Consequences for an organisation using new technologies

First, this section will explain the areas that are affected in general terms in order to inform the development of open socio-technical systems. After that, concrete consequences for the use of cloud computing are described.

When thinking of an organisation from a simplified IT perspective it is possible to identify four areas that define a company. These are technology, supplier, employees and customers. The organisation basically uses elements of technology, suppliers and employees to produce a product or service and sell it to the customer (for simpler reading the term product means product and service in this paper). Customers and employees are both important to the existence of an organisation. Therefore, these two groups can be put together as stakeholders. The customer is also affected from factors that lie outside the organisation: competitors, complementors and substitutors (see Figure 1). Competitors sell the same type of product and are interested in gaining market share from the organisation, e.g. through a better quality product or cheaper production costs. Research that was done in the area of competitive advantage comes into play. The main idea behind it is that competitors gain a competitive advantage, either through doing the same product differently, or doing a different product the same way.

Figure 1: Simplified representation of an organisation and its surroundings

Figure 1: Simplified representation of an organisation and its surroundings

Now it is possible to see what happens inside an organisation if it decides to use a new technology. Through the use of new technologies two areas of high uncertainty are created because an organisation doesn’t know how the technology will develop in the outside world and how the employees will react to this technology.Complementors are not a threat to the organisation per se. Instead, they can help the organisation to reach more customers by producing products that advance (complement) the products of the organisation. Hardware and Software are the best known complementors. Substitutors produce different products that have the potential to make the products of the organisation less desirable or obsolete although not necessarily initially intended. Substitutors often start off in different markets and then explore that their products can also be used differently (e.g. mobile phones have been used to make phone calls but are now also able to access the Internet). Other susbstitutors aim to replace a product (e.g. Pesi and Coca Cola).

Today many technologies can’t be acquired in isolation. It is not like in the past where you bought a PC and it was yours and you could do with it whatever you want. Take cloud computing for example: you are not only reliable on your own decisions about what you want to do with this technology. You also have to be aware of the cloud provider. This adds additional uncertainty as you don’t know what the cloud provider will do tomorrow. They might go out of business. Although the organisation will probably have enough time to find a new cloud provider, high costs can be the result of switching providers. In the end it means the IT has to deal with an unknown dimension which increases the degree of uncertainty significantly. By taking a look at other outside factors, i.e. suppliers, competitors, complementors, and substitutors, the picture becomes more complete but the degree of uncertainty is ever more increased. The organisation needs to be aware of the consequences a move into the cloud can have on suppliers and especially complementors. By moving into the cloud you automatically move parts of your suppliers and complementors into the cloud, as well (see Figure 2). In addition, competitors and substitutors might detect the move into the cloud and try to find and exploit resulting advantages. In the end it means that the control over the use of the cloud are not entirely in the hand of the organisation.

Figure 2: Effects of a move into the cloud

Figure 2: Effects of a move into the cloud

The effects of new technologies like cloud computing are also to a big extent on employees. By introducing a new technology the work environment changes. In the context of socio-technical systems, through the use of technology the people, tasks and processes are affected. The biggest fear for employees is often the one of losing their jobs because the technology can ‘replace’ them. In addition, the IT doesn’t know how the employees will react to the new technology. If they like it and will use it, or not. The introduction of a new technology often experiences a period of high use in the beginning. Many employees are excited to use it. However, if the new technology fails to become a real part of the tasks and processes employees will stop using it after a while because they don’t see the benefit (many companies report this happening with social media). This leaves the IT department with the risk of employees both rejecting the new technology and/or changing the processes themselves without the IT department knowing it because the employees are interested in getting their work done as efficiently as possible. Another internal area affected is the pressure of some business units on the IT. Especially accounting gets often named in this context. From their point of view the IT department needs to do more with costing less. Meaning, the IT is facing a pressure on budget. The IT department needs to be aware of that before and while introducing a new technology. A third area that is affected is the business side. For them the IT department should function as a strategic partner to enhance the business and help competing in the market. It is also possible to take the opposite perspective. This is the case when suppliers or competitors decide to move into the cloud. The organisation needs to be aware of this and decide if they want to follow or stay with their current technologies. If you only look at cloud computing this picture might look manageable. After all, it is only one technology you need to keep an eye on. But if you look at the big picture it becomes significantly more complex and dynamic resulting in more uncertainty. You need to watch many technologies and what your suppliers, competitors, complementors and substitutors do with it.

Figure 3: Areas of high uncertainty

Figure 3: Areas of high uncertainty

The above section made clear that through the use of new technologies two areas of high uncertainty are created that the IT department needs to get control of. Figure 3 summarises the findings.

By taking another look at Figure 2 it is possible to see that the cloud provider effectively moves into the company although organisations usually say ‘we move into the cloud’. Another way to look at it is shown in Figure 4 (for the purpose of simplicity the supplier is not shown but the same is applicable to them). Here the organisation literally ‘moves’ into the cloud.

Figure 4: Company literally moves into the cloud

Figure 4: Company literally moves into the cloud

In the end it depends on the viewpoint of the organisation what is applicable. However, being aware of these two viewpoints might enable the IT department to understand conflicts or disagreements better. If an employee thinks the cloud is moving into the company they might be afraid that the cloud provider sees what they are doing (for example their emails). How big the effect of the two viewpoints on organisations are still needs to be explored and proved. Nevertheless, it helps to raise another issue that is important for the organisation to be aware of. When thinking about the parties that are involved it is possible to name cloud provider, customer, supplier and the organisation itself (for simplification reasons customers and suppliers will be treated as the same for this section). They all have different viewpoints and issues they need to be aware of. As this section will show the organisation is in a difficult position after it moved into the cloud. To get started the viewpoints of the cloud provider and customer will be described. Basically, they both ‘see’ the organisation. The organisation is a customer of the cloud provider. Therefore, the organisation is a single entity to the cloud provider. This means the cloud provider doesn’t know what the organisation does with the cloud solution in detail and if other entities are involved (Figure 5).

Figure 5: Viewpoint of cloud provider (company needs to be replaced by organisation (for all pictures)

Figure 5: Viewpoint of cloud provider (company needs to be replaced by organisation (for all pictures)

On the other hand, the customer ‘sees’ only the organisation as a single entity. Depending on the product the customer doesn’t even know it is provided through the cloud. That means the customer isn’t necessarily aware of suppliers that are working with the company, or in this case cloud provider (Figure 6). In order to sum this up it is reasonable to say that both cloud provider and customer look only into one direction, namely the organisation.

Figure 6: Viewpoint of customer

Figure 6: Viewpoint of customer

Coming to the viewpoint of the organisation the picture becomes more complex. Because the organisation is literally in the middle they need to look into two directions (three if you also take supplier into the picture). Unfortunately, this is not the end of the story. By providing the products through the cloud and making the customers aware of it, the organisation might end up with two groups of customers: cloud customers and regular customers (Figure 7).

Figure 7: IT is losing control in two directions

Figure 7: IT is losing control in two directions

This leads to challenges the IT department needs to be aware of. First of all, they lose control to the cloud provider. They can’t decide alone anymore what to do with the technology provided and they are tied to the service level agreement and technical possibilities of the cloud provider. Secondly, they need to explore the boundaries of the above mentioned viewpoints for different deployment models. The picture might change depending on whether the company uses IaaS, PaaS, or SaaS. By doing so, and taking into account Figure 3, it might be possible to reduce the degree of uncertainty. Last of all, the IT department must be aware of the consequences for the product designers and its own designers to find out if existing products can still be produced and current applications supported.

This article was written as part of my PhD progress with the School of Computer Science at the University of St Andrews.

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