Information Technology and Organizational

Learning Managing Behavioral Change

in the Digital Age Third Edition

Information Technology and Organizational

Learning Managing Behavioral Change

in the Digital Age Third Edition

Arthur M. Langer

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v

Contents

Foreword xi Acknowledgments xiii Author xv IntroductIon xvii

chApter 1 the “rAvell” corporAtIon 1 Introduction 1 A New Approach 3

The Blueprint for Integration 5 Enlisting Support 6 Assessing Progress 7

Resistance in the Ranks 8 Line Management to the Rescue 8 IT Begins to Reflect 9 Defining an Identity for Information Technology 10 Implementing the Integration: A Move toward Trust and Reflection 12 Key Lessons 14

Defining Reflection and Learning for an Organization 14 Working toward a Clear Goal 15 Commitment to Quality 15 Teaching Staff “Not to Know” 16 Transformation of Culture 16

Alignment with Administrative Departments 17 Conclusion 19

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chApter 2 the It dIlemmA 21 Introduction 21 Recent Background 23 IT in the Organizational Context 24 IT and Organizational Structure 24 The Role of IT in Business Strategy 25 Ways of Evaluating IT 27 Executive Knowledge and Management of IT 28 IT: A View from the Top 29

Section 1: Chief Executive Perception of the Role of IT 32 Section 2: Management and Strategic Issues 34 Section 3: Measuring IT Performance and Activities 35 General Results 36

Defining the IT Dilemma 36 Recent Developments in Operational Excellence 38

chApter 3 technology As A vArIAble And responsIve orgAnIzAtIonAl dynAmIsm 41 Introduction 41 Technological Dynamism 41 Responsive Organizational Dynamism 42

Strategic Integration 43 Summary 48

Cultural Assimilation 48 IT Organization Communications with “ Others” 49 Movement of Traditional IT Staff 49 Summary 51

Technology Business Cycle 52 Feasibility 53 Measurement 53 Planning 54 Implementation 55 Evolution 57 Drivers and Supporters 58

Santander versus Citibank 60 Information Technology Roles and Responsibilities 60 Replacement or Outsource 61

chApter 4 orgAnIzAtIonAl leArnIng theorIes And technology 63 Introduction 63 Learning Organizations 72 Communities of Practice 75 Learning Preferences and Experiential Learning 83 Social Discourse and the Use of Language 89

Identity 91 Skills 92

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Emotion 92 Linear Development in Learning Approaches 96

chApter 5 mAnAgIng orgAnIzAtIonAl leArnIng And technology 109 The Role of Line Management 109

Line Managers 111 First-Line Managers 111 Supervisor 111

Management Vectors 112 Knowledge Management 116 Ch ange Management 120 Change Management for IT Organizations 123 Social Networks and Information Technology 134

chApter 6 orgAnIzAtIonAl trAnsFormAtIon And the bAlAnced scorecArd 139 Introduction 139 Methods of Ongoing Evaluation 146 Balanced Scorecards and Discourse 156 Knowledge Creation, Culture, and Strategy 158

chApter 7 vIrtuAl teAms And outsourcIng 163 Introduction 163 Status of Virtual Teams 165 Management Considerations 166 Dealing with Multiple Locations 166

Externalization 169 Internalization 171 Combination 171 Socialization 172 Externalization Dynamism 172 Internalization Dynamism 173 Combination Dynamism 173 Socialization Dynamism 173

Dealing with Multiple Locations and Outsourcing 177 Revisiting Social Discourse 178 Identity 179 Skills 180 Emotion 181

chApter 8 synergIstIc unIon oF It And orgAnIzAtIonAl leArnIng 187 Introduction 187 Siemens AG 187

Aftermath 202 ICAP 203

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Five Years Later 224 HTC 225

IT History at HTC 226 Interactions of the CEO 227 The Process 228 Transformation from the Transition 229 Five Years Later 231

