Information Technology in the Service Society A Twenty-First Century Lever (1994) / Chapter Skim
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4 Impacts of Information Technology at the Activity Level
4 Impacts of Information Technology at the Activity Level
Pages 136-164
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From page 136... ...
which embeds the tools for specific tasks and operations within networked infrastructures whose reach can extend well beyond a firm's boundaries provides vehicles for such changes. IT permits many of a firm's information-based tasks to be reconfigured and linked in alternative ways to generate new work flows and processes.
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From page 137... ...
, or, at best, optimization of a subset of existing tasks. By contrast, a purposive and holistic focus on the activity level where activities are regarded as relatively complete elements of a firm's work flow that often cross functional departments (e.g., departments such as marketing, production, or research and development)
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From page 138... ...
Thus, hard data are generally unavailable, and the literature suffers from a paucity of analytic models and substantial empirical research at the activity level.3 A number of ideas from the current organizational literature may be applied to assist with analysis at the level of activities (Box 4.1~. Although these ideas do not exhaust the paradigms that might be helpful in under
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From page 139... ...
in part because the output of service activities may be intangible.4 The committee hopes that the discussion presented in this chapter can stimulate further research at the activity level that will eventually provide a more thorough empirical base and a foundation for new paradigms and concepts with which to conduct activity-level analysis. The discussion in this report is based on material derived from the committee's interviews with senior managers as described in Appendix D, the experiences of committee members, accounts from secondary sources, conceptual models in current organizational literature (some of which have only recently appeared)
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From page 140... ...
These characteristics of activities underlie the utility of activity-level analysis for understanding service-sector performance and the potential effects of IT. Most important is the built-in customer orientation: the customer's expectations and value system can be used to set the standard against which the service activity is judged.6 And it is at the activity level that it is possible to assess whether the customer may be better served even if measured productivity declines.
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From page 141... ...
Service Activities Are Increasingly Important Not only are service activities present in all enterprises, but they also now contribute most of the value added within both manufacturing and service firms. Their elevated role is especially striking in manufacturing, where more value added now derives from service-related or intellectual activities than from physical production activities.
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From page 142... ...
create the major value in pharmaceuticals; sophisticated customer understanding and software concepts (rather than building circuit boards and boxes) create the predominant value in computers; understanding flavorings, customer preferences, and product texturing creates value in prepared foods; and so on.
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From page 143... ...
can be tailored to the needs of particular clients directly using IT; data on customers are more easily collected and analyzed; forms are more easily modified; change orders are more easily developed and communicated; and so on. As one executive in a service firm put it, "There's a sense in which we never sell the same product twice." In other words, "mass customization" is increasingly the order of the day; service firms would ideally deliver to every customer service products that are customized to his or her own individual needs.
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From page 144... ...
For example, Larry Bacon, senior vice president, Information Systems Department at the Travelers Companies, described the impact of putting policy information on line. If you look back a few years, our personal lines operation, for example, had 80 to 100 field offices.
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From page 145... ...
For example, according to Larry Bacon at the Travelers Companies, a computer-based system containing essential and optional pieces of text enables insurance sales representatives to construct group insurance policy documentation with the customer and deliver laser-printed copy the next day, in contrast to the previous approach of repeated iteration among representative, client, company lawyers, and others over a period of 3 to 9 months. SOURCE: Hammer, Michael.
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From page 146... ...
As Weston's example illustrates, the movement from relatively distinct instances of automation such as the original ADP processing systems and the original client systems that generated the paper printout used by ADPto far more integrated systems that involve direct computer-to-computer communication can provide a much greater degree of streamlining and other performance benefits. This movement toward greater integration over the past few years is expected by many technologists to increase the contributions of ITi2 in ways that can be best understood by examining changes at the activity level.
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From page 147... ...
. For example, the product management and engineering vice president of a major communications company observed that its new credit card business "was really launched out of an understanding developed through the analysis of data that's been accumulated over a number of years .
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From page 148... ...
are deployed to reduce dependence on human labor, not to enhance the job of the laborer. Further, the greater use of systems to complement knowledge workers implies a need to change the skill set that employees usually bring to their jobs.
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From page 149... ...
Cryptic and often poorly punctuated correspondence has become totally acceptable in the world of personal e-mail communications. Larry Bacon of the Travelers Companies discussed the many ways that better telecommunications has fostered improvements: It's the ability to communicate instantly and cheaply that allows me to put workstations and people wherever they need to be but let them think that they're working with someone that is right next door, whereas they could be anywhere they need to be.
