Impact IT On Organizational Performance

Impact of IT on Organization's
performance
Md Saifullah
Degree project in
ICS
Master thesis
Stockholm, Sweden 2013
XR-EE-ICS 2013:007
Impact of IT on Organizations performance

Md. Saifullah
May 30, 2013
Abstract
Organization Performance Analysis Framework (OPAF) is a Metamodel
which analyzes performance of organizational structure using Enterprise Architecture Analysis Tool (EAAT). This quantitative analysis is used to find
out which structure is good at learning, motivation, efficiency, productivity,
etc. and how to change it. Current framework does not include IT and how
it affects the organizational structure. This thesis work will try to find out
how IT affects organizational structure, directly and indirectly. The effect is
translated in Object Constraint Language (OCL) and inserted in the model.
The framework IT-OPAF is used to analyze three real life organizations and
see the changes in performance when IT is introduced. This will validate
the findings and also recognize pattern of the effect of IT on organizational
structure.
Keywords: IT impact on Organizations performance, OPAF, Analysis Framework, Enterprise Architecture, Performance Analysis, Case study
validation
Acknowledgements
My greatest gratitude goes to my supervisor Pia Narman for her continuous support, patience, motivation, enthusiasm, and encouragement. Her
guidance helped me in all the time of research, and her advices inspired me
to improve the project and without them, this thesis would not have been
possible.
Thanks to my examiner Pontus Johnson for his support during the development process of this thesis.
I would also like to thank my parents, brother, sister, and sister-in-law for
their patience and support despite the distance. Special thank goes to my
niece Tasneem for just being present in our lives. Thanks also to my friends
who were always there when I needed them. Thanks to all my colleagues
in IT division of UCB, especially to my friends in software section for their
unequivocal support throughout, as always, for which my mere expression
of thanks likewise does not suffice.
Needless to say, this thesis would not have been possible without the unconditional support of my loved ones.
Contents
1 Introduction
1.1 Background . . . . . . . . . . . .
1.1.1 Organizational Structure
1.1.2 Information Technology .
1.2 Goal . . . . . . . . . . . . . . . .
1.3 Outline . . . . . . . . . . . . . .
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2 Research Method
2.1 Overview of the Method
2.2 OPAF Model . . . . . .
2.3 Literature Study . . . .
2.4 Case Study . . . . . . .
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3 Literature Review
3.1 Area of Changes in Organizational Structure
3.1.1 IT effect on Differentiation . . . . . .
3.1.2 IT effect on Coordination . . . . . . .
3.1.3 Decentralization and Formalization . .
3.1.4 Hierarchy . . . . . . . . . . . . . . . .
3.2 Previous Research Point-of-View . . . . . . .
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4 Effect of IT on OPAF
4.1 What is OPAF . . . . . . . . . . . .
4.2 Effect of IT on OPAF . . . . . . . .
4.2.1 Effect on Coordination . . . .
4.2.2 Effect on Formalization . . .
4.2.3 Effect on Performance . . . .
4.2.4 Effect on Quality . . . . . . .
4.2.5 Effect on Mutual Adjustment
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4.3
4.4
4.2.6 Effect on Centralization . . . . . . .

4.2.7 Effect on Structure . . . . . . . . . .
Indirect effect of IT to business performance
4.3.1 Effect on Unit.employeeMotivation .
4.3.2 Effect on Unit.externalCoordination
4.3.3 Effect on Unit.internalCoordination
4.3.4 Effect on Unit.flexibility . . . . . . .
4.3.5 Effect on Quality . . . . . . . . . . .
4.3.6 Effect on Unit.efficiency . . . . . . .
4.3.7 Effect on Unit.learningPace . . . . .
4.3.8 Effect on Unit.variability . . . . . .
Non-matching effect of IT on OPAF . . . .
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measurements
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5 Case study
5.1 Loan Processing System . . . . . . . . . . . . . . . .
5.1.1 Sonali Bank . . . . . . . . . . . . . . . . . . .
5.1.2 Janata Bank . . . . . . . . . . . . . . . . . .
5.1.3 United Commercial Bank . . . . . . . . . . .
5.2 Similarities & Dissimilarities between study subjects
5.2.1 Importance of the workflow . . . . . . . . . .
5.2.2 Unit structure . . . . . . . . . . . . . . . . .
5.2.3 Decision rights . . . . . . . . . . . . . . . . .
5.2.4 Central office involvement . . . . . . . . . . .
5.2.5 Environment . . . . . . . . . . . . . . . . . .
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6 Result & Analysis

6.1 Performance Measurements Result . . . . .
6.2 Effect of IT . . . . . . . . . . . . . . . . . .
6.2.1 Effect on unit.employeeMotivation .
6.2.2 Effect on unit.externalCoordination
6.2.3 Effect on unit.internalCoordination .
6.2.4 Effect on quality . . . . . . . . . . .
6.2.5 Effect on unit.timeEfficiency . . . .
6.2.6 Effect on unit.flexibility . . . . . . .
6.2.7 Effect on unit.variability . . . . . . .
6.2.8 Effect on unit.learningPace . . . . .
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7 Conclusion
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67
A Case Subject Introduction

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1
Sonali Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
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Janata Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
3
United Commercial Bank Ltd . . . . . . . . . . . . . . . . . . 70
B Questionnaire
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List of Figures
3.1
Effect of Information Technology [16] . . . . . . . . . . . . . .
17
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
IT effect on OPAF . . . . . . . . .
Direct effect of IT to OPAF 1 . . .
Direct effect of IT to OPAF 2 . . .
Indirect effect of IT to performance
Effect on employee motivation . . .
Effect on decision coordination 1 .
Effect on decision coordination 2 .
Effect on units flexibility . . . . .
Effect on units learning pace . . .
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measurements attribute
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5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
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5.11
5.12
5.13
Loan Processing Workflow . . . . . . . . . . . . . . . . . . .

Organogram for Loan Processing System of Sonali Bank . .
Sonali Bank Learning viewpoint 1 . . . . . . . . . . . . . .
Sonali Bank Motivation viewpoint 2 . . . . . . . . . . . . .
Sonali Bank Learning viewpoint 2 . . . . . . . . . . . . . .
Sonali Bank Motivation viewpoint 2 . . . . . . . . . . . . .
Organogram for Loan Processing System of Janata Bank . .
Janata Bank Learning viewpoint . . . . . . . . . . . . . . .
Janata Bank Motivation viewpoint . . . . . . . . . . . . . .
Organogram for Loan Processing System of UCB . . . . . .
Committee structure of UCB in Loan Processing Workflow
UCB Learning viewpoint . . . . . . . . . . . . . . . . . . . .
UCB Motivation viewpoint . . . . . . . . . . . . . . . . . .
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6.1
6.2
6.3
6.4
Performance measurements result

Learning vs Motivation . . . . .
Effect of IT to Sonali Bank . . .
Effect of IT to Janata Bank . . .
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before IT effect
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6.5
6.6
6.7
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6.21
Effect of IT to UCB Bank . . . . . . . . . . . . . . . . . . .

Indirect effect of IT to units motivation . . . . . . . . . . .
Indirect effect of IT to units motivation . . . . . . . . . . .
Indirect effect of IT to units external coordination . . . . .
Indirect effect of IT to units external coordination . . . . .
Indirect effect of IT to units internal coordination . . . . .
Indirect effect of IT to units internal coordination . . . . .
Indirect effect of IT to quality of units decision and output
Direct effect of IT to information . . . . . . . . . . . . . . .
Indirect effect of IT on unit.efficiency . . . . . . . . . . . . .
Result of effect of IT on unit.efficiency . . . . . . . . . . . .
Indirect effect of IT on unit.flexibility . . . . . . . . . . . .
Indirect effect of IT to units flexibility . . . . . . . . . . . .
Indirect effect of IT on unit.variability . . . . . . . . . . . .
Result of effect of IT on unit.variability . . . . . . . . . . .
Indirect effect of IT on unit.learningPace . . . . . . . . . . .
Indirect effect of IT to unit.learningPace . . . . . . . . . . .
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A.1 Sonali Bank Organogram[23] . . . . . . . . . . . . . . . . . .
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List of Tables
3.1
Findings from literature study . . . . . . . . . . . . . . . . . .
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4.1
Non-matching findings from literature study . . . . . . . . . .
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5.1
Similarities & Dissimilarities between the study subjects . . .
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6.1
6.2
6.3
Result on average value based on all viewpoints . . . . . . . .

