to be provided in narrative format. 7. Section 6 - Cost Proposal Instructions Section 6 of the RFP contains the formats and instructions for completing the cost proposal. Section 6.2 (Instructions) requests five-year summary costing for: a) Application software (including upgrades and customization). b) Software maintenance. c) Services (installation, training, interfaces, project management, conversions, etc.).
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Chapter XV
The Columbia Disaster: Culture, Communication, & Change Ruth Guthrie, California Polytechnic University, Pomona, USA Conrad Shayo, California State University, San Bernardino, USA
EXECUTIVE SUMMARY
The National Aeronautics and Space Administration (NASA) is a government organization, founded to explore space to better understand our own planet and the universe around us. Over NASA’s history, there have been unprecedented successes: Apollo missions that put people into space and walking on the moon, the remarkable findings of the Hubble space telescope and the Space Shuttle Program, allowing astronauts to perform scientific experiments in orbit from a reusable space vehicle. NASA continues to be a source of national wonder and pride for the United States and the world. However, NASA has failures too. In February of 2002, the Space Shuttle Columbia disintegrated as it returned to Earth. This event occurred 16 years after the Space Shuttle Challenger exploded during take-off. As information was collected, investigators found that many of the problems uncovered during the Challenger investigation were also factors for Columbia. Underlying both disasters was the problem of relaying complex engineering information to management, in an environment driven by schedule and budget pressure. Once again, NASA is looking at ways to better manage space programs in an environment of limited resources. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
NASA was founded in 1958 to explore space. A year earlier, the Soviet Union beat the United States into space by launching Sputnik, the first satellite. In the United States, this was seen as an embarrassment, and the need for a space program was pressing. Only a few short months after the formation of NASA, the first American space missions were launched. In 1969, NASA’s Apollo 11 mission put the first humans on the moon surface. NASA’s space program has changed the way mankind views the Earth and helped bring about many important scientific findings that have resulted in numerous “spin-offs” in science, technology and commerce. After many other successful manned space flights, the Space Shuttle Program was initiated. The goal was to develop a reusable vehicle for frequent access to and from space. After nine years, the first shuttle, Columbia, was launched from Kennedy Space Center in 1981. Columbia was a remarkable success, though the promise of frequent access to space has never been realized. (Columbia flew 24 missions, the most of any shuttle in the fleet.) Today, NASA is renown for its discoveries and explorations in space — both manned and unmanned. NASA is truly a unique governmental agency with the lofty mission shown in Figure 1. In 1986, the world was shocked and saddened as the Challenger exploded during takeoff. Seven astronauts were dead along with the first civilian to ride the shuttle, Christy McAuliffe, an elementary school teacher. The Rogers Commission, formed by an executive order from President Reagan, found that design flaws contributed to the Challenger’s explosion. During the investigation, it was revealed that NASA engineers and management knew about the problems with the O-rings and failed to act on the information that was available. The report was also critical of safety procedures and Space Shuttle Program management. Sixteen years later, on February 1, 2003, the space shuttle Columbia disappeared. In the control room, contact was lost with the Columbia at 9:00 a.m. Minutes later, the Houston mission control room was locked down, as the team of ground support realized a disaster was occurring. By 2:05, President Bush addressed the public, “Columbia’s lost; there are no survivors.” The Columbia had disintegrated when it reentered the Earth’s atmosphere. Seven astronauts were dead, including the first Israeli astronaut and an Indian astronaut, who immigrated to the United States. The sadness of the national disaster deepened as pieces of the Columbia shuttle began to turn up in Texas and Louisiana. A NASA internal investigation was conducted. In the wake of 9/11, theories of a terrorist attack surfaced and were quickly dispelled. The theory that a piece of foam may have damaged the wing was proposed. It was quickly dismissed too, as not being possible for the foam to cause such a catastrophic failure. As the pieces of Columbia were collected and the shuttle was reassembled, it was determined that a large piece of insulation foam broke off during launch, and hit Columbia’s left wing at a velocity of 500 Figure 1: NASA’s Vision & Mission N A S A V isio n T o im p ro v e life h ere, T o ex ten d life to th ere, T o fin d life b eyo nd .
N A S A M issio n “T o u n derstan d and p ro tect o ur h o m e p lan et, T o ex plore th e u n iv erse and search for life, T o in sp ire th e n ext g en eration o f ex p lo rers … as o n ly N A SA can .”
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mph. On reentry, the heat was too great for the damaged shuttle, causing it to disintegrate. Disturbingly, the foam was discussed at NASA internal mission meetings, but only in passing. An external review board of 10 people, led by Retired Admiral Hal Gehman, was appointed to investigate what happened at NASA that could have prevented the Columbia tragedy. In August of 2003, after conducting over 230 interviews with NASA personnel, from mechanics to astronauts, a 243-page report summarized the findings. Excerpts from the Columbia Accident Investigation Board (CAIB) report are highly critical of NASA management and the culture of the agency: “Based on NASA’s history of ignoring external recommendations, or making improvements that atrophy with time, the Board has no confidence that the space shuttle can be safely operated for more than a few years based solely on renewed postaccident vigilance.” “Unless NASA takes strong action to change its management culture to enhance safety margins in shuttle operations, we have no confidence that other ‘corrective actions’ will improve the safety of shuttle operations. The changes we recommend will be difficult to accomplish — and they will be internally resisted.” (CAIB Report, Vol. 1, p. 13) Changes that NASA has made include the removal of more than 12 people from upper management into different positions. At the onset of the disaster, several critics of NASA wanted to hold someone accountable for the management mistakes that led up to the disaster, including Sean O’Keefe, NASA’s president. NASA now has the task of reviewing and deciding what to do with the external investigation report.
SETTING THE STAGE
The engineering for the Space Shuttle Program began development in the 1970s. The purpose was to develop a cheaper way to access space. Previously, any launch vehicle was destroyed when it entered the Earth’s atmosphere. American astronauts would parachute into the ocean in a heat-protected capsule. The military would seek and meet the capsule in the ocean and recover the astronauts. (The Russian astronauts parachuted onto ground, a harder landing.) Rockets, life support, communication and other subsystems were lost when the mission concluded. Having a launch vehicle that flew from space to Earth had the potential to save money because these subsystems were reusable. The space shuttle has three main components: the orbiter, the external fuel tanks and the rocket boosters. The orbiter is the main reusable component, carrying the astronauts and any payload and all the necessary support subsystems. The fuel tanks supply power to the orbiter’s thrusters. The rocket boosters give the shuttle enough power to escape the earth’s gravitational pull. Once the shuttle is near orbit, the rockets are discarded and fall to earth. The rockets are recovered for use in future shuttle missions. The external fuel tanks are also detached from the orbiter in space, but are not recovered. Over its history, the shuttle program has had several milestones (see Appendix A-1) including the first woman in space (Sally Ride who also participated in Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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both Challenger and Columbia investigations), docking with the Russian Mir Space Station and the return to space of astronaut, now Senator John Glenn. In 1986, after the Challenger exploded, an investigation of the disaster by the Rogers Commission identified technical deficiencies that led to the explosion — the O-rings between portions of the right solid rocket motor failed. Surprisingly, engineers were aware of the potential problem O-rings, though the decision to launch was still made. There were systems used to track anomalies. However, as stated in the Roger’s Report: “NASA’s system for tracking anomalies for Flight Readiness Reviews failed in that, despite a history of persistent O-ring erosion and blow-by, flight was still permitted. It failed again in the strange sequence of six consecutive launch constraint waivers prior to 51-L, permitting it to fly without any record of a waiver, or even of an explicit constraint. Tracking and continuing only anomalies that are ‘outside the data base’ of prior flight allowed major problems to be removed from and lost by the reporting system. ” (Roger’s Commission, p. 148) The Rogers Commission also found several organizational problems that led to the decision to launch Challenger under dangerous conditions. A tremendous amount of planning takes place prior to a shuttle launch. In addition to planning the payload and planning for the scientific mission, several other activities take place. A delay in launching a shuttle disrupts the schedule for all the missions that follow. There are many stakeholders, including astronauts, NASA engineers and administrators, as well as engineers and managers form subcontracting organizations. During the Rogers Commission investigation, the structure of the organization was reported to be complex and non-inclusive of engineering and subcontractor viewpoints. An example of this is that Rockwell Inc. and Thiokol expressed reservations at the flight readiness meeting before the decision to launch. The report indicates in several instances that Marshall Space Center management pressured and influenced subcontractors to approve the launch decision, even though their support for launch was ambiguous at best. The major findings of the Rogers Commission, with excerpts from their final report, were: Schedule Pressure/ Budget Pressure
“The pressure on NASA to achieve planned flight rates was so pervasive that it undoubtedly adversely affected attitudes regarding safety.” “Operating pressures were causing an increase in unsafe practices.” “Schedule pressures played an active role in the decision to launch the Challenger. Most emphasis in the program was placed on cost-cutting and meeting schedule requirements, rather than flight safety.”
Communication and Management Problems
The Commission stated that a ‘serious flaw’ existed in the decision-making processes at NASA. The launch decision did not take into account or understand the concerns raised by the Thiokol engineers and some Marshall engineers. Further, waiving of launch constraints seemed to occur with no checks at necessary levels of management.
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The Columbia Disaster Communication and Management Problems
“The Commission is troubled by what appears to be a propensity of management at Marshall to contain potentially serious problems and to attempt to resolve them internally rather than communicate them forward. This tendency is altogether at odds with the need for Marshall to function as part of a system working toward successful flight missions, interfacing and communicating with the other parts of the system that work to the same end.”
Silent Safety Program
During lengthy testimony, NASA’s safety staff was never mentioned. No safety personnel were present at the Mission Management team meetings or were part of the command structure for launch decisions. Additional problems of safety staff and requirements being reduced were reported. The organizational structure of Kennedy and Marshall space centers had safety and quality offices under the supervision of the organizations that they were supposed to check. This was a conflict of interest. Usually, organizations have safety and quality control departments report directly to senior management, independent from the pressures of individual programs.
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Recommendations made by the Rogers Commission were both technical and managerial. The technical recommendations included: (a) redesigning the rocket boosters, (b) upgrading the shuttle tires and breaks, and (c) retrofitting the shuttles to include escape systems. Some of the managerial recommendations were: • • • • • •
Create a strict risk-reduction program. Reorganize (decentralize) so that information is made available to all levels of management. Astronauts should be placed in NASA management positions so that their viewpoints are represented. All waivers to flight safety should be revoked and forbidden. All contractors need to agree to launch. Technical issues should be reviewed by independent government agencies, which report their analysis to NASA. The NASA Associate Administrator for Space Flight and the NASA Associate Administrator for Safety sponsor open reviews, encouraging NASA and contractor management, engineering and safety personnel to discuss concerns. Allowance be made for anonymous reporting of shuttle safety concerns.
In response, NASA implemented the recommendations of the Rogers Commission and adopted a more realistic launch schedule. However, over time, it is difficult to assess what changes were fully adopted.
Culture in Government Agencies
Throughout the discussions of NASA management, the topic of organizational culture is prevalent. “Every organization has a culture, that is, a persistent, patterned way of thinking about the central tasks of human relationships within an organization. Culture is to an organization what personality is to an individual. Like human culture generally, it is passed on from one generation to the next. It changes slowly if at all” (Wilson, 1989). Adoption of information systems or changes to processes created by introduction of
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information systems are frequently doomed because the organization’s culture is unwilling to accept change. NASA was formed to re-establish US dominance in space and science. Drawing from existing organizations and top research scientists, NASA became a high-performance organization (McCurd, 1993). In an amazingly short period of time, NASA was able to achieve the Apollo missions and become a source of national pride and prestige. The culture at the time, described by Vaughan (1996), was that of engineering. The very word ‘engineer’ implies that something is being created and tested in order that it be engineered again and improved. NASA’s early culture of scientists and engineers relied on testing, research and rigorous methodology to find out what worked in achieving manned space flight. The culture believe strongly that an in-house technical ability was necessary, that people hired by NASA were the best and brightest in the world, and that risk and failure were part of doing business. Failure was tolerated because the view was that you cannot achieve success without innovation and experimentation. McCurd points out that high-performance cultures tend to be unstable and short lived. As the organization grew, and the amount of work increased, the culture underwent a significant change, becoming more bureaucratic. Instead of keeping all work ‘in-house’, NASA began to use outside contractors to do research and development. The culture became more averse towards failure and innovation. Employees began to feel that their failures would not be tolerated. This was reflected in a NASA culture survey in 1988 (McCurdy, 1993) that showed employees were dissatisfied with the work going to outside contractors and were finding it difficult to get things done in a large bureaucracy. They felt that a loss of technical knowledge was occurring and that failure was no longer tolerated.
Information Systems Development for Government Agencies
In 1986, information systems used in organizational decision making were very different from the Web based, graphical systems we have today. Systems ran on a mainframe computer and were accessible to users through command-driven or primitive, menu-driven interfaces. Information systems were slow, not user-friendly and required training to learn how to operate. Commercial, mass-produced software (Commercial Off The Shelf [COTS]) was very minimal. If an agency like NASA wanted programs developed for them, it was customized software that was expensive and time consuming to create. Today, software development methodologies offer prototyping and iterative design so that users can identify problems in the system before they are developed. In 1986, government agencies followed a strict software methodology (DoD-STD-2167A, 1995; see Appendix A-2) that defined all the software requirements at the beginning of the life cycle and then delivered a system, often years later, based upon written requirements, difficult for the user to visualize. Governmental systems development contracts were notorious for being overrun, late and not meeting the needs of the users. Further, systems developed for agencies like NASA might be high risk and require high reliability. To achieve high reliability and fault tolerance is very expensive. Today’s methodologies using rapid application development, prototyping and iterative design make it cheaper to produce these systems. However, they are still expensive because of the effort involved in ensuring reliability. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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CASE DESCRIPTION Columbia’s Final Mission
Columbia’s final mission, STS-107, was to perform experiments related to physical, life and space sciences. The seven astronauts conducted more than 80 experiments while in orbit. This mission was an extended orbit, lasting 16 days. The crew was noted in the media because it had the first Israeli astronaut, Payload Specialist Ilan Ramon, quickly hailed as a national hero of Israel. See Appendix A-3 for a listing of Columbia’s crew and the STS-107 Mission. The mission goals are available in Appendix A-4. When Columbia launched on January 16, 2003, cameras caught images of insulation foam breaking loose from the fuel tank. Columbia entered its orbit over Earth without incident and conducted its 16-day mission. On February 1, 2003, while returning to Earth, Columbia lost communication with Johnson Space Center. After realizing that a disaster has occurred, Flight Director Leroy Cain order the communication center locked down and the contingency plan order is implemented. As the news reports begin, people from Texas to California report seeing the shuttle break up as it entered the atmosphere. Minimal talk of rescue fades as President Bush addresses the nation, “ The Columbia’s lost. There are no survivors.” People begin finding debris from the shuttle in Texas and Louisiana. NASA issues a warning that the debris might be hazardous and that people should report any finding to NASA, and not touch the debris. NASA’s top administrator, Sean O’Keefe, vows to investigate what went wrong. The Columbia Accident Review Board (CAIB) is formed, chaired by retired Navy Admiral Harold Gehman, Jr. Members of the review board are listed in Appendix A-5. The possibility of a terrorist strike is offered and quickly rejected by NASA. As more is discovered about the Columbia disaster, the foam debris that broke loose on take-off is mentioned. However, Shuttle Program Manager Ron Dittemore says this is highly unlikely. A few days later, he retracts these statements. As the CAIB investigates, some surprising information about the NASA and the shuttle program comes to light. • • • •
NASA had known about the foam debris-shedding problem for some time. However, since it had never caused a problem before, it became routinely ignored. NASA had the opportunity to obtain images of Columbia in orbit on the day of the disaster, but declined, feeling that this was unnecessary. Budget restrictions led to demoralizing attitudes on the shuttle safety program. For example, NASA inspectors were required by management to supply their own tools and were restricted from making spot checks. Lower level shuttle personnel felt that they could not raise issues of quality and safety without risk of being fired.
With this in mind, the CAIB conducted more than 230 interviews of shuttle personnel at every level. In their final report, they begin their analysis of organizational culture by revisiting the history of NASA and the Challenger disaster 16 years earlier. The shuttle program organizational chart is listed in the Appendix A-6. The CAIB final report identifies three problem areas: physical flaws in design that led to the disaster, weaknesses in NASA’s organization and other significant observaCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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tions. The report indicates that technical explanations were not enough to explain the Columbia disaster and is critical of NASA management: “In our view, the NASA organizational culture had as much to do with this accident as the foam. Organizational culture refers to the basic values, norms, beliefs, and practices that characterize the functioning of an institution. At the most basic level, organizational culture defines the assumptions that employees make as they carry out their work. It is a powerful force that can persist through reorganizations and the change of key personnel. It can be a positive or a negative force.” (CAIB Final Report, Part II, p. 1)
A Matter of National Pride
When Sputnik, the first satellite in space, was launched by the Soviet Union in 1957, Americans were stunned. Their Soviet rivals had beaten them into space. NASA was formed a year later and in 1961 rallied the American people to be the first to the moon. This was an unimaginable, engineering feat, and in 1969 NASA succeeded when Neil Armstrong became the first person to walk on the moon. NASA’s culture was defined through the spirit of exploration and achievement of the impossible. Those who witnessed the 1969 space walk clearly remember where they were and the awe inspired by the greatness of science and engineering achievement. Today, the shuttle program has made space flight seem common. Children do not remember a time when this was only a dream. Over time, the emphasis for space exploration has gone from achievement of the impossible to cost savings and streamlined operations. Figure 2 shows the NASA budget as a percentage of federal funding. A dramatic decline is evident in the early ’70s. Figure 3 shows the relatively flat spending over recent years on the shuttle and international space station programs. The CAIB contends that the NASA culture clashes with the shuttle philosophy of cheaper, frequent access to space. The Board goes further to state that the Rogers Commission recommendations made after the Challenger disaster were never fully realized.
DELICATE BALANCE OF RISK, BUDGET, & SCHEDULE IN SPACE EXPLORATION
Only three years after the Challenger disaster, NASA was viewed as being overly cautious and expensive in adhering to the Rogers Commission. NASA cut the budget on the shuttle program by 21% over a three year period (1991-1994). Interestingly, the White House formed a blue-ribbon committee in 1990 to investigate NASA spending. The recommendations of the Augustine Committee were that NASA was overwhelmingly under-funded and needed a budget increase of 10%, per year. During this time, The White House appointed Daniel S. Goldin, a former aerospace industry executive, as director of NASA. Viewed as a change agent, his goal was “faster, better, cheaper,” with the hopes that streamlining efforts in NASA would result in an eventual manned mission to Mars. Goldin made dramatic changes to NASA, following a Deming-like management philosophy, seeking a less bureaucratic, more empowered worker approach to NASA. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 2: NASA Budget as a Percentage of the Federal Budget from the CAIB Final Report
Figure 3: Space Shuttle Program Spending in Recent Years (in Millions of Dollars) Space Station Space Shuttle
FY 1998 2501.3
FY 1999 2304.7
FY 2000 2323.1
FY 2001 2087.4
FY 2002 1721.7
FY 2003 1492.1
2922.8
2998.3
2979.5
3118.8
3272.8
3208.0
Goldin’s greatest contribution to NASA was possibly the creation of the International Space Station. Sean O’Keefe replaced Goldin in 2001. At this time, the current debate was over privatization of NASA. The rationale was that privatizing portions of the shuttle program could save money and might facilitate more commercial uses of the shuttle. Parallel to this push was the effort to complete Node 2 of the International Space Station. The scheduled date, viewed widely as unrealistic, for deploying Node 2 of the International Space Station in February 2004 was programmed into a screen saver countdown and sent to all shuttle program managers. The CAIB made several recommendations, including a redesign of the thermal tank protection subsystem to eliminate debris shedding and several other technical enhancements. They also expressed the need for obtaining better images of the shuttle, on-board and from external sources. The need to perform emergency repairs of the shuttle from space was identified, along with the need to return to the industry standard for foreign object debris, which had been waived for the shuttle. The managerial recommendations were: • •
Ease scheduling pressure to be consistent with resources. Expand Mission Management Team crew and vehicle safety contingencies.
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• •
Establish independent Technical Engineering Authority that oversees technical standards, risk, waivers, and verifies launch readiness. Reorganize the Space Shuttle Integration Office so integration of all elements of the program is possible.
Chapter 7 of the CAIB is dedicated to the organizational causes of the Columbia disaster. Normal Accident theory was used to describe the culture of NASA. Namely, in a complex, noisy organization, management actions can increase noise levels to a point where communication is ineffective. High Reliability Theory contends that organizations are closed systems where management is characterized by an emphasis on safety, redundant systems are seen as necessary, not costly and the organizational culture is reliability driven. The problems highlighted in the report were: • •
•
A lack of Commitment to a Culture of Safety: “... reactive, complacent and dominated by unjustified optimism.” Lack of Adequate Communication: Specifically, managers in charge were resistant to new information indicating what they did not want to hear. Additionally, the databases in place to support decision and data dissemination processes were difficult to use. Oversimplification: Foam strikes had occurred over 22 years and were viewed as a maintenance issue, not a safety problem.
Similarities between the organizational culture of the Challenger and Columbia disasters are striking.
PROBLEMS WITH INFORMATION TECHNOLOGY
As with the Challenger disaster, Columbia also had communication problems related to information technology. During the Challenger disaster, it became apparent that several memos were written indicating the O-ring problem was seen by Thiokol and NASA engineers as being dangerous. The technical detail in the memos was considered difficult to understand and focused on technical detail over risk. Safety systems in place during the Challenger disaster were lax, allowing for waivers, and failing to track waivers and anomalies across flights. Several analyses of the Columbia disaster point to communication through PowerPoint and difficult-to-use databases as contributors to the problems with the shuttle safety program.
PowerPoint Given the technical nature of the Columbia disaster and all the complexity, technical and cultural, related to the launch decisions, reports from the CAIB related to PowerPoint presentations were quite remarkable:
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“As information gets passed up an organizational hierarchy, from people who do analysis to mid-level managers to high-level leadership, key explanations and supporting information is filtered out. In this context, it is easy to understand how a senior manager might read this PowerPoint slide and not realize that it addresses a life-threatening situation.” “At many points during its investigation, the board was surprised to receive similar presentation slides from NASA officials in place of technical reports. The Board views the endemic use of PowerPoint briefing slides instead of technical papers as an illustration of the problematic methods of technical communication at NASA.’’ (CAIB report, Vol. 1, p. 191) It seems that overuse of PowerPoint briefings, in place of detailed analysis, made it difficult for meeting attendees to identify what the launch risks were for Columbia. Edward Tufte, a highly prominent Yale professor and an expert in the visual display of data, gave a sample slide in the New York Times (Schwartz, 2003), showing how misleading and vague it was in conveying the risk of the foam strike. In his short book, The Cognitive Style of Power Point (Tufte, 2003) criticizing Power Point and its use in organizations, Tufte gives examples of the communication failures of NASA’s presentation. For example, a slide title states, “Review of Test Data Indicates Conservatism for the Tile Penetration.” This could be construed to indicate no risk for foam tiles. However, the title applied to conservatism about the choice of models used for prediction. Only at the bottom of the slide, in a lower level bullet, is the important information related to the audience. Namely, “Flight condition is significantly outside the test database.” Tufte goes further to say that the low resolution of the slide (presumably to condense information) and the use of condensed, non-specific phrasing adds to the ambiguity of the communication. Note: In Visual Explanations (1997), Tufte did an analysis of the Challenger disaster, showing 13 view graphs prepared for management and faxed to NASA. The critique stated the charts were unconvincing and non-explicit in stating the impact of temperature on O-rings.
Information Systems Used to Support Safety
The CAIB findings indicated critical problems with the information systems used to support shuttle safety: “The information systems supporting the shuttle — intended to be tools for decision making — are extremely cumbersome and difficult to use at any level. While tools were in place to support safety decision making, the design and use was difficult, causing them to fall into disuse.” In 1981, the PC was invented. The operating system, Disk Operating System (DOS), was command line driven and difficult to use. Windows 1.0 was released in 1985, but was viewed as slow and still difficult to use. In 1990, Windows 3.0 was released and graphical user interfaces (GUIs) gained massive popularity. GUIs were easy to use because the user
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did not have to remember any command names or sequences to operate the computer. The desktop analogy interface was intuitive to experiences users already had. Home use of PCs was rapidly rising. Consequently, customized, expensive systems developed for governmental agencies seemed archaic. A GUI design for safety that was easier to use and interpret, and that did not allow users to bypass safety features, may have led to a more informed decision. •
Another system existed that was easier to use, but not required. “The Lessons Learned Information System database is a much simpler system to use, and it can assist with hazard identification and risk assessment. However, personnel familiar with the Lessons Learned Information System indicate that design engineers and mission assurance personnel use it only on an ad hoc basis, thereby limiting its utility.”
Given a simple system was available, it was surprising that it was not organizational policy to use it. User training may be an issue here as well. • •
The simulation tool called Crater (mentioned in the slide in the above section) was inadequate to analyze foam impact data. The CAIB also indicated that the decentralized manner with which the shuttle program operated could hide unsafe conditions, whereas a centralized way to handle safety issues would foster better communication and insight.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION Can NASA Change?
Soon after the CAIB report was submitted, Brigadier General (and CAIB member) Duane Deal submitted a supplement to the CAIB report. Duane felt strongly that enough hadn’t been said about preventing “The Next Accident.” The language of the CAIB report was not strong enough in specific areas in its criticism of NASA management for letting schedules and budgets take precedence over safety. Brigadier Deal expressed strong reservations about NASA’s ability to change: “History shows that NASA often ignores strong recommendations; without a culture change, it is overly optimistic to believe NASA will tackle something relegated to an ‘observation’ when it has a record of ignoring recommendations.”
Can NASA’s Culture Be Transformed?
In the wake of the Columbia disaster, 12 top-level shuttle administrators and program managers were reassigned to different positions within NASA. In May of 2003, Former-Marine William Parsons replaced Dittemore. Previously, Parsons was the director of the Stennis Space Center and is viewed as a NASA insider with strong leadership Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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skills. Over a transition period, Parsons continues to learn more about the shuttle program from the retiring Ron Dittemore. Now he has the daunting task of changing NASA’s culture. His first major assignment is to ensure that personnel at all levels feel comfortable voicing concerns about shuttle safety. In a recent quote to the Associated Press, Parsons claims, “None of this is too touchy-feely for me.” He even went so far as to hire a colleague whose assignment among others is to critique his interactions with subordinates to ensure he is not intimidating. Even so, NASA veterans are reluctant to adopt a more humanistic style of management. Will changes at the top level by Parsons be enough to successfully change NASA’s culture?
Information Technology
In this case, what is missing, is quite informative. Information technology offers advantages of being distributed or centralized, accessible, user friendly and can track anomalies, extending human abilities to see trends that they might otherwise miss. Failing to use a tool that can help you is akin to burying one’s head in the sand. Yet, we see it every day when users press the NEXT button or the OK button without reading the alert message on their personal computers. Designers have set up clever ways for technology to help us, but it seems like human nature to ignore that help. Ironically, many military systems are designed specifically with a ‘man-in-the-loop’ to avoid catastrophic errors. After the Challenger disaster, the structure of the shuttle program was changed so that astronauts were managers and present at decision-making meetings. A proper safety system that did not allow people, in-the-loop, to bypass anomalies would have served the Columbia shuttle better. PowerPoint is part of business culture. At NASA, as with many organizations, PowerPoint presentations are interwoven with the structure and communication processes that support decision making. It is often said that “the devil is in the details.” PowerPoint is not a tool that is made to support a great deal of detail. Detailed information on a slide becomes an eye-chart, impossible to read. Lengthy reports with a lot of detail can unintentionally hide information by failing to display it in a way that catches the readers attention and overloading them with massive amounts of detail. Is reliance on Power Point to communicate ideas making NASA incapable of distinguishing key factors for decision making?
NASA’s Changing Goals
In January 2004, US President George Bush addressed the public, outlining the new plan for Space Exploration. In his speech, he gave three goals: 1. 2. 3.
Complete the International Space Station: This will be the primary mission of the Space Shuttle. The Space Shuttle will be retired in 2010. Develop and test a new spacecraft by 2008: This will be the replacement for the shuttle and it will operate to transfer astronauts to and from the space station. The spacecraft will also carry astronauts beyond the earth’s orbit to ‘other worlds.’ Return to the moon by 2020: Explore the moon robotically by no later than 2008.
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President Bush also spoke about NASA’s current $86 billion budget, vowing to reallocate $11 billion within the budget and to increase NASA’s budget by $1 billion over the next five years. Bush also expressed his support and confidence that Sean O’Keefe could usher NASA into a new age of space exploration. In light of the small increases in funding, one NASA watcher, Douglas Osheroff, a member of the CAIB and a Stanford University physics professor in an interview with the Seattle Times was skeptical about Bush’s support for the future of the space program: “If you give them a goal and you don’t give them resources, I think the situation will get worse.” The question remains: How will O’Keefe find the resources to meet Bush’s goals and assure NASA is an organization with a culture of safety?
Mars Rovers
In early 2004, NASA’s Jet Propulsion Lab (JPL) in Pasadena, California, successfully landed two ruggedized rovers on Mars. The rovers, Spirit and Opportunity, are sending remarkable images of the Martian surface to Earth. A poignant memorial, a plaque with the names of the seven, lost Columbia astronauts has been placed at Spirit’s landing site. The site has been named the Columbia Memorial Station. Opportunity’s landing site will be named for Challenger’s final crew.
REFERENCES
Associated Press (2003). Columbia Investigator Wants More Changes. Retrieved January 29, 2004: http://www.foxnews.com/story/0,2933,95892,00.html Associated Press (2003, Feb 1). Remains thought to be from Columbia Crew, NASA vows to find cause of shuttle disaster. Retrieved January 29, 2004: http://edition.cnn.com/ 2003/TECH/space/02/01/shuttle.columbia/ Associated Press (2003, Oct 12). Touchy Feely NASA-Effort. Retrieved January 29, 2004: http://www.wired.com/news/culture/0,1284,60798,00.html Augustine Committee (1990, Dec). Report of the advisory committee on the future of the US space program. Retrieved January 29, 2004: http://www.hq.nasa.gov/office/ pao/History/augustine/racfup1.htm Borenstein, S. (2004, Jan 31). A year after Columbia, NASA’s ‘culture’ reassessed. Retrieved January 29, 2004: http://seattletimes.nwsource.com/html/nationworld/ 2001847903_nasa31.html CNN.com Milestones in Space Shuttle History (n.d.) Retrieved January 29, 2004: http:/ /edition.cnn.com/interactive/space/0010/timeline.pop.up/frameset.exclude.html Columbia Accident Investigation Board (2003, Aug 26). Report of Columbia Accident Investigation Boar. Retrieved January 29, 2004: http://www.nasa.gov/columbia/ home/CAIB_Vol1.html Harwood, W. (2003, May 9). Parsons named Space Shuttle Program Manager. Retrieved January 29, 2004: http://spaceflightnow.com/shuttle/sts107/030509parsons/ Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Harwood, W. (2003, July 13). Shuttle Safety Team was Hamstrung. Retrieved January 29, 2004: http://www.cbsnews.com/stories/2003/07/22/tech/printable564420.shtml Deal, D. (2003, October). Supplement to the Report of the CAIB. Retrieved January 29, 2004: http://www.caib.us/news/report/pdf/vol2/part00a.pdf McCurd, H. E. (1993). Inside NASA: High Technology and Organizational Change in the US Space Program. Baltimore, MD: Johns Hopkins University Press (pp. 159174). Mission control transcript of Columbia’s final minutes. (n.d.). Retrieved January 29, 2004: http://datamanos2.com/columbia/transcript.html NASA Budget Reports (1998-2003). Summary of the President’s FY budget request for NASA. Retrieved January 29, 2004: http://www.nasa.gov/audience/formedia/features/MP_Budget_Previous.html NASA Official Columbia Page. (n.d.) Retrieved January 29, 2004: http://www.nasa.gov/ columbia/home/index.html Rogers Commission (1986, Feb 3). Report of the Presidential Commission on the Space Shuttle Challenger Accident. Retrieved January 29, 2004: http:// science.ksc.nasa.gov/shuttle/missions/51-l/docs/rogers-commission/table-ofcontents.html Schwartz, J. (2003). The level of discourse continues to slide. The New York Times, September, 2003. Tufte, E. R. (1997). Visual explanations: Images and quantities, evidence and narrative. Graphics Press, 38-53. Tufte, E. R. (2003). The cognitive style of PowerPoint. Graphics Press, 7-11. Vaughan, D. (1996). The challenger launch decision: Risky technology, culture and deviance at NASA. University of Chicago Press, Chicago, pp. 77-119. Wilson, J.Q. (1989). Bureaucracy: What government agencies do and why they do it. Basic Books: New York.
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APPENDICES Appendix A-1 Shuttle Program: Milestones (Adapted form Milestones in Space Shuttle History: http://edition.cnn.com/interactive/ space/0010/timeline.pop.up/frameset.exclude.html) Date
Description
Shuttle
Mission No.
4/12/81
Columbia is launched, marking the first mission into space of a reusable launch vehicle.
Columbia
STS-1
11/12/81
First Scientific Payload
Columbia
STS-2
11/11/82
Deployment of Commercial Communication Satellites
Columbia
STS-5
6/18/83
First Woman in Space, Sally Ride
Challenger
STS-7
8/30/83
First African American in Space
Challenger
STS-8
2/3/84
First Free Space Walk
Challenger
41-B
4/6/84
First Repair Satellite
Challenger
41-C
1/28/86
Challenger Explodes
Challenger
51-L
4/24/90
Hubble Space Telescope launched
Discovery
STS-31
12/2/93
Hubble Repaired
Endeavor
STS-61
6/27/95
Space Shuttle Docs with Mir
Atlantis
STS-71
10/29/98
John Glen flies on shuttle
Discovery
STS-95
10/10/00
100th Shuttle Mission
Discovery
STS-92
2/1/03
Columbia’s Last Mission
Columbia
STS - 107
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Appendix A-2 Software Development Life Cycle from DOD-STD: 2167A
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Appendix A-3: Columbia Mission STS-7 Crew Profiles from the NASA Columbia (http://www.nasa.gov/columbia/crew/index.html) Rick D. Husband, Commander William C. McCool, Pilot Michael P. Anderson, Payload Commander David M. Brown, Mission Specialist 1 Kalpana Chawla, Mission Specialist 2 Laurel Blair Salton Clark, Mission Specialist 4 Ilan Ramon, Payload Specialist 1
Rick Husband, 45, a colonel in the U.S. Air Force, was a test pilot and veteran of one spaceflight. Selected by NASA in December 1994, Husband logged more than 235 hours in space. William C. McCool, 41, a commander in the U.S. Navy, was a former test pilot. Selected by NASA in April 1996, McCool was making his first spaceflight. Michael P. Anderson, 43, a lieutenant colonel in the U.S. Air Force, was a former instructor pilot and tactical officer. Anderson logged over 211 hours in space. David M. Brown, 46, a captain in the U.S. Navy, was a naval aviator and flight surgeon. Selected by NASA in April 1996, Brown was making his first spaceflight Kalpana Chawla, 41, was an aerospace engineer and an FAA Certified Flight Instructor. Selected by NASA in December 1994, Chawla logged more than 376 hours in space. Laurel Clark, 41, was a commander (captain-select) in the U.S. Navy and a naval flight surgeon. Selected by NASA in April 1996, Clark was making her first spaceflight. Ilan Ramon, 48, a colonel in the Israeli Air Force, was a fighter pilot who was the only payload specialist on STS-107. Approved by NASA in 1998, he was making his first spaceflight.
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Appendix A-4: STS-107 Mission Overview from Columbia (http://www.nasa.gov/columbia/mission/index.html) STS-107 Mission Summary STS-107 Flight: January 16-February 1, 2003 Crew: Commander Rick D. Husband (second flight), Pilot William C. McCool (first flight), Payload Specialist Michael P. Anderson (second flight), Mission Specialist Kalpana Chawla (second flight), Mission Specialist David M. Brown (first flight), Mission Specialist Laurel B. Clark (first flight), Payload Specialist Ilan Ramon, Israel (first flight) Payload: First flight of SPACEHAB Research Double Module; Fast Reaction Experiments Enabling Science, Technology, Applications and Research (FREESTAR); first Extended Duration Orbiter (EDO) mission since STS-90. This 16-day mission was dedicated to research in physical, life, and space sciences, conducted in approximately 80 separate experiments, comprised of hundreds of samples and test points. The seven astronauts worked 24 hours a day, in two alternating shifts. First flight: April 12-14, 1981 (Crew John W. Young and Robert Crippen) 28 flights 1981-2003. Most recent flight: STS-109, March 1-12, 2002 Hubble Space Telescope Servicing Mission Other notable missions: STS 1 through 5, 1981-1982 first flight of European Space Agency built Spacelab. STS-50, June 25-July 9, 1992, first extended-duration Space Shuttle mission. STS-93, July 1999 placement in orbit of Chandra XRay Observatory. Past mission anomaly: STS-83, April 4-8, 1997. Mission was cut short by Shuttle managers due to a problem with fuel cell No. 2, which displayed evidence of internal voltage degradation after the launch.
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Appendix A-5: Columbia Accident Review Board Members from CAIB Web Site (http://www.caib.us/board_members/default.html) Chairman of the Board Admiral Hal Gehman, USN Board Members Rear Admiral Stephen Turcotte, Commander, Naval Safety Center Maj. General John Barry, Director, Plans and Programs, Headquarters Air Force Materiel Command Maj. General Kenneth W. Hess, Commander, Air Force Safety Center Dr. James N. Hallock, Chief, Aviation Safety Division, Department of Transportation, Volpe Center Mr. Steven B. Wallace, Director of Accident Investigation, Federal Aviation Administration Brig. General Duane Deal, Commander, 21st Space Wing, USAF Mr. Scott Hubbard, Director, NASA Ames Research Center Mr. Roger E. Tetrault, Retired Chairman, McDermott International, Inc. Dr. Sheila Widnall, Professor of Aeronautics and Astronautics and Engineering Systems, MIT Dr. Douglas D. Osheroff, Professor of Physics and Applied Physics, Stanford University Dr. Sally Ride, Professor of Space Science, University of California at San Diego Dr. John Logsdon, Director of the Space Policy Institute, George Washington University Board Support Standing Support Personnel Reporting to the Board Ex-Officio Member: Lt. Col. Michael J. Bloomfield, NASA Chief Astronaut Instructor Executive Secretary: Mr. Theron Bradley, Jr., NASA Chief Engineer
-Sally Ride was also on the Rogers Commission -The review board make up was changed twice to ensure proper representations from different constituencies.
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Appendix A-6: Space Shuttle Program Organizational Structure, From CAIB Final Report
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Chapter XVI
New Forms of Collaboration & Information Sharing in Grocery Retailing: The PCSO Pilot at Veropoulos Katerina Pramatari, Athens University of Economics & Business, Greece Georgios I. Doukidis, Athens University of Economics & Business, Greece
EXECUTIVE SUMMARY
In spring 2001, Veropoulos, the third biggest retailer in Greece and three of its top suppliers together with a service provider, started a pilot implementation to experiment with collaborative store ordering. The pilot involved the ordering from the retailer’s stores to their central warehouse as well as to the direct-store-delivery suppliers. The four companies together with the service provider were starting an ambitious plan to use the Internet technology in order to enable the sharing of daily POS data between retail stores and suppliers with the objective to streamline the store replenishment process. This effort resulted in significant business results but at the same time several pitfalls and challenges as far as the use of technology was concerned. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
The pilot involving the retailer and the three suppliers, facilitated by the service provider, was initiated based on the concept of sharing the daily sales data (POS data) and other information between retailer and suppliers over an Internet-based collaboration platform. This concept, referred to as Process of Collaborative Store Ordering (PCSO), can be considered as a new form of supply-chain collaboration in the grocery retail sector (Pramatari et al., 2002). The top management of the four companies committed to this project after being presented with the PCSO concept by the service provider, and with the objective to decrease the level of out-of-shelf in the retailer’s stores. On-shelf availability is a critical issue for both manufacturers and retailers today because it improves consumer value, builds consumer loyalty to the brand and shopper loyalty to the store, increases sales and — most importantly — boosts category profitability (Roland Berger, 2002). However, the advances in supply chain management, the initiatives of Efficient Consumer Response (ECR) and category management (Dhar et al., 2001), and the investments in inventory-tracking technology have not — by and large — reduced the overall level of out-of-stocks on store shelves (Gruen et al., 2002), referred to as “out-of-shelf” (OOS). A number of prior studies (Schary and Christopher, 1979; Straughn, 1991) have examined how product unavailability (via a temporary out-of-shelf) influences sales for a given product (SKU). Bell and Fitzsimons (2000) have studied the impact of OOS on category sales, while other studies have analyzed the possible consumer reactions to OOS from a marketing and retail management perspective (Campo et al., 2002, 2000; Fitzsimons, 2000; Verbeke et al., 1998). But what are the causes behind the OOS problem? These are classified into the following areas (Gruen et al., 2002; Vuyk, 2003): a. b. c.
Retail store shelving and replenishment practices, in which the product is at the store but not on the shelf. This category comprises all reasons relating to shelfspace allocation, shelf-replenishment frequencies, store personnel capacity, etc. Retail store ordering and forecasting causes, i.e., the product was not ordered or the ordered quantity was not enough to meet the actual consumer demand. Combined upstream causes, referring to the fact that the product was not delivered due to out-of-stock situations or other problems with the retailer’s distribution center (for centralized deliveries) or the supplier (for direct-store-deliveries).
The first area includes pure out-of-shelf situations, i.e., situations where the product exists in the store but not on the shelf, whereas the last two are out-of-stock situations. The analysis by Gruen et al. (2002), which is a compilation of several global studies, shows that 70-75% of out-of-shelf situations are a direct result of retail store practices, with 47% of the cases attributed to wrong store ordering and forecasting, and 25% to cases where the product was in the store but not on the shelf (Figure 1). In the following we present the organizations that participated in this case, their incentives in doing so and attitude towards the problem of out-of-shelf.
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Figure 1: OOS Causes Caus e s of OOS - Worldwide ave rage s (Grue n e t al., 2002)
Total upstream causes 28%
In the store, not on shelf 25%
S tore ordering and forecasting 47%
Source: Gruen et al. (2002)
The Retailer
In the competitive business environment of the Greek grocery retail market, where two international and three national retail chains account for approximately 60% of the total retail market, Veropoulos is ranked in third place. With 200 stores around Greece, Veropoulos covers almost the whole country, with sales estimated at around 710 million Euros for the year 2003. Veropoulos had been the first and the only supermarket chain in Greece at that time offering Internet and call-center-based services to its customers. The company was open to new ideas and a great supporter of Efficient Consumer Response (ECR) activities, participating in both local and European ECR groups. The top management was young, second generation, and had the ownership of the retail chain. The company owned a central warehouse serving all the stores around the country with its own fleet of vans. Almost half of the products in the assortment of a big store were replenished through the central warehouse, whereas for the smaller stores the percentage of centralization was around 60-70%. Before the pilot start, in September 2001, Veropoulos suffered an average out-ofshelf rate of 8.4%, which can be translated into a yearly turnover loss of million Euros, leaving aside the negative impact on shopper loyalty and long-term profitability. More than 70% of these situations were attributed to two main reasons: wrong order quantity, i.e., the quantity ordered was not enough to fulfill consumer demand till the next replenishment cycle, and no-order at all, i.e., the product had not been ordered at the last replenishment cycle although it did not exist in the store (Figure 2). The situation looked similar both for products delivered through the central warehouse and those delivered directly by the supplier. Clearly, these numbers indicated that there was a compelling need to improve the situation with the store ordering and replenishment practices. According to Nick Veropoulos, the company’s owner and CEO, “even a small reduction in out-of-shelf can bring significant results in turnover increase and improved consumer satisfaction; … clearly this is not a problem we can ignore and the suppliers have to get involved as well; it’s not only ours but also their problem.” Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 2: OOS Causes Before Pilot Start 60,0%
51,8%
W rong order quantity
50,0%
No order
40,0% 30,0%
Not delivered by the CW H
23,9%
20,0% 10,0%
13,8% 3,7%
6,9%
Not replenished from back-room P roduct code change
0,0%
The Suppliers
Supplier A was a Greek company offering an integrated system of commercial services including sales, marketing, trade marketing, logistics and merchandising. Supplier A was working with companies in Greece, Europe and the USA, representing their brands in many different categories, where the brands were usually positioned in the first or second place. Its sales for the year 2003 were estimated at around 155 million Euros. One of the company’s key aims had been to have a leading role in e-trading developments, and to use new technology in a way that facilitates everyday business with customers and enhance collaboration and synergies. Supplier A had a collaborative relationship with the retailer in many aspects and was also a shareholder in the service provider company. Supplier A’s product catalogue was one of the biggest in size compared to other suppliers (around 250-300 active product codes), containing food products but also smaller items usually located around the supermarket check-out counters. Supplier A mainly delivered to the retailer’s stores directly, using own logistics facilities and fleet. Because of the large number of products in the catalogue, including also slow-moving products in specialized categories, Supplier A encountered increased out-of-shelf levels, as well as high logistics costs from direct-store-delivery. These two reasons formed a strong incentive for the supplier to pilot with Veropoulos on PCSO, in an attempt to improve the store replenishment process and achieve reduced costs. The other two suppliers, Supplier B and Supplier C, were multinational companies with strong brands in several home and personal care categories. The two companies were major competitors in main categories and had a similar profile. They were both positioned among the top five suppliers of a supermarket, in terms of both turnover and number of products in their product catalogue (between 300-400 active product codes). They had been pioneers in the use of new ideas and technologies and great supporters of ECR activities. The two companies delivered to the retail stores through the retailer’s central warehouse, and managed the replenishment of the retailer’s central warehouse following Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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the VMI/CRP model (Cooke, 1998), which is a technique where the supplier has the sole responsibility for managing the customer’s inventory policy, including the replenishment process. In this way, the two suppliers had greatly streamlined the replenishment process in the retailer’s central warehouse, achieving great logistics efficiencies, but the positive effect of this had not been brought down to the store. Because of the large number of products in their catalogues and their continuous search for new areas of efficiency, the two centralized suppliers were concerned with the efficiency of the store replenishment processes and the level of out-of-shelf for their products. They were further excited by the idea of having access to the daily POS data, as this was an important piece of information they didn’t have until then from any other source and would like to understand the potential usage of by participating in a pilot with the retailer.
The Service Provider
The service provider was a new company acting as an intermediary between supermarkets and their suppliers, supporting their business transactions and exchange of information via its electronic marketplace. The provider would build and operate the Internet-based platform to support PCSO, based on the concept and requirements that would be developed in collaboration with the four companies above. More specifically, PCSO was a new idea and concept upon which the provider wanted to develop and establish its business plan. The company would then offer its services to both the retailer and the three suppliers following the Application Service Provider (ASP) model. According to this model, ASPs offer and manage outsourcing application services to many organizations via the Internet, while organizations outsource applications to ASPs to reduce upgrade and maintenance costs and to focus their efforts on core competencies (Soliman et al., 2003).
SETTING THE STAGE
The situation with the retailer, regarding the organization of the IT department and the utilization of technology was typical, as one would find it in almost any other Greek supermarket chain but also in many other retail chains across Europe. The internal IT department was located in the retailer’s central offices and was responsible for maintaining and running the internally developed central information system. The central Warehouse was running a separate warehouse management system integrated with the central information system via the exchange of data files. Each store was equipped with POS-scanning facilities at the checkout counters and ran its own store information system, which was connected via a Virtual Private Network (VPN) with the central offices. The data in all the retailer’s information systems were maintained at the level of the retailer’s internal product code, which resulted in a quite difficult data situation to manage, especially when one wanted to get some information at the level of the EAN product code (i.e., the barcode used for scanning a product through the cashier). The reason for this is that the relationship between the two codes is not one-to-one, as depicted in Figure 3, a situation that becomes even worse when the retailer wants to exchange data with its suppliers, using the EAN level as the bridge between the retailer’s and the suppliers’ product codes. In such a case, several data validation rules need be applied, and ensuring data quality becomes a challenge on its own. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 3: Relation Between Retailer-SKU, Product EAN Code and Supplier-SKU Example Retailer SKU
R-SKU-1
Nutella 200gr
EAN Code
EAN-1 Supplier SKU
Nutella 200gr Batch-1
S-SKU-1
Nutella 200gr Batch-2
Nutella 200gr
Nutella 200gr 10% off
Nutella 200gr +10gr
EAN-3
EAN-2
S-SKU-2
In regard to the store ordering process, the stores used to follow two different processes for ordering to the central warehouse: (a)
(b)
Smaller stores with frequent replenishments were equipped with hand-scanners aimed to support the ordering process. The store personnel responsible for ordering used the hand-scanner to perform a check around the shelves and scan the products to be included in the order. At the end of the process, the order was downloaded from the hand-scanner to the store’s computer and was electronically sent to the central warehouse. Larger stores used a printout of the store’s product assortment as a guide while they did the check around the shelves and the store’s back-room. Products and quantities to be ordered were marked on paper. At the end, the order was typed in the respective store system and was electronically sent to the central warehouse.
A comparative view of these two ordering practices in relation to the problem of outof-shelf is provided in the Appendix. In each case, the process was supported by IT applications enabling the store personnel to find a product in the store’s product assortment, scan or type in products and quantities to be ordered, and send the order electronically to the central warehouse. The retailer, like almost any other retailer in Greece, did not use the store sales data (POS data) in order to support the store ordering process, nor were the store stock data maintained in the store information system. On the suppliers’ side, each supplier had an internal IT department supporting the operation of the company. Supplier A had just completed the rollout of a new Enterprise Resource Planning System (SAP), while Suppliers B and C followed a global IT strategy, having implemented EDI (Perfett, 1992) for connecting with the retailers. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Overall, the objective of piloting PCSO in practice was threefold: (1) (2) (3)
To investigate the feasibility of timely sharing big amounts of large on a daily basis, and support critical business processes and supplier-retailer collaboration over an Internet-based platform. To understand the practical implications of this new process for retailers and suppliers, as well as the incentives and barriers for its implementation. To measure the impact of this new practice on order accuracy and ultimately shelf availability.
CASE DESCRIPTION The PCSO Concept
In the last few years, CPFR (Collaborative Planning Forecasting and Replenishment) has emerged as the latest business practice aiming to ensure that there is always enough quantity to meet consumer demand, while maintaining optimum levels of stock across the supply chain (Holmstrom et al., 2002). Several CPFR cases to-date (ECR Europe, 2002) have reported the ability to effectively manage the replenishment process through more accurate forecasting. Specific benefits described include inventory reduction, reduced costs, more frequent deliveries, less stock-outs and more effective handling of promotional items. The Process of Collaborative Store Ordering (PCSO), as briefly presented above, can be considered as a new form of CPFR, aiming to bring the impact of these potential benefits down to store level, affecting not only promotion and special line items but the full product range (Pramatari et al., 2002). This concept also builds on the notion of Vendor Managed Inventory (VMI), where the buyer shares demand information with the supplier who, in turn, manages the buyer’s inventory (Cetinkaya & Lee, 2000, 2002). In grocery retailing, the VMI practice has been exercised at the level of the retailer’s central warehouse, usually named Continuous Replenishment Program (CRP) (Clark and Lee, 2000). PCSO aims to bring this supply-chain collaboration practice to store level and enable its application on a large scale. In order to do so, it utilizes an Internet-based platform to enable information sharing and supplier-retailer collaboration in the store ordering process. The following description illustrates the practical aspects of this process. By connecting to the collaboration platform, a supplier can monitor his products per each store, the store’s product assortment, the product sell-out data, the in-store promotion activities, the level of stock and so forth on a daily basis. Moreover, the supplier can view the system’s proposed order quantities and make an order proposal to the respective store manager. He can also track the order status throughout the fulfillment cycle. All this information is also available in dynamic online reports, allowing statistical analysis of those parameters down to store level. The store manager, on the retailer’s side, has an overview of the full product assortment of his store per category or supplier and can submit an order based on both the system’s proposal and the supplier’s proposed quantities, as well as on the rest of Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 4: Information Sharing Between Retailer & Supplier in PCSO Store Manager
Supplier Salesman
POS data Store assortment Store promotion activities Stock _____________ Product marketing activities Market knowledge …
Order suggestion
Collaboration
Collaboartion Platform
Order confirmation
POS data Store assortment Store promotion activities Stock _____________ Store knowledge Competition performance in the store …
the information on product sales, promotions, stock, etc. The submitted order is automatically sent to the platform and then forwarded either directly to the supplier or to the retailer’s central warehouse. Automatic order-generation tools are also in place to help both the salesman and the store manager identify the right products that need to be replenished on a daily basis. Figure 4 gives an overview of the information that the store managers and the supplier salesmen share for the products and stores they have in common and the unique information each of them has.
The PCSO Pilot
The project started for the Retailer when the top management was presented with the PCSO concept and committed to the idea. Supplier A was the first to commit while Suppliers B and C joined in afterwards, finding the idea interesting and willing to pilot with it. Figure 5 gives a schematic representation of the context in which the PCSO concept was piloted. Five representative stores of the retailer were selected to take part in the pilot. A key role from the retailer’s organization, the chief buyer, assumed active responsibility of the project internally in the retailer.
Figure 5: PCSO Case Settings
Internet Platform
Central Warehouse
… Centralized Suppliers Suppliers B & C
Internet Platform
… Direct Suppliers Supplier A
… Retail Stores Stores
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The implementation for the pilot started in Spring 2001, with the definition of the requirements for the Internet-based collaboration platform. Because the project was initiated and managed by the service provider, the objective of the requirementsgathering phase was mainly to understand how to customize an electronic procurement platform to work in the context of grocery retailing, by enhancing it with the data (e.g., daily POS data, store assortment data, etc.) and the functionality (e.g., order suggestions) that are required to support work processes in this context. Based on the PCSO concept presented above, a demo of the system was initially built which was shared with people from the retailer’s and the suppliers’ organizations. From the retailer’s side, the people involved in the requirements meetings were from the IT, the central warehouse, the buying department and the stores’ management. The actual users from the stores were not actively involved in the requirements gathering process from the beginning, but only at the latter stages of the process. On the suppliers’ end, interdepartmental project teams participated in the requirements meetings, with the salesmen having an active participation. The implementation and testing of the system took place during the summer and was completed in September 2001. The platform was based on Microsoft technologies, utilizing SQL Server 2000 for the database and the data-loading processes through Data Transformation Services (DTS) and Active Server Pages (asp) for the Web front. Because of the intense information exchange between the Internet platform and the retailer’s information system (e.g., a daily POS data file for all the stores is more than 10 megabytes), back-end integration was necessary to allow for the automatic exchange and import/export of data files. The same applied to the relationship between the Internet platform and the suppliers’ information systems for the exchange of the product catalogue, as well as orders and dispatch advice for direct-store-delivery. In summary, the way the system worked during the pilot phase was as follows: • •
• •
The system ran centrally on the platform of the service provider. The platform was back-end integrated, via the exchange of text files over ftp with the retailer’s systems. This communication channel was used in order to send the orders from the platform to the retailer’s central warehouse system and in order to receive the following data from the retailer’s central information system: • Daily POS sales data from the stores • The product assortment of each store • The mapping between the product EAN code (consumer unit barcode) with the retailer’s internal product code (retailer SKU) • The promotion activities running in the stores At this stage, no information regarding the stock of the products in the stores was available. The platform received the product catalogue from the three suppliers’ systems either in the form of an EDI message (for Suppliers B and C) or ASCII file (for Supplier A). Additional information regarding the products not contained in the EDI message was maintained by the suppliers over the Web, such as the association of promotional products to their non-promotional counterparts (i.e., to mother product codes).
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The platform sent order files in ASCII format to Supplier A over ftp which were automatically imported to the ERP system. The update of the sales data as well as other information took place during the night, so in the morning the user could see the sales in the respective store until the night before. The product EAN code (i.e., the unique number identifying the consumer unit of each product, which is assigned by the product manufacturer), was used for data alignment. This means that the EAN code was the bridge between the retailer’s internal information system and the suppliers’ information systems.
Before the start of the pilot, a lot of effort had to be invested in ensuring that the right products were loaded and appeared to each user. This was quite a difficult task, as the data from the retailer’s and the suppliers’ information systems had to be aligned. For example, there were centralized products that were not active in the supplier’s current product catalogue, but still existed in the stores and the retailer’s central warehouse. These products had to appear in the store’s assortment so that they could be ordered. Other products were maintained with the wrong EAN code or supplier code in the retailer’s system and thus could not match with the supplier’s product catalogue. Thus, all the products had to be checked one by one to ensure that the information that appeared to the users was complete and accurate. This was much more difficult to ensure on an on-going basis through the automatic data loading procedures that had to be enhanced with several data-validation rules. The pilot went live on October 1, 2001 and ran in the five pilot stores for six weeks, from the first week of October to the second week of November 2001. At this stage the five pilot stores used the Internet-based collaboration platform for their collaboration with the direct-delivery Supplier A and for ordering the products of the two centralized suppliers, Supplier B and C, to the retailer’s central warehouse. For the rest of the centralized products they followed the traditional process. During the first two weeks, several data-validation issues, such as products that were missing from the platform and thus could not be ordered while they should, frustrated the users, especially since this problem was leading to out-of-shelf situations. However, after the third week, the data-loading processes had become more robust and these issues had been minimized. In the following section we discuss the results from the pilot phase and the issues that remained thereafter.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
At the end of the pilot, shelf availability measurements were repeated to quantify the business impact of the new practice. For the centralized products of Suppliers B and C, these measurements showed a reduction of 59%, from 9.8% to 4%, in the total level of out-of-shelf and a similar (60%) reduction in the OOS caused by ‘wrong order quantity’ (Figure 6). The results for the direct-store-delivery supplier A were similar, showing a 67% reduction in the total level of OOS from 12% to 4%. These were significant business results and raised management attention from the various organizations. However, the pilot had also revealed several issues regarding the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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usability and expandability of the solution. As was coming out from the users’ feedback, while they could see the value behind exploiting the daily POS data and collaborating for supporting the store ordering process, they considered that there was still major room for improvement as far as the use of the system was concerned. Their main concern related to the long times it was taking them to complete the ordering process, due to the following reasons: •
•
•
•
•
As the system was centralized and they connected to it through a dial-up Internet connection, they experienced several problems and delays connecting to the Internet. This problem was due either to the Internet Service Provider (ISP) or the telecommunications infrastructure in the store or in the area. When connected, they also experienced delays in the system response. As the system was not running locally but was accessed over the Internet, these delays were mainly associated with the transfer rate of their Internet connection. In many cases the modems used were very slow (less than 19Kbps) so they had to be upgraded to 52Kbps. Another delay in the system response, as perceived by the users, was that the products in the system were not presented all at once but in pages. This fact combined with the low transfer rate meant that a user spent a lot of his/her time just waiting for the pages to download, which was not productive. As the stock information was not available in the system, they had to review the products on the shelf and in the store’s back-room, in order to check the available stock. This fact resulted in further delays in the process, while for the suppliers’ salesmen it meant that they had to visit the store in order to place a suggested order. During the pilot phase, matching the stock-count to the information on the screen was also a useless and time-consuming task just because the order of the products on the printout did not match with the order the products appeared on the screen. In addition, the system was not optimized at that time for printing and the attempt
Figure 6: Comparing the OOS Rate for Centralized Products Before & at the End of the Pilot Out-of-she lf rate - Centralise d Products 12,0%
Before Pilot
10,0%
End of Pilot
8,0% 6,0% 4,0% 2,0% 0,0% Wrong order quantity
No order
Not delivered by the CWH
Not replenished from backroom
Product code change
Total
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to print a list of products could take quite long, especially as old-technology printers were used. All these issues resulted in time delays, both in the use of the system and the new ordering process, which varied from store-to-store depending on the size of the store. The smaller stores, which had a smaller number of products in the assortment and didn’t have to check the stock, were experiencing smaller delays with the process than the larger stores. However, all the people in the stores involved were frustrated about these time delays, leaving aside their insecurity that products might be missing from the system. This insecurity was translated into anger in the two cases where the back-end integration between the Internet platform and the retailer’s information system didn’t work properly, resulting in the orders not being sent at all! Apart from these usability and technical issues, the retailer had to face one other major concern regarding the expandability of the PCSO concept. During the pilot, the people in the store had to deal with four different ordering processes: (1) (2) (3) (4)
the traditional one for direct-store-delivery products, in which they had to review and confirm the orders prepared by the supplier salesmen; the traditional one for centralized products, in which they had to prepare the order for all centralized products (from 4.000 to 6.000 products to be reviewed each time) and send it to the retailer’s central warehouse; the PCSO process for direct-store-delivery Supplier A, in which they had to review the salesman’s order proposal in the computer and confirm it there; and the PCSO process for the centralized products of Suppliers B and C, in which they had to prepare the order themselves, using the information that was available on the Internet platform and taking into account suggestions by the salesmen if they existed.
Taking into account that Veropoulos was selling products of around 1.000 suppliers, 500 of whom delivered through the central warehouse, this was too complicated an ordering process for the stores to follow in case there was a gradual adoption of the system by the suppliers. It was thus decided that rollout to the rest of the stores would only take place if the new process would incorporate the total ordering to the central warehouse. In this way, the store would have to deal with just one system when preparing the order for the central warehouse, no matter if the supplier participated in this process or not. From an IT standpoint, this decision meant that the platform would have to be fed with product information from the retailer’s information system, as the respective suppliers didn’t participate in the process yet. This fact was a much greater data management challenge than confronted up-to-then. This information was not maintained correctly in the retailer’s information system, which is a typical situation for almost any retailer in the supermarket sector. As a reference, we can mention that in the retailer’s database there were 700,000 product records, of which only 15,000 should be selected and used, the ones that were actually active in the stores at the moment. Several data validation rules and filters had to be developed in order to deal with this issue. Another challenge had to do with the scalability of the platform, which had not been designed from Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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the beginning to deal with so many products, stores, and the respective POS and assortment data. With the support of the retailer’s top management, the solutions towards overcoming the above problems and reaping the potential business benefits were sought in the following directions: •
• • •
The loading of all the centralized products on the Internet platform, to fully cover the internal store ordering process to the central warehouse. This also required the incorporation of an order proposal mechanism to deal with the large number of products to make this process usable for the store users. The development of several data-validation rules to initially clean up the data and set up robust data-loading procedures that perform several checks in order to ensure that the information is updated correctly, even in cases of failures. The redesign of the platform and upgrade of its user interface to deal with the new requirements. The development of robust mechanisms ensuring the reliable transmission of information between the retailer’s and suppliers’ information systems and the collaboration platform, which should also give notification in case of failure (e.g., by sending an e-mail or mobile SMS message in the opposite case).
There were many more technical barriers to be overcome in this effort to make the system efficient and effective in its use. Nowadays, Veropoulos is using the platform in all the 200 stores of the chain to support the internal store ordering to the central warehouse, while suppliers gradually start getting involved in the process of collaborative store ordering.
REFERENCES
Bell, D.R., & Fitzsimons, G.J. (2000). An Experimental and Empirical Analysis of Consumer Response to Stockouts. Working Paper #00-001, Wharton Marketing Working Papers Series, The Wharton School, University of Pennsylvania, USA. Campo, K., Gijsbrechts, E., & Nisol, P. (2000). Towards understanding consumer response to stock-outs. Journal of Retailing, 76(2), 219-242. Campo, K., Gijsbrechts, E., & Nisol, P. (2002). Dynamics in consumer response to product unavailability: Do stock-out reactions signal response to permanent assortment reductions? Journal of Business Research. Article in Press, No: 5856. Available at: www.sciencedirect.com Cetinkaya, S., & Lee, C.Y. (2000). Stock replenishment and shipment scheduling for vendor managed inventory. Management Science, 46(2), 217-232. Cheung, K.L., & Lee, H.L. (2002). The inventory benefit of shipment coordination and stock rebalancing in a supply chain. Management Science, 48(2), 300-306. Clark, T.H., & Lee, H.G. (2000). Performance interdependence and coordination in business-to-business electronic commerce and supply chain management. Information Technology and Management, 1(1/2), 85-105. Cooke, J.A. (1998). VMI: Very mixed impact? Logistics Management Distribution Report, 37(12), 51. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Dhar, S.K., Hoch, S.J., & Kumar, N. (2001). Effective category management depends on the role of the category. Journal of Retailing, 77, 165-184. ECR Europe (2002). European CPFR Insights. ECR Europe Publications. Available at: www.ecr-europe.com Fitzsimons, G.J. (2000). Consumer response to stockouts. Journal of Consumer Research, 27(2), 249-266. Gruen, T.W., Corsten, D.S., & Bharadwaj, S. (2002). Retail Out-of-Stocks: A Worldwide examination of Extent, Causes and Consumer Responses. The Food Institute Forum (CIES, FMI, GMA). Holmstrom, J., Framling, K., Kaipia, R., & Saranen, J. (2002). Collaborative planning forecasting and replenishment: New solutions needed for mass collaboration. Supply Chain Management: An International Journal, 7(3), 136-145. Kurt Salmon Associates (1993). Efficient Consumer Response: Enhancing Consumer Value in the Grocery Industry. Washington, DC: Food Marketing Institute. Perfett, M. (1992). What is EDI? Oxford, UK: NCC Blackwell Limited. Pramatari K., Papakiriakopoulos, D., Poulymenakou, A., & Doukidis, G.I. (2002). New forms of CPFR. ECR Journal, 2(2), 38-43. Roland Berger (2002). Full-Shelf Satisfaction. Reducing out-of-stocks in the grocery channel. Grocery Manufactuers of America (GMA). Roland Berger (2003). Key Industry Trends in the Food, Grocery and Consumer Product Supply Chain. Grocery Manufacturers of America (GMA). Schary, P.B., & Christopher, M. (1979). The Anatomy of a Stock-Out. Journal of Retailing, 55(2), 59-70. Soliman, K.S., Chen, L., & Frolick, M.N. (2003). ASPs: Do they work? Information Systems Management, 20(4), 50-57. Straughn, K. (1991). The Relationship Between Stock-Outs and Brand Share. Unpublished Doctoral Dissertation, Florida State University. Verbeke, W., Farris, P., & Thurik, R. (1998). Consumer response to the preferred brand out-of-stock situation. European Journal of Marketing, 32(11/12), 1008-1028. Vuyk, C. (2003). Out-of-Stocks: A Nightmare for Retailer and Supplier. Beverage World, 122(2), 55.
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APPENDIX Order Process Pros Order to the central warehouse, supported by: Hand-scanners § Fast checking of the shelves § Fast order send-out § Minimizing errors due to wrong code typing
Print-out of the assortment
§
Easy to follow-up on the full product assortment and not omit products from the order
Cons § § §
§ § § §
Order for direct-store-delivery products: The supplier salesman § The salesman knows well the acts as the order-taker supplier products, the marketing activities, etc. § The salesman focuses on a limited number of products, so he can pay more attention § He usually keeps track of previous product deliveries, so he gets an indication of consumer demand
§
§
Easy to omit a product from the order if not found on the shelf Difficult to follow-up on new items in the assortment Just the physical check of the shelves does not give the right image of the consumer demand Requires more time to check through the shelves Requires more time to type-in and send the order Higher possibility of errors due to code typing mistakes Just the physical check of the shelves does not give the right image of the consumer demand The salesman does not have good knowledge on store assortment and store promotion activities, especially for competitive products His motives are often achieving sales bonus instead of reducing out-of-stocks and optimizing inventory levels
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Information Technology in the Practice of Law Enforcement 287
Chapter XVII
Information Technology in the Practice of Law Enforcement Susan Rebstock Williams, Georgia Southern University, USA Cheryl Aasheim, Georgia Southern University, USA
EXECUTIVE SUMMARY
In February 2001, the Charlotte-Mecklenburg Police Department began the rollout of a “mobile” information system that will eventually enable all information relating to incident reports, arrests, and investigations to be collected, distributed, and managed in a paperless, wireless environment. The system, dubbed Knowledge-Based Community Oriented Policing System (KBCOPS), began as a “grass roots” project within the police department to reduce paperwork, increase data accuracy, share knowledge and information, and promote a problem solving analytical framework. The system has been under development for seven years, from concept to implementation. The strategies and approaches used to develop this system, the technologies employed, and, most importantly, the challenges faced in merging wireless, wired, database, and applications technologies while satisfying the user requirements of the police department are detailed in this report. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
The Charlotte-Mecklenburg Police Department (CMPD) is the principal local law enforcement entity for the city of Charlotte, NC, and surrounding Mecklenburg County. CMPD serves a population of nearly 700,000 citizens in an area covering more than 550 square miles, and employs nearly 2,000 people, including sworn police officers and civilian support staff. Civilian personnel are assigned to a variety of clerical and administrative support functions related to but not directly involved in the practice of law enforcement activities. CMPD is headquartered in a state-of-the-art building in the downtown area of the city. This facility was designed and constructed to support the computing and data communications needs of CMPD. CMPD is commanded by the Chief of Police with the aid of the Deputy Chief of Administrative Services, Deputy Chief of Support Services, Deputy Chief of Field Services and Deputy Chief of Investigative Services. There are many units in CMPD. Figure 2 in Appendix A contains a full organizational chart for CMPD. Technology Services, a division of Administrative Services, manages existing information systems and is responsible for the design and implementation of new IT applications. In addition, they manage strategic planning and crime analysis and provide training for all police department personnel. The operating budget for CMPD in FY2005 is approximately $146 million. Administrative Services, which includes but is not limited to Technology Services, accounted for approximately 20% of the overall budget. CMPD’s operating budget over the 3 most recent fiscal years is shown in Table 1. CMPD prides itself on being a community-oriented law enforcement agency whose mission is “to build problem-solving partnerships with our citizens to prevent the next crime” (FY2004 & FY2005 Strategic Plan, p. 57). As stated in the 2004-2005 strategic plan, “the Police Department’s problem solving efforts are predicated on the availability of accurate and timely information for use by employees and citizens” (FY2004 & FY2005 Strategic Plan, p. 57). Since 1995, CMPD has recognized that IT will be one of the most important crime fighting tools of the 21st century and has emphasized the commitment to making information one of its most important problem-solving tools. The strategic plan recognizes that IT will play an integral role in achieving the strategic goal of “making Charlotte the safest large city in America” (FY2004 & FY2005 Strategic Plan, p. 31).
Table 1: CMPD Budget Summary
Field Operations Investigative Services Special Services Administrative Services Total Police Services
FY2003 $71,695,470 $14,963,920 $26,353,258 $27,513,572 $140,526,220
FY2004 $72,321,646 $14,388,016 $25,119,778 $28,886,714 $140,716,154
FY2005 $75,522,528 $14,915,761 $25,827,326 $29,827,691 $146,093,306
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Information Technology in the Practice of Law Enforcement 289
SETTING THE STAGE
CMPD was established in 1994 when the city and county police departments of the Charlotte-Mecklenburg area merged. At about that same time, CMPD hired a new Chief of Police, who recognized the potential of information technology as a problem-solving tool in the practice of law enforcement — particularly in the areas of crime analysis and computerized mapping. To further this cause CMPD commissioned a nearby university to conduct an in-depth needs analysis in 1995. CMPD also hired a planning director to lead the effort of updating or replacing antiquated systems, and more importantly, to identify new systems that would improve the quality of policing. As a result of the needs analysis, an information systems master plan was created in 1996. The master plan called for the establishment of an infrastructure, followed by the development of missioncritical databases. Top priorities included the creation of a wireless network, an improved dispatching system, and a new report management system. The information system requirements of CMPD are many and varied. Major systems include those that support (1) administrative and personnel functions; (2) dispatching and 911 emergency services; and (3) incident reporting, case management, arrest, investigative, and crime analysis activities. The system that supports the information requirements encountered in the daily activities of law enforcement is of primary interest in this case. This mission-critical system includes, but is not limited to, incident reporting, case management, arrests, investigation, and crime analysis. The Knowledge-Based Community Oriented Policing System (KBCOPS) was designed and developed to support these activities. Prior to the roll out of KBCOPS, daily law enforcement activities were carried out in a paper-laden environment. The processes of reporting and investigating incidents were not linked. When an incident was reported, a patrol officer was dispatched to perform a preliminary investigation. During this investigation, the officer took notes on a small paper notebook. When the officer returned to headquarters, often several hours later, he would file a paper report detailing the incident based on his notes and memory of the details of the case. The paper report was given to the appropriate supervisor for approval. The reports were sometimes returned to officers for revision before approval. Reasons for returned reports included spelling errors, grammatical errors and lack of sufficient information about the incident. Patrol officers quickly became aware of which supervisors were more likely to accept their reports without revision. In addition, reports were often resubmitted to a different supervisor due to shift changes. One problem arising from resubmission to a different supervisor was that the new supervisor was not aware of the initial rejection of the report and the reasons for the rejection. Once the report was approved it was sent to the Records Department. The Records Department was responsible for entering some of the information from the report into a database, archiving the report and routing a copy to the proper investigative unit. The supervisor for the investigative unit then assigned the case to a detective. The time frame from reporting an incident to assignment to a detective was four to five days. In the pre-KBCOPS environment, systems across CMPD did not effectively link to each other. As a result, when a detective discovered a pertinent piece of information upon investigation of the case, the patrol officer who originally investigated the case was not usually notified and there was no mechanism for the notification to take place. If an officer wanted to look at crimes with similar characteristics, the paper reports for those crimes Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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would have to be pulled from the archives by the Records Department and the cases would be analyzed manually by the detective. Information needed for crime analysis, which identifies patterns that might lead to the prevention of the next crime, was not readily accessible across units. Although information technology supported the collection of data needed in daily law enforcement activities prior to the rollout of KBCOPS, it did not meet the needs of the department with respect to sharing, assimilating, and reviewing these data. It also fell short of fulfilling the Chief’s vision of IT-enhanced law enforcement. Efforts to create KBCOPS began in 1996. The development and implementation of this new system is the subject of the case described in the following section.
CASE DESCRIPTION
When a police officer responds to an incident in the field an incident report is filed. The first portion of KBCOPS implemented at CMPD — the Incident Reporting Subsystem — supports the electronic capture, storage, and retrieval of these reports. Functionality has since been added to support case management activities, arrests, investigative activities, and crime analysis. The following sections describe the features of the system in more detail as well as the required infrastructure, the process used to develop the application, and user perceptions of the system.
The KBCOPS Application
The Incident Reporting subsystem rolled out in February 2001 and consists of modules for creating and approving incident reports. The Incident Reporting subsystem captures all information needed to file an initial police report. This includes data pertaining to suspects, vehicles, victims, witnesses, relationships between suspects and victims, the role a person plays in a crime (victim, suspect or witness) and prior offenses. Accurate, complete, and timely information is critical to subsequent arrest and investigative activities. KBCOPS runs in a client/server environment. The client runs on laptops issued to police officers in the field, in what is essentially a browser window. Officers use the client software to create police reports while they are in the police car rather than waiting until they return to their division office or police headquarters to complete their reports. The ability to capture the data at or near the source, as opposed to hours afterwards, is a significant benefit of KBCOPS because it pushes better investigation at the scene and improves the quality of the information contained within the incident report. Confidence in the merits of this system is so strong that upon initial roll-out of the Incident Reporting sub-system officers graduating from the police academy were issued three items: a flak jacket, a weapon, and a laptop. To complete an incident report an officer fills out a series of forms that are generated as Web pages. Figures 3 through 5 in Appendix B provide examples of forms used in an incident report. Each form is submitted via a wireless link to a server at headquarters (HQ). Context-sensitive field-level and form-level intelligence and workflow routing capabilities are built into this application. Context-sensitive field-level intelligence means that given a specific piece of information the system automatically knows which remaining Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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pieces of information are needed and, in many cases, what the range of acceptable values for those fields can be. Forms are also context driven — which means the next form generated is dependent on the entries on the previous form. This kind of built-in intelligence enables the system to check for errors, omissions, and inconsistencies. Officers must correct these errors before the report can be submitted. The length of time needed to complete an incident report depends upon the nature of the crime but typically ranges from thirty minutes to two hours. The information submitted by officers in the field is immediately available to other authorized users of KBCOPS. Once a report is filed its contents cannot be modified. Each time changes or additions to an existing report are needed a copy of the report is generated. Changes are appended to the copy and it is saved as a new report. Each previous version remains intact, ensuring that CMPD never loses a version of the incident report — an important consideration for data integrity. Once an incident report has been submitted, it must be reviewed by a supervisor. If the report is rejected the supervisor provides comments as to why. Reports are often rejected due to spelling and grammatical errors. The supervisor’s comments and submission history of the report are recorded, which prevents officers from submitting the same report to another supervisor for approval without first making the corrections suggested in the previous supervisor’s comments. Figure 6 in Appendix B shows the screen the officers view to determine the status of their reports. After the report has been approved, a rule-based feature routes the report to the proper investigative unit. These rules are quite complex — requiring knowledge of statutes, policies and specifics of the crime, offender(s) and victim(s). Prior to the development of the system routing a report to the appropriate investigative unit could take days or weeks. Now, the report is routed in a matter of hours. The Case Management subsystem, which went live in August 2001, extended these capabilities to allow tracking of a case from initial incident all the way through the arrest and investigation procedures. The officer in charge of the investigative unit responsible for the case can view the case summary, assign investigators to the case, or re-route a case to another unit. The Case Management subsystem allows supplements to be added to a case. A case supplement provides an officer with a copy of the original report to change as needed. Both the copy and the original are kept to track the progression of the investigation. When a supplement is added to a case all officers involved are automatically alerted to the new information. Supervisors can make a supplement required, in which case officers are notified when a supplement is past due. Figure 7 in Appendix B illustrates the screen officers view to manage their cases. The Incident Reporting and Case Management subsystems facilitated the process of completing and tracking police reports. However, users remained unable to retrieve information from the database in any way other than report format. The KBCOPS database contains a wealth of information that can be used to identify and apprehend perpetrators and to identify patterns and trends in criminal behavior. In August 2002 search capabilities were added. Officers, detectives, and other users can now use a large number of search options to retrieve information from the database. Searches can be based on the type of crime, date ranges, patrol division(s), method of operation (M.O.), physical characteristics of the suspect, weapon(s) used, or any combination of a wide range of variables. Figures 8 and 9 in Appendix B show examples of typical searches. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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In addition to search capabilities, several other new features have recently been implemented. For example, the data captured in KBCOPS can be rolled up into the format required for the National Incident-Based Reporting System (NIBRS). NIBRS (NIBRS Implementation Program, 2002) is a nationwide tracking system used to solve crimes that occur across individual police department jurisdictions and across state lines. Although many local police departments have records management systems to capture data about crime incidents, they are unable to use those systems to report to NIBRS because the data are in an incompatible format, not coded in a NIBRS-compliant manner or not all of the mandatory NIBRS elements are captured. A feature that will provide a direct interface to NIBRS is currently underway. Additional enhancements are being planned. One of these will integrate KBCOPS directly with other local, state, and federal law enforcement systems, as well as hospitals, pawnshops, utility companies, and other entities that possess potentially vital information. Additionally, GIS and global positioning system components will be integrated into KBCOPS to provide street file overlays on the officer’s laptop. Finally, a Juvenile Arrest subsystem will be added in the near future. Handling crimes involving juveniles is complex because statutes and policies for dealing with juvenile offenders and victims differ significantly from those that do not. For example, fingerprints are not taken from juveniles for positive ID, making it nearly impossible to link crimes involving the same juvenile offender. The Juvenile Arrest module is scheduled for rollout in March 2004. Table 2 summarizes the currently implemented and planned components of KBCOPS.
