ITC

Introduction
ICT-enabled The 1990s witnessed the failure of many
organisations: a model planned change interventions to achieve their
original objectives or realise significant ``hard''
for change or ``soft'' business benefits for host
management organisations in Australia, the USA, and the
UK (Carlopio, 1998; Wilkinson et al., 1998;
Zbaracki, 1998; Burnes, 1996; Stace and
Scott Gardner and
Dunphy, 1995).
Colin G. Ash IT focused interventions, such as business
process re-engineering (BPR) and enterprise
resource planning (ERP), feature prominently
in this catalogue of costly change failures, with
The authors reported levels of satisfaction with strategic IT
investments among surveyed senior executives
Scott Gardner is a Lecturer, Graduate Programs, and
in US corporations (1989-1997) ranging from
Colin G. Ash is Associate Head of School, both at Edith 20-75 per cent (Thorpe, 1998; Sauer, 1997;
Cowan University, Churchlands, Perth, Australia. Holland and Kumar, 1995). Ironically many
respondents were senior managers who
Keywords sanctioned investment in strategic information
systems with which they ``wanted to be seen to
Strategy, Change management, Information technology,
engage'', but neither ``trusted nor understood''
Organizations, United Kingdom, Norway
contributing to an estimated US$145 billion
in write-offs for US corporate IT investments
Abstract in the mid-1990s (King, 1997, cited in
Presents a preliminary framework for making sense of and Thorpe, 1998, p. 12). McHugh (2000) cites
managing change in organisations that have adopted several more recent examples of ``Faustian''
information systems and e-commerce as a core element of IT contracts signed by big corporate clients
their business strategy. Argues that the relatively low buying into ERP, claiming that 37 out of 100
level of organisational benefits realised by typical
US executives responsible for ERP adoptions
between 1996 and 1999 could not identify any
strategic information technology interventions over the
positive impact of these systems for their
past decade is often a product of poor adoption and
businesses.
implementation practices on the part of senior managers
While IT writers, including Thorpe (1998)
and IT practitioners, who have failed to understand the
and Koh et al. (2000), suggest that these
non-linear and emergent nature of change in complex failure rates will decline with systems
organisations. Argues that a clear understanding of the advancements, maturation in project
dynamics of change at the people/technology interface, management and improved benefits
and the symbiotic relationship between information realisation models, the continuing impact of
systems and strategy, is a prerequisite for the successful IT based change failure on corporate
business benefits realisation for major IT and e-business profitability and effective organisational
projects. Distils lessons learned from reflections on functioning in all sectors continues to warrant
theories-in-use and practice into a basic model for senior closer investigation. This requirement is
managers and IT practitioners. reinforced by the disappointing level of
business benefits realised by client
Electronic access
organisations from the latest wave of
enterprise-wide customer relationship
The Emerald Research Register for this journal is management (CRM) technologies, with over
available at 55 per cent offering no significant returns,
http://www.emeraldinsight.com/researchregister and low levels of executive confidence ± both
reported in major US corporate IT surveys
The current issue and full text archive of this journal is
(Bain, 2001, cited in Rigby et al., 2002).
available at
http://www.emeraldinsight.com/0957-6053.htm

Research objectives and methodology
Logistics Information Management
Volume 16 . Number 1 . 2003 . pp. 18-24
# MCB UP Limited . ISSN 0957-6053 A comprehensive investigation of the factors
DOI 10.1108/09576050310453705 that determine IT-based change failure or
18

ICT-enabled organisations: a model for change management Logistics Information Management
Scott Gardner and Colin G. Ash Volume 16 . Number 1 . 2003 . 18-24

success is beyond the scope of this paper individual behaviours, team and
which aims to inform future practice in the organisational performance was popularised
field of change management, by investigating by Kurt Lewin, Rensis Likert and other US-
the dynamic relationship between strategy, based figures in the organisational
change management practices, and fifth development movement of the 1950s to the
generation information and communication 1970s. During the same era Europe and
technologies (ICT), within complex Scandinavia witnessed the emergence and
organisational environments. More growth of socio-technical movement, which
specifically, the role of information systems made a significant contribution to current
within the broader change management systems thinking and the nature of
equation will be explored. interactions between people and technology
The investigation and subsequent analysis (Waddell et al., 2000).
were undertaken with reference to: Although the popularity of OD and socio-
. Recent literature on strategic approaches technical schools of thought declined in the
to change management and strategic 1980s, many of their fundamental principles
information systems to highlight key and methods have been carried forward into
concepts and current applications, current change management consulting
successes and failures in these fields; practices (Stace and Dunphy, 1994).