Direct effect of IT on CreditSection unit . . . . . . . . . . . .
Indirect effect of IT on CreditSection unit . . . . . . . . . . .
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Chapter 1
Introduction
1.1
Background
Information Technology (IT) has changed the traditional ways of people

to acquire and process information by drastically changing the communication medium and processing power. It also profoundly change organization
structure in space and time, breaking the balance of organizations interests
both inside and outside of the organization, which leads to changes in organization structure.[1][2] Not only are we observing rapid changes in IT
but also organizations increasingly invest in IT for their concern about their
market competitiveness and organizational performance.[3] Many organizations have become totally reliant on IT for success and recognize that IT is
becoming one of their main organizational assets.[4]
The performance of an organization is said to be greatest when they emphasize on both IT and organization structure. Measuring the contributions
of IT in isolation, without considering contextual variables like organization
structure cannot produce a meaningful indication of ITs business value.[5]
Also it should be said that measuring the benefit of IT and its impact on
organizational performance is a complicated task.[3]
To measure the performance of organization, many framework/tools have
been used. The framework in question in this thesis work is Organization
Performance Analysis Framework (OPAF). Using this model based framework along with Enterprise Architecture Analysis Tool (EAAT), one can
analyze the performance of an organization. This quantitative analysis can
be used to find out which organization structure is good for different performance measurements. Although a number of enterprise architecture software tools are available on the market, including etis, System Architect,
Aris, Qualiware, etc. and some of these provide possibilities to sum costs
or strategic value of a set of modeled objects. But none of them have such
significant capabilities for quality analysis as presented in EAAT.[6] Using
this we can find quantitative analysis between organization structure and its
performance, but the framework uses technology as a helping object, rather
seeing it as a viewpoint.
The literature on information technology and organizational changes
does not currently support reliable generalizations about the relationships
between information technology and organizational change. One of the
reasons for this is the conflicting and unclear definitions and measures of
information technology and organizational structure by biased researchers
from several academic disciplines.[7] It is also seen that, although technology
seems to be everywhere, over 95% of the articles published in leading management journals do not consider or take into account the role and influence
of technology in organization life.[8]
So, even though no one can deny the significance of Information Technology as an organizational variable, but there is disagreement over whether
technology is an independent or dependent variable, and over the weight
to be given to technology compare to other variables.[9] This defined the
question about whether or not Information Technology (IT) has significant
effect on the changes of organization structure, and the significance of its
effect.
This thesis is based on work done in the context of creating a framework
to measure performance of organization, and analysis tool that is used to
design the organization structure as per the organizations need. According to N
arman[10] there are nine viewpoints present in the OPAF. They
are Motivation, Learning, Information, Productivity, Efficiency, Variability,
Coordination, and Flexibility. Using these frameworks, the tool allows organization to design and analyze the outcome from these nine viewpoints. In
this framework, Technology is used as a helping object rather seeing Information Technology as a viewpoint. Also it lacks empirical data to perform
a validation.
1.1.1
Organizational Structure
According to wiki, the definition of Organizational Structure is an organizational structure consists of activities such as task allocation, coordination
and supervision, which are directed towards the achievement of organizational aims. It can also be considered as the viewing glass or perspective
through which individuals see their organization and its environment.[11]
8
It is interesting to see how the structure of an organization changes

over time, as it needs to adjust with changing environment and business
strategies.
In the field of Information Systems (IS), the relationship between information technology and organizational changes is one of the central concerns.
There are few researchers in the IS field questions the importance and role
of information technology in organizations and its implications for organizational design[7].
To understand the effect of Information Technology on organization
structure we need to first look into what organization structure consists
of. According to Baligh [12], contingency theory suggest that an appropriate organization design is contingent/dependent upon factors like size,
technology, etc. and to find out the effect of Information Technology on
organization structure we can see how does it affect the contingency factor.
1.1.2
Information Technology
Wiki defines it as, Information technology (IT) is the use of computers and
telecommunications equipment to store, retrieve, transmit and manipulate
data.[13]
IT System in an organization now takes on many shapes and sizes, from
replacing the typewriter with computer with a word processor, to state-ofthe-art computer-aided manufacturing machinery. For organizations, IT is
an enabling technology. It may also play the role of a constraint, in the
sense of not being enabling enough. IT applications can help develop core
capabilities in companies. It can also play an active role in the difficult
task of making the slow evolving organizational context change faster. It
can contribute effectively to firms competitiveness. To sum up, organizational capabilities are developed by going through organizational routines
whereas IT helps to turn these capabilities to core capabilities/competence
by enhancing the learning. [14]
1.2
Goal
The goals of this thesis can be present as follows:

Investigate whether IT has any effect on organizational structure
Identify through reading previous research papers
Find any qualitative data in those research papers that shows the effect
of IT on organizational structure dimensions, examining documentary
evidence in case study form.
Identify how IT effect the dimensions of the structure, directly, or
indirectly
Verify the framework through collecting data from different organization
Translate the effect in to OPAF
Investigate three financial organization in Bangladesh and create 3
model using OPAF
Introduce the changes on OPAF and investigate the changes in their
performance
Validate the framework through analyzing the changes
1.3
Outline
The rest of the thesis is organized as follows: In Chapter 2 research methodology is introduced. Then in Chapter 3 in literature review, I will discuss
about the research done previously and the findings related to the effect
of IT in organizational structure. Then I will move to chapter 4, where
I will discuss about the effect of IT on Organization Performance Analysis
Framework (OPAF) and how does it effect. Then I will discuss which effects
are not being mapped in OPAF and why not. Next chapter 5 case study,
the next part of my thesis will get started and will discuss how I model
studied subjects using Enterprise Architecture Analysis Tool (EAAT) and
will follow-up in chapter 6 result & analysis will be performed. Then I will
close this paper with conclusion and future work.
10
Chapter 2
Research Method
This thesis work is about exploring a different side of an existing framework, OPAF. The knowledge about OPAF is taken from studying paper
by N
arman[10] and through exploring the framework using Abstract Modeler. The knowledge about how IT effect organizations structure is taken
by studying different research paper published in different time period.
2.1
Overview of the Method
To examine the effect of IT on organization structure, it is also necessary

to first define what belongs to an organization structure. This is in this
case the organizational structure dimension. Then the search is performed
through previous research, which was done in this field on how IT affects the
dimensions. After finding out the key sections, where previous researchers
points out how IT affects the organizational structure, those key points are
then translated in to OPAF.
This allows us to extend OPAF while keeping its original stature, by
adding a new class that will represent the effect of IT on structure. This
new class will affect its connected class and this will show some difference
in performance of the organization, and will validate the new model.
To validate the model and to have some empirical data, I, then will
model a workflow of three real life organizations. The model that is designed
by using original OPAF will provide the performance data of organization
without IT, and the modified model that is designed by using IT-OPAF
metamodel, will provide the performance data of organization with IT. The
difference in performance data should validate our finding.
11
2.2
OPAF Model
Organization Performance Analysis Framework (OPAF) is an object based

model, which uses OCL language to define how object should behave. It
can be used in EAAT to analyze the performance of an organization. The
objects in this model represent the entities in organization and objects are
connected with different objects based on the rule defined in the metamodel.
These rules include how they should be connected, what is the minimum
requirements for a model, and can be used to give an initiation value for
each attribute.
OPAF also have viewpoints, which represent how objects affect another
object according to that viewpoint. This defines the relationship of the
objects and also creates requirements for modeling. In this thesis work, a
new viewpoint will be introduced which will reflect the changes IT introduce
in an organizational structure.
2.3
Literature Study
To collect information related to whether IT has any effect on Organizational

Structure/Performance, I search through previous research done in this field
with keywords like IT + Organization Structure, IT + Organization
Dimension, IT Capability + Organization Structure, etc. which gave me
the opportunity to study both part, whether or not IT has any effect on
Organizational Structure/Performance.
I choose organization structure design parameters that are mentioned in
research paper[12], which is the basis for OPAF (Organization Performance
Analysis Framework). They are Contingency factor like Size, Strategy, Environment, etc., Design parameter such as Structure, and Properties such as
Complexity, Formalization, Centralization, Span of control, etc. and many
more.
I also choose to study the effect of IT on organization structure that
does not fit into OPAF. This is necessary to eliminate the biased view of
the study by studying the effect on organization structure in broader sense
than to study specific structure which are mentioned in OPAF. In my belief
this unfit affect on structure will help me to validate the effect on OPAF
by answering the question what else is out there? Also hopefully this will
leave a trail for future study.
After finishing the study, the list of required changes is made, and
changes are incorporated within OPAF to create an IT-OPAF Meta model.
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These changes should reflect during case study and the analysis part will
tell us that.
2.4
Case Study
To validate the findings on how IT affects the organizational structure, I

need to model organizations structure without IT and with IT, and see the
effect. To model organizations structure, I choose 3 banks as case subjects.
To model a bank with huge number of workers and tasks, it would have been
very challenging with the time that I have. So, I choose to model one of the
workflow that all 3 banks uses. To understand the basic of this workflow
process and to validate the workflow, I interviewed 3 different officials from
these banks, Assistant General Manager from Sonali Bank, Divisional General Manager from Janata Bank, and Assistant Vice President from United
Commercial Ltd. Bank. The process is defined and changed according to
their description which helps me to define the workflow according to their
interpretation. To specify a boundary of this process, I limit myself to only
retail loan processing workflow. Although it is true that specific loan processing workflow does have specific task/decision relate to it, but for study
purpose it was needed to specify the boundary.
This study will show how performance varies with different organizational structure. As this study is conducted on different financial institute
who perform this same workflow using different structure, so it will tell us
whether the performance did vary or not. Also we can perform the study
using IT or without using IT, so that it will be interesting to observe if any
changes occur or not. In this way it will fulfill my goal for this thesis.
To perform this study, one can follow the questionnaire and map different parameters value in OPAF. The result should concur with current
study. Although as different organizations have different structures and follow different strategies, so it is unlikely to get the exact same result from
two different studies.
13
Chapter 3
Literature Review
Chapter 2 already discusses how the research is conducted. It also discusses
the structure parameters of an organization in this study, contingency factor
like Size, Strategy, Environment, etc., design parameter such as Structure,
and properties such as Complexity, Formalization, Centralization, Span of
control, etc. and many more. In this chapter I am going to discuss more
detail about them and will try to find out how IT affects them.
3.1
Area of Changes in Organizational Structure
As the study is conducted using some key focus term, like IT + Organization Structure, IT + Dimension Organization, IT Capability + Organization Structure, etc., some key areas are noted through out the literature
study. These can be depicting in Figure 3.1, and these areas are defined
below.
3.1.1
IT effect on Differentiation
Vertical differentiation reflects how information is transported, integrated,