The KBCOPS Infrastructure
KBCOPS supports nearly 2,000 users. Category 5 (CAT5) cable is used within HQ for local area network (LAN) connectivity. CAT5 provides data transmission speeds of up to 100 million bits per second (Mbps) over normal telephone wire. Fiber extends to district offices up to 18 miles from HQ via a synchronous optimal network (SONET). SONET (Tomsho et al., 2003) is a wide area network technology that is used to allow dissimilar long-distance networks to transmit voice, data and video at speeds in multiples of 51.84 Mbps using fiber-optic media. Within the headquarters building and at district offices, CAT5 cable drops are available every 10 feet each with quad jacks supporting two data connections and two voice connections. This wiring infrastructure provides maximum data connectivity and work area layout flexibility. The KBCOPS infrastructure initially included 1,500 laptops in the field (one issued to each patrol officer), more than 100 laptops at police headquarters for staff and support personnel, and some 500 desktop computers. Laptops are now issued to vehicles rather than to officers. Currently, over 700 police vehicles are equipped with trunk-mounted modems that support wireless data communication to and from headquarters. Servers and data switches were installed to support the implementation along with the required conventional wired connectivity. CMPD worked with a local wireless data provider to achieve a 99.9% coverage rate in the community. Approximately 53 towers are used to enable communication via TCP-based cellular digital packet data (CDPD). TCP (Tomsho et al., 2003) is an acronym for transmission control protocol, the primary protocol for transport of data packets over the Internet. CDPD (Tomsho et al., 2003) is a mobile computing technology used for wireless Internet and e-mail access. CDPD “sends Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 2: Components of KBCOPS Incident Reporting System Key Functionality Create Incident Reports Approve Incident Reports Assign Case to Investigative Unit View/Track Status Add Supplement Case Management System Key Functionality View Case Summary Assign Investigator(s) to Case Re-Route Case to Another Unit Add Supplement Search Capabilities Key Functionality Search by Type/Date of Crime Search by Patrol Division Search by Method of Operations Search by Suspect/Multiple Suspects Search by Weapon/Vehicle NIBRS Reporting Key Functionality Roll-up crime data for federal reporting Juvenile Arrest System* Key Functionality
Key Features Context-sensitive intelligence Checks for errors/inconsistencies Rule-based assignment algorithms Status screens Automated version control Key Features Complete history of all versions Automated alerts for new data Supplements can be required Notification of past due supplements Key Features
Key Features Collects/edits information for NIBRS Produces error reports Formats monthly data for submission Key Features
View Case Summary Complete history of all versions Assign Investigator(s) to Case Automated alerts for new data Re-Route Case to Another Unit Supplements can be required Add Supplement Notification of past due supplements Planned Enhancements Interfaces with other law enforcement entities Interfaces with hospitals, utility companies, pawnshops, and so forth Interface with GIS components to provide street overlays
* Scheduled to roll out in March 2004 packets of digital data over unused cellular voice channels at a rate of 19.2 Kbps” (Tomsho et al., 2003, p. 599). Although these towers are shared with cellular phone service providers, the frequencies over which CMPD transmits data do not compete with those used by cellular phone customers.
The Development & Implementation Process
The development process for KBCOPS has been lengthy and costly-running five years from concept to rollout of the Incident Reporting subsystem at a cost of nearly $4 million. Although a majority of this cost has been offset by grant funding, the remainder has been supplied through departmental funds. The development of KBCOPS was based upon the systems development life cycle (SDLC). The SDLC is a process for understanding how an information system can support the needs of a business, then designing, building, and implementing the system (Dennis Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 3: Systems Development Life Cycle Phases SDLC Phase Planning Analysis Design Implementation Support
Purpose Assess project feasibility; establish budget, schedule, and project team Study the business needs; determine system requirements; develop system models Create a detailed system specification (interface, database, program and network designs) Build the system, test the system, and place it into operation Maintain and enhance the system through its useful life
& Wixom, 2002). As shown in Table 3, the SDLC consists of five fundamental phases: planning, analysis, design, implementation, and support. Planning for KBCOPS began in 1996 with the creation of the information systems master plan. Shortly thereafter, efforts to understand the business needs began with one year spent determining the system requirements. System developers and consultants worked with a functional area expert from within CMPD to map the required processes to design specifications. The development team consisted of nine people — including applications developers, database administrators, systems administrators, project managers, consultants, and network/mobile communications experts. Coding for the Incident Reporting subsystem was finished in April 2000, and system validation testing was conducted in July and August of that year. As a result of these tests new functionality was added and a long test/fix cycle ensued. Despite early success in the requirements analysis and process mapping phases of development, the project soon suffered a variety of problems. These problems were primarily attributed to the creation of inadequate design specifications, failure to control project scope, and lack of a strong technical project leader. In addition, a number of organizational changes were taking place, including the retirement, in 1999, of the Chief of Police. Both the retiring Chief as well as his replacement supported the development of KBCOPS. As development of the system progressed the project experienced “scope creep”. Scope creep — the identification of new requirements after the project was initially defined — is one of the most common reasons for schedule slippage and cost overruns (Dennis & Wixom, 2002). In 1998 a new Director of Information Technology was hired, and the project was “re-scoped” with clearly identified project phases. An experienced technical project manager was brought on board to work with and oversee the development team. A formal development plan was established with a heavy emphasis on system validation testing. The design specifications were revised and new requirements defined. A great deal of progress on the KBCOPS application soon followed. Design specifications were developed using Oracle Designer/Developer — a computer-aided software engineering (CASE) tool that supports the tasks associated with the system development process. The use of CASE tools has been shown to reduce development time (and costs) and improve software quality (Dennis & Wixom, 2002). The Incident Reporting subsystem is comprised of more than 1,000 modules (screens, reports, PL/SQL code segments, etc.) and 240 tables. JavaScript and HTML were used for the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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majority of the client application on the laptops, with PL/SQL running on the Oracle server. At the time the KBCOPS application was developed the limited bandwidth (19.2 Kbps) available for the wireless transmission of data caused lengthy delays for officers filling in forms using the wireless connection from the field. Changes in the system architecture, including moving to JavaScript on the client side and redesigning transaction confirmation screens (referred to as “Success” screens) were required to address these delays. The use of JavaScript allows some validation of information entered into the forms (such as ensuring required fields are not blank) to be handled on the client machine, instead of sending the form over the wireless connection to the server for all validation (Gosselin, 2000). The rollout of the Incident Reporting subsystem — the first subsystem to go live — was conducted over a 6-week period. Two of the 12 patrol divisions went live each week. During this time period new incident reports were entered both in KBCOPS and in the old system to provide backup in the event of a major latent bug in the system. No major problems were found and duplicate data entry was soon discontinued. CMPD used a proactive support strategy to assist officers during the implementation of the Incident Reporting subsystem. Officers and other users received 16 hours of initial training to learn how to use the system. A technical team of 12 full-time and six splittime people supported officers in the field. If an officer had questions or problems that could not be handled remotely, support personnel would go to the officer in the field to assist. Some support personnel were stationed at HQ, some at district offices, and others were mobile and thus able to respond quickly to an officer’s questions at the incident site. Today, support is handled by a team of four people at HQ. There is no longer a need to assist officers in the field as the system has become more familiar. KBCOPS has become an integral part of training on “report writing” within the police academy. Approximately 16 hours of the two weeks spent on report writing is dedicated to KBCOPS. Officers identified by their peers as “power users” help fellow officers when questions arise. The rollout of new features and subsystems now utilizes the “big bang” approach rather than a phased approach going division by division. Incremental changes are not viewed as significant enough to require a more conservative approach. Development and implementation of new subsystems is ongoing. In September 2002 the Director of Information Technology was replaced. Despite this change in leadership support and enthusiasm for the application, it has continued. A summary of how a case was processed before KBCOPS versus after KBCOPS is provided in Table 4. Due to the automatic storage of fields in the report to the database and the automatic routing of the approved report to the appropriate investigative unit by the system the time from reporting an incident to assigning an investigator has been reduced from four to five days to less than 24 hours. A timeline of the major events that took place during the development and implementation of the KBCOPS application is provided in Table 5.
User Perspectives of the KBCOPS Application
In November 2003 several users were interviewed to determine their perceptions of the KBCOPS application. The participants came from two groups, patrol officers and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 4: Before & After Comparison of Processing of a Typical Case Event Incident reported Preliminary investigation Incident report Approval of report by supervisor
Report to Records Department Assign to investigative unit
Investigation of case
Before KBCOPS • Officer dispatched to scene • Officer interviews witnesses and records information in paper notebook • Officer files a paper report after returning to headquarters • Officer submits paper copy of completed report to supervisor • Report may be returned due to errors • Report revised and submitted (possibly to different supervisor) • Supervisor may not be aware of previous supervisor’s comments • Paper report sent to Records Department to be entered into database and archived • Records Dept. sends a paper copy of the report to investigative unit • Supervisor of investigative unit assigns it to a detective • Often takes 4-5 days from reporting of an incident to assignment of a detective • Detective updates paper case file • Only those with access to paper file see updates • Cases with similar characteristics pulled and analyzed manually
After KBCOPS • Officer dispatched to scene •
Officer interviews witnesses and records information in paper notebook
•
Officer files a report on-line while in the patrol car
•
Officer submits the report wirelessly The system alerts the supervisor of a new report Report may be rejected due to errors Each supervisor’s comments are saved by the system as part of the report
• • •
•
• • •
• • • •
Report does not go to Records Department but is automatically stored in the database System alerts investigative unit to the report Supervisor assigns a detective to the case electronically Often takes 24 hours or less from reporting of an incident to assignment of a detective Detective updates case electronically All versions maintained System alerts officers involved to updates Cases with similar characteristics analyzed using search capabilities
detectives. The interview questions were drawn from the technology acceptance model (Davis, 1989) and the information systems implementation literature (Burns, Turnipseed & Riggs, 1991). The interview protocol can be found in Appendix C. Example comments from each group are provided.
Detectives’ Comments: “In the beginning, the time it took was huge. The compression utility has made a big difference. I am excited about it now. From an administrative point of view, it is great.” Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 5: Timeline for KBCOPS Application Year 1994 1996 1996 1998 1999 2000 (April) 2000 (July) 2001 (February) 2001 (August) 2001 2002 (August) 2002 (September) 2004 (March)
Event CMPD established after merger of city and county police departments CMPD created an IS master plan Efforts to create KBCOPS began New director of IT and experienced technical project manager hired Chief of Police who initiated project retired Initial coding for incident reporting subsystem completed System validation testing on incident reporting subsystem Incident reporting subsystem goes live Case management subsystem goes live Compression software installed Search capabilities added to system New director of IT hired Juvenile arrest module projected to go live
“Newer officers do not seem to have a problem with the system. Older officers still have some resistance.” “Investigation has improved. It used to take 4 or 5 days to assign a case to an investigator. Now it takes less than 24 hours. Also, being able to do searches is a big timesaver. We can identify patterns and trends. Our case clearance rate has improved greatly.” “There is a big learning curve. Officers try to take shortcuts to get through the system. The reason the officers take so many shortcuts is there are so many screens to go through. Narratives aren’t being done as well as they were before. Quality of data is still one of the biggest problems.”
Patrol Officers’ Comments: “The availability of information is a big plus. The ability to do searches transformed the system from one that seemed worthless to one you can use. Once you see how the information you enter is used, you understand why they need it. Seeing the big picture really makes a difference.” “We were trained on how to use the system, but we didn’t understand why we had to use it or how it would alter the investigation process.” “The time it took to enter all that data seemed futile before. Now I use the search capabilities every day.” “Entering information one screen at a time is a big problem. You can’t see the big picture. Some screens ask for information you did not know you had to collect.”
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“Spellchecking takes too long. You can’t do intermediate saves in KBCOPS. If the system goes down while entering information, you lose the whole screen. I use Word so that I can undo, use the spellchecker and do intermediate saves.”
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
Despite the success of the project, CMPD faces ongoing challenges with respect to the KBCOPS application. These challenges stem from technology, user, budgetary issues and aligning IT with community policing objectives.
Technology Issues
At the time this case was written bandwidth in the wireless environment was limited to 19.2K, with an effective bandwidth of 10K. Compression software was installed to improve bandwidth, reducing delays by 60%. However, officers continue to experience delays in uploading and downloading forms. The system manages approximately one million inbound mobile requests per month and supports 200-250 simultaneous users. The system has thus far proven to be highly reliable, experiencing fewer problems than the internal LAN within CMPD. However, reliability could become an issue in the future as new modules are added and the number of simultaneous users increases. Although there have been no security breaches to date, security of the wireless implementation must continuously be evaluated. Initially, security issues required almost two years to resolve. The current solution includes user authentication with two levels of encryption. User authentication is the process of identifying authorized users (Newman, 2003). The most common method is through the use of user names and passwords. Encryption prevents a person with unauthorized access to data from reading them (Newman, 2003). Two independent vendors ensure an end-to-end secure connection. The commercial wireless provider encrypts data across its channels, and an additional layer of priority encryption and compression is performed by a leading software-based security system running on CMPD servers. Maintaining security across the network will be an ongoing challenge for CMPD as new encryption standards and better authentication techniques become available. As with any IT application, the need to manage and integrate emerging technologies is an ongoing challenge. Although there has been relatively little need for maintenance or replacement of equipment, this will become a necessity in the future.
User Issues
Restructuring CMPD’s business processes forced changes in the daily activities of police officers. These changes continue to meet with some resistance. If not managed properly, user resistance can lead to attempts to undermine the system (Jiang, Muhanna, & Klein, 2000). Thus, finding effective ways to deal with user resistance is vital to the continued success of the project. Although many users are satisfied with the system, pockets of user resistance are visible. Some officers see the system as pushing extra work on them. KBCOPS requires Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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them to spend a significant amount of time entering information that populates the incident database — a database that is subsequently used primarily by detectives. Although the implementation of search features has helped, some patrol officers still question the value added by the system. Additionally, the software has some shortcomings that frustrate users. Specific issues include the delay time for submitting forms, the inability for the officers to save a form before it is submitted, and the lack of support for spellchecking. The last two issues are particularly problematic for forms that require narratives. As a temporary solution, many officers enter their narratives in Word so that they can save their work intermittently and use the spelling and grammar features. They then copy the narrative to the required form. Although this workaround accomplishes the task, it takes extra time and leads to frustration. Another challenge is created as officers become familiar with the system and take “shortcuts” to avoid filling in extra forms. Entering certain information in one form may generate many additional forms to fill in. Additionally, officers sometimes fill in the required fields in a form and leave non-required fields blank. Consequently, the information stored is sometimes incomplete and inaccurate, compromising the quality of the data and the resulting investigation. The shortcuts and incomplete forms also lead to problems between officers who enter the information and the detectives that depend on it. Training is one of the most important parts of any change management initiative and is one of the most commonly overlooked (Dennis & Wixom, 2002). Training and a willingness to combine knowledge and skill sets across functional lines are critical success factors for implementation of large systems (Benji, Sharman, & Godla, 1999; Gauvin, 1998). Research suggests that training improves the likelihood of user satisfaction, increases organizational effectiveness, and improves employee morale (Barney, 1991; Peters & Waterman, 1982; Rosenberg, 1990; Ulrich, 1991). Although CMPD trains officers on the use of KBCOPS, training focuses on how to use the system rather than why it should be used and how it fits into the bigger picture of crime investigation.
Budgetary Issues
Continual feedback from users has led to a two-year backlog of requested enhancements. CMPD’s ability to respond to these requests is threatened by the drying up of federal grants that to this point have largely underwritten the development of the system. Federal funds previously directed to local police initiatives are being eliminated or redirected to homeland security. Replacement of these funds will be a challenge (FY2004 & FY2005 Strategic Operating Plan). Further evidence of budgetary problems is reflected by unfunded CMPD budget requests of $1,409,074 in FY04 and $917,009 in FY05 (FY2004 & FY2005 Strategic Operating Plan). Unfunded requests directly affecting KBCOPS included installation of LAN switches and other networking equipment to enable direct access to the system. At a more technical level, system enhancements present challenges in establishing effective ways to deal with configuration management, defect tracking, quality assurance, and test planning. Developers identified these as areas of concern. Lack of code/ version control and inadequate testing are classic implementation mistakes (McConnell, 1996). Continued success of the project will require finding solutions to these problems. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Number of Index Offenses
Figure 1: Index of Crime Rates per 100,000 of Population 12000 10000 8000 6000 4000 2000 0 1996
1997
1998
1999
2000
2001
2002
Year
Aligning IT with Community Policing Objectives
Through the development and implementation of KBCOPS, CMPD has migrated from using IT in a reactive manner to employing IT in an active role for sharing knowledge, facilitating collaboration, and promoting a problem-solving analytical framework. The ultimate goal of KBCOPS is to improve the quality of policing. Although a causal relationship cannot be shown, crime rates decreased steadily between 1996 and 2002, as shown in Figure 1. CMPD recognizes that it will be difficult to continue to reduce crime. Police will have to expand the number and scope of partnerships to solve new problems. CMPD must identify new ways in which KBCOPS and IT in general can support strategic initiatives and continue to improve the quality of policing.
REFERENCES
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. Benji, P., Sharma, M.K, & Godla, J. (1999, Summer). Critical issues affecting an ERP implementation. Information Systems Management, 7-14. Burns, M., Turnipseed, D., & Riggs, W. (1991). Critical success factors in manufacturing resource planning implementation. International Journal of Operations and Production Management, 11(4), 5-19. Davis, F.D. (1989, September). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 319-340. Dennis, A., & Wixom, B. (2000). Systems Analysis and Design. New York: John Wiley & Sons. FY 2004, & FY2005 Strategic Operating Plan. Retrieved November 25, 2003: http:// www.charmeck.org/NR/rdonlyres/ebfoi6vj2zxo3fizpg57kgvuw 4oylbc 52onaniem63x4s2rweqz6oogoohigtncpeyky6lcxy35tnlaswait6msbirb/Section+1+-+Final+FY2004+SOP.pdf Gauvin, G. (1998). Plan to succeed. Manufacturing Systems, A44-A48. Gosselin, D. (2000). JavaScript. Cambridge, MA: Course Technology. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Jiang, J., Muhanna, W., & Klein, G. (2000). User resistance and strategies for promoting acceptance across system types. Information & Management, 37(1), 25. McConnell, S. (1996). Rapid Development. Redmond, WA: Microsoft Press. National Incident-Based Reporting System (NIBRS) Implementation Program. (2002, December 26). Retrieved November 25, 2003: http://www.ojp.usdoj.gov/bjs/ nibrs.htm Newman, R.C. (2003). Enterprise Security. Upper Saddle River, NJ: Prentice Hall. Peters, T.J., & Waterman, R. (1982). In Search of Excellence: Lessons from America’s Best-run Companies. New York: Harper & Row. Rosenberg, M.J. (1990). Performance technology: Working the system. Training and Development, 44(1), 43-48. Smith, D. (1996). Taking Charge of Change. Reading, MA: Addison-Wesley. Tomsho, G., Tittel, E., & Johnson, D. (2003). Guide to Networking Essentials (3rd ed.). Boston, MA: Course Technology. Ulrich, D. (1991). Using human resources for competitive advantage. In I. Kilmann (Ed.), Making Organizations Competitive. San Francisco, CA: Jossey-Bass. Varshney, U., Vetter, R., & Kalakota, R. (2000). Mobile commerce: A new frontier. Computer, 33(10), 32-39.
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South Service Area M ajor
East Service Area M ajor
Central Service Ar ea M ajor
N ortheast Service Area M ajor
Southeast Service Area M ajor
W est Ser vice Area M ajor
Field Services Suppor t D ivision Burglary/Pawn International Relations Captain
F ield Services Group Deputy Chief
Vice & N arcotics Captain
Intel Division Captain
Special Investigations Bureau M ajor
HITS ( Tr affic) Division Captain
Property C rim es D ivision C aptain Fam ily Services D ivision C aptain
Anim al Control Division Captain
Tactical Support Division Captain
Special Operations Bureau M ajor
R ecords D ivision Non-Swor n
C om m unications Division Non-Swor n
W atch Com m ander’s D ivision Captains
C om m unity Outr each D ivision C aptain
Special Events/Secondary Em ploym ent D ivision C aptain
C om m unity Ser vices Bureau M ajor
Support Services Group Deputy Chief
Robber y/Sexual Assault Division C aptain
Hom icide/M issing Persons Division C aptain
C rim inal Investigations Bureau M ajor
Chaplains
Police Attorney
Public Affair s N on-Sworn
Investigative Services Group Deputy Chief
Professional Standards C aptain
Internal Affairs Bur eau M ajor
Assistant to the Chief Non-Sw or n
Internal Com m unications N on-Sworn
Chief of Police
C rim e Lab D ivision Non-Sw orn
Fiscal Affair s Division N on-Sworn
Property & Evidence M anagem ent D ivision N on-Sworn
Hum an Resour ces Division N on-Sworn
Recruiting D ivision Captain
Training D ivision Captain
Com puter Technology Solutions D ivision Non-Sw orn
Research, Planning & Analysis D ivision Non-Sw orn
Research & Technology Bureau M ajor
Administrative Services Group Deputy Chief
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APPENDIX A
Figure 2: Organizational Chart
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APPENDIX B Figure 3: Incidents Screen — Collects Information about the Date/Time & Location of the Incident
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Figure 4: Incident Demographics — Collects Other Details about the Incident Including the Clearance & Case Status
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Figure 5: Suspect Description — Collects Descriptive Information on the Suspect
Figure 6: Officer Report Status — Allows Officers to Manage Reports
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Figure 7: Case Assignments — Enables Officers to Manage their Cases
Figure 8: Vehicle Search —\ Illustrates a Search for an Orange Cadillac
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Figure 9: Suspect MO Search — Illustrates a Search for a Black Male, age 30-40, with Dreadlocks & Gold Teeth who Committed a Robbery
APPENDIX C Multiple visits were made to CMPD to interview project participants. The first round of interviews was conducted in February 2001 during initial system rollout. The second round was conducted in November 2003. Participants in each round were purposively chosen to span diverse areas of functional and technical expertise. Questions in the first round were directed primarily to developers. Questions were based on the Varshney, Vetter and Kalakota (2000) mobile commerce framework and focused on identifying and understanding: (1) development methodologies, (2) infrastructure, (3) interface of mobile and land–based technologies, and (4) functionality of the application. Questions in the second round focused on understanding implementation issues and user acceptance of the system. The following questions guided the second round of interviews:
1. 2. 3. 4. 5.
At the time of our last visit, the Incident Reporting System was being rolled out. What other modules are now in place? What kind of roll out approach have you used? What organizational difficulties have you encountered in implementing new modules? In general, what is the level of acceptance of the system? What are the “before” and “after” views of the users (police officers)? To what extent have you integrated KBCOPS with external systems (hospitals, emergency services, federal and state law enforcement agencies, etc.)?
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6. 7. 8. 9.
What technical difficulties have you encountered as the system has grown? How do you train officers to use the system? How do you support users in the field? In what ways has the quality of policing improved since the implementation of KBCOPS? Are other police departments following your lead and adopting similar systems?
10.
To improve reliability, all interviews were conducted with two researchers present, each taking notes independently. These notes were later compared and synthesized to arrive at a clear and consistent interpretation of the verbal data.
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Chapter XVIII
End-User System Development:
Lessons from a Case Study of IT Usage in an Engineering Organization Murray E. Jennex, San Diego State University, USA
EXECUTIVE SUMMARY
How much end-user computing is too much? Should end users develop systems? This case looks at a study of end user computing within the engineering organizations of an electric utility undergoing deregulation. The case was initiated when management perceived that too much engineering time was spent doing IS functions. The case found that there was significant effort being expended on system development, support, and ad hoc use. Reviews of a few key systems illustrate quality problems found with the enduser developed systems. Several issues were identified affecting system development including use of programming standards, documentation, infrastructure integration, and system support. Additionally, the issues of obsolescence, security, and procurement are discussed.
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ORGANIZATIONAL BACKGROUND
This case looks at end user computing (EUC) in an engineering organization. End users are non-IS professionals who use computers and EUC are those computer activities end users perform (Edberg & Bowman, 1996). Alavi and Weiss (1986) describe EUC as a rapidly growing and irreversible trend. But how much EUC should organizations allow, what kinds of activities should end users do, and how should organizations manage EUC? The subject engineering organization is part of a large, United States based, investor owned utility. The utility is over 100 years old, has a service area of over 50,000 square miles, provides electricity to over 11 million people via 4.3 million residential and business accounts, and had operating revenues of approximately $8.7 billion in 2002. Utility net revenue has fluctuated wildly the last few years with a $2.1 billion loss in 2000, $2.4 billion in earnings in 2001 (primarily due to one-time benefits from restructuring and other initiatives), and decreasing to $1.2 billion in earnings in 2002. To service its customers, the utility operates a transmission and distribution system and several large electrical generation plants and is organized into three main line divisions: Transmission and Distribution; Power Generation; and Customer Service. Divisions such as Human Resources, Security, and Information Technology (IT) support the line divisions. The utility has approximately 12,500 employees. The power generation division is organized into operating units dedicated to supporting specific power generation sites. Each operating unit has line organizations such as Operations, Maintenance, Engineering, and Chemistry/Health Physics. Power generation operating units are supported by dedicated units from the corporate support divisions (security, human resources, IT). The engineering organization used for this case study is part of the nuclear operating unit of the power generation division and is located at the largest electrical generation site operated by the utility. IT support is provided to this operating unit by Nuclear Information Systems (NIS) which administratively is part of the corporate IT division and which operationally reports to both corporate IT and the nuclear unit of the power generation division. NIS supported engineering through its Engineering Support Systems group. This group consisted of a supervisor, two project manager/analysts, and two developers. This group was tasked with the maintenance of the 11 systems under NIS control. New systems or enhancements to existing systems were done at the instigation of engineering. Engineering through a charge-back process paid costs associated with these projects and developers were hired as needed to support the work. At the time of the study the engineering organization consisted of approximately 460 engineers disbursed among several different engineering groups reporting to the Station Technical, Nuclear Design Organization, Nuclear Oversight, and Procurement management structures. Industry restructuring was causing large drops in revenues that was driving the nuclear unit to reorganize engineering into a single organization consisting of 330 engineers under the management of the Nuclear Design Organization.
SETTING THE STAGE
Between May 2000 and June 2001, the cost of unregulated wholesale power rose above revenues collected via rates that were frozen in 1998, and the utility was not Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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allowed by the regulators to pass these excess costs through to its customers. As a result, the utility incurred $4.7 billion (pre-tax) in write-offs related to under-collected costs and generation-related regulatory assets through August 31, 2001. The net impact of these under-collected costs was a net loss of $2.1 billion by the utility in 2000. This put the utility into a crisis situation with the result that all divisions were asked to freeze hiring and restructure to reduce costs. The power generation division had its groups assess their work to determine what had to be done and what could be dropped or deferred. The nuclear division decided the existing engineering organizations were inefficient and could be consolidated under one management structure. This review determined that staffing should be lowered by approximately 25%. An engineering change management team was formed for identifying where and how work effort could be reduced. During this process, it was noticed that the engineering organizations were spending significant amounts of time and effort on information technology (IT) related tasks. Computer use in all groups/sub-groups included use of the site work process systems and the basic software such as e-mail, WordPerfect, and QuatroPro (all considered standard end user computing per Benjamin (1982)); plus, whatever other software/hardware was deemed necessary to accomplish their mission. This other software included special engineering software packages for a variety of tasks, such as valve, pump, and pipe diagnosis, analysis, and design, various activity tracking systems, and several programs custom built to meet special needs. However, it was also noticed that engineers were building and maintaining/supporting systems. The nuclear organization’s computer support was split between two groups. NIS was responsible for the design, acquisition, implementation, and maintenance of business systems. This included work process systems, the site network, and desktop systems. The computer engineering group, a subgroup of engineering, was responsible for the design, acquisition, implementation, and maintenance of the plant process and control systems. This included systems used to perform plant processes, such as chemical and water treatment systems, reactor control systems, the plant monitoring system, and control room systems. While this seems to be a clear demarcation of responsibilities, conflicts arose with the use of personal computers. Personal computers were originally brought on-site to support reporting and work functions and were clearly understood to be within the NIS domain. However, as personal computers became prevalent, engineering found innovative systems in support of plant activities, such as testing, data collection, and data analysis. During this period of personal computer adoption, NIS was focused on supporting the mainframe-based work process systems and then converting these systems to a client-server infrastructure, and did not have the resources or expertise to support innovative systems of personal computers. It was also perceived by the nuclear organization that NIS had little respect or concern for personal computers and their adoption in supporting plant or work processes. Engineering stepped into this void and provided expertise and support to plant personnel. This continued until the late 1990s when NIS attempted to reassert its control over personal computers used with the business systems. Engineering resisted this and while they had to acknowledge NIS control over the acquisition of personal computers for business systems, they found novel ways of getting around NIS controls. Calling personal computers test equipment and purchasing them along with support services and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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software with their own budget usually accomplished this. Additionally, engineering had begun to develop their own systems during the 1980s due to a lack of resources and plant knowledge within NIS. This practice continued even after NIS took over control of personal computer systems. It was for these reasons that engineering management perceived that a significant amount of work activities could be shifted to NIS. Finally, there was a perception by engineering that there was a lack of support by NIS for engineer IT needs due to this history. To assess engineering IT usage and determine work that could be shifted to NIS, a team was formed consisting of engineering and NIS representatives and led by the author, a former member of the engineering organization and at the time of the study, a member of NIS. The team leader was chosen specifically because he had been one of the engineers who had bypassed NIS and had developed systems of his own. It was expected that the team leader would have the trust of the engineering organization and would know where to look for IT activities. Engineering team members consisted of engineers serving as computer representatives/liaisons and were considered to be subject matter experts (SMEs). NIS team members were personnel serving in the engineering support systems group. The goal of the team was to generate an inventory of IT products and resources used by engineering organizations but not supplied, supported, or controlled by NIS, and to assess how IT usage could be better managed by engineering and NIS. The team started with the inventory generated by NIS’s Year 2000 (Y2K) program. This effort documented 151 systems not supported by IS that were used and supported by engineering where the support consisted of personnel and/or annual renewal/ licensing costs. It also documented another 11 systems used by engineering but supported by NIS. Next, the team collected data using various informal surveys and interviews while the project manager conducted 40 structured interviews. The process was to first generate an inventory of IT systems used by the engineering organizations but not maintained by the IS group. The scope of the inventory was any specialized software/hardware for data collection, testing, and analysis, specialized databases, any software used for system development, any generic software that was being customized through the generation of macros, scripts, or programs, and any other software/hardware assessed to be important to engineering and worthy of inclusion. The second step was to generate a list of IT resources existing within each engineering organization. IT resources were considered to be engineers with IT skills in demand by their coworkers such that they spent significant amounts of time assisting management or their group with IT support. The initial list of resources was developed by the SMEs. The project manager finalized the list after conducting 40 interviews of selected individuals. A set script was used for determining what amount of IT support was being provided by engineers to engineers, any additional inventory items, general levels of automation and needed IT, and what issues were involved in using IT in engineering. Interview subjects were selected based on input from the SME’s and known expertise and/or participation in IT development. The final step was to take the gathered data, analyze it with respect to dollars and time invested as well as issues identified, and generate a set of recommendations for improving management of the IT effort in the engineering organizations. This was documented in a final report by Jennex et al. (2000) that was presented to IS and engineering management and is used as the data source for this paper. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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CASE DESCRIPTION The Assessment
The assessment found a significant but poorly managed investment in IT in terms of money, time, and expertise. With respect to the management of IT, it was observed that NIS is tasked with managing the infrastructure, networks, and enterprise level systems. This provides an overall organizational perspective and strategy for managing these assets. Engineering IT is managed at the division level and was found to lack an overall engineering strategy for the use, adaptation, and implementation of IT. Additionally, IT was unevenly applied throughout the engineering organizations. Some groups were fully automated; others had process steps automated but not the overall process; and still others were not automated at all. The net effect was that IT assets were not performing as effectively as they could and many engineers were expending more time and resources than they should to obtain the information and data they needed. Specifics on these findings are provided in the following paragraphs.
Investment
The inventory recorded 267 systems and other hardware. This number excludes enterprise work process systems, basic personal productivity systems (MSOffice, WordPerfect, Access, etc.), and plant control systems. Included are the analysis tools, graphics packages, scheduling tools, equipment databases, image and web editing and authoring tools, and data collection tools used by engineers. The team was confident this number reflected at least 90% of what was in use. The investment in terms of dollars and effort was not totally determined, not all numbers were known and not all groups were willing or able to report all costs. However, with about 30% of the inventoried systems reporting this data it was found that approximately $1,650,000 had been spent to purchase these systems with an additional five-person years (during the last two years) expended on development. Additionally, $290,000.00 was spent annually on license or maintenance fees and 10 full time equivalent engineers (FTEs) were expended maintaining these systems. Finally, an additional approximate 10 FTEs were expended assisting other engineers in the use of these tools. For political reasons, there were significant exclusions from these figures including 45 FTEs and $335,000 in annual licensing cost supporting plant control IT. The team was confident that purchase and support costs and efforts would at least double if all the information was available. For perspective, these numbers were not expected and were considered by management to be extremely excessive although Panko (1988) found in the 1980s that 25-40% of IT expenditures were in EUC and Benjamin (1982) expected EUC to account for 75% of the IT budget by 1990 where EUC is the adoption and use of IT by personnel outside of the IS organization to develop systems to support organizational tasks.
Engineer Involvement in IT
It was observed that engineers supported IT in three ways: supporting other engineers’ use/acquisition of IT, learning to use the IT, and maintaining systems; building queries, macros, and reports for special/ad hoc information requests; and developing IT solutions for supporting engineering processes. It was reported previCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ously that at least 20 FTEs were expended supporting other engineers, learning to use IT, and maintaining IT and approximately five person/years were expended (over the last two years) supporting system development. Doubling these values (per the team’s estimate) gives 45 FTEs/year for items one and three. The second item was found to take approximately 5% of each engineer’s time. Taken as a whole, this is a fairly extensive activity, approximately 21 FTEs yearly. Combining these efforts and excluding assets dedicated to plant IT support (50 FTEs), approximately 66 FTEs/year (16%) are spent on end user IT functions, see Table 1 for a summary of these resources (Note that the 16% figure does not include time spent using enterprise work process systems or standard office personal productivity systems used for doing routine work activities.) This was considered excessive, and if eliminated, could almost provide the necessary manpower reduction. Rockart and Flannery (1983) found that 85% of EUC was focused on report generation, inquiry, and analysis. The assessment did not find that level of reporting, instead finding a little over 50%, however, even at this level, the ability to do ad hoc reporting was considered a tremendous strength and the team did not see the need for ad hoc reporting decreasing. However, there were several issues that caused the time needed for this activity to be greater than it needed to be. Chief among these are a lack of standard query/reporting tools, advanced training in the use of the available tools, a central repository for queries with the result that many queries were written over and over, and integration of the site databases resulting in more complex and time consuming query/report generation. Interviews recorded numerous complaints of end users not knowing where data was located. Engineers that spent significant time assisting in ad hoc reports and queries stated that their time was taken in assisting with SQL and finding out where data was kept. Additionally, there is no process for tracking end user reports to determine if they are used in sufficient quantity to warrant inclusion in the enterprise system. The team did not consider this very important but from the interviews it appeared that there were several organizations doing the same or similar reports. Discussions with NIS and end user managers found no awareness of what reports and queries were being run although both groups expressed interest in making repeatedly run reports and queries part of the formal system. This leads to the key issue of NIS focusing on the enterprise level and allowing end users to go their own way. This case is an example of more effort than necessary being expended on ad hoc reporting because the enterprise database structure was not available to the end users and no effort is being made to monitor end user usage for common reports and queries. Dodson (1995) found this to be a common problem when IS focuses solely on the organizational systems. What makes this issue more significant is the ability to generalize the average of 5% time spent on ad hoc reports to other organizations. This was considered excessive by the engineering Table 1: Summary of Engineering Time Spent Supporting IT Item Support, Maintenance, Learning to Use IT Ad Hoc Report Support System Development Total
Documented Time 20 FTEs/year
Estimated Minimum Time 40 FTEs/year
21 FTEs/year 2.5 FTEs/year 43.5 FTEs/year
21 FTEs/year 5 FTEs/year 66 FTEs/year
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organization’s management and would probably be considered excessive in many organizations once it was quantified. Perhaps the most interesting observation during the study was the generally held opinion that the ability to do ad hoc reports was a great strength. While this is an indication of system flexibility and end user ability, it did not occur to anyone that large amounts of ad hoc reports and queries could also be a negative indicator. To address this, the organization is considering publishing a data road map. Grindley (1995) predicted that, by 1998, 80% of all system development would be done by end users or their consultants and while this case did not find that high of a percentage of system development being done by engineering, it did find that the ability of engineers to develop new systems for addressing specific engineering problems was considered a strength and a need by the engineering organizations. The team agreed that this function would continue to require engineering involvement. However, this is the function least understood by engineering with respect to cost and process. Engineers followed minimal processes and considered the Capability Maturity Model (CMM) processes followed by IS to be a waste of time and money (NIS is a CMM Level 2 shop). The engineers justified the need for engineering to provide its own IT support through several reasons that could be combined into primarily three issues. The first is that engineering systems are generally not supported by IS so expertise to assist engineers with these systems only exists in engineering. The second is that due to lack of standardization there are multiple products supporting the same function, this makes having central support prohibitively expensive. Experts would be needed for over 200 systems and devices that in many cases are only used by a few people. The third was an overall poor relationship between engineers and IS.
END-USER SYSTEM DEVELOPMENT
The assessment observed that with NIS focusing on enterprise systems, engineering was left free to support its IS needs as it saw fit, and without management oversight, this IS self support caused the organization to shift significant resources away from its central focus and function of supporting power plant operation. Even though this significant use of resources by EUC is common in many organizations (Jenne, 1996), the resources attributed to end-user system development were thought to be excessive and not effectively used. Of particular concern was end user or end user-led system development. Several systems were looked at that were developed by engineering and several issues affecting the quality of these systems identified. These include not following IS development standards, inadequate documentation, obsolescence/replacement of systems, and security. Lack of development standards, maintainability, and documentation are identified as EUC development risks by Amoroso (1988), Davis (1982), O’Donnell and March (1987), Palvia (1991), Sumner and Klepper (1987), and McGill (2002). Wetherbe, Vitalari, and Milner (1994) and Beheshti and Bures (2000) identified obsolescence of systems as a regular IS issue and Sumner and Klepper (1987) identified security as EUC development issues. The assessment found several systems that were developed directly by engineering or developed by outside developers under the control and direction of engineering; Dodd and Carr (1994) classify this as Systems Development Led by End-Users (SDLU). Many of these systems were found to be developed without following NIS development Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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or programming standards, tended to not meet requirements, were hard to modify, and/ or were designed such that they could not interface with the organizational infrastructure. These systems result in much higher maintenance costs than expected. To illustrate these problems, two systems were found of which the team was told “unofficially” cost approximately $500,000 each with neither able to perform the function it was purchased for due in total or in part to incompatibility with the infrastructure and failure to fully identify requirements. Engineering developed the accelerated flow corrosion test tracking system after NIS rated it a low priority. Engineering developed the system using outside developers to code the system and engineers as subject matter experts. The purpose of the system is to track outage activities of three groups — engineers, maintenance, and quality control — in the inspection and repair of high-energy steam lines. Engineering worked with the vendor to develop the system to engineering’s perceptions of the requirements. Potential process improvements were not considered and IS, quality control, and maintenance were not included on the project team. The system was implemented for use during the 1999 outage; however, it failed to meet the needs of quality control and maintenance and was abandoned after only a few days of use. In 2000, engineering requested IS take a look at the system and attempted to make it work. IS formed a small project team to re-work the system. System requirements were gathered through a series of meetings that included all stakeholders and were used to correct the system. The reworked system was verified to meet the requirements of all users through a simulated outage test and was used successfully throughout the next outage. Management was satisfied with the activity as the system facilitated management reporting and assisted in reducing the activity time by 33%. A post outage review was held with all activity participants with enhancements being identified and approved by all four organizations. A one-month window was identified for the work to be completed prior to the next outage scheduled for the other unit at the beginning of 2001. The activity was performed with even more success during the second outage. A post outage review was also held after the 2001 outage and a maintenance plan prepared for maintaining and enhancing the system. Management was extremely pleased with the final system after there had been a great deal of management dissatisfaction when the initial system failed. Re-work of the system was done at a cost of $40,000 with IS estimating that the system could have been built by IS for approximately $200,000. Engineering also developed the maintenance rule system after NIS rated it a low priority. Engineering developed the system using outside developers to code the system and engineers as subject matter experts. The purpose of the system is to track maintenance activities on critical equipment to determine if there is a maintenance rule violation and required the operations group to input data whenever a work authorization was issued. Engineering worked with the vendor to develop the system to engineering’s perceptions of the requirements. Operations and IS personnel were not included in this process with the result that the system failed to work when installation was attempted. After the system installation failure, a meeting was arranged with IS to discuss how to modify the system so that it could be installed in the site infrastructure. IS spent approximately one-person week working with the vendor to see if the system could be made to work with the IS infrastructure and when it was determined that it could not, the system was abandoned. Concurrent with this IS effort, meetings with other stakeholders Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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involved in the process found that the system added data entry burdens that those groups did not have the resources to support. Additionally, other engineers determined that the initial engineering requirements were incorrect. Management was very dissatisfied with this system as the system had to be scrapped and no value was ever obtained from the investment. Finally, when IS reviewed the correct requirements, it was determined that the system could have been built by IS at a maximum cost of $250,000 or half the amount paid to the vendors by engineering. Both of these systems were built without consideration of IS standards for the operating environment and consulting the appropriate stakeholders for identifying requirements with the result that both failed. Additionally, neither utilized IS standard interfaces or programming guidelines causing low quality and making both difficult to understand and work with from the IS developer viewpoint. While these two examples are the extreme, they were not isolated cases. Numerous examples were found where engineering groups bought or developed hardware and/or software without regard for IS development standards with the result that additional effort was required to get the hardware and/or software to initially work or to maintain it over its useful life. A review of the literature finds that the low quality found in the end-user developed systems is not uncommon. Edberg and Bowman (1996) compared the quality of end-user developed systems to those developed by IS professionals and found that the end-user developed systems had significantly lower quality. McGill (2002) found that this problem is worsened by less experienced end-user system developers as they tend to overestimate the quality of the systems they produce. Dodson (1995) believes that the trend towards end user system development is an “Achilles Heel” for the enterprise as attempts to integrate end user databases and systems into the enterprise infrastructure encounter problems that raise the cost for or prevent full integration. Edberg and Bowman (1996) support Dodson (1995) as they found that end-user developed systems tend to have major data integrity problems. Amoroso (1988), O’Donnell and March (1987), Palvia (1991), and Sumner and Klepper (1987) found that risks associated with end user developed systems included incorrect design, inadequate testing, and poor maintenance while Dodson (1995) lists issues such as lack of documentation, no planning for maintenance, improper system of design methodologies, and poor communication and understanding of requirements as the main problems associated with end user developed systems. To prevent or mitigate these issues, Dodson (1995) suggests organizations focus on five areas of standardization: business analysis and system design methodologies, communications structures, software architecture/libraries, documentation, and training. Dodson (1995) does not suggest that IS force end users to follow IS system analysis and design methodologies, but rather create hybrid methodologies that end users understand, can implement, and can use to identify, capture, and model user requirements. Communication structures reflect that end users should use the same project communications used in non-IS projects for IS projects, and Dodson (1995) suggests the widespread adoption of Joint Application Design (JAD) and Joint Implementation Process (JIP) as formal communication structures would improve stakeholder understanding and participation. Dodson (1995) recommends that organizations standardize products available to end users. This includes IS making their object, component, and module libraries available for use by end users in system development and IS creating standard design environments. Dodson (1995) suggests that IS specify standard Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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documents that must be produced for all system development projects. The generation and promulgation of standard document templates that can be tailored to the size and complexity of the project facilitate this. Finally, end users need to be trained to use these tools and processes to produce systems. The two examples were of large systems, but it should be noted that these issues also apply to smaller, personal productivity systems. Miric (1999) warned that the lack of programming standards and planning leads to large numbers of errors in end user created spreadsheets. KPMG Management Consulting studied end user created spreadsheets in their client organizations and found that 95% of the spreadsheets utilized models with significant errors and 59% of the spreadsheets had poor model design (Miric, 1999). To prevent these errors Miric (1999) suggests that spreadsheet development should be treated no differently than system development and that users need to be trained to use organizational programming standards, determine and document system requirements, perform testing, and use automated tools when available. The literature also suggests that end user groups such as engineering will be more problematic with respect to end-user developed systems. Munkvold (2002) found that high computer skill self-efficacy within end users coupled with a low regard for IS leads to end-user system/system development. Wagner (2000) investigated the use of end users as expert system developers and found that end users have significant domain knowledge. However, it was also found that end users had difficulty knowing and expressing what they know, making their contribution limited in content, quality, size, and scalability. Taylor, Moynihan, and Wood-Harper (1998) agreed that end users do not produce good systems and identified duplication of effort, low quality, and lack of training in system development methodology as issues. Note that low quality is reflected as a lack of documentation, standard development practices, and/or programming standards. Additionally, McBride (2002) found that imposing system development methodology on end users might be regarded as an attempt to impose IT culture and thus be rejected by the end users. Finally, Adelakun and Jennex (2002) found that end user development issues with respect to failing to meet requirements or failure to gather the appropriate requirements could be caused by end users not identifying appropriate stakeholders for project involvement and assessing success of the developed systems.
Lack of Documentation
Previous discussion of the literature found many sources that identified a documentation vulnerability for end-user developed systems. Virtually all of the systems developed or purchased by engineering were found to have minimal to no design documentation. This is potentially a large problem as there is a great deal of memory/knowledge captured in these systems that is not available to system maintenance personnel. Also, there is a great deal of knowledge as to why things are done a certain way built into macros, programs, reports, databases, and models that is not captured in a retrievable manner. As engineering undergoes change, it is likely that a great deal of this knowledge will be lost since engineering’s current knowledge management practices assume a static work force and does little to capture knowledge that exists in the heads of its members. An example was a system developed to model the fire protection system. The system is used to evaluate potential work activities to determine impact on the fire protection
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system and to determine what compensatory measures need to be taken to ensure the fire protection system will still function when portions of it are taken out of service. The system was designed, built, maintained, and supported by the fire protection engineer. No documentation was generated. The concern is what happens if this engineer leaves, as a replacement has nothing to learn from. The organization has grown to rely on this system, and its loss would severely impact the organization. Another example was a local leak rate system that was found abandoned. This system had been developed to automatically calculate penetration leakages and to determine the plant’s overall local leak rate in accordance with federal regulations. When the engineer who built the system left, the incoming engineer had no documentation to teach him how to use or maintain the system so he abandoned it and performed the needed functions using hand calculations where the potential for error is quite high. These were not isolated cases. Numerous examples were found of special reports, databases, spreadsheets, and systems that were built to satisfy specific needs but are not documented. All rely on the engineer using them to maintain and enhance them and would be lost should the engineer leave and the report, database, spreadsheet, or system have a failure or need to be modified. What makes these issues significant to this and all organizations is that it has the potential to lead to inaccurate data and incorrect decision-making. As processes change, the systems supporting the processes must be modified. Without documentation or system models to guide developers as to why the system is the way it is, it is easy for the developer to make wrong assumptions that can result in the incorrect modification of key calculations or algorithms. This can result in the system providing inaccurate data and results. This is of particular concern for this case as the subject organization operated a nuclear site and was subject to a great deal of regulatory required reports and data whose inaccurate generation could result in the site being shutdown.
Obsolescence/Procurement Standards
Obsolescence and procurement standards have been recognized as issues for IS planning. However, quite unexpectedly, the team found many plant and engineering digital systems that were approaching their end of life and needed to be replaced or updated. The team found systems running on Windows 3.1 and DOS as well as using 8” and 5 1/4” floppy drive technology. Expertise and hardware for maintaining these systems is disappearing. Problems arise as replacements are investigated for these systems and as new equipment/software is purchased for resolving new problems. The NIS infrastructure was standardized on proven technology and was not leading edge. Products bought on the open market tend to be leading or even bleeding edge. This results in some new products not being able to function within the NIS environment and requiring engineers to purchase equipment of an older standard. However, it is not good practice to develop replacement systems for this older infrastructure; instead, developers need to anticipate where the infrastructure is going and design for that. The issue is that NIS needs to create a process for assessing the incorporation of leading edge solutions needed by engineering into the NIS infrastructure while maintaining the reliability and coherence of the infrastructure. Additionally, procurement standards and processes need to be created for engineering to use and follow in the procurement of
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replacement systems and components. Another side of this issue is lack of documentation for these systems makes selecting and purchasing, or developing, replacement systems difficult as requirements are not documented and available for use in specifying the needs for the replacement systems. Another example where a lack of procurement standards affects the infrastructure is the rapidly growing use of digital cameras and digital images. Their use has had a very positive impact on productivity. However, due to a lack of procurement standards many varieties of equipment, software, and formats were obtained and implemented. Extra resources were needed to support these multiple versions of equipment and software reducing much of the productivity gains. Additionally, clogged networks (caused by widespread e-mailing of images), dealing with different formats, and incorporating images into processes not designed to handle them has reduced these gains even further. A final example is the use of web design and management tools. No procurement standards governing the purchase of web tools exist, and organizations have purchased whatever they have wanted making it difficult for NIS to support the use of the tools or to maintain sites created by non-IS endorsed tools. Additionally, use of intranet-based systems has failed to radically improve productivity as a lack of standard design practices and interfaces have resulted in many sites and systems being created with marginal usability and/or purpose.
Security
The team observed that the demarcation between the business systems maintained by NIS and plant systems maintained by engineering was blurring. Plant information flows across the business network on a routine basis. Plant processes have been developed that rely on e-mail and the business network to transmit data. Plant support productivity has improved by using the business networks to access and maintain plant systems. The key issue is to recognize that the boundary for protecting plant information now extends to the intranet firewalls. NIS and site management need to work together to create a security plan that recognizes this reality and allows for the creation of standards and processes for ensuring that systems developed by end users support the security plan. An example of this issue was the use by an engineering group of the business network to access plant equipment from remote locations such as their homes. This greatly increased productivity and reduced overtime costs but failed to take into account security needs. When interviewed and asked about security processes for ensuring proper access and user authorization, the group’s manager stated that business network login procedures were all that was necessary as he trusted his people to properly access and use the remote access process to modify plant equipment when needed. Another example was found in end-user system development. While troubleshooting the previously discussed flow tracking system, the author was able to connect to a plant database that had been given to the vendor for testing purposes. The database had been placed on a publicly accessible server that the author was able to access using America Online, raising the issue of possible inadvertent disclosure of restricted data by end users and/ or their vendors doing system development.
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CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
The greatest challenge faced by the organization is in learning to managing EUC within its management of traditional IS. McLean and Kappelman (1992) found that EUC has become an extension of corporate computing and suggest EUC be managed as a shared partnership of responsibility and authority. This organization has a schism between NIS and engineering that has resulted in engineering avoiding NIS control and viewing any attempt by NIS to form a partnership with suspicion. Munkvold (2002) found that this is most likely to occur with a group that has computer expertise and a low regard for IS, as the assessment found to be the case with engineering. McBride (2002) predicts this schism will be a hard issue to resolve as any attempt by NIS to enforce conformance with NIS standards will be perceived by the engineers as an attempt to impose IS culture and process on engineering. However, research suggests this must be done and provides suggestions such as Rittenberg and Senn (1993) who recognize that many users do not appreciate the risk involved in end user development and that this knowledge resides in IS. They suggest policies be implemented to govern EUC that include standards for procurement, documentation, and testing. Rittenberg and Senn (1993) also state that while user groups are suggested as a means of partnering IS and end users, they have found them to be ineffective unless there is strong leadership, a willingness to partner, and allocated resources to support the user groups within the IS and end user organizations. Jenne (1996) also supports creating a policy for managing end user development and suggests that it would be more effective if end user developed systems were grouped into various risk categories with IS development standards applied based on the risk category. Amoroso (1988) supports the use of end user policies to manage end users but suggests control must remain with the end user organization and not IS. Cheney, Mann, and Amoroso (1986) found that corporate policies controlling EUC were necessary to increase the likelihood of EUC success.
REFERENCES
Adelakun, O., & Jennex, M.E. (2002). Stakeholder process approach to information systems evaluation. The Eighth Americas Conference on Information Systems, AMCIS, AIS. Alavi, M., & Weiss, I. (1986). Managing the risks associated with end-user computing. Journal of Management Information Systems, 2(3), 5-20. Amoroso, D.L. (1986). Effectiveness of end-user developed applications in organizations: An empirical investigation. Unpublished Doctoral Dissertation, University of Georgia. Amoroso, D.L. (1988). Organizational issues of end-user computing. Data Base, 19, 34, 49-58. Amoroso, D.L., & Cheney, P.H. (1992). Quality end user-developed applications: Some essential ingredients. Data Base, 1-11. Amoroso, D.L, McFadden, F., & Breitton-White, K. (1990). Distributing realities concerning data policies in organizations. Information Resources Management Journal, 3(2), 18-27. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Beheshti, H.M., & Bures, A.L. (2000). Information Technology’s Critical Role in Corporate Downsizing. Industrial Management and Data Systems, 100(1), 31-35. Benjamin, R.I. (1982). Information technology in the 1990s: A long range planning scenario. MIS Quarterly, 6(2), 11-31. Cale Jr., E.G. (1994). Quality issues for end-user developed software. Journal of Systems Management, 45(1), 36-39. Cheney, P.H., Mann, R.I., & Amoroso, D.L. (1986). Organizational factors affecting the success of end-user computing. Journal of Management Information Systems, 3(1), 65-80. Davis, G.B. (1982). Caution: User Developed Systems Can Be Dangerous to Your Organizations. MISRC Working Paper #82-04, University of Minnesota. Dodd, J.L., & Carr, H.H. (1994). Systems development led by end-users. Journal of Systems Management, 45(8), 34-44. Dodson, W. (1995). Harnessing End-user Computing within the Enterprise. Online: http:/ /www.theic.com/dodson.html Edberg, D. T., & Bowman, B. J. (1996). User-developed applications: An empirical study of application quality and developer productivity. Journal of Management Information Systems, 13(1),167-185. Grindley, K. (1995). Managing IT at Board Level. FT Pitman Publishing. Jenne, S.E. (1996). Audits of end-user computing. The Internal Auditor, 53(6), 30-34. Jennex, M., Franz, P., Duong, M., Haverkamp, R., Beveridge, R., Barney, D., Redmond, J., Pentecost, L., Gisi, J., Walderhaug, J., Sieg, R., & Chang, R. (2000). Project report: Assessment of IT usage in the engineering organizations. Unpublished Corporate Report. McBride, N. (2002). Towards user-oriented control of end-user computing in large organizations. Journal of End User Computing, 14(1), 33-41. McGill, T. (2002). User-developed applications: Can users assess quality? Journal of End User Computing, 14(3), 1-15. McLean, E.R. (1979). End users as application developers. MIS Quarterly, 3(4), 37-46. McLean, E.R., & Kappelman, L.A. (1992). The convergence of organizational and enduser computing. Journal of Management Information Systems, 9(3), 145-155. Miric, A. (1999). The Hidden Risks of Spreadsheets and End User Computing. KPMG Virtual Library, http://www.itweb.co.za/office/kpmg/9908100916.htm Munkvold, R. (2002). End user computing support choices. Proceedings of the 2002 Information Resource Management Association Global Conference (pp. 531535). Hershey, PA: Idea Group Publishing. O’Donnell, D.J. & March, S.T. (1987). End-User Computing Environments: Finding a Balance Between Productivity and Control. Information and Management, 13(2), 77-84. Palvia, P. (1991). On end-user computing productivity: Results of controlled experiments. Information and Management, 21(4), 217-224. Panko, R. (1988). End User Computing: Management, Applications, and Technology. John Wiley & Sons. Rittenberg, L.E., & Senn, A. (1993). End-user computing. The Internal Auditor, 50(1), 35-42.
Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Rockart, J., & Flannery, L. (1983). The management of end-user computing. Communications of the ACM, 26(10), 776-784. Sumner, M., & Klepper, R. (1987). Information systems strategy and end-user application development. Data Base, 18(4), 18-30. Taylor, M.J., Moynihan, E.Y., & Wood-Harper, A.T. (1988). End-user computing and information system methodologies. Information Systems Journal, 8, 85-96. Wagner, C. (2000). End users as expert system developers? Journal of End User Computing, 12(3), 3-13. Wetherbe, J.C., Vitalari, N.P., & Milner, A. (1994). Key trends in systems development in Europe and North America. Journal of Global Information Management, 2(2), 5-18.
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Chapter XIX
LIBNET:
A Case Study in Information Ownership & Tariff Incentives in a Collaborative Library Database A. S. C. Hooper, Victoria University of Wellington, New Zealand
EXECUTIVE SUMMARY
In any cooperative database the participants contribute their data for their own as well as the benefit of the other members, usually with incentives from the database administrators. A South African library network company (LIBNET) provided a networked service to participating libraries. Member benefits included conversion of their catalogues into machine-readable form, significantly reduced costs through cooperative cataloguing and more efficient interlibrary loans through a union catalogue of the holdings of the participant libraries. This case study explores some of the issues influencing tariff determination in a cooperative database. Questions of data ownership and the provision of incentives for the uploading of data also raise legal and ethical issues. The case study provides a basis for exploring business strategy in collaborative database management. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND The Public Good Character of Information
Information is usually considered to be a public good (Braunstein, 1981; Spence, 1974). Certainly, that which falls outside the already established category of intellectual property is a public good, a shared resource that is enriched rather than diminished by policies that increase rather than decrease everyone’s access to it (Ebbinghouse, 2004). A pure public good is one that has two major characteristics — nonrivalous consumption and nonexcludability (West, 2000). Nonrivalous consumption means that the good or service is not diminished or depleted when consumed. If information is shared between two people, it is not diminished thereby, and both can have full use and benefit of it. Nonexcludability means that consumption of the good or service cannot be denied to people who have not paid for it. It is an important factor in controlling the spread of information by vendors wishing to market it, especially in an online environment where it can easily be downloaded and further distributed, processed or reused. Information may have different value to different people with whom it is shared. Some consumers may be prepared to pay significantly more for a specific piece of information than others. And, of course, the time it is delivered can be an important factor in determining the value of information for a particular consumer. The manner in which information is provided plays a significant role in determining its characteristics as a public good. Printed information in book or journal form has physical characteristics that enable it to be priced and marketed as an artifact irrespective of the informational value of the contents to different consumers. The implications of this are that, because it is difficult for a vendor of information to be reimbursed for the development and provision of the goods or services, or to control subsequent distribution, there is a reduced incentive for investing in the creation of the good. So, while there may be a demand for the information, no seller will offer it. Sometimes, public good providers create modified or less-efficient markets to generate the revenue that pays for the public good. Advertising revenue can be used to pay for public TV, Internet portals, search engines and other information products (West, 2000).
Alliance Forming for Information Provision
Because of the nature of information as a public good, very often it has fallen to governments to provide the good or service, either independently or in association with other providers. This concept is central to that of the knowledge economy in which the public good characteristic of information is used by governments to grow the competitiveness of the national economy through the development of knowledge and social capital. “E-Government is the use of information technology to deliver public services in a much more convenient, customer oriented, cost-effective, and altogether different and better way” (Holmes, 2001, p. 2). Increasingly, the way that governments make their services available is through online service provision, and, as such, they have become major players in the online database industry. “Digitising government can create a particularly lucrative new market” (Fountain, 2001, p. 5). By 1998, the electronic information services industry in the United States had become a $33.5 billion per annum market with an annual growth rate of 7.5% (Communications Industry Forecast, 2000). With so Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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much at stake, it is hardly surprising that governments seek to benefit from their investment, or to control the process of data-ownership and the way that information is distributed or shared (Ebbinghouse, 2004). By forming strategic alliances, individual organizations can increase their individual power with government and gain credibility, legitimacy and visibility. Many experts have regarded strategic alliances as the foundation for inter-organizational collaboration in the public and private sector, to reach new markets and technologies, to share risks and to gain complementary competencies. “When the knowledge base that supports an industry is hard to comprehend, still emerging and distributed across several organizations, then collaboration among firms, universities and national laboratories will reflect a strong and fundamental interest in access to knowledge rather than simply strategic calculation, resource sharing or transaction cost reduction” (Fountain, 2001, p. 75). In 1977, governments or not-for-profit agencies produced 78% of all databases, but by 1997 this percentage had dropped to 20% (West, 2000, p. 64). The use of computers for the development of databases and catalogues was appreciated early in the evolution of business computing. Ease of sorting, ease of searching and the fast generation of reports found applications in many organizations dealing with large product lines or customer bases. The use of structured formats for electronic data interchange (EDI) facilitated the deconstruction of the original data and its use in different forms and for different purposes. Along with bankers, supermarkets, motor and aircraft manufacturers, librarians were quick to recognize the value of using computers to provide greater operational efficiencies. In tight financial times, the cost of harnessing the large networked computers needed for library systems was beyond the budget and technical expertise of most academic libraries. Academic administrators and politicians turned to collaboration as a means of accomplishing their goals (Patrick, 1972; Kemp, 1996; Kopp, 1998). Especially in the 1980s and 1990s, a rapid increase in the number and cost of books and journals, combined with severe constraints placed on library budgets — especially in academic libraries — became a worldwide phenomenon, further exacerbated in those countries with volatile currency units (Hooper, 1990). The consequences of these problems were obsolete equipment, untrained personnel, out-of-date collections (Martey, 2002) and the resultant imperative to downsize/right-size, together with political pressure to collaborate (Kopp, 1998). It became imperative to find ways of making the most efficient use of the resources available by reducing duplication of book and journal purchases, especially on a regional basis, and optimizing interlibrary loan traffic to ensure the most efficient and effective use of those materials already available within the country. “Libraries are forming alliances for the purpose of identifying and addressing common needs arising from development in information technology, especially the growing importance of the Internet and the World Wide Web.” (Potter, 1997, p. 417) This instinct to cooperate is part of the ethos of the library profession. The major driver of cooperative alliances among libraries has not been technology, except in so far as technology is an enabler of greater efficiency. Rather, the main drivers are economic considerations. These include sharing of resources, cooperative acquisitions, cooperative automation, shared cataloguing, and preservation and access (Gorman & Cullen, 2000; Hayes, 2003; Hooper, 1989). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The purchase of a book or journal requires the generation of data that is used not only for the order process, but forms the basis for subsequent entries. That data is structured according to author, title, publisher and other components, all of which might be required as the sort key in the generation of a report or for database search purposes. Collaborative data entry into a centralized networked database enables libraries to speed their order processes, make their catalogue entries more accurate and make more informed decisions about purchases, depending on the holdings of other libraries in the region. The same networked database could also form the central resource for cooperative catalogue development and the establishment of a regional or national union catalogue of library holdings, facilitating interlibrary loans and promoting networked communications among participant libraries. The development of a centralized, networked database of the catalogue holdings of the major libraries in a region or in a country would provide operational efficiencies for participant organizations in the same way that banks, insurance companies and motor manufacturers promoted efficiencies through collaborative database development. Many of the problems associated with collaborative database development were the same — especially those relating to systems integration, data and content ownership, catalogue content management and the determination of tariffs for database use combined with incentives for participants to contribute their data. (Rayport & Jaworski, 2002, pp. 366-372). The reason for this is that, in collaborative databases, several information producers combine to generate the data for the online server/vendor to supply to the information consumer. These three players – producers, vendors and consumers — in the online information services market can have conflicting interests, especially when the information consumers are also the information providers and they establish the server/vendor for that purpose.
Inter-Organizational Systems & Library Consortia
Information technology has been used for many years to promote collaborative working opportunities, to share data and to control dispersed operations. The characteristics of inter-organizational systems (IOSs) that link numerous business partners have only recently been investigated because they form the basis for many electronic commerce business models. The reasons why organizations and businesses adopt IOS (or EDI as a prominent type of IOS) (Ahmad & Schroeder, 2001) show a marked similarity with those of libraries embarking on collaborative ventures. These include perceived benefits, external pressure including competitive pressure, and readiness in terms of financial resources and IT sophistication (Iacovou et al., 1995; Chwelos et al., 2001) Competitive pressure has also been highlighted by Premkumar and Ramamurthy (1995), Crook and Kumar (1998), Bensaou and Venkatraman (1996), Morrell and Ezingard (2001) and Maingot and Quon (2001), while industry pressure was noted by Bensaou and Venkatraman (1996), Iacovou et al. (1995), Chwelos et al. (2001). Efficiency and effectiveness also feature as key drivers (Morrell & Ezingard, 2001; Ahmad & Schroeder, 2001). Like library consortia, IOSs also raise the incongruity between the need for collaboration while still needing to compete (Johnston & Gregor, 2000). Creating congruence among the partners can be a key uncertainty and risk reducing strategy (Angeles & Nath, 2001). To do this, a participative rather than an authoritarian management and decision-making style is desirable among partners (Angeles & Nath, 2001). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Nevertheless, the competitive aspects of IOSs also need consideration. IOSs affect competition in three ways: they change the structure of the industry and alter the rules of competition, they create competitive advantages, and can create whole new businesses (Siau, 2003). Furthermore, academic administrators and politicians have turned to this form of collaboration as a means of accomplishing their goals (Siau, 2003), which are very often competitive. The origins of many of today’s e-commerce business models can be found in those business innovations that recognized the value of networked computers for obtaining greater efficiencies and promoting collaborative contributions. Many of the problems and issues that were found to have been intractable then remain problems in contemporary businesses. Solutions found to these problems in earlier models can often lead to insights and solutions in today’s businesses.
The Foundation & Promise of LIBNET
The South African library system is the most comprehensive and sophisticated network of information resources on the continent of Africa. Although very flawed, it gave birth to an impressive collaborative venture that has survived through dramatic political, economic and technological developments. In 1979, a committee examining the possibility of establishing a national computerized catalogue in South Africa concluded, “The cost and resources needed to establish a national catalogue from scratch would be prohibitive” (Laing, 1997, p. 53). The committee, largely made up of senior librarians and academics, was aware that the rate of growth of publication titles would double every 25 years. While very dependant on the importation of scientific and technical information, a small country like South Africa, with so many other more pressing demands on its national resources, needed to make the most efficient use of funds spent on its national bibliographic development and control. It made sense, therefore, to develop a national online catalogue of the bibliographic holdings of the major research and public libraries. No individual library could afford to fund the development of such a facility, not even the State Library. As a statutory organization falling under the Department of National Education, the State Library considered that its responsibilities, defined before the days of computerized catalogues and online databases, would have included the functions of a national online catalogue. Indeed, over the years it had been responsible for the compilation of the South African National Bibliography, the SANB. This serial publication provided the bibliographic details of all South African publications deposited by publishers in the various Legal Deposit Libraries. The State Library also maintained the South African Joint Catalogue of Monographs that recorded many of the acquisitions and holdings of the major libraries in the country in order to support interlibrary loan requests. The Joint Catalogue was terminated in 1976 and published on microfiche. From 1979 onwards it was decided to publish the bibliographic records of the Joint Catalogue on computer tape (Musiker, 1986, p. 152). Accordingly, the State Library had an important role to play in the development of LIBNET because several of the functions that had hitherto been the statutory responsibility of the State Library would be taken over by LIBNET and developed in electronic form. After months of investigation and consultation, LIBNET was established as a Section 21 (not-for-profit) utility company. The key enabler was a “pump-priming” grant from government and the 10-year subscription commitment made by the original members Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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in the Memorandum of Agreement. There was some tentative enthusiasm about the direction in which library cooperation was going with the establishment of the fledgling company. Besides the State Library, the original members included universities, national and regional government departments, and municipalities that owned and ran the libraries intended to benefit from the collaborative venture. The subscribing libraries hoped that their expenditure on subscriptions and purchases would be offset by reduced numbers of acquisition and cataloguing staff, more efficient interlibrary loans transactions (with associated staff efficiencies) and more efficient information retrieval by consultant or reference staff. In addition it was hoped that the pressure on libraries to automate their management processes would be offset or delayed by participation in the LIBNET initiative. If nothing else, participation by members was a learning process that would facilitate subsequent decision making about library computerization — a way of putting their toes into the water without the pain of sudden and total immersion. And, of course, there were incentives to load their cataloguing data that would offset the cost of establishing their own computerized catalogues. The original subscription commitment for 10 years made the member libraries shareholders in the company with the right to elect the Board of Directors at an Annual General Meeting of LIBNET. This was usually held, for convenience sake, at the annual conference of the South African Institute for Librarianship and Information Science. However, not all the directors were subject to election at the Annual General Meeting. Because of that library’s important statutory responsibilities, the Director of the State Library was a permanent member of the Board of Directors. In addition, the interests of the government were represented on the Board of Directors by a person nominated by the Minister of National Education. The Managing Director of LIBNET was ex officio a member of the Board, while the members at the Annual General Meeting elected the rest of the directors. Largely they were drawn from the academic library sector, although an important component was the presence of senior businessmen who could bring their business and entrepreneurial acumen and expertise to bear on decisions before the Board.
SETTING THE STAGE
Internally, the staff of LIBNET consisted of two main groupings — those responsible for developing the technological base of LIBNET’s operations and providing the networked services, and those responsible for marketing the products and services as well as growing the clientele and membership numbers. This latter activity had a very positive side effect in that it made the LIBNET staff very much part of the professional library community in South Africa, and in fact, helped to create a sense of unity and camaraderie among the members. This sense of participative ownership was essential to promote a constant flow of new cataloguing data of the highest possible quality being added to the database by all the subscribing libraries. It also provided LIBNET with the means to refine the services required by the members.
LIBNET’s Technical Infrastructure
Initially LIBNET operated on the Washington Library Network software. Access protocols for LIBNET included an X.28 dial-up facility for IBM PCs; an X.25 packet Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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switching as well as SNA and TCP/IP for dedicated data lines and point-to-point asynchronous communication with DEC VT-100 or compatible terminals. Any other data communications requirements were investigated to ensure as wide a range of access options for subscribers as possible (Laing, 1997, p. 54). From the beginning the intention was to develop its own system using South African Machine Readable Cataloguing (SAMARC) records. The SAMARC format was based on the original MARC format developed by Henrietta Avram and her team in the Library of Congress in the 1960s and 1970s. It included some modifications made in the British UKMARC format as well as some idiosyncratic requirements to suit the multilingual South African situation. A great deal of time and effort went into developing the specifications and writing the software for LIBNET’s new, home grown system until it was realized that it would not be as cost effective as originally intended. “Build or buy” decisions were very controversial at that stage, especially as the Open Systems Movement gained ground within the computer systems industry worldwide. Finally, in 1992, LIBNET rolled out their new system amidst some controversy. It was a turn-key system based on a library software package popular with university libraries in South Africa at the time. Running on a UNIX operating system, and therefore in line with current open-systems thinking, the system was accessible via X.28 dial-up facilities, via Telkom’s dedicated data lines with X.25 packet switching, or with TCP/IP communications protocol on GOVNET, UNINET and other networks available in South Africa. Databases available were originally based on the Washington Library Network database, supplemented by the Joint Catalogue of Monographs developed by the State Library from records sent to them by the major libraries in the country, particularly the main university, and public libraries and the legal deposit libraries. With the implementation of its new system in 1992, LIBNET made available to its members a new “bouquet” of databases. These included the South African Cooperative Library Database (SACD), the Index to South African Periodicals (ISAP), the Library of Congress Database (otherwise known as the National Union Catalog (NUC)), the British National Bibliography (BNB) and Whitakers Books In Print. The Union Catalogue of Theses and Dissertations developed by Potchefstroom University and the South African National Bibliography were also available on the LIBNET database.
Jan’s Problem
Jan’s problem was not trivial. Two months earlier he and his friend Sid had both been at a meeting of the Board of Directors of the national bibliographic service provider LIBNET. Jan represented the LIBNET Users Committee on the Board, while Sid had been elected by the members at an AGM and had served since then for a series of three-year terms. They had served together on the Board for several years and flew to Pretoria for Board meetings every two or three months. They were tall men, same age, same size, and archetypical representatives of the Boer and Brit elements of South African society. Yet the hostilities of the South African War were entirely absent in their dealings with one another. They were both university librarians of old and established research libraries. The good professional relationship they enjoyed started when Sid had been invited to serve as a professional advisor on the selection committee that recommended Jan’s appointment. Since then they had consulted one another on matters of common concern, and served on professional committees and task forces. The trust and mutual confidence Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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in each other’s perspective and professional ability led to constructive decision making in various cooperative initiatives. They presumed that it was that trust and confidence that persuaded the LIBNET Board to task them to find a solution to the data-ownership and tariff problem. The fact that LIBNET had been established as a cooperative venture with government seed-money meant that the customers were also the information providers. Instead of providing all the funding, the government wanted to play an enabling role such that LIBNET would in due course become self-sustaining as a non-profit organization. As the database administrator, LIBNET sold its networking and database services to its members, using the information they had provided as the database content. To ensure high standards of data entry, LIBNET ran nationwide training programs and established quality control mechanisms to monitor input. It was in the interests of all members to ensure accurate data capture, and so incentives needed to be built into the tariff structure to reward those members that participated in the process. The calculation on which the annual tariffs were determined had been a matter of concern to the LIBNET Board for several years. The larger libraries that were founding members of LIBNET paid an annual subscription and a usage charge based on EEs (Enquiry Equivalents) used. The EE was based on the number of searches conducted on the database. Associate members, who were usually the smaller libraries and other bodies, did not pay an annual subscription, but paid a monthly terminal connection fee and a tariff per EE used which was almost twice the EE charge of the larger subscribing library members. However, these tariff arrangements did not take account of intellectual property rights and data ownership. A great deal of original intellectual work went into the process of data capture of bibliographic records. The library catalogue of any large research library represents a major investment for the institution concerned. It is the intellectual property of the institution and as such could be sold or negotiated in the same way that other intellectual property could be negotiated. Many academic libraries continued to spend additional funds on catalogue conversion projects in order to capture their cataloguing data retrospectively. This expenditure enabled them more quickly to establish their own machine-readable catalogue for the needs of their domestic library systems. To upload that data to a national bibliographic service utility such as LIBNET did not draw them any royalty payments. They got no benefit from the initial expense of data capture other than greater bibliographic control of their own domestic collection. However, the enriched online catalogue was an important marketing consideration that could be used by LIBNET to attract new members. Like many other members, Jan and Sid considered that their extra expenditure gave them a greater stake in LIBNET, and they felt that their extra contribution to LIBNET’s development and welfare was not being recognized or appreciated. And, of course, the higher percentage of their libraries’ bibliographic records that were on the database, the more likelihood that other libraries would want to borrow books from them on interlibrary loan. Meanwhile, almost as an encouragement for this viewpoint, the State Library continued to develop and market its Joint Catalogue of Monographs and South African National Bibliography. Was there not a way in which other libraries, in tough budgetary times, might not recoup some of their expenditure in similar ways? LIBNET paid royalties to those information providers like the British Library for the British National Bibliography, the Library of Congress for its National Union Catalog and the Washington Library Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Network for its database. If LIBNET was deriving a benefit from the contribution of libraries such as those directed by Jan and Sid, surely there could be some reconsideration of the tariff determination by LIBNET? The two-hour flight back to Cape Town after that Board meeting in Pretoria had done little to ease the minds of Jan and Sid. Who were the information providers? Who owned the database? Who was paying for what services and should their institutions not be getting some form of royalty or compensation for the added contribution they were making? In addition, how could a tariff policy be set that allowed libraries to reduce budgetary uncertainty ahead of time when the tariff policy was based on an annual subscription as well as connect-time pricing and/or per-record charges? How could all this be done without damaging LIBNET and its financial viability, or were there other strategic options available to them? The Boeing 737 wove its way through tall towers of cumulus, like huge, airborne cities. Through the late afternoon sky, the sun’s rays struck the white bulbous towers from the west, creating deep shadows and slowly redecorating the thick, puffy clouds in gold and pink as the land below melted into shadow. Not much chance of the data ownership and tariff problems melting in the same way. Although it was a privilege to be able to see the world from a perspective that few creatures in all of Earth’s history had ever seen, one way or another, that privilege would have to be paid for.
