Business of bytes

Business of bytes

Tod Hoffman | Information technology (IT) is not some magical panacea guaranteeing wealth and efficiency. What it does do is present new opportunities with attendant challenges that individuals and organizations must address.

	Professor Alain Pinsonneault PHOTO: Claudio Calligaris

Alain Pinsonneault, Imasco Professor of Information Systems in the Faculty of Management, is examining how IT changes the way business is done and how managers and employees adapt to the environment it creates, particularly the phenomenon of telecommuting.

"Implementing IT won't, in and of itself, bring about change if managers resist," he found as a result of a study of municipal governments in the United States. "For IT to bring change to an organization it must be managed properly."

This, his research finds, often comes down to those very human organizational considerations of job security and power retrenchment. In decentralized organizations, middle managers often manipulate IT to consolidate their control over the flow of information, thereby entrenching their positions and bringing little improvements to efficiency. Highly centralized organizations, on the other hand, use IT to put more information in the hands of executives, by-passing middle management, thereby shrinking their ranks.

"What it comes down to," Pinsonneault says, "is how decision makers use IT, whether to reinforce existing power structures or to effect genuine change."

Among the challenges presented by IT is telecommuting. For employees, it promises a new way to merge work with lifestyle. For managers, it demands new techniques for communicating and measuring performance.

Interestingly, intuitive fears about the temptation to neglect work when not confined to an office space have not been realized. Pinsonneault's research shows that productivity is anywhere from 10% to 25% higher for telecommuters. At the same time, they are working longer hours because, whether in the evenings or on weekends, work is always close at hand and, seemingly, never far from their thoughts.

Plus, there's a fear factor, as he explains: "Employees lose visibility and this drives them. They're afraid that if they aren't seen to be working, they will be forgotten and overlooked for promotion."

Consequently, it is obligatory that managers make the necessary effort to ensure that telecommuters are comfortable and retain their sense of belonging to the organization. One solution is to have them come to the office a couple of times or so per week to limit their sense of isolation.

Not everybody is cut out to be a virtual employee. It is counter-productive for organizations to impose the concept willy-nilly for the short-term benefit of reducing costs by cutting overhead. Human resources must be directed to recruit individuals who value autonomy and flexibility and are at ease communicating electronically -- i.e., via e-mail or teleconferencing -- as opposed to face-to-face.

Similarly, managers must change their style of supervision.

"Traditionally, supervisors have managed the process of work. With telecommuting, they manage the output because they aren't present to witness the process," according to Pinsonneault. "This increases reliance on the employee because you don't know exactly what they're doing until the task is submitted."

Another of Pinsonneault's research interests is examining how IT impacts on customer loyalty. To this end, he has looked into the practice of telebanking.

"Telebanking presents a paradox. Loyalty depends on personal relationships, but directing customers to automatic tellers and dealing with them via the Internet reduces personal contact. The more impersonal the service, the more likely a customer is to shop elsewhere for products.

"IT has eliminated the cost and inconvenience of switching. The Internet allows consumers to shop for a bank without expending the time to visit an individual branch. For the bank, it is most efficient to keep existing customers because it's expensive to attract new ones."

The secret, then, resides in maximizing the profitability of those direct contacts banks have with their customers. They focus on cross-selling, the tactic by which a teller is encouraged to have profitable customers purchase multiple products or services from the bank. Cultivating customers to obtain at least three products is the objective.

How can a bank maximize its efficiency by promoting telebanking, while at the same time fostering a sense of customer loyalty?

"It may turn out that offering the best technology in telebanking is the answer. Those whose IT has the highest degree of interactivity may prove to be the most successful."

Pinsonneault joined McGill last year after a six-year stint at the école des Hautes études Commerciales (HEC) of the Université de Montréal. He is seen as a definite comer on the academic circuit. He won the Doctoral Award of the International Centre for Information Technology and MCI Communications in 1990. In 1991 La Presse honoured him as Person of the Week. HEC alumni regarded him as their most promising graduate in 1993 and in 1995 he won the Gaetan Morin Award as its most promising researcher. In 1997 he garnered the CD-ROM-SNI Award for the best pedagogical material using IT.

His papers have attracted a wide readership, appearing in Management Science, Management Information Systems Quarterly and the European Journal of Operational Research, among other journals.