Strategic Information Technology Management - IEEE Computer Society

5 downloads 239513 Views 108KB Size Report
Strategic Information Technology Management: Managing Organizational, ... Information Technology (IT) is no .... what one respondent termed a “career-.
Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

Strategic Information Technology Management: Managing Organizational, Political, and Technological Forces Keith Schildt, University of La Verne [email protected]

Suzann Beaumaster, University of La Verne [email protected]

Abstract This paper explores the role of Information Technology (IT) in the management of municipally-owned and operated public utilities. Through semi-structured interviews of senior management in the largest municipal electric and water systems, the paper examines the confluence of contextual factors fostering changes in an IT management strategy, which tend to be aimed at increasing efficiency and effectiveness of service delivery as well as improving customer/citizen satisfaction. The paper proposes a model of the IT strategic planning process occurring in municipal environments illustrating interplay between technological, political, and bureaucratic decision-making. The study finds that the complex nature of technology with its rapid and seemingly chaotic rate of change poses political risks for the organization attempting to manage the IT infrastructure. Successful strategic management of IT must take into account the differing value sets among its organizational and political members and how these differing motivations impact the management of the IT infrastructure. 1. Introduction Typically, public organizations are viewed as increasingly resource scarce, and this line of thought is captured in the “doing more with less” phrase. Oddly, public

Marcie Edwards University of La Verne [email protected]

organizations have an overabundance of information resources, which show no sign of diminishing in the foreseeable future and if not properly managed public administrators may end up “doing less, with more”. This burgeoning resource has concomitantly occurred with a complex set of technologies offered by the marketplace to manage it. While it’s one thing to have a resource and the potential power it brings, it is an entirely different matter to make effective use of that resource through management, control, and foresight. How organizations control, process, and disseminate information and how they manage the associated technologies is critical to organizational success. Strategic management of information technologies is an involved and complicated endeavor and becomes more so with each new innovation. It is no longer enough to simply automate clerical tasks or transfer reams of data into a computer. Today’s technologically savvy organization must make use of integrated information systems, which will not only allow them to process data and perform clerical tasks, but also provide services in a more effective and user-friendly way. Integrated municipal information systems can offer better ways to provide for government administration and service deliveries, but getting there is no easy matter.

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

1

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

Information Technology (IT) is no longer merely the gathering and processing of data. One the one hand, IT has become an integral managerial process that can be used to foster strategic organizational change. However, on the other hand, organizations can get caught up in chasing the advances in IT and lose sight of core organizational goals and objectives. The purpose of strategically managing information technology is to avoid goal displacement and its resulting depletion of organizational resources. This paper sets out to explore how various California municipalities attempt to strategically manage information technology. Specifically, the paper examines the management of IT in municipally operated public utility departments (i.e., organizations that deliver water and electricity to its citizens and customers). Public utility departments were chosen for this exploratory research for two interrelated reasons: (1) the basis and history of these operations are technologically driven and (2) the juxtaposition between the old core technologies of utility systems with its very stable and relatively predictable rates of change and obsolescence and the newer information technologies with their rapid and relatively unpredictable rates of change and obsolescence. Also, municipally operated public utility systems (MOPUS) are different than the typical municipal service being delivered to citizens. MOPUS are really businesses within government and are accounted for as enterprise funds, not financed as part of the general fund. Identical to the private sector, revenues derived from sales and not from property and sales taxes finance the operation. This research is based primarily on a series of lengthy iterative semi-structured interviews with senior management representatives of the California