coordinated among all levels of the organization. Higher score in this means
organizations operation is more effective and more efficient. On the other
hand lower score means organization structure is more complex and managers have to spend more time in communicating and coordination. IT helps
organization to continue a smooth communication to convey message from
headquarter to employees.[1]
Grouping employees into unit is done by organization based on market/
14
functionality, where market grouping is based by output, client, or place,

while functionally grouping is based on knowledge and skills or work processes and functions. Workers in such grouping should share supervisor,
resources, and have common measures of performance[10]. Complexity between such groups exists, and horizontal differentiation reflects the degree
of professionalism and differences in such groups[1].
Using IT application organizations can greatly save money and time in
gathering information, and worker can handle more extensive and volatile
work and activate their full potential. Also by using it, cooperation between
different group increased and thus complexity of organization structure is
decreased. As a result, organization can have higher score, which means
horizontal differentiation is more reasonable.[1]
Also, to the extent information technology (IT) is employed; the manager is aided in controlling and coordinating the differentiated structure,
and thus, can effectively manage a more complex organization. So we can
say that information technology (IT) would be positively associated with
horizontal differentiation in organizations.
3.1.2
IT effect on Coordination
Information Technology (IT) reduces the need for coordination itself, rather
than primarily be used for supporting existing coordination mechanisms.
Sometimes it is argued that computers take over routine decision making at
lower and middle levels, thereby increasing the capacity of these levels to
handle less routine decisions[15]. It also substantially alters the mechanisms
and the nature of organizational coordination and control, and, therefore,
has direct causal effects on the structure of the organization[16]. Also it
is being proposed that IT not solely focusing on internal coordination cost
minimization, but a powerful tool to enable the reduction of coordination
need[17].
3.1.3
Decentralization and Formalization
Decentralization means decentralized decision rights, which according to

wiki, is any process where the decision making authority is distributed
throughout a larger group. It also connotes a higher authority given to
lower level functionaries, executives, and workers[18]. On the contrary,
centralized decision rights mean the decision rights are concealed within
higher authority. In a fully centralized organization, the decision power lies
with one person[10]. Formalization of organization structure denotes how
15
the work processes and methods are formalized and normalized by building
up operation rules and procedures[2].
A key reason that IT may lead to centralization is the coordination
advantages that it provides by increasing the processing capacities of managers or decreasing communication costs which equips managers with more
information[19]. Henry C. Lucas [20] talks about 4 new organizational structures induce by IT and they are virtual, negotiated agreement, traditional
with electronic components, and vertically integrated conglomerates. All
mentioned structure talks about how they differ from traditional structure
by distributing decision making.
In favor of decentralization, IT increases available information (information overload) reduce burden on top management and cut unnecessary
communication up and down the hierarchy[19]. Both IT and organizational
structure are caused by the organizations environment. Heterogeneity - homogeneity and stability-change causes centralized or decentralized decision
making, which means rapid changes in the organization environment induce
more decentralized decision making. It is when the organization faces a
complex and rapidly changing environment that information technology is
both necessary and justified, thus it is associated with decentralization, less
formalization, and more differentiation within the organization[16]. IT also
provide rapid and accurate performance feedback concerning aspects of organizational and managerial performance, thus make it decentralized and
less formalize.
On the other-hand some argue that by using Information Technology,
working processes are integrated and more standardized, as well as IT applications requires higher workers education and personal quality. So it
formalizes organizations processes[1]. According to some, superior IT infrastructure provides a globally integrated platform that enforces standardization and integration of data and process[21].
Previous study shows that changing decision right structure with the
help of IT has positive performance impact on both centralized decision and
decentralized decision rights. Rapid changes produce more performance
than changing slowly, whereas big size organizations induce more positive
performance than smaller sized organization[19].
3.1.4
Hierarchy
In an organization, the hierarchy usually consists of a singular/group of

power at the top with subsequent levels of power beneath them[18]. Hierarchical organization means structure with more levels and structured that
16
we can see more in large organization, whereas, flat organization structure

means few or less level of management between staff and manager.
By the introduction of IT, it enhances managers capability to deal with
organizational complexity, and further can provide the manager with more
rapid and comprehensive feedback concerning the performance of the organization. It also permits the manager to control and coordinate more complex,
and differentiated organization[16]. All of this emphasizes on flattening the
organizational structure.
In Structure category of traditional variable Staffing, which represent
the size of a unit/organization, mentioned by Mintzberg becomes Technological leveling in IT design variables. Technology makes it possible to increase
the span of control and possibly eliminate layers in the organization, leveling
it in the process[20].
Figure 3.1: Effect of Information Technology [16]
3.2
Previous Research Point-of-View
Among the two task in this thesis, my first task is to find out the effect of
IT on organization structure and map that to OPAF. To find out how IT
affects the structure of an organization, I studied a range of articles and
table 3.1 shows some important note from the papers.
17
Table 3.1: Findings from literature study

Quotation
Cost-effective IT reduces external coordination costs in a variety of ways and can lead firms to turn to markets rather
than to integrate vertically with factor suppliers. [Gurbaxani et al.][22]
Horizontal differentiation reflects the degree of professionalism and differences in departments. IT capability has
positive impact on horizontal differentiation of organization
structure.[Gao et al.][1]
Vertical differentiation reflects how information is transported, integrated, coordinated among all levels of the firm.
IT capability has positive impact on vertical differentiation
of organization structure.[Gao et al.][1]
Translate
to
Framework
Positive
effects
on Unit .marketBased and Unit
.externalCoordination
Negative effects
on DecisionType
.horizontalSpecialization
by
increasing
the
amount of tasks
workers
can
perform
Positive effects on
Unit .verticalEnlargement by allowing workers to
perform variety of
tasks and decisions
Positive
effect
on
TaskType
.behaviourFormalized, if IT
imposes any rule
Formalization of organization structure denotes how the

processes and methods are formalized and normalized by
building up operation rules and procedures. IT capability
has positive impact on formalization of organization structure.[Gao et al.][1]
Information Technology is associated with decentralization,
less formalization, and more differentiation within the organization.[Pfeffer et al.][16]
IT, through its provision of more rapid and accurate perfor- Positive
effect
mance feedback, would be associated both with more decen- Task
.Perfortralization and less formalization.[Pfeffer et al.][16]
manceMeasured
Continued on next page
18
Table 3.1 Continued from previous page

Quotation
Modern IT can reduce the costs of communicating information by improving the quality and speed of information processing and managements decision making, leading to more
centralized management.[Gurbaxani et al.][22]
IT should not primarily be used for supporting existing coordination mechanisms, but to reduce the need for coordination itself, thus emphasizing on flattening the organizational structure, i.e. reducing hierarchical depth (scalar
chain length) and width (span of control).[Cordella et al.][17]
Translate
to
Framework
for rapid and
accurate performance feedback,
and positive effect
on
Information
.quality
Improve Decision
.mDecisionCoordination
and
negative effect on
.horizontalCentralization
& .verticalCentralization
by
flattening
the
structure
IT is not simply a tool for automating existing processes, but

is more importantly an enabler of organizational changes,
such as in communication and coordination, that can lead
to improve firms performance.[Chen et al.][5]
IT substantially alters the mechanisms and the nature
of organizational coordination and control, and, therefore,
has direct causal effects on the structure of the organization.[Pfeffer et al.][16]
In Structure category of traditional variable Staffing men- Positive effect on
tioned by Mintzberg becomes Technological leveling in IT Unit
.directSudesign variables. Technology makes it possible to increase pervision which
the span of control and possibly eliminate layers in the or- reflect the span of
ganization, leveling it in the process.[Lucas et al.][20]
control
According to Whisler IT cause following changes: 1. Subunits are consolidated; 2. Number of level in hierarchy is
reduced; 3. Span of control reduced; 4. Functional department replace parallel department; 5. Control become more
centralized; etc.[Pfeffer et al.][16]
Huber(1990) IT independent variables and 1) characteristics Effect the size of
of organization integelligence and decision-making, 2) as- the organization,
pects of organization design (size and heterogeneity of deci- thus effect Unit
sion units, number of levels), is dependent to IT.[Orlikowski .mutualAdjustet al.][8]
ment
19

