Introducing new values and practices

In accordance with the literature (cf. Fuchs and Hess 2018; Gerster et al. 2018;

Vejseli et al. 2019), the IT department introduced agile values to its operations in an effort to improve its ability to respond to the growing demands of the municipality.

In the IT department, the agile implementation centered around the new IT development process, through which the IT department incorporated agile values suggested by previous literature. These included improved empowerment of employees (Olsson et al. 2004), a shift in the focus from contract negotiations to collaboration (Mergel et al. 2020), and learning to focus on responding to change instead of relying on pre-planning (Lappi and Aaltonen 2017).

First, the IT department improved the empowerment of employees by establishing the solution office and the virtual team responsible for it. As the virtual team brought together employees from the siloed teams and was not bound by the official structures of the IT department, the IT department’s employees and the consultants could collaborate more efficiently. As people were selected to work on different

solution development projects based on their skills and competencies, the existing knowledge and know-how of the employees could be utilized more effectively, as suggested by previous literature (Janssen and van der Voort 2016; Mergel et al. 2020;

Olsson et al. 2004). The empowerment of employees also appeared to improve the IT department’s ability to respond to the needs of the business units more effectively.

As suggested by Janssen and van der Voort (2016), adopting agile practices, such as the empowerment of employees, in the public sector is not necessarily as simple as in the private sector. This was the case in the IT department as well. The organizational rules and structures, for example, limited the extent to which employees could be empowered to decide collectively who would work on which project. The CIO did not have the right to dissolve the IT department’s siloed team structure; therefore, the empowerment of employees relied on unofficial team structures, such as the virtual team. While this unofficial team improved collaboration between the different siloes, the work contracts of the employees stayed the same, forcing the employees to balance their “official” with their “virtual”

duties.

Efforts to empower the employees also suffered from employees’ difficulties in following the new process. These types of challenges in agile adaptation are typically explained in terms of unsuitable organizational structures, mismatches in values (Hekkala et al. 2017), insufficient capabilities, and the lack of motivation and an agile mindset (Fuchs and Hess 2018). In the case of the IT department, the unsustainable organizational structures hindered the adoption of the new way of working, while the other challenges were largely overcome due to the extensive use of consultants, who were not bound by the previous values, existing capabilities, or lack of an agile mindset. The challenges faced by the IT department in attempting to incorporate agile processes can be explained by unsuitable organizational structures, which encouraged the IT department’s employees to work independently to advance their projects as this enabled them to benefit the business unit for which they were structurally responsible. This is in line with the suggestions of Janssen and van Der Voort (2016) and Mergel et al. (2020), who have pointed out that bureaucratic structures of public sector organizations are one of the key challenges in incorporating agile values into the public sector context. In the case of the IT department, the extensive use of consultants mitigated this challenge significantly.

In addition to the empowerment of employees, the IT department began to shift from contract negotiations to collaboration. This was especially visible in the relationship between the IT department and the municipal business units. The new IT

development process played an important role in this transformation as well and directed the IT department in a more proactive direction. This proactivity, especially at the front-end of the IT development process, guided the IT department to rely more on collaboration than contract negotiations.

The relationship between the IT department and the business units was also improved owing to the dedicated contact persons and the active involvement of the business units in the solution development. Additionally, the digitalization plans improved this relationship because the planning process enabled the business units to become more familiar with the IT department, which, in turn, was enabled the IT department to become more familiar with the needs of the business units. Together, these improvements enhanced the collaboration, as suggested by Fowler and Higsmith (2001). In line with the findings of Janssen et al. (2013), the focus on collaboration also enabled the IT department to successfully increase its understanding of the different stakeholders, which again improved collaboration and enhanced the IT department’s ability to provide services and drive the digital transformation.

Although the IT department managed to increase collaboration with the business units, this collaboration was largely delimited by the IT department’s ability to keep its promises. Through the collaboration, the IT department was building trust, but in the case that they could not fulfill the digitalization plans, the business units would most likely demand a return to more contract-based operation.

Third, to improve its ability to support the municipal digital transformation, the IT department began to respond to change instead of relying on plans. By virtue of its more proactive approach in collaboration with the business units, clarification of roles and processes, and especially because of the digitalization plans, the IT department gained a better overview of the situation in the municipality. As suggested by the previous literature (cf. Olsson et al. 2004), the improved understanding of the situation in the different business units better equipped the IT department to monitor and respond to environmental feedback.

In the IT department, this better understanding of the operational situation also improved the money allocation for IT-related projects. Instead of possessing only a snapshot of the needs of the business units once a year during IT budgeting for the next year, there were now prioritized four-year plans. This again enabled more flexible money allocation, where funds could be moved from halted projects to new ones when necessary. The two-week development cycles in the solution office provided an opportunity to reevaluate the situation of ongoing IT development

projects more regularly, and this way enabled the IT department to respond to change instead of merely blindly following the original IT project plan.

The introduction of agile approaches enhanced the IT department’s ability to advance organizational digital transformation, as suggested by the previous literature (cf. Vial 2019). However, the challenges emphasized by the previous literature, such as the contradictions between stability and agility (Janssen and van der Voort 2016), were not the key issues arising from the case. Instead, the findings show that the challenges of introducing agile approaches are a result of a deeply rooted operational culture where business units, as well as individual projects, fight for scarce resources instead of working to build trust and improve collaboration. While the rules and regulations have been identified as challenges for transformation in the context of the public sector (Savoldelli et al. 2014), these do not necessarily play a significant role in the operations as expected. Instead, as long as there is a willingness to collaborate and build trust, the bureaucratic structures of public sector organizations can be overcome.

As previous research has suggested (cf. Vial 2019), implementation of agile values alone is not enough to enable continuous digital transformation; ambidexterity is also needed. For example, the IT department’s short-term focus resulted in unsustainable reliance on consultants in the long run. The need for ambidexterity was also evident in the contradictory demands the IT department was facing. The IT department needed to improve productivity while becoming more proactive.

While the demand for operational efficiency required explicit and stable processes, the CIO understood that the current processes would not serve the IT department in the long run. This need to balance stability with agility (Janssen and van der Voort 2016) or exploitation and exploration (Magnusson et al. 2020) are contradictions that many have long attempted to solve with ambidexterity.

To cope with the contradictory operational demands, the IT department separated the demands for efficiency and proactivity. This approach closely resembles structural separation, which is one approach to achieving organizational ambidexterity (Simsek et al. 2009). Here, structural separation was achieved by recruiting consultants to take care of the proactiveness while the existing resources (i.e., the internal employees) continued to take care of the existing processes, but in a more structured and efficient manner. To some degree, this separation did work, and the IT department achieved a more harmonic way of operation, as suggested by previous research on adapting ambidextrous approaches (Simsek et al. 2009). While the IT department did adapt ambidexterity to some operations, it did not successfully incorporate it into all aspects of the operations, for example, the use of consultants,

probably because there was no proper comprehension in the IT department that in a continuously changing environment, the role of consultants would also change.

This indicates that while ambidexterity has been suggested as a suitable approach to coping with the contradictions of digital transformation (Magnusson et al. 2020), its utilization in continuous transformations can be challenging. The research on ambidexterity has focused on static environments (Heracleous et al. 2019; Luger et al. 2018; Raisch and Birkinshaw 2008) and does not provide sufficient guidance on how to utilize ambidextrous approaches in fast-changing environments. As the case shows, this was a skill that was critically needed when the organization began its digital transformation. In sum, the degree and velocity of digital transformation can make using approaches that are suitable for stable environments difficult to utilize elsewhere (cf. Bharadwaj et al., 2013).