municipalities that operate utility systems (a total of six municipalities), as well as archival data and secondary data analyses. The aim of this exploratory study was to expand on a model of IT strategic management that incorporates the differing rates and patterns of change in technology compared to those typically found in organizational and political processes 2. ITM Strategic Management Model The context of public administration is open and influenced by factors external to the organization but critical in its operation and act as agents of organizational change. The typical rate and pattern of change for organizations can be characterized as bureaucratic in nature. Change is a steady and incremental process. Juxtaposed with this fairly predictable process is technological change. Technological change can be characterized as rapid and relatively chaotic in comparison. The analogous difference is between a very large ocean liner and a speedboat. The latter is capable of quick shifts in direction while the former is less amiable to such sudden change. The public administrator also exists in an environment affected by other external factors. Some of these other factors can be termed political in nature as they influence “who gets what, when, and how”. Whereas technological change is rapid and chaotic and organizational change is steadier and incremental, political change is more cyclical in nature. The cycles of elections of and budgetary approval by city councils are one such example of the seasonality of the political process. Similarly, economic conditions with cycles of inflation and recession impact organizational decision making and organizational change.

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

2

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

Based on previous, preliminary research, the authors concluded that the management of IT occurs at the convergence of three interrelated sphere of values and activities (See Model 1). One sphere contains political processes. These are factors that are predominately envisioned as external to the organization, which tend to be control oriented and generally distributive in nature. This political sphere includes elected officials, citizens and especially more formally organized citizen groups, consultants hired by the organization, and businesses as well as state and federal regulatory agencies and their rules. The second sphere contains organizational or bureaucratic processes, which tend to be stability oriented and generally procedural in nature. This organizational sphere includes the employees of the municipality and the administrative processes. The third sphere contains technological processes, which tend to be change oriented and catalytic in nature. All these spheres are interrelated and act to establish the parameters of strategic information technology management (SITM). The interaction between what is politically viable, organizationally feasible, and technologically possible provides for a dynamic SITM situation.

Model 1

3. Findings and Elaboration of the Basic Model The interviews with senior management representatives of the major municipally operated public utility systems in California confirmed the basic model’s assumptions about differing rates and patterns of change among the organizational, political, and technological spheres. Importantly, the interviews also identified other aspects about the interaction of the three spheres as they relate to attempts to strategically manage IT. As previously assumed, organizational processes produce rates and patterns of change that can be best characterized as steady and incremental. When queried about the reasons for this type of change, respondents all mentioned the following as the possible reasons: • Reward Systems. The rewards systems in government, including compensation, foster incremental decision-making. Bureaucracies tend to be risk-adverse and those managing them do not want to make what one respondent termed a “careerlimiting move”. A small incremental step, even if taken in the wrong direction, can be easily corrected without too much damage to the organization, its resources, or the administrator. Taken in the context as stewards of public resources, this is quite acceptable behavior. However it may act to limit innovation and precludes swift organizational change. • Predictability. One respondent summed this up by stating, “Bureaucracies need predictability”. The diverse array of services provided by municipal organizations, their complexity, and the numerous types of professions involved in the operation of the organization require an articulating mechanism; the ability to

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

3

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

foretell what others will do allows for the organization to move forward and function. • Time Necessary for Analysis. Respondents all agreed that it takes time to produce the type of analysis necessary for city councils to approve IT projects. All respondents spoke of creating an “authorizing environment” where administrative integrity can be fostered and a “political platform” be developed that mitigates council member concerns about the zero sum nature of expenditures; money spent for one project precluding other possible projects. This point also underscores the nature of IT projects in general. They are not easily visible by the electorate and may not create as much political capital as other more apparent expenditures afford (e.g., a new fire station). • The Product of Public Utilities. The product being delivered by public utilities has changed very little or as one respondent stated, “water is water”. Technological change was identified as rapid and chaotic. The respondents felt that technological change was very marketdriven and, implicitly, as marketmanipulated. Technology by its very nature is in constant flux. Change and constant design improvements drive technology and the timeline is very short forcing obsolescence. Importantly, not only were the rapid innovations mentioned as chaotic processes but also the impact of mergers and acquisitions, which make IT management difficult. Mergers of IT providers pose problems for administrators because support services may no longer be available or may be more costly. This exacerbates the relatively quick obsolescence of IT and may force obsolescence. Political processes and change were seen as steady as were organizational ones. However, instead of an incremental pattern