Summary 233

chApter 9 FormIng A cyber securIty culture 239 Introduction 239 History 239 Talking to the Board 241 Establishing a Security Culture 241 Understanding What It Means to be Compromised 242 Cyber Security Dynamism and Responsive Organizational Dynamism 242 Cyber Strategic Integration 243 Cyber Cultural Assimilation 245 Summary 246 Organizational Learning and Application Development 246 Cyber Security Risk 247 Risk Responsibility 248 Driver /Supporter Implications 250

chApter 10 dIgItAl trAnsFormAtIon And chAnges In consumer behAvIor 251 Introduction 251 Requirements without Users and without Input 254 Concepts of the S-Curve and Digital Transformation Analysis and Design 258 Organizational Learning and the S-Curve 260 Communities of Practice 261 The IT Leader in the Digital Transformation Era 262 How Technology Disrupts Firms and Industries 264

Dynamism and Digital Disruption 264 Critical Components of “ Digital” Organization 265 Assimilating Digital Technology Operationally and Culturally 267 Conclusion 268

chApter 11 IntegrAtIng generAtIon y employees to AccelerAte competItIve AdvAntAge 269 Introduction 269 The Employment Challenge in the Digital Era 270 Gen Y Population Attributes 272 Advantages of Employing Millennials to Support Digital Transformation 272 Integration of Gen Y with Baby Boomers and Gen X 273

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Designing the Digital Enterprise 274 Assimilating Gen Y Talent from Underserved and Socially Excluded Populations 276 Langer Workforce Maturity Arc 277

Theoretical Constructs of the LWMA 278 The LWMA and Action Research 281

Implications for New Pathways for Digital Talent 282 Demographic Shifts in Talent Resources 282 Economic Sustainability 283 Integration and Trust 283

Global Implications for Sources of Talent 284 Conclusion 284

chApter 12 towArd best prActIces 287 Introduction 287 Chief IT Executive 288 Definitions of Maturity Stages and Dimension Variables in the Chief IT Executive Best Practices Arc 297

Maturity Stages 297 Performance Dimensions 298

Chief Executive Officer 299 CIO Direct Reporting to the CEO 305 Outsourcing 306 Centralization versus Decentralization of IT 306 CIO Needs Advanced Degrees 307 Need for Standards 307 Risk Management 307

The CEO Best Practices Technology Arc 313 Definitions of Maturity Stages and Dimension Variables in the CEO Technology Best Practices Arc 314

Maturity Stages 314 Performance Dimensions 315

Middle Management 316 The Middle Management Best Practices Technology Arc 323

Definitions of Maturity Stages and Dimension Variables in the Middle Manager Best Practices Arc 325

Maturity Stages 325 Performance Dimensions 326

Summary 327 Ethics and Maturity 333

chApter 13 conclusIons 339 Introduction 339

glossAry 357 reFerences 363 Index 373

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Foreword

Digital technologies are transforming the global economy. Increasingly, firms and other organizations are assessing their opportunities, develop- ing and delivering products and services, and interacting with custom- ers and other stakeholders digitally. Established companies recognize that digital technologies can help them operate their businesses with greater speed and lower costs and, in many cases, offer their custom- ers opportunities to co-design and co-produce products and services. Many start-up companies use digital technologies to develop new prod- ucts and business models that disrupt the present way of doing busi- ness, taking customers away from firms that cannot change and adapt. In recent years, digital technology and new business models have dis- rupted one industry after another, and these developments are rapidly transforming how people communicate, learn, and work.

Against this backdrop, the third edition of Arthur Langer’ s Information Technology and Organizational Learning is most welcome. For decades, Langer has been studying how firms adapt to new or changing conditions by increasing their ability to incorporate and use advanced information technologies. Most organizations do not adopt new technology easily or readily. Organizational inertia and embed- ded legacy systems are powerful forces working against the adoption of new technology, even when the advantages of improved technology are recognized. Investing in new technology is costly, and it requires

xii Foreword

aligning technology with business strategies and transforming cor- porate cultures so that organization members use the technology to become more productive.

