Class 9 – April 27, 2012

1. Organizational Change and Management – Part 1 Class 9 – April 27, 2012

2. IT and Public Organizations • The structure of information (Multi-level Integrated Information System, MIIS, Jane Fountain) • Three interrelated levels • Micro level • Individuals share info in small groups within and across organizations • Organizational and interorganizational level • Design and use processes and systems to codify and structure information • Routinize repeated behaviors, transactions, and information processing sequences • Institutional level • Formal rule systems, laws, regulations, contracts, property rights • Codified and regularized information flows • Largely outside the control of any particular agency

3. IT and Public Organizations • Interactions between levels • When information flows change in one level, others are affected • Complex to implement • Difficult to predict effects and path of organizational change • Chief challenge for organizations is not the implementation of new technologies, but the organizational change required to develop more productive information flows. • Failure rates are very high, often due to inadequate conceptualization and management of organizational change.

4. IT and Public Organizations • Individual and small groups • Process • Social and professional networks • Interpersonal skills, champions, network brokers • Trust; social capital • Constrained by organizational processes – can stifle innovation, often a target for modification • Effects • IT will de-territorialize organizations • Individuation (customizing to the individual)and social networking • Social media: Blogs, listservs, web conferences, LinkedIn

5. IT and Public Organizations • Organizational Level • Process • Structures and channels • Standard operating procedures, routines, learning through repeated interactions • Governance; management • Division of labor • Overcoming the cognitive limitations of individuals • Effects • Centralization and decentralization of structure • Shrink middle management (flattening organizations) • Disintermediation

6. IT and Public Organizations • Institutional Level • Process • Legislative process • Budget process • Judicial process (laws, rules, and regulations) • Effects • Globalization; International financial flows; world is flat; 24/7 world; borderless world • Transnational corporations; International division of labor • National laws vs. global values • Linked cities • Weak or strong national government

7. Planning for IT Investments • Strategic Planning • Strategic planning is required for IT investments. • Strategic planning builds on environmental scanning to perceive changes. • Strategic planning for IT involves seven steps: • Creating a planning structure • Identify stakeholders; secure involvement and commitment of top management; define IT role; mandate focus on outcomes, not outputs • Auditing information systems • Review and clarify agency’s mission; inventory current systems, applications, structures, staffing, and resources.

8. Planning for IT Investments • Strategic planning for IT involves seven steps: (continued) • Defining goals • Strategic vision statement using consensus-building methods; assessment of IT technical and organizational system requirements. • Evaluating proposals • Investigation of best practices; prioritization of proposals; relate options to resources. • Composing annual plans • Planning ahead one to five years; implementation of a governance plan; plan training and support functions • Obtaining administrative and political approval • Matching specific authorities to proposed goals and objectives. • Implementing the plan, evaluating outcomes, revising the plan

9. Strategic Planning example: Enterprise Resource Planning (ERP) • ERP originated in the private sector; Initial efforts often were not successful • A number of states and cities have applied ERP with varied success. • ERP is a single computerized system that supports the common business functions of all agencies within a government unit (e..g federal, state, or local). They offer three central promises • That enterprise-wide software systems would be less expensive than multiple departmental systems. • That consolidation of databases would improve management decision-making. • That reliance on large ERP software vendors would assure critical systems remained state of the art, never obsolete. • Common functions include • Accounts payable, assets and inventory, budgeting, financial accounting, grants and projects, human resources, payroll, benefits administration, purchasing, revenues and receipts, and treasury. • Florida became a leader in ERP with its efforts to replace legacy systems. However, salaries were cut to pay the contractor for the new system. • It is debatable if there are actual savings.

10. Planning for IT Investments • Two major issues for planning IT investments • Risk Management • Records Management • Risk Management • All investments carry risks; risks of IT investments are particularly problematic • Classify IT risk: physical, liability, outsourcing of IT functions, security, workplace injury, etc. • Survey risks in each category, assessing probability and magnitude • Evaluate costs of safeguards for each risk • Risk management is a planning specialty that has increasingly become professionalized during the last two decades. Often, risk analysis is performed by consultants rather than in-house • Risk management is a broad category and is basically a subset of strategic planning.

