The Centrality of Organizations in the Computerization of Society
Rob Kling (Indiana University)
|Section III, Lead Article
of: Computerization and Controversy:
Value Conflicts and Social Choices,
by Rob Kling. San Diego, Academic Press, 1996.
Copyright, 1994, 1995. Rob Kling.
This section examines several organizational aspects of computerization which also have cultural and economic dimensions: the ways in which computer systems support new services and alter competition between organizations; the extent to which computerization alters the productivity of organizations, and changes their costs.(1)
We also examine how organizational processes, bureaucratization, and fights over power influence the way that organizations computerize.
Because of the powerful role that organizations of all kinds play in our society, it's important that we understand how they behave. The owners and managers of organizations often take organizations for granted. But many professionals are ambivalent about the roles of organizations in understanding how our society computerizes. For example, in Out of Control: The Rise of Neo-biological Civilization (excerpted in Section II), Kevin Kelly examines the evolution of industrial societies that utilize technologies such as computer networks and tiny robots. Kelly celebrates some key discoveries and inventions of computer scientists in advanced research laboratories funded by huge private firms such as Xerox, and giant Federal agencies such as NASA. But his own theorizing ignores the importance of organizations in his celebration of computing innovations. Kelly refers to organizations as part of an old fashioned control-oriented mindset that made more sense in the industrial era but which have significant roles in the new "anarchic society" that Kelly heralds.
Criticisms of organizations -- as such -- have deep roots in American individualism. In the mid-1950s, William H. Whyte published a scathing critique of U.S. corporations in his book The Organization Man.
the organization man ... I am talking about belong to (The Organization) as well. They are the ones of our middle class who have left home, spiritually as well as physically, to take the vows of organization life, and it is they who are the mind and soul of our great self-perpetuating institutions. Only a few are top managers or ever will be. .... they are of the staff as much as the line, and most are destined to live poised in a middle area .... they are the dominant members of our society nonetheless. They have not joined together into a recognizable elite -- our country does not stand still long enough for that -- but it is from their ranks that are coming most of the first and second echelons of our leadership, and it is their values which will set the American temper.
The corporation man is the most conspicuous example, but he is only one, for the collectivization so visible in the corporation has affected almost every field of work. Blood brother to the business trainee off to join Du Pont is the seminary student who will end up in the church hierarchy, the doctor headed for the corporate clinic, the physics Ph.D. in a government laboratory, the intellectual on the foundation-sponsored team project, the engineering graduate in the huge drafting room at Lockheed, the young apprentice in a Wall Street law factory.
They are all, as they so often put it, in the same boat. Listen to them talk to each other over the front lawns of their suburbia and you cannot help but be struck by how well they grasp the common denominators which bind them. Whatever the differences in their organization ties, it is the common problems of collective work that dominate their attentions, and when the Du Pont man talks to the research chemist or the chemist to the army man, it is these problems that are uppermost. The word collective most of them can't bring themselves to use --except to describe foreign countries or organizations they don't work for -- but they are keenly aware of how much more deeply beholden they are to organization than were their elders. They are wry about it, to be sure; they talk of the "treadmill," the "rat race," of the inability to control one's direction. But they have no great sense of plight; between themselves and organization, they believe they see an ultimate harmony and ... they are building a ideology that will vouchsafe this trust. (416 words) (Whyte, 1956:3-4)
Whyte's book became a best seller in the 1950s and 1960s when he helped identify the angst that many people feel about the ways that large organizations -- public and private -- can overwhelm individuals with their seductive and oppressive cultures, with their pressures for people to fit in, and so on. Love them or hate them, we have to engage them. In order to understand many key social aspects of computerization, we have to have some good understanding of how organizations behave.
Despite the ambivalence that many professionals feel about organizations, they are also central players in our national stories of computerization. Huge companies, like IBM, Burroughs, General Electric and RCA built the earliest computers in the 1950s(2). These costly room-sized behemoths were bought by large government agencies, such as the Department of Defense and the United States Census Bureau, as well as by large private firms such as the Bank of America.
Today, a book-sized 4 pound $1200 "sub-notebook PC" packs the computing power of million dollar mainframe computers of the 1960s. We might imagine that the downsizing and price-reductions of computing technology has moved large organizations from center-stage in our national story of computerization since now anyone who can afford to buy a car or color TV can afford a computer or two as well. The press is carrying more stories about the ways that diverse people use computers, especially computer networks such as the Internet. Some people argue that a computer at hand enables a tiny business made up of a few people to compete with the biggest firms. This position has been argued most forcefully by John Naisbitt (1994) in Global Paradox: The Bigger the World Economy, the More Powerful its Smallest Players. There is certainly some truth to the observation that tiny organizations have developed interesting software, and that tiny firms can sell high quality business services by carefully subcontracting some of the activities.
But tiny firms do not remain small when they manufacture millions of items, or provide services (such as training and repair) to thousands of customers. Apple Computer Company may have been started by two guys hacking in a garage. But in the 1990s, it was employing about 16,000 people. And Apple's behavior in releasing new products, servicing old ones, and so on was based, in part, on ways that large organizations behave.
I believe that organizations, large and small, still play major roles in the shape of computing in North America. On the production side, huge firms like Microsoft, Apple, Sun, Hewlett-Packard and IBM play major roles in selling computer software and hardware. While a gifted designer might conceive of the fundamental features of new kinds of software, it will become commonplace through sales to millions of computer users only with the followon work of a small army of product developers, marketers, salespeople, and accountants. Large firms like Microsoft, Claris, Novell, AT&T, Symantic, and Oracle -- as well as the major computer companies -- refine and market the software that runs on millions of computers, large and small. The communications infrastructure for wide area networking is provided by another set of huge organizations -- including AT&T, the seven regional Bell operating companies, McGaw, and so on.