Information Technology and Organizational Learning addresses these important issues— and much more. There are four features of the new edition that I would like to draw attention to that, I believe, make this a valuable book. First, Langer adopts a behavioral perspective rather than a technical perspective. Instead of simply offering norma- tive advice about technology adoption, he shows how sound learn- ing theory and principles can be used to incorporate technology into the organization. His discussion ranges across the dynamic learning organization, knowledge management, change management, com- munities of practice, and virtual teams. Second, he shows how an organization can move beyond technology alignment to true technol- ogy integration. Part of this process involves redefining the traditional support role of the IT department to a leadership role in which IT helps to drive business strategy through a technology-based learn- ing organization. Third, the book contains case studies that make the material come alive. The book begins with a comprehensive real-life case that sets the stage for the issues to be resolved, and smaller case illustrations are sprinkled throughout the chapters, to make concepts and techniques easily understandable. Lastly, Langer has a wealth of experience that he brings to his book. He spent more than 25 years as an IT consultant and is the founder of the Center for Technology Management at Columbia University, where he directs certificate and executive programs on various aspects of technology innovation and management. He has organized a vast professional network of tech- nology executives whose companies serve as learning laboratories for his students and research. When you read the book, the knowledge and insight gained from these experiences is readily apparent.

If you are an IT professional, Information Technology and Organi­ zational Learning should be required reading. However, anyone who is part of a firm or agency that wants to capitalize on the opportunities provided by digital technology will benefit from reading the book.

Charles C. Snow Professor Emeritus, Penn State University

Co­Editor, Journal of Organization Design

xiii

Acknowledgments

Many colleagues and clients have provided significant support during the development of the third edition of Information Technology and Organizational Learning.

I owe much to my colleagues at Teachers College, namely, Professor Victoria Marsick and Lyle Yorks, who guided me on many of the the- ories on organizational learning, and Professor Lee Knefelkamp, for her ongoing mentorship on adult learning and developmental theo- ries. Professor David Thomas from the Harvard Business School also provided valuable direction on the complex issues surrounding diver- sity, and its importance in workforce development.

I appreciate the corporate executives who agreed to participate in the studies that allowed me to apply learning theories to actual organizational practices. Stephen McDermott from ICAP provided invaluable input on how chief executive officers (CEOs) can success- fully learn to manage emerging technologies. Dana Deasy, now global chief information officer (CIO) of JP Morgan Chase, contributed enormous information on how corporate CIOs can integrate tech- nology into business strategy. Lynn O’ Connor Vos, CEO of Grey Healthcare, also showed me how technology can produce direct mon- etary returns, especially when the CEO is actively involved.

And, of course, thank you to my wonderful students at Columbia University. They continue to be at the core of my inspiration and love for writing, teaching, and scholarly research.

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Author

Arthur M. Langer, EdD, is professor of professional practice of management and the director of the Center for Technology Management at Columbia University. He is the academic direc- tor of the Executive Masters of Science program in Technology Management, vice chair of faculty and executive advisor to the dean at the School of Professional Studies and is on the faculty of the Department of Organization and Leadership at the Graduate School of Education (Teachers College). He has also served as a member of the Columbia University Faculty Senate. Dr. Langer is the author of Guide to Software Development: Designing & Managing the Life Cycle. 2nd Edition (2016), Strategic IT: Best Practices for Managers and Executives (2013 with Lyle Yorks), Information Technology and Organizational Learning (2011), Analysis and Design of Information Systems (2007), Applied Ecommerce (2002), and The Art of Analysis (1997), and has numerous published articles and papers, relating to digital transformation, service learning for underserved popula- tions, IT organizational integration, mentoring, and staff develop- ment. Dr. Langer consults with corporations and universities on information technology, cyber security, staff development, man- agement transformation, and curriculum development around the Globe. Dr. Langer is also the chairman and founder of Workforce Opportunity Services (www.wforce.org), a non-profit social venture

xvi Author

that provides scholarships and careers to underserved populations around the world.

Dr. Langer earned a BA in computer science, an MBA in accounting/finance, and a Doctorate of Education from Columbia University.

xvii

Introduction

Background

Information technology (IT) has become a more significant part of workplace operations, and as a result, information systems person- nel are key to the success of corporate enterprises, especially with the recent effects of the digital revolution on every aspect of business and social life (Bradley & Nolan, 1998; Langer, 1997, 2011; Lipman- Blumen, 1996). This digital revolution is defined as a form of “ dis- ruption.” Indeed, the big question facing many enterprises today is, How can executives anticipate the unexpected threats brought on by technological advances that could devastate their business? This book focuses on the vital role that information and digital technology orga- nizations need to play in the course of organizational development and learning, and on the growing need to integrate technology fully into the processes of workplace organizational learning. Technology personnel have long been criticized for their inability to function as part of the business, and they are often seen as a group outside the corporate norm (Schein, 1992). This is a problem of cultural assimila- tion, and it represents one of the two major fronts that organizations now face in their efforts to gain a grip on the new, growing power of technology, and to be competitive in a global world. The other major

xviii IntroduCtIon

front concerns the strategic integration of new digital technologies into business line management.