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From page 150... ...
For example, Pacific Bell has reaped benefits from a mobile terminal system developed by Bell Communications Research to support service technicians. Jack Hancock, executive vice president, Product and Technology Support, explained that the Technician Access Network, or TAN, .
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From page 151... ...
IT can be used to link value chains across firms and shift work involved in various functions between organizations. Marshall Carter, currently chairman and chief executive officer of State Street Bank, provided an example relating to the processing of financial information: Mutual fund companies each year have to do an annual report for the regulators and for other people.
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From page 152... ...
But IT is being used to support ever greater geographic dispersion of personnel, as cheaper and easier-touse communications technology encourages more organizations to experiment with telecommuting or other modes of long-distance work for some staff. For example, companies such as insurance agencies and airlines engage in extensive telephone interactions with their customers; these companies can use nationwide toll-free numbers to route customer service calls to personnel physically located in low-wage areas, perhaps even outside the country, while networking and data communications between these customer service agents and corporate databases enable the prompt servicing of customer requests.
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From page 153... ...
The movement toward flatter organizations, in many instances, provides testbeds for new ideas on organization. For example, a vice president of a major communications company describes how they moved toward a more matrix-like organization because of options made possible by IT.
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From page 154... ...
Outsourcing a given service activity may make particularly good sense when that activity involves what might be called "economies of knowledge scale." Typically, the competent provision of a service subject to economies of knowledge scale requires highly specialized (and thus costly) information tools as well as the specialized expertise required to use these tools effectively, for example, some specialized databases or knowledge systems.
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From page 155... ...
The activity level is where the first effects of change will be experienced by employees, effects that will then influence performance at the firm and industry levels. Users are important stakeholders in the introduction of new information tools.
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From page 156... ...
For example, Larry Bacon of the Travelers Companies described a major shift in the insurance industry from clerical to professional personnel, with workstations being manned by professional customer service representatives, underwriters, claims specialists, and nurses, for example. In addition, changes in professional, technical, and managerial jobs that are evident at the activity level suggest that growth rates in these job categories will slow (and are indeed beginning to do so)
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From page 157... ...
One executive at a major communications company described the changing role of managers: The whole character of the relationship between a manager and employees changes. Teams are empowered, which means that the role of the manager switches from being a director of activities to a facilitator, a coach, and a thought leader.
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From page 158... ...
generally require much more extensive education and training programs. For example, the product management and engineering vice president of a major communications company noted, We're expecting people to be able to be more than just technically able.
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From page 159... ...
Cross-functional jobs and teams imply more comprehensive knowledge and the ability to manage flexible and loosely coupled staff resources. For example, one communications company vice president described the movement toward cross-functional jobs as a trend toward "caseworkers"24 for applications in customer service, provisioning, and network configuration activities, suggesting that database and expert-system technology made such jobs possible.
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From page 160... ...
The chief conclusion to be drawn from the committee's activity-level inquiry is that the use of IT has so greatly increased the opportunities for designing service activities to meet a variety of performance goals that new perspectives are required for organizational learning, understanding, and assessment. Neither researchers nor decision makers have a base of empirical evidence or well-established precedents on which to rely in understanding how IT can be used most effectively to support work flows within and across enterprises.
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From page 161... ...
This observation was made by Larry Bacon of the Travelers Companies: One of the things we've seen has been enormous cost reduction over the last 2 or 3 years in our industry, and a great deal of that has been that people have reached down and really gone and taken advantage of the things they automated years ago. So if they automated something and they could eliminate 200 positions, maybe they reduced 150 initially.
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From page 162... ...
10 to 12 percent in service activities within goodsproducing companies, increasing the productivity of service activities whether within a company or in a separate service company seriously affects the nation's capacity to increase real wages over time. One of the more important conclusions that emerges from the study of the impact of IT on service performance at the activity level is the profound effect it will have on employees.
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From page 163... ...
are often profound, it is very hard to compare macroeconomic-level issues such as productivity. In addition, the work of these people focuses on levels of analysis that are finergrained than even the activity level, with no particular ties to economic performance.
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From page 164... ...
25Davenport, Thomas H., 1993, Process Innovation: Reengineering Work Through Information Technology, Harvard Business School Press, Cambridge, Mass.; Davenport, Thomas H., and James E Short, 1990, "The New Industrial Engineering: Information Technology and the Business Process Redesign," Sloan Management Review, Summer, pp.
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