And we live in a society in which many key goods and services are provided by organizations which employ hundreds to thousands of people -- the airlines, state university systems, pharmaceutical firms, insurers, phone companies, hotel chains, automobile manufacturers, and so on. Of course, many important life events do not take place in relationship to organizations -- especially large ones. But from our births in hospitals to the recording of our deaths by county administrators, we deal continually with organizations. And the ways that these organizations computerize can influence the nature of their services, the costs of their goods, the ways that we interact with them, and their kinds of workplaces that they create for tens of millions of North Americans.
It is easy to rely upon conventional simplifications about organizations and fail to understand how they behave. It is easy to refer to all government agencies as bureaucracies -- and emphasize their rigidities and rule-boundedness, while missing their roles as political agents which serve some interest groups more than others. It is easy to characterize private firms as efficient agents of their boards of directors, while underestimating the bureaucratic features of the larger firms. Or we might be willing to see a behemoth industrial firm like IBM as an arthritic bureaucracy, but miss the bureaucratic elements of more popular firms like Apple Computer or Ben and Jerry's ice cream company. In Images of Organization, Gareth Morgan examines about 30 different metaphors for understanding how organizations behave -- as machines, brains, psychic prisons (as in Whyte's characterization), and so on. It is an important book to help expand one's understanding of the many different ways to view organizations -- since no single metaphor is adequate.
NEW SERVICES AND BUSINESS COMPETITION
Business writers, managers, and technologists often argue that computerized information systems are essential if modern businesses are to compete nationally and internationally. In fact, some have argued that information technology and related skills are "the new wealth of nations".(3)
The specific arguments vary, and focus on different aspects of organizational life. Some focus on the ways that computer systems help firms develop new services, while other arguments emphasize the ways that computerized systems might enhance workers' productivity. It is an important social choice to organize society so as to maximize efficiency and profit -- rather than according to other values, such as plentiful jobs, good working conditions or reliable service to customers. The decisions to computerize are never merely economic(4)
The first selection, "The Computerization of Israel: Of Swords and Software Plowshares" by Gad Ariav and Sy Goodman examines some of the cultural and organizational aspects of computerization. They are quite frank in identifying the ways that a relatively aggressive cultural style leads software designers to "battle test" their computer systems. And they also identify the special role that the Israeli military played in training computer experts who were subsequently hired by private firms in Israel (and even the US).
In the second selection -- "Getting the Electronics Just Right" -- Barnaby Feder examines computerization at Wells Fargo, a major California bank. Feder's story concisely describes several different computerization efforts, some aimed at providing new services, and others aimed at improving internal efficiencies. Feder's account is one of the rare concise portraits of many different computerized information systems in a firm. Because of its brevity, it is necessarily highly simplified. Like many business writers, Feder stresses how a firm succeeded in developing innovative computer systems and new services. While each of Feder's descriptions portrays Wells Fargo as a cheerful place to work, one can readily imagine the stress that many workers felt in developing or using these information systems. Usually technological and organizational innovation is costly even when things go well(5).
The third selection is "How Information Technologies Can Transform Organizations" by Michael Scott-Morton of the MIT Sloan School of Management. He examines how organizations can benefit from making major company-wide investments in networked computer systems and how they should align their approaches to computerization with other major organizational strategies.
"...information technology is a critical enabler of the re-creation (redirection) of organizations. This is true because it permits the distribution of power, function and control to wherever they are most effective, given the missions & objectives of the organization and the culture it enjoys (Morton, 1991:17).
"IT (Information Technology) is available to radically alter the basic cost structure of a wide variety of jobs, jobs affecting at least half the members of an organization. IT is only an enabler, however: to actually change jobs takes a combination of management leadership and employee participation that is, thus far, extremely rare." (Morton, 1991: 11)
"In summary, the traditional organizational structures and practices do not have to stay the same as we move into the 1990s. All dimensions of the organization will have to be reexamined in light of the power of the new IT. The economics are so powerful and apply to so much of the organization that one has to question everything before accepting the status quo (Morton, 1991:11)."
Morton offers a relatively sophisticated conception of information technologies by viewing them as enablers rather than as causes. Morton is optimistic about the potential value of information technologies to upper managers and professionals, but he differs from the technological utopians by refusing to treat technology as a simple cause. He observes that effectively selecting, organizing, and using information technologies requires many subtle assessments of an organizations strategies, its culture, and the character of specific technical systems. He also notes that relatively few business firms have reaped broad benefits from IT. This is a frank observation to come from a senior professor of IT at MIT's Sloan School of Management.
Innovation is fraught with risks, and costs can escalate when things go wrong. And even very expensive projects developed by highly qualified professionals can fail to meet their designers' expectations; in extreme cases they may be aborted. Our fourth selection by Douglas Frantz examines how another major bank, the Bank of America, spent $60 million to get a $20 million computer system for trust-management to work properly -- and then abandoned the whole project. The Bank of America's experience is not unique (Oz, 1994). Many computerization projects lie between the Bank of America and Wells Fargo (Feder's case) -- they ultimately work in some way, but they take longer to implement, cost more, and are much more disruptive than their advocates had hoped. Since managers and professionals are usually embarrassed when their computerization projects do not go smoothly and according to schedule, few of the professional articles about computerization accurately portray the dynamics of computerization in real organizations.
The main controversies about the role of computer systems in supporting new services concern the extent to which they serve as economically effective means for drawing new customers, retaining old ones, and improving the economy generally. At the same time, computer-based services are not just conveniences. Their widespread deployment restructures industries, as well as relations between people and organizations.
