A Quest for Theoretical Foundations for COBIT 5

ECIME 2014 – v.1.0

Advertisements

Legacy ERP and Hybrid ERP

As if CIOs didn’t knew it. ERP and bespoke applications are unblendable. It is trying to dissolve oil in water. It gives you a colloid where customized particles are dispersed through the standard code. It becomes very hard to retrieve these particles if the standard code needs to be changed. Regularly this leads to a destruction of the complete application or delivers another failed IT project.  Gartner posits that by 2016 these customized ERP systems will become so called ‘Legacy ERP’ and will hamper IT departments to innovatively grow or even put a huge burden on their overall existence.

The problem seems to be the lack of flexibility of legacy ERP. The claim is that legacy ERP is not agile enough to meet changing business needs due to the overwhelmed insufficient documented modifications in a customized ERP system. Besides, the costs of legacy ERP are running high. On the issue of the impact of ERP on organizational flexibility is the literature highly divided, as Gartner should know. There is indeed a stream of academic literature comparing ERP systems with liquid (digital) concrete poured into the company. On the other hand, recent research has revealed that the positive or negative impact of ERP systems on organizational flexibility greatly depends to extend of assimilation of the ERP systems.  ERP systems drive organizational innovation to a certain extend which is greatly depended on the use of the ERP system and how use becomes routinized in the processes and projects of an  organization.  This is what is mend by assimilation of ERP systems.

The whole story reminds me of mainframe systems. These ancient IS systems were the first legacy systems and were overtaken by flexible midrange IS systems. Applications move further into PC-based-network point solutions. They called it ‘client-server’ systems and applications. By the 1990s ERP slung the pendulum back to heavily centralized systems not seldom without heavily customized modules and components. In that way ERP systems were transformational in nature and indeed change almost the complete IT landscape. In less than a decade since the 1990s, 76% of manufacturers, 35% of insurance  companies and 60% of the U.S. Fortune 1000 companies have adopted an ERP system. Now tables turning and ERP is framed in the role of a ‘legacy’ mainframe, condemned to focus on a limited job of supporting basic non-innovative business processes.

Not that there is an easy answer to these problems. Gartners mentioned ‘postmodern ERP’ or hybrid ERP indicating a federated, loosely coupled ERP environment with extra functionality sourced as cloud services and business process outsourcing. According to Gartner the Cloud seems to be key for a solution.  A shift is to be made from monolithic ERP to hybrid ERP incorporating differentiating functionalities  based on cloud applications and not on customized ERP. The Cloud is not so much the silver bullet, but it can deal with the insufficiencies of monolithic ERP, which focused all too much on tangible products and asset-centric industries and leaving too much crucial business processes without any (central) IT support . Service-centric organizations such as professional services, universities, government agencies and digital media are not so well served by ERP systems. This is much noticeable in my own organization (university) where an SAP implementation only covers the basic financial and  procurement processes, but the line-of-business processes are supported by very lean cloud applications. The question is now if the cloud will also be transformational in nature. It looks like it does. Cloud applications are real-time in nature due to augmented broadband connections and increased server capacity and performance. And opposed to ERP systems, cloud applications can be purchased from a multitude of software vendors or cloud providers. The own development of cloud applications (e.g. mobile apps) can easily be done, much easier than customizing ERP systems. Cloud application can easily fill the business gaps that ERP systems have left behind and focus more on core business processes.

As for me, I am a bit afraid of the term ‘loosely coupled suites of cloud functionalities’. It is the degree of coupled IT systems that is largely accountable for the organizational flexibility as well as for the strategic alignment of all business processes. Businesses need to function as a holistic system, where all business processes are aligned to the corporate strategy. The danger of dis-alignment between IT and business lurks behind the horizon with loosely coupled systems. We saw this already happened in the past.  But loosely coupled should not be the same as loosely managed. This can be a new challenge for the CIO.

jan devos

Lecture on Ownership of Enterprise and Governance

This module is about the firm’s position in the economy and in society, and about the forces that shape the firm. Central themes of the course Ownership of Enterprise and Governance are the enterprise’s position in the economy and society, the forces that shape the enterprise and its IT, and the way its board leads business and IT.