in the political sphere change was seen as cyclical. The management of the organization in relation to its political sphere is the crux strategically managing IT. To strategically manage IT an administrator must manage at the “gaps”. Gap management refers to the difference between the organizational realities and the technological changes the organization wishes to or is forced to undertake. Gap management requires an understanding of the political realities and harnessing those to achieve the desired outcome. For obvious reasons, elected officials are the most proximal influence within the political sphere and were mentioned repeatedly by respondents. Importantly, all respondents also mentioned business and citizens (especially citizen groups) as important factors to be considered when managing IT. The use of outside consultants was frequently mentioned as a way to satisfy the political sphere’s needs for external validation of organization requests for improved IT. Consultants are used by organizations for this external validation purpose as well as means to overcome organizational capacity issues associated with downsizing and the highly technical nature of IT. Consultants act as a bridge between the spheres occupying an important niche in government decision-making. 4. Catalysts of Change A number of factors were identified that foster change. These change catalysts operate at the conflux of the spheres and pose special problems for strategic management of IT in public utility systems. Of primary influence to public sector utility systems is the competition from the private sector and, importantly, the perceived superiority of private sector administration.

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

4

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

A number of the respondents spoke of having to deal with city council discussions of selling the system to the private sector. On the one hand, this can certainly be seen as a stressful situation. However, it can also be used internally to motivate improved production and efficient service delivery among employees and externally to get champions to support the city’s own publicly owned system. Other catalysts for change identified were: • Regulatory Agencies. Regulatory agencies at the state and federal level using their rulemaking powers to force changes plays a huge role in fostering change; albeit, many times this may be seen as unfunded mandates limiting local decision making. • Technological Change. The change in technology through innovation forces obsolescence of existing technology. Technical innovation also offers the potential for greater efficiencies with each change. • Market Changes. The mergers and acquisitions of IT service providing companies, previously mentioned in the paper, also perforce change. • Employee Knowledge of IT. Organizational staffing issues will impact change. The knowledge, skills, and abilities of the staff plays a role in degree to which IT will be integrated in the organization. This could act to foster IT advances in the organization, as one respondent stated, “I have a young staff, they understand technology, and I give them some leeway so they can be innovative”. Conversely, one of the biggest roadblocks in this area can be that information technologies often represent completely new processes for the organization and its employees. Human beings typically reach a certain comfort level with regard to their abilities and work processes. For most people new

technologies represent a daunting learning curve and possible downsizing of their jobs. This perception introduces fear into the process and creates significant resistance to technology. • Service Provision. All of the respondents stated the importance of customer information systems and billing operations as agents of change. The range of technologies available from automated customer service attendants to remote meter reading posed important strategic questions for the administrators. For example, all mentioned how automated customer service may reduce labor costs but they do so at the expense, as one respondent put it, “maintaining the human face of the organization” because many customers grow quickly frustrated of having to drill down through a series of prompts just to get a simple question answered. 5. Dynamics of the Spheres One of the more notable outcomes of this research is the dynamic nature of the spheres themselves. The original model based on initial research, suggests spheres of equal proportions, with each of the areas dominating its own particular environment. Given the current research findings, the reality is much more dynamic, fluid, and contextually based than previously assumed. It is the fluid nature of organizational, political, and technological changes that determine the extent to which a given sphere dominates SITM. All of the respondents in this study described scenarios where one sphere was more dominant than the others. Even a highly charged, politically driven municipality will defer to technological change if the current context warrants it.

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

5

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

This dynamic creates a scenario where the spheres expand or contract depending on the given context. There are a multitude of factors that impact the expansion or contraction of a sphere. To illustrate this point—One of the more significant issues affecting public institutions today relates to security issues. More than one municipality has found themselves the victims of computer hackers: individuals who have hacked into the customer information database creating a serious security breach. In most instances, while the insurgence was contained relatively quickly, the situation had a significant impact on all three spheres for the municipality. As the hacking was discovered, the technological sphere expanded as the immediate situation was dealt with. Once the security breach was contained, the political sphere expanded to its original level of influence. Finally the technological sphere contracted as the organizational sphere expanded to accommodate the changes necessary to prevent future, similar events from occurring. Eventually, the political sphere also contracted, as technological change became part of the organizational approach to security. In describing the interaction of all three spheres in this scenario, one of the respondents described the situation in this way, “ No one owned that loophole, it was just there. The reality was that the organization was unable to manage the process in the old way because the technological situation pushed a particular issue to the forefront.” This sort of technologically based situation has ramifications for the municipality, especially in terms of risk management and privacy issues The security scenario illustrates the way in which the spheres expand and contract in a given context. Each sphere appears to

