cht14

Managing IT Projects,Process Improvement,and OrganizationalChange

14Chapter

Learning ObjectivesAfter studying this chapter, you will be able to:

� Understand the concept of the technology adoptionlifecycle.

� Describe the five stages of the adoption lifecycle.

� Understand the impact of technology, task, individual,organizational, and environmental characteristics on theadoption of new technologies.

� Describe Rogers’ five adopter categories.

� Understand typical causes for IT implementation failures.

� Discuss challenges associated with implementing ITprojects.

� Understand the concept of business process management(BPM) and how it can be used to enhance effectiveness in anorganization.

� List and describe the steps in creating an effective BPMstrategy.

Describe the role of change management in systemsimplementation.

Con-way, Inc. Implements Innovative Technologyand Wins National Recognition

14.1 Adopting IT Projects

14.2 Implementing IT Projects

14.3 Business Process Management

14.4 Change Management and OrganizationalTransformation

14.5 Managerial Issues

Minicase: Raising Awareness and Recruiting EarlyAdopters for Dspace at MIT

Problem-Solving Activity: Impact of Adopter Categorieson Implementing a New Information System

Online Minicases:14.1 NCBJ Achieves a 500 Percent + ROI byRebuilding Its IT Infrastructure14.2 BT Focuses on Value in Adoption of SocialMedia Tools

ACC FIN MKT OM HRM IS

Integrating IT

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Copyright © 2010 John Wiley & Sons

521

How Shall WeGet There?

Strategy, Plans

How Can We ImprovePerformance?

Solutions, CriticalResponses

How Well Are We Doing?Monitoring,

Performance, Comparing

Where Do We Want to Go?Mission, Goals,

Objectives

InformationTechnology

(IT)

• Total quality management (TQM)• Six Sigma• Business process engineering

• Workflow automation• Wireless• Virtualization• Scanning systems• BPM tools

• How to manage projects, processes, and people?• How to transform organizational processes?• How to manage change?

• ROI of applications• Monitoring adoption process• Measure relative advantage• Business activity monitoring

• Innovative applications• Imaging systems• Increase predictability and dependability• Business process management• Business process mapping (modeling)

The business performance management cycle and IT model.

IT-PERFORMANCE MODELAs we have discussed in previous chapters, IT expenditureshave unquestionably transformed organizations. In fact, thesetechnologies have become an integral aspect of almost everybusiness process. The business and technology presses pub-lish many “success stories” about major benefits from infor-mation technology projects at individual organizations or evenindustries (e.g., electronic airline ticketing). It seems self-

evident that these investments must have increased produc-tivity, not just in individual organizations, but throughout theeconomy. In this chapter, we consider the management of ITprojects, processes, and the organizational changes that resultfrom IT implementations. We discuss the increases in ROI andprofitability that result when all three dimensions—projects,processes, and people—are managed correctly.

CON-WAY, INC. IMPLEMENTS INNOVATIVETECHNOLOGY AND WINS NATIONAL RECOGNITIONNamed Fortune magazine’s “Most Admired Company” in trans-portation and logistics for 2007, Con-way, Inc. is a $4.7 billionfreight transportation and logistics services company headquar-tered in San Mateo, California. Con-way delivers industry-leadingservices through its primary operating companies of Con-wayFreight, CFI and Con-way Truckload, and Menlo WorldwideLogistics.

Con-way, Inc. and its subsidiaries operate from 460operating locations across North America and in 17countries across five continents. Con-way capabilitiesinclude:

• Global operations in 17 countries across five continents

• A network of 460 operating locations across North America

• More than 27,000 highly trained personnel

• Con-way Freight: Local, regional, and transcontinental LTL(less than truckload) transportation services

• Menlo Worldwide Logistics: Designs, implements, and man-ages supply chain solutions, including logistics and trans-portation management, warehousing and distribution

• Con-way Truckload and CFI: A network of full truckload ser-vices across the United States and Canada

OMMKT GLOBAL

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The Problem

Over the years, Con-way had moved from using basic tech-nology to handle its complex logistics problems to thedeployment of leading-edge information technologies,including asset management software, a service-orientedarchitecture (SOA), business intelligence tools, and virtualiza-tion technology. These ITs improve internal processes, offerinnovative new services to its customers, and reduce costs ofhardware and service administration.

For example, in 2006, Con-way was experiencing ineffi-ciencies in its dock operations and needed to reduce its plan-ning time and forklift traffic and increase the pounds of freighthandled per labor-hour. To accomplish these tasks, Con-waydeveloped a Web-based, interaction Step Saver tool to auto-mate the planning process enabling dock coordinators toachieve optimal loads. Step Saver has been implemented at26 facilities and has achieved a 5.2 percent improvement inpounds handled per labor-hour, a 35 percent reduction inplanning time, and a 21 percent decrease in forklift travel.

In 2007, the company began testing Wi-Fi systems andRFID technology to track shipments across its North Americannetwork of service centers.

One of Con-way’s biggest challenges, however, was notrelated to tracking shipments, but instead centered aroundrecording and transmitting driver payroll data at Con-wayFreight. Con-way Freight is the premier provider of regional,inter-regional, and nationwide LTL service to customers acrossan integrated North American network of LTL operating loca-tions. These operating units provide high-performance, LTL, fulltruckload, and intermodal freight transportation; logistics, ware-housing, and supply chain management services; and trailermanufacturing. From its facility located in the San Francisco Bayarea, Con-way sends out 46 short-haul pickup and delivery dri-vers and 16 line-haul truckers, who cover longer-distanceovernight and two-day trips, every day. In any 24-hour period,more than 700 shipments are received and dispatched at theHayward operation that acts as a staging point for local BayArea shipments and as a freight assembly center for overnightloads. Hayward is just one of 440 Con-way service centers scat-tered across North America with a total of 15,000 drivers.

Despite deployment of innovative technology to handleshipping activities, payroll sheets—known as Form 265s—werestill being handwritten by its 15,000 drivers. The forms werethen collected at individual service centers across the countryand sent by courier to Con-way’s Portland operations center formanual entry by data clerks. It is ironic that Con-way, a majorfreight-shipping company, was relying on an outside providerto transport its Form 265s each week and paying nearly $500

thousand annually for this service. The problem was that formswere being lost, misplaced, or delivered late, and employeesatisfaction and morale was suffering. It was evident that thiswould not be an easy fix—the Form 265s was complex and dif-ficult to read. Con-way truckers are paid based on time spenton loading and unloading and mileage to and from the desti-nation. They are also paid on filling out paperwork, so a num-ber of different items need to be captured on the payrollsheets. Then the forms have to be put together and shippedto the Portland operations center for entry. Form 265s were dueevery Tuesday consistent with the weekly schedule for payingthe truck drivers. Forms were entered all day and the volumeoften caused the data entry clerks to have to stay late into thenight to complete the task. The drivers’ handwriting didn’t helpeither, making the information difficult to read. This added tothe clerks’ frustration and negatively affected morale.

The Solution

The task of “fixing” the broken payroll system was handed toIT manager John Reich. After he studied the complex Form265s and reviewed various software and hardware solutions,he knew that an off-the-shelf software/scanner combinationwouldn’t serve the purpose. While some of Con-way’s man-agers felt that the optical character recognition (OCR) scan-ning systems were up to the task, CIO Jacquelyn Barretta wasconcerned that the technology was not mature enough tohandle the volume and complexity of Form 265s. Con-wayCFO, Kevin Schick, also had reservations: “If it was a 50% solu-tion and we were still having people paw through these formsand determine the drivers’ work, it wasn’t going to do us anygood.” (Informationweek.com 2008).

To address their concerns, Reich arranged for three ven-dors to develop a simple application to demonstrate that theirproducts could accommodate the complexities of the Form265s. Of these only one succeeded. Reich recalls, “One of thevendors did it, another tried and gave up, and the thirddecided not to participate.”

The main sticking point was not the content of the forms,but the drivers’ illegible handwriting.

The vendor who was able to meet Con-way’s require-ments was Pegasus Imaging. It demonstrated its SmartScanXpress character-recognition software that runs on PanasonicKV-S3065CL and KV-S2026C scanners. At the beginning ofimplementation, the system achieved an 80% success rate, butthis soon increased to 99.9% after business rules were incor-porated to visually highlight fields where missing or incorrectdata were likely to occur. The total system cost just a little morethan Con-way spent in one year for courier service.

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The Results

Since September 2007 the Form 265s have been assembled andscanned at 38 different locations across North America and for-warded to the Portland service center. Focusing on the high-lighted fields, the forms can be validiated quickly and easily. Asa result of the adoption and implementation of the new system,Con-way truckers are paid on time, and morale among the dataentry clerks has improved significantly. As a result of the foresightof Stotlar, Schick, and Barretta, Con-way rose to top rank in the2007 InformationWeek 500—an annual ranking of the most inno-vative companies employing information technology in their

businesses—and on June 2, 2008, CIO magazine announcedCon-way, Inc. as the recipient of the 2008 CIO 100 award for itsuse of innovative technologies to generate business value. AsAbbie Lundberg, editor-in-chief of CIO, remarked, “Unlike othertop lists, it’s not just about who’s biggest—it’s about who’s doingthe most interesting and relevant things.” Clearly Con-way isdoing just that and they aren’t finished yet. Barretta and Reichare currently exploring the possibility of using OCR technologyto process bills of lading and delivery receipts.

Sources: Compiled from Con-way.com (2008), CIO magazine (2008),and informationweek.com (2007).

Lessons Learned from This Case

This opening case about Con-way, Inc. illustrates the impor-tance of adopting and implementing IT that closely aligns withall business goals, not just those focused on core competen-cies. It shows that although Con-way Freight was in the busi-ness of moving LTL shipments, its IT needed to address notonly trucking but also the broader business goal of maintain-ing an acceptable level of employee morale.

Although the company was adopting leading edge tech-nologies to improve operational efficiencies that improvedtheir bottom line, the morale of its data entry clerks and truck-ers was plummeting because of its antiquated payroll formprocesses. In addition, the payroll process was incurring hugeshipping costs for the payroll forms to be delivered from thevarious service centers to the Portland operations center.

Clearly, non-core business functions are not the only areas inwhich IT can be applied to achieve huge gains by anorganization.

The case also demonstrates the need to carefully fit thetechnology to its purpose. In this case it was to address prob-lems with a complex business form—and to carefully considerthe alternative methods of acquiring a system and evaluatingvendors.

In this chapter, we will explore the different issues asso-ciated with adopting and implementing IT projects and themanagement issues associated with improving businessprocesses. We will also focus on the organizational transfor-mation that follows from the introduction of new and innov-ative technology.

14.1 Adopting IT ProjectsWorldwide end user spending on IT in 2006 was reported at $1.16 trillion and isexpected to grow at a compound annual growth rate (CAGR) of 6.3 percent to $1.48trillion in 2010 (IDC, 2007). Estimates of hardware, software, and IT service spend-ing by 2010 are projected at $327 billion, $562 billion, and $587 billion, respectively.

The question then is how can organizations best adopt and implement informa-tion systems to maximize return on their investment? And, looking at the bigger pic-ture, how do organizations address issues of change management and business processmanagement that arise from the adoption and implementation of new technology?

This chapter attempts to answer these questions to assist organizations in achiev-ing the best outcomes from their investments in IT. Information systems are typi-cally adopted to create value by enabling or improving one or more businessprocesses or to contribute positively to faster and more effective decision making.Consequently, as discussed in Chapter 13, their planning must be aligned with theorganization’s overall business strategy and specific processes involved.

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524 Chapter 14 Managing IT Projects, Process Improvement, and Organizational Change

The technology adoption lifecycle was originally developed in 1957 at Iowa StateCollege (Beal, Rogers, and Bohlen, 1957). Its purpose was to track the purchase pat-terns of hybrid seed corn by farmers. Six years later, social scientist Everett Rogersbroadened the use of this model in his book, Diffusion of Innovations (now in its 5thedition), to include the adoption of emerging technologies. He introduced the inno-vation diffusion process that has become widely used in assessing technology adop-tion and diffusion. Rogers proposes there are four elements of adoption of anytechnology: (1) the technology itself, (2) the communication channels through whichinformation is exchanged between potential adopters (e.g., mass media and inter-personal), (3) the speed at which the emerging technology is being adopted, and (4)the social system into which the innovation is introduced that can be influenced byinternal opinon leaders and external change agents.

As shown in Figure 14.1, the adoption process occurs over time and passes throughfive stages: (1) acquire knowledge, (2) persuade, (3) decide, (4) implement, and (5)confirm. During the knowledge and persuasion stages, the potential adopter becomesaware of the technology and forms an attitude toward it, culminating in the decisionstage that leads to adoption or rejection of the innovation. Accordingly, the innova-tion diffusion process is the process through which an individual or other decision-making unit passes (Rogers, 2003, p. 161):

1. Knowing of an innovation2. Forming an attitude toward the innovation3. Making a decision to adopt or reject4. Implementation and initial use of the new technology5. Confirming the decision through continued use or disconfirming it through dis-continuance

The adoption process isn’t linear, but cyclical in nature. For example, if theadopter has an unfavorable attitude toward the technology under consideration, heor she can seek new information and return to the knowledge stage to acquire fur-ther information, or if the adopter realizes that he or she has acquired insufficientknowledge when moving into the persuasion stage, he or she can return to the knowl-edge stage.

ADOPTION STAGES

A FRAMEWORK FORADOPTING IT PROJECTS

ACQUIRE KNOWLEDGE (Awareness of Innovation)

IMPLEMENT

(Initial Use)

PERSUADE

(AttitudeFormation)

DECIDE

(Adopt/Reject)

CONFIRM

(Continued Use/ Discontinuance)

COMMUNICATIONCHANNELS

Change Agent Contact

INFLUENCING FACTORS Innovation Individual Organizational Environmental Task

Return to Any Stage

Mass Media/Interpersonal Internal/External

Figure 14.1 IT adoption process. (Source: Drawn by C. Pollard.)

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While the adoption process is relatively predictable, we can’t assume that theprocess will be the same for the introduction of all types of technology introducedinto different types of organizations, or even the same technology introduced into adifferent organization, or vice versa. By nature, technology, tasks, individuals, orga-nizations, and environments will differ depending on their characteristics, and havethe potential to significantly affect the adoption process. In this section we examinethe differences in these five elements, beginning with differences in technology.

Every innovation has four basic characteristics: compatibility, complexity, reliability,and relative advantage. All new systems are measured along these characteristicswhen they are being considered for adoption (Rogers, 2003).

Compatibility is the degree to which the new system is perceived to fit with theexisting values, past experiences, and needs of potential adopters. Organizations areeither looking for a minor improvement to a current business process or looking forfundamental changes in technology or a business process.

Complexity is the degree to which the new system is perceived to be difficult tounderstand and use. Complexity is measured on a continuum from easy to difficult.The more difficult the new system is to understand or use, the more difficult it willbe to get users to accept it. Complexity must be measured relative to the skill set ofadopters to obtain an accurate assessment.What is difficult to some users will be easyto others.

Reliability is the extent to which the new system is robust and dependable. Ifsystems are not operating, companies can virtually be out of business for the periodof time that the system is not functioning.

Relative Advantage is the degree to which the new system is perceived as bet-ter than the system it replaces. It is often expressed in the economic or social statusterms that will result from its adoption. For example, relative advantage may be mea-sured in terms of cost or time savings and by its added functionality. It is importantto assess both the business value added and the consequences of not adopting thesystem.

Measuring the new system along these characteristics is useful in assessing thesuitability of a new system early in the adoption process and projecting how easy itwill be to get users to accept it after implementation.

Task-technology dependency is the ability of a technology to efficiently and effec-tively execute a task. It is an interesting and important feature to consider whenassessing the adoption of different types of technology. For example, have you everused a Microsoft Word document to create a list of customers or calculate customerdiscounts based on product prices and date of payment? You can make it work, butit isn’t very efficient, and its functionality is very limited. Using Microsoft Accesswould be far preferable for maintaining a list of customers, and Microsoft Excelwould be much easier to use for calculating customer discounts. The message hereis that it is important to assess the purpose of the new system:What do you want thesystem to do? What type of business process is it designed to enhance? Given thoseanswers, the chosen technology must have the characteristics that lend themselvesbest to the task at hand.

Rogers introduced another important concept—that of the differing characteristicsof the adopters. According to Rogers, people fall into five different adopter cate-gories—innovators, early adopters, early majority, late majority, and laggards. Thecharacteristics of each of the adopter categories are summarized in Table 14.1. Rogerssuggested that innovations, such as the personal computer, would spread through asocial system (such as an organization), as the early adopters select the technologyfirst, followed by the majority, until the technology is commonly accepted.

Attitude toward a new technology is a key element of IT adoption and diffu-sion.Those who have a more positive attitude toward change are more likely to adopt

INDIVIDUAL DIFFERENCES

TASK DIFFERENCES

TECHNOLOGYDIFFERENCES

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earlier and adapt to the new system more easily than those who prefer to stay withthe status quo.

Understanding adopter categories helps IT managers, consultants, and vendorsunderstand that not all clients rush to adopt new technology. Many people are notinnovators or early adopters, as you can see when the frequency of adopter categoriesis plotted on a bell curve (see Figure 14.2).We can expect roughly 50 percent of peo-ple to be late majority or laggard adopters. That means that one-half of the generalpopulation is slow to adopt new technology!

What exactly do these adopter categories mean? They tell us that people aresocial creatures. They like to fit in. A lot of people like to follow the lead of others.People learn and emulate the behavior of those they trust and respect. However,inherent in each individual are certain characteristics that make up who they are. Forexample, one person might like to skydive. This is a person who seeks out riskyendeavors. Another person might be very traditional, and focused on the way thingshave always been done. This person is likely to be risk-averse and skeptical of newthings. It is this combination of social comparison and individual characteristics thatdetermine where a person fits on the adoption/innovation curve. Once an organiza-tion understands the social system in which it is operating, it needs to assess how newor established technologies are already being used.To do this, organizations scan theenvironment by reading reviews in trade publications, vendor websites, and the effortsof early adopting organizations.

Age, gender, and education are also important individual differences affectingwhen certain individuals will adopt new technology and how easily they will acceptthe associated changes (Wei, 2006). These differences require little explanation.Suffice to say that earlier adopters tend to be younger and have more years of for-

TABLE 14.1 Characteristics of Adopter Categories

Adopter Category General Discerning Characteristics

Innovator younger than averagewell educated risk seekerhigh financial statusrespected for being successful, but sometimes ridiculed by their more conservative peers

Early Adopter younger than averagewell educatedopinion leaderfinancially well offrespected by other members of social group

Early Majority slightly above average in ageabove average in educationrisk-averse; need to be sure an idea will work before they adopt itmoderate financial statusrespected as informal leaders

Late Majority older than averageless educatedadopt new ideas just after average member of a system

Laggard oldest of all categoriesleast educatedrisk-aversepay little attention to the opinions of others

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mal education. These characteristics presumably enable early adopters to cope withhigher levels of uncertainty and suggest that it is important to consider them in plan-ning for IT adoption.

Since no new system can exist without some interaction with its corporate sur-roundings, it isn’t surprising that organizational differences influence IT adoption.Not all organizations are capable of providing the same level of support to assist inthe introduction of new technology. Larger organizations are usually best equippedto obtain up-to-date information and have highly skilled technology specialists whocan facilitate the technology change. Small organizations are often more agile andcan move faster to adopt technology. Regardless, however, of the size of the organi-zation, there are other factors that influence the adoption of a new system when plan-ning for one. Planning needs to occur at each stage of the adoption process; allstakeholders must be considered and informed, and the plan adjusted as neededthroughout the adoption process. Planning for the changes that will be introducedinto an organization by the adoption of a new system includes a number of factors.These are a supportive IT infractructure, management support, and the presence ofa champion.

A supportive IT infrastructure refers to physical equipment and personnel to ful-fill all of the roles necessary to ensure successful adoption of a new system. Hardware,software, and staff members with IT skills to support various aspects of the adop-tion of the new system are necessary. Some need to be familiar with the technicaloperation of the system to assist with implementation, others will be equipped toassist in integrating the new system into existing business processes and getting usersonboard, while still others will be skilled at training users in-house. Finally, staff willbe needed to maintain the new system.

Management support is critical to the successful introduction of a new systembecause of the potentially extensive business changes that will be associated with itsintroduction (Camara, Sanchez, and Ortiz, 2004).Although it isn’t necessary to havesupport from the highest level within the organization, it is important to gain sup-port from middle to upper levels of management. Resources typically flow fromupper management.Without their strong support, adoption and implementation canbe delayed because of lack of funds, difficulty in accessing necessary personnel, andunavailable facilities or equipment. Identifying the appropriate source of manage-ment support will usually be dependent on the type of new system being adopted.For example, if a new accounting system is being introduced, it would make sense toobtain the support of the chief financial officer (CFO) or an upper-level manager inthe accounting department. This brings us to the next organizational factor that canimpact the success or failure of IT adoption.

ORGANIZATIONALDIFFERENCES


2.5% 16% 13.5%

Innovators EarlyMajority

EarlyAdopters

LateMajority

Laggards

34% 34%

Figure 14.2 Adopter categorydistribution.

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Presence of a champion is also a strong predictor of successful adoption of a newsystem. A champion is the person who will promote the benefits of the new systemacross different levels of the organization on an ongoing basis. While managementsupport is necessary, it is rarely the case that top executives have the time needed toactively support the project.The champion is available to answer questions, find infor-mation, create and maintain enthusiasm for change, maintain momentum, and gen-erally promote the positive aspects of the adoption of the new system. Often, achampion will naturally emerge to sponsor a new system; other times, it will be nec-essary to appoint and cultivate a champion to fight for the new system. In a largeorganization, it has even been shown that the greatest benefits are gained fromappointing a local or departmental champion to facilitate the adoption and accep-tance of a new system (Pollard, 2003). In the example given in the section above, whilethe support of the CFO would be very beneficial, it is likely that the success of thenew system could be greatly increased by the appointment of a mid-level account-ing manager to act as a champion for the new system throughout its adoption andimplementation.

Finally, the environment into which the system will be introduced can differ. Forexample, vendor support and training will differ, and customer skill levels with tech-nology and accessibility to online services may be very different. Coupling environ-mental differences with organizational differences, it has been found that fosteringand maintaining close vendor-champion alliances is a very beneficial tactic to takein adopting new technology (Pollard, 2003).

The successful adoption and implementation of an information system dependson the proper assessment of numerous individual, technology, task, organizational,and environmental factors. The most important differences that influence the adop-tion of a new system are summarized in Table 14.2.

The first step in adopting a new IT-based system is to identify technologies that maybe useful in improving or enabling business processes and assess how well they fitthe organizational culture. Some useful tools for identifying IT-based systems areavailable for this purpose and will be discussed next.

IDENTIFYINGTECHNOLOGY FORADOPTION

ENVIRONMENTALDIFFERENCES


TABLE 14.2 Factors That Influence IT Adoption

Technology CompatibilityRelative advantageComplexityReliability

Task Compatibility

Individual Attitude to changeAgeEducationGender

Organization Supportive IT infrastructureManagement supportTrainingChampion(s)

Environment Vendor supportCustomer technology skill levelsAccess to online servicesVendor-champion alliances

Category Influencing Factors

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The Hype Cycle. The hype cycle is a useful tool used widely by organizations toidentify and assess emerging technologies and decide when to adopt.The hype cyclewas developed by Gartner, Inc., an international research and advisory firm, oper-ating in 75 countries. By 2006, Gartner, Inc. was producing 70 different hype cyclesthat evaluated more than 1,500 information technologies and trends across 75 indus-tries. These annual hype cycles (see Figure 14.3) provide a snapshot of the relativematurity of different categories of technologies, IT methodologies, and managementdisciplines. They highlight overhyped areas vs. those technologies that are highimpact, and provide estimates of how long technologies and trends will take to reachmaturity.

Each hype cycle has five stages that reflect the basic adoption path any tech-nology follows, starting with a trigger point, through overblown hype and then endur-ing disillusionment, before finally becoming more mainstream and accepted.

Technology Trigger. A breakthrough, public demonstration, product launch, orother event that generates significant media and industry interest.

Peak of Inflated Expectations. A phase of overenthusiasm and unrealistic pro-jections during which a flurry of publicized activity by technology leaders resultsin some successes but more failures as the technology is pushed to its limits. Theonly enterprises making money at this stage are conference organizers and magazinepublishers.


A Closer Look 14.1Adoption of Web Services Get Swedish Banking Applications Talking to Each Other

Centrala Studie Stodsnamnden (CSN) is the Swedish govern-ment’s banking authority responsible for providing student loansand grants to Swedes who are pursuing higher education. Eachyear, CSN loans out 2.5 billion Swedish Krona to a half-million peo-ple and delivers a host of financial services to thousands more. InJanuary 2002, at the start of the new school semester, when onlinetraffic to the organization is typically four to five times greater thanin other months, CSN’s Web site went down. Students were forcedto phone CSN representatives directly to receive help with newloan and grant applications and payback information. The voice-response system, which was designed to meet a much lowerdemand, had proved inadequate.

A group of technicians led by the production team workedhard to stabilize the Web site and ease the burden caused byoveruse of the voice-response system. “We found the load prob-lem and tried to tame it by adding servers, but the solution waslike patchwork—and in the following weeks we could see thesame pattern with instability occur,” says Orjan Carlsson, ChiefArchitect of CSN’s information technology department (Plummerand McCoy 2006). Consistently poor Web site performance cou-pled with long waits on the telephone was enough to cause a pub-lic outcry.

Given CSN’s heterogeneous enterprise environment—com-prised of IBM mainframes, UNIX-based applications, and systemsrunning Microsoft Windows NT—a solution that could supportcross-platform communication was a necessity. Only a flexible,scalable, open-standards-based integration architecture couldsupply the level of interoperability for the high volume during thestart of a semester.

A locally based IBM team worked closely with CSN to inves-tigate solution possibilities. Together, the technical teams decided

that the best way to realize cross-platform, program-to-programcommunication was through Web Services built on IBMWebSphere. This architecture allows CSN’s disparate applicationsto exchange information with each other without human inter-vention. The team implemented a system that also eliminated theorganization’s reliance on an outsourced application serviceprovider for its voice-response system. The system leverages WebServices to enable the Windows NT–based voice-response systemto execute transactions that are easily recognized by CSN’s back-end (back-office) operations.

The new Web Services-enabled system allows CSN todeliver student account status and transaction information tophones (voice response) and to CSN’s portal at a significantlyreduced cost. “Web Services are essential for us today and in thefuture,” says Carlsson. According to Carlsson, Web Servicesenable a loosely coupled architecture, resulting in a highly inte-grated solution.

Reuse of code also gives CSN an advantage. One interfacecan serve several business systems using different channels, mak-ing it easy to modify existing channels or add new ones, a featurethat significantly reduces total cost of ownership. CSN dramaticallysaves on developer costs as well as gets new functionality to mar-ket faster. The result is a flexible and scalable Web services–enabled architecture that is essentially transparent to end users,giving CSN the cross-platform communication system it needs tooperate efficiently, serve its customers, and lower costs.

Sources: Compiled from Plummer and McCoy (2006) and IBM (2002).

For Further Exploration: How did this application arise? Whatdoes the solution provide? What role does the business partnerplay?

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Trough of disillusionment. The point at which the technology becomes unfash-ionable and the media abandons the topic, because the technology did not live upto its inflated expectations.

Slope of enlightenment. Focused experimentation and solid hard work by anincreasingly diverse range of organizations lead to a true understanding of the tech-nology’s applicability, risks, and benefits. Commercial off-the-shelf methodologies andtools become available to ease the development process.

Plateau of productivity. The real-world benefits of the technology are demon-strated and accepted. Tools and methodologies are increasingly stable as they entertheir second and third generation. The final height of the plateau varies accordingto whether the technology is broadly applicable or benefits only a niche market.

