Table Of ContentINFORMATION,ORGANIZATION
ANDINFORMATIONSYSTEMSDESIGN
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A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-1-4613-6990-5 ISBN 978-1-4615-4421-0 (eBook)
DOI 10.1007/978-1-4615-4421-0
Printed on acid-free paper
AII Rights Reserved
© 2000 Springer Science+Business Media Dordrecht
OriginaIly published by Kluwer Academic Publishers in 2000
Softcover reprint ofthe hardcover Ist edition 2000
No part of the material protected by this copyright notice may be reproduced or
utilized in any fonn or by any means, electronic or mechanical,
including photocopying, recording or by any infonnation storage and
retrieval system, without written pennission from the copyright owner.
PREFACE
When dealing with information problems, we are confronted with organizational
aspectsin three ways.
Firstly,informationproblemscanoftenbesolvedmoreefficientlyandeffectively
by organizational redesign, especially one which is based on the sociotechnical
approach, thanby the useofICTapplications.
Secondly,iforganizationsstillpreferICTsolutions,theyhavetobeawarethatthey
arefreezingtheexistinginformation/communicationstructure,includingitsshortcom
ings,foranumberofyears,sinceitisapartoftheoverallstructure.Beforewedesign
new information systems it is therefore of the utmost importance to examine the
organization's information and communication structure carefully, and to improve
them wherenecessary.
Thirdly,newinformationsystemsoftenchangethewaypeopleworktogether.As
aresult, thosesystemsarenotneutralfrom theorganizationalpointofview buthave
an impactwhichis sometimesfar-reaching.
Becauseofthesereasonsitmaybedisastroustoneglecttheorganizationalaspects
of information systems, and failure to take them into account is one of the main
explanations for the shortfall of ICT applications which is reported by so many
students. As a matter offact, it is not the technology but rather its organizational
embedmentwhichiscrucialforreapingthefruitsofanytechnologyingeneralandof
ICTinparticular.
This bookfocuses ontheorganizationalaspectsofICT, particularlywith respect
tothefirstpointmentionedabove.Inadditiontothis,otherrelevanttopicswillbedis
cussed,suchasthedesign(process)ofinformationsystems,theirprojectmanagement,
andasophisticatedeconomicevaluationprocedurewhichensuresthatwell-considered
decisionsare taken. In fact, thebookoffers acomprehensiveframework forcoping
with the major factors that are responsible for the shortfall ofinformation systems
whichis identifiedin thefirstchapter.
The bookalsocontains adescriptionofthe mostimportantinformationsystems
forcontrollingorganizations.Thefinalchapterisdevotedtoanevaluationprocedure
for projects in the field of ICT. This evaluation procedure goes beyond popular
techniqueslikebusinessscorecards,becausethelatterhaveanumberofshortcomings
that are related to the changing characterofsuch projects. Unfortunately, business
scorecards,althoughintendedformeasuringbothquantitativeandqualitativeeffects,
areunabletotreatallofthelatteradequately.
vi Preface
Ofcourse,therealizationofthisbookwasonlypossiblethankstothesupportofmy
dearandlovingfamily(Els,NynkeandSybrand)andofmycolleagueProf.Grahame
Lock,whowassokindtoreadthetextverycloselyandcritically.Ialsowanttothank
FilipVanDijkandDr. HamleMeihuizenforafinal checkofsomechapters.
