A Framework for Managing IT-Enabled Change

At Vista Elementary School, classrooms look and operate differently from traditional classrooms. Each classroom has five computer terminals for students and a teacher workstation. Students spend fifteen minutes to an hour a day at the terminals, depending on need. They receive customized reading, math, and writing instruction, which is delivered over a computer network through a technology called Integrated Learning Systems (ILS). The system provides corrective feedback loops when students have difficulty with particular skills and collects data on each student’s progress. The rest of the time, students work individually or in small groups and, for a small part of the day, in the large group. Teachers spend much time coaching individual students, analyzing assessment results against expected outcomes, and prescribing new instructional sequences for students. The technology-mediated instructional system demands much more planning and assessment work on the teacher’s part than traditional teaching does. The teacher stands in front of the whole class only a small part of the time.

Across town, the Valley School also has an integrated learning system, but it is set up in a laboratory classroom managed by an aide. Students from all of the grades come twice weekly for basic skills instruction that is separate from their normal classroom activities, just as they go to music and art classes.

Vista is getting good results (productivity increases); Valley is not.1 Most schools use the ILS technology as Valley School does. They graft it onto their normal routines without changing classroom organization or instructional processes, and they don’t get good results.

Like these schools, many organizations are tempted to use new information technology (IT) to solve some of their most difficult problems. Some organizations are successful in their implementation efforts; many are not.

The emerging literature on change management provides many useful ideas for making the complex changes enabled by IT. As most managers realize, new technology is not enough to increase productivity. Organizational and process changes must also be made. Vista School, for example, changed its values to emphasize outcomes rather than inputs and changed teaching and learning processes dramatically.

In this article, we integrate models from the change management literature into a set of principles for managing an IT-enabled change effort. The paper has evolved from our teaching and consulting experiences. We continually find that managers involved in these changes are hungry for models and principles that can form a common language for talking about and coping with change issues.

IT-Enabled Change Is Different

The cost of information technology has plummeted since the 1960s, generating enormous investments in IT applications to stimulate increasingly complex organizational change. It is anticipated that technology cost-performance improvements will continue to drive ever-larger change processes for at least the rest of the decade.2 But these IT-enabled change processes are different from more general change processes. They create unique issues for managers. Managers must know how to integrate the technology, business processes, and organization in order to achieve the goals they expect with the technology.

Skills, Jobs, and Organizational Control Processes Change Radically

Zuboff has described the revolutionary changes in jobs and control processes within organizations that take full advantage of IT.3 In the “informated” organization, workers have access to all the information necessary to perform their jobs, and they are empowered to perform tasks previously done by supervisors. As shown in Figure 1, the database is an equalizing source of knowledge for all parties. Workers must be educated to make good decisions and reskilled to see work processes through computer models. Executives must shift their orientation from controlling to providing counsel. Intermediary managers have to be retrained, if not eliminated from the organization. These are formidable challenges, and Zuboff’s studies show that managerial resistance tends to undermine the change effort; gains are seldom fully realized.

Change Reaches across Functions and Organizations

In the past, inter- and intra-organizational process has been limited by the amount of coordination technically feasible and economically affordable. Process has tended to be managed within functional entities rather than across functions. Cheaper coordination transactions are the fuel behind electronic integration, the catalyst for more complex and larger change projects. Venkatraman describes several levels of change that electronic integration stimulates — from increased functional integration to changes in the business’s scope — and each of these extends the reach of the change project.4

In Figure 2, we illustrate the technologically integrated organization. The diagram suggests a number of issues for the change effort:

• Managers must mobilize the forces for common good across organizational boundaries.
• Process spans the full organizational spectrum from suppliers, through traditional functions, to customers. It also extends through business units operating in many countries. Thus managers of the change process must deal with multiple cultures, organizational structures, and rewards systems.
• At every intersection of common process and hierarchy, there is tension over who will control funding and resource allocation. No single unit can make changes that will affect the general process, but each unit is empowered to change and improve local processes.
• The common processes are based on common infrastructure (at a minimum, the computers, telecommunications networks, workstations, and critical databases).5 Companies often lack an infrastructure that can support common processes. A return-on-investment case can be made for process change, but it is much more difficult to do so for the infrastructures that must be in place in anticipation of the process. For example, Vista School had to invest in the local area network, hardware, and ILS before it could change the instructional process.
• Soft infrastructure, including a common information base and a common set of measures, is as important as hard infrastructure. But executives seldom invest in soft infrastructure with the same importance as, say, the telecommunications network. Soft infrastructure generally does not require the major investments that hard infrastructure does, but it is at the heart of those changes that will allow common processes to be implemented.