CASE DESCRIPTION
Jan leaned back in his chair and looked across his desk and out the window. On the wall to his right hung a painting of a typical farming scene in red and brown and ochre — one of the university’s art treasures with which he had been burdened as curator. Below it, but closer to him was his computer, its monitor and keyboard, and his telephone — his links to the outside world. Evidence, if it was needed, of the increasing reliance of libraries on the growth of information and communications technologies to streamline and enhance business services in all areas of endeavor. It was now two months since he and Sid had flown home from Pretoria, and the problem that the LIBNET Board had referred to them had in no way been resolved in the intervening weeks. Within a few minutes, Sid would be arriving for a meeting to explore and, if possible, resolve the issues involved in tariff determination and data ownership. As usual for his meetings with Sid, Jan had scheduled a lunch break for about 12:45 p.m. in the university’s staff dining room. The caterer had agreed to prepare freshly caught grilled yellowtail and roast seasonal vegetables as the main course with a light sorbet and fresh fruit compote to finish off. And two bottles of Pinotage were ready to provide some consolation for the mental effort they expected to expend. He was looking forward to the rest of the day, and hoped that the business end would be completed before lunch started. “Good to see you, my friend!” smiled Jan, as he and Sid shook hands. After a brief word with Anne, Jan’s personal assistant, the two men went into the committee room with every intention of being undisturbed until they had resolved the problem. To set the scene Jan reviewed the background that had given rise to the situation. For 10 years, academic library directors had been laboring hard to ensure the purchasing levels of materials for their libraries. A combination of publishing price rises that had impacted on university and other libraries throughout the world, and the falling value of the South Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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African currency unit on international currency markets had increased their journals budget by a factor of three, while the book budget remained unchanged. The total acquisitions budget had almost doubled over a period of five years. Despite this, the actual buying power of the money was reduced by 20% in terms of the numbers of both book purchases and journals subscriptions. The academics were in an uproar and the university administrators were demanding closer cooperation on a regional basis between the two university libraries. “More bang for the buck” and “You must work smarter, not harder” were the clichés that rang around the meetings of the library committees of both institutions. “I tell you, Sid, the combination of publishing price rises and the falling value of the South African Rand on international currency markets has increased our journals budget by a factor of three, while our book budget remains unchanged. And we have fought to maintain that situation!” Jan complained. “Clearly, closer cooperation in purchasing policies and more ready access to the holdings of each other’s libraries would assist in easing the problem. But to do that we will need to ensure full bibliographic control of the book and journal holdings of both our libraries. That is not a trivial matter — and it will be expensive,” observed Jan. “Our options are to do it either through LIBNET, or through some form of cooperative regional bibliographic database as we have been discussing with our colleagues,” suggested Sid. Arising from their earlier meetings over many years, both Sid and Jan were under pressure to promote regional cooperation — and that pressure came in the form of financial incentives from outside benefactors willing to help fund the emergence of a new social structure now that the years of apartheid and social isolation were ended. “But LIBNET has made an important contribution over the eight years of its existence. We signed on for 10 years. We are committed to it for another two years at least. It makes sense to support and use it. But regional cooperation is also important. We can incorporate the benefits that flow from our LIBNET membership for regional advantage,” suggested Jan. “That’s true. But I have to conserve resources and watch carefully the percentage of my library’s budget that goes to LIBNET. The larger libraries that make up the foundation members of LIBNET pay not only our annual subscriptions, but also for the use we make of the system beyond the calculated maximum. If we cut back on use in order to save money, we’re cutting back on the benefits to be gained from our subscription,” reasoned Sid. “The tariff structure locks us in. Part of the problem is trying to budget ahead of time for our needs. I can’t anticipate the EE usage, the connect time, or even the annual subscription sufficiently far in advance to reflect them accurately when the budget goes to the University Council.” “Yeah! But both your library and mine still have a lot of retrospective cataloguing to do before we reap the real benefits of LIBNET. In fact there are holdings gaps for libraries throughout the country. We have started a project to convert our card-based catalogues to machine-readable form starting with heavily used materials. What are you doing?” asked Jan. “We’ve contracted with a commercial company operating out of Australia,” said Sid. “They sub-contract to staff in the Philippines, and send copies of our catalogue cards for data capture. It’s not entirely satisfactory because it involves a lot of checking for completeness, but I must say, mostly the quality of the data-capture is good.” Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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He looked out of the window trying to imagine a team of Philippino data-capturers making sense of the catalogue cards they were working with. “Look, you can’t expect them to use their initiative to fix obvious errors. That’s not what they are paid for — and anyway they may not even understand what they are keying in. But it still reflects the initial investment in creative cataloguing made by the university over the years. It would be great if we could recoup that expenditure by selling off our records to some other library. You’re not interested, are you? I’ll give you a special price?” smiled Sid. “After all, there must be a high percentage of overlap between your holdings and ours.” “No way, my friend. We are doing our retrospective conversion in-house, simply to save money. Can you imagine what my bosses would say if I bought catalogue records from you?” He grinned back. The traditional rivalry extended to professional matters as well. For both, retrospective conversion projects were an important cost factor and not without their detractors among the academic Luddites. “The urgent need is to establish a credible computer-readable catalogue for the needs of our domestic systems faster and cheaper than would otherwise be possible. That will give us a basis for any regional cooperation as well. With both our bibliographic databases loaded, we would have an immensely valuable regional resource,” mused Sid. “But when we upload it all to LIBNET, what are we going to get for our troubles? More interlibrary loan requests and a whole lot of extra work! Why can’t we get some additional form of recognition and compensation? After all, LIBNET is here to help us, but the spinoff of our membership means additional expense and work for us.” “How come? What are you trying to say?” asked Jan. “Look. Although there are incentives built into the LIBNET fee structure, to upload all our new data to the national database still costs us more. Is that extra contribution being recognized or appreciated? If the State Library and Potchefstroom University can own their data, and even sell it to others, why can’t we? After all, our additional data contributes to LIBNET’s enriched online catalogue. That’s partly what makes LIBNET attractive to new members. Other libraries join and then start using the records we provide to reduce their own cataloguing costs. Some benefit from the data we have uploaded. Others use the same data to save themselves the cost of buying books. They demand those books on interlibrary loan. It doesn’t seem right that our extra expenditure on retrospective catalogue conversion places us in a position of being additionally exploited by increased numbers of interlibrary loan requests! It’s nonsense! There should be some sort of royalty built into the LIBNET tariff structure to compensate us for our contribution — not just to LIBNET, but to the country as a whole.” “Ja! I see what you mean. Actually, this thing has been brewing a long time,” replied Jan, getting into the thrust of Sid’s argument. “Let’s look at it from another perspective. The State Library is statutorily charged with responsibility for the development of the South African National Bibliography, and the Director is therefore ex-officio a member of the LIBNET Board. He considers the records contributed by the State Library rightly belonged to the State Library. That includes the South African National Bibliography and the Index to South African Periodicals. Although they are all available through LIBNET, they belong to the State Library. On the other hand, the Executive Director of LIBNET would naturally want to protect his interests and would take the view that each subscribing library has a responsibility to load its bibliographic data onto LIBNET in terms of their Memorandum of Agreement — and the national interest. But the directors of the major research libraries, who like ourselves are also members of the Board, will Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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consider that they should be getting some return on their investment, some compensation for the initiative they had taken to ensure that the national online catalogue will be completed faster to everyone’s benefit. What is in it for us and them?” “That’s it. OK. Let’s look at the major issues.” Sid pulled out a document with his scribbled notes. That morning he had jotted several points down before driving over to Jan’s library. These were the principles that he thought should drive any decisions about equity in this situation. “Let’s take them one at a time as defendable issues or issues that may be of political or strategic importance to individual members of the Board.” He read them out. 1. 2. 3.
4. 5. 6.
7.
8.
Each library owns the records that it has generated through its own creative efforts. Each library also owns the records it has generated through paying for the data conversion process. The State Library owns all records that it has contributed to the LIBNET database, even though many of those records were contributed by participating libraries sending in copies of their catalogue cards, or by legal deposit libraries contributing their acquisitions lists to the State Library. Similarly, the Library of Congress owns the National Union Catalog that is accessible through LIBNET, and the British Library owns the British National Bibliography, also accessible through LIBNET. LIBNET owns all databases that it has developed from the contributions made to it by subscribing libraries, or for which it has paid in agreement with the owners of other bibliographies. Individual libraries have the right to decide whether or not to upload bibliographic data to LIBNET. Once uploaded, the records belong to LIBNET in terms of the subscription agreement, but they also belong to the originating library and may not be sold by LIBNET without permission or recompense. Having paid for their subscriptions and the downloading of their own bibliographic records from LIBNET, individual libraries are entitled to establish their own domestic bibliographic database, but may not sell records downloaded from LIBNET. Any library is free to sell, or otherwise make available, its own bibliographic records to any other individual or library, as it sees fit.
“Hey. That’s good!” complimented Jan. “Let’s go through each one and see if we can pick holes in them!” From this set of basic principles, Sid and Jan debated their implications. “What if the larger libraries withhold the uploading to LIBNET of their retrospective conversion records and recover their costs by selling them to other libraries? OK. In a way this would be going into competition with LIBNET and would be in breach of the original agreement we signed when we joined LIBNET.” “But by meeting that obligation, we are creating a stick for our own backs,” grumbled Sid. “Increased interlibrary loans are a significant counter-incentive increasing staff pressure in a sensitive area. Not only must I deal with pressure on my materials budget, I must keep my staffing budget under control. The budget cuts affect both materials as well as staffing budgets.” Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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“So what about a regional initiative?” asked Jan. “There is the financial incentive that flows from the possibility of overseas funding by benefactors. That could make a big difference to our situation. It will make good political sense too. We will be seen to be driving academic regional cooperation where many other initiatives have failed. Also, a smaller cooperative network would be easier to handle, would give more direct administrative control and would build on what we have already done through our earlier discussions and through LIBNET.” He looked questioningly at Sid. “Well, if LIBNET is unable to come up with some new and revised tariff structure that recognizes the contribution we are making, it could make sense for us to slowly withdraw our dependence on LIBNET and build a closer dependence on a regional cooperative structure. After all, we only have a year or so to go before our legal obligations to LIBNET end. As far as I am concerned, the financial constraints being placed on us by our respective administrations are such that all our options need to be considered. I am under a lot of pressure to reduce staff, improve services, increase book stock and take a lead in collaboration and regional rationalization.” Sid looked pensive. It sounded like treason. After all the years of working on the promotion of LIBNET and of national and regional library cooperation, to suddenly turn to a narrow and self-serving strategic direction went against the grain. But he had to consider all the options that were open. Jan looked at his watch. “Hey! It’s lunchtime,” he announced with a smile. “I have something good for you!” he said, thinking of the grilled yellowtail and the pinotage. They gathered up their papers and with a sense of relief found their way out of the library and across the square to the university’s staff dining room. Based on the discussion over lunch, Jan undertook to prepare a series of proposals for the next meeting of the LIBNET Board. He asked Sid to write up a memorandum on the basis of the day’s discussions and forward it to him as soon as possible. He would then consult with his deputies before submitting his final proposals to the LIBNET Board. The range and implications of their morning discussions ensured an ongoing debate over lunch and dominated their thoughts for the rest of that afternoon. On his way home, and while the issues were still fresh in his mind, Sid dictated a memorandum for typing the next day, so that it could be sent to Jan as a file attachment with the least possible delay. Both Jan and Sid felt they had had a very productive meeting — yet one that could have enormous repercussions for both the future of LIBNET, and also for academic library cooperation. It would probably have some important implications for the principles on which database development is funded and the way that the contribution of members is rewarded.
CURRENT CHALLENGES & PROBLEMS FACING THE ORGANIZATION
The question of database ownership and the provision of incentives and rewards to the information providers were reflective of the changing needs of LIBNET members. Originally, they had required a networked union catalogue of the holdings of the nation’s major research libraries. The cost of such a facility was beyond the budget of any one
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of the libraries, so they were happy to participate in and contribute to the development of this national utility. After 10 years, however, three things had happened to change the perspective of the members: 1. 2. 3.
LIBNET had successfully established the basis of that national catalogue. It had a modern networked system, a staff that nurtured high standards of contribution to the database, and simultaneously promoted the company’s services nationwide. The technology had changed, making online, real-time network access to a regional library system both affordable and desirable. The political and economic climate of the country had changed. South Africa was no longer under siege. The academic boycotts, political and economic sanctions, and civil unrest that spread to the campuses of the major LIBNET members were over. Nelson Mandela was out of gaol. The first democratic elections had been held, and around the world, aid agencies and benefactors were keen to contribute to and participate in the remarkable emergence of what Archbishop Desmond Tutu had referred to as “the Rainbow Nation.” What better contribution could be made than to democratize the nation’s information resources by networking the major libraries on a regional basis so that their collections were accessible to all the citizens, whether or not they were students or staff?
With this option before them, it was understandable that Jan and Sid and their colleagues on the LIBNET Board of Directors started giving attention to who owned the LIBNET database. Their cash-strapped universities saw many benefits flowing from the injection of funds by overseas benefactors. Not only were there savings to be made from cooperative library acquisitions policies and cataloguing activities, but a unified circulation system and a reduction in duplicate journal subscriptions would be facilitated by a regional cooperative system. LIBNET was therefore under pressure to deliver at the same time as its initial “pump-priming” government funding, and the 10-year membership commitments of its founder institutions were coming to an end. The resolution of the tariff and incentives structure became the catalyst that led on to the restructuring of the entire LIBNET business. On January 1, 1997, LIBNET sold its operations to a private company to enable it to expand into the commercial online market. Today, the new privatized LIBNET thrives as the most successful online information network in Africa. But it is very different in structure from its original conception — largely as a result of the factors driving the decisions outlined above. The main reasons for “privatizing” LIBNET operations in the mid-’90s were: • • •
to bring in strategic partners through a shareholding structure, to create a vehicle for generating development capital, and to attract and keep the right type of staff members.
These intentions are now reflected in the current shareholding structure. The perspective has become one of an equal partnership between clients and staff. So the new LIBNET is evolving into a situation where staff and client shareholder groups will both have a 50% shareholding. The co-ownership concept, together with a creative shareCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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incentive scheme, is making a huge contribution to its success. The business orientation of staff has increased beyond belief. Clients are benefiting through the ongoing improvement of products and services, while costs are controlled in the same process, because it is in the interest of the staff to run a profitable and competitive shop. Although there had been discussions at times with potential strategic partners to buy a stake in the company, that idea was abandoned several years ago without selling off any shares to outside investors. The traditional character of the company was therefore maintained without diluting the value of the shares. The big challenge in doing business in the new South Africa is the Black Economic Empowerment and Affirmative Action law. The general line of thinking is that all businesses should have a 25% black ownership by 2010. Government itself is more concerned about real empowerment, such as people development, skills transfer, enterprise development, corporate social upliftment, and so forth. The record shows that there are, unfortunately, a small number of black businessmen in the country who are pushing the shareholding idea without contributing anything to the growth of the economy. As a result, LIBNET is still not listed on the Johannesburg Stock Exchange (JSE) and has no immediate plans to do so. The corporate scandals of the last couple of years have made the JSE less attractive (from a cost viewpoint) to apply for a listing. LIBNET doesn’t need capital at present and shareholders are not prepared to sell their shares, so a listing does not make any sense. Accordingly, the new LIBNET intends to grow its black shareholding through the current structures of staff and client shareholders. Initially, shares were sold to staff at R0,20 per share at the time of privatization. Those shares were subdivided in the ratio of 10:1 five years later. The latest official valuation of the shares is about R0,50 to R0,60 per share. That is equal to 5 to 6 Rand per share before the subdivision. Functionally, LIBNET has developed into a company with a primary focus on the maintenance and development of its traditional services (cataloguing support, interlending and reference services). These are still growing slowly, but the real performers are the newer products, such as electronic journals and the legal products (government and provincial gazettes, parliamentary monitoring and statutes). This has helped to spread the risks far better than before. Structurally, LIBNET has divided into two separate business units (Academic/Library, Corporate) to reflect the separate focuses, and these are functioning well with totally different marketing and support approaches. The core strengths remain the same — excellent relationship with clients backed by high-quality client support, and an excellent team of people doing the job. The challenges facing the new LIBNET reflect the current economic development climate in contemporary South Africa. Apart from Black Economic Empowerment and Affirmative Action employment laws, these include doing international business with an unstable local currency, growing the markets and competing with larger international competitors.
REFERENCES
Ahmad, S. & Schroeder, R.G. (2001). The impact of electronic data interchange on delivery performance. Production and Operations Management, 10(1), 16-30. Angeles, R., & Nath, R. (2001). Partner congruence in electronic data interchange (EDI)enabled relationships. Journal of Business Logistics, 22(2), 109-127. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Bensaou, M., & Venkatraman, N. (1996). Interorganizational relationships and information technology: A conceptual synthesis and a research framework. European Journal of Information Systems, 5(2), 84-91. Braunstein, Y. (1981). Information as a commodity. In R.M. Mason, & J. E. Crebs, Jr. (Eds.), Information Services: Economics, Management and Technology (pp. 9-22). Boulder, CO: Westview. Chwelos, P., Benbasat, I., & Dexter, A. S. (2001). Research report: Empirical test of an EDI adoption model. Information Systems Research, 12(3), 304-321. Communications Industry Report. (2000) 14th ed. New York: Veronis, Suhler and Associates (as cited by Jain & Kennan, op. cit. p 1123). Crook, C.W., & Kumar, R. L. (1998). Electronic data interchange: A multi-industry investigation using grounded theory. Information Management, 34, 75-89. Ebbinghouse, C. (2004). If at first you don’t succeed, Stop!: Proposed legislation to set up new intellectual property rights in facts themselves. Searcher, 12(1), 8-17. Fountain, J. E. (2001). Building the Virtual State: Information Technology and Institutional Change. Washington, DC: Brookings Institute Press. Gorman, G. E., & Cullen, R. (2000). Models and opportunities for library cooperation in the Asian region. Library management, 21(7), 373-384. Hayes, R. M. (2003). Cooperative game theoretical models for decision-making in contexts of library cooperation. Library trends, 51(3), 441-461. Holmes, D. (2001). eGov: E-business strategies for government. London: Nicholas Brierley. Hooper, A. S. C. (1989). Formal cooperative agreements among libraries: Towards a South African model. South African Journal for Librarianship and Information Science, 57(2), 125-129. Hooper, A. S. C. (1990). Overlapping journal subscriptions as a factor in university library co-operation. South African Journal for Librarianship and Information Science, 58(1), 25-32. Iacovou, C. L., Benbasat, I., & Dexter, A. S. (1995). Electronic data interchange and small organizations: Adoption and impact of technology. MIS Quarterly, 19(2), 465-485. Jain, S. & Kannan, P.K. (2002). Pricing of information products on online servers: Issues, models and analysis. Management Science, 48(9), 1123-1142. Johnston, R. B., & Gregor, S. (2000). A theory of industry-level activity for understanding the adoption of interorganizational systems. European Journal of Information Systems, 9, 24-251. Kemp, G. (1996). Networking in South Africa. Bulletin of the American Society for Information Science, 22(6), 26-27. Kopp, J. J. (1998). Library consortia and information technology: The past, the present, the promise. Information Technology and Libraries, 17(1), 7-12. Laing, R. (1997). LIBNET (A Financial Mail Special Report). Financial Mail, 144(4), 5364. Maingot, M., & Quon, T. (2001). A survey of electronic data interchange (EDI) in the top public companies in Canada. INFOR, 39(3), 317-332. Martey, A. K. (2002). Management issues in library networking: Focus on a pilot library networking project in Ghana. Library Management, 23 (4/5), 239-251.
Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Morrell, M., & Ezingard, J. N. (2001). Revisiting adoption factors of inter-organizational information systems in SMEs. Logistics Information Management, 15(1/2), 46-57. Musiker, R. (1986). Companion to South African Libraries. Johannesburg: Ad Donker. Patrick, R. J. (1972). Guidelines for Library Cooperation: Development of Academic Library Consortia. Santa Monica, CA: System Development Corporation. Potter, W. G. (1997). Recent trends in state wide academic library consortia. Library Trends, 45, 417-418 (as cited by Kopp, 1998, op. cit.). Premkumar, G., & Ramamurthy, K. (1995). The role of interorganizational and organizational factors on the decision mode for adoption of interorganizational systems. Decision Sciences, 26(3), 303-336. Rayport, J. E., & Jaworski, B.J. (2002). Introduction to E-Commerce. New York: McGrawHill. Siau, K. (2003). Interorganizational systems and competitive advantages: Lessons from history. The Journal of Computer Information Systems, 44(1), 33-39. Spence, A. M. (1974). An economist’s view of information. Annual Review of Information Science and Technology. American Society for Information Science. West, L.A. (2000). Private markets for public goods: Pricing strategies of online database vendors. Journal of Management Information Systems, 17(1), 59-85.
APPENDICES 1. The Companies Act, No 61 of 1973 STATUTES OF THE REPUBLIC OF SOUTH AFRICA – COMPANIES Companies Act, No. 61 of 1973 21. Incorporation of associations not for gain (1)
Any association – (a) formed or to be formed for any lawful purpose; (b) having the main object of promoting religion, arts, sciences, education, charity, recreation, or any other cultural or social activity or communal or group interests; (c) which intends to apply its profits (if any) or other income in promoting its said main object; (d) which prohibits the payment of any dividend to its members; and (e) which complies with the requirements of this section in respect to its formation and registration, may be incorporated as a company limited by guarantee.
(2)
The memorandum of such association shall comply with the requirements of this Act and shall, in addition, contain the following provisions: (a) The income and property of the association whencesoever derived shall be applied solely towards the promotion of its main object, and no portion thereof shall be paid or transferred, directly or indirectly, by way of dividend, bonus,
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or otherwise howsoever, to the members of the association or to its holding company or subsidiary: Provided that nothing herein contained shall prevent the payment in good faith of reasonable remuneration to any officer or servant of the association or to any member thereof in return for any services actually rendered to the association. [Para. (a) amended by s. 4 of Act No 59 of 1978.] (b) Upon its winding up, deregistration or dissolution, the assets of the association remaining after the satisfaction of all its liabilities shall be given or transferred to some other association or institution or associations or institutions having objects similar to its main object, to be determined by the members of the association at or before the time of its dissolution or, failing such determination, by the Court. (3)
The provisions of section 49 (1) (c) of this Act shall not apply to any such association. [Sub-s. (3) substituted by s. 3 of Act No 31 of 1986.]
(4)
Existing associations incorporated under section 21 of the repealed Act shall be deemed to have been formed and incorporated under this section.
2. The LIBNET Tariff Structure LIBNET TARIFF STRUCTURE: GENERAL INFORMATION 1.
Current situation
The existing tariff structure is based upon the following: • an annual membership fee of R9720 incorporating 18000 enquiry equivalents (EEs); • a tariff of R0.49 per EE for the use of the system after the first 18000 EEs (0.43/ EE after 300000 EEs); • associated members do not pay any annual membership fee but they pay R0.70 per EE with a minimum usage of 200 EEs per month; • members receive credit for data contribution; and • all other products are priced separately. 2.
Advantages/disadvantages of present system
Advantages • Members pay in relation to their usage of the system; • Members who train their staff properly normally use fewer EEs per search. •
Disadvantages Because the variable cost (the actual cost of processing and retrieving the information) is only a small percentage of the EE tariff, the more frequent users are funding an unreasonably high portion of the LIBNET fixed costs. This aspect was also emphasized by LHA Management Consultants.
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• •
• • •
Users do pay for the usage of the system even if they don’t retrieve any information; Members do not use LIBNET to its full potential, because of the “CASH REGISTER SYNDROME.” Staff members are instructed to use LIBNET sparingly. It is difficult to determine the effect on the building of a cooperative database as a result of this behavior; The present system requires a complex accounting system; When users question their EE usage, it normally takes up a lot of time of skilled staff members to determine what the problem, if any, is; Users don’t know in advance what a specific search will cost them.
3. Financial Projections Depending on certain strategic decisions to be taken by the LIBNET Board, the income required to cover the expenditure during the next financial year will be approximately R5 million. The following tariff adjustments (based on the present tariff structure) would be required to provide that income: Service Unit EE tariff: Associate members
GT 18 000 GT 300000
: : : :
R27 000 R1,00 R0,45 R2,00
(R9720) (R0,49) (R0,43) (R0,70)
Most of the members will just cut back on their usage in order to stay within their budgets.
4. Alternatives It is important to determine what the requirements of a fair and just tariff structure must be. Some thoughts on that are: • • • •
A user must pay for the information received and not necessarily for the use of the system; The tariff structure must promote an increased use of the system; More frequent users must pay more than less frequent users; Less frequent users must pay more per transaction than more frequent users.
One very attractive alternative is to determine a fixed annual subscription fee with unlimited use of the system. The biggest problems would however be to find a formula to determine the annual subscription per member and to prevent abuse of this system. Aspects that could be considered for inclusion in the formula are:
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• • • •
the number of terminals per members; the size of the library based upon the number of books and periodicals or the staff complement; the number of databases (SACD, LC, UK, UCTD, etc.) being accessed; and systems functions (enquiry, cataloguing, etc.) being used.
3. Revising the LIBNET Tariff Structure LIBNET — CONSIDERATIONS FOR A REVISED TARIFF STRUCTURE
(Extracts from a document prepared by the ad-hoc sub-committee on tariffs)
Introduction At present tariffs are based entirely on usage and this, together with the GOVNET tariff structure, inhibits libraries from using LIBNET to its full potential. At the same time those libraries that are heavily involved and committed to LIBNET find themselves vulnerable to exploitation by libraries with a lesser commitment. Not only is their cataloguing data exploited, the identification of their holdings makes them the target of a greater degree of interlibrary loan requests than would otherwise be the case. At the same time libraries with a small contribution to LIBNET are protected from interlibrary loan requests and are able to exploit the libraries that contribute heavily. The libraries that are directly or indirectly funded by the Department of National Education contribute 95% to LIBNET’s running costs. … This situation will not change significantly when the original Memorandum of Agreement that established LIBNET comes to an end in two years time. While libraries using LIBNET are conscious of cost, most of the cost savings or the benefit of using LIBNET are hidden.
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4. LIBNET Organizational Structure Table 1: LIBNET Organisational Structure Board of Directors Executive committee LIBNET User’s Committee Marketing & member development
Managing Director
Administration Operations & networked services
After many years as an academic library director, A.S.C. (Tony) Hooper now teaches Information Systems Management at the Victoria University of Wellington, where he is program director for the Master’s of Information Management degree.
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Chapter XX
Information System for a Volunteer Center: System Design for Not-for-Profit Organizations with Limited Resources Suresh Chalasani, University of Wisconsin, Parkside, USA Dirk Baldwin, University of Wisconsin, Parkside, USA Jayavel Souderpandian, University of Wisconsin, Parkside, USA
EXECUTIVE SUMMARY
This case focuses on the development of information systems for not-for-profit volunteerbased organizations. Specifically, we discuss an information system project for the Volunteer Center of Racine (VCR). This case targets the analysis and design phase of the project using the Unified Modeling Language (UML) methodology, database modeling, and aspects of project management including scope and risk management. Students must decide how to proceed, including recommending an IT solution, managing risk, managing scope, projecting a schedule, and managing personnel. The rewards and special issues involved with systems for not-for-profit organizations will be revealed. This case can be used in a variety of courses, including systems analysis and design, database management systems, and project management.
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ORGANIZATIONAL BACKGROUND
Jeff McCoy, project lead of a four-person project team, was finishing requirements and project status documentation related to an information system for the Volunteer Center of Racine (VCR). Jeff, the information systems team, and the client needed to make some important decisions concerning the future of the project. Jeff needed to formulate his own opinion, but it was getting late. He promised his fiancé that they would see a movie at the new cinema tonight. Recently, his promises have gone unfulfilled. To this point, the VCR project had progressed smoothly. The focus of the project was the development of an application that helped the VCR place and track volunteers at various volunteer opportunities. The development team used the Unified Modeling Language (UML) to document the requirements of the system (Booch et al., 1999). A Gantt chart and a standardized project status report were used to record progress. The project status report contained fields to record the time, budget, people, process, and technology status of the project (Appendix B). A color code was used in each field: Green meant that the item was on task, yellow indicated concerns, and red signaled a danger. In addition to these fields, the team had an opportunity to specify their confidence in the project. A high score signaled that the project was moving along well and was within budget. The previously filed status reports were all very positive. Jeff and the other development team members, themselves, were volunteers at the Information Technology Practice Center (ITPC). The ITPC is a consortium of IT professionals from the local university and industry. The ITPC provided consulting services for not-for-profit agencies and small businesses. Some of the consulting engagements, including the VCR engagement, were performed on a pro bono basis. Many of the engagements involved students so that the students could obtain experience with live IT projects. The project status reports were sent to the ITPC executive committee. Jeff was concerned that the next status report would not be as positive. At the most recent team meeting, several issues emerged. First, the project team disagreed about the quality and adequacy of the UML documentation. Jeff made changes to the documentation produced by some members of the team, and these members took offense. Jeff wondered whether they had captured all of the key requirements and had accounted for these requirements in the project plan. Second, volunteer placement and tracking was not the only need of the VCR. Marilynn, the primary contact at the VCR, also needed a system to track donors and expenses. These additional features were part of the original project scope, but it was not clear whether the IS team could deliver a system with this functionality by the target delivery date in August. Third, other options emerged besides a custom-developed solution, including purchasing an off-the-shelf package. Jeff and the project team needed to recommend a particular approach. Finally, a recent problem emerged regarding the computer network. This problem must be solved before any solution is implemented. Could the team deliver the system within the target timeline?
Client Mission & Organization
The Volunteer Center of Racine (VCR) is a not-for-profit organization located in Racine, WI, a city with a population of 85,000. While it primarily serves the county of Racine, it also services occasional requests from nearby counties. Volunteer organizaCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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tions have existed in Racine County for a long time, but were not formally managed. That is, it existed as a volunteer organization managed by volunteers, and with no full-time employees on its staff. Since there was no full-time management staff, it was difficult to coordinate activities of the volunteers and obtain the much-needed funds for volunteer activities. VCR emerged as a formal organization only three years ago. Within three years it grew rapidly to list and coordinate thousands of volunteers. It currently has 7,000 active volunteers. An active volunteer is one who has volunteered with VCR in the past 12 months. VCR finds volunteers and places these volunteers at various community events. The community events range from blood donation drives at hospitals to fund raising ceremonies for causes such as leukemia. The mission of the VCR is stated on their Web site. Mission: The Volunteer Center is a: • • • •
Leader in our community that mobilizes people of all ages and backgrounds to volunteer by investing their resources of time & talent to make a difference in their own lives as well as the lives of those served. Catalyst for responding to community needs by creating, developing, implementing & supporting volunteer opportunities. Connector of people & resources with the needs & services in our community. Advocate for promoting the value of volunteerism.
Programs and services offered by VCR include: 1.
2.
3.
4. 5.
Retired & Senior Volunteer Program (RSVP): This program involves adults, 55 and over. Volunteers use their life experiences and skills to help make the community stronger. These volunteers commonly work with children, adults, or help homeland security activities. Youth with a Mission: This program serves several local organizations such as community centers, medical facilities, faith-based organizations, and schools. Volunteers who work in such programs are primarily from the youth population. The program strives to show how the power of community service can make a profound difference in their lives. Special Projects: This program provides onetime volunteer opportunities for individuals, co-workers, families, or youth. Example special projects include Earth Day and Make a Difference Day, and walks to raise food to feed the poor and the hungry. Volunteer Recruitment: VCR recruits volunteers and matches their interests, skills, and availability to a list of volunteer opportunities from local not-for-profit agencies, organizations, and schools in need of their support. Volunteer Training: VCR provides quarterly training meetings for volunteer coordinators of not-for-profit groups and organizations.
Being a small not-for-profit organization funded completely by grants and donations, VCR has a very simple organization structure. It has a board of directors and an executive director. There are other coordinators and support staff as listed below. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Marilynn, the Executive Director, believes that it is important that the organizational structure not be seen as a hierarchy. Rather, she pictures the full-time and part-time workers as a team working together to achieve the organization’s goals (Figure 1). VCR receives its funding primarily from federal/state grants, private companies, and individual donors. Its annual budget is approximately $278,000. Federal and state grants account for 65% of the budget. Corporate and private donations account for 27% and 8% respectively. The $278,000 annual budget is allocated to current employees, facilities, and programs. Additional expenditures, including funding for IT, can only be funded through new grants and donations. Marilynn, Executive Director, and Cheryl, RSVP Director, are responsible for developing the strategic plan. This plan, as well as progress toward the plan’s goals, is discussed with the Board of Directors. Consistent with VCR’s mission, the strategic plan identifies activities that will support VCR’s mission of finding, encouraging, and placing volunteers. Practically, the plan must also identify grant and other funding opportunities. Successful grant writing is critical to VCR’s survival. Over the last year, VCR has focused on operational efficiency. As the size of VCR’s volunteer base and opportunities have grown, the task of assigning and tracking volunteers has become more arduous. Success at grants has also resulted in significant administrative work. Grant writing, reports to funding agencies, and submitting reports to the state increasingly occupy Marilynn and Cheryl’s time. VCR believed that these tasks could be improved through the use of information technology.
Figure 1
Board of Directors (15 members) Executive Director Marilynn (full time) RSVP Director Cheryl (full time) RSVP, Homeland Security, Outreach Coordinator Dave (part time) Administrative Assistant Ellen (part time) Finance Administrator Agnes (part time) Volunteers
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Economic & Organizational Climate
The Wisconsin state budget and the budgets of local businesses, which are primarily manufacturing in nature, were adversely affected by the economy in 2003. These budgets are not expected to improve in the near future. The VCR and other not-for-profit agencies were increasingly under stress to find sources of revenue. Although the VCR has been successful in obtaining grants, the smaller pool of available funds is an ongoing concern. As a result of the shrinking pool of money and their growth, Marilynn and Cheryl were eager to improve the operations of VCR. They met regularly with the ITPC group and were very appreciative of their efforts to date. Marilynn and Cheryl’s support helped to motivate the other staff. In October, seven of VCR’s employees and volunteers met with the ITPC group to discuss the features of the new information system.
SETTING THE STAGE Project Team
The IS project team is composed of Jeff McCoy, Lyndsay Nash, Rick Harrington, Judy Taft, Bob Ferguson, and Zoya Alvi. Zoya Alvi is a graduate student in Computer Information Systems, while the remaining team members are senior students of Management Information Systems. In addition, both Jeff McCoy and Lyndsay Nash work full time for a major pharmaceutical company. Jeff has been with this corporation for more than 11 years, and is currently a senior computer software validation analyst. Lyndsay has been working for the pharmaceutical company for more than six years, and is currently a director’s assistant. Just as in any project team, different members of the IS team have different abilities and personalities (Whitten, 2004). Jeff and Lyndsay both handled largescale, complex projects in the past. Jeff is undoubtedly the most experienced person on the team and Lyndsay’s experience is next. Jeff, based on his experience, was designated as the project manager. Jeff, by nature, is a very motivated person and seeks perfection from himself and others around him. Lyndsay is a dynamic, outgoing person who works hard to achieve the tasks at hand; however, she at times is not confident of her abilities, and some times has difficulty presenting even nice deliverables in a positive manner. Rick accomplishes tasks that are assigned to him, but lacks the skills to research an open problem and find solutions for it. Judy has no prior IS project experience, and requires an extensive amount of coaching on how to accomplish tasks in an IS project. Bob and Zoya are very well organized, responsible team members who follow any given task until it is satisfactorily completed. Bob and Zoya are recent additions to the project team. In terms of capabilities, Jeff is skilled in project management, system analysis, system design, database development, and client-server programming. Lyndsay is skilled in project management, system analysis, and systems documentation. Rick is very comfortable with database development and client-server programming. Bob has expertise in implementation, troubleshooting, and network design. Zoya has expertise in project documentation, database design, client-server, as well as Web programming. Judy is skilled at system analysis and design.
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The project team from VCR is primarily composed of Marilynn and Cheryl. Marilynn understands the high-level overview of the VCR operations, while Cheryl knows in detail the inner workings of the current systems and paper-based processes at VCR.
Project Initiation
Early in the project cycle, Jeff and his project team met with Marilynn and others from VCR to initiate the project. The VCR team was not familiar with the System Development Life Cycle (SDLC) for constructing information systems (Dennis, 2002). Jeff and the project team explained the concepts behind SDLC and helped Marilynn create a system request (see Figure 2). Jeff forwarded a blank template of the system request to Marilynn, who then created a first draft. Jeff and Marilynn then sat together and refined the first draft into the system request document shown in Figure 2. After the system request was developed, Lyndsay and Jeff conducted a feasibility study. The feasibility study focused on economic, technical, and organizational feasibility. Lyndsay and Jeff created extensive documentation to support the summary conclusions indicated. •
•
•
Economic Feasibility: Based on the current available financial resources from the Volunteer Center, it has been determined that the proposed solution must be relatively inexpensive. Exact numbers were not available from the center; however, indications are that the Center can spend between $500 and $1,000 on this project. The Volunteer Center is in agreement that the value of this project greatly exceeds the allotted budget, but cannot support a larger budget at this time. Even with this budgetary constraint, the project team believed a solution can be obtained. Technical Feasibility: With the young technical skills of the project team consisting of senior MIS students, a certain degree of risk appears to be evident. This risk is born out of the uncertainty in the skill-sets of the team (Ward & Chapman, 2003). The project team, however, is working closely with the ITPC members who have significant experience in building large-scale information systems. The faculty resources will guide the student project team in all aspects of the project. Organizational Feasibility: An analysis of VCR staff indicates all end users are proficient with PCs. In addition, the VCR staff appears to be very open to accepting a new completely electronic system, as the current processes are highly inefficient.
Based on the above analysis, the project team concluded that the project meets the criteria for economic, technical, and organizational feasibility.
The Current System
Early in the system development process, the project team reviewed the current information systems at VCR. The VCR maintained and processed four general types of information: payroll, expenses, donors, and volunteer information. Agnes, the Finance Administrator, used a PC-based accounting application to process payroll and record expenses. Donors were recorded in a spreadsheet. Jeff and his team focused most of their time on the volunteer system. Information was manually gathered from each system to produce a variety of reports in preparation of grants and in fulfillment of state and national reporting requirements. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 2
Date: September 18, 2003 Project Name: Project Sponsor: Name: Department: Phone:
SYSTEM REQUEST Information Systems for the Volunteer Center of Racine Marilynn Pelky, Executive Director, Volunteer Center of Racine 262-996-9612
Email:
[email protected]
Business Need: VCR currently uses tools such as Excel to maintain information on the volunteers, organizations and the positions that the volunteers fill at different organizations. VCR also uses an older system to keep track of volunteers 55 and older. However, these tools have several limitations and are unable to meet the growing requirements as the number of volunteers, organizations, and the funding agencies grow. This project is aimed at obtaining a system that keeps track of the myriad pieces of information that VCR needs in a structured and organized database and provides the VCR employees a user-friendly interface to access the information and generate appropriate reports. Functionality: The VCR information system will: • Maintain information on all volunteers in one integrated system. • Maintain information on stations at which volunteers volunteer their time and the activities of the volunteers • Maintain information on the donors to the VCR and the donations • Generate reports for volunteer center management, and donors, which may include government agencies and private foundations • Maintain and track expenses and budget In addition, it is expected that all the above functions are integrated in one system with a user-friendly interface so that users with limited exposure to technology can use the system. Expected Value: Tangible: • •
Because the quality of data on volunteers will improve with the new system, costs such as mailing costs can be reduced. An approximate estimate of this reduction is between $1,000 to $1,500. Since the new system will generate reports automatically, it is expected that the time to prepare reports for funding agencies will be reduced by 50%.
Intangible: • •
Improved operations which will result in faster matching of volunteers with stations looking for volunteers. Improved satisfaction for the volunteers and for the stations.
Special Issues or Constraints: • •
The VCR is new to project management methodologies. Hence, there may be a learning curve involved with different phases of the project. Since the project is to be carried out by students, ensuring the continuity of the student team is critical for the success of the project.
The VCR used terminology that was initially unfamiliar to the team. A station is a place where volunteers work by devoting their time and effort. Stations include local hospitals and schools where the volunteers work. A job refers to a specific activity that a volunteer performs at a specific station. Example jobs include driving seniors between Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 3: Use Case Diagram for the Current Electronic System
a nursing home and a hospital or working at the reception desk at a blood-donation center. Placement is the process of matching volunteers, depending on their skills and interests, with specific jobs at stations. Currently, VCR uses an electronic system for maintaining senior volunteers, 55 and older, and their activities under the Retired & Senior Volunteer Program (discussed below). Activities of all other volunteers (younger than 55 years) are maintained using Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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paper processes. Jeff and his team documented the current business processes using UML documentation such as the use case diagram. For a discussion of UML, the reader is referred to Arrington (2001). In addition, Appendix A provides an introduction to UML. Jeff McCoy, leader of the project team, created the following use-case diagram to illustrate the different activities performed by the current electronic system. The actors in the above use-case diagram include the following: 55-or-older volunteers, VCR-employees, station-coordinators. The current electronic system maintains information only on volunteers who are 55 or older. These volunteers fill out a paper application form to join VCR, indicate preferences on which station they would like to work, and respond to special-event mailings from VCR via phone or e-mail. In addition, volunteers can retire from VCR, and this activity is accomplished by phone or e-mail. VCR employees create volunteer records in the current electronic system for new volunteers who are 55 years or older. VCR employees may also update information on existing volunteers, and search for volunteers who might be interested in a specific job at a specific station. In addition, VCR employees may update volunteer activities including the number of hours spent by each volunteer in a job. Station coordinators communicate with VCR employees most often by phone, and they request volunteers for specific jobs at their stations. Station coordinators also communicate the number of hours spent by each volunteer at their stations in specific jobs by filling out a paper form. Most of these activities do not have any predetermined frequency and take place on-demand. Note that the tasks performed by the volunteer and the station coordinator do not directly involve the current electronic system. However, the information obtained by performing these tasks is entered into the electronic system by the VCR employee. The use case diagram on the next page was also created by Jeff. This diagram includes all processes not integrated with the current electronic system. Some of the processes indicated in this use-case diagram do not necessarily involve “paper.” However, they use manual processes such as using the typewriter or maintaining documents and spreadsheets that are not integrated with the electronic system described in the previous section (Figure 4). The actors in the above use-case diagram include the following: VCR-employee and the donor. As part of the “Generate Mailings” use-case, VCR employees prepare word documents announcing opportunities to volunteers and mailing labels in Microsoft Word; they then mail them to volunteers. To accomplish the “Create Reports for Funding Agencies” use-case, VCR employees obtain information on the number of hours spent by volunteers on the electronic system, and type these hours on a report form that the funding agency provides. VCR employees track expenses in a PC-based financial system, while the donations to VCR and the donor information are maintained in a spreadsheet. Information on volunteers younger than 55 is also maintained in a spreadsheet. Funding agencies are one source from which VCR gets its support, apart from donations by individual donors. Some of the funding agencies require reports on a regular basis. These reports should include the following pieces of information. • • • •
Volunteer Name Station Name Station and Job Description Hours Worked for the Period
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Figure 4: Use-Case Diagram for the Current Manual/Paper Processes (not integrated with the current electronic system)
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Information System for a Volunteer Center 355
Some of the reports are indicated below: • • •
United Way Quarterly Report RSVP Homeland Security Report Wisconsin State Funding Report
From the above use-case diagram, it is clear that there is no comprehensive system at VCR that keeps track of the expenses, donations, and donors. In addition, volunteers who are younger than 55 are maintained in a spreadsheet.
Analysis of the Current System: Problems & Opportunities
Based on their analysis of the current system, Jeff and Lindsay developed a list of the following problems and opportunities for improvement. • •
• •
• • •
• •
Problem: The Volunteer Center is using a hybrid paper and electronic system. Opportunity: Combine into one unified electronic system. Problem: The current electronic system is on one personal computer that holds data only on retired and senior volunteers (those who are 55 and over). Any remaining volunteer categories, such as youth and adult (under 55), are handwritten and entered on an Excel spreadsheet on a separate personal computer. Opportunity: Bring all volunteer data into one integrated system. Problem: The data is entered manually which can lead to input errors and dataintegrity issues. For example, the same station names are entered differently at different times. Opportunity: Maintain consistent names and categories in the system, and minimize the user-input in the form of free text in the system. Problem: There is no support offered on the current electronic system. Questions about the operation of the RSVP system go unanswered. Opportunity: For the new system, provide support by creating user manuals. Problem: Reports are manually compiled. Opportunity: Improve the productivity of the VCR employees by generating reports required by different funding agencies electronically from the system. Problem: There are many fields of data required for reports that are currently not included in the system. Some of the fields that are not currently available in the existing system include person’s ethnicity, driver’s license number, actual number of hours for each volunteer, etc. A discussion with Marilynn revealed that there are at least 50 pieces of data not currently maintained by the system. Opportunity: Deliver a system so that it includes all the data needed by VCR. Problem: Security on the system seems to be non-existent. Opportunity: In the new system, provide security at the user level. Problem: The information cannot be shared with other users. Opportunity: Design the new system so that it is at least a client-server system so that users get their data from a centralized location (see Allamraju, 2001; Chalasani & Baldwin, 2003).
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•
Problem: There is no automatic backing-up of data in the current system. In addition, data could be typed over or errors made without proper verification at the time of entry. Opportunity: In the new system, arrive at procedures for backing up of data, and minimize the entry of free text by the users.
•
With these current processes in place, the Volunteer Center has struggled to perform two of its critical business functions. First, the Center has experienced difficulty in finding “best fit” volunteer candidates for stations requesting volunteer resources. As a result, a station requesting a volunteer may encounter situations where a volunteer’s skills do not fully meet their needs. Secondly, the Center has encountered difficulty in accurately managing, tracking, and reporting volunteer resources using multiple systems. Because the Center relies on the volunteer resource reports to procure government funds, a consequence of inaccurate reporting is insufficient funding to the Center.
CASE DESCRIPTION
Jeff and the project team spent a considerable amount of time in the analysis and early design phases of the System Development Life Cycle (SDLC). During this process several standard documents were produced, including use cases, a data model, and a project schedule. In addition, the project team noted other requirements, such as budget requirements, that would impact the choice of alternatives and the ultimate success of the project (Barki, Rivard, & Talbot, 2001). The various tasks required to complete the analysis and early design phases were divided among group members. Once an initial draft of a document was created, Jeff and Lindsay reviewed and integrated the work.
System Requirements
Early on, all parties agreed that the standard way to document the requirements was via use-case diagrams, and by providing details of each use-case (Hoffer, 2002; Prowell & Poore, 2003). After numerous meetings with the VCR team, led by Marilynn, Jeff McCoy, with the help of the IS team, arrived at the following use-case diagram. All processes, regardless of how they will be implemented, were documented as part of the use-case diagram (McConnell, 1998). There are four primary actors in this use-case diagram: Volunteer, VCR Employee, Station Coordinator, and the Donor. This use-case diagram shows the <
> and <<extends>> relationships. For example, when a station coordinator reports hours, it triggers the “Update Volunteer Activity,” and hence there is an <> relationship between the two activities. Similarly, updating information on a volunteer may cause a VCR employee to search for volunteer opportunities. Hence, there is an <<extends>> relationship between the “Update Volunteer” and “Search for Volunteer Opportunity” use-cases. Different members of the IS team documented the details of each use-case (Booch, 1999; Krushten, 1999). For example, the “Join VCR” use-case, developed by Lindsay, is detailed in Table 1. It includes key aspects such as the stakeholders, relationships to other use-cases, normal flow of events, and alternate flows. This use-case has three different alternate flows which model three different business scenarios in which a Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 5: Volunteer Center of Racine — Use Case Diagram
volunteer may join VCR (including enrolling by telephone, finding an enrollment form on the Web, and enrolling at an external recruiting event). Table 2 indicates the details of the use-case “Create Volunteer Records.” In addition to the use-cases, the project team documented the following high-level requirements for the VCR information system. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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(R1) Need to maintain volunteers and their information (R2) Need to maintain stations at which volunteers volunteer their time and the activities of the volunteers (R3) Need to maintain information on the donors to the RVC and the donations (R4) Need to generate reports for volunteer center management, and donors, which may include government agencies, private foundations (R5) Need to maintain and track expenses and budget (R6) Need to convert/transform current data into the new system, once the new system is built Table 1 Use-case name: Join VCR ID: 1 Importance level: High Primary actor: Volunteer Use case type: Detailed, Essential Stakeholders and interests: Volunteer - Want to volunteer to provide a community service. VCR - Want many volunteers to join VCR. Brief description: Volunteer joins VCR and has the ability to volunteer. Trigger: Volunteer decides to volunteer at VCR. Type: External (event driven) Relationships: Association: Volunteer, VCR, Enrollment Form Include: Use Case: Create Volunteer Records Extend: Generalization: Prerequisites: Volunteer desire to perform volunteer services in the community through the VCR. Normal flow of events: 1. Volunteer arrives at VCR. 2. Volunteer inquires about volunteer work. 3. VCR provides enrollment form. 4. Volunteer completes enrollment form. 5. VCR employee accepts enrollment from. 6. Execute: Create Volunteer Records. Subflows: (Groups of Subflows should start with a caption that describes the subflow group. The caption should be identified with a label in the following format: S-# (e.g., S-1, S-2)) Alternate/exceptional flows: 1a-1. Volunteer contacts VCR by telephone. 1a-2. VCR employee invites volunteer to VCR. 1a-3. Proceed to Step 3. 1b-1. 1b-2. 1b-3. 1b-4. 1b-5.
Volunteer connects to VCR Web site. Volunteer complete online enrollment form. Volunteer prints copy of enrollment form. Volunteer delivers enrollment form to VCR. Proceed to Step 5.
1c-1. Volunteer completes enrollment form through an external recruiting event. 1c-2. VCR employee delivers enrollment form to VCR. 1c-2. Proceed to Step 5.
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In addition to the use-cases, the IS team developed a data model to highlight the data requirements of the system. The initial data model was developed by Judy. Part of the ER model (Baldwin & Paradice, 2000) is shown on the next page. The main entity in the ER model is the Person entity. Person has many attributes such as name and ethnicity. A person can be of multiple types — “Volunteer,” “Donor,” “Station Coordinator,” and so forth. The type of a person is captured using the PersonType lookup table and PersonPersonType cross-reference table. This model is capable of maintaining multiple addresses, e-mail addresses, and phone numbers for a person. PersonPhone, PersonEmail, PersonAddress are separate entities that capture this data. Since most volunteers are retired and senior volunteers, it is possible that volunteers have some disability that restricts them from certain types of volunteer activities. PersonDisability captures this data, while PersonInterest captures the activities that a volunteer may be interested in (Figure 6). The entities and the data fields contained in a few example entities are described in Table 3. Judy developed the initial version of the data dictionary (Hoffer, 2002). Jeff modified various entries to correspond to his view of the data requirements.
Table 2 Use-case name: Create Volunteer Records ID: 2 Importance level: High Primary actor: VCR Use-case type: Detailed, Essential Stakeholders and interests: VCR - Wants to have a record of all volunteers. Brief description: VCR employee enters the new volunteer information into the system. Trigger: New volunteer completes enrollment form. Type: External (event driven) Relationships: Association: VCR Include: Extend: Generalization: Prerequisites: Must complete Use-Case: Join Volunteer Center. Normal flow of events: 1. VCR employee obtains enrollment form. 2. VCR employee gives enrollment form to Program Manager. 3. VCR Program Manager reviews enrollment from. 4. VCR Program Manager gives enrollment form to VCR employee for entry. 5. VCR employee enters information in the system. 6. VCR employee files hard copy into file cabinet. Subflows: (Groups of Subflows should start with a caption that describes the subflow group. The caption should be identified with a label in the following format: S-# (e.g., S-1, S-2)) Alternate/exceptional flows: 3a-1. Program Manager finds error or incomplete form. 3a-2. Program Manager or VCR employee contact volunteer for accurate information. 3a-3. Proceed to Step 4.
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Special Requirements
Not-for-profit organizations frequently face challenges that may not be faced by for-profit organizations. These challenges most often stem from budgetary and time constraints. For the Volunteer Center of Racine, even though Marilynn and Cheryl were completely committed to the project, they are unable to secure even limited funding to implement the project. For example, purchasing high-end PCs that implement new software is not an option; instead, they depend on local companies to donate equipment such as PCs. In addition, due to budgetary constraints, their current server and PCs are connected by a wireless network. The wireless network itself is supported by Mike Daniels, another volunteer. However, the wireless network is very unreliable with the client PCs losing their connections to the server very often during the day. Thus far, Mike has not been able to spend enough time to come up with a solution to the network
Figure 6: A Partial ER Model for the VCR Database System
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problem. Jeff and the project team are confident that they can implement a wired network for the VCR under a budget of $500. However, funding for this has not yet been secured. Such problems are routine in a non-profit organization, and cause dependencies that may affect the project schedules and project timelines significantly. Another requirement for the project is that it should be completed by August so that Cheryl and others at the volunteer center can start using the system for numerous fall volunteer activities. In addition, implementing the new system in August will also facilitate creation of the year-end reports needed by the funding agencies using this new system.
Table 3 Name: Type: Alias: Description:
I
Fields:
II
III
Name: Type: Alias: Description: Fields: Name: Type: Alias: Description: Fields:
IV
Name: Type: Alias: Description: Fields:
V
Name: Type: Alias: Description: Fields:
VI
Name: Type: Alias: Description: Fields:
Person Structure Person is used to model a Volunteer, a Donor, a VCR employee or a Station coordinator PersonID, PersonLastName, PersonFirstName, PersonBirthDate, IncomeLevelID, EthnicityID, PersonInterestID, PersonStationJobID, PersonSex, CompanyName, PersonInterestText, Organization, Position, Title, Comments, Retired, RetiredReasonCode, ReimbursementNeeded PersonType Structure Lookup table containing values for person types (volunteer, donor etc.) PersonTypeID, TypeName DonorLevel Structure Lookup table containing different donor levels depending on their contribution (Gold/Silver/Bronze). DonorLevelID, DonorLevelDescription
StationContacts Structure Information on contact persons for each station is maintained in this entity StationID, PersonID, PersonTypeID StationJob Structure Jobs at any station are maintained here StationJobID, StationID, JobID, StatoinJobStartDate, StationEndDate, Impact Station Structure Maintains information on a station StationID, StationName, StationTypeID, GroupAffiliationID, Contract Date
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Proposed Designs
Jeff and Rick arrived at four alternative solutions for the Volunteer Center Project. They presented these alternatives to the IS team, which conducted an analysis of the alternatives. Alternatives range from complete off-the-shelf packages to total custom developed system approaches. The identified alternatives and their analyses are presented below. Alternative #1. Purchase Off-the-Shelf This alternative would entail the purchase of commercially available off-the-shelf software that meets all the documented requirements. The product would then be used “as-is” with no additional configuring or modifications to meet the special needs of the business. • •
Benefits: Complete system, reliable/proven system, customer support available Weaknesses: High cost, proprietary code that cannot be modified easily for future customization or modifications, inability to configure to meet users’ needs
Alternative #2. Purchase Configurable This alternative would entail the purchase of commercially available off-the-shelf software that could be further configured by the user/developer. The product would be modified to meet the special needs of the business. • •
Benefits: Ability to configure as per requirements, large selection of vendors, availability of customer support Weaknesses: High cost, special skills needed to configure, limited customer support once configured
Alternative #3. Custom Develop This alternative would entail the purchasing of no software by the Volunteer Center. All software will be built by the project team to meet the special needs of the business. • •
Benefits: Low cost, ability to build to meet users’ exact needs, standard programming languages can be used (Visual Basic, Java, etc.) Weaknesses: Special skills needed to build, special skills needed to support, undefined maintenance responsibilities
Alternative #4. Reengineer Existing System This alternative would entail the reengineering of the existing system in place at the Volunteer Center. This alternative cannot be considered, as the existing system is a hybrid comprised of electronic and paper business processes. In addition, the existing electronic system uses proprietary code that is not accessible to the project team. A best attempt at reengineering would be to contact the software supplier and review current off-the-shelf offerings (the use of Alternative #1). This alternative was not considered further.
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As the project team managed by Jeff pondered on the above alternatives, they needed to choose one of the above alternatives in a logical way (Goseva-Popstojanova, 2003). It appeared to Jeff that purchasing an off-the-shelf component (Alternative #1) will require at least $5,000, and may be as high as $15,000. Alternative #2 has similar costs for purchasing the software. In addition, some of these products require customers to sign a multi-year maintenance deal that can run into hundreds of dollars per year. On the other hand, a custom-developed solution (Alternative #3) will require a significant amount of time to be spent in system design and development. The VCR will not have to pay for this alternative, since this will be done by the IS project team on a pro bono basis.
Project Schedule & Remaining Tasks
In order to help determine the viability of the custom-development approach, Jeff and Lindsay decided to sketch a schedule for this alternative. Their high-level schedule is indicated in Table 4. Even though the Waterfall method has been followed until the design phase, Jeff and the project team decided to use a phased approach that will implement the system in three different phases at the VCR site. The reason to use such a phased approach is to reduce the risk of implementation facing too many implementation problems, and also to incorporate user feedback into the system before the end of the project (Jorgensen 2004). Approximately 50 screens need to be developed for the VCR information system. In addition, Microsoft SQL server software will be installed and used to maintain the data. The approximate division of effort among team members to accomplish these tasks is shown in Table 5.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
The ITPC offices were quiet by the time Jeff began to fill in the project status report. The tone of the most recent meeting interfered with his ability to think. Jeff’s drive for perfection created friction between him and some of his team members who felt belittled Table 4 Phase Planning Analysis Design Implementation (including Development)
Post Implementation Support
Start Date 09/16/03 11/01/03 04/01/04 05/15/04
End Date 10/31/03 03/31/04 05/15/04 07/31/04 Phase #1 - 05/31/04 Phase #2 - 06/30/04 Phase #3 - 07/31/04
Completed? Yes Yes In progress
08/2004
Yet to begin
Yet to begin
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by his criticism of their work (Barki & Harwick, 2001). As an instance, when the data model and the data dictionary completed by Judy were substandard, Jeff spent a large amount of time modifying the models. Jeff felt that he needed to provide feedback and, if necessary, complete the task himself in order to obtain satisfactory results. He could not figure out why members of his team had problems with this approach (Radosevich, 1998). In addition to the personnel issues, several other issues needed to be considered. Should the team recommend purchasing software or custom developing a solution? What risks face the project and how can the risks be mitigated (Ward & Chapman, 2003; Goseva-Popstojanova, 2003)? How might the risks affect the project schedule? Will the project be completed on time? Are there any omissions in the requirements specification? How should the team manage the project scope? Jeff glanced at this watch, which now read 6:55. “Late movies are always good, fewer people in the theater,” he thought.
REFERENCES
Allamaraju, S. et al. (2001). Professional Java Server Programming J2EE 1.3 Edition. Birmingham, UK: WROX Press. Arrington, C.T. (2001). Enterprise Java with UML. Indianapolis, IN: OMG Press, John Wiley & Sons. Baldwin, D., & Paradice, D. (2000). Application Development in Microsoft Access 2000. Cambridge, MA: Course Technology. Barki, H., & Hartwick, J. (2001). Interpersonal conflict and its management in information systems development. MIS Quarterly, 25(2), 195-228. Table 5 Item
Task
1
Development, testing, and implementation of 10 screens Development, testing, and implementation of 20 screens Development, testing, and implementation of 20 screens Development of Database in MS SQL Server and Installation of MS SQL Server and Troubleshooting Data Conversion from the current System to the New System Creation of Test Plans Project Coordination and Management Post-Implementation Support TOTAL
2 4 5
6 7 8 9
Approximate Hours 100
Person Assigned
Start Date
End Date
Bob Ferguson
5/15/2004
6/30/2004
200
Zoya Alvi
5/15/2004
7/15/2004
200
Rick Harrington
5/15/2004
7/15/2004
100
Lyndsay Nahf
4/1/2004
5/15/2004
50
Lyndsay Nash
5/1/2004
6/30/2004
75 250
Lyndsay Nash Jeff McCoy
4/1/2004 1/10/2004
5/15/2004 7/31/2004
Yet to be determined
8/1/2004
9/30/2004
75 1,050
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Barki, H., Rivard, S., & Talbot, J. (2001). An integrative contingency model of software project risk management. Journal of Management Information Systems, 17(4), 3739. Booch, G., Rumbaugh, J., & Jacobson, I. (1999). The Unified Modeling Language User Guide. Reading, MA: Addision-Wesley-Longman. Chalasani, S., & Baldwin, D. (2003). Software architectures for an extensible Web-based survey system. Proceedings of the 2003 IASTED International Conference on Software Engineering and Applications, Marina del Rey, CA. Dennis, A. et al. (2002). Systems Analysis and Design: An Object Oriented Approach with UML. Indianapolis, IN: OMG Press, John Wiley & Sons. Goseva-Popstojanova, K. et al. (2003). Architectural-level risk analysis using UML. IEEE Transactions on Software Engineering, 29(10), 946-960. Hoffer, J.A. et al. (2002). Modern Systems Analysis & Design. Upper Saddle River, NJ: Prentice-Hall. Hoffer, J.A. et al. (2002). Modern Database Management. Upper Saddle River, NJ: Prentice-Hall. Jorgensen, M. (2004). Realism in assessment of effort estimation uncertainty: It matters how you ask. IEEE Transactions on Software Engineering, 30(4), 209-217. Krushten, P. (1999). The Rational Unified Process: An Introduction. Reading, MA: Addision-Wesley-Longman. McConnell, S. (1998). Software Project Survival Guide. Redmond, WA: Microsoft Press. Prowell, S.J., & Poore, J.H. (2003). Foundations of sequence-based software specification. IEEE Transactions on Software Engineering, 29(5), 417-429. Radosevich, L. (1998). Smells like team spirit. CIO Magazine, (October 1). Ward, S., & Chapman, C. (2003). Transforming project risk management into project uncertainty management. International Journal of Project Management, 21(2). Whitten, J.L. et al. (2004). Systems Analysis and Design Methods. New York: McGrawHill-Irwin.
APPENDIX A A Brief Introduction to UML This section is written by the authors from the information gathered from the references indicated in the references section. Unified Modeling Language (UML) is a language for specifying, visualizing, constructing, and documenting the artifacts of a software system. UML provides a precise notation needed to model software systems. It enables the creation and communication of ideas. •
Abstraction: Abstraction means simplification or model of a real-world object or a process or a complex concept. A good abstraction highlights the relevant characteristics and behavior of something that is too complex to understand in its entirety. Abstraction helps us understand how different parts of a larger model interact together. Different interacting parts of a model are referred to as objects.
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•
Encapsulation: Encapsulation means that data and behavioral logic are hidden within the object. Abstraction highlights the important aspects of an object, while encapsulation hides the cumbersome internal details of the object. A wellencapsulated object allows other objects to use it without depending on any internal details. Object: A particular and finite element of a larger model. Examples of an object are indicated below.
•
• • •
•
A specific car in a car dealer’s inventory system (very concrete object) Individual’s savings account in a banking system (invisible object) A transaction in a banking system (object with a short life)
Objects have state, which describes their current condition and characteristics. For example, the car object has some characteristics such as make/model that never change, and other characteristics such as mileage that change over time. Objects have behavior, which describes the actions other objects may perform on an object. For example, the customer object may withdraw/deposit money from/into the bank account object. Logic corresponding to this behavior resides within the object. Similarly, this behavior depends on the state. Each object in the system must be uniquely identifiable. There must be one or more characteristics that set each object apart from the other objects. For example, the Vehicle ID Number uniquely distinguishes one car object from another. Class: A class is a group of objects that have something in common. A class provides an abstraction for the object and a template for object creation. It specifies the type of data that the object can hold. It also specifies the type and number of objects that it knows about. For example, a car object may maintain information on one or more previous owners.
An object may have an association with a single object, with a certain number of objects, or with an unlimited number of objects. Multiplicity indicates the number of other objects to which a given object is related. There are several different types of relationships between objects. Some of these relationship types are described below. •
•
Dependency Relationship: Dependency is the weakest relationship between objects. An object depends on an object if it has a short-term relationship with the object. A dependent object calls the methods of the other object to obtain services. In the object-oriented world, dependency means that an object may create an object as part of a method, configure it, and pass the object to the calling method as a return value. Or, an object may receive an object as a parameter to a method, use it or modify it, then forget about it when the method ends. For example the cashier object may interact with the customer object to ring up grocery items, a relationship that is inherently short term. Association Relationship: Association is a long-term relationship between objects. Under association, an object can keep a reference to another object and
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•
•
•
•
•
•
•
call the other object’s methods, as it needs them. An object may instantiate another object and keep it for future use. In addition, an object may receive an object as a parameter to a configuration method and keep a reference to the object. Aggregation Relationship: An aggregation relationship indicates that an object is part of a greater whole. The contained object may participate in more than one aggregate relationship, and exists independently of the whole. For example, a developer object may exist on its own, but a project object may consist of multiple developer objects in addition to other objects. Composition Relationship: An object is owned by a greater whole. The contained object may not participate in more than one composition relationship, and cannot exist independently of the whole. The part is created as part of the creation of the whole and is destroyed when the whole is destroyed. For example, a small gear object may not exist on its own, but should be completely contained as part of the engine object. Interface: Each interface completely specifies the signature of one or more methods, complete with parameters and return type. An interface captures abstraction, without addressing any implementation details. A class realizes an interface by implementing each method in the interface. Interfaces provide flexibility. Polymorphism: Polymorphism through inheritance means that more than one class inherits from a base class (extends). Polymorphism through realization means that more than one class can implement an interface (implements). An advantage of polymorphism is the unlimited flexibility it provides. That is, different implementations can be mixed and matched to achieve interesting effects. Another advantage is long-term extensibility. That is, new implementations can be introduced without affecting the code that depends on an interface. UML enables developers to build a single coherent model that describes a software system from several perspectives. A variety of participants can use the same model and speak the same language throughout the development process. Some of the diagrams that are developed as part of UML are indicated below. Use-Case Diagrams: A use-case diagram models all interactions between the user and a system in a single high-level diagram. A use-case diagram allows developers and customers to understand/capture the intent and scope of the system. Use-case diagrams are constructed by finding actors, finding use-cases and the interactions between the actors and the use-cases. In addition to the use-case diagram, often detailed descriptions of each use are constructed. Class Diagram: A class diagram defines and constrains a group of objects in detail. It shows the state, behavior, and relationships with other objects that are mandated for each object that is instantiated from the class. Sequence Diagram: A sequence diagram depicts how objects interact with one another to provide functionality corresponding to a single use-case. A sequence diagram indicates the order of the interaction and the order of messages between objects. Sequence diagrams are often constructed based on the following steps: 1.
Add the objects that participate in accomplishing the use-case to the sequence diagram.
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2. 3.
•
•
•
•
Work forward from the actor, finding behavior and messages between the objects as the use-case functionality is developed. Validate the sequence from the end.
For the purpose of object-oriented analysis, objects are classified into four categories: Entity, LifeCycle, Control, and Boundary objects. These four types of objects are described below. A sequence diagram often depicts the sequence of messages that flow between boundary, control, lifecycle, and entity objects. Boundary Objects: Boundary objects are useful for presenting information to the actors (users). Boundary objects are identified by examining the relationship between the actors and the use cases. Each actor/use-case pair forms a boundary object. Control Objects: Control objects provide workflow and session services to other objects. A high-level message from the boundary object to the control object is converted into a series of messages from the control object to the lifecycle and entity objects. Each use case translates into one control object. Control objects do not encapsulate any business logic; most business logic is delegated to the lifecycle and entity objects. Entity Objects: Entity objects encapsulate the business data and part of the business logic of the system. Entity objects often have the attributes and the get/ set methods that read/modify these attributes. For example, an account is an entity object, and similarly customer is an entity object. Lifecycle Objects: Often, there is only one lifecycle object for each entity class. The lifecycle object is useful for accumulating and finding different instances of an entity class. Common functions of a lifecycle object include Create, Destroy and Locate entity objects. Sometimes, lifecycle objects are also referred to as factory, home, and container objects.
APPENDIX B Sample Project Status Report PROJECT STATUS REPORT Reporting Period: 12/02/03 PROJECT: Volunteer Center of Racine PROJECT SPONSORS: Marilynn Pelky (VCR), Suresh Chalasani, and Dirk Baldwin (UW-Parkside) PROJECT MANAGER: Jeffery McCoy PROJECT TEAM: Jeffery McCoy, Rick Harrington, Judy Taft, Lyndsay Nash SUBJECT MATTER EXPERTS: Marilynn Pelky (VCR), Suresh Chalasani, and Dirk Baldwin (Project Advisors) PROJECT OVERVIEW: The project is to create a new system for the Racine Volunteer Center. The system should allow for better overall management of past, present, and future volunteers, donors, and businesses/organizations with volunteer needs (“staCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Information System for a Volunteer Center 369
tions”). The system will allow for new volunteers to be entered into the system and their progress to be documented and monitored. The system will also allow for donor information to be stored and updated to be used for miscellaneous purposes, including the reporting of state taxes. Thirdly, the system will allow for a higher quality of management of the stations to better track the needs of the business/organization, providing a higher level of volunteer service. Finally, the system will provide several reports that encompass the above listed processes for better overall documentation and control. Project Current Status Summary On Time
On Budget
People
Process
Technology
Confidence
Yellow
Green
Green
Green
Green
10
FOR ANY YELLOW, RED, or CONFIDENCE less than a 5 status identify: Project Summary KEY: ISSUE Currently there is only one programmer assigned to complete this project. The project requires a project manager and one additional programmer, at minimum. We have had a few additional requirements given to us by VCR. We do not anticipate much set-back, however our diagrams, data dictionary, etc. will require updating.
ACTION PLAN We have a commitment from one student to join the team as a programmer for next semester. We also have a second potential student looking into joining next semester as well. Update the diagrams, use cases, data dictionary ASAP.
KEY: On Task Green
Concerns
Danger
Yellow
Red
Note: Include words Green, Yellow, & Red in appropriate cells for B/W printers Confidence Scale: 1= Project is beyond salvage, cannot to be completed with satisfactory deliverables 3= May be able to complete portions of the project with overruns likely 5= Project still has many unknowns but average risk for completion 7= Project moving well towards completion, adequate resources available 10= Project is virtually a certainty to complete on time, on budget, and to scope Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Chapter XXI
Siemens:
Expanding the Knowledge Management System ShareNet to Research & Development Hauke Heier, European Business School, Germany Hans P. Borgman, Universiteit Leiden, The Netherlands Andreas Manuth, Siemens Information & Communication Networks, Germany
EXECUTIVE SUMMARY
The case study describes the issues surrounding the expansion of the community-based knowledge management system (KMS) ShareNet to the research and development (R&D) function at Siemens Information and Communication Networks (ICN). It sets the stage for a decision situation that Siemens ICN’s vice president business transformation and knowledge management, Janina Kugel, faced in 2003. While R&D usage rates differed not remarkably from other Siemens ICN functions, a strategic emphasis on innovative products and services — as well as ambitious targets for leveraging offshore development resources — necessitated a stronger penetration of this highly relevant function. Could this extension build on earlier experiences gained with the best practice implementation approach at the sales and marketing function? The case description provides a chronological account of ShareNet’s conceptualization, development, international rollout, and operation. It pays attention to information systems (IS) implementation issues, change management, and current developments in the field of knowledge management (KM). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
Siemens, headquartered in Munich, is a German-based multinational corporation with a balanced business portfolio of activities predominantly in the field of electronics and electrical engineering. With sales of EUR 74.2 billion and a net income of EUR 2.4 billion in fiscal 2003, it was Europe’s industry leader with strong positions in the North American and Asian markets (in August 2003, EUR 1.00 was equivalent to about USD 1.13). Approximately 50,000 researchers and developers were employed; research and development (R&D) investments totaled EUR 5.1 billion. Exhibit 1 shows Siemens’ financial performance from 2000 to 2003. Siemens was a conglomerate of six business segments: Information and Communications, Automation and Control, Power, Transportation, Medical, and Lighting. Each business segment was split into several groups with independent profit responsibility and regional sales organizations (local companies) around the globe. The decentralized matrix structure allowed for entrepreneurial responsibility and the development of close ties to customers. Global, interdivisional cooperation and systematic sharing of best practices enabled the provision of comprehensive and customer-focused solutions. Siemens’ managing board confirmed that the “global network of innovation” — over 400,000 employees in 190 countries — was the firm’s greatest asset. Linked in a global knowledge network, they were key for innovation and finally for offering technologies, tailor-made solutions, and services. Siemens’ largest business segment, Information and Communications, comprised three groups. Siemens Business Services (SBS) offered single source IT solutions and services. Information and Communication Mobile (ICM) covered all mobile communication requirements with network technology, terminal devices, and mobile applications. The case study focuses on Information and Communication Networks (ICN) that developed, manufactured, and sold public communication systems, private business communication systems, as well as related software and services. Impacted by the telecommunications equipment industry’s continuing difficulties, Siemens ICN’s sales of EUR 7.1 billion resulted in a negative EBIT of EUR 366 million in fiscal 2003 (Siemens, 2003). The 38,000 employees in over 160 countries focused on improving the product base, cost structure, and sales channels. It was Siemens ICN’s strategy to become a solution provider for other “global networks of innovation”. Its three business units would provide the physical components of a sales project while the local companies were responsible for customizing and integration into the customer network: Enterprise Networks (EN) offered communications solutions for enterprise customers, Carrier Networks (CN) comprised IP-based convergence solutions, circuit-switched networks, optical networks solutions, and a portfolio of broadband access solutions, and Carrier Service (CS) provided local maintenance, system support, and general services for circuit-switched, IP-based, and hybrid networks (Siemens Information and Communication Networks, 2003). Exhibit 2 depicts Siemens ICN’s organizational structure. For the case study, mainly the complementary central functions business transformation (BT) and knowledge management (KM), as well as the local companies, are relevant. Headed by Janina Kugel, vice president of business transformation and knowledge management, a six-person team drove and supported knowledge sharing initiatives in order to enhance Siemens ICN business processes and global cooperation. Exhibit 3 presents the mission statement of the central function KM. Responsibilities included the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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mapping of business processes to establish supportive KM platforms, the creation of a common knowledge infrastructure and culture, and fostering the awareness that knowledge sharing generates value. This was supposed to facilitate cooperative global learning, as well as cross-divisional and cross-country reuse of global best practices.
SETTING THE STAGE
The case study illustrates the issues surrounding the implementation of the community-based knowledge management system (KMS) ShareNet at Siemens ICN over the period 1998-2003. It sets the stage for a range of decision options that Kugel must incorporate in her upcoming proposal to extend the KMS to Siemens ICN’s research and development (R&D) function, by presenting a chronological account of ShareNet’s history. Specific attention is paid to information systems (IS) implementation issues (e.g., Ginzberg, 1981; Zmud & Cox, 1979) as well as to change management interventions (e.g., Earl, 2001; Fahey & Prusak, 1998; Seeley, 2000). Kugel was convinced that much could be learned from the sales and marketing rollout history but that recent challenges in the telecommunications sector — as well as the specific needs of the R&D function — would make several adaptations to the system’s functionalities and implementation strategy necessary. ShareNet, a global knowledge sharing network initially developed for the global Siemens sales and marketing community, was conceived in 1998. With the market environment in constant flux, Siemens realized it had to be able to provide flexible bundles of services and products that could be easily adapted to individual customers. To this end, the company recognized that a major improvement in the fast and purposeful identification and exchange of relevant information and knowledge was needed. Hence, Siemens ICN started the development of a community-based KMS under the name ShareNet. For “explicit knowledge,” the aim was to provide structured knowledge objects in the form of project descriptions, functional and technical solutions, customers, competitors, and markets. For “tacit knowledge,” the system was intended to provide functionalities such as newsgroups, discussion forums, and chats. As explained next, ShareNet’s implementation and rollout across the global sales and marketing function was overall successful. Kugel’s challenge now was to extend this success to the R&D community in a much grimmer economic environment. Facing a difficult business situation and outlook in 2003, Siemens ICN’s group executive management continuously emphasized the need for innovative products and services. At the same time, all organizational functions had to meet strict cost criteria. In 2003, Siemens developed 5% of its software in low-cost countries. An ambitious program was started to extensively use offshore development resources in order to reduce costs. In addition, Siemens aimed to consolidate development activities to shorten the time to market, to concentrate on core competencies and, thereby, to strengthen its innovative power. Cost cuttings through decentralization to low-cost sites seemed easy. Keeping R&D quality high — while scattered across the globe — was the real challenge. Knowledge sharing between employees and partners in remote areas was seen as a key driver, again strengthening the call for ShareNet’s R&D expansion. Fueled by the KMS’ successful, large-scale rollout at the sales and marketing community, as well as by first
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evidence for related culture change, the ShareNet operating team had conducted first pilot implementations at R&D. Besides heading the KM team, Kugel also directed a team of business consultants — the BT team. Just when Kugel had to decide on ShareNet’s expansion to R&D, those employees had successfully finished a project to define and implement a process to foster radical new innovations (labeled “disruptive innovations”) within ICN and feed these innovations into the well-defined product and service development processes for the carrier and enterprise business. The BT team envisioned a central role for ShareNet in this process, which could give ShareNet a jump-start into the R&D environment. Now Kugel saw basically three options to proceed: first, to simply replicate the sales and marketing implementation approach for the entire R&D community; second, to adapt the implementation process for R&D and to establish several smaller groups of R&D employees; or third and last, to customize the implementation process and expand ShareNet usage step-wise along the R&D process.