. Data from interviews with four In the 1980s and 1990s the dominant
experienced IT consultants and two approaches to planned change were premised
senior IT project managers, to provide on the assumption that structures, processes,
insight into the limitations of current IT- technology and human skills, capabilities and
based change consulting practices; knowledge can be reconfigured to support or
. Two recent case examples: a provincial optimise the achievement of identified
bank which combined BPR and strategic goals. These included total quality
e-business technologies as part of a management (TQM); BPR and various forms
successful strategy to capture a significant of strategic IT interventions including ERP
share of the online housing loans market and e-commerce systems (Stace and Dunphy,
in the UK market between 1995 and 2001; Wilkinson et al., 1998; Burnes, 1996).
1998, and an offshore petroleum As discussed in section one of this paper,
engineering company which used Web planned change in its various forms had a
front-end technology with ERP to make fairly poor track record throughout the 1990s,
significant efficiency gains for minimising with TQM, BPR and IT failures incurring
offshore personnel costs and optimise use massive financial and human resource
of the available labour pool. deployment costs, with limited returns to the
These case examples of ICT as a platform for client organisation. While the reasons for
change will be discussed in the fifth section these failures are manifold, it is proposed that
following a consideration of some of the senior management's view of strategy as a
typical problems and issues associated with linear process, implemented through
information technology projects in the fourth conventional project management models,
section. The next section briefly examines the over predictable time frames, was a major
defining characteristics of strategic change contributing factor. This mechanistic view of
management and the enabling role of IT. strategic change, which ignores the emergent,
processual, and relationship-based models
advanced by prominent theorists in the field
of strategy and change management
Strategic approaches to change
management including: Quinn (1980), Pettigrew and
Whipp (1991), Mintzberg and Quinn (1991),
The notion of implementing planned reforms and Stacey (2000), is particularly evident in
to reorder the human and technological major IT project implementations. These
dimensions of the organisation has been in were characterised by a deterministic,
existence since the conception of the earliest strategy-in-a-box approach, where people are
armies and bureaucracies pre-dating configured around systems to ensure optimal
Christian times (Postman, 1992). organisational performance. Taken to its
In recent times the idea of planned logical extreme technology becomes strategy
interventions to bring about changes in or an end in itself.
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This tendency is illustrated by Markus and Y2K and other legacy system problems.
Benjamin's (1997) ``magic bullet'' analogy Clients were criticised for their lack of
where IT practitioners naõvely assume that, by
È up-front consultation with their own senior IS
building or designing a powerful technology to specialists, acceptance of unrealistic budgets
be shot into the problem area, desirable and deadlines from consultants and failure to
changes will result when the technology establish a clear business case for systems
penetrates the human and technological fabric adoption. According to Thorpe (1998) these
of the organisation (Markus and Benjamin, types of adoption practices reflect linear
1997, p. 57). This deterministic and flawed industrial age thinking, based on the
conception of the role of ICT within the assumption that plugging in extra
change management equation is identified by technological capacity will necessarily
the authors and the interviewed respondents generate business efficiencies and more profit.
as a major contributor to project failures in a
range of organisational environments. Vendor issues
To advance our understanding of Vendor indifference to the specific human,
IT-focused change within complex ICT- operational, and business requirements of
enabled environments, the paper will explore client organisations was identified as a major
some of the factors that precipitate the
contributor to project failure or low levels of
success or failure of technology-focused
benefits realisation. Vendors were seen to be
interventions. In the final section a model is
primarily concerned with selling template
presented which attempts to explain the
solutions on set margins that could be rolled
complex interaction between strategy,
out across a clearly defined time frame. This
technology and people within this type of
problem was compounded by the high costs
networked organisation and the symbiotic
associated with product customisation,
relationship between strategy and information
switching to an alternative vendor if
systems.
dissatisfied, and the general disruption to
workflow and productivity caused by system
installation disruptions. Each of these factors
Interview findings: IT project failures contributed to low returns for the
organisation on the original IT investment.
Interviews were conducted by the researchers,
with four experienced IT consultants and two
senior IT project directors between October Consultant issues
2000 and February 2001, to provide an Not surprisingly, many of the consultant and
insight into current IT-focused change vendor issues were similar, given that some
management contexts, approaches and consultants worked for the vendor, whilst
practices. The principal concern was to others worked closely with the vendor (on
establish the factors that led to the relative behalf of the client). From the perspective of
success or failure of strategic IT-based change the two project managers interviewed the
projects, with respect to their original goals. biggest problem for them was the increasing
In addressing the broad themes identified in tendency for consultancies to hire
the semi-structured interview format, the ``technicians'' trained to follow standardised
respondents emphasised issues and barriers methodologies, rather than strategists who
that they saw as contributing to IT change understood the organisation's business model
failure in various contexts. These are and were capable of implementing change
described below as Client, Vendor and across the people/technology interface.