Knowledge and Power Shift

Information shifts from managers and executives to databases. Power shifts with it. Similarly, expert systems convert knowledge from professionals, who have worked all their lives to obtain it, into digital form. People who lose control of information understandably feel insecure. A number of case studies show how power and knowledge shifts cause resistance.6

Process Cycles Speed Up

During the transition to mass production and assembly lines, the increasing speed of manufacturing activities caused organizational tension. One of the major thrusts of the reengineering efforts taking place throughout industry is to reduce the cycle time for processes critical to the organization, such as time to market and order to delivery. The changes in technology, process, and organizational roles necessary to move from a three-week order-to-delivery cycle to a one-day cycle cause similar tensions. People who are used to performing in the older mode resist the increased pace. The potentially large savings from reduced process cycle times must be balanced with the amount of energy and management attention required to deal with the organizational issues.

Work Methods Change

IT was first applied to physical production and then to mental production, such as loan evaluation and engineering design. Today we see IT moving into areas of collaborative work. For example, IT is being used to support the supply and demand negotiation process. The people responsible for making and selling specific product meet weekly and use the models and the collaborative negotiation decision process to decide what will be made. This process replaces the old process where decisions were made at the apex of the organization for large numbers of products on a worldwide basis. The old process took months. The new process results in a dramatic reduction in inventory and improved service levels for customer delivery. The Management in the 1990s program has documented how IT is changing the way people work.7

The Principles

We have identified eight principles, based on the change management literature, that managers need to consider as they make complex IT-enabled changes.8 Embedded in the principles are three powerful analytic models that are helpful to managers in planning and implementing IT-enabled change. One treats the systematic process of change; one deals with the need to mutually adapt technology, business process, and organizational structure; and one deals with coalition building and organizational resistance (politics). These models are illustrated with the Vista School case.

The eight principles are as follows:

1. Develop a systematic process for change;
2. Manage equilibrium and mutual adaptation of organization, technology, and business process;
3. Determine whether there is enough energy for change;
4. Analyze the size of the change effort;
5. Analyze and manage stakeholder commitment;
6. Major change requires a champion — know what one does;
7. Prototype organizational response; and
8. Build change reviews into management process.

Develop a Systematic Process for Change

Time-based process models describe the tasks necessary at each stage of the change process.9 They serve two general purposes: (1) to provide a road map over time, at several levels of detail, of the tasks that must be considered and (2) to provide a common frame of reference and vocabulary for discussing and managing change issues. Organizations use time-based models in other areas, notably for product and systems development and quality improvement. The change model an organization adopts should be related to these other basic process models. The broader the group involved in planning the change process and the more familiarity they have with it, the more intelligently they can discuss their specific issues and potential solutions.

Figure 3 illustrates the Beckhard and Harris model.10 It describes a change process that moves over time from a present state to a vision that energizes motion to the future because it appeals directly to the needs of the key stakeholders. The classic definition of a compelling vision was President Kennedy’s statement that “we will get a man to the moon and back in the decade of the 1970s.” But a vision is not enough to get by on. It must be decomposed into a number of future states, each of which describes an important deliverable that can overcome stakeholder doubts. In the case of the space program, early future states included building a rocket that could launch a satellite and putting a person into space. The intermediate future states mobilize the stakeholders by telling them what is coming in a way that encourages their input into the process. Reaching the vision requires managing the transitions from present state to future state, from new present state to next future state, and so on. Levinson divides transition activities into planning, implementing, and institutionalizing tasks.11 Many IT-enabled projects have not realized, or have delayed realizing, their benefit potential because the change process did not recognize the institutionalization phase. Institutionalization is concerned with issues such as providing support for the new culture after the initial flurry of implementation success and moving implementation from a primary site to other, different sites. For example, when Digital Equipment Corporation moved its XSEL expert order-entry and configuration system from the United States to Europe, it encountered considerable difficulty because of cultural differences.12 What was correct for salespeople to do in the United States was done by administrators in Europe.

