REORGANIZING THE REORGANIZING THE ENTERPRISEENTERPRISE

chapter 6chapter 6

Hirut GebrekidanHirut Gebrekidan

FEB 19, 2004FEB 19, 2004

Three key questionsThree key questions

Why have company-wide IT based Why have company-wide IT based initiatives been increasingly used as the initiatives been increasingly used as the vehicle for organizational transformation?vehicle for organizational transformation?

What effects have major organizational What effects have major organizational initiative had on work and worker identity?initiative had on work and worker identity?

How well have company-wide initiatives How well have company-wide initiatives coped with organizational variety and coped with organizational variety and cultural specificity? cultural specificity?

Three case materialsThree case materials

Corporate lending in UK BankCorporate lending in UK Bank Business Process Re-engineeringBusiness Process Re-engineering Enterprise systems or Enterprise Enterprise systems or Enterprise

resource planning (ERP) systemsresource planning (ERP) systems

Corporate lending in UK bankCorporate lending in UK bank

(Scott (1998,2000) and Scott and Walsham (1998)(Scott (1998,2000) and Scott and Walsham (1998)

Decision Support System (DSS)Decision Support System (DSS) The system called Lending Advisor(LA) The system called Lending Advisor(LA)

was implemented to formalize the was implemented to formalize the middle market lending processes.middle market lending processes.

LA projectLA project Formation of a teamFormation of a team Assesing approprate technologyAssesing approprate technology

Corporate lending in UK bank Corporate lending in UK bank (cont..)(cont..)

Implementation of the LA and the change program Implementation of the LA and the change program Negative aspects on the time of introductionNegative aspects on the time of introduction

Using of computers for the first time Using of computers for the first time Heightened anxiety regarding job security Heightened anxiety regarding job security

due to extensive reorganizationdue to extensive reorganization Concerns with respect to working practices Concerns with respect to working practices

centred on loss autonomy, longer working centred on loss autonomy, longer working hours, thier job was disembedded, hours, thier job was disembedded,

Tension of identity related to previous Tension of identity related to previous work rolework role

Corporate lending in UK bank Corporate lending in UK bank (cont..)(cont..)

Positive aspects Positive aspects

Computer-based organizational memoryComputer-based organizational memory Central access to organizational dataCentral access to organizational data Analysis capabilityAnalysis capability Electronic transmission of dataElectronic transmission of data

Corporate lending in UK Corporate lending in UK (cont..)(cont..)

Broader organizational and societal Broader organizational and societal effectseffects

Is the system beneficial to the efficiency, Is the system beneficial to the efficiency, effectiveness and profitability of UK Bank as effectiveness and profitability of UK Bank as a whole?a whole?

On the one hand yes:On the one hand yes: more informed decisions were taken on loansmore informed decisions were taken on loans Risk were eliminatedRisk were eliminated Bad loan managers could be identifiedBad loan managers could be identified

Corporate lending in UK Corporate lending in UK (cont..)(cont..)

On the other handOn the other hand Loan experties was lostLoan experties was lost

Business process re-Business process re-engineering (BPR)engineering (BPR)

Analysis and design of workflows and Analysis and design of workflows and processes within and between processes within and between organizationsorganizations

Concerned on job losses, Concerned on job losses, intensification of work, and tighter intensification of work, and tighter management controlmanagement control

Is used for a better-integrated Is used for a better-integrated organization with a closer customer-organization with a closer customer-oriented focusoriented focus

BPR in ProbankBPR in Probank

(By Knights and McCabe 1998a, 1998b)(By Knights and McCabe 1998a, 1998b)

ImplementationImplementation Negative concerns Negative concerns (Branch staff and (Branch staff and

management)management) Concerned with job lossesConcerned with job losses Loss of powerLoss of power Fear of unemploymentFear of unemployment Professional prideProfessional pride Self identitySelf identity Resistance to new ways of working in change Resistance to new ways of working in change

programmesprogrammes

BPR in Probank (cont..)BPR in Probank (cont..)

