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The Unintended Consequences of Implementing Information Technology. Michael Sallada May 15, 2012
Information Technology Three Observations: • Information Technology is ubiquitous in the environment today • IT is implemented to improve organizational performance in some dimension • Expected organizational improvement is often not realized
Research Purpose It is my observation that the hoped-for performance improvement is frequently not achieved, or it is accompanied with other unanticipated effects. The purpose of this research is to search for an answer to the fundamental question; “Why does this happen?”
Literature Review • Organizations • Organizational Routines • System Dynamics • Communication/Coordination • Goals and Performance Measures • Information Technology
Beer Distribution Game • Game Play • Research platform • Information Sharing • Game Modifications
Experimental Results Summary • When preparing for this research it was assumed that the implementation of information technology would improve the performance of the teams. • Five hypotheses were designed to test this assumption.
Experimental Design • Hypothesis 1 – the performance of the teams will improve with the implementation of information technology • Hypothesis 2 – Implementation of IT will reduce the bullwhip effect • Hypothesis 3 – subjects will no longer under weigh the supply line with the implementation of information technology • Hypothesis 4 – The estimated parameters of my trials without IT will be comparable to Sterman’s parameter estimations. • Hypothesis 5 – The estimated parameters of my trials with IT will not be comparable to Sterman’sestimation.
Experimental Results Summary • The first hypothesis is that teams with IT would perform better was rejected. Teams that implemented information technology did not perform any better. • The second hypothesis, implementing information technology would reduce the bullwhip effect was accepted.
Experimental Results Summary • The third hypothesis that teams with information technology would not under-weigh the supply line, was rejected. • The fourth hypothesis essentially compared teams today with the trials done in the 1980s. It was accepted that my control group trials were similar to the trials from the 1980s. • I rejected the fifth hypothesis that said that my test group trials would not be similar to the earlier trials
Experimental Results Summary • The results of the experiment did little to shed light on the subject. Although there was some reduction in the bullwhip effect, there was no evidence of the clear performance improvement that had been expected.
Experimental Results Summary • Despite the survey results, it appeared that players continued to use the same ordering heuristics immediately after the implementation of information technology as they had used prior to the implementation.
Ah-ha ! • The moment of discovery came when I understood that the change in the structure of the game was not accompanied by any attempt to align the behavior of the players with the new structure.
Back to the Literature • Alignment of behavior and structure • Integration of IT • Technically • Organizationally • IT as an Organizational Change Agent • Systems Dynamics • TechnoChange • Project Management
Misalignment is a Critical Factor • The relationship between the inert structure of the organization and the human elements, • The alignment of the organizational structures with mental models, which breathes life into the organization. • When the mental models are not aligned with the organizational structure there is a risk of failure in the implementation of information technology.
Conclusion • One of the underlying causes of the unanticipated effects of implementing information technology is the misalignment between the mental models of the people in the organization and the structure of the organization. • Implementation of new information technology alters the fundamental structure of the organization. • The performance of the organization is the result of the behavior of the people in the system acting within the structure of the system, changing the structure of the system will change the performance of the organization.