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Mastering the Three Worlds of Information

Does IT Matter in Organization?
Some Opinions
• Opinion 1- “Why should we bother? IT isn’t strategic, so it
doesn’t matter in a competitive sense. We should be
minimizing our technology expenditures.”

• Opinion 2- “Whether IT matters or not, we shouldn’t be doing

it ourselves. Companies are becoming virtual, and software is
becoming rentable, so why do IT the old-fashioned way?”
Problems with IT
Research has shown-
• IT projects display underwhelming results or outright failures
• 51% of IT efforts ran over budget
• 47% of IT Companies were getting low, negative or unknown
• Only 10% of companies believed that they were getting high
returns from IT investments
Possible Reasons for IT Failure
• Inaccurate requirements
• Uninvolved top management
• Shifting project objectives
• Inaccurate estimates
• Unexpected risks
• Dependency delays
• Not enough resources
• Poor project management
Example of Inaccurate Requirements
Example of Uninvolved Senior Management
Example of Poor Project Management
Benefits of IT

• Enhanced productivity

• Faster and cheaper communication

• Enhance customer experiences, and so on

• Top level executives and managers should stop looking at IT
projects as technology installations and start looking them at
them as periods of organizational change that they have a
responsibility to manage.
Organizational Capability
• An organizational capability is a company's ability to manage
resources, such as employees, effectively to gain an advantage
over competitors
• The company's organizational capabilities must focus on its
abilities to meet customer demand
• Examples of organizational capabilities would include, among
others: inspiring leadership; agility and speed; customer focus
and innovation
Building an Effective IT Model
• It requires the understanding of:
– What IT can do for your organization?
– How it can affect your organization?
– What managers must do to ensure that IT initiatives succeed?

One way to look at this is to build a comprehensive model and place IT in

a historical context by considering it as a General Purpose Technology
GPT (General Purpose Technologies)
• Innovations which cause jumps in an economy’s normal march
of progress
– For example: Electric power, transistor
• The performance of such technologies improves dramatically over time.
As people become more familiar with GPTs and let go of their old ways
of thinking, they find a great many uses for these innovations.
• GPT deliver greater benefits as people invent or develop complements
that multiply the power, impact, and uses of GPTs.

Can we therefore say that IT is one of the GPT?

Organizational Complements
• Organizational complements are the organizational innovations, or changes in the
way companies get work done
• Organizational complements which allow process GPTs to deliver improved
performance are-
– Better skilled workers
– Redesigned processes
– Higher level of teamwork
– New decision rights

• Can we now say that IT is one of the GPT in context of Organizational Complements?
• Information technologies is one of the widely known GPT,
however it doesn’t enjoy the same relationships with the four
organizational complements that other process GPTs have
• Some information technologies can deliver results without the
complements being in place; others allow the complements to
emerge over time; and still others impose the complements they
need as soon as companies deploy the technologies.
• Based on these variations in different IT with respect to
organizational complements, we classify IT into three parts-
Three Worlds of Information Technology
IT Category Definition Characteristics Examples
Function IT IT that assists with • Can be adopted without Simulators,
execution of complements spreadsheets, CAD
discrete tasks • Impact increases when
complements are in place

Network IT IT that helps • Complements emerges over Email, Instant

interactions period of time Messaging, wikis,
without specifying • Doesn’t specify tasks or blogs, mashups
parameters sequences
• Accepts data in many formats
• Use is optional

Enterprise IT that specifies • Imposes complements Software for ERP,

IT business processes throughout the organization CRM, SCM
• Defines tasks and sequences
• Mandates data formats
• Use is mandatory
Reason for Classifying IT
• Classifying IT into three types can help leaders/managers
understand which technologies they must invest in as well as
what they should do to maximize returns
• It can also indicate which IT initiatives are going to be relatively
easy to implement and on which projects executives should
Different Categories of IT
Function IT-
• An R & D engineer can use a CAD program to improve the way
he/she does his work without making changes in how the rest
of the department functions
• Function IT helps in-
Enhancing experimentation capacity: Simulation