Quotation
Translate
to
Framework
Effect on decision
right.
IT enables organizations to process decision-relevant information in a more cost-effective way, thus improving the quality and speed of upper managements decision making processes. This phenomenon may lead decision rights to move
upward in the organizational hierarchy, leading to more centralized management. [Gurbaxani et al.][22]
A firm may use IT to centralize some decision rights while
decentralizing others, leading to a hybrid structure. Clearly,
the choice depends on the specific cost structures of the firm
and the industry. All in all, therefore, the net effect of costeffective IT on the location of decision rights is not so obvious.[Gurbaxani et al.][22]
IT capability has positive impact on decentralization of organization structure.[Gao et al.][1]
IT provides the ability to improve monitoring and performance measurement, reducing agency costs and thus inducing the decentralization of decision rights.[Gurbaxani et
al.][22]
Firms that were able to use IT to radically centralize or
decentralize generally experienced a positive effect, whereas
not as many firms that performed only minor changes in
decision rights perceived such an effect.[Kanamori et al.][19]
4 new organizational structure induce by IT and they are
Virtual, Negotiated agreement, Traditional with electronic
components, and Vertically integrated conglomerates. All
mentioned structure shows how they difer from traditional
structure by distributing decision making.[Lucas et al.][20]
The degree of centralization and formalization of organizational structure is negatively related to the cross-functional
team interaction during the new product development period.[Chen et al.][5]
20

Quotation
The broad hypothesis holds good; technology and structure
are related; but the strength of multivariate research design
is that it prevents premature conclusions. Data have already
demonstrated that although technology does have a diffused
relationship with the structural dimensions, it always takes
second place to other variables.[Aldrich et al.][9]
The reduction of uncertainty due to the introduction of IT
basically results in a reduction of both coordination costs
and transaction costs. However, due to the investments in
infrastructure and technology, higher fixed costs are generated initially.[Cordella et al.][17]
Information technology can be used for reducing the cost
being associated to transactions, This argument is based
on the idea of using information technology to make more
information available to decision makers, thus contributing
to the reduction of uncertainty.[Cordella et al.][17]
There are positive correlation between IT and number of
departments, and levels in hierarchy.[Pfeffer et al.][16]
Data support the fact that conceptualization of organizational structure being affected by the information and control technology that is employed, rather that environment
effect both IT and structure.[Pfeffer et al.][16]
IT can become disabler for agility by the limitations of inflexible legacy IT systems, rigid IT architectures, or complex
nests of disparate technology silos.[Lu et al.][21]
Dewett & Jones (2001) - IT thus moderates the relationship
between organization characteristics (size, structure, interorganizational relations) and strategic outcomes (efficiency
and innovation).[Orlikowski et al.][8]
Attewell & Rule (1984) view IT as an independent variable
affecting: 1) Number and quality of jobs, 2) centralization of
management decision-making, 3) organizational interactions
with their environments.[Orlikowski et al.][8]
21
Translate
to
Framework
Effect by IT to
structure.
Effect on cost.
Effect on structure.
Effect on size, decision right, communication.
Chapter 4
Effect of Information
Technology(IT) on OPAF
This chapter will try to explain in detail about OPAF, how we can change
OPAF to introduce the effect of IT and the new design of IT-OPAF model.
Then it will also explain in detail about how the effects are introduced, both
direct effect and indirect effect. At the end of this chapter, I will talk about
how some of the findings from literature study did not get introduced in this
IT-OPAF model and why not.
4.1
What is OPAF
OPAF stands for Organization Performance Analysis Framework, uses modelbased architecture. As I have mentioned already in chapter 1, there are
several viewpoints in this framework, they are Motivation, Learning, Information, Productivity, Efficiency, Variability, Coordination, and Flexibility.
Using this framework, organizational structure can be designed and ran for
analysis, and the outcome of this analysis is performance.
OPAF uses Partial Positive Contingency theories to define the rules in
If A Then B manner and my work in this thesis is to try to find if and
how Information Technology (IT) effect A and ultimately B or effect B
directly.
Enterprise Architecture Analysis Tool (EAAT) is used to analyze the
organization performance. It uses OCL language to define properties or
constraints. It also guides the creation of enterprise information system
scenarios in the form of enterprise architecture models and generates quantitative assessments of the scenarios[6].
22
Another task for this thesis is to try to verify the existing framework by
collecting input data from the selected 3 banks. These data will help us to
define the structure of each organization in the framework, and it also should
help us to find the performance output of the organization and validate the
findings regarding the effect of IT on these performance outputs.
4.2
Effect of IT on OPAF
To design organization structure, there are 23 classes, like- Organization,

Worker, Unit, Task, Decision, Skill, Artefact, Environment, and many more.
These classes represent entities of an organizational structure. There is a
Information class exists in OPAF but it is shown as the knowledge you
get/need to perform a task/decision. So, to introduce the effect of IT in
OPAF, I had to introduce a new class named ITSystem, whose connection
with classes like Task, Decision, and Worker reflects the changes on
organization structure, which is shown in figure 4.1.
Figure 4.1: IT effect on OPAF
23
Based on the literature review and opinion from experts of OPAF, I

found that classes that are directly affected by ITSystem are Unit, Decision,
DecisionType, TaskType, RuleBook, and Information. These direct effect to
OPAF by IT means that, the attributes value gets affected by introducing
IT, thus ITSystem represents changes in their internal code. Figure 4.2
shows how ITSystem effect the attribute of the classes inside the framework
and in which way (positive or negative) they affect them. Figure 4.3 shows
how IT effect OPAF which can be represent by structural changes only.
These direct effects translate to OCL code as a direct association.
Figure 4.2: Direct effect of IT to OPAF attribute
24
Figure 4.3: Direct effect of IT to OPAF attribute represent by organizational

structure changes
4.2.1
Effect on Coordination
As shown on table 3.1 it has been said many times that IT improve decision
coordination by enhancing the capabilities and by reducing coordination
cost or need [17, 5, 16]. To map the effect, all the decisions that needs to be
coordinated, if those decisions involve the ITSystem, then their coordination
value will increase.
IF getDependentDecisions().iTSystem THEN Decision.mDecisionCoordination
INCREASE
The OCL code to represent such effect is:
i f g e t D e p e n d e n t D e c i s i o n s ( )>notEmpty ( )
then
i f g e t D e p e n d e n t D e c i s i o n s ( ) . iTSystem >notEmpty ( )
then
1.0
e l s e i f committee>notEmpty ( ) and decisionMaker>notEmpty ( )
..................
This effect on decision also effect ExternalCoordination, which will be

explained in next section.
25
4.2.2
Effect on Formalization
The impact of IT on how the behavior is formalized is divided into both

ways. On one hand, Gao [1] suggest that IT helps organization to be more
formalized by building up rules and procedures. But on other hand, Pfeffer
[16] mention several times on his article about how IT makes the structure less formalized. But as Pfeffers definition lack how does it make less
formalize.
So I choose to map the effect in such way that, if there exists a ruleBook,
that is created by IT system, then the process is more formalized.
IF ruleBook.iTSystem THEN TaskType.behaviourFormalized INCREASE
..................
e l s e i f ruleBook . iTSystem >notEmpty ( )
then 1 . 0
else
0.0
..................
This effect on formalization also effect the externalCoordination & the

flexibility on unit level, which will be discussed in section 4.3.
4.2.3
Effect on Performance
According to Pfeffer, IT improve performance measured by providing rapid

and accurate feedback. So if the task involve a iTSystem, then the performance measured value will be high.
IF Task.iTSystem THEN Task.performanceMeasured INCREASE
i f taskType . p er fo rm a nc eD at a >notEmpty ( )
then 1 . 0
e l s e i f iTSystem >notEmpty ( )
then 1 . 0
..................
And this value will affect the motivation of employee and the unit, this
will be discussed in section 4.3.
26
4.2.4
Effect on Quality
According to Gurbaxani[22] IT can be used to reduce cost of communicating information by improving the quality, so I can map that, the quality
attribute of Information will get higher, if the task/decision that produce
the Information involves ITSystem.
IF producingDecision.iTSystem or producingTask.iTSystem THEN
Information.quality INCREASE
..................
i f producingDecision>notEmpty ( )
then i f p r o d u c i n g D e c i s i o n . iTSystem>notEmpty ( )
then 1 . 0
e l s e p r o d u c i n g D e c i s i o n . quality
endif
else
if
producingTask>notEmpty ( )
then i f producingTask . iTSystem>notEmpty ( )
then 1 . 0
e l s e producingTask . quality
endif
else
i f p r o d u c i n g E n v i r o n m e n t >notEmpty ( )
then 1 . 0
else 0.0
endif
endif
endif
..................
This effect on information quality also effect DecisionQuality and OutputQuality on unit level, which will be discussed in section 4.3.
4.2.5
Effect on Mutual Adjustment
MutualAdjustment on Unit, reflects the effect on size of the organization,

and as IT is an independent variable affect size, according to Orlikowski [8],
thus it affect the value of MutualAdjustment, by increasing it. This effect
will come to play when a unit in that organization will use IT, by that, their
mutual adjustment value will be increased.
IF unit.iTSystem THEN Unit.mutualAdjustment INCREASE
27