CASE DESCRIPTION Definition & Prototyping
The initial development of ShareNet started in 1998. ShareNet’s first key project stage — “definition and prototyping” — lasted from August 1998 to the end of March 1999. Objectives were to establish the ShareNet project team, to create conceptual definitions and refinements, to start prototyping the technical platform, and to ensure early executive and user buy-in. Soon, the ShareNet project team developed the vision of a structured KM initiative for the sales and marketing function: “ICN ShareNet is the global knowledge sharing network. We leverage our local innovations globally. We are a community committed to increase value for our customers and ICN by creating and reapplying leading-edge solutions.” The aim was to change Siemens ICN’s communication flow from a broadcast-oriented “enabling” approach that is, headquarters to local companies, to a meshed network approach required for fast global learning. Several benefits were emphasized: costs should be reduced by avoiding expensive mistakes made in the past, or simply by reusing technical and functional components that had already been developed; project delivery times ought to be shortened through reuse, leading to higher project throughput/utilization by the sales force; quality should improve as reusable modules were repetitively sold and improved; lastly, besides representing benefits in their own right, these would lead to more successful tenders and higher revenues. Four crucial elements were defined to guide the KMS’ conceptual development, prototyping, and later implementation. Exhibit 4 depicts the basic components: Sales Value Creation Process, ShareNet Content, ShareNet Community, and ShareNet Systems. ShareNet’s central part — the Sales Value Creation Process — was a sequence of important sales activities and decisions where knowledge ought to be reused. It served as an abstract global sales process definition, where each individual local sales process could be mapped. The ShareNet project team and four consultants from The Boston Consulting Group (BCG) realized early that the KMS’ development should be no isolated Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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effort, and later parachuted into the local companies. Consequently, the team was augmented by 40 sales representatives from headquarters and 15 local companies. Their involvement served three distinct change management goals: they specified KMS solutions, supported a network of people experiencing similar difficulties, and set examples for the combined KM and change initiative’s progress. Siemens ICN’s group president and high ranking sales managers formed the steering committee responsible for project supervision and top management support. The ShareNet project team was assembled for the first time in October 1998 at the kick-off workshop at Frankfurt airport. Goals were the definition of the KMS’ content, objectives, and structure. The project team and BCG presented first ideas for ShareNet’s vision, basic concept, and graphical user interface (GUI) mock-ups for prototyping. Afterwards, the participants’ team engaged in a joint diagnosis of business problems in order to make sure that the KMS provided value-add to the sales and marketing process. The structure of the KMS was tailored to tackle these problems through global collaboration. All sales representatives were asked to identify projects, solutions, and practices in their home regions that could be leveraged globally, that is, early win-showcases. An Intranet site with a preliminary database, discussion and feedback groups, and core team member profiles was soon established. Altogether, the knowledge of 18 sales projects was captured, more than 30 sales tips and tricks identified, and a first concrete sharing of knowledge initiated. All content gathered was reviewed in November 1998 at the global exchange workshop in Garmisch. Based on their previous experiences, the ShareNet project team decided early on two ShareNet applications. First, the IS should serve as a document repository for the coding and sharing of best practices in selling solutions. It included structured knowledge about everything needed to create a solution. Second, ShareNet should foster the creation of knowledge networks. Employees should virtually exchange personalized knowledge to promote global cooperation, human networking, and quick help. The option of adding a corporate directory for the mapping of internal expertise (yellow pages functionality) — often found in KMS — was seen as less promising due to a perceived lack of data quality (see Alavi & Leidner, 2001; Earl, 2001, for a typology of KMS and KM strategies). To accommodate the first application, the explicit knowledge derived from different stages of the solutions-selling process fell into distinct categories of ShareNet solution objects (e.g., technical or functional solution knowledge) and ShareNet environment objects (e.g., customer or market knowledge). Technical solution components were all technology-related parts of solution packages provided to the customer. Functional solution components were all the non-technical tips and tricks or generic methods offered, for example consulting service, financing, and so forth. Useful documents (e.g., customer presentations, spreadsheets) could be linked and references to other content in ShareNet were supported. The linkage was to some extent inherent in the structure, for example a sales project naturally contained a pointer to a customer, and so forth. Additionally, contact persons were named for further help. To accommodate the second application, ShareNet’s tacit content consisted of urgent requests, discussion forums, news, and chats. The urgent request feature allowed ShareNet members to post an urgent message or question to alert the other ShareNet users. If feedback on general ideas or suggestions to solve low priority issues was Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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needed, discussion forums should rather be chosen. ShareNet news was a specific type of forum that served as a bulletin board for the ShareNet Community. ShareNet chat was the global virtual meeting room for the KMS’ members based on Internet relay chat (IRC). The final element in ShareNet’s people-to-people section was the ShareNet member directory, comprising a directory of all users with contact information, organizational details and the individual list of contributions to ShareNet. The ShareNet Systems included both the technical systems to facilitate low effort global publishing and searching, and the managerial systems to encourage the capturing, sharing, reuse, and global leverage of knowledge and best practices. These comprised — among others — incentives and rewards, methodologies to externalize knowledge, and dedicated resources for maintaining and evolving the KMS. The core team decided to start with rapid prototyping of the technical platform and to leave the definition of the managerial systems for the final workshop. The technical systems employed three-tier client/server architecture. The first tier was the user inter-face/personal workspace accessible via regular Web browsers. The second tier did most of the processing: a SUN SparcServer served as the designated application and Web server for all local companies and business units. It ran a software toolkit based on open Internet standards: open source Web server (AOLServer) and open source community system (ACS — ArsDigita Community System). ShareNet’s dynamic Web implementation was based on AOLServer Dynamic Pages (ADP), an HTML derivate. Web pages were generated by scripts loading meta-data (e.g., object structure and graphical layout) and actual data (e.g., customer description) from the relational database management system (Oracle 8i). It was housed on the same server and comprised the third tier. The third and final workshop in the “definition and prototyping” stage was held at Munich airport in February 1999. Content gathered and reviewed from three regions was posted on the prototype system and set an example for the successful application of managerial innovations. However, the participants were unsure about incentives, rewards, and culture change: how could they ensure that ShareNet was adopted by the whole organization? Joachim Doering, president group strategy, estimated that 80% of KMS failed for non-technical reasons: lack of capability to execute, missing readiness or commitment to change, defunct change communications, limited top management support, and poor strategy. To side-step these traps, he wanted the initiative to simultaneously address all domains of change management: strategic change, process change, technological change, and especially organizational and people change. For the managerial systems, the Munich workshop decided on a range of objectives: first, to increase the usage of ShareNet and thereby improve value creation in sales; second, to support the capturing of knowledge created in the sales processes; third and last, to enable ShareNet’s further development and growth by rewarding knowledge sharing. In order to ensure that all ShareNet crucial elements (processes, content, community, and systems) were developed and improved further, the Munich workshop participants proposed a consistent organizational structure. Exhibit 5 shows the resulting ShareNet organization, roles, and tasks. Top management support mainly relied on explicit means of change communications to bundle organizational resources and individual commitment to the project. Line managers rather served as neutral intermediaries to spread ShareNet’s idea across Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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organizational levels and functional departments. Nevertheless, in the long term the ShareNet Community should assume responsibility for the KMS’ maintenance and evolution through its input and formulation of requirements. In March 1999, Roland Koch, ICN group president, decided to continue the project and to proceed with the next development stage: “This [ICN ShareNet] network will be of key importance for the success of ICN’s solutions business, because the company that is able to make use of existing experiences and competencies quickest has a distinct competitive edge over the other players. We need to be among the first to realize this strategic competitive advantage through efficient knowledge management.”
Setup & Piloting
The second key project stage — “setup and piloting” — lasted from April to mid July 1999. Objectives were to test and improve the technical platform, to ensure local company commitment to the project, and to develop a phased implementation approach including training material. BCG’s assignment ended with the final workshop in Munich. The KMS was rolled out in four pilot countries (Australia, China, Malaysia, and Portugal) chosen for the following reasons: they showed good “fit in” with the core team, represented Siemens’ global operations well, and their first cross-regional sharing of experiences set examples for the entire company. A pilot project team conducted informal training sessions with workshops developed by Rolf Meinert, vice president of change management. The ShareNet team project saw the pilots as an important means to rapidly establish buy-in at headquarters and local companies. Team members and managers from the ShareNet committee began to meet key executives in local companies (i.e., local ICN heads, local company heads) and at headquarters. They made sure that the managers were committed to KM, informed the team about local particularities, and nominated or supported ShareNet managers. Besides the training material, the ShareNet project team had no formal change management strategy, but rather a range of measures to overcome common implementation barriers. Keeping the right balance between challenging and realistic goals avoided “scope creep”. Involving users in developing their own KM solutions helped to build personal networks, to create buy-in and trust with internal customers, and to secure top management support. The team strongly believed in a bottom-up approach for ShareNet manager nominations. Koch sent a personal letter to all local companies to create awareness for the KMS and to request the nomination of one part-time ShareNet manager per country. In addition, Meinert approached potential ShareNet managers all over the world, making use of his large personal network. Only in the case where countries without voluntary participants were detected were the local company heads asked to nominate some of their employees as ShareNet managers. Lack of competence and commitment or too strong a focus on technology were often the result of forced nominations. In very few cases, a removal of ShareNet managers who did not live up to their obligations was necessary. Technical systems accounted for only 25% of total project costs; the majority was spent on the selection and training of prospective ShareNet managers, communication campaigns, and training material. The ShareNet project team and the external consultancy Change Factory jointly developed a range of user trainings/workshops and tools for the global rollout, for example training videos, illustrated pocket references, and giveaways. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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A mission statement concretized ShareNet’s vision and explicitly linked it to economic benefits: “ICN ShareNet intends to network all local sales efforts to facilitate global learning, local reuse of global best practices, and the creation of global solution competencies. ICN ShareNet shall realize considerable and measurable business impact through time and cost savings and through the creation of new sales opportunities. ICN ShareNet shall be integrated in the daily work of every sales person. ICN ShareNet is a self-organizing growing system.” The ShareNet project team decided on two-sectioned local company workshops as a central element of the change management initiative. The first section — creating necessary know-how for using ShareNet — followed the participants’ working routines. They would learn about ShareNet’s philosophy, discover its benefits for daily work, and get to know the structure and handling of the technical platform. Coaches would provide walk-through examples, live exercises, and stimulate discussions about the value-add of global knowledge exchange. During the second section — capturing knowledge with ShareNet — the participants would start to capture and peer review some sample projects they brought to the workshop. A positive, knowledge-oriented attitude was considered the basis for success. The pilot project team began to test the KMS’ database, GUI and usability, response times, and reliability. Objectives were to have secure and stable technical systems available for the “global rollout” stage. To ensure smooth integration with Siemens’ Intranet, the ShareNet project team took a close look at Siemens ICN’s global technology infrastructure and the level of the local sales representatives’ Intranet know-how. Early on, the core team planned for integration with other Siemens knowledge sources and systems. However, the full mapping of all content into the ShareNet data model was never realized since speed of implementation was favored over lengthy coordination with other IS owners.
Global Rollout
The third key project stage — “global rollout” — lasted from mid July 1999 to mid February 2000. Objectives were to have ShareNet implemented in 30 major countries, to establish the ShareNet organization and managerial processes, and to capture and reuse valuable knowledge. The ShareNet project team provided user trainings, controlling to steer the global rollout, and communication material. Four phases for the international rollout were decided: buy-in and preparation (partly accomplished in the preceding stage), ShareNet manager handover, ShareNet workshops in local companies, and ShareNet manager review meetings. Early in the “global rollout” stage, the introduction of the consistent incentive system “bonus-on-top” put even more emphasis on top management support. Some local executives felt threatened by ShareNet because their employees were bypassing traditional hierarchies in search of solutions. A one-time promotion scheme in fiscal 2000 should link knowledge sharing with economic benefits: local ICN heads should now be rewarded for inter-country business generated through substantial international knowledge exchange. “Business generated” was the total order income of projects secured with knowledge from other countries and the revenues from other countries created with knowledge from the ICN head’s local company. “Substantial international cooperation” comprised reuse of knowledge via ShareNet and/or a verifiable exchange of human Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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resources, which together accounted for more than 10% of the order income generated, and/or more than 10% of total project cost or time savings. To be eligible for a bonus of approximately 10% of their fixed annual salary, the overall revenue achieved should sum up to at least 5% (up to 30%) of local ICN revenue (Gibbert, Kugler & Völpel, 2002). The local ICN heads had to complete forms that contained all cases of collaboration, that is, success stories. Several restrictions applied: since a successful knowledge transfer was described, knowledge giver and taker had to work in distinct departments and project groups and the amount of time and money saved or additionally earned turnover had to be stated. For approval, the ShareNet project team required written proof, for example, invoice, purchase order, or delivery confirmation. The success stories could be checked against each other just like consolidated balance sheets to ensure accuracy. Bonus-on-top yielded remarkable results: during fiscal 2000, Siemens ICN reported additional revenue of EUR130.9 million from international knowledge exchange, some 50% obtained through ShareNet. The ShareNet manager handover took place at the end of July 1999. Participants from some 30 countries were assembled for the first time at a one-week boot camp in Feldafing, Germany. The ShareNet team selected rollout countries primarily on the basis of annual sales, availability of local ShareNet project team members, advanced market stage, and advanced technology infrastructure. The ShareNet managers received indepth formal training enabling them to take over the responsibility for the introduction and utilization of ShareNet in local companies. Moreover, the ShareNet project team intended to build-up committed social networks, first among ShareNet managers, and later throughout the sales and marketing community. Team building events, for example, trying to build a raft without tools to cross the Lake Starnberg, and a friendly and relaxed climate were important change management measures. Doering recalled the team spirit at the boot camp: “All they had to work with were steel drums, logs, pontoons, and some rope. Another catch: no talking. The managers, who gathered from offices around the world, could only scribble messages and diagrams on a flip chart. For the better part of the day, it was knowledge sharing at its most basic. Yet the group managed to put together a small fleet of rafts, which they paddled about triumphantly on the placid waters of the lake.” There was low headquarter participation at the first boot camp and the business units showed higher implementation resistance than local companies: they were afraid to lose sales opportunities for internal services, questioned ShareNet’s positioning among other IS, and did not fully appreciate value creation in local companies. In addition, headquarters were afraid of sharing centralized knowledge, that is, a source of influence and power. Whereas more than half of the local companies’ employees supported the KMS and some 20% resisted its implementation, numbers at headquarters were roughly vice versa. Resistance came in several flavors: inactivity and lack of implementation support, postponing decisions, preventing employees from posting safeguarded knowledge, denying the right to use ShareNet, and all kinds of politics. The ShareNet project team decided to continue the implementation with central funding and a focus on key impact areas, that is, the local companies. Soon after the boot camps, the ShareNet managers began with the local rollouts. On average, each local implementation required project work for two or three months: one week for “selling” ShareNet in the local companies, three weeks for user training/ Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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workshops to teach the necessary skills to capture knowledge, up to two weeks for the review of captured content, two to three weeks for the support of local staff, and two days for a final review meeting. The ShareNet project team and ShareNet committee members visited 18 countries to support the implementation with communication campaigns and workshops. The entire implementation process was centrally driven and monitored, for example, rollout targets, resources, and workshops. Country-specific metrics were tracked and discussed with the local ShareNet managers on a monthly basis. To formally conclude the KMS project, the ShareNet project team organized a ShareNet manager implementation review conference at Sun City, South Africa in February 2000. Goals were to reinforce community spirit, to exchange experiences with the international rollout, and to define future implementation ideas. Exhibit 6 recapitulates ShareNet’s key project stages. Doering felt a substantial commitment to change: “ICN ShareNet is more than a database; it is a new spirit, a new way to cooperate worldwide across country and organizational boundaries. Knowledge reuse is the key to success, e.g., innovation, time to market, etc. With ICN ShareNet we take advantage of our strengths: local innovations and creativity and global leverage of sales power.” Approximately 4,200 ShareNet users had registered and posted more then 2,100 public knowledge objects and 490 urgent requests; news and discussion groups enjoyed significant traffic. To emphasize the project closing’s importance, Koch participated via videoconference on the conference’s last day. The participants consolidated their key learnings. Everybody acknowledged that ShareNet needed political attention and ongoing top management support, that is, Siemens ICN’s group executive management and local ICN heads. Otherwise, time resources and prioritization for ShareNet rollout activities would consequently be too low. An adjustment of goals, incentives, and rewards was required for all members of the ShareNet organization and individual users. ShareNet managers needed sufficient time for support; that is, 25%-50% of their working time; other tasks had to be reduced. During a formal handover ceremony, the ShareNet project team transferred the KMS’ ownership to a regular line organization, that is, the new ShareNet operating team. Through their new representatives, users should finally assume ownership and responsibility for ShareNet’s maintenance and evolution.
Operation, Expansion, & Further Development
The fourth key evolution stage — “operation, expansion, and further development” — lasted from mid February 2000 to the end of November 2001. Objectives were to continuously expand ShareNet throughout Siemens ICN and to further refine and develop the technical platform. The ShareNet operating team felt that knowledge exchange did not come naturally to the corporate culture. There were old boys’ networks, risk adverse decision making, and a strong engineering “do-it-all yourself” culture that made it difficult to get accustomed to new rules of competition (Gerndt, 2000). Top engineers had adopted a “hero mentality,” showing respect only for individual design achievements (Davenport, De Long, & Beers, 1998). Innovations no longer originated in central R&D; rather they were derived from customers’ needs. Strong hierarchies counteracted an atmosphere of openness, mutual respect, and ambiguity tolerance since they placed value on individual achievements at the expense of teamwork.
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The ShareNet operating team recognized that people were slow to change their behavior; first results from culture change after a few years showed that the whole processes needed a decade to become self-sustaining. Albeit “bonus-on-top” had been successful beyond expectations, it was unclear whether ShareNet itself was benefiting. Users commented: “Receiving some […] award naturally serves as an incentive to sharing our knowledge with colleagues worldwide, but it is not the most important aspect. Getting direct recognition for how much our daily job is appreciated is the most important thing. That’s what counts and motivates us.” The new team decided to focus incentives and rewards more on the users themselves to get a critical mass of content into the system, to make users active contributors, and to create awareness. Consequently, the ShareNet quality assurance and reward system went live on March 1, 2000. There were no monetary incentives since they encountered ambiguity in local companies; a share system, comparable to frequent flyer miles, faced less obstacles. ShareNet shares could be collected, accumulated, and finally turned into knowledgerelated rewards. The share system was a flexible incentive scheme that could be adjusted according to needs for motivation and guidance: for example, objects published and forum responses yielded between three and 20 shares, dependent on a pre-assigned value. One share was equivalent in value to approximately EUR 1.00. ShareNet’s technical systems automatically distributed the shares for contributions. During the first four months, the share system yielded remarkable results: there was more awareness for ShareNet (35% new users), more activity (50% additional active contributors), and increasing content quantity (plus 90% knowledge objects posted). In July 2000, the competitive reward system was turned into an “online shop” where shares could be traded for a defined range of products, for example professional literature and Siemens laptops. But the success in quantity imposed drawbacks on quality. Lots of users — especially ones that joined ShareNet in earlier stages — lamented the decrease of content quality. Thousands of new objects brought the ShareNet managers’ formal review process to its limits. The ShareNet operating team introduced a peer-to-peer review process, that is, feedback from users to contributors. The change became visible through a five-starrating of objects and urgent request answers. The stars were multiplied by a certain factor to compute the amount of shares the contributor earned. Introducing this new review process boosted the quality (plus 50% reuse feedback per knowledge object). The “ShareNet Special Weeks,” that is, doubled shares for promising knowledge objects, aroused even more interest in July 2001. Though many knowledge objects were posted and several new users registered, the ShareNet operating team criticized special events: an artificial and expensive hype was created that rapidly ebbed off. The ShareNet operating team continued with “networking people” at a second ShareNet manager conference in Istanbul in December 2000. Some 60 participants revised the quality assurance steps, discussed the inclusion of other communities into the KMS, and defined ShareNet manager targets. The basic requirement for the latter was general user support, for example, user trainings, presentations, and monthly reports. Complementary was the establishment of a constant knowledge input, that is, 1.5 knowledge objects per registered user per year, plus/minus 30% flexibility according to local peculiarities (knowledge givers vs. knowledge takers). Further required were the documentation of two success stories per 100 registered users per year and high performance Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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knowledge exchange, that is, an average of 10 shares per registered user per month. As a result some 20 ShareNet managers received 50-120% of an additional fixed monthly salary as a bonus at the end of 2001.
Shifting to a Multi-Community Concept
The fifth and last key evolution stage — “shifting to a multi-community concept” — began in December 2001. ShareNet had aroused much interest within Siemens. Heinrich von Pierer, Siemens CEO and president, declared ShareNet a Siemens-wide KMS best practice. Objectives of this stage were to sharpen the focus on topics leading to more efficiency, to foster the development and progress of smaller communities-of-practice (CoPs), and to delegate maintenance responsibilities to new user groups. The ShareNet operating team had gathered many requests for CoPs focusing on specific topics of interest. Those were seen as a good indicator for an institutionalization of the concepts and meanings inflicted by the culture change. Siemens ShareNet V1.x marked the introduction of a company-wide, multi-community platform. The former ShareNet became one CoP amongst others but retained the largest number of users. The conceptual change necessitated a personal workspace (WS) with personal data, e-mail alerts, bookmarks, and links to all CoPs for which users had registered. Community homepages provided an overview of community-specific content for each user, for example, new threads since last login. Designated functional modules (M), that is, knowledge libraries, discussion forums, chat, and news, could be flexibly adapted to each CoP’s businesses processes to win over users. This design also reflected the security requirements of sub-communities dealing with sensitive topics. In cooperation with other Siemens group divisions an interface/bridge license and user management was designed to ensure information exchange between ShareNet and Livelink Communities (the corporate document management system). Exhibit 7 shows the underlying technologies. When the new technical platform went live, some users complained about the new layout (adapted to Siemens’ corporate identity guidelines), many bugs, and weak performance. The majority of bugs were resolved quickly, while performance tuning required more time. Due to unclear specifications, former functionality was missing in Siemens ShareNet V1.x. ShareNet consultants and the global editor were badly prepared and encountered many obstacles over the first weeks. High user demand could not be met due to a shortage of resources: the central IT function needed additional human resources for timely development, implementation, and documentation; ShareNet consultants lacked money to travel and to train users globally. Top management could no longer provide the usual level of support due to other pending problems, that is, the collapsing telecommunications sector. Through its successes in the sales and marketing functions, ShareNet had always attracted attention from R&D employees. As a result, just before the introduction of the new ShareNet technical platform, the ShareNet team was approached by an R&D department that focused on the development of “carrier products”. This specific development process was well established and had not changed for many years. It, however, lacked formal mechanisms to share experiences and ideas across individual projects, for which R&D employees had to rely on their personal networks. As ShareNet
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had proven its ability to extend private networks within the sales and marketing environment, the R&D initiators expected the same for their community. Discussions between the ShareNet team, the initiators, and several potential key users led to the development of R&D-specific knowledge objects and a corresponding capturing wizard. Since no further user involvement was desired by the community leaders, only brief training sessions were conducted at headquarters. The first results were disappointing: a general lack of traffic with a narrow focus. The ShareNet operating team members explained this in part by pointing out the proprietary R&D applications as well as (perceived) security concerns that made possible users cautious. A virtual R&D conference set a more positive example. Participants could post presentations with links to discussion threads and knowledge objects. Similar to traditional conferences, presentations were organized by time sequence and were available for a window of time. After a slow start on the first day, lots of comments were posted the following days and active discussions evolved among the virtual participants (MacCormack, 2002). In September 2002, the ShareNet operating team announced a change in the knowledge sharing incentive system. Two main reasons were given: first, implementation success was established; second, both the current business situation and the business outlook were gloomy. Users could still keep and accumulate shares, but the incentive catalog was discontinued. There was no consensus within the ShareNet operating team whether the intrinsic motivation of knowledge exchange had already made ShareNet’s usage self-perpetuating. For compensation, visibility and expert recognition, invitations to high-level events, and integration with business processes, for example employee target agreements, were planned. However, most decisions were neither taken nor implemented since Siemens’ decentralized matrix structure required such decisions from local companies and not from Siemens ICN’s executive management. On the one hand, some team members were confident that the power of the ShareNet Community was not founded on incentives only. Users would keep their motivation on a high level since knowledge sharing was needed more than ever with globally distributed expertise and experiences. Thomas Ganswindt, Siemens ICN’s new group president, exclaimed: “global networking and sharing knowledge is key to the success of ICN, even more since we will no longer have all the necessary knowledge in all local companies. The same counts for headquarters. And, if people really contribute to the success of ICN, it has to be beneficial to them.” On the other hand, some team members argued that a discontinuation of extrinsic motivators would lead to significant drops in contributions and usage or even to a deadlock situation. Existing users might become passive and it would be difficult to attract others.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
The collapse of the telecommunications sector in 2001 did hurt Siemens ICN as seriously as any of its competitors. As a response, the group executive management started the Profit and Cash Turnaround (PACT) program. Its first phase, “clean-up,” aimed for cost reductions through organizational redesign, headcount reduction, and improved asset management. This phase lasted until fiscal 2003. In the same year, the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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overlapping second phase, “rebuild,” started — continuing until 2004. It comprised customer-orientated portfolio adjustments, as well as the implementation of innovative concepts for leveraging the synergies of enterprise and carrier solutions. Beginning in fiscal 2004, the third phase, “growth,” emphasized intense customer relationships, streamlined processes, and a balanced portfolio of products and services. “Rebuild” and “growth” were fuelled by major efforts in the field of innovation. On one hand, the group executive management required Kugel’s BT team to design and kickstart a common innovation process and a technology roadmap. In addition to an existing product line process for incremental innovations, Kugel’s team implemented a process to fuel disruptive innovations. Linked with ICN’s strategy and based on ideas from internal and external sources, both defined innovative projects to be handled in the carrier and enterprise business’ product development processes. The technology roadmap unified the view on existing and emerging technologies for all these processes, in order to foster synergies and to avoid double work. On the other hand, the existing R&D function and its product development processes were reconsidered in order to shorten new products’ time to market. As one outcome of this revision, the new group president Thomas Ganswindt requested Doering to expand ShareNet throughout the R&D function. In turn, Doering asked Kugel to provide him with a detailed roadmap within one week. Kugel knew that the “clean-up” phase’s headcount reduction had struck the whole organization. Not only was her KM team reduced to three full-time employees — just about able to maintain the existing ShareNet — but the local companies were reducing their ShareNet managers as well. Additionally, the targeted R&D departments were made leaner while simultaneously speeding up their cycle times. Those developments limited the organization’s ability and willingness to devote resources to KM. Cost reductions made it impossible to increase funding for external resources unless a striking business case could be presented. This was the only way to imagine a rollout comparable to the sales and marketing implementation. The extremely difficult business situation and outlook also had severe impact on ShareNet usage. More than ever, employees were complaining about their lack of time for knowledge sharing. Facing massive layoffs, knowledge hoarding was again taken up as a means to make oneself irreplaceable. The discontinuation of the highly efficient ShareNet incentive and reward system and its less successful substitution with the recognition of ShareNet “masters and experts” added to the general challenges. In result the number of visiting users had fallen from some 4,600 (in August 2002) to some 2,100 (in August 2003). Page views declined from 179,000 to 75,000, and the number of contributing ShareNet users dropped from 432 to 190. Though PACT led to more centralization in terms of target definition and controlling, it still made use of the “networking company” that ShareNet had fostered. Most employees recognized the need to identify and leverage Siemens ICN’s knowledge globally in order to remain competitive and innovative. A majority shared knowledge freely without ever making personal contact; rather they were bound together in a global corporate network, worked within the same industry, and had a common code of conduct. It had become a habit for Siemens ICN people to involve local companies into strategic decisions. This approach ensured global applicability and established early buy-in.
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While looking at the Alps from her office, Kugel wondered how to capitalize on the earlier experiences and accomplishments. Would the existing ShareNet line organization, training material, user base, brand identity, and culture change allow for a cheap and fast expansion into R&D? What would she present to Doering? A first meeting with her team led to the identification of three major expansion alternatives: first, replicating the original — but expensive — sales and marketing implementation approach with only minor modifications; second, identifying and fostering a range of smaller, topic-driven R&D communities (e.g., for technologies on the roadmap); third and finally, expanding ShareNet step by step along the R&D processes — starting from the recently defined innovation process, taking the adjacent process elements next and finally covering the full R&D process.
REFERENCES
Alavi, M., & Leidner, D.E. (2001). Knowledge management and knowledge management systems: Conceptual foundations and research issues. MIS Quarterly, 25(1), 107136. Davenport, T.H., De Long, D.W., & Beers, M.C. (1998). Successful knowledge management projects. Sloan Management Review, 39(2), 43-57. Earl, M.J. (2001). Knowledge management strategies: Toward a taxonomy. Journal of Management Information Systems, 18(1), 215-233. Fahey, L., & Prusak, L. (1998). The eleven deadliest sins of knowledge management. California Management Review, 40(3), 265-276. Gerndt, U. (2000). Serving the community. KM Magazine, 3(9), 7-10. Gibbert, M., Kugler, P., & Völpel, S. (2002). Getting real about knowledge sharing: The premium-on-top bonus system. In T.H. Davenport, & G.J.B. Probst (Eds.), Knowledge management case book: Siemens best practices (2nd ed., pp. 260-278). Erlangen and New York: Publicis Corporate Publishing and John Wiley & Sons. Ginzberg, M.J. (1981). Key recurrent issues in the MIS implementation process. MIS Quarterly, 5(2), 47-59. MacCormack, A. (2002). Siemens ShareNet: Building a knowledge network (pp. 1-27). Boston: Harvard Business School Press. Rothnie, D. (2001). ShareNet: Siemens information and communication networks. In V. Mellor, E. Barnfield, & N. Aitken (Eds.), Strategies for best practice intranet management (pp. 186-194). London: Melcrum Publishing. Seeley, C. (2000). Change management: A base for knowledge-sharing. Knowledge Management Review, 3(4), 24-29. Siemens. (2003). Annual report 2003. Berlin. Siemens Information and Communication Networks. (2003). Facts and figures 2003. Munich. Zmud, R.W., & Cox, J. F. (1979). The implementation process: A change approach. MIS Quarterly, 3(3), 35-43.
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APPENDIX Exhibit 1: Siemens’ Financial Performance from 2000 to 2003 (EUR in millions)
Net sales Cost of sales
2003
2002
2001
2000
74,233
84,016
87,000
77,484
(53,350) (60,810) (63,895) (55,949)
Gross profit on sales
20,883
23,206
23,105
21,535
Research and development expenses
(5,067)
(5,819)
(6,782)
(5,848)
Marketing, selling, and general administrative expenses
(13,534) (15,455) (16,640) (14,173)
Other operating income (expense), net (therein gain on issuance of subsidiary and associated company stock)
642
1,321
2,762
7,549
Income (loss) from investments in other companies, net
142
(114)
49
299
Income (expense) from financial assets and marketable securities, net
61
18
173
2,732
Interest income (expense) of operations, net
31
94
(32)
(35)
214
224
43
180
Income (loss) before income taxes
3,372
3,475
2,678
12,239
Income taxes
(867)
(849)
(781)
(3,017)
Minority interest
(96)
(29)
(191)
(362)
Net income (loss)
2,445
2,597
2,088
8,860
Other interest income (expense), net
Exhibit 1: The Siemens ICN Organization
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386 Heier, Borgman, & Manuth
Exhibit 3: Mission Statement of the Central Function Knowledge Management
• •
We foster the knowledge management activities within Siemens ICN and leverage our global knowledge sharing network with ShareNet. Managing knowledge is not just a matter of transferring information from one place to another, it is a social process which must motivate and encourage people to share that information proactively.
Exhibit 4: ShareNet as an Interplay of Four Crucial Elements
Exhibit 5: The ShareNet Organization
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Exhibit 6: How ShareNet was Developed
Exhibit 7: Application Overview Siemens ShareNet V1.x
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Chapter XXII
Enterprise System Development in Higher Education Bongsug Chae, Kansas State University, USA Marshall Scott Poole, Texas A&M University, USA
EXECUTIVE SUMMARY
“One system for everyone” has been an ideal goal for information technology (IT) management in many large organizations, and the deployment of such systems has been a major trend in corporate world under the name of enterprise systems (ES) (Brown & Vessey, 2003; Davenport, 2000; Markus, Petrie, & Axline, 2000). Benefits from ES use are claimed to be significant and multidimensional, ranging from operational improvements through decision-making enhancement to support for strategic goals (Shang & Seddon, 2002). However, studies (Hanseth & Braa, 2001; Rao, 2000; Robey, Ross, & Boudreau, 2002) of the deployment of ES in private sector organizations show that the ideal is difficult to accomplish. This paper reports a case in which a major university system in the US attempted to develop an in-house enterprise system. The system is currently used by more than 4,000 individual users in almost 20 universities and state agencies. This case offers a historical analysis of the design, implementation and use of the system from its inception in the mid 1980s to the present. This case indicates that ES design and implementation in higher education are quite challenging and complex due to unique factors in the public sector — including state mandates/ Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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requirements, IT leadership/resources, value systems, and decentralized organizational structure among other things — that must be taken into account in planning, designing and implementing ES (Ernst, Katz, & Sack, 1994; Lerner, 1999; McCredie, 2000). This case highlights (1) the challenges and issues in the rationale behind “one system for everyone” and (2) some differences as well as similarities in IT management between the private and public sectors. It offers some unique opportunities to discuss issues, challenges and potential solutions for the deployment of ES in the public arena, particularly in higher education.
ORGANIZATIONAL BACKGROUND
The Land Grant University System (LGUS) is one of the more complex systems of higher education in the nation. Currently, LGUS consists of nine universities, eight State agencies and a medical science center that serves over 100,000 students and reaches more than four million people each year through its service outreach mission. Research projects underway by system universities and research agencies total roughly $400 million. The system employs more than 23,000 faculty and staff members located throughout the state and serves all counties in the state. The annual budget for the LGUS is approximately $2.0 billion. The state established its first college in 1876, and this marked the beginning of LGUS. During the 1970s and 1980s, LGUS experienced tremendous growth in terms of its major activities of teaching, research, and public service. The system experienced a 27% growth in its student population, and more growth was expected. In 1986, the system achieved recognition as one of the top 10 National Science Foundation (NSF) ranked research universities in the US. In addition to teaching and research, LGUS provided significant services to the citizens of the state through practical application of researchbased knowledge. At the outset of our case, in October 1988, LGUS consisted of four universities and seven associated agencies: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.
Central System Administrative Office (HQ) — the university system’s headquarters; Big Campus; West Campus; Southeast Campus; South Campus; Agricultural Research Station (ARS); Agricultural Extension Service (AXS); Veterinary Extension Service (VXS); Engineering Research Station (ERS); Engineering Extension Service (EXS); Forest Service (FS); and Transportation Research Station (TS).
In 1989, LGUS experienced another period of significant growth when three universities joined the system. In 1990, another university (Northwest Campus) joined the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 1: The Land Grant University System The Universities • Big Campus (the largest campus) • West Campus • Southeast Campus • South Campus • Northwest Campus • Four other campuses
The Agencies • Agricultural Research Station (ARS) • Agricultural Extension Service (AXS) • Veterinary Extension Service (VXS) • Engineering Research Station (ERS) • Engineering Extension Service (EXS) • Forest Service (FS) • Transportation Research Station (TS) • Wildlife Management Service (WMS)
Health Science Center • College of Dentistry (CD) • College of Medicine
system. The growth continued, and in 1996, four additional institutions joined the system (two universities and two research agencies). In 1999, a medical center (MC) was established. The LGUS itself is relatively new in comparison to many systems of higher education in the US. Many of the system’s universities had long histories before joining LGUS, but have been part of the system for a decade or less. The units in LGUS also vary greatly in mission and purpose. Each unit has its own goals, traditions, and culture. The system values diversity and honors the principle that “one size doesn’t fit all”. Traditionally, there has been a decentralized culture within the system. Even though every unit is under a single umbrella, each is regarded as different and desires to maintain its uniqueness and independence.
SETTING THE STAGE
In the 1980s, three currents of change — technological, institutional and organizational — were gaining momentum in LGUS as well as in the US higher education as a whole. Together, the three forces set the stage for the emergence of the University System-Wide Management Information System (USMIS).
Technological Currents
The USMIS project cannot be properly understood without considering events in the computing industry in the 1980s. During this period, a number of new concepts and technologies, including model-oriented Decision Support Systems (DSS), query and reporting tools, On-line Analytical Processing (OLAP) and Executive Information Systems, emerged and were adopted by many organizations. These were all very attractive to organizations and their management, since they seemed to promise an increase in productivity and efficiency. In the 1980s these computer systems were mainframe-based. Building on the concept of Manufacturing Resource Planning (MRP) that was developed in the 70s and mid 80s, the idea of enterprise-wide software, today called ERP, spread rapidly through the vendor community, and SAP, Baan, JD Edwards, and PeopleSoft, among others, introduced major offerings in this area. The development of the SQL relational database management system in the late 1970s fostered the emergence of the concepts of enterprise-wide integration and enterprise software, which become popular
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among users that included private businesses and institutions of higher education. One vendor in particular, SCT, was prominent in the higher education sector. Established in 1968, SCT marketed a commercial student records system for higher education. In the 1980s, SCT began to promote the concept of enterprise software for higher education, and in 1989, SCT integrated an ERP system on RDBMS-Banner. The initial sponsors of USMIS — top officials of Big Campus and the HQ who later served on the IT steering committee — were aware of these technology trends and planned to develop an enterprise information system. The system was intended to support not only financial management but also other administrative functionalities, including contracts and grants management, purchasing, office automation and communication, cashiering, requests for travel advances, enterprise and departmental accounting, state interfaces, ad hoc reporting, and information management. They also planned to create a centralized staff (later called the MIS project team) to develop and maintain this ERP so that each unit would no longer need to dedicate computer/information systems personnel to support its financial information systems. The initial sponsors believed that, with centralized IT staff, modification of LGUS accounting systems to respond to environmental changes such as new state laws and regulations could be handled efficiently and uniformly. This would eliminate multiple, difficult-to-integrate versions created by each unit, as was required by fragmented pre-USMIS systems. One large-scale information system for all units was a very attractive idea to the senior administrators of LGUS. Calls for increased efficiency and productivity had found expression in a variety of changes in many college and university business and finance programs and practices (Jonas et al., 1997). The LGUS IT plan submitted to the state in 1984 stated: The application of modern automated information systems’ technologies to the solutions of fiscal and administrative problems … LGUS will continue to take advantage of new technologies to increase efficiency and effectiveness in fiscal operations, administration, programming, and communication. Prior to the USMIS project, there had been two major IT initiatives: BPP and SIMS. The Budget/Payroll/Personnel (BPP) System is an integrated data management system for human resources, payroll, and personnel operating budgets. The primary users are the administrative functions supported by the LGUS. The design concept for the BPP system was developed in the mid-1970s, with full implementation occurring on July 1, 1979. The BPP system was developed using COBOL and IBM’s Information Management System (IMS) data management software. Data from BPP could be electronically transmitted to the State Comptroller’s office in batch mode, thus offering the state better oversight of LGUS. By 1986, the Student Information Systems (SIMS) project had also been implemented. The SIMS supports administrative processing of student records for Big Campus and South Campus. The system uses Software AG’s ADABAS as the main database system. The main development languages are COBOL and NATURAL. The SIMS later played an important role in USMIS design.
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Organizational Currents
During the two decades from 1970 to 1990, the LGUS grew rapidly, attaining an annual budget of $800 million. The LGUS Board of Regents and system administrators felt a pressing need for consolidated information to facilitate coordination and control among (and over) member institutions. However, the existence of separate financial management systems supporting diverse accounting rules and practices throughout LGUS created a major barrier to enterprise-wide integration. In the mid-1980s, the business offices of the 11 units of LGUS were employing 11 different financial accounting systems. Most were modified versions of an in-house accounting information system developed by Big Campus in the 1970s. Departments within each unit had also developed or purchased their own departmental accounting systems. These functioned as shadow information systems, running in parallel with the main financial systems in each unit. In the mid-1980s, the President and financial officers of Big Campus initiated a project to develop a large-scale fiscal and administrative information system with capabilities for decision support, executive reporting, online purchasing, budgeting and planning, investment management, and streamlined integration across departments and colleges, among other functions. Initially their idea was to develop this system solely for Big Campus. LGUS administration was impressed by this plan and decided to expand its scope to include all units of the system. One highly-placed administrator at Big Campus commented that this was the most significant change in the history of USMIS. It was a change that later created many political issues and fostered resistance from other units. Two considerations drove this change in scope. First, there was the issue of development cost. The initial acquisition cost for the Big Campus information system was expected to be over $1 million. At the time, this seemed too high to justify for only a single university. An enterprise system that would serve all units in LGUS was an appealing idea to Big Campus because it would enable the cost to be distributed among all units. Second, the development of an “integrated large-scale fiscal and administrative information system” was part of LGUS’s strategic plan, and the expanded enterprise system was viewed by LGUS administration and the Board of Regents as a means of pursuing this plan.
Institutional Currents
Institutional forces also influenced the development of USMIS. In general, public organizations have more legal restrictions on their actions than those in the private sector (Guy, 2000). During the 1980s and through the 1990s, state after state mandated more stringent reporting requirements and accountability for higher education (Ernst et al., 1994). And such a mandate seemed necessary for LGUS. In the early 1980s, State auditors found that several units in LGUS had not followed proper fiscal procedures and that there were inconsistencies in the way the various units reported financial transactions on their annual financial reports. The use of automated information systems by governmental bodies had strong support in both the legislative and executive branches of the state. Information systems were viewed as a means to improve productivity and efficiency. Financial information systems in particular were regarded as a means to improve coordination, integration and control. Legislators and administrators also believed that a uniform information system
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could help ensure that state-mandated changes in accounting and other procedures were implemented quickly and uniformly and followed faithfully throughout the state. In 1987, the legislature mandated the State Comptroller’s office to develop a Unified Statewide Accounting System (USAS) for the collection and reporting of statewide payroll and personnel data. The USAS was intended to meet state agencies’ general accounting requirements and thus reduce the number of separate accounting systems. In fact, the ideal scenario would be to have a single financial information system based on USAS which would replace all current financial information systems. However, cooler heads recognized that in reality this was not feasible because of the variability among state agencies in terms of their size and the diversity and uniqueness of their needs. Thus, the Comptroller’s office proposed two approaches for state agencies: Either use USAS or maintain your own information systems and interface them with USAS. The latter approach was selected during discussions between the USAS development team and LGUS. This requirement offered a compelling reason to replace existing in-house computer systems with a large-scale fiscal and administrative information system. The USMIS project was welcomed by the USAS project team since it was expected to provide the Comptroller’s office with a single channel to communicate with all LGUS units. These technological, organizational, and institutional currents led the LGUS Board of Regents and chancellor to recognize the strategic role information systems would have in the future of LGUS. They delivered a directive for the development of USMIS that was aimed to insure compatibility and consolidation of accounting and fiscal information, analysis, and reports from all system units. The challenge now was to build it.
CASE DESCRIPTION Overview
First introduced in 1990 for Fiscal Year 1991, USMIS is an enterprise information system that incorporates financial regulations applicable to the units of LGUS. It integrates 30 databases that function as a unit across five independent modules or subsystems, including a financial accounting system, a purchasing system, a fixed assets management system, a system for sponsored research accounting, and annual financial reporting. The MIS project team has been responsible for the development and support of USMIS since the late 1980s. This team reports directly to the Department of Information Resources (DIR) within the central system administration office (HQ), the DIR in turn reports to the Office of the Vice Chancellor for Business Services who is under the Chancellor, the highest ranking officer of LGUS.
Design Process
The director of the MIS project was hired in October 1987. In November 1987, a survey questionnaire was distributed to all of the units of LGUS and the major departments within each unit to solicit input on their management information system needs. The survey demonstrated wide agreement on the need for substantial improvements in financial accounting management information within LGUS. In March 1988, an implementation team to work on the development of the USMIS was formed. The core members of Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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the team were four senior systems analysts, three of whom had worked on SIMS project since 1979 and one of whom worked for the CIS department at Big Campus. The team’s first task was to interview approximately 75 key users. The interviews resulted in the compilation of a Needs Inventory, the baseline requirements for LGUS. Ten alternative approaches to satisfy these requirements were investigated (Table 2). The team made site visits to other universities and conducted detailed evaluations of existing information systems. Option #10 was selected on the basis of functionality, risk, time to implementation, flexibility, LGUS policy, interface/state, user involvement and technology. According to the former director, the MIS project team was asked to complete the project in one year, which was regarded as a reasonable time frame. The team was required to make regular progress reports to the steering committee, which consisted of 11 top administrators representing the units of LGUS and the Board of Regents. In June 1988, the team prepared a requirements document which formed the basis of the Request for Proposal (RFP). In October 1988, the team submitted a 300+ page Advanced Certification Document for the USMIS to the state’s Automated Information and Telecommunications Council (AITC) for approval. In the same month, the RFP was finalized, and in November, the team received the state AITC approval to purchase a software package. Following the evaluation of vendor proposals, a contract was signed in 1989 with Information Associates for the Software AG NATURAL/ADABAS version of the Financial Records System (FRS), a popular financial information system among colleges and universities. This represented a three-way agreement among LGUS, Information Associates, and Software AG. LGUS requested this agreement in order to acquire a NATURAL/ADABAS version of the COBOL-based FRS. It was redesigned and reengineered using NATURAL, Software AG’s fourth generation language and the ADABAS data management systems. The redesign of NATURAL/FRS was completed in 1991. This redesign of FRS was necessary in order to bring it into line with existing information systems and the Big Campus computing environment. As previously noted, in the mid-1980s, Big Campus made two major information system procurements to support administrative computing: SIMS (the Student Information Management System) Table 2: Options for System Design 1. 2. 3.
Install a system currently in use at another institution of higher education within State Use the Uniform Statewide Accounting System Install a public domain software accounting system from out-of-State that could be altered to fit the LGUS system’s needs 4. Install a general purpose commercial system and adapt it into a college, university, and agency accounting system 5. Install one of the systems currently in use within the LGUS and tailor it to meet the system’s needs 6. Do nothing at all 7. Design and develop a system in-house 8. Install a college and university financial system that was designed and written by an outside vendor, with no modifications to the package 9. Modify and enhance a packaged system purchased from a vendor specializing in college and university systems 10. Install a college and university financial system designed and written by an outside vendor but enhanced and modified to meet the LGUS requirements and the Uniform Statewide Accounting System and other State requirements.
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and an IBM 3090-200E mainframe. The system underlying SIMS was purchased in 1984 and implemented by 1986. It included processes supporting admissions, registration, student financial aid, billing, grading, transcripts, degree audit, and loan repayment. The system employed Software AG’s ADABAS as the principal database system and COBOL and NATURAL as development languages. This procurement cost over $1.6 million. The project was also committed to NATURAL because its system analysts and programmers were trained and experienced in NATURAL from their work on the SIMS project. USMIS also had to utilize the IBM 3090-200E mainframe computer, which was purchased and installed in August 1987 and cost over $8.2 million. This commitment was further solidified by an upgrade to an IBM 3090-400E, planned for 1992. Existing information systems served as critical constraints on the project. These commitments combined with time pressure from the Board of Regents and the steering committee to produce a rather restrictive development environment. The former project director noted that: ... [p]eople (users) had little tolerance for changing. Flexibility does not mean much to users. It is not something what users want. They want what they are familiar with, so we tried to do as few changes possible … IS implementation has to be fast. A reasonable time for system implementation to me is one year. Why? Because key players leave and are changed. That’s a big problem. You lose focus and then give up. In late 1988, the administrators of LGUS, Big Campus, and other units grew concerned about delays in the implementation of USMIS. This increased time pressure on the MIS team. Final vendor selection, completed in April 1989, increased confidence that USMIS would be implemented in a meaningful way. After modification of the purchased software package, USMIS went live with the FRS subsystem for three units — Big Campus, HQ, and VXS — in September 1990 for the fiscal year 1991. In September 1990, the Sponsored Research (SPR) subsystem went live with limited functionality. In September 1992, the Fixed Assets (FFX) subsystem went live for four campuses and two research agencies. In 1993, the purchasing system went live for LGUS, and in 1998, the Annual Financial Reporting (AFR) system went live. Following are some of the major milestones for the project: • • • • • • • •
03/88 - Hiring of four Senior Systems Analysts for the Project; 06/89 - Contract signed with Information Associates for the Software AG NATURAL/ADABAS version of the software; 09/89 - Hiring of four entry-level programmers; 11/89 - Initial code delivered; 09/90 - System went live with FRS (Financial Record System) and FAR (Accounts Receivable) for three units; 09/90 - SPR (Sponsored Research) module went live with limited functionality; 09/93 - Commence implementation of first phase of purchasing module at Big Campus Purchasing Department (Requisitioning and Purchase Orders); and 02/98 - Commence Budget Module implementation.
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Implementation Process
Implementation turned out to be the most difficult task in the development of USMIS. At the outset, the MIS project team and the initial sponsors expected that full implementation of USMIS would take four years. The initial projection assumed an implementation schedule as follows: • • • •
Year 1 – Implementation in Big Campus (Fiscal Year 1990-91); Year 2 – Implementation in a second university and one research agency; Year 3 – Implementation in a third university and a second research agency; and Year 4 – Implementation in the entire LGUS.
As this schedule indicates, the goal was for USMIS to be implemented in all units of LGUS. The advanced certification document explicitly stated the importance of the “full implementation” to realize substantial savings and the many benefits that would follow from USMIS. The initial position — set by the chancellor and Board of Regents of LGUS — was that no waivers of this requirement would be allowed and that no other option for financial management would be offered other than use of USMIS. In pursuit of this goal, the MIS project team visited each member’s institution and informed them of the mandatory nature of implementation for all units of LGUS. However, when Chancellor Jones left LGUS, his successor, Chancellor Smith, decided that implementation of USMIS would be optional, rather than mandatory. Changes in implementation policy, discussed in more detail in the following text, undercut the MIS project team’s ability to hold to the schedule. Additional complications were introduced by local politics, leadership changes, resistance from some units, state-mandated rule and policy changes, user requests regarding system maintenance and enhancements, and lack of resources. The diffusion of USMIS through LGUS actually occurred as depicted in Figure 1. Several of the issues faced by the MIS team have much in common with the experiences of enterprise system development in private sector organizations (Brown & Vessey, 2003; Davenport, 1998; Robey et al., 2002). However, the contexts of IS management in the public sector and in higher education pose unique challenges and also intensifies some traditional private sector problems. Research on public organizations and management indicates that there are some differences between public and private sector organizations in terms of goal complexity, authority structure, accountability, and the role of rules and regulations (Allison, 1983; Guy, 2000; Rainey, Backoff, & Levine,
Figure1: USMIS Transition Schedule
1990 HQ Big C. VXS
1991 South C. 3 other C. ARS
1992 FS WMS Another C.
1993 TS AXS
1994
1995
Southeast C.
1996
1997
Northwest C. Another C. CD
1998
1999
2000
2001
CM
Note: C. denotes campus.
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1976). Research on IT in the public sector also indicates differences in IT management and planning between private and public sectors (Dufner, Holley, & Reed, 2002; Gauch, 1993; Mohan, Holstein, & Adams, 1990; Rocheleau & Wu, 2002). Furthermore, research on strategic planning and IT management in higher education indicates that the contexts of IS planning, development, implementation and use in higher education differ from those in private entities (Ernst et al., 1994; Lerner, 1999; McCredie, 2000). Interviews pointed to four major categories of challenges and issues that have significantly affected the USMIS over the years.
1. Politics and Organizational Resistance to Change: The Battle
The value system in higher education differs from that of the business arena. The guiding principle of the university — long term investment in the educating of citizens — is different from the business’s bottom line approach. Unlike the business model, which generally emphasizes a management-driven approach, university management is based on shared governance by faculty and administrators that is for the most part temporarily drawn from the ranks of faculty. A university is a loosely-coupled system in which units and employees recognize the need to work together for a mutually beneficial future, but understand that their differences will often create tensions (Lerner, 1999). Initially, units of LGUS had two sorts of reactions to USMIS. The smaller universities and agencies, which lacked computer and financial resources, were relatively favorable toward USMIS, since it provided them with an interface with the State’s Comptrollers’ office, a legislated requirement. However, other units were more negative. Despite the fact that they realized the need for consolidated reports for system level management, they preferred to use their own financial systems and interface them with USMIS. For example, one campus had just developed a new student information system and a financial information system and did not want USMIS. Two research agencies — Engineering Research Station and Engineering Extension Service — were strongly against USMIS adoption. They advocated the need for maintaining their own information systems based on two arguments. First, they pointed out functional deficiencies in USMIS to support their needs for contract and grant management and other research related functionalities. Their second argument was that as engineering agencies they differed from other units in LGUS. The Engineering Research Station in particular rejected the vision of “one system for everyone” and expressed concerns about USMIS. Top administrators and the IT manager of engineering research argued that USMIS was inferior to their own computer system, which was based on the Oracle database. During vendor selection in 1988, the MIS project team was less interested in a brand new system, but searched for a system compatible with existing information infrastructure (Star & Ruhlender, 1996), including SIMS, NATURAL, ADABAS and IBM 3090-200E. Engineering research had advocated a different alternative, SCT using Oracle DB. The MIS team argued that SCT was a riskier choice than Information Associates, exhibiting an attitude toward IT planning characteristic of the public sector. In general, public sector organizations tend to be more cautious and more concerned with rules and regulations, whereas private organizations tend to be more comfortable with risk (Bozeman & Kingsley, 1998). Competition is much less significant in the public sector, which tends to be concerned with service delivery Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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and continuity, as well as with protecting the public interest (Rocheleau & Wu, 2002). The view of IT in private and public organizations also tends to be different. For the public sector IT is not a proprietary resource to be exploited for competitive advantage (Dufner et al., 2002), but more often is regarded as a cost-cutting device, a way of doing more with the same number of staff (Rocheleau & Wu, 2002). Risk avoidance is evident in public IT management (Mohan et al., 1990). Engineering research also argued that the MIS team and steering committee initially designated research (e.g., research contract and grant management subsystem) as a low priority in the implementation plan. A top administrator of the engineering research agency insisted that “we will be asked to pay for a system we do not need nor want. We will be asked to pay for a system that at the very best will be mediocre.” A top administrator of a different research unit emphasized the importance of autonomy and distinctiveness in LGUS in a memo to the HQ: It is important to clarify the directives of the LGUS Board of Regents … Centralization seems to be effective in smaller state systems with less diversity of missions. But the size and complexity of LGUS make centralization a formidable task at best … Traditionally, the HQ had maintained a very workable interpretation of its role by providing overview and governance where a global perspective is necessary and where shared services reap benefits to the LGUS members. But the autonomy of the System members to exercise their authorities and means in order to do a good job is one that members have long cherished. In my opinion, the current USMIS philosophy threatens the traditional role of the HQ and threatens to share service even when such services are costly to some system members. Such a change in philosophy could not be implemented overnight. If such as a change was in order, then it should be communicated as such and simply not be the results of the [USMIS] initiative … the autonomy of the LGUS members is their strength and their means of attaining their goals. Most respondents recognized the conflict between these agencies and the MIS project team and HQ over the issue of USMIS adoption. They referred to it as “The Battle”. The result of The Battle was that in 1995 two units, engineering research and engineering extension, and the newly joined Northwest Campus were officially allowed to establish an interface with USMIS rather than adopting it as their primary system.
2. Top Management Commitment: Leadership and Politics
The Battle was tightly interwoven with changes of leadership in the system. Among many events in the history of USMIS, the resignation of the former director of the MIS project team had significant impacts on the process of USMIS implementation. The former director had been in charge of the MIS team from the beginning in 1987 and left LGUS on July 1991. His resignation caused serious problems in the continuation of USMIS implementation. A second leadership related event compounded the difficulty of USMIS implementation. One of the initial sponsors of USMIS, the Executive Deputy Chancellor, left LGUS. This loss of two key sponsors led to a loss of direction in the implementation effort. These departures made it more difficult for the MIS team and LGUS leadership to resist the efforts of units that wanted to opt out of USMIS.
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Another complicating factor was change in chancellors. From 1986 to present, there have been five chancellors. Each chancellor had different visions for USMIS, and these had significant impacts on USMIS implementation (Table 3). One interviewee noted that “Every time a new chancellor is in office, things change. USMIS shifts depending on who the chancellor is at that time. The vision of chancellor is a powerful influence.” The MIS project was officially established during Chancellor Smith’s regime. The chancellor and the board were very supportive of USMIS design and implementation. He strongly supported a mandatory policy for USMIS implementation. In 1990, three units implemented the USMIS as it went live. In 1991, Chancellor Jones, formerly the Deputy Chancellor for Engineering of Big Campus, assumed office. One of the initial sponsors of USMIS noted that: Chancellor Jones initially saw USMIS as bad, and I had to convince him not to stop what we had done so far. After becoming the chancellor, he changed his view a little bit and put his foot on both sides (us and engineering). He tried to take a neutral position but understood the engineering side more. That’s why the two research agencies could avoid using USMIS. Unlike the first chancellor who advocated USMIS, Chancellor Jones was not as strong an advocate of USMIS, and this weakened pressure for implementation. During Chancellor Jones’s term implementation of USMIS was widely regarded as optional. However, the HQ and the MIS team continued to push for adoption. In 1991, six more units of LGUS became users of USMIS, and in 1992, three units implemented it. The optional status for USMIS implementation changed dramatically when Chancellor Brown, formerly President of Big Campus, took over. Brown had been on the steering committee of the original MIS project at Big Campus and thus was very supportive of USMIS. He made implementation mandatory again and announced that all units must be on USMIS. This led to conflict between HQ and the MIS project team and those units that wanted to avoid using USMIS. A top IT administrator at one university campus recalled that “it was not a happy time for everyone”.
Table 3: Policy of USMIS Implementation and Change of Leadership Chancellor
Background
Term
Policy on USMIS Implementation
Smith
Formerly Dean of College of Agriculture at Big Campus
1986-1990
Mandatory
Jones
Formerly Dean of College of Engineering at Big Campus
1991-1993
Brown
Formerly President of Big Campus
Favorable to engineering agencies and neutral toward USMIS
1993-1994
Mandatory
White
Formerly President of Northwest Campus
1994-1999
Green
Hired from outside
1999-Present
Favorable toward Northwest Campus and neutral toward USMIS No Interest
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However, Chancellor Brown’s term lasted for only one year. In 1994, the Board of Regents appointed the president of the newly added Northwest Campus as the fourth chancellor during the period of LGUS implementation. Chancellor White stressed the importance of uniqueness and autonomy of each university and agency in LGUS. While White was not against USMIS implementation, he decided that units could choose not to use USMIS. Notwithstanding, acceptance of USMIS continued to spread. During Chancellor White’s term of office, all units except the two engineering agencies and the chancellor’s former university implemented USMIS as their primary financial and accounting system. This led a number of those involved in the development and implementation of USMIS to believe that USMIS implementation was very “political.” Several respondents said, “If you want to understand USMIS implementation you need to see how politics has played over time in the history of USMIS ... A lot of local politics was played in USMIS adoption … Politics was very powerful in the implementation of USMIS.” While the importance of top management commitment for large IT projects in the private sector can never be overstated (Brown & Vessey, 2003), the complex, often discontinuous, and fragmented power and leadership structure intensifies the challenge in obtaining continuous top management commitment in the public sector (Watson, Vaught, Gutierrez, & Rinks, 2003). In the private sector, the process of setting objectives and carrying them out are closely integrated, whereas in the public sector these processes are loosely coupled (Rocheleau, 2000). The loosely-coupled structure of public organizations impedes consideration of operational issues at the time objectives are established. For example, an objective might be “management information systems that will insure compatibility and the ability to consolidate accounting and fiscal information, analysis, and reports from all system units”. When elected top administrators negotiate to set objectives such as these, feasibility and operations aspects may not be fully considered (Dufner et al., 2002). Detailed IT issues and related topics have often not been considered relevant for consideration by university presidents or chancellors (Ward & Hawkins, 2003). Experience with developing EIS shows that “In the private sector, once the chief executive wants an EIS, it will move. In the public sector, wanting is not enough. Movement can stop at any of a number of stages” (Mohan et al., 1990).
3. Rules and Regulations from a Public Constituency
Public organizations have many legal restrictions on their actions and operate under public scrutiny (Guy, 2000). Higher education faces calls for increased accountability and regulations imposed by multiple social institutions and governing bodies, including legislators and Generally Accepted Accounting Principles (GAAP) (Ernst et al., 1994; Jonas et al., 1997). In the 1980s and 1990s, several state audits had shown deficiencies in LGUS and other universities, and many new rules and policy changes were mandated by the state. These were very influential in the design and implementation of USMIS. The USAS that went into effect on September 1, 1993 for a number of small state agencies has been influential in the maturity stage of USMIS implementation. Since this date, all units of LGUS had to report information to the central USAS database daily. This database, controlled and managed by the State Comptroller’s office, was designed to maintain accounting data consistent with GAAP and National Association of College and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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University Business Officers (NACUBO) standards. The system provides accounting services to all state agencies using a uniform chart of accounts. Also, USAS reflects any changes in the state legislatures and policy. Thus, in the implementation and maintenance of USMIS, priority had to be given to processing requirements and maintenance requests that were mandated by law or policy changes. For instance, in 1999, the Governmental Accounting Standards Board (GASB) Statements No. 34 and No. 35, “Basic Financial Statements” and “Management’s Discussion and Analysis for State and Local Governments and Public Colleges and Universities,” were issued. For the first time, accrual accounting was required for all government activities and all capital assets had to be depreciated. Starting in fiscal 2002, the state is required to implement these new rules. In response to this requirement, USMIS had to develop depreciation capabilities to report the depreciation of fixed assets. Priority had to be given to these sorts of mandated requirements and policy changes rather than user requests. USMIS was also required to respond to state auditors’ recommendations of management controls. The sate audit report in 1995 pointed out that USMIS did not provide useful information at the departmental level. USMIS responded to the audit’s recommendations in a number of ways. Immediately after the state audit the MIS team began the implementation of departmental download capability. LGUS finalized licensing agreements for a software package that allowed end users to download USMIS data to their microcomputer environments so that data could be processed to meet the end user’s needs. In 1998, USMIS began the implementation of budget and automated Annual Financial Report (AFR) subsystems. Recently, there has been an effort to convert the BPP system to the same processing environments (ADABAS) as the USMIS system in order to develop the interface between the two systems.
4. Diversity of Internal Constituencies and Their Needs: No CIO?
Like other public organizations (Guy, 2000; Rainey et al., 1976), LGUS serves a large number of constituencies whose goals and needs are diverse and sometimes even compete with one another. As the original objective of USMIS — one IS for everyone — indicates, USMIS was directed by a desire for centralization. The Board of Regents and the initial sponsors of USMIS believed that one IS for all units in LGUS was desirable and could be realized. However, as the design and implementation were proceeding, the size and diversity of LGUS emerged as a critical issue. Every unit had its own chart of accounts, and the accounting practices throughout LGUS were very diverse. Few wanted to change their accounting. Some feared losing control. USMIS had to adapt to the diversity of their accounting practices. Also each unit had different priorities. For example, the research agencies required contracts and grants/ research accounting capabilities in order to administer programs and to assure compliance on sponsored research projects. Big Campus, which had initially made a significant investment in the acquisition of the software package for USMIS, used this leverage to request that many other functionalities and subsystems (e.g., purchasing, departmentlevel accounting, and administration) be added into USMIS. The diversity of needs and requests and their sheer number resulted in problems in attaining the full design and implementation of USMIS. According to the state audit report in 1996, as of 1995 there was a backlog of over 250 user requests for system Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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maintenance and enhancement, some of which dated back to 1990 and 1991. From September 1995 until June 1996, the USMIS support staff had completed 219 service requests. During the same period, an additional 271 maintenance items were identified by various system users. Similar to the situation in the broader public sector (Mohan et al., 1990; Rocheleau & Wu, 2002), most academic institutions have a shortage of IT related resources and skills for user-support and system maintenance (Ernst et al., 1994). Needs at the top of LGUS also forced the MIS team to adapt. One of the original objectives of USMIS was to provide the capability of executive information systems to meet the information needs of system-level users, such as the Board of Regents and the Central System HQ. However, the 1996 state audit of management controls at LGUS pointed out the lack of a comprehensive management information system. The report recommended that: System management should reevaluate the overall intent and purpose of USMIS and how best to meet the management reporting needs of the board and executive management. Consideration should be given to the depth of accounting functions that USMIS will provide, including general ledger, project accounting, and management reporting. Alternative methods for meeting management reporting needs should be fully identified and evaluated. To respond to the recommendation that alternative methods be adopted, LGUS initiated the data warehousing project to develop an executive information system, rather than altering USMIS. This system went into operation in 2000. The system is looselycoupled with USMIS and other systems at Big Campus and the system-level. Also, there are several other needs that USMIS does not support such as departmental financial management and reporting. Thus different parts of LGUS had developed or purchased “shadow information systems” to make up for the deficiencies of USMIS to meet their specific, local needs. Until 1991, the 11-person steering committee, composed of members from universities’ fiscal management, system units, and the MIS team, set priorities for development. Starting in late 1991, a different committee consisting of the five top administrators from the university fiscal management, HQ and the USMIS team, took on this task and tried to set priorities for USMIS. However, the complex and interwoven elements in USMIS design and implementation made it difficult for the group to perform this task. This is partly because every unit in LGUS, including Big Campus, wanted their project to be the top priority. However, it was difficult to manage prioritization because the group did not have the same authority as a CIO in the corporate world. Public managers tend to have less authority over subordinates and less decision-making autonomy (Rainey et al., 1976). A top IT administrator in LGUS commented: Higher educational institutions differ from the private sector as far as IS is concerned. The university is governed by committees so the attitude is “convince us” of why we need such an information system. Therefore design and implementation become tougher. There is a lot less commitment by members.
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Since 1991, the MIS team’s position has been that priority was to be given to those projects that result in improved reporting and/or processing for all users of USMIS. With the recognition of the diversity of LGUS the MIS team adopted a “customer-oriented” rather than “enforcing” approach and tried to accommodate different needs of different members. The diversity of LGUS led the MIS project team to design an “average” system for all units, no matter whether they were large or small universities or research agencies, while different parts maintained “shadow systems” to meet local needs not satisfied by USMIS. The research agencies over that USMIS is for universities, not for them, while the smaller universities say it is too big for them. Reflecting on this, a key initial sponsor of the project commented “one system for everyone is nothing for nobody.”
CURRENT CHALLENGES & PROBLEMS FACING THE ORGANIZATION
As finally-realized, USMIS diverges considerably from the grand vision of the project initiators and the Board of Regents. The final system is not the fully integrated large-scale information system the MIS team set out to build, but it has certainly served critical functions for LGUS. After more than a decade of service, USMIS is now regarded as an aging legacy system. Currently LGUS and the MIS project team face the same three sets of forces — technological/functional, organizational and institutional — which demand important decisions and actions on the future of USMIS. The critical question is whether USMIS needs to be replaced or extended; if extended, in what way; if replaced, when is the right time and by what?
Technological Issues
Aging administrative, financial information infrastructure is one of the most critical challenges to universities today (McCredie, 2000). Functional pressures that raised doubts about the instrumental value of USMIS came from both inter-organizational and environmental levels. At the inter-organizational level, different user groups had pointed out functional deficiencies with USMIS. At a more general level, users complained that USMIS was not user friendly, did not utilize advanced databases, and had slow response time. At the environmental level, the emergence of new technologies such as GUI, fourth generation programming languages, and client-server architecture led to functional pressures. More recently, there have been some other functional pressures due to changes in the environment. For example, the industry has clearly moved to embrace SQL as the standard query language. SQL databases like Oracle and Microsoft SQL Server are becoming much more popular than ADABAS. Also it is very difficult to find programmers familiar with ADABAS. Currently LGUS is engaged in an effort to replace SIMS, the payroll system, and the human resource system with an ERP, which is expected to cost approximately $35 million. This project is becoming another source of technological/ functional pressures to either replace USMIS with an ERP or significantly enhance it through utilizing web technologies. Most recently, the project team is considering the utilization of middleware technologies such as the EntireX Broker for web-based services for USMIS.
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Organizational Issues
Given the state of the US economy in 2003, the number-one IT-related issue in higher education is funding (Crawford & Rudy, 2003). LGUS is no exception. Considering the magnitude of the ERP project, LGUS has concluded there is no way to replace USMIS in the short term. Key decision makers noted that people agree that “USMIS plays a large role in reporting to the state ... USMIS works.” However, a backlog of requests for functional improvements from departmental and individual user groups and cumbersome user interfaces (“Green Screens”) are acknowledged as major issues. Currently, the organization has decided to keep the legacy system, but the remaining question is for how long? And how can the USMIS be extended and renewed to meet new users and business requirements? Another issue may arise when LGUS decides to replace USMIS in the future. A top administrator commented: Some people have been talking about the replacement of USMIS, but they don’t know what they are talking about. In my opinion, they have no idea of the complexity and scope of USMIS. If they knew it they would never talk about the replacement of USMIS. You know what? USMIS cannot be easily pulled back. It has its own life!” In the late 1980s and early 1990s, USMIS was recognized as an alternative to the individual systems running in different units of LGUS. However, USMIS is now perceived to be part of the installed base, something that is exogenously given and resistant to willful change.
Institutional Issues
Institutional pressures have come from the state and the higher education community. Over the last decade, the state audit reports pointed out several limitations of USMIS, including lack of departmental support and reporting capabilities. They have questioned the appropriateness of further developing and maintaining USMIS since the mid-1990s. As an example, the state audit report of 1996 recommended that: System management [of LGUS] should reevaluate the overall intent and purpose of USMIS and how best to meet the management reporting needs of the Board and executive management … Implementation of USMIS at other system components should continue to be delayed until decisions are reached about the overall intent and purpose of USMIS … In addition to the state, the recent trend of deploying ERP in higher education is another powerful institutional pressure. Today information technology is increasingly becoming important for higher educational institutions to remain competitive (McCredie, 2003). ERP implementations are among the single largest investments in dollars and resources ever made by higher education institutions. Almost half of the major universities are using ERP systems. Of those that have not implemented an ERP, 10% are currently or will implement in a year, and an additional 25% are expected to do so within the next three years (King, 2002). A member of the steering committee for replacing SIMS with an ERP estimates that the replacement of USMIS will cost almost $50 million.
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REFERENCES
Allison, G. T. (1983). Public and private management: Are they fundamentally alike in all unimportant respects? In J. L. Perry, & K. L. Kraemer (Eds.), Public Management: Public and Private Perspectives (pp. 72-92). Palo Alto, CA: Mayfield. Bozeman, B., & Kingsley, G. (1998). Risk culture in public and private organizations. Public Administration Review, 58, 109-118. Brown, C. V., & Vessey, I. (2003). Managing the next wave of enterprise systems: leveraging lessons from ERP. MIS Quarterly Executive, 2(1), 65-77. Crawford, G., & Rudy, J. A. (2003). Fourth annual EDUCAUSE survey identifies current IT issues. EDUCAUSE Quarterly, 12-26. Davenport, T. H. (1998). Putting the enterprise into the enterprise system. Harvard Business Review, July/August, 121-131. Davenport, T. H. (2000). The Future of enterprise system-enabled organizations. Information Systems Frontiers: Special Issue of the Future of Enterprise Resource Planning Systems Frontiers, 2(2), 163-180. Dufner, D., Holley, L. M., & Reed, B. J. (2002). Can private sector strategic information systems planning techniques work for the public sector? Communications of AIS, 8, 413-431. Ernst, D. J., Katz, R. N., & Sack, J. R. (1994). Organizational and technological strategies for higher education in the information age. CAUSE Professional Paper Series #13. Gauch, R. R. (1993). Differences between public and private management information systems. Paper presented at the Proceedings of the 1993 conference on Computer personnel research, St. Louis, Missouri, USA. Guy, M. E. (2000). Public management. In J. M. Shafritz (Ed.), Defining Public Administration (pp. 166-168). Boulder, CO: Westview Press. Hanseth, O., & Braa, K. (2001). Hunting for the treasure at the end of the rainbow. Standardizing corporate IT infrastructure. The Journal of Collaborative Computing, 10(3/4), 261-292. Jonas, S., Katz, R. N., Martinson, L., Plympton, M. F., Relyea, S. W., Rennie, E. D., Rudy, J. A., & Walsh, J. F. (1997). Campus financial systems for the future. The National Assocation of College and University Business Officers and CAUSE. King, P. (2002). The promise and performance of enterprise systems in higher education. EDUCAUSE Quarterly. Lerner, A. (1999). A Strategic planning primer for higher education. Online: http:// www.des.calstate.edu/strategic.html Markus, M. L., Petrie, D., & Axline, S. (2000). Bucking the trends: What the future may hold for ERP packages. Information Systems Frontier: Special Issue of on The Future of Enterprise Resource Planning Systems, 2(2), 181-193. McCredie, J. (2003). Does IT matter to higher education? EDUCAUSE Quarterly. McCredie, J. W. (2000). Planning for IT in higher education: It’s not an oxymoron. EDUCAUSE Quarterly, (4), 14-21. Mohan, L., Holstein, W. K., & Adams, R. B. (1990). EIS: It can work in the public sector. MIS Quarterly, December, 435-448.
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Rainey, H., Backoff, R., & Levine, C. (1976). Comparing public and private organizations. Public Administration Review, 36(2), 233-244. Rao, S. S. (2000). Enterprise resource planning: Business needs and technologies. Journal: Industrial Management & Data Systems, 100(2), 81-88. Robey, D., Ross, J. W., & Boudreau, M. (2002). Learning to implement enterprise systems: An exploratory study of the dialectics of change. Journal of Management Information Systems. Rocheleau, B. (2000). Prescriptions for public-sector information management: A review, Analysis and Critique. American Review of Public Administration, 30(4), 414-435. Rocheleau, B., & Wu, L. (2002). Public versus private information systems: Do they differ in important ways? A review and empirical test. American Review of Public Administration, 32(4), 379-397. Shang, S., & Seddon, P. B. (2002). Assessing and managing the benefits of enterprise systems: The business manager’s perspective. Information Systems Journal, 12, 271-299. Star, S., & Ruhlender, K. (1996). Steps towards an ecology of infrastructure: Design and access for large scale information spaces. Information Systems Research, 7(1), 111134. Ward, D., & Hawkins, B. L. (2003). Presidential leadership for information technology. EDUCAUSE Review, May/June, 36-47. Watson, E., Vaught, S., Gutierrez, D., & Rinks, D. (2003). ERP implementation in state government. Annals of Cases on Information Technology, 5.
APPENDIX • •
Information Associates: The Information Associates software, a company based in New York State, is now owned by the SCT Corporation (www.sct.com) since 1992. Software AG NATURAL/ADABAS: Launched in 1979, NATURAL now has an installed base of more than 3,000 corporations. It was designed specifically for building mission-critical applications. Natural applications support many leading platforms and can be integrated with many major database systems (ADABAS, DB2, Oracle, etc.). Developed in 1969 by Software AG, ADABAS is a popular database management system, which is currently installed on many organizations including FBI, EPA’s Office of Information Resources Management, UPS, Merrill Lynch, and University of Texas.
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ERP Implementation for Production Planning at EA Cakes Ltd. 407
Chapter XXIII
ERP Implementation for Production Planning at EA Cakes Ltd. Victor Portougal, The University of Auckland, New Zealand
EXECUTIVE SUMMARY
This case details the implementation of the Systems Applications & Products (SAP) Production Planning module at EA Cakes Ltd. The market forced the company to change its sales and production strategy from “make-to-order” to “make-to-stock.” The decision to change the strategy involved not only the company’s decision to invest much more money in accumulation and keeping stocks of finished goods, it required a complete redesign of its production planning system, which was an integral part of an ERP system that used SAP software. A team of IT specialists and production planning personnel was formed for designing computer support for the new production planning system business processes. There was no consensus in the design group. IT specialists were sure that existing SAP software could provide adequate computer support. The production planning staff had doubts that SAP modules are relevant to their business processes. They argued that poor fit between the business processes implicit in the software and the business processes of EA Cakes will result in failure. To resolve the problem, the management invited a consulting company. The consultants suggested quickly designing a rough prototype system. Analyzing this system would help the working group to reach a consensus. Apart from giving adequate computer support to the new production planning system, the SAP implementation had to solve several implementation problems identified by consultants. The question is: can a standard software system like SAP give adequate computer support to an individually designed business management system? Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
EA Cakes Ltd., New Zealand, is a successful food manufacturing company with a major share of the market in New Zealand and the Asia-Pacific region. It produces more than 400 different kinds of fresh and frozen food products. From a shelf-life point of view, the company manufactures three types of products: 1. 2. 3.
Shelf-stable and frozen food with practically infinite shelf life (up to one year) Chilled products with a medium shelf life (from three to six months) Short shelf life products (from one week to six weeks)
The demand for many products is uneven. Christmas cakes and puddings, for example, are mainly sold during November and December. Generally, the demand for cakes is lower during summer than during winter. Sales are also volatile because they are conducted through numerous channels, including major supermarket chains, route outlets (such as groceries stores), and food service for hospitals, hotels, and restaurants. Sales to Australia, the major export market, add uncertainty to demand. For years EA Cakes Ltd. built a reputable brand name and had enjoyed a stable market. As a result, the dominant production strategy of the company was make-to-order, MTO (see for example, Vollmann, Berry, & Whybark, 1997). Permanent customers, such as supermarkets, shops, and restaurants, placed orders either for the next week, or for longer intervals with a regular delivery, and the company provided good customer service both in terms of quality and of on-time delivery. In the late 1990s EA Cakes Ltd. began to observe a decline of its market share in many of the traditional markets. Marketing analysis showed that the main reason for the drop in sales was price increase due to the company’s high production costs, and as a result competitors offered lower prices on similar products. The famous brand name did not attract customers enough to support the higher prices. An attempt was made to compete on low retail prices, with the results of slightly increased sales volumes, but significantly decreased profit. Soon the company was forced to reconsider its sales and production strategy. Two major faults were identified: 1.
