On the evolution of corporate information infrastructures

Introduction

In the last few decades two technology trends have changed much of the thinking about corporate IT infrastructures: commoditisation and the cloud.   As far as the first trend is concerned,  the availability of relatively cheap hardware and packaged “enterprise” software has enabled organisations to create their own IT infrastructures.  Yet, despite best efforts of IT executives and planners, most of these infrastructures take on lives of their own, often increasing in complexity to the point where they become unmanageable.

The maturing of cloud technologies in the last few years  appears to offer IT decision makers an attractive solution to this problem:  that of outsourcing their infrastructure headaches. Notwithstanding the wide variety of mix-and-match options of commodity and cloud offerings, the basic problem still remains: one can create as much of a mess in the cloud as one can in an in-house data center.  Moreover, the advertised advantages of cloud-based enterprise solutions can be illusory:  customers often find that solutions are inflexible and major changes can cost substantial sums of money.

Conventional wisdom tells us that these problems can be tackled by proper planning and control.  In this post I draw on Claudio Ciborra’s book, From Control to Drift: The Dynamics of Corporate Information Infrastructures, to show why such a view is simplistic and essentially untenable.

The effects of globalisation and modernity

The basic point made by Ciborra and Co.  is that initiatives to plan and control IT infrastructures via centrally-driven, standards-based governance structures are essentially misguided reactions to the unsettling effects of globalisation and modernity, terms that I elaborate on below.

Globalisation

Globalisation refers to the processes of interaction and integration between people of different cultures across geographical boundaries. The increasing number of corporations with a global presence is one of the manifestations of globalisation. For such organisations, IT infrastructures systems are seen as a means to facilitate globalisation and also control it.

There are four strategies that an organisation can choose from when establishing a global presence. These are:

• Multinational: Where individual subsidiaries are operated autonomously.
• International: Where work practices from the parent company diffuse through the subsidiaries (in a non-formal way).
• Global: Where local business activities are closely controlled by the parent corporation.
• Transnational: This (ideal) model balances central control and local autonomy in a way that meets the needs of the corporation while taking into account the uniqueness of local conditions.

These four business strategies map to two corporate IT strategies:

•  Autonomous: where individual subsidiaries have their own IT strategies, loosely governed by corporate.
•   Headquarters-driven: where IT operations are tightly controlled by the parent corporation.

Neither is perfect; both have downsides that start to become evident only after a particular strategy is implemented. Given this, it is no surprise that organisations tend to cycle between the two strategies, with cycle times varying from five to ten years; a trend that corporate IT minions are all too familiar with.  Typically, though,  executive management tends to favour the centrally-driven approach since it holds the promise of higher control and reduced costs.

Another consequence of globalisation is the trend towards outsourcing IT infrastructure and services. This is particularly popular for operational IT – things like infrastructure and support. In view of this, it is no surprise that organisations often choose to outsource IT development and support to external vendors.  Equally unsurprising, perhaps, is that the quality of service often does not match expectations and there’s little that can be done about it.  The reason is simple:  complex contracts are hard to manage and perhaps more importantly, not everything can be contractualised. See my post on the transaction cost economics of outsourcing for more on this point.

The effect of modernity

The phenomenon of modernity forms an essential part of the backdrop against which IT systems are implemented. According to a sociological definition due to Anthony Giddens,  modernity  is “associated with (1) a certain set of attitudes towards the world, the idea of the world as open to transformation, by human intervention; (2) a complex of economic institutions, especially industrial production and a market economy; (3) a certain range of political institutions, including the nation-state and mass democracy”  

Modernity is characterised by the following three “forces” that have a direct impact on information infrastructures:

• The separation of space and time: This refers to the ways in which technology enables us reconfigure our notions of geographical  space and time.  For instance,  coordinating activities in distant locations is now possible  – global supply chains and distributed project teams being good examples. The important consequence of this ability, relevant to IT infrastructures such as ERP and CRM systems,  is that it makes it possible (at least in principle)  for organisations to increase their level of surveillance and control of key business processes across the globe.
• The development of disembedding mechanisms: As I have discussed at length in this post, organisations often “import” procedures that have worked well in organisations. The assumption underlying this practice is that the procedures can be lifted out of their original context and implemented in another one without change. This, in turn, tacitly assumes that those responsible for implementing the procedure in the new context understand the underlying cause-effect relationships completely. This world-view, where organisational processes and procedures are elevated to the status of universal “best practices”  is  an example of a disembedding mechanism at work. Disembedding mechanisms are essentially processes via which certain facts are abstracted from their context and ascribed a universal meaning. Indeed, most “enterprise” class systems claim to implement such “best practices.”
• The reflexivity of knowledge and practice: Reflexive phenomena are those for which cause-effect relationships are bi-directional – i.e. causes determine effects which in turn modify the causes. Such phenomena are unstable in the sense that they are continually evolving – in potentially unpredictable ways. Organisational practices (which are based on organisational knowledge) are reflexive in the sense that they are continually modified in the light of their results or effects.  This conflicts with the main rationale for IT infrastructures such as ERP systems, which is to rationalise and automate organisational processes and procedures in a relatively inflexible manner.