Nijmegen, spring2000
CONTENTS
I Whydoinformationsystemsfail 1
1. Introduction 1
2. Failurefactors ofinfonnationprojects 3
3. Possiblesolutionsto neutralizefailure factors 7
4. Planofthebook II
II Concepts 13
1. Introduction 13
2. Systems 13
3. Control,policy anddecision making 22
4. Somemoreconcepts 34
III Theidentityofmanagementinformationsystems 51
1. Introduction 51
2. Theidentityofmanagementinfonnationsystemsasascientific
discipline 52
3. A(more)fundamental approachtoinfonnationproblems 55
4. Measurestoreduceinternal flows ofinfonnation 56
5. Measures toreduceexternal flows ofinfonnation 64
IV Thesociotechnicalapproachoforganizations 67
1. Introduction 67
2. Thesociotechnical structureoforganizations: designprinciples 68
3. Paving the way tothesociotechnicalorganization: theimplementation 72
4. Thesociotechnicalorganization; itsexploitation 75
5. Thesociotechnical structure; auniversal principle? 78
6. Theprincipleofdialogicalcontrol 83
V Information policy 85
1. Introduction 85
2. Thelevelsofinfonnationpolicy 88
3. Nolan'sstagemodel 91
4. Taskandpositionoftheinfonnationcentre 95
5. OutsourcingofICT 99
VI Projectmanagement lOS
1. Introduction 105
2. Organizinginfonnationprojects 106
3. Theorganizationstructureofinfonnationprojects 108
4. SystemsDevelopmentMethodology III
viii Contents
VII Designandmanagementmethods 115
1. Introduction 115
2. Infonnationprojectsandprojectrisks 120
3. Generaldesignmethods 124
4. Infonnationmanagementandflexibility 133
5. Specificdesignmethods 136
VIII Powerand thecontrolofconflictsdueto informationsystems
andlCT 139
1. Introduction 139
2. Changesin thepowerstructureoforganizationsdue to new
infonnationsystemsbasedonICT 142
3. Thecontrolofconflicts 144
IX Informationsystemsfor thecontroloforganizations;
categorizationandapplication 149
1. Introduction 149
2. Executiveinfonnationsystemsandstrategicinfonnationsystems 153
3. Databasesystemsanddocumentinfonnationsystems 156
4. Ideaprocessingsystems 158
5. Groupinfonnationsystems 161
6. Decisionsupportsystems 166
7. Knowledge-basedsystemsandartificial intelligence 170
8. Structureddecisionsystemsandelectronicdatainterchange 173
9. Transactionprocessingsystems 176
10. Businessprocessredesign 180
11. Telework 190
12. The relationshipbetweeninfonnationsystems andthedecision
makingprocess 194
X The(economic)evaluationofinvestmentsininformationsystems
and inICT 197
1. Introduction 197
2. Traditional capital budgetingtechniques 199
3. Quantitativeandqualitativefactors andtheevaluationofinfonnation
projects 201
4. Aproceduretohandletherisksofinfonnationprojects 206
5. Theevaluationofinfonnationprojects 207
6. AdecisionprocedureforICTprojects 213
7. Themutualcomparisonbetweenprojectsandthefinal decision
onceagain 221
References 223
Index 227
I
WHY DO INFORMATION
SYSTEMS FAIL
1. Introduction
In the lasttwenty-fiveyearsagreatdealofmoney has beenspenton investmentsin
Informationandcommunicationtechnology(lCT);especiallyin theservicesbranch
(in this book we explicitly speak of information and communication technology,
instead ofinformation technology only, becausethe communication componentof
information systems becomes more and more important; actually, information and
communicationaretwosidesofthesamecoin). Forinstance,intheUnitedStatesof
America this branch is responsible for 80% oftotal investments in ICT. And in the
Netherlands(theauthor'snativecountry)ICTshowedagrowthrateof8.4%in 1995.
However, thepositivevaluecreatedbyinvestmentsinICThasbeenunderattack
forsometime. Thisisbecauseofthemoderategrowthoflabourproductivityduring
thelasttwenty years. Sincethesixties, labourproductivity in theservicessectorhas
even slowed down to zero (Roach, 1991). As Solow says: 'Computers are found
everywhereinsociety exceptin theproductivity statistics'.
Apparently, in spiteofthe- information/communication - technologies thatare
appliedintheservicesbranchweareunabletoreducethenumberofpeoplenecessary
to generate a given level of output. This phenomenon is called the 'productivity
paradox' or 'informationparadox'; although some authors claim that, especially in
Europe, thesituationischangingforthebetter(Cabelo, 1996;Thorp, 1998).
InadditiontothelimitedimpactICThashaduntilnow,somepeoplethinkthatthe
productivityparadoxisalsocausedbythedifficultiesinvolvedinmeasuringproductiv
ity in theservicesbranch (Bjyrnjolfsson, 1993).
Moreover,itislegitimatetoquestionthevalidityofpartialrelations,suchasthe
relation between technology and productivity, on a macro economic level. For in
stance,insomebranchesintheUnitedStates,suchaswarehousing,labourproductivity
rosein the lastten years, whereas inothers, such as healthcare, labourproductivity
wasfalling in thesameperiod.
Inspiteofthislastmodificationoftherelevanceoftheproductivityparadox,itis
quiteclearthatICT, inconnectionwithacomplexofotherfactors, onthewholehas
nothadthepositiveeffects societyhopedfororexpected.
Whenwezoominonthesuccess- orfailure- ofindividualinformationprojectsthis
conclusion shouldnotsurpriseus. Afterall, withsomeregularityarticlesarewritten
withlabelssuchas 'Informationprojectskeep failing' (Pruijm, 1995).
B. Prakken, Information, Organization and Information Systems Design
© Springer Science+Business Media Dordrecht 2000
2 Whydoinformationsystemsfail
Several students have reported lately on the success and failure ofinfonnation
projects.Forinstance,afieldresearchprojectinTheNetherlandsshowedthefollowing
results(RiesewijkandWannerdam, 1988):
- 51% succeeded,
- 44% wereproblematic,
- 5% failed.