11. Planning for IT Investments • Records Management • Records, which are the agency’s memory, must be created, maintained, and preserved. • Records management underlies e-government. • The National Archives and Records Administration (NARA) issues the guiding document Agency Recordkeeping Requirements: A Management Guide. NARA guidelines require agencies to have a records management policy but do not spell out details for retention or discarding. • Digital records management is a major recent issue, as are what constitutes a public record, particularly in regards to email. Digital records have the potential to increase or diminish accountability. • The important point is that records be kept in complete and accurate fashion to support transparency

12. IT Management: Needs Assessment • Needs Assessment • The main purpose of needs assessment is to identify organizational problems (internal and external). • A thorough needs assessment can re-energize an organization as quickly as a poor one can damage it • Four stages of Needs Assessment • Collecting information: • Interview stakeholders, brainstorming, focus groups, organizational surveys, data and transaction reviews • Present modes of Service delivery of the organization • Identifying and prioritizing problems: This identifies • What are the baseline improvements sought in LOBs and Services • Can IT adaptation achieve the improvements? • Researching alternative possible solutions: This identifies alternative technological solutions to improve performance • Seeking consensus on proposed solution: People need to agree to the solution

13. IT Management: Business Process Analysis (BPA) • BPA is not the same as needs assessment and not necessarily associated with it. • Prime focus of BPA is on Workflow analysis • Workflows deal with how tasks are distributed and sequenced between employees in an agency (or between agencies). For example, building permit requires processing by several units, such as planning and zoning, fire, infrastructure, environment, and other departments. • Workflow analysis seeks to increase efficiency of task performed (e.g. reduce building permit process from 30 days to 5 days) • Workflows are categorized into processes (each with its associated process owner) • BPA uses an iterative method to consider how a process might be reengineered and to arrive at consensus on proposed solutions

14. IT Management: Feasibility study • Feasibility study analyzes a business problem and has three broad dimensions • Operational feasibility • Economic feasibility • Technical feasibility • Feasibility study is needed to indicate what is possible on the above three dimensions; Needs assessment identifies what is required for the organization. Sometime, what is needed may not be feasible, and what is feasible may not be needed. • Needs assessment should be coupled with feasibility studies in order for both to be effective • Feasibility studies do not ensure that projects match agency missions, and do not establish need. They simply bridge strategic planning and needs assessment on the one hand, and practical concerns of the project manager on the other hand.

15. IT Management: Project Management • A project is a temporary management effort to launch a product, service or process. • Project management is the oversight of this effort • A project plan involves several elements: • Mission statement • Governance of the project • Authority and approval structure • Budget and resources • General management approach • Evaluation procedures to be used

16. IT Management: Project Management • The Role of the Project Manager • Managing people is more difficult than managing technology • There are 10 broad tasks of all project managers • Setting clear goals for the project • Setting clear objectives for the project • Establishing specific checkpoints, activities, relationships, and timelines • Scheduling tasks for the project • Developing the project team and the individuals in it • Motivation of team members • Keeping stakeholders informed • Managing project tasks creatively • Negotiating agreements with all internal and external groups involved with the project • Negotiating enough power for the project manager, commensurate with responsibility

17. IT Management: Project Management • An important universal skill for project managers is project scheduling – PMs must have knowledge of critical path scheduling techniques, and address scheduling of all project resources (time, money, human resources, hardware, software) – identification of dependencies is critical • Various certification and training programs are now in place, and are being supported or supplemented by professional associations

18. How Aspects of IT Management “Fit”

19. Organizational Change and Management – Part 2 Class 9 – April 27, 2012

20. Managing IT in the public sector • In-house development • IT is managed by the public agency itself • However, the agency needs the human resources and technical expertise, which may not be available in-house • Partnerships (Public/ private) • Public agency partners with private sector in developing IT service, bringing strengths of each • Joint ventures between the public and private sectors • Public sector has its core service objective; private sector provides technical competence • Is it automatically more efficient to turn IT functions over to the private sector? Some have an ideological belief that it is always preferable to have market-based solutions. • Business always runs for profit, and most often short-term at the expense of long term. Often inconsistent with the goals of public policy.

21. Managing IT: Partnerships • Keys to successful partnerships • Agency culture open to learning from the private sector • Willingness to engage in mutual problem solving/goal seeking • Having a comprehensive partnering agreement • Having an ongoing day-to-day mechanism for feedback • Inclusion of performance penalties as well as rewards in contract • Agency must not become dependent on the partner • Private partner able to handle changes in services provided. • The degree of accountability of the private partner • What if the partnership is of weaknesses? • Private sector could hold the public sector hostage • Public services could be compromised

22. Managing IT: Outsourcing • Outsourcing as an alternative • Outsourcing is a process of contracting with a vendor to provide a service or an activity while the public agency retains the responsibility and accountability for the service or activity • There is a transfer of management responsibility for the delivery of resources and the performance of those resources

23. Managing IT: Outsourcing • Outsourcing Advantages • Contractor may be able to provide state of the art technology • Contractor may be able to provide technology at lower cost • Agencies receive hardware and software updates automatically • Large outsourcers deal better with scalability issues • Outsourcers may be able to obtain better human resources • Agencies can shift or shed training and support burdens • IT services are provided on fixed budget, no surprises • Competition between contractors ensures high quality/low cost (in theory!)

