I need a review of the following article and the review must include three parts overview, analysis, and conclusion.

O 8:04 File Details MIS-7910-201 Prob Memt Info... Information systems groups will not be gone next week, but making them into profit centers is the first step in an inevitable journey to oblivion. updated to correct the deficiency of the manual rangement will be a real improvement. Giving system, as well as to incorporate improvements responsibility for part of the management infor- made possible by the technology. The problem is mation system to an independent group was never that few, if any, IS specialists understand cost ac- a natural arrangement, because the goals and pri- counting well enough to do this. As a result, orities of IS departments were almost invariably deficient manual cost accounting systems become different from those of most users. Yet the users Sloan deficient automated cost accounting systems. The had no alternatives to dealing with the IS depart- Management IS specialist is knowledgeable only about steps two ments. Review and three. Decentralization will therefore also correct many In some applications, such as payroll or routine user dissatisfactions that have plagued information 89 data processing, steps two and three are sufficient. systems for as long as I can remember. Other The skills required to automate these systems are benefits of decentralization are: Summer 1987 reasonably consistent among applications. In many . The user is in the best position to react quickly important applications, however, the initial design to competitive threats that result from the installa- of the system is critical and can only be done by tion of superior software systems. Since most com- specialists in the particular system. Yet today such panies will be adopting improved systems, the abil- specialists may not even exist in a company. As a ity to take prompt and effective action could be result, systems development has been inadequate. the difference between success or failure. Software companies are, even now, specializing . The user is in the best position to judge and as- in particular types of information systems such as sess the importance and priority of applications. cost accounting, logistics, manufacturing, market- . The user is in the best position to control the ing, planning, and financial forecasting. As this interface between computerized and noncomputer- process develops a user will be able to acquire a ized information systems. software package that includes state-of-the-art de- . When users are given complete authority for velopments in the particular type of system. (Soft- their information systems, they are also given com- ware companies will also specialize by industry, e.g., plete responsibility. If the systems prove inadequate, banking, insurance, or brokerage houses.) Conse- the blame cannot be placed on someone else. quently, purchased or leased software will not only In summary, the primary argument for decen- be dramatically less expensive than internally gener- tralization is that managers should be responsible ated software-even more important, it will also for their own information systems because their be dramatically better. ability to function effectively is dependent on the quality of those systems. The factors that once Decentralization: A Major Benefit necessitated centralization no longer exist. Conse- quently, the authority and responsibility for manag- Lower costs and superior products are not the only ing information systems should revert to the user. benefits arising out of these changes. The software revolution will also enable senior managers to as- sign responsibility for information systems to the Decentralization: Potential Pitfalls system user. When computer hardware was expen- There will, of course, be a great deal of resistance sive and capacity limited, and when systems anal- to decentralizing computer information systems. ysis and programming were unique and specialized Even if it is generally acknowledged that hardware skills, it was not economically feasible to delegate and software control could be given to the func- responsibility for computer applications to each tional manager, four principal reasons will still be functional manager. But centralization is no longer given for maintaining centralized control. These are: an economic requirement, or at least it will not . To maintain computer linkage between differ- be in the near future. I believe that this new ar- ent users. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. . To ensure compatibility of hardware and facturing and logistics systems, may be required software. on-line. I see no reason, however, why users can- . To prevent duplication of systems and pro- not work this out between themselves. Responsi- gramming. bility for networks can be delegated to the parties . To ensure integrity and consistency of infor- involved. I do not see what a central IS depart- mation. ment adds to the process. Linkage. For at least twenty-five years, many ex- Electronic mail is also cited as an important perts have advocated integrating all information sys- benefit of networking. In fact, however, most in- Previous Next 0= 4 0= Dashboard Calendar To Do Notifications InboxO 8:04 File Details A MIS-7910-201 Prob Memt Info... . To ensure compatibility of hardware and facturing and logistics systems, may be required software. on-line. I see no reason, however, why users can- . To prevent duplication of systems and pro- not work this out between themselves. Responsi- gramming. bility for networks can be delegated to the parties . To ensure integrity and consistency of infor- involved. I do not see what a central IS depart- mation. ment adds to the process. Linkage. For at least twenty-five years, many ex- Electronic mail is also cited as an important perts have advocated integrating all information sys- benefit of networking. In fact, however, most in- tems. That concept has gone by a number of names: formation received through the mail will not gain integrated data processing, total systems, manage- from being delivered in any other fashion. And ment information systems, and database systems. there are