AdvantagesAdvantages Widespread job lossesWidespread job losses Empowerment (back office staff seemed happier with Empowerment (back office staff seemed happier with

the new arrangement)the new arrangement)

Enterprise SystemsEnterprise Systems

Improved communication between Improved communication between different parts of the business and its different parts of the business and its customerscustomers

Direct access to real time Direct access to real time management informationmanagement information

A promise of better control for the A promise of better control for the management management

Enterprise Systems (cont..)Enterprise Systems (cont..)SAP in Norsk HydroSAP in Norsk Hydro

(Hanseth and Braa (1998)(Hanseth and Braa (1998) ImplementationImplementation

Advantages Advantages

People (all around Europe) have become acquainted People (all around Europe) have become acquainted with each otherwith each other

Learning about each others’ ways of working and Learning about each others’ ways of working and doing businessdoing business

Best practices are identified and tried and then Best practices are identified and tried and then transfered to other locationstransfered to other locations

Different units get ideas about how to improve their Different units get ideas about how to improve their own workown work

Enterprise Systems (cont..)Enterprise Systems (cont..)SAP in Norsk HydroSAP in Norsk Hydro

(Hanseth and Braa (1998)(Hanseth and Braa (1998) ProblemsProblems

Local support was problematic while it Local support was problematic while it provided and integrated central processing provided and integrated central processing serviceservice

Language barriers for non-english speaking Language barriers for non-english speaking countriescountries

Reduce flexibility of the individual national Reduce flexibility of the individual national and regional unit to respond effectively to and regional unit to respond effectively to their own business cultures and markets their own business cultures and markets

Analysis and conclusionAnalysis and conclusion

Why have company-wide IT based initiatives Why have company-wide IT based initiatives been increasingly used as the vehicle for been increasingly used as the vehicle for organizational transformation?organizational transformation?

Pressure for global best practice standards in information Pressure for global best practice standards in information systems to enable integrated knowledge sharingsystems to enable integrated knowledge sharing

companies need to adapt to a global worldcompanies need to adapt to a global world Reinforced by the international consulting companiesReinforced by the international consulting companies The need to communicate across departments and The need to communicate across departments and

branches for knowledge sharing.branches for knowledge sharing. standardization on software is easier than standardizing on standardization on software is easier than standardizing on

IS to support key business processesIS to support key business processes Legacy systems grew organically to support business Legacy systems grew organically to support business

processes.processes. Management wants tighter control and lower costs.Management wants tighter control and lower costs. Need to balance autonomy and control. Need to balance autonomy and control.

What effects have major organizational What effects have major organizational initiative had on work and worker initiative had on work and worker

identityidentity?? Individual sense of identity and self-worth linked to Individual sense of identity and self-worth linked to

identification with work role and practiceidentification with work role and practice Should management worry? Yes, identity will affect the Should management worry? Yes, identity will affect the

result of company-wide change initiatives (meaning if result of company-wide change initiatives (meaning if they resist to change). Therefore resistance and tensions they resist to change). Therefore resistance and tensions can be a cause of major failure.can be a cause of major failure.

Since We are all part of a common society made up of Since We are all part of a common society made up of business organizations, we need a wider agenda in this business organizations, we need a wider agenda in this area. area.

We should be concerned with issues of stress, loss of We should be concerned with issues of stress, loss of work identity, work intensification, reduced autonomy work identity, work intensification, reduced autonomy and unemploymentand unemployment

How well have company-wide How well have company-wide initiatives coped with organizational initiatives coped with organizational

variety and cultural specificity?variety and cultural specificity? Organization have different routines Organization have different routines

and procedures, context and histories.and procedures, context and histories. Therfore getting rid of the mesy world of Therfore getting rid of the mesy world of

organizational variety, including its existing history, organizational variety, including its existing history, systems, people and procedures is importantsystems, people and procedures is important

to create a perfect organization structure, with to create a perfect organization structure, with irreversible infrastructures.irreversible infrastructures.

Gradualism may be a better approach to Gradualism may be a better approach to changechange..

Empirical data will support thisEmpirical data will support this Methaphor of continuous care rather than invasive Methaphor of continuous care rather than invasive

surgerysurgery

In generalIn general

Company-wide change initiatives Company-wide change initiatives have diverse and sometimes have diverse and sometimes unpredictable consequences because unpredictable consequences because of of

Individuals varied backgrounds, identities, Individuals varied backgrounds, identities, needs and goals, fears and aspirations, etcneeds and goals, fears and aspirations, etc

Organizations have different routines and Organizations have different routines and procedures, histories, etcprocedures, histories, etc