COMPUTERIZATION IN ORGANIZATIONAL CONTEXT
Studies of computerization often make critical implicit assumptions about the way that organizations behave. It is interesting to contrast the analyses by Feder and Frantz. Feder portrays Wells Fargo as tightly managed, in which major purchases such as computer systems fit narrowly defined organizational purposes very well. In contrast, Frantz portrays some of Bank of America's internal structures that influenced their choices. In his view, the bank's diverse managers were either supportive or cautious about computerization projects. He also portrays fragmented authority, and how different groups relied on the same staff to carry out incompatible activities.
One might casually dismiss these two articles as "only cases of two banks that have limited relevance to other organizations." The next two selections by Kirkpatrick and Orlikowski illustrate how analysts implicitly assume different models of organizational behavior in their studies of computerization. David Kirkpatrick, a journalist who publishes in Fortune, and Wanda Orlikowski, a professor of information systems at MIT's Sloan School of Management, both write about the use of groupware by businesses. Groupware refers to a range of computer systems which facilitate the functioning of groups by allowing many people to communicate via electronic mail and conferencing facilities, or to work together with common bodies of text, colleagues' schedules, etc.(6)
Lotus Notes is designed to enable groups that are located in different offices and locations to share messages and memos via computerized bulletin boards and document databases. Groupware has been marketed with an emphasis upon shared effort, collaboration and cooperation. However, in our selection, "Groupware Goes Boom," Kirkpatrick claims:
The new groupware tools are so powerful, in fact, that they virtually compel companies to reengineer themselves. By giving workers well below the top of the organizational pyramid access to information previously unavailable or restricted to upper levels of management, groupware spreads power far more widely than before. Many who have grown comfortable dwelling near the pyramid's apex are understandably distressed by the way groupware disrupts old-style hierarchies.
Many lower level workers would be keenly interested in seeing upper manager's memos about such topics as executive compensation pay and bonus structures(7)
, strategic plans for expanding an organization, or even specific
plans for firing some
staff! So one could imagine that lower level staff would be specially
interested in using
Lotus Notes. Kirkpatrick speculates about the ways that Lotus Notes may
have been used
when a major accounting firm, Price Waterhouse, licensed 10,000 copies
in 1991. Other
journalists also published glowing reports of Notes' use in newspapers
such as The New
York Times and The Washington Post, and business
magazines such as Forbes
and Business Week.(8)
In "Learning from Notes," Wanda Orlikowski reports her own observations of Lotus Notes' use at a major consulting firm in the months after Lotus Notes was being installed. (She does not disclose the firm's identity, but it is widely believed to be a regional Price Waterhouse office.) Her study raises questions about the extent to which powerful new technologies can provoke professionals in organizations to change their ways of working. Orlikowski's rich case illustrates the complexities of deploying a new information technology in a large decentralized professional organization. Lotus Notes was acquired by the firm's Chief Information Officer who was highly enthusiastic about its possibilities for enabling offices worldwide to rapidly share their expertise. However, as Orlikowski points out, he overestimated how much the potential for innovations based on Notes would "become obvious" to anyone who used it, and the extent to which diverse professionals would actually invest their time in learning about Notes.
Part of Orlikowski's analysis rests on the way that Notes' use was related to the reward structure at Price Waterhouse. At many consulting firms the staff is divided into consultants and staff groups. The salaried support staff provide core services, including accounting and information services for the firm. The consultants who bill direct services to clients can be further divided into partners and associates. A relatively small group of highly paid partners own the company and are essentially tenured in their jobs. They are assisted by a much larger group of less-well paid consultants, who are sometimes called associates. The partner's incomes is based primarily upon profits from the projects that they directly manage, and a share of the firms' overall profits. The associates are salaried, and many of them want to become partners. The major consulting firms have a system of annual reviews in which associates are retained and rewarded with more authority and pay; or they are asked to leave ("up or out" rules). After seven to nine years of successive promotions, some of the surviving associates are promoted to be partners while others leave the firm. The associates compete with each other for the few new partnerships, where incomes can start at over $200,000 per year. Orlikowski observed that the staff and partners who had significant job security, were most willing to learn Lotus Notes and share professional information. In contrast, the numerous associates were preoccupied with their careers and the risk of being fired if they did not produce lots of billable services for their immediate clients. They were reluctant to learn Notes or to share their special expertise with each other. Why should people whose promotions depend upon being seen as having unique expertise be willing to give it away to others, just because a slick computer system facilitates it? Her account of the relative interest in Notes use by partners and associates is the reverse of Kirkpatrick's claims that the uppermost managers would be least interested.
Our next pair of selections by Henry Jay Becker and Stephen Hodas examine the possibility of using computer technologies to facilitate learning in K-12 schools. They also illustrate how analyses of the nature and conditions of computerization can rest on conceptions about how organizations and people in them behave. In a "How Much Will a Truly Empowering Technology Rich Education Cost" Henry Becker examines the economic dimensions of educational innovation through new technology. He notes that U.S. schools buy 300,000 to 500,000 new computers, as well as associated software, every year. Traditional computer-based instruction, like the much despised drill and practice programs are based on a model of instruction that views students as recepticals who are delivered information and skills from central repositories, whether they are expert human teachers or software.
Today's leaders in instructional computing favor an "access model" (Newman, 1993) in which networked systems enable teachers and students to collaborate and gather information from distributed resources and communities of peers. Becker advocates this access model and briefly examines the full costs of effectively supported computing that the access model requires. One of the striking features of Becker's analysis is the magnitude of the annual costs per student for equipment (about $550) and personnel support beyond the traditional classroom teacher (about $1400). While the ratio of these costs might change with the decreasing costs of computer hardware, they are much higher than schools traditionally invest in educational innovations. Becker argues that schools could effectively computerize with a collaborative form of teaching and learning if educational reformers and technologists were willing to face up to the full costs. Becker concluded a recent related article with these observations:
Schools are lagging behind, though, in the critical area of curriculum development for using computer-based tools in subject matter classes. Most subject-matter teachers have not yet learned how, for example, spreadsheets relate to mathematics instruction, or multimedia to English or fine arts instruction, or databases to science instruction. For computer education to avoid becoming simply another isolated set of skills and procedures to be mastered, a major effort in curriculum upgrading must occur within the academic disciplines, as they are practiced in typical school settings. When that happens, computer education will be increasingly meaningful to the schools of America. (Becker, 1993:73).
