4.4 Outcomes of the transformation
4.4.2 Negative impacts
The transformation activities were largely successful and received a positive reception. Despite this, there were multiple challenges with the transformation.
These challenges and supporting quotations are presented in Table 10.
Table 10. Negative impacts of the transformation (Ylinen 2021).
“I think that [it is bothering] many of the long-standing employees, and me as well, that there are changes after changes. Is there any sense in these constant renewals?” (Web designer).
Reluctance to change “Also, [the business units] need to make changes and reorganize things. So actually, [this transformation] does not measure the change capability of the IT department but [of] the whole organization” (Consultant H).
Issues with following the new process
“I did not take the needs that came straight to me to the solution office. I tried to advance them on my own because it was possible” (Account manager C).
New types of financial challenges
“Now that project managers are asked to do realistic budget evaluations instead of excessive ones, we must tell them that a month ago, you said that you needed 70,000 this year, and now you’re telling me that you need more than 70,000, but we’ve already relocated the money. Now, this project will start to give excessive budget suggestions again” (Project manager).
Unsustainable dependence on consultants
“Well, quite a lot of people are leaving, and they are replaced by consultants. So, that hinders the operations, and the work time is increased” (Enterprise architect).
“This has resulted in uncontrolled growth of the number of consultants. Every time some new development project is started, a new consulting agency is brought in.
[The IT department] is on this endless tendering treadmill” (Consultant A).
First of all, the IT department employees were growing tired of the continuous changes. The consultants took an iterative approach to the design of the new IT development, which enabled them to improve it constantly. The employees of the IT department were not used to this type of approach, which resulted in a growing negative attitude toward the constant change. The benefits of incremental improvements compared to a one-time holistic transformation were not conveyed from the consultants to the employees. Although for the consultants, these changes seemed incremental, this was not the case among the internal employees who were, some for the first time, facing a requirement to adapt constantly to previously unfamiliar practices. Reluctance to change was increasing.
The reluctance to change was also visible among the business units. For example, these units were accustomed to using their budgets as they wished. When the IT department adopted a more proactive approach, the business units lost some of their power to the IT department. Although the digitalization plan process indicated that the business units were content with the IT department’s operations, the former still tended to conduct independent development projects.
The new development process was mainly communicated by the consultants and presented via complicated EA models. These models provided an all-inclusive overview of the changes but did not properly clarify how the process would work in
practice nor how the IT department’s employees should change their work practices.
As a result, the new process was not necessarily followed as intended. Because the new process was designed by consultants who were not necessarily that familiar with the existing structures and working practices of the IT department, many ordinary aspects of the new way of working were not clarified. For some employees, this was an opportunity, while others were more comfortable following the old rules and structures.
The more agile approach also attempted to leave more power to the individual employees, which caused issues. Employees were flustered that there was no higher-level decision-making body to provide clear rules on how things should be done or, for example, whether previous performance evaluations were still valid. It was safer for the internal employees not to follow the new and vague guidelines as doing so was not necessarily beneficial to them. This resulted in, for example, behavior whereby the employees intentionally focused on advancing IT development projects of the business unit they were originally assigned to instead of following the new process and competence allocations.
Furthermore, new types of financial challenges appeared. Because the IT department changed its process of allocating money to a more flexible approach, the project managers were flustered in the face of new demands related to budgeting their projects. The project managers were now facing growing responsibility in defining project budgets. Unlike before, the IT department was now able to move money from one project to another flexibly. For the project managers, this meant that they needed to be very precise in evaluating their budgets, as underestimation could result in financing issues as there was no longer money “lying around”;
however, overestimation would result in slowing down other projects. This challenge also created a confrontation between the business units because the IT department’s budget was no longer divided among these units.
Additionally, the solution to the lack of resources (i.e., the consultants) began to reveal its problems. While consultants were an excellent solution for the short-term resource shortage, keeping a team of costly consultants working full-time to replace regular staff was not cost-effective. Over time, the consultants had become a critical force keeping the new IT development process operational, which resulted in unsustainable dependence on consultants. This had multiple negative implications (see Table 11. for a list of negative effects and supporting quotations).
Table 11. Negative effects of extensive reliance on consultants (Ylinen and Pekkola 2021b).
Negative effects Quotations Knowledge is not
rooted in the organization
“Well, this is quite a special situation. New consultants come in, and a lot of old information is just lost” (Department head of the digital agency).
Expensive “Let’s just say that it has been an expensive service that they have tendered”
(Consultant H).
“Our main architect left our agency. Now we have [name removed,] who is now the main architect” (Consultant A).
“Another company won the bidding. We got new coworkers from [the new agency].
