Getting Value from IT: The Human Connection
This paper was presented at the UK Computer Management Group annual conference in Brighton, May 1992.
Many organisations are failing to achieve the benefits they expected from their investment in IT. The overwhelming evidence is that lack of attention to human and organisational factors (HOF) is at the heart of this problem. This paper describes several contrasting situations within Digital where a human oriented approach has unleashed the benefits that IT has made possible. The paper concludes with the lessons learnt and the implications for IS management.
The contribution of IT to an organisation's performance is under scrutiny as never before. On one hand IT is critical to the continuing operations of most organisations; on the other hand barely a week goes by without some piece of bad press or a pessimistic consultant's survey. Typical of the headlines are:
- "Over 30% of systems projects fail to meet expectations"
- "Only 27% of U.K. top management is satisfied with the contribution from IT investment (compared 52% on Germany and 58% in Italy)"
- "Only 11% of organisations are successful with their IT"
In spite of this, we can all point to situations where IT has achieved significant business benefits. Why do some investments succeed and others fail? Common explanations include lack of clarity in business strategy, coping with changing user needs and trying to adapt quickly to a turbulent business environment (internal as much as external!).
However, there is now clear evidence that lack of attention to human and organisational factors (HOF) is the most common cause. Thus A.T. Kearney in their 'Barriers-2' report cites: "human and organisational issues, not technology, are the main barriers to success in IT" (1).
This position is supported by other research. The MIT/Sloan School 'Management in the 1990s' (MITN) 5-year programme, co-sponsored by 12 major organisations including Digital, is currently the most in depth study into the business implications of information technology. A strong human and organisational theme runs through its main conclusions (2) among which are:
- IT is fundamentally changing ways in which work is done, especially information based work and 'knowledge work';
- Successful application of IT will require changes in management and organisation structures;
- Organisational transformations will be necessary to prosper in the globally competitive environment of the 1990s.
This research was paralleled by some more specific action learning within different parts of Digital. One programme - the 'People for the 90s' - investigated the issues that would be critical to Digital UK and its customers in the challenging 1990s. This work was carried out by a cross-functional core team of marketing, IT and human resource professionals together with academic researchers and Digital line managers. Again, the findings showed the crucial effect of introducing, as early as possible, HOF considerations into activities that would normally be regarded as concerned solely with IT and business.
The evolving nature of IT suggests why this will be increasingly important.
2. Evolution of IT
One strand of IT was historically called 'computing' or 'data processing' because of its computation emphasis. Automating repetitive processes was its primary domain.
Over time many 'islands of automation' were created and we all looked towards communication to help with the integration problem. The communication attributes of computers also attracted new users through the provision of electronic mail.
Accompanying the proliferation of terminals and PCs, users started to look more closely at information access and manipulation, for example for decision making.
Another function of IT is now emerging quite strongly, that of supporting cognition, where knowledge workers develop ideas and share conceptual models.
Thus, IT today is multi-faceted and pervasive. Its functions now relate much more closely to human processes. It straddles organisational boundaries with impunity; it affects almost every person in some aspect of their daily work; like the telephone beforehand, it influences an organisation's social processes. Therefore, unless we restrict our perspective to computers as machines and people as machine minders, then there is a clear need to think of IT and HOF as cooperating subsystems within a larger system.
The cases below (sections 3-6) have been selected to show the human connection with all the IT functions noted above. The emphasis of each successive case moves progressively from computation to cognition. They cover factory, office and home. The lessons we have learnt are pulled together in section 7, and the implications for IS management in section 8.
3. High Performance Work Groups - The Factory
There is a set of noteworthy statistics that came out of the MIT International Vehicle Research Programme (2). It shows productivity and quality measures for several US car assembly plants. Here is an extract:
Although the first two sets of data are comparable, the situations are not. GM, Mass was a traditional US car plant, while GM, Michigan had received a $600m investment in technology. The plant with best performance, NUMMI (a GM-Toyota joint venture) was less automated than Michigan. The significant differences between these cases what not the technology, but the fundamentally different approach to manufacturing systems taken by NUMMI with its heavy emphasis on human and organisational factors.
