The Business Transformations Organizational Context Information Technology Essay

Business Transformation, in an organizational context, is a process of profound and radical change, focussing an organization on a new direction and taking it to a new level of effectiveness. Transformation implies a basic change of character and little or no resemblance to the past configuration or structure (www.businessdictionary.com, 2010a). IT enabled business transformation is the use of technology in order to fundamentally alter the way business is carried out within an industry and organizations implementing these changes can competitive advantages (Rau, 2006).

Information Systems enabling business transformation has evolved greatly over time. The early 70s saw data being centralized and systems linked to a very few business functions and the operations of the bulky main frames. The 80s saw the installation of PCs and LANs and departments set up computer systems, using end-user computing with word processors and spreadsheets making departments less dependent on the IT department. The main focus was central control and corporate learning. The 90s Wide Area Networks became corporate standards with senior management looking for system and data integration. Main focus was central and corporate learning. The millennium brought with it Wide Area Network expansion through the internet to include global enterprises and business partners – supply chain and distribution. Senior management look for data sharing while the main focus is on attaining efficiencies and speed in inventory, manufacturing and distribution. (University of Wisconsin Oshkosh, n.d).

The roles and responsibilities of the CIO are ever evolving. Ross and Fenny (1999) highlight the varied roles of the CIO during three eras; mainframe era (1960s – 1980s), distributed era (late 1970s onwards) and the web-based era (mostly mid 1990s onwards). The mainframe era CIO was is most cases a Data Processing/Information Systems manager. The key tasks demanded were to deploy new systems to time and budget, and ensuring systems reliability during operations. The distributed era saw the CIO hit turbulent times. CIOs had to learn and master multiple roles in order to survive and prosper. The four main roles of the CIO were Organizational Designer, Technology Advisor, Technology Architect and Informed Buyer. During the web based era, the evolving CIO focuses on business change through new business models, management processes etc. The CIO also argues for greater measure of central coordination and also work with executive colleagues to improve leverage so as to fulfil the need for strategically aligning operations to IT in a bid to attain higher levels of efficiency and competitive advantage.

Lanka Bell is the second largest fixed line telecommunications operator in Sri Lanka with over 1.2 million CDMA and fixed wired lines. It is also the ISP with the largest international backbone in Sri Lanka. Lanka Bell was established in 1997 and was later acquired by Milford Holdings (Pvt) Ltd, a subsidiary of the Distilleries Company of Sri Lanka (DCSL) in 2005. Under new management, Lanka Bell was the first Operator to introduce CDMA into the Sri Lankan market and is presently has the largest CDMA customer base of more than 1.2 million subscribers. In 2008, Lanka Bell invested US $27 million to link Sri Lanka to the ‘Falcon’ section of the FLAG fibre optic undersea cable, which is owned by India’s Reliance Communications and has more than 87 points of presence (POPs) worldwide. Lanka Bell is the Sri Lankan operator with the largest international backbone capacity. Further, the Lanka Bell team more than quadrupled from about 350 employees in 2005 to about 1500 today. Lanka Bell currently has 65 branch offices, and also strategic ties to Abans, Softlogic, Arpico Shopping Malls and multiple banks in easing the obtaining of services and the settlement of bills. In mid 2008, Lanka Bell was the first Sri Lankan operator to commercially launch WiMAX operations. WiMAX is currently being deployed island wide in the provision of data and voice solutions. The WiMAX network enables the coupling of voice and data solutions including Broadband, Leased Lines and VPNs. It also provides for a centralized monitoring and fault locating. WiMAX is one of the most recent technologies to hit the telecom industry in the provision of high speed data, voice and streaming media.

Lanka Bell is just 13 years old and as Sri Lanka is a developing country, it cannot be assumed that Sri Lanka has the infrastructure and know-how currently available in more developed nations. In place of a CIO, Lanka Bell has an individual with the designation of General Manager IT. Presently Lanka Bell is upgrading IT/IS infrastructure and data and voice networks to support future expansion and create efficiency. The IT/IS division has presently taken over the IT/IS operations of 16 companies coming under the parent DCSL group and manages all technology related issues. This provides for improved efficiency and significant cost savings on man power and other resources. Further, Lanka Bell is testing the use of HP Blade Servers in collaboration with DMS Electronics (Private) Limited. The Blade systems are state of the art new server systems which support for advanced data processing, storage and redundancy option through SAN (Storage Area Network). These Blade systems consume less power, less space and support virtualization, which will enable multiple servers to be installed and managed on one system, which is the technology of tomorrow. The positive outcomes of this could be newer, faster and reliable systems supporting centralized storage and management and thus lowering the overall hardware costs, power costs, maintenance cost and labour costs etc. Tests are also being carried out on mobile CDMA. This technology has already established infrastructure and the company may have a considerable income if the system could be implemented. The organization also conducts tests on the WiMAX network with multiple vendors, testing inter vendor compatibility and the overcoming of identified issues etc. These experiments are being conducted to enable reduction of costs of operation and to also provide a wider range of products and services to customers at more competitive rates.