Then the city realized that it cannot let us go, and we had to dig up some old framework agreements so we could stay for now” (Consultant A).
Not enough knowledge about the organizational culture or operations
“Now that we have these outside consultants as project managers, I don’t think that we can talk about our culture anymore …. Of course, [our] own employees can also change constantly ..., but now, there are always newly appointed external project managers [to whom] you need to explain how the budget works …. There is a continuous need to help them” (Project manager).
“I would say [that in this current situation] where the consultants brief other
consultants, the end result cannot be good. Even the consultants who have been here the longest don’t possess the same knowledge as internal employees do” (Account manager A).
“It would be wrong to say that it has no influence …. [W]e have to adjust and transfer as much information as we can …” (Development service manager).
No internal workers to provide briefing
“The briefing has been quite scant” (Consultant E).
“We have wasted lot of time because they [the consultants] have not been taught properly about what we are trying to accomplish here” (Web designer).
Time lost when new consultants are constantly coming in
“As a lot of people leave and are replaced by consultants, of course, we are not as efficient as we could be; the schedules are prolonged, etc.” (Enterprise architect).
“Of course, it takes extra work when new guys come in” (Consultant E).
Tensions between internal and external workers
“From my point of view, the work would be more meaningful [if I could work with internal employees.] Working with the consultants, you get more of these sudden changes, and they think more about their own agency even though we are their customers” (Enterprise architect).
Business units prefer internal employees
“Well, the consultants are surely competent. But I have faced many situations where [the business units] are like, ‘Oh, a consultant; could we have an internal worker instead, please? A kind of person who is employed by the city’” (Department head of digital agency).
Unmanageable number of consulting agencies
“This is visible in the uncontrollable increase in the number of consultants. Every time something new is started, it is done by a new consulting agency …; now, the municipality has at least ten IT consulting agencies working for it” (Consultant A).
Complete reliance on consultants
“Even though I myself am working here as a consultant, I do not think that we can build this operation upon ourselves, that is, consultants. Now, the whole circus is run by external workers” (Consultant C).
First, because the consultants had become responsible for the everyday operations in the IT department, knowledge related to IT development was no longer rooted there. Instead, the consultants had become the gatekeepers of operations in the IT
department. While initially, this was beneficial to the IT department as the consultants were as knowledgeable about the operations as internal workers, the consultants were only there for the duration of their contract. While the reliance on consultants grew, so did the contracts, which forced the IT department to engage in laborious tendering processes, meaning that it was no longer in the IT department’s hands to ensure that the consultants holding tacit knowledge of the operations would remain.
For example, at the beginning of the transformation, the IT department had tendered the EA work to a single consulting agency, which then redesigned the EA work practices and governance models. When the EA contract ended, the work had to be tendered again, and a new agency took over. Because at this point, the IT department had no internal enterprise architects, all the tacit EA knowledge resided within the initial consultants. The IT department had to bring in new consultants but could not let go of the old ones. The results were, on the one hand, the creation of a new and looser contract with the initial agency so that the old consultants would not leave, and on the other, that the official EA tasks were handed over to new consultants from another agency. The IT department was facing a situation where they had several large concurrent contracts with different consulting agencies. At the end of the day, the number of consultants and contracts had become unmanageable.
Meanwhile, the number of internal workers was decreasing, making the consultants who had been working in the IT department for years the key holders of the IT department’s tacit knowledge. Owing to their accumulated knowledge and expertise (and the difficulty of hiring people in the public sector), these consultants were appointed to managerial positions and were becoming invaluable to the municipality. This knowledge, while extensive, was not at the level of internal operations. The consultants were not familiar with the organizational culture and operations, which was visible, for example, in the change resistance among the internal employees, which the consultants failed to take into consideration. Because the consultants were also not responsible for providing each other with an orientation, knowledge was not properly transferred throughout the IT department.
A lot of time was lost as new consultants attempted to get familiar with the IT department.
As the number of consultants grew, there were also tensions building between the internal employees and external consultants. The internal employees felt that it was their responsibility to make sure that their work would benefit the IT department and the municipality but felt that their views were not necessarily listened to. Similar
attitudes were evident among the business units, who would have preferred internal employees.
While focusing on the benefits gained from individual consultants and contracts, the municipality outsourced its tacit knowledge. Eventually, the municipal officials felt that the only reasonable way out of this unmanageable locked-in situation was to outsource the whole of IT development. The outsourcing decision was officially announced right after the case study ended.
5 DISCUSSION
This chapter will first present the different activities of the IT department in light of the current literature. It will then proceed to provide answers to the research questions and, finally, present the practical implications of this dissertation.