Because technology continues to change at such a rapid pace, the ability of organizations to operate within a new paradigm of dynamic change emphasizes the need to employ action learning as a way to build competitive learning organizations in the twenty-first century. Information Technology and Organizational Learning integrates some of the fundamental issues bearing on IT today with concepts from organizational learning theory, providing comprehensive guidance, based on real-life business experiences and concrete research.

This book also focuses on another aspect of what IT can mean to an organization. IT represents a broadening dimension of business life that affects everything we do inside an organization. This new reality is shaped by the increasing and irreversible dissemination of technology. To maximize the usefulness of its encroaching presence in everyday business affairs, organizations will require an optimal understanding of how to integrate technology into everything they do. To this end, this book seeks to break new ground on how to approach and concep- tualize this salient issue— that is, that the optimization of information and digital technologies is best pursued with a synchronous imple- mentation of organizational learning concepts. Furthermore, these concepts cannot be implemented without utilizing theories of strategic learning. Therefore, this book takes the position that technology liter- acy requires individual and group strategic learning if it is to transform a business into a technology-based learning organization. Technology­ based organizations are defined as those that have implemented a means of successfully integrating technology into their process of organiza- tional learning. Such organizations recognize and experience the real- ity of technology as part of their everyday business function. It is what many organizations are calling “ being digital.”

This book will also examine some of the many existing organi- zational learning theories, and the historical problems that have occurred with companies that have used them, or that have failed to use them. Thus, the introduction of technology into organizations actually provides an opportunity to reassess and reapply many of the past concepts, theories, and practices that have been used to support the importance of organizational learning. It is important, however, not to confuse this message with a reason for promoting organizational

xixIntroduCtIon

learning, but rather, to understand the seamless nature of the relation- ship between IT and organizational learning. Each needs the other to succeed. Indeed, technology has only served to expose problems that have existed in organizations for decades, e.g., the inability to drive down responsibilities to the operational levels of the organization, and to be more agile with their consumers.

This book is designed to help businesses and individual manag- ers understand and cope with the many issues involved in developing organizational learning programs, and in integrating an important component: their IT and digital organizations. It aims to provide a combination of research case studies, together with existing theories on organizational learning in the workplace. The goal is also to pro- vide researchers and corporate practitioners with a book that allows them to incorporate a growing IT infrastructure with their exist- ing workforce culture. Professional organizations need to integrate IT into their organizational processes to compete effectively in the technology-driven business climate of today. This book responds to the complex and various dilemmas faced by many human resource managers and corporate executives regarding how to actually deal with many marginalized technology personnel who somehow always operate outside the normal flow of the core business.

While the history of IT, as a marginalized organization, is rela- tively short, in comparison to that of other professions, the problems of IT have been consistent since its insertion into business organiza- tions in the early 1960s. Indeed, while technology has changed, the position and valuation of IT have continued to challenge how execu- tives manage it, account for it, and, most important, ultimately value its contributions to the organization. Technology personnel continue to be criticized for their inability to function as part of the business, and they are often seen as outside the business norm. IT employees are frequently stereotyped as “ techies,” and are segregated in such a way that they become isolated from the organization. This book pro- vides a method for integrating IT, and redefining its role in organiza- tions, especially as a partner in formulating and implementing key business strategies that are crucial for the survival of many companies in the new digital age. Rather than provide a long and extensive list of common issues, I have decided it best to uncover the challenges of IT integration and performance through the case study approach.

xx IntroduCtIon

IT continues to be one of the most important yet least understood departments in an organization. It has also become one of the most significant components for competing in the global markets of today. IT is now an integral part of the way companies become successful, and is now being referred to as the digital arm of the business. This is true across all industries. The role of IT has grown enormously in companies throughout the world, and it has a mission to provide stra- tegic solutions that can make companies more competitive. Indeed, the success of IT, and its ability to operate as part of the learning organization, can mean the difference between the success and failure of entire companies. However, IT must be careful that it is not seen as just a factory of support personnel, and does not lose its justification as driving competitive advantage. We see in many organizations that other digital-based departments are being created, due to frustration with the traditional IT culture, or because they simply do not see IT as meeting the current needs for operating in a digital economy.

