The paradox of information systems: strategic value and low status

Abstract

Information systems (IS) have provided dramatic returns for some organisations. For many others, IS underpin most of their activities. Spending on IS can be very high. Few organisations can function without adequate IS. Yet, there is an apparent paradox in the reliance on information systems and supporting information technologies (IT) on the one hand and the status of the information systems function on the other. While information systems can be critical to an organisation's ability to conduct and develop business, the information systems function is often considered as a secondary activity. To explore the paradox, this paper uses a cultural web model to assess the status of IS and IT activities as evidenced in the literature and through the study of four organisations. These serve to demonstrate the contradiction between the extent to which large organisations appear to rely on information systems and the low status of the information systems function. The implications of this are explored, and it is suggested that IS can be exploited fully only if there is a change in attitude and thereby an increase in status of the information systems function.

Introduction

Information systems (IS) can transform business and revolutionise the way business is conducted. Yet, senior managers and others often perceive the information systems function as having a secondary status within organisations. Information systems are judged in terms of speed of delivery, quality and cost—in the same way as contract cleaning and building maintenance might be judged. These comparisons and measures are not appropriate for a function that can transform business, yet they exist, perhaps, because of the low and inappropriate status attached to the IS function.

Jarvenpaa and Ives (1991) argue that general managers need to be involved in information systems due to the magnitude of expenditure involved, the ability of IS to enable business initiatives such as business process re-engineering, total quality management, globalisation and downsizing, and the weight of evidence which demonstrates that when general managers are not involved in IS, investment is wasted on automating inefficient processes. General managers are more likely to be willing to get involved with functions they perceive as having high status.

In order to investigate this paradox of high impact but low status, it is necessary to be able to describe the status of a function and those within it. Investigating status raises problems of formal definition, and its operationalisation in any study. Status concerns position, rank or importance. Status is an element of power, and while there has been little previous research on IS status, there is work on power—the ability or the authority to do something—which can inform the analysis.

Power is the ability to influence others’ behaviour. Lucas (1984) posits that the IS function “will be powerful” as it displays the characteristics that Hickson et al. (1971) identify as being sources of power. These sources are:

• High coping with uncertainty—units which help to absorb and control uncertainty should have high power.

• Low substitutability—easily substituted departments have low power.

• High workforce pervasiveness and immediacy—these capture the extent to which a department is connected to others and how quickly the rest of the organisation would be affected if the department ceased operating.

• High interdependence.

Yet Lucas’ empirical work does not support the contention that IS departments are powerful. He suggests that his results may be due to a lack of knowledge of the role of the IS function by others in the organisation. Subsequent work by Saunders and Scammell (1986) concurs that IS has low power. Again, the lack of awareness by others is suggested as a cause, along with ISs purportedly low political and negotiation skills. Saunders and Scammell also suggest that the type of IS used will affect the IS function's power. In those organisations where IS may be described as residing in McFarlan and McKenney's (1983) support or factory quadrant, it is likely that the IS function will not have high power, while the converse is probable if IS is strategic, or at least potentially so. In a related vein, Saunders and Scammell (1982) suggest that IS power will vary from industry to industry. Markus and Bjørn-Andersen (1987) differentiate between having and using power, and exercising power but that power not being perceived. This dichotomy of users and IS staff being either aware or unaware of the other's power leads, the authors conclude, to either mutual negotiation, professional manipulation, user resistance or unintended influence.

Since this work was carried out, the role of the IS function and hence its power (and status) have been affected by a number of countervailing forces. The moves to IS outsourcing may have the effect of reducing IS power. On the other hand, IS becoming increasingly strategic is likely to have increased its power. Similarly, the growth of inter-organisational systems and end-user (distributed) systems may well have had a positive impact in power terms.

This paper investigates one element of power, that is, status. There are a number of aspects to status that can be operationalised. The status of a function may be revealed by its position within the hierarchy and the value of resources given to it. It may be that function status is reflected by that of the function head. For example, the high status of the finance director might be reflected in a place on the board and a large budget. Yet, many indicators of status are more subtle and context-specific. The finance director's allocated space for a large company car, the size of the office and the colour of the chair might all contribute to the aura of a high-status employee. Status provides the power to influence others and control working practices in the organisation. It is unlikely that a group with a low status could transform a business. The effectiveness of the IS function depends, in part, on its power vis-à-vis other departments. As Lucas (1984) argues: “to a large extent, the success of information processing in a firm is dependent on the information services department and its relationship to other departments, managers and users”. There is also an associated issue of credibility. A function that lacks credibility with users and other managers is unlikely to be perceived as one that can effect major change in the organisation.

There is no universal set of status indicators. Status is largely dependent on internal context. For example, a desk by the window in Japan might indicate low status whereas in the West it would generally be considered desirable and thus suggests higher status. Indicators need to be found that participants agree, point to relative status within their particular environment. In this research, these indicators emerge through the study of four organisations, which were investigated using in-depth surveys; they do not necessarily translate between organisations. In exploratory, qualitative research, broad categorisations of status only are possible but this should not be seen as inhibiting the investigation. However, the evidence suggests that information systems (IS) and the supporting information technologies (IT) have crucial importance to the success of each organisation; although this is not reflected in the status of the IS function within these organisations.

This paper also uses evidence from the literature which further demonstrates this paradox. Johnson and Scholes’ (1993) cultural web model is used as a framework for assessing the literature and is also applied to the material obtained through investigating the four organisations. The paper concludes by considering ways of addressing the situation.