Priority Matrix. The benefit of a particular technology can vary significantly acrossindustries, so planners must determine which opportunities relate closely to theirorganizational objectives. To make this easier, a new feature in Gartner’s 2006 hypecycle was the addition of a priority matrix (Figure 14.4).The priority matrix is a sim-ple diagramming technique that assesses a technology’s potential impact—fromtransformational to low—against the number of years it will take before it reachesmainstream adoption.

The vertical axis of the priority matrix measures the impact of the technologyon a particular organization, and the horizontal axis measures the number of yearsit will take for the technology to realize widespread adoption.Technologies that ratehigh on impact and low in number of years reflect adoption priorities.

The pairing of each hype cycle with a priority matrix is recommended to helporganizations better determine the importance and timing of investments based onbenefits beyond the hype. When an organization is satisfied that a technology fits itsrequirements and that the timing is right for adoption, the organization decides to


less than 2 years 2 to 5 years 5 to 10 yearsobsoletebefore plateaumore than 10 years

Expertise Locationand Management

Collective IntelligenceVideo Telepresence

Content Analytics3-D Printing

Portable PersonalityWeb Platforms

Ambient and GlanceableDisplays

Mobile RobotsBehavioral Economics

Tera-architectures

TechnologyTrigger

Years to mainstream adoption:

visibility

Trough ofDisillusionment

Time

Slope of Enlightenment Plateau ofProductivity

Peak ofInflated

Expectations

RSS EnterpriseRFID (Case/Pallet)

WikisSemantic Web

Gesture RecognitionMashupVirtual Environments/Virtual Worlds

Mesh Networks: Sensor

Idea ManagementWeb 2.0 Workplace Technologies

Electronic Paper

RFID (Item)Social NetworkAnalysis

SOALocation-Aware Technology

Location-Aware Applications

As of July 2007

Enterprise Instant MessagingWeb 2.0

Figure 14.3 Gartner 2007 emerging technologies hype cycle. (Source: Gartner Inc.)

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adopt (or not) and explores ways to “acquire” the technology, or returns to scan theenvironment for other more suitable technologies and goes through the adoptionprocess again (see Figure 14.1).

The Forrester Wave. Another respected research firm, Forrester, offers theForrester WaveTM, a series of annual reports that classify technologies into cate-gories—leaders, strong performers, contenders, and risky bets. In addition, it allowsorganizations to customize the criteria to match their needs. Forrester also hosts anIT Forum annually to inform and educate IT professionals about newly emergingtechnologies and IT methodologies.

The diffusion process, hype cycle, priority matrix, and Forrester WaveTM reportsare among the most widely used tools in identifying potential technologies for newIT-based systems and can be accessed at their Web sites (www.gartner.com andwww.forrester.com).

Research Reports. In addition to these “tools,” research organizations also producenumerous reports that are useful in assessing suitable technologies for IT-based sys-tems. A sampling of research reports from Gartner, Inc. and Forrester is shown inTable 14.3. In addition, IT publications and Web sites (e.g., InformationWeek, CIO,BusinessEdge, SaaStream, ITToolbox, Computerworld, and many others) provideinformative articles in print and online that assess the current status and value ofmany different technologies.

Whereas Gartner, Inc. and Forrester subscriptions are very expensive and gen-erally are subscribed to only by larger organizations, many of the other publicationoutlets are available free of charge. Interestingly, though, despite the fact that


Years to mainstream adoption Potential Impact < 2 yrs. 2-5 years 5-10 years > 10 years

Transforma- tional

• Web 2.0 • SOA

• 3-D Printing

• Collective Intelligence

• RFID

• Virtual Worlds

• Mobile Robots

High

• EnterpriseInstantMessaging

• Location-AwareTechnology

• Mashups

• Location-AwareApplications

• Portable Personality

• SocialNetwork

Analysis

• BehavioralEconomics

• Mesh Networks

• Semantic Web

• Tera-Architectures

Moderate • Content

Analytics

• RSS Enterprise

• Idea Mgmt.

Low • Gesture Recognition Figure 14.4 Sample priority

matrix based on 2007 hypecycle data.

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acquiring knowledge and identification of technologies is a critical first step in adop-tion, very few organizations have a formal process in place to guide them throughthe masses of information available to them.

Once appropriate information technology has been identified, the next step isto acquire it. In Chapter 16, a detailed explanation is given of the five-step acquisi-tion approach, together with acquisition options and suggestions for vendor and prod-uct selection. In Chapter 13, the pros and cons of insourcing vs. outsourcing arediscussed.When an acquisition approach has been chosen and the IT project has beendeveloped, attention turns to the issues of implementing the system. These concernsare discussed in the next section.

Review Questions1. Name the five different categories of adopters.2. Consider the five different categories of adopters. How would you approach each

of the different types to encourage adoption of a new system?3. List the stages of innovation adoption.4. What do you think are the most important considerations you would need to assess

in adopting a new system in a small organization with little IT experience?5. What are the main characteristics of technology that must be considered when

adopting technology?

14.2 Implementing IT ProjectsIt is important to first understand what the term implementation means. Broadlyspeaking, systems implementation is the delivery of a system into day-to-day opera-tion. For our purposes, we define implementation as all organizational activities


TABLE 14.3 A Sampling of Informative Research Reports

Source Report

Forrester The Art of the EA DealBuilding a World-Class Security Operations Function2008 CISO Priorities: The Right Objectives but the Wrong FocusManaging IT When Times Get ToughBest Practices: Centers of Excellence for BPMFive Green IT Trends That Will Impact the IT Infrastructure and Operations ProfessionalUS IT Market Outlook: Q1 20082008 Trends in Backup and Data ProtectionMeasuring and Aligning Business PerformanceBuilding the Business Case for Disaster Recovery Spending

Gartner, Inc. The Skills Gap Will Limit Success with Corporate Performance ManagementThe Role of SaaS in IT ModernizationFindings: IT Management Must Not Wait for a Business Strategy to Be DeliveredWhen Servers Go Virtual: The Impact on Configuration Management2008 Update: What Organizations Are Spending on IT SecurityCool Vendors in IT Support, 2008How to Understand and Select Business Continuity Management SoftwareMaking Do with Less: Tactics for Managing the Impact of Security Budget CutsOpen Source in Database Management Systems, 2008The State of Open Source, 2008The Business Impact of Service-Oriented ArchitectureGartner’s Top 12 Actions for the Healthcare CIO, 2008 Key Issues for the Risk and Security Roles, 2008

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14.2 Implementing IT Projects 533

involved in the introduction, management, and acceptance of technology to supportone or more organizational processes.

In general, organizations implement two broad categories of information systems:applications with very specific objectives that are implemented over a relatively shorttime period (i.e., 12 to 24 months), and infrastructure needs that are generally imple-mented over longer periods of time.

IT infrastructure provides the foundations for IT applications in the enter-prise. Examples are a data center, networks, data warehouse, and a corporateknowledge base. Infrastructure exists and is shared by many applications through-out the enterprise.

IT applications are specific systems and programs for achieving certain objec-tives—for example, providing a payroll or taking a customer order. The number ofIT applications is large, and they can be in one functional department or shared byseveral departments.

Implementation of a new system typically involves a change in the way businessis conducted. As a result, the systems analyst must plan for and execute a smoothtransition from the old system to the new one. This transition often involves helpingusers cope with normal start-up problems.The process of implementation can be verycomplex, when large numbers of people in different departments or locations areaffected. The way in which a system is implemented is critical to its acceptance.Consequently, it’s easy to understand how important it is to have an implementationroadmap before proceeding.

The first step in establishing an implementation plan is determining how to put thenew system in place. There are four approaches used to implement an IT-based sys-tem.We refer to them here as the four P’s of implementation: plunge, parallel, phased,and pilot (see Figure 14.5). The approach(es) used can significantly affect the waythat work is performed. Each of the four major approaches can be used indepen-dently or in combination with other approaches to create a larger variety ofapproaches depending on the system’s size and complexity.

In the plunge approach, the old system is turned off at end of business on Day0 and the new system is put into operation at the beginning of Day 1. The imple-mentation date is often chosen to coincide with the beginning or ending of the fis-cal year or quarter. Although transition costs for the plunge approach are low, it isa high-risk approach. For example, major problems may arise if errors in the systemwere not identified during testing. This approach, however, may be the best choiceif an organization is under time pressure to comply with a new government regula-tion or a new business policy comes into effect with little prior notice.This techniqueis also referred to as the “big bang” or “abrupt cut-over” approach.

Using the parallel approach, both new and old systems operate concurrentlyfor a designated period of time. During this time period, major problems can beidentified and solved before the old system is abandoned. Final cutover is typicallyabrupt, but can be combined with the phased approach (described later) as vari-ous key modules undergo final testing and acceptance. Risk is lower in thisapproach. However, running two systems is resource-intensive and naturally resultsin higher costs than operating only one system. This cost may be incurred in theform of added labor costs or the use of an unreasonable amount of computerresources.

The pilot approach is used when a system is intended for adoption and imple-mentation in more than one business unit or geographic location. The system canbe pilot tested at one site first using either the plunge or parallel approach. Thisfirst site is referred to as the beta site. When the first site has resolved all majorproblems and approved the system, it can be rolled out to other sites using theplunge approach. When using the pilot approach, it is considered best practice toimplement the system in a relatively easy but typical unit first and then roll out

THE FOUR P’S OF SYSTEMIMPLEMENTATION

CREATING ANIMPLEMENTATIONROADMAP

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the implementation to other more complex or atypical units. One benefit of thisapproach is that subsequent sites are able to learn from the experiences of the betasites, thus promoting a higher level of user confidence and a lower level of userresistance over time. Again, cost and risk may vary depending on the extent towhich the new system is pilot tested.

The phased approach is based on the module or version concept. Each moduleor version of the system is implemented as it is developed and tested. This approachcan be used with the plunge or parallel approaches.A useful strategy is to implementthe key modules first using the plunge approach (sales, purchasing, materials plan-ning, etc.) and then the peripheral modules, such as human resources, document man-agement, maintenance, and financials, later using the phased approach. Risk and costvary depending on the way in which the phased approach is used.


PLUNGE

Old System New System

Day 0 Day 1

Organization

PILOT

Dept. 1 Dept. 2 Dept. 3 Dept. 4

NewSystem

OldSystem

NewSystem

OldSystem

Organization

PHASED

Time 4 Time 3

Time 2 Time 1

Version 1 Version 2

Version 3 Version 4

Organization

PARALLEL

New System

Time 1 Time 2

Organization

Old System

Figure 14.5 The four P’s of implementation.

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Regardless of implementation approach, there are no guarantees of success. Inthe next section, we will discuss the many reasons for success and failure of IT imple-mentation.

Not all IT-based projects succeed. Estimates of failed projects range from 30 to 70 per-cent.Those implementations that are enterprisewide, such as ERP and CRM, are par-ticularly prone to failure because they affect major changes across the organization(McNurlin and Sprague, 2006). Choice of implementation approach is an importantfirst step, but there are other considerations to be made when putting a new systemin place. The systems analyst may restructure processes that can significantly impactjob tasks and interactions between individuals and groups/departments.

For example, skill set requirements may change, locus of data or information movesfrom one individual or group to another, and stakeholders (sponsors, users, etc.) canbecome disenfranchised and feel as though their power base is being eroded.To lessenthe potential negative effects of these changes, the systems analyst must establish clearand open lines of communication to keep stakeholders fully informed. He or she mustalso act as mediator for conflicts that may arise between competing groups.

Despite improved methodologies in systems development—which we discuss inChapter 17—and a careful selection of implementation approaches, a large per-centage of IT projects still fail to meet the expectations of the users. If a new systemdoesn’t solve the problems for which it was intended, it will not be accepted and used.If the organization does not have personnel with the IT skill set required, it will bedifficult or impossible to successfully implement a new system. This situation oftenoccurs because of a lack of communication or understanding between the system ana-lysts/designers and the business client or a failure to establish partnerships with exter-nal technology providers.

Implementation success and failure have been influenced by a number of importantfactors. Some of the major factors are listed below.

• Top management support • Level of risk• Training of users• User acceptance of the IT project• Management of the implementation process

Top Management Support. Top management support is as important in IT imple-mentation as it is in IT adoption. There are several reasons to seek support of topmanagement for the design, development, and implementation of a new system. First,the necessary resources (money, people, time) will be easier to obtain. Second, thesystem is more likely to be perceived positively by both business and IT personnelwho may align themselves with the attitudes of top management for political rea-sons. In those cases where top management is not the system sponsor or owner, themost successful IT projects slowly gain management support through gradualinvolvement over time. In this way, managers have time to adjust to escalating lev-els of responsibility instead of being faced with them all at once.

Level of Risk. Risk associated with IT projects vary greatly depending on three vari-ables: project size, project structure, and complexity of the implementation effort.

The larger the project, in terms of dollars spent, number of staff involved, timeneeded for implementation, and number of business units involved, the greaterthe risk. The more structured a project, the lower the uncertainty, which lowersthe risk.

Directly associated with project size and structure is the issue of complexity.Some projects are relatively simple, such as when a single business unit upgrades toa new version of an existing software package. Others are extremely complex. One

FACTORS THAT IMPACTIMPLEMENTATIONSUCCESS

SUCCESS AND FAILUREOF IT IMPLEMENTATIONS


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A Closer Look 14.2Maslo Partners with a Technology Provider

Maslo is an independent, full-service brokerage, trading sec-ondary fibers or “recovered paper” within the paper-recyclingsegment of the pulp and paper industry. The company operatesfrom offices in Malvern, PA, and Charlotte, NC. In 2007, Maslo soldover 250,000 tons of scrap paper. Although much of that papernever crosses Maslo’s threshold, paper lots still need to be trackedand recorded while the product is in transit.

To stay competitive, Maslo needed to manage the moun-tain of paperwork to efficiently process its large number ofincoming shipments and outgoing orders. Without a real-timepicture of accounts payable and receivable, Maslo executiveshad a problem.