The school district in which the Vista and Valley schools operate has a vision to provide “outcomes-based” education. The final future state, to be achieved in five years, is for all district elementary schools to deliver individualized instruction on a distributed network and to support this instructional process with a differentiated, cost-effective staff. A centralized curriculum quality group will continually analyze and upgrade the instructional systems and provide help to those schools that request it. All principals will be held accountable, annually, for their schools’ outcomes. The technology-based instructional process and the accountability of outcomes will become institutionalized.

Vista School is a working prototype and the first future state. It demonstrates that an outcomes-based instructional process is viable. Student performance can improve, and stakeholder resistance can be overcome.

Manage Equilibrium and Mutual Adaptation

Change moves an organization from an old state of relative equilibrium to a new one. Thus, from the very beginning, change managers need to understand how all the organizational elements must change and what actions and resources will bring them back into equilibrium.

The notion of organizational equilibrium can be traced to Chandler, who described the difficult, multi-year adaptation between strategy and structure at Du Pont; General Motors; Sears, Roebuck; and Standard Oil of New Jersey as they moved from multifunctional to multidivisional forms of organization.13 Figure 4 illustrates the equilibrium model developed by the Management in the 1990s program.14 It describes five elements that need to be in balance: strategy, technology, individual roles and culture, management processes, and structure. The Management in 1990s program concludes that lack of attention to the latter three is the primary reason that IT implementations have poor results.

Our work suggests that a more simplified equilibrium model, as illustrated in Figure 5, proves useful. The change effort must focus on what must change, specifically in the areas of technology, business process, and organization and culture.

We can apply this model to the radical changes Ford made in its accounts payable process, as described in Hammer’s influential article on business reengineering.15 Ford combined the accounts payable functions of several automotive plants into a centralized function, reducing staff by several hundred people and improving operational quality. The driving change was a new business process: paying on receipt of merchandise rather than on invoice. To restore equilibrium, this work process change had to be supported by new technology and organizational and cultural changes. The necessary technology included a unified database to record receipts of merchandise against orders and to issue checks when merchandise had been received. The culture had to be changed to value work for the common good rather than the independence of the different plants. People had to learn to accept the computer’s output as sufficient to authorize payment rather than many signatures from multiple organizations. And layoffs had to be managed in such a way that implementation was not undermined.

Success for the Vista School project is characterized by a change in the instructional process so that it focuses on student outcomes. In the traditional process, the teacher works with large groups of students, directly controlling their time and activities. In the new process, students work independently with the technology, depending on their individual needs. The teacher moves into the role of coach and prescribes instruction by analyzing the system’s assessment output. Traditional assessment consists of teacher-controlled tests. Now students are continually assessed on-line. The teacher has moved to a more analytical and planning role. The most visible change to the outside observer is that students spend more time on tasks and less time in the large group, listening to the teacher.

The new instructional process cannot be attempted until a dependable network is installed throughout the school and, ultimately, the district. The organization must also change from an input-oriented culture that values group classroom activity to a culture that emphasizes student performance (outcomes). Teachers must give up control of the total group and allow learning to become student centered. Figure 6 illustrates these changes.

These mutually dependent changes in technology, organization, and process are the same ones that must happen in a business organization that moves from the traditional control system to the informated control system.

Process change is not always the driving change force. Flattening the organizational hierarchy is another driver of change. In that case, business processes and technology must be adapted to match organizational changes.

Determine Whether There Is Enough Energy for Change

A key part of the planning process is determining if the energy for change can be mobilized. Testing for organizational readiness is as important as analyzing technical feasibility. The change must be supported by a critical mass of stakeholders.16 Later we describe a method of analyzing stakeholder readiness.

Fundamentally, energy comes from the fact that the change satisfies organizational requirements. Where personal or group requirements are incongruent (or are perceived as incongruent) with the change, the energy for the process is sapped. Energy can be restored by training, communications, finding new role models, and the like. All of these require a commitment of resources.