 Implications for organisations

One of the main implications of globalisation and modernity is that the world is now more interconnected than ever before. This is illustrated by the global repercussions of the financial crises that have occurred in recent times. For globalised organisations this manifests itself in not-so-obvious dependencies  of the organisation’s  well-being on events within the organisation and outside it. These events are  usually not within the organisation’s control So they have to be  managed as risks.

A standard response to risk is to increase control. Arguably, this may well be the most common executive-level rationale behind decisions to impose stringent controls and governance structures around IT infrastructures.  Yet, paradoxically, the imposition of controls often lead to undesirable outcomes because of unforeseen side effects and the inability to respond to changing business needs in a timely manner.

 A bit about standards

Planners of IT infrastructures spend a great deal of time worrying about which standards they should follow. This makes sense if for no other reason than the fact that corporate IT infrastructures are embedded in a larger (external) ecosystem that is made up of diverse organisations, each with their own infrastructures. Standards ease the problem of communication between interconnected organisations. For example,  organisations often have to exchange information electronically in various formats. Without (imposed or de-facto) standards, this would be very difficult as IT staff would have to write custom programs to convert files from one format to another.

The example of file formats illustrates why those who plan and implement IT infrastructures prefer to go with well established technologies and standards rather than with promising (but unproven) new ones. The latter often cause headaches because of compatibility problems with preexisting technologies.  There are other reasons, of course, for staying with older technologies and established standards – acceptance, maturity and reliability being a few important ones.

Although the rationale for adopting standards seems like a sound one, there are a few downsides too.  Consider the following:

• Lock in: This refers to the fact that once a technology is widely adopted, it is very difficult for competing technologies to develop. The main reason for this is that  dominant technology will attract a large number of complementary products. These make it more attractive to stick with the dominant standard. Additionally, contractual commitments, availability of expertise, switching costs make it unviable for customers to move to competitor products.
• Inefficiency: This refers to the fact that a dominant standard is not necessarily the best. There are many examples of cases where a dominant standard is demonstrably inferior to a less popular competitor. My favourite example is the Waterfall project management methodology which became a standard for reasons other than its efficacy. See this paper for details of this fascinating story.
• Incompatibility:  In recent years, consumer devices such as smartphones and tablets have made their way into corporate computing environments, primarily because of pressures and demands from technology savvy end-users. These devices pose problems for infrastructure planners and administrators because they are typically incompatible with existing corporate technology standards and procedures. As an example, organisations that have standardised on a particular platform such as Microsoft Windows may face major challenges when introducing devices such as iPads in their environments.

Finally, and most importantly, the evolution of standards causes major headaches for corporate IT infrastructure planners. Anyone who has been through a major upgrade of an operating system at an organisation-wide level will have lived this pain.  Indeed, it is such experiences that have driven IT decision-makers to cloud offerings. The cloud  brings with it a different set of problems, but that’s another story.  Suffice to say that the above highlights, once again, the main theme of the book: that infrastructure planning is well and good, but planners have to be aware that the choices they make constrain them in ways that they will not have foreseen.

Summing up

The main argument that Ciborra and his associates make is that  corporate information infrastructures drift because they are subject to unpredictable forces within and outside the hosting organisation. Standards and processes may slow the drift (if at all) but they cannot arrest it entirely. Infrastructures are therefore best seen as ever-evolving constructs made up systems, people and processes that interact with each other in (often) unforeseen ways.  As Ciborra so elegantly puts it:

Corporate information infrastructures are puzzles, or better collages, and so are the design and implementation processes that lead to their construction and operation. They are embedded in larger, contextual puzzles and collages. Interdependence, intricacy, and interweaving of people, systems, and processes are the culture bed of infrastructure. Patching, alignment of heterogeneous actors and making do are the most frequent approaches…irrespective of whether management [is] planning or strategy oriented, or inclined to react to contingencies.

And therein lies an important message for those who plan and oversee information infrastructures.

Notes:

Sections of this post are drawn from my article entitled, The ERP Paradox.