Seeing the need for a computer system where data wouldbe entered only once and reports could be generated in min-utes rather than days, the Maslo executives began to look for asuitable technology to assist them. Like so many small andmedium-sized businesses, Maslo didn’t have a full-time com-puter person, and none of Maslo’s current employees had thetechnology knowledge or skills to implement the much-neededcomputer system.

Maslo’s first attempt to find technical expertise failed. Theyhired a retired IT specialist as a consultant to set up a network andinventory system, but his knowledge was dated and he didn’t havethe necessary technical skills. Then, one of the executives remem-bered Ben Spalding, who had consulted to Maslo in the past. Benhad moved on to found Computerized Inventory SystemsSpecialists, Ltd. (CISS, Ltd.), a major provider of standard inven-tory management software packages. CISS analyzes a currentworking environment, assesses future needs, and provides themost cost-effective solution for organizations. Based in Allentown,PA, the company developed Inventory Pro, an inventory man-agement software package designed to provide companies of all

sizes with a flexible, scalable, easy to use, and easy to afford inven-tory management tool.

Maslo decided that the solution to their implementationproblems was to hire CISS, Ltd., which would be responsible forsetting up a reliable computer network, installing business soft-ware, and creating a customized database that would allow instantaccess to crucial vendor, buyer, and business information.

Prior to hiring CISS, day-to day operation was largely paper-based. This was frustrating, and restrictive to growth. The basiccomputer infrastructure was severely out of date and unreliable:inventory was tracked via a program that was little more than aspreadsheet, payables and receivables were handled using astand-alone computer program, and the server was known mainlyfor its crashes. All personnel involved were overworked and frus-trated by vendor and customer requests for more information.Perhaps the most frustrating of all—no one knew the state of thebusiness at the end of the day. The company was operating inwhat vice president and general office manager Rob Loose Jr.,summed up as “the crudest sense.”

Ben Spalding immediately assessed Maslo’s needs and setabout turning the “technologically challenged” office into a “tech-nologically sophisticated” business. Through a series of steps,Spalding created a computer environment that enabled Maslo toincrease its volume of business, increase profits, and actuallyexpand to a second office several states away.

Sources: Compiled from cisltd.com/cas study.asp and maslocompany.com(accessed May 2008).

For Further Exploration: What techniques might Maslo haveused to look for suitable technology assistance? Consider whyMaslo chose to look for a technology partner rather than createthe needed technology themselves.

FIN

of the most complex projects is that of implementing an ERP system. By its verynature, the successful implementation of a large project is highly dependent on thecompany environment and its culture.

Systems analysts must recognize the subtle differences that exist between thebusiness units that create the corporate culture and develop an implementation planthat works around, or avoids, bottlenecks or pitfalls. Some questions to be asked ofeach business unit involved might include

• What is the attitude toward teamwork vs. individual effort?• What is the management philosophy?• What types of conflict management strategies are in place?• Is the company project focused?• Is there adequate resource commitment?• Will top management support remain steadfast despite project problems?

Training of Users. Training is another issue that must be addressed in the planningphase. How should you handle people’s fear of not understanding or being able towork with the new system? Many companies make the serious mistake of not

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insisting on a comprehensive training program to maximize employees’ knowledgeand confidence levels in adapting to and using the new systems. Many view trainingas an unnecessary expense. It is not. Insufficient training can lead to errors or otherexpenses. The increases in hidden cost can far exceed cost cutting savings. Trainingis an item that should receive the most serious attention during implementation. Oncetraining scope and budget are determined, they should be adjusted only if the pro-ject scope changes.

To provide a basis for training efforts, systems developers need to provide com-prehensive system documentation to IT personnel and easy-to-read and understanduser documentation (online and hardcopy) for the users to guide them.Training canbe provided using a number of different methods to different groups of users.A well-accepted axiom for delivery of training is the “See it, hear it, do it” concept. Goodtraining is participative and interactive.You see how a task is done, you hear an expla-nation of how to do it, and then you do it.

Timing of training is also important.The greatest benefits are obtained from justin time delivery of training, that is, users are trained as close to the time of imple-mentation of the new system as possible. In this way, the hands-on portion of thetraining is essentially carried over into initial and continued use of the system andthe training concepts are reinforced on the job. Typically users cannot retain infor-mation that is offered to them in short, intense sessions. If it is necessary to spend10 days delivering training at a pace at which users can comfortably digest and retainthe information, it is essential that management be prepared to authorize a 10-daytraining course. Unfortunately, in some instances, trainers have been coerced intodelivering the same training in a 5-day format that they know will not deliver long-term benefits.

Finally, the quality of training is just as important as the methods of delivery andlength of time devoted to it. An important criterion is reputation. All trainingproviders are assessed on quality of materials, subject matter expertise of trainers,level of instructor support, training skills of trainers, track record, quality and acces-sibility of facilities, and cost. While cost is a major issue in IT training, in manyinstances it is a deciding factor. Effective training can impact the next important fac-tor to consider in implementation—user acceptance.

User Acceptance of the IT Project. User Acceptance is the extent to which a newsystem is perceived as being useful and easy to use by the system users. Acceptanceof a system will be higher if users are involved in systems design. When they areoffered the opportunity to provide input into the design and development, users aremore inclined to buy into the system. The more people feel they have had a say insetting priorities and selecting a system, the more they feel compelled to stayinvolved, even during difficult phases of system development and implementation.One of the biggest challenges is sustaining enthusiasm and commitment throughoutthe entire project. Employee involvement secured early and maintained consistentlycan mean the difference between success and failure. For example, if software selec-tion is viewed as being done by a chosen few, other users may feel justified in remain-ing detached and uncooperative.

Sometimes incentives need to be offered to gain a higher degree of acceptance.For example, if managers’ end-of-year bonuses are dependent on specific project andfinancial goals, their buy in will increase.

Management support, project risk, training, and user acceptance need to be managed.Typical consequences of bad project management include

• Cost overruns• Failure to meet deadlines• System performance that fails to meet user expectations• Missing functionality

MANAGING THEIMPLEMENTATIONPROJECT


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Any one of these will result in a failed implementation. For example, if costs arenot controlled, there may not be funds available for training, and implementationsuccess will be jeopardized. Similarly, if time is not controlled, functionality and sys-tem performance may be adversely affected, with only a partial system being deliv-ered into production within the timeframe allotted. A worst case, time-relatedscenario would be that a system is not implemented on time to comply with a gov-ernment regulation, such as Sarbanes-Oxley.

While it is impossible to control or plan for every aspect of the implementationprocess, it is possible, through experience and the use of project management toolsand methodologies, to anticipate potential problems and put in place effective strate-gies to increase system success.

Project managers need to have strong technical and business knowledge and theability to put the right people on the team.Any essential technical skills not availableinternally should be secured from sources outside the organization. If it is necessaryto use the services of an external technology provider, the provider’s credentialsshould be closely assessed.

An important thing to remember in managing the implementation process is thatthe system belongs to and has been designed for the user, not the IT staff. At thispoint, it bears repeating that a critical challenge of managing the implementationprocess is meeting user needs head-on and addressing them in a satisfactory man-ner through planning, training, understanding, and obtaining “buy-in” to the imple-mentation effort. If you pay attention to these needs and address them in yourimplementation roadmap, you will be more likely to achieve success. People’s resis-tance to change severely influences the success of implementing a new system, regard-less of the size and structure of the project or the level of IT experience of the variousproject participants, and must be carefully managed.

An important step in wrapping up management of any implementation processis taking the time to capture lessons learned from the current project to help guidethe next project. Capturing lessons learned requires a retrospective examination ofthe implementation project to document successes and failures in each systems devel-opment phase as well as the project as a whole. Documenting what worked, whatdidn’t work, and how things could have been done better provides invaluable insight.Project plans, training materials, meeting agenda and minutes, and other materialsshould also be archived with the lessons learned.These materials then become a help-ful resource for future implementation teams.

Review Questions1. Name the four P’s of implementation and describe the differences between them.2. Give examples of situations when it would be best to use each implementation

approach listed in answer to review question 1.3. Physical requirements of a system are an important consideration when imple-

menting a system, but how do the social aspects of a system impact IT imple-mentation success?

4. What are some important factors to consider in ensuring a new system is suc-cessfully implemented by an organization?

14.3 Business Process ManagementA 2006 survey of IT executives conducted by CIO Insight and Equation Research,LLC, reported that 66 percent of IT executives ranked business process improvementas their No. 1 priority and more than 90 percent of the respondents said they wereconducting more process-improvement projects than they did in 2004. However,problems with vendors, ill-defined processes, and a lack of interdepartmental coop-eration hinder organization’s progress.

There are many reasons why an organization might need to document itsprocesses. Companies that have merged need to examine processes across their

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lines of business to discover which one is the most efficient and effective. Otherorganizations might want to improve their existing processes or automate manualprocesses. In some countries, organizations have to comply with government reg-ulations that require organizations to accurately document their business processes,such as the Sarbanes-Oxley Act in the United States and the ASX Principles inAustralia.

A business process is a collection of related activities that produce something of valueto the organization, its stakeholders, or its customers. A process has inputs and out-puts, with activities and tasks that can be measured. Many processes cut across func-tional areas. For example, a product development process cuts across severaldepartments including marketing, development, and production. Complex processesoften need to be broken into a number of sub-processes for easier management.Improving processes can greatly improve the efficiency and effectiveness of an orga-nization regardless of its industry sector, size, or geographic location.

Business process management (BPM) is a popular management technique thatincludes methods and tools to support the design, analysis, implementation, man-agement, and optimization of operational business processes (Kettinger, Teng, andGuha, 1997). BPM can be viewed as an extension of workflow management (WFM),where documents, information, and activities flow between participants according toexisting process models and rules.The activities of business process management con-sist of designing, analyzing, implementing, managing, and optimizing a process forboth effectiveness and efficiency, as shown in Figure 14.6.

In the short term, BPM helps companies improve profitability by decreasing costsand increasing revenues. In the long run, BPM helps create competitive advantageby improving organizational agility. BPM can provide cost benefits for most com-panies, increase customer satisfaction, enable business differentiation, and reduceerrors.

The BPM approach has its roots in business process reengineering. Businessprocess reengineering is the radical redesign of an organization’s business.Reengineering takes a current process and simplifies it to increase its efficiency andcreate new processes. In the 1990s most organizations failed to achieve fundamen-tal process improvement because they looked at processes in isolation and failed tofocus on larger, enterprisewide objectives. Despite decades of reengineering, orga-nizations still have problems with their business operations.They duplicate processes.They perform hundreds of non-core tasks that should be outsourced, and they spendvast amounts on proprietary process-management software that’s difficult toupdate. To address these issues, BPM has evolved as a technique that ties people,processes, and technology to strategic performance improvement goals, as shown inFigure 14.7.

To properly address process improvement, organizations must develop a care-fully crafted BPM strategy.

THE CONCEPT OFBUSINESS PROCESSMANAGEMENT

14.3 Business Process Management 539

Design

Management

Optimization Implementation

Analysis

Business Process

Management

Figure 14.6 Business processmanagement circle.

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Specifically, a well-implemented BPM strategy enables an organization to

• Gain greater visibility into processes• Identify root causes of bottlenecks within processes• Pinpoint hand-offs in processes

The result is that BPM helps an organization cut costs, improve service, achievegrowth, or comply with regulations.

The Business Project Management Institute (IDS Scheer AG, 2005) reports on thebenefits of an effective BPM strategy:

• Reduces product design time by 50 percent• Achieves faster time-to-market of competitive products• Reduces order fulfillment time by 80 percent• Improves customer satisfaction with the ordering process• Helps organizations achieve efficiency gains of 60 percent in call centers

Most organizations want to bring their customer-focused, financial, and opera-tional goals in line with the expectations of shareholders or owners.With this in mind,it is important to conduct a thorough assessment of core strategic and operationalprocesses to identify those processes that need to be improved. In core strategicprocesses, such as customer acquisition, bookings, invoicing, backlogs, and order-to-cash, the focus is typically on improving throughput. In the case of operationalprocesses, such as manufacturing, order fulfillment, and field service, companies typ-ically fall into the trap of measuring efficiency alone. The point of the assessment isto identify strategic and operational processes and link them with organizationalstrategic objectives.

For example, a manufacturer with a strategic goal of improving product qualityand reliability must look at its operational manufacturing processes and see how theylink to this business objective. If organizations focus exclusively on automation andcost savings, they might achieve significant operational efficiencies but lose their com-petitive edge and fall short of their performance targets, as British Telecom (BT) andUnited Airlines did when they failed to link strategic goals with their processimprovement initiatives.

CREATING A BPMSTRATEGY


People

Technology

Processes Corporate Goals

Figure 14.7 BPM focus.

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Once the assessment is complete, it is necessary to develop a process perfor-mance plan that documents the ways in which the identified operational processescontribute to strategic goals. If a strategic goal is customer satisfaction, for exam-ple, appropriate process benchmarks should be established to accurately andconsistently analyze progress of your BPM initiative. In improving an order-to-fulfillment process, although order throughput and on-time delivery are important,other measures might have a direct impact on customer satisfaction, such as ful-fillment accuracy.

Finally, processes must be prioritized with highest priority being given to thoseprocesses that are determined to have the greatest potential impact on strategicobjectives.

To put an effective BPM strategy into place, Merrifield, Calhoun, and Stevens(2008) stress the need to focus strongly on desired outcomes—not on the people whocarry out the operations or how they carry out the operations—activities and capa-bilities. For example, instead of creating a long list of items such as “accounts payablesends a customer an invoice” (who does it) or “check all orders against invoicespayable” (how they do it), a more concise statement of desired outcomes should be


TABLE 14.4 Steps to Creating a BPM Strategy

Activities Description

1 Align customer-focused, financial, and operational goals with expectationsof shareholders or owners

2 Conduct assessment of core strategic and operational processes3 Link strategic and operational processes with organizational objectives4 Develop a process performance plan5 Prioritize processes based on potential impact on strategic objectives

A Closer Look 14.3Harvard Pilgrim Health Care Benefits from an Effective BPM Strategy

When U.S. News and World Report’s 2007 health plan rankingsassessed the best of the hundreds of commercial, Medicare, andMedicaid managed-care plans across the United States, HarvardPilgrim Health Care Systems came out on top. Plans were scoredfrom 0 to 100 based on data collected and analyzed by theNational Committee for Quality Assurance (managed care’smajor accrediting and standards-setting body). Scores reflectedresults of consumer surveys and success in preventing and treat-ing illness compared with the average plan. Prevention and treat-ment were measured across 50 individual items. Harvard PilgrimHealth Care ranked No. 1 with a score of 91.7 out of 100.

Almost bankrupt in 2000, Harvard Pilgrim, a full-service healthbenefits company serving members throughout Massachusetts,New Hampshire, Maine, and beyond, is now solidly in the black,and in 2006 reported just under 1,000,000 members. HarvardPilgrim has repeatedly received top awards and rankings for itsservice quality and customer satisfaction, including receiving thehighest numerical score in the J.D. Power and Associates 2007National Health Insurance Plan Satisfaction Study of large com-mercial health plans in the northeastern United States. HarvardPilgrim achieved these distinctions by employing a carefully devel-oped BPM strategy that combines insourcing and outsourcing toalign process improvement with its organizational objectives.

Harvard Pilgrim identified its healthcare critical activities, includ-ing identifying subscribers at high risk or in the early stages ofdeveloping chronic illnesses such as diabetes and heart disease.Early recognition of these people enabled the company to enrollthem in preventive care or disease management programsbefore their conditions grew serious. They realized that sophisti-cated data mining and analysis technology would be needed tosift through claims and other information to identify those at risk.Recognizing that it lacked this technology and expertise, HarvardPilgrim entrusted those activities to a reputable outside provider.

Harvard Pilgrim also outsourced non-core activities, such aspharmacy benefits management. This enterprisewide strategyenabled Harvard Pilgrim to focus its internal resources on improv-ing high priority activities that afforded it a strategic advantage inthe healthcare marketplace, such as creating new offerings andselling to large groups, and thus achieving its goal of being theNo. 1 commercial, Medicare, and Medicaid managed-care planin the nation.

Source: Compiled from Harvard Pilgrim Health Care Annual Report 2006(harvardpilgrim.org/pls/portal/docs/PAGE/MEMBERS/ABOUT/2006_ANNUAL_REPORT.PDF), U.S. News and World Report (usnews.com/listings/health-plans/commercial/harvard_pilgrim_health_care), and jdpower.com (accessed June 2008).

SVR OM HRM

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developed, such as “Collect customer payment.” Following from this, they suggest afew basic rules to follow in creating a BPM strategy:

1. Describe operations in terms of desired outcomes.2. Identify activities that support the desired outcomes.3. Identify capabilities needed to support each of these activities.4. Identify activities most critical to organizational success.5. Design a more efficient way of operating.

Most successful BPM solutions incorporate the following components:

• Business process mapping: modeling the core processes and interdependencies• Business rules engine: encapsulating procedural rules and decisions• Workflow automation: routing information to the right people at the right time• Application integration: middleware that enables data exchange between software• Knowledge base: data repository that stores business rules and other information • Business activity monitoring: system that monitors all activities in a process

An important point to keep in mind when setting a BPM strategy is that managingbusiness processes is an activity that is not limited to the organization itself, butinstead extends beyond the internal and external walls of the enterprise to includepartners, suppliers, customers, and consultants, as shown in Figure 14.8.

Business process modeling, sometimes referred to as business process mapping,includes techniques and activities used as part of the larger business process man-agement discipline. The purpose of modeling business processes is to create a blue-print of how the company works, much like the blueprint created by an architect prior

BUSINESS PROCESSINGMODELING

Corporate Headquarters

Branch Offices

Suppliers

Customers

Consultants

Business Partners

Figure 14.8 BPM without boundaries.

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to building a house. The set of business process models are blueprints for how theprocess will work after it is created or improved.

A process model is similar to an income statement in accounting in that it looksat the entire organization over a long period of time (e.g., a year). It is not a “snap-shot” of specific time periods. Therefore, time is not a fundamental driver in creat-ing business process models.We might find that we get a very similar set of high-levelprocesses for many organizations, regardless of their size or industry. For example,a set of processes for a local pet store, a large international furniture manufacturer,or an online video store at the highest level might be:

• Sell products to customers.• Manage finances.• Order and supply products.• Manage employees.• Maintain facilities.

Before BPM initiatives can proceed and designers can identify those processes that areeffective and those which are inefficient, they must be measured. Six Sigma, total qual-ity management (TQM), and ISO 9000 are quality techniques to measure and improvean organization’s processes and are often used in conjunction with BPM initiatives.

Six Sigma is a methodology to manage process variations that cause defects,defined as unacceptable deviation from the mean or target, and to systematicallywork toward managing variation to prevent those defects. Six Sigma has five phases:

1. Define. Formally define the goals of the design that are consistent with customerdemands and enterprise strategy.2. Measure. Identify product capabilities, production process capability, risk assess-ment, and so forth.3. Analyze. Develop and design alternatives, create high-level design, and evaluatedesign capability to select the best design.4. Design. Develop detailed design specifications, optimize design, and plan fordesign verification. This phase may require simulations.5. Verify. Check designs, set up pilot runs, implement production process, and handover to process owners.

Total quality management (TQM) is a management strategy aimed at embed-ding awareness of quality in all organizational processes. One major aim of TQM isto reduce variation from every process so that greater consistency of effort isobtained (Royse et al., 2006).TQM utilizes multifunctional teams comprised of pro-fessional staff and workers from all departments involved to solve problems.

In the mid-1980s, W. Edwards Deming, a U.S. statistician, university professor,author, and consultant, developed the Plan, Do, Check, Act (PDCA) cycle to achievecontinuous improvement. The PDCA cycle is widely used in organizations that areseeking to improve processes for achieving efficiency and effectiveness (Deming, 1986).The PDCA cycle achieves continuous improvement by repeating the basic cycle of:

PLAN Establish the objectives and processes necessary to deliver results toachieve with organizational objectives.

DO Implement the processes.CHECK Monitor and evaluate the processes and results against objectives and

report the outcome.ACT Take action needed for improvement. Review all steps (Plan, Do, Check,

Act) and modify the process to continue to improve it before its nextimplementation.

ISO 9000 was developed as a standard for business quality systems by theInternational Organization for Standardization (ISO). To be certified, businesses

MEASURING PROCESSES


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must document their quality system and verify compliance through reviews andaudits. A key element of ISO 9000 is the identification of nonconformingprocesses and the development of a plan to prevent nonconforming processesfrom being repeated. Specific quality improvement steps are not prescribedwithin ISO 9000.

During measurement of a process, diagramming techniques, such as flow chartsand process maps, are used to graphically illustrate the process and visualize the flowof product or documents through a series of process steps. The predominant goal ofprocess improvement teams is to eliminate the non-value-adding steps and to resolvequality problems by adding new processes or deleting, splitting, combining, expand-ing, or reducing existing processes.

BPM software helps organizations automate workflows and processes such as mar-keting and supply chain, accounts payable, and placing orders. The shift from “data-centric” information systems in the 1980s to “process-centric” information systemsin the 1990s and, more recently, “object-oriented” information systems has led toenterprisewide information systems that support end-to-end business processes. BPMsoftware tools have evolved over time from tools that simply document processes(text-based word processors) to those that graphically depict processes (drawingtools, such as flowcharts, data flow diagrams, integrated case tools, etc.); automate,integrate, and optimize individual processes; deliver integrated process and knowl-edge through the integration of people, technology, and content (BPMS); and, mostrecently, analytics functionality through BPMS bundled with business intelligence(BI), as shown in Figure 14.9.

Word Processors. One of the simplest ways to document a process is to use atext-based document processor. Text documents have been used for many years tocapture business processes. Their advantage is that virtually every organization hasa word processor.

Drawing Tools. Managers have used flowcharts and other graphics for years forone simple reason: something that would take many pages in a document can be

SOFTWARE TOSUPPORT BPM


“Pure Play” BPM

BPM Suite

BPM+BI Bundle

Drawing Tool

Word Processor

Figure 14.9 Evolution of BPMsoftware tools.

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expressed quickly and simply in a graphic such as a diagram or a chart. A flowchartor data flow diagram is good at showing the big picture, instead of bogging you downin the details like a text document can. However, drawing tools alone can’t expressa business process. To capture the details, a text-based tool and a drawing tool needto be used together and synchronized.Together they work better than either one doesalone, but they still fall short of being an optimal BPM solution.

“Pure Play” BPM Tools. The need for greater synchronicity and flexibility led tothe development of basic “pure play” BPM software tools that combine text andgraphics and offer more advanced features such as a repository that allows reuse ofresources and simulations.The process can be captured in greater detail, with a higherdegree of accuracy. Simulation enables process redesign, and useful artifacts can begenerated for later use by IT developers.

Business Process Management Suites. In Business Process Management—TheThird Wave, Smith and Fingar (2002) foretold of a new type of BPM software—theBPM suites (BPMS), in which a business analyst could graphically compose aprocess model, optimize it through simulation and analysis, and execute it on a built-in process engine. By 2008, BPMS had become a reality. Current BPMS include acollection of critical software technologies that enable the control and managementof business processes. Unlike other model-oriented development tools, a BPMSemphasizes user involvement in the process improvement lifecycle, from designthrough implementation, deployment, monitoring, and ongoing optimization.Rather than reducing reliance on people through automation, a BPMS emphasizesthe value of coordinating people, information, and systems as central resources.Using a BPMS, the modified process can then be merged into the current businessprocess environment.

BPMS are most appropriate for processes that need to balance people, systems,and information, and where management of the interactions and interdependen-cies among all three aspects is critical to work outcomes (Hill, Cantara, andKerremans, 2007).The classic use scenario of a BPMS is most valuable for extendedprocesses that change frequently, cross multiple physical boundaries (organiza-tional, departmental, system, information), and need a high degree of coordinationof human activities, information, business transactions, and business rules. Forexample, a multinational company administers and tracks the bank accounts of itsvarious subsidiaries worldwide and has to comply with country-specific rules andregulations.

As the concept of BPM matures, vendors are responding to the piecemealprocess improvement methods and techniques.The majority of BPMS vendors haveevolved from pure-play BPM tool providers, and these vendors continue to lead theBPMS market, although many large middleware and software infrastructure vendorsare strengthening their BPMS products. Gartner classified 22 vendors who are theleading contenders for long-term global success in the BPM arena. A list of thosevendors is provided in Table 14.5.

Among the leading BPMS offerings, Fujitsu’s Interstage BPM 8.1 allows for Webmodeling of business processes with process rules updates and management tools,and starts at $60,000 per workstation.TIBCO Software Inc. (tibco.com) has releasedits Business Studio 2.0 software that spans BPM, workflow, and enterprise applica-tion integration (EAI) areas. Meanwhile, IBM has introduced WebSphere BusinessModeler and Business Monitor that are intuitive for business users and analysts, andfacilitate involvement in the design, monitoring, and analysis phases of processimprovement life cycles.

By the end of 2006, the BPMS market had reached nearly $1.7 billion in totalsoftware revenue and had begun to establish itself with proven technology, stablevendors, vendor consolidation, and rapid user adoption. In their 2007 report on soft-ware revenue in the portal, process, and middleware software market, Cantara,Biscotti, Correia, and Raina (2007) estimated that the BPMS market will increasemore than 24% from 2006 to 2011, compared with a five-year compound annual


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growth rate of 9.9% in total revenue across offerings in that software market sec-tor. In 2007, the BPMS market was the second fastest growing middleware softwaresegment.

BPMS-BI Bundle. Some of the more sophisticated BPMS products are includ-ing business analytics to enhance the features of their offerings. For example, BPMvendors Lombardi Software and Ultimus bundle Business Object’s reporting soft-ware with their BPMS.Additionally, business intelligence (BI) software vendors suchas Cognos are providing links between their BI software and several BPM vendortools.

Whatever the level of BPM software tools, when dealing with BPM vendors, itis critical to identify products that are closely aligned with current organizationaloperations, technologies, and underlying business events and activities.

The value of BPM can be seen in a number of organizations that are using IT toolsto manage their business processes. For example, Hasbro Inc. deployed TeamWorkssoftware to streamline the toy maker’s ordering process (Chen, 2004). Hasbroimproved not only the toy order process, but also the inquiry process. Great Clips, achain of 2,600 hair salons, uses Metastorm BPM software that includes BI function-

BUSINESS VALUE OF BPM


TABLE 14.5 Leading Contenders in the BPMS Market

Vendor Class Product

Adobe Challenger LifeCycle Enterprise Suite

Appian Leader Appian Enterprise 5.6

Appian Analytics Everywhere

Ascentn Visionary Ascentn AgilePoint

AuraPortal Visionary AuraPortal

BEA Systems Leader AquaLogic BPM Suite 6.0

Captaris Niche Captaris Workflow

EMC Challenger Documentum Process Suite

Fujitsu Challenger Fujitsu’s Interstage Business Process Manager 8.1

Global 360 Leader Global 360

IBM Leader WebSphere Business Modeler Websphere Business

Monitor

Intalio Visionary Intalio BPMS Enterprise Edition 5.0

Lombardi Leader Blueprint

Lombardi Teamworks 6

Metastorm Leader Metastorm

Microgen Niche Aptitude BPM Suite

Oracle Challenger Oracle BPA Suite

BPEL Process Manager

Oracle BAM

Pegasystems Leader SmartBPM Suite

Savvion Leader BusinessManager 7.0

Singularity Visionary Process Platform

Software AG Leader WebMethods BPMS 7.1

SunGard Visionary Carnot

Tibco Software Leader Business Studio 2.0

Ultimus Visionary Ultimus BPM Suite 8.0

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A Closer Look 14.4Chubb Links Strategic Innovation with BPM

In May 2006, Chubb, a multi-billion-dollar global property andcasualty insurance firm based in Warren, NJ, went live with its newCommercial Underwriting Workstation Inventory ManagementSystem (CUW). With the help of Metastorm’s BPM Suite, ChubbCommercial Insurance (CCI), the largest operational division ofChubb Group, was able to transform multiple local rate-book-issue (RBI) processes corresponding to its 40 field branches intoone standardized process and condense its formerly disparate ser-vice force into three service centers.

