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Weekly UpdatesCausal Factors of Change
Any discussion of organizational change associated with advances in information technology should include underlying causal assumptions made by the researcher (Markus and Robey, 1988). Two primary schools of thought, the technological imperative and the organizational imperative, attempt to explain organizational evolution when changes in information technology occur. The technological imperative [1] "views technology as an exogenous force which determines or strongly constrains the behavior of individuals and organizations" (Markus and Robey, 1988: 585). Technology is seen as the driver of change in organizations; management has very little control over changes that take place (Orlikowski, 1996; Pinsonneault and Kraemer, 1993).
In contrast to the technological imperative, the organizational imperative [2] "assumes almost unlimited choice over technological options and almost unlimited control over the consequences. This perspective holds that human actors design information systems to satisfy organizational needs for information" (Markus and Robey, 1988: 587). Supporters of the organizational imperative often cite exogenous factors, such as social, political, economic and cultural, as reasons for management to orchestrate organizational change. IT is seen as a tool used to achieve desired changes (Winter and Taylor, 1996; Ferioli and Migliarese, 1996).
The assumption of causality is important because generalizability of the findings may be affected. The technological imperative suggests results will generalize to companies implementing new IT. However, the organizational imperative suggests managerial initiatives aided by IT do not generalize solely on the basis of new IT. Remarks from the president and chief operating officer at one of the research sites in this study indicate the new IT was a critical component of the organization's plan to achieve certain changes. The president and chief operating officer commented in an introductory presentation of the new system that IS technology is crucial to achieving desired changes. The chief operating officer also stated that the company could not design independent solutions to every business or location need. It was only through integrated cross-functional systems that the company could achieve desired goals. Evidence from our research supports both technological and organizational imperatives. Consistent with the organizational imperative, some of the findings presented in this study represent how new IT is used to achieve desired organizational change and how these changes impact the accounting function in organizations. Included in this category would be the company's decision to reorganize by businesses and use new IT to allow this change. Other findings support the technological imperative assumption.
RESEARCH METHOD
This research utilizes case study methodology to identify changes taking place in the finance and accounting functions at two different organizations after implementing a new information system. Consistent with Yin's (1994) definition of a case study, we consider this methodology appropriate because we seek to describe how the organization has changed as a result of a contemporary event (the implementation of a new system).
Site Selection: Site A and Site B
A general proposition for this research is that changes are taking place in the finance and accounting functions in organizations and that recent advancements in information technology (either directly or indirectly) enable some of the changes. Both companies selected as field research sites have recently implemented an integrated information system and offer opportunities to observe the expected effects of the new system consistent with propositions developed from the IT/organizational change and accounting literature. [3]
Research Site A is a major manufacturing firm with annual sales exceeding $20 billion. This company operates over 90 manufacturing sites in 30 countries, and employs almost 40,000 persons. Research Site B also is a major manufacturing firm with annual sales exceeding $30 billion and manufacturing and administrative facilities worldwide. The information systems history of these two companies is similar over the past 30 years. Since the 1970s both companies have developed in-house information systems. Often these systems were unique to a location. During the 1980s and 1990s, the companies centralized several functions, including general ledger duties and distribution systems. Each company had literally hundreds of separate information systems that differed by geographic location and function. Each geographic site required support personnel for system issues. The goal in changing to a new information system was to standardize information systems across geographic locations and functional purposes and to central ize support functions for systems support to one location. SAP was the tool chosen by both companies to help implement this strategy. Site A began the process of educating its employees about the new information system in 1993. Implementation of the new system took place over the course of three years. Site B initiated their educational program about the new information system in 1995. Implementation of the new system at Site B took place over the course of 4 years.
Our primary investigation focuses on changes occurring in the controller's department of one division ("the division") for Site A after the implementation of the new information system. The division selected for this project employs approximately 1,800 persons in addition to several hundred independent contractors. The division manufactures a broad array of intermediate goods, primarily for use in other company-owned plants. Our discussion of findings for each of the propositions consists of an in-depth discussion of changes at the division. As corroborating evidence, we also present findings related to the propositions for company-wide situations both for Site A (the company to which the division belongs) and Site B, a similar company implementing the same information system during approximately the same time period.
Data Sources
Initial discussions with top accounting personnel at the sites were conducted to define the project scope and to determine appropriate personnel to be interviewed; subsequent fieldwork focused on gathering data.
Because this research seeks to identify changes that have taken place over several years, fieldwork was divided between documenting the departmental structure and accountants' responsibilities in 1992 (prior to the new IT system) and as of June, 1997 (4 years following the initial implementation phase) for the division at Site A. The implementation phase for research Site B was from 1995-1999.
Sources of information include semi-structured group and individual interviews, documentation, and direct observation. The group interview sessions included a discussion of the research project's scope, group projects designed to recreate organizational attributes prior to and after the new system implementation, and discussions about the new system. Structured interviews with three consultants, having experience in over 200 SAP implementations, were conducted to discuss changes that have taken place in the accountants' roles and responsibilities. Documentation obtained from the sites included job descriptions, organizational charts, information system descriptions, and post-hoc project cost/benefit analyses. Finally, direct observation of the department and accountants was used for further verification of changes that have taken place.
SAP--The New System
Important aspects of this research include understanding the new information system's functionality and identifying operational and structural changes associated with its use. Companies have long used computerized accounting systems, including in-house creations and purchased systems, but a limiting factor was their inability to interface with other systems within the organization. A recent development in information technology is the wholly integrated management information system. These systems encompass almost every aspect of the information system of a company, including accounting, manufacturing, and marketing. Software changes in this case involved switching to SAP (Systems, Applications and Products in Data Processing), a developer of integrated business application software.
SAP offers client/server and mainframe business applications to manage comprehensive financial, manufacturing, sales and distribution, and human resources functions. An advantage of SAP software lies in real-time integration, linking a company's business processes and applications while supporting immediate responses to change throughout the organization on a departmental, divisional or global scale.
A major advantage of integrated software systems is the compatibility among software programs representing different functions of an organization. Software packages representing accounting, manufacturing, inventory, and sales have existed for many years. In many cases, prior to the use of integrated software, effective interface among these systems was lacking. Often, monitoring and facilitating interfaces were a standard part of a cost accountant's duties during the closing process.
The systems replaced at each research site by SAP had been created over the course of many years. Several systems and applications had been developed or purchased to automate a variety of functions. The resulting information system was a network of canned and internally created software applications interfaced, where possible, to interact with each other. Each major production site had its own mainframe and unique set of programs designed to meet its needs. There was little standardization in the manner in which each manufacturing site at these two organizations met its information needs. The new system replaced a vast majority of old systems and permitted system standardization across functions and sites. Advantages of the new system include integration of functions, standardization of processes and systems across geographical and business segments, and implementation of one enterprise-wide system. The remainder of the article presents and discusses the findings related to the propositions.
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