Block 1 is dedicated to the topic Enterprise Models. Characteristics of the enterprise, such as ownership, size, political environment and enterprise strategy shape the governance of IT and the role of IT in achieving the enterprise’s strategic objectives. In this block, various enterprise models are discussed. After having completed this block, participants are able to assess the characteristics of an enterprise and the impact thereof on the IT function.

On Friday 31/1 – 13.30-16.45 – IT in small and medium-sized Enterprises
Teacher: Prof. dr. ir. Jan Devos, MBA

At Nyenrode Business University.

http://www.nyenrode.nl/Education/MBA/modularmba/MBA-BIT/modules/Pages/Entrepreneurship-.aspx

 

 

2013 in review

The WordPress.com stats helper monkeys prepared a 2013 annual report for this blog.

Here’s an excerpt:

A New York City subway train holds 1,200 people. This blog was viewed about 4,400 times in 2013. If it were a NYC subway train, it would take about 4 trips to carry that many people.

Click here to see the complete report.

New Skills for Design, Analysis and Implementation of IT projects

Of all invested capital in the U.S. between 1980 and 2011, information technology (IT) defined as hardware, software and communications equipment, grew from 32% to 52% (source U.S. Department of Commerce, 2012). However IT need to be designed, analyzed and implemented before there can be an ROI for the organization. It is there that things often go wrong.  On average investments in IT can produce returns far above those by other investments. However there is considerable variance across firms (Brynjolfsson et al. 2000). The reasons are the lack of investments in organizational and managerial capital, sometimes called complementary assets. We focus here on one particular complementary asset: the right skills or capabilities for design, analysis and implementation of IT projects. The literature on failed IT projects is abundant. IT failures can be not capturing essential business requirements, not providing organizational benefits, delivering a complicated, poorly organized user interface or inaccurate and inconsistent data. A large part of IT projects are runaway projects, exceeding schedule and/or budget and fail to perform as specified.

Practitioners as well as academics are desperately searching for new and better methods to gain more control over IT projects. Their strive for more control can be placed in a view of information systems (IS) as cybernetic systems. They see an information system mainly as a machine taking inputs like raw data from within the organization or from the environment. The inputs are then processed into meaningful information or knowledge. Finally the outputs transfers the processed information or knowledge to the people who will (hopefully) use it or to another process for which it will be used. This approach is entirely in line with a very mechanical perspective on IS and is the driver for skills typically found in an engineering education. There is surely nothing wrong with that. Indeed, IS deal with a highly complex technological artifacts. So more and especially deeper skills in STEM (science, technology, engineering and mathematics) fields are certainly most welcome.

However information systems are more than computers. Designing, analyzing and implementing information systems effectively requires an understanding of the organization, the management and information technology shaping information systems. It was K. Weick who stated already that computers will defeat their own purpose because they create complexity (Weick 1985).

I argue that we should also adopt a more behavioral approach to IS. For instance phenomenon’s as IT projects failures cannot always be understood with the models used in a solely (cyber)-technical approach. Other behavioral disciplines should contribute to the methods and models. We refer to psychology (e.g. how do users really deal with IS?), sociology (e.g. how do IS shape organizations?) and economy (e.g. how do we evaluate IS?) as behavioral disciplines.  The behavioral approach of IS is certainly not new for IS researchers, but there is still a lack of more behavioral skills within the community of IT practitioners.  And the research for a deeper understanding of IS and especially IT projects goes on. I like to bring some researched topics that may lead to paradigm shifts in the education of IT/IS professional.