Todd Ellis, Senior VP of Chubb & Son and CIO of ChubbCommercial Insurance (CCI), credits the significant efficiency gainsto BPM. Ellis claims that the BPM initiative “provides greater costtransparency, quality, and throughput CCI is able to track downbottlenecks in the processing life cycle,” and, “in the long run,reduce overall delivery costs, and improve overall efficiency”(O’Donnell, 2007). Chubb’s success had taken nearly four years tocome to fruition.

In 2002, Chubb wanted to create a process model to geo-graphically separate their branch underwriting employees andrate-book-issue (RBI) customer service representatives. Theirobjective was to centralize their RBI representatives in lower-costlocations and establish a higher degree of standardization amongtheir branches. First, they organized a business process study teamof home-office experts and field personnel who concluded thatan underlying BPM/workflow tool was essential to their efforts.Late in 2003, the team set out to find a BPM tool that could inte-grate with their existing portal for underwriters and their assistants.Following a formal RFP process that took approximately one year,the team identified Metastorm BPM as the best tool.

Chubb worked closely with Metastorm on a proof of con-cept that involved use-case scenarios and workflow maps thatwould be needed to implement the tool. This process gave

Chubb the opportunity to see firsthand how the tool could beused and to evaluate its ease of maintenance. To feed Web ser-vices from the CUW to the Metastorm BPM suite, CCI built amiddle layer using an open-source business-rules engine to pri-oritize work orders before they reached the workflow engine. CCIused an iterative testing strategy to make sure the applicationcould withstand nationwide deployment. The greatest challengewas to prepare the underwriting staff to work separately, in ageographic sense, from the customer-service representatives.Chubb achieved this by implementing a work-request docu-mentation process supported by a Microsoft Word template thatwould ready them for an automated work request provided byMetastorm’s BPM suite. Filling out these word processor tem-plates and emailing them was painful and tedious for theemployees, so much so that when Metastorm was rolled out,there was easy acceptance of the new automated process. In2005, the new process was phased into a limited number ofbranches on the West Coast where the first of the three servicecenters would be located. CCI completed the rollout in 2006when the two remaining centers located in the Midwest and onthe East Cost were successfully deployed. The BPM initiative isexpected to achieve its ROI by the end of 2009.

One of the lessons Chubb learned from the BPM initiative is theneed for a close alignment between BPM and business rules. CCI’ssuccessful initiative highlights the value of defining business modelsand business architecture, and encourages future BPM efforts.

Sources: Compiled from insurancetech.com and O’Donnell (2007).

For Further Exploration: What led Chubb to realize there was aneed for a closer alignment between BPM and business rules?What other challenges might have Chubb had to face in this caseif things had been handled differently?

MKTSVR

ality to manage the recruitment process for its 200 new franchisees each year. Thissoftware enabled Great Clips to identify internal inefficiencies associated with devel-oping its new stores and improve the way it manages external processes includingthe acquisition of construction permits (Whiting 2006).

Park University in Missouri used BP tools to change University processes, man-age documents, and create a nearly paperless environment. Automotive firms areusing BPM to change processes that create scheduling stability and manage pro-duction in transit batch sizes.

Just gaining a better understanding of the current state of organizationalprocesses is valuable in itself. However, eliminating non-valued-added processes oroutsourcing non-core processes can have major positive effects on performance.

Review Questions1. Define business process management (BPM).2. List and discuss the benefits of developing a business process management (BPM)

strategy.3. List the benefits of utilizing BPM within an organization.4. Describe the steps to creating a successful BPM strategy.

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14.4 Change Management and Organizational TransformationIt is impossible to consider making changes in information technology without con-sidering the costs of changes to the organization that occur when a new system isintroduced or an existing system is modified. The ability to successfully introducechange to individuals and organizational units is critical to successfully implement-ing a new system.

The purpose of this section is to discuss ways to manage the human factor as wellas the technical issues that arise in IT systems adoption and implementation.

Change management is a structured approach to transition individuals, teams,and organizations from a current state to a desired future state. In the case ofIT systems, it includes managing change as part of systems development to avoiduser resistance to business and system changes. Change management issues arisewhen organizations and their suppliers or new business partners—in the case ofa merger or acquisition—follow very different work practices. Addressing thesedifferences and creating an environment that supports the development andimplementation of common technical platforms, appropriate levels of data shar-ing, and acceptable ways of interacting on a personal level is a challenging propo-sition. Changes and compromise are always difficult to achieve, and change isoften resisted regardless of the advantages that new processes and systems haveto offer.

When changes in a system cause people to relate to others and work in waysthat conflict with their basic values (corporate, cultural, and personal), a project’ssuccess can be put at risk, despite the absence of any substantial technical issues.Indeed, in the vast majority of cases (approximately 90–95%), the problem in intro-ducing new systems is not in the technology. Cravens (2005) contends that whilesome of the problems come from either misapplication or malfunction of hardwareor software, most change management issues arise because people and the work theydo are impacted by the introduction of new or modified IT systems. Problems withhardware and software can usually be fixed by redesign, integration, or upgrade.Theproblems with people are more difficult to address. Disgruntled or disenfranchisedpeople can be constant threats to the success of any project. Dhillon (2004) rein-forces the proposition originally offered by Markus (1984) that the origins for resis-tance to system implementation can often be attributed to the distribution of powerimplied by the new system compared to the existing power base. Faced with poten-tial shifts in power, key stakeholders may consciously or unconsciously resist bydelaying, sabotaging, or insisting on the modification of system development.Thesetactics may include

• Withholding resources (money, people, time) needed for the project

• Purposely identifying the wrong people to work on the project

• Raising continual objections to project requirements

• Changing project requirements

• Expanding the size and complexity of the project

At the corporate level, it is important to keep in mind that no two organizationsare exactly alike. Organizations are highly specialized entities and can be classifiedalong many different dimensions, such as industry sector (manufacturing, retail, ser-vices, etc.), profit orientation (for-profit, nonprofit), sector (public vs. private), regu-latory status (regulated, not regulated), locale (domestic vs. multinational, or foreign),holding status (sole ownership, partnership, corporation, LLC, LLP), form (mecha-nistic vs. organic), and structure (hierarchical, matrix, projectized).

For these reasons, it is important to fit the change management plan and theprocess used to facilitate change management to the individual organization underreview.

THE CONCEPT OFCHANGE MANAGEMENT

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The change process is a structured technique to effectively transition groups or orga-nizations through change. When combined with an understanding of individualchange management, these techniques provide a framework for managing the peo-ple side of change.A number of process models have been proposed to facilitate orga-nizational change at an individual and corporate level.

Most process models are based on the simple three-stage model that was origi-nally theorized by Kurt Lewin (1951), a German-born psychologist and one of themodern pioneers of social, organizational, and applied psychology. Lewin’s three-stage change process consists of three stages of change (Figure 14.10). These stagesare unfreezing, change, and (re)freezing.

Unfreezing—in this first stage, people have a tendency to seek out a situation inwhich they feel relatively safe and have a sense of control. They want to remain ina comfortable state. Alternative situations are not appealing, even if they appear to

CHANGE PROCESSMODELS

14.4 Change Management and Organizational Transformation 549

A Closer Look 14.5Lincoln Financial Uses IT to Change Customer Interaction with Partner Web Sites

Lincoln Financial is a $5 billion provider of life insurance, retire-ment products, and wealth management services. It distributesofferings through financial advisors, banks, and independent bro-kers. In most of the insurance industry, if consumers want to accesstheir accounts or download a form from a broker site, they clickon a link that takes them to the insurance provider’s site, wherethey input a separate password or user ID. To become a “partnerof choice” on such sites, Lincoln Financial wanted tighter inte-gration with brokers’ Web sites. Lincoln wanted to go a step fur-ther, providing content and account access within its partners’Web sites, as well as single sign-on for consumers.

This was not a simple undertaking. Outlining the Lincoln con-tent in an HTML frame would not provide the partner’s look andfeel. A pure Web services approach was also out, because mostof Lincoln’s clients could not support that kind of system, since thepartner then had to process the XML/SOAP messages. For a shorttime, Lincoln maintained subsites for its partners who wantedthem, and those sites linked to requested content. However, main-tenance of the subsites was burdensome.

The ultimate answer was Service Broker. It took three devel-opers four months to build the pilot of Service Broker, which is aWeb Services–based application with a front end that the com-pany calls a servlet. When the servlet is installed on a partner’sserver, it provides a way to accept Lincoln’s content and applica-tions and still maintain the partner’s look and feel. The servlet man-ages authentication, digital signature, passwords, and pagerendering. When the partner wants to include Lincoln content oran application, it needs to add just one line of code.

In 2004, Lincoln was the only insurer that did not require cus-tomers to leave a partner’s Web site to access information. Thiscapability provided Lincoln with competitive advantage andchanged the way in which customers interact with partner Websites.

Source: Compiled from Brandel (2004) and lfg.com (accessed June 2008).

For Further Exploration: What changes occurred when systemswere connected between the business partners? Why was itimportant to maintain the look and feel of a partner’s Web site?

SVRFIN

Unfreezing Change

(Re)Freezing

Figure 14.10 Lewin’s three-stage change process.

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be preferable to the current state.Talking about the benefits of moving to what couldbe is seldom enough to move them from this frozen state, and significant efforts areoften necessary to unfreeze people. Some people accept change easily, whereas oth-ers are reluctant to move out of their comfortable situation. It is the task of the man-ager to determine the level and location of resistance and address it to move peopletoward the next stage.

Change—sometimes referred to as transition—is a key part of Lewin’s model.It encompasses the notion that change is a journey rather than a simple step. Thisstage often requires people to go through several stages of apprehension before theyare prepared to move forward. The change stage requires time—the amount of timeis often closely related to the extent of the change that is required. It is important toensure that leaders don’t focus solely on their own personal journey during the periodof time that it takes to move to the next stage. If they ignore the needs of everyoneelse and expect them to cross the chasm between the current state and the desiredstate in a single step, it is likely that their efforts will be unsuccessful. Often the mostdifficult part of change is taking the first step. As a result, good leadership is impor-tant in this stage, and includes providing coaching, counseling, or other psychologi-cal support for those undergoing change.

Refreezing—The third and final stage in the change process involves theprocess of moving to a new place of stability. Refreezing may be a slow processbecause the change stage seldom ends cleanly, particularly when large numbersof people are being subjected to the change. At any given point in time, not every-one will be at the same point of transition from the old way of doing things tothe new.

Change can occur unexpectedly and involve an individual, department, or theentire organization. Change can also be used to correct a problem, or to develop a newopportunity. Any of these types of change can be incremental, or they can be radical.

A major change in the way that an organization does business is typically referredto as organizational transformation. John Kotter, a Harvard Business School pro-fessor, is one of the foremost authorities on leadership and radical change. In hisrecent book, entitled Our Iceberg is Melting (2006), Kotter teamed up with HolgerRathgeber to present a simple story of radical change and the issues associated withmanaging such a change. Using the allegory of an emperor penguin colony inAntarctica, Kotter and Rathgeber explain, in layperson’s terms, how radical changecan be effectively addressed.They integrate actual innovative and creative solutionsthey have seen applied to organizational change problems, into the fanciful story ofFred, the concerned penguin.When Fred notices that a small part of the iceberg whichhis colony of penguins inhabit has disappeared, he goes about trying to manage thispotentially devastating change to his environment. The eight-step process originallyproposed by Kotter in his original book, Leading Change (1996), and used success-fully in hundred of organizations during the past decade, provides the foundation forthis easy-to-read tale of organizational change.

Kotter’s organizational transformation model consists of an eight-step changeprocess that organizations should follow in order to successfully transform an orga-nization. The eight steps are the following:

1. Establish a sense of urgency.2. Form a powerful guiding coalition.3. Create a vision.4. Communicate the vision.5. Empower others to act on the vision.6. Plan for and create short-term wins.7. Consolidate improvements and produce more change.8. Institutionalize the new approaches.

ORGANIZATIONALTRANSFORMATION


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Kotter’s model applies to organizational transformation in general, but its util-ity can be seen in two highly successful data warehousing initiatives at FirstAmerican Corporation (AMC) and Harrah’s Entertainment. In both companiesthere was a sense of urgency. First American Corporation (a bank) was losing moneyand operating under letters of agreement from regulators. It was likely to be closedunless a new business strategy could be successfully implemented. Harrah’sEntertainment (gaming) was not in financial trouble but changes in the gaming lawsallowed gambling on Indian reservations and riverboats, which created a tremen-dous opportunity for growth.

In both companies, senior management agreed on a business strategy and a visionfor how it would be implemented.First American Corporation implemented a customer-centric business strategy that was supported by a data warehouse that stored thecustomer data necessary to support the business strategy. Harrah’s Entertainmentgrew through the acquisition and opening of new properties, and the promotion ofcross-casino play through an innovative rewards program. A data warehouse thatstored casino, hotel, and special events data was the enabler for their new businessstrategy.

Regardless of the nature or extent of the change, it is advisable to take a struc-tured approach to affecting any type of organizational change. Jones, Aguirre, andCalderone (2004) of Booz, Allen, Hamilton, a global strategy and technology con-sulting company, headquartered in McLean, VA, offer a set of useful principles toassist in guiding successful change management. These 10 principles are:

1. Address the “human side” of change systematically: Develop a formal approachfor managing change and adapt it often as circumstances change within the organi-zation.

2. Start at the top: Top managers, including the CEO and CIO, must show full sup-port for the change in order to challenge and motivate the rest of the organization.They must act as role models and present a unified front on all matters related tothe change initiative.