respond in different ways as changes occur in the environment. As the respondents described their experiences from organizational, political, and technological contexts some patterns emerged. The technological sphere is associated with rapid change. In most instances, technology, as it impacts the municipalities in question, is tied directly to the market. Every respondent mentioned the difficulties in dealing with the perceptions of the constant flux of technology, “we need this now” rationalizations, individual fear of technological change, and the everincreasing rate of obsolescence. One of the key factors in this area is the historical stability of the industry in question. Utilities have historically been on a 30-50 year change plan; new technology has significantly impacted that timeframe. What was once a very stable sphere has now given way to an extremely dynamic one. In essence, the technology sphere expands when the manager can quantify the outcomes. One of the difficulties appears to be, associating the specific technological advances, processes, and acquisitions with planning outcomes. The respondents expressed the need to quantify technological outcomes by attaching them to proposed variables whether or not the specific technologies were the true catalysts for the outcomes or not The technology sphere also expands in the face of a perceived “uncontrolled onset of technology” and, for the respondents, this represents the point where technological expansion has gone too far. This scenario represents the random acceptance of global change and tends to be “distracting” to planned technological implementation. A respondent provided one such example in the form of the rising popularity of the Blackberry. Certain individuals in the

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

6

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

organization saw the global purchase and use of this new technology as imperative. The push was to integrate Blackberry use in numerous aspects of the municipality. This would have necessitated a large expenditure, training, and reworking a number of organizational processes. In the end the decision was made not to make use of the technology in question, as it was not deemed a necessary change for the municipality. The respondents all argued that technology needs in-depth scenarios for decisionmaking. All necessary tools must be justified based on needed and desired outcomes. The technological sphere expands when the technology need is global and inevitable, i.e. Email. But the changes must be resisted when they accommodate the needs of only a few, i.e. Blackberry. Catastrophic expansion occurs in this sphere when the change is too cutting edge and the organization cannot adapt—or when change is forced via “planned obsolescence”. Respondents cited the tendency to get on board and purchase new technology too early. In the case of GIS systems, one respondent found his municipality in technological trouble when they pursued the cutting edge of the GIS push. In buying in too early the organization found themselves with proprietary software and systems that were not upgradeable and far too expensive to keep up. All respondents echoed similar experiences in this area. Another common culprit is the CIS (customer information systems). These systems were extremely complex and expensive to implement, with an initial implementation failure rate of over 60%. Utility managers have learned to wait until after the learning curve has passed on new technologies. More than one of the respondents summed this up as not wanting to be “ on the bleeding edge” of technology.

The technological sphere most commonly contracts when the benefits are not quantified through their attachment to specific variables or outcomes. Contraction also occurs when the technology experiences planned obsolescence. This most commonly occurs in the form of software and hardware changes; for example, when a particular software company is bought out by a larger entity. In these cases the technology in question is often no longer supported, resulting in “stranded platforms”. Municipalities are left to support themselves, “buy in” to expensive upgrades and support initiatives, or completely change the system in question, all very expensive and time intensive options. In the end, the ability to expand—and the need to contract within the technological sphere is dependent on personal track records and the credibility of both the organization as a whole and the political players. The political sphere appears more stable than the technological sphere when it comes to its expansion or contraction. The changes in this arena are much less volatile for the most part. The political sphere tends to expand or contract in response to environmental factors brought on by external situations and the occurrences with regard to the other spheres. For example, the 9/11 tragedies and its new security implications or the hacking instance described previously. There are some other influences that affect this sphere, the primary force being the election cycle. The desire to maintain status quo during the election process greatly affects the organizational and technological spheres. In some instances, the political sphere expands when there is a “sword to fall on”. This typically occurs as a politician retires and is looking for the last