In "Technology Refusal and The Organizational Culture of Schools" Steven Hodas examines the likelihood that schools will embrace the kinds of changes in instructional technologies and instructional approaches advocated by Becker. Hodas notes that
all these attempts to modernize, to rationalize, to "improve" the schools by making them more efficient have had very little effect. Textbooks, paperbacks, blackboards, radio, film, film strips, airplanes, television, satellite systems and telecommunications have all in their time been hailed as modernizers of American education.
He identifies technologies as social constructions (rather than contraptions or machines) which are value laden, and
Any practice (and a technology is, after all, a set of practices glued together by values) that threatens to disrupt this existing structure will meet tremendous resistance at both adoption and implementation stages.
Hodas' argument about the dilemmas of providing significant computer support for K-12 education hinges on an observation that is also pertinent to Orlikowski's study of Lotus Notes at Price-Waterhouse:
The divergence of interests between managers and workers, and the potential implementation fissures along those lines, is a source of much of the implementation failure of widely-touted "advances."
But he goes on to make a much more wide-ranging systematic argument about the adoption of innovations than does Orlikowski or Becker:
And yet each battle is essentially the same battle. The technologists' rhetoric is remarkably consistent regardless of the specifics of the machine at issue. So too is their response when the technologies in question meet with only a lukewarm response: to blame the stubborn backwardness of teachers or the inflexibility and insularity of school culture. While elements of both of these certainly play their part in what I'll call 'technology refusal' on the part of schools, it behooves us to remember that all technologies have values and practices embedded within them. In this respect, at least, technology is never neutral; it always makes a difference. From this perspective, the reactionary response on the part of schools (by which I mean the response of individuals within schools acting to support their institutional function) perceived by technology advocates makes a great deal more sense than the pig-headed Luddism so often portrayed. Further, technology refusal represents an immediate and, I believe, fundamentally accurate assessment of the challenges to existing structures and authority that are embodied or embedded in the contested technology. I believe further that the depth of the resistance is generally and in broad strokes proportionate to the seriousness of the actual threat.
Hodas' paper provide a rich analysis of the ways that many interesting forms of computer-supported education threaten the expertise of many teachers' and thus a key aspect of their sometimes shaky authority. Hodas argument differs fundamentally from Becker's since he sees the core cultures of K-12 schools, rather than money, skill, and time, as the central dilemmas of effective instructional computing.
Arguably the best examples of the effective integration of instructional computing can be found in colleges and universities rather than K-12 schools. How do the most lively colleges and universities differ from K-12 schools, beyond their abilities to accept and retain the more talented and motivated students and their relatively free intellectual milieux? Unfortunately, even the best universities have sometimes engaged in million-dollar instructional computing projects that had little sustained educational value (Shields, 1995).
MODELS OF ORGANIZATIONAL BEHAVIOR.
We can find many points of contention between pairs of the last six articles -- Feder vs. Frantz, Kirkpatrick vs. Orlikowski, and Becker vs. Hodas. In some cases the articles do not directly contradict each other. For example, Bank of America may have had much more trouble implementing its trust investment system than did the Wells Fargo Bank. But Frantz's and Orlikowski's articles can lead us to wonder whether the information systems at Wells Fargo were all implemented as simply, smoothly, and happily as Feder implies. Kirkpatrick and Orlikowski do provide very different stories about the nature of Lotus Notes use at a specific company -- Price Waterhouse. But, more seriously, they differ in their ways of conceptualizing the use of Lotus Notes and the ways that people integrate such programs into their work. In contrast, Becker and Hodas agree on the relatively limited use of instructional computing to support collaborative learning in K-12 schools in the US. But they differ significantly in their diagnoses of the impediments to instructional innovation. Becker believes that a forthright willingness of school boards to account for the true equipment and labor costs of computerization (and tacitly, a willingness to raise taxes to pay for them) will transform the computation landscape of K-12 education. Hodas doesn't disagree that the actual costs for computing equipment and support staff are high. But he believes that professionals who are likely to lose power from an innovation -- as teachers can from progressive teaching via computing -- are unlikely to adopt it.
Underlying these debates about computerization in banks, consulting firms, and schools is a deeper set of debates about how organizations behave with information technology. Feder, Kirkpatrick, and Becker tacitly work with a vision of organization which sociologists refer to as a Rational Systems model (Kling & Jewett, 1994; Scott, 1992). A Rational Systems Model focusses upon clear goals, tasks, specialized jobs, and procedures (including information flows, authorizations, etc.). Concerns for efficiency dominate the organization, in this view. In contrast, Frantz, Orlikowski and Hodas work with a Natural Systems model (Kling & Jewett, 1994; Scott, 1992). Natural Systems Models focus upon the ways that work is done based on informal influence -- including informal communication patterns, status, power, friendships, emerging roles, etc. Goals may be ambiguous, resources inadequate and problematic, and groups may seriously conflict within and between organizations, and act in self-interested ways to maintain their survival.
