The effect of application of information technologies on organizations can be different and depends on the extent of IT integration into working process, on the character of labour and on the efficiency of IT facilities choice within the organization. However, the use of IT technologies inevitably leads to organizational change.
This essay is dedicated to discussing the four main kinds of organizational change that can be promoted by introducing information technology and the possible risks and consequences for the organization.
Four kinds of organizational change
Success of organization’s functioning strongly depends on proficiency of applying known technologies and new achievements of progress. In my opinion, nowadays information technology is one of the key factors that may let the company or organization gain significant competitive advantage. However, “many so-called advancements haven’t lived up to expectations”ť (McAfee, 2006).
Let us analyze which kinds of change may be caused by IT technologies.
First of all, the dimensions of changes depend on the extent of using IT technologies. The less risky (however, it is also less efficient in the long run) kind of organizational change is automation. In this case IT technology serves as an instrument for intensifying the processes within an organization; the structure of organization does not change significantly but the character of labour changes.
In the economic sense, professional, technical and managerial employees who do the kind of thinking that machines do will see a reduction in their wages and salaries unless they can acquire new tasks to protect their existing areas of expertise from automation (Perrolle, 1991, p. 231).
Another level of using IT technologies is rationalization of procedures: when the optimal combination of processes and streamlining of working process takes place. Automation usually gives clues to optimization of the process as well as gives the possibility to find the weak points and possible ways to increase efficiency of the process ”“ i.e., rationalization.
However, the other two implications of IT technologies have greater impact on the organizations. These are business process reengineering and even paradigm shift. Reengineering occurs when application of IT technologies leads to significant changes in the working process. As Keen (2003, p.29) states: “IT is most effective when it redeploys human capital”ť.
Paradigm change, in the terms of functioning of the organization means radical change of the organization’s mission and objectives. Thus, in the case of paradigm change the risks and possible benefit are maximal. In the case of success, the company may gain competitive leadership for a long time or maybe even create own economical niche.
Without doubt, information technologies and their applications are quite important for organizational development. From the very start of embedding IT into working process, organizational changes occur; and in the course of time the degree of IT application increases, causing the shift from automation to reengineering, and in some cases even to paradigm shift for the organization. However, despite the risks, the implementation of information technologies into working process is one of the crucial factors determining the company’s success.