The role played by IS/IT in the telecom industry worldwide is immense. Cansfield (2008) states “…value in telecoms is created by the IT systems that create the services that run on the network and are purchased by customers”. Cansfield (2008) further states “…the performance of the IT systems should be placed under as much scrutiny as the balance sheet”. As mentioned in the above paragraphs, it can be seen that IS/IT enabled business transformation is a continuous process and as change occurs, so does the role of the CIO have to evolve. It can be understood from the overview of Lanka Bell that as the company enforces changes to business strategy, it needs the IS/IT strategy to evolve too. For these changes to occur smoothly, the CIO should be able to evolve to match the situational requirements. Literature mostly covers the two areas of IS/IT enabled business transformation and the evolving role of CIOs as separate areas of study; neither providing sufficient comparisons nor emphasizing the relationship existent. Based on initial studies, congruency between the evolving role of the CIO and IS/IT enabled business transformation can be noted. This research is conducted so as to identify how the evolution of IS/IT enabled business transformation influences the change in the roles of CIOs and also to formulate guidelines and recommendations to Lanka Bell. These guidelines and recommendations are intended to assist the top level management match the changes in business environment with the level of IS/IT enabled business transformations and provide a clearer view for the CIO to conduct operations.

6.0 Literature Review:

IT enabled business transformation has many definitions by different academia. Rau (2006) defines IT enabled business transformation as the use of technology in order to fundamentally alter the way business is carried out within an industry and organizations implementing these changes can competitive advantages. Oestreich (2009) says of IT enabled business transformation that it is the integration of all activities and functions along business processes into a single process agile value chain. Similarly, Markus and Benjamin (1997) also view the transformation as a business process that crosses several functional lines. In studying the above definitions, it can be summarized that Rau (2006) views IT enabled transformation as the use of technology in attaining competitive advantages, while Oestreich (2009) views it as the integration of processes. Markus and Benjamin (1997) view is integration across functions. Based on the above, a definition can be formed where IT enabled transformation is the use of technology to attain competitive advantages by integrating processes across functional lines.

Ever since the commercialization of computers in the late 1950s, IT has been an enabler to business transformation. Ross and Fenny (1999) differentiate the levels of IS utilization during three eras. The mainframe era commenced with the automation of clerical tasks and overtime developed transaction processing capabilities. It was during this stage that Electronic Data Processing was initiated in the accounting function. In good time, firms began automating other functions until mainframe computing affected the organizational activities or most large organization. The distributed era commenced with the development of business applications for mini computers and personal computers and typically targeting needs of knowledge workers. This initially resulted in ‘islands’ of computing within organizations. IT was increasingly perceived as a tool for cross-functional integration and collaboration. It was at this stage that certain companies took IT as a competitive weapon and strove to innovate along the supply and distribution chains. Further changes evident were globalization and business process re-engineering. Towards the end of the era, ERP systems emerged and they seamlessly integrated all required transaction processing within a distributed network. Organizations invested huge sums in ERP development. The web-based era brought with it the development of the internet, extranet an intranet based applications for business. Organizations began to realize they could offer low cost value-added services via the web. Intranet applications linking the organization provide for data sharing and business process standardization. Knowledge management is a key development of the web-based era. Extranet applications have also developed to link an organization with multiple partners in supply, distribution, manufacturing etc. Rouse (2005) states in the late 1950s and early 1960s, a whole new segment of interactive computing emerged. In the late 1960s, Digital Equipment Corporation (DEC) minicomputers dominated the interactive computing market while in the mid 1980s, Apple came out with the Macintosh, which became the industry standard in the sense of its features and benefits. He further states that most of today’s attention has been dominated by the internet.

The process of transformation in itself is of complex nature and many academics have suggested models. Venkatraman (1994) provides a framework based on two dimensions: the potential IT benefit range and degree of organizational transformation, and states the benefits from deployment of IT are marginal if superimposed on existing organizational conditions. In cases where investments in IT functionality are complimented by organizational changes in characteristics, benefits accrue. A diagram of the model is given below:

Source: Venkatraman (1994)

Ventakraman (1994) further describes the distinctive characteristics of each stage:

Localized Exploitation covers the leveraging of IT functionality to redesign focused, high-value areas of business operation.

