Chapter 1
Managers: Key to Information Technology
Results
Solutions to End of Chapter Material
Answers to What Would You Do Questions
1. A new financial analyst at your firm has been tasked with performing a competitive
analysis of your firm’s IT spending versus your three top competitors. Over lunch with
you and a couple of other recent hires, the coworker shares that her analysis shows
your firm is spending just over 4 percent of revenue (recent annual revenue for the firm
was $150 million) on IT while your company’s competitors are all spending less than 3
percent (recent revenue ranges from $300 million to $400 million). She asks the group
if they think this spending difference is significant and if she should highlight it in her
report. What would you say?
Students’ answers will vary. However, students may mention that organizations
typically spend 1 to 6 percent of their total revenues on IT. This spending is generally
higher for industries in which IT is more critical to success, such as health care and
financial services. IT spending as a percentage of revenue is also typically higher within
small organizations than large organizations.
Students may also mention that these numbers represent rough averages. IT-related
spending varies greatly, even among similar-sized companies within the same industry.
While one company may outspend a competitor on IT, it is not necessarily making more
effective use of IT. The most important consideration is what organizations are getting
out of their investments in IT, not how much they are investing in IT. The most effective
users of IT maximize value from IT investments that are aligned with their
organization’s strategic needs and that are well managed and executed. Managers must
evaluate IT investment opportunities against existing business needs and help frame
these opportunities so others can understand them. Managers must provide the
leadership to recognize and advocate for those opportunities that fit with the
, organization’s business strategy.
2. Imagine instead that the new Avon order management system was well designed and
extremely easy to use. Identify key actions that the Avon management team must take
to ensure a successful rollout of an easy-to-use system for the Canadian sales reps.
Students’ answers will vary. Students may mention that to implement an IT system
successfully, Avon might need to change its business processes, worker roles and
responsibilities, reward systems, and decision making. Many organizations have tried to
implement a promising new IT system, only to have employees never use it or not use
the system to its full potential. Managers must be able to overcome this resistance so
that the new IT system is accepted and used throughout the organization. Several
theories on organizational change management can help smooth the introduction and
adoption of IT. Three such theories are: the Change Management Continuum Model, the
Unified Theory of Acceptance and Use of Technology, and the Diffusion of Innovation
Theory.
3. The board of directors at City Hospital is determined not to be fined for violation of
HIPAA rules. They asked your consulting group to prepare a comprehensive strategy to
communicate to employees and contractors the importance of following HIPAA
regulations. Brainstorm the key elements of your communications strategy. What
actions might you request of the board of directors and other executives at the hospital
to strengthen your strategy?
Students’ answers will vary. However, students may mention that the introduction of an
enterprise IT system requires large amounts of resources and significant changes in
procedures, roles and responsibilities, reward systems, and decision making. In other
words, it represents a major organizational change. Managers should have their work
cut out to gain acceptance of all these changes. To strengthen the communications
strategy, the board of directors and other executives should impose standards and
procedures that spell out exactly how transactions must be conducted and how the
supporting information must be captured, stored, and shared. Senior management may
sometimes encourage adoption of enterprise IT by threatening penalties for
nonconformance.
4. You are the new office manager for a small accounting firm of 12 people. You just
received a complaint of an employee viewing pornography while at work. Not only is
the employee wasting company time but he is also creating a potential liability for a
sexual harassment lawsuit if the practice is allowed to continue. What action would you
take to handle this situation?
Students’ answers will vary. The office manager should ensure that there is no
, inappropriate use of IT resources such that it reduces employees’ productivity.
Employees should not waste time visiting Web sites unrelated to their work.
Additionally, inappropriate use of IT resources to view sexually explicit material could
subject the firm to a sexual harassment lawsuit. Failure to ensure that IT risks are
mitigated can lead to serious problems, such as business disruptions, data breaches
exposing employee and/or customer personal data, and legal penalties. Hence, the
manager must tell the employee about the consequences of breaking the rule.
Answers to Discussion Questions
1. Reflecting on what you read in this chapter and looking forward to a successful course,
identify three learning objectives you want to meet this term.
Students’ answers will vary. The response will be different for every student.
2. Identify and briefly discuss an example of an enterprise or interorganizational system
with which you have recently interacted.
Students’ answers will vary. They might describe a system from their personal
experience.
3. Based on your own experience and reading, identify and briefly discuss an example of
an organization that has invested greatly in IT and yet has relatively little to show as a
result. Identify and briefly discuss an organization where the opposite is true. To what
do you attribute the difference?
