The impact of technology on organizational performance

The impact of technology on organizational performance

Yves-C. Gagnon and Jocelyne Dragon

Improvement in productivity is due not only to technology, but also to how it's integrated into the organization.

Repeated economic crises and steadily increasing competition, brought about in particular by the globalization of markets, are forcing an unprecedented rationalization of resources. Improved productivity has thus become a concern of all organizations, both public and private. At the same time, technology is developing with blinding speed and is becoming the principal instrument for meeting this concern.1 This explains why many municipalities are investing large amounts of money in implementing information systems. However, the advantages offered by technologies, especially in terms of enhancing productivity, depend upon how these technologies are integrated into an organization.

Many municipal officials realize that their systems departments do not have the necessary resources to meet the demands made on them. More and more time is required to complete projects and the work piles up.

Yves-C. Gagnon is a full professor at the ?cole nationale d'administration publique. He has a PhD in Management from the ?cole des hautes ?tudes commerciales in Montreal, an MBA in Organizational Information Systems from Laval University and an MSc in Industrial Relations from the University of Montreal. Dr. Gagnon teaches and conducts research in technology management, human resource management and labour relations. He also has some twenty years' experience as a manager with organizations in the public and parapublic sectors.

Moreover, these officials often find that technological, organizational and human resource development processes are not proceeding at the same pace within their organization, which makes them hesitant about adding new systems.2 Is the penetration of technologies really helping to improve the performance of municipalities? To answer this question, the extent to which information systems are incorporated into the culture and operations of municipal governments must be examined.

The concrete action system model developed by Gagnon and Landry and refined by Dragon outlines a strategy for investigating technological changes that affect unionized work places.3 As the authors note, "This road map, here called the concrete action system, tries to identify and characterize the principal actors involved in the activity of implementing systems, and then to establish the relationships among these actors."4

The concept of a concrete action system is based on the fact that an organization is a social system whose dynamics are grounded in the behaviour of groups of actors who develop particular strategies in a set of relationships

Jocelyne Dragon is the assistant director of administration and facilities with the recreation and community development department of the City of Saint-Laurent and is also a member of the management committee for the City's information highway project. She has a Master's degree in Public Administration.

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THE IMPACT OF TECHNOLOGY ON ORGANIZATIONAL PERFORM A N C E

that are subject to the constraints of the environment.5 Organizations contain individuals and groups who differ in their training and functions and have objectives that do not always coincide. Obviously, relationships differ according to context and are not spelled out in a formal structure such as an organization chart.

In such a context, systems development "provides the opportunity and the place for potential conflicts between interests, aspirations and values that involve something other than just technology."6 Figure 1 illustrates the concrete action system, showing the principal actors and how they relate to

each other when organizational information systems are adopted (i.e., the acquisition, successful implementation and use of a technology by an organization).7

The users/decision makers are senior managers who partially or completely control resources and influence the development of information systems.

The users/managers are those who, on behalf of the users/decision makers, supervise the implementation and operation of systems in collaboration with the designers. It is at their level that the collective agreement

FIGURE 1 Concrete action system

Users/Decision makers

Central labour organization

Other collective agreements

Other sites

Users/Managers/ Designers

Users/Managers

Collective agreement

Union representative

Local union

Other systems

Other sites

Designers

Users/ Operators

System

Clients

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THE IMPACT OF TECHNOLOGY ON ORGANIZATIONAL PERFORM A N C E

is negotiated and interpreted, particularly with respect to the clauses concerning technological change.

The users/managers/designers run the systems department and are often the architects of the organization's information technology policies, which are ratified by the users/decision makers. The users/managers/ designers are responsible for the design and technical management of information systems.

The designers are the experts who design systems in collaboration with the users/managers and clients. They are, if not the only ones responsible for making systems operational, at least in charge of the work.

The users/operators produce inputs or receive raw outputs from the systems, which are thought out in terms of the clients. They are indispensable for the day-to-day operation of the systems, but do not have any direct power to change them.

The local union is located at the interface between the users/operators and the users/managers. The aim of the local union is to defend the immediate interests of its members, the users/operators.