..................
e l s e i f iTSystem>notEmpty ( )
then 1 ( ( 0 . 0 5 worker>size ( ) ) / ( iTSystem>size ( ) +1) )
..................
This effect on mutual Adjustment also effect on units flexibility, which

will be discussed in section 4.3.
4.2.6
Effect on Centralization
According to Cordella[17], IT effect the organization structure by flattening

it, so this decrease the value of horizontalCentralization & verticalCentralization.
IF decision.iTSystem THEN DecisionType.horizontallyCentralized
DECREASE
IF decision.iTSystem THEN DecisionType.verticallyCentralized
DECREASE

i f ( decision>asOrderedSet ( )>includesAll ( decision . decisionMaker . perf ormedTas ks . decision>asOrderedSet ( ) ) )
then 0 . 0
e l s e i f decision . iTSystem >notEmpty ( )
then 0 . 1 6 5
..................
, and
i f decisionInfluencing>notEmpty ( )
then i f decision . iTSystem >notEmpty ( )
then 0 . 0
e l s e d e c i s i o n I n f l u e n c i n g . influence>sum ( )
endif
else
0.0
endif
The OCL code represent such effect by stating that- if the decisionType
influence other decisionType, then this value should increase, but if the
28
decisions are taken by the help of the ITSystem, then this value should
decrease.
This verticallyCentralized attribute also has a direct effect on unit.verticallyCentralized.
4.2.7
Effect on Structure
DirectSupervision attribute in unit represent the span of control, and according to Lucas and Pfeffer[20, 16] IT effect the span of control, thus IT
effect this attribute.
Gurbaxani suggest that IT helps the organization turns to MarketBased,
which should affect unit.MarketBased. Also according to Gao[?], IT has a
direct effect on Worker.horizontalSpecialization (which means workers perform how many task and how many times, IT will have a negative effect on
this attribute as it will allow user to perform more task with less specialization), and on Worker.verticalEnlargement (which means how variety of
task/decision can a worker perform).
But these effects are on structural level, where by introducing IT, the
structure will be changed to accommodate the effect. The changes I am
refereeing states that by introducing IT, more decisions are taken by worker
or more tasks are performed by the worker. These effects can be visible
only by modeling an organization without IT and again model the same
organization after they implement IT (clearly the structure will be different,
i.e. IT will make it possible for worker to perform more task/decision).
4.3
Indirect effect of IT to business performance

measurements
The attributes from different entity (class in OPAF) affect the value of
attributes of Unit entity, which is known as Business Performance Measurements (BPM). These affect are already mapped in OPAF. For example, the
quality of a units output depends on quality of information that it receives.
This logical map is already exists in OPAF. So as IT affect some of the
attributes of different entity, it has an indirect effect on the Business Performance Measurements (BPM). This is known as indirect effect of IT on
organizational structure. This section will investigate these effects as shown
by figure 4.4.
29
Figure 4.4: Indirect effect of IT to performance measurements attribute
4.3.1
Effect on Unit.employeeMotivation
Figure 4.5 shows how IT indirectly affecting unit.employeeMotivation, which

is a collection of all workers motivation value. Workers motivation depends
on several attributes, among them if workers performance is measured then
the motivation should increase, if worker get to perform more task/decision
through Worker.horizontalSpecialization then the value should increase, also
if they get to perform variety of task/decision that should also increase the
motivation.
30
Figure 4.5: (a) Indirect effect of IT to Motivation attribute, (b) direct effect
of IT to Worker.horizontalSpecialization, Worker.verticalEnlargement, and
TaskType.performanceMeasered
As the figure 4.5 suggests, IT has a positive effect on TaskType.performanceMeasured
and Worker.verticalEnlargement, but has a negative effect on Worker.horizontalSpecialization.
If the structure where worker get more task/decision is not changed, then
we can say that IT has a positive effect on unit.employeeMotivation.
4.3.2
Effect on Unit.externalCoordination
Figure 4.6 shows how IT indirectly affecting unit.ExternalCoordination. As

the figure shows, the attribute has positive impact of Decision.mDecisionCoordination,
TaskType.variability, and negative impact of Worker.horizontalSpecialization.
31
Figure 4.6: (a) Indirect effect of IT to externalCoordination attribute,

(b) direct effect of IT to Decision.mDecisionCoordination, (c) indirect effect of IT to TaskType.variability, (d) direct effect of IT to
Worker.horizontalSpecialization
As IT has direct impact of Decision.mDecisionCoordination and Worker.horizontalSpecialization,
it increases the value of Unit.externalCoordination. But, IT has indirect effect on TaskType.variability, where it may decrease the value, and by doing
so, may decrease the value of Unit.externalCoordination.
4.3.3
Effect on Unit.internalCoordination
Figure 4.7 shows how IT indirectly affecting unit.internalCoordination. As

the figure shows, the attribute has positive impact of Unit.DirectSupervision,
TaskType.behaviourFormalized, and Unit.MutualAdjustment. This means
that, if there is direct supervision, more task are formalized, there is better
mutual adjustment in the unit, then the internal coordination score will be
high. These all three attribute have direct positive effect from IT, thus we
can say:
IF unit.iTSystem AND ruleBook.iTSystem THEN Unit.internalCoordination
INCREASE
32
Figure 4.7: Indirect effect of IT to internalCoordination attribute
4.3.4
Effect on Unit.flexibility
Flexibility score of a unit represent the fact that they there is mutual adjustment inside the unit, task are less formalize, there is more task to
perform which means more options. Figure 4.8 shows how IT indirectly
affecting unit.flexibility. As the figure shows, the attribute has positive
impact of Decision.horizontallyCentralize, and negative impact of TaskType.behvaiourFormalized, and Unit.mutualAdjustment.
33
Figure 4.8: (a) Indirect effect of IT to flexibility attribute, (b) direct effect
of IT to DecisionType.horizontallyCentralize, Unit.mutualAdjustment, and
TaskType.behvaiourFormalized
As IT has direct impact of DecisionType.horizontallyCentralize and Unit.mutualAdjustment,
it increases the value of Unit.flexibility. But, IT has positive effect on TaskType.behvaiourFormalized, where it may increase the value, and by doing
so, may decrease the value of Unit.flexibility.
4.3.5
Effect on Quality
If the decision/task that produce a information involve ITSystem, then the

quality of the information will be high, and thus the quality of the output
from the decision/task, or the quality of the decision taken from that information will be high too. As figure 4.4 shows, IT has a positive impact
on Information.quality, which has a positive impact on Unit.OutputQuality
and Unit.decisionQuality. So we can say,
34
IF producingDecision.iTSystem OR producingTask.iTSystem THEN

Unit.outputQuality AND Unit.decisionQuality INCREASE
4.3.6
Effect on Unit.efficiency
If worker perform routine task, and the information quality is high, then
the efficiency will be higher. As figure 4.4 shows, IT has a positive impact
on Information.quality and negative impact on Unit.verticalCentralization,
which has a positive impact on Unit.efficiency. So we can say,
IF producingDecision.iTSystem AND decision.iTSystem THEN
Unit.effeciency INCREASE
4.3.7
Effect on Unit.learningPace
Figure 4.9: Indirect effect of IT to unit.learningPace

As figure 4.9 shows, IT decrease horizontalSpecialization of the worker,
which means worker will perform more task/decision, which means learning
pace will be increased as worker will learn faster by performing task/decision.
4.3.8
Effect on Unit.variability
Variability of a unit depends on the finale artefact variability, which depends on the variability of the taskType that produce the artefact. If the
behavior is formalized, then variability will be low. As figure 4.4 shows, IT
has a positive impact on TaskType.behaviourFormalized, and if the finale
artefact belong to this taskType, then the artefacts variability is lowered
by this effect. Thus it will lower the Unit.Variability value. So we can say,
35
IF ruleBook.iTSystem THEN Unit.variability DECREASE
4.4
Non-matching effect of IT on OPAF
Following table will explain how some of the findings from literature study
cannot be placed inside the IT-OPAF model.
Table 4.1: Non-matching findings from literature study
Quotation
IT enables organizations to process decision-relevant
information in a more cost-effective way, thus improving the quality and speed of upper managements decision making processes. This phenomenon may lead
decision rights to move upward in the organizational
hierarchy, leading to more centralized management.
[Gurbaxani et al.][22]
IT capability has positive impact on decentralization
of organization structure.[Gao et al.][1]
IT provides the ability to improve monitoring and
performance measurement, reducing agency costs
and thus inducing the decentralization of decision
rights.[Gurbaxani et al.][22]
4 new organizational structure induce by IT and they
are Virtual, Negotiated agreement, Traditional with
electronic components, and Vertically integrated conglomerates. All mentioned structure shows how they
differ from traditional structure by distributing decision making.[Lucas et al.][20]
Reason
for
non
match
It effect the decision
right and thus effect the
structure of the organization and this also effect the motivation of
the employees. So indirectly IT effects the
motivation of a organization [10]. But this effect
to organization performance is relevant to
each and every organization itself. although
study
shows that this effect
also dependent on size
and transaction strategy of the organization.
Bigger organization find
36

Quotation
Reason
for
non
match
Firms that were able to use IT to radically centralize performance spike than
or decentralize generally experienced a positive effect, smaller
organization,
whereas not as many firms that performed only mi- and it also dependent
nor changes in decision rights perceived such an ef- on whether structure is
fect.[Kanamori et al.][19]
shifted from being centralize to decentralize
or vice versa.
A firm may use IT to centralize some decision rights As per the author, the
while decentralizing others, leading to a hybrid struc- net effect is not so obviture. Clearly, the choice depends on the specific cost ous.
structures of the firm and the industry. All in all,
therefore, the net effect of cost-effective IT on the location of decision rights is not so obvious.[Gurbaxani
et al.][22]
The broad hypothesis holds good; technology and In this study it is shown
structure are related; but the strength of multivariate that, IT act as a inresearch design is that it prevents premature conclu- fluencing helper. So to
sions. Data have already demonstrated that although find out the effect of IT
technology does have a diffused relationship with the after the effect of anstructural dimensions, it always takes second place to other variable to organiother variables.[Aldrich et al.][9]
zation structure is difficult to find out.
The reduction of uncertainty due to the introduction The effect of IT in this
of IT basically results in a reduction of both coordina- case is too broad to put
tion costs and transaction costs. However, due to the in OPAF
investments in infrastructure and technology, higher
fixed costs are generated initially.[Cordella et al.][17]
Information technology can be used for reducing the
cost being associated to transactions, This argument
is based on the idea of using information technology to make more information available to decision
makers, thus contributing to the reduction of uncertainty.[Cordella et al.][17]
37