Reengineering an older process is more complex than developing an initial process. In the 1980s, Mrs. Field’s Cookie Company enjoyed great success with its fine-tuned control process and technology. But when it acquired La Petite Boulangerie, a fast-food chain in a somewhat different line of business, it encountered significant implementation difficulty.17

Most resistance is normal and rational. It can be overcome only if understood. The single largest opportunity for improving the management of IT-enabled change is to understand the sources of resistance and to make project review time explicitly available for developing plans to cope with resistance. There is a vast body of literature describing resistance and its management, and our discussion will necessarily be much more limited.

Beckhard and Harris describe three conditions that will create significant resistance to the change: when people are comfortable with the status quo, when they don’t understand why the change is desirable, and when they have doubts about the company’s ability to achieve the desired change.18

Change managers must work to unfreeze resistance. Only then can people consider new ideas.19 As the change process moves from planning to implementation to institutionalization, new stakeholders enter the process, and effort must be applied to unfreeze them as well. The window of opportunity before change is frozen can be very small, as the organization has a tendency to “satisfice” — to learn just enough to satisfy the immediate problem and no more.20 The pressure of work schedules and the lack of slack time closes in and cuts off potential change.

Walton points out the importance of first- and second-order effects of technological change.21 A first-order effect, such as a change in staffing level, leads to second-order effects, such as increases or decreases in job security. These second-order effects can create resistance or positive reinforcement for change.

Analyze the Size of the Change Effort and the Scale of the Change

Will the change be played on a children’s playground or in an Olympic stadium? Olympic-class change requires great commitment, energy, and resources, and maybe even outside coaches. One way to look at the size of the effort is whether the change represents a paradigm shift or an incremental change. Implementing a just-in-time manufacturing process represents a paradigm shift, whereas adding a new computer-controlled machine tool into an assembly line operation represents incremental change. Clearly, the benefits and the energy required for a paradigm change are substantially higher than for incremental change.

Incremental change can provide large cumulative benefits, as Japanese companies have demonstrated, but at some point the process no longer fits, and incremental change can give only marginal benefits at best. A new or transformed process is required, which can then be improved incrementally.

To lower the risk of large change efforts, a company can pursue paradigmatic change in several steps. Sometimes this is the only practical way to make the change. However, some experts suggest that only wholesale paradigm change will succeed, as the culture will otherwise smother the change effort.22

Another indicator of the change’s scope is the level of task and organizational integration required. For instance, providing one financial analyst with one workstation is simpler than providing workstations for a group to support a common process, which is simpler than implementing a core process throughout the organization. Figure 7 illustrates the relationship between level of task integration and risks and benefits. Similarly, when the reach of the change process spreads across organizational, cultural, and geographic boundaries, change management becomes increasingly difficult.

The same kind of curve applies to the relationship between organizational adaptation and the IT’s functionality (the number and range of functions it has).23 The greater the functionality of an IT system, the more levels of learning and adjustment are required to use it. An IT with great functionality may require changes in operator skills, organizational procedures and structures, and cultural fabrics. For instance, an order processing system, in which operators enter customer orders, requires less organizational adaptation than the systems that travel agents use to negotiate multiple airline fare options.

Walton points out that the three fundamental strategies of the organization must be congruent: business, organization, and technology.24 When they are not congruent, the organization must apply management commitment and energy to assure congruence.

Analyze and Manage Stakeholder Commitment

The change effort must have provisions for analyzing the current state of stakeholder commitment and for devoting time periodically to reconsidering that commitment. We suggest the following method of stakeholder analysis, which is illustrated in Figure 8 using the example of Ford’s change in its accounts payable function.

• Step 1. Identify a vision or objective.
• Step 2. Describe a number of future states in terms of goals understandable by the stakeholder group.
• Step 3. Break the goals down into the process, technology, and organization and culture steps necessary to balance the organizational equilibrium.
• Step 4. Identify the stakeholder groups whose commitment is necessary to achieve each goal.
• Step 5. For each type of stakeholder, describe the needed changes, perceived benefits, and expected kinds of resistance.
• Step 6. Analyze the effort required to gain the necessary commitment from the stakeholder group.25 Are the stakeholders capable of making the commitment? For example, do they have the training or skills necessary, or are they in a position to provide funding? Are they ready to make the commitment? What is their general attitude now and where does it need to be?
• Step 7. Develop action plans for those stakeholder groups that are not committed enough.

