Organizations in the Network Age

David Boddy, Nicky Gunson

• Publisher: Routledge
• Year: 2022
• Print ISBN: 9781032197371
• eBook ISBN: 9781000549737
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The follow-up to the acclaimed Organizations in the Computer Age this book, originally published in 1996, reveals that since computers had become increasingly linked in networks which span the world, information could be transmitted instantaneously to all parts of the organization. It describes the experiences of six organizations and draws lessons which apply very widely.

The issues raised include:

• the impact on employment levels and organizational structure;
• the effects of network technology and organization structure and control;
• the extent of management choice;
• the role of change agents.

This book shows that the introduction of computer networks raises new challenges concerning how the process of change is managed. The lessons from these cases could be widely applied in other organizations undertaking similar large-scale investments in new technology at the time.

1 Introduction

This book is about the opportunities that computer networks create for organizations, and the implications for their customers, the people who work for them and for the wider public. The chief technological focus of the book is the convergence of computer and telecommunications technology which has made it possible to link together widely separated computers and to pass information between them with great reliability, accuracy and speed. This convergence allows details of yesterday’s sales at hundreds of retail outlets to be analysed and ready for review at head office the following morning, together with almost instantaneous replacement from suppliers of the items sold. Engineering data can be exchanged instantaneously between design offices in different continents. Examples of the influence of this technology on everyday life range from drawing cash from automatic telling machines, to purchasing travel tickets of all kinds. This book explores in detail the experience of six organizations which have introduced network technology. It aims to identify the managerial issues that need to be resolved if the technological possibilities are to be translated into business success.

As with earlier stand-alone computer systems, it is clear that human and organizational issues need to be addressed if the business potential of convergent technology is to be realized. Many of the lessons learned from earlier systems still apply, and many users of network systems are rediscovering the consequences of depending too heavily on technology alone to solve their problems or obtain strategic advantage over their competitors. In addition, even more significant changes in organizational structure and practice are needed to support the new technology to ensure it makes its full contribution to business performance. It introduces the probability of major changes in the way organizations operate and are constructed; the organizational issues are in consequence far more complex and difficult to manage than those created by earlier systems.

The pace of technological change is such that it becomes more difficult to learn from either success or failure. We hope this book will help those who are responsible for such changes to learn from the experience of those systems that have already been implemented. In this first chapter we outline the technology, its applications in a business context and the main themes which the book will explore.

The Technology

In the 1950s it was widely predicted that the advent of the computer would significantly change the structure and processes of many organizations. In general, few really significant changes were observable as the first phase was largely concerned with the computerization of administrative paperwork. On the whole this enabled the companies to operate their existing processes more efficiently but led to few fundamental organizational changes. More recent applications of network technology have focused on the provision of management information and are coinciding with rapid organizational change, partly fuelled by dramatic developments in hardware and software, and partly stimulated by external changes. Four major trends have contributed to these organizational changes. First, the falling cost of computer hardware and the advent of the personal computer (PC) have meant that most working people will have a computer on their desks before very long. Second, the availability of software which allows users to access and use computers without the intervention of the computer expert. Third, the increasing availability of data for managers from both internal and external databases which provides information essential to maintain competitive market position. Last, and most important, the explosive development in communications technology and the increasing convergence of telecommunications and computing which has led to the creation of Local Area Networks (LANs) and Wide Area Networks (WANs).

LANs work over a restricted area, usually of less than a hundred metres, and connect a number of intelligent devices to a communications network. LANs are a major evolutionary step in the introduction of new technology in both the office and the industrial environment. The logic behind their introduction is that in any work environment 80 per cent of the work interactions are within the immediate locality and only 20 per cent outwith. Interconnected services on a LAN allow cost savings by sharing devices like file servers which can store large volumes of information, high quality print servers and so on. The more complex the system, the more simple it seems to the user due to increasingly sophisticated humancomputer interfaces. The LAN is of most value when a number of different functions are carried out with the aid of a common database and/or where a number of different devices need to interface and share resources. WANs range from many metres to a worldwide coverage and can link thousands of distant users with speech and/or data transmission techniques. WANs provide international electronic mail (e-mail), transfer of text, movement of files etc.

Since the early days of computing it has been recognized that it is difficult to realize the full potential of the technology, or the expectations of the organization (Cooper and Swanson 1979; Maish 1979; Boddy and Buchanan 1983; Gibson, 1981; Eason, 1982; Markus 1983; Neceo et al, 1987). Social, political and organizational problems can hamper the implementation of quite simple systems and, once implemented, these systems have sometimes resulted in inflexibility and an inability to respond to environmental changes. The implementation of network technology brings similar problems, but with the added dimensions of larger scale systems, more complex technology and consequently larger technical and political issues. Cost justification of network systems is more difficult than for stand-alone systems (Johnston and Vitale, 1988), as often the simpler systems can be justified in quantifiable operational terms. Since network systems are organization-wide, different functions may have different perceptions of costs and benefits, and during the often lengthy implementation process these perspectives on costs and benefits can radically change.