Students’ answers will vary. However, students may mention that while one company
may outspend a competitor on IT, it is not necessarily making more effective use of IT.
The most important consideration is what organizations are getting out of their
investments in IT, not how much they are investing in IT. The most effective users of IT
maximize value from IT investments that are aligned with their organization’s strategic
needs and that are well managed and executed. Managers must evaluate IT investment
opportunities against existing business needs and help frame these opportunities so
others can understand them. Managers must provide the leadership to recognize and
advocate for those opportunities that fit with the organization’s business strategy.
4. What percentage of revenue should an organization spend on IT? Explain the rationale
for your answer.
On average, organizations spend between 1% and 6% of their total revenue on IT. This
, can vary greatly depending on what opportunities and threats a given organization is
facing. Spending also depends on how wise management is in spending its IT dollars
effectively.
5. What are the basic reasons that people resist change? How can this resistance be
overcome?
Four basic reasons that people resist change are:
Parochial self-interest—some people are more concerned with the impact of the
change on themselves than with how it might improve the organization.
Misunderstanding—some people have misconceptions or lack information about
the change.
Low tolerance to change—some people require security and stability in their
work.
Different assessments of the situation—some people disagree about the reasons
for the change or do not support the change process.
One approach to help overcome resistance to change is to take people through the three
phases (inform, educate, and commit) and seven stages (contact, awareness,
understanding, positive perception, adoption, institutionalization, and internalization)
of the change management continuum model.
6. What is meant by management expectations, and how can they affect the acceptance of
new IT?
Management expectations is the degree of belief that management wants employees to
use the system. Management expects everyone to use the new technology and to behave
in a manner consistent with the new work processes. Management must communicate
their expectations, measure progress toward meeting those expectations, and provide
feedback to end users regarding their use of the new information system and work
process.
7. Develop a timeline that identifies the approximate times at which the various stages of
the Change Management Continuum Model should occur for the implementation of a
major enterprise system. Assume that the project will last 18 months and has these key
milestones:
Systems definition complete at 3 months
System design complete at 7 months
System construction complete at 12 months
System testing complete at 16 months
System cutover starts at 18 months
The approximate times at which the various stages of the Change Management
Managers: Key to Information Technology
Results
Solutions to End of Chapter Material
Answers to What Would You Do Questions
1. A new financial analyst at your firm has been tasked with performing a competitive
analysis of your firm’s IT spending versus your three top competitors. Over lunch with
you and a couple of other recent hires, the coworker shares that her analysis shows
your firm is spending just over 4 percent of revenue (recent annual revenue for the firm
was $150 million) on IT while your company’s competitors are all spending less than 3
percent (recent revenue ranges from $300 million to $400 million). She asks the group
if they think this spending difference is significant and if she should highlight it in her
report. What would you say?
Students’ answers will vary. However, students may mention that organizations
typically spend 1 to 6 percent of their total revenues on IT. This spending is generally
higher for industries in which IT is more critical to success, such as health care and
financial services. IT spending as a percentage of revenue is also typically higher within
small organizations than large organizations.
Students may also mention that these numbers represent rough averages. IT-related
spending varies greatly, even among similar-sized companies within the same industry.
While one company may outspend a competitor on IT, it is not necessarily making more
effective use of IT. The most important consideration is what organizations are getting
out of their investments in IT, not how much they are investing in IT. The most effective
users of IT maximize value from IT investments that are aligned with their
organization’s strategic needs and that are well managed and executed. Managers must
evaluate IT investment opportunities against existing business needs and help frame
these opportunities so others can understand them. Managers must provide the
leadership to recognize and advocate for those opportunities that fit with the
, organization’s business strategy.
2. Imagine instead that the new Avon order management system was well designed and
extremely easy to use. Identify key actions that the Avon management team must take
to ensure a successful rollout of an easy-to-use system for the Canadian sales reps.
Students’ answers will vary. Students may mention that to implement an IT system
successfully, Avon might need to change its business processes, worker roles and
responsibilities, reward systems, and decision making. Many organizations have tried to
implement a promising new IT system, only to have employees never use it or not use
the system to its full potential. Managers must be able to overcome this resistance so
that the new IT system is accepted and used throughout the organization. Several
theories on organizational change management can help smooth the introduction and
adoption of IT. Three such theories are: the Change Management Continuum Model, the
Unified Theory of Acceptance and Use of Technology, and the Diffusion of Innovation
Theory.