Since the 1970s a group of scholars including Bill Dutton, Suzanne Iacono, John King, Rob Kling, David Knights, Kenneth Kraemer, Kenneth Laudon, Lynne Markus, Wanda Orlikowski and Geoff Walsham, produced a series of detailed studies that examined how the political coalitions within organizations shaped decisions to computerize, and the consequences of computerization(10)
. These scholars focussed on large organizations -- with hundreds or thousands of employees. They found that these large organizations were frequently segmented into coalitions that held conflicting views of which goals the organization should emphasize and which strategies would best achieve them. While the computer projects favored by specific coalitions often had important elements of economic rationality, they often helped to strengthen the power of their champions as well. In fact, systems champions often exaggerated what was known about the economic value or necessity of specific projects. From this perspective, computerization entails organizational changes that do not benefit all participants. For example, in some research universities, the scientists have acquired relatively powerful "number crunchers", while instructional computing labs are relatively impoverished. Students and faculty do not necessarily benefit comparably when a university invests several million dollars in new academic computer systems. "Computer power" comes in part from the organized action of social systems rather than simply from "faster" computers with larger memories and greater communications capacity.
Those analysts who examine computerization from a rational systems perspective view computerization in very different terms from those who view computerization from a Natural Systems perspective. It is relatively rare that analysts of these differing persuasions debate each other. The controversies are much more implicit in the diverse stories about computerization, such as the contrasts between Kirkpatrick and Orlikowski or between Becker and Hodas. Newspapers and professional journals are most likely to publish systems rationalist accounts, while the natural systems accounts are most likely to appear in a small number of scholarly journals and books. While this is a critical controversy, the debate is not explicit and not joined.
Natural Systems analysts, like Hodas and Orlikowki, believe that behavior within organizations is really crucial for understanding the role of computerization in shaping organizations. In fact, some analyses within this approach examine computerized systems as forms of organization rather than as easily separable entities (Kling, 1987; Kling and Iacono, 1989; Kling, 1992).
COMPUTERIZATION AND THE PRODUCTIVITY PARADOX
Many analysts have argued that organizations could effectively increase the productivity of white collar workers through careful "office automation". There is a routine litany about the benefits of computerization: decreasing costs or increasing productivity are often taken for granted. For example, here is a brief sample news item from a computer science journal:
Chrysler Corporation's new computerized car design system promises
to accelerate the
development of cars by thirty per cent, saving the automotive giant
millions of dollars in
car costs. The $200,000 system was developed by the Evans and
Sutherland Company of Salt
Brief items like this appear frequently in newspapers and magazines. That they are often printed without comment -- as statements of fact -- indicates the way in which the link between computerization and cost-savings is often taken for granted. We might imagine some alternative news clips:
Chrysler Corporation's new air conditioning system in its design center promises to accelerate the development of cars by thirty per cent, saving the automotive giant millions of dollars in car costs.
Chrysler Corporation's new practice of having designers feel free to look at the ceiling when they let their minds wander promises to accelerate the development of cars by thirty per cent, saving the automotive giant millions of dollars in car costs.
These story-lines could have plausible rationales. Staring at the ceiling could free up the imaginations of designers; better air conditioning might improve their ability to concentrate during Detroit's hot, humid summer days. But stories like these are less likely to appear without some special explanation! The theme of computerization's direct economic value has already become a cultural stereotype in the United States. Like many stereotypes, it is based on some important insights. But like all stereotypes, it alters those insights and goes well beyond them.
Sometimes these stereotypes concerning the economics of computerization actually work against managers and their staffs. Some computer-based systems have enabled organizations to reduce the amount of direct labor required for certain everyday activities -- such as calculating and printing routine bills. However, many computer applications improve the quality of the work done, rather than reduce the number of people who work in a specific office. And this result won't readily appear in cost-accounting. For example, some computerized accounting systems provide more detailed, timely, and accurate information about expenditures than do their manual counterparts or simpler computerized precursors. Use of these systems can sometimes help managers and professionals to manage their funds better. But they may also require as many accounting clerks as the simpler systems for organizing data and producing new reports. Higher-level managers in organizations have sometimes balked at investing in more sophisticated computer applications and have refused to approve proposals for new computer systems without associated staff reductions. Many managers view computer systems in direct economic terms -- in terms of money spent or saved, and revenues generated.
Concerns with economic costs and payoffs might appear as rather narrow and very concrete, in contrast to a richer array of social values which we examine elsewhere in this book. Even so, there is a substantial debate about why organizations adopt some computer-based systems and why they do not adopt others. For example, despite the routine claims that computer-based technologies decrease costs and raise productivity, it is remarkably difficult to find careful cost/benefit studies of computerization in particular firms.(12)
Executives report that they do not evaluate IT on productivity alone, but that they also emphasize issues such as revenue stability, risk avoidance, growth potential, strategic flexibility, or market share (Quinn and Baily, 1994). But productivity improvements are important at the level of the whole economy to increase the economic standard of living.
The meaning of productivity is much narrower than a "positive cost/benefit ratio," and the term productivity is often used inaccurately and very loosely. Productivity refers to a ratio of outputs divided by inputs. The outputs can be units of goods or services or revenue, and the inputs can include labor, equipment, supplies, and similar costs. For a simple example, consider an office assistant who is paid $6 per hour and who has an ink-jet printer that prints two pages per minute to help her produce ten two-page letters a week during a part-time job. If her supervisor bought her a $2,000 laser printer that printed 12 pages per minute, she would spend less time waiting for her letters to print. She would feel more productive since a letter would be printed almost as fast as she turned to the printer. In fact, she would be saving about 10 minutes a week in finger-tapping time, at a labor savings of about $50 per year. However, if she were the only person to use that new printer, the organization's productivity would have decreased, because the cost of producing each letter would have increased after we add in the cost of the laser printer. However, if 12 full time assistants who produced 40 letters each week were paid $12 per hour shared this faster laser printer, the organization could be more productive after two years.
Many of us feel more productive when we get more done, or seem to be wasting less time. We focus on outputs or the costs that we bear personally. But the economic measures of productivity are defined by ratios of outputs to total costs, and are very sensitive to labor rates, equipment costs, and similar factors. One of the complications in measuring productivity is that new equipment or technical systems can often produce qualitatively different kinds of products.