Consultant issues:

Client issues Case study insights
Senior management (client) ignorance of IT
applications and their potential ramifications Case 1: Bank.com
throughout the adoptive organisation was The case of a highly conservative, provincial
identified as a prime contributor to project UK bank that used BPR and Web-based
failure. Two respondents noted that several technologies to become a major player in the
clients with whom they had dealt had adopted UK Internet home loans market is a
high cost (typically US$5m, plus) ERP remarkable illustration of both effective
technologies as a silver bullet solution to fix management and subsequent
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mismanagement of the technology/strategy As an IT-based change initiative, the
relationship. re-engineering of the original bank structure,
In the early 1990s the conservative lending processes, and information technology base to
policies and traditional branch banking create Bank.com and two other streamlined
structure that had served the bank well in business units proved to be a great success.
their traditional provincial markets during the The BPR intervention saved the business an
1980s looked like becoming an increasing estimated £30.1 million per annum and,
liability with the entry of major UK and combined with the value analysis
European players. The prospect of steady methodology, reduced the cost of processing
erosion of their core customer base by a housing loan by over 50 per cent. The
institutions with immense capital bases, bank's Internet-based business grew at 25 per
superior technology and international cent per annum between 1996 and 1999. In
networks and the increasing danger of a 1999 the bank estimated that the return from
forced merger or take-overs, moved the their investment in consulting and
bank's conservative board to initiate a survival information technology adoption since 1995
strategy. This required a massive departure was in the order of ten to one.
from their existing approach to lending Since that time the bank has continued to
through detailed personal vetting of record a steady increase in profitability due
customers and an extended approvals more to the rapid growth in the UK housing
process, which passed through seven layers of loans and financial markets during 2000 than
effective strategic and business management.
hierarchy for loans over £100,000.
In 1995 the board was persuaded that early However, major changes in the bank's top
team in 1999 and 2000, combined with
entry into the new technophile, 18-35 year
increased exposure to high risk commercial
old, Internet-based banking market
loans, led to increasing concerns being voiced
represented their only significant opportunity
by shareholders and analysts in the UK
for expansion into the broader UK market. At
business media. These concerns were
the same time they sought to recoup
compounded in 1999 by the departure from
significant business benefits from the new
the 1995-1998 business model through the
Internet technologies within a two-year period
use of CRM technologies, in an attempt to
from 1996-1998, whilst maintaining their no
integrate three successful, stand-alone
forced redundancy policy.
business units. Paradoxically, the board's
Despite the considerable challenge involved
decision to roll back the implementation of
in achieving these apparently conflicting
their CRM project with £80 million spent in
objectives, both outcomes were achieved. The
2001 reversed many of the gains from the
first through an innovative staff redeployment
investment in BPR and Internet technologies,
strategy, which transferred branch employees as tools with a clearly defined enabling role
into a massive centralised call centre servicing within a well conceived business model. As a
the entire UK market for Internet-sourced consequence the executive team were forced
housing loans. The second through a change within a few months of the decision to
strategy combining BPR, value chain analysis, reluctantly accept a merger deal with a major
cost cutting, and an aggressive Web-based competitor, effectively changing the bank's
business-to-customer (B2C) marketing identity forever.
strategy.
Under the new business model three Case 2: Engineer.com
distinct businesses were identified under a Engineer.com is the Norwegian-based
holding company structure: the traditional operation of a large US multinational and a
``Retail'' branch banking network; global leader in energy services, equipment,
``Commercial'' banking; and ``Bank.com''. engineering and construction. Until recently
The bank was able to offer a combination of one of the major challenges facing the
traditional and electronic banking services. company was the high cost of employee
These covered UK-based, Offshore, and resourcing for its offshore oil and gas
International customers, with low cost, credit operations, particularly with regard to
scored housing loans supplied online through scheduling, shift arrangements, and the
the call centre and broker network, which associated logistics for skilled
recorded a turnover of over £250m in 1999. offshore workers.