3.1 Digital, Ayr
Digital also has introduced a human oriented approach in many of its manufacturing plants, and has gained impressive benefits. An illustrative example is provided by the Digital manufacturing plant at Ayr.
In the mid-1980s the Ayr plant was faced with the need to 'meet or beat the Far East' for manufacturing performance, or face business decline. Having received approval to build a new product a small group set out to create a better way of organising work. Their focal point was the work team - its tasks, responsibilities and the expectations of its stakeholders. Each team took on full 'back-to-end' responsibilities (rather than just a few specialist operations) for a complete part of the end product. The team - not management - scheduled work, resolved problems, trained one another, reviewed each other, and hired new members.
They made extensive use of IT (including MRP) for manufacturing operations as well as e-mail for communication. Interestingly they evolved a mixed manual assembly-automation work cell rather than a fully automated process. The principles they used were those of high performance work systems (3).
Using this approach typically gives the following levels of improvement:
- outputs produced in half the time
- using one third the number of people
- in a quarter of the space.
In addition there is increased flexibility - coping with volume changes, covering for absences etc.
4. High Performance Work Groups - The Office
More recently similar principles have been applied to administrative work in offices, an area where during the 1980s productivity improvements have mostly lagged those in manufacturing. Many organisations are today redesigning their business processes. This next example also shows how a human oriented approach has enhanced the value of our IT investment.
4.1 HPA at Digital, Warrington
Historically Digital's customer administration group had been organised along functional lines. Altogether eight different computer systems were used in the order to delivery cycle. This fragmentation caused unwanted delays and resulted in low perceived customer satisfaction. With increasing volumes and product variety, it always seemed that our administrative IT systems lagged behind business needs. Clearly a radical rethink of the total IT-organisational system was needed.
A pilot project was initiated at our Northern Region office in Warrington. Traditional work flow analysis suggested ways of improving productivity by cutting out unnecessary work and removing the functional barriers. Based our experience at Ayr, and applying other techniques from behavioural science, an approach we call high performance administration (HPA) was evolved. Over several months, this facilitated process:
- clarified the business purpose to "turning orders into payable invoices";
- empowered the administrators with 'cradle to grave' responsibility for an order;
- focussed on work: which was core, which was non-core;
- investigated culture and beliefs;
- designed the organisational 'system'
At this point the legacy of existing systems became the main stumbling block. Local IS support proposed a traditional IT solution, but the time to design and implement would be too lengthy. In the event, some internally developed software, affectionately known as 'Jabberwocky', came to the rescue. It provided a common user interface and a way of integrating the information flows between the different systems. Only four specific systems changes, taking person-weeks rather than person-years were required.
The close cooperation between end-users, IT experts and human resource facilitators resulted in a ready adoption of new work systems with significant measurable improvements:
- 40% reduction in administrative staff
- One third the number of managers
- Doubled throughput
- Cost and space savings.
There were also quality improvements, a better working atmosphere, but most important - increased customer satisfaction.
5. Flexible Work Practices
Whereas the previous examples involve relatively structured work systems, more and more of people's time is spent doing less routine work that uses IT more for communication and information access. Digital's corporate network provides an excellent infrastructure for these through facilities such as electronic mail and videotex (VTX). The notion of 'any information', 'any time', 'any place' becomes more of a reality every day. This leads naturally into the fundamental question: 'what is an office? or even: 'why an office?'.
For many years a growing number of Digital people have been accessing the network from their homes, other Digital locations and customer sites. As a result office space allocated to individuals in many building was heavily underutilised. This led to a detailed investigation into flexible work practices including telework, remote management and flexible offices. Several pilot experiments were carried out with groups of varying sizes.
5.1 Pilot Group - Sales Training
One pilot group was Sales Training. Trainers were frequently out of the office. They were typically relocated from different parts of the UK to Reading, with the consequent costs and domestic disruption. Flexible working was seen as a means of giving greater individual and organisational efficiency. Employees were invited to identify their concerns and agree actions to address them. The ultimate outcome was:
- the establishment of many of the group as remote workers in regional offices
- the manager of the group teleworking from home
- a smaller more flexible office
with these attendant benefits:
- significant savings in relocation costs
- savings of 40% in space costs
- improved team-work
- better employee QWL
- better office environment.