2.
To support its MTO strategy, the company was forced to have a significant capacity cushion both in labor and equipment. It was necessary for providing stable customer service while the demand was uneven, sometimes with huge lumps. During Christmas, for example, the company usually tripled their average sales volumes. EA Cakes Ltd. was accustomed to seasonal variations and Christmas sales lumps, and coped with them by accumulating stock. Daily and weekly variations, however, led to losses in production time in low periods and to excessive use of overtime during peak periods. High labor cost variances (as compared to the standards) and low machine capacity utilization were prevalent. The MTO strategy implied that the company always quoted lead times to customers; for example, an order placed this week would be promised to deliver next week, or the week after, if there were too many orders. Old traditional customers agreed with this system, and the company was mostly successful in keeping its promises.
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The market, however, had become much more dynamic. Increased competition from NZ and overseas and a heavy promotional activity required improved “speed to market.” Many customers wanted the product on demand, not next week. The company was unable to exploit such opportunities and lost this significant part of the market. As a result EA Cakes Ltd. had decided to change its production and sales strategy (as recommended by operations management literature; see for example, Vollmann, Berry, & Whybark, 1997) for long and medium shelf-life products from “make-to-order” (MTO) to “make-to-stock” (MTS). The MTS strategy costs more in inventory than MTO, but it has two benefits: 1. 2.
Increased “speed to market” allows expanding the market share by attracting new customers and by catching unexpected opportunities. Capacity may be utilized more efficiently using the inventory “cushions” instead of capacity cushions (see McNair & Vangermeersch, 1998).
MTS companies hold stocks of all advertised products. The stocks usually are managed by a “min-max” rule: stocks below or close to minimum trigger production until they reach or approach the maximum level. The difference between minimum and maximum is defined by the demand forecast during a planning period. The production process is driven by the current levels of stocks rather than by customers’ orders. The decision to change the strategy from MTO to MTS involves not only the company’s decision to invest much more money in accumulation and keeping stocks of finished goods, it requires a complete redesign of its production planning system. There are several major reasons for making significant changes in production planning: • • •
MTO is driven by customers’ orders, MTS is triggered by forecasts; a forecasting system had to be designed and implemented. There are no significant stocks of finished goods under MTO, so there is no need for stock management; for MTS, an inventory management system for finished goods had to be developed. Under MTO there are no significant information links between the company planning and shop floor production planning; under MTS it is vital that the planning system preserves continuity. It has to be continuity in planning. That means the plans produced by each level are detailed plans of the top level. Also there must be feedback continuity: feedback of the top levels is an aggregation of bottom level feedback — for more detail see McNair and Vangermeersch (1998).
The production planning system was an integral part of an ERP system that used SAP software. Its redesign was a part of a major project of the ERP system development, carried out by Ernest Edams Ltd. for two years.
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410 Portougal
SETTING THE STAGE
The new production planning system consists of three levels (Figure 1).
Aggregate Capacity Planning (ACP)
The first (top-level) procedure is part of the general budgeting procedure, which starts from sales budget development. Sales budget is not a simple forecast of the amount of products that could be sold in the future. The budget not only predicts, but also directs the sales and marketing efforts of the company. Thus it is more a sales plan than a forecast. This defines the dual nature of the budget: on the one hand it should be realistic and should define what could be sold; on the other hand it should meet the business and financial goals of the company. The sales budget is a management tool for control of company performance by the Board of Directors. The Board provides the inputs to this budget in the form of key performance indicators. The marketing department provides other inputs (launch of new products and other marketing initiatives). The sales budget is developed for the fiscal year, and it is redeveloped every quarter with a one-year time horizon (a rollover procedure). All the budgets and rollovers are stored in the information system for reference and subsequent statistical processing. At any time two versions are available for analysis and use in the sales and production planning: a full budget for the current fiscal year, approved by the Board of Directors, and a current rollover budget. Figure 1: Three-Level Production Planning System Supporting MTS Strategy AGGREGATE CAPACITY PLANNING (Production and Labour Budgets)
MASTER PRODUCTION SCHEDULING
SHOP FLOOR SCHEDULING
PRODUCTION
MONTHLY FEEDBACK
WEEKLY FEEDBACK
DAILY FEEDBACK
LINES
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ACP has all the features of a capacity planning procedure. Starting from the sales budget, it produces an aggregate production plan for the following planning periods up to the planning horizon. The plan is balanced against the agreed target capacity, and at the same time meets the production and sales goals of the company. The demand forecast, the financial goals of the company, the target stock levels and actual stock levels are kept in the budget database. The planning starts from defining an optimum production strategy. The production strategy that follows the demand pattern month by month (“chase” strategy) is not sustainable here because of high seasonality of some products. Figure 2 shows that the “level” strategy with even production levels is not sustainable as well, because there is not enough time for stock accumulation from the beginning of the year until the start of the peak season. If production starts earlier, then the level of stocks becomes excessive. The optimum “mixed” strategy that combines stock accumulation with overtime use is shown in Figure 3. It plans some overtime at the peak season, and decreased resources utilization at the beginning of the year to compensate for the effect of increased production. The optimum mixed strategy, expressed in sales dollars, then is converted to an aggregate production plan. The planner uses: • • •
conversion tables, containing unit prices; capacity tables, which show the lines’ capacity (units/hours); and labor content tables (labor hours/machine hours) — these are necessary because different lines have crews of different sizes.
Figure 2: The “Level” Strategy is Not Sustainable — Negative Stocks Show This Month Apr Stock m 1.65 Sales T3.87 Indicis 0.83
May 3.17 3.99 0.85
Jun Jul Aug 3.82 5.48 6.89 4.87 3.86 4.1 1.05 0.82 0.88
Sep 3.56 8.85 1.17
Oct 0.85 8.22 1.03
Nov -3.5 9.85 1.39
Dec -5.9 7.94 1.72
Jan -2.9 2.51 0.53
Feb Mar Total -0.7 -0 3.36 4.77 66.2 0.71 1.02 12
$$$
Stocks vs Sales, Level Strategy 12 10 8 6 4 2 0 -2 Apr -4 -6 -8
Stock movement Sales Total Jun
Aug
Oct
Dec
Feb
m onth
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412 Portougal
Figure 3: Optimum “Mixed” Strategy Month Stock Production Overtime
Jan 1.51 4.02 -1.5
Feb 2.66 4.52 -1.0
Mar 2.91 5.02 -0.5
Apr 4.56 5.52 0.00
May 6.08 5.52 0.00
Jun Jul Aug Sep 6.73 8.39 9.80 6.47 5.52 5.52 5.52 5.52 0.00 0.00 0.00 0.00
Oct 4.26 6.02 0.50
Nov 0.92 6.52 1.00
Dec 0.00 7.02 1.50
Stocks vs Production, Optimum Mixed Strategy 12.00 10.00
$ mln
8.00 Stock movement
6.00
Production, total
4.00 2.00 0.00 Jan
Mar
May
Jul
Sep
Nov
m onth
Here the planner shifts shelf-stable seasonal products to an earlier month, targeting the optimum stock levels and loading the lines up to their capacity. The development of an aggregate plan based on the optimum strategy is necessary because: • •
The strategy gives total sales dollars and cannot be used for production planning while the plan is expressed in units of each products. There is no direct relationship between the selling price and production hours, therefore the strategy is not balanced against capacity.
Thus, the strategy serves as a goal for ACP. The aggregate capacity plan is developed initially for the fiscal year, and it is redeveloped every quarter with a one-year time horizon (a rollover procedure).
Master Production Scheduling
The master production scheduling system is the most important managerial tool for the operations manager of an MTS company. Master Production Schedule (MPS) gives the ability to ensure that available capacity is allocated with a customer service focus. The main MPS inputs are: • • •
aggregate capacity plan for the following two months, actual stock levels, and short-term demand forecast.
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ERP Implementation for Production Planning at EA Cakes Ltd. 413
The sales team prepares a short-term demand forecast by-product for the next five weeks, each week (a rollover forecast). The sales managers of particular products modify the monthly sales forecasts from the current budget, taking into account changes in demand, planned promotions, and so on. Starting from the demand forecast for the following planning period, the Master Scheduler produces a weekly production plan for the next five weeks, which is balanced against capacity, and at the same time meets production and sales goals of the company. As shown in Figure 4, the MPS Process uses the following logic: Opening Stock + Production – Sales Forecast = Closing Stock The MPS is calculated using several planning runs and is being balanced with the capacity. This can highlight where the capacity is insufficient for meeting the schedule or where the capacity utilization is insufficient within the schedule. The procedure is performed initially at the beginning of the planned month (the main run) in order to work out the MPS for the month. Only the first week of the plan is valid (and frozen). The rest of the plan is necessary for keeping the continuity of planning during the month. At the end of each week, when feedback on actual production and updated demand forecast become available, the procedure is run for the rest of the planning period (a control run). During this run the updated MPS for the following weeks will be produced. Also, instant changes in demand can initiate a control run in order to react quickly to the market demand. The primary function of the MPS is to produce feasible assignments for all product lines, which ensure their performance according to ACP with minimum cost. The other functions of this level are: 1. 2.
To keep desirable stock levels. To implement a “speed-to-market” principle: react quickly to significant changes in market demand.
Figure 4: Make-to-Stock Production
Cyclic Stock
Short-term Sales Forecast Average Inventory
Closing stock
Safety Stock Week 1
Week 2
Week 3
Week 4
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414 Portougal
Shop Floor Scheduling
This level performs actual scheduling for the next week (with a daily subdivision), specified by production lines and products. The scheduling constraints (for both men and machines scheduling) have been worked out as fixed recommended schedules for different proportions of the output. Setup times, planned downtime and average capacity losses due to unplanned downtime are known and used for realistic scheduling. This required a downtime reporting procedure and a schedule for major planned maintenance. The scheduling is performed initially at the beginning of the planned week (the main run) in order to work out an optimal weekly schedule. At the end of each day, when feedback on actual production becomes available, the procedure is run for the rest of the planning period (a control run). During this run the updated plan for the following days, subject to the same planning constraints, is produced. It was assumed that this level would be supported by a whole set of shop floor control procedures recognized in literature (Sherer, 1998). Similar to most organizations, EA Cakes Ltd. operates on a hierarchical basis. All activities and documents are organized through the Production Planning hierarchy. The hierarchy is organized so that the aggregate capacity planning (ACP) process is at the highest level of aggregation, while the shop floor scheduling process is at the lowest level. These levels can be presented using different parameters. Thus it includes a product hierarchy, time hierarchy, and organizational hierarchy. Each level varies in purpose, time span, and amount of detail (Figure 5).
CASE DESCRIPTION
The implementation of the Systems Applications & Products (SAP) Production Planning module at EA Cakes Ltd. in order to provide computer support to the MTS production planning system started from the detailed analysis of the problems.
Figure 5: Breakdown of Product, Time, & Production Planning System Hierarchies at EA Cakes Ltd. Product
Production Planning System
Time
ACP
Monthly
Aggregate Product Groups Product Lines
Product Batches
MPS Shop Floor Scheduling
Weekly
Daily
Disaggregate
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ERP Implementation for Production Planning at EA Cakes Ltd. 415
The production planning system described above carries specific features of production planning of EA Cakes. Standard software (and SAP by definition is standard software), on the other hand, comprises programs developed for an anonymous market. The question is: can a standard software system like SAP give adequate computer support to an individually designed business management system? This class of problems is widely discussed in literature (e.g., Robey, Ross, & Boudreau, 2002; Jacobs & Bendoly, 2003), with rather uncertain results, always pointing at the specific features of the enterprise. Because of this, a team from IT specialists and production planning personnel was formed for designing computer support for the new production planning system business processes. The concept of a business process is central to many areas of business systems design, specifically to business systems based on modern information technology (see Scholz-Reiter & Stickel, 1996). In the new era of computer-based business management, the design of business process has substituted the previous functional design. There are many definitions of a business process (see Davenport, 1993; Sharp & McDermott, 2001; Rosemann, 2001). According to Sharp and McDermott (2001), a business process is a collection of interrelated tasks initiated in response to an event that achieves a specific result for the customer of the process. Thinking in terms of business processes helps managers to look at their organization from the customer’s perspective. Usually a business process involves several functional areas and functions within those areas. Thus, a business process is cross-functional. Definitely, this is the case of the production planning at EA Cakes. The aggregate capacity planning uses sales budget, stock feedback, and available capacity (manpower and machinery). The master scheduling involves forecasting, feedback on stocks. The shop-floor scheduling and control absorbs a huge variety of activities from other functional areas such as material control, human resource management, inventory management, and so on. Quite to the contrary, standard software was initially developed only for certain functions that could easily be standardized. Modern standard software such as SAP is said to be object oriented or process oriented (see Kirchmer, 2002). However, it is still mostly functional, and the necessary orientation can only be achieved by adjusting the appropriate parameters. Even after the adjustments, the functionality of SAP may not be completely relevant to the business processes of a particular company. Then the implementation team will have only two options (Sawy, 2001): 1. 2.
To substitute the business processes of the company for the business processes implemented in SAP. To create additional special software for providing computer support to production planning.
There was no consensus in the design group. When the production planning staff got acquainted with the business processes suggested for production planning by SAP, they had doubts that these modules are relevant to their business processes. They argued that SAP, like most ERP systems, still focuses on the function such as inventory, production, accounting, finance, and so forth. The functional view poorly represents the interaction with other functional views. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
416 Portougal
Many companies have to modify their current business activity in order to use the ERP system. The members of production planning staff were the authors of the new production planning system, and they had a rather firm position that their planning processes were the most efficient for EA Cakes. No changes would be accepted. On the other hand, IT specialists were sure that existing SAP software could provide adequate computer support. They argued that SAP software mostly represents the “bestof-breed” solutions, thus producing a system that better fits each process in the company. While the best-of-breed solution would not fit precisely, it may be an investment that provides greater long-term flexibility and better solutions to the company’s problems. So, the management of EA Cakes was presented with the following dilemma: 1. 2.
Believing the IT specialists and continuing to implement the existing SAP modules on comparatively low cost, but facing all the risks of losses due to planning inefficiency. Believing the planning staff and ordering high cost computer support in addition to existing SAP system.
The management invited a consulting company. The consultants suggested quickly designing a rough prototype system (Hoffer, George, & Valasich, 1998), using ARIS (Sheer, 1999). Analysing this system would help the working group to reach a consensus. Apart from giving adequate computer support to the new production planning system, the SAP implementation was intended to solve several implementation problems (Hong & Kim, 2002) identified by consultants. Problem 1 The manufacturing process requires an updated short-term forecast each week. Sales managers must produce the forecast, and then it is automatically processed within the Master Production Scheduling. Sales figures for individual products have to be provided on a weekly basis for the current month and the next month. Actual sales made each week are captured and available for reporting on the following morning (after actual sales completion). Sales staff compare actual sales with long-term forecasts and using judgement make necessary adjustments. Currently, forecasts are prepared manually and then put into the database. It needs computer support to relieve sales personnel and to eliminate data entry. Problem 2 The Master Scheduler has to check the capacity requirements and to change the production volumes according to available capacity. Then he must present the changes to the Sales Department and the Production Department for acceptance. Problem 3 Presently at EA Cakes Ltd., scheduling is only done on finished items. It is desirable to schedule some components production as well.
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Problem 4 It is necessary to provide a reliable method for checking inventory availability. The question is: Can the SAP implementation solve all these problems?
CURRENT CHALLENGES
One of the biggest problems for EA Cakes Ltd. is low capacity utilization. The company has sufficient regular work force. Nevertheless, the Master Scheduler sometimes has to schedule overtime production, paying for overtime labor, which results in higher production costs for products. This can also cause shortages or stock-out of some materials for production, further increasing the cost of production. Managers are especially frustrated when an instant need for overtime follows a period of low demand, when inventory could have been built up; for example, in anticipation of an increase in sales following production promotions by marketing. Another problem was identified in inventory management. Stock control of raw material and finished items needs double-checking. Initially, the line manager records the data about actual production and actual use of raw materials. However, due to possible conflict of interests, this data is not absolutely reliable. The actual amounts of goods produced should be verified regularly. Any variances must be investigated; hence the necessary data must be kept for a longer time. More thought is required on the handling of rejects/seconds, as some are almost planned by-products. This will also have ramifications with stock control and sales analysis. There are hopes that these problems could be fixed after the ERP implementation by existing SAP tools. Of course, the company must modify its current business activity in order to fully use the functionality of SAP. If the planning staff will accept modest trade-offs, then the IT specialists are still sure that existing SAP software could provide adequate computer support.
REFERENCES
Davenport, T.H. (1993). Process Innovation. Boston, MA: Harvard Business School Press. Hoffer, J.A., George, J.F., & Valacich J.S. (2002). Modern Systems Analysis and Design (third edition). Upper Saddle River, NJ: Prentice Hall. Hong, H.K., & Kim, Y.J. (2002). The critical success factors for ERP implementation: An organisational fit perspective. Journal of Information and Management, 40(1), 2540. Jacobs, F.R., & Bendoly, E. (2003). Enterprise resource planning: Developments and directions for operations management research. European Journal of Operational Research, 146, 233-240. Keller, G., & Teufel, T. (1998). SAP R/3 Process Oriented Implementation. Harlow: Pearson Education Ltd. Kirchmer, M. (2002). Business Process Oriented Implementation of Standard Software (2nd edition). Springer. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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McNair, C.J., & Vangermeersch, R. (1998). Total Capacity Management: Optimizing at the Operational, Tactical, and Strategic Levels. Boca Raton, FL: St. Lucie Press. Robey, D., Ross, J.W., & Boudreau, M. (2002). Learning to implement enterprise systems: An exploratory study of the dialectics of change. Journal of Management Information Systems, 17-46. Rosemann, M. (2001, March). Business Process Lifecycle Management. Queensland University of Technology, pp. 1-29. Sawy, O.A. (2001). Redesigning enterprise processes for e-business. Boston, MA: McGrow Hill, Irwin. Sharp, A., & McDermott, P. (2001). Just what are processes anyway? Workflow Modeling: Tools for Process Improvement and Application Development, pp. 53-69. Sheer, A.-W. (1999). ARIS: Business Process Frameworks (3rd edition). Berlin: SpringerVerlag. Sherer, E. (1998). Shop Floor Control: A Systems Perspective. Berlin: Springer-Verlag. Scholz-Reiter, B., & Stickel, S. (1996). Business Process Modelling. Berlin & New York: Springer. Vollmann, T.E., Berry, W.L., & Whybark, D.C. (1997). Manufacturing Planning and Control Systems (4th edition). Chicago: Irwin.
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Chapter XXIV
MACROS:
Case Study of Knowledge Sharing System Development within New York State Government Agencies Jing Zhang, Clark University, USA Theresa A. Pardo, University at Albany, SUNY, USA Joseph Sarkis, Clark University, USA
EXECUTIVE SUMMARY
Knowledge sharing among divisions of an organization is an important yet difficult goal for any institution to achieve. This case reports on development of a system that fosters knowledge sharing across divisions and levels of government in a New York State agency. The case will focus on project management aspects, and discuss tools and models used to aid in the development and evolution of this project from an intradivision application to a more pervasive enterprise-wide system. A number of organizational and technological elements provide the impetus for growth, improvement, and success of this system. Overall, the case study provides insights and lessons learned to problems encountered in diverse and sizable organizations, such as large companies and not-for-profit organizations, as well as state and federal governments, where knowledge is distributed and sharing knowledge is critical to organizational performance. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
420 Zhang, Pardo, & Sarkis
ORGANIZATIONAL BACKGROUND
Government agencies at all levels have come under increasing pressure to provide better services to their constituents. To deliver the same or better services at a lower cost, the roles of technology, information systems, innovation, collaborations, and knowledge management become even more critical (Dawes & Pardo, 2003; Faerman, McCaffrey, & Van Slyke, 2001; Fountain, 2001). During the last two decades, applying valuable business concepts to managing the business processes of government agencies has gained momentum and is now central to governmental agency strategic and operational practices. E-government, customer relationship management, and knowledge sharing are examples of information technology (IT) innovations in government agencies. In many public policy and social service areas, important decisions are based on information and knowledge beyond the jurisdiction of one agency or one level of government. As public programs grow in complexity and interdependency, knowledge and information sharing across the boundaries of government agencies and levels of government has become an essential element of electronic government. Sharing knowledge and information through IT provides strategic advantages for governments to reduce the cost, improve decision making, and enhance the quality of services and programs (Caffrey, 1998; Dawes, Pardo, Connelly, Green, & McInerney, 1997; Kraatz, 1998; Landsbergen & Wolken, 2001). The focus of this case begins with the Division of Municipal Affairs (MA) of the Office of the State Comptroller (OSC), which is responsible for supervising the fiscal affairs of over 10,000 local government entities in New York State. The inception of the Multi-purpose Access for Customer Relations and Operational Support (MACROS) project can be traced back to 1997, as OSC found itself struggling with problems of locating the right information in the midst of islands of information, separated both geographically and organizationally. The services provided by OSC to local governments include auditing, training programs for local government officials, technical assistance, and local government financial information processing. The quality of services delivered relies heavily on the use of accurate and current information and knowledge about the fiscal conditions of local government. This information and knowledge is typically derived from diverse sources. For instance, when the State conducts an audit of a particular town, the audit will be more targeted if the field examiners have information about previous services offered, the type of previous policy inquiries these local government officials had made, and the technical assistance that they were given with respect to the inquiries. In addition to services provided to local government officials, MA also provides information about the financial condition of local governments in New York State to external customers such as federal agencies, legislatures, taxpayers, professional organizations, financial institutions, vendors, and citizens at large. Thus, information has always been a fundamental resource for MA’s daily operations.. The strategic value of information and organizational knowledge was especially heightened when former State Comptroller H. Carl McCall1 embarked on a new vision of partnership with local government officials to replace the regulation-oriented approaches such as directives, audits, and corrective action practiced in the past, to ensure the accountability of local governments. Under the new vision, MA began to embrace a service-oriented approach that would enable and encourage positive changes by providing training and services to local governments (CTG, 2001). In order to design and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
MACROS 421
provide effective training and services for their stakeholders, MA needs to know what and when training and services are needed, and who targeted clients should be.
SETTING THE STAGE
In spite of the prominence of information’s strategic value in MA, the information required to support the implementation of this new vision was not readily accessible. At the time there was a deficiency in information quality. Data were incomplete, disorganized, inaccurate, poorly defined, and not timely. It was often saved in different formats, and stored in diverse discrete places, such as personal information environments, file cabinets, and even in individual employee’s heads. Thus, when there was a need for particular information, users felt that they were engaging in “scavenger hunts.” This process was highly manual, hectic, unreliable, and time consuming. In addition to normal information retrieval, when MA staff needed to analyze data at an aggregate level to design and improve services to address common customer requirements or unique requirements in a particular locality, information and processing tools were unavailable or inadequate for the required analyses. The problems were related to the technological capacities and capabilities of the division. The customer information tracking database was hosted on a centralized non user-friendly mainframe database system. Updating and maintaining the information stored in the system was difficult; as a result overtime users became less confident in it. Partly because of the difficulties that arose from the inaccessibility of the system and the quality of the system of the data, and partly because of the increasing usage of personal computer applications, staff developed and stored their own information to meet the new business needs. This dispersal of information across personal computers created problems of data integrity and information sharing. In addition, although area offices were connected to the central office through a wide area network (WAN), regional office staff did not have access to the system. As a result, they developed their own systems and practices for managing information. The information and knowledge sharing difficulties also had organizational roots. The division has historically operated under a decentralized philosophy and structure. The 210 employees within the division were distributed in eight geographically separate offices (Figure 1), with each of the regional offices performing the same functions, but having de facto independent authority under the general direction of the central office and the governing regulatory requirements. Since both regional staff and central office staff handle communications with local governments, information was received, stored, and distributed through numerous geographical points and at various organizational levels within the division. There was no consistent policy or set of guidelines for data collection and maintenance. Furthermore, personal and informal contacts between MA staff and local government had been traditionally regarded as the preferred means of communication. Therefore, much of the knowledge about local government needs was shared through these personal contacts, and kept in one or a few staff’s own personal knowledge base (i.e., their own memories). This knowledge can be very valuable for assessing statewide policy and program issues, determining service selection to local governments, and performing
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422 Zhang, Pardo, & Sarkis
Figure 1: Office of the State Comptroller Division of Municipal Affairs Organizational Chart Deputy Comptroller Municipal Affairs
Assistant Deputy Comptroller Audits and Local Services
Binghamton Area Office
Glens Falls Area Office
Buffalo Area Office
Albany Area Office
Rochester Area Office
Hauppauge Area Office
Syracuse Area Office
Assistant Deputy Comptroller Administration, Research, Information and Training
Administration
Municipal Accounting Systems
Examinations
Training and Intergovernmental Affairs
Fiscal Awareness Strategy Team
Municipal Research and Statistics
risk assessments, but there was no mechanism to make this knowledge accessible to MA leadership as well as program and policy decision makers.
CASE DESCRIPTION
In order to tackle the challenges resulting from inadequate information quality and a decentralized organizational arrangement, MA participated in the Using Information in Government (UIG)2 program conducted by the Center for Technology in Government (CTG) 3 located at the State University of New York at Albany. Their participation, launched in 1998, began with the development of a business case for an information solution — Municipal Affairs Contact Repository Operating System (an original version of MACROS). In June 2000, MA awarded a contract to ComputerWorks, an Albanybased software development company, to begin building the MACROS system. After a year’s effort in constructing the infrastructure, MACROS offered service to the first user in June 2001. The system became available 18 months later on the desktops of 500 of the 2,000 OSC employees (see Figure 2 for the timeline of the project). Originally, MACROS was intended to facilitate the flow between the central and regional MA offices of information about technical assistance delivered to local government. As the project evolved, the agency recognized that MACROS represented potential opportunities to achieve efficiencies through knowledge sharing that went Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
MACROS 423
beyond its original use in MA. As a result it was expanded to other divisions such as Financial Services, Management Audit, and Administration, thereby becoming the first enterprise-wide application in OSC. The MACROS system is a Lotus Notes-based application powered by InterTrac (the software developed by ComputerWorks). The system is comprised of Notes databases with report capabilities. These databases are combined into a single system that acts as a multi-purpose tool for management of contacts, documents (policies, procedures, and training materials), correspondence (via print, e-mail or fax), projects, workflow, and the knowledge base (Figure 3). These functionalities enable staff to perform both targeted and mass dissemination of information to local governments, track communication histories with local governments, retrieve timely and accurate information in order to provide consistent service delivery to municipalities, and access a comprehensive library of training materials. Figure 2: Timeline of MACROS Project
Dec ’97 Proposal to CTG
March ‘99 More workshop from CTG Fight for Resources
Nov ‘98 Business Case presented
June ‘01 First Users
Feb-May ‘00 Agency-wide Advisory Meetings
Dec ’99 Draft RFP
June ‘00 Awarded Bid
Dec ‘02 500 + users
Dec ‘01 Expand to Press Office
Figure 3: Building Blocks of the InterTrac Design for MACROS
People, Organizations, Municipalities, Staff, Linking
Tracking Incoming Outgoing
Documents, Municipal Training Library, Annouce.
Division Activites
Activity Usage Project Mgt Time Sheet
Service Reports, Activity Tracking
Incoming Ougoing Faxes E-Mail
Audit Performance CPA, Smart Reports, Etc.
Merge Letters Letter Parag. Phrases
Tracking, Troubleshooting Issues
Lables Lists Ad Hoc
Online FAQ Get Answers
Online User Manual
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424 Zhang, Pardo, & Sarkis
The development dynamics of MACROS can be best understood through a more detailed look at the processes of planning, analysis, implementation, and expansion/ institutionalization. These major stages within the project did not follow a definitive linear development process. The stages were iterative with results from one stage feeding back to another.
Planning & Analysis
The events that occurred during the period from 1997 to 1998 can be described as planning activities. The system planning and analysis was a user-led initiative. A few key users in the organization realized there was a problem when the proverbial “left hand was not talking to the right hand.” For example, it was not unusual for four or five different people in different MA operations to interact with officials in the same local government but not be aware of the other ongoing conversations or service transactions. This problem was discussed among a few individuals, in particular the staff of the Deputy Comptroller of MA who were responsible for making decisions in the Division. They tried to find possible solutions to provide a better method of collecting, maintaining, and sharing information. Although several staff members had some awareness of various problem dimensions, each individual had a different grasp of the nature, scale, and urgency of the problem and possible solutions. Many of these perspective differences were due to varying professional roles and experiences. Some viewed it as a technological problem that required a quick fix, while others saw it as both a technological and organizational problem, where the solution would require the consideration of many aspects of management, policy, and technology. Some participants had a narrow perspective of the issues, usually focusing on particular sets of problems without seeing a larger strategic picture with limited ability to see the potential impact of a MACROS-like solution. In order to be successful, they needed to go beyond the initial problem identification and develop a full situational understanding, with a shared interpretation of the objectives to be achieved. In 1998, a shared understanding was achieved through a series of business analysis activities facilitated by CTG. CTG has a reputation as a neutral but competent facilitator for government IT initiatives. It has extensive knowledge about government operations, expertise in IT project management, numerous successes in the past, and an approachable methodology applied to the public sector. Therefore, CTG participation became a validating symbol for the MACROS concept. MA applied for and was accepted into the UIG program conducted by CTG. A team consisting primarily of users from management, central staff, and field staff worked with CTG to analyze the technical assistance process, to explore alternative solutions strategies, and what management, policy, and technology capabilities would need to be in place to achieve them. The team size grew as expertise in different areas became required for effective planning and analysis. However, the supporting, spearheading, and coordinating roles were consistently supplied by the upper management sponsor, a project leader, and numerous champion users. The project leader of the team was an administrative assistant for the Deputy Commissioner of MA. This role was assigned to her primarily because of her unique position, extensive knowledge about the organization, technological expertise, and a strong commitment to the objectives of the project. Her position and a highly accessible and open personality had allowed her to form networks of knowledge Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
MACROS 425
and expertise throughout MA. Her commitment to the project was derived from awareness of the value this information would provide to leadership in terms of their decision making and planning responsibilities. The approach that CTG uses to help government managers make appropriate IT decisions starts with a specification of the business problem and its context, followed by identifying and testing solutions and cost performance analysis, and is completed with evaluating alternatives (Dawes et al., 1996). Following this approach, the first step was to develop a clear service objective: To provide OSC/MA staff with remote/desktop access to up-to-date electronic indexed information about local government contacts that allows staff to: • • • •
Conduct targeted and mass dissemination of information to local governments Assess the need for service delivery to local governments Document contacts between OSC/MA staff and specific local governments Develop and maintain a contact list So that:
• • • • •
Local governments receive useful information provided by/through OSC Staff can determine risk assessment Staff can maintain a contact history between OSC and local governments Staff have timely and accurate information in order to provide consistent services delivery to municipalities Staff can produce a reliable, accessible, uniform centralized contact list.
Next, a stakeholder analysis (Table 1) and a strategic framework (Figure 4) were completed to identify how an information system would affect a variety of customers and other players, as well as to create a general categorization of internal and external factors that must be considered to achieve the service objective. Through stakeholder analysis, Table 1: Stakeholder Analysis Service Objective: Final Objective Stakeholders Direct
Internal
Products & Features
MA Staff
Division Managers (URA)
Legal Services
Press Office
Local Govts.
State Agencies
Centralized repository of local government information
EP, IA, IQ
IA, EP, IQ
IA
IA
IA
IA
On-line Access to information with structured and non-structured search capabilities
IA, EP, IQ
IA, IQ, EP
IA
IA
EB
EB
External
Communication Tracking
IA, IQ
IA, IQ
IA
Name & Address List of local governments and other contacts
EP, IQ, IA
IA
IA
IA, EP
Document Management
EP, IA
IA, IQ, EP
IA
IA
Decision Support
IA, IQ
EP, IQ, IA
Process/Service Management
IA, EP, IQ
IA, IQ
IA
IA
EB IA, EP
Codes: IQ = Improve Quality; IA = Increase Access; EB = Extend Benefit; EP = Enhanced Productivity
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426 Zhang, Pardo, & Sarkis
Figure 4: Strategic Framework Internal
New Partners
Legal Division Press Office Justice Court Mail Room Bureau of Information Technology Services Management Services
Resources
Existing Systems Media Reports Local Gov’t Documents Communication Policy Legal Opinions MA Staff Knowledge
External
State Agencies Loc. Gov’ts CTG Office of Technology
Customers Internal
MACROS Service Objective Innovations
Other Resources
Products
BITS OSC Divisions Network Resources Personnel Vendors Internet National Associations
Central Repository On-Line Access Search Capabilities Communication Tracking Document Management
Services
MA Staff MA Managers Legal Services Press Office
External Local Officials Other State Agencies Federal Agencies Taxpayers Legislature Media Professional Associations Vendors Financial Institutions
CTG Project Communications Center On-line Access Decision Support
Table 2: Cost-Performance of the System Functionality* Functions
Modest System
Moderate System
Elaborate System
Centralized Repository of local Government Information
Index-level information on all correspondence and telephone contacts
Summary information expanded to services
Full information including full documents expanded to documents, process and contact list
Online Access to information with structured and nonstructured search capabilities
Access by Central Office with limited (canned) structured capabilities
Access expanded to Area Offices with customized structured search capabilities
Access expanded to remote sites with full content search capabilities
Communication Tracking
Log of incoming and completed correspondence, telephone contacts
Log expanded to services
Secure real-time tracking including documents, processes, and contact lists
Name and address list of local governments and other contacts
Local government chief executive and fiscal officers including telephone and fax numbers and e-mail address; limited structure search capabilities
Expanded to all local government officials
Expanded to all contacts with automated distribution and full search capabilities
Document management
File management capability
Automated document management for internally produced materials
Full document management capability for internally and externally produced materials
Decision Support
Automated index to manual information
URA multiple automated searches conducted by staff
URA expert system retrieves necessary information
Process/service management
Log
Full service history
Full access to history including product details
*System functions by levels of implementation (it is assumed that higher-level systems include all functionality in lower levels). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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they identified MA staff as the direct beneficiaries of this system, other OSC divisions as the indirect beneficiaries, and local government customers as the external beneficiaries. The development of a strategic framework led to initial identification of potential resources, including partners and potential uses of IT and other innovations. These analyses gave the team members a chance to identify the nature of the problem in a broader context. Their new understanding of the problem enhanced their ability to contain the scope of the project. To identify solutions and evaluate alternatives, three other important analyses were completed. These were best practices research (Appendix A), process modeling and analysis (see Appendix B), and cost-performance modeling (Table 2). These analytical efforts provided the team an opportunity to consider alternatives, weigh the alternatives in light of the cost and benefit to various constituents, and identify risks. The specification of the problem and identifying alternative solutions was a critical step in the lifecycle of this project. The business case analysis helped them build a solid problem understanding and identify the business objectives to achieve through the information system. In addition, the written business case itself became a powerful tool in achieving shared understanding among key team members, gaining upper-management support, and persuading others about the need for and the value of collaboration. The business case focused on the benefits and values associated with each of the alternatives. Unlike for-profit businesses, the business case for a state government project needs to show value that is not exclusively expressed by ‘bottom-line’ profitability. Between 1998 and 2000, the MACROS team focused on gaining financial support for their initiative by continuing to illustrate the potential impact of the MACROS system. This process included extending the analysis to related business processes. The MACROS team performed additional business process analyses (see Appendix C), with users from eight offices mapping out the information flow, decision points, and business rules of the Technical Assistance process. All of the offices of MA received technical assistance calls from local government for guidance and consulting with regard to financial management. By capturing information contained in those calls in a uniform way, some of the MA staff believed they could better understand the nature of the inquiries as well as start to build a knowledge base for more effective services and training programs. A two-day workshop was held in the spring of 1999 to define technical assistance and examine the business processes involved in tracking technical assistance. Thirtyfive potential users from central and regional offices participated in this workshop. Although the discussion yielded valuable results about the business processes associated with technical assistance, it also detected an undercurrent that seemed to intensify the resistance to changes that would be necessary through the adoption of a new system. For instance, the discussion did not reach a consensus on the types of technical assistance to be recorded and how tracking could be carried out. Considering that there are a large number of calls for technical assistance and they are of a varying nature, it was suggested that only significant technical assistance should be kept in the information system. This approach seemed like a reasonable business rule to all attending. However, it quickly became apparent that since each office exercises different practices, participants would have difficulty reaching agreement on what types of technical assistance they considered significant. For example, one type of technical assistance Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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can be regarded as significant by one office, while viewed as trivial by another office. In addition, participants expressed extensive concerns that the knowledge shared could be misinterpreted or scrutinized in a misleading manner.
Implementation
The various controversies and concerns did not halt the project. The MACROS team continued to work toward acquiring the financial resources to fund the infrastructure necessary for MACROS. IT resources in OSC are rationalized and allocated in a centralized way. A central IT shop, the Bureau of Information Technology Services (BITS) is responsible for systems development and maintenance throughout the agency. To use the IT resources from BITS, a project has to go through a formal evaluation process, i.e., there is an Information Resource Management (IRM) planning process held once a year. The MACROS team made a request to have the MACROS project sponsored for agency-wide resources in 1999. The request was rejected on the grounds that the MACROS application did not support mission critical operations in OSC. After the MACROS project failed in the IRM agency process, MA upper management became determined to fund this project using MA’s own budget and personnel. At that time, there was no precedent for an IT project to be funded out of any budget other than central IT resources, nor had a system been implemented by staff other than developers from BITS. Therefore, the MA leaders were fully conscious that their initiative might meet tremendous resistance and even be stopped by political battles if they failed to gain some cross-agency support. To obtain this support, the leadership of MA met with many Deputy and Assistant Deputy Comptrollers in other divisions. Through conversation, presentation, and copies of the business case, they persuaded their colleagues that the MACROS proposal concept represented a generic information management and use solution with the potential to solve agency-wide information problems, not just those experienced by MA. These potential benefits were fully discussed in IRM meetings held throughout 2000 and 2001. Finally, MA gained permission from the First Deputy Comptroller’s office at OSC to proceed under the condition that the project would be managed as an enterprise-wide application pilot. Based on the analyses in the business case, the MA team wrote and released an RFP. ComputerWorks responded to the RFP, and the response showed that their software product was capable of achieving the general goals and objectives of the agency. ComputerWorks also committed to knowledge transfer with the agency and offered the lowest cost solution. As a result, they were awarded the contract. The knowledge and expertise of the project leader enabled her to effectively negotiate the contract with the vendor. She acted as a conduit between the organization and the vendor in defining the system requirements and in managing the customization process. Her suggestions for several enhancements were eventually incorporated into newly released versions of the software, and, as a result, those enhancements became freely available to OSC. At about the same time, the MACROS team made a mid-course change in its implementation strategy, partly because of the need to demonstrate the ability of MACROS to address agency-wide needs, and partly because of influence from the vendor. Instead of focusing on the concept of technical assistance alone, the MACROS team formulated an alternative cycle of implementation. That is, they decided to start with an easier component first, specifically the customer contact information, and then to Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
MACROS 429
incrementally introduce other components, such as document management, correspondence, and technical assistance. This change of strategy lowered the risks of a departure from the original objectives of the business case and demonstrated benefits to leadership in early stages, thus, paving the way for the full implementation. As one team member said: “[w]e had a follow-up to look at technical assistance and that generated significant, well, controversy because there wasn’t a big buy-in. But now, just this month, people are coming back and saying Gee, you’ve got this product, you know; we really could use that (for technical assistance) … so it’s coming full circle basically by relocating where it’s going to happen.” The pervasive need for accurate, timely, and accessible contact information throughout the agency created an ideal focus for communicating the benefit of the system and for demonstrating how seamlessly it could be integrated into the organizational operations through a phased approach (Figure 5). To continue their quest for the IT resources necessary to develop the system, the MA division built an IT unit and appointed a CIO to lead the division-wide IT efforts. A number of those who joined the team as information users were transformed into members of the development team. This transition enabled the MA team to maintain strong connections with users and to work closely with them throughout the implementation. Their ideas were incorporated into the business rules of the information system through iterative processes.
Figure 5: Phased-in Implementation Waterfall of MACROS System
Customer Information Directory
Document Management
Workflow & Process Management
Figure 5. Phased-in Implementation Waterfall of MACROS System
Management Analysis Tool
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430 Zhang, Pardo, & Sarkis
Organizational Adoption & Functional Expansion of MACROS
From 2000 to 2002, MA built and implemented the MACROS system as a tool to share knowledge. During this process, two more important cycles of planning, analysis, and implementation occurred. One was the expansion of MACROS to other divisions and the other was the integration of the Automated Workflow System and the Time Management System. From February to May 2000, the MACROS team, with CTG as facilitator, brought a number of senior managers from across the agency together in a number of group decision conferences to help them identify their information needs. The participants found that a core set of information requirements was common across the agency, and that MACROS was likely to be capable of addressing many of these common information needs. This new cycle of planning helped participants “begin to think MACROS was not just a tool for MA; it reflects common information use if we think not tools, not about my job and your job, if you think about what information we use and the barriers of using that information,” commented an MA executive. In December 2001, MACROS was expanded to a new user base — the Agency Press Office. The Press Office had for some time been requesting similar services from the central IT shop. MACROS was able to quickly meet their needs by providing access to the contact repository functionality developed to support MA users. This project was the first application of MACROS outside of the MA division. When the concept of MACROS was brewing in 1997 and 1998, a parallel IT initiative in the MA division was also under deliberation. That initiative was to build a new information system to automate workflow. The legacy automated workflow system was a DOS-based FoxPro system that the division used to keep track of business processes and workflow. An automated workflow system was not considered in the original plan for MACROS. However, after the division purchased the InterTrac software for the MACROS concept, they found that some components of this product could meet the automated workflow functionalities requirements of the agency. MACROS is organized around a central contact database. This contact database comprises all local officials and local governments, as well as an MA staff list. Since the services provided by MA revolve around these contacts, they envisioned being able to organize information about any one locality in one place and track services in the same way as they track correspondence. Therefore, MA integrated automated service requests, as well as the time management component to track resources required for a particular service. The information was organized and used in a way that added extraordinary value to MA in terms of understanding the service context and history of any particular customer, as well as the cost of their own efforts to provide service to that customer. Finally, during the winter of 2002, after a year of pilot testing in one regional office, the MA team began to roll out the technical assistance component of MACROS. Knowledge sharing was thus further formalized as a procedure to be carried out through the information system. The results cannot yet be easily evaluated, but the participants expect that this will enhance the knowledge base about financial management in local government and improve the quality of the technical assistance.
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Impact & Successes
The development and the implementation of the system were successful on several dimensions. In addition to providing more accessible and accurate information about customers, the agency saved $100,000 per year in postage and staff costs by using InterTrac’s mass mail features and fax integration, and reduced response time by 20% through elimination of redundancy in both paper and electronic data. Because of their innovative approach and remarkable results, the MACROS team received the Best Practice Award for Technical Implementation from the New York State Forum for Information Resource Management4 (NYSFIRM, 2002). ComputerWorks was also awarded the Lotus Beacon Award 5 for the impact that InterTrac has made at the OSC. The impact of MACROS has gone beyond a basic information system. It has been a stimulus and catalyst for learning and learning-oriented organizational changes. The MARCOS initiative changed the values, mindsets, and practices of the organization (i.e., the culture) with regard to knowledge sharing, collaboration, and information systems investment. As one Assistant Deputy Comptroller concluded, “It enhances the whole organization. It has strengthened our values and it has made us more efficient, and it has brought us together in a lot of ways as an organization.” A number of relatively profound changes occurred. First, the MACROS project instituted a new way of thinking about the use of information and technology at the agency. Instead of seeking IT as a certain path to better business, they did a serious analysis of business processes and information needs. It is widely understood that technology will not fix a bad business process. The OSC case illustrates this point. As one interviewee who worked in the original MACROS team commented: “... the Division of Municipal Affairs involvement went beyond the project. With the paradigm or the design that we were introduced to by CTG, we really looked at and it was really the starting or the start of how do we evaluate our IT resources.” Second, an important organizational impact of MACROS is that it created a model for enterprise integration of systems and business processes. The collaborative crossboundary model was adopted throughout the organization. The MACROS approach became a desired approach for addressing agency-wide information issues. As one Assistant Deputy Comptroller in another division commented: “Again, looking at something enterprise wide is pretty revolutionary. We haven’t really thought about it. We now think about it. MACROS is a leading-edge thing. It enables us to think of other things. I am working on a financial data warehouse that is going to cut across divisions. I don’t want to say it is all attributed to MACROS, but it really gave us the need to look agency wide.” Third, it constructed formal and informal networks and knowledge sharing routines to facilitate sharing practices outside of the information system. A MACROS expansion committee was created to continue to identify and address agency-wide information needs. The committee has become an important forum to exchange information, discuss information needs, share knowledge, and coordinate system development in different parts of the agency. In addition, informal professional networks developed and have Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
432 Zhang, Pardo, & Sarkis
evolved as a result of this project. When asked to what extent knowledge sharing has been integrated and institutionalized in the organization, the project leader reflected: “Not only have people had different information available now than they did before, but it’s kind of building up some networking among people. People can call one another. I think it has helped open up new gateways for people.”
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
MACROS represented a new approach for business process management and beyond. The success of this project is based on individual and collective (institutional) effort to evolve from the old approach, overcome barriers to change, and create new models of thinking and acting. The challenges that emerged throughout the development of MACROS had implications for organizational structures and for relationships among important actors. Challenges emerged as the team sought to make changes within the MA division and across divisions, between the MA division and BITs, across the boundaries of all divisions, between the central and regional MA staff, and among the regional offices themselves. MACROS development required a few structural changes. The most significant one involved the conflicts between the traditional centralized IT resource allocation and decentralized business requirements. Although MA gained permission to build the system on its own budget and personnel, conflicts, tensions, and mistrust were present during this process and could have prevented MACROS from achieving its goals. There were areas of mistrust between BITS (traditional developers) and the business bureaus (users) in OSC. While division staff saw BITS as focused on technical rather than business issues and not open to exploratory discussions of business problems, BITS was concerned, based on previous experiences with other divisions, that MA might produce a system solution that BITS would be responsible for maintaining over the long term. Mistrust also existed within the MA division due to historical information sharing behaviors, personnel changes, and personal conflicts. The benefits to sharing knowledge through collaboration were not immediately obvious to the regional staff. Instead, they felt they had many reasons for not sharing knowledge. For example, they could potentially lose their professional autonomy, giving up their independent approaches to their job functions and conforming to a uniform business process. In addition, they had to consider the difficulties of learning a new technique, and changing and adapting to a different set of rules and procedures. There had been many organizational changes, and staff had become tired of the constant uncertainty and adjustment. Another challenge faced during the project, as mentioned earlier, was related to the different definitions and practices exercised by various offices. The issue that appeared in the two-day workshop in 1999 with regard to “significant technical assistance” is a reflection of the difficulties in reaching consensus among regional groups. The challenge has much to do with the nature of knowledge, which can be highly tacit and embedded
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in local practices and context. As many studies in knowledge management and organizational learning have found, sharing knowledge interorganizationally or across geographically, professionally, or domain-divided divisions requires the development of common understandings or mindsets (Senge, 2000), as well as a level of co-participation across the boundaries of organizations and divisions (Brown & Duguid, 2001; Nonaka, Toyama, & Konno, 2001; Wenger, 1998). These characteristics make the exchange of knowledge across boundaries more complex and difficult. This complexity suggests that building the mechanisms of sharing knowledge and practices is a more challenging and pervasive task than simply creating a knowledge base. The complexity caused by group diversity was not only limited to within the MA division. The project could have failed when MACROS started to expand to other divisions. Because each division has different rules and procedures, the consensus building and coordination was strenuous. Some divisions are still very conservative in terms of adopting the functionality of MACROS. That is, they do not wish to utilize its full potential and would prefer to develop their own system for managing certain functions. In the divisions that fully embraced the concept of MACROS, the project leader needed to manage the progress and make sure that the requirement of a particular division were really part of the larger enterprise-wide landscape. Although there was great enthusiasm for implementing the system as quickly as possible, the project leader needed to constantly educate and manage the expectations of those who downplayed the importance of business process analysis and were looking for a quick technology solution. There were also concerns that the MACROS applications were advancing in support of the MA division, while the general progress of agency applications was relatively slow. Limited resource availability had implications in terms of the strategies and structures that could be employed to move the project forward. The MACROS team had been creative in sharing resources and responsibilities in order to proceed at a reasonable pace. The technology is new. Not enough technical support could be obtained from the central IT shop because their expertise was in mainframe databases. The MACROS team has had to cut short their learning curve. Finally, political turbulence could not be ignored. Although the election for a comptroller took place in November, 2002, it became clear from the summer of 2002 that the sitting comptroller would be leaving OSC in a bid for Governorship. With a new administration in office, the team was aware that MACROS could be subject to another round of scrutiny and possible budget cuts. The development of MACROS was and is an unfolding situation that continues, with uncertainties and new opportunities still emerging. Throughout this development, the project leader and the team need to be aware that in spite of early progress, continued progress could be tempered by the interrelated and resilient barriers, such as those embedded in the organizational structure and culture. Moreover, they will need to contend with emerging difficulties, such as the political fluctuation, shifting resources, budget cuts, and expectation upsurges. Weathering the storm of change remains a challenge and an opportunity for the MACROS project leader, upper management, and the entire organization.
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REFERENCES
Brown, J. S., & Duguid, P. (2001). Knowledge and organization: A social-practice perspective. Organization Science, 12(2), 198-213. Caffrey, L. (ed.). (1998). Information Sharing Between & Within Governments. Commonwealth Secretariat. ComputerWorks. (2002). InterTrac named best industry solution worldwide. Accessed February 23, 2003 from: http://www.computerworks.com/cwwebsite/itfilenys.nsf/ webgovframeset? Openframeset CTG. (2001). Using information for organizational change: The transition from regulation to service in the division of municipal affairs. Accessed February 23, 2003 from: http://www.ctg.albany.edu/guides/usinginfo/Cases/printable_ oscma_case.htm Dawes, S. S., Kelly, K. L., Andersen, D. F., Bloniarz, P. A., Cresswell, A. M., & Galvin, T. J. (1996). Making Smart IT Choices: A Handbook. Albany, NY: Center for Technology in Government. Dawes, S. S., & Pardo, T. A. (2003). Building collaborative digital government systems: Systemic constraints and effective practices. In W. J. McIver, & A. K. Elmagarmid (Eds.), Advances in Digital Government: Technology, Human Factors, and Policy. Boston: Kluwer Academic Publishers. Dawes, S. S., Pardo, T. A., Connelly, D. R., Green, D. F., & McInerney, C. R. (1997). Partners in State-Local Information Systems: Lessons from the Field. Albany, NY: Center for Technology in Government. Faerman, S. R., McCaffrey, D. P., & Van Slyke, D. M. (2001). Understanding interorganizational cooperation: Public-private collaboration in regulating financial market innovation. Organization Science, 12(3), 372-388. Fountain, J. E. (2001). Building the Virtual State: Information Technology and Institutional Change. Washington, DC: Brookings Institution Press. Kraatz, M. S. (1998). Learning by association? Interorganizational networks and adaptation to environmental change. Academy of Management Journal, 41(6), 621-643. Landsbergen, D., & Wolken, G. (2001). Realizing the promise: Government information systems and the fourth generation of information technology. Public Administration Review, 61(2), 206-220. Nonaka, I., Toyama, R., & Konno, N. (2001). Seci, Ba and Leadership: A Unified Model of Dynamic Knowledge Creation. In I. Nonaka, & D. J. Teece (Eds.), Managing Industrial Knowledge: Creation, Transfer, and Utilization (pp. 13-43). Sage Publications. NYSFIRM (2002). The Seventh Annual 2001-2002 Best Practices Award Winners: Technical Implementation. Accessed February 23, 2003 from: http:// www.nysfirm.org/nominations/practice_ti5.asp Senge, P. (2000). Classic work: The leader’s new work: Building learning organizations. In D. Morey, M. Maybury, & B. Thuraisingham (Eds.), Knowledge Management: Classics and Contemporary Works. Cambridge, MA: The MIT Press. Wenger, E. (1998). Communities of Practice: Learning, Meaning, and Identity. Cambridge University Press.
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ENDNOTES
1
2
3
4
5
H. Carl McCall was the elected Comptroller of the Office of the State Comptroller of New York State from 1994 through 2002. UIG was a three-year research project to answer questions about what information government managers need to do their job, the barriers to getting them the information, and the policy, strategy, data, technology, and people resources that government managers need to deliver that information. CTG is an applied research center devoted to improving government and public services through policy, management, and technology innovation. Located at the University at Albany, SUNY, CTG’s mission is to work “with government to develop information strategies that foster innovation and enhance the quality and coordination of public services through applied research and partnership projects on the policy, management, and technology issues surrounding information use in the public sector” (http://www.ctg.albany.edu). The New York State Forum for Information Resource Management is a network of public officials and state government organizations that supports the exchange of professional and managerial experiences, coordinates inter-governmental information management projects, and makes policy recommendations. The Lotus Beacon Award is awarded to IBM PartnerWorld Business Partners who provide quality products, innovative solutions, and superior services to customers using Lotus software technologies. ComputerWorks was selected for the “Best Industry Solution” award.
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Phone: (518) 555-1212
Title: Call Center Manager
Contact Person: Bonny Smith
Organization: NYS Dept. of Public Service Consumer Services Division
Contact
CMS- BEST PRACTICE RESEARCH RESULTS MAIL Tracking Systems --- State Agencies and Other Organizations October 1998 Central mail If yes, is it: Data base If yes, is it: Retention routing? to track Policy after mail? Completion? Opened & Unopened Your own Purchased Who has Yes Yes No sent? No access? Yes No System? & Sent? system? X X Division Oracle Staff Database (2) (1) 3-9 yrs. (3)
Time Frame
If yes,
(3) Use SARA guidelines for paper copies and depending on document type – retain 3-7 years. Oracle database files kept for 9 yrs.
(2) Division staff have levels of access
(1) Architecture for database done in-house – uses location codes for tracking.
Comments
436 Zhang, Pardo, & Sarkis
APPENDIX A
Benchmarking Form Used for Best Practices Research on Similar Technology (One Example)
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APPENDIX B Example of Existing Business Process for Letters Received from Comptroller’s Correspondence Office Comptroller’s Correspondence System sends letter to Municipal Affairs
Area Office Chief makes decision about what action needs to be taken.
Main Office Secretary receives letter and logs receipt
Central Office Associate Examiner and Secretary prepare response.
Assistant Deputy of Examinations reviews letter, refers to Associate Examiner
Assistant Deputy reviews.
Associate Examiner reviews and logs letter, refers to appropriate Area Office
Area Chief reviews.
Central Office Associate Examiner Reviews
Area Chief and/or Area Principal log receipt and review
Associate Examiner researches prior contact history in Central Office files. Area Office Secretary and Chief research prior contact history at Area Office.
Central Office Secretary makes final revisions to response letter, files and logs completion.
END
Business Process Performance Characteristics: (Values are all Estimated)
Total Transaction Time: 420 minutes Customer Turnaround Time: 2-3 weeks Total Transactions: 350/year
APPENDIX C Recommended Process for Incoming Mail, Written Correspondences and Faxes for Central Office (see Appendix III figure). Description of Process for Incoming Mail, Written Correspondences and Faxes for Central Office •
•
Box 1 – All incoming mail, written correspondence or faxes addressed to Central Office staff or Municipal Affairs are received at the Central Communication Unit. Personnel in the Central Correspondence Unit will perform an initial review and content analysis. Box 2 – Should item’s receipt be recorded? All items that are related to a Municipal Affairs business function, those which are non-routine and require a response, and items from the Comptrollers Correspondence System will be recorded. Items such as trade journals and magazines, promotional flyers, product advertisements, and items of a personal confidential nature will not be recorded. Staff performing this task in the Central Communication Unit will need to exercise and develop judgement over time when deciding which items meet the criteria for recording.
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438 Zhang, Pardo, & Sarkis
Appendix C 1
Comptroller’s Correspondence System sends letter to Municipal Affairs
2
8
Should Item’s receipt be recorded? YES
3
Central Communication Unit records receipt.
4
NO
Does the item relate to a routine business function? YES
5
Central Communication Unit closes out item and forwards item to appropriate functional
9
Central Communication Unit flags items as actionable, records as such and refers appropriate MA staff member
11
Can Staff Member handle at this time?
NO
13 Does this issue need additional research or to be referred?
Perform additional research and formulate response
Research
YES
6 Does Item need Response?
NO
7
NO
Central Communication Unit closes out item and forwards correspondence to named staff member.
Refer
YES
12
10 Central Communication Unit closes out item and forwards correspondence to named staff member.
Staff member forwards item to appropriate party and records referral to close out item
14 Perform additional research and formulate response
END
• •
• •
•
•
Box 3 – If the response to the question in Box 2 is “yes” the Central Communication Unit records receipt of item. Box 4 – Does the item relate to a routine business function? Items that reach this point will already have their initial receipt recorded. This question is meant to separate items such as AFRs, MA144s, Tax Limit Forms, exclusion applications, etc. from special request type items, items requiring official response, or items received. Box 5 – If the item relates to a routine business function, the Central Communication Unit records the item as closed and forwards the item to the appropriate functional unit. Box 6 – If the item was recorded initially and was deemed not to support a routine business function, the next question to ask is whether the item in question is actionable. Examples of these types of items are data requests from customers, requests from service provision, or items received from the Comptroller’s Correspondence Control System. Box 7 – If the item referenced in Box 6 is deemed by the Central Communication Unit not to be actionable, the Central Communication Unit records this and the item is forwarded to a named staff member. An example of this type of item would be an item received from the Comptroller’s Correspondence Control System, which is informational but does not require a response from Municipal Affairs. This is the end of this transaction stream. Box 8 – If correspondence referenced in Box 6 is deemed actionable by the Central Communication Unit, it is flagged as such and then referred to the appropriate Municipal Affairs staff member or functional unit. Examples of these types of items
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• • • • • •
would be a response to a taxpayer’s or Local Official’s request or an item received from the Comptroller’s Correspondence Control System which does require a response. Box 9 – Can staff member who correspondence is referred to handle the request? This is a decision point to determine whether further routing or more research is needed on the request. Box 10 – If ‘yes’ was answered to the question in Box 9, the responsible MA staff member provides then records the resolution. This is the end of this transaction stream. Box 11 – If the decision in Box 9 leads to a “no” answer, the next question that needs to be asked is whether the request needs to be referred or additional research performed. Box 12 – If the answer to the question in Box 11 is “refer,” correspondence is referred to appropriate party. Referral is recorded by responsible staff member. This is he end of this transaction stream. Box 13 – If the answer to the question in Box 11 is “additional research,” the responsible staff member performs the additional research to satisfy request. Box 14 – After the additional research is performed and the resolution to the request is determined, the responsible staff member records the resolution. This is the end of this transaction stream.
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Chapter XXV
Adoption & Implementation of IT in Developing Nations:
Experiences from Two Public Sector Enterprises in India Monideepa Tarafdar, University of Toledo, USA Sanjiv D. Vaidya, Indian Institute of Management, Calcutta, India
EXECUTIVE SUMMARY
This case describes challenges in the adoption and implementation of IT in two public sector enterprises in the postal and distribution businesses respectively, in India. In spite of similarities in the scale of operations and the general cultural contexts, the IT adoption processes and outcomes of the two organizations were significantly different. While one failed to implement IT in its crucial processes, the other responded effectively to changes in external conditions by developing and using IT applications for critical functions. The case illustrates how differences in organizational factors such as top management commitment, unions, middle management participation, capabilities of IS professionals and specific aspects of organization culture resulted in such differences. The case is interesting and significant because it is representative of experiences of many government-aided organizations in India, which have undertaken IT modernization as a response to external changes and government mandates. The findings can also be generalized across similar organizations in other developing countries. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND Introduction
The adoption of IT in large public sector organizations poses some interesting challenges and issues. These are related to specific characteristics of these organizations with regard to their entrenched processes, culture, the role of bureaucracy, performance measurement criteria and decision-making processes (see for example, Caudle et al., 1991). This case describes challenges in the adoption and implementation of IT in two public sector enterprises in India. The enterprises were in the postal and distribution businesses respectively. Public sector enterprises (PSEs), in the context of the Indian economy, are companies that are largely administered and supported by the government. They exist in different areas such as transportation, goods distribution, postal services, telecommunications, and other manufacturing and service sectors of the economy. There are different types of PSEs (Mathur et al., 1979). Some of them are statutory corporations established through legislative resolutions of the Parliament. The Parliament is the executive branch of the Government of India, similar to the House and the Senate in the United States. Many other PSEs are departmental agencies, functioning directly under a particular department of the government. Others are established as companies with limited liability under the Companies Act of India. A few PSEs, like those in the Railways sector, function exclusively under one ministry of the government. The government plays an important role at the strategic level, in activities such as policy making and financial outlay. At the operational level, PSEs run directly by government departments are staffed through a cadre of bureaucrats and administrators. In PSEs that are established through legislative acts, professional managers and technical specialists manage the operations. These bureaucrats, administrators, professional managers and technical specialists are responsible for achieving annual objectives in terms of activities accomplished and budgetary goals. Policy implementation with respect to modernization and IT adoption is the responsibility of organizational employees, who have autonomy over operational details of the implementation process, within a broad framework specified by the government. National Couriers Limited (NCL) was in the business of providing postal, courier and information transfer services to different parts of India. It functioned directly under a government department. The company also provided limited banking services such as money transfer, insurance and certificate of deposit services. It had about 90,000 employees working in offices in various states in the country. Eighty-five percent of the personnel of the company were unionized and were either unskilled or clerical level workers. The remaining were professionally trained administrators. National Traders Limited (NTL) was a distributor of agricultural products, particularly food grains, to different parts of the country. It was created by a Parliament resolution. It provided services such as procurement of these products from producers, their storage and management in warehouses, and distribution to non-producing consumers through retail outlets. During the 1970s and 1980s, the organization had played a key role in encouraging farmers to increase their production, by providing them with an assured market and stable purchase prices. Subsequently, the major function of the company had been to collect part of the surplus agricultural produce, and suitably Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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store and distribute it, so that it could be used during lean production seasons and in places where emergencies and natural calamities happened. The organization procured, distributed and transported about 22 million metric tons of produce, annually. Most of the purchasing centers were located in the northern part of the country. Consumers were located all across India and also in the islands off the southern part of the country. NTL had about 63,000 employees, 95% of whom were unionized.
Services & Processes: Brief Description
Both NCL and NTL were service organizations. The major processes of NCL were collection, sorting and delivery of articles. Articles were collected from more than half a million collection centers, sorted in 550 sorting offices and delivered through more than 100,000 delivery offices. Other processes included activities related to banking, money transfer and information transfer functions. Some financial details about the operations of the company are provided in Table 1. All these functions involved managing and processing significant amounts of information. In this context, the head of the operations of the Eastern Region observed: “The sheer volume of information and articles that is required to be handled is tremendous.” The major activities of NTL related to the distribution of agricultural produce. Relevant figures in this context are provided in Tables 2 and 3. There were four critical activities for NTL, as described next. Purchase of Agricultural Produce from Producers: This was done through a network of purchase centers all over the country. Storage of the Purchased Produce in Appropriate Places and Under Appropriate Environmental Conditions: NTL had a network of storage depots for this purpose. Interfacing and Maintaining Liaison with Administrative Authorities in Different States: This was required in order to plan for state-wise requirements of produce.
1. 2. 3.
Table 1: Background Information for National Courier’s Limited
Total Mail (no. of articles) Money Transfer (no. of transactions) Money Transfer i (Rs. mn) i
1992-93 million
1993-94 million
1994-95 million
1995-96 million
1996-97 million
1997-98 million
1998-99 million
1999-2000 million
13,400
13,051
13,607
13,957
15,096
15,750
16,790
17,430
105
99
102
106
111
111
120
122
29,124
31,825
33,555
37,872
41,018
44,654
47,450
48,790
45 INR (Indian Rupee) = 1 US dollar
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Table 2: Procurement of Food Grains from Different Parts of the Country PROCUREMENT OF FOOD GRAINS (in * 100,000 tons) WHEAT RICE (October – (April – September) March)
Year
1999-2000
120
185
2000-2001
150
220
2001-2002
200
2002-2003
185
2003-2004
150
215 160 170
*(As on 27.02.2004)
Table 3: Movement of Food Grains Moved in Different Parts of the Country
4.
Year
Movement of Food Grains (in Million Tons)
1996-97
25
1997-98
20
1998-99
22
1999-2000
20
2000-2001
15
2001-2002
19.5
2002-2003
26.8
2003-2004 (up to Nov'03)
15.3
Distribution planning and transportation of produce: This function involved the transfer of produce from purchase centers to storage warehouses and then to the numerous distribution centers. It required access to good transport infrastructure, and liaising with professional transport agencies.
The overall processes of both organizations were therefore similar, in that they involved the transfer of physical goods and the accompanying information to and from different parts of the country. They also involved interfacing with government authorities at the state and national levels.
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444 Tarafdar & Vaidya
Organization Structure & Characteristics
The bureaucracy in India is typically the administrative arm of the central government and is largely responsible for turning legislation into policies and policies into practice. Bureaucrats therefore have a wide range of functions in many sectors of the economy, including the government departments. Their responsibilities can be broadly visualized in terms of two types of functions. One, they are responsible for assisting in policy formulation in the different ministries and departments. They are also charged with the direct running of the day-today government functions like general administration, law enforcement, resources disbursement and tax collection. Two, they are also required to head government controlled PSEs in different industries such as utilities, postal services, nationalized banks, railways and public distribution systems for food grains. Both NCL and NTL, being public sector enterprises, were headed by a senior member of the administrative arm of the bureaucracy. They also had bureaucrats in different top management functions. The operations of NCL were divided into four regions. Each region was headed by a Regional Office, with the Regional Manager as the executive head of the region. The Regional Manager was a member of senior management who supervised a team of middle management. Each region was further divided into districts, with a District Office supervising the operations of each district. The head of each District Office was a member of middle management. Members of junior management worked in the Regional and District Offices. There were about 200 districts and each district supervised the operations of a given number of collection centers, sorting offices and delivery centers, which were staffed by unionized employees and clerks. At the apex, there was one head office, from where the top management and company policymakers operated. In a similar manner, NTL also carried out its operations through a network of administrative offices across the country. There was one central administrative office from where the top management functioned. The operations were divided into five zones and 17 regions. Each zone had a Zonal Administrative Office and each region had a Regional Administrative Office, supervised by a Zonal Manager and Regional Manager respectively. The regions were divided into a number of districts and each district was administered through a District Office, which managed the functions of a number of purchase centers and storage warehouses. There were 123 districts. There were 12,000 purchase centers and 1,700 depots and storage warehouses. Zonal Managers belonged to senior management cadre. Regional Managers and District Managers were middle managers. Junior managers also worked in all these offices. All employees in the management cadre were professional administrators. The company also had a number of clerical employees to carry out low-skilled functions in the different offices, purchase centers and warehouses. The scale and scope of the operations of the company were very large. One of the senior managers in the company observed: “The scale of operations is among the largest for any organization in the country. The amount of information required to be processed is tremendous.”
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Although the particulars of the organizational hierarchy such as specific office names and designations of managers were different, the broad organization structures of the two organizations were similar, as shown in Figure 1. There were five levels of hierarchy and the decision-making processes were largely centralized. The top management in the apex (central) office and senior management in the zonal and regional offices was responsible for overall policy setting and strategic planning. All new initiatives and programs were designed at the higher levels, and were subsequently communicated through orders and directives to the middle and lower levels. Implementation strategies were planned by the senior management in consultation with middle management and implemented by middle management. This kind of planning and implementation structure is often a feature of public sector enterprises. This is because public sector enterprises usually operate on a large scale and scope, and hence it is more efficient to decide on policy at the top and leave the implementation to the middle managers in the various regional offices. The role of middle managers in policy implementation is therefore crucial
Figure 1: Decision Hierarchy & Organization Structure at National Couriers Limited & National Traders Limited Level One: Top Management at the Apex – Both NCL and NTL Responsible for strategic planning and policy making, in consultation with senior management (Level Two)
Level Two: Senior Management Regional Managers - NCL Zonal Managers - NTL Responsible for aiding Top Management (Level One) in strategic planning and policy making Responsible for deciding on implementation strategies, in consultation with middle management (Level Three)
Level Three: Middle Management Regional Managers and District Managers - NCL District Managers - NTL Responsible for aiding Senior Management (Level Two) in planning implementation strategies Responsible for executing implementation strategies and directing Junior Management (Level Four) and unionized staff
Level Four: Junior Management Employees in the Zonal, Regional and District Offices - NCL Employees in the Regional and District Offices - NTL Responsible for carrying out instructions related to implementation as directed by Middle Management (Level Three)
Level Five: Unionized Staff Employees in the Zonal, Regional and District Offices, and in the collection, sorting and delivery centers - NCL Employees in the Regional and District Offices, and in the procurement centers and storage warehouses - NTL Responsible for carrying out instructions related to implementation as directed by Middle Management (Level Three)
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446 Tarafdar & Vaidya
(Caudle et al., 1991). In India, the accountability of the public sector to the people of India only further enhances the justification for rigid bureaucratic procedures. Such procedures lead to this rather strict division of labor between the senior management and the middle management. Traditionally, both organizations were similar in that they were large and centralized, and had historically functioned in stable economic and business environments. They had been largely supported by the government and had not seen any major changes in their business strategies or processes for the past 20 years. Between 1980 and 1987, the top management of both companies was indifferent towards the use of IT and there was no commitment on the part of the organizational leaders to deploy IT in any of the functions. Further, most employees did not have any knowledge or awareness about IT, and tended to associate technology with loss of jobs. This observation has also been recorded in other organizations in India during the 1970s and 1980s. During this time, the Indian economy was a closed one and most organizations did not have any exposure to the use of IT (Nidumolu et al., 1993; Tarafdar & Vaidya, 2002b; Wolcott & Goodman, 2003).
SETTING THE STAGE (1987-1991) External Conditions
The government financially aided NCL and, to a large extent, decided the rates for its services. NCL catered to both urban and rural segments of the population. During this time, the rural and semi urban segments accounted for over 70% of the customer base, and the company was a monopoly in this segment. Entry barriers were high because a vast distribution network was required to handle the volumes and reach in order to operate on a national scale. In the urban retail and corporate segments, the first major changes in the environment came in the late ’80s and early ’90s when a number of private companies were set up which provided faster deliveries, although at much higher prices. Hence there was some competition in this category. However, these new competitors were too small to pose any threat to NCL on a nationwide basis. Even then, NCL did have an internal drive towards business innovation. It introduced special premium “Speed” services in 1987, which were faster and more expensive than their regular services. Corporate customers were interested in efficient and reliable service and accounted for a majority of the high value transactions through the premium services. According to a senior manager in the eastern region: “The products and services prior to 1987 were standard. There were no innovations. However, after 1987, we could sense some of the then happening and some impending changes in the competitive environment. Hence, even though we were a monopoly in the rural retail segment, we introduced new services directed towards the urban corporate and retail segments.” NTL was financially aided by the government and many of the policies regarding purchase price, selling price, and distribution requirements were decided in consultation with the government and representatives of the producers. The company was required Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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to interact with a number of external agencies such as distribution and transport service providers in order to carry out its functions. All interactions with these external organizations were through established procedures. For example, producers were given a fixed price for their produce, and customers also paid a fixed price. Similarly, transporters were selected on the basis of tenders. There had been no significant change in most of these processes over the years. Therefore, the external environment had remained stable. In case of calamities such as floods and drought however, the company faced tremendous pressures because produce had to be rushed to specific places at all costs. The regional manager of one of the regions observed that: “Normally there are no pressures on us. We function in a regulated and financially supported environment. However in times of emergencies, we have to deliver at all costs.” Such instances however, were few and had occurred once in two or three years on an average. Moreover, in such times, NTL and other similar companies were given financial support from the government and also used their own slack resources. On the whole, NTL did not have any innate drive for business innovation. For example, it did not initiate efforts for introducing changes in its processes in a proactive manner. Its managers functioned within the parameters laid down by the government. The performance of the company was measured by the amount of produce purchased, the manner of quality control of stored produce and effectiveness of distribution. There was scope for performance slack because the company was financially supported by the government. In this context, one senior manager who had been with the company for 30 years observed: “Everyone follows standard procedures. There is no inherent drive to change and improve.”
Process Descriptions & Information Processing Requirements
The primary processes for NCL included the logistical activities of sorting and transferring articles. The company also carried out limited operations related to banking functions such as money transfers and money orders. Information processing had to be carried out quickly because article delivery times depended largely on the speed with which articles could be sorted and transported. Organizational processes were standardized through the use of standard operating procedures. Procedures were laid down for collection, sorting, delivery, after-sales activity like enquiry handling, refund, lost articles or other specific customer complaints. Tasks were structured and routine and, the context in which information had to be processed was clear. The presence of bureaucratic procedures, along with inherently simple tasks, did not leave much room for decision support requirements in the day-today operations. Decision making followed predictable patterns. There were well-defined rules for communicating information. All official communication was in written format. Information required for decision making was mostly available.
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448 Tarafdar & Vaidya
A senior executive explained the situation in this manner: “There are fixed procedures that we are trained to follow. All possible requirements can be anticipated because there is a limited set of options that customers can choose from.” Organizational processes for NTL included functions like packing, storing and handling of the produce. These were routine, standardized and well documented. There were written instructions and well-defined procedures for different activities. For instance, there were norms for storing bags in the warehouses, for deciding how many bags would be placed in a stack, how they would be stacked, how they would be issued for distribution and so on. There were specifications for the way in which warehouses were to be constructed. There were standards for preserving the produce in the warehouses according to the desired purity and quality levels. Information regarding relevant parameters such as humidity, temperature and cleanliness were clearly specified. All official communication was in standardized formats, formal and always recorded on paper. One of the middle managers in a regional office in the eastern region said: “All tasks are standardized and we have to follow standard operating procedures. There is no ambiguity.” As far as information processing was concerned, some aspects of the company’s operations required information to be processed within a given period of time. For instance, all the purchasing activities had to be completed within two to four months from the time that the produce was plucked and harvested. Transport and logistics operations involved coordination of activities across many geographical regions, and the produce had to be distributed to specific areas within a very short time, in case of disasters. The manager of one of the districts in the eastern region said: “There is a short span of two to three months within which we have to finish off all the purchase and storage activities. This is a time of great pressure for all of us.” Both organizations functioned in a stable environment and were financially supported by the government. This led to the possibility of having extensive bureaucratic procedures and well-defined processes. Thus, there was not much room for ambiguity and decision support. This is a common feature in public sector organizations, and has been found to influence the adoption of decision support aids in these organizations (Mohan et al., 1990). All policy decisions regarding the adoption of new innovations were taken by the top management team in consultation with representatives of the government and communicated clearly within the organization. However, there were some differences. NCL was widely regarded as one of the best public sector organizations in India, and within the broad framework of government-mandated policies, there was considerable scope for small-scale, local-level initiatives and innovations by its middle and junior managers. NTL, on the other hand, was more prone to functioning within the confines of government mandates, and there were not many opportunities for local innovation. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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IT Adoption During This Period
Basic computerization was first introduced in both these organizations in the midto late-1980s. This period was also marked by commencement of similar initiatives in other public sector enterprises in India (such as nationalized banks). These initiatives were largely driven by policies of the central government. To begin with, both NCL and NTL went in for applications like payroll and financial accounting at their respective central administration offices. These were later extended to their different regional offices. Overall, the IT infrastructure during this time was quite elementary and did not have any significant impact on their critical operations. Soon after, NCL took steps to introduce some additional IT applications as well. In 1989, money transfer pairing machines were first introduced in each zone. Hitherto, all the money transfer order slips originating in a particular region and bound for all other regions were collated separately and sent to each region. This was done by all the regions, so that a number of slips changed hands everyday between all the regions. With the introduction of the computerized pairing machines, instead of counting off individual slips for each region, each region’s outgoing sum was simply netted off against the incoming sum. This was a spreadsheet application in which the total amount of money ordered for each zone was collated on a spreadsheet and paired and matched for each zone. Also in 1989, counter operations for article booking were computerized in the largest office in the two largest cities. Stand-alone PCs were given to the counter clerks at these offices. This significantly reduced the waiting time for the customer and rationalized queues at the counters. Although these applications were introduced in a limited manner, it was an important step for NCL in that it had proactively implemented some IT beyond the overall parameters suggested by the government. Although the monetary investment in IT during this period was small, it nevertheless set the stage for the implementation of IT in more critical processes, in subsequent years. Further, it also served as a pilot project for demonstration and learning purposes.
Impending Changes in the External Environment
Government policies form an important aspect of the external environment for public sector organizations. Changes in these policies have often been the cause of IT deployment in organizations in developing nations in general (Albadvi, 2002; Li et al., 2002; Molla & Licker, 2002) and in India in particular (Tarafdar & Vaidya, 2002a). In 1991, the Government of India took a policy decision to liberalize the Indian economy. This decision resulted in an increase in external pressures for public sector undertakings in many industries including telecommunications, steel, banking and transportation, among others. The resulting changes in the business and economic environment had implications for adoption of IT in both NCL and NTL. There were also overall pressures for process re-engineering, modernization and human resource development.