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

7

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

big initiative. Or when political term limits expire, as occurs in some municipalities. As one respondent put it, “A politician at the end of their term can really throw a wrench in the system”. Typically it is the place of the political sphere to maintain the status quo. There is a tendency in the political realm to hesitate on the approval of new contracts for technology initiatives. Most political players do not have technology buy-in, nor do they typically understand what it is they are buying into unless there is a welldocumented environmental force pushing the change or acquisition, (i.e. Y2K). For the most part the political sphere “vapor locks” until forced, as politicians are frustrated by the lack of predictability on projects and technological related outcomes. Utility managers find it necessary to provide a platform for political figures to sponsor technologically change, which gives them a platform of quantifiable and proven outcomes to stand on. In the political sphere, expansion is dependent on proven outcomes. Much like the political sphere, the organizational sphere is dependent on outcomes. At the same time it must also be cognizant and focused on the objectives of both the municipality as a whole and the utility in particular. For the most part, the organizational sphere uses technology as a tool with the ultimate goal of “staying out of the elections”. By maintaining the planning process, the organizational sphere can pursue its technological objective at the same time without it becoming a “political question”. In some cases the organizational sphere expands when a dynamic change agent is thrown into the system. That change agent may come in the form of an individual with the specific agenda to “shake things up,” provide a catalyst for change, and then move

on. The key in this instance is to remove the change agent before damage occurs. The organizational sphere may also expand incrementally as necessary changes are made to accommodate technological needs. One respondent described an expansion scenario where an IT department specific to the utilities had to be created to deal with the planned technological changes because the municipalities IT staff was incapable of dealing with the needs. The existing staff did not have the capacity, training, or resources to implement the technology. The existing IT director’s hands were tied due to political pressures, process regulations, and bureaucratic rules. The new IT staff was hired based on specific skills, expertise, and professionalism. The job was completed and the organizational sphere permanently expanded, as the new staff became part of the municipal IT department. This scenario was made possible due to the nature of the municipal utility departments and their ability to fund the new organizational additions. 6. Techniques Management

for

Successful

IT

Garnered from the interviews, is a set of techniques that were thought to be associated with successful IT management by the respondents. These management strategies are derived from discussions with the respondents about successful and failed IT projects they have managed. In the aggregate they represent an attempt to first create an “authorizing environment” where the administrators create a consensus about the desirability of the IT project and gain a favorable approval from the city council, and secondly to successfully implement the project. They are not meant to be sequential or ranked in importance. Instead, they can

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

8

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

be thought of as additional ingredients added to the management mix used individually or in combination. Sell planned obsolescence – be sure the council understands that information technology has a shortened life span compared to more traditional technologies. Make the council aware of the rapid innovations in technology, the maintenance issues of not keeping up with technology, and the unpredictability of the technological marketplace. Identify “hard savings”, discount “soft” – Use monetary and other easily quantifiable hard savings as the primary rationale for the IT project in lieu of soft savings (e.g., increases in employee morale). Quantify IT success so political sponsors have a substantive, objective hook to hang their hat on. Avoid stranded capital by using pilot programs and incremental rollouts - IT projects carry some inherent risks. In lieu of selling planned obsolescence, a manager could use pilot programs. An element related to technological risk is the concept of “stranded capital”. The nature of technology with its rapid change and therefore obsolescence poses a problem because there is a lack of guarantee that the technology will be useful in the near future. The roll-out of an IT project may be implemented over a number of years and questions arise not only whether the technology will still be useful at the end of the roll-out, but additionally whether the organization can find a vendor to maintain the technology after full implementation. It is organizationally costly and politically hazardous to venture down a technological path only to find out half way through the implementation that less costly technological advances have been created, or that vendors are no longer servicing that particular

