"We are at the dawn of an age of networked intelligence—an age that is giving birth to a new economy, a new politics, and a new society. Businesses will be transformed, governments will be renewed, and individuals will be able to reinvent themselves—all with the help of information technology."
In 1865, roughly 50 percent of the workforce worked in the agricultural industry. This marked the peak of the Agrarian Era. By 1940, less than 5 percent of the workforce worked in agriculture, but close to 40 percent worked in manufacturing. Today, less than 10 percent of the workforce is involved in agriculture and manufacturing combined and the vast majority of workers could be more generally classified as knowledge workers. Federal Reserve Chairman Alan Greenspan has commonly used the term "creative destruction" to describe the radical transformation that the economy in virtually all industries has gone through. Creative destruction is the process by which new products and production methods render old ones obsolete. U.S. Treasury Secretary Lawrence Summers points out (Whalen, 2000) that "If the agricultural and industrial economies were Smithian, the new economy is Schumpeterian." Schumpeter has been credited with having viewed technological change at the core of economics. The digital computer created a technology that could effectively leverage information, giving managers a new tool for creating wealth. The move to the information era has provided business with a tremendous opportunity to knock out old hierarchic beaurocracy and replace it with leaner, more responsive, and more intelligent structures. A critical factor for the successful adoption and diffusion of information technology has been successful leadership and management.
Management leaders have provided keen insight and leadership during this era of reengineering and business transformation. Thomas Peters and Robert Waterman (1982) wrote a seminal book identifying eight basic practices characteristic of successfully managed companies. Many of the ideas were considered part of management's conventional wisdom in highly profitable Japanese corporations, but few were common practice in the majority of American business concerns. This book motivated much of the organizational improvement initiatives that were so popular in the 1980s. None of the eight steps referred to technology but rather focused on people, organization, and behavior. Later, Davenport (1990, 1993) clearly identified the opportunity for, and success of, technology-enabled change in an organization. Business Process Reengineering (Hammer & Champy, 1993) emerged as the buzz-word for technology-enabled organizational change and improvement. The importance of process and process-oriented organizations was popularized by Thomas Davenport (1993) and Michael Hammer (1996). Throughout the '80s and '90s, most organizations in the U.S. were involved in this great process change journey to the Information Economy, only to realize that this was not a destination but rather a lifelong journey.
Over the past 30 years, the IT management paradigm has evolved dramatically. The new IT environment is one of constant change and uncertainty. And clearly IT is being viewed less and less as an expense that must be minimized, but more as a core strategic enabler for an organization. Integrating IT "business" into the rest of the firm poses many organizational design and strategy formulation challenges. It is clear that the failure to successfully manage the introduction and assimilation of emerging technologies in an organization will result in a costly and ineffective collection of disjointed "islands of technology." Success can only come to those able to change the way they act and think. As a result, IT must be considered a tool to expand the "intelligence" of the people within the organization. Without a concomitant change at the individual level, technical success is likely to be accompanied by administrative failure (Applegate et al., 2002). Applegate and her colleagues identify six themes that reflect current insight into management practice and guidance for administrative action:
IT influences different industries, and the firms within them, in different ways.
Telecommunications, computing, and software technologies are evolving rapidly and will continue to evolve.
The time required for successful organizational learning about IT limits the practical speed of change.
External industry, internal organizational and technological changes are pressuring firms to "buy" rather than "make" IT software and services.
While all elements of the IT system life cycle remain, new technologies both enable and require dramatically different approaches to execution.
Managing the long-term evolution of the partnership between general management, IT management, and user management is crucial for capturing the value of new IT-enabled business opportunities.
These themes only thicken the dilemma faced by many organizations. The Industry Standard (July 3, 2000, p. 184) reported from a CEO survey that many CEOs do not have a clear vision for their company's current and future "Internet" plans. For instance, one A.T. Kearney managing director of global e-services was quoted as saying "CEOs describe themselves as technologically literate … You say that and try not to smile too hard, particularly with the difficulty that most of them have in finding the 'on' switch for their computers."
One such technology responsible for enabling the transition from the industrial era to the information era is packaged software applications; better known as enterprise systems (ES) (Davenport, 1998). ES packages have been implemented at companies in virtually every industry but in different ways and with different impact. These packages continue to evolve forcing firms to continuously evaluate their upgrade strategy. The complexity of these packages, and their continuous evolution, present never-ending learning challenges for the firm. The challenges and difficulties of implementing these packages have firms seeking alternatives such as application service providers (ASPs) and Web-services. Enterprise systems will continue to empower organizations in new ways. They will serve as the cornerstone of the networked, intelligent enterprise of the 21st century. The remainder of this chapter will present the key elements of enterprise systems that best contribute to their ability to support intelligent decision-making in an organization.