The 12ppm laser printer is not just a faster ink-jet printer; it is likely to store more varied fonts, print with much finer resolution, and consequently be used for printing niftier documents, like brochures and charts. These new capabilities sometimes give people a heady feeling of heightened effectiveness, and it has helped energize excitement about the economic value of computerization. But qualitative changes in the nature of computer-supported services make productivity comparisons more complex in practice(13)
One key point that is usually ignored is the way in which the burden for increasing productivity with computer systems usually falls on the poorest paid workers in an organization. A clerk who is paid $20,000 per year must increase her productivity five times as much as a $100,000 a year executive to get a comparable return on a $10,000 computer investment. Over a three year period, the clerk must increase her effectiveness (or productivity) by 15% a year (6 hours a week equivalent) while the executive need only improve by 3% a year to break even on the investment. Computerization is one strategy among many that organizations can employ to reduce costs or improve revenues and service. Other common strategies include improving the structure of the organization including reallocations of responsibility, reducing the levels of hierarchy(14), reducing the amount of internal review(15) and paperwork, etc(16). Computerization often seems most effective when it is coupled with a sensible reform program, rather than simply as a freestanding effort "to modernize."
Most articles and books about computerization and work, such as the article by Weiland in Section II and by Feder and Kirkpatrick in this section, are written as if computer systems are highly reliable and graceful instruments. The few systematic exceptions to this rule appear in some of the software reviews and advice sections written in popular publications such as PC World, Mac World, PC Magazine, and Byte Magazine, which sometimes identify clumsy features in commercial microcomputer software. But these reviews are exceptional, and are most likely to be read by computer specialists and computer buffs. And the names of some software packages, such as WordPerfect, RightWriter, Sidekick, and Excel, suggest graceful, refined tools that help only as needed.
It is common knowledge that programs can have bugs, or that people may have trouble transferring data between two different kinds of computers. But these problems are usually viewed as rare anomalies. An anomaly is an occurrence that differs from what one reasonably expects (See Gasser, 1986). Suppose that you write a report at home on a computerized word processor and take the file to your office for printing. If the system configurations in both locations are comparable, you naturally expect the report at work to print exactly as you formatted it at home; any differences appear to be anomalous.(17)
Contrary to much advertising and reporting, problems in ordinary uses of computer systems can consume large amounts of time and patience.
The folk wisdom about computing is framed in a series of assumptions about the normal operation of equipment, such as that reports formatted on one microcomputer will print "properly" on another compatible computer which runs the same version of the software. The conventional wisdom of the computing world also has some general "escape clauses" -- such as Murphy's Law.(18) And the vision of computing advanced in many popular and professional sources is of a set of technologies which are easily usable, highly reliable, and relatively seamless.
In "The Integration of Computing and Routine Work", Les Gasser (1986) examined the way in which anomalies are common in the daily use of computing systems. Anomalies include system bugs, but they go much farther. For example, in 1990 the State of Massachusetts billed the city of Princeton, MA one cent in interest after it paid a bill for a ten cent underpayment of taxes (Tracy, 1990). Each of these transactions cost twenty nine cents in postage, as well as several dollars in staff time and computing resources. The reporter viewed the situation as anomalous because one would not expect organizations to routinely invest many dollars in attempting to collect a few cents(19). However, the computer program was probably working as it was designed -- to compute interest on all underpayments and produce accurate bills for interest due to the State of Massachusetts.
Average Annual Growth in Gross Domestic Product per labor Hour
- United States -- (Selected Industries)
|Average Annual (% per||Growth Rate
From: Table 1.1 p.33 (Information Technology and the Service Society: A Twenty-First Century Lever. National Academy Press, Wash DC. 1994)
In the last few years economists have found it hard to identify systematic improvements in United States national productivity which they can attribute to computerization. Although banks, airlines and other United States service companies spent over $750 billion during the 1980s on computer and communications hardware -- and unknown billions more on software -- standard measures have shown only a tiny 0.7 percent average yearly growth in productivity for the country's service sector during that time (see Table #1). Table #1 also shows that productivity growth in many sectors of the United States economy was much lower since 1973 than between the end of World War II and 1973.
The discrepancy between the expected economic benefits of computerization and measured effects has been termed "The Productivity Paradox," based on a comment attributed to Nobel laureate Robert Solow who remarked that "computers are showing up everywhere except in the [productivity] statistics." Brynjolfsson (1993) groups many of the explanations that have been proposed for the productivity paradox into four categories: errors in measuring organizations' outputs and inputs; lags in time due to the time that organizations need for learning about information technologies and adjusting to them; redistribution and dissipation of profits; and the systematic mismanagement of information and technology.
In the next three selections, Martin Neal Baily, Paul Attewell and John King all examine the last three of these explanations and different facets of the productivity paradox. Each of them tacitly relies upon Natural systems models of organizations in examining why business firms don't computerize in ways that significantly improve their overall productivity.
In "Great Expectations: PCs and Productivity" economist Martin Neal Baily, raises questions about the cost-effectiveness of many computer applications. Baily keeps his eye on the overall productivity of the U.S. economy, as measured by economists.(20)
He notes that overall productivity growth in the U.S. economy has been very sluggish in the 1980s. While the aggregate statistics about productivity mask large variations among different firms, and even within particular firms, Baily wonders why the nation's major investment in computing technologies has not shown up in national level data.
Baily notes that computer systems often do things better than their manual equivalents. Computerized word processing systems make it easier than ever to revise a manuscript forty times, and financial analysts find it increasingly simple to break their data into finer slices and report them more frequently. But Baily notes that it is usually hard to place an economic value on more polished manuscripts and refined reporting.(21)
He also questions the role of certain applications in altering productivity within firms or within an industry. He points out that systems that help a firm attract its competitor's customers may be great for the firm; but it doesn't raise overall economic productivity. As Baily asks at one point, somewhat rhetorically, "If this stuff is so good, why do we have the same number of secretaries?"
