Organizations are in the midst of transformation. In many industries, mass production by large, vertically integrated, hierarchically organized firms is giving way to more flexible forms of both internal organization and industrial structure. Work is increasingly accomplished through networks of smaller, more focused groups. The resulting structure of sub-organizations is redefining the boundaries of both firms and industries.
A case in point is the computer industry.
In the past, large, vertically integrated firms such as IBM dominated the industry, which created products and services throughout the value chain — from the microprocessor level all the way up to the provision of solutions.
The vertical structure is now being replaced by a series of layers, each of which is, in effect, a separate industry. Value is generated by coalitions, where each member of a coalition specializes in its area of core competence and enhances it through the use of tactical or strategic partnerships.
Internally, team structures are replacing the traditional hierarchical form. Incentives are increasingly based on performance, and achievements.
In sum, modern enterprise is undergoing major restructuring and information technology IT is an important driver of this transformation.
“A fundamental change is taking place in the nature and application of technology in business. This change has profound and far-reaching implications for organizations and for you…the information age is evolving into a second era. Organizations that do not make this transition will fail.
They will become irrelevant or cease to exit.”
Information Technology: Technology is usually referred to as the production process of a society or an industry. But, with the advent of computers, such assumption is no longer valid. We are now living in a new era of Information, and a new definition is born: “Information Technology” which combines the processing power of computers and all hardware and software that accompanies it, enabling those components to retrieve, process, store and distribute information to support decision-making and control in an organization.
With such tools individuals can access and share a wide variety of information “Information technology… transcends the knowledge base constraints of general technology and gives the user access to a theoretically limitless perceptual field” .
The effects of computers and its accompanying systems have therefore, the capability to change social as well as organizational structures.
Organization Structure: The structure of an organization is seen as providing the framework, which turns a collection of people and resources into an identifiable form. “Mintzberg places considerable emphasis on structure and his definition proposes it as the summation of the ways in which a firm’s labor is directed and coordinated into tasks”
There are generally several models of organizations. But the most commonly used are the mechanistic form, which portrays the organization as a machine, and organic which view the organization as an organism, which is a more flexible model. Since structure (mechanistic or organic provides a framework for all the components of an organization including technology, we can therefore find a relationship between structure and technology, and more specifically IT.
At the turn of the century, Frederick Taylor sought to put the wisdom for successful business organization on a scientific basis. His work guided a generation of managers towards success in adapting their organizations with the technologies, markets, labor and general environment of the era.
By the 1920s, Henry Ford had applied the Taylorist approach and soon dominated the automobile market, driving dozens of competitors under. Ironically, these same principles are opposed to the prevailing wisdom of the 1990s. For example, consider the following guideline from The Science of Management
“It is necessary in any activity to have a complete knowledge of what is to be done and to prepare instructions… the laborer has only to follow instructions.
He need not stop to think.”
The current emphasis on “empowerment”, “learning organizations”, and even “thriving on chaos” stands in sharp contrast to the above advice. Similar contrast can be found with many, if not most, of the other principles that lead to success even as late as the 1960s. For example, there are growing calls for downsizing (vs. economies of scale), total quality (vs. cost leadership), project teams (vs.
functional departments), networked organization (vs. clear firm boundaries); performance-based pay (vs. position .