Forsure,thesedataare not very hopeful.
ResearchoutcomesintheUnitedStatesregardingtheapplicationofsoftwareatsome
ministries wereevendisastrous(DeSnoo, 1990):
- 47% was implementedbutneverused,
- 28% was neverimplemented,
- 20.6% was usedfor sometime,
- 3% was usefulafteradaptation,
- 1.4% was useful from thebeginning.
Fromanotherpointofview, i.e. thecostsofinfonnationprojects, wecanalsocome
to the conclusion that 'something' is really wrong. For example, research by the
AutomationGuideshowedthefollowing costcategorization:
- 67% maintenancecosts,
- 15% testingcosts,
- 8%costsofanalysisanddesign,
- 8%costsofidentifyingofuserneeds.
Theseresultsmeanthatmorethantwo-thirdsofprojectcostsaregeneratedafterimple
mentation, and areoften notforeseen beforetheprojectisstarted.
Furtherspecificationofmaintenancecosts identified:
- 43% costsofadapting to- changed- userneeds,
- 21% costsofcorrectingmistakes,
- 6%costsofadapting tonew hardware,
- 6%costsofadaptingdocumentation,
- 4% costsofimprovingefficiency,
- 3%othercosts.
The only conclusion that can be drawn from these data is that the identification of
- future - infonnationneedsisagreatproblemwhentraditionaldesignmethodsare
used.
Naumann andJenkins cameto similar, though slightly morefavourable, numerical
conclusions(NaumannandJenkins, 1987):
- 40%developmentcosts,
- 15%costsbecauseofdelayed use,
- 45%exploitationcosts.
Obviously,thisresearchalsoidentifiedthedisappointmentoftheusers,whichresulted
in (additional) exploitation costs, as a major reason for the failure of infonnation
projects.
Information. organizationandinformationsystemsdesign 3
Finally,Jenkins,NaumannandWetherbereportedthatthecostsofinformationprojects
in thecasestheystudiedwere66% higherthanplanned,thatthelead time was22%
longerandthattheprojectspecificationsof65%wereinsufficient(Jenkins,Naumann
andWetherbe, 1984).
Theresearchmentionedsofardatesfromapproximatelyfivetofifteenyearsago.More
recentdatarevealsonlyverymodestimprovements.Forinstance,yearly researchof
theStandishGroupInternational,basedontheFortune500list,showedthefollowing
results(ProjectLeadershipConference,Paris, 1998):
- 26% of the projects would be delivered without delay and without exceeding
budgetlimits,
- almost50%oftheprojectstookmoretimeandmoney,
- 28% oftheprojects would neverbeimplemented.
Comparedwithdatafrom thepastthereissomeimprovementon accountof:
- betterprojectmanagement,
- increaseduse ofstandardcomponentsand
- smallerprojects.
Itisespeciallythethirdfactorwhichisimportantfortherequirementswithreagrdto
timeandmoney.50%ofprojectscheaperthan$750,000donotexceedbudgetlimits
andwillbedeliveredintime. Forprojectsbetween$ 1,500,000and$3,000,000this
percentageis25.Ifprojectscostmorethan$10,000,000,thenumberthatissuccessful
in realizingplannedtimeand money iszero.
So, there is still sufficientroom for further improvement.
The research outcomesmentionedsofarmakeus verycuriousaboutthereasonsfor
these modest results. However, it is mostly a waste ofeffort to look in the same
publicationsforexplanationswhysomanyinformationprojectsfailbecauseresearch
ersoftenpresenttheirdatawithouttellingusforwhatreasonstheirresultsweresovery
disappointing,orthey only givespecificexplanations- suchaslackofuserinvolve
mentduring the design processofinformation systems- meanwhile ignoringother
factors whichareperhapsevenmore important.
Inthisbookwewillthereforetrytoclosethisgapbetweentheoryandempiricalresults
by developing a more complex theoretical framework for explaining the limited
successofinformationsystems.
Inthenextsectionwestartouranalysiswithathoroughidentificationofthefactors
we hold responsiblefor the failure ofinformation systems. In section 3 wediscuss
possiblesolutions.Finally,insection4wetakealookatthedifferentsubjectsthatwill
bediscussedin thechaptersafterthat.
2. Failurefactorsofinformation projects
Whenwearetalkingaboutthefailureofinformationprojectswemustwonderwhich
failurefactors,alsocalled'criticalsuccessfactors',areresponsible.Inouropinionthe