5.2 A Flexible Building
This experience has given us confidence in scaling up to much more sizeable projects. When Digital's Crescent office in Basingstoke burnt down in March 1990, it was a traumatic experience for all those involved. Luckily no one was hurt. The resilience of our computer network meant that all business systems were back up to full steam within 36 hours. Equally remarkable, though, was the fact that the 470 employees affected had found new places to work within days and with apparent little strain on facilities. Our established culture undoubtedly helped, but so did the technology. Senders of e-mail to the displaced employees were often unaware of the physical location of the recipient as automatic rerouting through the network took place.
After the ashes had settled, we started to discuss what we had learned. One lesson was that perhaps we did not need that office space after all. Thus a senior management decision was taken to rebuild the Crescent adopting flexible work practices throughout, enabling it to act as the base for many more people (over 650).
Again the key feature of implementation are the processes by which people design and plan their own work. IT has created more choice and flexibility. Many people have become teleworkers, and others have become 'location independent' or nomadic, treating the office purely as a 'service centre'.
New developments in computer-integrated telephony link PABX facilities to the ALL-IN-1 office system. The process of logging into terminals automatically transfers phone calls to that desk. Calls can also be rerouted to mobile phones and home through menu selection within the ALL-IN-1 system. Mobile PCs users can up-load and down-load electronic mail messages into their portables for off-line processing.
5.3 The Benefits
The full benefits of this large scale integration of technology and organisational systems have yet to be fully assessed. As a minimum we expect:
- significant savings in office costs
- improved communications
- work patterns more suited to lifestyle needs
6. Knowledge Networking
As well as using computers for information access and communications there is a growing need to provide better technology support for skilled 'knowledge workers'. For them it is important to be able to dialogue with colleagues and synthesise knowledge from a wide range of information sources, including other people's heads. This gives rise to the practice of knowledge networking.
6.1 Computer Conferencing
Computer conferencing using VAX Notes on Digital's world-wide network, has done the most to make knowledge networking a reality. Over half of Digital's employees regularly use VAX Notes for applications as varied as:
- problem solving
- product planning
- developing business/marketing plans
- decision making
- project management support
- holding meetings
- collaborative authoring
- management training.
An important attribute is that it allows people to work collaboratively irrespective of time and distance constraints. Hundreds of people can pool expertise efficiently towards a common task, such as making a sales bid. With due attention to HOF, it becomes even more powerful.
6.2 New Product Development
One knowledge networking application that combines the use of IT with an OD (organisational development) approach is exemplified by the development of one of Digital's high technology disk drives - the RA90. The challenge was to develop a 'world class' product using state-of-the-art technology, with brand new manufacturing processes in record time - about 4 challenges in one!
Conventional development processes would have taken too long. A concurrent engineering approach was therefore adopted, but with several variations. First, a core team of engineering, manufacturing, customer services and product management people were formed. Then development teams were selected. There were teams in 7 locations over 3 continents - from Arizona to Munich. Everybody had to work well together as if they were in the same place.
Very early in the development cycle team leaders were brought together for an extended period of team building and 'socialisation' in the US. Multi-functional task forces became a way of life. The full range of IT networking facilities was brought into play - electronic mail, computer, voice and video conferencing. Design changes were transmitted electronically around the world frequently.
The combination of computer network, face-to-face and OD processes gave a sense of common purpose and shared ownership. The net result of this team-work was:
- time from prototype to full production halved
- 45% fewer people
- 50% improvement in reliability
- 50% less manufacturing space
on top of which the RA90 is an award-winning product and a sales success.
7. Blending of HOF-IT: The Lessons
Significantly different though these applications of IT are, there are some common lessons that emerge:
- the benefits an OD approach, even for a project seemingly IT specific, such as business process re-engineering;
- the focus on work and worker involvement and empowerment: allowing work groups to organise their workflows and use of technology;
- the widening options that IT offers for a radical rethink of work and the workplace;
- the benefits of a systemic or holistic approach using people with business, IT and HR skills.
Indeed the systemic approach has become our watchword, exemplified by the overlapping domains depicted as circles (HOF - IT - Business).
