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CASE To Automate or Not To Automate?

7 December, 2015 - 10:48

When Pierre Lesparre, chief executive of a Paris-based insurance company, convened a meeting early [one ] September to consider plans for automating the head office, he became aware that deep-seated differences among some of his senior managers, which had previously become apparent, had not been resolved.

In August, before the start of the summer vacation, a similar meeting had revealed marked disagreements on how far and fast to automate and indeed, whether to proceed any further in that direction at all. Lesparre had asked his managers to give some further idle thought to the question while skin-diving or lying on the beach. "I'm a great believer in letting the subconscious mind take over, where thorny problems are involved," he had said. "Maybe you will all come back with your views substantially modified."

Now Lesparre sighed as he realized that the summer sun had not, in fact, worked miracles.

First he asked the finance director, Max Robinet, whether he was still opposed to the company installing a local area network along lines suggested by the data processing manager, Daniel Merten.

"I see no reason to modify my original position," Robinet replied. "As you all know, I am a firm believer in the principle of automation. I certainly agree that we cannot afford to fall too far behind our larger competitors in this respect.

SOURCE: The Best of Dilemma and Decision from International Management (London: McGraw-Hili International, 1985), 49-50.

"I am fully aware that in his submission in July, Merten favoured a comprehensive local area network of the kind already used by about 20, mainly AngloSaxon, companies. But I remain convinced that a more cost-effective solution would be to use our existing PABX, which after all has only recently been installed.

"Incidentally I have since learned that there is a dealer just around the corner who is well qualified to connect our existing equipment to the telephone network. He would provide us with all the support we need."

Lesparre turned to Merten, a younger man who had been hired to manage a small minicomputer the company had purchased three years previously. Since then, many different machines had been purchased and used for different purposes. They included two word processors and several microcomputers all of which had been used to handle particular problems at various times.

At an early stage Merten had mentioned to Lesparre the need for some kind of long-range commitment to link up all these machines so that each could communicate with the others. With the approval of Robinet, to whom Merten reported, Lesparre had asked the data processing manager to look at the market and come up with recommendations.

The result had been Merten's July report, in which he had advocated installing a local area network which would, in effect, mean buying or leasing a number of fairly expensive little black boxes to plug into the devices the insurance company already possessed.

It was the expenditure that Robinet now objected to. But Merten made it plain that despite the opposition of his immediate boss, and notwithstanding the mellowing effects of his recent holiday in Corsica, he had not changed his mind on the issue. "I remain as convinced as ever of the need to go the whole hog and choose an industry standard as our system," he said. "It will pay off in the long run, even if it means more expenditure now."

Finally Lesparre invited the comments of personnel manager Emile Sergent, who all along had been most opposed to the very idea of what he called "reckless automation."

"I want to put it to you," said Sergent, "that until this whole idea cropped up and became common knowledge, morale in this company was sky high. It is still fairly high. But there is this element of uncertainty, which is not helping things at all. Now the logical conclusion to the process suggested by Merten, by his own admission, is that we shall have to make quite large redundancies. Not only will typists not be needed but many professionals also will have to go. Morale is going to suffer heavily."

"With due respect," said Merten, "that is an argument commonly used by personnel departments looking for an easy life. The fact is that despite increasing turnover we have suffered declining profits in recent years. This has led to lower wage increases which in turn have done more than anything else to cause discontent among the staff. What I am proposing is to end the uncertainty. Of course we will have to work out progressive personnel policies to soften the blow. But that is another problem."

"I resent the suggestion that we just seek an easy life," Sergent replied.

"Rather, we are being realistic. Whatever we do to soften the blow, some of the better qualified staff will leave. It can be incredibly boring using computers, or hadn't you noticed?"

"As a technical man you want the very latest equipment-industry standard, as you put it. But I would suggest that as yet there is no such standard. There is no such thing as a fully functioning management information system and there is no such thing as a fully automated office. So I suggest it would be better to wait and do some research, while watching other companies make the mistakes."

"If we do that we shall fall too far behind," Merten said. "Competitors are making progress now." "Which is an argument for compromising, and using the PABX we already have," Robinet interposed.

All along, Lesparre had said that the final decision would be his. Now he realized, the moment of decision was fast approaching. Maybe he should be a bit wary about supporting a data processing manager who had been brought in, originally, just to manage a minicomputer, and whose recommendation was not favoured by his immediate boss.

On the other hand, could the company afford to dither, using as an excuse the question of staff morale? Faced with internal dissension, what should Lesparre do next, and how could staff morale be maintained?

ISSUES FOR DISCUSSION

(1) Prepare a I S-minute presentation for Mr. Lesparre on the latest in integrated management information systems and automated offices.
(2) How would you advise Mr. Lesparre to handle the dilemma of supporting a data processing manager "whose recommendation was not favoured by his boss"?
(3) In view of the current emphasis on "information as a strategic weapon," can the company afford to dither?
(4) Are the personnel manager's fears about the impact of computerization on personnel morale well founded? Weigh the positive strategic impact of the use of the latest information technology on the company's performance against its potentially negative impact on personnel morale.