Quotation
Reason
for
non
match
There are positive correlation between IT and num- This is too specific on
ber of departments, and levels in hierarchy.[Pfeffer et organization structure
al.][16]
Attewell & Rule (1984) view IT as an indepen- rather than organizadent variable affecting: 1) Number and quality tion performance.
of jobs, 2) centralization of management decisionmaking, 3) organizational interactions with their environments.[Orlikowski et al.][8]
Huber(1990) IT independent variables and 1) characteristics of organization integelligence and decisionmaking, 2) aspects of organization design (size and
heterogeneity of decision units, number of levels), is
dependent to IT.[Orlikowski et al.][8]
Dewett & Jones (2001) - IT thus moderates the relationship between organization characteristics (size,
structure, inter-organizational relations) and strategic outcomes (efficiency and innovation).[Orlikowski et
al.][8]
38
Chapter 5
Case study
In this chapter, I will try to describe the workflow that I am going to model
on OPAF, and the organizational structure of each of the studied subject.
This chapter will also describe the properties of the studied subject on how
they are similar or dissimilar from each other.
5.1
Loan Processing System
Figure 5.1 shows a basic loan processing workflow which involve actors
like Customer, FrontDesk, LoanOfficer, HeadOffice, and 3rd Party.
Workflow starts when Customer initiates the process through front desk. Involvement of front desk worker is optional for some cases, but in some cases
it requires certain skill and also some output depends on it. Loan Officer
perform most of the tasks and take most of the decisions, but after evaluation from loan officer the process involve committee of some decision maker
from head office or senior executives. It also involves some 3rd party actors to evaluate loan security, which in some cases performed by loan officer
workers. Expert opinion has been taken to design the process, along with
the opinion from the interviewee. Although there are several process like
this is involved in every one of the studied bank, but I choose to work with
this workflow because it is generic and most of the task in Loan Processing
System has been covered in this workflow.
39
40
Figure 5.1: Loan Processing Workflow
After these evaluating and processing the request, loan disbursement

happens and loan application goes to monitoring stage from which it finishes
after loan credit is fully paid. During this workflow all the decisions can
either pass the application to next stage or decline the request thus finish
the workflow.
5.1.1
Sonali Bank
In figure 5.2 unit structure of loan processing system of sonali bank is shown.
The unit HeadOffice is parent for unit CreditCommittee, BranchLevel
where role of each unit is described by the tasks they performed. BranchLevel unit also has two sub unit FrontDesk and CreditSection where
most of the decision related to loan take place. Each of these units contains one or more worker. The structure of this workflow is such that line
worker such as Loan Officer 1 have sufficient decision power to process the
workflow.
Figure 5.2: Organogram for Loan Processing System of Sonali Bank

The task and decision distribution between the lower level to upper level
managers confirm this that the decision rights are very much decentralized
41
where some of the critical decision can be taken by lower level management,
thus their skill level has to be very good.
This workflow depends heavily on the skill of LoanOfficer, as these workers on the CreditSection unit perform most of the task related to loan processing, and take initial loan evaluation decisions to whether or not pass the
application to higher authority. So in a way, they work as an initiator for
this workflow. In this case study, we have two LoanOfficer, where one of
them perform task with less significance, and other one perform task and
take decision on proper loan request. Figure 5.3 shows a snapshot of skills,
Tasks, and Decisions that are associated with LoanOfficer1 worker. Tasks
like CreditReportCreation and SelectionOfBorrower belongs to task
type ApplicationProcess which requires skill like RetailBanking. Task
like LoanDocumentCreation requires both RetailBanking and GeneralBanking skill.
Figure 5.3: LoanOfficer1 Task and Decision based on Learning viewpoint

From figure 5.4 we can see depending on this performed task type, it creates artifact type PreliminaryLoanDocument and FinaleLoanDocument which holds artifact such as ProofOfIdentity, SanctionLetter, CIBReport, CreditReport, etc and these artifact get used in taking decisions type
ApplicationEvaluation and ApplicationValidity.
42
Figure 5.4: LoanOfficer1 Task and Decision based on Motivation viewpoint

As we see in figure 5.5 compare to LoanOfficer1, LoanOfficer2 does not
require to perform a task which requires GeneralBanking skill. Similar to
LoanOfficer1, as we can see in figure 5.6 the viewpoint looks similar, and
sometimes the task of FrontDeskOfficer1 is performed by LoanOfficer2.
Figure 5.5: LoanOfficer2 Task and Decision based on Learning viewpoint
43
Figure 5.6: LoanOfficer2 Task and Decision based on Motivation viewpoint
5.1.2
Janata Bank
As we can compare the organogram of Janata Bank to Sonali bank is that

the involvement of Head Office unit, over here, Branch Level unit have the
ultimate say to these sample loan scenario. Here the Head of Branch acts
as CEO for this workflow and provide the ultimate decision. Here, mid level
manager from different unit come together as a committee to evaluate the
loan and evaluate the different aspect of each loan (Foreign Exchange unit,
General Banking unit, etc).
44
Figure 5.7: Organogram for Loan Processing System of Janata Bank

We can see from figure 5.7 that the structure is very much centralized.
The task allocation come from the head of the branch and it also gets evaluated by top management.
Figure 5.8: Head of Branch Task and Decision based on Learning viewpoint
45
Figure 5.8 shows us a snippet of how much Head of Branch gets involved
in this workflow. From accepting the application task to Application Approval decision, he is involved. HeadOfBranch have to heavily depend on
HOBRetailSkill to perform the tasks and take decisions.
Lower level employee SODIncharge1 and SODIncharge2 involved in
preparing the documents and taking decision about the routine evaluation
of the loan like CRG calculation, Transaction Profile evaluation, etc and
all their decision type and task type involve both FinaleDocuments and
InitialDocuments artefact type. Figure 5.9 shows the task and decision
performed by SODIncharge based on motivation viewpoint.
Figure 5.9: SOD Incharge Task and Decision based on Motivation viewpoint
5.1.3
United Commercial Bank
In figure 5.10 unit structure of loan processing system of united commercial

bank (UCB) is shown. The unit HeadOffice is parent for unit CreditCommittee, BranchLevel where role of each unit is described by the
tasks they performed. BranchLevel unit also has two sub unit FrontDesk
and CreditSection where most of the decision related to loan take place.
Each of these units contains one or more worker. The structure of this workflow is such that line worker such as Loan Officer 1 have sufficient decision
46
power to process the workflow.
Figure 5.10: Organogram for Loan Processing System of United Commercial

Bank
All the mentioned cases require a committee to judge the loan request
before approving them, In figure 5.11 the committee structure is different
from other cases. Here two committee require to validate the loan request,
RetailCredit committee validate the loan request with internal retail division and only after approving though this committee senior management
gets to take decision on those.
47
Figure 5.11: Committee structure of UCB in Loan Processing Workflow

In figure 5.12 shows the task and decision performed by RetailDivision
worker, as he takes most of the decision.
Figure 5.12: Decision Task performed by Retail Officer of UCB Head Office
based on Learning viewpoint
In figure 5.13 shows the task performed by CreditSection unit and shows
48
how the performance is measured.
Figure 5.13: Task performed by Credit Officer of UCB credit section based
on Motivation viewpoint
5.2
Similarities & Dissimilarities between study

subjects
To understand the result, we need to understand the similarities and dissimilarities in the structure, their way of doing task, and the circumstance
that they are in.
5.2.1
Importance of the workflow
The workflow that I am studying is one of the most recognized and important
workflow for a bank. It is also one of the money making & core functionality
for each of these banks.
So for obvious reasons, they invest a fair amount of resources in this
workflow. Although the number of people involved in this workflow vary
due to different size of the branch and number of functionality they have in
the branch. But they all have specialized skilled employee in the core of this
workflow. These specialized employees have training about how to work in
a credit section of a branch, internally and from outside of the organization,
before joining the unit. They also have this trainee program for junior
49
employees to work in credit section on a mentoring program, which would