3. Involve every layer: Change occurs at all levels of the organization. In additionto securing top-level support, it is important to cultivate leaders at various levels tosupport the change so that the change cascades down. These leaders must be giventhe resources they need to execute their job and kept motivated to achieve theneeded change.

4. Make the formal case: The need for change is always challenged. A formal writ-ten statement of the envisioned change helps create and solidify alignment betweenchange leaders and the change team.

5. Create ownership: Top management leaders need to work with the design teamsto fully understand the changes that will result from the introduction or modifica-tion of technology. Leaders must be willing to accept responsibility for achievingchange and offer incentives for participation in problem identification and solutiongeneration.

6. Communicate the message: Issues related to change must be clearly communi-cated. Employees must be repeatedly provided with the right information at the righttime through multiple channels to ensure they understand the consequences of thechange initiative.

7. Assess the cultural landscape: As change cascades down through organiza-tional levels, the culture and behaviors of employees must be addressed up front.Cultural assessments are often made too late or not at all. Core cultural values,behaviors, and perceptions must be addressed in regard to readiness for change;conflict areas must be identified and factors that can impact resistance must bedefined.

10 PRINCIPLES OFCHANGE MANAGEMENT

14.4 Change Management and Organizational Transformation 551

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8. Address Culture Explicitly: Once understood, the culture must be addressedhead on. In the case of new departments, a new culture is created; in merger/acqui-sitions, existing cultures are combined, and in well-established companies culturewill be reinforced. A baseline measurement of current vs. the desired culture mustbe developed along with a detailed plan for moving from current state to desiredstate.9. Prepare for the Unexpected: No matter how well a plan is executed, there arealways surprises along the way. The impact of change must be continually re-exam-ined to measure the source and level of resistance, and necessary adjustments madeto maintain momentum and achieve objectives.10. Speak to the Individual: All organizational change involves change at the invi-didual level; for the company to change, the individual and the way he or she worksmust change also. Employees must be involved in the change process, and individ-ual rewards, in the form of monetary incentives, personal recognition, and promo-tions, must be offered to reinforce the organization’s commitment to the changeprocess.

Technology adoption and implementation is a major cause of business processchange and organizational transformation. Given that technology is advancing expo-nentially, it is difficult, if not impossible, to stay current with all of the new develop-ments in available and emerging technology. The IT sector as a whole is also in aconstant state of change.

Whether an organization is introducing a new materials handling system, a newrobotics installation, or undergoing basic business systems integration, it is makingcontinuous improvements to do things better, faster, and cheaper. Change is centralto the concept of automation, and it is important to fully understand what it entailsand how it can best be managed. In the next chapter, the ways in which IT changescompanies will be discussed in greater detail.

Review Questions1. Discuss change management and issues that may arise when an organization goes

through change.2. Explain the three stages of Lewin’s change model.3. Research the term “change management” and report on any other process mod-

els that you are able to find that are currently being used to effect effective changemanagement.

4. Visit a company of your choice and discuss with a business manager and some-one in the IT department a recent change that has been implemented in their orga-nization. Compare their perceptions of the impact of the change on their daily workand the organization as a whole.

14.5 Managerial Issues1. Global and cultural issues. Adopting and implementing systems across organi-zations and countries could result in problems associated with the culturally basedways in which different people interact. Change management and organizationaltransformation can significantly disrupt the basic values of organizational culture.Care must be taken when managing processes that will substantially change the struc-ture and the culture of the organization.2. Ethical and legal issues. When restructuring processes through the adoptionand implementation of technology, it is important to consider the people in thesystem. Modifying existing or implementing new IT systems means that someemployees will have to completely change the way that they perform their workand, often, the actual work that they do. Some may feel too old to do so. Others

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may not have the necessary skills and do not wish to acquire them. Conductingbusiness process restructuring may result in the need to lay off, retrain, or trans-fer employees. Should management notify the employees in advance regardingsuch possibilities? What about those older employees who may be difficult toretrain?

Other ethical issues may involve sharing computing resources or personalinformation, which may be part of the new organizational culture. Finally, indi-viduals may have to share computer programs that they designed for their depart-mental use, and may resist doing so because they consider such programs theirintellectual property. Conducting interviews to find managers’ needs andrequirements must be done with full cooperation. Measures to protect privacymust be taken. Appropriate planning must take these and other issues into con-sideration.3. User involvement. The direct and indirect users of a system are likely to bethe most knowledgeable individuals concerning clarification and description ofthe business requirements and the most effective alternative ways of attainingthem. Users are also the most affected by a new information system. IS analystsand designers, on the other hand, are likely to be the most knowledgeable indi-viduals concerning technical and data management issues, as well as the mostexperienced in arriving at viable systems solutions. Functional managers mustparticipate in the development process and should understand all of the phases.They must also participate in the make-or-buy decisions and software selectiondecisions. The right mixture of user involvement and information systems exper-tise is crucial.4. Change management. People use information systems and get used to how exist-ing systems work. They may react to new systems in unexpected ways, making eventhe best technically designed systems useless. Changes brought about by informa-tion systems need to be managed effectively. Of special interest is the issue of moti-vating programmers to increase their productivity by learning new tools and reusingpreprogrammed modules.

Technology transfer is a transfer of knowledge rather than physical devices. It isnow increasingly recognized that changes in technology and work processes are fun-damentally culture changes, and preparing organizational members for such culturechanges is an important undertaking that cannot be ignored.5. Risk management. Building information systems involves risk. Systems may notbe completed, completed too late, or require more resources than planned. The riskis large in enterprise systems. It is helpful to think of IT system adoption as a processof embodying technical knowledge and knowledge of customer needs into a coher-ent solution. Under this view, those who want to understand and manage the risksassociated with IT systems adoption must first focus on the translation of customerneeds into project requirements and specifications.

14.5 Managerial Issues 553

How IT Benefits You

For the Accounting MajorAccounting professionals are often required to workclosely with those in information technology on the

design of IT systems specifications and acquisition of enter-prise systems applications such as electronic commerce anddata warehouses. Accountants play important managerial,

advisory, and evaluative roles in connection with the acquisi-tion of various information technologies by organizations ofall types and sizes. To maintain the accountancy profession’scredibility and capability in supporting new, strategic infor-mation technology initiatives, the competence of accountantsin IT resources acquisition must be preserved and enhanced.

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For the Finance Major

Information systems projects require significant finan-cial justification. The strategy to adopt IT resources

today is a major managerial as well as financial decision. Thechoice of adopting systems is heavily determined by finan-cial considerations, such as the total cost of ownership(TCO) and return on investment (ROI). Multiple sets ofassumptions and implementation plans look into every facetof an IT project’s costs and expected benefits. IT projectevaluation thus requires valuable advice and input fromfinancial professionals.

For the Human Resources Management Major

IT systems adoption and implementing does notjust involve acquisition of hardware and software,

but also includes changing the way people work and the jobsthat they do. As a result, human resources professionals areoften involved in the hiring, firing (or laying off), and retrain-ing of staff. The importance of training on the use of a newIT-based system cannot be overemphasized. Training includesthe transmission of technical expertise to fundamental changeof work activities and attitudes. Thus, the role of the humanresources professional in providing adequate and propertraining and counseling to end users is critical in IT systemsadoption and implementation.

For the IS Major

The subject of information systems grew out of com-puter science to fill a gap created by the failure of

computer programmers to understand and solve businessproblems. An information system professional, by virtue of

background and training, plays a key role in IT adoption andimplementation. The processes of developing a new or mod-ified system—from identification of possible technology toimplementation—all require extensive skills and knowledgefrom IS professionals.

For the Marketing Major

An organization should leverage the power of tech-nology and the strategic vision of marketing during

the process of IT systems adoption and implementation. Toimprove Web traffic and increase orders and revenue, themarketing staff can redevelop the content of the Web site sothat it speaks to the audience in clear, action-oriented lan-guage. Then the IT staff can explore ways to capture the traf-fic that comes in and organize it in ways that marketing canuse. Marketing professionals should always consider what theycan achieve if a particular IT infrastructure and system isacquired.

For the Production/Operations ManagementMajor

An organization acquires IT capability not just to auto-mate, but also to redesign its existing business processes.The implementation of enterprise systems is a technologi-cal change that leads to organizational and cultural changes.Production and operations management (POM) traditionallyfocuses on managing processes to produce and distributeproducts and services. A great deal of POM focus is on effi-ciency and effectiveness of processes. Therefore, the exper-tise and services from POM professionals are needed toacquire and implement IT infrastructure and system.

Adoption process 524Business process 539Business process management

(BPM) 539Business process modeling 542Business Process Management

Suites 545Business process reengineering

539Champion 528Change management 548Change process 549Compatibility 525Complexity 525Drawing Tools 544The four P’s of implementation

533

Hype cycle 529Implementation 532IT applications 533IT infrastructure 533ISO 9000 543Kotter’s organizational

transformation model 550Lessons learned 538Lewin’s three-stage change

process 549Organizational transformation

550Parallel approach 533Phased approach 534Pilot approach 533Plunge approach 533Priority matrix 530

Process improvement teams 544

“Pure Play” BPM Tools 545Relative Advantage 525Reliability 525Six Sigma 543Task-technology dependency

525Technology adoption lifecycle

524Total quality management (TQM)

543User Acceptance 537Word Processors 544Workflow management

(WFM) 539

Key Terms

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Virtual Company Assignment 555

Chapter Highlights (Numbers Refer to Learning Objectives)

� The technology adoption lifecycle is used to explain howinnovations are adopted for use in organizations.

� The adoption process occurs over time and passes throughfive stages: acquire knowledge, persuade, decide, implement,and confirm. During the knowledge and persuasion stages, thepotential adopter becomes aware of the technology and formsan attitude toward it, culminating in the decision stage thatleads to adoption or rejection of the innovation.

� Technology differences in a new system can be measured forcompatibility, complexity, reliability, and relative advantage.Thisis useful to determine the suitability of a new system.

� The ability of a technology to efficiently and effectively exe-cute a task is important to consider when assessing the adop-tion of new technologies.

� Organizational differences play a role in IT adoption, as dif-ferent levels of support and interest in the new technology caninfluence its success or failure.

� Environmental aspects of technology adoption must be care-fully weighed and considered before and during the adoptionof a new system.

� The different characteristics of the adopters is important toobserve,as people fall into five different adopter categories—inno-vators, early adopters, early majority, late majority, and laggards.

� If a new system does not solve the problems for which it wasintended, it will not be accepted and used. Additionally, if theorganization does not have personnel with the IT skill setrequired, it will be difficult or impossible to successfully imple-ment a new system.

� The success or failure of systems implementation can beinfluenced by top management support, level of risk, training ofusers, user acceptance of the IT project, and management of theimplementation process.

� Cost overruns, failure to meet deadlines, system performancefailures, and missing functionality are challenges to managingIT implementation.

� Risk is an important aspect of IT implementation that mustbe managed carefully.

� Business process management (BPM) is a strategy for cre-ating processes, modeling processes, monitoring processes, andreengineering them.

� BPM utilizes IT tools and quality control methods to trackand improve process efficiency and effectiveness.

� A successful BPM strategy starts with a thorough assessmentof core strategic and operational processes, followed by aprocess performance plan. Finally, one must prioritize theprocesses depending on which will have the greatest potentialimpact on strategic objectives.

� Before BPM initiatives can proceed and designers can iden-tify which processes are effective and which are inefficient, theymust be measured.

� BPM software tools can range from simple word processing,to drawing tools, or can be more integrated, such as “Pure Play”BPM tools and BPMS products.

Change management is a structured approach to transitionindividuals, teams, and organizations from a current state to adesired future state.

It is important to fit the content of a change managementplan and the process used to facilitate change management tothe individual organization under review.

The change process is a structured technique to effectivelytransition groups or organizations through change.

Radical technology changes can transform an organization.

Management Decision Support at The Wireless CaféGo to The Wireless Café’s link on the Student Web Site. There you will be asked to plan and rec-ommend how to proceed in upgrading and adding information systems for the restaurant.

Instructions for accessing The Wireless Café on the Student Web Site:

1. Go to wiley.com/college/turban.2. Select Turban/Volonino’s Information Technology for Management, Seventh Edition.3. Click on Student Resources site, in the toolbar on the left.4. Click on the link for Virtual Company Web site.5. Click on Wireless Café.

Virtual Company Assignment

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1. Divide into groups, with each group visiting a localcompany (include your university). At each firm,study the systems acquisition process. Find out themethodology or methodologies used by each organiza-tion and the types of application to which eachmethodology applies. Prepare a report and present it tothe class.

2. Have teams from the class visit IT acquisition efforts atlocal companies. Team members should interview

members of the project team to ascertain the followinginformation:a. How does the project contribute to the goals and

objectives of the company?b. Is there any information architecture in place? If so,

how does this project fit into that architecture?c. How was the project justified?d. What project planning approach, if any, was used?e. How is the project being managed?

Group Assignments and Projects

Internet Exercises1. Surf the Internet to find some recent material on the role

IT plays in support of BPM. Search for products andvendors and download an available demo.

2. Identify some newsgroups that are interested in BPM.Initiate a discussion on the role of IT in BPM.

3. Enter gensym.com and find its modeling products. Explainhow they support BPM and process restructuring.

4. Go to ouricebergismelting.com/html/seminar_leadingchange.html and view the 25-minute video of John Kotter explain-ing his 8-step change process and how it is used effectivelyin organizations.

1. Discuss which of the “4 P’s of implementation” would bebest to use in each of the following examples:a. Small computer training company that runs classes

each day for no more than 40 different users each day.There are five permanent staff members. They want toupgrade to a new operating system.

b. Global company with 5000+ users worldwide needs toperform a software upgrade on an existing system thatis used by 20 percent of the business on a daily basis.

c. Busy airline ticketing Web site needs its softwareupgraded to make searches run faster.

d. Existing software development company has newgraphic design software to unveil, but wants to test itfirst with some of their existing customers who arewilling to report performance problems and providefeedback.