3. The board of directors at City Hospital is determined not to be fined for violation of
HIPAA rules. They asked your consulting group to prepare a comprehensive strategy to
communicate to employees and contractors the importance of following HIPAA
regulations. Brainstorm the key elements of your communications strategy. What
actions might you request of the board of directors and other executives at the hospital
to strengthen your strategy?
Students’ answers will vary. However, students may mention that the introduction of an
enterprise IT system requires large amounts of resources and significant changes in
procedures, roles and responsibilities, reward systems, and decision making. In other
words, it represents a major organizational change. Managers should have their work
cut out to gain acceptance of all these changes. To strengthen the communications
strategy, the board of directors and other executives should impose standards and
procedures that spell out exactly how transactions must be conducted and how the
supporting information must be captured, stored, and shared. Senior management may
sometimes encourage adoption of enterprise IT by threatening penalties for
nonconformance.
4. You are the new office manager for a small accounting firm of 12 people. You just
received a complaint of an employee viewing pornography while at work. Not only is
the employee wasting company time but he is also creating a potential liability for a
sexual harassment lawsuit if the practice is allowed to continue. What action would you
take to handle this situation?
Students’ answers will vary. The office manager should ensure that there is no
, inappropriate use of IT resources such that it reduces employees’ productivity.
Employees should not waste time visiting Web sites unrelated to their work.
Additionally, inappropriate use of IT resources to view sexually explicit material could
subject the firm to a sexual harassment lawsuit. Failure to ensure that IT risks are
mitigated can lead to serious problems, such as business disruptions, data breaches
exposing employee and/or customer personal data, and legal penalties. Hence, the
manager must tell the employee about the consequences of breaking the rule.
Answers to Discussion Questions
1. Reflecting on what you read in this chapter and looking forward to a successful course,
identify three learning objectives you want to meet this term.
Students’ answers will vary. The response will be different for every student.
2. Identify and briefly discuss an example of an enterprise or interorganizational system
with which you have recently interacted.
Students’ answers will vary. They might describe a system from their personal
experience.
3. Based on your own experience and reading, identify and briefly discuss an example of
an organization that has invested greatly in IT and yet has relatively little to show as a
result. Identify and briefly discuss an organization where the opposite is true. To what
do you attribute the difference?
Students’ answers will vary. However, students may mention that while one company
may outspend a competitor on IT, it is not necessarily making more effective use of IT.
The most important consideration is what organizations are getting out of their
investments in IT, not how much they are investing in IT. The most effective users of IT
maximize value from IT investments that are aligned with their organization’s strategic
needs and that are well managed and executed. Managers must evaluate IT investment
opportunities against existing business needs and help frame these opportunities so
others can understand them. Managers must provide the leadership to recognize and
advocate for those opportunities that fit with the organization’s business strategy.
4. What percentage of revenue should an organization spend on IT? Explain the rationale
for your answer.
On average, organizations spend between 1% and 6% of their total revenue on IT. This
, can vary greatly depending on what opportunities and threats a given organization is
facing. Spending also depends on how wise management is in spending its IT dollars
effectively.
5. What are the basic reasons that people resist change? How can this resistance be
overcome?
Four basic reasons that people resist change are:
Parochial self-interest—some people are more concerned with the impact of the
change on themselves than with how it might improve the organization.
Misunderstanding—some people have misconceptions or lack information about
the change.
Low tolerance to change—some people require security and stability in their
work.
Different assessments of the situation—some people disagree about the reasons
for the change or do not support the change process.
One approach to help overcome resistance to change is to take people through the three
phases (inform, educate, and commit) and seven stages (contact, awareness,
understanding, positive perception, adoption, institutionalization, and internalization)
of the change management continuum model.
6. What is meant by management expectations, and how can they affect the acceptance of
new IT?
Management expectations is the degree of belief that management wants employees to
use the system. Management expects everyone to use the new technology and to behave
in a manner consistent with the new work processes. Management must communicate
their expectations, measure progress toward meeting those expectations, and provide
feedback to end users regarding their use of the new information system and work
process.
7. Develop a timeline that identifies the approximate times at which the various stages of
the Change Management Continuum Model should occur for the implementation of a
major enterprise system. Assume that the project will last 18 months and has these key
milestones:
Systems definition complete at 3 months
System design complete at 7 months
System construction complete at 12 months
System testing complete at 16 months
System cutover starts at 18 months
The approximate times at which the various stages of the Change Management