Example: Ducati
Different Categories of IT
Network IT-
Network IT principal capabilities include:-
1.Facilitating Collaboration: It allow employees to work together
but don’t define who should work with whom or what projects
employees should work on
2.Allowing expressions of judgment: NITs are technologies that
let people express opinions by means of blogs to voice their
Different Categories of IT
Enterprise IT is the type of IT applications that companies adopt to
restructure interactions among group of employees or with business

Enterprise IT primary capabilities includes-

1.Redesigning business processes (BPR)
2.Standardizing work flows
3.Monitoring activities and events efficiently

Example: CVS Case

Problems with Enterprise IT

• Resistance because of changes

• Delayed processes
• Abandoning the adoption
• Network IT percolate from bottom, whereas enterprise IT are
generally top-down.
Benefits of 3 Types of IT
• FIT delivers productivity and optimization
• NIT increases collaboration
• EIT helps standardize and monitor work
• ERP in IIM Indore generates value for IIM Indore?
• ERP in Big Bazaar generates value for Big Bazaar?
Managing 3 Types of IT
• Three tasks:
 Selection: Executives have to select IT applications that will deliver
organizational capabilities
 Adoption: Executives must lead adoption methods that result in
creation of complements
 Exploitation: must shape exploitation of IT by ensuring that
technologies, capabilities and complements stay align
Managing the Three Types of IT
IT Selection:
Few problems while selecting IT…..
• Companies usually select technologies when something new
comes into the market without giving a thought that the
technology is going to help or not
• The Outside-in approach adopted by the companies usually fails.

Remedy: Inside-out approach

Inside-Out Approach
• An inside-out approach puts the spotlight squarely on the
business before evaluating the technology landscape
• Focuses on the capabilities that IT can provide rather than on
the technologies themselves
• A discussion among executives about capabilities will highlight
what the business most wants to be good
• Once the company’s business needs are clear, the technologies
it requires will come into focus
Managing Three Types of IT
IT Adoption

In stark contrast to FIT and NIT, enterprise IT is hard for

companies to adopt. The benefits look great to people at the top,
but employees usually dislike EIT technologies.
Managing the Three Types of IT
IT Exploitation:
• To extract and maximize benefits.
• Companies can best exploit FIT by fine tuning organizational
• NIT technologies such as email, instant messaging are
exploited by their own.
• EIT’s exploitation is often easier than adoption since the work
of imposing new processes is done by this stage.
Ways to Achieve Success by using IT
• Leaders decided at the outset how key issues about configuration and other
aspects of the adoption will be raised and how they will be settled
• The most important participants in this task are not IT specialists or technical
consultants but business leaders from the areas affected by the new technology
• Leaders who successfully implement EIT try to build consensus in the
organization, but they’re also willing to push ahead without having everyone on
board every step of the way
• Executives need to stop looking at IT projects as technology installations and
start looking at them as periods of organizational change that they have a
responsibility to manage
An enterprise system imposes its own logic on a
company’s strategy, culture, and organization
• ERP pushes a company toward full integration even when
a certain degree of business-unit segregation may be in its
best interests
• ERP pushes a company toward generic processes instead
of customized processes
• If a company rushes to install an enterprise system
without first having a clear understanding of the business
implications, it could prove to be disastrous
• If the logic of the system conflict with the logic of the
business, then either the implementation will fail, wasting
huge sums of money or the system will weaken important
sources of competitive advantage
For Example
• Workflow of travel/leave application for a staff in IIM Indore

• Earlier-
Employee Supervisor  Department Head Dean Director

• After ERP-
Employee Department Head Dean Director
Next Class
• Cisco Case
• Group X and Group Y
• Please send the PPTs before the start of the class
• Case facts are not of much importance, case analysis is very
• Absentees from the group will be awarded 0 in this component
• Free riders might be identified and scored accordingly
Thank You