Internal Integration covers the leveraging of IT capability to create a seamless organization process – reflecting both technical interconnectivity and organizational interdependence.

Business Process Redesign addresses redesigning the key processes to derive organizational capabilities for competing in the future as opposed to simply rectifying current weaknesses; use IT capability as an enabler for future organizational capability.

Business Network Redesign is articulating the strategic logic to leverage related participants in the business network to provide products and services in the marketplace; exploiting IT functionality for learning from the extended network as well as for coordination and control.

Business Scope Redefinition is the redefining of the corporate scope that is enabled and facilitated by IT functionality.

Venkatraman (1994) conclusively states that,

…successful companies will be differentiated by their ability to visualize the logic of the new business world and leverage IT to create an appropriate organizational arrangement – internal and external – to support business logic. The transformation trajectory is a moving target, shaped by fundamental changes in the competitive business world. Management’s challenge is to continually adapt the organization and technological capabilities to be in dynamic alignment with the chosen business vision.

Rouse (2006) in his book provides a broad systems-oriented view of transformation and a theoretical view on the forces that prompt transformation and the nature of how it is pursued. He also addresses the issue of transformational leadership and organizational and cultural change. Towards the end, he provides a collection of transformational case studies.

Perumal and Pandey (2008) define the process of transformation as, “a drastic change in the way of running a business. This change may span across processes, people, technology, policies, vision or any other business component, and has a direction for meeting a specific business goal”. They provide a table containing the stages of the transformation process and further state that any business transformation impacts in one or more of the following ways; workforce culture becomes manageable, processes become efficient, automation of manual activities, business rules are altered, strategy gains direction. The following is an illustration of the various transformational process stages:

In analysing the above paragraphs, it can be noted that Ventakraman (1994) defines the stages or levels of transformation based on two variables; the range of potential benefits and the degree of organizational transformation. An organization can map itself into one of the five stages, given it matches the required criteria. Perumal and Pandey (2008) state transformation spans across processes, people, technology, policies, vision or any other business component, and has a direction for meeting a specific business goal and provide seven stages for transformation. Each stage has sub-steps and if conducted in the correct manner, each element of business gets favourably transformed during the process. The Booz Allen Hamilton (2010) transformation life cycle defines five stages for transformation. It also defines the key enablers to successful transformation which are people, process, technology and physical infrastructure. The model also illustrates the process areas of capability development, ownership building and program stewardship, each are related collectively performed sub processes to achieve a set of predefined goals.

In analysing the above paragraphs, Feldhues (2006) presents the Gottschalk set of CIO Leadership Roles. These nine roles described can be applied to a CIO and also to the role expected of a CIO. Furthermore, Edwards et al. (2009) presents five types of present day CIOs and describes them against six criteria he has defined. Also, Kaufeld et al. (2000) provide Chari’s extended IT Leadership Growth model in emphasizing the role of IS/IT management. This model divides the IS/IT leadership into a four stage process where, when the leadership evolves, the characteristics of the previous stages are included in the new stage, thus improving and increasing competencies and abilities.

Lanka Bell was incorporated in 1997 and since inception has been a key player in the telecom and Internet Service Provider (ISP) industry in Sri Lanka. Lanka Bell commenced with around 300 members of staff and very limited technology and systems. Most of the processes at inception had a lot of manual processing involved as they were only partially automated. As operations progressed, the influence of IS/IT upon operations increased. IS/IT was always a part of the business as the telecommunication industry is very dependent on IS/IT systems (Cansfield, 2008). The hierarchy of IT leadership at Lanka Bell also evolved over time with new designations being created and others removed. Currently, the role of the CIO at Lanka Bell is played by the General Manager IT. In 2005, as Lanka Bell saw a new management takeover, the strategic importance of IS/IT and the need for good leadership was recognized.

Research can be classified as primary and secondary research. Primary research refers to the researcher collecting his/her own data rather than depending solely on published literature while secondary research refers to the researcher seeking out literature from a number of sources including journals, books conference proceedings etc with a view to show he/she is well read in the area (Biggam, 2008).

Further to the above, research methods in general can be classified as action research, experimental research, case study approach, computing research are some examples. The Lecture notes (2010) mention Kock (1997) describes action research as research where the researcher’s aim is to directly improve the organization studied while also generating scientific knowledge, while Oates (2006) describes experimental research as a strategy investigating cause and effect relationships and seeking to prove or disprove the relationship between a factor and an observed outcome. It also mentions of Yin’s (2003) description of the case study approach as an empirical study investigating in real life context, even when boundaries are not clearly evident. Computing research is mentioned as being composed of eight major approaches (Galliers, 1992).

Dr. Bandu Ranasinghe