This book provides answers to other important questions that have challenged many organizations for decades. First, how can manag- ers master emerging digital technologies, sustain a relationship with organizational learning, and link it to strategy and performance? Second, what is the process by which to determine the value of using technology, and how does it relate to traditional ways of calculating return on investment, and establishing risk models? Third, what are the cyber security implications of technology-based products and services? Fourth, what are the roles and responsibilities of the IT executive, and the department in general? To answer these questions, managers need to focus on the following objectives:

• Address the operational weaknesses in organizations, in terms of how to deal with new technologies, and how to bet- ter realize business benefits.

• Provide a mechanism that both enables organizations to deal with accelerated change caused by technological innovations, and integrates them into a new cycle of processing, and han- dling of change.

• Provide a strategic learning framework, by which every new technology variable adds to organizational knowledge and can develop a risk and security culture.

xxiIntroduCtIon

• Establish an integrated approach that ties technology account- ability to other measurable outcomes, using organizational learning techniques and theories.

To realize these objectives, organizations must be able to

• create dynamic internal processes that can deal, on a daily basis, with understanding the potential fit of new technologies and their overall value within the structure of the business;

• provide the discourse to bridge the gaps between IT- and non- IT-related investments, and uses, into one integrated system;

• monitor investments and determine modifications to the life cycle;

• implement various organizational learning practices, includ- ing learning organization, knowledge management, change management, and communities of practice, all of which help foster strategic thinking, and learning, and can be linked to performance (Gephardt & Marsick, 2003).

The strengths of this book are that it integrates theory and practice and provides answers to the four common questions mentioned. Many of the answers provided in these pages are founded on theory and research and are supported by practical experience. Thus, evidence of the performance of the theories is presented via case studies, which are designed to assist the readers in determining how such theories and proven practices can be applied to their specific organization.

A common theme in this book involves three important terms: dynamic , unpredictable , and acceleration . Dynamic is a term that rep- resents spontaneous and vibrant things— a motive force. Technology behaves with such a force and requires organizations to deal with its capabilities. Glasmeier (1997) postulates that technology evolution, innovation, and change are dynamic processes. The force then is tech- nology, and it carries many motives, as we shall see throughout this book. Unpredictable suggests that we cannot plan what will happen or will be needed. Many organizational individuals, including execu- tives, have attempted to predict when, how, or why technology will affect their organization. Throughout our recent history, especially during the “ digital disruption” era, we have found that it is difficult, if not impossible, to predict how technology will ultimately benefit or

xxii IntroduCtIon

hurt organizational growth and competitive advantage. I believe that technology is volatile and erratic at times. Indeed, harnessing tech- nology is not at all an exact science; certainly not in the ways in which it can and should be used in today’ s modern organization. Finally, I use the term acceleration to convey the way technology is speeding up our lives. Not only have emerging technologies created this unpre- dictable environment of change, but they also continue to change it rapidly— even from the demise of the dot-com era decades ago. Thus, what becomes important is the need to respond quickly to technology. The inability to be responsive to change brought about by technologi- cal innovations can result in significant competitive disadvantages for organizations.

This new edition shows why this is a fact especially when examining the shrinking S-Curve. So, we look at these three words— dynamic, unpredictable, and acceleration— as a way to define how technology affects organizations; that is, technology is an accelerating motive force that occurs irregularly. These words name the challenges that organizations need to address if they are to manage technological innovations and integrate them with business strategy and competi- tive advantage. It only makes sense that the challenge of integrating technology into business requires us first to understand its potential impact, determine how it occurs, and see what is likely to follow. There are no quick remedies to dealing with emerging technologies, just common practices and sustained processes that must be adopted for organizations to survive in the future.