The central labour organization is responsible for the overall long-term strategy, which provides a framework for and supports the actions of the local union.

The clients (users/decision makers, users/managers, etc.) are those whom the systems help directly in the performance of their duties.

The process

To study a contemporary pragmatic phenomenon, it is essential to be familiar with the experience of the actors and the context in which that experience takes place. We have selected the case of an anonymous City administration.8

We first analyzed many internal documents of this municipal government. These documents describe the City, the history of its administrative development and its strategic plan, technology strategy, systems department and the information systems it has adopted. Then, using a semistructured scheme, we carried out exhaustive interviews with a random sample of 20 permanent employees who

had at least five years of experience with the municipality and had taken part in implementing information systems. Each category of actor was represented in the sample (two users/decision makers, three users/managers, three users/managers/designers, two designers, two clients, six users/operators and two officials of the local union). The respondents worked at seven different hierarchical levels in seven different municipal departments (administration, finance, human resources, systems, municipal court, engineering and fire prevention). Apart from the designers, none of the respondents had taken courses in information technology as part of his or her basic training; however, some had taken professional development courses within the organization or, in certain cases, outside it.

The City and its technological development

The city whose government we selected had approximately 70,000 inhabitants and was typical, with residential, industrial and commercial functions. Its administrative structure comprised an executive level and twelve departments, which were grouped into three different modules: quality of the environment (industrial and business development, technical planning, engineering and environment); quality of life (recreation and community development, communications, public works and fire prevention); and administration (finance, systems, human resources and purchasing). For 1995, the City's total budget was $150 million, of which 24.7 percent was used to pay salaries and 0.19 percent ($305,600) to acquire information technologies. The budget of the systems department was $1.5 million.

The systems department was the administrative unit responsible for systematizing and computerizing activities for all the municipal departments. In concrete terms, this department developed budgets and investment strategies concerning information technologies for all of the City's administrative units. It also administered the organization's data and was responsible for the development of information systems. Finally, it ensured that users had the required information technology tools, that they knew how to use them properly and that the systems met their needs. All activities of the systems department had to meet the following objectives: improvement of the quality and efficiency of

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THE IMPACT OF TECHNOLOGY ON ORGANIZATIONAL PERFORM A N C E

the services provided internally and externally; increased productivity; reduction of operating costs; and enhancement of the quality of information.

The City's technological development started with the introduction of information systems between 1965 and 1972, and involved automating a large number of manual activities that were already well established (payroll, tax collection, etc.). The information systems were useful for finance and the central computer was then used as an advanced form of accounting machine.

From 1972 to 1984, a number of other departments wanted to take advantage of computer resources and competition ensued as requests for new technology accumulated. Since the design of information systems was expensive and rationalization was therefore necessary, in 1983 management established a master plan for information systems. This plan recognized that managers were wholly responsible for running information systems. In particular, the plan noted: "Managers are the people who, through their day-to-day activities, are capable of managing these information systems; in other words, they see to it that existing systems are maintained in an acceptable operational condition and control the development of new information systems." The plan also emphasized that this responsibility must be exercised through close cooperation between the user departments and the systems department.

The master plan set the objective of diversifying the potential users of information technology, a new direction, since finance was then the principal user. It also emphasized the importance of continuing to invest money to maintain the proper operation of existing information systems and to ensure the development of new systems. Finally, the plan also advocated the creation of an information systems development plan. This three-year plan was to be revised annually when the budget was being prepared. Each department head was to present and defend his or her needs in relation to the resources allocated to information systems. The systems department would then analyze all requests and in collaboration with senior management, adjust the plan accordingly.

When the master plan came into force, 43 new information systems were added to the central computer and 225 new office automation applications were implemented. The introduction of the systems was gradual, although their

level of penetration differed within the City's 12 administrative units. The technological plan thus extended to the organization as a whole.

Over the previous 11 years, information systems represented an average annual expenditure of 1.3 percent of the City's total budget, of which 0.29 percent was for hardware and software, and 1.01 percent was the budget of the systems department. During this period, supervisory staff of this department was reduced by 66.6 percent, while the unionized workforce remained the same. What amounted to a change in position titles became necessary due to the introduction of microcomputer technology and an increase in the amount and diversity of technological equipment.