require a training object to calculate how they learn by doing the work.
5.2.2
Unit structure
All of these banks have functional hierarchy, Head office and branches. Each
branch has CEO who is known as Head of Branch. Their structure is further
divided based on functionality, such as Credit Section deals with loan/advance.
The structural difference between the banks can be found on how they
perform certain task, For example, Janata bank form a committee with all
other functional units head in the branch, but Sonali bank form more like
a traditional committee with only the credit units personal. UCB, on the
other hand has two committee, Retail division committee to assess risk of
loan proposal, and Approval committee to assess the potential of the loan
and approval.
5.2.3
Decision rights
Decision rights in Janata Bank are more centralized as the main decision is
taken by Head of the Branch. But Sonali bank is a little more decentralized, as some of the decision on evaluating the loan, is taken by the credit
officer. UCB, credit unit in branch take very less or no decision on the loan
application. They perform some predefined task on the application and pass
it to their Retail division of head office, where most of the decisions take
place. So we can say, they also take centralized decision making approach.
The involvement of Head of Branch of Janata Bank is much higher than
other banks and the involvement of credit officer in this workflow is higher
in Sonali Bank.
5.2.4
Central office involvement
The involvement of Head office in the model is limited for Sonali Bank for
special circumstance. As the limit of loan depends on the designation and
disbursement right of the Head of branch, thus the involvement of Head
Office is also defined by that. The involvement also depend on the outside environment of the branch, previous credit history of the branch, loan
amount, applicant, etc and based on the interview, I choose to accept the
default situation. As for UCB the involvement is much higher and in their
case the head office takes the role of centralized decision maker.
50
5.2.5
Environment
The environment where the studied branch was placed is different. The
branch of Janata Bank is placed in a high density small and medium business
places, where as branch of Sonali Bank is placed in places which involve some
big business loan. For UCB the study has to be done on head office as the
involvement of the head office is much higher than the involvement of the
branch.
Table 5.1: Similarities & Dissimilarities between the study
subjects
Parameter
Specialized
worker for the
workflow
Hierarchy
Decision Rights
External environment
Sonali Bank
Yes
Janata Bank
Yes
UCBL
Yes & Learn
by doing
Functional
Somewhat Decentralized
Large business
client
Functional
More Centralized
Small/Medium
business client
Functional
Centralized
51
Head office
Chapter 6
Result & Analysis

In this chapter, I will present the result found from EAAT, without IT and
with IT. Then I will explain the difference, if any. After that, I will try to
validate the new IT-OPAF framework.
The calculation is performed with 200 samples and the average value is
taken for each of the attributes. For analysis purpose, data from only the
related unit is taken, which in this case is CreditSection.
6.1
Performance Measurements Result
Figure 6.1 shows the calculated value of all performance measurements, without IT. The value differs due to the fact that we have so far discussed in the
similarities and dissimilarities section of previous chapter, different organizational structure will return different performance measurements values.
52
Figure 6.1: Performance measurements result of a) Sonali bank, b) Janata

bank, and c) UCB bank [Productivity & Coordination values are adjusted
according to scale]
Table 6.1: Result on average value based on all viewpoints
Viewpoint
Learning
Motivation
Coordination
Coordination
Effort
Productivity
Variability
Flexibility
Attribute
learningPace
employeeMotivation
internalCoordination
externalCoordination
timeEfficiency
productivity
variability
flexibility
Sonali
0.45
0.57
0.85
6.33
0.75
0.001
0.5
0.19
Janata
1.21
0.57
0.5
17.42
0.62
0.01
0.2
0.64
UCB
3.60
0.55
0.61
2.99
0.84
0.02
0.19
0.33
From the data and figure 6.2, we can clearly see that the UCB bank
is better in case of learning, as it have a training object to teach their
untrained credit officer, so the learning pace is much higher. For motivation
viewpoint, they all have similar values. Flexibilty viewpoint does reveal that
the structure of Janata bank is more flexible than Sonali or UCB. Higher
53
score in Unit.standardized makes Sonali bank less flexible, whereas UCB

holds the second position.
Figure 6.2: Learning vs Motivation
6.2
Effect of IT
On unit level, IT has direct effect on Unit.mutualAdjustment, Unit.verticalCentralization,

and Unit.directSupervision. In all three case subjects the unit size is too
small to be affected by IT, so the value of mutualAdjustment has no effect
from ITSystem. Also as we are looking at CreditSection unit, that does not
have any child unit, so the value of verticalCentralization remains the same.
Although, by introducing IT, the span of control is affected, but the value of
directSupervision was low before the introduction of IT, so it is not possible
to decrease the value to show the effect of IT, as shown in table 6.2.
Table 6.2: Direct effect of IT on CreditSection unit
Attribute
mutualAdjustment
verticalCentralization
directSupervision
Sonali
before
1
1
0
Bank
after
1
1
0
Janata
before
1
1
0
Bank
after
1
1
0
UCB
before after
1
1
1
1
0
0
Table 6.3: Indirect effect of IT on CreditSection unit

Attribute
Sonali Bank
before after
54
Janata Bank
UCB
before after
before after

Attribute
Sonali Bank Janata Bank
employeeMotivation
0.56
0.57
0.56
0.57
externalCoordination
6.33
6.33
17.42 21.42
internalCoordination
0.85
0.85
0.5
0.5
decisionQuality
0.87
0.89
0.90
0.92
outputQuality
0.60
0.64
0.93
0.94
timeEfficiency
0.75
0.84
0.62
0.64
flexibility
0.19
0.19
0.64
0.64
variability
0.5
0.5
0.2
0.2
learningPace
0.45
0.47
1.21
1.22
0.54
2.99
0.60
0.90
0.93
0.83
0.31
0.19
3.60
UCB
0.56
3.15
0.61
1
1
0.97
0.31
0.20
4.54
If we want to compare each of the case subjects to see how IT effect the
business performance measurements, then figure 6.3, 6.4, 6.5 shows the
effect in all viewpoints.
Figure 6.3: Effect of IT to Sonali Bank
55
Figure 6.4: Effect of IT to Janata Bank
Figure 6.5: Effect of IT to UCB Bank
6.2.1
Effect on unit.employeeMotivation
As figure 6.6 shows the result of the indirect effect of IT on employeeMotivation and figure 6.7 show the reason for this result on how IT effect the
value.
56
Figure 6.6: Indirect effect of IT on unit.employeeMotivation
Figure 6.7: (a) Indirect effect of IT to Motivation attribute, (b) direct effect
of IT to Worker.horizontalSpecialization, Worker.verticalEnlargement, and
TaskType.performanceMeasered
Although IT has a negative effect on Worker.horizontalSpecialization,
57
but as we know from the previous section that in our case study, the value
remains the same. Thus, we can clearly see that the value of performanceMeasured affect the value of motivation, after the introduction of IT.
The value in Sonali bank seems more than other banks, as the CreditSection unit of this bank involved in more task than other banks CreditSection
unit. Thus the performanceMeasured value gets more affected by IT and it
gets higher. That is the reason why unit of Sonali bank is more motivated
than others.
6.2.2
Effect on unit.externalCoordination
Figure 6.8: Indirect effect of IT on unit.externalCoordination
58
Figure 6.9: (a) Indirect effect of IT to externalCoordination attribute,

(b) direct effect of IT to Decision.mDecisionCoordination, (c) indirect effect of IT to TaskType.variability, (d) direct effect of IT to
Worker.horizontalSpecialization
As figure 6.8 shows the result of the indirect effect of IT on externalCoordination and figure 6.9 show the reason for this result on how IT effect the
value.
The attributes value depend heavily on the decision, task, and on how
many task does the worker perform. The value for Janata bank is higher
as the Credit Officer of Janata bank takes more decision than the other
banks credit officer. For this reason the value is higher before the effect of IT. As we can see from the figure 6.9, IT effect more on decisionType.mDecisionCoordination, this effect cause the increase in external coordination, as a result the effect is most in Janata bank.
59
6.2.3
Effect on unit.internalCoordination
Figure 6.10: Indirect effect of IT on unit.internalCoordination
Figure 6.11: Indirect effect of IT to internalCoordination attribute

As figure 6.10 shows the result of the indirect effect of IT on internalCoordination and figure 6.11 show the reason for this result on how IT effect the
value.
The value as expected did not change after the introduction of IT, because as I have mentioned the value of unit.DirectSupervision and unit.MutualAdjustment
does not change, so in this case unit.internalCoordination depend on TaskType.behaviourFormalized value.
But in this case, there is no ruleBook implemented by ITSystem to
60
enforce formalization, thus the value did not differ and internalCoordination
value remains the same.
6.2.4
Effect on quality
Figure 6.12:
Indirect
unit.decisionQuality
effect
of
IT
on
unit.outputQuality
and
Figure 6.13: IT effect Information.quality, thus effect decisionQuality and

outputQuality
As figure 6.12 shows the result of the indirect effect of IT on decisionQuality
and outputQuality. IT affects Information.quality by increasing its value,
which has a positive effect on unit.decisionQuality and unit.outputQuality.
Figure 6.13 shows the explanation, and figure 6.12 clearly states the increase
in value of decisionQuality of all three banks, which validate the hypothesis
that:
IF producingDecision.iTSystem OR producingTask.iTSystem THEN
Unit.outputQuality AND Unit.decisionQuality INCREASE
61
6.2.5
Effect on unit.timeEfficiency
As figure 6.14 shows the indirect effect of IT on unit.efficiency. IT affects

the quality of information that is required for task/decision to perform in
time. Thus, if the quality of information increases, so does the efficiency.
Figure 6.14: Indirect effect of IT on unit.efficiency
Figure 6.15: Result of effect of IT on unit.efficiency