Numerous accounting reports may give managers an enhanced sense of control. But managers may seek more reports than they truly need, as a way to help reduce their anxieties about managing(22)
. Similarly, some professionals may be specially pleased by working with advanced technologies. But much of the investment may result in improving job satisfaction rather than being the most effective means for improving organizational productivity(23).
Attewell does not argue that managers should not have some way of controlling activities for which they are responsible or that professionals should not enjoy their jobs. But he surmises that overall, a large fraction of the nation's multi-billion dollar investment in computerized systems have resulted in diverse changes which are "captured" within organizations rather than being translated into substantial overall productivity increases.
In "Where ares the Payoffs from Computerization?: Technology, Learning and Organizational Change" John King carries Attewell's argument further. He acknowledges that organizations may have not substantially improved their overall productivity because of their ways of computerizing. And he acknowledges the importance of social processes like those that Attewell identifies as turning computerization towards diverse ends. And he adds an important analysis of the ways that accounting and reporting organizational activities can confound our understanding of organizational productivity. But King's special advance beyond Attewell's argument lies in his historical argument about the organizational learning that is required for important innovations to effectively diffuse throughout industrial societies and for numerous mangers and professionals to figure out how to use them effectively. King's argument builds on the research of historically oriented scholars such as economist Paul David. David examined the replacement of steam driven factory equipment by electric motors in the early 20th century. While electric motors offered many advantages over steam, he found that it took over 20 years for the productivity gains of electric motors to show up in national level productivity data. King notes:
If and when computerization yields major productivity payoffs it will be as a result of the confluence of three factors: The new technologies themselves, the know-how needed to apply them successfully, and the wholesale substitution of the new technologies and new methods for older ways of doing things. the new technologies are here, and it is clear that we are learning to apply the technologies, but we have not learned enough to achieve cost-saving substitution. We are still bearing the direct costs of learning, and we must bear the costs of multiple, redundant systems until we have learned enough to switch completely from the old to the new. This learning phenomenon might sound simple and straight-forward, but it is not. It is highly complicated and it takes considerable time.
King's article examines these factors in some detail. His analysis encourages us to take a long historical view of the complex processes by which managers, professionals and workers learn about new technologies and restructure organizations to make the most of them. King is cautiously optimistic that, on balance, computerization will demonstrate major economic value. But he is aware that it can take decades before we are in a position to make firm judgements, and by that time trillions of dollars, millions of person-years, and immense hope and grief will have been expended on a great set of computerization ventures.
ORGANIZATIONAL ANALYSIS IN INFORMATION AND COMPUTER SCIENCE
During the last 30 years there has been a huge sea change in the nature of jobs for people educated in academic information science and computer science programs. To simplify, in the 1960s, most such people worked as software developers or support people for batch computer systems. The computer industry, aerospace firms, and large database providers were major sites of employment. Assembly language, COBOL and Fortran reigned supreme as programming languages. The concept of a "person who used their products" was usually an abstraction. In the 1990s, the spread of desktop computing and networks of all shapes and sizes has lead to a demand for people with information and computer science skills very close to the site of application. In the concluding selection, "Can Computer Science Solve Organizational Problems?," Jonathan Allen and I argue that many information science and computer science graduates need some skills in analyzing human organizations to do high quality professional jobs.
We introduce the relatively new term, Organizational Informatics(24)
, to denote a field which studies the development and use of computerized information systems and communication systems in organizations. It includes studies of their conception, design, effective implementation within organizations, maintenance, use, organizational value, conditions that foster risks of failures, and their effects for people and an organization's clients. We argue that is overdue for academic information science and computer science to embrace organizational analysis (the field of Organizational Informatics) as a key area of research and instruction.
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For Further Reading
Campbell, John P., Richard J. Campbell and Associates (Eds.) 1988. Productivity in Organizations: New Perspectives From Industrial and Organizational Psychology. San Francisco: Jossey-Bass.
Curtis, Bill, Herb Krasner and Neil Iscoe. 1988. "A Field Study of the Software Design Process for Large Systems." Communications of the ACM. 31(11)(November):1268-88.
Davenport, Thomas H. 1994. "Saving IT's Soul: Human-Centered Information Management." Harvard Business Review. (March-April):119-131.
Dunlop, Charles and Rob Kling. eds. 1991. Computerization and Controversy: Value Conflicts and Social Choices. San Diego: Academic Press.
King, J. L. and K. L. Kraemer. 1981. "Cost as a Social Impact of Telecommunications and Other Information Technologies." in Telecommunications and Productivity. M. Moss (ed.) New York: Addison-Wesley.
Kling, Rob. 1980. "Social Analyses of Computing: Theoretical Orientations in Recent Empirical Research." Computing Surveys. 12(1):61-110.
Kling, Rob. 1989. "Postscript 1988 to 'Social Analyses of Computing: Theoretical Orientations in Recent Empirical Research.'" in Perspectives on the Computer Revolution. 2nd ed. Zenon Pylyshyn and Liam Bannon (eds.) Norwood: Ablex Publishing Co. 504-518.
Kraemer, Kenneth. 1991. "Strategic Computing and Administrative Reform." Reprinted from Dunlop and Kling. 1991.
Kuttner, Robert. 1993. "The Corporation in America: How Can It Be Changed? Can It Be Controlled?" Dissent. (Winter):35-49.
Markus, M Lynne and Mark Keil. 1994. "If We Build It, They Will Come: Designing Information Systems That People Want to Use." Sloan Management Review 35(4) (Summer):11-25.
Markus, Lynne and Dan Robey. 1988. "Information Technology and Organizational Change: Causal Structure in Theory and Research" Management Sciences. 34(5):583-598.