7.1 Gaps - Thinking and Culture
Although deceptively simple, applying this model in practice is not easy. Our research has shown that the problems with many IT systems that were not delivering the expected benefits could be traced back to a failure to 'think the links' between these three domains. Even when consciously considered, the desired convergence or 'alignment' is not achieved without considerable difficulties.
Part of the cause is that the backgrounds, attitudes and approaches of business, IT and HR people are significantly different. Thus many business people rely heavily on intuition, IT specialists like logical analysis, HR people usually have a strong behavioural perspective. Managers and workers may also have different views on how work should be carried out. Such differences mean that each person has to go through a mutual learning process with their fellow sufferers before the benefits of applying their diverse skills to business problems come to fruition. In other words, the more practical and detailed the ways in which business and IT knowledge is transferred across organisational boundaries, the more likely is success.
7.2 Current Development Methods
Another cause is the current overreliance on structured systems development methods that take little or no cognisance of HOF. Thus our DTI sponsored research project 'SOFTCASE' into systems development methods has highlighted some issues in current development practice (4):
- gaps of understanding between IT-line managers, users-analysts;
- the strong and yet often underestimated influence of organisation culture, policies and reward systems on the outcome of systems;
- introduction of many systems without a full appreciation of the ramifications on organisational structures, worker attitudes and motivation. For example, much is known about what makes a 'good' job, but few systems designers know of the principles or how to apply them in practice;
- designing systems to automate everything, whereas allowing users to handle 'exceptions;' is often more cost-effective;
- user involvement, even when explicit, often covers only the 'task' aspects of the job and not the social ones.
8. Implications for IS Management
Making the human connection will require some significant changes in the education, training, processes and methods of the IS function. There also will need to be changes in attitudes and perspectives about systems and their users.
Some things to consider are:
- rethinking system boundaries in the light of distributed data-bases and object orientation;
- the emergence of an R&D philosophy (rather than an engineering one) to systems development, where the final system emerges as a result of a joint voyage of discovery by the analysts and the users;
- moving from a linear life cycle to a cyclical or spiral one;
- a greater use of live prototyping
- the development of hybrid managers at all levels of the organisation to bridge the user-IT knowledge gap;
- introducing more HOF based and socio-technical tools;
- having social psychologists on design teams working alongside users and IS specialists;
- using OD approaches for team-development and in development projects.
At a more personal level, try building up a strong partnership with one of your HR colleagues. Learn what skills you could pool to work on common organisational problems.
8.1 New Measures of Value
There are also other unresolved issues. One is that of measuring and valuing the benefits of IT. Existing measures of performance are usually heavily financially biassed and focus on the narrow perspective of a 'system'.
Many of the benefits we have achieved were not initially planned. Synergy between IT and OD investments gave greater returns than either could have achieved individually. Shifts away from discrete systems and towards those that continually evolve suggest that returns on investment should be perhaps measured more in terms of how the value of the asset base is increasing.
The human connection will become increasingly important as the scope of IT changes and the business environment becomes more dynamic. Several examples have illustrated how the interaction between OD processes, HOF and IT have realised significant business benefits. Achieving this, though, requires hard work to bridge the cultural and philosophical gaps. The difficulties are compounded by traditional systems development methods and ways of evaluating IT investments.
10. Looking Ahead
Digital's new organisation of interdependent networked business units, distributed work-teams and entrepreneurs managing global accounts will test the congruence of IT and the human connection as never before. We are embarking on a voyage of continuous organisational learning and discovery, aided and abetted by IT ... but that will be another story.
I would like to acknowledge the contributions of many colleagues in Digital who provided material and details for this paper - Tony Attew, John Gundry, John Horsley, Pat Kennedy, Ramsay Maclaren, Debra Rogers and Philip Scott. Additionally I want to recognise the pioneering attitude of those at the sharp end whose endeavours to make the human connection with IT have made this paper possible.
1. A.T. Kearney Ltd (1991) Breaking the Barriers: IT Effectiveness - A Management Perspective.
2. ed. Scott Morton, M. (1991) The Corporation of the 1990s Oxford University Press.
3. Buchanan, D.A. and McCalman, J. (1989), "High Performance Work Systems: The Digital Experience", Routledge.
4. Clegg, C., Maclaren, R. (1991), "Systems Design Methods - The Human Dimension", Digital.
Last updated: 29th March 2011