satisfactory methods for delivering urgent Withering Instead of accepting the partial centralization of messages. If electronic mail is the excuse to main- information systems as an economic necessity, these tain centralized control of hardware, then it is of IS Groups experts believed that centralization itself was de- questionable value. sirable. They now propose that independent com- 90 Compatibility. It is in a user's best interest to have puter installations be integrated through network compatible equipment if it must interface directly ing, providing the users of decentralized hardware with other users' equipment. (Certainly, users must Dearden with access to each other's systems. have better information on the interfaces to their The concept of a single integrated information systems than IS personnel.) In any case, the prob- system has never made sense to me, and I have lems of compatibility are already being reduced by so stated on a number of occasions.' It now makes manufacturers and I believe that this trend will con- even less sense. Networking is expensive. It com- tinue. plicates the installation of systems and, in some Duplicate Programs and Consistency. The same cases, reduces the number of hardware and soft- considerations apply to duplicate programs and con- ware options available. Clearly, there must be dis- sistent information. The first does not appear to tinct benefits from these networks in order for them be a problem, because most software will be pur- to be defensible. I have yet to see evidence that chased; specialized programs would probably ap- those benefits exist. ply only to the particular system. If there are in- Any benefits from networking must result from terfaces, why can't the managers involved work out the instantaneous access of one user to informa- the consistency of data preparation? If there are tion in another user's system. But how much com- no interfaces, what difference does it make? My mon data really exists? A recent Wall Street Jour- point here is that coordination was necessary when nal article estimated that "on average, 80 percent the company had a mainframe that everyone used of corporate information isn't needed elsewhere in and a department that was responsible for the oper- the company." This estimate is consistent with my ation of the mainframe and the related equipment, own experience. More important, however, most programming, and systems. Only the IS group un- or all of the remaining 20 percent is not needed derstood these operations. Consequently, the group on-line and, therefore, need not be linked. For ex- was involved in all decisions affecting computer use. ample, the same Wall Street Journal article noted When the responsibility for computer systems is that one financial service unit in a company could decentralized, only the users will have the knowl- "sift out new prospects from another unit's customer edge needed for decision making about their own list." How often would a user need to do this? Cer- information systems. To require that these deci- tainly not more than once a month. Why, then, sions be reviewed and approved by a central com- could not the different services agree to trade new puter group assumes that the users do not have customer lists every month? Most of the informa- the ability to make a rational decision or that the tion used in more than one system is not required IS group has knowledge not available to the users. on-line. For example, little or no accounting in- formation is even useful on an instantaneous ba- sis, because accounting information measures the The Transition Period financial effects of events that occur over a long The process of decentralizing systems responsibil period of time. ity has, of course, been under way for some time. Some common information, principally in manu- But inevitably the early stages of the process are Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. slow. For more than twenty-five years most sys- formation systems will be resisted - in some cases, tems have been influenced strongly, if not controlled adamantly. That will occur because decentraliza completely, by in-house IS groups. This pattern tion is entirely contrary to the longstanding goals cannot be quickly reversed. There are, however, of many IS experts. They have pursued increased indications that the reversal has begun. centralization even though its result is increased In a recent article, University of Virginia professor user dissatisfaction. Brandt Allen described the process whereby IS The concept that information systems are ho- departments are being made into profit centers His momneaucisa fallacy The concent that it is nece Previous Next 0= 4 O= Dashboard Calendar To Do Notifications InboxO 8:04 File Details MIS-7910-201 Prob Memt Info... sis, because accounting information measures the The Transidol renou financial effects of events that occur over a long The process of decentralizing systems responsibil period of time. ity has, of course, been under way for some time. Some common information, principally in manu- But inevitably the early stages of the process are Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. slow. For more than twenty-five years most sys- formation systems will be resisted - in some cases, tems have been influenced strongly, if not controlled adamantly. That will occur because decentraliza completely, by in-house IS groups. This pattern tion is entirely contrary to the longstanding goals cannot be quickly reversed. There are, however, of many IS experts. They have pursued increased indications that the reversal has begun. centralization even though its result is increased In a recent article, University of Virginia professor user dissatisfaction. Brandt Allen described the process whereby IS The concept that information systems are ho- departments are being made into profit centers. His mogeneous is a fallacy. The concept that it is neces- hesis is that they must compete for business and sary for all or most information to be available in- that the users are responsible for decision making. stantaneously, or even that it is most useful Allen writes, "Users can better evaluate and acquire instantaneously, is