Write a short report that lists the situations and theimplementation approach you chose as most appropriatefor each situation. Discuss the various implementationapproaches and describe how the differences in opinionwere resolved.

2. Examine some business processes in your university orcompany. Identify two processes that need to beredesigned. Employ some of the discussed BPR driversto plan the redesign. Be innovative.

3. Find examples of the four software tools used to docu-ment a BPM initiative. Demo each of the tools and writea report documenting which is best for integrating differ-ent aspects of BPM and explain why.

Exercises and Projects

1. List and briefly discuss the five steps of the informationsystems adoption process.

2. Describe some implementation and management issues.3. Consider what is involved in identifying an IT project.

How is such identification done?4. What is the basic idea of justifying a new system?5. What strategies can be used to overcome user resistance

to IT implementation?6. What organizational considerations should be addressed

when implementing a new or a modified system?7. Create a list of problems that show that an IT implemen-

tation has failed.8. Create a list of benefits that show that an IT implemen-

tation has been successful.

9. Describe how BPM has evolved out of the concept ofbusiness process reengineering.

10. Describe the enabling role of IT in BPM.11. Discuss three tools used to measure and improve an

organization’s processes.12. Name four software tools used to document a BPM.

Discuss which one is best for integrating different aspectsof a BPM.

13. Discuss why it is necessary to understand the concept ofIT implementation when managing organizationalchange.

14. What is the difference between change management andorganizational transformation?

Questions for Discussion

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Minicase 557

DSpace is a groundbreaking digital library system designedto capture, store, index, preserve, and distribute scholarlyresearch material in digital formats. DSpace was jointly devel-oped by Massachussetts Institute of Technology (MIT)Libraries and Hewlett-Packard for use by students, faculty, andresearchers worldwide. Its purpose is to:

• Store materials in an organized, secure, and searchablearchive

• Preserve articles, datasets, images, course materials, andother sources of information

• Create a distribution channel for research materials• Increase accessibility of research materials through world-

wide access

By early 2008, dozens of MIT faculty, researchers, depart-ments, labs, and centers had joined DSpace. In addition, MITmasters and Ph.D. theses dating back to the mid-1800s hadgrown to a whopping 15,000 stored on DSpace. Listed by aca-demic department, they can easily be accessed by title, authorname, subject area, or date. Dspace was designed to raise theresearch profile of MIT’s students and faculty worldwide.

The idea to create a digital institutional repository at MITdeveloped from conversations between Ann Wolpert,Director of MIT Libraries, and MIT faculty members. Shenoticed a need when faculty members joked about havingtheir research on e-mail. This initial awareness, coupled withshifting trends of electronic scholarly publishing and therequests of students and faculty’s increasing for on-demanddocument delivery, led to a meeting with Hewlett-PackardLabs in March 2000. Finally, MIT Libraries’ Associate DirectorMacKenzie Smith helped drive the project to completion withits November 2002 launch.

It is no surprise that, in order to succeed, a project suchas DSpace had to market itself and garner the support itneeded to survive. That support had to come from key mem-bers of the MIT academic community. Opinion leaders, keyadministrators, and respected members of the faculty had tobe courted and persuaded. Their conversations about the pro-ject would create awareness and interest, and their endorse-ment would promote credibility. At MIT, word-of-mouth, amost infectious means of disseminating interest and excite-ment, proved very effective.

Though informally excitement spreads like wildfire, thefire must be lit and stoked by planned, more formal inter-ventions. The idea of DSpace had to capture the imaginationof the faculty—and the implementation had to offer the solu-tion to problems some didn’t even know existed.

How did they do this? The DSpace team used a numberof communication channels to achieve their objectives, in thefollowing ways:

• They introduced DSpace to members of the MIT commu-nity at a program level and informally.

• In addition to its individual, enthusiastic, everyday conver-sations, the team made presentations to small groups thatelicited curiosity and created forums for discussion of what

Minicase

DSpace would be and how it would help the MIT commu-nity and its various constituents.

• Ann Wolpert presented the DSpace concept to her col-leagues on campus and helped solidify arrangements withearly adopters.

• A free DSpace-Announce electronic mailing regularlyreached subscribers, reporting on the project’s news andprogress.

• The Libraries’ public relations office sent press releasesabout DSpace’s milestones to the news media outside ofMIT. Their pieces are collected at the DSpace News andRelated Readings page (libraries.mit.edu/dspace-fed-test/news/index.html).

The word was getting out! And the DSpace team realizedthat gaining the support of key administrators was crucial. Theproject required their backing. Engaging the enthusiasm ofMIT’s most influential movers turned out to be contagious, asthey introduced the faculty to a notion some had doubtlessnever contemplated.

They also knew that to recruit early adopters, it was nec-essary to promote the benefits of early participation. With thisin mind, the DSpace team set about putting in motion a num-ber of benefits they could promote. For example, they knewthey had to stress that early DSpace adopters would benefitfrom the visibility that this new, exciting campus-wide tech-nology venture offered. They decided to prominently displaytheir names in promotional and publicity materials. Theyoffered them the opportunity to tailor and test the softwareand user interfaces. They would showcase their research aheadof later entrants and reach worldwide audiences faster. Theygave early adopters special and prompt attention in solvingproblems they encountered using the early version of DSpace.

Early adopters at MIT represented a cross section of theInstitute. They included groups of different sizes, submittingvaried types of research, using several formats, whose disci-plinary cultures and practices also varied. They were:

• The Center for Technology, Planning and IndustrialDevelopment (CTPID)

• The Department of Ocean Engineering• The Laboratory for Information and Decision Systems (LIDS)• The Sloan School of Management• The MIT Press

Librarian Margret Branschofsky, whose long experiencewithin the MIT Libraries turned out to be invaluable, joined theDSpace team as Faculty Liaison and User Support Manager inthe spring of 2000. With her help and foresight, the team’sFaculty Liaison helped early adopters define their communitiesand their membership. They also identified policy makers andpolicy decisions that affected submission and accessed policiesgoverning research materials. And a DSpace Coordinator wasappointed to act as liaison to the DSpace team and workdirectly with the team’s Faculty Liasion to manage these vari-ous activities. His job was to promote the setup and operationof the various research communities with DSpace.

Raising Awareness and Recruiting Early Adopters for Dspace at MIT

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ABC Accounts (ABC, a fictitious company) is a small, family-owned and -operated business in North Carolina. It has beenin existence for 32 years, and is very successful. Its owners andmanagers are Jon and Carol Young, a husband and wife team.The firm operates out of the home of Carol and Jon, and hasdone so since its inception. Customers are treated like fam-ily—they are welcome anytime and without appointment.Some clients have been with the company for over 25 years.Clients range from high profile businesses and individuals inthe growing wine industry to other mom and pop businesses.Most business customers started off very small and grew con-siderably during their relationship with ABC.

The company mission is to provide personal service andexcellent tax advice at competitive prices. Its goal is for every cus-tomer to feel like part of the family, and to be close friends. Caroland Jon have actively followed their mission in every aspect oftheir client interactions. They have been rewarded with life-longfriendships and a referral-only business that does not advertise.

About the PeopleCarol and Jon have been married for twelve years. Carol is inher fifties, and Jon is in his sixties. They are both well edu-cated in nontechnology fields. Indeed, neither Jon nor Carolare early adopters of technology. Through their behavior, theycan be classified as late majority adopters.

Although Carol is not an early adopter, she likes new tech-nology and is very interested in the latest tool for her work.Unfortunately, upon interviewing Jon and Carol, we find that thisis a cause for marital discord (minor, of course!). Jon gets frus-trated with Carol for buying the latest gadgets, and then notusing them when they prove difficult or intimidating. He wouldrather that she learn a new technology before she purchases it.

Carol, on the other hand, thinks that Jon is reluctant tosee new ways of doing business. She wants him to embracethe business and help her make it even more successful.

About the TechnologyABC runs a simple computer network that consists of twodesktops and one laptop. The laptop is new: it has 1.33 MHzand 50 gigabytes of storage. The memory, however, is mini-mal—500 megabytes. One desktop is new and, according toCarol, has “more than enough” memory and speed. This isthe computer she is using. Jon’s computer is older, but itworks quite well for the payroll he needs to generate. Thecompany has an Internet connection, but no remote network

access. The accounting and payroll applications installed onthe desktops are large and require a large amount of mem-ory and storage space. The files from those applications can-not be opened without the application present.

Considering Adopter CategoriesWe know from the Adopter Category Table shown earlier inthe chapter that Carol and Jon will be skeptical of any newsystem. We know from our meeting that Jon really wants Carolto try out any software before they purchase it—he is riskaverse. Carol, on the other hand, appears to be risk neutral.She has aggressively pursued creating, running, and expand-ing a successful business. She is going to want to have veryprogressive and newer technology.

Carol and Jon want to pursue a reasonably-priced IT solu-tion that will enable them to “work anywhere.” They are bothmindful of Jon’s age, as well as their desire to take vacations.The business they own has been very successful, and has leftthem much less time to travel. They would like to work “on thego.” We saw that Carol and Jon are both late majority adopters.

Your MissionWrite a recommendation to ABC Accounts about the tech-nology you would recommend to them, and what steps youwould take to implement it to make the transition from exist-ing technology to new technology as painless as possible forJon and Carol. To prepare the recommendation report you willneed to carefully research technologies that may be used tocreate a virtual office for ABC Accounts. In the report explain: 1. How you identified the different technologies2. What technologies you discovered3. Which you would recommend to ABC accounts4. What steps you would take to implement the recom-

mended solutionWhen preparing your report also make sure that you addressthe following issues:1. There are two main issues when adopting new technology

at ABC Accounts. What are they and how will you, as anexternal IT consultant, address these issues?

2. The differences between early adopters versus late adopterclients in systems adoption and implementation.

3. How understanding Jon’s and Carol’s adopter categorieswill help you to implement a better information system atABC Accounts.

Problem-Solving ActivityImpact of Adopter Categories on Implementing a New Information System

In addition to assisting early adopter communities to loadand submit their content, DSpace helped each communityestablish and name its collections and test its workflows forsubmission and review, and assisted with customizing indi-vidual community portal pages.

Things were going well—a critical mass of early adopterswas onboard; now all DSpace had to do was gain the supportof the rest of the MIT academic community!

Sources: Compiled from dspace.org/implement/case-study.pdf andBarton and Walker (2002).

Questions for Minicase

1. What tactics were used by developers of MIT’s DSpace tosuccessfully introduce the system into the organization?

2. What other tactics might have been effective?

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References 559

Barton, M. R., and J. H.Walker, MIT Libraries, DSpace Business Plan ProjectFinal Report to the Andrew W. Mellon Foundation, 2002,dspace.org/implement/mellon.pdf (accessed June 2008).

Beal, G., E. Rogers, and J. Bohlen, “Validity of the Concept of Stages in theAdoption Process,” Rural Sociology, 1957.

Berry, L. L.,V. Shankar, J.T. Parish, S. Cadwallader, and T. Dotzel,“CreatingNew Markets through Service Innovation,” Sloan Management Review,47(2), 2006.

Brandel, M., “Lincoln Financial Syndicates Content with Web Services,”ComputerWorld, March 15, 2004.

Camara, S. B., A. V. Sanchez, and M. J. H. Ortiz, “OrganizationalDeterminants of IT Adoption in the Pharmaceutical Distribution Sector,”European Journal of IS, 13(2), 2004.

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Your Organization Needs a Technology Plan,” 2005, coyotecommunications.com/tech/techbuy.html (accessed June 2008).

Deming, W. E., “Out of the Crisis,” MIT Center for Advanced EngineeringStudy, 1986,

Dhillon, G.,“Dimensions of Power and IS Implementation,” Information andManagement, 41(5), May 2004.

Hill, J., M. Cantara, E. Deitert, and M. Kerremans, “Magic Quadrant” forBusiness Process Management Suites, 2007, Gartner Inc. Report ID No:G00152906, December 14, 2007.

Horwitt, E., “Bank Achieves over 500% ROI in 8 Months,” Techtarget CaseStudy, May 3, 2006.

IBM (2002), p. 14.19.IDC Press Release, “Worldwide Spending on Information Technology Will

Reach $1.48 Billion by 2010,” idc.com/getdoc.jsp?containerId=prUS20514107, 2007 (accessed June 2008).

IDS Scheer AG, “Business Process Management,” IDS White Paper,May–June 2005.

Jones, J., D. Aguirre, and M. Calderone, “10 Principles of ChangeManagement,” Strategy�Business, April 2004.

Kettinger, J., J. Teng, and S. Guha, “Business Process Change: A Study ofMethodologies, Techniques, and Tools,” MIS Quarterly, 21(1), 1997.

Kotter, J. P., “Leading Change: Why Transformation Efforts Fail,” HarvardBusiness Review, 73(2), 1995.

Kotter, J., Leading Change. Boston: Harvard Business School Press, 1996.Kotter, J., and H. Rathgeber, Our Iceberg Is Melting. New York: St. Martin’s

Press, 2006.Lewin, K., Field Theory in Social Science. New York: Harper and Row, 1951.Markus (1984), p.14.55.McNurlin, B. C., and R. H. Sprague, Information Systems Management in

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Productivity,” Harvard Business Review, June 1, 2008.Murphy, R. M., “Tech Doesn’t Matter . . . Want to Bet?” Fortune Small

Business, January 31, 2006.O’Donnell,A.,“BPM:Insuring Business Success,”Optimizemag.com,April 2007.Plummer and McCoy (2006), p. 14.19.Pollard, C.,“Exploring Continued and Discontinued Use of IT:A Case Study

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References

Online ResourcesMore resources and study tools are located on the Student Web Site and on WileyPLUS. You’llfind additional chapter materials and useful Web links. In addition, self-quizzes that provide indi-vidualized feedback are available for each chapter.

Online Minicases for Chapter 14 are available at wiley.com/college/turban:14.1 NCBJ Achieves a 500 Percent+ ROI by Rebuilding Its IT Infrastructure14.2 BT Focuses on Value in Adoption of Social Media Tools

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