I had four goals in mind in writing this book. First, I am inter- ested in writing about the challenges of using digital technologies strategically. What particularly concerns me is the lack of literature that truly addresses this issue. What is also troublesome is the lack of reliable techniques for the evaluation of IT, especially since IT is used in almost every aspect of business life. So, as we increase our use and dependency on technology, we seem to understand less about how to measure and validate its outcomes. I also want to convey my thoughts about the importance of embracing nonmon- etary methods for evaluating technology, particularly as they relate to determining return on investment. Indeed, indirect and non- monetary benefits need to be part of the process of assessing and approving IT projects.

xxiiiIntroduCtIon

Second, I want to apply organizational learning theory to the field of IT and use proven learning models to help transform IT staff into becoming better members of their organizations. Everyone seems to know about the inability of IT people to integrate with other depart- ments, yet no one has really created a solution to the problem. I find that organizational learning techniques are an effective way of coach- ing IT staff to operate more consistently with the goals of the busi- nesses that they support.

Third, I want to present cogent theories about IT and organiza- tional learning; theories that establish new ways for organizations to adapt new technologies. I want to share my experiences and those of other professionals who have found approaches that can provide posi- tive outcomes from technology investments.

Fourth, I have decided to express my concerns about the valid- ity and reliability of organizational learning theories and practices as they apply to the field of IT. I find that most of these models need to be enhanced to better fit the unique aspects of the digital age. These modified models enable the original learning techniques to address IT-specific issues. In this way, the organization can develop a more holistic approach toward a common goal for using technology.

Certainly, the balance of how technology ties in with strategy is essential. However, there has been much debate over whether tech- nology should drive business strategy or vice versa. We will find that the answer to this is “ yes.” Yes, in the sense that technology can affect the way organizations determine their missions and business strate- gies; but “ no” in that technology should not be the only component for determining mission and strategy. Many managers have realized that business is still business, meaning that technology is not a “ sil- ver bullet.” The challenge, then, is to determine how best to fit tech- nology into the process of creating and supporting business strategy. Few would doubt today that technology is, indeed, the most signifi- cant variable affecting business strategy. However, the most viable approach is to incorporate technology into the process of determin- ing business strategy. I have found that many businesses still formu- late their strategies first, and then look at technology, as a means to efficiently implement objectives and goals. Executives need to better understand the unique and important role that technology provides us; it can drive business strategy, and support it, at the same time.

xxiv IntroduCtIon

Managers should not solely focus their attention on generating breakthrough innovations that will create spectacular results. Most good uses of technology are much subtler, and longer-lasting. For this reason, this book discusses and defines new technology life cycles that blend business strategy and strategic learning. Building on this theme, I introduce the idea of responsive organizational dynamism as the core theory of this book. Responsive organizational dynamism defines an environment that can respond to the three important terms (dynamic, unpredictable, and acceleration). Indeed, technology requires organizations that can sustain a system, in which individu- als can deal with dynamic, unpredictable, and accelerated change, as part of their regular process of production. The basis of this concept is that organizations must create and sustain such an environment to be competitive in a global technologically-driven economy. I further analyze responsive organizational dynamism in its two subcompo- nents: strategic integration and cultural assimilation, which address how technology needs to be measured as it relates to business strategy, and what related social– structural changes are needed, respectively.

Change is an important principle of this book. I talk about the importance of how to change, how to manage such change, and why emerging technologies are a significant agent of change. I support the need for change, as an opportunity to use many of the learning theories that have been historically difficult to implement. That is, implementing change brought on by technological innovation is an opportunity to make the organization more “ change ready” or, as we define it today, more “ agile.” However, we also know that little is known about how organizations should actually go about modifying existing processes to adapt to new technologies and become digital entities— and to be accustomed to doing this regularly. Managing through such periods of change requires that we develop a model that can deal with dynamic, unpredictable, and accelerated change. This is what responsive organizational dynamism is designed to do.

We know that over 20% of IT projects still fail to be completed. Another 54% fail to meet their projected completion date. We now sit at the forefront of another technological spurt of innovations that will necessitate major renovations to existing legacy systems, requiring that they be linked to sophisticated e-business systems. These e-business systems will continue to utilize the Internet, and emerging mobile

xxvIntroduCtIon

technologies. While we tend to focus primarily on what technology generically does, organizations need urgently to prepare themselves for the next generation of advances, by forming structures that can deal with continued, accelerated change, as the norm of daily opera- tions. For this edition, I have added new sections and chapters that address the digital transformation, ways of dealing with changing consumer behavior, the need to form evolving cyber security cultures, and the importance of integrating Gen Y employees to accelerate competitive advantage.