In 1984, the technological architecture changed from a central computer with ten terminals to a hybrid system of 266 work stations. This technological development and access to microcomputers brought a whole new dimension to information technology. A transition was made from centralized to decentralized management of information systems and the user became increasingly important. Microcomputer technology suddenly became a major strategic issue.

A steadily increasing number of employees were using computer technology to perform their work. Throughout the organization, the percentage of information technology users increased from 1.9 percent in 1984 to 51.25 percent in 1994. This rapid change had an impact in a number of areas: information systems, the organization of work, jobs, tasks, recruitment and training needs. In short, over a decade, the organization experienced complete technological change; consequently, it had to learn to manage the change and its repercussions in all units of the organization.

The perceptions of the actors

It is important to present the most important perceptions of each group involved in the concrete action system. These data enabled us to analyze the extent to which technology has contributed to the City's performance. Each group indicated how it perceived its role, the roles of the other groups, and the dynamics between them. Their assessment of the advantages associated with the use of organizational information systems follow.

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Users/decision makers

The executive director and the three assistant executive directors of the City were the users/decision makers. They had the power to influence the development of the information systems and, with regard to budget preparation, their role was to determine computerization needs. They were also responsible for allocating funds to carry out the three-year systems development plan. Their view was that the executive director cannot be a leader in the field, since to take advantage of information systems, the users in each department must themselves be convinced; consequently, the idea must emerge from the workplace. They believed that, at most, they could encourage department heads to ask questions. They also believed that the union did not have a role to play in the adoption of technology, and that the collective agreement protected the employees.

According to the executive director and the assistant executive directors, the implementation of information systems has some advantages. Automation of operations allows for faster data access and information processing. Information sharing, which reduces duplication of data input, increases communications between departments. On the other hand, the users/decision makers deplored the fact that the information systems had not produced the anticipated advantages in terms of reducing staff. They admitted that this was probably an illusion from the outset and they increasingly realized that this objective could not be attained. They also wondered how each of the departments was using the staff time that information systems enabled it to save.

The decision makers emphasized the lack of autonomy of the departments, a factor that impeded the integration of the systems. Some departments counted too much on long-term support from the systems department. While users expected the information systems to do everything, they did not fully exploit these systems. Each department was responsible for integrating its information systems with the help of a resource person. The systems department had the expertise and the information, but was not able to change the organization of work or to ensure that the information systems were integrated within the departments. According to the decision makers, autonomy could be achieved only through greater commitment on the part of the users/managers, who had to identify and assess needs so that work could be reorganized, then speeded up

with the help of technology. The managers had to manage the implementation by investing the necessary effort and stimulating the desire of the users/operators to participate. Finally, users/managers had to see to the development of a close collaboration and a cooperative relationship with the systems department.

As far as the users/operators were concerned, the decision makers emphasized that some had an aptitude for technology, while others did not. Consequently, the employees who were the most gifted in the area of information technology played an essential role with their colleagues where training in the workplace was concerned.

Users/managers

This category comprised the municipality's department heads. Their experience over the last few years had led them to recognize that their main role was to identify and analyze the needs associated with the acquisition and development of the information systems. As far as planning the addition of the new systems was concerned, they dealt with the preliminary needs assessment. Some of them emphasized the difficulties they had in assuming responsibility for managing and developing the systems because of their lack of technical knowledge.

The managers noted that information systems had undergone extensive development over the last few years. They also noted that the organization had not really changed ? at most, it had adjusted. For them, the systems department was the administrative unit that had ultimate control over planning, needs assessment, design and implementation of information systems, and ongoing training of users/operators. They made the users/managers/ designers and designers responsible for the performance of the information systems and for the performance of the users who employed these systems.

The advantages most appreciated by the users/managers were the availability of information that they could not obtain previously; the opportunity to meet deadlines more effectively, which considerably reduced the stress associated with preparing certain files; more rapid access to information; improved presentation of files; and more abundant and accurate data for analyzing files. However,

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