It's the classic scenario. Problems arise in the installation of a new business integration system and there's a stand-off between the finance department and the IT department. Words like over-budget and unworkable are bandied at one end, while functionality and servers are lobbed back from the other. There are behind-the-scenes mutterings about anoraks and Luddites.
As technology moves to centre stage in business, key behavioural conflicts are thwarting the transition. However, this is not a recent phenomenon.
Mr Joe McDonagh, director of studies at Trinity College for the BSc in Business and Information Technology, has been researching this area over the last four years as part of a PhD thesis.
"Empirical research over the last three decades bears witness to the fact that outcomes from IT investment initiatives are exceptionally poor with no more than 10 per cent of such initiatives delivering promised business value," says Mr McDonagh.
Organisations are battling on a daily basis to embrace the next tool purporting to offer competitive advantage. They come under the varying guises of data warehousing, knowledge management and electronic commerce. But it is how best to incorporate these innovations into an organisation that poses the greatest challenge to success.
In 1997, Gartner Group estimated that enterprise system vendors, like SAP, JD Edwards and Oracle, only manage to deliver on 20 per cent of their promises.
Lurking behind these rather startling and costly findings, there appears to be an immense conflict between senior management and the chief information officer (CIO). Last year, a Korn Ferry International survey of 340 CIOs in the US, Britain, Germany and France noted that CIOs "show a lack of business acumen and shrewdness" and "are generally perceived as geeks and not business professionals".
Running alongside these claims, a Harris Research survey of IT managers in 1996 concluded that 32 per cent of IT professionals felt that "senior management did not fully appreciate the role of IT in their business".
With a cultural gulf between senior management and IT professionals, problems arise which conspire to stymie the goal of a totally integrated business system. Invariably the economic argument is the issue on which a new IT system is won or lost. Senior management will only spend millions of pounds for technology if there is a promise of economic return.
This is the first mistake. Consideration is rarely given to the impact of a new system on the employees within an organisation. This is in stark contrast to management's supposed infatuation with improved customer care. The issue of job redesign does not enter the equation until staff enter a firefighting situation with a totally new system. Despite this, organisations tend to repeat their mistakes and never acknowledge their poor record of software implementation.
At the technical end, things aren't much better. As Mr McDonagh puts it: "IT managers work on the premise `if we build it, they will come'. They get the system up and running and then hand it over to human resources to implement. At that stage it is probably too late, the system has already been designed without engaging the end users in the process."
The combined effect of these polar approaches is the exclusion of the behavioural and organisational implications associated with the introduction of a new IT system. Now Mr McDonagh has developed a model which attempts to bridge the gap between IT managers and senior management, and effect integrated technological change.
Its success relies on the fulfilment of four key challenges:
Achieving the right technological fit between an organisation and its target audience. Finding the right balance of customer focus and shareholder return. This challenge tends to be very economically focused.
Optimising the technology so it is the best fit for the organisation in question. The IT department reigns supreme in this realm.
Social integration through the organisation, where employees can participate in the change process and provide input.
Political integration, where it is recognised that distinct and powerful groups exist within an organisation, and they do not always operate from the same power base.
The political and social aspects of integration are being neglected. Mr McDonagh tries to get IT and senior managers together to acknowledge the existence of these fundamentals for change, and identify who is best suited to addressing each challenge.
He says he generally manages to catch their attention at the outset when he tells them a £10 million IT investment scheduled for delivery over two years, can be rightfully expected to cost £18.9 million and take almost 4 1/2 years to conclude.
However, despite their shock, these people generally guess the exact figures when they are asked to estimate how many IT implementations do not meet their performance goals (90 per cent); how many are late and over budget (80 per cent); how many address training and skills requirements (40 per cent); how many are abandoned completely (40 per cent).
There is a certain irony in this age of rapid technological advancement, that the biggest stumbling block remains the human factor. The individual's need to be consulted, valued and respected will continue to thwart business process improvement, until social and political factors share the same platform as economic and technical issues.
Mr Joe McDonagh and other organisational behaviour experts will address a two-day IT and Behaviour programme at Trinity Institute, Blackrock, Co Dublin, starting on Friday, April 23rd. For further details contact Barbara Mullins 01 280 2984.