Computer networks offer organizations substantial opportunities for operational and strategic innovation and are regarded as crucial business tools by many large organizations, as ‘fundamental as water, electricity and heat’ (Hall and Macauley, 1987). Networks can play an important part in fundamental structural changes, the gradual elimination of layers of middle management, of individual functions and internal integration of departments. They also support external integration with suppliers and customers and external links with complementary organizations (Johnston and Vitale, 1988). These opportunities stimulate the use of network technology despite the difficulties of design and implementation and the financial risks involved.

We began this study with a preliminary survey of nineteen UK organizations from a wide range of economic sectors. In each organization we interviewed key IT managers and from these extended semi-structured interviews we were able to identify a range of key questions which were relevant to organizations introducing networks. These questions formed the focus for the six detailed case studies which were conducted over a period of six years. The questions are outlined below.

What Benefits Would the Organizations Expect?

The preliminary study showed that the objectives of introducing networks were often strategic and qualitative rather than quantitative and, as such, were difficult to express in financial terms. However few of the nineteen organizations in the preliminary survey had overtly used strategic objectives to justify the system, because operational, quantifiable benefits like cutting staff numbers, reducing stock holdings, reducing paperwork and increasing the efficiency of the accounting function were so much easier to present to financial decision-makers. Often when confronted with the impossibility of justifying the investment in terms of DCF capital appraisal techniques or other versions of investment analysis, the top level sponsor resorted to making ‘a bold leap of strategic faith’ (Kaplan, 1986) with a commitment to make the future happen (Hayes and Garvin, 1985) whilst presenting the decision-making body with operational justifications.

The costs of network systems were equally difficult to establish. The costs of training and maintenance were particularly problematic because of the scale of the projects and the involvement of many different functions and different technologies that were often ‘leading-edge’ and unpredictable in themselves. The cost of management time used to coordinate the project was open-ended and often much more substantial then predicted. Working practices often changed throughout the organization, in some organizations leading to some initial user resistance, and to large training and retraining commitments.

Perspectives on costs and benefits varied within the organization; the accounts department often felt that the cost of a centralized computerized accounting system was fully justified, whereas the sales function had a different perspective. Perspectives on the objectives and cost justification of the network evolved during the time it took to implement the system, which was years in some cases. The long-term empirical research on the detailed case studies allowed us to explore this aspect more closely.

What Would Networks Imply for Managing the Process of Change?

A substantial literature developed on the problems and the advantages of involving users in the development and implementation of earlier standalone computer systems (e.g. Mumford et al., 1978; Eason, 1977). Attempts to involve users in the development of quite simple systems have met with limited success. Network systems seemed likely to raise new difficulties with managing user-involvement. Centralized control of the design process is essential to maintain compatibility throughout the network, and to establish external links with customers, suppliers and complementary organizations. Yet at the same time the ultimate success or failure of the network system depends heavily on obtaining commitment and support from operational users. The system designers had to demonstrate an ability to design and develop systems that would fit local circumstances which differed in important details across the network.

It has been widely recognized that the outcome of system implementation depends heavily on the presence and status of a senior management sponsor (Curley and Gremilion, 1983; Schon, 1963; Maidique, 1980). This becomes peculiarly important for the outcome of network systems as necessarily they cross departmental boundaries, disrupt existing power distributions and necessitate an overall strategic perspective rather than a sectional or operational view. The more senior the sponsor the less likely that the network project will be subject to middle management resistance and implementation problems as the sponsor acts as a change agent’ or missionary’. This highlighted the paradox of central control of design and development against gaining local commitment to the new system and prompted us to explore in the detailed case studies how far it was possible to give local managers autonomy and scope for varying the design of network systems in response to local conditions.

How Might Networks Lead to Changes in Structure, Control and Work Organization?

Earlier studies of stand-alone computer technologies and the design of work indicated significant management choice in the way work was designed as computer systems were introduced. Often such systems led to work redesign which increased autonomy and skill, although in many cases there were examples of significant skills being lost. Does the introduction of network systems follow earlier patterns or does the process have different effects on the human aspects of organizations? What is the evidence from the cases about the design of tasks and for the way groups of staff work together?

Despite predictions to the contrary (Leavitt and Whisler, 1958) the early implementations of computer systems led to few changes in managerial decision-making patterns or organizational hierarchies. The often predicted demise of middle management and centralization of decisionmaking either did not happen or happened extremely slowly, although the establishment of centralized IT departments was widespread. As the technology has become far cheaper, more powerful and more reliable, speculation has continued that such structural changes following implementation would occur (Child, 1984; Rockart and Short, 1989).

From the evidence gathered in the preliminary survey, the convergence of computing and telecommunications have made the telecommunications function mo...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Preface
• Acknowledgements
• 1 Introduction
• 2 The Travel Company – A Branch Automation System in a Travel Company
• 3 Scotrail – ‘Omega’: A Network-Based Administrative Reorganization
• 4 The Library Network
• 5 General Insurance – A Network Linking Branches and Head Office in Insurance
• 6 The Scottish Ambulance Service–Computerization and Rationalization in a Public Service
• 7 Kwik-Fit–An Electronic Point of Sale System in a Retail Chain
• 8 The Process of Change
• 9 Changes to Structure, Control and Work Organization
• 10 Conclusions
• Bibliography
• Index