CASE DESCRIPTION (1992-2000) Changes in the External Environment
Economic liberalization in the early 1990s resulted in changes in the external and competitive environment for both organizations. Liberalization provided enormous Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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opportunities for firms from developed economies to set up manufacturing, service or distributing units in India. This resulted in the entry of many of these companies in a number of Indian industries including banking, financial institutions and the manufacturing sector (see for example, Cavusgil et al., 2002; Joshi & Joshi, 1998; Tarafdar & Vaidya, 2002, 2003). Many of these companies had advanced IT-enabled processes. This created pressures for improved performance of processes among Indian organizations. There were also pressures from different customer segments for more flexibility and better service. As far as NCL was concerned, private companies — from both India and outside — that provided courier and fax services entered the urban markets, and targeted the retail and corporate segments. There was also an increase in the volume of business related mail. Some customer segments like businesses, government organizations and institutional bodies required faster delivery, even if it was at a higher cost. Thus, increasing competition gave rise to a need to segment customers on the basis of specific needs and provide customized service options. Therefore, a Business Development Cell was set up in 1996 to design and develop a market for value-added premium products for specific customer segments. New services were introduced for corporate customers, and the accent was on speed and reliability rather than on cost. Utility payment and e-mail services were also introduced. That the organization perceived the pressures to be somewhat high can be gauged by the following statement, which appeared in the Annual Report of 1997-1998: “… will spend 65% of its plan budget on the induction of technology with a view to improving and upgrading the quality of service...developing and providing new value added services and products. NCL will continue to look at the technology options so that the postal products and services can be re-oriented to the needs of the customers.” The second change as a result of economic liberalization was related to the role of the government. As mentioned before, the government can, through its policies and regulations, influence the adoption of IT (Nidumolu & Goodman, 1996; Rainey et al., 1976). Toward the later part of the eighties, the government laid down certain policies and mandates for adoption of IT in all major public sector enterprises in India, across different industries. Public sector banks, manufacturing units and service organizations embarked upon IT modernization programs. These organizations typically generated and processed huge volumes of transaction data due to their large scope of operations. Consequently, the most pressing requirements were for transaction processing systems.
Initiating & Implementing IT Adoption: Two Contrasting Approaches
Both NCL and NTL initiated a program for organization-wide computerization in response to the government’s mandates. According to Caudle et al. (1991), there are four major concerns that are required to be addressed for adoption and implementation of IT in public sector organizations. The two organizations addressed these four factors in different ways. 1.
Goals of IT Adoption & Identification of Information Requirements: Market signals and profits guide companies in the private sector. In contrast, the public
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sector faces different goals, many of which are not necessarily related to financial performance. These could be related to efficiency and quality of customer service, scale of operations, the different kinds of customers served, social objectives and addressing political influences (Caudle et al., 1991). Thus, it is not always possible to directly link the adoption of IT with financial parameters, particularly for public sector enterprises. Hence, one of the ways to approach IT planning is to identify improvements that are required in concerned critical processes, and implement IT in the individual activities entailed in those processes. Identification of information requirements thus forms an important part of the planning for IT adoption and implementation in public sector organizations. National Couriers Limited Interviews with the head of the Eastern Region illustrated the process of identification of important information processing activities and requirements at NCL: “We had already implemented computerized transaction processing systems in the payroll and financial accounting functions, starting in 1988. After the government mandates in 1991, we identified three critical areas in order to focus our computerization efforts. The first was the handling of and sorting registered mail articles. This process was the key to speed, efficiency and customer satisfaction in our operations. The second was the transfer of information related to the status of mailed articles, money transfer and banking services. Information transfer processes formed our second largest area of operations after mail handling. The third focus for computerization was information exchange activities within our offices. These included sharing of files, data and other resources such as printers. Our computerization efforts during the period 1992-1999 were concentrated largely in these three areas.” Between 1992 and 1999, a number of new information technologies were introduced at NCL. In 1992, computerized mail handling and sorting was introduced in the two busiest centers in the country. This reduced the time required for sorting and directing articles by half. Computerized systems for article booking, tracking and delivery systems for select cities were introduced in 1997-98 in select cities (refer to Figure 2). This sped up the booking and delivery procedure, and enabled customers to keep track of their articles. A VSAT network consisting of 75 terminals was installed for this purpose. The articles would be booked with the help of a computerized system at the booking office, and the information would be transferred via a modem connection to the Central City sorting center, where the tracking system was installed. This center was connected through the VSAT network to other sorting centers. Customers could call up at the sorting center and find out the status of the booked articles. Computerized money transfer services were introduced in 1998. This was also done through the VSAT network. Individual offices were connected to the network through a leased line modem connection. This reduced the transit time of money orders from nearly a week to a few seconds. In 1997-1998, office operations were computerized and put on a WNT-based local area network. This enabled the sharing of files, data and other resources, and significantly enhanced the efficiency of office operations. The approach used by NCL has been referred to as the “functional approach” to IT planning (Nidumolu & Goodman, 1996). Organizations that follow this approach Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 2: Computerized Booking, Tracking & Delivery System at National Couriers Limited
Computerized booking counters (mail articles accepted)
Booking and Delivery Services
All arrows indicate electronic flow and processing of information without any manual re-entry of data
Delivery
Tracking and Tracing System
Central City Sorting Center
Outgoing Mail To destination
Incoming mail
believe adoption of IT is desirable because it can improve the timeliness of information flow and reduce process cycle times. NCL was able to respond effectively to the external conditions and government mandates through deployment of IT applications and infrastructure in many critical functions. The financial expenditure on IT between 1990 and 1999 was INR 1000 million1, which was 75% of the total expenditure on modernization during this period and about 2.75% of the organization’s revenues. This was relatively much higher than that during the previous 10 years. According to the head of operations of the eastern region: “For the first time, substantial budgets were being allocated annually, for the computerization process.” A senior manager in the eastern region further described the possible financial implications in the following way: “The areas that we targeted for IT adoption covered 65% to 70% of our operations. So we expected to see significant cost savings in around 70% of our functions.” National Traders Limited A member of the top management, who had been with the organization for more than 30 years, described the overall phenomenon of IT planning and adoption at NTL in the following manner:
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“We tried to follow the general instructions from the government, in identifying potential areas of IT adoption. The first step in this regard was the computerization of all high volume transaction processes. We decided to begin by computerizing the payroll and financial accounting processes.” In the mid-1990s a UNIX mainframe system was installed at the central office. This was used in batch processing applications for calculation of accounts, reporting of produce inventory and stock positions, and payroll accounting. In the late 1990s, the mainframe system was converted to a PC-based LAN. An ORACLE-based client server system was installed and the mainframe data were transferred to this. The administrative offices in the different regions carried out the same functions at the regional level using PC-based dBase applications. In 1998, NTL connected its central administrative office, five zonal offices and 17 regional offices through VSAT links. The district offices were connected to the respective regional offices through dial-up modem connections. At the time of the study, there were about 50 PCs at the central headquarters, four to five PCs in each zonal office, two in each regional office and one in each district office. The depots communicated with the district offices through postal mail and the districts communicated with the regional offices through modems. Forty percent of the data transferred between depots and district, regional and zonal offices related to the inventory and stock position. Forty percent related to financial information and 20% to payroll data. Stock and inventory data were sent in by the depots and district offices to the regional and zonal offices manually, or through leased line modem connections. The regional and zonal offices consolidated the data and then transferred them to the central administrative office through VSAT as well as on paper. Data from all the regional and zonal offices were again consolidated at the central office. Reports about stock positions and requirements were generated for senior managers at both the head office and the regions. The transfer of stock-related information took place on a weekly basis from the depots to the zones and subsequently to the headquarters. A central server housed the consolidated data from all the regions. All the communication links were backed up by traditional mail and fax systems. The IT infrastructure is shown in Figure 3. The investment in IT acquisition, maintenance and training during the period between 1992 and 1999 was INR 35 million, which was less than 5% of the total capital expenditure during this period. 2.
Management of Bureaucracy and Paperwork: The public sector produces a lot of paperwork that results in a proliferation of forms and paper (Caudle et al., 1991). All these records need to be computerized in an integrated manner during the process of computerization, in order to make electronic transfer of information possible between offices and minimize manual re entry of data. Hence it has been suggested (Mohan et al., 1990) that a central governing structure be set up. This structure should oversee the integration of IT management with records management and other information resource management areas.
For NCL, the different systems were designed such that seamless integration and flow of information between different functions was possible, in a limited manner, as Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 3: Information Technology Infrastructure National Traders Limited
Manual
Manual/ Modem
Warehouses (Depot)
District Office
#1700
#172
Regional Office (# 19) 2 stand-alone PCs.
Manual/ VSAT
Information re-entered manually prior to consolidation
Manual / VSAT
Zonal Office (# 5) 5 PCs-LAN Information re-entered manually prior to consolidation
Manual / VSAT
Central administrative office Unix mainframe ORACLE system Information partly re-entered manually prior to consolidation
shown in Figure 2. For instance, in the computerized booking and tracking system, article information generated at the time of booking was transferred using electronic means through intermediate stages, all the way to the central sorting centers. Similarly, office information related to administrative activities was shared electronically within each office. These capabilities were also planned to be extended to cover electronic transfer among different offices. For NTL, information transferred from the depots and district offices was manually reentered at the regional offices prior to consolidation and transferred to the Head Office, as shown in Figure 3. At the Head Office also, information was partly reentered manually before the generation of management reports. 3.
Role of Top Management: The top management plays a key role in deciding the thrust and direction of IT adoption in public sector organizations (Nidumolu & Goodman, 1996). This is because the planning and decision structure with respect to implementation of changes is usually centralized.
National Couriers Limited At NCL, there was a change in the top management in 1991 as a new CEO joined the organization. The new top management team was favorably disposed towards IT adoption and took many proactive initiatives in this regard. NCL was a member of the Universal Postal Union, and hence information about the latest IT applications in similar organizations around the world was available to the top executives. It was the thinking, planning and drive of top management that led to the introduction of the early IT initiatives. A middle manager in the eastern region office described the new priorities of the top management in this manner:
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“After 1991, a number of new thrusts towards IT adoption have been generated at the central office. Our new CEO is enthusiastic about the introduction of IT, and is aware of the possible areas of application. Seminars are often organized to educate and inform us about the use of IT in postal services worldwide.” All decisions regarding IT planning and deployment were centralized. However, the implementation of IT initiatives was decentralized. According to a member of the top management at the central office: “We tell the regions what the overall plans are, regarding the purchasing of hardware, installation of software and the applications required to be used. Broad decisions regarding all IT applications, hardware and software are taken at the headquarters in consultation with the regions and communicated to the zones and regions. The zones and regions have the power to make their own implementation decisions and purchases within given financial limits.” National Traders Limited At NTL, the top management was not, in principle, unfavorably oriented towards IT. They did realize the benefits that could accrue from the use of IT, in view of the size of the company and its scale of operations. However, they were not proactive about identifying areas where the company could benefit from IT. The senior managers and policy makers were typically professional administrators and bureaucrats, and the average age was more than 50 years. They did not have any knowledge of emerging IT applications and their use by similar companies around the world. Nor were they comfortable with the use of computers. They were content to depend on the government for direction and instructions on IT adoption. One of the middle managers who had worked in the organization for the last 15 years said: “ …If the government had not made certain suggestions, computerization might have come to NTL even later than the late 1980s.” Interviews with some of the senior managers revealed attitudes that varied from measured tolerance for IT, “It seems to be useful, but it is not indispensable,” to downright rejection, “Computers are just expensive typewriters.” 4.
Role of Middle Management in Driving IT Implementation: There is evidence that middle managers play a very critical role in driving IT implementation and use in public sector organizations (Caudle et al., 1991). This is because these organizations are usually large, with multiple levels of decision hierarchy (Figure 1), and it is not possible for top management to oversee the details of the implementation processes. Further, middle managers have considerable bureaucratic power in the individual departments and units. Hence, while the top management is responsible for policy setting and strategic planning with respect to IT adoption, it is the middle managers who play the most crucial role in driving the implementation processes within different organizational units.
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National Couriers Limited The middle management influenced IT adoption at NCL in two ways. First, they were actively involved in framing the specifics of IT adoption policies and driving implementation initiatives within their units. They used their collective organizational power to frame implementation schedules and timelines. They also developed programs for end-user training and education. This was a crucial aspect of the implementation process, given the large number of unskilled and unionized employees in the organization, who viewed IT as a potential threat to their jobs. In this context, one of the middle managers observed: “We encouraged the clerical and low skilled employees to get familiar with the PC, and start out by just playing games. We hoped that once they became comfortable with the use of PCs, they would be able to appreciate the benefits of computerization. We also conducted education programs regarding the use of IT in organizations. Further we took steps to assure them that their jobs were safe. Throughout the entire computerization process, there was not a single day in which there was a loss of working hours because of union problems.” In this connection, studies in the domain of IT adoption suggest that IT acceptance and innovation at the grassroots levels in different end-user units are crucial to the adoption of IT by an organization (Agarwal & Prasad, 1998; Nambisan, 1999; Rockart, 1988; Vaidya, 1991). In many developing countries, IT is seen to be the cause of reduction in opportunities for employment, and there is a hostile attitude to IT adoption and acceptance, not only at the level of semi-skilled and unskilled employees, but also by middle management. This has been a crucial factor in the introduction and management of IT in developing countries (Jantavongso & Li, 2002; Tarafdar & Vaidya, 2003). The middle management also played an effective role as IS professionals. While the overall head of the IS function was a member of the senior management, IS activities in each regional and district office were supervised by middle management. These managers were also responsible for IT implementation in the delivery and sorting centers. In other words, middle managers were the IS heads in their respective functional departments. They supervised teams of junior managers who were responsible for installing and maintaining the hardware and software. These junior and middle management members had received technical training and were hence capable of managing the technical aspects of project implementation and systems maintenance. This kind of an “indigenous” implementation strategy is often followed in public sectors. This is because in such organizations there are constraints on hiring and firing employees. Hence existing employees are retrained and reallocated to the newer functions (Nidumolu & Goodman, 1996). Thus there was no separate IS department in NCL. Members of middle and junior management were responsible for IT implementation. The middle management IS professionals also played an important part as IT champions. The role of IT champions in driving IT adoption has been well documented (Beath, 1991). The middle managers in NCL were credible and commanded authority by virtue of their positions. They had a good working relationship with the top management as well as the unskilled and clerical workers in the company. They were powerful enough to influence decisions at the higher levels, and saw to it that the resources required were made available. Initially there was considerable resistance — especially from the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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unionized staff — but this was neutralized through the efforts of middle and junior managers. In fact, in many instances, some of the unionized staff subsequently became advocates of the IT-related changes, after having gone through the training processes. They became IT champions themselves and saw to it that strong resistance groups were convinced and neutralized. Various studies have explored the role of IS professionals in influencing the adoption of IT. IS professionals have a positive impact on IT adoption in the organization when they are technically aware of the possibilities from IT, are competent at developing new IS and maintaining existing IS, and are capable of promptly solving end-user needs (Al-Khaldi et al., 1999; Dvorak et al., 1994; Swanson, 1994). At NCL, the IS professionals influenced IT implementation through their traditional organizational power as middle managers. They were able to effectively carry out project management and end-user training; they were also able to ensure that resources were available. This case therefore illustrates a new dimension of the role of IS professionals in driving IT adoption and considerably enhances similar preliminary findings by Caudle et al. (1991). National Traders Limited The Central IS department at NTL was headed by a senior manager who reported to the head of the finance function. He was somewhat aware of the possibilities of IT and had some limited ideas of its usefulness for the company. He supervised a team of 60 Central IS employees. Out of these 60 people, 10 had a diploma or some other professional training in different aspects of software development, and could develop applications on dBase, MS Access and ORACLE. About 30 people were data entry operators, whose tasks were to key in and consolidate the data from the zonal, regional and district offices. All these employees had received the requisite training and looked after various functions in the IS department. They worked in the central administrative headquarters, and were responsible for centralized consolidation and collation of data from the regions. They also designed and implemented training programs for data entry staff in the different regions. They looked after incremental modifications to the existing applications. Further, they managed third-party vendors who carried out maintenance of existing hardware and the development of new applications. The IS departments in the zones and regions comprised junior-level employees who had been transferred from other departments after training. They had no formal education in computer hardware or software. They were responsible for entering and consolidating the data received from the districts and depots, and generating relevant reports for senior managers at the zonal offices. At the time of the study, about 200 such employees, mostly staff and junior managers, had been trained in various applications, and had later been shifted to dedicated IS functions. They themselves were reluctant to use computers. Third-party vendors carried out the maintenance work. The IS manager was not powerful and senior enough to convince top management to make resources available for any IT initiative other than the most basic applications. He had no significant power to independently make important decisions relating to IT deployment. Moreover the IS professionals at the central office did not have any control over whether or not the regional heads would actually implement specific IT applications. The IS department had not met with much success in this regard and there had been stiff
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resistance in many cases. This greatly hindered the penetration of IT because regional heads had independent authority over IT implementation initiatives in their areas. The chief of the central IS function said: “The implementation and use of computers in the offices is completely decentralized. We cannot force anyone to start using computers. Ultimately the extent of IT use depends on the policies of the respective regions and zones.” There were more than 60,000 employees in the company, 85% of whom performed low skilled and clerical jobs. Similar to the situation at NCL initially, employees were not favorably biased towards IT, because they feared that they would lose their jobs. Hence they tried various ways to express their opinions in this regard. For example, very often, when reports were not made available on time to senior managers, subordinate junior employees would excuse themselves by saying that the computers were not working or the relevant officer in charge of taking the print-outs was not available. They would even suggest that such problems did not exist before computers were introduced. The reluctance of employees to use computers is exemplified by the fact that those who used them had to be given monetary incentives. Further, most of the middle mangers and even some of the senior managers in the regions were against the deployment of IT. There was limited penetration of IT into the user departments. Senior managers did not directly use computers. They would ask data entry operators to enter data and furnish printouts. The similarities and differences between the two organizations have been described in Table 4.
CURRENT CHALLENGES & PROBLEMS (2000 & BEYOND)
In spite of similarities in their overall nature and scale of operations and historical and cultural contexts, the IT adoption processes and outcomes in the two companies were considerably different. While NTL failed to implement IT in its crucial processes, NCL was able to respond effectively to the external conditions and government mandates through organization-wide deployment of IT applications and infrastructure in many critical functions. National Couriers Limited The computerization process at NCL took place in two distinct phases. In the first phase, from 1987 to 1991, computerization was limited and driven by the requirements of high-volume transaction processing. During this period, the company used IT for very basic and rudimentary transaction processing operations. It was in the Support Mode (McFarlan et al., 1983) or Delayed Sector (Earl, 1989). These two modes are the first stages of IT adoption in organizations where IT is not fundamentally essential for the smooth running of operations of the company. It is used to accomplish nonessential and noncritical tasks, and the IS department functions as a back-room support department, with no participation in functions like strategic planning and implementation.
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Table 4: Similarities & Differences Between NTL & NCL National Couriers Limited
National Traders Limited
Similarities Size
90,000
63,000
Overall Organization Structure
Multiple levels of hierarchy, centralized planning
Multiple levels of hierarchy, centralized planning
Having functioned in stable business and economic environments.
Having functioned in stable business and economic environments.
Historically supported by the government.
Historically supported by the government.
Working under overall policy directives of the government.
Working under overall policy directives of the government.
Subject to the IT adoption and modernization plans of the government.
Subject to the IT adoption and modernization plans of the government.
Staffed by bureaucrats. Professional managers and technical specialists who were responsible for tactical and operational tasks.
Staffed by bureaucrats. Professional managers and technical specialists who were responsible for tactical and operational tasks.
Postal Sector
Distribution Sector
Public Sector Enterprises and the accompanying characteristics
Service Organizations
The second phase of computerization between 1992 and 2000 saw an acceleration of the computerization process. The acceleration was partly in response to government mandates and partly as a result of the enthusiasm of the new leadership about IT. During this period, NCL went through the Turnaround Stage (McFarlan et al., 1983). IT became increasingly crucial to the future development of the organization. There was a change in focus, as far as IT planning and implementation were concerned. New applications were developed and there was an increase in IT investment. At the time this study was conducted, different applications had been introduced in a limited number of offices, and covered about 40% of the operations of the company. The Annual Report of 1994-95 described the induction of computerization in this manner: “... NCL has made a gradual and phased attempt to introduce information technology into the postal system, so as to provide better services to its customers ...” The most important impact of IT had been to increase operational efficiencies, and IT was accorded a high priority by the top management. Hence the organization was well positioned to move to the next level of IT use, that is, the Factory Mode (McFarlan et al., 1983) or the Dependent Sector (Earl, 1989). This would include the extension of current applications to more offices and the development of more sophisticated applications. The challenge before NCL was therefore to transform from a Turnaround organization into a Factory organization. One of the most important aspects of the Factory Mode is to ensure that IT is delivered efficiently and reliably. This implies that resource Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 4: Similarities & Differences Between NTL & NCL (cont.) National Couriers Limited
National Traders Limited
Differences
Goals of IT adoption
Based on systematic identification of critical processes (Article handling and sorting, Information management of mailed articles, Information exchange within offices) and their computerization. IT investment between 1990 and 1999 was INR 900 million, which was 70% of the total expenditure on modernization.
Followed general instructions from the government and did not attempt to identify critical processes. Computerization aimed at basic transaction processing, and not at critical processes. IT investment between 1992 and 1999 was INR 35 million, which was less 5% of the total expenditure on modernization
Management of paperwork
Different systems were designed so as to try to enable seamless integration and information transfer through electronic means. This was a consequence of an integrated approach to records management
In absence of an integrated approach to records management, information transferred from the depots to the district offices was reentered manually before the generation of management reports.
Role of Top management
Favorably disposed towards IT adoption. Kept abreast of the latest IT developments in similar organizations in other countries. Resources were allocated to new IT thrusts.
Not, in principle, favorably oriented towards IT. Not proactive about identifying areas that could potentially benefit from IT, beyond the obvious high transaction areas. Not comfortable with the use of computers and depended on the government for instruction and directions on IT adoption.
Role of middle management and the IS department
Actively involved in framing IT adoption policies and driving IT implementation efforts, schedules and timelines. Supervised IS activities in the regions and districts, and took on the role of IS professionals. Acted as IT champions, generated grassroots awareness and interest, and developed management and union buy-in for IT adoption efforts.
Basic computerization in conjunction with computerization in other public sector enterprises in India Use of IT in transaction processing for payroll and accounting. Extent of IT adoption
Proactive IT adoption beyond the overall parameters suggested by the government such as pairing machines and computerization of counter operations. Introduction of IT in key processes: Computerized mail handling and sorting, article tracking, money transfer. LAN’s within offices and a VSAT network connecting different offices.
IS department was headed by a senior manager who reported to the head of the finance function. Junior level employees were responsible for data entry, data consolidation and report generation. The IS head did not have any control over the implementation issues and schedules in the regional offices. Middle management was reluctant to use computers and depended on junior management to provide reports. They did not participate in or influence the IT adoption process in any way.
Basic computerization in conjunction with computerization in other public sector enterprises in India. Use of IT in batch processing transactions and for reporting- for payroll, accounting and stock calculations. Information transfer between offices manually or through modems. In many cases information from one MIS report was reentered manually at the next organizational level, because of incompatibility of technology and/or formats.
requirements and budgets be correctly estimated (Earl, 1989). In this context, Mohan et al. (1990) suggest that since public sector organizations operate under fixed and often tight budgets, an inability to logically derive and clearly communicate IS budget requirements is a primary reason for these organizations not allocating adequate resources for IT adoption. A similar problem existed at NCL also, in that there were no Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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budget-driven planning processes that could broaden the scope of the existing IT applications. National Traders Limited NTL was an interesting organization to study because it was large and there was significant potential for the use of IT. However, the organization did not use IT for any but the most basic functions. This was because there was a strong overall negative inclination towards IT adoption and use among the middle and junior management. For instance, none of the departmental heads at the head office or in the regional and zonal offices used computers for the latest available inventory positions. They would ask their secretaries for the relevant paper files or would simply ask their immediate subordinates over the phone. One senior manager observed: “Anyway, I have to ask for most of the information over the phone or through fax. So what is the use of the computer in tracking the movement of the stock?” Lack of enthusiasm among managers in public sector enterprises for using IS has been documented by Mohan et al. (1990). The primary reasons for this are a low comfort level with the use of computers and a lack of awareness of applications relevant to the organization. Nidumolu and Goodman (1996) suggest that perceptions towards IT can change from unfavorable to favorable, as more projects are undertaken and more functions are computerized. At the time this study was conducted, IT was used for routine administrative tasks, and not for any critical activities like logistics and distribution planning. Hence IT was not crucial to the achievement of the strategic objectives of the firm. Moreover, all electronic information was also stored in paper format. Transfer of information was both electronic and paper based. The challenge for NTL therefore was to move from the Support Mode to the Turnaround Mode (McFarlan et al., 1983), and increase the scope of existing IT applications. At the time of writing, they were pilot testing the use of a software for managing distribution and storage of food grains.
Change Management Issues
Change management has been suggested as an especially important issue in government organizations because of their entrenched processes (Caudle et al., 1991). In fact, the adoption of IT in the nationalized banks in India, which commenced in the mid1980s, had been fraught with issues regarding acceptance of process changes and the fear of job losses due to automation. Employee unions, perceiving that their concerns had not been adequately addressed, had offered considerable resistance and had significantly slowed the process of IT adoption in the banks (Joshi & Joshi, 2002). Hence it is anticipated that change management issues would be crucial to the continued infusion and diffusion of IT at NTL and NCL. The first aspect of change management had to do with overcoming resistance at different levels of the two organizations, especially at NTL. In a study of e-government initiatives in the Indian state of Kerala, Kumar (2003) reports that top management drive has been an important issue in driving IT adoption in various government departments Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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and has facilitated the acceptance of IT at lower organizational levels. In this regard NCL had so far been able to manage differences between the various units and had been able to convince unions and clerical staff about the benefits of IT adoption, largely through the efforts of its middle and top management. This process had been more difficult at NTL, given that the top and middle management themselves were not quite convinced about the usefulness of IT and that they had not proactively driven its adoption. As Joshi and Joshi (2002) have pointed out, it is relatively easier to work towards middle and lower management commitment after top management commitment has been secured. It has been observed that supervisors may often be reluctant to adopt IT in their departments because of possible reductions in head count, which might lead to a decrease in their span of control. This may partially explain the reluctance of middle and junior management cadres to adopt IT, especially in NTL. The middle mangers were afraid of losing headcount in their departments as a result of the junior management receiving training and getting relocated to IT-based functions. Similarly, junior management was apprehensive about the reduction in the number of unionized employees, the resultant loss in their own power and possible backlash from the labor unions. The second aspect of change management was that of managing the work environment during the change process. Studies by Amabile (1996) have suggested that the work environment often becomes negative in times of new technology implementation and significant business process changes. This is because the difficulties associated with adjusting to the changes often result in collective cynicism and confusion. Such conditions stifle creativity and motivation. This was observed in NTL, where the new IT was met with collective skepticism from all levels of the organization. Public sector organizations are characterized by complex performance measurement criteria. The lack of a clearly defined bottomline in most cases leads to a focus on inputs and budgets, rather than on outputs and productivity measures. Economic liberalization in India has resulted in an emphasis on service quality, process efficiency and overall modernization in both the public and private sectors (Wolcott & Goodman, 2003). The challenges before NCL and NTL would be to use IT for enhancing their service quality, for increasing the efficiency of their operations and to appropriately manage their IT adoption processes. In absence of such an effort, both organizations would be burdened with high-cost operations and increasingly dissatisfied customers.
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Agarwal, R., & Prasad, J. (1998). The antecedents and consequents of user perceptions in information technology adoption. Decision Support Systems, 22(1), 15-29. Al-Khaldi, M.A., & Wallace, R.S.O. (1999). The influence of attitudes on personal computer utilisation among knowledge workers: The case of Saudi Arabia. Information and Management, 36(4), 185-204. Amabile, T., Conti, R., Coon, H., Lazenby, J., & Herron, M. (1996). Assessing the work environment for creativity. Academy of Management Journal, 13(5), 1154-1184. Beath, C.M. (1991, Sept). Supporting the information technology champion. MIS Quarterly, 15(3), 155-371.
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Caulde, S.R., Gorr, W.L., & Newcomer, K.E. (1991). Key information systems management issues for the public sector. MIS Quarterly, 15(2), 171-188. Cavusgil, S.T., Ghauri, P.N., & Agarwal, M.R. (2002). Doing Business in Emerging Markets: Entry and Negotiation Strategies. CA: Sage Publications. Dvorak, R., Dean, D., & Singer, M. (1994). Accelerating IT innovation. The McKinsey Quarterly, 123-135. Earl, M.J. (1989). Management Strategies for Information Technology. London: Prentice Hall. Jantavongso, S., & Li, K.Y.R. (2002, May). E-business in Thailand: Social and cultural issues. In M. Khosrow-Pour (Ed.), Issues and Trends of IT Management in Contemporary Organizations. Proceedings of Information Resources Management Association Conference (pp. 443-446). Joshi, V.C., & Joshi, V.C. (2002). Managing Indian Banks (2nd ed.). CA: Sage Publications. Khera, S.S. (1979). Public sector management. In B.C. Mathur, K. Diesh, & C.C. Sekharan (Eds.), Management in Government. Publications Division, Ministry of Information and Broadcasting, Government of India. Kumar, A. (2003). E-government and efficiency, accountability and transparency: ASEAN executive seminar on e-government. International Journal of Information Systems in Developing Countries, 12(2), 1-15. Lachman, R. (1985, Sept). Public and private sector differences: CEOs’ perceptions of their role environments. Academy of Management Journal, 28(3), 671-679. Li, Q., Zhang, X., Sun, C., & Wang, S. (2002, May). Strategies of securities electronic commerce in China: Implications of comparative analyses between China and other countries. In M. Khosrow-Pour (Ed.), Issues and Trends of IT Management in Contemporary Organizations. Proceedings of the Information Resources Management Association Conference, (pp. 1080-1083). McFarlan, F.W., McKenney, J.L., & Pyburn, P. (1983). The information archipelago: Plotting a course. Harvard Business Review, 61(1), 145-156. Mohan, L., Holstein, W.K., & Adams, R.B. (1990). EIS: It can work in the public sector. MIS Quarterly, 14(4), 435-448. Molla, A., & Licker, P.S. (2002, May). PERM: A model of e-commerce adoption in developing countries. In M. Khosrow-Pour (Ed.), Issues and trends in IT Management in Contemporary Organizations. Proceedings of the Information Resources Management Association Conference, Seattle, WA (pp. 527-530). Moynihan, T. (1990). What chief executives and senior managers want from their IT departments. MIS Quarterly, 14(1), 15-25. Nambisan, S. (1999). Organisational mechanisms for enhancing user innovation in information technology. MIS Quarterly, 23(3), 365-395. Nidumolu, S.R., & Goodman, S.E. (1993). Computing in India: An Asian elephant learning to dance. Communications of the ACM, 36(4). Nidumolu., S.R., Goodman, S.E., Vogel, D.R., & Danowitz, A.K. (1996). Information technology for local administration support: The Governorates project in Egypt. MIS Quarterly, 20(2), 197-224. Rainey, H.G., Backoff, R., & Levine, C. (1976). Comparing public and private organizations. Public Administration Review, 36(2), 233-244. Rockart, J.F. (1988, Summer). The line takes the leadership: IS management in a wired society. Sloan Management Review, 29(4), 57-64. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Swanson, E.B. (1994). Information systems innovation in organizations. Management Science, 40(9), 1069-1091. Tarafdar, M., & Vaidya, S.D. (2002). Evolution of the use of IT for e-business at century financial services: An analysis of internal and external facilitators and inhibitors. Journal of IT Cases and Applications, 4(4), 49-76. Tarafdar, M., & Vaidya, S.D. (2003). Challenges in the adoption of information technology at Sunrise Industries: The case of an Indian firm. Annals of Cases in Information Technology, 6, 457-479. Vaidya, S.D. (1991, Dec 26-29). End user computing: An Indian perspective. Proceedings of the Indian Computing Congress (pp. 533-541). Wolcott, P., & Goodman, S. (2003). Global diffusion of the Internet in India: Is the elephant learning to dance? Communications of the Association for Information Systems, 11, 560-646.
ENDNOTE
1
45 INR (Indian Rupee) = 1 U.S. Dollar
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Chapter XXVI
IT-Business Strategic Alignment Maturity: A Case Study Deb Sledgianowski, Hofstra University, USA Jerry Luftman, Stevens Institute of Technology, USA
EXECUTIVE SUMMARY
Both information technology (IT) and business leaders are continually looking for management practices to help them align their IT and business strategies. Alignment seems to grow in importance as companies strive to link IT and business in light of dynamic business strategies and continuously evolving technologies. Importance aside, what is not clear is how to achieve and sustain harmony among business and IT, how to assess the maturity of alignment, and what the impact of misalignment might be on the firm. This case study describes the use of a management process and assessment tool that can help to promote long-term IT-business strategic alignment. The Strategic Alignment Maturity (SAM) assessment (Luftman, 2000) is used as a framework to demonstrate the evolution of an international specialty chemicals manufacturer’s ITbusiness alignment practices to enable the achievement of their corporate goals. Major insights from their experience and SAM best practices are highlighted. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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ORGANIZATIONAL BACKGROUND
The organization discussed in this case study is an international specialty chemicals developer and manufacturer. From here on, this organization is referred to as the ‘Company’. Except where noted, the content is adapted from documents and interviews internal to the organization. Specialty chemicals are chemicals that are added during the blending process of finished products which enhance the products’ performance, appearance, or some other quality. At the initial time of this case (May 2001), the global specialty chemicals market was valued at around $76 billion and consisted of approximately 40 market segments. The specialty chemical industry and the company have several notable external influences and competitive threats: • • •
a weak global economy resulting in decreased demand for specialty chemicals; highly volatile currency exchange rates have an adverse effect on profitability margins; and high growth market potential in Asia but increased competition from Asian suppliers.
The company’s customers range across many industries from automotive, electronics, plastics, coatings, petrochemicals, paper and mining, to textiles for fashions and the home, to wide-ranging products for hair and skin care. Specialty chemicals are frequently made-to-order for a customer’s specific manufacturing requirements and often are patented; this may result in increased switching costs to the customer due to limited substitution of alternative products. This usually necessitates a close relationship between the specialty chemicals provider and their customer. The company generated sales of around $5.4 billion in 2001 and employed over 20,000 people worldwide, with sales in 117 countries, 58 production sites in 29 countries, and research centers in 10 countries. The company’s merger and acquisition activity as well as their global expansion from their European headquarters into countries all over the world had resulted in multiple and duplicate IT infrastructures throughout the organization. At the end of the case time frame (July 2003), after the implementation of the “Aligning for One” business program, the company was well positioned to launch the next phase of their business strategy, the “Aligning for Growth” program. The effect of the “Aligning for One” program resulted in headcount reductions down to about 18,500 people worldwide (Figure 1), with sales in 120 countries, 60 production sites in 23 countries, and research centers in 11 countries. The company’s free cash flow increased by 50%, their cash and cash equivalents doubled, and their net debt was cut by more than half (Figure 2).
SETTING THE STAGE A New Business Strategy Program: Aligning for One
On the heals of the company’s collapsed merger plans and less than expected returns from a major acquisition of a chemical treatment business, Chairman of the Board Alvin Joseph (a pseudonym) took over as chief executive officer (CEO) in early 2001, with Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 1: The Company’s Headcount — Years 2000-2003 Headcount
Number of Employees Numbe r of Empl oyees
20500 20000 19500 19000 18500 18000 17500 2000
2001
2002
2003
Year
Figure 2: The Company’s Cash Development — Years 2000-2003 Cash Development 2500
Dollars in (Millions)
2000
Net Debt
1500
Cash and Cash Equivalents
1000
Free Cash Flow
500 0 2000
2001
2002
2003
Year
the company facing very competitive global market conditions and negative currency effects. Shortly thereafter, Joseph announced a new corporate vision, a new mission, and new business initiatives. He launched the company’s “Aligning for One” business strategy, steering the company strategically and structurally to its customers’ industries and the challenges ahead. With the new “Aligning for One” business strategy, Alvin Joseph reorganized the company from its divisional structure comprised of three divisions with nine business units, into a new structure of five business segments, without the division layer (Figure Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 3: Company’s Old and New Organizational Structures
Old Structure
CEO CFO
Home & Personal Care
Textile Chemicals
Paper Chemicals
Textile Colors
Colors for Inks, Paints Plastics
Water Treatment
Imaging & Coating Additives
Process & Lubricant Additives
Consumer Care
Colors
CEO
New Structure
Polymer Additives
Additives
CFO
Plastic Additives
Coating Effects
Water & Paper Treatment
Textile Effects
Home & Personal Care
3). Each business segment was given responsibility for its marketing, research and development, technology, production, and sales. Non-operational core support functions such as supply chain replenishment and distribution, finance, and human resources were grouped and provided through central support services on a global basis. An important aspect of the “Aligning for One” program was that best practices and systems would be taken from the previous organizational structure of nine decentralized business units and integrated into one set of best practices utilized by the entire company. Best practices are examples of the best way to perform a process or management practice which results in optimal performance using minimal resources. Identifying and implementing best practices should increase efficiency by streamlining and simplifying processes organization-wide. The “Aligning for One” program aimed to provide: 1. 2.
Increased speed of decision-making by eliminating the divisional structure. Centralized support services to allow the new business segments to focus on their respective markets and provide “one face to the customer”.
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After the new business strategy was accepted by the executive committee, each executive committee member called a meeting with his or her senior management team. Since the information technology functions ultimately reported to the CFO, David Bailey, he was responsible for centralizing the disparate IT functions and aligning them with the business. The new IT structure was announced at the CFO’s senior management meeting (Figure 4). With a goal of the restructuring to simplify processes and with the core IT infrastructure now centralized, it soon became apparent that the integration of disparate information systems, and its resulting reduction in expenses, was a key to achieving the business strategy. At the CFO’s senior management meeting, Jean Felder’s thoughts were in fast motion. As head of Global Supply Chain Services and a senior business manager, Jean knew that for the “Aligning for One” program to work, the company would need to leverage the capability of their information technology. She thought to herself, “we can change the structure all we want, but if we can’t properly leverage information technology to help coordinate and control the new streamlined structure, then our decisionmaking capability is not going to get any faster.” Meanwhile, Ramesh Chandra, Head of Corporate Information Technology (CIT) and a senior IT manager at the company, was thinking of how they could actually get the business to buy into all of the IT changes that would be necessary to implement “Aligning for One”. It was a big plus to the company that the changes were being endorsed by the CEO, but still, better communication and partnership between business and IT would be necessary to pull this off. Ramesh glanced over at Jean Felder. Their eyes locked in a look of acknowledgment; they both knew that the IT and business functions needed to work together to achieve joint goals, but now with the new changes, alignment would be key. Jean leaned over and whispered to Ramesh, “I could barely get the division’s IT staff to understand our business needs when we were decentralized with our own IT department, now with this new centralized support services structure, it’s going to be even more important to make sure our goals are aligned.” David Bailey overheard Felder and took this as a cue to tell them, “Jean, I am glad that you and Ramesh are brainstorming ideas because I was just about to tell you that Alvin Joseph asked me
Figure 4: IT and Supply Chain Services Reports to the CFO
CFO
Corporate Information Technology
Technical & Marketing Systems
ERP-Systems & e-Business
Global Supply Chain Services
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to put together a team to assess what needs to be done to implement the initiatives necessary for the “Aligning for One” program to succeed. I’ll be the sponsor for the IT and supply chain services initiatives for the program but we want you two to act as cochampions; we think you’re the ones who can best motivate the staff to implement the “Aligning for One” strategy.”
IT-Business Alignment Assessment Process Implementation of the company’s “Aligning for One” business strategy required alignment with their IT strategies. For an organization to successfully align its IT strategies with its business strategies, specific management practices and strategic IT choices should be considered that help facilitate integration. Luftman, Bullen, Liao, Nash, and Neumann (2004, pp. 89-90) discuss a six-step process (Figure 5) to assess strategic alignment. Jean and Ramesh decided to implement this IT-business alignment assessment process to understand the current IT-business alignment and to use this information as a roadmap to implement improvements. They used the SAM assessment questionnaire as a tool for their analysis. Details of the company’s assessment are described in the Case Description section. The company’s SAM assessment team used the results of the questionnaire to converge on an overall assessment level of the maturity for the firm. After the initial maturity level was established, the company used this as a baseline to determine best practices for facilitating alignment. They used the SAM assessment items that are identified as being more mature alignment management practices as a guideline Figure 5: Strategic Alignment as a Process 6.
5.
4.
3.
2.
1.
Sustain alignment
Choose and evaluate success criteria
Specify the actions (project management)
Analyze and prioritize gaps
Understand business-IT linkage
Set goals and establish the team
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to management practices they would like to implement. In addition, the SAM assessment team used their internally identified best practices as guidelines for their desired ITbusiness alignment maturity level. The discrepancies between the organization’s current management practices and the desired management practices were identified and then prioritized. Tasks were assigned by the team to the appropriate owners, with clearly defined deliverables and time frames for each of the prioritized discrepancies.
CASE DESCRIPTION The Company’s IT-Business Alignment Maturity
The SAM assessment undergone by the company consisted of a questionnaire comprised of 42 items measuring the degree to which specific management practices and strategic IT choices were demonstrated within the organization. The SAM framework classifies the assessment items into six criteria (Communications, Competency/Value Measurement, Governance, Partnership, Scope and Architecture, and Skills), each with five levels of alignment maturity ranging from a maturity of Level 1 (Initial/Ad hoc) to a maturity of Level 5 (Optimized) (Luftman et al., 2004, pp. 70-71): 1. 2. 3. 4. 5.
Initial/Ad Hoc Process is the lowest level of alignment whereby business and IT are not aligned and any practices in place to facilitate alignment are ad hoc in nature. Committed Process pertains to the existence of a commitment by the organization to promote IT-business alignment. Established/Focused Process refers to the existence of an established alignment process in place that is focused on business objectives. Improved/Managed Process refers to the existence of a strong alignment process that emphasizes the concept of IT as a creator of value for the firm. Optimized Process refers to a strategic alignment process that is fully integrated and co-adaptive between business and IT.
The SAM assessment instrument is based on best practices for IT-business strategic alignment derived from literature reviews of academic research, practitioner input, and evaluation of management practices and strategic choices employed by over 50 Global 2000 organizations. Information explaining the assessment items in more detail is provided in Luftman et al. (2004, pp. 73-77). The SAM assessment questionnaire was used by the SAM assessment team to assess the company’s strategic alignment maturity both before the “Aligning for One” initiatives were implemented, to provide a baseline measure, and afterwards, to provide a longitudinal perspective of their IT-business strategic alignment maturity evolution. The original assessment was conducted in May of 2001 with the SAM assessment team, consisting of seven senior IT and business executives, with Ramesh Chandra and Jean Felder as the team leaders. After best practices were determined and a gap analysis performed to determine differences between their AS-IS state where they presently stood and their TO-BE state of where they wanted to be, action plans were developed and implemented to execute the “Aligning for One” program. A follow-up assessment was conducted in January of 2003 to measure whether the SAM level was sustained. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The company’s maturity assessment results are listed in Table 1. Overall maturity (which is an average of the 42 individual assessment items) increased by one maturity level since the initial assessment. There were across-the-board maturity increases in all criteria, with the greatest increase in the scope/architecture and the skills criteria. The following section describes some of the key management practices and IT choices of the company that demonstrate their evolution from an overall alignment maturity of Level 2 to an overall of Level 3, helping facilitate the IT-business strategic alignment that was necessary to implement their “Aligning for One” initiatives. Included in the descriptions are “Major Insights” summarizing key aspects of what the company learned while improving their alignment maturity and “SAM Best Practices” which are management practices from the assessment instrument indicating higher levels of maturity.
Communications
The SAM assessment describes Communications as the sharing of information for mutual understanding between the IT and business functions, and the methods used to promote this. Communication has long been associated with IT-business alignment. Rockart, Earl, and Ross (1996) suggest that communication ensures that business and IT capabilities are integrated into the business effectively. Luftman, Papp, and Brier (1999) reported that IT understanding the business was considered by senior executives to be one of the top three enablers of alignment. Reich and Benbasat (2000) found that shared knowledge of IT and business and communication between IT and business managers positively influence alignment. The areas that comprise the Communications component are: 1. 2. 3. 4. 5.
mutual understanding of the IT and business environments; inter/intra-organizational learning; communication protocol rigidity; knowledge sharing; and liaison breadth/effectiveness.
Prior to the “Aligning for One” program, the company’s SAM assessment team determined their strategic alignment maturity for Communications was at a Level 2. The company’s IT-business communications were primarily at the divisional level. There was Table 1: Company’s Initial and Follow-Up Maturity Assessments
Communications Competency/Value Partnership Governance Scope & Architecture Skills Overall Maturity
Initial Assessment 2.5 2.3 2.7 2.1 3.0 1.9 Level 2
Follow-Up Assessment 3.1 2.5 3.1 2.8 3.8 2.7 Level 3
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a limited understanding of what IT can do for the business, resulting in information systems being underutilized. No formal knowledge sharing mechanisms existed. The follow-up assessment of the company’s strategic alignment maturity revealed an increase to a Level 3 for Communications. The organization demonstrated some strong improvements in their business communications process, which is now systemic throughout the organization, to increase communication and share knowledge. Since taking office as CEO, Joseph has advocated a culture change to value frequent and open communication. His recent worldwide tour of the organization’s facilities and his recurring intranet column “Ask Alvin” were well received by the organization’s employees. Additionally, regular “town hall” meetings conducted by regional leaders provide state-of-the-art business information, and question-and-answer opportunities. Face-toface informal communication with supervisors and department heads occurs regularly. Twice a year, performance reviews and regular staff meetings occur where both business and IT initiatives are discussed. Frequent e-mail communiqué are distributed to both business and IT employees, to update them on the objectives, status, and achievements of major IT projects and initiatives. The company’s intranet was recently redesigned to provide a global tool for intraorganizational communication and knowledge sharing. Informative memos, presentations, and documents are posted providing details of strategies and projects related to both IT and business. Corporate policy mandates periodic review of web page to ensure that displayed information is kept up-to-date and that the page owner is identified in case further inquiry is necessary.
Major insight Interorganizational communication is fostered by a culture that promotes regularly occurring communication as a fundamental task of every manager and employee. SAM best practice Communication between IT and business should be pervasive throughout the organization, informal, regularly occurring, and use rich methods such as email, videoconferencing, and face to face.
Competency/Value Measurement
The SAM assessment describes Competency/Value Measurement as the management practices and strategic IT choices an organization makes when determining the importance and contribution of IT to the firm. Measures of IT’s contribution to the business should go beyond traditional, one-dimensional technical considerations and include measures of cost efficiency, cost effectiveness, and human-related measures (Luftman, 2000; Van Der Zee & De Jong, 1999). Measures of business contribution should be multidimensional (Maltz, Shenhar, & Reilly, 2003) and IT and business measures should be integrated (Luftman et al., 2004, p. 382; Van Der Zee & De Jong, 1999). Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The areas that comprise the IT Competency/Value Measurement component are the: 1. 2. 3. 4. 5. 6.
focus of metrics and processes to measure IT's contribution; pervasiveness and orientation of integrated measures; pervasiveness of service level agreements; frequency and formality of benchmarking practices; frequency and formality of assessments/reviews; and pervasiveness of continuous improvement practices.
The company’s assessment for the Competency/Value Measurement criterion did not substantially change from a Level 2 after the “Aligning for One” program. The company has service level agreements (SLAs) between the IT function and business for both global and regional services. They apply a portfolio of services to indicate agreements with the business owners of the service. Supporting the SLAs are operational level agreements (OLAs), which are technical performance measurements. The service levels and operational levels are monitored and reported through a service level management process. Benchmarking has been used by organizations to compare management practices and objectives (Drew, 1997) and to identify best practices in order to replicate them (Daft, 1998, p. 542). The IT groups at the company are required to measure the performance of the service they provide against the expectations of their customers (customer satisfaction) and against similar services provided in other companies (internal and external benchmarking of selected services). Major insight Include business-related metrics, such as user satisfaction and IT’s responsiveness to the business, with technical SLAs, such as computer response time and minimum downtime, to help form more of a partnership between IT and the business. Additionally, measurements like contribution to profits, quality, and productivity improvements should be applied whenever possible. SAM best practice Have periodic formal assessments and reviews of SLAs with both IT and business representation to mandate continuous improvement of SLAs and the attainment of business objectives. Evaluation of IT investments, including formal and regular reviews, has been found to be positively related to IT-business alignment (Tallon, Kraemer, & Gurbaxani, 2000). The company utilized a SAM best practice of frequent and formal assessments by instituting a policy calling for post implementation audit procedures to be undertaken for each major IT project, to confirm that all key aspects of the project are in place and being used effectively (e.g., business processes, enhancements, common data, associated financial processes, and IT infrastructure and support). These assessments also ensure that the expected business benefits have been realized. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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SAM best practice Have frequent and formal assessments and reviews of IT investments with a formal process in place to make changes based on the results of the assessments. When possible, include business partners in the process. Share the knowledge gained across the organization.
Governance
Governance is the choice organizations make when allocating decision rights for IT activities such as selecting and prioritizing projects, assuming ownership of technology, and controlling budgets and IT investments (Henderson, Venkatraman, & Oldach, 1996; Luftman, 1996). The areas that comprise the Governance component are the: 1. 2. 3. 4. 5. 6. 7. 8.
pervasiveness of business strategic planning with IT involvement; pervasiveness of IT strategic planning with business involvement; structure of the IT organization; reporting level of the CIO; IT budgeting; IT investment management; frequency, formality, and effectiveness of steering committees; and integration of project prioritization.
Prior to the 2001 “Aligning for One” program, the company’s Governance was assessed at a low Level 2. Their IT organization utilized a decentralized structure at the business unit level. This meant the individual business units owned, funded, and determined the priorities of their IT departments. Each business unit and geographic region had its own supply chain system. Worldwide, there were 87 BPCS enterprise resource planning (ERP) systems and five SAP R/3 ERP systems. IT researchers (Brown & Magill, 1994; Sambamurty & Zmud, 1999) suggest that organizations comprised of multiple business segments should utilize a federated IT structure, whereby a corporate IT unit (or other central unit) has primary responsibility for architecture, common systems, and standards decisions, while each business segment unit has primary authority for application resource decisions. This structure leverages the advantages of economies of scale and IT standardization while providing responsiveness to the segment’s needs and priorities. Since the “Aligning for One” program, the company’s SAM assessment for Governance approached Level 3. The new information technology structure is centralized and IT was given an expanded role to provide 24x7 global support. An important change was centralizing supply chain systems including the reduction in number of systems to 33 worldwide provided by one ERP vendor. To oversee all significant decisions of the centralized IT structure, an IT steering committee was formed, led by the head of Corporate IT, reporting to the CFO, who acts
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as the committee sponsor. The committee is comprised of the heads of the global IT organizations (Figure 4).
SAM best practice Existence of an IT steering committee increases the alignment of IT and business strategies (Raghunathan & Raghunathan, 1989).
Partnership
Partnership refers to how each of the IT and business functions perceive the contribution of each other. It includes the trust that develops among the participants, and the sharing of risks and rewards. The areas that comprise the Partnership component are the: 1. 2. 3. 4. 5. 6.
business perception of IT value; role of IT in strategic business planning; integrated sharing of risks and rewards; formality and effectiveness of partnership programs; pervasiveness of trust and value; and reporting level of business sponsor/champion.
Giving IT the opportunity to have an equal role in defining business strategies is obviously important. However, how each organization perceives the contribution of the other, the trust that develops among the participants, ensuring appropriate business sponsors and champions of IT endeavors, and the sharing of risks and rewards are all major contributors to mature alignment. The IT-business partnership should evolve to a point where IT both enables and drives changes to both business processes and strategies. The company’s SAM assessment for Partnership, initially assessed at a high Level 2, improved slightly, to a low Level 3. At the operational level, they utilize champions to act as a link between their e-business platform, their local office, and their customers. The company’s e-champions are used to help their global organization to understand local e-business needs and to roll out global projects quickly. All countries and regions have an e-champion. The champions are responsible for collecting and communicating new customer requests, communicating e-business initiatives and enhancements, and coordinating training and education programs both internally and to external customers and business partners. Having executive level sponsors and champions for projects is important to strategic fit and understanding of the business aspects of a project (Koen, 2000). Major innovations benefit from executive champions who allocate resources and provide vision (Papadakis & Bourantas, 1998). Major insight Use global champions to both locally promote IT initiatives and act as global liaisons. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Some of the key IT initiatives that were launched to support the “Aligning for One” business initiatives and to realize the benefits of the restructuring into five business segments were (a) a global project introduced to streamline the supply chain systems and standardize processes and documents to show “one face to the customer”, (b) the global project implemented to provide straightforward access to key supply chain data through standard reporting, using a single global data warehouse, and (c) the global project implemented to provide a system for global replenishment and inventory planning. The fact that these three major information technology initiatives were implemented as a result of the “Aligning for One” business initiatives attests to the importance that the business places on the value of IT. Information technology is being used to enhance business processes, thus enabling the organization’s “one face to the customer” business strategy. Each of the three projects is sponsored by the CFO, a member of the business executive committee. Also, each project has a senior regional sponsor and champion from the business. Sharing of risks and rewards is equivalent among the business and IT function at the company in that all employees share in variable incentives consisting of an annual bonus when specific business targets are achieved. Johnston and Carrico (1988) found that organizations in which IT is integral to the company had compensation and reward systems that induced IT managers to take risks. Long-term partnerships are sustained when: (a) partners perceive mutual benefits, (b) partners share commitment to the partnership through common goals and incentive systems; and (c) partners exhibit trust and positive attitudes toward the potential contributions of the other (Henderson, 1990). SAM best practice IT should be a teammate with the business that co-adapts and improvises with their business partners in bringing value to the firm and meeting strategic objectives.
Scope & Architecture
SAM defines Scope and Architecture as the management decisions and strategic choices an organization makes when allocating resources toward its information technology infrastructure, including its reach and range. It includes the extent to which IT is able to assume a role supporting a flexible infrastructure that is transparent to all business partners and customers, evaluate and apply emerging technologies effectively, enable or drive business processes and strategies as a true standard, and provide solutions customizable to customer needs. The areas that comprise the Scope and Architecture component are the: 1. 2. 3. 4. 5.
technological and strategic sophistication of primary systems/applications; pervasiveness of integrated standards; pervasiveness of architectural integration; pervasiveness of infrastructure transparency and flexibility; and management of emerging technologies.
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Scope and Architecture has become one of the company’s most mature alignment facilitators since the “Aligning for One” initiative was launched. They have demonstrated a high level of strategic alignment maturity in their global integration initiatives of supply chain replenishment and inventory planning. Their implementation of an integrated IT infrastructure provides the pervasive transparency and flexibility necessary to enable this global integration. The use of global integrated standards for hardware and software solutions enabled standardized processes that facilitated the “one face to the customer” business strategy. IT standards facilitate connection among technology components and allow their integration, allowing easier integration and information access across business units (Weill & Broadbent, 1998, p. 58) and enable organizations to more easily share information with their business partners (Edwards, Peters, & Sharman, 2001). Major insight A single one-company solution with common processes, data and systems provides a common language to facilitate common understanding across countries, functions, and segments resulting in significant cost savings for both Customer Order Desks and IT. Additionally, the company has demonstrated more mature strategic alignment, as demonstrated by their use of emerging technologies and e-business models by participating in Elemica, the chemical industry neutral network marketplace that establishes system links between chemical companies and their trading partners to facilitate order processing and supply chain management of chemical transactions. According to Andrew Liveris, Business Group President of Performance Chemicals at The Dow Chemical Company (Liveris, 2002): Elemica is the first e-commerce company to commercialize what many consultants have called the “holy grail” of e-commerce: “ERP-to-ERP” connectivity. Using standards developed by the members, Elemica connects each member company’s enterprise planning system — whether SAP, Baan or other — to the hub to automate confidential transactions. Rather than 1-to-1 EDI connections, with Elemica you connect once and interact with many. (¶ 7)
SAM best practice Leverage IT assets on an enterprise-wide basis to extend the reach (the IT extrastructure) of the organization into supply chains of customers and suppliers.
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Skills
Skills refer to the management practices and strategic IT choices an organization makes concerning IT human resource considerations such as the cultural and social environment it cultivates. The areas that comprise the skills component of strategic alignment maturity are: 1. 2. 3. 4. 5. 6.
pervasiveness of an innovation culture; pervasiveness of integrated locus of power; formality of management style; pervasiveness of change readiness culture; pervasiveness of opportunity for skills enrichment through job transfer, crosstraining, and job rotation; and hiring and retention.
Prior to the “Aligning for One” program, the company’s SAM assessment team determined their strategic alignment maturity for the Skills criteria was at a high Level 1. As an inventor of specialty chemicals, innovation has long been part of their culture, but at the business unit level. A global management program, implemented as an extension of “Aligning for One”, has been launched to push out a process for innovation to all positions within the company. Each employee is required to participate in a workshop where everyone takes personal responsibility and ownership for growth. Goals of the workshops are to produce innovative growth projects in all areas, including both the information technology and the business functions of the organization, and to encourage continuous innovation awareness. This program represents a more mature ITbusiness alignment by encompassing an organization-wide scope. Skills development opportunities that were recently implemented that have contributed to their increased maturity in Skills include: • • • •
On-the-Job Training: a person works full-time in a position designed for development, for example, a project manager becomes a product manager to learn marketing and commerce. Rotation: a person takes a temporary assignment for three to six months in a new field, for example, a systems analyst goes into the field with a sales person. Job Enrichment: a person takes over the responsibility for a special project within a job, for example, a marketing manager develops a customer information system. International Assignment: selected candidates are placed in positions in other countries to gain broader international experience, perform a defined task, learn to make decisions in an international context, and enlarge their leadership experience.
IT research has found that professionals moving to non-IT business unit jobs may lead to increased knowledge of IT by the business (Reich & Kaarst-Brown, 1999). Job rotation enables employees to learn and perform the different tasks associated with multiple functions (Watad & DiSanzo, 1998). Fuchs, Mifflin, Miller, and Whitney (2000) suggest that collaboration between the business and IT functions is facilitated when employees develop relationships with their counterparts in other departments through job rotation. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Major insight Provide multiple methods for development of IT and business managers, including methods of on-the-job training, job rotation, job enrichment, and international assignment.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
Identifying and implementing best practices should increase efficiency by streamlining and simplifying processes organization-wide. The “Aligning for One” program aimed to provide: 1. 2.
increased speed of decision-making by eliminating the divisional structure; and centralized support services to allow the new business segments to focus on their respective markets and provide ‘one face to the customer’.
The company achieved decisive success with the “Aligning for One” business program, with substantial improvements in cash development and headcount reductions resulting from eliminating the divisional structure and centralizing support services. However, they cannot rest on their laurels. So, a new initiative has been launched for the years ahead to focus on profitable growth. The “Aligning for Growth” program is a logical continuation of the “Aligning for One” program with an aim to generate a culture of performance and successful implementation of new ideas that will generate profitable growth. A primary component of the “Aligning for Growth” program is the implementation of key projects identified by the executive committee to promote growth. These key growth projects include plans to leverage cross selling among the newly structured business segments and market expansion to geographic regions showing high growth potential, such as a new research facility in Guangzhou, China providing expeditious customer solutions directly to this market. Additionally, one of the key projects is to conduct workshops to engage all employees in developing and implementing growth projects. Some of the growth projects, suggested during the workshops, that are being considered for implementation by the Company include: 1. 2. 3.
development of an IT process education program to strengthen cross-departmental communication and training; worldwide implementation of a standardized client environment on all PCs and notebooks (the company needs to consider the pros and cons to a standardized client solution and possible alternatives); and development of a method to involve the company’s business partners in decisionmaking related to the management practices and strategic choices that facilitate ITbusiness alignment.
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The company’s executive committee is putting to task Jean Felder, Ramesh Chandra, and the rest of the SAM assessment team to help lead the way to aligning IT with the new “Aligning for Growth” business strategy and to consider the feasibility of the growth projects generated from the employee workshops. Moving forward, the SAM assessment team and the company should consider what is required to further improve ITbusiness alignment and what specific management practices and strategic IT choices the company can implement to further improve its IT-business alignment to ensure the success of the new “Aligning for Growth” program.
REFERENCES
Brown, C. V., & Magill, S. L. (1994). Alignment of the IS functions with the enterprise: Toward a model of antecedents. MIS Quarterly, 18(4), 371-403. Daft, R. L. (1998). Organization Theory and Design. Cincinnati, OH: South-Western College Publishing. Drew, S.A.W. (1997). From knowledge to action: The impact of benchmarking on organizational performance. Long Range Planning, 30(3), 427-441. Edwards, P., Peters, M., & Sharman, G. (2001). The effectiveness of information systems in supporting the extended supply chain. Journal of Business Logistics, 22(1), 127. Fuchs, P. H., Mifflin, K. E., Miller, D., & Whitney, J. O. (2000). Strategic integration: Competing in the age of capabilities. California Management Review, 42(3), 118148. Henderson, J. C. (1990). Plugging into strategic partnerships: The critical IS connection. Sloan Management Review, 31(3), 7-18. Henderson, J. C., Venkatraman, N., & Oldach, S. (1996). Aligning business and IT strategies. In J. Luftman (Ed.), Competing in the Information Age (pp. 21-42). New York: Oxford University Press. Johnston, H. R., & Carrico, S. R. (1988). Developing capabilities to use information strategically. MIS Quarterly, 12(1), 37-50. Koen, P. A. (2000). Developing corporate intrapreneurs. Engineering Management Journal, 12(2), 3-8. Liveris, A.N. (2002, April 9). The journey of Elemica: An E-commerce Consortium. Retrieved January 29, 2004: http://www.dow.com/dow_news/speeches/ 20020409_liveris.htm Luftman, J. N. (1996). Applying the strategic alignment model. In J. Luftman (Ed.), Competing in the Information Age (pp. 43-69). New York: Oxford University Press. Luftman, J. (1997). Align in the sand. Computerworld, February 17. Luftman, J. (2000). Addressing business-IT alignment maturity. Communications of the Association for Information Systems, 4(14), 1-50. Luftman, J. N., Bullen, C. V., Liao, D., Nash, E., & Neumann, C. (2004). Managing the Information Technology Resource. Upper Saddle River, NJ: Prentice-Hall. Luftman, J. N., Papp, R., & Brier, T. (1999). Enablers and inhibitors of business-IT alignment. Communications of the Association for Information Systems, 1(11), 1-33.
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Maltz, A. C., Shenhar, A. J., Reilly, R. R. (2003). Beyond the Balanced Scorecard: Refining the search for organizational success measures. Long Range Planning, 36, 187204. Papadakis, V., & Bourantas, D. (1998). The chief executive officer as corporate champion of technological innovation: An empirical investigation. Technology Analysis & Strategic Management, 10(1), 89-110. Raghunathan, B., & Raghunathan, T. S. (1989). Relationship of the rank of information systems executive to the organizational role and planning dimensions of information systems. Journal of Management Information Systems, 6(1), 111-126. Reich, B. H., & Benbasat, I. (2000). Factors that influence the social dimension of alignment between business and information technology objectives. MIS Quarterly, 24(1), 81-114. Reich, B. H., & Kaarst-Brown, M. (1999). Seeding the line: Understanding the transition from IT to non-IT careers. MIS Quarterly, 23(3), 337-364. Rockart, J. F., Earl, M. J., & Ross, J. W. (1996). Eight imperatives for the new IT organization. Sloan Management Review, Fall, 43-55. Sambamurthy, V., & Zmud, R. W. (1999). Arrangements for information technology governance: A theory of multiple contingencies. MIS Quarterly, 23(2), 261-290. Tallon. P. P., Kraemer, K. L., & Gurbaxani, V. (2000). Executives’ perceptions of the business value of information technology: A process-oriented approach. Journal of Management Information System, 16(4), 145-173. Van Der Zee, J. T. M., & De Jong, B. (1999). Alignment is not enough: Integrating business and information technology management with the Balanced Business Scorecard. Journal of Management Information Systems, 16(2), 137-156. Watad, M. M. & DiSanzo, F. J. (1998). Transforming IT/IS infrastructure and IS personnel issues. Business Process Management Journal, 4(4), 322-332. Weill, P., & Broadbent, M. (1998). Leveraging the New Infrastructure: How Market Leaders Capitalize on Information Technology. Boston: Harvard Business School.
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Experiences from Using the CORAS Methodology to Analyze a Web Application 483
Chapter XXVII
Experiences from Using the CORAS Methodology to Analyze a Web Application Folker den Braber, Norway Arne Bjørn Mildal, NetCom, Norway Jone Nes, NetCom, Norway Ketil Stølen, SINTEF, Norway Fredrik Vraalsen, SINTEF, Norway
EXECUTIVE SUMMARY
During a field trial performed at the Norwegian telecom company NetCom from May 2003 to July 2003, a methodology for model-based risk analysis was assessed. The chosen methodology was the CORAS methodology (CORAS, 2000), which has been developed in a European research project carried out by 11 European companies and research institutes partly funded by the European Union. The risk analysis and assessment were carried out by the Norwegian research institute SINTEF in cooperation with NetCom. NetCom (www.netcom.no) is one of the main mobile phone network providers in Norway. Their ‘MinSide’ application offers their customers access to their personal account information via the Internet, enabling them to view and change the properties of their mobile phone subscription. ‘MinSide’ deals with a lot of sensitive Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
484 den Braber, Mildal, Nes, Stølen, & Vraalsen
customer information that needs to be secure, while at the same time being easily available to the customer in order for the service to remain usable and competitive. The goal of the analysis was to identify risks in relation to the use of the ‘MinSide’ application and, where possible, suggest treatments for these risks. This was achieved through two model-driven brainstorming sessions based on system documentation in the form of UML sequence diagrams and data flow diagrams.
ORGANIZATIONAL BACKGROUND NetCom
NetCom is the second largest mobile phone network provider in Norway, providing solutions for mobile communication. NetCom is an innovative company that uses new technology and knowledge to meet its customers’ demands and aims to be a leading company in Norway within the market of mobile communication. A main goal for NetCom is that their products shall be competitive on price and quality, while at the same time remaining easy to use and understand for all its customers. With offices in Trondheim, Bergen, Stavanger, Kristiansand and Tønsberg, and its main office located in Oslo, NetCom has 740 employees in Norway. NetCom is owned by the Swedish-Finnish company TeliaSonera, the leading telecom company in the Nordic and the Baltic regions. Based on the number of customers, the company is the largest mobile provider in Sweden and Finland, the second largest in Norway (NetCom) and the fourth largest in Denmark. TeliaSonera is also the largest fixed voice and data provider in the region, with leading positions in Sweden and Finland. Furthermore, TeliaSonera is the largest operator in the Baltic region, with consolidated Table 1: NetCom’s Key Figures Customers
Number of customers NetCom’s market share (of total amount of mobile phone customers) Total share of mobile subscriptions in Norway Finance Turnover/Sales (million NOK1) (million USD2) Result/Profit (million NOK) (million USD) Calling minutes per customer per month Subscription Prepaid Text messages (SMS3) Total amount (in millions)
2002
2001
2000
1999
1998
1,178,466 29%
1,082,850 26%
900,282 28%
745,089 30%
535,892 30%
86%
81%
75%
62%
48%
4,591 670 1,101 160
3,752 547 725 106
2,914 425 421 61
2,494 364 331 48
2,032 296 103 15
255 63
227 58
214 64
179 79
-
-
502
310
157
36
NOK Norwegian Kroner USD United States Dollars 3 SMS Short Message Service 1 2
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Experiences from Using the CORAS Methodology to Analyze a Web Application 485
mobile and fixed line operations in Lithuania and consolidated mobile operations in Latvia. The TeliaSonera share is traded in Stockholm, Helsinki and on the NASDAQ Stock Market in the United States.
SINTEF
SINTEF is a Norwegian research institute with 1,700 employees. SINTEF performs research for the industry and the public sector in a number of different fields, ranging from oil and process industry to IT and medical research. The group involved in this case study is the group for Quality and Security Technology (QST), which consists of seven people. This group was also strongly involved in the CORAS project during which the used methodology was developed. QST is part of SINTEF Information and Communication Technology (ICT) with about 300 employees.
SETTING THE STAGE
Communication is a key aspect for NetCom’s products; naturally, the quality of the communication with its customers is an important part of the services offered by NetCom. NetCom offers its customers roughly three possibilities for interaction: • • •
a 24-hour telephone-based helpdesk and customer service center; e-mail and regular mail can be used to get answers about various topics; and a Web application which lets customers log on to their own mobile phone account Web site to view billing information, usage history information, and more.
Focus during the risk analysis was on the last of these three alternatives, the Web application called ‘MinSide’ (Norwegian for ‘MyPage’). MinSide makes it possible for each customer to get a complete overview of his or her mobile phone account, at any time of the day and from any place. The helpdesk/customer service was also slightly addressed but only where it was influenced by the MinSide application. Giving customers the ability to interact with NetCom’s databases and view their personal and sensitive information through the Internet requires a high level of security. With the help of the MinSide application, users are able to get information about their calling history and their calling cost status. MinSide also opens up for more interactive functionality, allowing the customer to send SMS and change their personal information and preferences. In addition to security, this kind of service leads to requirements on availability. Serving more than a million users, the system needs to be able to handle all customers at any time, satisfying their wants and needs with respect to the use of their personal Web site. A helpdesk where telephone operators are answering requests from customers related to their mobile phone account on a 24-hour basis is very costly. As a sub-goal, the MinSide application is meant to save money by relieving the helpdesk. Even though extra traffic will be generated from people with questions or problems related to MinSide, it is still believed that the MinSide application contributes to a reduction of the total helpdesk traffic.
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Security
Having personal Web sites and login functionality is nothing new. However, the fact that all users are mobile phone owners opens for some extra possibilities, both for users such as people having a NetCom mobile phone account, and misusers such as people illegally exploiting MinSide. NetCom uses a combination of a password and a PIN code for the login process. The password needs to be remembered by the customer while the PIN code is sent to the customer’s mobile phone in a text message (SMS). NetCom’s situation related to serving its customers with a Web application giving them direct access to their mobile phone account means that there is a need to identify both the security status and the security requirements related to the MinSide application. This case study describes the process used to analyze risks related to the MinSide application and to identify possible treatments to eliminate or reduce these risks.
CASE DESCRIPTION
The main goal of the analysis was to identify possibilities for misusing the MinSide application by violating one of the four security requirements: confidentiality, integrity, availability or non-repudiation, as defined in a number of standards related to IT security (ISO/IEC TR 13335, 2001; ISO/IEC 17799, 2000). This was achieved by carrying out a risk analysis based on the CORAS methodology. CORAS is specifically designed to address risk analysis of security-critical IT systems and offers a tool supported methodology for model-based risk analysis (MBRA). During a model-based risk analysis, models, in particular UML models, are used for specification and documentation of both the system (target of evaluation) and the risks. Also these models are the main medium for communication among the participants. We will not explain the complete methodology here, but provide a short outline of the process in order to illustrate the main steps of a risk analysis based on the CORAS methodology.
Activities of the Risk Management Process
The CORAS risk management process is based on the Australian/New Zealand Standard 4360 (1999) and provides a sequencing of the risk management process into the five sub-processes illustrated in Table 2. Table 2: CORAS Risk Management Process Sub process 1 Context Identification 2 Risk Identification: 3 Risk Analysis: 4 Risk Evaluation: 5 Risk Treatment:
Description Identify the context of the analysis. Describe the system and its environment; identify usage scenarios, the assets of the system and its security requirements. Identify the potential threats to assets, the vulnerabilities of these assets and document the unwanted incidents. Evaluate the frequencies and consequences of the unwanted incidents. Identify the level of risk associated with the unwanted incidents and decide whether the level is acceptable. Prioritize the identified risks and categorize risks into risk themes. Address the treatment of the identified risks and how to prevent the unacceptable risks.
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Experiences from Using the CORAS Methodology to Analyze a Web Application 487
Each of these five sub-processes comprises a number of activities, and the CORAS methodology for model-based risk analysis proposes different methods and models for use in the different sub-processes and activities. The CORAS methodology is developed to address systems of all kinds and sizes. For this field trial, one of the goals was to perform a lightweight risk analysis; therefore, several activities in the standard full CORAS methodology were skipped or modified. A description of the techniques and activities used is given below where the different subprocesses are described in more detail. Another goal was to test the CORAS tool that supports the risk analysis methodology.
Hypotheses for the NetCom MinSide Risk Analysis Field Trial
Prior to the field trial, a list of hypotheses concerning the use of the CORAS methodology and tool was produced. One of the goals of the field trial was to test whether these hypotheses were valid. The hypotheses were: • • • •
A lightweight model-based risk analysis (CORAS light) produces results whose value corresponds to the investment. The CORAS light methodology leads to risk analysis results at the “correct” level of abstraction. The CORAS Web-based risk analysis tool supports the risk analysis process and makes it more efficient. The CORAS Web-based risk analysis tool provides the functionality that is required to perform a (lightweight) risk analysis.
Model-Based Risk Analysis
The CORAS methodology defines its own UML stereotypes and methods for describing UML models related to security analysis. These specific security-related UML aspects are caught in the CORAS UML profile (OMG, 2003b). This UML profile for security modeling defines an abstract language for supporting model-based security analysis. The asset, threat and treatment diagrams in Figure 2, Figure 5, Figure 7 and Figure 8 are examples of how this profile is used, and shows where the term “modelbased” comes from.
Organization of the Trial
The field trial described in this case study was carried out over a period of three months, lasting from May 2003 to July 2003. It consisted of two brainstorming sessions that took place on the 21st and 27th of May, in which people from both NetCom and SINTEF participated. The preparations and analysis work before and after these sessions were mainly carried out by the risk analysis experts at SINTEF. Table 3 shows how many people from the two organizations were involved in the analysis and what roles they had.
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Table 3: Roles Role System owner 1 System owner 2 System developer 1 System developer 2 Network expert Security expert Risk analysis (RA) leader RA secretary Observer 1 Observer 2
Description Project leader for the MinSide application Project leader for the security part of the MinSide application A developer working on the MinSide application A developer working on the MinSide application A network system administrator A system administrator responsible for security in different NetCom applications Leader of the risk analysis The risk analysis secretary Observing the risk analysis process Observing the risk analysis process
Organization NetCom NetCom NetCom NetCom NetCom NetCom SINTEF SINTEF SINTEF SINTEF
Three Phases
The field trial was split into three main phases:
• • •
The first phase consisted of context identification and high-level risk analysis. This was performed by the risk analysis experts (SINTEF) with input from NetCom. The second phase was the risk identification and analysis. This consisted of two half-day meetings at NetCom, as well as preparatory work performed prior to each meeting by the risk analysis experts. The third phase consisted of continued analysis, treatment identification and structuring of the results gathered during the brainstorming sessions.
Context Identification
The goal of the first sub-process is to identify the context of the analysis, in other words: what are we going to analyze? This includes describing the system, its environment and the target of evaluation, and identifying usage scenarios, the assets of the system and its security requirements. The process steps that were followed for the context identification are illustrated in Figure 1. With assets we mean those parts of the system that contain a value that can possibly be lost. This can be anything from information to hardware. The identified assets are documented in an asset diagram, which is a UML class diagram. The asset diagram for this case is shown in Figure 2. Every context identification process ends with an approval meeting where all stakeholders involved in the coming risk analysis agree on the chosen target of evaluation and the describing documentation. It was decided that NetCom’s MinSide application was a suitable target of evaluation for the field trial. Prior to the context identification activity, NetCom provided system documentation in the form of UML (OMG, 2003a) use case (Cockburn, 1997) and class diagrams, use case descriptions and other textual descriptions. The risk analysis experts produced UML sequence diagrams based on the use case descriptions provided by NetCom, which were sent to NetCom for review and approval.
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Experiences from Using the CORAS Methodology to Analyze a Web Application 489
Figure 1: Context Identification System experts
1 flow
charts
class
4
dia-
description of target of evaluation
grams
assets roles
approval
texts
5
sequence
diagrams
use cases
2
3 Risk Analysis team
Figure 2: Asset Diagram <> NetCom’s income <> NetCom’s reputation
<> Value:AssetValueDef Value = high
<> Customer’s trust <> Value:AssetValueDef
<> Value:AssetValueDef Value = high
Vulnerabilities: - high amount
Vulnerabilities: - media sensitive
<> CS (customer service)
Value = moderate Vulnerabilities: - easily affected - emotional
<> Value:AssetValueDef Value = low Vulnerabilities: - always available
<> Sensitive information
<> MinSide Server
<> Customer’s money
<> Value:AssetValueDef
<> Value:AssetValueDef
<> Value:AssetValueDef
Value = high
Value = medium
Value = low
Vulnerabilities: -confidential - must be available
Vulnerabilities: - doesn’t check request - central role
Vulnerabilities: - high value
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Table 4: Target of Evaluation Table Target: Objective: Service/Function:
Security Aspects:
MinSide – Web application to give customers access to view and change the properties of their mobile account Provide customers with information and self-service solution - Send SMS - Retrieve New Password - Create Web Account - Manage Web Account - Data Confidentiality - Data Integrity
Table 5: Use Case Description — Retrieve New Password (continued on next page) High-level description
Actors
Pre-conditions Post-conditions Flow of events
A NetCom Personal Customer has lost the password and requests a new one. Can be used to change the password. The function is used by other NetCom Web-portal. - NetCom Personal Customer starts the use case, called user in the use case. - Profile server, the data storage of profile data. - NetCom Web-portal, the originating system for the request, e.g., MinSide, Mother or mms.netcom.no. - SMSC (SMS center) P1.
The user has accessed this system from other Web-based selfservice and information systems at NetCom.
Undefined 1. 2. 3. 4. 5. 6. 7.
8. 9. 10. 11.
The use-case starts when the user requests to retrieve a new password. If msisdn is not given in the URL, the user is asked for msisdn. The system gets the secret question and answer from the profile server. The system displays the question to the user. (A1) The user enters the secret answer. (A4, A5) The system validates that the entered answer matches the answer in the profile server, the system asks the user for a new password. (A2) The user enters the new password and confirmation of the password. (A4, A5) The system verifies the new password. The password should be a minimum of five characters, not only numbers or letters. (R1) The system generates a one-time password and asks the SMSC to send this in an SMS to the user's GSM number. The system then asks the user to enter this one-time password. The one-time password is only valid within five minutes from generation. The user enters the one-time pin code received in the SMS. (A4, A5) The system verifies that the one-time password is entered within the time limit and is the same as the generated one-time password sent. (A3) The system updates the profile server with updated profile data. The user is displayed a feedback message.
