The CCR Framework

The Different Categories

An enterprise information technology (enterprise IT, or EIT) is one that imposes new processes, and a network information technology (network IT, or NIT) as one that lets new processes emerge over time as the result of users’ interactions. The third technology category, called function IT (FIT) affects single tasks or functions rather than multi-function business processes.

IT-based Capabilities

The three technology categories offer distinct and non-overlapping capabilities. All enterprise information technologies, for example, deliver similar capabilities, even though the EIT category comprises applications developed by many vendors and positioned for distinct markets and customers. While capabilities are similar within the categories of FIT, EIT, and NIT, they are largely different across them. Function IT, for example, does not offer a subset of enterprise IT’s capabilities, or even a significant intersection with them.

Capabilities from Function IT

Increased experimentation capacity. FIT lets knowledge workers such as scientists, engineers, and financial analysts conduct huge numbers of trials and quickly explore the “solution space” of their work (BMW and Ducati).

Greater precision. If a system is well-understood, it can be modeled very accurately with FIT. This lets knowledge workers conduct very precise experiments, understanding the effects of very small changes and finding optima (Ducati).

Capabilities from Network IT

What is the IT intended to improve ?

Single task or function

Function IT (CAD, Simulators, Spreadsheets, Statistical s/w)

Multi function business process

How does the IT change the process?

Enterprise IT (ERP, CRM, SCM)

Imposes new structure up frontAllows

new structure to emerge over time

Network IT (Blogs, Wikis)

Facilitating collaboration. Network technologies let people work together without mandating or trying to predict how they will interact. This flexibility means that network technologies support many modes of collaboration (Blogs and Wikis at DrKW, wiki at VistaPrint).

Allowing expression of judgment. Network technologies give their users a voice and, in many cases, a forum to express themselves. Prediction markets, for example, let people express their judgments about the likelihood of future events (Blogs).

Capabilities from Enterprise IT

Design and redesign of business processes. Enterprise technologies allow general managers to define and then deploy novel business processes, even ones that cut across many organization groups (OTISLINE, Mount Auburn).

Standardization of workflows across an arbitrarily large “footprint.” Once a business process has been embedded within EIT, it can be replicated and distributed cheaply, widely, and with high fidelity. One of the problems of distributed companies is a reduced ability to control what happens far from headquarters; EIT provides a way to address this problem (Mount Auburn, Zara).

Monitoring of activities and events, often in something close to real time. Another problem of corporate scale has been managers’ inability to observe the performance of remote operations; available reports are often both out-of-date and too aggregated. With EIT in place, managers can get a more precise and current picture of what is happening throughout an enterprise (OTISLINE).

IT’s Complements

The capabilities mentioned above are maximized when organizations that adopt new IT also adopt a set of organizational complements.

Enterprise IT systems are used to define, then deploy new work structures – new workflows, interdependencies, and decision right allocations -- across multiple groups. In other words, enterprise technologies impose new complements on adopting organizations, and these complements are largely inseparable from the technology itself. It is not possible to introduce an ERP system without to some extent increasing interdependence, re-allocating decision rights, or imposing new workflows. Think of how a new workflow was introduced when Mount Auburn implemented the POE system. With the implementation of OTISLINE, the decision rights of the field officers changed.

Network IT facilitates interactions among people and groups, but does not pre-define these interactions. In other words, network IT does not impose complements. Some network technologies, however, contain mechanisms to let new complements—new workflows, interdependencies, and decision-right allocations—emerge over time as people use the technologies. We talked about the training wiki in DrKW, and that is a good example of how workflows and interdependencies change over time in the case of Network IT. The decision on who provides information to the employees of an organization changes if the company introduces an internal blog. However, note that no one in the company is imposing these structures. No manager actually asked for the training wiki. It is the employees who realize the potential of Network IT and create these work structures themselves.

Function IT’s value is increased by the complements listed above. With FIT, the organizational complements of IT are separable from the technology itself. FIT can be adopted with or without any changes to complements. We saw in class how BMW’s styling software could be introduced without putting any complements in place. However, Chris Bangle had to bring in the complements to get the maximum benefits. He announced one day that he would drop the idea of the styling software if usage does not pick up in another few weeks. This triggered off a change in interdependencies, and also a subsequent change in the workflows as

styling software experts started collaborating with the designers. We also looked at the example of Team New Zealand (one of the participants in Americas Cup), and noted how the managers asked the team members to collaborate and decide on the design of the boat. This changed the decision rights. However note that this had to be initiated by the managers.

General Managers’ IT-related Responsibilities

General managers have three main IT-related responsibilities: to select IT based on desired capabilities, then work during adoption and exploitation to put IT’s organizational complements in place . With EIT, adoption is typically the greater responsibility; with FIT and NIT, in contrast, exploitation often demands the most from general managers.

General Managers’ Three Roles in IT Success

Selection

The Selection process should always be inside out across the different categories. Inside-out approach means that managers should always look at the capabilities that they want to acquire from IT, and then look at the technology space to select the appropriate IT. In contrast, the outside-in approach is about looking at what others (competitors, industry leaders) are doing and then selecting the software without going into an analysis of the capabilities that the organization needs to acquire from IT.

Adoption

The Adoption process for FIT entails identifying the complements properly, and then implementing them, what Chris Bangle did in BMW (explained above).

This stage is extremely important for EIT. As complements are imposed on the employees, they naturally resist the system. The key to addressing these issues is to identify the potential pockets of resistances right at the selection phase, and then build a plan on how to counter resistance. The next step is to build consensus in the organization on the importance, and benefits of implementing the system. However, business leaders, and managers should be prepared to push the system through in spite of resistance. More often than not implementation of EIT demands a slightly heavy handed approach.

The adoption of Network IT mainly involves making the employees aware of the technologies.

Exploitation

Exploitation of FIT involves fine tuning the complements, similar to what Team New Zealand did (explained above).

The exploitation of EIT is easier than adoption of EIT as people are ready to use the system and get benefits from it since they have gone through the pain of adopting it. Sometimes we use FIT on top of EIT to exploit

SelectionBuy

BuildIT

Raw Materials

Adoption

Live

System

Exploitation

IT Finished GoodsConfiguration

TestingTraining

Getting Maximum out of IT

Time

EIT, for example statistical software tools (FIT) can provide great insights into the business, once the company standardizes data using EIT.

For Network IT, exploitation is important as well as subtle. Once the employees start using the technology, and once the complements emerge over time, the responsibility of the mangers is to ensure that the complements are sustained and enhanced. For example, at DrKW, one of the managers sustained and enhanced the complements by asking his subordinates to use the wiki to enter questions they want him to ask at meetings with the senior management.

Source – Proprietary material of Prof Andrew McAfee. Used with permission.