program or piece of hardware and that the organization spent scarce fiscal resources on an ineffective, inefficient project. The use of pilot programs or incremental rollouts allows for small test projects to be initiated and evaluated. This technique is useful because it acts to slow the rate of technological change in the organization, which allows for staff learning curves to ramp up and buys time until the “second wave” of technology is in the market. Ride the second waves, not the first – By being patient and not chasing after new technology, a manager can wait out the initial introduction of a new technology, which is typically costly and prone to maintenance problems. By awaiting the second-generation products the manager can also learn from others who have implemented the technology and gain from their successes (and miscues). Similarly, try to avoid “vendor pressure.” Those who are marketing technology may overstate the capability of new technology, which may not always live up to the salesperson’s hyperbolism. Recognize approval shifts – The process of IT planning occurs over a relatively long time frame. During this time frame, events can occur that may make approval of IT projects more or less probable. Obviously, changes in city council membership can preclude certain projects and make others more favorable for approval. Similarly, changes in demographics as well as business needs will influence IT projects. The testing of ideas about possible projects at various points of time can help a manager recognize the ripeness of the project. Gain political buy-in by getting a champion – Cultivate relations in the external environment to create a network of potential advocates who can champion a project through it s approval process.

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

9

Proceedings of the 38th Hawaii International Conference on System Sciences - 2005

Build credibility and demonstrate patience – remember that nothing works like success. If possible, start with small, do-able IT projects and use these successes to build momentum and credibility. Be perceived as not chasing after the newest technology. Build and sell by blocs – As much as possible, provide the appearance of a unified front among all staff (and across departments where applicable) when requesting approval from city council for IT projects. Use externalization to validate organizational desires – The use of outside consultants cultivates an aura of legitimacy around staff’s IT proposals. 7. Conclusions Successful strategies for managing IT must recognize not only the usual concepts associated with strategic planning but must also do so with a keen understanding of how organizational, political, and technological forces each originate from a different core set of values, foci, and activities. A successful manager must be aware that technological change occurs at not only a extremely quick pace but changes chaotically as well. Whereas, organizational change tends to be slow and incremental, and change in the political realm is also slow but occurs more cyclically or episodically due to budgetary approval cycles, elections, and redevelopment activities. 8. References Boar, B. H. (1993). The Art of Strategic Planning for Information Technology: Crafting Strategy for the 90’s. New York, NY: John Wiley & Sons, Inc. Braithwaite, T. (1996). The Power of IT: Maximizing Your Technology

Investments. Milwaukee, WI: ASQC Quality Press. Bryson, J. (1995). Strategic Planning for Public and Nonprofit Organizations. San Francisco, CA: Jossey-Bass. Byrd, T.A., Sambamurthy, V, and Zmud, R.W. (1995). An Examination of IT Planning in a Large Diversified Public Organization. Decision Sciences 26:1, 49-73. Goodstein, L., Nolan, T., and Pfeiffer, J. W. (1991). Applied Strategic Planning: A Comprehensive Guide. New York: McGraw-Hill. Gordon, G. L. (1993). Strategic Planning for Local Government. Washington, D.C.: ICMA. Harmon, R. et. al. (1998). Energy deregulation. American Water Works Association, 90, 26-30. Tat-Kei Ho, A. (2002). Reinventing local governments and the E-government initiative. Public Administration Review, 62. Landers, J. (2002). SafeguardingWater Utilities. Civil Engineering, 72, 4856. Newcomer, K. E. and Caudle, S. L. (1991). Evaluating Public Sector Information Systems: More Than Meets The Eye. Public Administration Review, 51. Nutt, P. and Backoff, R. (1992). Strategic Management of Public and Third Sector Organizations. San Francisco, CA: Jossey-Bass. Ward, J. (1995). Principals of Information Systems Management. New York, NY: Routledge. Winklhofer, H. (2002). Information systems project management during organizational change. Engineering Management Journal, 14.

0-7695-2268-8/05/$20.00 (C) 2005 IEEE

10