Following is a selection of risk analysis documentation in the form of tables and diagrams that specify the target of evaluation and provide the main input to the risk identification sub-process. Table 5 contains a use case description made by NetCom. This is shown to illustrate how such a description looks and to show the source for the sequence diagram in Figure 3. The description contains some terms that are specific to NetCom; they are irrelevant for the understanding of the case and will therefore not be further explained. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Experiences from Using the CORAS Methodology to Analyze a Web Application 491
Table 5: Use Case Description — Retrieve New Password (cont.) Use Case description – Retrieve New Password Alternative events
A1.
A2. A3. A4. A5. Special requirements
R1.
If the user doesn’t have a personal secret question and answer the user should enter both question and answer and password on the same page. 1. The system asks the user for question, answer and password. 2. The user enters information. (A4, A5) 3. The system validates the information. If the information is not valid, the next event is event 1 in A1. (R1) 4. The flow of events continues at event 7. If the user is unable to answer the secret question, the flow of events returns to event 3. The user has max 5 attempts to answer the secret question. The user fails to enter the pin code; the system displays an error message to the user. This use case ends. The user requests to cancel registration process. The system sends the user back to the originating NetCom Web-portal. This use case ends. The user leaves the registration process for more than 30 minutes. The system does necessary cleanup and displays an error message to the user. This use case ends. The user has max 5 attempts to answer the secret question and enter the pin code.
Figure 3: Sequence Diagram — Retrieve New Password Personal Custom er
RegApp
Profile Server
SMSC
request new password msisdn request page
pro vide msisdn get secret no secret enter secret and password page
provide secret and password verify password generate one-time password se nd SM S w ith o ne-t ime passw ord on e-t im e password page
provide one-time password verify password update user profil e feedback page
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492 den Braber, Mildal, Nes, Stølen, & Vraalsen
Based on this use case, a sequence diagram was created, as shown in Figure 3. The sequence diagram shall specify the same behavior as the use case description. However, we believe that the sequence diagram is much easier to read and therefore more suitable as a starting point for a risk analysis. This sequence diagram was one of the diagrams used during the first risk analysis session. The data flow diagram shown in Figure 4 was one of five diagrams provided by NetCom as system documentation to be used during the second risk analysis session.
Risk Identification
The risk identification process was performed during two meetings at NetCom on May 21 and May 27. These two risk identification sessions were the key activities in the Figure 4: Data Flow Diagram — PasswordForgotten ForgotPassword
Give 1-time PIN No
Correct 1-time PIN? Yes
Is there a security question No Yes
Update profile
Ask question No
Correct Correct aswer? Yes Yes
Complete profile?
Give new password No
No
Delete profile?
Generate password
Yes
Contact Customer service
Send password in email
Delete old profile
No
Valid password? Yes
Update profile
Register new profile
Update profile
Show confirmation
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Experiences from Using the CORAS Methodology to Analyze a Web Application 493
analysis. They not only served to generate risk analysis results, but also gave valuable feedback on the CORAS process. Following is a description of these meetings.
21st May — First HazOp Analysis
The meeting started with an approval session where the risk analysis leader performed a walkthrough of the context identification results and sequence diagrams that would be used as a basis for the risk identification. This was done as part of the first risk analysis meeting instead of conducting a separate approval meeting. Based on the results of this approval meeting, some information was added to the asset and risk evaluation criteria tables, but no other significant changes were made. Later it became clear that the importance of this approval was underestimated by both the system experts and the risk analysis team, as described.
HazOp Analysis
After the approval session, the risk analysis leader gave a brief introduction to HazOp (Hazard and Operability) analysis (Redmill, 1999), a risk analysis method to be used during the risk identification session. A HazOp analysis can be described as a ‘structured brainstorming’. The idea is to focus on certain items in the system documentation that are part of the target of evaluation, and try to identify risks connected to failure or incompleteness of these items. In this case, the use cases and especially their corresponding sequence diagrams were used. In order to find threats to the scenarios described in the use cases, one can ask the following questions for every message in a sequence diagram. What happens if this message... • • • •
...is not sent? ...is not received? ...is delayed? ...is changed?
During a HazOp session, the knowledge, expertise and intellect of all the members in the group is exploited, in order to find as many relevant risks as possible. The session is led by the risk analysis leader while the risk analysis secretary is responsible for writing down the results of the analysis itself. The results are stored in a HazOp table. Table 6 shows a part of the HazOp table produced during this risk analysis session. The CORAS tool was used to store the results from the HazOp analysis. The threats identified during the HazOp analysis are drawn in a threat diagram. An example of such a diagram from this analysis is given in Figure 5. The threat diagram shows the security scenarios that initiate the unwanted incidents that affect the assets. This case showed the importance of displaying the system documentation, which is the source for the analysis. The system documentation diagrams are the main input to HazOp, and it is therefore important for the people involved in the analysis to be able to look at them during the whole session. While analyzing the different steps of the sequence diagrams, it became clear that the diagrams did not describe the system correctly, for example, they were not complete or showed wrong behavior. In an ideal situation this would have been recognized and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 6: HazOp Table Template Risk ID
Every identified risk gets its own unique ID. One row contains one identified risk and corresponding information
Asset ID
Every asset identified during the context identification phase gets its own unique ID
Item
Here is the name of the diagram used when this risk was identified
Guideword/ Attribute
The guideword that was used to find this risk
Security Scenario
The security scenario initiating the unwanted incident
Unwanted Incident
Description of the unwanted incident for this risk
Consequence/Frequency
Specification of consequence and frequency values
Treatment
Description of treatment measures
corrected during a separate approval phase. The fact that this was not the case here indicates that the approval session deserves more attention. An important organizational detail for this type of analysis is the physical separation of analysis objects and recording results. Only one laptop was used for showing the diagrams to be analyzed and for recording the analysis results, which led to confusing situations. A better solution would have been to use one laptop for showing the diagrams to be analyzed and one laptop for gathering the analysis results. The second analysis session proved this was indeed a right conclusion. A comment from the system experts was that the information in the sequence diagrams was at too low a level of abstraction and that they were not very suitable to identifying threats. A bigger picture was suggested that could include more of the surrounding environment (users, mobile phones, customer service, social hacking, etc.). As mentioned above, this also motivates using a reasonable amount of time on approval of system documentation, not only to ensure that the documentation is correct, but also that it is addressing the right level of abstraction. It was decided to update the target of evaluation and to use data flow diagrams supplied by NetCom as the basis for the analysis during the second meeting. This meant that focus was shifted to a subcomponent of the MinSide application responsible for the login and authentication process. The system specification used during the second session consisted of data flow diagrams. One of these diagrams is shown in Figure 4. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Experiences from Using the CORAS Methodology to Analyze a Web Application 495
27th May — Second HazOp Analysis
This time, the data flow diagrams were used as an input to the risk analysis process. The risk analysis leader led the brainstorming session, using one laptop to show the diagrams that were being analyzed to all the participants. Another laptop was used by the risk analysis secretary to record the results on the fly. This activity was hidden from the other participants, allowing them to focus completely on the brainstorming session and coming up with new threats and risks. The risk identification process is illustrated in Figure 6. A selection of the results of this second HazOp analysis session is given in Table 7. Again the results of the HazOp analysis were translated into threat diagrams. Figure 7 shows one of them. After the risk analysis leader had gone through all the data flow diagrams, the HazOp table was shown to everyone, and the remaining time (about one hour) was spent cleaning up the table and filling in the missing information such as frequencies and consequences.
Risk Analysis
As described above, during the risk analysis sub-process, the consequences and frequencies for the identified unwanted incidents are determined. Unwanted incidents become risks as soon as they are assigned a consequence and frequency value. Doing this requires a thorough knowledge of the analyzed system and is therefore also Figure 5: Threat Diagram — First Session
<> <> wrong info about # free SMS’s
<> Customer’s trust
<> <> Mother.no receives incorrect priceplan
<> customer gets too many free SMS’s
<>
<> NetCom’s income
<> call to CS
<> <> more SMS sent than desired
<> slow feedback from server
<> Customer Service
<> <> unsatisfied customer <> Customer’s money
<> <> unauthorized SMS sent from user account
<> hacking of session ID
<> <> hacking published
<> NetCom’s reputation
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Figure 6: Risk Identification
System experts
flow
charts
sequence
diagrams
threats unwanted incidents consequences frequencies risks (treatments)
structured brainstorming session (HazOp)
Risk Analysis team
Table 7: Fragment of Filled in HazOp Table Id Asset Item Guideword Security Incident
G2.3 Customer Service Password Other than Customer Service resets unauthorized password Customer calls Customer Service
G2.2 Customer’s Trust Password Other than Customer Service resets unauthorized password Authorized user unable to log in
High
Medium
Very high
G2.1 Sensitive Information Password Other than Customer Service resets unauthorized password Tells unauthorized user new password Medium
Send new password as SMS
Send new password as SMS
Send new password as SMS
Send new password as SMS
Very low Low Medium High Very high
Frequency
Very low Low Medium High Very high
Consequence
Unwanted incident
G2.4 NetCom’s Reputation Password Other than Customer Service resets unauthorized password Published in media
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Figure 7: Threat Diagram — Second Session <> <> using stolen/borrowed cell phone
<>
<> delete profile
<> NetCom’s reputation
<>
<> NetCom’s income
<>
A
<> Malicious person
<> create unauthorized profile <> view account history
<>
<> Customer’s trust
<> new unauthorized password
<> <> <> Sensitive information <> authorized user unable to log in
<> call Customer Service
<> Customer Service
performed in cooperation with the system experts. When this is done the risk matrix can be drawn. Table 8 shows such a risk matrix. The qualitative values for both consequence and frequency scales where already indicated in the context identification phase, and are given in Table 9 and Table 10. During a complete risk analysis, a technique called Fault Tree Analysis (FTA) (IEC 1025, 1990) is used in order to calculate consequences of complicated unwanted incidents. Because of resource restrictions during this analysis, it was decided to combine the risk analysis sub-process with the risk identification process that was carried out at the two NetCom meetings. Instead of using FTA, consequence and frequency values were estimated with the help of the system experts, and these values were recorded together with the other risk information in the HazOp table.
Risk Evaluation & Risk Treatment
The NetCom meetings were the only two sessions where the system experts and risk analysis experts physically met. The results of these sessions were structured and summarized by the risk analysis experts. As a result of this, sub-process 4 — risk evaluation and sub process 5 — risk treatment were combined, and these were performed mainly by the risk analysis experts at SINTEF. The risk treatment sub-process was however to a certain degree also combined with the risk identification process, by recording treatments that were suggested during the HazOp session. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 8: Risk Matrix Very low
Frequency Consequence Very low Low Medium High Very high
Negligible Negligible Low Moderate Moderate
Low Negligible Low Low Moderate High
Medium Low Low Moderate High Extreme
High Low Moderate High Extreme Extreme
Very high Moderate High Extreme Extreme Extreme
Table 9: Consequence Values Consequence value Very low
Description
Low
1.000 – 10.000 NOK direct or indirect costs
Medium
10.000 – 100.000 NOK direct or indirect costs
High
100.000 – 1.000.000 NOK direct or indirect costs
Very high
More than 1.000.000 NOK direct or indirect costs
Less than 1.000 NOK direct or indirect costs
Table 10: Frequency Values Qualitative Definitions frequencies - for threats related to specific use of the service Very low Incidents that occur less often than 0.01% of the times the service is used. Low Incidents that occur between 0.01% and 0.1% of the times the service is used. Medium High
Very high
Incidents that occur between 0.1% and 1% of the times the service is used.
- for persistent threats Incidents that occur less often than once every 20th year. Incidents that occur more often than once every 20th year, but less than once every second year. Incidents that occur more often than once every second year, but less than three times every year.
Incidents that occur between 1% and 5% of the times the service is used.
Incidents that occur more often than three times every year, but less than once every month.
Incidents that occur between 5% and 100% of the times the service is used.
Incidents that occur more often than once every month.
Using the information of Table 8, Table 9 and Table 10 for the identified risks mentioned in the HazOp Table 7, we can range the risks after their risk value. This is done in Table 11. Following is a selection of the indicated treatments for the risks with risk ID G2.1, G2.2, G2.3 and G2.4, here identified by G2.*. The treatment for these risks is specified in a treatment diagram and a treatment activity diagram.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
The field trial produced valuable results in the form of identified threats and risks as well as possible treatments. One challenge for NetCom is to adjust these results of the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Table 11: A Selection of Ranked Risks Risk value
Id
Security incident
Unwanted incident
High
G2.2
Customer Service resets unauthorized password
Authorized user unable to log in
Moderate
G2.4
Customer Service resets unauthorized password
Published in media
Low
G2.3
Customer Service resets unauthorized password
Customer calls CS
Low
G2.1
Customer Service resets unauthorized password
Tells unauthorized user new password
Figure 8: Treatment Diagram for the Risks G2*
<> NetCom’s reputation
<> NetCom’s income
<>
<> send new password to cell phone
<> G2.* <> Customer’s trust
<> Sensitive information
Figure 9: Treatment Activity Diagram for the Risks G2* Misuser
Customer Service
User
receives call
asks Customer Service to reset password
resets password sends new password to mobile phone receives new password on mobile phone
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analysis to its own organizational structure. Even though the analysis was restricted to address the MinSide application, the results of this analysis will affect other parts outside the scope of MinSide but inside NetCom’s organization. In fact, since the termination of the field trial, it has already been shown that the effect of this trial on new projects at NetCom has been considerable. The methods used during this field trial have been adopted in several new projects in order to indicate risks and possible treatments at an early stage in the development or maintenance process. An individual project or case study with restrictions on both time and resources, carried out in a relatively large organization, will naturally have a corresponding limit on the ability to affect the organization. However, the choice of addressing only a small part of the organization implies a limit in itself. The expectations of such a project should reflect the amount of time and effort that is put into the case. The scope of the risk analysis described in this case was restricted to the MinSide application. Even though the results of such a risk analysis cannot be expected to have a major impact on how NetCom handles its customers, it certainly gives a good overview on the functionality of this specific service. The main problem connected to the use of the MinSide application that NetCom faces on a 24-hour basis is offering the customers the service they pay for, while protecting them at the same time. Through carrying out this risk analysis, this ability has increased. Since systems are continually updated, these analyses will also need to be updated. NetCom will always strive to be one step ahead of the people looking for the security holes in order to protect its customers. Hence a major challenge for NetCom is to obtain a correct picture of relevant risks and their risk values, and maintain the validity of this picture as the application, its context and NetCom’s business objectives evolve. Another issue related to this field trial is the relation between a system and its risk analysis over time. Is it enough to carry out a single risk analysis for a system like MinSide? Should a risk analysis of MinSide be carried out every other year? Every year? Are there systems that can safely be put into production without a preceding risk analysis? These are topics that span far wider than the scope of this teaching case. We refer to the list of additional sources of reading to find references to books and articles about risk analysis in general and model-based risk analysis in particular.
REFERENCES
Australian/New Zealand Standard AS/NZS 4360. (1999). Risk management. Cockburn, A. (1997). Structuring use cases with goals. Journal of Object-Oriented Programming, (Sep/Oct), 35-40; (Nov/Dec), 56-62. CORAS. (2003). A platform for risk analysis of security critical systems. IST-2000-25031. Online: http://coras.sourceforge.net/ IEC 1025. (1990). Fault tree analysis (FTA). IEC 61508. (2000). Functional safety of electrical/electronic/programmable safety related systems. ISO/IEC 10746. (1995). Basic reference model of open distributed processing. ISO/IEC TR 13335. (2001). Information technology — Guidelines for the management of IT security. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
Experiences from Using the CORAS Methodology to Analyze a Web Application 501
ISO/IEC (1999). Information technology — Security techniques — Evaluation Criteria for IT Security ISO/IEC, 15408-1. ISO/IEC 17799. (2000). Information technology — Code of practice for information security management. OMG. (2003a). Unified Modeling Language specification. Version 2.0. OMG document number: ptc/03-09-15. OMG. (2003b). UML Profile for Modeling Quality of Service and Fault Tolerance Characteristics and Mechanisms, OMG Draft Adopted Specification. OMG Document: ptc/2004-06-01. Raptis, D., Dimitrakos, T., Gran, B.A., & Stølen, K. (2002). The CORAS approach for model-based risk analysis applied to the e-commerce domain. In Proc. Communication and Multimedia Security (CMS-2002) (pp. 169-181). Kluwer. Redmill, F., Chudleigh, M., & Catmur, J. (1999). Hazop and software Hazop. Wiley. Sindre, G., & Opdahl, A. L. (2000). Eliciting security requirements by misuse cases. In Proc. of TOOLS_PACIFIC 2000 (pp. 120-131). IEEE Computer Society Press.
APPENDIX Figure 10: A Screenshot of the MinSide Application
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Chapter XXVIII
Infosys Technologies Limited: Unleashing CIMBA Debabroto Chatterjee, The University of Georgia, USA Rick Watson, The University of Georgia, USA
EXECUTIVE SUMMARY
Infosys Technologies Ltd., one of the world’s most profitable IT services company, implemented a customer relationship management (CRM) system called CIMBA — Customer Information Management By All. This customer-focused system was conceived and designed to improve communication and collaboration between the company and its customers. By seamlessly integrating the front-end sales system with the back-end delivery system, CIMBA was expected to further enhance the company’s IT solutions delivery capability. This case provides insights into the factors that triggered the need for developing such an integrated CRM solution and how the company went about developing and launching this system. It also brings to light the various challenges associated with the implementation of this IS solution. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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BACKGROUND
There was a lot on Nitin’s mind as he came out of yet another marathon meeting, a meeting to discuss problems the Infosys sales team was facing with the current customer relationship management (CRM) solution. As the Head of the Sales & Marketing Group in the Information Systems Department, Nitin Gupta was responsible for the software support needs of Infosys’ sales teams. Only two years ago, he along with a team of four, had deployed a CRM package called CRMX,1 for meeting the contact management and opportunity tracking needs of the sales team. The disappointing performance of CRMX had been the reason for this and numerous earlier meetings. At the time it was implemented, CRMX, a sales force automation (SFA) tool, marked the first automation attempt by Infosys in the area of customer relationship management. One of the primary objectives was to establish a centralized repository for the contact database of the enterprise and help the sales teams target potential customers. Another major objective was to improve responsiveness to customer needs by enabling seamless sharing of information between the onsite sales team and offshore delivery teams. Thus, the system was expected to provide synergistic benefits by facilitating communication and knowledge sharing during every stage of the order generation and fulfillment process. The system was also expected to be easily scalable to meet the growing information needs of the company. Though CRMX was a good and robust tool, it was not meeting Infosys’ expectations, especially those of the sales people. The Business Development managers (BDMs), who were supposed to be the key users of CRMX, found it difficult and cumbersome to use. Moreover, it did not enable real-time sharing of information between the onsite (at customer locations) sales personnel and offshore delivery personnel. Phone, fax, and e-mail continued to be the primary means of communication and information exchange for the personnel located at client offices and sales offices in different parts of the world. As a result, these sales personnel operating from remote locations felt disconnected and isolated and often called themselves the lone warriors. Nitin, a graduate of one of India’s premier business schools, was a smart young man, who fully understood the changing business needs of his company in a rapidly growing software consultancy market. A multitude of ideas ran through his mind. He knew something more scalable and dynamic was needed and that Infosys had to do away with the current tool, once and for all. Infosys had done enough performance tuning of the system to realize the futility of any further performance enhancement exercise. Sivashankar, the IS Head at Infosys and Basab Pradhan, the Regional Manager for the Chicago office, both key players in the technology initiatives for the sales team, were also very keen on a new system. Like Nitin, they were convinced that CRMX had outlived its usefulness.
Company History & Growth
Infosys Technologies Ltd. was founded in 1981 by seven engineers working for Patni Computers, a small reseller of U.S.-based Data General. Its aim was to be a key player in the software solutions market. Narayana NR Murthy, the CEO and founder of the company, was a visionary, who could see the potential in the still infantile software solutions market — a market in which Infosys built its reputation by not only providing Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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high-quality solutions at low cost, but also by reducing customer risk through effective execution of fixed-time and fixed-price contracts. The first employees were hired in 1982 and the company started by offering on-site services to foreign customers. It quickly built a reputation as a provider of quality turnkey software development and maintenance services (Appendix A). The client list grew and included many major firms across the globe. To expand its customer base in the U.S., Infosys also entered into a strategic marketing alliance with Kurt Salmon and Associates, a management consulting firm, and this move helped the company gain valuable name recognition. Through its initial public offering (IPO) in February 1993, Infosys raised muchneeded cash to expand operations at its headquarters in Bangalore. By 2002, Infosys was employing more than 10,000 software professionals. Its revenues had grown significantly — from a mere $3 million in 1990 to $545 million in 2002. Its compounded annual growth rate (CAGR) from 1996-2001 was a staggering 50%. Business Week (June 24, 2002) ranked it as the third most profitable IT company in the world, ranking higher than IBM and Dell. This India-based company has come a long way. Starting from a one-room office in 1982, Infosys today has sales offices in 17 countries, and several software development and training centers in India. It also has many notable firsts to its credit. For instance, it was the first Indian software solutions provider to be listed on NASDAQ (INFY) and also receive the Capability Maturity Model (CMM) Level 5 certification from the Software Engineering Institute at Carnegie Mellon University (www.infosys.com; Trivedi and Singh, 1999). The CMM certification process assesses the level of maturity and capability of software development processes used by IT services companies; Level 5 is the highest achievable. Its growing reputation as a world-class provider of high-quality solutions attracted the brightest talents from India’s top business and engineering schools. For the last several years, it had been consistently voted as India’s most admired company and best employer in a variety of business publications (Trivedi and Singh, 1999).
The Sales Organization
Infosys has sales offices in several countries. The U.S. headquarters, which also serves as the global sales headquarters, is in Fremont, California. In the U.S., it has sales offices in Phoenix (AZ), Fremont (CA), Lake Forest (CA), Atlanta (GA), Lisle (IL), Quincy (MA), Troy (MI), Berkeley Heights (NJ), Dallas (TX), and Bellevue (WA). At the core of the Sales Team are the Business Development Managers (BDMs). They are responsible for sales prospecting and generating clients and business for Infosys. They are assigned to one particular territory and are responsible for business growth in that area. They report to a Regional Manager, who is responsible for a very large geographical area, termed a region in Infosys terminology. Infosys has its delivery team divided into Strategic Business Units (SBUs). These units are organized in terms of geographic or domain specializations. For instance, there is an SBU called West and North America (WENA) that handles projects in most of North America, and there is an Enterprise Solutions (ES) SBU that handles projects in SAP, Baan, and other ERP technologies.
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Other than the sales people, there are Account Managers (AMs) for large accounts. AMs are located at clients’ sites and are the faces of the Offshore Delivery teams for the client. They are responsible for maintaining the client relationship, ensuring project deliveries, and generating new business from existing clients.
The IS Organization
The IS organization is a 150-member group and has the challenge of handling the technology needs of a technology-savvy company. The demands on the group are high, as system design requirements keep changing all the time — “our customers sit next door, so it’s inevitable” is how the MIS group describes the situation. It has played a key role in making Infosys a truly paperless workplace. As Sivashankar often said, “The IS department at Infosys is a key enabler and inherent part of all company systems and processes.” The IS department is divided into smaller groups, each of which specializes in serving the needs of the various departments in the company. For instance, there is a Finance group that fulfills the software requirements of the Finance department, an HR group for Human Resources, and the Sales & Marketing group that develops software for the Sales Team. Thus, each business function is mirrored within the MIS department.
The Industry
The birth of the IT professional services industry (in which Infosys operates) can be traced back to the mid-1960s when companies such as Electronic Data Systems (www.eds.com) started providing data processing services. The industry continued to grow and the service offerings extended beyond data processing. For instance, the service offerings ranged from custom software development to facilities management, system design, software consulting, and training and documentation (Trivedi and Singh, 1999). While the demand for software solutions continued to grow, companies in developed economies, like the U.S., were finding it prohibitively expensive and time consuming to develop solutions internally. Moreover, as technology cycles shortened and the complexity of computer systems grew, companies were finding outsourcing to be a more viable IT management strategy (Nalven & Tate, 1989; Clabum, 2003). Under these circumstances, Infosys found itself ideally positioned to make the most of this opportunity. This India-based company had a talented pool of programmers to draw from, and an efficient and mature software development and delivery process (Trivedi & Singh, 1999).
SETTING THE STAGE The Infosys Global Delivery Model
Infosys’s ability to deliver low-cost and high-quality solutions was primarily due to its Global Delivery Model (GDM). This GDM model (Appendix B) relies on geographically dispersed teams seamlessly working at the lowest work breakdown level, and in multiple time zones to deliver significant customer value. GDM leverages key company strengths like a wide global presence and fast-acting offshore development teams.
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While GDM was proving to be quite effective, its optimal utilization greatly depended on the effective coordination, communication, and collaboration between the onsite customer-facing sales teams and the offshore delivery teams. However, the support systems, to facilitate such interactions and information sharing, were either inaccessible or not integrated. For instance, the onsite personnel at client locations had to rely on fax and e-mail to communicate with their offshore counterparts. These onsite personnel had very limited access to the different corporate systems; many a times, they had literally no access to the data/information generated from these systems. To make matters worse, the existing customer relationship management system (CRMX) was not integrated with the back-end delivery systems. Such lack of integration greatly impeded the ability of the sales force to effectively respond to queries from current and prospective clients, promptly relay customer feedback to the delivery teams, and identify crossselling opportunities. Thus, CRMX had to be replaced with a more powerful and integrated CRM platform. Such empowering of the electronic infrastructure was essential for the future success of Infosys’s GDM.
CASE DESCRIPTION CRMX: The Current CRM Platform
CRMX, once an innovative product, was launched as an off-the-shelf customizable CRM package for mid-sized enterprises. It was easy to deploy and had a good contact management framework. Another major advantage with CRMX was that it had an easyto-understand user interface. Infosys in the mid-’90s was looking for just such a package — easy to understand and deploy, and relatively inexpensive. When Infosys implemented CRMX, it marked a breakthrough in sales force automation; but over a period of time, for many reasons, it started losing its usefulness. Primarily, it created another data island in the company, and the IS department found integration with other existing systems extremely complex. Secondly, access to all the stakeholders (essential for effective visibility across the service chain) was proving to be prohibitively expensive because access was controlled through a custom security setup in the system and required individual license for each named user. Each user also had to have the system installed on her/his machine. Another major reason for wanting to replace CRMX was that it was only a sales-facing system. Infosys at that time was a very rapidly evolving company, but with few systems that linked sales with the delivery group. “We just don’t know what you guys do out there in the field,” was a common refrain among the Offshore Delivery people. Most of the CRMX users were highly mobile and based out of small offices. Since CRMX did not offer Web-based access, it was becoming a problem for the mobile users to effectively use the system. The overall system performance was also a major irritant to the sales force. For instance, uploading client data by synchronizing the client PC with a “satellite server’ was a perennial problem. Some Business Development Managers (BDMs) were often heard complaining, “I dread Mondays when I’m back in office and
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have to sit in front of the stupid server and endlessly sync my data.” Comments like, “why can’t it (CRMX) improve my productivity for a change?” were also quite common.
Needs Analysis
Careful analysis of existing systems before considering the adoption and implementing of a new system is standard practice at Infosys. It was a CMM level 5 company and the change management process was clearly documented. The change initiative in this case was code-named “foCus.” The team formed to oversee this system replacement initiative had broad representation from all the involved groups. It included Basab (the Regional Manager, Chicago), Nitin, Jith (SBU head for the Asia-Pacific Delivery group), and many other Delivery Unit heads and other key people in the Sales Team. In fact, Nitin went the extra distance to ensure that each and every user group was represented in the steering team. The needs analysis exercise led to some interesting findings. For instance, one of the key requirements was the need for a very different looking CRM system. This was surprising as there was an existing belief (among the “foCus” team members) that the users were happy with the look and feel of the previous CRM solution. In addition to expressing the need for a new user interface, the respondents also emphasized the need for an integrated, fast, and cost-effective system. Since Infosys had a high level of expertise in a broad spectrum of application development and business analysis, senior management wanted an integrated system that would enable the various departments to share their respective knowledge and expertise and thereby realize synergistic benefits. The current environment of disparate applications serving disconnected user groups was no longer acceptable. Every system, it was felt, should be integrated with other systems for complete elimination of data duplication and data redundancy. The needs analysis process led to the following guiding principles for developing the new system. 1.
2. 3. 4.
The customer relationship management platform will facilitate and support an integrated service — from lead generation to opportunity identification, proposal generation and submission, contract finalization, project set up, software development, and delivery. From each stage in the project lifecycle, relevant data will be handed over to the next stage. Duplication of data entry will be minimized. Access will be provided to all stakeholders. The system will be intuitive and easy to use.
Evaluating Development Options
The options essentially boiled down to a) buying a new package and customizing it or b) building a customized system from scratch. Nitin argued that buying an off-theshelf system could once again take the company down the CRMX road. Rather than adjust to a company’s unique business model and process competences, an outside system often forces the company to modify its processes to adapt to the system’s needs
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(Davenport, 1998; Roy & Juneja, 2003). Moreover, the vision was to build a CRM platform that would ultimately integrate all aspects of the business — from marketing to product development and delivery and customer support. But there were others who felt that the company should not divert its resources toward a project that was going to be fairly long drawn, and there was no guarantee that the final product would live up to expectations. They did not buy into the vision of an integrated CRM platform that would give a significant boost to Infosys’s Global Delivery Model. They further suggested that Infosys send out a request for proposal from leading CRM vendors. An intense and long drawn meeting followed to discuss the buy-versus-make issue. Compelling arguments were made in support of each of the alternatives. The committee failed to reach a consensus and a vote was taken to make the decision. By a small margin of two votes, the motion in support of developing a CRM platform was passed. Nitin was pleased, especially because he strongly believed that the company possessed the requisite software development experience and expertise to deliver a leading-edge and long-term solution. He and his committee members then started brainstorming on how best to build a dynamic and scalable CRM system for the company. After numerous brainstorming sessions, the committee finally put together a proposal for building an integrated CRM platform. A name was needed for the system. It had to be something with which users could identify and in Sivashankar’s words “catchy.” An internal e-mail was sent out seeking suggestions for a suitable name. Almost everyone made a suggestion, and finally “CIMBA” was selected. CIMBA stood for: Customer Information Management By All. Overnight, the team became the CIMBA Team. The proposal was called the CIMBA (Customer Information Management By All) program. Thus, the intent of the CIMBA program was to build an integrated CRM platform that would effectively link the front-end customer support systems with the back-end delivery systems (Maddox, 2003; Hill, 2003). It was envisioned to be a full-cycle automation and process deployment program that would, both directly and through spinoff gains, change forever the level of integration between the onsite and offshore teams at Infosys. Appendix C1 provides a comparative depiction of the functionalities of CIMBA and CRMX. CIMBA was designed to offer a more comprehensive set of functionalities. For instance, CIMBA would offer additional capabilities in the areas of knowledge management, campaign management, and sales revenue forecasting. CIMBA was also expected to be a more integrated CRM platform that would effectively link the front-end customer support systems with the back-end delivery systems. Such integration would facilitate the handing down of data from one stage of the project life cycle to the next. Moreover, its superior data synchronization capabilities would provide (both the sales and delivery teams) access to real-time data. CIMBA would also support unique business rules and access controls, to insure, among other things, accuracy of revenue projections and avoidance of losses from unauthorized projects. It was also expected to (a) be more scalable, (b) provide greater information visibility and access to all stakeholders, and (c) be intuitive and easy to use.
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Potential Payoffs
The CIMBA program had revenue generation, risk reduction, and streamlining processes in client interaction as major goals. For Infosys, the most important metric for measuring the impact of CIMBA was average relationship size — ‘relationship size’ (it is an Infosys term) refers to the amount of revenue being generated from each client. It was expected that the roll-out of CIMBA will enable the company to identify more cross-selling opportunities and thereby increase revenue. Infosys had lost money on projects that were not properly authorized. By significantly improving process controls, CIMBA could cut down such losses. Moreover, CIMBA-enabled process controls would facilitate new levels of process compliance in the workings of the client-facing personnel, thereby greatly improving sales and revenue predictability. The CIMBA application would also offer (management) granular visibility to field activity and the forecasting process. Finally, CIMBA would greatly enhance connectivity and visibility across the customer service chain. Superior connectivity and visibility would result in: • • • •
Better targeting and follow-up of prospective clients. Improved quality and speed of response to customer queries. Offshore managers having a much better sense of the clients’ and the market’s pulse. Greater communication and coordination between sales and delivery teams.
Establishing a Development Team
Nitin set out to form the team that would develop the new system. He chose Sunil Thakur to lead the team. Sunil had recently joined the IS department and had just finished a project as a Team Leader. He was very good at mapping user requirements to system functionalities. The other members in the team were Krishna, who was the Technical lead, and four developers who had recently joined the department. It was a young team and the developers had little previous experience in building a large-scale Web-based system. The database administrator and graphics designer were sourced from a common pool in the MIS department. Development of the system started in November 2000.
Development & Implementation of CIMBA
Sunil decided on following an iterative approach for developing the system prototype. The next six months were spent developing the system from scratch. While building an integrated CRM platform seemed like a powerful idea, translating that idea into reality entailed overcoming several types of implementation hurdles. These hurdles ranged from technical to procedural and organizational (Corner & Hinton, 2002; Kenyon & Vakola, 2003; Schmerken, 2003). The CIMBA program called for building a class of Web applications that were never attempted before in the organization. It also called for seven other applications to be modified on synchronized timelines for seamless integration. For the first time, an
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application was being built for internal use that was not only to be used extensively from locations outside India on a true global scale, but also used in a sustained manner. Users were expected to stay connected for sessions as long as a full working day. To deliver acceptable performance in a sustained usage scenario to globally located users, the team had to find new technologies and approaches. The team selected XML as the technology of choice for developing a system that was scalable and could be seamlessly integrated with all types of devices and all other systems (Hagel & Brown, 2001; Marvich, 2003). Since none of the team members had prior experience with XML, a four-day training session was organized for the developers; the developers were given another week to become comfortable with the new technology. The CIMBA initiative also involved a large-scale process definition and mapping exercise that required organization-wide consensus building. Key organizational entities had to agree on the complete set of lifecycle processes — from prospecting to opportunity management, forecasting, engagement initiation and execution. A listserv called CIMBA TEAM was set up, and all stakeholders and future users were made members of this CIMBA TEAM distribution list. This listserv was used to share ideas, seek suggestions, discuss problems, post progress reports, and make announcements. The CIMBA program also called for one of the most complex multi-phased data migration and process integration roll-outs. It called for migrating data from disparate sources into a centralized repository. It was clear that there were a lot of data inconsistencies, and hence the migration exercise would involve a large data cleanup exercise. The cleanup effort was not a simple technical cleanup; it required continuous liaison with business users and data owners across the organization to determine the correct mappings in the destination data set. The development team also had to deal with scope creep challenges. Requests for changes kept coming even after the steering committee had come to an agreement on design and functionality specifications. Many of these requests led to changes in the look and feel of the system. By June 2001, the first phase of the project was complete. CIMBA provided customer and contact management functionalities and a means to record opportunities (see Appendix C2 for a CIMBA homepage screen shot). It was rolled out to select “pilot” users, most of whom belonged to the WENA business unit. The initial user response was one of excitement. The pilot users found the system easy to use and intuitive to navigate. Some bugs and small user issues did crop up, but the CIMBA team resolved these problems fairly quickly. Phase 2 involved integrating CIMBA with all other relevant systems. These were systems that were already in use and automated processes like business proposal generation, letter of engagement, and project set up. It was here that the steering committee hit the first significant roadblock. The stakeholders from Sales and Delivery had different ideas on how the integration should be carried out, and they found it difficult to reach consensus. There were numerous conference calls, meetings, and brainstorming sessions, but no decision was reached for a full four months. Meanwhile, Sunil and the CIMBA team kept on working to improve the system capabilities. Since the application was hosted on servers at Bangalore (a city in India) and the pilot users were in North America, system response was at times slow. To improve response time, programming code was optimized, cache settings were adjusted, and Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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database tables were clustered. As Sunil once said, “Since we have the time, let us ensure that not a single piece of code is heavy. Let’s ensure that when we send out data over the network, we send it in such a way that it’s lean, mean, and quick.” As October 2001 dawned, there was intense pressure (from the Board of Directors) on the steering committee to reach consensus on the CIMBA integration process. Finally, at the end of October, consensus was reached on how best to integrate CIMBA with the other systems. With these new specifications in place, the CIMBA team resumed work in earnest. Sunil and Krishna sat down with the teams that were maintaining the other systems and determined the changes required to integrate with CIMBA. Once these technical details were identified, it took just a month to finish Phase 2. By the first week of December, the integrated version of CIMBA was ready for delivery. In Nitin’s words, “The lion king is ready to roar,” referring to Simba, the lion cub character in the movie The Lion King.
CIMBA is Rolled Out
In mid-December the integrated CIMBA suite was rolled out for one customer account, Insureco,2 a U.S.-based insurance provider and one of Infosys’ prime clients. The reasons for choosing this particular company as the pilot account were many — a large account and a very tech-savvy AM, Michael Hudson, who was asked to be the key driver of CIMBA adoption in the Insureco team. Before the roll-out, many training sessions were held for the Insureco team, both in India and the U.S., to make it comfortable with the system. Enabling CIMBA for an account can be quite complex as it involves synchronizing multiple databases and enforcing “gates” across multiple applications. But, the development team came up with a very elegant solution to make this process fairly simple. A combined database “switch” was made, which was a roll up of all the downstream switches. Once the data were migrated to the CIMBA database, all that was left was to turn the “CIMBA Switch” on and the account was automatically migrated to the CIMBA platform. This one solution must have saved the CIMBA team many hours of error-prone work. Even though there were some initial hitches with the use of the CIMBA system for the INSURECO account, its implementation was deemed a success. Visibility of accountrelated information greatly increased across the entire management chain – from business development managers to account managers, delivery managers, and the entire top management team. Bolstered by the success, it was decided to roll out CIMBA, one by one, to the various sales regions (Roberts, 2004). The roll-out involved certain preparatory activities such as data migration from the CRMX database to the new CIMBA database, extensive training for both onsite and offshore users, and a whole list of other checks. Alongside the roll-out came carefully planned training and, as one Regional Manager put it, “impeccable user support.” By the time the roll-out was completed, 356 users across the globe had been trained; total training time was about 2,026 hours, out of which 896 hours were done outside India. However, to the surprise of the development team, within the first few days of the roll-out, the support calls would almost quadruple. There were BDMs requesting access to accounts, harried financial analysts complaining that they couldn’t access their Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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region’s accounts, and marketing analysts claiming “access denied” for creation of Letter of Engagements. As one developer remarked, “It has become a madhouse here at the CIMBA support hotline.” Sunil’s response was prompt, “No amount of training and pre-roll-out can prepare us for the post-roll-out period. These calls will come no matter how smooth the roll-out is. So folks, it makes no sense to wish them away!” As Nitin and Basab looked forward to 2002, and the upheavals in the software services market, they were thankful that they had CIMBA in place. While CIMBA was off to a good start, Nitin and Basab remained hopeful that this CRM platform would survive the test of time and prove to be a very good investment for the company. A lot of time, money, and effort had gone into building this platform. Some of the skeptics in the organization were still of the opinion that it would have been more prudent to have bought or leased a CRM solution from a leading vendor and thereby reduced some of the development, maintenance, and upgrade costs.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
While the CIMBA platform has greatly improved communication and collaboration between the sales and delivery people, it has yet to realize its ultimate goal of electronically integrating the entire value chain. While it does integrate the front-end customer support systems with many of the back-end delivery systems, the extent of integration is far from being total and seamless. The current version of the system is yet to enable the seamless sharing of data with several other corporate systems that are responsible for functions like project execution and operations, finance, accounting, and human resource management. For instance, the following systems are yet to be integrated with CIMBA. • • •
PSWEB: a manpower allocation (to projects) system. A/R Tracking: used to track the recovery of amount billed to customers. IPM: a tool used to manage an active project.
Mobilizing organization-wide support and commitment to bring about that level of integration has been difficult. Moreover, the relative newness of CIMBA made it difficult to convince those who still doubt the stability and scalability of the platform. Several of the key decision makers want to watch the performance of the current version of the system for a couple of years before expanding its scope. They are also keen on realizing some quick and significant returns from the time and money invested in developing CIMBA. In addition to the challenge of achieving greater process and functional integration, there is also the challenge of developing and/or adopting a suitable set of metrics to measure the effectiveness of CIMBA. While the CIMBA proponents have claimed victory by suggesting that this new system has realized its three major goals — revenue generation, risk reduction, and streamlining client interaction-related processes — these claims are yet to be well substantiated with a relatively objective set of metrics. For instance, it was claimed that CIMBA resulted in an improvement in the average Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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relationship size, that is, the average revenue earned from current clients. But several of the skeptics questioned the claim and argued that the increase in revenue was due to a boom in the outsourcing business and the company’s solid reputation; one of them commented, “I can’t see how the CIMBA platform has improved our capability to effectively execute the Global Delivery Model.” Computing the total cost of ownership (TCO) of CIMBA is yet another operational hurdle. Identifying and included all relevant expense categories — ranging from direct and indirect labor costs to hardware and software costs and the costs of providing ongoing training, maintenance, and user support — has been a challenge. The assumptions and estimates that have to be made for computing TCO have also been grounds for disagreement and dispute. For instance, while many felt that the TCO should be computed for three-to-five years, there were others who wanted it to be more long term. This disagreement essentially stemmed from two distinct views about the potential benefits from CIMBA. According to one school of thought, CIMBA was a short to medium-term technology solution for automating marketing, service, and sales functions. They had a narrow view of CIMBA — a CRM solution that was a competitive necessity and not a source of sustained competitive edge. But then there was the other group that envisioned the CIMBA program to be much more than a technology solution for automating sales, service, and the marketing function. To them, CIMBA: (a) represented a concerted effort to improve all business processes to better meet the needs of the customer; and (b) epitomized a customer-focused, long-term approach to achieve a better alignment between the company’s business and IT strategy. The other challenge that CIMBA implementers are grappling with is to get the users, both at the client sites and offshore delivery sites, to learn to use CIMBA more effectively. Despite providing several training sessions, several users are found to use only a limited set of the functionalities. For instance, many in the sales organization still treat and use it as a tool for contact management; they have yet to learn to use its various analytical capabilities to gauge customer needs and behavior and develop effective marketing strategies.
ACKNOWLEDGMENTS
This case is intended to be the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. While the situation discussed in this case is real, some distortions have been intentionally made for enhancing its effectiveness as a teaching tool. We would like to acknowledge the contributions of Mr. Amit Gupta and Mr. Nitin Gupta in helping us prepare this case.
REFERENCES
Clabum, T. (November 10, 2003). Bear Stearns signs up for overseas services. InformationWeek, 963, 34. Corner, I., & Hinton, M. (2002). Customer relationship management systems: Implementation risks and relationship dynamics. Qualitative Market Research, 5(4), 239252. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Davenport, T. H. (1998). Putting the enterprise into the enterprise System. Harvard Business Review, 76(4), 121-133. Ebner, M., Hu, A., Levitt, D., & McCrory, J. (2002). How to rescue CRM. The McKinsey Quarterly, Special Edition, 49-57. Georgiadis, M., Seshadri, R., & Yulinsky, C. (2002). Tactical CRM. McKinsey Marketing Solutions, 1-9. Hagel III, J., & Brown, J.S. (2001). Your next IT strategy. Harvard Business Review, 79(9),105-113. Hill, S. Jr. (2003). Next-generation CRM. Customer Management, 44-45. Kenyon, J., & Vakola, M. (2003). Customer relationship management: A viable strategy for the retail industry. International Journal of Organization Theory and Behavior, 6(3), 329-353. Maddox, K. (2003). CRM focus will be on integration in 2003. B to B, 88(2), 12. Marvich, V. (2003). CRM across the enterprise: Integrating the channels. Customer Inter@ction Solutions, 21(9), 42-45. Nalven, C., & Tate, P. (February 1, 1989). Software: Asia — taking the offshore option. Datamation, 35(3), 72-74. Roberts, B. (2004). Big Bang or phased roll-out. HRMagazine, 49(1), 89. Roy, A., & Juneja, A. (2003). CRM applications: Licensed or hosted — Which is better for you? Customer Inter@ction Solutions, 32-34. Schmerken, I. (2003). Earning a payback on CRM: Smaller projects, more homework. Wall Street & Technology, 12-16. Trivedi, B., & Singh, J. (1999). Infosys Technologies Limited (A). Wharton Case Study.
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APPENDIX A Infosys Products and Services
The table below provides a snapshot of the IT solutions and services provided by Infosys to a wide range of industry verticals. Illustrative solution areas Business Process Management
Engagement Life-cycle Stages • Consulting and Strategy
•
Customer Relationship Management
•
Architecture and Integration
• • •
•
Knowledge Management
•
Custom Systems Development
Aerospace
•
Mobile Computing and M-Strategy
•
Re-engineering and migration services
•
•
Supply Chain Management
Maintenance and Support
•
•
IT Strategy
Financial Services
•
Infrastructure Management Services
•
•
•
Typical Engagements Automotive
•
• •
Structural analysis of engine mounting bracket. Weight optimization of EDH bracket. Full range analysis and solutions for seating systems.
Design and analysis of airframe sections for aerospace vehicles. Software for buckling based design of rocket motor casing. Load analysis software for aerospace application.
Development of online trading systems for brokers. Development of a transaction processing system known as the Authorization and Capture system. Development of an application architecture.
Heathcare
• • •
Development of an electronic health record system. Development of a web-based integrated application to automate the authorization process. Development of an application architecture.
Source: Infosys corporate Web site, www.infosys.com.
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APPENDIX 2 The INFOSYS GDM in Action
ITO: Information Technology Outsourcing BPO: Business Process Outsourcing AMO: Application Maintenance/ Management Outsourcing
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APPENDIX C1 CRMX & CIMBA Functionalities Traditional CRM Sales force automation
CRMX
• Sales process management • Sales & territory management • Contact management • Lead/opportunity management • Knowledge management • Sales/revenue pipeline view
Call Center Support Campaign management Customer service E-commerce
CIMBA
+
• Integration with other systems • Fully integrated service chain • Data handing down • Access to ‘Delivery Team’ • Unique business rules & access control
CIMBA Hompage
APPENDIX C2
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Chapter XXIX
Development of KABISA: A Computer-Based Training Program for Clinical Diagnosis in Developing Countries Jef Van den Ende, Institute of Tropical Medicine, Belgium Stefano Laganà, Ospedale Sacro Cuore at Netrar, Italy Koenraad Blot, Pfizer Canada Inc., Canada Zeno Bisoffi, Sacro Cuore Hospital at Negrar, Italy Erwin Van den Enden, Institute of Tropical Medicine, Belgium Louis Vermeulen, Institute of Tropical Medicine, Belgium Luc Kestens, University of Antwerp, Belgium
EXECUTIVE SUMMARY
KABISA is a computer-based program for training in diagnostic problems in (sub-) tropical regions. It challenges the individual student with a randomly generated case, for which he should try to find the diagnosis, asking questions, performing a physical examination, and ordering tests. The built-in tutor follows the student’s input with complex logical algorithms and mathematical computations, gives comments and support, and accepts the final diagnosis if sufficient evidence has been built up. Several problems arose with the development. In the first place, the evolution in the teaching Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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of clinical logic is always ahead of the program, so regular updating of the computer logic is necessary. Secondly, the choice of MS Access as computer language has provoked problems of stability, especially the installation of an MS Access runtime. Thirdly, and most importantly, scholars want proof of the added value of computer programs over classical teaching. Moreover, the concept of a pedagogical “game” is often regarded as childish. Finally, the planning and financing of an “open-ended” pedagogical project is questioned by deciders, as is the case with all operational research.
ORGANIZATIONAL BACKGROUND
The Institute of Tropical Medicine is a private institute of public utility, located in Antwerp, Belgium. It has formal links with all Belgian universities. Its mission statement encompasses research, training, and services in the field of tropical medicine and medicine in resource-poor countries. It employs more than 300 people and has an annual budget of more than 25 million Euros. The ministry of education and the ministry of international cooperation provide the core budget. Training varies from several short courses, including a four-month course for nurses, a six-month diploma course for medical doctors, and different master’s courses and PhD programs. During recent years, the training philosophy has shifted to problembased and distance learning. Several computer-assisted tools and CD-ROMs have been produced. A telemedicine program is running for veterinary diseases and for antiretroviral treatment of HIV in developing countries. The institute has more than 100 projects, mostly in developing countries, and participates in many others. Training forms a substantial part of several of these projects.
SETTING THE STAGE
At the end of the eighties, the need for a different type of teaching and training became apparent worldwide. Merely loading students with more and more knowledge was questioned. The need for a shift from knowledge to competence was clear. New approaches to training were introduced: role-play (the trainer or an actor plays the patient’s role, the student asks questions and suggests investigations in order to reach a final diagnosis); simulation of trials, where students take the role of prosecutor, lawyer, and judge; discussion of diagnostic errors or patient management in small groups; and “problem-based learning” in general. Computers were introduced into the training, first for retrieval of information, and later for training programs (Clayden & Wilson, 1988; Siegel & Parrino, 1988; Verbeek, 1987). An interactive computer classroom with 50 computers, and a smaller one with 12 computers were installed in the institute. The library was also fully equipped with all available IT means. In student residences, wireless networks provided and maintained by the institute staff permit students to study at night and during the weekends. IT staff consists of five full-time computer experts, and several scholars are actively involved in writing and creating programs. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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CASE DESCRIPTION History
As part of the new didactic instruments, a card game called “KABISA” was developed in 1986. Students could suggest a diagnosis to their partner, who should guess it from the constellation of cards successively presented. Bridge-like rules were developed, and beautiful witty drawings were printed on the cards. With the introduction of microcomputers at the institute at the end of the eighties, an immunologist offered to write a simple computer program based on the card game. A first version was written in 1989 in dBase and compiled in clipper. The program challenged the student with cases electronically compiled from a randomly generated disease with randomly generated presenting symptoms. The student should find the diagnosis with disease characteristics such as symptoms, signs, and available tests in a hospital in developing countries. The program remained very limited, with logic very similar to that of the card game. In 1991 a resident in internal medicine asked permission to translate the program into C++. He achieved this in just one night. Further developments became possible, and the horizon broadened gradually. Weight was added to the disease characteristics, and thresholds were introduced for diagnosis. Further features included a formal exam, a scoring system, economic implications of testing, and relations between disease characteristics (Van den Ende et al., 1997). A major limitation was the absence of images. A first attempt to show a single ultrasound image during a consultation with KABISA II required 90 seconds, far too slow to be operational. When more powerful microcomputers became available, an Italian IT student proposed his collaboration, as part of his thesis. He preferred MS Access with Visual Basic for Applications, since it had an easy-to-use interface for images and sounds. From 1997 on, the complete program was rewritten in Access, and a large database with microscopy, X-ray, ultrasound, and ECG images was created. When the program became operational, his Italian university claimed the entire intellectual property, which was impossible, and finally he was not able to defend KABISA III as his thesis.
Description of the Program
KABISA is used as a tool for individual training, after explanation of clinical logic and teaching of tropical diseases in the classroom. Its use as an expert system is limited, and was also not the main aim (Van den Ende et al., 1997). It confronts the user with virtual patients, who are initially presented with three randomly selected symptoms. The student can ask questions, perform a physical examination, and order laboratory tests and imaging. The built-in tutor follows the student’s input with complex logical algorithms and mathematical computations, gives comments and support about disease characteristics and possible diagnosis, and accepts the final diagnosis only if sufficient evidence has been built up (Myers & Dorsey, 1994). Different tools are available to support learners (Figure 1). These tools allow students to look for information about certain symptoms or diseases, to check the relative weight of disease characteristics, to compare different diagnoses, or to see how much a disease characteristic contributes to the final certainty. An exam module challenges the students with a series of consultations, while all help functions are shut down. An Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 1: KABISA III XP — Main Menu. In the lecture, diseases with their characteristics are listed. In the expert, probability of a disease can be checked. In the cluster module, clusters of characteristics point toward certain diseases. Disease characteristics of two diseases can be listed as common or typical for one of them. In the consultation, randomly selected cases are to be solved by the student. In the module “select consultation,” students can ask an exercise around a case they compose themselves. The “ prof”" button opens the professor screen, but is available only on request. (Refer to Figure 3)
evaluation report keeps track of soundness of ordering of tests, and of correctness of final diagnosis. A separate module can be used for exercises with laboratory, x-ray, and ultrasound images. Randomly generated images have to be interpreted and commented on by the student. On request, the tutor offers an explanation. Students can choose their language, the continent in which they want to exercise (Africa, South-America, Asia), a pediatric or adult ward, their currency, and also the level of difficulty they prefer (Figure 2). In the “Professor” edition, the content of the databases can be changed and updated (Figure 3). This version is used only by the scholars who update the modules for each continent, as prevalence, presence, and presentation of diseases differ. Interested universities might create a KABISA version typical for their country or region. The program is distributed as public domain for developing countries. Its use is widespread in developing countries, and also in training institutions in Europe. It has been translated into eight languages, all available on one CD-ROM, which includes an Access XP runtime in case the student does not have a licensed MS Access XP program. As the image database is larger than 600 Megabytes, installing from the Internet is impossible, but updates of the logical engine and of the images can be obtained from www.kabisa.be.
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522 Van den Ende, Laganà, Blot, Bisoffi, Van den Enden, Vermeulen, & Kestens
Figure 2: Start Page of KABISA III XP (showing all options of initial settings)
Figure 3: KABISA III XP — “Professor” Screen. In this module, all databases can be modified. New diagnoses, symptoms, images, and references can be added; relations between diseases and characteristics, and between characteristics mutually can be updated.
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Development of KABISA 523
Logic
The development of the program paralleled the development of the teaching organized during the same period. In the beginning, the aim was to teach “classical” clinical epidemiology applied to cases of tropical medicine. Clinical epidemiology studies the value of disease characteristics in relation to diseases, and their contribution to certainty, all with rather complex mathematics. Students expressed their disbelief in the utility of this teaching, and asked for formal proof that this theory is useful in practice. The computer was a powerful tool to detect what was wrong in the teaching: the question was whether the difficult calculations themselves were the problem, or whether it was more the wording or the concepts. Even with results computed in milliseconds, clinicians did not use calculations. A fundamental problem of language became clear: clinicians do not think in mathematical terms or with mathematical data (Bryant & Norman, 1980). Developers were forced to “translate” terms like “positive likelihood ratio” into common language like “confirming power,” and so forth, in order to make the clinician comprehend the meaning. Only after translations of the terms, and shifting to a more intuitive certainty scale, did clinicians start to understand and to use a more formal logic (Van den Ende et al., 1994). Students forced programmers to refine the logic with each version: a complaint about the first version was that it lacked “weight” of arguments, and for the second one developers discovered the necessity for a clear endpoint, that is a certain “threshold” probability of disease where the student has gathered enough evidence to start treatment (Pauker & Kassirer, 1980). In the third version, developers had to take into account the diagnostic weight of images, as often their yield is much more than a yes/no statement.
IT
The first version was very simple and used only pattern recognition. In the second, developers included weight of symptoms and signs, and thresholds. C++ was quite interesting for this purpose: it remained stand-alone, and computation was quick. (Although the writing was quite complex: the source code contained 115,000 lines!) For the third version, teachers wanted to include images. Programmers struggled for a long time with the speed and the capacity of microcomputers at that time, but also with the interface between C++ and imaging. Finally developers decided to rewrite the code in MS Access, which at that time (1997) offered quite a good engine for retrieval and integration of images. But problems arose: since customers were mostly poor health professionals in tropical countries, they could not afford the high cost of a full MS Office package. An Access runtime assembled by the MS Office Developer package gave a solution but created many recurring problems. Microsoft gave support, but after fixing one problem, another arose. Moreover, since the program KABISA builds temporary tables, students had to be instructed on how to compact the database after exercising. If not, the database would reach up to 100 Megabytes, precluding all further exercises. Accidental closing of a session with the main window closure button was also a disaster, resulting in bilingual screens. Students became quite upset, and sometimes refused to use the program after bad experiences. Fortunately, the conversion of the program to MS Access XP and the development of an appropriate Access XP runtime by Microsoft brought relief. The program became stable, with a much easier installation procedure.
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Pedagogy
The biggest problems, however, arose with the proof that a program is useful. In an academic environment, one has to produce hard data that the addition of such a program to the curriculum is relevant. Especially when looking for funding of further developments, sympathy can turn into overt skepticism. Through the first development of the card game to the latest version of KABISA, it was a continuous fight to defend it when facing some scholars. Since 1995, final clinical exams of the diploma course are undertaken with a role-play of clinical cases. Before the advent of KABISA III, it was extremely difficult for the student to finish a case in less than half an hour. Since KABISA III, the mean time to make a correct diagnosis has been reduced to less than 10 minutes. But to prove this retrospectively is difficult. Moreover, a prospective study is unacceptable for students, since KABISA is public domain and very popular. The Department of Pedagogy of a Belgian University was asked to perform a formal evaluation (Clarebout et al., 2004). A special version was adapted for logging of all actions students took during a computer session. “Think aloud” sessions were recorded. The final conclusion was that the students rarely used the built-in logical help functions and did not follow an ideal path: they often reached the diagnosis through a rather intuitive quest. It seemed as though they used the program like a game, rather than an instructional tool. A new version with emphasis on training in formal logic and intensified guidance was written. In Italy, Spain, and Belgium, a trial version was abandoned by all students after a quarter of an hour. “We do not want to be treated like children,” was the main comment. Further development of this version was completely abandoned. One can argue that an “ideal path” to a diagnosis does not exist, and that the evaluation of a didactic tool for clinical reasoning cannot be solely based on the frequency the help functions are used by students. The students take each new case presented by the computer as a challenge, and try to solve the case without any help. It is indeed a kind of game in this sense. All the same, games can be very powerful pedagogic tools!
Management
In the first years, clinicians, professors, analysts, programmers, and financers were the same people. Coordination was simple, control of the production process was nonexistent. With the development of KABISA II, financial and managerial aspects became clear. The program was sold at a low price, given the lack of resources in developing countries, but bank transfer costs for purchase from abroad exceeded the cost of the program itself. With the growing success of the program, intellectual property also became an issue. Ownership was not discussed before programming, so debate arose and an investor was to be sought. For the development of KABISA III, a managerial structure was set up, programming was separated from design and management, and financing was sought. As the ministry of international cooperation became a major stakeholder, clear goals and formal evaluation were imposed. KABISA became public domain for use in developing countries, but a clear delimitation of use in Europe was difficult. Intellectual property issues became complex, as so many actors in different countries became involved.
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Planning
When asked how much further development would cost and how much time they would need, developers could never answer. The way developers make such an interactive training tool is a close collaboration between clinicians, logicians, programmers, and students. Every single step forward could open new horizons, could change the fundamental logic. Programmers could suggest new logic to logicians, who would test this with clinicians. Students checked every change and often suggested other approaches or a new layout. The possibility to try out every new step with groups of students and to adapt the program directly to their needs was innovative and exciting. For KABISA III, an attempt was made to write a classical project, with a clear architecture for the program and formal logical flowcharts. But after a few months, these plans were changed almost every week, as the interaction between bright people and the enormous possibilities of IT created new horizons and unpredictable dynamics. KABISA was an example of true “operational research,” where the process itself and the results are more important than the proof. It was a marvelous example of “crossfertilization” between different disciplines.
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
A fundamental problem that has hitherto not been resolved is that students can make a diagnosis of for example, “the flu,” while a dangerous disease like meningitis has not been excluded. Furthermore, they may make a diagnosis before exhausting all relevant disease characteristics. This may represent an overestimation of the probability of that particular disease, and as a consequence, other diseases (including severe ones like meningitis) may be erroneously pushed below their respective threshold and not considered any further. Adapting the logic appears to be very complex and might necessitate modification of all algorithms written in the actual version. A last important challenge for the future logic is how to manage clinical images, because for every disease, typical images for children or adults and for male and female patients are needed for all the different continents. Many contributors should be sought, transmission of data and coordination will be difficult, and privacy of patients could be a major obstacle. The question arises which language the programmers should write KABISA IV in: a more general language, independent of Microsoft? With the availability of the Internet almost all over the world, a Web-based version might be preferable. But speed might be a problem. In the future, evaluation of use and usefulness will become a challenge. Further scientifically founded proof of the utility of the program should be given. Formal proof of utility in classrooms could be set up, but comparing groups of students who use and who do not use KABISA in the same university or institution is very difficult, since the program is public domain. Also, what kind of proof is required: that students master logic, content, or both? For logic, it is all the more difficult, since no formal rules for good medical logic exist. Finally, evaluation of use of the program as an individual continuous training tool should be considered. For further development, separation of responsibilities will become a burden. As the team becomes bigger, more time will be spent in communication and meetings. Since Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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contributors are spread over almost the entire developing world and Europe, transmission and communication problems are a threat. How do we solve the marketing problem? Can managers agree to give such an expensive program free of charge to any person in the developed world who orders the program? Even more complex is the problem of ownership. With so many contributors, who will decide about selling the logical engine for use in the developed world? And what is to be done if a university builds on the logic of KABISA, without permission? For the development of KABISA IV, a strict planning structure should be written. Increasingly, stakeholders do not allow “art” to influence development, they favor a rigid framework, where quantity, quality, and time are scheduled (QQT logical framework). Should the makers of KABISA give up their artistic approach, or can alternative frameworks be found?
REFERENCES
Bryant, G. D., & Norman, G. R. (1980). Expressions of probability: Words and numbers. New England Journal of Medicine, 302(7), 411. Clarebout, G., Elen, J., Lowijck, J., Van den Ende, J., & Van den Enden, E. (2004). KABISA: Evaluation of an open learning environment. In A. Armstrong (Ed.), Instructional design in the real world: A view from the trenches. Hershey, PA: Information Science Publishing. Clayden, G. S., & Wilson, B. (1988). Computer-assisted learning in medical education. Medical Education, 22(5), 456-467. Myers, J.H., & Dorsey, J.K. (1994). Using diagnostic reasoning (DxR) to teach and evaluate clinical reasoning skills. Academic Medicine, 69, 429. Pauker, S.G., & Kassirer, J.P. (1980). The threshold approach to clinical decision making. New England Journal of Medicine, 302(20), 1109-1117. Siegel, J.D., & Parrino, T.A. (1988). Computerized diagnosis: Implications for clinical education. Medical Education, 22, 47-54. Van den Ende, J., Van Gompel, A., Van den Enden, E., Van Damme, W., & Janssen, A. J. (1994). Bridging the gap between clinicians and clinical epidemiologists: Bayes theorem on an ordinal scale. Theoretical Surgery, 9, 195. Van den Ende, J., Blot, K., Kestens, L., Van Gompel, A., & Van den Enden, E. (1997). KABISA: An interactive computer-assisted training program for tropical diseases. Medical Education, 31(3), 202-209. Verbeek, H. A. (1987). Self-instruction through patient simulation by computer. Medical Education, 21(1), 10-14.
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Chapter XXX
Cross-Cultural Implementation of Information System Wai K. Law, University of Guam, Guam Karri Perez, University of Guam, Guam
EXECUTIVE SUMMARY
GHI, an international service conglomerate, recently acquired a new subsidiary in an Asian country. A new information system was planned to facilitate the re-branding of the subsidiary. The project was outsourced to an application service provider through a consultant. A functional manager from another subsidiary in the country was assigned to assist the development of specifications. The customized information passed numerous benchmarking tests, and was ready for implementation. At that point, it was discovered that the native users at the rural location of the new subsidiary could not comprehend any of the user interfaces programmed in the English language. A depressed local management team, with a depleted technology budget, must reinvent all operating procedures dependent on the new information system.
ORGANIZATIONAL BACKGROUND
GHI was an international service conglomerate operating globally in more than 500 locations with established clienteles in high-value-added markets. As a member of a highly competitive industry, the business found success in carefully nurtured brand Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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images of quality and consistent services. GHI has been a strong leader in its industry and earned a respectable ranking among the Fortune 1,000 companies. In recent years, GHI has grown its annual revenue substantially beyond the billion-dollar mark. As part of an ongoing strategy, GHI aggressively sought opportunities to improve performance of undervalued business operations, through the introduction of better and more efficient management techniques and practices, including the injection of capital through ownership and contracts. GHI valued its workforce of more than 100,000 as a key asset in retaining loyalty from corporate clients as well as individual customers. The corporate values of GHI emphasized a passion for excellence, promoting cultural diversity; encouraged innovation and changes; and fully committed to serve communities where GHI maintained business interests. Recent GHI business strategy included a goal to improve operating efficiency through the increased use of technology. A small corporate IT team coordinated numerous projects to deploy technology throughout its global locations. GHI relied heavily on technology providers outside of the company to construct information systems (Best, 1997), with developmental projects to integrate systems from the various vendors. A challenge was to centrally control the flow of information through uniform technology platform, a practice with significant benefits, as GHI attempted to provide consistent services to its customers who rapidly entered global market locations. GHI insisted on the implementation of corporate systems to collect and analyze transaction data and customer demographics. This centralized reporting requirement allowed GHI to detect trends, allowing the corporate office to adjust its global strategies according to dynamic economic conditions, and identifying potential problems that required corporate attention. For example, capital budget could be planned for common needs for capital improvement. At the same time, the company realized cost reduction through purchasing economies in business services, supplies, capital goods, telecommunication services, and technology. A senior IT official emphasized the benefits of removing technology decisions from the local level, eliminating the duplication of efforts in acquiring and deploying packaged software. Standardization also reduced the challenges of data communication through an assortment of technology platforms (Aggarwal, 1993). GHI also pursued a strategic goal to expand e-business applications to improve sales and services. In 2002, a Web-based Customer Relationship Management (CRM) system was deployed to formalize the delivery of customer services. In the past, individual locations devised their own system to manage customer service problems, often as scribbled notes informally trickled through the corporate communication channels. The new system provided a tool to spot problem areas, and provided a way to expedite problem resolution while customers were being served. The managers gained real-time visibility on service activities, while the corporation could use the tool to promote and enforce uniform customer satisfaction levels across its many locations. The system was also instrumental in employee training, and for empowering front-line service personnel to mitigate service deficiencies. CRM enabled GHI to provide fast, convenient, dependable, and consistent service to its customers. The systems were tested in locations in North America with satisfactory results. CRM was also employed to enhance sales and marketing (O’Brien, 2002). GHI anticipated growth in demand for its quality services, especially from its loyal customers. The integration of its regional propriety customer databases represented an effort to Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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enhance the consistent delivery of services to its customers throughout the world. Centralized established information standards facilitated the sharing of data, and promoting uniform practices of data analysis and data-supported decision making. The new information systems provided a personal touch, targeting the needs of the customers at the right time, with the right offer. At the same time, GHI hoped to increase sales per customer through selling additional products and services to existing customers, improving revenue, and creating additional marketing opportunities. The elaborate data analysis and environmental scanning identified new business opportunities and helped to maximize the utilization of the highly perishable service capacities. The information system was also a valuable tool for inducing desirable behavioral change, especially in newly established subsidiaries affected by organizational changes (Parker, 1996). GHI anticipated the need for the powerful global information network to maintain corporate standards in their expanding network of service sites (KroacKakabadse and Kouzmin, 1999). The disciplined use of data in decision making also opened opportunities for GHI to market its management services.
SETTING THE STAGE
The weakened North American and European economies, combined with political and economic instabilities in South America, prompted strategic adjustment with increasing attention to emerging markets. The recent economic turmoil in the Asia Pacific region presented numerous attractive investment opportunities. Businesses severely affected by the economic downturn began to seek external assistance to improve business value. In 2001, GHI acquired interest in a major business in an Asian country as its subsidiary. There were over 1,500 workers employed by the organization at the time of the acquisition. The new subsidiary had historically focused on the domestic market, with established clienteles. The subsidiary has been highly regarded by business analysts and the local community. The GHI management planned to convert the new acquisition into one of its leading subsidiaries in Asia. As a gesture of cultural sensitivity, the local management team and the entire workforce were retained in employment as part of the acquisition agreement to smooth the transition. A transitional management team was sent, including trainers experienced in cultural diversity, differences in language, customs, rituals, and ceremonies (Bjerke, 1999). The GHI Asian regional office was tasked with re-branding the new subsidiary to attract a more diversified customer base. The regional management was confident of the assignment, with successful experience operating other subsidiaries in the country. A one-year transitional period was planned for the re-branding process, which included extensive training of the workforce and indoctrination of the new corporate values. A well-designed information system could assist the reshaping of work behavior of the workforce (Davenport, 1997), and the new location must comply with the corporate expectation of central data reporting, uniform software platform, and sharing data with other locations. An information system was currently in use at the new subsidiary. The information system was developed locally through an in-house IS staff with contracted services from local technical vendors. The local information system was providing adequate support for client and human resource information, and for retail transaction supports. The local Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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system lacked features for customer service supports, central reporting, and data sharing, but it handled transactions for a substantial retail business, which was a new business experience for the corporation. The management must decide between developing the information system locally and bringing in a brand new information system. In consideration of a tight budget, a short conversion deadline, and the central preference for standardized system, the regional management decided to implement a new turn-key system, and leave the existing system in place until the delivery of the new information system. The logical choice was to bring in a version of the information system already implemented in the other locations (Gwynne, 2001). However, the simple importation of technical solutions designed under different cultural contexts could be a fruitless effort (Al-Abdul-Gader, 1999). Precautions were made in hiring a consultant to monitor the project, and assigning an experienced user of the corporate system to serve as the user liaison officer (Oz, 1994).
CASE DESCRIPTION
With successful information systems at other subsidiaries in the country, the regional management expected a routine system development process, especially with opportunities to learn from the systems usage experience of many subsidiaries in other Asian cities. An IT consultant was hired to manage the system development project and bid out the project to a contractor. The fact that the consultant had recently completed an information system project for GHI could add weight to the selection process. A functional manager from a major subsidiary in the same country was relocated to the project site to serve as the user liaison, allowed benchmarking against a successfully implemented information system (Parker, 1996). The transferred employee was supposed to contribute first-hand experience as a user and trainer on a similar information system successfully implemented in a major international city. A 12-month target was set for the completion of the new information system. Evidently, the local management and IS staff were not consulted concerning the new information system (Sahraoui, 2003). It was an acceptable practice since the local culture discouraged the questioning of decisions by superior officers (Gannon, 2001). Although the local technical vendors were contacted, the consultant selected an application service provider (ASP) from another country. The consultant did not realize that the failure to involve the local technical vendors was a cultural blunder that would greatly diminish the chance of gaining their assistance at a later stage (Gannon, 2001). It was agreed that as a condition for a low bid on the project, the ASP would be allowed to develop the new system off-site and relieved of the responsibility of local language needs, including a user manual in the local language. The consultant promised to handle the translation work for the user manual. The consultant was to provide system specifications, including user interface requirements. The consultant followed specifications of similar corporate systems implemented in other global locations, and relied on the user liaison for specifications on appropriate local adjustments. It turned out that both the consultant and the ASP had limited experience working in the Asian country. The consultant stayed at the project site, but seemed to interact mainly with the user liaison. Since very few of the employees at the new subsidiary understood English, the consultant relied on the user liaison to review prototypes Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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throughout the various stages of the system development process. Beside the language and cultural barriers, the tight project schedule gave the consultant more reason to limit personal contact with the locals. As it turned out, the local people had a long tradition of demanding the establishment of a good personal relationship prior to a cooperative working relationship. Exhibit 1 illustrates the special arrangement under which the ASP was allowed to work exclusively with the consultant and the user liaison, due to the cultural and language barrier. Exhibit 1: Special Arrangement for System Development at the New Subsidiary
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The ASP was from a nation less recognized for technology achievement. It would have been difficult for the locals to accept the technical merits of the ASP, and the language barrier would have created immense problems during system analysis. The ASP was relieved to be able to omit on-site interviews with the local end-users. As a result, the ASP never visited the new subsidiary until the delivery of the new information system. The savings in travel expenses were also substantial due to the rural settings of the project site. Project cost was the primary concern for GHI, and the people and the location of programming the new information system were not considered important. The coding of the information system proceeded smoothly and on time. As the information system delivery date approached, the ASP contacted the management at the subsidiary to schedule a training workshop for the employees of the organization. The service contract stipulated that the ASP was to provide a system manual, and to provide initial training for system usage at the time of system delivery. It was at that point that the ASP realized that the local end-users could not understand the user interface programmed in English, the international language (Wallraff, 2000) chosen for the new information system. To make it worse, no one at the subsidiary could comprehend the system manual written in English (Regan & O’Connor, 1994). The ASP was greatly puzzled since the user liaison approved the new system. When confronted, the user liaison explained to the ASP, in fluent English, that English was the primary language used at his subsidiary since a majority of their customers at the branch spoke English. As a result, their employees must possess strong language skill in English. He assumed that English would also be the primary language after the re-branding process by GHI, which was well established in the western world. He thought his temporary assignment to the project was to facilitate the implementation of a similar information system. The newly coded system would be working fine at the subsidiary he came from. The consultant was surprised too, since English was the corporate language and the standard language used in the corporate information system. The consultant had relied solely on the input of the user liaison to finalize specifications, and did not bother to verify local user environments. He knew that the corporation was bringing another team to train the local employees, and assumed language training would be part of the rebranding process. He saw his role as certifying the quality of services from the ASP, and the user liaison was supposed to represent the needs of the user (Oz, 1994). To the best knowledge of the consultant, English has been the standard language used in the information systems of GHI. There was no indication that GHI would deviate from the western management protocols in this new subsidiary (Elin-Dor, Segev, & Orgad, 1993). The language and cultural issues they tried very hard to avoid finally surfaced as a huge issue (Bischoff & Alexander, 1997; Gannon, 2001). The ASP reminded the consultant of the promise to obtain a local translation of the user manual. The consultant turned to the local training manager for assistance with two copies of the English manual. The consultant was shocked when the request to translate the system manual into the native language was declined. The consultant was told that it was impossible to find anyone locally to translate the highly technical terms in the manual, especially on short notice. The local technical vendors were not interested in the translation work, possibility due to feelings of humiliation for being excluded from the system development. Other local language translators claimed lacking knowledge of the highly specialized technical terms in the manual. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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The effort to construct a user-interface in the local language was also unsuccessful. The consultant was told that the new information system could not support the native language and culture (Kersten, Kersten, & Rakowski, 2002). Similarly, the request to add native translation to the user screen was rejected. Some claimed that a new system in the native language would be needed. Other reasons included the conflicting layout formats between the native language and English, data representation and storage problems, translation problems for data in the native language for sharing with other locations, and service support information linked from other locations. There was little hope of soliciting local support to salvage the new information system. Unwilling to breach the contractual term, the ASP went ahead with the system delivery and presentation of the new information system, in English. During the initial system training session, a native-speaking audience sat silently throughout the presentation of the new information system. No one could comprehend any of the PowerPoint slides prepared in English. The audience felt humiliated when they found out that the ASP was from a nation lesser known for technical achievement, while they had developed a fully functional information system locally. They were further humiliated when the ASP failed to demonstrate any knowledge of local customs and the role of the information system in providing services to the customers. Anger flared and panic set in (Gallois & Callan, 1997). The local management was upset at the hastily delivered training in a foreign language. The failure to seek consensus to resolve this difficult problem was unacceptable in the local culture. Handicapped by the language barrier, the ASP could not explain the internal coding of the system. There was little assistance that the consultant, the user liaison, or the in-house computer group could offer without immediate knowledge of the computer programs. The consultant was from a small nation, and failing to build relationship with the locals, contributed little to earn the trust of the locals for cooperation (Gannon, 2001). The consultant was not familiar with information processing in the native language. The user liaison would soon return to his prior post. The local IS staff had little experience with the corporate information system in the English language. The local management recognized that there was no money to fix the problem. The ASP insisted that a functional information system had been delivered according to the contractual terms. After spending close to a million dollars on the new information system, the local management and IS staff suddenly realized that they had inherited a customized information system that was completely inappropriate for the user environment. There was little hope that the ASP would provide any further assistance to make the information system usable. Most of the employees at the subsidiary had limited experience with the western culture, and it was doubtful that even a small fraction of them would ever learn English as a second language. On the other hand, it would be extremely difficult to replace the current workforce with English-speaking workers from outside the rural area. Most importantly, even the corporate management intended to internationalize the operation of the subsidiary, since a majority of the customers would be natives of countries with poor command of the English language. To make matters worst, the corporate office expected customer and operation data from the local management through the new information system, and the usage of the old system was disallowed with the delivery of the new information system, especially with the many new operational practices. Many locals wondered the wisdom of hiring, from a remote land, an ASP that Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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could not even “explain” how the system worked, when there were capable nativespeaking contractors who must now be recruited to fix the information system!