McKersie, Robert B. & Richard E. Walton. 1991. "Organizational Change" in Michael Scott Morton (ed). The Corporation of the 1990's: Information Technology & Organizational Transformation. New York: Oxford University Press.
1. 1 Because of space limitations, this section will not examine how computerization changes employment and the distribution of income. See the following sources for an introduction to the key debates: Cyert and Mowery (1987); Forester (1987, Chapter 9); Ginzberg, Noyelle, and Stanback (1986); Hartman, Kraut and Tilly (1986); Kling (1990), Kling and Turner (1991); Menzies (1981), and Nisbet (1992). Bluestone (1994) reviews 10 possible causes of income inequality in the U.S., including technological change, the shift to services, and the global restructuring of businesses.
2. Some of these companies, such as GE and RCA left the computer industry by the 1960's. They have been replaced by firms such as Apple, Novell, Microsoft and Lotus which started as tiny firms in the early 1980s.
3. 3See, for example, Feigenbaum and McCorduck (1983) and Opel (1987).
4. 4 Kling (1983) examines the character of value conflicts stimulated by computerization. Also see Bluestone (1994). We will examine some of these value conflicts explicitly in Section VI.
5. Banks often compete on the interest they offer for savings, and the amount they charge for loans. If computer systems lowered administrative costs, banks would be able to offer more favorable interest rates, and thus attract more business. But banks also compete on the kinds of services they offer, including notaries, branch locations, banking hours, networks of automated teller machines, and the variety of kinds of accounts. So, administrative cost-savings, instead of being passed on to customers, may be used to support expanded banking services.
6. Social psychologists characterize a group as a collection of two or more persons who interact with one another in such a manner that each person influences and is influenced by each other person (Shaw, 1976:11).
7. See Earl Shorris' (1981) poignant stories of managers who are in the dark about the conditions under which they are rewarded, promoted, transferred or fired (and especially pp. 220-225).
8. See, for example, Dyson (1990a, 1990b), McAllister (1989), Miller (1992), and O'Reilly (1993).
9. 9 See, for example Kling and Iacono (1984), Kraemer, Dickhoven, Tierney and King (1987), Knights and Murray (1994), Lyytinen and Hirschheim (1987), and Walsham (1993).
10. 10 See Kling (1987), Kling (1992), and Kling and Jewett (1994) reviews of some of the studies which treat computerization as a phenomenon embedded within organizations.
11. 11Communications of the ACM, 32(9) (September, 1989).
12. 12See, for example, King and Schrems (1978) for an assessment of key techniques of cost-benefit analyses at the level of individual computer applications or systems. The "productivity paradox" refers to the absence of strong relationships between investments in information technologies and productivity at the level of economic sectors or the whole economy, not at the level of individual applications or the firm. Also, see Landauer (1995) for concrete discussions of the productivity gains attributable to specific technologies.
13. Economists struggle for reliable ways to measure the real output of service industries (ie. Sherwood, 1994).
14. 14 See, for example, Hymowitz (1990).
15. 15 For example, Smith and Alexander (1988) report that the Xerox Corporation required about 180 reviews and signatures for a new photocopier to reach the market in the late 1970s. In the 1980s the firms was restructured to streamline the reviews, with significant improvements in the speed of releasing more competitive products. Certain kinds of computerization projects could seem helpful, but could actually simply reinforce problematic organizational practices. For example, an organization which requires many signatures for product reviews might seem to "need" a computerized database system to help track the status of a product in the maze of reviews and approvals. A simpler review process, with a less complex status tracking system, might be of much greater value.
16. 16 See Campbell, Campbell and Associates (1988) for a high quality comprehensive review of the research about productivity in organizations.
17. 17The report might print differently because of differences in the ways that the word processors are configured, e.g., with different margin or font settings. In this case the anomaly is intelligible, even if it takes some time and fiddling to locate the problem. On the other hand, if the report prints in some weird format, such as printing the top half of the page in a bold font, or placing footer lines in the middle of the page, the source of the problem may be much less clear and even harder to track down.
18. 18Murphy's Law is sometimes stated as "If something can go wrong, it will". There are addenda such as, "Murphy was an optimist". Another wry observation, labelled Hoffman's Law states, "Computer tasks will take twice as long as you expect, even when you take Hoffman's Law into account." These elements of professional folk wisdom communicate the imperfection of complex technologies and the difficulties that people have of taking many factors into account when planning complex tasks. Of course, if Murphy's Law were really a "law", this book would never have been published.
19. 19 While some organizations routinely sent out bills for $0.00 when they first computerized in the 1960s and 1970s, one might expect that all major organizations would have cleared up these economic inefficiencies by 1990. The situation was specially farcical because the State was facing an $800 million budget deficit. See Tracy (1990).
20. 20 See Baily and Gordon (1988).
21. 21Sometimes it is also hard to place a precise cost on these products. Moreover, although multiple revisions and fine-grained reporting are even encouraged by the availability of new technology (e.g., word processors), the returns may be of diminishing economic and aesthetic value. For example, does a revision from Draft #39 to Draft #40 really represent time well spent?
22. See Jackall, 1988 for an insightful discussion of managerial anxieties.
23. Review, for example, Frantz's article about the Bank of America's style of developing grand scale information systems, and Kirkpatrick's article about some professionals' joy in working with Lotus Notes.
24. Organizational Informatics is a relatively new label. In Europe, the term Informatics is the name of many academic departments which combine both Computer Science and Information Systems. I have found that some people instantly like it while others are put off. I've experimented with alternative labels, like Organizational Computing, which has also resulted in strong and mixed reactions. Computing is a more common term than Informatics, but it's too narrow for some researchers. Informatics also can connote "information," which is an important part of this field. Sociological Computer Science would have the virtues of being a parallel construction of Mathematical Computer Science, but it doesn't connote information either.