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In order to minimise these costs through operation for staff, through flexible access and
optimal work scheduling and shift patterns better presentation of R/3 HR data offshore
the management realised that they needed projects (Ash and Burn, 2001; Ash, 2000).
remote access to relevant HR data such as As a further measure of its success and
shift details and updates on local employment strategic application for the organisation, the
regulations. There are significant penalties in e-business solution was expanded to include
Norway for companies that employ foreign the IT department's computer hardware
workers beyond an agreed time quota. tracking system and was incorporated as a key
Although the need to drastically reduce component of the company's global ICT
personnel deployment costs was apparent to network.
the offshore project managers, the
bureaucratic and autocratic culture of the
organisation had previously prevented a Managing emergent change?
creative solution emerging from management
or other key players in the organisation. Early The bank and the engineering company cases
in 1999 the situation changed when the HR both demonstrated the benefits of judicious
manager and project team championed the use of IT and Internet technologies as tools to
idea of a personnel management intranet to support a business model with objectives
leverage the power of graphics and Internet shared and understood by all major project or
technology and extend the reach of the program stakeholders including: senior
existing ERP system to remote users seeking managers; IT specialists; business unit
real time access to crucial deployment and managers, HR managers, and other change
scheduling data. Following an intensive six- agents responsible for the implementation,
month period spent educating peers, project communication or facilitation of the broader
managers, and other potential system users on change process. The need for shared
the benefits and applications of the understanding of the role of technology
technology and building a sound business within the change management and strategy
case for senior management, the HR team process has also been identified as a unifying
were successful. The intranet project was theme (Remenyi, 1999; Beckford, 1998).
adopted and fully operational within a year, However, future change management
with the significant addition of wireless practitioners face a significant challenge in
application protocol (mobile) technology to trying to deliver ambitious business outcomes
enhance network accessibility. for organisations operating in increasingly
Within six months of the new system being complex and dynamic ICT-enabled network
established and being accepted and environments. New theories and models of
understood by the project managers and other change management are required to help
key stakeholders, significant cost savings of practitioners understand the complex
over US$100k were recorded. The major dynamics of change within organisational
benefits realised from the application of the networks seeking to harness the power of the
new technology resulted from optimised shift fifth generation information and
patterns and increased flexibility in the communication technologies (Savage, 1996).
deployment of staff and contract personnel, in Figure 1 represents a first step towards
response to delays, downtime and other building this understanding by serving as a
offshore operational contingencies. Other common reference point for senior managers,
related benefits identified by the researcher IT practitioners, other change agents and key
included: cost savings in sourcing and inter-organisational stakeholders, such as
managing of contract staff; improved major customers and suppliers. It illustrates
relationships between the company's onshore how an emergent strategy process, focusing
and offshore management staff and the local on broad corporate intent rather than fixed
government agencies responsible for goals, informs, and is informed by, the
supplying and regulating the deployment of application of well defined and widely
staff; improvements in IT end user skills; understood business models. These are
better decision making by project managers designed to support achievement business
resulting in reduced uncertainty surrounding unit goals and broader organisational
work patterns and continuity amongst staff outcomes, by supporting and shaping
and contractors; and increased ease of electronic transactions with consumers and
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Figure 1 Dynamic model of change in ICT-enabled networks It is proposed that emergent change,
although difficult to manage in a conventional
sense, can be shaped, harnessed or
purposefully oriented under certain
conditions. These include: shared stakeholder
goals, a clear understanding of the business
model, its objectives, and the role of
technology within the process; creation of
common `ÌT change management'' protocols
and conventions; and ongoing use of
facilitated forums required to support
knowledge integration, through in-context
interpretation of emergent change.
Change in ICT contexts should be
managed and shaped through mutual
adjustment of the change implementation
other businesses, and day-to-day interactions
approaches employed by IT practitioners, line
with staff through the intranet and allied
managers, and other active stakeholders. This
networks. suggests the need for change agent attributes
Significantly, the success of these business suited to non-linear, and at times chaotic,
models within a complex ICT-enabled environments, notably: flexibility of thought
context, is determined not by a single variable and action; skilful interpretation of change
like technology or people but the contexts and contingencies; and crucially the
management of both planned change and the ability to create and facilitate purposeful
emergent changes generated at the people/ electronic and face-to-face dialogue, amongst
technology interface. In this context the role key stakeholders throughout the
of the IT project director or other designated organisational network. Broader adoption of
change agents becomes that of moderator, these ideas may go some way towards
interpreter, and manager of change. This reconciling the tension between second
represents a considerable shift from generation management practices and fifth
conventional linear IT project management generation technologies, which continues to
models of organisational change, which pre-determine change failure in complex
assume that effective planning, budgeting, organisations.
controls and communication will deliver
desired business results within a realistic
timeframe. The recent history of IT failure References
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