CURRENT CHALLENGES/PROBLEMS FACING THE ORGANIZATION
Depressed, the local management realized that it would be difficult to request additional budget to correct the information system problem. The different layouts and orientations of the native language comparing to the English language made it difficult to perform simple language conversion of the user interfaces. Neither the ASP nor the IT consultant had the required language skills to construct a user interface in the native language. Besides, the ASP was not interested in building an information system or system components in the native language. The local technical vendors that created the previous information system were not eager to work on a user interface for the new system. The local technical staffs, although keeping their jobs in the subsidiary, had little to contribute to the project. The user liaison had returned to his prior position after the delivery of the ill-fated information system. The local management was left to make the best use of the new information system. The immediate need was to devise methods for the workers to use the information system on a daily basis. Since all sale transactions must be processed through the new information system, workers were provided with cue cards for the interface screens, and corresponding translation in the native language. The process was slow and tedious. It was more challenging when handling customer payments. It was culturally desirable to show a customer an itemized bill with full explanation of all charges. This way, the customer could verify or question charges before making payment. The new information system printed all the invoices in English, which was not comprehensible by most workers and customers. Workers had to use dictionaries and politely explain all charges to each customer in the native language. The time-consuming activity tested the patience of everyone! The management did not return to using the old information system despite all the difficulties with the new system. In the meantime, GHI announced additional Phase II business expansions that were to be completed in the next 12 months. The new information system was expected to support these new business developments. One year later, many local managers had departed from the subsidiary for other career opportunities. These were unusual practices in the local culture in which long-term loyalty to an organization would be expected and rewarded. Although few would comment on their career changes, most of these people had expressed frustration towards the thoughtless and unconcerned way of the corporation, since the delivery of the new information system (Kroac-Kakabadse & Kouzmin, 1999). The cultural conflicts triggered by the handling of the new information system continued to manifest and erode the organizational cohesiveness. The local management, realizing the damaged relationships with the local technical vendors, was able to acquire a native language user interface, mainly for supporting the retail transactions. The new user interface utilized Web-based technology, including the use of ASP.NET. A native IT solution provider from another city was hired to provide periodic technical support for the user interface. With the new user interface, the new Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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information system seemed to be providing adequate support for the retail operations. Despite the intent design of the new system to support data sharing with other locations, the new system remained disconnected from the corporate system. Thus, the information system had fallen short of its initial goals to support central data reporting, uniform software platform, and data sharing for supporting sales and service developments. This should not be a surprise to the management of GHI since it has been estimated that only about 10% of the businesses implementing Web content management systems have successfully delivered content to their global users (Voelker, 2004). The local managers would not comment on how they handle customer satisfaction with the new information system, but they acknowledged that they have abandoned the plan to use the new system to support the new Phase II business developments that would be completed in the near future. On the other hand, the corporate office seemed to be satisfied with the implementation of the native language interface, and continued to retain the service of the IT consultant!
REFERENCES
Aggarwal, A. (1993). An end user computing view: Present and future. Journal of End User Computing, 5(4), 29-33. Al-Abdul-Gader, A.H. (1999). Managing Computer Based Information Systems in Developing Countries: A Cultural Perspective. Hershey, PA: Idea Group Publishing. Bjerke, B. (1999). Business Leadership and Culture: National Management Styles in the Global Economy. Cheltenham, UK: Edward Elgar. Best, J. D. (1997). The Digital Organization. New York: John Wiley & Sons. Bischoff, J., & Alexander, T. (1997). Data Warehouse: Practical Advice from the Expert. Upper Saddle River, NJ: Prentice Hall. Ein-Dor, P., Segev, E., & Orgad, M. (1993). The effect of national culture on IS: Implications for international information systems. Journal of Global Information Management, 1(1), 33-45. Gallois, C., & Callan, V.J. (1997). Communication and Culture: A Guide for Practice. Chichester, UK: John Wiley & Sons. Gannon, M. J. (2001). Understanding Global Cultures: Metaphorical Journeys through 23 Nations. Thousand Oaks, CA: Sage Publications. Gwynne, P. (2001). Information systems go global. MIT Sloan Management Review, 42(4), 14. Davenport, T. (1997). Information Ecology: Mastering the Information and Knowledge Environment. New York: Oxford University Press. Kersten, G.E., Kersten, M.A., & Rakowski, W.M. (2002). Software and culture: Beyond the internationalization of the interface. Journal of Global Information Management, 10(4). Korac-Kakabadze, N., & Kouzmin, A. (1999). Designing for cultural diversity in an IT and globalizing milieu some real leadership delimmas for the new millennium. The Journal of Management Development, 18(3), 291. O’Brien, J.A. (2002). Management Information Systems: Managing Information Technology in the E-Business Enterprise. New York: McGraw-Hill. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Oz, E. (1994). When professional standards are lax: The CONFIRM failure and its lesson. Communications of the ACM, 37(10), 29-37. Parker, M. (1996). Strategic Transformation and Information Technology: Paradigms for Performing While Transforming. NJ: Prentice Hall. Regan, E.A., & O’Connor, B.N. (1994). End-User Information Systems: Perspectives for Managers and Information Systems Professionals. New York: Macmillan Publishing. Sahraoui, S. (2003). Editorial preface: Towards an alternative approach to IT planning in non-western environments. Journal of Global Information Technology, 6(1), 1-7. Voelker, M. (2004). Web content management: Think globally, act locally. Transform Magazine, 13(4), 16-21. Wallraff, B. (2000). What global language? The Atlantic Monthly, 286(5), 52-66.
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Chapter XXXI
Change Management of People & Technology in an ERP Implementation Helen M. Edwards, University of Sunderland, UK Lynne P. Humphries, University of Sunderland, UK
EXECUTIVE SUMMARY
PowerIT is an autonomous company of about 200 staff producing and repairing power conversion supplies. Eighteen months after adopting an enterprise resource planning (ERP) system the chief executive officer wanted an investigation into the performance of the system. This was to focus on its technical capabilities and its acceptance by users, since it was not delivering the anticipated gains in profits. The results of the investigation reported here reveal problems with the acquisition and implementation process. This case highlights the difficulties that can be encountered by organizations that attempt to tailor an enterprise resource planning system to the existing business practices. In particular, the need for careful impact analysis of proposed software modifications and effective change management within the entire project is demonstrated.
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Edwards & Humphries
ORGANIZATIONAL BACKGROUND
PowerIT Ltd. is based in the north of England. It has an annual turnover of around £40 millions, and a workforce of around 200 people. It is part of the $4 billion Taiwanesebased PowerIT Group, an international company that employs over 40,000 people worldwide, 70% of whom work outside Taiwan. PowerIT Ltd. is classed as an autonomous decision-making company, where the management’s declared business strategy and direction is focused on customers’ needs. For UK and European customers, this provides the cost advantages of a Far Eastern supplier together with the local support and logistics of a European manufacturer. The appendix provides sample charts for this company (its management structure, growth in customers and a table of key performance indicators which are used to assess the company’s quality). The key performance areas that PowerIT focuses on in maintaining its competitive edge are: • • • • • • • •
technology and product innovation; responsiveness; environmental management; cost; customer service, being a self-managing supplier; delivery, always on-time delivery to promise; assured quality; and flexible supply (with minimum inventory, on-time delivery to request).
PowerIT has two business units: PowerIT Production and PowerIT Services. PowerIT Production designs and manufactures 30W to 2KW power supplies for the conversion and conditioning of AC and DC inputs to regulated DC outputs for applications in the networking, communications, financial services and industrial markets. PowerIT Production designs and manufactures custom-engineered power supplies from 30W to 2KW, AC/DC and DC/DC, with a global capacity of 34 million units annually. PowerIT’s design team uses project management software and state-of-the-art circuit, printed circuit board (PCB) and mechanical design tools, in producing their quality assured designs and bringing products to market on time. PowerIT Service’s core business function is to provide full service support to the electronics and electrical industries including full repair reporting and fault diagnosis, rework and refurbishment capability, route cause analysis and full repair capability offering customer support (inc onsite test and re-screen). Value-added business is created by fostering close business partnerships with strategic customers. There is a commitment to investing in and using the latest state-of-the-art equipment in the field. A third area of activity with PowerIT is “PowerIT Learning.” The company has an explicitly defined goal to “…develop the individuals within the organization to have the right knowledge, skills and values required to add value to the business, achieve the highest standards to the customer and ensure personal and professional development for all.” To this end the company has an ICT Learning Centre (a dedicated ICT suite, fully equipped with Internet-linked PCs, provides a vast range of ICT and general business courses through national UK initiatives) and the PowerIT Learning Cell (where
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trainees spend six months acquiring the knowledge, skills and values required to become a production/repair operator).
SETTING THE STAGE
During the 1990s the company had operated, for a number of years, with a materials resource planning (MRPII) system to support its production process. However, in 1999, the decision was made by the chief executive officer and the finance director to replace this with an enterprise resource planning (ERP) system in an effort to modernize practices and provide an integrated software solution to the business. The acquisition of such a system was viewed as a major investment for the organization; after some initial review of available packages, it was expected that the initial cost would be in the region of £360,000 (over $500,000), with on-going costs for training, maintenance, enhancement, and so forth. The system was implemented during 2000; however, one year after the full implementation, some sections of the organization viewed the system as a failure. There was discontent, as it seemed that the system was failing to deliver the anticipated improvements in productivity, and user morale was falling.
Enterprise Resource Planning Systems Background
Enterprise resource planning systems aim to manage all aspects of a business including: production planning, purchasing, manufacturing, sales distribution, accounting and customer service (Scall & Cotteleer, 1999). They are complex systems that are both difficult and costly to implement successfully, and numerous case studies indicate that the final benefits are often uncertain (see for example, Sheu, Chae, & Yang, 2004; Somers & Nelson, 2004). Studies, and the literature reviewed, by Sheu et al. (2004) and Soh, Kien, and Tay-Yap (2000) highlight the fact that there are often significant gaps between the functionality offered by enterprise resource planning systems and that required by the adopting company. Where firms adopt systems that do not meet their business strategies and attempt to configure these systems to meet their own needs, this tailoring greatly adds to the risks with the enterprise resource planning implementation and upgrading (Brehm, Heinzl, & Markus, 2001). These gaps can lead to lack of success in implementation, and potential loss of competitive advantage. The impact of the failure of enterprise resource planning implementations in small to medium-sized enterprises has the potential to be much greater than for larger businesses. This impact is linked to the fact that, often, the success of a small to mediumsized enterprises depends more on the knowledge and experience of their employees than on formalized procedures (which are captured in ERP systems) (Tsiorvas, 2003). Data quality and improvement of business processes are fundamental business drivers for enterprise resource planning systems (Beard & Sumner, 2004) and are implicated as among the top 10 benefits (Hawking, Stein, & Foster, 2004). However, implementing a vendor enterprise resource planning system in small to medium-sized enterprises may either require important changes in business logic or conflict with the existing business practices: both situations can lead to a loss of competitive advantage (Everdingen, Hillergersberger, & Waarts, 2000).
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Other issues arising from the decision to implement an enterprise resource planning system are related to the complexity of available choices for implementation. Enterprise resource planning systems are composed of a variety of modules, and businesses can adopt a mix of modules to suit their needs; therefore, decisions have to be made at the outset by project managers who may be unfamiliar with the impact of choosing, or not choosing, certain combinations. Moreover, in comparing offerings from different vendors, the customer is faced with a range of different product sets and different module names when comparing one vendor to another. For example, Olson (2003, p. 13) summarizes the functional support offered by enterprise resource planning solutions from four major vendors and the modules that each solution offers (this table is reproduced in Appendix Table A1). Even where comparable parts of the business are supported by the different enterprise resource planning systems, the naming conventions can differ radically. Table A1 in the appendix shows, for instance, the functional area “record sales orders and scheduled deliveries, customer information” is dealt with within the SAP R/3 system in the “sales and distribution” module, while Oracle locates it in “marketing sales supply chain,” PeopleSoft in “supply chain management” and JD Edwards in “order management.” In almost all cases therefore a business adopting an enterprise resource planning solution needs to identify which combinations of modules it needs to adopt, and what the impact of these choices are. This choice of modules is often known as “customization” of the system. One theme that recurs in the literature is how success in implementing an enterprise resource planning system depends on balancing the conflicting technological, organizational and people needs, and effectively managing employees in the change process (see for instance, Ash & Burn, 2003). Moreover, effective management of the change process when implementing enterprise resource planning systems depends on an assessment of the potential problems (risks) in all three of these areas. Hawking et al. (2004) found that enterprise resource planning implementations are people-focused projects that rely heavily on change for success. Hamilton (2003), in his book on justification of enterprise resource planning benefits, describes a sliding scale of four classes of enterprise resource planning systems’ success (Figure 1): class A describes a total success and class D a failure. As can be seen from Figure 1 the assessment of success is, again, based on business (organizational) factors, data accuracy and systems integration. Somers and Nelson (2001, 2004) comprehensively analyzed critical success factors from 86 organizations that had completed, or were completing, enterprise resource planning implementations. The authors ranked these into a table of 22 factors. Among the top factors found were: top management support, project team competence, having a project champion, interdepartmental cooperation, clear goals and expectations, and vendor support. Small to medium-sized enterprises often face a hostile competitive environment and consequently need to justify strongly the investment they intend making in a costly system. For instance, the adoption of such a system may be argued from the need to increase productivity (and the profit margin) by reducing wastage and controlling material costs. This case study contributes to the debate by presenting details of how a successful business (PowerIT), with a growing customer base (see Appendix Figure A2) and very good quality control of its products (see Appendix Table A2), failed to Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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Figure 1: Classification of Enterprise Resource Planning Success (Source: Figure 3.5, Hamilton, 2003) Class A
Class B
Class C
Class D
Management team uses its enterprise resource planning system to run the business. Complete and accurate data (99%) ...one set of numbers. Uses the latest versions of enterprise resource planning software. Company gains the full benefits of an enterprise resource planning system. Management team not fully using the enterprise resource planning system. Mostly complete and accurate (90% to 95%) data. Some informal or non-integrated systems. Company gains partial benefits of an enterprise resource planning system. Partial use of enterprise resource planning system, such as sales orders and accounting. Incomplete and inaccurate data (<90%). Not gaining the integrative benefits of an enterprise resource planning system. System not used by anyone. System only running on the computer.
successfully implement its enterprise resource planning system, and thus failed to reap the benefits of increased production control and reduced stock levels. The failure of enterprise resource planning implementations, caused by not assessing the impact of the change, exposes small to medium-sized enterprises to potentially catastrophic business failure. To complete setting the scene, the next subsection outlines how PowerIT approached its acquisition project and the perceived state of the system in the organization at the point at which the investigation team went in.
PowerIT ERP System Acquisition Process & ERP Usage
There are a range of approaches for acquiring systems; these vary from in-house development to purchasing “commercial off-the-shelf” (COTS) packages. Figure 2 summarizes these strategies and presents the typical characteristics that influence the appropriateness of choice of strategy. At PowerIT the chief executive officer and finance director decided to purchase an enterprise resource planning solution from a third-party vendor and have it modified to suit the local conditions (provided that was possible within the available budget). This strategy falls into the “third-party modified off-theshelf solution” approach as shown in Figure 2.
Figure 2: Acquisition Strategies & Their Areas of Relative Strength A c iuq
sition Strategy
Internal Development 3rd-party development (on site) 3rd-party development (off site) 3rd-party modified off-the-shelf solution 3rd-party standard commercial off-the-shelf solution End User Development
Sof tware e D e v lopment xE pertise Medium/High High High High High
A pplic ation D omain xE pertise Variable High High High High
o L a c l Company K nowl ede g High Low (but Accessible) Low Low None
Low
Variable
High
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The reasoning behind this decision lay in the fact that although the company had an internal IT department, the staff were not used to developing software of this scale. Moreover, although they had local company knowledge, they did not have sufficient application domain knowledge to allow them to develop such a system within the timescale required. Therefore, the company was more comfortable with the concept of “buying-in” expertise rather than risking large-scale development. Since the system was to be acquired from a third party, rather than developed in house, PowerIT adopted a tendering process. This process focused on the requirements specification, the evaluation of tenders, and the implementation (roll out) of the system. The tendering cycle is visualized in Figure 3. Within PowerIT the systems acquisition process was conducted in the following manner. •
•
Identify Need for System: The system acquisition was instigated by the chief executive officer and financial director. They were concerned about inadequacies in their current manufacturing resource planning system (MRPII) and unwilling to invest more in a system which they saw as antiquated. They perceived that their competitors within the industry were moving to ERP systems and therefore, after some investigation, decided that an ERP system needed to be acquired. At this point, in order to ensure they had the relevant skills for the procurement process, they hired a business development manager to oversee procurement and implementation. Develop Invitation to Tender: The business development manager identified potential stakeholders, set up user groups representing these, and arranged meetings in order to gather initial requirements. He also undertook “brown paper mapping” exercises with all managers within the system boundary to develop an understanding of the business processes in the company. From this he produced ranked and prioritized requirements, and developed an “invitation to tender.” He also constructed the detailed financial case and, as a result, resources were allocated to the project.
Figure 3: The Tendering Life Cycle Id e ntify N ee d fo r S yste m R o ll O u t syste m
P rodu ce D e taile d S pecifica tion
D e ve lo p Invita tion to Te n d e r The Tendering Process for System 's Procurem ent C h oo se V end o r's S ystem s
S hortlist P oten tia l V end o rs
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•
•
543
Shortlist Potential Vendors: The responses to the invitation to tender were then reviewed by the business development manager by comparing the tenders to the major requirements of the system. This provided a shortlist of three companies. Choose Vendor’s System: Each short-listed vendor was invited to give a detailed presentation to show how their product would satisfy PowerIT’s requirements. After the presentations the business development manager ranked the potential vendors against one another, and one vendor was awarded the contract. Produce Detailed Specification: The detailed requirements were further refined, with user group meetings being called to support this activity. During this phase the detailed implementation schedule was also developed, in conjunction with the vendor, and the level of vendor support to be provided was discussed. Roll Out System: The modified ERP system was provided by the vendor, accepted by PowerIT and began to be used throughout the organization. During the first 18 months of usage of the system, the end users identified additional requirements and desirable modifications: a number of these were implemented.
ERP Usage
Eighteen months after the initial acceptance of the system, it was apparent to the management that the system was unable to fulfill some of the fundamental requirements of the business. The system was still undergoing piecemeal modification in liaison with the suppliers: but the changes were having an unanticipated budgetary impact on PowerIT. The management also believed that the internal IT department (which was seen as fundamentally sound) was having difficulties in supporting the system because of problems with the system vendor’s support service. Linked with this the chief executive officer perceived fall in user morale and became aware of reports of resistance to the system’s use. A team was brought in from the University of Sunderland to investigate the situation in order to provide data that could be used to support the managers in deciding the way forward. The options that the senior management team wanted to consider were whether to: • • •
re-implement the current ERP system and modify the business processes to better match the system, consider proposals from the system vendor to upgrade, or scrap the existing system and look for a “better fit” replacement.
Each of these options had supporters within the senior management team, but each also had serious implications for the organization. Therefore, the senior management team wanted to base its decision on an objective and analytical review of the current state. The findings of the investigation team are presented in the remainder of this case study.
CASE DESCRIPTION
The investigation was to study the status of the system and to report on it, specifically in terms of user acceptance and potential system enhancements. The team assessed (i) the impact of the system throughout the organization, and (ii) determined Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
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the nature of user (dis)satisfaction. To do this a boundary was set for the investigation, encircling all elements of the production process. The management and operational staff were interviewed independently. The team spent six months in the organization carrying out interviews, document analysis and observations (although much of this time was “dead time,” as scheduled appointments were repeatedly cancelled by the organization). This case description provides the results of this investigation. Subsequent detailed analysis is required to identify why the project was seen to have failed, and what advantages could have accrued from using a risk management method during the project. These activities are not reported here, as they are the substance of the further analysis that should be conducted by the readers of this case study. The case description provides sufficient evidence to allow the reader to isolate problems (or identify “missed risks”) and to compare these with the standard literature on risk in systems development environments. The investigating team’s findings are present against the phases of the tendering lifecycle in order to present an ordered storyline.
Initiate Project: Identify Need for Project
Although the initial perception of the team was that the chief executive officer and financial director had been committed to the project, they initiated it and provided the resources. Interviews with the employees at managerial and shop floor levels indicated that there was little active involvement in, or acknowledgment of, the project by the chief executive officer and other senior managers. Therefore, at operational levels the project was not seen as a “high-priority” activity. This perception had ramifications on the way people interacted with the business development manager and related to the project. Although the business development manager had a good technical skills set, he lacked the social skills required to operate effectively in a traditional manufacturing environment. There were obvious personality clashes and conflicts between the business development manager and other managers (and hence their staff). Indications of this were unearthed in the preliminary meeting between the researchers and the chief executive officer, and then between the researchers and the business development manager himself. For instance, as the chief executive officer escorted the researchers to the business development manager’s location, he commented that “… he’s an odd guy — but very clever!” The issues further manifested themselves both with regard to the business development manager’s physical location and his articulated attitude to staff. He was not based in office accommodation alongside other senior managers, but was located in a separate part of the factory with his “territory” marked off by movable room dividers. Within 10 minutes of our preliminary meeting, he gave us an example of how he liaised with other members of staff, viz: when staff requested support or training from the vendors, they had to justify this on an application form, and after training was completed they had to supplement this form with an analysis of how this had benefited them. Failure to do so, he told us, “was a disciplinary matter.” He further explained that he had taken these steps because of his frustration with his failure to engage users and managers with the system. The levels of antagonism and disregard that existed between this manager and others were also detected in “throw-away” remarks made within the interviews with individual departmental managers.
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Develop Invitation to Tender, Shortlist Potential Vendors, & Choose Vendor’s System
The business development manager identified potential stakeholders, set up user groups representing these and arranged meetings in order to gather initial requirements. However, he revealed in interviews that he could not get staff to attend the user group meetings willingly, therefore he had had them made mandatory. This was corroborated by several staff who’d been members of the user groups: moreover, they indicated that although they had to attend, they could not be made to actively participate. The business development manager undertook a “brown paper mapping” exercise with all managers within the system boundary to develop an understanding of the business processes in the company. The use of “brown paper” process mapping to map out the business processes that would be affected by the system was in evidence (the maps were all on the wall within the business development manager’s area). These maps had been developed in conjunction with the PowerIT managers. However, they were not used for any detailed analysis. For instance, they were not used to assess the current usage of software (MRPII and other homegrown applications), nor were they used to evaluate the appropriateness of the current processes. The assumption at this stage was, therefore, that the current processes as understood by the managers were both accurate and appropriate. Moreover, it was assumed that they could be supported by a new ERP system without any analysis of the current systems usages (and associated work practices). The three short-listed vendors were invited to give detailed presentations on how their systems could support PowerIT’s needs. In practice, of the three short-listed vendors, one company didn’t respond to the invitation to demonstrate its product. One gave a generic presentation about the product. The third made some reference to the PowerIT environment and how the vendor’s product would fit. The business development manager was not truly satisfied with the response of any of the vendors, not even the one that had made an attempt to tailor the presentation to PowerIT’s needs. However, despite these misgivings the third vendor was awarded the contract and the detailed requirements were further refined. The business development manager did not consider that he had the option to stop, or review, the acquisition process at that point. Neither did he discuss his concerns with the chief executive officer and other senior managers. He wondered, in discussion with the investigators, whether, had he done this, could it have led to a review of the options to: (i) rerun the invitation to tender, (ii) bring back the short-listed vendors for detailed product demonstrations or (iii) consider the cancellation/suspension of the project. Instead he recommended the award of the tender to a vendor and proceeded to the next phase.
Produce Detailed Specification and Roll Out System
The resistance of the users in contributing to the acquisition process continued in this phase. As the phase continued, positions became entrenched. Therefore, the opportunities to thoroughly consider the impact that the new system would have on working practices and existing IT were lost. This was a point at which the brown paper maps could have been invaluable. The business development manager worked with the vendor to devise the implementation schedule and the associated training and support
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package. The business development manager also attempted to liaise with departmental managers to ensure that their needs and schedules were incorporated into this plan. However, this internal liaison was incomplete since critical staff (such as the production manager) failed to engage with the process and would not provide the required information. Inevitability, this resulted in “best guesses” being made and resultant errors creeping in. The modified system was provided by the vendor, accepted by PowerIT and rolled out for usage. Over the first 18 months, a variety of modifications were identified by users, some were implemented by the vendor in agreement with PowerIT. Dissatisfaction grew over time and was palpable by the time the investigation team was called in to review the situation. Missing functions and difficulty in using the system were cited as being major impediments in using the system. The system was accepted and rolled out. However, from this point forward it became clear to a number of users that there were system integration issues that had not been considered clearly. For instance: •
•
In addition to the MRPII system (which was replaced), there were other software packages that were still in place. These hadn’t been considered during the systems acquisition process. Substantial amounts of work were supported by supplementary packages (typically end-user applications in Microsoft Excel and Access). These had been used in conjunction with the MRPII systems and were still being used to circumvent problems encountered using the enterprise resource planning system. The existence of these end-user applications was, typically, unknown to the managers. Eighteen months after the roll-out of the system, there were still instances of inaccurate data; much of this was a result of poor procedures for managing the importing of data from the MRPII system.
Other issues that impacted on the functional performance of the system were that, although “minor” modifications were identified by users, approved by management and implemented by the vendor, the impact of these changes were not assessed. One of the investigators tracked back through the authorized changes that had been made to the system since its delivery. This enabled her to isolate the cause of one of the major areas of frustration with the system. This was the inability to run a “backflushing” function: backflushing refers to a method of updating stock levels and is defined as “the deduction from inventory, after manufacture, of the component parts used in a parent by exploding the bill of materials by the production total of parents produced” (Institute of Logistics and Transport, 2004). This had always been highlighted as a critical requirement from the initial specification onwards. However, one of the modifications that had been approved had resulted in this feature becoming inaccessible. The investigation revealed that most of the other problems that had been reported as causing dissatisfaction seemed to stem from two primary features: poor user interface design and inappropriate levels of training. For instance:
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The inability to create some reports and adequately handle the report writing module was a major irritation for the managers and supervisors in PowerIT. Users lacked relevant job-specific documentation in terms of how to use the ERP system within PowerIT. There had been a lack of appropriate initial system training.
The Investigators’ Report to PowerIT
At the end of the investigation, the team provided a detailed report to the chief executive officer focusing on the key features that the company needed to address. These are summarized here. The review of the system acquisition process had shown that errors had been made by the parties involved in the process. However, despite these errors, the analysis of the extent to which the system had become embedded in the organization (and its working practices) showed that the perception of the system as a failure was far from the full picture. In fact, an analysis of the current usage of the system took data about the original expectations of the senior managers (in terms of where and how the system would be used) and compared it against a summary of the data that had been gathered in the task-trailing process (showing actual usage). This simple analysis of the system indicates that it was being used more extensively in some areas and less in others than had been anticipated (Figure 4). Moreover, the reason for the low usage in the Service department was identified as being linked to a training need that could be rectified internally, whereas the shortfall in “Design for Manufacture” (and low usage in “Planning and Production”) is related to the disablement of the backflushing feature.
Figure 4: “Expected” vs. “Actual” Usage for the ERP System 100% 90%
Expected by SMT Detected (operational)
Percentage Usgae
80% 70% 60% 50% 40% 30% 20% 10%
ce Ac co un ts & Pr od uc t io n an ni ng Pl
ity
Area of Business Activity
Se rv i
Q ua l
Tr ad ed an uf ac tu M re an uf ac tu rin g M at er ia ls fo rm
De sig n
De sig n
Sa le s Q uo ta tio n
Cu st om
er O rd er s
0%
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CHALLENGES/PROBLEMS FACING THE ORGANIZATION
From the investigation two main themes were identified that needed to be addressed by PowerIT: the first focused on the system from a technical perspective, the second from a personnel and organizational perspective.
Technical Changes Needed
The functional capability of the ERP system was very close to that required by the organization. However, in total 29 system modifications were identified: 5 were outside the scope of the initial system specification (and therefore could not have been expected to be provided). Of the remaining 24 most related to changes in presentation of material (on screens or in reports) or in navigating from screen to screen. Very little was required under a “functionality” heading. The actions required to improve the system from the users’ viewpoint subdivide into changes the vendor would need to make, and internally focused actions and decisions. A number of modifications were identified that required the vendor to provide the solution, these ranged in impact, scope and costs. Three items were estimated to be costly (over £1,500, a “cut-off” value for PowerIT). Ten items were identified as requiring system modification where the budget was estimated as at less than £1,500. These predominantly related to alterations to screen designs and provision of additional reports; there were no underlying changes required to the database or functionality. All such changes need to be justified, resourced and an impact assessment undertaken before committing to the change(s). There were five items identified where additional functionality was required, but this functionality had been identified as existing within the ERP package, although not enabled for usage. Four of these items had been identified within the original specification, but had not been of top priority. Accessibility to these features is purely dependent on PowerIT agreeing to pay the vendor to “switch on” the features. Finally, there were three items (two in accounts, one in production) where technical problems existed, and the vendor agreed that these came within the terms of the maintenance contract and therefore could be corrected at no cost to the company. There were three areas in the accounts department where there was a need to export data from the system into another specialist package that was used to generate reports on specific stationery (e.g., for financial returns). These modifications could be achieved by the internal IT department, provided the staffing resource was available. Finally, five additional system change requests were identified that had no relationship with the original system specification. They were clearly outside the expected functionality of the system and therefore would only be considered by PowerIT for future enhancements if the decision were taken to keep the current ERP system.
Organizational Changes Needed
The technical capability of the system was shown to be essentially adequate. However, organizational issues remain as central areas requiring change: these can be subdivided into “Communication and Relationships” and “Understanding the Busi-
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ness.” During the roll-out of the system, the original vendors were taken over by a larger software house. The close relationship that had developed between the company and a small set of consultants was lost. PowerIT found the new organization difficult to deal with, and the level of trust that previously existed between the partners has not been reestablished. The seriousness of this deterioration was evidenced by the sight of letters exchanged between the two parties at senior management level discussing (in heated terms) claims and counter claims about broken promises, failure to deliver and unrealistic expectations. At a project level the response from the vendors to requests for training and consultancy has been seen by the users as increasingly sluggish and lack-lustre. Issues raised with the consultants had often been subject to serious delays before solutions were found, and the feeling of the PowerIT staff affected was that the new consultants did not have the necessary expertise in this ERP package to help them effectively. It must be noted, however, that this is a “one-sided” story, since the investigators were unable to meet the vendors to evaluate their perceptions of the project. The most significant problems still existing within the project are more attitudinal than functional. On an organizational level, as a result of the probing of the investigators, three departments identified specific instances where the system was used inappropriately because staff had not received relevant training. The training needs identified were categorized both by general and specific departmental needs. Much of the required training was not in the systems elements (e.g., how to log on, which functions to choose), but was not related to how to effectively use the system to support current work practices. However, the investigators’ analysis of the data related to user satisfaction and capability identified in all areas individuals who could be treated as “experts” and who could provide “on-the-job” training within departments. The need for training was recognized within PowerIT, and a structured approach to training through workshops led by such experts was also implemented. Much of this reflected an issue in building confidence rather than understanding the system per se. During the course of this investigation, there was a distinct lack of clarity from the workforce about the business processes they worked within. For instance few employees could name processes or tasks they were involved in. This was highlighted again during the system impact analysis. This case highlights the technical failures; these can be fixed but more importantly, there is a need to understand the causes of the problems and how people factors impacted on the efficiency and ultimate success of the system. In order to avoid future costly implementation problems, analysis of the issues in a sociotechnical systems context needs to be undertaken. How would you advise PowerIT to reassess the impact and consequences of their available options, which are to: • • •
re-implement the current ERP system and modify the business processes to better match the system, consider proposals from the system vendor to upgrade, or scrap the existing system and look for a “better fit” replacement?
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REFERENCES
Ash, C.G., & Burn, J.M. (2003). A strategic framework for the management of ERP enabled e-business change. The International Journal of Operational Research, 146, 374387. Beard, J.W., & Sumner, M. (2004). Seeking strategic advantage in the post-net era: Viewing ERP systems from the resource-based perspective. Journal of Strategic Information Systems (in press). Brehm, L., Heinzl, A., & Markus M.L. (2001). Tailoring ERP systems: A spectrum of choices and their implications. Proceedings of the 34th Annual Hawaii International Conference on System Sciences. Everdingen, Y., Hillergersberger, J., & Waarts, E. (2000). ERP adoption by European midsize companies. Communications of the ACM, 43(3), 27-31. Hamilton, S. (2003). Maximizing Your ERP System. Boston: McGraw-Hill. Hawking, P., Stein, A., & Foster, S. (2004) Revisiting ERP systems: Benefit realization. Proceedings of the 37th Annual Hawaii International Conference on System Sciences. Institute of Logistics and Transport. (2004). Glossary of supply-chain inventory management terms. Retrieved April 27, 2004: http://www.iolt.org.uk/process/ glossary.asp?B Olson, D.L. (2003). Managerial Issues of Enterprise Resources Planning Systems. Boston: McGraw-Hill. Scall, C.X., & Cotteleer, M.J. (1999). Enterprise Resources Planning (ERP). Boston: Harvard Business School Publishing. Sheu, C., Chae, B., & Yang, C.-L. (2004). National differences and ERP implementation: Issues and challenges. Omega the International Journal of Management Science (in press). Soh, C., Kien, S.S., & Tay-Yap, J. (2000). Cultural fits and misfits: Is ERP a universal solution? Communications of the ACM, 43(3), 47-51. Somers, T.M., & Nelson, K.G. (2001). The impact of critical success factors across the stages of enterprise resource planning implementations. Proceedings of the Hawaii International Conference on System Sciences. Somers, T.M., & Nelson, K.G. (2004). A taxonomy of player and activities across the ERP project life cycle. Information and Management, 41, 257-278. Tsiorvas, C. (2003). ERP implementation and actual work practice in SMEs: A dialectic perspective. Software Engineering Group internal report. Sunderland, UK: University of Sunderland.
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APPENDIX Figure A1: PowerIT Organizational Chart
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Figure A2: PowerIT Customer Growth Chart
annual growth in customers
6000 5000 4000 3000 2000 1000 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Table A1: Modules offered by Leading Vendors (Olson, 2003, p. 13) Functional Description Records sales orders and scheduled deliveries, customer information Purchasing and raw materials inventory, workin-progress, finished goods Production planning and scheduling, actual production Product inspections, material certifications, quality control Preventative maintenance, resource management Recruiting, hiring, training, payroll, benefits General ledger account transactions, generates financial statements Internal management, cost analysis by cost centre
SAP SD (sales and distribution) MM (materials management) PP (production planning) QM (quality management) PM (plant maintenance) HR (human resources) FI (financial accounting)
Oracle Marketing Sales Supply Chain
PeopleSoft Supply chain management
JDEdwards Order management
Procurement
Supplier Relationship management
Inventory management procurement Manufacturing management
Enterprise performance management Enterprise service automation Human capital management Financial management solutions
Technical foundation
Manufacturing
Service Human resources Financials
CO (controlling)
Fixed asset purchase and depreciation
AM (asset management)
Asset management
R&D, construction, marketing projects
PS (project system)
Projects. Contracts.
Automate system, task-flow analysis, prompt actions Best practices
WF (workflow)
Workforce management Financial management Time and expense management Enterprise asset management Project management, Subcontract management, Real estate management
IS (industry solutions)
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Table A2: PowerIT Quality & Dependability Table Based on Data from 2000 Description Delivery Volume Accuracy Delivery Mix Accuracy Out of Box Audit* Product Integrity Audit Customer Complaints % Scrap
Customer Target 98% 90% 2,500 DPPM# 10,000 DPPM Zero Complaints <10%
Average 100% 100% 348 DPPM 0 DPPM Zero Cases 4.69%
* Ready-to-ship product samples are randomly selected to verify conformance to established product specifications and company standards. # DPPM = Defective parts per million
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554 About the Authors
About the Authors
Mehdi Khosrow-Pour, D.B.A. is currently the Executive Director of the Information Resources Management Association (IRMA), USA and Senior Academic Technology Editor for Idea Group Reference, USA. Previously, he served on the faculty of the Pennsylvania State University as a Professor of Information Systems for twenty years. He has written or edited over thirty books in information technology management, and he is also the editor-in-chief of the Information Resources Management Journal, Journal of Electronic Commerce in Organizations, Journal of Cases on Information Technology, and International Journal of Cases on Electronic Commerce. *
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Cheryl Aasheim is assistant professor in IT in the College of Information Technology at Georgia Southern University, USA. In 2002 she received her PhD in decision and information sciences from the University of Florida. Dr. Aasheim’s publications include papers on research areas including information retrieval, text classification and the impact of IT. David J. Auer is the director of information systems and technology services in the College of Business and Economics at Western Washington University (WWU), USA. He holds degrees from the University of Washington (BA) and WWU (BA, MA, MS) and has published several textbooks. Dirk Baldwin is an associate professor of management information systems and department chair of business at the University of Wisconsin, Parkside. Professor Baldwin conducts research related to multiple view systems, decision support systems, and document management. He has published in journals such as the Journal of MIS and IEEE Transactions on System, Man, and Cybernetics. He has coauthored books on MS Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
About the Authors 555
Access. Professor Baldwin is chair of the Information Technology Practice Center and was named Wisconsin Idea Fellow by the University of Wisconsin Board of Regents. Daniel M. Berry earned his PhD in Computer Science from Brown University (1974). He was on the Faculty of the Computer Science Department at the University of California, Los Angeles (1972- 1987). He was with the Computer Science Faculty at the Technion, Israel (1987-1999). From 1990 to 1994, he worked for half of each year at the Software Engineering Institute at Carnegie Mellon University (USA), where he was part of a group that built CMU’s Master of Software Engineering program. During the 1998-1999 academic year, he visited the Computer Systems Group at the University of Waterloo in Waterloo, Ontario, Canada. In 1999, Dr. Berry moved to the School of Computer Science at the University of Waterloo. His current research interests are software engineering in general, and requirements engineering and electronic publishing. He has supervised 21 PhDs, numerous master’s students, and has received a Noted Instructor Award in Computer Science at Technion. He has consulted extensively in industry. He has served as associate editor for two journals and has been a referee for numerous journals. He has chaired and participated on programming committees for many conferences and workshops. He has published extensively in refereed journals and contributed to many refereed conferences, symposia, and books. Zeno Bisoffi earned his medical degree from the University of Padua (1980), a DTM&H from the London School of Tropical Medicine (1982), and a certificate of Public Health and Preventive Medicine from the University of Padua (1992). From 1982 to 1990, he worked in Nicaragua and in Burundi in clinic, epidemiology, and public health. Since 1990, he has worked at the Centre for Tropical Diseases at the Sacro Cuore Hospital, Negrar, Verona, Italy, where he was appointed head in 2000. His main scientific interests are tropical medicine, clinical epidemiology, and the mathematical basis of clinical reasoning. Pieter Blignaut is an associate professor at the Department of Computer Science and Informatics at the University of the Free State, South Africa. He is also head of the Centre of Excellence at the university that focuses on ICT related research. He teaches programming in high level languages as well as software engineering to senior students. His research interests are focused on adapting user interfaces for users with limited reading skills and the cognitive aspects that characterize successful computer users. Koenraad Blot holds an MD from Ghent University and a Diploma of Tropical Medicine from the Antwerp Institute of Tropical Medicine. From 1987 to 1990, he worked on various African missions for Doctors without Borders. During his residency (1991-1992) at the Institute for Tropical Medicine, he co-developed the first Windows® version of KABISA. In 1992, he joined Pfizer Belgium as medical advisor of anti-infectives. Following his move to Pfizer’s New York headquarters in 1995, he has held various national, regional, and international research-related assignments. He is currently the director of medical operations with Pfizer Canada Inc., Canada. Hans P. Borgman is a professor of business administration and information management at Leiden University School of Management, The Netherlands. Previous appointments include the University of Michigan Business School in Ann Arbor, USA, the European Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
556 About the Authors
Business School in Oestrich-Winkel, Germany, and the Erasmus University in Rotterdam (The Netherlands), where he also obtained his PhD. Dr. Borgman’s current research interests include management aspects of e-business, data warehousing, and the adoption of new technologies in organizations. In addition, he is active in consulting, on (supervisory) boards, as a frequent speaker at academic and business conferences, and in executive education programs. Tom Butler ([email protected]) is a senior lecturer in Information Systems at University College Cork, Ireland. Before joining academia, Dr. Butler had an extensive career in the telecommunications industry. His research is primarily qualitative, interpretive and casebased in nature and has two related major streams: IT capabilities and the development and implementation of information systems in organizations; and knowledge management systems. Other research interests include hermeneutics, e-learning, educational informatics, IT education and the digital divide. Dr. Butler received his PhD from the National University of Ireland at UCC, where his doctoral research examined the role of IT competencies in building firm-specific IT resources in knowledge-intensive organizations. Bongsug Chae (PhD, 2002, Texas A&M University) is an assistant professor of management information systems at Kansas State University, USA. His current research interests are in the area of large-scale information system and information infrastructure, knowledge management, technology adaptation, decision support systems, and ethics and social theories for IS research. His work also appears in Decision Support Systems, OMEGA: The International Journal of Management Science, Information Resource Management Journal, Electronic Journal of Information Systems for Developing Countries, International Journal of Information Technology and Decision Making, Journal of KMCI and others. Suresh Chalasani is an associate professor of management information systems at the University of Wisconsin, Parkside, USA. Professor Chalasani specializes in supply chain management systems, e-commerce systems, technologies for e-commerce systems, parallel computing, and bioinformatics applications. He is a member of IEEE and IASTED, and has published extensively in IEEE and journals and conferences in the area of information systems. Dr. Chalasani was a recipient of multiple research and instructional grants from the National Science Foundation and the University of Wisconsin System. Debabroto Chatterjee (Dave) is assistant professor at the Terry College of Business, The University of Georgia, USA. His research interests lie at the interface between information technology and strategy. His work has been published in several reputed journals like MIS Quarterly, Journal of Management Information Systems, Communications of the ACM, Electronic Markets, Information Resource Management Journal, and Annals of Cases on Information Technology. He has given invited talks in premier academic and business institutions, both in the U.S. and abroad. Other notable recognitions have come in the form of the Boeing Faculty Fellowship award in 1998, nomination to the United Nations panel of e-commerce experts in 2000, and invited talk on e-business at the SIM 2003 National Conference. Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
About the Authors 557
Susan J. Chinn, assistant professor of MIS at the University of Southern Maine, USA, holds a PhD from Kent State University and an MS from Virginia Commonwealth University. She spent several years in industry as a programmer/analyst and consultant. Dr. Chinn has taught systems analysis, systems design, expert systems, programming languages, and introductory undergraduate and graduate MIS survey courses. Her research interests include information technology in non-profit organizations, organizational use of the Internet, and tools and techniques for systems analysis and design. As traffic admin manager, Iann Cruywagen supervises the control room of Interstate Bus Lines, South Africa. He has his pulse on the daily operational activities of the company and is also in close contact with passengers. He holds two MSc degrees and has also completed a diploma in transport economics. Having been a bus driver himself for eight years, he is well-acquainted with a wide variety of aspects in the passenger transport industry. Charles K. Davis is a professor of MIS at the University of St. Thomas in Houston, Texas, USA. He is an authority on the use of information technology in business. In addition to authoring over 100 articles, monographs, books, and reports, he has held numerous technical and managerial positions with IBM Corporation, Chase Manhattan Bank, Occidental Petroleum Corporation, Pullman Incorporated, and Deloitte & Touché. He received a PhD in MIS from the University of Houston, an MBA from Columbia University, an MAT from Harvard University, and a BS from Oklahoma State University. Folker den Braber holds an MSc in Computer Science from the University in Leiden, The Netherlands. He has been employed as a research scientist in the Cooperative and Trusted Systems group of SINTEF Information and Communication Technology since 2001. Through his work on several projects around model-based risk analysis, he has been able to apply and increase his knowledge about specification, design and modeling. Other fields of interest are formal methods, Petri Nets and Genetic Algorithms. Georgios I. Doukidis is a professor and chairman in IS at the Department of Management Science and Technology and director of the eCommerce MSc Specialization at the Athens University of Economics and Business (AUEB). He has published 12 books and more than 130 papers, and has acted as guest editor for the Journal of Operational Research Society, the European Journal of Information Systems, the Journal of Information Technology and the International Journal of Electronic Commerce. Since 1991, he is the director of the eBusiness Center of AUEB (called ELTRUN) — one of the largest in Europe with more than 40 researchers — which has completed successfully more than 40 innovative R&D projects. Dennis Drinka is an assistant professor of Management Information Systems at the University of Alaska Anchorage, USA. He received his BS in Finance from the University of Illinois Urbana-Champaign and his PhD in Management Science and Information Systems from the University of Texas at Austin. Among others, he has published in Decision Sciences, European Journal of Operational Research, and Applications of Management Sciences. His research interests are in the areas of decision support, mathematical modeling and innovative course design. He currently teaches object Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
558 About the Authors
oriented programming in .Net, project management, Web development, and systems design, development, and implementation courses. Helen M. Edwards is professor of software engineering at the University of Sunderland, UK. Her original background was in mathematics (she has a BSc in applied mathematics and an MSc in engineering mathematics) but she focused, for her PhD, in the area of software engineering methods. She is a chartered engineer (CEng) and a member of the British Computer Society. Her recent research work has focused on risk assessment of systems change in small-medium enterprises. She teaches at the master’s level as well as supervising doctoral candidates in this area. She has published widely in the area of software engineering and information systems. Audrey Grace ([email protected]) is a lecturer in information systems at University College Cork, Ireland. She has more than 12 years of industry experience, principally in the development, implementation and mobilisation of business solutions from both a business and a technical perspective. Audrey is currently undertaking a PhD with the BIS Department at UCC and already holds a BSc in computer science; a CDip in accounting finance; a HDip in management and marketing; and an MSc in management information systems. Her research interests focus primarily on learning management and knowledge management, particularly on IS that support learning and the management of learning. Ruth Guthrie is a professor of Computer Information Systems at California Polytechnic University, Pomona, USA. She has experience in systems engineering, software test and program management of space based IR sensor programs. She has a PhD from Claremont Graduate University, an MS in Statistics from the University of Southern California and a BA in Mathematics from Claremont McKenna College. Her research interests are user interface design and computer ethics. She has authored several papers in a variety of areas including two books on Web development. Currently, she is associate director for AACSB for the College of Business at Cal Poly and is involved in several Web development efforts using video embedded flash. Hauke Heier is a fellow at European Business School in Oestrich-Winkel, Germany, and a visiting assistant professor of business administration and information management at Leiden Institute of Advanced Computer Science, at Leiden University School of Management, The Netherlands, and at Munich Business School, Germany. Dr. Heier holds a BA and MS in information systems and organizational behavior from European Business School, an MBA from James Madison University, USA, and a PhD from Leiden University. His current research interests include knowledge management systems, open source initiatives, and the adoption of new technologies in organizations. In addition, he is active as a frequent speaker at academic conferences. After many years as an academic library director, A.S.C. (Tony) Hooper now teaches information systems management at the Victoria University of Wellington, where he is program director for the Master’s of Information Management degree.
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About the Authors 559
Mickey Howard is a researcher and lecturer in operations andinformation systems at the School of Management, University of Bath, UK. He worked in the UK for 10 years in industrial design and engineering using computer-aided design to bring to market a wide range of products — from furniture to automotive components. Dr. Howard joined the University of Bath as a research officer on the 3DayCar Programme in 1999. He holds a first class degree in Industrial Design from Newcastle Polytechnic, a Masters in Business Administration from Durham University Business School, and has recently completed his PhD in inter-organizational systems and e-business. Lynne P. Humphries is a senior lecturer at the University of Sunderland, UK. Her original background was in the environmental sciences (BSc, geology), and she is a member of the Chartered Institute of Water Management. After developing an interest in computing through working for the UK’s Open University, she gained an MSc in computer based information systems and now teaches a master’s level module in risk assessment. She has publications in the environmental domain and in geographical information systems, and her research area is in risk assessment and interactive tools for management of decision support systems. Murray E. Jennex is an assistant professor at San Diego State University, USA, and president of the Foundation for Knowledge Management (LLC). Dr. Jennex specializes in knowledge management, system analysis and design, IS security, and organizational effectiveness, and is the editor-in-chief of the International Journal of Knowledge Management. He has managed projects in applied engineering and business and information systems development and implementation. His industrial and consulting experience includes nuclear generation, electrical utilities, communications, health services, and governmental agencies. Dr. Jennex is the author of numerous publications on knowledge management, end user computing, international information systems, organizational memory systems, and software outsourcing. He holds a BA in chemistry and physics from William Jewell College, an MBA and MS in software engineering from National University, and an MS in telecommunications management and PhD in information systems from the Claremont Graduate University. Dr. Jennex is also a registered professional mechanical engineer in the state of California. Jon M. Junell is the manager of information systems in the College of Business and Economics at Western Washington University (WWU). He holds a BA from WWU and has worked in IBM’s field services operations. Panagiotis Kanellis is currently a program manager with Information Society S.A. in Athens, Greece. He was educated at Western International University in business administration (BSc), at the University of Ulster in computing and information systems (Post-Graduate Diploma), and at Brunel University in data communication systems (MSc) and information systems (PhD). He is a research fellow in the Department of Informatics and Telecommunications at the National and Kapodistrian University of Athens and an adjunct faculty member at the Athens University of Economics and Business. Luc Kestens, born in 1955, studied biomedical sciences at the University of Antwerp, Belgium and obtained his PhD on experimental immunopathology of murine schistosoCopyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
560 About the Authors
miasis in 1987. Since the early days of the HIV pandemic in 1983, he became involved in HIV research at ITM and in the field (predominantly Africa). He published more than 100 scientific papers in international scientific journals and books. He was appointed professor of immunology in 1992 and became head of the Laboratory of Immunology in 1995 and chairman of the Department of Microbiology of ITM in 2000. He has lectured on immunology at the University of Antwerp since 2002. Stefano Laganà was born in Lecco, Italy. He studied ICT at the University of Milano. He has been active as a freelance analyst, programmer and database and datawarehouse manager. He has written the third version of KABISA in collaboration with the ITM, and he is involved in the writing of the Electronical Medical File in the Ospedale Sacro Cuore at Negrar, Italy. Wai K. Law ([email protected]) is associate professor at the School of Business and Public Administration, University of Guam, Guam. He received his PhD in strategy & policy, and MS in computer science, both from Michigan State University. Dr. Law’s research interests are in the areas of strategic information systems, public sector information management, information resources development, and information technology education. Thomas Levermann, from Germany, has a degree as Dipl-Kfm and LLM. He worked as a corporate finance consultant in the field of mergers and acquisitions and financial transactions. Furthermore, he worked as assistant, consultant and controller for different industries and European institutions. Jerry Luftman is a distinguished professor at Stevens Institute of Technology, School of Management, USA, and executive director of Stevens’ information systems programs. In this capacity, Dr. Luftman manages and conducts projects, research, and executive programs about business-IT alignment. Prior to his work at Stevens, Dr. Luftman worked at IBM as a program manager at the Advanced Business Institute, where he played a significant role in defining and introducing IBM’s Management Consulting Group. His framework for assessing strategic alignment maturity is fundamental in helping clients achieve the management, technology and business process changes required to achieve improved IT-business integration. Andreas Manuth is a member of the knowledge management team at Siemens Information and Communication Networks, department Group Strategy, Munich, Germany. He held previous positions as sales engineer and management consultant in German and international telecommunication carriers. Mr. Manuth holds an MS in computer science from Karlsruhe University, Germany. His current interests include knowledge management motivators and the adoption of new technologies in organizations. In addition, he is active as a frequent speaker at business conferences and executive education programs. Drakoulis Martakos is an associate professor at the Department of Informatics and Telecommunications, National and Kapodistrian University of Athens, Greece. He received his BSc in physics, MSc in electronics and radio communications, and PhD in Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
About the Authors 561
real-time computing from the same university. Professor Martakos is a consultant to public and private organizations and a project leader in numerous national and international projects. He is author or co-author of more than 50 scientific publications and a number of technical reports and studies. Arne Bjørn Mildal has worked for NetCom, Norway, since 1996 and has held various positions within the IT organization. His present position is development manager of IT & Internet with responsibility for all IT development activities within NetCom. This includes internal IT systems for billing and customer care, ERP systems, portals and selfservice applications for customers and partners. Before joining NetCom he worked in several large projects, building offshore constructions for the North Sea with responsibility for instrumentation and telecom engineering and testing. He holds an MSc in Electrical and Computer Science from the Norwegian University of Science and Technology (1988). Jone Nes holds a master’s degree from the Norwegian School of Management. After working as a consultant for Avenir (now Ementor), where he worked with system development and project management, he is now project leader for NetCom, Norway. He works mainly on development projects with a focus on customer aspects, both internal and external. The past year he has been the driving force behind the establishment of a data management group within NetCom, with the task of designing a logistic data model for the entire organization in order to facilitate internal business communication. David Paper is an associate professor at Utah State University, USA, in the Management Information Systems (MIS) Department. He has several refereed publications appearing in journals such as Information & Management, Journal of Information Technology Cases and Applications, Information Resource Management Journal, Communications of the AIS, Long Range Planning, Creativity and Innovation, Accounting Management and Information Technologies, Journal of Managerial Issues, Business Process Management Journal, Journal of Computer Information Systems, and Information Strategy: The Executive’s Journal. He has worked for Texas Instruments, DLS, Inc., and the Phoenix Small Business Administration. He has performed IS consulting work for the Utah Department of Transportation (Salt Lake City, UT) and the Space Dynamics Laboratory (Logan, UT). His teaching and research interests include change management, process reengineering, database management, e-commerce, and enterprise integration. Theresa A. Pardo ([email protected]) is the deputy director of the Center for Technology in Government located at the University at Albany, State University of New York, USA. As deputy director, Dr. Pardo works with a variety of government, corporate, and university partners on applied research projects on the policy, management, and technology issues surrounding information and information technology use in the public sector. She is a member of the faculty of information science and public administration and policy programs and has written articles, research reports, and case studies focusing on information technology innovation in the public sector, electronic information access programs, government information strategy and management, and interorganizational information integration. Her research includes projects funded by the Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
562 About the Authors
National Science Foundation, the National Historical Publications and Records Commission, the Library of Congress, and the United States Department of Justice. She holds a PhD in information science from the University at Albany, State University of New York. Karri Perez ([email protected]) has a PhD in human and organizational development from the Fielding Graduate Institute. Her research interests include human resources management, intercultural communications, and workplace adaptation. Dr. Perez is vice president of human resources at a financial institution, and has also served as an adjunct professor in human resources at the University of Guam, Guam, and the University of Phoenix. Marshall Scott Poole (PhD, 1979, University of Wisconsin) is a professor of information and operations management and of communication at Texas A&M University, USA. He has conducted research and published extensively on the topics of group and organizational communication, conflict management, computer-mediated communication systems, implementation of information systems, and organizational innovation. He has coauthored or edited 10 books including Communication and Group Decision-Making, Research on the Management of Innovation, Organizational Change and Innovation Processes: Theory and Methods for Research, and Handbook of Organizational Change and Innovation. Victor Portougal is associate professor in the Department of Information Systems and Operations Management, Business School, The University of Auckland, New Zealand. His research interests are in quantitative methods both in management science and information systems. In information systems his research specializes in security, information systems design and development, and ERP. Dr. Portougal’s practical and consulting experience includes information and ERP systems design and implementation for companies in Russia and New Zealand. He is the author of many articles in scholarly journals, practitioner magazines, and books. He holds degrees from the University of Gorki, Russia (BSc, MSc, Computer Science), Academy of Sciences, Moscow (PhD, Operations Research), and the Ukrainian Academy of Sciences, Kiev (Doctor of Economics). Philip Powell is deputy dean and professor of information management at the School of Management, University of Bath, UK. Formerly, he was a professor of information systems, University of London, and director of the Information Systems Research Unit at Warwick Business School. Prior to becoming an academic, he worked in insurance, accounting and computing. Currently he is researching IS strategy and planning particularly for small businesses and in health care, IS evaluation, issues of flexibility in and from IS, inter-organisation systems, and e-commerce. He has authored five books on information systems and financial modeling and more than 80 refereed journal publications. Katerina Pramatari holds a PhD from Athens University of Economics & Business, Greece. She has worked as a research officer in the ELTRUN research group for several years, working in areas such as efficient replenishment, supply-chain collaboration practices, electronic marketplaces, electronic retailing, digital marketing, etc. She has Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
About the Authors 563
worked as a system analyst for Procter & Gamble European Headquarters for two years, on the development of global category management applications, and another year in the Marketing Department of Procter & Gamble Greece. During her studies she has been granted eight state and school scholarships and has published more than 35 journal and conference articles. Charlotte A. Pryor, assistant professor of accounting at the University of Southern Maine, USA, holds a PhD from the Pennsylvania State University and a CPA certificate. Professor Pryor teaches accounting information systems, and managerial and governmental & not-for-profit accounting. For a number of years, Dr. Pryor was the chief accounting officer for the Washington, DC region of the National Park Service and treasurer of the Potomac Appalachian Trail Club. She is a member of the AICPA and the IMA. Her research interests primarily involve accounting education and accounting and information systems issues in small businesses and government and non-profit organizations. Mahesh S. Raisinghani, from India, is program director of e-business and faculty of information systems at the University of Dallas’ Graduate School of Management, Texas, USA. Dr. Raisinghani was the recipient of the 1999 UD Presidential Award and the 2001 King Hagar Award for excellence in teaching, research and service. His research focuses on strategic information systems and e-eusiness. Isabel Ramos earned her PhD in information technologies and systems from the University of Minho, Portugal, (2001). She is currently an assistant professor in the Information Systems Department, University of Minho, Portugal. She leads a research group in knowledge management. She also conducts research in requirements engineering. She is an associate editor of the new International Journal of Technology and Human Interaction. Other research and teaching interests include organizational theory, sociology of knowledge, history of science, and research methodology. She has authored several scientific papers presented at international conferences and workshops, and published in conference and workshop proceedings and journals. Steven C. Ross is an associate professor of MIS at Western Washington University (WWU), USA, and was previously on the faculties of Montana State and Marquette Universities. He holds degrees from Oregon State University (BS) and the University of Utah (MS, PhD), and conducts research in the areas of microcomputer software, systems development, and applications of database technology. Suprateek Sarker is an associate professor of information systems at Washington State University, USA. His research interests include virtual teams, BPR, IS implementation, and qualitative research methods. Joseph Sarkis is currently a professor of operations and environmental management in The Graduate School of Management at Clark University, USA. He earned his PhD from the State University of New York at Buffalo. His research interests include supply chain management and management of technology with a specific emphasis on environmentally conscious operations and logistics, performance management, justification issues, Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
564 About the Authors
and enterprise modeling. He has published more than 160 articles in a wide variety of peer reviewed academic journals, conferences and edited books. Christoph Schneider is a PhD student in MIS and graduate assistant/instructor at Washington State University, USA. Prior to starting the PhD program at WSU, he has studied at the Department of Business Informatics at the Martin-Luther University in Halle, Germany. Maha Shakir ([email protected]) is an assistant professor of information systems at Zayed University, UAE. Her primary research areas are strategic IS implementations, management information systems and enterprise system applications where her publications appeared in the Journal of Decision Systems, ERP edited books, ACM Software Engineering Notes, and several international IS conferences. Conrad Shayo is a professor of Information Science at California State University San Bernardino, USA. Over the last 23 years he has worked in various capacities as a university professor, consultant, and manager. He holds a Doctor of Philosophy and a Master of Science in information science from the Claremont Graduate University, formerly Claremont Graduate School. He also holds an MBA in Management Science from the University of Nairobi, Kenya, and a Bachelor of Commerce in Finance from the University of Dar-Es-Salaam, Tanzania. His research interests are in the areas of IT assimilation, performance measurement, distributed learning, end-user computing, organizational memory, instructional design, organizational learning assessment, reusable learning objects, IT strategy and “virtual societies.” Deb Sledgianowski is an assistant professor for the Department of Business Computer Information Systems and Quantitative Methods in the Zarb School of Business, Hofstra University, USA. She earned an MBA at Pace University and a PhD in information management at Stevens Institute of Technology. Prior to joining Hofstra University, she was an information systems practitioner with various responsibilities ranging from programming, systems analysis, database administration, SAP basis administration, and project management, accumulating more than 20 years of professional experience. Dr. Sledgianowski’s research interests include IT-business strategic alignment, strategic uses of IT, supply chain management, and database management. Jayavel Sounderpandian is professor of quantitative methods at the University of Wisconsin, Parkside, USA. He teaches project management, operations management, business statistics, and a few elective subjects. He has published in Operations Research, Interfaces, Abacus, Journal of Risk and Uncertainty, International Journal of Production Economics, and several others. He coauthored the book, Complete Business Statistics (McGraw-Hill/Irwin). He has won several awards for excellence in research and in teaching. He has 24 years of academic experience and seven years of industry experience. He is a consultant to many businesses in the region, and guides many students to do projects in those businesses. Teta Stamati is currently a sales manager in Delta Singular S.A. in Athens, Greece. She holds a degree in computing from the Informatics and Telecommunications Department Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
About the Authors 565
at National and Kapodistrian University of Athens, an MPhil in computing and information systems at UMIST in UK, and an MBA in Lancaster Business School at Lancaster University. She is a research fellow in the Department of Informatics and Telecommunications at the National and Kapodistrian University of Athens. Ketil Stølen is senior scientist and leader for the quality and security technologies group at the Department for Cooperative and Trusted Systems at SINTEF Information and Communication Technology. He is also a professor in computer science at the University of Oslo, Norway. Dr. Stølen has broad experience from basic research (four years at Manchester University; five years at Munich University of Technology) as well as applied research (one year at the Norwegian Defense Research Establishment; three years at the OECD Halden Reactor Project; and four years at SINTEF Telecom and Informatics). He completed his PhD, “Development of Parallel Programs on Shared Datastructures,” at Manchester University on a personal fellowship granted by the Norwegian Research Council for Science and the Humanities. E-Lin Tan, from Malaysia, studied chemical engineering (minor in law) in Singapore. She then worked in quality assurance in a Japanese multinational company for four years, specializing in strategic vendor development, technology management and quality auditing. When she left the company, she was managing her own team of engineers, a new section she had envisioned and formed with top management, in line with improved business process and total quality management. Monideepa Tarafdar is assistant professor at the University of Toledo in Ohio, USA. She has an undergraduate degree in physics and a graduate degree in telecommunications & electronics engineering from the University of Calcutta, India. Her doctoral degree is from the Indian Institute of Management Calcutta. Her current research and teaching interests are in the areas of strategic information systems management, management of IT, enterprise systems and organizational aspects of IS. Her teaching has been in the areas of management information systems, data management, data communications and e-commerce. Her research has appeared in the Journal of Information Technology Cases and Applications, Journal of Global Information Technology Management and System Dynamics: An International Journal of Policy Modeling. Craig K. Tyran is an associate professor of MIS at Western Washington University (WWU), USA, and was previously on the faculties of Oregon State and Washington State Universities. He holds degrees from Stanford (BS, MS), UCLA (MBA), and the University of Arizona (PhD), and conducts research in the areas of technology support for collaboration and learning. Jose Antonio Untama, from Peru, studied electronics engineering at the pontifical Catholic University of Peru. He then worked in a German multinational company for seven years in the Medical Solutions Division, starting as customer service engineer and having as his last position technical/service manager of the Division for Peru; dealing with the latest technology for medical diagnostic equipments.
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566 About the Authors
Sanjiv D. Vaidya is currently associate professor with the Management Information Systems Group at the Indian Institute of Management Calcutta, India. He holds a BTech in electrical engineering from the Indian Institute of Technology Bombay, and an MBA and doctorate from the Indian Institute of Management Calcutta. He has spent several years in Indian industry and has held positions in the operations and IT functions. He has also worked in the capacity of a principal advisor on strategy matters for a leading IT organization in India. His research interests are approaches and processes for information systems strategy formulation, impact of IT on organizations, end-user computing, DSS and knowledge management and e-business. His research work has been primarily of the theory building type. He has publications in Indian and international conferences and a book of strategic use of IT. His teaching interests are IS/IT strategy and management, and e-business strategies. He also participates extensively in training corporate executives. Jef Van den Ende was born in 1949. He earned his MD from the Catholic University of Leuven, Belgium, and his PhD on imported malaria from the University of Amsterdam. He worked as a tropical doctor in Zaire (1976-1985) and in Rwanda (2000-2003). He is associate professor in tropical medicine and chief of the Department of Clinical Sciences at the Institute of Tropical Medicine, Antwerp, Belgium. Besides tropical medicine and piano playing, he is active in clinical epidemiology, artificial intelligence, and computerbased training. Erwin Van den Enden graduated cum laude from the University of Antwerp, Belgium, in 1980. He specialized in tropical medicine and internal medicine. He worked in Sri Lanka and Zimbabwe. At present, he works as a clinician and lecturer at the Institute of Tropical Medicine, Antwerp, Belgium, and is a guest lecturer at the Koninklijk Instituut voor de Tropen, Amsterdam, The Netherlands. He likes working with motivated students. Among his many interests are the medical aspects of general biology, especially those of entomology and venomous animals. Natalie Verdeflor, from Germany, has an undergraduate degree in Business Administration from Pace University, New York. Ms. Verdeflor worked in the financial services sector for two major banks over the course of seven years. Upon relocating to Germany, Ms. Verdeflor went into consulting where she managed an internal Internet project and was a member of the committee that was responsible for the selection of a new CRM system for a large financial services and consulting firm. Louis Vermeulen, BSc, received a bachelor’s in chemical sciences (1966) and has since been working at the Institute of Tropical Medicine, Belgium. As head of the purchasing and expedition service of the ITM, he was a collaborator in many academic projects. After self-study in information and computer technology, his responsibilities were reoriented to internal ICT-consulting for staff and students. Since 1993, he has been responsible for the hard- and software of the different ICT classes and is the main consultant concerning ICT problems for master’s or PhD students. Richard Vidgen is a reader in information systems at the School of Management, University of Bath, UK. He worked in information systems development in industry for Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
About the Authors 567
15 years, during which time he was employed by a large software firm, a high street bank, and as a consultant. Dr. Vidgen joined the University of Salford in 1992, where he completed a PhD in systems thinking and IS quality. He is the author of two books: Data Modelling for Information Systems (Pitman, 1996) and Developing Web Information Systems (Elsevier, 2002). His current research interests include e-business quality, emarketplaces, and IS development methods. Dennis Viehland ([email protected]) is an associate professor of information systems at Massey University’s Auckland, New Zealand, campus. His primary research areas are information management, electronic commerce strategy, and ubiquitous computing. He has published widely, most recently as co-author of Electronic Commerce 2004: A Managerial Perspective. Kathleen Voge is an assistant professor of Management Information Systems at the University of Alaska Anchorage, USA, in the College of Business and Public and Public Policy. She received her BS in operations management along with her MBA in information and decision sciences from the University of Minnesota’s Carlson School of Management. Ms. Voge spent more than 15 years in industry, working in a variety of IT positions including programmer, senior business systems analyst, database administrator, and project lead before pursuing her full-time teaching career. She currently teaches systems analysis and general computing and tools-based courses. A frequent adviser to public and private concerns, John J. Voyer, professor of management at the University of Southern Maine, USA, is the author or co-author of several monographs and journal articles. He has made numerous refereed presentations before professional organizations in his field, serves as a reviewer for a number of academic journals in management as well as for conference papers, and is a former member of the editorial board of Group and Organization Management. Dr. Voyer has held the title of Price-Babson Fellow (2000), Sam Walton Fellow (2003) and has participated in the Art and Practice of Leadership Seminar (Harvard Kennedy School of Government, 2003). Fredrik Vraalsen received his MSc in computer science from the University of Illinois at Urbana-Champaign (2001). Since 2001 he has been employed as research scientist in the Cooperative and Trusted Systems group of SINTEF Information and Communication Technology, Norway. Bing Wang is a doctoral candidate in the Management Information Systems (MIS) Department at Utah State University, USA. She worked as a senior executive in a multinational company in Singapore prior to her PhD study, and has offered IT consulting services to the Utah Department of Transportation. She now serves as the assistant program chair as well as a track chair for the 2004 Global Information Technology Management Conference. Her research interests include technology-based organization intervention and change management. She is currently working on a major research project at a university-owned research institute. Rick Watson is the J. Rex Fuqua distinguished chair for Internet strategy and director of the Center for Information Systems Leadership in the Terry College of Business, The Copyright © 2006, Idea Group Inc. Copying or distributing in print or electronic forms without written permission of Idea Group Inc. is prohibited.
568 About the Authors
University of Georgia, USA. He has published in leading journals in several fields, as well as authored books on data management and electronic commerce. His current research focuses primarily on electronic commerce and IS leadership. He has given invited seminars in more than 20 countries for companies and universities. He is president-elect of AIS, a visiting professor at Agder University College, Norway, and a consulting editor to John Wiley & Sons. Heidi Weiershaus, from Peru, has a professional degree in business administration from the Universidad de Lima, Peru. She has seven years of professional experience in banking and finance, including three years in business strategy. Terrell G. Williams is a professor of marketing at Western Washington University (WWU), USA, and was previously on the faculties of California State University, Northridge, University of Colorado, Denver, and Utah State University. He holds degrees from the Universities of Wyoming (BS, MS) and Arizona (PhD) and has conducts research in the areas of consumer behavior, marketing strategy, and marketing education. Susan Rebstock Williams is professor and acting chair of the Department of Information Systems in the College of Information Technology at Georgia Southern University, USA. Prior to earning a PhD at Oklahoma State University, she spent 13 years in the IT industry, where she worked as a programmer, systems analyst, and information systems manager. She has published three books on object-oriented software development as well as numerous articles addressing the impact of IT. Minnie Yi-Miin Yen is an associate professor of Management Information Systems in the Department of Computer Information Systems, University of Alaska Anchorage, USA. She received her PhD in management information systems from the University of Houston. Dr. Yen’s work has appeared in IEEE Transactions on Software Engineering, Journal of Database Management, International Journal of Management, Human Factors in Information Systems, and a book chapter in Managing Business with Electronic Commerce: Issues and Trends. Her research interests focus on humancomputer interaction, client-server database systems, e-commerce, and Web-based learning. She currently teaches courses in database management, client-server systems, object-oriented programming — Java, and C++. Jing Zhang is an assistant professor of management information systems in the Graduate School of Management, Clark University, USA. Her research focuses on knowledge sharing and knowledge networking across organizational and functional boundaries. She has written articles, book chapter, and conference proceedings on the development of knowledge sharing systems, leadership in knowledge work, and organizational impact of technology and innovations in e-government initiatives. She received her PhD in information science from the University at Albany, State University of New York.
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Index 569
Index
A a/r tracking 512 accountability functionality 62 administration of training 220 aggregate capacity planning (ACP) 410 Akut-Kliniken (general hospitals) 55 Algos Center 21 aligning for growth 466 aligning for one 466 application server 173 application service provider (ASP) 276, 530 assured quality 538 automatic order-generation 279 automotive sector in Portugal 51
B balance of risk, budget & schedule 258 balancing stakeholder expectations 185 barcode 276 BATON technology 142, 147 BELFOR 169 British National Bibliography (BNB) 330 build-to-order (BTO) 90
built-in tutor 518, 520 business development managers (BDMs) 503 business objectives 221 business transformation (BT) 371
C capability maturity model (CMM) 504 career interests 37 carrier networks (CN) 371 carrier service (CS) 371 case management 62 CBA Information Systems 161 cellular digital packet data (CDPD) 292 central management systems 97 change management 461 CIMBA – Customer Information Management By All 502 classification of information kiosks 128 collaborative planning forecasting and replenishme 278 Columbia 257 common language 523 communicating with commuters 126 communities-of-practice 103 community extensions 22
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570 Index
competency models 224 completeness 200 computer-aided software engineering (CASE) 294 computer-telephone integration (CTI) 68 CORAS 487 cost 538 cost reduction 59 course and curriculum design 180 course effectiveness 179 CRM 54 currency 199 customer information needs 94 customer relationship management (CRM) 528 customer relationship management (CRM) 502, 503 customer service 538
D data collection 145 database server 173 dealer communication systems (DCS) 93 dealer management systems (DMS) 93 delivery 538 diagnosis related group (DRG) calculation system 54 diagnosis related goups (DRG) system 53 digital devices, Inc. 103 directory services 173 district health boards (DHBs) 79 diverse learning contexts 221 diversity peer support program 22
E e-hub 99 EA Cakes Ltd. 408 economic feasibility 350 economics evaluation 3 electronic data interchange (EDI) 97 electronic data processing (EDP) 169 electronic ticket machines (ETMs) 125 ellular digital packet data (CDPD) 292 end user computing (EUC) 310
end-user computing 309 end-user system development 315 ENGINECOMP 38 engineer involvement in IT 313 engineering-oriented business 107 enterprise networks (EN) 371 enterprise system (ES) 78 environmental management 538 extensible mark-up language (XML) 93 extranets 100
F file server 173 finance department 41 flexible supply 538 fun run 22 fundraising & accounting software 24
G German public hospitals 53 global delivery model (GDM) 505 global rollout 377 government agencies 256
H HazOp (hazard and operability) 493 health board 78 high-performance organization 256 higher education (HE) 197 Hopkins & Associates 2 hospital cooperation 56 hospital management strategy 57
I individual training 520 informal communication 37 information and communication networks (ICN) 370, 371 information and communication technology (ICT) 485 information resource management (IRM) 428 information systems development (ISD) 2231 Infosys Technologies Ltd. 502
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Index 571
Ingres 201 initiating & implementing IT adoption 450 Institute of Tropical Medicine 519 integrated circuits (ICs) 104 inter-organizational systems (IOSs) 327 interactive voice response (IVR) 68 internal process integration 66 International Neuroscience Research Institute (INR 72 Internet relay chat (IRC) 375 intranet support 115 investment 313 IPM 512 IS department 46 IT management issues 188 IT system legacy 96 IT-enabled IS 110
J job security 37 joint application design (JAD) 184, 317 joint implementation process (JIP) 317
K KABISA 518, 520 KBCOPS 287 Kennedy Elementary School 22 knowledge management 62 knowledge management system (KMS) 370
L leadership by vision 146 learning management systems (LMS) 213 LIBNET 324 LIBNET’s Technical Infrastructure 329 Life Care Program (LCP) 22 Local Networks (LANs) 100 logistics department 43
M MACROS system 422
make-to-order 407 make-to-stock 407 management information systems (MIS) 140 management of bureaucracy and paperwork 453 managerial tools for hospitals 56 MaPPAR 38 master production scheduling 412 maturity of alignment 465 Monte Carlo simulation technique 6
N NASA 251 National Couriers Limited (NCL) 441 National Union Catalog (NUC) 330 NetCom 483, 484 non-centrally-controlled software 147 non-profit organization 331 non-profit public organization 79 not-for-profit organizations 360 nterprise resource planning (ERP) 537 nuclear information systems (NIS) 310
O object-oriented development (OOD) 184 obsolescence/Procurement Standards 319 oil and gas industry 2 “old world” industry 89 old-world industry 90 opinion 2 Oracle 201 order visibility 94 organizational feasibility 350 organizational restructuring 81 “out-of-shelf” (OOS) 273 ownership 199
P patients as customers 57 payroll 207 personal digital assistance (PDA) 68 pet walk 22 petroleum 2
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572 Index
placement 352 planning for IT architecture 171 political tension 110 portal technology 62 post learning support 221 powerhouse 201 PREsys software 9 print server 173 printed circuit board (PCB) 538 process of collaborative store ordering (PCSO) 273, 278 process optimization 56 producing 2 productivity of training 221 PSWEB 512 public health care 78 public sector enterprises (PSEs) 441
Q quality and scurity technology (QST) 485 QuickBooks 24
R rapid application development (RAD) 184 readiness 254 recovery & repair of smoke-damaged systems 168 Reha-Kliniken (rehabilitation facilities) 55 research and development (R&D) 370 research and development server 173 reserves economics evaluation 2 reservoir engineering 3 reservoirs 2 resistance to change 155 responsiveness 538 retired & senior volunteer program (RSVP) 347 revenue-cycle management 59 risk analysis 495 risk evaluation & risk treatment 497 risk identification 492 role of middle management 455 role of top management 454
S safety 261 sales force automation (SFA) 503 sales value creation process 373 secqus 201 security 320 ShareNet community 375 significance of learning 216 SINTEF 483, 485 sources of funding for disaster recovery 168 South African Machine Readable Cataloguing (SAMARC 330 South African Periodicals (ISAP) 330 special projects 347 stakeholder analysis 425 stovepipe/chimney 96 strategic alignment maturity (SAM) assessment 465 strategic framework 425 stress 37 student ID 185 student learning outcome assessment system (SLOAS) 177 subject matter experts (SMEs) 312 supplier 97 support training planning 221 synchronous optimal network (SONET) 292 system development life cycle (SDLC) 183 system maintenance personnel 318 systems applications & products (SAP) 407
T tape back-up server 173 teaching effectiveness 179 teaching server 173 technical feasibility 350 technology and product innovation 538 three-tier client 375 total cost of ownership (TCO) 513
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Index 573
U uncertainty 37 unified modeling language (UML) 345 United Way 24 university-owned research foundation (URF) 140 user ignorance 135 user-led development 103
V vehicle manufacturing and distribution 90 vendor managed inventory (VMI) 278 Veropoulos 272 virtual private network (VPN) 276 Volunteer Center of Racine (VCR) 345 volunteer recruitment 347 volunteer training 347 VSAT network 451
W Web application protocol (WAP) 68 Web server 174 wide area network (WAN) 100, 421 work flows & cost drivers in hospitals 58 workflow/workload management 62
Y Youth with a Mission 347
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Cases on Information Technology: Lessons Learned, Volume 7 ISBN: Imprint: Pages: Copyright: Price: Editor:
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This volume is the latest addition to the Cases on Information Technology Series, a series which provides a collection of case studies focusing on IT implementation in organizations. The cases included in Cases on Information Technology: Lessons Learned, Volume 7 cover a variety of IT initiatives, including enterprise systems, wireless technologies, rebuilding operating systems after destruction, and implementation within non-profit organizations. Each case includes integral information regarding organizations working with IT, including key individuals involved, intelligent steps taken or perhaps overlooked, and the final project outcomes. This volume is useful to IT managers and researchers, as it describes various scenarios of IT implementation and also unfortunate downfalls. Using the real-life situations as facilitators for classroom discussion, professors and students will benefit as well from this collection of cases.
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