The completed stakeholder analysis provides useful data for a number of key analyses: (1) determining whether the organization can develop the commitment necessary for change; (2) identifying each critical change component and the key stakeholder groups involved; (3) assessing potential resistance and developing plans to overcome it; and (4) developing a change strategy that phases in the various elements in order to best restore equilibrium.

Figure 9 illustrates the stakeholder analysis for establishing a distributed network throughout the Vista School. There are a number of stakeholders. The school district’s financial office controls the procurement process. It has established procedures that are not set up for technology categories and that do not allow for quick project turnaround. The facilities people have no experience in this kind of activity and no budget for it —and a large backlog of projects they know how to do. The people in charge of telecommunications have little experience with data communications and network architectures. They are in competition with the instructional technologies group for control of local area network standards. Meanwhile, there is no agreement on who, among the hardware and software vendors and their contractors, is responsible for diagnosing and correcting network failures. The school personnel are motivated to use the network, but no one has the experience and training to take on the responsibility of managing the network and applications software and working with teachers. The analysis implies that unless there is a way to coordinate and control the large numbers of unmotivated and untrained stakeholders, there will be difficulty in installing and managing the network.

Complex Change Requires a Champion — Know What One Does

It has long been recognized by practitioners and academics that it is highly risky to attempt complex change without a champion. But because the champion role is poorly understood, it is difficult to know whether the champion is really a champion or simply someone who says he or she will support the project. A champion plays many roles. Not all of them are needed in all projects, but a surprising number are. The roles are as follows:

• provide funding and other key resources;
• provide advocacy for funding and other key resources in the organization’s resource commitment processes;
• influence critical stakeholder groups through direct accountability, acquired power, or perceived authority by (1) convening and participating in senior management and key stakeholder reviews of the project at critical junctures; (2) bringing problematic stakeholders into constructive project discussions; (3) doing “hallway” work with other peers and critical stakeholders on the project’s value; and (4) spending time with the project group to tell them why their work is important; and
• provide coaching and counseling on stakeholder and resource issues as needed.

Thus a project may need more than one champion, such as one who will fight for funding and one who will bring the stakeholders from multiple organizations together. Project groups often mistakenly believe the champion is doing them a favor. In reality, if they cannot find a champion, they must question whether the project is not doomed to failure in the first place. Ultimately, until the champion is asked to do some of the things listed above, it will not be known if he or she really exists.

Prototype Organizational Response

Organizations and human beings are more complex than our best attempts at rational analysis. Thus change managers should use some of the available modeling techniques to test any analysis derived from this framework. System modeling, process modeling, and organizational prototyping can uncover hidden sources of resistance to change.

Simulating system performance is an early and important step on the way to large process investment. Analysis of the nonobvious feedback loops of large systems, including behavioral and policy implications, can prove valuable.26

Process modeling analyzes the flows of information and decision actions required by a process. A number of tools are being developed to assist in process modeling, such as Decmodel^R. These tools should prove valuable for process design teams to better understand the trade-offs they make.

Organizational prototyping is an important way to ensure that the adaptations required for change are well understood. They are not designed to test the technical capability of the system but rather to test the organization’s response to the process and technology being introduced. Because expert systems introduce a high level of change, there are a number of case studies describing the effective use of organizational prototyping in their implementation.27 The object of organizational prototyping is to learn from the organization; it should not be considered part of full implementation but a developmental and learning effort.

Build Change Reviews into Management Process

It is easy to become distracted by technology or process issues and ignore the broader change issues. Thus an organization making a large IT-enabled change must periodically review the whole process. Sometimes these reviews take the form of stakeholder analysis. Such reviews should be linked to the organization’s more traditional project review processes.

The people involved in the change process can be trained to be good observers and to identify where resistance needs to be overcome and what actions are sensible. They know more than they think they know about what is happening, and, given a vocabulary, they can express it and analyze its ramifications.

Conclusion

Organizations must recognize that managing the change enabled by IT is at least as important as bringing IT to the organization. Otherwise, IT will not provide the productivity gains expected. To accomplish such management, people must be trained in a change process that takes into account the unique challenges presented by IT. Of course, introducing explicit management of IT-enabled change into the organization will be difficult. The principles described in this paper can provide the common vocabulary for that training.