24. Managing IT: Outsourcing • Outsourcing Disadvantages • Loss of agency jobs can leave them with little or no tech ability • Agencies lose capacity to get baseline performance data and contract management is difficult • Outsourcing of jobs has been done in the past for no good economic reason – cost/benefit did not support the actions • Outsourcing may involve the loss of local jobs • Outsourcing may lower agency morale and cause turnover • Outsourcing increases the possibility of favoritism • Outsourcing is done mainly through large contractors, making contract monitoring difficult • Costs of monitoring contracts are typically underestimated • Possibility of expensive litigation • Lowered security levels • False claims of savings • Questionable accounting procedures to make costs seem lower • Outsourcing can adversely affect women and minorities

25. Managing IT: Outsourcing • Why IT Outsourcing Fails • Complexity – projects are too large and complex • Commitment failure – lack of commitment from stakeholders • Planning failure – poor business plans • Vision failure – underlying assumptions are unrealistic • Inappropriate methods – agency methods may not match IT • Short time horizon – unrealistic schedules • Turbulent environments – rapid rates of change • Failure to support end users

26. Managing IT: Outsourcing • Why IT Outsourcing Succeeds • Management support – involvement of top officials • Stakeholder motivation – IT benefits • Goal clarity – project scope must be clear • Support for organization culture with IT • Participatory implementation – employee buy-in • User friendliness – to increase stakeholder motivation • Adequate budget and time horizon • Phased implementation – extension of goal clarity • Process and software engineering – dealing with legacy systems • Project management – professional is better

27. Managing IT: Outsourcing • San Diego Case study • First, San Diego’s outsourcing failed, then it turned around • Failure: See • http://www.cio.com/article/31139/GOVERNMENT_OUTSOURCING_You_Can_t_Outsource_City_Hall • Turn around: See • http://www.govtech.com/gt/93060 • http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=108019

28. Contract Management • Good contract management is a key element for successful outsourcing • Contract management allows an agency to obtain goods and services at an advantageous price, delivered on time, meeting functional specifications. • White and Korosec (2005) enumerate many problems with IT contracting: • Specification default – if specifications are lacking vendors take advantage • Requirement creep – agency asks for additional features • Legacy maintenance – vendors are reluctant to integrate existing legacy systems into new systems • Integration risk – vendors propose and government seeks enterprise software – however one size does not always fit all

29. Aspects of contract management • Performance Based Service Contracts • Performance Based Service Contracts • Agencies specify only the outcomes they want – the means and methods are left to the contractor. • Difficulties in managing performance-based contracts have given rise to a new industry • Consultants who assist agencies in development and monitoring of performance-based IT contracts • Pitfalls with performance contracting include achieving artificial cost savings due to reducing services to have a better bottom line and failing to closely monitor results

30. Aspects of contract management • Share-in-Savings Contracts • Share-in-Savings Contracts (SISC) • A contract management strategy for creating vendor incentives to deliver effective IT systems on time and within budget • Vendors are awarded a portion of the savings brought about by the system • SISC has many critics who say that it uses “shady financing and accounting techniques” and moves federal IT purchases away from “public and congressional” scrutiny • Evidence that SISC is in the public interest is weak as there is very little documentation of actual savings

31. Organizational Change • Virtual organizations • Impersonal; rules and regulations • Post bureaucratic organization • Less tangible vertical hierarchy • Loss of silo structures (departments) • Loss of control by layers – more horizontal connections • Horizontal networked structure • Geographical aspatiality • Face-to-face meetings not required • Computer mediated communications; virtual conferences • Wireless enabled field work • New Public Management • Lean structures for efficiency • Blur between public, private, voluntary • Emphasis on e-governance, rather than e-government • Contractual relationships • Driven by performance indicators of outcomes

32. Organizational Change • Telecommuting • Computer-based distant access to company business systems • Blurred distinction between office, field, and home • Why? • Budgetary limitations • Improved customer service • Employee needs/family-friendly workplace (quality of life) • Energy consumption • Traffic congestion and safety • Monitoring issues • Managing for program results • Developing a business case for telecommuting • Establishing measureable program goals • Establishing systems to collect data for program evaluation • Identifying problems and making appropriate adjustments