also a fallacy. Different infor- new systems, software, and information process- mation systems vary widely in purpose, content, Sloan ing technology than can a centralized IS Depart- and required availability. For any given user, there Management ment." He also describes several sophisticated com- are many more interfaces between automated and Review panies that have made their IS departments into nonautomated information than between auto- profit centers." mated information and other user systems. Also, 91 Although Professor Allen does not envision the an expert in one information system is not neces demise of information systems departments in the sarily an expert in other systems. No one is an ex- Summer 1987 same way that I do, we are probably disagreeing pert in all systems. Consequently, decentralization only about timing. These groups will not be gone of information systems is logical, while centraliza- next week, but making them into profit centers tion was logical only for as long as it was dictated is the first step in an inevitable journey to obliv- by economics. ion. With the exception of companies with large IS capabilities, there is no way in-house depart- ments will be able to compete against software com- panies in the long run. This conclusion is not based on an assumption that in-house staff are any less References competent than software company specialists- although, for the reasons stated earlier, I believe that in many cases they are. Even with the best J. Dearden, "MIS Is a Mirage," Harvard Business Review, January-February 1972, pp 90-99. people, IS departments will not be able to com- pete because their client base is too small and too 2 D. Keale, "Computer Caution," Wall Street Journal, 28 Janu- diversified. They cannot specialize in a limited num- ary 1986. ber of applications, nor can they use the same or a similar program with a number of different clients. B. Allen, "Make Information Services Pay Its Way," Harvard In many companies the decentralization of in- Business Review, January-February 1987, pp. 57-63. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 Previous Next 0= 4 0= Dashboard Calendar To Do Notifications InboxO 8:04 File Details MIS-7910-201 Prob Memt Info... SMR FORUM The Withering Away of the IS Organization John Dearden Sloan Management Review (1986-1998); Summer 1987; 28, 4; ABI/INFORM Global pg. 87 SMR FORUM The Withering Away of the IS Organization John Dearden Harvard Business School EVERYONE AGREES THAT INFORMATION TECHNOLOGY systems are an important strategic Sloan tool, but there remains much debate about who in the corporation should manage them. The Management author argues that users will soon completely control individual systems, and that systems de- Review velopment will be done almost entirely by outside software specialists. In essence, he predicts the demise of the in-house information systems department. Ed. 87 Summer 1987 Y ET ANOTHER REVOLUTION HAS BEGUN will depend on having a significant specialized base in the field of information systems (IS). from which to compete. For example, automobile When it is over, IS departments as they are companies have large, complex programs for pro- currently constituted will be dismantled. Indepen duction scheduling and control. Airlines have dent software specialists will dominate the devel- sophisticated reservation systems, and financial in- opment of systems, programming, and other soft- stitutions have an assortment of specialized finan- ware. Users will completely control individual cial systems. Furthermore, these companies have information systems. Sophisticated systems will be large numbers of competent IS staff members with practical for medium-sized and even small com- specialized expertise. Some companies will doubt- panies. less acquire independent software companies-as The development of centralized IS departments General Motors acquired Electronic Data Systems. over the past twenty-five years was the product of These software subsidiaries will constitute an im- the economic limitations of an evolving technol- portant part of the entire software market. As far ogy. It was not a natural separation of responsibil as users are concerned, though, dealing with sub- ities. It never worked well, but until recently there sidiaries should be no different than dealing with was no alternative. The economics of information independent suppliers. technologies are changing, and as a result the cen- tralized IS department is rapidly becoming obso- Technological Developments lete. The problem facing senior managers is this: and Cost Reductions There will be a stubborn rearguard action to main- tain a powerful IS group. The resistance will affect Developments in hardware are well documented: the speed with which improved information tech- micro and personal computers have already made nology is adopted. This paper describes the develop- users largely independent of mainframes. Future ments that made this revolution possible and ex- developments in software will enable users to be plains why it is necessary to change the locus of independent of IS departments for software sup- responsibility for information systems. port, as well. If users can get both hardware and One substantial caveat is necessary before we pro- software support from another source, then there ceed. Companies with large IS capabilities-finan- is no reason why they should not exercise com- cial service firms, insurance companies, airlines, and plete control over their information systems. I be- automobile manufacturers-will not dismantle their lieve that within the next five years companies information systems departments. Instead, they will specializing in software will largely replace in-house establish independent IS profit centers or indepen resources in U. S. companies because the cost will dent subsidiaries that will compete both inside and be far lower and the quality far higher than that outside the company. Such subsidiaries' viability which can be developed internally. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. It is difficult to conceive of a more inefficient Software specialists will be much better able to han- method for developing software than the one used dle the personnel function-their workers' skills will Previous Next 0= 4 O= Dashboard Calendar To Do Notifications InboxO 8:04 File Details MIS-7910-201 Prob Memt Info... It is difficult to conceive of a more inefficient Software specialists will be much better able to han- method for developing software than the one used dle the personnel function-their workers' skills will for the past twenty-five years. Literally hundreds not be unfathomable, and competitive pressure will of companies have developed systems and written ensure that excellent performance is required. programs for the same types of applications. The What this boils down to is that the factors that duplication of effort has been enormous, and the made in-house capability an economic necessity quality and cost of the software have varied widely. have now been overcome. Less expensive hardware The solution to this problem, of course, is for has tremendously reduced the economic disadvan users to buy or lease programs prepared by com- tage of the software packages. The increased avail- panies that specialize in creating software that could ability and lower costs of software have presented be used by a variety of companies. Unfortunately, businesses with a realistic alternative to internal de- for many years that was not a practical alternative. velopment. Withering Few such programs were available, and those that IS Groups did exist were frequently not satisfactory. They tended to be inefficient in both the amount of mem- The Complexity of System Design 88 ory they used and in the time required to run the Assessing and directing the flow of information to programs. The relative expensiveness of computer managers is one of the most complex aspects of Dearden capacity became a dominant consideration in soft- information systems creation. Consequently it calls ware design. There were other problems, as well. for specialized knowledge both of the individual The programs often had to be modified extensively. system and of the manager's need for information. John Dearden is the In some instances, the documentation was inade- The creation of an automated management in- Herman C. Krannert quate, so that, if something went wrong while a formation system can be divided into three steps. Professor of Business at program was running, the problem would be diffi- The first is to develop the basic system. That is, the Graduate School of Business Administra- cult to correct. Not enough programs were avail- to decide what information is required by manage- tion, Harvard Univer- able, so a company needed in-house capability in ment, how much information is available, how it sity. Professor Dearden any event. s to be processed, and what the nature and for- bolds the A.B. degree That need to develop systems and write programs mat of the output should be. That step is crucial from American Inter- in-house is changing, and it is changing fast. Most because it determines the usefulness, reliability, and national College and companies will soon find it uneconomical to do relevance of the information management receives. the M.B.A. degree this work in-house. As I see it, the following fac- Accomplishing this step requires different skills for from The Wharton School, University of tors will create an economic advantage for soft- each important management information system. Pennsylvania. He is ware specialists: The development of the system requires an inti- the author of numer- The most obvious factor is that more than one mate knowledge of management needs and of the ous books and articles. company will be able to use a given program. Once information available to meet those needs. It also His Forum paper, a program is written, the cost of each additional requires an understanding of computer capability. "Will the Computer user is relatively small. Consequently, the cost per Once the necessary information is decided upon, Change the Job of Top user will decrease rapidly as the number of users the second step is to develop procedures and flow Management?" ap- charts for processing the information. The third peared in the Fall increases. As more companies use software pack- 1983 issue of Sloan ages, the unit cost will continue to decrease almost step is to write the computer programs to auto- Management Review. indefinitely. I believe that the cost of software will mate the procedures created in step two. decrease as dramatically as did the cost of hardware. The problem is that step one requires different Software companies will be able to specialize by expertise for each type of system. The more im- type of application and by type of industry, whereas portant the system, the more likely it is to require an IS department must be a jack-of-all-trades. expertise not available in the typical IS department. . The systems and programming personnel will As a result, many automated systems are nothing be more capable, on average, than the people cur- more than a manual system transmitted onto a com- rently working in industry because the selection, puter. training, and evaluation will be better. The difficulty For example, most manual cost accounting sys- in evaluating information systems personnel has tems I have observed do not provide sufficiently plagued businesses since computers were intro- meaningful information to management, and many duced. Even today, many senior managers are un- provide no useful information at all. When these able to evaluate the quality of their IS department. systems were automated, they should have been Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Information systems groups will not be gone next week, but making them into profit centers is the first step in an inevitable journey to oblivion. updated to correct the deficiency of the manual rangement will be a real improvement. Giving system, as well as to incorporate improvements responsibility for part of the management infor- made possible by the technology. The problem is mation system to an independent group was never that few if any IS specialists understand cost ac- a natum acmangement because the apale and ari Previous Next 0= 4 0= Dashboard Calendar To Do Notifications Inbox