As figure 6.15 suggest, all the banks efficiency increased after introducing IT. Information.quality influence unit.timeEfficiency by increasing it
and by decreasing units verticalCentralization it has a positive impact on
efficiency. As IT increase the value of information.quality and decrease the
value of unit.verticalCentralization, thus has a positive impact on efficiency.
62
6.2.6
Effect on unit.flexibility
As figure 6.17 shows the indirect effect of IT on unit.flexibility. As we can

see from the result shown on figure 6.16, the value remains the same after
the introduction of IT.
Figure 6.16: Indirect effect of IT on unit.flexibility
63
Figure 6.17: (a) Indirect effect of IT to flexibility attribute, (b) direct effect
of IT to DecisionType.horizontallyCentralize, Unit.mutualAdjustment, and
TaskType.behvaiourFormalized
As the unit that I am monitoring, does not have any ruleBook that
is implemented by ITSystem, so the TaskType.behaviourFormalized value
does not get affected. Also as I have mentioned before, the unit is not so big
on worker size to get affected by IT on unit.mutualAdjustment attribute.
So this effect cannot be shown through the result that we have.
6.2.7
Effect on unit.variability
As figure 6.19 shows the indirect effect of IT on unit.variability. IT effect

TaskType.behaviourFormalized by increasing a non-formalize structure or
decreasing a formalize structure. This effect the artefact.variability, as more
formalize behaviour will give less variability. So they have an inverse relationship, which then effect the value of unit.variability.
64
Figure 6.18: Indirect effect of IT on unit.variability
Figure 6.19: Result of effect of IT on unit.variability

But as the figure 6.18 shows, ITSystem did not change the value. As the
TaskType.behaviourFormalized value is not changed due to the fact that IT
did not create any ruleBook that make task more formalized. So as a result,
IT did not affect unit.variability.
IF ruleBook.iTSystem THEN Unit.variability DECREASE
So the hypothesis cannot be verified with this data.
6.2.8
Effect on unit.learningPace
As figure 6.20 shows how learningPace differ in all the bank. Learning pace
gets effected by worker.horizontalSpecialization, as shown on figure 6.21.
Although the value of worker.horizontalSpecialization does not change by
the effect of IT, but the indirect effect to other attribute change the value
learning pace and increase it.
65
Figure 6.20: Indirect effect of IT on unit.learningPace
Figure 6.21: Indirect effect of IT to unit.learningPace

UCB have the highest value, as they have a formal Training object, so
the learningPace value is high.
66
Chapter 7
Conclusion
The goal of this thesis work is to identify the impact of IT on OPAF. For that,
key points of view from previous research papers have been taken. These key
points are being analyzed on how IT affects organizational structure. The
type of effect has been identified and these relations have been investigated.
Then to validate the findings, those key points are being translated into
OCL code, and they are placed inside new IT-OPAF model. This new ITOPAF model represents the OPAF model with IT. After that, three real life
banks have been selected to study one of their workflows. Interview has been
taken and with their information, three models for these three banks have
been created. Then the model has been run with framework without IT
and with IT. These two sets of data have been collected and they are being
compared. The comparison shows us that, the data corresponds with the
findings. Thus it can be concluded that the effect of IT has been successfully
mapped into this new IT-OPAF model.
The impact can be more visible after mapping the whole organization
and not only a workflow, and the effect that IT makes by changing the
organizational structure requires to model a organization without IT and
then model it again after when they implement IT.
This investigation about how IT effect organizational structure may provide us a lot of research background, but the specifics of organizational structure does present a problem on finding previous work. In future, more and
more previous study can be collected to this and more quantitative analysis
should be performed, to validate the IT-OPAF model.
67
Appendix A
Case Subject Introduction

1
Sonali Bank
Sonali Bank is the largest state owned leading commercial bank in Bangladesh.
It has 1200 branches with 21,839 employees, among them 854 branches are
rural branch and rest are urban branches. It also have 2 foreign branches in
USA & UK.[23]
68
Figure A.1: Sonali Bank Organogram[23]

Interviewee introduction:
Name: Md. Sanaullah
Current Designation: Assistant General Manager
Branch: B.Wapda Corp. branch
Years of banking experience: 33 years
Years of experience as a Head of Branch: 20 years
Contact: mdsanaullah01@yahoo.com
Janata Bank
Janata Bank Limited, is also one of the state owned commercial banks in
Bangladesh. It has 886 branches with employees more than 15,000. It also
have 4 foreign branches in UAE. The bank have won numerious awards including The Asian Banking & Finance Awards 2012. [24]
69
Name: Md. Ahsan Ullah

Current Designation: Deputy General Managers
Branch: Tipu Sultan Road Branch
Years of experience as a Head of Branch: 15 years
Contact: NIL
United Commercial Bank Ltd
United Commercial Bank Ltd. (UCB), is one of the first generation bank
in private sector, operating since 1983. It is operating with 113 branches all
over the country. [25]
Name: Sajjad Hossain
Current Designation: Assistant Vice President
Branch: Head Office
Contact: sajjad.hossain@ucbl.com
70
Appendix B
Questionnaire
This is a sample questionnaire that is used to interview the personal of
previously mentioned case subjects.
1. Units in organization
2. Objectives in organization
(a) What objectives do the unit(s) have?
3. Task type (group of tasks) in the organization
(a) Task(s) inside the task type
i. How frequent do you perform the task in a week?
ii. Is there any technical assistance for this task?
iii. Is the task using any external product/service? Please explain.
iv. How relevant is the task to satisfy the Objective?
(b) Skill needed for this task type (group of tasks)
i.
ii.
iii.
iv.
What are the skills require to perform this task type?

How much time does it require to master this task type?
Can you learn this skill by performing the task?
How large knowledge do the Worker have of the this Skills
(WorkerSkill)?
(c) What is the outcome (service/product) of this group of tasks

(d) Is the task type standardized or specified by rules?
(e) Which objects does this group of tasks satisfy?
71
4. Decision type (group of decisions) in the organization

(a) Decision inside the Decision type (group of decisions)
Who perform this decision?
How important is the information qualitys and impact to
make the decision?
How often are these Decisions performed (On a weekly basis)?
Does this decision effect any group of tasks? which one and
how?
What is the outcome (service/product) of this decision?
What kind of Information is required For this Decision? and
how much time does it require to understand the information? also which environment does this information belongs
to?
Is this decision aligned with objectives? If yes, how well
aligned?
(b) How much time would the decisionType require under perfect
conditions?
(c) Is the decisionType standardized or specified by rules?
5. Committee inside the organization
6. Performance Control System
(a) Which taskTypes are measured in a Performance Control System?
(b) Which services/products are measured in a Performance Control
System?
72
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Impact IT On Organizational Performance

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Impact of IT on Organization's

Impact of IT on Organizations performance

4.2.6 Effect on Centralization . . . . . . .

6 Result & Analysis

A Case Subject Introduction

Effect of Information Technology [16] . . . . . . . . . . . . . .

Loan Processing Workflow . . . . . . . . . . . . . . . . . . .

Performance measurements result

Effect of IT to UCB Bank . . . . . . . . . . . . . . . . . . .

A.1 Sonali Bank Organogram[23] . . . . . . . . . . . . . . . . . .

Findings from literature study . . . . . . . . . . . . . . . . . .

Non-matching findings from literature study . . . . . . . . . .

Similarities & Dissimilarities between the study subjects . . .

Result on average value based on all viewpoints . . . . . . . .

Information Technology (IT) has changed the traditional ways of people

It is interesting to see how the structure of an organization changes

The goals of this thesis can be present as follows:

Overview of the Method

To examine the effect of IT on organization structure, it is also necessary

Organization Performance Analysis Framework (OPAF) is an object based

To collect information related to whether IT has any effect on Organizational

To validate the findings on how IT affects the organizational structure, I

Area of Changes in Organizational Structure

Vertical differentiation reflects how information is transported, integrated,

functionality, where market grouping is based by output, client, or place,

Decentralization and Formalization

Decentralization means decentralized decision rights, which according to

In an organization, the hierarchy usually consists of a singular/group of

we can see more in large organization, whereas, flat organization structure

Figure 3.1: Effect of Information Technology [16]

Previous Research Point-of-View

Table 3.1: Findings from literature study

Formalization of organization structure denotes how the

Table 3.1 Continued from previous page

IT is not simply a tool for automating existing processes, but

Table 3.1 Continued from previous page

Table 3.1 Continued from previous page

Effect on size, decision right, communication.

To design organization structure, there are 23 classes, like- Organization,

Figure 4.1: IT effect on OPAF

Based on the literature review and opinion from experts of OPAF, I

Figure 4.2: Direct effect of IT to OPAF attribute

Figure 4.3: Direct effect of IT to OPAF attribute represent by organizational

This effect on decision also effect ExternalCoordination, which will be

The impact of IT on how the behavior is formalized is divided into both

This effect on formalization also effect the externalCoordination & the

According to Pfeffer, IT improve performance measured by providing rapid

Effect on Mutual Adjustment

MutualAdjustment on Unit, reflects the effect on size of the organization,

The OCL code to represent such effect is:

This effect on mutual Adjustment also effect on units flexibility, which

According to Cordella[17], IT effect the organization structure by flattening

The OCL code to represent such effect is:

Indirect effect of IT to business performance

Figure 4.4: Indirect effect of IT to performance measurements attribute

Figure 4.5 shows how IT indirectly affecting unit.employeeMotivation, which

Figure 4.6 shows how IT indirectly affecting unit.ExternalCoordination. As

Figure 4.6: (a) Indirect effect of IT to externalCoordination attribute,

Figure 4.7 shows how IT indirectly affecting unit.internalCoordination. As

Figure 4.7: Indirect effect of IT to internalCoordination attribute

If the decision/task that produce a information involve ITSystem, then the

IF producingDecision.iTSystem OR producingTask.iTSystem THEN