In the domain of organizational science there is research on High Reliability Organization (HRO). A topics that was initiated by K. Weick in 1999 (Weick et al. 1999).  In his seminal article, Organizing for High Reliability: Processes of Collective Mindfulness, Weick argues that in an HRO there is preoccupation with failure (“Failure is not an option”), reluctance to simplify interpretation (beware of ‘frameworks’, ‘models’, ‘mindsets’, …), sensitivity to operations (“situational awareness”) and commitment to resilience (“continuous management of fluctuations”). Lessons we can learn from HROs are:

          – The expectation of surprise is an organizational resource because it promotes attentiveness and discovery.

          – Anomalous events should be treated as outcomes rather than as accidents, to encourage search for sources and causes.

          – Errors should be made as conspicuous as possible to undermine self-deception and concealment.

          – Reliability requires diversity, duplication, overlap, and a varied response repertoire, whereas efficiency requires homogeneity, specialization, non-redundancy and standardization (bricolage?)

          – Interpersonal skills are just as important in HROs as are technical skills.

Another topic in IS research are Real Options Pricing Models (ROPMs) which could be suitable for large IT infrastructure investments where future revenue streams are unclear (unsuccessful?). RO means invest now – harvest later (Benaroch 2002). So an initial expenditure on IT/IS creates the right, but not the obligation to obtain the benefits associated with further development. The management has the freedom to cancel, defer, restart, or expand IT projects.

Very recently IS researchers are now working with the sociomateriality of IS (Orlikowski et al. 2008). This is a relational view of organizations and IS as sociomaterial arrangements of human and non-human actors. It assumes inherently inseparable sociality and materiality of IS by which IS enactments can create different kind of realities in practice (e.g. Why is one ERP implementation successful and why is another one considered as a failure?).

Some more shattered toughs on IT/IS projects that could inspire educators, technical colleges and universities to aim for new skills:

          – Traditional IT/IS project management techniques do not guaranteed success nor eliminates failures (IS success models)

          – IT/IS project management is too much focused on ‘how-to-do’

          – We should start to think about a management of meaning instead of management of control (Weick et al. 2005)

          – We should adopt a critical perspective on IT/IS projects: focus on values (technology is not neutral), ethics and morality equally important than efficiency & effectiveness. (e.g. trust versus control (Devos et al. 2009)

jan devos

sources

Benaroch, M. 2002. “Managing information technology investment risk: A real options perspective,” Journal of Management Information Systems (19:2) Fal, pp 43-84.

Brynjolfsson, E., and Hitt, L. M. 2000. “Beyond computation: Information technology, organizational transformation and business performance,” Journal of Economic Perspectives (14:4) Fal, pp 23-48.

Devos, J., Van Landeghem, H., and Deschoolmeester, D. 2009. “IT Governance in SMEs: Trust or Control?,” in Information Systems – Creativity and Innovation in Small and Medium-Sized Enterprises, G. Dhillon, B. C. Stahl and R. Baskerville (eds.), pp. 135-149.

Orlikowski, W. J., and Scott, S. V. 2008. “Sociomateriality: Challenging the Separation of Technology, Work and Organization,” Academy of Management Annals (2) 2008, pp 433-474.

Weick, K. E. 1985. “COSMOS VS CHAOS – SENSE AND NONSENSE IN ELECTRONIC CONTEXTS,” Organizational Dynamics (14:2) 1985, pp 50-64.

Weick, K. E., Sutcliffe, K. M., and Obstfeld, D. 1999. “Organizing for high reliability: Processes of collective mindfulness,” in Research in Organizational Behavior, Vol. 21, 1999, pp. 81-123.

Weick, K. E., Sutcliffe, K. M., and Obstfeld, D. 2005. “Organizing and the process of sensemaking,” Organization Science (16:4) Jul-Aug, pp 409-421.

New book! Information Systems for Small and Medium-sized Enterprises

Order your copy now!

http://www.springer.com/business+%26+management/business+information+systems/book/978-3-642-38243-7

Capture

ERP, Het einde van een tijdperk?

CFO1

CFO2 CFO3 CFO4 CFO5 CFO6

CFO1
%d bloggers like this: